You are on page 1of 221

2009

Dueas v. Guce-Africa
G.R. No. 165679, October 5, 2009

Doctrine: For actual damages to be recoverable, it must not only be capable of proof, but must
actually be proved with reasonable degree of certainty. Before actual damages can be awarded, there
must be competent proof of the actual amount of loss, and credence can be given only to claims which
are duly supported by receipts

FACTS:
In January 1998 respondent entered into a Construction Contract with petitioner for the demolition of
an ancestral house and the construction of a new four-bedroom residential house to be used in a
wedding ceremony and a family reunion to be held on April 18, 1998. The parties agreed that
respondent would pay P500kand petitioner will furnish all the necessary materials and labor for the
completion of the project as well as the finishing of all interior portions of the house on or before
March 31, 1998. On April 18, 1998, however, the house remained unfinished. The wedding ceremony

SENIORS

was thus held at the Club Victorina and respondent’s relatives were forced to stay in a hotel.

BATCH 2018
Respondent filed a Complaint for breach of contract and damages against petitioner alleging that
petitioner started the project without securing the necessary permit from the City Engineers Office and
thatshe gave petitioner P550k but petitioner unjustly and fraudulently abandoned the project leaving it
substantially unfinished and incomplete. Petitioner asserted that respondent undertook to secure the
permits and the amount of P50k was in payment for the additional works which respondent requested
while the construction was still on going. Healleged that the delay in the construction of the house was
due to circumstances beyond his control, namely: heavy rains, observance of Holy Week, and
celebration of barangay fiesta. Ultimately, he was not able to complete the project because respondent
went to his house and told him to stop the work.
The RTC found that Dueas failed to exercise the required diligence as a contractor and is guilty of
negligence and delay. Dueas was directed to pay plaintiff actual damages.

Petitioner contends that he neither abandoned the project nor violated the contract. He also questions
the award of actual damages for want of evidentiary foundation. He maintains that actual damages must
be proved with reasonable degree of certainty.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !1 of !221
2009
ISSUES:
Whether or need there was violation of the contract on the part of petitioner
Whether or not respondent is entitled to actual damages

HELD:
Yes. It has already been held that the determination of the existence of a breach of contract is a factual
matter not usually reviewable in a petition filed under Rule 45.

For actual damages to be recoverable, it must not only be capable of proof, but must actually be proved
with reasonable degree of certainty. Before actual damages can be awarded, there must be competent
proof of the actual amount of loss, and credence can be given only to claims which are duly supported
by receipts. Here, respondent did not present documentary proof to support the claimed necessary
expenses for the repair and completion of the house. In awarding the amounts of P100k and P200k the
RTC and the CA merely relied on the testimonies of the respondent and her witness.

SENIORS

Nonetheless, in the absence of competent proof on the amount of actual damages suffered, a party is

BATCH 2018
entitled to temperate damages. Temperate or moderate damages may be recovered when some
pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with
certainty.

There is no doubt that respondent sustained damages due to the breach committed by the petitioner.
The transfer of the venue of the wedding, the repair of the substandard work, and the completion of the
house necessarily entailed expenses. In view of the circumstances obtaining in this case, an award of
temperate damages equivalent to 20% of the original contract price of P500k, or P100k(which,
incidentally, is equivalent to 1/3 of the total amount claimed as actual damages), is just and reasonable.
Petitioner is ordered to pay respondent temperate damages in the amount of P100k.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !2 of !221
2009
Spouses Castro v. Tan
G.R. No. 168940, November 24, 2009

Doctrine: 1) The imposition of an unconscionable rate of interest on a money debt, even if knowingly
and voluntarily assumed, is immoral and unjust, and may be equitably reduced by the courts. 2) No
foreclosure proceedings may be instituted when the debtors are not given the opportunity to settle their
debt at the correct amount and without the iniquitous interest imposed.

Facts:
Respondent Angelina de Leon Tan (Tan) and her husband Ruben Tan entered into an agreement with
petitioner spouses Isagani and Diosdada Castro (Spouses Castro) denominated as Kasulatan ng
Sanglaan ng Lupa at Bahay (Kasulatan) to secure a loan of P30,000.00 they obtained from the latter.
Under the Kasulatan, the spouses Tan undertook to pay the mortgage debt within six months or until
August 17, 1994, with an interest rate of 5% per month, compounded monthly.
When her husband died, respondent Tan was left with the responsibility of paying the loan. However,

SENIORS

she failed to pay the same upon maturity. Thereafter, she offered to pay petitioners the principal amount
of P30,000.00 plus a portion of the interest but petitioners refused and instead demanded payment of

BATCH 2018
the total accumulated sum of P359,000.00. Petitioners extrajudicially foreclosed the mortgage and
emerged as the highest bidder. Tan was unable to redeem the property, thus she was ejected from the
property after the spouses obtained a writ of possession.

Respondent Tan filed a Complaint for Nullification of Mortgage and Foreclosure and/or Partial
Rescission of Documents and Damages before the RTC, alleging, inter alia, that the interest rate
imposed on the principal amount of P30,000.00 is unconscionable. The RTC ruled for respondents,
reduced the rate to 12% per annum and declared the foreclosure null and void.

On appeal, the CA affirmed the decision, but with allowed Tan to redeem in the interest of substantial
justice and equity. Hence, spouses Castro filed this Petition for Review on Certiorari, arguing that
because of the removal by the BangkoSentral of the ceiling on the rate of interest, the lender and the
borrower could validly agree on any interest rate on loans.They also argue that the court erred in
extending the period of redemption in favor of the respondents in violation of the clear and unequivocal
provisions of Act No. 3135 providing a period of only one year for the redemption.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !3 of !221
2009
Issue:
(1) Is 5% monthly interest, compounded monthly, unconscionable, and should be equitably reduced to
the legal rate of 12% per annum?
(2) Was the extension by the CA of the redemption period proper?

Ruling:
(1) Yes. The rate of 5% monthly interest is unconscionable and should be equitably reduced.
While parties to a loan agreement have wide latitude to stipulate on any interest rate in view of the
Central Bank Circular No. 905 s. 1982 which suspended the Usury Law ceiling on interest effective
January 1, 1983, it is also worth stressing that interest rates whenever unconscionable may still be
declared illegal. There is certainly nothing in said circular which grants lenders carte blanche authority
to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of
their assets.

In this case, the 5% monthly interest rate, or 60% per annum, compounded monthly, stipulated in the

SENIORS

Kasulatan is even higher than the 3% monthly interest rate imposed in the Ruiz case. Thus, we
similarly hold the 5% monthly interest to be excessive, iniquitous, unconscionable and exorbitant,

Civil Code. BATCH 2018


contrary to morals, and the law. It is therefore void ab initio for being violative of Article 1306 of the

(2) No. A judgment ordering a foreclosure sale is conditioned upon a finding on the correct amount of
the unpaid obligation and the failure of the debtor to pay the said amount. When the debtors are not
given the opportunity to settle their debt, at the correct amount and without the iniquitous interest
imposed, no foreclosure proceedings may be instituted.

Thus, the foreclosure proceedings should be nullified since the amount demanded as the outstanding
loan was overstated. Consequently, it has not been shown that the respondents have failed to pay the
correct amount of their outstanding obligation. Accordingly, we declare the registration of the
foreclosure sale invalid and cannot vest title over the mortgaged property.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !4 of !221
2009
ETROPOLITAN BANK & TRUST CO., vs. LAMB CONSTRUCTION CONSORTIUM
CORPORATION
G.R. No. 170906; November 27, 2009

DOCTRINE: Mere inadequacy or surplus in the purchase price does not affect the purchaser’s
entitlement to a writ of possession. In case there is a surplus, the mortgagor is entitled to receive the
same from the purchaser. The failure or refusal of the mortgagee-purchaser to return the surplus does
not affect the validity of the sale but gives the mortgagor a cause of action against the mortgagee-
purchaser.

FACTS:
Respondent Lamb Construction obtained a ₱5.5 million loan from petitioner Metropolitan Bank. To
secure the loan, respondent executed a Real Estate Mortgage in favor of petitioner involving six parcels
of land covered by their respective Transfer Certificates of Title. Respondent failed to pay the loan
upon maturity hence petitioner filed a petition for the extra-judicial foreclosure of the said properties.

SENIORS

During the auction sale, petitioner emerged as the highest bidder with the bid amount of ₱6,669,765.75
and was accordingly issued a Certificate of Sale.

BATCH 2018
During the period of redemption, petitioner filed a verified petition for issuance of a writ of possession
alleging that despite its demands, respondent refused and failed to turn over actual possession of the
foreclosed properties. The RTC rendered a decision denying petitioner’s application for the issuance of
a writ of possession because it failed to deposit the surplus proceeds from the foreclosure sale. It
reasoned that under the law, the buyer of the property is obligated to pay the contract price of
₱6,669,756.75 less the obligation of ₱5,251,705.67. Hence, the purchaser of the property should still
pay the auctioneer the amount of ₱1,418,060.08. The amount should be deposited at the Office of the
Clerk of Court in trust for the mortgagor.

Upon elevation to the CA, the CA ruled that petitioner is entitled to a writ of possession, the issuance of
which is ministerial upon the court.At the same time, the appellate court ruled that petitioner is also
obliged to return the excess of the bid price over the outstanding obligation. Based on its computation,
the appellate court held that petitioner must deliver to respondent the surplus proceeds of ₱488,289.35.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !5 of !221
2009
In its present petition, petitioner argues that in a petition for the issuance of a writ of possession, it is
improper for the RTC and the CA to rule upon the surplus or excess of the purchase price because the
only issue that must be resolved is the purchaser’s entitlement to the writ. According to petitioner, if
there is any surplus or excess, the remedy of the respondent is to file an independent action for
collection of surplus.

ISSUE:
Whether or not the surplus of the purchase price in a foreclosure sale must be returned to the mortgagor
before a writ of possession may be issued by the court.

RULING:
No. The failure of the mortgagee to deliver the surplus proceeds does not affect the validity of the
foreclosure sale. It gives rise to a cause of action for the mortgagee to file an action to collect the
surplus proceeds.

SENIORS

If the mortgagee is retaining more of the proceeds of the sale than he is entitled to, this fact alone will
not affect the validity of the sale but simply gives the mortgagor a cause of action to recover such
surplus.
BATCH 2018
In the instant case, the cadastral court is without jurisdiction to order petitioner to deliver to respondent
the surplus or excess of the purchase price. The only issue in a petition for the issuance of a writ of
possession is the purchaser’s entitlement to possession. No documentary or testimonial evidence is
even required for the issuance of the writ as long as the verified petition states the facts sufficient to
entitle the purchaser to the relief requested. When the mortgagee-purchaser fails to return the surplus,
the remedy of a mortgagorlies in a separate civil action for collection of a sum of money. In the same
case, both parties can establish their respective rights and obligations to one another, after a proper
liquidation of the expenses of the foreclosure sale, and other interests and claims chargeable to the
purchase price of the foreclosed property. The court can then determine the proper application of
compensation with respect to respondent’s claim on petitioners’ remaining unsecured obligations. In
this regard, respondent is not precluded from itself filing a case to collect on petitioners’ remaining
debt.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !6 of !221
2009
Jesus Campos and Rosemarie Campos-Bautista v. Nenita Buenvenida Pastrana, et. al.
G.R. No. 175994; December 8, 2009

DOCTRINE: Failure of vendee to take exclusive possession of the property which allegedly sold to
him/her or alternatively collect rentals is contrary to the principle of ownership and a clear badge of
simulation that renders the whole sale/transaction null and void, in pursuance of Article 1409 of the
New Civil Code.

FACTS:
The case arose when the petitioners’ father,Carlito Campos, refused to surrender possession of the
fishpond that he leased from the respondents’ mother SalvacionBuenavida, despite the lease contract’s
expiration in 1980. He filed an agrarian case against his lessor Salvacion in RTC Roxas City Br. 14,
where he alleged that, as an agricultural lessee, he cannot be evicted from the said fishpond. The said
RTC, however, rendered a judgment against him, so he appealed to the CA and subsequently tothe SC,
but he was unsuccessful.

SENIORS

While the agrarian case was pending before the CA, Salvacion’s heirs CarlitoBuenavida and

BATCH 2018
NenitaBuenavida-Pastrana filed a case to recover possession of the fishpond and the trial court decided
on November 27, 1990 that Carlito illegally retained that property. It ordered him to pay rentals and
value of produce to Salvacion’s heirs. The decision became final and executory and a writ of execution
was issued on February 7, 1995.

On and prior the issuance of the writ of execution, Spouses Campos owned residential lots 3715-A and
3715-B-2 with total area of 1,393 sq. m. as well as agricultural lots 850 and 852 with total area of 7,972
sq.m.Specifically, Spouses Campossold the residential lots with a total area of 1,393 square meters, to
their daughterRosemarie for P7,000.00 and the agricultural lots with a combinedarea of 7,972 square
meters, to their son Jesus for P5,600.00.

When the respondents were about to levy these properties to satisfy the judgment in the Possession
Case, they discovered that spouses Carlito and MargaritaCampos transferred these lots to their children
Rosemarie and Jesus Campos, hereinpetitioners, by virtue of Deeds of Absolute Sale dated October 18,
1985 and November 2, 1988.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !7 of !221
2009
On February 18, 1997, the respondents instituted a complaint to declare the subject Deeds of Absolute
Sale null and void on the ground of simulation. However, the RTC of Roxas City Br. 14 dismissed the
complaint. It upheld findings from evidence that as early as 1981 that Jesus Campos was already
leasing a fishpond in Brgy. Majanlud, Sapi-an, Capiz from VictorinoJumpay while Rosemarie Campos
was engaged in the sari-sari store business starting 1985 so that they were able to purchase the said
properties of their parents.

On appeal, the CA reversed the trial court’s decision. The CA found that the conveyances weremade in
1990, and not in 1985 or 1988, or just before their actual registration with the Registry of Deeds,
evidently to avoid the properties from being attached or levied uponby the respondents. The CA
likewise noted that the zonal value of the subjectproperties were much higher than the value for which
they were actually sold. Theappellate court further observed that despite the sales, Spouses Campos
retained possession of the properties in question. Finally, the CA took note of the fact that the writ of
execution and alias writ issued in the Possession Case remained unsatisfied as the lower court could not
find any other property owned by the Spouses Campos that could be levied upon to satisfy its

SENIORS

judgment, except the parcels of land subject of the assailed transactions. On these bases, the CA ruled
that the assailed contracts of sale were indeed absolutely simulated transactions and declared the same
to be void ab initio.

ISSUE:
BATCH 2018
Whether or not the CA erred in ruling that the Deeds of Absolute Sale executed by the Spouses Campos
to their children are void and without effect

HELD:
No. The CA correctly held that the assailed Deeds of Absolute Sale were executed when the Possession
Case was already pending, evidently to avoid the properties subject thereof from being attached or
levied upon by the respondents. While the sales in question transpired on October 18, 1985 and
November 2, 1988, as reflected on the Deeds of Absolute Sale, the same were registered with the
Registry of Deeds only on October 25, 1990 and September 25, 1990.

Indeed, the Deeds of Absolute Sale were executed for the purpose of putting the lots in question beyond
the reach of creditors. First, the Deeds of Absolute Sale were registered exactly one month apart from
each other and about another one month from the time of the promulgation of the judgment in the

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !8 of !221
2009
Possession Case. The Deeds of Absolute Sale were antedated and that the same were executed when
the Possession Case was already pending.

Second, there was a wide disparity in the alleged consideration specified in the Deeds of Absolute Sale
and the actual zonal valuation of the subject properties as per the BIR Certification.

Third, it appears on record that the money judgment in the Possession Case has not been discharged
with.

Lastly, Spouses Campos continue to be in actual possession of the properties in question. Despite the
transfer of the said properties to their children, the latter have not exercised complete dominion over
the same. Neither have the petitioners shown if their parents are paying rent for the use of the
properties which they already sold to their children.

The failure of petitioners to take exclusive possession of the property allegedly sold to them, or in the

SENIORS

alternative, to collect rentals from the alleged vendor is contrary to the principle of ownership and a
clear badge of simulation that renders the whole transaction void and without force and effect, pursuant

BATCH 2018
to Article 1409 of the Civil Code.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !9 of !221
2009
MOF Company, Inc. v. Shin Yang Brokerage Corporation
G.R. No. 172822; December 18, 2009

Doctrine: The bill of lading is often times drawn up by the shipper/consignor and the carrier without
the intervention of the consignee. However, the latter could be bound by stipulations of the bill of
lading and becomes a party by reason of either a) the relationship of agency between the consignee
and the shipper/consignor; b) the unequivocal acceptance of the bill of lading delivered to the
consignee, with full knowledge of its contents or c) availment of the stipulation pour autrui i.e., when
the consignee demands before the carrier the fulfilment of the stipulation made by the shipper in the
consignees favor.

Facts:
Halla Trading Co., a company shipped to Manila cars on board the vessel Hanjin Busan. The Bill of
Lading which was prepared by the carrier Hanjin, named respondent Shin Yang Brokerage Corp. as the
consignee and indicated that payment was on a Freight Collect basis, i.e., that the consignee/receiver of

SENIORS

the goods would be the one to pay for the freight and other charges. When the shipment arrived in
Manila, petitioner MOF Company, Inc., Hanjin’s exclusive general agent in the Philippines, repeatedly

BATCH 2018
demanded the payment of ocean freight, documentation fee and other charges from Shin Yang. When
Shin Yang refused to pay, MOF filed a case for sum of money.

According to MOF, the bill of lading, which expressly stated Shin Yang as the consignee, is the best
evidence of the latter’sactual participation in the transportation of the goods. That such document,
validly entered, stands as the law among the shipper, carrier and the consignee, who are all bound by
the terms stated therein. MOF further maintains that Shin Yang was the one that supplied all the details
in the bill of lading and acquiesced to be named consignee of the shipment on a Freight Collect Basis.
Shin Yang for its part contends that a bill of lading is essentially a contract between the shipper and the
carrier and ordinarily, the shipper is the one liable for the freight charge. A consignee on the other hand
is initially a stranger to the bill of lading and can be liable only when the bill of lading specifies that the
charges are to be paid by the consignee. Shin Yang argues that MOF failed to present any evidence to
prove that it was the one that made the preparations for the subject shipment or that it is an actual
practice that consolidators as consignees are the ones that provide carriers details and information on
the bills of lading.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !10 of !221
2009
Because of an unfavourable ruling from the CA, MOF filed a petition under Rule 45 for the reversal of
the decision.

Issue:
Whether a consignee who is not a signatory to the bill of lading, is bound by the stipulations thereof

Held:
The bill of lading is often times drawn up by the shipper/consignor and the carrier without the
intervention of the consignee. However, the latter could be bound by stipulations of the bill of lading
and becomes a party by reason of either a) he relationship of agency between the consignee and the
shipper/consignor; b) the unequivocal acceptance of the bill of lading delivered to the consignee, with
full knowledge of its contents or c) availment of the stipulation pour autrui i.e., when the consignee
demands before the carrier the fulfilment of the stipulation made by the shipper in the consignees favor.
In the instant case, Shin Yang consistently denied in all of its pleadings that it authorized Halla Trading
to ship the goods on its behalf; or that it got hold of the bill of lading covering the shipment or that it

SENIORS

demanded the release of the cargo. Here, MOF, other than presenting the bill of lading, has not adduced
any other credible evidence to strengthen its cause of action. It did not present any witness in support of

BATCH 2018
the allegation that it was Shin Yang which furnished all the details indicated in the bill of lading and
that Shin Yang consented to shoulder the shipment cost. There is also nothing on record which would
indicate that Shin Yang was an agent of Halla Trading or that it exercised any act that would bind it as
named consignee. Thus the petition is denied.


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !11 of !221
2010
SPOUSES PATRICIO and MYRNA BERNALES vs. HEIRS OF JULIAN SAMBAAN
G.R. No. 163271; January 15, 2010

Doctrine: WHEN THE INSTRUMENT PRESENTED IS FORGED, EVEN IF ACCOMPANIED BY THE


OWNERS DUPLICATE CERTIFICATE OF TITLE, THE REGISTERED OWNER DOES NOT LOSE
HIS TITLE AND NEITHER DOES THE ASSIGNEE IN THE FORGED DEED ACQUIRE ANY RIGHT
OR TITLE TO THE PROPERTY

FACTS:
Spouses Julian and GuillermaSambaan were the registered owner of a property located in Bulua,
Cagayan de oro City. The respondents and the petitioner Myrna Bernales are the children of Julian and
Guillerma. Myrna, who is the eldest of the siblings, is the present owner and possessor of the property
in question. Julian died in an ambush in 1975. Before he died, he requested that the property in
question be redeemed from Myrna and her husband Patricio Bernales. Thus, in 1982 one of Julian’s
siblings offered to redeem the property but the petitioners refused because they were allegedly using

SENIORS

the property as tethering place for their cattle. In January 1991, respondents received an information
that the subject property was already transferred to Myrna Bernales. The Deed of Absolute Sale dated

BATCH 2018
December 7, 1970 bore the forged signatures of their parents, Julian and Guillerma. On April 1993, the
respondents, together with their mother Guillerma, filed a complaint for Annulment of Deed of
Absolute Sale and cancellation of TCT No. T-14204 alleging that their parent’s signatures were forged.
The trial court rendered a decision on August 2, 2001 cancelling the TCT and ordering another title to
be issued in the name of the late Julian Sambaan. Petitioners went to the CA and appealed the decision.
The CA affirmed the decision of the lower court. A motion for reconsideration of the decision was,
likewise, denied in 2004. Hence, this petition for certiorari.

ISSUE:
Was the forged Deed of Absolute Sale null and conveys no title?

HELD:
YES. The forged Deed of Absolute Sale is null and conveys no title. In order that the holder of a
certificate for value issued by virtue of the registration of a voluntary instrument may be considered a
holder in good faith and for value, the instrument registered should not be forged. Indubitably,
therefore, the questioned Deed of Absolute Sale did not convey any title to herein petitioners.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !12 of !221
2010
Consequently, they cannot take refuge in the protection accorded by the Torrens system on titled lands.
Thus, the Supreme Court holds that with the presentation of the forged deed, even if accompanied by
the owners duplicate certificate of title, the registered owner did not thereby lose his title, and neither
does the assignee in the forged deed acquire any right or title to the said property.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !13 of !221
2010
Atty. Pedro M. Ferrer v. Spouses Alfredo Diaz and Imelda Diaz, Reina Comandante and Spouses
BienvenidoPangan and Elizabeth Pangan
G.R. No. 165300; April 23, 2010

DOCTRINE: No contract may be entered into upon a future inheritance except in cases expressly
authorized by law. For the inheritance to be considered future, the succession must not have been
opened at the time of the contract. Thus, an adverse claim annotated on a title based on such contract
is likewise invalid.

FACTS:
The Diazes, as represented by their daughter Comandante, through a Special Power of Attorney (SPA),
obtained from Atty. Ferrera loansecured by a Real Estate Mortgage Contract by way of second
mortgage over Transfer Certificate of Title (TCT) No. RT-6604 and a Promissory Note payable within
six months.Comandante also issued to petitioner postdated checks to secure payment of said loan.

SENIORS

Prior to this, Comandante, for a valuable consideration.executed in his favor an instrument entitled
Waiver of Hereditary Rights and Interests Over a Real Property (Still Undivided). On the basis of said

BATCH 2018
waiver, petitioner executed an Affidavit of Adverse Claim which he caused to be annotated at the back
of TCT No. RT-6604.

The Diazes, however, reneged on their obligation as the checks issued by Comandante were dishonored
upon presentment. Despite repeated demands, said respondents still failed and refused to settle the loan.
Thus, petitioner filed for Collection of Sum of Money Secured by Real Estate Mortgage Contract
against the Diazes and Comandante.

By way of special and affirmative defenses, Comandante asserted in her Answer to the amended
complaint that said complaint states no cause of action against her because the Real Estate Mortgage
Contract and the waiver referred to by petitioner in his complaint were not duly, knowingly and validly
executed by her; that the Waiver of Hereditary Rights and Interests Over a Real Property (Still
Undivided) is a useless document as its execution is prohibited by Article 1347 of the Civil Code,
hence, it cannot be the source of any right or obligation in petitioners favor; that the Real Estate
Mortgage was of doubtful validity as she executed the same without valid authority from her parents;

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !14 of !221
2010
and, that the prayer for collection and/or judicial foreclosure was irregular as petitioner cannot seek
said remedies at the same time.

ISSUES:
1) Whether or not a waiver of hereditary rights in favor of another executed by a future heir while the
parents are still living is valid
2) Whether or not an adverse claim annotated on the title of a property on the basis of such waiver is
likewise valid and effective as to bind the subsequent owners and hold them liable to the claimant

RULING:
1) NO. Pursuant to the second paragraph of Article 1347 of the Civil Code, no contract may be entered
into upon a future inheritance except in cases expressly authorized by law. For the inheritance to be
considered future, the succession must not have been opened at the time of the contract. A contract may
be classified as a contract upon future inheritance, prohibited under the second paragraph of Article
1347, where the following requisites concur:

SENIORS

(1) That the succession has not yet been opened.

BATCH 2018
(2) That the object of the contract forms part of the inheritance; and,
(3) That the promissor has, with respect to the object, an expectancy of a right which is purely
hereditary in nature.

In this case, there is no question that at the time of execution of Comandante’s Waiver of Hereditary
Rights and Interest Over a Real Property (Still Undivided), succession to either of her parents
properties has not yet been opened since both of them are still living. With respect to the other two
requisites, both are likewise present considering that the property subject matter of Comandante’s
waiver concededly forms part of the properties that she expect to inherit from her parents upon their
death and, such expectancy of a right, as shown by the facts, is undoubtedly purely hereditary in nature.

From the foregoing, it is clear that Comandante and petitioner entered into a contract involving the
formers future inheritance as embodied in the Waiver of Hereditary Rights and Interest Over a Real
Property (Still Undivided) executed by her in petitioners favor.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !15 of !221
2010
2) NO. It is provided in Section 70 of PD 1529, that it is necessary that the claimant has a right or
interest in the registered land adverse to the registered owner and that it must arise subsequent to
registration. Here, as no right or interest on the subject property flows from Comandante’s invalid
waiver of hereditary rights upon petitioner, the latter is thus not entitled to the registration of his
adverse claim. Therefore, petitioners adverse claim is without any basis and must consequently be
adjudged invalid and ineffective and perforce be cancelled.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !16 of !221
2010
Eriberto S. Masangkay v. People of the Philippines
G.R. No. 164443; June 18, 2010

NOTE: There is no genuine Civil issue in this case; the issue on void and inexistent contract was not
really one of the issues discussed by the Court.

Doctrine: A Deed of Exchange executed to acquire a piece of land without any consideration at all, is a
simulated and fictitious contract, therefore void and inexistent from the beginning.

FACTS:
Accused EribertoMasangkay, together with her wife and others, were the incorporators and directors of
Megatel Factors, Inc. (MFI). Later, Eriberto filed a Petition for Involuntary Dissolution of MFI, which
petition was made under oath. In his petition, Eriberto alleged that a special meeting of the Board of
Directors was held on December 5, 1992 whereby a resolution was adopted acquiring a lot owned by
Eriberto’s son Gilberto, in exchange for MFI’s shares of stock, when in fact, no such meeting took

SENIORS

place. Eriberto further claims that the Deed of Exchange with Cancellation of Usufruct, executed
pursuant to the Board’s resolution during the inexistent meeting, is simulated and fictitious because

BATCH 2018
they defraud the minor Gilberto and deprived him of his own property without any consideration at all.
Records of the MFI revealed that Gilberto or his alleged guardian Magdalena never became a
stockholder at any point in time of MFI.

Claiming that Eriberto lied under oath when he said that there was no meeting of the Board held on
December 5, 1992 and that the Deed of Exchange is a fictitious instrument, CesarMasangkay, director
of MFI, filed a complaint for perjuryagainst Eriberto before the prosecutor’s office.

ISSUE:
Whether an allegation, made in a Petition for Involuntary Dissolution, that a Deed of Exchange is void
and inexistent, a sufficient basis to charge the petitioner with the crime of perjury.

HELD:
NO. Petitioner-accused’s imputation of fictitiousness to the Deed of Exchange should not be taken out
of context. Eriberto explained in paragraph 5 of his petition for involuntary dissolution that the Deed of
Exchange is simulated and fictitious pursuant to Article 1409 of the Civil Code, because it deprived

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !17 of !221
2010
Gilberto of his property without any consideration at all. To justify his allegation that Gilberto did not
receive anything for the exchange, he stated in the same paragraph that Gilberto never became a
stockholder of MFI (MFI stocks were supposed to be the consideration for Gilberto’s land). This fact
was subsequently proven by the petitioner through the corporate secretary Elizabeth, who admitted that
MFI never issued stocks in favor of the stockholders. This testimony was never explained or rebutted
by the prosecution. Thus, petitioners statement that the exchange was simulated and fictitious because
they deprived Gilbertoof his own property without any consideration at all cannot be considered a
deliberate falsehood. It is simply his characterization of the transaction, based on the fact that Gilberto
did not receive consideration for the exchange of his land.

As importantly, Eriberto’s statements in paragraph 5 of the petition for involuntary dissolution about
the nature of the Deed of Exchange are conclusions of law, and not factual statements which are
susceptible of truth or falsity. They are his opinion regarding the legal character of the Deed of
Exchange. He opined that the Deed of Exchange was fictitious or simulated under Article 1409 of the
Civil Code, because MFI supposedly did not perform its reciprocal obligation to issue stocks to

SENIORS

Gilberto in exchange for his land. His opinion or legal conclusion may have been wrong (as failure of
consideration does not make a contract simulated or fictitious),but it is an opinion or legal conclusion

BATCH 2018
nevertheless. An opinion or a judgment cannot be taken as an intentional false statement of facts.

Wherefore, EribertoMasangkay is acquitted of the charge of perjury on the ground of reasonable doubt.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !18 of !221
2010
ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION v. CATHAY PACIFIC
STEEL CORPORATION
G.R. No 167942; June 29, 2010

Doctrine: The sales invoices are in the nature of contracts of adhesion. "The court has repeatedly held
that contracts of adhesion are as binding as ordinary contracts. Those who adhere to the contract are
in reality free to reject it entirely and if they adhere, they give their consent. It is true that in some
occasions the Court struck down such contracts as void when the weaker party is imposed upon in
dealing with the dominant party and is reduced to the alternative of accepting the contract or leaving
it, completely deprived of the opportunity to bargain on equal footing."

FACTS:
Asian Construction and Development Corp. (Asian) purchased from Cathay Pacific Steel Corp.
(Cathay) various reinforcing steel bars worth P2.6M covered by a total of 12 invoices. Asian made
partial payments leaving a balance of P200,000. Cathay sent demand letters but no payment was made

SENIORS

by Asian; prompting it to file a complaint for a sum of money and damages with the RTC. In its
answer, Asian contended among others that it had not agreed to pay interest and attorney's fees. The

BATCH 2018
RTC ordered Asian to pay the amount due. On appeal, the CA found that based on the invoices, there is
a specific amount of interest agreed upon, which is 24% per annum, and modified the RTC decision.

ISSUE:
Are the parties bound by express stipulations in the sales invoice?

HELD:
YES. Article 1306 of the Civil Code provides that the "contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary
to law, morals, good customs, public order, or public policy."

In the present case, the sales invoices expressly stipulated the payment of interest and attorney's fees in
case of overdue accounts and collection suits, to wit: "Interest at 24% per annum is to be charged to all
accounts overdue plus 25% additional on unpaid invoice for attorney's fees aside from court cost, the
parties expressly submit themselves to the venue of the courts in Rizal, in case of legal proceeding."

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !19 of !221
2010
The sales invoices are in the nature of contracts of adhesion. "The court has repeatedly held that
contracts of adhesion are as binding as ordinary contracts. Those who adhere to the contract are in
reality free to reject it entirely and if they adhere, they give their consent. It is true that in some
occasions the Court struck down such contracts as void when the weaker party is imposed upon in
dealing with the dominant party and is reduced to the alternative of accepting the contract or leaving it,
completely deprived of the opportunity to bargain on equal footing." Considering that Asian is not a
small time construction company, having such construction projects as the MRT III and the Mauban
Power Plant, "it is presumed to have full knowledge and to have acted with due care or, at the very
least, to have been aware of the terms and conditions of the contract. Asian was free to contract the
services of another supplier if respondent's terms were not acceptable".

By contracting with Cathay for the supply of the reinforcing steel bars and not interposing any
objection to the stipulations in the sales invoice, petitioner did not only bind itself to pay the stated
selling price, it also bound itself to pay (1) interest of 24% per annum on overdue accounts and (2) 25%
of the unpaid invoice for attorney's fees. Thus, the lower courts did not err in using the invoices as basis
for the award of interest.
SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !20 of !221
2010
SELWYN F. LAO AND EDGAR MANANSALA v. SPECIAL PLANS, INC.
G.R. No. 164791, June 29, 2010

DOCTRINE: We have restated this in Solinap v. Hon. Del Rosario where we held that compensation
takes place only if both obligations are liquidated.]A claim is liquidated when the amount and time of
payment is fixed.Ifacknowledged by the debtor, although not in writing, the claim must be treated as
liquidated.When the defendant, who has an unliquidated claim, sets it up by way of counterclaim, and a
judgment is rendered liquidating such claim, it can be compensated against the plaintiffs claim from the
moment it is liquidated by judgment.

FACTS:
Petitioners Selwyn F. Laoand Edgar Manansala, together with Benjamin Jim, entered into a Contract of
Leasewith respondent Special Plans, Inc. (SPI) for the period January 16, 1993 to January 15, 1995
over SPI’s building at Quezon City.Upon expiration of the lease contract, it was renewed for a period of
eight months.

SENIORS

SPI later fileda Complaintthat Jim and petitioners have accumulated unpaid rentals of P118,000.00.

BATCH 2018
Petitioners claimed that they were constrained to incur expenses for necessary repairs as well as
expenses for the repair of structural defects, which SPI failed and refused to reimburse. Petitioners
prayed that the complaint be dismissed and judgment on their counterclaims be rendered ordering SPI
to pay them the sum of P422,920.40 as actual damages.
MeTCdismissed the case for lack of cause of action.On appeal, the RTCaffirmed the MTCruling, with
modification. The CA affirmed in toto the RTC Decision. Petitioners moved for reconsideration, but it
was denied. Hence, this petition. Petitioners assert that the amount of P545,000.00 they spent for
repairs, P125,000.00 of which was spent on structural repairs, should be judicially compensated against
the said unpaid rentals amounting to P95,000.00.

ISSUE:
Should the repairs be judicially compensated against the unpaid rentals?

RULING:
No. The Civil Code provides that compensation shall take place when two persons, in their own right,
are creditors and debtors of each other.In order for compensation to be proper, it is necessary that: (1)

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !21 of !221
2010
each one of the obligors be bound principally and that he be at the same time a principal creditor of the
other; (2) both debts consist in a sum of money, or if the things due are consumable, they be of the
same kind, and also of the same quality if the latter has been stated; (3) the two debts are due; (4) the
debts are liquidated and demandable; (5) over neither of them be any retention or controversy,
commenced by third parties and communicated in due time to the debtor.

A claim is liquidated when the amount and time of payment is fixed.Ifacknowledged by the debtor,
although not in writing, the claim must be treated as liquidated.When the defendant, who has an
unliquidated claim, sets it up by way of counterclaim, and a judgment is rendered liquidating such
claim, it can be compensated against the plaintiffs claim from the moment it is liquidated by judgment.

We have restated this in Solinap v. Hon. Del Rosario where we held that compensation takes place only
if both obligations are liquidated. The onus of the petitioners is two-fold: (1) to establish the existence,
amount and demandability of their claim; and (2) to show that these expenses were incurred in the
repair of structural defects.The evidence presented by the petitioners failed to establish by preponderant

SENIORS

evidence that they have indeed spent the amounts they claim.Such want of evidence on this respect is
fatal to this appeal. Consequently, their claim remains unliquidated and, legal compensation is

BATCH 2018
inapplicable. The instant petition is DENIED.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !22 of !221
2010
Sps. Nonilon and Irene Montecalvo vs. Heirs (Substitutes) of Eugenia T. Primero
G.R. No. 165168; July 9, 2010

Doctrine: THE ABSENCE OF A PROVISION IN THE AGREEMENT TRANSFERRING TITLE FROM


THE OWNER TO THE BUYER IS A STRONG INDICATION THAT THE AGREEMENT IS A
CONTRACT TO SELL

Facts:
Eugenia Primero (Eugenia) leased Lot No. 263 to petitioner Irene Montecalvo (Irene). On 1985,
Eugenia entered into an un-notarized Agreement with Irene, where the former offered to sell the
property for ₱860,000.00. They agreed that Irene would deposit ₱40,000.00 as part of the down
payment equivalent to 50% of the purchase price, and that during the term of negotiation of 30 to 45
days from receipt of said deposit, the balance of ₱410,000.00 on the down payment will be paid. In
case of default, the deposit would be returned within 10 days from the lapse of said period and the
Agreement deemed terminated. However, if the negotiations pushed through, the balance of the full

SENIORS

value or ₱410,000.00 would be paid in installments.

BATCH 2018
Irene failed to pay the full down payment within the stipulated 30-45-day negotiation period.
Nonetheless, she continued to stay on the disputed property, and still made several payments with an
aggregate amount of ₱293,000.00. On the other hand, Eugenia did not return the ₱40,000.00 deposit to
Irene, and refused to accept further payments later.

Thereafter, Irene caused a survey of Lot No. 263 and the segregation of a portion equivalent to 293
square meters in her favor. However, Eugenia opposed her claim and asked her to vacate the property.
Irene and husband NonilonMontecalvo (Nonilon)instituted a Civil Case with the RTC for specific
performance, to compel Eugenia to convey the 293-square meter portion of Lot No. 263covered by
payments amounting to ₱293,000. Thereafter, Irene requested Eugenia to execute the deed of sale, but
the latter refused to do so.

Issue:
Is the 1985 Agreement a contract of sale which would entitle petitioners to compel the successors-in-
interest of the deceased Eugenia to execute a deed of absolute sale in their favor?

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !23 of !221
2010
Ruling:
No. The Agreement dated 1985 is not a contract of sale but a contract to sell. Hence, with petitioners'
non-compliance with its terms and conditions, the obligation of the respondents to deliver and execute
the corresponding deed of sale never arose.

The 1985 Agreement is not a contract of sale but a mere contract to sell, the efficacy of which is
dependent upon the resolutory condition that Irene pay at least 50% of the purchase price as down
payment within 30-45 days from the day Eugenia received the ₱40,000.00
deposit. Such condition was admittedly not met.

In Salazar v. Court of Appeals, we distinguished a contract of sale from a contract to sell in that in a
contract of sale the title to the property passes to the buyer upon the delivery of the thing sold; in
acontract to sell, ownership is, by agreement, reserved in the seller and is not to pass to the buyer until
full payment of the purchase price. Otherwise stated, in a contract of sale, the seller loses ownership
over the property and cannot recover it until and unless the contract is resolved or rescinded; whereas,

SENIORS

in a contract to sell, title is retained by the seller until full payment of the price. In the latter contract,
payment of the price is a positive suspensive condition, failure of which is not a breach but an event

BATCH 2018
that prevents the obligation of the vendor to convey title from becoming effective.

In the Agreement, Eugenia, as owner, did not convey her title to the disputed property to Irene since the
Agreement was made for the purpose of negotiating the sale of the 860-square meter property.On this
basis, we are more inclined to characterize the agreement as a contract to sell rather than a contract of
sale. Although not by itself controlling, the absence of a provision in the Agreement transferring title
from the owner to the buyer is taken as a strong indication that the Agreement is a contract to sell.

As stated in the Agreement, the payment of the purchase price, in installments within the period
stipulated, constituted a positive suspensive condition, the failure of which is not really a breach but an
event that prevents the obligation of the seller to convey title in accordance with Article 1184 of the
Civil Code. Hence, for petitioners' failure to comply with the terms and conditions laid down in the
Agreement, the obligation of the predecessor-in-interest of the respondents to deliver and execute the
corresponding deed of sale never arose.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !24 of !221
2010
Calibre Traders, Inc.,vs. Bayer Philippines, Inc.,
G.R. No. 161431; October 13, 2010

Doctrine: To justify a grant of actual or compensatory damages, the amount of loss must be proved
with a reasonable degree of certainty, based upon competent proof and the best evidence obtainable by
the injured party.

Facts:
Calibre Traders, Inc. (Calibre) was one of Bayer distributors/dealers of its agricultural chemicals.
However, Bayer stopped delivering stocks to Calibre after the latter failed to settle its unpaidaccounts.
As Bayer authorized dealer, Calibre then enjoyed discounts and rebates. Subsequently, however, the
parties had a disagreement as to the entitlement and computations of these discounts.Calibre, although
aware of the deadline to pay its debts with Bayer, nevertheless withheld payment to compel Bayerto
reconcile its accounts. Calibre’s General Manager expressed discontent in Bayer refusal to credit his
claims in full and underscored the alleged inaction of Bayer in reconciling Calibre’s accounts. A suit

SENIORS

was filed by Calibre accusing Bayer of maliciously breaching the distributorship agreement by
manipulating Calibre’s accounts, withholding discounts and rebates due it, charging unwarranted

BATCH 2018
penalties, refusing to supply goods, and favoring the new distributors/dealers to drive it out of business.
On the other hand, Bayer denied its alleged wanton appointment of other distributors, reasoning that it
could not be faulted for a difference in treatment between a paying dealer and a non-paying one. The
RTC rendered judgmentfavoring Calibre and was justified in withholding payment because there was
deliberate inaction/employment of dilatory tactics on the part of Bayerphil to reconcile accounts
making it liable for damages for abuse of rights and unfair competition under Articles 19, 20, and 28 of
the Civil Code. However, the CA reversed the RTC’s factual findings and ruled that it found no reason
to award Calibre anything as it has no cause of action against Bayer and nothing in the evidence
suggests that it deliberately and maliciously withheld approval of Calibre’s claims.

Issue:
Whether or not Calibre is entitled to an award of damages;

Ruling:

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !25 of !221
2010
NO. Calibre is not entitled to an award of damages. To justify a grant of actual or compensatory
damages, the amount of loss must be proved with a reasonable degree of certainty, based upon
competent proof and the best evidence obtainable by the injured party.

Incidentally, under actual or compensatory damages, indemnification comprises not only the value of
the loss suffered, but likewise the profits the obligee failed to obtain. In its attempt to support this claim
for compensatory damages, Calibre, based its computation of more or less a loss of P8 million on a 10-
year sales projection. The projected sum of P10 million sales cannot thus be the proper base in
computing actual damages. Calibre computed its lost income based only on its capability to sell around
P10 Million, not on the actual income earned in the past years to properly compute the average income/
profit.

At any rate, since Calibre had no cause of action at all against Bayerphil, there can be no basis to award
it with damages.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !26 of !221
2010
SPS.RAMY and ZENAIDA PUDADERA vs.IRENEO MAGALLANES, et.al
G.R. No. 170073, October 18, 2010

Doctrine: One is considered a buyer in bad faith not only when he purchases real estate with
knowledge of a defect or lack of title in his seller but also when he has knowledge of facts which should
have alerted him to conduct further inquiry or investigation.

FACTS:
In 1979, Lazaro sold a portion of Lot 11-E to Magallanes whoimmediately constructed a fence and a
nipa hut thereon.The other portions of Lot 11-E were, likewise, sold by Lazaro to several buyers.Lazaro
executed a "Partition Agreement"in favor of the aforesaid buyers. However, Lazaro refused to turn-over
the mother title of Lot 11-E resulting in the filing of legal suits byMagallanes and the other buyers
against her (Lazaro).

While these suits were pending, Lazaro sold Lot 11-E-8(assigned to Magallanes and Gonzales) to

SENIORS

Spouses Natividad. A new titlewas issued in the name of Spouses Natividad. Thereafter, Lot 11-E-8
was subdivided by Spouses Natividad. A portion thereof was sold to Petitioner Spouses.

BATCH 2018
Petitioner Spouses filed an action for forcible entry against Magallanes. The trial court dismissed the
action.Hence, they commenced an action for Recovery of Ownership, Quieting of Title and Damages
against Magallanes. The RTC and the CA ruled in favor of Magallanes. Hence, the present petition.

Petitioners argue that since the second sale involves Lazaro and their predecessor-in-interest, due
process requires that Spouses Natividad should first be allowed to establish that they (Spouses
Natividad) are second buyers and first registrants in good faith before any finding on petitioners' own
good faith can be made considering that they (petitioners) merely acquired their title from Spouses
Natividad.

ISSUE:
Who between petitioners and respondents have a better right over Lot 11-E-8-A?

RULING:
Respondent Magallanes has a better right over Lot 11-E-8-A.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !27 of !221
2010
Well-settled is the rule that every person dealing with registered land may safely rely on the correctness
of the certificate of title issued therefor and the law will in no way oblige him to go beyond the
certificate to determine the condition of the property. However, this rule shall not apply when the party
has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make
such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of
sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property
in litigation.Onewho buys a property withknowledge of facts which should put himupon inquiry or
investigation as to apossible defect in the title of the selleracts in bad faith.

Petitioners were not buyers and registrants in good faith owing to the fact thatMagallanes constructed a
fence and small hut on the subject lot and has been in actual physical possession since 1979. As such,
petitioners were aware or should have been aware of Magallanes' prior physical possession and claim
of ownership over the subject lot when they visited the lot on several occasions prior to the sale thereof.

SENIORS

The argument of petitioners is untenable. The presence or absence of good faith on the part of Spouses
Natividad during the second sale involving the subject lot will not erase the bad faith of petitioners in

BATCH 2018
purchasing the subject lot from Spouses Natividad.

Petitioners were negligent in not taking the necessary steps to determine the status of the subject lot
despite the presence of circumstances which would have impelled a reasonably cautious man to do so.
Thus, they cannot be considered buyers and registrants in good faith. 


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !28 of !221
2011
LUZON DEVELOPMENT BANK VS. ENRIQUEZ
G.R. No. 168646, 168666; January 12, 2011
Del Castillo, J.
Topic: Sales – Contract to Sell, Dacion en pago
Doctrine: A bank dealing with a property that is already subject of a contract to sell an is protected by
PD 957 or The Subdivision and Condominium Buyer Protective Decree, is bound by the contract to sell
even if such contract was not registered.

Facts:
Petitioner Delta Development And Management Services, Inc. (DELTA) is a domestic
corporation engaged in the business of developing and selling real estate properties, particularly Delta

SENIORS

Homes I in Cavite. DELTA is owned by Ricardo De Leon. De Leon and his spouse obtained a ₱4M
loan from Luzon Development Bank (BANK) for the development of Delta Homes I. To secure the

BATCH 2018
loan, the spouses executed a real estate mortgage, including Lot 4 property. Sometime in 1997, DELTA
executed a Contract to Sell with respondent Angeles Catherine Enriquez over the house and lot in Lot
4. The Contract to Sell provides that the failure to pay 3 successive monthly installments, gives the
owner the power to consider the Contract to Sell as void. Paid installments are forfeited in favor of the
owner as liquidated damages and to cover documentation expenses.

DELTA defaulted on its loan obligation, the BANK, instead of foreclosing the real estate
mortgage, agreed to a dation in payment. It signed a deed of assignment over several properties,
including Lot no. 4. The dation in payment was not annotated on the TCT of Lot no. 4. She is asking
for a refund of the purchase price pointing out that, the agreed upon amount exceeded the limit
prescribed by PD 957, or The Subdivision and Condominium Buyer Protective Decree, and that the
mortgage DELTA entered into was invalid per PD 957.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !29 of !221
2011
The HLURB ruled in favor of Enriquez and upheld the validity of the contract to sell, but did
not approve a refund. Instead, it reduced the balance due for the property. DELTA appealed the ruling,
and was able to get a better ruling from the commissioner. The Office of the President affirmed the
ruling. However, when Enriquez appealed to the Court of Appeals, the CA ruled against the validity of
the dacion en pago executed in favor of the BANK on the ground that DELTA had earlier relinquished
its ownership over Lot 4 in favor of Enriquez via the Contract to Sell. The CA ordered DELTA to pay
the corresponding value of Lot 4 to the BANK.

Issues:
(1) Whether or not a Contract to Sell conveys ownership over the Lot
(2) Whether the dacion en pago extinguished the loan obligation, such that DELTA has no more
obligations to the BANK
SENIORS

BATCH 2018
Held:
(1) No. A contract to sell is one where the prospective seller reserves the transfer of title to the
prospective buyer until the happening of an event, such as full payment of the purchase price. What the
seller obliges himself to do is to sell the subject property only when the entire amount of the purchase
price has already been delivered to him. In this case, Enriquez has not fully paid the purchase price of
the Lot. She does not own the Lot. Therefore, DELTA's transfer of ownership over the lot to LDB is
valid.

However, LDB is bound to respect the contract to sell with Enriquez. PD 957 provides thata contracts
to sell registered by the seller with the Register of Deeds is binding on third persons. While this
particular contract was not registed with the Register of Deeds by DELTA, this does not prejudice
Enriquez or extinguish LDB's obligation to respect the Contract to Sell. LDB cannot claim to be an
innocent purchaser as the Lot was clearly marked to be a part of the subdivision project of Delta. While

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !30 of !221
2011
the general rule is that persons dealing with registered property can rely on just the certificate of title,
banks are covered by a special rule. Banks should know that there is a risk in this dealing with this type
of business because they might be covered by existing contracts to sell.

(2) Yes. Like in all contracts, the intention of the parties to the dation in payment is paramount and
controlling. The contractual intention determines whether the property subject of the dation will be
considered as the full equivalent of the debt and will therefore serve as full satisfaction for the debt.
“The dation in payment extinguishes the obligation to the extent of the value of the thing delivered,
either as agreed upon by the parties or as may be proved, unless the parties by agreement, express or
implied, or by their silence, consider the thing as equivalent to the obligation, in which case the
obligation is totally extinguished.”In the case at bar, the Dacion en Pago executed by DELTA and the

SENIORS

BANK indicates a clear intention by the parties that the assigned properties would serve as full
payment for DELTA’s entire obligation.

BATCH 2018
Thus,
1. Delta Development and Management Services, Inc. is NOT LIABLE TO PAY Luzon Development
Bank the value of the subject lot; and
2. Respondent Angeles Catherine Enriquez is ordered to PAY the balance of the purchase price and
the interests accruing thereon, to the Luzon Development Bank.
3. The Luzon Development Bank is ordered to DELIVER a CLEAN TITLE to Angeles Catherine
Enriquez upon the latter’s full payment of the balance of the purchase price and the accrued
interests.

Note: The Court also found that the mortgage over the Lot was void because DELTA did not acquire
prior clearance from HLURB.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !31 of !221
2011
Heirs of Jose Marcial K. Ochoa namely: Ruby B. Ochoa, Micaela B. Ochoa, and Jomar B. Ochoa,
vs. G & S Transport Corporation
G.R. No. 170071 and G.R. No. 170125 March 9, 2011
Del Castillo, J.
Torts and Damages
Doctrine: An action filed for the recovery of damages arising from breach of contract of carriage
allegedly is an independent civil action arising from contract which is separate and distinct from the
criminal filed by reason of the same incident. Hence, regardless of the acquittal or conviction in said
criminal case, same has no bearing in the resolution of the civil case.

Facts: The late Jose Marcial K. Ochoa boarded and rode a taxicab, a passenger vehicle for hire owned

SENIORS

and operated by defendant corporation under the business name "Avis Coupon Taxi" (Avis) and driven
by its employee and authorized driver Bibiano Padilla, Jr.

BATCH 2018
While cruising along EDSA Santolan fly-over, it overtook another cab driven by Pablo Clave
and tried to pass another vehicle, a ten-wheeler cargo truck. Because of the narrow space between the
left side railing of the fly-over and the ten-wheeler truck, the Avis cab was unable to pass and because
of its speed, Padilla was unable to control it. To avoid colliding with the truck, Padilla turned the wheel
to the left causing his taxicab to ram the railing throwing itself off the fly-over and fell on the middle
surface of EDSA below. Both driver Padilla and passenger Jose Marcial K. Ochoa were injured and
rushed to the hospital. Ochoa was declared dead on arrival from the accident.
The heirs sent G & S a letter demanding that the latter indemnify them for Jose Marcial’s death,
his loss of earning capacity, and funeral expenses. As G & S failed to heed the same, the heirs filed
a Complaint for Damages before the RTC whixh adjudged the defendant guilty of breach of contract of
carriage and is ordered to pay plaintiffs. The CA ruled in favor of the heirs. The CA noted that Padilla
failed to employ reasonable foresight, diligence and care needed to exempt G & S from liability for
Jose Marcial’s death. Said court also quoted pertinent portions of the MTC decision convicting Padilla

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !32 of !221
2011
of reckless imprudence resulting in homicide to negate G & S’ claim that the proximate cause of the
accident was the fault of the driver of the delivery van who allegedly hit the right side of the
taxicab. On appeal, the heirs contended that CA gravely erred in not taking note of the fact that Padilla
has already been acquitted of the crime of reckless imprudence resulting in homicide, a charge which
arose from the same incident subject of this case.

Issue: Is the acquittal in the criminal case material in the civil action arising from the same incident?

Ruling: Under Article 31 of the Civil Code, when the civil action is based on an obligation not arising
from the act or omission complained of as a felony, such civil action may proceed independently of the
criminal proceedings and regardless of the result of the latter. In Cancio, Jr. v. Isip the court held, “In

SENIORS

the instant case, it must be stressed that the action filed by petitioner is an independent civil action,
which remains separate and distinct from any criminal prosecution based on the same act. Not being

BATCH 2018
deemed instituted in the criminal action based on culpa criminal, a ruling on the culpability of the
offender will have no bearing on said independent civil action based on an entirely different cause of
action, i.e., culpa contractual."
In this case, the action filed by the heirs is primarily for the recovery of damages arising from
breach of contract of carriage allegedly committed by G & S. Clearly, it is an independent civil action
arising from contract which is separate and distinct from the criminal action for reckless imprudence
resulting in homicide filed by the heirs against Padilla by reason of the same incident. Hence,
regardless of Padilla’s acquittal or conviction in said criminal case, same has no bearing in the
resolution of the present case. There was therefore no error on the part of the CA when it resolved this
case without regard to the fact that Padilla has already been acquitted by the RTC in the criminal case.
The fact that the MTC Decision from which the subject quoted portions were lifted has already been
reversed by the RTC is therefore immaterial.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !33 of !221
2011

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !34 of !221
2011
ARMANDO V. ALANO [Deceased], Substituted by Elena Alano-Torres, vs. PLANTER'S
DEVELOPMENT BANK, as Successor-in-Interest of MAUNLAD SAVINGS and LOAN
ASSOCIATION, INC.
Topic: Credit Transaction - Mortgagee in Good Faith
Main Doctrine: The general rule that a mortgagee need not look beyond the title does not apply to
banks and other financial institutions as greater care and due diligence is required of them. Imbued with
public interest, they "are expected to be more cautious than ordinary individuals." Thus, before
approving a loan, the standard practice for banks and other financial institutions is to conduct an ocular
inspection of the property offered to be mortgaged and verify the genuineness of the title to determine
the real owner or owners thereof. Failure to do so makes them mortgagees in bad faith.

Facts:
SENIORS

Armando and Alano are brothers who inherited a parcel of lan from their father. From the

BATCH 2018
proceeds of the sale of the inherited land, the brothers bought a property in Quezon City. The general
rule that a mortgagee need not look beyond the title does not apply to banks and other financial
institutions as greater care and due diligence is required of them. Imbued with public interest, they "are
expected to be more cautious than ordinary individuals." Thus, before approving a loan, the standard
practice for banks and other financial institutions is to conduct an ocular inspection of the property
offered to be mortgaged and verify the genuineness of the title to determine the real owner or owners
thereof. Failure to do so makes them mortgagees in bad faith.
When Alano died his wife and children registered the title under their name, which was then
registered later solely under the name of the wife Lydia. Lydia then used the property as a security for
the loan obtained from Maunlad Savings and Loan Association. On April 20, 1994, petitioner filed a
Complaint against Lydia, Melecio A. Javier, Maunlad Savings and Loan Association, Inc. Petitioner
sought the cancellation of TCT No. 90388, the issuance of a new title in his name for his one-half share

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !35 of !221
2011
of the Quezon City property, and the nullification of real estate mortgage insofar as his one-half share is
concerned.
Petitioner insists that Maunlad Savings and Loan Association, Inc. is not a mortgagee in good
faith as it failed to exercise due diligence in inspecting and ascertaining the status of the mortgaged
property.
Respondent claims that Maunlad Savings and Loan Association, Inc. has no obligation to look
beyond the title considering that there was no adverse claim annotated on TCT No. 90388 covering the
mortgaged property. And since the mortgaged property was occupied by the mortgagor Lydia, there
was also no need for Maunlad Savings and Loan Association, Inc. to verify the extent of her possessory
rights.

SENIORS

Issue: Whether or not Maunlad Savings and Loan Association is not a mortgagee in good faith.

BATCH 2018
Held:
Yes. In this case, petitioner contends that Maunlad Savings and Loan Association, Inc. failed to
exercise due diligence in inspecting and ascertaining the status of the mortgaged property because
during the ocular inspection, the credit investigator failed to ascertain the actual occupants of the
subject property and to discover petitioner's apartment at the back portion of the subject property.
Clearly, while the credit investigator conducted an ocular inspection of the property as well as a
"neighborhood checking" and found the subject property occupied by the mortgagor Lydia and her
children, he, however, failed to ascertain whether the property was occupied by persons other than the
mortgagor. Had he done so, he would have discovered that the subject property is co-owned by
petitioner and the heirs of his brother. Since Maunlad Savings and Loan Association, Inc. was remiss in
its duty in ascertaining the status of the property to be mortgaged and verifying the ownership thereof,
it is deemed a mortgagee in bad faith. Consequently, the real estate mortgage executed in its favor is
valid only insofar as the share of the mortgagor Lydia in the subject property. & Lease

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !36 of !221
2011
Leonardo Umale vs. ASB Realty Corporation
G.R. No. 181126
June 15, 2011

Facts:
In 1996, Amethyst Pearl executed a Deed of Assignment in Liquidation of the subject premises in favor
of ASB Realty in consideration of the full redemption of Amethyst Pearls outstanding capital stock from ASB
Realty. Thus, ASB Realty became the owner of the subject premises and obtained in its name Transfer
Certificate of Title No. PT-105797, which was registered in 1997 with the Registry of Deeds of Pasig City.

SENIORS

Sometime in 2003, ASB Realty commenced an action in the Metropolitan Trial Court (MTC) of Pasig
City for unlawful detainer of the subject premises against petitioner Leonardo S. Umale (Umale). ASB Realty

BATCH 2018
alleged that it entered into a lease contract[8] with Umale for the period June 1, 1999-May 31, 2000. Their
agreement was for Umale to conduct a pay-parking business on the property and pay a monthly rent
of P60,720.00 to ASB Realty.

Upon the contracts expiration on May 31, 2000, Umale continued occupying the premises and paying
rentals albeit at an increased monthly rent of P100,000.00. The last rental payment made by Umale to ASB
Realty was for the June 2001 to May 2002 period, as evidenced by the Official Receipt No. 56511 dated
November 19, 2001.

On June 23, 2003, ASB Realty served on Umale a Notice of Termination of Lease and Demand to
Vacate and Pay. ASB Realty stated that it was terminating the lease effective midnight of June 30, 2003; that
Umale should vacate the premises, and pay to ASB Realty the rental arrears amounting to P1.3 million by July
15, 2003. Umale failed to comply with ASB Realtys demands and continued in possession of the subject

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !37 of !221
2011
premises, even constructing commercial establishments thereon. Umale admitted occupying the property since
1999 by virtue of a verbal lease contract but vehemently denied that ASB Realty was his lessor. He was adamant
that his lessor was the original owner, Amethyst Pearl. Since there was no contract between himself and ASB
Realty, the latter had no cause of action to file the unlawful detainer complaint against him.

In asserting his right to remain on the property based on the oral lease contract with Amethyst Pearl, Umale
interposed that the lease period agreed upon was for a long period of time. He then allegedly paid P1.2 million in
1999 as one year advance rentals to Amethyst Pearl.

Umale further claimed that when his oral lease contract with Amethyst Pearl ended in May 2000, they
both agreed on an oral contract to sell. They agreed that Umale did not have to pay rentals until the sale over the

SENIORS

subject property had been perfected between them. Despite such agreement with Amethyst Pearl regarding the
waiver of rent payments, Umale maintained that he continued paying the annual rent of P1.2 million. He was

BATCH 2018
thus surprised when he received the Notice of Termination of Lease from ASB Realty.

Issue: Whether or not a contract of lease exists between ASB Realty and Umale

Held:

No. Petitioners say that under Article 1687 of the New Civil Code, the period for rent payments
determines the lease period. Judging by the official receipt presented by ASB Realty, which covers the 12-
month period from June 2001 to May 2002, the lease period should be annual because of the annual rent
payments. Petitioners then conclude that ASB Realty violated Article 1687 of the New Civil Code when it
terminated the lease on June 30, 2003, at the beginning of the new period. They then implore the Court to
extend the lease to the end of the annual period, meaning until May 2004, in accordance with the annual rent
payments.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !38 of !221
2011
In arguing for an extension of lease under Article 1687, petitioners lost sight of the restriction provided
in Article 1675 of the Civil Code. It states that a lessee that commits any of the grounds for ejectment cited in
Article 1673, including non-payment of lease rentals and devoting the leased premises to uses other than those
stipulated, cannot avail of the periods established in Article 1687. Moreover, the extension in Article 1687 is
granted only as a matter of equity. The law simply recognizes that there are instances when it would be unfair
to abruptly end the lease contract causing the eviction of the lessee. It is only for these clearly unjust
situations that Article 1687 grants the court the discretion to
extend the lease.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !39 of !221
2011
Philippine National Bank vs. F.F. Cruz and CO., Inc.

G.R. No. 173259

Torts: Negligence of a Bank

Doctrine: As between a bank and its depositor, where the banks negligence is the proximate cause of
the loss and the depositor is guilty of contributory negligence, the greater proportion of the loss shall be
borne by the bank.

FACTS:

It is alleged that respondent F.F. Cruz & Co., Inc. (hereinafter FFCCI) opened savings/current or so-

SENIORS

called combo account No. 0219-830-146 and dollar savings account No. 0219-0502-458-6 with
petitioner, Philippine National Bank (hereinafter PNB) at its Timog Avenue Branch. Its President Felipe

BATCH 2018
Cruz and Secretary-Treasurer Angelita A. Cruz (or Angelita) were the named signatories for the said
accounts. The said signatories on separate but coeval dates left for and returned from the Unites States
of America, Felipe on March 18, 1995 until June 10, 1995 while Angelita followed him on March 29,
1995 and returned ahead on May 9, 1995. While they were thus out of the country, applications for
cashiers and managers checks bearing Felipe’s signature were presented to and both approved by the
PNB. The first was on March 27, 1995 for P9,950,000.00 payable to a certain Gene B. Sangalang and
the other one was on April 24, 1995 for P3,260,500.31 payable to one Paul Bautista. The amounts of
these checks were then debited by the PNB against the combo account of FFCCI.

When Angelita returned to the country, she had occasion to examine the PNB statements of account of
FFCCI] for the months of February to August 1995 and she noticed the deductions of P9,950,000.00
and P3,260,500.31. Claiming that these were unauthorized and fraudulently made, FFCCI requested

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !40 of !221
2011
PNB to credit back and restore to its account the value of the checks. PNB refused, and thus
constrained FFCCI filed the instant suit for damages against the PNB and its own accountant Aurea
Caparas. In its traverse, PNB averred lack of cause of action. It alleged that it exercised due diligence
in handling the account of FFCCI. The applications for managers check have passed through the
standard bank procedures and it was only after finding no infirmity that these were given due course. In
fact, it was no less than Caparas, the accountant of FFCCI, who confirmed the regularity of the
transaction. The delay of FFCCI in picking up and going over the bank statements was the proximate
cause of its self-proclaimed injury. Had FFCCI been conscientious in this regard, the alleged chicanery
would have been detected early on and Caparas effectively prevented from absconding with its
millions. It prayed for the dismissal of the complaint.

ISSUE:

SENIORS

Whether the PNB is guilty of negligence.

HELD:
BATCH 2018
Yes. PNB is guilty of negligence.

Preliminarily, it had been resolved with finality that FFCCI is guilty of contributory negligence, thus,
making it partly liable for the loss (i.e., as to 40% thereof) arising from the unauthorized withdrawal
of P13,210,500.31 from its combo account. The case is, thus, limited to PNBs alleged negligence in the
subject transactions which the appellate court found to be the proximate cause of the loss, thus, making
it liable for the greater part of the loss (i.e., as to 60% thereof). PNB contends that it was not negligent
in verifying the genuineness of the signatures appearing on the subject applications for managers
check. It claims that it followed the standard operating procedure in the verification process and that
four bank officers examined the signatures and found the same to be similar with those found in the
signature cards of FFCCIs authorized signatories on file with the bank. PNB raises factual issues which
are generally not proper for review under a Rule 45 petition. While there are exceptions to this rule, we

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !41 of !221
2011
find none applicable to the present case. As correctly found by the appellate court, PNB failed to make
the proper verification because the applications for the managers check do not bear the signature of the
bank verifier. PNB concedes the absence of the subject signature but argues that the same was the result
of inadvertence. It posits that the testimonies of Geronimo Gallego (Gallego), then the branch manager
of PNB Timog Branch, and Stella San Diego (San Diego), then branch cashier, suffice to establish that
the signature verification process was duly followed. The Court is not persuaded.

First, oral testimony is not as reliable as documentary evidence. Second, PNBs own witness, San
Diego, testified that in the verification process, the principal duty to determine the genuineness of the
signature devolved upon the account analyst. However, PNB did not present the account analyst to
explain his or her failure to sign the box for signature and balance verification of the subject
applications for managers check, thus, casting doubt as to whether he or she did indeed verify the

SENIORS

signatures thereon. Third, we cannot fault the appellate court for not giving weight to the testimonies of
Gallego and San Diego considering that the latter are naturally interested in exculpating themselves

BATCH 2018
from any liability arising from the failure to detect the forgeries in the subject transactions. Fourth,
Gallego admitted that PNBs employees received training on detecting forgeries from the National
Bureau of Investigation. However, Emmanuel Guzman, then NBI senior document examiner, testified,
as an expert witness, that the forged signatures in the subject applications for managers check contained
noticeable and significant differences from the genuine signatures of FFCCIs authorized signatories
and that the forgeries should have been detected or observed by a trained signature verifier of any bank.
Given the foregoing, no reversible error in the findings of the appellate court that PNB was negligent in
the handling of FFCCIs combo account, specifically, with respect to PNBs failure to detect the
forgeries in the subject applications for managers check which could have prevented the loss. As often
ruled, the banking business is impressed with public trust. A higher degree of diligence is imposed on
banks relative to the handling of their affairs than that of an ordinary business enterprise. Thus, the

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !42 of !221
2011
degree of responsibility, care and trustworthiness expected of their officials and employees is far
greater than those of ordinary officers and employees in other enterprises.

In the case at bar, PNB failed to meet the high standard of diligence required by the circumstances to
prevent the fraud. In Philippine Bank of Commerce v. Court of Appeals and The Consolidated Bank &
Trust Corporation v. Court of Appeals, where the banks negligence is the proximate cause of the loss
and the depositor is guilty of contributory negligence, we allocated the damages between the bank and
the depositor on a 60-40 ratio. We apply the same ruling in this case considering that, as shown
above, PNBs negligence is the proximate cause of the loss while the issue as to FFCCIs contributory
negligence has been settled with finality in G.R. No. 173278. Thus, the appellate court properly
adjudged PNB to bear the greater part of the loss consistent with these rulings.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !43 of !221
2011
Montemayor vs. Millora
G.R. No. 168251

July 27, 2011
Obligations and Contracts: Compensation

Main Doctrine: A debt is liquidated when its existence and amount are determined. It is not necessary that it be
admitted by the debtor. Nor is it necessary that the credit appear in a final judgment in order that it can be
considered as liquidated; it is enough that its exact amount is known. A debt is considered liquidated, not only
when it is expressed already in definite figures which do not require verification, but also when the determination
of the exact amount depends only on a simple arithmetical operation.

SENIORS

FACTS: Respondent Atty. Vicente D. Millora (Vicente) obtained a Loan of P400,000.00 from petitioner Dr.
Jesus M. Montemayor (Jesus) as evidenced by a promissory note executed by Vicente. The parties executed a

BATCH 2018
loan contract . With Vicente’s consent, the interest rate was increased to 3.5% or P10,500.00 a month. For a
period of four months, Vicente was supposed to pay P42,000.00 as interest but was able to pay
only P24,000.00. This was the last payment Vicente made. Jesus made several demands for Vicente to settle his
obligation but to no avail.

Thus, Jesus filed before the RTC of Quezon City a Complaint for Sum of Money against Vicente. Vicente filed
his Answer interposing a counterclaim for attorneys fees of not less than P500,000.00. Vicente claimed that he
handled several cases for Jesus but he was summarily dismissed from handling them when the instant complaint
for sum of money was filed.

In its Decision, the RTC ordered Vicente to pay Jesus his monetary obligation amounting to P300,000.00 plus
interest of 12% from the time of the filing of the complaint until fully paid. At the same time, the trial court
found merit in Vicente’s counterclaim and thus ordered Jesus to pay Vicente his attorneys fees which is

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !44 of !221
2011
equivalent to the amount of Vicentes monetary liability, and which shall be set-off with the amount Vicente is
adjudged to pay Jesus.

Jesus is now before this Court contending that the trial court grievously erred in ordering the implementation of
the RTCs October 27, 1999 Decision considering that same does fix the amount of attorneys fees. According to
Jesus, such disposition leaves the matter of computation of the attorneys fees uncertain and, hence, the writ of
execution cannot be implemented.

Issue: Is the amount of Attorneys fees ascertainable and is compensation possible?

Held: Yes. The amount of attorneys fees is ascertainable from the RTC Decision. Thus, compensation is
possible.
SENIORS

BATCH 2018
For legal compensation to take place, the requirements set forth in Articles 1278 and 1279 of the Civil Code,
quoted below, must be present.

ARTICLE 1278. Compensation shall take place when two persons, in their own right,
are creditors and debtors of each other.

ARTICLE 1279. In order that compensation may be proper, it is necessary:

(1) That each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;

(2) That both debts consist in a sum of money, or if the things due are consumable, they
be of the same kind, and also of the same quality if the latter has been stated;

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !45 of !221
2011
(3) That the two debts be due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor.

A debt is liquidated when its existence and amount are determined. It is not necessary that it be admitted
by the debtor. Nor is it necessary that the credit appear in a final judgment in order that it can be considered as
liquidated; it is enough that its exact amount is known. And a debt is considered liquidated, not only when it is

SENIORS

expressed already in definite figures which do not require verification, but also when the determination of the
exact amount depends only on a simple arithmetical operation.

BATCH 2018
In the instant case, both obligations are liquidated. Vicente has the obligation to pay his debt due to Jesus
in the amount of P300,000.00 with interest at the rate of 12% per annum counted from the filing of the instant
complaint until fully paid. Jesus, on the other hand, has the obligation to pay attorneys fees. The said attorneys
fees were awarded by the RTC on the counterclaim of Vicente on the basis of quantum meruit for the legal
services he previously rendered to Jesus. Legal compensation or set-off thus takes place between Jesus and
Vicente.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !46 of !221
2011
CREDIT TRANSACTIONS
SPOUSES WILFREDO PALADA AND BRIGIDA PALADA VS. SOLIDBANK CORPORATION
AND SHERRIFF MAYO DELA CRUZ
G.R.NO. 172227; JULY 29,2011
DEL CASTILLO, J.

DOCTRINE: Allegations of bad faith and fraud must be proved by clear and convincing evidence. ;
Article 1934 of the Civil Code, a loan contract is perfected only upon the delivery of the object of the
contract.

FACTS:

SENIORS

Petitioners, spouses Wilfredo and Brigida Palada, applied for the P3 million loan broken down as
follows: P1 million as additional working capital under the bills discounting line; P500, 000 under the

BATCH 2018
bills purchase line; and P1.5 million under the time loan from respondent Solidbank Corporation
(bank).

The petitioners received from the bank the amount of P1 million as additional working capital
evidenced by a promissory note and secured by a real estate mortgage in favor of the bank covering
several properties in Santiago City. Petitioners failed to pay the obligation. The bank foreclosed the
mortgage and sold the properties at public auction.

Petitioners filed a Complaint for nullity of real estate mortgage and sheriff’s certificate of sale with
prayer for damages against the respondents before the RTC of Santiago City. The petitioners contended
that the bank, without their knowledge and consent, included their properties covered by TCT Nos.
T-225131 and T-225132, among the list of properties mortgaged; that it was only when they received
the notice of sale that they found out about the inclusion of the said properties; that despite their

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !47 of !221
2011
objection, the sheriff proceeded with the auction sale; and that the auction sale was done in Santiago
City violation of the stipulation on venue in the real estate mortgage.

The bank, in its Answer, said that since petitioners were collaterally deficient, they offered several
properties as additional collateral including the properties mentioned above; that although the said
properties were at that time mortgaged to PNB, the bank accepted the offer with the knowledge and
consent of petitioners in the Register of Deeds; and that when petitioner’s obligation to PNB was
distinguished, they delivered the titles to the four properties to the bank.

The RTC declared the real estate mortgage void for lack of sufficient consideration. The loan contract
was not perfected due to the failure of the bank to deliver the full P3 million to petitioners. The RTC

SENIORS

also found the bank guilty of fraud and bad faith when it made it appear that petitioners executed the
mortgage on June 16, 1997 instead of March 1997 and the date and place of execution were left blank.

BATCH 2018
Moreover, the bank acted in bad faith when it registered the mortgage with the Register of Deeds at the
time when the titles were still in the custody and possession of another mortgagee bank (PNB).

On appeal, the CA reversed the ruling of the RTC. It said that based on the promissory note and the real
estate mortgage contract, the properties were mortgaged to secure the P1 million loan and not P3
million loan. As to the venue of the auction sale, since the subject properties are in Santiago City, the
holding of the auction in the latter was proper. The document was notarized and the court does not find
any cogent reason to sustain the validity of the real estate mortgage. Lastly, the continued possession by
the bank of the certificates of title merely supports the bank’s position that the land titles were actually
mortgaged to secure the payment of the loan.

ISSUE:
Whether the Real Estate Mortgage and the auction sale is valid.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !48 of !221
2011
HELD:
Perfected Loan Contract

The Court held that the loan contract was perfected. Article 1934 of the Civil Code, a loan contract
is perfected only upon the delivery of the object of the contract. In the case, the petitioners applied for
P3 million loan but only the amount of P1 million was approved by the bank because petitioners
became collaterally deficient when they failed to purchase a property worth P1, 944,000.00. Upon
receipt of the approved loan, petitioners executed a promissory note for the amount of P1 million. On
the same day, executed in favor of the bank, a real estate mortgage over petitioners properties as
security for the loan. The loan contract was perfected when petitioners received the P1 million loan,

SENIORS

which was the object of both the promissory note and the real estate mortgage executed by petitioners
in favor of the bank.

Bad Faith and Fraud BATCH 2018


The Court does not agree with the claim of the petitioners that there was fraud and bad faith in the
execution and notarization of the real estate mortgage contract. There is nothing on the face of the real
estate mortgage contract to arouse suspicion of insertion or forgery of signatures of petitioners found
below the list of properties mortgaged.

Furthermore, exclusion of the two subject properties mortgaged as these were still mortgaged with the
PNB at that time is flawed. Under our laws, a mortgagor is allowed to take second or subsequent
mortgage on a property already mortgaged, subject to the prior rights of the previous mortgages.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !49 of !221
2011
When the date of execution of the real estate mortgage contract was left blank, it does not prove bad
faith. Likewise, any irregularity in the notarization or even lack of notarization does not affect the
validity of the document.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !50 of !221
2011
PHILIPPINE NATIONAL BANK vs CIRIACO JUMAMOY and HEIRS OF ANTONIO GO
PACE
G.R. No. 169901. August 3, 2011

MAIN DOCTRINE:
A banking institution is expected to exercise due diligence before entering into a mortgage contract.
The ascertainment of the status or condition of a property offered to it as security for a loan must be a
standard and indispensable part of its operations.

FACTS:
The RTC ordered the exclusion of 2.5002 hectares from Lot 13521 which is part of Lot 13521, a

SENIORS

13,752-square meter parcel of land registered in the name of Antonio Go Pace which actually pertains
to Sesinando Jumamoy, Ciriaco's predecessor-in-interest. The RTC found that said 2.5002-hectare lot

BATCH 2018
was erroneously included in Antonio's free patent application which became the basis for the issuance
of his OCT. It then ordered the heirs of Antonio to reconvey said portion to Ciriaco. The RTC Decision
became final and executory but the Deed of Conveyance issued in favor of Ciriaco could not be
annotated on OCT since said title was already cancelled.
Apparently, Antonio and his wife Rosalia mortgaged Lot 13521 to PNB as security for a series of loans.
After Antonio and Rosalia failed to pay their obligation, PNB foreclosed the mortgage and title to Lot
13521 was transferred to PNB. Ciriaco filed the instant complaint against PNB and the Paces for
Declaration of Nullity of Mortgage, Foreclosure Sale, Reconveyance and
Damages. The RTC ordered the partial nullification of the mortgage and the reconveyance of the
subject lot claimed by Ciriaco. The RTC found that PNB was not a mortgagee/purchaser in good faith
because it failed to take the necessary steps to protect its interest such as sending a field inspector to the
area to determine the real owner, its occupants, its improvements and its boundaries. The CA affirmed
the RTC's ruling that PNB is not an innocent ortgagee/purchaser.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !51 of !221
2011
ISSUE:
Whether or not PNB is an innocent mortgagee/purchaser for value.

HELD:
No. A banking institution is expected to exercise due diligence before entering into a mortgage
contract. The ascertainment of the status or condition of a property offered to it as security for a loan
must be a standard and indispensable part of its operations. It is undisputed that the 2.5002-hectare
portion of the mortgaged property has been adjudged in favor of Ciriaco's predecessor-in-interest in
Civil Case No. 2514. Hence, PNB has the burden of evidence that it acted in good faith from the time
the land was offered as collateral. However, PNB miserably failed to overcome this burden. There was

SENIORS

no showing at all that it conducted an investigation; that it observed due diligence and prudence by
checking for flaws in the title; that it verified the identity of the true owner and possessor of the land;

BATCH 2018
and, that it visited subject premises to determine its actual condition before accepting the same as
collateral.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !52 of !221
2011
ELENA JANE DUARTE vs. MIGUEL SAMUEL A.E. DURAN
G.R. No. 173038; September 14, 2011

MAIN DOCTRINE: Statute of Frauds applies only to executory contracts, and not to completed,
executed or partially executed contracts.

FACTS: On February 14, 2002, respondent Duran offered to sell a laptop computer for the sum of
₱15,000.00 to petitioner Duarte thru the help of a common friend, Josephine Dy. Since petitioner was
undecided, respondent left the laptop with petitioner for two days. On February 16, 2002, petitioner
told respondent that she was willing to buy the laptop on installment. Respondent agreed; thus,
petitioner gave ₱5,000.00 as initial payment and promised to pay ₱3,000.00 on February 18, 2002 and
₱7,000.00 on March 15, 2002. On February 18, 2002, petitioner gave her second installment of

SENIORS

₱3,000.00 to Dy, who signed the handwritten receipt allegedly made by petitioner as proof of
payment. But when Dy returned to get the remaining balance on March 15, 2002, petitioner offered to

BATCH 2018
pay only ₱2,000.00 claiming that the laptop was only worth ₱10,000.00. Due to the refusal of petitioner
to pay the remaining balance, respondent thru counsel sent petitioner a demand letter. Petitioner denied
the existence of a contract of sale insisting that the laptop was not sold to her but was given as a
security for respondent’s debt. Petitioner said that Dy offered to sell respondent’s laptop but because
petitioner was not interested in buying it, Dy asked if petitioner could instead lend respondent the
amount of ₱5,000.00. To prove that there was no contract of sale, petitioner calls attention to
respondent’s failure to present a written contract of sale.

ISSUE: Whether or not there was a contract of sale between the parties.

HELD: Yes, the absence of a written contract of sale does not mean otherwise. A contract of sale is
perfected the moment the parties agree upon the object of the sale, the price, and the terms of
payment. Once perfected, the parties are bound by it whether the contract is verbal or in writing
because no form is required. Contrary to the view of petitioner, the Statute of Frauds does not apply in

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !53 of !221
2011
the present case as this provision applies only to executory, and not to completed, executed or partially
executed contracts. In this case, the contract of sale had been partially executed because the possession
of the laptop was already transferred to petitioner and the partial payments had been made by her. Thus,
the absence of a written contract is not fatal to respondent’s case. 


SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !54 of !221
2011
CONTINENTAL CEMENT CORPORATION VS. ASEA BROWN BOVERI, INC.

G.R. NO. 171660, OCTOBER 17, 2011


CIVIL LAW REVIEW II: Sales;
MAIN DOCTRINES: Implied Warranty and Warranty against hidden defects
FACTS:
Petitioner Continental Cement Corporation (CCC), a corporation engaged in the business of
producing cement, obtained the services of respondents Asea Brown Boveri, Inc. (ABB) and BBC
Brown Boveri, Corp. to repair its 160 KW Kiln DC Drive Motor (Kiln Drive Motor).
Due to the repeated failure of respondents to repair the Kiln Drive Motor, petitioner filed with
Branch 101 of the Regional Trial Court (RTC) of Quezon City a Complaint for sum of money and
damages against respondent corporations and respondent Tord B. Eriksson (Eriksson), Vice President

SENIORS

of the Service Division of the respondent ABB.


Respondents, however, claimed that under Clause 7 of the General Conditions, attached to the

BATCH 2018
letter of offer dated July 4, 1990 issued by respondent ABB to petitioner, the liability of respondent
ABB "does not extend to consequential damages either direct or indirect." Moreover, as to respondent
Eriksson, there is no lawful and tenable reason for petitioner to sue him in his personal capacity
because he did not personally direct the repair of the Kiln Drive Motor.
The RTC rejected the defense of limited liability interposed by respondents since they failed to
prove that petitioner received a copy of the General Conditions. Consequently, the RTC granted
petitioner's claims for production loss, labor cost and rental of crane, and attorney's fees.
The CA reversed the ruling of the RTC and applied the exculpatory clause in the General
Conditions and ruled that there is no implied warranty on repair work; thus, the repairman cannot be
made to pay for loss of production as a result of the unsuccessful repair.
Petitioner also imputes error on the part of the CA in applying the concepts of warranty against
hidden defects and implied warranty. Petitioner contends that these concepts are not applicable because

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !55 of !221
2011
the instant case does not involve a contract of sale. What applies are Articles 1170 and 2201 of the Civil
Code.
Respondents likewise defend the ruling of the CA that there could be no implied warranty on
the repair made by respondent ABB as the warranty of the fitness of the equipment should be enforced
directly against the manufacturer of the Kiln Drive Motor. Respondents also deny liability for damages
claiming that they performed their obligation in good faith.
ISSUE:
Whether the CA seriously erred in applying the concepts of 'implied warranty' and 'warranty
against hidden defects' of the New Civil Code in order to exculpate the respondents from its contractual
obligation.
HELD:

SENIORS

The petition has merit. Having breached the contract it entered with petitioner, respondent ABB
is liable for damages pursuant to Articles 1167, 1170, and 2201 of the Civil Code. Based on the

BATCH 2018
foregoing, a repairman who fails to perform his obligation is liable to pay for the cost of the execution
of the obligation plus damages. Though entitled, petitioner in this case is not claiming reimbursement
for the repair allegedly done by Newton Contractor, but is instead asking for damages for the delay
caused by respondent ABB.
Consequential damages, such as loss of profits on account of delay or failure of delivery, may
be recovered only if such damages were reasonably foreseen or have been brought within the
contemplation of the parties as the probable result of a breach at the time of or prior to contracting.
Considering the nature of the obligation in the instant case, respondent ABB, at the time it agreed to
repair petitioner's Kiln Drive Motor, could not have reasonably foreseen that it would be made liable
for production loss, labor cost and rental of the crane in case it fails to repair the motor or incurs delay
in delivering the same, especially since the motor under repair was a spare motor. For the foregoing
reasons, petitioner is not entitled to recover production loss, labor cost and the rental of the crane.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !56 of !221
2011
Respondent Eriksson, however, cannot be made jointly and severally liable for the penalties.
There is no showing that respondent Eriksson directed or participated in the repair of the Kiln Drive
Motor or that he is guilty of bad faith or gross negligence in directing the affairs of respondent ABB. It
is a basic principle that a corporation has a personality separate and distinct from the persons
composing or representing it; hence, personal liability attaches only in exceptional cases, such as when
the director, trustee, or officer is guilty of bad faith or gross negligence in directing the affairs of the
corporation.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !57 of !221
2011
SAMUEL JULIAN, represented by his Attorney-in-Fact, ROBERTO DELA CRUZ , petitioner, vs
. DEVELOPMENT BANK OF THE PHILIPPINES and THE CITY SHERIFF , respondents.
G.R. No. 174193. December 7, 2011
Topic: Credit Transactions

FACTS:
A real estate mortgage (REM) was executed by Thelma Julian (Thelma), mother of petitioner, Samuel
Julian, over a property situated in Roxas City. In 1982, Thelma obtained a housing loan from
respondent DBP in the amount of P99,400. To secure payment of the loan, she executed in favor of the
DBP a REM on said property registered under her name. A SPA appointing the respondent and its
personnel to sell the property in the event of extrajudicial foreclosure was inserted in the mortgage
contract.
SENIORS

BATCH 2018
Thelma died on January 1982. Due to non-payment, DBP foreclosed the mortgaged property. After
being sold at public auction and DBP being the highest bidder, title to the property was consolidated in
favor of DBP, no redemption having been made.

The actual occupants of the mortgaged property, Spouses De la Cruz, offered to purchase the property.
DBP accepted the offer and executed a deed of conditional sale. However, Sps. De La Cruz failed to
pay resulting to the rescission of the deed. An unlawful detainer case was filed against them. Judgment
was rendered in favor of DBP. However, before the writ of execution was carried out, petitioner filed a
case for the cancellation of DBP’s title contending that the SPA which was used to sell the property at
public auction was no longer effective in view of Thelma’s death.

ISSUE:
Whether or not the extra-judicial sale made by the mortgagee after the death of the mortgagor is valid

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !58 of !221
2011
HELD:
Petitioner knew that his mother, Thelma, had already lost ownership rights to the property when the
latter defaulted in her payment to DBP and none of her successors-in-interest redeemed the property
within the prescribed period. This is the reason why Sps. De la Cruz offered to purchase the property
from DBP. Petitioner prays for leniency in the interest of justice but it will be the height of injustice if
the court accords such to petitioner as this would mean further waiting on the part of respondent which
has long been deprived of its right to possess the property it owns.

Note: The SC did not categorically answer the issue stated. The RTC dismissed the case for failure of
the parties to comply with the order of the court for an unreasonable length of time. The petitioner

SENIORS

failed to pay docket fees in his appeal to the CA and asked for leniency to enable him to establish his
case. The ruling above is the only ruling related to the case.

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !59 of !221
2012
ORIX METRO LEASING AND FINANCE CORPORATION (Formerly CONSOLIDATED
ORIX LEASING AND FINANCE CORPORATION), petitioner, vs. MINORS: DENNIS,
MYLENE, MELANIE and MARIKRIS, all surnamed MANGALINAO y DIZON, MANUEL M.
ONG, LORETO LUCILO, SONNY LI, AND ANTONIO DE LOS SANTOS, respondents.
Topic: Torts and Damages

Facts:
A multiple-vehicle collision in North Luzon Expressway (NLEX) resulting in the death of all
the passengers in one vehicle, including the parents and a sibling of the surviving orphaned minor heirs,
compelled the latter to file an action for damages against the registered owners and drivers of the two
10-wheeler trucks that collided with their parents' Nissan Pathfinder (Pathfinder).

SENIORS

The heirs impleaded the drivers Loreto and Antonio, as well as the registered owners of the
Fuso and the Isuzu trucks, namely Orix and Sonny, respectively. The children imputed recklessness,

BATCH 2018
negligence, and imprudence on the truck drivers for the deaths of their sister and parents; while they
hold Sonny and Orix equally liable for failing to exercise the diligence of a good father of a family in
the selection and supervision of their respective drivers. The children demanded payment of more than
P10.5 million representing damages and attorney's fees.
Orix in its Motion to Dismiss interposed that it is not the actual owner of the Fuso truck. Orix
reiterated that the children had no cause of action against it because on September 9, 1983, it already
sold the Fuso truck to MMO Trucking owned by Manuel Ong (Manuel). The latter being the alleged
owner at the time of the collision, Orix filed a Third Party Complaint against Manuel, a.k.a. Manuel
Tan.

Orix's contentions in its petition may be summarized as follows:


(a) It is not the owner and operator of the Fuso at the time of the collision and should not be held
responsible for compensating the minor children of the Mangalinaos;

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !60 of !221
2012
(b) The Fuso's swerving towards the inner lane where the Pathfinder is cruising is attributable not to the
alleged negligence of Loreto but to adverse driving conditions, i.e., the stormy weather and slippery
road;
(c) The CA has no reliable evidentiary basis for computing loss of earning capacity as the Balance
Sheet and Income Statement of Roberto Mangalinao, as certified by accountant Wilfredo de Jesus for
the year 1989, is hearsay evidence; and
(d) The award of attorney's fees sustained by the CA is not justified and is exorbitant.

Sonny and Antonio argue in their petition that:


(a) the CA erred in affirming the trial court's erroneous finding that the Isuzu was tailgating, which is
contradicted by the material evidence on record;

SENIORS

(b) the proximate cause of the death of the victims is Loreto's gross negligence. Antonio should have
been accorded the benefit of the 'emergency rule' wherein he was immediately confronted with a

BATCH 2018
sudden danger and had no time to think of how to avoid it;
(c) the CA should not have awarded damages and attorney's fees because of the total absence of
evidence to substantiate them.

Issues: (1) Whether or not the emergency rule applies.


(2) Whether or not Orix is liable

Held:
(1) We are not convinced that the Isuzu is without fault. As correctly found by the CA, the
smashed front of the Isuzu strongly indicates the strong impact of the ramming of the rear of the
Pathfinder that pinned its passengers. Furthermore, Antonio admitted that despite stepping on the
brakes, the Isuzu still suddenly smashed into the rear of the Pathfinder causing extensive damage to it,
as well as hitting the right side of the Fuso. These militate against Antonio's claim that he was driving

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !61 of !221
2012
at a safe speed, that he had slowed down, and that he was three cars away. Clearly, the Isuzu was not
within the safe stopping distance to avoid the Pathfinder in case of emergency. Thus, the 'Emergency
Rule' invoked by petitioners will not apply. Such principle states: [O]ne who suddenly finds himself in
a place of danger, and is required to act without time to consider the best means that may be adopted to
avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon
reflection may appear to have been a better method, unless the emergency in which he finds himself is
brought about by his own negligence. Considering the wet and slippery condition of the road that night,
Antonio should have been prudent to reduce his speed and increase his distance from the Pathfinder.
Had he done so, it would be improbable for him to have hit the vehicle in front of him or if he really
could not avoid hitting it, prevent such extensive wreck to the vehicle in front. With the glaring
evidence, he obviously failed to exercise proper care in his driving.

SENIORS

(2) Orix as the operator on record of the Fuso truck is liable to the heirs of the victims of the

BATCH 2018
mishap. Orix cannot point fingers at the alleged real owner to exculpate itself from vicarious liability
under Article 2180 of the Civil Code.Regardless of whoever Orix claims to be the actual owner of the
Fuso by reason of a contract of sale, it is nevertheless primarily liable for the damages or injury the
truck registered under it have caused. It has already been explained: “Were a registered owner allowed
to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him,
by collusion with others or otherwise, to escape said responsibility and transfer the same to an
indefinite person, or to one who possesses no property with which to respond financially for the
damage or injury done. A victim of recklessness on the public highways is usually without means to
discover or identify the person actually causing the injury or damage. He has no means other than by a
recourse to the registration in the Motor Vehicles Office to determine who is the owner. The protection
that the law aims to extend to him would become illusory were the registered owner given the
opportunity to escape liability by disproving his ownership. . . .” Besides, the registered owners have a
right to be indemnified by the real or actual owner of the amount that they may be required to pay as

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !62 of !221
2012
damage for the injury caused to the plaintiff, which Orix rightfully acknowledged by filing a third-party
complaint against the owner of the Fuso, Manuel.


SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !63 of !221
2012
Hermojina Estores vs. Spouses Arturo and Laura Supangan
G.R. No. 175139; April 18, 2012

Facts:

• On October 1993, petitioner Estores and respondent spouses Supangan entered into a
Conditional Deed of Sale, whereby petitioner offered to sell a parcel of land to the respondents
located at Naic, Cavite for the sum of PhP4.7 million.

• After almost seven (7) years from the time of execution of contract and notwithstanding
payment of PhP3.5 million, petitioner failed to comply with the conditions of the contract.

SENIORS

Respondents served a demand letter to the petitioner on September 27, 2000 for the return of
the PhP3.5 million, yet the petitioner still failed to return the said amount.

• BATCH 2018
Respondent spouses then filed a complaint for collection of sum of money to RTC Malabon.
Petitioner failed to appear during the trial despite several postponements, hence they were
deemed to have waived the presentation of their evidence. RTC ruled in favor of the respondent
spouses ordering them to pay the PhP3.5 million with an interest of 6% per annum counted
from October 1993.

• On appeal, the petitioner raised the sole issue of payment of interest. CA ruled in favor of the
respondent but modified the decision and declared that interest shall start to run from September
27, 2000 (The day the demand letter was served).

On Petition for Review under Rule 45 to the Supreme Court:

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !64 of !221
2012
Petitioner argued that she is not bound to pay interest on the PhP3.5 million because the Conditional
Deed of Sale only provided for the return of the downpayment in case of failure to comply with her
obligations.

Respondent-spouses, on the other hand, argued that it is fair that interest be imposed on the amount
paid considering that petitioner failed to return the amount upon demand and had been using the
PhP3.5 million for her own benefit. Moreover, petitioner failed to perform her obligations under the
contract.

Issue:
Whether petitioner is liable to pay interest.

Ruling: SENIORS

BATCH 2018
Yes. Interest may be imposed even in the absence of stipulation in the contract. Article 2210 of the
Civil Code provides that interest may, in the discretion of the court, be allowed upon damages awarded
for breach of contract. In this case, there is no question that petitioner is legally obligated to return the
PhP3.5 million because of her failure to fulfill the obligation under the Conditional Deed of Sale,
despite demand. She has in fact admitted that the conditions were not fulfilled and that she was willing
to return the full amount of PhP3.5 million but has not actually done so. Petitioner enjoyed the use of
the money from the time it was given to her until now. Thus, she is already in default of her obligation
from the date of demand.

Further, the interest at the rate of 12% is applicable in the instant case. Forbearance of
money, goods or credits should therefore refer to arrangements other than loan agreements, where a
person acquiesces to the temporary use of his money, goods or credits pending happening of certain

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !65 of !221
2012
events or fulfillment of certain conditions. In this case, the respondent-spouses parted with their money
even before the conditions were fulfilled. They have therefore allowed or granted forbearance to the
seller (petitioner) to use their money pending fulfillment of the conditions. They were deprived of the
use of their money for the period pending fulfillment of the conditions and when those conditions were
breached, they are entitled not only to the return of the principal amount paid, but also to compensation
for the use of their money. And the compensation for the use of their money, absent any stipulation,
should be the same rate of legal interest applicable to a loan since the use or deprivation of funds is
similar to a loan.

Petitioners unwarranted withholding of the money which rightfully pertains to respondent-spouses


amounts to forbearance of money which can be considered as an involuntary loan. Thus, the applicable

SENIORS

rate of interest is 12% per annum. 


BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !66 of !221
2012
DEL CARMEN JR. V. BACOY
G.R. NO. 173870; APRIL 25, 2012
DEL CASTILLO, J.;

TOPICS: TORTS AND DAMAGES


DOCTIRINE:
NEGLIGENCE IS PRESUMED UNDER THE DOCTRINE OF RES IPSA LOQUITUR

FACTS:
Emilia Bacoy Monsalud (Emilia), along with her spouse Leonardo Monsalud, Sr. and their
daughter Glenda Monsalud, were on their way home when they were run over by a passenger jeep that

SENIORS

was being driven by Allan Maglasang (Allan), registered in the name of petitioner Oscar del Carmen,
Jr. (Oscar Jr.) and used as a public utility vehicle. Because of this, Allan was charged and subsequently

BATCH 2018
convicted of reckless imprudence resulting in homicide. During the pendency of said criminal case,
Emilia’s father, Geronimo Bacoy (Geronimo), in behalf of the six minor children of the Monsaluds,
filed an independent civil action for damages based on culpa aquiliana. Aside from Allan, he also
impleaded his alleged employers, namely, Spouses del Carmen and the registered owner of the jeep,
their son Oscar Jr. Geronimo. He prayed for the reimbursement of funeral and burial expenses, as well
as the award of attorneys fees, moral and exemplary damages resulting from the death of the three
victims, and loss of net income earnings of Emilia who was then employed as a public school teacher.
Oscar Sr. averred that the Monsaluds have no cause of action against them because he and his wife do
not own the jeep and that they were never the employers of Allan. For his part, Oscar Jr. claimed to be a
victim himself, alleging that Allan and his friends stole his jeep while it was parked beside his drivers
rented house to take it for a joyride. Because of this allegation, Oscar Jr. even filed before the same trial
court a carnapping case against Allan and his companions, which was subsequently dismissed.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !67 of !221
2012
The RTC exculpated the spouses del Carmen from civil liability for insufficiency of evidence.
However, their son Oscar Jr. was held civilly liable in a subsidiary capacity. The RTC anchored its
ruling primarily on the principle of res ipsa loquitur. Upon a motion for reconsideration filed by
petitioner, the RTC reversed itself, absolving him from liability, and also declared the doctrine of res
ipsa loquitur inapplicable since the property owner cannot be made responsible for the damages caused
by his property by reason of the criminal acts of another. The CA found for the respondent. Hence, this
case.

ISSUE:
Is res ipsa loquitor applicable in this case so as to make petitioner liable for damages?

RULING:
SENIORS

Yes. The requisites of the doctrine of res ipsa loquitur as established by jurisprudence are all

BATCH 2018
present : 1) the accident is of a kind which does not ordinarily occur unless someone is negligent; 2) the
cause of the injury was under the exclusive control of the person in charge and 3) the injury suffered
must not have been due to any voluntary action or contribution on the part of the person injured. First,
no person just walking along the road would suddenly be sideswiped and run over by an on-rushing
vehicle unless the one in charge of the said vehicle had been negligent. Second, the jeep which caused
the injury was under the exclusive control of Oscar Jr. as its owner. When Oscar Jr. entrusted the
ignition key to Rodrigo, he had the power to instruct him with regard to the specific restrictions of the
jeeps use, including who or who may not drive it. As he is aware that the jeep may run without the
ignition key, he also has the responsibility to park it safely and securely and to instruct his driver
Rodrigo to observe the same precaution. Lastly, there was no showing that the death of the victims was
due to any voluntary action or contribution on their part.
The aforementioned requisites having been met, there now arises a presumption of negligence
against Oscar Jr. which he could have overcome by evidence that he exercised due care and diligence in

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !68 of !221
2012
preventing strangers from using his jeep. Unfortunately, he failed to do so. Hence, he is liable to pay
the damages.

Emilia Lim v. Mindanao Wines & Liquor Galleria


GR no. 173870 April 25, 2012

TOPIC: TORTS AND DAMAGES


DOCTRINE:
ACQUITTAL FROM A CRIME DOES NOT NECESSARILY MEAN ABSOLUTION FROM CIVIL
LIABILITY.

SENIORS

FACTS: Sales Invoice No. 1711 dated November 24, 1995, as well as Statement of Accounts No. 076 indicate
that respondent Mindanao Wines and Liquor Galleria (Mindanao Wines) delivered several cases of liquors to H

BATCH 2018
& E Commercial owned by Emilia, for which the latter issued four Philippine National Bank (PNB) postdated
checks worth P25,000.00 each. When two of these checks, particularly PNB Check Nos. 951453 and 951454
dated October 10, 1996 and October 20, 1996, respectively, bounced for the reasons ACCOUNT CLOSED and
DRAWN AGAINST INSUFFICIENT FUNDS, Mindanao Wines, thru its proprietress Evelyn Valdevieso,
demanded from H & E Commercial the payment of their value through two separate letters both dated
November 18, 1996. When the demands went unheeded, Mindanao Wines filed before Branch 2 of the
Municipal Trial Court in Cities (MTCC) of Davao City Criminal Case Nos. 68,309-B-98 and 68,310-B-98
against Emilia for violations of BP 22.
After the prosecution rested its case, Emilia filed a Demurrer to Evidence claiming insufficiency of
evidence. She asserted that not one of the elements of BP 22 was proven because the witness merely relied upon
the reports of the salesman; that the purchases covered by Sales Invoice No. 1711 were unauthorized because the
corresponding job order was unsigned; and that it was never established that the bank dishonored the checks or
that she was even sent a notice of dishonor.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !69 of !221
2012
MTCC ruling:

In its December 10, 1999 Order, the MTCC granted the Demurrer to Evidence. It ruled that while Emilia did
issue the checks for value, the prosecution nevertheless miserably failed to prove one essential element that
consummates the crime of BP 22, i.e., the fact of dishonor of the two subject checks. It noted that other than the
checks, no bank representative testified about presentment and dishonor.Hence, the MTCC acquitted Emilia of
the criminal charges. However, the MTCC still found her civilly liable because when she redeemed one of the
checks during the pendency of the criminal cases, the MTCC considered the same as an acknowledgement on
her part of her obligation with Mindanao Wines
.

SENIORS

ISSUE: Whether or not the dismissal of petitioner’s BP 22 cases likewise includes the dismissal of their civil
aspect.

HELD: BATCH 2018


No. The extinction of the penal action does not carry with it the extinction of the civil liability
where x x x the acquittal is based on reasonable doubt as only preponderance of evidence is required in civil
cases. On this basis, Emilia insists that the MTCC dismissed the BP 22 cases against her not on the ground of
reasonable doubt but on insufficiency of evidence. Hence, the civil liability should likewise be
extinguished. Emilias Demurrer to Evidence, however, betrays this claim. Asserting insufficiency of evidence as
a ground for granting said demurrer, Emilia herself argued therein that the prosecution has not proven [her] guilt
beyond reasonable doubt. And in consonance with such assertion, the MTCC in its judgment expressly stated
that her guilt was indeed not established beyond reasonable doubt, hence the acquittal.

In any case, even if the Court treats the subject dismissal as one based on insufficiency of evidence as Emilia
wants to put it, the same is still tantamount to a dismissal based on reasonable doubt.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !70 of !221
2012
Emilia also avers that a courts determination of preponderance of evidence necessarily entails the
presentation of evidence of both parties. She thus believes that she should have been first required to present
evidence to dispute her civil liability before the lower courts could determine preponderance of evidence. We
disagree. Preponderance of evidence is [defined as] the weight, credit, and value of the aggregate evidence on
either side and is usually considered to be synonymous with the term greater weight of the evidence or greater
weight of the credible evidence. It is evidence which is more convincing to the court as worthy of belief than that
which is offered in opposition thereto. Contrary to Emilias interpretation, a determination of this quantum of
evidence does not need the presentation of evidence by both parties. As correctly reasoned out by the CA,
Emilias interpretation is absurd as this will only encourage defendants to waive their presentation of evidence in
order for them to be absolved from civil liability for lack of preponderance of evidence.
Moreover, it is well to remember that a check may be evidence of indebtedness. A check, the entries of

SENIORS

which are in writing, could prove a loan transaction.While Emilia is acquitted of violations of BP 22, she should
nevertheless pay the debt she owes.

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !71 of !221
2012
LILY LIM vs. KOU CO PING a.k.a. CHARLIE CO,
G.R. No. 175256 August 23, 2012

TOPIC: TORTS AND DAMAGES


DOCTRINE: A SINGLE ACT OR OMISSION THAT CAUSED DAMAGE TO AN OFFENDED
PARTY MAY GIVE RISE TO TWO SEPARATE CIVIL LIABILITIES ON THE PART OF
OFFENDER- 1) CIVIL LIABLITY EX DELICTO, 2) INDEPENDENT CIVIL LIABLITY. THE
INDEPENDENT CIVIL LIABLITY MAY BE BASED ON “AN OBLIGATION NOT ARISING
FROM THE ACT OR OMISSION COMPLAINED OF AS FELONY”.

FACTS:

SENIORS

1.FR Cement Corporation, owner of a cement manufacturing plant, issued several withdrawal
authorities for cement dealers Fil-Cement Center and Tigerbilt. These withdrawal authorities

BATCH 2018
state the number of bags that the dealer paid for and can withdraw from the plant.

2.Fil-Cement Center and Tigerbilt, sold the withdrawal authorities covering 50,000 bags of
cement to Co for the amount of ₱ 3.15 million

3.Co sold these authorities to Lim at the price of ₱ 3.2 million. She successfully withdrew 2,800
bags of cement.

4.Sometime in April 1999, FRCC did not allow Lim to withdraw the remaining 37,200 bags
covered by the authorities. Lim clarified the matter with Co who explained that the plant
implemented a price increase and would only release the goods once Lim pays for the price
difference or agrees to receive a lesser quantity of cement.

5.Lim filed an information for Estafa through misappropriation and conversion before the RTC of
Pasig. The criminal case as well as the civil aspect of the case was dismissed. Lim appealed
the dismissal of the civil liability to the CA.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !72 of !221
2012
6.While the appeal was pending, she filed a complaint for specific performance and damages
before the RTC of Manila. Co maintained that the appealed civil liability and independent
civil action raises the same issue, thus, should have been dismissed on grounds of Litis
Pendentia and Forum Shopping.

ISSUE: Did Lim commit forum shopping in filing the civil case for specific performance and damages
during the pendency of her appeal on the civil aspect of the criminal case for estafa?

HELD: No. A single act or omission that causes damage to an offended party may give rise to two
separate civil liabilities on the part of the offender 1) civil liability ex delicto, that is, civil liability
arising from the criminal offense under Article 100 of the Revised Penal Code, and (2) independent
civil liability, that is, civil liability that may be pursued independently of the criminal proceedings. The
independent civil liability may be based on "an obligation not arising from the act or omission

SENIORS

complained of as a felony," as provided in Article 31 of the Civil Code (such as for breach of contract
or for tort. It may also be based on an act or omission that may constitute felony but, nevertheless,

BATCH 2018
treated independently from the criminal action by specific provision of Article 33 of the Civil Code ("in
cases of defamation, fraud and physical injuries").

Because of the distinct and independent nature of the two kinds of civil liabilities, jurisprudence
holds that the offended party may pursue the two types of civil liabilities simultaneously or
cumulatively, without offending the rules on forum shopping, litis pendentia, or res judicata.
One of the elements of res judicata is identity of causes of action. In the instant case, it must be
stressed that the action filed by petitioner is an independent civil action, which remains separate and
distinct from any criminal prosecution based on the same act. Not being deemed instituted in the
criminal action based on culpa criminal, a ruling on the culpability of the offender will have no bearing
on said independent civil action based on an entirely different cause of action, i.e., culpa contractual.In
the same vein, the filing of the collection case after the dismissal of the estafa cases against the offender

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !73 of !221
2012
did not amount to forum-shopping. The essence of forum shopping is the filing of multiple suits
involving the same parties for the same cause of action, either simultaneously or successively, to secure
a favorable judgment. Although the cases filed by [the offended party] arose from the same act or
omission of [the offender], they are, however, based on different causes of action. The criminal cases
for estafa are based on culpa criminal while the civil action for collection is anchored on culpa
contractual. Moreover, there can be no forum-shopping in the instant case because the law expressly
allows the filing of a separate civil action which can proceed independently of the criminal action.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !74 of !221
2012
COMMUNITIES CAGAYAN, INC., vs. SPOUSES ARSENIO (Deceased) and ANGELES
NANOL AND ANYBODY CLAIMING RIGHTS UNDER THEM
GR. No 176791 Nov. 14, 2012
Del Castillo, J.

TOPIC: SALES AND LEASE


DOCTRINE: In other words, before a contract to sell can be validly and effectively cancelled, the
seller has (1) to send a notarized notice of cancellation to the buyer and (2) to refund the cash
surrender value. Until and unless the seller complies with these twin mandatory requirements, the
contract to sell between the parties remains valid and subsisting. Thus, the buyer has the right to
continue occupying the property subject of the contract to sell, and may "still reinstate the contract

SENIORS

by updating the account during the grace period and before the actual cancellation" of the contract.

BATCH 2018
FACTS: Sometime in 1994, respondent-spouses Arsenio and Angeles Nanol entered into a Contract to
Sell with petitioner Communities Cagayan, Inc., (CCI) whereby the latter agreed to sell to respondent-
spouses a house and Lots 17 and 19 located at Block 16, Camella Homes Subdivision, Cagayan de Oro
City, for the price of P368,000.00. They obtained a loan from Capitol Development Bank (CDB), using
the property as collateral. To facilitate the loan, a simulated sale over the property was executed by
petitioner in favor of respondent-spouses. Accordingly, titles (TCT Nos. 105202 and 105203) were
transferred in the names of respondent-spouses and submitted to CDB for loan processing. The bank
collapsed and closed before it could release the loan.
On November 30, 1997, respondent-spouses entered into another Contract to Sell with petitioner
over the same property for the same price. This time, they availed of petitioner’s in-house
financing thus, undertaking to pay the loan over four years, from 1997 to 2001. Respondent Arsenio
demolished the original house and constructed a three-story house allegedly valued at P3.5 million,

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !75 of !221
2012
more or less. (Respondent Arsenio died, leaving his wife, herein respondent Angeles, to pay for the
monthly amortizations.)
On September 10, 2003, petitioner sent respondent-spouses a notarized Notice of Delinquency
and Cancellation of Contract to Sell due to the latter’s failure to pay the monthly amortizations.
Petitioner filed before the Municipal Trial Court in Cities, an action for unlawful detainer against
respondent-spouses. When the case was referred for mediation, respondent Angeles offered to pay
P220,000.00 to settle the case but petitioner refused to accept the payment. The case was later
withdrawn and consequently dismissed because the judge found out that the titles were already
registered under the names of respondent-spouses.
Petitioner, on July 27, 2005, filed before the RTC, Cagayan de Oro City, a Complaint for
Cancellation of Title, Recovery of Possession, Reconveyance and Damages. RTC ruled in favor of

SENIORS

respondents and declares the Deed of Absolute Sale VOID. Motion for reconsideration was denied.
Instead of answering the legal issue raised by petitioner, respondent Angeles asks for a review of the

BATCH 2018
Decision of the RTC by interposing additional issues. She maintains that the Deed of Absolute Sale is
valid. Thus, the RTC erred in cancelling TCT Nos. 105202 and 105203.
ISSUES:
1) Whether petitioner is obliged to refund to respondent-spouses all the monthly instalments
paid; and
2) Whether petitioner is obliged to reimburse respondent-spouses the value of the new house
minus the cost of the original house.

HELD:The petition is partly meritorious.

Respondent-spouses are entitled to the cash surrender value of the payments on the property
equivalent to 50% of the total payments made.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !76 of !221
2012
Considering that this case stemmed from a Contract to Sell executed by the petitioner and the
respondent-spouses, we agree with petitioner that the Maceda Law, which governs sales of real estate
on installment, should be applied. Sections 3, 4, and 5 of the Maceda Law provide for the rights of a
defaulting buyer.

In this connection, we deem it necessary to point out that, under the Maceda Law, the actual
cancellation of a contract to sell takes place after 30 days from receipt by the buyer of the notarized
notice of cancellation, and upon full payment of the cash surrender value to the buyer. In other words,
before a contract to sell can be validly and effectively cancelled, the seller has (1) to send a notarized
notice of cancellation to the buyer and (2) to refund the cash surrender value. Until and unless the
seller complies with these twin mandatory requirements, the contract to sell between the parties

SENIORS

remains valid and subsisting. Thus, the buyer has the right to continue occupying the property
subject of the contract to sell, and may "still reinstate the contract by updating the account during

BATCH 2018
the grace period and before the actual cancellation" of the contract.

In this case, petitioner complied only with the first condition by sending a notarized notice of
cancellation to the respondent-spouses. It failed, however, to refund the cash surrender value to the
respondent-spouses. Thus, the Contract to Sell remains valid and subsisting and supposedly,
respondent-spouses have the right to continue occupying the subject property. Unfortunately, we cannot
reverse the Decision of the RTC directing respondent-spouses to vacate and turnover possession of the
subject property to petitioner because respondent-spouses never appealed the order. The RTC Decision
as to respondent-spouses is therefore considered final.
In addition, in view of respondent-spouses failure to appeal, they can no longer reinstate the
contract by updating the account. Allowing them to do so would be unfair to the other party and is
offensive to the rules of fair play, justice, and due process. Thus, based on the factual milieu of the
instant case, the most that we can do is to order the return of the cash surrender value. Since

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !77 of !221
2012
respondent-spouses paid at least two years of installment, they are entitled to receive the cash surrender
value of the payments they had made which, under Section 3(b) of the Maceda Law, is equivalent to
50% of the total payments made.

Respondent-spouses are entitled to 



reimbursement of the improvements 

made on the property.
In view of the special circumstances obtaining in this case, we are constrained to rely on the
presumption of good faith on the part of the respondent-spouses which the petitioner failed to rebut.
Thus, respondent-spouses being presumed builders in good faith, we now rule on the applicability of
Article 448 of the Civil Code. Article 448 on builders in good faith does not apply where there is a

SENIORS

contractual relation between the parties, such as in the instant case. We went over the records of this
case and we note that the parties failed to attach a copy of the Contract to Sell. As such, we are

BATCH 2018
constrained to apply Article 448 of the Civil Code, which provides viz:
ART. 448. 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.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in
accord with the principle of accession, i.e., that the accessory follows the principal and not the other
way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive.
The landowner cannot refuse to exercise either option and compel instead the owner of the building to

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !78 of !221
2012
remove it from the land. The raison d’etre for this provision has been enunciated thus: Where the
builder, planter 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 impracticability of creating a state of forced co-ownership, the law has
provided a just solution by giving 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
the proper rent. He cannot refuse to exercise either option. It is the owner of the land who is authorized
to exercise the option, because his right is older, and because, by the principle of accession, he is
entitled to the ownership of the accessory thing.

In conformity with the foregoing pronouncement, we hold that petitioner, as landowner, has two

SENIORS

options. It may appropriate the new house by reimbursing respondent Angeles the current market value
thereof minus the cost of the old house. Under this option, respondent Angeles would have "a right of

BATCH 2018
retention which negates the obligation to pay rent." In the alternative, petitioner may sell the lots to
respondent Angeles at a price equivalent to the current fair value thereof. However, if the value of the
lots is considerably more than the value of the improvement, respondent Angeles cannot be compelled
to purchase the lots. She can only be obliged to pay petitioner reasonable rent.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !79 of !221
2012
ALBERT M. CHING AND ROMEO J. BAUTISTA, PETITIONERS, VS. FELIX M. BANTOLO,
ANTONIO O. ADRIANO AND EULOGIO STA. CRUZ JR., SUBSTITUTED BY HIS
CHILDREN, REPRESENTED BY RAUL STA. CRUZ JR., RESPONDENTS.
GR NO. 177086 DECEMBER 5, 2012

TOPIC: DAMAGES
DOCTRINE: IT IS ESSENTIAL THAT FOR DAMAGES TO BE AWARDED, A CLAIMANT
MUST SATISFACTORILY PROVE DURING THE TRIAL THAT THEY HAVE A FACTUAL
BASIS AND THAT THE DEFENDANT’S ACTS HAVE A CASUAL CONNECTION TO THEM.

FACTS: Respondents Felix M. Bantolo (Bantolo), Antonio O. Adriano and Eulogio Sta Cruz, Jr. are

SENIORS

owners of several parcels of land situated in Tagaytay City. They executed in favor of petitioners Albert
Ching (Ching) and Romeo J. Bautista a Special Power of Attorney (SPA) authorizing petitioners to

BATCH 2018
obtain a loan using respondents’ properties as collateral. Without notice to petitioners, respondents
executed a Revocation of Power of Attorney effective at the end of business hours of July 17, 2000. On
July 18, 2000, the Philippine Veterans Bank (PVB) approved the loan application of petitioner Ching in
the amount of P25 million for a term of five years subject to certain conditions.
Ching informed respondents of the approval of the loan. When petitioners learned about the
revocation of the SPA, they sent a letter to respondents demanding that the latter comply with the
agreement by annulling the revocation of the SPA.
Petitioners filed before the RTC a complaint for Annulment of Revocation of SPA, Enforcement
of SPA and/or interest in the properties covered by said SPA and Damages against respondent. They
later amended the Complaint to include an alternative prayer to have them declared as the owners of
one-half of the properties covered by the SPA. Petitioners alleged that the SPA is irrevocable because it
is a contract of agency coupled with interest. According to them, they agreed to defray the costs or

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !80 of !221
2012
expenses involved in processing the loan because respondents promised that they would have an equal
share in the proceeds of the loan or the subject properties.
Although the SPA was declared valid by the RTC, it held that it could no longer be enforced
because the circumstances present at the time of its execution have changed. For this reason, the RTC
found respondents liable for all the damages caused by the illegal revocation. The RTC also declared
petitioners owners of one-half of the subject properties.
The CA modified the Decision of the RTC. It ruled that petitioners are not entitled to one-half of
the subject properties because it is contrary to human experience for a person to give one-half of his
property to someone he barely knows. It likewise ruled that petitioners are not entitled to
reimbursement because they failed to show that the receipts presented in evidence were incurred in
relation to the loan application. As to the award of exemplary damages, the CA deleted the same

SENIORS

because respondents did not act in a wanton, fraudulent, reckless, oppressive or malevolent manner.

BATCH 2018
ISSUES:
1. Whether or not petitioners are entitled to one-half of the respondents’ properties
2. Whether or not petitioners are entitled to damages

HELD:
1. NO.
It is far from human experience that a person will give half of his property to another person
whom he barely knows. It is clear from the records of the case that the respondents do not know Ching.
It was Bautista who introduced him to Bantolo. The respondents agreed to give an SPA to Ching,
because they were informed that the latter could help them secure a loan with their pieces of property
as collateral. No one in his right mind would definitely agree to give half of his property to another. It is
certain that they agreed that they would share in the proceeds of the loan but not in the property.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !81 of !221
2012
In fact, other than petitioner Ching’s self-serving testimony, no evidence was presented to show
that respondents agreed to give one-half of the properties to petitioners.

2.
Petitioners are entitled to actual damages.
In exchange for his possession of the titles, petitioner Ching advanced the amount of P500,000.00
to respondents. Considering that the loan application with PVB did not push through, respondents are
liable to return the said amount to petitioner Ching.
Petitioners failed to show that the receipts submitted as evidence were incurred in relation to the
loan application. As aptly pointed out by the CA, majority of the receipts were incurred abroad and in
connection with petitioner Ching’s business dealings.

SENIORS

Petitioners are not entitled to exemplary damages.

BATCH 2018
Article 2229 of the Civil Code provides that exemplary damages may be imposed "by way of
example or correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages." They are, however, not recoverable as a matter of right. They are awarded
only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.
In this case, we agree with the CA that although the revocation was done in bad faith, respondents
did not act in a wanton, fraudulent, reckless, oppressive or malevolent manner. They revoked the SPA
because they were not satisfied with the amount of the loan approved. Thus, petitioners are not entitled
to exemplary damages.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !82 of !221
2013
THE MANILA INSURANCE COMPANY, INC., Petitioner, vs.
SPOUSES ROBERTO and AIDA AMURAO, Respondents.
G.R. No. 179628 January 16, 2013
DEL CASTILLO, J.:

TOPIC: LIABILITY OF A SURETY


DOCTRINE: A SURETY’S LIABILITY IS JOINT AND SEVERAL, LIMITED TO THE
AMOUNT OF THE BOND, AND DETERMINED STRICTLY BY THE TERMS OF CONTRACT
OF SURETYSHIP IN RELATION TO THE PRINCIPAL CONTRACT BETWEEN THE OBLIGOR
AND THE OBLIGEE. ALTHOUGH THE CONTRACT OF SURETYSHIP IS SECONDARY TO
THE PRINCIPAL CONTRACT, THE SURETY’S LIABILITY TO THE OBLIGEE IS

SENIORS

NEVERTHELESS DIRECT, PRIMARY, AND ABSOLUTE.

BATCH 2018
FACTS: On March 7, 2000, respondent-spouses Roberto and Aida Amurao entered into a Construction
Contract Agreement (CCA) with Aegean Construction and Development Corporation (Aegean) for the
construction of a six-storey commercial building in Tomas Morato corner E. Rodriguez Avenue,
Quezon City. To guarantee its full and faithful compliance with the terms and conditions of the CCA,
Aegean posted performance bonds secured by petitioner The Manila Insurance Company, Inc.
(petitioner) and Intra Strata Assurance Corporation (Intra Strata).
On November 15, 2001, due to the failure of Aegean to complete the project, respondent
spouses filed with the Regional Trial Court (RTC) of Quezon City against petitioner and Intra Strata to
collect on the performance bonds they issued in the amounts of ₱2,760,000.00 and ₱4,440,000.00,
respectively.
Intra Strata, for its part, filed an Answer and later, a Motion to Admit Third Party Complaint,
with attached Third Party Complaint against Aegean, Ronald D. Nicdao, and Arnel A. Mariano.
Petitioner, on the other hand, filed a Motion to Dismiss on the grounds that the Complaint states no

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !83 of !221
2013
cause of action and that the filing of the Complaint is premature due to the failure of respondent-
spouses to implead the principal contractor, Aegean.
During the pre-trial, petitioner and Intra Strata discovered that the CCA entered into by
respondent-spouses and Aegean contained an arbitration clause. Hence, they filed separate Motions to
Dismiss on the grounds of lack of cause of action and lack of jurisdiction.
RTC: denied both motions. Aggrieved, petitioner elevated the case to the CA by way of special civil
action for certiorari.
CA: dismissed the petition. The CA found no grave abuse of discretion on the part of the RTC when it
disregarded the fact that the CCA was not yet signed at the time petitioner issued the performance bond
on February 29, 2000. The CA explained that the performance bond was intended to be
coterminous with the construction of the building. The CA likewise said that, although the

SENIORS

contract of surety is only an accessory to the principal contract, the surety’s liability is direct,
primary and absolute.

BATCH 2018
ISSUE: Whether petitioner is a solidary debtor instead of a solidary gurantor

Petitioner argues that while a surety is bound solidarily with the obligor, this does not make the surety a
solidary co-debtor. A surety or guarantor is liable only if the debtor is himself liable. In this case, since
respondent-spouses and Aegean agreed to submit any dispute for arbitration before the CIAC, it is
imperative that the dispute between respondent-spouses and Aegean must first be referred to arbitration
in order to establish the liability of Aegean. In other words, unless the liability of Aegean is determined,
the filing of the instant case is premature.
Respondent-spouses insist that petitioner as a surety is directly and equally bound with the
principal. The fact that the performance bond was issued prior to the execution of the CCA also does
not affect the latter’s validity because the performance bond is coterminous with the construction of the
building.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !84 of !221
2013
HELD: Petitioner is a solidary debtor. A contract of suretyship is defined as "an agreement whereby a
party, called the surety, guarantees the performance by another party, called the principal or obligor, of
an obligation or undertaking in favor of a third party, called the oblige”. We have consistently held that
a surety’s liability is joint and several, limited to the amount of the bond, and determined strictly by the
terms of contract of suretyship in relation to the principal contract between the obligor and the obligee.
It bears stressing, however, that although the contract of suretyship is secondary to the principal
contract, the surety’s liability to the obligee is nevertheless direct, primary, and absolute.
In this case, respondent-spouses (obligee) filed with the RTC a Complaint against petitioner
(surety) to collect on the performance bond it issued. Petitioner, however, seeks the dismissal of the
Complaint on the grounds of lack of cause of action and lack of jurisdiction. Petitioner claims that

SENIORS

respondent-spouses have no cause of action against it because at the time it issued the performance
bond, the CCA was not yet signed by respondent-spouses and Aegean.

BATCH 2018
Effectivity of the Performance bond:
A careful reading of the Performance Bond reveals that the "bond is coterminous with the final
acceptance of the project." Thus, the fact that it was issued prior to the execution of the CCA does not
affect its validity or effectivity.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !85 of !221
2013
SPOUSES ALBERTO AND SUSAN CASTRO vs. AMPARO PALENZUELA
[G.R. No. 184698. January 21, 2013.]
DEL CASTILLO, J p:

TOPIC: CREDIT TRANSACTIONS


DOCTRINE: Back rentals are equivalent to a loan or forbearance of money, thus the interest rate
should be 12% per annum. (HOWEVER, this is no longer applicable as per BSP Circular NO. 799
providing that “the rate of interest for the loan or forbearance of any money, goods or credits and
the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall
be 6 percent per annum.”)

SENIORS

FACTS: Respondents own several fishponds totaling 72 hectares. Respondents, through their duly
appointed attorney-in-fact, leased out these fishponds to petitioners, spouses Alberto and Susan Castro.

BATCH 2018
The lease was to be for five years. The lease expired on June 30, 1999, but petitioners did not vacate
and continued to occupy and operate the fishponds until August 11, 1999, or an additional 41 days
beyond the contract expiration date. Previously, or on July 22, 1999, respondents sent a letter to
petitioners declaring the latter as trespassers and demanding the settlement of the latter's outstanding
obligations, including rent for petitioners' continued stay within the premises, in the amount of
P378,451.00. Petitioners still failed to pay. Respondents instituted a Civil Case for collection of a sum
of money with damages in the Regional Trial Court against the petitioners.

Ruling of the Regional Trial Court: RTC ordered the defendants, jointly and severally, to pay
plaintiffs the following: actual or compensatory damages; moral damages; exemplary damages;
attorney's fees; and Costs of suit.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !86 of !221
2013
Ruling of the Court of Appeals: The CA found no error in the award of moral and exemplary
damages, noting that petitioners' violations of the lease agreement compelled respondents to litigate
and endure unreasonable delays, sleepless nights, mental anguish, and serious anxiety. As for attorney's
fees, the CA sustained the trial court's award of 25%, saying that such stipulation may be justified
under Article 2208 of the Civil Code. Since respondents were compelled to incur expenses to protect
their interests as a result of petitioners' acts and omissions, they should be allowed to collect the
stipulated attorney's fees.

Petitioner’s argument: Petitioners maintained that the Decision is erroneous and the awards
excessive, echoing their previous argument below that the lease agreement did not authorize
respondents to charge additional rents for their extended stay and interest on delayed rental payments.

SENIORS

They added that respondents are not entitled to moral and exemplary damages and attorney's fees.
Finally, they bemoaned the trial court's act of resolving their Verified Motion for Reconsideration of the

BATCH 2018
Decision without conducting oral arguments.

Respondent’s argument: Respondents maintain that in the event of expiration of the lease period and
the lessee maintains himself within the premises, the law authorizes the collection of rentals on a
month-to-month or year-to-year basis, citing Articles 1670 and 1687 of the Civil Code. Thus, even if
the lease agreement with petitioners failed to provide for a stipulation covering lease extension, the
obligation to pay rent is not extinguished by the expiration of the lease on June 30, 1999.
Respondents further claim that interest should be paid at 12% per annum, and not merely 6%, on the
outstanding obligation.

ISSUES:
(1) Are the respondents liable to pay moral and exemplary damages?

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !87 of !221
2013
(2) Should back rentals be considered as loan or forbearance of money where interest rate should be
12% per annum?

HELD:
(1) YES. On the issue of moral and exemplary damages, the Court finds no reason to disturb the trial
and appellate courts' award in this regard. Petitioners have not been exactly above-board in dealing
with respondents. They have been found guilty of several violations of the agreement, and not just one.
They incurred delay in their payments, and their check payments bounced, for one; for another, they
subleased the premises to Reyes, in blatant disregard of the express prohibition in the lease agreement;

SENIORS

thirdly, they refused to honor their obligation, as stipulated under the lease agreement, to pay the
fishpond license and other permit fees and; finally, they refused to vacate the premises after the

BATCH 2018
expiration of the lease.

(2) YES. On the matter of interest, the proper rate is not 6% as petitioners argue, but 12% per annum,
collected from the time of extrajudicial demand on July 22, 1999. Back rentals in this case are
equivalent to a loan or forbearance of money.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !88 of !221
2013
NICOLAS P. DIEGO VS. RODOLFO P. DIEGO AND EDUARDO P. DIEGO,
G.R. NO. 179965; FEBRUARY 20, 2013

TOPIC: CONTRACT TO SELL


MAIN DOCTRINE: AN AGREEMENT WHICH STIPULATES THAT THE SELLER SHALL
EXECUTE A DEED OF SALE ONLY UPON OR AFTER PAYMENT OF THE PURCHASE
PRICE IS A CONTRACT TO SELL, NOT A CONTRACT OF SALE. WHERE THE VENDOR
PROMISES TO EXECUTE A DEED OF ABSOLUTE SALE UPON THE COMPLETION BY THE
VENDEE OF THE PAYMENT OF THE PRICE, THE CONTRACT IS ONLY A CONTRACT TO
SELL. SUCH STIPULATION SHOWS THAT THE VENDORS RESERVED TITLE TO THE
SUBJECT PROPERTY UNTIL FULL PAYMENT OF THE PURCHASE PRICE.

SENIORS

FACTS: Petitioner Nicolas P. Diego (Nicolas) and his brother Rodolfo, respondent herein, entered into

BATCH 2018
an oral contract to sell covering Nicolas's share, as co-owner of the family's Diego Building. Rodolfo
made a downpayment. It was agreed that the deed of sale shall be executed upon payment of the
remaining balance. However, Rodolfo failed to pay the remaining balance.
Meanwhile, the building was leased out to third parties, but Nicolas's share in the rents were not
remitted to him by herein respondent Eduardo, another brother of Nicolas and designated administrator
of the Diego Building. Instead, Eduardo gave Nicolas's monthly share in the rents to Rodolfo. Despite
demands by Nicolas, the respondents failed to render an accounting thereof.
Thus, Nicolas filed a Complaint before the RTC to compel respondents to render an accounting of all
the transactions and be ordered to deliver to Nicolas his share in the rents. On the other hand,
respondents contended that Nicolas had no more claim in the rents in the Diego Building since he had
already sold his share to Rodolfo.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !89 of !221
2013
RTC dismissed the case. It held that when Nicolas received the downpayment, a "contract of sale" was
perfected. It also ruled that the balance from Rodolfo will only be due and demandable when Nicolas
executes an absolute deed of sale.
CA affirmed that there was a perfected contract of sale.
Petitioner now argues that there was no perfected contract of sale even though Rodolfo had partially
paid the price; that in the absence of the third element in a sale contract the price there could be no
perfected sale; that failing to pay the required price in full, Nicolas had the right to rescind the
agreement as an unpaid seller.

ISSUE: Whether the contract entered into by Nicolas is a “contract to sell”.

SENIORS

HELD: Yes, petition is granted. The contract entered into by Nicolas is a contract to sell.
The stipulation to execute a deed of sale upon full payment of the purchase price is a unique and

BATCH 2018
distinguishing characteristic of a contract to sell. It also shows that the vendor reserved title to the
property until full payment.
An agreement which stipulates that the seller shall execute a deed of sale only upon or after payment of
the purchase price is a contract to sell, not a contract of sale.
In this case, both parties agreed that the deed of sale shall only be executed upon payment of the
remaining balance of the purchase price. Thus, the transaction entered into by the parties is a contract to
sell. Furthermore, the acknowledgement receipt signed by Nicolas as well as the contemporaneous acts
of the parties show that they agreed on a contract to sell, not of sale. The absence of a formal deed of
conveyance is indicative of a contract to sell.
SIDE DOCTRINE: The remedy of rescission is not available in contracts to sell.
In a contract to sell, title remains with the vendor and does not pass on to the vendee until the purchase
price is paid in full. If the vendor should eject the vendee for failure to meet the condition precedent, he
is enforcing the contract and not rescinding it.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !90 of !221
2013
Thus, Rodolfo has no right to compel Nicolas to transfer ownership to him because he failed to pay in
full the purchase price. Correlatively, Nicolas has no obligation to transfer his ownership over his share
in the Diego Building to Rodolfo.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !91 of !221
2013
ROBERN DEVELOPMENT CORP V. PEOPLE’S LANDLESS ASSOCIATION
GR NO. 173622 MARCH 11, 2013

TOPIC: PERFECTION OF CONTRACT OF SALE


DOCTRINE: WHEN THERE IS MERELY AN OFFER BY ONE PARTY WITHOUT
ACCEPTANCE OF THE OTHER, THERE IS NO CONTRACT.

FACTS: Al-Amanah owned a 2000-square meter lot located in Magtu-od, Davao City occupied by
PELA. On December 12, 1992, Al-Amanah asked some of the members of PELA to desist from
building their houses on the lot and to vacate the same, unless they are interested to buy it. The
informal settlers thus expressed their interest to buy the lot at P100.00 per square meter, which Al-

SENIORS

Amanah turned down for being far below its asking price.
Consequently, Al-Amanah reiterated its demand to the informal settlers to vacate the lot. March 18,

BATCH 2018
1993, PELA offered to purchase the lot for P300,000.00, half of which shall be paid as down payment
and the remaining half to be paid within one year.
In the lower portion of the said letter, Al-Amanah made the following annotation;
“Subject offer has been acknowledged/received but processing to take effect upon putting up of the
partial amt. of P150,000.00 on or before April 15, 1993”
By May 3, 1993, PELA had deposited P150,000.00 as evidenced by four bank receipts. In the
meantime, the PELA members remained in the property and introduced further improvements.
On November 29, 1993, Al-Amanah wrote then PELA President informing him of the Head Office's
disapproval of its offer to buy because the price offered is way below the selling price of the Bank.
Meanwhile, acting on petitioner’s undated written offer, Al-Amanah informed its Board that Robern is
interested to buy the lot for P400,000.00; that it has already deposited 20% of the offered purchase
price; that it is buying the lot on "as is" basis; Eight days later, Robern was informed of the acceptance.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !92 of !221
2013
However, upon learning of PELA’s claim, Robern expressed to Al-Amanah its uncertainty on the status
of the subject lot. However, the latter assured him that there is no existing contract between the bank
and PELA.H Hence, the sale was subsequently perfected.
Three months later, PELA filed a suit for Annulment and Cancellation of Void Deed of Sale, insisting
that as early as March 1993 it has a perfected contract of sale with Al-Amanah.
Al-Amanah claimed that the bank has every right to sell its lot to any interested buyer with the best
offer and thus they chose Robern.
Robern, on the other hand, asserted the corporation's standing as a purchaser in good faith and for value
in the sale of the property, having relied on the clean title of Al-Amanah. They also alleged that the
purported sale to PELA is violative of the Statute of Frauds as there is no written agreement covering
the same.

SENIORS

ISSUE: Whether or not there was a perfected contract of sale between PELA and Al-Amanah.

BATCH 2018
HELD: After scrutinizing the testimonial and documentary evidence in the records of the case, SC
found no proof of a perfected contract of sale between Al-Amanah and PELA. The parties did not agree
on the price and no consent was given, whether express or implied.
The note written by the bank on the March 18, 1993 cannot be construed as acceptance of PELA's offer
to buy. Taken at face value, the annotation simply means that the bank merely acknowledged receipt of
PELA's letter-offer.
Further, the court held that the receipt of the amount, coupled with the phrase written on the four
receipts as "deposit on sale" did not signify a tacit acceptance by Al-Amanah of PELA's offer.
For sure, the money PELA gave was not in the concept of an earnest money.
Hence, the transaction between Al-Amanah and PELA remained in the negotiation stage. The offer
never materialized into a perfected sale, for no oral or documentary evidence categorically proves that
Al-Amanah expressed amenability to the offered purchase price.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !93 of !221
2013

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !94 of !221
2013
MOLDEX REALTY, INC., PETITIONER, VS. FLORA A. SABERON, RESPONDENT.
G.R. NO.176289 APRIL 8, 2013
DEL CASTILLO

TOPIC: SALES

DOCTRINE: UNDER THE MACEDA LAW, THE DEFAULTING BUYER WHO HAS PAID AT
LEAST TWO YEARS OF INSTALLMENTS HAS THE RIGHT OF EITHER TO AVAIL OF THE
GRACE PERIOD TO PAY OR, THE CASH SURRENDER VALUE OF THE PAYMENTS MADE

FACTS: Respondent Flora A. Saberon asked Moldex, the developer of Metrogate Subdivision, to
reserve a lot in the said subdivision as shown by a Reservation Application dated April 11, 1992. Flora
opted to pay on installment basis which amounts to ₱583,498.20 at monthly amortizations of ₱8,140.97
payable in five years with 21% interest per annum based on the balance and an additional 5% surcharge

SENIORS

for every month of delay on the monthly installment due.

BATCH 2018
In April, August, and October 1996, Moldex sent Flora notices reminding her to update her account.
Upon inquiry, however, Flora was shocked to find out that as of July 1996, she owed Moldex
₱247,969.10. In November 1996, the amount ballooned to ₱491,265.91. Moldex thus suggested to
Flora to execute a written authorization for the sale of the subject lot to a new buyer and a written
request for refund so that she can get half of all payments she made. However, Flora never made a
written request for refund.

As of April 1997, Moldex computed Flora’s unpaid account at ₱576,569.89. It then sent Flora a
Notarized Notice of Cancellation of Reservation Application and/or Contract to Sell. Flora, on the other
hand, filed before the Housing and Land Use Regulatory Board (HLURB) Regional Field Office IV a
Complaint for the annulment of the contract to sell, recovery of all her payments with interests,
damages, and the cancellation of Moldex’s license to sell.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !95 of !221
2013
Flora alleged that the contract to sell between her and Moldex is void from its inception. According to
Flora, Moldex violated Section 5 of Presidential Decree (PD) No. 957 when it sold the subject lot to her
on April 11, 1992 or before it was issued a license to sell on September 8, 1992.
HLURB Arbiter: declared as void the Contract to Sell entered into by the parties because Moldex
lacked the required license to sell at the time of the contract’s perfection, in violation of Section 5 of
PD 957. Moldex was ordered to refund everything Flora had paid, plus legal interest, and to pay
attorney’s fees.
HLURB Board: dismissed the petition and affirmed in toto the Arbiter’s Decision.
Office of the President: affirmed HLURB Board
CA: Affirmed CA.

ISSUES:
SENIORS

1. Is intrinsic validity of the contract to sell affected by the developer’s violation of Section 5 of

BATCH 2018
PD 957?

2. Is Respondent entitled to a refund?

HELD:
1. No. In Spouses Co Chien v. Sta. Lucia Realty and Development Corporation, Inc.27 this Court
has already ruled that the lack of a certificate of registration and a license to sell on the part of a
subdivision developer does not result to the nullification or invalidation of the contract to sell it
entered into with a buyer. The contract to sell remains valid and subsisting. In said case, the
Court upheld the validity of the contract to sell notwithstanding violations by the developer of
the provisions of PD 957. We held that nothing in PD 957 provides for the nullity of a contract
validly entered into in cases of violation of any of its provisions such as the lack of a license to
sell.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !96 of !221
2013
2. Yes Respondent is nevertheless entitled to a 50% refund under the Maceda Law.

Under the Maceda Law, the defaulting buyer who has paid at least two years of installments has
the right of either to avail of the grace period to pay or, the cash surrender value of the
payments made:

Section 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding industrial
lots, commercial buildings and sales to tenants under RA no. 3844, as amended by RA no. 6398,
where the buyer has paid at least two years of installments, the buyer is entitled to the following
rights in case he defaults in the payment of succeeding installments:

SENIORS

(a) To pay, without additional interest, the unpaid installments due within the total grace period
earned by him which is hereby fixed at the rate of one month grace period for every one year of

BATCH 2018
installment payments made: Provided, That this right shall be exercised by the buyer only once
in every five years of the life of the contract and its extensions, if any.

(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the
payments on the property equivalent to fifty per cent of the total payments made, and, after five
years of installments, an additional five per cent every year but not to exceed ninety per cent of
the total payments made: Provided, That the actual cancellation of the contract shall take place
after thirty days from receipt by the buyer of the notice of cancellation or the demand for
rescission of the contract by a notarial act and upon full payment of the cash surrender value to
the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the total
number of installment payments made.1âwphi1

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !97 of !221
2013
It is on record that Flora had already paid more than two years of installments (from March 11, 1992 to
July 19, 1996) in the aggregate amount of ₱375,295.49. Her last payment was made on July 19, 1996.
It is also shown that Flora has defaulted in her succeeding payments. Thereafter, Moldex sent notices to
Flora to update her account but to no avail. She could thus no longer avail of the option provided in
Section 3(a) of the Maceda Law which is to pay her unpaid installments within the grace period.
Besides, Moldex already sent Flora a Notarized Notice of Cancellation of Reservation Application and/
or Contract to Sell. Hence, the only option available is Section 3(b) whereby the seller, in this case,
Moldex shall refund to the buyer, Flora, the cash surrender value of the payments on the property
equivalent to 50% of the total payments made, or ₱187,647.75.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !98 of !221
2013
SPS CACAYORIN V ARMED FORCES AND MUTUAL BENEFIT ASSOCIATION, INC.

GR NO. 171298 APRIL 15, 2013

TOPIC: CONSIGNATION
DOCTRINE: TENDER OF PAYMENT MUST BE DISTINGUISHED FROM CONSIGNATION.
TENDER IS THE ANTECEDENT OF CONSIGNATION, THAT IS, AN ACT PREPARATORY TO
THE CONSIGNATION, WHICH IS THE PRINCIPAL, AND FROM WHICH ARE DERIVED
THE IMMEDIATE CONSEQUENCES WHICH THE DEBTOR DESIRES OR SEEKS TO
OBTAIN. TENDER OF PAYMENT MAY BE EXTRAJUDICIAL, WHILE CONSIGNATION IS
NECESSARILY JUDICIAL, AND THE PRIORITY OF THE FIRST IS THE ATTEMPT TO MAKE
A PRIVATE SETTLEMENT BEFORE PROCEEDING TO THE SOLEMNITIES OF
CONSIGNATION.

SENIORS

FACTS: Petitioner Oscar Cacayorin (Oscar) is a member of respondent Armed Forces and Police

BATCH 2018
Mutual Benefit Association, Inc. (AFPMBAI). He filed an application with AFPMBAI to purchase a
piece of property which the latter owned, through a loan facility.

Oscar and his wife and co-petitioner herein, Thelma, on one hand, and the Rural Bank of San Teodoro
(the Rural Bank) on the other, executed a Loan and Mortgage Agreement5 with the former as borrowers
and the Rural Bank as lender, under the auspices of Pag-IBIG or Home Development Mutual Fund’s
Home Financing Program.

The Rural Bank issued a letter of guaranty6 informing AFPMBAI that the proceeds of petitioners’
approved loan in the amount of ₱77,418.00 shall be released to AFPMBAI after title to the property is
transferred in petitioners’ name and after the registration and annotation of the parties’ mortgage
agreement.

On the basis of the Rural Bank’s letter of guaranty, AFPMBAI executed in petitioners’ favor a Deed of
Absolute Sale,7 and a new title – Transfer Certificate of Title No. 370178 (TCT No. 37017) – was

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !99 of !221
2013
issued in their name, with the corresponding annotation of their mortgage agreement with the Rural
Bank, under Entry No. 3364.9

Unfortunately, the Pag-IBIG loan facility did not push through and the Rural Bank closed and was
placed under receivership by the Philippine Deposit Insurance Corporation (PDIC). Meanwhile,
AFPMBAI somehow was able to take possession of petitioners’ loan documents and TCT No. 37017,
while petitioners were unable to pay the loan/consideration for the property.

AFPMBAI made oral and written demands for petitioners to pay the loan/ consideration for the
property.10

In July 2003, petitioners filed a Complaint11 for consignation of loan payment, recovery of title and
cancellation of mortgage annotation against AFPMBAI, PDIC and the Register of Deeds of Puerto
Princesa City. Petitioners alleged in their Complaint that as a result of the Rural Bank’s closure and

SENIORS

PDIC’s claim that their loan papers could not be located, they were left in a quandary as to where they
should tender full payment of the loan and how to secure cancellation of the mortgage annotation on
TCT No. 37017.
BATCH 2018
AFPMBAI filed a Motion to Dismiss13 claiming that petitioners’ Complaint falls within the jurisdiction
of the Housing and Land Use Regulatory Board (HLURB) and not the Puerto Princesa RTC, as it was
filed by petitioners in their capacity as buyers of a subdivision lot and it prays for specific performance
of contractual and legal obligations decreed under Presidential Decree No. 95714 (PD 957). It added
that since no prior valid tender of payment was made by petitioners, the consignation case was fatally
defective and susceptible to dismissal.


ISSUE: Whether or not consignation is the proper remedy in this case.

HELD: YES. It appears that the petitioners’ debt is outstanding; that the Rural Bank’s receiver, PDIC,
informed petitioners that it has no record of their loan even as it took over the affairs of the Rural Bank,

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !100 of !221
2013
which on record is the petitioners’ creditor as per the July 4, 1994 Loan and Mortgage Agreement; that
one way or another, AFPMBAI came into possession of the loan documents as well as TCT No. 37017;
that petitioners are ready to pay the loan in full; however, under the circumstances, they do not know
which of the two – the Rural Bank or AFPMBAI – should receive full payment of the purchase price,
or to whom tender of payment must validly be made.

Under Article 1256 of the Civil Code,24 the debtor shall be released from responsibility by the
consignation of the thing or sum due, without need of prior tender of payment, when the creditor is
absent or unknown, or when he is incapacitated to receive the payment at the time it is due, or when
two or more persons claim the same right to collect, or when the title to the obligation has been lost.
Applying Article 1256 to the petitioners’ case as shaped by the allegations in their Complaint, the Court
finds that a case for consignation has been made out, as it now appears that there are two entities which

SENIORS

petitioners must deal with in order to fully secure their title to the property: 1) the Rural Bank (through
PDIC), which is the apparent creditor under the July 4, 1994 Loan and Mortgage Agreement; and 2)

BATCH 2018
AFPMBAI, which is currently in possession of the loan documents and the certificate of title, and the
one making demands upon petitioners to pay. Clearly, the allegations in the Complaint present a
situation where the creditor is unknown, or that two or more entities appear to possess the same right to
collect from petitioners. Whatever transpired between the Rural Bank or PDIC and AFPMBAI in
respect of petitioners’ loan account, if any, such that AFPMBAI came into possession of the loan
documents and TCT No. 37017, it appears that petitioners were not informed thereof, nor made privy
thereto.

Indeed, the instant case presents a unique situation where the buyer, through no fault of his own,
was able to obtain title to real property in his name even before he could pay the purchase price in full.
There appears to be no vitiated consent, nor is there any other impediment to the consummation of their
agreement, just as it appears that it would be to the best interests of all parties to the sale that it be once

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !101 of !221
2013
and for all completed and terminated. For this reason, Civil Case No. 3812 should at this juncture be
allowed to proceed.

Moreover, petitioners’ position is buttressed by AFPMBAI’s own admission in its


Comment25 that it made oral and written demands upon the former, which naturally aggravated their
confusion as to who was their rightful creditor to whom payment should be made – the Rural Bank or
AFPMBAI. Its subsequent filing of the Motion to Dismiss runs counter to its demands to pay. If it
wanted to be paid with alacrity, then it should not have moved to dismiss Civil Case No. 3812, which
was brought precisely by the petitioners in order to be able to finally settle their obligation in full.

Finally, the lack of prior tender of payment by the petitioners is not fatal to their consignation case.
They filed the case for the exact reason that they were at a loss as to which between the two – the Rural
Bank or AFPMBAI – was entitled to such a tender of payment. Besides, as earlier stated, Article 1256

SENIORS

authorizes consignation alone, without need of prior tender of payment, where the ground for
consignation is that the creditor is unknown, or does not appear at the place of payment; or is

BATCH 2018
incapacitated to receive the payment at the time it is due; or when, without just cause, he refuses to give
a receipt; or when two or more persons claim the same right to collect; or when the title of the
obligation has been lost.

Consignation is necessarily judicial; hence, jurisdiction lies with the RTC, not with the
HLURB. the Civil Code itself provides that consignation shall be made by depositing the thing or
things due at the disposal of judicial authority, thus:

Art. 1258. Consignation shall be made by depositing the things due at the disposal of judicial authority,
before whom the tender of payment shall be proved, in a proper case, and the announcement of the
consignation in other cases.

The consignation having been made, the interested parties shall also be notified thereof.
(Emphasis and underscoring supplied)

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !102 of !221
2013
The above provision clearly precludes consignation in venues other than the courts.
1âwphi1 Elsewhere, what may be made is a valid tender of payment, but not consignation. The two,
however, are to be distinguished.

Tender of payment must be distinguished from consignation. Tender is the antecedent of


consignation, that is, an act preparatory to the consignation, which is the principal, and from which are
derived the immediate consequences which the debtor desires or seeks to obtain. Tender of payment
may be extrajudicial, while consignation is necessarily judicial, and the priority of the first is the
attempt to make a private settlement before proceeding to the solemnities of consignation. (8 Manresa
325

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !103 of !221
2013
APOLONIO GARCIA, IN SUBSTITUTION OF HIS DECEASED MOTHER, MODESTA
GARCIA, AND CRISTINA SALAMAT VERSUS DOMINGA ROBLES VDA. DE CAPARAS.
G.R. NO. 180843, APRIL 17, 2013.

CIVIL LAW TOPIC: ***

DOCTRINE: UNDER THE DEAD MAN'S STATUTE RULE, "[I]F ONE PARTY TO THE
ALLEGED TRANSACTION IS PRECLUDED FROM TESTIFYING BY DEATH, INSANITY, OR
OTHER MENTAL DISABILITIES, THE OTHER PARTY IS NOT ENTITLED TO THE UNDUE
ADVANTAGE OF GIVING HIS OWN UNCONTRADICTED AND UNEXPLAINED ACCOUNT
OF THE TRANSACTION.” THUS, THE ALLEGED ADMISSION OF THE DECEASED PEDRO

SENIORS

CAPARAS (PEDRO) THAT HE ENTERED INTO A SHARING OF LEASEHOLD RIGHTS WITH


THE PETITIONERS CANNOT BE USED AS EVIDENCE AGAINST THE HEREIN

BATCH 2018
RESPONDENT AS THE LATTER WOULD BE UNABLE TO CONTRADICT OR DISPROVE
THE SAME.

FACTS: Flora Makapungay (Makapungay) is the owner of a farm in Bulacan being tilled by Eugenio
Caparas (Caparas). Makapungay, the lot owner, was succeeded by her nephews and niece, namely
Amanda, Justo and Augusto. On the other hand, Eugenio’s children – Garcia, Salamat, and Pedro –
succeeded him.

Before she passed away, Makapungay appointed Amanda as her attorney-in-fact. After Eugenio
died, or in 1974, Amanda (the owner’s niece) and Pedro (the lessee’s son) entered into an agreement
entitled “Kasunduan sa Buwisan”, followed by an April 19, 1979 Agricultural Leasehold Contract,
covering the land. In said agreements, Pedro was installed and recognized as the lone agricultural
lessee and cultivator of the land.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !104 of !221
2013
Pedro passed away in 1984, and his wife, herein respondent Dominga Robles Vda. De Caparas
(Dominga), took over as agricultural lessee. On July 10, 1996, the landowners Amanda, Justo and
Augusto, on the one hand, and Pedro’s sisters Garcia and Salamat on the other, entered into a
“Kasunduan sa Buwisan ng Lupa” whereby Garcia and Salamat were acknowledged as Pedro’s co-
lessees.

On October 24, 1996, herein petitioners Garcia and Salamat filed a Complaint for nullification
of leasehold and restoration of rights as agricultural lessees against Pedro’s heirs, represented by his
surviving spouse and herein respondent Dominga. The case was docketed as Department of Agrarian
Reform Adjudication Board (DARAB) Case No. R-03-02-3520-96.

SENIORS

In their Complaint, Garcia and Salamat claimed that when their father Eugenio died, they

BATCH 2018
entered into an agreement with their brother Pedro that they would alternately farm the land on a “per-
season basis”; that the landowner Makapugay knew of this agreement; that when Makapugay passed
away, Pedro reneged on their agreement and cultivated the land all by himself, deliberately excluding
them and misrepresenting to Amanda that he is Eugenio’s sole heir; that as a result, Amanda was
deceived into installing him as sole agricultural lessee in their 1979 Agricultural Leasehold Contract;
that when Amanda learned of Pedro’s misrepresentations, she executed on July 10, 1996 an Affidavit11
stating among others that Pedro assured her that he would not deprive Garcia and Salamat of their
“cultivatory rights”; that in order to correct matters, Amanda, Justo and Augusto executed in their favor
the 1996 “Kasunduan sa Buwisan ng Lupa”, recognizing them as Pedro’s co-lessees; that when Pedro
passed away, Dominga took over the land and, despite demands, continued to deprive them of their
rights as co-lessees. Petitioners prayed that the 1979 Agricultural Leasehold Contract between Pedro
and Amanda be nullified; that they be recognized as co-lessees and allowed to cultivate the land on an
alternate basis as originally agreed.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !105 of !221
2013
ISSUE: Whether Garcia and Salamat should be installed as Dominga’s co-lessees pursuant to the 1996
“Kasunduan sa Buwisan ng Lupa”.

HELD: No. DARAB Case No. R-03-02-3520-96, which was filed in 1996 or long after Pedro’s death
in 1984, has no leg to stand on other than Amanda’s declaration in her July 10, 1996 Affidavit that
Pedro falsely represented to Makapugay and to her that he is the actual cultivator of the land, and that
when she confronted him about this and the alleged alternate farming scheme between him and
petitioners, Pedro allegedly told her that “he and his two sisters had an understanding about it and he
did not have the intention of depriving them of their cultivatory rights.” Petitioners have no other
evidence, other than such verbal declaration, which proves the existence of such arrangement. No

SENIORS

written memorandum of such agreement exists, nor have they shown that they actually cultivated the
land even if only for one cropping. No receipt evidencing payment to the landowners of the latter’s

BATCH 2018
share, or any other documentary evidence, has been put forward.

What the PARAD, DARAB and CA failed to consider and realize is that Amanda’s declaration
in her Affidavit covering Pedro’s alleged admission and recognition of the alternate farming scheme is
inadmissible for being a violation of the Dead Man’s Statute, which provides that “[i]f one party to the
alleged transaction is precluded from testifying by death, insanity, or other mental disabilities, the other
party is not entitled to the undue advantage of giving his own uncontradicted and unexplained account
of the transaction.” Thus, since Pedro is deceased, and Amanda’s declaration which pertains to the
leasehold agreement affects the 1996 “Kasunduan sa Buwisan ng Lupa” which she as assignor entered
into with petitioners, and which is now the subject matter of the present case and claim against Pedro’s
surviving spouse and lawful successor-in-interest Dominga, such declaration cannot be admitted and
used against the latter, who is placed in an unfair situation by reason of her being unable to contradict
or disprove such declaration as a result of her husband-declarant Pedro’s prior death.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !106 of !221
2013
Amanda, on the other hand, cannot claim that Pedro deceived her into believing that he is the
sole successor to the leasehold. Part of her duties as the landowner’s representative or administrator
was to know the personal circumstances of the lessee Eugenio; more especially so, when Eugenio died.
She was duty-bound to make an inquiry as to who survived Eugenio, in order that the landowner – or
she as representative – could choose from among them who would succeed to the leasehold. Under
Section 9 of RA 3844, Makapugay, or Amanda – as Makapugay’s duly appointed representative or
administrator – was required to make a choice, within one month from Eugenio’s death, who would
succeed as agricultural lessee. Amanda may not claim ignorance of the above provision, as ignorance
of the law excuses no one from compliance therewith.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !107 of !221
2013
SPOUSES DELFIN O. TUMIBAY and AURORA T. TUMIBAY-deceased; GRACE JULIE ANN
TUMIBAY MANUEL, legal representative
vs. SPOUSES MELVIN A. LOPEZ and ROWENA GAY T. VISITACION LOPEZ
G.R. No.171692 June 3, 2013
DEL CASTILLO, J.:

CIVREV2 TOPICS : CONTRACT TO SELL; VOID SALE; AGENCY (SPA); DAMAGES

DOCTRINE: IN A CONTRACT TO SELL, THE SELLER RETAINS OWNERSHIP OF THE


PROPERTY UNTIL THE BUYER HAS PAID THE PRICE IN FULL. A -BUYER WHO
COVERTLY USURPS THE SELLER'S OWNERSHIP OF THE PROPERTY PRIOR TO THE

SENIORS

FULL PAYMENT OF THE PRICE IS IN BREACH OF THE CONTRACT AND THE SELLER IS
ENTITLED TO RESCISSION BECAUSE THE BREACH IS SUBSTANTIAL AND

BATCH 2018
FUNDAMENTAL AS IT DEFEATS THE VERY OBJECT OF THE PARTIES IN ENTERING
INTO THE CONTRACT TO SELL.

FACTS: Petitioners filed a Complaint for declaration of nullity ab initio of sale, and recovery of
ownership and possession of land with RTC Malaybalay. They alleged that they are the owners of a
parcel of land located in Sumpong, Malaybalay, Bukidnon, the subject land in the name of Aurora.
Reynalda Visitacion (Aurora’s sister) sold the subject land to her daughter, Rowena Gay T. Visitacion
Lopez (respondent), through a deed of sale for an unconscionable amount of ₱95,000.00 although its
market value is more than ₱2,000,000.00. The sale was done without the knowledge and consent of
petitioners who prayed for (1) the deed of sale be declared void ab initio, (2) reconveyance, and (3)
damages.
Respondents filed their Answer with counterclaim, averring that petitioners executed a SPA in
favor of Reynalda granting the power to offer for sale the subject land and that Rowena and petitioners

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !108 of !221
2013
agreed that the former would buy the subject land for the price of ₱800,000.00 on installment. Rowena
paid in cash $1,000.00 and the monthly instalments. A deed of sale was executed and the title was
issued in favor of Rowena and that the sale was done with the knowledge and consent of the
petitioners. Respondents prayed for dismissal and damages.
Petitioners filed an Answer to Counterclaim, admitting the SPA but claimed Reynalda violated
its terms when she sold the subject land without approval of petitioners as to the price. They claimed
that the monthly payments were mere deposits as requested by Rowena so that she would not spend the
same pending their agreement as to the purchase price; and that Reynalda, in bad faith, executed the
deed of sale and placed it in the name of Rowena, which sale is null and void because an agent cannot
purchase for herself the property subject of the agency.
RTC rendered a Decision in favor of petitioners. The CA reversed the RTC’s decision.

ISSUES AND RULING: ( 7 ) SENIORS

BATCH 2018
1. W/N there was, in effect, a contract to sell.
YES. Rowena entered into a contract to sell over the subject land. There was, indeed, a
contractual agreement between the parties for the purchase of the subject land – an oral contract
to sell. A contract to sell has been defined as "a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the subject property despite delivery thereof to the
prospective buyer, binds himself to sell the said property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon, that is, full payment of the purchase price." In a
contract to sell, "ownership is retained by the seller and is not to pass until the full payment of
the price x x x." It is "commonly entered into so as to protect the seller against a buyer who
intends to buy the property in installments by withholding ownership over the property until the
buyer effects full payment therefor."

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !109 of !221
2013
There was no written agreement evincing the intention of the parties to enter into a contract to
sell, its existence and partial execution were sufficiently established by, and may be reasonably
inferred from the actuations of the parties, to wit: (1) the title to the subject land was not
immediately transferred, through a formal deed of conveyance prior to or at the time of the first
payment of $1,000.00 (2) afterwards, petitioners received intermittent monthly installments;
and, (3) Rowena admitted that she had the title to the subject land transferred in her name only
later through a deed of sale, because she believed that she had substantially paid the purchase
priceand therefore entitled thereto as a form of security for the payments.

2. W/N there was a breach in the contract to sell.


YES. Rowena was in breach of the contract to sell because, at the time the deed of sale was

SENIORS

executed, the full price of the subject land was yet to be paid.

BATCH 2018
Her justification that the premature transfer of title was necessary as a security for the
installments she had already paid absent proof that petitioners agreed to this new arrangement is
unacceptable. Verily, she failed to prove that petitioners agreed to amend or novate the contract
to sell in order to allow her to acquire title even if she had not paid in full. Evidence on record
indicates that the premature transfer of title was done without the knowledge and consent of
petitioners. Rowena’s reliance on the SPA as the authority or consent to effect the premature
transfer of title in her name is plainly misplaced. The terms of the SPA are clear. It merely
authorized Reynalda to sell the subject land at a price approved by petitioners. The SPA could
not have amended or novated the contract to sell to allow respondent Rowena to acquire the title
despite non-payment of the price in full for the reason that the SPA was executed 4 years prior
to the contract to sell. In fine, Rowena made a unilateral determination that she had
substantially paid the purchase price and that she is entitled to the transfer of title as a form of
security for the installments she had already paid. Such reasons were unjustified.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !110 of !221
2013
3. W/N petitioners may rescind the contract to sell.
YES. The contract to sell is rescissible.
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.
The injured party may choose between fulfillment and the rescission of the obligation,
with the payment of damages in either case. He may also seek rescission even after he has
chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the
fixing of a period. x x x
As a general rule, "rescission will not be permitted for a slight or casual breach of the

SENIORS

contract, but only for such breaches as are substantial and fundamental as to defeat the object of
the parties in making the agreement."

BATCH 2018
Rowena’s act of transferring the title to the subject land in her name, without the
knowledge and consent of petitioners and despite non-payment of the full price thereof,
constitutes a substantial and fundamental breach of the contract to sell. Rowena took advantage
of the SPA.
Petitioners are entitled to the rescission of the subject contract to sell.

4. W/N damages may be awarded.


YES. Petitioners are entitled to moral damages and attorney’s fees while respondent Rowena is
entitled to the reimbursement of the monthly installments with legal interest.
Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof, are liable for damages.
Fraud or malice (dolo) has been defined as a "conscious and intentional design to evade
the normal fulfillment of existing obligations" and is, thus, incompatible with good faith.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !111 of !221
2013
Rowena was guilty of fraud in the performance of her obligation under the subject contract to
sell because she knew that she had not yet paid the full price when she had the title transferred,
and she orchestrated the transfer without the knowledge and consent of petitioners. Where fraud
and bad faith have been established, the award of moral damages is proper.
Further, under Article 2208(2) of the Civil Code, the award of attorney’s fees is proper
where the plaintiff is compelled to litigate with third persons or incur expenses to protect his
interest because of the defendant’s act or omission.

Rowena is entitled to the reimbursement of the same with legal interest. The records
indicate that, in their Complaint, petitioners made no mention of the fact that they had entered
into a contract to sell with Rowena and that they had received monthly installments. Further, no

SENIORS

evidence was presented to prove that respondent Rowena occupied the subject land or benefited
from the use thereof upon commencement of the contract to sell which would have justified the

BATCH 2018
setting off of rental income against the monthly installments paid by Rowena.

5. W/N the sale made is void for being against public policy.
YES. The SPA gave Reynalda the power and duty to, among others, (1) offer for sale the
subject land to prospective buyers, (2) seek the approval of petitioners as to the selling price
thereof, and (3) sign the contract of sale on behalf of petitioners upon locating a buyer willing
and able to purchase the subject land at the price approved by petitioners. Although the SPA was
executed four years prior to the contract to sell, there would have been no obstacle to its use by
Reynalda had the ensuing sale been consummated according to its terms. However, as
previously discussed, when Reynalda, as attorney-in-fact of petitioner Aurora, signed the
subject deed of sale dated July 23, 1997, the agreed price of ₱800,000.00 (which may be treated
as the approved price) was not yet fully paid because respondent Rowena at the time had paid

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !112 of !221
2013
only ₱260,262.50.52 Reynalda, therefore, acted beyond the scope of her authority because she
signed the subject deed of sale, on behalf of petitioners, at a price of ₱95,000.00 which was not
approved by the latter. For her part, respondent Rowena cannot deny that she was aware of the
limits of Reynalda’s power under the SPA because she (Rowena) was the one who testified that
the agreed price for the subject land was ₱800,000.00.

6. W/N petitioners, as principals, ratified the sale made by the agent.


NO. Under Article 1898 of the Civil Code, the principal’s ratification of the acts of the agent,
done beyond the scope of the latter’s authority, may cure the defect in the contract entered into
between the agent and a third person. That petitioners continued to receive four monthly
installments even after the premature titling did not, by itself, establish that petitioners ratified

SENIORS

such sale. On the contrary, the fact that petitioners continued to receive the installments tended
to establish that they had yet to discover the covert transfer of title. Evidence on record

BATCH 2018
established that the sale was done without petitioners’ knowledge and consent which would
explain why receipt or acceptance by petitioners of the aforementioned four monthly
installments still occurred. It also runs contrary to common human experience and reason that
petitioners, as sellers, would forego the reservation/retention of the ownership over the subject
land, which was intended to guarantee the full payment of the price.

7. W/N petitioners are therefore entitled to reconveyance of the land.


YES. Based on the above discussions: (1) Reynalda, as agent, acted beyond the scope of her
authority under the SPA when she executed the deed of sale in favor of Rowena, as buyer,
without the knowledge and consent of petitioners, and conveyed the subject land to Rowena at a
price not approved by petitioners, as principals and sellers, (2) Rowena was aware of the limits
of the authority of Reynalda under the SPA, and (3) petitioners did not ratify, impliedly or
expressly, the acts of Reynalda.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !113 of !221
2013
Under Article 1898 of the Civil Code, the sale is void and petitioners are, thus, entitled
to the reconveyance of the subject land.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !114 of !221
2013
LIM VS DEVELOPMENT BANK OF THE PHILIPPINES
GR NO. 177050
JULY 1, 2013

TOPIC:
PRINCIPLE OF CONSTRUCTIVE FULFILMENT
NOTICE OF FORECLOSURE IN REAL ESTATE MORTGAGE
MORAL DAMAGES IN CONTRACTUAL BREACH
PENALTIES AND INTEREST

MAIN DOCTRINES:
-IN ACT 3135, ONLY PUBLICATION IN 3 PUBLIC PLACES AND POSTING OF NOTICE
BEFORE FORECLOSURE IS REQUIRED. BUT WHEN THE PARTIES STIPULATE THAT

SENIORS

PERSONAL NOTICE IS NECESSARY, FAILURE TO GIVE SUCH NOTICE WILL INVALIDATE


THE FORECLOSURE SALE.

BATCH 2018
-THE PRINCIPLE OF CONSTRUCTIVE FULFILMENT (ART. 1186 OF THE CIVIL CODE)
HAS 3 REQUISITES:
a) THE CONDITION MUST BE SUSPENSIVE

b) OBLIGOR MUST ACTUALLY PREVENT THE FULFILMENT OF THE CONDITION

c) IT WAS VOLUNTARILY DONE BY OBLIGOR

-MORAL DAMAGES ARE NOT PROPER WHEN THE CONTRACT WAS NOT BREACHED
WITH WANTON RECKLESSNESS OR MALICE
-PENALTIES AND INTEREST CANNOT BE IMPOSED BY CREDITOR UNILATERALLY.
ONLY THOSE WHICH ARE STIPULATED IN WRITING ARE DUE.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !115 of !221
2013
FACTS: Petitioners (all surnamed Lim) obtained a loan of P40,000 from DBP to finance their cattle
ranch in Mindanao. They executed a promissory note undertaking to pay annual amortizations with 9%
interest and penalty of 11%. The Lims secured the loan by executing a mortgage in favour of DBP over
their real properties.
Due to armed violence in Mindanao brought by conflicts between the government troops and
muslim rebels, they were forced to abandon their ranch. Their business failed and they eventually failed
to pay the loan.
Edmundo Lim, representative of petitioners, proposed to settle the debt through dacion en pago
but DBP refused. DBP threatened them with foreclosure if they don’t pay up. Hence DBP negotiated
with Edmundo into making a Restructuring Agreement on the loan.
The Lims, despite several extensions, failed to pay the loan. DBP was forced to cancel the

SENIORS

Restructuring Agreement and foreclose the Real Estate Mortgage.


Petitioners filed a complaint with prayer for preliminary injunction to declare the foreclosure

BATCH 2018
sale void for want of personal notice. They also seek the extinguishment of the loan payment since,
under the Principle of Constructive Fulfilment, according to them, when DBP cancelled the
Restructuring Agreement and imposed additional interest, it became impossible for the Lims to pay the
loan.
DBP, on the other hand, argued that the foreclosure was proper since the Lims failed to pay
despite several extensions and it was their right to foreclose under Act 3135.

ISSUES:
W/N the principle of Constructive Fulfilment applies
W/N the foreclosure was valid
W/N the imposition of additional interests and penalties were valid
W/N moral damages are proper in favour of petitioners

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !116 of !221
2013
HELD:
-NO. The Princinple of Constructuve Fulfilment does not apply. The requisites of such principle are as
follows: a) there must be a suspensive condition, b) the obligor must actually preven the fulfilment of
the condition, c) it must be voluntarily done. In the case ate bar, there was no condition to prevent since
the payment of money was not dependent on a condition. In fact, the payment of money was
unconditional since it was on a promissory note. Also, the Restructuring Agreement was cancelled
because DBP had no choice since, despite granting of extensions, the Lims still defaulted in payment.
-NO. Prior to foreclosure sale, Sec. 3 of Act 3135 requires posting of notice in 3 public places and
publication of such notice in a newspaper of general circulation. It does not require personal notice for
it to be valid. However, in the case at bar, the parties in the mortgage contract (paragraph 11 thereof)
required personal notice. Since DBP failed to notify the petitioners, the foreclosure was void.

SENIORS

-NO. Under Art. 1956 of the Civil Code, only interests and penalties stipulated in writing may be
imposed. The imposition of additional interests by DBP other than those provided in the promissory

BATCH 2018
notes was improper and void.
-NO. Moral damage is generally not recoverable in a breach of contract unless there be recklessness or
wanton bad faith on the part of the obligor. Since the Lims failed to show proof that DBP acted in bad
faith, there was no basis to award moral damages. 


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !117 of !221
2013
TITLE: CARLOS LIM, CONSOLACION LIM, EDMUNDO LIM, CARLITO LIM, SHIRLEY
LEODADIA DIZON, AND ARLEEN LIM FERNANDEZ VS. DEVELOPMENT BANK OF THE
PHILIPPINES
G.R. No. 177050, July 01, 2013

TOPICS:
OBLICON; CONDITION
SALES; EXTRAJUDICIAL FORCLOSURE
SALES; INTEREST

MAIN DOCTRINES:
1. Suspensive condition is one the happening of which gives rise to the obligation. It will be irrational
for any Bank to provide a suspensive condition in the Promissory Note or the Restructuring Agreement
that will allow the debtor-promissor to be freed from the duty to pay the loan without paying it.

2. Unless the parties stipulate, "personal notice to the mortgagor in extrajudicial foreclosure
proceedings is not necessary" because Section 3 of Act 3135 only requires the posting of the notice of

SENIORS

sale in three public places and the publication of that notice in a newspaper of general circulation.

3. No interest shall be due unless it has been expressly stipulated in writing.

FACTS: BATCH 2018


Carlos, Consolacion, and Carlito, all surnamed Lim, obtained a loan of ₱40,000.00 from Development
Bank of the Philippines (DBP) to finance their cattle raising business. They executed a Promissory
Note undertaking to pay the annual amortization with an interest.

Carlos, Consolacion, Carlito, and Edmundo, all surnamed Lim; Shirley Leodadia Dizon, Arleen Lim
Fernandez, Juan S. Chua, and Trinidad D. Chua obtained another loan from DBP in the amount of
₱960,000.00 (Diamond L Ranch Account). They also executed a Promissory Note. To secure the loans,
petitioners executed a Mortgage in favor of DBP over real properties.

Due to violent confrontations between government troops and Muslim rebels in Mindanao, petitioners
were forced to abandon their cattle ranch. As a result, their business collapsed and they failed to pay the
loan amortizations.

Petitioners made a partial payment in the amount of ₱902,800.00, leaving an outstanding loan balance
of ₱610,498.30, inclusive of charges and unpaid interest.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !118 of !221
2013
In 1989, petitioners, represented by Edmundo Lim (Edmundo), requested from DBP Statements of
Account for the "Lim Account" and the "Diamond L Ranch Account."
Edmundo proposed the settlement of the accounts through dacion en pago, with the balance to be paid
in equal quarterly payments over five years. DBP rejected the proposal and informed Edmundo that
unless the accounts are fully settled as soon as possible, the bank will pursue foreclosure proceedings.

Edmundo received another Notice from the Sheriff that the mortgaged properties would be auctioned
on November 22, 1992. Edmundo again paid ₱30,000.00 as additional interest to postpone the auction.
But despite payment of ₱30,000.00, the mortgaged properties were still auctioned with DBP emerging
as the highest bidder in the amount of ₱1,086,867.26.

The auction sale, however, was later withdrawn by DBP for lack of jurisdiction.

He also informed Edmundo that the bank would immediately prepare the Restructuring Agreement
upon receipt of the downpayment and that the conditions for the settlement have been "pre-cleared"
with the bank’s Regional Credit Committee. Thus, Edmundo wrote a letter manifesting petitioners’
assent to the proposal.

SENIORS

Tamayo informed Edmundo that the bank cancelled the Restructuring Agreement due to his failure to
comply with the conditions within a reasonable time. DBP sent Edmundo a Final Demand Letter asking

BATCH 2018
that he pay the outstanding amount of ₱6,404,412.92, as of November 16, 1993, exclusive of interest
and penalty charges.

On July 11, 1994, the Ex-Officio Sheriff conducted a public auction sale of the mortgaged properties
for the satisfaction of petitioners’ total obligations in the amount of ₱5,902,476.34. DBP was the
highest bidder in the amount of ₱3,310,176.55.

On July 13, 1994, the Ex-Officio Sheriff issued the Sheriff’s Certificate of Extra-Judicial Sale in favor
of DBP covering 11 parcels of land.

In a letter dated September 16, 1994, DBP informed Edmundo that their right of redemption over the
foreclosed properties would expire on July 28, 1995.

On July 28, 1995, petitioners filed before the RTC of General Santos City, a Complaint against DBP for
Annulment of Foreclosure and Damages with Prayer for Issuance of a Writ of Preliminary Injunction
and/or Temporary Restraining Order. On same date, the RTC issued a Temporary Restraining Order
directing DBP to cease and desist from consolidating the titles over petitioners’ foreclosed properties
and from disposing the same.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !119 of !221
2013
The RTC granted the Writ of Preliminary Injunction and directed petitioners to post a bond in the
amount of ₱3,000,000.00.

ISSUES:
1. Whether the obligation is fully discharged and extinguished
2. Whether the foreclosure proceedings are null and void
3. Whether respondent is liable for damages

HELD:

1. The obligation was not extinguished or discharged. The Promissory Notes subject of the instant case
became due and demandable as early as 1972 and 1976. The only reason the mortgaged properties were
not foreclosed in 1977 was because of the restraining order from the court. In 1978, petitioners made a
partial payment of ₱902,800.00. No subsequent payments were made. It was only in 1989 that
petitioners tried to negotiate the settlement of their loan obligations. And although DBP could have
foreclosed the mortgaged properties, it instead agreed to restructure the loan. In fact, from 1989 to

SENIORS

1994, DBP gave several extensions for petitioners to settle their loans, but they never did, thus,
prompting DBP to cancel the Restructuring Agreement.

BATCH 2018
Article 1186 enunciates the doctrine of constructive fulfillment of suspensive conditions, which applies
when the following three (3) requisites concur, viz: (1) The condition is suspensive; (2) The obligor
actually prevents the fulfillment of the condition; and (3) He acts voluntarily. Suspensive condition is
one the happening of which gives rise to the obligation. It will be irrational for any Bank to provide a
suspensive condition in the Promissory Note or the Restructuring Agreement that will allow the debtor-
promissor to be freed from the duty to pay the loan without paying it.

Besides, petitioners have no one to blame but themselves for the cancellation of the Restructuring
Agreement. It is significant to point out that when the Regional Credit Committee reconsidered
petitioners’ proposal to restructure the loan, it imposed additional conditions. In fact, when DBP’s
General Santos Branch forwarded the Restructuring Agreement to the Legal Services Department of
DBP in Makati, petitioners were required to pay the amount of ₱1,300,672.75, plus a daily interest of
₱632.15 starting November 16, 1993 up to the date of actual payment of the said amount. This,
petitioners failed to do. DBP therefore had reason to cancel the Restructuring Agreement.
Moreover, since the Restructuring Agreement was cancelled, it could not have novated or extinguished
petitioners’ loan obligation. And in the absence of a perfected Restructuring Agreement, there was no
impediment for DBP to exercise its right to foreclose the mortgaged properties.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !120 of !221
2013
2. The foreclosure sale is not valid. But while DBP had a right to foreclose the mortgage, we are
constrained to nullify the foreclosure sale due to the bank’s failure to send a notice of foreclosure to
petitioners. We have consistently held that unless the parties stipulate, "personal notice to the
mortgagor in extrajudicial foreclosure proceedings is not necessary" because Section 3 of Act 3135
only requires the posting of the notice of sale in three public places and the publication of that notice in
a newspaper of general circulation.

However, no notice of the extrajudicial foreclosure was sent by DBP to petitioners about the
foreclosure sale scheduled on July 11, 1994. The letters dated January 28, 1994 and March 11, 1994
advising petitioners to immediately pay their obligation to avoid the impending foreclosure of their
mortgaged properties are not the notices required in paragraph 11 of the Mortgage. The failure of DBP
to comply with their contractual agreement with petitioners, i.e., to send notice, is a breach sufficient to
invalidate the foreclosure sale.

The Act only requires (1) the posting of notices of sale in three public places, and (2) the publication of
the same in a newspaper of general circulation. Personal notice to the mortgagor is not necessary.
Nevertheless, the parties to the mortgage contract are not precluded from exacting additional

SENIORS

requirements. In view of foregoing, the CA erred in finding the foreclosure sale valid.
Penalties and interest rates should be expressly stipulated in writing.

BATCH 2018
As to the imposition of additional interest and penalties not stipulated in the Promissory Notes, this
should not be allowed. Article 1956 of the Civil Code specifically states that "no interest shall be due
unless it has been expressly stipulated in writing." Thus, the payment of interest and penalties in loans
is allowed only if the parties agreed to it and reduced their agreement in writing.
In this case, petitioners never agreed to pay additional interest and penalties. Hence, we agree with the
RTC that these are illegal, and thus, void.

3) DBP did not act in bad faith or in a wanton, reckless, or oppressive manner in cancelling the
Restructuring Agreement. As we have said, DBP had reason to cancel the Restructuring Agreement
because petitioners failed to pay the amount required by it when it reconsidered petitioners’ request to
restructure the loan.

Likewise, DBP’s failure to send a notice of the foreclosure sale to petitioners and its imposition of
additional interest and penalties do not constitute bad faith. There is no showing that these contractual
breaches were done in bad faith or in a wanton, reckless, or oppressive manner.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !121 of !221
2013
TITLE: SPOUSES NAMEAL AND LOURDES BONROSTRO VS. SPOUSES JUAN AND
CONSTANCIA LUNA
G.R. No. 172346, July 24, 2013, 715 PHIL 1-18

TOPICS:
OBLICON ; RESCISSION
OBLICON ; TENDER AND CONSIGNATION
OBLICON ; INTEREST ; SUSPENSION
SALES ; CONTRACT TO SELL
SALES ; MACEDA LAW

MAIN DOCTRINES:
1. Since the contract entered into is a contract to sell, payment of the price is a positive suspensive
condition, failure of which is not a breach of contract warranting rescission under Article 1191 but
rather, just prevents the supposed seller from being bound to convey the title. Further still, as correctly
ruled by the CA, A1191 cannot be applied to sales of real property on installment since they are
governed by the Maceda Law.

SENIORS

2. Tender of payment, without more (i.e. consignation), produces no effect. [T]o have the effect of
payment and the consequent extinguishment of the obligation to pay, the law requires the companion

BATCH 2018
acts of tender of payment and consignation. Should the debtor not make any immediate steps to make a
consignation, then interest is not suspended from the time of such tender.

FACTS:
Respondent Luna, Constancia as a buyer, entered into a Contract to Sell with Bliss Development Corp
(BDC) for a house and lot. Barely a year after, Constancia, now as a seller, entered a Contract to Sell
with petitioner Lourdes concerning the same property. The subsequent contract provided for fixed dates
to pay varying installments, a penalty upon the amount due on the first default and cancellation and
forfeiture of a percentage of the total price upon the second default.

Petitioners immediately took possession of the property upon execution of the contract and payment of
the first installment worth P200,000.00. They failed to pay the other installments.

The spouses Luna filed an action for rescission and damages before the RTC. The spouses Bonrostro
claimed that they were willing to pay the due P630,000.00, after they sought a 60-day extension.
Respondents did not appear at the meeting point. Nor did the latter reply to letters sent to them.
Respondents signified their intention to pay and asked the RTC to instead fix a period within which to
effect payment.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !122 of !221
2013
The RTC held that the contract was still effective, because there was no substantial breach and gave
petitioners 60 days from receipt of order to pay what is due. It further order petitioners to
1. Pay the first installment of P300,000.00 plus an interest of 2% per month from April to
November 1993 and
2. Pay the second installment of P330,000.00 plus an interest of 2% per month from July to
November 1993.
3. Reimburse respondents P214,492.62 which the latter paid to BDC

The CA, upon respondents’ appeal, ruled that since the contract entered by the parties is a contract to
sell, rescission is not the proper remedy. It further held that since it is a contract to sell a realty on an
installment basis, RA6552 (Maceda Law) governs. Thus the seller must give the buyer a grace peiod of
not less than 60 days from the date the installment became due. Should the buyer still fail despite the
grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice
of cancellation or demand of rescission of the contract by a notarial act. Since the demand letters sent
by respondent were not notarized and made within the 60 day grace period, they are not effective as
cancellation.

SENIORS

The CA affirmed the RTC with the following modification


1. Ordering the defendants to pay plaintiffs the sum of P300,000.00 plus interest thereon at the

BATCH 2018
rate of 2% per month from May 1, 1993 until fully paid;
2. Ordering the defendants to pay plaintiffs the sum of P330,000.00 plus interest thereon at the
legal rate from August 1, 1993 until fully paid; and
3. Ordering the defendants to reimburse plaintiffs the sum of P214,492.62, which plaintiffs paid to
Bliss Development Corporation, plus interest thereon at the legal rate from filing of the
complaint until fully reimbursed.

Petitioners claim that since they were found to be willing to pay as evidenced by the 1993/11/24 letter,
they should not be assessed any interest subsequent to the date of the letter. They also claimed that they
should not be made to pay the P214,492.62 amount since respondents instructed BDC not to accept
them.

ISSUES:
1. WON the contract can be rescinded? NO. Maceda Law governs
2. WON the CA correctly modified the RTC decision with respect to the interests? YES

HELD:

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !123 of !221
2013
The RTC was mistaken in ruling that rescission was applicable to begin with, hence its determination
of casual breach not warranting rescission of the contract.

Since the contract entered into is a contract to sell, payment of the price is a positive suspensive
condition, failure of which is not a breach of contract warranting rescission under Article 1191 but
rather, just prevents the supposed seller from being bound to convey the title. Further still, as correctly
ruled by the CA, A1191 cannot be applied to sales of real property on installment since they are
governed by the Maceda Law

There being no breach to speak of, RTC’s factual finding of petitioners’ willingness to pay loses
significance.

Tender of payment, without more (i.e. consignation), produces no effect. [T]o have the effect of
payment and the consequent extinguishment of the obligation to pay, the law requires the companion
acts of tender of payment and consignation. Should the debtor not make any immediate steps to make a
consignation, then interest is not suspended from the time of such tender. Thus modification by the CA,
extending the period from 11/24 (date of the letter signifying willingness to pay) to until full payment
is proper.
SENIORS

The P214,492.62 amount should also carry interest. The defense of constructive fulfillment is not

BATCH 2018
applicable. Two requisites must concur for its application, to wit: (1) intent to prevent fulfillment of the
condition; and, (2) actual prevention of compliance. There is nothing in the record that shows BDC
heeded respondents’ instruction not to receive payment from petitioners. Petitioners made belated
offers to make payment, which they attempted to do 7 months after taking possession of the property,
thus negating their alleged keenness to make payment. Respondents understandably paid BDC the
amount due to avoid the prior contract.

WHEREFORE, the Petition for Review on Certiorari is DENIED and the assailed Decision dated April
15, 2005 and the Resolution dated April 17, 2006 of the Court of Appeals in CA-G.R. CV No. 56414
are AFFIRMED

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !124 of !221
2013
TITLE: SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M. SABITSANA vs.
JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact DOMINGO A. MUERTEGUI, JR
G.R. No. 181359, August 5, 2013

TOPIC:
SALES AND LEASE

MAIN DOCTRINE:
The provision of Article 1544 of the Civil Code does not apply to sales involving unregistered land.

The issue of the buyer’s good or bad faith is relevant only where the subject of the sale is registered
land, and the purchaser is buying the same from the registered owner whose title to the land is clean.
The purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in
good faith for value.

FACTS:
Alberto Garcia (Garcia) executed an unnotarized Deed of Sale in favor of respondent Juanito

SENIORS

Muertegui (Juanito) over a parcel of unregistered land in Biliran, Leyte del Norte.

Juanito’s father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo Jr. took actual possession

BATCH 2018
of the lot. They also paid the real property taxes on the lot for the years 1980 up to 1998.

Garcia sold the lot to the Muertegui family lawyer, petitioner Atty. Clemencio C. Sabitsana, Jr. through
a notarized deed of absolute sale which was registered with the Register of Deeds.

When Domingo Sr. passed away, his heirs applied for registration. Atty. Sabitsana opposed the
application claiming that he was the true owner of the lot. He asked that the application for registration
be held in abeyance until the issue of conflicting ownership has been resolved.

Juanito filed a civil case for quieting of title and preliminary injunction, against herein petitioners Atty.
Sabitsana and his wife, Rosario, claiming that they bought the lot in bad faith and are exercising acts of
possession and ownership over the same, which acts thus constitute a cloud over his title. The
Complaint prayed, among others, that the Sabitsana Deed of Sale, be declared null and void and of no
effect.

In their Answer with Counterclaim, petitioners asserted mainly that the sale to Juanito is null and void
absent the marital consent of Garcia’s wife, Soledad Corto (Soledad); that they acquired the property in
good faith and for value; and that the Complaint is barred by prescription and laches.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !125 of !221
2013
ISSUES:

1. Whether Article 1544 on double sales applies in this case.

2. Whether Juanito has a better right with unnotarized deed of sale over the subsequent notarized
deed of sale of Atty. Sabitsana.

3. Whether the sale is valid in the absence of marital consent.

HELD:

1) NO. The provision of Article 1544 of the Civil Code does not apply to sales involving unregistered
land.

The issue of the buyer’s good or bad faith is relevant only where the subject of the sale is registered
land, and the purchaser is buying the same from the registered owner whose title to the land is clean.

SENIORS

The purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in
good faith for value.

BATCH 2018
Act No. 3344 applies to sale of unregistered lands.

2) YES. The sale to Juanito was executed on September 2, 1981 in an unnotarized deed of sale, while
the sale to Atty. Sabitsana was made in a notarized document only on October 17, 1991 or ten (10)
years thereafter.

Thus, Juanito who was the first buyer has a better right to the lot, while the subsequent sale to Atty.
Sabitsana is null and void because when it was made, the seller Alberto was no longer the owner of the
lot.

The fact that the sale to Juanito was not notarized does not alter anything, since the sale between him
and Alberto remains valid nevertheless. Notarization or the requirement of a public document under the
Civil Code is only for convenience and not for validity or enforceability.

3) YES. Even admittedly the lot was a conjugal property, the absence of the wife’s signature and
consent to the deed did not render the sale to Juanito absolutely null and void, but merely voidable.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !126 of !221
2013
Since Alberto and his wife were married prior to the effectivity of the Family Code, Article 173 of the
Civil Code should apply. Under the said provision, the disposition of conjugal property without the
wife’s consent is not void but merely voidable. In the absence of a decree annulling the deed of sale in
favor of Juanito, the same remains valid.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !127 of !221
2014
TITLE: THE METROPOLITAN BANK AND TRUST COMPANY vs. ANA GRACE ROSALES
AND YO YUK TO
G.R. No. 183204, [January 13, 2014], 724 PHIL 66-80)

TOPICS:
OBLICON ; BREACH OF CONTRACT
CREDIT ; BANK DEPOSITS AS LOAN, PAID UPON DEMAND OF THE DEPOSITOR
BANKING ; HIGHEST DEGREE OF DILIGENCE

MAIN DOCTRINES:

1. The “Hold Out” clause applies only if there is a valid and existing obligation arising from any
sources of obligation enumerated in A1157 (Law, Contract, Quasi-contract, Delict, Quasi-Delict).
MBTC failed to show any such obligation. A criminal case is not enough reason for petition to “hold
out” as the case is still pending and no conviction has been rendered against respondent.

2. As provided by CC A2229, exemplary damages may be imposed "by way of example or correction

SENIORS

for the public good, in addition to the moral, temperate, liquidated or compensatory damages." They
are awarded only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner. MBTC is also liable for the same because they refused to release the deposits without legal
basis.

FACTS:
BATCH 2018
Respondents (mother and daughter) opened a Joint Peso Account with MBTC’s Pritil-Tondo branch. It
contained, then, a balance of P2,515,693.52. Rosales (the proprietor of the travel agency China Golden
Bridge) accompanied her Taiwanese client, Liu Fang who was applying for a retiree’s visa, to MBTC
Escolta. She acted as her interpreter since the client could only speak Mandarin. Respondents later
opened with the Pritil-Tondo branch a Joint Dollar Account with an initial deposit of USD14,000.00.

MBTC issued a “Hold Out” order against respondents’ accounts. Petitioner then filed a criminal case
for Estafa through false pretenses, misrepresentation, deceit and use of falsified documents against
Rosales. Petitioner accused Rosales and an unidentified woman as the ones responsible for the
unauthorized withdrawal of USD75,000.00 from Liu Fang’s dollar account with MBTC Escolta. The
withdrawal was facilitated by using an impostor. MBTC also noted that the serial numbers of the dollar
notes deposited by respondents were the same as those withdrawn by the impostor. The prosecutor
dismissed the complaint for lack of probable cause

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !128 of !221
2014
Respondents filed before the RTC a complaint for breach of obligation and contract with damages
against MBTC because they could not withdraw their deposits.

Subsequently, the Prosecutor reversed the dismissal of the complaint and an information was filed
correspondingly.

The RTC held MBTC liable for breach of contract since it was the duty of MBTC to release the deposit
to respondents as the act of withdrawal of a bank deposit is an act of demand by the creditor. It further
ruled that the recourse of MBTC is against its negligent employees and not against the respondents. It
awarded P50,000 actual damages, P50,000 moral damages and P30,000 exemplary damages plus 10%
of the amount due as attorney’s fees plus the cost of the suit

The CA affirmed the ruling but deleted the award of actual damages because the alleged basis for the
claim was the professional fee paid to the legal counsel for the defense against the estafa case and not
the civil suit against MBTC.

ISSUES:

damages? YES SENIORS

1. WON petitioner breached its contract with respondents? If so, WON MBTC is liable for

2. WON the damages awarded are proper? YES

HELD: BATCH 2018


1. Petitioner anchors its right to withhold the deposit on the terms and conditions for Deposit Accounts.
However, its reliance thereon is misplaced.

“The Bank is hereby authorized to withhold as security for any and all obligations with the Bank, all
monies, properties or securities of the Depositor x x x to pay any or all obligations incurred by
Depositor under the Account or by reason of any other transactions between the same parties now
existing or hereafter contracted”

The “Hold Out” clause applies only if there is a valid and existing obligation arising from any sources
of obligation enumerated in A1157 (Law, Contract, Quasi-contract, Delict, Quasi-Delict). MBTC failed
to show any such obligation. A criminal case is not enough reason for petition to “hold out” as the case
is still pending and no conviction has been rendered against respondent.

Thus, petitioner is guilty of breach of contract when it unjustifiably refused to release the deposit
despite demand. Having thus breached its contract, it can also be held liable for damages.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !129 of !221
2014
2. In case of breach of contract, moral damages may be recovered only if the defendant acted
fraudulently or in bad faith, or is guilty of gross negligence amounting to bad faith, or in wanton
disregard of his contractual obligations. MBTC is found to have issued the “hold out” order in bad faith
because the same was issued without any legal basis ; failed to inform respondents of the reason for the
“hold out” ; the order was issued prior to filing of the criminal complaint.

As provided by CC A2229, exemplary damages may be imposed "by way of example or correction for
the public good, in addition to the moral, temperate, liquidated or compensatory damages." They are
awarded only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner. MBTC is also liable for the same because they refused to release the deposits without legal
basis.

The banking industry is impressed with public interest, as such the highest degree of diligence is
expected, and high standards of integrity and performance are even required of it. It must therefore
"treat the accounts of its depositors with meticulous care and always to have in mind the fiduciary
nature of its relationship with them. For failing to do this, an award of exemplary damages is justified
to set an example.

SENIORS

Since exemplary damages are awarded, attorney’s fees is also proper (CC A2208)

BATCH 2018
WHEREFORE, the Petition is hereby DENIED. The assailed April 2, 2008 Decision and the May 30,
2008 Resolution of the Court of Appeals in CA-G.R. CV No. 89086 are hereby AFFIRMED. SO
ORDERED.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !130 of !221
2014
TITLE: FRANCISCO LIM vs. EQUITABLE PCI BANK, now known as the BANCO DE ORO
UNIBANK, INC.
G.R. No. 183918, January 15, 2014, 724 PHIL 453-464

TOPIC:
EVIDENCE; FORGERY*

MAIN DOCTRINE:
Allegations of forgery, like all other allegations, must be proved by clear, positive, and convincing
evidence by the party alleging it. It should not be presumed but must be established by comparing the
alleged forged signature with the genuine signatures. Although handwriting experts are often offered as
witnesses, they are not indispensable because judges must exercise independent judgment in
determining the authenticity or genuineness of the signatures in question

FACTS:
In 1988, Lim executed an Irrevocable Special Power of Attorney in favor of his brother Franco,

SENIORS

authorizing the latter to mortgage his share in the property covered by a TCT, which they co-owned.
BDO released an P8.5 million loan by virtue of said ISPA. By 1992, Franco fully paid his loan.

BATCH 2018
In 1996, Francisco, Franco and their mother, Victoria, obtained a P30 million loan from Equitable PCI
Bank in favor of Sun Paper Products. To secure the loan, petitioner and Franco executed a REM over
the same property. However, the loan was not paid, thus Equitable foreclosed the same. On 1999/09/29
a TCT and Tax Declaration were issued in Respondent’s name. A writ of possession was issued by the
RTC.

Petitioner subsequently filed a motion for TRO and a complaint for cancellation of SPA, Mortgage
Contract, Certificate of Sale and Tax Declaration with Damages and Issuance of Preliminary
Mandatory Injunction against Equitable, Franco and Victoria. He claimed that he did not authorize
Franco to mortgage the subject property and that his signatures in the REM and Surety Agreement were
forged. He claimed that he was not in the Philippines at the time of execution of the mortgage contract
and that Equitable was negligent in approving the loan.

Respondents assail petitioner’s mere allegation. It asserts that petitioner did not even make any attempt
to have the signature compared with his genuine signatures. Further still, petitioner himself
communicated with the bank to settle the loan when the property was foreclosed to repurchase the
same.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !131 of !221
2014
The RTC ruled in favor of petitioner since the latter was able to prove by preponderance of evidence
that he did not participate in the mortgage on the reason that he was not in the Philippines at the time of
execution of the mortgage, thus the RTC nullified the mortgage and corresponding certificates

The CA reversed the RTC ruling that a mere allegation that his signature was forged is not sufficient to
overcome the presumption of regularity of a notarized document.

ISSUES:
1. WON petitioner was able to prove that his signature was forged? NO
2. WON the Bank is negligent?

HELD:
1. Allegations of forgery, like all other allegations, must be proved by clear, positive, and convincing
evidence by the party alleging it. It should not be presumed but must be established by comparing the
alleged forged signature with the genuine signatures. Although handwriting experts are often offered as
witnesses, they are not indispensable because judges must exercise independent judgment in
determining the authenticity or genuineness of the signatures in question

SENIORS

In this case, the alleged forged signature was not compared with the genuine signatures of petitioner as
no sample signatures were submitted. What petitioner submitted was another mortgage contract

BATCH 2018
executed in favor of Planters Development Bank, which he claims was also forged by his brother. But
except for this, no other evidence was submitted by petitioner to prove his allegation of forgery. His
allegation that he was in the US at the time of the execution of the mortgage contract is also not
sufficient proof that his signature was forged.

2. Likewise without merit is petitioner's allegation of negligence on the part of respondent. No evidence
was presented to show that respondent did not exercise due diligence in accepting the mortgage. That
the petitioner was erroneously described as single and a Filipino citizen, when he is in fact married and
a US citizen, cannot be attributed to respondent because the property was registered in his and Franco’s
names

WHEREFORE, the Petition is hereby DENIED. The July 30, 2008 Decision of the Court of Appeals in
CA-G.R. CV No. 85139 is hereby AFFIRMED. SO ORDERED

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !132 of !221
2014
TITLE: LAND BANK OF THE PHILIPPINES V. EMMANUEL OÑATE
G.R. No. 192371, 15 January 2014

TOPIC:
OBLICON; PERFECTION

MAIN DOCTRINE:
As a general rule, a contract is the law between the parties. Thus, ‘from the moment the contract is
perfected, the parties are bound not only to the fulfilment of what has been expressly stipulated but also
to all consequences which, according to their nature, may be in keeping with good faith, usage and
law.’ The dearth of evidentiary documents that could have shed light on the alleged unintended
crediting and unexplained withdrawals was brought about by Land Bank’s failure to maintain accurate
records as required by the IMAs.

FACTS:
Respondent Oñate maintains seven (7) trust accounts with herein Petitioner bank evinced by
Investment Management Accounts (IMAs).

SENIORS

Petitioner bank also serves as the trustee of Philippine Virginia Tobacco Board (PVTB) and Philippine
Virginia Tobacco Authority (PVTA). Petitioner lent the investments of PVTB and PVTA to various
creditors. When these creditors paid their loans thru respondent’s agent, Land Bank alleged that Oñate

withdraw the same. BATCH 2018


misrepresented that the checks were his. After said checks were credited, he allegedly proceeded to

To recoup the remaining balance of respondent, petitioner filed a complaint for a sum of money to
recover the amount of more than Php8M plus legal interest. In his defense, Oñate asserted that the
setoff was without factual and legal bases. Further, Oñate said that he had no knowledge or
involvement in the transaction between petitioner and PVTA/PVTB. He alleged that funds in his
accounts came from legitimate sources and as of said date has accumulated Php229,222,160.25. Upon
recommendation of a Board of Commissioners, the RTC ruled in favor of Oñate and ordered petitioner
to return the total amount of funds debited.
On appeal to the CA, the ruling was affirmed and modified. The CA agreed with the RTC that
petitioner failed to establish its claim of erroneous credit to the account of petitioner and that petitioner
failed to comply with the Sec. X401 and X425 of Manual on Regulation for Banks (MORB). It
modified the award of RTC in that it ordered the return of the undocumented withdrawals to
respondent’s account. Land Bank filed a Petition for Review on Certiorari.

ISSUE:
WON respondent is entitled to undocumented withdrawals

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !133 of !221
2014
HELD:
Yes. Petitioner argues that it is not liable for the undocumented withdrawals as provided for under the
MORB since said manual was not yet existing when the subject transactions happened. However, the
SC ruled that even without the MORB, the IMA’s entered into by the parties imposed the same duties
such as keeping an accurate record as well as apprising the clients of the status of their accounts. Had
Land Bank kept an accurate record there would have been no need for the creation of a Board of
Commissioners or at least the latter’s work would have been a lot easier and more accurate.
As a general rule, a contract is the law between the parties. Thus, ‘from the moment the contract is
perfected, the parties are bound not only to the fulfilment of what has been expressly stipulated but also
to all consequences which, according to their nature, may be in keeping with good faith, usage and
law.’ The dearth of evidentiary documents that could have shed light on the alleged unintended
crediting and unexplained withdrawals was brought about by Land Bank’s failure to maintain accurate
records as required by the IMAs.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !134 of !221
2014
TITLE: MANLAR RICE MILL, INC vs. LOURDES L. DEYTO, doing business under the trade name
"J.D. Grains Center" and JENNELITA DEYTO ANG, a.k.a. "JANET ANG,"
G.R. No. 191189, January 29, 2014

TOPIC:
CONTRACTS; RELATIVITY OF CONTRACTS

MAIN DOCTRINE:
It is a basic principle in law that contracts can bind only the parties who had entered into it; it cannot
favor or prejudice a third person.

FACTS:
In October 2000, Respondent Ang entered into a rice supply contract with Petitioner Manlar, with the
former purchasing rice from the latter amounting to ₱3.8M. The transaction was covered by nine
postdated checks issued by Ang from her personal bank/checking account with Chinabank. Upon
presentment, all of the checks issued by Ang were dishonored. Manlar made oral and written demands
upon both Deyto and Ang, which went unheeded.

SENIORS

On November 2000, Manlar filed a Complaint for sum of money against Deyto and Ang before the
RTC of Quezon City. The Complaint essentially sought to hold Deyto and Ang solidarily liable on the
rice supply contract.

BATCH 2018
Manlar argues that it is not necessary to further show proof of deliveries of rice to Deyto and Ang in
order to prove the existence of their obligation; the issuance of the subject postdated checks as payment
established the obligation. It is also argued that the fact that Deyto was in possession of Ang’s
negotiated checks proved that both of them connived to defraud Manlar by using the said checks to
convince and induce the Sales Manager of Manlar to contract with them. On the other hand, Deyto who
does business under the trade name "JD Grains Center" claimed that she did not enter into contract with
Manlar or any of its representatives regarding the purchase and delivery of rice, and the fact that one of
her customers was her daughter Ang, who was also engaged in the buying and selling of rice under the
trade name "Janet Commercial Store."

ISSUE:
WON Respondent Deyto is liable under the rice supply contract.

HELD:
No. The Court ruled that there is no legal basis to hold Deyto solidarily liable with Ang for what the
latter may owe Manlar. The allegations that Deyto guaranteed Ang’s checks and that she consented to
be held solidarily liable with Ang under the latter’s rice supply contract with Manlar are hardly

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !135 of !221
2014
credible. Well-entrenched is the rule that solidary obligation cannot lightly be inferred. There is a
solidary liability only when the obligation expressly so states, when the law so provides or when the
nature of the obligation so requires.
What this Court sees is an attempt to implicate Deyto in a transaction between Manlar and Ang so that
the former may recover its losses, since it could no longer recover them from Ang as a result of her
absconding. Under Article 1311 of the Civil Code, contracts take effect only between the parties, their
assigns and heirs. Thus, Manlar may sue Ang, but not Deyto, who the Court finds to be not a party to
the rice supply contract.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !136 of !221
2014
TITLE: ONE NETWORK RURAL BANK, INC., V. DANILO G. BARIC
G.R. No. 193684, March 05, 2014

TOPIC:
TORTS AND DAMAGES

MAIN DOCTRINE:
A third party who did not commit a violation or invasion of the plaintiff or aggrieved party’s rights may
not be held liable for nominal damages.

FACTS:
Danilo Baric leased a space in a building (1994) owned by one Jaime Palado, which he used to operate
a barber shop. Eventually, Baric received a written notice (2000) from Palado demanding the return of
the leased commercial space and that he vacate such property. Baric took the matter to the Lupon for
conciliation in where he failed to attend and prompted the Barangay Chairman to issue a Certificate to
Bar Action. Said building in where the space was located was demolished.
In February 2001, Baric filed a case for forcible entry with a prayer for injunctive relief against Palado

SENIORS

and One Network Rural Bank. He assails that he had been occupying such commercial space since
1994 and added improvements with the consent of Palado but was prevented from enjoying the
property on January 2001 when Palado enclosed the space with a fence. Network Bank’s defense was

BATCH 2018
that the bank was essentially a buyer in good faith and should not be held liable.

The MTCC denied the complaint to where Baric appealed to the RTC which still affirmed the earlier
decision of the RTC. Baric then moved to the CA which granted the appeal and awarded nominal
damages for which it held that Palado and One Network Rural Bank Inc be solidarily liable.

ISSUE:
Should One Network Rural Bank Inc. be liable for Nominal damages with Palado?

HELD:
The Court held that, “Nominal damages are recoverable where a legal right is technically violated and
must be vindicated against an invasion that has produced no actual present loss of any kind or where
there has been a breach of contract and no substantial injury or actual damages whatsoever have been
or can be shown. Under Article 2221 of the Civil Code, nominal damages may be awarded to a plaintiff
whose right has been violated or invaded by the defendant, for the purpose of vindicating or
recognizing that right, not for indemnifying the plaintiff for any loss suffered.”
“Nominal damages are not for indemnification of loss suffered but for the vindication or recognition of
a right violated or invaded.”

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !137 of !221
2014
Network Bank being a mere purchaser or transferee of the property and did not commit any violation of
Baric’s rights. Baric was ousted from the property purely through the acts of Palado hence, only Palado
should be liable.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !138 of !221
2014
TITLE: VILMA MACEDONIO VS. CATALINA RAMO, YOLANDA S. MARQUEZ, SPOUSES
ROEL AND OPHELIA PEDRO, SPOUSES JOEFFRY AND ELIZA BALANAG, AND BPI FAMILY
SAVINGS BANK, INC
G.R. No. 193516, March 24, 2014

TOPIC:

OBLICON

MAIN DOCTRINE:
The remedy of a party to an obligation consisting of a subject matter outside the commerce of man is
rescission of the contract. The amount paid may thus be demanded from the party to whom payment is
made.

FACTS:
Herein petitioner Vilma Macedonio (Macedonio) filed a civil case for rescission of contract under Art.
1191 of the Civil Code with damages against herein respondent Catalina Ramo (Ramo). Macedonio
alleges that she and Ramo entered into an agreement for the purchase by the petitioner of a 240-square

SENIORS

meter portion of Ramo’s 637-square meter unregistered lot somewhere in Baguio City. According to
her, Ramo assured her that the subject property was free from liens and encumbrances. Relying on
these pronouncements, Macedonio paid P850,000.00 of the P1,7000,000.00 purchase price as earnest

BATCH 2018
money. A “Deed of Sale with Mortgage to Secure Payment of Price (October Deed of Sale) was
thereafter executed between them. Ramo handed to Macedonio a copy of the tax declaration covering
the subject property in which it was indicated that the property was subject to several liens—contrary
to Ramo’s earlier pronouncements and representations. It was discovered that the subject property was
subject of a levy made in relation to a civil case and a mortgage to ARGEM (a financial institution).
Despite this, Ramo assued Macedonio that she would clear the property of liens and encumbrances
before she pays the balance of the price on their agreed date of payment. However, Ramo failed to clear
the property of the ARGEM mortgage. This prompted Macedonio to rescind that contract executed
between them and demanded that the money she paid be returned to her plus damages. A case was
eventually filed for rescission of contract was filed in the RTC.

During the proceedings, the parties mutually agreed to settle. But despite several efforts, no
compromise was reached. The RTC then eventually dismissed the case for failure to submit a
compromise agreement. During the pendency of the proceedings, Ramo was able to secure in her favor
a sales patent and a certificate of title over the subject property. Ramo later on caused the property to be
subdivided into three portions and thereafter transferred to herein respondents. No part of these
transfers were made to petitioner.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !139 of !221
2014
Despite the dismissal of the case, Macedonio prayed to the RTC that it issue an order directing the
parties to comply with their oral agreement for Ramo to return Macedonio’s money. Ramo opposed
this arguing that the issue has become moot and academic for failure of Macedonio to comply with her
obligation to pay the balance of the purchase price. Thereafter, Macedonio received a letter signed by
Ramo and her counsel admitting that Ramo received the aforesaid amount of P850,000.00 as
downpayment for the subject property, but proposing to return only the amount of P255,000.00 within a
period of four (4) years without interest. While the case was pending, Macedonio filed a protest with
the DENR praying that the

Another case for specific performance was filed by Macedonio against Ramo with the RTC. However,
this case was dismissed by the RTC.

Hence, the present case.

ISSUE:
WON Macedonio is entitled to the return of her money or the performance of the her contractual
obligations with Ramo.

HELD: SENIORS

Macedonio is only entitled to the return of her money. The RTC committed grave abuse of discretion in

BATCH 2018
dismissing the civil case for rescission without allowing the parties to present evidence and after
ordering them to compromise is tantamount to deprivation of due process. Petitioner sought a refund of
her payments but evidently, Ramo was not willing to pay her. Thus, the compulsion for Ramo to pay
what she owed could only come from the trial court, after trial on the merits is conducted. Indeed, even
as Ramo made a judicial admission of her liability to petitioner that is, in open court on June 22, 2009
and an extrajudicial admission thereafter – via her June 29, 2009 letter which she and her counsel
signed she refuses to pay petitioner what she owes. It is thus clear that Ramo would by all means avoid
all efforts at compromising the case in earnest, which should have prompted the court to enter trial and
cancel all efforts at settlement, which Ramo used effectively to delay her final reckoning. In her
pleadings, Ramo admitted and confessed her liability to petitioner: that to this day, she owes petitioner
the amount ofP850,000.00 as a result of the botched sale. A refund of the said amount is what petitioner
prays for in the alternative in her Complaint in Civil Case No. 7150–R. At the very least, this is what
she is entitled to, including interest and attorney’s fees for having been compelled to litigate. The trial
court in Civil Case No. 7150–R should appreciate petitioner’s cause this much. Indeed, if the trial court
felt at any point that the DENR Protest should substantially affect the outcome of the case before it and
that it should give deference to the better judgment of the DENR, it could restrict itself to petitioner’s
alternative prayer for a refund.


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !140 of !221
2014
In arriving at the foregoing conclusions, the Court took into consideration the evidence and Ramo’s
admissions that while she refuses to honor her obligations under the sale or at least return petitioner’s
money, she went on to subdivide and transfer or sell the property to other individuals, which is
absolutely unfair if not perverse. Apparently, this injustice has been lost on the trial court, having
decided the way it did by disregarding the basic facts and adhering to technicalities.

Nonetheless, by filing a Protest with the DENR and claiming that Ramo is guilty of fraud and
misrepresentation in filing her application for a sales patent, and prodding the DENR to initiate
reversion proceedings so that she may apply for, bid, and acquire the property, petitioner is deemed to
have admitted that Ramo is not the owner of the subject property, and was not so when the same was
sold to her. This being the case, petitioner concedes that her purchase of the property is illegal as the
same belongs to the State; thus, her only recourse is to obtain a refund of what she paid.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !141 of !221
2014
TITLE: MARIANO JOSE, FELICISIMO JOSE, deceased, substituted by his children MARIANO
JOSE, CAMILO JOSE, TIBURCIA JOSE, FERMINA JOSE, and VICTORIA JOSE VS. ERNESTO
M. NOVIDA, RODOLFO PALA YLA Y, JR., ALEX M. BELARMINO, RODRIGO LIBED,
LEONARDO L. LIBED, BERNARDO B. BELARMINO, BENJAMIN G. ACOSTA, MODESTO A.
ORLANDA, W ARLITO B. MEJIA, MAMERTO B. BELARMINO, MARCELO O. DELFIN and
HEIRS OF LUCINO A. ESTEBAN, represented by CRESENCIA M. VDA. DE ESTEBAN
GR No. 177373, July 2, 2014

TOPIC:
JURISDICTION; DEPARTMENT OF AGRARIAN REFORM*

MAIN DOCTRINE:
The cancellation of EPs that are not yet registered with the Register of Deeds falls within the authority
of the Agrarian Reform Secretary or DAR officials duly designated by him, in the exercise of his/their
administrative functions.

FACTS:
SENIORS

Felicisimo Jose was the former legitimate agricultural lessee of the Galvan-Cabrera estate. However, on
August 13, 1981, he and his spouse mortgaged one-half of the said property with an area of 82,579

BATCH 2018
square meters to secure a loan of ₱10,000 from a certain Benigno Siobal and Rogelio Cerezo by
delivering the physical possession thereof to the mortgagees. Subsequently, respondent-appellant
(Felicisimo Jose) left for abroad to acquire his citizenship by naturalization in the United States of
America.

Sometime in 1985, the subject landholding was subdivided into sixteen (16) farm lots and the
complainants-appellees were installed by the mortgagee Benigno Siobal. Their possession and
cultivation were duly sanctioned by the landowner and DAR Team Leader of Alcala, Pangasinan. They
paid the rentals and later on the amortization payments to the subject landholding.

On January 6, 1991, their peaceful enjoyment and cultivation of their respective landholdings
was interrupted upon the unlawful dispossession, through force and intimidation by the defendants-
appellants, who forcibly took over by destroying the corn plants by hiring two (2) tractor operators
despite the issuance of the tenant-farmers’ Emancipation Patents.

The DARAB Urdaneta rendered judgment declaring among others that herein respondents are
the tenant-beneficiaries of the subject property. The DARAB Quezon City then affirmed the decision of
DARAB Urdaneta. CA affirmed.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !142 of !221
2014
ISSUES:
1. WON herein respondents should be declared as the tenant-beneficiaries of the subject
property
2. WON the DAR Secretary has jurisdiction for the cancellation of EPs

HELD:
Yes. Petitioners in effect abandoned their rights as beneficiaries, and that respondents’
installation as beneficiaries by the mortgagees (Siobal and Cerezo) was regular and in accordance with
law, and they paid the required amortizations as well. It held that as landless farmers, respondents
deserved the land more than petitioners, noting that one of them was a naturalized American citizens, it
would thus go against the rationale of the agrarianlaws to award such lands to such individuals.

When Felicisimo Jose left to pursue his desire to acquire his naturalization of citizenship in the United
States which amounted to a circumstance advantageous to him and his family, in effect, there was
literally an implied extinguishment and/or voluntary termination of the agricultural tenancy relation on
the part of the respondent-appellant as contemplated in Section 8 (2) in relation to Section 28 (5) of RA

SENIORS

3844.23 Both the elements of physical relinquishment of possession and intention to vacate were
consummated and remained undisputed findings of facts of the case.
Yes. The cancellation of EPs that are not yet registered with the Register of Deeds falls within the

BATCH 2018
authority of the Agrarian Reform Secretary or DAR officials duly designated by him, in the exercise of
his/their administrative functions.

These rules were issued pursuant to Sections 49 and 50 of RA 6657. In contrast to the DARAB Rules
of Procedure which govern the exercise of DAR’s quasi-judicial function, Administrative Order No.
06-00 govern the administrative function of the DAR. Under the said Rules of Procedure for Agrarian
Law Implementation (ALI) Cases, the Agrarian Reform Secretary has exclusive jurisdiction over the
issuance, recall or cancellation of EPs/CLOAs that are not yet registered with the Register of Deeds.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !143 of !221
2014
TITLE: SUN LIFE OF CANADA (PHILIPPINES), INC., VS. SANDRA TAN KIT AND THE
ESTATE OF THE DECEASED NORBERTO TAN KIT,
G.R. No. 183272, October 15, 2014

TOPIC:
TORTS AND DAMAGES; INTERESTS

MAIN DOCTRINE:
There are two kinds of interest – monetary and compensatory.
Monetary interest refers to the compensation set by the parties for the use or forbearance of money. No
such interest shall be due unless it has been expressly stipulated in writing. On the other hand,
compensatory interest refers to the penalty or indemnity for damages imposed by law or by the courts.

FACTS:
Respondent Tan Kit is the widow and designated beneficiary of Norberto Tan Kit, whose application
for a life insurance policy, with face value of P300,000.00, was granted by petitioner on October 28,
1999. On February 19, 2001, or within the two-year contestability period, Norberto died of

SENIORS

disseminated gastric carcinoma. Consequently, respondent Tan Kit filed a claim under the subject
policy. Petitioner denied respondent Tan Kit’s claim on account of Norberto’s failure to disclose in his
insurance that he had smoked cigarettes or cigars within the last 12 months prior to filling out said

BATCH 2018
application. According to petitioner, its underwriters would not have approved Norberto’s application
for life insurance had they been given the correct information. Believing that the policy is null and
void, petitioner opined that its liability is limited to the refund of all the premiums paid. Accordingly, it
enclosed in the said letter a check for P13,080.93 representing the premium refund. Respondent Tan
Kit refused to accept the check and insisted on the payment of the insurance proceeds. Petitioner filed a
Complaint for Rescission of the Insurance contract.

The RTC decided in favor of the respondents on the ground that the insurer, through its agent, knew of
Norberto’s lifestyle. It ordered the petitioner to pay the respondent P300,000.00, representing the
insurance policy. Petitioner appealed to the CA.

The CA reversed RTC’s ruling on the ground that Norberto is guilty of concealment. The CA ordered
petitioner to reimburse the sum of P13,080.93 representing the premium paid by the insured with
interest at the rate of 12% per annum from the time of the death of the insured until fully paid. Only the
petitioner appealed to the SC.

ISSUE:
WON petitioner is liable to pay interest on the premium to be refunded to respondents.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !144 of !221
2014
HELD:
The SC ordered petitioner to reimburse the sum of P13,080.93 within fifteen (15) days from date of
finality of the Decision. If the amount is not reimbursed within said period, the same shall earn interest
of 6% per annum until fully paid.

There are two kinds of interest – monetary and compensatory.

Monetary interest refers to the compensation set by the parties for the use or forbearance of money. No
such interest shall be due unless it has been expressly stipulated in writing. On the other hand,
compensatory interest refers to the penalty or indemnity for damages imposed by law or by the courts.

The CA incorrectly imposed compensatory interest on the premium refund reckoned from the time of
death of the insured until fully paid. As a form of damages, compensatory interest is due only if the
obligor is proven to have failed to comply with his obligation.

In this case, it is undisputed that simultaneous to its giving of notice to respondents that it was
rescinding the policy due to concealment, petitioner tendered the refund of premium by attaching to the

SENIORS

said notice a check representing the amount of refund. However, respondents refused to accept the
same since they were seeking for the release of the proceeds of the policy. Based on the foregoing, we
find that petitioner properly complied with its obligation under the law and contract. Hence, it should

BATCH 2018
not be made liable to pay compensatory interest.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !145 of !221
2014
TITLE: OWEN PROSPER A. MACKAY vs. SPOUSES DANA CASWELL and CERELINA
CASWELL
G.R. No. 183872, November 17, 2014

TOPICS:
OBLICON
SALES AND LEASE ; CONTRACT FOR A PIECE OF WORK

MAIN DOCTRINE:
One is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has
duly proved. To justify an award of actual damages, there must be competent proof of the actual
amount of loss, credence can be given only to claims which are duly supported by receipts.

FACTS:
The Caswells, seeking electrical installation service, asked the sole distributor of electricity in the area,
Zambales II Electric Cooperative (Zameco), how much its service for installation would be. Eng’r
Pulangco quoted an estimate of P456,000.00. Petitioner, offering to do the same for only P250,000.00

SENIORS

was chosen by the Caswells. After the service, Cerelina asked Zameco to inspect the installation and to
test the distribution transformers. It was found to be utterly deficient and incomplete. Thus Zameco II
refused to provide energization to the Caswell home. Petitioner could not be located by the Caswells,

BATCH 2018
thus the latter were constrained to ask Zameco to correct all the problems.

The Caswells executed a joint affidavit to charge Mackay and his group of swindling them of
P227,000.00. The spouses claimed that the group misrepresented themselves as people from the
NAPOCOR. This led to the filing of an estafa case under the RPC A315 P2 (a) against petitioner.
However, he was acquitted on the ground of reasonable doubt.

Still unpaid for the remaining P23,000.00 for his installation work, petitioner filed a complaint for
Collection of Sum of Money with Damages against the Caswells. The damage was on account of
sleepless nights, serious anxiety, and social humiliation he suffered due to the malicious prosecution.

The Caswells deny any liability, claiming that petitioner never finished the job and walked out of the
contract

The MTC, finding the contract to be a piece of work applied CC A1715. Petitioner was held liable for
P46,205.00 (Caswells’ expense of P69,205.00 less Mackay’s claim of P23,000.00)

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !146 of !221
2014
The RTC reversed the MTC and opined that the Caswells should have first filed an action for specific
performance. Their immediate resort to Zameco’s service never afforded petitioner of the opportunity
to correct the deficiencies mentioned in A1715. The court also gave weight to Zameco Engineer’s
testimony on cross-examination that electricity that without replacing the fuse cut-out connection,
electricity can still flow smoothly and functionally to the home. The RTC thus ordered the Caswells to
pay Mackay’s claim of P23,000 and awarded damages.

The CA reinstated the MTC decision

REF: CC A1715 The contractor shall execute the work in such a manner that it has the qualities agreed
upon and has no defects which destroy or lessen its value or fitness for its ordinary or stipulated use.
Should the work be not of such quality, the employer may require that the contractor remove the defect
or execute another work. If the contractor fails or refuses to comply with this obligation, the employer
may have the defect removed or another work executed, at the contractor's cost

ISSUES:
1. WON Mackay sufficiently discharged what was required of him? NO

SENIORS

2. WON the CA correctly ruled that Caswells’ effort to communicate with petitioner effectively
served as a demand to rectify the work done? YES
3. WON amount of the award for Mackay’s liability was proper? YES

HELD: BATCH 2018


1. The circumstance of the fact that despite repeated requests for Mackay to procure various permits
and tests to comply fitness for energization, taken with the list of defects Zameco later discovered
sufficiently explain why electricity could not be supplied to respondents’ home. Engr. Pulangco's
testimony that electricity will still work without replacing the fuse cut-out connection is not enough to
negate the fact that Owen's overall work is not satisfactory. Owen failed to execute his work in such a
manner that it has no defects which destroy or lessen its value or fitness for its ordinary or stipulated
use.

2. The demand required required of the employer under the subject provision need not be in a particular
form. The SC agreed with the CA that Mackay was given the opportunity to rectify his work.
Subsequent to Zameco's disapproval to supply the Caswells electricity for several reasons, the Court
gives credence to the latter's claim that they looked for Owen to demand a rectification of the work, but
Owen and his group were nowhere to be found. Had Owen really been readily available to the Caswells
to correct any deficiency in the work, the latter would not have entertained the thought that they were
deceived and would not have been constrained to undergo the rigors of filing a criminal complaint and
testifying therein

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !147 of !221
2014
Furthermore, to require the Caswells to file an action for specific performance, as opined by the RTC,
not only deprives them of hiring someone else to rectify the work, but also defeats the very purpose of
the contracted work, i.e., to immediately have electricity in their home. In this situation, time is of the
essence.

3. One is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has
duly proved. To justify an award of actual damages, there must be competent proof of the actual
amount of loss, credence can be given only to claims which are duly supported by receipts. The
documents relied on by the CA and the MTC in arriving at the rectification cost (i.e. Zameco’s
handwritten receipt of P15,400.00 and the Sales Invoice issued by Peter A. Eduria Enterprises
reflecting the total cost of P53,805.00) is given credence.

The failure of the Sales Invoice to itemize each item cannot defeat the Caswells’ claim. In most cases in
the ordinary course of business, sellers issue handwritten receipts that are perfunctorily filled out
without completely stating all the details of the purchase. This 'flaw' should not be taken against the
Caswells. Besides, if the unit price per item is an issue, a perusal of Dana's separate list will show the

SENIORS

unit prices of the items in the sales invoice.

Nor shall the fact that Peter A. Eduria Enterprise is not registered with the DTI affect the claim since it

BATCH 2018
only highlights the probable liability of the store with the government for non-compliance with
business registration

Respondents admitted that they paid only P227,000 of the contract’s lump price of P250,000.00. The
lower court implies that the P23,000.00 unpaid compensation he sought to recover from the Caswells
shall not be given directly to him, offsetting the said amount from the rectification cost that the
Caswells had prayed for. In effect, under the circumstances, we deem this fair and just to measure the
actual damages due the Caswells by reducing the cost they shouldered to repair the defects with the
unpaid amount of the contract price due Owen

WHEREFORE, the instant petition is DENIED. The April 30, 2008 Decision and July 24, 2008
Resolution of the Court of Appeals in CA-G.R. SP No. 97146, which reinstated the June 29, 2006
Decision of the Municipal Trial Court, San Narciso, Zambales, in Civil Case No. 538, are AFFIRMED
in toto. No costs.

SO ORDERED.


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !148 of !221
2015
FIRST OPTIMA REALTY CORPORATION vs. SECURITRON SECURITY SERVICES, INC.
G.R. No. 199648 January 28, 2015
Civil Law Review 2: Sales

DOCTRINE:
In a potential sale transaction, the prior payment of earnest money even before the property owner can
agree to sell his property is irregular, and cannot be used to bind the owner to the obligations of a seller
under an otherwise perfected contract of sale.

FACTS:
Petitioner First Optima Realty Corporation is a domestic corporation engaged in the real estate

SENIORS

business. It is the registered owner of a parcel of land with improvements covered by Transfer
Certificate of Title No. 125318 (the subject property). Respondent Securitron Security Services, Inc.,

BATCH 2018
on the other hand, is a domestic corporation with offices located beside the subject property.
Respondent – through its General Manager Eleazar – sent a Letter addressed to petitioner – through its
Executive Vice-President Young – offering to purchase the subject property. Eleazar was unable to
personally negotiate with Young or the petitioner’s board of directors. Respondent sent a Letter to
petitioner, accompanied by PNB Check (the subject check), made payable to petitioner. Respondent did
not deliver the letter and check directly to Young or her office; instead, they were coursed through an
ordinary receiving clerk/receptionist of the petitioner, who thus received the same and therefor issued
and signed Provisional Receipt. The check was eventually deposited with and credited to petitioner’s
bank account. Thereafter, respondent through counsel demanded in writing that petitioner proceed with
the sale of the property.

ISSUE: Whether or not there was a perfected contract of sale

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !149 of !221
2015

HELD:
NO. Respondent’s offer to purchase the subject property was never accepted by the petitioner at
any instance, even after negotiations were held between them. Thus, as between them, there is no sale
to speak of. "When there is merely an offer by one party without acceptance of the other, there is no
contract." The stages of a contract of sale are: (1) negotiation, starting from the time the prospective
contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection,
which takes place upon the concurrence of the essential elements of the sale; and (3) consummation,
which commences when the parties perform their respective undertakings under the contract of sale,
culminating in the extinguishment of the contract. In the present case, the parties never got past the
negotiation stage. Since there is no perfected sale between the parties, respondent had no obligation to

SENIORS

make payment through the check; nor did it possess the right to deliver earnest money to petitioner in
order to bind the latter to a sale. As contemplated under Art. 1482 of the Civil Code, "there must first be

BATCH 2018
a perfected contract of sale before we can speak of earnest money." "Where the parties merely
exchanged offers and counter-offers, no contract is perfected since they did not yet give their consent to
such offers. Earnest money applies to a perfected sale." In a potential sale transaction, the prior
payment of earnest money even before the property owner can agree to sell his property is irregular,
and cannot be used to bind the owner to the obligations of a seller under an otherwise perfected
contract of sale. Nor will respondent's supposed payment be 'treated as a deposit or guarantee; its
actions will not be dignified and must be called for what they are: they were done irregularly and with a
view to acquiring the subject property against petitioner's consent.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !150 of !221
2015
DARAGA PRESS, INC. VS. COMMISSION ON AUDIT AND DEPARTMENT OF
EDUCATION-AUTONOMOUS REGION IN MUSLIM MINDANAO
Obligations and Contracts

Doctrine:
The principle of quantum meruit allows a party to recover "as much as he reasonably
deserves." However, as aptly explained by the respondent COA, the principle of quantum meruit
presupposes that an actual delivery of the goods has been made. In this case, petitioner DPI failed to
present any convincing evidence to prove the actual delivery of the-subject textbooks. Thus, the
principle of quantum meruit invoked by petitioner DPI cannot be applied.

Facts:
SENIORS

On November 15, 2007, Department of Budget and Management (DBM) Secretary Rolando G.

BATCH 2018
Andaya, Jr. requested COA to validate and evaluate the request of then Regional Governor of ARMM
Nur Misuari for the release of funds to cover the region's alleged unpaid obligation to Daraga Press Inc.
(DPI) for textbooks delivered in 1998.

COA then issued a Local Government Sector (LGS) order creating a team of auditors to validate and
evaluate the alleged unpaid obligation. The Assistant Commissioner of LGS issued a Memorandum
expressing serious doubts on the validity of the obligation as the actual receipt of the subject textbooks
could not be ascertained.

DPI filed with the respondent COA a money claim for the payment of textbooks it allegedly delivered
on July 3, 1998 to DepEd-ARMM. The Legal Services Sector conducted further validation of petitioner
DPI's money claim, which yielded the same result, corroborating the initial findings of the LGS audit
team. COA denied the money claim because it found no convincing proof that the subject textbooks

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !151 of !221
2015
were delivered and that without any proof of delivery, there is no basis for DPI to recover even under
the principle of quantum meruit.

Issue: Whether or not the principle of quantum meruit applies in the case

Held:
NO. DPI's invocation of the equitable principle of quantum rmeruit must also fail. The principle of
quantum meruit allows a party to recover "as much as he reasonably deserves." However, as aptly
explained by the respondent COA, the principle of quantum meruit presupposes that an actual delivery
of the goods has been made. In this case, petitioner DPI failed to present any convincing evidence to
prove the actual delivery of the-subject textbooks. Thus, the principle of quantum meruit invoked by

SENIORS

petitioner DPI cannot be applied.


BATCH 2018
There's no grave abuse of discretion on the part of COA in denying DPI's money claim for failure to
present substantial evidence to prove the actual delivery of the subject textbooks. Without a doubt, the
inconsistencies and discrepancies in the documents submitted by petitioner DPI and the lack of
appropriation for purchase of the subject textbooks lead only to one inescapable conclusion: that there
was no actual delivery of the subject textbooks. #LOPEZ&QUIJANO-MANALO

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !152 of !221
2015
ROGELIO ROQUE vs. PEOPLE OF THE PHILIPPINES
G.R. No. 193169. April 6, 2015
DEL CASTILLO, J p:
TORTS & DAMAGES

DOCTRINES: "Nonetheless, absent competent proof on the actual damages suffered, a party still has
the option of claiming temperate damages, which may be allowed in cases where, from the nature of
the case, definite proof of pecuniary loss cannot be adduced although the court is convinced that the
aggrieved party suffered some pecuniary loss."

FACTS: Petitioner Rogelio Roque was charged with the crime of frustrated homicide. When arraigned

SENIORS

on March 23, 2003, petitioner pleaded "not guilty." The prosecution averred that on November 22,
2001, while brothers Reynaldo and Rodolfo Marquez were in the house of Bella Salvador-Santos in

BATCH 2018
Pandi, Bulacan, Rodolfo spotted Rogelio dela Cruz and shouted to him to join them. Believing that
Rodolfo's shout was directed at him, petitioner stopped the vehicle and cursed the former. Reynaldo
apologized for the misunderstanding but petitioner was unyielding. Before leaving, he warned the
Marquez brothers that something bad would happen to them if they continue to perturb him. Bothered,
Rodolfo went to the house of Barangay Chairman Tayao to ask for assistance in settling the
misunderstanding. Since Tayao was then no longer around, Reynaldo just proceeded to petitioner's
house to follow Tayao and Rodolfo who had already gone ahead. Upon arriving at petitioner's
residence, Reynaldo again apologized to petitioner but the latter did not reply. Instead, petitioner
entered the house and when he came out, he was already holding a gun which he suddenly fired at
Reynaldo who was hit in his right ear. Petitioner then shot Reynaldo who fell to the ground after being
hit in the nape. Unsatisfied, petitioner kicked Reynaldo on the face and back. Fortunately, Reynaldo's
parents arrived and took him to a local hospital for emergency medical treatment.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !153 of !221
2015
Presenting a totally different version, the defense claimed that as an act of self-defense, petitioner fired
back twice.
On March 12, 2007, the RTC Decision finding petitioner guilty as charged. Petitioner filed a motion for
reconsideration which was denied. Undaunted, petitioner appealed to the CA, which affirmed in full the
RTC's Decision. Petitioner’s motion for reconsideration was denied. Hence, this Petition

ISSUES: Whether or not it is proper for the court to grant the victim temperate damages in lieu
of actual damages or compensation

HELD: Yes. The Court, however, notes that while the penalty imposed upon appellant is also proper,
there is a need to modify the assailed CA Decision in that awards of damages must be made in favor of
the victim Reynaldo.
SENIORS

The RTC and the CA correctly held that actual damages cannot be awarded to Reynaldo due to the

BATCH 2018
absence of receipts to prove the medical expenses he incurred from the incident. "Nonetheless, absent
competent proof on the actual damages suffered, a party still has the option of claiming temperate
damages, which may be allowed in cases where, from the nature of the case, definite proof of pecuniary
loss cannot be adduced although the court is convinced that the aggrieved party suffered some
pecuniary loss." Since it was undisputed that Reynaldo was hospitalized due to the gunshot wounds
inflicted by petitioner, albeit as observed by the RTC there was no evidence offered as to the expenses
he incurred by reason thereof, Reynaldo is entitled to temperate damages in the amount of P25,000.00.
Aside from this, he is also entitled to moral damages of P25,000.00. These awards of damages are in
accordance with settled jurisprudence. An interest at the legal rate of 6% per annum must also be
imposed on the awarded damages to commence from the date of finality of this Resolution until fully
paid.


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !154 of !221
2015
MOVERTRADE CORPORATION vs. THE COMMISSION ON AUDIT AND THE
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
G.R. No. 204835
September 22, 2015
OBLIGATIONS AND CONTRACTS

DOCTRINE: Breach of contract occurs where the contractor inexcusably fails to perform substantially
in accordance with the terms of the contract.

FACTS: Movertrade Corp. and DPWH entered into a Contract Agreement for dredging and other
related works in Pampanga Bay and the primary Pasac-Guagua-San Fernando Waterways in Pampanga,

SENIORS

which were affected by the Mt. Pinatubo eruptions and mudflows. Paragraph 11 of the said agreement
provides that Movertrade should dispose of the dredge spoils by dumping them at the pre-designated

BATCH 2018
areas provided by respondent DPWH.

Due to alleged absence of spoil sites, Movertrade requested permission from Director Soriquez, the
head of The Mount Pinatubo Emergency-Project Management Office of DPWH, to allow it to
undertake side dumping (dumping within the river) chargeable against the dredging works. Director
Soriquez denied the request thru a letter reminding Movertrade that side dumping was not allowed and
as per the report of Engr. Bustos, the Area Engineer of DPWH, that Movertrade could still pump the
dredge spoils to the following spoil sites: Pascual "A," Pascual "B," and the Regala fishpond. Engr.
Bustos, the Area Engineer of DPWH, also issued a letter requiring Movertrade to provide additional
pipelines for distance pumping. He reiterated that "Pascual spoil site can still accommodate more
materials" and that DPWH is not allowing or giving any instruction to use side dumping process for
whatsoever reason. Despite these prohibitions, Movertrade continued with the side dumping.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !155 of !221
2015
When the project was completed, DPWH paid Movertrade the total amount of P180,029,910.15.
However, the amount of P7,354,897.10, representing the 165,576.27 cubic meters of side dumped
dredging work was not paid by DPWH. Respondent COA ruled that petitioner is not entitled to
payment for the dredging works for breach of contract

Petitioner Movertrade insists that it did not violate paragraph 11 of the Contract Agreement and alleges
it was respondent DPWH who failed to provide adequate spoil sites. It also claims that despite the
method of disposal used, the waterways remained navigable except for minimal siltation when the
DPWH engineers inspected the subject waterways. And since the dredging works benefited the public
and the government, petitioner asserts that it is entitled to its money claim in the highest interest of
justice and equity.

SENIORS

Respondents, on the other hand, maintain that respondent DPWH provided adequate spoil sites and that

BATCH 2018
assuming that these were insufficient, petitioner should have ceased dredging operation in the
meantime instead of breaching the terms and conditions of the Contract Agreement. Also, petitioner is
not entitled to its money claim as "a breach of contract cannot be the source of rights or the basis of a
cause of action.

ISSUE: Whether Movertrade is entitled to the payment of P7,354,897.10 for dredging works.

HELD:
NO. It is a basic principle in law that contracts have the force of law between the parties and should be
complied with in good faith. In this case, the contract specifically provides the manner of disposing
dredge spoils. Thus, petitioner cannot unilaterally change the manner of disposal without first
amending the contract or obtaining the express consent or approval of respondent DPWH. Otherwise,
petitioner would be guilty of breaching the contract. "[A] breach occurs where the contractor

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !156 of !221
2015
inexcusably fails to perform substantially in accordance with the terms of the contract." Without a
doubt, petitioner's failure to dump the dredge spoils at the designated spoil sites constitutes a breach.

Petitioner cannot justify the breach by merely alleging that the spoil sites provided by respondent
DPWH were inadequate, uneconomical, unsafe, and inoperable. To begin with, no evidence was
presented to support these allegations. And even if true, petitioner failed to inform respondent DPWH
of these problems.

Respondent DPWH, on the other hand, consistently prohibited side dumping as reiterated in the letters
issued by Engr. Bustos and Director Soriquez, respectively. However, notwithstanding the prohibition,
petitioner continued with its side dumping activities without any explanation. Petitioner's blatant

SENIORS

defiance of the prohibition on side dumping is a violation of the contract that should not be ignored just
because petitioner was able to complete the project.


BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !157 of !221
2015
Ruby Ruth S. Serrano Mahilum vs. Spouses Edilberto Ilano and Lourdes Ilano
G.R. No. 197923 June 22, 2015
Land, Title and Deeds

Doctrines:
1. In order that the holder of a certificate for value issued by virtue of the registration of a
voluntary instrument may be considered a holder in good faith for value, the instrument
registered should not be forged. When the instrument presented is forged, even if accompanied
by the owner’s duplicate certificate of title, the registered owner does not thereby lose his title,
and neither does the assignee in the forged deed acquire any right or title to the property.

SENIORS

2. The innocent purchaser for value protected by law is one who purchases a titled land by virtue
of a deed executed by the registered owner himself, not by a forged deed, as the law expressly

BATCH 2018
states.

Facts: Petitioner Ruby Ruth S. Serrano Mahilum is the registered owner of a parcel of land covered by
a Transfer Certificate of Title (TCT). She entrusted the original owner’s duplicate copy of TCT to
Teresa Perez (Perez) - a purported real estate broker, who claimed that she can assist petitioner to
obtain a loan, with the TCT serving as collateral. After several months, petitioner demanded the return
of the title, but Perez failed to produce the same. Subsequently, the latter admitted that the title was lost.
In June 2004, petitioner executed an Affidavit of Loss and caused the same to be annotated upon the
original registry copy of the transfer certificate of title.

Petitioner was then informed by the Register of Deeds of Las Pinas City that her TCT was not lost, but
that it was presented to the registry by Respondent spouses Edilberto and Lourdes Ilano, who claimed

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !158 of !221
2015
that the property covered by the title was sold to them. Respondents, however, did not register the
alleged sale.

Petitioner confronted respondents, who showed her a notarized Agreement with right of repurchase and
an unnotarized and undated Deed of Absolute Sale, on which documents petitioner’s purported
signatures were affixed. Petitioner denied having executed said document and claimed that her
purported signatures therein were in fact falsified and forged. She demanded the return of her TCT
which respondents refused.

Thereafter, petitioner filed an action for “annulment of agreement and deed of absolute sale, specific
performance, with damages”. The RTC ruled in favor of petitioner and denied respondent’s Demurrer
to Evidence.
SENIORS

BATCH 2018
On appeal, the CA dismissed petitioner’s complaint for failure to state a cause of action; specifically,
for failure to allege that respondents were purchasers in bad faith.

Hence this petition.

ISSUE: Whether or not respondents can interpose the defense of being innocent purchasers for value

HELD: No. The Court reiterated the ruling that in order that the holder of a certificate for value issued
by virtue of the registration of a voluntary instrument may be considered a holder in good faith and for
value, the instrument registered should not be forged. When the instrument presented is forged, even if
accompanied by the owner’s duplicate certificate of title, the registered owner does not thereby lose his
title, and neither does the assignee in the forged deed acquire any right or title to the property.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !159 of !221
2015
Since a new title was never issued in respondents’ favor and, instead, title remained in petitioner’s
name, the former never came within the coverage and protection of the Torrens system, where the issue
of good or bad faith becomes relevant. Since respondents never acquired a new certificate of title in
their name, the issue of their good or bad faith which is central in an annulment of title case is of no
consequence; petitioner’s case is for annulment of the Agreement and Deed of Absolute Sale, and not
one to annul title since the certificate of title is still in her name.

In this case, respondent’s failure to register the unnotarized and undated deed of absolute sale is at the
very least unusual; it is contrary to experience. It is uncharacteristic of a conscientious buyer of real
estate not to cause the immediate registration of his deed of sale as well as the issuance of a new

SENIORS

certificate of title in his name. Having supposedly paid a considerable amount for the property,
respondents certainly would have protected themselves by immediately registering the sale and

BATCH 2018
obtaining a new title in their name; but they did not. Even after petitioner caused the annotation of her
affidavit of loss, respondents did not register their supposed sale, but merely annotated an "affidavit of
non-loss." This, together with the fact that the deed of absolute sale is undated and unnotarized, places
their claim that they are purchasers in good faith seriously in doubt.

Likewise, the innocent purchaser for value protected by law is one who purchases a titled land by virtue
of a deed executed by the registered owner himself, not by a forged deed, as the law expressly states.

Indubitably, therefore, the questioned Deed of Absolute Sale did not convey any title to herein
petitioners. Consequently, they cannot take refuge in the protection accorded by the Torrens system on
titled lands.


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !160 of !221
2015
FAJ CONSTRUCTION & DEVELOPMENT CORPORATION vs . SAULOG
G.R. No. 200759. March 25, 2015
Torts and Damages

DOCTRINE: Article 1715 of the Civil Code provides “The contractor shall execute the work in such a
manner that it has the qualities agreed upon and has no defects which destroy or lessen its value or
fitness for its ordinary or stipulated use. Should the work be not of such quality, the employer may
require that the contractor remove the defect or execute another work. If the contractor fails or refuses
to comply with this obligation, the employer may have the defect removed or another work executed, at
the contractor's cost."

SENIORS

FACTS: Petitioner filed a collection of a sum of money against the respondent for the latter’s failure to
the pay the progress billing statements sent by petitioner in the total amount of P851,601.58 pursuant

BATCH 2018
to their construction agreement.

Petitioner alleged that despite faithful compliance with the construction agreement, respondent refused
to pay the outstanding balance of P851, 601.58, which prompted it to stop construction of the building.
On the other hand, respondent filed counterclaims and averred that while she religiously paid petitioner
pursuant to their construction agreement, petitioner's work was defective and delayed; that petitioner
failed to remedy said defects; that as a result, rainwater seeped through the building and caused
extensive damage to the unfinished building; and that she had to incur additional substantial expenses
for the repair of the building, to remedy the defects caused by petitioner, and to finish construction of
the building.

The trial court, noting respondent's manifestation, issued an Order dismissing the case for failure to
prosecute. Nonetheless, it rendered a Decision on respondent’s counterclaim and awarded the

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !161 of !221
2015
following: P3,213,575.91 as actual damages; Lost rentals of P5,391,456.00; Moral damages of
P500,000.00; Exemplary damages of P500,000.00; Penalties for delay amounting to P1,387,500.00;
Attorney's fees of P20,000.00. The CA agreed that petitioner is liable for actual damages and penalties
for delay but deleted the award for lost of rental, moral damages, exemplary damages, and attorney’s
fees for lack of evidence.

ISSUE: Whether the CA gravely erred when it concluded that petitioner is liable for: 1) actual
damages; 2) and in imposing the penalty for delay; and 3) awarding interest on all amounts due.

HELD:


SENIORS

1. No. The petitioner is guilty of violating the construction agreement, for its defective and incomplete
work, delay, and for unjustified abandonment of the project. Indeed, we find no reason to disturb the

BATCH 2018
identical pronouncements of the trial court and the CA. Article 1715 gives the employer the options to
require the removal of the work, to rectify the flaws in their work, or to have the work done at the
expense of the contractor. Here, the defective workmanship was amply proven by Architect Rhodora
Calinawan's testimony and documentary evidence i.e., photographs, receipts, and list of the expenses
needed to rectify appellant's poorly crafted work. The Court sustained the award of actual damages
based on these testimonial and documentary evidence.

2. The Court held that the trial and appellate courts' grant of P1, 387,500.00 not excessive; it is, in fact,
liberal. Construction period was agreed upon at 240 days from receipt by petitioner of a notice to
proceed. At P12,500.00 agreed penalty imposed for each day of delay, petitioner should be
correspondingly liable to respondent for P3,375,000.00 liquidated damages, more or less, under the
construction agreement. Yet, the courts below awarded a mere P1, 387,500.00; this award is certainly
not excessive and should remain, accepted as it is without question by the respondent.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !162 of !221
2015
3. Finally, the imposition of 6% interest per annum is proper. Indeed, as correctly held by the CA, when
an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of
damages awarded may be imposed at the discretion of the court at the rate of 6% per annum, from the
filing of the complaint until its full satisfaction.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !163 of !221
2016
SPOUSES DOMINGO V. SPOUSES MANZANO ET. AL.
G.R. No. 201883,
November 16, 2016

TOPIC: SALES, ART 1544 DOUBLE SALE AND CONTRACT TO SELL


DOCTRINE: Failure to pay the price in full in a contract to sell renders the same ineffective and
without force and effect, then there is no sale to speak of. Since there is only one valid sale, the rule on
double sales under Article 1544 of the Civil Code does not apply.

FACTS: Respondents spouses Manzanos were the registered owners of a parcel of land with
improvements in Bagong Barrio, Caloocan City. The Manzanos, through their duly appointed attorney-

SENIORS

in fact and herein co-respondent Estabillo, executed a notarized agreement with petitioners spouses
Domingo which contained a stipulation, among others, that: “… Ayon sa aming napagkasunduan

BATCH 2018
ililipat lamang ang Titulo ng lupa na may no. 160752 at bahay pag nabayaran ko ng lahat ang
(P900,000.00) Nine Hundred Thousand Pesos hanggang Marso ng 2001.” Petitioners paid the
P100,000.00 reservation fee upon the execution of the agreement. Thereafter, they also made payments
on several occasions. However, they failed to tender full payment of the balance when the March 2001
deadline came. Even then, Estabillo advised petitioners to continue their payments; thus, they made
additional payments totaling in the amount of P345,000.00. All this time, the Manzanos remained in
possession of the subject property. In December 2001, petitioners offered to pay the remaining
P555,000.00 balance, but Estabillo refused to accept payment; instead, he advised petitioners to await
respondent Tita Manzano's (Tita) arrival from abroad. When Tita arrived, petitioners tendered payment
of the balance, but the former refused to accept it. Instead, she told them that the property was no
longer for sale and she was forfeiting their payments. For this reason, petitioners caused the annotation
of their affidavit of adverse claim in the property’s title. Soon thereafter, petitioners discovered that
respondent Aquino bought the subject property on May 7, 2002, and a new title had been issued in her

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !164 of !221
2016
name. Their adverse claim was nevertheless carried over to Aquino's new title. RTC: It held that the
agreement between petitioners and the Manzanos was a contract of sale, thus, Article 1544 of the Civil
Code is applicable and Aquino is therefore a buyer in bad faith. CA: Reversed RTC’s decision and held
that the agreement between the spouses parties are mere Contract to Sell.

Issue: Whether or not CA erred in holding that Art. 1544 is not applicable to this case.

Held: NO. The Supreme Court ruled that in a contract to sell, payment of the price is a positive
suspensive condition, failure of which is not a breach of contract warranting rescission but rather just
an event that prevents the prospective buyer from compelling the prospective seller to convey title. In
other words, the non fulfillment of the condition of full payment renders the contract to sell ineffective
and without force and effect.
SENIORS

BATCH 2018
And it is precisely for the above reason that Article 1544 of the Civil Code cannot apply. Since failure
to pay the price in full in a contract to sell renders the same ineffective and without force and effect,
then there is no sale to speak of. Even petitioners' posture that their annotation of an adverse claim on
TCT is equivalent to registration or claim of ownership necessarily fails, on account of the fact that
there was never a sale in their favor - and without a sale in their favor, they could not register or claim
ownership of the subject property. Thus, as between the parties to the instant case, there could be no
double sale which would justify the application of Article 1544. Petitioners failed to pay the purchase
price in full, while Aquino did, and thereafter she was able to register her purchase and obtain a new
certificate of title in her name.

The Court ultimately declared that, there is only one sale - and that is, the one in Aquino's favor. "Since
there is only one valid sale, the rule on double sales under Article 1544 of the Civil Code does not
apply.”


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !165 of !221
2016
CONCHITA A. SONLEY vs. ANCHOR SAVINGS BANK/EQUICOM SAVINGS BANK

[G.R. No. 205623. August 10, 2016.]

DEL CASTILLO, J p:

DOCTRINE:

The language of this Article 2041, particularly when contrasted with that of Article 2039, denotes
that no action for rescission is required in said Article 2041, and that the party aggrieved by the
breach of a compromise agreement may, if he chooses, bring the suit contemplated or involved in
his original demand, as if there had never been any compromise agreement, without bringing an
action for rescission thereof.

FACTS:
SENIORS

Petitioner agreed to purchase a foreclosed land with an area of 126.50 square meters located at

BATCH 2018
Fairview, Quezon City from Anchor for the sum of Php2,200,000.00. Pursuant to the said agreement,
the parties entered into a Contract to Sell whereby the petitioner agreed to pay the amount of
Php200,000.00 as downpayment with the balance of Php2,000,000.00 payable in sixty (60) monthly
installments amounting to Php47,580.00. Petitioner, however, defaulted in paying her monthly
obligations prompting [Anchor] to rescind the contract to sell.

Petitioner filed for the declaration of nullity of the recission of the contract, averring that the rescission
was null and void because she had already substantially paid her obligation to the bank. Anchor, on the
contrary, contended that the post-dated checks issued by the petitioner covering the monthly
installments were all dishonored thus, petitioner should not be allowed to benefit from her own fault
and prevent [Anchor] from exercising its right to rescind their contract to sell.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !166 of !221
2016
After the Pre-Trial Order by the trial court, the parties agreed to an amicable settlement and entered
into a Compromise Agreement, resulting to the trial court’s Judgment whereby the petitioner agreed to
repurchase the subject property from [Anchor] for the amount of Php1,469,460.66 plus 12% interest
per annum.

However, Anchor later on filed a Manifestation and Motion for Execution in the trial court claiming
that petitioner had not been paying the agreed monthly installments in accordance with the compromise
agreement. Moreover, it averred that all the checks which the petitioner issued to pay her obligations
were again dishonored. Thus, [Anchor] prayed that a writ of execution be issued by the trial court in its
favor ordering. (1) that the contract to sell that was entered into between the parties be rescinded; (2)
that [Anchor] be allowed to apply all the payments that were made to it by the petitioner as rentals; and
(3) that petitioner immediately vacate the subject property, to which the court favorably granted.

SENIORS

Petitioner filed a Petition for Certiorari before the CA, claiming that the trial court committed grave
abuse of discretion in issuing a writ of execution, since there is nothing in the trial court's prior

BATCH 2018
judgment which authorizes the issuance of such a writ in case the parties fail to perform the obligations
stated under the Compromise Agreement.

CA decided against the petitioner, and her subsequent motion for reconsideration was denied, hence,
this Petition for Review on Certiorari

Issue:

WON after failure to comply with a compromise agreement judicially recognized by a court, there must
be a judicial declaration of recission of the original contract before a writ of execution may be issued.

Ruling:

It is not required.

Under Article 2041 of the Civil Code, "(i)f one of the parties fails or refuses to abide by the
compromise, the other party may either enforce the compromise or regard it as rescinded and insist

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !167 of !221
2016
upon his original demand." "The language of this Article 2041 denotes that no action for rescission is
required, and that the party aggrieved by the breach of a compromise agreement may, if he chooses,
bring the suit contemplated or involved in his original demand, as if there had never been any
compromise agreement, without bringing an action for rescission thereof. He need not seek a judicial
declaration of rescission, for he may 'regard' the compromise agreement already 'rescinded.'"

Unlike Article 2039 of the same Code, which speaks of "a cause of annulment or rescission of the
compromise" and provides that "the compromise may be annulled or rescinded" for the cause therein
specified, thus suggesting an action for annulment or rescission, said Article 2041 confers upon the
party concerned, not a "cause" for rescission, or the right to "demand" the rescission of a compromise,
but the authority, not only to "regard it as rescinded", but, also, to "insist upon his original
demand." The language of this Article 2041, particularly when contrasted with that of Article

SENIORS

2039, denotes that no action for rescission is required in said Article 2041, and that the party
aggrieved by the breach of a compromise agreement may, if he chooses, bring the suit

BATCH 2018
contemplated or involved in his original demand, as if there had never been any compromise
agreement, without bringing an action for rescission thereof. He need not seek a judicial
declaration of rescission, for he may "regard" the compromise agreement already "rescinded."

Certainly, a compromise agreement becomes the law between the parties and will not be set aside other
than [sic] the grounds mentioned above. Once the compromise is perfected, the parties are bound to
abide by it in good faith. Should a party fail or refuse to comply with the terms of a compromise or
amicable settlement, the other party could either enforce the compromise by a writ of execution or
regard it as rescinded and so insist upon his/her original demand.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !168 of !221
2016
IBM PHILIPPINES, INC. vs. PRIME SYSTEMS PLUS, INC.

G.R. No. 203192; August 15, 2016

CIVIL LAW REVIEW TOPIC: Credit Transactions

MAIN DOCTRINE: For interest to become due and demandable, two requisites must be present: (1)
that there must be an express stipulation for the payment of interest and (2) the agreement to pay
interest is reduced in writing.

FACTS: Petitioner entered into an agreement with respondent whereby the former will deliver 45
automated teller machines (ATMs) and several computer hardware to respondent's customers for the
total price of ₱24,743,610.43. However, petitioner instituted a complaint for sum of money against
respondent. Petitioner sought to have respondent pay the former ₱45,997,266.22 representing

SENIORS

respondent's unpaid obligation with 3% monthly interest.Respondent denied the allegations in the
complaint. Respondent also alleged that ''[it] (had) fully paid for the fifty six (56) A TMs it purchased

BATCH 2018
from petitioner.

The RTC rendered its decision ordering respondent to pay the sum of ₱46,036,028.42 with interest at
6% per annum from March 15, 2006 and attorney's fees in the amount of ₱1,000,000.00.. As regards
the computation of interest, the trial court found petitioner's imposition of 3% monthly interest
appropriate.

Citing Article 1956 of the Civil Code, the CA found that "there is no showing that the parties had
actually agreed on the imposition of the 3% monthly interest for invoices which remained unpaid 30
days from its delivery.

ISSUE: Whether or not petitioner's imposition of 3% monthly interest constitute a written stipulation
under Article 1956 of the Civil Code?

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !169 of !221
2016
HELD: NO. It has been a long-standing rule that for interest to become due and demandable, two
requisites must be present: (1) that there must be an express stipulation for the payment of interest and
(2) the agreement to pay interest is reduced in writing.

Here, petitioner insists that there was an express agreement for a 3% monthly interest, which petitioner
placed in writing in its letter dated December 29, 1997. Petitioner's conclusion that respondent agreed
to the 3% monthly interest was based on the following events/evidence:

1. That respondent's employee duly received (hence, assented to) the letter dated December 29, 1997;

2. That respondent did not object or comment to the letter after it received the same (thus, making
respondent in estoppel);

3. That respondent even asked for a reduction of the interest rate, which shows that respondent

SENIORS

originally agreed to its December 29, 1997 letter;

4. That even if the employee's act of receiving the letter was not an acceptance of the terms, the fact

BATCH 2018
that respondent still wanted to push through with the delivery of the A TMs in 1998, one year after the
letter, shows that respondent knew and agreed to the 3% monthly interest; and

5. That the parties entered into Agreement for Assignment of Receivables and that respondent executed
an Assignment of Receivables - which documents expressly stated that interest was to be included in
the unpaid balance.

Petitioner has gone through great lengths to attribute respondent's alleged silence, coupled with
respondent's request for the reduction of monthly interest to the latter's express agreement to a 3%
monthly interest. Nothing could be further from the truth.

Using the enumeration above, this Court finds that the evidence points to respondent's lack of consent
to a 3% monthly interest. Petitioner adamantly claims that respondent's act of requesting for a lower
interest rate shows the latter's agreement to a 3% monthly interest. Such an askewed reasoning escapes
us - especially here where respondent's authorized representative never assented to petitioner's letter.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !170 of !221
2016
To accept petitioner's misplaced argument that the parties mutually agreed to a 3% monthly interest
when respondent subsequently ordered ATMs despite receiving petitioner's letter in posing a 3%
monthly interest will render the second condition - that the agreement be reduced in writing - futile.
Although respondent did agree to the imposition of interest per se, the fact that there was never a clear
rate of interest still leaves room to guess as to how much interest respondent will pay. This is precisely
the reason why Article 1956 was included in the Civil Code - so that both parties clearly agree to and
are fully aware of the price to be paid in a contract.

In the absence of agreement as to the exact rate of interest, the CA properly applied the legal rate of 6%
annual interest following the SC ruling in Eastern Shipping Lines, Inc. v. Court of Appeals and the
Bangko Sentral ng Pilipinas MB Circular No. 799, series of 2013.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !171 of !221
2016
EVELYN V. RUIZ vs. BERNARDO F. DIMAILIG

G.R. No. 204280; November 9, 2016

CIVREV2 topic: Credit Transactions

MAIN DOCTRINES: For a mortgagee to invoke the doctrine of mortgagee in good faith, the impostor
must have succeeded in obtaining a Torrens title in his name and thereafter in mortgaging the property.
Where the mortgagor is an impostor who only pretended to be the registered owner, and acting on such
pretense, mortgaged the property to another, the mortgagor evidently did not succeed in having the
property titled in his or her name, and the mortgagee cannot rely on such pretense as what appears on
the title is not the impostor's name but that of the registered owner.

FACTS:
SENIORS

Respondent Bernardo F. Dimailig was the registered owner of a parcel of land covered in Cavite. He

BATCH 2018
entrusted the owner’s copy of the its TCT to his brother, Jovannie, who in turn gave the title to
Sanggalang, a broker, for its intended sale. However, the property was mortgaged to Evelyn V. Ruiz as
evidenced by a Deed of Real Estate Mortgage (REM) without Bernardo’s knowledge and consent.
Hence, Bernardo instituted this suit for annulment of the Deed of REM.

The RTC dismissed the Complaint and held that while Bernardo was the registered owner of the subject
property, Evelyn was a mortgagee in good faith because she was unaware that the person who
represented himself as Bernardo was an impostor. The RTC denied Bernardo's Motion for
Reconsideration. Thus, he appealed to the CA.

The CA reversed and set aside RTC's Decision. It ruled that for being a forged instrument, the Deed of
REM was a nullity, and the owner's copy of TCT must be returned to its rightful owner, Bernardo.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !172 of !221
2016
ISSUE: Whether or not Evelyn is a mortgagee in good faith and for value.

HELD: NO. No valid mortgage will arise unless the mortgagor has a valid title or ownership over the
mortgaged property. By way of exception, a mortgagee can invoke that he or she derived title even if
the mortgagor's title on the property is defective, if he or she acted in. good faith. In such instance, the
mortgagee must prove that no circumstance that should have aroused her suspicion on the veracity of
the mortgagor's title on the property was disregarded. Such doctrine of mortgagee in good faith
presupposes "that the mortgagor, who is not the rightful owner of the property, has already succeeded
in obtaining a Torrens title over the property in his name and that, after obtaining the said title, he
succeeds in mortgaging the property to another who relies on what appears on the said title." In short,

SENIORS

the doctrine of mortgagee in good faith assumes that the title to the subject property had already been
transferred or registered in the name of the impostor who thereafter transacts with a mortgagee who

BATCH 2018
acted in good faith. In the case at bench, it must be emphasized that the title remained to be registered
in the name of Bernardo, the rightful and real owner, and not in the name of the impostor. For a
mortgagee to invoke the doctrine of mortgagee in good faith, the impostor must have succeeded in
obtaining a Torrens title in his name and thereafter in mortgaging the property. Where the mortgagor is
an impostor who only pretended to be the registered owner, and acting on such pretense, mortgaged the
property to another, the mortgagor evidently did not succeed in having the property titled in his or her
name, and the mortgagee cannot rely on such pretense as what appears on the title is not the impostor's
name but that of the registered owner.

In this case, Evelyn insists that she is a mortgagee in good faith and for value. Thus, she has the burden
to prove such claim and must provide necessary evidence to support the same. Unfortunately, Evelyn
failed to discharge her burden.


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !173 of !221
2016
ROGER CABUHAT AND CONCHITA CABUHAT, vs. DEVELOPMENT BANK OF THE
PHILIPPINES

G.R. No. 203924, June 29, 2016

Civ Rev 2 Topic: Sales and Lease



Main doctrines:
Section 8 of Act No. 3135 does not prohibit a purchaser from filing the petition before the
purchaser enters into possession. The limitation merely prohibits the filing of the petition beyond
thirty (30) days from the purchaser’s possession of the property.

The provision is narrowly designed only to set aside the sale and/or the order granting possession,
not to annul the validity of the foreclosure or the mortgage.

SENIORS

Facts: The case involves a foreclosure sale executed pursuant to an unpaid six million loan contracted

BATCH 2018
in 1998 by petitioners Roger and Conchita Cabuhat in favor of respondent bank, which resulted in the
issuance of a writ of possession over a 292 square meter property in Narra, Palawan. Notwithstanding
subsequent sale of subject property by and pending possession of respondent, petitioners assailed the
validity of its foreclosure and prayed for the cancellation of the writ of possession before the Regional
Trial Court of Puerto Princesa. Petitioners contended that the executed foreclosure was without any
basis, since it pertained to an earlier extinguished loan from DBP in 1993. DBP counters that it
foreclosed the property pursuant to the October 30, 1998 mortgage after the Cabuhats failed to pay
their loan.

Deciding in respondent’s favor, the RTC decreed that petitioners’ action was premature since it can
only be filed within the 30-day period immediately after the purchaser acquires possession pursuant to
Section 8 of Act No. 3135, to wit:

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !174 of !221
2016
Sec. 8. The debtor may, in the proceedings in which possession was requested, but not
later than thirty days after the purchaser was given possession, petition that the sale be
set aside and the writ of possession cancelled, specifying the damages suffered by him…

The Court of Appeals, likewise, denied petitioners’ argument by emphasizing the summary and non-
litigious character of the subject proceedings.

Issues: (1). Whether or not subject petition is premature and proper in accordance with Section 8 of Act
No. 3135 (An Act to regulate the sale of property under Special Powers inserted in or annexed to real
estate mortgages); (2) Whether the petition is valid.

SENIORS

Held: NO. The petition was not premature. Contrary to the trial court’s ruling, the Supreme Court

BATCH 2018
decreed that the subject petition is not premature on the basis that Section 8 of Act No. 3135 merely
prohibits the filing of the petition beyond thirty (30) days from the purchaser’s possession of the
property. The reckoning point of the purchaser’s possession lies in the character of the proceedings,
which is ex parte and non-litigious. Act No. 3135 does not require the creditor to notify the debtor or
the mortgagor of the extrajudicial foreclosure. It does not prohibit a purchaser from filing the petition
before the purchaser enters into possession. Section 8 provides a 30-day cutoff period to set aside the
sale reckoned from the date when the mortgagor is presumed to have received notice. Nevertheless, it
does not prohibit the mortgagor from filing the petition earlier in case he learns of the proceedings
beforehand. The petition to set aside the foreclosure sale is not premature if the sale has already taken
place because the cause of action had already ripened.

NO. The petition is not valid even though the filing thereof before the RTC was not premature.
The Court ordered the dismissal of Cabuhats’ petition for going beyond the scope of Section 8 of Act

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !175 of !221
2016
No. 3135 which is narrowly designed only to set aside the sale and/or the order granting possession, not
to annul the validity of the foreclosure or the mortgage. The filing of petition only has two exclusive
grounds that admit the existence and validity of the mortgage: (1) that the mortgage was not violated,
meaning the debtor has not missed any payments of his loan; or (2) that the foreclosure sale did not
comply with the procedural requirements under Sections 1-4 of the Act. The remedy of a litigant who
challenges the existence of the mortgage or the validity - not the regularity - of the foreclosure is a
separate action to annul the same.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !176 of !221
2016
GREENSTAR EXPRESS, INC. AND FRUTO L. SAYSON, JR. v. UNIVERSAL ROBINA
CORPORATION AND NISSIN UNIVERSAL ROBINA CORPORATION
G.R. No. 205090, October 17, 2016
Civil Law Review 2: Torts

DOCTRINE: Where both the registered-owner rule and Article 2180 apply, the plaintiff must first
establish that the employer is the registered owner of the vehicle in question. Once the plaintiff
successfully proves ownership, there arises a disputable presumption that the requirements of Article
2180 have been proven. As a consequence, the burden of proof shifts to the defendant to show that no
liability under Article 2180 has arisen.


SENIORS

FACTS: Petitioner Greenstar Express, Inc. (Grepistar) is a domestic corporation engaged in the
business of public transportation, while petitioner Sayson is one of its bus drivers. Respondent NURC

BATCH 2018
is a subsidiary of respondent URC which are domestic corporations engaged in the food business. URC
is the registered owner of a Mitsubishi L-300 van with plate number WRN 403. At about 6:50 a.m. on
February 25, 2003, a declared holiday, petitioner's bus, which was then being driven by petitioner
Sayson, collided head-on with the URC van, which was then being driven by NURC's Operations
Manager, Renante Bicomong. Bicomong died on the spot, while the colliding vehicles sustained
considerable damage.


Petitioners filed a Complaint against NURC to recover damages sustained during the collision,
premised on negligence. An Amended Complaint was later filed, wherein URC was impleaded as
additional defendant.


Petitioners insist that respondents should be held liable for Bicomong's negligence under Articles 2176,
2180, and 2185 of the Civil Code; that Bicomong's negligence was the direct and proximate cause of

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !177 of !221
2016
the accident; that Bicomong's driving on the opposite lane constituted a traffic violation, therefore
giving rise to the presumption of negligence on his part; that in view of this presumption, it became
incumbent upon respondents to rebut the same by proving that they exercised care and diligence in the
selection and supervision of their employees.

Respondents argue that the collision occurred on a holiday and while Bicomong was using the URC
van for a purely personal purpose, it should be sufficient to absolve respondents of liability as
evidently, Bicomong was not performing his official duties on that day; that the totality of the evidence
indicates that it was Sayson who was negligent in the operation of Greenstar's bus when the collision
occurred; that Bicomong was not negligent in driving the URC van.

SENIORS

The RTC ruled in favor of defendant on the ground that under Article 2180 of the Civil Code, the
employer to be liable for the damages caused by his employee, the latter must have caused the damage

BATCH 2018
in the course of doing his assigned tasks or in the-performance of his duties." Upon appeal, the CA
sustained the decision of the RTC.


ISSUE: WON respondents are liable to the accident pursuant to the registered owner rule and Article
2180 of the Civil Code.

HELD: NO.


In Caravan Travel and Tours International, Inc. v. Abejar, the Court made the following relevant
pronouncement:
The resolution of this case must consider two (2) rules. First, Article 2180's specification that
'employers shall be liable for the damages caused by their employees ... acting within the scope of
their assigned tasks.' Second, the operation of the registered-owner rule that registered owners are

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !178 of !221
2016
liable for death or injuries caused by the operation of their Vehicles.


Article 2180 requires proof of two things: first, an employment relationship between the driver and the
owner; and second,that the driver acted within the scope of his or her assigned tasks. On the other
hand, applying the registered-owner rule only requires the plaintiff to prove that the defendant-
employer is the registered owner of the vehicle.

Preference for the registered-owner rule became more pronounced in Del Carmen, Jr. v. Bacoy where
the court stated that Article 2180 'should defer to' the registered-owner rule. It never stated that Article
2180 should be totally abandoned. Rules must be construed in a manner that will harmonize them with
other rules so as to form a uniform and consistent system of jurisprudence.


SENIORS

Therefore, the appropriate approach is that in cases where both the registered-owner rule and

BATCH 2018
Article 2180 apply, the plaintiff must first establish that the employer is the registered owner of
the vehicle in question. Once the plaintiff successfully proves ownership, there arises a disputable
presumption that the requirements of Article 2180 have been proven. As a consequence, the
burden of proof shifts to the defendant to show that no liability under Article 2180 has arisen.


When by evidence the ownership of the van and Bicomong's employment were proved, the
presumption of negligence on respondents' part attached, as the registered owner of the van and as
Bicomong's employer. The burden of proof then shifted to respondents to show that no liability under
Article 2180 arose. This may be done by proof of any of the following:

1. That they had no employment relationship with Bicomong; or

2. That Bicomong acted outside the scope of his assigned tasks; or

3. That they exercised the diligence of a good father of a family in the selection and supervision of
Bicomong.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !179 of !221
2016
In denying liability, respondents claimed the defense of absence of negligence on their part. During
trial, they presented evidence that on the day of the collision, which was a declared national non-
working holiday, Bicomong was not perforating his work, but was on his way home to Quezon on a
personal undertaking, that is, to give money to his daughter and spend the holiday with his family; and
that the vehicle he was driving was not an NURC vehicle, nor was it assigned to him, but was
registered to URC and assigned to its Logistics Manager, Soro-Soro. Hence, the respondents succeeded
in overcoming the presumption of negligence. The petition must be denied.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !180 of !221
2016
LUZ NICOLAS vs. LEONORA C. MARIANO
G.R. No. 201070, 01 August 2016
Sales and Lease

DOCTRINE: Indeed, the Torrens system of land registration “merely confirms ownership and does
not create it. It cannot be used to divest lawful owners of their title for the purpose of transferring it to
another one who has not acquired it by any of the modes allowed or recognized by law.”

FACTS: Leonora Mariano has built a 5-unit apartment on the subject lot in Bagong Barrio, Caloocan
City which she leases out to tenants. The parcel of land is part of the NHA’s Bagong Barrio Project. In
1972, she was instituted as grantee of the foregoing land subject to a mortgage and a proviso

SENIORS

proscribing any transfer or encumbrance. Mariano obtained a loan from Luz Nicolas and as security,
she executed a Mortgage Contract over the subject property, comprising the one-half portion of the

BATCH 2018
parcel of land.

Mariano, having defaulted in the payment of her obligation, executed in favor of Luz Nicolas a second
mortgage deed—this time mortgaging the subject property and the improvements thereon. The
Sanglaan ng Lupa at Bahay contains a provision that should Mariano fails to pay, Nicolas would be
deemed as the new owner of the property and that Mariano agreed to execute the necessary Deed of
Sale in Nicolas’ favor. Mariano, similarly defaulting on the second obligation, executed a deed of
Absolute Sale of Real Property, conveying to Luz Nicolas the ownership of the subject property and the
improvements thereon.

Thereafter, Mariano sued Nicolas before the RTC for Specific Performance with TRO. She sought to be
released from the second mortgage agreement and stop Nicolas from further collecting upon her credit
through the rentals from her apartments, claiming that she has fully paid her debt. In her sincere desire

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !181 of !221
2016
to settle her obligation, upon request of Nicolas, she executed a Special Power of Attorney in favor of
the latter, authorizing the aforesaid defendant to collect the rentals from the 5-door apartment. Although
the defendant assured the plaintiff that the payments by way of rentals would be applied to the
indebtedness of the plaintiff, such verbal agreement was never reduced in writing. In sum, Nicolas was
able to collect an amount which evidently tremendously exceeded the amount of the alleged
indebtedness of Mariano.

Nicolas denied that she collected rentals from Mariano’s apartments; that Mariano’s debt remained
unpaid; that the subject property and the improvements thereon were later sold to her via a deed of
absolute sale executed by Mariano which, however, did not bear the written consent of the latter’s
husband; and that as a result of the sale, she obtained the right to collect the rentals from the apartment

SENIORS

tenants. Nicolas thus prayed that Mariano be ordered to surrender the title to the subject property to her.

BATCH 2018
The RTC ruled in favor of the plaintiff ruling that the contract entered into between parties was a mere
contract of mortgage and not a sale of real property. Upon appeal, Nicolas maintains that the sale is
valid because of Mariano’s free and voluntary act in settlement of her mortgage liability and that the
Pagtanggap ng Kabuuang Halaga is conclusive evidence of Leonora Mariano’s full receipt of the
₱600,000.00. She further avers that the RTC erred in declaring Mariano’s release from liability on the
basis of the purported SPA, contending that assuming arguendo it exists, the sale superseded the same,
making her rental collection one in the concept of an owner. She finally theorizes that the sale novated
the mortgage contracts because it converted Leonor Mariano’s mortgage obligation into partial
consideration for the subject property.

ISSUE: Whether or not the absolute sale of real property is valid and binding

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !182 of !221
2016
HELD: While title to TCT No. C-44249 is in the name of Mariano, she has not completed her
installment payments to NHA; this fact is not disputed, and as a matter of fact, Mariano admits it.
Indeed, Mariano even goes so far as to concede, in her Comments and Opposition to the Petition, that
she is not the owner of the subject property. Thus, if she never became the owner of the subject
property, then she could not validly mortgage and sell the same to Nicolas. The principle nemo dat
quod non habet certainly applies.

Placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof
can no longer be disputed. Ownership is different from a certificate of title. The TCT is only the best
proof of ownership of a piece of land. Besides, the certificate cannot always be considered as
conclusive evidence of ownership

SENIORS

Nicolas is charged with knowledge of the circumstances surrounding the subject property. Before one

BATCH 2018
could part with his money as mortgagee or buyer of real property, it is only natural to demand to be
presented with the original owner’s copy of the certificate of title covering the same. Secondly, Entry
No. 98464/C-39393 on the dorsal side of TCT No. C-44249 constitutes sufficient warning as to the
subject property’s condition at the time. In other words, it was not a clean title, and if Nicolas exercised
diligence, she would have discovered that Mariano was delinquent in her installment payments to the
NHA, which in turn would have generated the necessary conclusion that the property belonged to the
said government agency.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !183 of !221
2016
TAINA MANIGQUE-STONE vs. CATTLEYA LAND, INC. AND SPOUSES TROADIO B.
TECSON and ASUNCION ORTALIZ-TECSON|||
G.R. No. 195975 September 5, 2016
DEL CASTILLO, J p:|||

DOCTRINE: Double sales - Given the fact that the sale by the Tecson spouses to Taina as Mike’s
dummy was totally abhorrent and repugnant to the Philippine Constitution, and is thus, void ab initio, it
stands to reason that there can be no double sale to speak of here.

FACTS:

SENIORS

In 1985, Taina Manigque-Stone (Taina) and, her then common-law spouse, Michael Stone (Mike)
bought a parcel of land from spouses Col. Troadio B. Tecson and Asuncion Tecson (spouses Tecson)

BATCH 2018
covered by Transfer Certificate of Title (TCT) No. 17655 (subject property). Subsequently, Taina and
Mike got married. In 1987, a Deed of Absolute Sale was executed by spouses Tecson in favor of Taina.
In 1990, the owner’s copy of the TCT was delivered to Taina. 


In the meantime, in 1992, Cattleya Land, Inc. (Cattleya) entered into a Contract of Conditional
Sale with the spouses Tecson covering 9 parcels of land, including the subject property. Thereafter, a
Deed of Absolute Sale was executed between the parties. Both documents were entered in the Primary
Book of the Office of the Register of Deeds of Bohol Cattleya sought to annotate its transaction on the
original certificate of title. However, the Register of Deeds refused to such request since Cattleya could
not surrender the owner’s copy of TCT No. 17655. 


In 1994, Taina filed a Notice of Adverse Claim covering the subject property, after she learned that the

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !184 of !221
2016
spouses Tecson had filed a petition for the issuance of a second owner’s copy over TCT No. 17655. As
such, Taina sought to have her Deed of Absolute Sale registered with the Office of the Register of
Deeds. The result was that on February 10, 1995, a new certificate of title, TCT No. 21771, was issued
in the name of Taina, in lieu of TCT No. 17655, in the name of the Tecson spouses.


Given this, Cattleya instituted against Taina a civil action for quieting of title and/or recovery of
ownership and cancellation of title with damages. The RTC held that the sale entered by the Tecson
spouses with Cattleya and with Taina involving one and the same property was a double sale, and that
Cattleya had a superior right to the lot covered thereby, because Cattleya was the first to register the
sale in its favor in good faith, among others. Moreover, RTC found that the sale between Mike and
spouses Tecson was a patent nullity an absolutely null and void sale, because under the Philippine

SENIORS

Constitution a foreigner or alien cannot acquire real property in the Philippines. Also, at the time of the
sale, Taina was only Mike's dummy, and their subsequent marriage did not validate or legitimize the

BATCH 2018
constitutionally proscribed sale earlier made in Mike's favor. Dissatisfied with this judgment, Taina
appealed to the CA. CA affirmed the RTC’s Decision. Taina moved for reconsideration but to no avail.
Hence, the case before us.

ISSUEs:
1. Whether the assailed Decision is legally correct in holding that petitioner is a mere dummy of Mike.
2. Whether the assailed Decision is legally correct in not applying the rules on double sale, which
clearly favor petitioner Taina.

HELD:

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !185 of !221
2016
1. Yes. This Petition is bereft of merit. Section 7, Article XII of the 1987 Constitution states that: “Save
in cases of hereditary succession, no private lands shall be transferred or conveyed except to
individuals, corporations, or associations qualified to acquire or hold lands of the public domain.”

In the case at bench, Taina herself admitted that it was really Mike who paid with his own funds the
subject lot; hence, Mike was its real purchaser or buyer. More than that, it bears stressing that if the
deed of sale at all proclaimed that she (Taina) was the purchaser or buyer of the subject property and
this subject property was placed under her name, it was simply because she and Mike wanted to skirt or
circumvent the constitutional prohibition barring or outlawing foreigners or aliens from acquiring or
purchasing lands in the Philippines. Indeed, both the CA and the RTC exposed and laid bare Taina’s
posturing and pretense for what these really are: that in the transaction in question, she was a mere

SENIORS

dummy, a spurious stand-in, for her erstwhile common-law husband, who was not a Filipino then, and
never attempted to become a naturalized Filipino citizen thereafter.

BATCH 2018
A scrutiny of the records would show that the trial court aptly held that the defendant-appellant was
only a dummy for Mike Stone who is a foreigner. Even if the Deed of Absolute Sale is in the name of
Taina Manigque-Stone that does not change the fact that the real buyer was Mike Stone, a foreigner.
The appellant herself had admitted in court that the buyer was Mike Stone and at the time of the
negotiation she was not yet legally married to Mike Stone. They cannot do indirectly what is
prohibited directly by the law.

2. Given the fact that the sale by the Tecson spouses to Taina as Mike’s dummy was totally abhorrent
and repugnant to the Philippine Constitution, and is thus, void ab initio, it stands to reason that there
can be no double sale to speak of here.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !186 of !221
2016
NAGA CENTRUM, INC., REPRESENTED BY AIDA K E L LY
Y U B U C O , P e t i t i o n e r , v. S P O U S E S R A M O N J . O R Z A L E S A N D N E N I TA F.
ORZALES, Respondent.
Property Law
Doctrine: A party cannot be allowed to influence and manipulate the court’s decisions by performing
acts upon the disputed property during the pendency of the case, which would allow it to achieve the
objectives it desires.

Facts: The petitioners own a house and lot situated at No. 28-B Valentin Street, Sabang, Naga City
which is surrounded on the North by the property of Aurora dela Cruz; on the West, by the property of
Bernardo Tawagon; and on the East and South, by the property of the respondents. The petitioners

SENIORS

alleged that when they acquired their property in 1965, their access to the public highway (Valentin
Street) was through Rizal Street, which forms part of a property now owned by the respondents but

BATCH 2018
when the squatters inhabiting said place were evicted, the respondents caused Rizal Street to be closed
by enclosing its property with a concrete fence. Although the petitioners were allowed to pass through
the steel gate of the respondents, the same is subject to the schedule set by the latter. This prompted the
petitioners to ask for a permanent right of way through the intervention of the court after the
respondents refused their offer to buy the portion where the proposed right of way is sought to be
established.


The respondents, however, alleged that there is an existing passageway leading to Valentin Street along
Lot 1503 of Cad-290 which is available to the petitioners. Accordingly, it argued that the letter’s cause
of action should be against the owner of the said property. But since the said owner of Lot 1503 was
not impleaded, the instant complaint is defective for failure to implead indispensable party. It also
denied that it granted the petitioners right of way on its property stating that title use by the latter of

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !187 of !221
2016
Rizal Street as access to Valentin Street is unauthorized and illegal. Moreover, it said that the property
of the petitioners became isolated due to their own acts.

Issue: Whether or not petitioners are entitled to a right of way.

Held: No. To be entitled to an easement of right of way, the following requisites should be met:
1. An immovable is surrounded by other immovables belonging to other persons, and is
without adequate outlet to a public highway;


2. Payment of proper indemnity by the owner of the surrounded immovable;


SENIORS

3. The isolation of the immovable is not due to its owner's acts; and c


BATCH 2018
4. The proposed easement of right of way is established at the point least prejudicial to
the servient estate, and insofar as consistent with this rule, where the distance of the
dominant estate to a public highway may be the shortest.

Respondents may not be blamed for the isolation the petitioners are now suffering. Petitioners evicted
the informal settlers and closed Rizal Street, except to respondents, who were allowed to use the same
as access to and from Valentin Street, although on a limited schedule, or from 6:00 a.m. to 9:00 p.m.
daily.27 Burdened by this imposition, respondents made a formal demand to acquire a portion of
petitioner's property to serve as access to Valentin Street, which petitioner rejected. Respondents then
instituted Civil Case No. 2004-0036.


The evidence further indicates that during the pendency of Civil Case No. 2004-0036, petitioner unduly
blocked Rizal Street by deliberately constructing a residential building thereon, dumping filling

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !188 of !221
2016
materials and junk on the main gate of respondents' home, and converting portions of the street into an
auto repair shop and parking space.

The Court cannot therefore accept petitioner's argument that since there are permanent structures
already erected on the appointed right of way, then the parties should negotiate a different location
therefor. To allow this would be tantamount to rewarding malice, cunning, and bad faith. A party cannot
be allowed to influence and manipulate the courts' decisions by performing acts upon the disputed
property during the pendency of the case, which would allow it to achieve the objectives it desires.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !189 of !221
2016
G.R. No. 205951, July 04, 2016
UNION BANK OF THE PHILIPPINES, Petitioner, v. PHILIPPINE RABBIT BUS LINES, INC.,
Respondent.
SALES AND LEASE
DOCTRINE: The full payment of the purchase price in a contract to sell is a positive suspensive
condition whose non-fulfillment is not a breach of contract, but merely an event that prevents the seller
from conveying title to the purchaser.

FACTS: Petitioner and respondent executed a Contract to Sell covering the subject property for
P12,208,633.57, payable within seven years in quarterly installments (principal and interest) of
P824,757,97. The contract to sell stipulated, among others, that "[a]ll payments required under this

SENIORS

Contract to Sell shall be made by the [buyer] without need of notice, demand, or any other act or deed,
at the principal office address of the [seller];" and that should respondent fail to fully comply with the

BATCH 2018
agreement or in case the contract is canceled or rescinded, all its installment payments "shall also be
forfeited by way of penalty and liquidated damages" and "applied as rentals for [its] use and possession
of the property without need for any judicial action or notice to or demand upon the [buyer] and
without prejudice to such other rights as may be available to and at the option of the [seller] such as,
but not limited to bringing an action in court to enforce payment of the Purchase Price or the balance
thereof and/or for damages, or for any causes of action allowed by law."
Respondent failed to fully pay the stipulated price in the contract to sell. Petitioner thus sent a notarized
demand letter entitled "Demand to Pay with Rescission of Three (3) Contracts to Sell.” Also, Petitioner
sent another letter-demand to vacate.
RULING OF MTCC:
Dismissed the ejectment case. It held that petitioner's case is one for rescission and enforcement of the
stipulations in the contract to sell; that the demand to vacate and fixing of rentals prayed for are
consequences of petitioner's unilateral cancellation of the contract and are thus inextricably connected

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !190 of !221
2016
with rescission; and that there is "no definite expiration or termination of the [respondent's] right to
possess" the subject property, and such right depended "upon its fulfillment of the stipulations in the
contract."
RULING OF RTC:
Dismissed the appeal. Analyzing the above letter of demand sent by the plaintiff-appellant to the
defendant-appellee, the same did not demand for the payment of the defendant-appellee's obligation. It
was merely a demand to vacate without the demand to pay. The Court is of the considered opinion that
such demand is not sufficient compliance with Sec. 2 of Rule 70 of the Rules of Court. Furthermore, a
Notice of Demand giving the lessee the alternative whether to pay the rental or vacate the premises
does not comply with the above rule.
RULING OF CA:

SENIORS

Denied the Petition for review. It found, as the RTC did, that while there was a demand to vacate upon
respondent, there was no prior demand to pay made on the latter; that since both requisites - demand to

BATCH 2018
pay and vacate - must concur, the absence of one strips the lower court of jurisdiction over petitioner's
Complaint for ejectment.

ISSUE: IS IT STILL REQUIRED FOR THE PETITIONER UBP TO ISSUE A DEMAND TO PAY
PRIOR TO THE FILING OF THE EJECTMENT CASE?

HELD: NO. It must have escaped the attention of the MTCC, the RTC, and the CA that an ejectment
case is not limited to lease agreements or deprivations of possession by force, intimidation, threat,
strategy, or stealth. It is as well available against one who withholds possession after the expiration or
termination of his right of possession under an express or implied contract, such as a contract to sell.
Under Section 1, Rule 70 of the 1997 Rules, "a x x x vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration or termination of the right
to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !191 of !221
2016
of any such lessor, vendor, vendee, or other person, may, at any time within one (1) year after such
unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court
against the person or persons unlawfully withholding or depriving of possession, or any person or
persons claiming under them, for the restitution of such possession, together with damages and costs."
In such cases, it is sufficient to allege in the plaintiffs complaint that -
1. The defendant originally had lawful possession of the property, either by virtue of a contract or by
tolerance of the plaintiff;
2. Eventually, the defendant's possession of the property became illegal or unlawful upon notice by the
plaintiff to defendant of the expiration or the termination of the defendant's right of possession;
3. Thereafter, the defendant remained in possession of the property and deprived the plaintiff the
enjoyment thereof; and

SENIORS

4. Within one year from the unlawful deprivation or withholding of possession, the plaintiff instituted
the complaint for ejectment.

BATCH 2018
Upon an examination of the Complaint and evidence in Civil Case No. 2171, it appears that petitioner
complied with the above requirements. It alleged that respondent acquired the right to occupy the
subject property by virtue of the November 8, 2001 Contract to Sell; that respondent failed to pay the
required amortizations and thus was in violation of the stipulations of the agreement; that petitioner
made a written "Demand to Pay with Rescission of Three (3) Contracts to Sell dated November 8,
2001," but respondent was unable to heed the demand; that respondent lost its right to retain possession
of the subject property, and it was illegally occupying the premises; that petitioner made another
demand, this time a written demand to vacate on May 24, 2004, which respondent received on May 26,
2004; that respondent refused to vacate the premises; that on May 26, 2005, or within the one-year
period required by the Rules, the ejectment case was filed; and that there is a need to determine the
rents and damages owing to petitioner.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !192 of !221
2016
It was plainly erroneous for the lower courts to require a demand to pay prior to filing of the ejectment
case. This is not one of the requisites in an ejectment case based on petitioner's contract to sell with
respondent. As correctly argued by petitioner, the full payment of the purchase price in a contract to sell
is a positive suspensive condition whose non-fulfillment is not a breach of contract, but merely an
event that prevents the seller from conveying title to the purchaser; in other words, the non-payment of
the purchase price renders the contract to sell ineffective and without force and effect.33 Respondent's
failure and refusal to pay the monthly amortizations as agreed rendered the contract to sell without
force and effect; it therefore lost its right to continue occupying the subject property, and should vacate
the same.


SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !193 of !221
2017
TITLE: SPOUSES ROMEO PAJARES and IDA T. PAJARES, petitioners, vs. REMARKABLE
LAUNDRY AND DRY CLEANING, represented by ARCHEMEDES G. SOLIS, respondent.
G.R. No. 212690, February 20, 2017

TOPICS:
TORTS AND DAMAGES; ENFORCEMENT OF PENAL CLAUSE IS A CLAIM FOR DAMAGES

MAIN DOCTRINE:
A complaint primarily seeking to enforce the accessory obligation contained in the penal clause is
actually an action for damages capable of pecuniary estimation. Petitioners' responsibility under the
penal clause involves the payment of liquidated damages because under Article 2226 of the Civil Code
the amount the parties stipulated to pay in case of breach are liquidated damages. "It is attached to an
obligation in order to ensure performance and has a double function: (1) to provide for liquidated
damages, and (2) to strengthen the coercive force of the obligation by the threat of greater
responsibility in the event of breach."

FACTS:

SENIORS

Respondent filed a Breach of Contract and Damages complaint against petitioners before RTC Cebu.
Respondent claimed that it entered into a Remarkable Dealer Outlet Contract, where petitioner would
as a dealer outlet, and shall receive items and materials for laundry which will be picked up and

BATCH 2018
processed at its main plant or laundry outlet. They claimed that petitioners violated the quota provision
of the contract when they failed to produce at least 200 kilos of laundry items per week when they
ceased operations on account of lack of personnel. Respondent made written demands to petitioners for
payment of the stipulated penalties but the latter failed to pay. They prayed for the payment of
P200,000 for incidental and consequential damages, P30,000 as legal expenses, P30,000 as exemplary
damages, P20,000 as cost and such other reliefs that the court deems as just and equitable.

During pre-trial, the issue of jurisdiction was raised

The RTC dismissed the case for lack of jurisdiction. Said court that the total claim was for P280,000.00
only which was below the threshold for the RTC under BP 129 as amended.

Respondent filed a petition for certiorari, alleging grave abuse of discretion on the RTC. It claimed that
the action was incapable of pecuniary estimation and that the damages prayed for are merely incidental
thereto, thus the RTC has jurisdiction.

The CA reversed and set aside the RTC order. The CA held that the action for rescission of contract, as
a counterpart of an action for specific performance, is incapable of pecuniary estimation. Thus, the

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !194 of !221
2017
totality of damages principle finds no application in the instant case since the same applies only when
damages is principally and primarily demanded in accordance with the specification in Administrative
Circular No. 09-94 which reads: 'in cases where the claim for damages is the main cause of action. . .
the amount of such claim shall be considered in determining the jurisdiction of the court.

ISSUE:
WON the action is incapable of pecuniary estimation? NO, IT IS AN ACTION FOR DAMAGES

HELD:
Respondent's complaint denominated as one for "Breach of Contract & Damages" is neither an action
for specific performance nor a complaint for rescission contract.

Specific performance is "[t]he remedy of requiring exact performance of a contract in the specific form
in which it was made, or according to the precise terms agreed upon. [It is t]he actual accomplishment
of a contract by a party bound to fulfill it.” Rescission of contract under Article 1191 of the Civil Code,
on the other hand, is a remedy available to the obligee when the obligor cannot comply with what is
incumbent upon him. It is predicated on a breach of faith by the other party who violates the

SENIORS

reciprocity between them. Rescission may also refer to a remedy granted by law to the contracting
parties and sometimes even to third persons in order to secure reparation of damages caused them by a
valid contract, by means of restoration of things to their condition in which they were prior to the
celebration of the contract
BATCH 2018
In determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction is in the municipal trial courts or in the courts of first
instance would depend on the amount of the claim. However, where the basic issue is something other
than the right to recover a sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought, this Court has considered such actions as cases where the
subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by
courts of first instance (now Regional Trial Courts)

An analysis of the factual and material allegations in the Complaint shows that there is nothing therein
which would support a conclusion that respondent's Complaint is one for specific performance or
rescission of contract. Respondent, however, neither asked the RTC to compel petitioners to perform
such obligation as contemplated in said contract nor sought the rescission thereof.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !195 of !221
2017
A complaint primarily seeking to enforce the accessory obligation contained in the penal clause is
actually an action for damages capable of pecuniary estimation. Petitioners' responsibility under the
penal clause involves the payment of liquidated damages because under Article 2226 of the Civil Code
the amount the parties stipulated to pay in case of breach are liquidated damages. "It is attached to an
obligation in order to ensure performance and has a double function: (1) to provide for liquidated
damages, and (2) to strengthen the coercive force of the obligation by the threat of greater
responsibility in the event of breach."

Concomitantly, what respondent primarily seeks in its Complaint is to recover aforesaid liquidated
damages (which it termed as "incidental and consequential damages") premised on the alleged breach
of contract committed by the petitioners when they unilaterally ceased business operations. Breach of
contract may also be the cause of action in a complaint for damages filed pursuant to Article 1170 of
the Civil Code.It provides:

Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay,
and those who in any manner contravene the tenor thereof, are liable for damages.

SENIORS

In an action for damages, the court which has jurisdiction is determined by the total amount of damages
claimed.

BATCH 2018
WHEREFORE, the Petition is GRANTED and the December 11, 2013 Decision and March 19, 2014
Resolution of the Court of Appeals in CA-G.R. CEB SP No. 07711 are REVERSED and SET ASIDE.
The February 19, 2013 Order of the Regional Trial Court, Branch 17, Cebu City dismissing Civil Case
No. CEB-39025 for lack of jurisdiction is REINSTATED.

SO ORDERED. 


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !196 of !221
2017
Spouses Estrada v. Philippine Rabbit Bus Lines
G.R. No. 203902, July 19, 2017
TORTS
Del Castillo, J.:
Doctrine/s: The Court restates in this petition two principles on the grant of damages. First, moral
damages, as a general rule, are not recoverable in an action for damages predicated on breach of
contract. Second, temperate damages in lieu of actual damages for loss of earning capacity may be
awarded where earning capacity is plainly established but no evidence was presented to support the
allegation of the injured party's actual income.

Facts: A mishap occurred along the national highway in Barangay Alipangpang, Pozorrubio,
Pangasinan, between the passenger bus, driven by respondent Eduardo Saylan and owned by

SENIORS

respondent Philippine Rabbit Bus, Lines, Inc., and the Isuzu truck driven by Willy U. Urez and
registered in the name of Rogelio Cuyton, Jr. The collision happened at the left lane or the lane

BATCH 2018
properly belonging to the Isuzu truck. The right front portion of the Isuzu Truck appears to have
collided with the right side portion of the body of the Philippine Rabbit bus. Before the collision, the
bus was following closely a jeepney. When the jeepney stopped, the bus suddenly swerved to the left
encroaching upon the rightful lane of the Isuzu truck, which resulted in the collision of the two
vehicles.

Dionisio argued that pursuant to the contract of carriage between him and Philippine Rabbit,
respondents were duty-bound to carry him safely as far as human care and foresight can provide, with
utmost diligence of a very cautious person, and with due regard for all the circumstances. However,
through the fault and negligence of Philippine Rabbit's driver, Eduardo, and without human care,
foresight, and due regard for all circumstances, respondents failed to transport him safely by reason of
the aforementioned collision which resulted in the amputation of Dionisio's right arm. And since
demands for Philippine Rabbit to pay him damages for the injury he sustained remained unheeded,

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !197 of !221
2017
Dionisio filed the said complaint wherein he prayed for the following awards: moral damages of
₱500,000.00 actual damages of ₱60,000.00, and attorney's fees of ₱25,000.00.

Philippine Rabbit in its Answer averred that it carried Dionisio safely as far as human care and
foresight could provide with the utmost diligence of a very cautious person and with due regard for all
the circumstances prevailing. In any case, Philippine Rabbit averred that it was the Isuzu truck coming
from the opposite direction which had the last clear chance to avoid the mishap. The proximate cause
of the accident, therefore, was the wrongful and negligent manner in which the Isuzu truck was
operated by its driver. In view of this, Philippine Rabbit believed that Dionisio has no cause of action
against it.

Treating petitioners' Complaint for damages as one predicated on breach of contract of carriage, the
RTC rendered its decision concluding that Eduardo was negligent in driving the Philippine Rabbit bus.

SENIORS

The CA modified the RTC Decision in that it declared Philippine Rabbit as solely and exclusively
liable to Dionisio for actual damages in the amount of ₱57,766.25 and deleted the award of moral

BATCH 2018
damages and attorney's fees.

Issue: Whether petitioner is entitled to damages?

Ruling:
Moral damages; Instances when

moral damages can be awarded in an

action for breach of contract.
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant's wrongful act or omission.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !198 of !221
2017
Since breach of contract is not one of the items enumerated under Article 2219, moral damages, as a
general rule, are not recoverable in actions for damages predicated on breach of contract.
As an exception, such damages are recoverable [in an action for breach of contract:] (1) in cases in
which the mishap results in the death of a passenger, as provided in Article 1764, in relation to Article
2206(3) of the Civil Code; and (2) in x x x cases in which the carrier is guilty of fraud or bad faith, as
provided in Article 2220.

It is obvious that this case does not come under the first of the abovementioned exceptions since
Dionisio did not die in the mishap but merely suffered an injury. Nevertheless, petitioners contend that
it falls under the second category since they aver that Philippine Rabbit is guilty of fraud or bad faith.

It has been held, however, that "allegations of bad faith and fraud must be proved by clear and
convincing evidence." They are never presumed considering that they are serious accusations that can

SENIORS

be so conveniently and casually invoked. And unless convincingly substantiated by whoever is alleging
them, they amount to mere slogans or mudslinging.

BATCH 2018
In this case, the fraud or bad faith that must be convincingly proved by petitioners should be one which
was committed by Philippine Rabbit in breaching its contract of carriage with Dionisio. Unfortunately
for petitioners, the Court finds no persuasive proof of such fraud or bad faith.

Fraud has been defined to include an inducement through insidious machination. Insidious machination
refers to a deceitful scheme or plot with an evil or devious purpose. Deceit exists where the party, with
intent to deceive, conceals or omits to state material facts and, by reason of such omission or
concealment, the other party was induced to give consent that would not otherwise have been given.

Bad faith, on the other hand, "does not simply connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty
through some motive or interest or ill will that partakes of the nature of fraud."

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !199 of !221
2017
There is no showing here that Philippine Rabbit induced Dionisio to enter into a contract of carriage
with the former through insidious machination. Neither is there any indication or even an allegation of
deceit or concealment or omission of material facts by reason of which Dionisio boarded the bus owned
by Philippine Rabbit. Likewise, it was not shown that Philippine Rabbit's breach of its known duty,
which was to transport Dionisio from Urdaneta to La Union, was attended by some motive, interest, or
ill will. From these, no fraud or bad faith can be attributed to Philippine Rabbit.

Actual damages for loss/impairment



of earning capacity are also not

recoverable. In lieu thereof, the

Court awards temperate damages.

It must be emphasized, though, that documentary proof of Dionisio's actual income cannot be

SENIORS

dispensed with since based on the above testimony, Dionisio does not fall under any of the two
exceptions aforementioned. Thus, as it stands, there is no competent proof substantiating his actual

BATCH 2018
income and because of this, an award for actual damages for loss/ impairment of earning capacity
cannot be made.

Nonetheless, since it was established that Dionisio lost his right arm, temperate damages in lieu of
actual damages for loss/impairment of earning capacity may be awarded in his favor. Under Article
2224, "[t]emperate or moderate damages, which are more than nominal but less than compensatory
damages, may be recovered when the court finds that some pecuniary loss has been suffered but its
amount cannot, from the nature of the case, be proved with certainty."

Actual damages by way of medical



expenses must be supported by

official receipts.
It has been held that actual proof of expenses incurred for medicines and other medical supplies
necessary for treatment and rehabilitation must be presented by the claimant, in the form of official

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !200 of !221
2017
receipts, to show the exact cost of his medication and to prove that he indeed went through medication
and rehabilitation. In the absence of the same, such claim must be negated.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !201 of !221
2017
Sps. Firmo S. Rosario & Agnes Annabelle Dean Rosario vs. Priscilla P. Alvar
G.R. No. 212731. September 6, 2017|||
Del Castillo, J.

Obligations and Contracts/Sales and Lease

Doctrine: In ruling that the Deeds of Absolute Sale were actually mortgages, the CA, in effect, had
reformed the instruments based on the true intention of the parties. Thus, the filing of a separate
complaint for reformation of instrument is no longer necessary because it would only be redundant and
a waste of time.

FACTS: Petitioner Agnes Rosario borrowed from respondent Priscilla Alvar a total of P600k, secured
by REM over two parcels of land covering the residence of the petitioners and a five-door rental

SENIORS

apartment. The mortgages were discharged.

Agnes executed two Deeds of Absolute Sale over the two lots in favor of Priscilla's daughter,

BATCH 2018
Evangeline, for the amount of P900k each. Evangeline later sold the lots to Priscilla also for the same
price.

Priscilla sent a demand letter to petitioner spouses asking them to vacate the lot. This prompted
petitioner spouses to file before the RTC-Makati City a Complaint for Declaration of Nullity of
Contract of Sale and Mortgage with Damages against Priscilla alleging that the latter deceived Agnes
into signing the Deeds of Absolute Sale. Priscilla, in turn, filed with the RTC a Complaint for Recovery
of Possession.

The RTC rendered a decision for the consolidated cases granting Priscilla's complaint for recovery of
possession while denying Rosario's complaint.

On appeal, CA reversed the decision (the November 15, 2006 decision) of the RTC. It ruled that
although the transfers from Agnes to Priscilla were identified as absolute sales, the contracts are

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !202 of !221
2017
deemed equitable mortgages pursuant to Article 1602 of the Civil Code. CA’s decision has attained
finality

For failure of the petitioner spouses to heed the demand, Priscilla filed before the RTC-Makati a
complaint for Judicial Foreclosure of REM. RTC rendered a decision in favor of Priscilla. On appeal,
the CA affirmed the decision of the RTC.

Hence, this petition.

Petitioner spouses insist, among all others, that before the subject lots can be judicially foreclosed, a
reformation of the fake and simulated Deeds of Absolute Sale must first be done to enable them to
present documentary and parol evidence. On the other hand, Priscilla asserts that there is no need for
such reformation as the declaration in the November 15, 2006 Decision is sufficient.

SENIORS

ISSUE: Whether a reformation of the contract is required before the subject lots may be foreclosed.

HELD: No. Reformation of an instrument is a remedy in equity where a written instrument already

BATCH 2018
executed is allowed by law to be reformed or construed to express or conform to the real intention of
the parties. The rationale of the doctrine is that it would be unjust and inequitable to allow the
enforcement of a written instrument that does not express or reflect the real intention of the parties.

In the November 15, 2006 Decision, the CA denied petitioner spouses' Complaint for declaration of
nullity of contract of sale on the ground that what was required was the reformation of the instruments,
pursuant to Article 1365 of the Civil Code. In ruling that the Deeds of Absolute Sale were actually
mortgages, the CA, in effect, had reformed the instruments based on the true intention of the parties.
Thus, the filing of a separate complaint for reformation of instrument is no longer necessary because it
would only be redundant and a waste of time.

Besides, the CA already declared that absent any proof that petitioner spouses Rosario had fully paid
their obligation, respondent may seek the foreclosure of the subject lots.


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !203 of !221
2017
SPOUSES ROMEO PAJARES and IDA T. PAJARES v. REMARKABLE LAUNDRY AND DRY
CLEANING, represented by ARCHEMEDES G. SOLIS
Obligations and Contracts; Jurisdiction

“Breach of contract may give rise to an action for specific performance or rescission of contract. It
may also be the cause of action in a complaint for damages filed pursuant to Art. 1170 of the Civil
Code. In the specific performance and rescission of contract cases, the subject matter is incapable of
pecuniary estimation; hence jurisdiction belongs to the Regional Trial Court (RTC). In the case for
damages, however, the court that has jurisdiction depends upon the total amount of the damages
claimed.”

Facts: SENIORS

BATCH 2018
Remarkable Laundry and Dry Cleaning filed a Complaint denominated as "Breach of Contract and
Damages" against spouses Romeo and Ida Pajares before the RTC of Cebu City. Respondent alleged
that it entered into a Remarkable Dealer Outlet Contract with petitioners whereby the latter, acting as a
dealer outlet, shall accept and receive items or materials for laundry which are then picked up and
processed by the former in its main plant or laundry outlet; that petitioners violated Article IV
(Standard Required Quota & Penalties) of said contract, which required them to produce at least 200
kilos of laundry items each week, when they ceased dealer outlet operations on account of lack of
personnel; that respondent made written demands upon petitioners for the payment of penalties
imposed and provided for in the contract, but the latter failed to pay; and, that petitioners' violation
constitutes breach of contract. The RTC dismissed the case for lack of jurisdiction.

Respondent filed its Motion for Reconsideration to Court of Appeals arguing that case is one whose
subject matter is incapable of pecuniary estimation and that the damages prayed for therein are merely

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !204 of !221
2017
incidental thereto. The CA rendered the assailed Decision setting aside the Order of the RTC and
remanding the case to the court a quo for further proceedings.
Petitioners sought to reconsider because the allegations in the complaint and the principal relief in the
prayer merely prayed for the payment of damages in its Complaint and not a judgment on the claim of
breach of contract, but were denied. Hence, appealed the Petition
Issue:
Whether the complaint of respondent denominated as "Breach of Contract and Damages" is essentially
one for simple payment of damages?
Ruling:
Respondent’s complaint denominated as one for “‘Breach of Contract &Damages” is neither an action
for specific performance nor a complaint for rescission of contract. From the allegations in the

SENIORS

complaint and the relief sought for it is simply for payment of damages.
Breach of contract may give rise to an action for specific performance or rescission of contract. It may

BATCH 2018
also be the cause of action in a complaint for damages filed pursuant to Art. 1170 of the Civil Code. In
the specific performance and rescission of contract cases, the subject matter is incapable of pecuniary
estimation, hence jurisdiction belongs to the Regional Trial Court (RTC). In the case for damages,
however, the court that has jurisdiction depends upon the total amount of the damages claimed.
The Court grants the Petition. The RTC was correct in categorizing the civil case filed by respondents
against petitioners as an action for damages seeking to recover an amount below its jurisdictional limit.
In ruling that respondent’s Complaint is incapable of pecuniary estimation and that the RTC has
jurisdiction, the CA comported itself with the following ratiocination:
A case for breach of contract [sic] is a cause of action either for specific performance or rescission of
contracts. An action for rescission of contract, as a counterpart of an action for specific performance, is
incapable of pecuniary estimation, and therefore falls under the jurisdiction of the RTC.
Without, however, determining whether, from the four corners of the Complaint, respondent actually
intended to initiate an action for specific performance or an action for rescission of contract. Specific

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !205 of !221
2017
performance is ”the remedy of requiring exact performance of a contract in the specific form in which
it was made, or according to the precise terms agreed upon. It is the actual accomplishment of a
contract by a party bound to fulfill it.” Rescission of contract under Article 1191 of the Civil Code, on
the other hand, is a remedy available to the obligee when the obligor cannot comply with what is
incumbent upon him. It is predicated on a breach of faith by the other party who violates the reciprocity
between them. Rescission may also refer to a remedy granted by law to the contracting parties and
sometimes even to third persons in order to secure reparation of damages caused them by a valid
contract; by means of restoration of things to their condition in which they were prior to the celebration
of the contract.
An analysis of the factual and material allegations in the Complaint shows that there is nothing therein
which would support a conclusion that respondent’s Complaint is one for specific performance or

SENIORS

rescission of contract. It should be recalled that the principal obligation of petitioners under the
Remarkable Laundry Dealership Contract is to act as respondent’s dealer outlet. Respondent, however,

BATCH 2018
neither asked the RTC to compel petitioners to perfom such obligation as contemplated in said contract
nor sought the rescission thereof. The Complaint’s body, heading, and relief are bereft of such
allegation. In fact, neither phrase appeared on or was used in the Complaint when, for purposes of
clarity, respondent’s counsels, who are presumed to be learned in law, could and should have used any
of those phrases to indicate the proper designation of the Complaint. Breach of contract may give rise
to a complaint for specific performance or rescission of contract. In which case, the subject matter is
incapable of pecuniary estimation and, therefore, jurisdiction is lodged with the RTC. However, breach
of contract may also be the cause of action in a complaint for damages. Thus, it is not correct to
immediately conclude, as the CA erroneously did, that since the cause of action is breach of contract,
the case would only either be specific pe1formance or rescission of contract because it may happen, as
in this case, that the complaint is one for damages.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !206 of !221
2017
Darines vs Quinones
G.R. No. 206468, August 2, 2017
TOPIC: TORTS AND DAMAGES
DOCTRINE:
• In an action for breach of contract, moral damages may be recovered only when

a) death of a passenger results; or


b) the carrier was guilty of fraud and bad faith even if death does not result
• The principle that, in an action for breach of contract of carriage, moral damages may be
awarded only in case (1) an accident results in the death of a passenger; or (2) the carrier is
guilty of fraud or bad faith, is pursuant to Article 1764, in relation to Article 2206(3) of the
Civil Code, and Article 2220 thereof,18 as follows:

SENIORS

Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title

BATCH 2018
XVIII of this Book, concerning Damages.1âwphi1 Article 2206 shall also apply to the death of a
passenger caused by the breach of contract by a common carrier. (Emphasis supplied)
Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least
three thousand pesos, even though there may have been mitigating circumstances. In addition:
xxxx
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.
Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under the circumstances, such damages are justly due. The same rule applies
to breaches of contract where the defendant acted fraudulently or in badfaith. (Emphasis supplied)

FACTS:

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !207 of !221
2017
Judith Darines, along with her daughter, Joyce, boarded an Amianan Bus Line from Pangasinan to
Baguio City, which was being driven by respondent Rolando Quitan, and Eduardo Quinones, as the
operator of the bus line. While traveling, the bus crashed into a parked truck, resulting to the damage of
both the bus and the truck, two passengers of the bus died, while Judith had an eye wound which
required operation, and Joyce suffered a cerebral concussion.
Petitioner filed a complaint for breach of contract of carriage and that Quitan’s reckless driving caused
the collision, praying for actual, moreal, exemplary, and temperate damages, and costs of the suit.
The respondent alleged that the proximate cause of the incident was the negligence of thr truck driver
who parked the truck at the roadside right after the curve without installing a warning device. Quinones
alleged that he observed due diligence in the selection and supervision of his employees as he
conducted seminars on road safety measures, along with those required by the government regarding
traffic safety.
SENIORS

Judith’s operation lasted for two months for which she could not report for work. She also claimed

BATCH 2018
actual damages based on receipts of medicine, and a summary of expenses, and the butcher of pig for
their ritual as being part of their indigenous tribe. Respondent testified that he bought the medicines
and paid petitioner’s hospitalization expenses.
The RTC denied the award for the butchering of pigs as their ritual, and denied the claim for lost
income for failure to substantiate the same. The RTC awarded moral damages based on Judith’s
suffering regarding her pain and suffering. It also awarded exemplary damages to serve as an example
to common carriers to exercise extraordinary diligence, plus attorney’s fees and costs of suit for being
compelled to litigate.
The CA stressed that respondents did not dispute that they were liable for breach of contract of
carriage; in fact, they paid for the medical and hospital expenses of petitioners. Nonetheless, the CA
deleted the award of moral damages because petitioners failed to prove that respondents acted
fraudulently or in bad faith, as shown by the fact that respondents paid petitioners' medical and
hospitalization expenses. The CA held that, since no moral damages was awarded, then there was no

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !208 of !221
2017
basis to grant exemplary damages. Finally, it ruled that because moral and exemplary damages were
not granted, then the award of attorney's fees must also be deleted.
ISSUE:
Whether or not respondent should be liable to pay moral damages, exemplary damages, and attorney’s
fees?
HELD:
No. In an action for breach of contract, moral damages may be recovered only when a) death of a
passenger results; orb) the carrier was guilty of fraud and bad faith even if death does not result; and
that neither of these circumstances were present in the case at bar.
Clearly, unless it is fully established (and not just lightly inferred) that negligence in an action for
breach of contract is so gross as to amount to malice, then the claim of moral damages is without merit.

SENIORS

Here, petitioners impute negligence on the part of respondents when, as paying passengers, they
sustained injuries when the bus owned and operated by respondent Quiñones, and driven by respondent

BATCH 2018
Quitan, collided with another vehicle. Petitioners propounded on the negligence of respondents, but did
not discuss or impute fraud or bad faith, or such gross negligence which would amount to bad faith,
against respondents. There being neither allegation nor proof that respondents acted in fraud or in bad
faith in performing their duties arising from their contract of carriage, they are then not liable for moral
damages.
The Court also sustains the CA's finding that petitioners are not entitled to exemplary damages.
Pursuant to Articles 2229 and 2234 of the Civil Code, exemplary damages may be awarded only in
addition to moral, temperate, liquidated, or compensatory damages. Since petitioners are not entitled to
either moral, temperate, liquidated, or compensatory damages, then their claim for exemplary damages
is bereft of merit.
Finally, considering the absence of any of the circumstances under Article 2208 of the Civil Code
where attorney's fees may be awarded, the same cannot be granted to petitioners.


Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !209 of !221
2017
Philippine National Bank vs. Chan
G.R. No. 20603| March 13, 2017
Obligations and Contracts
Doctrine: Consignation is necessarily judicial; it is not allowed in venues other than the courts.
Facts: Chan owns a three-story commercial building located along Paco, Manila. She leased said
commercial building to Philippine National Bank (PNB) for a period of five years from December 15,
1999 to December 14, 2004, with a monthly rental of ₱ 76,160.00. When the lease expired, PNB
continued to occupy the property on a month-to-month basis with a monthly rental of ₱ 116,788.44.
PNB vacated the premises on March 23, 2006.
Meanwhile, Chan obtained a ₱ l,500,000.00 loan from PNB which was secured by a Real Estate

SENIORS

Mortgage constituted over the leased property. In addition, Chan executed a Deed of Assignment over
the rental payments in favor of PNB. The amount of the Chan’s loan was subsequently increased to

BATCH 2018
₱7,500,000.00. Thus, PNB and Chan executed an "Amendment to the Real Estate Mortgage by
Substitution of Collateral", where the mortgage over the leased property was released and substituted
by a mortgage over a different parcel of land also located in Paco, Manila,.
Chan then filed a Complaint for Unlawful Detainer before the MTC of Manila against PNB, alleging
that the latter failed to pay its monthly rentals from October 2004 until August 2005. In its defense,
PNB claimed that it applied the rental proceeds from October 2004 to January 15, 2005 as payment for
respondent's outstanding loan which became due and demandable in October 2004. As for the monthly
rentals from January 16, 2005 to February 2006, PNB explained that it received a demand letter from a
certain Lamberto Chua (Chua) who claimed to be the new owner of the leased property and requested
that the rentals be paid directly to him, reckoned from January 15, 2005 until PNB decides to vacate the
premises or a new lease contract with Chua is executed. PNB thus deposited the rentals in a separate
non-drawing savings account for the benefit of the rightful party.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !210 of !221
2017
Issue: Whether there was proper consignment done by PNB to make it not liable to pay interest due to
delay?
Held: Consignation is the act of depositing the thing due with the court or judicial authorities whenever
the creditor cannot accept or refuses to accept payment. It generally requires a prior tender of payment.
Under Art. 1256 of the Civil Code, consignation alone is sufficient even without a prior tender of
payment a) when the creditor is absent or unknown or does not appear at the place of payment; b) when
he is incapacitated to receive the payment at the time it is due; c) when, without just cause, he refuses
to give a receipt; d) when two or more persons claim the same right to collect; and e) when the title of
the obligation has been lost.
For consignation to be valid, the debtor must comply with the following requirements under the law: a)
there was a debt due; b) valid prior tender of payment, unless the consignation was made because of

SENIORS

some legal cause provided in Article 1256; c) previous notice of the consignation has been given to the
persons interested in the performance of the obligation; d) the amount or thing due was placed at the

BATCH 2018
disposal of the court; and, e) after the consignation had been made, the persons interested were notified
thereof. Failure in any of the requirements is enough ground to render a consignation ineffective.
In the present case, the records show that: first, PNB had the obligation to pay Chan a monthly rental of
₱ l16,788.44, amounting to ₱ l,348,643.92, from January 16, 2005 to March 23, 2006; second, PNB
had the option to pay the monthly rentals to Chan or to apply the same as payment for Chan’s loan with
the bank, but PNB did neither; third, PNB instead opened a non-drawing savings account at its Paco
Branch under Account No. 202- 565327-3, where it deposited the subject monthly rentals, due to the
claim of Chua of the same right to collect the rent; and fourth, PNB consigned the amount of Pl,
348,643.92 with the Office of the Clerk of Court of the MTC of Manila on May 31, 2006.
Note that PNB's deposit of the subject monthly rentals in a non-drawing savings account is not the
consignation contemplated by law, precisely because it does not place the same at the disposal of the
court. Consignation is necessarily judicial; it is not allowed in venues other than the courts.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !211 of !221
2017
Consequently, PNB's obligation to pay rent for the period of January 16, 2005 up to March 23, 2006
remained subsisting, as the deposit of the rentals cannot be considered to have the effect of payment.
It is important to point out that PNB's obligation to pay the subject monthly rentals had already fallen
due and demandable before PNB consigned the rental proceeds with the MTC on May 31, 2006.
Although it is true that consignment has a retroactive effect, such payment is deemed to have been
made only at the time of the deposit of the thing in court or when it was placed at the disposal of the
judicial authority. Based on these premises, PNB's payment of the monthly rentals can only be
considered to have been made not earlier than May 31, 2006.
Given its belated consignment of the rental proceeds in court, PNB clearly defaulted in the payment of
monthly rentals to the respondent for the period January 16, 2005 up to March 23, 2006, when it finally
vacated the leased property, As such, it is liable to pay interest in accordance with Article 2209 of the
Civil Code.
SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !212 of !221
2017
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee vs. MELCHOR PANES y MAGSANOP,
Accused-Appellant
G.R. No. 215730, September 11, 2017
DEL CASTILLO, J.:

DOCTRINE:
In line with prevailing jurisprudence, the awards of civil indemnity, moral damages, and exemplary
damages are increased to ₱100,000.00 each.

FACTS:
SENIORS

Melchor Panes was indicted for qualified rape under three separate Informations. All three cases were

BATCH 2018
consolidated and heard by Branch 70 of the RTC of Iba, Zambales. During arraignment, appellant
pleaded "not guilty" to all three charges.

During the preliminary conference, the parties stipulated on the identity of the appellant; the identity of
the private complainant "AAA;" that "AAA" is the daughter of the appellant; that "AAA" was born on
January 16, 1991, as shown in her birth certificate; and that before the institution of these criminal
cases, appellant and "AAA" and her siblings were living together under one roof at Sitio Tumangan,
San Juan, Botolan, Zambales.

Trial on the merits ensued.

"AAA" testified on the three occasions when she was ravished by her father. She narrated that on
September 22, 2003, after her father assisted her mother in giving birth, the former went upstairs where
she was sleeping together with her siblings. Sensing that somebody was holding her thigh, "AAA"
woke up and saw her father. Appellant held her thigh, removed her panty, and then embraced her.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !213 of !221
2017
"AAA," although afraid, tried to remove appellant's hold on her thigh but was unsuccessful. Appellant
then undressed and proceeded to have carnal knowledge of her. "AAA" felt pain.

Three days later, appellant again raped "AAA." According to "AAA," she and her father were on their
way home and while passing by a creek, appellant pushed her towards a big rock, removed her clothes,
inserted his penis into her vagina, then made push and pull movements. "AAA" was shocked as she
was not expecting her father to rape her in such a place.

The third ravishment was committed inside their house. Appellant first embraced "AAA" then pushed
her to the floor. "AAA" tried to resist but her effort proved futile. Appellant succeeded in removing her
panty and inserted his penis into her vagina.

The trial court found "AAA's" testimony to be candid and straightforward, even during cross-
examination. It also held that it was unlikely for "AAA" to fabricate such a serious charge against her

SENIORS

own father. On the other hand, the RTC did not lend credence to appellant's denial and alibi because
aside from being a weak defense, appellant did not offer any other evidence to substantiate the same.

BATCH 2018
Against this backdrop, the RTC ruled for the prosecution, finding no merit at all in the appellant's plea
of denial, thus ---

IN VIEW THEREOF, accused MELCHOR PANES y MAGSANOP is found GUILTY beyond


reasonable doubt of three (3) counts of qualified rape and is sentenced to suffer the penalty of
Reclusion Perpetua for each count and without possibility of parole.

Further, accused is ordered to pay private complainant civil indemnity of Php75,000.00 for each
case, Php75,000.00 as moral damages for each case and exemplary damages in the amount of
Php25,000.00 for each case.

Dissatisfied with the RTC's verdict, the appellant went up to the CA. The CA denied the appeal and
affirmed the award of civil indemnity and moral damages as decreed by the lower court. However, the

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !214 of !221
2017
award of exemplary damages should be increased to ₱30,000.00 for each count, to conform with recent
Jurisprudence.

Dissatisfied with the CA's pronouncement, appellant filed a Notice of Appeal.

ISSUE:
Whether the accused-appellant is guilty of three (3) counts of qualified rape.
HELD:
The appeal lacks merit.

The CA's verdict is in full accord with the evidence on record. It is beyond cavil that appellant had
carnal knowledge of "AAA" on three separate occasions and the same were committed through force,
threat, or intimidation. Appellant also used his moral ascendancy to cow "AAA" to submit to his bestial

SENIORS

desires. It is also undisputed that it was properly alleged in the three Informations and proved during
trial that appellant is the father of "AAA," a 13-year-old minor at the time of the rape incidents.

BATCH 2018
Undoubtedly, appellant committed the crime of qualified rape (three counts). Both the trial court and
the CA therefore properly sentenced him to suffer the penalty of reclusion perpetua for each count of
qualified rape but without eligibility of parole.
However, the amount of damages awarded must be modified. In line with prevailing jurisprudence, the
awards of civil indemnity, moral damages, and exemplary damages are increased to ₱100,000.00
each. In addition, all damages awarded shall earn interest at the rate of 6% per anum from date of
finality of this Decision until full payment.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !215 of !221
2017
MARIANITO PADILLA and ALFREDO JAVALUYAS vs. UNIVERSAL ROBINA
CORPORATION, represented by its Senior Vice President, JOHNSON ROBERT GO
G.R. No. 214805 | December 14, 2017
Del Castillo, J.
Sales; Obligations and Contracts

Main Doctrine:
In the sale of animal feeds, there is an implied warranty that it is reasonably fit and suitable to be used
for the purpose which both parties contemplated. The manufacturer or seller of animal feeds cannot be
held liable for any damage allegedly caused by the product in the absence of proof that the product was

SENIORS

defective. The party making the allegations has the burden of proving them by a preponderance of
evidence.

BATCH 2018
Facts:
For various years, Universal Robina Corporation (URC) sold/supplied on credit day-old chicks and
poultry feeds to complainants who, in turn, provided the labor, poultry houses, electricity and water
facilities to care and grow these chicks until they are ready for harvest after 50 days, more or less.
Documents entitled Continuing Credit Accommodation with Real Estate Mortgage (CCAREM) were
executed by the parties whereby URC agreed to extend a continuous credit accommodation in favor of
each complainant, for the latter's purchases of day-old chicks, poultry feeds, and other agricultural
products from the former, while each complainant put up a real estate mortgage. Sometime in the year
1993, complainants informed URC of the stunting or slow growth and high mortality rate of the
chickens. They claimed that URC supplied them with low quality feeds with high aflatoxin content and
class B or junior day-old chicks. Meanwhile, the stunted chickens that failed to meet the standard target
weight for harvest were rejected by URC and were condemned (beheaded). As a result, complainants
incurred outstanding obligations. URC made several demands for complainants to settle their unpaid

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !216 of !221
2017
obligations under the CCAREMs, but they refused to pay. Hence, URC filed an application for extra
judicial foreclosure of the real estate mortgages on complainants' respective properties under the
CCAREMs.
RTC: Enjoined the URC to desist from foreclosing extrajudicially the properties mortgaged by
petitioners and declared the latters’ obligations to URC extinguished. The trial court found the
CCAREMs as unconscionable and against public policy for being a contract of adhesion which
contained terms that were heavily weighed in favor of URC.
CA: Reversed; Held that petitioners' acquiescence to the terms and provisions of the CCAREMs made
it a binding agreement between the parties that should govern and delineate their respective rights and
obligations. CA lifted the permanent injunction issued by the trial court to allow URC to initiate other
foreclosure proceedings against the mortgaged properties of petitioners.

Issue: SENIORS

BATCH 2018
Whether URC was guilty of fault or negligence for the defective/stunted growth of the broiler chickens
as would extinguish petitioners' obligation under the CCAREM.

Held:
No. At the outset, it must be stated that the CCAREMs executed and signed by the parties govern their
rights and obligations considering that the validity of its provisions was not assailed by petitioners.
Under the CCAREMs, URC is accountable only if the loss, damage, or destruction of the broiler
chickens was due to its fault, otherwise, petitioners should bear the loss and their obligation to pay the
day-old chicks and poultry feeds purchased from URC is not extinguished.
It is basic rule in civil cases that the party making the allegations has the burden of proving them by a
preponderance of evidence. The parties must rely on the strength of their own evidence and not upon
the weakness of the defense offered by their opponent. The Court finds that petitioners failed to prove

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !217 of !221
2017
by preponderance of evidence their claims against URC as to extinguish their obligation under the
contract.

The manufacturer or seller of animal feeds cannot be held liable for any damage allegedly caused by
the product in the absence of proof that the product was defective. The defect of the product requires
evidence that there was no tampering with, or changing of the animal feeds. In the sale of animal feeds,
there is an implied warranty that it is reasonably fit and suitable to be used for the purpose which both
parties contemplated. There was nothing in the records, except self-serving claims, which proves that
URC delivered low-quality feeds tainted with high aflatoxin and other harmful components. For this
reason, petitioners can be held liable for their unsettled obligations under the CCAREMs they executed
in favor of URC.

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !218 of !221
2017
Sps. Firmo S. Rosario & Agnes Annabelle Dean Rosario vs. Priscilla P. Alvar
G.R. No. 212731. September 6, 2017|||
Del Castillo, J.

Obligations and Contracts/Sales and Lease

Doctrine: In ruling that the Deeds of Absolute Sale were actually mortgages, the CA, in effect, had
reformed the instruments based on the true intention of the parties. Thus, the filing of a separate
complaint for reformation of instrument is no longer necessary because it would only be redundant and
a waste of time.

SENIORS

FACTS: Petitioner Agnes Rosario borrowed from respondent Priscilla Alvar a total of P600k, secured

BATCH 2018
by REM over two parcels of land covering the residence of the petitioners and a five-door rental
apartment. The mortgages were discharged.

Agnes executed two Deeds of Absolute Sale over the two lots in favor of Priscilla's daughter,
Evangeline, for the amount of P900k each. Evangeline later sold the lots to Priscilla also for the same
price.

Priscilla sent a demand letter to petitioner spouses asking them to vacate the lot. This prompted
petitioner spouses to file before the RTC-Makati City a Complaint for Declaration of Nullity of
Contract of Sale and Mortgage with Damages against Priscilla alleging that the latter deceived Agnes
into signing the Deeds of Absolute Sale. Priscilla, in turn, filed with the RTC a Complaint for Recovery
of Possession.

The RTC rendered a decision for the consolidated cases granting Priscilla's complaint for recovery of
possession while denying Rosario's complaint.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !219 of !221
2017
On appeal, CA reversed the decision (the November 15, 2006 decision) of the RTC. It ruled that
although the transfers from Agnes to Priscilla were identified as absolute sales, the contracts are
deemed equitable mortgages pursuant to Article 1602 of the Civil Code. CA’s decision has attained
finality

For failure of the petitioner spouses to heed the demand, Priscilla filed before the RTC-Makati a
complaint for Judicial Foreclosure of REM. RTC rendered a decision in favor of Priscilla. On appeal,
the CA affirmed the decision of the RTC.

Hence, this petition.

Petitioner spouses insist, among all others, that before the subject lots can be judicially foreclosed, a
reformation of the fake and simulated Deeds of Absolute Sale must first be done to enable them to

SENIORS

present documentary and parol evidence. On the other hand, Priscilla asserts that there is no need for
such reformation as the declaration in the November 15, 2006 Decision is sufficient.

BATCH 2018
ISSUE: Whether a reformation of the contract is required before the subject lots may be foreclosed.

HELD: No. Reformation of an instrument is a remedy in equity where a written instrument already
executed is allowed by law to be reformed or construed to express or conform to the real intention of
the parties. The rationale of the doctrine is that it would be unjust and inequitable to allow the
enforcement of a written instrument that does not express or reflect the real intention of the parties.

In the November 15, 2006 Decision, the CA denied petitioner spouses' Complaint for declaration of
nullity of contract of sale on the ground that what was required was the reformation of the instruments,
pursuant to Article 1365 of the Civil Code. In ruling that the Deeds of Absolute Sale were actually
mortgages, the CA, in effect, had reformed the instruments based on the true intention of the parties.

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !220 of !221
2017
Thus, the filing of a separate complaint for reformation of instrument is no longer necessary because it
would only be redundant and a waste of time.

Besides, the CA already declared that absent any proof that petitioner spouses Rosario had fully paid
their obligation, respondent may seek the foreclosure of the subject lots

SENIORS

BATCH 2018

Civil Law Review 2: Justice Del Castillo Cases


San Beda College of Law 2018 Page !221 of !221