CIVIL LAW

PART II
SALES
I. DEFINITION AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE
A. DEFINITION
ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125
2, 1994

December

A contract of sale is perfected when a person, called the seller, obligates

himself, for a price certain, to deliver and to transfer ownership of a thing or
right to another, called the buyer, over which the latter agrees.
B. CONTRACT OF OPTION NOT A CONTRACT OF SALE
ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125
2, 1994

December

Both the trial court and CA found that defendants' offer to sell was never
accepted by the plaintiffs for the reason that the parties did not agree upon the
terms and conditions of the proposed sale, hence, there was no contract of sale
at all. An accepted unilateral promise which specifies the thing to be sold and
the price to be paid, when coupled with a valuable consideration distinct and
separate from the price, is what may properly be termed a perfected contract of
option and not perfected contract of sale.
C. CONTRACT OF CONDITIONAL SALE
ART 1458
TAN vs BENOLIRAO, G.R. NO. 153820. October 16, 2009
The Deed of Conditional Sale, as termed by the parties, states that "in case,
BUYER has complied with the terms and conditions of this contract, then the
SELLERS shall execute and deliver to the BUYER the appropriate Deed of
Absolute Sale". The very essence of a contract of sale is the transfer of
ownership in exchange for a price paid or promised, but where the seller
promises to execute a deed of absolute sale upon the completion by the buyer
of the payment of the price, the contract is only a contract to sell, even if it is
denominated as a Deed of Conditional Sale.

D. CONTRACT TO SELL
PADILLA vs. SPOUSES PAREDES, G.R. NO. 124874, March 17, 2000
Under the parties contract, the property will be transferred to petitioner only
upon the latter's "complete compliance of his obligation provided in the
contract" but because of petitioners failure to fully pay the purchase price, the
obligation of private respondents to convey title to the property did not arise.
Petitioner's reliance on Article 1592 of the Civil Code is misplaced because
what this provision contemplates is an absolute sale and not a contract to sell
as in the present case.
ART 1478
SPOUSES REYES vs. SALVADOR, SR., G.R. NO. 139047, September 11,
2008
CRISTOBAL vs. SALVADOR, SR., G.R. NO. 139365, September 11, 2008
The Seller executed three separate contracts on the same property with three
different parties, wherein only the first two contracts contained a stipulation
that "if the Vendee fails to pay the Vendor the sums stated within the period
stipulated and after the grace period for each payment, this contract shall
automatically be null and void and of no effect without the necessity of any
demand, and the Vendor shall have the full and exclusive right to sell to any
person. The first two contracts were both mere contracts to sell and did not
transfer ownership to either of the buyers for failure to comply with the
condition of full payment of the purchase price, hence, vendor can still validly
convey the subject property to another buyer.
E. ELEMENTS OF A VALID CONTRACT OF SALE
PEALOSA vs. SANTOS, G.R. NO. 133749, August 23, 2001
Respondent insist that the second deed is a complete nullity because a) the
consideration stated in the deed was not paid; b)seller was not present when
the deed was notarized; c) seller did not surrender a copy of the title; d)real
estate taxes were not paid. The elements of a valid contract of sale are: (1)
consent or meeting of the minds; (2) determinate subject matter; and (3) price
certain in money or its equivalent which are present in the second Deed of Sale
hence there is already a perfected contract of sale.

ART 1475
HEIRS OF JUAN SAN ANDRES vs. RODRIGUEZ, G.R. NO. 135634 May 31,
2000
Respondent alleged that there was no contract of sale to speak of, while
petitioner as proof of the sale presented a receipt stating that Andres received
from Rodriguez a sum representing an advance payment for a residential lot
with the agreed price of 15php per square meter and that the payment of the
full consideration after the survey shall be due and payable in 5 years from the
execution of the formal deed of sale. All of the essential elements of a contract
of sale are present, i.e., that there was a meeting of the minds between the
parties, by virtue of which the late Andres undertook to transfer ownership of
and to deliver a determinate thing for a price certain in money.
II. PARTIES TO A CONTRACT OF SALE
A. SELLER
ART 1459
HEIRS OF ARTURO
November 27, 2008

REYES

vs

SOCCO-BELTRAN,

G.R.

176474

It was unmistakably stated in the Contract to Sell and made clear to both
parties thereto that the vendor was not yet the owner of the subject property
and was merely expecting to inherit the same. The law specifically requires
that the vendor must have ownership of the property at the time of delivery
hence, there was no valid sale from which ownership of the subject property
could have been transferred.
DACLAG vs. MACAHILIG et al., G.R. NO. 159578, February 18, 2009
Petitioners contend that the 10-year period for reconveyance is applicable if the
action is based on an implied or a constructive trust. However, since
respondents' action for reconveyance was based on fraud, the action must be
filed within four years from the discovery of the fraud. Respondent's action for
reconveyance was not even subject to prescription, since the deed of sale that
was executed in favor of petitioners was null and void because the seller was
not the owner of the land, nor has the authority when she sold it to petitioners,
hence, being an absolute nullity, the deed is subject to attack anytime because
an action to declare the inexistence of a void contract does not prescribe.
ART 1505
NOOL vs. COURT OF APPEALS, G.R. NO. 116635 July 24, 1997
3

Petitioners contend that they could repurchase the property that they "sold" to
private respondents when they allowed the respondent to redeem the properties
for them from DBP but DBP certified that the mortgagors' right of redemption
was not exercised within the period. Article 1505 of the Civil Code provides that
"where goods are sold by a person who is not the owner thereof, and who does
not sell them under authority or with consent of the owner, the buyer acquires
no better title to the goods than the seller had, unless the owner of the goods is
by his conduct precluded from denying the seller's authority to sell.", hence,
petitioners "sold" nothing, it follows that they can also "repurchase" nothing.
B. BUYER
ART 1491
DAROY vs. ATTY. ABECIA, A.C. NO. 3046, October 26, 1998
The prohibition in Art. 1491 does not apply to the sale of a parcel of land,
acquired by a client to satisfy a judgment in his favor to his counsel as long as
the property was not the subject of the litigation.
ARCENIO vs. JUDGE PAGOROGON, A.M. NO. MTJ-89-270 July 5, 1993
OFFICE OF THE COURT ADMINISTRATOR vs. JUDGE PAGOROGON, A.M.
NO. MTJ-92-637 July 5, 1993
The respondent judge engaged the services of a mechanic to tow the jeep in
custodia legis and to place the jeep in good running condition, spending in the
process her own money and also registered the same in her brother's name.
The act of respondent judge is not unlike the prohibited acquisition by
purchase described in Article 1491 of the New Civil code and is in fact, even
worse when she did not acquire the said vehicle from it's owner but instead
whimsically spent for its repairs and automatically appropriated the jeep for
her own use and benefit.
VALENCIA vs. ATTY. CABANTING, A.M. Nos. 1302, 1391 and 1543 April
26, 1991
Paulino alleged that the trial court failed to provide a workable solution
concerning his house and while the petition for certiorari was pending the trial
court issued an order of execution stating that "the decision in this case has
already become final and executory". While it is true that Atty. Cabanting
purchased the lot after finality of judgment, there was still a pending certiorari
proceeding, and a thing is said to be in litigation not only if there is some
contest or litigation over it in court, but also from the moment that it becomes
subject to the judicial action of the judge.
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FABILLO vs. THE HONORABLE INTERMEDIATE APPELLATE COURT, G.R.

NO. L-68838 March 11, 1991
After the court declared with finality that the petitioners are the lawful owners,
they refused to comply when the respondent lawyer proceeded to implement
the contract of services between him and the petitioners by taking possession
and exercising rights of ownership over 40% of said properties which are the
subject of litigation. A contract between a lawyer and his client stipulating a
contingent fee is not covered by said prohibition under Article 1491 (5) of the
Civil Code because the payment of said fee is not made during the pendency of
the litigation but only after judgment has been rendered in the case handled by
the lawyer.
MANANQUIL vs. ATTY. VILLEGAS, A.M. NO. 2430 August 30, 1990
Complainant alleges that for over a period of 20 years, respondent counsel
allowed lease contracts to be executed between his client and a partnership of
which respondent is one of the partners, covering parcels of land of the estate,
but respondent claims that he is only acting as an agent. Even if the
respondent signed merely as an agent, the lease contracts are covered by the
prohibition against any acquisition or lease by a lawyer of properties involved
in litigation in which he takes part.
BAUTISTA vs. ATTY. GONZALES, A.M. NO. 1625 February 12, 1990
The Solicitor General found that respondent counsel transferred to himself
one-half of the properties of his clients during the pendency of the case where
the properties were involved. Persons mentioned in Art. 1491 of the Civil Code
are prohibited from purchasing the property mentioned therein because of the
existing fiduciary relationship with such property and rights, as well as with
the client.
ART 1492
IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORY
OF GUAM OF ATTY. LEON G. MAQUERA, B.M. NO. 793. July 30, 2004
Maquera was suspended from the practice of law in Guam for misconduct, as
he acquired his clients property by exercising the right of redemption
previously assigned to him by the client in payment of his legal services, then
sold it and as a consequence obtained an unreasonably high fee for handling
his clients case. The prohibition extends to sales in legal redemption and such
prohibition is founded on public policy because, by virtue of his office, an
5

attorney may easily take advantage of the credulity and ignorance of his client
and unduly enrich himself at the expense of his client.
ART 1493
PROVINCE OF CEBU vs. HEIRS OF RUFINA MORALES, G.R. NO. 170115,
FEBRUARY 19, 2008
The City of Cebu was no longer the owner of the lot when it ceded the same to
petitioner under the compromise agreement and at that time, the city merely
retained rights as an unpaid seller but had effectively transferred ownership of
the lot to Morales. A successor-in-interest could only acquire rights that its
predecessor had over the lo which include the right to seek rescission or
fulfillment of the terms of the contract and the right to damages in either case.
III. SUBJECT MATTER
A. SALE OF AN EXPECTED THING
ART 1461
HEIRS OF AMPARO DEL ROSARIO vs. SANTOS, G.R. NO. L-46892
September 30, 1981
By the terms of the Deed of Sale itself, appellants declared themselves to be
owners of one-half (1,2) interest thereof and contend that the deed of
assignment of one-half (1,2) interest thereof executed by said Custodio in their
favor is strictly personal between them. Notwithstanding the lack of any title to
the said lot by appellants at the time of the execution of the deed of sale in
favor of appellee, the said sale may be valid as there can be a sale of an
expected thing.
B. SALE OF A MERE HOPE OR EXPECTANCY
JAVIER vs. COURT OF APPEALS, G.R. NO. L-48194 March 15, 1990
The efficacy of a deed of assignment is subject to the condition that the
application of private respondent for an additional area for forest concession be
approved by the Bureau of Forestry which was not obtained. The efficacy of
the sale of a mere hope or expectancy is deemed subject to the condition that
the thing will come into existence, which did not happen, hence the agreement
executed never became effective or enforceable.
C. BOUNDARIES OF THE SUBJECT MATTER
DEL PRADO vs SPOUSES CABALLERO, G.R. NO. 148225, March 3,2010

The parties agreed on the purchase price of P40,000.00 for a predetermined

area of 4,000 sq m, more or less, but when the OCT was issued, the area was
declared to be 14,475 sq m, with an excess of 10,475 sq m. Petititiomer,
however, claims that respondents are, therefore, duty-bound to deliver the
whole area within the boundaries stated, without any corresponding increase
in the price. Article 1542 is not hard and fast and admits of an exception and
the use of more or less or similar words in designating quantity covers only a
reasonable excess or deficiency, and clearly, the discrepancy of 10,475 sq m
cannot be considered a slight difference in quantity.
SEMIRA vs. COURT OF APPEALS, G.R. NO. 76031 March 2, 1994
Private respondent sold Lot 4221 to his nephew by means of a "Kasulatan ng
Bilihan ng Lupa" which incorporated both the area and the definite boundaries
of the lot, the former transferred not merely the 822.5 square meters stated in
their document of sale but the entire area circumscribed within its boundaries.
If besides mentioning the boundaries, which is indispensable in every
conveyance of real estate, its area or number should be designated in the
contract, the vendor shall be bound to deliver all that is included within said
boundaries, even when it exceeds the area or number specified in the contract;
and, should he not be able to do so, he shall suffer a reduction in the price, in
proportion to what is lacking in the area or number, unless the contract is
rescinded because the vendee does not accede to the failure to deliver what has
been stipulated.
IV. OBLIGATIONS OF A SELLER TO TRANSFER OWNERSHIP
ART 1462
DANGUILAN vs. IAC, G.R. NO. L-69970 November 28, 1988
Respondent admits that she did not take physical possession of property but
argues that symbolic delivery was effected through the notarized deed of sale.
The thing is considered to be delivered when it is placed "in the hands and
possession of the vendee," and in order that this symbolic delivery may produce
the effect of tradition, it is necessary that the vendor shall have had such
control over the thing sold at the moment of the sale, but if there is no
impediment to prevent the thing sold passing into the tenancy of the purchaser
by the sole will of the vendor, symbolic delivery through the execution of a
public instrument is sufficient.
ART 1495
CHUA vs COURT OF APPEALS, G.R. NO. 119255, April 9, 2003
Petitioner insists that he was ready to pay the balance of the purchase price
but withheld payment because he required that the property be registered first
in his name before he would turn over the check to the private respondent.
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The obligation of the seller is to transfer to the buyer ownership of the thing
sold, but in the sale of a real property, the seller is not obligated to transfer in
the name of the buyer a new certificate of title, but rather to transfer ownership
of the real property, because as between the seller and buyer, ownership is
transferred not by the issuance of a new certificate of title in the name of the
buyer but by the execution of the instrument of sale in a public document.
ART 1496
VISAYAN SAWMILL COMPANY, INC., vs. COURT OF APPEALS, G.R. NO.
83851. March 3, 1993.
The seller gave access to the buyer to enter his premises, manifesting no
objection thereto but even sending people to start digging up the scrap iron.
The seller has placed the goods in the control and possession of the vendee and
such action or real delivery (traditio) transfered ownership.
ART 1497
MUNICIPALITY OF VICTORIAS vs. THE COURT OF APPEALS, G.R. NO. L31189 March 31, 1987
Respondent discovered that a parcel of land she owns is being used by
Petitioner, Municipality of Victorias, as a cemetery for 29 years and when the
Mayor replied that Petitioner bought the land from her grandmother, she asked
to be shown the papers concerning the sale but petitioner refused to show the
same. Where there is no express provision that title shall not pass until
payment of the price, and the thing sold has been delivered, title passes from
the moment the thing sold is placed in the possession and control of the buyer.
DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010
Petitioner sold three parcels of land to respondent which were mortgaged to a
bank, hence petitioner and respondent executed a notarized deed of absolute
sale with assumption of mortgage, but petitioner some time thereafter paid the
mortgage and sold the properties to another person. Settled is the rule that the
seller is obliged to transfer title over the properties and deliver the same to the
buyer, and as a rule, the execution of a notarized deed of sale is equivalent to
the delivery of a thing sold.
ART 1523
PUROMINES, INC., vs. COURT OF APPEAL, G.R. NO. 91228. March 22,
1993.

Petitioner argues that the sales contract does not include the contract of
carriage which is a different contract entered into by the carrier with the cargo
owners.
As worded, the sales contract is comprehensive enough to include claims for
damages arising from carriage and delivery of the goods. As a general rule, the
seller has the obligation to transmit the goods to the buyer, and concomitant
thereto, the contracting of a carrier to deliver the same. Art. 1523 of the Civil
Code provides:
"Art. 1523. Where in pursuance of a contract of sale, the seller in authorized or
required to send the goods to the buyer, delivery of the goods to a carrier,
whether named by the buyer or not, for the purpose of transmission to the
buyer is deemed to be a delivery of the goods to the buyer, except in the cases
provided for in article 1503, first, second and third paragraphs, or unless a
contrary intent appear.
"Unless otherwise authorized by the buyer, the seller must take such contract
with the carrier on behalf of the buyer as may be reasonable, having regard to
the nature of the goods and the other circumstances of the case. If the seller
omit so to do, and the goods are lost or damaged in course of transit, the buyer
may decline to treat the delivery to the carrier as a delivery to himself,, or may
hold the seller responsible in damages."
xxx xxx xxx
The disputed sales contact provides for conditions relative to the delivery of
goods, such as date of shipment, demurrage, weight as determined by the bill
of lading at load port.

ART 1477
BOY vs. COURT OF APPEALS, G.R. NO. 125088, April 14, 2004
Petitioner sold the subject property to respondents as evidenced by a notarized
Deed of Absolute Sale, but contends that the respondents have no right to
material possession of the property since the respondents have not paid the
property in full. Unless there is a stipulation to the contrary, when the sale is
made through a public instrument, the execution thereof is equivalent to the
delivery of the thing which is the object of the contract.
V. PRICE
A. G.R.OSS INADEQUACY OF THE PRICE
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ART 1470
SPOUSES BUENAVENTURA et al vs. COURT OF APPEALS, G.R. NO.
126376. November 20, 2003
Petitioners assert that their respondent siblings did not actually pay the prices
stated in the Deeds of Sale to their respondent father and assuming that there
is consideration, the same is grossly inadequate as to invalidate the Deeds of
Sale. If there is a meeting of the minds of the parties as to the price, the
contract of sale is valid and gross inadequacy of price does not affect a contract
of sale, except if there is a defect in the consent, or that the parties really
intended a donation or some other contract.
ART 1471
HO, JR. vs TENG GUI, G.R. NO. 130115, July 16, 2008
RTC considered that although the sales of the properties on the lot were
simulated, it can be assumed that the intention of Ho in such transaction was
to give and donate such properties to the respondent. The Court holds that the
reliance of the trial court on the provisions of Article 1471 of the Civil Code to
conclude that the simulated sales were a valid donation to the respondent is
misplaced because its finding was based on a mere assumption when the law
requires positive proof, which the respondent was unable to show.

B. FIXING OF THE PRICE

ART 1473
HYATT ELEVATORS
December 1, 2010

vs. CATHEDRAL HEIGHTS, G.R. NO. 173881

As revealed by the records, it was only Hyatt who determined the price, without
the acceptance or conformity of CHBCAI. The fixing of the price can never be
left to the decision of one of the contracting parties, but a price fixed by one of
the contracting parties, if accepted by the other, gives rise to a perfected sale.
C. WHEN AND WHERE TO PAY THE PRICE
CHUA vs. COURT OF APPEALS, G.R. NO. 119255, April 9, 2003
On the agreed date, Chua refused to pay the balance of the purchase price as
required by the contract to sell, the signed Deeds of Sale, and imposes another
10

condition. The vendee is bound to accept delivery and to pay the price of the
thing sold at the time and place stipulated in the contract.
D. INTEREST
ART 1589
FULE vs. COURT OF APPEALS, G.R. NO. 112212, March 2, 1998
While it is true that the amount of P40,000.00 forming part of the
consideration was still payable to petitioner, its nonpayment by Dr. Cruz is not
a sufficient cause to invalidate the contract or bar the transfer of ownership
and possession of the things exchanged considering the fact that their contract
is silent as to when it becomes due and demandable.
Neither may such failure to pay the balance of the purchase price result in the
payment of interest thereon. Article 1589 of the Civil Code prescribes the
payment of interest by the vendee "for the period between the delivery of the
thing and the payment of the price" in the following cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits or income;
(3) Should he be in default, from the time of judicial or extrajudicial demand for
the payment of the price.
E. SUSPENSION OF PAYMENT OF THE PRICE
ART 1590
CENTRAL BANK OF THE PHILIPPINES vs. SPOUSES ALFONSO, G.R. NO.
131074, March 27, 2000
Respondents aver that they are entitled to cancel the obligation altogether in
view of petitioner's failure to pay the purchase price when the same became
due, while Petitioner claims that the respondent failed to comply with their
contractual obligations hence it was entitled to withhold payment of the
purchase price. Should the vendee be disturbed in the possession or ownership
of the thing acquired, he may suspend the payment of the price until the
vendor has cause the disturbance or danger to cease. This is not, however, the
only justified cause for retention or withholding the payment of the agreed
price, but also, if the vendor fails to perform any essential obligation of the
contract.
ART 1592
SOLIVA vs. The INTESTATE ESTATE of MARCELO M.VILLALBA, G.R. NO.
154017, December 8, 2003
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While petitioner is now barred from recovering the subject property due to
laches, all is not lost for her since by respondent's own admission, a balance of
P1,250 of the total purchase price remains unpaid. In the sale of immovable
property, even though it may have been stipulated that upon failure to pay the
price at the time agreed upon the rescission of the contract shall take place,
the vendee may pay, even after the expiration of the period, as long as no
demand for rescission of the contract has been made upon him either judicially
or extrajudicially or by a notarial act.
VI. FORMATION OF A CONTRACT OF SALE
A. STAGES TO THE CONTRACT OF SALE
SWEDISH MATCH
October 20, 2004

vs.

COURT

OF

APPEALS,

G.R.

NO.

128120

Petitioners stress that respondent Litonjua made it clear in his letters that the
quoted prices were merely tentative and still subject to further negotiations
between him and the seller, hence, there was no meeting of the minds on the
essential terms and conditions of the sale because SMAB did not accept
respondents offer that consideration would be paid in Philippine pesos. In
general, contracts undergo three distinct stages, to wit: (1) Negotiation - begins
from the time the prospective contracting parties manifest their interest in the
contract and ends at the moment of agreement of the parties; (2) Perfection or
birth of the contract takes place when the parties aG.R.ee upon the essential
elements of the contract; and (3) Consummation occurs when the parties fulfill
or perform the terms agreed upon in the contract, culminating in the
extinguishment thereof.
B. ACCEPTED UNILATERAL PROMISE
ART 1479 (Read together with ART 1324)
TUAZON vs. DEL ROSARIO-SUAREZ, G.R. NO. 168325, December 8, 2010
The lessor made an offer to sell to the lessee the property at a fixed price within
a certain period, but the lessee failed to accept the offer or to purchase on time,
hence, the lessor sold the said property to her daughter. An accepted
unilateral promise can only have a binding effect if supported by a
consideration separate and distinct from the purchase price. Hence, the option
can still be withdrawn, even if accepted, if the same is not supported by any
consideration.
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ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125, December
2, 1994
Both the trial court and CA found that defendants' offer to sell was never
accepted by the plaintiffs for the reason that the parties did not agree upon the
terms and conditions of the proposed sale, hence, there was no contract of sale
at all.
When the sale is not absolute but conditional, such as in a "Contract to Sell"
where invariably the ownership of the thing sold is retained until the fulfillment
of a positive suspensive condition (normally, the full payment of the purchase
price), the breach of the condition will prevent the obligation to convey title
from acquiring an obligatory force.
An imperfect promise (policitacion) is merely an offer and is not considered
binding commitments, thus, at any time prior to the perfection of the contract,
either negotiating party may stop the negotiation, and the offer, at this stage,
may be withdrawn; the withdrawal is effective immediately after its
manifestation, such as by its mailing and not necessarily when the offeree
learns of the withdrawal.
SERRA vs. COURT OF APPEALS, G.R. NO. 103338, January 4, 1994
The court found the contract to be valid, but nonetheless ruled that the option
to buy is unenforceable because it lacked a consideration distinct from the
price and RCBC did not exercise its option within reasonable time. Article
1324 of the Civil Code provides that when an offeror has allowed the offeree a
certain period to accept, the offer maybe withdrawn at anytime before
acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised; on the other
hand, Article 1479 of the Code provides that an accepted unilateral promise to
buy and sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.
C. EARNEST MONEY
ART 1482
SPOUSES SERRANO vs. CAGUIAT, G.R. NO. 139173, February 28, 2007
The lower court ruled that the receipt stating that the respondent made a
partial payment and that the execution and final deed of sale would be signed
upon payment of the balance, is a Contract of Sale and considered the partial
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payment as earnest money, which prompted the respondent to demand specific

performance and damages when the herein petitioners cancelled the
transaction. Whenever earnest money is given in a contract of sale, it shall be
considered as part of the price and proof of the perfection of the contract, but
the earnest money given in a contract to sell will form part of the consideration
only if the sale is consummated upon full payment of the purchase price.
SAN MIGUEL PROPERTIES PHILIPPINES, INC., vs. SPOUSES HUANG, G.R.
NO. 137290. July 31, 2000
The appellate court held that all the requisites of a perfected contract of sale
had been complied with upon acceptance of the petitioner of the earnest money
tendered by respondents. It is not the giving of earnest money, but the proof of
the concurrence of all the essential elements of the contract of sale which
establishes the existence of a perfected sale.
VII. TRANSFER OF OWNERSHIP
A. DEED OF SALE
ART 1498
DAILISAN vs. COURT OF APPEALS, G.R. NO. 176448, July 28, 2008
Respondents question the notarized deed of absolute sale presented by the
petitioner and refused to partition the property purportedly co-owned by them.
Ownership of the thing sold is acquired only from the time of delivery thereof,
either actual or constructive, and when the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the
thing which is the object of the contract, if from the deed the contrary does not
appear or cannot be inferred.
LEONARDO vs MARAVILLA, G.R. NO. 143369, November 27, 2002
It is not disputed that petitioner neither had, nor demanded, material
possession of the disputed lot as well as the transfer of title to his name
notwithstanding the alleged execution of a deed of absolute sale and it was the
respondents who have been in control and possession thereof in the concept of
owners. The execution of the deed of sale is only a presumptive, not conclusive
delivery which can be rebutted by evidence to the contrary, as when there is
failure on the part of the vendee to take material possession of the land subject
of the sale in the concept of a purchaser-owner.

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SPOUSES SABIO vs THE INTERNATIONAL CORPORATE BANK, INC. (now

UNION BANK OF THE PHILIPPINES) et al., G.R. NO. 132709,
September 4, 2001
Petitioners claims that, Ayala Corporation failed to "complete and perfect
ownership and title" to the subject property since it was never in actual
occupation, possession, control and enjoyment of said property due to the
presence of illegal occupants.
Notwithstanding the presence of illegal
occupants on the subject property, transfer of ownership by symbolic delivery
under Article 1498 can still be effected through the execution of the deed of
conveyance in a public document which is equivalent to the delivery of the
property.
B. CONSTRUCTIVE DELIVERY
ART 1499
DY, JR. vs. COURT OF APPEALS, G.R. NO. 92989, July 8, 1991
There is constructive delivery already upon the execution of the public
instrument pursuant to Article 1498 and upon the consent or agreement of the
parties when the thing sold cannot be immediately transferred to the
possession of the vendee. (Art. 1499)
DIGNOS vs CA, G.R. NO. L-59266, February 29, 1988
Although denominated a "Deed of Conditional Sale," a sale is still absolute
where the contract is devoid of any proviso that title is reserved or the right to
unilaterally rescind is stipulated, e.g., until or unless the price is paid.
Ownership will then be transferred to the buyer upon actual or constructive
delivery (e.g., by the execution of a public document) of the property sold.

C. POSSESSOR IN GOOD FAITH

ART 1544
DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010
Petitioner delivered the properties to respondent upon the execution of the
notarized deed and handed over to respondent the keys to the properties,
hence respondent took actual possession and exercised control over the
property before he made the second sale. Should there be no inscription,
ownership shall pertain to the person who in good faith was first in possession.
15

VIII. RISK OF LOSS

ART 1504 (2)
AEROSPACE CHEMICAL INDUSTRIES, INC. vs. CA, G.R. NO. 108129
September 23, 1999
The petitioner contends that rental expenses of storing sulfuric acid should be
at private respondent's account, as a seller, until ownership is transferred. The
general rule that before delivery, the risk of loss is borne by the seller who is
still the owner, is not applicable in this case because petitioner had incurred
delay in the performance of its obligation.
IX. DOCUMENTS OF TITLE
VDA. DE MELENCION vs COURT OF APPEALS, G.R. NO. 148846,
September 25, 2007
A. TORRENS TITLE

The subject property was under the operation of the Torrens System even
before the respective conveyances to AZNAR and Go Kim Chuan were made.
AZNAR knew of this, and admits this as fact. Yet, despite this knowledge,
AZNAR registered the sale in its favor under Act 3344 on the contention that at
the time of sale, there was no title on file.
The fact that the certificate of title over the registered land is lost does not
convert it into unregistered land. After all, a certificate of title is merely an
evidence of ownership or title over the particular property described therein. T
Act 3344 provides for the system of recording of transactions or claims over
unregistered real estate without prejudice to a third party with a better
right. But if the land is registered under the Land Registration Act (and
therefore has a Torrens Title), and it is sold and the sale is registered not
under the Land Registration Act but under Act 3344, as amended, such sale is
not considered registered, as the term is used under Art. 1544 of the New
Civil Code.
Although it is obvious that Go Kim Chuan registered the sale in his favor under
Act 496 while AZNAR did not, SC did not make an outright award of the
subject property to the petitioners solely on that basis. For the law is
clear: mere registration of title is not enough. Good faith must accompany the
registration.
16

Thus, to be able to enjoy priority status, the second purchaser must be

in good faith, i.e., he must have no knowledge of the previous alienation of the
property by the vendor to another. Notably, what is important for this purpose
is not whether the second buyer is a buyer in good faith, but whether he
registers the second sale in good faith, meaning, he does so without knowledge
of any defect in the title over the property sold.
B. FIRST TO REGISTER IN GOOD FAITH
DAUZ vs. SPOUSES ELIGIO, G.R. NO. 152407, September 21, 2007
Respondents caused the registration of the sale of the land in the Registry of
the Deeds. Petitioners, on the other hand, failed to cause the registration of the
sale to them. Where both parties claim to have purchased the same property,
the one who registered the sale in his favor, in good faith, has a preferred right
over the other who has not registered his title, even if the latter is in actual
possession of the immovable property.
SPOUSES AVELINO vs. SPOUSES CELEDONIO, G.R. NO. 135900, August
17, 2007
Article 1544 of the Civil Code contemplates a case of double sales or multiple
sales by a single vendor. It cannot be invoked where the two different contracts
of sale are made by two different persons, one of them not being the owner of
the property sold.
Spouses ABRIGO vs. DE VERA, G.R. NO. 154409, June 21, 2004
Both petitioners Abrigo and respondent registered the sale of the property, but
petitioners registered their sale under Act 3344, while respondent registered
the transaction under the Torrens system.
Between two buyers of the same immovable property, the law gives ownership
priority to (1) the first registrant in good faith; (2) then, the first possessor in
good faith; and (3) finally, the buyer who in good faith presents the oldest title.
Since the property in dispute in the present case was already registered under
the Torrens system, petitioners registration of the sale under Act 3344 was not
effective for purposes of Article 1544 of the Civil Code.
SPOUSES OCCEA vs. MORALES OBSIANA, G.R. NO. 156973, June 4,
2004
17

The general rule is that one who deals with property registered under the
Torrens system need not go beyond the same, but only has to rely on the title.
He is charged with notice only of such burdens and claims as are annotated on
the title.
However, this principle does not apply when the party has actual knowledge of
facts and circumstances that would impel a reasonably cautious man to make
such inquiry or when the purchaser has knowledge of a defect or the lack of
title in his vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property in litigation. One who falls
within the exception can neither be denominated an innocent purchaser for
value nor a purchaser in good faith.
ISABELA COLLEGES, INC. vs. THE HEIRS OF NIEVES TOLENTINORIVERA, G.R. NO. 132677, October 20, 2000
Cortez filed a complaint-in-intervention claiming ownership over two parcels of
land by virtue of a sale in 1988, alleging that the lots were included in the fourhectare land covered by a Torrens Title of petitioner Isabela Colleges.
Even assuming that Cortez was not guilty of bad faith when he bought the land
in question, the fact remains that the Isabela Colleges was first in possession.
Petitioner has been in possession of the land since 1949. Between petitioner
and Cortez, therefore, the former had a better right for the latter only bought
the property in 1988 when it was already purchased by and titled under the
name of petitioner.
BAYOCA et al vs. GAUDIOSO NOGALES, G.R. NO. 138201. September 12,
2000
First buyer registered the sale under Act 3344, while second buyer registered
the sale under PD 1529. The governing principle is prius tempore, potior jure
(first in time, stronger in right). Knowledge by the first buyer of the second sale
cannot defeat the first buyers rights except when the second buyer first
registers in good faith the second sale, conversely, knowledge gained by the
second buyer of the first sale defeats his rights even if he is first to register,
since such knowledge taints his registration with bad faith.
BARICUATRO, JR.,
February 9, 2000

vs.

COURT

OF

APPEALS,

G.R.

NO.

105902
18

Amores was in good faith when he bought the disputed lots. When he
registered his title, however, he already had knowledge of the previous sale of
the disputed lots to petitioner. Such knowledge tainted his registration with
bad faith, and to merit protection under article 1544, the second buyer must
act in good faith from the time of the sale until the registration of the same
X. REMEDIES OF AN UNPAID SELLER
ART 1484 , 1485
PCI LEASING AND FINANCE, INC. vs. GIRAFFE-X CREATIVE IMAGING,
INC., G.R. NO. 142618, July 12, 2007
Petitioner having recovered thru (replevin) the personal property sought to be
payable, leased on installments, still demanded the balance of the rent. In
choosing, through replevin, to deprive the respondent of possession of the
leased equipment, the petitioner waived its right to bring an action to recover
unpaid rentals on the said leased items.
ART 1486
PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION, vs. COURT OF
APPEALS, G.R. NO. 112733 October 24, 1997
When petitioner failed to abide by its obligation to pay the installments in
accordance with the contract to sell, and provision in the contract
automatically took effect, which provides that "(I)f the buyer fails to pay the
installments due at the expiration of the grace period, the seller may cancel the
contract and any and all sums of money paid under this contract shall be
considered and become rentals on the property. A stipulation that the
installments or rents paid shall not be returned to the vendee or lessee shall be
valid insofar as the same may not be unconscionable under the circumstances.
GIL vs. HON. COURT OF APPEALS, G.R. NO. 127206, September 12, 2003
The consignation by the vendee of the purchase price of the property is
sufficient to defeat the right of the petitioners to demand for a rescission of the
said deed of absolute sale.
IRINGAN vs. HON. COURT OF APPEALS, G.R. NO. 129107, September 26,
2001

19

Petitioner contends that no rescission was effected simply by virtue of the letter
sent by respondent stating that he considered the contract of sale rescinded.
Petitioner asserts that a judicial or notarial act is necessary before one party
can unilaterally effect a rescission.
Respondent, on the other hand, contends that the right to rescind is vested by
law on the obligee and since petitioner did not oppose the intent to rescind the
contract, petitioner in effect agreed to it and had the legal effect of a mutually
agreed rescission.
Article 1592 of the Civil Code is the applicable provision regarding the sale of
an immovable property.
Article 1592. In the sale of immovable property, even though it may have been
stipulated that upon failure to pay the price at the time agreed upon the
rescission of the contract shall of right take place, the vendee may pay, even
after the expiration of the period, as long as no demand for rescission of the
contract has been made upon him either judicially or by a notarial act. After the
demand, the court may not grant him a new term.
A judicial or notarial act is necessary before a valid rescission can take place,
whether or not automatic rescission has been stipulated. It is to be noted that
the law uses the phrase "even though" emphasizing that when no stipulation is
found on automatic rescission, the judicial or notarial requirement still applies.

XI. PERFORMANCE OF A CONTRACT

EASTERN ASSURANCE & SURETY CORPORATION vs. IAC, G.R. NO. L69450, November 22, 1988
The ordinary meaning of execution is not limited to the signing or concluding of
a contract but includes as well the performance or implementation or
accomplishment of the terms and conditions of such contract.
XII. WARRANTIES
A. EXPRESS WARRANTIES
ART 1502
INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE PHILIPPINES,
INC., vs. LPJ ENTERPRISES, INC., G.R. NO. 66140, January 21, 1993

20

Respondent alleges that it cannot be held liable for the 47,000 plastic bags
which were not used for packing cement as originally intended invoking it's
right of return. Article 1502 of the Civil Code, has no application at all to this
case, since the provision in the Uniform Sales Act and the Uniform Commercial
Code from which Article 1502 was taken, clearly requires an express written
agreement to make a sales contract either a "sale or return" or a "sale on
approval", which is absent in this case.
Parol or extrinsic testimony could not be admitted for the purpose of showing
that an invoice or bill of sale that was complete in every aspect and purporting
to embody a sale without condition or restriction constituted a contract of sale
or return. If the purchaser desired to incorporate a stipulation securing to him
the right of return, he should have done so at the time the contract was made.
On the other hand, the buyer cannot accept part and reject the rest of the
goods since this falls outside the normal intent of the parties in the "on
approval" situation.
B. IMPLIED WARRANTIES
ART 1628
LO vs. KJS ECO-FORMWORK SYSTEM PHIL., INC., G.R. NO. 149420
October 8, 2003
The vendor in good faith shall be responsible for the existence and legality of
the credit at the time of the sale, unless it should have been sold as doubtful;
but not for the solvency of the debtor, unless it has been so expressly
stipulated or unless the insolvency was prior to the sale and of common
knowledge.
ART 1546
ANG vs. COURT OF APPEALS, G.R. NO. 177874, September 29, 2008
The seller, in declaring that he owned and had clean title to the vehicle at the
time the Deed of Absolute Sale, is giving an implied warranty of title which
prescribes six months after the delivery of the vehicle.
ART 1547
PNB vs MEGA PRIME REALTY AND HOLDINGS CORPORATION, G.R. NO.
173454, October 6, 2008
MEGA PRIME REALTY AND HOLDINGS CORPORATION vs. PNB, G.R. NO.
173456, October 6, 2008
In a contract of sale, unless a contrary intention appears, there is an implied
warranty on the part of the seller that he has a right to sell the thing at the
time when the ownership is to pass, and that the buyer shall have a peaceful
21

possession of the thing and it shall be free from any hidden faults or defects, or
any charge or encumbrance not declared or known to the buyer.
ART 1548
ANG vs. COURT OF APPEALS, G.R. NO. 177874, September 29, 2008
The seller, in pledging that he will defend the same from all claims or any
claim whatsoever [and] will save the vendee from any suit by the government of
the Republic of the Philippines, is giving a warranty against eviction. A breach
of this warranty requires the concurrence of these four requisites:(1) The
purchaser has been deprived of the whole or part of the thing sold; (2) This
eviction is by a final judgment; (3) The basis thereof is by virtue of a right prior
to the sale made by the vendor; and (4) The vendor has been summoned and
made co-defendant in the suit for eviction at the instance of the vendee.
ART 1561
DE YSASI vs. ARCEO, G.R. NO. 136586, November 22, 2001
Petitioner admitted that he inspected the premises three or four times before
signing the lease contract and during his inspection, he noticed the rotten
plywood on the ceiling which in his opinion was caused by leaking water or
"anay" (termites), yet he decided to go through with the lease agreement. The
lessor is responsible for warranty against hidden defects, but he is not
answerable for patent defects or those which are visible.
C. REMEDIES AGAINST VIOLATIONS OF WARRANTIES
ART 1567
ENGINEERING & MACHINERY CORPORATION vs. COURT OF APPEALS,
G.R. NO. 52267, January 24, 1996
The original complaint is one for damages arising from breach of a written
contract - and not a suit to enforce warranties against hidden defects. The
remedy against violations of the warranty against hidden defects is either to
withdraw from the contract (redhibitory action) or to demand a proportionate
reduction of the price (accion quanti minoris), with damages in either case.

ART 1571
DINO vs COURT OF APPEALS, G.R. NO. 113564, June 20, 2001

22

Respondent made the last delivery of the vinyl products to petitioners on

September 28, 1988 and the action to recover the purchase price of the goods
petitioners returned to the respondent was filed on July 24, 1989, more than
nine months from the date of last delivery. Actions arising from breach of
warranty against hidden defects shall be barred after six months from the
delivery of the thing sold.
XIII. BREACH OF CONTRACT
ART 1545
LAFORTEZA vs. MACHUCA, G.R. NO. 137552, June 16, 2000
A MOA has this stipulation "....SELLER-LESSOR hereby agrees to sell unto
BUYER-LESSEE the property described within six (6) months from the
execution date hereof, or upon issuance by the Court of a new owner's
certificate of title and the execution of extrajudicial partition with sale of the
estate of Francisco Laforteza, whichever is earlier;...". Petitioner contends that
since the condition was not met, they no longer had an obligation to proceed
with the sale of the house and lot. The petitioners fail to distinguish between a
condition imposed upon the perfection of the contract and a condition imposed
on the performance of an obligation, failure to comply with the first condition
results in the failure of a contract, while the failure to comply with the second
condition only gives the other party the option either to refuse to proceed with
the sale or to waive the condition.
ART 1583
INTEGRATED PACKAGING CORP. vs. COURT OF APPEALS, G.R. NO.
115117, June 8, 2000
There is no dispute that the agreement provides for the delivery of printing
paper on different dates and a separate price has been agreed upon for each
delivery. When there is a contract of sale of goods to be delivered by stated
installments, which are to be separately paid for, and the seller makes defective
deliveries in respect of one or more installments, it depends in each case on the
terms of the contract and the circumstances of the case, whether the breach of
contract is so material as to justify the injured party in refusing to proceed
further and suing for damages for breach of the entire contract, or whether the
breach is severable, giving rise to a claim for compensation but not to a right to
treat the whole contract as broken.
ART 1597
VISAYAN SAWMILL COMPANY, INC., vs. THE HONORABLE COURT OF
APPEALS, G.R. NO. 83851. March 3, 1993.
23

The petitioner agreed to deliver the scrap iron only upon payment of the
purchase price by means of an irrevocable and unconditional letter of credit,
which the respondent failed to obtain, thus, there was no actual sale. Where
the goods have not been delivered to the buyer, and the buyer has repudiated
the contract of sale, or has manifested his inability to perform his obligations,
thereunder, or has committed a breach thereof, the seller may totally rescind
the contract of sale by giving notice of his election to do to the buyer.
XIV. EXTINGUSHMENT OF THE SALE
A. SALE WITH PACTO DE RETRO
ART 1601
NOOL vs. COURT OF APPEALS, G.R. NO. 116635, July 24, 1997
Petitioners contend that they could repurchase the property that they "sold" to
private respondents when they allowed the respondent to redeem the properties
for them from DBP. DBP, however, certified that the petitioner-mortgagors'
right of redemption was not exercised within the period, hence DBP became the
absolute owner of said parcels of land when it entered into a Deed of
Conditional Sale involving the same parcels of land with Private Respondent as
vendee. One "repurchases" only what one has previously sold since the right to
repurchase presupposes a valid contract of sale between the same parties.
DIAMANTE vs. HON. COURT OF APPEALS, G.R. NO. L-51824 February 7,
1992
A right to repurchase was granted subsequently in an instrument different
from the original document of sale which caused the cancellation of the permit
or lease by the Secretary of Fisheries. An agreement to repurchase becomes a
promise to sell when made after the sale, because when the sale is made
without such an agreement, the purchaser acquires the thing sold absolutely,
and if he afterwards grants the vendor the right to repurchase, it is a new
contract entered into by the purchaser, as absolute owner already of the object.
VASQUEZ vs. HONORABLE COURT OF APPEALS, G.R. NO. 83759 July 12,
1991
Respondents sold the lot to the petitioners under a Deed of Sale, On the same
day and along with the execution of the Deed of Sale, a separate instrument,
denominated as Right to Repurchase was executed by the parties, Later,
petitioners resisted the action for redemption. The transaction between the
24

petitioners and private respondents was not a sale with right to repurchase,
the second instrument is just an option to buy since it is not embodied in the
same document of sale but in a separate document, and since such option is
not supported by a consideration distinct from the price, said deed for right to
repurchase is not binding upon them.
ART 1603
BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008
Where in a contract of sale with pacto de retro, the vendor remains in
possession, as a lessee or otherwise, the contract shall be presumed to be an
equitable mortgage because in a contract of sale with pacto de retro, the legal
title to the property is immediately transferred to the vendee, subject to the
vendors right to redeem and retention by the vendor of the possession of the
property is inconsistent with the vendees acquisition of the right of ownership
under a true sale.
ART 1606
ABILLA vs. ANG GOBONSENG, JR., G.R. NO. 146651, January 17, 2002
The legal question to be resolved is "May the vendors in a sale judicially
declared as a pacto de retro exercise the right of repurchase under Article
1606, third paragraph, of the Civil Code, after they have taken the position that
the same was an equitable mortgage?" No, where the proofs established that
there could be no honest doubt as to the parties intention, that the transaction
was clearly and definitely a sale with pacto de retro, the vendor a retro is not
entitled to the benefit of the third paragraph of Article 1606.
AGAN vs. HEIRS OF SPS. NUEVA, G.R. NO. 155018, December 11, 2003
The lower court's dispositive position states: "However, the vendors can still
exercise the right to repurchase said property within thirty (30) days from
receipt of this decision pursuant to Article 1606 and 1607 of the New Civil
Code." Article 1606 grants the vendor a retro thirty (30) days from the time
final judgment was rendered, not from the defendants receipt of the judgment,
"final judgment must be construed to mean one that has become final and
executory.
ART 1607
Spouses CRUZ vs. LEIS et al., G.R. NO. 125233, March 9, 2000

25

The lower court rationalized that petitioners failed to comply with the
provisions of Article 1607 of the Civil Code requiring a judicial order for the
consolidation of the ownership in the vendee a retro to be recorded in the
Registry of Property. A judicial order is necessary in order to determine the
true nature of the transaction and to prevent the interposition of buyers in
good faith while the determination is being made, however, notwithstanding
Article 1607, the recording in the Registry of Property of the consolidation of
ownership of the vendee is not a condition sine qua non to the transfer of
ownership for the method prescribed thereunder is merely for the purpose of
registering the consolidated title.
ART 1616
BPI FAMILY SAVINGS BANK, INC. vs. SPS. VELOSO, G.R. NO. 141974,
August 9, 2004
The respondents offer to redeem the foreclosed properties and the subsequent
consignation in court were made within the period of redemption, but the
amount consigned did not include the interest and was also way below the
amount paid by the highest bidder-purchaser of the properties during the
auction sale. The redemption price should either be fully offered in legal tender
or else validly consigned in court because only by such means can the auction
winner be assured that the offer to redeem is being made in good faith.
ART 1619
LEE CHUY REALTY CORPORATION vs.HON. COURT OF APPEALS, G.R. NO.
104114 December 4, 1995
Petitioner questions the ruling of the Court of Appeals which concluded that a
prior tender or offer of redemption is a prerequisite or precondition to the filing
of the action for legal redemption. To avail of the right of redemption what is
essential is to make an offer to redeem within the prescribed period. There is
actually no prescribed form for an offer to redeem to be properly effected. It can
either be through a formal tender with consignation, or by filing a complaint in
court coupled with consignation of the redemption price within the prescribed
period.

VILLANUEVA vs. HON. ALFREDO C. FLORENDO, G.R. NO. L-33158,

October 17, 1985

26

It is not disputed that co-ownership exists but the lower court disallowed
redemption because it considered the vendee, Vallangca, a co-heir, being
married to Concepcion Villanueva.
The term "third person" or "stranger in Art. 1620 refers to all persons who are
not heirs in succession, either by will or the law or any one who is not a coowner.
ART 1621
PRIMARY STRUCTURES CORP. vs. SPS. VALENCIA, G.R. NO. 150060.
August 19, 2003
Article 1621 of the Civil Code expresses that the right of redemption it grants to
an adjoining owner of the property conveyed may be defeated if it can be shown
that the buyer or grantee does not own any other rural land.
ART 1622
G.R. NO. 134117. February 9, 2000
SEN PO EK MARKETING CORPORATION vs. MARTINEZ
Petitioner invokes its right of first refusal against private respondents, when
Teodora sold the property that petitioner has been leasing. Article 1622 of the
New Civil Code only deals with small urban lands that are bought for
speculation where only adjoining lot owners can exercise the right of preemption or redemption. It does not apply to a lessee trying to buy the land that
it was leasing, especially when such right was never stipulated in any of the
several lease contracts.
ART 1623
CABALES vs. COURT OF APPEALS, G.R. NO. 162421, August 31, 2007
Petitioners may redeem the subject property from respondents-spouses, but
they must do so within thirty days from notice in writing of the sale by their coowners vendors. In requiring written notice, Art. 1623 seeks to ensure that the
redemptioner is properly notified of (a) the sale and (b) the date of such notice,
as the date thereof becomes the reckoning point of the 30-day period of
redemption.

SPOUSES SI vs. COURT OF APPEALS, G.R. NO. 122047, October 12, 2000
Co-owners with actual notice of the sale are not entitled to written notice. A
written notice is a formal requisite to make certain that the co-owners have
27

actual notice of the sale to enable them to exercise their right of redemption
within the limited period of thirty days. But where the co-owners had actual
notice of the sale at the time thereof and/or afterwards, a written notice of a
fact already known to them, would be superfluous. The statute does not
demand what is unnecessary.
FRANCISCO vs. BOISER, G.R. NO. 137677, May 31, 2000
Art. 1623 of the Civil Code is clear in requiring that the written notification
should come from the vendor or prospective vendor, not from any other person.
Since the vendor of an undivided interest is in the best position to know who
are his co-owners who under the law must be notified of the sale, and is in the
best position to confirm whether consent to the essential obligation of selling
the property and transferring ownership thereof to the vendee has been given.
LEDONIO vs. CAPITOL DEVELOPMENT CORPORATION, G.R. NO. 149040,
July 4, 2007
An assignment of credit has been defined as an agreement by virtue of which
the owner of a credit (known as the assignor), by a legal cause - such as sale,
dation in payment or exchange or donation - and without need of the debtor's
consent, transfers that credit and its accessory rights to another (known as the
assignee), who acquires the power to enforce it, to the same extent as the
assignor could have enforced it against the debtor.
ART 1625
TEOCO, JR.,vs METROPOLITAN BANK AND TRUST COMPANY, G.R. NO.
162333, December 23, 2008
Would the exercise by the brothers Teoco of the right to redeem the properties
in question be precluded by the fact that the assignment of right of redemption
was not contained in a public document? NO, the phrase "effect as against
third person" in Article 1625 of the Civil Code is interpreted as to be damage or
prejudice to such third person, hence if the third person would not be
prejudiced then the assignment of right to redeem may not be in a public
instrument.
B. EQUITABLE MORTGAGE
ART 1602
HEIRS OF JOSE REYES, JR. vs. REYES, G.R. NO.
2010

158377, August 13,

28

The provisions of the Civil Code governing equitable mortgages disguised as

sale contracts, like the one herein, are primarily designed to curtail the evils
brought about by contracts of sale with right to repurchase, particularly the
circumvention of the usury law and pactum commissorium. Courts have taken
judicial notice of the well-known fact that contracts of sale with right to
repurchase have been frequently resorted to in order to conceal the true nature
of a contract, that is, a loan secured by a mortgage. It is a reality that grave
financial distress renders persons hard-pressed to meet even their basic needs
or to respond to an emergency, leaving no choice to them but to sign deeds of
absolute sale of property or deeds of sale with pacto de retro if only to obtain
the much-needed loan from unscrupulous money lenders. This reality precisely
explains why the pertinent provision of the Civil Code includes a peculiar rule
concerning the period of redemption, to wit:
Art. 1602. The contract shall be presumed to be an
equitable mortagage, in any of the following cases:
xxx
(3) When upon or after the expiration of the right to
repurchase another instrument extending the period of
redemption or granting a new period is executed;
VDA. DE DELFIN vs DELLOTA, G.R. NO. 143697, January 28, 2008
The essential requisites of an equitable mortgage are: (1) the parties enter into
what appears to be a contract of sale, (2) but their intention is to secure an
existing debt by way of mortgage and the presence of even one of the
circumstances enumerated in Article 1602.
SPS. SANTIAGO vs. DIZON, G.R. NO. 172771, January 31, 2008
Respondent alleged that the transaction was an equitable mortgage because
after the sale of the property respondent remained therein, and the price
according to respondent was grossly inadequate. The presumption of equitable
mortgage created in Article 1602 of the Civil Code is not conclusive and may be
rebutted by competent and satisfactory proof of the contrary.

CEBALLOS vs. Intestate Estate of the Late EMIGDIO MERCADO, G.R. NO.
155856, May 28, 2004

29

Petitioner argues that Mercados delay in registering the Deed of Absolute Sale
and transferring the land title shows that the real agreement was an equitable
mortgage. Delay in transferring title is not one of the instances enumerated by
law in which an equitable mortgage can be presumed.
CEBALLOS vs. Intestate Estate of the Late EMIGDIO MERCADO, G.R. NO.
155856, May 28, 2004
Petitioners contend that the sale was only an equitable mortgage because (1)
the price was grossly inadequate, and (2) the vendors remained in possession
of the land and enjoyed its fruits. For the presumption of an equitable
mortgage to arise, one must first satisfy the requirement that the parties
entered into a contract denominated as a contract of sale, and that their
intention was to secure an existing debt by way of mortgage.
BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008
The purchase price stated in the deed was the amount of the indebtedness of
the respondent to petitioner but the deed purports to be a sale with right to
purchase. The rule is firmly settled that whenever it is clearly shown that a
deed of sale with pacto de retro, regular on its face, is given as security for a
loan, it must be regarded as an equitable mortgage.
ART 1604
DEHEZA-INAMARGA vs ALANO, G.R. NO. 171321, December 18, 2008
The provisions of Article 1602 shall also apply to a contract purporting to be an
absolute sale, and in case of doubt, a contract purporting to be a sale with
right to repurchase shall be construed as an equitable mortgage in consonance
with the rule that the law favors the least transmission of property rights.
XV. The Subdivision and Condominium Buyers' Protective Decree (P.D.
957)
EUGENIO vs. EXECUTIVE SECRETARY, G.R. NO. 109404, January 22,
1996
Did the failure to develop a subdivision constitute legal justification for the
non-payment of amortizations by a buyer on installment under land purchase
agreements entered into prior to the enactment of P.D. 957, "The Subdivision
and Condominium Buyers' Protective Decree"?
P.D. 957 is undeniably applicable to the contracts in question, it follows that
Section 23 thereof had been properly invoked by private respondent when he
30

desisted from making further payment to petitioner due to petitioner's failure to

develop the subdivision project according to the approved plans and within the
time limit for complying with the same.
PNB vs. OFFICE OF THE PRESIDENT, G.R. NO. 104528, January 18, 1996
A buyer of a property at a foreclosure sale cannot disposses prior purchasers
on installment of individual lots therein, or compel them to pay again for the
lots which they previously bought from the defaulting mortgagor-subdivision
developer on the theory that P.D. 957, "The Subdivision and Condominium
Buyers' Protective Decree", is not applicable to the mortgage contract in
question, the same having been executed prior to the enactment of P.D. 957.
Moreover, the SC held that, P.D. 957 being applicable, Section 18 of said law
obliges petitioner Bank to accept the payment of the remaining unpaid
amortizations tendered by private respondents. Privity of contracts as a defense
does not apply in this case for the law explicitly grants to the buyer the option
to pay the installment payment for his lot or unit directly to the mortgagee
(petitioner), which is required to apply such payments to reduce the
corresponding portion of the mortgage indebtedness secured by the particular
lot or unit being paid for.
XVI. The Condominium Act (R.A. NO. 4726)
HULST vs. PR BUILDERS, INC., G.R. NO. 156364, September 25, 2008
Petitioner contends that the Contract to Sell between petitioner and respondent
involved a condominium unit and did not violate the Constitutional
proscription against ownership of land by aliens. The law expressly allows
foreigners to acquire condominium units and shares in condominium
corporations up to not more than 40% of the total and outstanding capital
stock of a Filipino-owned or controlled corporation, since under this set up, the
ownership of the land is legally separated from the unit itself.

CARDINAL BUILDING OWNERS ASSOCIATION, INC. vs. ASSET RECOVERY

AND MANAGEMENT CORPORATION, G.R. No. 149696, July 14, 2006
Section 20 of R.A. No. 4726, otherwise known as the Condominium Act,
provides:
31

Sec. 20. An assessment upon any condominium made in accordance with a

duly registered declaration of restrictions shall be an obligation of the owner
thereof at the time the assessment is made. The amount of any such
assessment plus any other charges thereon, such as interest, costs (including
attorney's fees) and penalties, as such may be provided for in the declaration of
restrictions, shall be and become a lien upon the condominium assessed when
the management body causes a notice of assessment to be registered with the
Register of Deeds of the city or province where such condominium project is
located. The notice shall state the amount of such assessment and such other
charges thereon as may be authorized by the declaration of restrictions, a
description of the condominium unit against which the same has been
assessed, and the name of the registered owner thereof. Such notice shall be
signed by an authorized representative of the management body or as
otherwise provided in the declaration of restrictions. Upon payment of said
assessment and charges or other satisfaction thereof, the management body
shall cause to be registered a release of the lien.
Such lien shall be superior to all other liens registered subsequent to the
registration of said notice of assessment except real property tax liens and
except that the declaration of restrictions may provide for the subordination
thereof to any other liens and encumbrances. Such liens may be enforced in
the same manner provided for by law for the judicial or extra-judicial
foreclosure of mortgage or real property. Unless otherwise provided for in the
declaration of restrictions, the management body shall have power to bid at
foreclosure sale. The condominium owner shall have the right of redemption as
in cases of judicial or extra-judicial foreclosure of mortgages.
Records do not show that petitioner had its notice of assessment registered
with the Registry of Deeds of Manila in order that the amount of such
assessment could be considered a lien upon Marual's two condominium units.
Clearly, pursuant to the above provisions, petitioner's claim can not be
considered superior to that of respondent. As mentioned earlier, the deed of
sale wherein Marual conveyed to respondent his two condominium units, was
registered in the Registry of Deeds of Manila.
CHATEAU DE BAIE CONDOMINIUM CORPORATION vs. SPOUSES MORENO,
G.R. NO. 186271, February 23, 2011
The petition sought to prohibit the scheduled extrajudicial sale for lack of a
special power to sell from the registered owner. Under RA 4726 (the
Condominium Act), when a unit owner fails to pay the association dues, the
condominium corporation can enforce a lien on the condominium unit by
selling the unit in an extrajudicial foreclosure sale, and a special authority
from the condominium owner before a condominium corporation can initiate a
foreclosure proceeding is not needed.
32

SUCCESSION

Death & Presumptive Death & Death of Marriage;

Inheritance v. Succession, Patrimony; Money Obligations
Transmission, Non-transmission; Presumptive Legitimes
Survivorship Agreement, Succession & Taxes; Aleatory Contract (Art.
2010, NCC)

Laws governing Form and content

In the matter of the Testate Estate of Edward Christensen, G.R. L-16749,
January 31, 1963
Whether or not, the intrinsic validity of the testamentary disposition should be
governed by Philippine Law, when the national law of the testator refers back to
the Philippine Law. Edward is domiciled in the Philippines hence, Philippine
court must apply its own laws which makes natural children legally
acknowledge as forced heirs of the parent recognizing them.

Vitug vs. Court of Appeals, G.R.NO. 82027, Mar. 29, 1990 183 SCRA 755
A will has been defined as "a personal, solemn, revocable and free act by which
a capacitated person disposes of his property and rights and declares or
complies with duties to take effect after his death."
Cayatenao vs Leonidas, 129 SCRA 524
The law which governs Adoracion Campos will is the law of Pennsylvania, USA
which is the national law of the decedent. It is settled that as regards to the
intrinsic validity of the provisions of the wills as provided for by article 16 and
1039 of the New Civil Code, the national law of the decedent must apply.
Subjects and Object of Succession
Parish Priest of Victoria vs. Rigor, 89 SCRA 483
The issue in this case is whether or not a male relative referred in the will
should include those who are born after the testators death. To construe it as
referring to the nearest male relative at any time after his death would render
33

the provisions difficult to apply and create uncertainty as to the disposition of

the estate.

Opening of Succession
De Borja vs De Borja, G.R. No, L-28040, August 18, 1972
There is no legal bar to a successor to dispose his or her share immediately
after such death, even if the actual extent of such share is not determined until
the subsequent liquidation of the estate. The effect of such alienation is to be
deemed limited to what is ultimately adjudicated to the vendor heir.

Bonilla vs Leon Barcena, G.R. L-41715, June 18, 1976

The right of the heirs to the property of the deceased vests in them even before
the judicial declaration of their being declared as heirs. When Fortunata died,
her claim or right to the parcel of land in litigation in civil case number 856
was not extinguished by her death but was transmitted to her heirs upon her
death.
Borromeo-Herrera vs Borromeo, 152 SCRA 171
The properties included in an existing inheritance cannot be the subject of a
contract. The heirs acquire a right to succession from the moment of death of
the decedent. In this case, the purported waiver of hereditary rights cannot be
considered effective.

Testamentary Succession
Form and Solemnities of Notarial Wills
Baltazar v. Laxa, G.R.NO. 174489, April, 11, 2012
It is an established rule that "[a] testament may not be disallowed just because
the attesting witnesses declare against its due execution; neither does it have
to be necessarily allowed just because all the attesting witnesses declare in
favor of its legalization; what is decisive is that the court is convinced by
evidence before it, not necessarily from the attesting witnesses, although they
must testify, that the will was or was not duly executed in the manner required
by law."

34

Echavez vs. Dozen Cons., G.R.NO. 192916, Oct. 11, 2010

An attestation must state all the details the third paragraph of Article 805
requires. In the absence of the required avowal by the witnesses themselves,
no attestation clause can be deemed embodied in the Acknowledgement of the
Deed of Donation Mortis Causa.

Lopez v. Lopez, G.R.NO. 189984, Nov. 12, 2012

The law is clear that the attestation must state the number of pages used upon
which the will is written. The purpose of the law is to safeguard against
possible interpolation or omission of one or some of its pages and prevent any
increase or decrease in the pages.

Azuela v. CA, 487 SCRA 119

The signatures on the left-hand corner of every page signify, among others, that
the witnesses are aware that the page they are signing forms part of the will.
On the other hand, the signatures to the attestation clause establish that the
witnesses are referring to the statements contained in the attestation clause
itself.
Lee v. Tambago, 544 SCRA 393
An acknowledgment is the act of one who has executed a deed in going before
some competent officer or court and declaring it to be his act or deed. It
involves an extra step undertaken whereby the signatory actually declares to
the notary public that the same is his or her own free act and deed. The
acknowledgment in a notarial will has a two-fold purpose: (1) to safeguard the
testators wishes long after his demise and (2) to assure that his estate is
administered in the manner that he intends it to be done.
Suroza vs. Honrado, 110 SCRA 388
In the opening paragraph of the will, it was stated that English was a language
"understood and known" to the testatrix but in its concluding paragraph, it was
stated that the will was read to the testatrix "and translated into Filipino
language". That could only mean that the will was written in a language not
known to the illiterate testatrix and, therefore, it is void because of the
mandatory provision of article 804 of the Civil Code that every will must be
executed in a language or dialect known to the testator.

35

Garcia vs. Vasquez, 32 SCRA 489

The rationale behind the requirement of reading the will to the testator if he is
blind or incapable of reading the will himself (as when he is illiterate), is to
make the provisions thereof known to him, so that he may be able to object if
they are not in accordance with his wishes. That the aim of the law is to insure
that the dispositions of the will are properly communicated to and understood
by the handicapped testator, thus making them truly reflective of his desire, is
evidenced by the requirement that the will should be read to the latter, not only
once but twice, by two different persons, and that the witnesses have to act
within the range of his (the testator's) other senses.

Alvarado vs. Gaviola, Jr., 226 SCRA 348

This Court has held in a number of occasions that substantial compliance is
acceptable where the purpose of the law has been satisfied, the reason being
that the solemnities surrounding the execution of wills are intended to protect
the testator from all kinds of fraud and trickery but are never intended to be so
rigid and inflexible as to destroy the testamentary privilege.
In the case at bar, private respondent read the testator's will and codicil aloud
in the presence of the testator, his three instrumental witnesses, and the
notary public. Prior and subsequent thereto, the testator affirmed, upon being
asked, that the contents read corresponded with his instructions. Only then
did the signing and acknowledgement take place. There is no evidence, and
petitioner does not so allege, that the contents of the will and codicil were not
sufficiently made known and communicated to the testator. On the contrary,
with respect to the "Huling Habilin," the day of the execution was not the first
time that Brigido had affirmed the truth and authenticity of the contents of the
draft. The uncontradicted testimony of Atty. Rino is that Brigido Alvarado
already acknowledged that the will was drafted in accordance with his
expressed wishes even prior to 5 November 1977 when Atty. Rino went to the
testator's residence precisely for the purpose of securing his conformity to the
draft.
Javellana vs. Ledesma GR. No. L-7179, 97 Phil 258
The subsequent signing and sealing by the notary of his certification that the
testament was duly acknowledged by the participants therein is no part of the
acknowledgment itself nor of the testamentary act. Hence their separate
execution out of the presence of the testatrix and her witnesses cannot be said
to violate the rule that testaments should be completed without interruption.

36

Cruz vs. Villasor NO.L-32213, 54 SCRA 31

The notary public before whom the will was acknowledged cannot be
considered as the third instrumental witness since he cannot acknowledge
before himself his having signed the will. This cannot be done because he
cannot split his personality into two so that one will appear before the other to
acknowledge his participation in the making of the will.

Caneda vs. CA, 222 SCRA 781

The rule on substantial compliance in Article 809 cannot be revoked or relied
on by respondents since it presupposes that the defects in the attestation
clause can be cured or supplied by the text of the will or a consideration of
matters apparent therefrom which would provide the data not expressed in the
attestation clause or from which it may necessarily be gleaned or clearly
inferred that the acts not stated in the omitted textual requirements were
actually complied within the execution of the will.

Lopez v. Lopez, 685 SCRA 209

The statement in the Acknowledgment portion of the subject last will and
testament that it "consists of 7 pages including the page on which the
ratification and acknowledgment are written" cannot be deemed substantial
compliance. The will actually consists of 8 pages including its acknowledgment
which discrepancy cannot be explained by mere examination of the will itself
but through the presentation of evidence aliunde.
Guerrero v. Bihis, 521 SCRA 394
The issue in this case whether the will acknowledged by the testatrix and the
instrumental witnesses before a notary public acting outside the place of his
commission satisfies the requirement under Article 806 of the Civil Code?
Outside the place of his commission, he is bereft of power to perform any
notarial act; he is not a notary public. Any notarial act outside the limits of his
jurisdiction has no force and effect.
Celada v. Abena, 556 SCRA 569
While it is true that the attestation clause is not a part of the will, error in the
number of pages of the will as stated in the attestation clause is not material to
invalidate the subject will. It must be noted that the subject instrument is
consecutively lettered with pages A, B, and C which is a sufficient safeguard
from the possibility of an omission of some of the pages.

37

Form and Solemnities of Holographic Wills

Rodelas vs. Aranza, 119 SCRA 16
The photostatic or xerox copy of a lost or destroyed holographic will may be
admitted because then the authenticity of the handwriting of the deceased can
be determined by the probate court.

Codoy vs. Calugay, 312 SCRA 333

The word shall connotes a mandatory order. We have ruled that shall in a
statute commonly denotes an imperative obligation and is inconsistent with the
idea of discretion and that the presumption is that the word shall, when used
in a statute is mandatory."
Ajero vs. CA, 236 SCRA 488
Thus, unless the unauthenticated alterations, cancellations or insertions were
made on the date of the holographic will or on testator's signature, their
presence does not invalidate the will itself. The lack of authentication will only
result in disallowance of such changes.
Kalaw vs. Relova, 132 SCRA 237
To state that the Will as first written should be given efficacy is to disregard the
seeming change of mind of the testatrix. But that change of mind can neither
be given effect because she failed to authenticate it in the manner required by
law by affixing her full signature.
Roxas vs. De Jesus, 134 SCRA 245
As a general rule, the "date" in a holographic Will should include the day,
month, and year of its execution. However, when as in the case at bar, there is
no appearance of fraud, bad faith, undue influence and pressure and the
authenticity of the Will is established and the only issue is whether or not the
date "FEB.,61" appearing on the holographic Will is a valid compliance with
Article 810 of the Civil Code, probate of the holographic Will should be allowed
under the principle of substantial compliance.

Labrador vs. CA, 184 SCRA 170

38

The law does not specify a particular location where the date should be placed
in the will. The only requirements are that the date be in the will itself and
executed in the hand of the testator.

Seangio v. Reyes, 508 SCRA 172

Holographic wills being usually prepared by one who is not learned in the law,
as illustrated in the present case, should be construed more liberally than the
ones drawn by an expert, taking into account the circumstances surrounding
the execution of the instrument and the intention of the testator.
Palaganas v. Palaganas, 2011 640 SCRA 538
A foreign will can be given legal effects in our jurisdiction. But, reprobate or reauthentication of a will already probated and allowed in a foreign country is
different from that probate where the will is presented for the first time before a
competent court.
Vda.De Perez vs. Tolete, 232 SCRA 722
What the law expressly prohibits is the making of joint wills either for the
testators reciprocal benefit or for the benefit of a third person (Civil Code of the
Philippines, Article 818). In the case at bench, the Cunanan spouses executed
separate wills. Since the two wills contain essentially the same provisions and
pertain to property which in all probability are conjugal in nature, practical
considerations dictate their joint probate.

Revocation of Wills and Testamentary Disposition

Modes of Revocation
Casiano vs CA 158 SCRA 451
Revocation under this condition to be effective must have complied with the
two requirements: the overt act as mentioned under the law; the intent to
revoke on the part of the testator. The document or paper burned by one of the
witnesses was not satisfactorily established to be the will at all, much less the
will of Adriana.

Adriana Maloto vs. CA, 158 SCRA 451

39

For one, the document or papers burned by Adriana's maid, Guadalupe, was
not satisfactorily established to be a will at all, much less the will of Adriana
Maloto. For another, the burning was not proven to have been done under the
express direction of Adriana. And then, the burning was not in her presence.

Gago vs. Mamuyac NO. L-26317, 49 Phil 902

Where a will which cannot be found is shown to have been in the possession of
the testator, when last seen, the presumption is, in the absence of other
competent evidence, that the same was cancelled or destroyed. The same
presumption arises where it is shown that the testator had ready access to the
will and it cannot be found after his death. It will not be presumed that such
will has been destroyed by any other person without the knowledge or
authority of the testator.

Seangio v. Reyes, 2006 508 SCRA 172

For disinheritance to be valid, Article 916 of the Civil Code requires that the
same must be effected through a will wherein the legal cause therefor shall be
specified. With regard to the reasons for the disinheritance that were stated by
Segundo in his document, the Court believes that the incidents, taken as a
whole, can be considered a form of maltreatment of Segundo by his son,
Alfredo, and that the matter presents a sufficient cause for the disinheritance
of a child or descendant under Article 919 of the Civil Code.

Doctrine of dependent relative revocation

Molo vs. Molo NO. L- 2538, 90 Phil 37
The failure of a new testamentary disposition upon whose validity the
revocation depends, is equivalent to the non-fulfillment of a suspensive
conditions, and hence prevents the revocation of the original will. But a mere
intent to make at some time a will in the place of that destroyed will not render
the destruction conditional.
Allowance of Wills
Requirements for probate
Gan vs Yap, 104 Phil. 509
The loss of the holographic will entail the loss of the only medium of proof; if
the ordinary will is lost, the subscribing witnesses are available to
40

authenticate. In case of holographic will if oral testimony were admissible only

one man could engineer the fraud this way.
Rodelas vs Aranza 119 SCRA 16
If the holographic will has been lost or destroyed and no other copy is available,
the will cannot be probated because the best and only evidence is the
handwriting of the testator. But a photostatic copy or Xerox copy of the
holographic will may be allowed because comparison can be made with the
standard writings of the testator.
Azaola vs Singson 109 Phil. 102
Since the authenticity of the will was not contested, the appellant is not
required to produce more than one witness. Even if the genuiness of the
holographic will were contested, article 811 cannot be interpreted as to require
the compulsory presentation of three witnesses to identify the handwriting of
the testator, under penalty of having denied the probate.
Codoy vs Calugay, 312 SCRA 333
We cannot eliminate the possibility that if the will is contested, the law requires
that three witnesses to declare that the will was in the handwriting of the
deceased. A visual examination of the holographic will convince us that the
strokes are different when compared with other documents written by the
testator.

Effect of allowance of Wills

Gallanosa vs Arcangel, 83 SCRA 676
After the finality of the allowance of a will, the issue as to the voluntariness of
its execution cannot be raised anymore. It is not only the 1939 probate
proceeding that can be interposed as res judicata with respect to private
respondents complaint.
Roberts vs Leonidas, 129 SCRA 33
It is anomalous that the estate of a person who died testate should be settled in
an intestate proceeding. Therefore, the intestate case should be consolidated
with the testate proceeding and the judge assigned to the testate proceeding
should hearing the two cases.
Nepomuceno vs CA, 139 SCRA 206
The general rule is that in probate proceedings, the courts area of inquiry is
limited to an examination and resolution of the extrinsic validity of the will.
41

Where practically considerations demand that the intrinsic validity of the will
be passed upon, even before it is probated, the court should meet the issue.

Legitime, Institution, Preterition

Aznar vs. Duncan, 17 SCRA 590
To constitute preterition, the omission must be total and complete, such that
nothing must be given to the compulsory heir.
Acain vs. IAC, 155 SCRA 100
Preterition annuls the institution of an heir and annulment throws open to
intestate succession the entire inheritance. The only provisions which do not
result in intestacy are the legacies and devises made in the will for they should
stand valid and respected, except insofar as the legitimes are concerned.
Nuguid vs. Nuguid, 17 SCRA 449
The will here does not explicitly disinherit the testatrix's parents, the forced
heirs. It simply omits their names altogether. Said will rather than be labeled
ineffective disinheritance is clearly one in which the said forced heirs suffer
from preterition.

Seangio v. Reyes G.R.NO. 140371-72, Nov. 27, 2006 508 SCRA 172
The mere mention of the name of one of the petitioners, Virginia, in the
document did not operate to institute her as the universal heir. Her name was
included plainly as a witness to the altercation between Segundo and his son,
Alfredo.

Legitime and Simulated Contracts; Spousal Marital Estrangement

Francisco vs. Francisco-Alfonso, 354 SCRA 112
Obviously, the sale was Gregorio's way to transfer the property to his
illegitimate daughters at the expense of his legitimate daughter. The sale was
executed to prevent respondent Alfonso from claiming her legitime and rightful
share in said property.
Capitle v. Elbambuena, 509 SCRA 444

42

Although estranged from Olar, respondent Fortunata remained his wife and
legal heir, mere estrangement not being a legal ground for the disqualification
of a surviving spouse as an heir of the deceased spouse.
Reserva Troncal Art. 891
Sienes vs. Esparcia, 1 SCRA 750
The sale made by Andrea Gutang in favor of appellees was, therefore, subject to
the condition that the vendees would definitely acquire ownership, by virtue of
the alienation, only if the vendor died without being survived by any person
entitled to the reservable property. Inasmuch much as when Andrea Gutang
died, Cipriana Yaeso was still alive, the conclusion becomes inescapable that
the previous sale made by the former in favor of appellants became of no legal
effect and the reservable property subject matter thereof passed in exclusive
ownership to Cipriana.
Gonzales vs. CFI, 104 SCRA 479
Mrs. Legarda could not convey in her holographic will to her sixteen
grandchildren the reservable properties which she had inherited from her
daughter Filomena because the reservable properties did not form part of her
estate (Cabardo vs. Villanueva, 44 Phil. 186, 191). The reservor cannot make a
disposition mortis causa of the reservable properties as long as the reservees
survived the reservor.

Vizconde v. CA, 286 SCRA 217

Estrellita, it should be stressed, died ahead of Rafael, in fact, it was Rafael who
inherited from Estrellita an amount more than the value of the Valenzuela
property. Hence, even assuming that the Valenzuela property may be collated
collation may not be allowed as the value of the Valenzuela property has long
been returned to the estate of Rafael.

Substitution of Heirs
Palacios vs Ramirez, 111 SCRA 704
The word degree means generation and the present code has obviously
followed this interpretation by providing that the substitution shall not go
beyond one degree from the heir originally instituted. The code thus clearly
indicates that the second heir must be related to and one generation from the
first heir.

43

Crisologo vs Singzon, 49 SCRA 491

In fideicommissary substitution clearly impose an obligation upon the first heir
to preserve and transmit to another the whole or part of the estate bequeathed
to him, upon his death or upon the happening of a particular event.
Legal or Intestate Succession
Rosales vs Rosales, 148 SCRA 69
The daughter-in-law is not an intestate heir of her spouses parents. There is
no provision in the civil code which states that a widow is an intestate heir of
her mother-in-law.
Delos Santos vs Dela Cruz, 37 SCRA 555
In an intestate succession, a grandniece of the deceased cannot participate in
the inheritance with the surviving nieces and nephews because the existence of
the latter excluded the more distant relatives. In the collateral line, the right of
representation does not go beyond the children of brothers and sisters.
Corpuz vs Corpuz, 85 SCRA 567
Since, Teodoro was an acknowledged natural child or was illegitimate and since
Juanita was the legitimate child of Tomas, himself was a legitimate child,
appellant Tomas has no cause of action to recovery of the supposed hereditary
share of his daughter, Juanita as a legal heir, in Yangcos estate.
Santillon vs Mirandan, 14 SCRA 563
If there is only one legitimate child surviving with the spouse since they shall
equally, one-half of the estate goes to the child and the other half goes to the
surviving spouse. Although the law refers to children or descendants, the rule
in the statutory construction that the plural can be understood to include the
singular.
Bacayo vs Borromeo, 14 SCRA 986
A decedents uncle and aunt may not succeed intestate so long as nephews and
nieces of the decedent survive and are willing and qualified to succeed. In this
case, the nephews and nieces were not inheriting by right of representation
because they only do so if they concur with the brothers and sisters of the
decedent.
Provisions Common to Testate and Intestate Succession
Legitime; Proximity & Representation; Art. 962;

44

Bagunu vs. Piedad, 347 SCRA 571

The rule on proximity is a concept that favors the relatives nearest in degree to
the decedent and excludes the more distant ones except when and to the
extent that the right of representation can apply. In the collateral line, the right
of representation may only take place in favor of the children of brothers or
sisters of the decedent when such children survive with their uncles or aunts.
Sayson vs. CA, 205 SCRA 321
The relationship created by the adoption is between only the adopting parents
and the adopted child and does not extend to the blood relatives of either party.
Corpus vs. Corpus, 85 SCRA 567
In default of natural ascendants, natural and legitimated children shall be
succeeded by their natural brothers and sisters in accordance with the rules
established for legitimate brothers and sisters." Hence, Teodoro R. Yangco's
half brothers on the Corpus side, who were legitimate, had no right to succeed
to his estate under the rules of intestacy.
Suntay v. Cojuangco-Suntay, 621 SCRA 142
Petitioners argument that the successional bar between the legitimate and
illegitimate relatives of a decedent does not apply in this instance where facts
indubitably demonstrate the contrary Emilio III, an illegitimate grandchild of
the decedent, was actually treated by the decedent and her husband as their
own son, reared from infancy, educated and trained in their businesses, and
eventually legally adopted by decedents husband, the original oppositor to
respondents petition for letters of administration.
Diaz vs. IAC, 150 SCRA 645
It is therefore clear from Article 992 of the New Civil Code that the phrase
"legitimate children and relatives of his father or mother" includes Simona
Pamuti Vda. de Santero as the word "relative" includes all the kindred of the
person spoken of. The record shows that from the commencement of this case
the only parties who claimed to be the legitimate heirs of the late Simona
Pamuti Vda. de Santero are Felisa Pamuti Jardin and the six minor natural or
illegitimate children of Pablo Santero.
Diaz vs. IAC, 182 SCRA 427
The term relatives, although used many times in the Code, is not defined by it.
In accordance therefore with the canons of statutory interpretation, it should
be understood to have a general and inclusive scope, inasmuch as the term is a
general one.
45

Heirs of Uriarte vs. CA, 284 SCRA 511

A nephew is considered a collateral relative who may inherit if no descendant,
ascendant, or spouse survive the decedent. That private respondent is only a
half-blood relative is immaterial.
Delos Santos vs Ferraris-Borromeo, 14 SCRA 986
Nephews and nieces alone do not inherit by right of representation unless
concurring with the brothers or sisters of the deceased which is provided in
article 975 when children of one or more brothers or sisters of the deceased
survive with their uncles and aunts but if they alone survive, they shall inherit
in equal portions.

PARTNERSHIP
I. Contract of Partnership
LIM TONG LIM vs. PHILIPPINE FISHING GEAR INDUSTRIES, INC., G.R. NO.
136448, November 3, 1999
A partnership may be deemed to exist among parties who agree to borrow
money to pursue a business and to divide the profits or losses that may arise
therefrom, even if it is shown that they have not contributed any capital of their
own to a "common fund." Their contribution may be in the form of credit or
industry, not necessarily cash or fixed assets.
ROSARIO U. YULO vs. YANG CHIAO SENG, G.R. NO. L-12541, August 28,
1959
The following are the requisites of partnership: (1) two or more persons who
bind themselves to contribute money, property, or industry to a common fund;
(2) intention on the part of the partners to divide the profits among themselves.
(Art. 1767, Civil Code.).
HEIRS OF TAN ENG KEE vs .COURT OF APPEALS and BENGUET LUMBER
COMPANY
G.R. NO. 126881; October 3, 2000
In determining whether a partnership exists, these rules shall apply:

46

(1) Except as provided by Article 1825, persons who are not partners as to each
other are not partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a partnership,
whether such co-owners or co-possessors do or do not share any profits made
by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership,
whether or not the persons sharing them have a joint or common right or
interest in any property which the returns are derived;
(4) The receipt by a person of a share of the profits of a business is a prima
facie evidence that he is a partner in the business, but no such inference shall
be drawn if such profits were received in payment:
(a) As a debt by installment or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits of
the business;
(e) As the consideration for the sale of a goodwill of a business or other property
by installments or otherwise.
II. Rights and Obligations of Partnership
ALFREDO N. AGUILA, JR vs. COURT OF APPEALS and FELICIDAD S. VDA.
DE ABROGAR, G.R. NO. 127347, November 25, 1999
Under Art. 1768 of the Civil Code, a partnership has a juridical personality
separate and distinct from that of each of the partners. The partners cannot
be held liable for the obligations of the partnership unless it is shown that the
legal fiction of a different juridical personality is being used for fraudulent,
unfair, or illegal purposes, hence it is the partnership, not its officers or agents,
which should be impleaded in any litigation involving property registered in its
name, violation of this rule will result in the dismissal of the complaint.
Villareal vs. Ramirez, G.R. NO. 144214. July 14, 2003
Since it is the partnership, as a separate and distinct entity, that must refund
the shares of the partners, the amount to be refunded is necessarily limited to
its total resources. In other words, it can only pay out what it has in its coffers,
which consists of all its assets. However, before the partners can be paid their
shares, the creditors of the partnership must first be compensated. After all the
creditors have been paid, whatever is left of the partnership assets becomes
available for the payment of the partners shares.
Angeles vs. Secretary of Justice, G.R. NO. 142612, July 29, 2005
47

The Angeles spouses position that there is no partnership because of the lack
of a public instrument indicating the same and a lack of registration with the
Securities and Exchange Commission (SEC) holds no water for the following
reasons: first, the Angeles spouses contributed money to the partnership and
not immovable property; and second, mere failure to register the contract of
partnership with the SEC does not invalidate a contract that has the essential
requisites of a partnership. The purpose of registration of the contract of
partnership is to give notice to third parties. Failure to register the contract of
partnership does not affect the liability of the partnership and of the partners
to third persons. Neither does such failure to register affect the partnerships
juridical personality. A partnership may exist even if the partners do not use
the words partner or partnership.
Ortega vs. CA, G.R. NO. 109248, July 3, 1995
The right to choose with whom a person wishes to associate himself is the very
foundation and essence of that partnership. Its continued existence is, in turn,
dependent on the constancy of that mutual resolve, along with each partner's
capability to give it, and the absence of a cause for dissolution provided by the
law itself. Verily, any one of the partners may, at his sole pleasure, dictate a
dissolution of the partnership at will. He must, however, act in good faith, not
that the attendance of bad faith can prevent the dissolution of the
partnership but that it can result in a liability for damages. Among
partners, mutual agency arises and the doctrine of delectus personae allows
them to have the power, although not necessarily the right, to dissolve the
partnership. An unjustified dissolution by the partner can subject him to a
possible action for damages.
III. Rights and Obligations of Partners Among Themselves
Liwanag vs. CA, G.R. NO. 114398, October 24, 1997
Petitioner was charged with the crime of estafa and advances the theory that
the intention of the parties was to enter into a contract of partnership, wherein
Rosales (private complainant for Estafa) would contribute the funds while she
would buy and sell the cigarettes, and later divide the profits between
them But even assuming that a contract of partnership was indeed entered
into by and between the parties, SC ruled that when money or property have
been received by a partner for a specific purpose (such as that obtaining in the
instant case) and he later misappropriated it, such partner is guilty of estafa.
Moran, Jr. vs. CA, G.R. NO. L-59956, October 31, 1984
The rule is, when a partner who has undertaken to contribute a sum of money
fails to do so, he becomes a debtor of the partnership for whatever he may have
48

promised to contribute (Art. 1786, Civil Code) and for interests and damages
from the time he should have complied with his obligation (Art. 1788, Civil
Code). Thus in Uy v. Puzon (79 SCRA 598), which interpreted Art. 2200 of the
Civil Code of the Philippines, we allowed a total of P200,000.00 compensatory
damages in favor of the appellee because the appellant therein was remiss in
his obligations as a partner and as prime contractor of the construction
projects in question.
Tai Tong Chuache & Co. vs. Insurance Commission, G.R. NO. L-55397
February 29, 1988
Petitioner being a partnership may sue and be sued in its name or by its duly
authorized representative. Thus, Chua as the managing partner of the
partnership may execute all acts of administration including the right to sue
debtors of the partnership in case of their failure to pay their obligations when
it became due and demandable.
Catalan vs. Gatchalian, G.R. NO. L-11648, April 22, 1959
Catalan and Gatchalian as partners mortgaged two lots together with the
improvements thereon to secure a credit. Catalan redeemed the property and
he contends that title should be cancelled and a new one must be issued in his
name. Under Article 1807 of the NCC every partner becomes a trustee for his
co-partner with regard to any benefits or profits derived from his act as a
partner. Consequently, when Catalan redeemed the properties in question, he
became a trustee and held the same in trust for his co partner Gatchalian,
subject to his right to demand from the latter his contribution to the amount of
redemption.
Evangelista & Co. vs. Abad Santos, G.R. NO. L-31684 June 28, 1973
Respondent industrial partner has the right to demand for a formal accounting
and to receive her share in the net profit that may result from such an
accounting.
IV. Obligations of Partnership, Partners to Third Persons
ISLAND SALES, INC. vs. UNITED PIONEERS GENERAL CONSTRUCTION
COMPANY, G.R. NO. L-22493, July 31, 1975
Defendant company, a general partnership purchased from the plaintiff a
motor vehicle on an installment basis with the condition that failure to pay any
of said installments as they fall due would render the whole unpaid balance
49

immediately due and demandable. Having failed to receive the installment, the
plaintiff sued the defendant company for the unpaid balance with Benjamin C.
Daco, Daniel A. Guizona, Noel C. Sim, Romulo B. Lumauig, and Augusto
Palisoc were included as co-defendants in their capacity as general partners of
the defendant company. In this case, there were five (5) general partners when
the promissory note in question was executed for and in behalf of the
partnership. Since the liability of the partners is pro rata, the liability of the
appellant Benjamin C. Daco shall be limited to only one-fifth of the obligations
of the defendant company. The fact that the complaint against the defendant
Romulo B. Lumauig was dismissed, upon motion of the plaintiff, does not
unmake the said Lumauig as a general partner in the defendant company. In
so moving to dismiss the complaint, the plaintiff merely condoned Lumauig's
individual liability to the plaintiff.
ELMO MUASQUE vs. COURT OF APPEALS, G.R. NO. L-39780, November
11, 1985
There is a general presumption that each individual partner is an authorized
agent for the firm and that he has authority to bind the firm in carrying on the
partnership transactions. The presumption is sufficient to permit third persons
to hold the firm liable on transactions entered into by one of members of the
firm acting apparently in its behalf and within the scope of his authority.
ANTONIO C. GOQUIOLAY, ET AL. vs. WASHINGTON Z. SYCIP, ET AL, G.R.
NO. L-11840, December 10, 1963
Where the partnership business is to deal in merchandise and goods, i.e.,
movable property, the sale of its real property (immovables) is not within the
ordinary powers of a partner, because it is not in line with the normal business
of the firm. But where the express and avowed purpose of the partnership is to
buy and sell real estate (as in the present case), the immovables thus acquired
by the firm from part of its stock-in-trade, and the sale thereof is in pursuance
of partnership purposes, hence within the ordinary powers of the partner.
J. TIOSEJO INVESTMENT CORP. vs. Ang, G.R. NO. 174149, September 8,
2010
Petitioner cannot avoid liability by claiming that it was not in any way privy to
the Contracts to Sell executed by PPGI and respondents. As correctly argued
by the respondent, a joint venture is considered in this jurisdiction as a form of
partnership and is, accordingly, governed by the law of partnerships and under
Article 1824 of the Civil Code of the Philippines, all partners are solidarily liable
with the partnership for everything chargeable to the partnership, including
loss or injury caused to a third person or penalties incurred due to any
wrongful act or omission of any partner acting in the ordinary course of the
business of the partnership or with the authority of his co-partners.
50

V. Dissolution
PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION
LAZATIN-MAGAT, et.al, G.R. NO. 167379, June 27, 2006

vs.

On dissolution, the partnership is not terminated but continues until the

winding up of partnership affairs is completed. Winding up means the
administration of the assets of the partnership for the purpose of terminating
the business and discharging the obligations of the partnership.
MARJORIE TOCAO vs. COURT OF APPEALS, G.R. NO. 127405, October 4,
2000
An unjustified dissolution by a partner can subject him to action for damages
because by the mutual agency that arises in a partnership, the doctrine
of delectus personae allows the partners to have the power, although not
necessarily the right to dissolve the partnership.
VI. Limited Partnership
COMMISSIONER OF INTERNAL REVENUE vs. WILLIAM J. SUTER, G.R. NO.
L-25532, February 28, 1969
A limited partnership, named "William J. Suter 'Morcoin' Co., Ltd.," was formed
on 30 September 1947 by herein respondent William J. Suter as the general
partner, and Julia Spirig and Gustav Carlson, as the limited partners. The
thesis that the limited partnership, William J. Suter "Morcoin" Co., Ltd., has
been dissolved by operation of law because of the marriage of the only general
partner, William J. Suter to the originally limited partner, Julia Spirig one year
after the partnership was organized is not tenable. The subsequent marriage of
the partners does not operate to dissolve it, such marriage not being one of the
causes provided for that purpose either by the Spanish Civil Code or the Code
of Commerce. The appellant's view, that by the marriage of both partners the
company became a single proprietorship, is equally erroneous. The capital
contributions of partners William J. Suter and Julia Spirig were separately
owned and contributed by them before their marriage; and after they were
joined in wedlock, such contributions remained their respective separate
property under the Spanish Civil Code.

51

AGENCY
I.Definition of Agency
Country Bankers Insurance Corp.. vs. Keppel Cebu Shipyard, June 18,
2012, G.R. NO. 166044
In a contract of agency, a person, the agent, binds himself to represent
another, the principal, with the latters consent or authority. Thus, agency is
based on representation, where the agent acts for and in behalf of the principal
on matters within the scope of the authority conferred upon him. Such acts
have the same legal effect as if they were personally done by the principal. By
this legal fiction of representation, the actual or legal absence of the principal is
converted into his legal or juridical presence.
Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006
It bears stressing that in an agent-principal relationship, the personality of the
principal is extended through the facility of the agent. In so doing, the agent, by
legal fiction, becomes the principal, authorized to perform all acts which the
latter would have him do. Such a relationship can only be effected with the
consent of the principal, which must not, in any way, be compelled by law or
by any court.

Eurotech Industrial Technologies, Inc. Cuizon, G.R. NO. 167552, April 23,
2007
In a contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another with the latters consent.
The underlying principle of the contract of agency is to accomplish results by
using the services of others to do a great variety of things like selling, buying,
manufacturing, and transporting. Its purpose is to extend the personality of
the principal or the party for whom another acts and from whom he or she
derives the authority to act. It is said that the basis of agency is representation,
that is, the agent acts for and on behalf of the principal on matters within the
scope of his authority and said acts have the same legal effect as if they were
personally executed by the principal. By this legal fiction, the actual or real
absence of the principal is converted into his legal or juridical presence qui
facit per alium facit per se. The elements of the contract of agency are: (1)
consent, express or implied, of the parties to establish the relationship; (2) the
object is the execution of a juridical act in relation to a third person; (3) the
agent acts as a representative and not for himself; (4) the agent acts within the
scope of his authority.
52

II. Powers
III. Express vs. Implies Agency
Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006
An agency may be expressed or implied from the act of the principal, from his
silence or lack of action, or his failure to repudiate the agency knowing that
another person is acting on his behalf without authority. Acceptance by the
agent may be expressed, or implied from his acts which carry out the agency,
or from his silence or inaction according to the circumstances. Agency may be
oral unless the law requires a specific form. However, to create or convey real
rights over immovable property, a special power of attorney is necessary. Thus,
when a sale of a piece of land or any portion thereof is through an agent, the
authority of the latter shall be in writing, otherwise, the sale shall be void.
IV. Agency by Estoppel
Naguiat vs. Court of Appeals, G.R. NO. 118375, October 3, 2003
The Court of Appeals recognized the existence of an agency by estoppels citing
Article 1873 of the Civil Code. Apparently, it considered that at the very least,
as a consequence of the interaction between Naguiat and Ruebenfeldt, Queao
got the impression that Ruebenfeldt was the agent of Naguiat, but Naguiat did
nothing to correct Queaos impression. In that situation, the rule is
clear. One who clothes another with apparent authority as his agent, and
holds him out to the public as such, cannot be permitted to deny the authority
of such person to act as his agent, to the prejudice of innocent third parties
dealing with such person in good faith, and in the honest belief that he is what
he appears to be. The Court of Appeals is correct in invoking the said rule on
agency by estoppel.

V. General vs. Special Agency

Siasat vs. Intermediate Appellate Court, G.R. NO. L-67889, October 10,
1985
A general agent is one authorized to do all acts pertaining to a business of a
certain kind or at a particular place, or all acts pertaining to a business of a
particular class or series. He has usually authority either expressly conferred
53

in general terms or in effect made general by the usages, customs or nature of

the business which he is authorized to transact. An agent, therefore, who is
empowered to transact all the business of his principal of a particular kind or
in a particular place, would, for this reason, be ordinarily deemed a general
agent. A special agent is one authorized to do some particular act or to act
upon some particular occasion, acts usually in accordance with specific
instructions or under limitations necessarily implied from the nature of the act
to be done
VI. Agency Couched in General Terms
Veloso vs. Court of Appeals, G.R. NO. 102737, August 21, 1996
There was no need to execute a separate and special power of attorney since
the general power of attorney had expressly authorized the agent or attorney in
fact the power to sell the subject property. The special power of attorney can
be included in the general power when it is specified therein the act or
transaction for which the special power is required. Whether the instrument be
denominated as general power of attorney or special power of attorney, what
matters is the extent of the power or powers contemplated upon the agent or
attorney in fact. If the power is couched in general terms, then such power
cannot go beyond acts of administration. However, where the power to sell is
specific, it not being merely implied, much less couched in general terms, there
cannot be any doubt that the attorney in fact may execute a valid sale. An
instrument may be captioned as special power of attorney but if the powers
granted are couched in general terms without mentioning any specific power to
sell or mortgage or to do other specific acts of strict dominion, then in that case
only acts of administration may be deemed conferred
VII. Agency Requiring Special Power of Attorney
Orbeta vs. Sendiong, G.R. NO. 155236, July 8, 2005
A special power of attorney simply refers to a clear mandate specifically
authorizing the performance of a specific power and of express acts subsumed
therein, and there is a specific authority given to Mae Sendiong to sign her
name in behalf of Paul Sendiong in contracts and agreements and to institute
suits in behalf of her father. Neither would the fact that the document is
captioned General Power of Attorney militate against its construction as
granting specific powers to the agent pertaining to the petition for annulment of
judgment she instituted in behalf of her father. As Justice Paras has noted, a
general power of attorney may include a special power if such special power is
mentioned or referred to in the general power.
Country Bankers Insurance Corp. vs. Keppel Cebu Shipyard, June 18,
2012, G.R. NO. 166044
54

Our law mandates an agent to act within the scope of his authority. The scope
of an agents authority is what appears in the written terms of the power of
attorney granted upon him. Under Article 1878(11) of the Civil Code, a special
power of attorney is necessary to obligate the principal as a guarantor or
surety.
Mercado vs. Allied Banking Corpporation, G.R. NO. 171460, July 24, 2007
Equally relevant is the rule that a power of attorney must be strictly construed
and pursued. The instrument will be held to grant only those powers which
are specified therein, and the agent may neither go beyond nor deviate from the
power of attorney. Where powers and duties are specified and defined in an
instrument, all such powers and duties are limited and are confined to those
which are specified and defined, and all other powers and duties are excluded.
This is but in accord with the disinclination of courts to enlarge the authority
G.R.anted beyond the powers expressly given and those which incidentally flow
or derive therefrom as being usual and reasonably necessary and proper for the
performance of such express powers.
Angeles vs. Philippines National Railways, G.R. NO. 150128, August 31,
2006
A power of attorney is only but an instrument in writing by which a person, as
principal, appoints another as his agent and confers upon him the authority to
perform certain specified acts on behalf of the principal. The written
authorization itself is the power of attorney, and this is clearly indicated by the
fact that it has also been called a letter of attorney. Its primary purpose is not
to define the authority of the agent as between himself and his principal but to
evidence the authority of the agent to third parties with whom the agent deals.
Except as may be required by statute, a power of attorney is valid although no
notary public intervened in its execution.
SHOPPERS PARADISE REALTY & DEVELOPMENT CORPORATION vs.
EFREN P. ROQUE, G.R. NO. 148775, January 13, 2004
Article 1878 of the Civil Code expresses that a special power of attorney is
necessary to lease any real property to another person for more than one year.
The lease of real property for more than one year is considered not merely an
act of administration but an act of strict dominion or of ownership. A special
power of attorney is thus necessary for its execution through an agent.
VIII. Agency by Operation of Law
IX. Rights and Obligations of Principal
55

VICTORIAS MILLING CO., INC. vs. COURT OF , G.R. NO. 117356, June 19,
2000
One factor which most clearly distinguishes agency from other legal concepts is
control; one person - the agent - agrees to act under the control or direction of
another - the principal. Indeed, the very word "agency" has come to connote
control by the principal. The control factor, more than any other, has caused
the courts to put contracts between principal and agent in a separate category.
X. Irrevocable Agency
Republic vs. Evangelista, G.R. NO. 156015, August 11, 2005
A contract of agency is generally revocable as it is a personal contract of
representation based on trust and confidence reposed by the principal on his
agent. As the power of the agent to act depends on the will and license of the
principal he represents, the power of the agent ceases when the will or
permission is withdrawn by the principal. Thus, generally, the agency may be
revoked by the principal at will. However, an exception to the revocability of a
contract of agency is when it is coupled with interest, i.e., if a bilateral contract
depends upon the agency. The reason for its irrevocability is because the
agency becomes part of another obligation or agreement. It is not solely the
rights of the principal but also that of the agent and third persons which are
affected. Hence, the law provides that in such cases, the agency cannot be
revoked at the sole will of the principal.
Lim vs. Saban, G.R. NO. 163720, December 16, 2004
Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral
contract depends upon it, or if it is the means of fulfilling an obligation already
contracted, or if a partner is appointed manager of a partnership in the
contract of partnership and his removal from the management is
unjustifiable. Stated differently, an agency is deemed as one coupled with an
interest where it is established for the mutual benefit of the principal and of the
agent, or for the interest of the principal and of third persons, and it cannot be
revoked by the principal so long as the interest of the agent or of a third person
subsists. In an agency coupled with an interest, the agents interest must be
in the subject matter of the power conferred and not merely an interest in the
exercise of the power because it entitles him to compensation. When an agents
interest is confined to earning his agreed compensation, the agency is not one
coupled with an interest, since an agents interest in obtaining his
compensation as such agent is an ordinary incident of the agency relationship.

56

XI. Modes of Extinguishment

RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS vs.
FELIX GO CHAN & SONS REALTY CORPORATION, G.R. NO. L-24332,
January 31, 1978
By reason of the very nature of the relationship between principal and agent,
agency is extinguished ipso jure upon the death of either principal or agent.
Although a revocation of a power of attorney to be effective must be
communicated to the parties concerned, yet a revocation by operation of law,
such as by death of the principal is, as a rule, instantaneously effective
inasmuch as "by legal fiction the agent's exercise of authority is regarded as an
execution of the principal's continuing will. With death, the principal's will
ceases or is the of authority is extinguished.

COMPROMISE
I.Definition
Air Transportation Office v. Gopuco, Jr., G.R. NO. 158563. June 30, 2005
A compromise agreement, when not contrary to law, public order, public policy,
morals, or good customs, is a valid contract which is the law between the
parties. It is a contract perfected by mere consent, whereby the parties,
making reciprocal concessions, avoid litigation or put an end to one already
commenced. It has the force of law and is conclusive between the parties, and
courts will not relieve parties from obligations voluntarily assumed, simply
because their contracts turned out to be unwise
II.Void Compromise
Uy vs. Chua, G.R. NO. 183965, September 18, 2009
Like any other contract, a compromise agreement must comply with the
requisites in Article 1318 of the Civil Code, to wit: (a) consent of the
contracting parties; (b) object certain that is the subject matter of the contract;
and (c) cause of the obligation that is established. And, like any other contract,
the terms and conditions of a compromise agreement must not be contrary to
law, morals, good customs, public policy and public order. Any compromise
agreement that is contrary to law or public policy is null and void, and vests no
rights in and holds no obligation for any party. It produces no legal effect at
all.
57

Rivero vs. Court of Appeals, G.R. NO. 141273, May 17, 2005
Article 2035(1) of the New Civil Code provides that no compromise upon the
civil status of persons shall be valid. As such, paternity and filiation, or the
lack of the same, is a relationship that must be judicially established, and it is
for the court to determine its existence or absence. It cannot be left to the will
or agreement of the parties.
III.Effect
Philippine National Oil Company-Energy Development Corporation (PNOCEDC) v. Abella, G.R. NO. 153904, January 17, 2005
A compromise once approved by final orders of the court has the force of res
judicata between the parties and should not be disturbed except for vices of
consent or forgery. Hence, a decision on a compromise agreement is final and
executory. Such agreement has the force of law and is conclusive on the
parties. It transcends its identity as a mere contract binding only upon the
parties thereto, as it becomes a judgment that is subject to execution in
accordance with the Rules. Judges therefore have the ministerial and
mandatory duty to implement and enforce it. Hence, compromise agreements
duly approved by the courts are considered the decisions in the particular
cases they involve.

CREDIT TRANSACTIONS
CREDIT
I. LOAN
BONEVIE vs CA, G.R. NO. L-49101 October 24, 1983
Petitioner assails the validity of the mortgage between Lozano and PBCOM
arguing that on the day the deed was executed there was yet no principal
obligation to secure as the loan of P75,000.00 was not received by the Lozano
spouses, so that in the absence of a principal obligation, there is want of
consideration in the accessory contract, which consequently impairs its validity
and fatally affects its very existence. A contract of loan being a consensual
contract, said contract of loan was perfected at the same time the contract of
mortgage was executed, and the promissory note is only an evidence of
indebtedness and does not indicate lack of consideration of the mortgage at the
time of its execution.
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SAURA IMPORT and EXPORT CO., INC. vs. DEVELOPMENT BANK OF THE
PHILIPPINES, G.R. NO. L-24968, April 27, 1972
The trial court rendered judgment for the plaintiff, ruling that there was a
perfected contract between the parties when the application of Saura, Inc. for a
loan was approved by resolution of the defendant, and the corresponding
mortgage was executed and registered and that the defendant was guilty of
breach thereof.
An accepted promise to deliver something, by way of commodatum or simple
loan is binding upon the parties, but the commodatum or simple loan itself
shall not be perferted until the delivery of the object of the contract.
FRANCISCO HERRERA vs. PETROPHIL CORPORATION, G.R. NO. L-48349,
December 29, 1986
Pursuant to a contract, the defendant-appellee paid to the plaintfff-appellant
advance rentals for the first eight years, subtracting therefrom the amount of
the interest or discount for the first eight years, Plaintiff-appellant insists that
the lower court erred in the computation of the interest collected out of the
rentals paid for the first eight years; that such interest was excessive and
violative of the Usury Law.
The contract between the parties is one of lease and not of loan since the
provision for the payment of rentals in advance cannot be construed as a
repayment of a loan because there was no grant or forbearance of money as to
constitute an indebtedness on the part of the lessor, hence usury law will not
apply.
PNB vs. CA, G.R. NO. 75223, March 14, 1990
An escalation clause is a valid provision in the loan agreement provided that
(1) the increased rate imposed or charged does not exceed the ceiling fixed by
law or the Monetary Board; (2) the increase is made effective not earlier than
the effectivity of the law or regulation authorizing such an increase; and (3) the
remaining maturities of the loans are more than 730 days as of the effectivity of
the law or regulation authorizing such an increase.
ART 1249
ILEANA DR. MACALINAO vs BANK OF THE PHILIPPINE ISLANDS, G.R. NO.
175490, September 17, 2009

59

In its Complaint, respondent BPI originally imposed the interest and penalty
charges at the rate of 9.25% per month or 111% per annum which was
declared as unconscionable by the lower courts for being clearly excessive, and
was thus reduced to 2% per month or 24% per annum but which the CA
modified increased them to 3% per month or 36% per annum based on the
Terms and Conditions Governing the Issuance and Use of the BPI Credit Card,
which governs the transaction between petitioner Macalinao and respondent
BPI.
The courts may reduce the interest rate as reason and equity demand, for
stipulations demanding interest excessive, iniquitous, unconscionable and
exorbitant interest rates are void for being contrary to morals, if not against the
law.
COMMODATUM
CATHOLIC VICAR APOSTOLIC
September 21, 1988

CHURCH

vs.

CA,

G.R.

L-80294-95,

When respondents allowed the free use of the property they became bailors in
commodatum and the petitioner the bailee. The bailees' failure to return the
subject matter of commodatum to the bailor did not mean adverse possession
on the part of the borrower. The bailee held in trust the property subject matter
of commodatum. Hence, an adverse claim could not ripen into title by way of
ordinary acquisitive prescription because of the absence of just title.
REPUBLIC OF THE PHILIPPINES vs BAGTAS, G.R. NO. L-17474, October
25, 1962
The appellant had been in possession of the bull even after the expiration of the
contract. He contends, however, that since the contract was commodatum the
appellee retained ownership or title to the bull. Hence, it should suffer its loss
due to force majeure.
A contract of commodatum is essentially gratuitous. If the breeding fee be
considered a compensation, then the contract would be a lease of the bull.
Under article 1671 of the Civil Code the lessee would be subject to the
responsibilities of a possessor in bad faith, because she had continued
possession of the bull after the expiry of the contract. And even if the contract
be commodatum, still the appellant is liable, because article 1942 of the Civil
Code provides that a bailee in a contract of commodatum
. . . is liable for loss of the things, even if it should be through a fortuitous
event:
60

(2) If he keeps it longer than the period stipulated . . .

(3) If the thing loaned has been delivered with appraisal of its value, unless
there is a stipulation exempting the bailee from responsibility in case of a
fortuitous event; xxx
REPUBLIC OF THE PHILIPPINES vs. CA, G.R. NO. L-46145 November 26,
1986
The disputed property is private land and this possession was interrupted only
by the occupation of the land by the U.S. Navy which eventually abandoned the
premises. The heirs of the late Baloy, are now in actual possession, and this
has been so since the abandonment by the U.S. Navy.
The occupancy of the U.S. Navy partakes of the character of a commodatum,
and one's ownership of a thing may be lost by prescription by reason of
another's possession if such possession be under claim of ownership, not
where the possession is only intended to be transient, in which case the owner
is not divested of his title, although it cannot be exercised in the meantime.
MUTUUM
INTEGRATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK,
G.R. NO. L-60705, June 28, 1989
OVERSEAS BANK OF MANILA vs. COURT OF APPEALS, G.R. NO. L-60907,
June 28, 1989
OBM contends that it had agreed to pay interest only up to the dates of
maturity of the certificates of time deposit and that respondent Santos is not
entitled to interest after the maturity dates had expired, unless the contracts
are renewed. When respondent invested his money in time deposits with OBM
they entered into a contract of simple loan or mutuum, not a contract of
deposit.

REPUBLIC OF THE PHILIPPINES vs. GRIJALDO, G.R. NO. L-20240,

December 31, 1965
The appellant maintains that because the loans were secured by a chattel
mortgage on the standing crops on a land owned by him and these crops were
61

lost or destroyed through enemy action his obligation to pay the loans was
thereby extinguished.
The chattel mortgage on the crops growing on appellant's land simply stood as
a security for the fulfillment of appellant's obligation, which is the payment of
the loan. The loss of the crops did not extinguish his obligation to pay, because
his obligation, as a simple loan or mutuum, was to pay a generic thing, the
amount of money with interest.
HERRERA vs. PETROPHIL CORPORATION, G.R. NO. L-48349 December
29, 1986
The difference between a discount and a loan or forbearance is that the former
does not have to be repaid. The loan or forbearance is subject to repayment
and is therefore governed by the laws on usury.
BRIONES vs. CAMMAYO, G.R. NO. L-23559, October 4, 1971
In simple loan with stipulation of usurious interest, the prestation of the debtor
to pay the principal debt, which is the cause of the contract is not illegal. The
illegality lies only as to the prestation to pay the stipulated interest. Hence,
being separable, the latter only should be deemed void, since it is the only one
that is illegal.
II. DEPOSIT
INTEGRATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK,
G.R. NO. L-60705, June 28, 1989
OVERSEAS BANK OF MANILA vs. CA, G.R. NO. L-60907, June 28, 1989
OBM contends that it had agreed to pay interest only up to the dates of
maturity of the certificates of time deposit and that respondent Santos is not
entitled to interest after the maturity dates had expired, unless the contracts
are renewed. When respondent invested his money in time deposits with OBM
they entered into a contract of simple loan or mutuum, not a contract of
deposit.
BPI vs. CA, G.R. NO. L-66826 August 19, 1988

62

The document which embodies the contract states that the US$3,000.00 was
received by the bank for safekeeping. A deposit is constituted from the
moment a person receives a thing belonging to another, with the obligation of
safely keeping it and of returning the same, but if the safekeeping of the thing
delivered is not the principal purpose of the contract, there is no deposit but
some other contract.
BPI vs. CA, G.R. NO. 104612, May 10, 1994
Bank deposits are in the nature of irregular deposits; they are really loans
because they earn interest. The relationship then between a depositor and a
bank is one of creditor and debtor, and the deposit under the questioned
account was an ordinary bank deposit; hence, it was payable on demand of the
depositor.
SERRANO vs. CENTRAL BANK OF THE PHILIPPINES, G.R. NO. L-30511,
February 14, 1980
All kinds of bank deposits, whether fixed, savings, or current are to be treated
as loans and are to be covered by the law on loans because it can use the
same. Failure of he respondent Bank to honor the time deposit is failure to pay
s obligation as a debtor and not a breach of trust arising from depositary's
failure to return the subject matter of the deposit
WAREHOUSE RECEIPT LAW
LUA KIAN vs. MANILA RAILROAD COMPANY, G.R. NO. L-23033, January
5, 1967
The legal relationship between an arrastre operator and the consignee is akin
to that of a depositor and warehouseman. As a custodian of the goods
discharged from the vessel, it was defendant arrastre operator's duty, like that
of any ordinary depositary, to take good care of the goods and to turn them
over to the party entitled to their possession. Under this particular set of
circumstances, said defendant should have withheld delivery because of the
discrepancy between the bill of lading and the markings and conducted its own
investigation, not unlike that under Section 18 of the Warehouse Receipts Law,
or called upon the parties, to interplead, such as in a case under Section 17 of
the same law, in order to determine the rightful owner of the goods.
TRUST RECEIPT
63

VINTOLA vs. INSULAR BANK OF ASIA AND AMERICA, G.R. NO. 73271,
May 29, 1987
A trust receipt is considered as a security transaction intended to aid in
financing importers and retail dealers who do not have sufficient funds or
resources to finance the importation or purchase of merchandise, and who may
not be able to acquire credit except through utilization, as collateral of the
merchandise imported or purchased.
III. GUARANTY AND SURETYSHIP
COMMONWEALTH INSURANCE CORPORATION vs. CA, G.R. NO. 130886.
January 29, 2004
Petitioners liability under the suretyship contract is different from its liability
under the law. There is no question that as a surety, petitioner should not be
made to pay more than its assumed obligation under the surety bonds.
However, it is clear from the above-cited jurisprudence that petitioners liability
for the payment of interest is not by reason of the suretyship agreement itself
but because of the delay in the payment of its obligation under the said
agreement.
THE MANILA INSURANCE CO INC vs SPOUSES AMURAO, G.R. NO. 179628,
January 16, 2013
Petitioner imputes error on the part of the CA in treating petitioner as a
solidary debtor instead of a solidary guarantor and argues that while a surety
is bound solidarily with the obligor, this does not make the surety a solidary
co-debtor. A suretys liability is joint and several and although the contract of
suretyship is secondary to the principal contract, the suretys liability to the
obligee is nevertheless direct, primary, and absolute.

THE IMPERIAL INSURANCE, INC. vs. DE LOS ANGELES, G.R. NO. L-28030,
January 18, 1982
Imperial Insurance, Inc. bound itself solidarily with the principal, the deceased
defendant Reyes. In accordance with Article 2059, par. 2 of the Civil Code of
64

the Philippines, excussion (previous exhaustion of the property of the debtor)

shall not take place "if he (the guarantor) has bound himself solidarily with the
debtor," hence the petitioner cannot escape liability on its counter-bonds.
MANILA SURETY & FIDELITY CO., INC. vs. ALMEDA, G.R. NO. L-27249
July 31, 1970
There is no question that under the bonds posted in favor of the NAMARCO in
this case, the surety company assumed to make immediate payment to said
firm of any due and unsettled accounts of the debtor-principal, even without
demand and notice of the debtor's non-payment, the surety, in fact, agreeing
that its liability to the creditor shall be direct, without benefit of exhaustion of
the debtor's properties, and to remain valid and continuous until the
guaranteed obligation is fully satisfied. In short, appellant secured to the
creditor not just the payment by the debtor-principal of his accounts, but the
payment itself of such accounts. Clearly, a contract of suretyship was thus
created, the appellant becoming the insurer, not merely of the debtor's solvency
or ability to pay, but of the debt itself. Under the Civil Code, with the debtor's
insolvency having been judicially recognized, herein appellant's resort to the
courts to be released from the undertaking thus assumed would have been
appropriate.
RCBC vs. ARRO, G.R. NO. L-49401, July 30, 1982
The surety agreement which was earlier signed by Enrique and private
respondent, is an accessory obligation, it being dependent upon a principal one
which, in this case is the loan obtained by Daicor as evidenced by a promissory
note. By the terms, it can be clearly seen that the surety agreement was
executed to guarantee future debts which Daicor may incur with petitioner
since a guaranty may also be given as security for future debts, the amount of
which is not yet known; there can be no claim against the guarantor until the
debt is liquidated.
REPUBLIC OF THE PHILIPPINES vs. PAL-FOX LUMBER CO., INC., G.R. NO.
L-26473, February 29, 1972
On whether the surety's liability can exceed the amount of its bond, it is
enough to remark that while the guarantee was for the original amount of the
debt of Gabino Marquez, the amount of the judgment by the trial court in no
way violates the rights of the surety. If it (the guaranty) be simple or indefinite,
it shall comprise not only the principal obligation but also all its accessories,
including judicial costs, provided with respect to the latter, that the guarantor
65

shall only be liable for those costs incurred after he has been judicially
required to pay.
IV. PLEDGE AND REAL MORTGAGE
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710 October
3, 1985
The fact that when Sulpicio M. Tolentino executed a real estate mortgage, no
consideration was then in existence, as there was no debt yet because Island
Savings Bank had not made any release on the loan, does not make the real
estate mortgage void for lack of consideration. It is not necessary that any
consideration should pass at the time of the execution of the contract of real
mortgage, it may either be a prior or subsequent matter, but when the
consideration is subsequent to the mortgage, the mortgage can take effect only
when the debt secured by it is created as a binding contract to pay.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October
3, 1985
Where the indebtedness actually owing to the holder of the mortgage is less
than the sum named in the mortgage, the mortgage cannot be enforced for
more than the actual sum due.
INTEG.R.ATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK,
G.R. NO. L-60705, June 28, 1989
OVERSEAS BANK OF MANILA vs.CA, G.R. NO. L-60907 June 28, 1989
The facts and circumstances leading to the execution of the deed of
assignment, has satisfied the requirements of a contract of pledge (1) that it be
constituted to secure the fulfillment of a principal obligation; (2) that the
pledgor be the absolute owner of the thing pledged; (3) that the persons
constituting the pledge have the free disposal of their property, and in the
absence thereof, that they be legally authorized for the purpose. The further
requirement that the thing pledged be placed in the possession of the creditor,
or of a third person by common agreement was complied with by the execution
of the deed of assignment in favor of PNB.
YULIONGSIU vs. PNB, G.R. NO. L-19227, February 17, 1968

66

The defendant bank as pledgee was therefore entitled to the actual possession
of the vessels, and while it is true that plaintiff continued operating the vessels
after the pledge contract was entered into, his possession was expressly made
"subject to the order of the pledgee." On the other hand, there is an authority
supporting the proposition that the pledgee can temporarily entrust the
physical possession of the chattels pledged to the pledgor without invalidating
the pledge. In such a case, the pledgor is regarded as holding the pledged
property merely as trustee for the pledgee.
MAKATI LEASING and FINANCE CORPORATION vs. WEAREVER TEXTILE
MILLS, INC., G.R. NO. L-58469, May 16, 1983
A house of strong materials may be considered as personal property for
purposes of executing a chattel mortgage thereon as long as the parties to the
contract so agree and no innocent third party will be prejudiced thereby. There
is absolutely no reason why a machinery, which is movable in its nature and
becomes immobilized only by destination or purpose, may not be likewise
treated as such. This is really because one who has so agreed is estopped from
denying the existence of the chattel mortgage.
BUNDALIAN vs. CA, G.R. NO. L-55739, June 22, 1984
The contract also provides that "it is agreed that the vendor shall have the right
to possess, use, and build on, the property during the period of redemption."
When the vendee acknowledged the right of the vendor to retain possession of
the property the contract is one of loan guaranteed by mortgage, not a
conditional sale or an option to repurchase.
TIOSECO vs. CA, G.R. NO. L-66597, August 29, 1986
When the respondents chose to enforce their right of redemption thru a court
action they were well within their right as the action was filed within one year
from the registration of the foreclosure sale of the real estate. The law does not
even require any previous notice to the vendee, nor a meeting between him and
the redemptioner, much less a previous formal tender before any action is
begun in court to enforce the right of redemption.
PNB vs. CA, G.R. NO. L-60208, December 5, 1985
When the foreclosure proceedings are completed and the mortgaged property is
sold to the purchaser then all interest of the mortgagor are cut off from the
property Prior to the completion of the foreclosure, the mortgagor is liable for
67

the interests on the mortgage. However, after the foreclosure proceedings and
the execution of the corresponding certificate of sale of the property sold at
public auction in favor of the successful bidder, the redemptioner mortgagor
would be bound to pay only for the amount of the purchase price with interests
thereon at the rate of one per centum per month in addition up to the time of
redemption, together with the amount of any assessments or taxes which the
purchaser may have paid thereon after the purchase and interest on such last
named amount at the same rate.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October
3, 1985
Where the indebtedness actually owing to the holder of the mortgage is less
than the sum named in the mortgage, the mortgage cannot be enforced for
more than the actual sum due.
RAMIREZ vs. CA, G.R. NO. L-38185, September 24, 1986
The antichretic creditor cannot ordinarily acquire by prescription the land
surrendered to him by the debtor. The petitioners are not possessors in the
concept of owner but mere holders placed in possession of the land by its
owners, thus, their possession cannot serve as a title for acquiring dominion.
OCAMPO vs. DOMALANTA, G.R. NO. L-21011, August 30, 1967
A proceeding for judicial foreclosure of mortgage is an action quasi in rem. It is
based on a personal claim sought to be enforced against a specific property of a
person named party defendant. And, its purpose is to have the property seized
and sold by court order to the end that the proceeds thereof be applied to the
payment of plaintiff's claim.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October
3, 1985
A pledge or mortgage is indivisible even though the debt may be divided among
the successors in interest of the debtor or creditor. Therefore, the debtor's heirs
who has paid a part of the debt can not ask for the proportionate
extinguishment of the pledge or mortgage as long as the debt is not completely
satisfied, neither can the creditor's heir who have received his share of the debt
return the pledge or cancel the mortgage, to the prejudice of other heirs who
have not been paid.
68

LEASE
Pagurayan vs. Reyes, G.R. NO. 154577, July 23, 2008
A contract of lease is a consensual, bilateral, onerous and commutative
contract by which the owner temporarily grants the use of his property to
another who undertakes to pay the rent. Being a consensual contract, it is
perfected at the moment there is a meeting of the minds on the thing and the
cause and consideration which are to constitute the contract. Without the
agreement of both parties, no contract of lease can be said to have been created
or established. Nobody can force an owner to lease out his property if he is not
willing.
I. Lease of Things

CA-AG.R.O-INDUSTRIAL DEVELOPMENT CORP. vs. Court of Appeals, G.R.

NO. 90027, March 3, 1993
We agree with the petitioner's contention that the contract for the rent of the
safety deposit box is not an ordinary contract of lease as defined in Article 1643
of the Civil Code. It cannot be characterized as an ordinary contract of lease
under Article 1643 because the full and absolute possession and control of the
safety deposit box was not given to the joint renters the petitioner and the
Pugaos.
II. Lease of Work or Services
III. Lease of Rural and Urban Lands
IV. Rights and Obligations of Lessor and Lessee
V. Special Rules for Lease of Rural,Urban Lands
VI. Household Service (Exclude, for inclusion in Labor Law)
VII. Contract of Labor (Exclude, for inclusion in Labor Law)
VIII. Contract for Piece of Work (Exclude, for inclusion in Labor Law)

LAND TITLES AND DEED S

Torrens System
Grey Alba vs. De la Cruz, 17 SCRA 49
The Torren system generally refer to the system of registration of transactions
with interest in land whose declared object is, under governmental authority, to

69

establish and certify to the ownership of an absolute and indefeasible title to

realty, and to simplify its transfer.
Legarda vs. Saleeby, G.R. NO. 8936, Oct. 2, 1915
The real purpose of the Torrens system of registration is to quiet title to land; to
put a stop forever to any question of the legality of the title, except claims
which were noted at the time of registration, in the certificate, or which may
arise subsequent thereto.
Government of the Philippine Islands v. Abural, 39 Phil. 996
The Torrens system aims to decree land titles that shall be final, irrevocable,
and indisputable, and to relieve the land of the burden of known as well as
unknown claims.
Sta. Lucia

vs.

Pasig, G.R.NO.

166838,

June

15,

2011

While a certificate of title is conclusive as to its ownership and location, this

does not preclude the filing of an action for the very purpose of attacking the
statements therein. Mere reliance therefore on the face of the TCTs will not
suffice as they can only be conclusive evidence of the subject properties'
locations if both the stated and described locations point to the same area.
Regalian Doctrine
Republic vs. Santos, G.R.NO. 180027, July

18,

2012

Jura Regalia simply means that the State is the original proprietor of all lands
and, as such, is the general source of all private titles. Thus, pursuant to this
principle, all claims of private title to land, save those acquired from native
title, must be traced from some grant, whether express or implied, from the
State. Absent a clear showing that land had been let into private ownership
through the States imprimatur, such land is presumed to belong to the State.
Yu Chang vs. Republic, G.R.NO. 171726, Feb. 23, 2011
The fact that the area within which the subject parcels of land are located is
being used for residential and commercial purposes does not serve to convert
the subject parcels of land into agricultural land. It is fundamental that before
any land may be declassified from the forest group and converted into alienable
or disposable land for agricultural or other purposes, there must be a positive
act from the government.

70

Republic vs. East Silverlane, G.R. No. 186961, Feb.

20,

2012

It is primordial that the status of the property as patrimonial be first

established. Furthermore, the period of possession preceding the
classification of the property as patrimonial cannot be considered in
determining the completion of the prescriptive period.
Citizenship Requirement
Krivenko vs. Register of Deeds 79 Phil 461
Aliens mat not acquire private or public agricultural lands.
Ong Ching Po v. Court of Appeals G.R. NO. 113472, Dec. 20, 1994, 239
SCRA 341.
The capacity to acquire private land is made dependent upon the capacity to
acquire or hold lands of the public domain. Private land may be transferred or
only to individuals or entities qualified to acquire lands of the public domain.
Halili vs. Court of Appeals, 287 SCRA 465
A natural-born citizen of the Philippines who has lost his citizenship may be a
transferee of private lands, subject to limitations provided by law.

Director of Lands vs. Intermediate Appellate Court and Acme, 146 SCRA
509
The time to determine whether a person acquiring land is qualified is the time
the right to own it is acquired and not the time to register ownership.
Original Registration
Republic vs. Gomez, G.R.NO. 189021, Feb. 22, 2012
The applicant for land registration must prove that the DENR Secretary had
approved the land classification and released the land of the public domain as
alienable and disposable, and that the land subject of the application for
registration falls within the approved area per verification through survey by
the PENRO or CENRO. In addition, the applicant for land registration must

71

present a copy of the original classification approved by the DENR Secretary

and certified as a true copy by the legal custodian of the official records.
Republic vs. Vega, 639 SCRA 541
While Cayetano failed to submit any certification which would formally attest to
the alienable and disposable character of the land applied for, the Certification
by DENR Regional Technical Director Celso V. Loriega, Jr., as annotated on the
subdivision plan submitted in evidence by Paulita, constitutes substantial
compliance with the legal requirement. It clearly indicates that Lot 249 had
been verified as belonging to the alienable and disposable area as early as July
18, 1925.
Ong vs. Republic, 548 SCRA 160
Actual possession of a land consists in the manifestation of acts of dominion
over it of such a nature as a party would naturally exercise over his own
property.
Republic vs. Espinosa, 677 SCRA 92
There must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial.
Without such express declaration, the property, even if classified as alienable
or disposable, remains property of the public dominion, pursuant to Article
420(2), and thus incapable of acquisition by prescription. It is only when such
alienable and disposable lands are expressly declared by the State to be no
longer intended for public service or for the development of the national wealth
that the period of acquisitive prescription can begin to run. Such declaration
shall be in the form of a law duly enacted by Congress or a Presidential
Proclamation in cases where the President is duly authorized by law.
Thus, granting that Isabel and, later, Espinosa possessed and occupied the
property for an aggregate period of thirty (30) years, this does not operate to
divest the State of its ownership. The property, albeit allegedly alienable and
disposable, is not patrimonial. As the property is not held by the State in its
private capacity, acquisition of title thereto necessitates observance of the
provisions of Section 48(b) of the PLA in relation to Section 14(1) of P.D. No.
1529 or possession and occupation since June 12, 1945. For prescription to
run against the State, there must be proof that there was an official declaration
that the subject property is no longer earmarked for public service or the
development of national wealth. Moreover, such official declaration should have
been issued at least ten (10) or thirty (30) years, as the case may be, prior to
72

the filing of the application for registration. The period of possession and
occupation prior to the conversion of the property to private or patrimonial
shall not be considered in determining completion of the prescriptive period.
Indeed, while a piece of land is still reserved for public service or the
development of national wealth, even if the same is alienable and disposable,
possession and occupation no matter how lengthy will not ripen to ownership
or give rise to any title that would defeat that of the States if such did not
commence on June 12, 1945 or earlier.
At any rate, the notation on the survey plan does not constitute
incontrovertible evidence that would overcome the presumption that the
property belongs to the inalienable public domain.
Tan vs. Republic April

16,

2012

Possession is open when it is patent, visible, apparent, notorious and

not clandestine. It is continuous when uninterrupted, unbroken and
not intermittent or occasional; exclusive when the adverse possessor
can show exclusive dominion over the land and an appropriation of it to
his own use and benefit; and notorious when it is so conspicuous that it
is generally known and talked of by the public or the people in the
neighborhood.
Rep. vs.

Metro Index

Realty, G.R. No. 198585, July 2, 2012

The mere planting of a sign or symbol of possession cannot justify a Magellanlike claim of dominion over an immense tract of territory. Possession as a
means of acquiring ownership, while it may be constructive, is not a mere
fiction.
Roman Catholic Apostolic Administrator
Registration Commission, 102 Phil. 596.

of

Davao,

Inc.

vs.

Land

A corporation sole, which consists of one person only, is vested with the right
to purchase and hold real estate and to register the same in trust for the
faithful or members of the religious society or church for which the corporation
was organized.
Subsequent Registration
Lucena vs. CA, G.R. NO. L-77468, August 25, 1999
It is a well-settled rule that a purchaser cannot close his eyes to facts which
should put a reasonable man upon his guard, and then claim that he acted in
73

good faith under the belief that there was no defect in the title of the vendor.
His mere refusal to believe that such defect exists, or his willful closing of his
eyes to the possibility of the existence of a defect in his vendor's title, will not
make him an innocent purchaser for value, if it afterwards develops that the
title was in fact defective, and it appears that he had such notice of the defect
as would have led to its discovery had he acted with that measure of
precaution which may reasonably be required of a prudent man in a like
situation.
Heirs of Brusas vs. CA, G.R. No. 126875, August 26, 1999
In the instant case, the litigated property is still registered in the name of Ines
Brusas, so that insofar as procedure is concerned, petitioners were correct in
availing of the remedy of reconveyance. However, an action for reconveyance
presupposes the existence of a defrauded party who is the lawful owner of the
disputed property.
Philippine National Bank vs. Court of Appeals, 98 SCRA 207
A person dealing with registered land is not required to go behind the register
to determine the condition of the property. He is only charged with notice of the
burdens on the property which are noted on the face of the register or the
certificate of title. To require him to do more is to defeat one of the primary
objects of the Torrens system.
Potenciano vs. Dineros, G.R. No. L-7614, May 31, 1955
The judgment creditor may not, as purchaser at the auction sale, invoke the
protection accorded by law to purchasers in good faith, because at the time of
the auction he already had notice, thru the third party claim filed by
Potenciano, that the property had already been acquired by the latter from the
judgment debtor.

Guaranteed Homes Inc vs. Valdez, G.R. No. 171531, Jan. 30, 2009
Every conveyance, mortgage, lease, lien, attachment, order, judgment,
instrument or entry affecting registered land shall, if registered, filled or
entered in the office of the Register of Deeds of the province or city where the
land to which it relates lies, be constructive notice to all persons from the time
of such registering filing or entering.
Fudot vs. Cattleya Land Inc., G.R. No. 171008 , Sept. 13, 2007

74

The registration of a void deed, for instance, is not an impediment to a

declaration by the courts of its invalidity.
Cusi vs. Domingo, G.R.NO. 195825, Feb. 27, 2013
As the purchasers of the property, they also came under the clear obligation to
purchase the property not only in good faith but also for value. A purchaser in
good faith is one who buys the property of another without notice that some
other person has a right to, or interest in, such property and pays full and fair
price for the same.

Non-Registrable Properties
Malabanan vs. Republic, 587 SCRA 172
Only when the property has become patrimonial can the prescriptive period for
the acquisition of property of the public domain begin to run.
Alvarez vs. PICOP Resources, Inc., 606 SCRA 444
Forest lands cannot be alienated in favor of petitioner private persons or
entities.
Republic vs. Fabio, G.R. No. 159589, Dec. 23, 2008
The usual proviso requiring the reservation to be subject to private rights
simply means that persons claiming rights over the reserved land are not
precluded from proving their claims.
Almagro vs. Kwan, 634 SCRA 250
To qualify as foreshore land, it must be shown that the land lies between the
high and low water marks and is alternately wet and dry according to the flow
of the tide. The land's proximity to the waters alone does not automatically
make it a foreshore land.
Republic vs. Espinosa G.R.NO. 171514, July 18, 2012
The notation made by a surveyor-geodetic engineer that the property surveyed
is alienable and disposable is not the positive government act that would
remove the property from the inalienable domain. Neither it is the evidence
accepted as sufficient to controvert the presumption that the property is
inalienable.
75

Chavez v. Public Estates Authority and AMARI Coastal Development

Corporation, G.R. No. 133250, July 9, 2002
Foreshore and submerged areas irrefutably belonged to the public domain and
were inalienable unless reclaimed, classified as alienable lands open to
disposition and further declared no longer needed for public service. The fact
that alienable lands of the public domain were transferred to the PEA (now
PRA) and issued land patents or certificates of title in PEAs name did not
automatically make such lands private.
Republic vs. Paraaque G.R.NO. 191109, July 18, 2012
The subject reclaimed lands are still part of the public domain, owned
by the State and, therefore, exempt from payment of real estate taxes.
Here, the subject lands are reclaimed lands, specifically portions of the
foreshore and offshore areas of Manila Bay. As such, these lands
remain public lands and form part of the public domain.
Dealings with Unregistered Land
Heirs of

Tanyag

vs.

Gabriel, 669

SCRA

284

It is continuous when uninterrupted, unbroken and not intermittent

or occasional. It is exclusive when the adverse possessor can show
exclusive dominion over the land and an appropriation of it to his own
use and benefit. It is notorious when it is so conspicuous that it is
generally known and talked of by the public or the people in the
neighborhood.
The party who asserts ownership by adverse possession must prove
the presence of the essential elements of acquisitive prescription.
Tan vs. Republic,
2012

G.R. No. 193443

G.R. No. 193443, April 16,

There must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial.
Without such express declaration, the property, even if classified as alienable
or disposable, remains property of the public dominion, pursuant to Article
420(2), and thus incapable of acquisition by prescription.
For one to invoke the provisions of Section 14(2) and set up acquisitive
prescription against the State, it is primordial that the status of the property as
76

patrimonial be first established. Furthermore, the period of possession

preceding the classification of the property as patrimonial cannot be considered
in determining the completion of the prescriptive period.
Tan vs. Republic,
2012

G.R. No. 193443

G.R. No. 193443, April 16,

Possession is open when it is patent, visible, apparent, notorious and not

clandestine. It is continuous when uninterrupted, unbroken and not
intermittent or occasional; exclusive when the adverse possessor can show
exclusive dominion over the land and an appropriation of it to his own use and
benefit; and notorious when it is so conspicuous that it is generally known and
talked of by the public or the people in the neighborhood. The party who
asserts ownership by adverse possession must prove the presence of the
essential elements of acquisitive prescription.
Tax declarations per se do not qualify as competent evidence of actual
possession for purposes of prescription.
A claim of ownership will not proper on the basis of tax declarations if
unaccompanied by proof of actual possession.
Valiao v. Republic, 661 SCRA 299
The burden of proof in overcoming the presumption of State ownership of the
lands of the public domain is on the person applying for registration (or
claiming ownership), who must prove that the land subject of the application is
alienable or disposable. It is settled that the applicant must present proof of
specific acts of ownership to substantiate the claim and cannot just offer
general statements which are mere conclusions of law than factual evidence of
possession.

TORTS AND DAMAGES

THE TORTFEASOR
Ylarde vs. Aquino, 163 SCRA 697
Teacher Edgardo Aquino, after bringing his pupils to an excavation site dug by
them, left them all by themselves, and one of the pupils fell into the pit. A
teacher acted with fault and gross negligence because a teacher who stands in

77

loco parentis to his pupils would have made sure that the children are
protected from all harm in his company.
Cogeo-Cubao Operators and Drivers Association vs. Court of Appeals, G.R.
NO. 100727, March 18, 1992
Cogeo-Cubao Operators and Drivers Association, a group of drivers, took over
all jeepneys of a transportation company, Lungsod Corporation, as well as the
operation of the service in the companys route without authority from the
Public Service Commission. The act was in violation of Article 21 of the Civil
Code [Any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for damages] because the constitutional right of the drivers to redress
their grievances with the company should not undermine public peace and
order nor should it violate the legal rights of other persons.
PROXIMATE CAUSE
F.F. Cruz and Co. vs. Court of Appeals, 164 SCRA 731
A fire that broke out in the furniture shop of the petitioner spread to an
adjacent house because of the shop owners failure to construct a firewall as
required by a city ordinance. The doctrine of res ipsa loquitur, which is applied
by the Court in this case, may be stated as follows: Where the thing which
caused the injury complained of is shown to be under the management of the
defendant or his servants and the accident is such as in the ordinary course of
things does not happen if those who have its management or control use
proper care, it affords reasonable evidence, in the absence of explanation by
the defendant, that the accident arose from want of care.
Phoenix Construction, Inc. vs. Dionisio, 148 SCRA 353
The driver of a dump truck parked it improperly at night near his residence
and it was bumped by the driver of a car, who suffered damages. The
proximate cause of the accident was the improper parking of the dump truck.
Africa vs. Caltex, 16 SCRA 448
A fire broke out at a gasoline station while gasoline was being hosed from a
tank truck into the underground storage, right at the opening of the receiving
tank where the nozzle of the hose was inserted, as a result of which several
houses were burned. Under the principle of res ipsa loquitor, the employees
negligence was the proximate cause of the fire which in the ordinary course of
things does not happen.
78

Gabeto vs. Araneta, 42 Phil. 232

Araneta stopped a calesa with passengers aboard on the street and seized the
rein of the horses bridle, by reason of which the driver brought the carromata
to the adjacent curb and alighted to fix the bridle, and while the driver was
engaged at the horses head, the horse moved forward bringing down a police
telephone box, and because of the noise caused thereby, the horse was
frightened and it ran away and one of the passengers jumped and was killed.
Araneta's act in stopping the horse was held as not the proximate cause of the
accident because the bridle was old, and the leather of which it was made was
probably so weak as to be easily broken.
Gregorio vs. Go, 102 Phil. 556
Go ordered his cargador, who had only a students permit to drive his truck,
but a policeman who boarded the truck took the wheel, and while driving the
truck, it hit and ran over a pedestrian. There was no direct and proximate
casual connection between the defendants negligence and the death because
the proximate immediate and direct cause of the death was the negligence of
the policeman.
Phoenix Construction, Inc. vs. Intermediate Appellate Court, 148 SCRA
353
Dionisio's negligence was only contributory, that the "immediate and proximate
cause" of the injury remained the truck driver's "lack of due care" and that
consequently respondent Dionisio may recover damages though such damages
are subject to mitigation by the courts (Article 2179, Civil Code of the
Philippines).
Phoenix Construction, Inc. vs. Intermediate Appellate Court, 148 SCRA
353
Petitioners sought the application of the doctrine of "last clear chance".
The Supreme Court said that the common law rule of contributory negligence
prevented any recovery at all by a plaintiff who was also negligent, even if the
plaintiff's negligence was relatively minor as compared with the wrongful act or
omission of the defendant. The common law notion of last clear chance
permitted courts to grant recovery to a plaintiff who had also been negligent
provided that the defendant had the last clear chance to avoid the casualty and
failed to do so. Accordingly, it is difficult to see what role, if any, the common
law last clear chance doctrine has to play in a jurisdiction where the common
law concept of contributory negligence as an absolute bar to recovery by the
79

plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code
of the Philippines.
Is there perhaps a general concept of "last clear chance" that may be extracted
from its common law matrix and utilized as a general rule in negligence cases
in a civil law jurisdiction like ours? We do not believe so. Under Article 2179,
the task of a court, in technical terms, is to determine whose negligence the
plaintiff's or the defendant's was the legal or proximate cause of the injury.
That task is not simply or even primarily an exercise in chronology or physics,
as the petitioners seem to imply by the use of terms like "last" or "intervening"
or "immediate." The relative location in the continuum of time of the plaintiff's
and the defendant's negligent acts or omissions, is only one of the relevant
factors that may be taken into account. Of more fundamental importance are
the nature of the negligent act or omission of each party and the character and
gravity of the risks created by such act or omission for the rest of the
community. The petitioners urge that the truck driver (and therefore his
employer) should be absolved from responsibility for his own prior negligence
because the unfortunate plaintiff failed to act with that increased diligence
which had become necessary to avoid the peril precisely created by the truck
driver's own wrongful act or omission. To accept this proposition is to come too
close to wiping out the fundamental principle of law that a man must respond
for the forseeable consequences of his own negligent act or omission. Our law
on quasi-delicts seeks to reduce the risks and burdens of living in society and
to allocate them among the members of society. To accept the petitioners' proposition must tend to weaken the very bonds of society.
Philippine Bank of Commerce vs. Court of Appeals, 269 SCRA 695
Respondent entrusted companys cash for deposit to his secretary who
defrauded the company by depositing the money, not to the companys
account, but to her husband who maintained similar account with the bank,
made possible because the duplicate slip was not compulsory required by the
bank in accepting the deposits. Under the doctrine of last clear chance, an
antecedent negligence of a person does not preclude the recovery of damages
for the supervening negligence of, or bar a defense against liability sought by
another, if the latter, who had the last fair chance, could have avoided, the
impending harm by the exercise of due diligence. Here, assuming that the
respondent company was negligent in entrusting cash to a dishonest employee,
thus providing the latter with the opportunity to defraud the company, as
advanced by the petitioner, yet it cannot be denied that the petitioner bank,
thru its teller, had the last clear opportunity to avert the injury incurred by its
client, simply by faithfully observing their self-imposed validation procedure.
Pantranco North Express, Inc. vs. Baesa, 179 SCRA 384
80

The driver of a Pantranco bus encroached into the lane of an incoming jeepney
and failed to return the bus immediately to its own lane upon seeing the
jeepney coming from the opposite direction, resulting to the death of eight
passengers of the jeep. The doctrine of last clear chance does not take into
operation here because it applies only in a situation where the plaintiff was
guilty of prior or antecedent negligence but the defendant, who had the last fair
chance to avoid the impending harm and failed to do so, is made liable for all
the consequences of the accident notwithstanding the prior negligence of the
plaintiff.
Cebu Shipyard and Engineering Works, Inc. vs. William Lines, Inc., 306
SCRA 762
The passenger ship of William Lines, Inc. caught fire and sank while in the
custody of Cebu Shipyard and Engineering Works to which it was brought for
annual repair. The doctrine of res ipsa loquitor applies here because the fire
that occurred and consumed MV Manila City would not have happened in the
ordinary course of things if reasonable care and diligence had been exercised
by Cebu Shipyard.
Radio Communications of the Phils., Inc. [RCPI] vs. Court of Appeals, 143
SCRA 657
Defamatory words were inserted in the telegram sent by respondent Timan,
which were not noticed and were included by the RCPI in the teleG.R.am when
delivered. Since negligence may be hard to substantiate in some cases, we may
apply the doctrine of RES IPSA LOQUITUR (the thing speaks for itself), by
considering the presence of facts or circumstances surrounding the injury.

LEGAL INJURY
Custodio vs. Court of Appeals, 253 SCRA 483
Custodio filed a case for damages because his tenants cancelled their contract
of lease due to adobe fences constructed by adjoining lot owners which
restricted passage from and to his apartment. To warrant the recovery of
damages, there must be both a right of action for a legal wrong inflicted by the
defendant, and damage resulting to the plaintiff therefrom as a wrong without
damage, or damage without wrong, does not constitute a cause of action, since
81

damages are merely part of the remedy allowed for the injury caused by a
breach or wrong.
Metropolitan Bank and Trust Company vs. Tan Chuan Leong, 42 SCRA
352
Although B&I Trading had knowledge of the simulated sale between Tan Chuan
Leong and his son and had entered into the contract of mortgage pursuant to a
design to defraud Leongs creditors, no damage or prejudice appears to have
been suffered by the petitioner thereby. Absent damage or prejudice, no right of
action arises in favor of the petitioner because wrongful violation of a legal right
is not a sufficient element of a cause of action unless it has resulted in an
injury causing loss or damages.
INTENTIONAL TORTS
Yu vs. Court of Appeals, 217 SCRA 328
House of Mayfair, a foreign manufacturer of wall covering products, with which
Yu has had an exclusive distributorship aageement was duped into believing
that the goods ordered through the FNF Trading were to be shipped to Nigeria
only, but the goods were actually sent to and sold in the Philippines. A ploy of
this character is akin to the scenario of a third person who induces a party to
renege on or violate his undertaking under a contract, thereby entitling the
other contracting party to relief therefrom.
Valenzuela vs. Court of Appeals, G.R. NO. 83122, October 19, 1990
Valenzuela did not receive his full commission which amounted to P1.6 Million
from the P4.4 Million insurance coverage of the Delta Motors he obtained for
Philippine American General Insurance (Philamgen) because the Philamgen
terminated their agency agreement after Valenzuela refused to share his
commission with the company. Philamgen was found to have acted with bad
faith and with abuse of right in terminating the agency under the principle that
every person must in the exercise of his rights and in the performance of his
duties act with justice, give everyone his due, and observe honesty and good
faith (Art. 19, Civil Code), and every person who, contrary to law, willfully or
negligently causes damages to another, shall indemnify the latter for the same.
NEGLIGENCE
Sanitary Steam Laundry, Inc. vs. Court of Appeals, 300 SCRA 20
82

The driver was in violation of the Land Transportation and Traffic Code when
its vehicle got involved in an accident that killed three persons. For the driver
to be found negligent petitioner must show that the violation of the statute was
the proximate or legal cause of the injury or that it substantially contributed
thereto because such negligence, consisting in whole or in part, of violation of
law, like any other negligence is without legal consequence unless it is a
contributing cause of the injury.
Mckee vs. Intermediate Appellate Court, 211 SCRA 517
A head-on-collision took place between a cargo truck driver and a car driver
Jose Koh, which resulted in the death of Jose Koh and two others because the
Koh avoided hitting two boys who suddenly darted across the lane. Under the
Emergency Rule, Koh was not negligent because his entry into the lane of the
truck was necessary in order to avoid what was, in his mind at that time, a
greater peril of death or injury to the two boys. Under this rule, a person who,
without fault or negligence on his part, is suddenly placed in an emergency or
unexpected danger and compelled to act instantly and instinctively with no
time for reflection and exercise of the required precaution, is not guilty of
negligence and, therefore, exempt from liability, if he did not make the wisest
choice of the available courses of conduct to avoid injury which a reasonably
prudent person would have made under normal circumstances.
Del Rosario vs. Manila Electric Co., 57 Phil. 478
An overhead wire of Meralco conducting electricity parted and one of the
charged ends fell to the ground, and a nine (9) year old school child touched
the wire and was electrocuted. It is doubtful whether contributory negligence
can properly be imputed to the deceased, owing to his immature years and the
natural curiosity which a child would feel to do something out of the ordinary,
and the mere fact that the deceased ignored the caution of a companion of the
age of 8 years does not, in our opinion, alter the case.

Astudillo vs. Manila Electric Co., 55 Phil. 327

A young man by the name of Juan Diaz Astudillo met his death through
electrocution, when he placed his right hand on a wire connected with an
electric light pole owned by Meralco. Meralco was negligent in so placing the
pole and wires as to be within the proximity of a place frequented by many
persons, with the possibility of coming in contact with a highly charged and
defectively insulated wire.
Bernardo vs. Legaspi, 29 Phil. 12
83

Two automobiles, going in opposite directions, collide on turning a street

corner, and it appears from the evidence that the drivers were equally negligent
and contributed equally to the collision. Under the doctrine of contributory
negligence, neither can recover from the other for the damages suffered.
Negros Navigation Co., Inc. vs. Court of Appeals, 281 SCRA 534
The ship captain of MT Tacloban City, an oil tanker owned by PNOC, was
playing mah-jong when it collided off the Tablan Strait in Mindoro, with M,V
Don Juan owned by petitioner NENACO. The owner of the ship was found
equally negligent with the ship captain because of tolerating the playing of
mahjong by the ship captain and other crew members while on board the ship
and failing to keep the ship seaworthy.
Philippine Long Distance Telephone Co., Inc. vs. Court of Appeals, 178
SCRA 94
The jeepney of the respondents fell into an open excavation when the jeep
swerved from the inside lane of the street, respondents being aware of the
presence of said excavation. The negligence of respondent Antonio Esteban was
not only contributory to his injuries and those of his wife but goes to the very
cause of the occurrence of the accident, as one of its determining factors, and
thereby precludes their right to recover damages.

SPECIAL LIABILITY IN PARTICULAR ACTIVITIES

Doctors
Ramos vs. Court of Appeals, 321 SCRA 584
At the time of her admission, patient Erlinda Ramos was neurologically sound
but during the administration of anesthesia and prior to the performance of a
gall bladder operation, she suffered irreparable damage to her brain and was
diaganosed to be suffering from diffuse cerebral parenchymal damage. The
damage sustained by Erlinda Erlinda in her brain prior to a scheduled gall
bladder operation presents a case for the application of res ipsa loquitur in
medical malpractice as it was found out that brain damage does not normally
occur in the process of gall bladder operations, and does not happen in the
absence of negligence of someone in the administration of anesthesia and in
the use of endotracheal tube.
Batiquin vs. Court of Appeals, 258 SCRA 334
84

A piece of rubber glove was left in the abdomen of a patient after a caesarean
section operation. The doctrine of res ipsa loquitor applies because aside from
the caesarean section, private respondent Villegas underwent no other
operation which could have caused the offending piece of rubber to appear in
her uterus, it stands to reason that such could only have been a by-product of
the caesarean section performed by Dr. Batiquin.
Lawyers
Roque vs. Gunigundo, 89 SCRA 178
Atty. Gunigundo was charged by his client Roque with G.R.oss negligence in
not seasonably filing their motion for reconsideration and in not perfecting an
appeal from the trial courts order of dismissal. Atty. Gunigundo's filing of
motions for extension on the last day and sending them by registered mail
(thus giving the court insufficient time to act before the extension sought had
expired) and his omission to verify whether his second motion for extension
was granted are indicative of lack of competence, diligence and fidelity in the
dispatch of his clients business.
Adarne vs. Aldaba, 83 SCRA 734
Adarne was declared in default for failure to appear in the hearing because his
one of his lawyers honestly believed that he had appeared for the complainant
only for a special purpose and that the complainant had agreed to contact his
attorney of record to handle his case after the hearing of October 23, 1964, so
that he did nothing more about it. An attorney is not bound to exercise
extraordinary diligence, but only a reasonable degree of care and skill having
reference to the character of the business he undertakes to do.
STRICT LIABILITY
Vestil vs. Intermediate Appellate Court, 179 SCRA 47
Theness, a three-year old child, was killed after she was bitten by a dog while
she was playing with the child of Purita Vestil in the house of Vicente Miranda,
the late father of Purita. Spouses Vestils contention that they cannot be
faulted as they are not the owner of the house where the child was bitten
cannot be accepted because under the Article 2183 of the Civil Code the
possessor of animal is liable even if the animal should escape or be lost and
so be removed from his control.
Amadora vs. Court of Appeals, 160 SCRA 315

85

Amadora was shot dead by his classmate Daffon inside the school auditorium,
when the classes had formally ended. As long as it can be shown that the
student is in the school premises in pursuance of a legitimate student
objective, in the exercise of a legitimate student right, and even in the
enjoyment of a legitimate student privilege, the responsibility of the school
authorities over the student continues.
Caedo vs. Yu Khe Thai, 26 SCRA 410
Yu was inside his car when his driver bumped a carretela in front and at the
same time hit another car coming from the opposite direct. Under [Article
2184], if the causative factor was the drivers negligence, the owner of the
vehicle who was present is likewise held liable if he could have prevented the
mishap by the exercise of due diligence.
ART 2176 , 2177
ANDAMO vs. IAC, G.R. NO. 74761November 6, 1990
Clearly, from petitioner's complaint, the waterpaths and contrivances built by
respondent corporation are alleged to have inundated the land of petitioners.
All the elements of a quasi-delict or culpa aquiliana are present, to wit: (a)
damages suffered by the plaintiff, (b) fault or negligence of the defendant, or
some other person for whose acts he must respond; and (c) the connection of
cause and effect between the fault or negligence of the defendant and the
damages incurred by the plaintiff.

PONCE vs. LEGASPI, G.R. NO. 79184 May 6, 1992

The present case stemmed from the filing before the Supreme Court OF a
complaint for disbarment against respondent by petitioner which was
dismissed. Respondent thereafter filed a complaint for damages against the
petitioner. The adverse result of an action does not per se make the action
wrongful and subject the actor to make payment of damages for the law could
not have meant to impose a penalty on the right to because one who exercises
his rights does no injury, and if damage results from a person's exercising his
legal rights, it is damnum absque injuria.
DAMAGES
86

MERALCO vs. RAMOY, G.R. NO. 158911, March 4, 2008

In the present case, MERALCO wilfully caused injury to Leoncio Ramoy by
withholding from him and his tenants the supply of electricity to which they
were entitled under the Service Contract. MERALCO's failure to exercise
utmost care and diligence in the performance of its obligation to its customer,
is tantamount to bad faith hence is entitled to moral damages.
MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. vs. PHOENIX
ASSURANCE COMPANY OF NEW YORK,MCGEE & CO., INC., G.R. NO.
162467, May 8, 2009
The Court ruled that Mindanao Terminal had duly exercised the required
degree of diligence in loading and stowing the cargoes, which is the ordinary
diligence of a good father of a family. There is no basis for the award of
attorneys fees in favor of petitioner since none of the circumstances
enumerated in Article 2208 of the Civil Code exists because the present case is
clearly not an unfounded civil action against the plaintiff as there is no
showing that it was instituted for the mere purpose of vexation or injury.
AIR FRANCE vs.CARRASCOSO, G.R. NO. L-21438, September 28, 1966
Plaintiff was forced out of his seat in the first class compartment of the plane
belonging to the defendant Air France while at Bangkok, and was transferred to
the tourist class without his consent and against his will. The contract of air
carriage, therefore, generates a relation attended with a public duty, and
neglect or malfeasance of the carrier's employees, naturally, could give ground
for an action for damages.
BAYANI vs. PANAY ELECTRIC CO., INC., G.R. NO. 139680, April 12, 2000
The requisites for an action for damages based on malicious prosecution are:
(1) the fact of the prosecution and the further fact that the defendant was
himself the prosecutor, and that the action was finally terminated with an
acquittal;
(2) that in bringing the action, the prosecutor acted without probable cause;
and
(3) the prosecutor was actuated or impelled by legal malice.
WASSMER vs VELEZ, G.R. NO. L-20089, December 26, 1964
87

Two days before the wedding, defendant, who was then 28 years old, simply left
a note for plaintiff stating: "Will have to postpone wedding My mother
opposes it ... ", then enplaned to his home city in Mindanao, and never
returned and was never heard from again. This is not a case of mere breach of
promise to marry but unjustifiably contrary to good customs for which
defendant must be held answerable in damages in accordance with Article 21
aforesaid and per express provision of Article 2219 (10) of the New Civil Code,
moral damages are recoverable in the cases mentioned in Article 21 of said
Code.
SANTOS VENTURA HOCORMA FOUNDATION, INC. vs. ERNESTO V.
SANTOS and RIVERLAND, INC., G.R. NO. 153004, November 5, 2004
The demand letter sent to the petitioner on October 28, 1992, was in
accordance with an extra-judicial demand contemplated by law. When the
debtor knows the amount and period when he is to pay, interest as damages is
generally allowed as a matter of right.
EXEMPLARY DAMAGES
TELEFAST COMMUNICATIONS vs. CASTRO, G.R. NO. 73867, February 29,
1988
Petitioner and private respondent entered into a contract whereby, for a fee,
petitioner undertook to send said private respondent's message overseas by
teleG.R.am but which petitioner did not do, despite performance by said private
respondent of her obligation by paying the required charges. The award of
exemplary damages by the trial court is likewise justified and, therefore,
sustained as a warning to all teleG.R.am companies to observe due diligence in
transmitting the messages of their customers.
BANK OF THE PHILIPPINE ISLANDS vs.COURT OF APPEALS, G.R. NO.
136202, January 25, 2007
Upon the prompting of Templonuevo and with full knowledge of the brewing
dispute between Salazar and Templonuevo, petitioner debited the account held
in the name of the sole proprietorship of Salazar without even serving due
notice upon her. The award of exemplary damages is justified when the acts
of the bank are attended by malice, bad faith or gross negligence and the award
of reasonable attorneys fees is proper where exemplary damages are awarded
because depositors are compelled to litigate to protect their interest.
88

ACTUAL or COMPENSATORY DAMAGES

ART 2203
VELASCO vs.MERALCO, G.R. NO. L-18390, August 6, 1971
It is undisputed that a sound unceasingly emanates from the substation of
MERALCO and whether this sound constitutes an actionable nuisance or not is
the principal issue in this case and appellant asked that he be declared entitled
to recover compensatory, moral and other damages. Article 2203 clearly
obligates the injured party to undertake measures that will alleviate and not
aggravate his condition after the infliction of the injury, and places upon him
the burden of explaining why he could not do so.
MORAL DAMAGES
BPI vs CA, G.R. NO. 136202, January 25, 2007
The bank froze and later unilaterally debited an amount from the account of
A.A. Salazar Construction and Engineering Services without informing her that
it had already done so, which caused plaintiff-appellee great damage and
prejudice particularly when she had already issued checks drawn against the
said account and as can be expected, the said checks bounced, thereby
causing private respondent Salazar undue embarrassment and inflicting
damage to her standing in the business community.
A depositor has the right to recover reasonable moral damages even if the
banks negligence may not have been attended with malice and bad faith, if the
former suffered mental anguish, serious anxiety, embarrassment and
humiliation.
VILLA REY TRANSIT, INC., vs. THE COURT OF APPEALS, G.R. NO. L25499 February 18, 1970
The trial court and the Court of Appeals, both found that the accident and the
death of Policronio had been due to the negligence of the bus driver, for whom
petitioner was liable under its contract of carriage with the deceased but the
only issue raised in this appeal is the amount of damages recoverable by
private respondents herein. The determination of the indemnity to be awarded
to the heirs of a deceased person has therefore no fixed basis and much is left
to the discretion of the court considering the moral and material damages
involved, and so it has been said that "(t)here can be no exact or uniform rule
for measuring the value of a human life and the measure of damages cannot be
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arrived at by precise mathematical calculation, but the amount recoverable

depends on the particular facts and circumstances of each case.
PEOPLE vs. EBAROLA, G.R. NO. L-69666, January 23, 1992
Appellant had been convicted of homicide and the trial court awarded the
amount of P100,000.00 to the heirs of Manahan as indemnity for death. The
indemnity for death must be reduced to P50,000.00 conformably with
prevailing jurisprudence on the matter and aside from the ordinary indemnity
for death appellant is obliged: (1) to compensate the heirs for the latter's loss of
earning capacity; (2) to give support in the form of expenses for education to
dependents of the deceased and (3) to pay the heirs for moral damages for the
mental anguish suffered by them.
COJUANGCO vs. COURT OF APPEALS, G.R. NO. 119398. July 2, 1999
To hold public officers personally liable for moral and exemplary damages and
for attorneys fees for acts done in the performance of official functions, the
plaintiff must prove that these officers exhibited acts characterized by evident
bad faith, malice, or gross negligence, but even if their acts had not been so
tainted, public officers may still be held liable for nominal damages if they had
violated the plaintiffs constitutional rights.
TEMPERATE DAMAGES
PLENO vs. COURT OF APPEALS, G.R. NO. L-56505, May 9, 1988
Temperate damages are included within the context of compensatory damages
and in arriving at a reasonable level of temperate damages to be awarded, trial
courts are guided by our ruling that: There are cases where from the nature of
the case, definite proof of pecuniary loss cannot be offered, although the court
is convinced that there has been such loss.
NOMINAL DAMAGES
AREOLA vs. COURT OF APPEALS, G.R. NO. 95641 September 22, 1994
Nominal damages are "recoverable where a legal right is technically violated
and must be vindicated against an invasion that has produced no actual
present loss of any kind, or where there has been a breach of contract and no
substantial injury or actual damages whatsoever have been or can be shown.

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