Table of contents:

page
Agency . . . . . . . . . . . . . . . 01 - 04
Partnership . . . . . . . . . . . . 04 - 04
Land Titles . . . . . . . . . . . . . 04 - 26
Torts & Damages . . . . . . . . . 26 - 39
Oblicon . . . . . . . . . . . . . . . 39 - 72
Sales . . . . . . . . . . . . . . . . 72 - 96
Sectrans . . . . . . . . . . . . . . 96 - 110
Property . . . . . . . . . . . . . . 110 -132
Succession . . . . . . . . . . . . . 133 -139
Persons . . . . . . . . . . . . . . 139 -156
* digests are arranged from the most recent to later cases

AGENCY

2000

Agency; Distinguished from Sale

VICTORIAS MILLING CO. v. CA
G.R. No. 117356. , June 19, 2000.
It is clear from Article 1868 that the basis of agency is representation. On the part of the principal,
there must be an actual intention to appoint or an intention naturally inferable from his words or
actions; and on the part of the agent, there must be an intention to accept the appointment and
act on it, and in the absence of such intent, there is generally no agency.
One factor which most clearly distinguishes agency from other legal concepts is control; one
person — the agent — agrees to act under the control or direction of another — the principal.
Indeed, the very word "agency" has come to connote control by the principal. The control factor,
more than any other, has caused the courts to put contracts between principal and agent in a
separate category.
This Court has ruled that where the relation of agency is dependent upon the acts of the parties,
the law makes no presumption of agency, and it is always a fact to be proved, with the burden of
proof resting upon the persons alleging the agency, to show not only the fact of its existence, but
also its nature and extent.
The question of whether a contract is one of sale or agency depends on the intention of the
parties as gathered from the whole scope and effect of the language employed. Ultimately, what
is decisive is the intention of the parties. That no agency was meant to be established by the CSC
and STM is clearly shown by CSC's communication to petitioner that SLDR No. 1214M had been
"sold and endorsed" to it. The use of the words "sold and endorsed" means that STM and CSC
intended a contract of sale, and not an agency.
…proceeding from the theory that the transactions entered into between petitioner and STM are
but serial parts of one account, petitioner insists that its debt has been offset by its claim for
STM's unpaid purchases, pursuant to Article 1279 of the Civil Code. However, the trial court
found, and the Court of Appeals concurred, that the purchase of sugar covered by SLDR No.
1214M was a separate and independent transaction; it was not a serial part of a single
transaction or of one account contrary to petitioner's insistence. Evidence on record shows,
without being rebutted, that petitioner had been paid for the sugar purchased under SLDR No.
1214M. Petitioner clearly had the obligation to deliver said commodity to STM or its assignee.
Since said sugar had been fully paid for, petitioner and CSC, as assignee of STM, were not
mutually creditors and debtors of each other. No reversible error could thereby be imputed to
respondent appellate court when it refused to apply Article 1279 of the Civil Code to the present
case.
Petitioner contends that the sale of sugar under SLDR No. 1214M is a conditional sale or a
contract to sell, with title to the sugar still remaining with the vendor…terms and conditions clearly
show that petitioner transferred title to the sugar to the buyer or his assignee upon payment of the
purchase price. Said terms clearly establish a contract of sale, not a contract to sell. Petitioner is
now estopped from alleging the contrary.

1996

Contract of Agency; Validity & Enforceability

LIM v. CA
FEBRUARY 1996
The contention is far from meritorious. The receipt which petitioner signed establishes a contract
of agency to sell on commission basis.
There are some provisions of the law which require certain formalities for particular contracts:
1) When the form is required for the validity of the contract
2) When it is required to make the contract effective as against third parties (Arts. 1357 &
1358, Civil Code)
3) When form is required for the purpose of proving the existence of the contract (Statute of
Frauds).
A contract to sell on commission basis does not belong to any of these three categories, hence, it
is valid and enforceable in whatever form it may be entered into.

Civil Law/Agency & Land Titles/GPA to sell land & innocent purchaser for value
FRANCISCO A. VELOSO v. COURT, AGLALOMA ESCARIO & REG. OF DEEDS, MLA.
G.R. No. 102737, Aug. 21, 1996
Petitioner contends that the power of attorney (GPA) was a forgery and presented checks, his
marriage certificate, etc. to compare his genuine signature with that in the GPA. He also alleged
that the same was not duly notarized for as testified by Atty. Tubig himself, he did not sign
thereon nor was it ever recorded in his notarial register.
The GPA was valid and regular on its face. It was notarized and such such, carries the
evidentiary weight with respect to due execution. While it is true that it was denominated as a
GPA, a perusal thereof revealed that it stated an authority to sell. Thus, there was no need for a
separate SPA as the document expressly authorized the agent to sell the subject property. The
SPA can be included in the GPA when it is specified therein the act or transaction for which the
special power is required.
We found, however, that the basis presented by petitioner was inadequate to sustain his
contention. Mere variance of the signatures is not conclusive proof of forgery. Forgery cannot be
presumed. (Tenio-Obsequio v. CA, G.R. No. 107967, 1 Mar. 1994) Petitioner failed to prove his
allegation and simply relied on the apprent difference of the signatures. His denial had not
established that the signature of the GPA was not his.
We agree with the lower court that private respondent was an innocent purchaser for value.
Respondent relied on the GPA presented by petitioner’s wife. Being the wife of the owner and
having with her the title to the property, there was no reason for private respondent not to believe
in her authority. Moreover, the GPA was notarized and carried with it the presumption of its due
execution. Thus, having had no inkling on any irregularity and having no participation thereof,
private respondent was a buyer in good faith. (Bautista v. CA, G.R. No. 106042, 28 Feb. 1994)
Documents acknowledged before a notary have the evidentiary weight with respect to their due
execution. The questioned GPA and deed of sale, were notarized and therefore, presumed to be
valid and duly executed. Atty. Tubig denied having notarized the said documents and alleged
that his signature had also been falsified. He presented samples of his signature to prove his
contention. Forgery should be proved by clear nad convincing evidence and whoever alleges it
has the burden of proving the saem. Just like petitioner, witness Atty. Tubig merely pointed out
that his signature was different from that in the GPA and deed of sale. There had never been an
accurate examination of the signature, even that of petitioner. To determine forgery, it was held
in Cesar v. Sandiganbayan (G.R. Nos. 54719-50, 17 Jan. 1985): The process of identification
must include the determination of the extent, kind and significance of this resemblance as well as
of variation. It becomes necessary to determine whether the variation is due to the operation of a
different personality, or is only the exepected and inevitable variation found in the genuine writing
of the same writer. It is also necessary to decide whether the resemblance is the result of a more
or less skillful imitation, or is the habitual and characteristic resemblance which naturally appeats
in a genuine writing. When these 2 questions are correctly answered the whole problem of
identification is solved.
Even granting that petitioner’s signature was falsified, and the GPA and deed of sale void, such
would not revoke title subsequently issued in favor of private respondent, an innocent purchaser
for value.
Finally, the trial court did not err in applying equitable estoppel, i.e., where one or two innocents
must suffer a loss, he who by his conduct made the loss possible must bear it. From the
evidence, petitioner must bear the loss as while he declared that he had sole access to the TCT,
his wife was able to get it, hence petitioner did not observe due diligence.

Civil Law/Agency
COSMIC LUMBER v. CA & ISIDRO PEREZ
G.R.No. 114311, NOVEMBER 1996
Petitioner argues that the trial court’s decision is void because the compromise agreement upon
which it was based is void. Attorney-in-fact Paz G. Villamil-Estrada did not possess the authority
to sell nor was she armed with a Board Resolution authorizing the sale of its property. She was
merely empowered to enter into a compromise agreement in the recovery suit she was
authorized to file against the squatters on the lot, such authority being expresly confined to the
“ejectment of third persons or squatters xxx”
We agree with petitioner. The authority granted to Estrada under the SPA was explicit and
exclusionary: for her to sue to eject all persons found on the lots so that petitioner could take
material possession thereof, and for this purpose, to appear at pre-trial and enter into a
compromise agreement, but only insofar as this was protective of petitioner’s rights. Nowhere
was Estrada granted, expressly or impliedly, the power to sell the lot or portion thereof. Neither
can conferment of the power to sell be validly inferred from the specific authority “to enter into a
compromise agreement” becuase of the explicit limitation fixed by the grantor that the
compromise entered into shall only be to protect petitioner’s rights. In the context of the grant of
powers to Estrada, alienation by sale cannot be deemed protective of petitioner’s rights, more so
when the land was being sold for P80/sq. m., very much less than its assessed value of
P250.00/sq. m.
When the sale of a piece of land or any interest thereon is through an agent, the authority of the
latter shall be in writing; otherwise, the sale shall be void. For the principal to confer the right
upon an agent to sell real estate, a POA must so express the powers of the agent in clear and
unmistakable language. Where there is any reasonable doubt, no such construction shall be
given the document. (citations omitted)
By selling to respondent Perez a portion of petitioner’s land through a compromise agreement,
Estrada acted without authority. The sale ipso jure is void. So is the compromise agreement.
This being the case, the judgment based thereon is void as well.
It may be argued that petitioner knew of the compromise agreement since the principal is
chargeable with and bound by the knowledge of or notice to his agent received while the agent
was acting as such. But the general rule is intended to protect those who exercise good faith and
not as a shield for unfair dealing. Hence, there is a well-established exception to the general rule
as where the conduct and dealings of the agent are such as to raise a clear presumption that he
will not communicate to the principal the facts in controversy. (Mutual Life v. Hilton Green, 241
US 613) The logical reason for this exception is that where the agent is committing fraud, it
would be contrary to common sense to expect that he would communicate this to the principal.
Verily, when an agent is engaged in the perpetration of fraud upon his principal, he is not really
acting for the principal but is acting for himself, entirely outside the scope of his agency. (Aetna
Casualty v. Local Bldg., 19P2d 612, 616) Indeed, the basic tenets of agency rest on the highest
considerations of justice, equity and fair play, and an agent will not be permitted to pervert his
authority to his own advantage, and his act in secret hostility to the interests of his principal
transcends the power afforded him. (citation omitted)

1995
Civil Law/Agency/Sales/Contract to sell
TOYOTA SHAW v. CA
244 SCRA 320 (1995 May)
A person dealing with an agent is put upon inquiry and must discover upon his peril the authority
of the agent
Definiteness of price is essential element in formation of a binding contract of sale.
PARTNERSHIP

1999

Partnership; Creation Of; Requisites

AFISCO INSURANCE CORP., ET AL. VS CA
Jan. 25, 1999
(1) Partnership; creation of; requisites – Art. 1767 of the CC recognizes the creation of a
contract of partnership when “2 or more persons bind themselves to contribute money, property,
or industry to a common fund, with the intention of dividing the profits among themselves.” Its
requisites are: (1)mutual contribution to a common stock, and (2) a joint interest in the profits.” In
other words, a partnership is formed when persons contract “to devote to a common purpose
either money, property, or labor with the intention of dividing the profits between themselves.”
Meanwhile, an association implies associates who enter into a “joint enterprise x x x for the
transaction of business.”
(2) Insurance pool; circumstances indicating partnership. – In the case before us, the ceding
companies entered into a Pool Agreement or an association that would handle all the insurance
businesses covered under their quota-share reinsurance treaty and surplus reinsurance treaty in
Munich. The following unmistakably indicates a partnership, or an association covered by
Section 24 of the NIRC

1998

Partnership, its Three Final Stages

IRMA IDOS v. CA, ET AL.
September 1998
Petitioner is charged for violation of BP 22, for issuing a check to complainant, Eddie
Alarilla, as payment for his share of assets of their partnership, which was in the process of
liquidation, which check however bounced.
There are three final stages of a partnership: (1) dissolution; (2) winding-up; and (3)
termination. Dissolution is the change in the relation of the partners caused by any partner
ceasing to be associated in the carrying on of the business. It is that point of time that the
partners cease to carry on the business together. Winding up is the process of settling the
business affairs after dissolution. Termination is the point in time after all the partnership affairs
have been wound up.
Art. 1829 of the NCC states that “On dissolution, a partnership is not terminated, but
continues until the winding up of partnership affairs is completed.
The best evidence of the existence of the partnership, which was not yet terminated
(though in the winding up stage) were the unsold goods and uncollected receivables, which were
presented to the trial court. Since the partnership has not been terminated, the petitioner and
complainant remained as co-partners. The check was thus issued by the petitioner to
complainant as would a partner to another, and not as payment from a debtor to a creditor.

LAND TITLES

2001

Land titles; certificate or registration

LORETA BRAVO CERVANTES, et al vs. HON. COURT OF APPEALS, et al,
G.R. No. 118982, February 19, 2001
It is a fundamental principle in land registration that the certificate of title serves as evidence of an
indefeasible and incontrovertible title to the property in favor of the person whose name appears
therein, in this case the private respondents' father, Antonio Francisco. A title once registered
under the Torrens System cannot be defeated even by adverse, open and notorious possession;
neither can it be defeated by prescription. Petitioners cannot prove their ownership of the subject
parcels of land through tax declarations and corresponding tax receipts inasmuch as they are not
conclusive evidence of ownership.

Land Titles; Public lands

FELIPE SEVILLE in his capacity as judicial administrator of the estate of JOAQUIN ORTEGA
and/or FELIPE SEVILLE, EMILIA ESTRADA, et al vs. NATIONAL DEVELOPMENT COMPANY,
et al,
G.R. No. 129401, February 2, 2001
Unless a public land is shown to have been reclassified as alienable or actually alienated by the
State to a private person, that piece of land remains part of the public domain. Hence, occupation
thereof, however long, cannot ripen into ownership.
Under the Regalian doctrine, all lands of the public domain belong to the State, which is the
source of any asserted right to ownership of land. All lands not otherwise appearing to be clearly
within private ownership are presumed to belong to the State. In Menguito v. Republic, 9 the
Court held that "[u]nless public land is shown to have been reclassified or alienated to a private
person by the State, it remains part of the inalienable public domain. Indeed, 'occupation thereof
in the concept of owner, no matter how long, cannot ripen into ownership and be registered as a
title.' To overcome such presumption, incontrovertible evidence must be shown by the applicant.
Absent such evidence, the land sought to be registered remains inalienable."
A person in open, continuous, exclusive and notorious possession of a public land for more than
thirty years acquires an imperfect title thereto. That title may be the subject of judicial
confirmation, pursuant to Section 48 of the Public Land Act. However, Section 4 of Presidential
Decree (PD) No. 1073, 10 paragraph "b" of the aforecited provision applies only to alienable and
disposable lands of the public domain.
Clearly, the burden of proof that the land has been classified as alienable is on the claimant. In
the present case, petitioners failed to discharge this burden. Hence, their possession of the
disputed property, however long, cannot ripen into ownership.
To begin with, the power to classify a land as alienable belongs to the State, not to private
entities. Hence, the pronouncements of Yap or LSBDA cannot effect the reclassification of the
property.
Semantics aside, petitioners are effectively seeking the modification of LSBDA's OCT, which
allegedly encompassed even a parcel of land allegedly belonging to them. Hence, the present
suit, purportedly filed for the "recovery of real property and damages," is tantamount to a
collateral attack not sanctioned by law. Section 48 of PD 1529, the Property Registration Decree
Moreover, the title became indefeasible and incontrovertible after the lapse of one year from the
time of its registration and issuance. 23 Section 32 of PD 1529 provides that "[u]pon the
expiration of said period of one year, the decree of registration and the certificate of title shall
become incontrovertible. Any person aggrieved by such decree of registration in any case may
pursue his remedy by action for damages against the applicant or other persons responsible for
the fraud."
Petitioners also claim that the disputed property should be reconveyed to them. This cannot be
allowed. Considering that the land was public before the Miscellaneous Sales Patent was issued
to LSBDA, petitioners have no standing to ask for the reconveyance of the property to them. The
proper remedy is an action for reversion, which may be instituted only by the Office of the
Solicitor General, pursuant to Section 101 of the Public Land Act
In the light of our earlier disquisition, the theory has no leg to stand on. Absent any showing that
the land has been classified as alienable, their possession thereof, no matter how lengthy, cannot
ripen into ownership. In other words, they have not become owners of the disputed property.
Moreover, LSBDA's title was derived from a Miscellaneous Sales Patent, not from Yap. Finally,
petitioners cannot, by a collateral attack, challenge a certificate of title that has already become
indefeasible and incontrovertible. If petitioners believe that they have been defrauded by Yap,
they should seek redress, not in these proceedings, but in a proper action in accordance with law.

2000

Land Titles: Adverse Claim

Diaz Duarte v. Ong
May 2000

This is a land dispute between Diaz & the spouses Ong. Diaz inherited the land from his parents.
In 1979 Diaz sold the land to Corregidor. Corregidor later on sold back the land by virtue of a
deed of repurchase to Diaz. Corregidor however refused to surrender the TC to Diaz hence, she
executed an adverse claim to the lot. The Ong's claim to be buyers in good faith. Ong contend
that the notice of adverse claim was already cancelled when they bought the property. Diaz
disputes the legality of the cancellation & maintains that the Registrar of Deeds should not have
automatically cancelled the notice of adverse claim simply because the 30 day period has lapsed.

RULINGS: (1) A notice of adverse claim remains valid even after the lapse of the 30-day
period. - The good faith of appellant-spouses rests heavily on whether the notice of adverse claim
on Lot 1208 was validly cancelled by the Registrar of Deeds. The issue is no longer of first
impression. In the 1996 case of Sajonas v. Court of Appeals (258 SCRA 79), we explained that a
notice of adverse claim remain valid even after the lapse of the 30-day period provided by Section
70 of P.D. No. 1529 or the Property Registration Decree.
We explained in Sajonas that for as long as there is yet no petition for its cancellation, the
notice of adverse claim remains subsisting. Thus:
"At first blush, the provision in question would seem to restrict the effectivity of the adverse
claim to thirty days. But the above provision cannot and should not be treated separately, but
should be read in relation to the sentence following, which reads:
"After the lapse of said period, the anotation of the adverse claim may be cancelled upon filing
of a verified petition therefor by the party in interest."
"If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the
lapse of thirty days, then it would have been necessary to include the foregoing caveat to clarify
and complete the rule. For then, no adverse claim need be cancelled. If it has been
automatically terminated by mere lapse of time, the law would not have required the party in
interest to do a useless act."
In a petition for cancellation of adverse claim, a hearing must first be conducted.
The hearing will afford the parties an opportunity to prove the propriety or impropriety of the
adverse claim. Petitioner was unlawfully denied this opportunity when the Registrar of Deeds
automatically cancelled the adverse claim. Needless to state, the cancellation of her adverse
claim is ineffective.

Land Titles; Conveyance

CORPUZ v. SPS. GROSPE
G.R. No. 135297, June 8, 2000.
The sale, transfer or conveyance of land reform rights are, as a rule, void in order to prevent a
circumvention of agrarian reform laws. However, in the present case, the voluntary surrender or
waiver of these rights in favor of the Samahang Nayon is valid because such action is deemed
legally permissible conveyance in favor of the government. After the surrender or waiver of said
land reform rights, the Department of Agrarian Reform, which took control of the property, validly
awarded it to private respondents.
We have already ruled that the sale or transfer of rights over a property covered by a Certificate
of Land Transfer is void except when the alienation is made in favor of the government or through
hereditary succession. This ruling is intended to prevent a reversion to the old feudal system in
which the landowners reacquired vast tracts of land, thus negating the government's program of
freeing the tenant from the bondage of the soil.
As such [the farmer-beneficiary] gained the rights to possess, cultivate and enjoy the landholding
for himself. Those rights over that particular property were granted by the government to him and
to no other. To insure his continued possession and enjoyment of the property, he could not,
under the law, make any valid form of transfer except to the government or by hereditary
succession, to his successors.
Despite the above prohibition, however, there are reports that many farmer-beneficiaries of PD 27
have transferred the ownership, rights, and/or possession of their farms/homelots to other
persons or have surrendered the same to their former landowners. All these transactions or
surrenders are violative of PD 27 and therefore, null and void.
Abandonment requires (a) a clear and absolute intention to renounce a right or claim or to desert
a right or property; and (b) an external act by which that intention is expressed or carried into
effect. The intention to abandon implies a departure, with the avowed intent of never returning,
resuming or claiming the right and the interest that have been abandoned.
Surrender of possession did not amount to an abandonment because there was an obligation on
the part of private respondents to return possession upon full payment of the loan.
PD 27 provides that title to land acquired pursuant to the land reform program shall not be
transferable except through hereditary succession or to the government, in accordance with the
provisions of existing laws and regulations. Section 8 of RA 3844 also provides that "[t]he
agricultural leasehold relation...shall be extinguished by: ...(2)[v]oluntary surrender of the
landholding by the agricultural lessee, . . . ."
Voluntary surrender, as a mode of extinguishment of tenancy relations, does not require court
approval as long as it is convincingly and sufficiently proved by competent evidence. Petitioner's
voluntary surrender to the Samahang Nayon qualifies as a surrender or transfer to the
government because such action forms part of the mechanism for the disposition and the
reallocation of farmholdings of tenant-farmers who refuse to become beneficiaries of PD 27. …
what was prohibited was the perpetration of the tenancy or leasehold relationship between the
landlord and the farmer beneficiary.

Land Titles; Property; Ownership

CARMELINO M. SANTIAGO, MONTSERRAT M. SANTIAGO, NILDA M. IBOLEON, BELINDA
MANAHAN AND JOSEFINA M. CAPINPIN, petitioners, vs. THE COURT OF APPEALS AND
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM
G.R. No. 109111, June 28, 2000
Documents proving ownership such as transfer and original certificates of title are the legs on
which petitioners’ case stands. Premised on the relevance of these documents, the trial court
ruled in favor of petitioners. However, the proverbial legs of evidence are broken. While the titles
presented by petitioners show ownership, such ownership is not of the land claimed, but over the
adjoining parcels of land. The technical descriptions in the titles presented by petitioners betray
them as adjacent and adjoining owners of the land claimed by MWSS for registration.
A torrens certificate of title covers only the land described therein together with
improvements existing thereon, if any, nothing more. The titles presented by petitioners covering
as they do land adjacent to that claimed in MWSS’ application for registration, do not support their
claim, but even defeat it.
Further, we agree with the Court of Appeals that if petitioners’ predecessors-in-interest being
members of the bar and learned in the law merely allowed and tolerated MWD or NAWASA’s use
of the land, they would have reduced the agreement into writing for use in the registration of their
property which at that time was still unregistered.
We hold that if petitioners’ predecessors were truly the owners of the subject parcels of land, they
would have taken steps to have the land properly titled long ago. The land was possessed by
MWSS long before World War II. That was over sixty (60) years ago! Petitioners "slept on the
rights" they claim to possess. Relief is denied to a claimant whose right has become "stale" by
reason of negligence or inattention for a long period of time.
MWSS presented tax declarations to buttress its ownership of the land. True, tax declarations do
not prove ownership. However, tax declarations can be strong evidence of ownership when
accompanied by possession for a period sufficient for prescription. Since MWSS possessed the
land in the concept of owner for more than thirty (30) years preceding the application, MWSS
acquired ownership by prescription. By placing the pipelines under the land, there was material
occupation of the land by MWSS, subjecting the land to its will and control. [Under Article 531 of
the Civil Code, "Possession is acquired by the material occupation of a thing or the exercise of a
right, or by the fact that it is subject to the action of our will, or by proper acts and legal formalities
established for acquiring such right."] Petitioners cannot argue that MWSS’ possession was not
"open". The existence of the pipes was indicated above the ground by "pilapils".
Even assuming arguendo that the pipes were "hidden" from sight, petitioner cannot claim
ignorance of the existence of the pipes. The possession must be public in order to be the basis
for prescription. If the owner proves that the possession is clandestine, it will not affect his
possession. Petitioners also cannot claim that MWSS abandoned its possession. There is no
showing that by discontinuing the use of the pipes, MWSS voluntarily renounced its claim over
the land. Petitioners did not prove that the spes recuperendi was gone and the animus revertendi
was given up.

Land Titles; Property; Lis pendens

ZAIDA RUBY S. ALBERTO vs. COURT OF APPEALS, EPIFANIO J. ALANO, CECILIA P.
ALANO, YOLANDA P. ALANO, and NATALIA REALTY, INC.
June 30, 2000
The notice of lis pendens is an announcement to the whole world that a particular real property is
in litigation, and serves as a warning that one who acquires an interest over said property does so
at his own risk, or that he gambles on the result of the litigation over said property. In Viewmaster
Construction Corporation v. Reynaldo Y. Maulit and Edgardo Castro, this Court did not confine
the availability of lis pendens only to cases involving the title to or possession of real property
when it held that:
"According to Section 24, Rule 14 of the Rules of Court and Section 76 of Presidential Decree
No. 1529, a notice of lis pendens is proper in the following cases, viz.:
a)....An action to recover possession of real estate;
b)....An action to quiet title thereto;
c)....An action to remove clouds thereon;
d)....An action for partition; and
e)....Any other proceedings of any kind in Court directly affecting the title to the land or the use or
occupation thereof or the buildings thereon."

Land Titles
REPUBLIC OF THE PHILIPPINES vs. CA
G.R. No. 130174, July 14, 2000
An applicant seeking to establish ownership over land must conclusively show that he is the
owner thereof in fee simple, for the standing presumption is that all lands belong to the public
domain of the State, unless acquired from the Government either by purchase or by grant, except
lands possessed by an occupant and his predecessors since time immemorial, for such
possession would justify the presumption that the land had never been part of the public domain
or that it had been private property even before the Spanish conquest.
The land in question is admittedly public. The applicant has no title at all. Its claim of acquisition
of ownership is solely based on possession. In fact, the parcels of land applied for were declared
public land by decision of the Cadastral Court. Such being the case, the application for voluntary
registration under P. D. No. 1529 [Formerly Act No. 496.] is barred by the prior judgment of the
Cadastral Court. The land having been subjected to compulsory registration under the Cadastral
Act and declared public land can no longer be the subject of registration by voluntary application
under Presidential Decree No. 1529. The second application is barred by res-judicata. As
previously held, "[W]here the applicant possesses no title or ownership over the parcel of land, he
cannot acquire one under the Torrens System of registration."
Nonetheless, applicant anchors its application for registration of title on the provisions of P. D. No.
1529 or in the alternative Com. Act No. 141, Section 48 (b), as amended by Rep. Act No. 1942,
which allows "those who by themselves or through their predecessors in interest have been in
open, continuous, exclusive and notorious possession and occupation of agricultural lands of the
public domain, under a bona fide claim of acquisition of ownership, for at least thirty years
immediately preceding the filing of the application" to apply for judicial confirmation and
registration of title.
However, the evidence is inconclusive that applicant and its predecessors in interest had been in
open, continuous, exclusive and notorious possession of the land in question, en concepto de
dueño, or a bona fide claim of acquisition of ownership for at least thirty (30) years immediately
preceding the filing of the application, or since June 12, 1945, or since time immemorial.
The applicant failed to prove the fact of possession by itself and its predecessors in interest for at
least thirty (30) years before the filing of the application. Applicant failed to prove specific acts
showing the nature of its possession and that of its predecessors in interest. The applicant must
present specific acts of ownership to substantiate the claim and cannot just offer general
statements which are mere conclusions of law than factual evidence of possession." "Actual
possession of land consists in the manifestation of acts of dominion over it of such a nature as a
party would naturally exercise over his own property."
The bare assertion of witnesses that the applicant of land had been in the open, adverse and
continuous possession of the property for over thirty (30) years is hardly "the well-nigh
incontrovertible" evidence required in cases of this nature. In other words, facts constituting
possession must be duly established by competent evidence. Consequently, the lower court
gravely erred in granting the application.

Land Titles; Reconstitution of Title

REPUBLIC OF THE PHILIPPINES, vs. PILAR ESTIPULAR
G.R. No. 136588, July 20, 2000
Petition for reconstitution of title. Republic Act No. 26 lays down the special requirements and
procedure that must be followed before jurisdiction may be acquired over a petition for
reconstitution of title. In Section 13 of said Act, these requirements and procedure are provided
as follows:
"SECTION 13. The Court shall cause a notice of the petition, filed under the preceding section,
to be published, at the expense of the petitioner, twice in successive issues of the Official
Gazette, and to be posted on the main entrance of the provincial building and of the municipal
building of the municipality or city in which the land is situated, at least thirty days prior to the date
of hearing. The court shall likewise cause a copy of the notice to be sent, by registered mail or
otherwise, at the expense of the petitioner, to every person named therein whose address is
known, at least thirty days prior to the date of the hearing. Said notice shall state, among other
things, the number of the lost or destroyed certificate of title if known, the name of the registered
owner, the name of the occupants or persons in possession of the property, the owner of the
adjoining properties, the location, area and boundaries of the property, and the date on which all
persons having any interest therein must appear and file their claim or objection to the petition.
The petitioner shall, at the hearing, submit proof of publication, posting and service of the notice
as directed by the court."
These requirements are mandatory and compliance with them is jurisdictional. In Republic v.
Court of Appeals, the Court held:
"Reconstitution of a certificate of title, in the context of Republic Act No. 26, denotes the
restoration in the original form and condition of a lost or destroyed instrument attesting [to] the
title of a person to a piece of land. The purpose of the reconstitution is to have, after observing
the procedures prescribed by law, the title reproduced in exactly the same way it has been when
the loss or destruction occurred. Among the conditions explicitly required by the law is publication
of the petition twice in successive issues of the Official Gazette, and its posting at the main
entrance of the provincial building and of the municipal building of the municipality or city in which
the land is situated, at least thirty days prior to the date of hearing. This directive is mandatory;
indeed, its compliance has been held to be jurisdictional. . ."

Thus, before the trial court can acquire jurisdiction to hear and decide a reconstitution case,
compliance with the following requisites is imperative:
"1. [That] the notice of the petition be published, at the expense of the petitioner, twice in
successive issues of the Official Gazette, and posted on the main entrance of the provincial
building and of the municipal building of the municipality or city in which the land is situated, at
least thirty days prior to the date of hearing;
"2. [That] the notice state among other things, the number of the lost or destroyed certificates
of title if known, the name of the registered owner, the name of the occupants or persons in
possession of the property, the owner of the adjoining properties and all other interested parties,
the location, area and boundaries of the property, and the date on which all persons having any
interest therein must appear and file their claim of objection to the petition;
"3. [That] a copy of the notice also be sent, by registered mail or otherwise, at the expense of
the petitioner, to every person named therein (i.e. the occupants or persons in possession of the
property, the owner of the adjoining properties and all other interested parties) whose address is
known at least thirty days prior to the date of the hearing; and
"4. [That] at the hearing, petitioner submit proof of publication, posting and service of the
notice as directed by the court."

Land Titles
FRANCISCO DE GUZMAN, et al. vs. THE NATIONAL TREASURER OF THE REPUBLIC OF
THE PHILIPPINES, et al.
G.R. No. 143281, August 3, 2000
Recovery from Assurance Fund under the Property Registration Decree. Section 95 of
Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provides:
SEC. 95. Action for compensation from funds. — A person who, without negligence on his
part, sustains loss or damage, or is deprived of land or any estate or interest therein in
consequence of the bringing of the land under the operation of the Torrens system or arising after
original registration of land, through fraud or in consequence of any error, omission, mistake or
misdescription in any certificate of title or in any entry or memorandum in the registration book,
and who by the provisions of this Decree is barred or otherwise precluded under the provision of
any law from bringing an action for the recovery of such land or the estate or interest therein, may
bring an action in any court of competent jurisdiction for the recovery of damage to be paid out of
the Assurance Fund.
It may be discerned from the foregoing provisions that the persons who may recover from the
Assurance Fund are:
1) Any person who sustains loss or damage under the following conditions:
a) that there was no negligence on his part; and
b) that the loss or damage sustained was through any omission, mistake or malfeasance of
the court personnel, or the Registrar of Deeds, his deputy, or other employees of the Registry in
the performance of their respective duties under the provisions of the Land Registration Act, now,
the Property Registration Decree; or
2) Any person who has been deprived of any land or interest therein under the following
conditions:
a) that there was no negligence on his part;
b) that he was deprived as a consequence of the bringing of his land or interest therein
under the provisions of the Property Registration Decree; or by the registration by any other
person as owner of such land; or by mistake, omission or misdescription in any certificate of
owner's duplicate, or in any entry or memorandum in the register or other official book or by any
cancellation; and
c) that he is barred or in any way precluded from bringing an action for the recovery of such
land or interest therein, or claim upon the same.
The Assurance Fund is intended to relieve innocent persons from the harshness of the doctrine
that a certificate is conclusive evidence of an indefeasible title to land. Petitioners did not suffer
any prejudice because of the operation of this doctrine. On the contrary, petitioners sought to
avail of the benefits of the Torrens System by registering the property in their name. Unfortunately
for petitioners, the original owners were able to judicially recover the property from them. That
petitioners eventually lost the property to the original owners, however, does not entitle them to
compensation under the Assurance Fund. While we commiserate with petitioners, who appear to
be victims of unscrupulous scoundrels, we cannot sanction compensation that is not within the
law's contemplation. As we said in Treasurer of the Philippines vs. Court of Appeals, the
Government is not an insurer of the unwary citizen's property against the chicanery of scoundrels.
Petitioners' recourse is not against the Assurance Fund, as the Court of Appeals pointed out, but
against the rogues who duped them.

Land titles; Property; Buyers in Good Faith

NATIONAL IRRIGATION ADMINISTRATION vs. COURT OF APPEALS and DICK MANGLAPUS
G. R. No. 114348, September 20, 2000
LAND TITLES: We agree with NIA that the Transfer Certificate of Title and the Original Certificate
of Title covering the subject parcel of land contained a reservation granting the government a
right of way over the land covered therein.
The transfer certificate of title, on which both the trial court and Court of Appeals relied, contains
such a reservation. It states that title to the land shall be:
“...subject to the provisions of said Land Registration Act and the Public Land Act, as well as
those of Mining Laws, if the land is mineral, and subject, further to such conditions contained in
the original title as may be subsisting (underscoring ours).”
Under the Original Certificate of Title, there was a reservation and condition that the land is
subject to “to all conditions and public easements and servitudes recognized and prescribed by
law especially those mentioned in Sections 109, 110, 111, 112, 113 and 114, Commonwealth Act
No. 141, as amended.” This reservation, unlike the other imposed on the grant, was not limited by
any time period and thus is a subsisting condition.
Section 112, Commonwealth Act No. 141, provides that lands granted by patent,
“shall further be subject to a right of way not exceeding twenty meters in width for public
highways, railroads, irrigation ditches, aqueducts, telegraphs and telephone lines, and similar
works as the Government or any public or quasi-public service or enterprises, including mining or
forest concessionaires may reasonably require for carrying on their business, with damages for
the improvements only (underscoring ours).”
The canal NIA constructed was only eleven (11) meters in width. This is well within the limit
provided by law. Manglapus has therefore no cause to complain.
Article 619 of the Civil Code provides that, “Easements are established either by law or by the will
of the owners. The former are called legal and the latter voluntary easements.” In the present
case, we find and declare that a legal easement of a right-of-way exists in favor of the
government. The land was originally public land, and awarded to respondent Manglapus by free
patent. The ruling would be otherwise if the land were originally private property, in which case,
just compensation must be paid for the taking of a part thereof for public use as an easement of a
right of way.
Neither can Manglapus argue that he was a transferee or buyer in good faith. Under the Torrens
system, for one to be a buyer in good faith and for value, the vendee must see the transfer
certificate of title and rely upon the same.Here, the annotation on the transfer certificate of title
imposed on Manglapus the duty to refer to the conditions annotated on the back of the original
certificate of title. This, he did not do. The law cannot protect him. Manglapus is a transferee
with notice of the liens annotated in the title.
One who deals with property registered under the Torrens system is charged with notice of
burdens and claims that are annotated on the title

Land Titles; Registration

AMELITA DOLFO vs. THE REGISTER OF DEEDS, et al,
G.R. No. 133465, September 25, 2000
Petitioner’s reliance on her title is infirm. While she presented numerous documents to prove its
authenticity, however, they have been disputed by Benjamin Flestado, Chief of the Inspection and
Investigation Division of the Land Registration Authority (LRA), in his Report showing that her
T.C.T. No. T-320601 was issued without legal basis and that no document was on file with the
Primary Entry Book of the Registry of Deeds of Trece Martires City to support the issuance
thereof. This Report concludes that petitioner’s T.C.T. No. T-320601 is spurious. Such finding is
reinforced by the NBI Report dated June 20, 1996 showing that the signature of Register of
Deeds Antonia Cabuco appearing on petitioner’s title is a forgery. Consequently, Atty. Artemio
Cana, Acting Register of Deeds of Cavite, filed a complaint with the Regional Trial Court, Branch
89 at Bacoor for annulment of petitioner’s title.
The rule that a title issued under the Torrens System is presumed valid and, hence, is the best
proof of ownership of a piece of land does not apply where the certificate itself is faulty as to its
purported origin.
Thus, petitioner cannot invoke the indefeasibility of her certificate of title. It bears emphasis that
the Torrens system does not create or vest title but only confirms and records one already
existing and vested. Thus, while it may be true, as petitioner argues, that a land registration court
has no jurisdiction over parcels of land already covered by a certificate of title, it is equally true
that this rule applies only where there exists no serious controversy as to the authenticity of the
certificate.

Land Titles; Certificate of title

SPOUSES FLORENTINO ZARAGOZA and ERLINDA ENRIQUEZ-ZARAGOZA vs. THE
HONORABLE COURT OF APPEALS, ALBERTA ZARAGOZA MORGAN,
G.R. No. 106401, September 29, 2000
Sec. 48. Certificate not subject to collateral attack. - A certificate of title shall not be subject to
collateral attack. It can not be altered, modified, or cancelled except in a direct proceeding in
accordance with law.
We have reiterated this rule in the case of Halili vs. Court of Industrial Relations, citing the earlier
cases of Constantino vs. Espiritu and Co vs. Court of Appeals. In Halili, we held that a certificate
of title accumulates in one document a precise and correct statement of the exact status of the
fee held by its owner. The certificate, in the absence of fraud, is the evidence of title and shows
exactly the real interest of its owner. The title once registered, with very few exceptions, should
not thereafter be impugned, altered, changed, modified, enlarged or diminished, except in some
direct proceeding permitted by law. Otherwise, all security in registered titles would be lost. In
Constantino, the Court decided that the certificate, in the absence of fraud, is the evidence of title
and shows exactly the real interest of its owner. The title once registered, with very few
exceptions, should not thereafter be impugned, altered, changed, modified, enlarged or
diminished, except in some direct proceeding permitted by law. Otherwise all security in
registered titles would be lost. And in Co, we stated that a Torrens title cannot be collaterally
attacked. The issue on the validity of title, i.e., whether or not it was fraudulently issued, can only
be raised in an action expressly instituted for that purpose.

1999

Forest Lands Not Subject to Private Ownership unless Declassified

ITUTRALDE V FALCASANTOS
Jan. 20, 1999
The Court of Appeals correctly held that “the evidence is unrebutted that the subject land
is within the Forest Reserve Area” and hence, not capable of private appropriation and
occupation. In Republic c Register of Deeds of QC (244 SCRA 537), we held that “Forest land,
like mineral or timber lands which are public lands, are not subject to private ownership under the
Constitution, become private properties. In the absence of such classification, the land remains
unclassified public land until released therefrom and rendered open to disposition.” Before any
land may be declassified form the forest group and converted into alienable or disposable land for
agricultural or other purposes, there must be a positive act from the government. Even rules on
the confirmation of imperfect titles do not apply unless and until the land classified as forest land
is released in an official proclamation to that effect so that it may form part of the disposable
agricultural lands of the public domain

Government Immunity from Laches and Estoppel for Acts of its Officials
Recovery of Ownership of Subidivision Lands Soldin Good Faith by Private Developer to Innocent
Purchaser for Value
RP v CA, et al.
Jan. 21, 1999
(1) The State can be put in estoppel by the mistakes or errors of its officials or agents.- Estoppels
against the public are not favored; they must be invoked only in rare and unusual circumstances
as they could operate to defeat the effective operation of a policy adopted to protect the public.
However, the government may not be allowed to deal dishonorably or capriciously with its
citizens. In the case at bar, for nearly 20 years, petitioner failed to correct and recover the
alleged increase in the lands area of St. Jude. Its prolonged inaction strongly militates against its
cause, as its is tantamount to laches, which means “the failure or neglect, for an unreasonable
and unexplained length of time, to do that which by exercising due diligence could or should
have been done earlier; it is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either abandoned it or declined to
assert it.
(2) Buyers of the subdivision lots that were allegedly “enlarged” relied in good faith on the clean
certificate of SJEI. – Because subdivision let buyers were in good faith and did not notice any flaw
in SJEI’s certificates of title, it is only fair and reasonable to apply the equitable principle of
estoppel by laches against the government to avosi an injustice to the innocent purchaser for
value.

Public Lands: Only the State Can Institute Reversion Proceedings

URQUIAGA V CA
Jan. 22, 1999
Even assuming that private respondents acquired title to Let No. 6532-B through fraud
and misrepresentation, it is only the State which may institute reversion proceedings under Sec.
101 of the Public Land Act considering the finding that the subject lot was public land at the time
of the sales applications. This law provides:
Sec. 101. – All actions for reversion to the Gov’t of land of the public domain or
improvements thereon shall be instituted by the SolGen or the officer acting in its stead, in the
proper courts, in the name of the RP.
In other words, petitioners have no standing at all to question the validity of respondents’
title.

Land Registration: Effect of Withdrawal of Application for Land Registration

DIR. OF LANDS VS. CA, ET AL.,
Feb. 23, 1999
(1) Section 37 of the Land Registration Act (Act 246) mandates that the w/drawal of the
application for land registration should not mean that the conflicting interests of the parties
ceased to exist and therefore the land registration proceedings must be pursued to its conclusion.
– The law states that an oppositor who claims ownership over the property covered by the
application, or part thereof, may now claim in his answer that the land be registered in his name
in the same proceeding.
(2) The w/drawal of application for registration of land does not obliterate the conflicting claims
over the sale parcel of land. – IF the Dir. Of Lands registers an adverse claim, the lower court is
bound to determine the conflicting interest ofthe claimant and the applicant and incase neither
succeeds through evidence of proper title for registration, the court may dismiss the case. An
opposition presented by the Dir. Of Lands is for all intents and purposes, a conflicting interest as
against that of the applicant or of the private oppositors, asserting a claim over the land
registered. Consequently, the w/drawal by either the applicant or any of the private oppositors
doesn’t ipso fact obliterate the conflicting interests in the case. Neither is the case terminated
because under the law, as amended, the trial court is required to resolve the claims of the
remaining parties, the withdrawal of the application by the applicant and/or some private
oppositors notwithstanding.

Civil Law/ land Titles

DELFIN VOLUNTAD et al. v. SPS. MAGTANGGOL & CORAZON DIZON, et al.
August 1999
The general rule is that a person dealing with a registered land has a right to rely on the
Torrens Certificate of Title without the need of inquiring further. But this rule cannot apply when
the party has actual knowledge of facts and circumstances that would impel a reasonably
cautious man to make such inquiry or when the purchaser has knowledge of a defect or lack of
title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the
status of the title of the property in litigation. In the case at bar, respondent spouses who knew of
the defect in title cannot be deemed buyers in good faith as against the true owner of the land or
interest thereon. In the case therefore, there is no need for petitioners to file a separate action to
enforce their right to repurchase the property as against the new registered owners.

1998

Registered Land, Sale of; Buyers in good faith defined; Two Transfer Certificates of Title on same
land, Rule
SPS. SONYA & ISMAEL MATHAY, JR v. CA, ET AL.
September 1998
In the three cases merged in this one petition, petitioners, Sps. Mathay, claim title to
three lots, which have been also bought and thereafter occupied by three different parties. The
SC dismissed the petition.
A purchaser in good faith is “one who buys property of another, without notice that some
other person has a right to, or interest in, such property and pays a full and fair price for the same
at the time of purchase, or before he has notice of the claims or interest of some other person in
the property.” As a rule, he who asserts the status of a purchaser in good faith and for value, has
the burden of proving such assertion. Petitioners can’t invoke good faith because at the time the
property was sold to them, the private respondents were occupying and cultivating the property.
Though as a rule, a person dealing with registered land need not go beyond the certificate of title,
where there are circumstances which would put the party on guard, as is the case at bar, it is
expected from the purchaser to inquire first into the status and nature of the possession of the
occupants. Failure to do so would bar him from invoking the rights of a purchaser in good faith.
As stated in the case of Baltazar v. CA, between two persons both of whom are in good
faith and both innocent of any negligence, the law must protect and prefer the lawful holder of
registered title over the transferee of a vendor bereft of any transmissible rights. In the instant
case, petitioners have no rights against private respondents. Their recourse is against their
vendors.
Where two transfer certificates of title have been issued on different dates, to two
different persons, for the same parcel of land, even if both are presumed to be titleholders in good
faith, it does not necessarily follow that he who holds the earlier title should prevail. The better
approach, assuming a regularity in the issuance of the two titles, is to trace the original
certificates from which the disputed certificates of title were derived. Should there be only one
common original certificate, the transfer certificate issued on an earlier date along the line must
prevail, absent any anomaly or irregularity tainting the process of registration.

Land registration; Amendment and Alteration of Certificate of Title

ERNESTO DAWSON, ET AL. v. REGISTER OF DEEDS OF Quezon City ET AL.
September 1998
The case revolves around the issue of whether Sec. 108 of PD 1529 (Land Registration
Act) applies in the instant case where a contract to sell is involved. The first buyer, Louis Dawson,
died without having finished paying the whole amount, which obligation was assumed by
petitioners, his heirs. The RTC and CA refused the cancellation of the certificate in the name of
Louis Dawson and issuance of a new title in the name of petitioners.
The SC allowed the application of Sec 108 of PD 1529 contending that this is a case of a
contract to sell and not a contract of sale. In the case of Salazar v. CA, in a contract of sale, the
title to the property passes to the vendee upon the delivery of the thing sold; in a contact to sell,
ownership is by agreement, reserved in the vendor and is not to pass to the vendee until full
payment of the purchase price. Thus, since Louis Dawson was unable to pay the whole price,
which was completely paid by petitioners, the property did not become part of the estate of Louis
Dawson. Partition is therefore not the proper remedy to determine the ownership of the lot whose
title had not been vested in Louis Dawson during his lifetime as his death caused the loss of his
juridical personality, which is the fitness to be the subject of legal relations.

1997

Civil Law/Land Titles

HEIRS OF FELICIDAD CANQUE, et al. v. CA, et al.
July 1997
The mortgagor of titled real estate acquired under the Public Land Act but foreclosed by a
rural bank, may redeem said property within 2 years from registration of the sheriff's certificate of
sale; and if said mortgagor fails to expire such right, he or his heirs may still repurchase the land
within 5 years from the expiration of the two-year redemption period.

Civil Law/Land Titles

THE DIRECTOR OF LANDS v. CA, TEODORA ABISTADO, et al.
July 1997
Is newspaper publication of the notice of initial hearing in an original land registration
case mandatory or directory? Mandatory.
Admittedly, P.D. No. 1529, §23 provides that publication in the OG suffices to confer
jurisdiction upon the land registration court. However, the question boils down to whether, absent
any publication in a NOGC, the land registration court can validly confirm and register the title of
private respondents. We hold in the negative.
The law used the term “shall” in prescribing the work to be done by the Commissioner of
Land Registration upon the latter’s receipt of the court order setting the time for initial hearing.
The word denotes an imperative and thus indicates the mandatory character of a statute. P.D.
No. 1529, §23 requires notice of the initial hearing by means of publication, mailing and posting,
all of which must be complied with. If the intent of the law were otherwise, said section would not
have stressed in detail the requirements of mailing of notices to all persons named in the petition.
Indeed, if mailing of notices is essential, then by parity of reasoning, publication in a NOGC is
likewise imperative since the law included such requirement in its detailed provision.
Further, a land proceedings is in rem, hence must be validated essentially through
publication.
It may be asked why publication in a NOGC is mandatory when the law already requires
notice by publication in the OG, mailing and posting. The reason is due process and the reality
that the OG is not as widely read and circulated and is oftentimes delayed in its circulation.

Civil Law/Land Titles/Reconstitution

ORTIGAS & CO. v. JUDGE TIRSO VELASCO & DOLORES MOLINA
August 1997
R.A. No. 26, §13, lays down the requisites for acquisition by the court of jurisdiction over
a proceeding for reconstitution of title:
1) Publication, at petitioner's expense, of notice of the petition for reconstitution twice in
successive issues of the OG, and posting thereof on the main entrance of the provincial building
and of the municipal building of the municipality or city in which the land is situated, at least 30
days prior to the date of hearing;
2) Specific statement in the notice of the nubmer of the lost or destroyed certificates of title if
known, the name of the registered owner, the name of the occupants or persons in possession of
the property, the owner of the adjoining properties and all other interested parties, the location,
area and boundaries of the property, and the date on which all persons having any interest
therein must appear and file their claim or objection to the petition;
3) Sending, by registered mail or otherwise, at the expense of petitioner, of a copy of the
notice to every person named therein (i.e., the occupants or persons in possession of the
property, the owner of the adjoining properties and all other interested parties) whose address is
known, at least 30 days prior to the date of the hearing; and
4) Submission by petitioner at the hearing of proof of the publication, posting and service of
notice as directed by the court.
Civil Law/Land Titles
JUAN C. CARVAJAL v. CA & SOLID HOMES
G.R. No. 98328 October 1997
Is there denial of due process if an applicant for land registration is unable to testify?
May a land registration court, after it is convinced that the property subject of an application for
registration under the Torrens system is already governed by an existing certificate, dismiss such
application and thus ignore petitioner’s insistence on submitting further evidence of his alleged
title? What constitutes sufficient evidence to show identity of the land applied for with the land
already titled in favor of private respondent?
The petition has no merit.
First Issue: Identity of the Property Applied For.
The 2 reports prepared by the LRA and DENR Survey Division clearly showed that there
was an overlapping between the 2 properties. Because the futility of petitioner’s application was
apparent, the trial court deemed it unnecessary to hear further evidence. We agree.
There was nothing irregular in the trial court’s order to the LRA and DENR to submit
reports on the location of the land covered by petitioner’s application and private respondent’s
certificate of title. The authority of the land registration court to require the filing of additional
papers to aid it in its determination of the propriety of the application is based on P.D. No. 1529,
§21, from which, it is also clear that ocular inspection of the property was merely discretionary,
not mandatory. Likewise, the land registration court was not obliged to order the survey of the
contested lot, especially when another government agency had already submitted a report finding
that the contested lot was identical with that described in private respondent’s certificate of title
and recommending dismissal of the application for registration.
Further, the order of the land court for the LRA and DENR to submit reports was in
accordance with the purposes of the LRA (Zuñiga v. CA, 95 SCRA 740, 747 [1980])

Civil Law/Land Titles/Reconveyance

VICTORIA LEGARDA v. CA, NEW CATHAY HOUSE, INC
October 1997
The parties entered into a lease agreement over a QC property owned by petitioner (123
West Avenue). For some reason, petitioner refused to sign the contract, although New Cathay
House (NCH) made a deposit and a downpayment of rentals. Thus, NCH sued before the RTC
for specific performance with preliminary injunction and damages.
We do not have to belabor the fact that all the successors-in-interest of Cabrera to the lot
were transferees for value and in good faith, having relied as they did on the clean titles of their
predecessors. The successive owners were each armed with indefeasible titles which
brought them within the aegis of the Torrens system. It is settled that one who deals with
registered property under the Torrens system need not go beyond the same, but only has to
rely on the title; he is charged with notice only of such burdens and claims as are annotated on
the title. (Sandoval v. CA, 260 SCRA 283 [1996]) Here, no notice of lis pendens was ever
annotated on any of the titles. And even if there were such a notice, it would not have created a
lien over the property as the main office of a lien is to warn prospective buyers that the property
they intend to purchase is the subject of a pending litigation. Therefore, since the property is
already in the hands of Luminlun, an innocent purchaser for value, it can no longer be returned to
Cabrera, much less to NCH.
Another thing to consider is that Cabrera was impleaded as a respondent only on 12
August 1991, after promulgation of the Gancayco decision. The dispositive portion itself ordered
NCH, not Cabrera, to reconvey the property to Legarda. Cabrera was never a party to this case.
Neither did he act as NCH's representative. As held in NPC v. NLRC (G.R. No.s 90933-61, 29
May 1997), jurisdiction over a party is acquired by voluntary appearance or by coercive process
[summons]. In other words, until Cabrera was impleaded as party respondent and ordered to file
a comment on 12 August 1991 resolution, the Court never obtained jurisdiction over him, and to
command NCH to reconvey a property which used to be Cabrera's would be inappropriate as a
violation of due process.
Assuming that reconveyance is possible, that NCH and Cabrera are one the same and
that Cabrera's payment redounded to the benefit of NCH, reconveyance, under the facts and
evidence here, would still not address the issues raised herein.
The application of the sale price to Legarda's judgment debt constituted a payment which
extinguished her liability to NCH as the party in whose favor the obligation to pay damages was
established. (Art. 1240, NCC) It was a payment in the sense that NCH had to resort to a court-
supervised auction sale in order to execute the judgment. With fulfillment of the judgment
debtor's obligation, nothing else was required to be done.
Under the Gancayco ruling, the order of reconveyance was premised on the alleged
gross negligence of Coronel.
The fact that Cabrera is an NCH officer does not make him a purchaser in bad faith. His
act in representing the company was never questioned nor disputed by Legarda. And while it is
true that he won in the bidding, it is likewise true that said bidding was conducted by the book.
There is no call to be alarmed in case an official of the company emerges as the winning bidder
since in some cases, the judgment creditor himself personally participates in the bidding.
Legarda, as judgment debtor, cannot claim she was illegally deprived of her property because
such deprivation was done in accordance with the rules on execution of judgments. Whether the
money used to pay for said property came from the judgment creditor or its representative is not
relevant. What is important is that it was purchased for value. Cabrera parted with real money at
the auction. Had there been no real purchase and payment below, the subject property would
never have been awarded to Cabrera and registered in his name, and the judgment debt would
never have been satisfied. Thus, to require either NCH or Cabrera to reconvey the property
would be an unlawful intrusion into the lawful exercise of the latter's proprietary right over the land
in question, an act which would constitute an actual denial of property without due process.
It may be true that the lot could have fetched a higher price, but there is not hint of any
irregularity as regards Cabrera's bid price. Further, despite this low selling price, Legarda still
failed to redeem her property within the 1-year redemption period. She could not feign ignorance
of the auction sale on account of her counsel's failure to inform her, as the auction sale complied
with requirements of notice and publication under the Rules. In absence of any clear and
convincing proof that such requisites were not followed, the presumption of regularity stands.
While Legarda maintains she was in the U.S. during the redemption period, she admitted that she
left only 16 days after the auction sale; moreover, her mother represented her during the latter's
absence.
Neither NCH nor Cabrera should be made to suffer the gross negligence of Coronel. If
Legarda may be said to be innocent because she was ignorant of her counsel's negligence, with
more reason are NCH and Cabrera innocent. As between 2 parties who may lose out to
negligence or incompetence of counsel of one, the party who was responsible for making it
happen should suffer the consequences. This reflects a basic common law maxim. Here it was
Legarda who misjudged and hired the services of a lawyer who practically abandoned her case
and who continued to retain him even after his proven apathy and negligence.
The Gancayco decision makes much of the fact that Legarda is now “consigned to penury" and,
therefore, the Court "must come to the aid of the distraught client." It must be remembered,
however, that this Court renders decision not on the basis of emotions, but on its sound
judgment, applying the relevant law. Much as we may pity Legarda, we cannot play the role of a
"knight in shining armor"

Civil Law/Land Titles

DANIEL C. VILLANUEVA v. CA, LAND REGISTRATION AUTHORITY, OO KIAN TIOK
November 1997
In Magdalena Homeowners v. CA (184 SCRA 325, 329-30 [1990]), this Court
enumerated the cases where a notice of lis pendens is proper:
1) action to recover possession of real estate
2) action to quiet title
 3) action to remove clouds
4) action for partition
5) any other proceeding of any kind in court directly affecting the title to the land or
the use or occupation thereof or the buildings thereon.
Elements to annotate a notice of lis pendens: (1) property must be of such character as
to be subject to the rule; (2) court must have jurisdiction both over the person and the res; and (3)
property or res involved must be sufficiently described in the pleadings.
Only the first requisite is at issue here.
Although it is not necessary for the applicant to prove his ownership or interest over the
property sought to be affected by lis pendens, the applicant must, in the complaint or answer filed
in the case, assert a claim of possession or title over the subject property in order to give due
course to his application. As settled, lis pendens may be annotated only where there is an action
or proceeding in court which affects the title to, or possession of, real property.
A notice of lis pendens does not create a nonexistent right or lien. It serves merely as a
warning to a person who contracts on the subject property that he does so at his peril and subject
to the result of the pending litigation. The registration of the notice of lis pendens is done without
leave of court. The Rule merely requires an affirmative relief to be claimed in the answer to
enable a defendant to apply for the annotation of the notice. There is no requirement that an
applicant-defendant must prove his right or interest over the property sought to be annotated
upon.

To require that an applicant must prove his ownership or his interest over the property
sought to be affected with the notice of lis pendens will unduly restrict the scope of the rule. In
such case, a party questioning the ownership of the registered owner will litigate his or her case
without an assurance that the property will be protected from unwanted alienation or
encumbrance during the pendency of the action, thereby defeating the very purpose and rationale
of the registration.

Civil Law/Land Titles/Innocent Purchaser for Value

GLORIA R. CRUZ v. CA, ROMY V. SUZARA & MANUEL R. VIZCONDE
November 1997
Petitioner owned a lot in QC. In 1977, she lived-in with Romy Suzara without benefit of marriage.
In 1982, solely out of love and affection, she executed a deed of sale in Romy’s favor without
monetary consideration. Romy registered the document in his favor and used the property as
collateral for a bank loan. Romy failed to pay off the loan, thus the mortgage was foreclosed.
Petitioner paid the bank to restructure the loan, resulting in the extension of the redemption
period to 2 years. But without petitioner’s knowledge, Romy redeemed the property and
thereafter avoided petitioner. Thus petitioner filed an affidavit of adverse claim with the RD of
QC, asserting that the sale to Ronmy was void for lack of consideration and for being contrary to
law and public policy. Petitioner then sued before the RTC for quieting of title, declaration of
nullity of documents, etc.
The RTC ruled that the sale between petitioner and Romy was valid, with love, affection
and accomodation being the consideration for the sale; further, that Vizconde was an innocent
purchaser for value. The CA affirmed.
We cannot sustain petitioner. Although under Art. 1490, a husband and wife cannot sell
property to one another as a rule which, for policy considerations requires that the prohibition
apply to common-law relationships (Calimlim v. Fortun, 129 SCRA 675 [1984]), petitioner can no
longer seek reconveyance of the property as it has already been acquired by Vizconde in good
faith and for value.
Both lower courts found that on 22 December 1989, when Romy executed the deed of
sale in favor of Vizconde, Romy was the registered owner and nothing was annotated in the
certificate to indicate a flaw in Romy’s title. It was only on 22 January 1990 that petitioner filed
her adverse claim with the RD.
This is without prejudice to any appropriate remedy petitioner may take against Romy.

Civil Law/Land Titles; Lease

REPUBLIC, represented by the Dir. of Lands v. CA, JOSEFINA L. MORATO, et al.
November 1997
Will the lease and/or mortgage of a portion of a realty acquired through free patent
constitute sufficient ground for the nullification of the grant? Should such property revert to the
State once it is invaded by the sea and thus becomes foreshore land?
First. Under the Public Land Act (C.A. No. 141), §§ 118, 121, 122 and 124, any
encumbrance of a parcel of land acquired under a free patent or homestead within 5 years from
such grant is prohibited = cancellation of grant and reversion of land to public domain.
Encumbrance has been defined as anything that impairs the use or transfer of property; anything
which constitutes a burden on the title; a burden or charge upon property; a claim or lien upon
property.
The lease and mortgage constitute encumbrances as the grantee (Morato) cannot fully
use or enjoy the land during the duration of the lease. In a contract of lease which is consensual,
bilateral, onerous and commutative, the owner temporarily grants the use of his or her property to
another who undertakes to pay rent therefor. During the term of the lease, the grantee cannot
enjoy the beneficial use of the land leased, this the Public Land Act prohibits.
As regards the mortgage, it clearly constitues an “encumbrance” prohibited by the law as
foreclosure of such mortgage would necessarily result in the auction of the property.
Second. Re: foreshore land reverting to the public domain.
Petitioner correctly contends that Morato cannot own foreshore land, although
respondents contend that it is unfair if Morato will be deprived of the whole property just because
a portion thereof was immersed in water for reasons not of her own doing.
Here, the free patent application was made in 1972. However, the land has since
become foreshore land. Thus, it can no longer be subject of a free patent, with Govt. v. Cabañgis
(53 Phil. 112, 115-16 [1929]) explaining the rationale for this proscription, i.e., where an owner
has to all intents and purposes abandoned the land and permitted it to be totally destroyed so as
to become part of the seashore, the land passes on to the public domain but the owner thus
dispossessed does not retain any right to the natural products resulting from their new nature; it
is a de facto case of eminent domain and not subject to indemnity.
When the sea moved towards the estate and the tide invaded it, the invaded property
became foreshore land and passed to the realm of the public domain.

Civil Law/Land Titles

HEIRS OF MARCIANO NAGAÑO v. CA, et al.
November 1997
It is settled that a MTD hypothetically admits the truth of the facts alleged therein. In their
complaint, private respondents specifically alleged that they were owners of a portion of the lot for
having possessed it in the concept of an owner, openly, peacefully, etc., since 1920. This claim
is an assertion that the lot was private land, or that even assuming it was part of the public
domain, private respondents ahd already acquired imperfect title thereto under C.A. No. 141, §48,
under which, a lot is segregated from the public domain as the beneficiary is conclusively
presumed to have performed all the conditions essential to a Government grant.
Thus, merely on the basis of the allegations of the complaint, the lot in question was
apparently beyond the jurisdiction of the Director of Lands and could not be the subject of a Free
Patent. Hence, dismissal of private respondents' complaint was premature and trial on the merits
should have been conducted to thresh out evidentiary matters.
It would been entirely different if the action were clearly for reversion, in which case, it
would have to be instituted by the Sol-Gen, pursuant to §101, C.A. No. 141.
In light of the above, and at this time, prescription is unavailing against private
respondents' action. A free patent issued over private land is void. Further, private respondents'
claim of open, public, etc., possession since 1029 and its illegal inclusion in petitioners' free
patent gave private respondents a cause of action for quieting of title, which is imprescriptible.
Thus private respondents' complaint may thus likewise be considered an action for quieting of
title.
1996

Land Titles; Adverse Claim

GARBIN v. CA
February 1996
Does the registration of an adverse claim prevail over the title which was registered subsequent
to the adverse claim? HELD: No. Under Act No. 496, §110, the purpose of an adverse claim is
to protect the interest of a person over a piece of real property where the registration of such
interest or right is not otherwise provided for by the Land Registration Act, and serve as notice
and warning to third parties dealing with said property that someone is claiming an interest on the
same or a better right than the registered owner.
In case at bench, what was registered was merely the adverse claim, and not the Deed of Sale.
Therefore, there is still need to resolve the former's validity in separate proceedings, as there is
an absence of registration of the actual conveyance of the portion of land therein claimed by
private respondents.

Land Titles; Reconstitution

NEW DURAWOOD v. CA
February 1996
R.A. No. 26, §13 applies only in cases of reconstitution of lost or destroyed original certificates on
file with the Register of Deeds, while P.D. No. 1529, §109 governs petitions for issuance of new
owner's duplicate certificates of title which are lost or stolen or destroyed. (The former is
expressly provided for in P.D. No. 1529, §110.)
In Demetriou v. CA (238 SCRA 158, 162 [1994]), we ruled that if a certificate of title has not been
lost but is in fact in the possession of another person, the reconstituted title is void and the court
rendering the decision has not acquired jurisdiction. Consequently, the decision may be attacked
at any time. In case at bench, the owner's duplicate certificates of title were not "lost or
destroyed," hence, there was no necessity for the petition filed in the trial court for the "Issuance
of New Owner's Duplicate Certificates of Title x x x." In fact, the said court never acquired
jurisdiction to order the issuance of new certificates. Hence, the newly issued duplicates are
themselves void.
It is obvious that this lapse happened because of failure to follow the procedure in P.D. No. 1529:
1) No notice of loss or theft sent to the Register of Deeds.
2) §107 provides that in case of the refusal or failure of the holder to surrender the owner's
duplicate certificate of title, the remedy is a petition in court to compel surrender thereof to the
Register of Deeds, and not a petition for reconstitution.

Land Titles; Mortgage

STATE INVESTMENT HOUSE v. CA
March 1996
Petitioner's registered mortgage over the property is inferior to that of respondents-spouses'
unregistered right. The unrecorded sale between respondents-spouses and Solid is preferred for
the reason that if the original owner (Solid) had parted with his ownership of the thing sold then
he no longer had ownership and free disposal of that thing so as to be able to mortgage it again.
Registration of the mortgage is of no moment since it is understood to be without prejudice to the
better right of third parties. (citations omitted)
Petitioner asserts that a purchaser or mortgagee of land covered under the Torrens System is not
required to do more than rely upon the certificate of title. HELD: As a general rule, where there
is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or
any encumbrance thereon, the purchaser is not required to explore further than what the Torrens
Title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently
defeat his right thereto. This rule, however, admits of an exception as where the purchaser or
mortgagee, has knowledge of a defect or lack of title in his vendor xxx In this case, petitioner was
well aware it was dealing with Solid, a business entity engaged in the business of selling
subdivision lots. In Sunshine v. IAC (203 SCRA 210), the Court, noting petitioner therein to be a
financing corporation, deviated from the general rule that a purchaser or mortgagee of a land is
not required to look further than what appears on the face of the Torrens Title.

REPUBLIC v. CA
March 1996
Once a patent is registered under Act No. 496 (now P.D. No. 1529) and the corresponding
certificate of title is issued, the land ceases to be part of the public domain and becomes private
property over which the Director of Lands will no longer have either control or jurisdiction. (Dir. of
Lands v. De Luna, 110 Phil. 28 [1960]) The Torrens Title issued on the basis of a free or
homestead patent becomes as indefeasible as one which was judicially secured upon the
expiration of one year from date of issuance of patent. However, even after the lapse of one
year, the State may still bring an action under §101 of the Public Land Act for the reversion to the
public domain of lands which have been fraudulently granted to private individuals. This has
been the consistent ruling of this Court. (citations omitted)

REPUBLIC v. CA & HEIRS OF RIBAYA

July 1996
The CA erred in holding that the Republic was barred, as the OCT was conclusive against all
persons. One year after its transcription which is the date of its effectivity said certificate of title
became incontrovertible. First, the one-year period provided for in Section 38 of Act No. 496
merely refers to a petition for review and is reckoned from the entry of decree. In the second
place, there are other remedies available to an aggrieved party after the said one-year period,
e.g., reconveyance, covered by Section 55 of Act No. 496 which, inter alia, provides that "in all
cases of registration procured by fraud, the owner may pursue all his legal and equitable
remedies against the parties to such fraud, without prejudice, however, to the rights of any
innocent holder for value of a certificate of title." Likewise, an action for damages is sanctioned in
cases where the property has been transferred to an innocent purchaser for value, which may be
filed within four years from discovery of the fraud. Recourse may also be had against the
Assurance Fund.
Finally, prescription never lies against the State for the reversion of property which is part of the
public forest or of a forest reservation which was registered in favor of any party. Then too, public
land registered under the Land Registration Act may be recovered by the State at any time.
"Public land fraudulently included in patents or certificates of title may be reverted to the state in
accordance with Section 101 of the Public Land Act.

Civil Law/Land Titles

REPUBLIC v. CA & HEIRS OF DEMOCRITO O. PLAZA
July 1996
Petitioner argues that the burden rests on applicant to show by convincing evidence that he has
registrable title over the property, which he failed to do. Further, aside from mere tax
declarations, all of recent vintage, private respondent has not established actual possession of
the property in the manner required by law (§14, P.D. 1529) and jurisprudence.
Although tax declarations not conclusive, good indicia of possession in concept of owner. They
constitute at least proof that the holder has a claim of title over the property. Such an act
strengthens one's bona fide claim of acquisition of ownership.
Registration does not vest title. It is merely evidence of such title.

Civil Law/Land Titles/Public Land Act (C.A. No. 141)

CLARA ATONG VDA. DE PANALIGAN, et al. v. CA, RTC S. COTOBATO, GAUDENCIO
SUPERIORIDAD & SOCORRO BARRIOS
July 1996
The case involves the simple issue of redemption as provided for in §119, C.A. No.
141.Petitioners contend that the CA ruling goes against State Investment House v. CA (215
SCRA 734 [1992]), that in exercising the right of redemption, tender of payment of the repurchase
price is necessary. Petitioners point out that during the hearings before the trial court, private
respondents could not readily deposit the repurchase price. Petition has no merit.
State Investment is not applicable because it did not involve land granted under a homestead or
free patent, but an ordinary parcel of land which was mortgaged and foreclosed. Redemption
was thus being exercised under civil law provisions and not under §119, C.A. No. 141, which
applies here.
Tender of payment of the repurchase price is not among the requisites of the law and is
therefore unnecessary. In PNB v. CA (179 SCRA 619 [1989]), with reference to 2 parcels of land
acquired under a free patent for which redemption within 5 years was conceded by petitioner, the
Court held that it was not even necessary for the preservation of the right of redemption to make
an offer to redeem or tender of payment of purchase price within 5 years. The filing of an action
to redeem within that period is equivalent to a formal offer to redeem. There is not even a need
for consignation of the redemption price.

HEIRS OF LUIS GONZAGA, et al. v. CA & SPS. JOSE LEELIN

September 1996
Civil Law/Land Titles: [After declaring that MWSS v. CA, 215 SCRA 783 (1992) is four-square re:
overlapping titles], [t]he present controversy hinges on the question as to who, between
petitioners and private respondents, have legal and valid title to the two lots.. In MWSS, we
ruled: Although petitioner's title was issued in 1940 [earlier than private respondents'] it will be
noted that petitioner's title was based on the cadastral survey of Kaloocan City, Cadastral Case
No. 34, while private respondents' title was derived from OCT No. 994 issued on April 19, 1917.
In Pamintuan v. San Agustin, this Court ruled that in a cadastral case the court has no jurisdiction
in an earlier land registration case and a second decree for the same land is null and void.
Where two certificates of title purport to include the same land, the earlier in date prevails. xxx In
successive registrations, where more than one certificate is issued in respect of a particular
estate in land, the person claiming under the prior certificate is entitled to the estate xxx Lastly, a
certificate is not conclusive evidence of title if it is shown that the same land had already been
registered and an earlier certificate for the same is in existence.
We sympathize with petitioner Mascariñas who may be a purchaser for value and in good faith,
but whose title, which is only a derivative of the void/later title, could not possibly be of force and
effect more than its parent title. Certainly the spring cannot rise higher than its source.

ATOK BIG-WEDGE MINING v. IAC & TUKTUKAN SAINGAN

G.R. No. 63528, September 1996
Civil Law/Land Titles: In the face of two sets of divergent rulings of the Supreme Court on the
nature of the rights of mining claimants over the land where their claim is located, the parties
herein seek a definitive ruling on the issue: What is actually the right of a locator of a mining
claim located and perfected under the Philippine Bill of 1902 over the land where the claim is
found? Does he have an absolute right of ownership or does he have the mere right to possess?
Whose right to the land should, therefore, prevail: the mining claimant's or that of an applicant for
land registration? Does the mere recording or location of a mining claim ipso facto and
irreversibly convert the land into mineral land, notwithstanding the fact that the mining claimant
failed to comply with the strict work requirement under the Philippine Bill of 1902?
1) The records bear out that private respondent has been in possession of the lot in concept
of owner for more than 30 years. While private respondent offered the tax declarations and
receipts in evidence, petitioner did not present any evidence in rebuttal thereof. Petitioner merely
anchored its cause on its alleged vested rights to its mining claims under the mandate of the
Philippine Bill of 1902 and our rulings in McDaniel v. Apacible (42 Phil. 749) and the catena of
cases subsequent thereto.
2) Petitioner is deemed to have abandoned his mining claims under E.O. No. 141 and P.D.
No. 1214.
All mineral lands, as part of the country's natural resources, belong to the State. This concept of
jura regalia enshrined in past and present Philippine constitutions has not always been the
prevailing principle in this jurisdiction. There was a time in our history when the mining laws were
comprising of the Filipino people's inherent rights to their natural wealth.
 Against this backdrop, we resolve whether or not the ownership of subject land had long
been vested on petitioner after it had allegedly located and recorded its mining claim in
accordance with the provisions of the Philippine Bill of 1902.
This issue is not novel, it having first ruled upon in McDaniel v. Apacible, where we stated: The
moment the locator discovered a valuable mineral deposit on the lands located, and perfected his
location in accordance with law, the power of the U.S. Gov't. to deprive him of the exclusive right
to the possession and enjoyment of the located claim was gone, the lands had become mineral
lands and they were exempted from lands that could be granted to any other person. The
reservations of public lands cannot be made so as to include prior mineral perfected located
locations; and , of course, if a valid mining location is made upon public lands afterward included
in a reservation, such inclusion or reservation does not affect the validity of the former location.
By such location and perfection, the land located is segregated from the public domain even as
against the Government.
We reiterated this ruling in 8 cases (citations omitted). These cases notwithstanding, however,
there came about thereafter a catena of cases where we declared that the rights of the holder of
a mining claim located under the Philippine Bill of 1902, are not absolute or are not strictly of
ownership. This was a ncessary premise in our affirmation of the constitutionality of P.D. No.
1214 in the 1987 case of Santa Rosa Mining v. Leido (156 SCRA 1), where we stated that mere
location does not mean absolute ownership over the affected land. It merely segregates the
located land from the public domain by barring other would-be locators from locating the same.
To rule otherwise would imply that location is all that is needed to acquire and maintain rights
over a located mining claim.
And our ruling there was upheld in 5 cases (citations omitted). While petitioner insists there is
only one construction of the provisions of the Philippine Bill of 1902, i.e., in the nature of
ownership, private respondent posits the ultimate question of which between the seemingly
inconsistent rulings is the correct interpretation of the Philippine Bill of 1902 in relation to E.O. No.
141 and P.D. No. 1214.
This is not the first time either that we are asked to resolve these postulations of this court that
are perceived to be contradictory. In the 1994 case of United Paracale Mining v. CA (232 SCRA
663), it would have been premature to rule on the issue, not all indispensable parties therein
having been joined. That is not the situation in the present controversy.
The determination of the rights of a mining claim holder under the Philippine Bill of 1902 is best
undertaken on the basis of the very source of those rights, i.e., the Bill itself. Any alteration or
change in the nature of those rights must be conceded for as long as such is statutorily and
constitutionally sanctioned, for even vested rights may be taken away by the State in the exercise
of police power.
The recording of mining claims could not have been intended to be the operative act of classifying
lands into mineral lands. The recording only operates to reserve to the registrant exclusive rights
to undertake mining activities upon the subject land. The power to classify lands into mineral
lands could not have been intended under the Philippine Bill of 1902 to be vested in just anyone
who records a mining claim. This strengthens our holding that the rights of a mining claimant are
confined to possessing the land for purposes of extraction of minerals. Thus, if no minerals are
extracted, notwithstanding the recording of the claim, the land is not mineral land and registration
thereof is not precluded by such recorded claim. Thus, in case at bench, the mining claimant,
who had failed to comply with the annual minimum work requirement, could not, all the more, be
expected to have extracted minerals from the mining location.
Thus, it can be said (1) that the rights under the Philippine Bill of 1902 of a mining claim holder
has been made subject by the Bill itself to the strict requirement that he actually performs work or
undertakes improvements on the mine every year and does not merely file his affidavit of annual
assessment, which requirement was correctly identified and declared in E.O. No. 141; and (2)
That the same rights have been terminated by P.D. No. 1214, a police power enactment, under
which non-application for mining lease amounts to waiver of all rights under the Philippine Bill of
1902 and application for mining lease amounts to waiver of the right under the Bill to apply for a
patent. In light of these conditions upon the right of a mining claim holder under the Bill, there
should remain no doubt now that such rights were not, in the first place, absolute or in the nature
of ownership, and neither were they intended to be so.
Applying this to the facts of this case, we find that, not only has petitioner failed to show
compliance with the actual annual work requirement, but also that nowhere on the land could any
tangible work or improvement be found (as noted by the trial commissioner during an ocular
inspection). Understandable thus is the action of the Dir. of Lands not to further appeal from
respondent court's decision, the Director conceding the land to be registrable, considering
petitioner's non-performance of mining work thereon, private respondent's adverse possession of
the subject land more than 30 years and its use thereof for as many years solely for agricultural
purposes.
Equally borne out by the records is the fact that petitioner had indeed applied for a mining lease
under P.D. No. 1214, thus, it has, in effect, waived its rights to secure a patent and it shall have
been governed, if private respondent's claim of adverse and open possession of the subject land
for more than 30 years were not established, by P.D. No. 463 in its activities respecting its mining
lease. (Petition dismissed.)

Civil Law/Land Titles: Remedial Law/Special Proceedings/Jurisdiction of probate court

Civil Law/Succession/Jurisdiction of probate court: Remedial Law/Evidence/Different judges
heard and decided the case: valid since full record available to the latter.
INTESTATE ESTATE OF THE LATE DON MARIANO SAN PEDRO y ESTEBAN v. CA, et al
Dec. 18, 1996
A probate court's jurisdiction is not limited to the determination of who the heirs are and what
shares are due them as regards the decedent's estate. Neither is it confirmed to the issue of the
validity of wills. We held in Maniñgat v. Castillo (75 Phil. 532, 535 [1945]) that the main function
of a probate court is to settle and liquidate the estates of deceased persons either summarily or
through the process of administration. This function necessarily includes the examination of the
properties of the deceased so as to rule on whether or not the invetory of the estate properly
included them for purposes of distribution. Thus in Trinidad v. CA (202 SCRA 106, 116 [1991]),
we held that questions of title to any property apparently still belonging to the estate of the
deceased may be passed upon in probate with the consent of all parties, without prejudice to third
persons.
Parenthetically, questions of title pertaining to the determination prima facie of whether certain
properties ought to be included or excluded from inventory and accounting may be resolved by
the probate court. (Garcia v. Garcia, 67 Phil. 353, 356-357 [1939]) Thus, the lower court did not
commit reversible error when it declared Titulo 4136 as void.
Under P.D. 892 (effective 16 Feb. 1976), all holders of Spanish titles/grants should cause their
lands covered thereby to be registered under Act No. 496 within 6 months from date of effectivity
or until 16 Aug. 1976. Otherwise, non-compliance results in a re-classification of their land.
Spanish titles can no longer be countenanced as indubitable evidence of land ownership.
(citations omitted)
It was error on the part of respondent RTC Judge Bagasao who rendered the decision (but
reversed by his successor RTC Judge Fernandez) to have declared the existence, genuineness
and authenticity of Titulo 4136 despite the effectivity of P.D. 892. Judge Fernandez emphasized
that Titulo 4136 was inadmissible and ineffective as evidence of private ownership.
This Court can only surmise that the reason for non-registration of Titulo 4136 under the Torrens
system is the lack of the necessary documents to be presented in order to comply with P.D. 892.
We do not discount the possibility that the Titulo in question is not genuine, especially since its
genuineness and due execution have not been proven. In both cases, the heirs were not able to
present the original of Titulo 4136 nor a genuine copy thereof, despite a subpoena duces tecum.
As an alternative to prove their claim, petitioners referred to a document known as "hypoteca"
allegedly appended to the Titulo. However, it was neither properly identified nor presented as
evidence.
The photostat submitted by petitioners had, as found by Judge Fernandez, ash rings around
portions with alterations which were done to erase any trace of the alterations. Other findings of
Judge Fernandez: petitioners did not exert serious effort to retrieve the original, thus leading one
to conclude that the original would be adverse if produced.
As regards the hipoteca which allegedly defined the metes and bounds of the subject property,
petitioners did not establish the conditions required by law for their admissibility as secondary
evidence to prove that there exists a document designated as Titulo 4136. Hence, it acquires no
probative value.
The private ownership of the land must be proved through genuineness of title AND clear identity
of the land claimed. For Spanish titles, the land must be concretely measured per hectare of
quinon, not in mass (cuerpos ciertos). (Dir. of Forestry v. CFI Judge Muñoz, 23 SCRA 1183,
where we ruled that Titulo 4136 was of doubtful validity.) Further, in Widows & Orphans
Association v. CA (212 SCRA 360, 380 [1992]), we ruled that Titulo 4136 had become bereft of
any probative value as evidence of land ownership by virtue of P.D. 892.
In G.R. No. 103727, the Titulo cannot be superior to the Torrens Titles of private respondents
Buhain, Ocampo and Dela Cruz. Under the Torrens system, the titles of private respondents
became indefeasible and incontrovertible one year from its final decree. More importantly, these
titles, having been issued under the Torrens system, enjoy the conclusive presumption of validity.
Re: petitioners' contention that their former counsel was guilty of gross negligence for having
failed to call the proper witnesses from the Bureau of Forestry, suffice it to say that counsel's
negligence binds the client. Further, petitioners were not prejudiced by the non-presentation of
evidence to prove that Buhain & co's. titles were void, considering that petitioners' ownership was
not duly proved.
It bears repeating that petitioners are not without recourse. P.D. 892 grants all holders of
Spanish titles the right to apply for registration of their lands under Act No. 496, within 6 months
from the effectivity of P.D. 892. Thereafter, however, any Spanish title, if utilized as evidence of
possession, cannot be used as evidence of ownership in any land registration proceedings under
the Torrens system.
All instruments affecting lands originally registered under the Spanish Mortgage Law may be
recorded under Section 194 of the Revised Administrative Code, as amended by Act No. 3344.

Civil Law/Land Titles: Political Law/Constitutional Law/Estoppel does not lie against Government;
Natural Resources
SPOUSES IGNACIO PALOMO & TRINIDAD PASCUAL, & CARMEN PALOMO v. CA,
REPUBLIC, FAUSTINO PERFECTO, et al.
G.R. No. 95608, Jan. 21, 1997
The issues raised essentially boil down to whether or not the alleged OCTs issued pursuant to
the CFI order in 1916-1917 and the subsequent TCTs issued in 1953 pursuant to the petition for
reconstitution are valid.
Petitioners contend that the Treaty of Paris which ended the Spanish-American War recognized
the property rights of Spanish and Filipino citizens and the American government had no inherent
power to confiscate properties of private citizens and declare them part of any kind of government
reservation. They allege that their predecessors-in-interest have been in open, adverse and
contituous possession of the subject lands for 20-50 years prior to their registration in 1916-1917.
Hence, the reservation of the land for provincial park purposes (Tiwi Hot Spring National Park) in
1913 by then Gov-Gen Forbes was tantamount to deprivation of private property without due
process. In support, petitioners presented copies of a number of decisions of the CFI of Albay,
15th Judicial District of the U.S.A. which state that the predecessors in interest of petitioners'
father, were in continuous, open and adverse possession of the lots from 20-50 years at the time
of their registration in 1916.
The Philippines passed to the Spanish Crown by discovery and conquest in the 16th century.
Before the Treaty of Paris, our land, whether agricultural, mineral or forest, were under the
exclusive patrimony and dominion of the Spanish Crown. Hence, private ownership of land could
only be acquired through royal concessions which were documented in various forms, e.g., Titulo
Royal or Royal Grant, Concesion Especial or Special Grant, Titulo de Compra or Title by
Purchase, and Informacion Posesoria or Possessory Information title obtained under the Spanish
Mortgage Law or under the Royal Decree of January 26, 1889.
Unfortunately, no proof was presented that petitioners' predecessors in interest dervied title from
an old Spanish grant. Petitioners placed much reliance upon the declarations of the CFI of Albay
as aforementioned. However, they were not even signed by the judge but were merely certified
copies of notification to Diego Palomo (petitioners' predecessor in interest) bearing the signature
of the clerk of court.
Moreover, despite claims by petitioners that their predecessors in interest were in open,
continuous and adverse possession for 20 to 50 years prior to their registration in 1916-1917, the
lots were only surveyed in December 1913, the same year they were acquired by Diego Palomo.
Curiously, in February 1913 or 10 months before the lots were surveyed for Diego, the
government had already surveyed the area in preparation for its reservation for provincial park
purposes. If petitioners' predecessors in interest were indeed in possession of the lots for a
number of years prior to their registration in 1916-1917, they would have undoubtedly known
about the inclusion of these properties in the reservation in 1913. It is certainly a trifle late at this
point to argue that the
that the CFI decrees were really issue, the lands are still not capable of appropriation. The
adverse possession which may be the basis of a grant of title in confirmation of imperfect title
cases applies only to alienable lands of the public domain.
There is no question that the lots here were not alienable lands of the public domain. As testified
by the District Forester, records in the Bureau of Forestry show that the subject lots were never
declared as inalienable and disposal prior to 1913 up to the present. Moreover, as part of the
provincial park reservation, they form part of the forest zone.
It is elementary in the law governing natural resources that forest land cannot be owned by
private persons. It is not registrable and possession thereof, no matter how lengthy, cannot
convert it into private property, unless such lands are reclassified and considered disposable and
alienable.
Neither do the tax receipts preented by petitioners prove ownership since they are not conclusive
proof of ownership in land registration cases.
We now discuss the matter regarding the forfeiture of improvements introduced on the subject
lots. It bears emphasis that E.O. No. 40 (reserving the lots for provincial park purposes) was
already in force at the time the lots were surveyed for Diego Palomo. Petitioners also apparently
knew that the subject lands were covered under the reservation when they filed a petition for
reconstitution of the lost original certificates of title inasmuch as the blue print of the survey done
for the reconstitution states: "in conflict with provincial reservation." In any case, petitioners are
presumed to know that the law and the failure of government to oppose the registration of the lots
in question is no justification for petitioners to plead good faith in introducing improvements on the
lots.

1995

Civil Law/Land Titles

LIGON v. CA
244 SCRA 693
No voluntary instrument shall be registered by the RD unless the owner's duplicate certificate is
presented together with such instrument, except in some cases or upon court order. (See
discussion re: an order issued by the RTC in exercise of its general jurisdiction, not as a land
registration court.)

Civil Law; Land Titles, Pacto de Retro Sales & Equitable Mortgage
IGNACIO v. COURT OF APPEALS
246 SCRA 242 (1995 July)
1) An action for consolidation of ownership must be filed as an ordinary civil action, not as a
land registration case.
2) Whether a particular issue should be resolved by the RTC in its limited jurisdiction as a
land registration court is not a jurisdictional question but a procedural question.
3) The distinction between the general jurisdiction vested in the RTC and its limited
jurisdiction when acting as a land registration court has been eliminated by P.D. No. 1529, to
avoid multiplicity of suits. The RTCs now have the authority to act not only on applications for
original registration but also over all petitions filed after the original registration of title, with power
to hear and determine all questions arising from such applications or petitions. The land
registration court can now hear and decide controversial and contentious cases and those
involving substantial issues.
Sale of Land/Land Titles
PILAPIL v. CA
G.R. No. 55134, Dec. 4, 1995
To affect the land sold, the presentation of the deed of sale and its entry in the day book must be
done with the surrender of the owner's duplicate of the certificate of title. Production of the
owner's duplicate of the certificate of title is required by Section 55 of Act No. 496 (not Section 53
of P.D. No. 1529), and only after compliance with this and other requirements shall actual
registration retroact to the date of entry in the day book.
However, nonproduction of the owner's duplicate of the certificate of title may not invalidate
petitioners' claim of ownership over the lot involved considering the factual circumstances of this
case, i.e., constructive knowledge of the prior sale.

TORTS & DAMAGES

2000

Torts; Vicarious Liability of Employers; Damages

MMTC v. CA
May 2000
MMTC is the operator of a fleet of passenger buses within the Manila Area. Spouses Rosales
sued the bus company for the death of their daughter who was hit by one of the buses owned by
MMTC. The RTC found MMTC & their driver guilty of negligence & who ordered to pay actual,
moral & exemplary damages, including atty's. fees & costs of lawsuit.

RULINGS: Art. 2180 of CC provides that "employers shall be liable for the damages caused by
their employees and household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry." The responsibility of employers
for the negligence of their employees in the performance of their duties is primary, that is, the
injured party may recover from the employers directly, regardless of the solvency of their
employees.
Employers may be relieved of responsibility for the negligent acts of their employees within the
scope of their assigned tasks only if they can show that "they observed all the diligence of a god
father of a family to prevent damage." For this purpose, they have the burden of proving that they
have indeed exercised such diligence, both in the selection of the employee who committed the
quasi-delict and in the supervision of the performance of his duties.
In the selection of prospective employees, employers are required to examine them as to their
qualifications, experience, and service records. On the other hand, with respect to the
supervision of employees, employers should formulate standard operating procedures, monitor
their implementation, and impose disciplinary measures for breaches thereof. To establish these
factors in a trial involving the issue of vicarious liability, employers must submit concrete proof,
including documentary evidence.
Moral damages. - Under Art. 2206, the "spouse, legitimate and illegitimate descendants
and ascendants of the deceased may demand moral damages for mental anguish by reason of
the death of the deceased." The reason for the grant of moral damages has been explained thus:
…the award of moral damages is aimed at a restoration, within the limits of the possible, of the
spiritual status quo ante; and therefore, it must be proportionate to the suffering inflicted. The
intensity of the pain experienced by the relatives of the victim is proportionate to the intensity of
affection for him and bears no relation whatsoever with the wealth or means of the offender. In
the instant case, the spouses Rosales presented evidence of the intense moral suffering they had
gone through as a result of the loss of Liza Rosalie who was their youngest child. The spouses
Rosales claim moral damages in the amount of P5,000,000.00. In People v. Teehankee, Jr., [249
SCRA 54, 116 (1995)] this Court awarded P 1 million as moral damages to the heirs of a
seventeen-year-old girl who was murdered. This amount seems reasonable to us as moral
damages for the loss of a minor child, whether he or she was a victim of a crime or a quasi-delict.
Hence, we hold that the MMTC and Musa are solidarily liable to the spouses Rosales in the
amount of P1,000,000.00 as moral damages for the death of Liza Rosalie.
Compensation for loss of earning capacity - Art. 2206 of the Civil Code provides that in addition to
the indemnity for death caused by a crime or quasi-delict, the "defendant shall be liable for the
loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the
latter;…." Compensation of this nature is awarded not for loss of earnings but for loss of capacity
to earn money. Evidence must be presented that the victim, if not yet employed at the time of
death, was reasonably certain to complete training for a specific profession. In People v.
Teehankee, [249 SCRA 54, 118 (1995)] no award of compensation was granted to the heirs of a
college freshman because there was no sufficient evidence on record to show that the victim
would eventually become a professional pilot. But compensation should be allowed for loss of
earning capacity resulting from the death of a minor who has not yet commenced employment or
training for a specific profession if sufficient evidence is presented to establish the amount
thereof. The argument for allowing compensation for loss of earning capacity of a minor is even
stronger if he or she was a student, whether already training for a specific profession or still
engaged in general studies. In Khromer v. Dahl, 402 P. 2d 979,982 (1965), the court, in affirming
the award by the jury of $85,000.00 to the heirs of an eighteen-year-old college freshman who
died of carbon monoxide poisoning, stated as follows:
There are numerous cases that have held admissible evidence of prospective earnings of a
student of a student or trainee…The appellants contend that such evidence is not admissible
unless the course under study relates to a given occupation or profession and it is shown that the
student is reasonably certain to follow that occupation or profession. It is true that the majority of
these decisions deal with students who are studying for a specific occupation or profession.
However, not one of these cases indicate that evidence of one's education as a guide to future
earnings is not admissible where the student is engaged in general studies or whose education
does not relate to a specific occupation.

Torts; Negligence
FOOD TERMINAL INC. vs. CA
G.R. No. 108397, June 21, 2000.
The basic issue raised is whether or not the …petitioner was negligent in the care and custody of
respondent's goods during storage…petitioner practically admitted that it failed to maintain the
agreed temperature of the cold storage area at 2 to 4 degrees centigrade at all times, and this
caused the deterioration of the yeast stored therein. Nonetheless, petitioner claimed that
temperature was not the sole cause for the deterioration of respondent's goods. Since negligence
has been established, petitioner's liability for damages is inescapable.

1999

Damages
ARTURO BORJAL and MAX SOLIVEN vs CA and WENCESLAO
Jan. 14, 1999
Wenceslao filed a civil action for damages based on libel against petitioners for an article
referring to “ a conference organizer associated with shady deals who has lot of trash tucked
inside his closet, “Thick-faced”,”self-proclaimed hero” and “a person with dubious ways.” The
article did not name or identify Wenceslao of the conference he was organizing.
RULING: Complaint for damages dismissed. Counterclaim also dismissed
Damages cannot be awarded in the absence of ill-motive in the filing of the
complaint. On petitioner’s counterclaim for damages, we find the evidence meager to sustain any
award. Private respondent can’t be said to have instituted the present suit in abuse of the legal
processes and with hostility to the press; or that he acted maliciously, wantonly oppressively,
fraudulently and for the sole purpose of harassing petitioners, thereby entitling the latter to
damages. On the contrary, private respondent acted with his right to protect his honor from what
he perceived to be malicious imputations against him. Proof and motive that the institution of the
action was prompted be a sinister design to vex and humiliate a person must be clearly and
preponderantly established to entitle the victim to damages. The law could not have meant to
impose a penalty on the right to litigate, nor should counsel’s fees be awarded every time a party
wins a suit.

1998

Civil Law; Moral Damages; Terms and Conditions of Credit Card and New Agreement; Abuse of
Right; Damages and Injury distinguished
BPI EXPRESS CARD CORPORATION v. CA, ET AL.
This is a case where private respondent, Marasigan, won an award in the trial court and
in the CA for damages allegedly sustained when his BPI credit card was rejected by a restaurant
where he was entertaining some guests on December 8, 1989. The SC reversed the CA and held
that there was no injury suffered by Marasigan as it was shown that he was at fault why his credit
card was dishonored. He was sent a letter by BPI informing him that he was indebted to them and
ordering him to pay his obligation. Marasigan did pay using a postdated check, dated December
15, 1989.
By using the postdated check as payment, Marasigan failed to comply with his
agreement with the bank to settle his account in order that his credit card would not be
suspended. Settled is the doctrine that a check is only a substitute for money and not money, the
delivery of such an instrument does not, by itself operate as payment. Thus, the BPI was justified
in suspending his credit card. As such, BPI did not abuse its right under the terms and conditions
of the contract.
The following are the elements for an abuse of right to exist: (1) there is a legal right or
duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another.
Lastly, there is a material distinction between damages and injury. Injury is the illegal
invasion of a legal right; damage is the loss, hurt or harm which results from the injury; and
damages are the recompense or compensation awarded for the damages suffered. Thus, in
cases where there is damage without injury, in those instances in which the harm or loss was not
the result of the violation of a legal duty, the injured party bears the consequences alone. The
award for tort damages is based on the premise that an individual was injured in contemplation of
law. There must be a breach of a duty, which breach must primarily cause the injury.

Civil Law/Land Titles/Certificate of Title not subject to collateral attack

HALILI v. CIR & DRIVERS and CONDUCTORS UNION
May 1996
The fact that the subject real property was registered under the Torrens System makes the
instant petition all the more dismissible, considering that the best proof of ownership of a piece of
land is the Certificate of Title. §48 of P.D. No. 1529 provides: a certificate of title shall not be
subject to collateral attack.
A certificate of title accumulates in one document a precise and correct statement of the exact
status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of title
and shows exactly the real interest of its owner. The title once registered, with very few
exceptions, should not thereafter be impugned, altered except in some direct proceeding
permitted by law. Otherwise, all security in registered titles would be lost.
The issue on the validity of title, i.e., whether or not it was fraudulently issued, can only be raised
in an action expressly instituted for that purpose. Hence, whether or not petitioners have the right
to claim ownership of the land in question is beyond the province of the instant proceeding.
Civil Law/Land Titles/Innocent purchasers for value: All portions of said land, now known as Holy
Cross Memorial Park, have already been sold out to individual lot buyers, who are innocent
purchasers for value. Where innocent third persons, relying on the correctness of the Certificate
of Title thus issued, acquire rights over the property, the Court cannot disregard such rights and
order the total cancellation of the certificate.
Civil Law/Sales/Capacity to sell: As adverted to earlier, ownership of the lot had already been
vested in the Union upon sale to it by the Heirs of Halili. Considering this, the Union had every
right to dispose of the property. After the termination of the above-entitled cases, judgment
therefor having become final and executory, even as of 1982, neither the NLRC nor this Court will
have any authority to look into the validity of the disposal by the Union of the property. Under the
circumstances, therefore, it is to be assumed that the sale by the Union, as virtual owner of the
property, to MMPCI would not need any authority to sell from the NLRC or from this Court and we
hereby write finis to these cases.

1997

Civil Law & Commercial Law/Damages & Transportation Law

PHILIPPINE AIRLINES (PAL) v. CA & LEOVIGILDO A. PANTEJO
July 1997
Pantejo boarded a PAL plane in Manila and disembarked in Cebu City where he was
supposed to take his connecting flight to Surigao City. Due to a typhoon, the connecting flight
was cancelled. PAL gave each passenger a total of P300.00 cash assistance for the 2-day stay
in Cebu. Pantejo requested that he be billeted at PAL's expense as he did not have cash with
him, but PAL refused. Pantejo learned that the hotel expenses of 2 other passengers were
reimbursed by PAL. Pantejo told PAL's manager that he was going to sue for discrimination. It
was only then that PAL offered to pay Pantejo, but due to his ordeal and anguish, Pantejo
refused.
What makes PAL liable for damages here is its blatant refusal to accord the amenities
equally to all its stranded passengers. No compelling reason was advanced to explain this
discriminatory conduct.
Moral damages are not intended to enrich plaintiff, merely to obtain means, diversion or
amusements that will serve to alleviate the moral suffering he underwent due to defendant's
culpable action and must, perforce, be proportional to the suffering inflicted. However, substantial
damages do not translate into excessive damages.
The interest of 6% imposed by the CA should be computed from the date of rendition of
judgment and not from the filing of the complaint. This is because at the time of the filing the
complaint, the amount of damages to which plaintiff may be entitled remains unliquidated and not
known until definitely ascertained, assessed and determined by the courts, and only after
presentation of proof.

Civil Law/Torts/Medical Malpractice Cases

LEONILA GARCIA-RUEDA v. WILFREDO L. PASCASIO, et al.
September 1997
There are 4 elements involved in medical negligence cases: duty, breach, injury and
proximate causation.
When the victim employed the services of the doctors, a physician-patient relationship
was created. In accepting the case, the doctors in effect represented that, having the needed
training and skill possessed by physicians and surgeons practicing in the same filed, they will
employ such training, care and skill in the treatment of their patients. They have a duty to use at
least the same level of care that any other reasonably competent doctor would use to treat a
condition under the same circumstances. The breach of these professional duties of skill and
care, or their improper performance, by a physician surgeon whereby the patient is injured in
body or in health, constitutes actionable malpractice. Thus, in the event that any injury results to
the patient from want of due care or skill during the operation, the surgeons may be held
answerable in damages for negligence.
Moreover, in malpractice or negligence cases involving the administration of anaesthesia,
the necessity of expert testimony and the availability of the charge of res ipsa to the plaintiff, have
been applied in actions against anaesthesiologists to hold the defendant liable for the death or
injury of a patient under excessive or improper anaesthesia. Essentially, it requires 2-pronged
evidence: evidence as to the recognized standards of the medical community in the particular
kind of case, and a showing that the physician in question negligently departed from this standard
in his treatment.
Another element in medical negligence cases is causation which is divided into 2
inquiries: whether the doctor's actions in fact casued the harm to the patient and whether these
were the proximate cause of the patient's injury.
Commercial Law/Transportation Law; Insurance/Civil Law/Torts and Damages
NEGROS NAVIGATION v. CA, et al
November 1997
The vessel Don Juan (owned by petitioner) collided with the Tacloban City, an oil tanker
owned by PNOC. As the Don Juan sank, several of her passengers perished; but the 4
members of private respondents' families were never found. Petitioner admitted that private
respondents purchased 4 tickets and that the tickets were listed in the passenger manifest.
However, petitioner denied that the 4 relatives of private respondents actually boarded the vessel
as their bodies were never recovered. Further, petitioner contended that the vessel was
seaworthy, had a full and competent crew; moreover, that the collision was entirely due to the
fault of the Tacloban City.
Issues: (1) whether members of private respondents' families were actually passengers;
(2) whether Mecenas v. CA (180 SCRA 83 [1989]) finding petitioner's crew members grossly
negligent was binding here; (3) whether the total loss of the Don Juan extinguished petitioner's
liability; and (4) whether the damages awarded were excessive, unwarranted, etc.
First. Petitioner contends that private respondents should have proven presence of
victims on ship as it is common knowlege that passengers purchase tickets in advance but do not
actually use them. No merit. One private respondent testified that he brought his family to the
vessel and stayed with them until it was time to depart. There is no reason he should claim
members of his family perished merely to sue. People do not normally lie about so grave a
matter as the loss of dear ones. It would be more difficult to conceal relatives if they were alive
than it is for petitioner to show the contrary.
Second. The trial court and CA both relied on Mecenas in finding that petitioner
breached its duty to exercise extraordinary diligence. It was found there that although proximatde
cause was negligence of Tacloban City's crew, Don Juan's crew was equally negligent as its
master was playing mahjong at the time of collision and the officer on watch admitted that he
failed to call the attention of the master to the imminent danger; further, the Don Juan was
overloaded and not seaworthy as it sank within 10 to 15 minutes of impact.
While petitioner's contention that the decision here should be based on the records of this
case may be true as regards the merits of the individual claims against petitioner, it cannot be
true re: cause of the sinking of its ship. Adherence to Mecenas dictated by stare decisis. Further,
the trial court made its own independent findings on the basis of the testimonies before it.
Third. It is settled that a shipowner is liable notwithstanding total loss of the ship if fault
can be attributed to the shipowner.
Fourth. Petitioner contends that private respondents should be allowed to claim only
P43,857.14 each as moral damages since in Mecenas, the amount of P307,500.00 was awarded
to the 7 children of the Mecenas couple.

Petitioner's contentkion that the expenses for the erection of a monument and other
expenses for memorial services for the victim should be considered included in the death
indemnity = without merit. Death indemnity is given to compensate for violation of the rights to
life and physical integrity of thedeceased. On the other hand, damages incidental to or arising
out of such death are for pecuniary losses of the beneficiaries of the deceased.

Civil Law/Torts; Medical Malpractice Suit

DR. NINEVETCH CRUZ v. CA & LYDIA UMALI
November 1997
Define a medical malpractice suit: the type of claim which a victim has available to him or
her to redress a wrong committed by a medical professional which has caused bodily harm.
(Garcia-Rueda v. Pascasio, G.R. No. 118141, 5 September 1997) In this jurisdiction, these
claims are most often brought as a civil action for damages under Art. 2176, NCC, and in some
instances, as a criminal case under Art. 365, RPC, with which the civil action for damages is
impliedly instituted. It is via this latter type of action that the heirs of the deceased here sought
redress for petitioner's alleged imprudence and negligence. The information against petitioner
(surgeon) and one Dr. Lina Ercillo (anaesthesiologist during deceased's operation) charged them
with negligently failing to supply or store sufficient provisions and facilities necessary to meet any
and all exigencies apr to arise before, during and/or after a surgical operation, thereby causing
the untimely death of Lydia Umali on the day following the operation. The MTCC acquitted Ercillo
but convicted Cruz. The RTC and CA affirmed.
Prior to 22 March 1991, petitioner, upon examination, found a myoma in Lydia's (the
deceased) uterus. Petitioner thus scheduled a hysterectomy for 1:00 p.m., 23 March 1991. Lydia
and Rowena (daughter) arrived at the hospital (Perpetual Help Clinic and General Hospital on
Balagtas Street, San Pablo City, Laguna) on 22 March 1991, at around 4:30 p.m. As Rowena
noticed that the clinic was untidy/very dusty, she tried to dissuade her mother from proceeding
with the operation. On 23 March 1991, before Lydia was wheeled into the operating room,
Rowena asked petitioner if the operation could be postponed. After petitioner and Lydia
conversed in petitioner's office, Lydia informed Rowena that petitioner told Lydia that she had to
be operated on as scheduled.
During the procedure, Rowena and her other relatives (Rowena's husband, sister and 2
aunts) waited outside the operaing room (OR). Dr. Ercillo then went out of the OR and instructed
them to buy tagamet ampules, which Rowena's sister bought immediately. After an hour, Dr.
Ercillo came out again and asked them to buy blood for Lydia. They bought type "A" blood from a
blood bank (St. Gerald Blood Bank) , which the attendant brought into the OR. After a few hours,
petitioner informed them that the operation was finished. The operating staff then went inside
petitioner's clinic to eat. Some 30 minutes later, Lydia was brought out of the OR on a stretcher,
and petitioner asked Rowena, et al., to buy additional blood. Unfortunately, there was no more
type "A" blood available at the blood bank. Thereafter, a person arrived to donate blood which
was later transfused into Lydia. Rowena then noticed her mother, who was attached to an
oxygen tank, gasping for breath. Apparently, the oxygen supply had run out and Rowena's
husband, together with petitioner's driver, had to go to another hospital to get oxygen. Lydia was
given the fresh supply of oxygen as soon as it arrived. But at around 10 p.m., Lydia went into
shock and her BP dropped to 60/50. Lydia's unstable condition thus necessitated her transfer to
another hospital (San Pablo District Hospital [SPDH]) for further examination and so that she
could be connected to a respirator. The transfer, however, was without the prior consent of
Rowena nor of the other relatives present, who only found out about the intended transfer when
an ambulance arrived to take Lydia to this other hospital. Rowena, et al., then boarded a tricycle
and followed the ambulance.
Upon Lydia's arrival at SPDH, she was wheeled into the OR and petitioner and Dr. Ercillo
re-operated on Lydia as there was blood oozing from the abdominal incision. The attending
physicians summoned Dr. Bartolome Angeles, the head of the Obstetrics and Gynecology Dept.
of SPDH. However, by the time Dr. Angeles arrived, Lydia was already in shock and possibly
dead as her blood pressure was already 0/0. Dr. Angeles then informed petitioner and Dr. Ercillo
that there was notheing he could do to save the patient. While petitioner was closing the
abdominal wall, Lydia died. Lydia was pronounced dead on 24 March 1991, 3 a.m., with the
death certificate indicating "shock" as the immediate cause of death and "disseminated
intravascular coagulation (DIC)" as the antecedent cause.
In convicting petitioner, the MTCC found that (1) the clinic was untidy; (2) there was lack
of provisions like blood and oxygen to prepare for any contingencies; (3) the manner and fact
that Lydia was brought to SPDH indicated there was something wrong in the manner by which
petitioner conducted the operation; and (4) no showing that prior to the operation, petitioner
conducted a cardio pulmonary clearance or any blood typing.
The RTC reiterated these findings, while the CA observed that: (1) while the untidiness
and filthiness of the clinic did not, by themselves, indicate negligence, such nevertheless showed
petitioner's absence of due care and supervision over her subordinates (thus leading to the
questions of whether these unsanitary conditions permeated the OR; whether the surgical
instruments were properly sterilized; whether these conditions contributed to Lydia's infection --
while only petitioner could answer these, she opted not to testify, giving rise to the presumption
that she had nothing good to testify in her defense); (2) the need to buy Tagamet and blood, and
the empty oxygen tank, showed that petitioner had not prepared for any unforeseen
circumstances prior to going into surgery; (3) no showing that petitioner conducted any cardio-
pulmonary clearance, or at least procured a clearance from/by an internist, which are standard
requirements before a patient is subjected to surgery; (4) no showing that petitioner determined,
as part of the pre-operative evaluation, the patient's bleeding parameters, such as bleeding and
clotting time; (5) obviously, petitioner did not prepare the patient; did not get the family's consent
to the operation; did not prepare a medical chart with instructions for the patient's care -- no proof
of these offered.
SC, however, holds differently and finds the foregoing circumstances insufficient to
sustain petitioner's conviction for reckless imprudence resulting in homicide.
Elements of reckless imprudence: (1) offender does or fails to do an act; (2) the doing or
failure to do that act is voluntary; (3) that it be without malice; (4) that material damage results
from the reckless imprudence; and (5) that there is inexcusable lack of precaution on the part of
the offender, considering his employment or occupation, degree of intelligence, physical
condition, and other circumstances regarding person, time and place.
Whether or not a physician has committed an "inexcusable lack of precaution" in the
treatment of his patient is to be determined according to the standard of care observed by other
members of the profession in good standing under similar circumstances bearing in mind the
advanced state of the profession at the time of treatment or the present state of medical science.
In the recent case of Garcia-Rueda v. Pascasio, this Court stated that in accepting a case, a
doctor in effect represents that, having the needed training and skill possessed by physicians and
surgeons practicing in the same field, he will employ such training, care and skill in the treatment
of his patients. He theerefore has a duty to use at least the same level of care that any other
reasonably competent doctor would use to treat a condition under the same circumstances. It is
in this aspect of medical malpractice that expert testimony is essential to establish not only the
standard of care of the profession but also that the physican's conduct in the treatment and care
falls below such standard. Further, inasmuch as the causes of the injuries involved in malpractice
actions are determinable only in light of scientific knowledge, it has been recognized that expert
testimony is usually necessary to support the conclusion as to causation.
Immediately apparent from a review of the records of this case is the absence of any
expert testimony on the matter of the standard of care employed by other physicians of good
standing in the conduct of similar operations. The prosecution's expert witnesses in the persons
of 2 NBI doctors only testified as to the possible cause of death but did not venture to illuminate
the court on the matter of the standard of care that petitioner should have exercised.
All 3 courts below bewailed the inadequacy of the facilities/supplies/provisions and
untidiness of petitioner's clinic; the failure to subject the patient to a cardio-pulmonary test prior to
the operation; the omission of any form of blood typing before the transfusion; and even the
subsequent transfer of Lydia to the SPDH and the reoperation performed on her by petitioner.
But while it may be true that the circumstances pointed out by the courts below seemed beyond
cavil to constitute reckless imprudence on the part of the surgeon, this conclusion is still best
arrived at not through the educated surmises nor conjectures of laymen, including judges, but by
the unquestionable knowledge of expert witnesses. For whether a physician or surgeon has
exercised the requisite degree of skill and care in the treatment of his patients is, in the generality
of cases, a matter of expert opinion. The deference of courts to the expert opinion of qualified
physicians stems from its realization that the latter possess unusual technical skills which layment
in most instances are incapable of intelligently evaluating. Expert testimony should have been
offered to prove that the circumstances cited by the courts below constituted conduct falling
below the standard of care employed by other physicians in good standing when performing the
same operation. (emphasis supplied) It must be remembered that when the qualifications of a
physicial are admitted, as here, there is an inevitable presumption that in proper cases he takes
the necessary precaution and employs the best of his knowledge and skill in attending to his
clients, unless the contrary is sufficiently established. This presumption is rebuttable by expert
opinion which is so sadly lacking in case at bench.
Even granting arguendo that the inadequacy of the facilities/supplies/provisions and
untidiness of petitioner's clinic; the failure of petitioner to conduct pre-operation tests on the
patient; and the subsequent transfer of Lydia to the SPDH and the reoperation performed on her
by petitioner do indicate, even without expert testimony, that petitioner was recklessly imprudent
in the exercise of her duties as a surgeon, no cogent proof exists that any of these circumstances
caused petitioner's death. Thus, the absence of the fourth element of reckless imprudence: that
the injury to the person or property was a consequence of the reckless imprudence.
 In litigations involving medical negligence, the plaintiff has th burden of establishing
appellant's negligence and for a reasonable conclusion of negligence, there must be proof of
breach of duty on the part of the surgeon as well as a causal connection of such breach and the
resulting death of his patient. In Chan Lugay v. St. Luke's Hospital (10 CA Reports 415, 427-28
[1966]), where the attending physicial was absolved of liability for the death of complainant's wife
and newborn baby, the Court of Appeals held that the negligence must be the proximate cause of
the injury; negligence, no matter in what it consists, cannot create a right of action unless it is the
proximate cause of the injury complained of.
This Court has no recourse but to rely on the expert testimonies rendered by the
prosecution and defense witnesses that substantiate rather than contradict petitioner's allegation
that the cause of Lydia's death was DIC which, as attested to by an expert witness, cannot be
attributed to petitioner's fault or negligence. The probability that Lydia's death was caused by DIC
was unrebutted during trial and has engendered in the mind of this Court a reasonable doubt as
to petitioner's guilt. Thus, her acquittal of the crime charged. While we condole with the family of
Lydia, our hands are bound by law. Nevertheless, this Court finds petitioner civilly liable for the
death of Lydia, for while a conviction requires proof beyond reasonable doubt, only a
preponderance of evidence is required to establish civil liability.

Civil Law/Damages/Moral & Exemplary damages (see text of decision)

PNB v. CA & CARMELO H. FLORES
G.R. No. 116181, Jan. 6, 1997
It is not disputed that petitioner is entitled to payment for the construction it made, which arose
from a quasi-contractual relation created between the former and private respondent. But should
petitioner be paid based on quantum meruit?
The issue was answered in the affirmative in Eslao, and we find no reason to depart therefrom
as: First, the instant quasi-contract is neither fraudulent nor mala in se. Second, the project was
already covered by a specific appropriation. Third, as in private contracts, the facts show that an
implied obligation to pay would be imposed upon the government. Fourth, the property or benefit
is not ultra vires, i.e., can be the proper subject of an express contract and are within the
contractual powers of the public body. Fifth, the case falls within the exemption from the
mandatory procedure of public bidding which is dispensed with on the ground of public necessity
or when time is of the essence, and considering that the subject project was contiguous to an on-
going project performed by petitioner and there is no proof of any unsatisfactory performance of
negative slippage. Sixth, the contractor substantially complied (95% complete) in good faith with
its obligation and no intentional departure from the specifications were alleged. Seventh,
petitioner's claim is clearly supported by equity. Private respondent is reaping benefits from the
scallop fence and wire placed by petitioner. Eight, there is no proof of any collusion among the
parties. Finally, payment is limited to the actual costs chargeable against funds authorized and
certified for the purpose. All these circumstances, taken together, negate fraud and collusion.
(Rivera v. Malolos, 102 Phil. 285, 291 [1957])
The Sol-Gen, on behalf of private respondent, argues that the matter should be referred to the
COA, citing Eslao. Such argument is without merit. Quantum meruit allows recovery of the
reasonable value regardless of any agreement as to value. It entitles the party to as much as he
reasonably deserves, as distinguished from quantum valebant, ot ro as what is reasonably worth.
Unliquidated claims present a justiciable question ripe for judicial determination which is beyond
the powers of COA to adjudicate. (See Phil. Operations v. Auditor-General, 94 Phil. 868 [1954])
Recovery based on quantum meruit is in the nature of such claim because its settlement requires
the application of judgment and discretion and cannot be adjusted by simple arithmetical
processes. In Eslao, the Court found it necessary to refer to the COA the task of determining the
total compensation due to the claimants considering that the matter on the exact amont was not
in issue and the determinatin thereof involves a review of the factual findings and evidence in
support thereof. On the other hand, the lower court here, had already made a factual finding on
the amount reasonably due to petitioner and scrutinized the evidence to sustain the claim.
Besides, there is nothing in the cited cases which would imply that only the COA can determine
the specific amount du to a contractor guided by the established principle of quantum meruit. As
our courts are both courts of law and equity, they are not powerless to determine a factual matter
in accordance with both standards. (CA decision set aside and RTC decision reinstated.)

1996

Torts & Damages: Contributory negligence; vicarious liability

VALENZUELA v. CA
FEBRUARY 1996
Was V guilty of contributory negligence in parking her car alongside Aurora Blvd., which, L points
out, is a no parking zone? No. When V discovered she had a flat tire, she stopped at a lighted
place where she parked the car very close to the sidewalk. Under these circumstances, V
exercised the standard reasonably dictated by the emergency and could not be considered to
have contributed to the unfortunate circumstances. The emergency which lead her to park her
car on a sidewalk in Aurora Blvd. was not of her own making, and it was evidence that she had
taken all reasonable precautions.
Re: the vicarious liability of L's employer, this is not based on the principle of respondeat superior,
which holds the master liable for acts of the servant, but that of pater familias, in which the liability
ultimately falls upon the employer, for his failure to exercise good father diligence in the selection
and supervision of his employees.
Ordinarily, evidence demonstrating the employer's diligent supervision of its employee during the
performance of the latter's assigned tasks would be enough to relieve him of the liability imposed
by Arts. 2180 and 2176. The employer is not expected to exercise supervision over either the
employee's private activities or during the performance of tasks either unsanctioned by the former
or unrelated to the employee's tasks.
When a company gives full use and enjoyment of a company car to its employee, it in effect
guarantees that it is, like every good father, satisfied that its employee will use the privilege
reasonably and responsively.
As such, in providing for a company car, the company owes a responsibility to the public to see to
it that the managerial or other employees to whom it entrusts virtually unlimited use of a company
issued car are able to use the company car capably and responsibly.
[There must be evidence] as to whether or not the company took the steps necessary to
determine or ascertain the driving proficiency and history of L, to whom it gave full and unlimited
use of a company car. Not having been able to overcome the burden of demonstrating that it
should be absolved of liability for entrusting its company car to L, said company, based on the
principal of bonus pater familias, ought to be jointly and severally liable with the former for the
injuries sustained by V during the accident.

Torts & Damages; Damnum Absque Injuria

SPOUSES CUSTODIO v. CA
FEBRUARY 1996
There is a material injury between damages and injury. Injury is the illegal invasion of a legal
right; damage is the loss, hurt, or harm which results from the injury; and damages are the
recompense or compensation awarded for the damage suffered. Thus, there can be damage
without injury when the loss or harm was not the result of a violation of a legal duty (damnum
absque injuria).
In order that a plaintiff may maintain an action for injuries of which he complains, he must
establish that such injuries resulted from a breach of [a legal duty] which the defendant owed to
the plaintiff -- a concurrence of injury to the plaintiff and legal responsibility by the person causing
it. In order that the law will give redress for an act causing damage, that act must be not only
hurtful, but wrongful. There must be damnum et injuria.
In case at bar, although there was damage, there was no injury.
Contrary to claim of private respondents, petitioners could not be said to have violated the
principle of abuse of right. In order that said principle can be applied, the following requisites
must concur:
1) The defendant acted in a manner that is contrary to morals, good customs or public
policy;
2) The acts should be willful; and
3) There was damage or injury to the plaintiff. (Art. 21, Civil Code)
Petitioners' act in constructing a fence within their lot is a valid exercise of their right as owners,
hence not contrary to morals, etc. (see Art. 430, Civil Code). At the time the fence was
constructed, the lot was not subject to any servitudes. There was no easement of way existing in
favor of private respondents, either by law or contract.
The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie,
although the act may result in damage to another, for no legal right has been invaded. One may
use any lawful means to accomplish a lawful purpose and though the means adopted may cause
damage another, no cause of action arises in the latter's favor. The courts can give no redress
for hardship to an individual resulting from action reasonably calculated to achieve a lawful end
by lawful means.

Torts & Damages; Rule 111

MANIAGO v. CA
The right to bring an action for damages under the Civil Code must be reserved as required by
Rule 111, §1, otherwise it should be dismissed.
The right of the injured party to sue separately for the recovery of the civil liability whether arising
from crimes or quasi-delicts must be reserved otherwise, they will be deemed instituted with the
criminal action. (Dulay v. CA, 243 SCRA 220 [1995]; Yakult v. CA, 190 SCRA 347 [1990])

Torts & Damages; Actual & Moral damages

TRANS-ASIA SHIPPING v. CA
March 1996
Petitioner's ship was unseaworthy even before it embarked on a voyage, thus causing private
respondent to be late for work by half a day.
Art. 698, Code of Commerce must be read in relation with Arts. 2199 - 2201, 2208 and 21, Civil
Code. As such, petitioner is liable for any pecuniary loss or loss of profits which the private
respondent may have suffered by reason of petitioner's failure to observe extraordinary diligence.
However, in case at bench, private respondent's delay was due to his insistence on
disembarking, which forced the vessel to return to its port of origin. Had he remained on the
vessel, it would have reached it destination, albeit, half a day late. Moreover, private respondent
failed to prove that he did not receive his salary, nor that his absence was not excused. Thus, no
actual damages can be awarded.
But moral and exemplary damages must be awarded as petitioner allowed its vessel to leave the
port of origin with full awareness that it was unseaworthy, hence, it acted with bad faith and in a
wanton and reckless manner.

Torts & Damages; Actual damages

MALALUAN v. COMELEC
March 1996
COMELEC declared private respondent Evangelista the winner in an election contest and
awarded actual damages, notwithstanding the fact that the controversy had become moot and
academic on account of the expiration of the term of office.
In case at bench, the question as to damages remains ripe for adjudication. Petitioner contends
that the damages (attorney's fees, xerox expenses, unearned salary and emoluments) were not
alleged nor proved during trial.
In light of Arts. 2199 and 2201, Civil Code, actual damages are appropriate only in breaches of
obligations in cases of contracts and quasi-contracts, and on the occasion of crimes and quasi-
delicts. Thus, the of a party in an election case for actual damages must hinge upon these. In
their absence, the claimant must be able to point out a specific provision of law authorizing a
money claim for election protest expenses against the losing party. (Atienza, 239 SCRA 298) For
instance, the claimant may cite Arts. 19, 20 and 32(5), Civil Code, which create obligations not by
contract, crime or negligence, but directly by law.
We rule that no breach of contract or quasi-contract nor tortious act nor crime may make
petitioner liable for actual damages. Further, private respondent has not been able to point out to
a specific provision of law authorizing a money claim for election protest expenses against the
losing party. Insofar as the award of protest expenses and attorney's fees are concerned, We
find them to have been awarded without basis, the election protest not having been clearly
unfounded.

Torts & Damages: Exemplary damages

PEOPLE v. PATROLLA JR. Y VEGA
March 1996
No factual basis for the award of moral damages. Exemplary damages may be awarded in
criminal cases where the crime was committed with one or more aggravating circumstances. No
aggravating circumstance is present, other than treachery, which qualified the killing to murder
and abuse of superior strength which was however absorbed in treachery, to warrant an award of
thereof.

Torts & Damages; Loss of luggage

SABENA v. CA
March 1996
Petitioner contends that the alleged negligence of private respondent should be considered the
primary cause of the loss of her luggage, as despite her awareness that the flight ticket had been
confirmed only for Casablanca and Brussels, and that her flight from Brussels to Manila had yet
to be confirmed, she did not retrieve the luggage upon arrival at Brussels.
It remained undisputed that private respondent's luggage was lost while in the custody of
petitioner. When she discovered her bag was missing, she promptly accomplished and filed a
Property Irregularity report, followed up her claim, and even filed a formal letter-complaint. She
felt relieved when she was advised that her luggage had been found, with its contents intact when
examined, and that she could expect it to arrive 4 days later. The then waited anxiously only to
be told later that her luggage had been lost for the second time. Thus, it was clear that petitioner
was guilty of gross negligence.
In Alitalia v. IAC (192 SCRA 9, 16-18), the Court held: "The Warsaw Convention however denies
to the carrier availment of the provisions which exclude or limit his liability, if the damage is
caused by his wilful misconduct or by such default on his part as, in accordance with the law of
the court seized of the case, is considered to be equivalent to wilful misconduct xxx The Hague
Protocol amended the Warsaw Convention by removing the provision that if the airline took all
necessary steps to avoid the damage, it could exculpate itself completely, and declared the
stated limits of liability not applicable 'if it is proved that the damage resulted from an act or
omission of the carrier xxx'
The Convention does not thus operate as an exclusive enumeration of the instances of an
airline's liability, or as an absolute limit of the extent of that liability. xxx [I]t should be deemed a
limit of liability only in those cases where the cause of death or injury to person, or destruction,
loss or damage to property or delay in its transport is not attributable to or attended by any willful
misconduct, etc.

PNB v. CA and FLORES

April 1996
Moral damages awarded must be commensurate with the loss or injury suffered. Moral damages
though incapable of pecuniary estimations, are in the category of an award designed to
compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer.
Moral damages are emphatically not intended to enrich a complainant at the expense of the
defendant. They are awarded only to enable the injured party to obtain means, diversion or
amusements that will serve to obviate the moral suffering he has undergone, by reason of the
defendant's culpable action. Its award is aimed at the restoration, within the limits of the possible,
of the spiritual status quo ante, and it must be proportional to the suffering inflicted.
Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a
deterrent against or as a negative incentive to curb socially deleterious actions.

BALIWAG TRANSIT v. CA
May 1996
Commercial Law & Civil Law/Transportation & Torts/Common Carriers & Negligence: The use of
a kerosene lamp substantially complies with Section 34 (g) of the Land Transportation Code.
The aforequoted law clearly allows the use not only of an EWD of the triangular reflectorized
plates variety but also parking lights or flares visible one hundred meters away. No negligence,
therefore, may be imputed to A & J Trading and its driver.
To prove actual damages, the best evidence available to the injured party must be presented.
The court cannot rely on uncorroborated testimony whose truth is suspect, but must depend upon
competent proof that damages have been actually suffered.
Second, as regards lost earnings, Leticia earned P5,000 a month, but was forced to stop working
due to her injuries. Considering the nature and extent of her injuries and the length of time it
would take her to recover, we find it proper that Baliwag should compensate her lost income for
five (5) years. Third, the award of moral damages is in accord with law. In a breach of contract
of carriage, moral damages are recoverable if the carrier, through its agent, acted fraudulently or
in bad faith. The evidence shows the gross negligence of the driver of Baliwag bus which
amounted to bad faith.
Finally, we find the award of attorney's fees justified. The complaint for damages was instituted
on December 15, 1982, following the unjustified refusal of Baliwag to settle their claim. The
Decision was promulgated by the trial court only about nine years later. Numerous pleadings
were filed. Given the complexity of the case and the amount of damages involved, the award of
P10,000.00 is just and reasonable.

PHILIPPINE AIRLINES v. CA & DR. & MRS. MIRANDA

It is now firmly settled that moral damages are recoverable in suits predicated on breach of a
contract of carriage where it is proved that the carrier was guilty of fraud or bad faith. Inattention
to and lack of care for the interests of its passengers amount to bad faith. What the law considers
as bad faith which may furnish the ground for an award of moral damages would be bad faith in
securing the contract and in the execution thereof, as well as in the enforcement of its terms, or
any other kind of deceit. Such unprofessional and proscribed conduct is attributable to petitioner
airline.
It must, of course, be borne in mind that moral damages are not awarded to penalize the
defendant but to compensate the plaintiff. In a contractual or quasi-contractual relationship,
exemplary damages, on the other hand, may be awarded only if the defendant had acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner. Attorney's fees in the concept of
damages may be awarded where there is a finding of bad faith. The evidence on record amply
sustains that the awards assessed against petitioner are justified and reasonable.

Civil Law/Damages
MR. & MRS. ENGRACIO FABRE & PORFIRIO CABIL v. CA, THE WORD FOR THE WORLD
CHRISTIAN FELLOWSHIP, et al.
July 1996
The CA erred in increasing the amount of compensatory damages because private respondents
did not question this award as inadequate. To the contrary, the award of P500,000 by the RTC as
actual damages is reasonable considering the contingent nature of her income as a casual
employee of a company and as distributor of beauty products and the fact that the possibility that
she might be able to work again has not been foreclosed.
With respect to the other awards:
Moral damages are granted since the driver's gross negligence amounted to bad faith.
Exemplary damages and attorney's fees proper. Error for CA to increase award of moral
damages and reduce attorney's fees, for same reason as compensatory damages.
Bus driver and owners jointly and severally liable.

BALIWAG TRANSIT v. CA, DIVINA VDA. DE DIONISIO, et al.

G.R. No. 116624, Septemer 1996
Civil Law/Torts and Damages; Employer's vicarious liability: 1) Circumstances showing
negligence of driver: he boarded the bus, sat on the driver's seat and was at the steering wheel
when the bus moved pinning down the deceased who was reparing the defective brake system
below. The driver should have known that his brake system was being repaired as he was the
one who told the deceased to do so. The driver should have partked the bus properly and safely.
After alighting from the bus to tell the gasman to fill the tank, he should have placed a stopper or
any hard object against a tire or two of the bus. But without taking the necessary precautions, he
boarded the bus, causing it to move, which lead to the accident.
2) Presumption of negligence on employer's part re: selection of or supervision over
employee, rebuttable by clear showing of good father diligence. Hence, to escape solidary
liability for quasi-delict committed by an employee, the employer must adduce sufficient proof that
it exercised such degree of care. (citations omitted)
3) Actual damages: life expectancy and loss of earning capacity; pecuniary loss, loss of
support and service; and moral and mental suffering. The loss of earning capacity is based on 2
factors: number of years on the basis of which the damages shall be computed, and the rate at
which the loss sustained by the heirs should be fixed. (citations omitted) [Gives Villa Rey
formula.]

FOOD TERMINAL, INC. (FTI) v. CA & TAO DEVT., INC.

September 1996
Petitioner argues that the CA erred in affirming the rate of interest imposed by the trial court. This
contention is well-taken. The CA incorrectly applied the provisions of CB Circular No. 416
referring to legal interest in a loan or forbearance of money, or to cases where money is
transferred from one person to another and the obligation to return the same or a portion thereof
is adjudged. Any other monetary judgment does not fall within its coverage for such imposition is
not within the ambit of authority granted to the CB. When an obligation not constituting a loan or
forbearance of money is breached then an interest on the amount of damages awarded may be
imposed at the court's discretion at the rate of 6% p.a. in accordance with Art. 2209, NCC.
Indeed, the monetary judgment in favor of Tao does not involve a loan or forbearance of money,
hence, the proper imposable rate of interest is 6%. However, as declared in Eastern Shipping v.
CA (234 SCRA 78), the interim period from the finality of the judgment awarding a monetary claim
and until payment thereof, is deemed to be equivalent to a forbearance of credit. Thus, from the
time the judgment becomes final until its full satisfaction, the applicable rate of legal interest shall
be 12%.
The awards of the trial court shall earn interest at the rate of 6% p.a. from 15 May 1984 (the date
fixed by the trial court) until fully satisfied, but before judgment becomes final. From date of
finality of judgment until the obligation is totally paid, a rate of 12% is imposed.

PEOPLE v. ERMELINO SEQUIÑO, et al.

G.R. No. 117397, November 1996
We do not agree with the awards of moral and exemplary damages. There is no factual basis
therefore insofar as 2 of the private complainants are concerned since they did not ask for and
testify thereon. Only 1 private complainant asked for moral damages of P50,000.00 for her
worries due to the death of her husband. As to exemplary damages, the law is clear that they are
recoverable in criminal cases only when the crime was committed with one or more aggravating
circumstances, none of which are proven here.

VIRGILIO M. DEL ROSARIO & CORAZON PAREDES-DEL ROSARIO v. CA & METAL

FORMING CORPORATION (MFC)
G.R. No. 118325, Jan. 29, 1997
There is merit in the petition. The issue is whether or not MFC is answerable to petitioners for the
damage caused to petitioners' residence when its roof, made of shingles purchased from and
installed by the former, was blown away by a typhoon. The Court rules that it is.
What matters here is that MFC's employees delivered and installed the shingles. Thus, all the
quibbling about whether Puno acted as agent of MFC or the spouses, is pointless. The matter is
not a factor in determining MFC's liability for its workers' use of inferior materials and their
defective installation of the shingles. What likewise matters is that MFC's employees, in installing
the shingles, used inferior materials and assembled them in a manner contrary to specifications,
in bad faith and with gross negligence. Hence, MFC infringed and is liable on its warranties.
Unfortunately, no evidentiary foundation for actual damages, hence must be struck down. But
grant of moral damages upheld since with adequate proof and MFC acted in bad faith (Art. 2220,
NCC); likewise with exemplary damages. But both awards must be reduced. Grant of attorney's
fees struck down since dealt with only in dispositive portion of the RTC decision.

1995

Civil Law/Torts & Damages

FAR EAST BANK v. CA
241 SCRA 671(1995 Feb)
A quasi-delict can be the cause for breaching a contract that might thereby permit the application
of applicable tort principles even where there is a pre-existing contract between plaintiff and
defendant.

Civil Law/Torts & Damages

CHUA v. CA
242 SCRA 341(1995 Mar)
Malicious prosecution has been expanded to include baseless civil suits which are meant to
harass or humiliate a defendant, but both malice and lack of probable cause must be clearly
shown to justify an award of damages.

OBLIGATIONS AND CONTRACTS

2000

Contracts; Sales; Ownership

Archipelago Mgmt & Mktng Corp v. CA
May 2000

This is a land dispute between Rosalina Morales & Archipelago Mgmt & Mktg Corp. The land
was originally owned by Rosalina. The corp. claims ownership by virtue of a deed of absolute
sale allegedly executed between Rosalina & the corp. Rosalina denies the contract & contends
that the signature was obtained by fraud through the machinations of her husband Emetero
Morales.

RULINGS:
(1) There is fraud when one party is induced by the other to enter into a contract through and
solely because of the latter's insidious words or machinations. It was clearly demonstrated that
fraud attended the execution of the deed of sale. -
(2) Irregularities also impair the notarization of the deed of sale.
(3) Acts of ownership were exercised by Rosalina even after the alleged execution of the deed
of sale. She continued to possess the disputed property, pay the real estate taxes and collected
rentals from the lessees. - Ownership of a property means, among others, the right to enjoy and
dispose of it, subject to limitations established by law. The law "recognizes in the owner the right
to enjoy and dispose of the thing owned. The right to enjoy includes: the jus utendi or the right to
receive from the thing what it produces, and the jus abutendi or the right to consume the thing by
its use." Further, "[t]he right to dispose or the jus disponedi, ids the power of the owner to
alienate, encumber, transform, and even destroy the thing owned." In the present case, even
after Rosalina allegedly sold her paraphernal property to herein petitioner, she still performed acts
of ownership over the same. Sixteen days after the alleged execution of the Deed of Sale, she
entered into a contract of lease with Siblings Rodolfo and Nympha as lessees. Furthermore,
Rosalina (and her heirs) continued to possess the disputed property even after the alleged sale.
She also paid the real estate taxes and collected rentals from the lessees. In fact, after the
alleged execution of the questioned Deed of Sale, she even executed a holographic will
bequeathing the property to her husband Emeterio, her caretaker Baonguis and her children by
her first husband.
In stark contrast, petitioner never exercised acts of ownership over the property. Indeed, aside
from the alleged Deed of Sale, it presented no other evidence of its ownership such as books,
records or financial statements. Moreover, it did not pay the real estate taxes even after a new
TCT Deed, It must also be underscored that Atty. Narciso Morales, president of the petitioner
corporation, knew of the subsequent acts of Rosalina, but offered no objection thereto.

Contracts; Sales
GoldenRod Inc v. CA
May 2000

FACTS: Land dispute again between Barreto Realty & GoldenRod. Barreto Realty executed an
agreement w/ GoldenRod wherein Barreto accepted GoldenRod's offer to buy the properties of
GoldenRod which was subject to imminent foreclosure. Later on, GoldenRod informed Barreto
then its President that it would not go through w/ the sale because of the denial of UCPB of its
request for an extension of time to pay the obligation. He also demanded the refund of the
earnest money of P1M which it gave to Barreto.
RULINGS: (1) An earnest money is part of the purchase price. - We sustain petitioner. Under
Article 1482 of the Civil Code, whenever earnest money is given in a contract of sale, it shall be
considered as part of the purchase price and as proof of the perfection of the contract. Petitioner
clearly stated without any objection from private respondents that the earnest money was
intended to form part of the purchase price. It was an advance payment which must be deducted
from the total price, especially in the absence of a clear and express agreement thereon.
(2)Failure by one party to oppose the other party's declaration of rescission of a contract amounts
to an admission of the validity of the rescinding party's claim.
(3)Rescission of a contract creates the obligation to return the things which were the object of the
contract, together with their fruits and interest. - Article 1385 of the Civil Code provides that
rescission creates the obligation to return the things which were the object of the contract
together with their fruits and interest. The vendor is therefore obliged to return the purchase price
paid to him by the buyer if the latter rescinds the sale, or when the transaction was called off and
the subject property had already been sold to a third person, as what obtained in this case.
Therefore, by virtue of the extrajudicial rescission of the contract to sell by petitioner without
opposition from private respondents who, in turn, sold the property to other persons, private
respondent BARRETO REALTY, as the vendor, had the obligation to return the earnest money of
P1,000,000.00 plus legal interest from the date it received notice of rescission from petitioner, i.e.,
30 August 1998, up to the date of the return of payment. It would be most inequitable if
respondent BARRETO REALTY would be allowed to retain petitioner's payment of P1,000,000.00
and at the same time appropriate the proceeds of the second sale made to another.

Oblicon; Estoppel
METROBANK v. CA
G.R. No. 122899, June 8, 2000.
Petitioner METROBANK is estopped from refusing the discharge of the real estate mortgage on
the claim that the subject property still secures "other unliquidated past due loans." In Maneclang
vs. Baun, 14 this Court enumerated the requisites for estoppel by conduct to operate, to wit:
there must have been a representation or concealment of material facts;
the representation must have been with knowledge of the facts;
the party to whom it was made must have been ignorant of the truth of the matter; and
it must have been with the intention that the other party would act upon it.
Petitioner METROBANK is thus barred from taking a stand inconsistent with its representation
upon which respondent GTP, as an innocent third person to the real mortgage agreement, placed
exclusive reliance. Respondent GTP had the reasonable right to rely upon such representations
as true, considering that it had no participation whatsoever in the mortgage agreement and the
preparation of the statement of account, coupled with the expectation that a reputable banking
institution such as petitioner METROBANK do conduct their business concerns in the highest
standards of efficiency and professionalism. For an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved as against a person
relying thereon. A party may not go back on his own acts and representations to the prejudice of
the other party who relied upon them. In the law of evidence, whenever a party has, by his own
declaration, act or omission, intentionally and deliberately led another to believe a particular thing
true, and to act upon such belief, he cannot, in any litigation arising out of such declaration act, or
omission, be permitted to falsify it.

Oblicon; Contractsl Sales

ROMAGO ELECTRIC CO. v. CA
G.R. No. 125947, June 8, 2000.
A contract is defined as a meeting of minds between two persons whereby one binds himself with
respect to the other, to give something or to render some service. Generally, contracts need not
be in writing in order to be valid. Contracts are obligatory in whatever form they may have been
entered into provided all essential requisites for their validity are present. We are not convinced
that there was a meeting of the minds between Romago and TSI regarding the question of
sharing of payment of rentals and utilities charges, pending the consummation of the Stock
Purchase Agreement. There is no adequate showing that TSI consented to any such verbal
agreement. On the contrary, TSI through its General Manager Severino Lim and Director Jorge
Salazar denied the existence of such verbal agreement or understanding.
Sales – …the understanding of the parties was that, unless and until complete and substantial
payment on the Motown transaction shall have been made, TSI’s occupancy is allowed as a
concession or as "come-on" or incentive for the sale because they could immediately enter into
the premises and begin renovation work. Apparently, as a result of this understanding, no
mention was made by the parties in the Motown Agreement regarding TSI taking immediate
possession of portions of the premises and of any interim sharing of payment of rentals and
utilities charges. …since both Romago and TSI paid equally two months rents and utilities
charges for the four months period …they shared the use and occupancy of the subject leased
premises, the parties actually paid their respective share (of rentals and utilities charges) out of
equity and mutual consideration and not pursuant to any verbal agreement existing between
them.

Oblicon; Trust; Constructive Trust

YUCHENGCO v. REPUBLIC
G.R. No. 131127, June 8, 2000
Considering that petitioner seeks to recover properties, the ownership and possession of which
he was allegedly deprived through fraud, duress and/or coercion, we hold that, assuming
hypothetically these averments to be true, the legal relationship of constructive trust was present
among the parties concerned in the said transactions.
Constructive trust is that created by reason of equity to answer the demands of justice and
prevent unjust enrichment. It arises against one, who, by fraud, duress or abuse of confidence,
obtains or holds the legal right to property which he ought not, in equity and good conscience,
hold. Correspondingly, actions thereon prescribe after ten (10) years as provided by Article 1144
of the Civil Code:
The following actions must be brought within ten (10) years from the time the right of action
accrues:
1. Upon a written contract;
2. Upon an obligation created by law;
3. Upon a judgment.
Article 1154 of the Civil Code is applicable by parallelism, to wit: The period during which the
obligee was prevented by fortuitous event from enforcing his right is not reckoned against him.
Contracts; Perfection
JARDINE DAVIES INC. v. CA
G.R. No. 128066 , June 19, 2000.
A contract is defined as "a juridical convention manifested in legal form, by virtue of which one or
more persons bind themselves in favor of another for others, or reciprocally, to the fulfillment of a
prestation to give, to do, or not to do." There can be no contract unless the following requisites
concur: (a) consent of the contracting parties; (b) object certain which is the subject matter of the
contract; and, (c) cause of the obligation which is established. A contract binds both contracting
parties and has the force of law between them.
Contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made
by the offeror. From that moment, the parties are bound not only to the fulfillment of what has
been expressly stipulated but also to all the consequences which, according to their nature, may
be in keeping with good faith, usage and law. To produce a contract, the acceptance must not
qualify the terms of the offer. However, the acceptance may be express or implied. For a contract
to arise, the acceptance must be made known to the offeror. Accordingly, the acceptance can be
withdrawn or revoked before it is made known to the offeror.
Cited case: we distinguished between a condition imposed on the perfection of a contract and a
condition imposed merely on the performance of an obligation. While failure to comply with the
first condition results in the failure of a contract, failure to comply with the second merely gives
the other party options and/or remedies to protect his interests.
…by the unilateral cancellation of the contract, the defendant has acted with bad faith and this
was further aggravated by the subsequent inking of a contract between defendant and co-
defendant. It is very evident that (the defendant) thought that by the expedient means of merely
writing a letter would automatically cancel or nullify the existing contract entered into by both
parties after a process of bidding. This, to the Court's mind, is a flagrant violation of the express
provisions of the law and is contrary to fair and just dealings to which every man is due.

Oblicon; Novation
ESPINA v. CA
G.R. No. 116805, June 22, 2000.
The novation must be clearly proved since its existence is not presumed. In this light, novation is
never presumed; it must be proven as a fact either by express stipulation of the parties or by
implication derived from an irreconcilable incompatibility between old and new obligations or
contracts. Novation takes place only if the parties expressly so provide, otherwise, the original
contract remains in force. In other words, the parties to a contract must expressly agree that they
are abrogating their old contract in favor of a new one.
Where there is no clear agreement to create a new contract in place of the existing one, novation
cannot be presumed to take place, unless the terms of the new contract are fully incompatible
with the former agreement on every point. Thus, a deed of cession of the right to repurchase a
piece of land does not supersede a contract of lease over the same property.
On February 13, 1993, petitioner gave respondent a notice to vacate the premises and to pay his
back rentals. Failing to do so, respondent's possession became unlawful and his eviction was
proper.
Now respondent contends that the petitioner's subsequent acceptance of such payment
effectively withdrew the cancellation of the provisional sale. We do not agree. Unless the
application of payment is expressly indicated, the payment shall be applied to the obligation most
onerous to the debtor. In this case, the unpaid rentals constituted the more onerous obligation of
the respondent to petitioner. As the payment did not fully settle the unpaid rentals, petitioner's
cause of action for ejectment survives.

Contracts; Statute of Frauds; Implied Trusts; Sales

VIEWMASTER CONSTRUCTION CORP vs. ROXAS, et al,
G.R. No. 133576, July 13, 2000
Petitioner Viewmaster agreed to act as the guarantor of Allen Roxas for the loan that the latter
needs from FMIC if herein respondent Allen Roxas shall sell fifty percent (50%) of his
shareholdings in State Investment and shall undertake a joint venture project with Plaintiff
Viewmaster to co-develop the two real estate properties in Quezon City and Las Piñas, and if
Roxas shall sell and petitioner Viewmaster shall purchase fifty percent (50%) of the latter’s total
eventual acquisitions of shares of stock in State Investment. These were not put into writing.
The court a quo did not err in finding that the Statute of Frauds covers the foregoing agreements.
The verbal agreement entered into between petitioner Viewmaster and respondent Allen Roxas
was an agreement that by its terms is not to be performed within a year from the making thereof.
To be taken out of the operation of the Statute of Frauds, the agreement must be fully performed
on one side within one year from the making thereof.
"Contracts which by their terms are not to be performed within one year may be taken out of the
Statute of Frauds through performance by one party thereto. In order, however, that a partial
performance of the contract may take the case out of the operation of the statute, it must appear
clear that the full performance has been made by one party within one year, as otherwise the
statute would apply." [Babao vs. Perez, 102 Phil756.]
In the case at bar, since neither of the parties has fully performed their obligations within the one-
year period, then it behooves this Court to declare that the case falls within the coverage of the
Statute of Frauds. It will not take a mathematical genius to figure out that the sale of fifty percent
(50%) of Allen Roxas’s shareholdings in State Investment would amount to more than five
hundred pesos (P500.00). Thus, to be enforceable, the contract must be in writing.
It is contended that an implied trust exists between petitioner and Allen Roxas. The
implied trust was allegedly created by operation of law in accordance with Article 1448 of the New
Civil Code. Quoted below is the provision referred to:
"Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one
party but the price is paid by another for the purpose of having the beneficial interest of the
property. The former is the trustee, while the latter is the beneficiary. However, if the person to
whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the
sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the
child." (Emphasis Ours)
From the above, it is quite clear that in order for the provisions of Article 1448 to apply in the case
at bar "the price is paid by another for the purpose of having the beneficial interest of the
property."
It bears stressing that respondent Allen Roxas obtained a loan from First Metro Investments, Inc.
not from petitioner Viewmaster. It was FMIC that provided the funds with which Allen Roxas
acquired the controlling interest in State Investment Trust, Inc. FMIC lent the money to Roxas
because the latter needed the money and not to obtain any beneficial interest in the shares of
stock in State Investment. Viewmaster merely facilitated the loan by acting as guarantor of the
loan and nothing more.

Contracts; Fraud
ARRIOLA vs. DEMETRIO
The law, however, requires that in case one of the parties to a contract is unable to read and
fraud is alleged, the person enforcing the contract must show that the terms thereof have been
fully explained to the former.
Consent, having been obtained by fraud, the deed entered into could be annulled.

Obligations and Contracts; Sales

PILIPINAS HINO vs. CA
It is, of course, a basic rule in evidence that a party must prove his own affirmative allegations. In
civil cases, the burden of proof is on the plaintiff to establish his case by a preponderance of
evidence. In affirmative averment the onus probandi falls on pleader’s shoulder.
Obligation arising from contracts have the force of law between the contracting parties and should
be complied with in good faith.
Agreement between the parties, not being contrary to law, morals, good customs, public policy, or
public order has therefore the force of law between the parties.
Equity is applied only in the absence of, and never against, statutory law or judicial rules of
procedure.
Sales: While this Court recognizes that in contracts to sell even if the contract is terminated the
seller can retain the sums already received or paid, such can be done only if it is expressly
provided for in the contract.

ACE HAULERS CORP. vs. CA

Civil liability coexists with criminal responsibility. In negligence cases, the offended party (or his
heirs) has the option between an action for enforcement of civil liability based on culpa criminal
under Article 100 of the Revised Penal Code and an action for recovery of damages based on
culpa aquiliana under Article 2176 of the Civil Code. Article 2177 of the Civil Code, however,
precludes recovery of damages twice for the same negligent act or omission.
Consequently, a separate civil action for damages lies against the offender in a criminal act,
whether or not he is criminally prosecuted and found guilty or acquitted, provided that the
offended party is not allowed, if he is actually charged also criminally, to recover damages on
both scores, and would be entitled in such eventuality only to the bigger award of the two,
assuming the awards made in the two cases vary.

Oblicon
PRODUCERS BANK OF THE PHILIPPINES, et al vs. BPI & CA
G.R. No. 125167, September 8, 2000
The nature of an action is determined by the allegations of the complaint.
In this case, petitioners' complaint alleges facts constituting its cause of action based on a written
contract, the deed of pledge. Hence, the prescriptive period is ten (10) years. The pledge was
executed in August 1980 and petitioners refused to register the shares pledged after respondent
acquired the same. Respondent commenced suit in 1989, before the ten-year prescriptive period
expired.

Oblcion; Rescission
SBMA vs. UNIVERSAL INTERNATIONAL GROUP OF TAIWAN
G.R. No. 131680, September 14, 2000
A stipulation authorizing a party to extrajudicially rescind a contract and to recover possession of
the property in case of contractual breach is lawful. But when a valid objection is raised, a judicial
determination of the issue is still necessary before a takeover may be allowed. In the present
case, however, respondents do not deny that there was such a breach of the Agreement; they
merely argue that the stipulation allowing a rescission and a recovery of possession is void.
Hence, the other party may validly enforce such stipulation.

Oblicon; Interpretation of contracts

PILIPINAS BANK vs. COURT OF APPEALS, HON. ELOY R. BELLO, In his capacity as Presiding
Judge, RTC_Manila, Branch 15, And MERIDIAN ASSURANCE CORPORATION
G.R. No. 141060, September 29, 2000
Petitioners Complaint merely alleged that under the provisions of the Policy, it was entitled to
recover from private respondent the amount it lost during the heist. It did not allege therein that
the Policys terms were ambiguous or failed to express the true agreement between itself and
private respondent. Such being the case, petitioner has no right to insist that it be allowed to
present Tubianosas testimony to shed light on the alleged true agreement of the parties,
notwithstanding its statement in its Pre_Trial Brief that it was presenting said witness for that
purpose.
Section 9, Rule 130 of the Revised Rules of Court expressly requires that for parol evidence to be
admissible to vary the terms of the written agreement, the mistake or imperfection thereof or its
failure to express the true agreement of the parties should be put in issue by the pleadings.
As correctly noted by the appellate court, petitioner failed to raise the issue of an intrinsic
ambiguity, mistake or imperfection in the terms of the Policy, or of the failure of said contract to
express the true intent and agreement of the parties thereto in its Complaint. There was
therefore no error on the part of the appellate court when it affirmed the RTCs Order disallowing
the recall of Tubianosa to the witness stand, for such disallowance is in accord with the rule that
when the terms of an agreement have been reduced to writing, it is considered as containing all
the terms agreed upon and there can be, between the parties and their successors_in_interest,
no evidence of such other terms other than the contents of the written agreement.

Contracts; Equitable Mortgage

TUAZON vs. CA, et al
G.R. No. 119794. October 3, 2000
Article 1602 of the Civil Code provides that a contact shall be presumed to be an equitable
mortgage by the presence of any of the following:
'(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument extending
the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
obligation.'"
Under Article 1604 of the New Civil Code, the provisions of Article 1602 shall also apply to a
contract purporting to be an absolute sale. And for these provisions of law to apply, two requisites
must concur: that the parties entered into a contract denominated as a contract of sale and that
their intention was to secure an existing debt by way of mortgage.
The present case is entirely different. Records on hand and the documentary evidence introduced
by the parties indubitably show no room for construction, Article 1365 of the New Civil Code on
reformation of contracts applies only if there is evidence, clear and convincing, that the parties did
agree upon a mortgage of subject property. Here, everything appears to be clear and
unambiguous and nothing is doubtful, within the contemplation of Article 1602. When the words of
the contract are clear and readily understandable, there is no room for construction. The contract
is the law between the parties. Said this Court:

Contracts; Extraordinary inflation

SINGSON vs. CALTEX (PHILIPPINES).
G.R. No. 137798. October 4, 2000
The only issue crucial to the present appeal is whether there existed an extraordinary inflation
during the period 1968 to 1983 that would call for the application of Article 1250 of the Civil Code
and justify an adjustment or increase of the rentals between the parties.
Article 1250 of the Civil Code states:
In case an extraordinary inflation or deflation of the currency stipulated should supervene, the
value of the currency at the time of the establishment of the obligation shall be the basis of
payment, unless there is an agreement to the contrary.
Article 1250 was inserted in the Civil Code of 1950 to abate the uncertainty and confusion that
affected contracts entered into or payments made during World War II, and to help provide a just
solution to future cases. The Court has held extraordinary inflation to exist when there is a
decrease or increase in the purchasing power of the Philippine currency which is unusual or
beyond the common fluctuation in the value of said currency, and such increase or decrease
could not have been reasonably foreseen or was manifestly beyond the contemplation of the
parties at the time of the establishment of the obligation.
“Erosion” is indeed an accurate description of the trend of decline in the value of the peso in the
past three to four decades. Unfortunate as this trend may be, it is certainly distinct from the
phenomenon contemplated by Article 1250.
Moreover, this Court has held that the effects of extraordinary inflation are not to be applied
without an official declaration thereof by competent authorities.

Contracts; Sales
SANTOS vs. HEIRS OF MARIANO, et al.
G.R. No. 143325. October 24, 2000
What determines the validity of a contract, in general, is the presence of the elements constituting
the same, namely, (1) consent of the contracting parties; (2) object certain which is the subject
matter of the contract; and (3) cause of the obligation which is established (Article 1318, Civil
Code). "The contract of sale is perfected at the moment there is a meeting of minds upon the
thing which is the object of the contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the provisions of the law governing the form of
contracts" (Article 1475, Civil Code).
Even with a duly executed written document purporting to be a contract of sale, the Court cannot
rule that the subject contracts of sale are valid, when the evidence presented in the courts below
show that there had been no meeting of the minds between the supposed seller and
corresponding buyers of the parcels of land in this case. The case is replete with evidence
tending to show that there was really no intention to sell the subject properties, and we need not
delve into these matters anew because such factual issues are beyond the scope of our review.
Suffice it to note that due execution of documents representing a contract is one thing, but
perfection of the contract is definitely another.

Contracts; Breach; Sales

DBP V. CA, et al.
G.R. No. 137557. October 30, 2000
The interest and penalty charges to be paid in case of delay in payments were expressly
stipulated in the Conditional Contract of Sale. Under the Civil Code, parties to a contract can
make stipulations therein provided they are not contrary to law, morals, good customs, public
order or public policy. There being no question as to the validity of the Conditional Contract of
Sale, the DBP correctly applied the provision on interests and penalty charges when private
respondents failed to pay on the dates agreed upon. No further notice to private respondents had
to be given to them.
Article 1374 of the Civil Code provides that "the various stipulations of a contract shall be
interpreted together, attributing to the doubtful ones that sense which may result from all of them
taken jointly."
[N]either the law nor the courts will extricate a party from an unwise or undesirable contract he or
she entered into with all the required formalities and with full awareness of its consequences."
Article 1229 of the Civil Code states that "Even if there has been no performance, the penalty
may also be reduced by the courts if it is iniquitous or unconscionable."
In the instant case, private respondents made regular payments to petitioner DBP in compliance
with their principal obligation. They failed only to pay on the dates stipulated in the contract. This
indicates the absence of bad faith on the part of private respondents and their willingness to
comply with the terms of the contract.
There was no substantial breach in the performance of private respondents' obligation. Article
1191 of the Civil Code provides that "The power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with what is incumbent upon him. The injured
party may choose between the fulfillment and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the
latter should become impossible . . ." Rescission of a contract will not be permitted for a slight or
casual breach, but only such substantial and fundamental breach as would defeat the very object
of the parties in making the agreement.
Notwithstanding private respondents' delay in paying the amortizations, petitioner DBP
unqualifiedly accepted the payments made by them. Hence, petitioner lost its right to rescind the
sale on the basis of such late payments.

Contracts; Application of Payments

PACULDO vs. REGALADO
G.R. No. 123855. November 20, 2000
The right to specify which among his various obligations to the same creditor is to be satisfied first
rests with the debtor, as provided by law, to wit:
“Article 1252. He who has various debts of the same kind in favor of one and the same creditor,
may declare at the time of making the payment, to which of them the same must be applied.
Unless the parties so stipulate, or when the application of payment is made by the party for
whose benefit the term has been constituted, application shall not be made as to debts which are
not yet due.
If the debtor accepts from the creditor a receipt in which an application of the payment is made,
the former cannot complain of the same, unless there is a cause for invalidating the contract.
There was no clear assent by petitioner to the change in the manner of application of payment.
The petitioner’s silence as regards the application of payment by respondent cannot mean that he
consented thereto. There was no meeting of the minds. Though an offer may be made, the
acceptance of such offer must be unconditional and unbounded in order that concurrence can
give rise to a perfected contract. Hence, petitioner could not be in estoppel.
Assuming arguendo that, as alleged by respondent, petitioner did not, at the time the payments
were made, choose the obligation to be satisfied first, respondent may exercise the right to apply
the payments to the other obligations of petitioner. But this is subject to the condition that the
petitioner must give his consent. Petitioner’s silence is not tantamount to consent. The consent
must be clear and definite.
Under the law, if the debtor did not declare at the time he made the payment to which of his debts
with the creditor the payment is to be applied, the law provided the guideline--no payment is to be
made to a debt that is not yet due and the payment has to be applied first to the debt most
onerous to the debtor.

Contracts; Sales
PUA, vs. CA, et al.
G.R. No. 134992. November 20, 2000
The appellate court correctly found that since said Johnny P. Uy was not even conceived yet at
the time of the alleged sale, he therefore had no legal personality to be named as a buyer in the
said deed of sale. Neither could he have given his consent thereto.
Article 1318 of the New Civil Code provides: There is no contract unless the following requisites
concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
The contract of sale is perfected at the moment there is a meeting of the minds upon the thing
which is the object of the contract and upon the price. Consent is manifested by the meeting of
the offer and the acceptance upon the thing and the cause which are to constitute the contract.
Unemancipated minors, insane or demented persons, and deaf-mutes who do not know how to
write can not validly give consent to contracts. In the instant case, Johnny P. Uy could not have
validly given his consent to the contract of sale, as he was not even conceived yet at the time of
its alleged perfection. The appellate court, therefore, correctly ruled that for lack of consent of one
of the contracting parties, the deed of sale is null and void
Coloma could not have acted as representative of Johnny P. Uy. In the first place, she did not
have the right to represent Johnny P. Uy for lack of legal authority to act for and in behalf of said
minor. It is well-settled that without authority from the Court, no person can make a valid contract
for or on behalf of a minor. Besides, petitioners themselves insist that Coloma was not acting in a
representative capacity when she purchased the subject, but rather, that she was acting in her
own behalf as the actual buyer of said land.
An absolutely simulated contract is not susceptible of ratification.

Obligations; Payment
SPOUSES BUENAFLOR, vs. CA, et al
G.R. No. 142021. November 29, 2000
In the civil law sense, it means not only the delivery of money but also the performance, in any
other manner, of the obligation. The Civil Code enunciates a counterpart principle to the rule on
liberal construction under Section 6, Rule 1 of the 1997 Rules of Civil Procedure. Article 1234 of
the Civil Code allows substantial performance in the payment of obligations. In order that there
may be substantial performance of an obligation, there must have been an attempt in good faith
to perform, without any willful or intentional departure therefrom. This concept of substantial
performance may be applied by analogy in the determination of question on the proper payment
of the appellate docket fees. In this case, there is good faith attempt to comply with the
requirements of the Rules regarding the manner of appeal from the decision of the Regional Trial
Court, without any willful or intentional departure therefrom. The postal money orders which were
intended for the payment of the appellate docket fees were actually sent to the trial court. They
were filed within the reglementary period and received by the trial court. The petitioners clearly
intended to file an appeal.

Contracts
ORTIGAS & CO. LTD. Vs CA, et. al
G.R. No. 126102. December 4, 2000
The contractual stipulations annotated on the Torrens Title, on which Ortigas relies, must yield to
the ordinance. When that stretch of Ortigas Avenue from Roosevelt Street to Madison Street was
reclassified as a commercial zone by the Metropolitan Manila Commission in March 1981, the
restrictions in the contract of sale between Ortigas and Hermoso, limiting all construction on the
disputed lot to single-family residential buildings, were deemed extinguished by the retroactive
operation of the zoning ordinance and could no longer be enforced. While our legal system
upholds the sanctity of contract so that a contract is deemed law between the contracting parties,
nonetheless, stipulations in a contract cannot contravene "law, morals, good customs, public
order, or public policy." Otherwise such stipulations would be deemed null and void.

Contracts; Characteristics
AYALA CORPORATION, vs. ROSA-DIANA REALTY AND DEVELOPMENT CORPORATION
G.R. No. 134284. December 1, 2000
Contractual obligations between parties have the force of law between them and absent any
allegation that the same are contrary to law, morals, good customs, public order or public policy,
they must be complied with in good faith. Hence, Article 1159 of the New Civil Code provides
"Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith."
The party guilty of violating the deed restrictions may only be held alternatively liable for
substitute performance of its obligation, that is, for the payment of damages.

Contracts; lease
LHUILLIER, vs. CA, et al.
G.R. No. 128058. December 19, 2000

A covenant to renew a lease, which makes no provision on its terms, implies an extension or
renewal subject to the same terms in the original lease contract. Since the parties did not make a
new one, the terms and conditions of the original except the provision on the rate and period of
lease are deemed extended. Corollarily, Art. 1678 of the Civil Code did not apply. 9 The parties
agreed that all improvements introduced by the lessee would accrue to the benefit of the owner at
the end of the lease, without reimbursement. 10 This stipulation, not being contrary to law,
morals, public order or public policy, binds the parties and is the law between them.

Civil Law/ Contracts/ Compromise

PETER CHUA LAO v. MACAPUGAY et al.
August 1999
In private respondent’s Comment to the petition, they bring to the Court’s attention a
Compromise Agreement executed by petitioner and private respondents whereby they mutually
agreed to settle amicably their dispute and to cause the dismissal of all pending cases filed by 1
party against the other by filing a joint motion to dismiss.
A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical
agreement by the CC. Art 202 provides that “a compromise is a contract whereby the parties by
making reciprocal concessions, avoid a litigation or put an end to one already commenced. The
CC does not only defines and authorizes compromises, it in fact encourages them in civil actions.
They are generally to be favored and cannot be set aside if the parties acted in good faith
and made reciprocal concessions to each other in order to terminate a case. However, the law
abhors settlement of criminal liability so that the compromise agreement cannot affect charges of
violation of RA 3019, sec 3(e) and (j) and Sec 4 and RPC Art 171, 172 par 2, Arts. 206 and 207.

1999

Contracts; Lease; Ejectment; Court Without Power to Extend Leases with Expired Contract
CHUA v. CA, IBARRA
Jan. 21, 1999
(1) Petitioners are not entitled to an extension of the time to occupy the premises in view of the
termination of the lease agreement on January 1, 1990; court have no power to extend lease with
a term.-As there was no longer any lease to speak of which could be extended, the MTC was in
effect making a contract for the parties which it obviously did not have the power to do. The
potestative authority of the courts to fix a longer term for a lease under Art. 1687 of the CC
applies only to cases where there is NO period fixed by the parties.
(2) Improvements made by lessees on the leased premises are not valid reasons for their
retention thereof; otherwise, a lessee would “improve” his landlord out of his property. – The fact
that petitioners allegedly made repairs on the premises in question is not a reason for them to
retain the possession of the premises. There is no provision of law which grants the lessees a
right of retention over the leased premises on that ground. Art. 448 of the CC, in relation to Art.
546, which provides for full reimbursement of useful improvements and retention of the premises
until reimbursements us made, applies only to a possessor in good faith, i.e., one who builds on a
land in the belief that he is the owner thereof. In a number of cases, the Court has held that this
right does not apply to a mere lessee, otherwise, it would always be in his power to “improve” his
landlord our of the latter’s property. Art. 1678 merely grants to such a lessee making in good faith
useful improvements the right to be reimbursed ½ of the value of the improvements upon the
termination of the lease, or, in the alternative, to remove the improvements if the lessor refuses to
make reimbursement.

Requisites for a Valid Contract; Basis for the Award of Damages

ABS-CBN v. CA, et al.,
Jan. 21, 1999

(1) Key issue for consideration in whether there was a perfected contract between VIVA and
ABS-CBN. – Resolved against ABS-CBN. A contract is a meeting of the minds between two
persons whereby one binds himself to give something or render some service to another for a
consideration. Contracts that are consensual in nature are perfected upon mere meeting of the
minds. Once there is concurrence between the offer and the acceptance upon the subject
matter, consideration, and terms of payment a contract is produced. When Mr. Del Rosario of
Viva met Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the package of
films, said package of 104 VIVA film was VIVA’s offer to ABS-CBN to enter into a new Film
Exhibition Agreement. But ABS-CBN, sent thru MS. Concio, counter-proposal in the form of a
graft contract proposing exhibition of 53 films for consideration of P35M. This counter-proposal
could be nothing less than the counter-offer of Mr.Lopez during his conference with Mr. Del
Rosario. Clearly, there was no acceptance of VIVA’s offer for it was met by a counter-offer which
substantially varied the terms of the offer. ABS-CBN made no unqualified acceptance of VIVA’s
offer hence, they underwent a period of bargaining.
(2) On the claim of RBS Corp for damages. – The award of moral damages cannot be granted in
favor of a corporation because being an artificial person and having existence only in legal
contemplation, it has no feelings, no emotions, no senses.
Exemplary damages are imposed by way of correction for the public good, in addition to
moral, temperate, liquidated, or compensatory damages. They are recoverable in criminal cases
as part of the civil liability when the crime was committed with one or more aggravating
circumstances; in quasi-delicts. It may be reiterated that the claims of RBS against ABS-CBN is
not based on contract, quasi-contract, delict, or quasi-delict. Hence, the claims of moral and
exemplary damages can only be based on Articles 19, 20, and 21 of the CC. Verily then, malice
or bad faith is at the core of Articles 19, 20, 21. Malice or bad faith implies a conscious and
intentional design to do a wrongful act for a dishonest purpose or moral obliquity. Such must be
substantiated by evidence. There is no adequate proof that ABS-CBN was inspired by malice or
bad faith. It was honestly convinced of the merits of its cause after it had undergone serious
negotiations culminating in its formal submission of a draft contract. Settled is the rule that the
adverse result of an action does not have meant to impose a penalty on the right to litigate. If
damages result from a person’s exercise of a right, it is damnum absque injuria.

Contracts; Lease with Option to Purchase; Exception of Period to Exercise Option

DIZON, ET AL. v. CA
Jan. 28, 1999
Private respondent’s right to exercise the option to purchase expired with the termination
of the original contract of lease for one year. Hence, there was an implicit renewal of the contract
of lease on a monthly basis. The other terms of the original contract of lease which are revived in
the implied new lease under Under Article 1670 of the CC are only those terms which are
germane to the lessee’s right of continued enjoyment of the property leased. Therefore, an
implied new lease does not ipso facto carry with it any implied revival of private respondent’s
option to purchase (as lessee thereof) the leased premises. The provision entitling the lessee the
option to purchase the leased premises is not deemed incorporated in the impliedly renewed
contract because it is alien to the possession of the lessee. Private respondent’s right to
exercise the option to purchase expired with the termination of the original contract of lease for
one year.

Principle of Relativity of Contracts; Prescription or Adverse Possession

RAMOS v. CA, BAUTISTA, ET AL.
Feb. 3, 1999

(1) Assuming arguendo that the existence of the documents was properly established, still, the
supposed agreement embodied in the 2 documents bound only the parties thereto, namely
Tolentino and the petitioners, because the latter failed t prove that these were later registered as
to operate against the whole world. They could not have bound 3rd person like private
respondent because of the basic civil law principle of relativity of contracts. This basic principle
applies even if the sales were supposedly concluded at a time prior to the operation of the
Torrens system of land registration over the properties involved.
(2) No title to registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession. – Bautista’s calim to the properties appears incontrovertible.
Under the Cadastral Act, the OCTs issued to the original registrant, shall have the same effect as
CTs granted to an application for registration of land under the Land Registration Act, because
“no title to registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession.”

Oblicon; Option; Contracts

Carceller v. CA, SIHI
Feb. 10, 1999
Petitioner as lessee and SIHI as lessor entered into a lease contract with option to
purchase for a period of 18 months to expire on January 30, 1986. On Jan. 7, 1986, SIHI notified
Carceller of its desire to sell the property. In a letter fated Jan. 15, 986, rec’d by SIHI on Jan. 29,
1986, petitioner requested for a 6-month extension of the lease contract alleging he needs time to
raise money in order to exercise the option. SIHI disapproved the request and offered to lwase
the same property to petitioner at P30,000/month for one year. On Feb. 18, 1986, petitioner
notified SIHI of its decision o exercise the option, but this was again disapproved, SIHI stressing
that the option had already lapsed. Petitioner filed an action for specific performance.
(1) Option defined. – IT is a preparatory contract in which one party grants to the other, for a fixed
period and under specified conditions, the power to decide, WON to enter into a principal
contract. It binds the party who has given the option, not to enter into the principal contract with
the one to who, the option was granted, if the latter should decide to use the option. IT is a
separate agreement distinct from the contract which the parties may enter upon the
consummation of the option.
(4) Contracts; the law allows the parties leeway in the terms of their agreement. – In the
contractual relations, the law allows the parties leeway in the terms of their agreement, which is
the law between them. Note that by contract SIHI had given petitioner 4 periods: (a) the option to
purchase for P1.8M within the lease period; (b) the option to be exercised w/in the option period
by written notice anytime; (c) the “document of sale…to be consummated w/in the month
immediately following the month” when petitioner exercises the option; and (d) the payment in
equal installments of the purchase price over a period of 60 months. In our view, petitioner’s leter
of Jan. 5, 1986 and his formal exercise of the option on Feb. 18, 1986 were within a reasonable
time-frame consistent with periods given and the known intent of the parties to the agreement
dated Jan. 10, 1985. A contrary view would be harsh and iniquitous.

Sale of Real Property; When Presumed an Equitable Mortgage Instead

MISENA v. RONGAVILLA
Feb. 25, 1999
(1)Instances when a contract regardless of its nomenclature may be presumed an equitable
mortgage; case of . – Art. 1602 of the CC enumerates Instances when a contract regardless of its
nomenclature may be presumed an equitable mortgage. It also applies to a contract purporting to
be an absolute sale, and the presence of any of the circumstances in 1602 give rise to the
presumption in favor of an equitable mortgage. Here, the CA confirmed that 3 circumstances
were present and proven, to wit: (1) the inadequacy of the consideration; (2) the respondent
remained in possession of the land and (3) the subject property was charged as security for the
loan.

Civil Law/Contracts
JAIME ONG v. CA & SPOUSES ROBLES
July 1997
Petitioner and Respondent executed an Agreement of Purchase and Sale over a parcel of land.
Petitioner failed to completely pay the purchase price so the respondents filed a complaint for
rescission of contract and recovery of their property wi