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Joseph Edward L.

Matias Chairman
Aster beane L. Araneta Vice Chairman

COMITTEE HEADS:
Kayelyn mae B. lat Secretariat
Olive grace Ma. p. Cachapero Academics
Jan Michael dave s. Lao Finance
Joshua y. Bagotsay Hotel Operations
Angelo m. marasigan Logistics
charles lindoln-jay d. laminato Special Projects

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ACADEMICS COMMITTEE 2015
Head: OLIVE CACHAPERO
Deputy Head: NINA CONSTANTINO

Subject chairs:
Political LawANGELO TIGLAO (Asst.: GC Pillena)
Labor Law GELENE GUEVARRA
Civil Law KAMAE CRUZ (Asst.: John Briones Caldan)
Taxation KELVIN HUNG Asst.: Daphne Mendoza)
Commercial Law JOYCE BAYLON
Criminal LawMHEL VALE CRUZ (Asst.: Nigel Reago)
Remedial Law GRACE VETUS (Asst.: Patricia Canalita)
Legal Judicial Ethics KYLIE DADO (Asst.: Jess Bigalbal

LAYOUT TEAM: Bernina pascual and Thea denilla


Academics committee head: olive cachapero

Deputy head: Nina Constantino
SUBJECT CHAIR: kamae cruz
Assistant: john briones caldan
JAN PABLO FILIO / Sales
rexcia baldeo and joshua salteras
STEPHANIE ROJAS / persons and family relations
Diana Casano, Mark Padrones, Joana Castro and Kat Monje
CHEYENNE YU / land titles and deeds
LJ Pantorgo, Aimee Espinosa AND Avi Francisco

eumir songcya / Conflictof laws


jade lorenzo
kamae cruz / Property
miguel ocampo / Obligations and Contracts
Krizzia Gojar, Jeshaiah Innoe Garcia, John Caldan Briones,
justin Mendoza, Arjay Parian and Kat Monje
arjuna guevara / Agency Trust and Partnership
Catherine diesta / Credit Transactions
Avi Francisco, Jimuel Mattias, Vito Sales and Revy Neri
JON DIAZ DE RIVERA / succession

LAYOUT: Bernina pascual


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Table of Contents
PERSONS & FAMILY RELATIONS 7
OCHOSA v. ALANO [640 SCRA 517, 2011] 7
AZCUETA vs. REPUBLIC [588 SCRA 196, 2009] 8
DELA CRUZ v. SEGOVIA [555 SCRA 453, 2008] 9

OBLICON 1 0
NAVIDA v. DIZON, JR.[649 SCRA 33, 2011) 1 0
CATUNGAL v. RODRIGUEZ [646 SCRA 130, 2011) 1 1
MIAA V. DING VELAYO SPORTS CENTER, INC. [662 SCRA 399, December 14, 2011] 1 2
COMMISSIONER OF INTERNAL REVENUE v. BANK OF COMMERCE [709 SCRA 390, 2013] 1 5
CACHOPERO v. CELESTIAL [668 SCRA 619, 2012] 1 6
UNIVERSITY PHYSICIANS SERVICES, INC. v. MARIAN CLINICS, INC. [629 SCRA 535, 2010) 1 7
MCA-MBF COUNTDOWN CARDS PHIL. INC v. MBF CARD INTERNATIONAL LTD. [668 SCRA 214, 2012] 81
SUATENGO v. REYES [574 SCRA 187, 2008] 1 9

AGENCY, trust, and partnership 2 0


COUNTRY BANKERS INSURANCE CORPORATION v.KEPPEL CEBU SHIPYARD [673 SCRA 427, 2012] 2 0
ORMOC SUGARCANE PLANTERS ASSOCI-
ATION, INC. (OSPA), et al. v. COURT OF APPEALS [596 SCRA 630, 2009] 2 1
RAMON v.PHILIPPINE NATIONAL BANK [662 SCRA 479, 2011] 2 2
PHILIPPINE CHARTER INSURANCE CORPORATION vs. EXPLORER MARITIME CO., LTD 2 3
[G.R. No. 17540, September 7, 2011] 2 3
GSISv.COA [680 SCRA 376, 2012] 2 4
SPOUSES RENATO and FLORINDA DELA CRUZv. SPOUSES
GIL and LEONILA SEGOVIA [555 SCRA 453, 2008] 2 5

PROPERTY 2 6
FERNANDO, JR. v. ACUNA [657 SCRA 499, 2011] 2 8
DURAWOOD CONSTRUCTION AND LUMBER SUPPLY, INC. v. BONA [664 SCRA 204, 2012] 3 0
PHILIPPINE NATIONAL OIL COMPANY v. MAGLASANG [570 SCRA 560, 2008] 3 1

CREDIT Transactions 3 2
PHILIPPINE DEPOSIT INSURANCE CORPORATION v. BIR [698 SCRA 311, 2013] 32
RAMOS v. PHILIPPINE NATIONAL BANK [662 SCRA 479, 2011] 32
TORBELA v. ROSARIO [661 SCRA 633, 2011] 33
CEBU BIONIC BUILDERS SUPPLY, INC. v. DEVELOPMENT BANK OF THE PHILIPPINES [635 SCRA 13,
2010] 34
NATIONAL HOUSING AUTHORITY v. BASA [618 SCRA 461, 2010] 35
CENTURY SAVINGS v. SAMONTE [634 SCRA 261, 2010] 36
CAHILIG v. TERENCIO [661 SCRA 261, 2011] 37
GARCIA v. VILLAR [675 SCRA 80, 2012] 38
BPI v. REYES [664 SCRA 700, 2012] 40

Land, Titles and Deeds 4 1

4
REPUBLICvs. CAPCO DE TENSUAN [708 SCRA 367, 2013] 41
FEDERICO JARANTILLA, JR., v.
ANTONIETA JARANTILLA, BUENAVENTURA REMOTIGUE [636 SCRA 299, 2010] 43
REPUBLIC v.HEIRS OF MAXIMA LACHICA SIN, NAMELY: SALVACION L. SIN, ROSARIO S. ENRIQUEZ, FRANCISCO
L. SIN, MARIA S. YUCHINTAT, MANUEL L. SIN, JAIME CARDINAL SIN, RAMON L. SIN, AND CEFERINA S. VITA
[720 SCRA 41, 2014] 44
DECALENG v. BISHOP OF THE MINISTRY DISTRICT OF THE PHILIPPINE ISLANDS OF PROTESTANT EPISCOPAL
CHURCH IN THE UNITED STATES OF AMERICA OR THE PHILIPPINE EPISCOPAL CHURCH (PEC) [675 SCRA
145, 2012] 46
SPOUSES MORRIS CARPO and SOCORRO CARPOv.AYALA LAND, INCORPORATED [611 SCRA 436, 2010]
48
REPUBLIC v. JARALVE [684 SCRA 495, 2012] 49
MORLA v. BELMONTE [661 SCRA 717, 2011] 50
DURAWOOD CONSTRUCTION AND LUMBER SUPPLY, INC. v. BONA [664 SCRA 204, 2012] 51
CHING v. ENRILE [565 SCRA 402, 2008] 52
REPUBLIC v. LORENZO [687 SCRA 478, 2012] 54
BARCELIZA P. CAPISTRANO v. DARRYL LIMCUANDO and FE S. SUMIRAN [579 SCRA 176, 2009] 58

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Persons and Family Relations

PERSONS & FAMILY RELATIONS


OCHOSA v. ALANO [640 SCRA 517, 2011]
DOCTRINE: In the landmark case of Santos v. Court of Appeals, we observed that psychological inca-
pacity must be characterized by (a) gravity, (b) juridical antecedence, and (c) incurability. The incapacity
must be grave or serious such that the party would be incapable of carrying out the ordinary duties re-
quired in marriage; it must be rooted in the history of the party antedating the marriage, although the
overt manifestations may emerge only after marriage; and it must be incurable or, even if it were other-
wise, the cure would be beyond the means of the party involved.

FACTS: Alanos illicit affairs with other men started at the onset of their marriage when Ochosa was
assigned in various parts of the country. She had illicit relations with other men, and apparently, did not
change her ways when they lived together at Fort Bonifacio. She entertained male visitors in her bedroom
whenever Ochosa was out of their living quarters. On one occasion, Alano was caught by Bajet, a security
aide, having sex with Ochosas driver, Corporal Gagarin. Rumors of Alanoas sexual infidelity circulated in
the military community. Ochosa got a military pass from his jail warden and confronted Alano about the
rumors, which the latter and Gagarin admitted. Since then, they were separated, and their foundling,
Ramona, stayed with Alano in Basilan until 1994 to live with Ochosa.

Ochosa filed a Petition for the declaration of nullity of marriage between him and Alano based on the
ground of the latters psychological incapacity to fulfill the essential marital obligations of marriage.

Dr. Rondain, a psychiatrist and one of the witnesses, testified and submitted a psychological evaluation
report on Alanos mental state. The interviews she had with Ochosa and two of his witnesses brought
her to the conclusion that Alano was suffering from Histrionic Personality Disorder (HPD), and it was
traceable to her family history.

The trial court declared the marriage of Ochosa and Alano void ab initio on the ground of Alanos psy-
chological incapacity under Art. 36 of the Family Code. The trial court found that Alanos illness exhibited
gravity, antecedence, and incurability. The OSG appealed the trial court decision to the CA. The CA grant-
ed the appeal and reversed the trial court decision.

ISSUE: WON Alano should be deemed psychologically incapacitated to comply with the essential marital
obligations. NO.

HELD:
The alleged psychological incapacity did not satisfy the jurisprudential requisite of juridical antecedence
since the witnesses presented came to know her only during the marriage.

There is inadequate credible evidence that Alanos defects were already present at the inception of, or
prior to, the marriage. In other words, her alleged psychological incapacity did not satisfy the jurispru-
dential requisite of juridical antecedence.

Dr. Rondain evaluated Alanos psychological condition indirectly from the information gathered solely
from Ochosa and his witnesses. This factual circumstance evokes the possibility that the information fed
to the psychiatrist is tainted with bias for Ochosas cause due to the absence of sufficient corroboration.

Alanos dysfunctional family portrait, which, as Dr. Rondain had painted, brought about Alanos HPD, was
based solely on the assumed truthful knowledge of Ochosa, the spouse who has the most to gain if his
wife, Alano, is found to be indeed psychologically incapacitated. No other witness testified to Alanos
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Persons and Family Relations
family history or her behavior prior to or at the beginning of the marriage. The badges of Alanos alleged
psychological incapacity, i.e., her sexual infidelity and abandonment, can only be convincingly traced to
the period of time after her marriage to Ochosa and not to the inception of the said marriage.

The psychiatrists conclusion about Alanos HPD, i.e. that Alano is prone to promiscuity and sexual infi-
delity started to exist before her marriage to Ochosa, cannot be taken as credible proof of antecedence
since the method by which such an inference was reached leaves much to be desired in terms of meeting
the standard of evidence required in determining psychological incapacity.

Art. 36 of the Family Code is not to be confused with a divorce law that cuts the marital bond at the time
the causes therefore manifest themselves. It refers to a serious psychological illness afflicting a party
even before the celebration of the marriage. It is a malady so grave and so permanent as to deprive one
of awareness of the duties and responsibilities of the matrimonial bond that one is about to assume.
These marital obligations are those provided under Arts. 68 to 71, 220, 221 and 225 of the Family Code.

AZCUETA vs. REPUBLIC [588 SCRA 196, 2009]


DOCTRINE: In Republic v. Molina, the Court laid down the following stringent guideliness in the inter-
pretation and application of Art. 36 of the Family Code:
(1) The burden of proof to show the nullity of the marriage belongs to the plaintiff.
(2) The root cause of the psychological incapacity must be: (a) medically or clinically
identified, (b) alleged in the complaint, (c) sufficiently proven by experts and (d) clearly
explained in the decision.
(3) The incapacity must be proven to be existing at the time of the celebration of the
marriage.
(4) Must also be medically ot clinically permanent or incurable.
(5) Such illness must be grave enough to bring about the disability of the party to assume
the essential obligations of marriage.
(6) The essential marital obligations must be those embraced by Arts. 68 to 71 of the
Family Code.
FACTS: Marietta Azcueta (Marietta) and Rodolfo Azcueta (Rodolfo) got married less than two months
after their first meeting. At that time of their marriage, Marietta was 23 years old while Rodolfo was 28.
They separated after four years of marriage. They have no children. Marietta filed a petition for decla-
ration of absolute nullity of marriage under Art. 36 of the Family Code before the RTC. She claimed that
Rodolfo was suffering from Dependent Personality Disorder with severe inadequacy related to masculine
strivings because he was so dependent on his mother and that all his decisions and attitudes in life should
be in conformity with those of his mother.
ISSUE: WON the totality of the evidence presented is adequate to sustain a finding that Rodolfo is psy-
chologically incapacitated to comply with his essential marital obligations. YES.
HELD:
There was sufficient compliance with Molina to warrant the annulment of the parties marriage under Art.
36 of the Family Code, namely:
(1) Marietta successfully discharged her burden to prove the psychological incapacity of her husband;
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Persons and Family Relations
(2) the root cause of the psychological incapacity has been medically or clinically identified, alleged in the
petition, sufficiently proven by expert testimony, and clearly explained in the trial court decision;
(3) the psychological incapacity have clearly existed at the time of and even before the celebration of
marriage;
(4) the psychological incapacity has been shown to be sufficiently grave, so as to render him unable to
assume the essential obligations of marriage;
(5) Rodolfo evidently unable to comply with the essential marital obligations embodied in Arts. 68 to 71
of the Family Code; and
(6) the incurability of this condition, which has been deeply ingrained in his system since his early years,
was supported by evidence and duly explained by the expert witness.


DELA CRUZ v. SEGOVIA [555 SCRA 453, 2008]
DOCTRINE: Art. 124 of the Family Code provides that the administration of the conjugal partnership is a
joint undertaking of the husband and the wife. In the event that one spouse is incapacitated or otherwise
unable to participate in the administration of the conjugal partnership, the other spouse may assume sole
powers of administration. However, the power of administration does not include the power to dispose
or encumber property belonging to the conjugal partnership. In all instances, the present law specifically
requires the written consent of the other spouse, or authority of the court for the disposition or encum-
brance of conjugal partnership property without which the disposition or encumbrance shall be void.
FACTS: Dela Cruz wanted to purchase two parcels of land (Lot 503 and Lot 505) in Sta. Mesa, Manila at
the price of 180,000.oo. Having only 144,000.00 at hand at that moment, she asked her sister, Segovia,
to contribute 36,000.00 to complete the purchase price. In 1985, the sisters verbally agreed that Lot
503 would belong to Segovia upon full payment of its purchase price of 80,000.00. They also agreed
that Segovia and her family will stay at Lot 505 until she had fully paid for Lot 503. The sisters signed an
Agreement containing the detailed scheme of payment for the subject lot. The agreement indicated that
the balance shall be paid in an installment basis within 10 years upon the signing. Segovia continued to
pay the balance until May 16, 1995; however, Dela Cruz refused to accept such on the ground that the
period for the payment of the balance had already expired based on their verbal agreement. Relying on
Art. 124 of the Family Code, Dela Cruz further contended that the subject agreement had no force and
effect on account of the absence of signature of Dela Cruz husband, Renato.
ISSUE: WON Art. 124 of the Family Code applies to the instant case. NO.
HELD:
Art. 124 of the Family Code finds no application in this case. The agreement between Dela Cruz and
Segovia does not involve any disposition of property belonging to any of the sisters conjugal properties,
to wit:
Art. 124. The administration and enjoyment of the conjugal partnership shall belong to both
spouses jointly. In case of disagreement, the husbands decision shall prevail, subject to recourse
to the court by the wife for proper remedy, which must be availed of within five years from the
date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume sole powers of administration. These powers do
not include disposition or encumbrance without authority of the court or the written consent of the other
spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. How-
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Persons and Family Relations
ever, the transaction shall be construed as a continuing offer on the part of the consenting spouse and
the third person, and may be perfected as a binding contract upon the acceptance by the other spouse
or authorization by the court before the offer is withdrawn by either or both offerors.
The agreement was for the acquisition of two lots which were sold together at 180,000.00 pesos (value
of Lot 503: 80,000 and value of Lot 505: 100,000). With the sisters money pooled together, they agreed
that the 36,000.00 contribution of Leonila shall be applied to Lot 503 and upon payment of the balance
of 44,000.00, the lot shall belong to Segovia. The 44,000.00 served as a loan to Segovia and to secure
its payment, Lot 503 was provisionally registered to the names of the Dela Cruz spouses. Hence, Lot 503
was not intended to be part of the conjugal assets of the Dela Cruz spouses, but it was only to serve as
a security for the payment of the 44,000.00 due from Segovia.
Moreover, while Renato did not affix his signature in the agreement, he, by his actuations, agreed and
gave his conformity to the agreement. The courts found that he was present at the time when the sisters
and their witnesses signed the agreement. He had knowledge of the agreement as it was presented to
him for his signature, although he did not sign the same because his wife insisted that her signature
already carried that of her husband. Renato witnessed the fact that Segovia contributed her hard earned
savings in the amount of P36,000.00 to complete their share in the purchase price of the properties in
question in the total amount of P180,000.00.

OBLICON

NAVIDA v. DIZON, JR.[649 SCRA 33, 2011)


DOCTRINE: Art. 2028 of the NCC provides that a compromise is a contract whereby the parties, by
making reciprocal concessions, avoid a litigation or put an end to one already commenced. Like any other
contract, an extrajudicial compromise agreement is not excepted from rules and principles of a contract,
but it does not need judicial approval for its perfection. It is a consensual contract, perfected by mere
consent.

FACTS: Citizens of twelve countries (including the Philippines) filed a number of personal injury suits in
different Texas state courts. Navida prayed for the payment of damages due to the illnesses and injuries
they had allegedly suffered because of their exposure to dibromochloropropane (DBCP), a chemical used
to kill nematodes (worms). Navida alleged the following:
(1) respondent companies knew, or ought to have known, of their exposure and the possible damages
such exposure will bring about;
(2) the alleged tortious acts and/or omissions of defendant companies occurred within the Philippine
territory, therefore, the Philippine courts must assume jurisdiction over the case; and
(3) The provisions of Chapter 2 of the Preliminary Title of the NCC, as well as Art. 2176 thereof, are
broad enough to cover their claim for damages.

ISSUE: WON the RTC has jurisdiction over the subject matter of the case. YES.

HELD:
The allegations in the complaints constitute the cause of action of a quasi-delict, which under the NCC
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Persons and Family Relations
is defined as an act, or omission which causes damage to another, there being fault or negligence.
Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this Chapter. It points to the acts and/or omissions of
the defendant companies in manufacturing, producing, selling, using, and/or otherwise putting into the
stream of commerce, nematocides which contain DBCP, without informing the users of its hazardous
effects on health and/or without instructions on its proper use and application. The acts and/or omissions
attributed to the defendant companies constitute a quasi-delict which is the basis for the claim for
damages filed by the petitioners., with individual claims of approximately P2.7 million for each plaintiff
claimant, which obviously falls within the purview of the civil action jurisdiction of the RTCs.

The responsibility of two or more persons who are liable for the same quasi-delict is solidary. Art. 2194
of the NCC provides that a solidary obligation is one in which each of the debtors is liable for the
entire obligation, and each of the creditors is entitled to demand the satisfaction of the whole obligation
from any or all of the debtors. However, the above right of reimbursement of a paying debtor and the
corresponding liability of the co-debtors to reimburse will only arise if a solidary debtor (who is made to
answer for an obligation) actually delivers payment to the creditor. In the cases at bar, there is no right
of reimbursement to speak of as yet. A trial on the merits must necessarily be conducted first in order to
establish whether or not defendant companies are liable for the claims for damages filed by the plaintiff
claimants, which would necessarily give rise to an obligation to pay on the part of the defendants.

CATUNGAL v. RODRIGUEZ [646 SCRA 130, 2011)


DOCTRINE: In conditional sales, the acquisition of rights as well as extinguishment or loss of those
already acquired shall depend upon the happening of the event, which constitutes the condition. An obli-
gation dependent upon a suspensive condition cannot be demanded until after the condition takes place
because it is only after the fulfillment of the condition that the obligation arises. When the condition is
imposed merely on the performance of an obligation, and not on the perfection of the contract, it gives
the other party the option to either refuse to proceed with the sale or to waive the condition.
FACTS: The Catungal spouses and Rodriguez entered into a Conditional Deed of Sale wherein the for-
mer agreed to sell and the latter agreed to buy the subject lot. The transaction was conditioned on the
payment of a certain price, but the obligation to pay the balance of the purchase price would only arise if
Rodriguez would successfully negotiate and secure a road right of way. The Catungal spouses requested
for an advance of 5M on the purchase price. However, Rodriguez objected, stating that in view of the
terms of the Conditional Deed of Sale, he would only pay the balance of the purchase price if he would
be able to obtain a road right of way. Rodriguez was given sufficient time to do so and he was also given
the right to rescind the contract. However, it was the Catungal spouses who rescinded the contract. On
one hand, Rodriguez contended that the unilateral rescission of the Catungal spouses was unjustified. On
the other hand, the Catungal spouses contended that the terms of the Conditional Deed of Sale violated
the principle of mutuality under Art. 1308 of the NCC stating that the contract was a potestative condition
because it was dependent on the sole will of the debtor, Rodriguez.
ISSUE: WON the stipulations of their Conditional Deed of Sale constitute a potestative condition. NO.
HELD:
The stipulation wherein Rodriguez shall pay the balance of the the purchase price when he has success-
fully negotiated and secured a road right of way is not a condition on the perfection of the contract nor
on the validity of the entire contract or its compliance as contemplated in Art 1308 of the NCC. Rather, it
is a condition imposed only on Rodriguez obligation to pay the remainder of the purchase price.

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Persons and Family Relations

Applying Art. 1182 of the NCC, such a condition is not purely potestative as the Catungal spouses argued.
It is not dependent on the sole will of the debtor but also on the will of third persons who own the adja-
cent land and from whom the road right of way shall be negotiated. Such a condition is likewise depen-
dent on chance as there was no guarantee that Rodriguez and the third party-landowners would come
to an agreement regarding the road right of way. This type of mixed condition is expressly allowed under
Art 1182 of the NCC, which provides that when the fulfillment of the condition depends upon the sole
will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a
third person, the obligation shall take effect in conformity with the provisions of the NCC. In other words,
the obligation to pay the balance is conditioned upon the acquisition of the road right of way. Therefore,
the Catungal spouses cannot rescind the contract nor demand the fulfillment of Rodriguez obligation to
pay the balance. In the event the condition is not fulfilled, Rodriguez can either proceed with the sale and
demand return of his down payment or to waive the condition and still pay the purchase price despite
the lack of road access.

MIAA V. DING VELAYO SPORTS CENTER, INC. [662 SCRA 399, December 14, 2011]

DOCTRINE: In Tanada v. Tuvera, we enunciated that publication is indispensable in order that all stat-
utes, including administrative rules that are intended to enforce or implement existing laws, attain bind-
ing force and effect, to wit: Covered by this rule are presidential decrees and executive orders promul-
gated by the President in the exercise of legislative powers whenever the same are validly delegated by
the legislature or, at present, directly conferred by the Constitution. Administrative rules and regulations
must also be published if their purpose is to enforce or implement existing law pursuant also to a valid
delegation.
FACTS: Petitioner and Salem Investment Corporation (Salem) entered into a Contract of Lease whereby
petitioner leased in favor of Salem a parcel of land known in front of the Manila International Airport
(MIA). Subsequently, in a Transfer of Lease Rights and Existing Improvement, Salem conveyed in favor of
Ding Velayo Export Corporation (Velayo Export) its leasehold rights over a portion of said Lot, executing
at the same time a Contract of lease.
Petitioner eventually issued Administrative Order that would increase the rental charges. More than 60
days prior to the expiration of the lease respondents informed the petitioner of their intention to renew.
Petitioner, in a Letter dated declined to renew the lease, ordered respondent to vacate the subject prop-
erty within five days, and demanded respondent to pay arrears in lease rentals.
Respondent filed against petitioner before the RTC a Complaint for Injunction, Consignation, and Damag-
es with a Prayer for a Temporary Restraining Order. Respondent essentially prayed for the RTC to order
the renewal of the Contract of Lease between the parties. Petitioner contends that it is not bound to
renew the lease contract.
The RTC and CA ruled in favor of respondents. That the lease contract should be renewed. The lease
contract contained a provision:
paragraph 17: The LESSEE, if desirous of continuing his lease, should notify the LESSOR
sixty (60) days prior to expiration of the period agreed upon for the renewal of the Con-
tract of Lease.

ISSUES:

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Persons and Family Relations
1) WON paragraph 17 is a void potestative condition. NO.

2) WON paragraph 17 is a mere procedural provision for negotiating renewal terms in the lease contract.
NO.

3) WON the Administrative order is invalid. YES.

HELD:

1. Par. 17 is not a void potestative condition. The fact that such option is binding only on
the lessor and can be exercised only by the lessee does not render it void for lack of mutuality.

After all, the lessor is free to give or not to give the option to the lessee. And while the les-
see has a right to elect whether to continue with the lease or not, once he exercises his option to
continue and the lessor accepts, both parties are thereafter bound by the new lease agreement.

Their rights and obligations become mutually fixed, and the lessee is entitled to retain
possession of the property for the duration of the new lease, and the lessor may hold him liable
for the rent therefor. The lessee cannot thereafter escape liability even if he should subsequently
decide to abandon the premises.

Article 1308 of the Civil Code expresses what is known in law as the principle of
mutuality of contracts. This binding effect of a contract on both parties is based on the principle
that the obligations arising from contracts have the force of law between the contracting parties,
and there must be mutuality between them based essentially on their equality under which it is
repugnant to have one party bound by the contract while leaving the other free therefrom. The
ultimate purpose is to render void a contract containing a condition which makes its fulfillment
dependent solely upon the uncontrolled will of one of the contracting parties.

An express agreement which gives the lessee the sole option to renew the lease is fre-
quent and subject to statutory restrictions, valid and binding on the parties. This option, which is
provided in the same lease agreement, is fundamentally part of the consideration in the contract
and is no different from any other provision of the lease carrying an undertaking on the part of
the lessor to act conditioned on the performance by the lessee. It is a purely executory contract
and at most confers a right to obtain a renewal if there is compliance with the conditions on which
the right is made to depend. The right of renewal constitutes a part of the lessees interest in the
land and forms a substantial and integral part of the agreement.

The fact that such option is binding only on the lessor and can be exercised only by the
lessee does not render it void for lack of mutuality. After all, the lessor is free to give or not to
give the option to the lessee.

2. Par. 17 is not a mere procedural provision. If we were to adopt the contrary theory that
the terms and conditions to be embodied in the renewed contract were still subject to mutual
agreement by and between the parties, then the option which is an integral part of the consider-
ation for the contract would be rendered worthless. For then, the lessor could easily defeat the
lessees right of renewal by simply imposing unreasonable and onerous conditions to prevent the
parties from reaching an agreement, as in the case at bar.

As in a statute, no word, clause, sentence, provision or part of a contract shall be con-


sidered surplusage or superfluous, meaningless, void, insignificant or nugatory, if that can be
reasonably avoided. To this end, a construction which will render every word operative is to be
preferred over that which would make some words idle and nugatory.

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Persons and Family Relations
3. The administrative orders are invalid. The RTC found that the adverted administrative
orders were not published in full, thus, the same were legally invalid within the context of Article 2
of the Civil Code which provides that: laws shall take effect after fifteen days following the com-
pletion of their publication in the Official Gazette, unless it is otherwise provided.The Supreme
Court cited the case of Tanada vs. Tuvera. It held:

We hold therefore that all statutes, including those of local application and
private laws, shall be published as a condition for their effectivity, which
shall begin fifteen days after publication unless a different effectivity date
is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders pro-
mulgated by the President in the exercise of legislative powers whenever
the same are validly delegated by the legislature or, at present, directly
conferred by the Constitution. Administrative rules and regulations must
also be published if their purpose is to enforce or implement existing law
pursuant also to a valid delegation.
The RTC found that the adverted administrative orders were not published in full, thus, the same were
legally invalid within the context of Article 2 of the Civil Code which provides that laws shall take effect
after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise
provided.
There is no basis for the argument of petitioner that the validity of its administrative orders cannot be
collaterally attacked. To the contrary, we have previously declared that a party may raise the unconsti-
tutionality or invalidity of an administrative regulation on every occasion that said regulation is being
enforced. Since it is petitioner which first invoked its administrative orders to justify the increase in lease
rentals of respondent, then respondent may raise before the court the invalidity of said administrative
orders on the ground of non-publication thereof.

RAMOS v. PNB [662 SCRA 479, 2011]


DOCTRINE: When the terms of a contract are clear and unambiguous, the literal meaning of such stip-
ulations have the force of law and shall govern.
FACTS: In 1973, Luis Ramos, husband of Ramona, executed a real estate mortgage to secure an agricul-
tural loan from PNB with a stipulation that this mortgage shall also stand as security for the payment of
subsequent or future contracted loans without the need of executing a new contract. In 1989, Luis and
PNB entered into a Credit Line Agreement under PNBs sugar quedan financial progam with certain crop
years as pledge for security. He was able to obtain a total loan of P15.6M. Luis authorized PNB to sell the
crop years he had pledged. The Ramos spouses obtained another agricultural loan which they success-
fully settled. Hence, the Ramos spouses demanded that PNB release the real estate mortgage. However,
PNB refused to heed the demand due to the failure to settle the 1989 credit line agreement. Hence, this
petition. The RTC ruled in favor of the Ramos spouses, stating that there was no mention in 1989 credit
line agreement that the 1973 real estate mortgage would stand as its security.
ISSUE: WON the 1973 real estate mortgage stands as security for the 1989 credit line agreement. YES.
HELD:
The SC stated that while it is true that there was no mentioning in the 1989 credit line agreement that the
1973 real estate mortgage would stand as security, it was, however, stipulated in such real estate mort-
gage that it could stand as security even to obligations contracted before, during or after the constitution
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Persons and Family Relations
of this mortgage without the need of executing a new contract. Therefore, the SC finds such stipulation
clear and unambiguous and therefore, it should govern.
Such clause in the mortgage is a blanket clause or dragnet clause.As a general rule, a mortgage
liability is usually limited to the amount mentioned in the contract. However, the amounts named as
consideration in a contract of mortgage do not limit the amount for which the mortgage may stand as
security if, from the four corners of the instrument, the intent to secure future and other indebtedness
can be gathered. This stipulation is valid and binding between the parties and is known as the blanket
mortgage clause or dragnet clause.

REPUBLIC v. DE GUZMAN [652 SCRA 101, 2011]


DOCTRINE: Payment made by the debtor to the person of the creditor or to one authorized by him or by
the law to receive it extinguishes the obligation. However, as held in Cembrano v. City of Butuan, when
payment is made to the wrong party, the obligation is not extinguished as to the creditor who is without
fault or negligence, even if the debtor acted in utmost good faith and by mistake as to the person of the
creditor or through error induced by fraud of a third person.
FACTS: MGM and PNP executed a Contract of Agreement wherein MGM undertook to procure and de-
liver to the PNP the construction materials. MGM demanded the payment for the construction materials.
PNP claims that MGM had already been paid. PNP made an admission that it entered into a contract with
MGM, MGM delivered the construction materials, and the check payable to MGM was received by Cruz, as
he was connected with Highland Enterprise, a fellow PNP-accredited contractor. De Guzman denied ever
having authorized Cruz to receive or claim any of the checks due to MGM. Cruz claimed that the other
contractors agreed to the use of their business name for a 2% commission of the purchase order price
to avoid the impression that Highland Enterprises was monopolizing the supply of labor and materials to
the PNP. Thus, MGM knew that the check was really meant for Highland Enterprises as she had already
been paid her 2% commission.
ISSUE: WON PNPs obligation has been extinguished in light of the payment received by Cruz. NO.
HELD:
The payment made to Cruz cannot be considered as the payment for the materials that MGM had deliv-
ered. The RTC and the CA correctly ruled that PNPs obligation has not been extinguished. PNPs obliga-
tion consisted of payment of a sum of money. In order for PNPs payment to be effective in extinguishing
its obligation, it must be made to the proper person. In general, a payment in order to be effective to
discharge an obligation must be made to the proper person. Thus, payment must be made to the obligee
himself or to an agent having authority, express or implied, to receive the particular payment. Payment
made to one having apparent authority to receive the money will, as a rule, be treated as though actual
authority had been given for its receipt. Likewise, if payment is made to one, who by law is authorized
to act for the creditor, it will work as a discharge. The receipt of money due on a judgment by an officer
authorized by law to accept it will, therefore, satisfy the debt. In the case at bar, De Guzman was able to
establish that neither she nor an authorized personnel receive the check. PNPs own records showed that
the check was claimed and signed for by Cruz. Hence, absent any showing that De Guzman had agreed to
assign another person to receive the payment of the contract price, or that she authorized Cruz to claim
the check on her behalf, the payment, to be effective must be made to her.

COMMISSIONER OF INTERNAL REVENUE v. BANK OF COMMERCE [709 SCRA 390, 2013]


15
Persons and Family Relations
DOCTRINE: In merger, the acquiring corporation will issue a block of shares equal to the net asset value
transferred, which stocks are in turn distributed to the stockholders of the absorbed corporation in pro-
portion to the respective share.
FACTS: Bank of Commerce (BOC) and Traders Royal Bank (TRB) executed a Purchase and Sale Agree-
ment whereby it stipulated the TRBs desire to sell and the BOCs desire to purchase identified recorded
assets of TRB in consideration of BOC assuming identified recorded liabilities. Under the Purchase and
Sale Agreement, BOC and TRB shall continue to exist as separate corporations with distinct corporate
personalities. Eventually, BOC received demand letters addressed to TRB which the CIR issued. The
demand letters were for the payment of deficiency documentary stamp taxes (DST) on TRBs Special
Savings Deposit Account. TRB filed its protest letter contesting the demand letters. This was denied and
TRB was ordered to pay the DST. BOC filed a petition for review praying that it should not be held liable
for the DST. BOC emphasized that there was no merger between it and TRB as it only acquired assets of
TRB in return for its assumption of some of TRBs liabilities.
ISSUE: WON there is merger between BOC and TRB. NO.
HELD:
1. The Purchase and Sale Agreement shows the following:
a. Items in litigation, both actual and prospective, against TRB are excluded from liabilities
to be assumed by BOC.
b. BOC and TRB shall continue to exist as separate corporations with distinct personalities.
2. Also, the agreement did not contain any provision that BOC had acquired the identified assets of TRB
solely in exchange for the latters stocks.
3. Under Sec. 40 (C) (6) (b) of the Tax Code, merger is defined as:
a. The ordinary merger or consolidation; or
b. The acquisition by one corporation of all or substantially all the properties of another
corporation solely for stock: Provided, that for a transaction to be regarded as a merger
or consolidation within the purview of this Section, it must be undertaken for a bona fide
business purpose and not solely for the purpose of escaping the burden of taxation.
4. In the case at bar, the assets between the two companies do not constitute a merger under the
abovementioned provision. Hence, BOC is considered an entity separate from TRB and thus, cannot
be held liable for the payment of the DST.

CACHOPERO v. CELESTIAL [668 SCRA 619, 2012]

DOCTRINE: A compromise is a contractwhereby the parties, by making reciprocal concessions, avoid a


litigation or put an end to one already commenced. It has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with a judicial compromise.
FACTS: Celestial is Cachoperos sister. They had a dispute over a piece of land which was formerly part
of a dried creek. Celestial filed an ejectment case against the Cachopero spouses when they refused
to vacate the house after it became uninhabitable. Both parties had a compromise agreement that the
Cachopero spouses will vacate the premises. When the portion of the house beyond Celestials lot was
not demolished, she filed a Motion for the Issuance of an Alias Writ of Execution. On one hand, the
Cachopero spouses insisted that the Writ of Execution had been properly implemented as they had
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Persons and Family Relations
already vacated Celestials lot, which was the subject of the case, therefore, to eject them from the
subject land would be going beyond what was agreed upon by the parties. On the other hand, Celestial
claimed that it was clear from both the Sheriffs own return and the RTC ocular inspection that the old
house was only partially demolished. The CA ruled in favor of Celestial, hence, this appeal t the SC. The
Cachopero spouses anchored their right on the MSA that they filed with the DENR over land, when this
case concerns the compromise agreement they executed with Celestial. Because what is involved here is
the transfer of the old house from the subject land, and not the subject land itself.
ISSUE: WON the Cachopero spouses can avail of the MSA after demolition of the contested house by
virtue of a compromise agreement in an ejectment case. NO.
HELD:
The terms of the compromise agreement involved are clear and unequivocal. The Cachopero spouses
agreed to vacate Celestials lot and transfer the old house to the land at the back of Celestials lot. While
it has been shown that the Cachopero spouses had already removed part of the old house, Cachopero
himself admitted that part of the old house beyond Celestials lot was not demolished nor removed. It is
clear from the records and the facts of this case that the real reason Celestial wanted to eject the Cachop-
ero spouses from the subject land is to reclaim the use of such land for herself. This can be gleaned from
the fact that in their compromise agreement, she was willing to shoulder the expenses of transferring the
old house to the area at the back of her own lot.

UNIVERSITY PHYSICIANS SERVICES, INC. v. MARIAN CLINICS, INC. [629 SCRA 535, 2010)

DOCTRINE: Under the principle of the parties freedom of contract, the contracting parties may estab-
lish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not
contrary to law. In a contract of lease, wherein personal properties are included and wherein there is a
judgment on a suit for unlawful detainer ejecting the lessees from the subject property, the judgment
carries with it the return of the personal properties included in the lease. If some of the personal prop-
erties are lost, destroyed, the ejected lessees are ordered to pay for the value.
FACTS: University Physicians Services, Inc. (UPSI) and Marian, the owner of Marian Clinics, Inc. (MCI)
entered into a Contract of Lease wherein Marian leased to UPSI the Marian General Hospital (MGH) and
four schools for a period of ten years. In the contract, personal properties were included such as the
facilities, fixtures and equipment. MCI filed a case of unlawful detainer against UPSI for failing to pay the
rent stipulated in the contract. Subsequently, the IAC rendered a decision ordering UPSI to vacate the
lease properties, including the fixtures, supplies and equipment. During the execution, the RTC, acting
on MCIs Motion for Delivery of Leased Equipment or Payment of the their Value if Defendant cannot
Deliver Them, issued a decision directing UPSI to replace the leased equipment or pay for their value if it
cannot be replaced. UPSI appealed claiming the decision of the RTC varies the term of the IAC judgment
arguing that judgment did not order the replacement of the leased personal properties or pay their value.
ISSUE: WON UPSI has the obligation to return/replace the leased personal properties such as the equip-
ment, fixtures and supplies. YES
HELD:
It was stipulated in the Contract of Lease that upon the termination of the Contract of Lease, UPSI shall
surrender to MCI all the leased assets and in case of any loss or deterioration, it shall be replaced by the
UPSI in the same quantity and quality in which they were received by the lessee, UPSI.

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Persons and Family Relations
Under the principle of parties freedom of contract, the contracting parties may establish such stipulations
provided they are not contrary to law, morals, good customs, public order or public policy. Obligations
arising from contracts have the force of law between the parties. The provisions in the lease contract
clearly show the parties binding obligation that upon the termination of the lease, certain types of mov-
able properties subject of the lease will not simply be returned but replaced in the same quantity/quality
in case of loss or deterioration.
The basis for the obligation of UPSI to return/replace or pay the value of the equipment is both law and
contract:
Art. 1665 of the NCC provides that the lessee shall return the thing leased upon the termination of the
lease, just as he received it, save what has been lost or impaired by the lapse of time, or by ordinary wear
and tear, or from an inevitable cause.
Art. 1667 of the NCC likewise states, the lessee is responsible for the deterioration or loss of the thing
leased, unless he proves that it took place without his fault.
In other words, by law, a lessee is obliged to return the thing(s) leased and be responsible for any dete-
rioration or loss of the properties, except for those that were not his fault.
IACs judgment ordering UPSI to vacate the leased properties was in effect a judicial determination of
the termination of the lease contract. Upon the termination of the contract, UPSIs obligation to return/
replace the leased properties arose. The return/replacement of the leased properties being a necessary
consequence of the termination of the lease, the Order of the execution court did not vary the IAC judg-
ment, which ordered the restitution of the leased assets.

MCA-MBF COUNTDOWN CARDS PHIL. INC v. MBF CARD INTERNATIONAL LTD. [668 SCRA 214, 2012]

DOCTRINE: Art. 1315 of the NCC provides that contracts are perfected by mere consent. Art. 1356 of
the NCC provides that contracts shall be obligatory in whatever form that they may be entered into, pro-
vided all the essential requirements are present for its validity.
FACTS: MBF Card International (MCI) and Discount Card Limited (DCL), both foreign corporations not
doing business in the Philippines, filed a complaint for Recovery of Money, Unfair Competition and Dam-
ages, against MCA-MBF Countdown Cards Phils., Inc. (MCA-MBF). MCA-MBF and MCI were to establish a
joint venture agreement (JVA). However, while the two parties were still under negotiation for the intend-
ed JVA, MCA-MBF, without MCIs authority, promoted and sold the Countdown cards to the public. MCI
argued that MCA-MBF was not authorized, hence, it prayed for injunction and damages against MCA-MBF.
The RTC ruled that there was no perfected contract, hence, MCA-MBFs acts are void.
ISSUE: WON the RTC allegedly disregarded the basic principles of contract law when it ruled that the
joint venture agreement had not yet been perfected. NO.
HELD:
The RTC is correct that there was yet to be a perfected contract. Although the general principle in con-
tract law provides that a contract is perfected by mere consent, findings or evidence to the contrary may
provide an exception to the rule. In addition, while the court agrees with MCA-MBF that the absence of a
written JVA does not necessarily negate the perfection of a contract, we nevertheless find that this very
lack of a written contract constitutes convincing circumstantial proof that said parties were still indeed in
the process of negotiating the contracts terms. When there is as of yet no meeting of the minds as to
the subject matter of the cause or consideration of the contract being negotiated, the same cannot be
considered to have been perfected.
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Persons and Family Relations

SUATENGO v. REYES [574 SCRA 187, 2008]


DOCTRINE: A penalty clause, expressly recognized by law, is an accessory undertaking to assume
greater liability on the part of the obligor in case of breach of an obligation. It functions to strengthen
the coercive force of an obligation and to provide, in effect, for what could be the liquidated damages
resulting from such a breach. The obligor would then be bound to pay the stipulated indemnity without
the necessity of proof on the existence and on the measure of damages caused by the breach. It is
well-settled that so long as such stipulation does not contravene law, morals, or public order, it is strictly
binding upon the obligor.
FACTS: The Suatengcos borrowed money from Reyes to pay an obligation to Philphos. They executed
a Promissory Note binding themselves jointly and severally to pay Reyes in thirty one monthly install-
ments. However, only one payment have been made by defendants. Both the RTC and CA ordered the
Suatengcos to pay Reyes the outstanding balance plus 12% interest; moral damages; attorneys fees in
the amount of 20% of the sum collected; and the costs of the suit. The Suatengcos claimed that both
courts erred in awarding 20% attorneys fees contrary to the 5% as stipulated in the promissory note.
ISSUE: WON the court erred in awarding the 20% attorneys fees. YES.
HELD:
The attorneys fees herein litigated are in the nature of liquidated damages and not the attorneys fees
recoverable as between attorney and client enunciated and regulated by the Rules of Court. Liquidated
damages are those agreed upon by the parties to a contract to be paid in case of breach thereof. The
stipulation on attorneys fees contained in the said Promissory Note constitutes what is known as a penal
clause. A penalty clause, expressly recognized by law, is an accessory undertaking to assume greater lia-
bility on the part of the obligor in case of breach of an obligation. It functions to strengthen the coercive
force of obligation and to provide, in effect, for what could be the liquidated damages resulting from such
a breach. The obligor would then be bound to pay the stipulated indemnity without the necessity of proof
on the existence and on the measure of damages caused by the breach. It is well-settled that so long as
such stipulation does not contravene law, morals, or public order, it is strictly binding upon the obligor.
The attorneys fees so provided are awarded in favor of the litigant, not his counsel.
In this case, there is a contractual stipulation in the Promissory Note that in case of petitioners default
on the terms and conditions of the said Promissory Note by failing to pay any installment due, then this
will render the entire balance of the obligation immediately due and payable. The total obligation of
petitioners amounted to P1,321,313.00 plus the 12% interest per annum of the said balance, as well as
attorneys fees equivalent to 5% of the total outstanding indebtedness. The Promissory Note was signed
by both parties voluntarily, thus the stipulation therein has the force of law between the parties and
should be complied with by them in good faith.
In sum, we find it improper for both the RTC and the CA to increase the award of attorneys fees despite
the express stipulation contained in the said Promissory Note which we deem to be proper under these
circumstances, since it is not intended to be compensation for respondents counsel but was rather in the
nature of a penalty or liquidated damages.

19
Agency Trust and Partnership

AGENCY, trust, and partnership

COUNTRY BANKERS INSURANCE CORPORATION v.KEPPEL CEBU SHIPYARD [673 SCRA 427, 2012]
DOCTRINE: Third persons dealing with agents are bound at their peril, if they would hold the principal
liable, to ascertain not only the fact of agency but also the nature and extent of authority. Consequently,
any act of an agent who has acted beyond his authority will not bind the principal unless the latter tacitly
or expressly ratifies the act.

FACTS: Unimarine Shipping Lines, Inc. (Unimarine) contracted the services of Keppel Cebu Shipyard
(KCS) for dry docking and repair works for its vessel, the M/V Pacific Fortune. Negotations resulted to
the reduction of the billing amount for services. Unimarine bound itself to pay the adjusted bill in two
installments and issued three postdated checks equal to the amount of each installment and an additional
check for the VAT on the bill. Furthermore, Unimarine also secured 2 bonds, one from Country Bankers
Insurance Corporation (CBIC), through the latters agent, Quinain, CBIC Surety Bond No. G (16) 29419
amounting to P3, 000, 000.00 and another from Plaridel and Insurance Co. (Plaridel), PSIC Bond No. G
(16)-00365 in the amount of P1, 620, 000.00.Unimarine failed to pay its obligations to KCS despite sever-
al extensions and demands from the latter. CBIC and Plaridel also failed to discharge their obligation after
KCS asked them to fulfill their obligations as sureties. This prompted KCS to file an action against Unima-
rine, CBIC and Plaridel. CBIC contends that its agent, Quinain, acted beyond his authority and it had no
knowledge that such bond was issued. Furthermore, it is stated in Quinains Special Power of Attorney
that he is only authorized to issue bond in favor of the Department of Public Works and Highways and
only up to P500, 000.00. Both the RTC and CA held CBIC liable to KCS for the amount of the bond issued.

ISSUES:

1) WON CBIC is bound by the bond which was issued by Quinain beyond his Authority. NO.

2) WON CBIC is estopped to deny Quinains authority to issue bonds in CBICs behalf. NO.

HELD:
1) The Supreme Court held that the 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 Art. 1878(11) of the NCC, a special power of attorney is necessary to
obligate the principal as a guarantor or surety. In the case at bar, CBIC could be held liable even
if Quinain exceeded the scope of his authority only if Quinains act of issuing Surety Bond No. G
(16) 29419 is deemed to have been performed within the written terms of the power of attorney
he was granted.However, contrary to what the RTC held, the Special Power of Attorney accorded
to Quinain clearly states the limits of his authority and particularly provides that in case of surety
bonds, it can only be issued in favor of the Department of Public Works and Highways, the Na-
tional Power Corporation, and other government agencies Furthermore, the amount of the surety
bond is limited to P500, 000.00. CBICs stance is grounded on its contract with Quinain, and the
clear, written terms therein. The Court found that the terms of the contract of agency specifically
provided for the extent and scope of Quinains authority, and Quinain has indeed exceeded them.
Under Arts. 1898 and 1910 of the NCC, an agents act, even if done beyond the scope of his au-
thority, may bind the principal if he ratifies them, whether expressly or tacitly. It must be stressed
though that only the principal, and not the agent, can ratify the unauthorized acts, which the
principal must have knowledge of. If material facts were suppressed or unknown, there can be no
valid ratification and this regardless of the purpose or lack thereof in concealing such facts and
regardless of the parties between whom the question of ratification may arise.

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Persons and Family Relations
2) Art. 1911 of the NCC is based on the principle of estoppel, which is necessary for the protec-
tion of third persons. It states that the principal is solidarily liable with the agent even when the
latter has exceeded his authority, if the principal allowed him to act as though he had full powers.
However, for an agency by estoppel to exist, the following must be established:
a) The principal manifested a representation of the agents authority or knowingly allowed
the agent to assume such authority
b) The third person, in good faith, relied upon such representation and
c) Relying upon such representation, such third person has changed his position to his det-
riment. In Litonjua, Jr. v. Eternit Corp., this Court said that an agency by estoppel, which
is similar to the doctrine of apparent authority, requires proof of reliance upon the rep-
resentations, and that, in turn, needs proof that the representations predated the action
taken in reliance. This Court cannot agree with the CAs pronouncement of negligence on
CBICs part. CBIC not only clearly stated the limits of its agents powers in the contract, it
also even stamped its surety bonds with the restrictions, in order to alert the concerned
parties. Furthermore, for one to successfully claim the benefit of estoppel on the ground
that he has been misled by the representations of another, he must show that he was not
misled through his own want of reasonable care and circumspection. Unimarine undoubt-
edly failed to establish this.

ORMOC SUGARCANE PLANTERS ASSOCIATION, INC. (OSPA), et al. v. COURT OF APPEALS [596 SCRA 630,
2009]
DOCTRINE: An organization with a separate and distinct juridical personality with its members cannot
bring a suit without the members proper authorization. Furthermore, even with proper authorization, the
suit must be in the name of the Principal, the real party in interest.
FACTS: OSPA are associations organized by and whose members are individual sugar planters (Planters).
Hideco Sugar Milling Co., Inc. (Hideco) and Ormoc Sugar Milling Co., Inc. (OSCO) are sugar centrals en-
gaged in grinding and milling sugarcane delivered to them by numerous individual sugar planters, who
may or may not be members of an association. OSPA assert that some of its members are under a milling
contract with Hideco and OSCO. The milling contract provides that 34% of the sugar and molasses pro-
duced from milling the Planters sugarcane shall belong to the centrals, 65% shall go to the Planter and
the remaining 1% shall go to the association the Planter belongs to; however, if they do not belong to
any association, the 1% shall revert back to the centrals. A provision of said milling contract prohibits the
centrals, during the life of the milling contract, to enter into any contract or agreement that will provide
better or more benefits to a planter without the written consent of the existing and recognized associa-
tions except to Planters whose plantations are situated in areas beyond thirty kilometers from the mill.
Furthermore, the milling contract also provides an agreement to submit to arbitration for settlement all
differences and controversies which may arise between the contracting parties.

OSPA, without impleading any of their individual members, filed a suit for Arbitration under R.A. No. 876,
Recovery of Equal Benefits, Attorneys Fees, and Damages against the centrals. OSPA alleged that the
centrals violated the milling contract when they gave independent planters who do not belong to any
associations the 1% share instead of reverting said share back to the centrals, consequently entering into
an agreement with more benefits to a different planter. The RTC ruled in OSPAs favor. The CA reversed
the RTC decision.

ISSUE: WON OSPA can maintain a case against Respondents in behalf of its members. NO.

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Persons and Family Relations
HELD:
The SC said that during the proceedings before the CA, found that of the 2,000 Planters, only about
eighty Planters, who were all members of petitioner OSPA, in fact individually executed milling contracts
with the centrals. None of the OSPA members were parties or signatories to the milling contracts. This
circumstance is fatal to OSPAs cause since they anchor their right to demand arbitration from the centrals
upon the arbitration clause found in the milling contracts. There is no legal basis for OSPAs purported
right to demand arbitration when they are not parties to the milling contracts, especially when the lan-
guage of the arbitration clause expressly grants the right to demand arbitration only to the parties to the
contract.
OSPA argued that they could sue the centrals notwithstanding the fact that they were not signatories
in the milling contracts because they are the recognized representatives of the Planters. This is wrong
because the OSPA members did not sign the milling contracts at all, whether as a party or as a rep-
resentative of their member Planters. The individual Planter and the appropriate central were the only
signatories to the contracts and there is no provision in the milling contracts that the individual Planter
is authorizing the association to represent him/her in a legal action in case of a dispute over the milling
contracts.Moreover, the SC held that even assuming that OSPA are indeed representatives of the member
Planters who have milling contracts with the centrals, and assuming further that OSPA signed the milling
contracts as representatives of their members, OSPA could not initiate arbitration proceedings in their
own name as they had done in the present case. As mere agents, they should have brought the suit in
the name of the principals that they purportedly represent. Even if Section 4 of R.A. No. 876 allows the
agreement to arbitrate to be signed by a representative, the principal is still the one who has the right
to demand arbitration.

RAMON v.PHILIPPINE NATIONAL BANK [662 SCRA 479, 2011]


DOCTRINE: An authorization letter giving the Pledgee the right to dispose of the things pledged does
not terminate the Contract of Pledge but is merely a consequence of the contract. The ownership of the
things pledged remains with the Pledgor and the authorization letter simply establishes the Pledgee as
the Pledgors attorney-in-fact for purposes of foreclosing the things pledge.

FACTS: In 1973, the Ramos spouses obtained a credit line worth P83,000.00 from the Philippine National
Bank (PNB). A real estate mortgage was constituted upon five parcels of land to secure this loan. The
real estate mortgage had a dragnet clause which provides that the mortgage will also secure any and all
subsequent loans and/or obligations that the Ramos spouses will obtain from PNB. From the year 1973,
Luis Ramos would renew the loan every year after paying the amounts falling due therein. In 1989, the
Ramos spouses entered into a credit line agreement worth P50,000.00 with PNB. From this line, they
availed and loaned a total amount of P15, 600, 000.00 on two different occasions, securing each loan by
pledging two official warehouse receipts for refined sugar issued by Noahs Ark Refinery. Petitioners were
not able to pay the P15, 600, 000.00 prompting Luis Ramos to issue an Authorization letter in favor of
PNB or any of its officers to dispose and/or sell the warehouse receipts in consideration of the credit line
granted by PNB.Also in 1989, the Ramos spouses obtained an agricultural loan from PNB in the amount of
P160, 000.00 which they secured with the same parcels of land in the abovementioned Real Estate Mort-
gage. They were able to pay the agricultural loan upon maturity but PNB refused to release the mortgage
arguing that the Ramos spouses owed PNB P15, 600, 000.00. This prompted the Ramos spouses to file
an action of specific performance to compel PNB to release the mortgage.The RTC ruled in favor of the
Ramos spouses, stating that the Authorization letter given by Luis Ramos constituted a dacion en pago
which consequently discharged the obligation of the Ramos spouses to pay the P15, 600, 000.00 loan.
22
Persons and Family Relations
The CA reversed the RTC upon appeal ruling that the authorization letter did not transfer ownership of
the warehouse receipts to PNB which was the essence of dacion en pago. Furthermore, the authorization
letter merely established PNB as the attorney-in-fact of the Ramos spouses to sell or otherwise dispose
of the said real rights, in case of default, and to apply proceeds to the payment of the loan which was a
standard condition in pledge contracts.

ISSUE: WON the authorization letter constitutes as a transfer of ownership thus discharging the Ramos
spouses of their loan obligation. NO.

HELD:
The status of PNB as a pledgee of the sugar quedans involved in this case had long been confirmed by
the Court in Philippine National Bank v. Sayo, Jr., which held that, the creditor, in a contract of real secu-
rity, like pledge, cannot appropriate without foreclosure the things given by way of pledge. Any stipulation
to the contrary, termed pactum commissorio, is null and void. The law requires foreclosure in order to
allow a transfer of title of the good given by way of security from its pledgor, and before any such fore-
closure, the pledgor, not the pledgee, is the owner of the goods. x x x.

A close reading of the Authorization executed by Luis Ramos reveals that it was nothing more than a let-
ter that gave PNB the authority to dispose of and sell the sugar quedans after the maturity date thereof.
As held by the CA, the said grant of authority on PNBs part is a standard condition in a contract of pledge,
in accordance with the provisions of Art. 2087 of the NCC that it is also of the essence of these con-
tracts that when the principal obligation becomes due, the things in which the pledge or creditor. More
importantly, Art. 2115 of the NCC expressly provides that the sale of the thing pledged shall extinguish
the principal obligation, whether or not the proceeds of the sale are equal to the amount of the principal
obligation, interest and expenses in a proper case. As we adverted to in Sayo, it is the foreclosure of the
thing pledged that results in the satisfaction of the loan liabilities to the pledgee of the pledgors. Thus,
prior to the actual foreclosure of the thing pleged, the sugar quedan financing loan in this case is yet to
be settled. As matters stand, with more reason that PNB cannot be compelled to release the real estate
mortgage and the titles involved therein since the issue of whether the sugar quedan financing loan will
be fully paid through the pledged sugar receipts remains the subject of pending litigation.

PHILIPPINE CHARTER INSURANCE CORPORATION vs. EXPLORER MARITIME CO., LTD


[G.R. No. 17540, September 7, 2011]
DOCTRINE: Sec. 3, Rule 3 of the Rules of Court provides that an agent acting in his own name and for
the benefit of an undisclosed principal may sue or be sued without joining the principal, except when the
contract involves things belonging to the principal.

FACTS: Philippine Charter Insurance Corporation (PCIC), as insurer-subrogee, filed a complaint against
Explorer Maritime Co., Ltd. (EMC), to wit: the unknown owner of the vessel M/V Explorer (common
carrier), Wallem Philippines Shipping, Inc. (ship agent), Asian Terminals, Inc. (arrastre), and Foremost
International Port Services, Inc. (broker). On the same date, PCIC filed a similar case against respondents
Wallem Philippines Shipping, Inc., Asian Terminals, Inc., and Foremost International Port Services, Inc.,
but, this time, the fourth defendant is the unknown owner of the vessel M/V Taygetus.

23
Persons and Family Relations
Respondent common carrier, the Unknown Owner of the vessel M/V Explorer, and Wallem Philippines
Shipping, Inc. filed a Motion to Dismiss on the ground that PCIC failed to prosecute its action for an un-
reasonable length of time. PCIC allegedly filed its Opposition, claiming that the trial court has not yet act-
ed on its Motion to Disclose where PCIC supposedly prayed for the trial court to order Wallem Philippines
Shipping, Inc. to disclose the true identity and whereabouts of defendant Unknown Owner of the Vessel
M/V Explorer. PCIC allegedly realized that its Motion to Disclose was inadvertently filed with another
branch of the court. This Court required the counsel of the Unknown Owner of the vessel M/V Explorer
and Wallem Philippines Shipping, Inc. to submit proof of identification of the owner of said vessel.

ISSUE: WON the pendency of the Motion to Disclose barred PCIC from moving for the setting of the
case for pre-trial. NO.

HELD:

In the Amended Complaint, PCIC alleged that defendant Unknown Owner of the vessel M/V Explorer
is a foreign corporation whose identity or name or office address are unknown to PCIC but is doing busi-
ness in the Philippines through its local agent, co-defendant Wallem Philippines Shipping, Inc., a domestic
corporation. As all the parties have been properly impleaded, the resolution of the Motion to Disclose was
unnecessary for the purpose of setting the case for pre-trial. Furthermore, Section 3, Rule 3 of the Rules
of Court likewise provides that an agent acting in his own name and for the benefit of an undisclosed
principal may sue or be sued without joining the principal, except when the contract involves things
belonging to the principal. Since Civil Case No. 95-73340 was an action for damages, the agent may be
properly sued without impleading the principal. Thus, even assuming that PCIC had filed its Motion to
Disclose with the proper court, its pendency did not bar PCIC from moving for the setting of the case for
pre-trial as required under Rule 18, Section 1 of the Rules of Court.

GSISv.COA [680 SCRA 376, 2012]


DOCTRINE: A deeper analysis of Art. 1456 of the NCC reveals that it is not a trust in the technical sense
for in a typical trust, confidence is reposed in one person, who is named a trustee for the benefit of anoth-
er who is called thecestui que trust, with respect to property which is held by the trustee for the benefit
of thecestui que trust. A constructive trust, unlike an express trust, does not emanate from, or generate
a fiduciary relation. While in an express trust, a beneficiary and a trustee are linked by confidential or
fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of
and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary.

FACTS: Quilatan, in his capacity as one of the petitioners inGSIS, et al. v. COA, et al., and in represen-
tation of his fellow GSIS officers and employees who retired under the GSIS RFP (Retirement/Financial
Plan), filed aMotion for Clarification and Reconsiderationand aManifestation to Supplement the Mo-
tion for Clarification and Reconsideration of this Courts Decision. Quilatan filed a Final Memorandum
and Summary of Arguments,which he followed-up with anotherManifestation to Supplement the Final
Memorandum and Summary of Arguments.Quilatan filed a Manifestation and Motion to Defer Execution
of Judgment, alleging that GSIS, the main petitioner in the case, which no longer contested this Courts
October 11, 2011 Decision, had started to send out demand letters from the payees, asking them to
refund the amounts they had received as retirement benefits under the GSIS RFP. As for Quilatan, GSIS
claimed that he has no legal standing to represent the payees as he has no interest in the main contro-
versy,i.e., the power of GSIS to adopt the RFP, and because he was not prejudiced by the decision on the
case. Moreover, the GSIS averred that Quilatan had already retired from the GSIS, therefore, he cannot
represent it and argue its case before the court.

24
Persons and Family Relations
ISSUE: WON Quilatan has legal standing to represent the payees. NONE.

HELD:

Implied trusts are those which, without being expressed, are deducible from the nature of the transaction
as matters of intent or which are superinduced on the transaction by operation of law as matters of eq-
uity, independently of the particular intention of the parties. In the case of Policarpio v. Court of Appeals,
the courtexpounded on the doctrine of implied trust in relation to another provision of the NCC. The
Court ruled in the said case that a constructive trust is substantially an appropriate remedy against unjust
enrichment, as follows: And specifically applicable to the case at bar is the doctrine that a constructive
trust is substantially an appropriate remedy against unjust enrichment. It is raised by equity in respect
of property, which has been acquired by fraud, or where although acquired originally without fraud, it is
against equity that it should be retained by the person holding it.Thus, the payees, who acquired the re-
tirement benefits under the GSIS RFP, are considered as trustees of the disallowed amounts, as although
they committed no fraud in obtaining these benefits, it is against equity and good conscience for them
to continue holding on to them.

SPOUSES RENATO and FLORINDA DELA CRUZv. SPOUSES GIL and LEONILA SEGOVIA [555 SCRA 453, 2008]

DOCTRINE: In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal partnership, the other spouse may assume sole powers of administra-
tion. However, the power of administration does not include the power to dispose or encumber property
belonging to the conjugal partnership. In all instances, the present law specifically requires the written
consent of the other spouse, or authority of the court for the disposition or encumbrance of conjugal
partnership property without which, the disposition or encumbrance shall be void.

FACTS: Florinda dela Cruz wanted to purchase two parcels of land with an apartment unit erected there-
on and Lot 505 with a residential house. The two lots were being sold together forP180,000.00. Inas-
much as Florinda had onlyP144,000.00 at hand, she asked her sister, Leonila, to contributeP36,000.00
to complete the purchase price. The sisters agreed that Lot 503 and the apartment unit thereat would
belong to Leonila upon full payment of its purchase price ofP80,000.00, while Lot 505 with a residential
house would belong to Florinda. The properties were then registered in the name of Renato, married to
Florinda The parties, however, verbally agreed that Leonila and her family would stay at Lot 505 until
she had fully paid for Lot 503.Desiring to reduce the verbal agreement into writing, the parties executed
and signed a handwritten covenant entitled Note of Agreement. Florinda and Leonila signed an Agree-
mentembodying the detailed scheme of payment for the lot covered by the sisters agreement. Leonila
attempted to pay the remaining balance in full satisfaction of her obligation but Florinda refused to accept
the same on the ground that, the ten-year period for the payment of the balance, reckoned from July
1985, the alleged date of the verbal agreement between them, had already expired. Thereafter Florin-
da demanded that Leonila and her family vacate the house. The dela Cruz spouses fileda complaint for
Nullity of Contract/Agreement with Damages on the ground that the Agreement had no force and effect
on account of the absence of the signature of Florindas husband, Renato. The RTC ruled to the contrary,
saying that Florindas claim that she has never informed her husband involving a very substantial prop-
erty registered in his name lacks basis.

ISSUE: WON the subject agreement had no force and effect on account of the absence of the signature
of Florindas husband. NO.

25
Persons and Family Relations
HELD:

The court agrees with the ruling that the absence of Renatos signature in the Agreement bears little
significance to its validity. Art. 124 of the Family Code relied upon by the dela Cruz spouses provides that
the administration of the conjugal partnership is now a joint undertaking of the husband and the wife. In
the event that one spouse is incapacitated or otherwise unable to participate in the administration of the
conjugal partnership, the other spouse may assume sole powers of administration. However, the power
of administration does not include the power to dispose or encumber property belonging to the conjugal
partnership. In all instances, the present law specifically requires the written consent of the other spouse,
or authority of the court for the disposition or encumbrance of conjugal partnership property without
which, the disposition or encumbrance shall be void.

The foregoing provision finds no application in this case because the transaction between Florinda and
Leonila in reality did not involve any disposition of property belonging to any of the sisters conjugal
assets. It may be recalled that the agreement was for the acquisition of two lots which were being sold
together forP180,000.00. Florinda who had onlyP144,000.00 asked Leonila to contributeP36,000.00 to
complete the purchase price of said lots. With money pooled together, the sisters agreed that Lot 503
be valued atP80,000.00 and Lot 505 valued atP100,000.00. On one hand, theP36,000.00 contribu-
tion of Leonila shall be applied to the 503 property which upon full payment of the remaining balance
ofP44,000.00 advanced by Florinda shall belong to Leonila. On the other hand, of FlorindasP144,000.00
contribution,P100,000.00 shall be considered as full payment for the purchase of the 505 property and
theP44,000.00 which was the balance of the purchase price of Lot 503, as loan to Leonila. To secure
payment of the loan, Lot 503 was provisionally registered in the name of the dela Cruz spouses. Hence,
Lot 503 was at the outset not intended to be part of the conjugal asset of the dela Cruz spouses but only
as a security for the payment of theP44,000.00 due from the Segovia spouses.

Moreover, while Florindas husband did not affix his signature to the above-mentioned Agreement, Rena-
tos consent to the Agreement was drawn from the fact that he was present at the time it was signed by
the sisters and their witnesses; he had knowledge of the Agreement as it was presented to him for his
signature, although he did not sign the same because his wife Florinda insisted that her signature already
carried that of her husband; Renato witnessed the fact that Leonila contributed her hard earned savings
in the amount ofP36,000.00 to complete their share in the purchase price of the properties in question
in the total amount ofP180,000.00. The aforesaid factual findings of the courts below are beyond review
at this stage.

PROPERTY

TORBELA v. ROSARIO [661 SCRA 633, 2011]


DOCTRINE: Whatever is built, planted, or sown on the land of another, and the improvements or repairs
made thereon, belong to the owner of the land. Where, however, the planter, builder, or sower has acted
in good faith, a conflict of rights arises between the owners and it becomes necessary to protect the
owner of the improvements without causing injustice to the owner of the land. In view of the impractica-
bility of creating a forced co-ownership, the law allows the owner of the land the option to acquire the
improvements after payment of the proper indemnity or to oblige the builder or planter to pay for the
land and the sower to pay the proper rent. It is the owner of the land who is allowed to exercise the op-
tion because his right is older and because, by the principle of accession, he is entitled to the ownership
of the accessory thing. But even as the option lies with the landowner, the grant to him, nevertheless, is
preclusive. He must choose one. It is only if the owner chooses to sell his land, and the builder or planter
fails to purchase it where its value is not more than the value of the improvements, that the owner may
26
Property
remove the improvements from the land. The owner is entitled to such remotion only when, after having
chosen to sell his land, the other party fails to pay for the same. Finally, following the rules of accession,
civil fruits, such as rents, belong to the owner of the building.
FACTS: Lot 356-A was given to the Torbela spouses. When the Torbela spouses died, their children in-
herited it in equal shares. The Torbela children executed a Deed of Absolute Quitclaim over Lot 356-A in
Rosarios favor. Rosario obtained a loan from PNB, secured by a mortgage constituted on Lot 356-A. The
loan proceeds were used to construct improvements on Lot 356-A. Rosario and his wife obtained another
loan from Banco Filipino, secured by a mortgage on Lot 356-A. The Rosario spouses failed to pay the loan
with Banco Filipino. Banco Filipino extra-judicially foreclosed the mortgage over Lot 356-A. Hence, the
Torbela children filed a complaint, praying that the Rosario spouses be ordered to redeem Lot 356-A from
Banco Filipino. The Rosario spouses filed a case for annulment of extrajudicial foreclosure and damages
before the RTC against Banco Filipino. The RTC held the mortgage in favor of Banco Filipino as legal and
valid. The Torbela siblings appealed the RTC decision before the CA. The CA affirmed the RTC decision.
ISSUE:
(1) WON the Torbela children, as landowners, and Rosario, as builder, are deemed in bad faith. YES.
(2) WON Rosario has a right on the rentals on the improvements. YES.

HELD:
(1) It is not disputed that Rosario built the improvements on Lot 356-A with the consent of the Torbe-
la children so that Rosario can obtain a loan from PNB, using Lot 356-A as security. Both the Torbela
children, as landowners, and Rosario, as builder, are in bad faith because the former were aware of the
construction of the building, while Rosario proceeded with the construction despite his knowledge that
Lot 356-A belonged to the Torbela children.
This is the case contemplated under Art. 453 of the NCC, which provides that if there was bad faith, not
only on the part of the person who build, planted or sowed on the land of another, but also on the part
of the owner of such land, the rights of one and the other shall be the same as though had acted in good
faith. It is understood that there is bad faith on the part of the landowner whenever the act was done
with his knowledge and without opposition on his part.
Art. 448 of the NCC provides that the owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted
to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In
such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case
of disagreement, the court shall fix the terms thereof.
(2) In the end, Rosario has a right to the rents of the improvements on Lot 356-A and is under no obli-
gation to render an accounting of the same to anyone. In fact, it is the Torbela siblings who are required
to account for the rents they had collected from the lessees of the improvements. Rosarios right to the
rents of the improvements on Lot 356-A shall continue until the Torbela children have chosen their option
under Art. 448 of the NCC. And in case the Torbela children decide to appropriate the improvements,
Rosario shall have the right to retain said improvements, as well as the rents thereof, until the indemnity
for the same has been paid.

27
Property
FERNANDO, JR. v. ACUNA [657 SCRA 499, 2011]

DOCTRINE: Art. 457 of the NCC, which provides the principle of accretion, only applies when the
following requisites concur:
(1) that the deposit be gradual and imperceptible;
(2) that it be made through the effects of the current of the water; and
(3) that the land where accretion takes place is adjacent to the banks of rivers.
FACTS: Fernando et al died intestate, thus, leaving a property to their heirs. The property, which was
constituted by two main parts, Lot 1303 and Sapang Bayan, remained undivided because the heirs
failed to agree on its division. Hence, some of these heirs and successors-in-interest filed a Complaint
for partition against the other heirs. The Complaint prayed for the equal partition of the property. Acuna
filed a Complaint-in-Intervention on the ground that, among other things, some of the heirs had already
sold their respective shares to Villasenor as evidenced by a Kasulatan sa Bilihang Patuluyan, and that
besides possessing the OCT over the property, he had not commenced the issuance of new titles to the
subdivided lots. With respect to ownership of Sapang Bayan, the trial court found that the parties did
not clearly prove that Sapang Bayan was previously a dry portion of other lots, or that it was just a river
that had dried up, or that it was an accretion which the adjoining lots gradually received from the effects
of the water current. It was likewise not established who were the owners of the lots adjoining Sapang
Bayan. Hence, the trial court concluded that none of the parties had clearly and sufficiently established
their claims over Sapang Bayan. All the parties, except Acuna, elevated the trial court decision to the CA.
The CA reversed and set aside the trial court decision and dismissed the complaint.
ISSUES:
(1) WON the heirs own Sapang Bayan. NO.
(2) WON the principle of accretion is applicable. NO.
HELD:
(1) The CA is correct in ruling that none of the heirs had substantially proven their ownership over
Sapang Bayan. Therefore, Sapang Bayan cannot be granted to any of the heirs.
(2) The principle of accretion is not applicable in the instant case. This principle is embodied in Art.
457 of the NCC, which provides that to the owners of lands adjoining the banks of rivers belong
the accretion which they gradually receive from the effects of the current of the waters. Art. 457
applies when the following requisites concur:
(1) that the deposit be gradual and imperceptible;
(2) that it be made through the effects of the current of the water; and
(3) that the land where accretion takes place is adjacent to the banks of rivers.
In the instant case, the character of Sapang Bayan was not shown to be of the nature that is being re-
ferred to in Art. 457, which is an accretion known as alluvion, because there is no evidence presented to
support such assertion. In fact, the transcripts of the proceedings show that the parties could not agree
how Sapang Bayan came about. However, even assuming that Sapang Bayan was a dried-up creek bed,
under Arts. 420 (1) and 502 (1) of the NCC, rivers and their natural beds are property of public dominion.
In the absence of any provision of law vesting ownership of the dried-up riverbed in some other person,
it msut continue to belong to the State.

28
Property

GARCIA v. VILLAR [675 SCRA 80, 2012]


DOCTRINE: The real nature of a mortgage is described in Article 2126 of the NCC, which provides that
the mortgage directly and immediately subjects the property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the obligation for whose security it was constituted. Simply put,
a mortgage is a real right, which follows the property, even after subsequent transfers by the mortgagor.
A registered mortgage lien is considered inseparable from the property inasmuch as it is a right in rem.
The sale or transfer of the mortgaged property cannot affect or release the mortgage; thus the purchaser
or transferee is necessarily bound to acknowledge and respect the encumbrance. The mere fact that the
purchaser of an immovable has notice that the acquired realty is encumbered with a mortgage does not
render him liable for the payment of the debt guaranteed by the mortgage, in the absence of stipulation
or condition that he is to assume payment of the mortgage debt because the mortgage is merely an en-
cumbrance on the property, entitling the mortgagee to have the property foreclosed, i.e., sold, in case the
principal obligor does not pay the mortgage debt, and apply the proceeds of the sale to the satisfaction of
his credit. Mortgage is merely an accessory undertaking for the convenience and security of the mortgage
creditor, and exists independently of the obligation to pay the debt secured by it. The mortgagee, if he is
so minded, can waive the mortgage security and proceed to collect the principal debt by personal action
against the original mortgagor.
FACTS: Galas owned the subject property. She, with her daughter, Pingol, as co-maker, mortgaged the
subject property to Villar as security for a loan. Galas TCT contained an annotation of this mortgage
providing that further encumbrances are restricted if without the mortgagees prior consent. Eventually,
Galas and Pingol mortgaged the subject property to Garcia to secure another loan. Both loans were an-
notated on the subject propertys TCT. Galas eventually sold the subject property to Villar and declared
in the Deed of Sale that said property was free and clear of all liens and encumbrances of any kind
whatsoever. The Deed of Sale was registered, and consequently, a TCT was issued in Villars name. Both
Villars and Garcias mortgages were carried over and annotated at the back of Villars new TCT. Garcia
filed a Petition for Mandamus with Damages against Villar before the RTC. The Petition was amended
into a Complaint for Foreclosure of Real Estate Mortgage with Damages. Garcia alleged that Villar acted
in bad faith in purchasing the subject property because the latter disregarded the laws on judicial and
extra-judicial foreclosures of mortgaged properties. The RTC ruled in Garcias favor because a direct sale
to Villar, the first mortgagee, could not operate to deprive Garcia of his right as a second mortgagee. The
second mortgage could not be discharged, and that Villar, as the new registered owner of the subject
property with a subsisting mortgage, was liable for it. The CA reversed the RTC decision because Galas
was free to mortgage the subject property even without Villars consent as the restriction that the mort-
gagees consent was necessary in case of a subsequent encumbrance was absent in the Deed of Real
Estate Mortgage.
ISSUE: WON the second mortgage to Garcia is valid. YES.
HELD:
While it is true that the annotation of the first mortgage to Villar on Galass TCT contained a restriction on
further encumbrances without the mortgagees prior consent, this restriction was nowhere to be found
in the Deed of Real Estate Mortgage. As this Deed became the basis for the annotation on Galas title,
its terms and conditions take precedence over the standard, stamped annotation placed on her title. If it
were the intention of the parties to impose such restriction, they would have and should have stipulated
such in the Deed of Real Estate Mortgage itself. Neither did this Deed proscribe the sale or alienation of
the subject property during the life of the mortgages.

29
Property
DURAWOOD CONSTRUCTION AND LUMBER SUPPLY, INC. v. BONA [664 SCRA 204, 2012]

DOCTRINE: Entry alone produces the effect of registration, whether the transaction entered is a vol-
untary or an involuntary one, so long as the registrant has complied with all that is required of him for
purposes of entry and annotation, and nothing more remains to be done but a duty incumbent solely on
the register of deeds.

FACTS: Durawood filed an action for sum of money plus damages with a prayer for the issuance of a writ
of preliminary attachment against LBB Construction and its President before the RTC. The RTC issued an
Order granting the Writ. The Sheriff levied on a parcel of land registered in LBB Constructions name. A
Notice of Levy on Attachment was annotated on the subject propertys TCT. Candice then filed a Motion
seeking intervention, alleging that LBB Corporation sold the subject property to her and her siblings,
thereby making her a co-owner of the subject property. Eventually, the RTC ruled in Durawoods favor.
Durawood filed a Motion for the Issuance of a Writ of Execution that the RTC issued. It was when this
Writ was about to be enforced that Durawood discovered the cancellation of the TCT and the issuance
of another TCT in the name of Candice and her siblings. Durawood filed a Motion to Reinstate Notice of
Levy on Attachment in the new TCT. The RTC granted this Motion.

ISSUE: WON the RTC committed grave abuse of discretion in reinstating the Notice of Levy on Attach-
ment. NO.
HELD:
The CA, in considering the date of entry in the day book of the Registry of Deeds as controlling over the
presentation of the entries in TCT No. R-17571, relied on Sec. 56 of P.D. No. 1529 which provides in part
that, they [instruments] shall be regarded as registered from the time so noted, and the memorandum
of each instrument, when made on the certificate of title to which it refers, shall bear the same date:
Provided, that the national government as well as the provincial and city governments shall be exempt
from the payment of such fees in advance in order to be entitled to entry and registration.
The consequence of this provision is two-fold:
1) in determining the date in which an instrument is considered registered, the reckoning point is the
time of the reception of such instrument as noted in the Primary Entry Book; and
2) when the memorandum of the instrument is later made on the certificate of title to which it refers,
such memorandum shall bear the same date as that of the reception of the instrument as noted
in the Primary Entry Book. Pursuant to the second consequence stated above, the CA correctly
held that it was correct to place the date of entry in the Primary Entry Book as the date of the
memorandum of the registration of the deed of sale in the former TCT.
There is no question that the fees were paid, albeit belatedly. The Records show that as of June 25, 2004,
the date of the letter of Atty. Santos seeking the opinion of the LRA as regards the registration of the
Deed of Sale and the Notice of Levy on Attachment, the required registration fees for the Deed of Sale
has not yet been paid. Hence, the court is constrained to rule that the registration of the Notice of Levy
on Attachment on June 17, 2004 should take precedence over the former. Considering that the Notice of
Levy on Attachment was deemed registered earlier than the Deed of Sale, the TCT issued pursuant to
the latter should contain the annotation of the Attachment.

30
Property
PHILIPPINE NATIONAL OIL COMPANY v. MAGLASANG [570 SCRA 560, 2008]

DOCTRINE: In the context of the States inherent power of eminent domain, there is taking where
the owner is actually deprived or dispossessed of his property; where there is a practical destruction or
a material impairment of the value of his property; or when he is deprived of the ordinary use thereof.
FACTS: The Philippine National Oil Company (PNOC) filed a complaint for eminent domain against
Oscar Maglasang (Oscar), the registered owner of a parcel of land, i.e. Lot 11900. PNOC filed another
expropriation complaint against Leolino Maglasang (Leolino), the registered owner of another parcel of
land, i.e. Lot. 11907. PNOC will use the two subject properties in the construction and operation of a
power plant. The RTC issued writs of possession over the two subject properties. The RTC appointed
commissioners to ascertain and make a recommendation on the just compensation for the two subject
properties. The commissioners produced different land valuations. Therefore, the court made its own de-
termination, taking into consideration the inflation factor and adjustment factor for the determination
of just compensation. The parties did not agree with the courts determination. Hence, both parties filed
their respective appeals with the CA. The CA rendered a decision reducing the just compensation. PNOC
insists that contrary to the findings of the RTC and CA, the determination of just compensation should be
reckoned prior to the time of the filing of the complaint for expropriation because PNOC took possession
of the land on January 1, 1992 when it leased the same from its administrator as evidenced by a Lease
Agreement for the period of January 1, 1992 to December 31, 1992. Thus, taking, for purposes of com-
puting just compensation, should have been reckoned from January 1, 1992.
ISSUE: WON the reckoning point, for purposes of computing just compensation, should have been from
the time of possession. NO.
HELD:
In Republic v. Castellvi, it was held that there is a taking when the expropriator enters private prop-
erty not only for a momentary period but for a more permanent duration, for the purpose of devoting
the property to a public use in such a manner as to oust the owner and deprive him of all beneficial
enjoyment thereof. Thus, in that case, we rejected the States contention that a lease on a year to year
basis can give rise to a permanent right to occupy, since by express legal provision, a lease made for a
determinate time ceases upon the day fixed without need of a demand. Neither can it be said that the
right of eminent domain may be exercised by simply leasing the premises to be expropriated. Where, as
here, the owner was compensated and not deprived of the ordinary and beneficial use of his property by
its being diverted to public use, there is no taking within the constitutional sense.
In expropriation proceedings, the value of the land and its character at the time it was taken by the
government are the criteria for determining just compensation because there are instances when the
expropriating agency takes over the property prior to the expropriation suit, in which situation just com-
pensation shall be determined as of the time of taking. The reason for this rule is explained in Republic v.
Lara that provided that (w)here property is taken ahead of the filing of the condemnation proceedings,
the value thereof may be enhanced by the public purpose for which it is taken; the entry by the plaintiff
upon the property may have depreciated its value thereby; or, there may have been a natural increase in
the value of the property from the time the complaint is filed, due to general economic conditions. The
owner of private property should be compensated only for what he actually loses; it is not intended that
his compensation shall extend beyond his loss or injury. And what he loses is only the actual value of his
property at the time it is taken. This is the only way that compensation to be paid can be truly just; i.e.,
just not only to the individual whose property is taken, but to the public, which is to pay for it.

31
Property
CREDIT Transactions

PHILIPPINE DEPOSIT INSURANCE CORPORATION v. BIR [698 SCRA 311, 2013]


DOCTRINE: Debts and liabilities of a bank under liquidation are to be paid in accordance with the rules
on concurrence and preference of credit under the NCC. Duties, taxes, and fees due to the Government
enjoy priority only when they are with reference to a specific movable property, under Art. 2241(1) of
the NCC, or immovable property, under Art. 2242(1) of the same Code. However, with reference to the
other real and personal property of the debtor, sometimes referred to as free property, the taxes and
assessments due to the National Government, other than those in Arts. 2241(1) and 2242(1) of the NCC,
such as the corporate income tax, will come only in ninth place in the order of preference.

FACTS: BSP prohibited the Rural Bank of Tuba Inc. (RBTI) from doing business in the Philippines. It
placed it under receivership and designated PDIC as its receiver. PDIC conducted an evaluation of RBTIs
financial condition and determined that RBTI remained insolvent. PDIC then proceeded with the liquida-
tion of RBTI and was granted assistance in the liquidation of RBTI. BIR intervened and prayed that the
proceedings be suspended until PDIC has secured a tax clearance. The RTC granted BIRs motion which
caused PDIC to move for partial reconsideration of the order with respect to the directive for it to secure
a tax clearance. PDIC argued that Sec. 52( c) of the Tax Code does not cover closed banking institutions
as the liquidation of closed banks is under Sec. 30 of the New Central Bank Act. However, the motion
was denied.
ISSUE: WON a bank under liquidation has to secure a tax clearance from the BIR before the project of
distribution of the assets of the bank can be approved by the liquidation court. NO.
HELD:
A bank under liquidation need not secure a tax clearance from the BIR before the project of distribution
of the assets of the bank can be approved by the liquidation court. Sec. 52(C) of the Tax Code of 1997
is not applicable to banks which are ordered to be placed under liquidation by the Monetary Board. A tax
clearance is not a prerequisite to the approval of the project of distribution of the assets of a bank under
liquidation by the PDIC.On one hand, Sec. 52(C) of the Tax Code of 1997 pertains only to a regulation
of the relationship between the SEC and the BIR with respect to corporations contemplating dissolution
or reorganization. On the other hand, banks under liquidation by the PDIC as ordered by the Monetary
Board constitute a special case governed by the special rules and procedures provided under Sec. 30
of the New Central Bank Act, which does not require that a tax clearance be secured from the BIR. In
view of the timeline of the liquidation proceedings under Sec. 30 of the New Central Bank Act, it is un-
reasonable for the liquidation court to require that a tax clearance be first secured as a condition for the
approval of project of distribution of a bank under liquidation.If the BIRs contention that a tax clearance
be secured first before the project of distribution of the assets of a bank under liquidation may be ap-
proved, then the tax liabilities will be given absolute preference in all instances, including those that do
not fall under Articles 2241(1) and 2242(1) of the Civil Code. In order to secure a tax clearance which
will serve as proof that the taxpayer had completely paid off his tax liabilities, PDIC will be compelled to
settle and pay first all tax liabilities and deficiencies of the bank, regardless of the order of preference
under the pertinent provisions of the NCC. This should not be as the law clearly provides for the rules on
concurrence and preference of credit, and such should apply.

RAMOS v. PHILIPPINE NATIONAL BANK [662 SCRA 479, 2011]

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DOCTRINE: As a general rule, a mortgage liability is usually limited to the amount mentioned in the con-
tract. However, the amounts named as consideration in a contract of mortgage do not limit the amount
for which the mortgage may stand as security if, from the four corners of the instrument, the intent to
secure future and other indebtedness can be gathered.
FACTS: Luis Ramos obtained a P83, 000 agricultural loan with a real estate mortgage from PNB. The
real estate mortgage executed was with a provision that such would also secure payment of subsequent
promissory notes or new loans. Luis then entered into a Credit Line Agreement of P50M under PNBs
sugar quedan financing program, and obtained an availment of P7.8M. Luis then executed a Contract of
Pledge for 2 official warehouse receipts for refined sugar issued by Noahs Ark Sugar Refinery. Luis then,
again procured availment of P7.8M and executed another Pledge on said quedans. Luis failed to settle
loans amounting to P15.6M and authorized PNB to sell all Quedan Receipts. Later, Spouses Ramos fully
settled their agricultural loan and demanded that PNB release the real estate mortgage. PNB however,
refused alleging that REM also secured other loans such as sugar quedan financing loan of P15.6M which
remained unpaid as the quedans were dishonoured by warehouseman Noahs Ark.

ISSUE: WON the REM secured both sugar quedan financing loan and agricultural crop loan? YES

HELD: The real estate mortgage executed secured both the agricultural loan and the sugar quedan
financing loan. It cannot be denied that the real estate mortgage executed by the parties provided that
it shall stand as security for any subsequentpromissory note or notes either as a renewal of the former
note, as an extension thereof, or as a new loan, or is given any other kind of accommodations such as
overdrafts, letters of credit, acceptances and bills of exchange, releases of import shipments on Trust
Receipts, etc.The same real estate mortgage likewise expressly covered any and all other obligations
of the Mortgagor to the Mortgagee of whatever kind and naturewhether such obligations have been
contracted before, during or after the constitution of this mortgage.Such a blanket clause or dragnet
clause in mortgage contracts has long been recognized in our jurisprudence.

As a general rule, a mortgage liability is usually limited to the amount mentioned in the contract. Howev-
er, the amounts named as consideration in a contract of mortgage do not limit the amount for which the
mortgage may stand as security if, from the four corners of the instrument, the intent to secure future
and other indebtedness can be gathered. This stipulation is valid and binding between the parties and is
known as the blanket mortgage clause/ dragnet clause.

The mortgage contract indisputably provides that the subject properties serve as security, not only for
the payment of the subject loan, but also for such other loans or advances already obtained, or still to
be obtained. The cross-collateral stipulation in the mortgage contract between the parties is thus simply
a variety of a dragnet clause. After agreeing to such stipulation, the petitioners cannot insist that the
subject properties be released from mortgage since the security covers not only the subject loan but the
two other loans as well.The Authorization that Luis had executed reveals that it was nothing more than a
letter that gave PNB the authority to dispose of and sell the sugar quedansafter the maturity date thereof.
As held by the CA, the said grant of authority on the part of PNB is a standard condition in a contract of
pledgePNB cannot be compelled to release the real estate mortgage and the titles involved therein since
the issue of whether the sugar quedanfinancing loan will be fully paid through the pledged sugar receipts
remains the subject of pending litigation.

TORBELA v. ROSARIO [661 SCRA 633, 2011]


DOCTRINE: One of the essential requisites of the contract of mortgage is that the mortgagor should
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be the absolute owner of the property to be mortgaged; otherwise, the mortgage is considered null and
void. However, an exception to this rule is the doctrine of mortgagee in good faith. If the mortgag-
or is not the owner of the mortgaged property, the mortgage contract and any foreclosure sale arising
therefrom are given effect by reason of public policy.
FACTS: The Torbela siblings inherited a Lot 356-A from their parents, Sps. Torbela, who in turn, acquired
the same from the first registered owner, Valeriano. The siblings executed a Deed of Absolute Quitclaim
(DAQ) in which they transferred and conveyed Lot 356-A to Rosario. A TCT was issued in Rosarios name.
However, Rosario executed his own DAQ, in which he acknowledged that he only borrowed the parcel
of land and that he was conveying and transferring the same back to the Torbela siblings. The siblings
then filed an adverse claim over the land and such was annotated on the TCT Later, Rosario acquired a
loan from Banco Filipino and to secure the loan, they constituted mortgages on the disputed property and
their several other real properties. The Torbela siblings then filed with the RTC a complaint for recovery
of ownership and possession of the disputed property. Rosario failed to pay the loan. Hence, Banco Fili-
pino extra-judicially foreclosed the mortgaged properties and bought them in a public sale. The Torbela
siblings failed to redeem the disputed property. Upon the expiration of the one-year redemption period,
the Certificate of Final Sale and Affidavit of Consolidation were executed. New certificates of title were
issued in the name of Banco Filipino. The Torbela siblings moved for the annulment of Certificate of Final
Sale but the RTC declared the REM and sale legal and valid. Hence, this petition.
ISSUE:WON Banco Filipino is a mortgagee in good faith. NO.

HELD:
Banco Filipino is not a mortgagee in good faith. Having said that Rosario is estopped from claiming or as-
serting ownership over Lot 356-A based on his DAQ. Rosarios admission in the said Deed that he merely
borrowed Lot 356-A is deemed conclusive upon him. Under Art. 2085 of the NCC, one of the essential
requisites of the contract of mortgage is that the mortgagor should be the absolute owner of the property
to be mortgaged; otherwise, the mortgage is considered null and void. However, an exception to this
rule is the doctrine of mortgagee in good faith. Banco Filipino cannot avail of the doctrine of mortgagee
in good faith. The entries of the adverse claim and the DAQ of Rosario were not validly cancelled, and
improper cancellation should have been apparent to Banco Filipino and aroused suspicion in said bank
of some defect in Rosarios title. Banco Filipino is not an ordinary mortgagee, but is a mortgagee-bank,
whose business is impressed with public interest. The law provides for a hearing where the validity of the
adverse claim is to be threshed out in order to afford the adverse claimant an opportunity to be heard,
providing a venue where the propriety of his claimed interest can be established or revoked, all for the
purpose of determining at least the existence of any encumbrance on the title arising from such adverse
claim. Banco Filipino cannot be deemed a mortgagee in good faith, much less a purchaser in good faith
at the foreclosure sale of Lot 356-A. Hence, the right of the Torbela siblings over Lot 356-A is superior
over that of Banco Filipino; and as the true owners of Lot 356-A, the Torbela siblings are entitled to a
reconveyance of said property even from Banco Filipino.

CEBU BIONIC BUILDERS SUPPLY, INC. v. DEVELOPMENT BANK OF THE PHILIPPINES [635 SCRA 13, 2010]

DOCTRINE: As a rule, the buyer at the foreclosure salemay terminate an unregistered lease except
when it knows of the existence of the lease.

FACTS: The Robles spouses entered into a mortgaged contract with DBP to secure a loan of P500,000.00.
The properties mortgaged were a parcel of land in Cebu with all the existing improvements and building
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to be constructed thereon. Rudy Robles executed a contract of lease in favor of Cebu Bionic Builders
(CBB). The contract was not registered by the parties with the Register of Deeds of Cebu. The Robles
spouses then failed to settle their loan obligation with DBP which prompted DBP to foreclose the proper-
ties. DBP as the lone bidder acquired ownership over the properties. It later sent a letter to Bonifacio Sia,
husband of Lydia Sia who was then president of CBB, notifying them of DBPs acquisition of the building.
The letter required Bonifacio to remit the rental due and asked if they wished to continue leasing the
property. A certificate of time deposit then was issued in the name of Bonifacio Sia and the same was
allegedly remitted to DBP as advance rental deposit, however, no written contract of lease was executed
between DBP and CBB. DBP then offered the property for sale along with its other assets. It published a
series of invitations to bid but no interested bidder came forward so, DBP publicized an Invitation on Ne-
gotiated Sale/Offer. On the last day for the acceptance of negotiated offers, CBB offered to purchase the
subject properties but it was not accepted since the deposit was allegedly insufficient; and CBB no longer
submitted any other offer/proposal to purchase the properties. Respondents To Chip, Yap and Balila then
offered to purchase, and such was accepted by DBP so they then sent a letter to CBB informing them of
the transfer of ownership and ordering them to vacate the premises within 30 days. They further directed
CBB to pay the rentals until the end of the said 30-day period.
ISSUE: WON the buyer at the foreclosure sale may terminate an unregistered lease. YES.
HELD:
The buyer at the foreclosure sale may terminate an unregistered lease. In Uy v. Land Bank of the Philip-
pines, the Court held that in respect of the lease on the foreclosed property, the buyer at the foreclosure
sale merely succeeds to the rights and obligations of the pledger-mortgagor subject to the provisions of
Article 1676 of the Civil Code on its possible termination. This article provides that the purchaser of a
piece of land which is under a lease that is not recorded in the Registry of Property may terminate the
lease, save when there is a stipulation to the contrary in the contract of sale, or when the purchaser
knows of the existence of the lease. Thus, the buyer at the foreclosure sale, as a rule, may terminate an
unregistered lease except when it knows of the existence of the lease.

NATIONAL HOUSING AUTHORITY v. BASA [618 SCRA 461, 2010]


DOCTRINE: The rule is that it is the mortgagor who alleges the absence of a requisite who has the
burden of establishing such fact. This is so because foreclosure proceedings have in their favor the pre-
sumption of regularity and the burden of evidence to rebut the same is on the party who questions it.

FACTS: The Basa spouses entered a loan of P556, 827.10, secured by a real estate mortgage, with the
National Housing Authority (NHA) but failed to pay the loan. The NHA moved to foreclosure the real es-
tate mortgage and properties were later sold at a public auction. The NHA was the highest bidder. The
certificate of sale was registered and annotated only on the owners duplicate copies of the titles with the
Basa spouses, since the titles in the custody of the Register of Deeds were among those burned down
when a fire gutted the City Hall of Quezon City. The redemption period expired without the spouses re-
deeming the property, and the NHA moved for consolidation of ownership. The Consolidation was grant-
ed, a writ of possession was issued and the Basa spouses were ordered to vacate the lots. The spouses
refused claiming that the foreclosure was a nullity because notices were not posted and published, and
even assuming that the foreclosure sale was valid, they were still entitled to redeem the same since the
one-year redemption period from the registration of the sheriffs certificate of foreclosure sale had not
yet prescribed because instrument is deemed registered only upon actual inscription on the certificate of
title in the custody of the civil registrar.
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ISSUE: WON the property may still be redeemed by the Basa spouses. NO.

HELD:
The Basa spouses may no longer redeem the subject property. The rule is that it is the mortgagor who
alleges absence of a requisite who has the burden of establishing such fact. This is so because foreclo-
sure proceedings have in their favor the presumption of regularity and the burden of evidence to rebut
the same is on the party who questions it.Since the entry of the certificate of sale was validly registered,
the redemption period accruing to respondents commenced therefrom, since the one-year period of
redemption is reckoned from the date of registration of the certificate of sale. It must be noted that on
April 16, 1991, the sheriffs certificate of sale was registered and annotated only on the owners duplicate
copies of the titles and on April 16, 1992, the redemption period expired, without respondents having
redeemed the properties. In fact, on April 24, 1992, NHA executed an Affidavit of Consolidation of Own-
ership. Clearly, Sps. Basa have lost their opportunity to redeem the properties in question.

Considering that the foreclosure sale and its subsequent registration with the Register of Deeds were
done validly, there is no reason for the non-issuance of the writ of possession. A writ of possession is an
order directing the sheriff to place a person in possession of a real or personal property, such as when
a property is extrajudicially foreclosed. Sec. 7 of Act No. 3135 provides for the rule in the issuance of
the writ of possession involving extrajudicial foreclosure sales of real estate mortgage, this provision of
law authorizes the purchaser in a foreclosure sale to apply for a writ of possession during the redemp-
tion period by filing an ex parte motion under oath for that purpose in the corresponding registration or
cadastral proceeding in the case of property with Torrens title. Upon the filing of such motion and the
approval of the corresponding bond, the law also in express terms directs the court to issue the order for
a writ of possession.

CENTURY SAVINGS v. SAMONTE [634 SCRA 261, 2010]


DOCTRINE: A mortgagor who alleges absence of a requisite has the burden of establishing that fact.
Foreclosure proceedings have in their favor the presumption of regularity and the burden of evidence to
rebut the same is on the mortgagor.

FACTS: Century Savings extended loan agreements to Samonte which were secured by promissory
notes and real estate mortgages issued in favor of Century Savings. Samonte failed to pay the loans upon
their maturity and the real estate mortgages were extrajudicially foreclosed pursuant to Act No. 3135.
Century Savings, as the winning and highest bidder, was issued a Certificate of Sale. However, the public
auction failed to fully satisfy the obligation of Samonte so Century Savings moved for the collection of the
deficiency of their loans.A contract of lease was thereupon entered into between the parties where these
facts were established. It was further noted that Century Savings was in the process of consolidating the
title in his name after Samonte failed to exercise his right of redemption.Samonte then filed a complaint
for the annulment of extrajudicial foreclosure contending that Century Savings failed to comply with Sec.
3 of Act No. 3135 for failure to state in the Certificate of Posting that that the Notice of Sale was posted
for twenty days before the sale in at least three public places of the city where the properties sought to
be foreclosed [were] situated

ISSUES:
1) WON the legal requirements on the notice of sale were complied with. YES.

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2) WON the extrajudicial foreclosure sales of respondents mortgaged properties was valid. YES.
HELD:
1) The legal requirements on the notice of sale were complied with by Century Savings.Un-
der Section 3, notice is required to be published once a week for at least three consecutive weeks
in a newspaper of general circulation in the municipality or city and so Petitioner complied with
this by causing a Notice of Sale in the Challenger News- a weekly newspaper of general circula-
tionon November 15, 22, and 29, 1999.
In Cristobal v. CA, the Court explicitly ruled that foreclosure proceedings enjoy the presumption of reg-
ularity and that the mortgagor who alleges absence of a requisite has the burden of proving such fact.

In the case, Samonte seeked to annul the foreclosure on the gorund of non-compliance with the require-
ments. The burden thus falls upon him to prove such. He however failed miserably in this regard. He did
not present any evidence at all to establish that the notices of sale were not posted as required under
Sec. 3 of Act No. 3135, as amended. Instead, he merely focused on how Notary Public Magpantays Cer-
tificate of Posting was worded, and emphasized on technicalities and semantics. Furthermore, despite
any defect in the posting of the Notice of Sale the Court reiterates its ruling in previous jurisprudence that
the publication of the same notice in a newspaper of general circulation is already sufficient compliance
with the requirement of the law. Hence, the publication of the notice of sale in the newspaper of general
circulation alone is more than sufficient compliance with the notice-posting requirement of the law.By
such publication, a reasonably wide publicity had been effected such that those interested might attend
the public sale, and the purpose of the law had been thereby subserved.
2) The extrajudicial foreclosure sales of Samontes mortgaged properties is valid. The Court
upholds the validity of the extrajudicial foreclosure proceeding under the equitable principle of
estoppel. Samonte admitted execution of the Contract of Lease where he clearly acknowledge
that the subject extrajudicial foreclosure sale was conducted in accordance with Act No. 3135,
as amended; that they failed to redeem the foreclosed properties within the redemption period;
and that Century Savings has valid and legal right and title as absolute owner of the foreclosed
properties-- that alone establishes that they do not have any cause of action or are estopped from
impugning the validity of the subject extrajudicial foreclosure proceedings.
The mortgagor is already estopped from challenging the validity of the foreclosure sale, after entering
into a Contract of Lease with the buyer over one of the foreclosed properties the title of the landlord
is a conclusive presumption as against the tenant or lessee, as provided in Rule 131 Section 2(b) of the
Rules of Court, to wit:
Sec. 2(b): [t]he tenant is not permitted to deny the title of his landlord at the time of the commencement
of the relation of landlord and tenant between them

CAHILIG v. TERENCIO [661 SCRA 261, 2011]


DOCTRINE: After the consolidation of titles in the buyers name, for failure of the mortgagor to redeem,
entitlement to a writ of possession becomes a matter of right. As the confirmed owner, the purchasers
right to possession becomes absolute.

FACTS: Soterania Siel executed a real estate in favor of Moneytrend Lending Corporation (MLC) as a
security for two promissory notes. MLC assigned the promissory notes and deeds of REM to Mercantile
Credit Resources Corporation (MCRC). Due to the non-payment of loans, MCRC foreclosed the mortgages
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and became the highest bidder. Siel failed to redeem the property within the prescribed period and so
a final deed of sale was issued in favor of MCRC. Judge Terencio then granted the issuance of a writ of
possession over the property, but upon inspection of the property, Viola Cahilig, the daughter or Siel,
was found to be in possession. Cahilig now wants that a writ of possession be issued in her favor, but
evidence shows that the property sought to be possessed by Cahilig is not in the possession of any third
person. So Cahilig was served the writ of possession, but she manifested that she could only turn over
1/6 share as the others do not belong to her. Antonio Siel then executed a third party claim which states
that he and his sibling bought the property from their mother.
ISSUE: WON the issuance of the writ of possession over the property subject of the foreclosure of the
real estate mortgage is proper. YES.
HELD:
The issuance of the writ of possession over the foreclosed property subject of the real estate mortgage
is proper. There is no dispute that MCRC foreclosed the real estate mortgage after Siel defaulted on her
loan payments when they became due. It is likewise undisputed that MCRC purchased the same property
at the extrajudicial foreclosure sale and, as a result thereof, a certificate of sale was issued in its favor.
Given this factual premise, MCRC acted within its legal rights when it petitioned for the issuance of a
writ of possession, which the trial court eventually granted. Also, the trial court issued the alias writ of
possession only after giving due consideration to petitioners motion for reconsideration and, subsequent-
ly, to their supposed third-party claim wherein petitioners allege that they and their other siblings had
already bought the subject property from the now deceased, Soterania Siel, prior to the constitution of
the mortgage and that they were in actual possession of the land in dispute. It is on the strength of this
third-party claim that petitioners doggedly oppose the trial courts issuance of the said writ of possession
arguing that under Section 33, Rule 39 of the Rules of Court, which is made to apply suppletorily to the
extrajudicial foreclosure of real estate mortgages under Sec. 6 of Act 3135, as amended by Act 4118,
the possession of the mortgaged property may be awarded to a purchaser in the extrajudicial foreclosure
unless a third party is actually holding the property adversely to the judgment debtor, to wit:
Sec. 33 (2). Upon the expiration of the right of redemption, the purchaser or redemptioner shall
be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the
property as of the time of the levy. The possession of the property shall be given to the purchaser
or last redemptioner by the same officer unless a third party is actually holding the property ad-
versely to the judgment obligor.
We, in a number of cases, have held that the obligation of the court to issue an ex parte writ of possession
in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears that
there is a third party in possession of the property who is claiming a right adverse to that of the debtor/
mortgagor. However, unlike in those cases, the third party claim in the instant case was not presented at
the onset of litigation. In fact, it was not the original theory propounded by petitioners when they filed a
motion for reconsideration of the Order which first granted the writ of possession in private respondents
favor. More importantly, the judicial admissions made by petitioners in their motion were wholly incom-
patible with their belated claim that they are actually vendees of Soterania Siels property. Therefore,
the writ of possession in favor of MCRC, being the purchaser of the foreclosed property, is proper.

GARCIA v. VILLAR [675 SCRA 80, 2012]


DOCTRINE: Mortgage is a real right, which follows the property, even after subsequent transfers by the
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mortgagor. A registered mortgage lien is considered inseparable from the property inasmuch as it is a
right in rem.

FACTS: Lourdes Galas was the original owner of a property in QC. She and her daughter, Ophelia, mort-
gaged the property to Villa as a security for a P2.2M loan. The two later mortgaged the same property
to Pablo Garcia to secure a loan of P1.8M. Both mortgages were annotated at the back of TCT. Galas
then sold the property Villar for P1.5M and declared that such property was free and clear of all liens
and encumbrances of any kind whatsoever. The Deed of Sale was registered and both mortgages were
annotated at the back of the new TCT. Upon default of Galas, Garcia sought to foreclose the property.
Villar opposed saying that the second mortgage made in favor of Garcia was without her knowledge and
consent, hence void.

ISSUES:
1) WON the second mortgage to Garcia and the sale to VIllar was valid. YES
2) WON Garcias action for foreclosure of mortgage on the subject property can prosper. NO.

HELD:
1) The second mortgage to Garcia and the sale to Villar are valid. While it is true that the an-
notation of the first mortgage to Villar on Galas TCT contained a restriction on further en-
cumbrances without the mortgagees prior consent, this restriction was nowhere to be found
in the Deed of Real Estate Mortgage. If it were the intention of the parties to impose such
restriction, they would have and should have stipulated such in the Deed of Real Estate Mort-
gage itself. Neither did this Deed proscribe the sale or alienation of the subject property during
the life of the mortgages. Garcias insistence that Villar should have judicially or extrajudicially
foreclosed the mortgage to satisfy Galass debt is misplaced. Deed of Real Estate Mortgage
merely provided for the options Villar may undertake in case Galas or Pingol fail to pay their
loan. Nowhere was it stated in the Deed that Galas could not opt to sell the subject property
to Villar, or to any other person. Such stipulation would have been void anyway, as it is not
allowed under Article 2130 of the Civil Code, to wit: Art. 2130. A stipulation forbidding the
owner from alienating the immovable mortgaged shall be void.

2) Garcias action for foreclosure cannot prosper.A mortgage is a real right, which follows the
property, even after subsequent transfers by the mortgagor. A registered mortgage lien is
considered inseparable from the property inasmuch as it is a right in rem.The sale or trans-
fer of the mortgaged property cannot affect or release the mortgage; thus the purchaser or
transferee is necessarily bound to acknowledge and respect the encumbrance. In fact, under
Art. 2129 of the NCC, the mortgage on the property may still be foreclosed despite the trans-
fer. The creditor may claim from a third person in possession of the mortgaged property, the
payment of the part of the credit secured by the property which said third person possesses,
in terms and with the formalities which the law establishes.

Villar, in buying the subject property with notice that it was mortgaged, only undertook to pay such mort-
gage or allow the subject property to be sold upon failure of the mortgage creditor to obtain payment
from the principal debtor once the debt matures. Villar did not obligate herself to replace the debtor in
the principal obligation, and could not do so in law without the creditors consent. Art. 1293 of the NCC
provides thatnovation which consists in substituting a new debtor in the place of the original one, may
be made even without the knowledge or against the will of the latter, but not without the consent of the
creditor. Payment by the new debtor gives him the rights mentioned in Art. 1236 and 1237. Obligation to
pay the mortgage indebtedness remains with the original debtors Galas and Pingol.

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Effects of a transfer of a mortgaged property to a third person. According to Art. 1879 of the NCC, the
creditor may demand of the third person in possession of the property mortgaged payment of such part
of the debt, as is secured by the property in his possession, in the manner and form established by the
law. The Mortgage Law provided that the debtor should not pay the debt upon its maturity after judicial
or notarial demand, for payment has been made by the creditor upon him. The obligation of the new
possessor to pay the debt originated only from the right of the creditor to demand payment of him, it
being necessary that a demand for payment should have previously been made upon the debtor and the
latter should have failed to pay. And even if these requirements were complied with, still the third pos-
sessor might abandon the property mortgaged, and in that case it is considered to be in the possession
of the debtor. (Art. 136 of the same law.) This clearly shows that the spirit of the Civil Code is to let the
obligation of the debtor to pay the debt stand although the property mortgaged to secure the payment
of said debt may have been transferred to a third person.

BPI v. REYES [664 SCRA 700, 2012]


DOCTRINE: A mortgage is simply a security and cannot be considered payment of an outstanding obli-
gation, the creditor is not barred from recovering the deficiency even if it bought the mortgaged property
at the extrajudicial foreclosure sale at a lower price than its market value notwithstanding the fact that
said value is more than or equal to the total amount of the debtors obligation. If the proceeds of the sale
are insufficient to cover the debt in an extrajudicial foreclosure of mortgage, the mortgagee is entitled to
claim the deficiency from the debtor.
FACTS: Reyes was granted by BPI a loan amounting to Php20,950,000.00 and as security, Reyes issued
4 promissory notes and instituted Real Estate Mortgage Agreements involving 22 parcels of land. Reyes
failed to settle her obligations when the debt became due and demandable and this caused the BPI to
foreclose the properties.At the public auction, the properties were awarded to BPI in consideration of
its highest bid price amounting to Php9,032,960. On the same date, the obligation already amounted to
Php30, 000,000.00 inclusive of interest but excluding attorneys fees and other charges. However, Reyes
claims that the 22 properties were fetched a total appraisal value of more than Php47M and considering
the appraisal value and the amount of his obligation, the properties were more than enough to satisfy
her obligation with BPI.
ISSUE: WON Reyes is entitled to recover the balance or deficiency from respondent despite the respon-
dents property. YES.
HELD:
BPI is entitled to recover the balance from Reyes, despite having already bought the properties mort-
gaged. There is no dispute with regard to the total amount of the outstanding loan obligation that re-
spondent owed to petitioner at the time of the extrajudicial foreclosure sale of the property subject of the
real estate mortgage. Likewise, it is uncontested that by subtracting the amount obtained at the sale of
the property, a loan balance still remains. The rule is that the creditor is not precluded from recovering
any unpaid balance on the principal obligation if the extrajudicial foreclosure sale of the property subject
of the real estate mortgage results in a deficiency.
Act No. 3135, as amended, does not discuss the mortgagees right to recover the deficiency, neither does
it contain any provision expressly or impliedly prohibiting recovery. If the legislature had intended to
deny the creditor the right to sue for any deficiency resulting from the foreclosure of a security given to
guarantee an obligation, the law would expressly so provide. Absent such a provision in Act No. 3135, as
amended, the creditor is not precluded from taking action to recover any unpaid balance on the principal
obligation simply because he chose to extrajudicially foreclose the real estate mortgage.

40
Land Titles and Deeds
Further, a Mortgage is simply a security and cannot be considered payment of an outstanding obligation,
the creditor is not barred from recovering the deficiency even if it bought the mortgaged property at the
extrajudicial foreclosure sale at a lower price than its market value notwithstanding the fact that said val-
ue is more than or equal to the total amount of the debtors obligation. Hence, it is wrong for petitioners
to conclude that when respondent bank supposedly bought the foreclosed properties at a very low price,
the latter effectively prevented the former from satisfying their whole obligation. We have declared that
unlike in an ordinary sale, inadequacy of the price at a forced sale is immaterial and does not nullify a
sale since, in a forced sale, a low price is more beneficial to the mortgage debtor for it makes redemption
of the property easier.
An examination of the said law reveals nothing to the effect that there should be a minimum bid price or
that the winning bid should be equal to the appraised value of the foreclosed property or to the amount
owed by the mortgage debtor. What is clearly provided, however, is that a mortgage debtor is given the
opportunity to redeem the foreclosed property within the term of one year from and after the date of
sale.

Land Titles and Deeds

REPUBLICvs. CAPCO DE TENSUAN [708 SCRA 367, 2013]


DOCTRINE: The requisites for the filing of an application for registration of title under Sec. 14(1) of
the Property Registration Decree are:

1) that the property in question is alienable and disposable land of the public domain; and

2) that the applicants by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation; and that such possession is un-
der a bona fide claim of ownership since June 12, 1945 or earlier.

To prove that the land subject of an application for registration is alienable and disposable, the applicant
must establish the existence of a positive act of the government declaring the land as such. But a CENRO
Certification, by itself, is insufficient proof .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 present a copy of the original classification approved by the DENR Secretary and certified as a true
copy by the legal custodian of the official records. These facts must be established to prove that the land
is alienable and disposable.

FACTS: Tensuan, represented by her sister, filed for an application for registrationof two lots: Nos. 1109-
A and 1109-B. Tensuan alleged that (1) she is the absolute owner and possessor of the said lots; and
that (2) she and her predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation of the said lands under a bonafide claim of ownership since June 12, 1945,
and many years earlier, as provided under Section 14(1) of Presidential Decree No. 1529. Lot 1109-B was
later withdrawn from application because it was a legal easement.

The Republic, through the Office of the Solicitor General (OSG) opposed, arguing that (1) applicant nor
her predecessors-in-interest have been in open, continuous, exclusive, and notorious possession and
41
Land Titles and Deeds
occupation of the subject property since June 12, 1945 or prior thereto; and that (2) the subject property
forms part of the public domain not subject of private appropriation. The Laguna Lake Development
Authority (LLDA) also opposed, arguing that the lot is located below the reglementary lake elevation of
12.50 meters referred to datum 10.00 meters below mean lower water. Therefore, the land is part of the
bed of Laguna Lake which is considered as public land.

Tensuan presented 2 witnesses, proving that she and her predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of the said lot since June 12, 1945 or
earlier. Also as evidence, Tensuan presented a Certification from the CENRO-DENR stating that the said
land falls within alienable and disposable land.

ISSUE: WON the subject property is an alienable and disposable land of the public domain at the time
of application for registration and may be registered under the applicants name as the real owner. NO.

HELD:

The subject lot is not an alienable and disposable land of the public domain.

Sec. 14(1) of Presidential Decree No. 1529 (Property Registration Decree): The following persons
may file in the proper Court of First Instance an application for registration of title to land, whether per-
sonally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continu-
ous, exclusive and notorious possession and occupation of alienable and disposable lands of the
public domain under a bona fide claim of ownership since June 12, 1945, or earlier.

The aforequoted provision authorizes the registration of title acquired in accordance with Section 48(b)
of Commonwealth Act No. 141, (Public Land Act) as amended by Presidential Decree No. 1073, which
provides:

SEC. 48. The following described citizens of the Philippines, occupying lands of the public domain
or claiming to own any such lands or an interest therein, but whose titles have not been perfected
or completed, may apply to the Court of First Instance of the province where the land is located
for confirmation of their claims and the issuance of a certificate of title thereafter, under the Land
Registration Act, to wit:

(b) Those who by themselves or through their predecessors-in-interest have been in the
open, continuous, exclusive, and notorious possession and occupation of alienable and
disposable lands of the public domain, under a bona fide claim of acquisition or ownership,
since June 12, 1945, except when prevented by war or force majeure. These shall be con-
clusively presumed to have performed all the conditions essential to a Government grant
and shall be entitled to a certificate of title under the provisions of this chapter.

Under the Regalian doctrine, all lands of the public domain belong to the State, and that the State is
the source of any asserted right to ownership of land and charged with the conservation of such pat-
rimony. Also, it states that all lands not otherwise appearing to be clearly within private ownership are
presumed to belong to the State. Consequently, the burden of proof to overcome the presumption of
ownership of lands of the public domain is on the person applying for registration. Unless public land is
shown to have been reclassified and alienated by the State to a private person, it remains part of the
inalienable public domain.

The 1987 Constitution classified lands of the public domain into agricultural, forest or timber and national
parks. Of these, only agricultural lands may be alienated.

42
Land Titles and Deeds
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, who must prove that the land subject of the application is alien-
able or disposable. Incontrovertible evidence must be established that the land subject of the application
is alienable or disposable. To prove that the land subject of an application for registration is alienable
and disposable, the applicant must establish the existence of a positive act of the government such as a
presidential proclamation or an executive order; an administrative action; investigation reports of Bureau
of Lands investigators; and a legislative act or a statute. The applicant may also secure a certification
from the government that the land claimed to have been possessed for the required number of years is
alienable and disposable.

Tensuan presented a Certification issued by the CENRO-DENR verifying that said land falls within alien-
able and disposable land. But a CENRO Certification, by itself, is insufficient proof that a parcel of land
is alienable and disposable. 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 present
a copy of the original classification approved by the DENR Secretary and certified as a true copy by the
legal custodian of the official records. These facts must be established to prove that the land is alienable
and disposable.

While as an exception, substantial compliance with evidentiary requirements may be dispensed with, the
case does not fall under the exception. In the present case, the DENR recognized the right of the LLDA
to oppose Tensuans Application for Registration; and the LLDA argued that the subject property is part
of the Laguna Lake bed and, therefore, inalienable public land. Since Tensuan failed to present satisfac-
tory proof that the subject property is alienable and disposable, her application for registration must be
denied.

FEDERICO JARANTILLA, JR.,v.


ANTONIETA JARANTILLA, BUENAVENTURA REMOTIGUE [636 SCRA 299, 2010]
DOCTRINE: While tax declarations and realty tax receipts do not conclusively prove ownership, they
may constitute strong evidence of ownership when accompanied by possession for a period sufficient for
prescription. A certificate of title is merely an evidence of ownership or title over the particular property
described therein. Registration in the Torrens system does not create or vest title as registration is not a
mode of acquiring ownership.

FACTS: The Jarantilla spouses had eight children: Federico, Delfin, Benjamin, Conchita, Rosita, Pacita,
Rafael and Antonieta. Upon their demise, the heirs extrajudicially partitioned among themselves the real
properties of their deceased parents. They also agreed to allot the produce of the said real properties
for the years 1947-1949 for the studies of two of their siblings, Rafael and Antonieta. Rosita and Con-
chita, along with their husbands entered into an agreement to provide mutual assistance to each other
by way of financial support to any commercial and agricultural activity on a joint business arrangement.
This partnership ended when the parties voluntarily agreed to completely dissolve their joint business
relationship/arrangement. In the document Acknowledgement of Participating Capital, both parties
acknowledged that while certain businesses were registered only in one of the parties name, they were
not the only owners; it included Antonieta Jarantilla and Federico Jarantilla Jr. with participating capitals
of P8,000.00 and P5,000.00 respectively. Antonieta filed the case for the accounting of the assets and
income of the co-ownership, for its partition and the delivery of her share corresponding to 8% and for
damages. Federico Jr., entered into a compromise agreement with Antonieta and likewise prayed for an
accounting of his share equivalent to 6% of the supposed partnership.

43
Land Titles and Deeds
ISSUES:

1) WON Federico was able to prove that he was entitled to his share. NO.

2) WON a collateral attack is allowed against a title. NO.

HELD:

1) No other evidence was presented other than Federicos self-serving testimony. Tax declarations
and tax receipts were coupled with testimonial evidence and documentary evidence were pre-
sented by respondents to prove how they acquired and funded such properties. While tax decla-
rations and realty tax receipts do not conclusively prove ownership, they may constitute strong
evidence of ownership when accompanied by possession for a period sufficient for prescription.
A certificate of title is merely an evidence of ownership or title over the particular property de-
scribed therein. A Torrens title is generally conclusive evidence of ownership of the land referred
to therein, and a strong presumption exists that a Torrens title was regularly issued and valid. A
Torrens title is incontrovertible against anyinformacion possessoria, of other title existing prior to
the issuance thereof not annotated on the Torrens title. Moreover, persons dealing with property
covered by a Torrens certificate of title are not required to go beyond what appears on its face.
Registration in the Torrens system does not create or vest title as registration is not a mode of
acquiring ownership; hence, this cannot deprive an aggrieved party of a remedy in law.However,
Federico asserts ownership over portions of the subject real properties on the strength of his own
admissions and on the testimony of Antonieta Jarantilla.

2) The action filed is not for a partition of a co-ownership, but for an accounting. To permit Federi-
cos claim on these properties is to allow a collateral, indirect attack on the admitted titles. Such
is prohibited under Section 48 of Presidential Decree No. 1529, the Property Registration Decree.
- A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or
cancelled except in a direct proceeding in accordance with law.A collateral attack transpires when,
in another action to obtain a different relief and as an incident to the present action, an attack is
made against the judgment granting the title. A direct attack against a judgment granting the
title, is an action whose main objective is to annul, set aside, or enjoin the enforcement of such
judgment if not yet implemented, or to seek recovery if the property titled under the judgment
had been disposed of.

REPUBLIC v.HEIRS OF MAXIMA LACHICA SIN, NAMELY: SALVACION L. SIN, ROSARIO S. ENRIQUEZ, FRANCISCO
L. SIN, MARIA S. YUCHINTAT, MANUEL L. SIN, JAIME CARDINAL SIN, RAMON L. SIN, AND CEFERINA S. VITA
[720 SCRA 41, 2014]
DOCTRINE: There must be a positive act declaring land of the public domain as alienable and dispos-
able. To prove that the land subject of an application for registration is alienable, the applicant must
establish the existence of a positive act of the government, such as a presidential proclamation or an
executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a
legislative act or a statute. The applicant may also secure a certification from the government that the
land claimed to have been possessed for the required number of years is alienable and disposable.
FACTS: Respondents, the lawful heirs of the late Maxima Lachica Sin the owner of a parcel of land in
Aklan filed a complaint against the ANCF Superintendent, for recovery of possession, quieting of title,
and declaration of ownership with damages. They claim that a portion of their inherited property had
been usurped by ANCF and converted into a fishpond for educational purpose. The ANCF Superintendent
countered that the land was the subject of Proclamation No. 2074 of President Ferdinand E. Marcos which
was allocated as civil reservation for educational purposes of ANCF. The MCTC, the RTC and the Court
44
Land Titles and Deeds
of Appeals unanimously held that respondents retain private rights to the disputed property. The private
rightreferred to is an allegedimperfect title, which respondents supposedly acquired by possession of
the subject property, through their predecessorsininterest, for 30 years before it was declared as a
timberland on December 22, 1960.

ISSUE: WON the land is an alienable and disposable land of the public domain and respondents are
entitled to it as registered owners. NO.
HELD:
There was no positive act on the part of the government declaring such land as alienable and disposable
land of the public domain. The requirements for judicial confirmation of imperfect title are found in Sec-
tion 48(b) of the Public Land Act, as amended by Presidential Decree No. 1073, as follows:
Sec. 48. The following described citizens of the Philippines, occupying lands of the public domain or
claiming to own any such lands or an interest therein, but whose titles have not been perfected or com-
pleted, may apply to the Court of First Instance of the province where the land is located for confirmation
of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit:
(b) Those who by themselves or through their predecessors in interest have been in the open,
continuous, exclusive, and notorious possession and occupation of alienable and disposable lands
of the public domain, under abona fideclaim of acquisition or ownership, since June 12, 1945,
or earlier, immediately preceding the filing of the application for confirmation of title except when
prevented by war orforce majeure. These shall be conclusively presumed to have performed all
the conditions essential to a Government grant and shall be entitled to a certificate of title under
the provisions of this chapter.
An equivalent provision is found in Section 14(1) of the Property Registration Decree, which pro-
vides:
SECTION 14.Who may apply. The following persons may file in the proper Court of First Instance an
application for registration of title to land, whether personally or through their duly authorized represen-
tatives:
(1) those who by themselves or through their predecessorsininterest have been in open, con-
tinuous, exclusive and notorious possession and occupation of alienable and disposable lands of
the public domain under abona fideclaim of ownership since June 12, 1945, or earlier.
There are two requisites for judicial confirmation of imperfect or incomplete title under CA No. 141,
namely:
1) open, continuous, exclusive, and notorious (OCEN) possession and occupation of the subject
land by himself or through his predecessorsininterest under a bona fideclaim of ownership
since time immemorial or from June 12, 1945; and
2) the classification of the land as alienable and disposable land of the public domain.
Under the Regalian doctrine, all lands of the public domain belong to the State, which is the source of
any asserted right to any ownership of land. All lands not appearing to be clearly within private owner-
ship are presumed to belong to the State. Accordingly, public lands not shown to have been reclassified
or released as alienable agricultural land or alienated to a private person by the State remain part of the
inalienable public domain. Unless public land is shown to have been reclassified as alienable or disposable
to a private person by the State, it remains part of the inalienable public domain. Property of the public
domain is beyond the commerce of man and not susceptible of private appropriation and acquisitive pre-
scription. Occupation thereof in the concept of owner no matter how long cannot ripen into ownership
and be registered as a title. The burden of proof in overcoming the presumption of State ownership of

45
Land Titles and Deeds
the lands of the public domain is on the person applying for registration who must prove that the land
subject of the application is alienable or disposable. To overcome this presumption, incontrovertible evi-
dence must be established that the land subject of the application is alienable or disposable.

There must be a positive act declaring land of the public domain as alienable and disposable. To prove
that the land subject of an application for registration is alienable, the applicant must establish the ex-
istence of a positive act of the government, such as a presidential proclamation or an executive order;
an administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or
a statute. The applicant may also secure a certification from the government that the land claimed to
have been possessed for the required number of years is alienable and disposable. In the case, no such
proclamation, executive order, administrative action, report, statute, or certification was presented to
the Court. No evidence showing that prior to 2006, the portions of Aklan occupied by private claimants
were subject of a government proclamation that the land is alienable and disposable. Respondents have
the burden to identify apositive act of the government, such as an official proclamation, declassifying
inalienable public land into disposable land for agricultural or other purposes. But they failed to do so.

DECALENG v. BISHOP OF THE MINISTRY DISTRICT OF THE PHILIPPINE ISLANDS OF PROTESTANT EPISCOPAL
CHURCH IN THE UNITED STATES OF AMERICA OR THE PHILIPPINE EPISCOPAL CHURCH (PEC) [675 SCRA 145,
2012]
DOCTRINE: A collateral attack on a certificate of title is not allowed under Section 48 of Presidential De-
cree No. 1529- A certificate of title shall not be subject to collateral attack. It cannot be altered, modified,
or cancelled except in a direct proceeding in accordance with law. A certificate of title serves as evidence
of an indefeasible title to the property in favor of the person whose name appears therein. The certificate
of title is indefeasible and imprescriptible and all claims to the parcel of land are quieted upon issuance
of the certificate.A Torrens title cannot be attacked collaterally, and the issue on its validity can be raised
only in an action expressly instituted for that purpose.A collateral attack is made when, in another action
to obtain a different relief, the certificate of title is assailed as an incident in said action.
FACTS: The Philippine Episcopal Church Episcopal Diocese of Northern Philippines (PEC- EDNP) filed an
Accion ReinvindicatoriaandAccion Publicianaagainst Decaleng and Lopez, alleging that it is the owner
of two parcels of land in the areas of Ken-geka and Ken-gedeng. The Ken-geka property is covered by
Certificate of Title No. 1in the name of the U.S. Episcopal Church.According said certificate, the U.S.
Episcopal Church acquired the Ken-geka property by virtue of a sales patent issued by the Governor-
General of the Philippine Islands in accordance with the Land Registration Act. It asserted that the U.S.
Episcopal Church donated the property to the PEC by virtue of a Deed of Donation. Further, it averred
that it and its predecessors-in-interest occupied the Ken-gedeng property openly, adversely, continuously,
and notoriously inen concepto de duesince the American Missionaries arrived in the Mountain Province
in 1901.Decaleng entered and cultivated a portion of about 1,635 square meters of the property despite
the protestations of PEC-EDNP representatives. Worse, Decaleng sold a portion of the property to Lo-
pezwho purchased it despite the warning of PEC-EDNP. Both Decaleng and Lopez refused to vacate the
premises, with Decaleng claiming to have inherited the property from their ancestors since time imme-
morial through local custom and Lopez as a mere tenant of the spouses Decaleng. Decaleng argues that
Certificate of Title No. 1 does not exist.
ISSUES:
1) WON PEC-EDNP was able to prove that it is the real owner of the properties in question. YES.
2) WON a collateral attack on a certificate of title is allowed. NO.

46
Land Titles and Deeds
3) WON an owners duplicate certificate can be used as evidence in Philippine courts. YES.
HELD:
1) PEC-EDNP was able to successfully prove that it is the real owner of the properties, both doc-
umentary and testimonial.The Ken-geka property is covered by Certificate of Title No. 1, while
the Ken-gedeng property is identified as Lot 3 of Survey Plan PSU-118424. The Ken-geka prop-
ertywas registered in the name of the U.S. Episcopal Church under Certificate of Title No. 1.It
was conveyed by the U.S. Episcopal Church to PEC through a Deed of Donation and was declared
by the U.S. Episcopal Church and PEC-EDNP for real property tax purposes under Tax Declaration
Nos. 6307, 14326, and A-11179. The Ken-gedeng property is not covered by any certificate of
title but had been occupiedunder claim of title by PEC-EDNP and its predecessor-in-interest, the
U.S. Episcopal Church, since the latters arrival in 1901. It was also declared for real property tax
purposes under Tax Declaration Nos. 14325 and 6306.PEC-EDNP also introduced improvements
in the properties such as permanent buildings, pine trees, fruit trees, and vegetable gardens.
2) A collateral attack on a certificate of title is not allowed. The argument that Certificate of Title
No. 1 does not exist constitutes a collateral attack of Certificate of Title No. 1 and is not allowed
under Section 48 of Presidential Decree No. 1529. It is a hornbook principle that a certificate of
title serves as evidence of an indefeasible title to the property in favor of the person whose name
appears therein. The certificate of title is indefeasible and imprescriptible and all claims to the
parcel of land are quieted upon issuance of the certificate.
Section 48 of Presidential Decree No. 1529 provides: A certificate of title shall not be subject to
collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance
with law.
A Torrens title cannot be attacked collaterally, and the issue on its validity can be raised only in an action
expressly instituted for that purpose.A collateral attack is made when, in another action to obtain a dif-
ferent relief, the certificate of title is assailed as an incident in said action.
The original complaint filed by PEC-EDNP is foraccion publicianaandaccion reinvindicatoria (for recov-
ery of possession and ownership) of the Ken-geka and Ken-gedeng properties. As defense, Decaleng
raised issues as to the validity and existence of Certificate of Title No. 1. But they did not pray for the
annulment or cancellation of Certificate of Title No. 1. Decalengs attack on the validity and the existence
of Certificate of Title No. 1 is only incidental to their defense against theaccion publicianaandaccion
reinvindicatoriainstituted by PEC-EDNP, hence, merely collateral.
3) An owners duplicate certificate of title can be used in evidence before Philippine courts in the
same way as the original certificates in the registration book. Section 47 of Act No. 496 clearly
states:
SEC. 47.The original certificate in the registration book, any copy thereof duly certified
under the signature of the clerk, or of the register of deeds of the province or city where the
land is situated, and the seal of the court, and also the owners duplicate certificate, shall
be received as evidence in all the courts of the Philippine Islands and shall be conclusive
as to all matters contained therein except as far as otherwise provided in this Act. Though
the Mountain Province Register of Deeds Dailay-Papas certified that Certificate of Title No.
1 does not appear in the record of registered titles, it does not necessarily mean that such
certificate has never been issued.To show that no record of the original certificate of title
in question existed requires a preponderance of proof which Decaleng failed to adduce.
Also, Decaleng failed to produce evidence on the manner of its possession and occupation
of the properties since time immemorial.

47
Land Titles and Deeds
SPOUSES MORRIS CARPO and SOCORRO CARPOv.AYALA LAND, INCORPORATED [611 SCRA 436, 2010]
DOCTRINE: Once a decree of registration is made under the Torrens system, and the time has passed
within which that decree may be questionedthe title is perfect and cannot later on be questioned. A par-
ty dealing with a registered landneed not go beyond the Certificate of Title to determine the true owner
thereof so as to guard or protect his or her interest. In the case of two certificates of title, purporting
to include the same land, the earlier in date prevails.In successive registrations, where more than one
certificate is issued in respect of a particular estate or interest in land,the person claiming under the
prior certificate is entitled to the estate or interest; and that person is deemed to hold under the prior
certificate who is the holder of, or whose claim is derived directly or indirectly from the person who was
the holder of the earliest certificateissued in respect thereof. An action for reconveyance, which is a legal
remedy granted to a landowner whose property has been wrongfully or erroneously registered in anoth-
ers name, must be filed within ten years from the issuance of the title, since such issuance operates as
a constructive notice.
FACTS: On February 16, 1995, spouses Carpo filed a Complaint for Quieting of Title against Ayala Cor-
poration, Ayala Property Ventures Corporation (APVC), and the Register of Deeds of Las Pinas, claiming
to be the owners of a land covered by Transfer Certificate of Title issued in their names.Further, they
alleged that Ayala Corporation was claiming to have titles over their property and that Ayala Corporation
will develop the property into a residential subdivision.ALI, on the other hand, argued that it is the true
owner of the property as it traces back its title to an Original Certificate of Title issued in 1950 while the
Carpos title was issued only in 1970. During the pendency of the case, ALI secured a title in its own
name over the property.
ISSUES:
1) WON ALI and its predecessors-in-interest have title to the property. YES.
2) Whether Carpos or ALIs title to the property prevails. ALIs title prevails.
3) WON the action against the title is already barred by prescription. YES.
HELD:
1) A decree of registration was issued to ALIs predecessor-in-interest. A survey plan is one of the
requirements for the issuance of decrees of registration, but upon the issuance of such decree, it
can most certainly be assumed that said requirement was complied with by ALIs original prede-
cessor-in-interestat the time the latter sought original registration of the subject property. Once
a decree of registration is made under the Torrens system, and the time has passed within which
that decree may be questionedthe title is perfect and cannot later on be questioned. ALI need
not allege in its pleadings, much less prove, that its predecessor-in-interest complied with the
requirements for the original registration of the subject property.A party dealing with a registered
landneed not go beyond the Certificate of Title to determine the true owner thereof so as to
guard or protect his or her interest.Hence, ALI was not required to go beyond what appeared in
the transfer certificate of title in the name of itsimmediate transferor.It may rely solely, as it did,
on the correctness of the certificate of title issued for the subject property andthe law will in no
way oblige it to go behind the certificate of title to determine the condition of the property.

2) The general rule is that in the case of two certificates of title, purporting to include the same land,
the earlier in date prevails.In successive registrations, where more than one certificate is issued
in respect of a particular estate or interest in land,the person claiming under the prior certificate
is entitled to the estate or interest; and that person is deemed to hold under the prior certificate
who is the holder of, or whose claim is derived directly or indirectly from the person who was the
48
Land Titles and Deeds
holder of the earliest certificateissued in respect thereof.ALIs title was the valid title having been
derived from the earlier OCT which was issued on May 7, 1950, or forty-five (45) years before
Carpos filed their complaint on March 10, 1995.
3) The OCT had become incontrovertible after the lapse of one (1) year from the time a decree of
registration was issued. Any action for reconveyance which the Carpos could have availed of is
also barred. An action for reconveyance, which is a legal remedy granted to a landowner whose
property has been wrongfully or erroneously registered in anothers name, must be filed within
ten years from the issuance of the title, since such issuance operates as a constructive notice.
Since ALIs title is traced to an OCT issued in 1950, the ten-year prescriptive period expired al-
ready in 1960.

REPUBLIC v. JARALVE [684 SCRA 495, 2012]


DOCTRINE: The Public Land Act or Commonwealth Act No. 141 is the existing general law governing the
classification and disposition of lands of the public domain, except for timber and mineral lands. Under
the Regalian doctrine embodied in our Constitution, land that has not been acquired from the govern-
ment, either by purchase, grant, or any other mode recognized by law, belongs to the State as part of
the public domain.
FACTS: On October 22, 1996, Gloria Jaralve et.al. filed an Application forthe registration in their names
of Lot SGS-07-000307), under PD No. 1529. They alleged that they were the co-owners in fee simple of
the property, acquiring ownership over it by way of purchase from their predecessors-in-interest who had
been in continuous, open, adverse, public, uninterrupted, exclusive, and notorious possession thereof for
more than thirty (30) years, or from June 12, 1945. To prove that the property is alienable and disposable
land of the public domain, they presented the CENRO Certificate dated March 20, 1996. The Republic of
the Philippines opposed on the ground that the applicants failed to prove that the land sought to be reg-
istered is alienable and disposable. The Republic also argued that the CENRO Certificate that respondents
relied on was inadvertently and erroneously issued as it was based on a mistaken projection.
ISSUE: WON the grant of respondents application for registration of title to the subject property was
proper under the law and jurisprudence. NO.
HELD:
Respondents failed to prove in accordance with law that the subject property is within the alienable and
disposable portion of the public domain.The Public Land Act or Commonwealth Act No. 141 is the existing
general law governing the classification and disposition of lands of the public domain, except for timber
and mineral lands. Under the Regalian doctrine, land that has not been acquired from the government,
either by purchase, grant, or any other mode recognized by law, belongs to the State as part of the
public domain.Thus, it is indispensable for a person claiming title to a public land to show that his title
was acquired through such means. Land classification or reclassification cannot be assumed. It must be
proved.To prove that the subject property is alienable and disposable land of the public domain, respon-
dents presented the CENRO Certificate dated March 20, 1996 signed by CENR Officer Iluminado C. Lucas
and PENR Officer Isabelo R. Montejo, and verified by Forester Anastacio C. Cabalejo.

A CENRO or PENRO Certification is not enough to certify that a land is alienable and disposable. 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 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.
49
Land Titles and Deeds
These facts must be established to prove that the land is alienable and disposable.
Although the survey and certification were done in accordance with Forestry Administrative Order No.
4-642, issued by the then Secretary of Agriculture and Natural Resources declaring certain portions of
the public domain situated in Cebu City as alienable and disposable, an actual copy of such classification,
certified as true by the legal custodian of the official records, was not presented in evidence. This was a
crucial mistake. What was presented was the certificationof Nicomedes R. Armilla, the Land Evaluation
Party Coordinator that the Cebu CENRO had on file a certified photocopy of the administrative order.
Moreover, DENR Administrative Order (DAO) No. 20 dated May 30, 1988,delineated the functions and
authorities of the offices within the DENR. Under Section G (1) of the above DAO, CENROs issue certif-
icates of land classification status for areas below 50 hectares. For those falling above 50 hectares, the
issuance of such certificates is within the function of the PENROs, as per Section F (1) of the same DAO.
This delineation, with regard to the offices authorized to issue certificates of land classification status,
was retained in DAO No. 38 dated April 19, 1990. In the case at bar, the property has an area of 731,380
square meters or 73.138 hectares. Clearly, under DAO No. 38, series of 1990, the subject property is
beyond the authority of the CENRO to certify as alienable and disposable.

MORLA v. BELMONTE [661 SCRA 717, 2011]


DOCTRINE: Nowhere in Commonwealth Act No. 141 does it say that the right to repurchase under Sec-
tion 119 thereof could not be extended by mutual agreement of the parties involved. Neither would ex-
tending the period in Section 119 be against public policy as the evident purpose of the Public Land Act,
especially the provisions thereof in relation to homesteads, is to conserve ownership of lands acquired as
homesteads in the homesteader or his heirs.
FACTS: Spouses Nisperos were the original homesteaders of an 80,873-square meter tract of public land
known and identified as Lot No. 4353 situated in Isabela. The Nisperos spouses sold a portion of Lot No.
4353 to the Morla brothers for the sum of 250,000.00 and executed a Partial Deed of Absolute Sale.
Morla brothers acknowledged and confirmed in writing that they bought from the Nisperos spouses the
subject land, and agreed to give the Nisperos spouses a period of ten years within which to repurchase
the subject land for 275,000.00.The 1988 contract was written in Ilocano and executed at the Office
of the Barangay Captain in the Municipality of Burgos, Isabela.The Nisperos spouses filed aComplaint
for Repurchase and/or Recovery of Ownership Plus Damagesagainst the Morla brothers alleging that the
deed of sale was registered by the Morla brothers only when they had signified their intention to repur-
chase their property. Morla brothers, on the other hand, claimed that the repurchase of the subject land
was improper for being outside the five-year period provided under Section 119 of Commonwealth Act
No. 141.The Morla brothers sought to have this decision reconsidered on the strength of a newly discov-
ered Contract of Sale of farm land dated June 28, 1978. According to them, this contract covering the
subject land provided that even the ten-year period to repurchase the subject land under Article 1606 of
the Civil Code had already expired.
ISSUE: WON parties to a deed of sale of a land covered by a homestead patent may extend or prolong
the 5-year period of repurchase under Section 119 of Act 141, under a private writing subsequently ex-
ecuted by them. YES.
HELD:
Since the land was acquired pursuant to a homestead patent, the applicable law is Commonwealth Act
No. 141, or the Public Land Act.Section 119 thereof specifically speaks about repurchases of a home-
stead or free patent land:Every conveyance of land acquired under the free patent or homestead
provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within
50
Land Titles and Deeds
a period of five years from the date of the conveyance.
Nowhere in Commonwealth Act No. 141 does it say that the right to repurchase under Section 119
thereof could not be extended by mutual agreement of the parties involved. Neither would extending the
period in Section 119 be against public policy as the evident purpose of the Public Land Act, especially the
provisions thereof in relation to homesteads, is to conserve ownership of lands acquired as homesteads
in the homesteader or his heirs. What cannot be bartered away is the homesteaders right to repurchase
the homestead within five years from its conveyance, as this is what public policy by law seeks to pre-
serve. This is the only logical meaning to be given to the law, which must be liberally construed in order
to carry out its purpose.
The 1988 contract neither shortens the period provided under Section 119 nor does away with it. Instead,
it gives the Nisperos spouses more time to reacquire the land that the State gratuitously gave them.The
1988 contract therefore is not contrary to law; instead it is merely in keeping with the purpose of the
homestead law. Since the 1988 contract is valid, it should be given full force and effect.

DURAWOOD CONSTRUCTION AND LUMBER SUPPLY, INC. v. BONA [664 SCRA 204, 2012]

DOCTRINE: For the entry to be considered to have the effect of registration, there is still a need to
comply with all that is required for entry and registration, including the payment of the prescribed fees.
FACTS: Durawood Construction and Lumber Supply, Inc. filed an action for sum of money plus damages
with a prayer for the issuance of a writ of preliminary attachment against LBB Construction and Devel-
opment Corporation and its president Leticia Barber and prayed for the sum ofP665,385.50 as payment
for construction materials delivered to LBB Construction.The RTC granted Durawoods prayer for the
issuance of a writ of attachment. The Sheriff levied on a 344-square meter parcel of land registered in
the name of LBB Construction.Bona filed a Motion seeking leave to intervene in the case. Bona claimed
that she is a co-owner of the property. She alleged that LBB Construction had sold the property to her
and her siblings, through a Deed of Absolute Sale. Bona asserted that thesaleis the subject ofEntry No.
30549datedJune 16, 2004in the books of the Registry of Deeds of Antipolo City, while thelevy on at-
tachmentis onlyEntry No. 30590datedJune 17, 2004. TheRTC granted the intervention.The RTC ruled
in favor of Durawood. When the decision became final and executory, Durawood moved for execution.
The RTC issued the writ and it was when this writ was about to be enforced that Durawood discovered
the cancellation of TCT No. R-17571 and the issuance of TCT No.R-22522 in the name of Candice and
her siblings.The supposed Register of Deeds of Antipolo City, Atty. Randy A. Rutaquio cancelled TCT
No. R-17571 and issued TCT No. R-22522 in the name of Candice and her co-owners. Durawood filed a
Motion to Reinstate Notice of Levy on Attachment. The new Acting Register of Deeds Jose S. Loriega, Jr.
complied with the Order of the RTC by reinstating in TCT No. R-22522 the Notice of Levy on Attachment
in favor of Durawood.
ISSUE: WON RTC committed grave abuse of discretion in its order to reinstate the notice of levy on
attachment in TCT No. R-22522. NO.

HELD:
The RTC acted properly when it ordered the reinstatement of the Notice of Levy on Attachment in
TCT No. R-22522. The CA, in considering the date of entry in the day book of the Registry of Deeds as
controlling over the presentation of the entries in TCT No. R-17571, relied on Section 56 of Presidential
Decree No. 1529 which provides that:
SEC. 56.Primary Entry Book; fees; certified copies. Each Register of Deeds shall keep a primary entry
51
Land Titles and Deeds
book in which, upon payment of the entry fee, he shall enter, in the order of their reception, all instru-
ments including copies of writs and processes filed with him relating to registered land.He shall, as a
preliminary process in registration, note in such book the date, hour and minute of reception of all in-
struments, in the order in which they were received.They shall be regarded as registered from the time
so noted, and thememorandum of each instrument, when made on the certificate of title to which it
refers, shallbear the same date: Provided, that the national government as well as the provincial and city
governments shall be exempt from the payment of such fees in advance in order to be entitled to entry
and registration.
The consequence of the above section is two-fold:
1) in determining the date in which an instrument is considered registered, the reckoning point is
thetime of the reception of such instrument as noted in the Primary Entry Book; and
2) when the memorandum of the instrument is later made on the certificate of title to which it refers,
such memorandum shall bear thesame date as that of the reception of the instrument as noted
in the Primary Entry Book.
For the entry of instruments in the Primary Entry Book to be equivalent to registration, certain require-
ments have to be met. Thus, we held inLevinthat in voluntary registration, such as a sale, mortgage,
lease and the like, if the owners duplicate certificate be not surrendered and presented orif no payment
of registration fees be made within 15 days, entry in the day book of the deed of sale does not operate
to convey and affect the land sold.
Levin, which was decided in 1952, applied Section 56 of the Land Registration Act which provides:
Sec. 56.xxx Provided, however, That no registration, annotation, or memorandum on a certifi-
cate of title shall be made unless the fees prescribed therefor by this Act are paid within fifteen
days time after the date of the registration of the deed, instrument, order or document in the
entry book or day book, and in case said fee is not paid within the time above mentioned, such
entry shall be null and void:Provided further, That the Insular Government and the provincial
and municipal governments need not pay such fees in advance in order to be entitled to entry or
registration.
For the entry to be considered to have the effect of registration, there is still a need to comply with all
that is required for entry and registration, including the payment of the prescribed fees.
Records in the case reveal thatas of June 25, 2004, the date of the letter of Atty. Santos seeking the
opinion of the LRA as regards the registration of the Deed of Sale and the Notice of Levy on Attachment,
the required registration fees for the Deed of Sale has not yet been paid.
Since there was still no compliance of all that is required for purposes of entry and annotationof the
Deed of Sale as ofJune 25, 2004, we are constrained to rule that the registration of the Notice of Levy
on Attachment onJune 17, 2004should take precedence over the former. Considering that the Notice of
Levy on Attachment was deemed registered earlier than the Deed of Sale, the TCT issued pursuant to
the latter should contain the annotation of the Attachment.

CHING v. ENRILE [565 SCRA 402, 2008]

DOCTRINE: 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 good faith under the belief that there
was no defect in the title of the vendor.

52
Land Titles and Deeds
FACTS: Petitioners purchased from one Raymunda La Fuente a 370-square meter lot located at Barrio
Tungtong, Las Pinas. La Fuente delivered to petitioners a duly notarized Deed of Absolute Salewith the
Owners Duplicate Certificate of Title and afterwhich, petitioners took physical possession of said proper-
ty. However, the conveyance was not registered in the Register of Deeds as prescribed by Section 51 of
PD 1529and instead, petitioners executed an Affidavit of Adverse Claim which was recorded and anno-
tated at the back of TCT. In the meantime, petitioners peacefully and continuously possessed the subject
property.Three years after the purchase, petitioners received aNotice of Levy on AttachmentandWrit
of Execution issued by RTC of Pasig in favor of respondents, in Sps. Adolfo Enrile and Arsenia Enrile v.
Raymunda La Fuente over the subject property. Petitioners filed aPetition to Remove Cloud on or Quiet
Title to Real Propertyasserting ownership of the disputed property. The CA ruled that petitioners filing of
the Affidavit of Adverse Claim was procedurally flawed and that the annotated adverse claim had already
prescribed on December 20, 1986 after the lapse of 30 days from its registration which was November
20, 1986,and hence cannot be considered sufficient notice to third person like the respondents who were
not aware of the sale of the disputed lot to petitioners prior to the levy on attachment.
ISSUES:
1) WON Adverse Claim annotated at the back of the title has prescribed by the mere lapse of 30 days
and even without any petition in court for its cancellation. NO.
2) WON respondents were purchasers in good faithwhen they acquired the disputed lot despite the
annotated adverse claim on their title. NO.
HELD:
1) A notice of adverse claim remains valid even after the lapse of the 30-day period provided by
Section 70 of PD 1529. In the case ofSajonas v. Court of Appeals, the Court explained that a
notice of adverse claim remains valid even after the lapse of the 30-day period provided by Sec-
tion 70 of PD 1529. The provision in question would seem to restrict the effectivity of the adverse
claim to thirty days. But the above provision cannot and should not be treated separately, but
should be read in relation to the sentence following, which reads: After the lapse of said period,
the annotation of the adverse claim may be cancelled upon filing of a verified petition therefor by
the party in interest.If the rationale of the law was for the adverse claim to ipso facto lose force
and effect after the lapse of thirty days, then it would not have been necessary to include the
foregoing caveat to clarify and complete the rule. For then, no adverse claim need be cancelled.
If it has been automatically terminated by mere lapse of time, the law would not have required
the party in interest to do a useless act.In a petition for cancellation of adverse claim, a hearing
must first be conducted. The hearing will afford the parties an opportunity to prove the propriety
or impropriety of the adverse claim.
2) Respondents were not purchasers in good faith and, as such, could not acquire good title to the
property as against the former transferee. The law does not require a person dealing with the
owner of registered land to go beyond the certificate of title as he may rely on the notices of
the encumbrances on the property annotated on the certificate of title or absence of any anno-
tation. In this case, petitioners adverse claim is annotated at the back of the title coupled with
the fact that they are in possession of the disputed property. These circumstances should have
put respondents on guard and required them to ascertain the property being offered to them
has already been sold to another to prevent injury to prior innocent buyers. A person who delib-
erately ignores a significant fact which would create suspicion in an otherwise reasonable man
is not an innocent purchaser for value. 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
good faith under the belief that there was no defect in the title of the vendor. Regardless of the
non-registration of the Deed of Absolute Sale to petitioners, nor the 30-day effectivity of the ad-
verse claim under Section 70 of PD 1529, respondents were constructively notified of petitioners
prior purchase of the disputed property.
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Land Titles and Deeds

REPUBLIC v. LORENZO [687 SCRA 478, 2012]


DOCTRINE: The term any other document in paragraph (f) refers to reliable documents of the kind
described in the preceding enumerations and that the documents referred to in Section 2(f) may be re-
sorted to only in the absence of the preceding documents in the list. Therefore, the party praying for the
reconstitution of a title must show that he had sought to secure such documents and failed to find them
before presentation of other documents as evidence in substitution is allowed.
FACTS: Respondents Concepcion Lorenzo and Orlando et.al. all surnamed Fontanilla filed a petition for
the Reconstitution of Original Certificate of Title (OCT) No. 3980 covering a parcel of land measuring 811
square meters in Echague, Isabela. They alleged that during the lifetime of Pedro Fontanilla and Concep-
cion Lorenzo, husband and wife, they acquired a parcel of residential land covered and embraced under
OCT NO. 3980 from Antonia Pascua (mother of Pedro Fontanilla) evidenced by Deed of Sale. Owners
duplicate copy of OCT NO. 3980 was delivered to the spouses, which they have been keeping only to later
discover that it was eaten by white ants (Anay). The original and office file copy of said OCT NO. 3980
kept and to be on file in the Registry of Deeds of Isabela is not now available, because it was burned and
lost beyond recovery when the office was razed by fire sometime in 1976.
Since both the original copy on file and the owners duplicate copy are non-existent, respondents in-
stituted the petition for reconstitution of lost or destroyed Torrens certificate of title. In support for the
reconstitution, the following documents are submitted:
(a) SEPIA PLAN with Blue Prints
(b) Certified technical description of Lot 18, Cad. 210
(c) Certification by LRA as to the non-availability of a copy of DECREE NO. 650254
ISSUE: WON Petition for Reconstitution of OCT No. 3980 should be granted. NO.
HELD:
R.A. No. 26 governs the reconstitution of a lost or destroyed Torrens certificate of title. RA No. 26,
Sec. 2 enumerates the following as valid sources for judicial reconstitution of title in the following order:
a) The owners duplicate of the certificate of title;
b) The co-owners, mortgagees, or lessees duplicate of the certificate of title;
c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal
custodian thereof;
d) An authenticated copy of the decree of registration or patent, as the case may be, pursuant to
which the original certificate of title was issued;
e) A document, on file in the Registry of Deeds, by which the property, the description of which is
given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said
document showing that its original had been registered;
f) Any other document which, in the judgment of the court, is sufficient and proper basis for recon-
stituting the lost or destroyed certificate of title.

In Republic v. Holazo, the term any other document in paragraph (f) refers to reliable documents of the
kind described in the preceding enumerations and that the documents referred to in Section 2(f) may be
resorted to only in the absence of the preceding documents in the list. Therefore, the party praying for
54
Land Titles and Deeds
the reconstitution of a title must show that he had sought to secure such documents and failed to find
them before presentation of other documents as evidence in substitution is allowed.

Any other document, of Sec 2(f) or 3(f) of RA 26 refers to similar documents previously enumerated
therein or documents ejusdem generis as the documents earlier referred to. The documents alluded to in
Section 3(f) must be resorted to in the absence of those preceding in order. If the petitioner fails to show
that he had, in fact, sought to secure such prior documents (except with respect to the owners duplicate
copy of the title which it claims had been, likewise, destroyed) and failed to find them, the presentation
of the succeeding documents as substitutionary evidence is proscribed.

Respondents were unable to discharge the burden of proof prescribed by law and jurisprudence for the
reconstitution of lost or destroyed Torrens certificate of title. Respondents were unable to present any of
the documents mentioned (from a to e). The only documentary evidence the respondents were able to
present are those that they believed to fall under the class of any other document described in par (f).

The Deed of Sale involving OCT No. 3980 cannot be relied upon as basis for reconstitution because the
date when OCT was issued does not appear in the document. The absence of any document, private or
official, mentioning the number of the certificate of title and the date when the certificate of title was
issued, does not warrant the granting of a petition for reconstitution.

REPUBLIC v. HEIRS OF EVARISTO TIOTIOEN [568 SCRA 152, 2008]


Land Titles and Deeds

DOCTRINE: Belated filing of an appeal by the State, or even its failure to file an opposition, in a land
registration case because of the mistake or error on the part of its officials or agents does not deprive
the government of its right to appeal from a judgment of the court. The rules of procedure are mere
tools designed to facilitate the attainment of justice and that strict and rigid application of rules which
would result in technicalities that tend to frustrate rather than promote substantial justice must always
be avoided.

FACTS: Evaristo Tiotioen filed a second application on September 6, 1993 for judicial confirmation
and registration under the Torrens System of 2 parcels of land situated in Pico, La Trinidad, Benguet.
The Republic opposed arguing that the parcels of land belong to the communalforestofLa Trinidad,
Benguet, and are inalienable land of the public domain. The Land Registration Court (LRC) granted the
application.The Republic and the municipality received a notice of the decision of LRC on September
6 and 7, 2001, respectively.The municipality filed an MR but was denied by the LRC in itsResolution.
The OSGwas not furnished with a notice of such resolution.But it was informed by the provincial pros-
ecutor of such denial onJanuary 4, 2002when it received theLetterdatedDecember 19, 2001of the
Provincial Prosecutor.The OSGfiled the notice of appeal for the Republic only onJanuary 11, 2002which
the LRC denied for having been filed way beyond the fifteen-day reglementary period to appeal reck-
oned fromSeptember 6, 2001.The Republic contends that OSG as its principal counsel is entitled to be
furnished with copies of orders, notices, and decision of trial court. The date of service of such copies to
theOSGis the reckoning period in counting the timeliness of its appeal.The prescribed period to file the
appeal did not commence to run and therefore, its notice of appeal should not be treated as filed out of
time.
55
Land Titles and Deeds
ISSUE: WON appeal should be given due course. YES.

HELD:
Belated filing of an appeal by the State, or even its failure to file an opposition, in a land registration case
because of the mistake or error on the part of its officials or agents does not deprive the government
of its right to appeal from a judgment of the court.InHeirs of Marina C. Regalado v. Republic, SC ruled
that the failure of the Republic to file any opposition or answer to the application for registration, despite
receipt of notice did not deprive its right to appeal theRTCdecision.It is far better for the court to excuse
a technical lapse and afford the parties a review of the case to attain the ends of justice, rather than
dispose of the case on technicality and cause grave injustice to the parties, giving a false impression of
speedy disposal of cases while actually resulting in more delay, if not a miscarriage of justice.The vast
tracts of land involved in this case are claimed by the Republic to be a protected watershed area, which
allegedly preserves the main source of water of theMunicipalityofLa Trinidad. The Republic raises
substantial factual and legal issues which should be decided on their merit instead of being summarily
disposed of based on a technicality.

REPUBLIC v. HON. MAMINDIARA P. MANGOTARA [633 SCRA 64, 2010]

DOCTRINE: Reversionis an action where the ultimate relief sought is to revert the land back to the
government under the Regalian doctrine. Considering that the land subject of the action originated from
a grant by the government, its cancellation is a matter between the grantor and the grantee.It is defined
as an action whichseeks to restore public land fraudulently awarded and disposed of to private indi-
viduals or corporations to the mass of public domain.It bears to point out, though, that the Court also
allowed the resort by the Government to actions for reversion to cancel titles that were void for reasons
other than fraud,i.e., violation by the grantee of a patent of the conditions imposed by law;and lack of
jurisdiction of the Director of Lands to grant a patent covering inalienable forest landor portion of a river,
even when such grant was made through mere oversight.

FACTS:
These are 7 consolidated petitions which preceded from 1914 case of Cacho v. Government of the United
States (1914 Cacho case) arising from actions for quieting of title, expropriation, ejectment, and rever-
sion, which all involve the same parcels of land.

1914 CACHO CASE :


The late Dona Demetria Cacho applied for the registration of2 parcels of land in theMunicipalityofIli-
gan,MoroProvince. Only the Government opposed the applications for registration on the ground that
the lands were US property and formed part of a military reservation. The land registration court found
that the applicant is owner of only a portion of the land and her application to all the rest of the land is
denied. It ordered that a new survey of the land be made and a corrected plan be presented. Final deci-
sion in this case is reserved until the presentation of the said deed and the new plan. Dissatisfied, Doa
Demetria appealed to SC. SC affirmed LRC Decision. 83 years later, the Court was again called upon to
settle a matter concerning the registration of the Lots in the case of Cacho v. CA. (1997 Cacho Case0

1997 CACHO CASE:


Teofilo Cacho (Teofilo), claiming to be the late Doa Demetrias son and sole heir, filed a petition for re-
constitution of two original certificates of title (OCTs). Such was opposed by the Republic, National Steel
Corporation (NSC), and the City ofIligan.RTC granted Teofilos petition and ordered the reconstitution
56
Land Titles and Deeds
and re-issuance of Decree Nos. 10364 and 18969. The original issuance of these decrees presupposed a
prior judgment that had become final. The SC affirmed the decision of the RTC approving the re-issuance
of Decree Nos. 10364 and 18969. The Court found that such decrees had in fact been issued and had
attained finality, as certified by the Acting Commissioner, Deputy Clerk of Court III, Geodetic Engineer,
and Chief of Registration of the then Land Registration Commission. MR denied. Hence, the decrees of
registration were re-issued bearing new numbers and OCTs were issued for 2 parcels of land in Dona
Demetrias name.

Another 4 cases involving the same parcels of land were instituted before the trial courts during and af-
ter the pendency of the 1997 Cacho case. These cases are: (1) Expropriation Case; (2) Quieting of Title
Case; (3) Ejectment or Unlawful Detainer Case; (4) Cancellation of Titles and Reversion Case. The Re-
public filed a Complaint for the Cancellation of OCT and Reversion of parcels of land against the late Dona
Demetria. Republic alleged that OCTs issued are null and void since the technical descriptions vis-a-vis
the areas of the parcels of land covered went beyond the areas granted by the Land Registration Court.

ISSUES:
1) WON the Republic has the right to institute an action for reversion. YES.
2) WON the Republic is barred by prescription. NO.

HELD:
1) The right of the Republic to institute an action for reversion is rooted in the Regalian doctrine.
Under theRegalian doctrine, all lands of the public domain belong to the State, and that the State
is the source of any asserted right to ownership in land and charged with the conservation of
such patrimony.This same doctrine also states that all lands not otherwise appearing to be clear-
ly within private ownership arepresumed to belong to the State.It is incorporated in the 1987
Philippine Constitution under Article XII, Section 2 which declares all lands of the public domain,
waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State.
No public land can be acquired by private persons without any grant, express or implied, from the
government; it is indispensable that there be a showing of the title from the State.Reversionis
an action where the ultimate relief sought is to revert the land back to the government under the
Regalian doctrine. Considering that the land subject of the action originated from a grant by the
government, its cancellation is a matter between the grantor and the grantee.

It is defined as an action whichseeks to restore public land fraudulently awarded and disposed of to
private individuals or corporations to the mass of public domain.It bears to point out, though, that the
Court also allowed the resort by the Government to actions for reversion to cancel titles that were void for
reasons other than fraud,i.e., violation by the grantee of a patent of the conditions imposed by law;and
lack of jurisdiction of the Director of Lands to grant a patent covering inalienable forest landor portion of
a river, even when such grant was made through mere oversight.

Just becauseOCTs were already issued in Dona Demetrias name does not bar the Republic from institut-
ing an action for reversion.Section 101 of the Public Land Act may be invoked only when title has already
vested in the individual,e.g., when a patent or a certificate of title has already been issued, for the basic
premise in an action for reversion is that the certificate of title fraudulently or unlawfully included land of
the public domain, hence, calling for the cancellation of said certificate.It is actually the issuance of such
a certificate of title which constitutes the third element of a cause of action for reversion.

2. Prescription does not run against the State and its subdivisions. When the government is the real party
in interest, and it is proceeding mainly to assert its own right to recover its own property, there can as
a rule be no defense grounded on laches or prescription. Public land fraudulently included in patents or
certificates of title may be recovered or reverted to the State in accordance with Section 101 of the Public
Land Act.The right of reversion or reconveyance to the State is not barred by prescription. Despite the
57
Land Titles and Deeds
lapse of one year from the entry of a decree of registration/certificate of title, the State, through the
Solicitor General, may still institute an action for reversion when s
aid decree/certificate was acquired by fraud or misrepresentation.Indefeasibility of a title does not attach
to titles secured by fraud and misrepresentation.

BARCELIZA P. CAPISTRANO v. DARRYL LIMCUANDO and FE S. SUMIRAN [579 SCRA 176, 2009]
DOCTRINE: The ultimate objective of the law is to promote public policy, that is, to provide home and
decent living for destitute, aimed at providing a class of independent small landholders which is the
bulwark of peace and order. Our prevailing jurisprudence requires that the motive of the patentee, his
widow, or legal heirs in the exercise of their right to repurchase a land acquired through patent or grant
must be consistent with the noble intent of the Public Land Act. The right to repurchase of a patentee
should fail if his underlying cause is contrary to everything that the Public Land Act stands for.

FACTS: Capistrano owned a parcel of land, with an estimated area of 224 square meters located in La-
guna pursuant to a Free Patent issued on August 23, 1977. She sold the land with a right of repurchase
in favor of spouses Zuasola.Subsequently, she sold half of the same parcel of land to respondents Limc-
uando for P75,000.00 with the latter paying P10,000.00 as partial payment and the balance by monthly
installments. Petitioner received the partial payment of P10,000.00 but signed a deed of absolute sale.
Limcuando defaulted on their monthly installments despite repeated demands. Limcuando then learned
that the land had been previously sold to the spouses Zuasola leading Limcuando to file a criminal
complaint for estafa against Capistrano. Capistrano convicted.After 4 months, Capistrano repurchased
the land from the spouses Zuasola. She also offered to repurchase from Limcuando the portion of the
disputed land which she sold to them but the latter refused. A TCT No. 127771 over the land was issued
in the names of respondents Limcuando.Capistrano filed a complaintfor the annulment of the deed of
sale alleging that the sale was a nullity from the beginning. As an alternative cause of action, petitioner
Capistrano invoked Section 119 of Commonwealth Act No. 141 (Public Land Act) in order to repurchase
the disputed land from respondents Limcuando.

ISSUE: WON Capistrano may still repurchase the land invoking Sec. 119 of Public Land Act. NO.

HELD:
Section 118of the Public Land Act pertains to the prohibition of the sale or encumbrance of a land
acquired through free patent and homestead provision within a period of five years from the date of the
issuance of the patent or grant. But Section 119of PLA subjects said lands alienation, impliedly after the
expiration of the prohibitive period, upon a right of repurchase by the homesteader, his widow, or heirs,
within a period of five years from the date of its conveyance. These provisions complement the intent
and purpose of the law to preserve and keep in the family of the homesteader that portion of public
land which the State had gratuitously given to him. However, it is important to stress that the ultimate
objective of the law is to promote public policy, that is, to provide home and decent living for destitute,
aimed at providing a class of independent small landholders which is the bulwark of peace and order.

Our prevailing jurisprudence requires that the motive of the patentee, his widow, or legal heirs in the
exercise of their right to repurchase a land acquired through patent or grant must be consistent with the
noble intent of the Public Land Act. The right to repurchase of a patentee should fail if his underlying
cause is contrary to everything that the Public Land Act stands for.

Capistrano is guilty of bad faith. She only made efforts to repurchase the property from the first buyers
after an information for estafa had been filed against her by the second buyers. Her successive convey-
ances of the land for valuable consideration to different vendees clearly indicate her profit-making motive
and lack of intention to preserve the land for herself and her family.
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