Tibaijas filed a motion to lift the writ of exectution on the ground that judgement
1. Arrieta v. NRCC debt had already been paid. The motion was denied.
ARRIETA v. NATIONAL RICE AND CORN CORPORATION, G.R. No.L-15645, January 31,
1964
FACTS:
Paz Arrieta is a rice dealer/importer. In May 1952, she participated in a public
bidding held by the National Rice and Corn Corporation (NARIC) where she was the
lowest bidder at $203.00 per metric ton hence she won the bidding. A contract was
made whereby Arrieta is to deliver the rice supply and NARIC is to pay for the
imported rice “by means of an irrevocable, confirmed and assignable letter of credit
in U.S. currency in favor of the Arrieta and/or supplier in Burma, immediately.”
Arrieta then proceeded to contact her supplier in Burma (Thiri Setkya) and arranged
the sale of the 20k metric ton of Burmese Rice, Arrieta promised Setkya that he will
be paid by NARIC on August 4, 1952. Arrieta also made a 5% deposit (P200k) as
advance payment to Setkya.
Meanwhile, NARIC tried to open a letter of credit in the amount of $3,614,000.00
with the Philippine National Bank. PNB agreed to open the letter of credit but only
on the condition that NARIC deposits 50% of the said amount. NARIC failed to do
this and the letter of credit was not opened when the obligation to pay Setkya
became due. Because of this, Arrieta lost the opportunity to profit from the sale as
the agreement was eventually forfeited. Her 5% depoit was likewise forfeited
pursuant to Burma laws.
ISSUE:
Whether or not NARIC has the obligation to indemnify Arrieta for damages.
RULING:
Yes. Article 1170 provides that Those who in the performance of their obligation are
guilty of fraud, negligence, or delay, and those who in any manner contravene the
tenor thereof, are liable in damages. In this case, It is clear upon the records that
the sole and principal reason for the cancellation of the allocation contracted by the
appellee herein in Rangoon, Burma, was the failure of the letter of credit to be
opened with the contemplated period. This failure must, therefore, be taken as the
immediate cause for the consequent damage which resulted. Hence, NARIC is liable
for damages.
2. Tibajia v. CA
TIBAIJA v. COURT OF APPEALS and EDEN TAN, G.R. No. 100290, June 4, 1993
FACTS:
Tibaija spouses delilvered to Sheriff the total money judgement in cashier’s check
and cash. Private respondent, Eden Tan, refused to accept the payment made by
the Tibaija spouse and instead insisted that the garnished funds deposited with the
cashiers of the RTC of Pasig, be withdrawn to satisfy the judgement obligation.
ISSUE:
Whether or not the cashier’s check tendered by petitioners for payment of the
judgement debt is legal tender.
RULING:
No.
Art. 1249. The payment of debts in money shall be made in the currency stipulated,
and if it is not possible to deliver such currency, then in the currency which is legal
tender in the Philippines.
The delivery of promissory notes payable to order, or bills of exchange or other
mercantile documents shall produce the effect of payment only when they have
been cashed, or when through the fault of the creditor they have been impaired.
xxx
In the recent cases of Philippine Airlines, Inc. vs. Court of Appeals and Roman
Catholic Bishop of Malolos, Inc. vs. Intermediate Appellate Court, this Court held
that —
A check, whether a manager's check or ordinary check, is not legal tender, and an
offer of a check in payment of a debt is not a valid tender of payment and may be
refused receipt by the obligee or creditor.
3. Pauldo v. Regalado
FACTS:
Nereo Paculdo, petitioner, and Bonifacio Regalado, respondent, entered into a
lease contract over a 16,478 square meter property with a wet market building
located along Don Mariano Marcos Avenue, Fairview Park, Quezon City on
December 27, 1990. Lease period is for 25 years beginning January 1, 1991 up to
December 31 , 2015. On top of this lease contract, petitioner also leased from
respondent eleven other properties and purchased from the same respondent eight
units of heavy equipment and vehicles.
The petitioner failed to pay rentals for the wet market property for May, June, and
July 1992. Respondent on July 6, wrote demand letter to petitioner for payment of
the due rent with advise that if payment is not received within fifteen days the
lease contract will be canceled. Another letter was sent by the respondent on July
17, 1992 reiterating demand for payment and for the petitioner to vacate the
premises. Petitioner tried to pay on a daily basis the rental beginning August 25,
1992 but the petitioner refused to accept the same.
On August 20, 1992, petitioner filed an action for injunction and damages seeking
to enjoin respondent from disturbing his possession of the leased property. On the
same day the respondent filed an ejectment case against the petitioner. The
ejectment case was however withdrawn five days later on the ground that certain
details included therein had been omitted and must be re-computed. On April 22,
1993, the case for ejectment was re-filed with the MTC. On January31, 1994, the
MTC ruled in favor of Regalado and ordered the petitioner and all persons claiming
right under him to vacate the leased premises and to pay the respondent the back
rentals beginning July 1992. This order was appealed to the RTC which subsequently
affirmed the MTC decision en toto.
Despite having completely turned over the leased property, petitioner nevertheless
filed a petition for review with the Court of Appeals alleging among others that
portions of his payments to respondents were applied to his other obligations. The
CA found for the respondent when it ruled that petitioner consented to the
respondent’s application of payment to the petitioner’s other obligations. Hence
the appeal.
ISSUE: Whether the petitioner was truly in arrears in the payment of the rentals on
the subject property at the time of the filing of the complaint for ejectment
HELD:
NO. There was no clear assent from the petitioner to the change in the manner of
application of payment. The silence of the petitioner with regard the request of the
respondent with regard the application of the rental did not mean that he
consented thereto. Assuming further that petitioner did not choose the obligation
to be first satisfied, giving the respondent the right to apply the payments to the
other obligations of the petitioner, the law provided that no payment shall be made
to a debt not yet due (Article 1252 of the Civil Code) and that payment must be first
applied to the debt most onerous to the debtor (Article 1254 of the Civil Code).
4. DBP v. CA
FACTS:
Plaintiff CUBA is a grantee of a Fishpond Lease Agreement from the Government.
CUBA obtained from DBP three separate loans totaling P335,000, each of which was
covered by a promissory note and as security for said loans, CUBA executed two
Deeds of Assignment of her Leasehold Rights. Plaintiff failed to pay her loan on the
scheduled dates in accordance with the terms of the Promissory Notes; Without
foreclosure proceedings, whether judicial or extra-judicial, defendant DBP
appropriated the leasehold Rights of plaintiff CUBA over the fishpond in question;
then executed a Deed of Conditional Sale of the Leasehold Rights in favor of
plaintiff CUBA over the same fishpond; In the negotiation for repurchase, plaintiff
CUBA addressed two letters (offers to repurchase the fishpond) to the Manager
DBP, which DBP accepted;
After the Deed of Conditional Sale was executed in favor of plaintiff CUBA, a new
Fishpond Lease Agreement was issued by the Ministry of Agriculture and Food in
favor of plaintiff CUBA but CUBA failed to pay the amortizations stipulated in the
Deed of Conditional Sale and entered with the DBP a temporary arrangement
whereby in consideration for the deferment of the Notarial Rescission of Deed of
Conditional Sale, plaintiff CUBA promised to make certain payments as stated in
temporary Arrangement;
Defendant DBP thereafter sent a Notice of Rescission thru Notarial Act which CUBA
received, a and thereafter, defendant DBP took possession of the Leasehold Rights
of the fishpond in question, advertised the public bidding to dispose of the
property; and thereafter executed a Deed of Conditional Sale in favor of defendant
Agripina Caperal; defendant Caperal was awarded Fishpond Lease Agreement by
the Ministry of Agriculture and Food. CUBA filed complaint against DBP and Caperal
RTC sided with CUBA; CA declared valid the ff: (1) the act of DBP in appropriating
Cuba's leasehold rights and interest under Fishpond Lease Agreement No. 2083; (2)
the deeds of assignment executed by Cuba in favor of DBP; (3) the deed of
conditional sale between CUBA and DBP; and (4) the deed of conditional sale
between DBP and Caperal, the Fishpond Lease Agreement in favor of Caperal, and
the assignment of leasehold rights executed by Caperal in favor of DBP.
ISSUES: Whether the assignment of leasehold rights was a mortgage contract, not
amounting to novation, cession under Art. 1255 of Civil Code, nor a Dation under
Art. 1254.
HELD: YES, the assignment of leasehold rights was a mortgage contract. An
assignment to guarantee an obligation is in effect a mortgage, and being in its
essence a mortgage, is but a security and not a satisfaction of indebtedness. The
stipulations of the deeds of assignment constantly referred to the contract as a
mortgage contract. The parties admitted that the assignment was by way of
security for the payment of the loans.
- on NOVATION: the said assignment merely complemented or supplemented the
notes; both could stand together. The obligation to pay a sum of money
remained,and the assignment merely served as security for the loans covered by
the promissory notes.
- on CESSION: Article 1255 contemplates the existence of two or more creditors and
involves the assignment of all the debtor's property, but in the case only DBP is the
creditor
- on DATION: The assignment, being in its essence a mortgage, was but a security
and not a satisfaction of indebtedness so not Dation as defined in Article 1254
5. Pabugais v. Sahijwani

G.R. No. 156846. February 23, 2004.
FACTS:
There was an Agreement and Undertaking by both parties, Pabugais will sell his lot
in Forbes Park located at Makati to the respondent. In the agreement paragraph 5 it
stated that in case the respondent fails to pay the balance within the stipulated due
time the agreement will be forfeited on the other hand if Pabugais fails to deliver
the said title upon the fulfillment of the obligation of the respondent he will pay the
respondent the amount agreed upon with an interest rate of 18% per annum
ISSUE: W/ON THERE WAS A VALID CONSIGNATION
RULING:
Yes. There was a valid consignation.
One of the requisites of consignation is the existence of a valid tender of payment.
In this case a manager’s check was not a legal tender unless it will be converted to
cash. As a general rule a manager’s check was not a valid legal tender but the
exception was it is depends upon the will of the creditor if he will accept or refuse
it.
Therefore. The consignation was valid.
DOCTRINE:
Consignation is the act of depositing the thing due with the court or judicial
authorities whenever the creditor cannot accept or refuses to accept payment and
it generally requires a prior tender of payment. In order that consignation may be
effective, the debtor must show that:
(DCPDN)
(1) there was a debt due;
(2) the consignation of the obligation had been made because the creditor to whom
tender of payment was made refused to accept it, or because he was absent or
incapacitated, or because several persons claimed to be entitled to receive the
amount due or because the title
to the obligation has been lost;
(3) previous notice of the consignation had been given to the person interested in
the performance of the obligation;
(4) the amount due was placed at the disposal of the court; and
(5) after the consignation had been made the person interested was notified
thereof.
Failure in any of these requirements is enough ground to render a consignation
ineffective.
6. ETPI v. ETEV
G.R. No. 185665. February 8, 2012.*
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., (ETPI) petitioner,
vs.
EASTERN TELECOMS EMPLOYEES UNION, (ETEU) respondent.
FACTS:
The respondents are the employees of the petitioner they have an existing CBA
with the company to expire in the year 2004 with a Side Agreement. The company’s
plan to defer the 2003 14th, 15th and 16th month bonuses sometime in April 2004.
The company’s main ground in postponing the payment of bonuses is due to allege
continuing deterioration of company’s financial position. The company avers that
the 14th, 15th and 16th month bonuses are not part of wages that are demandable
since it was only freely given or gratuitously given for the services rendered by their
employees.
ISSUE:
W/ON ETPI is liable to pay 14th, 15th and 16th month bonuses for the year 2003
and 14th month bonus for the year 2004 to the members of respondent union
RULING:
Yes. The ETPI is liable.
The grant of a bonus is basically a management prerogative which cannot be forced
upon the employer who may not be obliged to assume the onerous burden of
granting bonuses or other benefits aside from the employee’s basic salaries or
wages. In the case at bench, it is indubitable that ETPI and ETEU agreed on the
inclusion of a provision for the grant of 14th, 15th and 16th month bonuses
DOCTRINE:
From a legal point of view, a bonus is a gratuity or act of liberality of the giver which
the recipient has no right to demand as a matter of right; A bonus, however,
becomes a demandable or enforceable obligation when it is made part of the wage
or salary or compensation of the employee
7. Yan & Yek Sun Lent v. CA
FACTS:
Petitioners entered into a loan agreement with an assumption of solidary liability
whereby they were given a loan amounting to Php 500,000 by private respondents.
The said loan was secured by a chattel mortgage on the printing machinery of the
petitioners. Subsequently, they contracted another loan amounting to Php 300,000
evidenced by two promissory notes and a new loan agreement was made by both
parties as to the increase of annual interest.
Petitioners then paid in full the first loan of Php 500,000 together with the interest.
Ricardo Lirio and Cristina Destajo was then made receiver and inhouse examiners of
the private respondent. Petitioners then made a partial payment for their second
loan. Then they wrote a letter to the respondent for an offer proposing to settle
their obligation which respondents counter-offered saying that they will reduce the
penalty up to Php 140,000 if petitioners can pay on or before July 30, 1986. On July
31, 1986 petitioners paid a total amount of Php 410,854.47 which was the sum of
their principal and interest minus the Php 50,000 which they paid earlier on. Private
respondent sent two demand letters seeking payment of the balance and
foreclosing the chattel mortgage. Petitioners argue that they have fully paid the
respondents since they met with the president of the respondent corporation who
has agreed to waive the penalties and service charge if they would pay on July 31,
1986. Moreover, they argue that they have indicated a written “full payment note”
on the voucher that they have given as payment together with the check. The lower
court and the CA ruled in favor of the private respondents ordering defendants to
pay the loan balance and foreclosing the chattel mortgage.
ISSUE:
Whether or not petitioners can be held liable for the payment of the
penalties and service charge on their loan?
RULING:
Donation and acceptance of a movable, the value of which exceeds P5,000.00, must
be made in writing, otherwise the same shall be void. Art. 1270, par. 2 of the Civil
Code provides that express condonation must comply with the forms of donation.
Art. 748, par. 3 provides that the donation and acceptance of a movable, the value
of which exceeds P5,000.00, must be made in writing, otherwise the same shall be
void. In this connection, under Art. 417, par. 1, obligations, actually referring to
credits, are considered movable property. In the case at bar, it is undisputed that
the alleged agreement to condone P266,146.88 of the second IGLF loan was not
reduced in writing.
The appointment of a receiver operates to suspend the authority of a corporation
and of its directors and officers over its property and effects, such authority being
reposed in the receiver.—It is to be noted that the alleged agreement to condone
the amount in question was supposedly entered into by the parties sometime in
July 1986, that is, after respondent corporation had been placed under receivership
on November 4, 1985. As held in Villanueva v. Court of Appeals “the appointment
of a receiver operates to suspend the authority of a [corporation] and of its
directors and officers over its property and effects, such authority being reposed in
the receiver.” Thus, the President of private respondent had no authority to
condone the debt.
The decision of the CA is affirmed.
8. Mirasol v. CA
FACTS:
The Mirasols are sugar land owners and planters. Private respondent PNB
financed the Mirasol’s sugar production venture under a crop loan financing
scheme. President Marcos then issued PD No. 579 authorizing privates respondent
PHILEX to purchase sugar allocated for export to foreign markets and authorizing
PNB to finance PHILEX’s purchases and whatever profit would be remitted to
national government funds. PNB continued to finance Mirasol’s sugar production.
The Mirasol’s then asked for accounting of the proceeds of sale but PNB ignored
said request. Believing that proceeds of sale of sugar was more than enough to pay
their obligations, petitioners continuously avail loans from PNB. PNB then asked
petitioners to settle their due and demandable accounts. Petitioners then conveyed
real properties amounting to Php 1.4M by way of dacion en pago. Despite demands
for the balance of petitioner’s loan, PNB has decided to foreclose mortgaged
properties of petitioners. Petitioners continued to ask bank for the account of
proceeds of sale of their sugar. PNB argues that under PD 579, sale of sugar
pertained were remitted to the national government’s fund. Petitioners then filed a
suit for the determination of total amount due. The trial court decided in favor of
the petitioners but without prejudice to whatever benefits that may have accrued
in favor of the plaintiffs. The CA reversed the decision rendering the dacion en pago
and the foreclosure of properties proper and ordering PNB to account and
recomputed the loan due of the plaintiffs.
ISSUE:
Whether or not the dacion en pago and the foreclosure of the mortgaged
properties are valid?
Whether or not there is compensation which extinguishes the obligation of
the Mirasol’s to PNB?
RULING:
Petitioners claim that the dacion en pago and the foreclosure of their
mortgaged properties were void for want of consideration. Petitioners insist that
the loans granted them by PNB from 1975 to 1982 had been fully paid by virtue of
legal compensation. Hence, the foreclosure was invalid and of no effect, since the
mortgages were already fully discharged. It is also averred that they agreed to the
dacion only by virtue of a martial law Arrest, Search, and Seizure Order (ASSO).
Petitioner’s argument is unpersuasive. The Mirasols admitted that they were
indebted to PNB in the sum stated in the latter’s counterclaim. Petitioners
nonetheless insist that the same can be offset by the unliquidated amounts owed
them by PNB for crop years 1973-74 and 1974-75. Petitioners’ argument has no
basis in law. For legal compensation to take place, the requirements set forth in
Articles 1278 and 1279 of the Civil Code must be present. Compensation cannot
take place between the parties because neither of the parties are mutually
creditors and debtors of each other. There was nothing with which PNB was
supposed to have off-set Mirasols’ admitted indebtedness. Second, compensation
cannot take place where one claim, as in the instant case, is still the subject of
litigation, as the same cannot be deemed liquidated.
The court affirmed the decision of the CA.
9. Sime Darby v. Good Year
FACTS:
Macgraphics leased a billboard to Sime Darby at a monthly rental of P120,000.00.
The lease had a term of four years. Upon signing of the contract, Sime Darby paid
Macgraphics a total of P1.2 million representing the ten-month deposit. Sime Darby
executed a Memorandum of Agreement (MOA) with Goodyear, whereby it agreed
to sell its tire manufacturing plants and other assets to the latter for a total of
P1.65 billion. Sime Darby and Goodyear executed a Deed of Assignment through
which Sime Darby assigned, among others, its leasehold rights and deposits made
to Macgraphics pursuant to its lease contract over the said billboard. Macgraphics
informed Goodyear that the monthly rental of the billboard is P250,000.00 and
explained that the increase in rental was in consideration of the provisions and
technical aspects of the submitted design. However, Goodyear stated that it
intended to honor the P120,000.00 monthly rental rate given by
Macgraphics to Sime Darby. Macgraphics then sent a letter to Sime Darby, dated
July 11, 1996, informing the latter that it could not give its consent to the
assignment of lease to Goodyear. Macgraphics advised Goodyear that any
advertising service it intended to get from them would have to wait until after the
expiration or valid pre-termination of the lease then existing with Sime Darby. Due
to Macgraphics refusal to honor the Deed of Assignment, Goodyear
demanded partial rescission of the Deed of Assignment and the refund of
P1,239,000.00 from Sime Darby. Sime Darby refused to accede to Goodyear’s
demand for partial rescission. Consequently, the latter commenced Civil Case
with the
RTC. RTC rendered its decision that the Deed of Assignment of Receivables shall
be partially rescinded and Sime Darby Pilipinas, Inc. shall pay Goodyear
Philippines, Inc. the amount of P1,239,000.00 with legal interest. Sime Darby and
Goodyear thereafter sought relief from the CA. However, the CA echoed the
findings and conclusions of the trial court and affirmed its
decision in toto. Hence, this petition.
ISSUE:
Whether or not the partial rescission of the Deed of Assignment is proper.
RULE:
Yes, the partial rescission of the Deed of Assignment is proper. It is clear that by
Sime Darby’ s failure to secure the consent of Macgraphics to the assignment of
lease, Sime Darby failed to perform what was incumbent upon it under the Deed of
Assignment.
According to Article 1191 of the New Civil Code, the power to rescind obligations is
implied in reciprocal ones, in case one of the obligors should not comply with what
is incumbent upon him. Xxx In this case, Macgraphics made formal its refusal to give
consent to the transfer/assignment to GOODYEAR of its right in the lease over the
billboard through a letter to Sime Darby, dated July 11, 1996. The records are
bereft of any evidence that clearly shows that Macgraphics consented to the
assignment of the lease. Moreover, Macgraphics was never part of the
negotiations between Sime Darby and Goodyear. Neither did it give its conformity
to the assignment after the execution of the Deed of Assignment. Therefore,
failure to secure the consent of Macgraphics to the assignment of lease, Sime
Darby failed to perform what was incumbent upon it under the
Deed of Assignment. The rescission of the Deed of Assignment pursuant to Article
1191 of the New Civil Code is, thus, justified.
10. Garcia v. Llamas
Facts
Petitioner and de Jesus borrowed P400,000.00 from respondent secured with
promissory note wherein they bound themselves jointly and severally to pay the
loan with a 5% interest per month. The loan has long been overdue and, despite
repeated demands, petitioner and de Jesus have failed and refused to pay it.
Petitioner Garcia, averred that he assumed no liability under the promissory note
because he signed it merely as an accommodation party for de Jesus; and that he is
relieved from any liability arising from the note in as much as the loan had been
paid by de Jesus by means of a check; and that, in any event, the issuance of the
check and responde nt’s acceptance thereof novated or superseded the note.
Respondent asserted that the loan remained unpaid for the reason that the check
issued by de Jesus bounced. Respondent filed a complaint for sum of money and
damages against Petitioner Romeo Garcia and Eduardo de Jesus. Regional Trial
Court (RTC) rendered in favor of respondent and against petitioner and Jesus, who
are hereby ordered to pay, jointly and severally, respondent P400,000.00
representing the principal amount plus 5% interest less the amount of P120,000.00
representing interests already paid by de Jesus. CA ruled that no novation express
or implied had taken place when respondent accepted the check from De Jesus.
According to the CA, the check was issued precisely to pay for the loan that was
covered by the promissory note jointly and severally undertaken by petitioner and
De Jesus. Respondent’s acceptance of the check did not serve to make De Jesus
the sole debtor because, first, the obligation incurred by him and petitioner was
joint and several; and, second, the check which had been intended to extinguish
the obligation bounced upon its presentment. Hence, this Petition.
ISSUE:
Whether or not there was novation of the obligation.
RULE:
No, there was no novation of the obligation. According to Art. 1293. Novation which
consists in substituting a new debtor in the place of the original one, may be made
even without the knowledge or against the will of the latter, but not without the
consent of the creditor. Payment by the new debtor gives him rights mentioned in
articles 1236 and 1237. For novation to take place, the following requisites must
concur: 1) There must be a previous valid obligation. 2) The parties concerned must
agree to a new contract. 3) The old contract must be extinguished. 4) There must be
a valid new contract. Novation may also be express or implied. It is express when
the new obligation declares in unequivocal terms that the old obligation is
extinguished. It is implied when the new obligation is incompatible with the old one
on every point. The test of incompatibility is whether the two obligation s can stand
together, each one with its own independent existence. In this case, the parties did
not unequivocally declare that the old obligation had been extinguished by the
issuance and the acceptance of the check, or that the check would take the place of
the note. There is no incompatibility between the promissory note and the check.
The check had been issued precisely to answer for the obligation. On the one
hand, the note evidences the loan obligation; and on the other, the check answers
for it. Neither could the payment of interests which, in petitioner’s view, also
constitutes novation change the terms and conditions of the obligation. Such
payment was already provided for in the promissory not e and, like the check, was
totally in accord with the terms thereof.
Also unmeritorious is petitioner’s argument that the obligation was novated by the
substitution of debtors. In order to change the person of the debtor, the old one
must be expressly released from the obligation, and the third person or new debtor
must assume the former’s place in the relation. Novation is never presumed.
Consequently, the change in the person of the debtor must be clear and express. It
is thus incumbent on petitioner to show cle arly and unequivocally
that novation has indeed taken place. Therefore, there was no novation of the
obligation.
11. Pakistan v Ople
Doctrine: While parties to a contract may establish stipulations, terms and
conditions as they may deem convenient, they may not contract away applicable
provisions of law especially peremptory provisions dealing with matters heavily
impressed with public interest.
Facts:
1. Pakistan International Airline (PIA) is a foreign corporation licensed to do
business in the PH. 2 separate contracts of employment with Farrales and
Mamasig were entered into by PIA in Manila. The contracts became
effective in 1979. The contracts contained provisions—
a. Providing for the term of 3 years extendible upon mutual consent
of the parties
b. That PIA reserves the right to terminate the employee either by
giving notice 1 month before the date of termination or one
month’s salary
c. “This agreement shall be construed and governed under and by
the laws of Pakistan, and only the Courts of Karachi, Pakistan
shall have the jurisdiction to consider any matter arising out of
or under this agreement.”
2. After their training period, Farrales and Mamasig commenced their
services as flight attendants with base station in Manila.
3. 1 year and 4 months before the lapse of the 3-year period, counsel for the
local branch of PIA sent Farrales and Mamasig notices expressing that their
services will be terminated a month thereafter.
4. Farrales and Mamasig filed a joint complaint for illegal termination and
non-payment of company benefits before the then Ministry of Labor and
Employment (MOLE)
5. PIA submitted a position paper claiming that Farrales and Mamasig were
habitual absentees; that both were in the habit of bringing in from abroad
sizeable quantities of "personal effects"; and that PIA personnel at the
Manila International Airport had been discreetly warned by customs
officials to advise private respondents to discontinue that practice.
6. Regional Director ordered reinstatement and payment of full back wages
or in the alternative payment of their salaries for the remainder of the 3-
year period.
a. They have attained status of regular employees
b. The provision stipulating a three-year period of employment is
null and void for violating LAbor Code provisions on regular
employment
c. Dismissal without clearance from MOLE entitles employees to
reinstatement
7. Deputy Minister affirmed the RD’s order.
8. PIA filed a petition for certiorari before the SC.
a. PIA’s relationship with Farrles and Mamasig was governed by the
provisions of its contract rather than by the general provisions of
the Labor Code
Issue/s:
What law governs the relationship of the parties to the contract?
Held/Ratio: PHILIPPINE LAW
1. Art 1306 of the Civil Code provides: The contracting parties may establish
such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs,
public order, or public policy.
2. The governing principle is that parties may not contract away applicable
provisions of law especially peremptory provisions dealing with matters
heavily impressed with public interest. The law relating to labor and
employment is clearly such an area and 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. It is thus necessary
to appraise the contractual provisions invoked by petitioner PIA in terms of
their consistency with applicable Philippine law and regulations.
3. PIA cannot take refuge in paragraph 10 of its employment agreement
which specifies, firstly, the law of Pakistan as the applicable law of the
agreement and, secondly, lays the venue for settlement of any dispute
arising out of or in connection with the agreement "only [in] courts of
Karachi Pakistan".
a. The relationship is much affected with public interest and that the
otherwise applicable Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon some other law to
govern their relationship.
b. A cursory scrutiny of the relevant circumstances of this case will
show the multiple and substantive contacts between Philippine
law and Philippine courts, on the one hand, and the relationship
between the parties, upon the other:
i. the contract was not only executed in the Philippines, it
was also performed here, at least partially;
ii. private respondents are Philippine citizens and
respondents, while petitioner, although a foreign
corporation, is licensed to do business (and actually
doing business) and hence resident in the Philippines;
iii. private respondents were based in the Philippines in
between their assigned flights to the Middle East and
Europe.
All the above contacts point to the Philippine courts and
administrative agencies as a proper forum for the resolution of
contractual disputes between the parties. Under these
circumstances, paragraph 10 of the employment agreement
cannot be given effect so as to oust Philippine agencies and courts
of the jurisdiction vested upon them by Philippine law.
c. Finally, and in any event, the petitioner PIA did not undertake to
plead and prove the contents of Pakistan law on the matter; it
must therefore be presumed that the applicable provisions of the
law of Pakistan are the same as the applicable provisions of
Philippine law
12. Avon v Luna
FACTS
- Leticia Luna worked as a Supervisor in Beautifont.
- Subsequently, when Avon Cosmetics took over the management and
operations of Beautifont, Avon and Luna entered into an agreement
entitled Supervisor’s Agreement through which she became a part of the
independent sales force of Avon. The pertinent provision is:
o 5) That the Supervisor shall sell or offer to sell, display or promote
only and exclusively the products sold by the Company.
- Luna was invited by a former Avon employee to become Group Franchise
Director of another company, Sandre Philippines, which sells vitamins and
other food supplements.
- Luna consulted with a law firm to render a legal opinion as to the legal
consequence of the Supervisor’s Agreement with Avon.
- In response to that, the firm explained that the Supervisor’s Agreement
was contrary to law and public policy.
- Subsequently, Avon caught wind of Luna’s position as Group Franchise
Director of another company, and ordered for the cancellation of the
Supervisor’s Agreement.
ISSUE
- Whether or not paragraph 5 of the Supervisor’s Agreement is null and void
for being against public policy.
HELD – NO
- In business parlance, this is commonly termed as the "exclusivity clause."
This is defined as agreements which prohibit the obligor from engaging in
"business" in competition with the obligee.
- First off, restraint of trade or occupation embraces acts, contracts,
agreements or combinations which restrict competition or obstruct due
course of trade
 o Whether under the particular circumstances of the case and the
nature of the particular contract involved, such contract is, or is
not, against public interest
- Contracts requiring exclusivity are not per se void. Each contract must be
viewed vis-à-vis all the circumstances surrounding such agreement in
deciding whether a restrictive practice should be prohibited as imposing an
unreasonable restraint on competition.
- When is a restraint in trade unreasonable? Authorities are one in
declaring that a restraint in trade is unreasonable when it is contrary to
public policy or public welfare (Ferrazzini v. Gsell).
- And what is public policy? that principle of the law which holds that no
subject or citizen can lawfully do that which has a tendency to be injurious
to the public or against the public good.
- Applied to contracts, in the absence of express legislation or constitutional
prohibition, a court, in order to declare a contract void as against public
policy, one must find that the contract as to the consideration or thing to
be done, has a tendency to injure the public, is against the public good, or
contravenes some established interests of society, or is inconsistent with
sound policy and good morals, or tends clearly to undermine the security of
individual rights, whether of personal liability or of private property
Application to the case at bar
- There is nothing invalid or contrary to public policy par. 5 of the
Supervisor’s Agreement.
- Such prohibition is neither directed to eliminate the competition like
Sandré Phils., Inc. nor foreclose new entrants to the market. Sandré
Philippines, Inc. is still very much free to distribute its products in the
market but it must do so at its own expense. The exclusivity clause does
not in any way limit its selling opportunities, just the undue use of the
resources of petitioner Avon.
- It would be unfair to Avon if the talents and skills Luna acquired while
working under it would be shared to its competitor Sandre Philippines. This
would be tantamount to unjust enrichment.
13. PS Bank v Castillo
FACTS:
1. Respondent spouses Alfredo M. Castillo and Elizabeth Capati-Castillo were the
registered owners of a lot located in Tondo, Manila. Respondent spouses Romeo B.
Capati and Aquilina M. Lobo were the registered owners of another lot.
2. On May 7, 1997, respondents obtained a loan, with real estate mortgage over the
said properties, from petitioner Philippine Savings Bank. The Promissory Note, in
part, reads:
“FOR VALUE RECEIVED, I/We, solidarily, jointly and severally, promise to
pay to the order of PHILIPPINE SAVINGS BANK, at its head office or at the
above stated Branch the sum of TWO MILLION FIVE HUNDRED THOUSAND
PESOS ONLY (P2,500,000.00), Philippine currency, with interest at the rate
of seventeen per centum (17%) per annum, from date until paid, as follows:
P43,449.41 (principal and interest) monthly for fifty nine (59) months
starting June 07, 1997 and every 7th day of the month thereafter with
balloon payment on May 07, 2002.
Also, the rate of interest herein provided shall be subject to review
and/or adjustment every ninety (90) days.
All amortizations which are not paid on due date shall bear a penalty
equivalent to three percent (3%) of the amount due for every month or
fraction of a month’s delay.”
3. From the release of the loan in May 1997 until December 1999, petitioner had
increased and decreased the rate of interest, the highest of which was 29% and the
lowest was 15.5% per annum, per the Promissory Note.
4. Respondents regularly paid their amortizations until December 1999, when they
defaulted due to financial constraints.
5. Petitioner sent them demand letters. Respondents failed to pay the total
outstanding obligation of P2,525,910.29.
6. Petitioner initiated an extrajudicial foreclosure sale of the mortgaged properties.
It was sold for and awarded to the petitioner as the only bidder for P2,778,611.27.
Being the mortgagee, petitioner no longer paid the said amount but rather credited
it to the loan amortizations and arrears, past due interest, penalty charges,
attorney’s fees, all legal fees and expenses incidental to the foreclosure and sale,
and partial payment of the mortgaged debt.
7. The respondents failed to redeem the said properties within the one year
redemption period. The asked the court an extension of 60 days, where the court
approved, however they still failed to redeem the properties.
8. The respondents filed the following cases in the RTC, where they a favorable
judgement. Thereby an appeal was filed in the CA but the judgement was rendered
in favor of the spouses Castillo. Hence, this appeal.
ISSUE:
Whether or not the interest rate/s imposed upon by PS Bank, as indicated in the
contract, in unreasonable.
Whether or not there is a violation of the mutuality of contracts.
Whether or not the respondents may recover damages against PSBank for the
breach of contract.
HELD:
1. Yes. Escalation clauses are generally valid and do not contravene public policy.
They are common in credit agreements as means of maintaining fiscal stability and
retaining the value of money on long-term contracts. Nevertheless, the validity of
the escalation clause did not give petitioner the unbridled right to unilaterally
adjust interest rates. The adjustment should have still been subjected to the mutual
agreement of the contracting parties. In light of the absence of consent on the part
of respondents to the modifications in the interest rates, the adjusted rates cannot
bind them notwithstanding the inclusion of a de-escalation clause in the loan
agreement.
The order of refund was based on the fact that the increases in the interest rate
were null and void for being violative of the principle of mutuality of contracts. The
amount to be refunded refers to that paid by respondents when they had no
obligation to do so. Simply put, petitioner should refund the amount of interest that
it has illegally imposed upon respondents. Any deficiency in the payment of the
obligation can be collected by petitioner in a foreclosure proceeding, which it
already did.
2. Basic is the rule that there can be no contract in its true sense without the mutual
assent of the parties. If this consent is absent on the part of one who contracts, the
act has no more efficacy than if it had been done under duress or by a person of
unsound mind. Similarly, contract changes must be made with the consent of the
contracting parties. The minds of all the parties must meet as to the proposed
modification, especially when it affects an important aspect of the agreement. In
the case of loan contracts, the interest rate is undeniably always a vital component,
for it can make or break a capital venture. Thus, any change must be mutually
agreed upon, otherwise, it produces no binding effect.
3. No. A breach of contract may give rise to exemplary damages only if the guilty
party acted in a fraudulent or malevolent manner. In this case, we are not
sufficiently convinced that fraud, bad faith, or wanton disregard of contractual
obligations can be imputed to petitioner simply because it unilaterally imposed the
changes in interest rates, which can be attributed merely to bad business judgment
or attendant negligence. Bad faith pertains to a dishonest purpose, to some moral
obliquity, or to the conscious doing of a wrong, a breach of a known duty
attributable to a motive, interest or ill will that partakes of the nature of fraud.
Respondents failed to sufficiently establish this requirement.
14. DKC holdings v CA
Facts:
1. The subject of the controversy is a 14,021 square meter parcel of land located in
Valenzuela, which was originally owned by private respondent Victor U.
Bartolome’s deceased mother, Encarnacion Bartolome.
2. The petitioner entered into a Contract of Lease with Option to Buy with
Encarnacion Bartolome, whereby petitioner was given the option to lease or lease
with purchase the subject land, which option must be exercised within a period of
two years counted from the signing of the Contract.
3. The petitioner undertook to pay P3,000 a month as consideration for the
reservation of its option.
4. The contract also provided that in case petitioner chose to lease the property, it
may take actual possession of the premises. In such an event, the lease shall be for
a period of six years, renewable for another six years, and the monthly rental fee
shall be P15,000 for the first six years and P18,000 for the next six years, in case of
renewal.
5. The petitioners, who were religiously payed the monthly due, coursed their
payment to Victor Bartolome upon Encarnacion’s death.
6. Meanwhile, Victor executed an Affidavit of Self-Adjudication over all the
properties of Encarnacion, including the subject lot.
7. The petitioner sent a letter to Victor, stating their desire to exercise the option to
lease, tendering the amount of P15,000 as rent for the month of March.
8. Victor Bartolome refused to accept the payments made by the petitioners.
Issue:
Whether or not the Contract of Lease with Option to Buy entered into by the late
Encarnacion Bartolome with petitioner was also terminated upon her death and
does not bind her sole heir, Victor, even after her demise.
Held:
1. No. The general rule, therefore, is that heirs are bound by contracts entered into
by their predecessors-in-interest except when the rights and obligations arising
therefrom are not transmissible by:
(1) their nature,
(2) stipulation or
(3) provision of law.
In the case at bar, there is neither contractual stipulation nor legal provision making
the rights and obligations under the contract intransmissible. More importantly, the
nature of the rights and obligations therein are, by their nature, transmissible.
the subject matter of the contract is likewise a lease, which is a property right. The
death of a party does not excuse nonperformance of a contract which involves a
property right, and the rights and obligations thereunder pass to the personal
representatives of the deceased. Similarly, nonperformance is not excused by the
death of the party when the other party has a property interest in the subject
matter of the contract.
Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is
bound by the subject Contra
15. Mamaril v BSP
Facts
Spouses Mamaril are jeepney operators since 1971. They would park their six (6)
passenger jeepneys every night at the Boy Scout of the Philippines' (BSP) compound
for a fee of P300.00 per month for each unit. On May 26, 1995 at 8 o'clock in the
evening, all these vehicles were parked inside the BSP compound. The following
morning, however, one of the vehicles was missing and was never recovered.
According to the security guards Cesario Peña and Vicente Gaddi of AIB Security
Agency, Inc. with whom BSP had contracted for its security and protection, a male
person who looked familiar to them took the subject vehicle out of the compound.
On November 20, 1996, Sps. Mamaril filed a complaint for damages before the
Regional Trial Court of Manila against BSP, AIB, Peña and Gaddi. In support thereof,
Sps. Mamaril averred that the loss of the subject vehicle was due to the gross
negligence of the above-named security guards on-duty who allowed the subject
vehicle to be driven out by a stranger despite their agreement that only authorized
drivers duly endorsed by the owners could do so. Mamaril's demands for a
conference to settle the matter. They therefore prayed that Peña and Gaddi,
together with AIB and BSP, be held liable for the value of the subject vehicle and its
accessories, etc.
BSP denied any liability contending that in the ticket itself expressly stated that
"Management shall not be responsible for loss of vehicle or any of its accessories or
article left therein."
Issue
Whether or not BSP is liable based on the Guard Service Contract and the parking
ticket it issued.
Ruling
BSP is not liable. In this case, it is undisputed that the proximate cause of the loss of
Sps. Mamaril's vehicle was the negligent act of security guards Peña and Gaddi in
allowing an unidentified person to drive out the subject vehicle. Proximate cause
has been defined as that cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the injury or loss, and
without which the result would not have occurred.
It is uncontested that Peña and Gaddi were assigned as security guards by AIB to
BSP pursuant to the Guard Service Contract. Clearly, therefore, no employer-
employee relationship existed between BSP and the security guards assigned in its
premises. Consequently, the latter's negligence cannot be imputed against BSP but
should be attributed to AIB, the true employer of Peña and Gaddi.
However, Sps. Mamaril insist that BSP should be held liable for their loss on the
basis of the Guard Service Contract that the latter entered into with AIB and their
parking agreement with BSP. Such contention cannot be sustained.
Under Art. 1311. Contracts take effect only between the parties, their assigns and
heirs, except in case where the rights and obligations arising from the contract are
not transmissible by their nature, or by stipulation or by provision of law. The heir is
not liable beyond the value of the property he received from the decedent.
If a contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not
sufficient. The contracting parties must have clearly and deliberately conferred a
favor upon a third person.
Thus, in order that a third person benefited by the second paragraph of Article
1311, referred to as a stipulation pour autrui, may demand its fulfillment, the
following requisites must concur: (1) There is a stipulation in favor of a third person;
(2) The stipulation is a part, not the whole, of the contract; (3) The contracting
parties clearly and deliberately conferred a favor to the third person - the favor is
not merely incidental; (4) The favor is unconditional and uncompensated; (5) The
third person communicated his or her acceptance of the favor before its revocation;
and (6) The contracting parties do not represent, or are not authorized, by the third
party. However, none of the foregoing elements obtains in this case.
It is undisputed that Sps. Mamaril are not parties to the Guard Service
Contract.Neither did the subject agreement contain any stipulation pour autrui.
And even if there was, Sps. Mamaril did not convey any acceptance thereof. Thus,
under the principle of relativity of contracts, they cannot validly claim any rights or
favor under the said agreement.
Anent Sps. Mamaril's claim that the exculpatory clause: "Management shall not be
responsible for loss of vehicle or any of its accessories or article left therein"
contained in the BSP issued parking ticket was void for being a contract of adhesion
and against public policy, suffice it to state that contracts of adhesion are not void
per se. It is binding as any other ordinary contract and a party who enters into it is
free to reject the stipulations in its entirety.
Same; same; same
Civil Law; Quasi-Delicts; Article 20 of the Civil Code provides that every person, who,
contrary to law, willfully or negligently causes damage to another, shall indemnify
the latter for the same.―Article 20 of the Civil Code provides that every person,
who, contrary to law, willfully or negligently causes damage to another, shall
indemnify the latter for the same. Similarly, Article 2176 of the Civil Code states:
Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no preexisting contractual relation between the parties, is called a quasi-
delict and is governed by the provisions of this Chapter. In this case, it is undisputed
that the proximate cause of the loss of Sps. Mamaril’s vehicle was the negligent act
of security guards Peña and Gaddi in allowing an unidentified person to drive out
the subject vehicle. Proximate cause has been defined as that cause, which, in
natural and continuous sequence, unbroken by any efficient intervening cause,
produces the injury or loss, and without which the result would not have occurred.
Moreover, Peña and Gaddi failed to refute Sps. Mamaril’s contention that they
readily admitted being at fault during the investigation that ensued.
Same; Same; Security Guards; It is settled that where the security agency, as here,
recruits, hires and assigns the work of its watchmen or security guards, the agency
is the employer of such guards and watchmen. Liability for illegal or harmful acts
committed by the security guards attaches to the employer agency, and not to the
clients or customers of such agency.―Neither will the vicarious liability of an
employer under Article 2180 of the Civil Code apply in this case. It is uncontested
that Peña and Gaddi were assigned as security guards by AIB to BSP pursuant to the
Guard Service Contract. Clearly, therefore, no employer-employee relationship
existed between BSP and the security guards assigned in its premises.
Consequently, the latter’s negligence cannot be imputed against BSP but should be
attributed to AIB, the true employer of Peña and Gaddi. In the case of Soliman, Jr. v.
Tuazon, 209 SCRA 47 (1992), the Court enunciated thus: It is settled that where the
security agency, as here, recruits, hires and assigns the work of its watchmen or
security guards, the agency is the employer of such guards and watchmen. Liability
for illegal or harmful acts committed by the security guards attaches to the
employer agency, and not to the clients or customers of such agency. As a general
rule, a client or customer of a security agency has no hand in selecting who among
the pool of security guards or watchmen employed by the agency shall be assigned
to it; the duty to observe the diligence of a good father of a family in the selection
of the guards cannot, in the ordinary course of events, be demanded from the client
whose premises or property are protected by the security guards. The fact that a
client company may give instructions or directions to the security guards assigned
to it, does not, by itself, render the client responsible as an employer of the security
guards concerned and liable for their wrongful acts or omissions. Those instructions
or directions are ordinarily no more than requests commonly envisaged in the
contract for services entered into with the security agency.
Same; Same; Agency; Article 1868 of the Civil Code states that “[b]y 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.”―Nor can it be said that a principal-agent relationship existed between BSP
and the security guards Peña and Gaddi as to make the former liable for the latter’s
complained act. Article 1868 of the Civil Code states that “[b]y 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.”
The basis for agency therefore is representation, which element is absent in the
instant case. Records show that BSP merely hired the services of AIB, which, in turn,
assigned security guards, solely for the protection of its properties and premises.
Nowhere can it be inferred in the Guard Service Contract that AIB was appointed as
an agent of BSP. Instead, what theparties intended was a pure principal-client
relationship whereby for a consideration, AIB rendered its security services to BSP.
Same; Stipulation Pour Autrui; Requisites in order that a third person benefited by a
stipulation pour autrui may demand its fulfillment.―In order that a third person
benefited by the second paragraph of Article 1311, referred to as a stipulation pour
autrui, may demand its fulfillment, the following requisites must concur: (1) There is
a stipulation in favor of a third person; (2) The stipulation is a part, not the whole, of
the contract; (3) The contracting parties clearly and deliberately conferred a favor
to the third person―the favor is not merely incidental; (4) The favor is
unconditional and uncompensated; (5) The third person communicated his or her
acceptance of the favor before its revocation; and (6) The contracting parties do not
represent, or are not authorized, by the third party. However, none of the foregoing
elements obtains in this case.
Same; Lease; It has been held that the act of parking a vehicle in a garage, upon
payment of a fixed amount, is a lease.―The Court concurs with the finding of the
CA that the contract between the parties herein was one of lease as defined under
Article 1643 of the Civil Code. It has been held that the act of parking a vehicle in a
garage, upon payment of a fixed amount, is a lease. Even in a majority of American
cases, it has been ruled that where a customer simply pays a fee, parks his car in
any available space in the lot, locks the car and takes the key with him, the
possession and control of the car, necessary elements in bailment, do not pass to
the parking lot operator, hence, the contractual relationship between the parties is
one of lease.
Same; Same; Article 1664 of the Civil Code states that “[t]he lessor is not obliged to
answer for a mere act of trespass which a third person may cause on the use of the
thing leased; but the lessee shall have a direct action against the intruder.”―In the
instant case, the owners parked their six (6) passenger jeepneys inside the BSP
compound for a monthly fee of P300.00 for each unit and took the keys home with
them. Hence, a lessor-lessee relationship indubitably existed between them and
BSP. On this score, Article 1654 of the Civil Code provides that “[t]he lessor (BSP) is
obliged: (1) to deliver the thing which is the object of the contract in such a
condition as to render it fit for the use intended; (2) to make on the same during
the lease all the necessary repairs in order to keep it suitable for the use to which it
has been devoted, unless there is a stipulation to the contrary; and (3) to maintain
the lessee in the peaceful and adequate enjoyment of the lease for the entire
duration of the contract.” In relation thereto, Article 1664 of the same Code states
that “[t]he lessor is not obliged to answer for a mere act of trespass which a third
person may cause on the use of the thing leased; but the lessee shall have a direct
action against the intruder.” Here, BSP was not remiss in its obligation to provide
Sps. Mamaril a suitable parking space for their jeepneys as it even hired security
guards to secure the premises; hence, it should not be held liable for the loss
suffered by Sps. Mamaril.
Same; Contracts; Contracts of Adhesion; Contracts of adhesion are not void per se.
It is binding as any other ordinary contract and a party who enters into it is free to
reject the stipulations in its entirety. If the terms thereof are accepted without
objection, then the contract serves as the law between them.―Anent Sps.
Mamaril’s claim that the exculpatory clause: “Management shall not be responsible
for loss of vehicle or any of its accessories or article left therein” contained in the
BSP issued parking ticket was void for being a contract of adhesion and against
public policy, suffice it to state that contracts of adhesion are not void per se. It is
binding as any other ordinary contract and a party who enters into it is free to
reject the stipulations in its entirety. If the terms thereof are accepted without
objection, as in this case, where plaintiffs-appellants have been leasing BSP’s
parking space for more or less 20 years, then the contract serves as the law
between them. Besides, the parking fee of P300.00 per month or P10.00 a day for
each unit is too minimal an amount to even create an inference that BSP undertook
to be an insurer of the safety of plaintiffs-appellants’ vehicles.
Same; Damages; Actual Damages; Actual damages must be proved with reasonable
degree of certainty and a party is entitled only to such compensation for the
pecuniary loss that was duly proven.―On the matter of damages, the Court noted
that while Sonia P. Mamaril testified that the subject vehicle had accessories worth
around P50,000.00, she failed to present any receipt to substantiate her claim.
Neither did she submit any record or journal that would have established the
purported P275.00 daily earnings of their jeepney. It is axiomatic that actual
damages must be proved with reasonable degree of certainty and a party is entitled
only to such compensation for the pecuniary loss that was duly proven. Thus,
absent any competent proof of the amount of damages sustained, the CA properly
deleted the said awards.
16. Limketkai v CA
The main issue here is the sale of a parcel of land, approximately 3.3 hectares in
area, and located in Barrio Bagong Hog, Pasig City, Metro Manila.
Branch 151 of the Regional Trial Court of the National Capital Judicial Region
ruled that there was a perfected contract of sale between petitioner and BPI. It
stated that there was mutual consent between the parties; the subject matter is
definite; and the consideration was determined.
Upon elevation of the case to the Court of Appeals, it was held that no contract
of sale was perfected because there was no concurrence of the three requisites
enumerated in Article 1318 of the Civil Code.
On June 23, 1988, Pedro Revilla, Jr., a licensed real estate broker was given
formal authority by BPI to sell the lot for P1,000.00 per square meter. Broker Revilla
contacted Alfonso Lim of petitioner company who agreed to buy the land. On July 8,
1988, petitioner’s officials and Revilla were given permission by Rolando V. Aromin,
BPI Assistant Vice-President, to enter and view the property they were buying.
On July 9, 1988, Revilla formally informed BPI that he had procured a buyer. On
July 11, 1988, Alfonso Lim and Albino Limketkai, went to BPI to confirm the sale.
They were entertained by Vice-President Merlin Albano and Asst. Vice-President
Aromin. Petitioner asked that the price of P1,000.00 per square meter be reduced
to P900.00 while Albano stated the price to be P1,100.00. The parties finally agreed
that the lot would be sold at P1,000.00 per square meter to be paid in cash.
Notwithstanding the final agreement to pay P1,000.00 per square meter on a
cash basis, Alfonso Lim asked if it was possible to pay on terms. The bank officials
stated that there was no harm in trying to ask for payment on terms because in
previous transactions, the same had been allowed. It was the understanding,
however, that should the term payment be disapproved, then the price shall be
paid in cash.
Two or three days later, petitioner learned that its offer to pay on terms had
been frozen. Alfonso Lim went to BPI on July 18, 1988 and tendered the full
payment of P33,056,000.00 to Albano. The payment was refused because Albano
stated that the authority to sell that particular piece of property in Pasig had been
withdrawn from his unit. The same check was tendered to BPI Vice-President
Nelson Bona who also refused to receive payment.
An action for specific performance with damages was thereupon filed on August
25, 1988 by petitioner against BPI. In the course of the trial, BPI informed the trial
court that it had sold the property under litigation to NBS.
Issue
Whether or not there was a perfected contract between petitioner Limketkai Sons
Milling, Inc. and respondent Bank of the Philippine Islands.
Ruling

There was a valid contract of sale. There is no dispute in regard to the following: (a)
that BPI as trustee of the property of Philippine Remnant Co. authorized a licensed
broker, Pedro Revilla, to sell the lot for P1,000.00 per square meter; (b) that
Philippine Remnants confirmed the authority to sell of Revilla and the price at
which he may sell the lot; (c) that petitioner and Revilla agreed on the former
buying the property; (d) that BPI Assistant Vice-President Rolando V. Aromin
allowed the broker and the buyer to inspect the property; and (e) that BPI was
formally informed about the broker having procured a buyer.
Petitioner states that the contract to sell and to buy was perfected on July 11,
1988 when its top officials and broker Revilla finalized the details with BPI Vice-
Presidents Merlin Albano and Rolando V. Aromin at the BPI offices.
Respondents, however, contend that what transpired on this date were part of
continuing negotiations to buy the land and not the perfection of the sale. The
arguments of respondents center on two propositions (1) Vice-Presidents Aromin
and Albano had no authority to bind BPI on this particular transaction and (2) the
subsequent attempts of petitioner to pay under terms instead of full payment in
cash constitutes a counter-offer which negates the existence of a perfected
contract. The alleged lack of authority of the bank officials acting in behalf of BPI is
not sustained by the record.
At the start of the transactions, broker Revilla by himself already had full
authority to sell the disputed lot. This court believed in Revilla’s testimony that the
authority given to him was to sell and not merely to look for a buyer, as contended
by respondents. Revilla testified that at the time he perfected the agreement to sell
the litigated property, he was acting for and in behalf of the BPI as if he were the
Bank itself.
Same; same; same
Sales; Agency; Brokers; Banks and Banking; If a bank could give the authority
to sell to a licensed broker, the Court sees no reason to doubt the authority to sell of
two of the bank’s vice-presidents whose precise job therein was to manage and
administer real estate property.—At the start of the transactions, broker Revilla by
himself already had full authority to sell the disputed lot. Exhibit B dated June 23,
1988 states, “this will serve as your authority to sell on an as is, where is basis, the
property located at Pasig Blvd., Bagong Ilog x x x.” We agree with Revilla’s
testimony that the authority given to him was to sell and not merely to look for a
buyer, as contended by respondents. Revilla testified that at the time he perfected
the agreement to sell the litigated property, he was acting for and in behalf of the
BPI as if he were the Bank itself. This notwithstanding and to firm up the sale of the
land, Revilla saw it fit to bring BPI officials into the transaction. If BPI could give the
authority to sell to a licensed broker, we see no reason to doubt the authority to
sell of the two BPI Vice-Presidents whose precise job in the Bank was to manage
and administer real estate property.
Same; Contracts; The Phases in Contract-Making.—The phases that a contract
goes through may be summarized as follows: a. preparation, conception or
generation, which is the period of negotiation and bargaining, ending at the
moment of agreement of the parties; b. perfection or birth of the contract, which is
the moment when the parties come to agree on the terms of the contract; and c.
consummation or death, which is the fulfillment or performance of the terms
agreed upon in the contract (Toyota Shaw, Inc. vs. Court of Appeals, G.R. No.
116650, May 23, 1995).
Same; Same; Statute of Frauds; The fact that the deed of sale still has to be
signed and notarized does not mean that no contract has already been perfected—
the requisite form under Article 1458 of the Civil Code is merely for greater efficacy
or convenience and the failure to comply therewith does not affect the validity and
binding effect of the act between the parties.—In the case at bench, the allegation
of NBS that there was no concurrence of the offer and acceptance upon the cause
of the contract is belied by the testimony of the very BPI official with whom the
contract was perfected. Aromin and Albano concluded the sale for BPI. The fact that
the deed of sale still had to be signed and notarized does not mean that no contract
had already been perfected. A sale of land is valid regardless of the form it may
have been entered into (Claudel vs. Court of Appeals, 199 SCRA 113, 119 [1991]).
The requisite form under Article 1458 of the Civil Code is merely for greater efficacy
or convenience and the failure to comply therewith does not affect the validity and
binding effect of the act between the parties (Vitug, Compendium of Civil Law and
Jurisprudence, 1993 Revised Edition, p. 552). If the law requires a document or
other special form, as in the sale of real property, the contracting parties may
compel each other to observe that form, once the contract has been perfected.
Their right may be exercised simultaneously with action upon the contract (Article
1359, Civil Code).
Same; Same; Same; Cross-examination on the contract is deemed a waiver of
the defense of the Statute of Fraud.—In any event, petitioner cites Abrenica vs.
Gonda (34 Phil. 739 [1916]) wherein it was held that contracts infringing the Statute
of Frauds are ratified when the defense fails to object, or asks questions on cross-
examination. In the instant case, counsel for respondents cross-examined
petitioner’s witnesses at length on the contract itself, the purchase price, the
tender of cash payment, the authority of Aromin and Revilla, and other details of
the litigated contract. Under the Abrenica rule (reiterated in a number of cases,
among them Talosig vs. Vda. De Nieba, 43 SCRA 472 [1972]), even assuming that
parol evidence was initially inadmissible, the same became competent and
admissible because of the cross-examination, which elicited evidence proving the
evidence of a perfected contract. The cross-examination on the contract is deemed
a waiver of the defense of the Statute of Frauds (Vitug, Compendium of Civil Law
and Jurisprudence, 1993 Revised Edition, supra, p. 563).
 Same; Same; Same; An exception to the unenforceability of contracts pursuant
to the Statute of Frauds is the existence of a written note or memorandum
evidencing the contract, which memorandum may be found in several writings, not
necessarily in one document.—Moreover, under Article 1403 of the Civil Code, an
exception to the unenforceability of contracts pursuant to the Statute of Frauds is
the existence of a written note or memorandum evidencing the contract. The
memorandum may be found in several writings, not necessarily in one document.
The memorandum or memoranda is/are written evidence that such a contract was
entered into.
Same; Evidence; Witnesses; It is a settled principle of civil procedure that the
conclusions of the trial court regarding the credibility of witnesses are entitled to
great respect from the appellate courts.—On the matter of credibility of witnesses
where the findings or conclusions of the Court of Appeals and the trial court are
contrary to each other, the pronouncement of the Court in Serrano vs. Court of
Appeals (196 SCRA 107 [1991]) bears stressing: It is a settled principle of civil
procedure that the conclusions of the trial court regarding the credibility of
witnesses are entitled to great respect from the appellate courts because the trial
court had an opportunity to observe the demeanor of witnesses while giving
testimony which may indicate their candor or lack thereof. While the Supreme
Court ordinarily does not rule on the issue of credibility of witnesses, that being a
question of fact not properly raised in a petition under Rule 45, the Court has
undertaken to do so in exceptional situations where, for instance, as here, the trial
court and the Court of Appeals arrived at divergent conclusions on questions of fact
and the credibility of witnesses.
Same; Badges of Fraud; A buyer could not be considered an innocent
purchaser for value where it ignored the notice of lis pendens on the title when it
bought the lot.—On the fourth question of whether or not NBS is an innocent
purchaser for value, the record shows that it is not. It acted in bad faith.
Respondent NBS ignored the notice of lis pendens annotated on the title when it
bought the lot. It was the willingness and design of NBS to buy property already
sold to another party which led BPI to dishonor the contract with Limketkai.
Same; Same; The circumstance that in the deed of absolute sale, instead of
the vendee insisting that the vendor guarantee its title to the land and recognize the
right of the vendee to proceed against the vendor if the title to the land turns out to
be defective, the reverse is found, clearly negates any allegation of good faith on the
part of the buyer.—It is the very nature of the deed of absolute sale between BPI
and NBS which, however, clearly negates any allegation of good faith on the part of
the buyer. Instead of the vendee insisting that the vendor guarantee its title to the
land and recognize the right of the vendee to proceed against the vendor if the title
to the land turns out to be defective as when the land belongs to another person,
the reverse is found in the deed of sale between BPI and NBS. Any losses which NBS
may incur in the event the title turns out to be vested in another person are to be
borne by NBS alone. BPI is expressly freed under the contract from any recourse of
NBS against it should BPFs title be found defective.
Same; Same; There are innumerable situations where fraud is manifested—
one enumeration in a 1912 decision cannot possibly cover all indications of fraud
from that time up to the present and into the future.—NBS, in its reply
memorandum, does not refute or explain the above circumstance squarely. It
simply cites the badges of fraud mentioned in Oria v. McMicking (21 Phil. 243
[1912]) and argues that the enumeration there is exclusive. The decision in said
case plainly states “the following are some of the circumstances attending sales
which have been denominated by courts (as) badges of fraud.” There are
innumerable situations where fraud is manifested. One enumeration in a 1912
decision cannot possibly cover all indications of fraud from that time up to the
present and into the future.
Same; Damages; The profits and the use of the land which were denied to
vendee because of the non-compliance or interference with a solemn obligation by
the vendor and a third party is somehow made up by the appreciation of the land
values in the meantime.—The Court of Appeals did not discuss the issue of
damages. Petitioner cites the fee for filing the amended complaint to implead NBS,
sheriff’s fees, registration fees, place fare and hotel expenses of Cebu-based
counsel. Petitioner also claimed, and the trial court awarded, damages for the
profits and opportunity losses caused to petitioner’s business in the amount of
P10,000,000.00. We rule that the profits and the use of the land which were denied
to petitioner because of the non-compliance or interference with a solemn
obligation by respondents is somehow made up by the appreciation in land values
in the meantime.
17. Malabrosa v CA
18. Sanchez v Rigos
BALASTA
19. Adelfa v CA
Facts:
Private respondents and their brothers Jose and Dominador were the
registered CO-OWNERS of a parcel of land in Las Pinas, covered by a TCT.
Jose and Dominador sold their share (eastern portion of the land) to
Adelfa. Thereafter, Adelfa expressed interest in buying the western portion of the
property from private respondents herein. Accordingly, an “exclusive Option to
Purchase” was executed between Adelfa and Private respondents and an option
money of 50,000 was given to the latter.
 A new owner’s copy of the certificate of title was issued (as the copy with
respondent Salud was lost) was issued but was kept by Adelfa’s counsel, Atty.
Bernardo.
Before Adelfa could make payments, it received summons as a case was
filed (RTC Makati) against Jose and Dominador and Adelfa, because of a complaint
in a civil case by the nephews and nieces of private respondents herein. As a
consequence, Adelfa, through a letter, informed the private respondents that it
would hold payment of the full purchase price and suggested that they settle the
case with their said nephews and nieces. Salud did not heed the suggestion;
respondent’s informed Atty. Bernardo that they are canceling the transaction. Atty
Bernardo made offers but they were all rejected.
of sale or purchase” or a mere “option” is whether the agreement could be
specifically enforced.
In this case, there is no doubt that the obligation of petitioner to pay the
purchase price is specific, definite and certain, and consequently binding and
enforceable. Had private respondents chosen to enforce the contract, they could
have specifically compelled petitioner to pay the balance. This is distinctly made
manifest in the contract itself as an integral stipulation, compliance with which
could legally and definitely be demanded from petitioner as a consequence.
Hence, no option contract was executed.

RTC Makati dismissed the civil case. A few days after, private respondents
executed a Deed of Conditional Sale in favor of Chua, over the same parcel of land.

Atty Bernardo wrote private respondents informing them that in view of

the dismissal of the case, Adelfa is willing to pay the purchase price, and requested
that the corresponding deed of Absolute Sale be executed. This was ignored by
private respondents.

Private respondents sent a letter to Adelfa enclosing therein a check

representing the refund of half the option money paid under the exclusive option to
purchase, and requested Adelfa to return the owner’s duplicate copy of Salud.
Adelfa failed to surrender the certificate of title, hence the private respondents
filed a civil case before the RTC Pasay, for annulment of contract with damages. The
trial court directed the cancellation of the exclusive option to purchase. On appeal,
respondent CA affirmed in toto the decision of the RTC hence this petition.

Issue:
Whether or not an option contract was executed.

Ruling:

No, the agreement between the parties is a contract to sell, and not an
option contract or a contract of sale.

According to the law, an option is a continuing offer or a contract by which

the owner stipulates with another that the latter shall have the right to buy the
property at a fixed price within a certain time, or under, or in compliance with,
certain terms and conditions, or which gives the owner of the property the right to
sell or demand a sale. An option is not of itself a purchase, but merely secures the
privilege to buy. Notably, the test in determining whether a contract is a “contract

20. Braganza v De Villa
Facts:
Herein petitioner and her sons Rodolfo and Guillermo received as a loan
from respondent on October 30, 1944 the amount of P70, 000 in Japanese war
notes and in consideration thereof, promised in writing to pay the latter P10, 000
“in legal currency in two years after the cessation of the present hostilities or as
soon as international exchange has been established in the Philippines, plus 2% per
annum. Because payment has not been made, respondent sued. Herein petitioners
averred that Guillermo and Rodolfo were minors when they signed the promissory
note. The MTC ruled in favor of herein respondent and the CA affirmed, hence, this
petition.
Issue:
Whether or not minors Rodolfo and Guillermo are liable for the loan.
Ruling:
Yes, minors Rodolfo and Guillermo are liable.
According to Article 1340 of the Civil Code, even if a written contract in
unenforceable because of non-age, they shall make restitution to the extent that
they have profited by the money they received.
In this case, there is testimony that the funds delivered to the petitioners
by respondent were used for their support during the Japanese occupation. Such
being the case, it is but fair to hold that they had profited to the extent of the value
of such money, which value has been authoritatively established in the so called
Ballantine Schedule: in October 1944, P40 Japanese notes were equivalent to P1 of
current Philippine money.
Hence, minors Rodolfo and Guillermo are liable to the extent that they
have profited from the money they received.
21. Katipunan v Katipunan
Facts:
Herein respondent filed a complaint with the RTC of Manila a complaint for
annulment of deed of sale. He avers that he was assisted by his brother, (petitioner
Miguel Katipunan) in entering a Deed of Absolute Sale. Respondent avers that his
brother Miguel, Atty. Balguma and Innocencia Valdez convinced him to go abroad
and that through insidious words and machinations they made him sign a document
purportedly a contract of employment but it turned out to be a Deed of Absolute
Sale. By virtue of the said sale, the petitioners were able to register the title of the
property lot in their names. Respondent alleges that he did not receive the
consideration stated in the contract and claims that the defendants, now
petitioners conspired with one another in taking advantage of his ignorance, he
being only a third grader.
Eventually, the trial court set the case for pre-trial. RTC dismissed the
complaint holding that respondent failed to prove his causes of action in admitting
that (1) he obtained a loan from Balgumas (2) he signed the Deed of Absolute Sale
(3) he acknowledged selling the property and that he stopped collecting the rentals.
Respondent appealed. CA reversed the decision and a new one entered annulling
the Deed of Sale. Petitioners now seek the reversal of CA’s decision.
Issue: Whether or not the respondent’s consent was vitiated.
Held: Yes. Article 1332 of the Civil Code provides that “When one of the parties is
unable to read, or if the contract is in a language not understood by him, and
mistake or fraud is alleged, the person enforcing the contract must show that the
terms thereof have been fully explained to the former.” In this case, it is a proven
fact that respondent reached only Grade 3 due to his very low IQ; that he is
illiterate; and that he cannot read and has slow in comprehension. On the other
hand, the document presented by the appellees in their favor was written in
English. As there is no showing that the contracts were read/or explained to
respondent, the contract is annullable under Art 1390 of the Civil Code on the
ground of undue influence. In this case, it appears that undue influence was exerted
upon him by his brother, Innocencio Valdez and Atty. Balguma when it was his
brother who negotiated with Atty Balguma and the petitioners did not bother to
explain the nature and contents of the contract. His lack of education, coupled with
mental affliction virtually rendered him incapable of giving rational consent. His
ignorance and weakness made him most vulnerable to the deceitful cajoling and
intimidation of petitioners.
22. Martinez v HSBC
Facts:
Herein petitioner Mercedes is the wife of the former managing partner of Aldecoa
& Co., Alejandro Macleod. A civil action was instituted by respondent HSBC against
her, Alejandro, and Aldecoa & Co. alleging that Alejandro transferred unto his wife
Mercedes some undertaking due from Aldecoa in favor of HSBC.
Thereafter, another civil action was instituted by Aldecoa & Co. against
Alejandro for recovery and damages on the grounds of the latter’s criminal
misconduct.
Alejandro and Mercedes then hired attorneys to represent and defend them on
both civil actions.
 When it became apparent that a criminal charge will be filed against
Alejandro, he fled to Portuguese leaving Mercedes, with the assistance of their
attorneys, to settle the pending civil suits.
Aldecoa & Co. offered another term of settlement, which Mercedes
refused at first. The latter claims that some of the properties being insisted upon by
Aldecoa & Co. is her exclusive separate property.
However, through an intermediary and the petitioner’s attorney, it was explained
to the petitioner that if she assents to the settlement offered by Aldecoa & Co., the
criminal charges against her husband Alejandro and the civil suit against the both of
them will be withdrawn.
Plaintiff acceded to Aldecoa’s terms in the settlement contract. After
Mercedes’s cooperation in the negotiation of the partition of the land and the
dismissal of Aldecoas & Co.’s charges/suits instituted, said charges/suit were
dismissed by Aldecoa & Co.
Issue: Whether or not the contract of settlement was entered into by Mercedes
under duress.
Ruling: NO.
Jurisprudence settled essential elements/circumstances found in cases of duress.
In the previous cases of duress decided by the Court, it found the following
elements/ circumstances that constitute duress:
1. Lack of time within which to deliberate the matter as it should have
been deliberated.
2. Lack of time or opportunity to take the advice of friends or of disinterested
persons.
3. Lack of time or opportunity to take advice of counsel.
4. The treats made to secure the performance of the acts complained of were made
directly to the complaining party by the person directly interested or by someone in
his behalf who was working in his interest and who had no interest whatever in the
welfare of the complaining party.
5. Lack of consideration for the performance of the act complained of except
immunity from the prosecution threatened.
6. Property transferred or encumbered by the act complained of was the separate
property of the person performing the act in which the person for whom the act
was performed claimed no interest whatever.
7. Absence of dispute as to the title of the property transferred or incumbered, no
claim made to it by anybody, no suits pending to recover it or any portion of it, and
no pretension that it could be taken for the debts of the husband or of any other
person.
In this case, the Court found circumstances that BELIE petitioner’s claim of
duress. First, it is petitioner, through her representative, who first made offers of
compromise. Second, there were at no time, during the course of the negotiations
for settlement, any direct personal relations or communications between the
parties to this action. Third, the petitioner by means of the negotiations and
settlement in question was engaged partly at least in the settlement of her own
suits and controversies. Fourth, petitioner Mercedes never, at any time, stood alone
in the negotiations. Lastly, petitioner took advantage of said contract after its
execution and required the complete fulfilling of every one of its provisions
favorable to herself.
Not all contracts executed by a wife made solely to save her husband from
criminal charges are voidable.
Bases on jurisprudence, where a wife claims that she was duressed, in entering into
a contract in which she conveys her exclusive property for the sole and only
consideration of obtaining for her husband immunity from criminal prosecution, the
party enforcing such contract must expect the very closest scrutiny of the
transaction with the presumptions all against the latter. However, the said rule
could not be applied in this case.
It is noteworthy that the wife, petitioner herself, has claimed rights involved in
actual litigation of cases in which she is also a party. Further, under the advice of
her counsel, the situation was so presented to her that it was evident that in signing
the settlement agreement she had all to gain and nothing to lose, whereas, in
refusing to sign said agreement, she had all to lose and nothing to gain.
Hence, the petition on the ground of alleged duress was dismissed.
Other Notes:
Real duress and motive which is present when one gives his consent reluctantly,
distinguished.
A contract whereby reparation is made by one party for injuries which he has
willfully inflicted upon another is one which from its inherent nature is entered into
reluctantly and against the strong desires of the party making the reparation. He is
confronted with a situation in which he finds the necessity either of making
reparation or of taking the consequences, civil or criminal, of his unlawful acts. He
makes the contract of reparation with extreme reluctance and only by the
compelling force of the punishment threatened. Nevertheless, such contract is
binding and enforceable.
23. Tankeh v DBP
Facts: Private respondent Ruperto V. Tankeh was the president of Sterling Shipping
Lines, which was incorporated way back in 1979. In 1980, petitioner Dr. Alejandro
V. Tankeh, the older brother of Ruperto Tankeh, alleged that the latter approached
him wherein the former informed the latter that he was operating a new shipping
line business and offered petitioner one thousand (1,000) shares worth
P1,000,000.00 to be a director of the business. Petitioner accepted his brother’s
offer and he became a member of the corporation’s board.
In 1981, petitioner signed the Assignment of Shares of Stock with Voting Rights and
promissory note where he bound himself solidarily liable with the other corporate
officers as regards the loan obtained by Ruperto for the purchase of a vessel in
order to commence their business. However, the corporation failed to meet their
obligations. Sometime in 1987, the DBP sold the vessel to a Singaporean enterprise.
DBP then informed petitioner that it would still pursue its claim over the unpaid
liabilities of the corporation. Hence, petitioner filed a Complaint for the annulment
of the contracts he signed in 1981 on the ground that he was fraudulently deceived
by Ruperto, the other corporate officers and DBP into signing the said contracts.
Issue: Whether or not the fraud perpetrated by respondents is serious enough to
warrant
annulment of the contract.
Held: No. Only incidental fraud exists in this case. Therefore it is not sufficient to
warrant the annulment of the contracts petitioner entered into but respondent
Ruperto is liable to pay him damages. The distinction between fraud as a ground for
rendering a contract voidable or as basis for an award of damages is provided in
Article 1344: In order that fraud may make a contract voidable, it should be serious
and should not have been employed by both contracting parties. Incidental fraud
only obliges the person employing it to pay damages.
There are two types of fraud contemplated in the performance of contracts: dolo
incidente or incidental fraud and dolo causante or fraud serious enough to render a
contract voidable. If there is fraud in the performance of the contract, then this
fraud will give rise to damages. If the fraud did not compel the imputing party to
give his or her consent, it may not serve as the basis to annul the contract, which
exhibits dolo causante. However, the party alleging the existence of fraud may
prove the existence of dolo incidente. This may make the party against whom fraud
is alleged liable for damages.
Jurisprudence has shown that in order to constitute fraud that provides basis to
annul contracts, it must fulfill two conditions. First, the fraud must be dolo causante
or it must be fraud in obtaining the consent of the party. Second, this fraud must be
proven by clear and convincing evidence. In this case, it cannot be said that fraud
was serious enough to warrant the annulment of the contract because petitioner
knew of the contents of the contracts that he signed. The required standard of
proof – clear and convincing evidence – was not met. There was no dolo causante
or fraud used to obtain the petitioner’s consent to enter into the contract.
Petitioner had the opportunity to become aware of the facts that attended the
signing of the promissory note. He even admitted that he has a lawyer-son who the
petitioner had hoped would assist him in the administration of Sterling Shipping
Lines, Inc. The totality of the facts on record belies petitioner’s claim that fraud was
used to obtain his consent to the contract given his personal circumstances and the
applicable law.
However, in refusing to allow petitioner to participate in the management of the
business, respondent Ruperto V. Tankeh was liable for the commission of incidental
fraud. The Court, in a previous case, defined incidental fraud as "those which are
not serious in character and without which the other party would still have entered
into the contract." Although there was no fraud that had been undertaken to obtain
petitioner’s consent, there was fraud in the performance of the contract. The
records showed that petitioner had been unjustly excluded from participating in the
management of the affairs of the corporation. This exclusion from the management
in the affairs of Sterling Shipping Lines, Inc. constituted fraud incidental to the
performance of the obligation. Respondent Ruperto V. Tankeh’s bare assertion that
petitioner had access to the records cannot discredit the fact that the petitioner
had been effectively deprived of the opportunity to actually engage in the
operations of Sterling Shipping Lines, Inc. Petitioner had a reasonable expectation
that the same level of engagement would be present for the duration of their
working relationship. This would include an undertaking in good faith by
respondent Ruperto V. Tankeh to be transparent with his brother that he would not
automatically be made part of the company’s administration.
24. Blanco v Quasha
Facts: Mary Ruth C. Elizalde was an American national who owned a house and lot
in Forbes Park, Makati. During her lifetime, she, through attorney-in-fact Don
Manuel Elizalde, entered into a Deed of Sale over the property in favor of Parex
Realty Corporation (Parex), for and in consideration of the amount of P625,000.00
payable in twenty-five (25) equal annual installments. Also, simultaneously with the
execution of the Deed of Sale, Parex executed a Contract of Lease with Mary Ruth
C. Elizalde, whereby the same parcel of land was leased to the latter for a term of
twenty five (25) years. Rental payments shall be credited to and applied in
reduction of the agreed yearly installments of the purchase price of the property.
Parex, was registered with the SEC with the following incorporators, namely, Cirilo
F. Asperilla, Jr., Alonzo Q. Ancheta, William H. Quasha, Delfin A. Manuel, Jr. and
Edgardo F. Sundiam. By virtue of the sale, the title was issued in the name of Parex
on May 27, 1975.
Mary Ruth Elizalde executed a Confirmation and Ratification of the Deed of Sale.
Despite the transfer of title, however, she continued to pay the Forbes Park
Association dues, garbage fees, and the realty taxes on the property during the
term of the lease until her demise in 1990.
Atty. Daisy P. Arce on behalf of some heirs of Mary Ruth Elizalde, sent a letter to
Peter Wohlfeiler, Esq., who was handling the legal affairs of the other heirs,
informing him that Elizalde left property (the subject of this case)
Petitioner J.R. Blanco, special administrator of the estate of Elizalde demanded from
respondents, the individual stockholders and directors of Parex, the reconveyance
of the title to the property to the estate of Mary Ruth Elizalde or, in the alternative,
to assign all shares of Parex to said estate. Respondents ignored. Petitioner alleged
that the sale of the property by Elizalde to Parex was absolutely simulated and
fictitious and, therefore, null and void. According to petitioner, the alleged sale was
executed upon advice of Elizalde's lawyers, namely, the individual respondents
herein, in order to circumvent the effects of this Court's ruling in Republic v. Quasha
which held that “under the 'Parity Amendment' to our Constitution, citizens of the
United States and corporations and business enterprises owned or controlled by
them can not acquire and own, save in cases of hereditary succession, private
agricultural lands in the Philippines and that all other rights acquired by them under
said amendment will expire on 3 July 1974.”
Petitioner further alleges that a few months before July 3, 1974, respondents
rushed the organization and incorporation of Parex. Subsequently, PD No. 471 was
issued limiting the duration of leases of private lands to aliens to 25 years
renewable for another 25 years. Hence, petitioner posits that the Quasha law firm
caused Elizalde to simulate a sale of her land to Parex. Simultaneously with the
execution of the contract of sale, Parex and Elizalde entered into a lease contract
whereby Parex leased back to Elizalde the same land for a period of 25 years.
Hence, petitioner prayed that the land be reconveyed to the estate of Elizalde,
arguing that she did not receive a single centavo from the transactions.
RTC rendered judgment in favor of the plaintiff and against the defendants
declaring the sale executed by Elizalde in favor of Parex to be fictitious and
simulated;
CA set aside the appealed judgment and dismissed petitioner's action for
reconveyance.
ISSUE: Whether or not the sale-lease-back is simulated
HELD: No.In order to determine whether or not the sale-lease-back agreement is
simulated, there is a need to look into the true intent or agreement of the parties.
To do so, however, is to pass upon a factual issue, a function that is not within the
province of this Court. The findings of the Court of Appeals are binding and
conclusive on us, especially, the conclusion of the appellate court is more in accord
with the documents on record.
The Court finds nothing wrong with the arrangement stated in the contract for the
same is not contrary to law, morals, good customs, public order, or public policy,
but rather, for the convenience of both parties. The requisites of a contract of sale
have been complied with, and that the parties intended to be bound by the deed of
sale and for it to produce legal effects.
Reasoning To begin with, this Court is not a trier of facts. It is not its function to
examine and determine the weight of the evidence supporting the assailed decision
- Simulation of a contract may be absolute or relative. The former takes place when
the parties do not intend to be bound at all; the latter, when the parties conceal
their true agreement. An absolutely simulated or fictitious contract is void. A
relative simulation, when it does not prejudice a third person and is not intended
for any purpose contrary to law, morals, good customs, public order or public policy
binds the parties to their real agreement. The characteristic of simulation is the fact
that the apparent contract is not really desired nor intended to produce legal
effects nor in any way alter the juridical situation of the parties.
Court of Appeals based its ruling on the following factual findings:
First, Elizalde decided to transfer, as in fact she did, the ownership of the subject
property. Second, the vendee, Parex obligated itself to pay a price certain for the
property. Although no actual exchange of money was made, yet payment was
effected between the vendee and the vendor by mutual arrangement. Third,
Elizalde never contested the sale of the property. Fourth, Mary Ruth Elizalde, during
her lifetime, never contested the cancellation of Certificate of Title. By
preponderance of evidence, therefore, the defendants were able to prove that the
deed of sale executed by Elizalde in favor of Parex is a valid and binding contract
which transferred ownership of the property to the said corporation.
25. Tañedo v CA
FACTS: Lazaro Tañedo executed a deed of absolute sale in favor of Ricardo Tañedo
and Teresita Barrera in which he conveyed a parcel of land which he will inherit.
Upon the death of his father he executed an affidavit of conformity to reaffirm the
said sale. He also executed another deed of sale in favor of the spouses covering the
parcel of land he already inherited. Ricardo registered the last deed of sale in the
registry of deeds in their favor.
Ricardo later learned that Lazaro sold the same property to his children through a
deed of sale.
ISSUE/S: 1. WON the sale of future inheritance valid.
2. WON the subsequent execution on January 13, 1981 (and
registration with the Registry of Property) of a deed of sale covering the same
property to the same buyers valid.
HELD: 1. NO. Pursuant to Article 1347 of the Civil Code, (n)o contract may be
entered into upon a future inheritance except in cases expressly authorized by law.
However, the sale made in 1962 involving future inheritance is not really at issue
here. The subject of dispute therefore is the deed of sale made by him in favor of
spouses Tañedo and another to his children after he already legally acquired the
property.
2. YES. Article 1544 of the Civil Code governs the preferential rights of vendees in
cases of multiple sales, as follows:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.
The property in question is land, an immovable, and following the above-quoted
law, ownership shall belong to the buyer who in good faith registers it first in the
registry of property. Thus, although the deed of sale in favor of private respondents
was later than the one in favor of petitioners, ownership would vest in the former
because of the undisputed fact of registration. On the other hand, petitioners have
not registered the sale to them at all.
Petitioners contend that they were in possession of the property and that private
respondents never took possession thereof. As between two purchasers, the one
who registered the sale in his favor has a preferred right over the other who has not
registered his title, even if the latter is in actual possession of the immovable
property.
26. San Miguel v Huang
Facts: San Miguel Properties offered two parcels of land for sale and the offer was
made to an agent of the respondents. An “earnest-deposit” of P1 million was
offered by the respondents and was accepted by the petitioner’s authorized officer
subject to certain terms.
Petitioner, through its executive officer, wrote the respondent’s lawyer that
because the parties failed to agree on the terms and conditions of the sale despite
the extension granted by the petitioner, the latter was returning the “earnest-
deposit”.
The respondents demanded execution of a deed of sale covering the properties and
attempted to return the “earnest-deposit” but petitioner refused on the ground
that the option to purchase had already expired.
A complaint for specific performance was filed against the petitioner and the latter
filed a motion to dismiss the complaint because the alleged “exclusive option” of
the respondents lacked a consideration separate and distinct from the purchase
price and was thus unenforceable.
The trial court granted the petitioner’s motion and dismissed the action. The
respondents filed a motion for reconsideration but were denied by the trial court.
The respondents elevated the matter to the Court of Appeals and the latter
reversed the decision of the trial court and held that a valid contract of sale had
been complied with. Petitioner filed a motion for reconsideration but was denied.
Issue: WON there was a perfected contract of sale between the parties.
Ruling: No. In the present case, the P1 million "earnest-deposit" could not have
been given as earnest money as contemplated in Art. 1482 because, at the time
when petitioner accepted the terms of respondents offer of March 29, 1994, their
contract had not yet been perfected.
Furthermore, even the option secured by respondents from petitioner was fatally
defective. Under the second paragraph of Art. 1479, an accepted unilateral promise
to buy or sell a determinate thing for a price certain is binding upon the promisor
only if the promise is supported by a distinct consideration. Consideration in an
option contract may be anything of value, unlike in sale where it must be the price
certain in money or its equivalent. There is no showing here of any consideration
for the option. Lacking any proof of such consideration, the option is unenforceable.
It is not the giving of earnest money, but the proof of the concurrence of all the
essential elements of the contract of sale which establishes the existence of a
perfected sale.
The alleged “indubitable evidence” of a perfected sale cited by the appellate court
was nothing more than offers and counter-offers which did not amount to any final
arrangement containing the essential elements of a contract of sale. While the
parties already agreed on the real properties which were the objects of the sale and
on the purchase price, the fact remains that they failed to arrive at mutually
acceptable terms of payment, despite the 45-day extension given by petitioner.
27. Uy v CA
28. Heirs of Balite v Lim
FERNANDEZ C/O BUDZ
29. Sabitsana v Muertegui
FACTS:
Subject in this case is a parcel of land owned by Alberto Garcia who was sold twice:
-First is to Domingo Muertegui (Juanito’s Father) but the absolute deed of sale is
UNNOTARIZED hence unregistered. Improvements was made and real property
taxes were paid from 1980 to 1998.
-after ten years, such land was sold again to Atty. Sabitsana and the absolute deed
of sale is NOTARIZED thus it was registered to the Registry of Deeds. He also paid
Rea Property Taxes on 1992, 1993 and 1999. Improvements was also made but was
destroyed by typhoon.
ISSUES:

1. Which sale is valid?
2. Whether or not Muertegui is barred by laches for not registering the sale for ten
years.
HELD:
1. Juanito who was the first buyer has a better right to the lot, while the subsequent
sale to petitioners is null and void, because when it was made, the seller Garcia was
no longer the owner of the lot.
The fact that the sale to Juanito was not notarized does not alter anything, since the
sale between him and Garcia remains valid nonetheless. Notarization, or the
requirement of a public document under the Civil Code, is only for convenience,
and not for validity or enforceability. And because it remained valid as between
Juanito and Garcia, the latter no longer had the right to sell the lot to petitioners,
for his ownership thereof had ceased.
Nor can petitioners’ registration of their purchase have any effect on Juanito’s
rights. The mere registration of a sale in one’s favor does not give him any right
over the land if the vendor was no longer the owner of the land, having previously
sold the same to another even if the earlier sale was unrecorded. Neither could it
validate the purchase thereof by petitioners, which is null and void. Registration
does not vest title; it is merely the evidence of such title. Our land registration
laws do not give the holder any better title than what he actually has.
2. Petitioners’ defense of prescription, laches and estoppel are unavailing since
their claim is based on a null and void deed of sale. The fact that the Muerteguis
failed to interpose any objection to the sale in petitioners’ favor does not change
anything, nor could it give rise to a right in their favor; their purchase remains void
and ineffective as far as the Muerteguis are concerned.
30. Roselo - Bentir v Leanda
FACTS:
Leyte Gulf Traders Inc. entered into a contract of lease with petitioner Bentir for a
period of 20 years starting May 1968. It was extended into another 4 years or until
May 1992. However, Bentir sold the property on 1989 to Samuel and Charito
Pormada. Leyte Gulf questioned the sale alleging that it had the right to first refusal.
Thus, it filed an action seeking for reformation of the expired lease of contract on
the ground that its lawyer inadvertently omitted to incorporate in the contract of
lease executed in 1968, the verbal agreement or understanding between the
parties that in the event petitioner Bentir leases or sells the lot after the expiration
of the lease, respondent corporation has the right to equal the highest offer.
In due time, petitioners filed their answer alleging that the inadvertence of the
lawyer who prepared the lease contract is not a ground for reformation. They
further contended that respondent corporation is guilty of laches for not bringing
the case for reformation of the lease contract within the prescriptive period of ten
(10) years from its execution.
ISSUE:
Whether the complaint for reformation of instrument has prescribed.
HELD:
Yes. The petition has merit.
The remedy of reformation of an instrument is grounded on the principle of equity
where, in order to express the true intention of the contracting parties, an
instrument already executed is allowed by law to be reformed. The right of
reformation is necessarily an invasion or limitation of the parol evidence rule since,
when a writing is reformed, the result is that an oral agreement is by court decree
made legally effective.
However, the remedy, being an extraordinary one, must be subject to limitations as
may be provided by law. Our law and jurisprudence set such limitations, among
which is laches. A suit for reformation of an instrument may be barred by lapse of
time. The prescriptive period for actions based upon a written contract and for
reformation of an instrument is ten (10) years under Article 1144 of the Civil Code.
Prescription is intended to suppress stale and fraudulent claims arising from
transactions like the one at bar which facts had become so obscure from the lapse
of time or defective memory. In the case at bar, respondent corporation had ten
(10) years from 1968, the time when the contract of lease was executed, to file an
action for reformation. Sadly, it did so only on May 15, 1992 or twenty-four (24)
years after the cause of action accrued, hence, its cause of action has become stale,
hence, time-barred.
31. Carantes v CA
FACTS:
The petitioner is among the children of Mateo Carantes, original owner of
the lot in question. The lot is located in Loakan where the Loakan airport was
constructed. The lot was subdivided into several portions with some sold to the
government for the airport and the remaining slots inherited by the siblings after
their parents death. Maximo was the appointed executor of his father. Four of his
siblings executed an Assignment of Right to Inheritance, consequently, it was
registered by Maximo on March 16, 1940. And a new TCT was issued in the name of
Maximo Carantes. On September 4, 1958, 3 of his sibling filed a complaint against
Mario alleging that Maximo’s registration of the lot in his name was obtained
through fraud and thus invalid.
ISSUE:
WHETHER OR NOT the action against Maximo was already barred by prescription.
HELD:
YES. Action had already prescribed because there was constructive notice to the
heirs when Maximo registered the deed of assignment in the register of deeds on
March 16, 1940. The four year period provided by law within which an action
should be made has already prescribed when they instituted an action only on Sept.
4, 1958. Neither does the other party’s contention that by virtue of constructive
trust, the action is imprescriptible. The court had already ruled before that the
prescription period for constructive trust is 10 years, thus even if this period was
considered by the court, action has already been barred by prescription.
32. Heirs of Quirong v. DBP
FACTS:
Emilio Dalope left a 589 sqm of untitled lot to his wife, Felisa, and their 9 children,
one of whom is Rosa Funcion. To enable Rosa to obtain a loan from DBP, Felisa sold
the whole lot to the Funcions as a mortgage to their loan from DBP. DBP foreclosed
the mortgage on the lot when the Funcions failed to pay their loan. Later, on Sept.
20, 1983, DBP conditionally sold said lot to Sofia Quirong for P78,000.00. felisa and
her eight other children filed an action for partition and nullity of documents with
damages against DBP. The court ruled that the sale was valid only for the share of
Felisa and Rosa; thus, the other children were entoitled to recover their respecxtive
portions of the lot. Consequently, the Quirong heirs were stripped of their rights for
almost the whole lot. Hence, they filed an action for rescission of the contract of
sale against DBP on June 10, 1998.
ISSUE: WHETHER OR NOT the Quirong heir’s action for rescission have already
been barred by prescription.
HELD: YES. The prescriptive period for the rescission is four years since the action
involved is a rescission under Article 1381. The court distinguished the rescission
under Article 1381 against Article 1191. Under Article 1381, rescission is a
subsidiary action based on injury to the plaintiff’s economic interest. On the other
hand, rescission, under Art.1191, is based in the defendant’s breach of faith,
violation of reciprocity between the parties.
In this case, the cause of action of the heirs stems from their being ousted by final
judgment from the ownership of the lot that DBP sold to Sophia Quirong in
violation of the warranty against eviction that comes with every contract of sale.
Their action for rescission was based on the economic loss that they suffered; thus,
it is a rescission that falls under Article 1381. Consequently, the prescriptive period
for rescission of this type shall be four years from the time the right of action
accrues. Since it accrued on Jan. 28, 1993, they have until Jan. 28, 1997 to file an
action. Unfortunately, they did so only on June 10, 1998, which is beyond the
prescriptive period.
33. Siguan v. Lim
Facts
Respondent Rosa was charged by petitioner with two counts of violation of Batas
Pambansa Blg. 22 for issuing checks, in the total amount of P541,668,
dishonored by the bank for the reason of "account closed." The conviction was
affirmed by the Court of Appeals and is now pending review with this Court.
Petitioner, thereafter filed action pauliana against respondent Rosa to rescind, the
notarized deed of donation over 4 parcels of land Rosa executed in favor of her
three children, the other respondents. Petitioner claimed that there was fraudulent
transfer leaving no sufficient properties to pay her obligations with her and that the
deed of donation was not antedated. During the hearing of the case, petitioner
presented evidence on Rosa's civil liability to one Victoria Suarez in the amount of
P169,000. For her defense, Rosa denied liability and the alleged antedating of the
deed. The trial court rendered judgment in favor of petitioner, ordered the
rescission of the contract and declared the titles in the name of Rosa's children null
and void. On appeal, the Court of Appeals reversed the trial court and dismissed the
action pauliana. It ruled that the deed of donation was not fraudulent transfer as
respondent debtor Rosa still owns 4 parcels of land sufficient to cover her
debts to petitioner, that the notarized deed of donation, a public document
in the absence of convincing evidence that the notary and the parties antedated
the instrument, is evidence of the fact that gave rise to its execution and of the date
thereof. Petitioner's motion for reconsideration having been denied she resorted to
this recourse.
Issue : Whether or not the rescission of the Deed of Donation was valid
Held :
The Supreme Court held that contracts undertaken in fraud of creditors are
rescissible when the latter
cannot in any other manner collect the claims due them; that rescission is
but a subsidiary remedy which cannot be instituted except when the party
suffering damage has no other legal means to obtain reparation for the same. In the
case at bar, respondent Rosa has 4 other real properties, hence, the presumption of
fraud will not come into play; and that a party cannot invoke the credit of others to
justify rescission of the deed of donation.
34. Velarde v. CA
Facts:
Petitioners entered into a deed of sale with assumption of mortgage with private
respondents paying a downpayment of P800,000 and assuming the mortgage
amount of P1.8M in favor of BPI. Petitioners further agreed "to strictly and
faithfully comply with all the terms and conditions appearing in the real
estate mortgage signed and executed by the vendor in favor of BPI . . . as if the
same were originally signed and executed by the vendee." As part of the deed,
petitioner Avelina with her husband's consent executed an undertaking that
during the pendency of the application for the assumption of mortgage she
agreed to continue paying said loan in accordance with the mortgage deed and
that in the event of violation of any of the terms and conditions of the deed of
real estate mortgage, she agreed that the P800,000 down payment shall be
forfeited as liquidated damages and the deed of sale with assumption of mortgage
shall be deemed automatically cancelled. When the bank denied the application
for assumption of mortgage, petitioners stopped making payments. Thus,
notice of cancellation/rescission was sent to petitioners for non-performance of
their obligation. Aggrieved, petitioners filed a complaint against private respondent
for specific performance, nullity of cancellation, writ of possession and damages.
Both parties admitted that their agreement mandated that petitioners should pay
the purchase price balance of P1.8M to private respondents in case the request to
assume the mortgage would be disapproved. The trial court dismissed the
complaint, but on reconsideration, directed the parties to proceed with the sale. On
appeal, the Court of Appeals upheld the validity of the rescission. Hence, this
recourse.
Issue : Whether or not the rescission is valid?
Held : form under Article 1458 of the Civil Code is merely for greater efficacy or
The failure of the vendee to pay the balance of the purchase price
constitutes a breach on the performance of a reciprocal obligation, and not a
violation of the terms and conditions of the mortgage contract. This gave rise
to the vendor's right to rescind the contract. However, the automatic rescission and
forfeiture of payment clauses in the mortgage contract does not apply. Considering
that the rescission of the contract was based on Article 1191 of the Civil Code,
mutual restitution by the parties is required.
35. Limketkai v. CA
Facts: On June 23, 1988, Pedro Revilla, Jr., a licensed real estate broker was given
formal authority by BPI to sell the lot for P1,000.00 per square meter. The owners
of the Philippine Remnants concurred this arrangement. Broker Revilla contacted
Alfonso Lim of petitioner company who agreed to buy the land. On July 9, 1988,
Revilla formally informed BPI that he had procured a buyer, herein petitioner. On
July 11, 1988, petitioner's officials, Alfonso Lim and Albino Limketkai, went to BPI to
confirm the sale. Vice-President Merlin Albano and Asst. Vice-President Aromin
entertained them. The parties agreed that the lot would be sold at P1,000.00 per
square meter to be paid in cash. The authority to sell was on a first come, first
served and non-exclusive basis; there is no dispute over petitioner's being the first
comer and the buyer to be first served. Alfonso Lim then asked if it was possible to
pay on terms. The bank officials stated that there was no harm in trying to ask for
payment on terms because in previous transactions, the same had been allowed. It
was the understanding, however, that should the term payment be disapproved,
then the price shall be paid in cash. Two or three days later, petitioner learned that
its offer to pay on terms had been frozen. Alfonso Lim went to BPI on July 18, 1988
and tendered the full payment of P33,056,000.00 to Albano. The payment was
refused because Albano stated that the authority to sell that particular piece of
property in Pasig had been withdrawn from his unit. The same check was tendered
to BPI Vice-President Nelson Bona who also refused to receive payment. An action
for specific performance with damages was thereupon filed on August 25, 1988 by
petitioner against BPI. In the course of the trial, BPI informed the trial court that it
had sold the property under litigation to NBS on July 14, 1989.
Issue: Whether or not such contract is covered by the statute of frauds.
Held: In the case at bench, the allegation that there was no concurrence of the offer
and the acceptance upon the cause of the contract is belied by the testimony of the
very BPI official with whom the contract was perfected. Aromin and Albano
concluded the sale for BPI. The fact that the deed of sale still had to be signed and
notarized does not mean that no contract had already been perfected. A sale of
land is valid regardless of the form it may have been entered into. The requisite
convenience and the failure to comply does not affect the validity and binding
effect of the act between parties. Therefore, such contract that was made
constituted fraud and is covered by the statute of frauds. BPI should be held liable
and can be sued for damages.
36. Orduna v. Fuentebella
Facts: The subject of this case is a residential lot located at Fairview Subdivision,
Baguio City, which was firstly registered under Amando Gabriel, Sr. Around1996,
Gabriel, Sr. sold the subject lot to Antonita Orduña but there was no executed
formal deed. The price of the lot was payable in installments and Gabriel, Sr.
accepted the set-up. Antonita and her sons have long been residing in the lot since
1979 and even had a house constructed therein. They also paid real property taxes
and declared the lot for tax purposes.After the death of Gabriel, Sr., his son and one
of the respondents Gabriel, Jr. continued to accept installment payments from
Antonita.Then he wrote a letter to her ordering her to fence off the lot and to
construct a road on the adjacent lot. However, despite the payments made by
Antonita, Gabriel, Jr. sold the subject lot to Bernard Banta without the knowledge
of Antonita and the rest of petitioners. Banta then sold the subject lot to Marcos
Cid and Benjamin Cid. The Cids thereafter ceded the subject lot to Eduardo
Fuentabella, Jr. Eduardo, through his lawyer, sent a letter to the residence of
Gabriel, Jr. ordering those living therein to vacate the lot or else ejectment would
commence. When Antonita, et. al. went directly to Gabriel, Jr.’s house after
receiving the letter, they were informed by the wife of Gabriel, Jr., Teresita Gabriel
that she filed an affidavit-complaint against her husband and the Cids for
falsification of public documents, because according to her, her signature was
forged in the deed of sale between Gabriel, Jr. and Banta. Teresita accompanied
Antonita to file a Complaint for Annulment of Sale, Title, Reconveyance with
Damages and along with this a prayer to acquire ownership over the subject lot
upon payment of their remaining balance.
ISSUE:
Whether or not the Statute of Frauds is applicable to partially executed contracts
RULING OF THE COURT:
Petition GRANTED. The Statute of Frauds expressed in Article 1403, par. (2), of the
Civil Code applies only to executory contracts. The Statute of Frauds, in context,
provides that a contract for the sale of real property or of an interest therein shall
be unenforceable unless the sale or some note or memorandum thereof is in
writing and subscribed by the party or his agent.
However, where the verbal contract of sale has been partially executed through the
partial payments made by one party duly received by the vendor, as in the present
case, the contract is taken out of the scope of the Statute. Evidently, Gabriel, Jr. ,as
his father earlier, had benefited from the partial payments made by the petitioners.
Thus, neither Gabriel Jr. nor the other respondents—successive purchasers of
subject lots—could plausibly set up the Statute of Frauds to thwart petitioners’
efforts towards establishing their lawful right over the subject lot and removing any
cloud in their title. As it were, petitioners need only to pay the outstanding balance
of the purchase price and that would complete the execution of the oral sale.
37. Swedish Match v. CA
FACTS:
In 1988, STORA, then parent company of Swedish Match, AB (SMAB),
decided to sell SMAB of Sweden and the latter’s worldwide match, lighter and
shaving products operations to Eemland Management Services, now Swedish
Match NV of Netherlands (SMNV). SMNV initiated steps to sell the worldwide
match and lighter businesses while retaining for itself the shaving business. In line
with this, Ed Enriquez was commissioned and granted full powers by SMNV to
negotiate with the prospective buyers. Enriquez was held under instructions that
the sale of Phimco shares should be executed on or before 30 June 1990. Several
interested parties tendered offers to acquire the Phimco shares, one of which was
ALS Management and Development Corporation through its president and general
manager Litonjua, herein respondent. In his letter dated 3 November 1989, Litonjua
submitted to SMAB a firm offer to buy all the latter’s shares in Phimco and all of
Phimco’s shares for the amount of 75million. In response, Rossi, the CEO of SMAB,
informed Litonjua that the offer was too low. Thereafter, an exchange of
correspondence ensued between petitioners and respondents regarding the sale of
the Phimco shares. In his letter dated 21 May 1990. Litonjua offered to buy the
disputed shares, excluding the lighter business for US$30.6 million which was later
increased to US$36 million. However, in said offer, Litonjua stressed that the bid
amount is still subject to adjustment. In an answer to said letter, Rossi made it clear
that ALS should submit its final offer not later than 30 June 1990. Due to the failure
of ALS to meet the deadline for the submission of offer, Rossi informed Litonjua
that they have signed a conditional contract with a local group for the disposal of
Phimco. However, the said sale with the local group did not materialize. Enriquez
invited Litonjua to resume negotiations with SMAB. In response, Litonjua expressed
objections to the totally new sets of terms and conditions for the sale of Phimco.
Thus, ALS filed before the RTC of Pasig a complaint for specific
performance with damages, with a prayer for the issuance of a writ of preliminary
injunction, against defendants, now petitioners. SMAB alleged that respondents
have no cause of action, contending that no perfected contract, whether verbal or
written, existed between them. Petitioners added that respondents’ cause of
action, if any, was barred by the Statute of Frauds since there was no written
instrument or document evidencing the alleged sale of the Phimco shares to
respondents. The RTC dismissed respondents’ complaint. The CA reversed the trial
court’s decision.
ISSUES:
1. WON the CA erred in reversing the trial court’s decision dismissing the complaint
for being unenforceable under the Statute of Frauds
2. WON there was a perfected contract of sale between petitioners and
respondents with respect to the Phimco shares.
HELD
1. YES. The Statute of Frauds embodied in Article 1403, paragraph (2), of the Civil
Code requires certain contracts enumerated therein to be evidenced by some note
or memorandum in order to be enforceable. The term “Statute of Frauds” is
descriptive of statutes which require certain classes of contracts to be in writing.
The Statute does not deprive the parties of the right to contract with respect to the
matters therein involved, but merely regulates the formalities of the contract
necessary to render it enforceable. Evidence of the agreement cannot be received
without the writing or a secondary evidence of its contents.
- The Statute, however, simply provides the method by which the contracts
enumerated therein may be proved but does not declare them invalid because they
are not reduced to writing. By law, contracts are obligatory in whatever form they
may have been entered into, provided all the essential requisites for their validity
are present. However, when the law requires that a contract be in some form in
order that it may be valid or enforceable, or that a contract be proved in a certain
way, that requirement is absolute and indispensable. Consequently, the effect of
non-compliance with the requirement of the Statute is simply that no action can be
enforced unless the requirement is complied with. Clearly, the form required is for
evidentiary purposes only. Hence, if the parties permit a contract to be proved,
without any objection, it is then just as binding as if the Statute has been complied
with.
- The purpose of the Statute is to prevent fraud and perjury in the enforcement of
obligations depending for their evidence on the unassisted memory of witnesses,
by requiring certain enumerated contracts and transactions to be evidenced by a
writing signed by the party to be charged. However, for a note or memorandum to
satisfy the Statute, it must be complete in itself and cannot rest partly in writing and
partly in parol. The note or memorandum must contain the names of the parties,
the terms and conditions of the contract, and a description of the property
sufficient to render it capable of identification. Such note or memorandum must
contain the essential elements of the contract expressed with certainty that may be
ascertained from the note or memorandum itself, or some other writing to which it
refers or within which it is connected, without resorting to parol evidence.
- Contrary to the CA’s conclusion, the exchange of correspondence between the
parties hardly constitutes the note or memorandum within the context of Art 1403.
Rossi’s letter, heavily relied upon by respondents, is not complete in itself. First, it
does not indicate at what price the shares were being sold. In paragraph (5) of the
letter, respondents were supposed to submit their final offer in U.S. dollar terms, at
that after the completion of the due diligence process. The paragraph undoubtedly
proves that there was as yet no definite agreement as to the price. Second, the
letter does not state the mode of payment of the price. In fact, Litonjua was
supposed to indicate in his final offer how and where payment for the shares was
planned to be made.
2. NO In the case of a contract of sale, required is the concurrence of three
elements, to wit: (a) consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price; (b) determinate subject matter, and (c) price
certain in money or its equivalent. Such contract is born from the moment there is a
meeting of minds upon the thing which is the object of the contract and upon the
price. - In general, contracts undergo three distinct stages, to wit: negotiation;
perfection or birth; and consummation. Negotiation begins from the time the
prospective contracting parties manifest their interest in the contract and ends at
the moment of agreement of the parties. Perfection or birth of the contract takes
place when the parties agree upon the essential elements of the contract.
Consummation occurs when the parties fulfill or perform the terms agreed upon in
the contract, culminating in the extinguishment thereof. A negotiation is formally
initiated by an offer. A perfected promise merely tends to insure and pave the way
for the celebration of a future contract. An imperfect promise (policitacion), on the
other hand, is a mere unaccepted offer. Public advertisements or solicitations and
the like are ordinarily construed as mere invitations to make offers or only as
proposals. At any time prior to the perfection of the contract, either negotiating
party may stop the negotiation. The offer, at this stage, may be withdrawn; the
withdrawal is effective immediately after its manifestation, such as by its mailing
and not necessarily when the offeree learns of the withdrawal.
- An offer would require, among other things, a clear certainty on both the object
and the cause or consideration of the envisioned contract. Consent in a contract of
sale should be manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain
and the acceptance absolute. A qualified acceptance constitutes a counter-offer.
- Quite obviously, Litonjua’s letter proposing the acquisition of the Phimco shares
for US$36 million was merely an offer. This offer, however, in Litonjua’s own words,
“is understood to be subject to adjustment on the basis of an audit of the assets,
liabilities and net worth of Phimco and its subsidiaries and on the final negotiation
between ourselves.” Litonjua repeatedly stressed in his letters that they would not
be able to submit their final bid by 30 June 1990. With indubitable inconsistency,
respondents later claimed that for all intents and purposes, the US$36 million was
their final bid. If this were so, it would be inane for Litonjua to state, as he did, in his
letter dated 28 June 1990 that they would be in a position to submit their final bid
only on 17 July 1990. The lack of a definite offer on the part of respondents could
not possibly serve as the basis of their claim that the sale of the Phimco shares in
their favor was perfected, for one essential element of a contract of sale was
obviously wanting —the price certain in money or its equivalent. The price must be
certain, otherwise there is no true consent between the parties. There can be no
sale without a price. Quite recently, this Court reiterated the long-standing doctrine
that the manner of payment of the purchase price is an essential element before a
valid and binding contract of sale can exist since the agreement on the manner of
payment goes into the price such that a disagreement on the manner of payment is
tantamount to a failure to agree on the price.
- Granting arguendo, that the amount of US$36 million was a definite offer, it
would remain as a mere offer in the absence of evidence of its acceptance. To
produce a contract, there must be acceptance, which may be express or implied,
but it must not qualify the terms of the offer. The acceptance of an offer must be
unqualified and absolute to perfect the contract. In other words, it must be
identical in all respects with that of the offer so as to produce consent or meeting of
the minds. Respondents’ attempt to prove the alleged verbal acceptance of their
US$36 million bid becomes futile in the face of the overwhelming evidence on
record that there was in the first place no meeting of the minds with respect to the
price. It is dramatically clear that the US$36 million was not the actual price agreed
upon but merely a preliminary offer which was subject to adjustment after the
conclusion of the audit of the company finances. Respondents’ failure to submit
their final bid on the deadline set by petitioners prevented the perfection of the
contract of sale. It was not perfected due to the absence of one essential element
which was the price certain in money or its equivalent. - Respondents’ plea of
partial performance should likewise fail. The acquisition audit and submission of a
comfort letter, even if considered together, failed to prove the perfection of the
contract. Quite the contrary, they indicated that the sale was far from concluded.
Respondents conducted the audit as part of the due diligence process to help them
arrive at and make their final offer. On the other hand, the submission of the
comfort letter was merely a guarantee that respondents had the financial capacity
to pay the price in the event that their bid was accepted by petitioners. - The
Statute of Frauds is applicable only to contracts which are executory and not to
those which have been consummated either totally or partially. If a contract has
been totally or partially performed, the exclusion of parol evidence would promote
fraud or bad faith, for it would enable the defendant to keep the benefits already
derived by him from the transaction in litigation, and at the same time, evade the
obligations, responsibilities or liabilities assumed or contracted by him thereby. This
rule, however, is predicated on the fact of ratification of the contract within the
meaning of Article 1405 of the Civil Code either (1) by failure to object to the
presentation of oral evidence to prove the same, or (2) by the acceptance of
benefits under them. In the instant case, respondents failed to prove that there was
partial performance of the contract within the purview of the Statute
38. Manzano v. Garcia
FACTS:
This case involves a parcel of land covered by Transfer Certificate of Title (TCT) No.
T-25464, issued in the name of respondent Marcelino D. Garcia (Garcia). The
property was the subject of a deed of pacto de retro sale dated May 26, 1992
allegedly executed by Garcia in favor of Constancio Manzano, the predecessor-in-
interest and brother of petitioner Vicente Manzano, Jr. (Vicente) for the amount of
eighty thousand five hundred pesos (P80,500.00). Under said contract, Garcia
purportedly reserved the right to repurchase the subject property for the same
price within three months from the date of the instrument.
On July 12, 1992, Constancio Manzano passed away. His properties,
including the subject of this case, were adjudicated to his heirs by virtue of a deed
of extrajudicial partition with special power of attorney executed by them. Vicente
was named the administrator of the intestate estate of Constancio Manzano.
Garcia did not redeem the subject property within the three-month period.
Consequently, Vicente instituted a petition for consolidation of ownership over the
property, docketed as Civil Case No. 93-610. Garcia filed an opposition and answer,
alleging that the document evidencing the pacto de retro sale was a forgery. He
claimed that he and his wife were in the United States of America (USA) from June
1, 1988 to November 14, 1992, and therefore could not have possibly executed the
said pacto de retro sale on May 26, 1992.
During the trial, Vicente presented TCT No. T-25464 and Tax Declaration
No. 41672 to prove the due execution of the pacto de retro sale, which was
recorded in the office of the Register of Deeds of Cagayan de Oro City.
On the other hand, Garcia testified that he went to the USA on November
7, 1987. A few months later, he returned to the Philippines. He went back to the
USA on June 1, 1988. His three children were left in the Philippines, while the titles
to his properties were left in the office of his business establishment in Tablon,
Cagayan de Oro City with two of their children. Garcia testified that the signatures
appearing in the pacto de retro sale were not his and his wifes. He presented his
passport and drivers license, both of which bear an entirely different signature than
what appeared in the pacto de retro sale document.
Atty. Demosthenes Mediante, Jr. (Atty. Mediante), the person who
notarized the deed of conveyance in question, and Perla Babano, one of the
witnesses to the execution of the pacto de retro sale, testified that the Marcelino
Garcia who appeared in his office and who executed the pacto de retro sale is not
the same Marcelino Garcia who was in court during the trial of the case.
ISSUE:
Whether the pacto de retro sale between the parties was valid
HELD:
 From an assiduous examination of the records of the case, it is plainly
apparent to this Court that the alleged signature of Garcia in the pacto de retro sale
is utterly dissimilar from his customary signature appearing in the evidence on
record, as well as in the verifications of the pleadings before this Court and the
courts a quo. From this circumstance alone, we are constrained to affirm the ruling
of the Court of Appeals finding that the pacto de retro sale was forged and,
therefore, void ab initio.
The variance in the alleged signature of Garcia in the pacto de retro sale,
on one hand, and in the evidence on record and in the verifications of the pleadings
before this Court and the courts a quo, on the other hand, was enormous and
obvious, such that this Court can readily conclude that the pacto de retro sale was
in all likelihood made by someone who has not even seen the customary signature
of Garcia. Furthermore, the falsity of the signature on the pacto de retro sale was
affirmed by two persons present when the instrument was signed, one of which is
the very person who notarized the same.
Petitioner likewise argues that the Court of Appeals erred in failing to
appreciate that the notarized deed of pacto de retro sale was entitled to the
presumption of regularity and should be given great weight. It is settled that while a
notarized document enjoys this presumption, "the fact that a deed is notarized is
not a guarantee of the validity of its contents." The "presumption of regularity of
notarized documents is not absolute and may be rebutted by clear and convincing
evidence to the contrary."
Irregularities in the notarization of the document may be established by
oral evidence of persons present in said proceeding. Here, the presumption of
regularity of the notarized deed of pacto de retro sale was sufficiently overcome by
the testimony of Atty. Mediante.
39. Alfred Fritz Frenzel v. Catito
Facts:
Petitioner Alfred is an Australian citizen of German descent married to
Teresita Santos. Later on they separated from bed and board without getting a
divorce. Sometime in February 1993, Alfred met Ederlina Catito, a Filipina in
Australia. Ederlina at that time found an employment at Kings Cross Nightclub
where Alfred stays while on a vacation. Unknown to Alfred, Ederlina was a resident
of Germany married to Klaus Muller, a German National. The two saw each other
again where Ederlina ended up staying in Alfred’s Hotel. Alfred then persuaded her
to stop working at Kingcross and engage a wholesome business in the Philippines.
Alfred then told Ederlina that he is married but was eager to divorce, thereafter he
proposed to Ederlina but the latter refused and said that they should wait a little bit
longer. Soon, these properties where acquired: (1) a beauty parlor business
registered with the DTI in the name of Ederlina and (2) a House and Lot under
Ederlina’s name on the Deed of Sale.
When Alfred decided to stay in the Philippines for good and live with
Ederlina, he then sold some of his personal and real properties and the proceeds
thereof was deposited to his savings account with the Hong Kong Shanghai Banking
Corporation, Kowloon Branch. Also, when Alfred and Ederlina was in Hong Kong,
they opened another account with HSBC Kowloon under the name of Ederlina.
Alfred then transferred his deposit in Savings Account with the said new bank
account. Ederlina opened account with Bank of America Kowloon Main Office.
Meanwhile, while Alfred was in Papua New Guinea he received a letter
from Klaus Muller informing him that the latter was Ederlina’s husband. When
Alfred confronted Ederlina, the latter did not deny it and assured him that she is
going to divorce Klaus Muller. So, Alfred continued their amorous relationship.
Alfred then purchased another house and lot located in Davao where Ederlina
appeared to be the vendee in the Deed of Sale and a TCT was issued to her as the
sole owner of the property. The couple also decided to put up a beach resort where
Alfred spent for the purchase, construction and upkeep of the property. In the
meantime, Ederlinas petition for Divorce was denied because Klaus opposed the
same. Klaus wanted half of Ederlina’s property before he would agree to divorce.
Alfred then proposed the creation of partnership to Ederlina which the latter
initially agreed but at the last minute, she declined. Thereafter, their relationship
started deteriorating. Threatened by the bigamy case that Klaus would file against
them, Alfred then decided to live separately and cut off all contacts with her. Alfred
is now complaining that it was Ederlina’s fault that he is now virtually penniless.
Alfred filed a complaint against Ederlina with the RTC Quezon City for the recovery
of his real and personal properties. Ederlina failed to file an answer and was
declared in default. Alfred also filed a complaint against Ederlina with RTC Davao for
specific performance, declaration of ownership of real and personal properties and
damages.
Issue: Whether or not Alfred can recover his properties.
Held: No. The sales in question even when entered into by him as the real vendee,
the said transactions are in violation of the Constitution; hence null and void ab
initio. It vests no rights and creates no obligations. The petitioner being a party to
an illegal contract cannot come into court and ask for his legal objective to be
carried out. One who losses his money or property by knowingly engaging in a
contract or transaction which involves his own moral turpitude may not maintain an
action for his losses. Moreover, under Article 1412 of the Civil Code, the petitioner
cannot have the subject properties deeded to him or allow the recovery of money
he had spent thereof. Equity as a rule will follow the law and will not permit that to
be done indirectly which because of public policy, cannot be done directly.
40. Villaroel v. Estrada
Facts:
On May 9, 1912 Alejandra Callao, mother of defendant John Villaroel,
obtained from the spouses Mariano Estrada and Severina a loan of 1,000 pesos
payable after seven years. Alejandro died, leaving as sole heir to the defendant.
Spouses Mariano Estrada and Severina also died leaving as sole heir to the plaintiff
Bernardo Estrada. On August 9, 1930 the defendant signed a document by which
the applicant must declare in the amount of 1,000 with an interest of 12% per year.
The Court of First instance of Laguna which was filed in this action, condemn the
defendant to pay the claimed amount of 1, 000 with legal interest of 12% per year
since August 9, 1930 until full pay. Villaroel appealed sentence.
Issue: Whether or not Villaroel is liable to pay the prescribed debt of her mother.
Held: Yes. Article 1424 provides that when a right to sue upon a civil obligation has
lapsed by extinctive prescription, the obligor who voluntary performs the contract
cannot recover what he has delivered or the value of service he has rendered. In
this case, since the defendant is the only inheritor of the primitive debtor, with the
right to succeed inheritance, that debt brought by his mother is a moral obligation
which is consideration sufficient to create and render enforceable obligation
voluntarily contracted on August 9, 1930. Although the action to recover the
original debt has already been prescribed when the claim was filed, this present
action however is not based on the original obligation but in which the defendant
contracted on August 9, 1930 upon assuming the fulfillment of that obligation
already prescribed. Hence, CFI Laguna’s decision is affirmed.
41. Hojas v. Philippines Anonah Bank
FACTS:
Spouses Hojas secured a P450, 000 loan from PAB secured by a mortgage.
For failure to pay, the PAB applied for Extrajudicial foreclosure of the real
properties, which was granted, and the properties were acquired by PAB. The OIC
President of PAB wrote the son of the petitioners stating that the petitioners can
still exercise the one year right of redemption over the foreclosed properties until
April 21, 1988 which shall be good only up to December 31, 1988. Petitioner
interpreted the letter as extending the redemption period until December 31, 1988.
On November 4, 1988, a public bidding was conducted wherein the mortgaged
properties were awarded to Ramon Kue. Thereafter, petitioners received a letter
from PAB demanding them to vacate the premises. Petitioners filed an action for
the Annulment of the Extrajudicial foreclosure of the Mortgage and Damages. They
claimed that the letter of the OIC President extending the redemption period
violated the principle of estoppel. Hence, this petition.
ISSUE:
Whether or not the PAB violated the principle of estoppel when it
conducted the public sale on November 4, 1988.
RULING:
No. According to Article 1431, through estoppel, an admission or
representation is rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying on it. This doctrine is based on the
grounds of public policy, fair dealing, good faith and justice and its purpose is to
forbid one to speak against his own act, representations or commitments to the
injury of one to whom they were directed and who reasonably relied on it. Estoppel
would not lie against one who, in the first place, did not make any representation.
In the instant case, a perusal of the letter would reveal that the date “December 31,
1988” refers to the last day when owners of foreclosed properties, like petitioners,
could submit their payment proposals to the bank. The letter was very clear. It was
about the availment of the liberalized payment scheme of the bank. The
redemption period was not extended. Therefore, estoppel finds no application in
this case.
42. Philippine National Bank vs. Philippine Vegetable Oil Co., 49 SCRA 857, G.R.
No. 25400. January 14,
FACTS:
In 1920, Phil Vegetable was in debt to the extent of around P30M. PNB was the
largest creditor with Phil Vegetable owing it P17M. The PNB loan was secured by a
real and chattel mortgage for P3.5M. Phil Vegetable executed another chattel
mortgage in favor of the bank on its vessels to guarantee around P4M. Bankruptcy
was imminent. Phil Vegetable General Manager Whitaker made his first offer to
pledge certain private properties to secure creditors of Phil Vegetable. A creditors’
meeting was held and a receiver for the Phil Vegetable was appointed by the CFI.
During the period when receiver was in control of Phil Vegetable’s property, an
agreement was perfected by Phil Vegetable, Whitaker, and some creditors whereby
creditors transferred to Whitaker a part of their claims against Phil Vegetable. PNB
was not a direct party to the agreement though the officials had full knowledge of
its accomplishment and its GM placed his OK at the end of the final draft. The next
move of PNB was to obtain a new mortgage from Phil Vegetable. Receivership for
Phil Vegetable was terminated. Phil Vegetable’s plant was definitely closed. PNB
filed action to foreclose its mortgage on Phil Vegetable’s property. Hence, this
petition.
ISSUE:
 Whether or not the mortgage was null and void because at time of its Bank by paying the amount of P247.26 with the understanding that the balance
execution all the properties of Phil Vegetable was under receiver and neither the would be payable upon execution of the corresponding deed of conveyance.
approval of the receiver nor the court was obtained. Nevertheless, Poncio refuses to execute the deed of conveyance and sold the same
property to the Infantes, the latter knowing the first sale to the plaintiff.
RULING:
No, it is merely voidable or valid until annulled. PNB challenged the right of
Whitaker as intervenor. PNB is right that Phil Vegetable is the defendant, Whitaker Plaintiff filed an action to annul the sale to the Infantes and to require Poncio to
was one of the largest individual stockholders. It was he who asked for appointment execute the deed of conveyance in her favor. Respondents filed a motion to
of receiver. It was he who was the leading figure in the negotiations. It was he who dismiss on the ground that the plaintiff's claim is unenforceable under Statue of
pledged own property to assist in rehab of Phil Vegetable. Whitaker is more vitally Frauds. The trial court dismissed the motion but later on dismissed the plaintiffs
interested in case than Phil Vegetable. If the mortgage had been the free act of Phil
Vegetable, it could not be heard to allege its own fraud, and only a creditor could 's complaint on the ground that the cause of action is unenforoceable under Statute
take advantage of fraud to intervene to avoid conveyance. Mssrs. Wilson and of Frauds
Cuaderno, PNB Directors, were serving as Phil Vegetable Directors after Wilson
suggested reorganization of Phil Vegetable so that the bank might have close
working relationship with Phil Vegetable. Wilson became Pres of Phil Vegetable. ISSUE: Whether or not the cause of action is unenforceable under Statute of Frauds.
Mortgage was not ratified before notary public until 3/8/22 and was not recorded
in registry of property until 3/21/22. In other words, mortgage was executed by
PNB through its GM and another corp before the termination of receivership of the
RULING. No, it is not unenforceable under Statute of Frauds. As a rule, statute of
said corp, but was not acknowledged or recorded until after termination of the
frauds applies only to executory contracts not to contracts which are partially or
receivership. It must be evident that PNB could secure no new mortgage while the
totally performed. Partial or total performance is established by documentary
prop of Phil Vegetable was in custodia legis. Phil Vegetable was then inhibited fr
evidence before one could have resort to oral testimony on the transaction. In this
giving mortgage on its property. The receiver was not a party to the mortgage.
case, a document written in the native language of Poncio was signed by him which
Court had not authorized receiver to consent to the execution of a new mortgage.
states that he would stay in the land sold by him to the plaintiff for one year.
The Court would want to protect rights of all creditors and not just one particular
Moreover, plaintiff already paid an amount of P247.26 to the Republic Saving's
creditor. While the mortgage could not have been executed w/o dissolution of the
Bank in assumption of the defendant's pbligation. This cas be inferred as a partial
receivership, dissolution was apparently secured through representations that PNB
payment by the plaintiff to the defendant
would continue to finance the operations of Phil Vegetable. Instead of so doing, the
bank within less than 2 months after the mortgage was recorded, withdrew its Therefore, unenforceability under Statute of Frauds is inapplicable in this case.
support. Another reason is that the mortgage was accomplished when PNB was an
influence in affairs of Phil Vegetable through Wilson and Cuaderno. On one hand
was PNB in person and on the other hand was PNB by proxy. It is unconscionable to 44. Modina vs. Court of Appeals, 617 SCRA 696, G.R. No. 109355. October 29,
allow the bank after the hands of the creditors were tied, to appropriate to itself all 1999
the property of Phil Vegetable. The setting aside of this mortgage does not mean
PNB is left without security. Even before the receivership, PNB already had 3 The parcels of land ib question are those in the ne of Ramon Chiang. He theorized
mortgages on property of Phil Vegetable. They’re still in effect and can be that the subject properties were sold to him by her wife. Thereafter, he sold the
foreclosed. same to petitioner Modina. However, the same lands were also leased to the
private respondents.
43. Carbonell vs. Poncio, et al., 103 Phil. 655, G.R. No. L-11231, May 12, 1958

Plaintiff purchased from the defendant a parcel of land. One of the conditions of Modina filed a complaint for recovery of possession with damages against the
the sale was that Poncio would continue staying in said land for one year, as stated provate respondents in RTC Iloilo. Upon learning of the institution of the case,
in a document signed by him which was written in the dialect of Batanes, known to reapondent Melinda, wife of Ramon, presented a Complaint-in-intervention seeking
Poncio. Plaintiff assumed the obligation of the defendant with the Republic Savings the nullity of the sale between the petitioner and her husband on the ground that
the titles of the land in question were never legally transferred to her husband as
fraudulent acts were employed by him to obtain the Torrens titles. Nevertheless,
she confirmed the validity of the lease contracts with the other private
respondents.
RTC ruled in favor of Melinda. The CA affimed the decision. Hence, this petition.
ISSUE: whether or not the doctrine of in pari delicto barred Melinda from
questioning the subject deed of Sale hence she cannot recover the property
RULING: No, the doctrine will not apply. As a rule, the doctrine of in pari delicto is
when two persons are equally at fault; the law does not relieve them. It apies only
to contracts with illegal consideration or purpose, whether the attendant facts
constitues an offense or dismeanor or whether the considerarion involves is merely
rendered illegal. Hence, it denies all recovery to the parties In this case, Merlina
never averred that the subject sale is null and void on the ground that such is under
the prohibition of sale against spouses(knowing that this is prohibited, but still
made it to defraud others in buying such land) but only denied the Deed of Sale in
favor of her husband. Therefore, since the sale between Ramon and Modina is void
because of lack of consideration and object and the doctrine of in pari delicto will
not apply, Merlina can recover the property.
45. Torbela vs. Spouses Rosano and BF Savings Bank, 7 December 2011
Presently before the Court are two consolidated Petitions for Review
on Certiorari under Rule 45 of the Rules of Court, both assailing the
Decision dated June 29, 1999 and Resolution dated October 22, 1999 of the Court of
Appeals in CA-G.R. CV No. 39770.
The controversy began with a parcel of land, with an area of 374 square
meters, located in Urdaneta City, Pangasinan (Lot No. 356-A). Upon the deaths of
the spouses Torbela, Lot No. 356-A was adjudicated in equal shares among their
children, the Torbela siblings, by virtue of a Deed of Extrajudicial Partition
dated December 3, 1962.
On December 12, 1964, the Torbela siblings executed a Deed of Absolute
Quitclaim over Lot No. 356-A in favor of Dr. Rosario. According to the said Deed, the
Torbela siblings for and in consideration of the sum of NINE PESOS (P9.00) x x x
transfer[red] and convey[ed] x x x unto the said Andres T. Rosario, that undivided
portion of THREE HUNDRED SEVENTY-FOUR square meters of that parcel of land
embraced in Original Certificate of Title No. 16676 of the land records of
Pangasinan x x x. Four days later, on December 16, 1964, OCT No. 16676 in
Valerianos name was partially cancelled as to Lot No. 356-A and TCT No. 52751 was
issued in Dr. Rosarios name covering the said property.
Another Deed of Absolute Quitclaim was subsequently executed on
December 28, 1964, this time by Dr. Rosario, acknowledging that he only borrowed
Lot No. 356-A from the Torbela siblings and was already returning the same to the
latter for P1.00. The Deed was notarized, but was not immediately annotated on
TCT No. 52751.
Following the issuance of TCT No. 52751, Dr. Rosario obtained a loan from
the Development Bank of the Philippines (DBP) on February 21, 1965 in the sum of
P70,200.00, secured by a mortgage constituted on Lot No. 356-A. The mortgage
was annotated on TCT No. 52751 on September 21, 1965 as Entry No. 243537. Dr.
Rosario used the proceeds of the loan for the construction of improvements on Lot
No. 356-A.
On May 16, 1967, Cornelio T. Tosino (Cornelio) executed an Affidavit of
Adverse Claim, on behalf of the Torbela siblings. The very next day, on May 17,
1967, the Torbela siblings had Cornelios Affidavit of Adverse Claim dated May 16,
1967 and Dr. Rosarios Deed of Absolute Quitclaim dated December 28, 1964
annotated on TCT No. 52751 as Entry Nos. 274471 and 274472, respectively.
Dr. Rosario was able to fully pay his loan from DBP, the mortgage
appearing under Entry No. 243537 was cancelled per the Cancellation and
Discharge of Mortgage executed by DBP in favor of Dr. Rosario and ratified before a
notary public on July 11, 1980.
In the meantime, Dr. Rosario acquired another loan from the Philippine
National Bank (PNB) sometime in 1979-1981. The loan was secured by mortgages
constituted on the following properties: (1) Lot No. 356-A, covered by TCT No.
52751 in Dr. Rosarios name; (2) Lot No. 4489, with an area of 1,862 square meters,
located in Dagupan City, Pangasinan, covered by TCT No. 24832; and (3) Lot No. 5-F-
8-C-2-B-2-A, with an area of 1,001 square meters, located in Nancayasan, Urdaneta,
Pangasinan, covered by TCT No. 104189
On December 8, 1981, Dr. Rosario and his wife, Duque-Rosario (spouses
Rosario), acquired a third loan in the amount of P1,200,000.00 from Banco Filipino
Savings and Mortgage Bank (Banco Filipino). To secure said loan, the spouses
Rosario again constituted mortgages on Lot No. 356-A, Lot No. 4489, and Lot No. 5-
F-8-C-2-B-2-A. The mortgage on Lot No. 356-A was annotated on TCT No. 52751
as Entry No. 533283 on December 18, 1981. Because Banco Filipino paid the
balance of Dr. Rosarios loan from PNB, the mortgage on Lot No. 356-A in favor of
PNB was cancelled per Entry No. 533478 on TCT No. 52751 dated December 23,
1981.
On February 13, 1986, the Torbela siblings filed before the Regional Trial
Court (RTC) of Urdaneta, Pangasinan, a Complaint for recovery of ownership and
possession of Lot No. 356-A, plus damages, against the spouses Rosario. The
spouses Rosario afterwards failed to pay their loan from Banco Filipino. As of April
2, 1987, the spouses Rosarios outstanding principal obligation and penalty charges
amounted to P743,296.82 and P151,524.00, respectively.
Banco Filipino extrajudicially foreclosed the mortgages on Lot No. 356-A,
Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A. During the public auction on April 2,
1987, Banco Filipino was the lone bidder for the three foreclosed properties for the
price of P1,372,387.04. The Certificate of Sale dated April 2, 1987, in favor of Banco
Filipino, was annotated on TCT No. 52751 on April 14, 1987 as Entry No. 610623.
The spouses Rosario instituted before the RTC on March 4, 1988 a case for
annulment of extrajudicial foreclosure and damages, with prayer for a writ of
preliminary injunction and temporary restraining order, against Banco Filipino, the
Provincial Ex Officio Sheriff and his Deputy, and the Register of Deeds of
Pangasinan. The Torbela siblings intervened in Civil Case No. U-4667. Eventually,
on October 17, 1990, the RTC issued an Order dismissing without prejudice Civil
Case No. U-4667 due to the spouses Rosarios failure to prosecute.
Meanwhile, the Torbela siblings tried to redeem Lot No. 356-A from Banco
Filipino, but their efforts were unsuccessful. Upon the expiration of the one-year
redemption period in April 1988, the Certificate of Final Sale and Affidavit of
Consolidation covering all three foreclosed properties were executed on May 24,
1988 and May 25, 1988, respectively.
On June 7, 1988, new certificates of title were issued in the name of Banco
Filipino, particularly, TCT No. 165812 for Lot No. 5-F-8-C-2-B-2-A and TCT No.
165813 for Lot No. 356-A. The Torbela siblings thereafter filed before the RTC on
August 29, 1988 a Complaint for annulment of the Certificate of Final Sale dated
May 24, 1988, judicial cancelation of TCT No. 165813, and damages, against Banco
Filipino, the Ex Officio Provincial Sheriff, and the Register of Deeds of Pangasinan,
which was docketed as Civil Case No. U-4733.
Issue:
Whether or not Dr. Rosario is estopped from claiming/asserting ownership
over the subject lot?
Ruling:
Yes. On December 16, 1964, TCT No. 52751, covering Lot No. 356-A, was
already issued in Dr. Rosarios name. On December 28, 1964, Dr. Rosario executed
his own Deed of Absolute Quitclaim, in which he expressly acknowledged that he
only borrowed Lot No. 356-A and was transferring and conveying the same back to
the Torbela siblings for the consideration of P1.00. On February 21, 1965, Dr.
Rosarios loan in the amount of P70,200.00, secured by a mortgage on Lot No. 356-
A, was approved by DBP. Soon thereafter, construction of a hospital building
started on Lot No. 356-A.
Among the notable evidence presented by the Torbela siblings is the
testimony of Atty. Lorenza Alcantara (Atty. Alcantara), who had no apparent
personal interest in the present case. Atty. Alcantara, when she was still a boarder
at the house of Eufrosina Torbela Rosario (Dr. Rosarios mother), was consulted by
the Torbela siblings as regards the extrajudicial partition of Lot No. 356-A. She also
witnessed the execution of the two Deeds of Absolute Quitclaim by the Torbela
siblings and Dr. Rosario.
In contrast, Dr. Rosario presented TCT No. 52751, issued in his name, to
prove his purported title to Lot No. 356-A. Registration does not vest title; it is
merely the evidence of such title. Land registration laws do not give the holder any
better title than what he actually has. Consequently, Dr. Rosario must still prove
herein his acquisition of title to Lot No. 356-A, apart from his submission of TCT No.
52751 in his name.
Dr. Rosario testified that he obtained Lot No. 356-A after paying the
Torbela siblings P25,000.00, pursuant to a verbal agreement with the latter. The
Court though observes that Dr. Rosarios testimony on the execution and existence
of the verbal agreement with the Torbela siblings lacks significant details (such as
the names of the parties present, dates, places, etc.) and is not corroborated by
independent evidence.
In addition, Dr. Rosario acknowledged the execution of the two Deeds of
Absolute Quitclaim dated December 12, 1964 and December 28, 1964, even
affirming his own signature on the latter Deed. The Parol Evidence Rule provides
that when the terms of the agreement have been reduced into writing, it is
considered as containing all the terms agreed upon and there can be, between the
parties and their successors in interest, no evidence of such terms other than the
contents of the written agreement. Dr. Rosario may not modify, explain, or add to
the terms in the two written Deeds of Absolute Quitclaim since he did not put in
issue in his pleadings (1) an intrinsic ambiguity, mistake, or imperfection in the
Deeds; (2) failure of the Deeds to express the true intent and the agreement of the
parties thereto; (3) the validity of the Deeds; or (4) the existence of other terms
agreed to by the Torbela siblings and Dr. Rosario after the execution of the Deeds.
Even if the Court considers Dr. Rosarios testimony on his alleged verbal
agreement with the Torbela siblings, the Court finds the same unsatisfactory. Dr.
Rosario averred that the two Deeds were executed only because he was planning to
secure loan from the Development Bank of the Philippines and Philippine National
Bank and the bank needed absolute quitclaim[.] While Dr. Rosarios explanation
makes sense for the first Deed of Absolute Quitclaim dated December 12, 1964
executed by the Torbela siblings (which transferred Lot No. 356-A to Dr. Rosario
for P9.00.00), the same could not be said for the second Deed of Absolute Quitclaim
dated December 28, 1964 executed by Dr. Rosario. In fact, Dr. Rosarios Deed of
Absolute Quitclaim (in which he admitted that he only borrowed Lot No. 356-A and
was transferring the same to the Torbela siblings for P1.00.00) would actually work
against the approval of Dr. Rosarios loan by the banks. Since Dr. Rosarios Deed of
Absolute Quitclaim dated December 28, 1964 is a declaration against his self-
interest, it must be taken as favoring the truthfulness of the contents of said Deed.
It can also be said that Dr. Rosario is estopped from claiming or asserting
ownership over Lot No. 356-A based on his Deed of Absolute Quitclaim
dated December 28, 1964. Dr. Rosario's admission in the said Deed that he merely
borrowed Lot No. 356-A is deemed conclusive upon him. Under Article 1431 of the
Civil Code, [t]hrough estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved as
against the person relying thereon. That admission cannot now be denied by Dr.
Rosario as against the Torbela siblings, the latter having relied upon his
representation.
Therefore, Dr. Rosario is estopped from claiming/asserting ownership over
the subject lot.
MIDTERMS
1. Calicdan vs. Cendana, G.R. 155080, 2/5/04
Facts:
This petition for review seeks the reversal of the April 4, 2002 decision of
the Court of Appeals in CA-G.R. CV No. 67266,[1]which set aside the November 12,
1996 decision of the Regional Trial Court of Dagupan City, Branch 44 in Civil Case
No. D-10270.
The instant controversy involves a 760 square meter parcel of unregistered
land located in Poblacion, Mangaldan, Pangasinan. The land was formerly owned by
Sixto Calicdan, who died intestate on November 4, 1941. He was survived by his
wife, Fermina, and three children, namely, petitioner Soledad, Jose and Benigno, all
surnamed Calicdan.
On August 25, 1947, Fermina executed a deed of donation inter vivos whereby
she conveyed the land to respondent Silverio Cendaña, who immediately entered
into possession of the land, built a fence around the land and constructed a two-
storey residential house thereon sometime in 1949, where he resided until his
death in 1998.
On June 29, 1992, petitioner, through her legal guardian Guadalupe Castillo,
filed a complaint for Recovery of Ownership, Possession and Damages against the
respondent, alleging that the donation was void; that respondent took advantage of
her incompetence in acquiring the land; and that she merely tolerated respondents
possession of the land as well as the construction of his house thereon.
In his Answer with Motion to Dismiss, respondent alleged, by way of
affirmative defenses, that the land was donated to him by Fermina in 1947; and
that he had been publicly, peacefully, continuously, and adversely in possession of
the land for a period of 45 years. Moreover, he argued that the complaint was
barred by prior judgment in the special proceedings for the Inventory of Properties
of Incompetent Soledad Calicdan, where the court decreed the exclusion of the land
from the inventory of properties of the petitioner.
Issue:
Whether or not the respondent has become the rightful owner of the land
by prescription?
Ruling:
Yes. The Court ruled that the respondent has become the rightful owner of
the land by extraordinary acquisitive prescription.
Prescription is another mode of acquiring ownership and other real rights
over immovable property. It is concerned with lapse of time in the manner and
under conditions laid down by law, namely, that the possession should be in the
concept of an owner, public, peaceful, uninterrupted and adverse. Acquisitive
prescription is either ordinary or extraordinary. Ordinary acquisitive prescription
requires possession in good faith and with just title for ten years. In extraordinary
prescription ownership and other real rights over immovable property are acquired
through uninterrupted adverse possession thereof for thirty years without need of
title or of good faith.
The good faith of the possessor consists in the reasonable belief that the
person from whom he received the thing was the owner thereof, and could
transmit his ownership. For purposes of prescription, there is just title when the
adverse claimant came into possession of the property through one of the modes
recognized by law for the acquisition of ownership or other real rights, but the
grantor was not the owner or could not transmit any right.
Assuming arguendo that ordinary acquisitive prescription is unavailing in
the case at bar as it demands that the possession be in good faith and with just
title, and there is no evidence on record to prove respondents good faith,
nevertheless, his adverse possession of the land for more than 45 years aptly shows
that he has met the requirements for extraordinary acquisitive prescription to set
in.
The records show that the subject land is an unregistered land. When the
petitioner filed the instant case on June 29, 1992, respondent was in possession of
the land for 45 years counted from the time of the donation in 1947. This is more
than the required 30 years of uninterrupted adverse possession without just title
and good faith. Such possession was public, adverse and in the concept of an
owner. Respondent fenced the land and built his house in 1949, with the help of
Guadalupe’s father as his contractor. His act of cultivating and reaping the fruits of
the land was manifest and visible to all. He declared the land for taxation purposes
and religiously paid the realty taxes thereon. Together with his actual possession of
the land, the tax declarations constitute strong evidence of ownership of the land
occupied by him.
Moreover, the deed of donation inter vivos, albeit void for having been
executed by one who was not the owner of the property donated, may still be used
to show the exclusive and adverse character of respondents possession. Therefore,
the Court declared that respondent is now the rightful owner of the subject
property, not on the basis of the Deed of Donation Inter Vivos, which is hereby
declared void, but on extraordinary acquisitive prescription.
2. Spouses Ragudo vs. Fabella Estate, G.R. 146823, 8/9/05
FACTS:
Earlier, the tenants of a parcel of land at Mandaluyong City (hereinafter referred to
as the Fabella Estate), organized themselves and formed the Fabella Estate Tenants
Association, Inc. (FETA), for the purpose of acquiring said property and distributing
it to its members.
Unable to raise the amount sufficient to buy the property from the heirs of Don
Dionisio M. Fabella, FETA applied for a loan from the National Home Mortgage
Finance Corporation (NHMFC) under the latter’s Community Mortgage Program.
However, as a pre-condition for the loan, and in order that specific portions of the
property could be allotted to each tenant who will have to pay the corresponding
price therefor, NHMFC required all tenants to become members of FETA.
Accordingly, all the tenants occupying portions of the Fabella Estate were asked to
join FETA. While the rest did, the spouses Ramon Ragudo and Estrella Ragudo who
were occupying the lot subject matter of this controversy, consisting of about 105
square meters of the Fabella Estate, refused to join the Association. Consequently,
the portion occupied by them was awarded to Mrs. Miriam De Guzman, a qualified
FETA member.
To effect the ejectment of the spouses Ragudo from the portion in question which
they continued to occupy despite the earlier award thereof to Mrs. Miriam de
Guzman, FETA filed against them a complaint for unlawful detainer before the
Metropolitan Trial Court (MeTC) of Mandaluyong City. In a decision dated 6 August
1990, the MeTC dismissed the unlawful detainer case on the ground that it was an
improper remedy because the Ragudos had been occupying the subject portion for
more than one (1) year prior to the filing of the complaint, hence the proper action
should have been one for recovery of possession before the proper regional trial
court.
FETA then filed with the RTC-Pasig a complaint for recovery of possession against
the Ragudos. In their Answer, the spouses interposed the defense that they have
already acquired ownership of the disputed portion since they have been in
occupation thereof in the concept of an owner for more than forty (40) years. They
also insist that FETA’s right to recover has been barred by laches in view of their
more than 40-year occupancy of the portion in question.
In a decision dated 29 July 1994, the trial court rendered judgment in FETAs favour.
In the assailed decision dated 19 July 2000, the Court of Appeals dismissed the
Ragudos appeal and affirmed trial court’s decision with modifications.
ISSUES:
Whether or not Spouses Ragudo are owners to the property by acquisitive
prescription
Whether or not laches set in against FETA
RULING:
The petition was denied.
The Court has consistently ruled in its long line of cases that lands covered by a title
cannot be acquired by prescription or adverse possession. The Court also held
that, in reference to the case of Natalia Realty Corporation vs.Vallez et al., a claim
of acquisitive prescription is baseless when the land involved is a registered land
because of Article 1126 of the Civil Code in relation to Act 496 (now, Section 47 of
Presidential Decree No. 1529).
Under Article 1126 of the Civil Code, prescription of ownership of lands registered
under the Land Registration Act shall be governed by special laws. Correlatively,
Act No. 496 provides that no title to registered land in derogation of that of the
registered owner shall be acquired by adverse possession. Consequently, proof of
possession by the defendants is both immaterial and inconsequential.
As to the issue about laches, the Court observed that the lower court found that
petitioners’ possession of the subject lot was merely at the tolerance of its former
lawful owner. In this connection, the case of Bishop vs. Court of Appeals teaches
that if the claimant’s possession of the land is merely tolerated by its lawful
owner, the latter’s right to recover possession is never barred by laches:
3. Bautista vs. Poblete, G.R. 141007, 9/13/05
FACTS:
In their application for registration of Lot 1243 (a 6.2556-hectare parcel of land),
private respondents, the successors-in-interest of Socorro Reyes vda. de Poblete
(Socorro), claimed that Lot 1243 was donated by Marcelo Reyes Sr. (Marcelo Sr.) to
Socorro, his daughter by a second marriage; that the cadastral survey of Lot 1243
had been undertaken primarily for and in the name of Socorro; that they purchased
the same land from their parents Socorro and Juan Poblete; and that they and their
predecessors in interest have been in open, continuous, peaceful and notorious
possession of the subject lot in the concept of owner for more than 50 years. Thus,
they prayed that the land be registered in their names as co-owners.
Petitioners, Marcelo Sr.s children by his third marriage, opposed said application
alleging that Lot 1243 had been acquired by the deceased Marcelo Reyes, Sr. by
purchase from a certain Juan Aranda. Hence, said lot should be awarded to them as
their fathers lawful heirs.
During trial proceedings, SOCORRO REYES VDA. DE POBLETE, an octogenarian,
testified that Lot No. 1243 was given to her by her father, Marcelo Reyes, Sr. in
1932, by way of a deed of donation which was destroyed when her house was
burned sometime in 1980. Due to failure to present the alleged deed of donation,
trial court dismissed the petition for registration.
However, Court of Appeals considered private respondents’ contention that even if
the donation may have been invalid, the same could still serve as basis for
acquisitive prescription. Consequently, the appellate court reversed the trial court’s
decision and ordered the issuance of a decree of registration over Lot 1243 in favor
of private respondents.
ISSUE:
Whether or not petitioners are entitled to the property in spite of the alleged
donation of said property to private respondents
RULING:
The petition was denied.
The appellate court, upon meticulous review of the records, found that private
respondents’ possession of Lot 1243 since 1934 was adverse, continuous, open,
public, peaceful and uninterrupted, and in the concept of an owner. This case was
filed only in 1991. All this time, Socorro was exercising acts of dominion over the
land such as enjoying its fruits to the exclusion of all others, having the land
cadastrally surveyed in her name and faithfully paying realty taxes on Lot 1243 in
her name. Assuming but not conceding that there existed an implied trust between
the parties, Socorro’s aforementioned acts of dominion clearly repudiated such
trust. It is the essence of the statute of limitations that, whether the party had the
right to the possession or not, if he entered under the claim of such right and
remained in possession for the period required for acquisitive prescription, the
right of action of a party claiming title is barred by that adverse possession. The
right given by the statute of limitations does not depend on and has no necessary
connection to the validity of the claim under which the possession is held.
The donation of Lot 1243 to Socorro was made in 1932. She took possession of the
land immediately thereafter. Under the Code of Civil Procedure which was then in
force, ten years of adverse possession by the person claiming to be the owner, in
whatever way such occupancy may have commenced, shall vest in the actual
possessor of the land a full and complete title.
4.) Restar vs. Cichon, G.R. 161720, 11/22/05
5.) Heirs of Crisologo vs. Rañon, G.R. 171068, 9/5/07
FONTA
6. Aguirre v. Court of Appeals, 421 SCRA 310*
FACTS: Leocadio Medrano and his first wife Emilia owned a piece of land. After the
death of Emilia, Leocadio married his second wife Miguela. When Leocadio died, all
his heirs agreed that Sixto Medrano, a child of the first marriage, should manage
and administer the said property. After Sixto died, his heirs learned that he had
executed an Affidavit of Transfer of Real Property in which he falsely stated that he
was only heirs of Leocadio. Sixto, then living, was able to sell the property to Maria
Bacong a portion of the property, and another portion to Tiburcio Balitaan. Maria
Bacong later sold the said portion to Rosendo Bacong. Petitioners, all heirs of
Leocadio who were affected by the sale demanded reconveyance of the portions
sold by Sixto but the 3 vendees refused. So, petitioners sued them seeking the
nullity of the documents and partition. The vendees contended that they acquired
the property under the valid deed of sale and petitioners ‘cause of action was bared
by laches and prescription. Tiburcio also contended that he is an innocent
purchaser for value.
ISSUE: Whether or not there was a valid sale made by a co-owner (Sixto) without
the consent of the other co-owners.
RULING: A sale by a co-owner of the whole property as his will affect only his own
share but not those of the other co-owners who did not consent to the sale (Art.
493, NCC). It clearly provides that the sale or other disposition affects only the
seller’s share pro indiviso, and the transferee gets only what corresponds to his
grantor’s share in the partition of the property owned in common. Since a co-owner
is entitled to sell his undivided share, a sale of the entire property by one co-owner
without the consent of the other co-owner is NOT NULL AND VOID; only the rights
of the co-owner-seller are transferred, thereby making the buyer a co-owner of the
property. The proper action in cases like this is not for the nullification of the sale or
for the recovery of possession of the things owned in common from the third
person who substituted the co-owner or co-owners who alienated their shares, but
the DIVISION of the common property as if it continued to remain in the possession
of the co-owners who possessed and administered it. (Mainit v. Bandoy). It is clear
therefore that the deed of sale executed by Sixto in favor of Tiburcio Balitaan is
valid conveyance only insofar as the share of Sixto in the co-ownership is
concerned.
As we have enunciated in Salvador v. CA (1995), to wit: this Court has held
that the possession of a co-owner is like that of a trustee and shall not be regarded
as adverse to the other co-owners but in fact beneficial to all of them. Acts which
may be considered adverse to strangers may not be considered adverse in so far as
co-owners are concerned. A mere silent possession by a co-owner, his receipts of
rentals, fruits or profits from the property, the erection of buildings and fences and
planting of trees thereon, and the payment of land taxes, cannot serve as proof of
exclusive ownership, if it is not borne out by clear and convincing evidence that he
exercised such acts of possession which unequivocally constituted an ouster or
deprivation of the rights of the other co-owners.
Thus, in order that a co-owner’s possession may be deemed adverse to the
cetui que trust or the other co-owners, the following elements must concur: (1) that
he has performed unequivocal acts of repudiation amounting to an ouster of the
cetui que trust or the other co-owners; (2) that such positive acts of repudiation
have been known to the cestui que trust or the other co-owners; and (3) that the
evidence thereon must be clear and convincing. Tested against these guidelines, the
respondents failed to present competent evidence that the acts of Sixto adversely
and clearly repudiate the existing co-ownership among the heirs of Leocadio
Medrano.
Respondent’s reliance on the tax declaration in the name of Sixto Medrano
is unworthy of credit since we have held on several occasions that tax declarations
by themselves do not conclusively prove title to land. Further, respondents failed to
show that the Affidavit executed by Sixto to the effect that he is the sole owner of
the subject property was known or made known to the other co-heirs of Leocadio
Medrano.
7.) Vda. De Gualberto vs. Go, G.R. 139843, 7/21/05
FACTS: Petitioners are the heirs of the late Generoso Gualberto, former registered
owner of a parcel of land situated at Redor Street, Barangay Redor, Siniloan, Laguna
under Transfer Certificate of Title (TCT) No. 9203, containing an area of 169.59
square meters, more or less, and declared for taxation purposes under Tax
Declaration No. 4869.
In 1965, the subject parcel of land was sold by Generoso Gualberto and his wife,
herein petitioner Consuelo Natividad Vda. De Gulaberto, to respondents’ father Go
S. Kiang for P9, 000.00, as evidenced by a deed entitled "Kasulatan ng Bilihang
Tuluyan" dated January 15, 1965, which deed appears to have been duly notarized
by then Municipal Judge Pascual L. Serrano of the Municipal Court of Siniloan,
Laguna and recorded in his registry.
On April 1, 1973, petitioner Consuelo executed an Affidavit attesting to the fact that
the aforementioned parcel of land had truly been sold by her and her husband
Generoso to the spouses Go S. Kiang and Rosa Javier Go, as borne by the said
"Kasulatan". Evidently, the affidavit was executed for purposes of securing a new
tax declaration in the name of the spouses Go.
In December, 1973, in a case for Unlawful Detainer filed by a certain Demetria
Garcia against herein petitioners, the latter alleged that therein plaintiff Garcia "is
not a real party in interest and therefore has no legal capacity and cause of action
to sue the defendants; that the real parties in interest of the parcel of commercial
land and the residential apartment in question are Generoso Gualberto and Go S.
Kiang respectively as shown by TCT No. 9203 issued by the Register of Deeds of
Laguna."
In a Forcible Entry case filed by respondents against petitioners before the
Municipal Circuit Trial Court of Siniloan-Famy, Siniloan, Laguna docketed as Civil
Case No. 336, amdecision was rendered in favor of respondents, which decision was
affirmed in toto by the RTC of Siniloan, Laguna. When elevated to the Court of
Appeals, that same decision was affirmed by the latter court, saying that "the Court
finds that the judgment of the court a quo affirming the previous judgment of the
municipal court is supported by sufficient and satisfactory evidence and there is no
reason for the Court to hold otherwise."
In June 14, 1978, Original Certificate of Title (OCT) No. 1388 was issued in the name
of respondent Rosa Javier Go, wife of Go S. Kiang. the petitioner filed a complaint
for Conveyance, Accion Publiciana, and Quieting of Title with Damages in the
Regional Trial Court at Siniloan, Laguna in August 10, 1995. The petition was denied
by the RTC. On appeal to the Court of Appeals, the CA affirmed the decision of the
trial court.
ISSUES:
1. Whether or not the right of a registered owner to the demand the
return of his property can be lost by prescription or laches.
 2. Whether or not an action for reconveyance of property based on
a nullity of title prescribes.
RULING:
Yes, the right of a registered owner to the demand the return of his property can be
lost by prescription or laches.
Yes, an action for reconveyance of property based on a nullity of title prescribes.
Once again, the Supreme Court ruled in Consuelo Vda. de Gualberto, et al. vs.
Francisco Go, et al., G.R. No. 139843, July 21, 2005 that an action for reconveyance
of real property based on implied or constructive trust is not barred by the 10-year
period of prescription only if the plaintiff is in actual, continuous and peaceful
possession of the property involved. In DBP vs. CA, 331 SCRA 267 (2000) it was said
that generally an action for reconveyance based on an implied or constructive trust
prescribes in 10-years from the date of issuance of the decree of registration.
However, this rule does not apply when the plaintiff is in actual possession of the
land.
If property is acquired through mistake or fraud, the person obtaining it is, by force
of law, considered a trustee of an implied trust for the benefit of the person from
whom the property comes. (Art. 1456, NCC). Thus, the law thereby creates the
obligation of the trustee to reconvey the property and the title thereto in favor of
the true owner. The prescriptive period for the reconveyance for fraudulently
registered real property is ten (10) years reckoned from the date of the issuance of
the certificate of title.
Here, it was never established that petitioners remained in actual possession of the
property after their father’s sale thereof to Go S. Kiang in 1965 and up to the filing
of their complaint in this case on August 10, 1995. On the contrary, the trial court’s
factual conclusion is that respondents had actual possession of the subject property
ever since. The action for reconveyance in the instant case is, therefore, not in the
nature of an action for quieting of title, and is not imprescriptible.
8.) Solid Homes vs. Tan, G.R. 145156, 29/05
9.) Mariano vs. Petron, G.R. 169438, 1/21/10
VALENCIA
10. Sagrada Orden de Predicadores del Santisimo Rosario Filipinas vs. National
Coconut
FACTS: During the Japanese occupation the property was acquired by a Japanese
corporation by the name of Taiwan Tekkosho and a title was issued in its name. On
1946, after liberation, the Alien Property Custodian of the United States took
possession, control and custody thereof under the enemy act. During that time the
property was occupied by Copra Export Management under a custodian
Agreement, when it vacated the property NACOCO occupied it. In 1948 NACOCO
rented one third of the property to Dioscoro Sarile for P 500 per month and later on
became P1,000, but he did not pay and action against him was brought. However, it
is not shown if the judgement was executed.
Plaintiff made a claim to his property before the Alien Property Custodian
but was denied, it brought an action to the court of first instance to annul the sale
of property to Taiwan Tekkosho and recover its possession. The case did not come
for trial because the sale was void ab initio, for being executed under duress,
threats and intimidation, and title is reissued in favour of the plaintiff. Alien
Property Custodian is free from responsibility or liability for any acts of NACOCO.
The court rendered its judgement releasing defendant from liability, but reversing
to the plaintiff the right to recover from NACOCO reasonable rentals for the use and
occupation of the premises.
NACOCO did not contest its liabilities from the time it occupied until
February 1949, but resisted only prior to that date. They contend that they
occupied the property in good faith and had no obligation to pay the rentals.
Judgement rendered in favour of plaintiff, defendant to pay P3,000 from August
1946 to February 1949.
ISSUE: Whether or not NACOCO is to pay the rentals from August 1946 to February
1949.
RULING: NO. NACOCO is not liable to pay the rentals from August 1946 to February
1949. According to Article 1157 of the civil code obligations arises from law,
contracts, quasi contracts, crime or negligence. In this case, Defendant-appellant is
not guilty of any offense at all, because it entered the premises and occupied it with
the permission of the entity which had the legal control and administration thereof,
the Allien Property Administration. Neither was there any negligence on its part.
There was also no privity (of contract or obligation) between the Alien Property
Custodian and the Taiwan Tekkosho, which had secured the possession of the
property from the plaintiff-appellee by the use of duress, such that the Alien
Property Custodian or its permittee (defendant-appellant) may be held responsible
for the supposed illegality of the occupation of the property by the said Taiwan
Tekkosho. The Allien Property Administration had the control and administration of
the property not as successor to the interests of the enemy holder of the title, the
Taiwan Tekkosho, but by express provision of law (Trading with the Enemy Act of
the United States, 40 Stat., 411; 50 U.S.C.A., 189). Neither is it a trustee of the
former owner, the plaintiff-appellee herein, but a trustee of then Government of
the United States in its own right, to the exclusion of, and against the claim or title
of, the enemy owner. From August, 1946, when defendant-appellant took
possession, to the late of judgment on February 28, 1948, Allien Property
Administration had the absolute control of the property as trustee of the
Government of the United States, with power to dispose of it by sale or otherwise,
as though it were the absolute owner. Therefore, even if defendant-appellant were
liable to the Allien Property Administration for rentals, these would not accrue to
the benefit of the plaintiff-appellee, the owner, but to the United States
Government.
11. Casupanan v. Laroya, G.R. No. 145391, August 26, 2002
FACTS: This an accident that involves two vehicles, one driven by Laroya and the
other owned by Capitulo, driven by Casupanan. As a result two cases were filed,
criminal case for reckless imprudence by Laroya and a civil case for quasi delict by
Capitulo and Casupanan in the Municipal Circuit Trial Court of Capas. Laroya filed a
motion to dimiss the civil case on the ground of forum shopping considering that a
criminal case was still pending. MCTC granted and dismissed the civil case. Filed a
Motion for Reconsideration stating that it is a separate civil action which can
proceed independently from the criminal case. It was denied. Then Casupanan and
Capitulo filed a petition for certiorari in the RTC and it assailed the order of MCTC’s
order of dismissal. RTC states that the order of dismissal by MCTC is final order
nwhich disposes of a case and therefore the proper remedy should be an appeal. A
special civil action for certiorari is not a substitute for a lost appeal.
ISSUE: Whether or not an accused in a pending criminal case can validly file,
simultaneously and independently, a separate civil action for quasi delict against
private complainant in the criminal case.
HELD:YES. An accused in a criminal case can file a separate civil case for quasi delict
against complainant in the criminal case. Under Section 1 of the present Rule 111,
what is deemed instituted with the criminal action is only the action to recover civil
liability arising from the crime or ex-delicto. All the other civil actions under Articles
32, 33, 34 and 2176 of the Civil Code are no longer deemed instituted, and may be
filed separately and prosecuted independently even without any reservation in the
criminal action. The failure to make a reservation in the criminal action is not a
waiver of the right to file a separate and independent civil action based on these
articles of the Civil Code. In this case the civil case filed by Casupanan and Capitulo
is proper. Therefore the civil case is reinstated.
 NOTE: the offended party can file two separate suits for the same act or
omission. The first a criminal case where the civil action to recover civil
liability ex-delicto is deemed instituted, and the other a civil case for quasi-
delict - without violating the rule on non-forum shopping. The two cases
can proceed simultaneously and independently of each other. The
commencement or prosecution of the criminal action will not suspend the
civil action for quasi-delict. The only limitation is that the offended party
cannot recover damages twice for the same act or omission of the
defendant. In most cases, the offended party will have no reason to file a
second civil action since he cannot recover damages twice for the same act
or omission of the accused. In some instances, the accused may be
insolvent, necessitating the filing of another case against his employer or
guardians.
12.) Mendoza vs. Arrieta, 91 SCRA 113 (1975)
Facts: The records show that private respondent Jose Kuan Sing was "side-swiped
by a vehicle in the evening of July 7, 1971 in lznart Street, Iloilo City" The
respondent Court of Appeals concurred in the findings of the court a quo that the
said vehicle which figured in the mishap, a Volkswagen (Beetle type) car, was then
driven by petitioner Edgar Jarantilla along said street toward the direction of the
provincial capitol, and that private respondent sustained physical injuries as a
consequence. Petitioner was accordingly charged before the then City Court of
Iloilo for serious physical injuries thru reckless imprudence in Criminal Case No.
47207 thereof. Private respondent, as the complaining witness therein, did not
reserve his right to institute a separate civil action and he intervened in the
prosecution of said criminal case through a private prosecutor. Petitioner was
acquitted in said criminal case "on reasonable doubt". private respondent filed a
complaint against the petitioner in the former Court of First Instance of Iloilo,
Branch IV, docketed therein as Civil Case No. 9976, and which civil action involved
the same subject matter and act complained of in Criminal Case No. 47027. In his
answer filed therein, the petitioner alleged as special and affirmative detenses that
the private respondent had no cause of action and, additionally, that the latter's
cause of action, if any, is barred by the prior judgment in Criminal Case No. 47207
inasmuch as when said criminal case was instituted the civil liability was also
deemed instituted since therein plaintiff failed to reserve the civil aspect and
actively participated in the criminal case.
Issue: Whether the private respondent, who was the complainant in the criminal
action for physical injuries thru reckless imprudence and who participated in the
prosecution thereof without reserving the civil action arising from the act or
omission complained of, can file a separate action for civil liability arising from the
same act or omission where the herein petitioner was acquitted in the criminal
action on reasonable doubt and no civil liability was adjudicated or awarded in the
judgment of acquittal.
Held: Yes, Apropos to such resolution is the settled rule that the same act or
omission (in this case, the negligent sideswiping of private respondent) can create
two kinds of liability on the part of the offender, that is, civil liability ex delicto and
civil liability ex quasi delicto. Since the same negligence can give rise either to a
delict or crime or to a quasi-delict or tort, either of these two types of civil liability
may be enforced against the culprit, subject to the caveat under Article 2177 of the
Civil Code that the offended party cannot recover damages under both types of
liability. 19
The Court, expressly declared that the failure of the therein plaintiff to reserve his
right to file a separate civil case is not fatal; that his intervention in the criminal case
did not bar him from filing a separate civil action for damages, especially
considering that the accused therein was acquitted because his guilt was not
proved beyond reasonable doubt; that the two cases were anchored on two
different causes of action, the criminal case being on a violation of Article 365 of the
Revised Penal Code while the subsequent complaint for damages was based on a
quasi-delict; and that in the judgment in the criminal case the aspect of civil liability
was not passed upon and resolved. Consequently, said civil case may proceed as
authorized by Article 29 of the Civil Code.
13.) San Ildefonso Lines, Inc. v. Court of Appeals, G.R. No. 119771, April 24, 1998
Facts :
A Toyota Lite Ace Van being driven by its owner Annie U. Jao and a passenger bus of
herein petitioner San Ildefonso Lines, Inc. (hereafter, SILI) figured in a vehicular
mishap at the intersection of Julia Vargas Avenue and Rodriguez Lanuza Avenue in
Pasig, Metro Manila, totally wrecking the Toyota van and injuring Ms. Jao and her
two (2) passengers in the process. A criminal case was thereafter filed with the
Regional Trial Court of Pasig on September 18, 1991 charging the driver of the bus,
herein petitioner Eduardo Javier, with reckless imprudence resulting in damage to
property with multiple physical injuries.About four (4) months later,herein private
respondent Pioneer Insurance and Surety Corporation (PISC), as insurer of the van
and subrogee, filed a case for damages against petitioner SILI with the Regional Trial
Court of Manila, seeking to recover the sums it paid the assured under a motor
vehicle insurance policy as well as other damages, With the issues having been
joined upon the filing of the petitioners' answer to the complaint for damages and
after submission by the parties of their respective pre-trial briefs, petitioners filed
on September 18, 1992 a Manifestation and Motion to Suspend Civil Proceedings
grounded on the pendency of the criminal case against petitioner Javier in the Pasig
RTC and the failure of respondent PISC to make a reservation to file a separate
damage suit in said criminal action.
Issue:
Whether or not a criminal case was filed, can an independent civil action based on
quasi-delict under Article 2176 of the Civil Code be filed if no reservation was made
in the said criminal case?
Held:
We rule for petitioners. On the chief issue of "reservation", at the fore is Section 3,
Rule 111 of the Rules of Court which reads:"Sec. 3. When civil action may proceed
independently. -- In the cases provided for in Articles 32, 33, 34 and 2176 of the
Civil Code of the Philippines, the independent civil action which has been reserved
may be brought by the offended party, shall proceed independently of the criminal
action, and shall require only a preponderance of evidence."
There is no dispute that these so-called "independent civil actions" based on the
aforementioned Civil Code articles are the exceptions to the primacy of the criminal
action over the civil action as set forth in Section 2 of Rule 111. However, it is easily
deducible from the present wording of Section 3 as brought about by the 1988
amendments to the Rules on Criminal Procedure -- particularly the phrase " which
has been reserved" -- that the "independent" character of these civil actions does
not do away with the reservation requirement. In other words, prior reservation is a
condition sine qua non before any of these independent civil actions can be
instituted and thereafter have a continuous determination apart from or
simultaneous with the criminal action.
14.) Heirs of Simon v. Chan, G.R. No. 157547, February 23, 2011
• On July 11, 1997, the Office of the City Prosecutor of Manila filed in the
Metropolitan Trial Court of Manila (MeTC) an information charging the late Eduardo
Simon (Simon) with a violation of BP 22, docketed as Criminal Case No. 275381
entitled People v. Eduardo Simon.
• More than three years later, or on August 3, 2000, respondent Elvin Chan
commenced in the MeTC in Pasay City a civil action for the collection of the
principal amount of P336,000.00, coupled with an application for a writ of
preliminary attachment (docketed as Civil Case No. 915-00).
• On August 9, 2000, the MeTC in Pasay City issued a writ of preliminary
attachment, which was implemented on August 17, 2000 through the sheriff
attaching a Nissan vehicle of Simon.
• On August 17, 2000, Simon filed an urgent motion to dismiss with
application to charge plaintiffs attachment bond for damages
• On August 29, 2000, Chan opposed Simons urgent motion to dismiss with
application to charge plaintiffs attachment bond for damages,
• On October 23, 2000, the MeTC in Pasay City granted Simon the urgent
motion to dismiss with application to charge plaintiffs attachment bond for
damages. The MTC cites the grounds of litis pendentia and that the case for sum of
money is one based on fraud and hence falling under Article 33 of the Civil Code,
still prior reservation is required
• Chans motion for reconsideration was denied as well as his appeal with the
RTC. On the CA, Chan's appeal was granted.
ISSUE: Whether or not Chan's civil action to recover the amount of the unfunded
check (Civil Case No. 915-00) was an independent civil action.
RULING: NO. There is no independent civil action to recover the civil liability arising
from the issuance of an unfunded check prohibited and punished under Batas
Pambansa Bilang 22 (BP 22).
This is clear from Rule 111 of the Rules of Court which relevantly provides: "The
criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include
the corresponding civil action. No reservation to file such civil action separately
shall be allowed."
Supreme Court Circular 57-97 also provides that: "1. The criminal action for
violation of Batas Pambansa Blg. 22 shall be deemed to necessarily include the
corresponding civil action, and no reservation to file such civil action separately
shall be allowed or recognized."
15. Rodriquez v. People, G.R. No. 155531-34, July 29, 2005
FACTS:
 The Honorable Assistant City Prosecutor Rossana S. Morales-
Montojo of Quezon City Prosecutors Office issued her Resolution
in I.S. No. 01-15902, the dispositive portion of which reads as
follows:
o Premises considered, there being PROBABLE
CAUSE to charge respondent for ESTAFA under
Article 315 paragraph 2(d) as amended by PD
818 and for Violation of Batas Pambansa Blg. 22,
it is respectfully recommended that the
attached Information be approved and filed in
Court.
 As a consequence thereof, separate informations were separately
filed against herein [p]etitioner before proper [c]ourts, for Estafa
and [v]iolation of Batas Pambansa Blg. 22.
 Upon payment of the assessed and required docket fees by the
[p]rivate [c]omplainant, the informations for [v]iolation of Batas
Pambansa Blg. 22 against herein [p]etitioner were filed and
raffled to the Metropolitan Trial Court of Quezon City, Branch 42,
docketed as Criminal Cases Nos. 0108033 to 36.
 On the other hand, the informations for [e]stafa cases against
herein [p]etitioner were likewise filed and raffled to the Regional
Trial Court of Quezon City, Branch 104, docketed as Criminal
Cases Nos. 01-106256 to 59.
 Petitioner through counsel filed in open court before the [p]ublic
[r]espondent an Opposition to the Formal Entry of Appearance of
the Private Prosecutor dated 14 June 2002.
 The [p]ublic [r]espondent court during the said hearing noted the
Formal Entry of Appearance of Atty. Felix R. Solomon as [p]rivate
[p]rosecutor as well as the Opposition filed thereto by herein
[p]etitioner. x x x.
 As ordered by the Court, [p]rivate [c]omplainant through counsel
filed her Comment to the Opposition of herein [p]etitioner.
 The [p]ublic [r]espondent court issued the first assailed Order
allowing the appearance of the [p]rivate [p]rosecutor in the
above-entitled criminal cases upon payment of the legal fees
pursuant to Section 1 of Rule 141 of the Rules of Court, as
amended.
 Accused through counsel filed a Motion for Reconsideration dated
26 July 2002.
 The [p]ublic [r]espondent court issued the second assailed Order
denying the Motion for Reconsideration of herein [p]etitioner.
ISSUE:
Whether or not a [p]rivate [p]rosecutor can be allowed to intervene and
participate in the proceedings of the above-entitled [e]stafa cases for the purpose
of prosecuting the attached civil liability arising from the issuance of the checks
involved which is also subject mater of the pending B.P. 22 cases.
RULING:
Based on the foregoing rules, an offended party may intervene in the
prosecution of a crime, except in the following instances: (1) when, from the nature of
the crime and the law defining and punishing it, no civil liability arises in favor of a
private offended party; and (2) when, from the nature of the offense, the offended
parties are entitled to civil indemnity, but (a) they waive the right to institute a civil
action, (b) expressly reserve the right to do so or (c) the suit has already been
instituted. In any of these instances, the private complainants interest in the case
disappears and criminal prosecution becomes the sole function of the public
prosecutor. None of these exceptions apply to the instant case. Hence, the private
prosecutor cannot be barred from intervening in the estafa suit.
True, each of the overt acts in these instances may give rise to two criminal
liabilities -- one for estafa and another for violation of BP 22. But every such act of issuing a
bouncing check involves only one civil liability for the offended party, who has sustained only
a single injury.
Thus, the possible single civil liability arising from the act of issuing a
bouncing check can be the subject of both civil actions deemed instituted with the
estafa case and the BP 22 violation prosecution. In the crimes of both estafa and
violation of BP 22, Rule 111 of the Rules of Court expressly allows, even automatically
in the present case, the institution of a civil action without need of election by the
offended party. As both remedies are simultaneously available to this party, there
can be no forum shopping.
In the present cases before us, the institution of the civil actions with the
estafa cases and the inclusion of another set of civil actions with the BP 22 cases
are not exactly repugnant or inconsistent with each other. Nothing in the Rules
signifies that the necessary inclusion of a civil action in a criminal case for
violation of the Bouncing Checks Law precludes the institution in an estafa case of
the corresponding civil action, even if both offenses relate to the issuance of the
same check.
The purpose of Section 1(b) of Rule 111 is explained by Justice Florenz D.
Regalado (ret.), former chairman of the committee tasked with the revision of the
Rules of Criminal Procedure. He clarified that the special rule on BP 22 cases was
added, because the dockets of the courts were clogged with such litigations; creditors
were using the courts as collectors. While ordinarily no filing fees were charged for
actual damages in criminal cases, the rule on the necessary inclusion of a civil action
with the payment of filing fees based on the face value of the check involved was laid
down to prevent the practice of creditors of using the threat of a criminal
prosecution to collect on their credit free of charge.
Clearly, it was not the intent of the special rule to preclude the prosecution
of the civil action that corresponds to the estafa case, should the latter also be filed.
The crimes of estafa and violation of BP 22 are different and distinct from each
other. There is no identity of offenses involved, for which legal jeopardy in one case
may be invoked in the other. The offenses charged in the informations are perfectly
distinct from each other in point of law, however nearly they may be connected in
point of fact.
What Section 1(b) of the Rules of Court prohibits is the reservation to file
the corresponding civil action. The criminal action shall be deemed to include the
corresponding civil action. [U]nless a separate civil action has been filed before the
institution of the criminal action, no such civil action can be instituted after the
criminal action has been filed as the same has been included therein. In the instant
case, the criminal action for estafa was admittedly filed prior to the criminal case
for violation of BP 22, with the corresponding filing fees for the inclusion of the
corresponding civil action paid accordingly.
Furthermore, the fact that the Rules do not allow the reservation of civil
actions in BP 22 cases cannot deprive private complainant of the right to protect
her interests in the criminal action for estafa. Nothing in the current law or rules on
BP 22 vests the jurisdiction of the corresponding civil case exclusively in the court
trying the BP 22 criminal case.[
In promulgating the Rules, this Court did not intend to leave the offended
parties without any remedy to protect their interests in estafa cases. Its power to
promulgate the Rules of Court is limited in the sense that rules shall not diminish,
increase or modify substantive rights. Private complainants intervention in the
prosecution of estafa is justified not only for the prosecution of her interests, but
also for the speedy and inexpensive administration of justice as mandated by the
Constitution.[
The trial court was, therefore, correct in holding that the private
prosecutor may intervene before the RTC in the proceedings for estafa, despite the
necessary inclusion of the corresponding civil action in the proceedings for violation
of BP 22 pending before the MTC. A recovery by the offended party under one
remedy, however, necessarily bars that under the other. Obviously stemming from
the fundamental rule against unjust enrichment this is in essence the rationale for
the proscription in our law against double recovery for the same act or omission.
WHEREFORE, the Petition is DISMISSED and the assailed Order AFFIRMED.
16.) Daluraya v. Oliva, G.R. No. 210148, December 8, 2014
FACTS:
On January 4, 2006, Daluraya was charged in an Information for Reckless
Imprudence Resulting in Homicide in connection with the death of Marina Oliva.
Records reveal that sometime in the afternoon of January 3, 2006, Marina Oliva was
crossing the street when a Nissan Vanette, bearing plate number UPN-172 and
traversing EDSA near the Quezon Avenue flyover in Quezon City, ran her over.
Unfortunately, Marina died, prompting her daughter, herein respondent Marla
Oliva (Marla), to file a criminal case for Reckless Imprudence Resulting in Homicide
against Daluraya, the purported driver of the vehicle.
After the prosecution rested its case, Daluraya filed an Urgent Motion to Dismiss
(demurrer) which the MeTC granted and the case was dismissed. Daluraya was not
held criminally nor civilly liable. The RTC affirmed the MeTC decision. However,
when appealed to the CA, it held that the MeTC’s Order showed that Daluraya’s
acquittal was based on the fact that the prosecution failed to prove his guilt beyond
reasonable doubt. As such, Daluraya was not exonerated from civil liability. Hence,
this petition for review.
ISSUE:
Whether or not the CA was correct in finding Daluraya civilly liable for Marina
Oliva’s death despite his acquittal in the criminal case for Reckless Imprudence
Resulting in Homicide on the ground of insufficiency of evidence.
HELD:
NO. In Manantan v. Court of Appeals, the Court elucidates on the two kinds of
acquittal recognized by our law as well as on the different effects of acquittal on the
civil liability of the accused:
a.) Acquittal on the ground that the accused is not the author of the act or
omission complained of--- a person who has been found to be not the
perpetrator of any act or omission cannot and can never be held liable for such
act or omission
b.) Acquittal based on reasonable doubt on the guilt of the accused--- even if the
guilt of the accused has not been satisfactorily established, he is not exempt
from civil liability which may be proved by preponderance of evidence only.
Furthermore, In Dayap v. Sendiong, the Court explained further:
The extinction of the penal action does not carry with it the extinction of the civil
liability where:
(a) the acquittal is based on reasonable doubt as only preponderance of evidence is
required;
(b) the court declares that the liability of the accused is only civil; and
(c) the civil liability of the accused does not arise from or is not based upon the
crime of which the accused is acquitted. However, the civil action based on delict
may be deemed extinguished if there is a finding on the final judgment in the
criminal action that the act or omission from which the civil liability may arise did
not exist or where the accused did not commit the acts or omission imputed to him.
In this case, records disclose that Daluraya’s acquittal was based on the
fact that "the act or omission from which the civil liability may arise did not exist" in
view of the failure of the prosecution to sufficiently establish that he was the
author of the crime ascribed against him. Consequently, his civil liability should be
deemed as non-existent by the nature of such acquittal.
17.) Lumantas v. Calapiz, G.R. No. 163753, January 15, 2014
FACTS:
Hanz Calapiz had to undergo emergency appendectomy where his doctor was Dr.
Encarnacion Lumantas. Before the operation, Dr. Lumantas suggested to the child’s
parents that Hanz should also undergo circumcision at no added cost to spare him
the pain. Unfortunately, after that, Hanz experienced pain in his penis and
eventually had to be confined due to the abscess found in his organ. It was later on
found that his urethra was damaged and he had to undergo three different
operations to repair it.
Hanz’s parents charged Dr. Lumantas with reckless imprudence resulting to serious
physical injuries where the latter was eventually acquitted for insufficiency of
evidence. However, the RTC ruled that the petitioner was liable for moral damages
because there was a preponderance of evidence showing that Hanz had received
the injurious trauma from his circumcision by the petitioner. The petitioner
appealed the decision but the CA sustained the RTC decision; hence this appeal to
the SC.
ISSUE:
WON the petitioner should still be civilly liable despite his acquittal of the crime of
reckless imprudence resulting in serious physical injuries.
HELD:
YES. In Manantan v. Court of Appeals, the Court elucidates on the two kinds of
acquittal recognized by our law as well as on the different effects of acquittal on the
civil liability of the accused:
a. Acquittal on the ground that the accused is not the author of the act or
omission complained of--- a person who has been found to be not the
perpetrator of any act or omission cannot and can never be held liable for
such act or omission
b. Acquittal based on reasonable doubt on the guilt of the accused--- even if
the guilt of the accused has not been satisfactorily established, he is not
exempt from civil liability which may be proved by preponderance of
evidence only.
In this case, although the Prosecution’s evidence was insufficient to sustain a
judgment of conviction against the petitioner for the crime charged, the RTC and
the CA both found that Hanz had sustained the injurious trauma from the hands of
the petitioner on the occasion of or incidental to the circumcision, and that the
trauma could have been avoided. Hence, by mere preponderance of evidence, the
petitioner is held civilly liable despite his acquittal in the crime charged against him.
18.) Asilo vs. Bombasi, G.R. Nos. 159017-18, March 9, 2011
FACTS:
On 15 March 1978, Private Respondent Visitacion’s late mother Marciana
Vda. De Coronado (Vda. De Coronado) and the Municipality of Nagcarlan, Laguna
(represented by the then Municipal Mayor Crisostomo P. Manalang) entered into a
lease contract whereby the Municipality allowed the use and enjoyment of
property comprising of a lot and a store located at the corner of Coronado and E.
Fernandez Sts. at Poblacion, Nagcarlan, Laguna, in favor of the respondent’s mother
for a period of twenty (20) years beginning on 15 March 1978 until 15 March 1998,
extendible for another 20 years.
Visitacion took over the store when her mother died sometime in 1984.
Sometime in 1986, a fire razed the public market of Nagcarlan and although the
store remained intact and stood strong, the sanguniang bayan issued a resolution
to demolish the same.
On 19 August 1994, Visitacion, together with her husband Cesar Bombasi
(Spouses Bombasi) filed with the Regional Trial Court of San Pablo City, Laguna a
Civil Case for damages with preliminary injunction against the Municipality of
Nagcarlan, Laguna, Mayor Demetrio T. Comendador, Paulino S. Asilo, Jr., and
Alberto S. Angeles. Spouses Bombasi, thereafter, filed a criminal complaint against
Mayor Comendador, Asilo and Angeles for violation of Sec. 3(e) of Republic Act No.
3019 otherwise known as the "Anti-Graft and Corrupt Practices Act" before the
Office of the Ombudsman.
During the pendency of the case, Alberto S. Angeles died on 16 November
1997. Accordingly, the counsel of Angeles filed a motion to drop accused Angeles.
The death of Mayor Comendador followed on 17 September 2002. As a result, the
counsel of the late Mayor filed on 3 March 2003 a Manifestation before the
Sandiganbayan informing the court of the fact of Mayor Comendador’s death.
On 28 April 2003, the Sandiganbayan rendered a decision finding accused Demetrio
T. Comendador and Paulino S. Asilo, Jr. guilty beyond reasonable doubt of violation
of Sec. 3(e) of Republic Act. No. 3019 as amended and civilly liable to pay jointly and
severally plaintiff P437,900.00 as actual damages for the destruction of the store;
P100,000.00 as moral damages; P30,000.00 as attorney’s fees, and to pay the cost
of the suit. The counsel for the late Mayor filed its Motion for Reconsideration on
12 May 2003 alleging that the death of the late Mayor had totally extinguished both
his criminal and civil liability. The Sandiganbayan on its Resolution granted the
Motion insofar as the extinction of the criminal liability is concerned and denied the
extinction of the civil liability holding that the civil action is an independent civil
action.
Hence, these Petitions for Review on Certiorari.
ISSUE:
WON the death of the late Mayor had totally extinguished both his criminal and civil
liability.
HELD:
NO. In People v. Bayotas:
Death of the accused pending appeal of his conviction extinguishes his
criminal liability as well as the civil liability based solely thereon. As opined by
Justice Regalado, in this regard, "the death of the accused prior to final judgment
terminates his criminal liability and only the civil liability directly arising from and
based solely on the offense committed, i.e., civil liability ex delicto in senso
strictiore."
Corollarily, the claim for civil liability survives notwithstanding the death of
(the) accused, if the same may also be predicated on a source of obligation other
than delict. Article 1157 of the Civil Code enumerates these other sources of
obligation from which the civil liability may arise as a result of the same act or
omission: a) Law b) Contracts c) Quasi-contracts d) Acts or omissions punished by
law; and e) Quasi-delicts.
In this case, the death of Mayor Comendador during the pendency of the
case could have extinguished the civil liability if the same arose directly from the
crime committed. However, in this case, the civil liability is based on another source
of obligation, the law on human relations. There was a violation of the right to
private property of the Spouses Bombasi. The accused public officials should have
accorded the spouses the due process of law guaranteed by the Constitution and
New Civil Code. Notably, the fact that a separate civil action precisely based on due
process violations was filed even ahead of the criminal case, is complemented by
the fact that the deceased plaintiff Comendador was substituted by his widow,
herein petitioner Victoria who specified in her petition that she has "substituted
him as petitioner in the above captioned case." Section 1, Rule III of the 1985 Rules
in Criminal Procedure mentioned in Bayotas is, therefore, not applicable. Truly, the
Sandiganbayan was correct when it maintained the separate docketing of the civil
and criminal cases before it although their consolidation was erroneously based on
Section 4 of Presidential Decree No. 1606 which deals with civil liability "arising
from the offense charged."
19.) People vs. Amistoso, G.R. No. 201447, August 28, 2013
FACTS:
Accused-appellant Amistoso was found guilty of qualified rape under Article 266-A,
paragraph (1)(a), in relation to Article 266-B, paragraph (1), of the Revised Penal
Code for raping his daughter. The RTC sentenced him to the capital penalty of
DEATH; to pay the victim the sum of PhP75,000.00 as indemnity; to pay the said
victim the sum of Fifty Thousand Pesos PhP50,000.00 as for moral damages, and to
pay the costs. The Court of Appeals affirmed Amistoso’s conviction for qualified
rape but modified the penalties imposed. Insisting upon his innocence, Amistoso
appealed to this Court. In its Decision dated January 9, 2013, the Court affirmed
with modification the judgment of conviction against Amistoso, expressly making
him liable for interest on the amounts of damages awarded. However, Roque,
Officer-in-Charge, Inmate Documents and Processing Division of the Bureau of
Corrections, informed the Court that Amistoso had died on December 11, 2012. Yet,
the Public Attorney’s Office, which represented Amistoso and which was apparently
also unaware of its client’s demise, still filed a Motion for Reconsideration of the
Court’s Decision dated January 9, 2013. In a Resolution dated March 20, 2013, the
Court required Roque to submit a certified true copy of Amistoso’s Death Certificate
within 10 days from notice and deferred action on the Motion for Reconsideration
filed by the PAO pending compliance with the Court’s former directive.
ISSUE: Whether or not the civil liability is extinguished by reason of the death of
Amistoso.
RULING: Article 89 of the Revised Penal Code provides: “ART. 89. How criminal
liability is totally extinguished. – Criminal liability is totally extinguished: x x x 1. By
the death of the convict, as to the personal penalties; and as to pecuniary penalties,
liability therefore is extinguished only when the death of the offender occurs before
final judgment. x x x In People v. Bayotas,18 the Court laid down the rules in case the
accused dies prior to final judgment: 1. Death of the accused pending appeal of his
conviction extinguishes his criminal liability as well as the civil liability based solely
thereon. As opined by Justice Regalado, in this regard, "the death of the accused
prior to final judgment terminates his criminal liability and only the civil liability
directly arising from and based solely on the offense committed, i.e., civil liability ex
delicto in senso strictiore." x x x
Given the foregoing, it is clear that the death of the accused pending appeal of his
conviction extinguishes his criminal liability, as well as his civil liability ex delicto.
Since the criminal action is extinguished inasmuch as there is no longer a defendant
to stand as the accused, the civil action instituted therein for recovery of civil
liability ex delicto is ipso facto extinguished, grounded as it is on the criminal case.
Undeniably, Amistoso’s death on December 11, 2012 preceded the promulgation by
the Court of its Decision on January 9, 2013. WHEREFORE, the Court RESOLVES to:
(1) NOTE PIS Lansangan’s letter dated June 20, 2013 providing the Court with a
certified true copy of Amistoso’s Death Certificate; (2) SET ASIDE its Decision dated
January 9, 2013 and DISMISS Criminal Case No. 10106 before the RTC of Masbate
City, Branch 48 by reason of Amistoso’s death on December 11, 2012; and (3) NOTE
WITHOUT ACTION the Motion for Reconsideration of the Court’s Decision dated
January 9, 2013 filed by the PAO given the Court’s actions in the preceding
paragraphs. SO ORDERED.
ADDITIONAL
20.) Mendoza v. Sps. Gomez, G.R. No. 160110, June 18, 2014
FACTS:
As a result of a vehicular collision resulting from the driver’s negligence,
respondents suffered physical injuries and the Isuzu truck sustained extensive
damage. Hence, this case for damages. Respondents argued that although the
registered owner of the bus was Cirilo Enriquez, who had the bus attached with
Mayamy Transportation Company under the so called “kabit system.” Respondents
then impleaded both Lim and Enriquez.
ISSUE:
Whether or not Lim, as the registered owner of the bus may be held liable under
the doctrine of vicarious liablitity or imputed negligence.
RULING:
Yes. Mendoza’s employer may also be held liable under the doctrine of vicarious
liability or imputed negligence. Under such doctrine, a person who has not
committed the act or omission which caused damage or injury to another may
nevertheless be held civilly liable to the latter either directly or subsidiarily under
certain circumstances. In our jurisdiction, vicarious liability or imputed negligence is
embodied in Article 2180 of the Civil Code and the basis for damages in the action
under said article is the direct and primary negligence of the employer in the
selection or supervision, or both, of his employee.
21.) PSBA vs. CA, 205 SCRA 729 (1992)
FACTS
A stabbing incident occurred within the premises of petitioner Philippines
School of Business Administration (PSBA) which caused the death of one of
its student, Carlitos Bautista the spouse’s respondents child. The assailants
were found to be outsiders and not members of the school. Respondent
spouses filed a suit for damages against the PSBA and its corporate officer.
The respondent posits that PSBA is liable for their son’s untimely demise
due to PSBA’s alleged negligence, recklessness and lack of security
precautions, means and methods before, during and after the attack on
the victim.S
Petitioner filed a Motion to Dismiss before the trial court on grounds that
as an academic institution, they are beyond the ambit of the rule stated in
Article 2180 of the Civil Code. Said Motion was denied, as well as the
 subsequent Motion for Reconsideration. On appeal, the CA affirmed the
RTC Decision.
ISSUE:
Whether PSBA should be held liable for the damages?
HELD
Yes, the PSBA is liable for damages but not under Article 2180.
HELD
The Court ruled PSBA is liable for damages because when an academic
institution accepts students for enrollment, there is established a contract
between them, resulting in bilateral obligations which both parties are
bound to comply with. It becomes the implicit or “built-in” obligation of
the institution to provide their students with an atmosphere that promotes
or assists in attaining its primary undertaking of imparting knowledge.
Article 2180 in conjunction with Article 2176 of the Civil Code only applies
in the rule of in loco parentis where when the damage have been caused
or inflicted by pupils or students of the educational institution while in its
custody.
In this case, PSBA failed to comply with such obligation through its
negligence in keeping a secure environment for its students. Therefore, the
PSBA is liable for damages arising from tort in their contractual relation
with the deceased.
22.) Amadora vs. CA, 160 SCRA 315 (1988
FACTS
Alfredo Amadora, a student of Colegio de San Juan-Recoletos (school),
while he allegedly went to the school to pass a requirement for his
graduation, was shot and killed by Pablo Daffon, another student of the
same school, while inside the school auditorium.
Amadora’s parent then filed a civil action for damages under Article 2180
of Civil Code against the school, its rector, the high school principal, the
dean of the boys, the physics teacher, and the respective parents of Daffon
and two other students.
The CFI found all defendants liable for damages. On appeal, the court itself
reversed its decision citing that Art 2180 of the Civil Code was not
applicable to the impleaded school personnel as it is not a school ‘of arts
and trades’ and that the semester has already ended.
ISSUES
a) Whether the CFI erred in its interpreting that Article 2180 of Civil code
applies only to school of arts and trades?
b) Whether the School, its rector, the high school principal, the dean of the
boys, and or the physics teacher can be held liable for damage under
Article 2180 of Civil Code?
a) Yes, the CFI erred in citing CC Art 2180 as only applicable to academic
institutions of arts and trades.
The court held that there is no substantial distinction between the
academic and non-academic schools insofar as torts committed by their
students are concerned. The student is in the custody of the school
authorities as long as he is under the control and influence of the school
and within its premises, whether the semester has not yet begun or has
already ended.
The court further held that under the said article it is the teachers or
persons of authority of the school that shall be liable for damages caused
by their student so long as they remain in their custody. The school may be
held liable for the acts of its teachers or personnel under the principle of
respondeat superior but it can invoke it had exercised diligence of bonus
paterasfamilias as a defense to exculpate itself.
In this case, the CFI’s literal construction of the provision of Art 2180 was
invalid. Therefore, the CFI erred in reversing its decision not holding the
school liable for damages.
b) The Court cleared the School, its rector, the high school principal, the dean
of the boys and the physics teacher from civil liability.
The rector, the high school principal and the dean of boys – none of them
was the teacher in charge as previously as mentioned in Art 2180
The physics teacher, show no negligent in enforcing discipline upon
Daffon, his absence during the tragedy happened cannot be considered
against him because at first place he is not supposed or required to be on
the school on that day.
Lastly, the School cannot be held liable under Art 2180 because only
teachers and or head of the school of arts and trades can be made
responsible for the damage caused by the student or apprentice.