Limketkai Sons Milling

Limketkai Sons Milling, Inc. vs. CA, G.R. No.
L-23351,
March 13, 1968, 22 SCRA
1000
LIMKETKAI
SONS
MILLING,
INC., petitioner,
G.R. No. 118509
vs.
March 29, 1996
COURT OF APPEALS, ET. AL., respondents.
FACTS:
Phil.Remnants Co. constituted BPI to manage,
administer and sell its real property located in Pasig,
Metro Manila.
BPI gave authority to real estate broker Pedro Revilla Jr.
to sell the lot for P1000 per square meter.
Revilla contacted Alfonso Lim of petitioner company
who agreed to buy the land and thereafter was allowed
to view the land.
Lim and Alfonso LImketkai went to BPI to confirm the
sale and both finally agreed that the land would be sold
for P1000 per square meter. Notwithstanding the
agreement, Alfonso asked BPI if it was possible to pay in
terms provided that in case the term is disapproved, the
price shall be paid in cash.
Two or three days later, petitioner learned that its offer
to pay on terms had been frozen. Alfonso Lim went to
BPI on July 18, 1988 and tendered the full payment of

P33,056,000.00 to Albano. The payment was refused
because Albano stated that the authority to sell that
particular piece of property in Pasig had been
withdrawn from his unit
An action for specific performance with damages was
thereupon filed on August 25, 1988 by petitioner against
BPI. In the course of the trial, BPI informed the trial
court that it had sold the property under litigation to
NBS
ISSUE:
WON there was a perfected contract of sale between
Limketkai Co. and BPI.
HELD:
There was already a perfected contract of sale because
both parties already agreed to the sale of P1000/sq.m.
Even if Lim tried to negotiate for a payment in terms, it
is clear that if it be disapproved, the payment will be
made in cash.
The perfection of the contract took place when Aromin
and Albano, acting for BPI, agreed to sell and Alfonso
Lim with Albino Limketkai, acting for petitioner
Limketkai, agreed to buy the disputed lot at P1,000.00
per square meter. Aside from this there was the earlier
agreement between petitioner and the authorized
broker. There was a concurrence of offer and
acceptance, on the object, and on the cause thereof.
The phases that a contract goes through may be

summarized as follows:
a. preparation, conception or generation, which is the
period of negotiation and bargaining, ending at the
moment of agreement of the parties;
b. perfection or birth of the contract, which is the
moment when the parties come to agree on the terms
of the contract; and
c. consummation or death, which is the fulfillment or
performance of the terms agreed upon in the contract
BABAO VS. PEREZ, G.R. NO. L-8334, DECEMBER 28,

1957, 102 PHIL. 756
Bienvenido Babao vs. Florencio Perez (Article 1324;
statute
of
fraud)
FACTS: Santiago Babao married the niece of Celestina
Perez. 1924, Santi and Celestina allegedly had a verbal
agreement where Santi was bound to improve the land
of Celestina by leveling, clearing, planting fruits and
other crops; that he will act as the administrator of the
land; that all expenses for labor and materials will be at
his cost, in consideration of which Celestina in turn
bound herself to convey to Santi or his wife of the
land,, with all the improvements after the death of
Celestina. But, shortly before Celestinas death, she
sold the land to another part. Thus, Santi filed this

complaint alleging the sale of the land as fraudulent
and fictitious and prays to recover the land or the
expenses he incurred in improving the land.
ISSUE: whether or not the verbal agreement falls within
the
Stature
of
Frauds
HELD: Contracts which by their terms are not to be
performed within one year, may be taken out of the
statute through performance by one party thereto. All
that is required in such case is complete performance
within the year by one party, however many tears may
have to elapse before the agreement is performed by
the other party. But nothing less than full performance
by one party will suffice, and it has been held that, if
anything remains to be done after the expiration of the
year besides the mere payment of money, the statute
will apply. It is not therefore correct to state that
Santiago Babao has fully complied with his part within
the year from the alleged contract in question.
Having reached the conclusion that all the parol
evidence of appellee was submitted in violation of the
Statute of Frauds, or of the rule which prohibits
testimony against deceased persons, we find
unnecessary to discuss the other issues raised in
appellants'
brief.
The case is dismissed, with costs against appellee.
PATERNO VS. JAO YAN, G.R. NO. L-12218, FEBRUARY

28, 1961, 1 SCRA 631
FACTS:
(1) By a notarized contract under date 3 of June 1948,
the appellees, represented by their attorney-in-fact,
Martina Paterno, leased to the appellant Jao Yan a
parcel of land situated at a corner of Escolta Street and
Plaza Moraga, of the City of Manila, covered by Transfer
Certificate of Title No. 7768. The lease was to be for a
period of seven (7) years, commencing on the 15th of
July, 1948. The leasee bound himself to construct a
building "to be made of strong wooden materials" on the
leased premises, which would become property of the
lessors at the termination of the lease; to pay P5,500,00
monthly rental, and all taxes, charges, and assessments
on the building.
(2) By complaint dated 20 May 1955, subsequently
amended on 20 September 1955, the lessors filed action
to recover from the lessee rentals in the sum
P23,250.00 due for the months of March to June, 1955
and the first days of July, 1955; P7,680 for real estate
taxes and penalties due on the building for the years
1953 to 1955; P2,500.00 attorney's fees; and for the
recovery of the building constructed on the leased
land..
(3) Defendant lessee averred, in his answer, that the

original written contract had been orally extended from
seven (7) to ten (10) years, in consideration of his
constructing a semi-concrete building (instead of the
wooden one originally contemplated), as he actually
had done, at a cost of P13,000.00, higher than the
original wooden structure would have cost; that the
rentals due had been retained by him because of
plaintiff's refusal to recognize the modified contract;
that [plaintiff's refusal to recognize the modified
contract; that plaintiffs maliciously garnished the rents
due from his sub-lessees; and prayed for judgment
compelling plaintiffs to recognize the modified contract
and to pay him damages, material and moral..
Applicable law:
Art. 1403. The following contracts are unenforceable,
unless they are ratified:
(1) Those entered into in the name of another person by
one who has been given no authority or legal
representation, or who has acted beyond his powers;
(2) Those that do not comply with the Statute of Frauds
as set forth in this number. In the following cases an
agreement hereafter made shall be unenforceable by
action, unless the same, or some note or memorandum,
thereof, be in writing, and subscribed by the party
charged, or by his agent; evidence, therefore, of the
agreement cannot be received without the writing, or a
secondary evidence of its contents:
(a) An agreement that by its terms is not to be

performed within a year from the making thereof;
(b) A special promise to answer for the debt, default, or
miscarriage of another;
(c) An agreement made in consideration of marriage,
other than a mutual promise to marry;
(d) An agreement for the sale of goods, chattels or
things in action, at a price not less than five hundred
pesos, unless the buyer accept and receive part of such
goods and chattels, or the evidences, or some of them,
of such things in action or pay at the time some part of
the purchase money; but when a sale is made by
auction and entry is made by the auctioneer in his sales
book, at the time of the sale, of the amount and kind of
property sold, terms of sale, price, names of the
purchasers and person on whose account the sale is
made, it is a sufficient memorandum;
(e) An agreement of the leasing for a longer period than
one year, or for the sale of real property or of an
interest therein;
(f) A representation as to the credit of a third person.
(3) Those where both parties are incapable of giving
consent to a contract.
ISSUE: WON the Statute of Frauds is applicable to the
lease agreement (oral extension)
RTC: Yes, the contract is unenforceable. At the trial,

defendant offered testimonial evidence to support his
claim that the original written contract had been
subsequently modified by oral agreement between the
parties in the manner alleged in the answer; he also
submitted documents filed with the City Engineer's
office,
regarding
the
semi-concrete
building,
conformably to the modificatory oral agreement.
The RTC dismissed such testimony.
HELD: No because there has already been partial
performance.
RATIO:
(1) Partial performance takes an oral contract out of the
scope of the Statute Frauds. "The taking of possession
by the lessee and the making of valuable improvement,
and the like, on the faith of the oral agreement, may
operate to the case out of the prohibition of the
statute, for it would be gross fraud to permit the lessor
in such a case to avoid the lease ." (49 Am. Jur. p. 809,
sec. 106, case cited) The expenditure of money by a
tenant in making improvement on the premises on the
faith of an oral agreement for a lease for a further
term, may be viewed not only as constituting in itself an
act of part performance but as furnishing strong if not
conclusive evidence that possession is continued under
the oral contract and not as a tenant holding over under
the original lease. (49 Am. Jur. 810; 33 A.L.R.. 1489,
1501).
Paul Reiss, et al. vs. Jose M. Memije, G.R. No. 5447,

March 1, 1910, 15 Phil. 167
FACTS:
ISSUE:
HELD:
RATIO:
Defendant appellant entered into a contract with one
Buenaventura Kabalsa for the repair of a house in the
city of Manila. The contractor undertook to furnish the
necessary materials, including a considerable amount of
lumber, to be used in the repairs. The contractor being
a man of no commercial standing in the community was
unable to secure credit therefor, and was compelled to
pay cash for all purchases. Having no money and no
credit he was unable to continue the purchase of the
necessary lumber, plaintiffs, with whom he was dealing,
absolutely refusing to allow any lumber to leave their
yard without payment in advance. The work on the
house being delayed for the lack of the necessary
materials, defendant accompanied the contractor to
plaintiffs' lumber yard, and after satisfying plaintiffs as
to his own financial responsibility, and that as a
property owner and an attorney in active practice in the

city of Manila, he was good for the amount of lumber
needed in the repair of his house, he entered into an
agreement with them whereby they were to deliver the
necessary lumber to the contractor for use in the repair
of his house.
In pursuance of and in accordance with the directions of
the defendant, plaintiffs delivered to Kabalsa a
considerable amount of lumber which was used in the
repairs upon defendant's house, and judgment in this
action was rendered in favor of the plaintiffs for the
proven amount of the unpaid balance of the purchase
price of this lumber.
Appellant makes various assignments of error, and
contends: First, that the trial court erred in declining to
allow an amendment to defendant's answer for the
purpose of formally denying plaintiff's allegations as to
defendant's guaranty of payment of the purchase price
of the lumber; second, that the trial court erred in
failing to set out in its decision the finding of facts upon
which the judgment rests; third, that the evidence of
record does not sustain a finding that the defendant did
in fact assume responsibility for the payment of the
purchase price of the lumber delivered to his
contractor; and forth, that even if it be held that he did
so, then since the alleged promise, as set up by
plaintiffs in their evidence, merely guaranteed payment
for the lumber and was not in writing, proof thereof was
not admissible in evidence, and defendant was not
bound thereby, under the provisions of section 335 of
the Code of Civil Procedure.
The alleged errors of procedures may be dismissed
without much discussion. We think a reading of the
judgment itself clearly discloses that the trial judge did
in fact make the necessary findings of fact, and that he
expressly held that, admitting all the evidence offered
by both parties, the evidence of record establishes the
existence of defendant's promise to pay for the lumber,
and discloses the existence of a balance due on account
of the lumber delivered to defendant's contractor.
Without considering whether, under the pleadings, the
defendant's evidence should have been stricken out of
the record and his motion to amend his answer denied,
as appears to have been the opinion of the trial court,
we agree with the trial court that even if the evidence
be admitted and the complaint amended, the weight of
all the evidence, including the evidence, thus admitted,
supports the plaintiffs' allegation touching defendants'
promise to pay for the lumber in question, and
establishes his contention that this lumber was in fact
delivered to the defendant's contractor, and by him
used in the construction of the house under the
direction of the defendant, and that the amount for
which the judgment was given in the court below was
the amount of the unpaid purchase price of the lumber
thus delivered. If, therefore, it was error of the trial

court to rule that defendant's evidence should be
stricken from the record and that defendant's answer
should not be amended in accordance with a motion for
that purpose made three weeks after judgment was
rendered, it was at most error without prejudice.
The only question that remains is defendant's
contention that his alleged guaranty of payment of the
purchase price of the lumber furnished at his request to
his contractor Kabalsa not being in writing, it is
unenforceable in this action.
Section 335 of Act No. 190 is as follows:
In the following cases an agreement hereafter
made shall be unenforceable by action unless the
same, or some note or memorandum thereof, by
in writing, and subscribed by the party charged,
or by his agent; evidence, therefore, of the
agreement can not be received without the
writing, or secondary evidence of its contents:
xxx
xxx
xxx
2 A special promise to answer for the debt,

default, or miscarriage of another;
xxx
xxx
xxx
An immense amount of litigation has arisen in England

and the United States over the construction of similar
provisions which are found in most, if not all, of the socalled statutes of fraud which have been enacted in
those jurisdictions, and many courts and text writer
have acknowledged their inability to find anything like
uniform rules of construction in the conflicting decisions
which have been rendered, applying the statute to the
infinite variety of facts which have presented
themselves; so that it has been said by some that the
law upon the subject is in a state of hopeless confusion.
The true test as to whether a promise is within the
statute had been said to lie in the answer to the
question whether the promise is an original or a
collateral one. If the promise is an original or an
independent one; that is, if the promisor becomes
thereby primarily liable for the payment of the debt,
the promise is not within the statute. But, on the other
hand, if the promise is collateral to the agreement of
another and the promisor becomes thereby merely a
surety, the promise must be in writing. (Gull vs. Lindsay,
4 Exch. 45; and other cases cited under note 2, p. 906,
Encyclopedia of Law, vol. 29.)
Just what is the character of a promise as
original or collateral is a question of law and fact
which must in each case be determined from the
evidence as to the language used in making the
promise, and the circumstances under which the

promise was made; and, since as a general rule
the parties making a promise of this nature rarely
understand the legal and technical difference
between an original and a collateral promise, the
precise form of words used, even when
established by undisputed testimony is not always
conclusive. So that it is said that "While, as a
matter of law, a promise, absolute in form, to
pay or to be 'responsible' or to be the 'paymaster,'
is an original promise, and while, on the other
hand, if the promisor says, 'I will see you paid,' or
'I will pay if he does not,' or uses equivalent
words, the promise standing alone is collateral,
yet under all the circumstances of the case, an
absolute promise to pay, or a promise to be
'responsible,' may be found to be collateral, or
promises deemed prima facie collateral may be
adjudged original." (Encyclopedia of Law, 2d ed.,
vol. 29, p. 907, and many cases there cited.)
If goods are sold upon the sole credit and responsibility
of the party who make the promise, then, even though
they be delivered to a third person, there is no liability
of the third person to which that of the party promising
can be collateral, and consequently such a promise to
pay does not require a memorandum in writing; and on
the same principle it has been held that when one
advances money at the request of another (on his
promise to repay it) to pay the debt of a third party, as

the payment creates no debt against such third party,
not being made at all upon his credit, the liability of the
party on whose request and promise it was made is
original and not collateral, and not with the Statute of
Frauds. (Pearse vs. Blagrave, 3 Com. Law, 338; Prop'rs.
of Upper Locks vs.Abbott, 14 N. H., 157.) But it has
been said that if the person for whose benefit the
promise is made was himself liable at all, the promise
of
the
defendant
must
be
in
writing.
(Matson vs. Wharam, 2 T. R., 80.) And the text writers
point out that if this rule be understood as confined to
cases where a third party and the defendant are liable
in the same way, and to do the same thing, one as
principal and the other as surety, it may be accepted as
the uniform doctrine of all the cases both in England
and in the United States. (Browse on the Statute of
Frauds, par. 197, and cases there cited.) In such cases,
the defendant is said to come in aid to procure the
credit to be given to the principal debtor, and the
question, therefore, ultimate is "upon whose credit the
goods were sold or the money advanced, or whatever
other thing done which the defendant by his promise
procured to be done;" and where the defendant stands
in the relation to the third party of surety to principal
"if any credit at all be given to the third party, the
defendant's promise is required to be in writing as
collateral." (Browne on the Statute of Frauds, p. 227,
and notes 2 and 4.) But it must be clearly recognized
that these principles are applicable only where the

parties are liable in the same way to do the same thing,
one as principal and the other as surety, for if the credit
is given to both jointly, since neither can be said to be
surety for the other to the creditor, their engagement
need not be in writing.
As has been said before, it is frequently a matter of
difficulty to determine to whom the credit has actually
been given, whether to the defendant alone, in which
case the debt is his own and his promise is good without
writing; or in part to the third party, in which case the
defendant's promise being collateral to and in aid of the
third party's liability, requires a writing to support it, or
to both jointly, in which case as has been said their
engagement need not be in writing. This must be
determined from the language and expressions used by
the parties promising, and from an examination of the
circumstance showing the understanding of the parties.
The unexplained fact that charges were made against a
third party on the plaintiffs' books, or that the bill was
presented to the original debtor in the first
instance, unqualified by special circumstances, tends to
prove that the credit was given in whole or in part to
him, and that the defendant's promise is a collateral
one. (Larson vs. Wyman, 14 Wend. (N.Y.), 246;
Pennell vs. Pentz, 4 E. D. Smith (N. Y.), 639.) But it is
evidently quite impossible to specify any one fact or set
of facts on which the question as to whom the plaintiff
gave credit is to be determined. In the language of

Buchanan, C.J., in Elder vs. Warfield (7 Harris & (Md.),
397), "the extent of the understaking, the express in
used, the situation of the parties, and all the
circumstances of the case should be taken into
consideration."
Application of these principles has been made in many
cases where owners of buildings going up under contract
enter into agreements upon the faith of which
subcontractors or other have continued to supply labor
or material after the principle contractor has become
either actually or probably unable to pay. In these
cases, the question is whether the services for which
the action is brought against the owner of the building
were performed solely upon the credit of his promise,
to be himself responsible and to pay for the materials
and labor furnished, or whether the subcontractors and
laborers continued to furnish labor and materials to the
principal contractor relying upon his obligation
guaranteed by the promise of the owner.
(Gill vs. Herrick, 11 Mass., 501; Walker vs. Hill, 119
Mass., 249; Clifford vs. Luhring, 69 Ill., 401;
Rawson vs. Springsteen, 2 Thomp. & C. (N. Y.), 416;
Belknap vs. Bender, 6 Thomp. & C. (N.Y.), 611; Jefferson
County vs. Slagle,
66
Pa.
St.,
202.
See
Eshleman vs. Harnish, 76 Pa. St., 97; Harvey vs. Mercur,
78 Pa. St., 257; Weyland vs. Critchfield, 3 Grant (Pa.),
113; Lakeman vs. Mountstephen, L.R. 7 H. L., 17.)
Taking into consideration all the circumstances of the

case at bar, we are satisfied that the credit for the
lumber delivered by the plaintiffs to defendant's
contractor was extended solely and exclusively to the
defendant under the verbal agreement had with him,
and therefore, that the provisions of the statue did not
require that it should be made in writing. Defendant
admitted on the stand that his contractor had no
commercial credit or standing in the community, and it
appears that plaintiffs, after investigation, absolutely
refused to extent him any credit whatever upon any
conditions and that the defendant was well aware of
that fact. From the testimony of the contractor himself,
it seems clear that when the agreement for the delivery
of lumber was made, the credit was extended not to
the contractor but to the defendant. It appears that
both plaintiffs and defendant exercised especial
precautions to see that all the lumber was delivered on
defendant's lot, and that before each bill of lumber was
delivered, defendant carefully examined the invoice,
which the agreement was submitted to him, and that no
lumber was delivered without his approval. The precise
language in which the verbal agreement was made does
not appear from the evidence, and while it is true that
one of the plaintiffs in his disposition, made in the
United States, refers to the agreement as one whereby
defendant "guaranteed" payment for the lumber, we are
satisfied from all the evidence that the word was not
used by this witness in its technical sense, and that he
did not mean thereby to say that defendant guaranteed

payment by the contractor, but rather that after
satisfying plaintiffs as to his own financial responsibility,
he obligated himself to pay for the lumber delivered to
his contractor for use in his house. The only evidence in
the whole record which tends to put our conclusion in
this regard in doubt, is the testimony of plaintiffs'
acting manager during plaintiffs' absence in the United
States who stated that he sent a statement of account
and a bill for the lumber to the contractor; but this
fact, which under ordinary circumstances would be
strong evidence that the credit was originally extended
to the contractor and merely guaranteed by the
defendant, was satisfactorily and sufficiently explained
by proof that plaintiffs were compelled to leave for the
United States quite unexpectedly, with no opportunity
to go over the accounts with their acting manager, who
was left in charge, so that the latter having no
knowledge whatever as to plaintiffs' agreement with
defendant, and learning that the lumber had been
delivered to the contractor, supposed that it had been
sold to him, and only discovered his mistake on later
investigation and correspondence with his principals,
after the contractor had notified him as to the true
nature of the transaction.
The judgment appealed from should be affirmed with
the costs of this instance against the appellant. So
ordered.
Arellano, C.J., Torres, Mapa, Johnson and Moreland,

JJ., concur.
GONZALO VS. TARNATE, JR., G.R. NO. 160600,

JANUARY 15, 2014
FACTS:
ISSUE:
HELD:
RATIO:
What is "In Pare Delicto"?
"In pare delicto" is a doctrine which stipulates that the
guilty parties to an illegal contract are not entitled to
any relief. It literally means that both parties are in
equal fault and it follows that both of them can't
recover from each of them any damages or any other
relief from law.
under the deed of assignment but without the award of

exemplary damages in favor of Tarnate, Jr. for failure to
show that the defendant Gonzalo acted in wanton,
fraudulent, reckless, oppressive or malevolent manner.
Photo credits to www.ramirezlaw.blogspot.com

In a recent decided case from the Supreme Court of the
Philippines, particularly the case of Gonzalo vs. Tarnate,
Jr. (G.R. No. 160600), the doctrine of "in pare delicto"
was put to a test. This case sprung out from a
prohibited subcontracting of a contract with a DPWH
pursuant to Sec. 6 of PD 1594. However, Gonzalo as a
contractor of DPWH subcontracted Tarnate, Jr. As a
consequence, Gonzalo and Tarnate, Jr. entered into a
deed of assignment contract in favor of the latter.
However, later on, Tarnate learned that Gonzalo
unilaterally rescinded the deed of assignment. Hence,
Tarnate, Jr. filed a case in the Regional Trial Court.
The initial finding of RTC was in favor of Tarnate, Jr.
Gonzalo was ordered to comply with his obligations
Gonzalo appealed the case to the Court of Appeals (CA).

The CA did not apply the doctrine of "in pare delicto" to
the case explaining that the said doctrine is only
applicable if the fault of one party was more or less
equivalent to the fault of the other party. The CA ruled
in favor of Tarnate, Jr. again this time. It found that
Gonzalo is more guilty than Tarnate, Jr to the extent of
violating the deed of assignment. It declared Gonzalo
to pay Tarnate, Jr. the agreed 10% retention fee (based
from the deed of assignment) for the said amount had
unjustly enriched Gonzalo. It was noted that Gonzalo
made use of the equipment of Tarnate, Jr. for the DPWH
project.
Gonzalo filed a petition for review of the decision of the
CA before the Supreme Court. The SC denied Gonzalo's
petition. Below are the very significant provisions (most
are based from the Civil Code of the Philippines) and
findings of the Supreme Court on this case:
1.
Illegal subcontract - The SC ruled that the
subcontract was illegal because it did not comply with
the requirements of PD 1594. It is clear from the
provisions of PD 1594 that every contractor is prohibited
from subcontracting with or assigning to another person
any contract or project that he has with DPWH unless
the DPWH Secretary has approved the subcontracting
assignment.
2.
Illegal deed of assignment - The deed of
assignment is also illegal because it sprung from an
illegal subcontract. Since there was no legal
subcontract that existed, there will be no legal deed of
assignment to speak of.
3.
Article 1409 of the Civil Code - This provides that
"a contract whose cause, object or purpose is contrary
to law is void or not existing." A void contract can not
produce a valid one.
4.
Article 1422 of the Civil Code - This also provides
that "a contract which is the direct result of a previous
illegal contract is also void and inexistent."
5.
Article 1412 of the Civil Code - This provides that
the guilty parties to an illegal contract cannot recover
from one another and are not entitled to an affirmative
relief because they are "in pare delicto" or in equal
fault.
6.
Article 22 of the Civil Code - This provision states
that "every person who through an act of performance
by another, or any other means, acquires or comes into
possession of something at the expense of the latter
without just or legal ground, shall return the same to
him."
The final decision of SC is in favor of Tarnate, Jr. The
previous decision of the RTC and CA to properly
adjudged Gonzalo to be liable for Tarnate, Jr. in the
amount of 10% retention fee are confirmed as correct.
Gonzalo's defense of his payment of the 10% retention
fee was conditioned that Tarnate has to pay his personal
debt to Congressman Dominguez was set aside.
Burdening Tarnate to pay his personal debt would
constitute an another unjust enrichment case.
However, there was no damages in favor of Tarnate, Jr.

since the contract was void. A void and nonexistent
contract produces no juridical tie between the parties
involved.
The doctrine of "in pare delicto" as in this case, can not
prevent a recovery if doing so violates the public policy
against unjust enrichment. Gonzalo's unjust enrichment
overcome the doctrine of "in pare delicto". In addition,
the illegality of their contract should not be allowed to
deprive Tarnate, Jr. from being fully compensated what
is recoverable including the imposition of a legal
interest of 6% per annum. But, this is without the award
for moral damages, attorney's fees and litigation
expenses. Gonzalo as the petitioner has been ordered
to pay for costs of the suit.
Full Case:
Republic
SUPREME
Manila
of
the
Philippines
COURT
FIRST DIVISION
G.R. No. 160600
January 15, 2014
DOMINGO
GONZALO, Petitioner,
vs.
JOHN TARNATE, JR., Respondent.
DECISION
BERSAMIN, J.:
The doctrine of in pari delicto which stipulates that the
guilty parties to an illegal contract are not entitled to
any relief, cannot prevent a recovery if doing so
violates the public policy against unjust enrichment.
Antecedents
After the Department of Public Works and Highways
(DPWH) had awarded on July 22, 1997 the contract for
the improvement of the Sadsadan-Maba-ay Section of
the Mountain Province-Benguet Road in the total
amount of 7 014 963 33 to his company, Gonzalo
Construction,1 petitioner Domingo Gonzalo (Gonzalo)
subcontracted to respondent John Tarnate, Jr. (Tarnate)
on October 15, 1997, the supply of materials and labor
for the project under the latter s business known as JNT
Aggregates. Their agreement stipulated, among others,
that Tarnate would pay to Gonzalo eight percent and
four percent of the contract price, respectively, upon
Tarnate s first and second billing in the project.2
In furtherance of their agreement, Gonzalo executed on
April 6, 1999 a deed of assignment whereby he, as the
contractor, was assigning to Tarnate an amount
equivalent to 10% of the total collection from the DPWH
for the project. This 10% retention fee (equivalent
to P233,526.13) was the rent for Tarnates equipment
that had been utilized in the project. In the deed of

assignment, Gonzalo further authorized Tarnate to use
the official receipt of Gonzalo Construction in the
processing of the documents relative to the collection
of the 10% retention fee and in encashing the check to
be issued by the DPWH for that purpose.3 The deed of
assignment was submitted to the DPWH on April 15,
1999. During the processing of the documents for the
retention fee, however, Tarnate learned that Gonzalo
had unilaterally rescinded the deed of assignment by
means of an affidavit of cancellation of deed of
assignment dated April 19, 1999 filed in the DPWH on
April 22, 1999;4 and that the disbursement voucher for
the 10% retention fee had then been issued in the name
of Gonzalo, and the retention fee released to him.5
Tarnate demanded the payment of the retention fee
from Gonzalo, but to no avail. Thus, he brought this suit
against Gonzalo on September 13, 1999 in the Regional
Trial Court (RTC) in Mountain Province to recover the
retention fee of P233,526.13, moral and exemplary
damages for breach of contract, and attorneys fees.6
In his answer, Gonzalo admitted the deed of assignment
and the authority given therein to Tarnate, but averred
that the project had not been fully implemented
because of its cancellation by the DPWH, and that he
had then revoked the deed of assignment. He insisted
that the assignment could not stand independently due
to its being a mere product of the subcontract that had

been based on his contract with the DPWH; and that
Tarnate, having been fully aware of the illegality and
ineffectuality of the deed of assignment from the time
of its execution, could not go to court with unclean
hands to invoke any right based on the invalid deed of
assignment or on the product of such deed of
assignment.7
Ruling of the RTC
On January 26, 2001, the RTC, opining that the deed of
assignment was a valid and binding contract, and that
Gonzalo must comply with his obligations under the
deed of assignment, rendered judgment in favor of
Tarnate as follows:
WHEREFORE, premises considered and as prayed for by
the plaintiff, John Tarnate, Jr. in his Complaint for Sum
of Money, Breach of Contract With Damages is hereby
RENDERED in his favor and against the above-named
defendant Domingo Gonzalo, the Court now hereby
orders as follows:
1. Defendant Domingo Gonzalo to pay the
Plaintiff, John Tarnate, Jr., the amount of TWO
HUNDRED THIRTY THREE THOUSAND FIVE
HUNDRED TWENTY SIX and 13/100 PESOS
(P233,526.13)
equipment;
representing
the
rental
of
2. Defendant to pay Plaintiff the sum of THIRTY

THOUSAND (P30,000.00) PESOS by way of
reasonable
Attorneys
Fees
for
having
forced/compelled the plaintiff to litigate and
engage the services of a lawyer in order to
protect his interest and to enforce his right. The
claim of the plaintiff for attorneys fees in the
amount of FIFTY THOUSAND PESOS (P50,000.00)
plus THREE THOUSAND PESOS (P3,000.00) clearly
appears to be unconscionable and therefore
reduced to Thirty Thousand Pesos (P30,000.00) as
aforestated making the same to be reasonable;
3. Defendant to pay Plaintiff the sum of FIFTEEN
THOUSAND PESOS (P15,000.00) by way of
litigation expenses;
4. Defendant to pay Plaintiff the sum of TWENTY
THOUSAND PESOS (P20,000.00) for moral
damages and for the breach of contract; and
5. To pay the cost of this suit.
Award of exemplary damages in the instant case is not
warranted for there is no showing that the defendant
acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner analogous to the case of Xentrex

Automotive, Inc. vs. Court of Appeals, 291 SCRA 66.8
Upon denial of his motion for reconsideration, 10 Gonzalo

has now come to the Court to seek the review and
reversal of the decision of the CA.
Gonzalo appealed to the Court of Appeals (CA).

Issues
Decision of the CA
On February 18, 2003, the CA affirmed the RTC.
Although holding that the subcontract was an illegal

agreement due to its object being specifically
prohibited by Section 6 of Presidential Decree No. 1594;
that Gonzalo and Tarnate were guilty of entering into
the illegal contract in violation of Section 6 of
Presidential Decree No. 1594; and that the deed of
assignment, being a product of and dependent on the
subcontract, was also illegal and unenforceable, the CA
did not apply the doctrine of in pari delicto, explaining
that the doctrine applied only if the fault of one party
was more or less equivalent to the fault of the other
party. It found Gonzalo to be more guilty than Tarnate,
whose guilt had been limited to the execution of the
two illegal contracts while Gonzalo had gone to the
extent of violating the deed of assignment. It declared
that the crediting of the 10% retention fee equivalent
to P233,256.13 to his account had unjustly enriched
Gonzalo; and ruled, accordingly, that Gonzalo should
reimburse Tarnate in that amount because the latters
equipment had been utilized in the project.
Gonzalo contends that the CA erred in affirming the RTC

because: (1) both parties were in pari delicto; (2) the
deed of assignment was void; and (3) there was no
compliance with the arbitration clause in the
subcontract.
Gonzalo submits in support of his contentions that the
subcontract and the deed of assignment, being
specifically prohibited by law, had no force and effect;
that upon finding both him and Tarnate guilty of
violating the law for executing the subcontract, the RTC
and the CA should have applied the rule of in pari
delicto, to the effect that the law should not aid either
party to enforce the illegal contract but should leave
them where it found them; and that it was erroneous to
accord to the parties relief from their predicament.11
Ruling
We deny the petition for review, but we delete the
grant of moral damages, attorneys fees and litigation
expenses.
There is no question that every contractor is prohibited

from subcontracting with or assigning to another person
any contract or project that he has with the DPWH
unless the DPWH Secretary has approved the
subcontracting or assignment. This is pursuant to
Section 6 of Presidential Decree No. 1594, which
provides:
Section 6. Assignment and Subcontract. The contractor
shall not assign, transfer, pledge, subcontract or make
any other disposition of the contract or any part or
interest therein except with the approval of the
Minister of Public Works, Transportation and
Communications, the Minister of Public Highways, or the
Minister of Energy, as the case may be. Approval of the
subcontract shall not relieve the main contractor from
any liability or obligation under his contract with the
Government nor shall it create any contractual relation
between the subcontractor and the Government.
Gonzalo, who was the sole contractor of the project in
question, subcontracted the implementation of the
project to Tarnate in violation of the statutory
prohibition. Their subcontract was illegal, therefore,
because it did not bear the approval of the DPWH
Secretary. Necessarily, the deed of assignment was also
illegal, because it sprung from the subcontract. As aptly
observed by the CA:
x x x. The intention of the parties in executing the Deed

of Assignment was merely to cover up the illegality of
the sub-contract agreement. They knew for a fact that
the DPWH will not allow plaintiff-appellee to claim in
his own name under the Sub-Contract Agreement.
Obviously, without the Sub-Contract Agreement there
will be no Deed of Assignment to speak of. The illegality
of the Sub-Contract Agreement necessarily affects the
Deed of Assignment because the rule is that an illegal
agreement cannot give birth to a valid contract. To rule
otherwise is to sanction the act of entering into
transaction the object of which is expressly prohibited
by law and thereafter execute an apparently valid
contract to subterfuge the illegality. The legal
proscription in such an instance will be easily rendered
nugatory and meaningless to the prejudice of the
general public.12
Under Article 1409 (1) of the Civil Code, a contract
whose cause, object or purpose is contrary to law is a
void or inexistent contract. As such, a void contract
cannot produce a valid one.13 To the same effect is
Article 1422 of the Civil Code, which declares that "a
contract, which is the direct result of a previous illegal
contract, is also void and inexistent."
We do not concur with the CAs finding that the guilt of
Tarnate for violation of Section 6 of Presidential Decree
No. 1594 was lesser than that of Gonzalo, for, as the CA

itself observed, Tarnate had voluntarily entered into the
agreements with Gonzalo.14 Tarnate also admitted that
he did not participate in the bidding for the project
because he knew that he was not authorized to contract
with the DPWH.15 Given that Tarnate was a businessman
who had represented himself in the subcontract as
"being financially and organizationally sound and
established, with the necessary personnel and
equipment for the performance of the project," 16 he
justifiably presumed to be aware of the illegality of his
agreements with Gonzalo. For these reasons, Tarnate
was not less guilty than Gonzalo.
According to Article 1412 (1) of the Civil Code, the
guilty parties to an illegal contract cannot recover from
one another and are not entitled to an affirmative relief
because they are in pari delicto or in equal fault. The
doctrine of in pari delicto is a universal doctrine that
holds that no action arises, in equity or at law, from an
illegal contract; no suit can be maintained for its
specific performance, or to recover the property agreed
to be sold or delivered, or the money agreed to be paid,
or damages for its violation; and where the parties are
in pari delicto, no affirmative relief of any kind will be
given to one against the other.17
Nonetheless, the application of the doctrine of in pari
delicto is not always rigid.1wphi1 An accepted
exception arises when its application contravenes wellestablished public policy.18 In this jurisdiction, public
policy has been defined as "that principle of the law
which holds that no subject or citizen can lawfully do
that which has a tendency to be injurious to the public
or against the public good."19
Unjust enrichment exists, according to Hulst v. PR
Builders, Inc.,20 "when a person unjustly retains a
benefit at the loss of another, or when a person retains
money or property of another against the fundamental
principles of justice, equity and good conscience." The
prevention of unjust enrichment is a recognized public
policy of the State, for Article 22 of the Civil Code
explicitly provides that "[e]very person who through an
act of performance by another, or any other means,
acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall
return the same to him." It is well to note that Article
22 "is part of the chapter of the Civil Code on Human
Relations, the provisions of which were formulated as
basic principles to be observed for the rightful
relationship between human beings and for the stability
of the social order; designed to indicate certain norms
that spring from the fountain of good conscience; guides
for human conduct that should run as golden threads
through society to the end that law may approach its
supreme ideal which is the sway and dominance of
justice."21
There is no question that Tarnate provided the

equipment, labor and materials for the project in
compliance with his obligations under the subcontract
and the deed of assignment; and that it was Gonzalo as
the contractor who received the payment for his
contract with the DPWH as well as the 10% retention fee
that should have been paid to Tarnate pursuant to the
deed of assignment.22 Considering that Gonzalo refused
despite demands to deliver to Tarnate the stipulated
10% retention fee that would have compensated the
latter for the use of his equipment in the project,
Gonzalo would be unjustly enriched at the expense of
Tarnate if the latter was to be barred from recovering
because of the rigid application of the doctrine of in
pari delicto. The prevention of unjust enrichment called
for the exception to apply in Tarnates favor.
Consequently, the RTC and the CA properly adjudged
Gonzalo liable to pay Tarnate the equivalent amount of
the 10% retention fee (i.e., P233,526.13).
Gonzalo sought to justify his refusal to turn over
the P233,526.13 to Tarnate by insisting that he
(Gonzalo) had a debt of P200,000.00 to Congressman
Victor Dominguez; that his payment of the 10%
retention fee to Tarnate was conditioned on Tarnate
paying that debt to Congressman Dominguez; and that
he refused to give the 10% retention fee to Tarnate
because Tarnate did not pay to Congressman
Dominguez.23 His
justification
was
unpersuasive,
however, because, firstly, Gonzalo presented no proof of

the debt to Congressman Dominguez; secondly, he did
not competently establish the agreement on the
condition that supposedly bound Tarnate to pay to
Congressman Dominguez;24 and, thirdly, burdening
Tarnate with Gonzalos personal debt to Congressman
Dominguez to be paid first by Tarnate would constitute
another case of unjust enrichment.
The Court regards the grant of moral damages,
attorneys fees and litigation expenses to Tarnate to be
inappropriate. We have ruled that no damages may be
recovered under a void contract, which, being
nonexistent, produces no juridical tie between the
parties involved.25 It is notable, too, that the RTC and
the CA did not spell out the sufficient factual and legal
justifications for such damages to be granted.
Lastly, the letter and spirit of Article 22 of the Civil
Code command Gonzalo to make a full reparation or
compensation to Tarnate. The illegality of their contract
should not be allowed to deprive Tarnate from being
fully compensated through the imposition of legal
interest. Towards that end, interest of 6% per annum
reckoned from September 13, 1999, the time of the
judicial demand by Tarnate, is imposed on the amount
of P233,526.13. Not to afford this relief will make a
travesty of the justice to which Tarnate was entitled for
having suffered
enrichment.
too
long
from
Gonzalos
unjust
SECOND DIVISION
G.R. No. 192861
June 30, 2014
WHEREFORE, we AFFIRM the decision promulgated on

February 18, 2003, but DELETE the awards of moral
damages, attorneys fees and litigation expenses;
IMPOSE legal interest of 6% per annum on the principal
oLP233,526.13 reckoned from September 13, 1999; and
DIRECT the petitioner to pay the costs of suit.
LINDA
RANA, Petitioner,
vs.
TERESITA LEE WONG, SPS. SHIRLEY LEE ONG and
RUBEN ANG ONG, represented by their Attorney-infact WILSON UY, and SPS. ROSARIO and.WILSON
UY, Respondents.
SO ORDERED.
x-----------------------x
G.R. No. 192862
FACTS:
SPS. ROSARIO and WILSON UY, WILSON UY as attorneyin-fact of TERESITA LEE WONG, and SPS. SHIRLEY LEE
ONG
and
RUBEN
ANG
ONG, Petitioners,
vs.
SPS. REYNALDO. and LINDA RANA, Respondents.
ISSUE:
DECISION
RANA VS. WONG, ET AL., G.R. NO. 192861, JUNE 30,

2014
PERLAS-BERNABE, J.:
HELD:
RATIO:
Republic
SUPREME
Manila
of
the
Philippines
COURT
Assailed in these consolidated petitions for review on

certiorari1 are the Decision2 dated July 13, 2005 and the
Resolution3 dated June 18, 2010 of the Court of Appeals
(CA) in CA-G.R. CV No. 78463 which affirmed the
Decision4 dated December 20, 2002 of the Regional Trial
Court of Cebu City, 7th Judicial Region, Branch 22 (RTC)
in Civil Case Nos. CEB-20893 and CEB-21296.
The Facts
The RTC Proceedings
Teresita Lee Wong (Wong) and Spouses Shirley and

Ruben Ang Ong (Sps. Ong) are co-owners pro-indivisoof a
residential land situated in Peace Valley Subdivision,
Lahug, Cebu City, covered by Transfer Certificate of
Title
(TCT)
No.
1391605 (Wong-Ong
property),
6
7
abutting a 10-meter wide subdivision road (subject
road).
On September 19, 1997, Wong, Sps. Ong, and Sps. Uy

(Wong, et al.) filed a Complaint17 for Abatement of
Nuisance with Damages against Sps. Rana before the
RTC, docketed as Civil Case No. CEB-20893, seeking to:
(a) declare the subject portion as a nuisance which
affected the ingress and egress of Wong and Sps. Ong to
their lot "in the usual and [normal] manner, such that
they now have to practically jump from the elevated
road to gain access to their lot and scale the same
elevation in order to get out";18 (b) declare the subject
backfilling as a nuisance considering that it poses a
clear and present danger to the life and limb of the Uy
family arising from the premature weakening of Sps.
Uys perimeter fence due to the seeping of rain water
from the Rana property that could cause its sudden
collapse;19 (c) compel Sps. Rana to restore the subject
portion to its original condition; (d) compel Sps. Rana to
remove the backfilling materials along Sps. Uys
perimeter fence and repair the damage to the fence;
and (e) pay moral and exemplary damages, attorneys
fees, litigation expenses, and costs of suit.20
On the opposite side of the subject road, across the

Wong-Ong property, are the adjacent lots of Spouses
Wilson and Rosario Uy (Sps. Uy) and Spouses Reynaldo
and Linda Rana (Sps. Rana), respectively covered by
TCT Nos. 1240958 (Uy property) and T-1155699 (Rana
property). The said lots follow a rolling terrain 10 with
the Rana property standing about two (2)
meters11 higher than and overlooking the Uy property,
while the Wong-Ong property is at the same level with
the subject road.12
Sometime in 1997, Sps. Rana elevated and cemented a
portion of the subject road that runs between the Rana
and Wong-Ong properties (subject portion) in order to
level the said portion with their gate. 13 Sps. Rana
likewise backfilled a portion (subject backfilling) of the
perimeter fence separating the Rana and Uyproperties
without erecting a retaining wall that would hold the
weight of the added filling materials. The matter was
referred to the Office of the Barangay Captain of
Lahug14 as well as the Office of the Building Official of
Cebu City (OBO),15 but to no avail.16
In their Answer dated October 23, 1997, 21 Sps. Rana

countered that prior to the construction of their
residence, there was no existing road and they merely
developed the subject portion which abuts their gate in
view of the rolling terrain. They claimed thatWong and
Sps. Ong do not have any need for the subject portion
because their property is facing an existing road, i.e.,
Justice Street. They likewise denied having undertaken
any backfilling along the boundary of the Uy property
considering the natural elevation of their own property,

which renders backfilling unnecessary.22
After the filing of Sps. Ranas Answer, Wong, et al., in
turn, filed a Motion for Leave to be Allowed to Bring in
Heavy Equipment23 for the intermediate development of
the Wong-Ong property with a view to the use of the
subject road as access to their lot. Notwithstanding Sps.
Ranas opposition, the RTC granted Wong,et al.s motion
in an Order24 dated November 27, 1997 (November 27,
1997 Order), the dispositive portion of which reads as
follows: WHEREFORE, as prayed for, the motion is
hereby GRANTED. Consequently, the plaintiffs are
hereby allowed to use heavy equipments/machineries in
order to develop the area and make use of the right of
way which is located between the [Wong-Ong and Rana
properties]. (Emphasis supplied)
Despite the limited tenor of the November 27, 1997
Order, Wong, et al., on May 23 and 24, 1998, proceeded
to level the subject portion, which, in the process,
hampered Sps. Ranas ingress and egress to their
residence, resulting too to the entrapment of their
vehicle inside their garage.25 Feeling aggrieved, Sps.
Rana, on June 19, 1998, filed a Supplemental
Answer,26 praying for: (a) the restoration of the soil,
boulders, grade, contour, and level of the subject
portion; and (b) payment of moral damages, actual and
consequential damages, and exemplary damages.
Meanwhile, on December 8, 1997, Sps. Rana filed with
another branch of the same trial court a Complaint 27 for
Recovery of Property and Damages against Sps. Uy,
docketed as Civil Case No. CEB-21296. They alleged that

in October 1997, theycaused a resurvey of their
property which purportedly showed that Sps.
Uyencroached upon an11-square meter (sq. m.) portion
along the common boundary of their properties. Their
demands for rectification as well as barangay
conciliation efforts were, however, ignored. Thus, they
prayed that Sps. Uy be ordered to remove their fence
along the common boundary and return the encroached
portion, as well as to pay moral damages, attorneys
fees, and litigation expenses. After the filing of Sps.
Ranas complaint, Civil Case No. CEB-21296 was
consolidated with Civil Case No. CEB-20893.28
In response thereto, Sps. Uy filed an Answer with
Counterclaim,29 averring that prior to putting up their
fence, they caused a relocation survey of their property
and were, thus, confident that their fence did not
encroach upon the Rana property. In view of Sps.Ranas
complaint, they then caused another relocation survey
which allegedly showed, however, that while they
encroached around 3 sq. m. of the Rana property, Sps.
Rana intruded into 7 sq. m. of their property. Hence,
theyposited that they had "a bigger cause than that of
[Sps. Rana] in [so] far as encroachment is
concerned."30 Accordingly, they prayed for the dismissal
of Sps. Ranas complaint with counterclaim for
damages, attorneys fees, and litigation expenses.
In light of the foregoing, the RTC appointed three (3)
commissioners to conduct a resurvey of the Uy and Rana
properties for the purpose of determining if any
encroachment occurred whatsoever.31
The RTC Ruling

On December 20, 2002, the RTC rendered a Decision 32 in
the consolidated cases.
In Civil Case No. CEB-20893, the RTC found that: (a)
Sps. Rana, without prior consultation with the
subdivision owner or their neighbors, developed to their
sole advantage the subject portion consisting of onehalf of the width of the 10-meter subject road by
introducing filling materials, and rip rapping the side of
the road; (b) the said act denied Wong and Sps. Ong the
use of the subject portion and affected the market
value of their property; (c) Sps. Uy have no intention of
using the subject portion for ingress or egress
considering that theybuilt a wall fronting the same; and
(d) Wong, et al.s manner of enforcing the November
27, 1997 Order caused damage and injury to Sps. Rana
and amounted to bad faith. In view of these findings,
the RTC declared that the parties all acted in bad faith,
and, therefore, no relief can be granted to them against
each other.33
Separately, however, the RTC found that the backfilling
done by Sps. Rana on their property exerted pressure on
the perimeter fence of the Uy property, thereby
constituting a nuisance. As such, the former were
directed to construct a retaining wall at their own
expense.34 Meanwhile, in Civil Case No. CEB-21296, the
RTC, despite having adopted the findings of Atty. Reuel
T. Pintor (Atty. Pintor) a court-appointed commissioner
who determined that Sps. Uy encroached the Rana
property by 2 sq. m35 dismissed both the complaint and
counterclaim for damages because of the failure ofboth

parties to substantiate their respective claims of bad
faith against each other.36
Dissatisfied with the RTCs verdict, the parties filed
separate appeals with the CA.
The CA Ruling
On July 13, 2005, the CA rendered a Decision 37 affirming
the RTC.
With respect to Civil Case No. CEB-20893, the CA found
that (a) Sps. Ranas act of elevating and cementing the
subject portion curtailed the use and enjoyment by
Wong and Sps. Ong of their properties; (b) the undue
demolition of the subject portion by Wong, et
al.hampered Sps. Ranas ingress and egress to their
residence and deprived them of the use of their vehicle
which was entrapped in their garage; and (c) both
parties were equally at fault in causingdamage and
injury to each other and, thus, are not entitled to the
reliefs sought for.38
On the other hand, the CA found that the backfilling
done by Sps. Rana on their property requires necessary
works to prevent it from jeopardizing someones life or
limb.39
As for Civil Case No. CEB-21296, the CA sustained the
dismissal of the complaint as well as the parties
respective claims for damages for lack of legal and
factual bases.40
The
parties
filed
separate
motions
for
41
reconsideration which were, however, denied in the
Resolution42 dated June 18, 2010, hence, the instant
petitions.
The Issues Before the Court
In G.R. No. 192861, petitioner Linda Rana (Linda
Rana)43 faults the RTC in (a) not finding Wong and Sps.
Uyguilty of malice and bad faith both in instituting Civil
Case No. CEB-20893 and in erroneously implementing
the November 27, 1997 Order, and (b) failing or refusing
to grant the reliefs initially prayed for,among others,
the reconveyance of the encroached property.44
On the other hand, in G.R. No. 192862, petitioners
Wong, et al. fault the RTC in (a) applying the in pari
delictodoctrine against them and failing to abate the
nuisance45 which still continues and actually exists as
Sps. Rana caused the same to be reconstructed and
restored to their prejudice,46 and (b) not finding Sps.
Rana guilty of bad faith in instituting Civil Case No. CEB21296 and ordering them to pay damages to petitioners
Wong, et al.47
The Courts Ruling
The petitions are partly meritorious.
As both petitions traverse the issues intersectingly, the
Court deems it apt to proceed with its disquisition
according to the subject matters of the cases as
originally filed before the RTC.
A. Civil Case No. CEB-20893

For Abatement of Nuisance and Damages.
Under Article 694 of the Civil Code, a nuisance is
defined as "any act, omission, establishment, business,
condition of property, or anything else which: (1) Injures
or endangers the healthor safety of others; or (2)
Annoys or offends the senses; or(3) Shocks, defies or
disregards decency or morality; or (4) Obstructs or
interferes with the free passage of any public highway
or street, or any body of water;or (5) Hinders or impairs
the use of property." Based on case law, however, the
term "nuisance" is deemed to be "so comprehensive that
it has been applied to almost all ways which have
interfered with the rights of the citizens, either in
person, property, the enjoyment of his property, or his
comfort."48
Article 695 of the Civil Code classifies nuisances with
respect to the object or objects that they affect. In this
regard, a nuisance may either be: (a) a public nuisance
(or one which "affects a community or neighborhood or
any considerable number of persons, although the
extent of the annoyance, danger or damage upon
individuals may be unequal"); or (b) a private nuisance
(or one "that is not included in the foregoing definition"
[or, as case law puts it, one which "violates only private
rights and produces damages to but one or a few
persons"]).49
Jurisprudence further classifies nuisances in relation to
their legal susceptibility to summary abatement (that is,
corrective action without prior judicial permission). In

this regard, a nuisance may either be: (a) a nuisance
per se(or one which "affects the immediate safety of
persons and property and may be summarily abated
under the undefined law of necessity"); 50 or (b) a
nuisance per accidens(or that which "depends upon
certain conditions and circumstances, and its existence
being a question of fact, it cannot be abated without
due hearing thereon ina tribunal authorized to decide
whether such a thing does in law constitute a
nuisance.")51
per sea nuisance warranting its summary abatement

without judicial intervention.
It is a standing jurisprudentialrule that unless a

nuisance is a nuisance per se, it may not be summarily
abated. In Lucena Grand Central Terminal, Inc. v. Jac
Liner, Inc.,52 the Court, citing other cases on the matter,
emphasized the need for judicial intervention when the
nuisance is not a nuisance per se, to wit:
Aside from the remedy of summary abatement which

should be taken under the parameters stated in Articles
70454 (for public nuisances) and 70655 (for private
nuisances) of the Civil Code, a private person whose
property right was invaded or unreasonably interfered
with by the act, omission, establishment, business or
condition of the property of another may file a civil
action to recover personal damages.56 Abatement may
be judicially sought through a civil action therefor 57 if
the pertinent requirements under the Civil Code for
summary abatement, or the requisite that the nuisance
is a nuisance per se, do not concur. To note, the
remedies of abatement and damages are cumulative;
hence, both may be demanded.58
In Estate of Gregoria Francisco v. Court of Appeals, this

Court held:
Respondents can not seek cover under the general
welfare clause authorizing the abatement of nuisances
without judicial proceedings. That tenet applies to a
nuisance per se, or one which affects the immediate
safety of persons and property and may be summarily
abated under the undefined law of necessity. The
storage of copra in the quonset building is a legitimate
business. By its nature, it can not be said to be injurious
to rights of property, of health or of comfort of the
community. If it be a nuisance per accidensit may be so
proven in a hearing conducted for thatpurpose. It is not
In Pampanga Bus Co., Inc. v. Municipality of Tarlacwhere

the appellant-municipality similarly argued that the
terminal involved therein is a nuisance that may be
abated by the Municipal Council viaan ordinance, this
Court held: "Suffice it to say that in the abatement of
nuisances the provisions of the Civil Code (Articles 694707) must be observed and followed. This appellant
failed to do."53 (Emphases supplied; citations omitted)
In the present cases, Wong, et al. availed of the remedy

of judicial abatement and damages against Sps.Rana,
claiming that both the elevated and cemented subject
portionand the subject backfillingare "nuisances"
caused/created by the latter which curtailed their use
and enjoyment of their properties.
With respect to the elevated and cemented subject

portion, the Court finds that the same is not a nuisance
per se. By its nature, it is not injurious to the health or
comfort of the community. It was built primarily to
facilitate the ingress and egress of Sps. Rana from their
house which was admittedly located on a higher
elevation than the subject road and the adjoining Uy
and Wong-Ong properties.Since the subject portion is
not a nuisance per se(but actually a nuisance per
accidensas will be later discussed) it cannot be
summarily abated. As such, Wong, et al.s demolition of
Sps. Ranas subject portion, which was not sanctioned
under the RTCs November 27, 1997 Order,remains
unwarranted. Resultantly, damages ought to be awarded
in favor of Sps. Rana particularly that of (a) nominal
damages59 for the vindication and recognition of Sps.
Ranas right to be heard before the court prior to Wong,
et al.sabatement of the subject portion (erroneously
perceived as a nuisance per se) and (b) temperate
damages60 for the pecuniary loss owing to the
demolition of the subject portion, which had been
established albeit uncertain as to the actual amount of
loss.
Sps. Ranas entitlement to the above-mentioned
damages, however, only stands in theory.1wphi1 This is
because the actual award thereof is precluded by the
damage they themselves have caused Wong, et al. in
view of their construction of the subject portion. As the
records establish, Sps. Rana, without prior consultation
with Wong, et al. and to their sole advantage, elevated
and cemented almost half61 of the 10-meter wide
subject road. As homeowners of Peace Valley
Subdivision, Wong, et al. maintain the rights to the

unobstructed use of and free passage over the subject
road. By constructing the subject portion, Sps. Rana
introduced a nuisance per accidensthat particularly
transgressed the aforesaid rights. Thus, for the
vindication and recognition of Wong, et al.srights, Sps.
Rana should be similarly held liable for nominal
damages. Under Article 2216 of the Civil Code, 62courts
have the discretion to determine awards of nominal and
temperate damages without actual proof of pecuniary
loss, as in this case. Assessing the respective infractions
of the parties herein, the Court finds it prudent to
sustain the CAs verdict offsetting the damage caused by
said parties against each other. The Court can, however,
only concur with the CA in result since the latter
inaccurately applied,63 as basis for its ruling, the in pari
delictoprinciple enunciated in the case of Yu Bun Guan
v. Ong64 (Yu Guan).In said case, the Court discussed the
in pari delicto principle with respect to the subject
matter ofinexistent and void contracts, viz.:
Inapplicability of the in Pari Delicto Principle
The principle of in pari delictoprovides that when two
parties are equally at fault, the law leaves them as they
are and denies recovery by either one of them.
However, this principle does not apply with respect to
inexistent and void contracts. Said this Court in Modina
v. Court of Appeals:
"The principle of in pari delicto non oritur actio denies
all recovery to the guilty parties inter se. It applies to
cases where the nullity arises from the illegality of the
consideration orthe purpose of the contract. When two

persons are equally at fault, the law does not relieve
them. The exception to this general rule is when the
principle is invoked with respect to inexistent
contracts."65 (emphasis supplied; citations omitted)
Clearly, no void or inexistent contract is hereinat issue,
hence, the Courts disagreement with the CAs
invocation of Yu Guanin this respect.
As for the subject backfillingtouching the perimeter
fence of the Uy property, records show that the said
fence was not designed to act as a retaining wall 66 but
merely to withhold windload and its own load. 67 Both
the RTC and the CA found the subject backfilling to
have added pressure on the fence,68 consequently
endangering the safety of the occupants of the Uy
property, especially considering the higher elevation of
the Rana property. With these findings, the Court thus
agrees with the courts a quothat there is a need for
Linda Rana to construct a retaining wall 69 which would
bear the weight and pressure of the filling materials
introduced on their property. The Court, however,
observed that neither the RTC nor the CA specified in
their respective decisions the backfilled areas which
would require the retaining wall. Due to the
technicality of the matter, and considering that the due
authenticity
and
genuineness
of
the
findings/recommendation70 of the OBO and the
accompanying sketch71thereto were not specifically
denied by Sps. Rana,72 the required retaining wall shall
beconstructed in accordance with the said sketch which
showed the area backfilled.
B. Civil Case No. CEB-21296

For Recovery of Property.
Now, with respect to Civil Case No. CEB-21296, the
Court finds that the CA erred in affirming the RTCs
dismissal thereof considering that it was determined
that Sps. Uy had actually encroached upon the Rana
property to the extent of 2 sq. m.
Settled is the rule that in order that an action for the
recovery of property may prosper, the party prosecuting
the same need only prove the identity of the thing and
his ownership thereof.73 In the present cases, the
Report74 of the court-appointed commissioner, Atty.
Pintor, who conducted a relocation survey75 of the Rana
and Uy properties identified and delineated the
boundaries of the two properties and showed that Sps.
Uys perimeter fence intruded on 2 sq. m.of the Rana
property.76 Both the RTC and the CA relied upon the said
report; thus, absent any competent showing that the
said finding was erroneous, the Court sees no reason to
deviate from the conclusions reached by the courts a
quo. Having sufficiently proven their claim, Sps. Rana
are, therefore entitled to the return of the 2 sq.m.
encroached portion. Corollary thereto, compliance by
Linda Rana with the directive in Civil Case No. CEB20893to build a retaining wall on their property shall be
held in abeyance pending return of the encroached
portion.
C. Claims Common to Both Civil Case No. CEB-20893 and
Civil Case No. CEB-21296: Malicious Prosecution of Both
Cases, Moral and Exemplary Damages, Attorneys Fees,

and Litigation
Expenses.
As a final matter, the Court resolvesthe claims common
to both Civil Case No. CEB-20893 and Civil Case No.
CEB-21296, particularly those on malicious prosecution,
as well asmoral and exemplary damages, attorneys
fees, and litigation expenses.
As the Court sees it, the filing bythe parties of their
respective complaints against each other was notclearly
and convincingly shown to have been precipitated by
any maliceor bad faith, sufficient enough to warrant the
payment of damages in favor of either party. As
correctly pointed out by the CA, malicious prosecution,
both in criminal and civil cases, requires the presence
oftwo (2) elements, namely: (a) malice; and (b) absence
of probable cause. Moreover, there must be proof that
the prosecution was prompted by a sinister design to
vex and humiliate a person; and that it was initiated
deliberately knowing that the charge was false and
baseless.77 Hence, the mere filing of a suitwhich
subsequently turns out to be unsuccessful does not
render a person liable for malicious prosecution, for the
law could not have meant toimpose a penalty on the
right to litigate.78 As the aforementioned elements were
not duly proven, the claims for malicious prosecution
are hereby denied.
With respect to the claims for moral damages, although
the Court found the parties to have sustained nominal
damages as a result of the other parties acts, an award

of moral damages would nonetheless be improper in this
case. Article 2217 of the Civil Code states that "[m]oral
damages include physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar
injury. Though incapable of pecuniary computation,
moral damages may be recovered if they are the
proximate result of the defendant's wrongful act for
omission." Corollary thereto, Article 2219 of the same
code (Article 2219) states that "[m]oral damages may be
recovered in the following and analogous cases: (1) A
criminal offense resulting in physical injuries; (2) Quasidelicts causing physical injuries; (3) Seduction,
abduction, rape, or other lascivious acts; (4) Adultery or
concubinage; (5) Illegal or arbitrary detention or arrest;
(6) Illegal search; (7) Libel, slander or any other form of
defamation; (8) Malicious prosecution; (9) Acts
mentioned in Article 309; [and] (10) Actsand actions
referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and
35."
Here, it was not proven thatthe damage caused by (a)
Sps. Rana against Wong, et al., arising from the
elevation and cementing of the subject portion and the
subject backfilling, and (b) Sps. Uy against Sps. Rana,
by virtue of their 2 sq. m. encroachment, could be
characterized as a form of or had resulted in physical
suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock,
social humiliation, or any other similar injury.
Neitherwas it convincingly shown that the present
controversies fall within the class of cases enumerated
under Article 2219. Therefore, no moral damages should

be awarded.
Similarly, the Court deems that an award of exemplary
damages would be inappropriate since these damages
are imposed only "by way of example or correction for
the publicgood, in addition to the moral, temperate,
liquidated or compensatory damages."79 Bluntly placed,
the Court does not view the present matters of such
caliber. Hence, there is no reason to grant the parties
claims for the same.
Lastly, considering that neither of the parties was able
to successfully prove (a) their claims for malicious
prosecution,80 (b) their entitlement to moral and
exemplary damages,81 and (c) the attendance of any of
the circumstances under Article 220882 of the Civil Code,
their respective claims for attorneys fees and litigation
expensesagainst each other are also denied.
WHEREFORE, the Decision dated July 13, 2005 and the
Resolution dated June 18, 2010 in CA-G.R. CV No. 78463
are SET ASIDE and a new one is entered as follows:
In Civil Case No. CEB-20893:
(a) The awards of damages in favor of each party
are OFFSETagainst each other as herein
discussed;
(b) Linda Rana is hereby ORDEREDto build, at her
own expense, a retaining wall on the property
covered by TCT No. 124095 in accordance with
the sketch of the Office of the Building Official of
Cebu City attached to the records of the case,

subject to the condition as shall be hereunder
set; and
(c) All other claims and counterclaims are
DISMISSED for lack of legal and factual bases.
In Civil Case No. CEB-21296:
(a) Spouses Rosario and Wilson Uy are DIRECTED
to return to Linda Rana the 2-square meter
encroached portion as reflected in the relocation
survey
conducted
by
court-appointed
commissioner Atty. Reuel T. Pintor, after which
Linda Rana shall be OBLIGED to build the
retaining wall as directed by the Court; and
(b) All other claims and counterclaims are
DISMISSED for lack of merit.
SO ORDERED.
ESTELA
Associate Justice
M.
PERLAS-BERNABE
WE CONCUR:
ARTURO
Associate
Acting Chairperson
DIOSDADO
PERALTA**
D.
M. MARIANO
CASTILLO
BRION*
Justice
C.
DEL
Associate Justice
JOSE
Associate Justice
* Designated Acting Chairperson per Special Order

No. 1699 dated June 13, 2014.
Associate Justice
CATRAL
MENDOZA***
ATT E S TAT I O N
I attest that the conclusions in the above Decision had
been reached in consultation before the cases were
assigned to the writer of the opinion of the Court's
Division.
** Designated Acting Member per Special Order

No. 1712 dated June 23, 2014 .
*** Designated Acting Member per Special Order
No. 1696 dated June 13, 2014.
1
Rollo (G.R. No. 192861), pp. 5-26; rollo (G.R.

No. 192862), pp. 3-32.
BRION
Justice
Pursuant to Section 13, Article VIII of the Constitution,

and the Division Acting Chairperson's Attestation, I
certify that the conclusions in the above Decision had
been reached in consultation before the cases were
assigned to the writer of the opinion of the Court's
Division.
ARTURO
D.
Associate
Acting Chairperson, Second Division
C E R TI F I C AT I O N
MARIA
LOURDES
Chief Justice
P.
A.
SERENO

No. 192862), pp. 38-55. Penned by Executive
Justice Mercedes Gozo-Dadole, with Associate
JusticesSesinando E. Villon and Ramon M. Bato,
Jr., concurring.
No. 192862), pp. 57-60. Penned by Associate
Justice Agnes Reyes Carpio, with Associate
Justices Edgardo L. delos Santos and Eduardo B.
Peralta, Jr., concurring.
4

No. 192862), pp. 130-137. Penned by Judge (now
Court of Appeals Justice) Pampio A. Abarintos.
5
Rollo (G.R. No. 192861), p. 35 (including the

dorsal portion); rollo (G.R. No. 192862), pp. 119120.
Footnotes
Rollo (G.R. No. 192861), p. 63.
See RTC Order in Civil Case No. CEB-20893; rollo

(G.R. No. 192861), p. 50.
19
Rollo (G.R. No. 192861), p. 37 (including the

dorsal portion); rollo (G.R. No. 192862), pp. 123.
20
Rollo (G.R. No. 192861), p. 36; rollo (G.R. No.

192862), pp. 121-122.
21
10

192862), p. 40.
22
11
23
Rollo (G.R. No. 192861), pp. 46-47.
24
Id. at 51.
Rollo (G.R. No. 192861), p. 50.
12
Rollo (G.R. No. 192861), p. 74; rollo(G.R. No.

192862), p. 40.

192862), p. 115.
No. 192862), pp. 116-117.
No. 192862), pp. 125-129.
No. 192862), pp. 125-126.
25
13
Rollo (G.R. No. 192861), pp. 64 and 74;

rollo(G.R. No. 192862), p. 131.
14

192862), p. 49.
26
Rollo (G.R. No. 192861), pp. 52-55.
27
Id. at 57-60.
Rollo (G.R. No. 192861), p. 38.
15
See Certification to file action [in court] issued

by OBO; rollo (G.R. No. 192862), p. 124.
16

No. 192862), pp. 40-41.
17

No. 192862), pp. 112-118.
28
See RTC Order dated April 6, 1998 signed by

Judge Ireneo Lee Gako, Jr.; id. at 61-62.
29
Records, pp. 154-156.
30
Id. at 155.
31
18

192862), p. 114.
See RTC Order dated February 21, 2000 signed

by Judge Pampio A. Abarintos; id. at 246.
32

No. 192862), pp. 130-137.
43

No. 192862), pp. 135-136.
During the pendency of the proceedings before

the RTC, Linda Ranas husband, Reynaldo Rana,
passed away, thus, the petition in G.R. No.
192861 was instituted by her solely. (See Notice
of Death; records, pp. 247-249.)
34
44
Rollo (G.R. No. 192861), pp. 14-15.
45
Rollo (G.R. No. 192862), p. 17.
46
Id. at 22.
47
Id. at 27-28.
33
Id.
35

192862), p. 134.
36

No. 192862), pp. 136-137.
37

No. 192862), pp. 38-55.
48
38
49

192862), p. 49.
AC Enterprises, Inc. v. Frabelle Properties

Corp., 537 Phil. 114, 143 (2006).
Id.
50
39

192862), p. 50.
Perez v. Madrona, G.R. No. 184478, March 21,

2012, 668 SCRA 696, 706-707.
51
Salao v. Santos, 67 Phil. 547, 550-551 (1939).
52
492 Phil 314 (2005).
53
Id. at 327.
40

No. 192862), pp. 53-54.
41
See Separate Motions filed by Sps. Rana and

Wong, Sps. Ong and Sps. Uy; rollo(G.R. No.
192861), pp. 92-100 and rollo(G.R. No. 192862),
pp. 61-79, respectively.
42
Rollo (G.R. No. 192861), pp. 102-105; rollo

(G.R. No. 192862), pp. 57-60.
54
ART. 704. Any private person may abate a

public nuisance which is specially injurious to
himby removing or, if necessary, by destroying
the thing which constitutes the same, without
committing a breach of the peace, or doing

unnecessary injury. But it is necessary:
ART. 699. The remedies against a public

nuisance are:
(1) That demand be first made upon the

owner or possessor of the property to
abate the nuisance;
(1) A prosecution under the Penal Code or

any local ordinance: or
(2) A civil action; or
(2) That such demand has been rejected;

(3)
Abatement,
proceedings.
(3) That the abatement be approved by

the district health officer and executed
with the assistance of the local police; and
judicial
ART. 705. The remedies against a private

nuisance are:
(4) That the value of the destruction does

not exceed three thousand pesos.
(Emphasis supplied)
(1) A civil action; or

(2)
Abatement,
without
judicial
proceedings. (Emphases supplied)
55
ART. 706. Any person injured by a private

nuisance may abateit by removing or, if
necessary, by destroying the thing which
constitutes the nuisance, without committing a
breach of the peace, or doing unnecessary injury.
However, it is indispensable that the procedure
for extrajudicial abatement of a public nuisance
by private person be followed. (Emphases
supplied)
without
58
See Article 697 of the Civil Code. See also

Paras,Edgardo L., Civil Code of the Philippines
Annotated (16th Ed., 2008), Vol. 2, p. 747.
59
See AC Enterprises, Inc. v. Frabelle Properties

Corp.,supra note 48, at 144-145.
Civil Code, ART. 2221. Nominal damages are

adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the
defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff
for any loss suffered by him.
57
60
56
Articles 699 and 705 of the Civil Code provide

as follows:
Civil Code ART. 2224. Temperate or moderate

damages, which are more than nominal but less
than compensatory damages, may be recovered
when the court finds that some pecuniary loss has

been suffered but its amount can not, from the
nature of the case, be provided with certainty.
67
Transcript of Stenographic Notes, June 1, 1999,

pp. 7, 11.
68
61
Rollo(G.R. No. 192861), p. 50.
62
ART. 2216. No proof of pecuniary loss is

necessary in order that moral, nominal,
temperate, liquidated or exemplary damages may
be adjudicated. The assessment of such damages,
except liquidated ones, is left to the discretion of
the court, according to the circumstances of each
case.
Rollo, (G.R. No. 192861), pp. 69 and 80;

rollo(G.R. No. 192862), p. 135.
69
Under Section 1202(c)(2) of PD 1096, amending

R.A. No. 6541, otherwise known as the "National
Building Code of the Philippines."
SEC. 1202. Excavation, Foundation and
Retaining Walls.
xxxx
63
See pages 13 and 14, as well as footnote 5 of

CA Decision, rollo(G.R. No. 192861), pp. 84-85.
64
65
(c) Footings, Foundations and Retaining

Walls
419 Phil. 845 (2001).
x x x x (2) Whenever or wherever there

exists in the site of the construction an
abrupt change in the ground levels or level
of the foundation such that instability of
the soil could result, retaining walls shall
be provided and such shall be of adequate
design and type of construction as
prescribed by the Secretary [of the then
Public
Works,
Transportation
and
Communications].
Id. at 856.
66
See Annex "A" of Presidential Decree No. (PD)

1096 (1977), entitled "ADOPTING A NATIONAL
BUILDING CODE OF THE PHILIPPINES (NBCP)
THEREBY REVISING REPUBLIC ACT NUMBERED
SIXTY-FIVE HUNDRED FORTY-ONE (R.A. NO.
6541),"on "Words, Terms and Phrases" which
defines "retaining wall" as "[a]ny wall used to
resist the lateral displacement of any material; a
subsurface wall built to resist the lateral pressure
of internal loads.
70
Records, p. 205. Issued by Engineering Assistant

Cresercia F. Alcuizar dated June 2, 1997.
71
Id. at 206.
72
See paragraph 9 of the Complaint in Civil Case

No. CEB-20893; id. at 4. See also paragraphs 7
and 8 of the answer; id. at 19-20.
78
73
79
See Articles 428 and 434 of the Civil Code

which respectively read:
Premiere Devt. Bank v. Central Surety &

Insurance Co.,Inc., 598 Phil. 827, 861 (2009);
citation omitted.
CIVIL CODE, Art. 2229.
80
ART. 428. The owner has the right to enjoy

and dispose of a thing, without other
limitations than those established by law.
The owner has also a right of action
against the holder and possessor of the
thing in order to recover it.
ART. 434. In an action to recover, the
property must be identified, and the
plaintiff must rely on the strength of his
title and not on the weakness of the
defendant's claim.
74
See Commissioners Report dated November 22,

2000; records, pp. 304-306.
75
Id. at 311.
76
Id. at 304-306.
77
Rollo(G.R. No. 192861), p. 88; rollo(G.R. No.

192862), p. 53.
See Premiere Devt. Bank v. Central Surety &

Insurance Co., Inc., supra note 78.
81
See Equitable PCI Bank v. Ng Sheung Ngor, 565

Phil. 520, 543 (2007).
82
ART. 2208. In the absence of stipulation,

attorneys fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendants act or omission
has compelled the plaintiff to litigate with
third persons or to incur expenses to
protect his interest;
(3) In criminal cases of malicious
prosecution against the plaintiff;
(4) In case of a clearly unfounded civil
action or proceeding against the plaintiff;
(5) Where the defendant acted in gross
and evident bad faith in refusing to satisfy
the plaintiffs plainly valid, just and
demandable claim;
(6) In actions for legal support;

(7) In actions for the recovery of wages of
household helpers, laborers and skilled
workers;
(8) In actions for indemnity under
workmens compensation and employers
liability laws;
FACTS:
ISSUE:
HELD:
RATIO:
(9) In a separate civil action to recover

civil liability arising from a crime;
(10) When at least double judicial costs
are awarded; or
(11) In any other case where the court
deems it just and equitable that attorneys
fees and expenses of litigation should be
recovered.
In all cases, the attorneys fees and
expenses oflitigation must be reasonable.
(Emphases supplied)
Republic of the Philippines

Supreme Court
Manila
THIRD DIVISION
PEDRO T. BERCERO,
PEDRO T. BERCERO VS. CAPITOL DEVELOPMENT
CORPORATION, G.R. NO. 154765, MARCH 29, 2007
G.R. No. 154765
Petitioner,
Present:
YNARES-SANTIAGO,
Chairperson,
Before the Court is a Petition for Review
AUSTRIA-MARTINEZ,
on Certiorari under Rule 45 of the Revised Rules of
CALLEJO, SR.,
Court assailing the Decision[2] dated February 11, 2002
CHICO-NAZARIO,
of the Court of Appeals (CA) in CA-G.R. CV No. 56484
NACHURA,
which set aside the Decision[3] dated May 27, 1996 of the
- versus -
CAPITOL DEVELOPMENT
CORPORATION,
[1]
Respondent.
Regional Trial Court, Branch 88, Quezon City (RTCPromulgated:

Branch 88) in Civil Case No. Q-92-11732, and the CA
March 29, 2007
Resolution[4] dated August
x-----------------------------------------------x
29,
2002
which
denied
petitioners Motion for Reconsideration.
The factual background of the case is as follows:
DECISION
On January 31, 1983, Capitol Development
Corporation (respondent) leased its commercial building
and lot located at 1194 EDSA, Quezon City to R.C.
AUSTRIA-MARTINEZ, J.:
Nicolas Merchandising, Inc., (R.C. Nicolas) for a 10-year
period or until January 31, 1993 with the option for the
52933. Respondent also impleaded the sub-lessees of
latter to make additional improvements in the property
R.C. Nicolas as parties-defendants.
to suit its business and to sublease portions thereof to

third parties.[5]
During the pendency of Civil Case No. 52933,
several sub-lessees including petitioner, entered into a
R.C. Nicolas converted the space into a bowling
compromise
settlement
with
respondent. [7] In
the
and billiards center and subleased separate portions
compromise settlement, the sub-lessees recognized
thereof to Midland Commercial Corporation, Jerry Yu,
respondent as the lawful and absolute owner of the
Romeo Tolentino, Julio Acuin, Nicanor Bas, and Pedro T.
property and that the contract between respondent and
Bercero
contract
R.C. Nicolas had been lawfully terminated because of
with R.C. Nicolas was for a three-year period or until
the latters non-payment of rent; and that the sub-
August 16, 1988.[6]
lessees
(petitioner). Petitioners
sublease
voluntarily
surrendered
possession
of
the
premises to respondent; that the sub-lessees directly

executed lease contracts with respondent considering
Meanwhile, for failure to pay rent, respondent
filed an ejectment case against R.C. Nicolas before the
Metropolitan Trial Court, Branch 41, Quezon City (MeTCBranch
41),
docketed
as
Civil
Case
No.
the termination of leasehold rights of R.C. Nicolas.
Petitioner entered into a lease contract with

respondent for a three-year period, from August 16,
Nicolas and ordered the eviction of petitioner from the

leased premises.[11]
1988 to August 31, 1991.[8]

Dissatisfied, petitioner filed an appeal before the
On October 21, 1988, respondent and petitioner,
Regional Trial Court, Branch 78, Quezon City (RTC-
as well as several other sub-lessees of R.C. Nicolas,
Branch 78). R.C. Nicolas filed a Motion for Execution
filed a Joint Manifestation and Motion in Civil Case No.
Pending Appeal which was opposed by petitioner.
52933, manifesting to the MeTC-Branch 41 that they

entered into a compromise settlement and moved that
In an Order dated October 4, 1990, RTC-Branch
the names of the sub-lessees as parties-defendants be
78 directed the issuance of a writ of execution pending
dropped and excluded.[9]
appeal since petitioner failed to file a
On November 14, 1988, R.C. Nicolas filed a

complaint for ejectment and collection of unpaid
rentals against petitioner before the Metropolitan Trial
Court, Branch 39, Quezon City (MeTC-Branch 39),
docketed as Civil Case No. 0668.
[10]
On April 18, 1989,
MeTC-Branch 39 rendered a Decision in favor of R.C.
supersedeas bond and periodically deposit the rentals

due during the pendency of the appeal. [12] Accordingly,
on October 22, 1990 a writ of execution was issued.
[13]
Sometime in November 1990, petitioner was evicted
from the leased premises.[14]
Petitioner assailed the Order dated October 4,
Two months later, or on November 13, 1991,
1990 in a petition for certiorari with the CA, docketed
MeTC-Branch 41 rendered a Decision in Civil Case No.
as CA-G.R. SP No. 23275, but the petition was denied
52933 in favor of respondent and ordered R.C. Nicolas
due course and dismissed by the CA in a Decision dated
to pay its unpaid rentals from September 1986 until
December 28, 1990.[15]
October 1988.[17]
On September 3, 1991, respondent filed a
Meanwhile, since his eviction in November 1990,
Manifestation in Civil Case No. 52933 urging MeTC-
petitioner made repeated demands on respondent for
Branch 41 to order R.C. Nicolas to desist from harassing
the restoration of his possession of the commercial
respondent and petitioner, and to confirm respondents
space leased to him to no avail. [18]
right of possession to the premises in the light of the

ejectment case filed by R.C. Nicolas against petitioner.
[16]
Thus, on March 24, 1992, petitioner filed a

complaint for sum of money with attachment and
mandatory
injunction
with
damages
against
the
respondent before the RTC-Branch 88, docketed as Civil

Case No. Q-92-11732.[19]
On May 27, 1996, RTC-Branch 88 rendered its
d. P 50,000.00 attorneys
fees
Decision[20] in favor of petitioner, the dispositive portion

of which reads:
3) to pay the costs.
WHEREFORE, premises rendered,

this Court finds for the plaintiff and orders
the defendant:
1) to restore plaintiffs possession

of the rented building located at 1194
EDSA, Quezon City for the next three years
effective from receipt of the copy of this
decision;
Accordingly, the counterclaim filed

by the defendant Capitol Development
Corporation is hereby DISMISSED.
SO ORDERED.[21]
The RTC held that respondent miserably failed to

2) to
following:
pay
the
plaintiff
a. P480,000.00 actual
damages
the
comply with its obligation under Article 1654 of the New

Civil Code due to its apathy and failure to extend any
assistance to the petitioner and was, therefore, liable
for the restoration of petitioners possession and the
b. P 50,000.00 moral
damages
payment of actual damages corresponding to lost profit,
c. P 50,000.00 exemplary
damages
the eviction, as well as moral and exemplary damages
cash, generator, and other items petitioner lost due to
and attorneys fees.
since he was aware of the facts which led to his ouster

Dissatisfied, respondent filed an appeal with the
CA, docketed as CA-G.R. CV No. 56484.
from the subject premises; and that petitioner was well

aware that respondent had a 10-year lease contract
with R.C. Nicolas which was subject of an ejectment
suit that was still pending litigation when petitioner
On February 11, 2002, the CA rendered its
executed a lease contract with respondent.
Decision[22] setting aside the Decision of RTC-Branch 88,

to wit:
On March 5, 2002, petitioner filed his Motion for

Reconsideration.[23] On August 29, 2002, the CA issued its
WHEREFORE, premises considered,

the Decision dated May 27, 1996 of the
Regional Trial Court of Quezon City, Branch
88, in Civil Case No. Q-92-11732, is hereby
REVERSED
and
SET
ASIDE. No
pronouncement as to costs.
Resolution
denying
petitioners
Motion
for
Reconsideration.[24]
Hence, the present Petition anchored on the

following grounds:
Applying the equitable principle of estoppel, the CA
held that although respondent as lessor failed to ensure
the peaceful possession of petitioner as its lessee in the
subject premises, the latter is not entitled to damages
I.
THE HONORABLE COURT OF APPEALS

CLEARLY
COMMITTED
GRAVE
ERROR AND ABUSE OF DISCRETION IN
APPLYING THE
PRINCIPLE OF ESTOPPEL TO PETITIONER
assured him that it had a valid and legal right to enter

into a new lease contract with him; that he is entitled
to damages since respondent did not even lift a finger
to protect him when R.C. Nicolas filed an ejectment
case against him; and that respondent acted in utter
II.
bad faith when it still refused to restore his possession

after he was evicted in November 1990, notwithstanding
THE HONORABLE COURT OF APPEALS

COMMITTED
GRAVE
ERROR
BY
DISREGARDING THE LAW, JURISPRUDENCE
AND EVIDENCE IN DELETING THE AWARD
MADE BY THE LOWER COURT OF DAMAGES
AND REVERSING THE THREE (3) YEAR
POSSESSION OF THE SUBJECT PROPERTY
GIVEN TO THE PETITIONER[25]
that his lease contract with respondent was valid until

August 31, 1991.
Respondent, on the other hand, counters that the

CA correctly applied the principle of estoppel since
petitioner voluntarily entered into a lease agreement
with respondent despite full knowledge that the latters
Petitioner argues that the principle of estoppel is

inapplicable because he dealt with respondent in good
faith and relied upon the latters representations that
the lease of R.C. Nicolas was already terminated at the
time he contracted with the latter; that respondent
lease with R.C. Nicolas over the subject premise had yet
to be judicially terminated; and that petitioner knew
that at the time he contracted with respondent, he still
had existing obligations to R.C. Nicolas relating to their
sub-lease agreement.
Under Article 1654 (3) of the New Civil Code, to

wit:
Art. 1654. The lessor is obliged:
xxxx
(3) To maintain the lessee in the

peaceful and adequate enjoyment of the
lease for the entire duration of the
contract.
The lessor must see that the

enjoyment is not interrupted or disturbed,
either by others acts x x x or by his
own. By his own acts, because, being the
person principally obligated by the
contract, he would openly violate it if, in
going back on his agreement, he should
attempt to render ineffective in practice
the right in the thing he had granted to
the lessee; and by others acts, because he
must guarantee the right he created, for
he is obligated to give warranty in the
manner we have set forth in our
commentary on article 1553, and, in this
sense, it is incumbent upon him to protect
the lessee in the latters peaceful
enjoyment.[27]
it is the duty of the lessor to place the lessee in the

legal possession of the premises and to maintain the
peaceful possession thereof during the entire term of
the lease.[26] To fully appreciate the importance of this
provision, the comment of Manresa on said article is
worth mentioning:
The obligation of the lessor arises only when

acts, termed as legal trespass (perturbacion de
derecho),
disturb,
dispute,
object
to,
or
place
difficulties in the way of the lessees peaceful

enjoyment of the premises that in some manner or
other cast doubt upon the right of the lessor by virtue
inexistent cause - respondent did not have the right to
of which the lessor himself executed the lease, in which
lease the property to petitioner considering that its
case the lessor is obligated to answer for said act of
lease contract with R.C. Nicolas was still valid and
trespass.[28] The lessee has the right to be respected in
subsisting, albeit pending litigation. Having granted to
his possession and should he be disturbed therein, he
R.C. Nicolas the right to use and enjoy its property from
shall be restored to said possession by the means
1983 to 1993, respondent could not grant that same
established by the law or by the Rules of Court.
right to petitioner in 1988. When petitioner entered
[29]
Possession is not protection against a right but
into a lease contract with respondent, the latter was
against the exercise of a right by ones own authority.[30]
still obliged to maintain R.C. Nicolass peaceful and

adequate possession and enjoyment of its lease for the
10-year duration of the contract.
Petitioner claims that respondent as lessor was

obliged to restore his possession following his eviction
from the premises. The Court disagrees.
Respondents unilateral rescission of its lease

contract with R.C. Nicolas, without waiting for the final
outcome of the ejectment case it filed against the
Void are all contracts in which the cause or
latter, is unlawful. A lease is a reciprocal contract and
object does not exist at the time of the transaction.
its continuance, effectivity or fulfillment cannot be
[31]
In the present case, the lease contract between
made to depend exclusively upon the free and
petitioner and respondent is void for having an
uncontrolled choice of just one party to a lease
contract.[32] Thus, the lease contract entered into
thereof. Petitioner was fully aware that R.C. Nicolas
between
had a lease contract with respondent which was subject
petitioner
and
respondent,
during
the
pendency of the lease contract with R.C. Nicolas, is
of a pending litigation.
void.
It is well-settled that parties to a void agreement
There is no merit to petitioners claim of good
cannot expect the aid of the law; the courts leave them
in
is
as they are, because they are deemed in pari delicto or
ordinarily used to describe that state of mind denoting
in equal fault.[35] No suit can be maintained for its
honesty of intention, and freedom from knowledge of
specific performance, or to recover the property agreed
circumstances which ought to put the holder upon
to be sold or delivered, or the money agreed to be paid,
inquiry;[33] an honest intention to abstain from taking
or damages for its violation, and no affirmative relief of
any unconscientious advantage of another, even through
any kind will be given to one against the other.[36] Each
technicalities of law, together with absence of all
must bear the consequences of his own acts.[37] They
information, notice, or benefit or belief of facts which
will be left where they have placed themselves since
render the transaction unconscientious.[34] Being privy
they did not come into court with clean hands.
faith
dealing
with
respondent. Good
faith
to the pendency of the ejectment case involving the

leasehold rights of R.C. Nicolas since he was impleaded
as a party-defendant in said ejectment case, petitioner
cannot
feign
innocence
of
the
existence
In sum, the underlying case for sum of money

filed by petitioner against respondent cannot prosper,
his right of action being anchored on a contract which,

for all intents and purposes, has no legal existence and
effect from the start. A void or inexistent contract is
equivalent to nothing; it is absolutely wanting in civil
effects; it cannot be the basis of actions to enforce
compliance.
FACTS:
ISSUE:
HELD:
[38]
RATIO:
WHEREFORE, the present petition is DENIED for
Supreme Court
Manila
lack of merit. The assailed Decision and Resolution of

the Court of Appeals in CA-G.R. CV No. 56484
SECOND DIVISION
are AFFIRMED. Petitioners Complaint and respondents

Counterclaim
in
Civil
Case
No.
Q-92-11732
are DISMISSED. Costs against petitioner.
SO ORDERED.
CAMPOS, ET AL. VS. PASTRANA, ET AL., G.R. NO.

175994, DECEMBER 8, 2009
JESUS CAMPOS and ROSEMARIE

CAMPOS-BAUTISTA,
Petitioners,
G.R. No. 175994
- versus -
Present:
NENITA BUENVENIDA PASTRANA,

ROGER BUENVENIDA,
SONIA BUENVENIDA,
TEDDY BUENVENIDA,
VICTOR BUENVENIDA,
HARRY BUENVENIDA,
MILDRED BUENVENIDA,
CARPIO,* J., Chairpe

LEONARDO-DE CAST
BRION,
DEL CASTILLO, and
ABAD, JJ.
MANOLITO BUENVENIDA
Factual antecedents
and DAISY BUENVENIDA,
represented by their Attorney-in-Fact
Promulgated:
*
CARLITO BUENVENIDA,
Respondents.
December 8, 2009 This is the third case between essentially the same
x------------------------------------parties and the second among those cases to reach this
-------- --------------x
Court on appeal, spanning a period of close to three
DECISION
DEL CASTILLO, J.:
decades.
The first case arose from the refusal of Carlito

Campos (Carlito), the father of herein petitioners, to
It sometimes happens that a creditor, after securing a
surrender the possession of a fishpond he leased from
judgment against a debtor, finds that the debtor had
respondents mother, Salvacion Buenvenida, despite the
transferred all his properties to another leaving nothing to
expiration of their contract of lease in 1980. Alleging that
satisfy the obligation to the creditor. In this petition for
he was an agricultural lessee, Carlito filed an agrarian case
review on certiorari,[1] petitioners ask us to set aside the
docketed as CAR Case No. 1196 (Agrarian Case) against his
November 23, 2005 Decision[2] of the Court of Appeals (CA)
lessor. After trial, the Regional Trial Court of Roxas City,
in CA-G.R. CV No. 68731 declaring as null the sale of several
Branch 14, found that Carlito was not an agricultural
parcels of land made by their parents in their favor, for
tenant. He then appealed to the CA and subsequently to
being absolutely simulated transactions. Also assailed is
this Court, but was unsuccessful.
the November 21, 2006 Resolution.[3]
While the appeal in the Agrarian Case was pending

before the CA, herein respondents filed the second
case, Civil Case No. V-5417, against Carlito for Recovery of
Possession and Damages with Preliminary Mandatory
During the pendency of the Agrarian Case, as well as

prior to the filing of the Possession Case, Carlito was the
registered owner of the following properties:
Injunction (Possession Case) involving the same fishpond

subject of the earlier agrarian case. On November 27, 1990,
1.
Residential Lots 3715-A and 3715-B-2
the Regional Trial Court of Roxas City, Branch 16, rendered a
covered by Transfer Certificates of Title Nos. 18205[7] and
Decision[4] finding Carlito to have retained possession of the
18417,[8] respectively and
fishpond notwithstanding the expiration of the contract of

lease and ordering him to pay rentals, the value of the
produce and damages to the herein respondents. The
Decision became final and executory and a Writ of
2.
Agricultural Lots 850 and 852 covered by
Original Certificates of Title

Nos. P-9199[9] and P-9200,[10] respectively.
Execution[5] was issued on February 7, 1995. Subsequently,

on September 19, 1995, an Alias Writ of Execution[6] was also
issued. Both were returned unsatisfied as per Sheriffs
Return of Service dated November 14, 1995.
When the respondents were about to levy these

properties to satisfy the judgment in the Possession Case,
they discovered that spouses Carlito and Margarita Campos
transferred these lots to their children Rosemarie and Jesus
Campos, herein petitioners, by virtue of Deeds of Absolute
Sale dated October 18, 1985[11] and November 2, 1988.
[12]
Specifically, spouses Campos sold the residential lots
(Lots 3715-A and 3715-B-2), with a total area of 1,393 square
properties in satisfaction of a money judgment that might

be rendered in the Possession Case.
meters, to their daughter Rosemarie for P7,000.00 and the

agricultural lots (Lots 850 and 852) with a combined area of
7,972 square meters, to their son Jesus for P5,600.00.
In
[14]
their
Answer
with
Counterclaim,
spouses Campos and petitioners averred that Rosemarie
and Jesus Campos acquired the lots in question in good faith
Proceedings before the Regional Trial Court

Civil Case No. V-7028
and for value because they were sold to them before they
had any notice of the claims or interests of other persons
On February 18, 1997, respondents instituted the
thereover.
third case, Civil Case No.

V-7028 (Nullity of Sale Case),[13] subject of this appeal,
On August
21,
2000,
seeking to declare as null the aforesaid deeds of sale and
the Regional Trial Court of Roxas City, Branch 14, dismissed
the
the complaint.[15] It held that
transfer
certificates
of
title
issued
pursuant
thereto. They alleged that the contracts of sale between

spouses Campos and petitioners were simulated for the sole
purpose of evading the levy of the abovementioned
In the Resolution of this case the issue

is whether or not the spouses Carlito Campos
and Margarita Arduo, sensing that an
unfavorable judgment might be rendered
against them in Civil Case No. V-5417 filed in
Branch 16 on July 17, 1987 by the same
plaintiffs for Recovery of Possession and
Damages
with
Preliminary
Mandatory
Injunction, in evident bad faith and wanton
disregard of the law, maliciously and
fraudulently, executed a purely fictitious and
simulated sale of their properties thereby
ceding and transferring their ownership
thereto to their children Rosemarie CamposBautista and Jesus Campos.
A close scrutiny of the defendants
documentary exhibits and testimonies showed
that as early as 1981 defendant Jesus Campos
was already leasing a fishpond in Brgy.
Majanlud, Sapi-an, Capiz from Victorino
Jumpay and defendant Rosemarie Campos
was engaged in the sari-sari store business
starting 1985 so that they were able to
purchase the properties of their parents out of
their profits derived therefrom.
The Deed of Absolute Sale (Exh. 6 &
10) executed by the spouses Carlito Campos
and Margarita Arduo to Rosemarie Campos and
Jesus Campos were dated October 17,
1985 and November 2, 1988, respectively.
It can readily [be] gleaned from the
records that Civil Case No. V-5417 was filed
on July
7,
1987 and
was
decided
on November 27, 1990. Furthermore, the
alias writ of execution was issued only on July
5, 1995for which the Sheriffs Return of
Service was returned unsatisfied on November

14, 1995.
WHEREFORE, the complaint of the
plaintiffs
against
the defendants
is
DISMISSED. Their claim for damages is
likewise DISMISSED. The counter-claim of the
defendants must also be DISMISSED as the
case was not filed in evident bad faith and
with malicious intent.
SO ORDERED.[16]
Proceedings before the Court of Appeals
Upon review of the evidence presented, the CA found

that the conveyances were made in 1990, and not in 1985 or
1988, or just before their actual registration with the
Registry of Deeds, evidently to avoid the properties from
being attached or levied upon by the respondents. The CA
likewise noted that the zonal value of the subject properties
were much higher than the value for which they were
actually sold. The appellate court further observed that
despite the sales, spouses Campos retained possession of
ordered to cancel Transfer Certificates of Title

Nos. T-26092 and T-26093 in the name of
Rosemarie Campos, and Transfer Certificates
of Title Nos. T-23248 and 23249 in the name of
Jesus Campos and restore said titles in the
name of the previous owner, Carlito Campos.
the properties in question. Finally, the CA took note of the

fact that the writ of execution and alias writ issued in the
Possession Case remained unsatisfied as the lower court
could not find any other property owned by the
SO ORDERED.
spouses Campos that could be levied upon to satisfy its

judgment, except the parcels of land subject of the assailed
transactions.
Only petitioners moved for reconsideration[17] but the

CA denied the same.[18]
On these bases, the CA ruled that the assailed

contracts of sale were indeed absolutely simulated
Issues
transactions and declared the same to be void ab

initio. The dispositive portion of the Decision of the CA
Hence, this petition for review on certiorari raising

the following errors:
reads:
WHEREFORE, the instant appeal is
GRANTED. The
decision
of
the Regional Trial Court of Roxas City, Branch
14, dated August 21, 2000 in Civil Case No. V7028 is REVERSED and SET ASIDE. Let a copy
of this Decision be furnished to the Register of
Deeds of the Province of Capiz who is hereby
I.
THE COURT OF APPEALS COMMITTED AN
ERROR OF LAW IN APPLYING ARTICLE 1409,
CIVIL CODE, INSTEAD OF ARTICLE 1381 (3),
CIVIL CODE, AND IN SPECULATING THAT A
CAUSE OF ACTION OF SUPPOSED SALE IN
FRAUD OF CREDITORS EXISTS DESPITE NON-
EXHAUSTION OF REMEDIES TO ENFORCE THE

JUDGMENT IN CIVIL CASE NO. V-5417.
II.
THE COURT OF APPEALS COMMITTED AN
ERROR OF LAW OVERLOOKING THAT THE
CAUSE OF ACTION HAD PRESCRIBED, THE
COMPLAINT HAVING BEEN FILED AFTER SEVEN
(7) YEARS OR ONLY ON 14 OCTOBER 1997,
FROM THE TIME THE TITLES WERE ISSUED IN
1990.
III.
THE COURT OF APPEALS ERRONEOUSLY
ANCHORED ITS IMPUGNED JUDGMENT ON
MISAPPREHENSION
OF
FACTS
THAT
THE SALE WERE
ANTEDATED,
HENCE
SIMULATED DESPITE GLARING ABSENCE OF
EVIDENCE IN SUPPORT THEREOF.
IV.
THE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION IN CASTING ASIDE
OVERWHELMING EVIDENCE DULY APPRECIATED
BY THE TRIAL COURT THAT PETITIONERS ARE
BUYERS IN GOOD FAITH AND FOR VALUE, WHO
EXERCISED DOMINION OVER THE SUBJECT
LOTS, WHICH IF PROPERLY CONSIDERED,
SHALL WARRANT THE SINGULAR CONCLUSION
THAT THE SALE AND TRANSFER OF TITLES ARE
VALID.[19]
Petitioners arguments
Petitioners assail the application of Article 1409[20] of

the Civil Code on void
contracts as against Article 1381(3)[21] of the Civil Code on
rescissible contracts in fraud of creditors, considering that
the
questioned
conveyances
executed
by
the
spouses Campos to their children were allegedly done to

evade the enforcement of the writ of execution in the
Possession Case.[22] In addition, petitioners allege that the
CA misappreciated the facts of this case when it found that
the questioned transactions were tainted with badges of
fraud.[23]
Respondents arguments
Respondents argue that the application of Article
of fact of the CA are conclusive and binding, and are not
1409 on void contracts was a natural and logical
reviewable by this Court, unless the case falls under any of
consequence of the CAs finding that subject deeds of sale
the following recognized exceptions:
were absolutely simulated and fictitious, consistent with the

nature of the respondents cause of action which was for
declaration of nullity of said contracts and the transfer
certificates of titles issued pursuant thereto.[24] Respondents
also stressed that the CAs finding is conclusive upon us and
that only questions of law may be raised in a petition for
(1)
When the conclusion is a finding grounded
entirely on speculation, surmises and conjectures;

(2)
When the inference made is manifestly
mistaken, absurd or impossible;

(3)
Where there is a grave abuse of discretion;
(4)
When
review on certiorari under Rule 45 of the Rules of Court.[25]
Our Ruling
the
judgment
is
based
on
misappreciation of facts;
(5)
When the findings of fact are conflicting;
(6)
When the CA in making its findings, went
The petition lacks merit.
Well-settled is the rule that this Court is not a trier of

facts. When supported by substantial evidence, the findings
beyond the issues of the case and the same is contrary to

the admissions of both appellant and appellee;
(7)
When the findings are contrary to those of the
trial court;
(8)
When the findings of fact are conclusions
without citation of specific evidence on which they are

based;
(9)
When the facts set forth in the petition as well
as in the petitioners main and reply briefs are not disputed

by the respondents; and
The
subject
Deeds of
Absolute
Sale exec
uted by
the
Spouses C
ampos to
their
children
(herein
petitioner
s)
are
absolutely
simulated
and
fictitious.
(10) When the findings of fact of the CA are premised

on the supposed absence of evidence and contradicted by
the evidence on record.
The CA correctly held that the assailed Deeds of

Absolute Sale were executed when the Possession Case was
None of these exceptions is present in this case. We
already pending, evidently to avoid the properties subject
find that the Decision of the CA is supported by the required
thereof from being attached or levied upon by the
quantum of evidence.
respondents. While the sales in question transpired

on October 18, 1985 and November 2, 1988, as reflected on
the Deeds of Absolute Sale, the same were registered with
of the judgment in the Possession Case. The Deeds of
the
Absolute Sale were antedated and that the same were
Registry
of
Deeds
only
on October
25,
1990 and September 25, 1990.
executed when the Possession Case was already pending.
We also agree with the findings of the CA that
Second, there was a wide disparity in the alleged
petitioners failed to explain the reasons for the delay in the
consideration specified in the Deeds of Absolute Sale and the
registration of the sale, leading the appellate court to
actual zonal valuation of the subject properties as per the
conclude that the conveyances were made only in 1990 or
BIR Certification, as follows:
sometime just before their actual registration and that the

corresponding Deeds of Absolute Sale were antedated. This
conclusion is bolstered by the fact that the supposed notary
public before whom the deeds of sale were acknowledged
had no valid notarial commission at the time of the
notarization of said documents.[26]
Indeed, the Deeds of Absolute Sale were executed for

the purpose of putting the lots in question beyond the reach
of creditors. First, the Deeds of Absolute Sale were
registered exactly one month apart from each other and
about another one month from the time of the promulgation
Consideration
Market Value as Computed Z
specified
in per
Tax Valuation
Deed
of Declaration
Certification)
Absolute Sale
Residential
Lots:
From P 7,000.00
Spouses
Campos
to
daughter,
Rosemarie
Campos
Agricultural
Lots:
From P 5,600.00
P 83,580.00[27]
P 417,900.00
P 25,000.19[29]
P 39,860.00[3
A:
It consists of One Thousand (1,000)
Square Meters.[32]
Spouses
Campos
to
son,
Jesus Campos
xxxx
Q:
By the way, for how much did you

buy this [piece] of land consisting of
1,000 square meters?
A:
Seven Thousand Pesos (P7,000.00)
Your Honor.[33]
As correctly noted by the CA, the appraised value of

the properties subject of this controversy may be lower at
the time of the sale in 1990 but it could not go lower
than P7,000.00
and P5,600.00. We
likewise
find
the
Fourth, it appears on record that the money
considerations involved in the assailed contracts of sale to
judgment in the Possession Case has not been discharged
be inadequate considering the market values presented in
with. Per Sheriffs Service Return dated November 14,
the tax declaration and in the BIR zonal valuation.
1995, the Alias Writ of Execution and Sheriffs Demand for

Payment dated September 19, 1995 remain unsatisfied.
Third, we cannot believe that the buyer of the 1,393-
Finally, spouses Campos continue to be in actual
square meter[31] residential land could not recall the exact
possession of the properties in question. Respondents have
area of the two lots she purchased. In her cross-
established through the unrebutted testimony of Rolando
examination, petitioner Rosemarie Campos stated:
Azoro
Q:
Can you tell us the total area of
those two (2) lots that they sold to you?
that
spouses Camposhave
their
house
within Lot 3715-A and Lot 3715-B-2 and that they reside
there together with their daughter Rosemarie. [34] In
addition, spouses Campos continued to cultivate the rice
of the said transfer, the same being contrary

to the principle of ownership.
lands which they purportedly sold to their son Jesus.

[35]
Meantime, Jesus, the supposed new owner of said rice
While in Spouses Santiago v. Court of Appeals,[39] we
lands, has relocated to Bulacan[36] where he worked as a
held that the failure of petitioners to take exclusive
security guard.[37] In other words, despite the transfer of the
possession of the property allegedly sold to them, or in the
said properties to their children, the latter have not
alternative, to collect rentals from the alleged vendor x x x
exercised complete dominion over the same. Neither have
is contrary to the principle of ownership and a clear badge
the petitioners shown if their parents are paying rent for the
of simulation that renders the whole transaction void and
use of the properties which they already sold to their
without force and effect, pursuant to Article 1409 of the
children.
Civil Code.
In Suntay v. Court of Appeals,[38] we held that:

The failure of the late Rafael to take
exclusive possession of the property allegedly
sold to him is a clear badge of fraud. The
fact that, notwithstanding the title transfer,
Federico remained in actual possession,
cultivation and occupation of the disputed lot
from the time the deed of sale was executed
until the present, is a circumstance which is
unmistakably added proof of the fictitiousness
The
issuance
of
transfer
certificat
es of title
to
petitioner
s did not
vest upon
them
ownership
of
the
properties
.
that the purported deed was antedated. Moreover, her

failure to take exclusive possession of the property allegedly
sold, or, alternatively, to collect rentals is contrary to the
The fact that petitioners were able to secure titles in

their names did not operate to vest upon them ownership
over the subject properties. That act has never been
recognized
[40]
as
mode
of
acquiring
principle of ownership and a clear badge of simulation. On

these grounds, we cannot hold that Rosemarie Campos was
an innocent buyer for value.
ownership.
The Torrens system does not create or vest title. It only
confirms and records title already existing and vested. It

does not protect a usurper from the true owner. It cannot
Likewise, petitioner Jesus Campos supposedly bought

the rice land from his parents in 1988 but did not have the
assailed Deed of Absolute Sale registered with the proper
[41]
be a shield for the commission of fraud.
Registry of Deeds for more than two years, or until two

months before the promulgation of the judgment in the
In the instant case, petitioner Rosemarie Campos

supposedly bought the residential properties in 1985 but did
not have the assailed Deed of Absolute Sale registered with
the proper Registry of Deeds for more than five years, or
until a month before the promulgation of the judgment in
the Possession Case. Hence, we affirm the finding of the CA
Possession Case. Thus, we likewise affirm the finding of the

CA that the purported deed was antedated. In addition, on
cross, he confirmed that he had knowledge of the prior
pending cases when he supposedly purchased his parents
rice land stating that:
Q:
A:
Q:
A:
You never knew that your parents

and the plaintiffs in this case have
cases in the past prior to this case now,
is that right?
Yes, sir. I knew about it.
And in spite of your knowledge,
that there was a pending case between
your parents and the plaintiffs here,
you still purchased these two (2) lots
850 and 852 from your parents, is that
what you are telling us?
All I knew was that, that case was a
different case from the subject matter
then [sic] the lot now in question.[42]
The
action for
the
declaratio
n of the
inexistenc
e of the
assailed
Deeds of
Absolute
Sale does
not
prescribe.
Petitioners argue that respondents cause of action

On these findings of fact, petitioner Jesus Campos
cannot be considered as an innocent buyer and for value.
had prescribed when they filed the Nullity of the Sale Case
on October 14, 1997, or seven years after the registration of
the questioned sales in 1990.
Since both the transferees, Rosemarie and Jesus

Campos, are not innocent purchasers for value, the
We cannot agree. As discussed above, the sale of
subsequent registration procured by the presentation of the
subject properties to herein petitioners are null and
void deeds of absolute sale is likewise null and void.
void. And under Article 1410 of the Civil Code, an action or

defense for the declaration of the inexistence of a contract
is imprescriptible. Hence, petitioners contention that
settled several decades ago when we held that an action to
respondents cause of action is already barred by
rescind is founded upon and presupposes the existence of a
prescription is without legal basis.
contract.[43] A contract which is null and void is no contract
Since the
assailed
Deeds of
Absolute
Sale are
null and
void, the
Civil Code
provisions
on
rescission
have no
applicatio
n in the
instant
case.
at all and hence could not be the subject of rescission.[44]
In the instant case, we have declared the Deeds of

Absolute Sale to be fictitious and inexistent for being
absolutely simulated contracts. It is true that the CA cited
instances that may constitute badges of fraud under Article
1387 of the Civil Code on rescissible contracts. But there is
nothing else in the appealed decision to indicate that
rescission was contemplated under the said provision of the
Civil Code. The aforementioned badges must have been
Finally, petitioners argument that the applicable law

in this case is Article 1381(3) of the Civil Code on rescissible
contracts and not Article 1409 on void contracts is not a
question of first impression. This issue had already been
considered merely as grounds for holding that the sale is

fictitious. Consequently, we find that the CA properly
applied the governing law over the matter under
consideration which is Article 1409 of the Civil Code on void
MARIN V. ADIL G.R. NO. 47986
or inexistent contracts.
FACTS:
WHEREFORE, the petition is DENIED. Costs against
The Armadas were expecting to inherit some lots from

their uncle. Marin had hereditary rights in the estates of
petitioners.
her parents. A deed of exchange was executed wherein

it was stipulated that both parties acknowledge that the
SO ORDERED.
exchange operates to their individual and mutual

benefit and advantage, for the reason that the property
MARIANO C. DEL CASTILLO

Associate Justice
WE CONCUR:
being ceded, transferred, conveyed and unclaimed by

one party to the other is situated in the place where
either is a resident resulting in better administration of
the properties. But the expected land was adjudicated
to Soledad, sister of Marin. So, the Armadas and other
heirs sued Soledad for claiming to be the sole heir of
Marin, et al. vs. Abdil, G.R. No. L-47986, July 16,

1984, 15 Phil. 167
their uncle, but ended in a compromise where the

Armadas
were
awarded
two
lots. Marin
waived,
renounced and quitclaimed her share in her parents

estate in favour of her another sister Aurora. She cannot
anymore fulfil her obligations in her signed deed of
exchange with the Armadas. The Armadas filed a

rescisorry action against Marin.
ISSUE:
Did Armadas action prescribe?
HELD:
No. The action to declare contracts void and inexistent
does not prescribe. It is evident from the deed of
exchange that the intention of the parties relative to
the
lots
cannot
be
definitely
ascertained.
circumstance renders the exchange void.

RATIO:
This
another school in consideration of the scholarship grant and if he transfers,

he shall pay the tuition fees awarded to him while being a scholar. He
transferred to another school to finish his last term in law school. When he
was about to take the Bar, his TOR at Arellano was not issued unless he
pays the amount of the tuition fees that were returned to him when he
was
still
RP
vs.
their
PLDT
scholar.
He
(contracts;
paid
under
autonomy
protest.
of
will)
Held: We agree with the court below that parties can not be coerced to
enter into a contract where no agreement is had between them as to the
principal terms and conditions of the contract. Freedom to stipulate such
terms and conditions is of the essence of our contractual system, and by
express provision of the statute, a contract may be annulled if tainted by
violence, intimidation, or undue influence. But the court a quo has
apparently overlooked that while the Republic may not compel the PLDT to
celebrate a contract with it, the Republic may, in the exercise of the
sovereign power of eminent domain, require the telephone company to
Cui vs. Arellano University (contracts; contrary to public policy)
permit interconnection of the government telephone system and that of

the PLDT, as the needs of the government service may require, subject to
Held: The waiver signed by Cui was void as it was contrary to public policy;
the payment of just compensation to be determined by the court.
it
Nominally, of course, the power of eminent domain results in the taking or
was
null
and
void.
appropriation of title to, and possession of, the expropriated property; but
Facts: Cui was a law scholar at the Arellano University; he paid the tuition
no cogent reason appears why the said power may not be availed of to
fees but it was returned to him at the end of every semester. Before
impose only a burden upon the owner of condemned property, without loss
Arellano awarded the scholarship grant, Cui was made to sign a contract
of title and possession. It is unquestionable that real property may, through
covenant and agreement saying that he waives his right to transfer to
expropriation, be subjected to an easement of right of way. The use of the
PLDT's lines and services to allow inter-service connection between both
present one's candidacy to the people and to be voted to public office,
telephone systems is not much different. In either case private property is
provided, however, that all the qualifications prescribed by law obtain.
subjected to a burden for public use and benefit. If, under section 6,
Such rights may not, therefore, be bargained away curtailed with impunity,
Article XIII, of the Constitution, the State may, in the interest of national
for they are conferred not for individual or private benefit or advantage
welfare, transfer utilities to public ownership upon payment of just
but
for
the
public
good
and
interest.
compensation, there is no reason why the State may not require a public
utility to render services in the general interest, provided just
Facts: Saura and Sindico were contesting for nomination as the official
compensation is paid therefor. Ultimately, the beneficiary of the
candidate of the Nacionalista. On August 23, 1957, the parties entered into
interconnecting service would be the users of both telephone systems, so
a written agreement bearing the same date, containing among other
that
matters
the
condemnation
would
be
for
public
use.
stated
therein,
pledge
that
Each aspirant shall respect the result of the aforesaid convention, i.e., no
Facts: The Bureau of Telecommunications had a contract with PLDT; that
one of us shall either run as a rebel or independent candidate after losing
the Bureau would pay PLDT for the use the trunk lines of PLDT to establish
in
phone lines in all government offices in the country. However, after
Saura was elected and proclaimed the Party's official congressional
sometime, the Bureau extended its services for commercial use as PLDT
candidate for the aforesaid district of Pangasinan. Nonetheless, Sindico
could not cope with the demands of the public for phone line connections.
filed her certificate of candidacy for election. Saura commenced this suit
PLDT knew about the actuations of the Bureau but it took PLDT a long time
for the recovery of damages. RTC dismissed the complaint on the basis
to
that the agreement sued upon is null and void, in that (1) the subject
file
complaint
for
the
Bureaus
act.
said
convention.
matter of the contract, being a public office, is not within the commerce
of man; and (2) the "pledge" was in curtailment of the free exercise of
Saura
vs.
Sindico
(contracts;
contrary
to
public
policy)
Held: Contract or agreement is a nullity. Among those that may not be the
elective
Kauffman
franchise
vs.
PNB
and
therefore
(contracts;
against
stipulation
public
policy
pour
autrui)
subject matter (object) of contracts are certain rights of individuals, which

the law and public policy have deemed wise to exclude from the
Held:
Yes;
it
is
stipulation
pour
autrui.
commerce of man. Among them are the political rights conferred upon
Should the contract contain any stipulation in favor of a third person, he
citizens, including, but not limited to, once's right to vote, the right to
may demand its fulfillment, provided he has given notice of his acceptance
to the person bound before the stipulation has been revoked. (Art. 1257,
point on which the payment is ordered and that on receipt of the cable
par. 2, Civ. Code.) In the light of the conclusion thus stated, the right of
directing the transfer his correspondent at such point will make payment
the plaintiff to maintain the present action is clear enough; for it is
to the beneficiary described in the cable. All these transaction are matters
undeniable that the bank's promise to cause a definite sum of money to be
of
paid to the plaintiff in NYC is a stipulation in his favor within the meaning
Facts: Kauffman, based in NYC, was the president of a Philippine Company;
of the paragraph above quoted; and the circumstances under which that
he was entitled to receive a dividend so the treasurer of the company went
promise was given disclose an evident intention on the part of the
to the exchange department of PNB and requested to that a telegraphic
contracting parties that the plaintiff should have the money upon demand
transfer of the money Kauffman was supposed to receive from the
in NYC. The recognition of this unqualified right in the plaintiff to receive
company. The PNB agreed with additional charges for the transaction. The
the money implies in our opinion the right in him to maintain an action to
treasurer issued a check to PNB and it was accepted. The PNBs
recover
it.
representative in New York sent a message suggesting the advisability of
It will be noted that under the paragraph cited a third person seeking to
withholding this money from Kauffman, in view of his reluctance to accept
enforce compliance with a stipulation in his favor must signify his
certain bills of the company. PNB acquiesced in this and dispatched to its
acceptance before it has been revoked. In this case the plaintiff clearly
NY agency a message to withhold the Kauffman payment as suggested.
signified his acceptance to the bank by demanding payment; and although
Meanwhile, Wicks then he informed Kauffman that his dividends had been
PNB had already directed its NY agency to withhold payment when this
wired to his credit in the NY agency of PNB. So Kauffman went to PNB
demand was made, the rights of the plaintiff cannot be considered to as
office in NYC and demanded the money, however, he was refused payment.
there used, must be understood to imply revocation by the mutual consent
So he filed this complaint. Does Kauffman have a right of action against
of the contracting parties, or at least by direction of the party purchasing
PNB?
he
purchase
and
sale
create
no
trust
relationship."
exchange.
Note: Legniti vs. Mechanics, etc. Bank (130 N.E. Rep., 597), decided by CA
Florentino
vs.
Encarnacion
(contracts;
stipulation
pour
autrui)
of NYC on March 1, 1921, it was held that, by selling a cable transfer of

funds on a foreign country in ordinary course, a bank incurs a simple
Held: The stipulation embodied on religious expenses is not revocable at
contractual obligation, and cannot be considered as holding the money
the unilateral option of the co-owners and neither is it binding to both
which was paid for the transfer in the character of a specific trust. Thus, it
parties
was said, "Cable transfers, therefore, mean a method of transmitting
The stipulation in part of an extrajudicial partition duly agreed and signed
money by cable wherein the seller engages that he has the balance at the
by the parties, hence the sanie must bind the contracting parties thereto
and its validity or compliance cannot be left to the will of one of them
third person must make his acceptance. As a rule, there is no time at such
(Art. 1308, N.C.C.). Under Art 1311 of the New Civil Code, this stipulation
third person has after the time until the stipulation is revoked. Here, We
takes effect between the parties, their assign and heirs. The article
find that the Church accepted the stipulation in its favor before it is sought
provides:
to be revoked by some of the co-owners, namely the petitioners-appellants
Art. 1311. Contracts take effect only between the parties, their assigns
herein. It is not disputed that from the time of the will of Doa
and heirs, except in cases where the rights and obligations arising from the
Encarnacion Florentino in 1941, as had always been the case since time
contract are not transmissible by their nature, or by stipulation or by
immemorial up to a year before the filing of their application in May 1964,
provision of law. The heir is not liable beyond the value of the property he
the Church had been enjoying the benefits of the stipulation. The
received
decedent.
enjoyment of benefits flowing therefrom for almost seventeen years
If a contract should contain a stipulation in favor of a third person, he may
without question from any quarters can only be construed as an implied
demand its fulfillment provided he communicated his acceptance to the
acceptance by the Church of the stipulation pour autrui before its
obligor before its revocation. A mere incidental benefit or interest of a
revocation.
person is not sufficient. The contracting parties must have clearly and
The acceptance does not have to be in any particular form, even when the
deliberately
stipulation is for the third person an act of liberality or generosity on the
from
conferred
the
favor
upon
third
person.
In the case at bar, the determining point is whether the co-owners
part
of
the
promisor
or
promise.
intended to benefit the Church when in their extrajudicial partition of
It need not be made expressly and formally. Notification of acceptance,
several parcels of land inherited by them from Doa Encarnacion Florendo
other than such as is involved in the making of demand, is unnecessary.
they agreed that with respect to the land, the fruits thereof shall serve to
A trust constituted between two contracting parties for the benefit of a
defray the religious expenses. The evidence on record shows that the true
third person is not subject to the rules governing donation of real property.
intent of the parties is to confer a direct and material benefit upon the
The beneficiary of a trust may demand performance of the obligation
Church. The fruits of the aforesaid land were used thenceforth to defray
without having formally accepted the benefit of the this in a public
the expenses of the Church in the preparation and celebration of the Holy
document, upon mere acquiescence in the formation of the trust and
Week.
acceptance under the second paragraph of Art. 1257 of the Civil Code.
We find that the trial court erred in holding that the stipulation,
arrangement or grant is revocable at the option of the co-owners. While a
stipulation in favor of a third person has no binding effect in itself before
its acceptance by the party favored, the law does not provide when the
Bonifacio
vs.
Mora
(contracts;
stipulation
pour
autrui)
or materialmen in case of repair of the car in question. The parties to the

Held: The appellants seek to recover the insurance proceeds, and for this
insurance contract omitted such stipulation, which is a circumstance that
purpose, they rely upon paragraph 4 of the insurance contract document
supports the said conclusion. On the other hand, the "loss payable" clause
executed by and between the State Bonding & Insurance Company, Inc.
of the insurance policy stipulates that "Loss, if any, is payable to H.S.
and Enrique Mora. The appellants are not mentioned in the contract as
Reyes, Inc." indicating that it was only the H.S. Reyes, Inc. which they
parties thereto nor is there any clause or provision thereof from which we
intended
to
benefit.
can infer that there is an obligation on the part of the insurance company
to pay the cost of repairs directly to them. It is fundamental that contracts
Another cogent reason for not recognizing a right of action by the
take effect only between the parties thereto, except in some specific
appellants against the insurance company is that "a policy of insurance is a
instances provided by law where the contract contains some stipulation in
distinct and independent contract between the insured and insurer, and
favor of a third person. Such stipulation is known as stipulation pour autrui
third persons have no right either in a court of equity, or in a court of law,
or a provision in favor of a third person not a pay to the contract. Under
to the proceeds of it, unless there be some contract of trust, expressed or
this doctrine, a third person is allowed to avail himself of a benefit granted
implied between the insured and third person." In this case, no contract of
to him by the terms of the contract, provided that the contracting parties
trust, expressed or implied exists. We, therefore, agree with the trial
have clearly and deliberately conferred a favor upon such person.
court that no cause of action exists in favor of the appellants in so far as
Consequently, a third person not a party to the contract has no action
the proceeds of insurance are concerned. The appellants' claim, if at all, is
against the parties thereto, and cannot generally demand the enforcement
merely equitable in nature and must be made effective through Enrique
of the same. The question of whether a third person has an enforcible
Mora who entered into a contract with the Bonifacio Bros. Inc.
interest in a contract, must be settled by determining whether the

contracting parties intended to tender him such an interest by deliberately
Facts: Mora mortgaged his car to H.S Reyes with a condition that Mora
inserting terms in their agreement with the avowed purpose of conferring
would insure the car with H.S. Reyes Inc. as the beneficiary. State Bonding
a favor upon such third person. In this connection, this Court has laid down
& Company insured the car and a motor car insurance policy was issued to
the rule that the fairest test to determine whether the interest of a third
Mora. Right after, the car met an accident. The insurance company then
person in a contract is a stipulation pour autrui or merely an incidental
assigned the accident to the Bayne Adjustment Co. for investigation and
interest, is to rely upon the intention of the parties as disclosed by their
appraisal of the damage. Mora, without the consent and knowledge of H.S.
contract. In the instant case the insurance contract does not contain any
Reyes Inc., authorized Bonifacio Brothers Inc. to fix the car. For the cost of
words or clauses to disclose an intent to give any benefit to any repairmen
labor and materials, Enrique Mora was billed at P2,102.73 through the H.H.
Bayne Adjustment Co. The insurance company after claiming a franchise in
people.
the amount of P100, drew a check in the amount of P2,002.73, as proceeds
WE reiterated this rule in Pacific Merchandising Corp. vs. Consolacion
of the insurance policy, payable to the order of Enrique Mora or H.S.
Insurance & Surety Co., Inc. (73 SCRA 564 [1976]) citing the case of Perez
Reyes,. Inc., and entrusted the check to the H.H. Bayne Adjustment Co.
v.
for disposition and delivery to the proper party. In the meantime, the car
Where one has rendered services to another, and these services are
was delivered to Enrique Mora without the consent of the H.S. Reyes, Inc.,
accepted by the latter, in the absence of proof that the service was
and without payment to the Bonifacio Bros. Inc. of the cost of repairs and
rendered gratuitously, it is but just that he should pay a reasonable
materials. Upon the theory that the insurance proceeds should be paid
remuneration therefor because 'it is a well-known principle of law, that no
directly to them, the Bonifacio Bros. Inc filed a complaint against Mora and
one should be permitted to enrich himself to the damage of another.
the State Bonding & Insurance Co., Inc. for the collection of the sum of
Facts: David accepted the case of Corpus though there was no express
P2,002.73
agreement
Pomar,
supra
regarding
thus:
attorneys
fees.
Corpus was administratively charged. He employed the services of David.

Corpus
vs.
CA
(innominate
contracts)
David
won
the
administrative
case
For Copuz. Corpus gave a check to David, but was returned by David with
Held: While there was no express agreement between petitioner Corpus
the
and respondent David as regards attorney's fees, the facts of the case
the case is ruled with finality by the SC and Corpus gets his back salaries
support the position of respondent David that there was at least an implied
and
agreement
efforts I have invested in your case is enough compensation therefor,
for
the
payment
of
attorney's
fees.
intention
of
wages.
however,
getting
(Your
when
paid
appreciation
you
shall
after
of
have
the
obtained
Payment of attorney's fees to respondent David may be justified by virtue
decision which would have finally resolved the case in your favor,
of the innominate contract of facio ut des (I do and you give which is based
remembering
on the principle that "no one shall unjustly enrich himself at the expense
In the meantime, you will make me happier by just keeping the check)
of another." Innominate contracts have been elevated to a codal provision
David
in the New Civil Code by providing under Article 1307 that such contracts
case and got a favorable judgment. Corpus refused to pay David
shall be regulated by the stipulations of the parties, by the general
contending
provisions or principles of obligations and contracts, by the rules governing
check
the most analogous nominate contracts, and by the customs of the
me
then
continued
given
that
by
will
to
since
him,
make
fight
David
he
gave
me
for
refused
his
happy.
services
Corpus
the
first
gratuitously.
especially
Daywalt vs. La Corporation de los Padres Agustinos Recoletos (Art 1314)
from
other
contracts.
The
consideration
paid
for
an
unperformed promise is an instance of this sort of damage. In all such

cases the damages recoverable are such as naturally and generally would
Held: The most that can be said with reference to the conduct of
result from such a breach, according to the usual course of things. In
Teodorica Endencia is that she refused to carry out a contract for the sale
cases involving only ordinary damage, it is conclusively presumed from the
of certain land and resisted to the last an action for specific performance
immediateness and inevitableness of the damage, and the recovery of such
in court. The result was that the plaintiff was prevented during a period of
damage follows as a necessary legal consequence of the breach. Ordinary
several years from exerting that control over the property which he was
damage is assumed as a matter of law to be within the contemplation of
entitled to exert and was meanwhile unable to dispose of the property
the parties. Special damage, on the other hand, is such as follows less
advantageously. The extent of the liability for the breach of a contract
directly from the breach than ordinary damage. It is only found in cases
must be determined in the light of the situation in existence at the time
where some external condition, apart from the actual terms of the
the contract is made; and the damages ordinarily recoverable in all events
contract exists or intervenes, as it were, to give a turn to affairs and to
limited to such as might be reasonably foreseen in the light of the facts
increase damage in a way that the promissor, without actual notice of the
then known to the contracting parties. Where the purchaser desires to
external condition, could not reasonably be expected to foresee.
protect himself, in the contingency of the failure of the vendor promptly

to give possession, from the possibility of incurring other damages than
Plaintiffs right chiefly as against Teodorica Endencia; and what has been
such as are incident to the normal value of the use and occupation, he
said suffices in our opinion to demonstrate that the damages laid under the
should cause to be inserted in the contract a clause providing for
second cause of action in the complaint could not be recovered from her,
stipulated amount to be paid upon failure of the vendor to give possession;
first, because the damages in question are special damages which were not
and no case has been called to our attention where, in the absence of such
within contemplation of the parties when the contract was made, and
a stipulation, damages have been held to be recoverable by the purchase
secondly, because said damages are too remote to be subject of recovery.
in
This conclusion is also necessarily fatal to the right of the plaintiff to
excess
of
the
normal
value
of
use
and
occupation.
recover such damages from the defendant corporation for, as already

The damages recoverable in case of the breach of a contract are two sorts,
suggested, by advising Teodorica Endencia not to perform the contract,
namely, (1) the ordinary, natural, and in a sense, necessary damage; and
said corporation could in no event render itself more extensively liable
(2) special damages. Ordinary damages is found in all breaches of
than the principal in the contract. Our conclusion is that the judgment of
contract where there are no special circumstances to distinguish the case
the trial court should be affirmed, and it is so ordered, with costs against
the
appellant.
Daywalt to get possession of the land and the Torrens Title. The lower
court held that the defendant was liable to the plaintiff for the use and
occupation of the land in question and condemned the defendant to pay
the plaintiff Pesos 2,497.00 as damages. The Supreme Court affirmed this
Facts: Teodorica Endencia obligated herself to sell a parcel of land to the
adjudication of the lower court. With respect to the claim of Pesos
plaintiff. It was agreed that the final deed of sale will be executed when
500,000.00
damages,
Ong
vs.
the
Supreme
Court.
the land was registered in Endencias name. Subsequently, the Torrens Title
for the land was issued in her favor but in the course of the proceedings
Yiu
CA
(contracts
of
Adhesion)
for registration it was found that the land involved in the sale contained a
greater area than what Endencia originally thought and she became
Held: PAL did not act in bad faith therefore Petitioner is not granted moral
reluctant to consummate the sale of the land to the plaintiff. This
and exemplary damages; liability if PAL is limited to P100 as stipulated in
reluctance was due to the advice of the defendant which exercised a great
the
ticket.
moral influence over her. However, in advising Endencia that she was not
bound by her contract with the plaintiff, the defendant was not actuated
We agree with the foregoing finding. The pertinent Condition of Carriage
with improper motives but did so in good faith believing that, under the
printed
circumstances, Endencia was not really bound by her contract with the
8. BAGGAGE LIABILITY ... The total liability of the Carrier for lost or
plaintiff. In view of Endencias refusal to make the conveyance, the
damaged baggage of the passenger is LIMITED TO P100.00 for each ticket
plaintiff instituted a complaint for specific performance against her and,
unless a passenger declares a higher valuation in excess of P100.00, but
upon appeal, the Supreme Court held that she was bound by the contract
not in excess, however, of a total valuation of P1,000.00 and additional
and she was ordered to make the conveyance of the land in question to the
charges
at
are
the
back
paid
of
pursuant
the
plane
to
ticket
Carrier's
reads:
tariffs.
plaintiff. The plaintiff then instituted an action against the defendant to

recover the following damages: (a) The amount of Pesos 24,000.00 for the
There is no dispute that petitioner did not declare any higher value for his
use and occupation of the land in question by reason of the pasturing of
luggage, much less did he pay any additional transportation charge.
cattle therein during the period that the land was not conveyed by
Endencia to the plaintiff; (b) The amount of Pesos 500,000.00 for plaintiffs
But petitioner argues that there is nothing in the evidence to show that he
failure to sell the land in question to a sugar growing and milling
had actually entered into a contract with PAL limiting the latter's liability
enterprise, the successful launching of which depended on the ability of
for loss or delay of the baggage of its passengers, and that Article 1750 of
the
Civil
Code
has
not
been
complied
with.
While it may be true that petitioner had not signed the plane ticket, he is
Velasco
nevertheless bound by the provisions thereof. "Such provisions have been
HELD: It is not difficult to glean from the aforequoted averments that the
held to be a part of the contract of carriage, and valid and binding upon
petitioners themselves admit that they and the respondent still had to
the passenger regardless of the latter's lack of knowledge or assent to the
meet and agree on how and when the down-payment and the installment
regulation". 5 It is what is known as a contract of "adhesion", in regards
payments were to be paid. Such being the situation, it cannot, therefore,
which it has been said that contracts of adhesion wherein one party
be said that a definite and firm sales agreement between the parties had
imposes a ready made form of contract on the other, as the plane ticket in
been perfected over the lot in question. Indeed, this Court has already
the case at bar, are contracts not entirely prohibited. The one who adheres
ruled before that a definite agreement on the manner of payment of the
to the contract is in reality free to reject it entirely; if he adheres, he
purchase price is an essential element in the formation of a binding and
gives his consent. "A contract limiting liability upon an agreed valuation
unforceable contract of sale. 3 The fact, therefore, that the petitioners
does not offend against the policy of the law forbidding one from
delivered to the respondent the sum of P10,000 as part of the down-
contracting
payment that they had to pay cannot be considered as sufficient proof of
against
his
own
negligence.
vs.
CA
(Elements)
the perfection of any purchase and sale agreement between the parties
Facts: Petitioner was a frequent passenger of PAL. He travelled from Cebu
herein under article 1482 of the new Civil Code, as the petitioners
to Butuan for a case bringing his luggage that contained his documents for
themselves admit that some essential matter the terms of payment
the case. It was loaded to the wrong plane. Petitioner demanded the
still
return of his luggage and PAL complied accordingly. It was delivered to him
Sir Mik: The manner of payment is NOT an essential element of a contract.
had
to
be
mutually
covenanted.
the next day but it was allegedly opened already and his case documents
missing. Petitioner sued for damages contending that PAL acted in bad
faith. RTC gave petitioner a favorable judgment but he appealed to CA for
Bienvenido Babao vs. Florencio Perez (Article 1324; statute of fraud)
more damages. However, CA only granted him P100 as damages finding

that PAL acted without bad faith and petitioner not being able to declare
Held: Contracts which by their terms are not to be performed within one
the contents and value of his luggage as stipulated in the PAL ticket.
year, may be taken out of the statute through performance by one party
thereto. All that is required in such case is complete performance within
the year by one party, however many tears may have to elapse before the
agreement is performed by the other party. But nothing less than full
Issue: whether or not the verbal agreement falls within the Stature of
performance by one party will suffice, and it has been held that, if
Frauds
anything remains to be done after the expiration of the year besides the
mere payment of money, the statute will apply. It is not therefore correct
to state that Santiago Babao has fully complied with his part within the
year
from
the
alleged
contract
in
question.
Sanchez
vs.
Rigos
(contracts;acceptance)
Held: The SC affirmed the decision appealed from, with costs against
Having reached the conclusion that all the parol evidence of appellee was
Severina
submitted in violation of the Statute of Frauds, or of the rule which
1.
prohibits testimony against deceased persons, we find unnecessary to
The option did not impose upon Sanchez the obligation to purchase Rigos
discuss
property. The contract denominated as Option to Purchase is not a
the
other
issues
raised
in
appellants'
brief.
Option
Rigos.
to
purchase
not
contract
to
buy
and
sell
contract to buy and sell, it merely granted Sanchez an option to buy,

The
case
is
dismissed,
with
costs
against
appellee.
and both parties so understood it, as indicated by the caption given by

them to said instrument. Under the provisions thereof, Rigos agreed,
promised and committed herself to sell the land therein described to
Facts: Santiago Babao married the niece of Celestina Perez. 1924, Santi
Sanchez for P1,510.00, but there is nothing in the contract to indicate that
and Celestina allegedly had a verbal agreement where Santi was bound to
her aforementioned agreement, promise and undertaking is supported by a
improve the land of Celestina by leveling, clearing, planting fruits and
consideration distinct from the price stipulated for the sale of the land.
other crops; that he will act as the administrator of the land; that all
2. Article 1354 applicable to contracts in general, Article 1479 refers to
expenses for labor and materials will be at his cost, in consideration of
sales
which Celestina in turn bound herself to convey to Santi or his wife of
Relying upon Article 1354 of the Civil Code, which provides that when the
the land,, with all the improvements after the death of Celestina. But,
offerer has allowed the offeree a certain period to accept, the offer may
shortly before Celestinas death, she sold the land to another part. Thus,
be withdrawn at any time before acceptance by communicating such
Santi filed this complaint alleging the sale of the land as fraudulent and
withdrawal, except when the option is founded upon consideration, as
fictitious and prays to recover the land or the expenses he incurred in
something paid or promised, the lower court presumed the existence of a
improving
consideration distinct from the price. It must be noted however that
the
land.
in
particular
Article 1354 applies to contracts in general, whereas the second paragraph
of Article 1479 refers to sales in particular, and, more specifically, to an
Sevilla, 9 Phil. 210). This view was reiterated in Evangelista V. De la Rosa
accepted unilateral promise to buy or to sell. In other words, Article 1479
and Mercys Incorporated v. Herminia Verde. In the present case, Rigos
is controlling in the present case. Article 1479 provides that A promise to
explicitly averred in her answer, and pleaded as a special defense, the
buy and sell a determinate thing for a price certain is reciprocally
absence of said consideration for her promise to sell and, by joining in the
demandable. An accepted unilateral promise to buy or to sell a
petition for a judgment on the pleadings, Sanchez has impliedly admitted
determinate thing for a price certain is binding upon the promissor if the
the
promise is supported by a consideration distinct from the price.
5. Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co. case
3. Article 1479 imposes condition for a unilateral promise to be binding;
The Court in the Southwestern Sugar case held that under article 1479 of
Burden
proof
the new Civil Code an option to sell, or a promise to buy or to sell, as
In order that a unilateral promise may be binding upon the promisor,
used in said article, to be valid must be supported by a consideration
Article 1479 requires the concurrence of a condition, namely, that the
distinct from the price. This is clearly inferred from the context of said
promise be supported by a consideration distinct from the price.
article that a unilateral promise to buy or to sell, even if accepted, is only
Accordingly, the promisee can not compel the promisor to comply with the
binding if supported by a consideration. In other words, an accepted
promise, unless the former establishes the existence of said distinct
unilateral promise can only have a binding effect if supported by a
consideration. In other words, the promisee has the burden of proving such
consideration, which means that the option can still be withdrawn, even if
consideration. In the present case, Sanchez has not even alleged the
accepted, if the same is not supported by any consideration. Here it is not
existence
complaint.
disputed that the option is without consideration. It can therefore be
4. Implied admission of the truth of the other partys averment if party
withdrawn notwithstanding the acceptance made of it by appellee. The
joins in the petition for a judgment based on the pleadings without
Court held that the general rule regarding offer and acceptance under
introducing
evidence
Article 1324 must be interpreted as modified by the provision of article
In the case of Bauermann v. Casas (14 March 1908), it was held that one
1479, which applies to a promise to buy and sell specifically. In short, the
who prays for judgment on the pleadings without offering proof as to the
rule requires that a promise to sell to be valid must be supported by a
truth of hie own allegations, and without giving the opposing party an
consideration
opportunity to introduce evidence, must be understood to admit the truth
6.
of all the material and relevant allegations of the opposing party, and to
In the case of Atkins, Kroll and Co., Inc. v. Cua Hian Tek, decided later than
rest his motion for judgment on those allegations taken together with such
Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., the Court
of his own as are admitted in the pleading. (La Yebana Company vs.
saw no distinction between Articles 1324 and 1479 of the Civil Code and
of
thereof
in
his
truth
Atkins,
of
said
distinct
Kroll
and
averment
in
from
Co.
Rigos
the
v.
Cua
answer.
price.
Hian
Tek
applied the former where a unilateral promise to sell similar to the one
generated a contract, if none there was before (arts. 1254 and 1262 of the
sued upon here was involved, treating such promise as an option which,
Civil Code; Zayco vs. Serra, 44 Phil. 331.) In other words, since there may
although not binding as a contract in itself for lack of a separate
be no valid contract without a cause or consideration, the promisor is not
consideration, nevertheless generated a bilateral contract of purchase and
bound by his promise and may, accordingly, withdraw it. Pending notice of
sale
acceptance.
its withdrawal, his accepted promise partakes, however, of the nature of
unilateral
an offer to sell which, if accepted, results in a perfected contract of sale.
Furthermore, an option is unilateral: a promise to sell at the price fixed
9. Proper construction of conflicting provisions of the same law; Harmonize
whenever the offeree should decide to exercise his option within the
to implement the same principle rather than to create exceptions
specified time. After accepting the promise and before he exercises his
In line with the cardinal rule of statutory construction that, in construing
option, the holder of the option is not bound to buy. He is free either to
different provisions of one and the same law or code, such interpretation
buy or not to buy later. In the present case, however, upon accepting
should be favored as will reconcile or harmonize said provisions and avoid
Rigos offer a bilateral promise to sell and to buy ensued, and Sanchez ipso
a conflict between the same. Indeed, the presumption is that, in the
facto assumed the obligation of a purchaser. He did not just get the right
process of drafting the Code, its author has maintained a consistent
subsequently to buy or not to buy. It was not a mere option then; it was
philosophy or position. Moreover, the decision in Southwestern Sugar &
bilateral
sale.
Molasses Co. v. Atlantic Gulf & pacific Co., holding that Art. 1324 (on the
8. Option without consideration is a mere offer of a contract of sale, which
general principles on contracts) is modified by Art. 1479 (on sales) of the
is
accepted
Civil Code, in effect, considers the latter as an exception to the former,
If the option is given without a consideration, it is a mere offer of a
and exceptions are not favored, unless the intention to the contrary is
contract of sale, which is not binding until accepted. If, however,
clear, and it is not so, insofar as said 2 articles are concerned. What is
acceptance is made before a withdrawal, it constitutes a binding contract
more, the reference, in both the second paragraph of Art. 1479 and Art.
of sale, even though the option was not supported by a sufficient
1324, to an option or promise supported by or founded upon a
consideration. . . . (77 Corpus Juris Secundum p. 652. See also 27 Ruling
consideration, strongly suggests that the 2 provisions intended to enforce
Case Law 339 and cases cited.) It can be taken for granted that the option
or
contract was not valid for lack of consideration. But it was, at least, an
10. Atkins, Kroll & Co. case modifies or abandons Southwestern Sugar case
offer to sell, which was accepted by latter, and of the acceptance the
insofar
offerer had knowledge before said offer was withdrawn. The concurrence
Upon mature deliberation, the Court is of the considered opinion that it
of both acts the offer and the acceptance could at all events have
should, as it hereby reiterates the doctrine laid down in the Atkins, Kroll &
upon
7.
Option
is
contract
not
binding
of
until
implement
as
the
same
to
principle.
inconsistencies
Co. case, and that, insofar all inconsistent therewith, the view adhered to
in the South western Sugar & Molasses Co. case should be deemed
Held: CA erred in applying to the present case the pari delicto rule. First,
abandoned
modified.
because it can not be said that both parties here had equal guilt when we
Facts: On 3 April 1961, Nicolas Sanchez and Severina Rigos executed an
consider that as against the deceased Salvador P. Lopez, who was a man
instrument, entitled Option to Purchase, whereby Mrs. Rigos agreed,
advanced in years and mature experience, the appellant was a mere minor,
promised and committed . . . to sell to Sanchez, for the sum of
16 yrs of age, when the donation was made; that there is no finding made
P1,510.00, a parcel of land situated in the barrios of Abar and Sibot,
by CA that she was fully aware of the terms of the bargain entered into by
municipality of San Jose, province of Nueva Ecija, and more particularly
and Lopez and her parents; that, her acceptance in the deed of donation
described in TCT NT-12528 of said province, within two (2) years from said
(Art. 741) did not necessarily imply knowledge of conditions and terms not
date with the understanding that said option shall be deemed terminated
set forth therein; and that the substance of the testimony of the
and elapsed, if Sanchez shall fail to exercise his right to buy the
instrumental witnesses is that it was the appellant's parents who insisted
property within the stipulated period. Inasmuch as several tenders of
on the donation before allowing her to live with Lopez. These facts are
payment of the sum of P1,510.00, made by Sanchez within said period,
more suggestive of seduction than of immoral bargaining on the part of
were rejected by Mrs. Rigos, on 12 March 1963, the former deposited said
appellant. It must not be forgotten that illegality is not presumed, but
amount with the CFI Nueva Ecija and commenced against the latter the
must be duly and adequately proved. Second, the rule that parties to an
present action, for specific performance and damages. On 11 February
illegal contract, if equally guilty, will not be aided by the law but will both
1964, after the filing of defendants answer, both parties, assisted by their
be left where it finds them, has been interpreted by this Court as barring
respective counsel, jointly moved for a judgment on the pleadings.
the party from pleading the illegality of the bargain either as a cause of
Accordingly, on 28 February 1964, the lower court rendered judgment for
action
or
or
as
defense.
Sanchez, ordering Mrs. Rigos to accept the sum judicially consigned by him
and to execute, in his favor, the requisite deed of conveyance. Mrs. Rigos
CA correctly held that Lopez could not donate the entirety of the property
was, likewise, sentenced to pay P200.00, as attorneys fees, and the costs.
in litigation, to the prejudice of his wife Maria Ngo, because said property
Hence, the appeal by Mrs. Rigos to the Court of Appeals, which case was
was conjugal in character and the right of the husband to donate
the certified by the latter court to the Supreme Court upon the ground
community
that
it
involves
question
purely
of
property
is
strictly
limited
by
law
law.
ART. 1409. The conjugal partnership shall also be chargeable with anything
Liguez
vs.
CA
(void
contracts)
which may have been given or promised by the husband alone to the
children born of the marriage in order to obtain employment for them or

give then, a profession or by both spouses by common consent, should they
Facts:
not have stipulated that such expenditures should be borne in whole or in
Plaintiff averred to be a legal owner, pursuant to a deed of donation of a
part
them.".
land, executed in her favor by the late owner, Salvador P. Lopez, on 18 May
ART. 1415. The husband may dispose of the property of the conjugal
1943. The defense interposed was that the donation was null and void for
partnership
1409.)
having an illicit causa or consideration, which was the plaintiff's entering
ART. 1413. In addition to his powers as manager the husband may for a
into marital relations with Salvador P. Lopez, a married man; and that the
valuable consideration alienate and encumber the property of the conjugal
property had been adjudicated to the appellees as heirs of Lopez by the
partnership
court
by
the
for
separate
the
without
property
purposes
of
mentioned
the
consent
one
in
of
of
Article
the
wife.
of
First
Instance,
since
1949.
The text of the articles makes it plain that the donation made by the
The Court of Appeals rejected the appellant's claim on the basis of the
husband in contravention of law is not void in its entirety, but only in so far
well- known rule "in pari delicto non oritur actio" as embodied in Article
as it prejudices the interest of the wife. In this regard, as Manresa points
1306 of 1889 (reproduced in Article 1412 of the new Civil Code):
out the law asks no distinction between gratuitous transfers and
ART. 1412. If the act in which the unlawful or forbidden cause consists does
conveyances for a consideration. To determine the prejudice to the widow,
not constitute a criminal offense, the following rules shall be observed:
it must be shown that the value of her share in the property donated can
(1) When the fault is on the part of both contracting parties, neither may
not be paid out of the husband's share of the community profits. The
recover what he has given by virtue of the contract, or demand the
requisite data, however, are not available to us and necessitate a remand
performance
of the records to the court of origin that settled the estate of the late
(2) When only one of the contracting parties is at fault, he cannot recover,
Salvador
Lopez.
what he has given by reason of the contract, or ask for fulfillment of what
The decisions appealed from are reversed and set aside, and the appellant
has been promised him. The other, who is not at fault, may demand the
Conchita Liguez declared entitled to so much of the donated property as
return of what he has given without any obligation to comply with his
may be found, upon proper liquidation, not to prejudice the share of the
promise.
P.
widow Maria Ngo in the conjugal partnership with Salvador P. Lopez or the
legitimes
of
the
forced
heirs
of
the
latter.
of
the
other's
undertaking;

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Limketkai Sons Milling, Inc. vs. CA, G.R. No.

BPI on July 18, 1988 and tendered the full payment of

The phases that a contract goes through may be

BABAO VS. PEREZ, G.R. NO. L-8334, DECEMBER 28,

sold the land to another part. Thus, Santi filed this

The case is dismissed, with costs against appellee.

PATERNO VS. JAO YAN, G.R. NO. L-12218, FEBRUARY

(3) Defendant lessee averred, in his answer, that the

(a) An agreement that by its terms is not to be

RTC: Yes, the contract is unenforceable. At the trial,

Paul Reiss, et al. vs. Jose M. Memije, G.R. No. 5447,

property owner and an attorney in active practice in the

thus delivered. If, therefore, it was error of the trial

2 A special promise to answer for the debt,

An immense amount of litigation has arisen in England

promise, and the circumstances under which the

promise to repay it) to pay the debt of a third party, as

that these principles are applicable only where the

gave credit is to be determined. In the language of

Taking into consideration all the circumstances of the

did not mean thereby to say that defendant guaranteed

Arellano, C.J., Torres, Mapa, Johnson and Moreland,

GONZALO VS. TARNATE, JR., G.R. NO. 160600,

under the deed of assignment but without the award of

Photo credits to www.ramirezlaw.blogspot.com

Gonzalo appealed the case to the Court of Appeals (CA).

However, there was no damages in favor of Tarnate, Jr.

January 15, 2014

that had been utilized in the project. In the deed of

to its being a mere product of the subcontract that had

2. Defendant to pay Plaintiff the sum of THIRTY

malevolent manner analogous to the case of Xentrex

Upon denial of his motion for reconsideration, 10 Gonzalo

Gonzalo appealed to the Court of Appeals (CA).

Although holding that the subcontract was an illegal

Gonzalo contends that the CA erred in affirming the RTC

There is no question that every contractor is prohibited

x x x. The intention of the parties in executing the Deed

No. 1594 was lesser than that of Gonzalo, for, as the CA

There is no question that Tarnate provided the

however, because, firstly, Gonzalo presented no proof of

June 30, 2014

WHEREFORE, we AFFIRM the decision promulgated on

RANA VS. WONG, ET AL., G.R. NO. 192861, JUNE 30,

Assailed in these consolidated petitions for review on

The RTC Proceedings

Teresita Lee Wong (Wong) and Spouses Shirley and

On September 19, 1997, Wong, Sps. Ong, and Sps. Uy

On the opposite side of the subject road, across the

In their Answer dated October 23, 1997, 21 Sps. Rana

considering the natural elevation of their own property,

docketed as Civil Case No. CEB-21296. They alleged that

The RTC Ruling

counterclaim for damages because of the failure ofboth

A. Civil Case No. CEB-20893

corrective action without prior judicial permission). In

per sea nuisance warranting its summary abatement

It is a standing jurisprudentialrule that unless a

Aside from the remedy of summary abatement which

In Estate of Gregoria Francisco v. Court of Appeals, this

In Pampanga Bus Co., Inc. v. Municipality of Tarlacwhere

In the present cases, Wong, et al. availed of the remedy

With respect to the elevated and cemented subject

Subdivision, Wong, et al. maintain the rights to the