HO-38 - Chair - S Cases Civil Law - Legal Edge

2019 BAR REVIEW CIVIL LAW
CHAIR’S CASES Handout No. 38

JUSTICE PERLAS-BERNABE
GENERAL PRINCIPLES
Abuse of Rights
While the Court mindfully notes that damages may be recoverable due to an abuse of right
under Article 21 in conjunction with Article 19 of the Civil Code of the Philippines, the following
elements must, however, obtain: (1) there is a legal right or duty; (2) exercised in bad faith; and
(3) for the sole intent of prejudicing or injuring another. Records reveal that none of these
elements exists in the case at bar and thus, no damages on account of abuse of right may he
recovered. Padillo vs. Rural Bank of Nabunturan, Inc., 689 SCRA 53, G.R. No. 199338 January
21, 2013
Article 20 of the Civil Code provides that every person, who, contrary to law, willfully or
negligently causes damage to another, shall indemnify the latter for the same.
Similarly, Article 2176 of the Civil Code states: Art. 2176. Whoever by act or omission causes
damage to another, there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no preexisting contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter.
In this case, it is undisputed that the proximate cause of the loss of Sps. Mamaril’s vehicle was
the negligent act of security guards Peña and Gaddi in allowing an unidentified person to drive
out the subject vehicle. Proximate cause has been defined as that cause, which, in natural and
continuous sequence, unbroken by any efficient intervening cause, produces the injury or loss,
and without which the result would not have occurred.
Moreover, Peña and Gaddi failed to refute Sps. Mamaril’s contention that they readily admitted
being at fault during the investigation that ensued. Mamaril vs. The Boy Scout of the
Philippines, 688 SCRA 437, G.R. No. 179382 January 14, 2013
The time-honored principle is that he who seeks equity must do equity, and he who comes
into equity must come with clean hands.
Conversely stated, he who has done inequity shall not be accorded equity. Thus, a litigant may
be denied relief by a court of equity on the ground that his conduct has been inequitable, unfair
and dishonest, or fraudulent, or deceitful. Beumer vs. Amores, 686 SCRA 770, G.R. No. 195670
December 3, 2012
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Equity as a rule will follow the law and will not permit that to be done indirectly which,
because of public policy, cannot be done directly. Surely, a contract that violates the
Constitution and the law is null and void, vests no rights, creates no obligations and produces
no legal effect at all.
In any event, the Court cannot, even on the grounds of equity, grant reimbursement to
petitioner given that he acquired no right whatsoever over the subject properties by virtue of
its unconstitutional purchase. xxx Corollary thereto, under Article 1412 of the Civil Code,
petitioner cannot have the subject properties deeded to him or allow him to recover the money
he had spent for the purchase thereof. The law will not aid either party to an illegal contract or
agreement; it leaves the parties where it finds them. Indeed, one cannot salvage any rights
from an unconstitutional transaction knowingly entered into. Beumer vs. Amores, 686 SCRA
770, G.R. No. 195670 December 3, 2012
Principle of Unjust Enrichment
Neither can the Court grant petitioner’s claim for reimbursement on the basis of unjust
enrichment. As held in Frenzel v. Catito, a case also involving a foreigner seeking monetary
reimbursement for money spent on purchase of Philippine land, the provision on unjust
enrichment does not apply if the action is proscribed by the Constitution, to wit: Futile, too, is
petitioner’s reliance on Article 22 of the New Civil Code which reads:
Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or
legal ground, shall return the same to him.
The provision is expressed in the maxim: “MEMO CUM ALTERIUS DETER DETREMENTO
PROTEST” (No person should unjustly enrich himself at the expense of another). An action for
recovery of what has been paid without just cause has been designated as an accion in rem
verso. This provision does not apply if, as in this case, the action is proscribed by the
Constitution or by the application of the pari delicto doctrine. It may be unfair and unjust to bar
the petitioner from filing an accion in rem verso over the subject properties, or from recovering
the money he paid for the said properties, but, as Lord Mansfield stated in the early case of
Holman v. Johnson: “The objection that a contract is immoral or illegal as between the plaintiff
and the defendant, sounds at all times very ill in the mouth of the defendant. It is not for his
sake, however, that the objection is ever allowed; but it is founded in general principles of
policy, which the defendant has the advantage of, contrary to the real justice, as between him
and the plaintiff.” Beumer vs. Amores, 686 SCRA 770, G.R. No. 195670 December 3, 2012

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PERSONS AND FAMILY RELATIONS
Article 26 of the Family Code — which addresses foreign marriages or mixed marriages
involving a Filipino and a foreigner — allows a Filipino spouse to contract a subsequent
marriage in case the divorce is validly obtained abroad by an alien spouse capacitating him or
her to remarry.
At the outset, it bears stressing that Philippine law does not provide for absolute divorce;
hence, our courts cannot grant it. However, Article 26 of the Family Code — which addresses
foreign marriages or mixed marriages involving a Filipino and a foreigner — allows a Filipino
spouse to contract a subsequent marriage in case the divorce is validly obtained abroad by an
alien spouse capacitating him or her to remarry.
The provision reads: Art. 26. All marriages solemnized outside the Philippines in accordance
with the laws in force in the country where they were solemnized, and valid there as such, shall
also be valid in this country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37
and 38. Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall likewise have capacity to remarry under Philippine law.
Medina vs. Koike, 798 SCRA 733, G.R. No. 215723 July 27, 2016
Foreign divorce decrees obtained to nullify marriages between a Filipino and an alien citizen
may already be recognized in this jurisdiction, regardless of who between the spouses
initiated the divorce; provided, of course, that the party petitioning for the recognition of such
foreign divorce decree - presumably the Filipino citizen - must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing it.
In this case, a plain reading of the RTC ruling shows that the denial of Luzviminda's petition to
have her foreign divorce decree recognized in this jurisdiction was anchored on the sole ground
that she admittedly initiated the divorce proceedings which she, as a Filipino citizen, was not
allowed to do. In light of the doctrine laid down in Manalo, such ground relied upon by the RTC
had been rendered nugatory.
However, the Court cannot just order the grant of Luzviminda.'s petition for recognition of the
foreign divorce decree, as Luzviminda has yet to prove the fact of her "Divorce by Agreement"
obtained in Nagoya City, Japan and its conformity with prevailing Japanese laws on divorce.
Luzviminda Morisono v. Ryoji Morisono, et al., G.R. No. 226013, July 2, 2018

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The law confers jurisdiction on Philippine courts to extend the effect of a foreign divorce
decree to a Filipino spouse without undergoing trial to determine the validity of the
dissolution of the marriage.
In Corpuz v. Sto. Tomas, 628 SCRA 266 (2010), the Court had the occasion to rule that: The
starting point in any recognition of a foreign divorce judgment is the acknowledgment that our
courts do not take judicial notice of foreign judgments and laws. Justice Herrera explained that,
as a rule, “no sovereign is bound to give effect within its dominion to a judgment rendered by a
tribunal of another country.”
This means that the foreign judgment and its authenticity must be proven as facts under our
rules on evidence, together with the alien’s applicable national law to show the effect of the
judgment on the alien himself or herself. The recognition may be made in an action instituted
specifically for the purpose or in another action where a party invokes the foreign decree as an
integral aspect of his claim or defense. Medina vs. Koike, 798 SCRA 733, G.R. No. 215723 July
27, 2016
Since our courts do not take judicial notice of foreign laws and judgment, our law on evidence
requires that both the divorce decree and the national law of the alien must be alleged and
proven like any other fact.
In Garcia v. Recio, 366 SCRA 437 (2001), it was pointed out that in order for a divorce obtained
abroad by the alien spouse to be recognized in our jurisdiction, it must be shown that the
divorce decree is valid according to the national law of the foreigner. Both the divorce decree
and the governing personal law of the alien spouse who obtained the divorce must be proven.
Since our courts do not take judicial notice of foreign laws and judgment, our law on evidence
requires that both the divorce decree and the national law of the alien must be alleged and
proven like any other fact.
Considering that the validity of the divorce decree between Doreen and Michiyuki, as well as
the existence of pertinent laws of Japan on the matter are essentially factual that calls for a
reevaluation of the evidence presented before the RTC, the issue raised in the instant appeal is
obviously a question of fact that is beyond the ambit of a Rule 45 petition for review. Medina
vs. Koike, 798 SCRA 733, G.R. No. 215723 July 27, 2016

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It has consistently been held that psychological incapacity, as a ground to nullify a marriage
under Article 36 of the Family Code, should refer to the most serious cases of personality
disorders clearly demonstrative of an utter insensitivity or inability to give meaning and
significance to the marriage.
The policy of the Constitution is to protect and strengthen the family as the basic autonomous
social institution, and marriage as the foundation of the family. As such, the Constitution
decrees marriage as legally inviolable and protects it from dissolution at the whim of the
parties. Thus, it has consistently been held that psychological incapacity, as a ground to nullify a
marriage under Article 36 of the Family Code, should refer to the most serious cases of
personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning
and significance to the marriage. It must be a malady that is so grave and permanent as to
deprive one of awareness of the duties and responsibilities of the matrimonial bond one is
about to assume. Republic vs. Romero II, 785 SCRA 164, G.R. No. 209180, G.R. No. 209253
February 24, 2016
It should refer to no less than a mental — not merely physical — incapacity that causes a party
to be truly incognitive of the basic marital covenants that concomitantly must be assumed and
discharged by the parties to the marriage, which, as provided under Article 68 of the Family
Code, among others, include their mutual obligations to live together, observe love, respect
and fidelity, and render help and support. Del Rosario vs. Del Rosario, 818 SCRA 83, G.R. No.
222541 February 15, 2017; see also Republic vs. De Gracia, 716 SCRA 8, G.R. No. 171557
February 12, 2014
To warrant the declaration of nullity of marriage, the psychological incapacity must: (a) be
grave or serious such that the party would be incapable of carrying out the ordinary duties
required in a marriage; (b) have juridical antecedence, i.e., it must be rooted in the history of
the party antedating the marriage, although the overt manifestations may emerge only after
the marriage; and (c) be incurable, or even if it were otherwise, the cure would be beyond the
means of the party involved.
Verily, all people may have certain quirks and idiosyncrasies, or isolated traits associated with
certain personality disorders and there is hardly any doubt that the intention of the law has
been to confine the meaning of psychological incapacity to the most serious cases. Republic vs.
Romero II, 785 SCRA 164, G.R. No. 209180, G.R. No. 209253 February 24, 2016; see also
Republic vs. De Gracia, 716 SCRA 8, G.R. No. 171557 February 12, 2014

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That he married Olivia not out of love, but out of reverence for the latter’s parents, does not
mean that Reghis is psychologically incapacitated in the context of Article 36 of the Family
Code.
After a thorough review of the records of this case, the Court finds that the foregoing
requirements do not concur. As aptly pointed out by the petitioners, Reghis’ testimony shows
that he was able to comply with his marital obligations which, therefore, negates the existence
of a grave and serious psychological incapacity on his part. Reghis admitted that he and Olivia
lived together as husband and wife under one roof for fourteen (14) years and both of them
contributed in purchasing their own house in Parañaque City. Reghis also fulfilled his duty to
support and take care of his family, as he categorically stated that he loves their children and
that he was a good provider to them. Republic vs. Romero II, 785 SCRA 164, G.R. No. 209180,
G.R. No. 209253 February 24, 2016
Any doubt should be resolved in favor of the validity of the marriage and the indissolubility of
the marital tie.
Indeed, the standards used by the Court in assessing the sufficiency of psychological evaluation
reports may be deemed very strict, but these are proper, in view of the principle that any doubt
should be resolved in favor of the validity of the marriage and the indissolubility of the marital
tie. After all, marriage is an inviolable institution protected by the State. Accordingly, it cannot
be dissolved at the whim of the parties, especially where the pieces of evidence presented are
grossly deficient to show the juridical antecedence, gravity and incurability of the condition of
the party alleged to be psychologically incapacitated to assume and perform the essential
marital duties. Republic vs. Romero II, 785 SCRA 164, G.R. No. 209180, G.R. No. 209253
February 24, 2016
Absent sufficient evidence to prove psychological incapacity within the context of Article 36 of
the Family Code, the Supreme Court (SC) is compelled to uphold the indissolubility of the
marital tie.
The Court can only commiserate with the parties’ plight as their marriage may have failed. It
must be reiterated, however, that the remedy is not always to have it declared void ab initio on
the ground of psychological incapacity. Article 36 of the Family Code must not be confused with
a divorce law that cuts the marital bond at the time the grounds for divorce manifest
themselves; rather, it must be limited to cases where there is a downright incapacity or inability
to assume and fulfill the basic marital obligations, not a mere refusal, neglect or difficulty, much

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less, ill will, on the part of the errant spouse. Republic vs. Romero II, 785 SCRA 164, G.R. No.
209180, G.R. No. 209253 February 24, 2016
An expert opinion is not absolutely necessary and may be dispensed with in a petition under
Article 36 of the Family Code if the totality of the evidence shows that psychological
incapacity exists and its gravity, juridical antecedence, and incurability can be duly
established.
The evidence need not necessarily come from the allegedly incapacitated spouse, but can come
from persons intimately related to the spouses, i.e., relatives and close friends, who could
clearly testify on the allegedly incapacitated spouse’s condition at or about the time of the
marriage.
In other words, the Republic v. Molina, 268 SCRA 198 (1997), guidelines continue to apply but
its application calls for a more flexible approach in considering petitions for declaration of
nullity of marriages based on psychological incapacity.
To be clear, however, the totality of the evidence must still establish the characteristics that
Santos v. CA, 240 SCRA 20 (1995), laid down: gravity, incurability, and juridical antecedence. Del
Rosario vs. Del Rosario, 818 SCRA 83, G.R. No. 222541 February 15, 2017
Psychological incapacity must be more than just a “difficulty,” “refusal” or “neglect” in the
performance of the marital obligations; it is not enough that a party prove that the other
failed to meet the responsibility and duty of a married person.
In sum, Dr. Tayag’s assessment, even when taken together with the various testimonies, failed
to show that Jose’s immaturity, irresponsibility, and infidelity rise to the level of psychological
incapacity that would justify the nullification of the parties’ marriage.
There must be proof of a natal or supervening disabling factor in the person — an adverse
integral element in the personality structure that effectively incapacitates the person from
really accepting and thereby complying with the obligations essential to marriage — which
must be linked with the manifestations of the psychological incapacity. Del Rosario vs. Del
Rosario, 818 SCRA 83, G.R. No. 222541 February 15, 2017

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It is well to reiterate that Article 36 of the Family Code, as amended, is not a divorce law that
cuts the marital bond at the time the grounds for divorce manifest themselves; a marriage, no
matter how unsatisfactory, is not a null and void marriage.
Thus, absent sufficient evidence establishing psychological incapacity within the context of
Article 36, the Court is compelled to uphold the indissolubility of the marital tie. Del Rosario vs.
Del Rosario, 818 SCRA 83, G.R. No. 222541 February 15, 2017
The Supreme Court, in Dedel v. Court of Appeals, 421 SCRA 461 (2004), held that therein
respondent’s emotional immaturity and irresponsibility could not be equated with
psychological incapacity as it was not shown that these acts are manifestations of a
disordered personality which make her completely unable to discharge the essential marital
obligations of the marital state, not merely due to her youth, immaturity or sexual
promiscuity.
In the same light, the Court, in the case of Pesca v. Pesca, 356 SCRA 588 (2001), (Pesca), ruled
against a declaration of nullity, as petitioner therein “utterly failed, both in her allegations in
the complaint and in her evidence, to make out a case of psychological incapacity on the part of
respondent, let alone at the time of solemnization of the contract, so as to warrant a
declaration of nullity of the marriage,” significantly noting that the “[e]motional immaturity and
irresponsibility, invoked by her, cannot be equated with psychological incapacity.” In Pesca, the
Court upheld the appellate court’s finding that the petitioner therein had not established that
her husband “showed signs of mental incapacity as would cause him to be truly incognitive of
the basic marital covenant, as so provided for in Article 68 of the Family Code; that the
incapacity is grave, has preceded the marriage and is incurable; that his incapacity to meet his
marital responsibility is because of a psychological, not physical illness; that the root cause of
the incapacity has been identified medically or clinically, and has been proven by an expert; and
that the incapacity is permanent and incurable in nature.” Republic vs. De Gracia, 716 SCRA 8,
G.R. No. 171557 February 12, 2014
Although expert opinions furnished by psychologists regarding the psychological

temperament of parties are usually given considerable weight by the courts, the existence of
psychological incapacity must still be proven by independent evidence.
After poring over the records, the Court, however, does not find any such evidence sufficient
enough to uphold the court a quo’s nullity declaration. To the Court’s mind, Natividad’s refusal
to live with Rodolfo and to assume her duties as wife and mother as well as her emotional

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immaturity, irresponsibility and infidelity do not rise to the level of psychological incapacity that
would justify the nullification of the parties’ marriage. Indeed, to be declared clinically or
medically incurable is one thing; to refuse or be reluctant to perform one’s duties is another.
Republic vs. De Gracia, 716 SCRA 8, G.R. No. 171557 February 12, 2014
All property of the marriage is presumed to belong to the conjugal partnership, unless it be
proved that it pertains exclusively to the husband or to the wife.
Pertinent to the resolution of this second issue is Article 160 of the Civil Code which states that
“[a]ll property of the marriage is presumed to belong to the conjugal partnership, unless it be
proved that it pertains exclusively to the husband or to the wife.” For this presumption to
apply, the party invoking the same must, however, preliminarily prove that the property was
indeed acquired during the marriage. As held in Go v. Yamane, 489 SCRA 107 (2006): x x x As a
condition sine qua non for the operation of [Article 160] in favor of the conjugal partnership,
the party who invokes the presumption must first prove that the property was acquired during
the marriage. In other words, the presumption in favor of conjugality does not operate if there
is no showing of when the property alleged to be conjugal was acquired. Moreover, the
presumption may be rebutted only with strong, clear, categorical and convincing evidence.
There must be strict proof of the exclusive ownership of one of the spouses, and the burden of
proof rests upon the party asserting it. Tan vs. Andrade, 703 SCRA 198, G.R. No. 171904
August 7, 2013
Judicial Declaration of Presumptive Death
Before a judicial declaration of presumptive death can be obtained, it must be shown that the
prior spouse had been absent for four consecutive years and the present spouse had a well-
founded belief that the prior spouse was already dead. Under Article 41 of the Family Code of
the Philippines (Family Code), there are four (4) essential requisites for the declaration of
presumptive death: (1) that the absent spouse has been missing for four (4) consecutive years,
or two (2) consecutive years if the disappearance occurred where there is danger of death
under the circumstances laid down in Article 391 of the Civil Code; (2) that the present spouse
wishes to remarry; (3) that the presaent spouse has a well-founded belief that the absentee is
dead; and (4) that the present spouse files a summary proceeding for the declaration of
presumptive death of the absentee. The burden of proof rests on the present spouse to show
that all the foregoing requisites under Article 41 of the Family Code exist. Since it is the present
spouse who, for purposes of declaration of presumptive death, substantially asserts the
affirmative of the issue, it stands to reason that the burden of proof lies with him/her. He who

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alleges a fact has the burden of proving it and mere allegation is not evidence. Republic vs.
Tampus, 787 SCRA 563, G.R. No. 214243 March 16, 2016
The “well-founded belief” in the absentee’s death requires the present spouse to prove that
his/her belief was the result of diligent and reasonable efforts to locate the absent spouse
and that based on these efforts and inquiries, he/she believes that under the circumstances,
the absent spouse is already dead.
It necessitates exertion of active effort, not a passive one. As such, the mere absence of the
spouse for such periods prescribed under the law, lack of any news that such absentee spouse
is still alive, failure to communicate, or general presumption of absence under the Civil Code
would not suffice. The premise is that Article 41 of the Family Code places upon the present
spouse the burden of complying with the stringent requirement of “well-founded belief” which
can only be discharged upon a showing of proper and honest-to-goodness inquiries and efforts
to ascertain not only the absent spouse’s whereabouts, but more importantly, whether the
latter is still alive or is already dead. Republic vs. Tampus, 787 SCRA 563, G.R. No. 214243
March 16, 2016
As defined in Section 8 of Republic Act (RA) No. 9262, [a] protection order is an order issued
x x x for the purpose of preventing further acts of violence against a woman or her child
specified in Section 5 of this Act and granting other necessary relief.
The urgency for resolution also rendered such filing unnecessary. It should be emphasized that
Cherith had already been issued a PPO. As defined in Section 8 of RA 9262, “[a] protection
order is an order issued x x x for the purpose of preventing further acts of violence against a
woman or her child specified in Section 5 of this Act and granting other necessary relief. The
relief granted under a protection order serve the purpose of safeguarding the victim from
further harm, minimizing any disruption in the victim’s daily life, and facilitating the opportunity
and ability of the victim to independently regain control over her life. x x x.”
With a standing PPO issued for the purpose of protecting not only the woman, but also her
child against acts of violence committed by the person against whom the order is issued — in
this case, Manny — the resolution of the issue of whether or not Manny should be given
visitation rights, despite any discernible basis therefor, is urgent, else Cherith and Francheska
be unduly exposed to the very danger which they are seeking protection from. As the Court
sees it, any further delay would substantially prejudice their interests, thus, allowing a direct
recourse to certiorari. Bucal vs. Bucal, 759 SCRA 262, G.R. No. 206957 June 17, 2015

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PROPERTY
Buyer in Good Faith
A purchaser in good faith is one who buys the property of another without notice that some
other person has a right to, or an interest in, such property and pays a full and fair price for the
same at the time of such purchase, or before he has notice of some other person’s claim or
interest in the property. Corollary thereto, when a piece of land is in the actual possession of
persons other than the seller, the buyer must be wary and should investigate the rights of those
in possession. Without making such inquiry, one cannot claim that he is a buyer in good faith.
When a man proposes to buy or deal with realty, his duty is to read the public manuscript, that
is, to look and see who is there upon it and what his rights are. A want of caution and diligence,
which an honest man of ordinary prudence is accustomed to exercise in making purchases, is in
contemplation of law, a want of good faith. The buyer who has failed to know or discover that
the land sold to him is in adverse possession of another is a buyer in bad faith. Go vs. Estate of
the Late Felisa Tamio de Buenaventura, 763 SCRA 632, G.R. No. 211972 July 22, 2015
The terms builder, planter, or sower in good faith as used in reference to Article 448 of the
Civil Code, refers to one who, not being the owner of the land, builds, plants, or sows on that
land believing himself to be its owner and unaware of the defect in his title or mode of
acquisition.
“The essence of good faith lies in an honest belief in the validity of one’s right, ignorance of a
superior claim, and absence of intention to overreach another.” On the other hand, bad faith
may only be attributed to a landowner when the act of building, planting, or sowing was done
with his knowledge and without opposition on his part. Dinglasan-Delos Santos vs. Abejon, 821
SCRA 132, G.R. No. 215820 March 20, 2017
Article 453 of the Civil Code provides that where both the landowner and the builder, planter,
or sower acted in bad faith, they shall be treated as if both of them were in good faith.
Article 453. If there was bad faith, not only on the part of the person who built, planted or
sowed on the land of another, but also on the part of the owner of such land, the rights of one
and the other shall be the same as though both had acted in good faith. It is understood that
there is bad faith on the part of the landowner whenever the act was done with his knowledge
and without opposition on his part. Dinglasan-Delos Santos vs. Abejon, 821 SCRA 132, G.R. No.
215820 March 20, 2017

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Whenever both the landowner and the builder/planter/sower are in good faith (or in bad
faith, pursuant to 548 of the Civil Code), the landowner is given two (2) options under Article
448 of the Civil Code
The landowner is given two (2) options under Article 448 of the Civil Code, namely: (a) he may
appropriate the improvements for himself after reimbursing the buyer (the builder in good
faith) the necessary and useful expenses under Articles 546 and 548 of the Civil Code; or (b) he
may sell the land to the buyer, unless its value is considerably more than that of the
improvements, in which case, the buyer shall pay reasonable rent. Dinglasan-Delos Santos vs.
Abejon, 821 SCRA 132, G.R. No. 215820 March 20, 2017
To be deemed a builder in good faith, it is essential that a person asserts title to the land on
which he builds, i.e., that he be a possessor in concept of owner, and that he be unaware that
there exists in his title or mode of acquisition any flaw which invalidates it.
Good faith is an intangible and abstract quality with no technical meaning or statutory
definition, and it encompasses, among other things, an honest belief, the absence of malice and
the absence of design to defraud or to seek an unconscionable advantage. It implies honesty of
intention, and freedom from knowledge of circumstances which ought to put the holder upon
inquiry. As for Sps. Sarili, they knew — or at the very least, should have known — from the very
beginning that they were dealing with a person who possibly had no authority to sell the
subject property considering the palpable irregularity in the subject SPA’s acknowledgment.
Yet, relying solely on said document and without any further investigation on Ramos’ capacity
to sell, Sps. Sarili still chose to proceed with its purchase and even built a house thereon. Based
on the foregoing, it cannot be seriously doubted that Sps. Sarili were actually aware of a flaw or
defect in their title or mode of acquisition and have consequently built the house on the subject
property in bad faith under legal contemplation. The case is therefore remanded to the court a
quo for the proper application of the above-cited Civil Code provisions. Heirs of Victorino Sarili,
The vs. Lagrosa, 713 SCRA 726, G.R. No. 193517 January 15, 2014
An action for reconveyance is one that seeks to transfer property, wrongfully registered by
another, to its rightful and legal owner.
It is evident that petitioner ultimately seeks for the reconveyance to her of the subject
properties through the nullification of their supposed sale to Gran. An action for reconveyance
is one that seeks to transfer property, wrongfully registered by another, to its rightful and legal
owner. Having alleged the commission of fraud by Gran in the transfer and registration of the

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subject properties in her name, there was, in effect, an implied trust created by operation of
law pursuant to Article 1456 of the Civil Code which provides: Art. 1456. If property is acquired
through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property comes. Zuñiga-Santos vs.
Santos-Gran, 738 SCRA 33, G.R. No. 197380 October 8, 2014
Settled is the rule that in order that an action for the recovery of property may prosper, the
party prosecuting the same need only prove the identity of the thing and his ownership
thereof.
In the present cases, the report of the court-appointed commissioner, Atty. Pintor, who
conducted a relocation survey of the Rana and Uy properties identified and delineated the
boundaries of the two properties and showed that Sps. Uy’s perimeter fence intruded on 2 sqm
of the Rana property. Both the RTC and the CA relied upon the said report; thus, absent any
competent showing that the said finding was erroneous, the Court sees no reason to deviate
from the conclusions reached by the courts a quo.
Having sufficiently proven their claim, Sps. Rana are, therefore entitled to the return of the 2
sq. m. encroached portion. Corollary thereto, compliance by Linda Rana with the directive in
Civil Case No. CEB-20893 to build a retaining wall on their property shall be held in abeyance
pending return of the encroached portion. Rana vs. Wong, 727 SCRA 539, G.R. No. 192862
June 30, 2014
In actions for partition, the court cannot properly issue an order to divide the property, unless
it first makes a determination as to the existence of co-ownership.
Santiago’s contention that he had already bought the interests of the majority of the heirs and,
thus, they should no longer be regarded as indispensable parties deserves no merit. As
correctly noted by the CA, in actions for partition, the court cannot properly issue an order to
divide the property, unless it first makes a determination as to the existence of co-ownership.
The court must initially settle the issue of ownership, which is the first stage in an action for
partition. Indubitably, therefore, until and unless this issue of co-ownership is definitely and
finally resolved, it would be premature to effect a partition of the disputed properties.
Divinagracia vs. Parilla, 753 SCRA 87, G.R. No. 196750 March 11, 2015

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An action for partition is at once an action for declaration of co-ownership and for
segregation and conveyance of a determinate portion of the properties involved.
The determination, therefore, as to the existence of co-ownership is necessary in the resolution

of an action for partition. The first phase of a partition and/or accounting suit is taken up with
the determination of whether or not a co-ownership in fact exists, and a partition is proper (i.e.,
not otherwise legally proscribed) and may be made by voluntary agreement of all the parties
interested in the property. This phase may end with a declaration that plaintiff is not entitled to
have a partition either because a co-ownership does not exist, or partition is legally prohibited.
It may end, on the other hand, with an adjudgment that a co-ownership does in truth exist,
partition is proper in the premises and an accounting of rents and profits received by the
defendant from the real estate in question is in order. In the latter case, the parties may, if they
are able to agree, make partition among themselves by proper instruments of conveyance, and
the court shall confirm the partition so agreed upon. In either case, either the action is
dismissed or partition and/or accounting is decreed, the order is a final one, and may be
appealed by any party aggrieved thereby. Bagayas vs. Bagayas, 706 SCRA 73, G.R. Nos. 187308
and 187517 September 18, 2013
In an action for partition premised on the existence or non-existence of co-ownership

between the parties, it was pronounced that a resolution on the issue of ownership does not
subject the Torrens title issued over the disputed realties to a collateral attack.
It must be borne in mind that what cannot be collaterally attacked is the certificate of title and
not the title itself. There is no dispute that a Torrens certificate of title cannot be collaterally
attacked, but that rule is not material to the case at bar. What cannot be collaterally attacked is
the certificate of title and not the title itself. The certificate referred to is that document issued
by the Register of Deeds known as the TCT. In contrast, the title referred to by law means
ownership which is, more often than not, represented by that document. Petitioner apparently
confuses title with the certificate of title. Title as a concept of ownership should not be
confused with the certificate of title as evidence of such ownership although both are
interchangeably used. Bagayas vs. Bagayas, 706 SCRA 73, G.R. No. 187308 Sept. 18, 2013
In actions for partition, the court cannot properly issue an order to divide the property, unless
it first makes a determination as to the existence of co-ownership.
Santiago’s contention that he had already bought the interests of the majority of the heirs and,
thus, they should no longer be regarded as indispensable parties deserves no merit. As correct-

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ly noted by the CA, in actions for partition, the court cannot properly issue an order to divide
the property, unless it first makes a determination as to the existence of co-ownership. The
court must initially settle the issue of ownership, which is the first stage in an action for
partition. Indubitably, therefore, until and unless this issue of co-ownership is definitely and
finally resolved, it would be premature to effect a partition of the disputed properties.
Divinagracia vs. Parilla, 753 SCRA 87, G.R. No. 196750 March 11, 2015
Legal Easement Pertaining to the Natural Drainage of Lands
Contributory negligence is conduct on the part of the injured party, contributing as a legal
cause to the harm he has suffered, which falls below the standard to which he is required to
conform for his own protection. In the case at bar, it is undisputed that the Sonkin property is
lower in elevation than the Vergara property, and thus, it is legally obliged to receive the waters
that flow from the latter, pursuant to Article 637 of the Civil Code. This provision refers to the
legal easement pertaining to the natural drainage of lands, which obliges lower estates to
receive from the higher estates water which naturally and without the intervention of man
descends from the latter, i.e., not those collected artificially in reservoirs, etc., and the stones
and earth carried by the waters, viz.:
Art. 637. Lower estates are obliged to receive the waters which naturally and without the
intervention of man descend from the higher estates, as well as the stones or earth which they
carry with them. The owner of the lower estate cannot construct works which will impede this
easement; neither can the owner of the higher estate make works which will increase the
burden. (Emphasis and underscoring supplied)
In this light, Sps. Sonkin should have been aware of such circumstance and, accordingly, made
the necessary adjustments to their property so as to minimize the burden created by such legal
easement. Instead of doing so, they disregarded the easement and constructed their house
directly against the perimeter wall which adjoins the Vergara property, thereby violating the
National Building Code in the process, specifically Section 708(a) thereof which reads:
Section 708. Minimum Requirements for Group A Dwellings.—(a) Dwelling Location and Lot
Occupancy. The dwelling shall occupy not more than ninety percent of a corner lot and eighty
percent of an inside lot, and subject to the provisions on Easement on Light and View of the
Civil Code of the Philippines, shall be at least 2 meters from the property line. Vergara vs.
Sonkin, 757 SCRA 442, G.R. No. 193659 June 15, 2015

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Based on case law, the term “nuisance” is deemed to be “so comprehensive that it has been
applied to almost all ways which have interfered with the rights of the citizens, either in
person, property, the enjoyment of his property, or his comfort.”
Under Article 694 of the Civil Code, a nuisance is defined as “any act, omission, establishment,
business, condition of property, or anything else which: (1) Injures or endangers the health or
safety of others; or (2) Annoys or offends the senses; or (3) Shocks, defies or disregards decency
or morality; or (4) Obstructs or interferes with the free passage of any public highway or street,
or any body of water; or (5) Hinders or impairs the use of property.” Rana vs. Wong, 727 SCRA
539, G.R. No. 192862 June 30, 2014
Classifications of Nuisance
Article 695 of the Civil Code classifies nuisances with respect to the object or objects that they
affect. In this regard, a nuisance may either be: (a) a public nuisance (or one which “affects a
community or neighborhood or any considerable number of persons, although the extent of
the annoyance, danger or damage upon individuals may be unequal”); or (b) a private nuisance
(or one “that is not included in the foregoing definition” [or, as case law puts it, one which
“violates only private rights and produces damages to but one or a few persons”]).
Jurisprudence further classifies nuisances in relation to their legal susceptibility to summary
abatement (that is, corrective action without prior judicial permission).
In this regard, a nuisance may either be: (a) a nuisance per se (or one which “affects the
immediate safety of persons and property and may be summarily abated under the undefined
law of necessity”); or (b) a nuisance per accidens (or that which “depends upon certain
conditions and circumstances, and its existence being a question of fact, it cannot be abated
without due hearing thereon in a tribunal authorized to decide whether such a thing does in
law constitute a nuisance.”) Rana vs. Wong, 727 SCRA 539, G.R. No. 192862 June 30, 2014
Aside from the remedy of summary abatement which should be taken under the parameters
stated in Articles 704 (for public nuisances) and 706 (for private nuisances) of the Civil Code, a
private person whose property right was invaded or unreasonably interfered with by the act,
omission, establishment, business or condition of the property of another may file a civil
action to recover personal damages.
Abatement may be judicially sought through a civil action therefor if the pertinent
requirements under the Civil Code for summary abatement, or the requisite that the nuisance is

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a nuisance per se, do not concur. To note, the remedies of abatement and damages are
cumulative; hence, both may be demanded. Rana vs. Wong, 727 SCRA 539, G.R. No. 192862
June 30, 2014
The defense of acquisitive prescription inevitably involves the issue of actual, physical and
material possession, which is always a question of fact. The existence of this issue therefore
necessitates, for its proper resolution, the presentation of competent and relevant evidence,
which can only be done in the course of a full-blown trial.
In this case, records show that the original defendant, Jeremias, raised the special and
affirmative defense of acquisitive prescription in his answer, claiming that he was in open,
continuous and notorious possession or the disputed property as, in fact, his house and other
permanent improvements are still existing thereon. Soller vs. Heirs of Jeremias Ulayao, 677
SCRA 124, G.R. No. 175552 July 18, 2012
To determine when the prescriptive period commenced in an action for reconveyance, the
plaintiff’s possession of the disputed property is material.
If there is an actual need to reconvey the property as when the plaintiff is not in possession, the
action for reconveyance based on implied trust prescribes in ten (10) years, the reference point
being the date of registration of the deed or the issuance of the title.
On the other hand, if the real owner of the property remains in possession of the property, the
prescriptive period to recover title and possession of the property does not run against him and
in such case, the action for reconveyance would be in the nature of a suit for quieting of title
which is imprescriptible. Zuñiga-Santos vs. Santos-Gran, 738 SCRA 33, G.R. No. 197380
October 8, 2014
SUCCESSION
The law is clear that the attestation must state the number of pages used upon which the will
is written. The purpose of the law is to safeguard against possible interpolation or omission of
one or some of its pages and prevent any increase or decrease in the pages.

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While Article 809 allows substantial compliance for defects in the form of the attestation
clause, Richard likewise failed in this respect. The statement in the Acknowledgment portion of
the subject last will and testament that it “consists of 7 pages including the page on which the
ratification and acknowledgment are written” cannot be deemed substantial compliance. The
will actually consists of 8 pages including its acknowledgment which discrepancy cannot be
explained by mere examination of the will itself but through the presentation of evidence
aliunde. Lopez vs. Lopez, 685 SCRA 209, G.R. No. 189984 November 12, 2012
Claims against deceased persons should be filed during the settlement proceedings of their
estate.
Among these special rules, Section 7, Rule 86 of the Rules (Section 7, Rule 86) provides the rule
in dealing with secured claims against the estate: SEC. 7. Mortgage debt due from estate.—A
creditor holding a claim against the deceased secured by a mortgage or other collateral
security, may abandon the security and prosecute his claim in the manner provided in this rule,
and share in the general distribution of the assets of the estate; or he may foreclose his
mortgage or realize upon his security, by action in court, making the executor or administrator
a party defendant, and if there is a judgment for a deficiency, after the sale of the mortgaged
premises, or the property pledged, in the foreclosure or other proceeding to realize upon the
security, he may claim his deficiency judgment in the manner provided in the preceding section;
or he may rely upon his mortgage or other security alone, and foreclose the same at any time
within the period of the statute of limitations, and in that event he shall not be admitted as a
creditor, and shall receive no share in the distribution of the other assets of the estate; but
nothing herein contained shall prohibit the executor or administrator from redeeming the
property mortgaged or pledged, by paying the debt for which it is held as security, under the
direction of the court, if the court shall adjudged it to be for the best interest of the estate that
such redemption shall be made. Heirs of the Late Spouses Flaviano Maglasang and Salud
Adaza-Maglasang vs. Manila Banking Corporation, 706 SCRA 235, G.R. No. 171206 September
23, 2013
Matters relating to the rights of filiation and heirship must be ventilated in the proper
probate court in a special proceeding instituted precisely for the purpose of determining such
rights.
In the case of Heirs of Teofilo Gabatan v.CA, the Court, citing several other precedents, held
that the determination of who are the decedent’s lawful heirs must be made in the proper
special proceeding for such purpose, and not in an ordinary suit for recovery of ownership and/

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or possession, as in this case: Jurisprudence dictates that the determination of who are the
legal heirs of the deceased must be made in the proper special proceedings in court, and not in
an ordinary suit for recovery of ownership and possession of property. This must take
precedence over the action for recovery of possession and ownership.
The Court has consistently ruled that the trial court cannot make a declaration of heirship in the
civil action for the reason that such a declaration can only be made in a special proceeding.
Under Section 3, Rule 1 of the 1997 Revised Rules of Court, a civil action is defined as one by
which a party sues another for the enforcement or protection of a right, or the prevention or
redress of a wrong while a special proceeding is a remedy by which a party seeks to establish a
status, a right, or a particular fact. It is then decisively clear that the declaration of heirship can
be made only in a special proceeding inasmuch as the petitioners here are seeking the
establishment of a status or right.
In the early case of Litam, et al. v. Rivera, this Court ruled that the declaration of heirship must
be made in a special proceeding, and not in an independent civil action. This doctrine was
reiterated in Solivio v. Court of Appeals x x x: In the more recent case of Milagros Joaquino v.
Lourdes Reyes, the Court reiterated its ruling that matters relating to the rights of filiation and
heirship must be ventilated in the proper probate court in a special proceeding instituted
precisely for the purpose of determining such rights. This Court held that the status of an
illegitimate child who claimed to be an heir to a decedent’s estate could not be adjudicated in
an ordinary civil action which, as in this case, was for the recovery of property. Heirs of
Magdaleno Ypon vs. Ricaforte, 700 SCRA 778, G.R. No. 198680 July 8, 2013
By way of exception, the need to institute a separate special proceeding for the determination
of heirship may be dispensed with for the sake of practicality, as when the parties in the civil
case had voluntarily submitted the issue to the trial court and already presented their
evidence regarding the issue of heirship, and the Regional Trial Court had consequently
rendered judgment thereon, or when a special proceeding had been instituted but had been
finally closed and terminated, and hence, cannot be re-opened.
In this case, none of the foregoing exceptions, or those of similar nature, appear to exist.
Hence, there lies the need to institute the proper special proceeding in order to determine the
heirship of the parties involved, ultimately resulting to the dismissal of Civil Case No. T-2246.
Heirs of Magdaleno Ypon vs. Ricaforte, 700 SCRA 778, G.R. No. 198680 July 8, 2013

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OBLIGATIONS AND CONTRACTS
Specific performance and “rescission” (more accurately referred to as resolution) are

alternative remedies available to a party who is aggrieved by a counterparty’s breach of a
reciprocal obligation.
This is provided for in Article 1191 of the Civil Code, which partly reads:
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him. The injured party may choose
between the fulfillment and the rescission of the obligation, with the payment of damages in
either case. He may also seek rescission, even after he has chosen fulfillment, if the latter
should become impossible. Buenviaje vs. Salonga, 805 SCRA 369, G.R. No. 216023 October 5,
2016
Specific performance pertains to “[t]he actual accomplishment of a contract by a party bound

to fulfill it.”
Specific performance is defined as “[t]he remedy of requiring exact performance of a contract

in the specific form in which it was made, or according to the precise terms agreed upon.”
Buenviaje vs. Salonga, 805 SCRA 369, G.R. No. 216023 October 5, 2016
Resolution under Article 1191 of the Civil Code will not be permitted for a slight or casual
breach, but only for such substantial and fundamental violations as would defeat the very
object of the parties in making the agreement.
Resolution is defined as the “unmaking of a contract for a legally sufficient reason x x x.”
“[Resolution] does not merely terminate the contract and release the parties from further
obligations to each other, but abrogates the contract from its inception and restores the parties
to their original positions as if no contract has been made.
Consequently, mutual restitution, which entails the return of the benefits that each party may
have received as a result of the contract, is thus required.” xxx “Ultimately, the question of
whether a breach of contract is substantial depends upon the attending circumstances.”

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In reciprocal obligations, either party may rescind — or more appropriately, resolve — the
contract upon the other party’s substantial breach of the obligation/s he had assumed
thereunder.
This is expressly provided for in Article 1191 of the Civil Code which states: Art. 1191. The
power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him. The injured party may choose between the
fulfillment and the rescission of the obligation, with the payment of damages in either case. He
may also seek rescission, even after he has chosen fulfillment, if the latter should become
impossible. The court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of a period. This is understood to be without prejudice to the rights of third persons
who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.
Nolasco vs. Cuerpo, 777 SCRA 447, G.R. No. 210215 December 9, 2015
More accurately referred to as resolution, the right of rescission under Article 1191 is
predicated on a breach of faith that violates the reciprocity between the parties to the
contract.
This retaliatory remedy is given to the contracting party who suffers the injurious breach on the
premise that it is ‘unjust that a party be held bound to fulfill his promises when the other
violates his.’” Note that the rescission (or resolution) of a contract will not be permitted for a
slight or casual breach, but only for such substantial and fundamental violations as would
defeat the very object of the parties in making the agreement. Ultimately, the question of
whether a breach of contract is substantial depends upon the attending circumstances. Nolasco
vs. Cuerpo, 777 SCRA 447, G.R. No. 210215 December 9, 2015
For a contracting party to be entitled to rescission (or resolution) in accordance with Article
1191 of the Civil Code, the other contracting party must be in substantial breach of the terms
and conditions of their contract.
A substantial breach of a contract, unlike slight and casual breaches thereof, is a fundamental
breach that defeats the object of the parties in entering into an agreement. Here, it cannot be
said that petitioners’ failure to undertake their obligation under paragraph 7 defeats the object
of the parties in entering into the subject contract, considering that the same paragraph
provides respondents contractual recourse in the event of petitioners’ nonperformance of the
aforesaid obligation, that is, to cause such transfer themselves in behalf and at the expense of
petitioners. Nolasco vs. Cuerpo, 777 SCRA 447, G.R. No. 210215 December 9, 2015

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In reciprocal obligations, either party may rescind the contract upon the other’s substantial
breach of the obligation/s he had assumed thereunder.
The basis therefor is Article 1191 of the Civil Code which states as follows: Art. 1191. The power
to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him. The injured party may choose between the
fulfillment and the rescission of the obligation, with the payment of damages in either case. He
may also seek rescission, even after he has chosen fulfillment, if the latter should become
impossible. The court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of a period. This is understood to be without prejudice to the rights of third persons
who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.
More accurately referred to as resolution, the right of rescission under Article 1191 is
predicated on a breach of faith that violates the reciprocity between parties to the contract.
This retaliatory remedy is given to the contracting party who suffers the injurious breach on the
premise that it is “unjust that a party be held bound to fulfill his promises when the other
violates his.” Golden Valley Exploration, Inc. vs. Pinkian Mining Company, 726 SCRA 259, G.R.
No. 190080 June 11, 2014
As a general rule, the power to rescind an obligation must be invoked judicially and cannot be
exercised solely on a party’s own judgment that the other has committed a breach of the
obligation.
This is so because rescission of a contract will not be permitted for a slight or casual breach, but
only for such substantial and fundamental violations as would defeat the very object of the
parties in making the agreement. As a well-established exception, however, an injured party
need not resort to court action in order to rescind a contract when the contract itself provides
that it may be revoked or cancelled upon violation of its terms and conditions. Golden Valley
Exploration, Inc. vs. Pinkian Mining Company, 726 SCRA 259, G.R. No. 190080 June 11, 2014
Where parties agree to a stipulation allowing extrajudicial rescission, no judicial decree is

necessary for rescission to take place; the extrajudicial rescission immediately releases the
party from its obligation under the contract, subject only to court reversal if found improper.
While it remains apparent that PMC had not judicially invoked the other grounds to rescind in
this case, the only recognizable effect, however, is with respect to the reckoning point as to
when the contract would be formally regarded as rescinded. xxx On the other hand, without a
stipulation allowing extrajudicial rescission, it is the judicial decree that rescinds, and not the

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will of the rescinding party. This may be gathered from previous Court rulings on the matter.
Golden Valley Exploration, Inc. vs. Pinkian Mining Company, 726 SCRA 259, G.R. No. 190080
June 11, 2014
The invocation of a stipulation allowing extrajudicial rescission effectively puts an end to the
contract and, thus, releases the parties form the obligations thereunder, notwithstanding the
lack of a judicial decree for the purpose.
In the case at bar, PMC, through its Letter dated June 8, 1999 to GVEI, invoked Section 8.01,
Article VIII in relation to Section 5.01, Article V of the OA which allows it to extrajudicially
rescind the contract for GVEI’s nonpayment of royalties. Thus, at that point in time, PMC had
effectively rescinded the OA and was then considered to have been released from its legal
effects. Accordingly, there stood no legal impediment so as to hinder PMC from entering into a
contract with CVI covering the same mining claims subject of this case. Golden Valley
Exploration, Inc. vs. Pinkian Mining Company, 726 SCRA 259, G.R. No. 190080 June 11, 2014
When the creditor is in possession of the document of credit, proof of non-payment is not
needed for it is presumed.
Of particular note is the affirmative defense of payment raised during the proceedings a quo.
While petitioners insisted that they had paid, albeit partially, their loan obligation to
respondent, the fact of such payment was never established by petitioners in this case.
Jurisprudence abounds that, in civil cases, one who pleads payment has the burden of proving
it; the burden rests on the defendant, i.e., petitioners, to prove payment, rather than on the
plaintiff, i.e., respondent, to prove nonpayment. When the creditor is in possession of the
document of credit, proof of nonpayment is not needed for it is presumed. Here, respondent’s
possession of the Credit Agreement, PN, and CSA, especially with their genuineness and due
execution already having been admitted, cements its claim that the obligation of petitioners
has not been extinguished. Instructive too is the Court’s disquisition in Jison v. Court of Appeals,
286 SCRA 495 (1998), on the evidentiary burdens attendant in a civil proceeding. Go Tong
Electrical Supply Co., Inc. vs. BPI Family Savings Bank, Inc., 760 SCRA 486, G.R. No. 187487
June 29, 2015
In S.C. Megaworld Construction and Development Corporation v. Parada, 705 SCRA 584
(2013), the Supreme Court (SC) held that to constitute novation by substitution of debtor, the

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former debtor must be expressly released from the obligation and the third person or new
debtor must assume the former’s place in the contractual relations.
Moreover, the Court ruled that the “fact that the creditor accepts payments from a third
person, who has assumed the obligation, will result merely in the addition of debtors and not
novation.” At its core, novation is never presumed, and the animus novandi, whether totally or
partially, must appear by express agreement of the parties, or by their acts that are too clear
and unequivocal to be mistaken. Here, the intent to novate was not satisfactorily proven by
respondent. At best, petitioner only manifested her desire to shoulder the debt of her parents,
which, as above discussed, does not amount to novation. Thus, the courts a quo erred in
holding petitioner liable for the debts obtained by her deceased parents on account of novation
by substitution of the debtor.
Novation is never presumed, and the animus novandi, whether totally or partially, must
appear by express agreement of the parties, or by their acts that are too clear and
unequivocal to be mistaken.
The Court must dispel the notion that the stipulation anent MTCL’s reservation of ownership of
the subject products as reflected in the Invoice Receipt, i.e., the title reservation stipulation,
changed the complexion of the transaction from a contract of sale into a contract to sell.
Records are bereft of any showing that the said stipulation novated the contract of sale
between the parties which, to repeat, already existed at the precise moment ACE Foods
accepted MTCL’s proposal. To be sure, novation, in its broad concept, may either be extinctive
or modificatory. It is extinctive when an old obligation is terminated by the creation of a new
obligation that takes the place of the former; it is merely modificatory when the old obligation
subsists to the extent it remains compatible with the amendatory agreement. Ace Foods, Inc.
vs. Micro Pacific Technologies Co., Ltd., 712 SCRA 679, G.R. No. 200602 December 11, 2013
A contract is a meeting of minds between two (2) persons whereby one binds himself, with
respect to the other, to give something or to render some service.
There is no contract unless the following essential requisites concur: (a) consent of the
contracting parties; (b) object certain which is the subject matter of the contract; and (c) cause
of the obligation which is established. Sagun vs. ANZ Global Services and Operations (Manila),
Inc., 801 SCRA 243, G.R. No. 220399 August 22, 2016

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In general, contracts undergo three (3) distinct stages. These are negotiation, perfection or
birth, and consummation.
Negotiation begins from the time the prospective contracting parties manifest their interest in
the contract and ends at the moment of their agreement. Thereafter, perfection or birth of the
contract takes place when the parties agree upon the essential elements of the contract.
Finally, consummation occurs when the parties fulfill or perform the terms agreed upon in the
contract, culminating in the extinguishment thereof. Sagun vs. ANZ Global Services and
Operations (Manila), Inc., 801 SCRA 243, G.R. No. 220399 August 22, 2016
An employment contract is perfected at the moment the parties come to agree upon its terms
and conditions, and concur in the essential elements thereof.
In this relation, the contracting parties may establish such stipulations, clauses, terms, and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order or public policy. Sagun vs. ANZ Global Services and Operations (Manila),
Inc., 801 SCRA 243, G.R. No. 220399 August 22, 2016
When a contract is subject to a suspensive condition, its effectivity shall take place only if and
when the event which constitutes the condition happens or is fulfilled.
In the realm of civil law, a condition is defined as “every future and uncertain event upon which
an obligation or provision is made to depend. It is a future and uncertain event upon which the
acquisition or resolution of rights is made to depend by those who execute the juridical act.”
Sagun vs. ANZ Global Services and Operations (Manila), Inc., 801 SCRA 243, G.R. No. 220399
August 22, 2016
A perfected contract may exist, although the obligations arising therefrom — if premised
upon a suspensive condition — would yet to be put into effect.
While a contract may be perfected in the manner of operation described above, the efficacy of
the obligations created thereby may be held in suspense pending the fulfillment of particular
conditions agreed upon. Sagun vs. ANZ Global Services and Operations (Manila), Inc., 801
SCRA 243, G.R. No. 220399 August 22, 2016

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In a contract with a suspensive condition, if the condition does not happen, the obligation
does not come into effect.
Thus, until and unless petitioner complied with the satisfactory background check, there exists
no obligation on the part of ANZ to recognize and fully accord him the rights under the
employment contract. Sagun vs. ANZ Global Services and Operations (Manila), Inc., 801 SCRA
243, G.R. No. 220399 August 22, 2016
Applicable laws form part of, and are read into, contracts without need for any express
reference thereto; more so, when it pertains to a labor contract which is imbued with public
interest.
Each contract thus contains not only what was explicitly stipulated therein, but also the
statutory provisions that have any bearing on the matter. Halili vs. Justice for Children
International, 770 SCRA 241, G.R. No. 194906 September 9, 2015
Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.
Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith. As such, the stipulations in contracts are binding on
them unless the contract is contrary to law, morals, good customs, public order or public policy.
The same principle on obligatory force applies by extension to the contracting party’s assignees,
in turn, by virtue of the principle of relativity of contracts which is fleshed out in Article 1311 of
the Civil Code, viz.: Art. 1311. Contracts take effect only between the parties, their assigns and
heirs, except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. The heir is not liable
beyond the value of the property he received from the decedent. Fort Bonifacio Development
Corporation vs. Fong, 754 SCRA 544, G.R. No. 209370 March 25, 2015
Principle of Relativity of Contracts
In this case, it is undisputed that Sps. Salonga were not parties to the above mentioned
contract. Under Article 1311 of the Civil Code, it is a basic principle in civil law on relativity of
contracts, that contracts can only bind the parties who had entered into it and it cannot favor

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or prejudice third persons. Contracts take effect only between the parties, their successors in
interest, heirs and assigns. Thus, absent any privity of contract as to them, there is no basis to
hold Sps. Salonga liable for any of the obligations stated under the said contract to sell.
At this juncture, it should be further made clear that the imputation of joint or solidary liability
against a particular person — such as that insistently claimed against Sps. Salonga by Buenviaje
— first presupposes the existence of that person’s obligation. On the active side, the joint or
solidary nature of an obligation is an aspect of demandability; it pertains to the extent of a
creditor’s entitlement to demand fulfillment against any or all of his debtors under one
particular obligation.
Based on case law, a solidary obligation is one in which each of the debtors is liable for the
entire obligation, and each of the creditors is entitled to demand the satisfaction of the whole
obligation from any or all of the debtors. On the other hand, a joint obligation is one in which
each debtors is liable only for a proportionate part of the debt, and the creditor is entitled to
demand only a proportionate part of the credit from each debtor. Buenviaje vs. Salonga, 805
SCRA 369, G.R. No. 216023 October 5, 2016
For a stipulation pour autrui to be appreciated, it is indispensable that there be a stipulation

deliberately conferring a benefit or favor to a third person.
Art. 1311. Contracts take effect only between the parties, their assigns and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by their nature,
or by stipulation, or by provision of law. The heir is not liable beyond the value of the property
he received from the decedent. If a contract should contain some stipulation in favor of a third
person, he may demand its fulfilment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not sufficient. The
contracting parties must have clearly and deliberately conferred a favor upon a third person.
Republic vs. Legal Heirs of Jose L. Africa, 767 SCRA 640, G.R. No. 205722 August 19, 2015
Requisites of a Stipulation Pour Autrui
The Court laid down the requisites of a stipulation pour autrui, namely: (1) there is a stipulation
in favor of a third person; (2) the stipulation is a part, not the whole, of the contract; (3) the
contracting parties clearly and deliberately conferred a favor to the third person — the favor is
not an incidental benefit; (4) the favor is unconditional and uncompensated; (5) the third
person communicated his or her acceptance of the favor before its revocation; and (6) the

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contracting parties do not represent, or are not authorized by, the third party. Republic vs.
Legal Heirs of Jose L. Africa, 767 SCRA 640, G.R. No. 205722 August 19, 2015; see also Mamaril
vs. The Boy Scout of the Philippines, 688 SCRA 437, G.R. No. 179382 January 14, 2013
The real nature of a contract may be determined from the express terms of the written
agreement and from the contemporaneous and subsequent acts of the contracting parties.
A contract is what the law defines it to be, taking into consideration its essential elements, and
not what the contracting parties call it. xxx However, in the construction or interpretation of an
instrument, the intention of the parties is primordial and is to be pursued. The denomination or
title given by the parties in their contract is not conclusive of the nature of its contents. Ace
Foods, Inc. vs. Micro Pacific Technologies Co., Ltd., 712 SCRA 679, G.R. No. 200602 December
11, 2013
Simulation takes place when the parties do not really want the contract they have executed
to produce the legal effects expressed by its wordings. Simulation or vices of declaration may
be either absolute or relative.
Article 1345 of the Civil Code distinguishes an absolute simulation from a relative one; while
Article 1346 discusses their effects, as follows: Art. 1345. Simulation of a contract may be
absolute or relative. The former takes place when the parties do not intend to be bound at all;
the latter when the parties conceal their true agreement. Art. 1346. An absolutely simulated or
fictitious contract is void. A relative simulation, when it does not prejudice a third person and is
not intended for any purpose contrary to law, morals, good customs, public order or public
policy binds the parties to their agreement. Tanchuling vs. Cantela, 774 SCRA 406, G.R. No.
209284 November 10, 2015
The main characteristic of an absolute simulation is that the apparent contract is not really
desired or intended to produce legal effect or in any way alter the juridical situation of the
parties.
In Heirs of Policronio M. Ureta, Sr. v. Heirs of Liberato M. Ureta, 657 SCRA 555 (2011), the Court
explained that “[i]n absolute simulation, there is a colorable contract but it has no substance as
the parties have no intention to be bound by it. As a result, an absolutely simulated or fictitious
contract is void, and the parties may recover from each other what they may have given under

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the contract.” In this case, the Court agrees with the RTC that the subject deed was absolutely
simulated. The parties never intended to be bound by any sale agreement. Instead, the subject
deed was executed merely as a front to show the public that Sps. Tanchuling were the owners
of the properties in order to deter the group of John Mercado from illegally selling the same.
Tanchuling vs. Cantela, 774 SCRA 406, G.R. No. 209284 November 10, 2015
It is well-settled that fraud is never presumed but must be proven by clear and convincing
evidence by the same party who alleges it.
The undated deed, which serves as a counter-agreement to, and which was simultaneously
executed with, the subject deed, unmistakably evinces absolute simulation. While Cantela
posits that he was tricked into signing the undated deed as it was supposedly surreptitiously
inserted by Sps. Tanchuling into the copies of the subject deed at the time of their signing,
nothing, aside from his self-serving assertions, support his account.
It is well-settled that fraud is never presumed but must be proven by clear and convincing
evidence by the same party who alleges it. Besides, Navarro and Botero, who equally witnessed
the signing of the undated deed, never testified on any irregularity. Notably, the fact that the
undated deed was not notarized is rendered irrelevant by Cantela’s own admission of the
document’s execution, which, unless proven to be fraudulent, must be presumed to be fair and
regular, as in all private transactions. Tanchuling vs. Cantela, 774 SCRA 406, G.R. No. 209284
November 10, 2015
Article 1370 of the Civil Code provides that “[i]f the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the literal meaning of its stipulations
shall control.”
In Norton Resources and Development Corporation v. All Asia Bank Corporation, 605 SCRA 370
(2009), the Court had the opportunity to thoroughly discuss the said rule as follows: The rule is
that where the language of a contract is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or aids. The intention of the parties must be
gathered from that language, and from that language alone. Stated differently, where the
language of a written contract is clear and unambiguous, the contract must be taken to mean
that which, on its face, it purports to mean, unless some good reason can be assigned to show
that the words should be understood in a different sense.

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Courts cannot make for the parties better or more equitable agreements than they themselves
have been satisfied to make, or rewrite contracts because they operate harshly or inequitably
as to one of the parties, or alter them for the benefit of one party and to the detriment of the
other, or by construction, relieve one of the parties from the terms which he voluntarily
consented to, or impose on him those which he did not. Century Properties, Inc. vs. Babiano,
795 SCRA 671, G.R. No. 220978 July 5, 2016
A contract of adhesion is one wherein one party imposes a ready-made form of contract on
the other.
A contract of adhesion is one wherein one party imposes a ready-made form of contract on the
other. It is a contract whereby almost all of its provisions are drafted by one party, with the
participation of the other party being limited to affixing his or her signature or “adhesion” to
the contract. However, contracts of adhesion are not invalid per se as they are binding as
ordinary contracts.
While the Court has occasionally struck down contracts of adhesion as void, it did so when the
weaker party has been imposed upon in dealing with the dominant bargaining party and
reduced to the alternative of taking it or leaving it, completely deprived of the opportunity to
bargain on equal footing.
Thus, the validity or enforceability of the impugned contracts will have to be determined by the
peculiar circumstances obtained in each case and the situation of the parties concerned.
Encarnacion Construction & Industrial Corporation vs. Phoenix Ready Mix Concrete
Development & Construction, Inc., 838 SCRA 500, G.R. No. 225402 September 4, 2017
Contracts of adhesion are not void per se. It is binding as any other ordinary contract and a
party who enters into it is free to reject the stipulations in its entirety. If the terms thereof are
accepted without objection, then the contract serves as the law between them.
Anent Sps. Mamaril’s claim that the exculpatory clause: “Management shall not be responsible
for loss of vehicle or any of its accessories or article left therein” contained in the BSP issued
parking ticket was void for being a contract of adhesion and against public policy, suffice it to
state that contracts of adhesion are not void per se. It is binding as any other ordinary contract
and a party who enters into it is free to reject the stipulations in its entirety.

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If the terms thereof are accepted without objection, as in this case, where plaintiffs-appellants
have been leasing BSP’s parking space for more or less 20 years, then the contract serves as the
law between them. Besides, the parking fee of P300.00 per month or P10.00 a day for each unit
is too minimal an amount to even create an inference that BSP undertook to be an insurer of
the safety of plaintiffs-appellants’ vehicles. Mamaril vs. The Boy Scout of the Philippines, 688
SCRA 437, G.R. No. 179382 January 14, 2013
Rescission (as contemplated in Articles 1380 to 1389 of the Civil Code) is a remedy granted by
law to the contracting parties and even to third persons, to secure the reparation of damages
caused to them by a contract, even if this should be valid, by restoration of things to their
condition at the moment prior to the celebration of the contract. It implies a contract, which
even if initially valid, produces a lesion or a pecuniary damage to someone.
Pursuant to Articles 1177 and 1313 of the Civil Code, creditors are given remedies whenever
their debtors perform acts or omissions or enter into contracts that tend to defraud the former
of what is due them. Such remedy comes in the form of rescission under Articles 1381(3) in
relation to Articles 1383 and 1384 of the Civil Code. In the rescission by reason of lesion or
economic prejudice, the cause of action is subordinated to the existence of that prejudice,
because it is the raison d’être as well as the measure of the right to rescind. Hence, where the
defendant makes good the damages caused, the action cannot be maintained or continued, as
expressly provided in Articles 1383 and 1384. Buenviaje vs. Salonga, 805 SCRA 369, G.R. No.
216023 October 5, 2016
It is settled that “the declaration of nullity of a contract which is void ab initio operates to
restore things to the state and condition in which they were found before the execution
thereof.”
Pursuant to this rule, since the Deed of Sale involving the subject land stands to be nullified in
view of the parties’ stipulation to this effect, it is incumbent upon the parties to return what
they have received from said sale. Accordingly, Erlinda and the rest of petitioners (as Pedro’s
heirs) are entitled to the return of the subject land as stipulated during the pretrial. To effect
the same, the Register of Deeds of Makati City should cancel TCT No. 180286 issued in the
name of Teresita, and thereafter, reinstate TCT No. 131753 in the name of Pedro and Erlinda
and, restore the same to its previous state before its cancellation, i.e., with the mortgage
executed by the parties annotated thereon.

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On the other hand, respondents, as Teresita’s successors-in-interest, are entitled to the refund
of the additional P50,000.00 consideration she paid for such sale. However, it should be
clarified that the liability for the said amount will not fall on all petitioners, but only on Erlinda,
as she was the only one among the petitioners who was involved in the said sale. Pursuant to
Nacar v. Gallery Frames, 703 SCRA 439 (2013), the amount of P50,000.00 shall be subjected to
legal interest of six percent (6%) per annum from the finality of this Decision until fully paid.
Dinglasan-Delos Santos vs. Abejon, 821 SCRA 132, G.R. No. 215820 March 20, 2017
A void contract is equivalent to nothing; it produces no civil effect; and it does not create,
modify or extinguish a juridical relation.
In consequence, petitioner cannot assert any right over the subject landholding, such as his
present claim for landholding exemption, because his title springs from a null and void source.
A void contract is equivalent to nothing; it produces no civil effect; and it does not create,
modify or extinguish a juridical relation. Hence, notwithstanding the erroneous identification of
the subject landholding by the MARO as owned by Cipriano Borromeo, the fact remains that
petitioner had no right to file a petition for landholding exemption since the sale of the said
property to him by Garcia in 1982 is null and void. Proceeding from this, the finding that
petitioner’s total agricultural landholdings is way below the retention limits set forth by law
thus, becomes irrelevant to his claim for landholding exemption precisely because he has no
right over the aforementioned landholding. Borromeo vs. Mina, 697 SCRA 516, G.R. No.
193747 June 5, 2013
Article 1409(1) of the Civil Code provides that purpose is contrary to law, morals, good
customs, public order or public policy is considered void and as such, creates no rights or
obligations or any juridical relations.
Consequently, given the unlawful purpose behind the Subject Loans which is to fund the
commercialization of the Agoo Plaza pursuant to the Redevelopment Plan, they are considered
as ultra vires in the primary sense thus, rendering them void and in effect, non-binding on the
Municipality. At this juncture, it is equally observed that the land on which the Agoo Plaza is
situated cannot be converted into patrimonial property―as the SB tried to when it passed
Municipal Ordinance No. 02-2007―absent any express grant by the national government. As
public land used for public use, the foregoing lot rightfully belongs to and is subject to the
administration and control of the Republic of the Philippines. Hence, without the said grant, the
Municipality has no right to claim it as patrimonial property. Land Bank of the Philippines vs.
Cacayuran, 696 SCRA 861, G.R. No. 191667 April 17, 2013

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The principle of in pari delicto provides that when two parties are equally at fault, the law
leaves them as they are and denies recovery by either one of them. However, this principle
does not apply with respect to inexistent and void contracts
Assessing the respective infractions of the parties herein, the Court finds it prudent to sustain
the CA’s verdict offsetting the damage caused by said parties against each other. The Court can,
however, only concur with the CA in result since the latter inaccurately applied, as basis for its
ruling, the in pari delicto principle enunciated in the case of Yu Bun Guan v. Ong (Yu Guan), 367
SCRA 559 (2001). In said case, the Court discussed the in pari delicto principle with respect to
the subject matter of inexistent and void contracts, viz.: Inapplicability of the in Pari Delicto
Principle. Xxx Said this Court in Modina v. Court of Appeals: “The principle of in pari delicto non
oritur actio denies all recovery to the guilty parties inter se. It applies to cases where the nullity
arises from the illegality of the consideration or the purpose of the contract. When two persons
are equally at fault, the law does not relieve them.
The exception to this general rule is when the principle is invoked with respect to inexistent
contracts.” (emphasis supplied; citations omitted) Clearly, no void or inexistent contract is
herein at issue, hence, the Court’s disagreement with the CA’s invocation of Yu Guan in this
respect. Rana vs. Wong, 727 SCRA 539, G.R. No. 192862 June 30, 2014; see also Banco Filipino
Savings and Mortgage Bank vs. Tala Realty Services Corporation, 705 SCRA 208, G.R. No.
158866 September 9, 2013
A compromise is a contract whereby the parties, by making reciprocal concessions, avoid

litigation or put an end to one already commenced.
The cardinal rule in the interpretation of contracts such as compromise agreements is that “if
the terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control.” Republic vs. Legal Heirs of Jose L.
Africa, 767 SCRA 640, G.R. No. 205722 August 19, 2015
It contemplates mutual concessions and mutual gains to avoid the expenses of litigation; or
when litigation has already begun, to end it because of the uncertainty of the result. Its validity
is dependent upon the fulfillment of the requisites and principles of contracts dictated by law;
and its terms and conditions must not be contrary to law, morals, good customs, public policy,
and public order.
When given judicial approval, a compromise agreement becomes more than a contract binding
upon the parties. Having been sanctioned by the court, it is entered as a determination of a
controversy and has the force and effect of a judgment. It is immediately executory and not

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appealable, except for vices of consent or forgery. The nonfulfillment of its terms and
conditions justifies the issuance of a writ of execution; in such an instance, execution becomes
a ministerial duty of the court. Metro Manila Shopping Mecca Corp. vs. Toledo, 739 SCRA 399,
G.R. No. 190818 November 10, 2014
To be considered valid and binding between the contracting parties, a compromise

agreement must be: (a) not contrary to law, morals, good customs, public order, and public
policy; (b) freely and intelligently executed by and between the parties; and (c) compliant
with the requisites and principles of contracts.
A compromise agreement is a contract whereby the parties, by making reciprocal concessions,

avoid a litigation or put an end to one already commenced. xxx Once entered into, it has the
effect and the authority of res judicata upon the parties. In other words, a valid compromise
agreement may render a pending case moot and academic. However, the parties may opt to
put therein clauses, conditions, and the like that would prevent a pending case from becoming
moot and academic — such as when the execution of such agreement is without prejudice to
the final disposition of the said case.
After all, a compromise agreement is still a contract by nature, and as such, the parties are free
to insert clauses to modify its legal effects, so long as such modifications are not contrary to
law, morals, good customs, public order, or public policy. Philippine Transmarine Carriers, Inc.
vs. Pelagio, 766 SCRA 447, G.R. No. 211302 August 12, 2015
It is settled that for a defendant to benefit from the compromise agreement executed
between the plaintiff and the other defendants, it must be established that: (1) the plaintiff
alleged a common cause of action against the defendants; and (2) all the defendants are
indispensable parties to the case.
Relatedly, respondents neither argued nor showed that the causes of action against the
defendants are the same and that they are all indispensable parties as to benefit from the
dismissal of a case as a result of the Compromise Agreement. xxx This was the crux of the
Court’s ruling in Imson v. Court of Appeals, 239 SCRA 58 (1994), viz.:
In sum, Lim Tanhu states that where a complaint alleges a common cause of action against
defendants who are all indispensable parties to the case, its dismissal against any of them by
virtue of a compromise agreement with the plaintiff necessarily results in the dismissal of the
case against the other defendants, including those in default. The ruling is rooted on the ratio-

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nale that the court’s power to act in a case involving a common cause of action against
indispensable parties is integral and cannot be split such that it cannot relieve any of them and
at the same time render judgment against the rest. Republic vs. Legal Heirs of Jose L. Africa,
767 SCRA 640, G.R. No. 205722 August 19, 2015
SALES
A contract of sale is classified as a consensual contract, which means that the sale is perfected
by mere consent.
No particular form is required for its validity. Upon perfection of the contract, the parties may
reciprocally demand performance, i.e., the vendee may compel transfer of ownership of the
object of the sale, and the vendor may require the vendee to pay the thing sold.
In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the property despite delivery thereof to the
prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, i.e., the full payment of the purchase price. A contract
to sell may not even be considered as a conditional contract of sale where the seller may
likewise reserve title to the property subject of the sale until the fulfillment of a suspensive
condition, because in a conditional contract of sale, the first element of consent is present,
although it is conditioned upon the happening of a contingent event which may or may not
occur. Ace Foods, Inc. vs. Micro Pacific Technologies Co., Ltd., 712 SCRA 679, G.R. No. 200602
December 11, 2013
A contract to sell is defined as a bilateral contract whereby the prospective seller, while
expressly reserving the ownership of the subject property despite delivery thereof to the
prospective buyer, binds himself to sell the said property exclusively to the latter upon his
fulfillment of the conditions agreed upon, i.e., the full payment of the purchase price and/or
compliance with the other obligations stated in the contract to sell.
Given its contingent nature, the failure of the prospective buyer to make full payment and/or
abide by his commitments stated in the contract to sell prevents the obligation of the
prospective seller to execute the corresponding deed of sale to effect the transfer of ownership
to the buyer from arising.

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As discussed in Sps. Serrano and Herrera v. Caguiat, 517 SCRA 57 (2007): A contract to sell is
akin to a conditional sale where the efficacy or obligatory force of the vendor’s obligation to
transfer title is subordinated to the happening of a future and uncertain event, so that if the
suspensive condition does not take place, the parties would stand as if the conditional
obligation had never existed. Ventura vs. Heirs of Spouses Eustacio T. Endaya, 706 SCRA 631,
G.R. No. 190016 October 2, 2013; see also Associated Marine Officers and Seamen's Union of
the Philippines PTGWO-ITF vs. Decena, 682 SCRA 308, G.R. No. 178584 October 8, 2012
“Contract to Sell” and “Conditional Contract of Sale,” Distinguished.
To note, while the quality of contingency inheres in a contract to sell, the same should not be
confused with a conditional contract of sale. In a contract to sell, the fulfillment of the
suspensive condition will not automatically transfer ownership to the buyer although the
property may have been previously delivered to him. The prospective seller still has to convey
title to the prospective buyer by entering into a contract of absolute sale.
On the other hand, in a conditional contract of sale, the fulfillment of the suspensive condition
renders the sale absolute and the previous delivery of the property has the effect of
automatically transferring the seller’s ownership or title to the property to the buyer. Ventura
vs. Heirs of Spouses Eustacio T. Endaya, 706 SCRA 631, G.R. No. 190016 October 2, 2013
Article 1484 of the Civil Code governs the sale of personal properties in installments.
Article 1484. In a contract of sale of personal property the price of which is payable in
installments, the vendor may exercise any of the following remedies: (1) Exact fulfilment of the
obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee’s failure to pay
cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has
been constituted, should the vendee’s failure to pay cover two or more installments. In this
case, he shall have no further action against the purchaser to recover any unpaid balance of the
price. Any agreement to the contrary shall be void. Equitable Savings Bank (now known as the
merged entity “BDO Unibank, Inc.”) vs. Palces, 787 SCRA 260, G.R. No. 214752 March 9, 2016
There was no vendor-vendee relationship between respondent and petitioner. A judicious

perusal of the records would reveal that respondent never bought the subject vehicle from

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petitioner but from a third party, and merely sought financing from petitioner for its full
purchase price.
In order to document the loan transaction between petitioner and respondent, a Promissory
Note with Chattel Mortgage dated August 18, 2005 was executed wherein, inter alia,
respondent acknowledged her indebtedness to petitioner in the amount of P1,196,100.00 and
placed the subject vehicle as a security for the loan.
Indubitably, a loan contract with the accessory chattel mortgage contract — and not a contract
of sale of personal property in installments — was entered into by the parties with respondent
standing as the debtor-mortgagor and petitioner as the creditor-mortgagee. Therefore, the
conclusion of the CA that Article 1484 finds application in this case is misplaced, and thus, must
be set aside. Equitable Savings Bank (now known as the merged entity “BDO Unibank, Inc.”)
vs. Palces, 787 SCRA 260, G.R. No. 214752 March 9, 2016
Settled is the rule that a forged deed of sale is null and void and conveys no title.
In the present case, the complaint was filed assailing the validity of the 1979 deed of sale, the
execution of which was denied by both parties. However, while the CA found that petitioners’
signatures on the said deed were manifestly different from their signatures on other pertinent
documents before it, and thus, declared the said deed as spurious and did not validly transfer
title to the subject properties, it failed to nullify the subject certificates of title issued pursuant
to the said deed.
Settled is the rule that a forged deed of sale is null and void and conveys no title. Notably, the
complaint prayed for the nullification of the said certificates of title based on the spurious 1979
deed of sale. Hence, finding the foregoing in order, the CA’s ruling must be modified
accordingly. Aguinaldo vs. Torres, Jr., 839 SCRA 354, G.R. No. 225808 September 11, 2017
Although the improper notarization of the 1991 deed of sale did not affect the validity of the
sale of the subject properties to respondent, the same, however, rendered the said deed
unregistrable, since notarization is essential to the registrability of deeds and conveyances.
Bearing in mind that the legal requirement that the sale of real property must appear in a
public instrument is merely a coercive means granted to the contracting parties to enable them
to reciprocally compel the observance of the prescribed form, and considering that the
existence of the sale of the subject properties in respondent’s favor had been duly established,

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the Court upholds the CA’s directive for petitioners to execute a registrable deed of conveyance
in respondent’s favor within thirty (30) days from finality of the decision, in accordance with the
prescribed form under Articles 1357 and 1358(1) of the Civil Code.
Notably, if petitioners fail to comply with this directive within the said period, respondent has
the option to file the proper motion before the court a quo to issue an order divesting
petitioners’ title to the subject properties under the parameters of Section 10(a), Rule 39 of the
Rules of Court. Aguinaldo vs. Torres, Jr., 839 SCRA 354, G.R. No. 225808 September 11, 2017
Realty Installment Buyer Protection Act (R.A. No. 6552); R.A. No. 6552, otherwise known as
the Realty Installment Buyer Protection Act, recognizes in conditional sales of all kinds of real
estate (industrial, commercial, residential) the right of the seller to cancel the contract upon
non-payment of an installment by the buyer, which is simply an event that prevents the
obligation of the vendor to convey title from acquiring binding force.
While we agreed that the cancellation of a contract to sell may be done outside of court,
however, “the cancellation by the seller must be in accordance with Sec. 3(b) of R.A. No. 6552,
which requires a notarial act of rescission and the refund to the buyer of the full payment of the
cash surrender value of the payments on the property.” Associated Marine Officers and
Seamen's Union of the Philippines PTGWO-ITF vs. Decena, 682 SCRA 308, G.R. No. 178584
October 8, 2012
Case law states that when a person assigns his credit to another person, the latter is deemed
subrogated to the rights as well as to the obligations of the former.
By virtue of the Deed of Assignment, the assignee is deemed subrogated to the rights and
obligations of the assignor and is bound by exactly the same conditions as those which bound
the assignor.
Accordingly, an assignee cannot acquire greater rights than those pertaining to the assignor.
The general rule is that an assignee of a nonnegotiable chose in action acquires no greater right
than what was possessed by his assignor and simply stands into the shoes of the latter. Fort
Bonifacio Development Corporation vs. Fong, 754 SCRA 544, G.R. No. 209370 March 25, 2015

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LEASE
It has been held that the act of parking a vehicle in a garage, upon payment of a fixed
amount, is a lease.
The Court concurs with the finding of the CA that the contract between the parties herein was
one of lease as defined under Article 1643 of the Civil Code. It has been held that the act of
parking a vehicle in a garage, upon payment of a fixed amount, is a lease. Even in a majority of
American cases, it has been ruled that where a customer simply pays a fee, parks his car in any
available space in the lot, locks the car and takes the key with him, the possession and control
of the car, necessary elements in bailment, do not pass to the parking lot operator, hence, the
contractual relationship between the parties is one of lease. Mamaril vs. The Boy Scout of the
Article 1664 of the Civil Code states that “[t]he lessor is not obliged to answer for a mere act
of trespass which a third person may cause on the use of the thing leased; but the lessee shall
have a direct action against the intruder.”
In the instant case, the owners parked their six (6) passenger jeepneys inside the BSP
compound for a monthly fee of P300.00 for each unit and took the keys home with them.
Hence, a lessor-lessee relationship indubitably existed between them and BSP.
On this score, Article 1654 of the Civil Code provides that “[t]he lessor (BSP) is obliged: (1) to
deliver the thing which is the object of the contract in such a condition as to render it fit for the
use intended; (2) to make on the same during the lease all the necessary repairs in order to
keep it suitable for the use to which it has been devoted, unless there is a stipulation to the
contrary; and (3) to maintain the lessee in the peaceful and adequate enjoyment of the lease
for the entire duration of the contract.” xxx Here, BSP was not remiss in its obligation to provide
Sps. Mamaril a suitable parking space for their jeepneys as it even hired security guards to
secure the premises; hence, it should not be held liable for the loss suffered by Sps. Mamaril.
Mamaril vs. The Boy Scout of the Philippines, 688 SCRA 437, G.R. No. 179382 January 14, 2013
In fixed lump sum contracts, the project owner’s liability to the contractor is generally limited
to what is stipulated therein.
In a fixed lump sum contract, the project owner agrees to pay the contractor a specified
amount for completing a scope of work involving a variety of unspecified items of work without

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requiring a cost breakdown. The contractor estimates the project cost based on the scope of
work and schedule and considers probable errors in measurement and changes in the price of
materials. Otherwise stated, in fixed lump sum contracts, the project owner’s liability to the
contractor is generally limited to what is stipulated therein. Filinvest Alabang, Inc. vs. Century
Iron Works, Inc., 777 SCRA 519, G.R. No. 213229 December 9, 2015
Article 1724 of the Civil Code does not preclude the parties from stipulating on additional
works to the project covered by said fixed lump sum contract which would entail added
liabilities on the part of the project owner.
In fact, the said provision allows contractors to recover from project owners additional costs in
fixed lump sum contracts, as well as the increase in price for any additional work due to a
subsequent change in the original plans and specifications, provided that there exists: (a) a
written authority from the developer or project owner ordering or allowing the written changes
in work; and (b) written agreement of the parties with regard to the increase in price or cost
due to the change in work or design modification. Jurisprudence instructs that compliance with
these two (2) requisites is a condition precedent for recovery and hence, the absence of one or
the other condition bars the claim for additional costs.
Notably, neither the authority for the changes made nor the additional price to be paid therefor
may be proved by any evidence other than the written authority and agreement as above
mentioned. Filinvest Alabang, Inc. vs. Century Iron Works, Inc., 777 SCRA 519, G.R. No. 213229
December 9, 2015
PARTNERSHIP
Articles 1822 and 1824 of the Civil Code pertain to the obligations of a co-partner in the event
that the partnership to which he belongs is held liable.
There is no perceptible legal basis to hold them solidarily liable under Articles 1822 and 1824 of
the Civil Code. These provisions, which are found under Section 3, Chapter 2, Title IX, Book IV of
the Civil Code on Partnership, respectively state:
Article 1822. Where, by any wrongful act or omission of any partner acting in the ordinary
course of the business of the partnership or with the authority of his copartners, loss or injury is
caused to any person, not being a partner in the partnership, or any penalty is incurred, the
partnership is liable therefor to the same extent as the partner so acting or omitting to act.

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Article 1824. All partners are liable solidarily with the partnership for everything chargeable to
the partnership under Articles 1822 and 1823. Evidently, the foregoing legal provisions pertain
to the obligations of a copartner in the event that the partnership to which he belongs is held
liable.
In this case, Buenviaje never dealt with any partnership constituted by and between Jebson and
Sps. Salonga. As previously mentioned, the subject CTS, which was the source of the obligations
relative to the completion and delivery of Unit 5, solely devolved upon the person of Jebson. As
there was no partnership privy to any obligation to which Buenviaje is a creditor, Articles 1822
and 1824 of the Civil Code do not apply. Buenviaje vs. Salonga, 805 SCRA 369, G.R. No. 216023
October 5, 2016
AGENCY
An agent is not personally liable to the party with whom he contracts, unless he expressly
binds himself or exceeds the limits of his authority without giving such party sufficient notice
of his powers.
Article 1868 of the Civil Code states: “ART. 1868. By the contract of agency, a person binds
himself to render some service or to do something in representation or on behalf of another,
with the consent or authority of the latter.” Ace Navigation Co., Inc. vs. FGU Insurance
Corporation, 674 SCRA 348, G.R. No. 171591 June 25, 2012
Article 1868 of the Civil Code states that “[b]y the contract of agency, a person binds himself
to render some service or to do something in representation or on behalf of another, with the
consent or authority of the latter.”
Nor can it be said that a principal-agent relationship existed between BSP and the security
guards Peña and Gaddi as to make the former liable for the latter’s complained act. Article 1868
of the Civil Code states that “[b]y the contract of agency, a person binds himself to render some
service or to do something in representation or on behalf of another, with the consent or
authority of the latter.” The basis for agency therefore is representation, which element is
absent in the instant case. Records show that BSP merely hired the services of AIB, which, in
turn, assigned security guards, solely for the protection of its properties and premises. Nowhere
can it be inferred in the Guard Service Contract that AIB was appointed as an agent of BSP.
Instead, what the parties intended was a pure principal-client relationship whereby for a

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consideration, AIB rendered its security services to BSP. Mamaril vs. The Boy Scout of the
TRUST
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in
another.
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in
another. It is a fiduciary relationship that obliges the trustee to deal with the property for the
benefit of the beneficiary. Trust relations between parties may either be express or implied. An
express trust is created by the intention of the trustor or of the parties, while an implied trust
comes into being by operation of law. Go vs. Estate of the Late Felisa Tamio de Buenaventura,
763 SCRA 632, G.R. No. 211972 July 22, 2015
Express trusts are created by direct and positive acts of the parties, by some writing or deed,
or will, or by words either expressly or impliedly evincing an intention to create a trust.
Express trusts are created by direct and positive acts of the parties, by some writing or deed, or
will, or by words either expressly or impliedly evincing an intention to create a trust. Under
Article 1444 of the Civil Code, “[n]o particular words are required for the creation of an express
trust, it being sufficient that a trust is clearly intended.” It is possible to create a trust without
using the word “trust” or “trustee.” Conversely, the mere fact that these words are used does
not necessarily indicate an intention to create a trust. The question in each case is whether the
trustor manifested an intention to create the kind of relationship which to lawyers is known as
trust. It is immaterial whether or not he knows that the relationship which he intends to create
is called a trust, and whether or not he knows the precise characteristics of the relationship
which is called a trust. Go vs. Estate of the Late Felisa Tamio de Buenaventura, 763 SCRA 632,
G.R. No. 211972 July 22, 2015
Express trusts prescribe in ten (10) years from the time the trust is repudiated.
Anent the issue of prescription, the Court finds that the action for reconveyance instituted by
respondents has not yet prescribed, following the jurisprudential rule that express trusts
prescribe in ten (10) years from the time the trust is repudiated. In this case, there was a

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repudiation of the express trust when Bella, as the remaining trustee, sold the subject property
to Wilson and Peter on January 23, 1997. As the complaint for reconveyance and damages was
filed by respondents on October 17, 1997, or only a few months after the sale of the subject
property to Wilson and Peter, it cannot be said that the same has prescribed. Go vs. Estate of
the Late Felisa Tamio de Buenaventura, 763 SCRA 632, G.R. No. 211972 July 22, 2015
CREDIT TRANSACTIONS
Article 1956 of the Civil Code provides that “[n]o interest shall be due unless it has been
expressly stipulated in writing.”
It is fundamental that for monetary interest to be due, there must be an express written
agreement therefor. Article 1956 of the Civil Code provides that “[n]o interest shall be due
unless it has been expressly stipulated in writing.” In this relation, case law states that the lack
of a written stipulation to pay interest on the loaned amount bars a creditor from charging
monetary interest and the collection of interest without any stipulation therefor in writing is
prohibited by law. Odiamar vs. Valencia, 795 SCRA 18, G.R. No. 213582 June 28, 2016
A liability based on a loan or forbearance of money, shall be subject to legal interest of 12%
per annum.
Following the Court’s ruling in the iconic case of Eastern Shipping Lines, Inc. v. Court of Appeals,
234 SCRA 78 (1994), the foregoing liability, which is based on a loan or forbearance of money,
shall be subject to legal interest of 12% per annum from the date it was judicially determined
by the CA on March 30, 2009 until the finality of this Decision, and not from 1975 (the date of
the constitution of the mortgage); nor from 1998 (when an attempt to pay was made) or in
2000 at the time the complaint was filed, because it was the Heirs of Adolfo and not Bangis who
filed the instant suit to collect the indebtedness. Thereafter, the judgment award inclusive of
interest shall bear interest at 12% per annum until its full satisfaction. Bangis vs. Heirs of
Serafin and Salud Adolfo, 672 SCRA 468, G.R. No. 190875 June 13, 2012
In light of prevailing jurisprudence, the rental arrearages due to petitioner shall earn legal
interest of twelve percent (12%) per annum, computed from first demand on May 24, 2011 to
June 30, 2013, and six percent (6%) per annum from July 1, 2013 until fully paid.

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Considering that all the requisites of a suit for unlawful detainer have been complied with,
petitioner is justified in ejecting respondent from the subject land. Thus, the rulings of the RTC-
Br. 23 and the CA must be reversed and set aside, and accordingly, the MTCC ruling must be
reinstated. xxx The other amounts awarded by the MTCC, i.e., P20,000.00 as attorney’s fees,
P50,000.00 as litigation expenses, and the costs of suit shall likewise earn legal interest of six
percent (6%) per annum from finality of the Decision until fully paid. Zaragoza vs. Iloilo Santos
Truckers, Inc., 828 SCRA 452, G.R. No. 224022 June 28, 2017
Excessive, iniquitous, unconscionable, and exorbitant interest rates
The Court notes that the stipulated three percent (3%) monthly interest is excessive and
unconscionable. In a plethora of cases, the Court has affirmed that stipulated interest rates of
three percent (3%) per month and higher are excessive, iniquitous, unconscionable, and
exorbitant, hence, illegal and void for being contrary to morals. Guevarra vs. The Commoner
Lending Corporation, Inc., 751 SCRA 144, G.R. No. 204672 February 18, 2015
“Surety” and “Guarantor,” Distinguished
Comparing a surety’s obligations with that of a guarantor, the Court, in the case of Palmares v.
CA, 288 SCRA 422 (1998), illumined that a surety is responsible for the debt’s payment at once
if the principal debtor makes default, whereas a guarantor pays only if the principal debtor is
unable to pay, viz.: A surety is an insurer of the debt, whereas a guarantor is an insurer of the
solvency of the debtor. A suretyship is an undertaking that the debt shall be paid; a guaranty,
an undertaking that the debtor shall pay. Stated differently, a surety promises to pay the
principal’s debt if the principal will not pay, while a guarantor agrees that the creditor, after
proceeding against the principal, may proceed against the guarantor if the principal is unable to
pay. A surety binds himself to perform if the principal does not, without regard to his ability to
do so. A guarantor, on the other hand, does not contract that the principal will pay, but simply
that he is able to do so. In other words, a surety undertakes directly for the payment and is so
responsible at once if the principal debtor makes default, while a guarantor contracts to pay if,
by the use of due diligence, the debt cannot be made out of the principal debtor. Trade and
Investment Development Corporation of the Philippines (Formerly Philippine Export and
Foreign Loan Guarantee Corporation) vs. Asia Paces Corporation, 716 SCRA 67, G.R. No.
187403 February 12, 2014

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Although the contract of a surety is in essence secondary only to a valid principal obligation,
his liability to the creditor is direct, primary and absolute; he becomes liable for the debt and
duty of another although he possesses no direct or personal interest over the obligations nor
does he receive any benefit therefrom. The fundamental reason therefor is that a contract of
suretyship effectively binds the surety as a solidary debtor
A surety is considered in law as being the same party as the debtor in relation to whatever is
adjudged touching the obligation of the latter, and their liabilities are interwoven as to be
inseparable. Xxx This is provided under Article 2047 of the Civil Code which states: Article 2047.
By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation
of the principal debtor in case the latter should fail to do so. If a person binds himself solidarily
with the principal debtor, the provisions of Section 4, Chapter 3, Title I of this Book shall be
observed. In such case the contract is called a suretyship. Trade and Investment Development
Corporation of the Philippines (Formerly Philippine Export and Foreign Loan Guarantee
Corporation) vs. Asia Paces Corporation, 716 SCRA 67, G.R. No. 187403 February 12, 2014; see
also Go Tong Electrical Supply Co., Inc. vs. BPI Family Savings Bank, Inc., 760 SCRA 486, G.R.
No. 187487 June 29, 2015
Since the surety is a solidary debtor, it is not necessary that the original debtor first failed to
pay before the surety could be made liable; it is enough that a demand for payment is made
by the creditor for the surety’s liability to attach.
Article 1216 of the Civil Code provides that: Article 1216. The creditor may proceed against any
one of the solidary debtors or some or all of them simultaneously. The demand made against
one of them shall not be an obstacle to those which may subsequently be directed against the
others, so long as the debt has not been fully collected. Trade and Investment Development
Corporation of the Philippines (Formerly Philippine Export and Foreign Loan Guarantee
Corporation) vs. Asia Paces Corporation, 716 SCRA 67, G.R. No. 187403 February 12, 2014
Article 2079 of the Civil Code, which pertinently provides that “[a]n extension granted to the
debtor by the creditor without the consent of the guarantor extinguishes the guaranty,”
equally applies to both contracts of guaranty and suretyship.
The rationale therefor was explained by the Court as follows: The theory behind Article 2079 is
that an extension of time given to the principal debtor by the creditor without the surety’s
consent would deprive the surety of his right to pay the creditor and to be immediately subro-

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gated to the creditor’s remedies against the principal debtor upon the maturity date. The
surety is said to be entitled to protect himself against the contingency of the principal debtor or
the indemnitors becoming insolvent during the extended period. Trade and Investment
Development Corporation of the Philippines (Formerly Philippine Export and Foreign Loan
Guarantee Corporation) vs. Asia Paces Corporation, 716 SCRA 67, G.R. No. 187403 February
12, 2014
In a contract of suretyship, one lends his credit by joining in the principal debtor’s obligation
so as to render himself directly and primarily responsible with him, and without reference to
the solvency of the principal.
That CGAC’s financial standing differs from that of NSSC does not negate the order of execution
pending appeal. As the latter’s surety, CGAC is considered by law as being the same party as the
debtor in relation to whatever is adjudged touching the obligation of the latter, and their
liabilities are interwoven as to be inseparable. xxx Thus, execution pending appeal against NSSC
means that the same course of action is warranted against its surety, CGAC. The same reason
stands for CGAC’s other principal, Orimaco, who was determined to have permanently left the
country with his family to evade execution of any judgment against him. Centennial Guarantee
Assurance Corporation vs. Universal Motors Corporation, 737 SCRA 654, G.R. No. 189358
October 8, 2014
After consolidation of title in the purchaser’s name for failure of the mortgagor to redeem the
property, the purchaser’s right to possession ripens into the absolute right of a confirmed
owner.
It is well-established that after consolidation of title in the purchaser’s name for failure of the
mortgagor to redeem the property, the purchaser’s right to possession ripens into the absolute
right of a confirmed owner. At that point, the issuance of a writ of possession, upon proper
application and proof of title, to a purchaser in an extrajudicial foreclosure sale becomes merely
a ministerial function, unless it appears that the property is in possession of a third party
claiming a right adverse to that of the mortgagor. The foregoing rule is contained in Section 33,
Rule 39 of the Rules of Court which partly provides. Rural Bank of Sta. Barbara (Iloilo), vs.
Centeno, 693 SCRA 110, G.R. No. 200667 March 11, 2013

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In China Banking Corporation v. Lozada, 557 SCRA 177 (2008), the Court held that the phrase
“a third party who is actually holding the property adversely to the judgment obligor”
contemplates a situation in which a third party holds the property by adverse title or right,
such as that of a co-owner, tenant or usufructuary.
The co-owner, agricultural tenant, and usufructuary possess the property in their own right,
and they are not merely the successor or transferee of the right of possession of another co-
owner or the owner of the property. Notably, the property should not only be possessed by a
third party, but also held by the third party adversely to the judgment obligor. Rural Bank of
Sta. Barbara (Iloilo), vs. Centeno, 693 SCRA 110, G.R. No. 200667 March 11, 2013
An action to enforce a right arising from a mortgage should be enforced within ten (10) years
from the time the right of action accrues, i.e., when the mortgagor defaults in the payment of
his obligation to the mortgagee; otherwise, it will be barred by prescription and the
mortgagee will lose his rights under the mortgage.
However, mere delinquency in payment does not necessarily mean delay in the legal concept.
To be in default is different from mere delay in the grammatical sense, because it involves the
beginning of a special condition or status which has its own peculiar effects or results. Maybank
Philippines, Inc. (formerly PNB-Republic Bank) vs. Tarrosa, 772 SCRA 670, G.R. No. 213014
October 14, 2015
The secured creditor has three remedies/options that he may alternatively adopt for the
satisfaction of his indebtedness. In particular, he may choose to: (a) waive the mortgage and
claim the entire debt from the estate of the mortgagor as an ordinary claim; (b) foreclose the
mortgage judicially and prove the deficiency as an ordinary claim; and (c) rely on the
mortgage exclusively, or other security and foreclose the same before it is barred by
prescription, without the right to file a claim for any deficiency.
Jurisprudence breaks down the rule under Section 7, Rule 86 and explains that the secured
creditor has three remedies/options that he may alternatively adopt for the satisfaction of his
indebtedness. xxx It must, however, be emphasized that these remedies are distinct,
independent and mutually exclusive from each other; thus, the election of one effectively bars
the exercise of the others. With respect to real properties, the Court in Bank of America v.
American Realty Corporation, 321 SCRA 659 (1999), pronounced: In our jurisdiction, the
remedies available to the mortgage creditor are deemed alternative and not cumulative.
Notably, an election of one remedy operates as a waiver of the other. For this purpose, a

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remedy is deemed chosen upon the filing of the suit for collection or upon the filing of the
complaint in an action for foreclosure of mortgage, pursuant to the provision of Rule 68 of the
1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed elected by
the mortgage creditor upon filing of the petition not with any court of justice but with the
Office of the Sheriff of the province where the sale is to be made, in accordance with the
provisions of Act No. 3135, as amended by Act No. 4118. Heirs of the Late Spouses Flaviano
Maglasang and Salud Adaza-Maglasang vs. Manila Banking Corporation, 706 SCRA 235, G.R.
No. 171206 September 23, 2013
The stipulated venue and that provided under Act No. 3135 can be applied alternatively. In
particular, Section 2 of Act No. 3135 allows the foreclosure sale to be done within the
province where the property to be sold is situated.
Case law states that absent such qualifying or restrictive words to indicate the exclusivity of the
agreed forum, the stipulated place should only be as an additional, not a limiting venue. As a
consequence, the stipulated venue and that provided under Act No. 3135 can be applied
alternatively. In particular, Section 2 of Act No. 3135 allows the foreclosure sale to be done
within the province where the property to be sold is situated, viz.: SEC. 2. Said sale cannot be
made legally outside of the province which the property sold is situated; and in case the place
within said province in which the sale is to be made is subject to stipulation, such sale shall be
made in said place or in the municipal building of the municipality in which the property or part
thereof is situated. Heirs of the Late Spouses Flaviano Maglasang and Salud Adaza-
Maglasang vs. Manila Banking Corporation, 706 SCRA 235, G.R. No. 171206 September 23,
2013
In an extrajudicial foreclosure of registered land acquired under a free patent, the mortgagor
may redeem the property within two (2) years from the date of foreclosure if the land is
mortgaged to a rural bank under Republic Act (RA) No. 720, as amended, otherwise known as
the Rural Banks Act, or within one (1) year from the registration of the cerstificate of sale if
the land is mortgaged to parties other than rural banks pursuant to Act No. 3135.
If the mortgagor fails to exercise such right, he or his heirs may still repurchase the property
within five (5) years from the expiration of the aforementioned redemption period pursuant to
Section 119 of the Public Land Act, which states: SEC. 119. Every conveyance of land acquired
under the free patent or homestead provisions, when proper, shall be subject to repurchase by
the applicant, his widow, or legal heirs, within a period of five years from the date of the

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conveyance. Guevarra vs. The Commoner Lending Corporation, Inc., 751 SCRA 144, G.R. No.
204672 February 18, 2015
The Supreme Court (SC) has rules that redemptions from lending or credit institutions, like The
Commoner Lending Corporation, Inc. (TCLC), are governed by Section 78 of the General
Banking Act (now Section 47 of the General Banking Law of 2000), which amended Section 6
of Act No. 3135 in relation to the proper redemption price when the mortgagee is a bank, or a
banking or credit institution.
The Court has, however, ruled that redemptions from lending or credit institutions, like TCLC,
are governed by Section 78 of the General Banking Act (now Section 47 of the General Banking
Law of 2000), which amended Section 6 of Act No. 3135 in relation to the proper redemption
price when the mortgagee is a bank, or a banking or credit institution. Guevarra vs. The
Commoner Lending Corporation, Inc., 751 SCRA 144, G.R. No. 204672 February 18, 2015
In addition to the principal and interest, the repurchase price should also include all the
expenses of foreclosure, i.e., Judicial Commission, Publication Fee, and Sheriff’s Fee, in
accordance with Section 47 of the General Banking Law of 2000.
Considering further that Sps. Guevarra failed to redeem the subject property within the one-
year reglementary period, they are liable to reimburse TCLC for the corresponding
Documentary Stamp Tax (DST) and Capital Gains Tax (CGT) it paid pursuant to Bureau of
Internal Revenue (BIR) Revenue Regulations No. 4-99, which requires the payment of DST on
extrajudicial foreclosure sales of capital assets initiated by banks, finance and insurance
companies, as well as CGT in cases of non-redemption. CGT and DST are expenses incident to
TCLC’s custody of the subject property, hence, likewise due, under the above provision of law.
Guevarra vs. The Commoner Lending Corporation, Inc., 751 SCRA 144, G.R. No. 204672
February 18, 2015
In the case of banks and other financial institutions, greater care and due diligence are
required since they are imbued with public interest, failing which renders the mortgagees in
bad faith. Thus, before approving a loan application, it is a standard operating practice for
these institutions to conduct an ocular inspection of the property offered for mortgage and to
verify the genuineness of the title to determine the real owner(s) thereof.

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Primarily, it bears noting that the doctrine of “mortgagee in good faith” is based on the rule
that all persons dealing with property covered by a Torrens Certificate of Title are not required
to go beyond what appears on the face of the title. This is in deference to the public interest in
upholding the indefeasibility of a certificate of title as evidence of lawful ownership of the land
or of any encumbrance thereon. xxx The apparent purpose of an ocular inspection is to protect
the “true owner” of the property as well as innocent third parties with a right, interest or claim
thereon from a usurper who may have acquired a fraudulent certificate of title thereto.
Philippine Banking Corporation vs. Dy, 685 SCRA 567, G.R. No. 183774 November 14, 2012
Nothing short of extraordinary diligence is required of banks whose business is impressed

with public interest.
A finding of negligence must always be contextualized in line with the attendant circumstances
of a particular case. As aptly held in Philippine National Bank v. Heirs of Estanislao Militar, 494
SCRA 308 (2006), “the diligence with which the law requires the individual or a corporation at
all times to govern a particular conduct varies with the nature of the situation in which one is
placed, and the importance of the act which is to be performed.”
Thus, without diminishing the time-honored principle that nothing short of extraordinary
diligence is required of banks whose business is impressed with public interest, Philbank’s
inconsequential oversight should not and cannot serve as a bastion for fraud and deceit.
Philippine Banking Corporation vs. Dy, 685 SCRA 567, G.R. No. 183774 November 14, 2012
Fraud comprises “anything calculated to deceive, including all acts, omissions, and
concealment involving a breach of legal duty or equitable duty, trust, or confidence justly
reposed, resulting in damage to another, or by which an undue and unconscientious
advantage is taken of another.”
In this light, the Dys’ and Sps. Delgado’s deliberate simulation of the sale intended to obtain
loan proceeds from and to prejudice Philbank clearly constitutes fraudulent conduct. As such,
Sps. Delgado cannot now be allowed to deny the validity of the mortgage executed by the Dys
in favor of Philbank as to hold otherwise would effectively sanction their blatant bad faith to
Philbank’s detriment. Philippine Banking Corporation vs. Dy, 685 SCRA 567, G.R. No. 183774
November 14, 2012

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Like an accommodation party to a negotiable instrument, the accommodation mortgagor in

effect becomes a surety to enable the accommodated debtor to obtain credit.
There being valid consent on the part of petitioners to act as accommodation mortgagors, no
reversible error was committed by the CA in setting aside the RTC’s Decision declaring the real
estate mortgage as void for vices of consent and awarding damages to petitioners. As mere
accommodation mortgagors, petitioners are not entitled to the proceeds of the loan, nor were
required to be furnished with the loan documents or notice of the borrower’s default in paying
the principal, interests, penalties, and other charges on due date, or of the extrajudicial
foreclosure proceedings, unless stipulated in the subject deed. As jurisprudence states, an
accommodation mortgagor is a third person who is not a debtor to a principal obligation but
merely secures it by mortgaging his or her own property. Like an accommodation party to a
negotiable instrument, the accommodation mortgagor in effect becomes a surety to enable the
accommodated debtor to obtain credit, as petitioners in this case. Sierra vs. Paic Savings and
Mortgage Bank, Inc., 734 SCRA 694, G.R. No. 197857 September 10, 2014
Elements of a contract of antichresis.
Antichresis involves an express agreement between parties whereby: (a) the creditor will have
possession of the debtor’s real property given as security; (b) such creditor will apply the fruits
of the said property to the interest owed by the debtor, if any, then to the principal amount; (c)
the creditor retains enjoyment of such property until the debtor has totally paid what he owes;
and (d) should the obligation be duly paid, then the contract is automatically extinguished
proceeding from the accessory character of the agreement. Reyes vs. Heirs of Benjamin
Malance, 801 SCRA 485, G.R. No. 219071 August 24, 2016
For the contract of antichresis to be valid, Article 2134 of the Civil Code requires that the
amount of the principal and of the interest shall be specified in writing; otherwise the
contract of antichresis shall be void.
In this case, the Heirs of Adolfo were indisputably unable to produce any document in support
of their claim that the contract between Adolfo and Bangis was an antichresis, hence, the CA
properly held that no such relationship existed between the parties. Bangis vs. Heirs of Serafin
and Salud Adolfo, 672 SCRA 468, G.R. No. 190875 June 13, 2012

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QUASI-CONTRACTS
Bank of the Philippine Islands’ (BPI’s) payment of the proceeds of the subject check was due
to a mistaken notion that such check was cleared, when in fact, it was dishonored due to an
alteration in the amount indicated therein. Such payment on the part of BPI to respondents
was clearly made by mistake, giving rise to the quasi-contractual obligation of solutio indebiti
under Article 2154 in relation to Article 2163 of the Civil Code.
Not being a loan or forbearance of money, an interest of six percent (6%) per annum should be
imposed on the amount to be refunded and on the damages and attorney’s fees awarded, if
any, computed from the time of demand until its satisfaction. Consequently, respondents must
return to BPI the aforesaid amount, with legal interest at the rate of six percent (6%) per annum
from the date of extrajudicial demand — or on June 27, 1997, the date when BPI informed
respondents of the dishonor of the subject check and demanded the return of its proceeds —
until fully paid. Bank of the Philippine Islands vs. Mendoza, 821 SCRA 41, G.R. No. 198799
March 20, 2017
LAND TITLES AND DEEDS
Save in cases of hereditary succession, no private lands shall be transferred or conveyed

except to individuals, corporations, or associations qualified to acquire or hold lands of the
public domain.
In In Re: Petition For Separation of Property-Elena Buenaventura Muller v. Helmut Muller, 500
SCRA 65 (2006), the Court had already denied a claim for reimbursement of the value of
purchased parcels of Philippine land instituted by a foreigner Helmut Muller, against his former
Filipina spouse, Elena Buenaventura Muller.
It held that Helmut Muller cannot seek reimbursement on the ground of equity where it is clear
that he willingly and knowingly bought the property despite the prohibition against foreign
ownership of Philippine land enshrined under Section 7, Article XII of the 1987 Philippine
Constitution which reads:
Section 7. Save in cases of hereditary succession, no private lands shall be transferred or

conveyed except to individuals, corporations, or associations qualified to acquire or hold lands
of the public domain. Beumer vs. Amores, 686 SCRA 770, G.R. No. 195670 December 3, 2012

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The constitutional ban against foreigners applies only to ownership of Philippine land and not
to the improvements built thereon.
Precisely, it is the Constitution itself which demarcates the rights of citizens and non-citizens in
owning Philippine land. To be sure, the constitutional ban against foreigners applies only to
ownership of Philippine land and not to the improvements built thereon, such as the two (2)
houses standing on Lots 1 and 2142 which were properly declared to be co-owned by the
parties subject to partition. Needless to state, the purpose of the prohibition is to conserve the
national patrimony and it is this policy which the Court is duty-bound to protect. Beumer vs.
Amores, 686 SCRA 770, G.R. No. 195670 December 3, 2012
Since the subject lands are untitled and unregistered public lands, then petitioners correctly
argued that it is the Director of Lands who has the authority to award their ownership.
Thus, the RTC Br. 61 correctly recognized its lack of power or authority to hear and resolve
respondents’ action for quieting of title. In Heirs of Pocdo v. Avila, 719 SCRA 552 (2014), the
Court ruled that the trial court therein correctly dismissed an action to quiet title on the ground
of lack of jurisdiction for lack of authority to determine who among the parties have better
right over the disputed property, which is admittedly still part of public domain for being within
the Baguio Townsite Reservation. Bilag vs. Ay-Ay, 824 SCRA 78, G.R. No. 189950 April 24, 2017
If two certificates of title purport to include the same land, whether wholly or partly, the
better approach is to trace the original certificates from which the certificates of titles were
derived.
As held in the case of Top Management Programs Corporation v. Luis Fajardo and the Register
of Deeds of Las Piñas City, 652 SCRA 18 (2011): “if two certificates of title purport to include the
same land, whether wholly or partly, the better approach is to trace the original certificates
from which the certificates of titles were derived.” Having, thus, traced the roots of the parties’
respective titles supported by the records of the Register of Deeds of Malaybalay City, the
courts a quo were correct in upholding the title of the Heirs of Adolfo as against TCT No. T-
10567 of Bangis, notwithstanding its earlier issuance on August 18, 1976 or long before the
Heirs of Adolfo secured their own titles on May 26, 1998. To paraphrase the Court’s ruling in
Mathay v. Court of Appeals, 295 SCRA 556 (1998): where two (2) transfer certificates of title
have been issued on different dates, the one who holds the earlier title may prevail only in the
absence of any anomaly or irregularity in the process of its registration, which circumstance

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does not obtain in this case. Bangis vs. Heirs of Serafin and Salud Adolfo, 672 SCRA 468, G.R.
No. 190875 June 13, 2012
No title in derogation of that of the registered owner can be acquired by prescription or

adverse possession.
Settled is the rule that no title in derogation of that of the registered owner can be acquired by
prescription or adverse possession. Moreover, even if acquisitive prescription can be
appreciated in this case, the Heirs of Bangis’ possession being in bad faith is two years shy of
the requisite 30-year uninterrupted adverse possession required under Article 1137 of the Civil
Code. Bangis vs. Heirs of Serafin and Salud Adolfo, 672 SCRA 468, G.R. No. 190875 June 13,
2012
The reconstitution of a certificate of title denotes restoration in the original form and
condition of a lost or destroyed instrument attesting the title of a person to a piece of land
It partakes of a land registration proceeding. Thus, it must be granted only upon clear proof
that the title sought to be restored was indeed issued to the petitioner or his predecessor-in-
interest, and such title was in force at the time it was lost or destroyed. In the present case, the
reconstitution petition is anchored on a purported owner’s duplicate copy of TCT No. 1297 — a
source for reconstitution of title under Section 3(a) of Republic Act (RA) No. 26.
Based on the provisions of the said law, the following must be present for an order of
reconstitution to issue: (a) the certificate of title had been lost or destroyed; (b) the documents
presented by petitioner are sufficient and proper to warrant reconstitution of the lost or
destroyed certificate of title; (c) the petitioner is the registered owner of the property or had an
interest therein; (d) the certificate of title was in force at the time it was lost and destroyed;
and (e) the description, area, and boundaries of the property are substantially the same as
those contained in the lost or destroyed certificate of title. Particularly, when the reconstitution
is based on an extant owner’s duplicate TCT, the main concern is the authenticity and
genuineness of the certificate. Tested against the foregoing, the Court finds that Luriz was not
able to prove that TCT No. 1297 sought to be reconstituted was authentic, genuine, and in force
at the time it was lost and destroyed. Luriz vs. Republic, 785 SCRA 142, G.R. No. 208948
February 24, 2016
Verily, the reconstitution of a certificate of title denotes restoration in the original form and
condition of a lost or destroyed instrument attesting the title of a person to a piece of land. The

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purpose of the reconstitution of title is to have, after observing the procedures prescribed by
law, the title reproduced in exactly the same way it has been when the loss or destruction
occurred. RA 26 presupposes that the property whose title is sought to be reconstituted has
already been brought under the provisions of the Torrens System. Sebastian vs. Cruz, 821 scra
150, G.R. No. 220940 March 20, 2017; see also Republic vs. Susi, 814 SCRA 397, G.R. No.
213209 January 16, 2017
The fact of loss or destruction of the owner’s duplicate certificate of title is crucial in clothing
the Regional Trial Court (RTC) with jurisdiction over the judicial reconstitution proceedings.
In Spouses Paulino v. CA, 725 SCRA 273 (2014), the Court reiterated the rule that when the
owner’s duplicate certificate of title was not actually lost or destroyed, but is in fact in the
possession of another person, the reconstituted title is void because the court that rendered
the order of reconstitution had no jurisdiction over the subject matter of the case. Sebastian
vs. Cruz, 821 scra 150, G.R. No. 220940 March 20, 2017
A reconstitution of title proceeding involves only the re-issuance of a new certificate of title
lost or destroyed in its original form and condition.
Notably, these findings should not be taken as an adjudication on the ownership of the subject
lands. As priorly intimated, they are but determinations of whether or not the certificate of title
sought to be reconstituted is authentic, genuine, and in force and effect at the time it was lost
or destroyed, which, based on case law, are central to resolving petitions for reconstitution of
title. Clearly, a reconstitution of title proceeding involves only the re-issuance of a new
certificate of title lost or destroyed in its original form and condition. In this light, the court does
not pass upon the ownership of the land covered by the lost or destroyed certificate, as the said
matter should be threshed out in a separate proceeding for the purpose. Luriz vs. Republic, 785
SCRA 142, G.R. No. 208948 February 24, 2016
Republic Act (RA) No. 26 governs the process by which a judicial reconstitution of Torrens
Certificates of Title may be done.
Specifically, Section 2 of the said law enumerates in the following order the competent and
exclusive sources from which reconstitution of an OCT may be based, viz.: Section 2. Original
certificates of title shall be reconstituted from such of the sources hereunder enumerated as

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may be available, in the following order: (a) The owner’s duplicate of the certificate of title; (b)
The co-owner’s, mortgagee’s, or lessee’s duplicate of the certificate of title; (c) A certified copy
of the certificate of title, previously issued by the register of deeds or by a legal custodian
thereof; (d) An authenticated copy of the decree of registration or patent, as the case may be,
pursuant to which the original certificate of title was issued; (e) A document, on file in the
registry of deeds, by which the property, the description of which is given in said document, is
mortgaged, leased or encumbered, or an authenticated copy of said document showing that its
original had been registered; and (f) Any other document which, in the judgment of the court,
is sufficient and proper basis for reconstituting the lost or destroyed certificate of title. Republic
vs. Dagondon, 790 SCRA 414, G.R. No. 210540 April 19, 2016
Republic Act (RA) No. 26 presupposes that the property whose title is sought to be
reconstituted has already been brought under the provisions of the Torrens System.
Verily, case law provides that “[t]he reconstitution of a certificate of title denotes restoration in
the original form and condition of a lost or destroyed instrument attesting the title of a person
to a piece of land. The purpose of the reconstitution of title is to have, after observing the
procedures prescribed by law, the title reproduced in exactly the same way it has been when
the loss or destruction occurred. RA 26 presupposes that the property whose title is sought to
be reconstituted has already been brought under the provisions of the Torrens System.” Hence,
under the aforesaid law, the following must be present for an order for reconstitution to issue:
(a) that the certificate of title had been lost or destroyed; (b) that the documents presented by
petitioner are sufficient and proper to warrant reconstitution of the lost or destroyed certificate
of title; (c) that the petitioner is the registered owner of the property or had an interest therein;
(d) that the certificate of title was in force at the time it was lost and destroyed; and (e) that the
description, area and boundaries of the property are substantially the same as those contained
in the lost or destroyed certificate of title. Thus, petitioner correctly pointed out that the
applicability of RA 26 in this case is contingent on the existence of a previously issued OCT
which has been lost or destroyed. Republic vs. Dagondon, 790 SCRA 414, G.R. No. 210540 April
19, 2016
Republic Act (RA) No. 26 provides two (2) procedures and sets of requirements in the
reconstitution of lost or destroyed certificates of title depending on the source of the petition
for reconstitution.
Section 10 in relation to Section 9 provides the procedure and requirements for sources falling
under Sections 2(a), 2(b), 3(a), 3(b), and 4(a). On the other hand, Sections 12 and 13 lay down

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the procedure and requirements for sources falling under Sections 2(c), 2(d), 2(e), 2(f), 3(c),
3(d), 3(e), and 3(f). Thus, before the court can properly act, assume, and acquire jurisdiction or
authority over the petition and grant the reconstitution prayed for, petitioner must observe the
above procedures and requirements prescribed by the law. In numerous cases, the Court has
held that the noncompliance with the prescribed procedure and requirements deprives the trial
court of jurisdiction over the subject matter or nature of the case and, consequently, all its
proceedings are rendered null and void. The rationale underlying this rule concerns the nature
of the conferment in the trial court of the authority to undertake reconstitution proceedings. In
all cases where the authority to proceed is conferred by a statute and the manner of obtaining
jurisdiction is mandatory, the same must be strictly complied with, or the proceedings will be
utterly void. As such, the court upon which the reconstitution petition is filed is duty-bound to
examine thoroughly the same, and review the record and the legal provisions laying down the
germane jurisdictional requirements. Republic vs. Susi, 814 SCRA 397, G.R. No. 213209 January
16, 2017
It is well to point out that trial courts hearing reconstitution petitions under Republic Act (RA)
No. 26 are duty-bound to take into account the Land Registration Authority’s (LRA’s) report.
Records show that as early as January 16, 2006, the LRA, in a Manifestation dated December 5,
2005, had already called the court’s attention to its Report dated March 1, 1995 in the previous
reconstitution petition before Branch 88, expressing serious doubts on the authenticity of Susi’s
duplicate title, and informing it of the existence of other titles over the subject land.
It is well to point out that trial courts hearing reconstitution petitions under RA 26 are duty-
bound to take into account the LRA’s report. Notably, both the RTC and the CA overlooked the
fact that while the petition for reconstitution before Branch 77 was filed on the basis of Susi’s
purported owner’s duplicate copy of TCT No. 118999 bearing Serial No. 1121955, Susi’s prior
reconstitution petitions, as stated in the LRA’s Report, were anchored on an owner’s duplicate
certificate bearing a different serial number, i.e., Serial No. 1775634.
Indeed, a perusal of the said certificates of title, which were attached to the Republic’s motion
for reconsideration of the CA’s Decision dated February 13, 2014, reveals that save for the
serial number, all the entries therein are the same. The Court notes that Susi did not refute the
existence of the said certificates bearing different serial numbers in her comment to the said
motion. Republic vs. Susi, 814 SCRA 397, G.R. No. 213209 January 16, 2017

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Jurisprudence is replete with cases underscoring the indispensability of actual and personal
notice of the date of hearing of the reconstitution petition to actual owners and possessors of
the land involved in order to vest the trial court with jurisdiction thereon.
In cases where the LRA challenges the authenticity of the applicant’s purported owner’s
duplicate certificate of title, the reconstitution petition should be treated as falling under
Section 3(f) of RA 26, and the trial court should require compliance with the requisites under
Sections 12 and 13 of RA 26. In particular, the reconstitution petition and the published and
posted notice of hearing in compliance with the October 13, 2005 Order failed to show that
notices were sent to the other occupants, possessors, and persons who may have an interest in,
or who have buildings or improvements on the land covered by the certificate of title sought to
be reconstituted, as well as the owners of adjoining properties. xxx If no notice of the date of
hearing of a reconstitution case is served on a possessor or one having interest in the property
involved, he is deprived of his day in court and the order of reconstitution is null and void.
Republic vs. Susi, 814 SCRA 397, G.R. No. 213209 January 16, 2017
An adverse claim serves as a notice to third persons that any transaction regarding the
disputed land is subject to the outcome of the dispute.
An adverse claim is a type of involuntary dealing designed to protect the interest of a person
over a piece of real property by apprising third persons that there is a controversy over the
ownership of the land. It seeks to preserve and protect the right of the adverse claimant during
the pendency of the controversy, where registration of such interest or right is not otherwise
provided for by the Property Registration Decree. Logarta vs. Mangahis, 795 SCRA 644, G.R.
No. 213568 July 5, 2016
Before a notice of adverse claim is registered, it must be shown that there is no other
provision in law for the registration of the claimant’s alleged right in the property.
In Register of Deeds of Quezon City v. Nicandro, 1 SCRA 1334 (1961), the Court held that where
the basis of the adverse claim was a perfected contract of sale which is specifically governed by
Section 57 of the Land Registration Act, or Act No. 496, the filing of an adverse claim was held
ineffective for the purpose of protecting the vendee’s right. Similarly, in L. P. Leviste &
Company, Inc. v. Noblejas, 89 SCRA 520 (1979), the Court emphasized that if the basis of the
adverse claim is a perfected contract of sale, the proper procedure is to register the vendee’s
right as prescribed by Sections 51 and 52 of PD 1529, and not under Section 70 which is ineffec-

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tive for the purpose of protecting the vendee’s right since it does not have the effect of a
conveyance. Logarta vs. Mangahis, 795 SCRA 644, G.R. No. 213568 July 5, 2016
The prevailing rule is that voluntary instruments such as contracts of sale, contracts to sell,
and conditional sales are registered by presenting the owner’s duplicate copy of the title for
annotation, pursuant to Sections 51 to 53 of Presidential Decree (PD) No. 1529.
The reason for requiring the production of the owner’s duplicate certificate in the registration
of a voluntary instrument is that, being a willful act of the registered owner, it is to be
presumed that he is interested in registering the instrument and would willingly surrender,
present or produce his duplicate certificate of title to the Register of Deeds in order to
accomplish such registration.
The exception to this rule is when the registered owner refuses or fails to surrender his
duplicate copy of the title, in which case the claimant may file with the Register of Deeds a
statement setting forth his adverse claim. Logarta vs. Mangahis, 795 SCRA 644, G.R. No.
213568 July 5, 2016
Time and again, it has been held that a certificate of title shall not be subject to a collateral
attack and that the issue of the validity of title can only be assailed in an action expressly
instituted for such purpose.
It should be pointed out that petitioners’ attack on the validity of respondent’s Torrens title in
Civil Case No. S-606 by claiming that their father Victor became the owner of the subject
property by virtue of the CLT issued to him in 1978 constitutes a collateral attack on said title. It
is an attack incidental to their quest to defend their possession of the property in an accion
publiciana, not in a direct action aimed at impugning the validity of the judgment granting the
title.
Hence, any declaration the CA may have made in its October 17, 2003 Decision stemming from
Civil Case No. S-606 cannot affect respondent’s ownership over the property nor nullify his
Torrens title, as the adjudication was only for the purpose of resolving the issue of possession.
Heirs of Victor Amistoso vs. Vallecer, 848 SCRA 268, G.R. No. 227124 December 6, 2017

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An action or proceeding is deemed to be an attack on a certificate of title when its objective is

to nullify the same, thereby challenging the judgment pursuant to which the certificate of title
was decreed.
Corollary thereto, it is a well-known doctrine that the issue as to whether the certificate of title
was procured by falsification or fraud can only be raised in an action expressly instituted for
such purpose. As explicated in Borbajo v. Hidden View Homeowners, Inc., 450 SCRA 315 (2005):
It is a well-known doctrine that the issue as to whether [the certificate of] title was procured by
falsification or fraud can only be raised in an action expressly instituted for the purpose. A
Torrens title can be attacked only for fraud, within one year after the date of the issuance of
the decree of registration. Such attack must be direct, and not by a collateral proceeding. The
title represented by the certificate cannot be changed, altered, modified, enlarged, or
diminished in a collateral proceeding. The certificate of title serves as evidence of an
indefeasible title to the property in favor of the person whose name appears therein. Bagayas
vs. Bagayas, 706 SCRA 73, G.R. Nos. 187308 and 187517 September 18, 2013
While the rule is that every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no way oblige him to
go beyond the certificate to determine the condition of the property, where the land sold is in
the possession of a person other than the vendor, the purchaser must go beyond the
certificate of title and make inquiries concerning the actual possessor.
As this Court explained in the case of Sps. Mathay v. CA, 295 SCRA 556 (1998): Although it is a
recognized principle that a person dealing [with] a registered land need not go beyond its
certificate of title, it is also a firmly settled rule that where there are circumstances which
would put a party on guard and prompt him to investigate or inspect the property being sold to
him, such as the presence of occupants/tenants thereon, it is, of course, expected from the
purchaser of a valued piece of land to inquire first into the status or nature of possession of the
occupants, i.e., whether or not the occupants possess the land en concepto de dueño, in
concept of owner. As is the common practice in the real estate industry, an ocular inspection of
the premises involved is a safeguard a cautious and prudent purchaser usually takes. Should he
find out that the land he intends to buy is occupied by anybody else other than the seller who,
as in this case, is not in actual possession, it would then be incumbent upon the purchaser to
verify the extent of the occupant’s possessory rights. The failure of a prospective buyer to take
such precautionary steps would mean negligence on his part and would thereby preclude him
from claiming or invoking the rights of a “purchaser in good faith.” Magsano vs. Pangasinan
Savings and Loan Bank, Inc., 806 SCRA 197, G.R. No. 215038 October 17, 2016; see also Heirs
of Victorino Sarili, The vs. Lagrosa, 713 SCRA 726, G.R. No. 193517 January 15, 2014

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It is well-settled that even if the procurement of a certificate of title was tainted with fraud
and misrepresentation, such defective title may be the source of a completely legal and valid
title in the hands of an innocent purchaser for value.
Where innocent third persons, relying on the correctness of the certificate of title thus issued,
acquire rights over the property, the court cannot disregard such rights and order the total
cancellation of the certificate. The effect of such an outright cancellation would be to impair
public confidence in the certificate of title, for everyone dealing with property registered under
the Torrens system would have to inquire in every instance whether the title has been regularly
or irregularly issued. This is contrary to the evident purpose of the law. Heirs of Victorino Sarili,
The vs. Lagrosa, 713 SCRA 726, G.R. No. 193517 January 15, 2014
A higher degree of prudence is required from one who buys from a person who is not the
registered owner, although the land object of the transaction is registered.
In such a case, the buyer is expected to examine not only the certificate of title but all factual
circumstances necessary for him to determine if there are any flaws in the title of the
transferor. The buyer also has the duty to ascertain the identity of the person with whom he is
dealing with and the latter’s legal authority to convey the property. The strength of the buyer’s
inquiry on the seller’s capacity or legal authority to sell depends on the proof of capacity of the
seller. If the proof of capacity consists of a special power of attorney duly notarized, mere
inspection of the face of such public document already constitutes sufficient inquiry. If no such
special power of attorney is provided or there is one but there appears to be flaws in its notarial
acknowledgment, mere inspection of the document will not do; the buyer must show that his
investigation went beyond the document and into the circumstances of its execution. Heirs of
Victorino Sarili, The vs. Lagrosa, 713 SCRA 726, G.R. No. 193517 January 15, 2014
As against an array of proofs consisting of tax declarations and/or tax receipts which are not
conclusive evidence of ownership nor proof of the area covered therein, an original certificate
of title, which indicates true and legal ownership by the registered owners over the disputed
premises, must prevail.
It is an elemental rule that a decree of registration bars all claims and rights which arose or may
have existed prior to the decree of registration. By the issuance of the decree, the land is bound
and title thereto quieted, subject only to certain exceptions under the property registration
decree. xxx Accordingly, respondents’ Decree No. 98992 for which an original certificate of title
was issued should be accorded greater weight as against the tax declarations and tax receipts

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presented by petitioners in this case. Heirs of Alejandra Delfin vs. Rabadon, 702 SCRA 587,
G.R. No. 165014 July 31, 2013
Tax declarations and tax receipts may only become the basis of a claim for ownership when
they are coupled with proof of actual possession of the property.
In this case, records are bereft of any showing that petitioners, or any of their predecessors-in-
interest, have been in actual possession of the subject property prior to 1989 as they claim. The
tax declarations and tax receipts are insufficient to prove their proffered theory that their
predecessor-in-interest, Remegio, was the lawful possessor and owner of the foregoing
property even before the last World War. In fact, petitioners altogether failed to prove the
legitimacy of Remegio’s possession and ownership since they failed to present the pertinent
deed of sale or any other evidence of the latter’s title. On the contrary, aside from the LRA
certification and daybook entry which prove the existence of Decree No. 98992, respondents’
possession of the subject property prior to petitioners’ entry in 1989 was attested to by one
Marcelina Tabora who, as the CA notes, appears to be an unbiased witness. All told, by sheer
preponderance of evidence, respondents have shown a better right to the ownership and
possession of the subject property and hence, must be awarded the same. Heirs of Alejandra
Delfin vs. Rabadon, 702 SCRA 587, G.R. No. 165014 July 31, 2013
Reconstitution requires that (a) notice of the petition should be published in two (2)
successive issues of the Official Gazette; and (b) publication should be made at least thirty
(30) days prior to the date of hearing.
At the outset, the Court notes that the present amended petition for reconstitution is anchored
on the owner’s duplicate copy of TCT No. 8240 — a source for reconstitution of title under
Section 3(a) of RA 26 which, in turn, is governed by the provisions of Section 10 in relation to
Section 9 of RA 26 with respect to the publication, posting, and notice requirements. Section 10
reads: SEC. 10. Nothing hereinbefore provided shall prevent any registered owner or person in
interest from filing the petition mentioned in section five of this Act directly with the proper
Court of First Instance, based on sources enumerated in sections 2(a), 2(b), 3(a), 3(b), and/or
4(a) of this Act: Provided, however, That the court shall cause a notice of the petition, before
hearing and granting the same, to be published in the manner stated in section nine hereof:
And, provided, further, That certificates of title reconstituted pursuant to this section shall not
be subject to the encumbrance referred to in section seven of this Act. Corollarily, Section 9
reads in part: SEC. 9. Thereupon, the court shall cause a notice of the petition to be published,
at the petitioner’s expense, twice in successive issues of the Official Gazette, and to be posted

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on the main entrance of the provincial building and of the municipal building of the
municipality or city in which the land lies, at least thirty days prior to the date of hearing, and
after hearing, shall determine the petition and render such judgment as justice and equity may
require. x x x. The foregoing provisions, therefore, clearly require that (a) notice of the petition
should be published in two (2) successive issues of the Official Gazette; and (b) publication
should be made at least thirty (30) days prior to the date of hearing. Substantial compliance
with this jurisdictional requirement is not enough; it bears stressing that the acquisition of
jurisdiction over a reconstitution case is hinged on a strict compliance with the requirements of
the law. Republic vs. De Asis, Jr.., 702 SCRA 258, G.R. No. 193874 July 24, 2013
The thirty-day period that precedes the scheduled hearing should be reckoned from the time
of the actual circulation or release of the last issue of the Official Gazette, and not on the date
of its issue as reflected on its front cover.
To interpret it otherwise, as the CA had erroneously done in this case, would render nugatory
the purposes of publication in reconstitution proceedings, which are to safeguard against
spurious and unfounded land ownership claims, to apprise all interested parties of the
existence of such action, and to give them enough time to intervene. Otherwise, unscrupulous
parties would merely invoke compliance with the requirement of two-time publication in the
Official Gazette, without regard to the date of its actual release, as a convenient excuse for
their failure to observe the mandatory prerequisite of publication. Republic vs. De Asis, Jr.., 702
SCRA 258, G.R. No. 193874 July 24, 2013
While it is true that the thirty-day period in this case was short by only three (3) days, the
principle of substantial compliance cannot apply, as the law requires strict compliance,
without which the Supreme Court is devoid of authority to pass upon and resolve the petition.
As the Court has declared in the case of Castillo v. Republic, 652 SCRA 600 (2011): x x x In all
cases where the authority of the courts to proceed is conferred by a statute, the mode of
proceeding is mandatory, and must be strictly complied with, or the proceeding will be utterly
void. When the trial court lacks jurisdiction to take cognizance of a case, it lacks authority over
the whole case and all its aspects. All the proceedings before the trial court, including its order
granting the petition for reconstitution, are void for lack of jurisdiction. Republic vs. De Asis, Jr.,
702 SCRA 258, G.R. No. 193874 July 24, 2013

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Strict compliance with the requirements of the law aims to thwart dishonest parties from
abusing reconstitution proceedings as a means of illegally obtaining properties otherwise
already owned by other parties.
It bears stressing that the nature of reconstitution proceedings under RA 26 denotes a

restoration of the instrument, which is supposed to have been lost or destroyed, in its original
form and condition. As such, reconstitution must be granted only upon clear proof that the title
sought to be restored had previously existed and was issued to the petitioner. Strict compliance
with the requirements of the law aims to thwart dishonest parties from abusing reconstitution
proceedings as a means of illegally obtaining properties otherwise already owned by other
parties. Republic vs. De Asis, Jr.., 702 SCRA 258, G.R. No. 193874 July 24, 2013
TORTS AND DAMAGES
Elements of Quasi-delicts
An action for damages due to the negligence of another may be instituted on the basis of
Article 2176 of the Civil Code, which defines a quasi-delict: Article 2176. Whoever by act or
omission causes damage to another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no preexisting contractual relation between
the parties, is called a quasi-delict and is governed by the provisions of this Chapter. The
elements of a quasi-delict are: (1) an act or omission; (2) the presence of fault or negligence in
the performance or nonperformance of the act; (3) injury; (4) a causal connection between the
negligent act and the injury; and (5) no preexisting contractual relation. St. Martin Polyclinic,
Inc. vs. LWV Construction Corporation, 847 SCRA 378, G.R. No. 217426 December 4, 2017
Jurisprudence defines negligence as the omission to do something which a reasonable man,

guided by those considerations which ordinarily regulate the conduct of human affairs, would
do, or the doing of something which a prudent and reasonable man would not do.
It is the failure to observe for the protection of the interest of another person that degree of
care, precaution, and vigilance which the circumstances justly demand, whereby such other
person suffers injury. Ruks Konsult and Construction vs. Adworld Sign and Advertising
Corporation, 746 SCRA 622, G.R. No. 204866 January 21, 2015
Negligence is defined as the failure to observe for the protection of the interests of another
person, that degree of care, precaution and vigilance which the circumstances justly demand,

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whereby such other person suffers injury. St. Martin Polyclinic, Inc. vs. LWV Construction
Corporation, 847 SCRA 378, G.R. No. 217426 December 4, 2017
Gross Negligence is one that is characterized by the want of even slight care, acting or
omitting to act in a situation where there is a duty to act, not inadvertently but willfully and
intentionally with a conscious indifference to consequences insofar as other persons may be
effected.
In the case of Government Service Insurance System v. Pacific Airways Corporation, 629 SCRA
219 (2010), the Court has defined gross negligence as “one that is characterized by the want of
even slight care, acting or omitting to act in a situation where there is a duty to act, not
inadvertently but willfully and intentionally with a conscious indifference to consequences
insofar as other persons may be affected.” Baño vs. Bachelor Express, Inc., 667 SCRA 782, G.R.
No. 191703 March 12, 2012
The underlying precept on contributory negligence is that a plaintiff who is partly responsible
for his own injury should not be entitled to recover damages in full but must bear the
consequences of his own negligence.
In view of Sps. Sonkin’s undisputed failure to observe the two (2)-meter setback rule under the
National Building Code, and in light of the order of the courts a quo directing Sps. Vergara to
provide an adequate drainage system within their property, the Court likewise deems it proper,
equitable, and necessary to order Erlinda, who is solely impleaded as respondent before the
Court, to comply with the aforesaid rule by the removal of the portion of her house directly
abutting the partition wall. Vergara vs. Sonkin, 757 SCRA 442, G.R. No. 193659 June 15, 2015
As a general rule, any act or omission coming under the purview of Article 2176 gives rise to a
cause of action under quasi-delict.
This, in turn, gives the basis for a claim of damages. Notably, quasi-delict is one among several
sources of obligation. Article 1157 of the Civil Code states: Article 1157. Obligations arise from:
(1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasi-
delicts. St. Martin Polyclinic, Inc. vs. LWV Construction Corporation, 847 SCRA 378, G.R. No.
217426 December 4, 2017

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Under the Civil Code, acts done in violation of Articles 19, 20, and 21 will also give rise to
damages.
As explained by Associate Justice Marvic M.V.F. Leonen (Justice Leonen) in his opinion in Alano
v. Magud-Logmao (Alano), 720 SCRA 655 (2014), “Article 2176 is not an all-encompassing
enumeration of all actionable wrongs which can give rise to the liability for damages. Under the
Civil Code, acts done in violation of Articles 19, 20, and 21 will also give rise to damages.” These
provisions — which were cited as bases by the MTC, RTC and CA in their respective rulings in
this case — read as follows: Article 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe honesty and
good faith. Article 20. Every person who, contrary to law, willfully or negligently causes damage
to another, shall indemnify the latter for the same. Article 21. Any person who willfully causes
loss or injury to another in a manner that is contrary to morals, good customs, or public policy
shall compensate the latter for the damage. St. Martin Polyclinic, Inc. vs. LWV Construction
As claimed negligent act of petitioner was not premised on the breach of any law, and not to
mention the incontestable fact that no preexisting contractual relation was averred to exist
between the parties, Article 2176 — instead of Articles 19, 20 and 21 — of the Civil Code
should govern.
In this case, the courts a quo erroneously anchored their respective rulings on the provisions of
Articles 19, 20, and 21 of the Civil Code. This is because respondent did not proffer (nor have
these courts mentioned) any law as basis for which damages may be recovered due to
petitioner’s alleged negligent act. In its amended complaint, respondent mainly avers that had
petitioner not issue a “fit for employment” Medical Report to Raguindin, respondent would not
have processed his documents, deployed him to Saudi Arabia, and later on — in view of the
subsequent findings that Raguindin was positive for HCV and hence, unfit to work — suffered
actual damages in the amount of P84,373.41. St. Martin Polyclinic, Inc. vs. LWV Construction
Malicious Prosecution
As the Court sees it, the filing by the parties of their respective complaints against each other
was not clearly and convincingly shown to have been precipitated by any malice or bad faith,
sufficient enough to warrant the payment of damages in favor of either party. As correctly
pointed out by the CA, malicious prosecution, both in criminal and civil cases, requires the

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presence of two (2) elements, namely: (a) malice; and (b) absence of probable cause.
Moreover, there must be proof that the prosecution was prompted by a sinister design to vex
and humiliate a person; and that it was initiated deliberately knowing that the charge was false
and baseless. Hence, the mere filing of a suit which subsequently turns out to be unsuccessful
does not render a person liable for malicious prosecution, for the law could not have meant to
impose a penalty on the right to litigate. As the aforementioned elements were not duly
proven, the claims for malicious prosecution are hereby denied. Rana vs. Wong, 727 SCRA 539,
G.R. No. 192862 June 30, 2014
It is settled that where the security agency, as here, recruits, hires and assigns the work of its
watchmen or security guards, the agency is the employer of such guards and watchmen.
Liability for illegal or harmful acts committed by the security guards attaches to the employer
agency, and not to the clients or customers of such agency.
Neither will the vicarious liability of an employer under Article 2180 of the Civil Code apply in
this case. It is uncontested that Peña and Gaddi were assigned as security guards by AIB to BSP
pursuant to the Guard Service Contract. Clearly, therefore, no employer-employee relationship
existed between BSP and the security guards assigned in its premises. Consequently, the latter’s
negligence cannot be imputed against BSP but should be attributed to AIB, the true employer of
Peña and Gaddi. xxx As a general rule, a client or customer of a security agency has no hand in
selecting who among the pool of security guards or watchmen employed by the agency shall be
assigned to it; the duty to observe the diligence of a good father of a family in the selection of
the guards cannot, in the ordinary course of events, be demanded from the client whose
premises or property are protected by the security guards. The fact that a client company may
give instructions or directions to the security guards assigned to it, does not, by itself, render
the client responsible as an employer of the security guards concerned and liable for their
wrongful acts or omissions. Those instructions or directions are ordinarily no more than
requests commonly envisaged in the contract for services entered into with the security
agency. Mamaril vs. The Boy Scout of the Philippines, 688 SCRA 437, G.R. No. 179382 January
14, 2013
Under Article 2194 of the Civil Code, joint tortfeasors are solidarily liable for the resulting
damage; Joint tortfeasors are each liable as principals, to the same extent and in the same
manner as if they had performed the wrongful act themselves.
Both Transworld and Ruks were fully aware that the foundation for the former’s billboard was
weak; yet, neither of them took any positive step to reinforce the same. They merely relied on

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each other’s word that repairs would be done to such foundation, but none was done at all.
Clearly, the foregoing circumstances show that both Transworld and Ruks are guilty of
negligence in the construction of the former’s billboard, and perforce, should be held liable for
its collapse and the resulting damage to Adworld’s billboard structure. As joint tortfeasors,
therefore, they are solidarily liable to Adworld. Verily, “[j]oint tortfeasors are those who
command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the
commission of a tort, or approve of it after it is done, if done for their benefit. They are also
referred to as those who act together in committing wrong or whose acts, if independent of
each other, unite in causing a single injury. Ruks Konsult and Construction vs. Adworld Sign
and Advertising Corporation, 746 SCRA 622, G.R. No. 204866 January 21, 2015
As case law holds, the amount of loss warranting the grant of actual or compensatory
damages must be proved with a reasonable degree of certainty, based on competent proof
and the best evidence obtainable by the injured party.
Since the sales projection on which the CA based its award for actual damages was derived
from figures representing the “alleged unregistered or fabricated sales invoices” of E.A.
Northam from 1990 to 1993 and the “desired profit” of 15-20%, it would therefore be a legal
mishap to sustain that award. As case law holds, the amount of loss warranting the grant of
actual or compensatory damages must be proved with a reasonable degree of certainty, based
on competent proof and the best evidence obtainable by the injured party. The CA’s finding on
respondents’ supposed loss of profits in the amount of P6,000,000.00 based on the erroneous
sales projection hardly meets this requirement. Accordingly, it must be set aside. S.V. More
Pharma Corporation vs. Drugmakers Laboratories, Inc., 740 SCRA 253, G.R. No. 200408
November 12, 2014
Even when a claimant is compelled to litigate with third persons or to incur expenses to
protect his rights, still attorney’s fees may not be awarded where no sufficient showing of bad
faith could be reflected in a party’s persistence in a case other than an erroneous conviction of
the righteousness of his cause.
As to attorney’s fees, the general rule is that the same cannot be recovered as part of damages
because of the policy that no premium should be placed on the right to litigate. They are not to
be awarded every time a party wins a suit. The power of the court to award attorney’s fees
under Article 2208 of the Civil Code demands factual, legal, and equitable justification.

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Even when a claimant is compelled to litigate with third persons or to incur expenses to
protect his rights, still attorney’s fees may not be awarded where no sufficient showing of bad
faith could be reflected in a party’s persistence in a case other than an erroneous conviction of
the righteousness of his cause.
Anent the issue on attorney’s fees, the general rule is that the same cannot be recovered as
part of damages because of the policy that no premium should be placed on the right to
litigate. They are not to be awarded every time a party wins a suit. The power of the court to
award attorney’s fees under Article 2208 of the Civil Code demands factual, legal, and equitable
justification. xxx In this case, the Court observes that neither Sps. Sonkin nor Sps. Vergara (thru
their compulsory counterclaim) were shown to have acted in bad faith in pursuing their
respective claims against each other. The existence of bad faith is negated by the fact that both
parties have valid contentions against each other. Thus, absent cogent reason to hold
otherwise, the Court deems it inappropriate to award attorney’s fees in favor of either party.
Vergara vs. Sonkin, 757 SCRA 442, G.R. No. 193659 June 15, 2015; see also Equitable Savings
Bank (now known as the merged entity “BDO Unibank, Inc.”) vs. Palces, 787 SCRA 260, G.R.
No. 214752 March 9, 2016
Under Article 2216 of the Civil Code, courts have the discretion to determine awards of
nominal and temperate damages without actual proof of pecuniary loss.
As the records establish, Sps. Rana, without prior consultation with Wong, et al. and to their
sole advantage, elevated and cemented almost half of the 10-meter wide subject road. As
homeowners of Peace Valley Subdivision, Wong, et al. maintain the rights to the unobstructed
use of and free passage over the subject road. By constructing the subject portion, Sps. Rana
introduced a nuisance per accidens that particularly transgressed the aforesaid rights. Thus, for
the vindication and recognition of Wong, et al.’s rights, Sps. Rana should be similarly held liable
for nominal damages. Rana vs. Wong, 727 SCRA 539, G.R. No. 192862 June 30, 2014
Article 2224 of the Civil Code states that “temperate or moderate damages, which are more
than nominal but less than compensatory damages, may be recovered when the court finds
that some pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be proved with certainty.”
Considering that respondents palpably suffered some form of pecuniary loss resulting from
petitioners’ breach of contract, the Court deems it proper to, instead, award in their favor the

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sum of P100,000.00 in the form of temperate damages. S.V. More Pharma Corporation vs.
Drugmakers Laboratories, Inc., 740 SCRA 253, G.R. No. 200408 November 12, 2014
Temperate Damages
Under the foregoing circumstances, the Court is convinced that Nanito should have received
remittances representing net profits from respondents, albeit he failed to prove the exact
amount he should receive from the latter. In Seven Brothers Shipping Corporation v. DMC-
Construction Resources, Inc., 743 SCRA 33 (2014), the Court allowed the recovery of temperate
damages in instances where it has been established that some pecuniary loss has been
suffered, but its amount cannot be proven with certainty. Evangelista vs. Andolong III, 809
SCRA 271, G.R. No. 221770 November 16, 2016
Moral Damages are only given to ease the defendant’s grief and suffering and should,
therefore, reasonably approximate the extent of hurt caused and the gravity of the wrong
done.
In view of Sps. Sonkin’s contributory negligence, the Court deems it appropriate to delete the
award of moral damages in their favor. While moral damages may be awarded whenever the
defendant’s wrongful act or omission is the proximate cause of the plaintiff’s physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation and similar injury in the cases specified or analogous to those provided in
Article 2219 of the Civil Code, they are only given to ease the defendant’s grief and suffering
and should, therefore, reasonably approximate the extent of hurt caused and the gravity of the
wrong done. Vergara vs. Sonkin, 757 SCRA 442, G.R. No. 193659 June 15, 2015
Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant’s wrongful act or omission.
With respect to the claims for moral damages, although the Court found the parties to have
sustained nominal damages as a result of the other parties’ acts, an award of moral damages
would nonetheless be improper in this case.
Article 2217 of the Civil Code states that “[m]oral damages include physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social

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humiliation, and similar injury. Though incapable of pecuniary computation, moral damages
may be recovered if they are the proximate result of the defendant’s wrongful act for
omission.” Corollary thereto, Article 2219 of the same code (Article 2219) states that “[m]oral
damages may be recovered in the following and analogous cases: (1) A criminal offense
resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction,
rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or
arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious
prosecution; (9) Acts mentioned in Article 309; [and] (10) Acts and actions referred to in Articles
21, 26, 27, 28, 29, 30, 32, 34, and 35.” Rana vs. Wong, 727 SCRA 539, G.R. No. 192862 June 30,
2014
In order that moral damages under Article 2219 of the Civil Code may be awarded, there must
be pleading and proof of moral suffering, mental anguish, fright and the like.
In Mahinay v. Velasquez, Jr., 419 SCRA 118 (2004), the Court explained: While no proof of
pecuniary loss is necessary in order that moral damages may be awarded, the amount of
indemnity being left to the discretion of the court, it is nevertheless essential that the claimant
should satisfactorily show the existence of the factual basis of damages and its causal
connection to defendant’s acts. This is so because moral damages, though incapable of
pecuniary estimation, are in the category of an award designed to compensate the claimant for
actual injury suffered and not to impose a penalty on the wrongdoer. In Francisco v. GSIS, the
Court held that there must be clear testimony on the anguish and other forms of mental
suffering. Thus, if the plaintiff fails to take the witness stand and testify as to his/her social
humiliation, wounded feelings and anxiety, moral damages cannot be awarded. In Cocoland
Development Corporation v. National Labor Relations Commission, the Court held that
“additional facts must be pleaded and proven to warrant the grant of moral damages under the
Civil Code, these being, x x x social humiliation, wounded feelings, grave anxiety, etc., that
resulted therefrom.” Buenviaje vs. Salonga, 805 SCRA 369, G.R. No. 216023 October 5, 2016
Exemplary damages are imposed only “by way of example or correction for the public good,
in addition to the moral, temperate, liquidated or compensatory damages.”
The Court deems that an award of exemplary damages would be inappropriate since these
damages are imposed only “by way of example or correction for the public good, in addition to
the moral, temperate, liquidated or compensatory damages.” Bluntly placed, the Court does
not view the present matters of such caliber. Hence, there is no reason to grant the parties’
claims for the same. Rana vs. Wong, 727 SCRA 539, G.R. No. 192862 June 30, 2014

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Exemplary Damages are awarded to serve as a warning to the public and as a deterrent
against the repetition of similar deleterious actions.
The CA erred in deleting the awards of exemplary damages, which the law grants to serve as a
warning to the public and as a deterrent against the repetition of similar deleterious actions.
However, the award should be tempered as it is not intended to enrich one party or to
impoverish another. Thus, the Court reinstates the separate awards of exemplary damages to
petitioners in the amount of P50,000.00. Baño vs. Bachelor Express, Inc., 667 SCRA 782, G.R.
No. 191703 March 12, 2012

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2019 BAR REVIEW CIVIL LAW

CHAIR’S CASES Handout No. 38

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Principle of Unjust Enrichment

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PERSONS AND FAMILY RELATIONS

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Although expert opinions furnished by psychologists regarding the psychological

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Judicial Declaration of Presumptive Death

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Buyer in Good Faith

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The determination, therefore, as to the existence of co-ownership is necessary in the resolution

In an action for partition premised on the existence or non-existence of co-ownership

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Legal Easement Pertaining to the Natural Drainage of Lands

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OBLIGATIONS AND CONTRACTS

Specific performance and “rescission” (more accurately referred to as resolution) are

Specific performance pertains to “[t]he actual accomplishment of a contract by a party bound

Specific performance is defined as “[t]he remedy of requiring exact performance of a contract

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Where parties agree to a stipulation allowing extrajudicial rescission, no judicial decree is

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Principle of Relativity of Contracts

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For a stipulation pour autrui to be appreciated, it is indispensable that there be a stipulation

Requisites of a Stipulation Pour Autrui

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A compromise is a contract whereby the parties, by making reciprocal concessions, avoid

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To be considered valid and binding between the contracting parties, a compromise

A compromise agreement is a contract whereby the parties, by making reciprocal concessions,

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“Contract to Sell” and “Conditional Contract of Sale,” Distinguished.

There was no vendor-vendee relationship between respondent and petitioner. A judicious

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