SUPREME COURT DECISIONS

CIVIL LAW
LAND TITLES AND DEEDS; No title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse possession. A title, once registered, cannot be defeated even by adverse, open and notorious possession.
FACTS: The heirs of Leopoldo Vencilao Sr., the petitioners, filed a complaint against the spouses Gepalago alleging that they were the absolute owners of a parcel of land having inherited the same from their father, who during his lifetime was in peaceful, open, notorious and uninterrupted possession and enjoyment of the property in the concept of owner for more than 30 years. The Gepalago spouses, on the other hand, appeared that they were the registered owners of the land which was previously a portion of a 1,401,570 sq. m. land owned by a certain Pedro Luspo. The records showed that the entire property was mortgaged by Luspo as security for a loan which for his failure to pay was foreclosed by the bank. PNB as the highest bidder in the foreclosure sale, conveyed the whole property to 56 vendees among whom were the spouses Gepalago. ISSUE: Who has the better right over the land, the Vencilaos or the Gepalagos? HELD: The Gepalago spouses has the better right. The rule is well settled that prescription does not run against registered land. Thus, under Sec. 47 of PD No. 1529, otherwise known as the Property Registration Decree, it is specifically provided that “no title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse possession.” A title, once registered, cannot be defeated even by adverse, open and notorious possession. The certificate of title issued is an absolute and indefeasible evidence of ownership of the property in favor of the person whose name appears therein. It is binding and conclusive upon the whole world. [Heirs of Leopoldo Vencilao Sr. vs CA et al, G.R. No. 123713, April 1, 1998---FIRSTDI VISION; Bellosillo, J.]

ESTOPPEL; Whenever a paTty has, by his own declaration, act or omission, intentionally and deliberately led another to believe a par ticular thing to be true, and to act upon such a belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsity it.
FACTS: Petitioner Pureza contracted the services of spouses Bonifacio and Crisanta Alejandro to construct a two-storey building. To facilitate this project, he applied for a Pag-ibig Housing Loan with the Asia Trust Development Bank. An order of payment was signed by him authorizing the respondent-bank to release the contract price of P155,356.30 to the spouses-contractors. The house was not constructed as originally planned. Nevertheless, petitioner signed a Certificate of House Completion/Acceptance. Payment was subsequently released by the respondent bank to spousescontractors. Subsequently, petitioner filed a complaint against the respondent bank claiming that although the construction was only 70% finished, the latter released to the spouses 90% of the proceeds. The lower

obligated itself to Solid Bank not as a guarantor but as a surety under the continuing guaranty.SECOND DIVISION.00 to finance the purchase of two [2] maritime barges and one tugboat which would be used in their maritime business. Narvasa. and he obligates himself to pay if the principal does not pay. vs. ISSUE: Whether or not the respondent bank was negligent in releasing the proceeds of the loan to the spouses.court rendered judgment in favor of petitioners. To allow him to do so would be tantamount to conferring upon him the liberty to limit his liability at his whim and caprice. now herein petitioner F. In order to secure the loan. 113931. C.000. The latter moved to dismiss the complaint on the ground that its liability as guarantor of the loan was extinguished pursuant to Art. !n addition Ayala Int’l. No. 2080 of the Civil Code of the Phil. May 6. a guarantor is the insurer of the solvency of the debtor and thus binds himself to pay if the principal is unable to pay while a surety is the insurer of the debt. executed a continuing guaranty. Zobel Inc. to the prejudice of the latter. doing business under the name “Agro Brokers”. having performed affirmative acts upon which the respondents based their subsequent actions. [Pureza vs. Petitioner. Inc. CA. HELD: The use of the term “guarantor” does not ipso facto mean that the contract is one of guaranty.] - CREDIT TRANSACTIONS. and pronounced as one of the conclusive presumption under Rule 131. The application of principle of estoppel is proper and timely in heading off petitioner’s shrewd efforts at renouncing his previous acts to the prejudice of parties who had dealt with him honestly and in good faith. and he obligates himself to pay it the principal does not pay. CA.. The interpretation of the contract is not limited to the title alone but to the contents and intention of the parties. 1998 THIRD DIVISION. contracted a loan with Consolidated Bank and Trust Corp. Zobel Inc. FACTS: Spouses Raul and Elen Claveria. . Motion to dismiss was denied. [now Solid Bank] in the amount of P2. 1998. It argued that it has lost its right to be subrogated to the first mortgage in view of Solid Bank’s failure to register the chattel mortgage with the appropriate government agency. 3 [a] of the Rules of Court. which is against the very principle of equity and natural justice. Solid Bank filed a complaint for sum of money against the spouses and F. May 15. Sec. in accordance with the Order of Payment. respondent spouses executed a chattel mortgage over three [3] vessels.875. Zobel Inc. Simply put. Phil.J. 122053. 2080 is not applicable because petitioner is not a guarantor but a surety. A principle of equity and natural justice. [E. No.R. The terms of the coniract categorically obligates the petitioner as “surety” to induce Solid Bank to extend credit to respondent spouses. A guarantor is the insurer of the solvency of the debtor and thus binds himself to pay if the principal is unable to pay while a surety is the insurer of the debt. this is expressly adopted under Art. When the spouses defaulted in the payment. cannot thereafter refute his acts or revenge on the effects of the same. Zobel Inc. ISSUE: Whether F. HELD: The respondent bank cannot be held liable for the release of the proceeds to the contractors because the petitioners willingly and voluntarily signed the Order of Payment and the Certificate of House Completion/Ac-ceptance. 1431 of the Civil Code. GB. G. Solid Bank contended that Art.

the literal meaning of its stipulation shall control. J. a contract of sal€ has the force of law between the contracting parties and they are expected to abide in good faith by their respective contractual commitments. a banker and a jeweler at the same time. G. No. [Palmares vs. ISSUES: Whether or not there was a perfected contract of sale. FACTS: Pursuant to a promissory note. The lower court ruled in favor of the company. CA.R. respondent corporation filed a complaint against petitioner Palmares as the lone partydefendant. while a guarantor agrees that the creditor after proceeding against the principal.] CREDIT TRANSACTIONS. petitioner expressly bound herself to be jointly and severally or solidarily liable with the principal maker of the note. Fule then filed a case in court praying that the contract of sale between him and the respondent be declared null and void.] CONTRACT OF SALE. In the case at bar. explicit and unequivocal that her liability is that of a surety. March 31. . The court ruled otherwise which the CA affirmed. Being consensual. may proceed against the guarantor if the princi pal is unable to pay. In the case at bar. she may be held liable only after the respondent company has proceeded against the principal debtors. Cruz countered that the jewelry is genuine and that before Fule accepted the earrings. a guaranty is an undertaking that the debtor shall pay. The terms of the contract are clear. it is evident that there was a meeting of the minds between petitioner and Dr. FACTS: Petitioner Fule. On the basis of the petitioner’s solidary liability under the promissory note. Petition. while a guarantor agrees that the creditor after proceeding against the principal. Having failed to settle the disputes. and respondent Dr. Barely two hours after the sale. A surety promises to pay the principal’s debt if the principal will not pay. Regalado. Cruz entered into a contract of sale involving a pair of emerald-cut diamond earrings owned by the latter and a 1O-hectare land owned by the former. to the exclusion of the principal debtors allegedly by reason of insolvency. A surety is an undertaking that the debt shall be paid.Regalado. 1998--SECOND DIV/S/ON. A surety promises to pay the principal’s debt if the principal will not pay. HELD: It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties. the petitioner have it examined for 15 minutes. The principal debtors were not able to pay the entire amount of the loan. As such. She invoked as a defense that he is a guarantor and not a surety. the parties agreed that the balance of the same would be paid in cash. The result indicates that indeed the same was fake. 126490. they are bound by the contract unless there are reasons or circumstances that warrant its nullification. J. another jeweler was consulted. a guaranty is an undertaking that the debtor shall pay. Thus. HELD: A 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. ISSUE: Whether the petitioner is liable as a surety or as a guarantor. may proceed against the guarantor if the principal is unable to pay. Cruz. respondent corporation extended a loan to the spouses Osmena and Azarraga as principal debtors with the petitioner as the co-maker. A surety is an undertaking that the debt shall be paid. Since the value of the jewelry is much higher than the parcels of land. Fule demanded that his money be returned for it appeared that the earrings were fake. A contract of sale is perfected at the moment there is a meeting of the minds upon the thing that is the object of the contract and upon the price. Whether or not the contract of sale is null and void.

000. Mananzala denied selling the land contending that the deed was a forgery and that her signature was obtained by means of fraud. Eventually. there was a perfected contract of safe between petitioner and private respondent as confirmed by the trial court when it found that “by accepting a deposit of P50.] CONTRACT OF SALE. Sale of property by a holder of land prior to the issuance of the certificate of title is valid and binding between the parties. J. Samson decided to pay the balance by tendering a check in the amount of P250. No. private respondent Corazon Aranes and petitioner entered into a contract of sale covering the same parcel of land. due to the slow pace in the processing of their application for financing. are bare of any evidence manifesting that private respondent employed insidious words or machinations to entice Fule into entering the contract of barter. No.R. and (2) those where the consent is vitiated by mistake.’ Resultingly. undue influence or fraud.000. HELD: The petition lacks merit. 25 years prior to the actual issuance of the certificate of title. FACTS: Petitioner Xentrex Automotive.000. it can be rightfully assumed that he was an expert on matters regarding gems. From that moment. intimidation. Private respondent Samson made an initial deposit of P50. Petition. G. [Xentrex vs. Inc. Romero. Moreover.00. Among the agreement between the parties is that title to the land shall be transferred to Aranes within 30 days after Mananzala paid the full price of the land to NHA. prompting him to file a complaint for breach of contract and damages against Xentrex. Quisumbing. contracts that maybe annulled or voided are: (1) those where one of the parties is incapable of giving consent to a contract.000. FACTS: Petitioner Mananzala was the owner of a parcel of land by virtue of the deed of sale executed by National Housing Authority (NHA) in her favor. Nissan. 121559. his consent was vitiated with fraud. ISSUE: Whether or not there was a perfected contract of sale between Samson and Xentrex. subject to the provisions of the law governing the forms of contract. contingency or risk affecting the object of the contract. CA. As it turned out to private respondent’s shock and disappointment. G.00 and by pulling out a unit of Phil.” [Fu/e vs. In the case at bar. He had the intellectual capacity and the business acumen as a banker to take precautionary measures to avert such a mistake. CA. violence. however. March 2. “there is no mistake if the party alleging it knew the doubt. Phil. On October 1991.000. 1998 THIRD DIVISION. is a dealer of motor vehicles.00 while the balance was to be paid thru bank financing. the parties may reciprocally demand performance. Neither is there any evidence showing that Dr. As the Civil Code provides. June 18. she averred that the sale was void since it was made before the actual title of the land has been delivered to her in violation of the resolution of NHA. 112212. petitioner stresses that the jewelry subject of the contract was a counterfeit and therefore. on account of his work as a banker-jeweler. 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.As regards the second issue.R. Nissan committed a breach of contract when it allowed the unit in question to be sold to another buyer to the prejudice of private respondent. Furthermore. J. The trial court . private respondent went to petitioner to purchase a brand new car valued at P494. petitioner obliged itself to sell to Samson a determinate thing for a price certain in money which was P494. The lower court ruled in favor of Samson which the Court of Appeals affirmed.1998 FIRST DIVISION. Undoubtedly. Cruz induced petitioner to sell his land or that she cajoled him to take the earrings in exchange for said property.00. the car had already been sold to another buyer without his knowledge. However. Article 1475 of the New Civil Code is very explicit that 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.00.] CONTRACT OF SALE. The records.

e. FACTS: The car owned and driven by Soriano collided with the car owned by FILCAR Transport. G. There is no evidence whatsoever tnat the sale between the parties was made in violation of any rule of the NHA. As a consequence. J. Petitioner insists that respondents are liable for damages suffered by third persons although the vehicle is leased to another. and. 1998 SECOND DIVISION. The trial court itself arrived at the same conclusions as to the genuineness and due execution of the deed. (b) fault or negligence of the defendant. petitioner’s claim that her signature on the deed had been procured through fraud is contradicted by her allegation in court that the signature on the deed was not hers. CA. After trial. [Mananzala vs.] QUASI-DELICT. the follow ing requisites must concur: (a) damage suffered by the plaintiff. the petitioner failed to prove the existence of the second requisite. ISSUE: Whether or not FILCAR and its insurer may be held liable for damages suffered by a third party although the vehicle is leased to another. therefore. (FILCAR). was not passed upon and she did not urge it anymore except on appeal. the sale between the parties is valid and binding. (a) damage suffered by the plaintiff. For all intents and purposes. No. petitioner FGU Insurance Corporation. It relied on the report of the NBI which found the signature of the petitioner on the questioned document to be genuine. (c) connection of cause and effect between the fault or negligence of the defendant and the damage incurred by the plaintiff. HELD: Petitioner avers that the appellate court erred in relying on the presumption of regularity accorded to notarial documents in holding the deed of sale between her and private respondent to be valid. and (c) connection of cause and effect between the fault of the defendant and the damage incurred by the plaintiff. petitioner waived this ground and cannot urge it as a ground for reversing the decision of the Court of Appeals.R. i. This issue was never passed upon either by the trial court nor by the Court of Appeals. This is not true. Unfortunately. in view of its insurance contract with Lydia. Indeed. Petitioner has . the court dismissed the case for failure of FGU to substantiate its claim of subrogation. he was dropped from the complaint. The Court of Appeals affirmed the ruling of the trial court although based only on the fault or negligence of Dahl-Jensen since the negligence of respondent FILCAR was not sufficiently proved. paid the latter. then it could not have been procured by fraud. HELD: To sustain a claim based on quasi-delict. If the signature on the deed was not her signature. The decision of the appellate court shows that the court also took into account the evidence of the parties.. As to the second contention. Appeal. By way of subrogation. Inc. In the case at bar.. summons was not served on Jensen since he was no longer staying at his given address and upon motion of petitioner. Mendoza. ISSUE: Whether or not the sale of the land was valid. March 2. (b) fault or negligence of the defendant. fault or negligence of defendant FILCAR. because only the fault or negligence of Dahl-Jensen was sufficiently established. as well as petitioner’s contention that the sale to private respondent is void because it was made within one year after the title to the property was issued in the name of the petitioner. the following requisites must concur. It is plain that the negligence was solely attributable to DahI-Jensen thus making the damage suffered by the other vehicle his personal liability. It should be noted that the damage caused on the vehicle of Soriano was brought about by the circumstance that Dahl-Jensen swerved to the right while the vehicle he was driving was at the center lane. To sustain a claim based on quasi-delict. Respondent FILCAR did not have any participation therein. and driven by Peter Dahl-Jensen as lessee. it sued Dahl-Jensen and respondent FILCAR as well as Fortune Insurance Corporation (FORTUNE) as insurer of the latter for quasi-delict before the RTC of Makati City. The above argument. 115101. It ruled that petitioner failed to establish its cause of action for sum of money based on quasi-delict.ruled in her favor which the Court of Appeals reversed. while raised by petitioner in her answer in the trial court.

Rather. a widow and grandmother of petitioner Lagazo executed a deed of donation in favor of the latter. [FGU Insurance Cotp. Donation is onerous when the burden. March23. Panganiban. No. vs. charges or future services equal to or more in value than the thing donated. the petitioner’s payment of the arrearages and balances due on the lot does not render the donation onerous. CA. ISSUE: Whether there was a valid simple or onerous donation. (PFCCI) in different capacities until 1988. No. After the six-month probationary employment has elapsed. FACTS: Private respondent Victoria Abril was employed in 1982 by petitioner Philippine Federation of Credit Cooperatives. Bellosillo . HELD: The donation is a simple donation.] - CONTRACTS. her employment was terminated. Petition denied. Logically. while an onerous donation is one which is subject to burdens. The appellate court anchored its decision on the ground that there was no showing that petitioner accepted his grandmother’s donation and that said donation having found to be a simple donation has not complied with the formalities for donation of real property. following the theory of cognition. the donation. Nowhere in the case did the petitioner present any evidence of his acceptance of the donation. So. the completion or termination of which had been determined at the time of engagement. [Lagazo vs.R. Hence. On appeal. A simple or pure donation is one whose cause is pure liberality. G.FIRST DI VISION. is perfected only upon the moment the donor knows of the acceptance of the donation by the doneé. such payment was not however imposed by the donor as a condition for the donation. 118889. Even conceding the petitioner’s full payment of the purchase price of the lot might have been a burden to him. Acceptance of the donation by the donee is indispensable for its validity. J.] DONATION. J. the decision was reversed by the NLRC. The company alleged that she is a casual or contractual employee because she applied for the position of Regional Field Officer under a contract which had been fixed for a specific project or undertaking. 1998-. The Labor Arbiter dismissed the case for lack of merit. Lagazo also sent a demand letter to defendant Cabanlit asking him to vacate the land but the latter claimed ownership thereof. HELD: The employee has become a regular employee because she has been allowed to work after the . he paid the installment in arrears and the balance on the lot and declared the said property in the name of Catalina. G. charge or future service equal to or more in value than the thing donated is imposed by the donor. March 5.no cause of action against respondent FILCAR on the basis of quasi-delict. Later. However.R. this petition by PFCCI. She filed a complaint for illegal dismissal against PFCCI. 112796. after which period. In the case at bar. Following the donation. the petitioner checked with the Register of Deed and found out that the property was in the delinquent list. she was allowed to work for a period of one year. CA. ISSUE: Whether the employment based on the contract is contractual or probationary. FACTS: Catalina. A contract of employment is a contract of adhesion and any ambiguity therein should be construed against the party preparing it. Inc. 1998 FIRST DIVISION. its claim against respondent Fortune can neither prosper. The initial statements of employment contract provide that PFCCI hires her on contractual basis until the completion of the project while the succeeding provisions thereof provided that she shall be under probationary status for a period of six (6) months. the payments made by Lagazo were his voluntary act as gleaned from his testimony during the trial. Trial ensued and the lower court ruled in favor of the petitioner which the CA reversed.

The latter manifested that she was willing to pay the balance of the price of the Beata property and not the second property.. It appears that the same property is leased to Prudential Bank (PB) which continued paying the monthly rentals. FACTS: A lease contract was executed between Urban Development Bank (UDB) and Valgosons Realty. (Philippine Federation of Credit Cooperatives. Inc. a lessor. 126233.] EARNEST MONEY. The failure of the first lessee to vacate the premises cannot exculpate the lessor from its obligation to the subsequent lessee. (VRI). The first lease contract executed by petitioner VRI with respondent Prudential Bank is separate and distinct from its second lease contract with respondent Urban Bank. Inc. After a demand to pay the balance of $70. The lessor VRI had also been accepting the monthly rentals. it was incumbent on him to deliver the premises to the lessee in accordance with their agreement and should it become necessary. Under Article 1654 of the New Civil Code.probationary period.000. they would forfeit the $30. Because of Prudential Bank’s continued failure to surrender the leased premises despite the termination of the contract.000 and P40. HELD: Prudential Bank’s refusal to vacate the leased premises did not exculpate the lessor from its obligation to deliver possession of the same to the second lessee.000 payable in two installments. Under their contract.aI. the ambiguity in the terms of the contract should be construed against the company. As lessor. G. they will be held responsible for any claim for damages by its new tenant. vs. Martinez. G. NLRC. An option is a distinct and separate contract granting a privilege to buy or sell within an agreed time and at a determined price. Furthermore. Where a contract of employment. No.R. Despite repeated demands. the Cos paid $1. kept on reminding PB that the place should be made available for its new lessee. No. vs. J. 1998. 121071. is ambiguous. In the case at bar.000 as earnest money in order that the property may be reserved for them to be deducted from the total purchase price of $100. is obliged to deliver the thing which is the object of the contract in such a condition as to render it for the use intended. to eject any unlawful occupant therefrom. on the other hand. like petitioner herein. Custodio paid the Cos the sum of $30. Thus.J. The lower court adjudged the lessor and the first lessee liable for damages The Court of Appeals affirmed the trial court’s finding except that it absolved the first lessee from liability. They offered to sell her another property and the previous payments already made will be applied to the payment of the second property if Custodio would purchase the same within thirty (30) days. the Cos rescinded the contract. Otherwise. In view thereof. any ambiguity therein should be construed strictly against the party who prepared it.R.] CONTRACTS. An earnest money is considered part of the pur chase price and proof of the perfection of the sale. ISSUE: Whether or not the first lessee’s refusal to vacate the leased premises exculpates the lessor from its obligation to deliver possession of the same to the second lessee. the Cos informed her that the option to purchase the Beata property was lost. Although the period of payment had already expired.000 Custodio failed to complete payments. in case of doubt. being a contract of adhesion. et. Article 1702 of the Civil Code provides that. . September 11.000. VRI failed to place UDB in possession of the leased premises. Romero. 1998. December 11. It. otherwise. CA. covering a portion of the ground floor of the latter’s building. Urban Development Bank and Prudential Bank. FACTS: Spouses Co entered into a verbal contract with Custodio covering the sale of the Beata property in favor of the latter for $100.000 as partial payment of the purchase price. Urban Bank sued petitioner VRI for rescission of their lease contract. all labor contracts shall be construed in favor of the laborer. [Valgosons Realty Inc.

through its agent. 1482 of the Civil Code. . 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. She demanded the refund of earnest money paid.R. Inc. Even the manner of payment was agreed upon and there was payment of an earnest money which is considered part of the purchase price and proof of the perfection of the sale. Golden Rod filed an action before the Regional Trial Court which ordered the refund of the earnest money. Barretto Realty owned 43 parcels of land which were mortgaged to UCPB. When the mortgage was about to be foreclosed. earnest money being a part of the purchase price should be returned to the prospective buyer in case the sale fails. The Court of Appeals reversed the trial court. Hence. ISSUE: Whether or not the seller of real property may keep the earnest money to answer for damages in the event the sale fails due to the fault of the prospective buyer. J.000 in Custodio’s favor. HELD: The seller cannot keep the earnest money in the absence of a specific stipulation.000.. HELD: The Co’s cannot forfeit the amounts paid by Custodio because that would be in violation of the contract of sale entered into between themselves. Art. It must be supported by consideration. informed private respondent that it would no longer push through with the sale. offered to buy the property. The trial court ruled in her favor and ordered the Cos to refund the amount of $30. Inc. The facts show that the parties entered into a perfected contract of sale and not an option contract. The Cos’ main argument is that Custodio lost her option over the Beata property and her failure to exercise said option resulted in the forfeiture of any amounts paid by her. No. An option is a contract granting a privilege to buy or sell within an agreed time and at a determined price. 1999. G. In the absence of stipulation to the contrary. Hence. By reason of its failure to make payment. ISSUE: Whether or not the Cos may forfeit the amounts paid for the buyer’s failure to observe the option pursuant to the letter. Due to some economic reverses however. especially in the absence of a clear and express agreement thereon. 112330. By virtue of the extra-judicial rescission. petitioner resorted to extra-judicial rescission of its agreement with private respondent. All the elements of the contract of sale are present when Custodio’s offer to purchase the Beata property was accepted by the Cos. The Court of Appeals affirmed the decision.] EARNEST MONEY. Petitioner clearly stated without any objection from private respondent that the earnest money was intended to form part of the purchase price. Golden Rod was not able to pay UCPB. After failure to refund the earnest money. Gonzaga-Reyes.Custodio filed a complaint for rescission of the Contract and prayed for the refund of the $30. Golden Rod. petitioner. [Spouses Co vs CA. Under Art. this petition. It granted the forfeiture of the earnest money to answer for the damages sustained by the private respondent. whenever earnest money is given in a contract of sale. petitioner. the parties could not have intended that the earnest money or advance payment would be forfeited when the buyer should fail to pay the balance of the price. August 17. It is separate and distinct contract from that which the parties may enter into upon the consummation of the option. it shall be considered as part of the purchase price and as proof of perfection of the contract. It then wrote Barretto Realty that it could not go through with the purchase of the property. The offer was accepted by the Barretto Realty who thereby acknowledged the receipt of earnest money from Golden Rod. FACTS: Private respondent. It was agreed that the latter would pay the Barretto’s indebtedness to UCPB. In other words.

HELD: Assuming arguendo that respondent Prudential Bank’s refusal to leave the premises was the proximate cause of lessor’s failure to comply with its obligation to respondent Urban Bank. however. otherwise.] PRIVITY OF CONTRACTS. Neither does it appear that petitioner-lessor imposed such condition on respondent UDB. FACTS: Petitioner Marsh Thomsom was an officer of the respondent American Chamber of Commerce (AmCham) for over ten years. 1998. AmCham executed a Release and Quitclaim of its claims against Thomsoin. FACTS: Urban Development Bank (UDB) leased from Valgosons Realty. Bellosillo. however. September 11. Despite repeated demands. The quitclaim did not mention the MPC shares. He failed to do so despite the many demands from AmCham management. When petitioner’s contract of employment was up for renewal. vs. A trust arises in favor of one who pays the purchase money of the property in the name of another on the presumption that he who pays for a thing intends a beneficial interest therein for himself. Thomsom paid the corresponding transfer fee but AmCham subsequently reimbursed the amount. When his superior retired.private respondent is obliged to return the earnest money. absolved respondent PB from liability. J. The Court of Appeals however. they will be held responsible for any claim for damages which may be filed by its new tenant. vs. as lessee. J. CA. Pending the negotiation. G. [Golden Rod.] — TRUST. has no cause of action against the first lessee respondent Prudential Bank. AmChain. 126233. The lower court adjudged the lessor VRI and Prudential Bank liable for damages. 1998. continued paying and Valgosons had been accepting the monthly rentals after the expiration of the contract. However. Urban Bank sued petitioner VRI for rescission of their lease contract. (VRI). 126812. asserting that he merely . It was not also shown that respondent UDB. Inc. asked the former to stay on for another six (6) months. Inc. still the latter. each has no cause of action between them. There being no privity of contract between two lessees. CA. The latter kept reminding Prudential Bank that the place should be made available for its new lessee. It should be noted that there is no privity of contract between the two respondent-lessees. Martinez. No. Because of Prudential Bank’s continued failure to surrender the leased premises. Prudential Bank. It was rejected. ISSUE: Whether or not the first lessee (Prudential Bank) can be held liable by the second lessee (UDB). that he shall accept it if he shall be allowed to retain the shares after reimbursing AmCham the purchase price. the latter’s proprietary share in the Manila Polo Club (MPC) was listed in Thomsom’s name and paid for by AmCham through his retiring superior’s intercession. It was incumbent upon the lessor to place the lessee in possession of the property and to defend the latter against other claims related to rightful possession. The petitioner made a counter-proposal.R. VRI failed to place UDB in possession of the leased premises because Prudential Bank is still occupying the space as the first lessee. November24. Urban Development Bank and Prudential Bank. assumed the obligation under the lease contract to eject any person who occupies the property. a portion of the ground floor of its building. as second lessee. he notified his employer of his unwillingness to continue his services. The company demanded the return of the MPC shares and the transfer of said shares to the nominee of AMCHAM but Thomsom claims ownership of the MPG shares. /Valqosons Realty Inc. it was agreed that Thomsom shall execute a document recognizing AmCham’s beneficial ownership over the shares. Urban Bank commenced an action against the owner of the building who instead heaped the blame on Prudential Bank (PB) when it refused to vacate the premises.

executed an affidavit of adjudication vesting unto himself the sole ownership of the property thus. ISSUE: Whether or not the petition for reconveyance and partition has prescribed. Quisumbing. petitioner occupied a fiduciary position in the business of AmCham. Therefore. They filed a complaint for reconveyance and partition with damages alleging that the affidavit of adjudication and the deed of donation inter vivos executed by their father were fraudulent as the three children who benefited as donees took advantage of the advanced age of their father. Thus. Romemo J. FACTS: During the lifetime of spouses Rafael Sr. The trial court decided against the donees but the Court of Appeals reversed the decision. G. Although the share was placed in the name of the petitioner. [ Marsh Thomson v. Sometime in 1982. When Rafael Sr. presription has not yet barred the action. Court of Appeals. ] PRESCRIPTION. an action based on an implied or constructive trust prescribes in ten (10) years from the issuance of the Torrens title over the property. When the other children knew about the new leT. and Felicidad Marquez. No. a constructive trust under Article 1456 of the New Civil Code was established in favor of the children. ] ADOPTION. He executed a donation inter vivos covering the land and the house constructed thereon in favOr of three of his children. AmChain asserts beneficial ownership whereby petitioner only holds the share in its name but the beneficial title belongs to private respondent. HELD: The action has not yet prescribed. considering that the action for reconveyance was filed in 1991 or nine years later. his title is limited to usufruct. that is. a new TCT was issued in favor of the donees who occupied the land from 1983 to 1991. October 28. ISSUE: Whether or not petitioner has the obligation to transfer the MPG shares to the nominee of AMCHAM. Court of Appeals. 1998. Such arrangement reflects a trust relationship governed by the law and equity. the prescriptive period shall start to run in 1982 when a new TCT was issued in the name of Rafael Sr. An action based on an implied or constructive trust prescribes In ten (10) years from the issuance of the Torrens title over the property. misrepresented in the affidavit of adjudication that he was the only heir of his wife when in fact all their children were alive and managed to secure a new TCT in his name. a new TCT was issued in his name. a resulting trust is presumed as a matter of law. they begot twelve children. The trial court awarded the share to Thomsom on the ground that the Articles of incorporation of Manila Polo Club prohibits artificial persons to be club members. As a result of the donation. G. The donees contended that the action has prescribed. December29. The written consent of the natural parent is indispensable for the validity of the decree of adoption except when the parent has abandoned the child or that such parent . When AmChain paid the purchase price for the share but Thomsom was given legal title thereto.R. [Marquez vs. On the other hand. Rafael Sr. As an officer of AMCHAM. The respondent’s purpose in acquiring the share was to provide additional incentive to its chosen executive. 125715. The Court of Appeals reversed the decision. to enjoy the facilities and privileges of such membership.R. 1998. they immediately demanded their respective shares over the land but to no avail. J. They both acquired a parcel of land sometime in 1945.116631.incurred a debt to respondent when the latter advanced the funds for the purchase of the share. HELD: Petitioner is obligated to transfer the MPG shares to the nominee of AmCham as he is merely holding the shares in trust. Felicidad predeceased Rafael in 1952. No. Perforce.

105308. R. and the latter in favor of spouses Tan. Court of Appeals. the spouses were legally separated and the court awarded the custody of the children to Anna Marie. on the other hand. Purisima. Only Anna Marie’s consent was attached to the petition without including Herbert’s consent. FACTS: Herbert and Anna Marie Gang were husband and wife who have three children. December 19. In the instant case. Romero. G. She submits that his consent is not necessary because the latter has abandoned the children. Severa’s heirs filed a complaint against spouses Tan for cancellation of title and/or reconveyance with damages alleging that the deed of conveyance by Severa in favor of Santos was a forgery and that the subsequent sale by the latter of the property was void. Nevertheless. Physical estrangement alone. and is not required to go beyond the certificate and inquire into the circumstances culminating in the vendor’s acquisition of the property. Later on. 1998. HELD: Every person dealing with registered lands may Safely rely on the correctness of the certificate of title of the vendor.] . Herbert immediately sent a telegram manifesting his opposition to the adoption proceedings. The latter filed a special proceedings for the adoption of the children. ISSUE: Whether or not the decree of adoption is valid. September25. he had deposited amounts for the benefit of the children. ISSUE: Whether or not the purchase of the land by spouses Tan was valid despite a claim of forgery in the deed of sale. the pieces of evidence show that there was no financial and moral desertion and Herbert’s written consent is necessary in order for the decree of adoption to be valid. Herbert appealed contending that the decree of adoption is invalid because of the lack of his written consent which is required by the Family Code. [Herbert Cang vs CA. the title was clean andfree from any lien and encumbrance. one of her heirs tried to sell the land notwithstanding the fact that pertinent documents from the Registry of Deeds showed previous sale of 2/3 portion of the lot in favor of Santos. The land is covered by a Torrens title showing that it was originally acquired from Severa Gregorio: After Severa’s death. The written consent of the natural parent is indispensable for the validity of the decree of adoption. 1998. without financial and moral desertion. J. the requirement of written consent can be dispensed with if the parent has abandoned the child or that such parent is insane or hopelessly intemperate. Consequently. He further argues that he had not abandoned his children by presenting as evidence the letters of the children to him showing their love and affection and the certification of US banks showing that even prior to the petition for adoption. Upon learning such fact. the lower court issued the decree of adoption in favor of Anna Marie’s brother. The Court of Appeals affirmed the lower court’s decision. went to the United States and got naturalized as an American citizen but continuously supported his children as required by the court. they are purchasers ri good faith for they bought the property without notice that some persons have a right or interest over such property and paid the full price at the time of the purchase or before they have notice of a defect in the vendor’s title.] LAND TITLES AND DEEDS. When the spouses Tan purchased the subject property from Santos. Notwithstanding the opposition. FACTS: Spouses Tan bought a parcel of land from Santos.is insane or hopelessly intemperate. The conveyance is evidenced by deed of absolute sale. is not tantamount to abandonment. Herbert. 117609. No. and he is not required to go beyond the certificate and inquire into the circumstances culminating in the vendor’s acquisition of the property. G. Every person dealing on registered lands may safely rely on the certificate of title of the vendor/transferor. J. No. [Heirs of Severa Gregorio vs. Anna Marie entrusted the custody of the children to her childless brother and sister-in-law.R. HELD: The decree of adoption is not valid. Later.

Thereafter. but was dismissed.u~s after the effec tivity of the Civil Code is not recognized in the Philippines as it is contrary to State policy. In 1962. 105308. The divorce obtained by Filipino citizens after the effectivity of the Civil Code is not • recognized in the Philippines as it is contrary to State policy. ISSUE: Whetheror not the sale made by Trinidad to Mondejar was valid. he divorced his American wife and never remarried. the ownership of the donated property reverted to Trinidad as provided in the automatic reversion clause in the deed of donation. the heirs of Trinidad filed a complaint for forcible entry against Mondejar. In 1987. [Herbert Cang vs. HELD: The divorce decree granted to Herbert is not valid. FACTS: Trinidad Gorvera together with her sisters Leonila and Paz and brother Epapiadito executed a Conditional Deed of Donation over a IWOhectare land in favor of Municipality of Talacogon. she verbally sold the remaining land again to Mondejar without a deed of sale and evidenced solely by receipts of payment. the heirs of Trinidad filed a complaint against the four vendees contending that the sale between Trinidad and Mondejar is invalid because of the donation and therefore the subsequent sales made are null and void. In a conditional donation with an automatic reversion clause. the Sangguniang Bayan of Talacogon enacted a resolution reverting the ownership over the two-hectare land back to the donor as the condition was not fulfilled. that he divorced her. Trinidad remained in possession of the land despite the donation. Such inchoate interest may be the .] DONATION.R. the donor may have an inchoate interest in the donated property during the time that ownership of the land has not reverted to her by virtue of the automatic reversion clause. J. The divorce obtained by Filipino citIz. HELD: The sale was valid. No. 1998. In 1980. In the meantime. When the Sangguniang Bayan enacted the resolution that it cannot comply with the condition of building a school and the same was made known to the donor. Mondejar sold portions of land to four vendees. While Herbert is now an American citizen. ISSUE: Whether or not the divorce decree granted by the Nevada court is valid. CA. Romero. only Anna Marie’s consent was attached to the petition. she sold one hectare of the said land to Regalado Mondejar. Said court issued the divorce decre. FACTS: Spouses Herbert and Anna Marie Gang were FilipinQ citizens. as regards Anna Marie who has apparently remained a Filipino citizen. subject to the condition that the land shall be used solely and exclusively as part of the campus of proposed school in Talacogon. the divorce has no legal effect. He then took an American wife and thus became naturalized American citizen. He~bert~Wep~t0 the United States where he sought a divorce from Anna Marie bef?re~he court of the State of Nevada. After the petition for legal separation was granted. September25. In 1988. Prior to such reversion of ownership. G. In a special proceedings for the adoption of their children. the donor has an inchoate interest in the donated property prior to the fulfillment by the donee of the condition and such inchoate interest may be sold by the donor. The deed of donation provides for the automatic reversion of the property to the donor in casethe condition was not complied with.MARRIAGE. She submits that Herbert’s consent is not necessary because the latter has long forfeited his parental rights over the children on ground. Subsequently. among others. The donation made is subject to a resolutory condition.

The trial court ruled in her favor and ordered the Cos to refund fhe amount of $30. G. Unisphere alleged that it could not be deemed in default in the payment of said unpaid dues because its tardiness was occasioned by petitioner’s failure to provide security for the building premises in order to prevent robberies. In the absence of an express stipulation authorizing the sellers to extrajudically rescind the contract of sale. The latter manifested that she was willing to pay the balance of the price of the Beata property and not the second property. Custodio filed a complaint for rescission of the contract and prayed for the refund of the $30. The condition was unilaterally imposed by the Cos and was agreed to by Custodio and cannot be considered as part of the contract of sale for lack of Custodio’s consent. No. [Spouses Co vs CA. Thus. When the latter any liability. the Cos informed her that the optton to purchase the Beata property was lost. is an occupant of a unit in a condominium owned by EGV Realty.000.000.000 in Custodio’s favor but the earnest money of $1. 1999. the Cos rescinded the contract. December 4. Otherwise. J. In order for compensation to take place.] COMPENSATION. In its answer. It .R.00. EGV Realty sued for the collection of unpaid monthly dues in the amount of P 13. Martinez. ] RESCISSION. Unisphere withheld payment of its monthly dues. Accordingly.000 is proper.000 payable in two installments. said unit was robbed resulting to a total loss of P 12. They offered to sell her another property and the previous payments already made will be applied to the payment of the second property if Custodio would purchase the same within thirty (30) days. GonzagaReyes. FACTS: Spouses Co entered into a verbal contract with Custodio covering the sale of the Beata property in favor of the latter for $100.295. The Court of Appeals affirmed the decision. two per sons must be mutually debtors and creditors of each other. 1998. Court of Appeals. After a demand to pay the balance of $70.000 Custodio failed to complete payments. Custodio paid the Cos the sum of $30. FACTS: Unisphere International Inc. ISSUE: Whether or not the refund of $30. Although the period of payment had already expired.R.000) as the contract was still subsisting.142. 112330. The Cos are of the mistaken belief that Custodio had lost heroption overthe Beata propertyforherfailure to pay the balance of $70.67. The Cos argued that the rescission was proper and the $30.000 is proper. It demanded compensation and reimbursement from EGV Realty for the losses incurred as a result of the robbery. HELD: The refund of the $30. the Cos cannot unilaterally and extrajudicially rescind the contract of sale.000.subject of contract including the contract of sale. 126444. No. On two occasions.000 should be forfeited in their favor because Custodio lost her option to pay the balance of the purchase price.000 was forfeited in Co’s favor. the latter cannot unilaterally and extrajudicially rescind the contract of sale. The condition contained in the letter that the property would be forfeited is not binding. [Quiqada vs.000 and P40. In the absence of an express stipulation authorizing the sellers to extrajudlcally rescind the contract of sale. August 17.000 as partial payment of the purchase price. they would forfeit the $30. G. J. In view thereof. Custodio acted well within her rights when she attempted to complete the sum owed ($100.

what respondent Unisphere has against the petitioner is just a claim. now on the increased interest rate at 21% per annum. Respondent Unispheres claim for its loss has not been passed upon by any legal authority so as to elevate it to the level of a debt hence it cannot be deemed as a creditor of the petitioner. HELD: Set-off or compensation is not proper. the Court of Appeals reversed the decision finding petitioner liable for the value of lost items. Also.V. to wit: (1) the existence of a previous valid obligation. Apex brought an action against the spouses. Kapunan. there being no apparent defenses inherent in them. .G. (3) the extinguishment of the old contract. and (4) the validity of the new one.295.] NOVATION. Realty vs. At best. Allegedly. 295. A debt is a claim which has been formally passed upon by the highest authority to which it can in law be submitted and has been declared to be a debt.00 against the said P13. it is not enforceable in court. A claim. representing the balance after offsetting the amount of P 12. FACTS: Petitioner spouses purchased a house and lot. Another promissory note was executed by them. Compensation takes place when two persons. Court of Appeals. Petitioner spouses failed to pay several installments. the spouses failed to pay the same. Thus.R. J. NO. (2) the agreement of all parties to the new contract. ISSUE: Whether or not set-off or compensation is proper. July20. is a debt in embryo. Interest rate at 12% was stipulated in the note. Hence. Both parties appealed. an escalation clause was contained in the note authorizing Apexto increase the rate of interest in the event that any law should be enacted increasing the lawful rate of interest. It ordered Unisphere to pay the amount of P847. (Apex) and issued a promissory note in favor of the latter.67. [E. ISSUE: Whether the collectible interest is at the rate of 12% under the first note or 21% under the second note. On appeal.00 representing the total value of its loss due to the two robberies be awarded to it by way of damages. Novation has four essential requisites. on the other hand. While respondent Unisphere does not deny any liability for its unpaid dues to petitioner. not a debt. It is only the debts that are enforceable in court. EGV Realty questions the propriety of the offsetting of claims. Such being the case. 120236.asserted as counterclaim that the amount of P 12. a distinction must be made between a debt and a mere claim. The CA modified the decision of the trial court and ordered the spouses to pay the note at 21% interest. the first note defined the terms and conditions of the loan while the second note is merely an extension of and derives its existence from the former.142. the second note is governed by the stipulations in the first note. 1999. in their own right are creditors and debtors of each other. the latter does not admit any responsibility for the loss suffered by the former occasioned by the burglary. To finance the same. For compensation to take place. Petitioner spouses filed a petition for review on the contention that the 21% interest cannot be enforced. It is mere evidence of a debt and must pass thru the process prescribed by the law before it develops into what is properly called debt. The trial court ruled in favor of Apex and ordered the spouses to pay Apex the amount of the note plus interest at 12%.67. They claim that the interest rate of 12% per annum should be adjudged inasmuch as the two promissory notes constitute one transaction. G. they obtained a loan from Apex Mortgage and Loan Corp. The SEC ruled that EGV Realty was not liable for the value of the items burglarized from the respondents’ unit. Again.

1978” and the word “cancelled” is boldly stamped on the face of the first note. J. (3) the extinguishment of the old contract. Pilar Devt. Corp. the first note was valid and subsisting when the spouses executed the second note. Puno. August 17. This second note became the new contract governing the parties’ obligation.] . [Sps.aarni Bautista vs. In effect.R. The first promissory note was cancelled and replaced by the second. 135046.HELD: The collectible interest is 21% based on the second promissory note. to wit: (1) the existence of a previous valid obligation. No. (2) the agreement of all parties to the new contract. there is novation. Florante and L.. Both parties voluntarily accepted the terms of the second note as to the interest rate and they unequivocally stipulated to extinguish the first note as shown by the fact that the second note states this cancels PN # A-387-78 (referring to the first note) dated Dec. In the instant case. (4) the validity of the new one.22. G.1999. All the elements of novation are present.

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