CIVIL LAW CASES

(J. Bersamin)

MENDOZA VS. REPUBLIC

685 SCRA 16, 12 November 2012
Persons and Family Relations; Annulment of Marriage

Facts: Petitioner filed in the RTC her petition for the declaration of the nullity of her
marriage with Dominic based on his psychological incapacity under Article 36 of the
Family Code. The OSG opposed the petition. In the RTC, petitioner presented herself as
a witness, together with a psychiatrist, Dr. Rocheflume Samson, and Professor Marites
Jimenez. On his part, Dominic did not appear during trial and presented no evidence.
RTC declared the marriage between petitioner and Dominic an absolute nullity. CA
reversed the decision of the RTC.

Held: The Supreme Court held that even if the expert opinions of psychologists are not
conditions sine qua non in the granting of petitions for declaration of nullity of marriage,
the actual medical examination of Dominic was to be dispensed with only if the totality
of evidence presented was enough to support a finding of his psychological incapacity.
This does not mean that the presentation of any form of medical or psychological
evidence to show the psychological incapacity would have automatically ensured the
granting of the petition for declaration of nullity of marriage. What was essential, was
the "presence of evidence that can adequately establish the party’s psychological
condition," as the Supreme Court held in Marcos v. Marcos.

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REPUBLIC V. COURT OF APPEALS

685 SCRA 33, 12 November 2012
Persons and Family Relations; Annulment of Marriage

Facts: Eduardo and Catalina were married in civil rites solemnized by the Municipal
Mayor of Lingayen, Pangasinan. The couple was not blessed with a child due to
Catalina’s hysterectomy following her second miscarriage. Eduardo filed a petition for
the declaration of nullity of their marriage, citing Catalina’s psychological incapacity to
comply with her essential marital obligations. Catalina did not interpose any objection
to the petition, but prayed to be given her share in the conjugal house and lot located in
Bacabac, Bugallon, Pangasinan.

Held: Psychological incapacity under Article 36 of the Family Code contemplates an

incapacity or inability to take cognizance of and to assume basic marital obligations,
and is not merely the difficulty, refusal, or neglect in the performance of marital
obligations or ill will. It consists of: (a) a true inability to commit oneself to the essentials
of marriage; (b) the inability must refer to the essential obligations of marriage, that is,
the conjugal act, the community of life and love, the rendering of mutual help, and the
procreation and education of offspring; and (c) the inability must be tantamount to a
psychological abnormality. Proving that a spouse failed to meet his or her responsibility
and duty as a married person is not enough; it is essential that he or she must be shown
to be incapable of doing so due to some psychological illness.

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ABLAZA VS. REPUBLIC

G.R. No. 158298, 11 August 2010
Persons and Family Relations; Declaration of Nullity of Marriage

Facts: Petitioner filed in the RTC Masbate a petition for the declaration of the absolute
nullity of the marriage contracted on December 26, 1949 between his late brother
Cresenciano Ablaza and Leonila Honato. The petitioner alleged that the marriage
between Cresenciano and Leonila had been celebrated without a marriage license, due
to such license being issued only on January 9, 1950, thereby rendering the marriage
void ab initio for having been solemnized without a marriage license. He insisted that
his being the surviving brother of Cresenciano who had died without any issue entitled
him to one-half of the real properties acquired by Cresenciano before his death, thereby
making him a real party in interest; and that any person, himself included, could
impugn the validity of the marriage between Cresenciano and Leonila at any time, even
after the death of Cresenciano, due to the marriage being void ab initio.

Ruling: The Court has to clarify the impact to the issue posed herein of Administrative
Matter (A.M.) No. 02-11-10-SC (Rule on Declaration of Absolute Nullity of Void Marriages
and Annulment of Voidable Marriages), which took effect on March 15, 2003. Section 2,
paragraph (a), of A.M. No. 02-11-10-SC explicitly provides the limitation that a petition
for declaration of absolute nullity of void marriage may be filed solely by the husband or
wife. Such limitation demarcates a line to distinguish between marriages covered by
the Family Code and those solemnized under the regime of the Civil Code. Specifically,
A.M. No. 02-11-10-SC extends only to marriages covered by the Family Code, which took
effect on August 3, 1988, but, being a procedural rule that is prospective in application,
is confined only to proceedings commenced after March 15, 2003.

Based on Carlos v. Sandoval, the following actions for declaration of absolute nullity of a
marriage are excepted from the limitation, to wit:
1. Those commenced before March 15, 2003, the effectivity date of A.M.
No. 02-11-10-SC; and
2. Those filed vis--vis marriages celebrated during the effectivity of
the Civil Code and, those celebrated under the regime of the Family
Code prior to March 15, 2003.

Considering that the marriage between Cresenciano and Leonila was contracted
on December 26, 1949, the applicable law was the old Civil Code, the law in effect at the
time of the celebration of the marriage. Hence, the rule on the exclusivity of the parties
to the marriage as having the right to initiate the action for declaration of nullity of the
marriage under A.M. No. 02-11-10-SC had absolutely no application to the petitioner.

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AGGABAO VS. PARULAN, JR.
G.R. No. 165803, 1 September 2010
Persons and Family Relations; Conjugal Property

Facts: Ma. Elena sold a conjugal property to Spouses Aggabo by presenting a special
power of attorney to sell (SPA) purportedly executed by her husband, Dionisio in her
favor. Atty. Prulan, Dionisio’s attorney-in-fact filed a case for the declaration of the
nullity of the deed of absolute sale execu5ted by Ma. Elena. RTC rendered a judgment
in favor of Dionisio, and declared that the SPA in the hands of Ma. Elena was forged.
CA affirmed the decision of the RTC opining that Article 124 of the Family Code
applied because Dionisio had not consented to the sale of the conjugal property by Ma.
Elena; and that the RTC correctly found the SPA to be a forgery.

Held: The sale was made on March 18, 1991, or after August 3, 1988, the effectivity of
the Family Code. The proper law to apply is, therefore, Article 124 of the Family Code,
for it is settled that any alienation or encumbrance of conjugal property made during
the effectivity of the Family Code is governed by Article 124 of the Family Code.

The petitioners’ insistence that Atty. Parulan’s making of a counter-offer during the
March 25, 1991 meeting ratified the sale merits no consideration. Under Article 124 of
the Family Code, the transaction executed sans the written consent of Dionisio or the
proper court order was void; hence, ratification did not occur, for a void contract could
not be ratified

On the other hand, the Supreme Court held that void sale was a continuing offer from
the petitioners and Ma. Elena that Dionisio had the option of accepting or rejecting
before the offer was withdrawn by either or both Ma. Elena and the petitioners. The last
sentence of the second paragraph of Article 124 of the Family Code makes this clear,
stating that in the absence of the other spouse’s consent, the transaction should 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 upon authorization by the court before the offer is withdrawn by either or
both offerors.

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LAVADIA VS. HEIRS OF JUAN LUCES LUNA

730 SCRA 376, 23 July 2014
Property; Co–Ownership; Void Marriage; Foreign Divorce Decree

Facts: Atty. Luna was first married to Eugenia Zaballero – Luna. Nonetheless, after two
decades of marriage life, they decided to live apart from each other and entered into a
written agreement entitled “AGREEMENT FOR SEPARATION AND PROPERTY
SETTLEMENT.” However, their marriage had not been dissolved by a Divorce Decree.
On the same date, Atty. Luna contracted another marriage this time with the petitioner.
Since Atty. Luna is a practicing lawyer, he established a law firm on which he
purchased a condominium unit. Upon the dissolution of the firm, the petitioner claims
for the 25/100 pro indiviso share of Atty. Luna in the condominium unit and other
properties of the firm on the grounds that it was acquired during the existence of their
marriage through their joint effort and that since they had no children, the petitioner
became the co-owner of the said properties upon the death of Atty. Luna.

Held: Due to the second marriage between Atty. Luna and the petitioner being void ab
initio by virtue of its being bigamous, the properties acquired during the bigamous
marriage were governed by the rules on co-ownership, conformably with Article 144 of
the Civil Code. However, in such a situation, whoever alleges co-ownership carried the
burden of proof to confirm such fact. To establish co-ownership, therefore, it became
imperative for the petitioner to offer proof of her actual contributions in the acquisition
of property. Petitioner’s mere allegation of co-ownership, without sufficient and
competent evidence, would warrant no relief in her favor.

Meanwhile, the Supreme Court ruled that divorce between Filipinos is void and
ineffectual under the nationality rule adopted by Philippine law. Hence, any settlement
of property between the parties of the first marriage involving Filipinos submitted as an
incident of a divorce obtained in a foreign country lacks competent judicial approval,
and cannot be enforceable against the assets of the husband who contracts a subsequent
marriage.

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REPUBLIC vs. ALBA

767 SCRA 385, 19 August 2015
Property; Ownership

Facts: The respondent was the purchaser for value of the parcel of land situated in the
province of Aklan. He then applied for the original registration of title over the parcels
of land in the MCTC. However, the Office of the Solicitor General (OSG), on behalf of
the Republic of the Philippines, opposed the application for original registration of title,
contending that the respondent and his predecessors-in-interest had not been in open,
continuous, exclusive and notorious possession and occupation of the lands in question
since June 12, 1945.

Held: Tax declarations or realty tax payments relevant to the lands were not conclusive
evidence of ownership, they were good indicia of his possession in the concept of owner,
for “no one in his right mind would be paying taxes for a property that is not in his
actual or at least constructive possession.” The respondent's claim of ownership on the
basis of the tax declarations alone did not also suffice. In Cequeña v. Bolante, the Court
has pointed out that only when tax declarations were coupled with proof of actual
possession of the property could they become the basis of a claim of ownership. Indeed,
in the absence of actual public and adverse possession, the declaration of the land for
tax purposes did not prove ownership. It is well-settled that tax declarations are not
conclusive proof of possession or ownership, and their submission will not lend
support in proving the nature of the possession required by the law.

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PENTA PACIFIC REALTY CORPORATION VS. LEY CONSTRUCTION
G.R. No. 161589, 24 November 2014
Property; Possession; Ownership; Accion Interdictal, Accion Publiciana and Accion
Reivindicatoria

Facts: Penta Pacific leased its properties to Ley Construction. Both parties then entered
into a contract to sell. Ley Construction failed to pay its amortizations prompting Penta
Pacific to file an action for ejectment. The CA affirmed the ruling of the RTC that the
MeTC had no jurisdiction over the case.

Held: The Supreme Court ruled that, a defendant's claim of possession de jure or his
averment of ownership does not render the ejectment suit either accion publiciana or
accion reivindicatoria. The suit remains an accion interdictal, a summary proceeding
that can proceed independently of any claim of ownership. Even when the question of
possession cannot be resolved without deciding the issue of ownership, the issue of
ownership is to be resolved only to determine the issue of possession.

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ANGELES VS. PASCUAL

658 SCRA 23, 21 September 2011
Property; Builders in Good Faith

Facts: Respondent Pascual and the petitioner Angeles were the registered owners of
adjacent parcels of land located in Cabanatuan City (Lot 4 and Lot 5, respectively). Each
of them built a house on his respective lot, believing all the while that his respective lot
was properly delineated. It was not until Metrobank bought Lot 3 and later discovered
that respondent’s house encroached on Metrobank’s lot. In turn, respondent caused the
relocation survey of his own Lot 4 and discovered that petitioner’s house in turn
encroached on his lot.

Held: Art. 448 contemplate a person building, or sowing, or planting in good faith on
land owned by another. The law presupposes that the land and the building or plants
are owned by different persons, like here. The RTC and CA found and declared
petitioner to be a builder in good faith. We cannot veer away from their unanimous
conclusion, which can easily be drawn from the fact that petitioner insists until now
that he built his house entirely on his own lot. Good faith consists in the belief of the
builder that the land he is building on is his and in his ignorance of a defect or flaw in
his title.

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FEDMAN DEVELOPMENT CORPORATION VS. AGCAOILI

656 SCRA 354, 31 August 2011
Property; Condominiums

Facts: Petitioner FDC is the owner and developer of a condominium project located in
Makati City. Respondent Agcaoili rented out a unit in petitioner’s condominium.
Unfortunately, the centralized air-conditioning unit of such condominium where the
respondent’s unit was located broke down. Respondent, being adversely affected a
demand letter regarding the said inconveniency, but the letters were unheeded. The
respondent then informed the petitioner that he was suspending his payment of
condominium dues and monthly amortization.

Held: The failure of the condominium developer and owner to comply with its
obligations to the unit owners or purchasers, such as providing a centralized air-
conditioning unit, lighting, electricity, and water, as well as maintaining adequate fire
exit, elevators, and cleanliness in each floor of the common areas, may justify a
purchaser in suspending the payment of his monthly amortizations and condominium
dues.

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HEIRS OF MARGARITA PRODON VS. HEIRS OF MAXIMO S. ALVAREZ AND

VALENTINA CLAVE
704 SCRA 465, 2 September 2013
Property; Quieting of Titles

Facts: Respondents contend that they were the registered owners of the parcels of land.
They inherited the land from their late parents and that they had the continued
possession of the property paying real property taxes due thereon. They also alleged
that the subjected land covered by the original copy containing an entry stating that the
property had been sold to petitioner subject to the right to repurchase had been
maliciously done by Prodon and therefore, did not exist. Thus, the respondents claim
for an action to quite the title and remove the clouds theron. On the side of the
petitioner, they alleged that the late Maximo Alvarez, Sr. had been granted six (6)
months within which to repurchase property but the latter had failed to repurchase it,
and that she became the absolute owner of the property.

During the trial, the custodian of the records of the property attested that the copy of
the deed of sale with right to repurchase could not be found in the files of the Register
of Deeds of Manila.

Held: The action for quieting of title may be based on the fact that a deed is invalid,
ineffective, voidable, or unenforceable. In such an action, the competent court is tasked
to determine the respective rights of the complainant and other claimants to place
things in their proper place and to make the one who has no rights to said immovable
respect and not disturb the other. The action is for the benefit of both, so that he who
has the right would see every cloud of doubt over the property dissipated, and he can
thereafter fearlessly introduce any desired improvements, as well as use, and even
abuse the property. For an action to quiet title to prosper, two indispensable requisites must
concur, namely: (a) the plaintiff or complainant has a legal or an equitable title to or
interest in the real property subject of the action; and (b) the deed, claim, encumbrance,
or proceeding claimed to be casting cloud on his title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.
The terms of the writing may or may not be material to an action for quieting of title,
depending on the ground alleged by the plaintiff. For instance, when an action for
quieting of title is based on the unenforceability of a contract for not complying with the
Statute of Frauds, Article 1403 of the Civil Code specifically provides that evidence of
the agreement cannot be received without the writing, or a secondary evidence of its
contents. There is then no doubt that the Best Evidence Rule will come into play.

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TUMBOKON VS. LEGASPI

G.R. No. 153736, 4 August 2010
Succession

Facts: The parcel of land subject in this case was originally owned by the
late Alejandra Sespeñe, who had two marriages. The first marriage was to Gaudencio
Franco, by whom she bore Ciriaca Franco, whose husband was Victor Miralles. The
second marriage was to Jose Garcia, by whom she bore respondent Apolonia Garcia,
who married Primo Legaspi. Alejandra died without a will in 1935, and was survived
by Apolonia and Crisanto Miralles, the son of Ciriaca (who had predeceased Alejandra
in 1924) and Victor Miralles; hence, Crisanto Miralles was Alejandras grandson. The
ownership and possession of the parcel of land became controversial after Spouses
Nicanor Tumbokon and Rosario Sespee (petitioners) asserted their right in it by virtue
of their purchase of it from Cresenciana Inog, who had supposedly acquired it by
purchase from Victor Miralles. The tug-of-war over the property between the
petitioners and the respondents first led to the commencement of a criminal case.

Ruling: The CA correctly found that the petitioner’s claim of ownership could not be
legally and factually sustained. First of all, the petitioners adduced no competent
evidence to establish that Victor Miralles, the transferor of the land to Cresenciana Inog
(the petitioners immediate predecessor in interest) had any legal right in the first place
to transfer ownership. He was not himself an heir of Alejandra, being only her son-in-
law (as the husband of Ciriaca, one of Alejandras two daughters). Thus, the statement in
the deed of absolute sale entered into between Victor Miralles and Cresenciana Inog, to the
effect that the parcel of land was inherited from the deceased Alejandra Sespee by
Victor Miralles being the sole heir of the said Alejandra Sespee, having no other
brothers or sisters, was outrightly false. Secondly, a decedents compulsory heirs in
whose favor the law reserves a part of the decedents estate are exclusively the persons
enumerated in Article 887; The following are compulsory heirs: (1) Legitimate children
and descendants, with respect to their legitimate parents and ascendants; (2) In default
of the foregoing, legitimate parents and ascendants, with respect to their legitimate
children and descendants; (3) The widow or widower; (4) Acknowledged natural
children and natural children by legal fiction; (5) Other illegitimate children referred to
in article 287. Compulsory heirs mentioned in Nos. 3, 4, and 5 are not excluded by those
in Nos. 1 and 2; neither do they exclude one another. In all cases of illegitimate children,
their filiation must be duly proved. The father or mother of illegitimate children of the
three classes mentioned shall inherit from them in the manner and to the extent
established by this Code.

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MEGAWORLD PROPERTIES VS MAJESTIC FINANCE
G.R. No. 169694, 9 December 2015
Obligations; Conditional and Suspensive Obligations

Facts: Petitioner and respondent entered into a Joint Venture agreement (JVA) for the
development of a residential subdivision. The owner filed in the RTC a complaint for
specific performance with damages against the petitioner for their failure to comply
with their obligations under the JVA. The RTC ruled in favor of the respondent. The CA
promulgated its assailed decision dismissing the petitioner's petition for certiorari.

Held: The obligation of each party was dependent upon the obligation of the other.
Although their obligations were to be performed simultaneously, the performance of an
activity obligation was still conditioned upon the fulfillment of the continuous
obligation, and vice versa. Should either party cease to perform a continuous obligation,
the other's subsequent activity obligation would not accrue. Conversely, if an activity
obligation was not performed by either party, the continuous obligation of the other
would cease to take effect. The performance of the continuous obligation was subject to
the resolutory condition that the precedent obligation of the other party, whether
continuous or activity, was fulfilled as it became due. Otherwise, the continuous
obligation would be extinguished.

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PRIETO VS. COURT OF APPEALS

G.R. No. 158597, 18 June 2012
Contract of Adhesion

Facts: Marcos filed in the RTC a complaint against FEBTC to declare the nullity of
several real estate mortgage contracts. Defendant spouses, using the property of
plaintiff as collateral, had thereafter obtained from FEBTC a series of loans. However,
defendant spouses had failed to pay the loans, leading FEBTC to initiate the extra-
judicial foreclosure of the mortgages; and that the promissory notes and the real estate
mortgage contracts were in the name of defendant spouses for themselves alone, who
had incurred the obligations, rendering the promissory notes and the mortgage
contracts null and void ab initio.

Held: Contracts of adhesion are valid but might be occasionally struck down only if
there was a showing that the dominant bargaining party left the weaker party without
any choice as to be “completely deprived of an opportunity to bargain effectively.” The
exception did not apply in the instant case for, verily, Marcos, being a lawyer, could not
have been the weaker party. As the tenor of the acknowledgment indicated, he was
fully aware of the meaning and sense of every written word or phrase, as well as of the
legal effect of his confirmation thereby of his agent’s act. It is axiomatic that a man’s act,
conduct and declaration, wherever made, if voluntary, are admissible against him, for
the reason that it is fair to presume that they correspond with the truth, and it is his
fault if they do not.
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NETLINK COMPUTER INCORPORATED VS. ERIC DELMO

G.R No. 160827, 18 June 2014
Contracts; Payment or Performance

Facts: Netlink Computer, Inc. Products and Services hired Eric S. Delmo as account
manager. He was able to generate sales from which he earned commissions amounting
to P993,558.89 and US$7,588.30. He then requested payment of his commissions, but
Netlink refused and only gave him partial cash advances chargeable to his
commissions. Later on, Netlink began to nitpick and fault find, like stressing his
supposed absences and tardiness. In order to force him to resign, Netlink issued several
memoranda detailing his supposed infractions of the company’s attendance policy.
Despite the memoranda, Delmo continued to generate huge sales for Netlink. On
November 28, 1996, Delmo was shocked when he was refused entry into the company
premises by the security guard pursuant to a memorandum to that effect. This incident
prompted Delmo to file a complaint for illegal dismissal. The Labor Arbiter ruled
against Netlink and in favor of Delmo. On appeal, the National Labor Relations
Commission modified the decision of the Labor Arbiter by setting aside the backwages
and reinstatement decreed by the Labor Arbiter due to the existence of valid and just
causes for the termination of Delmo’s employment. On May 9, 2003, the CA
promulgated its assailed decision upholding the NLRC’s ruling subject to
modifications. Hence, this appeal. Netlink submits that the CA committed a palpable
and reversible error of law in not holding that the applicable exchange rate for
computing the US dollar commissions of Delmo should be the rates prevailing at the
time when the sales were actually generated, not the rates prevailing at the time of the
payment; and in awarding attorney’s fees.

Held: In the absence of a written agreement between the employer and the employee
that sales commissions shall be paid in a foreign currency, the latter has the right to be
paid in such foreign currency once the same has become an established practice of the
former. The rate of exchange at the time of payment, not the rate of exchange at the time
of the sales, controls. There was no written contract between Netlink and Delmo
stipulating that the latter’s commissions would be paid in US dollars. The absence of the
contractual stipulation notwithstanding, Netlink was still liable to pay Delmo in US
dollars because the practice of paying its sales agents in US dollars for their US dollar
denominated sales had become a company policy.

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METROPOLITAN FABRICS INC. VS PROSPERITY CREDIT

G.R. No. 154390, 17 March 2014
Voidable Contracts

Facts: MFI sought from PCRI a loan to prevent its repossession by the seller. CA
promulgated its assailed judgment reversing and setting aside the decision of the RTC,
and dismissing the complaint and the counterclaim.
Held: Where the consent was given through fraud, the contract was voidable, not void
ab initio. This is because a voidable or annullable contract is existent, valid and binding,
although it can be annulled due to want of capacity or because of the vitiated consent of
one of the parties. With the contract being voidable, petitioners’ action to annul the real
estate mortgage already prescribed. Article 1390, in relation to Article 1391 of the Civil
Code, provides that if the consent of the contracting parties was obtained through
fraud, the contract is considered voidable and may be annulled within four years from
the time of the discovery of the fraud. The discovery of fraud is reckoned from the time
the document was registered in the Register of Deeds in view of the rule that
registration was notice to the whole world.

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CALILAP-ASMERON VS DEVELOPMENT BANK OF THE PHILIPPINES

G.R. No. 157330, 23 November 2011
Contracts; Rescission

Facts: Petitioner constituted a real estate mortgage over two parcels of land to secure
the performance of their loan obligation with respondent DBP. With the principal
obligation being ultimately unpaid, DBP foreclosed the mortgage. The mortgaged
parcels of land were then sold to DBP as the highest bidder. DBP sold the lot to
respondent Cruz via a deed of absolute sale. The petitioner consequently filed a
complaint for the rescission of the sale to respondent Cruz. The RTC dismissed the case.

Held: A contract is the law between the parties. Absent any allegation and proof that
the contract is contrary to law, morals, good customs, public order or public policy, it
should be complied with in good faith. As such, the petitioner, being one of the parties
in the deed of conditional sale, could not be allowed to conveniently renounce the
stipulations that she had knowingly and freely agreed to. As a consequence of the valid
rescission, DBP had the legal right to thereafter sell the property to a person other than
the petitioner, like Cruz. In turn, Cruz could validly sell the property to Cabantog and
Trinidad, which he did.

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HEIRS OF SERVANDO FRANCO VS GONZALES

G.R. No. 159709, 27 June 2012
Contracts; Novation

Facts: Petitioners obtained a loan from respondents payable in two months. On

maturity of the loan, the borrowers failed to pay the indebtedness. Respondent filed
with the RTC a complaint for collection of the full amount. Petitioner alleged that he did
not obtain any loan from the plaintiffs; that it was defendants Leticia and Dr. Rafael
Medel who borrowed from the respondents

Held: For a valid novation to take place, there must be: (a) a previous valid obligation;
(b) an agreement of the parties to make a new contract; (c) an extinguishment of the old
contract; and (d) a valid new contract. In short, the new obligation extinguishes the
prior agreement only when the substitution is unequivocally declared, or the old and
the new obligations are incompatible on every point. To be clear, novation is not
presumed. This means that the parties to a contract should expressly agree to abrogate
the old contract in favor of a new one. In the absence of the express agreement, the old
and the new obligations must be incompatible on every point.

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SPOUSES JAIME SEBASTIAN AND EVANGELINE SEBASTIAN VS. BPI FAMILY

BANK, INC., CARMELITA ITAPO AND BENJAMIN HAO
G.R. No. 160107, 22 October 2014

Facts: Petitioners are spouses who used to work for BPI Family. At the time material to
this case, Jaime was the Branch Manager of BPI Family’s San Francisco del Monte
Branch in Quezon City and Evangeline was a bank teller at the Blumentritt Branch in
Manila. On October 30, 1987, they availed themselves of a housing loan from BPI
Family as one of the benefits extended to its employees. Their loan amounted to
P273,000.00, and was covered by a Loan Agreement, whereby they agreed that the loan
would be payable in 108 equal monthly amortizations of P3,277.57 starting on January
10, 1988 until December 10, 1996; and that the monthly amortizations would be
deducted from his monthly salary. To secure the payment of the loan, they executed a
real estate mortgage in favor of BPI Family over the property situated in Bo. Ibayo,
Marilao, Bulacan and covered by TCT No. T-30.827 (M) of the Register of Deeds of
Bulacan. The petitioners’ monthly loan amortizations were regularly deducted from
Jaime’s monthly salary since January 10, 1988. On December 14, 1989, however, Jaime
received a notice of termination from BPI Family’s Vice President, Severino P.
Coronacion, informing him that he had been terminated from employment due to loss
of trust and confidence resulting from his wilful non-observance of standard operating
procedures and banking laws. Evangeline also received a notice of termination dated
February 23, 1990, telling her of the cessation of her employment on the ground of
abandonment. About a year after their termination from employment, the petitioners
received a demand letter dated January 28, 1991 from BPI Family’s counsel requiring
them to pay their total outstanding obligation amounting to P221,534.50.12.

In the meantime, BPI Family instituted a petition for the foreclosure of the real estate
mortgage. The petitioners received on March 6, 1991 the notice of extrajudicial
foreclosure of mortgage dated February 21, 1991. To prevent the foreclosure of their
property, the petitioners filed against the respondents their complaint for injunction
and damages with application for preliminary injunction and restraining order.
Petitioners argued, among others, that their rights under Republic Act No. 6552 (Realty
Installment Buyer Protection Act) had been disregarded, considering that Section 3 of
the law entitled them to a grace period within which to settle their unpaid installments
without interest; and that the loan agreement was in the natureof a contract of adhesion
that must be construed strictly against the one who prepared it, that is, BPI Family
itself.

Held: The protection of Republic Act No. 6552 (Realty Installment Buyer Protection Act)
does not cover a loan extended by the employer to enable its employee to finance the
purchase of a house and lot. The law protects only a buyer acquiring the property by
installment, not a borrower whose rights are governed by the terms of the loan from the
employer.

Petitioners’ insistence would have been correct if the monthly amortizations being paid
to BPI Family arose from a sale or financing of real estate. In their case, however, the
monthly amortizations represented the installment payments of a housing loan that BPI
Family had extended to them as an employee’s benefit. The monthly amortizations they
were liable for was derived from a loan transaction, not a sale transaction, thereby
giving rise to a lender-borrower relationship between BPI Family and the petitioners.

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UY vs. FULE
727 SCRA 456, 30 June 2014
Sales; Buyer in Good Faith

Facts: Ronda, a farmer – beneficiary of a lot located in Camarines Sur sold his portion to
one Chisan Uy who then registered his title to such lot. On the other hand, the heirs of
farmer – beneficiary Ronda, sold their land to the petitioner Hector Uy. The president,
acting though the DAR Secretary issued emancipation patents to a number of people,
including the name of the petitioner prompting the respondents file a complaint for
cancellation of titles, quieting of title, etc. against the DAR Secretary et al., alleging that
they had been denied due process and that the titles of the defendants in the disputed
land constituted clouds on their title.

The petitioner argues that he paid the full and fair price and that all documents shown
to him by the vendors did not indicate any defect on their title or any claim by the
respondents. The petitioner concludes that the absence of any irregularities in the
documents presented to him, he need not to look beyond those titles and he is deemed a
purchaser for value.

Held: In determining whether or not a buyer of property is a purchaser in good faith, he

must show that he has bought the property without notice that some other person had a
right to, or interest in, such property, and he should pay a full and fair price for the
same at the time of his purchase, or before he had notice of the claim or interest of some
other persons in the property. He must believe that the person from whom he receives
the property was the owner and could convey title to the property, for he cannot close
his eyes to facts that should put a reasonable man on his guard and still claim he acted
in good faith. In this case, since the petitioner entered into the deed of sale without
having been able to inspect the titles, he cannot be considered an innocent purchaser for
value. Hence, he cannot be awarded the disputed land.

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HEIRS OF JOSE REYES, JR. VS. REYES

GR 158377, 13 August 2010
Sales; Equitable Mortgage; Pactum Commisorium
Facts: Antonio Reyes and Leoncia Reyes were the owners of a parcel of land. The
spouses had begotten four children. Later on, Antonio Reyes died intestate. The
remaining heirs continued to occupied the land until they sold the land to spouses
Francia and executed a deed denominated Kasulatang Mabibiling Muli for P500.00,
subject to the vendors right to repurchase for the same amount sa oras na sila'y
makinabang. Nonetheless, Teofilo and Jose, Jr. and their respective families remained in
possession of the property and paid the realty taxes thereon. Leoncia and her children
were unable to repay the amount of P500.00. Alejandro Reyes, the Son of Jose, Sr. paid
the sum of P500.00 to the heirs of spouses Francia and later on, the heirs executed a
deed entitled Pagsasa-ayos ng Pag-aari at Pagsasalin, whereby they transferred and
conveyed to Alejandro all their rights and interests in the property. Thus, Alejandro
executed a document denominated as Kasulatan ng Pagmeme-ari to prove his ownership
on the subject property.

Held: Considering that sa oras na silay makinabang, the period of redemption stated in
the Kasulatan ng Biling Mabibiling Muli, signified that no definite period had been stated,
the period to redeem should be ten years from the execution of the contract, pursuant to
Articles 1142 and 1144 of the Civil Code and upon the expiration of said 10-year period,
mortgagees Spouses Francia or their heirs should have foreclosed the mortgage, but they
did not do so.

The Kasulatan ng Pagmeme-ari executed by Alejandro was ineffectual to predicate the

exclusion of the petitioners and their predecessors in interest from insisting on their
claim to the property. Alejandros, being an assignee of the mortgage, did not authorize
him or his heirs to appropriate the mortgaged property for himself without violating
the prohibition against pactum commissorium contained in Article 2088 of
the Civil Code, to the effect that [t]he creditor cannot appropriate the things given by
way of pledge or mortgage, or dispose of them[;] [a]ny stipulation to the contrary is null
and void.

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COMSAVINGS BANK VS. SPS. CAPISTRANO

G.R. No. 170942, 28 August 2013
Torts; Negligence

Facts: Sps. Capistrano (respondents) desirous of building their own house on the lot
availed themselves of the UHLP implemented by the National Home Mortgage Finance
Corporation (NHMFC). They executed a construction contract with GCB Builders with
the latter undertaking to complete the construction within 75 days. To finance the
construction, GCB Builders facilitated their loan application with Comsavings Bank, an
NHFMC-accredited originator. Thereafter, Comsavings Bank informed respondents
that they would have to sign various documents as part of the requirements for the
release of the loan. Among the documents was a certificate of house completion and
acceptance. Due to the failure to complete the house, respondents sued GCB Builders
and Comsavings Bank for breach of contract and damages, praying that defendants be
ordered jointly and severally liable: (1) to finish the construction of the house according
to the plans and specifications agreed upon at the price stipulated in the construction
contract; and (2) to pay them P38,450.00 as the equivalent of the mortgage value in
excess of the contract price; P25,000.00 as actual damages for the expenses incurred by
reason of the breach of contract; P200,000.00 as moral damages; P30,000.00 as attorney’s
fees; and P50,000.00 as exemplary damages. Comsavings Bank now insists on its non-
liability, contending that it committed no misrepresentation when it made respondents
sign the certificate of house acceptance/completion notwithstanding that the
construction of the house had not yet started.

Held: Comsaving Bank’s liability was not based on its purchase of loan agreement with
NHMFC but on Article 20 and Article 1170 of the Civil Code. Based on the provisions, a
banking institution like Comsavings Bank is obliged to exercise the highest degree of
diligence as well as high standards of integrity and performance in all its transactions
because its business is imbued with public interest.

There is no question that Comsavings Bank was grossly negligent in its dealings with
respondents because it did not comply with its legal obligation to exercise the required
diligence and integrity. As a banking institution serving as an originator under the
UHLP and being the maker of the certificate of acceptance/completion, it was fully
aware that the purpose of the signed certificate was to affirm that the house had been
completely constructed according to the approved plans and specifications, and that
respondents had thereby accepted the delivery of the complete house. Given the
purpose of the certificate, it should have desisted from presenting the certificate to
respondents for their signature without such conditions having been fulfilled. Yet, it
made respondents sign the certificate (through Estrella Capistrano, both in her personal
capacity and as the attorney-in-fact of her husband Danilo Capistrano) despite the
construction of the house not yet even starting. Its act was irregular per se because it
contravened the purpose of the certificate. Worse, the pre-signing of the certificate was
fraudulent because it was thereby enabled to gain in the process the amount
of P17,306.83 in the form of several deductions from the proceeds of the loan on top of
other benefits as an originator bank. On the other hand, respondents were prejudiced,
considering that the construction of the house was then still incomplete and was
ultimately defective. Compounding their plight was that NHMFC demanded payment
of their monthly amortizations despite the non-completion of the house. Had
Comsavings Bank been fair towards them as its clients, it should not have made them
pre-sign the certificate until it had confirmed that the construction of the house had
been completed.

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PHILTRANCO SERVICE VS. PARAS

G.R. No. 161909, 25 April 2012
Moral Damages; Transportation Law

Facts: The Inland bus was travelling along Maharlika Highway when it was bumped at
the rear by Philtranco bus. As a result of the strong and violent impact, the Inland bus
was pushed forward and smashed into a cargo truck parked along the outer right
portion of the highway. Paras was not spared from the effects of the accident. Paras
filed a complaint for damages based on breach of contract of carriage against Inland.

Held: Paras can recover moral damages. As a general rule, indeed, moral damages are
not recoverable in an action predicated on a breach of contract. By way of exception,
moral damages are recoverable in an action predicated on a breach of contract: (a)
where the mishap results in the death of a passenger, as provided in Article 1764, in
relation to Article 2206 of the Civil Code; and (b) where the common carrier has been
guilty of fraud or bad faith, as provided in Article 2220 of the Civil Code Although this
action does not fall under either of the exceptions, the award of moral damages to Paras
was nonetheless proper and valid because of the nedligent and imprudent manner
petitioner drove the unit. Paras may also recover temperate damages. The Civil code
expressly authorizes the courts to award temperate damages despite lack of certain
proof of actual damages.

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SULPICIO LINES INC. VS. CURSO

G.R. no. 157009, 17 March 2010
Torts; Common carrier; Moral Damages

Facts: Curso was among the victims when Dona Marilyn sank while at sea due to
inclement weather conditions. The respondents, allegedly the surviving brothers and
sisters, sued the petitioner in the RTC to claim damages based on breach of contract of
carriage by sea. The RTC dismissed the complaint upon its finding that the sinking of
the vessel was due to force majeure.

Held: As a general rule, moral damages are not recoverable in actions for damages
predicated on a breach of contract, unless there is fraud or bad faith. As an exception,
moral damages may be awarded in case of breach of contract of carriage that results in
the death of a passenger. To be entitled to moral damages, the respondents must have a
right based upon law. It is true that under Article 1003 of the Civil Code they succeeded
to the entire estate of the late Dr. Curso in the absence of the latter's descendants,
ascendants, illegitimate children, and surviving spouse. However, they were not
included among the persons entitled to recover moral damage.

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METRO MANILA TRANSIT CORP. VS. CUEVAS

G.R. No. 167797, 15 June 2015
Quasi-delicts; Transportation Law

Facts: MMTC and Mina Transit entered into an agreement to sell whereby the latter
bought several bus units from the former at a stipulated price. They agreed that MMTC
would retain the ownership of the buses until certain conditions were met. One of the
buses subject of the agreement to sell, hit and damaged a Motorcycle owned by
Reynaldo Cuevas and driven by Junnel Cuevas. Reynaldo and Junnel sued MMTC and
Mina's Transit for damage.
Held: MMTC could not escape liability for the personal injuries and property damage
suffered by the Cuevases. This is because of the registered-owner rule, whereby the
registered owner of the motor vehicle involved in a vehicular accident could be held
liable for the consequences. MMTC could not evade liability by passing the buck to
Mina's Transit. The stipulation in the agreement to sell did not bind third parties like
the Cuevases, who were expected to simply rely on the data contained in the
registration certificate of the erring bus.

The registered owner of a motor vehicle whose operation causes injury to another is
legally liable to the latter. But it is error not to allow the registered owner to recover
reimbursement from the actual and present owner by way of its cross-claim.

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BPI EXPRESS CARD CORPORATION VS. MA. ANTONIA R. ARMOVIT

G.R. No. 163654, 8 October 2014
Moral Damages

Facts: This case involves a credit card holder's claim for damages arising from the
suspension of her credit privileges due to her supposed failure to reapply for their
reactivation. She has insisted that she was not informed of the condition for
reactivation.

Held: The relationship between the credit card issuer and the credit card holder is a
contractual one that is governed by the terms and conditions found in the card
membership agreement. Such terms and conditions constitute the law between the
parties. In case of their breach, moral damages may be recovered where the defendant is
shown to have acted fraudulently or in bad faith. Malice or bad faith implies a
conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity. However, a conscious or intentional design need not always be present
because negligence may occasionally be so gross as to amount to malice or bad faith.
Hence, bad faith in the context of Article 2220 of the Civil Code includes gross
negligence. Nowhere in the terms and conditions requires the defendant to submit new
application form in order to reactivate her credit card. Indeed, BPI Express Credit did
not observe the prudence expected of banks whose business was imbued with public
interest. Hence, the award of moral damages in the amount of ₱100,000.00 to defendant
card holder is proper.

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PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORP. VS.

AMALGAMATED MANAGEMENT
G.R. No. 177729, 28 September 2011
Interest Rates

Facts: AMDC obtained from NCBSA a loan to finance the working capital requirements
and the down payment for the trucks to be used in AMDC's hauling project in the
Middle East. As the security for the guaranty, AMPI, a sister company of AMDC, acted
as an accommodation mortgagor, and executed in favor of the petitioner a real estate
mortgage. AMDC defaulted on the obligation. Petitioner sued AMDC to collect the
deficiency. The petitioner appealed to the CA, asserting that the rates of interest and
penalty charges on the deficiency claim should each be at 16% per annum instead of
only 6% per annum.

Held: In contracts, the law empowers the courts to reduce interest rates and penalty
charges that are iniquitous, unconscionable and exorbitant. Whether an interest rate or
penalty charge is reasonable or excessive is addressed to the sound discretion of the
courts. The huge disparity between the market value and the price realized at the
foreclosure sale obviously gave a clear financial advantage to the petitioner, and this
did not escape the attention of both the RTC and the CA. In view of these, to still fix the
interest rate and penalty charge at 16% per annum each would be plainly inequitable
and oppressive.

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CASIMIRO DEVELOPMENT VS. MATEO

654 SCRA 676, 27 January 2011
Land Registration, Torrens System

Facts: Casimiro Development Corporation (CDC) bought parcel of land from China
Bank. Respondent brought an action for quieting of title, reconveyance of four-fifths of
the land, and damages against CDC and Laura in the RTC in Las Piñas City. RTC ruled
in favor of CDC. On appeal, the Court of Appeals reversed the decision of the RTC and
declared CDC to be not a buyer in good faith due to its being charged with notice of the
defects and flaws of the title at the time it acquired the property from China Bank.

Held: To start with, one who deals with property registered under the Torrens system
need not go beyond the certificate of title, but only has to rely on the certificate of
title. He is charged with notice only of such burdens and claims as are annotated on the
title. The pertinent law on the matter of burdens and claims is Section 44 of the Property
Registration Decree, which provides:

Section 44. Statutory liens affecting title. — Every registered owner receiving a
certificate of title in pursuance of a decree of registration, and every subsequent
purchaser of registered land taking a certificate of title for value and in good faith, shall
hold the same free from all encumbrances except those noted on said certificate and any
of the following encumbrances which may be subsisting, namely:

First. Liens, claims or rights arising or existing under the laws and Constitution of the
Philippines which are not by law required to appear of record in the Registry of Deeds
in order to be valid against subsequent purchasers or encumbrances of record.

Second. Unpaid real estate taxes levied and assessed within two years immediately
preceding the acquisition of any right over the land by an innocent purchaser for value,
without prejudice to the right of the government to collect taxes payable before that
period from the delinquent taxpayer alone.

Third. Any public highway or private way established or recognized by law, or any
government irrigation canal or lateral thereof, if the certificate of title does not state that
the boundaries of such highway or irrigation canal or lateral thereof have been
determined.

Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or
pursuant to, Presidential Decree No. 27 or any other law or regulations on agrarian
reform.

In short, considering that China Bank’s TCT No. 99527 was a clean title, that is, it was
free from any lien or encumbrance, CDC had the right to rely, when it purchased the
property, solely upon the face of the certificate of title in the name of China Bank.

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PAZ VS. REPUBLIC

G.R. No. 157367, 23 November 2011
Property Registration Decree

Facts: Petitioner filed a petition for cancellation. The petition, ostensibly made under
Section 108 of P.D. No. 1529, impleaded the Republic of the Philippines (Republic),
Filinvest Development Corporation (FDC), and Filinvest Alabang, Inc. (FAI) as
respondents.

Held: The proceeding for the amendment and alteration of a certificate of title under
Section 108 of P.D. No. 1529 is applicable in seven instances or situations, namely: (a)
when registered interests of any description, whether vested, contingent, expectant, or
inchoate, have terminated and ceased; (b) when new interests have arisen or been
created which do not appear upon the certificate; (c) when any error, omission or
mistake was made in entering a certificate or any memorandum thereon or on any
duplicate certificate; (d) when the name of any person on the certificate has been
changed; (e) when the registered owner has been married, or, registered as married, the
marriage has been terminated and no right or interest of heirs or creditors will thereby
be affected; (f) when a corporation, which owned registered land and has been
dissolved, has not conveyed the same within three years after its dissolution; and (g)
when there is reasonable ground for the amendment or alteration of title. The petitioner
was in reality seeking the reconveyance of the property covered by OCT No. 684, not
the cancellation of a certificate of title as contemplated by Section 108 of P.D. No. 1529.
Thus, his petition did not fall under any of the situations covered by Section 108, and
was for that reason rightly dismissed.

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MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY VS. HEIRS OF
GAVINA
G.R. No. 173140, 11 January 2016
Land Registration

Facts: A deed of Extrajudicial Settlement and Sale was executed in favor of the
petitioner. The respondents caused the judicial reconstitution of the original certificate
of title covering the subject lot. The failure of the respondents to surrender the owner's
copy prompted petitioner to sue them for the cancellation of title in the RTC alleging in
its complaint that the certificate of title conferred no right in favor of the respondents
because the lot had already been sold to the Government. The RTC dismissed
petitioner's complaint. The CA affirmed the orders of the RTC.

Held: The Supreme Court ruled in favor of the respondent. Under the Torrens System,
no adverse possession could deprive the registered owners of their title by prescription.
The real purpose of the Torrens System is to quiet title to land and to stop any question
as to its legality forever. Thus, once title is registered, the owner may rest secure,
without the necessity of waiting in the portals of the court, or sitting on the mirador su
casa to avoid the possibility of losing his land.

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REPUBLIC VS. SANTOS III

685 SCRA 51, 12 November 2012
Land Titles and Deeds; Preponderance of evidence
Property; river beds

Facts: Alleging continuous and adverse possession of more than ten years, respondent
Arcadio Ivan A. Santos III (Arcadio Ivan) applied for the registration of Lot 4998-B in
the RTC, Paranaque City. Arcadio Ivan amended his application for land registration to
include Arcadio, Jr. as his co-applicant because of the latter’s co-ownership of the
property. He alleged that the property had been formed through accretion and had
been in their joint open, notorious, public, continuous and adverse possession for more
than 30 years.

The City of Parañaque (the City) opposed the application for land registration, stating
that it needed the property for its flood control program; that the property was within
the legal easement of 20 meters from the river bank; and that assuming that the
property was not covered by the legal easement, title to the property could not be
registered in favor of the applicants for the reason that the property was an orchard that
had dried up and had not resulted from accretion.

Held: Respondents as the applicants for land registration carried the burden of proof to
establish the merits of their application by a preponderance of evidence, by which is
meant such evidence that is of greater weight, or more convincing than that offered in
opposition to it. They would be held entitled to claim the property as their own and
apply for its registration under the Torrens system only if they established that, indeed,
the property was an accretion to their land. However, respondents did not discharge
their burden of proof.

Furthermore, subject to the exceptions defined in Article 461 of the Civil Code (which
declares river beds that are abandoned through the natural change in the course of the
waters as ipso facto belonging to the owners of the land occupied by the new course,
and which gives to the owners of the adjoining lots the right to acquire only the
abandoned river beds not ipso facto belonging to the owners of the land affected by the
natural change of course of the waters only after paying their value), all river beds
remain property of public dominion and cannot be acquired by acquisitive prescription
unless previously declared by the Government to be alienable and disposable.
Considering that Lot 4998-B was not shown to be already declared to be alienable and
disposable, respondents could not be deemed to have acquired the property through
prescription.

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