ATENEO CENTRAL BAR OPERATIONS 2018 CIVIL LAW CASES PENNED BY JUSTICE DEL CASTILLOATENEO cen GAR OPERATIONS 2518 JUSTICE DEL CASTILLO CASE DIGESTS SR CrenTONS 7018 __sUSTIcE DEL CASTILLO CASE DIGESTS CIVIL LAW CASES PERSONS & FAMILY RELATIONS LAW ©: When X and ¥ married, the marriage contract indicated X's status as Gectaration of nullity of the marriage for being bigamous, claiming that X is stil married to Z when he married ¥ x and Z could not have been divorced since their marriage is governed by the Civil Code and not the Islamic laws. On the other hand, ¥ argues that the ‘marriage is valid since X is already Givorced under the Code of Muslim Personal Laws, and such laws should govern 2's Marriage without need of Tegistering their consent to be covered by it, since Z is a Muslim whose marriage is solemnized under Muslim laws. ts the marriage between X and Y bigamous? ivorced”. Z filed for a Pees. X's subsequent marriage to Y is bigamnous, thus void ab initio. Anew law ought to affect the future, ‘Rot what is past. Hence, in the case of subse quent marriage laws, no vested rights shail be impaired that Pele. '2 the Protection of the legitimate union of a marted couple. X and 2 meted in 1958; the only lane in force governing marriage relationships was the Civil Code, This governs their personal status sites this Popa otsCt at the time of the celebration of their mariage. The Muslim Code took effect only on February 4, 1977, and this law cannot retroactively overide the Civil Code which akeacy bestowed Sr pain tants on the marriage of X and Z, The Civil Code explicitly provided forthe prospective application Sear Nisions unless otherwise provided. (Estrelita Julano-Liave v. Republic of the Philppives Gf 169766, March 20, 2011), Q: X and ¥ got married in 4976. After the birth of their 4 child, Y had an affair with Z. tn 1985, X left the conjugal home together with their 4 children. In 1994, ¥ filed for declaration of nullity of ;rartiags based on Anicle 36 cf the Family Code. He alleged that X was psychologically incapacitated to perform and comply with the essential marital obligations at the time of the Celebration of their marriage. Y alleged that 1) X leaves the children without proper care and Attention as she played mahjong all day and ail night; 2) X leaves the house to party with male fiends and returned in the early hours of the following day; and 3) X committed adultery on 1985, presented a psychologist who explained that X suffers from Narcissistic Personality Disorder and '@ Catholic canon law expert to testify on X's psychological incapacity. Did Y sufficiently Proven the psychological incapacity? ‘A: No. ¥ presented the testimonies of two supposed ex, Psychologically incapacitated, but the conclusions of these witnesses were premised on the alleged acls Or behavior of respondent which had not been sufficiently proven. No proof whalsoever was presented to rove her visits to beauty salons or her frequent partying with friends. X's sexual infidelity was also not proven because she was only dating other men. Even assuming that she had an extramarital afait with another man, sexual infidelity cannot be equated with obsessive need for attention from other men Sexual infidelity per se is 9 ground for legal separation, but it does no! necessarily constiute Psychological incapacity. (Valerio Kafaw v. Ma, Elena Femandez, G.R. No. 166357, September 19, 2011) ‘pert witnesses who concluded that respondent is. PAGE 1 OF 60ATENEOCENTRAL JUSTICE DEL CASTILLO CASE DIGESTS ener nae Q: X and Y lived as common-taw spouses for two years and had a son, Z. X became a seaman to Work but he abandoned Y and Z. After a while, X got married to another woman and fived with her. Now, ¥ is asking the court to order X to support Z. Before the court, Y presented the following that he ana) Z'S birth cortificate indicating X as the father, but not signed by X, (b) Z's testimony that he met and hugged X once when he stayed in his aunt's house for a week, and (c) Z's baptismal certificate. Was Y able to prove Z's filiation with X to be entitled to support? Pian, Atle 175 of the Family Code provides that ilegitmate children may establish their legitimate: {Maton in the same way and on the same evidence as legitimate children, which is enumerated in Article rad one. f the evidences presented in court establish Z's ilegiimatefifation because X oid not have a. and i the preparation of Z's birth cerificate as shown by the inconsistencies inthe enines and the fact ‘hat it has no X's signature. Nor does Z's stay in his aunt's house constitute open and. continuous Freaeein of the status of an illegitimate child because there was no manifestation of X's permanent rie an 19 consider Z as his, 2's baptismal certificate was also unsigned. Support may only be ordered Min gitation or patemity has been established by clear and convincing evcence. (Antonio. Perla v. Miraso! Baring, G.R. 172471, November 12, 2012) OX owns a land which is adjacent to Y's land. Y constructed an auto-repair shop building. ¥ Elaimed that x illegally sot up a fence without a permit. In order to get evidence ¥ inetalled on the, building two video surveillance cameras facing X's property. X filed» ease contending that his. ‘ight to privacy is being violated. is there a violation of X's right to privacy? Pree. Ntcle 26(1) of the Civil Code, on the other hand, protects an individuals right to privacy and Mroviges a legal remedy against abuses that may be committed against him by other inalviducle It ctatoe dinar nCry Person shall respect the dignity, personaliy, privacy and peace of mind of his neigrboss ace quack Persons which includes prying into the privacy of another's residence. This provision recosriges Frat upats house is his caste, where his right to privacy cannot be denied or even resticted by others nncludes “any act of intrusion into, peeping or peering inquistively into the residence of ancthey wihoct Tie Consent of the latter". The phrase “prying into the privacy of another's residence (Spe, Bal sat Victoria Hing v Alexander Choachuv, G.R. No. 179736 June 26. 2013) Q: X executed an SPA in favor of his Y to mortgage his share in a property in order to secure a loan. The loan acquired by Y was not paid. Thus, Bank A tried to foreclose the property. After the decision of the CA, X is now contending that the bank failed to exercise due diligence when ranting the toan without his wife's signature? Is the contention of X proper? A: No. The absence of his wife's signature on the mortgage contract also has no bearing in this case. All Property of the marriage is presumed to be conjugal, unless itis shown that i is owned exclusively by the husband or the wife: that this presumption is not overcome by the fact that the pronerty is registered in the rame of the husband or the wile alone; and tha: the consent of both spcuses is required before conjugal property may be mortgaged. However, we find it iniquitous to apply the foregoing presumption especially since the nature of the mortgaged property was never raised as an issce before the RTC, the CA, and even before this Court. In fact. X never alleged in his Complaint that the said property was not conjugal in nature. Hence, Bank A had no opportunily to rebut the said presumption. (Francisco Lim v. Equitable PGI Bank, G.R. No. 183918, January 15, 2014) PAGE 20F 60ATENEO CENTRAL BAR OPERATIONS 2018 JUSTICE DEL CASTILLO CASE DIGESTS seagate, the lease was renewed through a series of vevbal ned written agreements. In November 2003, X informed ¥ that he sold the property to.Z amd Ineeunn cy Y to pay the rent to Z. After the Geaciation of the lease contract, ¥ refused to vacate and caanwet the leased premises on the Vacate: 2 ract2 Feconduccion or implied renewal of lease since te ned not receive a notice to Ieoue te Rod 2 Complaint for uniawful detainer. Y contends that Me hos no jurisdiction since the 'ssue is the existence of an implied new lease, Docs MG tare jurisdiction over the case? eracrdnary prescription thwough possession for 30 years. Hence, Y never aoqured owmershytheush extraordinary prescipion of the subject reat Possession, to constitute the foundation of aoqusiive prescrpucn ust be possession under a dam of tite or must be adverse. As ofa possessary charactor performed by one wn holds the property by mere tolerance of the owner are clearly not in the concept of an owner and such ‘acts, no matter how long continued, do nat stat the running ofthe period of prescription. (Arsenio Olegario Pedro Mar, G.R. No. 147951, December 14, 2009) PAGE 4 OF 60ATENEO.CENTRAL JUSTICE DEL CASTILLO CASE DIGESTS gaforewmionsz01e JUSTICE DEL CASTILLO CASE DIGESTS Q: X engaged in a voluntary-offer-to-sell of his sugarland to the Department of Agrarian Reform for acquisition under CARP. Upon referral to Bank A, the valuation was far lower compared to the offer of X. As such, X requested reevaluation of the compensation, but DAR proceeded to take possession and awarded Certificates of Land Ownership Awards to farmer-beneficiaries. X then filed a petition for judicial determination of just compensation, contending that the area where his. property is located is predominantly residential. Judgment was rendered in his favor. The Bank assails the valuation of X's property as residential land. 's the Bank's contention tenable? ‘A: YES. For purposes of just compensation, 's determined by its character and its price at Character refers to ts actual use at the time os the fair market value of an expropriated property the time of taking. In expropriation cases, the propertys. taking, not its potential uses. itis the DAR that is mandated by law to Purpose of the relationship is to bring part of the tenant or agric Prove by substantial evidence ail the requisites of agriuitural tenancy, (Lucia Rodriguez v. Teresita Salvador, G.R. No. 171972, June 8, 2011) 2: A parcel of land was registered under the name of X. While the property was still untitied and unregistered, Z mortgaged it to Bank A. Later, it was discovered that a part of the land wos erroneousiy registered and actually pertained to Y. Upon X's failure to pay the lod, Bank A foreclosed the whole property. Y averred that X could not valid ly mortgage the entire lot because a Portion of which belongs to hira. ¥ claimed that Bank A is not an innocent mortgagecipurchaser for value because prior to the execution and registration of the deed of sale with the Re: Deeds, the Bank A had prior notice that the disputed lot is the subject of innocent mortgagee/purchaser for value? A: NO. A banking institution is expected to exercise due dligence belore entering into a mortgage Contract. The ascertainment of the stetus or condition of a property ofered to it as secutily for a loan ect be a standard and indispensable part ofits operations. Bank A has the burden of evidence that it acted in 00d faith fror) the time the land was offered as collateral. However, Bank A miserably failed to overcome this burden. There was no showing at al that it conducted an inves..gation: that t observed due diligence and prudence by checking for flaws in the tile; that it verified the identity of he true owner and possececr of the land. and, that it visited subject premises to determine is actual condion before accepting the same as collateral. Bank A failed to prove that it conducted an investigation on the real condition of the PAGE 5 OF 60Ske OPeNaTIONS 2018 JUSTICE DEL CASTILLO CASE DIGESTS Bam orenarions 2015 __ JUSTICE DEL CASTILLO CASE DIGESTS mortgaged property. Had the bank done so, it could have discovered that Y had possession of the disputed lot for quite some time. (Fhilippine National Bank v. Ciniaco Jumamoy, G.R. No. 169901, August 3, 2011) @: X bought tand from a realty corporation through a deed of sale. A new title covering the land Was issued in the name of X but he was not able to physically occupy the land because of his Mork circumstances. Several years later X visited the land he bought and discovered that Y has Gcrupled his property. X sert a letter to Y demanding that the latter vacate his land but this was unheeded. X then filed a complaint for recovery of possession of land. Y in their answer to Complaint, claimed that the subject property was assigned to him and that he has bee in that rglon Of the land since Kiay 3, 1979 and that the title of X does not cover his land. Y asserts {hat laches and prescription bars X from filing the case. X argues that his Torrens Titie prevails exer the assignment of the right and that laches and prescription does not apply against him, Is X eniitled to the property? A: YES. Atticle 434 of the Civil Code provides that “in an action to recover, the Property must be ‘centifed, and the piaintif must rely on the strength of his tile and not on the weakness of the defendant's claim” Hence, in order to recover possession, a person must prove (1) the identity of the land claimed, and (2) his title X was able to prove the identity of the property and his tite to the land. X presented the: following evidence on court: (1) Land Purchase Agreement: (2) Deed of Absohte Sale; (3} and a Torrens {ie registered under his name. To prove the identity of the property he offered the testimonies witnesses, who conducted tne relocation survey, the caretaker of the subdivision, who showed Xe the exact location of the subject property. He likewise submitted as evidence the Verification St and Lathe canese 00 not apply in the instant case. Jurisprudence consistenlly olds hat "preseription and iaches can not apply to registered land covered by y the Torrens system" because “under the Property Registration Decree, no title to registered land in d lerogation to that of the registered owner shall bo rons, Peeresctplion or adverse possession.” (Rogelio J. Jakosalem v. Roberto &: Barangam, GR. Ne 175028, Feb 12, 2012) entitied to conveyance of the property? ‘A: No. X failed present the private document fom which she derived her alleged rights over the property and failed {0 prove her ownership by competent evidence. The SALLN cannot take precedence over the tax declaration ‘absent any other strong evidence to suppor a claim of ownership. While tax receipts and declarations ore merely indicia of a claim of ownership, however, since X was unable to produce any stved of document ne ‘evidence of her claim, the tax deciaratn becomes prima facie evidence of ownership in favor oF Y and 2. Absent any other strong evidence, tax receipts or tax declarations are prima facie proof of ownership or Possession of the property for which such taxes have been paid. (Sps. Wiliam Guidangen v. Devote Wooden, G.R. 174445, February 15, 2012) PAGE 6 OF 60‘TENEO CENTRAL oar OPERATIONS 2018 JUSTICE DEL CASTILLO CASE DIGESTS: SeRoveraTions ove __AUSTICE DEL CASTILLO CASE DIGESTS for the needs of the dominant estate. x must indemnity Corporation A forthe use of the entire network of oads leading to the highway, subject only to the width of passage needed py X (Demetna De Guzman v. Fiinvest Development Corporation, G.R. No. 191710, January 14, 2015) G: Lot 835 is a property registered under the Torrens system. X and heirs inherited from their predecessors Lot 835 throu igh @ Deed of Absolute Sale and was subdivided into four lots. Y, also an heir of the predecessors, alleged that the Deed is a forgery because the vendors were already tong dead when it was executed with X and heirs. Stil, X and heirs asser: that they have been irk Possession of the land for more than thirty years and that Y is barred from prescription and laches. In addition, X and heirs claim that they are buyers in good faith and for value which shoulel merit as a validation of title over the lots. Aro X and heirs considered as the rightful owners of the Subject lot? A: NO. No title to registered land in derogation of that of the registered owner shall be acquired by Prescription or adverse ossession. In addition, laches is based upon equity and the public policy of pacouraging stale claims and cannot be used to defeat justice oF to perpetrate fraud and injustice. Prescription cannot be allowed against the hereditary successors of the regislered owner because they, Treraly step into the sho2s of their decedent and thus continue their personality, and since a certificate of {iastraton covers it the lot cannot be acquired by prescription regardless of X's good faith. With regard 1 (aches, its assertion cannot be with merit because the Deed upen which X and heirs base their claim is 8 forgery. (Heirs of Sps. Joaquin Menguardla v. Heirs of Simplicio Valles, G-R. 177616, August 27, 2014) X and Y are siblings, they inherited a piace of land from thi covering the land was cancelled, and a new title was issued in favor of Y. Y then asked K and his ther siblings who are living in the subject property to vacate the subject property, Subsequently, Y filed an unlawful detainer suit against X and his other siblings based former's new title. % ‘counieved that the new title issued covering the land in favor of Y is void because the daed of sale Conveying the land to Y was forged. Further, when the title was executed their parents, who Presumably sold the land to Y, were already deceased. Thus X argues, that he and their othe siblings remain co-owners of the land with ¥. and they cannot be evicted from the subject ‘roperty. Can Y evict X and his other siblings on the ground that Y has the tite to the land and is. low the sole owner of the land? leceased parents. The title A: NO. X and Y stil remain as co-owners of the subject property. The deed of sale where Y's parents were the setter and Y as the buyer is manifestly forged because at the ‘ime of the execution of the deed of ‘sale the parents had already been deceased. This makes the deed of sale null and void, which voids the ‘new tile of ¥ over the land. The fact that Y has in her favor a certvicate of title is of no moment: her ile cannot be used to validate the forgery or cure the void sale. Insofar as a person who fraudulently obtained @ property is concemed, the registration of the propery in said person's name would not be sufficient to vest in him or her the tile to the property. A certilicate of tile merely confirms or records title already existing and vested. The indefeasibilty of the Torrens title should not be used as a means to perpeirate fraud against the rightful owner of real property. Since Y acquired no tight over the subject. property, the same remained in the name of the criginal registered owners which were X and Y's parents, Being heirs of the owners, X and Y thus became, and remain co-owners — by succession — of the subject property. As such, X may exercise all atrbutes of ownership over the same, including possession — whether de facto or de jure. (Consolacio D. Romero v. Engracia . Singson, G.R. No. 200969, Aug. 3 2015) PAGE 8 OF 60fo Exe OvenaTiOns 7618 JUSTICE DEL CASTILLO CASE DIGESTS SAR OPERATIONS 7019 _USTICE DEL CASTILLO CASE DIGESTS X, filed a complaint for easement of right-of-way against Corporation A, because the latter built 2 concrete perimeter fence surrounding Corporation A's subdivision project, which was adjoining, caenereperty X was denied access to a public road because of this perimeter fence. In its answer fo the complaint Corporation A denies having any knowledge of any property adjoining it Subdivision, and that in any case X failed to allege in the complaint the requisites for the granting of an easement of right-of-way. The RTC granted the prayer for an easement for right-of-way of X, Tuling that X was the owner of the subject property through extraordinary prescription he has @ tha, cant to the same and is entitled to demand an easement of right-of-way under Article 649 of ree cnll Code. Howaver, the CA reversed the decision and ruled that X failed to sufficiently Sgiablish his ownership since the property is still part of public domain. Is X entitled to an easement of right-of-way? A: NO. X ic not the owner disposable land of th ‘0 Prescription. it was clarified the Heirs of Mario Malabanan v. Republic of {he Philippines, that only lands of the public domain subsequently closeted or deetered ae oe longer Gominasy °F Butic use or for the development of national wealth, or removed rom the sphere of Public Srennion and are considered converted into patrimonial lands or lands of privete ‘ownership, may be arepaled of disposed through any ofthe modes of acquiring ownership under the hil Ceoe Andy he Mode of acquisition is prescription, Dane Beasy been converted to private ownership prior to the requisite actulstine prescriptive period. Gurerwise, Aticle 1113 of the Civil Code, which provides that property of the State wor atrimonial in SpRtseier Shall not be the subject of prescription, applies. in this case the land wee acne be Classified stil as public ugriculturel land and anent the foregoing X does not lnve «wes Fight over their Doveenang (cannot demand easement of right-of-way. (Livayway Andres w. Sle, Lave meaty e Development Incorporated, G.R. No. 201408, Aug. 24. 2015) Q: X has been in peaceful possession of a 50 hect land was reserved for a military purpose, and marine protected area. X filed an injunctive writ forced to leave their land because of the Navy's Petition for the injunctive writ on is different. Further, he is arguin; Subject property and therefore his right to possession is protected by law. IX entitled te « writ or mandatory injunction? tare land since 1962. Subsequently in 1967 the. 2 decades later the tand was reclassified as a against the Philippine Navy because they were orders to vacate the area. X asserts he is filing a the right of possession and rot on the right of ownership, which ‘A: NO. Only things and rights which are susceptible Possession. The following cannot be appropriated and Public dominion, commen things (res communos} prohibited by law. Pursuant to the Regalian Doctrine Hence, “al lands not appearing to be clearly under private ownership are presumed to belong to the State. Also, public lands remain patt of the inalienable land of the public domain unless the State is Shown tc have reclassified of alienated them to puivate persons.” To prove that a land is alienable, the existence of a positive act of the government, such as presidential proclamation or an executive order: an ‘administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or statute declaring the land as alienable and disposable must be established. n this case, there is no such proof showing that the subject portion of land has been declared alienable and disposable when X stertod to occupy the same. Hence, it must be considered as sill inalienable public domain, Being such, it cannot bbe appropriated and therefore not a proper subject of possession under Article 520 of the Civil Code, Hie possession of the subject area, ven if the same be in the concept of an owner oF no matter how long, cannot produce any legal effect in his favor since the property cannot be lawfully possessed in the fiat place. (Republic of the Philippines v. Rev. Claudio R. Cortez Sr, G.R. No. 197472, September 7, 2015) ‘of being appropriated may be the object of hence, cannot be possessed: orcperty of the Such as sunlight and ir, and things specifically all lands of the public domain belong to the State PAGE 9 OF 60EXR OPE NATIONS 2018 JUSTICE DEL CASTILLO CASE DIGESTS. CE AT en JUSTICE DEL. CASTILLO CARE DIGESTS Q: X filed a complaint for uniawful detainer and damages against Y, MTEC dismissed the case {for failure to mention in its certification against forum shopping a complete statement of the ‘status of another case concerning the recovery of ownership of the same parcels of land earlier filed before the RTC. Is X guilty of forum shopping for failing to disclose in the unlawful detainer case that an action for recovery of ownership of the same property is pending? A: NO. The issues or causes of action in the two cases are not similar. In the summary action of unlawful Getainer, the question to be resolved is which party has tho better or superior right to the physical Possession (de facto possession) of the disputed premises, independent of any ciaim of ownership by any Party. Whereas in the action for recovery of ownership, the question to be resolved is wh'-* warty has {he lawful ttle or deminical right (owner's right) to the disputed premises. A pending action involving Mmership neither suspends nor bars the proceedings in the summary action for ejectment pertaining 10 he Same propery, in view of the dissimilarities or differences in the relies prayed for. (Bradford Unitoc! Church of Christ, Inc. v, Dante Ando, G.R. 195669, May 30, 2016). PAGE 100F 60ATENEO CENTRAL, BAR OPERATIONS 2018 JUSTICE DEL CASTILLO CASE DIGESTS OBLIGATIONS AND CONTRACTS LAW @: X and her husband were the owners of a 240-square meter residential lot in Bulacan, They Secured a loan of P30,000.00 from Y and undertook to pay the mortgage debt within six months Tuth an interest rate of 5% per month, compounded monthly. Y caused the extrajudicial foreclosure of the mortgage because X failed to pay the whole amount. The Court of Appeals held {hat the interest rate is unconscionable and thus reduced it to 12% per annum. Y contended that wits (he suspension by the Bangko Sentra! of the Usury Law ceiling on interest, the contracting Parties could freely agree on any interest rate. Is Y correct? NO, While parties to a loan agreement have wide latitude to stipulate, it may stil be deciared legal henever unconscionable. In this case, 5% monthly inlerest rate or 60% per annum appears to be inauitous and contrary to morals, and the law. Article 1306 of the Civil Coae allows the conacing Farties to establish such stipulations, clauses, torms and conditions as hey may deem (ope aay Ptovided they are not contrary to law, morals, good customs, public order of publ: poly. (eg S290"! Castro and Diosdada Castro v. Angelina De Leon Tan, GR. No. 166940, Novomtoy 25, 2009) O: X rufused to surrender the possession of a fishpond he leased from Y's mother despite the expiration of their centract cf se in 1980. Y filed for a Recovery of Possession and ‘Subsequently discovered that X sold the lot to hi is children white the case was pending. Y filed an 2cfion to nullify the two deeds of absolute sale executed but the children ot X contended thet tre angler Jor nutty has already prescribed having filed only 7 years after the registration, and thee the proper ai n is rescission under Article 138 (3). 1s the action for nullity the proper? Has. already prescribed? Nes. The action for nullity is proper when the sale is absolvely simulated and fictitious, such action £o8s ot prescribe. in this case, the sale was executed forthe sole purpose of puting the it in question beyond the reach of creditors. 1 also appears that X stil possesses and cultivates the fole question Gespite the transfer of properties to his children. In Suntay v. CA, the Court held that such is-2 cleat badge of Simulation. An action for rescission presupposes the existence of a contract. Since the sale aoe Fmnulated and thus void, the action for nulity is proper and is imprescripble. (Jesus Campos v. Nona Buenvenida Pastrana, G.R. No. 175994, December 8, 2009) &: X Corporation, a corporation engaged in the business of producing cement, engaged the services of Y to repair its motors in producing cement. ¥ failed to repair the motor, and thus X filed a complaint for sum of inoney and damages against ¥. Y claimed that under the "Clause 7 of the General Conditions” in its contrast with X, the liability of ¥ does not extend to consequential damages. either direct or indirect. X claimed that the General Conditions cannot exculpate ¥ because X never agreed to be bound by it nor did X receive a copy of it. Is ¥ liable, despite the limited liability in the General Conditions of the Contract? A: Yes. Clause 7 of the General Conditions is NOT BINDING General Conditions is unavailing because ¥ failed to show that X was duly furnished with a copy of said General Condtions. Having breached the contract it entered with X, Y is liable for damages pursuant to Aticles 1167, 1170, and 2201 of the Civil Code. A repairman who fails to perform his obligation is hable to pay for the cost of the execution of the obligation plus damages. Though eniilled, X in this case is not laiming reimbursement for the repair allegedly done by Newion Contractor, but is instead asking for damages for the delay caused by Y. (Continental Cement v Asea Brown, G.R_No. 171660. October 17, 2011) On petitioner. The limited liability under the PAGE 11 OF 60NTRAL Can OPERATIONS 2018 JUSTICE DEL CASTILLO CASE DIGESTS BAR OPERATIONS 2018 __sUSTICE DEL CASTILLO CASE DIGESTS Q: X and ¥ entered into a Contract of Lease with Corporation A. Upon expiration of the contract, both parties renewed their contract for another 8 months. However, X and Y did not pay their allotted rental fees which prompted Corporation A to demand payment of the rental fees amounting to 100k. X and Y counters non-payment due to Corporation A failing to deliver the leased premises for their intended use, thus, they (X and Y) incurred expenses for necessary repairs as well as expenses for structural defects amounting to 120k. X and Y claims that their expenses for necessary and structural repairs should be judicially compensated against the unpaid rentals. Should the unpaid rentals be judicially compensated with the expenses incurred? A: No. In order that compensation to take place, two persons, in their own right, should be debtor anct creditor of each other. In ord ler to be proper, it is necessary that (1) each ..: of the obligors be bound rncipally and that he be at the same time a principal creditor of the other: (2) both debts consist in a sum, tesnoney, oF ifthe things due are consumable, they be of the same kind, and also of the same quality if ihe latter has been stated; (3) the two debis are due; (4) the debts are liquidated and demandable, (5) Sker neither of them be any retention or controversy, commenced by third parties and communicated in. due time to the debior. In this case, X and Y failed to show that the debts are liquidated and demandable. A diaim Is liquidated when the amount and time of payment is fixed. When the defendant, who has any Lntiauidated claim. sets it up by way of counterclaim, and a judgment is rendered liquidating such claim, it Ce he Compensated against the plainti’s claim from the moment it is hquidated by judgment. ‘Compensation takes place only if both obligations are liquidated. (Selwyn Lao and Edgar Manansala vs ‘Special Plans Inc, G.R. No. 164791 June 29, 2010) @: Corporation A purchased from Corporation B various reinforcing steel bars. Corporation made payments but it eventual lly defaulted. Corporation B filed a complaint for sum of money. CA [tled that applicable interest rate is 24% as provided in the sales invoice. Is 24%, the applicable Interest rate? A: Yes. The sales invoices expressly stioulated the payment of interest and attomey's everdue accounts and collection suits. The vales invoices are in the nature of contracts of adhesion Contracts of adhesion are as binding as ordinary contracts. Those who adhere to the contract are in reallly free fo reject it enirely and if thay anhera, they give their consent. Considering that Corporation A is Mot a small ime construction company, having such construction projects as the MRT Ill and the Mauban Power Plant, Corporation is presumed to have full knowledge and to have acted with due care OF, at the very least, 1o have been aware of the terms and conditions of the contract. Thus, the sales invoices are binding on Corporation A. (Asian Con struction and Development Cerporation v. Cathay Pacific Steel Corporation, G.R. No. 187942, June 29, 2010) fees in case of Q: W owned Lot No. 9 located at Pardo, Cebu City and left it intestate to his six heirs. Four of them sold their respective shares to X. An expropriation case was instituted against the property in Question and X wanted {o withdrav/ his share in the expropriation payment. Tne other two heirs who did not sell their shares, ¥ and Z, claim that under the Deed of Sale executed by thelr four co. heirs, X agreed to additional obligation regarding the payment of estate taxes. Y and 7 filed for specific performance against X to enforce the alleged additional obligation. Can Y and Z maintain their action? A: No. Article 1311 of the Civil Code provides that contracts take effect only between the parties, their assigns and heirs. Thus, only a party to the contract can meintain an action to enforce the obligations arising under said contract. In this case, Y and Z were not parties to the sale executed by their co-heirs. It is ue that third parties may seek enforcement of a contract under the second paragraph of Article 1311, which provides that “if a contract should contain some stipulation in favor of a thitd person, he may demana its fulfilment.” This refers to stipulations pour autrui. However, the written contracts of sale in this case contain no such stipulation in favor of ¥ and Z. Thus, they cannot enforce the obligations under the Deed of Sale because they were not parties to it and neither was there a stipulation made in favor of them as a third party. (Pacres v. Heirs of Cecilia Ygofa, G.R. No. 174719, May 5, 2010) PAGE 12.0F 60 cae 1CUaorerarions 718 JUSTICE DEL CASTILLO CASE DIGESTS SAR OPERATIONS 7018 _AUSTICE DEL CASTILLO CASE DIGESTS Q: Two parcels of land were entrusted as administrator to X, one out of seven children, who are al! heirs and received their shares in the fruits of the properties. After some time, two others out of the seven children, Y and Z, had their shares withheld by the administrator. This is shown through the repeated entries of X in the book of accounts, showing that Y and Z are no longer entitled to share the fruits starting from July 17, 1986. Gn November 4, 1990, a written demand letter for Partition were signed by the heirs, Y and Z included, Subsequently, when X failed to do so, they fied 3 complaint for partition on February 23, 1993. X agreed with the partion, but claimed that ¥ ar a ad aiready relinquished their shares; whereas Y and Z claim that they are entitled to such Shares. X posits that the two heirs are estopped by iaches from asserting thelr entitlement to qrares in the subject properties. Are Y and Z estopped to asse-" “air entitlement to the shares in the properties? A’ No. Laches is the failure of or neglect for an unrea: which by exercising due diligence coula or should hi uly 8 Zope, is: Y and Z are not guity of laches. (Amoila Hebron v. Franco Loyola, GR. No. 168960. uly 5, 2010) of contract, this did not absolve X's criminal liability, because AUER 2orsement affects only the civil obligation of X. Given this, is X sill lable for eaters, despite the presence of the Debt Settlement Agreement between them? cls only civil ability, ané not the criminal liabity. Hence, in this case, Lay Debt Settlement Agreement extinguishes meray the civil aspect of X's habilty as a corporate ently, but not the criminal ability of the persons who actualy commited the crime of estata against the tony (Motropolian Bank and Trust Co. v. Rogelio Reynaldo, G R. No. 164538, August 9, 2010: PAGE 13 OF 60Sikoperarton 018 JUSTICE DEL CASTILLO CASE DIGESTS BAR OPERATIONS 20¢__USTICE DEL CASTILLO CASE DIGESTS : X, an baloi descendant, claims ownership of a land in Baguio against the occupants of such land, who have been iiving in such land for more than 30 years, and are cousins-in-aw of X, hereinafter Y and Z. This was triggered by the fact that Y and Z sold portions of the land to W ancl U. Upon tral, a resolution from the Community Special Task Force on Ancestral Lands (CSTFAL) of the DENR was presented by X, purporting that the land is their ancestral land. Y and Z claims that they came into possession by tolerance of another person. The CSTFAL resolution was given more credence and was accepted by the court and by both parties, and as such, judgment was rendered in faver of X up to the CA. On appeal to the SC, Y and Z argue that the courts have no jurisdiction to rule on the matter by virtue of the IPRA, because the law gives original and exclusive jurisdiction over disputes involving ances‘--! lands and domains to the NC'P, and Provides that customary laws and practices of indigenous groups shali be used to resolve disputes, Did the trial court have jurisdiction to decide the case? & Yes, the trial court had jurisdiction to decide the case. Such issue of lack of jurisdiction was raised for the first time in the entire proceedings of the case. As @ rule, objection over subject-matter jurisdiction may be raised at any time of the proceedings, hecause jurisdiction cannot be waived by the parties OF Nested by agreement of the parties. Jurisdiction is vested by the law prevailing at the time of the filing of the complaint. An exception to this rule is when a party is barred by laches to raise the court's lack of jurisdiction. In this case, at the time the complaint was filed, the IPRA was already in effect but Y and Z never raised the same as a ground for dismissal-they neglected to ‘ake IPRA into consideration. They proceeded to trial, all the time aware of the exi istence of the IPRA. Itis oniy before the SC, 8 years after {the complaint, after the trial court had already conducted a full-blown trial and rendered a decision on the merits, afler the CA made a review, and after Y and Z have encountered adverse decisions, that Petitioners raise the issue of lack of jurisdiction. Hence, they are barred by laches from raising it under the Circumstances. (Delfin Lamsis v. Margarita Semon Dong-E, G.R. No. 173021, October 20, 2010) ©: Atty. X obtained a loan of 400k from ¥. It had an agreed interest of 3.5%. When the obligation to Pay was duo, Atty. X failed to settle his oblig ions despite demands from Y. Atty. X filed a counterclaim saying that he was Y's lawyer on several occasions and that in fact, Y owes Atty. X attorney's fees of 500k. The RTC ordered Y to pay his monetary obligations plus interests until fully paid. Additionally, there was no pronouncement on attorney's fees and cost of suit. Y contends that the trial court grievously erred in the implementation of the decision. Should the absence of a speci jount in the decision representing Atty. X's counterclaim the same could be validly offset against the specific amount of eward mentioned in the decision in favor of Y? A: Yes. In order that compensation to take place, two persons, in their own right, should be debtor and creditor of each other. in order to be proper, it is necessary that (1) each one of the obligors be bound principally and that he be at the same time a principal creditor of the other: (2) both debts consist in of money, or if the things due are consumable, they be of the same kind, and also of the same quality f the taller has been stated; (3) the two debis are dve; (4) the debts are liquidated and demandable: (5) ‘over neither of them he any retention or controversy, commenced by third parties and communicated in due time to the debtor. asum In the instant case, both obligations are liquidated. Ally. X has the obligation to pay his debt due to Y in the amount of 400k with interest at the rate of 3.5% per annum until fuly paid. -Y. on the other hand, has the obligation to pay attorney's fees which the RTC had already determined to be equivalent to whatever ‘amount recoverable from X. The said attorney's fees were awarded by the RTC on the counterclaim of X on the basis of “quantum merui for the legal services he previously rendered to Y. (Jesus Montemayor v Vicente Millora, G.R. no, 168251 July 27, 2011) PAGE 14 0F 60qi ATENEO CENTRAL JUSTICE DEL CASTILLO CASE DIGESTS sinoreranows aire __ JUSTICE DEL CASTILLO CASE DIGESTS @: Corporation A and X entered into a Warehousing Agreement. Corporation A began delivering feeds to X's warehouse. X then delivered three land titles to Corporation A as collateral for the feeds warehousing. Corporation A informed X that it was terminating the contract because of X's violation of the agreement. According to their agreement, the warehouse operator should only release stocks to Corporation A’s sales personnel after the latter presents a clearance to withdraw stocks. X released stocks without the necessary clearance. Corporation A now argues that X and his bodegero admitted in open court that they issued stocks directly to customers without clearance. Was there a breach in the contract? Yes. These admissions were ignored by the trial and appellate courts, which seemed to brush off X's negligence as understandable because he was 6 r~*~e in the warehousing business. But one’s newness to the business is not an excuse to violate the clear terms of one’s contract. A seasoned businessman uch as X (who admitted in open court to having several successful businesses) should have been alert {o the dangers of contravening the clear terms of one’s contract. He should not have deviated from the Procedure provided in the contract in the absence of any amendment therein. X's total reliance on the word of Corporation A's sales personnel, contrary to the written contract, is a clear act of negligence. A Contract is the law between the parties and those who are guilty of negligence in the performance of their obligations ars liable for damages. (Swift Foods inc. v. Sps. Jose Maleo and Irene Mateo, G.R. No. 170486, September 12, 2011) Q: Corporation A obtained the services of Corporations B and C to repair its motor. Corporations. B and € failed to repair the motor so Corporation A filed a complaint for sum of money and damages. Corporations B and C argue that under Clause 7 of the General Conditions, their liability does not extend to consequential damages. Are Corporations B and C jiable? A: Yes. Corporations B and C failed to show that Corporation A was duly furnished with a copy of General Conditions so itis not binding on Corporation A. Under Article 1226 of the Civil Code, the penalty clause takes the place of indemnity for damages and the payment of interests in case of non-compliance with the. Obligation, uniess there is a stipulation to the contrary. In this case, since there is no stipulation to the contrary, the penalty in the atnount of 967.25 per day of delay covers all other damages (i¢. production loss, labor cost, and rental of the crane) claimed by Corporation A. (Continental Cement Corporation v, Asea Brown Boveri, G.R No. 171660, Outover 17, 2011) Q: Corporation A executed a Memorandum of Agreement with Corporation B undertaking the construction of a condominium on a parcel of land owred by Corporation B. In their agreement, they will share the profits for every condominiuin unit sold. Under Section 2.4 of the MOA, if Corporation A fails to start the construction works within the thirty (30) working days from date all Felevant permits and licenses from concerned agencies are obtained, or within six (6) months from the date of the execution of this Agreement, whichever is earlier, or at any given time abandon the same or otherwise commit any breach of their obligations and commitments under this Agreement, this agreement shall be deemed terminated and cancelled without need of judicial action by giving thirty (30) days written notice to Corporation A who hereby agrees to abide by the decision of Corporation 8. Corporation A was not able to start construction becavse it could not secure building permits for § months. Can the MOA be rescinded? ‘A: Yes, the parties may validly stipulate a unilateral rescission of their contract. Corporation B has every right to rescind the contract under the terms of the MOA. The Court also held that rescission constitute & mutual restitution of the things pursuant to Article 1191 of the Cwil Code. In case both parties have committed a breach of the obligation, the liability of the fist infractor shall be equitably tempered by the courts. if it cannot be determined which of the parties first violated the contract, he same shail be deemed extinguished, and each shall bear his own damages. The first infractor cannot be determined in this case but it cannot be conclusively presumed who is the first infractor, thus both parties shail bear the damages. (Goldloop Properties Inc. v. Government Service Insurance System, G.R. No. 171076, August nae PAGE 15 OF 60RAL Ske Secrarions 2518 JUSTICE DEL CASTILLO CASE DIGESTS BAR OPERATIONS 2018 _AUSTICE DEL CASTILLO CASE DIGESTS : Lots H, G, and F were lands of the public domain pursuant to Proclamation No. 1 and 2. Lots G and F became open for disposition to qualified applicants while Lot H remained part of the reservation now a public park pursuant to Proclamation No. 3. The record shows that X and Y petitioned the President to have Lots G and F taken out of the reservation because they claim they have acquired vested private rights over these lots through their predecessor. With regard to Lot H, X and ¥ filed applications for the issuance of individual miscellaneous sales patents and 16 original certificates of titles (OCTs) covering Lot H were subsequently issued in the name of X and ¥. The titles were then conveyed to Retirement and Separation Benefits Corporation A. Republic of the Philippines filed a complaint for reversion, canceliation and annulment of said tities on the basis that they were issued over 3 park which is classified as inalienable and non- disposable pubiic land. X and Y argue that they likewise acquired vested rights over Lot H for having occupied the same for more than 30 years. Are X and Y barred by the principle of estoppel? A Yes, The principle of estoppel bars one from denying the truth of a fact which has, in the contemplation of law. become settled by the acts and proceedings of judicial or legislative officers or by the act of the party himself. either by conventional writing or by representations, express or implied or in pais. In the case at bar, X and Y only lobbied for the exclusion of Lots G and F from the reservations while they did Rot question Proclamation No.3. Moreover, when Proclamation No. 3 was issued, they did not institution action to question its validity, using a5 cause of action their claimed ownership and title over the land. They did not fle suit to invalidate it but merely sat and waited for the State to declare them beneficiaries of the land. Thus, X and Y are estopped from acquiring ownership of the land based on Proclamation No. Sand their actions. (Republic v. AFP Retizement, G.R. No. 180463, January 16, 2013). Q: X obtained two loans froin Bank A which was secured by a mortgage in favor of the latter. X was ‘not able to pay and comply with Bank A’s demands despite multiple restructuring agreements. Because of this, Bank A cancelled the Restructuring Agreement and foreclosed X's mortgage. X is arguing that their obligation should be deemed extinguished because it was Bank A's fault that they were not able to comply with such obligation. Moreover, X is alleging that Bank Accharged them excessive interests and penalties net stipulation in X's promissory netes, failed to Provide the correct Statement of Accounts, and cancelled the Restructuring Agreem=nt. However, Bank A counters such argument by stating that X simply did not comply with his obligation and that it has the right to foreclose the mortgage. Was X's obligation deemed extinguished? A: No. Article 1186 of the Civil Code provides that the condition shall be deemed fulfited when the obligor voluntarily prevents its futfilment. in the case at bar, Article 1186 cannot apply because Bank A did not voluntarily prevent X from futfling his obligation. in fact, Bank A gave X multiple chances and tried to compromise several times in order for X to be able comply with Bank A's conditions. (Carlos Lim x Development Bank of the Philippines, G.R. No. 177050, July 1, 2013) PAGE 16 OF 60(TRAL Eee Ne 2018 JUSTICE DEL CASTILLO CASE DIGESTS BAR OPERATIONS 2018 __JUSTICE DEL CASTILLO CASE DIGESTS Q: In a contract to sell a house and lot, X, the seller, agreed with Y, the buyer, that the payment would be in installments. In their agreernent, if Y failed to pay half of the price within 3 months, the contract of sale would be cancelled. Y was able to pay the down payment, however she failed to pay Subsequent amortization. Is a delay in the payment of installment a substantial breach of obligation as to warrant rescission? ‘A: NO, in a contract to sell, payment of the price is positive suspensive condition. Failure of which is not a breach of contract warranting rescission under Article 1191 of the Civil Code, but rather just an event thal prevents the supposed seller from being bound to convey tte to the supposed buyer. The Contract to sell entered by the p...s refers to real property on installment basis, in which Art. 1191 cannot apply since they are governed by the Maceda Law. However, there being no breach, Y is stil not excused from being made liable for interest on the installments due from the date of default until fuly paid. Tender of payment, a manifestation by the debtor of a desire to comply with or pay an obligation, asserted by Y for the accrual of interest to be suspended is not a valid defense because for a tender of Payment to take effect it must be accompanied by the means of payment and debtor must take immediate step to make a consignation, the deposit of the proper amount with a judicial authority, then interest is. Suspended from the time of such tender. (Sps. Nameal and Lourdes Bonrostro v. Sps. Juan and Constancia Luna, G.R. No. 172346, July 24, 2013) Q: X is a member of mutual benefit associ on A duly organized and existing under Philippine laws and engaged in the business of developing low-cost housing piojects for police officers. X filed an application with said association to purchase a piece of property. X then executed a Loant and Mortgage Agreement with mutual benefit association A and bank B. A Deed of Absolute Sale and the Transfer Certificate Title was issued in favor of X. Meanwhile, mutual benefit association A was able to take possession of X's loan documents and the TCT while X was unable to pay the loan/consideration for the property. X filed a complaint for consignation of loan payment, recovery of title and cancellation of mortgage annotation against mutual benefit association A. X alleges that as a result of bank B's closure and their claim that the loan papers could not be located, X was left in a quandary as to where he should tendor full payment of the loan. X was ready to pay the loan in full; however, under the circumstances, he does now know which of the two -- mutual benefit association A or bank B - should receive full payment of the purcha.2 price. or to whom. tender of payment must validly be made. Was there a valid consignation? A: Yes. Under Article 1256 of the Civil Code, the debtor shall be released from responsibility by the onsignation of the thing or sum due, without need of prior tender of payment, when the creditor is absent oF unknown, of when he is incapacitated to receive the payment at the time itis due, or when two or more ersons claim the same right to collect, or when the title to the obtigation has been lost. In the case at hand, the Supreme Court held that a case for consignation has been made out, a3 it now appears that there are two entities which X musi deal with in order to fully secure the tile to the property. (Sps. Oscar ‘and Thelma Cacayorin v. Armed Forces, G R. No. 171298, April 15, 2013) : X obtained a loan from Bank with X executing a mortgage of house and lot in favor of Bank. X defaulted so Bank foreclosed on the mortgage. X filed a Petition to nullify the foreclosure proceedings. X claims that she paid P6,000 as evidenced by Bank's Official Receipt. Should Bank return the P6,0007 A: Yes. Bank was not entitled to receive the said amount, as itis deemed fully paid from the foreclosure of X's property since its bid price at the auction sale covered all that X o ved it by way of principal, interest, attorney's fees and charges. Bank thus must retin the same to X. "H something is received when there is, ho right to demand it, and it was unduly delivered through mistake, the obligation to return it atises." (Virginia Venzon v. Rural Bank of Buenavista, GR. No. 178031, August 28, 2013) PAGE 17 OF 60L ATENEO CATIONS 2018 JUSTICE DEL CASTILLO CASE DIGESTS BAR OPERATIONS 2078 __ JUSTICE DEL CASTILLO CASE DIGESTS @: X and ¥ opened with Bank A a Joint Dollar Account with an initial deposit of US$14,000.00. X and Y wanted to withdraw money from the account, however Bank A issued a “Hold Out” order against X and Y's accounts and refused to release their deposit. Did Bank A breach its contract with X and 7 ‘A: Yes, The Court held that Bank A'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 ancl existing obligation arising from any of the sources of obligation enuimeratad in Article 1187 of the Civil Code, to wit law, contrac... .uiasi-contracts, delict, and quasi-dalict. In this case, Bank A falled to show that X and ¥ have an obligation to it under any law, contract, quasi-contract, delit, or quasi-delic. Bank A 's guily (of breach of contract when it unjustifiably refused to release respondents’ deposit despite demand. (Metropolitan Bank v. Ana Grace Rosales, G.R. No. 183204, January 13, 2014) Were allegedly deposited by X's representative to X's Trust account and were later withdrawn by the latter. X refused to return such funds after the bank demanded its return which snade the valet bank unilaterally set off the outstanding balanco in all of X's accounts. Thereafter, the bank filed a Eamblaint seeking to recover PEM plus legal interest per aninuim. This complaint was dismissed by the lower and appellate court. The bank argues that the determination of whether the CA erred retroactively applying the 2008 MORB poses a legal question, the samo deserves scant consideration. Is the bank correct? ‘AC No. True, the CA included in the duties of banks to keep an , the contract that As a general rile, a contract is the law between the parties, Contract is perfected, the parties aro bound n:: only to ihe fulfilment of what Tas been expressly siipulated but also to all consequences which, according to their nature. may be in keeping with good faith. usage and law’ Also, the stipulations of the contract being the law between the parties, courts have no alternative but to enforce them as they were agreed [upon] and writen x x » (Landbank of he Philippines v. Emmanuel Onate, G.R. No. 192371, January 15, 2014) GX entered into a rice supply contract with Corporation A with X purchasing rice from Corporation A. The total transaction amounted to Php 3.8M which was covered by 9 postdated checks issued by X in her personallchecking account with Corporation B. However, the checks were all dishonored due to insufficient funds or drawn against closed account. Thus, Corporation A filed a complaint for sum of money against X and Y in order to hold them solidarily liable on the rice supply contract. Corporation A claimed that Y verbally guaranteed X's issuance of checke Can Y be held solidarily liable with x? A No. Wellantrenched is the rule that soliary obligation cannot lightly be inietred. There is a soliary liability only when the obligation expressly so states, when the law so provides or when the nature of ne obligation so requires. In this case, the allegations that Y guaranteed X's checks and that she consented to be held soldaniy liable with X under the latter's rice sug aly contract with Corporation A are hardly Credible since this was not in writing, but just @ verbal assurance. Furthermore, as a general rule. a contract affects only the partes toi, and cannot be enforced by or against a person who is not a party thereto. ILis a basic principle in law that contracts can bind only the parties who had entered into it & cannot favor or prejudice a third person, Under Aticle 1311 of the Civil Code, contracts take effect only PAGE 18 OF 60TRAL, Ae Seerartons 268 JUSTICE DEL CASTILLO CASE DIGESTS nro __—@$@$ TICE CASTILLOCAErr between the parties, their assigns and heirs. Thus, Corporation A may sue X, but not Y, who the Court finds to be not a party to the rice supply contract. (Manlar Rice Mill vs. Lourdes Deyto, GR. No. 191189, January 29, 2014) 4: X Is the owner of a parcel of land leased to Y. Y failed to pay the monthly rental, prompting Z to file a case of unlawful detainer against him. When Y leased the said property, it was just bare land. Y spent substantial amounts of money in developing the land by building improvements such as. water dikes, drainage and electrical system. The value cf unpaid rentals is P140,000.00. Meanwhile, pursuant to their contract, there exists an amount of P200,000.00 representing the rental deposit of Y. Can compensation take place between Y and Z, considering the amount oF unpaid rentals a...’ :he rental deposit? ‘A: No, There is no compensation in this case. The violation of the lease through non-payment of rent is what constitutes the cause of action. Hence, once the failure to pay rent is established, a cause of action for uniawful detainer arises. There will exist a creditor-debtor relationship only when the lease contract is terminated, prompting the lessor to reium the rental deposit. (Sps. Manzanilla and Velasco v. Waterfield Industries Corporation, G.R. No.177484, July 18, 2014) Q: X went to a casino and handed his brothers Y and Z several chips valued at 50k, Sor the use at the casino. Thereat, a company personnel accosted his brothers and confiscated his casino chips, and failed to return the same to him despite demand. Brothers Y and Z were accused of stealing casino chips from the casino. They were made to confess that the chips were supplied by a casino employee. Is Y the lawful possessor of the casino chips entitling him to collect from the casino? A: Yes. Though casino chips do not constitute legat tender, tnere is no law which prohibits their use or {rade dutside of the casino which uses them. Since casino chips are considered to have been eychanged with their corresponding representative value- it is more reason that the Court should require the casino 10 prove convincingly and persuasively that the chips it confiscated from Y and Z were indeed stolen from it If the casino cannot prove its less, then Art. §99 cannot apply, that the presumptions inat the chips were exchanged for value remains. (Subic Bay Legend Resorts and Casinos v Femandez, G.R. No. 193426 Septemher 29, 2014) Q: Corporation A bought a property from Corporation 8 for Php 4M, as evidenced by a deed of absolute sale. It was stated in the deed of absolute sale that Corporation B will defend its title to said property against the claims of any person. However, the said property had already been the Subject of pending litigation between Corporation 8 and X, former owner. The trial court rendered @ decision in favor of X and thus, nullifying the sale betwean Corporation A and Corporation B. Due to the negligence of Corporation B, Corporation A was evicted from the property wherein it had already begun construction of a new building. Hence, Corporation A filed a complaint against Corporation B for breach of contract and prayed for damages. Is Corporation B liable for breach of contract and warranty against eviction? A: 1. Yes. Negligence may be occasionally so gross as to amount to malice or bad faith. In culpa onitactual or breach of contract, gross negligence of a party amounting to bad faith is a ground for the recovery of damages by the injured party. n this case, the record reveals tnat Corporation B was grossly negiigent in the handling and prosecution of the case when it failed to file the required appellant's brief late filing and payment of legal fees, and failure to comply with the SC Circular No. 28-1. As a result the trial court's decision became final and executory, and Corporation A was evicted from the property. Such negligence in the handling of the case is far from coir cidental, itis decidedly faith. ring, and amounts to bad 2. Yes. Eviction shall take piace whenever by a final judgment based on a right prior to the sale or an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased. In case PAGE 19 0F 600 CENTRAL Sie overarions cul JUSTICE DEL CASTILLO CASE DIGESTS ————___________USTICE DEL CASTILLO CASE DIGESTS eviction occurs, the vendee shall have the ri value which the thing sold had at the time the expenses of the contract, if the ver ‘ght to demand of the vendor, among others, the return of thee of the eviction, be it greater or less than the price of the sales ndee has paid them; and the damages and interests, ancl ‘omamental expenses, if the sale was made in bad faith. In this case, however, here appears to be NO dispute as to the value of the building constructed on the property by A and the amount of the award for damages. (Bignay Ex-im Philippines Inc. vs. Union Bank of the Philippines, GR. No. 171590, February 12, 2014) Recause side dumping was not allowed under their contract. Despite such prohibition, Corporation A proceeded with the side dumping. Subsequently, Corporation A claims for payment but Corporation 8 refused on the ground of breach of contract by the former. Was Corporation B. Justified in its refusal to pay Corporation A on the ground of breach of contract? ‘A. Yes. Itis a basic principte in law that contra ‘complied with in good faith. In this case, the Spoils. Thus, Corpcration A cannot unilater cts have the force of law between the parties and should be contract specifically provides the manr.er of disposing dredge rally change the manner of disposal without first amending the F approval of Corporation ®. Otherwise, Corporation A would be guilty of breaching the contract. Without primary relief on the payment of damagi ‘ore the principal action is based on action for damages. Consequently, the complaint should be dismissed because the amount of damages is clearly not within the jurisdiction of the trial court. Was X correct in his argument? ‘A: No. Under Art, 1170 of the Givi Code, Breach of Contract may also be the cause of action in a Complaint for damages. X's counsel designated the Complaint as one for “Breach of Contract & Damages,” which is a misnomer and inaccurate. There is no such thing as an “action for breash of Contract” Rather, breach of contract is @ cause of ection, but not the action of reli itself. Furthermore Breach of contiact may be the cause of action in a complaint for specific performance or rescission of Contract, both of which are incapable of pacuniary estimation and, therefore, cognizable by the tial coun However, breach of contract may also be the cause of action in a complaint for damages. (Sps, Romeo Pajares and Ida Pajares v. Remarkable Laundry, G.R. No, 212690, February 20, 2017) PAGE 20 OF 60,oe SE CaATIONS 2018 JUSTICE DEL CASTILLO CASE DIGESTS: a SE’ Q: X obtained a foan from Y which was secured by a Real Estate Mortgage. In addition, X also executed a Deed of Assignment over the rental payments in favor of ¥. Subsequently, X filed 2 Complaint for Untawful Detainer against Y, alleging that the latter failed to pay its monthly rentals. {In its defense, Y claimed that a certain Z claimed to be the owner of the leased property and requested that the rentals be paid directly to the latter, and thus, Y deposited the rentals in a ‘separate non-drawing savings account for the benefit of X. Corollary, Y argues that it cannot be held lable because the deposit is considered as a valid consignation that will excuse the latter from any liability to X. Was there proper consignation in this case? ~~ ‘9. Under Art. 1256 of the Civil Code, one of the requisites for a valid consignation is that “the amount o« thing due was placed at the disposel of the court.” Valid consignation is equivalent to a valid payment ‘which wall result to an extinguishment of an obligation. However, failure in any of the requirements of such ‘Provision is enough ground to render a consignation ineffective, and consequently, will not excuse the Party in complying with his obligations. In the present case, Y's deposit of the subject monthly rentals in a ‘non-drawing savings account is not the Consignation contemplated by law, precisely because it does not Place the same at the disposal of the court. Consequently, Y's obligation to pay rent remained subsisting, as the deposit of the rentals cannot be considered to have the effect of payment. Consignation is necessanty judicial; it is not allowed in venues other than the courts. (Philippines National Bank v. iibeth Chan, G.R. No. 206037, March 13, 2017) @ X borrowed Php 600K from Y which was secured by real estate mortgage over 2 parcels of land. Thereafter, X executed 2 deeds of absotute sale over the said properties in favor of Z, Y's daughter, for Php 900K each which was later or sold by Z to Y for the same price. Y then sent Gemand lettor to X and her husband to vacate the property. This prompted the X to file a complaint for declaration of nullity of contract of sale and mortgage. X alleged that ¥ deceived X into signing, the deods of absoluta sale in favor of Z, as X merely intended {o renew the mortgages over the 2 lots. RTC rendered decision in favor of Y. However, the CA reversed it and held that the Pursuant to Art. 1602 of tive Civil Code and held that Thereafter, B of A to pay the outstanding ‘ation of the instrument betore the instrument needed before filed for judicial foreclosure of the propertius due to the failure obligation. However, X claimed that there should be first a reform: the foreciosure proceedings can be held. Is reformation of foreclosure proceedings ‘A: No Reformation of an inetrument is @ remedy in equity where a writen instrument cleady executed is ‘alowed by law to be reformed or construed to express or conform to the real intention of the parties, The rationale of the docirine is that it would be unjust and inequitable to allow the enforcement cf a written, instrument that does not express or reflect the real intention of the parties. In this case, the CA decision ruling that the Deeds of Absolute Sale were actually mortgages, it, in effect, had reformed tha instruments based on the true intention of the parties. Thus, the fling of a separate complaint for reformation ot instrument is no longer necessary because it would only be redundant and a waste of time. (Sps. Firma ‘and Agnes Annabelle Dean-Rosario vs, Priscila Alvar, G.R. No. 212731, September 6, 2017) PAGE 21 OF 60