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Title of the Case: John E.R Reyes and Merwin Joseph Reyes vs. Orico Doctolero et al.

Gr. 185597, August 2, 2017

Nature of Action: Vicarious Liability

Facts:

1. The case arose from an altercation between private respondent Orico Doctolero, a security
guard of respondent grandeur Security and Services Corporation (Grandeur) and petitioners
John E.R Reyes and Mervin Joseph Reyes in the parking area of respondent Makati Cinema
Square (MCS).
2. As a result of heated argument regarding a traffic violation, Doctolero wrestled with John who
tried to get his gun. This caused the gun to fire off and hit John’s leg. Mervin then ran after
Doctolero but was shot on the stomach by security guard Avila.
3. Petitioners filed with RTC Manila a Complaint for damages against respondent Doctolero and
Avila and their employer Grandeur, charging the latter with negligence in the selection and
supervision of its employees.
4. They likewise impleaded MCS on the ground that it was negligent in getting Grandeur’s services.
In their complaint, petitioners prayed that respondents be ordered, jointly and severally, to pay
them actual, moral and exemplary damages, attorney’s fees and litigation costs.
5. RTC held that Grandeur was able to shoe that it observed diligence of a good father of the family
during the existence of employment when it conducted regular and close supervision of its
security guards assigned to various clients. CA dismissed petitioners’ appeal.

Issue:

1. Whether MCS may be held vicariously liable for the damages caused by respondents?
2. Whether Grandeur may be held vicariously liable for the damages caused by respondents?

Ruling:

1. No. As a general rule, one is only responsible for his own act or omission. This general rule is laid
down in Article 2176 of the Civil Code which provides:
Article 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter. (1902a)

The law, however, provides for exceptions when it makes certain persons liable for the act or
omission of another.

One exception is an employees who is made vicariously liable for the tort committed by his
employees under Art. 2180(5) “Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their assigned tasks, even though
the former are not engaged in any business or industry.”
Here, although the employer is not the actual tortfeasor, the law makes him viariously liable on
the basis of the civil law principle of pater familias for failure to exercise due care and vigilance
over the acts of one’s subordinates to prevent damage to another.

It must be stressed, however, that the above rule is applicable only if there is an employer-
employees relationship.

We find no employer-employee relationship between MCS and respondent guards. The guards
were merely assigned by Grandeur to secure MCS’ premises pursuant to their contract. Thus,
MCS cannot be held vicariously liable for damages caused by these guards’ acts or omission.

2. No. On the other hand, paragraph 5 of article 2180 of the Civil Code may be applicable to
Grandeur, it being undisputed that respondent guards were its employees.

When the employee causes damages due to his own negligence while performing his own
duties, there arises the juris tantum presumption that the employer is negligent, rebuttable only
by proof of observance of the diligence of a good father of a family. The “diligence of good
father” referred to in the last paragraph of Article 2180 means diligence in the selection and
supervision of employees.

To rebut the presumption of negligence, Grandeur must prove two things: first, that it had
exercised due diligence in the selection of respondents Doctolero and Avil, and second, that
after hiring Doctolero and avila, grandeur had exercised due diligence in supervising them.

The question of diligent supervision, however, depends on the circumstances of employment.


Ordinarily, evidence demonstrating that the employer has exercised diligent supervision of its
employee during the performance of the latter’s assigned tasks would be enough to relieve him
the liability imposed by Article 2180 in relation to Article 2176 of the Civil Code.

Considering all the evidence borne by the records, we find that Grandeur has sufficiently
exercised the diligence of a good father of a family in the selection and supervision of its
employess. Hence, having successfully overcome the legal presumption of negligence, it is
relieved of liability from the negligent acts of its employees.
Tile of the Case: Manuel Bakunawa III vs. Nora Reyes Bakunawa

Gr. 217993, August 9, 2017

Nature of the case: Validity of Marriage

Facts:

1. Manuel and Nora met in 1974 at the University of the Philippines where they were students and
became sweethearts. When Nora became pregnant, she and Manuel got married on July 26,
1975 at St. Ignatius Church, Camp Aguinaldo, Quezon City.
2. Manuel had to stop his studies to help his father in the family’s construction business.
Manuel was assigned to provincial projects and came home only during weekends. This setup
continued even as Nora gave birth to their eldest child. However, whenever Manuel came back
from his provincial assignments, he chose to spend his limited time with friends and girlfriends
instead of his family. Nora resented this and they started quarreling about Mauel’s behavior.
Worse, Manuel depended on his father and on Nora for their family’s needs.
3. In 1976, Manuel and Nora lived separately from Manuel's parents. It was during this period that
Manuel first observed Nora's passiveness and laziness; she was moody and mercurial. Their
house was often dirty and disorderly.
4. On May 9, 1977, Nora gave birth to their second child. However, nothing changed in their
relationship.
5. In 1985, Manuel, upon Nora's request, bought a house for her and their children. After Manuel
spent a few nights with them in the new house, Nora became pregnant again and thereafter
gave birth to their third child.
6. On June 19, 2008, Manuel filed a petition for declaration of nullity of marriage with the Regional
Trial Court (RTC) of Quezon City, on the ground that he and Nora are psychologically
incapacitated to comply with the essential obligations of marriage.
7. Manuel presented a psychiatrist, Dr. Cecilia Villegas (Dr. Villegas), who testified that Manuel has
Intermittent Explosive Disorder, characterized by irritability and aggressive behavior that is not
proportionate to the cause.
8. RTC granted the petition declaring the marriage null and void under article 36. Nora appealed to
CA arguing that RTC erred in finding that the testimony of the psychiatrist is sufficient to prove
the parties’ psychological incapacity.

ISSUE:

Whether the validity of the marriage of the parties on the ground of psychological incapacity be
proved by psychological evaluation report of a psychiatrist?
Held:

No. As the CA correctly ruled, the totality of evidence presented by Manuel comprising of his
testimony and that of Dr. Villegas, as well as the latter's psychological evaluation report, is
insufficient to prove that he and Nora are psychologically incapacitated to perform the essential
obligations of marriage.

Dr. Villegas' conclusion that Manuel is afflicted with Intermittent Explosive Disorder and that Nora
has Passive Aggressive Personality Disorder which render them psychologically incapacitated under
Article 36 of the Family Code, is solely based on her interviews with Manuel and the parties' eldest
child, Moncho. Consequently, the CA did not err in not according probative value to her
psychological evaluation report and testimony.

In Republic of the Philippines v. Galang, the Court held that "[i]f the incapacity can be proven by
independent means, no reason exists why such independent proof cannot be admitted to support a
conclusion of psychological incapacity, independently of a psychologist's examination and report."

In Taring v. Taring, et al., the Court stated that:

“Other than from the spouses, such evidence can come from persons intimately related to them,
such as relatives, close friends or even family doctors or lawyers who could testify on the allegedly
incapacitated spouses' condition at or about the time of marriage, or to subsequent occurring
events that trace their roots to the incapacity already present at the time of marriage.”

In this case, the only person interviewed by Dr. Villegas aside from Manuel for the spouses'
psychological evaluation was Moncho, who could not be considered as a reliable witness to
establish the psychological incapacity of his parents in relation to Article 36 of the Family Code, since
he could not have been there at the time his parents were married.
Title of the case: Dr. Restituto Buenviaje vs. Sps. Jovito and Lydia Salonga

GR. 216023, October 5, 2016

Nature of the case: Specific Performance

Facts:

1. On May 29, 1997, Jebson, an entity engaged in the real estate business, through its
Executive Vice President, Banez, entered into a Joint Venture Agreement6 (JV A) with Sps.
Salonga.
2. On June 9, 1997, Jebson entered into a Contract to Sell (subject CTS) with Buenviaje over
Unit 5 for a total consideration of Pl 0,500,000.00, without the conformity of Sps. Salonga.
3. Out of the purchase price, P7,800,000.00 was paid through a "swapping arrangement,"
whereby Buenviaje conveyed to Jebson a house and lot, golf share, while the remaining
balance was paid periodically.
4. However, despite full payment of the contract price, Jebson was unable to complete Unit 5
in violation of its contractual stipulation to finish the same within twelve (12) months from
the date of issuance of the building permit. Thus, in April 1999, Buenviaje formally
demanded the immediate completion and delivery of Unit 5, to which Jebson cited the 1997
financial crisis as the reason for the delay.
5. On May 27, 2002, Buenviaje filed before the HLURB Regional Field Office IV (HLURB-RIV) a
Complaint for Specific Performance with Damages and Attorney's Fees, against Jebson,
Banez, and Sps. Salonga (respondents).
6. In the alternative, he prayed for the rescission of the subject CTS, and the return of all
payments made thereunder, with interest at 24% per annum (p.a.), as well as the house and
lot, and golf share pursuant to the "swapping arrangement”.
7. For their part, Sps. Salonga averred that they were not liable to the complainants since there
was no privity of contract between them, adding that the contracts to sell were
unenforceable against them as they were entered into by Jebson without their conformity,
in violation of the JVA.

Issue:

1. Whether the remedy of specific performance should be granted in Buenviaje’s favor was
proper.
2. Whether Sps. Salonga are liable with Jebson and banez to Buenviaje for the completion of
the construction and delivery of the unit

Held:

1. Yes. Specific performance and recission are alternative remedies available to a party who is
aggrieved by a counter-party's breach of a reciprocal obligation. This is provided for in
Article 1191 of the Civil Code, which partly reads:
Art. 1191. 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.

The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.

Specific performance is defined as "[t]he remedy of requiring exact performance of a


contract in the specific form in which it was made, or according to the precise terms agreed
upon."49 It pertains to "[t]he actual accomplishment of a contract by a party bound to fulfill
it."50

On the other hand, resolution is defined as the "unmaking of a contract for a legally
sufficient reason x x x."[Resolution] does not merely terminate the contract and release the
parties from further obligations to each other, but abrogates the contract from its inception
and restores the parties to their original positions as if no contract has been made.

Relatedly, it is observed that Buenviaje's alternative prayer for resolution is textually


consistent with that portion of Article 1191 of the Civil Code which states that an injured
party "may also seek rescission, even after he has chosen fulfillment, if the latter should
become impossible." Nevertheless, the impossibility of fulfillment was not sufficiently
demonstrated in the proceedings conducted in this case.

As the HLURBBOC pointed out, "[t]here is no finding that specific performance has become
impossible or that there are insuperable legal obstacles to the completion of the
constructed units so as to justify [resolution.

2. No. At this juncture, it should be further made clear that the imputation of joint or solidary
liability against a particular person -such as that insistently claimed against Sps. Salonga by
Buenviaje -first presupposes the existence of that person's obligation. On the active side,
the joint or solidary nature of an obligation is an aspect of demandability; it pertains to the
extent of a creditor's entitlement to demand fulfillment against any or all of his debtors
under one particular obligation.
Based on case law, a solidary obligation is one in which each of the debtors is liable for the
entire obligation, and each of the creditors is entitled to demand the satisfaction of the
whole obligation from any or all of the debtors. On the other hand, a joint obligation is one
in which each debtors is liable only for a proportionate part of the debt, and the creditor is
entitled to demand only a proportionate part of the credit from each debtor.

As already mentioned, no source of obligation under the subject CTS can be traced to Sps.
Salonga as they were clearly non-parties thereto. Therefore, without such extant obligation, the
possibility of holding them liable in solidum with Jebson under the said contract is out of the
question.
Title of the Case: Philippine National Bank vs. Venancio Reyes, Jr.

GR. 212483, October 5, 2016

Nature of the case: Disposition or encumbrance of conjugal properties

Facts:

1. Venancio is married to Lilia since 1973. During their union, they acquired three (3) parcels of
land in Malolos, Bulacan.
2. The properties were mortgaged to Philippine National Bank on August 25, 1994 to secure a
loan. According to Philippine National Bank, the Reyes Spouses contracted and duly
consented to the loan.
3. When the Reyes Spouses failed to pay the loan obligations, Philippine National Bank
foreclosed the mortgaged real properties. An auction sale was conducted. Philippine
National Bank emerged as the highest bidder, and a certificate of sale was issued in its favor.
4. On September 22, 1998, Venancio filed before the Regional Trial Court a Complaint (or
Annulment of Certificate of Sale and Real Estate Mortgage against Philippine National Bank.
5. In assailing the validity of the real estate mortgage, Venancio claimed that his wife
undertook the loan and the mortgage without his consent and his signature was falsified on
the promissory notes and the mortgage. Since the three (3) lots involved were conjugal
properties, he argued that the mortgage constituted over them was void.
6. Regional Trial Court of Malolos, Bulacan ordered the annulment of the real estate mortgage
and directed Lilia to reimburse Philippine National Bank the loan amount with interest.

Issue:

Whether the conjugal partnership can be held liable for the loan contracted unilaterally by Lilia
C. Reyes.

Held:

No. There are two scenarios considered: one is when the husband, or in this case, the wife,
contracts a loan to be used for the family business and the other is when she acts as a surety or
guarantor. If she is a mere surety or guarantor, evidence that the family benefited from the loan
need to be presented before the conjugal partnership can be held liable. On the other hand, if
the loan was taken out to be used for the family business, there is no need to prove actual
benefit. The law presumes the family benefited from the loan and the conjugal partnership is
held liable.

According to petitioner, the Regional Trial Court found that the loan was used as additional
working capital for respondent's printing business.

Since the real estate mortgage was an encumbrance attached to a conjugal property without
the consent of the other spouse, it is void and legally inexistent. Although petitioner cannot
foreclose the mortgage over the conjugal property in question, it can still recover the loan
amount from the conjugal partnership.

In Philippine National Bank v. Banatao "a mortgage is merely an accessory agreement and does
not affect the principal contract of loan. The mortgages, while void, can still be considered as
instruments evidencing the indebtedness.

The last paragraph of Article 121 of the family Code points to the "subsidiary but solidary liability
of the separate properties" of the spouses for liabilities enumerated in the Article. This Article,
similar to Article 94 of the Family Code governing the Absolute Community of Property regime,
explicitly holds the spouses solidarily liable with each other if the conjugal properties are not
enough to answer for the liabilities. In this case, if the conjugal properties of the Reyes Spouses
are not enough to answer for the loan, petitioner can recover the remaining unpaid balance
from the separate properties of either respondent or his wife Lilia.
Title of the case: Julia Lim Rosario, Mercedes Lim Custodio vs. Alfonso Lim

GR. 206534, October 5, 2016

Nature of the Case: Ownership

Facts:

1. Sometime in 1973, Brigida Aquino Lim acquired a leasehold right over a government-owned
lot. Later, Brigida and his son, respondent Alfonso Lim, allegedly entered into an agreement
on March 10, 1973 for the construction of a building on said property, which would be fully
financed by Lim. Alfonso thus administered the construction of a commercial building.
2. On March 23, 1992, Brigida executed an Affidavit of Waiver of Rights, categorically waiving,
renouncing, and transferring all her rights and interests over the leased lot in Alfonso's
favor. On November 29, 1995, Brigida executed a Deed of Waiver of Rights reiterating her
waiver of rights over the leased lot and the erected building in favor of her son.
3. However, on March 23, 1996, Brigida executed another affidavit assailing the validity of the
previously executed documents and stating that she and her husband, Luis, were the real
owners of the property and that Alfonso never caused and paid for the construction of the
subject building.
4. On February 8, 2001, Brigida died intestate. Subsequently, Alfonso and his sisters,
petitioners Julia Lim Rosario, Mercedes Lim Custodio, Norma Licardo, and Leila Espiritu
executed a Deed of Extrajudicial Settlement for the estates of their parents without
including the disputed property. However, after six (6) years, or on November 20, 2007,
petitioners filed a Complaint for Judicial Partition of Real Estate, Accounting with Damages
and Writ of Preliminary Injunction.
5. CA reversed the decision on appeal.

Issue:

Whether the property in question should be included in Brigida’s estate and be divided in equal
shares among her children.

Held:

Yes. Upon a close examination of the available records of the case at bar, the Court affirms the
findings of the courts below that, indeed, Brigida acquired the disputed property during the
subsistence of her marriage to Luis. It likewise appears that the title to said property remains in
Brigida's name.

The appellate court went further by saying that clearly, it was never Brigida's intention to give
the exclusive ownership of the contested lot to Alfonso, and the title to the same was never
transferred in anybody else's name.

The CA concluded that Alfonso was the owner of the building simply based on the assailed
agreement dated March 10, 1973 between Alfonso and Brigida, building contract with a certain
contractor, Romeo Laigo, tax declarations, and various acknowledgment receipts and
commercial invoices for construction materials. But while the CA utilized said affidavit to uphold
Brigida's ownership of the lot, it ignored the other portions which categorically declared that the
money used for, the development of the building had actually come from Brigida and L4is and
not from Alfonso, who was jobless and had no sufficient source of income at that time to
finance the construction of a building. Said affidavit indubitably exposes the fact that Brigida
never intended to transfer the sole ownership of the contested property to her only son, but
wanted it to benefit all of her children, and that whatever document she may have had
executed in the past was fraudulently acquired and not obtained with her valid consent.
Title of the case: Ferro Chemicals, Inc. vs. Antonio M. Garcia et al and Chemical Industries of
the Philippines, Inc.

Gr. 168134, October 5, 2016

Facts of the case:

1. Ferro Chemicals Incorporated (Ferro Chemicals), is a domestic corporation duly authorized


by existing law to engage in business in the Philippines. It is represented in this action by its
President, Ramon M. Garcia.
2. Chemical Industries of the Philippines Inc. (Chemical Industries), on the other hand, is also a
domestic corporation duly organized and existing by virtue of Philippine laws. Antonio
Garcia, one of the parties in the instant case, is the Chairman of the Board of Directors
(BOD) of Chemical Industries and a brother of Ferro Chemical's President, Ramon Garcia.
3. On 15 July 1988, Antonio Garcia and Ferro Chemicals entered into a Deed of Absolute Sale
and Purchase of Shares of Stock.
4. On 17 January 1989, Antonio Garcia entered into a Compromise Agreement with Philippine
Investments System Organization (PISO), Bank of the Philippine Islands (BPI), Philippine
Commercial International Bank (PCIB), Rizal Commercial Banking Corporation (RCBC) and
Land Bank of the Philippines (LBP) (collectively known as Consortium Banks). The settlement
was entered in connection with the Surety Agreements previously contracted by Antonio
Garcia and Dynetics Corporation with the Consortium Banks.
5. With Antonio Garcia and Dynetics' failure to comply with the compromise agreement, the
Consortium Banks, on 18 July 1989, filed a Motion for Execution.10 Thus, the RTC, issued a
Writ of Execution on 11 August 1989, to enforce the court-approved compromise against
Antonio Garcia and Dynetics.
6. After having found that Antonio Garcia violated the terms of the purchase agreement by
falsely representing to Ferro Chemicals that the subject shares were free from liens and
encumbrances other than the ones mentioned in the agreement, the trial court found him
liable under Article 1170 of the New Civil Code which states that "those who in the
performance of their obligations are guilty of fraud, negligence or delay, and those who in
any manner contravene the tenor thereof, are liable for damages."

Issue:

Whether or not Antonio Garcia was guilty of bad faith from the inception of the sale of contract
until his compromise with Consortium Banks.

Held:

No.

We do not agree.

Fraud, in its general sense, is deemed to comprise anything calculated to deceive, including all
acts, omissions, and concealment involving a breach of legal or equitable duty, trust or
confidence justly reposed, resulting in the damage to another, or by which an undue and
unconscionable advantage is taken of another. It is a question of fact and the circumstances
constituting it must be alleged and proved in the court below.42

In the case of Tankeh v. DBP, et al., 43 this Court reviewed the doctrines of fraud in relation to
contractual relations and the quantum of proof necessary to prove fraud and establish liability
therefor:

"Fraud is defined in Article 1338 of the Civil Code as:

x x x .fraud when, through insidious words or machinations of one of the contracting parties, the
other is induced to . enter into a contract which, without them, he would not have agreed to.

Under Article 1344, the fraud must be serious to annul or avoid a contract and render it
voidable. This fraud or deception must be so material that had it not been present, the
defrauded party would not have entered into the contract. However, Article 1344 also provides
that if fraud is incidental, it follows that this type of fraud is not serious enough so as to render
the original contract voidable.
Title of the case: Melencio Domingo vs. Sps. Genaro Molina and Elena Molina

Gr. 200274, April 20, 2016

Nature of the case: Sale of Conjugal Property, Co-ownership

Facts:

1. In June 15, 1951, the spouses Anastacio and Flora Domingo bought a property in Camiling,
Tarlac, consisting of a one-half undivided portion over an 18, 164 square meter parcel of
land.
2. During his lifetime, Anastacio borrowed money from the respondent spouses Genaro and
Elena Molina (spouses Molina). In 1978 or 10 years after Flora’s death, Anastacio sold his
interest over the land to the spouses Molina to answer for his debts.
3. Melecio, one of the children of Anastacio and Flora, learned of the transfer and filed a
Complaint for Annulment of Title and Recovery of Ownership (Complaint) against the
spouses Molina on May 17, 1999.8

4. Melecio claims that Anastacio gave the subject property to the spouses Molina to serve as
collateral for the money that Anastacio borrowed. Anastacio could not have validly sold the
interest over the subject property without Flora’s consent, as Flora was already dead at the
time of the sale.
5. The spouses Molina asserted that Anastacio surrendered the title to the subject property to
answer for his debts and told the spouses Molina that they already own half of the land.
The spouses Molina have been in possession of the subject property before the title was
registered under their names and have religiously paid the property’s real estate taxes.

6. The Regional Trial Court (RTC) dismissed15 the case because Melecio failed to establish his
claim that Anastacio did not sell the property to the spouses Molina.

7. The RTC also held that Anastacio could dispose of conjugal property without Flora’s consent
since the sale was necessary to answer for conjugal liabilities.

Issue:

1. Whether the sale of a conjugal property to the spouses Molina without Flora’s consent is valid
and legal

Held:

1. Yes.
We do not find Melecio’s argument meritorious.
There is no dispute that Anastacio and Flora Domingo married before the Family Code’s
effectivity on August 3, 1988 and their property relation is a conjugal partnership.

Conjugal partnership of gains established before and after the effectivity of the Family Code are
governed by the rules found in Chapter 4 (Conjugal Partnership of Gains) of Title IV (Property
Relations Between Husband and Wife) of the Family Code. This is clear from Article 105 of the
Family Code which states:
x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains
already established between spouses before the effectivity of this Code, without
prejudice to vested rights already acquired in accordance with the Civil Code or other
laws, as provided in Article 256.

The conjugal partnership of Anastacio and Flora was dissolved when Flora died in 1968,
pursuant to Article 175 (1) of the Civil Code22 (now Article 126 (1) of the Family Code).

Article 130 of the Family Code requires the liquidation of the conjugal partnership upon death of
a spouse and prohibits any disposition or encumbrance of the conjugal property prior to the
conjugal partnership liquidation, to quote:
Article 130. Upon the termination of the marriage by death, the conjugal partnership
property shall be liquidated in the same proceeding for the settlement of the estate of
the deceased. If no judicial settlement proceeding is instituted, the surviving spouse
shall liquidate the conjugal partnership property either judicially or extrajudicially within
one year from the death of the deceased spouse. If upon the lapse of the six month
period no liquidation is made, any disposition or encumbrance involving the conjugal
partnership property of the terminated marriage shall be void. x x x (emphases supplied)

While Article 130 of the Family Code provides that any disposition involving the conjugal
property without prior liquidation of the partnership shall be void, this rule does not apply since
the provisions of the Family Code shall be “without prejudice to vested rights already acquired
in accordance with the Civil Code or other laws.”

As to Co-ownership
The OCT annotation of the sale to the spouses Molina reads that “[o]nly the rights, interests and
participation of Anastacio Domingo, married to Flora Dela Cruz, is hereby sold, transferred, and
conveyed unto the said vendees for the sum of ONE THOUSAND PESOS (P1,000.00) which
pertains to an undivided one-half (1/2) portion and subject to all other conditions specified in
the document x x x”25 (emphases supplied). At the time of the sale, Anastacio’s undivided
interest in the conjugal properties consisted of: (1) one-half of the entire conjugal properties;
and (2) his share as Flora’s heir on the conjugal properties.

Anastacio, as a co-owner, had the right to freely sell and dispose of his undivided interest, but
not the interest of his co-owners. Consequently, Anastactio’s sale to the spouses Molina without
the consent of the other coowners was not totally void, for Anastacio’s rights or a portion
thereof were thereby effectively transferred, making the spouses Molina a co-owner of the
subject property to the extent of Anastacio’s interest.
Title of the Case: Rosario Victoria and Elma Pidlaoan vs. Normita Jacob Pidlaoan et al

Gr. 196470, April 20, 2016

Nature of the Case: Co-ownership

Facts:

1. The petitioners Rosario Victoria (Rosario) and Elma lived together since 1978 until Rosario
left for Saudi Arabia.
2. In 1984, Elma bought a parcel of land with an area of 201 square meters in Lucena City.
3. Elma allegedly mortgaged the house and lot to a certain Thi Hong Villanueva in 1989.4
When the properties were about to be foreclosed, Elma allegedly asked for help from her
sister-in-law, Eufemia Pidlaoan (Eufemia), to redeem the property.5 On her part, Eufemia
called her daughter abroad, Normita, to lend money to Elma. Normita agreed to provide
the funds.
4. Elma allegedly sought to sell the land.7 When she failed to find a buyer, she offered to sell it
to Eufemia or her daughter.
5. Elma executed a deed of sale entitled “Panananto ng Pagkatanggap ng Kahustuhang Bayad”
transferring the ownership of the lot to Normita.
6. When Elma and Normita were about to have the document notarized, the notary public
advised them to donate the lot instead to avoid capital gains tax.11 On the next day, Elma
executed a deed of donation in Normita’s favor and had it notarized.
7. Rosario found out about the donation when she returned to the country a year or two after
the transaction.
8. In 1997, the petitioners filed a complaint for reformation of contract. The petitioners
argued that: first, they co-owned the lot because both of them contributed the money used
to purchase it; second, Elma and Normita entered into an equitable mortgage because they
intended to constitute a mortgage over the lot to secure Elma’s loan but they executed a
deed of sale instead; and third, the deed of donation was simulated because Elma executed
it upon the notary public’s advice to avoid capital gains tax.
9. The RTC ruled that Rosario and Elma co-owned the lot and the house.17 Thus, Elma could
only donate her one-half share in the lot. CA reversed the RTC’s decision and dismissed the
petitioners’ complaint.

Issue:

1. Whether Rosario is a co-owner?


2. Whether the transaction between Elma and Normita was a sale, a donation, or an equitable
mortgage.

Held:

1. We hold that mere construction of a house on another’s land does not create a co-
ownership. Article 484 of the Civil Code provides that coownership exists when the
ownership of an undivided thing or right belongs to different persons. Verily, a house and a
lot are separately identifiable properties and can pertain to different owners, as in this case:
the house belongs to Rosario and the lot to Elma.

Article 448 of the Civil Code provides that if a person builds on another’s land in good
faith, the land owner may either: (a) appropriate the works as his own after paying
indemnity; or (b) oblige the builder to pay the price of the land. The law does not force
the parties into a co-ownership. A builder is in good faith if he builds on a land believing
himself to be its owner and is unaware of the defect in his title or mode of
acquisition.30

As applied in the present case, Rosario’s construction of a house on the lot did not create a co-
ownership, regardless of the value of the house. Rosario, however, is not without recourse in
retrieving the house or its value. The remedies available to her are set forth in Article 448 of the
Civil Code.

2. Second, on the nature of the transaction between Elma and Normita, we find that the deed
of donation was simulated and the parties’ real intent was to enter into a sale.

In the present case, Elma and Normita’s contemporaneous and subsequent acts show that
they were about to have the contract of sale notarized but the notary public ill-advised them
to execute a deed of donation instead. Following this advice, they returned the next day to
have a deed of donation notarized. Clearly, Elma and Normita intended to enter into a sale
that would transfer the ownership of the subject matter of their contract but disguised it as
a donation. Thus, the deed of donation subsequently executed by them was only relatively
simulated.

Considering that the deed of donation was relatively simulated, the parties are bound to their
real agreement. The records show that the parties intended to transfer the ownership of the
property to Normita by absolute sale. This intention is reflected in the unnotarized document
entitled “Panananto ng Pagkatanggap ng Kahustuhang Bayad.”

An equitable mortgage is one which, although lacking in some formality or other requisites
demanded by statute, nevertheless reveals the intention of the parties to charge real property
as security for a debt, and contains nothing impossible or contrary to law. Articles 1602 and
1604 of the Civil Code provide that a contract of absolute sale shall be presumed an equitable
mortgage if any of the circumstances listed in Article 1602 is attendant.

In the present case, the unnotarized contract of sale between Elma and Normita is denominated
as “Panananto ng Pagkatanggap ng Kahustuhang Bayad.” Its contents show an unconditional
sale of property between Elma and Normita. The document shows no intention to secure a debt
or to grant a right to repurchase.
Title of the case: Renato A. Castillo vs. Lea P. de Leon Castillo

Gr. 189607, April 18, 2016

Nature of the case: Declaration of Nullity of Marriage

Facts:

1. On 25 May 1972, respondent Lea P. De Leon Castillo (Lea) married Benjamin


Bautista (Bautista). On 6 January 1979, respondent married herein petitioner
Renato A. Castillo (Renato).
2. On 28 May 2001, Renato filed before the RTC a Petition for Declaration of Nullity of
Marriage,4 praying that his marriage to Lea be declared void due to her subsisting
marriage to Bautista and her psychological incapacity under Article 36 of the Family
Code. The CA states in its Decision that petitioner did not pursue the ground of
psychological incapacity in the RTC. The reason for this finding by the CA while
unclear, is irrelevant in this Petition.
3. On 22 January 2003, the Regional Trial Court of Parafiaque City, Branch 260
rendered its Decision6 declaring that Lea's first marriage to Bautista was indeed null
and void ab initio.
4. On 12 August 2004, respondent filed a Demurrer to Evidence claiming that the proof
adduced by petitioner was insufficient to warrant a declaration of nullity of their
marriage on the ground that it was bigamous.
5. In a Decision 11 dated 23 March 2007, the RTC declared the marriage between
petitioner and respondent null and void ab initio on the ground that it was a
bigamous marriage under Article 41 of the Family Code.
6. Petitioner moved for reconsideration insofar as the distribution of their properties
were concerned. His motion, however, was denied by the RTC.

Issue: Whether a requirement of judicial decree annulling a marriage celebrated before the effectivity of
the Family code is necessary.

Held:

No.

We deny the Petition.

The validity of a marriage and all its incidents -must be determined in accordance with the law in effect
at the time of its celebration. In this case, the law in force at the time Lea contracted both marriages was
the Civil Code. The children of the parties were also born while the Civil Code was in effect i.e. in 1979,
1981, and 1985. Hence, the Court must resolve this case using the provisions under the Civil Code on
void marriages, in particular, Articles 80,26 81,27 82,28 and 83 (first paragraph);29 and those on
voidable marriages are Articles 83 (second paragraph),30 8531 and 86.
This Court clarified in Apiag v. Cantero41 and Ty v. Court of Appeals, the requirement of a judicial decree
of nullity does not apply to marriages that were celebrated before the effectivity of the Family Code,
particularly if the children of the parties were born while the Civil Code was in force.