Significant Rulings in Civil Law

Based on Latest Jurisprudence and

Decisions penned by Justice Perlas-Bernabe
2019 Bar Examinations
Prepared by Atty. Victoria V. Loanzon
(U.P. College of Law)
with the assistance of Atty. Zarah Suarez
(U.S.T. Faculty of Civil Law)

HUMAN RELATIONS AND GENERAL PRINCIPLES

Locsin v. Mekeni, G.R. NO. 192105, December 9, 2013
Q. X, an employee of Y Company, obtained a car plan where it was agreed that half of the cost of
the vehicle shall be paid by Y company while the other half shall be deducted from X's salary. X
was able to pay his 50% share and thereafter, he resigned from work. He offered to purchase the
vehicle from Y Company but the latter refused, saying that the deductions made from X's salary
will be treated as rentals for the use of the car and shall not be refunded.
Is Y Company guilty of unjust enrichment?
Answer: Yes, Y Company is guilty of unjust enrichment. There is unjust enrichment ''when a
person unjustly retains a benefit to the loss of another, or when a person retains money or
property of another against the fundamental principles of justice, equity and good conscience."
The principle of unjust enrichment requires two conditions: (1) that a person is benefited without
a valid basis or justification, and (2) that such benefit is derived at the expense of another. The
main objective of the principle against unjust enrichment is to prevent one from enriching himself
at the expense of another without just cause or consideration.

HUMAN RELATIONS: ABUSE OF RIGHT PRINCIPLE

Elizabeth L. Diaz v. Georgina R. Encanto, et. al., (G.R. No. 171303, 20 January 2016)
Q. Diaz applied for a sabbatical leave and she was only allowed to go on leave based on her
accumulated leave credits. She had hoped that the higher authorities of the University of the
Philippines would approve of her leave and she expressed her unwillingness to take any teaching
assignments.
When her sabbatical leave was disapproved she accepted her new teaching assignments; but
failed to comply with the Duty Form so her salaries were withheld.
She instituted an action against the respondents before the RTC of Pasig City praying that the
respondents be adjudged, jointly and severally to pay her damages. Aside from her claim of her
salaries, she also prayed for moral and exemplary damages and attorney's fees.
The trial court ruled in favor of Diaz holding that the delay in the resolution of her application
was unreasonable and unconscionable. The Court of Appeals reversed the decision of the trial
court having found neither negligence nor bad faith on the part of the respondents in their denial
of petitioner Diaz's sabbatical leave application and in withholding her salaries.
Diaz appealed the decision to the Supreme Court. Resolve the appeal of Diaz.
Answer: The appeal of Diaz must be dismissed. The decision of the Court of Appeals must be
sustained. Evidently, Diaz failed to prove bad faith on the part of the respondents. Article 19 of
the Civil Code "prescribes a 'primordial limitation on all rights' by setting certain standards that
must be observed in the exercise thereof." Abuse of right under Article 19 exists when the
following elements are present: (1) there is a legal right or duty; (2) which is exercised in bad
faith; (3) for the sole intent of prejudicing or injuring another.
This Court, expounding on the concept of bad faith under Article 19, held:
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“Malice or bad faith is at the core of Article 19 of the Civil Code. Good faith refers to the state
of mind which is manifested by the acts of the individual concerned. It consists of the intention to
abstain from taking an unconscionable and unscrupulous advantage of another. It is presumed.
Thus, he who alleges bad faith has the duty to prove the same. Bad faith does not simply connote
bad judgment or simple negligence; it involves a dishonest purpose or some moral obloquy and
conscious doing of a wrong, a breach of known duty due to some motives or interest or ill will
that partakes of the nature of fraud. Malice connotes ill will or spite and speaks not in response
to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad
motive.” (Citations omitted.)

St. Martin Polyclinic, Inc., v. LWV Construction Corporation, G.R. No. 217426, December 4, 2017,
J. Perlas-Bernabe
Q. LWV Construction Corporation recruits Filipino workers for deployment to Saudi Arabia. St.
Martin Polyclinic, Inc. (SMPI) is an entity authorized to conduct medical examinations of
prospective applicants for overseas employment.
Jonathan Raguindin, a prospective applicant was referred to SMPI for a pre-deployment
medical examination. Raguindin was found “fit for employment.” Raguindin was eventually
deployed to Saudi Arabia.
Raguindin underwent another medical examination with the General Care Dispensary of Saudi
Arabia and he tested positive for Hepatitis C Virus.
May LMV institute an action against SMPI based on Articles 19, 20 and 21?
Answer: The action for damages should be anchored on Art. Art. 2176 and not based on Articles
19, 20 and 21 of the Civil Code. An action for damages due to the negligence of another may be
instituted on the basis of Art. 2176 of the Civil Code which defines a quasi-delict.
Art. 2176 applies when the negligent act causing damage to another does not constitute “a breach
of an existing law or a pre-existing contractual obligation.”

PERSONS AND FAMILY RELATIONS: GOOD FAITH

Heirs of Jose Ochoa v. G & S Transport Corporation (G.R. No. 170071, July 16, 2012)
Q. Jose Marcial K. Ochoa boarded a taxicab operated by G & S Transport and driven by
Bibiano Padilla, Jr. While going up the Santolan fly-over, he overtook another vehicle which was
trying to overtake another vehicle, a ten-wheeler cargo truck.
Bibiano tried to avoid the collision but was unsuccessful and his taxi cab fell in the middle of
EDSA. Ochoa was declared dead on arrival from the accident. Bibiano was acquitted in the
reckless imprudence case but the heirs of Ochoa filed the present Breach of Contract case. Will
the case prosper?
Answer: Yes, the case will prosper. The acquittal of Bibiano in the criminal case is immaterial to
the instant case for breach of contract. Article 31 of the Civil Code provides, “when the civil
action is based on an obligation not arising from the act or omission complained of as a felony,
such civil action may proceed independently of the criminal proceedings and regardless of the
result of the latter. A common carrier is required to observe extraordinary diligence.

ESSENTIALS OF MARRIAGE
Alcantara vs. Alcantara, G.R. No. 167746, August 28, 2007)
Q. Is the marriage void on the ground of absence of a marriage license?
Answer: To be considered void on the ground of absence of a marriage license, the law requires
that the absence of such marriage license must be apparent on the marriage contract, or at the

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very least, supported by a certification from the local civil registrar that no such marriage license
was issued to the parties.
The Certification moreover is precise in that it specifically identified the parties to whom the
marriage license was issued, further validating the fact that a license was in fact issued to the
parties herein. This Certification enjoys the presumption that official duty has been regularly
performed and the issuance of the marriage license was done in the regular conduct of official
business.
Q. Is it material that the party must be a resident of the place where the license was applied?
Answer: Issuance of a marriage license in a city or municipality, not the residence of either of
the contracting parties, and issuance of a marriage license despite the absence of publication or
prior to the completion of the
10-day period for publication are considered mere irregularities that do not affect the validity of
the marriage. An irregularity in any of the formal requisites of marriage does not affect its
validity but the party or parties responsible for the irregularity are civilly, criminally and
administratively liable.

Q. What are the instances when marriage license is not required?

Answer: The requirement of marriage license may be dispensed with in the following instances:
(1) Marriage in articulo mortis (at the point of death) even if the ailing party subsequently
survives;
(2) If the residence of either party is so located that there is no means of transportation to
enable such party to personally appear before the local civil registrar;
(3) Marriage among Muslims or among members of the ethnic cultural communities, provided
they are solemnized in accordance with their customs, rites or practices;
(4) Marriage between a man and a woman who have lived together as husband and wife for at
least five years and without impediment to marry each other; (Art. 27, 28, 33, and 34, Family
Code)
(5) Marriages celebrated abroad and in accordance with the laws of the place of celebration
which do not require a valid marriage license (Art. 26, and 35, Family Code)

Q. Can consul-generals, consuls, or vice-consuls solemnize a marriage abroad between a Filipino

and an alien?
Answer: No, consul-generals, consults, or vice-consuls cannot solemnize mixed marriages. Only
marriages between Filipino citizens abroad may be solemnized by a consul-general, consul or
vice-consul of the Philippines. With this, their authority is limited to marriages of both Filipinos
residing abroad. (Art. 10, Family Code)

Q. As a rule, 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 the Philippines. What are the exceptions to this rule?
Answer: Marriages under Arts. 35 (1), (4), (5) and (6), 36, 37 and 38 of the Family Code shall be
void from the beginning even if solemnized outside the Philippines, and valid there as such. More
specifically:
(1) Marriages contracted by any party below 18 years of age even with the consent of parents or
guardians;
(2) Bigamous or polygamous marriages not failing under Art. 41 which provides that where
before the celebration of a subsequent marriage, a prior spouse had been absent for four
consecutive years (or four years in case of disappearance where there is danger of death)

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and the spouse present has a well-founded belief that the absent spouse was already dead,
and the spouse present will institute a summary proceeding for the declaration of
presumptive death of the absentee;
(3) Marriages contracted through mistake of one contracting party as to the identity of the
other;
(4) Subsequent marriages that are void under Art. 53, i.e., when there is non-compliance with
the requirement of recording in the appropriate civil registry and registries of property the
judgment of annulment or of absolute nullity of the marriage, the partition and distribution of
the properties of the spouses and the delivery of the children’s presumptive legitimes, and
either of the former spouses marry again;
(5) A marriage contracted by any party who, at the time of the celebration, was psychologically
incapacitated to comply with the essential marital obligations of marriage, even if such
incapacity becomes manifest only after its solemnization;
(6) Incestuous marriages, whether relationship between the parties be legitimate or illegitimate:
a. between ascendants and descendants of any degree; or
b. between brothers and sisters, whether of the full or half blood; and
(7) Void marriages for reasons of public policy:
a. Between collateral blood relatives whether legitimate or illegitimate, up to the fourth
civil degree;
b. Between step-parents and step-children;
c. Between parents-in-law and children-in-law;
d. Between the adopting parent and the adopted child;
e. Between the surviving spouse of the adopting parent and the adopted child;
f. Between the surviving spouse of the adopted child and the adopter;
g. Between an adopted child and a legitimate child of the adopter;
h. Between adopted children of the same adopter; and
i. Between parties where one, with the intention to marry the other, killed that other
person's spouse, or his or her own spouse.

PROOF IN PETITION FOR DECLARATION OF NULLITY

Matudan v. Republic (G.R. No. 203284, November 14, 2016)
Q. Spouses Nicolas and Marilyn have been married for nine years when the latter decided to
work abroad. She has not communicated with her family and this prompted Nicolas to file an
action for Petition for Declaration of Nullity on the ground of psychological incapacity. The trial
court found no sufficient ground to grant the petition because the testimony of the child cannot
be given credence as she was only two years old when Marilyn left for abroad and the testimony
of the expert witness was based on a one-sided account.

(a) Does abandonment constitute incapacity that will merit annulment of marriage?
Answer: No, abandonment does not indicate one’s incapacity. Psychological incapacity refers to
no less than mental- not 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, as expressed in Article 68 of the Family Code.

(b) What will indicate incapacity to perform one’s marital duties?

Answer: In the landmark case of Santos v. Court of Appeals, the Court taught us that
psychological incapacity under Article 36 of the Family Code must be characterized by (a)
gravity, (b) juridical antecedence, and (c) incurability. Thus, the incapacity "must be grave or
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serious such that the party would be incapable of carrying out the ordinary duties required in
marriage; it must be rooted in the history of the party antedating the marriage, although the
overt manifestations may emerge only after marriage; and it must be incurable or, even if it were
otherwise, the cure would be beyond the means of the party involved."

(c) Who has the burden of proving psychological incapacity?

Answer: The burden is on the petitioner, pursuant to Republic v. Court of Appeals or the Molina
case. The existence or absence of the psychological incapacity is based strictly on the facts of each
case and not on a priori assumptions, predilections or generalizations. Indeed, the incapacity
should be established by the totality of evidence presented during trial, making it incumbent
upon the petitioner to sufficiently prove the existence of the psychological incapacity. Indeed,
what is important is the presence of evidence that can adequately establish the party's
psychological condition. The complete facts should allege the physical manifestations, if any, as
are indicative of psychological incapacity at the time of the celebration of the marriage.
Petitioner's judicial affidavit and testimony during trial, however, fail to show gravity and
juridical antecedence.
(d) Was the dismissal of the petition proper?
Answer: Yes, the child was not a competent witness to prove psychological incapacity of his
mother since he was barely two years old when his parents separated and for the court to
consider incapacity as a ground for annulment, the expert witness must have examined both
spouses.

Republic v. Reghis M. Romero II (GR No. 209180, FIRST DIVISION, February 24, 2016,
PERLAS-BERNABE, J.)
Q. Reghis and Olivia were married and were blessed with two (2) children. After having been
married for more than a decade, the couple parted ways in 1986.
Reghis then filed a petition for declaration of nullity of marriage citing his psychological
incapacity to comply with his essential marital obligations. The clinical psychologist submitted a
report and testified that Reghis suffered from Obsessive Compulsive Personality Disorder
(OCPD). This gave him a strong obsession for whatever endeavour he chooses, such as his work,
to the exclusion of other responsibilities and duties such as those pertaining to his roles as father
and husband. Dr. Basilio surmised that Reghis’ OCPD was the root of the couple’s disagreements
and that the same is incurable. The Office of the Solicitor General (OSG), representing the
Republic, opposed the petition. Rule on the petition.
Answer: I will deny the petition for nullity of Reghis. 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.
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 less, ill will, on the part of the errant spouse.

Rachel A. Del Rosario v. Jose O. Del Rosario and Court of Appeals (G.R. No. 222541, FIRST
DIVISION, February 15, 2017, PERLAS-BERNABE, J.)
Q. Rachel worked as a domestic helper in Hong Kong. She married Jose and settled in a house
they acquired. The married life ran smoothly up until Rachel filed a petition for declaration of
nullity of marriage.
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Her petition was anchored on the ground that Jose was psychologically incapacitated to fulfill his
essential marital obligations.
Rachel presented the testimony of Dr. Tayag who prepared the psychological report stating that
Jose suffered from Antisocial Personality Disorder (APD). The RTC declared the marriage
between Jose and Rachel void on the ground of psychological incapacity relying mainly on the
testimony of Dr. Tayag, declaring that Jose's APD interferes with his capacity to perform his
marital and paternal duties, as he in fact even refused to take responsibility for his actions,
notwithstanding the overwhelming evidence against him.
The Republic appealed the decision of the trial court. Rule on the appeal of the Republic.
Answer: The declaration of nullity of marriage of the trial court must be reversed.
Following the case of Republic v. Molina, the totality of evidence must show that psychological
incapacity exists and its gravity, juridical antecedence, and incurability must be duly established.
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.

Republic v. Gina P. Tecag, (G.R. No. 229272, SECOND DIVISION, November 19, 2018, PERLAS-
BERNABE, J.)
Q. After living together as husband and wife for two years, Gina and Marjune formalized their marital
union through civil rites. As a means of livelihood, they engaged in vegetable farming until Gina found
employment in Macau, where she likewise searched for job opportunities for Marjune but was not
successful. The marriage was marred with animosities between the spouses.
Thus, Gina filed a petition to declare her marriage with Marjune null and void on the basis of the latter's
psychological incapacity.
During trial, Gina presented the findings of Professor Emma Astudillo-Sanchez (Prof. Sanchez), the
psychologist who conducted a psychological examination of the parties. Was the testimony of Prof.
Sanchez sufficient to establish the incapacity of the spouses?
Answer: Under Article 36 of the Family Code, as amended, psychological incapacity is a valid ground to
nullify a marriage. However, in deference to the State's policy on marriage, psychological incapacity does
not merely pertain to any psychological condition; otherwise, it would be fairly easy to circumvent our
laws on marriage so much so that we would be practically condoning a legal
subterfuge for divorce.
Psychological incapacity has a specific and peculiar denotation.
The requirements for proving psychological incapacity can be traced in a long line of cases.
In Santos v. CA, the SC emphasized "that psychological incapacity must be characterized by:
(a) gravity (i.e., it must be grave and serious such that the party would be incapable of carrying out
the ordinary duties required in a marriage); (b) 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) incurability (i.e., it must be incurable, or even if it were otherwise, the
cure would be beyond the means of the party involved)."

PRESUMPTIVE DEATH OF ABSENT SPOUSE UNDER THE FAMILY CODE

Republic v. Nilda B . Tampus (G.R. No. 214243, FIRST DIVISION, March 16, 2016, PERLAS-
BERNABE, J.)
Q. Nilda B. Tampus and Dante L. Del Mundo got married on November 29, 1975. The last time
Nilda saw Dante, a member of the Armed Forces of the Philippines, was on December 2, 1975.
After all efforts of making inquiries with his parents, relatives, and neighbors as to Dante’s
whereabouts, Nilda filed before the RTC a petition to declare Dante as presumptively dead for

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the purpose of remarriage, alleging that after the lapse of thirty-three (33) years without any
kind of communication from him, she firmly believes that he is already dead.
Will the petition of Nilda prosper?
Answer: No, Nilda’s petition will not prosper. 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.
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.
Nilda made no further efforts to find her husband. She could have called or proceeded to the
AFP headquarters to request information about her husband, but failed to do so. She did not
even seek the help of the authorities or the AFP itself in finding him.

Q. What are the requisites to institute an action to declare a spouse to be presumptively dead?
Answer: Art. 41 of the Family Code requires that:
(1) The absent spouse has been missing for four consecutive years, or two consecutive years if
the disappearance occurred where there is danger of death under the circumstances laid
down in Art. 391 of the Civil Code;
(2) The present spouse wishes to remarry;
(3) The present spouse has a well-founded belief that the absentee is dead; and
(4) The present spouse files a summary proceeding for the declaration of presumptive death of
the absentee.

Tadeo-Matias v. Republic, G.R. No. 230751, April 25, 2018

Q. Is it proper to institute an action to solely declare person presumptively dead?
Answer: A petition whose sole objective is to have a person declared presumptively dead under
the Civil Code is not regarded as a valid suit and no court has any authority to take cognizance of
the same. A rule creating a presumption of death is merely one of evidence that cannot be the
lone subject of an independent action or proceeding. Such petition presents no actual controversy
that a court could decide. In such action, there would be no actual rights to be enforced, no
wrong to be remedied nor any status to be established. Moreover, a court action to declare a
person presumptively dead under Arts. 390 and 391 of the Civil Code would be unnecessary. The
presumption in the said articles is already established by law.

CONFLICT OF LAWS
Norma A. Del Socorro for and in behalf of her minor child Rodrigo Norjo Van Wilsem v. Ernst
Johan Brinkman Van Willem (G.R. No. 193707, 10 December 2014)
Q. Petitioner Norma married Ernst, a Dutch national. Wilhelm was born out their marriage. The
spouses were divorced when Wilhelm was only 8 years old. After the divorce, Norma decided to
return to the Philippines with Wilhelm. Ernst agreed to support Wilhelm but he never made
good his promise.
When Ernst returned to the Philippines, he remarried another Filipina. Norma filed an action
against Ernst to obtain support from him. She hinged her claim based on Article 195 of the
Family Code which provides the parent’s obligation to support his child. Petitioner contends that
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notwithstanding the existence of a divorce decree issued in relation to Article 26 of the Family
Code, respondent is not excused from complying with his obligation to support his minor child
with petitioner. On the other hand, respondent contends that there is no sufficient and clear basis
presented by petitioner that she, as well as her minor son, are entitled to financial support.
Respondent also added that by reason of the Divorce Decree, he is not obligated to petitioner for
any financial support.
Norma also instituted a criminal action against Ernst for violation of VAWC Act.

(a) Does Ernst have an obligation to support his minor child under Philippine law?
Answer: No, petitioner cannot rely on Article 195 of the New Civil Code in demanding support
from respondent, who is a foreign citizen, since Article 15 of the New Civil Code stresses the
principle of nationality. In other words, insofar as Philippine laws are concerned, specifically the
provisions of the Family Code on support, the same only applies to Filipino citizens. By analogy,
the same principle applies to foreigners such that they are governed by their national law with
respect to family rights and duties.
Under the Doctrine of Processual Presumption, if the foreign law involved is not properly
pleaded and proved, our courts will presume that the foreign law is the same as our local or
domestic or internal law. For Ernst’s failure to prove a foreign law, it will bar its application in
the Philippines. Applying the foregoing, even if the laws of the Netherlands does not enforce a
parent’s obligation to support his child, such obligation is still duly enforceable in the Philippines
because it would be of great injustice to the child to be denied of financial support when the latter
is entitled thereto.

(b) Can Ernst be held criminally liable under R.A. No. 9262 for his unjustified failure to support
his minor child?
Answer: Respondent may be made liable under Section 5(e) and (i) of R.A. No. 9262 for unjustly
refusing or failing to give support to petitioner’s son. The deprivation or denial of financial
support to the child is considered an act of violence against women and children. The act of
denying support to a child under Section 5(e)(2) and (i) of R.A. No. 9262 is a continuing offense
and will not prescribe for as long as respondent has not provided support to his son.

PROOF OF FOREIGN JUDGMENT

DAVID A. NOVERAS vs. LETICIA T. NOVERAS (G.R. No. 188289, August 20, 2014, J. Perez)
Q. Spouses Noveras were former Filipinos who became naturalized American citizens. When
they suffered financial reverses, David decided to return in the Philippines. The spouses obtained
a divorce from the State of California wherein the court awarded all the properties in the USA to
Leticia.
Leticia sought for the Judicial Separation of Conjugal Property before the RTC of Baler, Aurora.
Without authentication, David opposed the petition alleging that a judgment for the dissolution
of their marriage was rendered by the Superior Court of California. He demanded that the
conjugal partnership properties, which also include the USA properties, be liquidated and that
all expenses of liquidation, including attorney’s fees of both parties be charged against the
conjugal partnership.
The RTC considered the petition filed by Leticia as one for liquidation of the absolute community
of property regime instead of an action for judicial separation of conjugal property. The trial
court ruled that in accordance with the doctrine of processual presumption, Philippine law
should apply. It held that the absolute community properties cannot be forfeited in favor of
Leticia and her children.
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On appeal, the Court of Appeals modified the trial court’s Decision by directing the equal
division of the Philippine properties between the spouses.

(a) Is the divorce decree issued by the California Court binding to the trial court?
Answer: No, the divorce decree should not be judicially recognized for the requisites were not
complied with.
The requirements of presenting the foreign divorce decree and the national law of the foreigner
must comply with our Rules of Evidence. Specifically, for Philippine courts to recognize a foreign
judgment relating to the status of a marriage, a copy of the foreign judgment may be admitted in
evidence and proven as a fact under Rule 132, Sections 24 and 25, in relation to Rule 39, Section
48(b) of the Rules of Court.

(b) Was the petition for judicial separation of the absolute community of property of the spouses
proper?
Answer: Yes, having established that Leticia and David had actually separated for at least one
year, the petition for judicial separation of absolute community of property should be granted.
Separation in fact for one year as a ground to grant a judicial separation of property was not
tackled in the trial court’s decision because, the trial court erroneously treated the petition as
liquidation of the absolute community of properties.

NULLITY OF MARRIAGE AND FOREIGN JUDGMENT

Luzviminda Dela Cruz Morisono v. Ryoji Morisono and Local Civil Registrar of Quezon
City, G.R. No. 226013, SECOND DIVISION, July 02, 2018, PERLAS-BERNABE, J.
Q. Luzviminda was married to Ryoji Morisono in Quezon City on December 8, 2009. Thereafter,
they lived together in Japan but the relationship was filled with animosities so the two of them
submitted a “Divorce by Agreement” before the City Hall of Mizuho-ku in
Nagoya, Japan, which was approved and duly recorded. In view of this, Luzviminda filed a
petition for recognition of foreign divorce decree obtained by her and Ryoji before the RTC so
that she could cancel the surname of her husband and be able to marry again.
The RTC denied Luzviminda’s petition, holding that while a divorce decree held that while a
divorce obtained abroad by an alien spouse may be recognized in the Philippines – provided that
such decree is valid according to the national law of the alien – the same does not find application
when it was the Filipino spouse, i.e., petitioner, who procured the same. Invoking the nationality
principle provided under Article 15 of the Civil Code, in relation to Article 26 (2) of the Family
Code, the RTC opined that since petitioner is a Filipino citizen whose national laws do not allow
divorce, the foreign divorce decree she herself obtained in Japan is not binding in the Philippines.
Luzviminda filed an appeal to reverse the decision of the trial court. Rule of the appeal of
Luzviminda.
Answer: I will grant the appeal and reverse the decision of the trial court. It had been ruled in
Republic vs. Manalo that 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

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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. Notably, the RTC did not rule on such issues. Since these are questions which require an
examination of various factual matters, a remand to the trial court is warranted.

PERSONS AND FAMILY RELATIONS: THE FAMILY HOME

Willem Beumer v Avelina Amores, G.R. No. 195670. SECOND DIVISION. December 3, 2012.
PERLAS-BERNABE, J.
Q. Beumer, a Dutch National, and Amores, a Filipina, were married. After several years of
marriage, the RTC of Negros Oriental, declared the nullity of their marriage on the basis of the
former’s psychological incapacity.
Beumer filed a Petition for Dissolution of Conjugal Partnership praying for the
distribution of the properties claimed to have been acquired during the subsistence of their
marriage. The RTC of Negros Oriental rendered its Decision, dissolving the parties’ conjugal
partnership, awarding all the parcels of land to respondent as her paraphernal properties; the
tools and equipment in favor of Beumer as his exclusive properties; the two (2) houses standing
on Lots 1 and 2142 as co-owned by the parties holding that he used his personal funds to
purchase the subject parcels of land. The CA affirmed the Decision of RTC.
(a) Can Beumer legally own land in the Philippines?
Answer: No, Beumer, being a Dutch national, cannot legally acquire land in the Philippines. He
acquired no right whatsoever over the subject properties by virtue of its
unconstitutional purchase. It is well-established that 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.

(b) Can Beumer claim reimbursement of the funds he used to purchase the subject parcels of
land?
Answer: No, Beumer cannot claim reimbursement of the funds he used to purchase the subject
parcels of land. A claim for reimbursement of the value of purchased parcels of Philippine land
instituted by a foreigner against his former Filipina spouse cannot prosper 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.
Corollary thereto, under Article 1412 of the Civil Code, petitioner cannot have the subject
properties titled 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.

VALIDITY OF MARRIAGE UNDER MUSLIM PERSONAL LAWS (P.D. 1803)

Juliano-Llave vs. Republic, et al. (G.R. No. 169766, March 30, 2011)
Q. Before he died, Senator Tamano married Estrellita twice once under the Islamic laws and,
subsequently, under civil ceremonies. In their marriage contracts, Sen. Tamano's civil status was
10 | P a g e
indicated as divorced. Estrellita represented herself to the whole world as Sen. Tamano's wife,
and upon his death, his widow.
In 1994, Haja Putri Zorayda A. Tamano (Zorayda) and her son Adib Ahmad A. Tamano (Adib),
in their own behalf and in behalf of the rest of Sen. Tamano's legitimate children with Zorayda,
filed a complaint with the RTC of Quezon City for the declaration of nullity of marriage between
Estrellita and Sen. Tamano for being bigamous. The complaint alleged that Sen. Tamano
married Zorayda on May 31, 1958 under civil rites, and that this marriage remained subsisting
when he married Estrellita in 1993.
RTC-QC ruled that Tamano’s marriage to Estrellita is void ab initio. The Court of Appeals
affirmed the RTC decision.
Estrellita assailed the decision as being both Muslims, the marriage of Tamano and Zorayda
must be governed by the provision of P.D. 1083, otherwise known as the Code of Muslim
Personal Laws. Thus, the declaration of Tamano as being divorced must be given credence.
(a) What is the effect of P.D. 1083 on the marriages of Tamano and Estrellita and Tamano and
Zorayda?
Answer: P.D. No. 1083 cannot benefit Estrellita. Firstly, Article 13 (1) thereof provides that the
law applies to "marriage and divorce wherein both parties are Muslims or wherein only the male
party is a Muslim and the marriage is solemnized in accordance with Muslim law or this Code in
any part of the Philippines." Article 13 of PD 1083 does not provide for a situation where the
parties were married both in civil and Muslim rites."

(b) Can the Muslim Code be applied retroactively as to affect provisions of the Civil Code which
govern the marriage of Tamano and Zorayda?
Answer: The Muslim Code took effect only on February 4, 1977, and this law cannot
retroactively override the Civil Code which already bestowed certain rights on the marriage of
Sen. Tamano and Zorayda. The marriage of the two was still subsisting when Tamano contracted
his second marriage.

(c) Do Zorayda and Adib have locus standi to file the Petition?
Answer: Zorayda and Adib, as the injured parties, have the legal personalities to file the
declaration of nullity of marriage. A.M. No. 02-11-10-SC, which limits to only the husband or the
wife the filing of a petition for nullity is prospective in application and does not shut out the prior
spouse from filing suit if the ground is a bigamous subsequent marriage.

SALE OF CONJUGAL PROPERTY

Titan Construction Corporation, vs. Spouses David (G.R. No. 169548, March 15, 2010)
Q. Manuel and Martha own a 602- meter lot in White Plains. They separated in 1978 and lost
communication. In 1995, Manuel learned that Martha sold to Titan Construction Corporation the
White Plains property.
Manuel filed a complaint for Annulment of Contract and Reconveyance. He alleged that the sale
was without his knowledge. Titan Construction Corporation claimed it is a buyer in good faith. Is
the Deed of Sale executed by Martha to Titan Construction valid?
Answer: The sale is not valid. In the absence of Manuel's consent, the Deed of Sale is void.
Article 165 of the Civil Code expressly provides that "the husband is the administrator of the
conjugal partnership." Article 172 of the Civil Code ordains that "(t) he wife cannot bind the
conjugal partnership without the husband's consent, except in cases provided by law." Similarly,
Article 124 of the Family Code requires that any disposition or encumbrance of conjugal
property must have the written consent of the other spouse, otherwise, such disposition is void.
11 | P a g e
Article 116 of the Family Code is unequivocal in that "all property acquired during the
marriage, whether the acquisition appears to have been made, contracted or registered in the
name of one or both spouses, is presumed to be conjugal unless the contrary is proved.” The
presumption being in favor of the conjugal nature of the property, the burden to prove otherwise
rested with Titan Construction Corporation.

EFFECT OF NULLITY OF MARRIAGE ON CONJUGAL PROPERTY

Marietta N. Barrido v. Leonardo V. Nonato (G.R. No. 176492, 20 October 2014)
Q: Is the property still owned in common after the marriage was declared void on the GROUND
of psychological incapacity.
Answer: Yes, the property is still owned in common after the marriage was declared void on the
GROUND of psychological incapacity. During their marriage, however, the conjugal partnership
regime governed their property relations. Although Article 129 provides for the procedure in
case of dissolution of the conjugal partnership regime, Article 147 specifically covers the effects
of void marriages on the spouses’ property relations.
This particular kind of co-ownership applies when a man and a woman, suffering no illegal
impediment to marry each other, exclusively live together as husband and wife under a void
marriage or without the benefit of marriage.
It is clear, therefore, that for Article 147 to operate, the man and the woman: (1) must be
capacitated to marry each other; (2) live exclusively with each other as husband and wife; and (3)
their union is without the benefit of marriage or their marriage is void.

PARENTAL AUTHORITY
Q. May grandparents be granted temporary custody of a grandchild?
Answer: A full trial is required. In the case of Bagtas v. Santos, which was a tug-of-war between
the maternal grandparents of the illegitimate minor child and the actual custodians of the latter,
the Court faulted the trial court for hastily dismissing the petition for habeas corpus and
awarding the custody of the minor to the grandparents without conducting any trial. The import
of such decision is that the preference accorded by Article 216 of the Family Code does not
automatically attach to the grandparents, and is conditioned upon the determination of their
fitness to take care of their grandchild. In ruling as it did, the Court ratiocinated that the child's
welfare being the most important consideration, it is not bound by any legal right of a person
over the child.

Renalyn A. Masbate and Spouses Renato Masbate and Marlyn Masbate v. Ricky James Relucio
(G.R. No. 235498, SECOND DIVISION, July 30, 2018, PERLAS-BERNABE, J.)
Q. May the court grant “limited and temporary custody” to a parent who is deprived of the
care and custody of a child below 7 years old pending final determination of who has the right to
custody?
Answer: No, it is not proper to grant temporary custody of child because Sec. 15 of A.M. No. 03-
04-04-SC (Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of
Minors) provides for temporary visitation rights, not temporary custody. It is only after trial,
when the court renders its judgment awarding the custody of the minor to the proper party, that
the court may likewise issue “any order that is just and reasonable permitting the parent who is
deprived of the care and custody of the minor to visit or have temporary custody.” By granting
temporary albeit limited custody ahead of trial, the trial court will overturn the tender-age
presumption with nothing but bare allegations, to which the Court cannot give its imprimatur.

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Even way back, Article 363 of the Civil Code provides that in all questions relating to the care,
custody, education and property of the children, the latter's welfare is paramount. Under present
rules, A.M. No. 03-04-04-SC explicitly states that "[i]n awarding custody, the court shall consider
the best interests of the minor and shall give paramount consideration to [her] material and
moral welfare. The best interests of the minor refer to the totality of the circumstances and
conditions as are most congenial to the survival, protection, and feelings of security of the minor
encouraging to [her] physical, psychological and emotional development. It also means the least
detrimental available alternative for safeguarding the growth and development of the minor."

Aguilar v. Siasat, G.R. No. 200169, January 28, 2015

Q. What proof may be adduced to establish filiation under the Family Code?
Answer: The filiation of illegitimate children, like legitimate children, is established by (1) the
record of birth appearing in the civil register or a final judgment; or (2) an admission of
legitimate filiation in a public document or a private handwritten instrument and signed by the
parent concerned. In the absence thereof, filiation shall be proved by (1) the open and continuous
possession of the status of a legitimate child; or (2) any other means allowed by the Rules of
Court and special laws. The due recognition of an illegitimate child in a record of birth, a will, a
statement before a court of record, or in any authentic writing is, in itself, a consummated act of
acknowledgment of the child, and no further court action is required. In fact, any authentic
writing is treated not just a ground for compulsory recognition; it is in itself a voluntary
recognition that does not require a separate action for judicial approval. Where, instead, a claim
for recognition is predicated on other evidence merely tending to prove paternity, i.e., outside of
a record of birth, a will, a statement before a court of record or an authentic writing, judicial
action within the applicable statute of limitations is essential in order to establish the child’s
acknowledgment.

ADOPTION
Q. Who are qualified to adopt under R.A. No. 8552 (Domestic Adoption Act of 1998)?
Answer: The following may adopt:
(1) Any Filipino citizen –
a. of legal age,
b. in possession of full civil capacity and legal rights,
c. of good moral character,
d. has not been convicted of any crime involving moral turpitude,
e. emotionally and psychologically capable of caring for children,
f. at least 16 years older than the adoptee, and
g. who is in a position to support and care for his children in keeping with the means of
the family; or
(2) Any alien possessing the same qualifications as above stated for Filipino nationals, provided –
a. His country has diplomatic relations with the Republic of the Philippines,
b. He has been living in the Philippines for at least three (3) continuous years prior to
the filing of the application for adoption and maintains such residence until the
adoption decree is entered,
c. He has been certified by his diplomatic or consular office or any appropriate
government agency that he has the legal capacity to adopt in his country, and
d. His government allows the adoptee to enter his country as his adopted child.
(3) The guardian with respect to the ward after the termination of the guardianship and
clearance of his financial accountabilities. (Sec. 7, RA 855)
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Q. May an alien claim exemption from the requirements of residency and certification of the
alien’s qualification to adopt?
Answer: The requirements on residency and certification of the alien’s qualification to adopt in
his country
may be waived for the following:
(1) A former Filipino citizen who seeks to adopt a relative within the fourth (4th) degree of
consanguinity or affinity;
(2) One who seeks to adopt the legitimate child of his Filipino spouse; or
(3) One who is married to a Filipino citizen and seeks to adopt jointly with his spouse a relative
within the fourth degree of consanguinity or affinity of the Filipino spouse. (Sec. 7, RA 855)

Q. Who may be adopted under RA 8552?

Answer: The following may be adopted:
(1) Any person below 18 years of age who has been administratively or judicially declared
available for adoption;
(2) The legitimate son/daughter of one spouse by the other spouse;
(3) An illegitimate son/daughter by a qualified adopter to improve his/her status to that of
legitimacy;
(4) A person of legal age if, prior to the adoption, said person has been consistently considered
and treated by the adopter/s as his/her own child since minority;
(5) A child whose adoption has been previously rescinded; or
(6) A child whose biological or adoptive parent/s has died (provided that no proceedings shall be
initiated within 6 months from the time of death of said parent/s).

Q. Under what circumstances may spouses need not adopt jointly?

Answer: Husband and wife are not required to adopt jointly:
(1) If one spouse seeks to adopt the legitimate son/daughter of the other;
(2) If one spouse seeks to adopt his/her own illegitimate son/daughter; provided, however, that
the other spouse has signified his/her consent thereto; or
(3) If the spouses are legally separated from each other. (Sec. 7, RA 8552)

Bartolome v. Social Security System, G.R. No. 192531 November 12, 2014
Q. A was employed in Katta Shipping Company and was enrolled under the government’s
Employees’ Compensation Program (ECP). He died while on board a vessel of Katta.
A was, at the time of his death, childless and unmarried.
B, A’s biological mother filed a claim for death benefits. SSS denied the claim on the ground that
B was no longer considered as the parent of A since the latter was legally adopted by a certain C.
According to the records, C died during A’s minority. Can B claim the death benefits of A?
Answer: Yes, B can claim A’s death benefits. The death of an adopting parent during the
minority of the adopted child automatically revives the filial relationship of the child to his/her
biological parents. State policies behind RA 8552 wherein the paramount consideration is the
best interest of the child justify such disposition. It is, after all, for the best interest of the child
that someone will remain charged for his welfare and upbringing should his or her adopter fail
or is rendered incapacitated to perform his duties as a parent at a time the adoptee is still in his
formative years, and in the absence or, as in this case, death of the adopter, no one else could
reasonably be expected to perform the role of a parent other than the adoptee’s biological one.

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RULES ON ACCESSION
Heirs of Francisco I. Narvasa, Sr. et al. v. Emiliana Imbornal et al., G.R. No. 182908, August 6,
2014, SECOND DIVISION, PERLAS-BERNABE, J
Q. Who has the right over alluvial deposits?
Answer: Alluvial deposits along the banks of a creek or a river do not form part of the public
domain as the
alluvial property automatically belongs to the owner of the estate to which it may have been
added. The only restriction provided for by law is that the owner of the adjoining property must
register the same under the Torrens system; otherwise, the alluvial property may be subject to
acquisition through prescription by third persons.

QUIETING OF TITLE
Bilag v. Ay Ay et al., G.R. No. 189950, FIRST DIVISION, April 24, 2017, PERLAS-BERNABE, J.
Q. May parties claim registration of parcels of land covered the Baguio Townsite Reservation
after July 31, 1973?
Answer: In a catena of cases, and more importantly, in PD 1271, it was expressly declared that
all orders and decisions issued by the Court of First Instance of Baguio and Benguet in
connection with the proceedings for the reopening of Civil Reservation Case No. 1, GLRO
Record 211, covering lands within the Baguio Townsite Reservation are null and void and
without force and effect. While PD 1271 provides for a means to validate ownership over lands
forming part of the Baguio Townsite Reservation, it requires, among others, that a Certificate of
Title be issued on such lands on or before July 31, 1973. In this case, records reveal that the
subject lands are unregistered and untitled, as petitioners' assertion to that effect was not
seriously disputed by respondents. In view of the foregoing, it is only reasonable to conclude that
the subject lands should be properly classified as lands of the public domain as well.

LAND TITLES AND DEEDS TORRENS SYSTEM (GENERAL PRINCIPLES)

Republic of the Philippines v. Heirs of Julio Ramos (G.R. No. 169481, 22 February 2010)
Q: What are the jurisdictional requirements for reconstitution of a lost title?
Answer: In petitions for reconstitution of a lost or destroyed Torrens certificate of title, trial
courts are duty bound to examine the records of the case to determine whether the jurisdictional
requirements have been strictly complied with.
Sections 12 and 13 of RA No. 26 laid down the specific procedure for the reconstitution of lost or
destroyed Torrens certificates of title. Section 12 provides for the facts that a petition must
contain while Section 13 requires notice of the petition to be published twice and to be posted on
the main entrance of the provincial and municipal building. Copy of the notice should also be
sent, by registered mail, to every person named therein. The notice shall state the number of the
lost or destroyed certificate of title, name of registered owner, and names of occupants.

EVIDENTIARY VALUE OF A TITLE ON LAND: INDEFEASIBILTIY OF TITLE

Spouses Federico Valenzuela and Luz Buena-Valenzuela v. Spouses Jose Mano Jr. and Rosanna
Reyes-Mano (G.R. No. 172611, 9 July 2010)
Q: Is a certificate of title sufficient to prove ownership to a parcel of land?
Answer: No, settled is the rule that a person, whose certificate of title included by mistake or
oversight the land owned by another, does not become the owner of such land by virtue of the
certificate alone. The Torrens System is intended to guarantee the integrity and conclusiveness of
the certificate of registration but is not intended to perpetrate fraud against the real owner of the
land. The certificate of title cannot be used to protect a usurper from the true owner.
15 | P a g e
Augusto Ong Trinidad II et. al. v. Spouses Bonifacio Palad and Felicidad Kausapin (G.R. No.
203397, 9 December 2015)
Q: What are the purposes or effects of Transfer of Certificate of Title?
Answer: Transfer Certificate of Title constitutes as evidence of ownership over the subject
property, which lies within the area covered by said title; it serves as evidence of indefeasible and
incontrovertible title to the property in favor of whose names appear therein; and that as
registered owners, they are entitled to possession of the subject property.

INDEFEASIBILITY OF TITLE; RESOLVING EXISTENCE OF TWO TITLES OVER A

PARCEL OF LAND
Leoncio C. Oliveros, represented by his heirs, Moises Dela Cruz, and the Heirs of Lucio Dela Cruz,
represented by Felix Dela Cruz v. San Miguel Corporation, the Register of Deeds of Caloocan City,
and the Register of Deeds of Valenzuela (G.R. No. 173531, 1 February 2012)
Q. What is the rule in resolving existence of two titles over a parcel of land?
Answer: The principle that the earlier title prevails over a subsequent one applies when there are
two apparently valid titles over a single property. The existence of the earlier valid title renders
the subsequent title void because a single property cannot be registered twice. As stated in
Metropolitan Waterworks and Sewerage Systems v. Court of Appeals, "a certificate is not
conclusive evidence of title if it is shown that the same land had already been registered and an
earlier certificate for the same is in existence.

EVIDENTIARY VALUE OF TRANSFER CERTIFICATE OF TITLE

Gina Endaya v. Ernesto V. Villaos (G.R. No. 202426, 27 January 2016)
Q: Should a Transfer Certificate of Title be given more probative weight than unregistered deed
of sale?
Answer: Yes, in resolving the issue of possession in an ejectment case, the registered owner of the
property is preferred over the transferee under an unregistered deed of sale. In the present case,
there is no dispute that petitioner is the holder of a Torrens title over the entire lot. Respondents
have only their notarized but unregistered Kasulatan sa Bilihan to support their claim of
ownership. Thus, even if respondents’ proof of ownership has in its favor a juris tantum
presumption of authenticity and due execution, the same cannot prevail over petitioner’s Torrens
title. It remains true that the registered owner is preferred to possess the property subject of the
unlawful detainer case. The age-old rule is that the person who has a Torrens Title over a land is
entitled to possession thereof.

RESTORATION OF TITLES – ERASURE, ALTERATION OR AMENDMENT

Rosario Banguis-Tambuyat v. Wenifreda Balcom-Tambuyat (G.R. No. 202805, 23 March 2015)
Q: What are the instances where the erasure, alteration or amendment of a certificate of title
may be restored?
Answer: Under Section 108 of PD 1529, the proceeding for the erasure, alteration, or amendment
of a certificate of title may be resorted to in seven instances: (1) when registered interests of any
description, whether vested, contingent, expectant, or inchoate, have terminated and ceased; (2)
when new interests have arisen or been created which do not appear upon the certificate; (3)
when any error, omission or mistake was made in entering a certificate or any memorandum
thereon or on any duplicate certificate; (4) when the name of any person on the certificate has
been changed; (5) when the registered owner has been married, or, registered as married, the
marriage has been terminated and no right or interest of heirs or creditors will thereby be
16 | P a g e
affected; (6) when a corporation, which owned registered land and has been dissolved, has not
conveyed the same within three years after its dissolution; and (7) when there is reasonable
ground for the amendment or alteration of title.

EVIDENTIARY PROOFS IN REGISTRATION OF ORIGINAL LAND TITLES

Republic of the Philippines v. Spouses Dante and Lolita Benigno (G.R. No. 205492, 11 March 2015)
Q: What must an applicant prove for registration of title under PD 1529?
Answer: Applicants for registration of title under PD 152950 must prove: (1) that the subject
land forms part of the disposable and alienable lands of the public domain; and (2) that they have
been in open, continuous, exclusive and notorious possession and occupation of the land under a
bona fide claim of ownership since 12 June 1945 or earlier.

GOOD FAITH UNDER A REAL ESTATE MORTGAGE

Evelyn B. Ruiz v. Bernardo F. Dimailig (G.R. No. 204280, 9 November 2016)
Q: BD owned a parcel of and. He entrusted the owner’s copy of the said TCT to JD, his brother,
who in turn gave the title to ES, a broker, for the intended sale. Without the knowledge and
consent of BD, ES mortgaged the property to ER. Upon discovery, BD filed a complaint for
annulment of the Deed of REM arguing that his signature was forged. In opposition, ER argued
that she met JD when she inspected the property and was given assurance that BD owned the
property and the title is genuine. ER claimed that she is a mortgagee in good faith and the deed
of REM cannot be annulled unless the loan was paid. Is being a mortgagee in good faith be a
defense?
Answer: No, as a rule, no valid mortgage will arise unless the mortgagor has a valid title or
ownership over the mortgaged property. By way of exception, a mortgagee can invoke that he or
she derived title even if the mortgagor's title on the property is defective, if he or she acted in
good faith. In such instance, the mortgagee must prove that no circumstance that should have
aroused her suspicion on the veracity of the mortgagor's title on the property was disregarded.
Where the mortgagor is an impostor who only pretended to be the registered owner, and acting
on such pretense, mortgaged the property to another, the mortgagor evidently did not succeed in
having the property titled in his or her name, and the mortgagee cannot rely on such pretense as
what appears on the title is not the impostor's name but that of the registered owner.

LAND OF PUBLIC DOMAIN

Republic of the Philippines v. Angeline L. Dayaoen, Agustina Tauel, and Lawana T. Batcagan (G.R.
No. 200773, 8 July 2015)
Q. What is the evidence required to register a title of a parcel of land alleged to have been
declared available for disposition by the government?
Answer: Under the Regalian doctrine, all lands of the public domain belong to the State. The
classification and reclassification of such lands are the prerogative of the Executive Department.
The President may at any time transfer these public lands from one class to another.
In Republic v. Cortez, the Court stressed that incontrovertible evidence must be presented to
establish that the land subject of the application is alienable or disposable. To prove that the land
subject of an application for registration is alienable, an applicant must establish the existence of
a positive act of the government such as a presidential proclamation or an executive order, an
administrative action, investigation reports of Bureau of Lands investigators, and a legislative act
or statute. The applicant must also secure a certification from the Government that the lands
applied for are alienable and disposable

17 | P a g e
The well-entrenched rule is that all lands not appearing to be clearly of private dominion
presumably belong to the State. The onus to overturn, by incontrovertible evidence, the
presumption that the land subject of an application for registration is alienable and disposable
rests with the applicant.

CONCEPT OF AN EQUITABLE TITLE

Q. Distinguish legal from equitable title.
Answer: Legal title denotes registered ownership, while equitable title means beneficial
ownership. In the absence of such legal or equitable title, or interest, there is no cloud to be
prevented or removed. (Macalino, Jr. v. Pis-An, G.R. No. 204056, June 1, 2016)

ENCROACHMENT OVER PROPERTY OF ANOTHER; BUILDER IN BAD FAITH

Q. An RTC Decision reconveying to X a portion of Lot 123 which was erroneously included in
Y's free patent application became final and executory. In so ruling, the RTC acknowledged X's
actual and exclusive possession, cultivation, and claim of ownership. The Deed of Conveyance
issued in favor of X, however, could not be annotated on the OCT of Lot 123 because said title
had been cancelled because the area over by the title of his property was included in homestead
title of Y. X’s title was cancelled because Y previously mortgaged the lot to the bank as security
for series of loans, and the mortgage was eventually foreclosed. Thus, title to the lot was
transferred to PNB. X filed a complaint against PNB and Y for Declaration of Nullity of
Mortgage, Foreclosure Sale, Reconveyance and Damages. According to X, PNB was not an
innocent purchaser/mortgagee for value. According to the bank, the action of X had prescribed.
Rule on the respective party's contentions.
Answer: (1) Ruling on PNB’s contention: PNB is not an innocent purchaser for value or "one
who buys the property of another, without notice that some other person has a right or interest in
such property and pays the full price for the same, at the time of such purchase or before he has
notice of the claims or interest of some other person in the property. PNB has the burden of
evidence that it acted in good faith from the time the land was offered as collateral. However,
PNB miserably failed to overcome this burden. There was no showing at all that it conducted an
investigation; that it observed due diligence and prudence by checking for flaws in the title; that
it verified the identity of the true owner and possessor of the land; and, that it visited subject
premises to determine its actual condition before accepting the same as collateral. A banking
institution is expected to exercise due diligence before entering into a mortgage contract. The
ascertainment of the status or condition of a property offered to it as security for a loan must be a
standard and indispensable part of its operations.

(2) Ruling X’s Action for Reconveyance: An action for reconveyance filed by a person claiming to
be the owner and who is in actual possession of the property does not prescribe. The reason for
this is that one who is in actual possession of a piece of land claiming to be the owner thereof may
wait until his possession is disturbed or his title is attacked before taking steps to vindicate his
right, the reason for the rule being, that his undisturbed possession gives him a continuing right
to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a
third party and its effect on his own title, which right can be claimed only by one who is in
possession. In X’s case, as it has been judicially established that he is in actual possession of the
property he claims as his and that he has a better right to the disputed portion, his suit for
reconveyance is in effect an action for quieting of title. Hence, PNB’s defense of prescription
against X does not lie.
18 | P a g e
(3) Ruling on Y’s defense: 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. An action for reconveyance based on implied trust prescribes in 10
years as it is an obligation created by law, to be counted from the date of issuance of the Torrens
title over the property. This rule, however, applies only when the plaintiff or the person enforcing
the trust is not in possession of the property. (PNB v. Jumamoy, G.R. No. 169901, August 3, 2011)
EASEMENTS
Q. What are the requisites for entitlement to a right of way?
Answer: To be entitled to an easement of right of way, the following requisites should be met: (1)
An immovable is surrounded by other immovables belonging to other persons, and is without
adequate outlet to a public highway;
(2) Payment of proper indemnity by the owner of the surrounded immovable;
(3) The isolation of the immovable is not due to its owner’s acts; and
(4) The proposed easement of right of way is established at the point least prejudicial to the
servient estate, and insofar as consistent with this rule, where the distance of the dominant estate
to a public highway may be the shortest. (Naga Centrum v. Sps. Orzals, G.R. No. 203576,
September 14, 2016)

Andres et. Al. v. Sta. Lucia Realty and Development Inc. (G.R. No. 201405, August 24, 2015)
Q. Can the petitioners demand an easement of right-of-way from respondent despite the fact that
they have not acquired ownership over the supposed dominant estate?
Answer: Under Article 649 of the Civil Code, an easement of right-of-way may be demanded by
the owner of an immovable or by any person who by virtue of a real right may cultivate or use
the same.
It appears that the subject property is an unregistered public agricultural land. Thus, being a
land of the public domain, petitioners, in order to validly claim acquisition thereof through
prescription, must first be able to show that the State has -expressly declared through either a
law enacted by Congress or a proclamation issued by the President that the subject [property] is
no longer retained for public service or the development of the national wealth or that the
property has been converted into patrimonial.
Consequently, without an express declaration by the State, the land remains to be a property of
public dominion and hence, not susceptible to acquisition by virtue of prescription.
In the absence of such proof of declaration in this case, petitioners' claim of ownership over the
subject property based on prescription necessarily crumbles. Conversely, they cannot demand an
easement of right-of-way from respondent for lack of personality.

HEIRS OF VICTOR AMISTOSO v. ELMER T. VALLECER, REPRESENTED BY EDGAR

VALLECER, G.R. No. 227124, SECOND DIVISION, December 06, 2017, PERLAS-BERNABE, J.
Q. What is accion reivindicatoria?
Answer: Accion reivindicatoria is a suit which has for its object the recovery of possession of real
property as owner and that it involves recovery of ownership and possession based on the said
ownership.
Q. What is accion publiciana?
Answer: Accion publiciana is a plenary action to recover the right of possession of land.

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BUILDER IN BAD FAITH
Pen Development Corp, et al., v. Martinez Leyba, Inc.(G.R. No. 211845, August 9, 2017)
Q. Martinez Leyba, Inc. is the owner of three parcels of contiguous lands. Pen Development
Corp. and Las Brisas Resorts Corp., which merged into one corporate entity, likewise owns a
land adjacent to Leyba’s properties.
Las Brisas fenced its land which encroached on Leyba’s property. Leyba sent a letter to Las
Brisas informing it of the encroachment and requested it to refrain from performing other acts
that would impair Leyba’s property. Despite several notices, Las Brisas continued on developing
the property.
Martinez filed a Complaint for Quieting of Title, Cancellation of Title and Recovery of
Ownership with Damages. Las Brisas denied the encroachment.
(a) Is Las Brisas a possessor/builder in good faith.
Answer: Las Brisas is a builder in bad faith because of its obstinate refusal to abide with
Martinez’s repeated demands to cease and desist from encroaching on their area.
The Civil Code provides:
Art. 449. He who builds, plants or sows in bad faith on the land of another,
loses what is built, planted or sown without right to indemnity.
Art. 450. The owner of the land on which anything has been built, planted or
sown in bad faith may demand the demolition of the work, or that the planting or
sowing be removed, in order to replace things in their former condition at the
expense of the person who built, planted or sowed; or he may compel the builder or
planter to pay the price of the land, and the sower the proper rent.
Art. 451. In the cases of the two preceding articles, the landowner is entitled to
damages from the builder, planter or sower.

(b) Was Leyba guilty of laches in enforcing its putative rights?

Answer: Leyba is not guilty of laches because as owner of the land, it has an imprescriptible right
to recover possession thereof from any person illegally occupying its lands. “prescription and
laches cannot apply to registered land covered by the Torrens system” pursuant to Section 47 of
the Property Registration Decree 1529, which states that “no title to registered land in derogation
of the title of the registered owner shall be acquired by prescription or adverse possession.”

(c) May the trial court grant indemnity in favor of Leyba?

Answer: Yes. Leyba has the right to recover damages. As a builder in bad faith, Las Brisas is not
entitled to indemnity and Martinez may demand the demolition of the developments in the
property.

CO-OWNERSHIP
Neri et. al v Heirs of Hadji Yusop Uy, G.R. No. 194366. SECOND DIVISION. October 10, 2012,
PERLAS-BERNABE, J.
Q. What are rights of a co-owner?
Answer: Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute
another person in its enjoyment, except when personal rights are involved. But the effect of the
alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which
may be allotted to him in the division upon the termination of the co-ownership.
Q. What is the effect of the execution of the Extra-Judicial Settlement of the Estate with Absolute
Deed of Sale when not all the co-owners participated in the transaction?
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Answer: Where in the execution of the Extra-Judicial Settlement of the Estate with Absolute
Deed was executed without the participation of the other co-owners, the settlement was not valid
and binding upon them and consequently, a total nullity.

Antipolo Ining (deceased), survived by Manuel Villanueva, et. al. v. Leonardo R. Vega, substituted
by Lourdes Vega, et. al. (G.R. No. 174727, 12 August 2013)
Q: What are the requisites in order that the title may prescribe in favor of a co-owner?
Answer: The requisites in order that the title may prescribe in favor of a co-owner are: (1) the co-
owner has performed unequivocal acts of repudiation amounting to an ouster of the other co-
owners; (2) such positive acts of repudiation have been made known to the other co-owners; and
(3) the evidence thereof is clear and convincing.

CO-OWNERS, NOT INDISPENSABLE PARTIES TO A CASE

Rey Castigador Catedrilla v. Mario and Margie Lauron (G.R. No. 179011, 15 April 2013)
Q: Are all co-owners indispensable parties even if only one of them filed a case covering the
property they co-own?
Answer: No, in suits to recover properties, all co-owners are real parties in interest. However,
pursuant to Article 487 of the Civil Code and the relevant jurisprudence, any one of them may
bring an action, any kind of action for the recovery of co-owned properties. Therefore, only one
of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned
property, is an indispensable party thereto. The other co-owners are not indispensable parties.
They are not even necessary parties, for a complete relief can be afforded in the suit even without
their participation, since the suit is presumed to have been filed for the benefit of all co-owners.

SALE OF REAL PROPERTY ON INSTALLMENT

Q. For failure to pay the monthly amortization of a house and lot which was the subject of a
Contract to Sell, the seller sent the buyer a notarized Notice of Delinquency and Cancellation of
Contract to Sell. The seller likewise file an action for unlawful detainer against the buyer.
(a) In case the sale should be cancelled, is the seller required to refund all the monthly
installments paid by the buyer?
Answer: No, the sale should not canceled since the buyer paid at least two (2) years of
installment, he is only entitled to receive the cash surrender value of the payments he made
which, under Section 3(b) of the Maceda Law, is equivalent to 50% of the total payments made.
Under the Maceda Law, the actual cancellation of a contract to sell takes place after 30 days from
receipt by the buyer of the notarized notice of cancellation, and upon full payment of the cash
surrender value to the buyer. In other words, before a contract to sell can be validly and
effectively cancelled, the seller has (1) to send a notarized notice of cancellation to the buyer and
(2) to refund the cash surrender value.
Until and unless the seller complies with these twin mandatory requirements, the contract to sell
between the parties remains valid and subsisting. Thus, the buyer has the right to continue
occupying the property subject of the contract to sell, and may still reinstate the contract by
updating the account during the grace period and before the actual cancellation of the contract.
In this case, the seller complied only with the first condition by sending a notarized notice of
cancellation to the buyer. It failed, however, to refund the cash surrender value to him. Thus, the
Contract to Sell remains valid and subsisting and supposedly, the buyer has the right to continue
occupying the subject property.

(b) Is the seller required to pay the buyer the value of the house erected on the subject lot?
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Answer: Yes, the buyer is entitled to reimbursement of the improvements made on the property.
In view of the special circumstances obtaining in this case, the Court is constrained to rely on the
presumption of good faith on the part of the buyer. Thus, the buyer is presumed builder in good
faith.

RECISSION OF A CONTRACT BASED ON FAILURE TO FULFILL SUSPENSIVE

CONDITION; APPLICATION OF MACEDA LAW ON SALE OF REAL PROPERTY ON
INSTALLMENT
Q. Spouses Bonrostro v. Spouses Luna (G.R. No. 172346, July 24, 2013)
Constancia Luna entered into a Contract to Sell over a house and lot with Bliss Development
Corp.(“BDC”), a government-owned and control corporation. Luna sold to Spouses Bonrostro
the house for the price of P1,250,000, payable on four (4) installments. It was stipulated that
should Spouses Bonrostro fail to pay, the Contract to Sell shall be deemed cancelled and
rescinded and 5% of the total price shall be forfeited. After the execution of the contract,
Spouses Bonrostro took possession of the property but failed to pay the three other installments.
Luna was compelled to pay the unpaid amortization so that her Contract to Sell would not be
cancelled and she would not be liable for interest.
Luna then filed a Complaint for Rescission against Spouses Bonrostro. Luna instructed BDC not
to receive payment from the Spouses Bonrostro anymore. Meanwhile, the Spouses Bonrostro
claimed that they made a tender of payment.

(a) Is rescission the proper remedy for failure to pay the installments in a Contract to Sell real
property?
Answer: No, rescission is not the property remedy. In a Contract to Sell, payment of the price is
a positive suspensive condition. Failure of which is not a breach of contract warranting rescission
under Article 1191 of the Civil Code, but rather just an event that prevents the supposed seller
from being bound to convey the title to the supposed buyer.

(b) What is the proper remedy under the foregoing facts?

Answer: Maceda law shall apply. Section 4 thereof provides that “in case where less than two
years of installment were paid, the seller shall give the buyer a grace period of not less than sixty
days from the date the installment became due. If the buyer fails to pay the installments due at
the expiration of the grace period, the seller may cancel the contract after thirty days from
receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a
notarial act.”

(c) Was there a valid tender of payment of Spouses Bonrostro?

Answer: There was no valid tender of payment. Tender of payment, without money, produces no
effect. To have the effect of payment and the consequent extinguishment of the obligation to pay,
the law requires the companion acts of tender of payment and consignation.
(d) Can the court impose interest payment on Spouses Bonrostro?
Answer: Spouses Bonrostro are liable for the payment of interest. Contancia and her spouse
suffered damages brought about by the failure of the Spouses Bonrostro to comply with their
obligation on time. " Under Article 2209 of the Civil Code, "[i]f the obligation consists in the
payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there
being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the
absence of stipulation, the legal interest.

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ACCESSION AND SALE OF REAL PROPERTY ON INSTALLMENT
Q. What is the applicable rule on improvements made a seller on a property sold on installment?
Answer: While Article 448 on builders in good faith as a general rule does not apply where there
is a contractual relation between the parties such as in the instant case, it can still be applied if
the parties failed to attach a copy of the contract in the records of the case.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in
accord with the principle of accession, i.e., that the accessory follows the principal and not the
other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is
preclusive. The landowner cannot refuse to exercise either option and compel instead the owner
of the building to remove it from the land. The raison d’être for this provision has been
enunciated thus: Where the builder, planter or sower has acted in good faith, a conflict of rights
arises between the owners, and it becomes necessary to protect the owner of the improvements
without causing injustice to the owner of the land.
In view of the impracticability of creating a state of forced co-ownership, the law has provided a
just solution by giving the owner of the land the option to acquire the improvements after
payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the
sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land who
is authorized to exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing. (Communities Cagayan v. Sps.
Nanoy, G.R. No. 17679, November 14, 2012)

Q. What are the options of the landowner as seller under the foregoing situation?
Answer: The seller, as landowner, has two options. It may appropriate the new house by
reimbursing buyer the current market value thereof minus the cost of the old house. Under this
option, buyer would have "a right of retention which negates the obligation to pay rent." In the
alternative, seller may sell the lots to buyer at a price equivalent to the current fair value thereof.
However, if the value of the lots is considerably more than the value of the improvement, buyer
cannot be compelled to purchase the lots. He can only be obliged to pay reasonable rent.
(Communities Cagayan v. Sps. Nanoy, G.R. No. 17679, November 14, 2012)

Q. Petitioners are co-owners for more than 50 years of an unregistered agricultural land in Rizal.
Respondent owns the lands surrounding the petitioner’s property. Respondent developed the
lands, built a concrete perimeter fence around it. As a result, petitioners were denied access from
their property to the nearest public road and vice versa. Petitioners filed a Complaint for
Easement or Right of Way before the RTC to gain access to the public road. Should the
Complaint be granted?
Answer: No. Under Article 649 of the Civil Code, an easement of right of way may be demanded
by the owner or an immovable or by any person who by virtue of a real right may cultivate or
use the same. Only lands of the public domain subsequently declared as such and no longer
intended for public use or for development of national wealth, or removed from the sphere of
public dominion are considered converted into patrimonial lands or lands of private ownership.
The property in this case, being an unregistered agricultural land, is a land of public domain.
Petitioners, in order to validly claim acquisition thereof through prescription must first be able to
show that the state has expressly declared through either a law enacted by Congress or a
proclamation issued by the President that the subject property is no longer retained for public
service or development of national wealth or that the property has been converted into

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patrimonial. Thus, no right of way may be granted to petitioners. (Andres v. Realty &
Development Inc., GR No. 201405, August 24, 2015)

SALE OF PROPERTY GOVERNED BY CO-OWNERSHIP; QUIETING OF TITLE

Gil Macalino, Jr., Teresita Macalino, et. al. v. Artemio Pis-An, (G.R. No. 204056, 1 June 2016)
Q. What is Quieting of Title?
Answer: Quieting of title is a common law remedy for the removal of any cloud upon or doubt or
uncertainty with respect to title to real property. In order that an action for quieting of title may
prosper, it is essential that the plaintiff must have legal or equitable title to, or interest in, the
property which is the subject-matter of the action. Legal title denotes registered ownership, while
equitable title means beneficial ownership. In the absence of such legal or equitable title, or
interest, there is no cloud to be prevented or removed.

Q. What are indispensable requisites for an action to quiet title?

Answer: The indispensable requisites are: (1) the plaintiff or complainant has a legal or an
equitable title to or interest in the real property subject of the action; and (2) the deed, claim,
encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.

SALES: SUSPENSIVE CONDITION IN A CONTRACT OF SALE

Spouses Domingo vs. Spouses Manzano (G.R. No. 201883, Nov. 16, 2016)
Q. Spouses Manzano and Spouses Domingo executed a Contract of Sale which allowed Spouses
Domingo to pay in installments Spouses Manzano’s property. Spouses Domingo failed to pay the
property in full. The land remained in possession of the Spouses Manzano.
It took Spouses Domingo a while to pay the balance and by that time, Spouses Manzano no
longer accepted their payment. Spouses Domingo caused the annotation of an affidavit of adverse
claim.
Spouses Manzano sold the property to a certain Carmelita Aquino. This prompted Spouses
Domingo file a Complaint for Specific Performance and Damages, with prayer that the new titled
issued to Carmelita be cancelled.
(a) Under the foregoing facts, who will the Spouses Domingo have a better right than Carmelita?
Answer: Spouses Domingo will not have a better right than Carmelita.

(b) Is there a double sale under the foregoing facts?

There is no double sale. In a contract to sell, the full payment of the purchase price partakes of a
suspensive condition, the non-fulfillment of which prevents that obligation to sell from arising
and thus ownership is retained by the seller.
Without that sale, Article 1544 shall not apply as there is no case of double sale. There is here
only one sale and that is to Carmelita.

(c) What reliefs may the trail court grant to Spouses Domingo?
Answer: The court may order Spouses Manzano to reimburse Spouses Domingo of the amount
they paid in installments plus nominal damages and interests.

SALE OF REAL PROPERTY: BAD FAITH ON THE PART OF THE SELLER; MORTGAGE
WITHOUT THE CONSENT OF SPOUSE
Bignay EX-IM Phils. Inc. v. Union Bank of the Phil. (G.R. No. 171590, February 12, 2014)

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Q. Bignay bought from Union Banka a foreclosed property subject of a pending case between
Union Bank and Rosario De Leon, the mortgagor. De Leon had filed an action for annulment of
mortgage as the foreclosed property was mortgaged by her husband without her consent. The
trial court annulled the mortgage and ruled that Rosario was the owner of the undivided half of
the property.
Bignay filed a case against Union Bank for breach of warranty against eviction under Article
1547 and 1548 of the Civil Code. The RTC held that Union Bank acted in bad faith in selling the
property to Bignay. The CA made Union Bank liable for the amount of the land and building
constructed on it by Bignay.
Was the judgment against Union Bank making it liable to pay Bignay the cost of the land and
building correct?
Answer: The judgment is correct. Union Bank is liable to Bignay. It appears that Union Bank did
not inform Bignay of the pending case between Union Bank and Rosario. Under the law, Bignay
shall have the right to demand of Union Bank the return of the value which the thing sold had at
the time of the eviction, be it greater or less than the price of the sale as well as the expenses of
the contract, if the vendee has paid them and the damages and interests, and ornamental
expenses, if the same was made in bad faith.

PERFECTION OF A CONTRACT OF SALE

First Optima Realty Corp. v. Securitron Security Services, Inc. (G.R. No. 199648, January 28, 2015)
Q. Mr. Antonio Eleazar, the General Manager of Securitron sent a letter to First Optima offering
to purchase a property. A series of telephone negotiations ensued between Eleazar and First
Optima’s employees. Eleazar also went to the office of First Optima and offered to pay in cash
but Carolina Young, Executive Vice President of First Optima refused to accept it.
Securitron made a formal offer in a letter accompanied by a check in the amount of P100,000.00.
The check was deposited and credited to First Optima. Securitron then demanded to proceed
with the sale.
Securitron filed a complaint for specific performance with damages since First Optima refused to
honor the agreement between them. First Optima claimed that it did not agree to sell the
property.
(a) Was the contract of sale between First Optima and Securitron perfected?
Answer: The contract of sale was never perfected. Nothing shows that the parties had agreed on
any final arrangement containing the essential elements of a contract of sale, namely (1) consent
or the meeting of the minds; (2) object or subject matter of the contract; and (3) the price or
consideration of the sale.

(b) Can the P100,000.00 deposited to the account of First Optima be considered earnest money?
Answer: Earnest money applies to a perfected sale. Article 1482 states that “there must be first a
perfected contract of sale before we can speak of earnest money.”

FORBEARANCE
Hermojina Estores v. Spouses Arturo and Laura Supangan (G.R. No. 175139, 18 April 2012)
Q. What is forbearance?
Answer: In Crismina Garments, Inc. v. Court of Appeals, "forbearance" was defined as a
"contractual obligation of lender or creditor to refrain during a given period of time, from
requiring the borrower or debtor to repay a loan or debt then due and payable."
In such case, "forbearance of money, goods or credits" will have no distinct definition from a
loan.
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Forbearance of money, goods or credits refers to arrangements other than loan agreements,
where a person acquiesces to the temporary use of his money, goods or credits pending
happening of certain events or fulfillment of certain conditions.

Q. What is an Option Contract?

Answer: Option Contract is an agreement in writing to give a person the 'option' to purchase
lands within a given time at a named price. It is neither a sale nor an agreement to sell. In a right
of first refusal, while the object might be made determinate, the exercise of the right, however,
would be dependent not only on the grantor's eventual intention to enter into a binding juridical
relation with another but also on terms, including the price, that obviously are yet to be later
firmed up.

PUBLICATION OF EXTRAJUDICIAL SETTLEMENT OF ESTATE

Noli Alfonso and Erlinda Fundialan v. Spouses Henry and Liwanag Andres (G.R. No. 166236, 29
July 2010)
Q: Is publication of the Deed of Extrajudicial Settlement of the Estate required before validly
entering into a Contract of Sale?
Answer: No, in Alejandrino v. Court of Appeals, the Court upheld the effectivity of a deed of
extrajudicial settlement that was neither notarized nor published.
Significantly, the title of the property owned by a person who dies intestate passes at once to his
heirs. Such transmission is subject to the claims of administration and the property may be taken
from the heirs for the purpose of paying debts and expenses, but this does not prevent an
immediate passage of the title, upon the death of the intestate, from himself to his heirs. The deed
of extrajudicial settlement executed evidences their intention to partition the inherited property.

SUCCESSION: GENERAL PROVISIONS

Morales vs. Olondriz, G.R. No. 198994, February 3, 2016
Q. What is preterition?
Answer: Preterition consists in the omission of a compulsory heir in the direct line from the will,
either because he is not named or, although he is named, he is neither instituted as an heir nor
assigned
any part of the estate without expressly being disinherited – tacitly depriving the heir of his
legitime.
Q. What are the requisites for a valid preterition?
Answer: Preterition requires that the omission is total, meaning the heir did not also receive any
legacies,devises, or advances on his legitime. Preterition annuls the institution of heir, but the
devises and legacies shall be valid insofar as they are not inofficious, i.e., impairs or diminishes
the legitime of the compulsory heirs.
It applies when:
(1) There is omission of one, some, or all of the compulsory heirs in the direct line, whether
living at the time of the execution of the will or born after the death of the testator;
(2) The omission must be total; and
(3) The omitted compulsory heirs should survive the testator. (Art. 854 and 907, Civil Code)

Mendoza v. Delos Santos, G.R. No. 176422, March 20, 2013; Chua vs. CFI, G.R. No. L-29901 August 31,
1977
Q. What is reserva troncal?

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Answer: Reserva troncal is a special rule designed primarily to assure the return of a reservable
property to the third degree relatives belonging to the line from which the property originally
came, and avoid its being dissipated into and by the relatives of the inheriting ascendant. The
principle of reserva troncal is provided in Art. 891 of the Civil Code.

Q. What are the requisites for reserva troncal to apply?

Answer: Pursuant to the said provision, in order that a property may be impressed with a
reservable character the following requisites must exist, to wit:
(1) That the property was acquired by a descendant from an ascendant or from a brother or
sister by gratuitous title;
(2) That said descendant died without an issue;
(3) That the property is inherited by another ascendant by operation of law; and
(4) That there are relatives within the third degree belonging to the line from which said
property originated.

Q. Who are the persons involved in reserva troncal?

Answer: The persons involved in reserva troncal are:
(1) Origin. The ascendant or brother or sister from whom the property was received by the
descendant by lucrative or gratuitous title;
(2) Prepositus. The descendant or prepositus who received the property;
(3) Reservista. The reservor, the other ascendant who obtained the property from the prepositus
by operation of law; and
(4) Reservatario. The reservee who is within the third degree from the prepositus and who
belongs to the linea o tronco from which the property came and for whom the property
should be reserved by the reservor.

Q. Enumerate the lines of transmission in reserva troncal.

Answer: There are three (3) lines of transmission in reserva troncal:
(1) First transmission is by gratuitous title, whether by inheritance or donation, from an
ascendant/brother/sister to a descendant called the prepositus;
(2) Second transmission is by operation of law from the prepositus to the other ascendant or
reservor, also called the reservista.
(3) Third and last transmission is from the reservista to the reservees or reservatarios who must
be relatives within the third degree from which the property came.

Q. What is the right of representation in succession?

Answer: Right of representation takes place:
(1) In testamentary succession, in case some, but not all, of the compulsory heir in the direct
descending line (a) dies before the testator; (b) becomes incapacitated to succeed from the
testator; or (c) is disinherited, and he is survived by his children or descendants. But not when
the compulsory heir repudiates his share. (Art. 856, 923, and 1035, Civil Code)
(2) In intestate succession, in case some, but not all, of the legal heir in the direct descending line
(a) dies before; or (b) becomes incapacitated to succeed from, the decedent, and he is survived
by his children or descendant, or in the absence of other heirs which can exclude them from the
succession, a brother or sister dies before the decedent survived by his or her own children.
(Arts. 972, 975, 981, 982, and 1035; Civil Code)

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Arado vs. Alcoran, G.R. No. 163362, July 8, 2015
Q. Do illegitimate children of legitimate child have the right of representation in the inheritance
of a legitimate grandparent?
Answer: As provided under Art. 992 of the Civil Code, an illegitimate child has no right to inherit
ab intestate from the legitimate children and relatives of his father or mother; nor shall such
children or relatives inherit in the same manner from the illegitimate child. This is otherwise
known as the “Iron Curtain Rule.” The right of representation is not available to illegitimate
descendants of legitimate children in the inheritance of a legitimate grandparent.

Q. Under what circumstances may a person waive inheritance?

Answer: Pursuant to the second paragraph of Art. 1347 of the Civil Code, no contract may be
entered into upon a future inheritance except in cases expressly authorized by law. For the
inheritance to be considered “future,” the succession must not have been opened at the time of
the contract. A contract may be classified as a contract upon future inheritance, prohibited
under the second paragraph of Art. 1347, where the following requisites concur:
(1) That the succession has not yet been opened.
(2) That the object of the contract forms part of the inheritance; and
(3) That the promissor has, with respect to the object, an expectancy of a right which is
purely hereditary in nature.

Arellano vs. Pascual, G.R. No. 189776, December 15, 2010

Q. What are the types of compulsory heirs?
Answer: The three kinds of compulsory heirs are:
(1) Primary: Those who have precedence over and exclude other compulsory heirs.
(2) Secondary: Those who succeed only in the absence of the primary heirs.
(3) Concurring: Those who succeed together with the primary or secondary compulsory heirs.

Antonio B. Baltazar, Sebastian M. Baltazar, Antonio L. Mangalindan, Rosie M. Mateo, Nenita A.

Pacheco, Virgilio Regala, Jr., and Rafael Titco v. Lorenzo Laxa (G.R. No. 174489, 11 April 2012)
Q: Is the state of being forgetful will make an individual mentally unsound to render him unfit to
execute a will?
Answer: No, the state of being forgetful does not necessarily make a person mentally unsound so
as to render him unfit to execute a Will. Forgetfulness is not equivalent to being of unsound
mind. Besides, Article 799 of the New Civil Code states:
Art. 799. To be of sound mind, it is not necessary that the testator be in full
possession of all his reasoning faculties, or that his mind be wholly unbroken,
unimpaired, or unshattered by disease, injury or other cause.
It shall be sufficient if the testator was able at the time of making the will to
know the nature of the estate to be disposed of, the proper objects of his
bounty, and the character of the testamentary act.
The testimony of subscribing witnesses to a Will concerning the testator’s mental condition is
entitled to great weight where they are truthful and intelligent. More importantly, a testator is
presumed to be of sound mind at the time of the execution of the Will and the burden to prove
otherwise lies on the oppositor. Article 800 of the New Civil Code states:
Art. 800. The law presumes that every person is of sound mind, in the absence
of proof to the contrary.
The burden of proof that the testator was not of sound mind at the time of
making his dispositions is on the person who opposes the probate of the will;

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 but if the testator, one month, or less, before making his will was publicly
known to be insane, the person who maintains the validity of the will must
prove that the testator made it during a lucid interval.

LEGAL STANDING OF HEIRS TO SUE

Lazaro Pasco and Lauro Pasco v. Heirs of Filomena De Guzman, represented by Cresencia De
Guzman-Principe (G.R. No. 165554, 26 July 2010)
Q: Do heirs have the capacity to sue for collection of the proceeds of the loan on behalf of the
estate of the deceased?
Answer: Yes, heirs have the capacity to sue for collection of the proceeds of the loan on behalf of
the estate of the deceased. Unpaid loans are considered assets of the estate of the creditor-
decedent. In this case, while it is true that Filomena’s estate has a different juridical personality
that that of the heirs, the latter certainly have an interest in the preservation of the estate and the
recovery of its properties for at the moment of Filomena’s death, the heirs start to own the
property, subject to the decedent’s liabilities. In this connection, Article 777 of the Civil Code
states that the rights to the succession are transmitted from the moment of the death of the
decedent.

DONATIONS
Q. X is the registered owner of a parcel of land issued in 1986 pursuant to an emancipation
patent. X filed a case for Forcible Entry against Y who, with violence, ousted X from the land. Y
filed a Motion to Dismiss claiming that the land was agricultural land which allegedly rendered
the dispute an agrarian matter within the jurisdiction of the DAR. Y also claimed that he
obtained title through Z whose claim to the property is by virtue of an unregistered Deed of
Donation executed prior to 1972.

(a) Is the case an agrarian dispute which divests the regular court of jurisdiction?
Answer: No. A case involving an agricultural land does not immediately qualify as an agrarian
dispute. For the DAR to acquire jurisdiction over the case, there must be a tenancy relationship
between the parties. It is necessary to establish the indispensable elements of tenancy:
(1) that the parties are the landowner and tenant or agricultural lessee;
(2) the subject matter of the relationship is an agricultural land;
(3)there is consent between the parties to the relationship; 4)that the purpose of the relationship
is bring about agricultural production;
(5) that there is personal cultivation on the part of the tenant or agricultural lessee; and
(6) that the harvest is shared between the parties. In this case, not all the conditions are present.

(b) Is X bound by the unregistered deed of donation?

Answer: No, in order that the donation of an immovable may be valid, it must be made in a public
document. Article 709 explicitly states that “the titles of ownership, or other rights over
immovable property, which are not duly inscribed or annotated in the Registry of Property shall
not prejudice third persons.” Although the non-registration of a deed of donation shall not affect
its validity, the necessity of registration comes into play when the rights of third persons are
affected, as in the case at bar. The donation executed in this case, although in writing and duly
notarized, has not been registered in accordance with law. When X’s title was issued in 1986, it
became indefeasible and incontrovertible. Certificates of title issued pursuant to emancipation
patents acquire the same protection accorded to other titles, and become indefeasible upon
expiration of one year from the date of the issuance of the order for the issuance of the patent.
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Land so titled may no longer be the subject matter of a cadastral proceeding; nor can they be
decreed to other individuals. (Bumagat, et al. v.Arribay, GR No. 194818, June 9, 2014)

RIGHT TO INHERIT OF A RELATIVE BY AFFINITY

Antipolo Ining, et. al v. Leonardo Vega, et al. (G.R. No. 174727, August 12, 2013)
Q: R and G are siblings. In 1997, L, the grandson of R, filed an Action for Partition claiming that
he was entitled to one-half of the property, being R’s heir. G’s heirs claimed that he has no cause
of action as they have become the land’s sole owners through Lucimo Sr. who executed an
Affidavit of Ownership of the Land in 1979, having acquired it through sale as early as 1943.
From then on, Lucimo Sr. enjoyed possession of the property. This resulted to the repudiation of
the co-ownership. Lucimo Sr. appeared to be the husband of Teodora, Antipolo’s daughter.
Antipolo is one of the children of G.
(a) Did L’s right prescribe because 30 years had already lapsed?
Answer: No, Leonardo’s right did not prescribe. Since Leon died without issue, his heirs are his
siblings, R and G, who thus inherited the property in equal shares. In turn, R’s and G’s heirs –
the parties herein – became entitled to the property upon the sisters’ passing. Under Article 777
of the Civil Code, the rights to the succession are transmitted from the moment of death.
For prescription to set in, the repudiation must be done by a co-owner.
Time and again, it has been held that "a co-owner cannot acquire by prescription the share of the
other co-owners, absent any clear repudiation of the co-ownership. In order that the title may
prescribe in favor of a co-owner, the following requisites must concur: (1) the co-owner has
performed unequivocal acts of repudiation amounting to an ouster of the other co-owners; (2)
such positive acts of repudiation have been made known to the other co-owners; and (3) the
evidence thereof is clear and convincing."

(b) Is Lucimo, Jr. a co-owner of the heirs of R and G?

Answer: Lucimo, Jr. cannot be considered as a co-owner as he was just the son-in law of
Antipolo, being married to his daughter Teodora. Lucimo is not an heir of Gregoria hence not a
co-owner.
A family relation under Article 150 of the Family Code is confined to husband and wife, parents
and children, ascendants and descendants and brothers and sisters. It was Teodora who is the
co-owner, not Lucimo as he is merely related by affinity to the decedent.
The Court concluded that one who is merely related by affinity to the decedent does not inherit
from the latter and cannot become a co-owner of the decedent’s property. Consequently, he
cannot effect a repudiation of the co-ownership of the estate that was formed among the
decedent’s heirs.

PRESCRIPTION: ACQUISITIVE AND EXTINCTIVE PRESCRIPTION

Q. May X’s possession of Y’s land, which possession was tolerated by Y for 25 years, ripen into
X’s full ownership over the said land?
Answer. No, acts that might have been merely tolerated by the owner do not constitute
possession to commence the running of the prescriptive period. (Olegario v. Mari, GR No. 147951,
December 14, 2009)
CREDIT TRANSACTION

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Bankard v. Alarte (G.R. No. 202573, April 19, 2017)
Q: Petitioner Bankard, Inc. (Bankard, now RCBC Bankard Services Corporation) is a duly
constituted domestic corporation doing business as a credit card provider, extending credit
accommodations to its member-cardholders for the purchase of goods and services obtained
from Bankard-accredited business establishments, to be paid later on by the member-
cardholders following billing.

What is the nature of a credit card transaction?

Answer: Credit card transactions are simple loan arrangements between the card issuer
and the card holder. It actually involves three (3) contracts:
(a) the sales contract between the credit card holder and the merchant;
(b) the loan agreement between the credit card issuer and the credit card holder; and
(c) the promise to pay between the credit card issuer and the merchant.

CREDIT TRANSACTIONS: LOAN

Jocelyn M. Toledo v. Marilou M. Hyden (G.R. No. 172139, 8 December 2010)
Q: Is the stipulated interest of 6%-7% monthly interest excessive, iniquitous, unconscionable and
exorbitant?
Answer: The disputed 6% to 7% monthly interest rate is not iniquitous or unconscionable where
there was no urgency of the need for money on the part of the debtor which compelled her to
enter into the loan transactions. rebate on her sales. This is the reason why she did not mind the
6% to 7% monthly interest.
It was clearly shown that before the debtor availed of said loans, she knew full well that the same
carried with it an interest rate of 6% to 7% per month, yet she did not complain. The debtor
cannot now go to court to have the said interest rate be annulled on the ground that it is
excessive, iniquitous, unconscionable, exorbitant, and absolutely revolting to the conscience of
man. This is so because among the maxims of equity are (1) he who seeks equity must do equity,
and (2) he who comes into equity must come with clean hands. It signifies that 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 as to the controversy in issue.

CREDIT TRANSACTIONS: “HOLD-OUT STATUS OF A BANK ACCOUNT

Metropolitan Bank and Trust Company v. Ana Grace Rosales and Yo Yuk To (G.R. No. 183204, 13
January 2014)
Q: AR and YT attempted several times to withdraw their deposits but MBTC refused stating
that their bank accounts were placed under “Hold Out” status. No explanation was given to
them. Thus, they filed a complaint for Breach of Obligation and Contract with Damages and
prayed that the Hold Out status be lifted and be allowed to withdraw their deposits. Is the Hold
Out status bank account of proper?
Answer: No. Bank deposits, which are in the nature of a simple loan or mutuum, must be paid
upon demand by the depositor.
The "Hold Out" clause applies only if there is a valid and existing obligation arising from any of
the sources of obligation enumerated in Article 1157 of the Civil Code, to wit: law, contracts,
quasi-contracts, delict, and quasi-delict. In this case, MBTC failed to show that AR and YT have
an obligation to it under any law, contract, quasi-contract, delict, or quasi-delict. And although a
criminal case was filed by MBTC against AR, this is not enough reason for petitioner to issue a
"Hold Out" order as the case is still pending and no final judgment of conviction has been
rendered against AR. In fact, it is significant to note that at the time MBTC issued the "Hold
Out" order, the criminal complaint had not yet been filed. Thus, considering that AR is not liable
under any of the five sources of obligation, there was no legal basis for MBTC to issue the "Hold
Out" order. In view of the foregoing, we find that MBTC is guilty of breach of contract when it
unjustifiably refused to release AR’s and YT’s deposit despite demand. Having breached its
contract with AR and YT, MBTC is liable for damages.

EFFECT OF RESCISSION OF CONTRACT

Goldloop Properties Inc. v. Government Service Insurance System (G.R. No. 171076, 1 August 2012)
Q: What is the effect of rescission of contract?

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Answer: In cases involving rescission under Article 1191, mutual restitution is required. The
parties should be brought back to their original position prior to the inception of the contract.
"Accordingly, when a decree of rescission is handed down, it is the duty of the court to require
both parties to surrender that which they have respectively received and to place each other as
far as practicable in [their] original situation.” If both parties failed to comply with their
respective obligations, Article 1192 will be applied which reads, “In case both parties have
committed a breach of the obligation, the liability of the first infractor shall be equitably
tempered by the courts. If it cannot be determined which of the parties first violated the contract,
the same shall be deemed extinguished, and each shall bear his own damages.”

ENFORCMENT OF A CONDITION UNDER A CONTRACT

REFORMATION OF INSTRUMENTS
Salun-At Marquez and Nestor Dela Cruz v. Eloisa Espejo, et. al. (G.R. No. 168387, 25 August 2010)
Q: What is the rule in case there is doubt as to the contents of the contract?
Answer: When the parties admit the contents of written documents but put in issue whether
these documents adequately and correctly express the true intention of the parties, the deciding
body is authorized to look beyond these instruments and into the contemporaneous and
subsequent actions of the parties in order to determine such intent.
Well-settled is the rule that in case of doubt, it is the intention of the contracting parties that
prevails, for the intention is the soul of a contract, not its wording which is prone to mistakes,
inadequacies, or ambiguities. To hold otherwise would give life, validity, and precedence to mere
typographical errors and defeat the very purpose of agreements.

UNENFORCEABLE CONTRACTS
Elena Jane Duarte v. Miguel Samuel A.E. Duran (G.R. No. 173038, 14 September 2011)
Q: When may a party seek the application of the Statute of Frauds?
Answer: The Statute of Frauds applies only to executory, and not to completed, executed or
partially executed contracts.

VOID AND INEXISTENT CONTRACTS

Luz S. Nicolas v. Leonora C. Mariano (G.R. No. 201070, 1 August 2016)
Q: What is effect if both parties are in pari delicto?
Answer: When both parties are in pari delicto or in equal fault, none of them may expect positive
relief from the courts in the interpretation of their agreement; instead, they shall be left as they
were at the time the case was filed.

AGENCY: NATURE, FORM AND KINDS OF AGENCY

William Angidan Siy v. Alvin Tomlin (G.R. No. 205998, 24 April 2017)
Q: What are the kinds of agency?
Answer: Articles 1869 provides that: Agency may be express, or implied from the acts of the
principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that
another person is acting on his behalf without authority. Agency may be oral, unless the law
requires a specific form.
Article 1870 provides that: Acceptance by the agent may also be express or implied from his acts
which carry out the agency, or from his silence or inaction according to the circumstances.

OBLIGATIONS OF THE AGENT

Nicanora G. Bucton (deceased), substituted by Requilda B. Yray (Petitioner) v. Rural bank of El
Salvador, Inc., Misamis Oriental, and Reynaldo Cuyong (Respondents) v. Erlinda Concepcion and
her husband and Agnes Bucton Lugod (Third-Party Defendants) (G.R. No. 179625, 24 February
2014)
Q: NB filed a complaint for Annulment of Mortgage, Foreclosure and Special Power of Attorney
against EC and RBES Bank. NB alleged that she is the owner of a parcel of land. She gave EC
the TCT of the parcel of land thinking that the latter will just show it to a possible buyer.
Unfortunately, EC obtained a loan from RBES Bank and as security, she mortgaged the
property. Due to failure to settle the loan, the property was foreclosed and sold in favor of RBES
Bank. NB claimed that she did not allow EC to mortgage the property. Is there an agency
relationship between NB and EC?

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Answer: No. In order to bind the principal by a deed executed by an agent, the deed must upon
its face purport to be made, signed and sealed in the name of the principal. In other words, the
mere fact that the agent was authorized to mortgage the property is not sufficient to bind the
principal, unless the deed was executed and signed by the agent for and on behalf of his principal.
In this case, the authorized agent failed to indicate in the mortgage that she was acting for and on
behalf of her principal. The Real Estate Mortgage, explicitly shows on its face, that it was signed
by EC in her own name and in her own personal capacity. In fact, there is nothing in the
document to show that she was acting or signing as an agent of NB. Thus, consistent with the law
on agency and established jurisprudence, NB cannot be bound by the acts of EC.
EC acted beyond the scope of his authority.

JOINT AND SOLIDARY OBLIGATIONS

Q. What is a solidary obligation?
Answer There is a solidary liability only when the obligation expressly so states, when the law so
provides or when the nature of the obligation so requires.

EXTINGUISHMENT OF OBLIGATIONS: PAYMENT OR PERFORMANCE

Q. A dacion en pago was executed between a bank and its debtor and it was worded as follows:
“THAT, the ASSIGNOR acknowledges to be justly indebted to the ASSIGNEE in the sum
of ELEVEN MILLION EIGHT HUNDRED SEVENTY-EIGHT THOUSAND EIGHT
HUNDRED PESOS (P11,878,800.00), Philippine Currency as of August 25, 1998.
Therefore, by virtue of this instrument, ASSIGNOR hereby ASSIGNS, TRANSFERS, and
CONVEYS AND SETS OVER [TO] the ASSIGNEE that real estate with the building and
improvements existing thereon, more particularly described as follows:
xxxx
of which the ASSIGNOR is the registered owner being evidenced by TCT No. x x x issued
by the Registry of Deeds of Trece Martires City.
THAT, the ASSIGNEE does hereby accept this ASSIGNMENT IN PAYMENT OF THE
TOTAL OBLIGATION owing to him by the ASSIGNOR as above-stated”
The debtor claimed that the bank's acceptance of the assignment, without any reservation or
exception, resulted in the extinguishment of the entire loan obligation. Is the debtor correct?
Answer: Yes, like in all contracts, the intention of the parties to the dation in payment is
paramount and controlling. The contractual intention determines whether the property subject
of the dation will be considered as the full equivalent of the debt and will therefore serve as full
satisfaction for the debt. The dation in payment extinguishes the obligation to the extent of the
value of the thing delivered, either as agreed upon by the parties or as may be proved, unless the
parties by agreement, express or implied, or by their silence, consider the thing as equivalent to the
obligation, in which case the obligation is totally extinguished. In the case at bar, the dacion en
pago executed by DELTA and the BANK indicates a clear intention by the parties that the
assigned properties would serve as full payment for DELTA's entire obligation without any
reservation or condition, the dacion stated that the assigned properties served as full payment of
DELTA's total obligation to the BANK. (Luzon Dev't Bank v. Enriquez, G.R. No. 168646, January
12, 2011)

VALID CONSIGNATION
Q. What are the requirements for a valid consignation?
Answer: For consignation to be valid, the debtor must comply with the following requirements
under the law: 1) there was a debt due; 2) valid prior tender of payment, unless the consignation
was made because of some legal cause provided in Article 1256; 3) previous notice of the
consignation has been given to the persons interested in the performance of the obligation; 4) the
amount or thing due was placed at the disposal of the court; and, 5) after the consignation had
been made, the persons interested were notified thereof:
"Failure in any of the requirements is enough ground to render a consignation
ineffective.” (PNB v. Chan, G.R. No. 206037, March 13, 2017)
COMPENSATION
Q. What are the requirements in order for legal compensation to take place and extingusih an
obligation?

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Answer: For legal compensation to take place, the requirements set forth in 1279 of the Civil
Code must be present, namely: (1) That each one of the obligors be bound principally, and that
he be at the same time a principal creditor of the other; (2) That both debts consist in a sum of
money, or if the things due are consumable, they be of the same kind, and also of the same
quality if the latter has been stated; (3) That the two debts be due; (4) That they be liquidated
and demandable; (5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.

OFFSETTING AS A WAY TO EXTINGUISH OBLIGATION

Q. What is offsetting as a way of extinguishing obligation?
Answer: Offsetting may be made on the two obligations. A debt is considered liquidated, not only
when it is expressed already in definite figures which do not require verification, but also when
the determination of the exact amount depends only on a simple arithmetical operation. When
the defendant, who has an unliquidated claim, sets it up by way of counterclaim, and a judgment
is rendered liquidating such claim, it can be compensated against the plaintiff’s claim from the
moment it is liquidated by judgment. In the instant case, both obligations are liquidated.
(Montemayor v. Millora, G.R. No. 168251, July 27, 2011)

CONTRACTS: ESSENTIAL REQUISITES

Q. What are the essential elements of a contract of sale?
Answer: The essential elements of a contract of sale are: a) consent or meeting of the minds; b)
determinate subject matter; and c) price certain in money or its equivalent. (Robern
Development Corp. vs. Bernardo, G.R. No. 173622, March 11, 2013)

CONTRACTS: CONSTRUCTIVE DELIVERY

Q. Q purchased a parcel of land through a notarized Deed of Absolute Sale. Q agreed that his
brother R will have possession of the subject land. In exchange, S, the son of R will deliver to Q
the produce of said land. Unfortunately, S and R continuously refused to deliver the produce of
the land or vacate the same despite his repeated demands. Hence, Q filed an action for recovery
of possession of the land. S and R contend that Q failed to establish legal and equitable title over
the land, observing that the notarized deed executed in Q’s favor did not transfer the land’s
ownership to him given that he was never placed in possession and control thereof. Is the
contention correct?
Answer: No. Art. 1477 of the Civil Code recognizes that the ownership of the thing sold shall be
transferred to the vendee upon the actual or constructive delivery thereof. Art. 1498 lays down
the general rule that the execution of a public instrument shall be equivalent to the delivery of the
thing which is the object of the contract, if from the deed the contrary does not appear or cannot
clearly be inferred.
However, the execution of a public instrument gives rise only to a prima facie presumption of
delivery, which is negated by the failure of the vendee to take actual possession of the land sold. A
person who does not have actual possession of the thing sold cannot transfer constructive
possession by the execution and delivery of a public instrument.
In this case, the prima facie presumption of constructive delivery to Jose was not successfully
negated by proof that the land was not actually placed in the latter’s control and possession. Jose
exercised possession of the subject land through Manuel and eventually, his son, Marlon whom
he allowed to stay and care for the land in exchange for the delivery of the produce thereof.

STIPULATION ON RESCISSION
Q. May the parties to a contract validly stipulate its rescission?
Answer: Yes, parties may validly stipulate the unilateral rescission of a contract. Such is the case
here since the parties conferred upon GSIS the right to unilaterally rescind the MOA. It is basic
that a contract is the law between the parties, and the stipulations therein – provided that they
are not contrary to law, morals, good customs, public order or public policy – shall be binding as
between the parties. (Goodloop Properties vs. GSIS, G.R. No. 171076, August 1, 2012)

THE CONCEPTS AND DOCTRINES OF RES IPSA LOQUITUR, LAST CLEAR CHANCE,
PROXIMATE CAUSE, DAMNUM ABSQUE INJURIA, PRESUMPTION OF NEGLIGENCE,
VICARIOUS LIABILITY
Q. What are the requisites of the Doctrine of Res Ipsa Loquitur?
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Answer: The requisites of the doctrine of res ipsa loquitur as established by jurisprudence are as
follows: (1) the accident is of a kind which does not ordinarily occur unless someone is negligent;
(2) the cause of the injury was under the exclusive control of the person in charge and (3) the
injury suffered must not have been due to any voluntary action or contribution on the part of the
person injured. The above requisites are all present in this case. (Del Carmen, Jr., vs. Bacoy, G.R.
No. 173870, April 25, 2012)

EMERGENCY RULE
Q. Explain the “Emergency Rule.”
Answer: The Emergency Rule states that one who suddenly finds himself in a place of danger,
and is required to act without time to consider the best means that may be adopted to avoid the
impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon
reflection may appear to have been a better method, unless the emergency in which he finds
himself is brought about by his own negligence. (Orix Metro Lising vs. Mangalinao, G.R. No.
174089, January 25, 2012)

DAMAGES (ARTICLES 2195-2235, CIVIL CODE)

ACTUAL AND COMPENSATORY DAMAGES
MORAL DAMAGES
Q. May the registered owner of a parcel of land be awarded moral damages for the defendant's
unjustified retention of the title over the land?
Answer: Yes, as for the land titles surrendered by Sps. Mateo, the Court determines that Swift
has no basis for retaining the same as collateral for feeds warehousing. In the absence of such
bond agreement or security instrument, it cannot be said that a bond has actually been posted or
constituted. Besides, even assuming that the real properties served as collateral, Swift cannot just
appropriate them in view of the prohibition against pactum commissorium. Considering the
wrongful retention of titles, moral damages should be awarded to Sps. Mateo. They were able to
prove that Swift acted in bad faith in keeping the titles despite its knowledge that there was no
bond or real estate mortgage to justify its retention thereof. (Swift Foods vs. Sps. Mateo, G.R. No.
170486, September 12, 2011)

ACTUAL DAMAGES
Q. May actual damages be awarded sans proof of the actual amount lost?
Answer: Article 2199 of the Civil Code provides that "one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved." In Ong v.
Court of Appeals, we held that "actual damages are such compensation or damages for an injury
that will put the injured party in the position in which he had been before he was injured. They
pertain to such injuries or losses that are actually sustained and susceptible of measurement." To
be recoverable, actual damages must not only be capable of proof, but must actually be proved
with reasonable degree of certainty. We cannot simply rely on speculation, conjecture or
guesswork in determining the amount of damages. Thus, it was held that before actual damages
can be awarded, there must be competent proof of the actual amount of loss, and credence can be
given only to claims which are duly supported by receipts. Here, respondent did not present
documentary proof to support the claimed necessary expenses for the repair and completion of
the house. (Dueñas vs. Africa, G.R. No. 165679, October 5, 2009 )

MORAL DAMAGES
Q. What constitutes bad faith?
Answer: Bad faith means breach of a known duty through some motive or interest or ill will. By
refusing to honor her solemn obligations under the lease, and instead unduly profiting from these
violations, Z is guilty of bad faith. Moral damages may be awarded when the breach of contract
is attended with bad faith. Exemplary damages may also be awarded when a wrongful act is
accompanied by bad faith or when the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner. And since the award of exemplary damages is proper in this
case, attorney's fees and costs of the suit may also be recovered as stipulated in the lease
agreement. (Sps. Castro vs. Palenzuela, G.R. No. 184698, January 21, 2013)

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DAMAGES FOR MALICIOUS PROSECUTION
Q. What must the plaintiff prove in order to be successfully claim for damages for malicious
prosecution?
Answer: The plaintiff must prove (1) the prosecution did occur, and the defendant was himself
the prosecutor or that he instigated its commencement; (2) the criminal action finally ended with
an acquittal; (3) in bringing the action, the prosecutor acted without probable cause; and (4) the
prosecution was impelled by legal malice -- an improper or a sinister motive. The gravamen of
malicious prosecution is not the filing of a complaint based on the wrong provision of law, but the
deliberate initiation of an action with the knowledge that the charges were false and groundless.
The statutory basis for a civil action for damages for malicious prosecution are found in the
provisions of the New Civil Code on Human Relations and on damages particularly Articles 19,
20, 21, 26, 29, 32, 33, 35, 2217 and 2219 (8). (Marsman and Company v. Ligo, G.R. No. 198643,
August 19, 2015)

TEMPERATE OR MODERATE DAMAGES

Q. May the court award damages even if the injury suffered was not proven with certainty?
Answer: A claimant is entitled to be compensated reasonably and commensurately for what he or
she has lost as a result of another’s act or omission, and the amount of damages to be awarded
shall be equivalent to what have been pleaded and adequately proven. Should the claimant fail to
prove with exactitude the extent of injury he or she sustained, the court will still allow redress if
it finds that the claimant has suffered due to another’s fault. (Adrian Wilson vs. TMX, G.R. No.
162608, July 26, 2010)

EXEMPLARY OR CORRECTIVE DAMAGES

Q. A executed an SPA in favor of B authorizing B to obtain a loan using A's property as
collateral. Without notice to B, A revoked the SPA effective at the end of business hours of July
17, 2000. On July 18, 2000, the X Bank approved the loan application of B in the amount of P25
million. On July 31, 2000, B, thru a letter, notified A of the approval of the loan. Sometime in the
first week of August 2000, B learned about the revocation of the SPA. B filed before the RTC a
Complaint for Annulment of Revocation of SPA, Enforcement of SPA and/or interest in the
properties covered by said SPA and damages against A.

(a) May the SPA be revoked upon the sole will of A?

Answer: NO. There is no question that the SPA executed by A in favor of B is a contract of
agency coupled with interest. This is because their bilateral contract depends upon the agency.
Hence, it cannot be revoked at the sole will of the principal.

(b) When may the court award exemplary damages?

Answer: NO. Article 2229 of the Civil Code provides that exemplary damages may be imposed
"by way of example or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages." They are, however, not recoverable as a matter of right.
They are awarded only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. In this case, although the revocation was done in bad faith, respondents did
not act in a wanton, fraudulent, reckless, oppressive or malevolent manner. They revoked the
SPA because they were not satisfied with the amount of the loan approved. Thus, petitioners are
not entitled to exemplary damages. (Ching vs. Bantolo, et al., G.R. No. 17708, December 5, 2012)

COMPROMISE AGREEMENT
Sonley v. Anchor Savings Bank/Equicom Savings Bank (G.R. No. 205623, August 10, 2016)
Q: Conchita Sonley entered into a Contract to Sell with Anchor for the purchase of the
foreclosed property. Sonley defaulted hence Anchor rescinded the Contract. Sonley filed an
action for the court to declare the rescission as null and void. They however entered into a
Compromise Agreement. To settle the matter, the parties agreed to enter into a Compromise
Agreement. Under the Judgment based on the Compromise Agreement, Sonley would
repurchase the property from Anchor. Sonley again defaulted prompting Anchor to move for
execution. It prayed that (a) the Compromise Agreement be rescinded; (b) it be allowed to apply
the payments as rentals; and (c) Sonley be evicted from the property.
Can Anchor ask for execution of the judgment based on a compromise agreement?

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Answer: Yes, Anchor may move for execution of judgment based on the Compromise Agreement
executed by the party-litigants and duly approved by the trial court. A compromise agreement is
the law between the parties. Its purpose is to put an end to litigation because of the uncertainty
that may arise from it. Once the compromise is perfected, the parties are bound to abide by it in
good faith. Should a party fail or refuse to comply with the terms, the other party could either
enforce the compromise by a writ of execution A compromise agreement is equivalent to a ruling
on the merits.

(b) Is there a need to file a separate civil action for rescission?

Answer: No, there is no need to file a separate action for rescission. A breach of any of the
conditions of the compromise agreement will give any of the parties to rescind the same without
filing a separate civil action.
Compromise Agreement and Injunction
Cathay Land, Inc. et al. v. Ayala Land, Inc. (G.R. No. 210209, August 9, 2017)
Q: Cathay filed a Complaint for easement of right of way against Ayala, claiming it denied
passage to its personnel. Before trial ensued, parties entered into a Compromise Agreement.
Ayala granted easement of right of way in favor of Cathay, subject to faithful compliance with its
undertaking under the Compromise, such as not to develop “high-rise buildings.” It was further
agreed that Ayala has the right “to withdraw or suspend the grant of easement of right of way”
from Cathay if it “would fail to rectify its breach within a period of 30 days from receipt of a
notice.” The trial court approved the Compromise Agreement.
After the execution of the judgment based on the Compromise Agreement, Ayala noticed from
Cathay’s flyers that it intended to construct high rise building. Ayala made verbal and written
demand to Cathay to abide with the Compromise. Cathay did not heed Ayala’s demand forcing it
to file a Motion for Execution with Prayer for Injunction and TRO. The trial court granted the
execution. What are the limitations when the trial executes a judgment based on a compromise
agreement?
Answer: Courts cannot modify, impose terms different from the term of the agreement or set
aside the compromise and reciprocal concessions made in good faith by the parties without
gravely abusing their discretion. Under the Compromise Agreement, the remedies of Ayala are:
first to notify Cathay of the breach and second to withdraw or suspend the easement if Cathay
failed to rectify such breach within 30 days.
Ayala has no right to seek injunctive relief. Ayala also prematurely moved for the execution.
GUARANTY AND SURETYSHIP
Manila Insurance Company, Inc. v. Spouses Roberto and Aida Amurao (G.R. No. 179628, 16
January 2013)
Q: What is the liability of a surety?
Answer: The Court have consistently held that a surety’s liability is joint and several, limited to
the amount of the bond, and determined strictly by the terms of contract of suretyship in relation
to the principal contract between the obligor and the obligee. However, that although the
contract of suretyship is secondary to the principal contract, the surety’s liability to the obligee is
nevertheless direct, primary, and absolute.

PLEDGE, MORTGAGE AND ANTICHRESIS, CHATTEL MORTGAGE (INLCUDE ACT NO.

1508 AND SECTION 47 OF R.A. NO. 8791 OR THE GENERAL BANKING ACT OF 2000)
Q: Union Bank of the Philippines v. Alain Juniat, Winwood Apparel, Inc., Wingyan Apparel,
Inc., Nonwoven Fabric Philippines (G.R. No. 171569, 1 August 2011)
Question: AJ obtained a loan from UB which was secured by a Chattel Mortgage over the
motorized sewing machines. When AJ failed to pay, UB filed an action for Sum of Money with
Issuance of a Writ of Preliminary Attachment. At the time of issuance of the writ, the possession
of the machines is with NF. The latter argued that it has a better title considering that the Chattel
Mortgage was not notarized. Will the argument of NF prevail?
Answer: No, NF’s argument will not prevail. Indeed, the unnotarized Chattel Mortgage executed by
AJ in favor of UB does not bind NF. However, it must be pointed out that UB’s primary cause of action is
for a sum of money with prayer for the issuance of ex-parte writs of attachment and replevin against AJ
and the person in possession of the motorized sewing machines and equipment. Thus, the fact that the
Chattel Mortgage executed in favor of UB was not notarized does not affect UB’s cause of action. UB only
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needed to show that the loan of AJ remains unpaid and that it is entitled to the issuance of the writs
prayed for. Considering that writs of attachment and replevin were issued by the RTC. NF had to prove
that it has a better right of possession or ownership over the attached properties. This it failed to do.

TORTS AND DAMAGES: CLASSIFICATION OF TORTS - NEGLIGENT TORTS

Equitable Banking Corporation v. Special Steel Products, Inc. and Augusto Pardo
(G.R. No. 175350, 13 June 2012)
Q: ICEC purchased welding electrodes from SSPI. As payment, ICEC issued three crossed
checks payable to the order of SSPI with the notation account payee only and was drawn against
EBC.
JU demanded the deposit of the checks in his personal account and EBC allowed such thinking
that JU being the son-in-law of the ICEC majority stockholder had the authority to make such
demand..
Later, SSPI demanded payment from ICEC. SSPI denied receipt of the checks. The two
companies discovered that JU received the proceeds of the checks. Due to the denial of ICEC of
the obligation to pay SSPI, the latter filed a complaint for damages against JU and EBC. Does
SSPI have a cause of action against EBC for quasi-delict?
Answer: Yes. SSPIs cause of action is not based on the three checks. SSPI does not ask EBC or
JU to deliver to it the proceeds of the checks as the rightful payee. SSPI does not assert a right
based on the undelivered checks or for breach of contract. Instead, it asserts a cause of action
based on quasi-delict.
A quasi-delict is an act or omission, there being fault or negligence, which causes damage to
another. Quasi-delicts exist even without a contractual relation between the parties.
Equitable did not observe the required degree of diligence expected of a banking institution
under the existing factual circumstances. It should have verified if the payee (SSPI) authorized
the holder (JU) to present the same in its behalf, or indorsed it to him. Such misplaced reliance
on empty words is tantamount to gross negligence, which is the absence of or failure to exercise
even slight care or diligence, or the entire absence of care, evincing a thoughtless disregard of
consequences without exerting any effort to avoid them.

LIABILITY UNDER ARTICLE 2180, CIVIL CODE

Greenstart Express, Inc. and Fruto L. Sayson, Jr. v. Universal Robina Corporation and Nissin
Universal Robina Corporation(G.R. No. 205090, 17 October 2016)
Q: How may a respondent prove that he has no liability under Article 2180?
Answer: This may be done by proof of any of the following: (1) That there is no employee-
employer relationship; or (2) That the employee-driver acted outside the scope of his assigned
tasks; or (3) That employer exercised the diligence of a good father of a family in the selection
and supervision of his employee.

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