SUMMARY OF DOCTRINES

I. PERSONS AND FAMILY RELATIONS

Art. 26, NCC

The philosophy behind Art. 26, NCC underscores the

necessity for its inclusion in our Civil Law. The Code
Commission stressed in no uncertain terms that the
human personality be exalted. Thus, under this article, the
rights of a person are amply protected, and damages are
provided for violations of a person’s dignity, personality,
privacy and peace of mind. Further, the violations
mentioned in this codal provision are not exclusive but
merely examples and do not preclude other similar or
analogous acts such as the one involved in this case.
(CONCEPCION vs. COURT OF APPEALS, G.R. No.
120706, January 31, 2000)

Prejudicial Question

A prejudicial question is one that arises in a case the

resolution of which is a logical antecedent of the issue involved
therein, and the cognizance of which pertains to another tribunal.
The prejudicial question must be determinative of the case before
the court but the jurisdiction to try and resolve the question must
be lodged in another court or tribunal.
 More simply, for the court to appreciate the pendency of a
prejudicial question, the law requires the concurrence of two
essential requisites, to wit:
a) The civil action involves an issue similar or intimately
related to the issue raised in the criminal action; and
b) The resolution of such issue determines whether or not
the criminal action may proceed. (CHING vs. COURT OF
APPEALS, G.R. No. 110844, April 27, 2000)

Pendency of a civil action for nullity of marriage does

not pose a prejudicial question in a criminal case for
concubinage. The rationale behind the principle of
prejudicial question is to avoid two conflicting decisions. For
a civil case to be considered prejudicial to a criminal action
as to cause the suspension of the latter pending the final
determination of the civil case, it must appear not only that
the said civil case involves the same facts upon which the
criminal prosecution would be based, but also that in the
resolution of the issue or issues raised in the aforesaid civil
action, the guilt or innocence of the accused would
necessarily be determined. (BELTRAN vs. PEOPLE, G.R.
No. 137567, June 20, 2000)

Property Regime of Unions Without Marriage (Art. 148,

FC); Support; Retroactive Application of the Family Code

Actual contribution is required by Art. 148 of the Family

Code, in contrast to Art. 147 . which states that efforts in the care
and maintenance of the family and household are regarded as
contributions to the acquisition of common property by one who
has no salary or income or work or industry. The care given by
one party [to] the home, children, and household, or spiritual or
moral inspiration provided to the other, is not included in
Art.148. Hence, if actual contribution of the party is not proved,
there will be no co-ownership and no presumption of equal shares
The right to support (for shelter) of illegitimate children
does not prevail over the right of the spouses to eject
them. Article 203 of the Family Code expressly provides
that the obligation to give support shall be demandable
from the time the person who has the right to receive the
same needs it for maintenance, but it shall not be paid
except from the date of the judicial or extra-judicial
demand. (TUMLOS vs. FERNANDEZ, G.R. No.
137650, April 12, 2000)

Judicial Declaration of Presumptive Death of a

Spouse

Since the marriage was contracted in 1958, the

applicable provision is Art. 83, NCC which provides that a
subsequent marriage contracted during the lifetime of the
first spouse is illegal and void ab initio unless the prior
marriage is first annulled or dissolved, except when the
first spouse (1) has been absent for seven consecutive
years at the time of the second marriage without the
spouse present having news of the absentee being alive,
or (2) if absent for less than seven years, is generally
considered as dead and believed to be so by the spouse
present at the time of contracting such subsequent
marriage, or (3) is presumed dead according to Articles
390 and 391 of the Civil Code. For the exception to apply,
the subsequent marriage must have been made in good
faith. A judicial declaration of absence of the absentee
spouse is not necessary as long as the prescribed period
of absence is met. The marriage under these exceptional
cases is deemed to be valid “until declared null and void
by a competent court.” In contrast, under the 1988 Family
Code, in order that a subsequent bigamous marriage may
exceptionally be considered valid, the following conditions
must concur: (a) the prior spouse of the contracting party
must have been absent for four consecutive years, or two
years where the danger of death under the circumstances
in Article 391 of the Civil Code at the time of
disappearance; (b) the spouse present has a well founded
belief that the absent spouse is already dead; and (c)
there is, unlike the old rule, a judicial declaration of
presumptive death of the absentee for which purpose the
spouse present can institute a summary proceeding in
court to ask for that declaration. (ARMAS vs.
CALISTERIO, G. R. No. 136467, April 6, 2000)

Validity of Marriage; Marriage License Required

A marriage license is a formal requirement, its absence

renders the marriage void ab initio. Absence any claim of
an exceptional character, the purported marriage between
the parties could not be classified among those exempt
from the marriage license requirement. (SY vs. COURT
OF APPEALS , G.R. No. 127263, April 12, 2000)
 Exemption from Marriage License; Declaration of
Nullity of a Void Marriage

The five-year period provided by law in order to

exempt the future spouses from securing a marriage
license should be computed on the basis of a cohabitation
as "husband and wife" where the only missing factor is the
special contract of marriage to validate the union. In other
words, the five-year common-law cohabitation period,
which is counted back from the date of celebration of
marriage, should be a period of legal union had it not been
for the absence of the marriage. This 5-year period should
be the years immediately before the day of the marriage
and it should be a period of cohabitation characterized by
exclusivity — meaning no third party was involved at any
time within the 5 years and continuity — that is unbroken.
Otherwise, if that continuous 5-year cohabitation is
computed without any distinction as to whether the parties
were capacitated to marry each other during the entire five
years, then the law would be sanctioning immorality and
encouraging parties to have common law relationships
and placing them on the same footing with those who lived
faithfully with their spouse.
The Family Code is silent as to who can file a petition
to declare the nullity of a marriage. A void marriage can be
attacked collaterally and can be questioned even after the
death of either party. That is why the action or defense for
nullity is imprescriptible. Any proper interested party may
attack a void marriage. (NIÑAL vs. BAYADOG, G.R. No.
133778, March 14, 2000)
 Property Relations of Unions Without Marriage
The co-ownership in Article 144 of the Civil Code requires
that the man and woman living together as husband and wife
without the benefit of marriage must not in any way be
incapacitated to marry. If the property is acquired during the time
when the other party to the cohabitation has a subsisting marriage,
such property is presumed to be conjugal unless it be proved that
it pertains exclusively to the husband or to the wife. (ADRIANO
vs. COURT OF APPEALS, G.R. No. 124118, March 27,
2000)

II. PROPERTY

Property of Public Dominion

Like public street, public parks are beyond the commerce of

man and, thus, could not be the subject of a lease
contract. (LANSANG vs. COURT OF APPEALS, G.R. No.
102667, February 23, 2000)

Builder in Good Faith

Both Article 448 and Article 546, NCC which allow full
reimbursement of useful improvements and retention of the
premises until reimbursement is made, apply only to a possessor
in good faith, i.e., one who builds on land with the belief that he
is the owner thereof. Verily, persons whose occupation of a realty
is by sheer tolerance of its owners are not possessors in good faith.
Neither did the promise of the alleged owners that they were
going to donate the premises to petitioners convert them into
builders in good faith for at the time the improvements were built
on the premises, such promise was not yet fulfilled, i.e., it was a
mere expectancy of ownership that may or may not be
realized. (VERONA PADA-KILARIO vs. COURT OF
APPEALS, G.R. No. 134329, January 19, 2000)

Quieting of Title; Termination of Co-ownership by

Prescription

An action to quiet title, under Art. 476, NCC, is a common-

law remedy for the removal of any cloud or doubt or uncertainty
on the title to real property. It is essential for the plaintiff or
complainant to have a legal or an equitable title to or interest in
the real property which is the subject matter of the action. Also,
the deed, claim, encumbrance or proceeding that is being alleged
as a cloud on plaintiff's title must be shown to be in fact invalid
or inoperative despite its prima facie appearance of validity or
legal efficacy.
It is a fundamental principle that a co-owner cannot acquire by
prescription the share of the other co-owners, absent any clear
repudiation of the co-ownership. In order that the title may
prescribe in favor of a co-owner, the following requisites must
concur: (1) the co-owner has performed unequivocal acts of
repudiation amounting to an ouster of the other co-owners; (2)
such positive acts of repudiation have been made known to the
other co-owners; and (3) the evidence thereof is clear and
convincing. (ROBLES vs. COURT OF APPEALS, G.R. No.
123509, March 14, 2000)
 Quieting of Title; Laches; Freedom to Enter into
Contracts; Waiver of Rights

Persons having legal as well as equitable title to or interest

in a real property may bring an action for quieting of title and
"title" here does not necessarily denote a certificate of title issued
in favor of the person filing the suit.
Moreover, if the plaintiff in an action for quieting of title is
in possession of the property being litigated, such action is
imprescriptible. One who is in actual possession of a land,
claiming to be the owner thereof may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate
his right because his undisturbed possession gives him a
continuing right to seek the aid of the courts to ascertain the nature
of the adverse claim and its effects on his title. Although
prescription and laches are distinct concepts, nonetheless in some
instances, the doctrine of laches is inapplicable where the action
was filed within the prescriptive period provided by
law. Moreover, since laches is a creation of equity, acts or
conduct alleged to constitute the same must be intentional and
unequivocal so as to avoid injustice. Laches operates not really
to penalize neglect or sleeping on one's rights, but rather to avoid
recognizing a right when to do so would result in a clearly
inequitable situation.
The act of registration of a voluntary instrument is the
operative act which conveys or affects registered land
insofar as third persons are concerned. Hence, even
without registration, the contract (oral partition) is still valid
as between the parties. Neither a Transfer Certificate of
Title nor a subdivision plan is essential to the validity of an
oral partition.
 Quitclaims are valid contracts of waiver of property
rights. The freedom to enter into contracts, such as the
quitclaims, is protected by law and the courts are not quick
to interfere with such freedom unless the contract is
contrary to law, morals, good customs, public policy or
public order. Quitclaims, being contracts of waiver,
involve the relinquishment of rights, with knowledge of
their existence and intent to relinquish them. The intent
to waive rights must be clearly and convincingly shown.
Moreover, when the only proof of intent is the act of a party,
such act should be manifestly consistent and indicative of
an intent to voluntarily relinquish a particular right such that
no other reasonable explanation of his conduct is
possible. ( MAESTRADO vs. COURT OF APPEALS, G.R.
No. 133345 & 133324, March 9, 2000)

Preference of Possession; Ownership

Between the claimants, ownership shall be vested to the one

who has proven acquisitive prescription. Tax receipts and
declarations of ownership for taxation, when coupled with proof
of actual possession of the property, can be the basis of a claim
for ownership through prescription.
It is settled that ownership cannot be acquired by
mere occupation. Unless it is hostile, occupation and use,
however long, will not confer title by prescription or adverse
possession. The tax declarations and receipts are only
prima facie, not conclusive, evidence of ownership in
the absence of actual public and adverse possession.
(CEQUENA vs. BOLANTE, G. R. No. 137944, April 6,
2000)

Donation Inter Vivos; Repudiation Of Inheritance;

Escheat
There are 3 essential elements of a donation: (a) the
reduction of the patrimony of the donor; (b) the increase in the
patrimony of the donee; and (c) the intent to do an act of liberality
or animus donandi. When applied to a donation of an
immovable property, the law further requires that the donation
be made in a public document and that there should be an
acceptance thereof made in the same deed of donation or in a
separate public document. In cases where the acceptance is
made in a separate instrument, it is mandated that the donor
should be notified thereof in an authentic form, to be noted in both
instruments.
The inexistence of a donation does not render the repudiation
of the inheritance valid. There is no valid repudiation of
inheritance as there was already an acceptance and where there is
no showing that such acceptance was made thru any of the causes
which vitiate consent or there is no proof of the existence of an
unknown will. Art. 1056 of the Civil Code provides – “The
acceptance or repudiation of an inheritance is irrevocable and
cannot be impugned except when it was made thru any of the
causes that vitiate consent or when and unknown will appears.”
Nevertheless, the nullity of the repudiation does not ipso
facto operate to convert the parcels of land into res nullius to be
escheated in favor of the Government. The repudiation, being of
no effect whatsoever, the parcels of land should revert to their
private owner, who although being an American citizen is
qualified by hereditary succession to own the property subject of
the litigation. (REPUBLIC vs. GUZMAN, G.R. No.132964,
Feb. 18,2000)

Donation Inter Vivos

A donation as a mode of acquiring ownership results

in an effective transfer of title over the property from the
donor to the donee and the donation is perfected from the
moment the donor knows of the acceptance by the
donee. And once a donation is accepted, the donee
becomes the absolute owner of the property donated.
(VELASQUEZ vs. COURT OF APPEALS, G.R. No.
126996, February 15,2000)

PRESCRIPTION

Real actions over immovables prescribe after thirty

years. Good faith consists in the reasonable belief that the person
from whom the possessor received the thing was its owner but
could not transmit the ownership thereof. (SERASPI vs.
COURT OF APPEALS, G.R. No. 135602, April 28, 2000)

Prescription in Action for Reconveyance

Prescription cannot be invoked in an action for reconveyance

when the claimant is in possession of the land to be reconveyed.
(MILLENA vs. COURT OF APPEALS, G.R. No. 127797,
January 31, 2000)

Ownership Through Acquisitive Presciption

Together with actual possession of the land, tax declarations
constitute strong evidence of ownership of the land occupied by
a person. Uninterrupted adverse possession of the land for
more than 30 years could only ripen into ownership of the
land through acquisitive prescription which is a mode of
acquiring ownership and other real rights over immovable
property. Prescription requires public, peaceful, uninterrupted
and adverse possession of the property in the concept of an
owner for ten (10) years, in case the possession is in good faith
and with a just title. (DBP vs. COURT OF APPEALS, G.R.
No. 129471. April 28, 2000.)

III. SUCCESSION

Successional Rights; Transmission of; Scope

It is a general rule under the law on succession that

successional rights are transmitted from the moment of death of
the decedent and compulsory heirs are called to succeed by
operation of law. Under Article 776 NCC, inheritance includes
all the property, rights and obligations of a person, not
extinguished by his death.
 In a modal institution, the testator states (1) the object of the
institution, (2) the purpose or application of the property left by
the testator, or (3) the charge imposed by the testator upon the
heir. A "mode" imposes an obligation upon the heir or legatee but
it does not affect the efficacy of his rights to the succession. On
the other hand, in a conditional testamentary disposition, the
condition must happen or be fulfilled in order for the heir to be
entitled to succeed the testator. The condition suspends but does
not obligate; and the mode obligates but does not suspend. To
some extent, it is similar to a resolutory condition.
Substitution is the designation by the testator of a person
or persons to take the place of the heir or heirs first
instituted. Under substitutions in general, the testator may
either (1) provide for the designation of another heir to
whom the property shall pass in case the original heir
should die before him/her, renounce the inheritance or be
incapacitated to inherit, as in a simple substitution, or (2)
leave his/her property to one person with the express
charge that it be transmitted subsequently to another or
others, as in a fideicommissary substitution.
A Will is a personal, solemn, revocable and free act by
which a person disposes of his property, to take effect after his
death. Since the Will expresses the manner in which a person
intends how his properties be disposed, the wishes and desires of
the testator must be strictly followed. Thus, a Will cannot be the
subject of a compromise agreement which would thereby defeat
the very purpose of making a Will. (RABADILLA vs. COURT
OF APPEALS, G.R. No. 129471. April 28, 2000.)
Partition; Preterition
 Every act intended to put an end to indivision among co-
heirs and legatees or devisees would be a partition although it
would purport to be a sale, an exchange, a compromise, a
donation or an extrajudicial settlement. The deed of donation and
deed of extra-judicial settlement consolidated the title solely to
one of the heirs and ceased the co-ownership.
The exclusion of one of the children of the
decedent from the deed of extrajudicial settlement has the
effect of preterition. This kind of preterition, in the absence
of proof and bad faith, does not justify a collateral attack
on the new TCT. The relief instead rests on Art.1104, NCC
to the effect that where the preterition is not attended by
bad faith and fraud, the partition shall not be rescinded but
the preterited heir shall be paid the value pertaining to
her. (VIADO NON vs. COURT OF APPEALS, G.R. No.
137287, February 15, 2000)

Formal Requirements of a Valid Partition

The intrinsic validity of partition not executed in a public
instrument is not undermined when no creditors are involved.
The partition of inherited property need not be embodied in a
public document so as to be effective as regards the heirs that
participated therein. The requirement of Article 1358 of the Civil
Code that acts which have for their object the creation,
transmission, modification or extinguishment of real rights over
immovable property, must appear in a public instrument, is only
for convenience, non-compliance with which does not affect the
validity or enforceability of the acts of the parties as among
themselves. And neither does the Statute of Frauds under Article
1403 of the New Civil Code apply because partition among heirs
is not legally deemed a conveyance of real property, considering
that it involves not a transfer of property from one to the other but
rather, a confirmation or ratification of title or right of property
that an heir is renouncing in favor of another heir who accepts and
receives the inheritance. (VERONA PADA-KILARIO vs.
COURT OF APPEALS, G.R. No. 134329, January 19, 2000)

IV. OBLIGATIONS AND CONTRACTS

Novation

Novation is never presumed; it must be proven as a fact

either by express stipulation of the parties or by implication
derived from an irreconcilable incompatibility between old and
new obligations or contracts. Otherwise, the original contract
remains in force. (ESPINA vs. COURT OF APPEALS, G.R.
No. 116805 June 22, 2000)

Relativity of Contracts

The general rule under Article 1311, NCC is that heirs are
bound by contracts entered into by their predecessors-in-interest
except when the rights and obligations arising therefrom are not
transmissible by (1) their nature, (2) stipulation or (3) provision
of law.
A good measure for determining whether a contract
terminates upon the death of one of the parties is whether it is of
such character that it may be performed by the promissor’s
personal representative. Furthermore, the subject matter of the
contract is a lease, which is a property right. The death of a party
does not excuse nonperformance of a contract which involves a
property right, and the rights and obligations thereunder pass to
the personal representatives of the deceased. Similarly,
nonperformance is not excused by the death of the party when the
other party has a property interest in the subject matter of the
contract. (DKC HOLDINGS CORP. vs. COURT OF
APPEALS, G. R. No. 118248, April 5, 2000)

Onerous Contract

The fact that no renewal was granted removed the basis for
the continued payment of the monthly royalty fee. It is the essence
of a royalty fee that it is paid in consideration of an existing right.
In its ordinary acceptation, royalties refer to payments made to
the owner for permitting another to use his property. Royalties
are similar to the rents payable for the use or right to use an
invention and after the right to use it has terminated there is no
obligation to make further royalty payments.
The MOA is an onerous contract, wherein the
contracting parties are obliged to render reciprocal
prestations. Entitlement to the royalty fee is wholly
dependent upon the existence and subsistence of the right
for which the royalty was granted. If the reason which gave
rise to the contract has ceased to exist, the result is that the
obligation too, has ceased to exist. (GOLDEN DIAMOND
vs. COURT OF APPEALS, G.R. No. 131436, May 31,
2000)
 Power to Rescind in Reciprocal Obligations

The power to rescind or resolve is given to the injured party.

More, the rescission of the contracts requires the parties to restore
to each other what they have received by reason of the
contracts. The rescission has the effect of abrogating the
contracts in all parts. (RELIANCE COMMODITIES INC.
vs. INTERMEDIATE APPELLATE COURT, G.R. No.
74729, May 31, 2000)

The right to rescind a contract involving reciprocal

obligations is provided for in Article 1191 of the Civil
Code. The law speaks of the right of the "injured party" to
choose between rescission or fulfillment of the obligation,
with the payment of damages in either case. The parties
should not be allowed to rescind the contract where they
themselves did not perform their essential obligation
thereunder. It should be emphasized that a contract of
sale involves reciprocity between the parties. (CENTRAL
BANK OF THE PHILIPPINES vs. BICHARA, G.R. No.
131074, March 27, 2000)

Contract to Sell; Rescission

Article 1191,NCC on rescission, speaks of obligations

already existing. In a contract to sell, the full payment of the
purchase price is a positive suspensive condition, the
failure of which is not considered a breach, casual or
serious, but simply an event which prevented the obligation
of the vendor to convey title from acquiring any obligatory
force. There can be no rescission of an obligation that is
non-existent, considering that the suspensive condition
therefor has not yet happened. (PADILLA vs. PAREDES,
G.R. No. 124874, March 17, 2000)

Interpretation of Contracts; Rescission

The various stipulations in a contract should be

interpreted together. Ambiguous ones should be so
construed as to conform to the sense that would result if
all the provisions are comprehended jointly.
The act of treating a contract as cancelled or rescinded on
account of infractions by the other contracting party is
always provisional; that is, contestable and subject to
judicial determination. When one party resolved or
rescinded the Agreement without previous court action, it
proceeded at its own risk. Only the final judgment of a
court will conclusively and finally settle whether such
recourse was correct in law.
If breach is insubstantial, rescission is not justified.
(PHIL. NATIONAL CONSTRUCTION CORP. vs. MARS
CONSTRUCTION ENT., G.R. No.133909, February 15,
2000)

Badges of Fraud

Under Article 1381(3) of the Civil Code, contracts

which are undertaken in fraud of creditors when the latter
cannot in any manner collect the claims due them, are
rescissible. The existence of fraud with intent to defraud
creditor may either be presumed in accordance with
Article 1387, NCC or duly proved in accordance with the
ordinary rules of evidence. Hence, the law presumes that
there is fraud of creditors when: a) There is alienation
of property by gratuitous title by the debtor who has not
reserved sufficient property to pay his debts contracted
before such alienation; or b) There is alienation of property
by onerous title made by a debtor against whom some
judgment has been rendered in any instance or some writ
of attachment has been issued. The decision or
attachment need not refer to the property alienated and
need not have been obtained by the party seeking
rescission.
In determining whether or not a certain conveyance is
fraudulent, the question in every case is whether the conveyance
was a bona fide transaction or a trick and contrivance to defeat
creditors or whether it conserves to the creditor to the debtor or a
special right. It is not sufficient that it is founded on good
considerations or is made with bona fide intent. It must have both
elements. If defective in either of these, although good between
the parties, it is voidable as to creditors. The question as to
whether or not the conveyance is fraudulent is: does it prejudice
the rights of the creditors? The mere fact that the conveyance was
founded on valuable consideration does not necessarily negate the
presumption of fraud under Art. 1387, NCC. There has to be a
valuable consideration and the transaction must have been made
bona fide. (China Banking Corp. vs. Court of Appeals, G.R.
No. 129644, March 7, 2000)

Void and Voidable Contracts

Under Art. 1409 (2),NCC, one type of contract which can
be declared void and inexistent is that which is absolutely
simulated or fictitious, as when there are several badges
of simulation proving that the sale between the parties was
not intended to have any legal effect between them..
Nonetheless, a sale of the entire property by a co-heir
is unenforceable having been entered into in behalf of
the co-heirs who gave no authority or legal representation.
However, such a contract is susceptible of ratification.
Where there is a ratification, then the sale is considered
valid and binding. (SEN PO EK MARKETING CORP. vs.
MARTINEZ, G.R. No. 134117, February 9, 2000)

Capacity to Enter into Contract

A person is not incapacitated to contract merely

because of advanced years of AGE or by reason of physical
infirmities. Only when such age or infirmities impair his
mental faculties to such extent as to prevent him from
properly, intelligently, and fairly protecting his property
rights is he considered incapacitated. (LOYOLA vs.
COURT OF APPEALS, G.R. No. 115734, February 23,
2000)

Unenforceable Contract

Article 1529 of the old Civil Code, which was the

prevailing law in 1948 and thus governed the questioned
Deed of Sale, clearly provided that a contract is
unenforceable when there is an absence of authority on the
part of one of the contracting parties. The mere lapse of
time cannot give efficacy to such a contract. The defect is
such that it cannot be cured except by the subsequent
ratification of the unenforceable contract by the person in
whose name the contract was executed. (VILLANUEVA-
MIJARES vs. COURT OF APPEALS, G.R. No. 108921,
April 12, 2000)

Simulation of Contracts

Simulation is the declaration of a fictitious will

deliberately made by agreement of the parties, in order to
produce, for the purposes of deception, the appearances of
a juridical act which does not exist or is different what that
which does not exist or is different what that which was
really executed.” Characteristic of simulation is that the
apparent contract is not really desired or intended to
produce legal effect or in any way alter the judicial situation
of the parties. The requisites for simulation are: (a) an
outward declaration of will different from the will of the
parties; (b) the false appearance must have been intended
by mutual agreement; and (c) the purpose is to deceive third
persons. (LOYOLA vs. COURT OF APPEALS, G.R. No.
115734, February 23, 2000)

Laches; Prescription

While a review of the decree of registration is no longer

available after the expiration of the one-year period from
entry thereof pursuant to the doctrine of res judicata, an
equitable remedy is still available. Those wrongfully
deprived of their property may initiate an action for
reconveyance of the property. (VILLANUEVA-MIJARES
vs. COURT OF APPEALS, G.R. No. 108921, April 12,
2000)

The essence of laches is the failure, or neglect, for an

unreasonable and unexplained length of time to do that
which, by exercising due diligence, could or should have
been done earlier; it is the negligence or omission to assert
a right within a reasonable time, warranting a presumption
that the party entitled to assert it either has abandoned it or
declined to assert it. (GASTON vs. COURT OF APPEALS,
G.R. No. 116340 June 29, 2000)

TRUST

Express Trust

Trust is the right to the beneficial enjoyment of property, the

legal title to which is vested in another. It is a fiduciary
relationship that obliges the trustee to deal with the property for
the benefit of the beneficiary. Trust relations between parties
may either be express or implied. An express trust is created by
the intention of the trustor or of the parties. An implied trust
comes into being by operation of law. Under Art. 1444, NCC ‘no
particular words are required for the creation of an express trust,
it being sufficient that a trust is clearly intended.’
 While no time limit is imposed for the enforcement of
rights under express trusts, prescription may, however, bar
a beneficiary’s action for recovery, if a repudiation of the
trust is proven by clear and convincing evidence and
made known to the beneficiary. (SECUYA vs. VDA. DE
SELMA, G.R. No. 136021, February 22, 2000)

SALES AND LEASE

Elements of a Contract of Sale

Since the lot subsequently sold is said to adjoin the

"previously paid lot" on three sides thereof, the subject lot is
capable of being determined without the need of any new
contract. The fact that the exact area of these adjoining residential
lots is subject to the result of a survey does not detract from the
fact that they are determinate or determinable. Concomitantly,
the object of the sale is certain and determinate. Under Article
1460,NCC, a thing sold is determinate if at the time the contract
is entered into, the thing is capable of being determined without
necessity of a new or further agreement between the parties.
There is also no reservation of ownership nor a stipulation
providing for a unilateral rescission by either party. The
stipulation that the "payment of the full consideration based on a
survey shall be due and payable in five (5) years from the
execution of a formal deed of sale" is not a condition which
affects the efficacy of the contract of sale. It merely provides the
manner by which the full consideration is to be computed and the
time within which the same is to be paid. But it does not affect in
any manner the effectivity of the contract. (SAN ANDRES vs.
RODRIGUEZ, G.R. No. 137287, February 15, 2000)

Option Money vs. Earnest Money

An option contract is a preparatory contract in which one

party grants to the other, for a fixed period and under
specified conditions, the power to decide, whether or not
to enter into a principal contract, it binds the party who has
given the option not to enter into the principal contract with
any other person during the period designated, and within
that period, to enter into such contract with the one to
whom the option was granted, if the latter should decide to
use the option. It is a separate agreement distinct from the
contract to which the parties may enter upon the
consummation of the option. An option contract is
therefore a contract separate from and preparatory to a
contract of sale which, if perfected, does not result in the
perfection or consummation of the sale.
IN THIS CASE, AFTER THE PAYMENT OF THE
10% OPTION MONEY, THE OFFER TO PURCHASE
PROVIDES FOR THE PAYMENT ONLY OF THE
BALANCE OF THE PURCHASE PRICE, IMPLYING
THAT THE "OPTION MONEY" FORMS PART OF THE
PURCHASE PRICE. THIS IS PRECISELY THE RESULT
OF PAYING EARNEST MONEY UNDER ART. 1482 OF
THE CIVIL CODE. IT IS CLEAR THEN THAT THE
PARTIES IN THIS CASE ACTUALLY ENTERED INTO A
CONTRACT OF SALE, PARTIALLY CONSUMMATED AS
TO THE PAYMENT OF THE PRICE. (CAVITE
DEVELOPMENT BANK VS. CYRUS LIM, G.R. NO.
131679, FEBRUARY 1, 2000)

Delivery in Contract of Sale

For while a contract of sale is perfected by the

meeting of minds upon the thing which is the object of the
contract and upon the price, the ownership of the thing
sold is not transferred to the vendee until actual or
constructive delivery of the property. Hence, the maxim
non nudis pactis, sed traditione dominia dominica rerum
transferuntur (not mere agreements but tradition transfers
the ownership of things). (SERASPI vs. COURT OF
APPEALS, G.R. No. 135602, April 28, 2000)

Under Article 1497, NCC, a thing sold shall be understood

as delivered when it is placed in the control or possession of the
vendee. Delivery is generally evidenced by a written
acknowledgment of a person that he or she has actually received
the thing or the goods, as in delivery receipts. A bill of lading
cannot substitute for a delivery receipt. This is because it is a
written acknowledgment of the receipt of the goods by the carrier
and an agreement to transport and deliver them at a specific place
to a person named or upon his order. It does not evidence receipt
of the goods by the consignee or the person named in the bill of
lading; rather, it is evidence of receipt by the carrier of the goods
from the shipper for transportation and delivery. Likewise, a
factory consignment invoice is not evidence of actual delivery of
the goods. An invoice is nothing more than a detailed statement
of the nature, quantity and cost of the thing sold. It is not proof
that the thing or goods were actually delivered to the vendee or
the consignee. (LAO vs. COURT OF APPEALS, G.R. No.
47013, 60647 & 60958-59, February 17, 2000)

Sale with Right of Repurchase

The mere fact that the price is inadequate does not

prove support the conclusion that the contract was a loan
or that the property was not at all sold. The price fixed in
the sale with a right to repurchase is not necessarily the
true value of the land sold. The rationale is that the vendor
has the right to fix a relatively reduced price, although not
a grossly inadequate one, in order to afford the vendor
a retro every facility to redeem the land. Thus,
inadequacy of the price is not sufficient to set aside a sale
unless it is grossly inadequate or purely shocking to the
conscience. (ABAPO vs. COURT OF APPEALS, GR No.
128677, March 2, 2000)

Consolidation of Title in Pacto de Retro Sale

Art. 1607, NCC requiring a judicial order for the

consolidation of the ownership in the vendee a retro to be
recorded in the Registry of Property is intended to
minimize the evils which the pacto de retro sale has
caused in the hands of usurers. A judicial order is
necessary in order to determine the true nature of the
transaction and to prevent the interposition of buyers in
good faith while the determination is being
made. Notwithstanding Art. 1607, the recording in the
Registry of Property of the consolidation of ownership of
the vendee is not a condition sine qua non to the transfer
of ownership. The essence of the pacto de retro sale is
that title and ownership of the property sold are
immediately vested in the vendee a retro, subject to the
resolutory condition of repurchase by the vendor a retro
within the stipulated period. Failure thus of the vendor a
retro to perform said resolutory condition vests upon the
vendee by operation of law absolute title and ownership
over the property sold. As title is already vested in the
vendee a retro, his failure to consolidate his title under
Article 1607, NCC does not impair such title or ownership
for the method prescribed thereunder is merely for the
purpose of registering the consolidated title. (CRUZ vs.
LEIS, G.R. No. 125233, March 9, 2000)

DOUBLE SALE

The prior registration of the disputed property by the

second buyer does not by itself confer ownership or a
better right over the property. Article 1544,NCC requires
that such registration must be coupled with good faith.
Primus tempore, potior jure (first in time, stronger in
right). Knowledge gained by the first buyer of the second
sale cannot defeat the first buyer's rights except where the
second buyer registers in good faith the second sale
ahead of the first. Such knowledge of the first buyer does
not bar him from availing of his rights under the law,
among them, to register first his purchase as against the
second buyer. But in converso, knowledge gained by the
second buyer of the first sale defeats his rights even if
he is first to register the second sale, since such
knowledge taints his prior registration with bad faith.
This is the price exacted by Art. 1544 for the second buyer
being able to displace the first buyer; that before the
second buyer can obtain priority over the first, he must
show that he acted in good faith throughout (i.e. in
ignorance of the first sale and of the first buyer's rights) —
from the time of acquisition until the title is transferred to
him by registration or failing registration, by delivery of
possession. The second buyer must show continuing good
faith and innocence or lack of knowledge of the first sale
until his contract ripens into full ownership through prior
registration as provided by law. To merit protection under
Art. 1544, the second buyer must act in good faith from
the time of the sale until the registration of the same.
(BARICUATRO, JR. vs. COURT OF APPEALS, G.R. No.
105902, February 9, 2000)

Under Article 1544 of the Civil Code before the second buyer
can obtain priority over the first, he must show that he acted in
good faith throughout (i.e., in ignorance of the first sale and of
the first buyer's rights) — from the time of acquisition until title
is transferred to him by registration or failing registration, by
delivery of possession. Knowledge gained by the second buyer
of the first sale defeats his rights even if he is first to register the
second sale, since such knowledge taints his prior registration
with bad faith. (ANGEL BAUTISTA vs. COURT OF
APPEALS,
G.R. No. 123655, January 19, 2000)

Legal Redemption

A letter given by the vendee notifying the co-owner of the

sale of the co-owned property cannot be considered compliance
with the notice requirement of Art. 1623, NCC for purposes of
legal redemption. Art. 1623 of the Civil Code is clear in requiring
that the written notification should come from the vendor or
prospective vendor, not from any other person. In the second
place, it makes sense to require that the notice required in Art.
1623 be given by the vendor and by nobody else. The vendor of
an undivided interest is in the best position to know who are his
co-owners who under the law must be notified of the sale. It is the
notification from the seller, not from anyone else, which can
remove all doubts as to the fact of the sale, its perfection, and its
validity, for in a contract of sale, the seller is in the best position
to confirm whether consent to the essential obligation of selling
the property and transferring ownership thereof to the vendee has
been given. (FRANCISCO vs. BOISER, G.R. No.
137677, May 31, 2000)

Validity of Stipulations in a Lease Contract

Jurisprudence supports the view that when parties to a

contract expressly reserve an option to terminate or rescind a
contract upon the violation of a resolutory condition, notice of
resolution must be given to the other party when such right is
exercised. In Zulueta vs. Mariano, the SC ruled that resort to
courts may be necessary when the right involves the retaking of
property which is not voluntarily surrendered by the other party.
The rationale for such ruling is based on the thesis that no one
should take the law into his own hands. In this sense, the
stipulation is legally vulnerable. Permitting the use of unqualified
force to repossess the property and without condition of notice
upon the lessee is fraught with dangerous possibilities. Such a
broad stipulation cannot be sanctioned for the reason that it would
allow the lessor/owner to take the law into his own hands, and
undermine the philosophy behind the remedy of forcible entry
which is to prevent breach of the peace and criminal disorder and
to compel the party out of possession to respect and resort to the
law alone to obtain what he claims to be his. (CAMPO ASSETS
CORP. vs. CLUB X. O. COMPANY, G.R. No.
134986, March 17, 2000)

Nature of Lease of Chattels

In the lease of chattels, the lessor loses complete

control over the chattel leased although the lessee cannot
be reckless in the use thereof, otherwise, he would be
responsible for the damages to the lessor. In the case
of jeepney owners/operators and jeepney drivers, the
former exercise supervision and control over the latter. The
management of the business is in the owner’s hands. The
owner as holder of the certificate of public convenience
must see to it that the driver follows the route prescribed by
the franchising authority and the rules promulgated as
regards its operations. This relationship may be applied by
analogy to taxi owners/operators and taxi drivers. (JARDIN
vs. NLRC, G.R. No. 119268, February 23, 2000)

Right of First Refusal of a Lessee

Art. 1622, NCC which only deals with small urban

lands that are bought for speculation where only adjoining
lot owners can exercise the right of pre-emption or
redemption is not available to one who is not an adjoining
lot owner, but a lessee trying to buy the land that it was
leasing. Indeed the right of first refusal may be provided for
in a lease contract. However, such grant of the right of first
refusal must be clearly embodied in a written
contract. (SEN PO EK MARKETING CORP. vs.
MARTINEZ, G.R. No. 134117, February 9, 2000)

Renewal of Term of Lease

Pursuant to Art. 1196, NCC, the period of the lease contract

is deemed to have been set for the benefit of both parties. Renewal
of the contract may be had only upon their mutual agreement or
at the will of both of them. It is the owner-lessor’s prerogative to
terminate the lease at its expiration. The continuance, effectivity
and fulfillment of a contract of lease cannot be made to depend
exclusively upon the free and uncontrolled choice of the lessee
between continuing the payment of the rentals or not, completely
depriving the owner of any say in the matter. Mutuality does not
obtain in such a contract of lease and no equality exists between
the lessor and the lessee since the life of the contract would be
dictated solely by the lessee. (BUCE vs. COURT OF
APPEALS, G.R. No. 136913, May 12, 2000)

Extension of Lease

The provisions of a contract should not be read in isolation

from the rest of the instrument but, on the contrary, interpreted in
the light of the other related provisions in order to fix the meaning
of any of its parts. Furthermore, in a reciprocal contract like a
lease, the period of the lease must be deemed to have been agreed
upon for the benefit of both parties, absent language showing that
the term was deliberately set for the benefit of the lessee or lessor
alone. (UNIVERSITY PHYSICIANS SERVICES, INC. vs.
CA, G.R. No. 115045, January 31, 2000)

Concept of Implied New Lease

The prescriptive period for an action of reformation should

be counted from the date of execution of the lease contract and
not from the date of extension of the same. First, Art. 1670 speaks
of an implied new lease (tacita reconduccion) where at the end of
the contract, the lessee continues to enjoy the thing leased "with
the acquiescence of the lessor", so that the duration of the lease is
"not for the period of the original contract, but for the time
established in Article 1682 and 1687." Hence, if the extended
period of lease was expressly agreed upon by the parties, then the
term should be exactly what the parties stipulated, not more, not
less. Second, even if the supposed 4-year extended lease be
considered as an implied new lease under Art. 1670, "the other
terms of the original contract" contemplated in said provision are
only those terms which are germane to the lessee’s right of
continued enjoyment of the property leased. The prescriptive
period of 10 years provided for in Art. 1144 for reformation of an
instrument applies by operation of law, not by the will of the
parties. (ROSELLO-BENTIR vs. LEANDA, G.R. No.
128991, April 12, 2000)

V. TORTS AND DAMAGES

Damages

In seeking recovery for actual damages it is necessary that

the claimant produce competent proof or the best evidence
obtainable such as receipts to justify an award therefor. Actual or
compensatory damages cannot be presumed but must be proved
with reasonable degree of certainty. Only substantiated and
proven expenses or those which appear to have been genuinely
incurred in connection with the death, wake or burial of the victim
will be recognized by the court.
Civil indemnity (ex delicto) requires no proof other than the
fact of death of the victim and assailant’s responsibility therefor.
Compensation for lost income is in the nature of
damages and as such requires due proof of the damages
suffered; there must be unbiased proof of the deceased’s
average income. (PEOPLE vs. EREñO, G.R. 1224706,
Feb. 22, 2000)

The award authorized by criminal law as civil indemnity

(ex delicto) for the offended party is mandatory upon the
finding of the fact of rape; it is distinct from and should not
be denominated as moral damages which are based on
different jural foundation and assessed by the court in the
exercise of sound discretion. (PEOPLE vs. MENDIONA,
G.R. No. 129056, Feb. 21, 2000)

As a general rule, moral damages are not recoverable in

actions for damages predicated on a breach of contract for it is not
one of the items enumerated under Art. 2219 of the Civil Code.
As an exception, such damages are recoverable: (1) in cases in
which the mishap results in the death of a passenger, as provided
in Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2)
in the cases in which the carrier is guilty of fraud or bad faith, as
provided in Art. 2220. (CALALAS vs. COURT OF APPEALS,
G.R. No. 122039, May 31, 2000)

Indemnity for death is presently fixed at P50,000.00. As to

actual damages. Art. 2199,NCC provides that "except as provided
by law or by stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he
has duly proved."
The civil liability of accused for indemnity for death and
actual and moral damages is solidary
Under Art. 2230,NCC, "exemplary damages as a part of the
civil liability may be imposed when the crime was committed
with one or more aggravating circumstances." (PEOPLE vs.
BAUTISTA, G.R. No. 131840, April 27, 2000)
As to the matter of moral damages, the law clearly states that
one may only recover moral damages if they are the proximate
result of the other party’s wrongful act or omission. Two
elements are required. First, the act or omission must be the
proximate result of the physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation and similar injury. Second, the act must
be wrongful. The rule has always been that moral damages
cannot be recovered from a person who has filed a complaint
against another in good faith.
Where a party is not entitled to actual or moral damages, an
award of exemplary damages is likewise baseless.
No premium should be placed on the right to litigate
and not every winning party is entitled to an automatic grant
of attorney’s fees. The party must show that he falls under
one of the instances enumerated in Article 2208 of the Civil
Code. Where the award of moral and exemplary damages
is eliminated, so must the award for attorney’s fees be
deleted. (OROSA vs. COURT OF APPEALS, G. R. No.
111080, April 5, 2000)

The amount of indemnity for loss of earning capacity

is based on the income at the time of death and the
probable life expectancy of the victim. It should be
stressed that the amount recoverable is not the entire
earnings, but only that portion which the beneficiaries
would have received. Thus, indemnity for lost income
refers to the victim's total earnings minus the necessary
living expenses. (PEOPLE vs. CABANDE, G.R. No.
132747, February 8, 2000)

Any person who seeks to be awarded actual or

compensatory damages due to acts of another has the
burden of proving said damages as well as the amount
thereof. Actual damages cannot be allowed unless
supported by evidence on the record. The court cannot
rely on speculation, conjectures or guesswork as to the
fact and amount of damages. To justify a grant of actual
or compensatory damages, it is necessary to prove with a
reasonable degree of certainty, the actual amount of loss.
Moral damages may be recovered in cases involving acts
referred to in Art. 21, NCC. As a rule, a public official may not
recover damages for charges of falsehood related to his official
conduct unless he proves that the statement was made with actual
malice. (BAÑAS, JR. vs. COURT OF APPEALS, G.R. No.
102967, February 10, 2000)
The Court can only grant such amount for expenses if they
are supported by receipts. In the absence thereof, no award for
actual damages can be granted. (PEOPLE vs. ALAGON, G.R.
Nos. 126536-37, February 10, 2000)
The heirs are also entitled to receive a compensation for the
loss of earning capacity of the victim. The formula for computing
the same as established in decided cases is as follows:
Gross Necessary
Net Earning = Life x Annual - Living
Capacity Expectancy Income Expense
s.
(PEOPLE vs. DANDO, G.R. No. 120646, February 14,
2000)

Attorney's fees may be awarded if one who claims it

is compelled to litigate with third persons or to incur
expenses to protect one's interests by reason of an
unjustified act or omission on the part of the party from
whom it is sought. (INDUSTRIAL INSURANCE
COMPANY vs. BONDAD, G.R. No. 136722, April 12,
2000)

The requisites for an action for damages based on malicious

prosecution are: (1) the fact of the prosecution and the further fact
that the defendant was himself the prosecutor, and that the action
was finally terminated with an acquittal; (2) that in bringing the
action, the prosecutor acted without probable cause; and (3) the
prosecutor was actuated or impelled by legal malice. (BAYANI
vs. PANAY ELECTRIC CO., G.R. No. 139680, April 12,
2000)

The adverse result of an action does not make the

prosecution thereof wrongful neither does it subject the
action to payment of damages. The law does not impose a
penalty to the right to litigate. Resort to judicial processes,
by itself, is not an evidence of ill will. As the mere act of
filing criminal complaint does not make the complainant
liable for malicious prosecution. There must be proof that
the suit was performed by legal malice, an inexcusable
intent to oppress, vex, annoy or humiliate. A contrary rule
would discourage peaceful resources to the court and
unjustly penalize the exercise of a citizen’s right to litigate.
Where the action is filed in good faith, no penalty should
be imposed thereon. (VILLANUEVA vs. UNITED
COCONUT PLANTERS BANK, G.R. No. 138291, March
7, 2000)

Recovery of Damages in Negligent Acts

 In quasi-delict, the negligence or fault should be clearly
established because it is the basis of the action, whereas in breach
of contract, the action can be prosecuted merely by proving the
existence of the contract and the fact that the obligor, in this case
the common carrier, failed to transport his passenger safely to his
destination. (CALALAS vs. COURT OF APPEALS, G.R. No.
122039, May 31, 2000)

Negligence; Easement

Even if the heavy rains constituted an act of God, one may

still be held liable for damages to the other. The event
was not occasioned exclusively by an act of God or force
majeure; a human factor – negligence or imprudence –
had intervened. The effect then of the force majeure in
question may be deemed to have, even if only partly,
resulted from the participation of man. Thus, the whole
occurrence was thereby humanized, as it were, and
removed from the rules applicable to acts of God.
Article 637, NCC provides that lower estates are imposed the
obligation to receive the waters which naturally and without the
intervention of man descend from higher estates. However,
where the waters which flow from a higher state are those which
are artificially collected in man-made lagoons, any damage
occasioned thereby entitles the owner of the lower or servient
estate to compensation. (REMMAN ENTERPRISES vs.
COURT OF APPEALS, G. R. No. 125018, April 6, 2000)

Rule Against Double Recovery in Negligence Cases

 In negligence cases, the aggrieved party has the choice
between (1) an action to enforce civil liability arising from crime
under Article 100 of the Revised Penal Code; and (2) a separate
action for quasi delict under Article 2176 of the Civil Code. Once
the choice is made, the injured party can not avail himself of any
other remedy because he may not recover damages twice for the
same negligent act or omission of the accused. This is the rule
against double recovery. In other words, the same act or omission
can create two kinds of liability on the part of the offender, that
is, civil liability ex delicto, and civil liability quasi delicto, either
of which may be enforced against the culprit, subject to the caveat
under Article 2177 of the Civil Code that the offended party can
not recover damages under both types of liability. (RAFAEL
REYES TRUCKING CORPORATION vs. PEOPLE, G.R.
No. 129029, April 3, 2000)

Liability of an Educational Institution

It is the contractual obligation of the school to timely

inform and furnish sufficient notice and information to each
and every student as to whether he or she had already
complied with all the requirements for the conferment of a
degree or whether they would be included among those
who will graduate. The negligent act of professor who fails
to observe the rules of the school, for instance by not
promptly submitted a student’s grade, is not only imputable
to the professor but is an act of the school, being his
employer. Educational institutions are duty-bound to inform
the student of their academic status and not wait for the
latter to inquire from the former. The conscious indifference
of a person to the rights or welfare of the person/persons
who may be affected by his act or omission can support a
claim for damages. Want of care to the conscious disregard
of civil obligation coupled with a conscious knowledge the
cause naturally calculated to produce them would make the
erring party liable. (UNIVERSITY OF THE EAST vs.
JADER, G.R. NO. 132344, February 17, 2000)

VI. CREDIT TRANSACTIONS

Escalation Clause; Interest

Pursuant to P.D. No. 1684 which became effective

March 1980 wherein to be valid, escalation clauses should
provide: 1) that there can be an increase in interest if
increased by law or by the Monetary Board; and 2) in order
for such stipulation to be valid, it must include a provision
for the reduction of the stipulated interest in the event that
the maximum rate of interest is reduced by law or by the
Monetary Board. Despite the validity of the escalation
clause, the contracting party may not, however, increase
the stipulated interest pursuant to the Central Bank Circular
494 from 12% to 17%. CB Circular 494, although it has the
force and effect of law, is not a law and is not the law
contemplated by the parties. (BANCO FILIPINO SAVINGS
& MORTGAGE BANK vs. COURT OF APPEALS, G.R.
No. 129227, May 30, 2000)

Real Estate Mortgage

In a real estate mortgage contract, it is essential that

the mortgagor be the absolute owner of the property to be
mortgaged; otherwise, the mortgage is void. Buyers of
unregistered real property, especially banks, must exert
due diligence in ascertaining the titles of mortgagors and
sellers, lest some innocent parties be prejudiced. Failure to
observe such diligence may amount to bad faith and may
result in the nullity of the mortgage, as well as of the
subsequent foreclosure and/or auction sale. (ROBLES vs.
COURT OF APPEALS, G.R. No. 123509, March 14, 2000)

Rights of a Mortgagee

A mortgage is a contract entered into in order to secure

the fulfillment of a principal obligation. It is constituted by
recording the document in which it appears with the proper
Registry of Property, although, even if it is not recorded, the
mortgage is nevertheless binding between the parties.
Thus, the only right granted by law in favor of the mortgagee
is to demand the execution and the recording of the
document in which the mortgage is formalized. As a general
rule, the mortgagor retains possession of the mortgaged
property since a mortgage is merely a lien and title to the
property does not pass to the mortgagee. However, even
though a mortgagee does not have possession of the
property, there is no impairment of his security since the
mortgage directly and immediately subjects the property
upon which it is imposed, whoever the possessor may be,
to the fulfillment of the obligation for whose security it was
constituted. If the debtor is unable to pay his debt, the
mortgage creditor may institute an action to foreclose the
mortgage, whether judicially or extrajudicially, whereby the
mortgaged property will then be sold at a public auction and
the proceeds therefrom given to the creditor to the extent
necessary to discharge the mortgage loan. Regardless of
its possessor, the mortgaged property may still be sold, with
the prescribed formalities, in the event of the debtor's
default in the payment of his loan obligation. (ISAGUIRRE
vs. DE LARA, G.R. No. 138053, May 31, 2000)

Legal Redemption; Mortgage

Under RA No. 3844, Section 12, "In case the

landholding is sold to a third person without the knowledge
of the agricultural lessee, the latter shall have the right to
redeem the same at a reasonable price and consideration.
Provided, that the entire landholding sold must be
redeemed. Provided further, that where there are two or
more agricultural lessees, each shall be entitled to said right
of redemption only to the extent of the area actually
cultivated by him. The right of redemption under this section
may be exercised within two (2) years from the registration
of the sale and shall have priority over any other right of
legal redemption." (PHILBANCOR FINANCE vs. COURT
OF APPEALS, G.R. No. 129572, June 26, 2000)

Concurrence and Preference of Credit

Art. 2242, NCC provides that the claims of contractors

engaged in the construction, reconstruction or repair of
buildings or other works shall be preferred with respect to
the specific building or other immovable property
constructed. However, this provision only finds application
when there is a concurrence of credits, i.e. when the same
specific property of the debtor is subjected to the claims of
several creditors and the value of such property of the
debtor is insufficient to pay in full all the creditors. In such
a situation, the question of preference will arise, that is,
there will be a need to determine which of the creditors will
be paid ahead of the others. This statutory lien should
only be enforced in the context of some kind of a
procedure where the claims of all preferred creditors may
be bindingly adjudicated, such as in insolvency
proceedings. (J.L. BERNARDO CONSTRUCTION vs.
COURT OF APPEALS, G.R. No. 105827, January 31,
2000)

VII. LAND TITLES AND DEEDS/AGRICULTURAL

TENANCY LAWS
 Registration of Land Under the Torrens System

Registration has never been a mode of acquiring

ownership over an immovable property. The purpose of the
Land Registration Act is not to create or vest title but to
confirm and register already created and already vested.
(DBP vs. COURT OF APPEALS, G.R. No. 129471, April
28, 2000)

Proof required in Land Registration Proceedings

The burden of proof in land registration cases is incumbent
on the applicant who must show that he is the real and absolute
owner in fee simple of the land applied for. On him also rests the
burden to overcome the presumption that the land sought to be
registered forms part of the public domain considering that the
inclusion in a title of a part of the public domain nullifies the title.
The declaration by the applicant that the land applied for has
been in the possession of her predecessor-in-interest for a certain
period, does not constitute the "well-nigh incontrovertible" and
"conclusive" evidence required in land registration. Further, it
should be noted that tax declaration, by itself, is not considered
conclusive evidence of ownership in land registration cases.
Rosario should have substantiated her claim with clear and
convincing evidence specifically showing the nature of her
claim. The applicant must likewise prove the identity of the land.
It must be borne in mind that what defines a piece of land is not
the size or area mentioned in its description, but the boundaries
therein laid down, as enclosing the land and indicating its limits.
 Considering that the writ of possession was sought by
Rosario against persons who were in "actual possession under
claim of ownership," the latter's possession raises a disputable
presumption of ownership. This unrebutted presumption militates
against the claim of Rosario, especially considering the
evidentiary rule under Article 434 of the Civil Code that a
claimant of a parcel of land, such as Rosario, must rely on the
strength of his title and not on the weakness of the defendant's
claim. (MARIANO TURQUESA, ET AL. vs. ROSARIO
VALERA, G.R. No. 76371, January 20, 2000)

Evidence of Ownership
A Torrens Certificate of Title covers only the land described
therein together with improvements existing thereon, if any,
nothing more.
True, tax declarations do not prove ownership.
However, tax declarations can be strong evidence of
ownership when accompanied by possession for a period
sufficient for prescription. (SANTIAGO vs. COURT OF
APPEALS, G.R. No. 109111, June 28, 2000)

Grant of Title/Confirmation of Imperfect Title on

Lands

Under the Regalian doctrine, all lands of the public domain

belong to the State, and that the State is the source of any asserted
right to ownership in land and charged with conservation of such
patrimony. This same doctrine also states all lands not otherwise
appearing to be clearly within private ownership are presumed to
belong to the State. Hence, the burden of proof in overcoming
the presumption of State ownership of lands of the public domain
is on the person applying for registration. The applicant must
also show that the land subject of the application is alienable or
disposable. The adverse possession which may be the basis of a
grant of title or confirmation of an imperfect title refers only to
alienable or disposable portions of the public domain.
(BRACEWELL vs. COURT OF APPEALS, G.R.
No. 107427, January 25, 2000)

Remedies Available to Aggrieved Party in Registration

Proceedings

In land registration proceedings, the rule is that

whoever first acquires title to a piece of land shall prevail.
This rule refers to the date of the certificate of title and not
to the date of filing of the application for registration of title.
Hence, even though an applicant precedes another, he
may not be deemed to have priority of right to register title.
As such, while his application is being processed, an
applicant is duty-bound to observe vigilance and to take
care that his right or interest is duly protected.
An applicant for registration has but a one-year period
from the issuance of the decree of registration in favor of
another applicant, within which to question the validity of the
certificate of title issued pursuant to such decree. Once the
one-year period has lapsed, the title to the land becomes
indefeasible. However the aggrieved party is without a
remedy at law. If the property has not yet passed to an
innocent purchaser for value, an action for reconveyance is
still available. If the property has passed into the hands of
an innocent purchaser for value, the remedy is an action for
damages against those who employed the fraud, and if the
latter are insolvent, an action against the Treasurer of the
Philippines for recovery against the Assurance
Fund. Recognizing the futility of these actions, aggrieved
applicants sought protection under the provisions of the
Rules of Court by an action for revival and execution of
judgment. However, the provisions of the Rules are merely
suppletory to special laws governing land registration
proceedings and hence, cannot prevail over the latter.
(HEIRS OF PEDRO LOPEZ vs. DE CASTRO, G.R. No.
112905, February 3, 2000)

Grant/Transfer of Friar Lands

In case the holder of the certificate shall have sold his

interest in the land before having complied with all the
conditions thereof, the purchaser from the holder of the
certificate shall be entitled to all the rights of the holder of
the certificate upon presenting his assignment to the Chief
of the Bureau of Public Lands for registration. In order that
a transfer of the rights of a holder of a certificate of sale of
friar lands may be legally effective, it is necessary that a
formal certificate of transfer be drawn up and submitted to
the Chief of the Bureau of Public Lands for his approval and
registration. The law authorizes no other way of
transferring the rights of a holder of a certificate of sale of
friar lands. (DELA TORRE vs. COURT OF APPEALS,
G.R. No. 113095, February 8, 2000)
 Free Patent

In the light of their open, continuous and notorious

possession and occupation of the land, petitioners are
deemed to have acquired by operation of law, a right to a
grant, a government grant without a necessity of a
certificate of title being issued. The land was “segregated
from the public domain”. Accordingly, the Director of Lands
had no authority to issue a free patent thereto in favor of
another person. Verily, jurisprudence holds that free patent
covering private land is void. (ROBLES vs. COURT OF
APPEALS, G.R. No. 123509, March 14, 2000)

Presumptive Conclusiveness of Torrens Title

If a property covered by Torrens title is involved, the

presumptive conclusiveness of such title should be given
due weight, and in the absence of strong compelling
evidence to the contrary, the holder thereof should be
considered as the owner of the property in controversy until
his title is nullified or modified in an appropriate ordinary
action, particularly, when possession of the property itself is
in the persons named in the title. (LIM vs. COURT OF
APPEALS, G.R. No. 124715, January 24, 2000)

Tenancy

The requisites of a tenancy relationship are: (1) the

parties are the landowner and the tenant; (2) the subject is
agricultural land; (3) there is consent by the landowner;
(4) there is personal cultivation; and (5) there is sharing of
harvest. Tenancy relationship can only be created with the
consent of the true and lawful landholder who is either the
owner, lessee, usufructuary or legal possessor of the land,
and not thru the acts of the supposed landholder who has
no right to the land subject of the tenancy. (BAUTISTA vs.
ARANETA, G.R. No. 135829, February 22, 2000)

A tenant is defined under Section 5 (a) of Republic Act No.

1199 as a person who himself and with the aid available
from within his immediate farm household cultivates the
land belonging to or possessed by another, with the
latter's consent, for purposes of production, sharing the
produce with the landholder under the share tenancy
system, or paying to the landholder a price certain or
ascertainable in produce or in money or both under the
leasehold tenancy system. Briefly stated, for this
relationship to exist, it is necessary that:
1. The parties are the landowner and the tenant;
2. The subject is agricultural land;
3. There is consent;
4. The purpose is agricultural production;
5. There is personal cultivation; and
6. There is sharing of harvests.
Upon proof of the existence of the tenancy relationship,
a tenant could avail of the right of redemption under RA
3844. This right of redemption is validly exercised upon
compliance with the following requirements: a) the
redemptioner must be an agricultural lessee or share
tenant; b) the land must have been sold by the owner to a
third party without prior written notice of the sale given to
the lessee or lessees and the DAR in accordance with Sec.
11, RA 3844, as amended; c) only the area cultivated by the
agricultural lessee may be redeemed; d) the right of
redemption must be exercised within 180 days from notice;
and e) there must be an actual tender or valid consignation
of the entire amount which is the reasonable price of the
land sought to be redeemed. (RUPA, SR. vs. COURT OF
APPEALS, G.R. No. 80129, January 25, 2000)

The right of tenancy attaches to the landholding by

operation of law. The leasehold relation is not extinguished
by the alienation or transfer of the legal possession of the
landholding. (PHILBANCOR FINANCE vs. COURT OF
APPEALS, G.R. No. 129572, June 26, 2000)

RA 3844 allows only one heir to succeed to the tenancy of

the deceased tenant in the order of preference prescribed by
Section 9 of the said law. However, where the land is not
cultivated by one tenant alone (predecessor of the present
claimants) but with other tenants who are likewise qualified and
who are related to him, this provision does not apply. Thus, it can
be said that the entitlement of the other possessors is not by virtue
of succession to the rights of a predecessor-in-interest, but in their
individual capacity as tenants therein simultaneously with an
ascendant.
Under Section 22 of RA 6657, the Comprehensive Agrarian
Reform Law, those entitled to the award of the land are: “Section
22. Qualified Beneficiaries – the lands covered by the CARP shall
be distributed as much as possible to landless residents of the
 same barangay or in the absence thereof, landless residents of the
same municipality in the following order of priority:
a.) agricultural lessees and share tenants
b.) regular farm workers
c.) seasonal farmworkers
d.) other farmworkers
e.) actual tillers or occupants of public lands
f.) collective or cooperatives of the above beneficiaries
g.) others directly working on the land.
(GREENFIELD REALTY CORP. vs. CARDAMA, G.R. No.
129246, January 25, 2000)

Preferential Rights of Tenants under P.D. 1517

Sale to one tenant alone, among the many tenants, is

sufficient compliance with P.D. 1517 where the landowner
had offered his tenants the chance to buy the land which
they respectively occupied. (DEE v. COURT OF
APPEALS, G.R. No.108205, February 15, 2000)

Jurisdictional Requirements for Reconstitution of

Title

The requirements for reconstitution of title, under R.A.

26, Secs. 12 and 13, are the following: That the petition
must state (1) the nature and description of the buildings
and improvements, if any, which do not belong to the owner
of the land, and the names and addresses of the owners of
such building and improvements, (2) the names and
addresses of the occupants of the adjoining properties and
of all persons who may have any interest in the property,
and (3) that no deeds or other instrument affecting the
property may have been presented for registration; and
That there should be notice and publication of said petition.
The failure to comply with the requirements of publication
and posting of notices prescribed in RA 26 Sec. 12 & 13 is
fatal to the jurisdiction of the court. Hence, non-compliance
with the jurisdictional requirements renders its decision
approving the reconstitution and all proceedings therein
utterly null and void. (HEIRS OF EULALIO RAGUA vs.
COURT OF APPEALS, G.R. 88521-22 & 89366-67,
January 31, 2000)
 CASE DIGESTS

I. PERSONS AND FAMILY RELATIONS

ART. 26, NCC

CONCEPCION vs. COURT OF APPEALS

G.R. No. 120706, January 31, 2000

Facts: Spouses Nestor and Allem Nicolas reside in an

apartment leased to them by Florence Concepcion. The spouses
engage in a joint venture by supplying government agencies with
office supplies and equipment. Sometime in July 1985, petitioner
Rodrigo, brother of the deceased husband of Florence accosted
Nestor and accused him of conducting an adulterous relationship
with Florence. As a result of the incident, Nestor felt extreme
embarrassment and shame that he could no longer face his
neighbors. Consequently, Nestor demanded public apology and
payment of damages. Rodrigo ignored the demand for which
reason, the Spouses Nicolas filed a civil suit. The RTC ordered
Rodrigo to pay for moral and exemplary damages. CA affirmed
the award.

Issue: Is there a legal basis for the award of damages?

Held: Yes. The incident charged of Rodrigo was no less than

an invasion on the right of Nestor as a person. The philosophy
behind Art. 26, NCC underscores the necessity for its inclusion in
our Civil Law. The Code Commission stressed in no uncertain
terms that the human personality be exalted. Thus, under this
article, the rights of a person are amply protected, and damages
are provided for violations of a person’s dignity, personality,
privacy and peace of mind. Further, the violations mentioned in
this codal provision are not exclusive but merely examples and do
not preclude other similar or analogous acts such as the one
involved in this case.

Prejudicial Question

CHING vs. COURT OF APPEALS

G.R. No. 110844, April 27, 2000
Facts: On 04 February 1992, petitioner Ching was charged
before the RTC of Makati with four counts of estafa punishable
under Article 315 par. 1(b) of the Revised Penal Code, in relation
to Presidential Decree 115, otherwise known as the "Trust
Receipts Law". On 05 March 1992, Ching, together with
Philippine Blooming Mills Co. Inc., filed a case before the RTC
of Manila for declaration of nullity of documents and for damages
docketed as Civil Case No. 92-60600, entitled "Philippine
Blooming Mills, Inc. et. al. vs. Allied Banking Corporation."
On 07 August 1992, Ching filed a petition before the RTC-
Makati, for the suspension of the criminal proceedings on the
ground of prejudicial question in a civil action. Said court denied
the petition to suspend.

Issue: Does the pendency of a civil action for damages and

declaration of nullity of documents constitute a prejudicial
question as to warrant the suspension of criminal proceedings?

Held: NO. As defined, a prejudicial question is one that arises

in a case the resolution of which is a logical antecedent of the
issue involved therein, and the cognizance of which pertains to
another tribunal. The prejudicial question must be determinative
of the case before the court but the jurisdiction to try and resolve
the question must be lodged in another court or tribunal. It is a
question based on a fact distinct and separate from the crime but
so intimately connected with it that it determines the guilt or
innocence of the accused, and for it to suspend the criminal action,
it must appear not only that said case involves facts intimately
related to those upon which the criminal prosecution would be
based but also that in the resolution of the issue or issues raised in
the civil case, the guilt or innocence of the accused would
necessarily be determined. It comes into play generally in a
situation where a civil action and a criminal action are both
pending and there exists in the former an issue which must be
preemptively resolved before the criminal action may proceed,
because howsoever the issue raised in the civil action is resolved
would be determinative juris et de jure of the guilt or innocence
of the accused in the criminal case.
More simply, for the court to appreciate the pendency of a
prejudicial question, the law requires the concurrence of two
essential requisites, to wit:
a) The civil action involves an issue similar or intimately related
to the issue raised in the criminal action; and
b) The resolution of such issue determines whether or not the
criminal action may proceed.
Verily, under the prevailing circumstances, the alleged prejudicial
question in the civil case for declaration of nullity of documents
and for damages, does not juris et de jure determine the guilt or
innocence of the accused in the criminal action for estafa.
Assuming arguendo that the court hearing the civil aspect of the
case adjudicates that the transaction entered into between the
parties was not a trust receipt agreement, nonetheless the guilt of
the accused could still be established and his culpability under
penal laws determined by other evidence. To put it differently,
even on the assumption that the documents are declared null, it
does not ipso facto follow that such declaration of nullity shall
exonerate the accused from criminal prosecution and liability.
Therefore, the civil action for declaration of nullity of
documents and for damages does not constitute a prejudicial
question to the criminal cases for estafa filed against petitioner.
 BELTRAN vs. PEOPLE
G.R. No. 137567, June 20, 2000

Facts: Petitioner Meynardo Beltran sought a declaration of

nullity of his marriage on the ground of psychological incapacity
before the RTC of QC. His wife, Charmaine Felix alleged that it
was petitioner who abandoned the conjugal home and lived with
a certain woman named Milagros Salting. Later on, upon
complaint of Charmaine, a criminal case for concubinage was
instituted before the Metropolitan TC of Mkti. City against
petitioner and his paramour. Petitioner moved to defer the
proceedings arguing that the pendency of the civil case for
declaration of nullity of his marriage posed a prejudicial question
to the determination of the criminal case.

Issue: Does a pending petition for declaration of nullity of

marriage constitute a prejudicial question that should merit the
suspension of the criminal case for concubinage?

Held: NO. Pendency of a civil action for nullity of marriage

does not pose a prejudicial question in a criminal case for
concubinage.
The rationale behind the principle of prejudicial
question is to avoid two conflicting decisions. It has two
essential elements: (a) the civil action involves an issue
similar or intimately related to the issue raised in the
criminal action; and (b) the resolution of such issue
determines whether or not the criminal action may
proceed. For a civil case to be considered prejudicial to a
criminal action as to cause the suspension of the latter
pending the final determination of the civil case, it must
appear not only that the said civil case involves the same
facts upon which the criminal prosecution would be based,
but also that in the resolution of the issue or issues raised
in the aforesaid civil action, the guilt or innocence of the
accused would necessarily be determined.
In a case for concubinage, the accused, like the
herein petitioner need not present a final judgment
declaring his marriage void for he can adduce evidence in
the criminal case of the nullity of his marriage other than
proof of a final judgment declaring his marriage
void. Article 40 of the Family Code provides:
"The absolute nullity of a previous marriage may be
invoked for purposes of remarriage on the basis solely of a
final judgment declaring such previous marriage void."
In Domingo vs. CA, this Court ruled that the import of said
provision is that for purposes of remarriage, the only
legally acceptable basis for declaring a previous marriage
an absolute nullity is a final judgment declaring such
previous marriage void, whereas, for purposes of other
than remarriage, other evidence is acceptable.
With regard to petitioner's argument that he could be
acquitted of the charge of concubinage should his
marriage be declared null and void, suffice it to state that
even a subsequent pronouncement that his marriage is
void from the beginning is not a defense. Parties to the
marriage should not be permitted to judge for themselves
its nullity, for the same must be submitted to the judgment
of the competent courts and only when the nullity of the
marriage is so declared can it be held as void, and so long
as there is no such declaration the presumption is that the
marriage exists for all intents and purposes. Therefore, he
who cohabits with a woman not his wife before the judicial
declaration of nullity of the marriage assumes the risk of
being prosecuted for concubinage.

Property Regime of Unions Without Marriage (Art. 148,

FC); Support; Retroactive Application of the Family Code

TUMLOS vs. FERNANDEZ

G.R. No. 137650, April 12, 2000

Facts: Respondent-spouses Mario and Lourdes Fernandez

filed an action for ejectment against petitioner Guillerma Tumlos
and her two children. In her Answer, Guillerma averred that the
Fernandez spouses had no cause of action against her, since she
is a co-owner of the subject premises as evidenced by a Contract
to Sell wherein it was stated that she is a co-vendee of the property
in question together with Mario. The MTC ruled for the spouses
Fernandez. Upon appeal to the RTC, Guillerma alleged that
Mario and Guillerma had an amorous relationship, and that they
acquired the property in question as their love nest, that they lived
together in the apartment building subject of the ejectment suit
with their 2 children for around 10 years, and that Guillerma
administered the property by collecting rentals from the lessees
of the other apartments, until she discovered that Mario deceived
her as to the annulment of his marriage. The RTC ruled that
Guillerma and Mario acquired the property during their
cohabitation as husband and wife, although without the benefit of
marriage, it concluded that Guillerma Tumlos was a co-owner of
the subject property and could not be ejected therefrom.
Issues: 1. Did Guillerma have the right of co-ownership over
the property in question?
2. Does the right to support (for shelter) of illegitimate
children prevail over the right of the spouses to eject
them?
Held: 1. NO. There was no proof of actual contribution by
Guillerma in the purchase of the subject property. Her only
evidence was her being named in the Contract to Sell as the wife
of Mario. Since she failed to prove that she contributed money to
the purchase price of the subject apartment building, there is no
basis to justify her co-ownership with Mario. The said property is
thus presumed to belong to the conjugal partnership property of
Mario and Lourdes Fernandez, it being acquired during the
subsistence of their marriage and no other proof to the contrary. It
is clear that actual contribution is required by Art. 148 of the
Family Code, in contrast to Art. 147 . which states that efforts in
the care and maintenance of the family and household are
regarded as contributions to the acquisition of common property
by one who has no salary or income or work or industry. The care
given by one party [to] the home, children, and household, or
spiritual or moral inspiration provided to the other, is not included
in Art.148. Hence, if actual contribution of the party is not
proved, there will be no co-ownership and no presumption of
equal shares

2. NO. Article 203 of the Family Code expressly provides

that the obligation to give support shall be demandable from the
time the person who has the right to receive the same needs it for
maintenance, but it shall not be paid except from the date of the
judicial or extra-judicial demand. Thus, it cannot be presumed.
No demand was made by Guillerma to make the obligation to give
support for dwelling demandable.

Judicial Declaration of Presumptive Death of a

Spouse

ARMAS vs. CALISTERIO

G. R. No. 136467, April 6, 2000

Facts: On April 24, 1992, Teodorico Calisterio died intestate,

leaving parcels of land. He was survived by his wife, respondent
Marietta Calisterio. Teodorico was the second husband of
Marietta who had previously been married to James William
Bounds on January 13, 1946. James disappeared without a trace
on February 11, 1947. Eleven years after, Marietta found a new
romance in the loving arms of Teodorico when the two got
married on May 8, 1958, without Marietta having priorly secured
a court declaration that James was presumptively dead.
On October 9, 1992, herein petitioner Antonia, a surviving
sister of Teodorico, filed with the RTC of Quezon City a petition
for the granting of letters of administration, claiming herself to be
the sole surviving heir of Teodorico, the marriage between the
latter and respondent Marietta being allegedly bigamous and
thereby null and void. The trial court rendered a judgment
declaring Antonia as the sole heir of the estate of Teodorico.

Issue: Was the subsequent marriage between Teodorico and

Marietta invalid due to Marietta’s failure to secure the judicial
declaration of the presumptive death of James?
Held: NO. The subsequent marriage was valid. When the
marriage between Teodorico and Marietta was solemnized on
May 8, 1958, the law in force at that time was the Civil Code, not
the Family Code which took effect only on August 3,
1988. Article 256 of the Family Code itself limited its retroactive
application only to cases where it thereby would not prejudice or
impair vested or acquired rights in accordance with the Civil Code
or other laws.
Hence, the applicable provision is Art. 83, NCC which
provides that a subsequent marriage contracted during the lifetime
of the first spouse is illegal and void ab initio unless the prior
marriage is first annulled or dissolved, except when the first
spouse (1) has been absent for seven consecutive years at the time
of the second marriage without the spouse present having news of
the absentee being alive, or (2) if absent for less than seven years,
is generally considered as dead and believed to be so by the
spouse present at the time of contracting such subsequent
marriage, or (3) is presumed dead according to Articles 390 and
391of the Civil Code. For the exception to apply, the subsequent
marriage must have been made in good faith. A judicial
declaration of absence of the absentee spouse is not necessary as
long as the prescribed period of absence is met. The marriage
under these exceptional cases is deemed to be valid “until
declared null and void by a competent court.” In contrast, under
the 1988 Family Code, in order that a subsequent bigamous
marriage may exceptionally be considered valid, the following
conditions must concur: (a) the prior spouse of the contracting
party must have been absent for four consecutive years, or two
years where the danger of death under the circumstances in
Article 391 of the Civil Code at the time of disappearance; (b) the
spouse present has a well founded belief that the absent spouse is
already dead; and (c) there is, unlike the old rule, a judicial
declaration of presumptive death of the absentee for which
purpose the spouse present can institute a summary proceeding in
court to ask for that declaration.
In the case at bar, Marietta’s first husband, James
Bounds, has been absent or had disappeared for more
than eleven years before she entered into a second
marriage with Teodorico. This second marriage, having
been contracted during the regime of the Civil Code,
should thus be deemed valid notwithstanding the absence
of a judicial declaration of presumptive death of James
Bound. Moreover, there is no finding that the said second
marriage was contracted in bad faith.

Validity of Marriage; Marriage License Required

SY vs. COURT OF APPEALS

G.R. No. 127263, April 12, 2000

Facts: Filipina Sy filed a petition for the declaration of

absolute nullity of her marriage to Fernando Sy on the
ground of psychological incapacity. To show the
manifestations of her husband’s psychological incapacity,
she presented the following proofs: 1) final judgment
rendered in her favor, in her previous petitions for
separation of property and legal separation; 2) Fernando's
infliction of physical violence on her which led to the
previous conviction of her husband for slight physical
injuries; 3) habitual alcoholism; 4) refusal to live with her
without fault on her part, choosing to live with his mistress
instead; and 5) refusal to have sex with her, performing
the marital act only to satisfy himself. The petition was
denied.
Hence the present petition whereby Filipina raises for the first
time the nullity of their marriage on the ground of the lack of
marriage license at the time of the celebration of the marriage.

Issue: Is the marriage between Filipina and Fernando void

from the beginning for lack of a marriage license at the time of
the ceremony?

Held: The documents (marriage certificate, photocopies of

birth certificates of their children, marriage license) and pleadings
submitted by Filipina show the incongruity between the date of
the actual celebration of their marriage (November 15, 1973) and
the date of the issuance of their marriage license (September 17,
1974). The ineluctable conclusion is that the marriage was indeed
contracted without a marriage license. A marriage license is a
formal requirement, its absence renders the marriage void ab
initio.
There being no claim of an exceptional character, the purported
marriage between Filipina and Fernando could not be classified
among those exempt from the marriage license requirement.

Exemption from Marriage License; Declaration of

Nullity of a Void Marriage

Niñal vs. Bayadog

G.R. No. 133778, March 14, 2000
Facts: Pepito Niñal was married to Teodulfa Bellones
on September 26, 1974. Out of their marriage were born
herein petitioners. Teodulfa was shot by Pepito resulting in
her death on April 24, 1985. One year and eight months
thereafter Pepito and Norma Badayog got married without
any marriage license. In line thereof, Pepito and Norma
executed an affidavit stating that they have lived together
at least five years and more thus exempt for securing a
marriage license. Pepito died in a car accident. After their
father’s death, petitioners filed a petition for declaration of
nullity of the marriage of Pepito and Norma alleging that
said marriage was void for lack of marriage license.
Norma filed a motion to dismiss on the ground that the
petitioners have no cause of action since they are not
among the persons who can file action for annulment of
marriage under Article 47 of the Family Code.

Issues: 1. What nature of cohabitation is contemplated

by law to warrant the counting of the five-year period in
order to exempt the future spouses from securing a
marriage license?
2. Do the petitioners have the personality to file a
petition to declare their father’s marriage void ab initio
after his death?

Held: The 5-year period should be computed on the

basis of a cohabitation as “husband and wife” where the
only missing factor is the special contract of marriage to
validate the union.
The two marriages involved herein having been
solemnized prior to the effectivity of the Family Code (FC),
the applicable law to determine their validity is the Civil
Code which was the law in effect at the time of their
celebration. A valid marriage license is a requisite of
marriage under Art. 53 of the Civil Code, the absence of
which renders the marriage void ab initio. However there
are several instances recognized by the Civil Code
wherein a marriage license is dispensed with, one of
which is that provided in Art. 76, referring to the marriage
of a man and a woman who have lived together and
exclusively with each other as husband and wife for a
continuous and unbroken period of at least five years
before the marriage. There is no dispute that the marriage
of petitioners' father to respondent Norma was celebrated
without any marriage license. In lieu thereof, they
executed an affidavit stating that "they have attained the
age of majority, and, being unmarried, have lived together
as husband and wife for at least five years, and that we
now desire to marry each other." Working on the
assumption that Pepito and Norma have lived together as
husband and wife for five years without the benefit of
marriage, that five-year period should be computed on the
basis of a cohabitation as "husband and wife" where the
only missing factor is the special contract of marriage to
validate the union. In other words, the five-year common-
law cohabitation period, which is counted back from the
date of celebration of marriage, should be a period of legal
union had it not been for the absence of the marriage. This
5-year period should be the years immediately before the
day of the marriage and it should be a period of
cohabitation characterized by exclusivity — meaning no
third party was involved at any time within the 5 years and
continuity — that is unbroken. Otherwise, if that
continuous 5-year cohabitation is computed without any
distinction as to whether the parties were capacitated to
marry each other during the entire five years, then the law
would be sanctioning immorality and encouraging parties
to have common law relationships and placing them on
the same footing with those who lived faithfully with their
spouse.

2. YES. Petitioners have the personality to file the

petition. Having determined that the second marriage involved in
this case is not covered by the exception to the requirement of a
marriage license, it is void ab initio because of the absence of such
element. The Family Code is silent as to who can file a petition to
declare the nullity of a marriage. A void marriage can be attacked
collaterally and can be questioned even after the death of either
party. That is why the action or defense for nullity is
imprescriptible. Any proper interested party may attack a void
marriage. Contrary to the trial court's ruling, the death of
petitioner's father extinguished the alleged marital bond between
him and respondent. The conclusion is erroneous and proceeds
from a wrong premise that there was a marriage bond that was
dissolved between the two. It should be noted that their marriage
was void hence it is deemed as if it never existed at all and the
death of either extinguished nothing.

Property Relations of Unions Without Marriage

ADRIANO vs. COURT OF APPEALS

G.R. No. 124118, March 27, 2000.
Facts: The testator Lucio Adriano, married Gliceria Dorado in
1933 and they had 3 children, herein private respondents.
Sometime in 1942 or prior thereto, Lucio cohabited with Vicenta
Villa, with whom he had 8 children. All his children by Vicenta
are the named petitioners in the instant case, with the exception
of Jose Vergel, who died before the inception of the proceedings.
After the death of Gliceria in 1968, Lucio married
Vicenta. In 1980, Lucio executed a will disposing of all his
properties to his second wife Vicenta and all his children by his
first and second marriages. While estate settlement proceedings
were pending before the RTC, petitioners instituted an action for
annulment of Lucio’s will. In the complaint, petitioners alleged
that before the marriage of Lucio and their mother, Vicenta, the
two lived together as husband and wife and as such, acquired
properties which became the subject of inventory and
administration in the petition for probate of the will. Petitioners
claimed that the properties bequeathed in Lucio's will are
undivided "civil partnership and/or conjugal properties of Lucio
and Vicenta ", and thus, the will sought to be probated should be
declared void and ineffective insofar as it disposes of the rightful
share or properties of Vicenta.
The trial court favored the evidence of private
respondents, which indicated that the purchase money for
the contested properties came from the earnings of Lucio
during the subsistence of his marriage to Gliceria.
Issue: Is Vicenta a co-owner with respect to ½ of the properties
in question or does the entire property belong to the conjugal
partnership of Lucio and Gliceria?
Held: NO. Petitioners' insistence that a co-ownership of
properties existed between Lucio and Vicenta during their period
of cohabitation before their marriage in 1968 is without lawful
basis considering that Lucio's marriage with Gliceria was then
subsisting. The co-ownership in Article 144 of the Civil
Code requires that the man and woman living together as
husband and wife without the benefit of marriage must not in any
way be incapacitated to marry. Considering that the property was
acquired in 1964, or while Lucio's marriage with Gliceria
subsisted, such property is presumed to be conjugal unless it be
proved that it pertains exclusively to the husband or to the wife.
In Belcodero vs. CA, the SC held that property acquired by
a man while living with a common-law wife during the
subsistence of his marriage is conjugal property, even when the
property was titled in the name of the common-law wife. In such
cases, a constructive trust is deemed to have been created by
operation of Article 1456 of the Civil Code over the property
which lawfully pertains to the conjugal partnership of the
subsisting marriage.
In Vicenta's case, it is clear that her designation as a
co-owner of the property in the TCT is a mistake which
needs to be rectified by the application of the foregoing
provisions of Article 1456 and the ruling in Belcodero. The
principle that a trustee who takes a Torrens title in his or
her name cannot repudiate the trust by relying on the
registration, is a well-known exception to the principle of
conclusiveness of a certificate of title.
PROPERTY

Property of Public Dominion

LANSANG vs. COURT OF APPEALS
G.R. No. 102667, February 23, 2000

Facts: Private respondents General Assembly of the Blind, Inc.

(GABI) and Jose Iglesias were allegedly given office and library
space as well as kiosks area for sale of food and drinks in Rizal
Park through an alleged “verbal contract of lease” awarded in
1970 by the National Parks Development Committee (NPDC).
To clean up Rizal Park, the new chairman of the NPDC sent
a written notice to GABI and Iglesias of the termination of the so-
called verbal agreement and the demand for the latter to vacate
the premises and the kiosks.

Issue: Did petitioner Amado Lansang abuse his authority in

ordering the ejectment of private respondents GABI and Iglesias?

Held: NO. There is no evidence of abuse of authority on the

part of the petitioner.
Like public street, public parks are beyond the
commerce of man and, thus, could not be the subject of a
lease contract. Admittedly, there was no written
contract. That private respondents were allowed to
occupy office and kiosk spaces in the park was only a
matter of accommodation by the previous
administrator. This being so, petitioner may validly
discontinue the accommodation to private respondents,
who may be ejected from the park when
necessary. Private respondents cannot and does not
claim a vested right to continue to occupy Rizal Park.
 Builder in Good Faith

VERONA PADA-KILARIO vs. COURT OF APPEALS

G.R. No. 134329, January 19, 2000.

Facts: One Jacinto Pada died intestate leaving 6 children. His

estate included a parcel of land located at Poblacion, Matalom,
Leyte.
During the lifetime of Jacinto Pada, his half-brother,
Feliciano Pada, obtained permission from him to build a house on
the northern portion of subject land. When Feliciano died, his
son, Pastor, continued living in the house together with his 8
children. Petitioner Verona Pada-Kilario, one of Pastor's children,
has been living in that house since 1960.
In 1993, private respondent Silverio Pada bought the co-
ownership right over the subject land of one of the heirs of
Jacinto. Thereafter, he demanded that petitioner spouses vacate
the northern portion of the subject land so his family can utilize
the said area. They went through a series of meetings with the
barangay officials concerned for the purpose of amicable
settlement, but all earnest efforts toward that end,
failed. Consequently, Silverio instituted a complaint for
ejectment with prayer for damages against petitioner
spouses. The petitioner spouses were eventually ordered
to remove their house at their expense unless Silverio exercises
the option of acquiring the same.
Issue: Are the petitioner spouses Pada-Kilario builders in good
faith as to be entitled to reimbursement for improvements made
on the property?

Held: No. Petitioner spouses explicitly admitted in their

Answer that they had been occupying the subject property since
1960 without ever paying any rental as they only relied on the
liberality and tolerance of the Pada family. Considering that they
were in possession of the subject property by sheer tolerance of
its owners, they knew that their occupation of the premises may
be terminated any time. Thus, they cannot be considered
possessors nor builders in good faith. It is well-settled that both
Article 448 and Article 546, NCC which allow full
reimbursement of useful improvements and retention of the
premises until reimbursement is made, apply only to a possessor
in good faith, i.e., one who builds on land with the belief that he
is the owner thereof. Verily, persons whose occupation of a realty
is by sheer tolerance of its owners are not possessors in good faith.
Neither did the promise of the alleged owners that they were
going to donate the premises to petitioners convert them into
builders in good faith for at the time the improvements were built
on the premises, such promise was not yet fulfilled, i.e., it was a
mere expectancy of ownership that may or may not be realized.
As such, petitioner spouses cannot be said to be entitled to the
value of the improvements that they built on the said lot.

Builder in Bad Faith

ISAGUIRRE vs. DE LARA
G.R. No. 138053, May 31, 2000

Facts: Petitioner Isaguirre and respondent De Lara were

parties in a case involving a parcel of land wherein there was
dispute as to its ownership as well as the nature of the transaction
they entered into regarding the disputed land. The case was
resolved by the Supreme Court which declared that De Lara was
the lawful owner of the land and held that the contract they
entered into was an equitable mortgage and not a sale.
On the basis of the Court’s decision, De Lara filed a
motion for execution with the trial court for the delivery of
possession of the land. Isaguirre opposed the motion,
asserting that, as mortgagee, he had the right of retention
over the property until payment of the value of the
improvements, arguing that he is builder in good faith with
respect to the said improvements he made before the
transaction was declared to be an equitable mortgage.

Issue: Can Isaguirre be considered a builder in good faith?

HELD: NO. ISAGUIRRE IS NOT A BUILDER IN

GOOD FAITH. HE IS A POSSESSOR IN BAD FAITH. IT
IS EVIDENT THAT PETITIONER KNEW FROM THE
VERY BEGINNING THAT THERE WAS REALLY NO
SALE AND THAT HE HELD RESPONDENT'S
PROPERTY AS MERE SECURITY FOR THE PAYMENT
OF THE LOAN OBLIGATION THEREFORE,
PETITIONER MAY CLAIM REIMBURSEMENT ONLY
FOR NECESSARY EXPENSES; HOWEVER, HE IS NOT
ENTITLED TO REIMBURSEMENT FOR ANY USEFUL
EXPENSES WHICH HE MAY HAVE INCURRED.

Quieting of Title; Termination of Co-ownership by

Prescription

ROBLES vs. COURT OF APPEALS

G.R. No. 123509, March 14, 2000

Facts: The property subject of this case is originally owned by

Leon Robles. When he died, it passed to his son Silvino who
declared the property in his name and paid the taxes
thereon. Upon the latter’s death, his widow and children inherited
the property. Petitioners Lucio Robles, et al. were the children of
Silvino, and Hilario Robles is their half-brother. The task of
cultivating was assigned to Lucio while the payment of the land
taxes was entrusted to Hilario. For unknown reason, the tax
declaration of the parcel of land in the name of Silvino was
cancelled and transferred to Exequiel Ballena. Ballena secured a
loan from Antipolo Rural Bank using the tax declaration as
security. Somehow the tax declaration was transferred to the
name of Antipolo Rural Bank and later was transferred to the
name of respondent- spouses Hilario and Andrea Robles.
Andrea secured a loan from Cardona Rural Bank using the tax
declaration as security. For failure to pay the mortgage debt, the
property was foreclosed with Cardona Rural Bank emerging as
the highest bidder. The bank sold the property to spouses Vergel
and Ruth Santos. In Sept. 1987, petitioners discovered the
mortgage and attempted to redeem the property but was
unsuccessful. In 1988, the spouses Santos took possession of the
propertry and was able to secure a Free Patent. Petitioners then
filed an action for quieting of title. Respondents questioned their
standing to sue for quieting of title, contending that petitioners no
longer have any interest to the property in question due to the
mortgage effected by Hilario and the consequent foreclosure
thereof by the Bank. Respondents argued that Hilario had
become the absolute owner of the property at the time he
mortgaged the same. The CA ruled that the several transfers of
the tax declaration of the property in question from Silvino until
to the spouses Santos had the effect of divesting petitioners of
their title by prescription to Hilario.

Issues: 1. Do the petitioners have appropriate title that will

entitle them to the remedy of the quieting of title?
2. Did Hilario acquire the share of his co-owners in the
disputed property by prescription?

Held: 1. YES. An action to quiet title, under Art. 476,

NCC, is a common-law remedy for the removal of any cloud or
doubt or uncertainty on the title to real property. It is essential for
the plaintiff or complainant to have a legal or an equitable title to
or interest in the real property which is the subject matter of the
action. Also, the deed, claim, encumbrance or proceeding that is
being alleged as a cloud on plaintiff's title must be shown to be in
fact invalid or inoperative despite its prima facie appearance of
validity or legal efficacy. That there is an instrument or a
document which, on its face, is valid and efficacious is clear in
the present case. Petitioners allege that their title as owners and
possessors of the disputed property is clouded by the tax
declaration and, subsequently, the free patent thereto granted to
Spouses Santos. Petitioners anchor their claim on their open and
continuous possession as owners. Spouses Santos, on the other
hand, trace their claims to Exequiel, and then to Hilario who
mortgaged the same to the Bank as absolute owner. It was from
Exequiel that Hilario’s claim is rooted. However, in this case,
there is a failure to show Exequiel’s title to the property in
question. When Hilario, therefore, mortgaged the property, he
did so in his capacity as mere co-owner thereof. Consequently,
the said transaction did not divest the petitioner of the title to the
property at the time of the institution of the complaint for
quieting of title.

2. NO. Hilario effected no clear and evident repudiation of

the co-ownership. It is a fundamental principle that a co-owner
cannot acquire by prescription the share of the other co-owners,
absent any clear repudiation of the co-ownership. In order that the
title may prescribe in favor of a co-owner, the following requisites
must concur: (1) the co-owner has performed unequivocal acts of
repudiation amounting to an ouster of the other co-owners; (2)
such positive acts of repudiation have been made known to the
other co-owners; and (3) the evidence thereof is clear and
convincing. In the present case, Hilario did not have possession
of the subject property; neither did he exclude the petitioners from
the use and the enjoyment thereof, as they had indisputably shared
in its fruits. Likewise, his act of entering into a mortgage contract
with the bank cannot be construed to be a repudiation of the co-
ownership. As absolute owner of his undivided interest in the
land, he had the right to alienate his share, as he in fact
did. Neither should his payment of land taxes in his name, as
agreed upon by the co-owners, be construed as a repudiation of
the co-ownership. The assertion that the declaration of ownership
was tantamount to repudiation was belied by the continued
occupation and possession of the disputed property by the
petitioners as owners.

Quieting of Title; Laches; Freedom to Enter into

Contracts; Waiver of Rights

MAESTRADO vs. COURT OF APPEALS

G.R. No. 133345 & 133324, March 9, 2000.

Facts: The spouses Ramon and Rosario Chaves died

intestate leaving several properties. They were survived
by their six children who later entered into a project of
partition which was approved by the court. Accordingly,
the estate was divided and distributed to the heirs. Lot
5872, for some reason however, was not included in the
project of partition, nor in the inventory. During the actual
partition in 1956, Lot 5872 was delivered to petitioners
Josefa Maestrado and her children, one of the heirs. The
non-inclusion of said lot was discovered only in 1976. In
an effort to set things right, petitioners prepared a
quitclaim in their favor to confirm to the alleged oral
agreement, which notarized quitclaim was signed by the
other heirs. Six years after the execution of said quitclaim,
or in 1983, respondents, children of the other heirs,
discovered that Lot 5872 is still in the name of the
deceased spouses Chaves. They requested that the
property be divided and distributed to the heirs. In
response, petitioners filed an action for quieting of
title. Respondents argued, among others, that petitioners
have no standing to sue for the quieting of title and that
their action is barred by laches. They likewise assailed
the validity and due execution of the quitclaim. The trial
court declared that Lot 5872 is still common property and
ordered its division among the heirs.

Issues: 1. Do the petitioners have the legal standing to sue

for quieting of title? If so, is such action barred by laches?
2. Is Lot No. 5872 still a common property?

Held: 1. YES. Petitioners are proper parties to bring an

action for quieting of title. Persons having legal as well as
equitable title to or interest in a real property may bring
such action and "title" here does not necessarily denote a
certificate of title issued in favor of the person filing the
suit. Moreover, if the plaintiff in an action for quieting of
title is in possession of the property being litigated, such
action is imprescriptible. One who is in actual possession
of a land, claiming to be the owner thereof may wait until
his possession is disturbed or his title is attacked before
taking steps to vindicate his right because his undisturbed
possession gives him a continuing right to seek the aid of
the courts to ascertain the nature of the adverse claim and
its effects on his title. Although prescription and laches
are distinct concepts, nonetheless in some instances, the
doctrine of laches is inapplicable where the action was
filed within the prescriptive period provided by law. Thus,
laches does not apply in this case because petitioners'
possession of the subject lot has rendered their right to
bring an action for quieting of title imprescriptible and,
hence, not barred by laches. Moreover, since laches is a
creation of equity, acts or conduct alleged to constitute the
same must be intentional and unequivocal so as to avoid
injustice. Laches operates not really to penalize neglect or
sleeping on one's rights, but rather to avoid recognizing a
right when to do so would result in a clearly inequitable
situation. In the case at bench, the cloud on petitioners'
title to the subject property came about only on December
1, 1983 when Angel Chaves transmitted respondents'
letters to petitioners, while petitioners' action was filed on
December 22, 1983. Clearly, no laches could set in under
the circumstances since petitioners were prompt and
vigilant in protecting their rights.

2. NO. Lot No. 5872 is no longer common property

of the heirs of the deceased spouses Chaves. Petitioners'
ownership over said lot was acquired by reason of the oral
partition agreed upon by the deceased spouses' heirs
sometime before 1956. That oral agreement was
confirmed by the notarized quitclaims executed by the said
heirs. Nevertheless, respondent court was convinced that
Lot No. 5872 is still common property of the heirs of the
spouses Chaves because the TCT covering the said
property is still registered in the name of the said spouses.
Unfortunately, respondent court was oblivious to the
doctrine that the act of registration of a voluntary
instrument is the operative act which conveys or affects
registered land insofar as third persons are concerned.
Hence, even without registration, the contract is still valid
as between the parties. Neither a Transfer Certificate of
Title nor a subdivision plan is essential to the validity of an
oral partition. Since the oral partition has been duly
established, the notarized quitclaims confirmed such prior
oral agreement as well as the petitioners' title of ownership
over the subject Lot No. 5872. More importantly,
independent of such oral partition, the quitclaims in the
instant case are valid contracts of waiver of property
rights. The freedom to enter into contracts, such as the
quitclaims, is protected by law and the courts are not
quick to interfere with such freedom unless the contract is
contrary to law, morals, good customs, public policy or
public order. Quitclaims, being contracts of waiver,
involve the relinquishment of rights, with knowledge of
their existence and intent to relinquish them. The intent to
waive rights must be clearly and convincingly shown.
Moreover, when the only proof of intent is the act of a
party, such act should be manifestly consistent and
indicative of an intent to voluntarily relinquish a particular
right such that no other reasonable explanation of his
conduct is possible. In the instant case, the terms of the
subject quitclaims are clear; and the heirs' signatures
thereon have no other significance but their conformity
thereto resulting in a valid waiver of property rights.

Preference of Possession; Ownership

CEQUENA vs. BOLANTE

G. R. No. 137944, April 6, 2000

Facts: Since 1926, a parcel of land was declared in the name

of Sinforoso Mendoza, father of respondent Bolante. When
Sinforoso died in 1930, his brother Margarito Mendoza, father of
petitioners Cequena and Lirio, took possession of the land and
cultivated it with his son Miguel (brother of petitioners). At the
same time, respondent and her mother continued residing in the
lot. When respondent came of age in 1948, she paid realty taxes
for the years 1932-1948, and thereafter. On the basis of an
affidavit allegedly signed by respondent and her mother, the tax
declaration in the name of Sinforoso of the contested lot was
cancelled and subsequently declared in the name of Margarito in
1953 who paid its realty taxes beginning 1952. When Margarito
died, Miguel continued cultivating the land until 1985 when he
was physically ousted by the respondent.
Based on the foregoing, the trial court resolved the issue of
lawful ownership and possession favor of petitioners.

Issue: As between the claimants, who is the preferred

possessor and the lawful owner of the subject parcel of land?

Held: Respondent is the preferred possessor and lawful owner

of the disputed land. Despite their dispossession in 1985, the
petitioners did not lose legal possession because possession
cannot be acquired through force or violence. A possessor, even
if physically ousted, is still deemed the legal possessor. However,
possession by the petitioners does not prevail over that of the
respondent. Their possession before 1985 was not exclusive, as
the latter also acquired it before 1985. Petitioner’s father and
brother, as well as the respondent and her mother were
simultaneously in adverse possession of the land. Based on
Article 538 of the Civil Code, respondent is the preferred
possessor because, benefiting from her father’s tax declaration of
the subject lot since 1926, respondent has been in possession
thereof for a longer period. On the other hand, petitioners’ father
acquired joint possession only in 1952.
As to the issue of ownership, respondent argues that she
was legally presumed to possess the subject land with a
just title since she possessed it in the concept of
owner. Under Article 541 of the Civil Code, she could not
be obliged to show or prove such title. This is untenable
since the presumption in Article 541 is merely
disputable. Article 538 settles only the question of
possession, and possession is different from
ownership. Ownership in this case should be established
in one of the ways provided by law.
Between the claimants, ownership shall be vested to the one
who has proven acquisitive prescription. Respondent’s
possession was not disturbed until 1953 when petitioners’ father
claimed the land. But by then, her possession, which was in the
concept of owner – public, peaceful, and uninterrupted – had
already ripened into ownership. Furthermore she herself declared
and paid realty taxes for the disputed land. Tax receipts and
declarations of ownership for taxation, when coupled with proof
of actual possession of the property, can be the basis of a claim
for ownership through prescription. In contrast, petitioners did
not acquire ownership despite 32 years (1953-1985) of farming
the subject land. It is settled that ownership cannot be acquired
by mere occupation. Unless it is hostile, occupation and use,
however long, will not confer title by prescription or adverse
possession. Moreover, the petitioners cannot claim that their
possession was public, peaceful and uninterrupted. Although
their father and brother arguably acquired ownership through
extraordinary prescription because of their adverse possession of
32 years, this supposed ownership can not extend to the entire
disputed lot, but must be limited to the portion that they actually
farmed. The tax declarations and receipts of petitioners are only
prima facie, not conclusive, evidence of ownership in the absence
of actual public and adverse possession.

Donation Inter Vivos; Repudiation Of Inheritance;

Escheat

REPUBLIC vs. GUZMAN

G.R. No.132964, Feb. 18, 2000

Facts: Respondent David Rey Guzman, a natural born

American citizen is the son of spouses Simeon Guzman ,
naturalized American citizen and Helen Meyers
Guzman, American citizen. In 1968, Simeon died living to his
sole heirs Helen and David an estate consisting of several parcels
of land located in Bulacan. Thereafter, Helen and David executed
a Deed of Extrajudicial settlement dividing and adjudicating to
themselves the property belonging to the estate of Simeon. The
document was registered in the Register of Deeds and the parcels
of land were accordingly registered in the name of Helen and
David in undivided equal shares. In 1981, Helen executed a
Quitclaim Deed conveying to David her undivided ½ interest on
said lands. On Aug. 9, 1989, she executed another Deed of
Quitclaim confirming the earlier quitclaim in 1981 as well as
modifying the document to encompass all her other property in
the Philippines. More than a week later, David executed a Special
Power of Attorney (SPA) where he acknowledged that
he became the owner of the parcels of land subject of the Aug. 9,
1989 Deed of Quitclaim and empowering Atty. Abella to sell or
otherwise dispose of the lot. On Feb. 1, 1990, Atty. Abella, upon
instruction of Helen, paid donor’s taxes to facilitate the registry
of the parcels of land in the name of David.
In 1994, upon information furnished by a certain Atty.
Batongbacal, showing that David’s ownership of ½ of Simeon’s
estate was defective, the Government filed before the RTC of
Bulacan a petition for escheat praying that ½ of David’s interest
in each of the subject parcels of land be forfeited in its
favor. Petitioner anchors its argument on Art. XII, Secs. 7 & 8 of
the Constitution, which sets the rule that only Filipino citizen can
acquire private lands in the Philippines. The exceptions are in the
case of hereditary succession and if he was formerly a natural-
born Filipino citizen who lost his Filipino citizenship. Since
David’s acquisition of said lands does not fall under any of these
exceptions, David could not validly acquire ½ interest in each of
the subject parcels of land in dispute by way of the two Deed of
Quitclaims as they are in reality donation inter vivos. David
maintains, on the other hand, that he acquired the property by
right of accretion and not by way of donation.

Issue: Should respondent’s ½ interest of the disputed parcels

of land be escheated in favor of the government?

Held: NO. Escheat is not proper under the circumstances.

In the first place, there is no valid donation. There are 3
essential elements of a donation: (a) the reduction of the
patrimony of the donor; (b) the increase in the patrimony of the
donee; and (c) the intent to do an act of liberality or animus
donandi. When applied to a donation of an immovable property,
the law further requires that the donation be made in a public
document and that there should be an acceptance thereof made in
the same deed of donation or in a separate public document. In
cases where the acceptance is made in a separate instrument, it is
mandated that the donor should be notified thereof in an authentic
form, to be noted in both instruments. Not all the elements of a
donation of an immovable property are present in the instant
case. The transfer of the property by virtue of the Deed of
Quitclaim executed by Helen resulted in the reduction of her
patrimony as donor and the consequent increase in the patrimony
of David as donee. However, Helen’s intention to perform an act
of liberality in favor of David was not sufficiently established. A
perusal of the Deeds of Quitclaim reveals that Helen intended to
convey to her son David certain parcels of land located in the
Philippines, and to re-affirm the quitclaim she executed in 1981
which likewise declared a waiver and renunciation of her rights
over the parcels of land . The language of the Deed is clear that
Helen merely contemplated a waiver of her rights, title and
interest over the land in favor of David, and not a donation. The
element of animus donandi, therefore, was missing. Likewise the
two Deeds of Quitclaim may have been in the nature of a public
document but they lacked the essential element of acceptance in
the proper form required by law to make the donation valid. The
SPA does not qualify as an implied acceptance by David of the
alleged donation but merely acknowledges that David owns the
property referred to and that he authorizes Atty. Abella to sell the
same in his name. There is no intimation, expressly or impliedly,
that David’s acquisition of the parcels of land is by virtue of
Helen’s possible donation to him and we cannot look beyond the
language of the document to make a contrary
construction. Moreover, it is mandated that if an acceptance is
made in a separate public writing the notice of acceptance must
be noted not only in the document containing the acceptance but
also in the Deed of Donation. These requisites have not been
complied with and no proof of compliance appears in the
record. .The 2 Quitclaims set out the conveyance of the parcels
of land by Helen in favor of David but its acceptance by David
does not appear in the Deeds, nor in the SPA.
However, the inexistence of a donation does not render the
repudiation made by Helen in favor of David valid. There is no
valid repudiation of inheritance as Helen had already accepted her
share of the inheritance when she together with David executed a
Deed of Extrajudicial Settlement of the Estate of Simeon. By
virtue of such extrajudicial settlement, the parcels of land were
registered in her and her son’s name in undivided equal share and
for 11 years they possessed the lands in the concept
of owner. Art. 1056 of the Civil Code provides – “The
acceptance or repudiation of an inheritance is irrevocable and
cannot be impugned except when it was made thru any of the
causes that vitiate consent or when and unknown will
appears.” Nothing on record shows that Helen’s acceptance of
her inheritance from Simeon was made thru any of the causes
which vitiated her consent nor is there any proof of the existence
of an unknown will executed by Simeon. Thus, Helen cannot
belatedly execute an instrument which has the effect of revoking
or impugning her previous acceptance of her ½ share. Hence, the
2 Quitclaims which she executed 11 years after her acceptance
have no legal force and effect.
 Nevertheless, the nullity of the repudiation does not ipso
facto operate to convert the parcels of land into res nullius to be
escheated in favor of the Government. The repudiation, being of
no effect whatsoever, the parcels of land should revert to their
private owner, Helen, who although being an American citizen is
qualified by hereditary succession to own the property subject of
the litigation.

Donation Inter Vivos

VELASQUEZ vs. COURT OF APPEALS

G.R. No. 126996, February 15, 2000

Facts: The spouses Cornelio Aquino and Leoncia de Guzman

acquired six pieces of real properties during their marriage. They
were childless and died intestate. Leoncia de Guzman was
survived by her sisters Anatalia and Tranquilina. The heirs of
Anatalia filed a complaint for partition of the six properties
against the heirs of Cesario Velasquez (son of Tranquilina). In
their answer, the heirs of Cesario were able to adduce
uncontroverted
documentary evidences showing that during the lifetime of the
spouses Aquino, they had already disposed of four of the six
properties in favor of their predecessors-in-interest through
donation or conveyance.

Issue: Did the heirs of Cesario acquire absolute ownership over

the property in dispute as to bar an action for partition?
Held: YES. The heirs of Cesario have acquired absolute and
exclusive ownership over the property in question. A donation as
a mode of acquiring ownership results in an effective transfer of
title over the property from the donor to the donee and the
donation is perfected from the moment the donor knows of the
acceptance by the donee. And once a donation is accepted, the
donee becomes the absolute owner of the property donated. The
donation of the first parcel made by the Aquino spouses to
petitioners Jose and Anastacia Velasquez who were then minors
was accepted through their father Cesario Velasquez, and the
acceptance was incorporated in the body of the same deed of
donation and made part of it, and was signed by the donor and the
acceptor. Legally speaking there was delivery and acceptance of
the deed, and the donation existed perfectly and irrevocably. The
donation inter vivos may be revoked only for the reasons provided
in Articles 760, 764 and 765 of the Civil Code. The donation
propter nuptias in favor of Cesario Velasquez and Camila de
Guzman over the third and sixth parcels including a portion of the
second parcel became the properties of the spouses Velasquez
since 1919. The deed of donation propter nuptias can be revoked
by the non-performance of the marriage and the other causes
mentioned in article 86 of the Family Code. The alleged reason
for the repudiation of the deed, i.e., that the Aquino spouses did
not intend to give away all their properties since Anatalia
(Leoncia's sister) had several children to support is not one of the
grounds for revocation of donation either inter vivos or propter
nuptias, although the donation might be inofficious.

PRESCRIPTION
SERASPI vs. COURT OF APPEALS
G.R. No. 135602, April 28, 2000

Facts: Marcelino Recasa was the owner of two parcels of land.

During his lifetime, Marcelino contracted 3 marriages. At the
time of his death in 1943, he had 15 children from his three
marriages. In 1948, his intestate estate was partitioned into three
parts by his heirs, each part corresponding to the share of the heirs
in each marriage. The heirs of the first marriage, sold their share
to Dominador Recasa, an heir of the second marriage.
Dominador, representing the heirs of the second marriage, in turn
sold the share of the heirs to Quirico and Purificacion Seraspi
whose heirs are the present petitioners. In 1958, the Seraspis
obtained a loan from the Kalibo Rural Bank, Inc. (KRBI) on the
security of the lands in question to finance improvements on the
lands. However, they failed to pay the loan for which reason the
mortgage was foreclosed and the lands were sold to KRBI as the
highest bidder. Subsequently, the lands were sold by KRBI to
Manuel Rata, brother-in-law of Quirico Seraspi. It appears that
Rata, as owner of the property, allowed Quirico Seraspi to
administer the property.
In 1974, private respondent Simeon Recasa, Marcelino’s
child by his third wife, taking advantage of the illness of Quirico
Seraspi, forcibly entered the lands in question and took possession
thereof. In 1983, the Seraspis purchased the lands from Manuel
Rata and afterwards filed a complaint against Simeon Recasa for
recovery of possession of the lands.

Issues: 1. Is the action for recovery of possession ( accion

publiciana) barred by extinctive prescription?
 2. Has Simeon acquired the ownership of the land by
prescription?

Held: 1. NO. Art. 1141 NCC provides that real actions over
immovables prescribe after thirty years. From 1974 to April 12,
1987 when the action was filed, only thirteen years has elapsed.

2. NO. Simeon has no just title or not in good faith to acquire

the land by acquisitive prescription. Private respondent could not
have acquired ownership over the property through occupation
since, under Art. 714 of the Civil Code, the ownership of a piece
of land cannot be acquired by occupation. Nor can he base his
ownership on succession for the property was not part of those
distributed to the heirs of the third marriage, to which private
respondent belongs. It must be remembered that in the partition
of the intestate estate of Marcelino Recasa, the properties were
divided into three parts, each part being reserved for each group
of heirs belonging to one of the three marriages Marcelino entered
into. Since the contested parcels of land were adjudicated to the
heirs of the first and second marriages, it follows that private
respondent, as heir of the third marriage, has no right over the
parcels of land. While, as heir to the intestate estate of his father,
private respondent was co-owner of all of his father’s properties,
such co-ownership rights were effectively dissolved by the
partition agreed upon by the heirs of Marcelino Recasa. Neither
can private respondent claim good faith in his favor. Good faith
consists in the reasonable belief that the person from whom the
possessor received the thing was its owner but could not transmit
the ownership thereof. Private respondent entered the property
without the consent of the previous owner. For all intents and
purposes, he is a mere usurper.
 Prescription in Action for Reconveyance

MILLENA vs. COURT OF APPEALS

G.R. NO. 127797, JANUARY 31, 2000

Facts: In 1926, a parcel of land in Daraga, Albay (Lot 1874)

was divided between Gregoria Listana and Potenciana Maramba:
¼ was given to Gregoria and ¾ to Potenciana. The portion owned
by Gregoria was sold to Gaudencia Jacob who entered the same
and started harvesting the coconuts found therein. In 1966, the
land was passed on to Gaudencia’s daughter, Felisa Jacob by
virtue of an extrajudicial settlement. Sometime in 1981, Felisa
discovered that Potenciana’s son (Florencio) was able to acquire
a free patent over the entire lot including the portion adjudicated
to her. Notwithstanding Felisa’s protest filed before the Bureau
of Lands, the heirs of Florencio sold the entire lot to Alejandro
Millena. In 1992, Felisa filed a complaint against Alejandro for
annulment of title and reconveyance of the portion owned by the
former. RTC ordered the reconveyance of the ¼ portion of the
land. CA affirmed the TC.

Issue: Is the action for reconveyance barred by prescription?

Held: NO. Prescription cannot be invoked in an action for

reconveyance when the claimant is in possession of the land to be
reconveyed. Apparently, Felisa Jacob met the requisite elements
of possession. She exercised control over the parcel of land in
litigation through her caretaker. Moreover, her declaration that
the land was her property and the payment of real property taxes
manifested clearly that she was in possession of the
land. Consequently, Alejandro may not validly invoke
prescription as defense against Felisa.

Ownership Through Acquisitive Presciption

DBP vs. COURT OF APPEALS

G.R. No. 129471. April 28, 2000.

Facts: The land in dispute consisting of 19.4 hectares was

originally owned by Ulipiano Mumar, whose ownership since
1917 was evidenced by Tax Declaration No. 3840. In 1950,
Mumar sold the land to respondent Cajes who was issued Tax
Declaration No. R-1475 that same year. Cajes occupied and
cultivated the said land. In 1969, unknown to Cajes, Jose Alvarez
succeeded in obtaining the registration of a parcel of land with an
area of 1,512, 468.00 square meters, in his name for which he was
issued OCT No. 546 on June 16, 1969. The parcel of land
included the 19.4 hectares occupied by respondent. Alvarez never
occupied nor introduced improvements on said land.
In 1972, Alvarez sold the land to the spouses Gaudencio
and Rosario Beduya to whom TCT No. 10101 was issued.
That same year, the spouses Beduya obtained a loan from
petitioner DBP for P526,000.00 and, as security,
mortgaged the land covered by TCT No. 10101 to the
bank. In 1978, the SAAD Investment Corp., and the
SAAD Agro-Industries, Inc., represented by Gaudencio
Beduya, and the spouses Beduya personally executed
another mortgage over the land in favor of DBP to secure
a loan of P1,430,000.00. The spouses Beduya later failed
to pay their loans, as a result of which, the mortgage on
the property was foreclosed and sold to DBP as the
highest bidder. As the spouses Beduya failed to redeem
the property, DBP consolidated its ownership. It appears
that Cajes had also applied for a loan from DBP in 1978,
offering his 19.4 hectare property under Tax Declaration
No. D-2247 as security for the loan. Cajes’ loan
application was later approved. However, it was found that
the land mortgaged by Cajes was included in the land
covered by TCT No. 10101 in the name of the spouses
Beduya. DBP, therefore, cancelled the loan and
demanded immediate payment of the amount. Cajes paid
the loan to DBP for which the former was issued a
Cancellation of Mortgage releasing the property in
question from encumbrance. DBP asked Cajes to vacate
the property. As the latter refused to do so, DBP filed a
complaint for recovery of possession with damages
against him. The RTC of Tagbilaran City declared DBP
the lawful owner of the entire land covered by TCT No.
10101 on the ground that the decree of registration was
binding upon the land.

Issue: Who has better right to the land in dispute, DBP or

Cajes?

Held: Cajes has better right. In the present case, Cajes has been
in actual, open, peaceful and continuous possession of the
property since 1950. His claim based on actual occupation of the
land is bolstered by the Tax Declarations issued in his name.
Together with his actual possession of the land, these tax
declarations constitute strong evidence of ownership of the land
occupied by him. More importantly, it was established that
respondent, having been in possession of the land since 1950, was
the owner of the property when it was registered by Jose Alvarez
in 1969, his possession tacked to that of his predecessor-in-
interest, Mumar, which dates back to 1917. Clearly, more than
30 year had elapsed before a decree of registration was issued in
favor of Alvarez. This uninterrupted adverse possession of the
land for more than 30 years could only ripen into ownership of
the land through acquisitive prescription which is a mode of
acquiring ownership and other real rights over immovable
property. Prescription requires public, peaceful, uninterrupted
and adverse possession of the property in the concept of an owner
for ten (10) years, in case the possession is in good faith and with
a just title. Accordingly, the land in question must be reconveyed
in favor of Cajes, the true and actual owner thereof, reconveyance
being clearly the proper remedy in this case.

II. SUCCESSION

Successional Rights; Transmission of; Scope

RABADILLA vs. COURT OF APPEALS

G.R. No. 113725, June 29, 2000

Facts: In a Codicil appended to the will of testatrix Aleja

Belleza, Dr. Jorge Rabadilla was instituted as a devisee of a
parcel of land in Bacolod City with the obligation to deliver 100
piculs of sugar yearly to private respondent Marlena Belleza.
Such obligation is likewise imposed upon the heirs of Dr.
Rabadilla and their buyer, lessee, or mortgagee should they sell,
lease, mortgage or otherwise negotiate the property
involved. The Codicil further provides that in case of failure to
comply with such obligation, private respondent shall seize the
subject property and shall turn it over to the near descendants of
the testatrix. The Codicil allows the alienation of the property
but only to the testatrix’s near descendants and sister.
The lot was transferred to Dr. Rabadilla, who died in 1983
and was survived by his wife and children, one of which is
petitioner herein. In 1989, private respondent sought before the
RTC of Bacolod City, the reconveyance of the property to the
surviving heirs of the testatrix. During pre-trial, parties admitted
that in 1998, the private respondent and a certain Alan Azurin, a
lessee of the property, arrived at an amicable settlement and
assumed the obligation to deliver one hundred piculs of sugar.
There was no compliance with the agreement.
In 1991, the RTC dismissed the complaint for lack of cause
action. On appeal, the CA reversed the decision of the TC. The
CA ordered reconveyance of the lot to the estate of Aleja Belleza
on the ground of non-compliance of petitioner, as heirs of the
modal heir Rabadilla, of the obligation under the codicil, since
1985. Hence this petition.

Issue: Does the private respondent have a cause of action to

institute the present case for reconveyance of the land in
controversy against petititoner?
Held: YES. Private respondent has a cause of action against
petitioner. It is a general rule under the law on succession that
successional rights are transmitted from the moment of death of
the decedent and compulsory heirs are called to succeed by
operation of law. The petitioner, his mother and sisters, as
compulsory heirs of the instituted heir, Dr. Rabadilla, succeeded
the latter by operation of law, without need of further
proceedings, and the successional rights were transmitted to them
from the moment of death of the decedent. Under Article 776
NCC, inheritance includes all the property, rights and obligations
of a person, not extinguished by his death. Conformably,
whatever rights and obligations Dr. Rabadilla had by virtue of
subject Codicil were transmitted to his forced heirs, at the time of
his death. Such obligation of the instituted heir reciprocally
corresponds to the right of private respondent over the usufruct,
the fulfillment or performance of which is now being demanded
by the latter through the institution of the case at bar.

Modal Institution vs. Conditional institution;

Substitution

Issue: Is the testamentary institution of Dr. Rabadilla a

modal institution?

Held: YES. The institution of Dr. Rabadilla under subject

Codicil is in the nature of a modal institution.
In a modal institution, the testator states (1) the object
of the institution, (2) the purpose or application of the
property left by the testator, or (3) the charge imposed by
the testator upon the heir. A "mode" imposes an obligation
upon the heir or legatee but it does not affect the efficacy
of his rights to the succession. On the other hand, in a
conditional testamentary disposition, the condition must
happen or be fulfilled in order for the heir to be entitled to
succeed the testator. The condition suspends but does not
obligate; and the mode obligates but does not
suspend. To some extent, it is similar to a resolutory
condition. The manner of institution of Dr. Rabadilla under
subject Codicil is evidently modal in nature because it
imposes a charge upon the instituted heir without,
however, affecting the efficacy of such institution. Further,
since testamentary dispositions are generally acts of
liberality, an obligation imposed upon the heir should not
be considered a condition unless it clearly appears from
the Will itself that such was the intention of the testator. In
case of doubt, the institution should be considered as
modal and not conditional.

The Codicil sued upon does not contemplate a

substitution. Substitution is the designation by the testator
of a person or persons to take the place of the heir or heirs
first instituted. Under substitutions in general, the testator
may either (1) provide for the designation of another heir
to whom the property shall pass in case the original heir
should die before him/her, renounce the inheritance or be
incapacitated to inherit, as in a simple substitution, or (2)
leave his/her property to one person with the express
charge that it be transmitted subsequently to another or
others, as in a fideicommissary substitution. The
provisions of subject Codicil do not provide that should Dr.
Rabadilla default due to predecease, incapacity or
renunciation, the testatrix's near descendants would
substitute him. What the Codicil provides is that, should
Dr. Rabadilla or his heirs not fulfill the conditions imposed
in the Codicil, the property referred to shall be seized and
turned over to the testatrix's near descendants. Neither is
there a fideicommissary substitution. In a fideicommissary
substitution, the first heir is strictly mandated to preserve
the property and to transmit the same later to the second
heir. In this case, the instituted heir is in fact allowed under
the Codicil to alienate the property provided the
negotiation is with the near descendants or the sister of
the testatrix. Also, the near descendants' right to inherit
from the testatrix is not definite. The property will only
pass to them should Dr. Rabadilla or his heirs not fulfill the
obligation to deliver part of the usufruct to private
respondent. Under Article 863, the second heir or the
fideicommissary to whom the property is transmitted must
not be beyond one degree from the first heir or the
fiduciary. In this case, the near descendants are not at all
related to the instituted heir, Dr. Rabadilla.

Wills

Issue: Can the provisions of a Codicil be a valid subject

of an amicable settlement subsequently entered into
between the private respondent and the lessee of the
subject land which effectively relieves the petitioner from
the obligation?
Held: NO. The amicable settlement whereby the lessee
assumed the obligation in the codicil, cannot be deemed to be a
substantial and constructive compliance of petitioner’s obligation
therein as to effectively release the latter from his obligation. A
Will is a personal, solemn, revocable and free act by which a
person disposes of his property, to take effect after his death.
Since the Will expresses the manner in which a person intends
how his properties be disposed, the wishes and desires of the
testator must be strictly followed. Thus, a Will cannot be the
subject of a compromise agreement which would thereby defeat
the very purpose of making a Will.

Partition; Preterition

VIADO NON VS. COURT OF APPEALS

G.R. No. 137287, February 15, 2000

Facts: During their lifetime, spouses Julian and Virginia Viado

owned a house and lot in Quezon City. Virginia died in 1982,
while Julian died in 1985. Surviving them were their four children
– Nilo, Leah, Rebecca, and Delia. Nilo and Leah both died in
1987. The property was occupied and shared by Rebecca, Delia
and the heirs of Nilo. In 1988, petitioners Rebecca and Delia filed
a case for partition against the heirs of Nilo. The latter claimed
absolute ownership based on two documents, (1) a deed of
donation executed by Julian covering his one-half conjugal share
of the property in favor of Nilo and (2) a deed of extrajudicial
settlement in which Julian, Leah and Rebecca waived in favor of
Nilo their rights and interests over their share of the property
inherited from Virginia, which documents were the basis of the
cancellation of OCT and the issuance of a TCT in the their name.
Petitioners attacked the validity of the foregoing instruments,
contending that Nilo employed forgery and undue influence to
coerce Julian to execute the deed of donation. Rebecca averred
that Nilo employed fraud to procure her signature to the deed of
extrajudicial settlement. She added that the exclusion of her
retardate sister, Delia, in the extrajudicial settlement, resulted in
the latter's preterition that should warrant its annulment.

Issues: 1. Did the heirs of Nilo acquire absolute ownership

over the property in question?
2. What is the effect of the exclusion of Delia in the
extrajudicial settlement?

Held: 1. When Virginia died intestate in 1982, her part of the

conjugal property was transmitted to her heirs — her husband
Julian and their children. The inheritance, which vested from the
moment of death of the decedent, remained under a co-ownership
regime among the heirs until partition. Every act intended to put
an end to indivision among co-heirs and legatees or devisees
would be a partition although it would purport to be a sale, an
exchange, a compromise, a donation or an extrajudicial
settlement. The deed of donation and deed of extra-judicial
settlement consolidated the title solely to Nilo and ceased the co-
ownership.

2. The exclusion of Delia Viado from the deed of

extrajudicial settlement has the effect of preterition. This kind of
preterition, in the absence of proof and bad faith, does not justify
a collateral attack on the new TCT. The relief instead rests on
Art.1104, NCC to the effect that where the preterition is not
attended by bad faith and fraud, the partition shall not be
rescinded but the preterited heir shall be paid the value pertaining
to her. Therefore, the value of the property must be ascertained
to determine the amount due to Delia.

Formal requirements of a valid partition

VERONA PADA-KILARIO vs. COURT OF APPEALS

G.R. No. 134329, January 19, 2000.

Facts: Sometime in May, 1951, the heirs of Jacinto Pada

entered into an extra-judicial partition of his estate which includes
a parcel of land in Leyte. The partition was not registered as it
was written in a private document. The land was allocated to 2 of
the heirs, Ananias and Marciano. Meanwhile, petitioner spouses
occupied the northern portion of the subject land with the consent
of the heirs of Jacinto.
In 1993, Maria Pada sold the co-ownership right of her
father, Marciano to private respondent, Silverio Pada. Thereafter,
Silverio demanded that petitioner spouses vacate the northern
portion of the subject land so his family can utilize the said area.
When conciliation proceedings failed, Silverio filed in the MCTC
of Matalom, Leyte, a complaint for ejectment against petitioner
spouses.
The MCTC sustained the possession of petitioner spouses
and held that the extra-judicial partition was not valid since it was
executed in a private document and was never registered. On
appeal, the RTC reversed the decision of the lower court holding
that Maria Pada was the legal owner of the property sold. The
CA affirmed the decision of the RTC holding that the 1951
extrajudicial partition being legal and effective as among
Jacinto’s heirs, Maria Pada validly transferred her ownership
rights over the subject land to Silverio.

Issue: Is it necessary for the validity of the extrajudicial

partition that the same be embodied in a public instrument?

Held: No. The intrinsic validity of partition not executed

in a public instrument is not undermined when no
creditors are involved. The partition of inherited property
need not be embodied in a public document so as to be
effective as regards the heirs that participated therein. The
requirement of Article 1358 of the Civil Code that acts
which have for their object the creation, transmission,
modification or extinguishment of real rights over
immovable property, must appear in a public instrument, is
only for convenience, non-compliance with which does not
affect the validity or enforceability of the acts of the parties
as among themselves. And neither does the Statute of
Frauds under Article 1403 of the New Civil Code apply
because partition among heirs is not legally deemed a
conveyance of real property, considering that it involves
not a transfer of property from one to the other but rather,
a confirmation or ratification of title or right of property that
an heir is renouncing in favor of another heir who accepts
and receives the inheritance.
III. OBLIGATIONS AND CONTRACTS

Novation

ESPINA vs. COURT OF APPEALS

G.R. No. 116805, June 22, 2000

Facts: Petitioner Mario Espina is the registered owner

of a Condominium Unit in Antipolo, Rizal. In 1987, the
condominium unit in question was leased to respondent
Rene Diaz. In 1991 while Diaz occupied the premises as
lessee, Mario executed a Provisional Deed of Sale
whereby he agreed to sell the condominium unit to
respondent for the initial downpayment of P100,000.00 to
be paid upon the execution of the contract and the
balance to be paid in 6 installments through PCI Bank
postdated checks. Diaz’s checks all bounced and were
dishonored upon presentment for the reason that the bank
account was closed. Consequently, on July 26, 1992,
Mario terminated the provisional deed of sale by a notarial
notice of cancellation. Nonetheless, Diaz continued to
occupy the premises, as lessee, but failed to pay the
rentals due. On October 28, 1992, Diaz made a payment
of P100,000.00 which was accepted by Mario. On
February 24, 1993, Mario filed with the MTC-Antipolo
Rizal, an action for unlawful detainer against Diaz. The TC
ordered Diaz to vacate the premises and to pay back &
current rentals, attorneys fees and costs. On appeal to
the RTC, the latter court affirmed the decision of the
MTC. Diaz filed with the CA a petition for review. The CA
reversed the appealed decision and dismissed the
complaint for unlawful detainer. MFR filed by Mario was
denied. Hence, this appeal via petition for review on
certiorari.

Issue: Did the provisional deed of sale novate the

existing lease contract?

Held: NO. The provisional deed of sale that was subsequently

executed by the parties did not novate the original existing
contract of lease.
Novation is never presumed; it must be proven as a fact
either by express stipulation of the parties or by implication
derived from an irreconcilable incompatibility between old and
new obligations or contracts. Otherwise, the original contract
remains in force.

Relativity of Contracts

DKC HOLDINGS CORP. vs. COURT OF APPEALS

G. R. No. 118248, April 5, 2000
Facts: On March 16, 1988, petitioner corporation entered into
a Contract of Lease with Option to Buy with Encarnacion
Bartolome, whereby petitioner was given the option to lease or
lease with purchase the subject land. Petitioner regularly paid
the monthly P3,000.00 reservation fee until the death of
Encarnation in January 1990. Thereafter, petitioner coursed its
payment to private respondent Victor Bartolome, the sole heir of
Encarnacion. Victor, however, refused to accept. On March 14,
1990, petitioner served upon Victor a written notice that it was
exercising its option to lease the property. Again, Victor refused
to accept the rental fee and to surrender possession of the property
to petitioner. Petitioner thus opened a savings account with a
bank in the name of Victor Bartolome and deposited therein the
aforesaid rental fee as well as P6,000.00 reservation fees.
Petitioner then filed a Complaint for specific performance and
damages against Victor.
The trial court dismissed the complaint, holding that the
subject contract was terminated upon the death of Encarnacion
Bartolome and did not bind Victor because he was not a party
thereto.

Issue: Was the Contract of Lease with Option to Buy entered

into by Encarnacion with petitioner terminated upon her death,
hence not binding upon Victor?

Held: NO. The contract was not terminated upon

Encarnacion’s death. It remains binding upon Victor. The
general rule under Article 1311, NCC is that heirs are bound by
contracts entered into by their predecessors-in-interest except
when the rights and obligations arising therefrom are not
transmissible by (1) their nature, (2) stipulation or (3) provision
of law. In the case at bar, there is neither contractual stipulation
nor legal provision making the rights and obligations under the
contract intansmissible. In fact, the nature of the rights and
obligations therein are, by their nature, transmissible.
A good measure for determining whether a contract
terminates upon the death of one of the parties is whether it is of
such character that it may be performed by the promissor’s
personal representative. In the case at bar, there is no personal act
required from the late Encarnacion Bartolome. Rather, the
obligation of Encarnaction in the contract to deliver the
possession of the subject property to petitioner upon the exercise
by the latter of its option to lease the same may very well be
performed by her heir Victor. There exists a privity of interest
between Victor and his deceased mother. Victor cannot escape
the legal consequence of a transaction entered into by his
predecessor-in-interest because he has inherited the property
subject to the liability affecting the latter.
Furthermore, the subject matter of the contract is a lease,
which is a property right. The death of a party does not excuse
nonperformance of a contract which involves a property right, and
the rights and obligations thereunder pass to the personal
representatives of the deceased. Similarly, nonperformance is not
excused by the death of the party when the other party has a
property interest in the subject matter of the contract.

Onerous Contract

GOLDEN DIAMOND vs. COURT OF APPEALS

 G.R. No. 131436, May 31, 2000

Facts: Petitioner Golden Diamond, Inc. (GDI) entered into a

Dealer Agreement with International Family Food Services, Inc.
(IFFSI), the exclusive licensee in the Philippines of Shakey's
U.S.A., for the operation of Shakey's pizza parlors in Caloocan
City for a period of ten years, from February 1981 to February
1991 renewable for another ten years. GDI subsequently entered
into a Memorandum of Agreement (MOA) with private
respondent Cheng, whereby GDI assigned to the latter, its rights,
interests and obligations under its agreement with IFFSI over the
Shakey's outlet at Gotesco Grand Central, in exchange for the
payment of a monthly royalty fee of five per cent (5%) of the
gross dealer sales for a period of five (5) years, from August 1988
to August 1993.
On February 1991, Cheng stopped payment of the royalty
fees on the ground that the contract between GDI and IFFSI had
expired. Cheng insisted that his payment of the royalty fees is
conditioned on the existence of the agreement between petitioner
GDI and IFFSI.

Issue: Is Cheng obliged to pay the royalty fee to GDI even after
the expiration of GDI’s area franchise?

Held: NO. Cheng is no longer obliged to pay the royalty

fee. The fact that no renewal was granted removed the basis for
the continued payment of the monthly royalty fee. It is the essence
of a royalty fee that it is paid in consideration of an existing right.
In its ordinary acceptation, royalties refer to payments made to
the owner for permitting another to use his property. Royalties
are similar to the rents payable for the use or right to use an
invention and after the right to use it has terminated there is no
obligation to make further royalty payments.
The MOA is an onerous contract, wherein the
contracting parties are obliged to render reciprocal
prestations. GDI is entitled to receive the royalty fee in
return for Cheng’s use of its (GDI) exclusive right to the
Shakey's outlet at the Gotesco Grand Central. Indelibly,
the very reason which impelled Cheng to assume the
obligation to pay the royalty fee was that of GDI’s
representation that it has the exclusive right to operate the
outlet. To expect Cheng to continue paying the royalty fee
after February 1991, or until August 1993, when what GDI
assigned no longer exists — is legally untenable. GDI’s
entitlement to the royalty fee is wholly dependent upon the
existence and subsistence of the right for which the royalty
was granted. If the reason which gave rise to the contract
has ceased to exist, the result is that the obligation too,
has ceased to exist.

Power to Rescind in Reciprocal Obligations

RELIANCE COMMODITIES INC. vs. INTERMEDIATE

APPELLATE COURT
G.R. No. 74729, May 31, 2000

Facts: Respondent Marvin Paez entered into contract with

Reliance Commodities, Inc. (RCI) whereby the latter agreed to
provide the former with funds and equipment for the operation of
a manganese mining claim. Subsequently, Paez and his wife
executed a deed of first real estate mortgage (REM) on their
property in favor of RCI as security for more cash advances
needed to sustain the mining operation. RCI then made cash
advances to Paez until subsequently, a difference arose between
Paez and RCI concerning these cash advances. Later, for failure
to repay, RCI foreclosed extrajudicially the mortgage executed by
Paez in its favor.
The spouses Paez thereafter filed an action to annul the
Deed of First Real Estate Mortgage, and for damages.
The trial court ordered Paez to pay RCI the cash
advances they received and lifted the TRO as to the
foreclosure, allowing RCI to proceed with the extrajudicial
foreclosure of the mortgage should Paez fails to pay. The
CA however, declared the REM and the contract
between the parties void, finding that it is RCI which gave
cause for the rescission of the contract, and that restitution
is not available in rescission. RCI now claims that the
violation of the contracts came from the Paez spouses
because they failed to deliver at all the manganese ores
stipulated in the contract according to the schedule
outlined. Hence, they were not entitled to rescind the
contracts or recover damages and by reason of which RCI
was entitled to foreclose on the security constituted.
Issue: Does RCI have the power to rescind the contract? If so,
is restitution available?

Held: YES. RCI has the power to rescind the contract,

it having been established that Paez failed to comply with
his obligation under the contract. Under the agreement of
RCI with Paez, the former was to pay Paez P70.00 for
every ton of manganese ores delivered. On the other
hand, Paez failed to make even a single delivery of
manganese ores to the stockpile yard at Gabaldon. In fact,
there was no mining operation at all.
Consequently, RCI rescinded the contracts. The power to
rescind or resolve is given to the injured party. More, the
rescission of the contracts requires the parties to restore to each
other what they have received by reason of the contracts. The
rescission has the effect of abrogating the contracts in all parts.

CENTRAL BANK OF THE PHILIPPINES vs. BICHARA

G.R. No. 131074, March 27, 2000

Facts: On July 19, 1983, respondents Spouses Alfonso and

Anacleta Bichara sold 2 lots in Legazpi City, with an aggregate
area of 811 sq. m. to petitioner CENTRAL BANK OF THE
PHILIPPINES (CBP). The deed of sale contained the following
pertinent stipulations: that the purchase price shall be paid only
after the Deed of Sale has been duly registered and a clean title
issued in the name of the vendee and; that the vendors shall
undertake to fill the parcels of land with an escombro free from
waste materials compacted to the street level upon the signing of
the Deed to suit the ground for the construction of the regional
office of CBP.
Title over the property was issued in CBP's name on
September 6, 1983. Despite the issuance of the title, CBP failed
to pay the spouses. The latter did not fill up the lot with escombro
despite several demands made by the former. CBP was thus
constrained to undertake the filling up of the said lots, by
contracting the services of BGV Construction. The filling up of
the lots cost CBP P45,000.00, which amount was deducted from
the purchase price payable to the spouses.
CBP, however, still did not pay the spouses. Consequently,
on September 7, 1992, the spouses filed an action for rescission
or specific performance with damages, against CBP before the
RTC of Legazpi City, alleging that CBP failed to pay the purchase
price despite demand.

Issues: Is rescission of the contract of sale a proper remedy

available to the Spouses?

Held: No. The right to rescind a contract involving reciprocal

obligations is provided for in Article 1191 of the Civil Code. The
law speaks of the right of the "injured party" to choose between
rescission or fulfillment of the obligation, with the payment of
damages in either case. Here, the spouses claim to be the injured
party and they aver that they are entitled to cancel the obligation
altogether in view of CBP's failure to pay the purchase price when
the same became due. CBP disputes the spouses’ stand, claiming
that it was entitled to withhold payment of the purchase price
because of the latter’s failure to comply with their contractual
obligations.
By law, "[t]he vendee is bound to accept the delivery and to
pay the price of the thing sold at the time and place stipulated in
the contract." In the case at bench, CBP's obligation to pay arose
as soon as the deed of sale was registered and a clean title was
issued. CBP justifies non-payment on the spouses' breach of
several stipulations in the contract, such as: non-payment of tax
and the occupation by squatters of the premises. However, CBP’s
obligation to pay was not subject to the foregoing "conditions,"
only that its demandability is suspended until the opportune time.
That arrived upon the registration of the deed of sale and the
issuance of a clean title in its favor.
The Spouses should not be allowed to rescind the contract
where they themselves did not perform their essential obligation
thereunder. Evidently, the spouses were guilty of non-
performance of an essential contractual obligation. The deed of
sale expressly stipulated that the vendors were to undertake, at
their expense, the filling up of the lots with escombro free from
waste material compacted to the street level. This was required in
order to make the site suitable for the construction of a substantial
edifice which will house the regional office of CBP. This was to
be accomplished upon the signing of the contract and insofar as
CBP was concerned, the spouses obligation was demandable at
once.
It should be emphasized that a contract of sale
involves reciprocity between the parties. Since the
spouses were in bad faith, they may not seek the
rescission of the agreement they themselves breached.

Contract to Sell; Rescission

PADILLA vs. PAREDES

G.R. No. 124874, March 17, 2000
Facts: Petitioner Albert Padilla and private respondents
Floresco and Adelina Paredes entered into a contract to sell a
parcel of land in San Juan, La Union. The land was untitled
although the Spouses Paredes were paying taxes thereon. Under
the contract, Padilla undertook to secure title to the property in
Spouses Paredes’ names. Of the P312,840.00 purchase price,
petitioner was to pay a downpayment of P50,000.00 upon signing
of the contract, and the balance was to be paid within 10 days
from the issuance of a court order directing issuance of a decree
of registration for the property. Padilla failed to pay the balance
of the purchase price within the period set. Later Spouses Paredes
offered to sell to Padilla ½ of the property for all the payments
the latter had made, subject to the condition that if Padilla will not
agree, they would enforce the automatic rescission of the
contract. Padilla did not accept the proposal. Instead, he offered
to pay the balance in full for the entire property, plus interest and
attorney's fees, which the spouses refused. Padilla then instituted
an action for specific performance against the spouses, alleging
that he had already substantially complied with his obligation
under the contract to sell.

Issue: Are the Spouses Paredes entitled to rescind their

"contract to sell" the land to Padilla?

Held: YES. The spouses may validly cancel the

contract to sell their land to Padilla. However, the reason
for this is not that the spouses have the power to rescind
such contract, but because their obligation thereunder did
not arise. Article 1191 of the Civil Code, on rescission,
speaks of obligations already existing. In a contract to
sell, the full payment of the purchase price is a positive
suspensive condition, the failure of which is not
considered a breach, casual or serious, but simply an
event which prevented the obligation of the vendor to
convey title from acquiring any obligatory force. There can
be no rescission of an obligation that is non-existent,
considering that the suspensive condition therefor has not
yet happened. Because of Padilla's failure to fully pay the
purchase price, the obligation of the spouses to convey
title to the property did not arise. Thus, they are under no
obligation, and may not be compelled, to convey title to
Padilla and receive the full purchase price.

Interpretation of Contracts; Rescission

PHIL. NATIONAL CONSTRUCTION CORP. vs. MARS

CONSTRUCTION ENT.
G.R. No.133909, February 15, 2000

Facts: Mars Construction Enterprises, Inc. (Mars) entered into

a contract with the Phil. National Construction Corp. (PNCC) for
the supply of approximately 70,000 cubic meters of aggregates
but with out specification as to the volume of each of the items
mentioned therein. The two parties subsequently amended the
contract by specifying the volume for three of the items, totaling
the originally agreed 70,000 cubic meters of aggregate, except the
fourth item, the volume of which was not specified.
Because the delivery of aggregates was delayed for 8
months, PNCC was constrained to obtain necessary
materials from other sources, incurring additional costs
 representing the difference between the agreed price in
the contract and the pricing of outside sources, which was
reimbursed by Mars in accordance with the default clause
under the contract. When Mars delivered 17,000 cubic
meters of washed gravel, PNCC refused to accept, on the
following grounds:
1. Mars has already delivered aggregates 45% over and
above the required volume in the amended contract and
PNCC had no more need for the same;
2. PNCC has already informed Mars in a letter of the final
quantities of concrete aggregates to be delivered and that
it would not accept any further deliveries from Mars;
3. Mars has defaulted on its contractual obligations.

Issue: May PNCC be compelled to accept the delivery

of the 17,000 cu. m. of washed gravel?

Held: YES. PNCC may be compelled to accept.

(1) The amendment made the agreement ambiguous
because the quantity of sub-base 2” minus crusher run
was not specified. If said aggregate were included
however, the total would definitely be in excess of 70,000
cu. m. PNCC had ordered from Mars more than what was
specified in the agreement. This act signified that the
maximum limit of 70,000 cu. m. was disregarded because
of PNCC's needs. What then would be the significance of
the quantities stated in the amendment? We interpret that
these are the minimum quantities that must be delivered
by Mars. Both parties are bound by these figures. In this
way, both parties would know exactly how much to
demand from each other to be able to comply with their
respective obligations. The various stipulations in a
contract should be interpreted together. Ambiguous ones
should be so construed as to conform to the sense that
would result if all the provisions are comprehended jointly.
(2) By saying that the quantity specified in the letter was its
last order, PNCC unilaterally amended its Contract with the Mars.
The act of treating a contract as cancelled or rescinded on account
of infractions by the other contracting party is always provisional;
that is, contestable and subject to judicial determination. When
PNCC resolved or rescinded the Agreement without previous
court action, it proceeded at its own risk. Only the final judgment
of a court will conclusively and finally settle whether such
recourse was correct in law.
3) The default was an insubstantial breach. The contract
specifically provided that if Mars failed to deliver the required
aggregates, PNCC could procure them from other sources so as
not to jeopardize the entire construction project. Since PNCC was
already compensated for Mars’ defaults, such defaults cannot be
considered as a substantial breach that justified the rescission of
the Contract and the refusal to accept the questioned delivery.
Furthermore, when PNCC exercised its options in case of delay
or default on the part of Mars, the former waived its right to
rescind and was thus estopped from rescinding the Contract by
reason of such short delivery.

Badges of Fraud
 China Banking Corp. vs. Court of Appeals
G.R. No. 129644, March 7, 2000

Facts: In connection with a civil case filed by Metropolitan

Bank against Alfonso Roxas Chua , a notice of levy affecting the
residential land of Alfonso and his wife was issued. Meanwile, in
1985, the trial court rendered another decision in favor of China
Banking Corporation against Alfonso in a collection case. A
certificate of sale covering ½ of the undivided portion of the
property was executed in favor of Metro Bank. In 1988, Alfonso
executed “Assignment of Right to Redeem” to his son Paulino
who redeemed the said property on the same day. On the other
hand, another levy on execution in favor of China Bank was
issued on the same property. Thereafter, a certificate of sale on
execution was issued to China Bank in 1992. Paulino instituted a
civil case arguing that he has a better right over the title of China
Bank, the property having been redeemed by him in 1988 while
China Bank acquired its right in 1991. The trial court ruled that
the assignment was made for a valuable consideration and was
executed two years before China Bank levied the conjugal share
of Chua. China Bank argued that the assignment of right of
redemption made by Alfonso to Paulino was done in fraud of
creditors and may be rescinded under Article 1387, NCC.

Issue: Was the assignment by Alfonso to Paulino of the

right of redemption done to defraud his creditors and may
be rescinded under Art. 1387, NCC?

Held: YES. The assignment was done in fraud of

creditors. China Bank is, therefore entitled to rescind the
same. Under Article 1381(3) of the Civil Code, contracts
which are undertaken in fraud of creditors when the latter
cannot in any manner collect the claims due them, are
rescissible. The existence of fraud with intent to defraud
creditor may either be presumed in accordance with
Article 1387,NCC or duly proved in accordance with the
ordinary rules of evidence. Hence, the law presumes that
there is fraud of creditors when:
a) There is alienation of property by gratuitous title by the
debtor who has not reserved sufficient property to pay his debts
contracted before such alienation; or
b) There is alienation of property by onerous title made
by a debtor against whom some judgment has been
rendered in any instance or some writ of attachment has
been issued. The decision or attachment need not refer to
the property alienated and need not have been obtained
by the party seeking rescission.
Inasmuch as the judgment of the trial court in favor of
China Bank against Alfonso was rendered as early as
1985, there is a presumption that the 1988 sale of his
property, in this case the right of redemption, is fraudulent
under Article 1387 of the Civil Code. The fact that private
respondent Paulino redeemed the property and caused its
annotation on the TCT more than two years ahead of
petitioner China Bank is of no moment. The Court of
Appeals maintained that although the transfer was made
between father and son, the conveyance was not
fraudulent since Paulino has indeed paid the redemption
fee of P1,463,375.39 to Metrobank and the sum of
P100,000 to his father. In determining whether or not a
certain conveyance is fraudulent, the question in every
case is whether the conveyance was a bona fide
transaction or a trick and contrivance to defeat creditors or
whether it conserves to the creditor to the debtor or a
special right. It is not sufficient that it is founded on good
considerations or is made with bona fide intent. It must
have both elements. If defective in either of these,
although good between the parties, it is voidable as to
creditors. The question as to whether or not
the conveyance is fraudulent is: does it prejudice the
rights of the creditors? The mere fact that the conveyance
was founded on valuable consideration does not
necessarily negate the presumption of fraud under Art.
1387, NCC. There has to be a valuable consideration and
the transaction must have been made bona fide. In the
case at bar, the presumption that the conveyance is
fraudulent has not been overcome. At the time a judgment
was rendered in favor of China Bank against Alfonso,
Paulino was still living with his parents in the subject
property. Paulino himself admitted that he knew his father
was heavily indebted and could not afford to pay his debts.
The transfer was undoubtedly made between father and
son at the the time when the father was insolvent and had
no other property to pay his creditors. Hence, it is of no
consequence whether or not Paulino had given valuable
consideration for the conveyance.

Void and Voidable Contracts

SEN PO EK MARKETING CORP. vs. MARTINEZ

G.R. No. 134117, February 9, 2000
Facts: Sofia Martinez was the registered owner of 2 parcels of
land who leased the lots to Yu Siong, father of the president and
stockholders of petitioner Sen Po Ek for a period of 10
years. When the lease expired it was later renewed several times,
the last renewal being on March 1982 which is to expire on Jan.
1987. In the meantime, Sofia sold the lots and the building to her
daughter, respondent Teodora Martinez. After the lease contract
expired in Jan. 1987, it was no longer renewed by the parties. Sen
Po Ek, however, continued to possess and occupy the leased
properties, and regularly paid the monthly rentals to Sofia until
her death, and then to her heirs through Teodora. On November
11, 1989, Teodora sent a letter to petitioner Sen Po Ek informing
it of her intention to sell the leased premises and authorizing a
broker to negotiate the sale "with any and all interested
parties." Sen Po Ek offered to purchase the poperty. Another
buyer, Tiu Uyping, was also interested. Sen Po Ek then filed a
complaint for the annulment of the sale executed by Sofia in favor
of Teodora. Days later, the property was sold to Tiu Uyping. Sen
Po Ek amended its complaint, praying for the nullity of the second
sale transaction.

Issue: Were the two disputed sale transactions valid?

Held: The first sale is void. The second sale, however, is valid
and binding. The first sale between Sofia and Teodora was void
for being fictitious. Under Art. 1409 (2),NCC, one type of
contract which can be declared void and inexistent is that which
is absolutely simulated or fictitious, and this was established by
several badges of simulation proving that the sale between Sofia
and Teodora was not intended to have any legal effect between
them.The combination of all of these events leads one to the
inescapable conclusion that the first sale transaction was
absolutely simulated, hence void.
Nonetheless, the sale between Teodora and the Tiu
Uyping, is valid. Teodora, as only one of the co-heirs of
Sofia, had no authority to sell the entire lot to the Tiu
Uyping. She can only sell her undivided portion of the
property. Thus, when she sold the leased premises to Tiu
Uyping, the sale is unenforceable having been entered
into by Teodora in behalf of her co-heirs who, however,
gave no authority or legal representation. However, such a
contract is susceptible of ratification. In this case, the
ratification came in the form of "Confirmation of Sale of
Land and Improvements" executed by the other heirs of
Sofia. Since the sale by Teodora of the leased premises
to Tiu Uyping was ratified by her co-heirs, then the sale is
considered valid and binding

Capacity to Enter into Contract

LOYOLA vs. COURT OF APPEALS

G.R. No. 115734, February 23, 2000

Facts: Three years before her death, Gaudencia Zarraga sold to

private respondents, the children of one her siblings, her share in
Lot 115-A-1 for P34,000.00. The sale was evidenced by a
notarized document denominated as “Bilihang Tuluyan ng
Kalahati ng isang Lagay na Lupa.” Her other siblings assail the
validity of the execution of the deed of the absolute sale
suggesting that the deed of sale is not valid because Gaudencia
was old and senile and incapable of independent and clear
judgment.

Issue: Is the deed of absolute sale invalid on the ground of

Gaudencia’s incapacity?

Held: NO. A person is not incapacitated to contract

merely because of advanced years of by reason of
physical infirmities. Only when such age or infirmities
impair his mental faculties to such extent as to prevent him
from properly, intelligently, and fairly protecting his
property rights is he considered incapacitated. Petitioners
show no proof that Gaudencia had lost control of her
mental faculties at the time of the sale. The notary public
who interviewed her, testified that when he talked to
Gaudencia before preparing the deed of sale, she
answered correctly and he was convinced that Gaudencia
was mentally fit and knew what she was doing.

Unenforceable Contract

VILLANUEVA-MIJARES vs. COURT OF APPEALS

G.R. No. 108921, April 12, 2000

Facts: Petitioners are the legitimate children of the late Leon

Villanueva. Leon was one of eight children of Felipe Villanueva,
predecessor-in-interest of the parties in the present case. During
his lifetime, Felipe, owned real property situated in Kalibo,
Aklan. Upon Felipe’s death, ownership of the land was passed on
to his children. Pedro, one of the children of Felipe got his share
equivalent to one-sixth (1/6) of the property and had it declared
under his name. The remaining undivided portion of the land was
held in trust by Leon for his co-heirs. During Leon’s lifetime, his
co-heirs made several seasonable and lawful demands upon him
to subdivide and partition the property, but for one reason or
another, no subdivision took place.
After the death of Leon in August 1972, private
respondents discovered that the shares of four of the heirs
of Felipe were purchased by Leon as evidenced by a
Deed of Sale executed on August 25, 1946 but registered
only in 1971. It also came to light that Leon had, sometime
in July 1970, executed a sale and partition of the property
in favor of his own children, herein petitioners.
Issue: Are the petitioners the legal owners of the property in
question in accordance with the individual titles issued to them?

Held: No. The Deed of Sale of August 25, 1946 was

"unenforceable” and thus did not make the petitioners the legal
owners of the property in question in accordance with the
individual titles issued to them.
Article 1529 of the old Civil Code, which was the prevailing
law in 1948 and thus governed the questioned Deed of Sale,
clearly provided that a contract is unenforceable when there is an
absence of authority on the part of one of the contracting parties.
The mere lapse of time cannot give efficacy to such a contract.
The defect is such that it cannot be cured except by the subsequent
ratification of the unenforceable contract by the person in whose
name the contract was executed. In the instant case, there is no
showing of any express or implied ratification of the assailed
Deed of Sale by the private respondents.
 Simulation of Contracts

LOYOLA vs. COURT OF APPEALS

G.R. No. 115734, February 23, 2000

Facts: Three years before her death, Gaudencia Zarraga sold to

private respondents, the children of one her siblings, her share in
Lot 115-A-1 for P34,000.00. The sale was evidenced by a
notarized document denominated as “Bilihang Tuluyan ng
Kalahati ng isang Lagay na Lupa.” Her other siblings assail the
validity of the execution of the deed of the absolute sale
suggesting that the deed of sale is simulated.

Issue: Is the deed of absolute sale simulated?

Held: NO. Simulation is the declaration of a fictitious will

deliberately made by agreement of the parties, in order to
produce, for the purposes of deception, the appearances
of a juridical act which does not exist or is different what
that which does not exist or is different what that which
was really executed.” Characteristic of simulation is that
the apparent contract is not really desired or intended to
produce legal effect or in in any way alter the judicial
situation of the parties. Perusal of the questioned deed
will show that the sale of the property would convert the
co-owners to vendors and vendees, a clear alteration of
the judicial relationships. This is contrary to the requisite
of simulation that the apparent contract was not really
meant to produce any legal effect. Also in a simulated
contract, the parties have no intention to be bound by the
contract. But in this case, the parties clearly intended to
be bound by the contract of sale, an intention they do not
deny. The requisites for simulation are: (a) an outward
declaration of will different from the will of the parties; (b)
the false appearance must have been intended by mutual
agreement; and (c) the purpose is to deceive third
persons. None of these are present in the assailed
transaction.

Laches; Prescription

VILLANUEVA-MIJARES vs. COURT OF APPEALS

G.R. No. 108921, April 12, 2000

Facts: Petitioners are the legitimate children of the late Leon

Villanueva. Leon was one of eight children of Felipe Villanueva,
predecessor-in-interest of the parties in the present case. During
his lifetime, Felipe, owned real property situated in Kalibo,
Aklan. Upon Felipe’s death, ownership of the land was passed on
to his children. Pedro, one of the children of Felipe got his share
equivalent to one-sixth (1/6) of the property and had it declared
under his name. The remaining undivided portion of the land was
held in trust by Leon for his co-heirs. During Leon’s lifetime, his
co-heirs made several seasonable and lawful demands upon him
to subdivide and partition the property, but for one reason or
another, no subdivision took place.
 After the death of Leon in August 1972, private
respondents discovered that the shares of four of the heirs
of Felipe were purchased by Leon as evidenced by a
Deed of Sale executed on August 25, 1946 but registered
only in 1971. It also came to light that Leon had, sometime
in July 1970, executed a sale and partition of the property
in favor of his own children, herein petitioners.
Issue: Is the claim by private respondents to recover the
property in question barred by laches, estoppel, prescription and
res judicata?

Held: NO. At the time of signing of the Deed of Sale of August

26, 1948, private respondents Procerfina, Prosperidad, Ramon
and Rosa were minors. Even if the case was brought more than
29 years later, they could not be faulted for their failure to file a
case to recover their inheritance from their uncle Leon, since up
to the age of majority, they believed and considered Leon their
co-heir and administrator. Upon learning of their uncle’s actions,
they filed an action for recovery. Hence, the doctrine of stale
demands formulated in Tijam vs. Sibonghanoy cannot be applied
here. They did not sleep on their rights, contrary to petitioners’
assertion.
Moreover, there is no impled ratification in the instant case
because no benefit accrued to the children of Maria Baltazar, thus
the action is not barred by prescription.
While a review of the decree of registration is no longer
available after the expiration of the one-year period from entry
thereof pursuant to the doctrine of res judicata, an equitable
remedy is still available. Those wrongfully deprived of their
property may initiate an action for reconveyance of the property.
 GASTON vs. COURT OF APPEALS
G.R. No. 116340, June 29, 2000.

Facts: In 1972, private respondent Gertrudes Medel filed a

complaint before the RTC of Silay City, against petitioner Cecilia
Gaston's mother Sofia de Oca vda. De Gaston and other
defendants for recovery of her share over certain parcels of land
of Talisay Cadastre, claiming that, as her mother is the daughter
of Mariano de Oca by his first marriage, she (Gertrudes) is
entitled to the properties left by Mariano de Oca. RTC dismissed
the same. On appeal, the CA reversed the TC’s decision. The
CA ordered the defendants, Sofia Gaston, et. al, to partition the
properties involved to include the share of private respondent
Medel within 60 days from the finality of the said decision. As
the said defendants had not complied with the said CA’s order,
despite the lapse of the period indicated therein and inspite of
representations made by Medel to the defendants to submit the
project of partition, the private respondent filed with the
respondent RTC on November 27, 1991, a motion to require the
defendants to submit a project of partition. Acting on the said
motion, the respondent court in its order of December 3, 1991,
required the defendants' counsel to comment thereon within 5
days from receipt thereof, with warning 'otherwise the court will
partition'. The defendants also ignored the said order of the
respondent court. Thus, the respondent court, in its order dated
January 17, 1992, acted on the ex-parte motion of the private
respondent to partition the properties.
Issue: Is the petition for nullification of the questioned order
dated Jan. 17, 1992 time-barred?

Held: YES.
The questioned order of the respondent court is dated
January 17, 1992 but the petition was filed only on December 29,
1992 or almost a year after the issuance of the questioned order.
The yardstick to measure the timeliness of a petition for certiorari
is the reasonableness of the length of time that had expired from
the commission of the actuation complained of up to the
institution of the proceeding to amend the same. Failure to file the
certiorari petition within a reasonable time renders the petitioner
susceptible to the adverse legal consequences of laches.
The essence of laches is the failure, or neglect, for an
unreasonable and unexplained length of time to do that which, by
exercising due diligence, could or should have been done earlier;
it is the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled
to assert it either has abandoned it or declined to assert it. This
Court has ruled that an interval of seven (7) months after rendition
of the last order sought to be set aside is definitely barred by
laches. A petition brought after 99 days is also barred by laches.
The special civil action for certiorari under Rule 65 of the Rules
of Court must be filed within a reasonable period of only 3
months.

TRUSTS

Express Trust
 SECUYA vs. VDA. DE SELMA
G.R. No. 136021, February 22, 2000

Facts: The present petition is rooted in an action for quieting

of title filed before the RTC by petitioners, all surnamed Secuya
against Gerarda De Selma.
The parcel of land subject of this case is a portion of
Lot 5679 of the Talisay-Minglanilla Friar Lands
Estate. The lot was originally sold to Maxima Caballero
Vda. De Carino. During the lifetime of the latter, she
entered into an Agreement of Partition dated January 5,
1938 with Paciencia Sabellona, whereby Maxima bound
herself to part with 1/3 of Lot 5679 in favor of Paciencia
upon the approval of her application for patent. Paciencia
took possession and occupation of said portion
adjudicated to her. Later she sold the 3,000 sq. m. portion
thereof to Dalmacio Secuya on October 20,1953. After
said purchase, Dalmacio and his siblings took physical
possession of the land and cultivated the same. The
petitioners herein are the heirs of Dalmacio. In 1975,
Gerarda bought a bulk of Lot 5679, which embraced and
included the land bought by Dalmacio.

Issue: Do petitioners have the requisite title that would enable

them to avail themselves of the remedy of quieting of title?

Held: NO. Petitioners do not have the requisite title to pursue

an action for quieting of title. Petitioners anchor their claim of
ownership on the Agreement of Partition. Notwithstanding its
nomenclature, the Agreement is not one of partition, because
there was no property to partition and the parties were not co-
owners. Rather, it is in the nature of a trust agreement. Trust is
the right to the beneficial enjoyment of property, the legal title to
which is vested in another. It is a fiduciary relationship that
obliges the trustee to deal with the property for the benefit of the
beneficiary. Trust relations between parties may either be express
or implied. An express trust is created by the intention of the
trustor or of the parties. An implied trust comes into being by
operation of law.
The present Agreement involves an express trust. Under Art.
1444 of the Civil Code, ‘no particular words are required for the
creation of an express trust, it being sufficient that a trust is clearly
intended.’
While no time limit is imposed for the enforcement of rights
under express trusts, prescription may, however, bar a
beneficiary’s action for recovery, if a repudiation of the trust is
proven by clear and convincing evidence and made known to the
beneficiary. There was a repudiation of the express trust when
the heirs of Maxima failed to deliver or transfer the property to
Paciencia, and instead sold the same to a 3rd person not privy to
the Agreement. The Agreement was not registered, thus, it could
not bind 3rd persons. Consequently, the subsequent sales
transactions involving the land in dispute, which ultimately led to
its purchase by Gerarda, and the titles covering it must be upheld,
in the absence of proof that the said transactions were fraudulent
and irregular.

SALES AND LEASE

 Elements of a Contract of Sale

SAN ANDRES vs. RODRIGUEZ

G.R. No. 135634, May 31, 2000

Facts: Juan San Andres sold a parcel of land with an area of

345 square meters to respondent Vicente Rodriguez. The sale is
evidenced by a Deed of Sale. When San Andres died, the judicial
administrator of the decedent's estate undertook a survey of the
entire land owned by the decedent including the land sold to
Rodriguez. It was found that respondent had enlarged the area
which he purchased from San Andres by 509 square
meters. Accordingly, the judicial administrator demanded that
Rodriguez vacate the portion allegedly encroached by him. When
Rodriguez refused to leave, the judicial administrator thereafter
brought an action for the recovery of possession of the 509-square
meter lot
Rodriguez claims the disputed portion was also subsequently
the subject of an absolute sale to him as shown by a receipt signed
by the late San Andres, which reads in full as follows: “Received
from Vicente Rodriguez the sum of Five Hundred (P500.00)
Pesos representing an advance payment for a residential lot
adjoining his previously paid lot on three sides excepting on the
frontage with the agreed price of Fifteen (15.00) Pesos per square
meter and the payment of the full consideration based on a survey
shall be due and payable in five (5) years period from the
execution of the formal deed of sale.”
Issue: Was there a perfected contract of absolute sale for the
portion of the disputed 509 sq.m.-land?

Held: YES. There was a perfected contract of sale. Since the

lot subsequently sold to Rodriguez is said to adjoin the
"previously paid lot" on three sides thereof, the subject lot is
capable of being determined without the need of any new
contract. The fact that the exact area of these adjoining residential
lots is subject to the result of a survey does not detract from the
fact that they are determinate or determinable. Concomitantly,
the object of the sale is certain and determinate. Under Article
1460,NCC, a thing sold is determinate if at the time the contract
is entered into, the thing is capable of being determined without
necessity of a new or further agreement between the parties. Here,
this definition finds realization. Thus, all of the essential elements
of a contract of sale are present, i.e., that there was a meeting of
the minds between the parties, by virtue of which San Andres
undertook to transfer ownership of and to deliver a determinate
thing for a price certain in money. Without any doubt, the receipt
profoundly speaks of a meeting of the mind between San Andres
and Rodriguez for the sale of the property adjoining portion
previously sold to Rodriguez. The price is certain, which is
P15.00 per square meter. Evidently, this is a perfected contract of
sale on a deferred payment of the purchase price. All the pre-
requisite elements for a valid purchase transaction are present.
There is also no reservation of ownership nor a
stipulation providing for a unilateral rescission by either
party. The stipulation that the "payment of the full
consideration based on a survey shall be due and payable
in five (5) years from the execution of a formal deed of
sale" is not a condition which affects the efficacy of the
contract of sale. It merely provides the manner by which
the full consideration is to be computed and the time within
which the same is to be paid. But it does not affect in any
manner the effectivity of the contract.

Option Money vs. Earnest Money

CAVITE DEVELOPMENT BANK VS. CYRUS LIM

G.R. No. 131679, February 1, 2000

Facts: A certain Rodolfo Guansing obtained a loan from Cavite

Development Bank (CDB), to secure which he mortgaged a
parcel of land. As Rodolfo defaulted in the payment of his loan,
CDB foreclosed the mortgage. At the foreclosure sale held on
March 15, 1984, the mortgaged property was sold to CDB as the
highest bidder and later title to the property was issued in its
name. On June 16, 1988, private respondent Lolita Chan Lim
offered to purchase the property from CDB. Pursuant to the terms
of the offer, Lim paid CDB P30,000.00 as Option Money.
However, after some time following up the sale, Lim discovered
that the title of subject property was originally registered in the
name of Perfecto Guansing, father of mortgagor Rodolfo, and that
title of Rodolfo was cancelled on March 23, 1984 by the RTC of
Q.C as it was fraudulently secured by the latter. This decision has
since become final and executory. Lim filed an action for specific
performance and damages against CDB and its mother company
FEBTC for the latter’s alleged misrepresentation on their ability
to sell the property.
 CDB deny that a contract of sale was ever perfected
between them and Lolita Chan Lim. They contend that Lim's
letter-offer clearly states that the sum of P30,000.00 was given as
option money, not as earnest money. They thus conclude that the
contract between CDB and Lim was merely an option contract,
not a contract of sale. The trial court ruled in favor of Lim.

Issue: Is there a perfected contract of sale between Lim and

CDB?

Held: Yes. The sum of P30,000.00, although denominated in

the offer to purchase as "option money," is actually in the nature
of earnest money or down payment when considered with the
other terms of the offer. In determining the nature of a contract,
the courts are not bound by the name or title given to it by the
contracting parties. In Carceler v. CA, the SC has explained the
nature of an option contract:
“An option contract is a preparatory contract in which one
party grants to the other, for a fixed period and under
specified conditions, the power to decide, whether or not
to enter into a principal contract, it binds the party who has
given the option not to enter into the principal contract with
any other person during the period designated, and within
that period, to enter into such contract with the one to
whom the option was granted, if the latter should decide to
use the option. It is a separate agreement distinct from the
contract to which the parties may enter upon the
consummation of the option. An option contract is
therefore a contract separate from and preparatory to a
contract of sale which, if perfected, does not result in the
perfection or consummation of the sale.”
 In this case, after the payment of the 10% option
money, the Offer to Purchase provides for the payment
only of the balance of the purchase price, implying that the
"option money" forms part of the purchase price. This is
precisely the result of paying earnest money under Art.
1482 of the Civil Code. It is clear then that the parties in
this case actually entered into a contract of sale, partially
consummated as to the payment of the price.

Delivery in Contract of Sale

SERASPI vs. COURT OF APPEALS

G.R. No. 135602, April 28, 2000

Facts: Marcelino Recasa was the owner of two parcels of land.

During his lifetime, Marcelino contracted 3 marriages. At the
time of his death in 1943, he had 15 children from his three
marriages. In 1948, his intestate estate was partitioned into three
parts by his heirs, each part corresponding to the share of the heirs
in each marriage. The heirs of the first marriage, sold their share
to Dominador Recasa, an heir of the second marriage.
Dominador, representing the heirs of the second marriage, in turn
sold the share of the heirs to Quirico and Purificacion Seraspi
whose heirs are the present petitioners. In 1958, the Seraspis
obtained a loan from the Kalibo Rural Bank, Inc. (KRBI) on the
security of the lands in question to finance improvements on the
lands. However, they failed to pay the loan for which reason the
mortgage was foreclosed and the lands were sold to KRBI as the
highest bidder. Subsequently, the lands were sold by KRBI to
Manuel Rata, brother-in-law of Quirico Seraspi. It appears that
Rata, as owner of the property, allowed Quirico Seraspi to
administer the property.
In 1974, private respondent Simeon Recasa, Marcelino’s
child by his third wife, taking advantage of the illness of
Quirico Seraspi, forcibly entered the lands in question and
took possession thereof. In 1983, the Seraspis purchased
the lands from Manuel Rata and afterwards filed a
complaint against Simeon Recasa for recovery of
possession of the lands.

Issue: Did the petitioners acquire ownership over the property

in question?

Held: NO. For while a contract of sale is perfected by the

meeting of minds upon the thing which is the object of the
contract and upon the price, the ownership of the thing sold is not
transferred to the vendee until actual or constructive delivery of
the property. Hence, the maxim non nudis pactis, sed traditione
dominia dominica rerum transferuntur (not mere agreements but
tradition transfers the ownership of things). Consequently,
petitioners are not the owners of the property since it has not been
delivered to them. At the time they bought the property from Rata
in 1983, the property was in the possession of private respondent.

LAO vs. COURT OF APPEALS

G.R. No. 47013, 60647 & 60958-59, February 17, 2000

Facts: The Associated Anglo-American Tobacco Corporation

(Associated) entered into a “Contract of Sales Agent” with
petitioner Andres Lao where Lao would sell cigarettes
manufactured and delivered by Associated. Lao would in turn
remit the sale proceeds to the corporation. During the effectivity
of the contract, Lao failed to accomplish his monthly sales report
despite a demand letter sent by Associated. Associated stopped
its shipments to Lao.
Lao filed a complaint for accounting and damages against
Associated. The CFI ruled in favor of Lao and ordered both
parties to undergo a court supervised accounting of their
respective account with the view of establishing the true and
correct accountability of Lao to Associated. The Audit
Committee submitted its report to the court. The committee
excluded shipments by Associated covered by bill of lading and
factory invoices but without the corresponding delivery receipts.

Issue: Was the committee correct in excluding the shipments

not supported by delivery receipts although covered by bills of
lading and factory consignment invoices?

Held: YES. Under Article 1497, NCC, a thing sold shall be

understood as delivered when it is placed in the control or
possession of the vendee. The Audit Committee was correct when
it adopted as guideline that accountability over the goods shipped
was transferred from the corporation to Andres Lao only upon
actual delivery of the goods to him. For it is only when the goods
were actually delivered to and received by Lao, did Lao have
control and possession over subject goods, and only when he had
control and possession over said goods could he sell the same.
Delivery is generally evidenced by a written
acknowledgment of a person that he or she has actually
received the thing or the goods, as in delivery receipts. A
bill of lading cannot substitute for a delivery receipt. This is
because it is a written acknowledgment of the receipt of
the goods by the carrier and an agreement to transport
and deliver them at a specific place to a person named or
upon his order. It does not evidence receipt of the goods
by the consignee or the person named in the bill of lading;
rather, it is evidence of receipt by the carrier of the goods
from the shipper for transportation and delivery. Likewise,
a factory consignment invoice is not evidence of actual
delivery of the goods. An invoice is nothing more than a
detailed statement of the nature, quantity and cost of the
thing sold. It is not proof that the thing or goods were
actually delivered to the vendee or the consignee.
However, as to shipments covered only by bills of
lading and factory consignment invoices but were reported
in Lao’s sales reports, the Audit Committee correctly
considered them in Lao's account. The fact that Lao
included them in his sales reports is an implied admission
that subject goods were actually delivered to him, and that
he received the said goods for resale.

Sale with Right of Repurchase

ABAPO vs. COURT OF APPEALS

GR No. 128677, March 2, 2000

Facts: Crispula Abapo and Santiago Abapo executed in

favor of Teodulfo Quimada a contract denominated as
“Deed of Sale under Pacto de Retro”. Under the contract,
the land was sold for P500.00 with right of repurchase
within five (5) years, failing which the conveyance would
become absolute and irrevocable without the necessity of
drawing up a new deed. No redemption was made. More
than seven years later, Teodulfo Quimada sold the
property to Crispula and husband Pedro Bacalao for
P500.00 . Upon the death of the spouses Bacalao, the
land was alloted to their heirs in equal individual shares
and succeeded the possessions and enjoyment of the
land and paid each real estate taxes thereon to the
exclusion of Santiago Abapo.
In 1990, Santiago instituted a petition for
reconstitution of original certificate of title over the
property. The petition was granted. Upon the discovery of
the said reconstitution of title, the private respondents
interposed a petition to surrender owner’s copy of the
reconstituted title in the hands of Santiago. The trial court
dismissed the petition without prejudice to the filing of the
appropriate action. Private respondents instituted the
complaint for Quieting of Title with damages. In his
answer, Santiago assailed the due execution of both the
deed of sale under Pacto de Retro and the Deed of
Absolute Sale. Santiago argues that what he entered in
1967 may be considered only as an equitable mortgage in
view of the unusually inadequate consideration of P500
which was the same consideration in the Deed of Absolute
Sale in favor of spouse Bacalao executed in 1975.

Issue: Should the Deed of Absolute Sale under Pacto

de Retro be considered an equitable mortgage due to the
alleged inadequacy of price?
Held: NO. The price of P500 is not unusually
inadequate. The record reveals that the assessed value of
the land in dispute in 1970 was only P400. Thus, at the
time of sale in 1967, the price of P500 is inadequately over
and above the assessed value of P400. Besides, the mere
fact that the price is inadequate does not prove support
the conclusion that the contract was a loan or that the
property was not at all sold to Teodulfo Quimada. The
price fixed in the sale with a right to repurchase is not
necessarily the true value of the land sold. The rationale is
that the vendor has the right to fix a relatively reduced
price, although not a grossly inadequate one, in order to
afford the vendor a retro every facility to redeem the land.
Thus, inadequacy of the price is not sufficient to set aside
a sale unless it is grossly inadequate or purely shocking to
the conscience.

Consolidation of Title in Pacto de Retro Sale

CRUZ vs. LEIS

G.R. No. 125233, March 9, 2000
Facts: Gertrudes Isidro, mother or respondents Leis, et
al. obtained a loan from the petitioner-spouses Alexander
and Adelaida Cruz. The loan was secured by a mortgage
over the property covered by TCT No. 43100. Unable to
pay her outstanding obligation after the debt became due
and payable, Gertrudes executed two contracts in favor of
Alexander. The first is denominated as “Kasunduan” which
the parties concede is a Pacto de Retro sale granting
Gertrudes one year to repurchase the property. The
second is a “Kasunduan ng Tuwirang Bilihan”, a Deed of
Absolute Sale covering the same property per the price of
P39,083.00, the same amount stipulated in the
Kasunduan. For failure of Gertrudes to repurchase the
property, ownership was therefore consolidated in the
name of Alexander in whose name a new TCT was
issued. Gertrudes died. Thereafter, her heirs received
demands to vacate the premises from spouses Cruz, the
new owners of the property. The private respondents
responded by filing a complaint for the nullification of
sale. The trial court court ruled that the "Kasunduan,"
providing for a sale con pacto de retro, had superseded
the "Kasunduan ng Tuwirang Bilihan," the deed of
absolute sale. It was likewise found that Gertrudes as well
as private respondents failed to repurchase the property
within the period stipulated and has lost all their rights to
it. Nonetheless, the trial court and the CA found for
private respondents. It rationalized that spouses Cruz
failed to comply with the provisions of Article 1607 of the
Civil Code requiring a judicial order for the consolidation of
the ownership in the vendee a retro to be recorded in the
Registry of Property.
Issue: Is the recording in the Registry of Property of the
consolidation of ownership of the vendee a condition sine
qua non to the transfer of ownership?

Held: NO. Art. 1607, NCC requiring a judicial order for

the consolidation of the ownership in the vendee a retro to
be recorded in the Registry of Property is intended to
minimize the evils which the pacto de retro sale has
caused in the hands of usurers. A judicial order is
necessary in order to determine the true nature of the
transaction and to prevent the interposition of buyers in
good faith while the determination is being
made. Notwithstanding Art. 1607, the recording in the
Registry of Property of the consolidation of ownership of
the vendee is not a condition sine qua non to the transfer
of ownership. Petitioners are the owners of the subject
property since neither Gertrudes nor the co-owners
redeemed the same within one year stipulated in the
“Kasunduan”. The essence of the pacto de retro sale is
that title and ownership of the property sold are
immediately vested in the vendee a retro, subject to the
resolutory condition of repurchase by the vendor a retro
within the stipulated period. Failure thus of the vendor a
retro to perform said resolutory condition vests upon the
vendee by operation of law absolute title and ownership
over the property sold. As title is already vested in the
vendee a retro, his failure to consolidate his title under
Article 1607, NCC does not impair such title or ownership
for the method prescribed thereunder is merely for the
purpose of registering the consolidated title.
 DOUBLE SALE

BARICUATRO, JR. vs. COURT OF APPEALS

G.R. No. 105902, February 9, 2000

Facts: On October 16, 1968, petitioner Severino Baricuatro, Jr.,

bought 2 lots on an installment basis from respondent Constantino
Galeos. Baricuatro, however, was unable to pay the full amount
to Galeos. At the time the original action for quieting of title was
filed in the trial court, Baricuatro had an unpaid balance of
P4,000.00. The titles to the said lots remained in the name of
Galeos. The contract of sale involving Lot No. 10 expressly
provided that "the parties both agree that a final deed of sale shall
be executed, in favor of the buyer upon full and complete payment
of the total purchase price agreed upon." After the sale,
Baricuatro introduced certain improvements on the said lots and
started to reside therein in 1970. Since then he has been in actual
and physical possession of the 2 lots. However, on December 7,
1968, Galeos sold the entire subdivision, including the 2 lots, to
Eugenio Amores. Subsequently, Baricuatro was informed by
Galeos about the sale to Amores and was advised to pay the
balance of the purchase price of the 2 lots directly to
Amores. After the sale of the entire subdivision to Amores, he
allegedly took possession thereof and developed the same for
residential purposes and registered the deed of sale.
Thereafter, Amores sold the 2 lots to the spouses Mariano
and Felisa Nemenio. Prior to the sale, however, Baricuatro was
informed through a letter by Amores about the impending sale of
the lots but the former failed to respond. The spouses Nemenio
caused the transfer of the titles to the said lots and the issuance of
tax declarations in their names. Thereafter, the spouses Nemenio
demanded from Baricuatro to vacate the said lots but the latter
refused to do so.

Issue: Who has better right over the lots in dispute?

Held: Petitioner Baricuatro as the first buyer has better right

over the disputed lots. Although Amores as the second buyer had
caused the registration of the Deed of Sale, the prior registration
of the disputed property by the second buyer does not by itself
confer ownership or a better right over the property. Article
1544,NCC requires that such registration must be coupled with
good faith. Primus tempore, potior jure (first in time, stronger in
right). Knowledge gained by the first buyer of the second sale
cannot defeat the first buyer's rights except where the second
buyer registers in good faith the second sale ahead of the
first. Such knowledge of the first buyer does not bar him from
availing of his rights under the law, among them, to register first
his purchase as against the second buyer. But in converso,
knowledge gained by the second buyer of the first sale defeats his
rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith. This is the
price exacted by Art. 1544 for the second buyer being able to
displace the first buyer; that before the second buyer can obtain
priority over the first, he must show that he acted in good faith
throughout (i.e. in ignorance of the first sale and of the first
buyer's rights) — from the time of acquisition until the title is
transferred to him by registration or failing registration, by
delivery of possession. The second buyer must show continuing
good faith and innocence or lack of knowledge of the first sale
until his contract ripens into full ownership through prior
registration as provided by law. It does not appear that Amores
was in good faith when he registered the sale.
Assuming arguendo that Amores was in good faith, there is
no showing in the assailed decision that he continued to act in
good faith as required by Art. 1544. A careful and thorough
scrutiny of the records of this case reveals that Amores did not
act in good faith when he registered his title. Moreover, the
preponderance of evidence supports the finding that he already
had knowledge of the previous sale of the disputed lots to
Baricuatro. Such knowledge tainted his registration with bad
faith. To merit protection under Art. 1544, the second buyer must
act in good faith from the time of the sale until the registration of
the same.

DOUBLE SALE; INTERPRETATION OF CONTRACT

ANGEL BAUTISTA vs. COURT OF APPEALS

G.R. No. 123655, January 19, 2000

Facts: On April 13, 1977, respondents Atienzas sold to

petitioner Angel Bautista a parcel of land in Tagaytay City, for
P1.5M. At the time of the sale, the lot was still registered in the
names of the deceased parents of the Atienzas. The sale is subject
to the following terms and conditions, to wit:
a. P10,000.00 upon signing of the contract;
b. P90,000.00 upon the Atienza’s presentation to Bautista
of a new certificate of title of the property subject of the
sale, registered in their name. However, the buyer may
advance the necessary amount to the sellers for payment
of their taxes which might be required by the Register of
Deeds of Tagaytay City before the TCT from the
registered owners to the sellers can be effected but not
exceeding P90,000.00. Any and all cash advances made
by the buyer to the sellers shall be deducted from the
second payment of P90,000.00. Bautista made the initial
payment of P10,000.00.
In July 1977, the Atienzas wrote a letter to Bautista, asking
P50,000.00 for the inheritance and realty taxes due on the subject
property and other incidental expenses to facilitate the transfer of
the title of the subject property in their names. Bautista refused to
give the additional money arguing that advance payment would
be discretionary on his part. Hence, the Atienzas cancelled the
contract to sell the subject land.
Meanwhile, Bautista discussed with the Chairman of the
Board of Realty Baron Corporation (RBC) the possible sale of the
subject property in favor of RBC which however, did not push
through.
In October, 1978 the Atienzas were able to secure title over
subject land. Thereafter, they sold a portion of the land to
RBC. TCT was issued in the name of RBC.

Issues: 1. Do the Atienzas have the right to rescind the contract

of sale because of Bautista's refusal to advance the payment
intended to pay for taxes and other fees?
2. Is the sale of a portion of the land by the Atienzas
to RBC valid?

Held: 1. No. The Atienzas have no right to rescind the

contract.
 The rule is that where the language of a contract is
plain and unambiguous, its meaning should be determined
without reference to extrinsic facts or aids. The intention of
the parties must be gathered from that language, and from
that language alone unless some good reason can be
assigned to show that the words used should be
understood in a different sense. In the case at bar, the
provision of the Contract of Sale is plain and unambiguous
that Bautista as buyer MAY advance to the Atienzas as
sellers the necessary amount (not exceeding P90,000.00)
for the payment of such taxes as may be required before
the TCT in favor of the sellers can be effected. The use of
the word MAY meant that Bautista has the discretion
whether or not to advance the P90,000.00. He has no duty
to do it. It is purely optional on his part. Thus, Bautista did
not violate the contract when he refused to pay the
advance money.

2. No. Under Article 1544 of the Civil Code before the

second buyer can obtain priority over the first, he must
show that he acted in good faith throughout (i.e., in
ignorance of the first sale and of the first buyer's rights) —
from the time of acquisition until title is transferred to him
by registration or failing registration, by delivery of
possession. RBC cannot pretend to be a buyer in good
faith. In Uraca vs. Court of Appeals, the SC held that " . . .
knowledge gained by the second buyer of the first sale
defeats his rights even if he is first to register the second
sale, since such knowledge taints his prior registration with
bad faith. There is no dispute that RBC knew that Bautista
was the first buyer of the subject lot. Its initial plan was to
buy the whole lot from Bautista. It changed its plan only
when it found squatters on the hilly portion of the property.
Thus, it cannot claim the right of an innocent purchaser for
value.
"One who purchases real estate with knowledge of a
defect or lack of title in his vendor cannot claim good faith
as well as one who has knowledge of facts which should
have put him upon such inquiry or investigation as might
be necessary to acquaint him with the defects in the title of
his vendor. . . His mere refusal to believe that such defect
exists, or his willful closing of his eyes to the possibility of
existence of a defect in the vendor's title, will not make him
an innocent purchaser for value if it afterwards develop
that title was in fact defective and it appears that he had
such notice of defect as would have led to its discovery
had he acted with that measure of precaution which may
reasonably be required of a prudent man in a like
situation."

VOID CONTRACT OF SALE AND ITS EFFECTS

CAVITE DEVELOPMENT BANK VS. CYRUS LIM

G.R. No. 131679, February 1, 2000
Facts: A certain Rodolfo Guansing obtained a loan from Cavite
Development Bank (CDB), to secure which he mortgaged a
parcel of land. Upon default of Rodolfo in the payment of his
loan, the mortgaged property was sold to CDB in a foreclosure
sale held in March, 1984. In June, 1988, private respondent Lolita
Chan Lim offered to purchase the property from CDB. Pursuant
to the terms of the offer, Lim paid CDB P30,000.00 as Option
Money. However, after some time following up the sale, Lim
discovered that the title of subject property was originally
registered in the name of Perfecto Guansing, father of mortgagor
Rodolfo, and that title of Rodolfo was cancelled on March 23,
1984 by the RTC of Q.C as it was fraudulently secured by the
latter. This decision has since become final and
executory. Spouses Lim filed an action for specific performance
and damages against CDB and its mother company FEBTC for
the latter’s alleged misrepresentation on their ability to sell the
property. The trial court rendered a decision in favor of spouses
Lim. It held CDB and FEBTC liable for damages (P250,000.00
as moral damages; P50,000.00 as exemplary and P30,000.00 as
attoryney’s fees) arising from the impossibility of the
performance of their obligation under the perfected contract of
sale.

Issue: Is the contract of sale between petitioners CDB and

FEBTC and respondents Lim valid? If not, what is the effect of
the nullity of the contract?

Held: No. CDB does not have a valid title over the property
sold. Under Art. 1459 NCC, at the time of delivery or
consummation stage of the sale, it is required that the seller be the
owner of the thing sold. Otherwise, he will not be able to comply
with his obligation to transfer ownership to the buyer.
The foreclosure sale from which CDB derived its title over
the property cannot be given effect: 1) Rodolfo, the mortgagor
did not have a valid title over the property sold. Being a sale, the
rule that the seller must be the owner of the thing sold also applies
in a foreclosure sale. This is the reason Art. 2085 NCC, requires,
among other things, that the mortgagor or pledgor be the absolute
owner of the thing pledged or mortgaged, in anticipation of a
possible foreclosure sale should the mortgagor default in the
payment of the loan; and 2) Neither can the foreclosure sale be
given effect based on the doctrine of “the mortgagee in good
faith” which provides the rule that all persons dealing with
property covered by a Torrens Certificate of Title, as buyers or
mortgagees, are not required to go beyond what appears on the
face of the title. CDB cannot be considered a mortgagee in good
faith because it failed to observe its duty of diligence in
ascertaining the validity of Rodolfo’s title, as is required of
banking institutions. It appears that Rodolfo obtained his
fraudulent title by executing an Extra-Judicial Settlement of the
Estate With Waiver where he made it appear that he and Perfecto
were the only surviving heirs entitled to the property, and that
Perfecto had waived all his rights thereto. This self-executed deed
should have placed CDB on guard against any possible defect in
or question as to the mortgagor's title. Indeed, CDB and FEBTC
admit that they are aware that the subject land was being occupied
by persons other than Rodolfo and that said persons, who are the
heirs of Perfecto, contest the title of Rodolfo.
Pursuant to Article 1412(2) of the Civil Code, spouses Lim,
being the non-guilty parties, are entitled to recover the P30.000.00
option money paid by them with interest at the legal rate to be
computed from the date of the filing of the complaint. However,
under this provision, prior demand is necessary in order that the
obligation to return what was given becomes legally demandable.
The filing of the action for damages against CDB and FEBTC
amounted to a demand by respondents Lim for the return of their
money. Considering CDB's negligence, the latter is liable to pay
moral damages on the basis of Arts. 21 and 2219 of the Civil Code
and the SC’s ruling in Tan v. CA that moral damages may be
recovered even if a bank's negligence is not attended with malice
and bad faith. However, the sum of P250,000.00 awarded by the
trial court is excessive. Moral damages are only intended to
alleviate the moral suffering undergone by respondents Lim, not
to enrich them at the expense of CDB and FEBTC. Accordingly,
the award of moral damages must be reduced to
P50,000.00. Likewise, the award of P50,000.00 as exemplary
damages and P30,000 as attorneys fees, although justified under
the Civil Code is reduced for being excessive.

Legal Redemption

FRANCISCO vs. BOISER

G.R. No. 137677, May 31, 2000

Facts: Petitioner Adalia Francisco, three of her sisters, and

their mother Adela Blas, were co-owners of land on which stands
a commercial building. On August 1986, without the knowledge
of the other co-owners, Adela Blas sold her 1/5 share to
respondent Zenaida Boiser.
On August 5, 1992, Francisco received summons
concerning a complaint filed by Boiser demanding her
share in the rentals from the tenants of the building.
Francisco then informed Boiser that she was exercising
her right of redemption. On August 12, 1992, she
deposited the redemption price with the Court.
On September 14, 1995, Francisco filed a case in court for
legal redemption alleging that the 30-day period for
redemption under Art. 1623, NCC had not yet expired
since the vendor, Blas, never informed her and the other
owners about the sale to respondent. Boiser, however,
claims that Francisco had knowledge of the sale as early
as May 30, 1992 when she sent Francisco a letter with a
copy of the deed of sale between her (Boiser) and Blas
attached, informing petitioner of the sale and demanding
that rentals corresponding to her 1/5 share of the property
be remitted to her. The trial court dismissed the complaint
for legal redemption holding that Art. 1623 does not
prescribe any form of notifying co-owners about a sale of
co-owned property to enable them to exercise legal
redemption. The court considered the May 30,1992 letter
with the copy of the deed of sale as substantial
compliance with the required notice under Art. 1623.
Consequently, the 30-day period of redemption should be
counted not from August 5, 1992, when petitioner received
the summons, but at the latest from June 8, 1992, the date
petitioner wrote the tenants of the building advising them
to continue paying rentals in full to her.

Issue: Can the May 30, 1992 letter by Boiser to Francisco

notifying her of the sale of be considered compliance with the
notice requirement of Art. 1623 for the purposes of legal
redemption?

Held: NO. Art. 1623 of the Civil Code is clear in requiring that
the written notification should come from the vendor or
prospective vendor, not from any other person. There is,
therefore, no room for construction. Indeed, the principal
difference between Art. 1524 of the former Civil Code and Art.
1623 of the present one is that the former did not specify who
must give the notice, whereas the present one expressly says the
notice must be given by the vendor. Effect must be given to this
change in statutory language. In the second place, it makes sense
to require that the notice required in Art. 1623 be given by the
vendor and by nobody else. The vendor of an undivided interest
is in the best position to know who are his co-owners who under
the law must be notified of the sale. It is the notification from the
seller, not from anyone else, which can remove all doubts as to
the fact of the sale, its perfection, and its validity, for in a contract
of sale, the seller is in the best position to confirm whether consent
to the essential obligation of selling the property and transferring
ownership thereof to the vendee has been given.
Now, it is clear that by not immediately notifying the co-
owner, the vendor can effectively prevent the exercise of right of
redemption. In the present case, the sale took place in 1986 but
kept secret until 1992. It is, therefore, unjust when the subject sale
has already been established before both lower courts and now,
before this Court, to further delay petitioner's exercise of her right
of legal redemption by requiring that notice be given by the
vendor before petitioner can exercise her right. For this reason,
we rule that the receipt by petitioner of summons on August 5,
1992 constitutes actual knowledge on the basis of which
petitioner may now exercise her right of redemption within 30
days from finality of this decision.

Validity of Stipulations in a Lease Contract

CAMPO ASSETS CORP. vs. CLUB X. O. COMPANY

G.R. NO. 134986, MARCH 17, 2000

Facts: Alma Arambulo (Arambulo) used to operate a food and

entertainment business establishment in Pasay City pursuant to a
Memorandum of Agreement (MOA) executed in 1991 between
her husband and Campo Assets which had a contract of lease with
the owner of the subject premises. The MOA was renewed in
1993. It appears that sometime in June, 1994, Arambulo and Chan
York Gui (Allan) entered into a partnership registered as Club
X.O. Company, for the operation of the business. Club X. O.
operated the business and introduced improvements thereon. In
1996, Campo Assets took possession of the club's premises,
claiming that Arambulo had abandoned the premises and that the
re-taking was pursuant to Paragraph VI of the MOA between
Arambulo and Campo Assets, which reads:
"VI. In case the premises shall be deserted or vacated
before the expiration of this Agreement, the FIRST PARTY
shall have the right to enter the same as the agent of the
SECOND PARTY either by force or otherwise, without
being liable to any prosecution thereof, and the FIRST
PARTY shall furthermore have the option to retake and
operate the business itself or relet the same as agent of
the SECOND PARTY xxx.”
 Consequently, Club X. O. represented by Allan filed a
complaint for forcible entry to recover possession of the premises
and damages.
The case was dismissed for lack of merit. The court held that
the act of Campo Assets in taking possession is pursuant to Par.
VI of the MOA, which stipulation is valid, being in the nature of
a resolutory condition which is not proscribed by law.

Issue: Is the stipulation in Par. VI of the lease contract void for

being contrary to public order and public policy?

Held: YES. The stipulation is void. Although Par. VI of the

MOA employs the prefatory words "in case the premises shall be
deserted or vacated before the expiration of the Agreement",
which would restrict the operation of the clause to situations
wherein the premises are in fact vacated already, and would
therefore imply that the re-entry with the use of force if at all, is
against property only, the stipulation would not proscribe re-
taking by use of force against persons despite the fact that the
premises are still in the actual possession of another, albeit under
a questioned right. Moreover, there is no requirement of notice
before re-entry. Jurisprudence supports the view that when parties
to a contract expressly reserve an option to terminate or rescind a
contract upon the violation of a resolutory condition, notice of
resolution must be given to the other party when such right is
exercised. In Zulueta vs. Mariano, the SC ruled that resort to
courts may be necessary when the right involves the retaking of
property which is not voluntarily surrendered by the other party.
The rationale for such ruling is based on the thesis that no one
should take the law into his own hands. In this sense, the
stipulation is legally vulnerable. Permitting the use of unqualified
force to repossess the property and without condition of notice
upon the lessee is fraught with dangerous possibilities. Such a
broad stipulation cannot be sanctioned for the reason that it would
allow the lessor/owner to take the law into his own hands, and
undermine the philosophy behind the remedy of forcible entry
which is to prevent breach of the peace and criminal disorder and
to compel the party out of possession to respect and resort to the
law alone to obtain what he claims to be his.

Nature of Lease of Chattels

JARDIN vs. NLRC

G.R. No. 119268, February 23, 2000

Facts: Petitioners were drivers of private respondent, Philjama

International, Inc. (PII), a domestic corporation engaged in the
operation of “Goodman Taxi.” Petitioners used to drive PII’s
taxicabs every other day on a 24-hr. work schedule under the
boundary system. Under this arrangement, the petitioners earned
an average of P400 daily. Nevertheless, PII deducts from said
daily earnings P30.00 for the washing of the taxi units. Believing
that the deduction is illegal, petitioners decided to form a labor
union to protect their rights, however their plans were cut short
by their dismissal. Petitioners filed a complaint for unfair labor
practice and illegal dismissal with the labor arbiter, who
dismissed said complaint. On appeal, the NLRC dismissed the
case on the ground of lack of jurisdiction over the case as
petitioners and private respondent have no employer-employee
relationship but rather a leasehold agreement which is covered
under the Civil Code.

Issue: Is there a lessor-lessee relationship between petitioners

and PII?

Held: NO. In the lease of chattels, the lessor loses complete

control over the chattel leased although the lessee cannot be
reckless in the use thereof, otherwise, he would be responsible for
the damages to the lessor. In the case of jeepney
owners/operators and jeepney drivers, the former exercise
supervision and control over the latter. The management of the
business is in the owner’s hands. The owner as holder of the
certificate of public convenience must see to it that the driver
follows the route prescribed by the franchising authority and the
rules promulgated as regards its operations. This relationship
may be applied by analogy to taxi owners/operators and taxi
drivers.

Right of First Refusal of a Lessee

SEN PO EK MARKETING CORP. vs. MARTINEZ

G.R. No. 134117, February 9, 2000
Facts: Sofia Martinez was the registered owner of 2 parcels of
land who leased the lots to Yu Siong, father of the president and
stockholders of petitioner Sen Po Ek for a period of 10
years. When the lease expired it was later renewed several times,
the last renewal being on March 1982 which is to expire on Jan.
1987. In the meantime, Sofia sold the lots and the building to her
daughter, respondent Teodora Martinez. After the lease contract
expired in Jan. 1987, it was no longer renewed by the parties. Sen
Po Ek, however, continued to possess and occupy the leased
properties, and regularly paid the monthly rentals to Sofia until
her death, and then to her heirs through Teodora. In 1989,
Teodora sent a letter to petitioner Sen Po Ek informing it of her
intention to sell the leased premises and authorizing a broker to
negotiate the sale "with any and all interested parties." Sen Po Ek
offered to purchase the poperty. Another buyer, Tiu Uyping, was
also interested. Sen Po Ek then filed a complaint for the
annulment of the sale executed by Sofia in favor of Teodora,
invoking its alleged right of first refusal or preferential right to
buy the leased premises Days later, the property was sold to Tiu
Uyping. Sen Po Ek amended its complaint, praying for the nullity
of the second sale transaction.

Issue: Does petitioner Sen Po Ek have a right of first refusal?

Held: NO. Sen Po Ek does not have a right of first refusal to

assert against private respondents. Neither any law nor any
contract grants it preference in the purchase of the leased
premises. Petitioner cites P.D. No. 1517, R.A. No. 1162 and Art.
1622,NCC but they are not applicable to the case at bar. P.D. No.
1517(The Urban Land Reform Act) pertains to areas proclaimed
as urban land reform zones. The lots in dispute are located in
Tacloban City, which has not been declared as an urban land
reform zone. R.A. No. 1162, on the other hand, only deals with
expropriation of parcels of land located in the City of Manila,
which the leased premises are not. Finally, Art. 1622, NCC only
deals with small urban lands that are bought for speculation where
only adjoining lot owners can exercise the right of pre-emption or
redemption. Sen Po Ek is not an adjoining lot owner, but a lessee
trying to buy the land that it was leasing. Indeed the right of first
refusal may be provided for in a lease contract. However in this
case, such right was never stipulated in any of the several lease
contracts between Sen Po Ek and Sofia. Sen Po Ek claims that it
was Teodora herself who assured them that they can have the first
priority to buy the subject parcels of land, but there is absolutely
no proof of this. Such grant of the right of first refusal must be
clearly embodied in a written contract, but there is none in the
present case.

Renewal of Term of Lease

BUCE vs. COURT OF APPEALS

G.R. No. 136913, May 12, 2000

Facts: Petitioner entered into a lease contract over a parcel of

land with private respondents Tiongcos for a period of 15 years
to commence on June 1979 and to end on June 1994 "subject to
renewal for another 10 years, under the same terms and
conditions." Petitioner then constructed a building and paid the
required monthly rentals. When private respondents later
demanded an increase in the rent, petitioner offered to pay the
previous lower rental which the former refused to accept.
On August 1993, petitioner filed with the RTC a
complaint for specific performance praying that private
respondents be ordered to accept the rentals she
tendered and to respect the lease of fifteen years, which
was renewable for another ten years.
Issue: Can it be reasonably inferred that the parties intended an
automatic renewal of the lease contract when they stipulated that
the lease shall be for a period of 15 years "subject to renewal for
another 10 years"?

Held: NO. There is nothing in the stipulations in the contract

and the parties’ actuation that shows that the parties intended an
automatic renewal or extension of the term of the contract. The
fact that the lessee was allowed to introduce improvements on the
property is not indicative of the intention of the lessors to
automatically extend the contract. Neither the filing of the
complaint a year before the expiration of the 15-year term has any
bearing on the intention of the parties regarding renewal. In the
case at bar, it was not specifically indicated who may exercise the
option to renew, neither was it stated that the option was given for
the benefit of herein petitioner. Thus, pursuant to Art. 1196, NCC,
the period of the lease contract is deemed to have been set for the
benefit of both parties. Renewal of the contract may be had only
upon their mutual agreement or at the will of both of them. It is
the owner-lessor’s prerogative to terminate the lease at its
expiration. The continuance, effectivity and fulfillment of a
contract of lease cannot be made to depend exclusively upon the
free and uncontrolled choice of the lessee between continuing the
payment of the rentals or not, completely depriving the owner of
any say in the matter. Mutuality does not obtain in such a contract
of lease and no equality exists between the lessor and the lessee
since the life of the contract would be dictated solely by the lessee.

Extension of Lease

UNIVERSITY PHYSICIANS SERVICES, INC. vs. COURT

OF APPEALS
G.R. No. 115045, January 31, 2000

Facts: Spouses Lourdes and Fausto Mabanta and University

Physicians Services, Inc. (UPSI) entered into a lease agreement,
commencing on June 1, 1973 and ending on May 31, 1983, with
a provision that the ‘period of this lease may be extended for
another period of 5 years subject only to re-negotiation of rentals,
which re-negotiations should start not less than 6 months prior to
the termination of the original period of this lease.’
On May 12, 1983, UPSI informed the spouses that it is
exercising its option to extend the lease for another period of 5
years and that it is willing to negotiate the rentals. The spouses,
through their lawyers, answered that since there was no
renegotiation on the rentals which should have started not less
than 6 months prior to the termination of the original period, there
are no rights which have arisen thereunder. UPSI insisted on its
right to extend the lease.
Meanwhile, the lease was terminated upon the filing of the
unlawful detainer case by the spouses, which was ultimately
resolved against UPSI in the IAC.
On November 21, 1985, Spouses Mabanta filed a
complaint for Compensation and Damages against UPSI
before the RTC of Pasig claiming that despite the lapse of
the original period of the lease, the latter continuously
occupied and used the leased premises without paying the
necessary rent. The trial court granted the claim of the
spouses. On appeal, the CA affirmed the decision of the
trial court with some modifications. Hence, this appeal.
Issue: Does UPSI have the right to extend the duration of the
lease under the terms of the lease agreement?

Held: NO. The provisions of a contract should not be read in

isolation from the rest of the instrument but, on the contrary,
interpreted in the light of the other related provisions in order to
fix the meaning of any of its parts. A careful reading of the
renewal clause yields no basis for recognizing an exclusive
unilateral right on the part of the lessee to extend the term of the
lease for another 5 years. The word ‘extended’ was qualified by
the word ‘may be’ which connotes possibility; it does not connote
certainty. The extension clearly was premised on the act of both
parties, i.e., renegotiation of rentals, which should start not less
than 6 months prior to the termination of the original period of the
lease. Furthermore, in a reciprocal contract like a lease, the
period of the lease must be deemed to have been agreed upon for
the benefit of both parties, absent language showing that the term
was deliberately set for the benefit of the lessee or lessor
alone. UPSI failed to comply with the 6 month period,
hence, no extension of the lease in its favor has arisen.

Concept of Implied New Lease

ROSELLO-BENTIR vs. LEANDA

G.R. No. 128991, April 12, 2000

Facts: Respondent Leyte Gulf Traders, Inc. (LGTI)

entered into a contract of lease of a parcel of land with
Bentir for a period of 20 years starting May 5, 1968, which
was extended for another 4 years or until May 31, 1992. In
1989, Bentir sold the leased premises to spouses
Pormada. LGTI questioned the sale alleging that it had a
right of first refusal. On May 15, 1992, LGTI filed a
complaint for reformation of the expired contract of lease
to incorporate therein, the verbal agreement between the
parties that in the event Bentir leases or sells the lot after
the expiration of the lease, LGTI has the right of first
refusal or the right to equal the highest offer. The
complaint was dismissed on the ground of
prescription. On LGTI’s motion for reconsideration,
respondent judge reversed the order of dismissal on the
ground that the action for reformation had not yet
prescribed.
Bentir and Spouses Pormada filed a petition for certiorari to
the CA seeking the annulment of the order of respondent court. In
holding that the action for reformation has not prescribed, the CA
upheld the ruling of the trial court that the 10-year prescriptive
period should be reckoned not from the execution of the contract
of lease in 1968, but from the date of the alleged 4-year extension
of the lease contract after it expired in 1988. Consequently, when
the action for reformation of instrument was filed in 1992 it was
within 10 years from the extended period of the lease. LGTI
theorized, and the CA agreed, that the extended period of lease
was an "implied new lease" within the contemplation of Article
1670 of the Civil Code, under which provision, the other terms of
the original contract were deemed revived in the implied new
lease.

Issue: Has the complaint for reformation of instrument filed

by respondent Leyte Gulf Traders, Inc. prescribed?

Held: YES. The prescriptive period should be counted from

the date of execution of the lease contract and not from the date
of extension of the same. First, Art. 1670 speaks of an implied
new lease (tacita reconduccion) where at the end of the contract,
the lessee continues to enjoy the thing leased "with the
acquiescence of the lessor", so that the duration of the lease is "not
for the period of the original contract, but for the time established
in Article 1682 and 1687." Hence, if the extended period of lease
was expressly agreed upon by the parties, as in the present case,
then the term should be exactly what the parties stipulated, not
more, not less. Second, even if the supposed 4-year extended
lease be considered as an implied new lease under Art. 1670, "the
other terms of the original contract" contemplated in said
provision are only those terms which are germane to the lessee’s
right of continued enjoyment of the property leased. The
prescriptive period of 10 years provided for in Art. 1144 for
reformation of an instrument applies by operation of law, not by
the will of the parties. Therefore, the right of action for
reformation accrued from the date of execution of the contract of
lease in 1968. As the action was filed only in 1992 or 24 years
after the cause of action accrued, the same has become stale,
hence, time-barred.

CREDIT TRANSACTIONS

Escalation Clause; Interest

BANCO FILIPINO SAVINGS & MORTGAGE BANK vs.

COURT OF APPEALS
G.R. No. 129227, May 30, 2000

Facts: Respondent-spouses Arcilla obtained loans secured by

real estate mortages from the petitioner Banco Filipino Savings
and Mortgage Bank (BANK) where the BANK may increase the
rate of interest on said loans, within the limits allowed by law, as
its Board of Directors may prescribe for its borrowers. At that
time, under the Usury Law, as amended, the maximum rate of
interest for loans secured by real estate mortgages was 12% per
annum.
On January 1976, the Central Bank of the Philippines issued
CB Circular No. 494, increasing the maximum interest rate at
19% per annum. On October 1978, spouses Arcilla received from
the BANK their "Statement of Account" on their loan accounts
with interest computed computed at 17% per annum. It turned out
that the BANK unilaterally increased the rate of interest on the
loan account from 12% as provided in their REM agreement to
17% based on the authority of the aforequoted CB Circular. Upon
failure of the spouses Arcilla to pay the amortizations due, the
bank then filed a petition for extrajudicial foreclosure, where at
the auction, the bank purchased the property.
On September 1985, the spouses Arcilla filed a complaint
for the annulment of the loan contracts and foreclosure sale. They
contend, among others, that the loan contracts and mortgages
between the parties were null and void because: (a) the rate of
interests charged by the BANK were usurious; (b) that they are
entitled to the refund inasmuch as the escalation clause
incorporated in the loan contracts do not have a corresponding de-
escalation clause and is therefore illegal.

Issue: Is the unilateral increase in interest rate made by

petitioner based on an escalation clause in their contract valid?

Held: NO. The unilateral increase in interest is not valid. The

loan contracts with real estate mortgage entered into by and
between the petitioner and respondents stated that the petitioner
may increase the interest on said loans, within the limits allowed
by law, as petitioner's Board of Directors may prescribe for its
borrowers. At the time the contracts were entered into, said
escalation clause was valid. It was only pursuant to P.D. No. 1684
which became effective March 1980 wherein to be valid,
escalation clauses should provide: 1) that there can be an increase
in interest if increased by law or by the Monetary Board; and 2)
in order for such stipulation to be valid, it must include a provision
for the reduction of the stipulated interest in the event that the
maximum rate of interest is reduced by law or by the Monetary
Board. Despite the validity of the escalation clause, the
petitioner may not, however, increase the stipulated interest
pursuant to the Central Bank Circular 494 from 12% to 17%. CB
Circular 494, although it has the force and effect of law, is not a
law and is not the law contemplated by the parties which
authorizes the petitioner to unilaterally raise the interest rate of
the loan. Consequently, the reliance by the petitioner on Central
Bank Circular 494 to unilaterally raise the interest rates on the
loan in question was without any legal basis.

Real Estate Mortgage

ROBLES vs. COURT OF APPEALS

G.R. No. 123509, March 14, 2000

Facts: The property subject of this case is originally owned by

Leon Robles. When he died, it passed to his son Silvino who
declared the property in his name and paid the taxes
thereon. Upon the latter’s death, his widow and children inherited
the property. Petitioners Lucio Robles, et al. were the children of
Silvino, and Hilario Robles is their half-brother. The task of
cultivating was assigned to Lucio while the payment of the land
taxes was entrusted to Hilario. For unknown reason, the tax
declaration of the parcel of land in the name of Silvino was
cancelled and transferred to Exequiel Ballena. Ballena secured a
loan from Antipolo Rural Bank using the tax declaration as
security. Somehow the tax declaration was transferred to the
name of Antipolo Rural Bank and later was transferred to the
name of respondent- spouses Hilario and Andrea Robles.
Andrea secured a loan from Cardona Rural Bank using the tax
declaration as security. For failure to pay the mortgage debt, the
property was foreclosed with Cardona Rural Bank emerging as
the highest bidder. The bank sold the property to spouses Vergel
and Ruth Santos. In Sept. 1987, petitioners discovered the
mortgage and attempted to redeem the property but was
unsuccessful. In 1988, the spouses Santos took possession of the
propertry and was able to secure a Free Patent. Petitioners then
filed an action for quieting of title. Respondents questioned their
standing to sue for quieting of title, contending that petitioners no
longer have any interest to the property in question due to the
mortgage effected by Hilario and the consequent foreclosure
thereof by the Bank. Respondents argued that Hilario had
become the absolute owner of the property at the time he
mortgaged the same.

Issue: Is the real estate mortgage constituted by Hilario valid?

Held: NO. In a real estate mortgage contract, it is essential that

the mortgagor be the absolute owner of the property to be
mortgaged; otherwise, the mortgage is void. In the present case,
it is apparent that Hilario was not the absolute owner of the entire
subject property; and that the Rural Bank of Cardona, Inc., in not
fully ascertaining his title thereto, failed to observe due diligence
and, as such, was a mortgagee in bad faith. Buyers of unregistered
real property, especially banks, must exert due diligence in
ascertaining the titles of mortgagors and sellers, lest some
innocent parties be prejudiced. Failure to observe such diligence
may amount to bad faith and may result in the nullity of the
mortgage, as well as of the subsequent foreclosure and/or auction
sale. Considering that Hilario can be deemed to have mortgaged
the disputed property not as absolute owner but only as a co-
owner, he can be adjudged to have disposed to the Rural Bank of
Cardona, Inc., only his undivided share therein. The said bank,
being the immediate predecessor of the Santos spouses, was a
mortgagee in bad faith. Thus, justice and equity mandate the
entitlement of the Santos spouses, who merely stepped into the
shoes of the bank, only to what legally pertains to the latter —
Hilario's share in the disputed property.

Rights of a Mortgagee

ISAGUIRRE vs. DE LARA

G.R. No. 138053, May 31, 2000

Facts: Petitioner Isaguirre and respondent De Lara were

parties in a case involving a parcel of land wherein there was
dispute as to its ownership as well as the nature of the transaction
they entered into regarding the disputed land. The case was
resolved by the Supreme Court which declared that De Lara was
the lawful owner of the land and held that the contract they
entered into was an equitable mortgage and not a sale.
 On the basis of the Court’s decision, De Lara filed a motion
for execution with the trial court for the delivery of possession of
the land. Isaguirre opposed the motion, asserting that, as
mortgagee, he had the right of retention over the
property pending actual payment of the loan by De Lara.

Issue: Is Isaguirre, as mortgagee, entitled to retain possession

of the subject property until payment of the loan?

HELD: NO. A MORTGAGE IS A CONTRACT

ENTERED INTO IN ORDER TO SECURE THE
FULFILLMENT OF A PRINCIPAL OBLIGATION. IT IS
CONSTITUTED BY RECORDING THE DOCUMENT IN
WHICH IT APPEARS WITH THE PROPER REGISTRY
OF PROPERTY, ALTHOUGH, EVEN IF IT IS NOT
RECORDED, THE MORTGAGE IS NEVERTHELESS
BINDING BETWEEN THE PARTIES. THUS, THE ONLY
RIGHT GRANTED BY LAW IN FAVOR OF THE
MORTGAGEE IS TO DEMAND THE EXECUTION AND
THE RECORDING OF THE DOCUMENT IN WHICH THE
MORTGAGE IS FORMALIZED. AS A GENERAL RULE,
THE MORTGAGOR RETAINS POSSESSION OF THE
MORTGAGED PROPERTY SINCE A MORTGAGE IS
MERELY A LIEN AND TITLE TO THE PROPERTY DOES
NOT PASS TO THE MORTGAGEE. HOWEVER, EVEN
THOUGH A MORTGAGEE DOES NOT HAVE
POSSESSION OF THE PROPERTY, THERE IS NO
IMPAIRMENT OF HIS SECURITY SINCE THE
MORTGAGE DIRECTLY AND IMMEDIATELY
SUBJECTS THE PROPERTY UPON WHICH IT IS
IMPOSED, WHOEVER THE POSSESSOR MAY BE, TO
THE FULFILLMENT OF THE OBLIGATION FOR WHOSE
SECURITY IT WAS CONSTITUTED. IF THE DEBTOR IS
UNABLE TO PAY HIS DEBT, THE MORTGAGE
CREDITOR MAY INSTITUTE AN ACTION TO
FORECLOSE THE MORTGAGE, WHETHER
JUDICIALLY OR EXTRAJUDICIALLY, WHEREBY THE
MORTGAGED PROPERTY WILL THEN BE SOLD AT A
PUBLIC AUCTION AND THE PROCEEDS THEREFROM
GIVEN TO THE CREDITOR TO THE EXTENT
NECESSARY TO DISCHARGE THE MORTGAGE
LOAN. REGARDLESS OF ITS POSSESSOR, THE
MORTGAGED PROPERTY MAY STILL BE SOLD, WITH
THE PRESCRIBED FORMALITIES, IN THE EVENT OF
THE DEBTOR'S DEFAULT IN THE PAYMENT OF HIS
LOAN OBLIGATION.

Legal Redemption; Mortgage

PHILBANCOR FINANCE vs. COURT OF APPEALS

G.R. No. 129572, June 26, 2000

Facts: Petitioner Vicente Hizon, Jr. is the owner of agricultural

lands located in Balite, San Fernando, Pampanga and the private
respondents Alfredo Pare, Pablo Galang and Amado Vie are the
legitimate and bona fide tenants thereof. The said lands were
mortgaged by Hizon to petitioner Philbancor which were later on
extrajudicially foreclosed upon default of Hizon in the payment
of his obligations. Subsequently, the lands were sold at public
auction to petitioner Philbancor. Seven years after the
registration of the sale with the Register of Deeds, private
respondents filed with the Provincial Agrarian Reform
Adjudication Board (PARAB) a complaint for maintenance of
possession with redemption and tenancy right of pre-emption
against petitioners Philbancor and Hizon. Petitioner Philbancor
alleged, among others, that it has no tenancy or agricultural
relationship with private respondents considering that it acquired
ownership over the disputed lots by virtue of an extrajudicial
foreclosure sale & that private respondents’ right to redeem the
lots in question, if there is any, has already expired in accordance
with Section 12 of R. A. 3844. PARAB allowed legal redemption
of the subject lands in favor of private respondents. This decision
was affirmed by the Department of Agrarian Reform
Adjudication Board (DARAB). Petitioners appealed to the
CA. The appeal was dismissed as well as the MFR which was
subsequently filed. Hence, this appeal.

Issue: Can the private respondents still exercise their

legal right of redemption over the subject lands
considering that they invoked their right to redeem only on
July 14, 1992, seven years after the date of registration of
the certificate of sale with the Register of Deeds?
Held: NO. Private respondents can no longer redeem the
subject lands.
RA No. 3844, Section 12, provides as follows: "In case
the landholding is sold to a third person without the
knowledge of the agricultural lessee, the latter shall have
the right to redeem the same at a reasonable price and
consideration. Provided, that the entire landholding sold
must be redeemed. Provided further, that where there are
two or more agricultural lessees, each shall be entitled to
said right of redemption only to the extent of the area
actually cultivated by him. The right of redemption under
this section may be exercised within two (2) years from the
registration of the sale and shall have priority over any
other right of legal redemption."

Concurrence and Preference of Credit

J.L. BERNARDO CONSTRUCTION vs. COURT OF

APPEALS
G.R. No. 105827, January 31, 2000

Facts: The municipal government of San Antonio, Nueva

Ecija, awarded to J.L. Bernardo Construction (BC), the
construction of the San Antonio Public Market. The municipality
agreed to assume the expenses for the demolition, clearing and
site filling of the construction site. These expenses were
advanced by BC. The municipality refused to pay the same
despite repeated demands and that the public market was almost
complete. Thus, BC filed a complaint for specific performance
with prayer for preliminary attachment and enforcement of
contractor’s lien.
The lower court issued the writ of preliminary attachment and
it also granted the right to maintain possession of the public
market and to operate the same. It held that since BC has not been
reimbursed, it stands in the position of an unpaid contractor and
as such is entitled pursuant to Art. 2242 & 2243 NCC to a lien
upon the public market which it constructed.
Issue: May the contractor’s lien be enforced?

Held: NO. Art. 2242, NCC provides that the claims of

contractors engaged in the construction, reconstruction or repair
of buildings or other works shall be preferred with respect to the
specific building or other immovable property
constructed. However, this provision only finds application when
there is a concurrence of credits, i.e. when the same specific
property of the debtor is subjected to the claims of several
creditors and the value of such property of the debtor is
insufficient to pay in full all the creditors. In such a situation, the
question of preference will arise, that is, there will be a need to
determine which of the creditors will be paid ahead of the
others. This statutory lien should only be enforced in the context
of some kind of a procedure where the claims of all preferred
creditors may be bindingly adjudicated, such as in insolvency
proceedings.
The action filed by petitioner does not partake of the nature
of an insolvency proceeding, but is basically for specific
performance and damages. Thus, even if it is finally adjudicated
that BC is entitled to invoke the contractor’s lien, such lien cannot
be enforced in the present action for there is no way of
determining whether or not there exist other preferred creditors
with claims over the public market.

IV. TORTS AND DAMAGES

Damages
PEOPLE vs. TOREJOS
G.R. No. 132217, Feb. 18, 2000

Facts: On April 25, 1997, accused Bonifacio Torejos was

convicted for raping Mary Cris Cerna and was meted the
supreme penalty of death. The victim was, at the time of the
commission of the crime, only 3 years old and nine days. The
judgment of the RTC of Davao City, finding him guilty beyond
reasonable doubt of the crime of rape, and ordering him to pay the
parents of Mary Cris Cerna, Luciano and Rosalie Cerna, the
amount of P30,000.00 as civil indemnity pursuant to Art. 100 in
relation to Art. 104,RPC, is now before the Supreme Court on
automatic review.

Issue: How much and to whom should the civil indemnity and
moral damages be awarded?

Held: Considering that the crime was committed under

circumstances which justify the imposition of death penalty, i.e.,
the victim is a child below 7 years old, the amount of civil
indemnity is increased to P75,000.00. Moreover, accused
Torejos is also ordered to pay moral damages in the amount
P50,000.00. Finally, the civil indemnity and moral damages
should be awarded to Mary Cris as the offended party.

PEOPLE vs. GONZALO PENASO

G.R. No. 121980, February 23, 2000
Facts: Gonzalo Penaso was found guilty by the RTC of
Tagbilaran of the crime of rape and sentenced to suffer an
imprisonment of reclusion perpetua and to pay the victim
indemnity and moral damages in the amount of
P50,000.00 The victim was 15 years old at the time the
offense was committed.

Issue: Is the award of damages proper?

Held: NO. Pursuant to current jurisprudence, the award of

P50,000.00 as civil indemnity is mandatory upon the finding of
the fact of rape. In addition, moral damages amounting to
P50,000.00 at the least should be imposed in rape cases involving
young and immature girls between the ages of 13 and 14, without
need of further proof. Hence, the amount of damages awarded
should be P100,000.00.

PEOPLE vs. EREñO

G.R. 1224706, Feb. 22, 2000

Facts: On the night of June 21, 1995, an altercation over a

flashlight led to the untimely death of Rosanna Honrubia. The
victim died by reason of the stab wounds she sustained at the back
and at the chest. An eyewitness sufficiently identified the
assailant as the accused Carlito Ereño. The mother of Rosanna
claimed she spent P24,000.00 in connection with her death and
burial. She was also claiming P187,200.00 by way of lost
income which Rosanna could have earned had she not been
untimely killed. There was also a claim for moral damages
brought by the pain and sorrow caused by Rosanna’s demise.
The trial court found accused guilty of murder and ordered
him to pay to the heirs of Rosanna P24,000.00 for
expenses incurred in connection with her death and burial;
P50,000.00 for loss of the victim’s life and P50,000.00 by
way of moral damages. The claim for loss income was
however denied.

Issue: Is the award of damages and the denial of the award for
loss of income proper and correct under the circumstances?

Held: As to actual damages, NO. In seeking recovery for

actual damages it is necessary that the claimant produce
competent proof or the best evidence obtainable such as receipts
to justify an award therefor. Actual or compensatory damages
cannot be presumed but must be proved with reasonable degree
of certainty. Only substantiated and proven expenses or those
which appear to have been genuinely incurred in connection with
the death, wake or burial of the victim will be recognized by the
court. The list of expenses incurred for the wake, funeral and
burial of the victim amounting to P24, 700.00 submitted by the
victim’s mother is self-serving and not substantiated. The
Supreme Court cannot, therefore, affirm the trial court’s award of
P24,000.00 as actual expenses.
As to the civil indemnity, YES. In line with current
jurisprudence the award of P50,000.00 as civil indemnity (ex
delicto) is sustained, which requires no proof other than the fact
of death of the victim and assailant’s responsibility therefor.
As to the moral damages, YES. The award of P50,000.00 by
way of moral damages for the pain and sorrow suffered by the
victim’s family in connection with Rosanna’s death is
sustained. Such award is adequate reasonable and with sufficient
basis taking into consideration the pain and mental anguish
suffered by the victim’s family.
As to denial of the award for loss of income, YES. The court
a quo correctly denied for lack of factual basis the claim of the
victim’s mother for an award for loss of income or earning
capacity of the deceased estimated by her at P600 per day or
P15,600.00 a month or P187,200.00 a year. This handwritten
estimate of the deceased’s daily income as a self- employed fish
vendor during the past eight years prior to her death submitted by
the victim’s mother in the course of her testimony in court is not
supported by competent evidence like income tax returns or
receipts. It bears stress that compensation for lost income is in the
nature of damages and as such requires due proof of the damages
suffered; there must be unbiased proof of the deceased’s average
income. In the instant case the victim’s mother gave only a self-
serving hence unreliable statement of her deceased daughter’s
income. Moreover, the award for lost income refers to the net
income of the deceased, that is, her total income less her average
expenses. No proof of the victim’s average expenses was
presented. Hence, there can be no reliable estimate of the
deceased’s lost income.

N.B. The SC held the accused guilty only of the crime of

homicide.

PEOPLE vs. DE GUZMAN

G.R. No.118670, Feb. 22, 2000

Facts: Accused Renato de Guzman, et al. were found guilty by

the RTC of Baguio City of the crime of robbery with homicide
committed against the person of Dr. Amadeo Belmonte and the
house helper Teresa Hape. On the civil aspect, they were
ordered to restore or pay the value of the stolen properties, to
indemnify P50,000.00 each victim in accordance with Art. 2206,
NCC; P46,200,000.00 representing the lost earnings of Dr.
Belmonte for 25 years since he was only 35 years old when killed
and the life expectancy of an average Filipino is 60 years
old, P274,809 representing actual and compensatory
damages, P1,000,000 as moral damages and P100,000.00 as
exemplary damages to the heirs of Dr. Belmonte; and
P100,000.00 exemplary damages to the heirs of Hape.

Issue: Is the award of damages proper and correct under the

circumstances?

Held: The award given by the trial court for loss of earnings is
erroneous. As established, Dr. Belmonte was earning an average
of P150,000.00 as practicing physician; P20,000 as professor of
medicine per month or P2,088,000 per year. It was likewise
established that Dr. Belmonte was only 35 years old at the time
of his death. Loss of earning capacity is computed on the
following formula:

Net Life expectancy Gross Living

Earning = [(2/3) (80-
35)] x annual _ expenses
Capacity at death income (GAI ) ( 50% of
GAI)
=[(2/3) (80-
35)] x P2,088,000.00 – P1,044.000.00
=[(2/3) (45)] x P1,044,000.00
= 30 x P1,044,000.00
 =P31,320,000.00

Thus the award for loss of earning is reduced to P31,320,000.00.

As regards the award for actual damages the same is reduced
from P274,809 to P113,709.75 since this is the amount that was
proved and duly receipted.
The award for moral damages to the legal heirs of Dr.
Belmonte is likewise reduced to P50,000.00 in line with
prevailing jurisprudence. The lower court should have awarded
moral damages for the killing of Teresa Hape considering its
finding that aggravating circumstances attended the robbery-
killing, in accordance with Art. 2230 of the Civil Code. Thus, the
award of P50,000.00 as moral damages is warranted under the
circumstances. Likewise the award for exemplary damages is
reduced to P20,000.00 each for the heirs of Dr. Belmonte and
Teresa Hape.

PEOPLE vs. MENDIONA

G.R. No. 129056, Feb. 21, 2000

Facts: Accused Liberato Mendiona was convicted of the crime

of rape, and sentenced to suffer the supreme penalty of death. He
was also ordered to pay the offended party, Maricel Capongcol,
the amount of P50,000.00 as moral damages.

Issue: Should the P50,000.00 awarded to the offended party be

classified as moral damages?

Held: NO. We correct the trial court’s erroneous classification

of the award of P50,000.00 as moral damages. The award
authorized by criminal law as civil indemnity (ex delicto) for the
offended party is mandatory upon the finding of the fact of
rape; it is distinct from and should not be denominated as moral
damages which are based on different jural foundation and
assessed by the court in the exercise of sound discretion. Further,
our more recent rulings hold that the indemnification for the
victim shall be in the increased amount of P75,000.00 if the crime
of rape is committed or effectively qualified by any of the
circumstances under which the death penalty is authorized by
law. Applying the foregoing ruling, the civil indemnity to be
awarded to the complainant is P75,000.00.

CALALAS vs. COURT OF APPEALS

G.R. No. 122039, May 31, 2000

Facts: On the way to Poblacion Sibulan, Negros Occidental,

petitioner Vicente Calalas’ passenger jeepney was bumped by an
Isuzu truck. Private respondent Eliza Sunga, a passenger in the
jeepney sustained injuries. Eliza filed a complaint for damages
against Vicente based on breach of contract of carriage by the
latter in failing to exercise the diligence required of him as a
common carrier. Vicente was adjudged liable for damages to
Eliza, including P50,000 as moral damages.

Issue: Is the award of moral damages proper?

Held: NO. As a general rule, moral damages are not

recoverable in actions for damages predicated on a breach of
contract for it is not one of the items enumerated under Art. 2219
of the Civil Code. As an exception, such damages are recoverable:
(1) in cases in which the mishap results in the death of a
passenger, as provided in Art. 1764, in relation to Art. 2206(3) of
the Civil Code; and (2) in the cases in which the carrier is guilty
of fraud or bad faith, as provided in Art. 2220.
In this case, there is no legal basis for awarding moral
damages since there was no factual finding by the appellate court
that petitioner acted in bad faith in the performance of the contract
of carriage.

PEOPLE vs. MAGAT

G.R. No. 130026, May 31, 2000

Facts: Before this court for automatic review is the joint

decision of the RTC of QC, in 2 criminal cases, finding accused
Antonio Magat guilty of raping his daughter, Ann Fideli Magat,
on two occasions and sentencing him to suffer the extreme
penalty of death for each case, and to pay the sum of P50,000.00
as compensatory damages, P200,000.00 as moral damages and,
P500,000 00 as exemplary and corrective damages.

Issue: Is the award of damages proper?

Held: The sum awarded as compensatory damages should be

increased from P50,000.00 to P75,000.00. The SC has previously
held that “if the crime of rape is committed or effectively qualified
by any of the circumstances under which the death penalty is
authorized by the present amended law, the indemnity of the
victim shall be in the increased amount of not less than
P75,000.00. In the 2nd criminal case however, while appellant was
sentenced to reclusion perpetua, as the crime of rape was
committed when the victim is already above 18 years old, the
compensatory damage should be the same (P75,000.00). The
trauma, ignominy, pain and shame suffered by the complainant
can not be treated or regarded any lesser.
In crimes of rape, moral damages may additionally be
awarded to the victim in the criminal proceeding, in such amount
as the Court deems just, without the need for pleading or proof of
the basis thereof. The fact that complainant has suffered the
trauma of mental, physical and psychological sufferings which
constitute the bases for moral damages are too obvious to still
require the recital thereof at the trial by the victim, since the Court
itself even assumes and acknowledges such agony on her part as
a gauge of her credibility. Nevertheless, the award of
P200,000.00 as moral damages is excessive. An award of
P50,000.00 for each count of rape is more reasonable.
The award of exemplary or corrective damages is
deleted in the absence of any legal basis therefor.

PEOPLE vs. BAUTISTA

G.R. No. 131840, April 27, 2000

Facts: The RTC of Rizal found Henry and Nilo Bautista guilty
of murder and sentenced them to suffer the penalty of reclusion
perpetua and to pay jointly the amounts of P24,839.00 as actual
damages and P30,000.00 as civil indemnity to the heirs of the
victim, Igmidio Grajo. The prosecution witness Richard Grajo,
son of the victim, testified on the commission of the crime by the
accused. Purita Grajo testified on the amount of damages: funeral
expenses, earning capacity, hospital bill amounting to
P24,839.00.
Issue: What are the nature and the amount of damages that may
be awarded by the court?

Held: Every person criminally liable for a felony is also civilly

liable. The amount and nature of damages to be awarded are:
1. Indemnity for Death. Art. 2206,NCC provides for the
payment of indemnity for death caused by a crime. Initially fixed
in Art. 2206 at P3,000.00, the amount of indemnity for death has,
through the years, been gradually increased in view of the
declining value of the peso. It is presently fixed at
P50,000.00. Hence, the trial court correctly awarded indemnity
for death to the heirs of Igmidio in this amount.
2. Actual Damages. Art. 2199,NCC provides that "except as
provided by law or by stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he
has duly proved." The prosecution submitted receipts and
presented the testimony of Purita, the widow of Igmidio, showing
that his family incurred expenses in the total amount of
P24,839.00 for his wake and burial. Hence, the trial court likewise
correctly awarded actual damages to the heirs of Igmidio in this
amount.
The civil liability of accused for indemnity for death and
actual and moral damages, however, is solidary and not joint as
ruled by the trial court.
3. Moral Damages. Under Art. 2206,NCC, the spouse,
legitimate and illegitimate descendants and ascendants of the
deceased are entitled to moral damages "for mental anguish by
reason of the death of the deceased." Purita testified that she
suffered pain from the death of her husband. Thus, in accordance
with recent decisions of this Court, accused should be liable to
pay the additional amount of P50,000.00 as moral damages.
 4. Exemplary Damages. Under Art. 2230,NCC, "exemplary
damages as a part of the civil liability may be imposed when the
crime was committed with one or more aggravating
circumstances." In this case, the aggravating circumstance of
abuse of superior strength should be appreciated against Nilo.
Thus, accused Nilo Bautista should be ordered to pay the heirs of
Igmidio the additional sum of P30,000.00 as exemplary damages.

N.B. Accused were found guilty of homicide not murder.

PEOPLE VS. PASCUAL

G.R. No. 127761, April 28, 2000

Facts: The accused, Pedro R. Pascual, and a certain John Doe

were charged with the crime of murder. Pascual was found guilty
of killing Dr. Picio by testimony of prosecution witness Marissa
Robles. Rosalinda S.Picio, wife of the late Dr.Picio, testified on
the civil aspect of the case. She stated she spent around P300,000
for the wake and funeral service. She also declared that her
husband used to receive a monthly salary of P13,000 as municipal
health officer in addition to the P240,000 annual income he used
to earn in farming and grains business.

Issue: What are the nature and the amount of damages that may
be awarded?

Held: In view of the death of the victim, Dr. Maximino Picio,

Jr., his forced heirs are entitled to P50,000.00 representing civil
indemnity ex delicto. They are also entitled to P50,000.00 by way
of moral damages inasmuch as the widow of the victim,
Rosalinda Picio, testified on how she felt over the loss of her
husband. Additionally, the accused is liable to pay to the heirs of
the victim damages for loss of earning capacity of the deceased.
However, actual damages may not be awarded in view of the
absence of competent evidence to support the same.
It appears that Dr. Picio was 64 years old at the time of his
death on March 14, 1995. Her widow testified that he used to
receive a monthly salary of P13,000.00 as Municipal Health
Officer of San Manuel, Isabela. In accordance with the American
Expectancy Table of Mortality which was adopted by the Court,
the loss of earning capacity shall be computed as follows:
Net Earning Capacity (X) = Life Expectancy x (Gross Annual
Income – Living Expenses e.g. 50% of annual gross income)
= 2 (80-64) x (156,000.00-78,000.00)
————
3
= 10.667 x 78,000.00
= P832,026.00

OROSA vs. COURT OF APPEALS

G. R. No. 111080, April 5, 2000

Facts: Petitioner Jose Orosa purchased a Ford Sedan on

installment from Fiesta Motor Sales Corporation (FMSC),
executing and delivering to the latter a promissory note payable
in monthly installments. To secure payment, he executed a
chattel mortgage over the subject motor vehicle in favor of FMSC
which in turn assigned the promissory note and chattel mortgage
to private respondent FCP Credit Corporation. Orosa failed to
pay part of an installment as well as three (3) other consecutive
installments. Consequently, FCP Credit Corporation demanded
from him payment of the entire outstanding balance of the
obligation with accrued interest and to surrender the vehicle
which petitioner was allegedly detaining. As Orosa failed to do
so, FMSC filed a complaint for replevin and damages in the RTC
of Manila against the former. It was able to provisionally secure
the writ.
The trial court ruled that FMSC is not entitled to the writ of
replevin since Orosa already made payments on the installments,
albeit late and irregular. It ordered the return of the subject
vehicle, or its equivalent, to petitioner. It likewise granted
petitioner’s counterclaim for moral damages, exemplary
damages, and attorney’s fees.

Issue: Is Orosa entitled to moral damages, exemplary damages,

and attorney’s fees?

Held: NO. Orosa’s claim must be denied. As to the matter of

moral damages, the law clearly states that one may only recover
moral damages if they are the proximate result of the other party’s
wrongful act or omission. Two elements are required. First, the
act or omission must be the proximate result of the physical
suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation
and similar injury. Second, the act must be wrongful.
According to Orosa, the car subject of this case was being
used by his daughter, married to Jose Concepcion III, a scion of a
prominent family. He maintains that when the complaint was
filed against him, he suffered untold embarrassment as he had to
explain the suit to his daughter’s in-laws. However, that could
have been avoided had he not assigned the car to his daughter and
had he been faithful and prompt in paying the installments
required. Orosa brought the situation upon himself and cannot
now complain that FMSC is liable for the mental anguish and
humiliation he suffered. Further, FMSC brought the complaint
only to exercise a legal right, believing that it had a meritorious
cause of action clearly borne out by a mere perusal of the
promissory note and chattel mortgage. The rule has always been
that moral damages cannot be recovered from a person who has
filed a complaint against another in good faith.
Anent the award of exemplary damages, jurisprudence
provides that where a party is not entitled to actual or moral
damages, an award of exemplary damages is likewise baseless.
In the matter of attorney’s fees, it should likewise be
denied. No premium should be placed on the right to litigate and
not every winning party is entitled to an automatic grant of
attorney’s fees. The party must show that he falls under one of
the instances enumerated in Article 2208 of the Civil Code. This,
Orosa failed to do. Furthermore, where the award of moral and
exemplary damages is eliminated, so must the award for
attorney’s fees be deleted.

PEOPLE vs. CABANDE

G.R. No. 132747, February 8, 2000

Facts: Vicente Trinidad and Victor Trinidad and accused

Cabande, had serious misunderstanding over Lot No. 1990 of the
Buenavista Estate in Bulacan. In convicting Cabande, the trial
court relied on the eyewitness account of Christopher Trinidad,
son of Victor, who was five years old when the crime was
committed and who was then riding the jeepney together with the
two victims. The court a quo also noted that there was a feud
between accused and the victims over the ownership of a parcel
of land. It concluded that the killing was qualified by treachery,
because the victims "were totally defenseless and had no
opportunity to defend themselves or retaliate when shot." The
trial court likewise ordered the accused to pay P50,000.00 as civil
indemnity, P100,000.00 for the wake and burial expenses, moral
damages and exemplary damages each to the heirs of the victims,
as well as indemnity for loss of income in the amount of P1.5
million to the heirs of Victor and P337,000.00 to the heirs of
Vicente.

Issue: Is the award of damages and civil indemnity proper and

correct under the circumstances?

Held: In line with current jurisprudence, we affirm the award

of indemnity ex delicto to the heirs of each victim in the sum of
P50,000 or a total of P100,000. This may be awarded without
need of proof other than the commission of the crime. Likewise,
we sustain the award of P100,000.00 to the heirs of each victim
for the wake and burial expenses, for these were duly
proven. Although the records show that they were entitled to
moral damages, we hold that the award should be reduced to
P100,000 or P50,000 for each set of heirs of the victims.
We cannot sustain, however, the award of exemplary
damages, which are awarded only in the presence of one or more
aggravating circumstances. None was established in this case.
Likewise, we hold that the trial court erred in awarding the
amount of P1.5 million and P337,000. as loss of
income. The amount of indemnity for loss of earning
capacity is based on the income at the time of death and
the probable life expectancy of the victim. It should be
stressed that the amount recoverable is not the entire
earnings, but only that portion which the beneficiaries
would have received. Thus, indemnity for lost income
refers to the victim's total earnings minus the necessary
living expenses. In the case of Victor, his wife testified
that the annual income from their piggery business was
P300,000. Considering that the two of them operated and
managed the business, the profits should be divided
equally between them. Accordingly, the annual income of
Victor, who was 39 years old at the time of his death, was
P150,000. Considering that his living expenses have not
been proven, the Court exercises the discretion to
ascertain and fix the same. Under the circumstances, we-
find the amount of P50,000 as reasonable living expenses.

BAÑAS, JR. vs. COURT OF APPEALS

G.R. No. 102967, February 10, 2000

Facts: A sale of land and nonpayment of income tax

thereon resulted to the filing by BIR Regional Director Aquilino
Larin of a criminal complaint for tax evasion against petitioner
Banas. Such filing of the case against him was publicized in
several newspapers. Reacting to the complaint for tax evasion
and the news reports, Banas filed with the RTC of Manila an
action for damages against respondents Larin, et al. for extortion
and malicious publication of the BIR's tax audit report. He
claimed that the filing of criminal complaints against him for
violation of tax laws were improper because he had already
availed of the tax amnesty laws.
 The trial court decided in favor of the respondents and
awarded Larin P200,000.00 as actual damages.

Issue: Is the award of damages to Larin proper?

Held: NO. Any person who seeks to be awarded actual or

compensatory damages due to acts of another has the burden of
proving said damages as well as the amount thereof. Larin says
the extortion cases filed against him hampered his immediate
promotion, caused him strong anxiety and social humiliation. The
trial court awarded him actual damages. However, the appellate
court stated that, despite pendency of this case, Larin was given a
promotion at the BIR. Said respondent court found nothing on
record, to show that he suffered loss of seniority that allegedly
barred his promotion. In fact, he was promoted to his present
position despite the pendency of the instant case Moreover, the
records of the case contain no statement whatsoever of the amount
of the actual damages sustained by the respondents. Actual
damages cannot be allowed unless supported by evidence on the
record. The court cannot rely on speculation, conjectures or
guesswork as to the fact and amount of damages. To justify a
grant of actual or compensatory damages, it is necessary to prove
with a reasonable degree of certainty, the actual amount of
loss. Since we have no basis with which to assess, with certainty,
the actual or compensatory damages counter-claimed by Larin,
the award of such damages should be deleted.
Moral damages may be recovered in cases involving acts
referred to in Art. 21, NCC. As a rule, a public official may not
recover damages for charges of falsehood related to his official
conduct unless he proves that the statement was made with actual
malice.
 PEOPLE vs. ALAGON
G.R. Nos. 126536-37, February 10, 2000

Facts: The RTC of Pasig City found accused Alagon and

Rafael guilty of two counts of murder for the death of Magno
and Barcelona and ordered them to pay actual, moral and
exemplary damages, as well as indemnity for the deaths to the
heirs of the two victims.

Issue: Is the award of damages and indemnity proper and

correct under the circumstances?

Held: As to actual damages, NO. We cannot sustain the award

of actual damages in favor of the heirs of Magno for failure to
substantiate the bare assertion of the widow with other
corroborative evidence. The Court can only grant such amount for
expenses if they are supported by receipts. In the absence thereof,
no award for actual damages can be granted. For the same reason,
the award of actual damages to the heirs of Isidro Barcelona
should be reduced as the amount duly supported by documentary
evidence.
As to the award of P50,000.00 each to the heirs of the
victims as indemnity for the deaths of Magno and Barcelona,
YES. We affirm such award as this is in accord with prevailing
jurisprudence.
As to moral and exemplary damages, NO. The trial court
erred in awarding to the heirs of the two victims lump sums of
P100,000.00 each for moral and exemplary damages. These are
separate in nature and require separate determination.
Considering that the heirs of the victims asked for it and testified
that they experienced moral suffering, moral damages in the
amount of P50,000.00 is awarded to the heirs of the victims to
compensate them for the injuries to their feelings. The award for
exemplary damages must be deleted, considering the crime was
committed without any other aggravating circumstances.
Finally, we must also add the award for loss of earning
capacity. The sister of the deceased Barcelona testified that the
victim was earning P145.00 a day or P4,350.00 per month and
the records reveal that he was 27 years old at the time of his
death. On the other hand, it was established that Magno was 31
years old at the time of his death and earning P4,500.00 per
month.

PEOPLE vs. DANDO

G.R. No. 120646, February 14, 2000.

Facts: The RTC of Laguna found accused PO3 Apolinar

Dando guilty of murder for the killing of Cesar Castro and
awarded to the heirs of the victims civil indemnity for the death
of Castro, reimbursement for actual expenses incurred for the
wake and burial, as well as indemnity for loss of earning capacity
in the amount of P1,620,000.00.

Issue: Is the award of damages and indemnity proper and

correct under the circumstances?

Held: As to the amount of P50,000 as indemnity for the death

for Castro, YES. Said amount is awarded, without need of further
proof other than the death of the victim. In addition, the heirs are
also entitled to receive a compensation for the loss of earning
capacity of the victim. The formula for computing the same as
established in decided cases is as follows:
Gross Necessary
Net Earning = Life x Annual - Living
Capacity Expectancy Income Expenses
The life expectancy is equivalent to two thirds (2/3)
multiplied by the difference of 80 and the age of the
deceased. Since Castro was 47 years old at the time of his death,
his life expectancy was 22 more years. Celso, Castro’s son,
testified that his father earned P3,000.00 monthly or P36,000.00
annually from the sash factory. In addition, the victim's annual
income from farming as found by the trial court was P53,000.00.
The gross annual income of the deceased was P89,000.00.
Allowing for necessary living expenses of fifty percent (50%) of
his gross earnings, his total net earning capacity amounts to
P979,000.00. 39
As to the expenses actually incurred by the family of
the victim for the wake and burial, Celso was able to prove
during trial that they incurred the sum of P39,974.00. The
amount of P35,974.00 awarded by the trial court as
reimbursement of funeral expenses is, accordingly,
increased to P39,974.00.

Attorney’s Fees in the Concept of Damages

INDUSTRIAL INSURANCE COMPANY vs. BONDAD

G.R. No. 136722, April 12, 2000
Facts: The present Petition finds its roots in an incident which
involved three vehicles: a Galant Sigma car driven by Grace
Morales, a packed passenger jeepney originally driven by Ligorio
Bondad, and a DM Transit Bus driven by Eduardo Mendoza. The
respondents asserted that their vehicle was on full stop because of
a flat tire and it was the bus which hit Morales' car. Moreover,
they contended that petitioner had acted in bad faith in impleading
them and that, contrary to its allegation, no prior demand had been
made upon them.
The trial court exculpated the Bondads and ordered
petitioner to pay them actual, moral and exemplary damages, as
well as attorney's fees.

Issue: May attorney’s fees and other litigation expenses be

awarded if one who claims it is compelled to litigate with third
persons?

Held: YES. Attorney's fees may be awarded if one who claims

it is compelled to litigate with third persons or to incur expenses
to protect one's interests by reason of an unjustified act or
omission on the part of the party from whom it is sought. In
justifying the award of attorney's fees and other litigation
expenses, the court held that respondents were compelled to
litigate an unfounded suit because of petitioner's negligence and
lack of prudence in not verifying the facts before filing this action.
The facts of this case clearly show that petitioner was motivated
by bad faith in impleading respondents. Indeed, a person's right
to litigate, as a rule, should not be penalized. This right, however,
must be exercised in good faith. Absence of good faith in the
present case is shown by the fact that petitioner clearly has no
cause of action against respondents but it recklessly filed suit
anyway and wantonly pursued pointless appeals, thereby causing
the latter to spend valuable time, money and effort in
unnecessarily defending themselves, incurring damages in the
process. In this case, the records show that petitioner's suit against
respondents was manifestly unjustified.

LIABILITY FOR DAMAGES IN ACTION BASED ON

MALICIOUS PROSECUTION

BAYANI vs. PANAY ELECTRIC CO.

G.R. No. 139680, April 12, 2000

Facts: In March 1996, Panay Electric Company, Inc. (PECO)

discontinued supplying electrical services to two pension houses
owned by petitioner. Alleging that it had discovered theft of
electricity in petitioner's business establishments, PECO filed two
complaints for violation of R.A. No. 7832 against petitioner with
the City Prosecutor of Iloilo City. The City Prosecutor dismissed
the complaints on August 8, 1996 and August 19, 1996,
respectively. PECO appealed the dismissal to the Secretary of
Justice.
On October 10, 1996, petitioner filed with the RTC of
Iloilo City an action for injunction and damages arising
from malicious prosecution, then amended his complaint
to add a prayer for writ of preliminary prohibitory injunction
to make PECO desist from making "false imputations that
plaintiff allegedly continued to commit violations" of R.A.
No. 7832. PECO filed a motion to dismiss the amended
complaint, but said motion was denied. On September 2,
1997, the trial court granted petitioner's request for the
issuance of a writ of preliminary mandatory
injunction. On November 17, 1997, PECO filed a petition
for certiorari and prohibition with the Court of Appeals,
praying that the appellate court declare the orders of the
trial court denying the motion to dismiss and grant of writ
of PMI null and void and likewise sought the dismissal of
herein petitioner's complaint in the lower court.
The Secretary of Justice upheld the dismissal of the
complaints for violations of R.A. No. 7832 on March 4, 1998. The
CA dismissed the complaint for injunction and damages filed by
Bayani.

Issue: Is the action for malicious prosecution premature?

Held: YES. The requisites for an action for damages based on

malicious prosecution are: (1) the fact of the prosecution and the
further fact that the defendant was himself the prosecutor, and that
the action was finally terminated with an acquittal; (2) that in
bringing the action, the prosecutor acted without probable cause;
and (3) the prosecutor was actuated or impelled by legal
malice. Considering the facts in this case, we agree with the
appellate court that one of the elements for an action based on
malicious prosecution, the element of final termination of the
action resulting in an acquittal, was absent at the time petitioner
filed civil case. The records show that petitioner's action for
injunction and damages was filed on October 10, 1996, whereas
the Secretary of Justice dismissed with finality PECO's criminal
complaints against herein petitioner only on March 4, 1998.
Hence, the civil case for malicious prosecution was prematurely
filed.

VILLANUEVA vs. UNITED COCONUT PLANTERS

BANK
G.R. No. 138291, March 7, 2000

Facts: Herminigildo Villanueva, father of the petitioner,

applied for and was granted a loan by UCPB which at the
time was managed by Bobby Café. In the course of the
bank audit, certain fraud, anomalies and irregularities were
discovered in the application, processing and quantity of
said amount which prompted UCPB to conduct
investigation on the matter. UCPB filed criminal complaints
which resulted to the acquittal of the defendants. In view of
the acquittal, Hector Villanueva filed an action for
damages on the ground of alleged malicious prosecution
with RTC. In its answer, UCPB denied the allegation in the
complaint and asserted that there is no cause of action
since the filling of the criminal complaint was not tainted
with malice.

Issue: Is UCPB liable for damages?

Held: NO. The adverse result of an action does not

make the prosecution thereof wrongful neither does it
subject the action to payment of damages. The law does
not impose a penalty to the right to litigate. Resort to
judicial processes, by itself, is not an evidence of ill will. As
the mere act of filing criminal complaint does not make the
complainant liable for malicious prosecution. These must
be proof that the suit was performed by legal malice. An
inexcusable intent to oppress, vex, annoy or humiliate. A
contrary rule would discourage peaceful resources to the
court and unjustly penalize the exercise of a citizen’s right
to litigate. Where the action is filed in good faith, no
penalty should be imposed thereon.

Recovery of Damages in Negligent Acts

CALALAS vs. COURT OF APPEALS

G.R. No. 122039, May 31, 2000

Facts: On the way to Poblacion Sibulan, Negros Occidental,

Petitioner Vicente Calalas’ passenger jeepney was bumped by an
Isuzu truck owned by Francisco Salva. Private respondent Eliza
Sunga, a passenger in the jeepney sustained injuries. Eliza filed
a complaint for damages against Vicente based on breach of
contract of carriage by the latter in failing to exercise the
diligence required of him as a common carrier. Vicente, on the
other hand, filed a 3rd party complaint againt Francisco.
The lower court rendered judgment, against Francisco
and absolved Vicente of liability. It took cognizance of
another case (Civil Case No. 3490) filed by Vicente
against Francisco and his driver Verena, for quasi-delict,
in which the latter were held jointly liable to Vicente for the
damage to his jeepney.
 On appeal to the CA, the ruling of the lower court was
reversed on the ground that Eliza’s cause of action was based on
a contract of carriage, not quasi-delict, and that the common
carrier failed to exercise the diligence required under the Civil
Code. The appellate court dismissed the third-party complaint
against Francisco and adjudged Vicente liable for damages to
Eliza.

Issue: Is Eliza bound by the ruling in the earlier case (Civil

Case No. 3490) finding the driver and the owner of the truck
liable for quasi-delict?

Held: NO. The issue in the former case (Civil Case No. 3490)
is not the same as those in the present. The issue in Civil Case
No. 3490 was whether Salva and his driver Verena were liable for
quasi-delict for the damage caused to petitioner's jeepney. On the
other hand, the issue in this case is whether petitioner is liable on
his contract of carriage. The first, quasi-delict, also known as
culpa aquiliana or culpa extra contractual, has as its source the
negligence of the tortfeasor. The second, breach of contract or
culpa contractual, is premised upon the negligence in the
performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should
be clearly established because it is the basis of the action, whereas
in breach of contract, the action can be prosecuted merely by
proving the existence of the contract and the fact that the obligor,
in this case the common carrier, failed to transport his passenger
safely to his destination.

Negligence; Easement
 REMMAN ENTERPRISES vs. COURT OF APPEALS
G. R. No. 125018, April 6, 2000

Facts: Petitioner REMMAN Enterprises, Inc. (REMMAN)

and private respondent Crispin Lat are owners of adjoining lots.
Lat’s land is agricultural and planted mostly with fruit tress, while
REMMAN devotes its land to its piggery business. REMMAN’s
land is 1½ meters higher in elevation than that of respondent
Lat. Sometime in July 1984, Lat noticed that REMMAN’s waste
disposal lagoon was already overflowing and inundating his
plantation. He made several representations with REMMAN but
the latter fell on deaf ears. On March 14, 1985, after almost one
hectare of Lat’s plantation was already inundated with ankle-deep
water containing pig manure, as a result of which trees growing
on the flooded portion started to wither and die, Lat filed a
complaint for damages with preliminary mandatory injunction
against REMMAN. REMMAN denied the allegations and
argued that additional measures such as the construction of
additional lagoons were already adopted to contain the waste
water coming from its piggery to prevent any damage to the
adjoining estates.
The trial court held REMMAN liable for damages. In this
petition, REMMAN contends that its negligence and liability for
damages were not sufficiently established. It also raises the
defense of fortuitous event (heavy rains) which caused the
inundation of Lat’s plantation, and the supposed natural easement
imposed upon Lat’s property.

Issue: Is REMMAN negligent and should be held liable for

damages?
Held: YES. REMMAN’s negligence was clearly
established. Lat’s property was practically made a catch basin of
polluted water and other noxious substances emptying from
REMMAN’s piggery which could have been prevented had it not
been for the negligence of appellant arising from its: (a) failure to
monitor the increases in the level of water in the lagoons before,
during and after the heavy downpours; (b) failure to augment the
existing lagoons prior to the incident, notwithstanding the fact
that at the time of the flooding, the piggery had grown to a
capacity of 11,000 heads, and considering that it was reasonably
foreseeable that the existing waste disposal facilities were no
longer adequate to accommodate the increasing volume of waste
matters; and (c) the repeated failure to comply with its promise to
private respondent.
REMMAN’s assertion that the damages, if any, were due to
a fortuitous event is not well taken. Even if the heavy rains
constituted an act of God, REMMAN was still guilty of
negligence. The event was not occasioned exclusively by an act
of God or force majeure; a human factor – negligence or
imprudence – had intervened. The effect then of the force
majeure in question may be deemed to have, even if only partly,
resulted from the participation of man. Thus, the whole
occurrence was thereby humanized, as it were, and removed from
the rules applicable to acts of God.
As regards the contended natural easement imposed upon
Lat’s property, Article 637 provides that lower estates are
imposed the obligation to receive the waters which naturally and
without the intervention of man descend from higher
estates. However, where the waters which flow from a higher
state are those which are artificially collected in man-made
lagoons, any damage occasioned thereby entitles the owner of the
lower or servient estate to compensation.

Rule Against Double Recovery in Negligence

Cases

RAFAEL REYES TRUCKING CORPORATION vs.

PEOPLE
G.R. No. 129029, April 3, 2000

Facts: Petitioner Rafael Reyes Trucking Corporation is a

domestic corporation engaged in the business of transporting beer
products for San Miguel Corporation. Among its fleet of vehicles
is a truck driven by the accused Romeo Dunca who met an
accident in Isabela with a Nissan Pick-up. Dunca’s vehicle
rammed the Nissan, causing severe damages to it and the instant
death to its driver, Balcita, and passenger, Dy.
An Information was filed in the RTC of Isabela against
Romeo Dunca for reckless imprudence resulting in double
homicide and damage to property. Offended parties, heirs of the
two deceased, made a reservation to file a separate civil action
against the accused arising from the offense charged. Thereafter,
they actually filed with the RTC of Isabela a complaint against
petitioner Corporation, as employer of Romeo Dunca, based on
quasi delict. Petitioner settled the claim of heirs of Balcita. The
heirs of Dy opted to continue with the criminal and civil
actions. Later, they withdrew their reservation to file a separate
civil action ex delicto against the accused and manifested their
intention to prosecute the same in the criminal action. They did
not, however, withdraw the separate civil action based on quasi
delict against petitioner. Upon agreement of the parties, both
criminal and civil cases were consolidated.
The trial court found Dunca guilty and ordered him to
indemnify private respondents with damages. Petitioner
corporation was ordered to pay private respondents actual
damages. Private respondents moved for amendment of the
dispositive portion to hold petitioner subsidiarily liable for all the
damages ex delicto awarded to them in the event of insolvency of
the accused.

Issue: May petitioner be held subsidiarily liable for the

damages awarded to the offended parties in the criminal action
against the accused despite the filing of a separate civil action
against said petitioner?

Held: NO. Petitioner cannot be held subsidiarily liable. In

negligence cases, the aggrieved party has the choice between (1)
an action to enforce civil liability arising from crime under Article
100 of the Revised Penal Code; and (2) a separate action for quasi
delict under Article 2176 of the Civil Code. Once the choice is
made, the injured party can not avail himself of any other remedy
because he may not recover damages twice for the same negligent
act or omission of the accused. This is the rule against double
recovery. In other words, the same act or omission can create two
kinds of liability on the part of the offender, that is, civil liability
ex delicto, and civil liability quasi delicto, either of which may be
enforced against the culprit, subject to the caveat under Article
2177 of the Civil Code that the offended party can not recover
damages under both types of liability.
 In the instant case, the offended parties elected to file a
separate civil action for damages against petitioner under Article
2176,NCC to hold him vicariously liable for the fault or
negligence of the accused-employee, based on quasi
delict. Having made such choice, private respondents cannot now
recover their claim in a civil action for damages ex delicto
primarily against the accused, and subsidiarily against petitioner.
Based on the foregoing, and on Rule 111, Sec. 1, par. 3 of
the 1985 Rules on Criminal Procedure which provides that the
reservation to file or the filing of a separate civil action results in
a waiver of other available civil actions arising from the same act
or omission of the accused, the trial court grievously erred in
holding, and the court of Appeals in affirming, that petitioner is
subsidiarily liable for damages arising from crime (ex delicto) in
the criminal action. There would be no occasion to rule on the
accused’s ex delicto civil liability, and petitioner’s subsidiary
liability, because of the aforesaid waiver and proscription against
double recovery.

Liability of an Educational Institution

UNIVERSITY OF THE EAST V. JADER

G.R. NO. 132344, February 17, 2000

Facts: Respondent was enrolled in the plaintiff’s College of

Law. In the first semester of his senior year, he failed to take the
regular final examination in Practice Court I for which he was
given an incomplete grade. He enrolled for the second semester
as senior student and on February 1, 1988 he filed an application
for the removal of the incomplete grade given by Professor Carlos
Ortega which was approved by Dean Tiongson after payment of
the required fee. He took the examination on March 28, 1988. On
May 30, 1988, Professor Ortega flunked the respondent.

The respondent’s name appeared in the Tentative List of

Candidates for graduation. The respondent attended the
investiture ceremonies.

Respondent thereafter prepared himself for the bar

examination. He took a leave of absence without pay from his job
and enrolled at the pre-bar review class in Far Eastern University.
Having learned of his deficiency he dropped his review class and
was not able to take the bar examinations.

Issues: 1. May an educational institution be held liable for

damages for misleading a student into believing that the latter had
satisfied all the requirements for graduation?
2. May he be awarded moral damages?

Held: 1. Yes. It is the contractual obligation of the school to

timely inform and furnish sufficient notice and information to
each and every student as to whether he or she had already
complied with all the requirements for the conferment of a degree
or whether they would be included among those who will
graduate. Although commencement exercises are but a formal
ceremony, it nonetheless is not an ordinary occasion, since such
ceremony is the educational institution’s way of announcing to
the whole world that the students included in the list of those who
will be conferred a degree during the ceremony have satisfied all
the requirements for such degree.
 The negligent act of professor who fails to observe the rules
of the school, for instance by not promptly submitted a student’s
grade, is not only imputable to the professor but is an act of the
school, being his employer. Educational institutions are duty-
bound to inform the student of their academic status and not wait
for the latter to inquire from the former. The conscious
indifference of a person to the rights or welfare of the
person/persons who may be affected by his act or omission can
support a claim for damages. Want of care to the conscious
disregard of civil obligation coupled with a conscious knowledge
the cause naturally calculated to produce them would make the
erring party liable.

2. NO. While petitioner was guilty of negligence and thus

liable for respondent for actual damages, we hold that respondent
should not be awarded moral damages. It behooves upon
respondent to verify for himself whether he has completed all
necessary requirements to be eligible for the bar examinations. As
a senior law student, respondent should have been responsible
enough to ensure that all his affairs, specifically those pertaining
to his academic achievement, are in order.

VI. LAND TITLES AND DEEDS/AGRICULTURAL

TENANCY LAWS

Registration of Land Under the Torrens System

DBP vs. COURT OF APPEALS

G.R. No. 129471, April 28, 2000
Facts: The land in dispute consisting of 19.4 hectares was
originally owned by Ulpiano Mumar, whose ownership since
1917 was evidenced by Tax Declaration No. 3840. In 1950,
Mumar sold the land to respondent Cajes who was issued Tax
Declaration No. R-1475 that same year. Cajes occupied and
cultivated the said land. In 1969, unknown to Cajes, Jose Alvarez
succeeded in obtaining the registration of a parcel of land with an
area of 1,512, 468.00 square meters, in his name for which he was
issued OCT No. 546 on June 16, 1969. The parcel of land
included the 19.4 hectares occupied by respondent. Alvarez never
occupied nor introduced improvements on said land.
In 1972, Alvarez sold the land to the spouses Gaudencio
and Rosario Beduya to whom TCT No. 10101 was issued.
That same year, the spouses Beduya obtained a loan from
petitioner DBP for P526,000.00 and, as security,
mortgaged the land covered by TCT No. 10101 to the
bank. In 1978, the SAAD Investment Corp., and the
SAAD Agro-Industries, Inc., represented by Gaudencio
Beduya, and the spouses Beduya personally executed
another mortgage over the land in favor of DBP to secure
a loan of P1,430,000.00. The spouses Beduya later failed
to pay their loans, as a result of which, the mortgage on
the property was foreclosed and sold to DBP as the
highest bidder. As the spouses Beduya failed to redeem
the property, DBP consolidated its ownership. It appears
that Cajes had also applied for a loan from DBP in 1978,
offering his 19.4 hectare property under Tax Declaration
No. D-2247 as security for the loan. Cajes’ loan
application was later approved. However, it was found that
the land mortgaged by Cajes was included in the land
covered by TCT No. 10101 in the name of the spouses
Beduya. DBP, therefore, cancelled the loan and
demanded immediate payment of the amount. Cajes paid
the loan to DBP for which the former was issued a
Cancellation of Mortgage releasing the property in
question from encumbrance. DBP asked Cajes to vacate
the property. As the latter refused to do so, DBP filed a
complaint for recovery of possession with damages
against him. The RTC of Tagbilaran City declared DBP
the lawful owner of the entire land covered by TCT No.
10101 on the ground that the decree of registration was
binding upon the land.
Issue: Is registration of land under the Torrens System a mode
of acquiring ownership over an immovable?

Held: NO. Registration has never been a mode of acquiring

ownership over an immovable property. The purpose of the Land
Registration Act is not to create or vest title but to confirm and
register already created and already vested.

Proof required in land registration proceedings

MARIANO TURQUESA, ET AL. vs. ROSARIO VALERA

G.R. No. 76371 January 20, 2000

Facts: More than half a century ago, private respondent

Rosario Valera applied for the registration of 2 parcels of land
located in Barrio Pulot, Laguyan, Abra. Lot 1 has an area of
210,767 sq. m. and Lot 2 has an area of 22,141 sq. m. In support
of her application, private respondent presented documents
showing that she bought Lot 1 during the years 1929-1932 from
Cristeta Trangued and the heirs of Juan Valera Rufino who were
allegedly in possession thereof since the Spanish regime in the
concept of owners and who declared it in their name for taxation
purposes. From 1929, she continued possession of said land in the
concept of owner and continued to pay the tax thereon in her
name. The Director of Lands together with petitioners and other
persons opposed the application of Rosario.
Rosario was adjudged to have a registrable title over the 2
lots. The Director of Lands' opposition was denied for failure to
substantiate his claim that the subject lands were part of the public
domain. After this decision became final and executory, Rosario
filed with the trial court a motion for the issuance of writ of
possession over the lots. Portions of Lot 1 were respectively
claimed by Santiago Partolan (not an oppositor in the land
registration case) and Crispin Baltar (one of the oppositors). The
Motion was denied. On appeal, the then IAC issued the writ.

Issue: Is private respondent Rosario Valera properly entitled to

a writ of possession of portions of Lot 1 occupied by Partolan and
Baltar?

Held: No. Rosario failed to show evidence of her rightful claim

whether possessory or proprietary over the subject areas. The
burden of proof in land registration cases is incumbent on the
applicant who must show that he is the real and absolute owner in
fee simple of the land applied for. On him also rests the burden
to overcome the presumption that the land sought to be registered
forms part of the public domain considering that the inclusion in
a title of a part of the public domain nullifies the title.
The declaration by the applicant that the land applied for has
been in the possession of her predecessor-in-interest for a certain
period, does not constitute the "well-nigh incontrovertible" and
"conclusive" evidence required in land registration. Further, it
should be noted that tax declaration, by itself, is not considered
conclusive evidence of ownership in land registration cases.
Rosario should have substantiated her claim with clear and
convincing evidence specifically showing the nature of her
claim. The applicant must likewise prove the identity of the land.
It must be borne in mind that what defines a piece of land is not
the size or area mentioned in its description, but the boundaries
therein laid down, as enclosing the land and indicating its limits.
Considering that the writ of possession was sought by
Rosario against persons who were in "actual possession under
claim of ownership," the latter's possession raises a disputable
presumption of ownership. This unrebutted presumption militates
against the claim of Rosario, especially considering the
evidentiary rule under Article 434 of the Civil Code that a
claimant of a parcel of land, such as Rosario, must rely on the
strength of his title and not on the weakness of the defendant's
claim.

Evidence of Ownership

SANTIAGO vs. COURT OF APPEALS

G.R. No. 109111, June 28, 2000
Facts: In 1980, the MWSS filed with the RTC of Rizal an
application for registration of title of eleven (11) parcels of land,
situated in San Mateo, Rizal. An aqueduct pipeline belonging to
MWSS was buried under the subject lands long before World War
II. MWSS further alleged ownership of the subject properties
since 1945. Petitioners opposed claiming ownership over certain
portions of the properties and supported their respective claims
by presenting certificates of title. TC decided in favor of
petitioners, relying mainly on the certificates of title
presented. MWSS appealed to the CA which ruled differently.
Reasoning: 1) the property covered by the certificates of title
presented by petitioners merely adjoins and are adjacent to the
property claimed by MWSS. Such is shown by the technical
descriptions in the certificates of title presented. The parcels of
land covered by the certificates of title do not overlap or encroach
on the property claimed by MWSS. 2) the aqueducts were
installed and buried long before WW II, under untitled land,
giving rise to the presumption that such land was "public land".
3) MWSS acquired ownership by prescription. It is a matter of
public knowledge and judicial notice that the pipes existed and
were buried under the land before WW II and its existence was
indicated above the ground by " pilapils".

Issue: Is the MWSS the owner of the lands in controversy?

Held: YES.
The titles presented by petitioners, while showing
ownership, is not of the land claimed, but over the
adjoining parcels of land. The technical descriptions in the
titles presented by petitioners betray them as adjacent and
adjoining owners of the land claimed by MWSS for
registration. A torrens certificate of title covers only the
land described therein together with improvements
existing thereon, if any, nothing more.
MWSS presented tax declarations to buttress its ownership
of the land. True, tax declarations do not prove ownership.
However, tax declarations can be strong evidence of ownership
when accompanied by possession for a period sufficient for
prescription. Since MWSS possessed the land in the concept of
owner for more than thirty (30) years preceding the application,
MWSS acquired ownership by prescription. By placing the
pipelines under the land, there was material occupation of the land
by MWSS, subjecting the land to its will and control. Petitioners
cannot argue that MWSS' possession was not "open". The
existence of the pipes was indicated above the ground by "
pilapils". Even assuming arguendo that the pipes were "hidden"
from sight, petitioner cannot claim ignorance of the existence of
the pipes. The possession must be public in order to be the basis
for prescription. Petitioners also cannot claim that MWSS
abandoned its possession. There is no showing that by
discontinuing the use of the pipes, MWSS voluntarily renounced
its claim over the land. Petitioners did not prove that the spes
recuperendi was gone and the animus revertendi was given up.

Grant of Title/Confirmation of Imperfect Title on Lands

BRACEWELL vs. COURT OF APPEALS

G.R. No. 107427, January 25, 2000
Facts: In 1908, Maria Cailles acquired certain parcels of land
in Las Pinas, Metro Manila. In 1961, Cailles sold the same to her
son, petitioner James Bracewell, Jr. In 1963, Bracewell filed
before the CFI an action for confirmation of imperfect title under
Sec 48(b) of CA No. 141. The Solicitor General opposed
petitioner’s application on the grounds that neither he nor his
predecessors-in-interest possessed sufficient title to the subject
land nor have they been in open, continuous, exclusive and
notorious possession and occupation of the same for at least thirty
(30) years prior to the application, and that the subject parcels of
land were only classified as alienable or disposable on March 27,
1972.

Issue: Are the lands in question alienable or disposable at the

time of the application for confirmation of imperfect title?

Held: NO. Under the Regalian doctrine, all lands of the public
domain belong to the State, and that the State is the source of any
asserted right to ownership in land and charged with conservation
of such patrimony. This same doctrine also states all lands not
otherwise appearing to be clearly within private ownership are
presumed to belong to the State. Hence, the burden of proof in
overcoming the presumption of State ownership of lands of the
public domain is on the person applying for registration. The
applicant must also show that the land subject of the application
is alienable or disposable. This Bracewell failed to do. On the
contrary, it was conclusively shown by the government that the
same were only classified as alienable or disposable on March 27,
1972. Thus, even granting that Bracewell and his predecessors-
in-interest had occupied the same since 1908, he still cannot
claim title thereto by virtue of such possession since the subject
parcels of land were not yet alienable land at that time nor capable
of private appropriation. The adverse possession which may be
the basis of a grant of title or confirmation of an imperfect title
refers only to alienable or disposable portions of the public
domain.

Remedies Available to Aggrieved Party in Registration

Proceedings

HEIRS OF PEDRO LOPEZ vs. DE CASTRO

G.R. No. 112905, February 3, 2000

Facts: Two applications for registration of the same

parcel of land were filed 12 years apart in different
branches of the same CFI, but a certificate of title was
issued in one case while the other is still pending
appeal. The first application was filed in 1956 by Pedro
Lopez, et. al. with Branch III of the CFI of Cavite. An order
for the issuance of decree for registration was
promulgated which became final in 1980. The second
application was filed by private respondents Honesto de
Castro, et. al. in 1967 before Branch IV of the same CFI in
Tagaytay City. In 1981, the certificate of title in favor of
the De Castro’s were discovered in the course of the
examination of the records for the purpose of the issuance
of the decree of registration in favor of Lopez, et. al.
Consequently, the trial court declared that it has lost
jurisdiction over the registration proceedings in view of the
title issued by the Tagaytay Branch in favor of the De
Castros over the same land.
Seven (7) years later, or in 1988, the heirs of Pedro Lopez,
et al. filed a complaint for execution of judgment and cancellation
of land titles of De Castro, et. al. before the RTC of Cavite at
Tagaytay City. They alleged that the Tagaytay Branch could not
have acquired jurisdiction over the registration proceeding as the
res is already within the jurisdiction of the Cavite Branch. De
Castro, et. al. interposed the defenses of prescription, laches
and/or estoppel and failure to state a cause of action. The
complaint was denied. On appeal, the CA stressing the
indefeasibility of title under the Torrens System of land
registration, echoed the lower court's ruling that the decree of
registration in favor of respondents cannot be reopened or set
aside in a "collateral proceeding such as the one in the case at bar
which has for its objective the execution of a judgment which
apparently has become dormant."

Issue: Should the Torrens Certificate of Title issued in favor of

De Castro be nullified?

Held: NO. First, the Court is not persuaded that the

registration proceedings instituted by De Castro, et. al. should be
nullified by reason of the fact that the Cavite City branch of the
same court was already proceeding with another registration case
for the same piece of land. In land registration proceedings, the
rule is that whoever first acquires title to a piece of land shall
prevail. This rule refers to the date of the certificate of title and
not to the date of filing of the application for registration of title.
Hence, even though an applicant precedes another, he may not be
deemed to have priority of right to register title. As such, while
his application is being processed, an applicant is duty-bound to
observe vigilance and to take care that his right or interest is duly
protected.
Second, Lopez, et. al. failed to exercise the due diligence
required of them as applicants for land registration. They
let almost 7 years to pass from discovery of the
registration of the land in favor of De Castro, et. al. before
they acted to revive what already was a dormant
judgment. They were guilty of laches as they neglected or
omitted to assert a right within a reasonable time. An
applicant for registration has but a one-year period from
the issuance of the decree of registration in favor of
another applicant, within which to question the validity of
the certificate of title issued pursuant to such decree.
Once the one-year period has lapsed, the title to the land
becomes indefeasible. However the aggrieved party is
without a remedy at law. If the property has not yet passed
to an innocent purchaser for value, an action for
reconveyance is still available. If the property has passed
into the hands of an innocent purchaser for value, the
remedy is an action for damages against those who
employed the fraud, and if the latter are insolvent, an
action against the Treasurer of the Philippines for recovery
against the Assurance Fund. Recognizing the futility of
these actions, aggrieved applicants sought protection
under the provisions of the Rules of Court by an action for
revival and execution of judgment. However, the
provisions of the Rules are merely suppletory to special
laws governing land registration proceedings and hence,
cannot prevail over the latter.
GRANT/TRANSFER OF FRIAR LANDS

DELA TORRE vs. COURT OF APPEALS

G.R. No. 113095, February 8, 2000

Facts: This case involves a tract of friar land titled in the name
of the government which was bought by Mamerto dela Torre for
P110.00 payable in installments. Mamerto then occupied the
subject land until his death. Meanwhile, respondent Isabelo dela
Torre obtained from the Director of Lands a Deed of Conveyance
executed in his favor covering the subject property, on the
strength of a Joint Affidavit, executed by his father, Feliciano, and
then minor nephew, petitioner Eliseo dela Torre, certifying that
he bought the subject parcel of land from Mamerto for P400.
Thus, a TCT was issued in Isabelo’s name.

Issue: Was there a valid grant of the disputed friar lands in favor
of Isabelo?

Held: NO. The grant made by the government of the subject

property in favor of Isabelo was invalid. In case the holder of the
certificate shall have sold his interest in the land before having
complied with all the conditions thereof, the purchaser from the
holder of the certificate shall be entitled to all the rights of the
holder of the certificate upon presenting his assignment to the
Chief of the Bureau of Public Lands for registration. In order that
a transfer of the rights of a holder of a certificate of sale of friar
lands may be legally effective, it is necessary that a formal
certificate of transfer be drawn up and submitted to the Chief of
the Bureau of Public Lands for his approval and registration. The
law authorizes no other way of transferring the rights of a holder
of a certificate of sale of friar lands. In the case at bar, no such
assignment or formal certificate of transfer was submitted to the
Bureau of Public Lands for its approval and registration.

Free Patent

ROBLES vs. COURT OF APPEALS

G.R. No. 123509, March 14, 2000

Facts: The property subject of this case is originally owned by

Leon Robles. When he died, it passed to his son Silvino who
declared the property in his name and paid the taxes
thereon. Upon the latter’s death, his widow and children inherited
the property. Petitioners Lucio Robles, et al. were the children of
Silvino, and Hilario Robles is their half-brother. The task of
cultivating was assigned to Lucio while the payment of the land
taxes was entrusted to Hilario. For unknown reason, the tax
declaration of the parcel of land in the name of Silvino was
cancelled and transferred to Exequiel Ballena. Ballena secured a
loan from Antipolo Rural Bank using the tax declaration as
security. Somehow the tax declaration was transferred to the
name of Antipolo Rural Bank and later was transferred to the
name of respondent- spouses Hilario and Andrea Robles.
Andrea secured a loan from Cardona Rural Bank using the tax
declaration as security. For failure to pay the mortgage debt, the
property was foreclosed with Cardona Rural Bank emerging as
the highest bidder. The bank sold the property to spouses Vergel
and Ruth Santos. In 1988, the spouses Santos took possession of
the property and was able to secure a Free Patent. Petitioners then
filed an action for quieting of title.

Issue: Is the free patent issued to the spouses Santos valid?

Held: NO. The free patent issued is not valid. In the light of
their open, continuous and notorious possession and
occupation of the land, petitioners are deemed to have acquired
by operation of law, a right to a grant, a government grant without
a necessity of a certificate of title being issued. The land was
“segregated from the public domain”. Accordingly, the Director
of Lands had no authority to issue a free patent thereto in favor of
another person. Verily, jurisprudence holds that free patent
covering private land is void.

Presumptive Conclusiveness of Torrens Title

LIM vs. COURT OF APPEALS

G.R. No. 124715, January 24, 2000

Facts: Petitioner Rufina Lim is the surviving spouse of the

late Pastor Lim whose estate is the subject of estate
proceedings. Private respondents Auto Truck Corp., et al. are
domestic corporations which owned real properties covered under
the Torrens system. These properties were included in the
inventory of the estate of Pastor. Respondent corporations filed a
motion for the lifting of the lis pendens and the exclusion of said
properties from the estate of the decedent. Rufina, on the other
hand, argued that said properties must be included because the
assets, capital, and equity of respondent corporations are
personally owned by Pastor.

Issue: Should the properties in question be included in the

inventory of the estate of Pastor?

Held: NO. If a property covered by Torrens title is involved,

the presumptive conclusiveness of such title should be given due
weight, and in the absence of strong compelling evidence to the
contrary, the holder thereof should be considered as the owner of
the property in controversy until his title is nullified or modified
in an appropriate ordinary action, particularly, when possession
of the property itself is in the persons named in the title. A perusal
of the records would reveal that no strong compelling evidence
was ever presented by petitioner to bolster her bare assertions as
to the title of the deceased Pastor Lim over the properties. Even
so, P.D. 1529 (The Property Registration Decree) proscribes
collateral attack on Torrens Title. It provides that a certificate of
title shall not be subject to collateral attack. It cannot be altered,
modified or cancelled except in a direct proceeding in accordance
with law.
Inasmuch as the real properties included in the inventory of
the estate of Pastor are in the possession of and are registered in
the name of private respondent corporations, which under the law
possess a personality separate and distinct from their
stockholders, and in the absence of any cogency to shred the veil
of corporate fiction, the presumption of conclusiveness of said
titles in favor of private respondents should stand
undisturbed. Therefore, the properties in question should not be
included from the inventory of the property of the estate.

Tenancy

BAUTISTA vs. ARANETA

G.R. No. 135829, February 22, 2000

Facts: In 1978, petitioner Bayani Bautista allegedly entered

into an oral tenancy agreement with Gregorio Araneta II and had
since then, cultivated and possessed the land in an open, peaceful
and continuous manner. Bayani’s possession however was
disturbed when in 1991, a group of armed men sent by
respondent, Patricia Araneta, successor of GA II, ordered Bayani
to vacate the land. Bayani filed a complaint praying for injunctive
relief and for recognition of his right as tenant. Patricia, on the
other hand, filed a counterclaim to dismiss the complaint and eject
Bayani.
The Provincial Adjudicator decided in favor of Bayani. The
CA reversed the same. It held that Bayani has not been
constituted as a tenant by the landowner.

Issue: Is respondent Patricia Araneta bound by the alleged oral

leasehold agreement between Bayani and Gregorio Araneta II?

Held: NO. The requisites of a tenancy relationship are: (1) the

parties are the landowner and the tenant; (2) the subject is
agricultural land; (3) there is consent by the landowner; (4) there
is personal cultivation; and (5) there is sharing of
harvest. Bayani is not a tenant of the disputed land. Bayani
admitted in his own testimony that he does not even know the
landowner as he was not introduced to the same. Further, Bayani
did not establish that Gregorio, whom he has known and believed
as the owner of the land, became or was ever, the
landowner. Since he hinges his right on his alleged agreement
with Gregorio, it follows that his position is untenable since it was
never shown that Gregorio has a right on the landholding. In
Lastimosa vs. Blanco, the SC has ruled that ‘tenancy relationship
can only be created with the consent of the true and lawful
landholder who is either the owner, lessee, usufructuary or legal
possessor of the land, and not thru the acts of the supposed
landholder who has no right to the land subject of the tenancy.’

RUPA, SR. vs. COURT OF APPEALS

G.R. No. 80129, January 25, 2000

Facts: Claiming that he was the agricultural share tenant and

overseer of parcels of coconut lands, petitioner Gerardo
Rupa commenced an action for redemption on March 26, 1981
against private respondent Magin Salipot, the vendee in the sale
made by spouses Vicente and Patrocinia Lim in January 1981
without any prior written or verbal notice required by
law. Rupa came to know about the sale when he was informed
in writing by the former landowner on February 16, 1981.
Both the RTC and CA shared the view that Rupa is not a
share tenant and accordingly dismissed the complaint for
redemption.
Issue: Is Rupa a share tenant so as to be entitled to the right
of redemption?

Held: YES. A tenant is defined under Section 5 (a) of

Republic Act No. 1199 as a person who himself and with the aid
available from within his immediate farm household cultivates
the land belonging to or possessed by another, with the latter's
consent, for purposes of production, sharing the produce with the
landholder under the share tenancy system, or paying to the
landholder a price certain or ascertainable in produce or in money
or both under the leasehold tenancy system. Briefly stated, for this
relationship to exist, it is necessary that:
1. The parties are the landowner and the tenant;
2. The subject is agricultural land;
3. There is consent;
4. The purpose is agricultural production;
5. There is personal cultivation; and
6. There is sharing of harvests.
Upon proof of the existence of the tenancy relationship,
Rupa could avail of the right of redemption under RA 3844. This
right of redemption is validly exercised upon compliance with the
following requirements: a) the redemptioner must be an
agricultural lessee or share tenant; b) the land must have been sold
by the owner to a third party without prior written notice of the
sale given to the lessee or lessees and the DAR in accordance with
Sec. 11, RA 3844, as amended; c) only the area cultivated by the
agricultural lessee may be redeemed; d) the right of redemption
must be exercised within 180 days from notice; and e) there must
be an actual tender or valid consignation of the entire amount
which is the reasonable price of the land sought to be redeemed.
 The statements of Rupa in the criminal case that he is an
“administrator” of the landowners are not sufficient basis to
overcome the rights of the petitioner as provided in the
Constitution and Agrarian statutes. The essence of agricultural
tenancy lies in the establishment of owner-cultivatorship and the
economic family-size farm as the basis of Philippine agriculture,
and as a consequence, divert landlord capital in agriculture to
industrial development. Rupa’s evidence to prove the tenancy
relationship consisted of his own testimony and those of his
witnesses from whose declarations it appears that the petitioner
has physically possessed the landholding continuously until he
was ejected from it. Rupa lives on the landholding and he has
built a house next to the copra kiln. It has also been established
that Rupa has cultivated the land from the time he has taken
possession thereof, although there may have already been existing
coconut trees in the landholding. The fact that Rupa has been
planting coconut seedlings and minor crops in the vacant portions
of the subject land as well as cleaning and gathering coconuts to
process them into copra is borne out by the records. Further
indicating the tenancy relationship between the landlord and Rupa
is their agreement to share 50/50. The sharing arrangement taken
together with other factors characteristic of tenancy shown to be
present in the case at bar, strengthens the claim of Rupa that
indeed, he is a tenant.

PHILBANCOR FINANCE vs. COURT OF APPEALS

G.R. No. 129572, June 26, 2000
Facts: Petitioner Vicente Hizon, Jr. is the owner of agricultural
lands located in Balite, San Fernando, Pampanga and the private
respondents Alfredo Pare, Pablo Galang and Amado Vie are the
legitimate and bona fide tenants thereof. The said lands were
mortgaged by Hizon to petitioner Philbancor which were later on
extrajudicially foreclosed upon default of Hizon in the payment
of his obligations. Subsequently, the lands were sold at public
auction to petitioner Philbancor. Seven years after the
registration of the sale with the Register of Deeds, private
respondents filed with the Provincial Agrarian Reform
Adjudication Board (PARAB) a complaint for maintenance of
possession with redemption and tenancy right of pre-emption
against petitioners Philbancor and Hizon.

Issue: Can the private respondents maintain their possession of

the subject lands?

Held: YES. Private respondents may continue in possession

and enjoyment of the land in question as legitimate
tenants because the right of tenancy attaches to the landholding
by operation of law. The leasehold relation is not extinguished by
the alienation or transfer of the legal possession of the
landholding.

GREENFIELD REALTY CORP. vs. CARDAMA

G.R. No. 129246, January 25, 2000

Facts: Private respondents Loreto Cardama, et al. claim to

have succeeded their father Hermogenes Cardama who died in
1989 in the latter’s tenancy rights, and should be declared as
leasehold tenants and actual tillers of the subject irrigated rice
land. It is alleged that the leasehold tenancy began in 1978
through a verbal agreement entered into by and between
Independent Realty Corp. (IRC) and the late Hermogenes
wherein the former had designated the latter to take over the
maintenance of said landholding which was then undeveloped
and uncultivated but with the aid of the immediate members of
their respective families became productive as irrigated rice
land. To prove their contention, the Cardamas submitted their up-
to-date payment of the lease rentals as evidenced by the receipts
issued by IRC and petitioner Greenfield Realty Corp. (GRC).

Issue: Are the private respondents bona fide tenants of the

subject irrigated rice land?

Held: YES. The DARAB ruled that Loreto, et al. cannot

simultaneously claim the right to succeed since RA 3844 allows
only one heir to succeed to the tenancy of the deceased tenant in
the order of preference prescribed by Section 9 of the said law. In
this case however, the land is not cultivated by Hermogenes
alone but with other tenants who are likewise qualified and who
are related to him. Thus, it can be said that the entitlement of the
other possessors is not by virtue of succession to the rights of a
predecessor-in-interest, but in their individual capacity as tenants
therein simultaneously with an ascendant. It is to be noted that the
land herein involved is more than 10 hectares which cannot be
personally cultivated by Hermogenes alone.
Under Section 22 of RA 6657, the Comprehensive Agrarian
Reform Law, those entitled to the award of the land are: “Section
22. Qualified Beneficiaries – the lands covered by the CARP shall
be distributed as much as possible to landless residents of the
 same barangay or in the absence thereof, landless residents of the
same municipality in the following order of priority:
h.) agricultural lessees and share tenants
i.) regular farm workers
j.) seasonal farmworkers
k.) other farmworkers
l.) actual tillers or occupants of public lands
m.) collective or cooperatives of the above beneficiaries
n.) others directly working on the land
Being the agricultural lessees on the land, Loreto et al. are
qualified beneficiaries
absent any showing that they have been validly ejected or
removed therefrom.

Preferential Rights of Tenants under P.D. 1517

DEE v. COURT OF APPEALS

G.R. No.108205, February 15, 2000

Facts: Petitioners are occupants of the lands that belonged to

Alejandro Castro. Upon Castro’s death, his wife and son sold the
lands for P500 per square meter to Cesar Gatdula, a tenant of the
land. Pending the transfer of the titles, Gatdula offered to sell the
disputed lots at P3,000 per square meter to each of the petitioners
who were occupants of the lands.. Petitioners did not buy at the
price offered. They filed a complaint against Gatdula for the
exercise of their preferential right to purchase the lands under
Sec.6 of P.D. 1517, which grants pre-emptive rights to (1)
legitimate tenants who have resided on the land for ten years or
more who have built their homes on the land and (2) residents
who have legally occupied the land by contract, continuously for
the last ten years.

Issue: Was the sale to Gatdula alone, among the many tenants
sufficient compliance with P.D. 1517?

Held: YES. The Castro heirs offered petitioners the chance to

buy the land which they respectively occupied. Gatdula, a tenant,
expressed his intention to buy the land provided he be given time
to raise the funds. Petitioners stopped paying rent after the death
of Alejandro Castro, and they offered no proof that they did pay.
They also failed to show that they have resided on the land for ten
years or more. Nor have they shown that they are residents who
have legally occupied the land by contract, continuously for the
last ten years and were entitled to benefit from the provisions of
P.D. 1517. With their failure to establish entitlement thereto, the
offer and sale of the land to Gatdula could not be said to be outside
the pale of the Decree.

Jurisdictional Requirements for Reconstitution of

Title

HEIRS OF EULALIO RAGUA vs. COURT OF APPEALS

G.R. 88521-22 & 89366-67, January 31, 2000

Facts: A petition for reconstitution of title was filed by Eulalio

Ragua in 1964 covering 439 hectares of land situated in QC. He
averred that the owner’s duplicate of the OCT was lost and
destroyed in 1945 when his personal effects and papers were
eaten by termites. The petition was opposed by several parties
contending that there was failure to comply with the jurisdictional
requirements for judicial reconstitution under RA 26 Sec. 12 &
13. The lower court ordered the Register of Deeds to reconstitute
in the name of Eulalio. However, the CA reversed the decision,
holding that the TC had no jurisdiction because of Eulalio’s
failure to comply with the requirements of the said law and that
the latter’s action is also barred by laches.

Issue: Did the trial court acquire jurisdiction over the

proceedings for reconstitution of title?

Held: Petitioners admittedly did not comply with the

requirements of Sec. 12 (d), (e) and (g), namely: The petition did
not state (1) the nature and description of the buildings and
improvements, if any, which do not belong to the owner of the
land, and the names and addresses of the owners of such building
and improvements, (2) the names and addresses of the occupants
of the adjoining properties and of all persons who may have any
interest in the property, and (3) that no deeds or other instrument
affecting the property may have been presented for
registration. Neither do this data appear in the notice of
hearing. Besides, petitioners also did not comply with the notice
and publication under Sec. 13 because the order directed that the
notice be posted at the Caloocan City Hall, not in QC, where the
land is situated.
We have ruled that the failure to comply with the
requirements of publication and posting of notices prescribed in
RA 26 Sec. 12 & 13 is fatal to the jurisdiction of the court. Hence,
non-compliance with the jurisdictional requirements renders its
decision approving the reconstitution and all proceedings therein
utterly null and void.
Moreover, petitioners filed the petition for reconstitution 19
years after the title was allegedly lost or destroyed. Hence,
petitioners are guilty of laches.
Posted by James Mamba at 12:38 AM

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jovenciAbril 16, 2013 nang 10:11 PM

isang malaking tulong.

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