Leonen Case Digests - Civil Law

LEONEN CASES
CIVIL LAW CASE DIGESTS

SAN BEDA COLLEGE – ALABANG SCHOOL OF LAW
CENTRALIZED BAR OPERATIONS 2020
ACADEMICS TEAM
Jose Rio E. Sanchez

Chairperson for Academics
Heddrik C. Gonzales Chelsi Maine T. Laxamana

Deputy Deputy
John Leymar C. Magalang
Deputy
Lady Joyce A. Bernardez

Chairperson for Electronic Data Processing
#ParaKayCarlo
SUBJECT HEADS
Carlo Diamond S. Antipuesto Ma. Isabella A. Soriano

Political Law Labor Law
Ezekiel Japhet C. Esguerra Joanna Marie L. Barrozo

Civil Law Taxation Law
Christian Miguel C. Candelaria Natasha Felicia M. Francia

Commercial Law Criminal Law
Ma. Rosalia Emmanuel S. Ladignon Antonio Luis C. Duran

Remedial Law Legal Ethics
ADMINISTRATION
Dr. Ulpiano P. Sarmiento III

Dean
Atty. Anna Marie Melanie B. Trinidad

Vice Dean
Atty. Carlo D. Busmente

Prefect
Atty. Roben B. Cadugo Jr.

Administrative Officer
CIVIL LAW TEAM
Ezekiel Japhet C. Esguerra

Subject Head
Beverly Vyne Hautea

Assistant Subject Head
Alexandre Janus B. Bido

Avy Jude Marie M. Pakingan
Erika Mae D. Fernandez
Fe Esperanza P. Trampe
Jeanne Lavin M. Aguilar
Jorge Brium M. Amarante
Juan Miguel V. Silva
Lea O. Cerrudo
Maria Arielle Samantha T. Alvarez
Marielle B. Sison
Mary Jashmin G. Serquina
Niño Jorge Y. Arevalo
Patricia Mikaela T. Barredo
Rochelle Anne M. Luna
Rohanne Karolle D. Ablang
Ser Lancelot P. Gamboa
Vivienne Nicole V. Lim
NOTICE
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ALABANG SCHOOL OF LAW and SAN BEDA COLLEGE
ALABANG CENTRALIZED BAR OPERATIONS 2020-2021.
It is intended solely for the use of the individuals to which it is

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SAN BEDA COLLEGE ALABANG SCHOOL OF LAW CENTRALIZED
BAR OPERATIONS ACADEMICS COMMITTEE 2020-2021, as
enumerated below, is strictly prohibited.
The following may give consent:

a. Vice Chairperson for Academics and his deputies – all materials
produced by San Beda College Alabang School of Law
Centralized Bar Operations 2020-2021; or
b. Subject heads and assistant subject heads – limited to their
respective subjects only. Prior notice to the Vice Chairperson for
Academics is needed.
Copyright © 2020
SAN BEDA COLLEGE ALABANG SCHOOL OF LAW
SAN BEDA COLLEGE ALABANG SCHOOL OF LAW CENTRALIZED BAR OPERATIONS 2020-2021
All Rights Reserved by the Authors.
TABLE OF CONTENTS
DOCTRINES
IN GENERAL 1
PERSONS AND FAMILY RELATIONS 1
PROPERTY 2
PRESCRIPTION 3
OBLIGATIONS 3
CONTRACTS 4
SPECIAL CONTRACTS 5
LAND TITLES AND DEEDS 6
TORTS 8
DAMAGES 8
SPECIAL LAWS AND REGULATIONS 9
IN GENERAL
MABUGAY-OTAMIAS V. REPUBLIC 12
LORIA V. MUÑOZ 13
RODRIGUEZ V. YOUR OWN HOME DEVELOPMENT CORPORATION 14
PERSONS AND FAMILY RELATIONS
TUPAL V. ROJ 15
DE GUZMAN V. PEOPLE 16
RACHO V. TANAKA 17
ARREZA V. TOYO 18
TANI-DE LA FUENTE V. DE LA FUENTE 19
SANTOS V. SANTOS 20
PHILIPPINE NATIONAL BANK V. REYES 21
MALABANAN V. MALABANAN 22
VITUG V. ABUDA 23
ARA V. PIZARRO 24
ABELLA V. CABAÑERO 25
MILLER V. MILLER 26
PROPERTY
PROVINCIAL ASSESSOR OF AGUSAN DEL SUR V. FILIPINAS PALM OIL PLANTATION, INC 27
PADILLA V. MALICSI 28
REYES V. VALENTIN 29
DPWH V. CITY ADVERTISING VENTURES CORPORATION
PRESCRIPTION
UNIVERSITY OF MINDANAO, INC. V. BANGKO SENTRAL NG PILIPINAS 30

SPOUSES ABOITIZ V. SPOUSES PO 31
PLDT V. CITI APPLIANCE M.C. CORPORATION 32
OBLIGATIONS
DEE HWA LIONG V. ASIAMED SUPPLIES AND EQUIPMENT CORPORATION 33

WELLEX GROUP, INC. V. U-LAND AIRLINES, CO., LTD. 34
PEZA V. PILHINO SALES CORP 35
CAMP JOHN HAY DEVELOPMENT CORP. V. CHARTER CHEMICAL AND COATING CORP. 36
OLIVAREZ REALTY CORPORATION V. CASTILLO 37
CHINATRUST COMMERCIAL BANK V. TURNER 38
DEVELOPMENT BANK OF THE PHILIPPINES V. CLARGES REALTY CORPORATION 39
ARCO PULP AND PAPER V. LIM 40
DEVELOPMENT BANK OF THE PHILIPPINES V. STA. INES MELALE FOREST PRODUCTS CORP. 41
CONTRACTS
SPOUSES LIMSO V. PHILIPPINE NATIONAL BANK 42

ORIENTAL ASSURANCE CORP. V. ONG 43
LUNTAO V. BAP CREDIT GUARANTY CORP. 44
METRO RAIL TRANSIT DEVELOPMENT CORPORATION V. GAMMON PHILIPPINES, INC. 45
TANKEH V. DEVELOPMENT BANK OF THE PHILIPPINES 46
MAKATI TUSCANY CONDOMINIUM V. MULTI-REALTY DEVELOPMENT 47
METROPOLITAN BANK & TRUST CO. V. G&P BUILDERS, INC 48
NATIONAL POWER CORPORATION V. SOUTHERN PHILIPPINES POWER 49
CE CONSTRUCTION CORPORATION V. ARANETA CENTER INC. 50
CEZAR YATCO INC. V. BEL-AIR VILLAGE ASSOCIATION, INC 51
SPECIAL CONTRACTS
SALES
CABRERA V. YSAAC 52
POOLE-BLUNDEN V. UNION BANK 53
AGENCY
SPOUSES YULO V. BPI 54
INTERNATIONAL EXCHANGE BANK V. SPOUSES BRIONES 55
COMPROMISE
MAGSAYSAY MARITIME CORP. V. DE JESUS 56
TEAM IMAGE ENTERTAINMENT INC. V. SOLAR TEAM ENTERTAINMENT INC. 57
GADRINAB V. SALAMANCA 58
CHIQUITA BRANDS INC. V. OMELIO 59
LOAN
SPOUSES ABELLA V. SPOUSES ABELLA 60
PHILIPPINE NATIONAL BANK V. SANTOS 61
LEASE
RACELIS V. SPOUSES JAVIER 62
INTRAMUROS ADMINISTRATION V. OFFSHORE CONSTRUCTION DEVELOPMENT COMPANY 63
LAND TITLES AND DEEDS
REPUBLIC V. HEIRS OF DAQUER 64

AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM V. REPUBLIC 65
CANLAS V. REPUBLIC 66
LA TONDENA, INC. V. REPUBLIC 67
REPUBLIC V. SOGOD DEVELOPMENT CORP. 68
REPUBLIC V. SPOUSES GO 69
REPUBLIC V. SPOUSES NOVAL 70
REPUBLIC V. MALIJAN-JAVIER 71
KAWAYAN HILLS CORP. V. COURT OF APPEALS 72
HEIRS OF LOPEZ V. DEVELOPMENT BANK OF THE PHILS. 73
LEONG V. SEE 74
LAND BANK OF THE PHILIPPINES V. MUSNI 75
SINDOPHIL, INC. V. REPUBLIC 76
CATHAY METAL CORP. V. LAGUNA WEST MULTI-PURPOSE COOPERATIVE, INC. 77
TORTS
ORIENT FREIGHT INTERNATIONAL, INC. V. KEIHIN-EVERETT FORWARDING CO., INC. 78

VISAYAN ELECTRIC COMPANY, INC. V. ALFECHE 79
CARAVAN TRAVEL AND TOURS INTERNATIONAL, INC. V. ABEJAR 80
IMPERIAL V. HEIRS OF SPOUSES BAYABAN 81
DAMAGES
LAO V. LIM 82
SHARPE SEA PERSONNEL, INC., ET. AL. V. MABUNAY 83
MANILA ELECTRIC COMPANY V. NORDEC PHILIPPINES 84
GUY V. TULFO 85
TORREON V. APARRA 86
ERMA INDUSTRIES, INC. V. SECURITY BANK CORP. 87
LORENZO SHIPPING CORP. V. NATIONAL POWER CORP. 87
TABONES V. PEOPLE 88
SPECIAL LAWS AND REGULATIONS
REPUBLIC ACT NO. 8552

CASTRO V. GREGORIO 89

REPUBLIC V. GALLO 90
COMMONWEALTH ACT NO.141

HEIRS OF DELFIN V. NHA 91
GALINDEZ V. FIRMALAN 92
TAAR V. LAWAN 93
MENDOZA V. VALDEZ 94
PRESIDENTIAL DECREE NO. 1529

HEIRS OF CASCAYAN V. SPOUSES. GUMALLAOI 95
PADILLO V. VILLANUEVA 96
REPUBLIC V. ORTIGAS AND COMPANY LIMITED PARTNERSHIP 97
REGISTER OF DEEDS V. ANGLO 98
PRESIDENTIAL DECREE NO. 957

REGISTER OF DEEDS V. ANGLO 99

BNL MANAGEMENT CORPORATION V. UY 100

ORBE V. FILINVEST LAND 101

HEIRS OF SALAS V. CABUNGCAL 102
HEIRS OF NUÑEZ V. HEIRS OF VILLANOZA 103
SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM V. HEIRS OF ABUCAY 104
GSIS V. DATOY 105

WILLIAM G. KWONG MANAGEMENT, INC., V. DIAMOND HOMEOWNERS & RESIDENTS ASSOC. 106
I. IN GENERAL
WAIVER OF RIGHTS
1. A person may waive any matter which affects his property, and any alienable right or privilege of which he
is the owner or which belongs to him or to which he is legally entitled, whether secured by contract, conferred
with statute, or guaranteed by constitution, provided such rights and privileges rest in the individual do not
infringe on the rights of others, and further provided the waiver of the right or privilege is not forbidden by
law, and does not contravene public policy. (Mabugay-Otamias v. Republic, G.R. No. 189516, June 8, 2016)
HUMAN RELATIONS
2. To avoid unjust enrichment, recovery under a void subcontract is allowed as an exception to the in pari
delicto doctrine. (Loria v. Muñoz, G.R. No. 187240, October 15, 2014)
3. A drawee bank is obligated to return the full amounts of the checks upon discovering that they were not
paid to the correct payees. (Rodriguez v. Your Own Home Development Corporation, G.R. No. 199451,
August 15, 2018)
II. PERSONS AND FAMILY RELATIONS

MARRIAGE
1. The judge, as solemnizing officer, must personally examine the affidavit of cohabitation and execute a
sworn statement that he personally ascertained the parties' qualifications to marry and found no legal
impediment to the marriage. However, notarizing affidavits of cohabitation is inconsistent with the duty to
examine the parties' requirements for marriage. (Tupal v. Rojo, A.M. No. MTJ-14-1842, February 24,2014)
2. A person cannot unilaterally declare his marriage void. The law provides that a judicial declaration of nullity
is indispensable for the purposes of remarriage. (De Guzman v. People, G.R. No. 224742, August 7, 2019)
3. Judicial recognition of a foreign divorce requires that the national law of the foreign spouse and the divorce
decree be pleaded and proved as a fact before the Regional Trial Court. The Filipino spouse may be granted
the capacity to remarry once our courts find that the foreign divorce was validly obtained by the foreign spouse
according to his or her national law, and that the foreign spouse's national law considers the dissolution of
the marital relationship to be absolute. (Racho v. Tanaka, G.R. No. 199515, June 25, 2018)
4. Philippine courts do not take judicial notice of foreign judgments and laws. They must be proven as fact
under our rules on evidence. A divorce decree obtained abroad is deemed a foreign judgment, hence the
indispensable need to have it pleaded and proved before its legal effects may be extended to the Filipino
spouse. (Arreza v. Toyo, G.R. No. 213198, July 1, 2019)
5. The Molina doctrine itself does not require a physician to examine a person and declare him/her to be
psychologically incapacitated. What matters is that the totality of evidence presented establishes the party's
psychological condition. The notion of psychological incapacity should also consist of the inability to comply
with essential marital obligations such that public interest is imperiled. (Tani-De la Fuente v. De la Fuente,
G.R. No. 188400, March 8, 2017)
6. The provision on reappearance in the Family Code as a remedy to effect the termination of the subsequent
marriage does not preclude the spouse who was declared presumptively dead from availing other remedies
existing in law. This court had recognized that a subsequent marriage may also be terminated by filing an
action in court to prove the reappearance of the absentee and obtain a declaration of dissolution or termination
of the subsequent marriage. (Santos v. Santos, G.R. No. 187061, October 8, 2014)
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PROPERTY RELATIONS OF THE PARTIES
7. A spouse's consent is indispensable for the disposition or encumbrance of conjugal properties. (Philippine
National Bank v. Reyes, G.R. No. 212483, October 5, 2016)
8. Under the Civil Code, property acquired during marriage is presumed to be conjugal. There is no need to
prove that the money used to purchase a property came from the conjugal fund. What must be established is
that the property was acquired during marriage. Only through "clear, categorical, and convincing "proof to
the contrary will it be considered the paraphernal property of one of the spouses. (Malabanan v. Malabanan,
G.R. No. 187225, March 6, 2019)
THE FAMILY
9. The family home shall be exempted from execution, forced sale, or attachment except for debts secured by
mortgages on the premises before or after such constitution. (Vitug v. Abuda, G.R. No. 201264, January 11,
2016)
PATERNITY AND FILIATION

10. A person who seeks to establish illegitimate filiation after the death of a putative parent must do so via a
record of birth appearing in the civil register or a final judgment, or an admission of legitimate filiation. (Ara
v. Pizarro, G.R. No. 187273, February 15, 2017)
11. To establish filiation, an action for compulsory recognition may be filed against the putative father ahead
of an action for support. In the alternative, an action for support may be directly filed, where the matter of
filiation shall be integrated and resolved. (Abella v. Cabañero, G.R. No. 206647, August 9, 2017)
12. The legitimacy and filiation of children cannot be collaterally attacked in a petition for correction of entries
in the certificate of live birth. (Miller v. Miller, G.R. No. 200344, August 28, 2019)
III. PROPERTY
ACCESSION
1. An improvement will be exempt from taxation if it is an integral part of the public land on which it is
constructed, and the improvement is the property of the government by right of accession. (Provincial Assessor
of Agusan Del Sur v. Filipinas Palm Oil Plantation, Inc., G.R. No. 183416, October 5, 2016)
2. The lack of blood relation should have been enough to put respondents on guard and convince them not
to rely on her claim of ownership. (Padilla v. Malicsi, G.R. No. 201354, September 21, 2016)
EASEMENT
3. This easement is not compulsory if the isolation of the immovable is due to the proprietor’s own acts. (Reyes
v. Valentin, G.R. No. 194488, February 11, 2015)
NUISANCE
4. The district health officer is required to determine whether abatement, without judicial proceedings, is the
best remedy against a public nuisance. Any private person may abate a public nuisance which is especially
injurious to him by removing or if necessary, by destroying the thing which constitutes the same, without
committing a breach of the peace, or doing unnecessary injury. (DPWH v. City Advertising Ventures
Corporation, G.R No. 182944, November 9, 2016)
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IV. PRESCRIPTION
1. The prescriptive period for actions on mortgages is ten (10) years from the day they may be brought. Actions
on mortgages may be brought not upon the execution of the mortgage contract but upon default in payment
of the obligation secured by the mortgage. (University of Mindanao, Inc. v. Bangko Sentral ng Pilipinas, G.R.
Nos. 194964-65, January 11, 2016)
2. The prescriptive period to recover property obtained by fraud or mistake, giving rise to an implied trust is
10 years. This ten-year prescriptive period begins to run from the date the adverse party repudiates the implied
trust, which repudiation takes place when the adverse party registers the land. (Spouses Aboitiz v. Spouses
Po, G.R. Nos. 208450 & 208497, June 5, 2017)
3. An action for forcible entry must be filed within one (1) year from the date of actual entry on the land.
However, when the entry was done through stealth, the one- year time bar is reckoned from the time the entry
was discovered. In contrast to unlawful detainer suits, no previous demand to vacate is required before an
action for forcible entry may be filed. (PLDT v. Citi Appliance M.C. Corporation, G.R. No. 214546, October
9, 2019)
V. OBLIGATIONS
GENERAL PROVISIONS
1. A contract may be contained in several instruments with non-conflicting terms. (Dee Hwa Liong Foundation
Medical Center v. Asiamed Supplies and Equipment Corporation, G.R. No. 205638, August 23, 2017)
KINDS OF OBLIGATIONS
2. Rescission is a principal action that is immediately available to the party at the time that the reciprocal
prestation was breached. (Wellex Group, Inc. v. U-Land Airlines, Co., Ltd., G.R. No. 167519, January 14,
2015)
3. 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. (PEZA v. Pilhino Sales Corp., G.R. No. 185765, September 28, 2016)
4. Rescission under Article 1191 of the Civil Code is the proper remedy when a party breaches a reciprocal
obligation. Because each case has its own distinct circumstances, this Court’s power to fix a period of an
obligation under Article 1197 is discretionary and should be exercised only if there is just cause. (Camp John
Hay Development Corp. v. Charter Chemical and Coating Corp., G.R. No. 198849, August 7, 2019)
5. Article 1191 of the Civil Code on the right to rescind reciprocal obligations does not apply to contracts to
sell. The contract to sell is instead cancelled, and the parties shall stand as if the obligation to sell never existed.
In case of corporations, the directors or trustees and officers are not liable with the corporation even if it is
through their acts that the corporation incurred the obligation. This is because a corporation is separate and
distinct from the persons comprising it. (Olivarez Realty Corporation v. Castillo, G.R. No. 19625, July 9, 2014)
6. Once the amount represented by the telegraphic transfer order is credited to the account of the payee or
appears in the name of the payee in the books of the receiving bank, the ownership of the telegraphic transfer
order is deemed to have been transmitted to the receiving bank. The local bank is deemed to have fully
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executed the telegraphic transfer and is no longer the owner of this telegraphic transfer order. (Chinatrust
Commercial Bank v. Turner, G.R. No. 191458, July 3, 2017)
7. Articles 1266 and 1267 of the Civil Code only apply to obligations to do. They do not apply to obligations
to give as when a party is obliged to deliver a thing which, in this case, is a certificate of title to a real property
free from liens and encumbrances. (Development Bank of the Philippines v. Clarges Realty Corporation, G.R.
No. 170060, August 17, 2016)
8. Novation occurs only when the new contract declares so "in unequivocal terms" or that "the old and the
new obligations be on every point incompatible with each other. If there is a substitution of debtor, the consent
of the creditor must also be secured for the novation to be valid. (Arco Pulp and Paper v. Lim, G.R. No.
206806, June 25, 2014)
9. The intention of the parties, whether partial or total, "must appear by express agreement of the parties, or
by their acts which are too clear and unequivocal to be mistaken.” (Development Bank of the Philippines v.
Sta. Ines Melale Forest Products Corporation, G.R. No. 193068, February 1, 2017)
VI. CONTRACTS
GENERAL PROVISIONS
1. The restructuring of the loan does not ratify the void agreement about the interest rate. Even in the
restructured agreement, there is still no mutuality with regards to the amount of the interest rate as only one
party determines the amount of interest for a specific month. (Spouses Limso v. Philippine National Bank, G.R.
Nos. 158622 and 169444, January 27, 2016)
2. A management contract, which is a sort of a stipulation pour autrui within the meaning of Article 1311 of
the Civil Code, is also binding on a consignee because it is incorporated in the gate pass and delivery receipt
which must be presented by the consignee before delivery can be effected to it. (Oriental Assurance Corp. v.
Ong, G.R. No. 189524, October 11, 2017)
3. The validity of accessory contracts mainly flows from the validity of the principal contracts. A real estate
mortgage is in the nature of an accessory contract. Thus, the validity of a mortgage contract that was
constituted to secure a loan obligation is affected by the validity of the loan contract. (Luntao v. BAP Credit
Guaranty Corp., G.R. No. 204412, September 20, 2017)
4. To determine when the contract was perfected, the acceptance of the offer must be unqualified,
unconditional, and made known to the offeror. In bidding contracts, the Court has ruled that the award of the
contract to the bidder is an acceptance of the bidder's offer. (Metro Rail Transit Development Corporation v.
Gammon Philippines, Inc., G.R. No. 200401, January 17, 2018)
5. Although there was no fraud that had been undertaken to obtain petitioner’s consent, there was fraud in the
performance of the contract when petitioner had been unjustly excluded from participating in the management
of the affairs of the corporation. This constituted fraud incidental to the performance of the obligation. (Tankeh
v. Development Bank of the Philippines, G.R. No. 171428, November 11, 2013)
REFORMATION OF INSTRUMENTS
6. The rationale is that it would be unjust to enforce a written instrument which does not truly reflect the real
agreement of the parties. In reforming an instrument, no new contract is created for the parties, rather, the
reformed instrument establishes the real agreement between the parties as intended but was not embodied in
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the original instrument. (Makati Tuscany Condominium Corporation v. Multi-Realty Development
Corporation, G.R. No. 185530, April 18, 2018)
INTERPRETATION OF CONTRACTS
7. Where the language of a written contract is clear and unambiguous, the contract must be taken to mean
that which, on its face, it purports to mean, unless some good reason can be assigned to show that the words
should be understood in a different sense. (Metropolitan Bank & Trust Co. v. G&P Builders, Inc., G.R. No.
189509, November 23, 2015)
8. The legal effect of a contract is not determined by any particular provision alone, disconnected from all
others, but from the language used and gathered from the whole instrument. (National Power Corporation v.
Southern Philippines Power, G.R. No. 219627, July 4, 2016)
9. A tribunal does not act in excess of jurisdiction when confronted not only with ambiguous contractual terms
but also with the total absence of an instrument which definitively articulates the contracting parties’
agreement. (CE Construction Corporation v. Araneta Center Inc., G.R. No. 192725, August 9, 2017)
10. In contract interpretation, courts must first determine whether a stipulation is ambiguous or susceptible of
multiple interpretations. If no ambiguity is found and the terms of the contract clearly reflect the intentions of
the contracting parties, the stipulation will be interpreted as it is written. (Cezar Yatco Inc. v. Bel-Air Village
Association, Inc., G.R. No. 211780, November 21, 2018)
VII. SPECIAL CONTRACTS

SALES
1. A co-owner could enter into a contract to sell a definite portion of the property. However, such contract is
still subject to the suspensive condition of the partition of the property, and that the other co-owners agree
that the part subject of the contract to sell vests in favor of the co-owner’s buyer.
The absence of a contract of sale means that there is no source of obligations for respondent, as seller, or
petitioner, as buyer. Rescission is impossible because there is no contract to rescind. (Cabrera v. Ysaac, G.R.
No. 166790, November 19, 2014)
2. An “as-is-where-is” clause can only pertain to the readily perceptible physical state of the object of a sale
and it cannot encompass matters that require technical competence. A seller is generally responsible for
warranty against hidden defects of the thing sold pursuant to Article 1561 of the Civil Code. (Poole-Blunden
v. Union Bank, G.R. No. 205838, November 29, 2017)
AGENCY
3. When issuing a pre-screened or pre-approved credit card, the credit card provider must prove that its client
read and consented to the terms and conditions governing the credit card's use. Failure to prove consent
means that the client cannot be bound by the provisions of the terms and conditions, despite admitted use of
the credit card. (Spouses Yulo v. BPI, G.R. No. 217440, January 16, 2019)
4. Upon accepting an agency, the agent becomes bound to carry out the agency and shall be held liable for
the damages, which the principal may incur due to the agent's non-performance.
Revocation as a form of extinguishing an agency under Article 1924 of the Civil Code only applies in cases of
incompatibility, such as when the principal disregards or bypasses the agent in order to deal with a third
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person in a way that excludes the agent. (International Exchange Bank v. Spouses Briones, G.R. No. 205657,
March 29, 2017)
COMPROMISE
5. A conditional settlement of a judgment award may be treated as a compromise agreement and a judgment
on the merits of the case if it turns out to be highly prejudicial to one of the parties. (Magsaysay Maritime
Corp. v. De Jesus, G.R. No. 203943, August 30, 2017)
6. A judgment upon a compromise is rendered based on the parties’ reciprocal concessions. With all the more
reason should a judgment upon a compromise be complied with in good faith considering that the parties
themselves crafted its terms. (Team Image Entertainment Inc. v. Solar Team Entertainment Inc., G.R. No.
191652, September 13, 2017)
7. A judgment on compromise agreement is a judgment on the merits. It has the effect of res judicata and is
immediately final and executory unless set aside because of falsity or vices of consent. (Gadrinab v. Salamanca
G.R. No. 194560, June 11, 2014)
8. Courts can neither amend nor modify the terms and conditions of a compromise validly entered into by the
parties. A writ of execution that varies the respective obligations of the parties under a judicially approved
compromise agreement. (Chiquita Brands Inc. v. Omelio, G.R. No. 189102, June 7, 2017)
LOAN
9. Article 1956 prevents the application of any interest rate other than that specifically provided for by the
parties in their loan document or, in lieu of it, the legal rate. (Spouses Abella v. Spouses Abella, G.R. No.
195166, July 8, 2015)
10. The contractual relationship between banks and their depositors is governed by the Civil Code provisions
on simple loan. Once a person makes a deposit of his or her money to the bank, he or she is considered to
have lent the bank that money. The bank becomes his or her debtor, and he or she becomes the creditor of
the bank, which is obligated to pay him or her on demand. (Philippine National Bank v. Santos, G.R. No.
208293, December 10, 2014)
LEASE
11. Lessees are entitled to suspend the payment of rent if their legal possession is disturbed. Acts of physical
disturbance that do not affect legal possession is beyond the scope of this rule. (Racelis v. Spouses Javier, G.R.
No. 189609, January 29, 2018)
12. A person who occupies the land of another at the latter's tolerance or permission without any contract
between them is necessarily bound by an implied promise that he will vacate upon demand, failing which a
summary action for ejectment is the proper remedy against him. (Intramuros Administration v. Offshore
Construction Development Company, G.R. No. 196795, March 7, 2018)
VIII. LAND TITLES AND DEEDS

1. In classifying lands of the public domain as alienable and disposable, there must be a positive act from the
government declaring them as open for alienation and disposition. (Republic v. Heirs of Daquer, G.R. No.
193657, September 4, 2018)
2. In computing the period of possession, what is important is that the land has already been declared alienable
and disposable at the time of the application for registration. Upon satisfaction of this requirement, the
computation of the period may include the period of adverse possession prior to the declaration that land is
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alienable and disposable. (AFP Retirement and Separation Benefits System v. Republic, G.R. No. 180086, July
2, 2014)
3. An applicant for land registration or judicial confirmation of incomplete or imperfect title must prove the
following requisites: “(1) that the subject land forms part of the disposable and alienable lands of the public
domain, and (2) that the applicant has been in open, continuous, exclusive and notorious possession and
occupation of the same under a bona fide claim of ownership since June 12, 1945, or earlier.” (Canlas v.
Republic, G.R. No. 200894, November 10, 2014)
4. The June 12, 1945 reckoning point refers to date of possession and not to date of land classification as
alienable and disposable. (La Tondena, Inc. v. Republic, G.R. No. 194617, August 5, 2015)
5. A claimant is conclusively presumed to have been in an open, continuous, exclusive, and notorious
possession and occupation of alienable and disposable lands of public domain, under a bona fide claim of
acquisition or ownership, since June 12, 1945, or earlier, immediately preceding the filing of the application
for confirmation of title shall be entitled to a certificate of title. (Republic v. Sogod Development Corp., G.R.
No. 175760, February 17, 2016)
6. A CENRO certification, by itself, is insufficient to prove the alienability and disposability of land sought to
be registered. It is the DENR Secretary who has the authority to approve land classification and release a land
of public domain as alienable and disposable. (Republic v. Spouses Go, G.R. No. 197297, August 2, 2017)
7. When a person applies for judicial confirmation of title, he or she already holds an incomplete or imperfect
title over the property being applied for, after having been in open, continuous, exclusive, and notorious
possession and occupation from June 12, 1945 or earlier. The date "June 12, 1945" is the reckoning date of
the applicant's possession and occupation, and not the reckoning date of when the property was classified as
alienable and disposable. (Republic v. Spouses Noval, G.R. No. 170316, September 18, 2017)
8. To establish that the land sought to be registered is alienable and disposable, applicants must "present a
copy of the original classification approved by the Department of Environment and Natural Resources
Secretary and certified as a true copy by the legal custodian of the official records.” (Republic v. Malijan-Javier,
G.R. No. 214367, April 4, 2018)
9. It is a well-settled rule that tax declarations are not conclusive evidence of ownership or of the right to
possess land when not supported by any other evidence but payment of real property taxes is a good indicia
of possession in the concept of an owner, and when coupled with continuous possession, it constitutes strong
evidence of title. (Kawayan Hills Corp. v. Court of Appeals, G.R. No. 203090, September 5, 2018)
10. An ordinary buyer may rely on the certificate of title issued in the name of the seller. However, the ordinary
buyer will not be considered an innocent purchaser for value if there is anything on the certificate of title that
arouses suspicion, and the buyer failed to inquire or take steps to ensure that there is no cloud on the title,
right, or ownership of the property being sold. (Heirs of Lopez v. Development Bank of the Phils., G.R. No.
193551, November 19, 2014)
11. Even if the procurement of title was tainted with fraud and misrepresentation, a defective title may be the
source of a completely legal and valid title in the hands of an innocent purchaser for value. (Leong v. See,
G.R. No. 194077, December 3, 2014)
12. Banks must show that they exercised the required due diligence before claiming to be mortgagees in good
faith or innocent purchasers for value. (Land Bank of the Philippines v. Musni, G.R. No. 206343, February 22,
2017)
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13. The presumption that a holder of a Torrens title is an innocent purchaser for value is disputable and may
be overcome by contrary evidence. Once a prima facie case disputing this presumption is established, the
adverse party cannot simply rely on the presumption of good faith and must put forward evidence that the
property was acquired without notice of any defect in its title. (Sindophil, Inc. v. Republic, G.R. No. 204594,
November 7, 2018)
14. A claim based on a future right does not ripen into an adverse claim. A right still subject to negotiations
cannot be enforced against a title holder or against one that has a legitimate title to the property based on
possession, ownership, lien, or any valid deed of transfer. (Cathay Metal Corp. v. Laguna West Multi-Purpose
Cooperative, Inc., G.R. No. 172204, July 2, 2014)
IX. TORTS
1. Article 2176 of the Civil Code does not apply when the party's negligence occurs in the performance of an
obligation. The negligent act would give rise to a quasi-delict only when it may be the basis for an independent
action were the parties not otherwise bound by a contract. (Orient Freight International, Inc. v. Keihin-Everett
Forwarding Co., Inc., G.R. No. 191937, August 9, 2017)
2. An electric distribution company is a public utility presumed to have the necessary expertise and resources
to enable a safe and effective installation of its facilities. Absent an indication of fault or negligence by other
actors, it is exclusively liable for fires and other damages caused by its haphazardly installed posts and wires.
(Visayan Electric Company, Inc. v. Alfeche, G.R. No. 209910, November 29, 2017)
3. The plaintiff may first prove the employer's ownership of the vehicle involved in a mishap by presenting
the vehicle's registration in evidence. Thereafter, a disputable presumption that the requirements for an
employer's liability under Article 2180 of the Civil Code have been satisfied will arise. The burden of evidence
then shifts to the defendant to show that no liability under Article 2180 has ensued. (Caravan Travel and Tours
International, Inc. v. Abejar, G.R. No. 170631, February 10, 2016)
4. The burden of proving that a negligent act of an employee was performed within the scope of his assigned
tasks rests with the plaintiff. When the plaintiff has discharged this burden, the presumption that the employer
was negligent arises, and the employer must put forward evidence showing that he exercised the due diligence
of a good father of a family in the selection and supervision of the employee. (Imperial v. Heirs of Spouses
Bayaban, G.R. No. 197626, October 3, 2018)
X. DAMAGES
1. The award of moral damages finds legal basis in Articles 2217 and 2220 of the New Civil Code, which
allow recovery of moral damages in case of willful injury to property. A stockholder's right to vote is inherent
in and incidental to the ownership of a capital stock. (Lao v. Lim, G.R. No. 201306, August 9, 2017)
2. Bad faith means a breach of a known duty through some motive or interest or ill-will that partakes of the
nature of fraud. It exists when a company-designated physician failed to arrive at a final and definite
assessment of a seafarer's fitness to work or level of disability within the prescribed. (Sharpe Sea Personnel,
Inc., Et. Al. v. Mabunay, G.R. No. 206113, November 6, 2017)
3. Exemplary damages, which cannot be recovered as a matter of right, may not be awarded if no moral,
temperate, or compensatory damages have been granted. Since exemplary damages cannot be awarded, the
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award of attorney's fees should likewise be deleted. (Manila Electric Company v. Nordec Philippines, G.R.
Nos. 196020 & 196116, April 18, 2018)
4. Actual damages may be awarded when the pecuniary loss he or she had suffered was duly proven. Moral
damages may be awarded even if the injured party failed to prove that he has suffered pecuniary loss.
Exemplary damages are designed to permit the courts to mold behavior that has socially deleterious
consequences, and its imposition is required by public policy to suppress the wanton acts of an
offender. (Guy v. Tulfo, G.R. No. 213023, April 10, 2019)
5. Lack of documentary evidence is not fatal to a claim for the deceased's lost earning capacity. Testimony
from a competent witness familiar with his salary is a sufficient basis to determine the deceased's income
before his death. (Torreon v. Aparra, G.R. No. 188493, December 13, 2017)
6. The award of attorney's fees demands factual, legal and equitable justification. Even when a claimant is
compelled to litigate to defend himself/herself, still attorney's fees may not be awarded where there is no
sufficient showing of bad faith of the other party. (Erma Industries, Inc. v. Security Bank Corp., G.R. No.
191274, December 6, 2017)
7. The precise amount of pecuniary loss must be established by evidence in conformity with the Rules on
Evidence. Thus, a mere unauthenticated private document and a testimony giving a mere estimate, do not
establish the precise amount of pecuniary loss. In such a case, only temperate damages, not actual damages,
may be awarded. (Lorenzo Shipping Corp. v. National Power Corp., G.R. Nos. 181683 & 184568, October 7,
2015)
8. Temperate damages may be awarded when there is a finding that some pecuniary loss has been suffered
but its amount cannot from the nature of the case, be proved with certainty. The amount of temperate damages
to be awarded in each case is discretionary upon the courts as long as it is reasonable under the circumstances.
(Tabones v. People, G.R. No. 204544, July 3, 2017)
XI. SPECIAL LAWS AND REGULATIONS
R.A. 8552 OR DOMESTIC ADOPTION LAW

1. In all instances where it appears that a spouse attempts to adopt a child out of wedlock, the other spouse
and other legitimate children must be personally notified through personal service of summons. It is not
enough that they be deemed notified through constructive service. (Castro v. Gregorio, G.R. No. 188801,
October 15, 2014)
R.A. 9048 OR AN ACT AUTHORIZING THE CITY OR MUNICIPAL CIVIL REGISTRAR OR THE
CONSUL GENERAL TO CORRECT A CLERICAL OR TYPOGRAPHICAL ERROR IN AN ENTRY
AND/OR CHANGE OF FIRST NAME OR NICKNAME IN THE CIVIL REGISTER WITHOUT NEED
OF A JUDICIAL ORDER
2. Changes to one's name can be the result of either one of two (2) motives. The first, as an exercise of one's
autonomy, is to change the appellation that one was given for various reasons. The other is not an exercise to
change the label that was given to a person; it is simply to correct the data as it was recorded in the Civil
Registry. (Republic v. Gallo, G.R. No. 207074, January 17, 2018)
COMMONWEALTH ACT NO. 141 OR PUBLIC LAND ACT

3. The period to acquire public land by acquisitive prescription under Presidential Decree No. 1529 begins
to run only after the promulgation of a law or a proclamation by the President stating that the land is no longer
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intended for public use or the development of national wealth. (Heirs of Delfin v. NHA, G.R. No. 193618,
November 28, 2016)
4. The Director of Lands, under the immediate control of the Secretary of Agriculture and Commerce, now the
Department of Environment and Natural Resources Secretary, has executive control over the survey,
classification, lease, concession, disposition, and management of lands under the public domain. (Galindez
v. Firmalan, G.R. No. 187186, June 6, 2018)
5. A judgement approving the subdivision of a parcel of land does not preclude other parties with a better
right from instituting free patent application over the same land.
Only extrinsic fraud may be raised as a ground to review or reopen a decree of registration. It refers to that
type of fraud that is employed to deprive parties of their day in court and thus prevent them from asserting
their right to the property registered in the name of the applicant. (Taar v. Lawan, G.R. No. 190922, October
11, 2017)
6. The existence or non-existence of fraud is a legal conclusion based on a finding that the evidence presented
is sufficient to establish facts constituting its elements. In any event, petitions for a review or reopening of a
decree of registration based on actual fraud must be filed before the proper court within the one-year period.
The party alleging fraud must overcome the burden of proving the fraud with clear and convincing evidence.
(Mendoza v. Valdez, G.R. No. 172961, September 7, 2015)
P.D. 1529 OR PROPERTY REGISTRATION DECREE

7. A certificate of title shall not be subject to collateral attack and cannot be altered, modified, or canceled
except in a direct proceeding. (Heirs of Cascayan v. Spouses. Gumallaoi, G.R. No. 211947, July 3, 2017)
8. The registration of a certificate of land ownership award places the subject land under the operation of the
Torrens systems. Once under the Torrens system, a certificate of land ownership award or certificate of title
issued may only be attacked through a direct proceeding before the court. (Padillo v. Villanueva, G.R. No.
209661, October 3, 2018)
9. Sec. 50 of PD No. 1529, which provides that delineated boundaries, streets, passageways, and waterways
of a subdivided land may not be closed or disposed of by the owner except by donation to the government,
does not apply in a case that is the proper subject of an expropriation proceeding. (Republic v. Ortigas and
Company Limited Partnership, G.R. No.171496, March 3, 2014)
10. When a claimant of assurance fund made the conscious choice of recovering the value of the properties
he purchased by selling the properties to another buyer, it him from making a subsequent claim from the
Assurance Fund because that will be tantamount to unjust enrichment. (Register of Deeds v. Anglo, SR., G.R.
No. 171804, August 5, 2015)
P.D. NO. 957 OR SUBDIVISION AND CONDOMINIUM BUYER'S PROTECTION ACT

11. Delineated roads and streets, whether part of a subdivision or segregated for public use, remain private
and will remain as such until conveyed to the government by donation or through expropriation proceedings.
An owner may not be forced to donate his or her property even if it has been delineated as road lots because
that would partake of an illegal taking. (Republic v. Spouses Llamas, G.R. No. 194190, January 25, 2017)
R.A. 4726 OR THE CONDOMINIUM ACT

12. The declaration of restrictions provides for the project management, among others, and is enforceable by
the condominium's management body. (BNL Management Corporation v. Uy, G.R. No. 210297, April 3,
2019)
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R.A. 6552 OR MACEDA LAW
13. When the buyer's payments fall short of the equivalent of two (2) years' worth of installments under Section
3, the benefits that the buyer may avail of are limited to those under Section 4. Should the buyer still fail to
make payments within Section 4's grace period, the seller may cancel the contract. Any such cancellation is
ineffectual, however, unless it is made through a valid notarial act. (Orbe v. Filinvest Land, Inc., G.R. No.
208185, September 06, 2017)
R.A. 6657 AS AMENDED BY R.A. 9700 OR COMPREHENSIVE AGRARIAN REFORM LAW

14. Republic Act No. 6657 never required that a landholding must be exclusively used for agricultural
purposes to be covered by the Comprehensive Agrarian Reform Program. What determines a tract of land's
inclusion in the program is its suitability for any agricultural activity. (Heirs of Salas v. Cabungcal, G.R. No.
191545, March 29, 2017)
15. The landowner has the option to choose the area to be retained only if it is compact or contiguous. The
heirs of a deceased landowner may exercise the retention right only if the landowner signified his or her
intention to exercise the right of retention before August 23, 1990. (Heirs of Nuñez v. Heirs of Villanoza, G.R.
No. 218666, April 26, 2017)
16. The jurisdiction over the administrative implementation of agrarian laws exclusively belongs to the
Department of Agrarian Reform Secretary. This is true even if the dispute involves the cancellation of registered
emancipation patents and certificates of title. (Secretary of the Department of Agrarian Reform v. Heirs of
Abucay, G.R. No. 186964, March 12, 2019)
17. Lands foreclosed by the Government Service Insurance System, a government financial institution, are
subject to agrarian reform and are not among the Comprehensive Agrarian Reform Law's exclusive list of
exemptions and exclusions. (GSIS v. Datoy, G.R. No. 232863, July 24, 2019)
R.A. 9904 OR MAGNA CARTA FOR HOMEOWNERS AND HOMEOWNERS' ASSOCIATIONS

18. A homeowners' association may regulate passage into a subdivision for the safety and security of its
residents, even if its roads have already been donated to the local government. It has the right to set goals for
the promotion of safety and security, peace, comfort, and the general welfare of its residents. (William G.
Kwong Management, Inc., v. Diamond Homeowners & Residents Association, G.R. No. 211353, June 10,
2019)
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MABUGAY-OTAMIAS v. REPUBLIC
G.R. No. 189516 | June 8, 2016
Waiver of rights
DOCTRINE
A person may waive any matter which affects his property, and any alienable right or privilege of
which he is the owner or which belongs to him or to which he is legally entitled, whether secured by contract,
conferred with statute, or guaranteed by constitution, provided such rights and privileges rest in the individual
do not infringe on the rights of others, and further provided the waiver of the right or privilege is not forbidden
by law, and does not contravene public policy.
FACTS
In 1978, Edna Mabugay-Otamias married Colonel Francisco Otamias. The couple had five children.
In September 2000, the two separated because of Colonel Otamias’ alleged infidelity. After the separation,
their children remained with Edna. Thereafter, she demanded support equivalent to 75% of the colonel’s
retirement benefits. However, Colonel Otamias executed an affidavit stating that he can commit only 50% of
his retirement benefits to his children and wife. Because of this, they entered into a compromise agreement.
On February 26, 2003, the colonel executed a Deed of Assignment where he waived 50% of his salary and
pension in favor of Edna and his children. Colonel Otamias retired on April 1, 2003, and the agreement had
been honored until January 6, 2006. According to Edna, the Armed Forces of the Philippines (AFP) decided
not to honor the agreement.
ISSUE
Did the CA err in ruling that the AFP Finance Center cannot be directed to automatically deduct the
amount of support needed by the legitimate family of Colonel Otamias?
HELD
YES. According to Article 6 of the Civil Code, rights may be waived unless it is contrary to law or
public policy. The Court held that the doctrine of waiver extends to rights and privileges of any character, and,
since the word 'waiver' covers every conceivable right, it is the general rule that a person may waive any
matter which affects his property, and any alienable right or privilege of which he is the owner or which
belongs to him or to which he is legally entitled, whether secured by contract, conferred with statute, or
guaranteed by constitution, provided such rights and privileges rest in the individual, are intended for his sole
benefit, do not infringe on the rights of others, and further provided the waiver of the right or privilege is not
forbidden by law, and does not contravene public policy. When Colonel Otamias executed the Deed of
Assignment, he effectively waived his right to claim that his retirement benefits are exempt from execution.
The right to receive retirement benefits belongs to Colonel Otamias. His decision to waive a portion of his
retirement benefits does not infringe on the right of third persons, but even protects the right of his family to
receive support.
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LORIA v. MUÑOZ
G.R. No. 187240 | October 15, 2014
Human Relations: Unjust enrichment
DOCTRINE
To avoid unjust enrichment, recovery under a void subcontract is allowed as an exception to the in
pari delicto doctrine.
FACTS
Carlos Loria represented that he would make arrangements such that Elizaldy Co, owner of Sunwest
Construction and Development Corporation, would turn out to be the lowest bidder for the project. Elizaldy
Co would pay P8,000,000.00 to ensure the project's award to Sunwest. After the award to Sunwest, Sunwest
would subcontract 20% or P10,000,000.00 worth of the project to Muñoz. Since Muñoz had known Loria for
five years, Muñoz accepted Loria's proposal. On October 2, 2000, Muñoz requested Allied Bank to release
P3,000,000.00 from his joint account with his business partner, Christopher Co, to a certain Grace delos
Santos. Loria then obtained the money from delos Santos. The project to dredge the Masarawag and San
Francisco Rivers in Guinobatan was subjected to public bidding. The project was awarded to the lowest
bidder, Sunwest. Allegedly, Sunwest finished the project without subcontracting Muñoz. With the project
allegedly finished, Muñoz demanded Loria to return his P2,000,000.00. Loria, however, did not return the
money.
ISSUE
Is there unjust enrichment on Loria’s part?
HELD
YES. Under Article 22 of the Civil Code, "every person who through an act of performance by another,
or any other means, acquires or comes into possession of something at the expense of the latter without just
or legal ground, shall return the same to him." There is unjust enrichment "when a person unjustly retains a
benefit to the loss of another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience." The principle of unjust enrichment has two conditions.
First, a person must have been benefited without a real or valid basis or justification. Second, the benefit was
derived at another person's expense or damage. In this case, Loria received P2,000,000.00 from Muñoz for a
subcontract of a government project to dredge the Masarawag and San Francisco Rivers in Guinobatan, Albay.
However, contrary to the parties' agreement, Muñoz was not subcontracted for the project. Nevertheless, Loria
retained the P2,000,000.00. Thus, Loria was unjustly enriched. He retained Muñoz's money without valid
basis or justification. Thus, Loria must return the P2,000,000.00 to Muñoz.
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RODRIGUEZ v. YOUR OWN HOME DEVELOPMENT CORPORATION (YOHDC)
G.R. No. 199451 | August 15, 2018
Human Relations
DOCTRINE
A drawee bank is obligated to return the full amounts of the checks upon discovering that they were
not paid to the correct payees.
FACTS
Tarcisius found a property owned by Rosa Rosillas (Rosillas) and proceeded to negotiate with her.
According to YOHDC, Rosillas agreed to sell the land for P1,200,000.00. However, Tarcisius misrepresented
to the partner corporations that Rosillas had asked for P4,000,000.00 instead. Rosillas was paid P1,200,000.00
in two (2) installments on April 8, 1993 and May 14, 1993. Despite this, Tarcisius still requested for two (2)
more checks in Rosillas' name, each for P500,000.00. Aside from this, Tarcisius also requested for two (2)
more checks to pay the surveyor of Rosillas' property, Engineer Delos Reyes in the amount of P254,400.00
each. However, instead of delivering them to Rosillas and Delos Reyes, spouses Rodriguez deposited two (2)
checks totaling P754,400.00 in their personal BPI account. YOHDC eventually discovered the irregularities
on Rosillas' and Delos Reyes' checks after it received reports of project anomalies. BPI then advised the
Rodriguez Spouses to deposit the amount of P1,508,800.00 in their BPI bank account so that it could respond
to YOHDC's complaint. The Rodriguez Spouses complied and deposited the amount of P1,508,800.00 in their
BPI Account. BPI denied the request to suspend its action on YOHDC’c claim and sent Metrobank Special
Clearing Receipt No. 065273 to reimburse the amounts of the four (4) checks totaling P1,508,000.00.
Thereafter, Metrobank credited the amount to YOHDC. These events prompted the Rodriguez Spouses to file
a Complaint for Damages against respondents. As for Delos Reyes' Checks, the spouses Rodriguez asserted
that Delos Reyes received P424,000.00 from the proceeds of Metrobank Check. Based on the principle against
unjust enrichment, it ordered YOHDC to reimburse the Rodriguez Spouses P424,000.00, representing the
amount that Delos Reyes had received.
ISSUE
Is Your Own Home Development Corporation liable to Iris Rodriguez based on the principle of unjust
enrichment?
HELD
NO. It cannot be said that YOHDC was unjustly enriched to make it liable to petitioner. Article 22 of
the Civil Code addresses unjust enrichment. It is the State's public policy to prevent a person from unjustly
retaining a benefit, money, or property, at the expense of another, or against the fundamental principles of
justice, equity, and good conscience. Metrobank rightfully returned to YOHDC the amounts in Delos Reyes'
and Rosillas' Checks. Considering that Metrobank is the drawee bank, it is obligated to return the full amounts
of the checks upon discovering that they were not paid to the correct payees. Thus, the return of the amounts
to YOHDC was rightful and justified.
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TUPAL v. ROJO
A.M. No. MTJ-14-1842 | February 24,2014
Persons and Family Relations: Marriage: Requisites
DOCTRINE
The judge, as solemnizing officer, must personally examine the affidavit of cohabitation and execute
a sworn statement that he personally ascertained the parties' qualifications to marry and found no legal
impediment to the marriage. However, notarizing affidavits of cohabitation is inconsistent with the duty to
examine the parties' requirements for marriage.
FACTS
Rex M. Tupal filed with the Office of the Court Administrator a complaint against Judge Remegio V.
Rojo for violating the Code of Judicial Conduct and for gross ignorance of the law. Judge Remegio V. Rojo
presides Municipal Trial Court in Cities. Judge Rojo allegedly solemnized marriages without the required
marriage license. He instead notarized affidavits of cohabitation and issued them to the contracting parties.
He notarized these affidavits on the day of the parties’ marriage. These "package marriages" are allegedly
common in Bacolod City. According to Rex, Judge Rojo allegedly violated the 2004 Rules on Notarial Practice.
Judge Rojo notarized affidavits of cohabitation without affixing his judicial seal on the affidavits. He also did
not require the parties to present their competent pieces of evidence of identity as required by law. Judge Rojo
did not deny notarizing the affidavits of cohabitation. He argued that notarizing affidavits of cohabitation was
connected with his official functions and duties as a judge.
ISSUE
Is notarizing affidavits of cohabitation of parties whose marriage they will solemnize, part of the
official function of a solemnizing officer?
HELD
NO. As a solemnizing officer, the judge's only duty involving the affidavit of cohabitation is to
examine whether the parties have indeed lived together for at least five years without legal impediment to
marry. Before performing the marriage ceremony, the judge must personally interview the contracting parties
and examine the requirements they submitted. The parties must have complied with all the essential and
formal requisites of marriage. Among these formal requisites is a marriage license. If the contracting parties
have cohabited as husband and wife for at least five years and have no legal impediment to marry, they are
exempt from the marriage license requirement. Instead, the parties must present an affidavit of cohabitation
sworn to before any person authorized by law to administer oaths. The judge, as solemnizing officer, must
personally examine the affidavit of cohabitation and execute a sworn statement that he personally ascertained
the parties' qualifications to marry and found no legal impediment to the marriage. Notarizing affidavits of
cohabitation is inconsistent with the duty to examine the parties' requirements for marriage. The Guidelines
does not state that the judge can notarize the parties' affidavit of cohabitation. Thus, affidavits of cohabitation
are documents not connected with the judge's official function and duty to solemnize marriages.
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DE GUZMAN v. PEOPLE
G.R. No. 224742 | August 7, 2019
Persons and Family Relations: Marriage: Void Marriages
DOCTRINE
A person cannot unilaterally declare his marriage void. The law provides that a judicial declaration
of nullity is indispensable for the purposes of remarriage.
FACTS
On April 8, 1994, Prudencio De Guzman and Arlene De Guzman were married before the RTC of
Quezon City, which was solemnized by Judge Julieto Tabiolo. In 2007, Prudencio abandoned his wife and
children. In 2009, a friend of Arlene informed her that Prudencio contracted a second marriage with a certain
Jean Basan on December 17, 2009 at Immaculate Church in Las Piñas City. Thereafter, Arlene went to the
said church and indeed confirmed Prudencio’s second marriage. She then filed a complaint of Bigamy against
Prudencio. However, Prudencio argued that his marriage with Arlene was void because the copy of their
Marriage Contract, which was secured from the NSO, did not bear the solemnizing officer’s signature. The
trial court concluded that Prudencio cannot unilaterally declare that his marriage with Arlene was void.
Hence, he was convicted of Bigamy.
ISSUE
Did the CA err in affirming the trial court’s decision?
HELD
NO. The law provides that a judicial declaration of nullity is indispensable for the purposes of
remarriage. In Teves v. People, it was held that “the Family Code has settled once and for all the conflicting
jurisprudence on the matter. A declaration of the absolute nullity of a marriage is now explicitly required either
as a cause of action or a ground for defense. Where the absolute nullity of a previous marriage is sought to be
invoked for purposes of contracting a second marriage, the sole basis acceptable in law for said projected
marriage to be free from legal infirmity is a final judgment declaring the previous marriage void.” Prudencio
cannot claim to have been in good faith in assuming that there was no legal impediment for him to remarry
based merely on the National Statistics Office's issuance of a Certificate of No Marriage Record. The
discrepancy was merely inadvertent since a copy of the Marriage Certificate under the Local Civil Registry had
been signed. The trial court explained that the marriage contract between the accused and the complainant
that was presented by the prosecution bears the signature of the solemnizing officer. Upon the other hand, the
NSO copy of the marriage contract secured by the accused does not have the signature of the solemnizing
officer but after a careful scrutiny, it is shown that the two (2) marriage contracts contain the same details of
the civil wedding ceremony between the accused and the complainant. Even the signatures of the parties and
their witnesses have a striking resemblance to the naked eye. The only logical explanation for this is that the
duplicate original that must have been forwarded by the local civil registry to the NSO was not signed by the
solemnizing officer but the other duplicate original on file with the local civil registry is duly signed.
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RACHO v. TANAKA
G.R. No. 199515 | June 25, 2018
Persons and Family Relations: Marriage: Foreign divorce
DOCTRINE
Judicial recognition of a foreign divorce requires that the national law of the foreign spouse and the
divorce decree be pleaded and proved as a fact before the Regional Trial Court. The Filipino spouse may be
granted the capacity to remarry once our courts find that the foreign divorce was validly obtained by the
foreign spouse according to his or her national law, and that the foreign spouse's national law considers the
dissolution of the marital relationship to be absolute.
FACTS
Racho and Seiichi Tanaka (Tanaka) were married on April 20, 2001 in Las Piñas City, Metro Manila.
They lived together for nine (9) years in Saitama Prefecture, Japan, and did not have any children. Racho
alleged that on December 16, 2009, Tanaka filed for divorce and the divorce was granted. She secured a
Divorce Certificate from the Japanese Consulate in the Philippines and had it authenticated by an
authentication officer of the Department of Foreign Affairs. She then filed the Divorce Certificate with the
Philippine Consulate General in Tokyo, Japan, where she was informed that by reason of certain administrative
changes, she was required to return to the Philippines to report the documents for registration and to file the
appropriate case for judicial recognition of divorce. As such, she tried to have the Divorce Certificate registered
with the Civil Registry of Manila but was refused by the City Registrar since there was no court order
recognizing it. After similar situations followed, Racho filed a Petition for Judicial Determination and
Declaration of Capacity to Marry with the Regional Trial Court, Las Piñas City. A decision was rendered against
her favor. She filed a Motion for Reconsideration which was also denied. Hence, this Petition for Review on
Certiorari with this Court.
ISSUE
Is a Certificate of Acceptance of the Report of Divorce sufficient to prove the fact that a divorce
between petitioner Rhodora Ilumin Racho and respondent Seiichi Tanaka was validly obtained by the latter
according to his national law?
HELD
YES. Under Article 26 of the Family Code, a divorce between a foreigner and a Filipino may be
recognized in the Philippines so long as it was validly obtained according to the foreign spouse's national law.
Mere presentation of the divorce decree before a trial court is insufficient. A separate action must first be
instituted for that purpose, as courts do not take judicial notice of foreign laws and foreign judgments. While
the respondent's national law was duly admitted, petitioner failed to present enough evidence before the
Regional Trial Court that a divorce was validly obtained according to the national law of her foreign spouse.
There is no doubt that pursuant to his national law, the private respondent is no longer the husband of
petitioner, as he has already contracted a second marriage. Therefore, Paragraph 2 of Article 26 of the Family
Code should be interpreted to allow Filipino spouses to remarry as if the other party were a foreigner at the
time of the solemnization of the marriage.
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ARREZA v. TOYO
G.R. No. 213198 | July 1, 2019
Person and Family Relations: Marriage: Foreign divorce
DOCTRINE
Philippine courts do not take judicial notice of foreign judgments and laws. They must be proven as
fact under our rules on evidence. A divorce decree obtained abroad is deemed a foreign judgment, hence the
indispensable need to have it pleaded and proved before its legal effects may be extended to the Filipino
spouse.
FACTS
Genevieve, a Filipino citizen, and Tetsushi Toyo (Tetsushi), a Japanese citizen, were married in
Quezon City. They bore a child whom they named Keiichi Toyo. After 19 years of marriage, the two filed a
Notification of Divorce by Agreement, which the Mayor of Konohana-ku, Osaka City, Japan received on
February 4, 2011. It was later recorded in Tetsushi's family register as certified by the Mayor of Toyonaka City,
Osaka Fu. On 2012, Genevieve filed before the RTC a Petition for judicial recognition of foreign divorce and
declaration of capacity to remarry. In support of her Petition, Genevieve submitted a copy of their Divorce
Certificate, the Certificate of Acceptance of the Notification of Divorce, an English translation of the Civil Code
of Japan, among others. RTC denied the petition on the ground that while their divorce agreement was
accepted by the local government of Japan, she nevertheless failed to prove the copy of Japan's law. RTC
noted that the copy of the Civil Code of Japan and its English translation submitted by Genevieve were not
duly authenticated by the Philippine Consul in Japan, the Japanese Consul in Manila, or the Department of
Foreign Affairs.
ISSUE
Did the RTC err in denying the petition for judicial recognition of foreign divorce and declaration of
capacity to remarry filed by petitioner Genevieve Rosal Arreza?
HELD
NO. The second paragraph of Article 26 was introduced as a corrective measure to resolve an absurd
situation where the Filipino spouse remains married to the alien spouse even after their marital bond had been
severed by the divorce decree obtained abroad. Through this provision, Philippine courts are given the
authority "to extend the effect of a foreign divorce decree to a Filipino spouse without undergoing trial to
determine the validity of the dissolution of the marriage." It bestowed upon the Filipino spouse a substantive
right to have his or her marriage considered dissolved, granting him or her the capacity to remarry. In the case
at bar, the English translation submitted by petitioner was published by Eibun-Horei- Sha, Inc., a private
company in Japan engaged in publishing English translation of Japanese laws. However, it is in the KANPŌ
or the Official Gazette where all official laws and regulations are published, albeit in Japanese. Accordingly,
the English translation submitted by petitioner is not an official publication EXEMPTED from the requirement
of authentication. The only evidence of the translator's and advisors' credentials is the inside cover page of
the English translation of the Civil Code of Japan. Hence, the Regional Trial Court was correct in not
considering the English translation as a learned treatise.
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TANI-DE LA FUENTE v. DE LA FUENTE
G.R. No. 188400 | March 8, 2017
Persons and Family Relations: Marriage: Void Marriages: Psychological incapacity
DOCTRINE
The Molina doctrine itself does not require a physician to examine a person and declare him/her to
be psychologically incapacitated. What matters is that the totality of evidence presented establishes the party's
psychological condition. The notion of psychological incapacity should also consist of the inability to comply
with essential marital obligations such that public interest is imperiled.
FACTS
Petitioner Maria Teresa eitioner and respondent Rodolfo Dela Fuente got married on June 21, 1984.
Maria Teresa alleges that Rodolfo's attitude worsened as they went on with their marital life, with the latter
being physically, emotionally, and sexually abusive towards the latter. Sometime in 1986, they quarreled
because Maria Teresa was suspected of having an affair. In the heat of their quarrel, Rodolfo poked a gun at
her head. After this event, Maria Teresa and their daughters left Rodolfo and their conjugal home. She never
saw him again and resolved to support their children by herself. On June 3, 1999, Maria Teresa filed a petition
for declaration of nullity of marriage which was initially archived because Rodolfo failed to file a responsive
pleading. A clinical psychologist presented as an expert witness testified that he conducted an in-depth
interview with Maria Teresa and Rodolfo’s best friend to gather information on her family background and her
marital life with Rodolfo and subjected her to a battery of psychological tests. He concluded that she was not
suffering from any severe mental disorder and had no indication of any organic or functional impairment.
Rodolfo refused to be interviewed by him. Nevertheless, he was diagnosed with paranoid personality disorder.
As such, it was recommended that their marriage be annulled on the ground of his psychological incapacity.
Summons was served upon Rodolfo but he did not file any responsive pleading. Neither did he appear during
the pre-trial conference. His non-appearance was deemed as a waiver of his right to present evidence.
ISSUE
Did the Court of Appeals err in denying the Petition for Declaration of Nullity of Marriage because
petitioner's evidence was insufficient to prove that Rodolfo was psychologically incapacitated to fulfill his
marital obligations?
HELD
YES. In the instant petition, there was enough compliance with the long-standing Molina doctrine on
psychological incapacity to warrant the nullity of petitioner's marriage with respondent. The Court of Appeals
was remiss in ruling that the doctor’s testimony should not have been given weight as he was unable to
personally examine Rodolfo. Jurisprudence holds that the non-examination of one of the parties will not
automatically render as hearsay or invalidate the findings of the examining psychiatrist or psychologist, since
"marriage, by its very definition, necessarily involves only two persons. The totality of the behavior of one
spouse during the cohabitation and marriage is generally and genuinely witnessed mainly by the other." What
matters is that the totality of evidence presented establishes the party's psychological condition.
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SANTOS v. SANTOS
G.R. No. 187061 | October 8, 2014
Persons and Family Relations: Marriage: Void Marriages: Reappearance of absent spouse
DOCTRINE
The provision on reappearance in the Family Code as a remedy to effect the termination of the
subsequent marriage does not preclude the spouse who was declared presumptively dead from availing other
remedies existing in law. This court had recognized that a subsequent marriage may also be terminated by
filing "an action in court to prove the reappearance of the absentee and obtain a declaration of dissolution or
termination of the subsequent marriage.
FACTS
On July 27, 2007, the Regional Trial Court of Tarlac City declared petitioner Celerina Santos
presumptively dead after her husband, respondent Ricardo Santos, filed a petition for declaration of absence
or presumptive death for the purpose of remarriage on June 15, 2007. Ricardo remarried on September 17,
2008. On November 17, 2008, Celerina filed a petition for annulment of judgment before the Court of Appeals
on the grounds of extrinsic fraud and lack of jurisdiction. She argued that she was deprived of her day in court
when Ricardo, despite his knowledge of her true residence, misrepresented to the court that she was a resident
of Tarlac City when in fact, her true residence was in Neptune Extension, Congressional Avenue, Quezon
City. This residence had been her and Ricardo’s conjugal dwelling since 1989 until Ricardo left in May 2008.
As a result of Ricardo’s misrepresentation, she was deprived of any notice and opportunity to oppose the
petition declaring her presumptively dead. Ricardo was aware that she never left their conjugal dwelling in
Quezon City. It was he who left the conjugal dwelling in May 2008 to cohabit with another woman. Celerina
referred to a joint affidavit executed by their children to support her contention that Ricardo made false
allegations in his petition. Celerina claimed that she learned about Ricardo's petition only sometime in
October 2008 when she could no longer avail the remedies of new trial, appeal, petition for relief, or other
appropriate remedies.
ISSUE
Does mere reappearance of the absentee or presumptively dead spouse automatically terminate the
subsequent marriage?
HELD
NO. Article 42 states that the subsequent marriage referred to in the preceding Article shall be
automatically terminated by the recording of the affidavit of reappearance of the absent spouse, unless there
is a judgment annulling the previous marriage or declaring it void ab initio. Also, it is subject to conditions
wherein the subsequent marriage may still subsist despite the absent or presumptively dead spouse's
reappearance (1) if the first marriage has already been annulled or has been declared a nullity; (2) if the sworn
statement of the reappearance is not recorded in the civil registry of the subsequent spouses' residence; (3) if
there is no notice to the subsequent spouses; or (4) if the fact of reappearance is disputed in the proper courts
of law, and no judgment is yet rendered confirming such fact of reappearance.
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PHILIPPINE NATIONAL BANK v. REYES
G.R. No. 212483 | October 5, 2016
Persons and Family Relations: Property relations of the parties
DOCTRINE
A spouse's consent is indispensable for the disposition or encumbrance of conjugal properties.
FACTS
The respondent had been married to Lilia Reyes since 1973. During their union, they acquired three
(3) parcels of land in Malolos, Bulacan, registered under her name. The properties were mortgaged to
Philippine National Bank (PNB) on August 25, 1994 to secure a loan worth P1,100,000.00. On October 6,
1994, this loan was increased to P3,000,000.00. When the spouses failed to pay the loan obligations, PNB
foreclosed the mortgaged real properties. An auction sale where PNB emerged as the highest bidder was held.
A certificate of sale was issued in its favor. On September 22, 1998, the respondent alone filed a Complaint
for Annulment of Certificate of Sale and Real Estate Mortgage against the bank. Upon order of the trial court,
it was amended to include Lilia and the Provincial Sheriff of Bulacan as defendants. In assailing the validity of
the real estate mortgage, it was claimed that Lilia undertook the loan and the mortgage without his consent
and his signature was falsified on the promissory notes and the mortgage. As the lots involved were conjugal
properties, he argued that the mortgage constituted over them was void. As such, the court ordered the
annulment of the real estate mortgage and directed Lilia to reimburse the loan amount with interest. The bank
appealed this decision to the Court of Appeals. This was denied. Upon denial of the Motion for
Reconsideration, the bank brought this petition before the Supreme Court.
ISSUE
Is a real estate mortgage entered solely by the wife valid?
HELD
NO. The instant real estate mortgage over the conjugal properties is void for want of consent from the
respondent. The Family Code is clear: the written consent of the spouse who did not encumber the property
is necessary before any disposition or encumbrance of a conjugal property can be valid. It is not disputed that
the spouses Reyes were married in 1973, before the Family Code took effect. Under the Family Code, their
property regime is the Conjugal Partnership of Gains; thus, Article 124 is the applicable provision regarding
the administration of their conjugal property. While the petitioner points to respondent's signature on the
Promissory Notes and Deed of Mortgage to prove that he consented to the transactions, both the Regional
Trial Court and the Court of Appeals agreed that respondent presented clear and convincing evidence that his
signature, as it appeared on the mortgage contract, was forged. The petitioner also possessed an inability to
prove that respondent took part in the transactions. Having established that his signature was forged, the
respondent proved that he did not consent to the real estate mortgage which is now indisputably void and
legally nonexistent. Nevertheless, the principal obligation in this case was not affected. It remains valid.
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MALABANAN v. MALABANAN
G.R. No. 187225 | March 6, 2019
Persons and Family Relations: Property relations of the spouses
DOCTRINE
Under the Civil Code, property acquired during marriage is presumed to be conjugal. There is no
need to prove that the money used to purchase a property came from the conjugal fund.
FACTS
Melinda Malabanan is the widow of Jose Malabanan. The spouses built a house on the disputed lot,
which the family had owned since 1984. On October 13, 1984, Melinda left the Philippines to work in Libya.
Unfortunately, Jose was murdered on June 12, 1985 prompting her to return home on June 25, 1985. She then
returned to Libya on August 19, 1985, and only came home on November 8, 1990. She learned that the
property was registered under the name of spouses Dominador III and Guia Montano. When Melinda's
mother-in-law, Adelfina Mendoza died, her family executed an Extrajudicial Settlement of her estate. The
property was adjudicated to Ramon Malabanan, Jose's brother. On June 1, 1994, Melinda filed before the
Regional Trial Court a Complaint for Annulment of Title with Damages against Ramon and Prescila Malabanan
and Francisco Malabanan. Jr. Melinda later filed an Amended Complaint to implead the spouses Montano.
She argued that the Special Power of Attorney was void as her signature in it was forged, and that she and Jose
remained the real owners of the property. She prayed for the nullification of the document.
FIRST ISSUE
Was the disputed property considered conjugal?
HELD
YES. The circumstances transpired prior to the effectivity of the Family Code on August 3, 1988. Thus,
the Civil Code governed petitioner and Jose’s marriage and property relations. Under the Civil Code, property
acquired during marriage is presumed to be conjugal. There is no need to prove that the money used to
purchase a property came from the conjugal fund. What must be established is that the property was acquired
during marriage. Only through "clear, categorical, and convincing” proof to the contrary will it be considered
the paraphernal property of one of the spouses. Here, the pieces of evidence presented by respondents, who
had the burden of proving that the property was not conjugal, were insufficient to overturn this presumption.
SECOND ISSUE
Can the disputed property be sold without the wife's consent?
HELD
NO. Since this case involves conjugal property, Articles 165 and 166 of the Family Code are
relevant. Sale of conjugal property by a spouse without the other's consent is void. All subsequent transferees
of the conjugal property acquire no rights whatsoever from the conjugal property's unauthorized sale. A
contract conveying conjugal properties entered by the husband without the wife's consent may be annulled
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entirely. The contract, in its entirety, executed by the husband without the wife's consent, may be annulled
by the wife.
VITUG v. ABUDA
G.R. No. 201264 | January 11, 2016
Persons and Family Relations: The Family: Family Home
DOCTRINE
The family home shall be exempted from execution, forced sale, or attachment except for debts
secured by mortgages on the premises before or after such constitution.
FACTS
Abuda loaned to spouses Vitug. As security for the loan, Vitug mortgaged to Abuda his property. The
property was then subject of a Conditional Contract to Sell between the National Housing Authority and Vitug.
That, upon consummation and completion of the sale by the NHA of said property, the title-award thereof,
shall be received by the mortgagee by virtue of a Special Power of Attorney, executed by mortgagor in her
favor. Parties executed a “restructured” mortgage contract on the property to secure the amount of the original
loan, and subsequent credit accommodations given by Abuda to Vitug. Spouses Vitug failed to pay their loans
despite Abuda’s demands. Abuda filed a complaint for Foreclosure of Property, which happened to be
constituted as spouses Vitug’s family home before its mortgage. Petitioner argues that the property should be
exempt from forced sale, attachment, and execution, based on Article 155 of the Family Code.
ISSUE
Is the family home exempt from the rule against execution, forced sale, or attachment?
HELD
NO. Even though the petitioner's property has been constituted as a family home, it is not exempt
from execution. Article 155 of the Family Code explicitly provides that debts secured by mortgages are
exempted from the rule against execution, forced sale, or attachment of family home except for debts secured
by mortgages on the premises before or after such constitution. Since the petitioner's property was voluntarily
used by him as security for a loan he obtained from the respondent, it may be subject to execution and
attachment.
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ARA v. PIZARRO
G.R. No. 187273 | February 15, 2017
Persons and Family Relations: Paternity and Filiation
DOCTRINE
A person who seeks to establish illegitimate filiation after the death of a putative parent must do so
via a record of birth appearing in the civil register or a final judgment, or an admission of legitimate filiation.
FACTS
The petitioners, Romeo Ara and William Garcia, and the respondents, Dra. Fely Pizarro and Henry
Rossi all claimed to be children of the late Josefa Ara, who died on November 18, 2002. Petitioners argue that
Fely Pizarro was born to Josefa and her then husband, Vicente Salgado, who died during World War II.
Towards the end of the war, Josefa met and lived with an American soldier by the name of Darwin Gray.
Romeo Ara was born from this relationship. Josefa later met a certain Alfredo Garcia, and, from this
relationship, gave birth to sons Ramon Garcia and William Garcia. Josefa and Alfredo married on January 24,
1952. And after Alfredo passed away, Josefa met an Italian missionary named Frank Rossi, who allegedly
fathered Henry Rossi. Respondent Pizarro claims that, to her knowledge, she is the only child of Josefa, and
that petitioner Garcia is recorded as a son of a certain Carmen Bucarin and Pedro Garcia, as evidenced by a
Certificate of Live Birth dated July 19, 1950, and petitioner Ara is recorded as a son of spouses Jose Ara and
Maria Flores, evidenced by his Certificate of Live Birth. The parties verbally sought partition of the properties
left by the deceased Josefa, which were in the possession of respondent Pizarro. Plaintiffs a quo filed a
Complaint for judicial partition of properties left by the deceased Josefa, before the Regional Trial Court.
Pizarro averred that, to her knowledge, she was the only legitimate and only child of Josefa.
ISSUE
May the petitioners prove their filiation to Josefa through their open and continuous possession of the
status of illegitimate children, found in the second paragraph of Article 172 of the Family Code?
HELD
NO. If filiation is sought to be proved under the second paragraph of Article 172 of the Family Code,
the action must be brought during the lifetime of the alleged parent. A person who seeks to establish
illegitimate filiation after the death of a putative parent must do so via a record of birth appearing in the civil
register or a final judgment, or an admission of legitimate filiation. Petitioners did not present evidence that
would prove their illegitimate filiation to their putative parent, Josefa, after her death as provided under Articles
172 and 175 of the Family Code. The documents submitted by petitioners do not constitute as evidence under
the first paragraph of Article 172 of the Family Code. It is evident that appellants Romeo F. Ara and William
Garcia can no longer be allowed at this time to introduce evidence of their open and continuous possession
of the status of an illegitimate child or prove their alleged filiation through any of the means. The simple reason
is that Josefa Ara is already dead and can no longer be heard on the claim of her alleged sons' illegitimate
filiation.
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ABELLA v. CABAÑERO
G.R. No. 206647 | August 9, 2017
DOCTRINE
To establish filiation, an action for compulsory recognition may be filed against the putative father
ahead of an action for support. In the alternative, an action for support may be directly filed, where the matter
of filiation shall be integrated and resolved.
FACTS
This case involves an action for support of the minor Mari Jhorylle Abella. The petitioner Richelle is
the minor’s mother. She alleges in the action that she was repeatedly sexually abused by the respondent in
this case. As a result, she gave birth to the minor child. Prior to the child’s birth, she initiated a criminal case
for rape which was dismissed. She initiated another criminal case for child abuse under RA No. 7610. This,
too, was dismissed. All she asks from the respondent now is a monthly allowance as support for the child. The
respondent denies ever having sexual relations with the petitioner. The RTC dismissed the petitioner’s
complaint on the ground of her failure to implead the minor child as a plaintiff therein. Thus, a petition for
certiorari and mandamus was filed before the Court of Appeals. The appellate court likewise dismissed the
complaint, but on the ground of failure to establish the filiation and paternity of the child. Following a motion
for reconsideration that was also denied, this instant petition was filed.
ISSUE
Did Court of Appeals err in ruling that filiation proceedings should have first been separately instituted
to ascertain the minor child's paternity and that without these proceedings having first been resolved in favor
of the child's paternity claim, the action for support could not prosper?
HELD
YES. Articles 194 and 195 of the Family Code of the Philippines delineate the extent of support among
family members and identify family members who "are obliged to support each other,” respectively. An
illegitimate child, "conceived and born outside a valid marriage," as is the admitted case with the petitioner's
daughter, is such a person entitled to the privileges of these provisions. However, to claim the same, a child
should have first been acknowledged by the putative parent or must have otherwise previously established his
or her filiation with the putative parent, as when "filiation is beyond question, support shall then follow as a
matter of obligation." Illegitimate children establish their filiation "in the same way and on the same evidence
as legitimate children," by (1) the record of birth appearing in the civil register or a final judgment; or (2) an
admission of legitimate filiation in a public document or a private handwritten instrument and signed by the
parent concerned. In the absence of these, illegitimate filiation, (1) the open and continuous possession of the
status of a legitimate child; or (2) any other means allowed by the Rules of Court and special laws may operate
to provide the same effect. In this case, only the child's birth certificate was presented. A separate action for
filiation in cases such as the case at bar will only result in a multiplicity of suits, given how intimately related
the main issues in both cases are. Thus, the declaration of filiation is entirely appropriate to these proceedings.
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MILLER v. MILLER
G.R. No. 200344 | August 28, 2019
DOCTRINE
The legitimacy and filiation of children cannot be collaterally attacked in a petition for correction of
entries in the certificate of live birth.
FACTS
John Miller and Beatriz Marcaida were legally married and bore four children, namely the petitioners.
After John’s death, Joan Miller, through her mother Lennie Espenida (Lennie), filed before the Regional Trial
Court a partition case, alleging that she is John's illegitimate child with Lennie. Joan presented her Certificate
of Live Birth, which showed John to be her registered father. Glenn filed a separate petition praying that Joan's
Certificate of Live Birth be canceled. Petitioners sought the correction of private respondent’s surname in the
birth certificate registered. They want her to use her mother’s surname, Espenida, instead of Miller, claiming
that she was not an acknowledged illegitimate child of John. Joan countered that from 1978 until John's death
in 1990, her mother Lennie and John had an amorous relationship, out of which she was born on June 25,
1982. While she admitted that John did not sign her birth certificate, he openly and continuously recognized
her as his child during his lifetime. Joan further claimed that Glenn knew that John recognized her as his child,
alleging that his petition was merely filed to harass her because she filed the partition case.
ISSUE
Can the legitimacy and filiation of children be collaterally attacked in a petition for correction of
entries in the certificate of live birth?
HELD
NO. What petitioners seek is not a mere clerical change. It is not a simple matter of correcting a single
letter in private respondent's surname due to a misspelling. Rather, private respondent's filiation will be gravely
affected, as changing her surname from Miller to Espenida will also change her status. This will affect not only
her identity, but her successional rights as well. Certainly, this change is substantial. In Braza v. The City Civil
Registrar of Himamaylan City, Negros Occidental, this Court emphasized that "legitimacy and filiation can be
questioned only in a direct action seasonably filed by the proper party, and not through collateral attack."
Moreover, impugning the legitimacy of a child is governed by Article 171 of the Family Code. Hence, Court
Decision is without prejudice to the refilling of the appropriate action before the proper court.
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PROVINCIAL ASSESSOR OF AGUSAN DEL SUR v. FILIPINAS PALM OIL PLANTATION, INC.,
G.R. No. 183416 | October 5, 2016
Property: Accession
DOCTRINE
An improvement will be exempt from taxation if it is an integral part of the public land on which it is
constructed, and the improvement is the property of the government by right of accession.
FACTS
Filipinas Palm Oil Plantation (FPOP) is a private organization engaged in palm oil plantation with
National Development Company (NDC) lands in Agusan del Sur. Harvested fruits from oil palm trees are
converted into oil through FPOP’s milling plant in the middle of the plantation area. Within the plantation,
there are also three plantation roads and a number of residential homes constructed by FPOP for its employees.
After the Comprehensive Agrarian Reform Law (CARL) was passed, NDC lands were then transferred to CARL
beneficiaries who formed themselves as the merged NDC-Guthrie Plantations, Inc., NDC-Guthrie Estates, Inc.,
(NGPI-NGEI) Cooperatives. FPOP entered into a lease contract agreement with NGPI-NGEI. The Provincial
Assessor of Agusan del Sur assessed FPOP’s properties found within the plantation area and imposed real
property taxes against the petitioner for roads, bridges, culverts, pipes and canals as these belonged to the
cooperatives.
ISSUE
Should the roads constructed by FPOP be exempted from real property tax because it belonged to
national government by right of accession?
HELD
YES. The roads that FPOP constructed became permanent improvements on the land owned by the
NGPI-NGEI by right of accession under the Civil Code. Despite the land being leased by FPOP when the roads
were constructed, the ownership of the improvement still belongs to NGPI-NGEI. As provided under Article
440 and 445 of the Civil Code, the land is owned by the cooperatives at the time FPOP built the roads. Hence,
whatever is incorporated in the land, either naturally or artificially, belongs to the NGPI-NGEI as the
landowner. Although the roads were primarily built for FPOP’s benefit, the roads were also being used by the
members of NGPI and the public. Furthermore, the roads inured to the benefit of NGPI-NGEI as owners of the
land not only by right of accession but through the express provision in the lease agreement.
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PADILLA v. MALICSI
G.R. No. 201354 | September 21, 2016
Property: Accession: Builder in good faith
DOCTRINE
The lack of blood relation should have been enough to put respondents on guard and convince them
not to rely on her claim of ownership.
FACTS
Spouses Padilla bought a parcel of land in Magsaysay Norte, Cabanatuan City in 1984. The lot was
covered by Transfer Certificate Title. Sometime in 1998, Spouses Padilla discovered that Leopoldo Malicsi,
Lito Casino, and Agrifino Guanes (Malicsi, et al.) constructed houses on their lot. Spouses Padilla made
repeated verbal and written demands for Malicsi, et al. to vacate the premises and pay a monthly rental of
P2,000.00, but Malicsi, et al. refused to heed Spouses Padilla's demands. 2007, Spouses Padilla filed a
complaint for recovery of possession against Malicsi, et al. Malicsi, et al. alleged that they believed in all
honesty and good faith that the lot belonged to Toribia Vda. De Mossessgeld. They claimed that they possessed
the land and built their houses on the lot only after receiving De Mossessgeld's permission. Malicsi, et al. also
claimed that they and De Mossessgeld agreed that she would sell them the areas occupied by their houses,
provided that pending full payment, they would pay her P40.00 per month as rent and even introduced
improvements to the houses they had built. Respondents stated that they first found out about Spouses Padilla's
claim of ownership sometime in 2002.
ISSUE
Are respondents considered builders in good faith?
HELD
NO. The RTC was not swayed by respondents' assertion of being builders in good faith since it found
that the property was titled, as early as 1963, to petitioner Pablo M. Padilla, Jr.'s mother, while respondents
only entered the lot sometime between 1980 and 1983. Respondents also claim that they received permission
from De Mossessgeld to build their houses on the land, subject to their eventual purchase of the portions
where their houses stood. However, aside from this naked and self-serving testimony, respondents failed to
present any evidence to bolster their claim. Respondents likewise failed to prove that they exercised the
necessary diligence required by their situation. They did not examine the tax declarations or the title to the
property before they built on it. No such peculiar circumstance of close family relations can also be found
here. The records show that De Mossessgeld was a complete stranger to them. Failing to substantiate their
claim, respondents cannot be considered as builders in good faith. As builders in bad faith, respondents have
no right to recover their expenses over the improvements they have introduced to petitioners' lot under Article
449 of the Civil Code. Therefore, petitioners as landowners became the owners of the improvements on the
lot, including the residential buildings constructed by respondents, if they chose to appropriate the accessions.
However, they could instead choose the demolition of the improvements at respondents' expense or compel
respondents to pay the price of the land under Article 450 of the Civil Code.
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REYES v. VALENTIN
G.R. No. 194488 | February 11, 2015
Property: Easement
DOCTRINE
This easement is not compulsory if the isolation of the immovable is due to the proprietor’s own acts.
FACTS
Petitioner alleged that she was the registered owner of a parcel of land, designated as Lot No. 3-B-12.
The property used to be a portion of Lot No. 3-B and was surrounded by estates belonging to other persons.
Petitioner also alleged that respondents' 1,500-square-meter property surrounded her property, and that it was
the only adequate outlet from her property to the highway. The easement sought was the vacant portion near
the boundary of respondents' other lot. Respondents' lot was given to Dominador Ramos (Dominador) who
allegedly was respondents' predecessor-in-interest. Part of the 1,500 square meters was intended as a right of
way. Dominador was tasked to prepare the documents. But, instead of limiting the conveyance to himself to
500 square meters of the property, he conveyed the whole 1,500 square meters, including that which was
supposed to be the access to the barangay road. Instead of giving way, however, he closed the passage, causing
the petitioner's property's isolation. Respondents alleged that the isolation was due to the acts of petitioner's
predecessor-in-interest.
ISSUE
Does petitioner have the compulsory easement of right of way over respondents' property?
HELD
NO. Petitioner also failed to satisfy the requirement of "least prejudicial to the servient estate." Article
650 of the Civil Code provides that in determining the existence of an easement of right of way, the
requirement of "least prejudice to the servient estate" trumps "distance [between] the dominant estate [and
the] public highway." "Distance" is considered only insofar as it is consistent to the requirement of "least
prejudice." This court had already affirmed the preferred status of the requirement of "least prejudice" over
distance of the dominant estate to the public highway. It is true that an easement of right of way may be
granted even if the construction of the bridge was allowed. However, in determining if there is an adequate
outlet or if the choice of easement location is least prejudicial to the servient estate, this court cannot disregard
the possibility of constructing a bridge over the four-meter-wide canal. This court must consider all the
circumstances of the case in determining whether the petitioner was able to show the existence of all the
conditions for the easement of right of way.
29 of 106
DPWH v. CITY ADVERTISING VENTURES CORPORATION
G.R No. 182944 | November 9, 2016
Property: Nuisance
DOCTRINE
The district health officer is required to determine whether or not abatement, without judicial
proceedings, is the best remedy against a public nuisance. Any private person may abate a public nuisance
which is especially injurious to him by removing or if necessary, by destroying the thing which constitutes the
same, without committing a breach of the peace, or doing unnecessary injury.
FACTS
City Advertising Ventures Corporation (CAVC) entered into a lease agreement with the MERALCO
Financing Services Corporation for the use of its lampposts to display advertising banners. When Typhoon
Milenyo hit, several billboards in Metro Manila were blown by strong winds and fell. In its wake, Former
President Gloria Macapagal-Arroyo, issued Administrative Order No. 160 directing the Department of Public
Works and Highways to conduct field investigations, evaluations and assessments of all billboards and
determine those that are hazardous and pose imminent danger to life, health, safety and property of the general
public and to abate and dismantle the same. Thereafter, Administrative Order No. 160-A was issued,
specifying the legal grounds and procedures for the prohibition and abatement of billboards and signboards
constituting public nuisance or other violations of law. During its operations, the DPWH was able to remove
CAVC’s lamppost banners and frames, pedestrian overpass banners, frames, and halogen lamps. CAVC
asserted that Administrative Order No. 160 pertained specifically to "billboards" (i.e., "large panels that carry
outdoor advertising") and not to small advertising fixtures such as its signages and banners.
ISSUE
Did DPWH exceed its authority when it dismantled CAVC’s banners and other fixtures?
HELD
YES. Administrative Order No. 160 expressed the Chief Executive's general directive for the abatement
of billboards that pose a hazard to the general welfare. In doing so, it did not give the DPWH unbridled
authority to dismantle all billboards and signages. Before any such abatement and dismantling, the DPWH is
required to: first, conduct field inspections; second, make evaluations and assessments; third, issue
certifications as to those billboards found to be hazardous and violative of existing standards; and fourth,
furnish copies of these certifications to concerned local government units. The DPWH disregarded the
minimum requirements of due process when they dismantled CAVC’s banners duly licensed by the local
government concerned and covered by a legitimate agreement with MERALCO. No proof was shown by the
DPWH that they had complied with the requirements of Administrative Order No. 160 particularly as to the
evaluation and certification process prior to the dismantling, or to the creation of a task force, or at least a
finding that said banners are nuisances or hazardous. Worse, they jumped right into abatement, skipping initial
investigatory stages and the all-important feature that is due process.
30 of 106
UNIVERSITY OF MINDANAO, INC v. BANGKO SENTRAL NG PILIPINAS
G.R. Nos. 194964-65 | January 11, 2016
Prescription
DOCTRINE
The prescriptive period for actions on mortgages is ten (10) years from the day they may be brought.
Actions on mortgages may be brought not upon the execution of the mortgage contract but upon default in
payment of the obligation secured by the mortgage.
FACTS
On May 25, 1982, University of Mindanao's Vice President for Finance, Saturnino Petalcorin,
executed a deed of real estate mortgage over University of Mindanao's property in Cagayan de Oro City
(covered by Transfer Certificate of Title No. T-14345) in favor of Bangko Sentral ng Pilipinas. "The mortgage
served as security for FISLAI's P1.9 Million loan." It was allegedly executed on University of Mindanao's behalf.
1985, FISLAI, DSLAI, and Land Bank of the Philippines entered into a Memorandum of Agreement intended
to rehabilitate the thrift banks. Among the terms of the agreement was the merger of FISLAI and DSLAI, with
DSLAI as the surviving corporation and later became known as Mindanao Savings and Loan Association, Inc
(MSLAI). On June 18, 1999, Bangko Sentral ng Pilipinas sent a letter to University of Mindanao, informing it
that the bank would foreclose its properties if MSLAI's total outstanding obligation of P12,534,907.73
remained unpaid. On July 16, 1999, University of Mindanao filed two Complaints for nullification and
cancellation of mortgage.
ISSUE
Did the action of Bangko Sentral ng Pilipinas to foreclose the mortgaged properties already
prescribed?
HELD
NO. The prescriptive period for filing an action may run either (1) from 1990 when the loan became
due, if the obligation was covered by the exceptions under Article 1169 of the Civil Code; (2) or from 1999
when respondent demanded payment, if the obligation was not covered by the exceptions under Article 1169
of the Civil Code. However, under Article 1155 of the Civil Code, prescription of actions may be interrupted
by (1) the filing of a court action; (2) a written extrajudicial demand; and (3) the written acknowledgment of
the debt by the debtor. Therefore, the running of the prescriptive period was interrupted when the respondent
sent its demand letter to petitioner on June 18, 1999. This eventually led to petitioner's filing of its annulment
of mortgage complaints before the Regional Trial Courts of Iligan City and Cagayan De Oro City on July 16,
1999. Assuming that demand was necessary, respondent's action was within the ten (10)-year prescriptive
period. Respondent demanded payment of the loans in 1999 and filed an action in the same year.
31 of 106
SPOUSES ABOITIZ v. SPOUSES PO
G.R. Nos. 208450 & 208497 | June 5, 2017
Prescription
DOCTRINE
The prescriptive period to recover property obtained by fraud or mistake, giving rise to an implied
trust is 10 years. This ten-year prescriptive period begins to run from the date the adverse party repudiates the
implied trust, which repudiation takes place when the adverse party registers the land.
FACTS
On May 5, 1978, Spouses Po bought the subject parcel of land from Ciriaco Seno, who acquired it
from the late Mariano Seno. They claimed that the Spouses Aboitiz registered the same property without their
knowledge and through fraud. Thus, they sought to recover the property and to cancel the title of the spouses
Aboitiz. On November 12, 1996, the spouses Po filed a complaint to recover the land and to declare nullity
of title with damages. The Regional Trial Court of Mandaue City declared Spouses Po as the rightful owners,
which the Court of Appeals affirmed upon appeal by Spouses Aboitiz. In this Petition for Review on Certiorari,
Spouses Aboitiz, among others, asserted that the Spouses Po's cause of action has already prescribed and
allegedly accrued when the Deed of Absolute Sale between the Spouses Po and Ciriaco was executed on May
5, 1978. They maintain that more than 10 years had elapsed when the complaint was filed on November 12,
1996, thus barring the action through prescription. The Spouses Aboitiz further insist that "estoppel and laches
have already set in." They claim that they have been "in open, public, continuous, uninterrupted, peaceful,
and adverse possession" in the concept of owners over the property for "46 years as of 1993," without the
spouses Po acting on the Deed of Absolute Sale. 2. The Spouses Aboitiz insist that the RTC as Land Registration
Court Case already held that Ciriaco merely held the property "in trust for the [Mariano Heirs]." They claim
that these findings are binding on the whole world because land registration proceedings are actions in rem.
ISSUE
Were Spouses Po barred by prescription from filing an action for reconveyance and damages?
HELD
NO. It is now well-settled that the prescriptive period to recover property obtained by fraud or mistake,
giving rise to an implied trust under Art. 1456 of the Civil Code, is 10 years pursuant to Art. 1144. This ten-year
prescriptive period begins to run from the date the adverse party repudiates the implied trust, which
repudiation takes place when the adverse party registers the land. An action for reconveyance and cancellation
of title prescribes in 10 years from the time of the issuance of the Torrens title over the property. Considering
that the spouses Po's complaint was filed on November 19, 1996, less than three (3) years from the issuance
of the Torrens title over the property on April 6, 1994, it is well within the 10-year prescriptive period imposed
on an action for reconveyance.
32 of 106
PLDT v. CITI APPLIANCE M.C. CORPORATION
G.R. No. 214546 | October 9, 2019.
Prescription
DOCTRINE
An action for forcible entry must be filed within one (1) year from the date of actual entry on the land.
However, when the entry was done through stealth, the one- year time bar is reckoned from the time the entry
was discovered. In contrast to unlawful detainer suits, no previous demand to vacate is required before an
action for forcible entry may be filed.
FACTS
Citi Appliance has owned a parcel of land in Cebu City. Citi Appliance had to make a deep excavation
to lay the foundation of the parking lot. In the process, it discovered telephone lines, cables, and manholes
underground, which had been placed there by PLDT sometime in 1983. In April 2003, Citi Appliance applied
for exemption from the parking requirement, which the Cebu City Zoning Board initially granted. However,
upon reconsideration, the Cebu City Zoning Board denied the exemption. Citi Appliance wrote PLDT,
demanding that it remove the underground telephone lines, cables, and manholes, or to shoulder the parking
exemption fee. On May 28, 2004, Citi Appliance made a final demand on PLDT. When PLDT still refused to
comply, Citi Appliance filed a complaint with the MTC for ejectment against PLDT. PLDT, argued that the
case should be dismissed since the action for forcible entry had been prescribed. It argued that the one-year
prescriptive period within which to bring an action for forcible entry based on stealth should be reckoned
from the discovery of the alleged unlawful entry, not the last demand to vacate.
ISSUE
Did the case already prescribe?
HELD
YES. The Civil Code provides the prescriptive period for forcible entry or unlawful detainer suits.
Particularly, Article 1147 provides that an action must be filed within one (1) year. In an action for forcible
entry, the following requisites are essential for the MTC to acquire jurisdiction over the case: (1) the plaintiff
must allege prior physical possession of the property; (2) the plaintiff was deprived of possession by force,
intimidation, threat, strategy or stealth; and (3) the action must be filed within one (1) year from the date of
actual entry on the land, except that when the entry is through stealth, the one (1) year period is counted from
the time the plaintiff- owner or legal possessor learned of the deprivation of the physical possession of the
property. It is not necessary, however, for the complaint to expressly use the exact language of the law. For as
long as it is shown that the dispossession took place under said conditions, it is considered as sufficient
compliance with the requirements. Here, a review of respondent's own narration of facts reveals that it
discovered the underground cables and lines in April 2003 when it applied for exemption from the parking
slot requirement with the Cebu City Zoning Board. Counting from this date, the one-year prescriptive period
to file the forcible entry suit had already lapsed sometime in April 2004. Thus, by the time the complaint for
forcible entry was led on October 1, 2004, the period had already been prescribed. The Municipal Trial Court
in Cities, therefore, no longer had jurisdiction to resolve the case.
33 of 106
DEE HWA LIONG FOUNDATION MEDICAL CENTER v. ASIAMED SUPPLIES AND EQUIPMENT
CORPORATION
G.R. No. 205638 | August 23, 2017
Obligations and Contracts: General Provisions
DOCTRINE
A contract may be contained in several instruments with non-conflicting terms.
FACTS
Dee Hwa Liong Foundation Medical Center (DHLFMC)and respondent Asiamed Supplies entered into
a contract of sale wherein it agreed to purchase machines from Asiamed. The agreement provided that it shall
pay the machines not later than two days from receiving the said machines. The sales invoice indicated the
payment of 12% interest per annum and payment of lawyer fees in case of delay in payment. The agreement
was entered into on August 2, 2002. January 26, 2004, Asiamed filed a complaint for a sum of money after
the delay of payment of DHFLMC. Asiamed delivered the machines on May 20, 2003 and July 17, 2003.
DHLFMC only paid the amounts of P3,500,000.00 on July 25, 2003, P1,000,000.00 on September 16, 2003,
and P800,000.00 on October 30, 2003. Asiamed then demanded the rest of the payment but DHLFMC refused
to pay. DHLFMC, argued that the sale was a conditional sale dependent on whether or not DHLFMC will be
approved for a loan. Since DHLFMC was not approved of a loan, there was no contract of sale. DHLFMC also
argued that assuming the sale is valid, it cannot be asked to pay the interest stipulated in the sales invoice as
the same was not in the contract of sale.
ISSUES
Were the interest rate and attorney's fees stipulated in the delivery invoices binding on the parties?
HELD
YES. The RTC ruled that the 12% interest and 25% attorney's fees in case of litigation are explicitly
stated in the sales and delivery invoices. "Art. 1159. Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith.". As there is no written agreement
to rescind, respondent is not bound by petitioners’ notice of rescission. "Art. 1308 — The contract must bind
both contracting parties; the validity or compliance cannot be left to the will of one of them". All told, plaintiff
has established a preponderance of evidence in its favor. Interest shall accrue from October 28, 2003 when
formal demand was made while lawyer's fee will be toned down to about 10% of the amount due. Both the
Regional Trial Court and the Court of Appeals also found that the delivery invoices formed part of the Contract
of Sale. They also ruled that the parties mutually agreed to the interest and attorney's fees as a factual matter.
Although petitioners allege that these invoices lacked petitioner DHLFMC's informed consent, there is no
attempt to prove this. It is also not proven that the stipulations were somehow hidden or obscured such that
DHLFMC could not have read them, making it impossible for DHLFMC to agree to the terms. In any case, it
is a question of fact, which is not proper for review in a petition for review. Absent any other factual or legal
basis, the mere allegation that the documents were signed without the informed consent of petitioner DHLFMC
will not suffice to cause this Court to review these documents.
34 of 106
THE WELLEX GROUP, INC. v. U-LAND AIRLINES, CO., LTD.
G.R. No. 167519 | January 14, 2015
Obligations and Contracts: Kinds of Obligations: Rescission
DOCTRINE
Rescission is a principal action that is immediately available to the party at the time that the reciprocal
prestation was breached.
FACTS
Wellex is a corporation established under Philippine law and it maintains airline operations in the
Philippines. On the other hand, U-Land Airlines Co. Ltd. (U-Land), a foreign corporation, is engaged in the
business of air transportation in Taiwan and in other Asian countries. Wellex and U-Land entered into a
Memorandum of Agreement to expand their respective airline operations in Asia. In the First Memorandum of
Agreement, Wellex and U-Land agreed to develop a long-term business relationship through the creation of
joint interest in airline operations and property development projects in the Philippines. In the Second
Memorandum of Agreement was allegedly incorporated into the First Memorandum of Agreement as a
disclosure to U-Land that Wellex was still in the process of acquiring and consolidating its title to shares of
stock of APIC. Wellex and U-Land were not able to enter into any share purchase agreement although drafts
were exchanged between the two. Despite the absence of a share purchase agreement, U-Land remitted to
Wellex a total of US$7,499,945.00. Wellex acknowledged the receipt of these remittances in a confirmation
letter addressed to U-Land. Wellex then delivered to U-Land stock certificates. Despite these transactions,
Wellex and U-Land still failed to enter into the share purchase agreement and the joint development
agreement. After the last formal communication between the two parties, U-Land, through counsel, demanded
the return of the US$7,499,945.00. Counsel for U-Land claimed that Wellex had unjustifiably refused to enter
into the Share Purchase Agreement. U-Land filed a Complaint prayed for rescission of the First Memorandum
of Agreement and damages against Wellex.
ISSUE
Did the Court of Appeals err in affirming the Decision of the Regional Trial Court that granted the
rescission of the First Memorandum of Agreement prayed for by U-Land?
HELD
NO. Respondent U-Land correctly sought the principal relief of rescission or resolution under Article
1191. The obligations of the parties gave rise to reciprocal prestation, which arose from the same cause: the
desire of both parties to enter into a share purchase agreement that would allow both parties to expand their
respective airline operations in the Philippines and other neighboring countries. Rescission or resolution under
Article 1191, therefore, is a principal action that is immediately available to the party at the time that the
reciprocal prestation was breached. Article 1383 mandating that rescission be deemed a subsidiary action
cannot be applicable to rescission or resolution under Article 1191. Wherefore, petition was denied.
35 of 106
PEZA v. PILHINO SALES CORP
G.R. No. 185765 | September 28, 2016
Obligations and Contracts: Kind of Obligations: Rescission
DOCTRINE
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.
FACTS
Philippine Economic Zone Authority (PEZA) awarded to Pilhino a contract for its acquisition of two
brand new fire truck units. The contract provides that Pilhino will deliver to PEZA the two fire truck units
within 45 days from receipt of the purchase order. It further stipulated that in case of failure to deliver the
goods on the specified date, Pilhino agrees to pay the penalty at the rate of 1/10 of 1% of the total contract
price for each day commencing on the first day after the date as specified on the previous provision. On
November 6, 1997, PEZA furnished the purchase order to Pilhino but the latter failed to deliver the said units
and as a result, PEZA filed a complaint for rescission of contract and damages. In its defense, Pilhino claimed
that there was no starting date from which the obligation to deliver could be reckoned since the said complaint
failed to allege acceptance by Pilhino of the purchase order. The Regional Trial Court ruled in favor of PEZA
and ordered Pilhino to pay the liquidated damages at the stipulated rate. The Court of Appeals partly granted
Pilhino’s Appeal by deleting the forfeiture of Pilhino’s performance bond and pegging the liquidated damages
due from it to the PEZA in the amount of P1,400,000
ISSUE
Did the rescission of a contract of sale obliterates the liability of Pilhino to pay the liquidated damages?
HELD
NO. A contract of sale entails a reciprocal obligation and rescission on account of breach of reciprocal
obligation is provided for in Article 1191 of the Civil Code. It states that the power to rescind obligations is
implied in reciprocal ones, in case 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 of the latter should
become impossible. Article 1191 clearly states that the options of rescission and specific performance come
with the payment of damages in either case. The very same breach or delay in performance that triggers
rescission is what makes the damages due. When the contracting parties, by their own free will, enter into an
agreement on the penalty for failure to perform an obligation, it is the law between them and to uphold both
Article 1191 of the Civil Code and the parties’ will, the contractually stipulated liquidated damages must be
maintained.
36 of 106
CAMP JOHN HAY DEVELOPMENT CORP. v. CHARTER CHEMICAL AND COATING CORP.
G.R. No. 198849 | August 7, 2019
Obligations and Contracts: Kinds of Obligations: Rescission
DOCTRINE
Rescission under Article 1191 of the Civil Code is the proper remedy when a party breaches a
reciprocal obligation. Because each case has its own distinct circumstances, this Court’s power to fix a period
of an obligation under Article 1197 is discretionary and should be exercised only if there is just cause.
FACTS
In January 2001, Camp John Hay Development entered into a Contractor’s Agreement with Charter
Chemical, the company awarded to complete the interior and exterior painting works of unit 2E of the Camp
John Hay Manor. The contract price included the price of the two studio type units at Camp John Hay Suites,
the total amount of which would be based on the units chosen by Charter Chemical. In 2003, Charter
Chemical completed the painting works. Charter Chemical demanded the execution of the deed of sale and
delivery of the titles of the two units in September 2004, with a follow-up in April 2005. In June 2005, Camp
John Hay Development and Charter Chemical executed contracts to sell. In August 2005, Camp John Hay
Development issued certifications to Charter Chemical that the two units were fully paid under their offsetting
scheme. However, the units were not delivered because the construction of Camp John Hay Suites was not
yet complete. Due to the subsisting construction delay, Charter Council, through counsel, wrote Camp John
Hay Development, demanding that it transfer the units or pay the value of these units. When it felt that further
demands would be futile, Charter Chemical, in June 2008, filed before the Construction Industry Arbitration
Commission a Request for Arbitration under the arbitration clause in the Contractor’s Agreement. Both the
arbitral tribunal and CA ruled in favor of Charter Chemical.
ISSUE
Did the CA correctly rescind the obligation under Article 1191 of the Civil Code and and should
period be fixed under Article 1197 of the Civil Code?
HELD
YES. Rescission is invoked when there is non-compliance by one of the contracting parties in case of
reciprocal obligations. Rescission of the contract is sanctioned here. Under the contract, petitioner and
respondent have reciprocal obligations. Respondents, for its part, were bound to render painting services for
the petitioner’s property. This was completed by respondent in 2003, after which it was belatedly issued a
clearance in 2005. Meanwhile, in accordance with the Contractor’s Agreement, petitioner paid part of the
contract price with the remaining balance to be paid through offsetting of two Camp John Hay Suites units.
The law, then, gives respondent the right to seek rescission because the petitioner could not comply with what
is incumbent upon it. When the obligor cannot comply with its obligation, the obligee may exercise its right
to rescind the obligation, and this Court will order the rescission in the absence of any just cause to fix the
period. Here, lacking any reasonable explanation and just cause for the fixing of the period for petitioner’s
non-compliance, the rescission of the obligation is justified.
37 of 106
OLIVAREZ REALTY CORPORATION v. CASTILLO
G.R. No. 196251 | July 9, 2014
Obligations and Contracts: Kinds of Obligations
DOCTRINES
Article 1191 of the Civil Code on the right to rescind reciprocal obligations does not apply to contracts
to sell. The contract to sell is instead cancelled, and the parties shall stand as if the obligation to sell never
existed.
In case of corporations, the directors or trustees and officers are not liable with the corporation even
if it is through their acts that the corporation incurred the obligation. This is because a corporation is separate
and distinct from the persons comprising it.
FACTS
Benjamin Castillo was a registered owner of a parcel of land in Laurel, Batangas which is allegedly
claimed by The Philippine Tourism Authority. In 2010, Olivarez Realty Corp, represented by Dr. Olivarez,
entered into a contract of conditional sale with Castillo over the said property for P19,080,490. Under the said
deed, Olivarez Realty Corp. shall file the action against the Philippine Tourism Authority with the full
assistance of Castillo. Castillo reserved his title to the property and undertook to execute a deed of absolute
sale upon Olivarez Realty Corporation’s full payment of the purchase price. In 2004, Castillo filed an action
to rescind the contract on the ground that Olivarez Realty Corp committed substantial breach of the contract
of conditional sale because they did not file any action against the Philippine Tourism Authority, they failed
to pay the purchase price for the property and that they failed to clear the property of the tenants and pay them
disturbance compensation.
FIRSTT ISSUE
Was the agreement between the parties a contract of conditional sale that can be rescinded?
HELD
NO. the agreement between the parties was a contract to sell and not a contract of conditional sale.
And, since Olivarez Realty Corporation illegally withheld payments of the purchase price, Castillo is entitled
to cancel his contract with the said corporation. Article 1191 of the Civil Code on the right to rescind reciprocal
obligations does not apply to contracts to sell. Failure to fully pay the purchase price is only an event that
prevents the seller’s obligation to convey title from acquiring binding force because there can be no rescission
of a non-existent obligation since the suspensive condition did not yet occur.
SECOND ISSUE
Is Dr. Olivarez solidarily liable with the corporation for the damages awarded in favor of Castillo.
38 of 106
HELD
NO, Dr. Olivarez is not solidarily liable. Under Article 1207 of the Civil Code of the Philippines, there
is solidary liability only when the obligation states it or when the law or the nature of the obligation requires
solidarity. In case of corporations, they are solely liable for their obligations. The directors or trustees and
officers are not liable with the corporation even if it is through their acts that the corporation incurred the
obligation. This is because a corporation is separate and distinct from the persons comprising it. As an
exception to the rule, directors or trustees and corporate officers may be solidarily liable with the corporation
for corporate obligations if they acted "in bad faith or with gross negligence in directing the corporate affairs."
In this case, Castillo failed to prove with preponderant evidence that it was through Dr. Olivarez’s bad faith
or gross negligence that Olivarez Realty Corporation failed to fully pay the purchase price for the property.
CHINATRUST COMMERCIAL BANK v. TURNER

G.R. No. 191458 | July 3, 2017
Obligations and Contracts: Extinguishment of Obligations: Payment or performance
DOCTRINE
Once the amount represented by the telegraphic transfer order is credited to the account of the payee
or appears in the name of the payee in the books of the receiving bank, the ownership of the telegraphic
transfer order is deemed to have been transmitted to the receiving bank. The local bank is deemed to have
fully executed the telegraphic transfer and is no longer the owner of this telegraphic transfer order.
FACTS
Turner, respondent, filed an action for damages against Chinatrust Commercial Bank, for its breach
of obligation, after its failure to return his money that he asked the said petitioner bank to transfer to a travel
agency even if he has cancelled the said flight. On September 13, 2004, British national Turner initiated via
Chinatrust-Ayala Branch the telegraphic transfer of US$430.00 to the account of "MIN TRAVEL/ESMAT AZMY,
Account No. 70946017, Citibank, Heliopolis Branch" in Cairo, Egypt. The amount was a partial payment to
Turner's travel agent for his and his wife's 11-day tour in Egypt. On the same day, Chinatrust remitted the
funds through the Union Bank of California, its paying bank, to Citibank-New York, to credit them to the bank
account of Min Travel/Esmat Azmy in Citibank-Cairo, Egypt. On September 17, 2004, Chinatrust received
Citibank-Cairo's telex-notice about the latter's inability to credit the funds it received because the "beneficiary
name did not match their books (referred to as the 'discrepancy notice')." On September 22, 2004, Turner said
that Ezmat Azmy has already received the money, the discrepancy was fixed, and Citibank-New York was
able to remit the money. However, Turner is then asking Chinabank to cancel the payment given to Ezmat
and refund his account as Turner’s wife got sick and they are cancelling their flight. Chinabank then said that
it can no longer do so as it has no control over the money when it performed its obligation to transmit money
to Ezmat Azmy’s bank account. Furthermore, the money was transmitted on September 15, 2004, while the
demand of the refund was on September 22, 2004. Chinabank’s obligation was done by then.
ISSUE
Is Chinabank liable for damages for breach of obligation for failing to reimburse the money to Turner’s
account despite the cancelled travel plan?
39 of 106
HELD
NO. Chinabank’s obligation to transmit money to Min Travel, the travel agency was completed as
early as September 15, 2004. Chinabank was not privy to the travel agreement between Turner and Min Travel
and is not part of the said contract. The remedy of Turner is to the travel agency who has the money.
Furthermore, Chinabank is also not liable for the mistaken account name as it was Turner who caused the said
mistake. Once the amount represented by the telegraphic transfer order is credited to the account of the payee
or appears in the name of the payee in the books of the receiving bank, the ownership of the telegraphic
transfer order is deemed to have been transmitted to the receiving bank. The local bank is deemed to have
fully executed the telegraphic transfer and is no longer the owner of this telegraphic transfer order.
DEVELOPMENT BANK OF THE PHILIPPINES v. CLARGES REALTY CORPORATION

G.R. No. 170060 | August 17, 2016
Obligations and Contracts: Extinguishment of obligations: Impossibility or difficulty of performance
DOCTRINE
Articles 1266 and 1267 of the Civil Code only apply to obligations to do. They do not apply to
obligations to give as when a party is obliged to deliver a thing which, in this case, is a certificate of title to a
real property free from liens and encumbrances.
FACTS
The Development Bank of the Philippines offered the subject property for public sale, where Clarges
Realty Corporation emerged as the highest bidder. The Development Bank of the Philippines (as vendor) and
Clarges Realty Corporation (as vendee) executed a Deed of Absolute Sale for the property. The parties agreed
that all expenses to be incurred in connection with the transfer of title to Clarges Realty Corporation would be
borne by the Development Bank of the Philippines. Moreover, the Development Bank of the Philippines bound
itself under Clause 6 of the Deed of Absolute Sale to deliver a title to the property "free from any and all liens
and encumbrances on or before December 15, 1987." The Development Bank of the Philippines succeeded
in having the property registered under its name. Marinduque Mining and Industrial Corporation's TCT No. S-
16279 was cancelled and, in its place, TCT No. 151178 was issued. However, TCT No. 151178 contained
annotations from the former TCT No. 5- 16279, specifically, the mortgage lien of the Philippine National Bank
and a tax lien for unpaid taxes incurred by Marinduque Mining and Industrial Corporation. Clarges Realty
Corporation demanded a clean title from the Development Bank of the Philippines, but the bank failed to
deliver a clean title. Development Bank of the Philippines sought to implead the Asset Privatization Trust as a
third-party defendant and maintained that the Asset Privatization Trust had assumed the "direct and personal"
obligation to pay for Marinduque Mining and Industrial Corporation's tax liability and to have the partially
reduced tax lien cancelled. The trial court denied such motion.
ISSUE
Did the trial court err in denying the Motion for Leave to File Third- Party Complaint?
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HELD
NO. Petitioner need not await contribution from the Asset Privatization Trust before it can fulfill its
obligation to deliver a clean title to the property to respondent. Petitioner, as mortgagee of the property, can
very well pay the tax liability and cause the cancellation of the tax lien. There was no legal impossibility to
speak of, as the proviso in Section 219 of the National Internal Revenue Code states that "any mortgagee,
purchaser or judgment creditor" to whom no tax lien shall be valid until notice of the lien is filed before the
Register of Deeds. This suggests that the tax lien may be enforced against any mortgagee. Petitioner cannot
invoke Articles 1266 and 1267 of the Civil Code. These provisions — which release debtors from their
obligations if they become legally or physically impossible or so difficult to be manifestly beyond the
contemplation of the parties — only apply to obligations to do. They do not apply to obligations to give as
when a party is obliged to deliver a thing which, in this case, is a certificate of title to a real property free from
liens and encumbrances.
ARCO PULP AND PAPER v. LIM

G.R. No. 206806 | June 25, 2014
Obligations and Contracts: Extinguishment of obligations: Novation
DOCTRINE
Novation occurs only when the new contract declares so "in unequivocal terms" or that "the old and
the new obligations be on every point incompatible with each other. If there is a substitution of debtor, the
consent of the creditor must also be secured for the novation to be valid.
FACTS
Under the name Quality Paper and Plastic Products Enterprises, Dan Lim supplies scrap papers to
Arco Pulp and Paper. They agreed that Arco Pulp would either pay Dan Lim the value of the raw materials or
deliver to him their finished products of equivalent value. Lim alleged that when he delivered the raw
materials, Arco Pulp and Paper issued a post-dated check, but it was dishonored for being drawn against a
closed account. Arco Pulp and Paper subsequently entered into a memorandum of agreement with Eric Sy
where Lim would supply the raw materials and that Arco Pulp would deliver their finished product to
Megapack Container Corporation, owned by Eric Sy, for his account. Lim filed a complaint for the collection
of a sum of money for failure of Arco pulp and Paper to pay its obligation however the said enterprise argued
that the execution of the memorandum of agreement constituted a novation of the original obligation since
Eric Sy became the new debtor of Lim.
ISSUE
Was the obligation between the parties extinguished by novation?
HELD
NO. The obligation between the parties was not extinguished by novation because the memorandum
of agreement between Arco Pulp and Paper and Eric Sy did not constitute a novation of the original contract.
Article 1291 of the Civil Code provides that obligations may be modified by changing their object or principal
conditions; substituting the person of the debtor; or subrogating a third person in the rights of the creditor.
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Novation occurs when the new contract declares so in unequivocal terms or that the old and new obligations
are on every point incompatible with each other. In this case, there is nothing in the memorandum of
agreement that states that with its execution, the obligation of Arco pulp and Paper to Lim would be
extinguished. It also does not state that Eric Sy somehow substituted Arco Pulp and Paper as Lim’s debtor.
Likewise, if the memorandum of agreement was intended to novate the original agreement between the
parties, Lim must have first agreed to the substitution of Eric Sy as his new debtor.
DEVELOPMENT BANK OF THE PHILIPPINES v. STA. INES MELALE FOREST PRODUCTS

CORPORATION
G.R. No. 193068 | February 1, 2017
Obligations and Contracts: Extinguishment of obligations: Novation
DOCTRINE
The intention of the parties, whether partial or total, must appear by express agreement of the parties,
or by their acts which are too clear and unequivocal to be mistaken. Novation cannot be presumed.
FACTS
Galleon experienced financial difficulties and had to take out several loans from different sources
such as foreign financial institutions, its shareholders, and other entities "with whom it had ongoing
commercial relationships." DBP guaranteed Galleon's foreign loans. In return, Galleon and its stockholders
executed a Deed of Undertaking and obligated themselves to guarantee DBP's potential liabilities. To secure
DBP's guarantee, Galleon undertook to secure a first mortgage on its five new vessels and two second-hand
vessels. However, despite the loans extended to it, "Galleon financial condition did not improve." Galleon's
stockholders, represented by Cuenca, and NDC, through its then Chairman of the Board of Directors, Roberto
V. Ongpin (Ongpin) entered into a Memorandum of Agreement, where NDC and Galleon undertook to
prepare and sign a share purchase agreement covering 100% of Galleon's equity. The share purchase
agreement also provided for the release of Sta. Ines, Cuenca, Tinio and Construction Development Corporation
of the Philippines from the personal counter-guarantees they issued in DBP's favor under the Deed of
Undertaking. DBP, as guarantor, paid the foreign loans of Galleon after Galleon had paid its obligations. When
DBP demanded the reimbursement of his payment to the respondent, respondent argued that there is novation
of the obligation and it is NDC who is liable to DBP for reimbursement as it is now the only shareholder and
operator of Galleon Trading.
ISSUE
Was there novation?
HELD
NONE. The consent of the creditor DBP was not given in the subrogation of the debtor, thus the
designation of NDC as the debtor is void. Hence, Sta. Ines Melale Forest Products is still liable to DBP for the
reimbursement of the amount paid by DBP as a guarantor of Galleon’s obligation. Novation is a mode of
extinguishing an obligation by changing its object or principal conditions, substituting the person of the debtor
or subrogating a third person in the rights of the creditor. It should be noted that in order to give novation its
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legal effect, the law requires that the creditor should consent to the substitution of a new debtor. This consent
must be given expressly for the reason that, since novation extinguishes the personality of the first debtor who
is to be substituted by new one, it implies on the part of the creditor a waiver of the right that he had before
the novation, which waiver must be express under the principle that renuntiatio non proesumitur, recognized
by the law in declaring that a waiver of right may not be performed unless the will to waive is indisputably
shown by him who holds the right.
SPOUSES LIMSO v. PHILIPPINE NATIONAL BANK

GR Nos. 158622 and 169444 | January 27, 2016
Obligations and Contracts: Contracts: General provisions
DOCTRINE
The restructuring of the loan does not ratify the void agreement about the interest rate. Even in the
restructured agreement, there is still no mutuality with regards to the amount of the interest rate as only one
party determines the amount of interest for a specific month.
FACTS
Spouses Limso filed a petition to declare the provision requiring payment of interest amounting to
217.15 million for a loan amounting to 1.067 billion extended to them by respondent PNB on the grounds
that there was no mutuality of contract with regards to the amount of the interest as the amount of the interest
was not agreed upon by the Spouses and the said amount is only dependent upon the interest rate determined
by the management of the bank. Their loan agreement has been restructured after Spouses Limso failed to pay
the loan when it was due and demandable. The loan agreement in dispute is the restructured one. The contract
provides that it is only the management of PNB who determines the amount of the interest rate for a specific
date. Failure to reply within 10 days from the receipt of the letter, means that it has accepted the interest rate,
and if the debtor disagrees with the interest rate, the whole debt becomes due and demandable. No negotiation
is allowed. PNB, argued that there is mutuality of the contract, and if there is not, the restructure of the loan
agreement cures the defect of the original loan contract.
ISSUES
Was the contract regarding the amount of interest rate void? If yes, did the restructuring of the loan
ratified or cured the defect of the contract about the amount of interest?
HELD
YES. The contract regarding the amount of the interest is void as there is no mutuality of the contract.
The principle of mutuality of contracts is stated in Article 1308 of the Civil Code. There is no mutuality of
contract when the interest rate in a loan agreement is set at the sole discretion of one party. Nor is there any
mutuality when there is no reasonable means by which the other party can determine the applicable interest
rate. These types of interest rates stipulated in the loan agreement are null and void. However, the nullity of
the stipulated interest rate does not automatically nullify the provision requiring payment of interest. Certainly,
it does not nullify the obligation to pay the principal loan obligation. Thus, only the amount of the interest rate
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is void for lack of mutuality, there is still an obligation to pay interest but only on the prescribed rate of the
Monetary Board.
As to the issue on whether the restructuring of the loan cures the defect of the contract, no. It does
not ratify the void agreement about the interest rate. As a void contract under Art. 1409 NCC cannot be cured
by ratification. Furthermore, even in the restructured agreement, there is still no mutuality with regards to the
amount of the interest rate as only the management of PNB determines the amount of interest for a specific
month.
ORIENTAL ASSURANCE CORP. v. ONG

G.R. No. 189524 | October 11, 2017
Obligations and Contracts: Contracts: General provisions
DOCTRINE
A management contract, which is a sort of a stipulation pour autrui within the meaning of Article
1311 of the Civil Code, is also binding on a consignee because it is incorporated in the gate pass and delivery
receipt which must be presented by the consignee before delivery can be effected to it.
FACTS
JEA Steel Industries, Inc. imported from South Korea 72 steel sheets in coils. These steel sheets were
transported to Manila on board a vessel as evidenced by a Bill of Lading. Upon arrival of the vessel, 72 coils
were discharged and stored in Pier 9 under the custody of the arrastre contractor, Asian Terminals, Inc. From
the storage compound of Asian Terminals, the coils were loaded on the trucks of Manuel Ong and delivered
to JEA Steel’s plant in Cavite. Eleven of these coils were then found to be in damaged condition, dented or
their normal round shape deformed. JEA Steel filed a claim with Oriental for the value of the eleven damaged
coils, pursuant to its Marine Insurance policy. Oriental paid JEA and subsequently demanded indemnity from
ONG and Asian Terminals, but they refused to pay. Oriental then filed a Complaint before the RTC for a sum
of money against respondents. Oriental contends that it was not aware of the provisions of the Gate Pass or
the Management Contract, neither of which it was a party to. Consequently, it cannot be bound by the
stipulation limiting the liability of Asian Terminals. Asian Terminals counters that “the provisions of the
Management Contract and the Gate Pass are binding on Oriental as insurer-subrogee and successor-in-interest
of the consignee.
ISSUE
Is the petitioner, who was not a party to the Gate Pass or Management Contract, bound by the 15-day
prescriptive period fixed in them to file a claim against the arrastre operator?
HELD
YES. In Government Service Insurance System v. Manila Railroad Company, the Court held that the
provisions of a gate pass or of an arrastre management contract are binding on an insurer-subrogee even if the
latter is not a party to it. This doctrine was reiterated in the later case of Summa Insurance Corporation v. Court
of Appeals: in the performance of its job, an arrastre operator is bound by the management contract it had
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executed with the Bureau of Customs. However, a management contract, which is a sort of a stipulation pour
autrui within the meaning of Article 1311 of the Civil Code, is also binding on a consignee because it is
incorporated in the gate pass and delivery receipt which must be presented by the consignee before delivery
can be effected to it. The insurer, as successor-in-interest of the consignee, is likewise bound by the
management contract. Indeed, upon taking delivery of the cargo, a consignee (and necessarily its successor-
in-interest) tacitly accepts the provisions of the management contract, including those which are intended to
limit the liability of one of the contracting parties, the arrastre operator. Hence, petitioner’s assertion that the
15-day prescriptive period could not be enforced upon to defeat its claim since the Gate Pass was pro forma
and it was not given notice of the Management Contract is untenable.
LUNTAO v. BAP CREDIT GUARANTY CORP

G.R. No. 204412 | September 20, 2017
Obligations and Contracts: Contracts: General provision: Essential requisites
DOCTRINE
The validity of accessory contracts mainly flows from the validity of the principal contracts. A real
estate mortgage is an accessory contract. Thus, the validity of a mortgage contract that was constituted to
secure a loan obligation is affected by the validity of the loan contract.
FACTS
Petitioner Vicente Luntao gave Nanette Luntao, a special power of attorney to mortgage his real
property and to apply for a loan and have the said real property be the collateral for the loan. Nanette Luntao,
applied for a loan from the respondent BAP Credit Guaranty Corp. They were then granted a 900,000 pesos
loan. The loan will be used for Holy Trinity Clinic, a clinic operated by Vicente Luntao When the debt became
due and demandable, Vicente sent a letter to BAP Credit Guaranty apologizing for the delay of the payment
and asking for an additional time. However, Luntao failed to pay the loan. Thus, the respondent foreclosed
the property. Petitioner questioned the validity of the foreclosure and argued that Luntao never received the
proceeds of the loan, therefore, since a real estate mortgage contract is an accessory contract, it depends on
the principal obligation. Since the principal contract of loan is void and inexistent, as it was never perfected
by delivery, the accessory contract also does not exist.
ISSUE
Should the Real Estate Mortgage executed by Vicente L. Luntao and Nanette L. Luntao be nullified?
HELD
YES. As an accessory contract, a mortgage contract's validity depends on the loan contract's validity.
It is, thus, imperative for this Court to determine if the contract of loan between petitioners and private
respondent is valid. The requisites of a valid contract are 1) consent 2) object, which is the proceeds of the
loan and 3) cause of the obligation. All elements should be present in a contract; otherwise, it cannot be
perfected. Furthermore, in a loan contract it is perfected upon delivery. Here, both the trial court and the Court
of Appeals found that petitioners received the proceeds of the loan through the account under the name of
Holy Infant Medical Clinic/Nanette Luntao/Eleanor Luntao. This finding was supported by evidence presented
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by the parties. Both courts also gave weight to Luntao's letter. The letter shows that Vicente did receive the
loan and he even acknowledged that they were in delay.
METRO RAIL TRANSIT DEVELOPMENT CORPORATION v. GAMMON PHILIPPINES, INC.

G.R. No. 200401| January 17, 2018
Obligations and Contracts: Contracts: General provisions: Essential requisites
DOCTRINE
To determine when the contract was perfected, the acceptance of the offer must be unqualified,
unconditional, and made known to the offeror. In bidding contracts, the Court has ruled that the award of the
contract to the bidder is an acceptance of the bidder's offer.
FACTS
This case involves MRT's MRT-3 North Triangle Description Project (Project). Parsons Interpro JV
(Parsons) was the Management Team authorized to oversee the construction’s execution. Gammon received
from Parsons an invitation to bid for the complete concrete works of the Podium. Gammon submitted three
(3) separate bids and several clarifications on certain provisions of the Instruction to Bidders and the General
Conditions of Contract. Gammon won the bid. Gammon transmitted to Parsons a signed Letter of Comfort to
guarantee its obligations in the Project. However, MRT wrote Gammon that it would need one (1) or two (2)
weeks before it could issue the latter the Formal Notice to Proceed. After several negotiations, a suit was filed.
The Construction Industry Arbitration Commission (CIAC) awarded Gammon Philippines, Inc. (Gammon) its
monetary claims for lost profits and reimbursements for engineering services, design work, and site de-
watering and clean up, due to breach of contract. On appeal, the Court of Appeals affirmed the CIAC Decision.
MRT contends that that Gammon was not entitled to CIAC's award considering that there is no perfected
contract between MRT and Gammon.
ISSUE
Is there a perfected contract between petitioner Metro Rail Transit Development Corporation and
respondent Gammon Philippines, Inc.?
HELD
YES. The Supreme Court ruled that there is a perfected contract between MRT and Gammon. Court
ruled that there is a perfected contract between the parties. The requisites of a valid contract are provided for
in Article 1318 of the Civil Code: 1) Consent of the contracting parties; 2) Object certain which is the subject
matter of the contract; 3) Cause of the obligation which is established. There are three (3) stages in a contract:
negotiation, perfection, and consummation. To determine when the contract was perfected, the acceptance
of the offer must be unqualified, unconditional, and made known to the offeror. In bidding contracts, this
Court has ruled that the award of the contract to the bidder is an acceptance of the bidder's offer. Its effect is
to perfect a contract between the bidder and the contractor upon notice of the award to the bidder. Thus, the
award of a contract to a bidder perfects the contract. Failure to sign the physical contract does not affect the
contract's existence or the obligations arising from it. Applying this principle to the case at bar, this Court finds
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that there is a perfected contract between the parties. MRT has already awarded the contract to Gammon, and
Gammon's acceptance of the award was communicated to MRT before MRT rescinded the contract.
TANKEH v. DEVELOPMENT BANK OF THE PHILIPPINES

G.R. No. 171428 | November 11, 2013
Obligations and Contracts: Contracts: General provisions: Essential requisites: Fraud
DOCTRINE
Although there was no fraud that had been undertaken to obtain petitioner’s consent, there was fraud
in the performance of the contract when petitioner had been unjustly excluded from participating in the
management of the affairs of the corporation. This constituted fraud incidental to the performance of the
obligation.
FACTS
Respondent Tankeh applied for a loan from public respondent Development Bank of the Philippines.
To authorize the loan, Development Bank of the Philippines required that the following conditions be met: (1)
A first mortgage must be obtained over the vessel, which by then had been renamed the M/V Sterling Ace; (2)
Ruperto V. Tankeh, petitioner Dr. Alejandro V. Tankeh, Jose Marie Vargas, as well as respondents Sterling
Shipping Lines, Inc. and Vicente Arenas should become liable jointly and severally for the amount of the loan.
Later, petitioner wrote a letter to respondent Ruperto V. Tankeh saying that he was severing all ties and
terminating his involvement with Sterling Shipping Lines, Inc. He required that its board of directors pass a
resolution releasing him from all liabilities, particularly the loan contract with Development Bank of the
Philippines. Petitioner alleged that respondent Ruperto V. Tankeh, together with Vicente L. Arenas, Jr. and
Jose Maria Vargas, had exercised deceit and fraud in causing petitioner to bind himself jointly and severally
to pay respondent Development Bank of the Philippines the amount of the mortgage loan. Petitioner also
alleged that respondent Development Bank of the Philippines had been inexcusably negligent in the
performance of its duties.
ISSUE
Did respondent Rupert V. Tankeh commit fraud against the petitioner?
HELD
The petition was partially granted. The petitioner had given his consent to become a shareholder of
the company without contributing a single peso to pay for the shares of stock given to him by Ruperto V.
Tankeh. This fact was admitted by both petitioner and respondent in their respective pleadings submitted to
the lower court. Given the standing and stature of the petitioner, he was in the position to ascertain more
information about 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. Although there was
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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 constituted fraud incidental to the performance of the obligation.
MAKATI TUSCANY CONDOMINIUM CORPORATION v. MULTI-REALTY DEVELOPMENT

CORPORATION
G.R. No. 185530 | April 18, 2018
Obligations and Contracts: Contracts: Reformation of Instruments
DOCTRINE
The rationale is that it would be unjust to enforce a written instrument which does not truly reflect the
real agreement of the parties. In reforming an instrument, no new contract is created for the parties, rather, the
reformed instrument establishes the real agreement between the parties as intended but was not embodied in
the original instrument.
FACTS
Multi-Realty Development Corporation filed for damages and an action for reformation of instrument
as allowed under Art. 1359 of the Civil Code with their contract Makati Tuscany Condominium Corporation
(MUTASCO), as there was a mistake in the Deed of Assignment of the common space of the Makati Tuscany
Condominium given by its owner and operator Multi-Realty Development Corporation to Makati Tuscany
Condominium Corporation, with regards to the parking slots. Respondent argued that there was a mistake in
their contract which states that 106 of the parking slots are owned by MUTASCO. The respondent said that
there was a mistake in the formation of the contracts as only 8 of the 106 parking lots were transferred to
MUTASCO and is considered a common area while the 98 parking lots are still owned by Multi-Realty. Multi-
Realty’s evidence was the fact that they sold 26 parking lots after the Deed of Assignment without any
complaint from the petitioner, in fact the petitioner also made an offer to buy the parking lots after the Deed
of Transfer of Ownership.
ISSUE
Is reformation allowed in this case?
HELD
YES. Reformation of an instrument is a remedy in equity where a valid existing contract is allowed by
law to be revised to express the true intentions of the contracting parties. The rationale is that it would be
unjust to enforce a written instrument which does not truly reflect the real agreement of the parties. In
reforming an instrument, no new contract is created for the parties, rather, the reformed instrument establishes
the real agreement between the parties as intended, but for some reason, was not embodied in the original
instrument. It is clear from the facts that there was no intention on the part of Multi-Realty to transfer the
ownership of all 106 parking lots. There was a mistake with the instrument and the instrument does not show
the true intention of the parties. In fact, the petitioner MUTASCO, by its action of allowing Multi-Realty from
selling 26 of the parking lot shows that the intention of the parties is not to transfer the ownership of all the
parking lots but only 8 out of the 106 lots. The requisites of an action for reformation are the following: (1)
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there must have been a meeting of the minds of the parties to the contract; (2) the instrument does not express
the true intention of the parties; and (3) the failure of the instrument to express the true intention of the parties
is due to mistake, fraud, inequitable conduct or accident.
METROPOLITAN BANK & TRUST CO. v. G&P BUILDERS, INCORPORATED

G.R. No. 189509 | November 23, 2015
Obligations and Contracts: Contracts: Interpretation of Contracts
DOCTRINE
Where the language of a written contract is clear and unambiguous, the contract must be taken to
mean that which, on its face, it purports to mean, unless some good reason can be assigned to show that the
words should be understood in a different sense.
FACTS
Respondent G&P Builders, Inc. filed a Petition for Rehabilitation before RTC Misamis Oriental. Among
the allegations in the Petition is that the former “obtained a loan from Metrobank and mortgaged twelve parcels
of land as collateral.” While the rehabilitation proceedings were pending, Metrobank and G&P executed a
Memorandum of Agreement (first MOA) where they agreed that four out of twelve parcels of land mortgaged
would be released and sold. The sale amounted to P15 million. The amount was then deposited with
Metrobank “for subsequent disposition and application in conformity with the Court approved Rehabilitation
Plan.” Metrobank then entered into a Loan Sale and Purchase Agreement with Elite Union Investments Limited.
Metrobank sold G&P’s loan account for P10,419,000. G&P, Elite Union, and Spouses Paras then executed a
Memorandum of Agreement (second MOA) where Elite Union sold all its rights, titles, and interests over G&P’s
account to Spouses Paras for P10,419,000. G&P then filed a Motion for the Release of Unapplied Deposit
with Metrobank. It cited the court order which approved the first MOA and provided that P15 million proceeds
of the sale of real properties that secured the loan obligation be deposited with Metrobank. Metrobank opposed
the Motion and claimed that the deposit was not covered by the contract transferring G&P’s loan obligation
to Elite Union.
ISSUE
Is the P15 million deposit included in the transfer of the loan account from petitioner Metrobank to
Elite Union?
HELD
YES. The first paragraph of Article 1370 of the Civil Code: “if the terms of a contract are clear and
leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.”
Here, the first MOA between petitioner and respondent G&P, as approved by the trial court, is clear that the
application of the P15 million deposit would be subject to the court-approved rehabilitation plan. Respondent
G&P’s obligation was still subsisting at this point as the parties did not agree to outright payment, whether full
or partial. When the petitioner entered into the Loan Sale and Purchase Agreement with Elite Union, the entire
obligation was transferred to Elite Union. Through the assignment of credit, the new creditor is entitled to the
rights and remedies available to the previous creditor. Hence, the Loan Sale and Purchase Agreement entitled
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Elite Union to all rights and interests that petitioner had had as creditor of respondent G&P, including the
securities of the loan account. The provisions of the first MOA are plain and simple.
NATIONAL POWER CORPORATION v. SOUTHERN PHILIPPINES POWER

G.R. No. 219627 | July 4, 2016
Obligations and Contracts: Interpretation of Contracts
DOCTRINE
The legal effect of a contract is not determined by any particular provision alone, disconnected from
all others, but from the language used and gathered from the whole instrument.
FACTS
The consortium of ALSONS Power Holdings Corporation and TOMEN Corporation entered into an
Energy Conversion Agreement with the National Power Corporation for a 50 megawatt bunker-C fired diesel-
generating power project in General Santos City. Southern Philippines Power Corporation assumed the
obligations of the consortium to the agreement through Accession Undertaking and eventually informed the
NPC that it installed an additional engine with 5 megawatt generating capacity to which the latter did not
expressly prohibited such act. Thus, from April 2005, SPPC guaranteed to the NPC a total capacity of 55
megawatts, equivalent to 110% of the nominal capacity allowed under the agreement. It then requested for
the payment attributable to the additional 10% capacity made available to NPC but the latter refused on the
grounds that it had the discretion to accept or reject SPPC capacity nomination if it exceeds 100% of the
nominal capacity.
ISSUE
Was the petitioner obliged to accept a capacity nomination of up to 110% and pay respondents for
the additional capacity supplied?
HELD
YES. Under the Eight Schedule of the Agreement, petitioner is obliged to pay for the amount of
contracted capacity, which is determined by the “actual net [kilowatt capability of the Power Station
nominated and demonstrated by respondent].” Contrary to petitioner’s stance, a reading of the entire Energy
Conversion Agreement and its schedules reveals no express prohibition against respondent’s installation of a
sixth engine in its Power Station. Thus, the agreement does not limit the respondent to the five (5) generating
units initially required to be installed. Sec. 3.1 of the agreement’s first schedule which provides for the
construction of a five engine power station, cannot be construed alone. Various stipulations of a contract must
be interpreted or read together to arrive at its true meaning under Article 1374. The legal effect of a contract
is not determined by any particular provision alone, disconnected from all others, but from the language used
and gathered from the whole instrument.
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CEZAR YATCO INC. v. BEL-AIR VILLAGE ASSOCIATION, INC.
G.R. No. 211780 | November 21, 2018
Obligations and Contracts: Contracts: Interpretation of Contracts
DOCTRINE
In contract interpretation, courts must first determine whether a stipulation is ambiguous or
susceptible of multiple interpretations. If no ambiguity is found and the terms of the contract clearly reflect the
intentions of the contracting parties, the stipulation will be interpreted as it is written.
FACTS
Makati Development Corporation developed Bel-Air Village and sold lots to interested buyers. The
contracts of sale between said Corporation and the lot buyers were subjected to specific conditions and
easements embodied in the Deed of Restrictions, which had a lifetime of 50 years. Bel-Air Village Association,
Inc., Bel-Air Village’s homeowners’ association, held a special membership meeting where the majority of the
Association's members approved the board resolution extending the term of effectivity of the Deed
Restrictions. Petitioners, members of the Association who voted against the term extension, claim that a plain
reading of the Deed Restrictions would show that the term is not a restriction which can be validly amended
by private respondent’s members, as it is not a limitation on the use of property. They also assert that the Deed
restrictions never expressly or impliedly authorized private respondent to extend its term of effectivity. In
contrast, private respondent insists that a plain reading of the Deed Restriction would show that the term
restrictions may be amended by a majority vote of the numbers. It emphasizes that the term of effectivity is a
necessary element of the Deed Restrictions; thus, its members may validly extend its effectivity.
ISSUE
Can the private respondent Bel-Air Village Association, Inc.’s members, by majority vote, extend the
Deed Restrictions’ term of effectivity?
HELD
YES. Article 1370 of the Civil Code provides that “if the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control. If the
words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former.
Here, a plain reading of Part VI of the Deed Restrictions, or the Term of Restrictions, would show that the term
of effectivity was not set in stone, and that private respondent was empowered to cancel it altogether, through
its members’ majority vote. The contracting parties’ clear intention was to give the lot owners freedom to
establish rules and regulations, under which they could best use their properties and protect their interests.
This is apparent from the second sentence of Part VI: “However, the Association may, from time to time, add
new ones, amend or abolish particular restrictions or parts thereof by majority rule. Moreover, this freedom
granted to private respondents was confirmed by Ayala Land, Makati Development Corporation’s successor-
in-interest, when it stated that it was never its intention to prohibit the lot owners from extending the term of
the Deed Restrictions.
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CABRERA v. YSAAC
G.R. No. 166790 | November 19, 2014
Special Contracts: Sales
DOCTRINES
A co-owner could enter into a contract to sell a definite portion of the property. However, such
contract is still subject to the suspensive condition of the partition of the property, and that the other co-owners
agree that the part subject of the contract to sell vests in favor of the co-owner’s buyer.
The absence of a contract of sale means that there is no source of obligations for respondent, as seller,
or petitioner, as buyer. Rescission is impossible because there is no contract to rescind.
FACTS
Heirs of Luis and Matilde Ysaac co-owned 5, 517 sq.m parcel of land located in Sabang, Naga City
and one of the co-owners is Henry Ysaac. He sold 439 sq m of land to his lessee Juan Cabrera which was later
reduced to 321 sq.m, however, this agreement was not reduced into writing. Cabrera tried to pay the balance
of the purchase price but Ysaac’s wife refused to receive such payment because of the lack of authority from
her husband. Ysaac decided to rescind the said contract of sale on the ground that Cabrera failed to pay the
balance of the purchase price. Ysaac also told Juan Cabrera that he could no longer sell the property because
the new administrator of the property was his brother Franklin Ysaac. Juan Cabrera filed a civil case for specific
performance for the execution of a formal deed of sale and for the transfer of the title of the real property in
his name. The lower courts ruled that there was a perfected contract of sale between the parties but due to the
sale of the entire property to the local government of Naga, an innocent purchaser for value, the verbal contract
between Cabrera and Ysaac cannot be subject to the remedy of specific performance.
FIRST ISSUE
Was there a valid contract of sale between the parties of the Civil Code?
HELD
NO. As defined by the Civil Code, "a contract is a meeting of minds between two persons whereby
one binds himself, with respect to the other, to give something or to render some service." For there to be a
valid contract, there must be consent of the contracting parties, an object certain which is the subject matter
of the contract, and cause of the obligation which is established. There was no valid contract of sale between
the parties because Henry Ysaac was not authorized by his co-owners to sell the portion of the land occupied
by Cabrera. The agreement between them is a contract to sell and not a contract of sale. A contract to sell is
a promise to sell an object which is subject to a suspensive condition. Without the fulfillment of these
suspensive conditions, the sale does not operate to determine the obligation of the seller to deliver the object.
A co-owner could enter into a contract to sell a definite portion of the property. However, such contract is still
subject to the suspensive condition of the partition of the property, and that the other co-owners agree that the
part subject of the contract to sell vests in favor of the co-owner’s buyer. Hence, the co-owners’ consent is an
important factor for the sale to ripen.
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SECOND ISSUE
Is Article 1592 of the Civil Code applicable in this case?
HELD
NO. The absence of a contract of sale means that there is no source of obligations for respondent, as
seller, or petitioner, as buyer. Rescission is impossible because there is no contract to rescind. The rule in
Article 1592 that requires judicial or notarial act to formalize rescission of a contract of sale of an immovable
does not apply. The said provision contemplates a contract of sale of an immovable property and a stipulation
in the contract that failure to pay the price at the agreed time will cause the rescission. Furthermore, the buyer
can still pay even after the stipulated time if the agreement of the parties has these requisites but this right
ceases as the seller demands the rescission judicially or by notarial act. This provision does not apply if the
agreement was merely a contract to sell. A contract to sell is "where the ownership or title is retained by the
seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition
and failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of
the vendor to convey title from acquiring binding force.
POOLE-BLUNDEN v. UNION BANK

G.R. No. 205838 | November 29, 2017
Special Contracts: Sales: Warranties
DOCTRINE
An “as-is-where-is” clause can only pertain to the readily perceptible physical state of the object of a
sale and it cannot encompass matters that require technical competence. A seller is generally responsible for
warranty against hidden defects of the thing sold pursuant to Article 1561 of the Civil Code.
FACTS
Poole-Blunden came across an advertisement placed by Union Bank for the public auction of a
condominium unit located at Makati City. The Unit was advertised to have an area of 95 square meters. He
won the unit during the bidding and subsequently entered into a Contract to sell with the Bank. When he was
about to construct two additional bedroom units, he discovered that the total area of the unit was 74.4 square
meters. In their reply, Union Bank stated that the unit was confirmed to be 95 square meters inclusive of the
terrace and the common areas surrounding it. This prompted him to file an action to rescind the contract on
the ground that Union Bank acted with fraud in failing to disclose to him that the advertised 95 square meters
was inclusive of the common areas. He insisted that Union Bank is liable for breach of warranty despite the
“as-is-where-is” clause in the Contract to Sell.
FIRST ISSUE
Did Union Bank act with causal fraud that would entitle Poole-Blunden to rescind the Contract to Sell
of the said condominium unit?
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HELD
YES. Union Bank acted with causal fraud which entitles Poole-Blunden to rescind the Contract to Sell.
Under Section 6(a) of the Condominium Act, specified that common areas are not part of the unit. Thus, the
unit sold to Poole-Blunden was deficient in relation to its advertised area of 95 square meters. Likewise,
reliance on the “as-is-where-is” clause in the Contract to Sell is misplaced because a stipulation absolving the
seller from liability of hidden defects can only be invoked by a seller who has no knowledge of hidden defects
however, Union Bank here knew that the unit's area was not 95 square meters. An “as-is-where-is” clause can
only pertain to the readily perceptible physical state of the object of a sale and it cannot encompass matters
that require technical competence. A seller is generally responsible for warranty against hidden defects of the
thing sold pursuant to Article 1561 of the Civil Code.
SECOND ISSUE
Is Article 1562 of the Civil Code a bar to rescind the contract?
HELD
NO. Article 1562 of the Civil Code is not a bar to rescind the contract. The said provision provides
that in the sale of real estate made for lump sum, there can be no increase or decrease of the price although
there be a greater or less area or number than that stated in the contract. Article 1542 has nothing to do with
annulling fraudulently made sales because what it is concerned with is the proportionate reduction of the
purchase price in relation to the measurable units sold.
SPOUSES YULO v. BPI

G.R. No. 217440 | January 16, 2019
Special Contracts: Agency
DOCTRINE
When issuing a pre-screened or pre-approved credit card, the credit card provider must prove that its
client read and consented to the terms and conditions governing the credit card's use. Failure to prove consent
means that the client cannot be bound by the provisions of the terms and conditions, despite admitted use of
the credit card.
FACTS
The Bank of the Philippine Islands (BPI) issued pre-approved credit cards to Rainer Yulo and his wife,
Juliet, as an extension of his account. At first, the spouses Yulo regularly settled their accounts but upon
delinquency, BPI sent two demand letters. Upon failure to compile, BPI filed a Complaint before the
Metropolitan Trial Court of Makati City for sum of money against the Yulo Spouses. In their Answer, the
spouses Yulo claimed that BPI did not fully disclose to them the Terms and Conditions on their use of the
issued credit cards. The Regional Trial Court noted that the BPI presented as evidence the Delivery Receipt for
the credit card packet, which was signed by Rainier's authorized representative, Jessica Baitan. However, due
to unsuccessful mediation, the case was re-raffled to the Metropolitan Trial Court which ruled in favor of BPI.
The Court of Appeals likewise affirmed the decision of the MTC, ruling that as a pre-screened client, Rainier
did not submit or sign any application form as a condition for the issuance of a credit card in his account.
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Thus, respondent, as the credit card provider, had the burden of proving its allegation that petitioner Rainier
consented to the Terms and Conditions surrounding the use of the credit card issued to him. Hence, this
petition for review.
ISSUE
Were petitioners Rainier Jose M. Yulo and Juliet L. Yulo bound by the Terms and Conditions on their
use of credit cards issued by respondent?
HELD
The petition was partially granted. When petitioners accepted respondent's credit card by using it to
purchase goods and services, a contractual relationship was created between them, "governed by the Terms
and Conditions found in the card membership agreement. However, the Delivery Receipt failed to indicate
Baitan's relationship with him. Respondent also failed to substantiate its claim that petitioner Rainier
authorized Baitan to act on his behalf and receive his pre-approved credit card. The only evidence presented
was the check mark in the box beside "Authorized Representative" in the Delivery Receipt. This self-serving
evidence is obviously insufficient to sustain the respondent's claim. Respondent fell short in establishing an
agency relationship between petitioner Rainier and Baitan, as the evidence presented did not support its claim
that petitioner Rainier authorized Baitan to act on his behalf. Without proof that petitioner Rainier read and
agreed to the Terms and Conditions of his pre-approved credit card, petitioners cannot be bound by it. It is,
however, undeniable that the petitioner accumulated unpaid obligations using the credit card issued to him.
INTERNATIONAL EXCHANGE BANK v. SPOUSES JEROME AND QUINNIE BRIONES

G.R. No. 205657 | March 29, 2017
Special Contracts: Agency
DOCTRINE
Upon accepting an agency, the agent becomes bound to carry out the agency and shall be held liable
for the damages, which the principal may incur due to the agent's non-performance.
FACTS
Respondent Spouses Priones took out a loan from iBank to purchase a BMW Z4 Roadster. They
executed a promissory note with chattel mortgage that required them to take out an insurance policy on the
vehicle and gave iBank an irrevocable authority to file an insurance claim in case of loss or damage to the
vehicle. When the mortgaged vehicle was carnapped, the Spouses Briones declared the loss to iBank. They
were instructed to continue paying the next three-monthly installments "as a sign of good faith," which they
complied with. Thereafter, iBank sent them a letter demanding full payment of the lost vehicle. When the
respondents submitted a notice of claim with their insurance company, it was denied due to the delayed
reporting of the lost vehicle. iBank filed a complaint for replevin and/or sum of money against the Spouses
Briones. The Regional Trial Court dismissed iBank's complaint and held that iBank had the obligation to
facilitate the filing of the notice of claim and then to pursue the release of the insurance proceeds. The Court
of Appeals likewise upheld the Regional Trial Court's ruling. The case herein resolves the Petition for Review
on Certiorari.
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FIRST ISSUE
Was there agency?
HELD
YES. Rallos v. Felix Go Chan & Sons Realty Corporation lays down the elements of agency: 1) there is
consent, express or implied, of the parties to establish the relationship; 2) the object is the execution of a
juridical act in relation to a third person; 3) the agent acts as a representative and not for himself; and 4) the
agent acts within the scope of his authority. The Court held that all the elements of agency exist in this case.
Under the promissory note with chattel mortgage, spouses Briones appointed iBank as their attorney-in-fact,
authorizing it to file a claim with the insurance company if the mortgaged vehicle was lost or damaged.
Petitioner was also authorized to collect the insurance proceeds as the beneficiary of the insurance policy.
The Court upheld the decisions of the lower court that an agency to exist between the parties.
SECOND ISSUE
Was the agency relationship revoked or terminated?
HELD
NO. Revocation as a form of extinguishing an agency under Article 1924 of the Civil Code only
applies in cases of incompatibility, such as when the principal disregards or bypasses the agent in order to
deal with a third person in a way that excludes the agent. The spouses Briones' did not disregard or bypass
the petitioner when they made an insurance claim; rather, they had no choice but to personally do it because
of their agent's negligence. A bilateral contract that depends upon the agency is considered an agency coupled
with an interest, making it an exception to the general rule of revocability at will. Lim v. Saban emphasizes
that when an agency is established for both the principal and the agent, an agency coupled with an interest is
created and the principal cannot revoke the agency at will. Clearly, a bilateral contract existed between the
parties, making the agency irrevocable. Petitioner was also aware of the bilateral contract; thus, it included
the designation of an irrevocable agency in the promissory note with chattel mortgage that it prepared for the
Spouses Briones to sign.
MAGSAYSAY MARITIME CORP v. DE JESUS

G.R. No. 203943 | August 30, 2017
Special Contracts: Compromise
DOCTRINE
A conditional settlement of a judgment award may be treated as a compromise agreement and a
judgment on the merits of the case if it turns out to be highly prejudicial to one of the parties.
FACTS
Petitioner hired Bernardine De Jesus (Bernardine) as an accommodation supervisor for the cruise ship
Regal Princess. Based on the contract of employment, he was to receive a basic monthly wage of US$388.00
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for a period of 10 months. On March 9, 2006, Bernardine boarded Regal Princess and he eventually
disembarked 10 months later, or on January 16, 2007 after his contract of employment ended. Bernardine was
soon diagnosed with Aortic Aneurysm and on March 15, 2007, he had a coronary angiography and died on
March 26, 2007. Herein respondent, Cynthia, filed a complaint for payment of death benefits, medical
expenses, sickness allowance, damages and attorney’s fees. The Labor Arbiter and NLRC both held that the
sickness of Bernardine is work-related. On June 30, 2011, petitioner paid respondent P3.370,514.40 as a
conditional satisfaction of the judgment award against it and without prejudice to its Petition for Certiorari
pending before CA. CA denied the petition for being moot and academic.
ISSUE
Had the payment of the money judgment rendered the petition for Certiorari moot and academic?
HELD
YES. Article 2028 of the Civil Code defines a compromise agreement as "a contract whereby the
parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced." Parties
freely enter into a compromise agreement, making it a judgment on the merits of the case with the effect of
res judicata upon them. While the general rule is that a valid compromise agreement has the power to render
a pending case moot and academic, being a contract, the parties may opt to modify the legal effects of their
compromise agreement to prevent the pending case from becoming moot. In the Affidavit of Heirship,
respondent was prohibited from seeking further redress against petitioners, making the compromise agreement
ultimately prejudicial to respondent. This prohibition on the part of respondent to pursue any of the available
legal remedies should he CA or this Court reverse the judgment award of the labor tribunals or prosecute any
other suit or action in another country puts the seafarer’s beneficiaries at a grave disadvantage.
TEAM IMAGE ENTERTAINMENT INC v. SOLAR TEAM ENTERTAINMENT INC.

G.R. No. 191652| September 13, 2017
DOCTRINE
A judgment upon a compromise is rendered based on the parties’ reciprocal concessions. With even
more reason should a judgment upon a compromise be complied with in good faith considering that the
parties themselves crafted its terms.
FACTS
Solar Team (ST) entered into a Marketing Agreement with Team Image (TI), which agreed to act as
Solar Team’s exclusive marketing agent by selling advertising spots to business enterprises on behalf of ST. ST
demanded liquidation from TI alleging that the latter had breached its MA and represented itself as the owner
of ST and collected sale proceeds. RTC held that TI breached its MA and should not collect any sales proceeds.
On April 28, 2003, ST and TI entered into a Compromise agreement (CA) whereas it agreed on the payment
terms and division of receivables and was approved by RTC. TI filed a writ of execution for the alleged failure
of ST to collect receivables from VTV Corp and submit certification of existence. It initially approved the
suspension of payments by TI but later set aside the ruling under ST’s motion for reconsideration. TI filed a
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second motion on the ground that ST failed to cause the dismissal of its complaint against TI which was
approved. ST filed its own motion for issuance of a writ of execution alleging that TI failed to submit documents
necessary for the auditing and accounting of receivables to the auditor. RTC denied both motion and ordered
for the deposit of P2,000,000.00 with the Office of the Clerk of Court.
ISSUE
Was the order of the RTC Judge for the deposit of P2,000,000.00 with the Office of the Clerk of Court
violates the Compromise Agreement.
HELD
YES. As held by CA, it was grave abuse of discretion for Judge Dumayas to keep the P2,000,00.00 in
custodia legis. Upon approval, a judgment upon a compromise is immediately executory, not even subject to
appeal. Ordering of the deposit of P2,000,000.00 with the Office of the Clerk of Court effectively stayed the
execution of an immediately executory judgment, it is highly irregular. Nowhere in the law or the Rules of
Court is such deposit allowed. However, as previously discussed, TI violated par 6 and 7 of the agreement by
failing to pay its monetary obligations under these paragraphs. For these violations, TI must pay ST
P2,000,000.00 in liquidated damages. As so far ST, it violated par 22 for failure to withdraw the complaint-
in-intervention it had earlier led against TI. Hence ST must pay TI liquidated damages of P2,000,000.00.
however, the court ruled that it is already offset by operation of law.
GADRINAB v. SALAMANCA
G.R. No. 194560 | June 11, 2014
DOCTRINE
A judgment on compromise agreement is a judgment on the merits. It has the effect of res judicata
and is immediately final and executory unless set aside because of falsity or vices of consent.
FACTS
Respondents, together with Adoracion Gadrinab and Arsenia Talao, are siblings and heirs of the late
Spouses Talao, Nicolas and Aurelia. The Spouses Talao died intestate, leaving a parcel of land in Sta. Ana,
Manila. The five Talao children divided the property among themselves through an extrajudicial settlement.
Subsequently, Arsenia Talao waived her share over the property in favor of her siblings. Respondent
Salamanca filed a complaint for partition against her siblings, Antonio, Elena (deceased, now represented by
her husband, Jose Lopez), and Adoracion (deceased, now represented by petitioner Gadrinab) before the RTC
of Manila. All parties claimed their respective shares in the property. They also claimed shares in the rentals
collected from one of the units of a duplex apartment on the property. Upon being referred to mediation, the
parties entered into a compromise agreement. Nestor Gadrinab filed a motion for execution of the compromise
agreement and demanded his 1/4 share in the accumulated rentals. During the hearing, the parties agreed that
the rentals shall be divided only into three since Nestor had already been occupying one of the duplex units.
They also agreed that Antonio Talao would shoulder Nestor’s share, equivalent to 1/4 of the rental amount.
Based on the agreement, the property was appraised. Unsatisfied with the appraisal, Antonio Talao moved for
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the property’s reappraisal, which was denied by the RTC. Respondent Salamanca moved for the physical
partition of the property before the RTC of Manila. She prayed for the physical partition of the property instead
of having it sold.
ISSUE
Did the CA err in affirming RTC’s decision, allowing the physical partition of the property despite
finality of a previous judgment on compromise agreement involving the division of the same property?
HELD
YES. In a compromise agreement, the parties freely enter stipulations. “A judgment based on a
compromise agreement is a judgment on the merits” of the case. It has the effect of res judicata; but there shall
be no execution except in compliance with a judicial compromise. This case involves “bar by prior judgment.”
Respondents cannot file another action for partition after final judgment on compromise had already been
rendered in a previous action for partition involving the same parties and property. Doctrines on bar by prior
judgment and immutability of judgment apply whether judgment is rendered after a full-blown trial or after
the parties voluntarily execute a compromise agreement duly approved by the court. Because a judicial
compromise agreement is both an agreement between the parties and a judgment on the merits, it is covered
by the Civil Code provisions on contracts. It can be avoided on grounds that may avoid an ordinary contract,
e.g., it is not in accord with the law; lack of consent by a party; and existence of fraud or duress.
CHIQUITA BRANDS INC v. OMELIO

G.R. No. 189102 | June 7, 2017
DOCTRINE
Courts can neither amend nor modify the terms and conditions of a compromise validly entered into
by the parties. A writ of execution that varies the respective obligations of the parties under a judicially
approved compromise agreement.
FACTS
Thousands of banana plantation workers form over 14 countries instituted class suits for damages in
the US against 11 foreign corporations claiming that they have been exposed to dibromochloropropane
(DBCP) while working in the plantations that utilized it. The US courts dismissed the actions and directed their
claimants to file actions in their respective home countries. Filipino claimants filed for a complaint for damages
against the same foreign corporations before the Philippine courts. Before pre-trial, the corporations entered
into a worldwide settlement in US with all the banana plantation workers. It provided, among others, that the
settlement should be deposited in the escrow account, which should be administered by a mediator.
Consequently, the corporations moved to dismiss the case and alleged that all claimants except two, executed
quitclaims denominated as “released in full.” RTC approved the compromise agreement and dismissed the
case. Shortly after dismissal, several claimants moved for the execution of the judgment on compromise to
which herein petitioners opposed on the ground of mootness. They argued that they had already complied
with their obligation by depositing the settlement amounts into an escrow account. RTC granted the motion
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for execution absence proof that the settlement amounts have been withdrawn and delivered to each
individual claimant. The RTC issued an amended writ of execution on July 31, 2009 which included all the
subsidiaries, affiliates controlled and related entities, successor and assigns of the foreign corporations and
imposed solidary liability against them.
ISSUE
Did the respondent court commit grave abuse of discretion amounting to lack or excess of its
jurisdiction in issuing the assailed orders and writs?
HELD
YES. A compromise validly entered into has the authority and effect of res judicata as between the
parties under Article 2037. A judgment on compromise that has attained finality cannot be modified in any
respect even if the modification is meant to correct erroneous conclusions of fact and law, and whether it be
made by the court that rendered it or by the highest court of the land.
SPOUSES ABELLA v. SPOUSES ABELLA

G.R. No. 195166 | July 8, 2015
Special Contracts: Loan
DOCTRINE
Article 1956 prevents the application of any interest rate other than that specifically provided for by
the parties in their loan document or, in lieu of it, the legal rate.
FACTS
Petitioner spouses Salvador and Alma Abella alleged that respondent spouses Romeo and Annie
Abella obtained a loan from them and that respondents failed to pay the amount due in full. The loan was
evidenced by an acknowledgment receipt. Respondents, however, claimed that the amount involved did not
pertain to a loan they obtained from petitioners but was part of the capital for a joint venture involving lending
of money. The RTC ruled in favor of petitioners. The CA ruled that while respondents had indeed entered into
a simple loan with petitioners, respondents were no longer liable to pay the outstanding balance. It reasoned
that said loan could not have earned interest citing Article 1956, which requires interest to be stipulated in
writing. While the acknowledgment receipt showed that interest was to be charged, no particular interest rate
was specified. Thus, at the time respondents were making interest payments of 2.5% per month, these interest
payments were invalid for not being properly stipulated by the parties.
ISSUE
Did interest accrue on respondents’ loan from petitioners? If so, at what rate?
HELD
NO. The acknowledgment receipt attests to: first, respondents' receipt of the sum of P500,000.00
from petitioner Alma Abella; second, respondents' duty to pay back this amount within one (1) year from
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March 22, 1999; and third, respondents' duty to pay interest. Consistent with what typifies a simple loan,
petitioners delivered to respondents with the corresponding condition that respondents shall pay the same
amount to petitioners within one year. On the matter of interest, the text of the acknowledgement receipt
attests to the contracting parties’ intent to subject to the interest the loan extended by petitioners to
respondents. The controversy, however, stems from the acknowledgement receipt’s failure to state the exact
rate of interest. Article 1956 of the Civil Code provides that “no interest shall be due unless it has been
expressly stipulated in writing.” Jurisprudence is also clear about the applicable interest rate if a written
instrument fails to specify at a rate. In a loan or forbearance of money, the interest due should be that stipulated
in writing, and in the absence thereof, the rate shall be 12% per annum. Recently, however, the Bangko Sentral
ng Pilipinas Monetary Board, in its Resolution No. 796, changed the legal rate from 12% to 6% per annum.
In sum, Article 1956, read in light of established jurisprudence, prevents the application of any interest rate
other than that specifically provided for by the parties in their loan document or, in lieu of it, the legal rate.
Here, as the contracting parties failed to make a specific stipulation, the legal rate must apply. Moreover, the
rate that petitioners adverted to, 2.5% per month, is unconscionable. The conventional interest due on the
principal amount loaned by respondents from petitioners is held to be 12% per annum.
PHILIPPINE NATIONAL BANK v. SANTOS

G.R. No. 208293 | December 10, 2014
Special Contracts: Loan
DOCTRINE
The contractual relationship between banks and their depositors is governed by the Civil Code
provisions on simple loan. Once a person makes a deposit of his or her money to the bank, he or she is
considered to have lent the bank that money. The bank becomes his or her debtor, and he or she becomes the
creditor of the bank, which is obligated to pay him or her on demand.
FACTS
Respondents discovered that their father maintained a premium savings account with Philippine
National Bank (PNB). Respondents went to PNB to withdraw their father’s deposit. The branch manager of
PNB required them to submit an original or certified true copy of the Death Certificate. However, when they
tried to withdraw the deposit, the branch manager informed them that the deposit had already "been released
to a certain Bernardito Manimbo (Manimbo). Respondents filed before the Regional Trial Court of Marikina
City a complaint for sum of money and damages against PNB. The trial court ruled that PNB and the branch
manager were both negligent in releasing the deposit to Manimbo. Court of Appeals affirmed the decision of
RTC.
ISSUE
Were Philippine National Bank and Aguilar negligent in releasing the deposit to Bernardito Manimbo?
HELD
YES. The Supreme Court ruled that the trial court and the Court of Appeals correctly found that
petitioners PNB and Aguilar were negligent in handling the deposit of Angel C. Santos. The contractual
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relationship between banks and their depositors is governed by the Civil Code provisions on simple loan.
Once a person makes a deposit of his or her money to the bank, he or she is considered to have lent the bank
that money. The bank becomes his or her debtor, and he or she becomes the creditor of the bank, which is
obligated to pay him or her on demand. The default standard of diligence in the performance of obligations is
"diligence of a good father of a family.” However, similar with common carriers, banking is a business that is
impressed with public interest. This is the reason we have recognized the fiduciary nature of the banks’
functions and attached a special standard of diligence for the exercise of their functions. Petitioners PNB and
Aguilar’s treatment of Angel C. Santos’ account is inconsistent with the high standard of diligence required of
banks. They accepted Manimbo’s representations despite knowledge of the existence of circumstances that
should have raised doubts on such representations. As a result, Angel C. Santos’ deposit was given to a person
stranger to him.
RACELIS v. SPOUSES JAVIER

G.R. No. 189609 | January 29, 2018
Special Contracts: Lease
DOCTRINE
Lessees are entitled to suspend the payment of rent if their legal possession is disturbed. Acts of
physical disturbance that do not affect legal possession is beyond the scope of this rule.
FACTS
On August 2001, the Spouses Javier offered to purchase the Marikina Property from Victoria Racelis.
However, since the former could not afford the purchase price, which was worth P3,500,000, they offered to
lease the property while raising enough money. The spouses then agreed to the said set-up. In July 2002,
Racelis inquired whether the spouses Javier were still interested to purchase the property. The Spouses Javier
reassured her of their commitment and even promised to pay P100,000.00 to buy them more time within
which to pay the purchase price. On July 26, 2002, the Spouses Javier tendered the sum of P65,000.00
representing “initial payment or goodwill money.” On several occasions, they tendered small sums of money
to complete the promised P100,000.00, but by the end of 2003, they only delivered a total of P78,000.00.
Meanwhile, they continued to lease the property. They consistently paid rent but started to fall behind by
February 2004. Racelis filed a complaint for ejectment against the spouses Javier, alleging that she agreed to
lease the property to the spouses Javier based on the understanding that they would eventually purchase it. She
also claimed that they failed to pay rent for a total of P84,000.00. The spouses Javier averred that they never
agreed to purchase the property from Racelis because they found a more affordable property. They claimed
that the amount of P78,000.00 was advanced rent. The MTC ruled by dismissing the said complaint.
ISSUE
Can the respondents invoke their right to suspend the payment of rent under Article 1658 of the Civil
Code?
HELD
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NO. Under Article 1658 of the Civil Code, a lessee can postpone the payment of rent if the lessor fails
to either (1) make the necessary repairs on the property; or (2) maintain the lessee in peaceful and adequate
enjoyment of the property leased. The latter enumeration does not contemplate all acts of disturbance as the
lessees may suspend the payment of rent only if their legal possession is disrupted. This provision implements
the obligation imposed on lessors under Article 1654(3) of the Civil Code. In this case, the disconnection of
electrical service over the leased premises on May 14, 2004 was not just an act of physical disturbance but
one that is meant to remove respondents from the leased premises and disturb their legal possession as lessees.
Generally, this would have entitled respondents to invoke the right accorded by Article 1658. However, this
rule will not apply in the present case because the lease had already expired when the petitioner requested
for the temporary disconnection of electrical service. At that point, the petitioner was no longer obligated to
maintain respondents in the “peaceful and adequate enjoyment of the lease for the entire duration of the
contract.” Therefore, respondents cannot use the disconnection of electrical service as justification to suspend
the payment of rent.
INTRAMUROS ADMINISTRATION v. OFFSHORE CONSTRUCTION DEVELOPMENT

COMPANY
G.R. No. 196795 | March 7, 2018
Special Contracts: Lease
DOCTRINE
A person who occupies the land of another at the latter's tolerance or permission without any contract
between them is necessarily bound by an implied promise that he will vacate upon demand, failing which a
summary action for ejectment is the proper remedy against him.
FACTS
In 1998, Intramuros leased three real properties, which it administered, to Offshore Construction. The
Contracts of Lease for the said properties were for a period of 5 years and included a provision for lease
renewals every 5 years upon the parties’ mutual agreement. Thereafter, Offshore Construction occupied the
leased properties and introduced improvements therein. Eventually, the parties executed a Compromise
Agreement, which retained the 5-year period of the existing lease contracts, and affirmed the validity of the 2
lease contracts, and terminated the other lease contract. During the lease period, Offshore failed to pay its
utility bills and rental fees even after several demand letters. Despite this, Intramuros tolerated the continuing
occupation, hoping that Offshore would pay its arrears. Intramuros then filed a complaint for ejectment before
the MTC.
ISSUE
Is Intramuros Administration is entitled to possess the leased premises and collect the unpaid rentals?
HELD
YES. It is undisputed that respondent's occupation and use of the 3 properties started on September
1, 1998 by virtue of the Contracts of Lease all dated August 20, 1998. Said Contracts of Lease were modified
through Addendums to the Contracts likewise dated August 20, 1998. The parties entered into a Compromise
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Agreement, wherein they affirmed the validity of the lease contracts. Thereafter, the Contracts of Lease expired.
Respondent does not concede this, but there is no proof that there has been any contract mutually agreed
upon by the parties for any extensions of the leases. Respondent can only argue that petitioner's continuing
tolerance of respondent's possession and acceptance of respondent's rental payments impliedly renewed the
Contracts of Lease. But petitioner's tolerance of respondent's occupation and use of the leased premises after
the end of the lease contracts does not give the latter a permanent and indefeasible right of possession in its
favor. When a demand to vacate has been made, as what petitioner had done, respondent’s possession became
illegal and it should have left the leased premises.
REPUBLIC v. HEIRS OF DAQUER

G.R. No. 193657 | September 4, 2018
Land Titles and Deeds
DOCTRINE
In classifying lands of the public domain as alienable and disposable, there must be a positive act
from the government declaring them as open for alienation and disposition.
FACTS
Daquer lodged Homestead Application before the Bureau of Lands, now Land Management Bureau,
a piece of land for his "exclusive personal use and benefit." The PENRO, by the Director of the Bureau of
Lands' authority, approved Daquer's application and issued him Homestead Patent No. V-67820. Thereafter,
it was transmitted to the Registrar of Deeds of Palawan for registration and OCT was issued in Daquer's name.
However, upon investigation, CENRO discovered that the land covered by Homestead Application and OCT
fell within the zone of unclassified public forest. The heirs of Daquer presented Porcepina who testified that
she was residing at Lot No. H-19731 and that she had custody of OCT. On the other hand, the Republic
contended that public lands may only be classified by the Executive Department through the Office of the
President. Citing Heirs of Spouses Vda. De Palanca v. Republic, it argued that "when the property is still
unclassified, whatever possession applicants may have had, and however long, still cannot ripen into private
ownership."
ISSUE
Can a mere issuance of a homestead patent classify an otherwise unclassified public land into an
alienable and disposable agricultural land of the public domain?
HELD
NO. At the outset, it must be emphasized that in classifying lands of the public domain as alienable
and disposable, there must be a positive act from the government declaring them as open for alienation and
disposition. A positive act is an act which clearly and positively manifests the intention to declassify lands of
the public domain into alienable and disposable. As aptly argued by petitioner, an act of the government may
only be considered as "express or positive if it is exercised directly for the very purpose of lifting land from
public ownership." In this case, the records are bereft of any evidence showing that the land has been classified
as alienable and disposable. Respondents presented no proof to show that a law or official proclamation had
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been issued declaring the land covered by Homestead Patent No. V-67820 to be alienable and disposable.
Having failed to overcome the burden of proving that the land covered by Homestead Patent No. V-67820 is
alienable and disposable, the presumption that it is an inalienable land of the public domain remains.
AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM v. REPUBLIC

G.R. No. 180086 | July 2, 2014
Land Titles and Deeds: Original registration: Who may apply
DOCTRINE
In computing the period of possession, what is important is that the land has already been declared
alienable and disposable at the time of the application for registration. Upon satisfaction of this requirement,
the computation of the period may include the period of adverse possession prior to the declaration that land
is alienable and disposable.
FACTS
The Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) filed an
application for original registration of parcels of land in Silang, Cavite alleging that their predecessors-in-
interest had been in possession of the properties since June 12, 1945. The Municipal Circuit Trial Court
approved AFP- RSBS's application. The Republic of the Philippines moved for reconsideration which was
denied. The Republic appealed the decision and order of the trial court, alleging lack of the Department of
Environment and Natural Resources certification showing that the properties were already declared alienable
and disposable at the time of possession by the predecessors-in-interest. AFP-RSBS, on the other hand, argued
that what is required is that the property sought to be registered has already been declared to be alienable and
disposable land of the public domain at the time of the application for registration. The Court of Appeals
reversed the decision of the trial court and dismissed AFP-RSBS's application. The CA held that the lot in
question was declared alienable and disposable only on March 15, 1982 and that the period of possession of
the predecessors-in-interest before that date should be excluded from the computation of the period of
possession.
ISSUE
Is the period of possession before the declaration of the land as an alienable and disposable
agricultural land excluded from the computation of the period of possession for purposes of original
registration?
HELD
NO. An applicant for original registration based on a claim of exclusive and continuous possession
or occupation must show the existence of (1) Open, continuous, exclusive, and notorious possession, by
themselves or through their predecessors-in-interest, of land; (2) The land possessed or occupied must have
been declared alienable and disposable agricultural land of public domain; (3) The possession or occupation
was under a bona fide claim of ownership; (4) Possession dates back to June 12, 1945 or earlier. In this case,
the properties were already declared alienable and disposable land on March 15, 1982. Hence, the property
was already alienable and disposable at the time of petitioner's application for registration on July 10, 1997.
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Petitioner was also able to show that it, through itself or its predecessors-in-interest, has been in open,
continuous, exclusive, and notorious possession before 1945 through testimonies and documents.
CANLAS v. REPUBLIC
G.R. No. 200894 | November 10, 2014
Land Titles and Deeds: Original Registration: Who may apply
DOCTRINE
An applicant for land registration or judicial confirmation of incomplete or imperfect title must prove
the following requisites: “(1) that the subject land forms part of the disposable and alienable lands of the public
domain, and (2) that the applicant has been in open, continuous, exclusive and notorious possession and
occupation of the same under a bona fide claim of ownership since June 12, 1945, or earlier.”
FACTS
Petitioner Luzviminda A. Canlas applied for the original registration of title, under Presidential Decree
No. 1529, of the 9,751-square-meter parcel of land located in Barrio Macamot, in Binangonan, Rizal and
technically described as Cadastral Lot No. 11566, Psu-04-006561. There was no opposition to Canlas’
application. Respondent (Republic) did not submit its comment or opposition despite the opportunity given
by the trial court. The Regional Trial Court granted Canlas’ application. The Republic appealed and the Court
of Appeals reversed the decision of the lower court and held that Canlas was not able to prove open,
continuous, exclusive, and notorious possession and occupation of the property. However, Canlas argues that
she has duly overcome the burden of proof by showing open, continuous, exclusive, adverse, and notorious
possession and occupation of the property. This is allegedly shown in the following acts of Canlas and her
predecessors-in-interest since the 1900’s.
ISSUE
Has petitioner proved her open, continuous, exclusive, and notorious possession and occupation of
the land described in plan Psu-04-006561?
HELD
YES. The burden to prove the requisites rests on the applicant. About the first requisite, it is undisputed
that the land subject of registration is part of the alienable and disposable lands of the public domain. The
trial court found the DENR’s report enough to prove the existence of the first requisite. As to the second
requisite, petitioner claims that she “by herself, and through her predecessors-in-interest, had since June 12,
1945 or earlier, been in open, continuous, exclusive and notorious possession of the parcel of land.” Contrary
to respondent’s arguments, the trial court specifically found that petitioner’s possession and occupation,
through her predecessors-in-interest, started earlier than June 12, 1945. Petitioner has sufficiently shown that
she, through her predecessors-in-interest, have been in open, continuous, exclusive, and notorious possession
and occupation of the of said land in Barrio Macamot, Binangonan, Rizal, since June 12, 1945 or earlier.
Documentary evidence to prove possession was presented and substantiated by the witnesses’ testimonies.
We remand the issue of the inclusion of plan Psu-04-006561 in TCT No. 23377, as allegedly certified by the
Land Registration Authority, to the trial court of origin.
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LA TONDENA, INC. v. REPUBLIC
G.R. No. 194617 | August 5, 2015
DOCTRINE
The June 12, 1945 reckoning point refers to date of possession and not to date of land classification
as alienable and disposable.
FACTS
The petitioner files an application for the registration of a 14, 286 square-meter parcel of land located
in La Union. The petitioner attached to their application a certification, in lieu of the lost surveyor’s certificate
for registration, and copy of tax declaration. Petitioner contends that they acquired the property by purchase
from one Pablo Rimorin. Then, the Land Registration Authority forwarded the records to the Municipal Trial
Court for initial hearing. During the hearing, the petitioner alleged that all the records showing La Tondena’s
purchase of the land from Pablo Rimorin was burned hence they can only present tax declarations from 1948
up to 1999. They also presented testimonial evidence from Victor Dumuk, who alleged that his father, Juan
Dumuk, was the property administrator before the second world war and the petitioner’s ownership of the
land was uncontested and its possession was peaceful, continuous, open and public. The DENR-CENRO
submitted a report that the land was declared alienable and disposable only on January 21, 1987. The Trial
Court subsequently granted the application for registration. However, the Respondent, Republic of the
Philippines, filed a Notice of Appeal on the ground that the trial’s court decision was contrary to law and
evidence and the land cannot be subject to an application for judicial confirmation for imperfect title under
Commonwealth Act 141 that required possession from June 12, 1945.
ISSUE
Did the petitioner comply with all the requirements for land registration under Sec. 48(b) of the
Commonwealth Act No. 141, in relation to PD No. 1529?
HELD
NO. Under, Sec. 48(b) of the Commonwealth Act no. 141, The petitioner failed to prove that the land
was declared alienable and disposable on or before June 12, 1945. The admissibility of the report by the
DENR-CENRO as evidence on when the land was classified as alienable and disposable was mooted by the
ruling in Heirs of Malabanan v Republic stating that the reckoning point refers to date of possession and not
to date of land classification as alienable and disposable. Also, the petitioner failed to prove possession and
occupation of the parcel of land since June 12, 1945 or earlier. The petitioner cannot show with clarity how
its predecessor-in-interest got hold of the property, the character of its possession and how long such
possession was exercised. Petitioner filed the application for registration on September 28, 2004. All dates
claimed as dates of classification of the land as alienable and disposable — August 12, 1934 as stated in the
survey plan notation that petitioner relies upon; January 21, 1987 as stated in the Report dated May 31, 2005
that petitioner argues to be inadmissible; and March 5, 1930 as stated in the "Plan of Private Land as Surveyed
for Pablo Rimorin" that petitioner would like to present as additional evidence if the court remands the case
— were all prior to the September 28, 2004 application date.
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REPUBLIC v. SOGOD DEVELOPMENT CORP.
G.R. No. 175760 | February 17, 2016
DOCTRINE
A claimant is conclusively presumed to have been in an open, continuous, exclusive, and notorious
possession and occupation of alienable and disposable lands of public domain, under a bona fide claim of
acquisition or ownership, since June 12, 1945, or earlier, immediately preceding the filing of the application
for confirmation of title shall be entitled to a certificate of title.
FACTS
In 1999, Sogod Dev’t filed an application for registration and confirmation of land title over the subject
parcel of land situated in Sogod, Cebu, to which Sogod claimed that it had purchased from Catalina Rivera
through a Deed of Absolute Sale. Respondent alleged that itself and its predecessors-in-interest had been in
an open, continuous, exclusive, and notorious possession and occupation of the land since June 12, 1945 or
earlier. The Office of the Solicitor General opposed the application on the ground that the petitioner was
disqualified from applying for original registration of title to alienable lands under Article XII, Sec. 3 of the
1987 Constitution. The DENR likewise manifested its opposition, which said that the subject land was only
declared alienable and disposable on January 17, 1986, and prior to that it could not be registered without
violating Sec.48 of C.A. 141. During the trial conducted by the MCTC, apart from documentary evidence,
Sogod presented testimonial evidence from people familiar to the land in question in support of its claim of
possession within the time prescribed by law. The MCTC granted the application of Sogod for confirmation of
title. Hence, the present case.
ISSUE
Did the land subject for judicial confirmation merely require that it is already alienable and
disposable, as long the application is already in possession and occupation of the land since June 12, 1945,
or earlier?
HELD
YES. The SC upheld the decision of MCTC and CA. The court cited the case of Heirs of Malabanan v.
Republic where the interpretation of Sec. 14 (1) of P.D 1529 merely requires the property seeking to be
registered as already alienable and disposable at the time that the application for registration of title is filed. It
also emphasizes in the Naguit case, the absurdity that would result if interpreting Sec. 14 (1) meant that public
land should have already been characterized as alienable since June 12, 1945.
68 of 106
REPUBLIC v. SPOUSES GO
G.R. No. 197297 | August 2, 2017
Land Titles and Deeds: Original registration: who may apply
DOCTRINE
A CENRO certification, by itself, is insufficient to prove the alienability and disposability of land
sought to be registered. It is the DENR Secretary who has the authority to approve land classification and
release a land of public domain as alienable and disposable.
FACTS
Respondents Spouses Go applied for the registration and confirmation of title over Cadastral Lot No.
4699-B. They registered the lot in their names for taxation purposes. They claimed to be in an open,
continuous, exclusive, notorious, and actual possession of the property for 7 years since they bought it and
tacked their possession through that of their predecessors-in-interest. The Republic of the Philippines opposed
their application for registration for the following reasons: 1) Lot No. 4699-B was part of the public domain;
2) neither the Spouses Go nor their predecessors-in-interest had been in open, continuous, exclusive, and
notorious possession and occupation of the property since June 12, 1945 or even before then; 3) the tax
declaration and payment were not competent or sufficient proof of ownership, especially considering that
these were relatively recent. The MTC confirmed the title of the lot in the name of the Spouses Go. The CA
denied the appeal of the Republic.
ISSUE
Did the Court of Appeals err in issuing the Spouses Go a Decree of Registration over Lot No. 4699-
B?
HELD
YES. The Spouses Go's possession, by themselves or through their predecessors-in-interest, does not
meet the statutory requirements under Sec. 48 (b) of C.A. No. 141, as amended, and Sec. 14 (1) of P.D. No.
1529. They could not support their claim of possession in the concept of an owner, by themselves or through
their predecessors-in-interest, from June 12, 1945 or earlier. Nothing in the records shows that the Spouses
Go's predecessors-in-interest religiously paid real property taxes. They also failed to prove the alienable and
disposable character of the land. A CENRO certification, by itself, is insufficient to prove the alienability and
disposability of land sought to be registered. It is the DENR Secretary who has the authority to approve land
classification and release a land of public domain as alienable and disposable. Without the original land
classification approved by the DENR Secretary, their application for registration must be denied. The land
remains inalienable. Thus, their occupation of this land, no matter how long, cannot ripen into ownership and
cannot be registered as a title. In sum, the CA gravely erred in affirming the trial court's Decision that granted
the Spouses Go's application for registration of Lot No. 4699-B.
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REPUBLIC v. SPOUSES NOVAL
G.R. No. 170316 | September 18, 2017
DOCTRINE
When a person applies for judicial confirmation of title, he or she already holds an incomplete or
imperfect title over the property being applied for, after having been in open, continuous, exclusive, and
notorious possession and occupation from June 12, 1945 or earlier. The date "June 12, 1945" is the reckoning
date of the applicant's possession and occupation, and not the reckoning date of when the property was
classified as alienable and disposable.
FACTS
Applicants sought the registration of their titles over the subdivided portions of a land in Barangay
Casili, Consolacion, Cebu, designated as Lot 4287. They alleged to have acquired their respective portions of
this land by "purchase, coupled with continuous, public, notorious, exclusive and peaceful possession in the
concept of an owner for more than 30 years including [the possession of their predecessors-in-interest.". The
Office of the Solicitor General, filed its Opposition on the ground that the applicants failed to prove open,
continuous, exclusive, and notorious possession of the property since June 12, 1945. The applicants'
immediate predecessor-in-interest was Cecilia Alilin Quindao (Cecilia), who was already 73 years old when
she testified before the trial court. She said that she was familiar with Lot 4287 since she was 15 years old.
The Municipal Trial Court granted their application for registration of title. The trial court ordered the issuance
of decrees of registration upon finality of its judgment. The Republic appealed the Decision of the trial court
arguing that the applicants failed to show open, continuous, exclusive and notorious possession of alienable
and disposable lands for 30 years. It reiterated that tax declarations may not be used as bases for the grant of
the application. It added that there was no DENR report submitted to show when the properties were declared
alienable and disposable, for the purpose of computing the 30-year period of possession required by law.
ISSUE
Did the Court of Appeals err in affirming the trial court decision to allow the respondents to register
their respective portions of Lot 4287?
HELD
NO. According to Section 14(1) of the Property Registration Decree provides that following persons
may file in the proper Court of First Instance an application for registration of title to land, whether personally
or through their duly authorized representatives: Those who by themselves or through their predecessors-in-
interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and
disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
Both courts affirmed that respondents have met the required period of possession for land registration cases.
They acknowledged the credibility of the testimony of respondents' predecessor-in-interest, which established
possession of Lot 4287 in the concept of an owner since 1942 or earlier. This means that respondents and
their predecessor-in-interest have already been in occupation and possession of the land for more than 50
years at the time of their application for registration.
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REPUBLIC v. MALIJAN-JAVIER
G.R. No. 214367 | April 4, 2018
DOCTRINE
To establish that the land sought to be registered is alienable and disposable, applicants must "present
a copy of the original classification approved by the Department of Environment and Natural Resources
Secretary and certified as a true copy by the legal custodian of the official records.”
FACTS
Laureana and Iden filed an application for registration of a parcel of land located at Talisay, Batangas.
The respondent Republic of the Philippines, filed an opposition contending that neither the applicants nor
their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and
occupation of the land in question in the concept of an owner since June 12, 1945 or earlier, the tax
declarations relied upon by appellees do not constitute competent and sufficient evidence of a bona fide
acquisitions of the land by the appellees and that the parcel of land applied for is a land of public domain and
such is not subject to private appropriation. In the initial report, Laureana alleged that she was married to
Cecilio Javier and that Iden was their son. She claimed that she and her husband purchased the property from
one Sps. Lumbres and that they fenced and planted with coconut the property. She also claimed that they paid
its taxes since 1986. Subsequently, Hernandez, Special Land Investigator, conducted an ocular inspection and
reported that the land had not been forfeited in favor of the government, the land was outside a reservation or
forest zone and no prior application was filed or any patent, decree or title was ever issued for it. DENR-
CENRO testified that she inspected the property before issuing a certification and the land was within the
alienable and disposable zone. The trial court decided in favor of Javier. Hence, the present case.
ISSUE
Did the trial court err in granting respondent’s application for registration of property?
HELD
NO. The petition must fail. In Sec. 14(1) of P.D 1529, the applicant must establish (a) the subject land
forms part of the disposable and alienable lands of the public domain; (b) that the applicant and his
predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation
of the land; and (c) that it is under a bona fide claim of ownership since June 12, 1945, or earlier. To satisfy,
first requirement, petitioner argues that both CENRO or PENRO certification and a certified true copy of a
DENR Secretary certificate should be obtained to prove that the land is alienable and disposable. The court
cited the case of Republic v. Tan, “the applicant for land registration must present a copy of the original
classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official
records. These facts must be established to prove that the land is alienable and disposable. The certification
issued by the DENR Secretary is necessary since he or she is the official authority to approve land classification,
including the release of land from public domain.
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KAWAYAN HILLS CORP. v. COURT OF APPEALS
G.R No. 203090 | September 5, 2018
DOCTRINE
It is a well-settled rule that tax declarations are not conclusive evidence of ownership or of the right
to possess land when not supported by any other evidence but payment of real property taxes is a good indicia
of possession in the concept of an owner, and when coupled with continuous possession, it constitutes strong
evidence of title.
FACTS
Kawayan Hills (Kawayan) is a domestic corporation dealing with real estate. It is in possession of a
parcel of land in Paoay, Ilocos Norte. Kawayan filed an application through its President for confirmation and
registration of the lot’s title in its name before the Municipal Circuit Trial Court alleging to have acquired the
lot through a Deed of Adjudication with Sale executed by the successors-in-interest of Andres Dafun (Andres)
who had been the lot’s real property tax declarant since 1931 and cultivated said land with his children. The
Republic of the Philippines (the Republic), filed its Opposition to the application on the ground that Kawayan
failed to comply with the requirements of Section 14 (1) of Presidential Decree No. 1529, otherwise known
as the Property Registration Decree. The Municipal Circuit Trial Court (MCTC) ruled in favor of Kawayan but
the Court of Appeals (CA) reversed MCTC’s decision holding that Kawayan failed to establish its or its
predecessors-in-interest's bona de claim of ownership since June 12, 1945 or earlier because the tax
declarations dating back to 1931 supposedly did not prove ownership. Kawayan filed a Motion for
Reconsideration which the CA denied. Subsequent to this, Kawayan filed a Manifestation/Motion dated which
the CA also denied. Kawayan filed another Manifestation/Motion which the CA noted without action.
ISSUE
Did Kawayan Hills fail to establish its or its predecessors-in-interest bonafide claim of ownership since
June 12, 1945 or earlier, as to enable confirmation of title under Section 14 (1) of the Property Registration
Decree?
HELD
NO. The court held that the petitioner is entitled to registration under Section 14 (1) of Presidential
Decree No. 1529. The two (2) things which must be shown to enable registration under Section 14 (1) are
that the land is part of the disposable and alienable lands of the public domain and open, continuous,
exclusive, and notorious possession under a bona fide claim of acquisition of ownership since June 12, 1945,
or earlier. The fact that the disputed property may have been declared for taxation purposes in the name of
the applicant for registration or of their predecessors-in-interest does not necessarily prove ownership. They
are merely indicia of a claim of ownership. However, this Court also recognized that the voluntary declaration
of a piece of property for taxation purposes strengthens one's bonafide claim of acquisition of ownership. The
Court found in the records of this case that aside from Andres' payment of the lot’s real property taxes for
almost a decade and a half ahead of June 12, 1945, together with his and his successors-in-interest's unfailing
diligence in paying real property taxes, there are more details that attest to possession in the concept of owner.
72 of 106
HEIRS OF LOPEZ v. DEVELOPMENT BANK OF THE PHILS.
G.R. No. 193551 | November 19, 2014
Land Titles and Deeds: Innocent purchaser for value
DOCTRINE
An ordinary buyer may rely on the certificate of title issued in the name of the seller. However, the
ordinary buyer will not be considered an innocent purchaser for value if there is anything on the certificate of
title that arouses suspicion, and the buyer failed to inquire or take steps to ensure that there is no cloud on the
title, right, or ownership of the property being sold.
FACTS
Petitioners discovered that Enrique executed an affidavit of self-adjudication declaring himself to be
Gregoria Lopez’s only surviving heir, thereby adjudicating upon himself the land in Bulacan. He sold the
property to Marietta Yabut. Petitioners demanded from Marietta the nullification of Enrique’s affidavit of self-
adjudication and the deed of absolute sale. They also sought to redeem Enrique’s 1/4 share. Marietta, who
was already in possession of the property, refused. Marietta obtained a loan from Development Bank of the
Philippines (DBP) and mortgaged the property as security. An original certificate of title was issued in Marietta’s
name. Petitioners filed a complaint with the RTC praying that judgment be rendered, ordering the annulment
of Enrique’s affidavit of self-adjudication, the deed of sale executed by Enrique and Marietta, and the deed of
real estate mortgage executed by Marietta in favor of DBP. They also prayed for the reconveyance of their 3/4
share in the property, their exercise of their right of redemption of Enrique’s 1/4 share. Marietta failed to pay
her loan to DBP. DBP instituted foreclosure proceedings on the land. Marietta failed to redeem the property.
The title to the property was consolidated in favor of DBP. The RTC ruled in favor of petitioners but the CA
reversed. It held that DBP was a mortgagee in good faith.
ISSUE
Was the property validly transferred to Marietta and, eventually, to DBP?
HELD
NO. The Supreme Court has consistently upheld the principle that "no one can give what one does
not have.” Since Enrique’s right to the property was limited to his ¼ share, he had no right to sell the undivided
portions that belonged to his siblings/their respective heirs. The affidavit of self-adjudication by Enrique is
invalid for the simple reason that it was false. Such did not have the effect of vesting upon Enrique ownership
or rights to the property. Marietta cannot claim the protection accorded by law to innocent purchasers for
value because the circumstances do not make this available to her. There was no certificate of title to rely on
when she purchased the property from Enrique. At the time of the sale, the property was still unregistered. At
the very least, the unregistered status of the property should have prompted Marietta to inquire further as to
Enrique’s right over the property. She did not. Hence, she was not an innocent purchaser for value. She
acquired no title over petitioners’ portions of the property.
73 of 106
LEONG v. SEE
G.R. No. 194077 | December 3, 2014
DOCTRINE
Even if the procurement of title was tainted with fraud and misrepresentation, a defective title may be
the source of a completely legal and valid title in the hands of an innocent purchaser for value.
FACTS
The spouses Florentino Leong and Carmelita Leong used to own the property located at Quiapo,
Manila. Elena Leong is Florentino's sister-in-law. She had stayed with her in-laws on the property rental-free
for over two decades until the building they lived in was razed by fire. They then constructed makeshift houses,
and the rental-free arrangement continued. Florentino and Carmelita immigrated to the United States and
eventually had their marriage dissolved in Illinois. A provision in their marital settlement agreement states that
"Florentino shall convey and quitclaim all of his right, title and interest in and to 540 De Guzman Street,
Manila, Philippines . . . to Carmelita." Carmelita sold the land to Edna. In lieu of Florentino's signature of
conformity in the deed of absolute sale, Carmelita presented to Edna and her father, witness Ernesto See, a
waiver of interest notarized in Illinois. In this waiver, Florentino reiterated his quitclaim over his right, title,
and interest to the land. Consequently, the land's title was transferred to Edna's name. Edna filed a complaint
for recovery of possession against Elena and the other relatives of the Leong ex-spouses. In response, Elena
alleged the title's legal infirmity for lack of Florentino's conformity to its sale. She argued that Carmelita's non-
compliance with the proviso in the property agreement — that the Quiapo property "may not be alienated
without Florentino first obtaining a clean title over the Malabon property" — annulled the transfer to Edna.
Regional Trial Court ruled in favor of Edna. The Court of Appeals affirmed.
ISSUE
Was respondent a buyer in good faith and for value?
HELD
YES. The Supreme Court affirmed the decision of the lower courts who correctly found that respondent
is a purchaser in good faith for value who exercised the necessary diligence in purchasing the property. First,
good faith is presumed, and petitioners did not substantiate their bold allegation of fraud. Second, respondent
did not rely on the clean title alone precisely because of the possession by third parties, thus, she also relied
on Florentino's waiver of interest. Respondent even verified the authenticity of the title at the Manila Register
of Deeds with her father and Carmelita. These further inquiries prove the respondent's good faith. An innocent
purchaser for value refers to someone who "buys the property of another without notice that some other person
has a right to or interest in it, and who pays a full and fair price at the time of the purchase or before receiving
any notice of another person's claim." Even assuming the procurement of title was tainted with fraud and
misrepresentation, "such defective title may still be the source of a completely legal and valid title in the hands
of an innocent purchaser for value." Respondent, an innocent purchaser in good faith and for value with title
in her name, has a better right to the property than Elena. Elena's possession was neither adverse to nor in the
concept of owner.
74 of 106
LAND BANK OF THE PHILIPPINES v. MUSNI
G.R. No. 206343 | February 22, 2017
DOCTRINE
Banks must show that they exercised the required due diligence before claiming to be mortgagees in
good faith or innocent purchasers for value.
FACTS
Respondent Lorenzo Musni (Musni) was the compulsory heir of Jovita Musni (Jovita), who was the
owner of a lot in Tarlac. Musni filed before the Regional Trial Court of Tarlac City a complaint for
reconveyance of land and cancellation of TCT No. 333352 against Spouses Nenita Sonza Santos and Ireneo
Santos (Spouses Santos), Eduardo Sonza (Eduardo), and Land Bank of the Philippines (Land Bank). Musni
alleged that Nenita Sonza Santos (Nenita) falsified a Deed of Sale and caused the transfer of title of the lot in
her and her brother Eduardo's names. He claimed that the spouses Santos and Eduardo mortgaged the lot to
Land Bank as security for their loan. Musni said that he was dispossessed of the lot when Land Bank foreclosed
the property upon Nenita and Eduardo's failure to pay their loan. Musni claimed that he filed a criminal case
against Nenita and Eduardo for falsification of a public document. The trial court rendered in favor of Musni.
It relied on the fact that Nenita was convicted of falsification of the Deed of Sale. The trial court found that
Musni did not agree to sell the property to the spouses Santos and Eduardo. In addition, the amount of Musni's
indebtedness was an insufficient consideration for the market value of the property. On appeal, the Court of
Appeals found that the sale of the lot between Musni, and the spouses Santos and Eduardo, was null and void
since Nenita was convicted for falsifying the signatures of Jovita and Musni in the Deed of Sale. Hence, this
petition.
ISSUE
Is the petitioner a mortgagee in good faith and an innocent purchaser for value?
HELD
NO. Petitioner is neither a mortgagee in good faith nor an innocent purchaser for value. On
petitioner's claim that it was a mortgagee in good faith, the Court held that petitioner "was actually remiss in
its duty to ascertain the title of respondents Eduardo and Nenita to the property. A perusal of the report and
the testimony of the account officer failed to establish that the bank's standard operating procedure in
accepting the property as security, including having investigators visit the subject property and appraise its
value were followed. The Court also found that petitioner was not an innocent purchaser for value. With all
its resources, it could have ascertained how Nenita Sonza acquired the land mortgaged to it and later
foreclosed by it. The fact the land was foreclosed after Criminal Case No. 4066-99 was instituted should have
warned it. The questionable ownership of Nenita Sonza for it and its employees to obtain knowledge of the
questionable transfer of the land to Nenita Sonza. Its failure to take the necessary steps or action shall make
the bank liable for damages. The bank shall be responsible for its and its employer shortcomings.
75 of 106
SINDOPHIL, INC. v. REPUBLIC
G.R. No. 204594 | November 7, 2018
DOCTRINE
The presumption that a holder of a Torrens title is an innocent purchaser for value is disputable and
may be overcome by contrary evidence. Once a prima facie case disputing this presumption is established,
the adverse party cannot simply rely on the presumption of good faith and must put forward evidence that the
property was acquired without notice of any defect in its title.
FACTS
Sindophil anchors its right to the Tramo property on Transfer Certificate of Title (TCT) No. 132440,
which was purportedly issued by the Register of Deeds of Pasay City. The said land was once owned and
registered to one Teodoro who subsequently sold it until it was Sindophil who was able to buy it. Republic of
the Philippines filed a Complaint for revocation, annulment, and cancellation of certificates of title and
claimed that TCT No. 10354 in the name of Teodoro was "spurious or of doubtful authenticity." And that all
certificates of title that emanated from it, including Sindophil's TCT No. 132440, were null and void and
should accordingly be cancelled. Petitioner contended that they were innocent purchasers for value and, in
the absence of evidence to the contrary, reconveyance should not lie. Republic prayed for the dismissal of the
Complaint. Petitioners were all deemed to have waived their right to present evidence when they failed to
present any evidence or witness despite several settings. Sindophil filed a Motion to Re-Open Case, praying
that it be allowed to present evidence that it was a buyer in good faith. The Regional Trial Court, however,
went on to decide the case without acting on Sindophil's Motion and ruled in favor of the Republic and voided
the certificates of title issued to defendants Teodoro, Puma, Ty, and Sindophil. It found that the Tramo property
claimed by Teodoro under TCT No. 10354 was derived from TCT No. 6735 registered in the name of the
Republic. However, no annotation of the supposed transfer to Teodoro was annotated on TCT No. 6735.
ISSUE
Is Sindophil an innocent purchaser for value?
HELD
NO. With the Republic having put forward evidence that the Tramo property claimed by Sindophil
belongs to the Republic, the burden of evidence shifted to Sindophil to prove that its title to it was valid.
Concomitantly, it had the burden of proving that it was indeed a buyer in good faith and for value.
Unfortunately for Sindophil, it utterly failed to discharge the burden of evidence because its counsel failed to
attend the scheduled initial presentation of evidence. Further, the defects in Sindophil's title could be inferred
from the annotations in TCT No. 129957, the certificate of title held by Sindophil's immediate predecessor,
Ty. A certain Antonio C. Mercado had filed an adverse claim against Ty because the Tramo property had been
previously sold to him by Puma, Ty's predecessor. The alleged double sale should have prompted Sindophil
to look into Puma's title where it can be gleaned that Teodoro likewise filed an adverse claim. These
annotations show that the Tramo property is controversial and has been the subject of several adverse claims,
belying Sindophil's contention that it acquired the property in good faith.
76 of 106
CATHAY METAL CORP. v. LAGUNA WEST MULTI-PURPOSE COOPERATIVE, INC.
G.R. No. 172204 | July 2, 2014
Land Titles and Deeds: Subsequent Registration: Involuntary Dealings
DOCTRINE
A claim based on a future right does not ripen into an adverse claim. A right still subject to negotiations
cannot be enforced against a title holder or against one that has a legitimate title to the property based on
possession, ownership, lien, or any valid deed of transfer.
FACTS
Respondent Laguna West Multi-Purpose Cooperative is a cooperative recognized under Republic Act
No. 6657 or the Comprehensive Agrarian Reform Law. It allegedly entered into a joint venture agreement with
farmer-beneficiaries through Certificates of Land Ownership Award (CLOA) in Silang, Cavite. While
respondent was negotiating with the farmer-beneficiaries, petitioner Cathay Metal Corporation entered into
Irrevocable Exclusive Right to Buy (IERB) contracts with the same farmer-beneficiaries. Under the IERB, the
farmer-beneficiaries committed themselves to sell to petitioner their agricultural properties upon conversion
to industrial or commercial properties or upon expiration of the period of prohibition from transferring title to
the properties. In 1996, respondent caused the annotation of its adverse claim on the farmer-beneficiaries’
certificates of title. In 1999, petitioner and the farmer-beneficiaries executed contracts of sale of the properties.
Transfer certificates of title were also issued in the name of petitioner in the same year. The annotations in the
original titles were copied to petitioner's titles. On September 15, 2000, petitioner filed a consolidated petition
for cancellation of adverse claims on its transfer certificates of title with the Regional Trial Court of Tagaytay
City. The Regional Trial Court ordered the Register of Deeds to cancel the annotations on the transfer
certificates of title. The Court of Appeals granted respondent's appeal.
ISSUE
Should the Register of Deeds cancel the annotations of adverse claim on the properties?
HELD
YES. Respondent’s claim was not based on any of those. Its claim was based on a deal with the CLOA
farmer-beneficiaries, which did not materialize. In sum, whether there were provisions on transfer of rights or
promise to transfer rights in the joint venture agreement, there could be no basis for respondent’s adverse
claim. Lack of that provision means that respondent does not have any valid claim or right over the properties
at all. Meanwhile, inclusion of such provision is illegal and, therefore, void. This ruling is also applicable to
petitioner, which entered into irrevocable exclusive right to buy contracts from the farmer-beneficiaries. These
contracts provided that the farmer-beneficiaries committed themselves to selling their properties to petitioner
upon expiration of the period of prohibition to transfer or upon conversion of the properties from agricultural
to industrial or commercial use, whichever comes first. These contracts were executed between farmer-
beneficiaries and petitioner during the period of prohibition and before the properties' conversion from
agricultural to mixed use. Upon conversion of the properties, these were immediately sold to petitioner.
77 of 106
ORIENT FREIGHT INTERNATIONAL, INC. v. KEIHIN-EVERETT FORWARDING CO., INC.
G.R. No. 191937 | August 9, 2017|||
Torts and Damages: Negligence
DOCTRINE
Article 2176 of the Civil Code does not apply when the party's negligence occurs in the performance
of an obligation. The negligent act would give rise to a quasi-delict only when it may be the basis for an
independent action were the parties not otherwise bound by a contract.
FACTS
Keihin-Everett executed an In-House Brokerage Service Agreement for Matsushita's PEZA’s export
operations; and continued to retain the services of Orient Freight. Matsushita called Keihin-Everett, about a
column issue on a tabloid newspaper which narrated the interception by Caloocan City police of a stolen
truck filled with shipment of video monitors and CCTV systems owned by Matsushita. Orient Freight stated
that the tabloid report had blown the incident out of proportion but admitted that its previous report was
erroneous and that pilferage was apparently proven when confronted with Keihin-Everett's findings that there
was such incident. This eventually led to Matsushita terminating its Service Agreement with Keihin-Everett
who filed a complaint for damages on the grounds of fraud and misrepresentation under Article 2176 of
the Civil Code. Orient contended that Article 2176 cannot be applied because there is an existing contract
between the parties.
ISSUE
May Petitioner claim damages against Orient Freight under Article 2176?
HELD
NO. Article 2176 of the Civil Code does not apply when the party's negligence occurs in the
performance of an obligation. The negligent act would give rise to a quasi-delict only when it may be the basis
for an independent action were the parties not otherwise bound by a contract. The Court however still found
the petitioners liable under Articles 2200 and 2201 of the Civil Code which provide for the liability for
damages in contractual obligations. It upheld the lower court’s findings that the failure to disclose the true
facts of an incident, especially when it turned out that a crime might have been committed, lead to a loss of
trust and confidence in the party which was bound to disclose these facts. Petitioner caused the loss of trust
and confidence when it misled respondent and Matsushita into believing that the incident had been
irresponsibly reported and merely involved a stalled truck. Thus, petitioner is liable to respondent for the loss
of profit sustained due to Matsushita's termination of the In-House Brokerage Service Agreement under Articles
2200 and 2201 of the Civil Code.
78 of 106
VISAYAN ELECTRIC COMPANY, INC. v. ALFECHE
G.R. No. 209910 | November 29, 2017
Torts and Damages: Negligence
DOCTRINE
An electric distribution company is a public utility presumed to have the necessary expertise and
resources to enable a safe and effective installation of its facilities. Absent an indication of fault or negligence
by other actors, it is exclusively liable for fires and other damages caused by its haphazardly installed posts
and wires.
FACTS
A fire broke out and burned down the house of Alfeche and the watch repair shop of Manugas. It was
alleged that the cause of the fire was the constant abrasion of petitioner VECO’s electric wire with M. Lhuillier’s
signboard. The respondents asked financial assistance from VECO, which the latter denied, claiming that the
fire was due to the fault of M. Lhuillier. The RTC ruled that the proximate cause of the injury suffered by
respondents was the negligence of M. Lhuillier for installing its signboard long after VECO moved its poles
due to a road widening project. This was reversed by the CA, which found VECO liable in M. Lhuillier’s stead,
giving greater credence to the testimony of impartial witnesses who testified that VECO transferred its poles to
a distance of only 8 inches from the signboard, and this caused the abrasion and the fire.
ISSUE
Did the CA err in ruling that VECO’s negligence, rather than that of M. Lhuillier, was the proximate
cause of the fire which razed the properties of respondents?
HELD
NO. All the elements for liability for a quasi-delict under Article 2176 of the Civil Code have been
shown to be attendant on VECO's part. The elements of a quasi-delict are: (1) the damages suffered by the
plaintiff; (2) the fault or negligence of the defendant or some other person for whose act he must respond; and
(3) the connection of cause and effect between the fault or negligence and the damages incurred. Between
VECO and M. Lhuillier, it is VECO which was negligent. M. Lhuillier was not negligent in installing its signage.
It installed its signage well before the road-widening and drainage projects commenced and ahead of VECO's
relocation of its posts. The witnesses both emphasized that the signage was installed free of any obstacle.
Other than VECO's evasive accusations, there is no proof to the contrary. It was VECO that was negligent. It
is apparent that it transferred its posts and wires without regard for the hazards that the transfer entailed,
particularly with respect to the installations which had previously been distant from the wires and posts but
which had since come into close proximity. VECO is a public utility tasked with distributing electricity to
consumers. It is its duty to ensure that its posts are properly and safely installed. As the holder of a public
franchise, it is to be presumed that it has the necessary resources and expertise to enable a safe and effective
installation of its facilities. By installing its posts and wires haphazardly, without regard to how its wires could
meet a previously installed signage, VECO failed to act in keeping with the diligence required of it.
79 of 106
CARAVAN TRAVEL AND TOURS INTERNATIONAL, INC. v. ABEJAR
G.R. No. 170631 | February 10, 2016
Torts and Damages: Registered-owner rule
DOCTRINE
The plaintiff may first prove the employer's ownership of the vehicle involved in a mishap by
presenting the vehicle's registration in evidence. Thereafter, a disputable presumption that the requirements
for an employer's liability under Article 2180 of the Civil Code have been satisfied will arise. The burden of
evidence then shifts to the defendant to show that no liability under Article 2180 has ensued.
FACTS
Reyes was hit by a van registered in the name of petitioner (Caravan) and driven by its employee-
driver Bautista. Reyes died. Her paternal aunt, Abejar, filed a complaint for damages against Bautista and
Caravan. The RTC awarded damages in favor of Abejar as Bautista was grossly negligent in driving. This was
affirmed by the CA.
ISSUE
Should Caravan be held liable as an employer, pursuant to Art. 2180 of the Civil Code?
HELD
YES. The resolution of this case must consider two (2) rules. First, Art. 2180's specification that
"employers shall be liable for the damages caused by their employees acting within the scope of their assigned
tasks." Second, the operation of the registered-owner rule that registered owners are liable for death or injuries
caused by the operation of their vehicles. These rules appear to be in conflict when it comes to cases in which
the employer is also the registered owner of a vehicle. Art. 2180 requires proof of two things: first, an
employment relationship between the driver and the owner; and second, that the driver acted within the scope
of his or her assigned tasks. On the other hand, applying the registered-owner rule only requires the plaintiff
to prove that the defendant-employer is the registered owner of the vehicle. It is imperative to apply the
registered-owner rule in a manner that harmonizes it with Arts. 2176 and 2180 of the Civil Code. Therefore,
the appropriate approach is that in cases where both the registered-owner rule and Article 2180 apply, the
plaintiff must first establish that the employer is the registered owner of the vehicle in question. Once the
plaintiff successfully proves ownership, there arises a disputable presumption that the requirements of Article
2180 have been proven. As a consequence, the burden of proof shifts to the defendant to show that no liability
under Article 2180 has arisen. Here, Abejar presented a copy of the Certificate of Registration of the van with
Caravan as its registered owner. A presumption that the requirements of Article 2180 have been satisfied arises.
It is now up to Caravan to establish that it incurred no liability under Article 2180. However, it failed to do so.
Caravan admitted that Bautista was its employee at the time of the accident, it was unable to prove that Bautista
was not acting within the scope of his assigned tasks at the time of the accident, and it failed to prove that it
exercised the requisite diligence in the selection and supervision of Bautista. In its selection of Bautista as a
service driver, petitioner contented itself with Bautista's submission of a non-professional driver's license.
Employing a person holding a non-professional driver's license to operate another's motor vehicle violates
Section 24 of the Land Transportation and Traffic Code.
80 of 106
IMPERIAL v. HEIRS OF SPOUSES BAYABAN
G.R. No. 197626 | October 3, 2018
Torts and Damages: Negligence of an employee
DOCTRINE
The burden of proving that a negligent act of an employee was performed within the scope of his
assigned tasks rests with the plaintiff. When the plaintiff has discharged this burden, the presumption that the
employer was negligent arises, and the employer must put forward evidence showing that he exercised the
due diligence of a good father of a family in the selection and supervision of the employee.
FACTS
A van registered in the name of Imperial and driven by Laraga figured in a vehicular accident with a
tricycle, causing injuries to Sps. Bayaban who were onboard the tricycle. The spouses filed a complaint for
damages before the RTC. The RTC found Laraga negligent and the proximate cause of the accident, i.e.,
overtaking another vehicle and, in the process, colliding with the tricycle that carried the spouses. It also ruled
that Imperial failed to prove that he had exercised due diligence in the selection and supervision of Laraga,
his employee; thus, he was presumed negligent and was also liable for damages to the spouses. Imperial
appealed, but the CA maintained his liability. It found that he failed to prove that he had exercised due
diligence in the selection and supervision of Laraga. Apart from his bare allegation that he had financed the
formal driving lessons of Laraga, he failed to present documentary evidence that he did so. He could not even
remember the name of the driving school where Laraga had allegedly enrolled.
ISSUE
Did the CA shift the burden on Imperial to prove that his employee, Laraga, was not acting within the
scope of his assigned task?
HELD
NO. Respondent-spouses have discharged the burden of proof necessary to hold Imperial vicariously
liable under Article 2180 of the Civil Code. Laraga was the petitioner's driver, hence, his employee. The
spouses have established that Laraga was acting within the scope of his assigned tasks at the time of the
accident. It was 3PM and Laraga was driving in Antipolo City, where, as alleged by the petitioner, his
greenhouse and garden were located. Laraga was driving the van in connection with the upkeep of the
petitioner's Antipolo greenhouse and garden. Laraga was driving the van in furtherance of the interests of
petitioner at the time of the accident. The defense that Sunday was supposedly Laraga's day off fails to
convince. There is no proof whatsoever of the truthfulness of this allegation. With respondents having
discharged their burden of proof, the disputable presumption that petitioner Imperial was negligent in the
selection and supervision of Laraga arises. Contrary to petitioner's claim, there was no shifting of burden on
him to prove that Laraga was acting outside of his assigned tasks. Rather, petitioner had to put forward
evidence that he had exercised due diligence in the selection and supervision of Laraga as his driver to be
relieved of liability. Unfortunately for petitioner, he miserably failed to dispute the presumption of negligence
in his selection and supervision of Laraga. As the RTC and the CA found, he only gave self-serving testimonies
without the requisite documentary proof that he had enrolled Laraga in a formal driving school.
81 of 106
LAO v. LIM
G.R. No. 201306 | August 9, 2017
Torts and Damages: Kinds of damages
DOCTRINE
The award of moral damages finds legal basis in Articles 2217 and 2220 of the New Civil Code,
which allow recovery of moral damages in case of willful injury to property. A stockholder's right to vote is
inherent in and incidental to the ownership of a capital stock.
FACTS
Yao Bio Lim was elected President and King was Vice President. Lao, the former president, refused to
acknowledge the newly elected directors and officers as well as King's ownership of 1,200 PSI shares. Lao
issued a Secretary's Certificate stating that a board meeting was held on the same date wherein the board of
directors resolved to nullify the transfer to King of the shares owned by his father. King discovered that a
stockholders' meeting was conducted wherein Lao, William Chua Lian, Jeffrey Ong, and Henry Sy were
elected as new members of the board of directors. King filed a petition before the Securities and Exchange
Commission "to enjoin Lao, Chua Lian, Ong, and Henry Sy from representing themselves as officers and
members of the board of directors of the Philadelphia School, Inc. and to nullify all acts done and resolutions
passed by them. RTC granted King’s petition, which was upheld by the CA. It held that there were valid
grounds to nullify the stockholders' meeting for not complying with PSI’s by-laws, Corporation Code, and the
orders of the SEC and of the RTC; and ordered petitioners to pay moral and temporary damages, attorney's
fees, and litigation expenses in favor of respondents.
ISSUE
Did the CA err in ruling that petitioners should be ordered to pay moral and temporary damages,
attorney's fees, and litigation expenses in favor of respondents?
HELD
NO. The award of moral damages finds legal basis in Articles 2217 and 2220 of the New Civil
Code, which allow recovery of moral damages in case of willful injury to property. A stockholder's right to
vote is inherent in and incidental to the ownership of a capital stock. The Court of Appeals found that the
acts of the petitioners in refusing to recognize respondents' shareholdings in PSI and disallowing them to
participate in the 2002 stockholders' meeting and elections of the corporation's directors have caused
mental anguish, serious anxiety and social humiliation to respondents. The Court of Appeals likewise
correctly sustained the award of temperate damages. Petitioners contest the award on the ground that
respondents have not prayed for it. While this may be true, it is also true that respondents have prayed for
actual damages in their complaint. Under the law, courts may award other kinds of damages in lieu of actual
damages under Article 2224. The Court has sustained the award of temperate damages where the Petitioners’
wrongful acts have prevented respondents from exercising their rights as legitimate stockholders of the
corporation. Amount of actual damages was not sufficiently proven.
82 of 106
SHARPE SEA PERSONNEL, INC., ET. AL. v. MABUNAY
G.R. No. 206113 | November 6, 2017
DOCTRINE
Bad faith means a breach of a known duty through some motive or interest or ill-will that partakes of
the nature of fraud. It exists when a company-designated physician failed to arrive at a final and definite
assessment of a seafarer's fitness to work or level of disability within the prescribed.
FACTS
Mabunay encountered an accident a day after he boarded M/V Larisa. Mabunay informed a certain
Engineer Castro of his accident who however, directed him to continue with his assigned duties until a certain
Engr. De Leon allowed him to have a medical checkup when the ship docked in Nanjing, China. He was
declared unfit to work by his attending physician and was medically repatriated to Manila. He reported to
Sharpe Sea's office and was told to report to Dr. Nicomedes G. Cruz a company-designated physician. After
it was noted that Mabunay was not responding to physical therapy, Dr. Cruz recommended that Mabunay
undergo a discectomy. After Mabunay was discharged from the hospital, Mabunay filed a complaint against
Sharpe Sea for damages, and attorney's fees. The Labor Arbiter found for Mabunay. The NLRC upheld the
Labor Arbiter's finding' holding that the records were bereft of evidence to support Sharpe Sea's claim that its
company-designated physicians gave Mabunay a disability rating of Grade 8, while Mabunay adequately
proved that his private physicians both assessed him to be unfit for work. The Court of Appeals ruled that
Sharpe Sea failed to adequately explain why it only submitted the medical report with the Grade 8 disability
rating in its Motion for Reconsideration of the NLRC Decision. The Court of Appeals also ruled that Mabunay
was entitled to attorney's fees, moral, and exemplary damages since Sharpe Sea acted with bad faith in
belatedly submitting a Grade 8 disability rating.
ISSUE
Is there a sufficient basis for the award of damages and attorney's fees?
HELD
YES. The respondent’s basis is bad faith. Bad faith is not simply bad judgment or negligence. “It
imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It means a breach of a
known duty through some motive or interest or ill-will that partakes of the nature of fraud." By not timely
releasing Dr. Cruz's interim disability grading, petitioners revealed their intention to leave respondent in the
dark regarding his future as a seafarer and forced him to seek diagnosis from private physicians. Petitioners'
bad faith was further exacerbated when they tried to invalidate the findings of respondent's private physicians,
for his supposed failure to move for the appointment of a third-party physician as required by the POEA-SEC,
despite their own deliberate concealment of their physician's interim diagnosis from respondent and the labor
tribunals. Nonetheless, in light of petitioners' patently malicious act in belatedly submitting an ante-dated
medical report, this Court increases the award of moral damages, compensation for the anxiety and
inconvenience that respondent suffered. The award of exemplary damages is also increased to serve as a
deterrent against the commission of similar oppressive acts.
83 of 106
MANILA ELECTRIC COMPANY v. NORDEC PHILIPPINES
G.R. Nos. 196020 & 196116 | April 18, 2018
DOCTRINE
Exemplary damages, which cannot be recovered as a matter of right, may not be awarded if no
moral, temperate, or compensatory damages have been granted. Since exemplary damages cannot be
awarded, the award of attorney's fees should likewise be deleted.
FACTS
Nordec, the new owner of Marvex, sued Meralco for damages alleging that Meralco conducted
inspections without its consent or approval, tampered its meters, and disconnected its service without prior
notice, which resulted to loss of income. The RTC found for Meralco; but on appeal to the CA, it reverses
its decision and found for Nordec, awarding him exemplary damages and attorney's fees, but not actual
damages. As to actual damages, Nordec failed to prove that it actually sustained pecuniary losses due to
Meralco's disconnection. Meralco contests the awards of refund, exemplary damages, and attorney's fees
to Nordec. It argues that since the Court of Appeals itself found that Nordec was not entitled to actual
damages, it could not award exemplary damages or attorney's fees to Nordec. Nordec claims that it should
be awarded at least P500,000.00 in temperate damages, P150,000.00 in moral damages, and legal interest
by the Court of Appeals. It argues that temperate damages are warranted since Meralco's unceremonious
and unreasonable disconnection led to Nordec's inability to fulfill its contractual obligations and was even
forced to cancel its clients' purchase orders.
ISSUE
Is Nordec Philippines entitled to actual, temperate, moral or exemplary damages, attorney's fees, and
legal interest?
HELD
NO. According to the Supreme Court, the Court of Appeals erred in awarding exemplary damages
when it rightfully declined to award actual damages for failure to prove its pecuniary losses due to Meralco's
disconnection to Nordec by way of example or correction for the public good. Exemplary damages, which
cannot be recovered as a matter of right, may not be awarded if no moral, temperate, or compensatory
damages have been granted. Since exemplary damages cannot be awarded, the award of attorney's fees should
likewise be deleted. Moreover, moral damages are also not proper, for the records are bereft of evidence that
would show that Nordec's name or reputation suffered due to the disconnection of its electric supply. It cannot
be awarded temperate or moderate damages under Art. 2224 because the court found that Nordec failed to
prove the fact of pecuniary loss, and not just the amount of this loss. However, the court granted Nordec
nominal damages for Meralco's negligence in not providing Nordec sufficient notice of disconnection of
its electric supply.
84 of 106
GUY v. TULFO
G.R. No. 213023 | April 10, 2019
DOCTRINE
Actual damages may be awarded when the pecuniary loss he or she had suffered was duly proven.
Moral damages may be awarded even if the injured party failed to prove that he has suffered pecuniary loss.
Exemplary damages are designed to permit the courts to mold behavior that has socially deleterious
consequences, and its imposition is required by public policy to suppress the wanton acts of an offender.
FACTS
Raffy Tulfo, a journalist, wrote an article, which was published in Abante Tonite, a newspaper of
general circulation in the Philippines. In this article, Tulfo wrote about the Revenue Integrity Protection Service
(RIPS) of the Department of Finance, against guy, for tax fraud. According to the article, as soon as Guy found
out that that RIPS is investigating him for tax fraud, he immediately sought the help of Juanita Amatong
(Secretary Amatong). Amatong then called RIPS and asked that they cease their investigation on Guy. Amatong
further asked that all their gathered documents be surrendered to her office. As a result of this article, Guy
filed a complaint at the RTC against Tulfo et al., for libel.
The RTC convicted Tulfo et al. of the crime of libel. The RTC ordered Tulfo et al., each to pay 6,000.00
as fine. It further ordered them to jointly and severally pay Guy, five million pesos (5,000,000.00) as actual
damages, five million pesos (5,000,000.00) as moral damages, and two hundred eleven thousand two hundred
pesos (211,200.00) as attorney’s fees. Tulfo et al., filed an appeal with the Court of Appeals. The CA affirmed
the RTC’s decision. However, it reduced the award of moral damages to 500,000.00 and ordered them to pay
Guy exemplary damages in the amount of five hundred thousand pesos (500,000.00). Tulfo et al., filed an MR
with the CA. This time, the CA modified its first decision and deleted the award of exemplary damages. It also
deleted the RTC’s award of actual damages for lack of factual and legal basis.
ISSUE
Is the petitioner entitled to payment for damages? If yes, what kind of damages?
HELD
The petitioner is partially correct. The Court held that the petitioner is entitled to moral and exemplary
damages only, because his bare allegation is insufficient to prove that he has indeed lost P5,000,000.00 as
earnings. As this Court has previously held, "the award of unrealized profits cannot be based on the sole
testimony of the party claiming it." Unlike actual and temperate damages, moral damages may be awarded
even if the injured party failed to prove that he has suffered pecuniary loss. As long as it was established that
complainant's injury was the result of the offending party's action, the complainant may recover moral
damages. His tainted reputation in his family merit an award of P500,000.00 as moral damages to recompense
the mental anguish and wounded feelings that petitioner had endured. To ensure that such conduct will no
longer be repeated, and considering their profession, respondents are directed to pay petitioner exemplary
damages in the amount of P1,000,000.00.
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TORREON v. APARRA
G.R. No. 188493 | December 13, 2017
Torts and Damages: Actual or Compensatory Damages
DOCTRINE
Lack of documentary evidence is not fatal to a claim for the deceased's lost earning capacity.
Testimony from a competent witness familiar with his salary is a sufficient basis to determine the deceased's
income before his death.
FACTS
Abellana, her employee Rodolfo Torreon and his daughters Monalisa and Johanna boarded the truck
owned and operated by Simolde. Caballes was the official driver, but he allowed Aparra, who only had a
student’s license, to drive. Aparra avoided a bicycle and a person, but since the road was narrow and was full
of potholes, the truck fell, resulting in the death of Rodolfo and Monalisa, and injuries to Abellana and Johanna.
A civil case for damages was filed by Rodolfo’s wife Vivian and Abellana against Simolde, Caballes, and
Aparra. Abellana testified as to how much she was paying Rodolfo, but she could not present her accounting
books as she had disposed of them. The RTC held them liable for damages. The CA affirmed the RTC decision
but deleted the award of actual damages for Rodolfo’s loss of earning capacity, ruling that documentary
evidence should be presented to substantiate a claim for loss of earning capacity.
ISSUE
Should actual damages for loss of earning capacity be awarded to Vivian?
HELD
YES. Civil or death indemnity is mandatory and granted to the heirs of the victim without need of
proof other than the commission of the crime. The amount of the indemnity is currently fixed at P50,000.00.
Thus, respondents are liable to pay Rodolfo's heirs P50,000.00. They are liable to pay another P50,000.00 to
answer for the death of Monalisa. The CA deleted the award of actual damages granted to the petitioner for
Rodolfo's lost earnings. According to the CA, documentary evidence should be presented to substantiate a
claim for the deceased's lost income. This Court disagrees. In civil cases, Vivian is only required to establish
her claim by a preponderance of evidence. Allowing testimonial evidence to prove loss of earning capacity is
consistent with the nature of civil actions. In determining if this quantum of proof is met, this Court is not
required to exclusively consider documentary evidence. In a torts case, this Court also accepted testimony
from co-workers of the deceased to establish his income before his death. If co-workers were deemed
competent to testify on the compensation that the deceased was receiving, all the more should an employer
be allowed to testify on the amount she was paying her deceased employee.
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ERMA INDUSTRIES, INC. v. SECURITY BANK CORP.
G.R. No. 191274 | December 6, 2017
Torts and Damages: Actual or compensatory damages: Attorney’s fees
DOCTRINE
The award of attorney's fees demands factual, legal and equitable justification. Even when a claimant
is compelled to litigate to defend himself/herself, still attorney's fees may not be awarded where there is no
sufficient showing of bad faith of the other party.
FACTS
Petitioner (Erma) obtained from Security Bank a credit facility. A suretyship agreement was executed
by Spouses Marcelo and Spouses Ortiz in favor of the bank should Erma default in any of its payments with
the bank. Erma obtained various loans from the bank, but when it defaulted in the payment, Erma, through its
President, Mr. Marcelo, requested a restructuring of the whole of Erma’s obligations. Mr. Marcelo offered a
certain property as security and delivered the TCT, which the bank accepted and kept in its possession.
However, the bank only approved a partial structuring of the loans. The bank then demanded payment of the
obligations, and later filed a complaint for a sum of money with the RTC. The RTC held that Erma, Mr. Marcelo,
and Mr. Ortiz were liable. This was affirmed by the CA.
ISSUE
Are petitioners Erma and Spouses Marcelo entitled to attorney’s fees?
HELD
NO. The award of attorney's fees under Article 2208 of the Civil Code demands factual, legal and
equitable justification. Even when a claimant is compelled to litigate to defend himself/herself, still attorney's
fees may not be awarded where there is no sufficient showing of bad faith of the other party. It is well within
Security Bank's right to institute an action for collection and to claim full payment. Absent any proof that
respondent Bank intended to prejudice or injure petitioners when it rejected petitioners' offer and filed the
action for collection, we find no basis to grant attorney's fees.
LORENZO SHIPPING CORP. v. NATIONAL POWER CORP.

G.R. Nos. 181683 & 184568 | October 7, 2015
Torts and Damages: Temperate damages
DOCTRINE
The precise amount of pecuniary loss must be established by evidence in conformity with the Rules
on Evidence. Thus, a mere unauthenticated private document and a testimony giving a mere estimate, do not
establish the precise amount of pecuniary loss. In such a case, only temperate damages, not actual damages,
may be awarded.
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FACTS
MV Lorcon Luzon, owned by Petitioner (LSC), was being maneuvered by harbor pilot Captain Yape,
but the vessel’s Master Captain Villarias remained at the side of Yape and repeated his orders. When the vessel
neared the wharf, Yape ordered the vessel to move backward. Despite his orders, the engine failed to timely
respond, so the vessel rammed into the Power Barge 104, owned by respondent (NPC). NPC filed a complaint
for damages against LSC. The RTC absolved LSC of liability, but this was reversed by the CA. In its amended
decision, the CA, noting that the amount of actual damages was not proven by NPC, awarded it the amount
of P300,000.00 as temperate damages in lieu of actual damages.
ISSUE
What damages may be awarded to NPC?
HELD
TEMPERATE DAMAGES. Article 2199 of the Civil Code spells out the basic requirement that
compensation by way of actual damages is awarded only to the extent that pecuniary loss is proven: “Except
as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved.” It is basic that any material presented as evidence will not be
considered unless duly admitted by the court before which it is presented. Just as basic is that a private
document offered as authentic evidence shall not be admitted unless its due execution and authenticity are
established in the manner specified by Rule 132, Section 30 of the Revised Rules on Evidence. A bill of
expenses, such as NPC’s Exhibit "F", is considered a private document as it does not fall under what the Revised
Rules on Evidence defines to be public documents. Accordingly, for it to have been admitted by the RTC as
authentic, Rule 132, Section 30 of the Revised Rules on Evidence must have been complied with. NPC failed
in this respect. As regards Homena's testimony, all he did was give an estimate of P1,000,000.00. Certainly,
a mere estimate does not suffice as proof of actual pecuniary loss. Clearly, NPC failed to establish the precise
amount of pecuniary loss it suffered. Nevertheless, it remains that Power Barge 104 sustained damage —
which may be reckoned financially — as a result of the MV Lorcon Luzon's ramming into it. NPC suffered
pecuniary loss, albeit its precise extent or amount had not been established. Accordingly, we sustain the CA’s
conclusion that NPC is entitled to temperate damages under Art. 2224 of the Civil Code: “Temperate or
moderate damages, which are more than nominal but less than compensatory damages, may be recovered
when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be provided with certainty.”
TABONES v. PEOPLE
G.R. No. 204544 | July 3, 2017
Torts and Damages: Temperate Damages
DOCTRINE
Temperate damages may be awarded when there is a finding that some pecuniary loss has been
suffered but its amount cannot from the nature of the case, be proved with certainty. The amount of
temperate damages to be awarded in each case is discretionary upon the courts so long as it is reasonable
under the circumstances.
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FACTS
This case resolves the Petition for Review assailing the decision of the Court of Appeals which
upheld the conviction of Marlon Bacerra y Tabones for the crime of simple arson. Regional Trial Court in
Villasis, Pangasinan found Bacerra guilty beyond reasonable doubt of arson, and ordered the accused to
pay the private complainant P50,000.00 as temperate damages. Bacerra appealed the Decision of the
Regional Trial Court. In the Decision the Court of Appeals affirmed the Decision in toto. Bacerra filed a
Petition for Review on Certiorari assailing among others the Decision of the Court of Appeals of granting
temperate damages amounting to P50,000.00 should not have been awarded because private complainant
could have proven actual damages during trial. However, respondent argued that it was properly granted
because the burning of private complainant's nipa hut brought some pecuniary loss.
ISSUE
Was the award of temperate damages amounting to P50,000.00 proper?
HELD
YES. Under Article 2224 of the Civil Code, temperate damages may be awarded when there is a
finding that "some pecuniary loss has been suffered but its amount cannot from the nature of the case, be
proved with certainty." The amount of temperate damages to be awarded in each case is discretionary upon
the courts so long as it is "reasonable under the circumstances." Since private complainant clearly suffered
some pecuniary loss as a result of the burning of his nipa hut, he is entitled to be indemnified for his loss.
The award of temperate damages amounting to P50,000.00 is proper and reasonable under the
circumstances.
CASTRO v. GREGORIO
G.R. No. 188801 | October 15, 2014
R.A. 8552 or Domestic Adoption Law
DOCTRINE
In all instances where it appears that a spouse attempts to adopt a child out of wedlock, the other
spouse and other legitimate children must be personally notified through personal service of summons. It is
not enough that they be deemed notified through constructive service.
FACTS
Atty. Jose G. Castro (Jose) is the estranged husband of Rosario Mata Castro (Rosario) and the father of
Joanne Benedicta Charissima M. Castro (Joanne), also known by her baptismal name, "Maria Socorro M.
Castro" and her nickname, "Jayrose." He sought to adopt Jose Maria Jed Lemuel Gregorio (Jed) and Ana Maria
Regina Gregorio (Regina). Rosario alleged that she and Jose were married on August 5, 1962 in Laoag City.
Their marriage had allegedly been troubled. They had a child, Rose Marie, who was born in 1963, but
succumbed to congenital heart disease and only lived for nine days. Rosario allegedly left Jose after a couple
of months because of the incompatibilities between them. However, they briefly reconciled in 1969 and
Rosario gave birth to Joanne a year later. She and Jose allegedly lived as husband and wife for about a year
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even if she lived in Manila and Jose stayed in Laoag City. Afterwards, they separated permanently because of
Jose’s alleged homosexual tendencies. Nevertheless, they "remained friends for fifteen (15) years despite their
separation.” On August 1, 2000, Jose filed a petition for adoption before the Regional Trial Court of Batac,
Ilocos Norte alleging that Jed and Regina were his illegitimate children with Lilibeth Fernandez Gregorio
(Lilibeth), his housekeeper. He was 70 years old at the time of the filing of the petition, and Lilibeth had been
dead since 1995. The adoption was approved. A certificate of finality was issued soon after. Rosario then filed
a complaint for disbarment against Jose, alleging that Jose had been remiss in providing support for their
daughter, Joanne, for the past 36 years.
ISSUE
Is the consent of the spouse and legitimate children 10 years or over of the adopter required?
HELD
YES. Under Article III, Section 7 of Republic Act No. 8552, the husband must first obtain the consent
of his wife if he seeks to adopt his own children born out of wedlock. In the absence of any decree of legal
separation or annulment, Jose and Rosario remained legally married despite their de facto separation. For Jose
to be eligible to adopt Jed and Regina, Rosario must first signify her consent to the adoption. Jose, however,
did not validly obtain Rosario's consent. Since her consent was not obtained, Jose was ineligible to adopt.
Article III, Section 9 of R.A. 8552 also requires the written consent of the adopter's children if they are 10
years old or older. The consent of the adopter's other children is necessary as it ensures harmony among the
prospective siblings. It is undisputed that Joanne was Jose and Rosario's legitimate child and that she was over
10 years old at the time of the adoption proceedings. Her written consent, therefore, was necessary for the
adoption to be valid. As her written consent was never obtained, the adoption was not valid.
HEIRS OF DELFIN v. NHA

G.R. No. 193618 | November 28, 2016
Commonwealth Act No. 141 or Public Land Act
DOCTRINE
The period to acquire public land by acquisitive prescription under Presidential Decree No. 1529
begins to run only after the promulgation of a law or a proclamation by the President stating that the land is
no longer intended for public use or the development of national wealth.
FACTS
The Spouses Delfin claimed that they were the owners of a parcel of land in Iligan City. They allegedly
bought the property in 1951 from Felix Natingo and Carlos Carbonay, who, allegedly, had been in actual
possession of the property since time immemorial. The Spouses Delfin had been declaring the Iligan Property
in their names for tax purposes since 1952, and had been planting it with mangoes, coconuts, corn, seasonal
crops, and vegetables. They further alleged that the National Housing Authority (NHA) forcibly took possession
of a portion of the property. Despite their repeated demands for compensation, the NHA failed to pay the
value of the property. The Spouses Delfin thus filed their Complaint.
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ISSUE
Do Spouses Delfin and their heirs have been in possession of the Iligan Property as will enable them
to claim ownership and be entitled to just compensation?
HELD
YES. While the Spouses Delfin may not claim title by prescription under Sec. 14 (2) of P.D. No. 1529,
they may, nevertheless, claim title pursuant to Sec. 48 (b) of Commonwealth Act No. 141 (the Public Land
Act). It requires that two (2) requisites be satisfied before claims of title to public domain lands may be
confirmed:
(a) That the land subject of the claim is agricultural land; and
(b) Open, continuous, notorious, and exclusive possession of the land since June 12, 1945.
That the Iligan property was alienable and disposable, agricultural land, has been admitted. Indeed, by
virtue of Proclamation No. 2143 certain parcels of land in Barrio Suarez, Iligan City were reserved for slum-
improvement and resettlement program purposes. The proclamation characterized the covered area as
"disposable parcel of public land". Clearly then, Spouses Delfin acquired title over the Iligan Property pursuant
to Sec. 48(b) of the Public Land Act. First, there is no issue that the Iligan Property had already been declared
to be alienable and disposable land. NHA has admitted this and Deputy Public Land Inspector Pio Lucero,
Jr.'s letters to the Director of Land attest to this. Second, although the Spouses Delfin' testimonial evidence
and tax declarations showed that their possession went only as far back as 1952, Deputy Public Land Inspector
Pio Lucero, Jr.'s letters to the Director of Land nevertheless attest to a previous finding that the property had
already been occupied as early as June 1945. Having shown that the requisites of Section 48(b) of the Public
Land Act have been satisfied and having established their rights to the Iligan Property, it follows that the
Spouses Delfin must be compensated for its taking.
GALINDEZ v. FIRMALAN
G.R. No. 187186 | June 6, 2018
DOCTRINE
The Director of Lands, under the immediate control of the Secretary of Agriculture and Commerce,
now the Department of Environment and Natural Resources Secretary, has executive control over the survey,
classification, lease, concession, disposition, and management of lands under the public domain.
FACT
In 1949, Salvacion Firmalan filed an application with Bureau of Land for a 150 square meters parcel
of land in Romblon. In 1967 or almost 18 years later after filing her first application, Firmalan filed another
application which includes a 325 square meter parcel of land and the 150 square meter lot in her first
application. The Acting District Land Officer recommended the approval of Firmalan’s second application.
Respondent, Alicia Galindez, filed a protest on Firmalan’s second application claiming that she and her family
had been in constant possession of a portion the 325 square meter lot since 1951 and had built a house and
planted coconut trees on the lot. Upon ocular inspection, it was found out that the lot covered in Firmalan’s
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application was occupied by one Felipe Gaa and Elmer Galindez, son of Alicia, and not Firmalan. The case
was then referred to DENR Regional Director who then concluded that Firmalan has superior right over the
lot since she was the rightful applicant and filed earlier than Alicia and Alicia obtained possession of the lot
through trickery and defiance of law. Petitioner accuses respondent of applying for as many lots as she could,
regardless of whether there were actual occupants on the lots being applied for and of having "unlawful
support from some elements in the Bureau of Lands and the DENR." respondent stresses that the Department
of Environment and Natural Resources, the Office of the President, and the Court of Appeals made unanimous
factual findings that she adhered to the terms of her miscellaneous sales application. Petitioner repeats that as
the long-time occupant of the lot, she has a preferential status over it.
ISSUE
Should petitioner’s application have been given preference over respondent application in light of the
former's long-time possession of the disputed lot?
HELD
NO. In pursuance of its functions, the Director of Lands is empowered to put in place such rules and
regulations, which would best carry out the provisions of the Public Land Act. The Public Land Act also states
that the decisions of the Director of Lands "as to questions of fact shall be conclusive when approved by the
Secretary of Agriculture and Commerce." Bureau of Lands Examiner Gabay, after an ocular inspection of Lot
No. 915 and a formal hearing between the parties, who were then represented by counsels and were given
the opportunity to present their evidence, concluded that there was no conflicting claim as to the portion of
the lot occupied by Gaa. The conflict was limited to the northern side of Lot No. 915, or the portion occupied
by petitioner. Examiner Gabay then opined that between petitioner and respondent, respondent was the
rightful applicant over the disputed lot.
TAAR v. LAWAN
G.R. No. 190922 | October 11, 2017
DOCTRINE
A judgement approving the subdivision of a parcel of land does not preclude other parties with a
better right from instituting free patent application over the same land.
FACTS
Narcisa Taar, Alipio Duenas, Fortunata Duena and Pantaleon Taar inherited two vast tracts of land
situated in Tarlac, one parcel of land was adjudicated exclusively in favor of Panteleon while the second
parcel of land was given to the four of them. Narcisa sold her share. Later, Pantaleon and others (Petitioners)
executed an agreement for partition over the second parcel of land which was subsequently approved by the
Court of First Instance of Tarlac. This agreement was approved by the Court of First Instance of Tarlac in its
February 18, 1948 Decision Petitioners prepared a subdivision plan over the property and then applied for
free patents. Sometime in 2001, the private respondents filed a protest alleging that their predecessors-in-
interest had been in actual, physical, exclusive and notorious possession and occupation of the land since
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1948. Petitioners contends that the private respondent’s predecessors-in-interest occupied the property as
tenants. Petitioners insist that their predecessors-in-interest were declared ipso jure owners of the Property by
the Court of First Instance of Tarlac in its February 18, 1948 Decision. According to petitioners, the Court of
First Instance recognized that their predecessors-in-interest "possessed, occupied, and cultivated the lots for
more than thirty (30) years since 1915. Private respondents contend that they are not bound by the February
18, 1948 Decision of the Court of First Instance. They assert that the principle of res judicata does not apply
because there is no identity of parties and subject matter.
FIRST ISSUE
Did the 1948 Decision of the Court of First Instance bar respondents from applying for free patents
over the Property?
HELD
NO. The rule on res judicata states that a final judgement or decree rendered on the merits by a court
of competent jurisdiction is conclusive of the rights of the parties or their privies, in all other subsequent
actions or suits and on all points and matters determined in the first suit. The decision of the CFI did not
recognize, expressly or impliedly, that private petitioner’s predecessors-in-interest occupied and cultivated the
property for more than 30 years. It did not also declare petitioner’s predecessors-in-interest as the ipso jure
owners of the same. Hence, the decision of the CFI cannot bar the filing of a subsequent free patent application
over the property. Likewise, petitioners cannot rely solely on this decision to obtain free patents. The
petitioners in choosing to apply for free patents acknowledged that the land covered by their application still
belongs to the government and is still part of public domain. Hence under Sec. 44 of Public Land Act, they
shall prove that they continuously occupied and cultivated the subject land for 30 years prior to April 15,
1990 and paid the real estate taxes while the land has not been occupied by other persons.
SECOND ISSUE
Were the free patents and certificates of title issued in valid and secured through fraud and
misrepresentation?
HELD
NO. Section 91 of the Public Land Act provides the automatic cancellation of the applications filed
on the ground of fraud and misrepresentation. Only extrinsic fraud may be raised as a ground to "review or
reopen a decree of registration." Extrinsic fraud has a specific meaning under the law. It refers to that type of
fraud that "is employed to deprive parties of their day in court and thus prevent them from asserting their right
to the property registered in the name of the applicant.” Petitioners failed to allege and prove that this case
falls under the exceptions. Assuming that private respondents procured their free patents and certificates of
title through extrinsic fraud and misrepresentation, the petition must still be denied. Petitioners are not the
proper parties to bring an action for the cancellation of free patents and certificates of title. The validity or
invalidity of free patents granted by the government and the corresponding certificates of title is a matter
between the grantee and the government.
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MENDOZA v. VALDEZ
G.R. No. 172961 | September 7, 2015
Commonwealth Act No. 141 or Public Land Act: Section 101
DOCTRINE
The existence or non-existence of fraud is a legal conclusion based on a finding that the evidence
presented is sufficient to establish facts constituting its elements. In any event, petitions for a review or
reopening of a decree of registration based on actual fraud must be filed before the proper court within the
one-year period. The party alleging fraud must overcome the burden of proving the fraud with clear and
convincing evidence.
FACTS
In 1978, Reynosa Valte, respondent, filed a free patent application of a parcel of land located at Nueva
Ecija. Respondent attached to her application the testimonies of one Vallega and Mendoza, petitioner, who
testifies the truth of the allegations of the application. The Director of lands then issued a Notice of Application
stating that all adverse claims on the subject parcel of land shall be filed on or before August 7, 1978 and all
adverse claims not filed shall be forever barred. No adverse claim was filed, and the application was
subsequently granted, issuing then Free Patent. In 1982, the petitioner filed a protest the respondent’s
application claiming to be the lawful owner of the land and that the respondent’s application was fraudulent
by presenting testimonial evidence of their witnesses.
ISSUE
Were the allegations of fraud and misrepresentation properly controverted?
HELD
NO. The court held that the petitioner were not only burdened to prove the fraudulent representation
that respondent allegedly committed in her application by clear and convincing evidence but also they are
burdened to present sufficient evidence to overcome the presumption that official duties have been regularly
performed and that the public documents which constitutes evidence in favor of respondent should not be
given credence. The court cited the case of Republic v. Bellate which states that “Fraud must be actual and
extrinsic, not merely constructive or intrinsic.; the evidence thereto must be clear, convincing, and more than
merely preponderant. Interestingly, the petitioner was listed as a witness in the application of the respondent
declaring that the applicant has continuously occupied and cultivated the subject parcel of land since July 4,
1945 or earlier. Also, the petitioner did not explain why they did not file the proper petition before the trial
court during the one-year period for filing adverse claims of the subject parcel of land. Sec. 101 of
Commonwealth Act no. 141 allows action for the reversion of land fraudulently granted to private individuals
filed even after the lapse of the one-year period, but this must be initiated by the state.
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HEIRS OF CASCAYAN v. SPS. GUMALLAOI
G.R. No. 211947 | July 3, 2017
P.D. 1529 or Property Registration Decree: Certificate not subject to collateral attack
DOCTRINE
A certificate of title shall not be subject to collateral attack and cannot be altered, modified, or
canceled except in a direct proceeding.
FACTS
The Cascayan Heirs filed a complaint against the Spouses Gumallaoi alleging that by virtue of a free
patent application, they were co-owners of a parcel of land covered by an Original Certificate of Title. They
affirmed that the Spouses bought Lot No. 20029, an adjacent lot. The Spouses built a residential house on Lot
No. 20029 which the Cascayan Heirs allegedly encroached on Lot No. 20028 after renovations and
improvements. The Spouses ignored the notifications that they had encroached into Lot No. 20028. In
response, the Spouses maintained that they were the true owners of both Lot Nos. 20029 and 20028. They
claimed that the Cascayan Heirs secured a free patent to Lot No. 20028 through manipulation. They asserted
that the supporting affidavits for the Cascayan Heirs' free patent application were obtained through fraud and
deception. The RTC rendered a Decision declaring the Spouses Gumallaoi the legal owners of Lot No. 20028.
It ruled that Cascayan heirs did not prove that they or their predecessor-in-interest had been in possession of
it. It concluded that their title had been secured through fraud, without legal and proper basis, and hence,
disregarded it. The CA denied the petition and affirmed the RTC Decision.
ISSUE
Did the Court of Appeals commit any error of law in affirming the Regional Trial Court Decision,
which declared respondents as the legal owners of Lot No. 20028?
HELD
NO. Sec. 48 of P.D. 1529, the Property Registration Decree, provides that a certificate of title shall
not be subject to collateral attack and cannot be altered, modified, or canceled except in a direct proceeding.
An action is an attack on a title when the object of the action is to nullify the title, and thus challenge the
judgment or proceeding pursuant to which the title was decreed. The attack is direct when the object of an
action is to annul or set aside such judgment or enjoin its enforcement. On the other hand, the attack is indirect
or collateral when, in an action to obtain a different relief, an attack on the judgment or proceeding is
nevertheless made as an incident thereof. Thus, the Court of Appeals did not commit any error of law in
affirming the Regional Trial Court Decision, which declared respondents as the legal owners of Lot No. 20028,
and in cancelling petitioners' title to it.
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PADILLO v. VILLANUEVA
G.R. No. 209661 | October 3, 2018
P.D. 1529 or Property Registration Decree: Certificate not subject to collateral attack
DOCTRINE
The registration of a certificate of land ownership award places the subject land under the operation
of the Torrens systems. Once under the Torrens system, a certificate of land ownership award or certificate of
title issued may only be attacked through a direct proceeding before the court.
FACTS
Perfecto Vales (Vales) owned a parcel of land in Barangay Dela Paz, Banate, Iloilo, which was placed
under the Comprehensive Agrarian Reform Program. Portions of the land were awarded to three (3) people:
Boso, Diopenes and Villanueva. TCT or Certificates of Land Ownership Award were issued to them. Four (4)
years after, Aurelio Padillo (Padillo) filed before the Agrarian Reform Regional Office No. 6 a Petition for
Inclusion as Farmer-Beneficiary. He applied as farmer-beneficiary when Vales' property was placed under the
Comprehensive Agrarian Reform Program, and was awarded an area of 1,003 square meters, allegedly less
than the portion he occupied. Moreover, some portions he occupied were erroneously awarded to Diopenes
and Villanueva. Diopenes and Villanueva opposed the Petition. Regional Director Arsenal in his Order
declared that Padillo was a qualified beneficiary of Villanueva and Diopenes's portion. Padillo filed before
the Provincial Agrarian Reform Adjudicator of Iloilo a Petition for Cancellation of Certificate of Land
Ownership Award against Diopenes and Villanueva but was dismissed. On Appeal, the Department of
Agrarian Reform Adjudication Board ordered the cancellation of the Transfer Certificates of Title and
Certificates of Land Ownership Award issued to Diopenes and Villanueva.
ISSUE
May the Department of Agrarian Reform may cancel the registered Certificates of Land Ownership
Award or Transfer Certificates of Title four (4) years after their issuance?
HELD
NO. Well-settled is the rule that certificates of title emanating from the grant of public land in an
administrative proceeding enjoy the same protection as those issued in registration proceedings. The Court
affirms the Court of Appeals in ruling that a certificate of land ownership award becomes indefeasible and
incontrovertible upon the expiration of one year from the date of registration with the Office of the Registry of
Deeds. Under Section 48 of Presidential Decree No. 1529, a registered certificate of land ownership award
may be altered, modified, or canceled only through an action for annulment of the certificate itself. In this
case, the lots were already covered by Certificates of Land Ownership Award registered with the Registry of
Deeds, with Transfer Certificates of Title issued four (4) years before petitioner led his Petition for Inclusion as
farmer-beneficiary. This Petition was a collateral attack on respondents' title. It incidentally questioned the
validity of the Transfer Certificates of Title issued in respondents' favor in an action seeking a different relief
— purportedly for petitioner to be included as farmer- beneficiary in the subject lots.
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REPUBLIC v. ORTIGAS AND COMPANY LIMITED PARTNERSHIP
G.R. No.171496 | March 3, 2014
P.D. 1529 or Property Registration Decree: Subdivision and consolidation plans
DOCTRINE
Sec. 50 of PD No. 1529, which provides that delineated boundaries, streets, passageways, and
waterways of a subdivided land may not be closed or disposed of by the owner except by donation to the
government, does not apply in a case that is the proper subject of an expropriation proceeding.
FACTS
Respondent Ortigas is the owner of a parcel of land in Pasig City. Upon the request of the Department
of Public Works and Highways (DPWH), Ortigas caused the segregation of its property into 5 lots and reserved
1 portion for road widening for the C-5 flyover project. The C-5-Ortigas Avenue flyover was completed,
utilizing only 396 sq. m. of the 1,445 sq. m. allotment for the project. Consequently, Ortigas further subdivided
the lot into the portion used for road widening, and the unutilized portion. He filed with the Pasig RTC a
petition for authority to sell to the government the portion of the lot used for the road widening. The RTC
issued an order authorizing the sale but petitioner Republic of the Philippines, represented by the Office of
the Solicitor General, filed an opposition, alleging that Ortigas’ property can only be conveyed by way of
donation to the government, citing Sec. 50 of Presidential Decree No. 1529 (Property Registration Decree).
The Republic filed a motion for reconsideration which was denied by the RTC. Republic’s appeal was also
dismissed by the Court of Appeals.
ISSUE
Did the CA gravely err in dismissing the appeal from the trial court order granting Ortigas authority to
sell the land to the Republic of the Philippines?
HELD
NO. Sec. 50 of PD No. 1529 does not apply in a case that is the proper subject of an expropriation
proceeding. Ortigas may sell its property to the government. It must be compensated because its property was
taken and utilized for public road purposes. Taking occurs when the following elements are present: 1) The
government must enter the private property; 2) The entrance into the private property must be indefinite or
permanent; 3) There is color of legal authority in the entry into the property; 4) The property is devoted to
public use or purpose; and 5) The use of property for public use removed from the owner all beneficial
enjoyment of the property.
All of the above elements are present in this case. Moreover, since the Constitution proscribes taking of
private property without just compensation, any taking must entail a corresponding appropriation for that
purpose. When the road or street was delineated upon government request and taken for public use, as in this
case, the government has no choice but to compensate the owner for his or her sacrifice, lest it violates the
constitutional provision against taking without just compensation.
97 of 106
REGISTER OF DEEDS OF NEGROS OCCIDENTAL v. ANGLO
G.R. No. 171804 | August 5, 2015
P.D. No. 1529 as amended by R.A. No. 11057: Assurance Fund
DOCTRINE
When a claimant of assurance fund made the conscious choice of recovering the value of the
properties, he purchased by selling the properties to another buyer, it him from making a subsequent claim
from the Assurance Fund because that will be tantamount to unjust enrichment.
FACTS
Alfredo V. de Ocampo filed an application before the Court of First Instance of Negros Occidental to
register two parcels of prime sugar land. The registration was contested by the Republic of the Philippines’
Bureau of Education. According to the Republic, the lots de Ocampo sought to register were bequeathed to
the Bureau of Education by the late Esteban Jalandoni. Due to the donation, the Bureau of Education owned
the lots as evidenced by Transfer Certificate of Title (TCT) No. 6014. While registration proceedings were
pending, de Ocampo sold the lot to Oscar Anglo, Sr. The Republic caused the annotations of notices of lis
pendens in Anglo, Sr. 's transfer certificate of title. Despite the notices of lis pendens, Anglo, Sr. conveyed the
lots to Anglo Agricultural Corporation in exchange for shares of stock. Anglo, Sr. and Anglo Agricultural
Corporation filed a Complaint for Recovery of Damages from the Assurance Fund against the Register of Deeds
of Negros Occidental and the National Treasurer of the Republic of the Philippines before the Regional Trial
Court of Bacolod City, Negros Occidental. According to their Complaint, Anglo, Sr. acquired the lots in good
faith and for value without any negligence on his part.
ISSUE
Are the respondents entitled to an award of damages from the Assurance Fund under Section 95 of
Presidential Decree No. 1529?
HELD
NO. Respondents Anglo, Sr. and Anglo Agricultural Corporation do not meet the criteria set to recover
damages from the Assurance Fund. In the sale to Anglo Sr., by de Ocampo, the former was in good faith.
Individuals who rely on a clean certificate of title in making the decision to purchase the real property are
often referred to as innocent purchasers for value and in good faith. However, Anglo Sr. no longer had an
interest over the lots after he had transferred these to Anglo Agricultural Corporation in exchange for shares of
stock. Hence, he no longer has a claim from the Assurance Fund. Anglo Agricultural Corporation cannot be
considered as a transferee in good faith because it was already aware of the title’s notices of lis pendens. Thus,
it also has no right to claim damages from the Assurance Fund.
98 of 106
REPUBLIC v. SPOUSES LLAMAS
G.R. No. 194190 | January 25, 2017
P.D. No. 957 or Subdivision and Condominium Buyer's Protection Act: Donations of roads and open spaces
to local government
DOCTRINE
Delineated roads and streets, whether part of a subdivision or segregated for public use, remain private
and will remain as such until conveyed to the government by donation or through expropriation proceedings.
An owner may not be forced to donate his or her property even if it has been delineated as road lots because
that would partake of an illegal taking.
FACTS
The Department of Public Works and Highways initiated an action for expropriation for the widening
of Sucat Road in Parañaque City. The Commissioners appointed by the Regional Trial Court in the
expropriation case submitted a resolution recommending that just compensation for the expropriated areas be
set. After years of not obtaining a favorable ruling, the Llamas Spouses filed a Motion for Issuance of an Order
to Pay and/or Writ of Execution, where they faulted the DPWH for its deliberate failure to comply with the
RTC’s previous Orders and even with its own undertaking to facilitate the payment of just compensation to
the Llamas Spouses. The RTC issued the Order directing the payment to the Llamas Spouses of just
compensation for the lot covered by TCT No. 217267. But it denied payment for areas covered by TCT No.
179165 and noted that these were subdivision road lots, which the Llamas Spouses no longer owned and
which belonged to the community for whom they were made.
ISSUE
Are Llamas Spouses entitled for payment of just compensation for the subdivision road lots covered
by TCT No. 179165?
HELD
YES. The last paragraph of Section 31 of Presidential Decree No. 957, as amended by Presidential
Decree No. 1216, otherwise known as the Subdivision and Condominium Buyer's Protective Decree, uses the
word "shall" in requiring subdivision developers to donate to the city or municipality with territorial jurisdiction
over the subdivision project all such roads, alleys, sidewalks, and open spaces and imposes upon cities and
municipalities the concomitant obligation or compulsion to accept such donations. Section 31's compulsion
to donate and concomitant compulsion to accept cannot be sustained as valid. One cannot speak of a donation
and compulsion in the same breath. The local government should first acquire them by donation, purchase,
or expropriation, if they are to be utilized as a public road. Delineated roads and streets, whether part of a
subdivision or segregated for public use, remain private and will remain as such until conveyed to the
government by donation or through expropriation proceedings. An owner may not be forced to donate his or
her property even if it has been delineated as road lots because that would partake of an illegal taking. He or
she may even choose to retain said properties.
99 of 106
BNL MANAGEMENT CORPORATION v. UY
G.R. No. 210297 | April 3, 2019
R.A. 4726 or the Condominium Act
DOCTRINE
The declaration of restrictions provides for the project management, among others, and is enforceable
by the condominium's management body.
FACTS
BNL Management owned six (6) condominium units at the Imperial Bayfront Tower Condominium,
A. Mabini Street, Malate, Manila (Imperial Bayfront). 1996, BNL Management, through David, wrote a letter
to the building administrator of Imperial Bayfront, acknowledging receipt of the November billing statement.
1999, BNL Management received the Third Notice of Billing. Still, BNL Management did not pay the arrears.
Thus, in an August 24, 1999 meeting, the Association's Board of Directors, composed of Reynaldo Uy,
resolved to disconnect the lighting facilities in the six (6) units owned by BNL Management. The Association
also sent a Notice informing BNL Management that should it fail to pay its dues, the water services would be
disconnected from its units. Since the Association refused to restore its electricity and water, BNL Management
and David filed before the Regional Trial Court a Complaint against Uy, et al., for damages and specific
performance with preliminary mandatory/prohibitory injunction. BNL Management and David argued that the
House Rules and Regulations, on which the disconnection was based, were never ratified by the Association
members, hence, not valid.
ISSUE
Are the petitioners entitled to damages for the disconnection of water and electricity utilities from the
units they own at Imperial Bayfront?
HELD
NO. The creation and incidents of the Imperial Bayfront are governed by the Condominium Act.
Under Section 9, the owner of the condominium shall register a declaration of restrictions to be annotated to
the certificate of title of land included within the project. The declaration of restrictions provides for, among
others, the management of the project. Here, when petitioners bought the condominium units from Imperial
Bayfront, they were bound by the terms and conditions of the declaration of restrictions attached to the Master
Deed. As the Court of Appeals found, the Master Deed expressly allows its condominium association to subject
its owners, purchasers, tenants, and lessees to rules and regulations for "the efficient and mutually beneficial
management and operation of the project." These were the House Rules and Regulations, which vested in the
Association the power to interrupt utility services in case of nonpayment of association dues. As the Court of
Appeals held, petitioners cannot feign ignorance and insist that these rules cannot apply to them. Neither can
they justify their non-payment of dues with mere allegations that the House Rules and Regulations are invalid
and that the Association's Board of Directors was not duly elected. Petitioners' action for damages is not the
proper forum to determine the legitimacy of the Association's Board of Directors and whether its acts are ultra
vires. Finally, petitioners are not entitled to the damages they prayed for.
100 of 106
ORBE v. FILINVEST LAND, INC.
G.R. No. 208185 | September 06, 2017
R.A. 6552 or Maceda Law
DOCTRINE
When the buyer's payments fall short of the equivalent of two (2) years' worth of installments under
Section 3, the benefits that the buyer may avail of are limited to those under Section 4. Should the buyer still
fail to make payments within Section 4's grace period, the seller may cancel the contract. Any such
cancellation is ineffectual, however, unless it is made through a valid notarial act.
FACTS
On June 2001, Priscilla Zafrq Orbe entered into a purchase agreement with Filinvest Land, Inc. over
a lot in Highlands Pointe, Taytay, Rizal for P2, 566, 795.00 with a reservation fee of P20,000 and down
payment of P493,357 payable on installments for P54, 818.00 monthly from August 04, 2001 to April 04,
2002. The balance of P2,053,436 is payable on installment for a period of 7 years from May 08, 2002 to April
08, 2009. She has to pay P27, 936.84 per month for the first year, P39,758.84 per month for the second year,
P41, 394.84 per month on the third year and P42, 138.84 per month on the fourth year. From June 17, 2001
to July 14, 2004, Orbe paid a total of P608,648.20 however, for failure to make further payments due to
financial difficulties, Filinvest sent a notice of cancellation on October 4, 2004. The said land was
subsequently sold to Ruel Ymana. Orbe filed a complaint before the HLURB Field Office asking for a refund
with damages on the ground that she had made payments from June 1, 2001 to October 2004 and that the
October 4 notice did not amount to an effective cancellation by notarial act. On the other hand, Filinvest
asserted that Orbe could not benefit from Section 3 of RA 6552 because she failed to make 24 monthly
amortization payments on her account.
ISSUE
Is the petitioner entitled to a refund or to any other benefit under Sec 3 of RA 6552?
HELD
NO. When Section 3 speaks of paying “at least two years of installments,” it does not only refer to the
period when the buyer has been making payments but also to the proportionate value of the installments
made, as well as, payments made for at least two years. To determine if the buyer has satisfied the requisite of
2 years’ worth of installments, the divisor that must be used is the monthly amortizations due from the buyer.
In this case, the court used as divisor the monthly amortization for the first year. The computation showed that
Orbe has only paid 21.786 months’ (Total Payment/Monthly Amortization) worth of installments. With the
shortage of her payment, what applies is Section 4 which provides that if the buyer fails to make payments
within Section 4's grace period, the seller may cancel the contract. However, the cancellation is ineffectual if
it is not through a valid notarial act. In this case, the notice of cancellation made by Filinvest was an invalid
notarial act since it was only executed by an individual from their Collection Dep’t. However, considering
that it did not validly cancel its contract with Orbe and has also sold the lot to another person, it is proper that
Filinvest be ordered to refund the equivalent of the amount actually paid by her.
101 of 106
HEIRS OF SALAS v. CABUNGCAL
G.R. No. 191545 |March 29, 2017
R.A. 6657 as amended by R.A. 9700 or Comprehensive Agrarian Reform Law: Agricultural Lands
DOCTRINE
Republic Act No. 6657 never required that a landholding must be exclusively used for agricultural
purposes to be covered by the Comprehensive Agrarian Reform Program. What determines a tract of land's
inclusion in the program is its suitability for any agricultural activity.
FACTS
Petitioners are the heirs of the registered owner of a vast tract of land, while respondents are agrarian
reform beneficiaries under the CARP. Pursuant to the approved town plan (Town Plan/Zoning Ordinance), the
subject land was reclassified as farm lot subdivision for cultivation, livestock production, or agro-forestry.
While portion of the land was sold, more than half remained unsold. Hence, petitioner heirs assailed the
inclusion of their landholdings from CARP.
ISSUE
Did the reclassification of petitioners' agricultural land as a farm lot subdivision exempt the Estate of
Salas from the coverage of the CARP?
HELD
NO. The Comprehensive Agrarian Reform Law covers all agricultural lands, save for those not used
or suitable for agricultural activities. The reclassification of Salas' landholding into a farm lot subdivision,
although effected before Republic Act No. 6657, has not changed the nature of these agricultural lands, the
legal relationships existing over such lands, or the agricultural usability of the lands. Thus, these lots were
properly subjected to compulsory coverage under the Comprehensive Agrarian Reform Law. This case
involves a land that was reclassified as a "farm lot subdivision," intended for "intensive agricultural activities."
Likewise, located away from the city center, the farm lot subdivision has not been developed into an urban
zone. Salas' farm lot subdivision fulfills the three elements of an agricultural land. For the first element, the
lots are devoted to agricultural activity. Petitioners never denied the continued existence of agricultural activity
within these lots. For the second element, it is undisputed that the lots have not been declared as mineral or
forest lands by the Department of Environment and Natural Resources (DENR). No application has been filed
to declare the landholdings as mineral or forest lands, and neither has the DENR ever declared the properties
as such. As to the third element, the lands were not classified by the Lipa City Town Plan/Zoning Ordinance
as commercial, residential, or industrial lands prior to June 15, 1988. Rather, the reclassification, which was
approved by HLURB's predecessor agency, was that of a "farm lot subdivision."
102 of 106
HEIRS OF LEONILO P. NUÑEZ, SR. v. HEIRS OF GABINO T. VILLANOZA
G.R. No. 218666 | April 26, 2017
R.A. No. 6657 as amended by Rep. Act No. 9700 or Comprehensive Agrarian Reform Law
DOCTRINE
The landowner has the option to choose the area to be retained only if it is compact or contiguous.
The heirs of a deceased landowner may exercise the retention right only if the landowner signified his or her
intention to exercise the right of retention before August 23, 1990.
FACTS
Leonilo Sebastian Nuñez owned a land measuring "more or less" 2.833 located at Barangay
Castellano, San Leonardo, Nueva Ecija. Sebastian mortgaged this property to then ComSavings Bank, now
GSIS Family Bank, to secure a loan but failed to pay his dues. Tenant-farmer Gabino T. Villanoza tiled
Sebastian's land. GSIS Family Bank extrajudicially foreclosed his mortgaged properties including the land
tenanted by Villanoza. A public auction was held, and GSIS Family Bank emerged as "the highest and only
bidder." Sebastian filed a complaint before the Regional Trial Court to annul the extrajudicial foreclosure sale.
While the case was pending at the Regional Trial Court, the Department of Agrarian Reform sent a notice of
coverage under Republic Act No. 6657 or the Comprehensive Agrarian Reform Program to GSIS Family Bank,
then landowner of the disputed property. Neither GSIS Family Bank nor Sebastian exercised any right of
retention within 60 days from this notice of coverage. The Department of Agrarian Reform issued an
emancipation patent or Certificate of Land Ownership Award (CLOA No. 00554664) to Villanoza.
ISSUE
Do petitioners have a right of retention over the land measuring "more or less" 2.833 hectares awarded
to farmer beneficiary Gabino T. Villanoza?
HELD
NONE. Section 6 of Republic Act No. 6657 gives the landowner the option to choose the area to be
retained only if it is compact or contiguous. The landowner's retention right is subject to another condition.
Under Section 3.3 of Administrative Order No. 02-03, the heirs of a deceased landowner may exercise the
retention right only if the landowner signified his or her intention to exercise the right of retention before
August 23, 1990. Petitioners cannot claim the right of retention through "Leonilo Sebastian" or "Leonilo P.
Nuñez, Sr." when the alleged predecessor-in-interest himself failed to do so. The Court of Appeals correctly
ruled that during his lifetime, Sebastian did nothing to signify his intent to retain the property being tilled by
Villanoza. It was only two (2) years after his death that petitioners started to take interest over it. Unfortunately,
in this case, the landowner has miserably failed to invoke his right at the right time and in the right moment.
The farmer beneficiary should not, in equity, be made to suffer the landowner's negligence. The issuance of
the title to Villanoza could no longer be revoked or set aside by Secretary Pangandaman. Acquiring the lot in
good faith, Villanoza registered his Certificate of Land Ownership Award title under the Torrens system. After
the expiration of one (1) year, the certificate of title covering the property became irrevocable and indefeasible.
103 of 106
SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM v. HEIRS OF ABUCAY
G.R. No. 186964 | March 12, 2019
R.A. 6657 as amended by R.A. 9700 or Comprehensive Agrarian Reform Law; Exclusive and original
jurisdiction over cases for cancellation of registered emancipation patents
DOCTRINE
The jurisdiction over the administrative implementation of agrarian laws exclusively belongs to the
Department of Agrarian Reform Secretary. This is true even if the dispute involves the cancellation of registered
emancipation patents and certificates of title.
FACTS
The Heirs of Spouses Abucay alleged that they inherited the subject property upon their parents' death
and enjoyed its ownership and possession. They claimed that they did not receive any just compensation for
area of the property that was placed under the Operation Land Transfer Program. The Certificate of Deposit
issued by the Land Bank of the Philippines as compensation was not only inadequate, but was also issued to
the property's previous owner. Thus, they prayed, among others, that they be paid just compensation, Heirs
of Spouses Abucay filed another Complaint for the cancellation of original certificates of title and
emancipation patents. This time, they also impleaded the farmer-beneficiaries as respondents.
ISSUE
Do Regional Agrarian Reform Adjudicator and the Department of Agrarian Reform Adjudication
Board have jurisdiction over the Complaint for cancellation of original certificates of title and emancipation
patents filed by the Heirs of Abucay?
HELD
NONE. At the time of the Complaint's filing, the Department of Agrarian Reform Adjudication Board
Rules of Procedure governed the jurisdiction of the Department of Agrarian Reform Adjudication Board. It
provides that adjudicators have exclusive original jurisdiction over registered certificates of land ownership
award and emancipation patents, while the Department of Agrarian Reform Adjudication Board has appellate
jurisdiction. However, it is not sufficient that the controversy involves the cancellation of a certificate of land
ownership award already registered with the Land Registration Authority. What is of primordial consideration
is the existence of an agrarian dispute between the parties. Section 3(d) of the Comprehensive Agrarian Reform
Law defines agrarian dispute as those relating to tenurial arrangements, including leasehold and tenancy. With
the enactment of Republic Act No. 9700, the exclusive and original jurisdiction over cases for cancellation of
registered emancipation patents now belongs to the Department of Agrarian Reform Secretary. In line with
this, the Department of Agrarian Reform has issued Administrative Order No. 07-14, which outlines in the
procedure for the cancellation of registered emancipation patents, certificates of land ownership awards, and
other agrarian titles. The petition for cancellation shall be filed before the Office of the Provincial Agrarian
Reform Adjudicator, which would then undertake the case buildup before forwarding it to the Department of
Agrarian Reform Secretary for decision.
104 of 106
GSIS v. DATOY
G.R. No. 232863 | July 24, 2019
R.A. No. 6657 as amended by RA. No. 9700 or Comprehensive Agrarian Reform Law
DOCTRINE
Lands foreclosed by the Government Service Insurance System, a government financial institution,
are subject to agrarian reform and are not among the Comprehensive Agrarian Reform Law's exclusive list of
exemptions and exclusions.
FACTS
The Metro Davao Agri-Hotel Corporation obtained a P20 million commercial loan from the
Government Service Insurance System. This loan was secured by a mortgage over two (2) parcels of land. As
the Metro Davao Agri-Hotel Corporation was unable to pay its loan obligations, the Government Service
Insurance System (GSIS) foreclosed both properties. After the lapse of the redemption period, ownership of the
two (2) properties was consolidated in the Government Service Insurance System. Municipal Agrarian Reform
Officer Romerico Datoy issued a Notice of Coverage concerning the agricultural land covered by Transfer
Certificate of Title No. T-54074, land foreclosed by GSIS. The GSIS filed before the Department of Agrarian
Reform Regional Director a Petition asking that the property be excluded from compulsory agrarian reform
coverage. Regional Director Inson denied the GSIS’s Petition. The GSIS appealed the Order, but its appeal
was denied by Agrarian Reform Secretary Pangandaman. The GSIS elevated the case to the Office of the
President, but its appeal was denied. The Court of Appeals sustained the rulings of the Office of the President,
the Agrarian Reform Secretary, and Regional Director Inson.
ISSUE
May the property foreclosed by GSIS may be excluded from compulsory agrarian reform coverage?
HELD
NO. Section 7 of the Comprehensive Agrarian Reform explicitly states that "lands foreclosed by
government financial institutions" are subject to agrarian reform: SECTION 7. Priorities. — The Department of
Agrarian Reform (DAR) in coordination with the Presidential Agrarian Reform Council (PARC) shall plan and
program the acquisition and distribution of all agricultural lands through a period of ten (10) years from the
effectivity of this Act. Lands shall be acquired and distributed as follows: “all lands foreclosed by government
financial institutions.” Section 3 (m) of Republic Act No. 10149 defines government financial institutions:
SECTION 3. Definition of Terms. —m) Government Financial Institutions (GFIs) refer to financial institutions
or corporations in which the government directly or indirectly owns majority of the capital stock and which
are either… the Government Service Insurance System and the Social Security System...” Petitioner does not
only meet Section 3 (m)'s definition; it is even cited as the exemplar of a government financial institution. This,
vis-à-vis Section 7 of the Comprehensive Agrarian Reform Law, negates any doubt on its being covered by the
Comprehensive Agrarian Reform Law.
105 of 106
WILLIAM G. KWONG MANAGEMENT, INC., v. DIAMOND HOMEOWNERS & RESIDENTS
ASSOCIATION
G.R. No. 211353 | June 10, 2019
R.A. 9904 or Magna Carta for Homeowners and Homeowners' Associations: Rights and Powers of Association
DOCTRINE
A homeowners' association may regulate passage into a subdivision for the safety and security of its
residents, even if its roads have already been donated to the local government. It has the right to set goals for
the promotion of safety and security, peace, comfort, and the general welfare of its residents.
FACTS
Diamond Subdivision is a residential subdivision in Angeles City, Pampanga with several commercial
establishments operating within it. These establishments include beer houses, karaoke bars, night clubs, and
other drinking joints. Because of these, its residents were exposed to incidents of robbery, akyat-bahay,
prostitution, rape, loud music, and noise that would last until the wee hours of the morning. Diamond
Homeowners & Resident Association sought to address the residents' peace and security issues by raising their
concerns to the City Council of Angeles City, which issued an Ordinance reclassifying the subdivision as
exclusively residential and prohibited the further establishment and operation of any business except for those
already existing. This Ordinance was not complied with as more beer gardens and nightclubs were still put
up. Among those affected was William G. Kwong, a resident of Diamond Subdivision who runs three motels
in the subdivision under his company, William G. Kwong Management, Inc. The other residents of Diamond
Subdivision also wanted their security concerns addressed. Thus, to safeguard the whole subdivision,
Diamond Homeowners proposed the "No Sticker, No ID, No Entry" Policy.
ISSUE
Was Diamond Homeowners & Residents Association authorized in issuing the "No Sticker, No ID,
No Entry" Policy despite the roads having been donated to the local government?
HELD
YES. Although Presidential Decree No. 957 or the Subdivision and Condominium Buyers' Protection
Decree, as amended by Presidential Decree No. 1216 is silent on the right of homeowners' associations to
issue regulations on using the roads to ensure the residents' safety and security, this was addressed when
Republic Act No. 9904, or the Magna Carta for Homeowners and Homeowners' Associations, was enacted.
Section 10(d) gives homeowners' associations the right to regulate access to, or passage through the
subdivision/village roads for purposes of preserving privacy, tranquility, internal security, safety, and traffic
order so long as they comply with the requisites. The law does not distinguish whether the roads have been
donated to the local government or not. In this case, the Policy maintains the public nature of the subdivision
roads. It neither prohibits nor impairs the use of the roads. It does not prevent the public from using the roads,
as all are entitled to enter, exit, and pass through them. One must only surrender an identification card to
ensure the security of the residents. It likewise neither denies nor impairs any of the local government's rights
of ownership. It still has the power to temporarily close, permanently open, or generally regulate the
subdivision roads.
106 of 106

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LEONEN CASES

CIVIL LAW CASE DIGESTS

Jose Rio E. Sanchez

Heddrik C. Gonzales Chelsi Maine T. Laxamana

Lady Joyce A. Bernardez

Carlo Diamond S. Antipuesto Ma. Isabella A. Soriano

Ezekiel Japhet C. Esguerra Joanna Marie L. Barrozo

Christian Miguel C. Candelaria Natasha Felicia M. Francia

Ma. Rosalia Emmanuel S. Ladignon Antonio Luis C. Duran

Dr. Ulpiano P. Sarmiento III

Atty. Anna Marie Melanie B. Trinidad

Atty. Carlo D. Busmente

Atty. Roben B. Cadugo Jr.

Ezekiel Japhet C. Esguerra

Beverly Vyne Hautea

Alexandre Janus B. Bido

This work is the intellectual property of SAN BEDA COLLEGE

It is intended solely for the use of the individuals to which it is

The following may give consent:

PERSONS AND FAMILY RELATIONS

UNIVERSITY OF MINDANAO, INC. V. BANGKO SENTRAL NG PILIPINAS 30

DEE HWA LIONG V. ASIAMED SUPPLIES AND EQUIPMENT CORPORATION 33

SPOUSES LIMSO V. PHILIPPINE NATIONAL BANK 42

LAND TITLES AND DEEDS

REPUBLIC V. HEIRS OF DAQUER 64

ORIENT FREIGHT INTERNATIONAL, INC. V. KEIHIN-EVERETT FORWARDING CO., INC. 78

REPUBLIC ACT NO. 8552

REPUBLIC ACT NO. 9048

COMMONWEALTH ACT NO.141

PRESIDENTIAL DECREE NO. 1529

PRESIDENTIAL DECREE NO. 957

REPUBLIC ACT NO. 4726

REPUBLIC ACT NO. 6552

REPUBLIC ACT NO. 6557

REPUBLIC ACT NO. 9904

II. PERSONS AND FAMILY RELATIONS

PATERNITY AND FILIATION

VII. SPECIAL CONTRACTS

VIII. LAND TITLES AND DEEDS

XI. SPECIAL LAWS AND REGULATIONS

R.A. 8552 OR DOMESTIC ADOPTION LAW

COMMONWEALTH ACT NO. 141 OR PUBLIC LAND ACT

P.D. 1529 OR PROPERTY REGISTRATION DECREE

P.D. NO. 957 OR SUBDIVISION AND CONDOMINIUM BUYER'S PROTECTION ACT

R.A. 4726 OR THE CONDOMINIUM ACT

R.A. 6657 AS AMENDED BY R.A. 9700 OR COMPREHENSIVE AGRARIAN REFORM LAW

R.A. 9904 OR MAGNA CARTA FOR HOMEOWNERS AND HOMEOWNERS' ASSOCIATIONS

CHINATRUST COMMERCIAL BANK v. TURNER

DEVELOPMENT BANK OF THE PHILIPPINES v. CLARGES REALTY CORPORATION

ARCO PULP AND PAPER v. LIM

DEVELOPMENT BANK OF THE PHILIPPINES v. STA. INES MELALE FOREST PRODUCTS

SPOUSES LIMSO v. PHILIPPINE NATIONAL BANK

ORIENTAL ASSURANCE CORP. v. ONG

LUNTAO v. BAP CREDIT GUARANTY CORP

METRO RAIL TRANSIT DEVELOPMENT CORPORATION v. GAMMON PHILIPPINES, INC.

TANKEH v. DEVELOPMENT BANK OF THE PHILIPPINES

MAKATI TUSCANY CONDOMINIUM CORPORATION v. MULTI-REALTY DEVELOPMENT

METROPOLITAN BANK & TRUST CO. v. G&P BUILDERS, INCORPORATED

NATIONAL POWER CORPORATION v. SOUTHERN PHILIPPINES POWER

POOLE-BLUNDEN v. UNION BANK

SPOUSES YULO v. BPI

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