MIGUEL VS.

CATALINO

On January 22, 1962, appellants Simeon, Emilia and Marcelina Miguel, and appellant Grace Ventura brought suit in
the Court below against Florendo Catalino for the recovery of the land above-described, plaintiffs claiming to be the
children and heirs of the original registered owner, and averred that defendant, without their, knowledge or
consent, had unlawfully taken possession of the land, gathered its produce and unlawfully excluded plaintiffs
therefrom. Defendant answered pleading ownership and adverse possession for 30 years, and counterclaimed for
attorneys' fees. After trial the Court dismissed the complaint, declared defendant to be the rightful owner, and
ordered the Register of Deeds to issue a transfer certificate in lieu of the original. Plaintiffs appealed directly to this
Court, assailing the trial Court's findings of fact and law.

As found by the trial Court, the land in dispute is situated in the Barrio of San Pascual, Municipality of Tuba,
Benguet, Mountain Province and contains an area of 39,446 square meters, more or less. It is covered by Original
Certificate of Title No. 31, which was issued on 28 December 1927 in the name of Bacaquio (or Bakakew), a
widower. No encumbrance or sale has ever been annotated in the certificate of title.

The plaintiff-appellant Grace Ventura is the only child of Bacaquio by his first wife, Debsay, and the other plaintiffs-
appellants, Simeon, Emilia and Marcelina, all surnamed "Miguel", are his children by his third wife, Cosamang. He
begot no issue with his second wife, Dobaney. The three successive wives have all died.

Bacaquio, who died in 1943, acquired the land when his second wife died and sold it to Catalino Agyapao, father of
the defendant Florendo Catalino, for P300.00 in 1928.Of the purchase price, P100.00 was paid and receipted for
when the land was surveyed, but the receipt was lost; the balance was paid after the certificate of title was issued.
No formal deed of sale was executed, but since the sale in 1928, or for more than 30 years, vendee Catalina Agyapao
and his son, defendant-appellee Florendo Catalino, had been in possession of the land, in the concept of owner,
paying the taxes thereon and introducing improvements.

On 1 February 1949, Grace Ventura, by herself alone, "sold" (as per her Transferor's Affidavit, Exhibit "6") anew the
same land for P300.00 to defendant Florendo Catalino,

In 1961, Catalino Agyapao in turn sold the land to his son, the defendant Florendo Catalino.

This being a direct appeal from the trial court, where the value of the property involved does not exceed
P200,000.00, only the issues of law are reviewable by the Supreme Court, the findings of fact of the court a quo
being deemed concededly the appellant (Jacinto v. Jacinto, 105 Phil. 218; Del Castillo v. Guerro, L-11994, 25 July
1960; Abuyo, et al. v. De Suave, L-21202, 29 Oct. 1966; 18 SCRA 600, 601).We are thus constrained to discard
appellant's second and third assignments of error.

In their first assignment, appellants assail the admission in evidence over the objection of the appellant of Exhibit
"3".This exhibit is a decision in favor of the defendant-appellee against herein plaintiff-appellant Grace Ventura, by
the council of Barrio of San Pascual, Tuba, Benguet, in its Administrative Case No. 4, for the settlement of
ownership and possession of the land.The decision is ultra vires because barrio councils, which are not courts, have
no judicial powers (Sec. 1, Art. VIII, Constitution; see Sec. 12, Rep. Act 2370, otherwise known as the Barrio
Charter).Therefore, as contended by appellants, the exhibit is not admissible in a judicial proceeding as evidence for
ascertaining the truth respecting the fact of ownership and possession (Sec. 1, Rule 128; Rules of Court).

Appellants are likewise correct in claiming that the sale of the land in 1928 by Bacaquio to Catalino Agyapao,
defendant's father, is null and void ab initio, for lack of executive approval (Mangayao, et al. vs. Lasud, et al., L-
19252, 29 May 1964).However, it is not the provisions of the Public Land Act (particularly Section 118 of Act 2874
and Section 120 of Commonwealth Act 141) that nullify the transaction, for the reason that there is no finding, and
the contending parties have not shown, that the land titled in the name of Bacaquio was acquired from the public
domain (Palad vs. Saito, 55 Phil. 831).The laws applicable to the said sale are: Section 145(b) of the Administrative
Code of Mindanao and Sulu, providing that no conveyance or encumbrance of real property shall be made in that
department by any non-Christian inhabitant of the same, unless, among other requirements, the deed shall bear
indorsed upon it the approval of the provincial governor or his representative duly authorized in writing for the
purpose; Section 146 of the same Code, declaring that every contract or agreement made in violation of Section 145
"shall be null and void"; and Act 2798, as amended by Act 2913, extending the application of the above provisions to
Mountain Province and Nueva Vizcaya.

Since the 1928 sale is technically invalid, Bacaquio remained, in law, the owner of the land until his death in 1943,
when his title passed on, by the law on succession, to his heirs, the plaintiffs-appellants.

Notwithstanding the errors aforementioned in the appealed decision, we are of the opinion that the judgment in
favor of defendant-appellee Florendo Catalino must be sustained. For despite the invalidity of his sale to Catalino
Agyapao, father of defendant-appellee, the vendor Bacaquio suffered the latter to enter, possess and enjoy the land
in question without protest, from 1928 to 1943, when the seller died; and the appellants, in turn, while succeeding
the deceased, also remained inactive, without taking any step to reivindicate the lot from 1944 to 1962, when the
present suit was commenced in court.Even granting appellants' proposition that no prescription lies against their
father's recorded title, their passivity and inaction for more than 34 years (1928-1962) justifies the defendant-
appellee in setting up the equitable defense of Laches in his own behalf. As a result, the action of plaintiffs-
appellants must be considered barred and the Court below correctly so held.

Courts cannot look with favor at parties who, by their silence, delay and inaction, knowingly induce another to
spend time, effort and expense in cultivating the land, paying taxes and making improvements thereon for 30 long
years, only to spring from ambush and claim title when the possessor's efforts and the rise of land values offer an
opportunity to make easy profit at his expense. In Mejia de Lucas vs. Gamponia, 100 Phil. 277, 281, this Court laid
down a rule that is here squarely applicable:

"Upon a careful consideration of the facts and circumstances, we are constrained to find, however, that while no
legal defense to the action lies, an equitable one lies in favor of the defendant and that is, the equitable defense of
Laches. We hold that the defense of prescription or adverse possession in derogation of the title of the registered
owner Domingo Mejia does not lie, but that of the equitable defense of Laches. Otherwise stated, we hold that
while defendant may not be considered as having acquired title by virtue of his and his predecessors' long continued
possession for 37 years, the original owners right to recover back the possession of the property and title thereto
from the defendant has, by the long period of 37 years and by patentee's inaction and neglect, been converted into a
stale demand."

As in the Gamponia case, the faro elements of Laches[3] are present in the case at bar, namely:(a) conduct on the
part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is made and
for which the complaint seeks a remedy; (b) delay in asserting the complainant's rights, the complainant having had
knowledge or notice, of the defendant's conduct and having been afforded an opportunity to institute a suit; (c)
lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he
bases his suit; and (d) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the
suit is not held to be barred. In the case at bar, Bacaquio sold the land in 1928 but the sale is void for lack of the
governor's approval. The vendor, and also his heirs after him, could have instituted an action to annul the sale from
that tine, since they knew of the invalidity of the sale, which is a matter of law; they did not have to wait for 34
years to institute suit. The defendant was made to feel secure in the belief that no action would be filed against him
by such passivity, and also because he "bought" again the land in 1949 from Grace Ventura who alone tried to
question his ownership; so that the defendant will be plainly prejudiced in the event the present action is not held
to be barred.
The difference between prescription and laches was elaborated in Nielson & Co., Inc. vs. Lepanto Consolidated
Mining Co., L-21601, 17 December 1966, 18 SCRA p. 1040, as follows:

"Appellee is correct in its contention that the defense of Laches applies independently of prescription. Laches is
different from the statute of limitations. Prescription is concerned with the fact of delay, whereas Laches is
concerned with the effect of delay. Prescription is a matter of time; Laches is principally a question of inequity of
permitting a claim to be enforced, this inequity being founded on some change in the condition of the property or
the relation of the parties. Prescription is statutory; Laches is not. Laches applies in equity, whereas prescription
applies at law. Prescription is based on fixed time, Laches is not.(30 C.J.S., p. 522; See also Pomeroy's Equity
Jurisprudence, Vol. 2, 5th ed., p. 177)." (18 SCRA 1053).

With reference to appellant Grace Ventura, it is well to remark that her situation is even worse than that of her co-
heirs and co-plaintiffs, in view of her executing an affidavit of transfer (Exh. 6) attesting under oath to her having
sold the land in controversy to herein defendant-appellee, and the lower Court's finding that in 1949 she was paid
P300.00 for it, because she, "being a smart woman of enterprise, threatened to cause trouble if the defendant failed
to give her P300.00 more, because her stand (of being the owner of the land) was buttressed by the fact that
Original Certificate of Title No. 31 is still in the name of her father, Bacaquio (Decision, Record on Appeal, p.
24).This sale, that was in fact a quitclaim, may not be contested as needing executive approval; for it has not been
shown that Grace Ventura is a non-Christian inhabitant like her father, an essential fact that cannot be assumed
(Sale de Porkan vs. Yatco, 70 Phil, 161,175).

Since the plaintiffs-appellants are barred from recovery, their divestiture of all the elements of ownership in the
land is complete; and the Court a quo was justified in ordering that Bacaquio's, oiginal certificate be cancelled, and a
new transfer certificate in the name of Florendo Catalino be issued in lieu thereof by the Register of Deeds.

FOR THE FOREGOING REASONS, the appealed decision is hereby affirmed, with costs against the plaintiffs-
appellants.

AGRA vs PNB PANGANIBAN

Facts

On August 30, 1976, an action for collection of a sum of money was filed by the Philippine National Bank (PNB, for
brevity) against Fil-Eastern Wood Industries, Inc. (Fil-Eastern, for short) in its capacity as principal debtor and
against Cayetano Ferreria, Pedro Atienza, Vicente O. Novales, Antonio R. Agra, and Napoleon M. Gamo in their
capacity as sureties. Plaintiff PNB alleged that on July 17, 1967 Fil-Eastern was granted a loan in the amount
(P2,500,000.00) with interest at twelve percent (12%) per annum as evidenced by several promissory notes and
were credited to the account of Fil Eastern. It was further alleged that as of May 31, 1976 the total indebtedness of
Fil-Eastern and its sureties on subject loan amounted to [ (P5,297,976.17), excluding attorney’s fees.
Notwithstanding repeated demands, the defendants refused and failed to pay their loans. October 30, 1978,
defendant Fil-Eastern was declared in default for its failure to answer the complaint within the reglementary period
Petitioners Defense in RTC The cause of action of the complainant is barred by laches and estoppel in that the
plaintiff with full knowledge of the deteriorating financial condition of Fil-Eastern did not take steps to collect
from said defendant corporation while still solvent Regional Trial Court ruled against herein petitioners (agra,
ferreria, gamo, novales) .

On appeal, the CA modified the RTC ruling by deleting the award of attorney’s fees. Hence, this recourse to this
Court. Ruling of the Court of Appeals In ruling that petitioners were liable under the surety agreement, the Court
of Appeals rejected their defense of laches. It held that “the lapse of seven years and eight months from December 31,
1968 until the judicial demand on August 30, 1976 cannot be considered as unreasonable delay which would
necessitate the application of laches. The action filed by the plaintiff has not yet prescribed. It is well within the ten
prescriptive period provided for by law wherein actions based on written contracts can be instituted.”[5] the Court
of Appeals also noted that the “prescriptive period did not begin to run from December 31, 1968 as [herein
petitioners] presupposed. It was only from the time of the judicial demand on August 30, 1976 that the cause of
action accrued. Thus, [private respondent] was well within the prescriptive period of ten years when it instituted
the case in court.” The Court of Appeals further ruled that “placing the blame on [PNB] for its failure to
immediately pounce upon its debtors the moment the loan matured is grossly unfair for xxx demand upon the
sureties to pay is not necessary.”

The appellate court also held that petitioners proved only the first of the following four essential elements of laches:
“(1) conduct on the part of the defendant, or one under whom he claims, giving rise to the situation of which
complaint is made and for which the complainant seeks a remedy; Defense on appeal to SC: Petitioners admit that
PNB’s claim, though filed more than seven years from the maturity of the obligation, fell within the ten-year
prescriptive period. They argue, however, that the cause was already barred by laches, which is defined as “the
failure or neglect for an unreasonable or unexplained length of time to do that which by exercising due diligence,
could or should have been done earlier warranting a presumption that he has abandoned his right or declined to
assert it.”[7] In arguing that the appellate court erred in rejecting the defense of laches, petitioners cite four reasons:
(1) the defense of laches applies independently of prescription; (2) the cause of action against petitioners accrued
from the maturity of the obligation, not from the time of judicial demand; (3) the four well-settled elements of
laches were duly proven; and (4) PNB v. CA applies in the instant case

Issue:

Whether petitioners may invoke the defense of laches, considering that PNB’s claim had not yet prescribed.

Ruling

Assailing the CA ruling that laches was inapplicable because the claim was brought within the ten-year
prescriptive period, petitioners stress that the defense of laches differs from and is applied independently of
prescription. In support, they cite, among others, Nielson & Co., Inc. v. Lepanto Consolidated Mining Co.,[8] in
which the Supreme Court ruled: “[T]he defense of laches applies independently of prescription. Laches is different
from the statute of limitations. Prescription is concerned with the fact of delay, whereas laches is concerned with
the effect of delay. Prescription is a matter of time; laches is principally a question of inequity of permitting a claim
to be enforced, this inequity being founded on some change in the condition of the property or the relation of the
parties. Prescription is statutory; laches is not. Laches applies in equity; whereas prescription applies at law.
Prescription is based on fixed time, laches is not.” True, prescription is different from laches, but petitioners’
reliance on Nielson is misplaced.

As held in the aforecited case, laches is principally a question of equity. Necessarily, “there is no absolute rule as to
what constitutes laches or staleness of demand; each case is to be determined according to its particular
circumstances. The question of laches is addressed to the sound discretion of the court and since laches is an
equitable doctrine; its application is controlled by equitable considerations.”[9] Petitioners, however, failed to show
that the collection suit against herein sureties was inequitable.

Remedies in equity address only situations tainted with inequity, not those expressly governed by statutes.
Petitioners failed to prove the presence of all the four established requisites of laches, viz: “(1) conduct on the part of
the defendant or one under whom he claims, giving rise to the situation of which complaint is made and for which
the complainant seeks a remedy; (2) delay in asserting the complainant’s right, the complainant having had
knowledge or notice of defendant’s conduct and having been afforded an opportunity to institute a suit; (3) lack of
knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his
claim; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is
not held barred.”[10] That the first element exists is undisputed. Neither FilEastern nor the sureties, herein
petitioners, paid the obligation under the Surety Agreement. The second element cannot be deemed to exist.
Although the collection suit was filed more than seven years after the obligation of the sureties became due, the
lapse was within the prescriptive period for filing an action.

In this light, we find immaterial petitioners’ insistence that the cause of action accrued on December 31, 1968, when
the obligation became due, and not on August 30, 1976, when the judicial demand was made. In either case, both
submissions fell within the ten-year prescriptive period. In any event, “the fact of delay, standing alone, is
insufficient to constitute laches.”[11] Petitioners insist that the delay of seven years was unreasonable and
unexplained, because demand was not necessary. Again we point that, unless reasons of inequitable proportions are
adduced, a delay within the prescriptive period is sanctioned by law and is not considered to be a delay that would
bar relief. In Chavez v. Bonto-Perez, [12] the Court reiterated an earlier holding, viz: “Laches is a doctrine in equity
while prescription is based on law.

Our courts are basically courts of law and not courts of equity. Thus, laches cannot be invoked to resist the
enforcement of an existing legal right. We have ruled in Arsenal v. Intermediate Appellate Court x x x that it is a
long standing principle that equity follows the law. Courts exercising equity jurisdiction are bound by rules of law
and have no arbitrary discretion to disregard them. In Zabat, Jr. v. Court of Appeals x x x, this Court was more
emphatic in upholding the rules of procedure. We said therein: “As for equity, which has been aptly described as
‘justice outside legality,’ this is applied only in the absence of, and never against, statutory law or, as in this case,
judicial rules of procedure.

Aequetas nunquam contravenit legis. This pertinent positive rules being present here, they should preempt and
prevail over all abstract arguments based only on equity.’ “Thus, where the claim was filed within the three-year
statutory period, recovery therefore cannot be barred by laches.” Petitioners also failed to prove the third element of
laches. It is absurd to maintain that petitioners did not know that PNB would assert its right under the Surety
Agreement. It is unnatural, if not unheard of, for banks to condone debts without adequate recompense in some
other form. Petitioners have not given us reason why they assumed that PNB would not enforce the Agreement
against them.

Finally, petitioners maintain that the fourth element is present because they would suffer damage or injury as a
result of PNB’s claim. This is the crux of the controversy. In addition to the payment of the amount stipulated in the
Agreement, other equitable grounds were enumerated by petitioners, viz: “1. Petitioners acted as sureties under
pressure from Felipe ‘Baby’ Ysmael, Jr., the headman of the Ysmael Group of Companies where the petitioners were
all employed in various executive positions. 2. Petitioners did not receive a single centavo in consideration of their
acting as sureties. 3. The surety agreement was not really a requisite for the grant of the loan to FIL-EASTERN
because the first release on the loan was made on July 17, 1967, or even before the Surety Agreement was executed
by petitioners on July 21, 1967. 4.

Petitioners were assured that the Surety Agreement was merely a formality, and they had reason to believe that
assurance because the loan was principally secured by an assignment of 15% of the proceeds of the sale of logs of
FILEASTERN to Iwai & Co., Ltd., and such assignment was clearly stated in PNB Board Resolution No. 407. In
fact, while it was expressly stated in all of the eight (8) promissory notes covering the releases of the loan that the
said loan was secured by 15% of the contract of sale with Iwai & Co., Ltd., only three (3) promissory notes stated
that the loan was also secured by the “joint and several signatures of the officers of the corporation”. It is to be noted
that no mention was even made of the joint and several signatures of petitioners as sureties. In other words, the
principal security was the assignment of 15% of the contract for the sale of logs to Iwai & Co., Ltd. 5.

For reasons not explained by PNB, PNB did not collect the 15% of the proceeds of the sale of the logs to Iwai & Co.,
Ltd., and such failure resulted in the non-collection of the P2,500,000.00 demand loan, or at least a portion of it. 6.
For reasons likewise unexplained by PNB, PNB did not make any demand upon petitioners to pay the unpaid loan
of FIL-EASTERN until after FIL-EASTERN had become bankrupt, and PNB was aware of this fact because it
foreclosed the chattel mortgages on the other loans of FILEASTERN which were secured by said chattel
mortgages.”[13] (Emphasis found in the original.) These circumstances do not justify the application of laches.
Rather, they disclose petitioners’ failure to understand the language and the nature of the Surety Arrangement.

Akang v. Municipality of Isulan, Sultan Kudarat Province

FACTS:

Petitioner is a member of the national and cultural community belonging to the Maguindanaon tribe of Isulan,
Province of Sultan Kudarat and the registered owner of parcel of land located at Isulan, Sultan Kudarat, with an
area of 20,030 square meters.

Sometime in 1962, a two-hectare portion of the property was sold by the petitioner to the Municipality of Isulan,
Province of Sultan Kudarat through then Isulan Mayor DatuAmpatuan under a Deed of Sale to be used purposely
and exclusively as a Government Center site. The respondent immediately took possession of the property and
began construction of the municipal building.

39 years later, the petitioner, together with his wife, Patao Talipasan, filed a civil action for Recovery of Possession
of Subject Property and/or Quieting of Title thereon and Damages against the respondent, represented by its
Municipal Mayor, et al.

In his complaint, the petitioner alleged, among others, that the agreement was one to sell, which was not
consummated as the purchase price was not paid.

In its answer, the respondent denied the petitioner’s allegations, claiming, among others: that the petitioner’s cause
of action was already barred by laches; that the Deed of Sale was valid; and that it has been in open, continuous and
exclusive possession of the property for 40 years.

ISSUE:

Whether or not there was a contract of sale or a contract to sell;

RULING:

The Deed of Sale is a Valid Contract of Sale.

By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefore a price certain in money or its equivalent.The elements of a
contract of sale are:

(a) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;
(b)determinate subject matter; and
(c) price certain in money or its equivalent.

A contract to sell, on the other hand, is a bilateral contract whereby the prospective seller, while expressly reserving
the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the
said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full
payment of the purchase price.
In a contract of sale, the title to the property passes to the buyer upon the delivery of the thing sold, whereas in a
contract to sell, the ownership is, by agreement, retained by the seller and is not to pass to the vendee until full
payment of the purchase price.

The Deed of Sale executed by the petitioner and the respondent is a perfected contract of sale, all its elements being
present. There was mutual agreement between them to enter into the sale, as shown by their free and voluntary
signing of the contract. There was also an absolute transfer of ownership of the property by the petitioner to the
respondent as shown in the stipulation: “x xx I petitioner hereby sell, transfer, cede, convey and assign as by these
presents do have sold, transferred, ceded, conveyed and assigned, x xx.”There was also a determine subject matter,
that is, the two-hectare parcel of land as described in the Deed of Sale. Lastly, the price or consideration was to be
paid after the execution of the contract.

The fact that no express reservation of ownership or title to the property can be found in the Deed of Sale bolsters
the absence of such intent, and the contract, therefore, could not be one to sell. Had the intention of the petitioner
been otherwise, he could have: (1) immediately sought judicial recourse to prevent further construction of the
municipal building; or (2) taken legal action to contest the agreement. The petitioner did not opt to undertake any
of such recourses.

Spouses Buenaventura v. Court of Appeals

Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora, Emma
and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all
surnamed JOAQUIN. The married Joaquin children are joined in this action by their respective spouses. Sought
to be declared null and void ab initio are certain deeds of sale covering 6 parcels of land executed by defendant
parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the corresponding
certificates of title issued in their names. In seeking the declaration of nullity of the aforesaid deeds of sale
and certificates of title, plaintiffs, in their complaint, aver that the purported sale of the properties in litis was the
result of a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of
their legitime.

ISSUE:

Whether Petitioners have a legal interest over the properties subject of the Deeds of Sale

RULING:

Petitioners do not have any legal interest over the properties subject of the Deeds of Sale. As
the appellate court stated, petitioners’ right to their parents’ properties is merely inchoate and vests only upon their
parents’ death. While still living, the parents of petitioners are free to dispose of their properties. In
their overzealousness to safeguard their future legitime, petitioners forget that theoretically, the sale of the lots to
their siblings does not affect the value of their parents’ estate. While the sale of the lots reduced the estate, cash of
equivalent value replaced the lots taken from the estate.
 REPUBLIC OF THE PHILIPPINES V. HON. PEDRO SAMSON ANIMAS

FACTS

The land covered by the free patent and title in question was originally applied for by Precila Soria, who transferred
her rights to the land and its improvements to defendant Isagani Du Timbol. On December 12, 1969, free Patent No.
V-466102 was issued by the President of the Philippines for the land in question, and on July 20, 1970, after
transmittal of the patent to the Register of Deeds of General Santos City, Original Certificate of Title was issued in
the name of defendant.

On August 5, 1971, the Republic of the Philippines, at the instance of the Bureau of Forestry, filed a complaint in the
Court of First Instance of Cotabato to declare subject free patent and OCT in the name of the defendant null and
void ab initio and to order the reversion of the land in question to the mass of public domain on the ground that the
land covered thereby is a forest or timber land which is not disposable under the Public Land Act. In the
reclassification of the public lands in the vicinity where the land in question is situated made by the Bureau of
Forestry on March 7, 1958, the said land was plotted on Bureau of Forestry map.

The application for free patent by defendant was filed on June 3, 1969, or more than eleven years thereafter, thus,
alleging that said patent and title were obtained fraudulently as Du Timbol never occupied and cultivated the land
applied for.

The respondent court dismissed the complaint on the ground that Certificate of Title based on the patent had
became indefeasible in view of the lapse of the one-year period prescribed under Section 38 of the Land Registration
Act for review of a decree of title on the ground of fraud.

ISSUE

Whether the patent and title issued to Du Timbol is null and void.

RULING

Yes. The area covered by the patent and title is not disposable public land, it being a part of the forest zone, hence
the patent and title thereto are null and void.

The defense of indefeasibility of a certificate of title issued pursuant to a free patent does not lie against the state in
an action for reversion of the land covered thereby when such land is a part of a public forest or of a forest
reservation. As a general rule, timber or forest lands are not alienable or disposable. Although the Director of Lands
has jurisdiction over public lands classified as agricultural under the constitution, or alienable or disposable under
the Public Land Act, and is charged with the administration of all laws relative thereto, mineral and timber lands
are beyond his jurisdiction. It is the Bureau of Forestry that has jurisdiction and authority over the demarcation,
protection, management, reproduction, occupancy and use of all public forests and forest reservations and over the
granting of licenses for the taking of products therefrom, including stone and earth.

The area in question is a forest or timber land, hence it is clearly established by the certification made by the Bureau
of Forest Development that it is within the portion of the area which was reverted to the category of forest land and
approved by the President.
When the defendant Isagani Du Timbol filed his application for free patent over the land in question, the area in
question was not a disposable or alienable public land but a public forest. Titles issued to private parties by the
Bureau of Lands when the land covered thereby is not disposable public land but forest land are void ab initio.

The complaint alleges that applicant Isagani Du Timbol was never in possession of the property prior to his filing
the application, contrary to the provisions of law that the applicant must have been in possession or cultivation
thereof for at least 30 years. After diligent search of the Acting Chief of the Survey-Party, alleged circumstances are
indicative of fraud in the filing of the application and obtaining title to the land, and if proven would override
respondent Judge's order dismissing the case without hearing. The misrepresentations of the applicant that he had
been occupying and cultivating the land and residing thereon are sufficient grounds to nullify the grant of the
patent and title under the Public Land Law.

A certificate of title that is void may be ordered cancelled. A title will be considered void if it is procured through
fraud, as when a person applies for registration of the land under his name although the property belongs to
another.

FAR EAST BANK V. QUERIMIT

FACTS: Respondent deposited her savings with petitioner-bank. She did not withdraw her deposit even after
maturity date of the certificates of deposit (CDs) precisely because she wanted to set it aside for her retirement,
relying on the bank’s assurance, as reflected on the face of the instruments themselves, that interest would “accrue”
or accumulate annually even after their maturity. Petitioner-bank failed to prove that it had already paid
respondent, bearer and lawful holder of subject CDs, i.e., petitioner failed to prove that the CDs had been paid out
of its funds, since evidence by respondent stands unrebutted that subject CDs until now remain unindorsed,
undelivered, and unwithdrawn by her.

ISSUE: Would it be unjust to allow the doctrine of laches to defeat the right of respondent to recover her savings
which she deposited with the petitioner?

HELD: Yes, it would be unjust not to allow respondent to recover her savings which she deposited with petitioner-
bank. For one, Petitioner failed to exercise that degree of diligence required by the nature of its business. (Art. 1173).
Because the business of banks is impressed with public interest, the degree of diligence required of banks is more
than that of a good father of the family or of an ordinary business firm.

The fiduciary nature of their relationship with their depositors requires banks to treat accounts of their clients with
the highest degree of care. (Canlas v. CA, 326 SCRA 415 [2000]). A bank is under obligation to treat accounts of its
depositors with meticulous care whether such accounts consist only of a few hundred pesos or of millions of pesos.
Responsibility arising from negligence in the performance of every kind of obligation is demandable. (Prudential
Bank v. CA, 328 SCRA 264 [2000]). Petitioner failed to prove payment of the subject CDs issued to respondent and,
therefore, remains liable for the value of the dollar deposits indicated thereon with accrued interest.

A certificate of deposit is defined as a written acknowledgment by a bank or banker of the receipt of a sum of money
on deposit which the bank or banker promises to pay to the depositor, to the order of the depositor, or to some
other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is
created. Principles governing other types of bank deposits are applicable to CDs (10 AM Juri 2d Sec. 455), as are the
rules governing promissory notes when they contain an unconditional promise to pay a sum certain of money
absolutely. (Ibid., Sec. 457).

The principle that payment, in order to discharge a debt, must be made to someone authorized to receive it is
applicable to the payment of CDs. Thus, a bank will be protected in making payment to the holder a certificate
indorsed by the payee, unless it has notice of the invalidity of the indorsement or the holder’s want of title. (10 Am
Jur 2d Sec. 461). A bank acts at its peril when it pays deposits evidenced by a CD, without its production and
surrender after proper indorsement. (Clark v. Young, 21 So. 2d 331 [1994]).

The equitable principle of laches is not sufficient to defeat the rights of respondent over the subject CDs. Laches is
the failure or neglect, for an unreasonable length of time, to do that which, by exercising due diligence, could or
should have been done earlier. It is 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. (Felizardo v.
Fernandez, GR 137509, Aug. 15, 2001).

There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be determined
according to its particular circumstances. The question of laches is addressed to the sound discretion of the court
and, being an equitable doctrine, its application is controlled by equitable considerations. It cannot be used to
defeat justice or perpetrate fraud and injustice. Courts will not be guided or bound strictly by the Statute of
Limitations or the doctrine of laches when to do so manifest wrong or injustice would result. (Rosales v. CA, GR
137566, Feb. 28, 2001).

Respondent is entitled to moral damages because of the mental anguish and humiliation she suffered as a result of
the wrongly refusal of petitioner to pay her even after she had delivered the CDs. (Arts. 2217 and 2219). In addition,
petitioner should pay respondent exemplary damages which the trial court imposed by way of example or
correction for the public good (Art. 2229). Finally, respondent is entitled to attorney’s fees since petitioner’s act or
omission compelled her to incur expenses to protect her interest making such award just and equitable. (Art. 2208).

NATIVIDAD DEL ROSARIO VDA. DE ALBERTO v. CA, GR No. L-29759, 1989-05-18

Facts:
This is a petition for review on certiorari of the August 31, 1968 Decision of the Court of Appeals in CA-G.R. No.
34750-R* entitled "Antonio J. Alberto, Jr., thru his mother as his natural guardian, Andrea
Jongco, plaintiff-appellant, vs. Natividad del Rosario Vda. de Alberto, in her individual capacity and as judicial
guardian of the minors, Lourdes Alberto and Antonio Alberto, Jr.,... defendants-appellees", reversing the August 10,
1964 Decision** of the then Court of First Instance of Manila.
The case originated from a complaint for acknowledgment and partition filed on September 8, 1960 with the then
Court of First Instance of Manila by the herein private respondent, a minor, 18 years of age, assisted by his mother,
Andrea Jongco, as his natural... guardian, against the herein petitioners
In the said Complaint, private respondent alleged, in substance, that in 1941 his alleged father, Antonio C. Alberto,
and his mother, Andrea Jongco, lived together as husband... and wife and as a result of which, he was born on
September 10, 1942... hat during the time that his alleged father and mother lived together as husband and wife and
up to the time of his birth, both were single and had no legal impediment to marry each other;... that after his...
birth, his father and mother continued living together as husband and wife, his father supporting them and
introducing him to the public as his natural child; that even the family of his father recognized him as such; that on
or about the year 1944, his father and mother... separated, and subsequently, his father married herein petitioner
Natividad del Rosario... that as a result of the marriage, two (2) children were born - herein petitioners Lourdes
Alberto and Antonio Alberto, Jr.
although his father was separated from his... mother, he continued to support him and recognized him as his own
child; that on July 3, 1949, his father died, and without notice to him, petitioner Natividad del Rosario Vda. de
Alberto, on July 17, 1949, instituted before the then Court of First
Instance of Manila an intestate proceedings for the estate of his deceased father, docketed therein as Special
Proceedings No. 9092... in the said intestate proceedings, petitioners deliberately omitted him as one of the heirs
and for this reason they succeeded in having the... properties of his deceased father adjudicated and partitioned
among themselves; that the said intestate proceedings were terminated on November 9, 1953; that his father left
properties valued at P74,963.81, and accordingly, as a natural child of his father, he... is entitled to at least
P18,000.00; and that he had absolutely no previous knowledge of the intestate proceedings and came to know about
it only recently and thereupon made a demand from the petitioners who refused to give him his...
share. Accordingly, he prays that the petitioners be ordered to acknowledge him as the natural child of Antonio C.
Alberto; that his one-fourth share be turned over to him; and that petitioners be sentenced to pay him the sum of
P5,000.00... as attorney's fee and the cost of suit (Record on Appeals, pp. 2-9).
On September 21, 1960, petitioners filed a Motion to Dismiss on the grounds that (1) the cause of action is barred by
prior judgment; and (2) that the cause of action is also barred by the statute of limitation
"Wherefore, the decision appealed from is hereby reversed and set aside and another rendered declaring plaintiff
Antonio J. Alberto, Jr., an acknowledged Natural Child of the deceased Antonio C. Alberto; declaring said plaintiff
the owner... pro indiviso of one-fifth (1/5) of the hereditary estate of Antonio C. Alberto
Issues:
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COURT OF FIRST
INSTANCE OF MANILA (TRIAL COURT) HAD NO JURISDICTION TO TAKE COGNIZANCE OF THE
INSTANT CASE.
Ruling:
It is the contention of petitioners that inasmuch as the instant case was filed on September 8, 1960, almost five (5)
years after the enactment of R.A. No. 1401 - creating the Juvenile and Domestic Relations Court, the questions of
paternity and acknowledgment fall... beyond the jurisdictional pale of the Court of First Instance of Manila and
instead comes within the exclusive original jurisdiction of the Juvenile and Domestic Relations Court. While
petitioners admitted that this objection to lack... of jurisdiction by the Court of First Instance of Manila over the
subject matter of the present action had not been raised either in the said court or in the Court of Appeals and is
brought to this Court for resolution for the first time on... appeal, they contend that a party may object to the
jurisdiction of the court over the subject matter of the action at any stage of the proceedings, even for the first time
on appeal since lack of jurisdiction of the court over the subject matter cannot be... waived. Such contention is
untenable.
This Court has already ruled that the question of jurisdiction not raised in the trial court cannot be raised on appeal
(Dalman vs. City Court of Dipolog City, Branch II, 134 SCRA 243 [1985]). Besides, a party who had... voluntarily
participated in the trial, like the herein petitioners, cannot later on raise the issue of the court's lack of jurisdiction
(Philippine National Bank vs. Intermediate Appellate Court, 143 SCRA 299 [1986]; Royales vs.
Intermediate Appellate Court, 127 SCRA 470 [1984]; Tijam vs. Sibonghanoy, 23 SCRA 29 [1968]). Moreover, there
are no more Juvenile and Domestic Relations Courts today. Under Batas
Pambansa Blg. 129, the functions of the Juvenile and Domestic Relations Court have been transferred to the
Regional Trial Courts (Divinagracia vs. Bellosillo, 143 SCRA 356 [1986]).
II.
Petitioners alleged that the intestate proceedings for the settlement of estate of the deceased Antonio C. Alberto
(Special Proceedings No. 9092) had already been terminated on November 9, 1953 by the order of distribution
directing the delivery of the residue of the... estate to the persons entitled thereto and that in said proceedings the
court also declared who are the heirs of the deceased. Consequently, the instant case which seeks to secure the
recognition of Antonio J. Alberto, Jr. as an acknowledged natural child of... the deceased in order to establish his
rights to the inheritance is already barred by prior judgment (Petitioners' Brief, p. 47) despite private respondent's
insistence that he had no knowledge or notice of the intestate proceedings of his alleged natural father (Record on
Appeal, p. 21).
Petitioners' submission is impressed with merit.
This Court has invariably ruled that insolvency proceedings and settlement of a decedent's estate are both
proceedings in rem which are binding against the whole world. All persons having interest... in the subject matter
involved, whether they were notified or not, are equally bound (Philippine Savings Bank vs. Lantin, 124 SCRA 483
[1983]). The court acquires jurisdiction over all persons interested, through the publication of the notice...
prescribed x x x and any order that may be entered therein is binding against all of them (Ramon vs. Ortuzar, 89
Phil. 741 [1951] citing in re Estate of Johnson, 39 Phil. 156). It was ruled... further that a final order of distribution of
the estate of a deceased person vests the title to the land of the estate in the distributees; and that the only instance
where a party interested in a probate proceeding may have a final liquidation set... aside is when he is left out by
reason of circumstances beyond his control or through mistake or inadvertence not imputable to negligence. Even
then, the better practice to secure relief is reopening of the same case by proper motion within the... reglementary
period, instead of an independent action, the effect of which, if successful, would be, as in the instant case, for
another court or judge to throw out a decision or order already final and executed and reshuffle... properties long
ago distributed and disposed of (Ramon vs. Ortuzar, supra; Santos vs. Roman Catholic Bishop of Nueva Caceres, 45
Phil. 895).
Intestate proceedings were terminated as alleged in the complaint itself on November 9, 1953 so that said four years
prescriptive period expired on November 9, 1957. Hence, the present action filed... on September 8, 1960 and which
has for one of its objects the rescission of the agreement of partition among the petitioners, as approved by the
intestate court, is already barred by prescription.
That an action for rescission is also the proper action in case of an alleged preterition of a compulsory heir by reason
of alleged bad faith or fraud of the other persons interested, which is what the complaint in this case alleges in
substance, is... indicated in Article 1104 of the Civil Code as follows:
"Art. 1104. A partition made with preterition of any of the compulsory heirs shall not be rescinded, unless it be
proved that there was bad faith or fraud on the part of the other persons interested; x... x x."
It has also been ruled by this Court that the four years period provided in Article 1100 of the Civil Code (formerly
Art. 1076 of the old Civil Code) should commence to run from the approval of the agreement of partition by the
Court (Samson vs. Araneta, 60 Phil.
27, 36). Thus, in the case at bar, it is evident that the action to rescind the Agreement of Partition which was
approved by the Court on November 9, 1953, had already prescribed when respondent filed the complaint in the
case at bar on September
8, 1960.
While as a general rule the action for partition among co-owners does not prescribe so long as the co-ownership is
expressly or impliedly recognized (Art. 494, Civil Code), petitioners herein had never recognized respondent as a
co-owner or co-heir either... expressly or impliedly. Consequently, the rule on non-prescription of action for
partition of property owned in common (Art. 494) does not apply to the case at bar.
Respondent Alberto, Jr. who has a living parent, his mother, Andrea Jongco, who in fact filed the complaint in the
case at bar for him, falls squarely under the above-cited provision.
Granting arguendo that respondent is a natural child of the deceased Antonio Alberto, Sr., the action for recognition
of natural child may be brought only during the lifetime of the presumed parent.
And if the presumed father or mother died during the minority of the child, the latter may file the action within four
(4) years from the attainment of majority (Art. 285 [1]). However, if the minor has a guardian as in this case,
prescription runs against him... even during minority (Wenzel, etc., et al. vs. Surigao Consolidated Mining, Inc., 108
Phil. 530 [1960]). In such case, the action for recognition must be instituted within four (4) years after the death of
the natural father
(Magallanes, et al. vs. Court of Appeals, et al., 95 Phil. 795 [1954]). Antonio C. Alberto, Sr., the alleged father, died
on July 3, 1949. The complaint for acknowledgment and... partition was filed eleven (11) years later, on September 8,
1960. Hence, prescription had set in.
Neither can it be claimed that the present action is in substance one for recovery of property in order to avoid the
consequences of prescription, for as correctly stated by the petitioners, to be entitled to the recovery of the property
from the... estate. Alberto, Jr. must first rescind the partition and distribution approved by the intestate
proceedings, otherwise, the recovery of any property from the petitioners is not possible. Be that as it may, such...
partition can no longer be rescinded having been already barred by the Statute of Limitations.
Furthermore, even granting that Article 1104 of the Civil Code does not apply and there is an injury to the rights of
plaintiff, this action would still not prosper under Articles 1146 and 1149 of the same
Code which provide that the action must be brought within four and five years, respectively, from the time the right
of action accrues.
IV.
The other explanation might have been the minority of Antonio Alberto, Jr. at the time of his supposed father's
death. But such explanation as discussed earlier is unavailing even in case of prescription under Article 1108 of... the
Civil Code where minority does not stop the running of the prescriptive period for minors who have parents,
guardians or legal representatives.
The record shows, however, that both admissions were correct, the first marriage was a secret civil marriage
celebrated in Pililla, Rizal while the second was a religious ratification of the former. The lack of... marriage
certificate as evidence was also considered by the Court of Appeals as an impairment of credibility despite a
certification to the effect that all pre-war records in the Municipality of Pililla Rizal were destroyed during the
last... war. Said Appellate Court is of the view that if they did plan to marry secretly at that time, they could have
chosen a city or municipality near Manila and that Pililla must have been chosen as the place of the supposed
marriage so that... petitioners could have an apparent good reason for the non-presentation of the marriage
certificate.

Metropolitan Bank and Trust Company

In 2000, respondent Ana Grace Rosales, an owner of a travel agency, and her mother Yo Yuk To opened a Joint Peso
Account10 with petitioner bank. In May 2002, respondent Rosales accompanied her client Liu Chiu Fang, a
Taiwanese National applying for a retiree’s visa from the Philippine Leisure and Retirement Authority (PLRA), to
petitioner’s branch in Escolta to open a savings account.

On 31 July 2003, petitioner issued a "Hold Out" order against respondents’ accounts. On 3 Sept 2003, petitioner
filed a criminal case for Estafa through False Pretences, Misrepresentation, Deceit and Use of Falsified Documents
against the respondent. It was alleged that the respondents are the one responsible for the unauthorized
withdrawal fo $75,000 from Liu Chiu Fang’s account. Petitioner alleged that on 5 Feb 2003, it received from the
PLRA a Withdrawal Clearance for the account of Liu Chiu Fang, that in the afternoon of the same day, respondents
went to inform the branch head Gutierrez that Liu Chiu Fang was going to withdraw her deposits in
cash. Gutierrez told respondents to come back the following day for the bank did not have enough dollars. On 6
Feb, respondents accompanied an unidentified impostor to the bank with enabled them to withdraw Liu Chiu
Fang’s dollar deposit.

On 3 Mar 2003, respondents opened a Joint Dollar Account with petitioner bank with an initial deposit of
$14,000. The bank later discovered that the serial numbers of the dollar notes deposited by respondents were the
same as those withdrawn by the impostor.

On 10 Sept 2004, respondents filed before the RTC of Manila a Complaint for Breach of Obligation and Contract
with Damages, against petitioner. Respondents alleged that they attempted several times to withdraw their
deposits but were unable to because petitioner had placed their accounts under "Hold Out" status. No explanation,
however, was given by petitioner as to why it issued the "Hold Out" order. Petitioner alleged that respondents have
no cause of action because it has a valid reason for issuing the "Hold Out" order. It averred that due to the fraudulent
scheme of respondent Rosales, it was compelled to reimburse Liu Chiu Fang the amount of US$75,000.0050 and to
file a criminal complaint for Estafa against respondent Rosales.

ISSUE: Whether or not the Metrobank breached its contract with respondents Rosales.

HELD:

Yes. The Court held that Metrobank’s reliance on the “Hold Out” clause in the Application and Agreement for
Deposit Account is misplaced. Bank deposits, which are in the nature of a simple loan or mutuum, must be paid
upon demand by the depositor.
The “Hold Out” clause applies only if there is a valid and existing obligation arising from any of the sources of
obligation enumerated in Article 1157 of the Civil Code, to wit: law, contracts, quasi-contracts, delict, and quasi-
delict. In this case, petitioner failed to show that respondents have an obligation to it under any law, contract,
quasi-contract, delict, or quasi-delict. And although a criminal case was filed by petitioner against respondent
Rosales, this is not enough reason for petitioner to issue a “Hold Out” order as the case is still pending and no final
judgment of conviction has been rendered against respondent Rosales.

In fact, it is significant to note that at the time petitioner issued the “Hold Out” order, the criminal complaint had
not yet been filed. Thus, considering that respondent Rosales is not liable under any of the five sources of
obligation, there was no legal basis for petitioner to issue the “Hold Out” order. Accordingly, we agree with the
findings of the RTC and the CA that the “Hold Out” clause does not apply in the instant case.

In view of the foregoing, the Court found that petitioner is guilty of breach of contract when it unjustifiably refused
to release respondents’ deposit despite demand. Having breached its contract with respondents, petitioner is liable
for damages.

Office of the Solicitor General v Ayala Land Incorporated

Facts:
This is a Petition for Review on Certiorari, under Rule 45 of the Revised Rules of Court, filed by petitioner seeking
the reversal and setting aside of the decision of CA which affirmed the decision of RTC, which denied the Motion
for Reconsideration of OSG. The RTC adjudged that respondents Ayala Land Incorporated (Ayala Land),
Robinsons Land Corporation (Robinsons), Shangri-la Plaza Corporation (Shangri-la), and SM Prime Holdings, Inc.
(SM Prime) could not be obliged to provide free parking spaces in their malls to their patrons and the general
public.

The Senate Committee on Trade and Commerce found that the collection of parking fees by shopping malls is
contrary to National Building Code and figuratively speaking, the Code has “expropriated” the land for parking.
Also, Committee stated that the collection of parking fees would be against Article II of RA 9734 (Consumer Act of
the Philippines) as to the State’s policy of protecting the interest of consumers. Moreover, Section 201 of the
National Building Code gives the responsibility for the administration and enforcement of the provisions of the
Code, including the imposition of penalties for administrative violations thereof to the Secretary of Public Works.
This is not being strictly followed as the LGUs are tasked to discharge the regulatory powers of DPWH instead of
DPWH instead.

As such, Senate Committee recommended that: 1) Office of Solicitor General should institute the action to enjoin
the collction of parking fees and enforce the sanctions for violation of National Building Code; 2) DTI pursuant to
RA 7394 should enforce the provisions of Code relative to parking; and 3) Congress should amend and update the
National Building Code to prohibit the collection of parking fees and its waiver of liability.

Respondent SM Prime assailed the recommendation of the Committee and filed a Petition for Declaratory Relief
under Rule 63 of the Revised Rules of Court against DPWH and local building officials, contending that: 1) Rule
XIX of Implementing Rules and Regulations of National Building Code is unconstitutional and void; 2) respondent
has the legal right to lease parking spaces; and 3) National Building Code IRR is ineffective as it was not published
for 3 consecutive weeks in newspaper of general circulation as mandated by Section 211 of PD 1096.

OSG then filed a Petition for Declaratory Relief and Injunction (with Prayer for Temporary Restraining Order and
Writ of Preliminary Injunction) to the RTC against respondents, prohibiting them from collecting parking fees and
contending that their practice of charging parking fees is violative of National Building Code.

The RTC held that: 1) OSG has the capacity to institute the proceeding it being a controversy of public welfare; 2) a
petition for declaratory relief is proper since all the requisites are present; 3) the Building Code with its IRR does
not necessarily impose that parking spaces shall be free of charge and providing parking spaces for free can be
considered as unlawful taking of property right without just compensation; and 4) there was no sufficient evidence
to justify any award for damages. They deemed that the respondents are not obligated to provide parking spaces
free of charge.

OSG appealed the decision to CA, saying that RTC erred in holding that the National Building Code did not intend
the parking spaces to be free of charge. On the other hand, respondent SM filed a separate appeal to the CA,
contending that: 1) RTC erred in failing to declare Rule XIX of IRR as unconstitutional; 2) RTC erred in failing to
declare IRR ineffective for not having been published as required by law; 3) RTC erred in dismissing the OSG’s
petition for failure to exhaust administrative remedies; and 4) RTC erred in failing to declare that OSG has no legal
standing as it is not a real party-in-interest.

CA denied the appeals of both petitioners and respondents on the following grounds: 1) OSG did not fail to exhaust
administrative remedies and that an administrative review is not a condition precedent to judicial relief where the
question in dispute is purely a legal one and nothing of an administrative nature is to be or can be done; 2) the
validity of National Building Code IRR cannot be proceeded as it was not discussed in RTC and the controversy
could be settled on other grounds without touching the issue of validity since the courts should refrain from
passing upon the constitutionality of a law; and 3) Section 803 of National Building Code and Rule XIX of IRR are
clear that they are only intended to control the occupancy of areas and structures, and in the absence of provision of
law, respondents could not be obliged to provide parking spaces free of charge.

As such, OSG presented itself to SC for the instant Petition for Review.

Issues:
1. Whether the CA erred in affirming the ruling of RTC that respondents are not obliged to provide free parking
spaces to their customers or the public.

2. Whether the petition of OSG for prohibiting the collection of parking fees is a valid exercise of the police power
of State.

Held:
1. No. The CA was correct in affirming the ruling of RTC, and the respondents are not obliged to provide free
parking spaces. SC found no merit in the OSG’s petition:

Sec 803 of National Building Code.

Percentage of Site Occupancy states that maximum site occupancy shall be governed by the use, type of
construction, and height of the building and the use, area, nature, and location of the site; and subject to the
provisions of the local zoning requirements and in accordance with the rules and regulations promulgated by the
Secretary.

RULE XIX – PARKING AND LOADING SPACE REQUIREMENTS

Pursuant to Section 803 of the National Building Code (PD 1096) providing for maximum site occupancy, the
following provisions on parking and loading space requirements shall be observed:
1. The parking space ratings listed below are minimum off-street requirements for specific uses/occupancies for
buildings/structures:
1.1 The size of an average automobile parking slot shall be computed as 2.4 meters by 5.00 meters for perpendicular
or diagonal parking, 2.00 meters by 6.00 meters for parallel parking. A truck or bus parking/loading slot shall be
computed at a minimum of 3.60 meters by 12.00 meters. The parking slot shall be drawn to scale and the total
number of which shall be indicated on the plans and specified whether or not parking accommodations, are
attendant-managed. (See Section 2 for computation of parking requirements).
x x x x
1.7 Neighborhood shopping center – 1 slot/100 sq. m. of shopping floor area

SECTION 102. Declaration of Policy

It is hereby declared to be the policy of the State to safeguard life, health, property, and public welfare, consistent
with the principles of sound environmental management and control; and to this end, make it the purpose of this
Code to provide for all buildings and structures, a framework of minimum standards and requirements to regulate
and control their location, site, design, quality of materials, construction, use, occupancy, and maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim of safeguarding “life,
health, property, and public welfare, consistent with the principles of sound environmental management and
control.” Adequate parking spaces would contribute greatly to alleviating traffic congestion when complemented
by quick and easy access thereto because of free-charge parking. Moreover, the power to regulate and control the
use, occupancy, and maintenance of buildings and structures carries with it the power to impose fees and,
conversely, to control — partially or, as in this case, absolutely — the imposition of such fees.

The explicit directive of the above is that respondents, as operators/lessors of neighborhood shopping centers,
should provide parking and loading spaces with the minimum ratio of one slot per 100 square meters of shopping
floor area. There is nothing therein pertaining to the collection (or non-collection) of parking fees by respondents.
In fact, the term “parking fees” cannot even be found at all in the entire National Building Code and its IRR. One
rule of statutory construction is that if a statute is clear and unequivocal, it must be given its literal meaning and
applied without any attempt at interpretation. Since Section 803 of the National Building Code and Rule XIX of its
IRR do not mention parking fees, then simply, said provisions do not regulate the collection of the same

The OSG cannot rely on Section 102 of the National Building Code to expand the coverage of Section 803 of the
same Code and Rule XIX of the IRR, so as to include the regulation of parking fees. The OSG limits its citation to
the first part of Section 102 of the National Building Code declaring the policy of the State “to safeguard life, health,
property, and public welfare, consistent with the principles of sound environmental management and control”; but
totally ignores the second part of said provision, which reads, “and to this end, make it the purpose of this Code to
provide for all buildings and structures, a framework of minimum standards and requirements to regulate and
control their location, site, design, quality of materials, construction, use, occupancy, and maintenance.” While the
first part of Section 102 of the National Building Code lays down the State policy, it is the second part thereof that
explains how said policy shall be carried out in the Code. Section 102 of the National Building Code is not an all-
encompassing grant of regulatory power to the DPWH Secretary and local building officials in the name of life,
health, property, and public welfare. On the contrary, it limits the regulatory power of said officials to ensuring that
the minimum standards and requirements for all buildings and structures, as set forth in the National Building
Code, are complied with.

Consequently, the OSG cannot claim that in addition to fixing the minimum requirements for parking spaces for
buildings, Rule XIX of the IRR also mandates that such parking spaces be provided by building owners free of
charge. If Rule XIX is not covered by the enabling law, then it cannot be added to or included in the implementing
rules. The rule-making power of administrative agencies must be confined to details for regulating the mode or
proceedings to carry into effect the law as it has been enacted, and it cannot be extended to amend or expand the
statutory requirements or to embrace matters not covered by the statute. Administrative regulations must always
be in harmony with the provisions of the law because any resulting discrepancy between the two will always be
resolved in favor of the basic law.

2. No. The petition of OSG to prohibit collection of parking fees is not a valid exercise of the police power of State.
It is not sufficient for the OSG to claim that “the power to regulate and control the use, occupancy, and
maintenance of buildings and structures carries with it the power to impose fees and, conversely, to control,
partially or, as in this case, absolutely, the imposition of such fees.” Firstly, the fees within the power of regulatory
agencies to impose are regulatory fees. It has been settled law in this jurisdiction that this broad and all-compassing
governmental competence to restrict rights of liberty and property carries with it the undeniable power to collect a
regulatory fee. It looks to the enactment of specific measures that govern the relations not only as between
individuals but also as between private parties and the political society.

True, if the regulatory agencies have the power to impose regulatory fees, then conversely, they also have the power
to remove the same. Even so, it is worthy to note that the present case does not involve the imposition by the
DPWH Secretary and local building officials of regulatory fees upon respondents; but the collection by respondents
of parking fees from persons who use the mall parking facilities. Secondly, assuming arguendo that the DPWH
Secretary and local building officials do have regulatory powers over the collection of parking fees for the use of
privately owned parking facilities, they cannot allow or prohibit such collection arbitrarily or whimsically.
Whether allowing or prohibiting the collection of such parking fees, the action of the DPWH Secretary and local
building officials must pass the test of classic reasonableness and propriety of the measures or means in the
promotion of the ends sought to be accomplished.

Without using the term outright, the OSG is actually invoking police power to justify the regulation by the State,
through the DPWH Secretary and local building officials, of privately owned parking facilities, including the
collection by the owners/operators of such facilities of parking fees from the public for the use thereof. The Court
finds, however, that in totally prohibiting respondents from collecting parking fees, the State would be acting
beyond the bounds of police power.

Police power is the power of promoting the public welfare by restraining and regulating the use of liberty and
property. It is usually exerted in order to merely regulate the use and enjoyment of the property of the owner. The
power to regulate, however, does not include the power to prohibit. A fortiori, the power to regulate does not
include the power to confiscate. Police power does not involve the taking or confiscation of property, with the
exception of a few cases where there is a necessity to confiscate private property in order to destroy it for the
purpose of protecting peace and order and of promoting the general welfare; for instance, the confiscation of an
illegally possessed article, such as opium and firearms.

When there is a taking or confiscation of private property for public use, the State is no longer exercising police
power, but another of its inherent powers, namely, eminent domain. Eminent domain enables the State to forcibly
acquire private lands intended for public use upon payment of just compensation to the owner.

Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession
of, the expropriated property; but no cogent reason appears why the said power may not be availed of only to
impose a burden upon the owner of condemned property, without loss of title and possession. It is a settled rule
that neither acquisition of title nor total destruction of value is essential to taking. It is usually in cases where title
remains with the private owner that inquiry should be made to determine whether the impairment of a property is
merely regulated or amounts to a compensable taking. A regulation that deprives any person of the profitable use of
his property constitutes a taking and entitles him to compensation, unless the invasion of rights is so slight as to
permit the regulation to be justified under the police power. Similarly, a police regulation that unreasonably
restricts the right to use business property for business purposes amounts to a taking of private property, and the
owner may recover therefor.

Although in the present case, title to and/or possession of the parking facilities remain/s with respondents, the
prohibition against their collection of parking fees from the public, for the use of said facilities, is already
tantamount to a taking or confiscation of their properties. The State is not only requiring that respondents devote a
portion of the latter’s properties for use as parking spaces, but is also mandating that they give the public access to
said parking spaces for free. Such is already an excessive intrusion into the property rights of respondents. Not only
are they being deprived of the right to use a portion of their properties as they wish, they are further prohibited
from profiting from its use or even just recovering therefrom the expenses for the maintenance and operation of the
required parking facilities.

In conclusion, the total prohibition against the collection by respondents of parking fees from persons who use the
mall parking facilities has no basis in the National Building Code or its IRR. The State also cannot impose the same
prohibition by generally invoking police power, since said prohibition amounts to a taking of respondents’ property
without payment of just compensation.

WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The Decision dated 25
January 2007 and Resolution dated 14 March 2007 of the Court of Appeals in CA-G.R. CV No. 76298,
affirming in toto the Joint Decision dated 29 May 2002 of the Regional Trial Court of Makati City,
Branch 138, in Civil Cases No. 00-1208 and No. 00-1210 are hereby AFFIRMED. No costs.
 JOAQUIN VS. ANICETO

This case comes to Us for review directly from the Court of First Instance of Manila. The facts are not in dispute.
They are as follows:

While Pilar Joaquin was on the sidewalk of Aviles Street, Manila, on April 27, 1960, a taxicab driven by Felix
Aniceto and owned by Ruperto Rodelas bumped her. As a result, she suffered physical! injuries.

Aniceto was charged with serious physcial injuries through reckless imprudence in the Municipal Court (now the
City Court) of Manila. He was subsequently found guilty and sentenced to imprisonment. However, no ruling was
made on his civil liability to the offended party in view of the latter's reservation to file a separate civil action for
damages for the injuries suffered by her.

Aniceto appealed the judgment of conviction to the Court of First Instance of Manila. While the criminal case was
thus pending appeal, Pilar Joaquin, the injured party, filed this case for damages in the Court of First Instance of
Manila, in accordance with the reservation which she had earlier made. Felix Aniceto and Ruperto Rodelas, driver
and owner, respectively, of the taxicab were made party defendants.

At the trial of this case, the plaintiff blocked all attempts of Rodelas to prove that, as employer, he had exercised
due diligence in the selection and supervision of his employee, on the ground that such a defense is not available in a
civil action brought under the Penal Code to recover the subsidiary civil liability arising from the crime. The lower
court sustained plaintiff's objection. However, it dismissed the case on the ground that, in the absence of a final
judgment of conviction against the driver in the criminal case, any action to enforce the employer's subsidiary civil
liability would be premature. Such liability, the trial court added, may only be enforced on proof of the insolvency of
the employee. Hence, this appeal.

The issue in the case is: May an employee's primary civil liability for crime and his employer's subsidiary liability
therefor be proved in a separate civil action even while the criminal case against the employee is still pending?

To begin with, obligation arise from law, contract, quasi contract, crime and quasi-delict.[1] According to appellant,
her action is one to enforce the civil liability arising from crime. With respect to obligations arising from crimes,
Article 1161 of the New Civil Code provides:

"Civil obligations arising from criminal offenses shall be governed by the penal laws, subject to the provisions of
article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations, and
of Title XVIII of this Book, regulating damages." (Italics supplied)

The Revised Penal Code provides in turn that "every person criminally liable for a felony is also civilly liable"[2] and
that in default of the persons criminally liable, emplo- yers, teachers, persons and corporations engaged in any kind
of Industry shall be civilly liable for felonies committed by their servants, pupils, workmen, apprentices or
employees in the discharge of their duties.[3]

As this Court held in City of Manila vs. Manila Electric Co., 52 Phil. 586:
"* * * The penal Code authorizes the determination of subsidiary liability. The Civil Code negatives its applicability
by providing that civil obligations arising from crimes or misdemeanors shall be governed by the provisions of the
Penal Code. In other words, the Penal Code affirms its jurisdiction while the Civil Code negatives its jurisdiction."

It is now settled that for an employer to be subsidiarily liable, the following requisites must be present: (1) That an
employee has committed a crime in the discharge of his duties; (2) that said employee is insolvent and has not
satisfied his civil liability; (3) that the employer is engaged in some kind of industry. (1 Padilla, Criminal Law, Re-
vised Penal Code 794 [1964])

Without the conviction of the employee, the employer cannot be subsidiary liable.

Now, it is no reason to bring such action against the employer on the ground that in cases of defamation, fraud and
physical injuries, Article 33 of the Civil Code authorizes a civil action that is "entirely separate and distinct from the
criminal action," (Carandang vs. Santiago, 97 Phil., 94; 51 Off. Gaz. 2878; Reyes vs. De la Rosa, 99 Phil., 103; 52 Off.
Gaz. 6548; Dyogi vs. Yatco, G. R. No. L-9623, January 22, 1957.

Can Article 33 above cited be made applicable to an employer in a civil action for subsidiary liability? The answer to
this question is undoubtedly in the negative.

What this article 33 authorizes is an action against the employee on his primary civil liability. It cannot apply to an
action against the employer to enforce his subsidiary civil liability as stated above, because, such liability aries only
after conviction of the employee in the criminal case. Any action brought against him before the conviction of his
employee is premature.

In cases of negligence, the injured party or his heirs has the choice between an action to enforce the civil liab- ility
arising from crime under Article 100 of the Revised Penal Code and an action for quasi delict under Articles 2176-
2194 of the Civil Code. (See Barredo vs. Garcia and Almario, 73 Phil. 607; Parker vs. Panlilio, et al., 91 Phil. 1)

If he chooses an action for quasi delict, he may hold an employer liable for the negligent act of the employee, subject,
however, to the employer's defense of exercise of the diligence of a good father of the family. (Art. 2180, Civil Code)

On the other hand, should he choose to prosecute his action under Article 100 of the Penal Code, he can hold the
employer subsidiarily liable only upon prior conviction of the employee. While a separate and independent civil
action for damages may be brought against the employee under Article 33 of the Civil Code, no such action may be
filed against the employer on the latter's subsidiary civil liability because such liability is governed not by the Civil
Code but by the Penal Code, under which conviction of the employee is a condition sine qua non for the employer's
subsidiary liability. If the court trying the employee's liability adjudges the employee liable, but the court trying the
criminal action acquits the employee, the subsequent insolvency of the employee cannot make the employer
subsidiarily liable to the offended party or to the latter's heirs.

Wherefore, decision appealed from is affirmed, without pronouncement as to costs.

 PEOPLE OF THE PHILIPPINES v. BENJAMIN GALICIA Y ROBLAS

Accused-appellant Benjamin Galicia was tried and eventually convicted of five counts of rape by the Regional Trial
Court (RTC), Branch 25, in Naga City. The dispositive portion of the Joint Judgment dated 03 April 2007, in
Criminal Cases Nos. 2004-0034 to 43, reads as follows:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered finding, the accused guilty beyond
reasonable doubt in five (5) counts of rape, namely, Crim. Cases Nos. 2004-0034, 2004-0035, 2004-0036, 2004-0037
and 2004-0038, and hereby sentences him to suffer the penalty of reclusion perpetua and to pay the complainant the
sum of Php 50,000.00 as civil indemnity, Php 50,000.00 as moral damages and Php 50,000.00 as exemplary
damages, for each count. Considering that accused has been under preventive detention during the pendency of the
trial in these cases, let the same be credited in the service of his sentence, if still applicable.

SO ORDERED.

Thereafter, the RTC issued a Final Commitment Order dated 25 April 2007 committing accused-appellant Galicia
to the National Bilibid Prison in Muntinlupa City.

On 07 May 2007, accused-appellant Galicia, through the Public Attorney's Office, filed a Notice of Appeal.[3] His
appeal was eventually docketed with the Court of Appeals as CA-G.R. CR-H.C. No. 02818.

After the parties filed their respective briefs, the Court of Appeals promulgated its Decision denying the appeal of
accused-appellant Galicia and affirming his conviction in toto:

WHEREFORE, premises considered herein appeal is hereby DENIED for evident lack of merit and the challenged
RTC Decision promulgated on 25 April 2007 is AFFIRMED in toto.

Following the adverse Decision of the appellate court, accused-appellant appeals to this Court through a Notice of
Appeal. The Court resolved to accept his appeal and notified the parties to file their supplemental briefs, if they so
desired. Plaintiff-appellee Republic, through the Office of the Solicitor General, however, manifested that it would
no longer file a supplemental brief, as the issues had been exhaustively discussed in its appellate brief. Similarly, the
Public Attorney's Office, counsel for accused-appellant Galicia, adopted its brief in the appellate proceedings as its
supplemental brief to the instant appeal with this Court. Pursuant to the directives of the Court, the Bureau of
Corrections confirmed receipt of the custody of accused-appellant in the New Bilibid Prison on 16 November 2007.

While the appeal was still pending, the Court, on 24 April 2012, received a Notice from the Bureau of Corrections
advising it that accused-appellant Galicia had died at the New Bilibid Prison Hospital on 03 December 2011. In
compliance with the Court's Resolution, the Bureau of Corrections thereafter sent accused-appellant's Certificate
of Death, in which the immediate cause of death was recorded as "Squamous Cell Carcinoma, Well Differentiated
(L) Axillary Area."

The death of accused-appellant Galicia during the pendency of his appeal in this Court results in the total
extinguishment of his criminal liability for the five counts of rape. Under Article 89 of the Revised Penal Code,
criminal liability, as applied to personal penalties, is totally extinguished by the death of the convict.

Moreover, the death of accused-appellant during the pendency of their appeal extinguishes not only their criminal
liabilities, but their civil liabilities as well for damages arising solely from the said crimes. "The death of the accused
likewise extinguished the civil liability that was based exclusively on the crime for which the accused was
convicted (i.e., ex delicto), because no final judgment of conviction was yet rendered by the time of his death. Only
civil liability predicated on a source of obligation other than the delict survived the death of the accused, which the
offended party can recover by means of a separate civil action."
WHEREFORE, the appeal of accused-appellant Benjamin Galicia y Roblas is DISMISSED, and this criminal case
is considered CLOSED AND TERMINATED.

NORKIS DISTRIBUTORS, INC. vs. THE COURT OF APPEALS & ALBERTO NEPALES

Rule Synopsis

Intent to deliver is indispensable to make the delivery effectual, absent which, the risk of loss remains with the
seller despite execution of modes of delivery in favor of the buyer.

On September 20, 1979, Norkis sold a specific motorcycle to Nepales for P7,500, payable via Letter of Guaranty from
the Development Bank of the Philippines (DBP). This was to be secured by a chattel mortgage over the vehicle.
Norkis then issued a Sales Invoice, signed by Nepales. The motorcycles was also registered in Nepales’ name. The
latter paid the fees evidence by official receipt. The registration was made to facilitate the execution of the chattel
mortgage. On January 22, 1980, the motorcycle was released to one Julian Nepales, an alleged agent of the buyer. On
February 3, the motorcycle was totally wrecked in an accident while driven by one Payba. On March 20, DBP
released the loan proceeds. Nepales paid Norkis out of the same and demanded delivery of the motorcycle. Norkis
failed.

Thus, the buyer filed a complaint for specific performance with damages on ground of non-delivery.

The seller, in its answer, said that the motorcycle had already been delivered to buyer at the time of the accident.
Thus, it contended that Nepales shall bear the risk of loss being the owner. Furthermore, it added that the risk of
loss of the thing is shifted to the buyer upon perfection of the contract of sale, even before delivery and transfer of
ownership. As according to Art. 1262, the obligation to deliver a specific thing is extinguished by the loss of the
thing due to fortuitous event. Lastly, it contended that while there was no actual delivery, there had been
constructive delivery upon: 1) the issuance of the Sales Invoice; 2) the registration of the vechicle; and 3) the
issuance of the official receipts for the payment of the registration fees.

The RTC ruled in favor of the Nepales, ordering Norkis to pay Nepales the value of the mortorcycle or to deliver
another motorcycle of the same brand, kind and quality. It also awarded damages. The CA, affirmed with
modification as to the award of damages. The Supreme Court affirmed.

Issues resolved —

1. Who should bear the loss of the motorcycle?

HELD – NORKIS.
In the absence of an express assumption of risk by the buyer, the things sold remain at seller’s risk until the
ownership thereof is transferred to the buyer (Art. 1496). This is in accordance with the doctrine of res perit
domino.

In this case, not actual or constructive deliver was effected. Thus, the risk of loss should be borne by the seller,
Norkis, which was still the owner and possessor of the motorcycle when it was wrecked.
2. Was there a delivery of the motorcycle to Nepales?

HELD – NONE.
The critical factor in the different modes effecting delivery, which gives legal effect to the act, is the actual intention
of the vendor to deliver, and its acceptance by the vendee. Without that intention, there is no tradition.

The purpose of the execution of the sales invoice and the registration of the vehicle in the name of Nepales was not
to transfer to the latter, the ownership of the motorcycle, but only to comply with the reguirements of the DBP for
processing his loan.

Before Nepales’ loan was released and before he even paid Norkis, the motorcycle had already figured in an accident
while driven by one Payba. Payba was not shown by Norkis to be a representative or relative of Nepales.

Decision affirmed.

Equatorial Realty Development v. Mayfair Theater Inc.

FACTS:

Carmelo and Bauermann, Inc. leased its parcel of land with two-storey building to Mayfair Theater, Inc. Carmelo
informed Mayfair that they intend to sell the entire property. Mayfair replied that they were interested to buy the
entire property if the price is reasonable. However, Carmelo sold the entire property to Equatorial. Mayfair filed an
action for specific performance and annulment of the sale because it violated their exclusive option to purchase the
property for 30 days as stipulated in the lease contract. Carmelo contended that it informed Mayfair their desire to
sell the property and the option to purchase by Mayfair is null and void for lack of consideration.

ISSUE:

Whether the option to purchase in the leased contract is an option contract or a right of first refusal.

RULING:

The Court agrees with the respondent Court of Appeals that the contractual stipulation provides for a right of first
refusal in favor of Mayfair. It is not an option clause or an option contract. It is a contract of a right of first refusal.
An option is a contract granting a privilege to buy or sell within an agreed time and at a determined price. It is a
separate and distinct contract from that which the parties may enter into upon the consummation of the option. It
must be supported by consideration. In the instant case, the right of first refusal is an integral part of the contracts
of lease. The consideration is built into the reciprocal obligations of the parties.

Since Mayfair has a right of first refusal, it can exercise the right only if the fraudulent sale is first set aside or
rescinded. The facts of the case and considerations of justice and equity require that the Court should order
rescission here and now. Rescission is a relief allowed for the protection of one of the contracting parties and even
third persons from all injury and damage the contract may cause or to protect some incompatible and preferred
right by the contract. The sale of the subject real property by Carmelo to Equatorial should now be rescinded
considering that Mayfair, which had substantial interest over the subject property, was prejudiced by the sale of the
subject property to Equatorial without Carmelo conferring to Mayfair every opportunity to negotiate within the
30-day stipulated period.
 HEIRS OF GAITE VS THE PLAZA INC.

FACTS:

On July 16, 1980, The Plaza, Inc. (The Plaza), a corporation engaged in the restaurant business, through its
President, Jose C. Reyes, entered into a contract with Rhogen Builders (Rhogen), represented by Ramon C. Gaite,
for the construction of a restaurant building in Greenbelt, Makati, Metro Manila for the price of P7,600,000. On
July 28, 1980, The Plaza paid P1,155,000 down payment to Gaite and soon after Rhogen commenced construction of
the restaurant building. 2 Months later, Engineer Angelito Z. Gonzales, the Acting Building Official of the
Municipality of Makati, ordered Gaite to cease and desist from continuing with the construction of the building for
violation of The National Building Code.

The Plaza’s Project Manager Architect Roberto evaluated the Progress Billing and Tayzon stated that actual jobsite
assessment showed that the finished works fall short of Rhogen’s claimed percentage of accomplishment and
Rhogen was entitled to only P32,684.16 and not P260,649.91 being demanded by Rhogen. On the same day, Gaite
notified Reyes that he is suspending all construction works until Reyes and the Project Manager cooperate to
resolve the issue he had raised to address the problem. Gaite informed The Plaza that he is terminating their
contract based on the Contractor’s Right to Stop Work or Terminate Contracts as provided for in the General
Conditions of the Contract and demanded the payment of P63,058.50 representing the work that has already been
completed by Rhogen. Reyes also informed Gaite that The Plaza will continue the completion of the structure
utilizing the services of a competent contractor but will charge Rhogen for liquidated damages as stipulated in
Article VIII of the Contract The Plaza filed a civil case for breach of contract, sum of money and damages against
Gaite and FGU in the Court of First Instance (CFI) of Rizal.

The RTC Makati rendered its decision granting in favor of the Plaza against Gaite. The Court of Appeals affirmed
such decision with modification.

ISSUE:

Whether or not the Rhogen had factual or legal basis to terminate the General Construction Contract.

HELD:

The construction contract between Rhogen and The Plaza provides for reciprocal obligations whereby the latter’s
obligation to pay the contract price or progress billing is conditioned on the former’s specified performance.
Pursuant to its contractual obligation, The Plaza furnished materials and paid the agreed down payment. Rhogen,
having breached the contractual obligation it had expressly assumed specifically to comply with all laws was
already at fault. Respondent The Plaza, on the other hand, was justified in withholding payment on Rhogen’s first
progress billing. Upon the facts duly established, Rhogen committed a serious breach of its contract with The Plaza,
which justified the latter in terminating the contract. Article 1170 of the Civil Code provides that those who in the
performance of their obligations are guilty of fraud, negligence or delay and those who in any manner contravene
the tenor thereof are liable for damages.

Petition DENIED.

Vasquez v Ayala Corporation

FACTS:

On April 23, 1981, spouses Vasquez entered into a MOA with Ayala Corp. with Ayala buying from the
Vazquez spouses all of the latter's shares of stock in Conduit Development, Inc. The main asset was a property in
Ayala Alabang which was then being developed by Conduit under a development plan where the land was divided
into Villages 1, 2 and 3. The development was then being undertaken by G.P. Construction and Development Corp.
Under the MOA, Ayala was to develop the entire property, less what was defined as the "Retained Area". This
"Retained Area" was to be retained by the Vazquez spouses. The area to be developed by Ayala was called the
"Remaining Area". In this "Remaining Area" were 4 lots adjacent to the "Retained Area" and Ayala agreed to offer
these lots for sale to the spouses at the prevailing price at the time of purchase. After the execution of the MOA,
Ayala caused the suspension of work on Village 1 of the project. Ayala then received a letter from Lancer General
Builder Corp. in which the latter was claiming a certain amount as subcontractor. G.P. Construction not being able
to reach an amicable settlement with Lancer, Lancer sued G.P. Construction, Conduit and Ayala in the court. G.P.
Construction and Lancer both tried to enjoin Ayala from undertaking the development of the property. The suit
was terminated only on 1987. Taking the position that Ayala was obligated to sell the 4 lots adjacent to the
"Retained Area" within 3 years from the date of the MOA, the Vasquez spouses sent several "reminder" letters of the
approaching so-called deadline. However, no demand after 1984, was ever made by the Vasquez spouses for Ayala to
sell the 4 lots. On the contrary, one of the letters signed by their authorized agent categorically stated that they
expected development of Phase 1 to be completed 3 years from the settlement of the legal problems with the
previous contractor. By early 1990, Ayala finished the development of the vicinity. The 4 lots were then offered to be
sold to the Vasquez spouses at the prevailing price in 1990. This was rejected by the Vasquez spouses who wanted
to pay at 1984 prices, thereby leading to the suit below.

ISSUE:

Whether or not respondent incurred default or delay in the fulfillment of its obligation.

HELD:

No. In order that the debtor may be in default it is necessary that the following requisites be present: (1) that
the obligation be demandable and already liquidated; (2) that the debtor delays performance; and (3) that the
creditor requires the performance judicially or extrajudicially. Under Article 1193 of the Civil Code, obligations for
whose fulfillment a day certain has been fixed shall be demandable only when that day comes. However, no such
day certain was fixed in the MOA. Petitioners, therefore, cannot demand performance after the 3 year period fixed
by the MOA for the development of the first phase of the property since this is not the same period contemplated
for the development of the subject lots. Since the MOA does not specify a period for the development of the subject
lots, petitioners should have petitioned the court to fix the period in accordance with Article 1197 of the Civil Code.
As no such action was filed by petitioners, their complaint for specific performance was premature, the obligation
not being demandable at that point. Accordingly, Ayala Corp. cannot likewise be said to have delayed performance
of the obligation. Even assuming that the MOA imposes an obligation on Ayala Corp. to develop the subject lots,
within 3 years from date thereof, Ayala Corp. could still not be held to have been in delay since no demand was
made by petitioners for the performance of its obligation. Moreover, the letters were mere reminders and not
categorical demands to perform. These letters were sent before the obligation could become legally demandable.
More importantly, petitioners waived the 3 year period as evidenced by their agent's letter to the effect that
petitioners agreed that the 3 year period should be counted from the termination of the case filed by Lancer.