CIVIL LAW UPDATES

JURISTS BAR REVIEW CENTER, INC.

PRE-BAR 2022
Dean Viviana M. Paguirigan

PERSONS AND FAMILY RELATIONS

RAEMARK S. ABEL v. MINDY P. RULE G.R. No. 234457, May 12, 2021, Third Division
(Leonen, J.)

Raemark S. Abel, an American citizen, married Mindy P. Rule, a Filipino

citizen, in California. On November 18, 2008, Abel and Rule jointly sought the
summary dissolution of their marriage before the Los Angeles Superior Court. They
neither acquired community assets or liabilities nor bore any children during the
time they were married. Their Joint Petition for the summary dissolution of marriage
was timely filed within five years from the date of their marriage. They also waived
their rights to appeal, move for a new trial, and ask for spousal support in their
petition. The Superior Court of California dissolved Abel and Rule's marriage.

Meanwhile, Abel reacquired his Filipino citizenship and became a dual

citizen of the Philippines and the United States of America on December 3, 2008.
On the other hand, Rule became a citizen of the United States of America on
September 21, 2012. On January 10, 2017, an authenticated California judgment
dissolving Abel and Rule's marriage was recorded with the City Registry Office of
Manila. Abel then filed a Petition for the judicial recognition of foreign divorce
and correction of civil entry before the Regional Trial Court. On February 22, 2017,
the RTC found the Petition to be sufficient in form and substance. The Office of
the Solicitor General filed an Opposition to Abel's petition. It claimed that the
divorce sought to be recognized was not obtained by the alien spouse, contrary
to law, because Abel and Rule jointly filed the petition for summary dissolution of
marriage.

ISSUE: Whether a divorce decree jointly obtained by a Filipino and their alien
spouse can be judicially recognized in the Philippines.

YES. In Republic v. Manalo and succeeding cases, it was consistently held

that it is irrelevant if the foreign or Filipino spouse initiated the foreign divorce
proceeding. Article 26(2) of the Family Code, when read together with Section 19
of Republic Act No. 9710 (Magna Carta of Women), can only be interpreted to
mean that it is immaterial who initiated the divorce proceedings abroad. In a
concurring opinion to Manalo, it was emphasized that once a divorce decree is
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issued, the foreign spouse is deemed to have 'obtained' a divorce which

capacitates him or her to remarry. The same status should therefore be afforded
to the Filipino spouse.

Here, petitioner Abel and private respondent Fule jointly filed for the
summary dissolution of their marriage and their petition was granted by the
Superior Court of California. A clear and plain reading of Article 26 shows that
what is only required is that the divorce must have been validly obtained abroad
by the alien spouse. It does not impose an additional requirement for the alien
spouse to solely obtain the divorce.

Moreover, the reality of joint petitions for divorce was acknowledged in

Galapon v. Republic. In Galapon, the Supreme Court through Justice Caguioa
ruled that Article 26(2) applies to mixed marriages where the divorce decree is:
(i) obtained by the foreign spouse; (ii) obtained jointly by the Filipino and foreign
spouse; and (iii) obtained solely by the Filipino spouse. Applying Manalo and the
later case of Galapon to the present case, it is immaterial that the divorce decree
was obtained jointly by petitioner, then a citizen of the United States of America,
and private respondent, then a Filipino citizen. They are deemed to have
obtained the divorce as required in Article 26(2) of the Family Code, capacitating
them to remarry under the Philippine law.

TAN-ANDAL v. ANDAL G.R. No. 196359|May 11, 2021

Mario Andal married Rosanna in 1995. Mario was 33 while Rosanna was 31.
They separated de facto in 2000. Mario filed a petition for custody of their
daughter while Rosanna filed a petition to declare their marriage void alleging
that Mario was psychologically incapacitated to comply with essential marital
obligations. It appears that Mario was addicted to drugs and refused to find a
job and even caused the siphoning of funds from the company that Rosanna set-
up to support his drug use.

The RTC declared the marriage void but the CA reversed the decision and
ruled that the psychiatric report presented by Rosanna’s expert witness was
unscientific and unreliable. Rosanna interposed an appeal to the Supreme Court.

The Supreme Court through Justice Leonen unanimously modified the

interpretation of the requirements of psychological incapacity as a ground for
declaration of nullity of marriage found in Article 36 of the Family Code.

It pronounced that psychological incapacity is not a medical but a legal

concept, that the word mental is not synonymous with psychological.
Psychological incapacity refers to a personal condition that prevents a spouse to
comply with the fundamental marital obligations only in relation to a specific
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partner that may exist at the time of the marriage but may have revealed through
behavior subsequent to the celebration thereof. Psychological incapacity
consists of clear acts of dysfunctionality that show a lack of understanding and
concomitant compliance with one's essential marital obligations due to psychic
causes. It is not a medical illness that has to be medically or clinically identified;
hence, expert opinion is not required.

The Court added that the psychological incapacity need not be a

permanent incurable condition. Thus, the testimony of a psychologist or
psychiatrist is not mandatory in all cases, instead the totality of the evidence must
show clear and convincing evidence the one or both were incapable of
complying with marital obligations for causes psychological in nature. Based on
these parameters, Mario is psychologically incapacitated, hence their marriage
is void.

Being capacitated to marry each other and having lived exclusively with
each other albeit under a void marriage, the Court held that Article 147 of the
Family Code governs the property relationship of Mario and Rosanna.

With respect to properties acquired during their cohabitation, the rules on

co-ownership under the Civil Code govern. Therefore, a property acquired during
the parties' cohabitation shall be presumed to have been acquired through the
parties' joint efforts. For purposes of Article 147, "joint efforts" includes a party's care
and maintenance of the family and of the household. With this presumption, the
parties are deemed to own the property in equal shares. However, if a piece of
property was obtained through the efforts, work, or industry of only one party, and
there is proof that the other did not contribute through the care and
maintenance of the family and of the household, the property acquired during
the cohabitation shall be solely owned by the party who actually worked to
acquire the property.

In this case, there is proof that the Paranaque property which the parties
used as their dwelling was not obtained by Mario and Rosanna's joint efforts, work,
or industry. Rosanna's aunt, donated the 315-square meter lot to Rosanna and her
father, Rodolfo M. Tan. Thus, Rosanna exclusively owns half of the 315-square
meter Paranaque lot. Mario has no share in this property because he did not care
for and maintain the family and the household.

IRENE CONSTANTINO DATU v. ALFREDO FABIAN DATU G.R. No. 209278, September
15, 2021 (Leonen, J.)

Respondent Alfredo was previously employed in the United States Navy but
he was discharged only after 14 months because he was found to be suffering
from schizophrenia. His friends from the church introduced him to Irene and they
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later became intimate. At one time, Irene’s older sister dropped by the latter’s
house and saw Alfredo sleeping on Irene’s bed and Irene’s sister demanded they
get married. The parties tied the knot in December 1980.

After 25 years or more specifically in 2005, Alfredo filed before the RTC a
Complaint for declaration of nullity of marriage due to his psychological
incapacity. Alfredo also offered in evidence, among others, the expert opinion of
clinical psychologist Dela Cruz who testified that Alfredo's psychosis was due to
schizophrenia, paranoid type. She likewise said that there was no cure for
Alfredo's psychosis.

Irene admitted that she and Alfredo have different religious beliefs, and
that Alfredo believed himself to be the son of God who can have as many wives
as he pleases. Irene also said that Alfredo indeed believed that wives should be
submissive to their husbands. As for their children, Irene admitted that her children
are on speaking terms with their father and that he gives them money personally.

The Regional Trial Court declared the marriage void and ruled that Alfredo
was psychologically incapacitated to comply with his essential marital obligations
to Irene. The trial court stated that the multiple expert opinions Alfredo offered in
evidence sufficiently proved that he had schizophrenia even before he married
Irene, and that the mental disorder was a manifestation of his psychological
incapacity.

Irene filed a Motion for New Trial on the ground of collusion, conflict of
interest on the part of Alfredo's counsel, and fraud, but this was denied by the trial
court. On appeal, the Court of Appeals echoed the trial court's findings, and
affirmed the finding that Alfredo suffered from schizophrenia and that his
condition justified the marriage’s dissolution.

Irene argues that the characteristics of psychological incapacity — gravity,

juridical antecedence, and incurability— are not present. With no competent
evidence of Alfredo's schizophrenia, she contends that gravity and incurability
were not proven. Furthermore, with no evidence that, prior to his marriage,
Alfredo was discharged from the United States Navy due to schizophrenia, Irene
says juridical antecedence was likewise absent.

Alfredo maintains that his psychological condition rendered him

psychologically incapacitated to comply with his essential marital obligations. He
argues that he has clearly shown that his inability was attended by gravity,
juridical antecedence, and incurability.

ISSUES: Whether the elements of psychological incapacity have been proven to

render the marriage of Alfredo and Irene void.
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YES. The lower courts' factual findings that Alfredo suffered from
schizophrenia is sufficiently supported by evidence. The Supreme Court held that
even if they disregard the purportedly unauthenticated documents issued by
United States Veteran Affairs Office and Dr. Soriano, the testimony of the expert
witness sufficiently proved that Alfredo suffered from schizophrenia. In fact, Irene
herself, on re-cross examination admitted that she receives pension from the
Veterans Affairs Office because of Alfredo's schizophrenia.

Consequently, Alfredo and Irene’s marriage is void due to Alfredo’s

psychological incapacity.

Psychological incapacity, as clarified in Tan-Andal v. Andal, is a legal

concept. Instead of being a medical illness, psychological incapacity is a durable
or enduring aspect of a person's personality, called 'personality structure,' which
manifests itself through clear acts of dysfunctionality that undermines the family.
The spouse's personality structure must make it impossible for him or her to
understand and, more important, to comply with his or her essential marital
obligations.

As a legal concept, psychological incapacity cannot be characterized as

incurable. Instead, it is permanent relative to a specific partner. The incapacity
must be shown to be due to a genuinely serious psychic cause. And, as explicitly
required by the law, the incapacity must have existed before or during the
celebration of the marriage.

The Court declared that Alfredo is psychologically incapacitated to

comply with his essential marital obligations, not because he suffers from
schizophrenia per se, but because his psychosis has been found to be an
enduring part of his personality structure. This psychosis, in turn, led him to do clear
acts of dysfunctionality that undermined Irene and their family. As the lower courts
found, Alfredo believes himself to be the son of God. In his mind, his refusal to live
with Irene and to provide for the family was God's will. He also believes that he
can have as many wives as he wants, which is not only illegal but is in utter
disrespect and disregard of his marital vow to Irene. His incapacity is grave, not a
"mild characterological peculiarity," a "mood change," or an "occasional
emotional outburst"; his psychosis was grave enough for him to be discharged
from military service. Thus, the Court ruled that the marriage is void by reason of
Alfredo’s psychological incapacity.

LUISITO G. PULIDO v. PEOPLE OF THE PHILIPPINES G.R. No. 220149, July 27, 2021, En
Banc (Hernando, J.)

On September 5, 1983, then 16-year old petitioner Luisito Pulido married his
teacher, then 22-year old private complainant Nora Arcon in a civil ceremony at
 6

the Municipal Hall of Rosario, Cavite solemnized by then Mayor Calixto D.

Enriquez.

In 2007, Pulido admitted that he was having an affair with Rowena Baleda,
to whom he was also married in 1995. This resulted in the filing of a criminal charge
of Bigamy against Pulido and Baleda.

In his defense, Pulido claimed that he could not be criminally liable for
bigamy since both his marriages were null and void. As for his marriage with
Arcon, it lacked a valid marriage license. While his marriage with Baleda lacked
a marriage ceremony.

On the part of Baleda, she puts forth by way of defense that she only
gained knowledge of Pulido’s prior marriage in April 2007. She later filed a Petition
to Annul her marriage which was granted by the Regional Trial Court (RTC) on
October 25, 2007. Hence, her marriage with Pulido was already annulled even
before the filing of the bigamy case.

The RTC convicted Pulido and acquitted Baleda. This decision was affirmed
by the Court of Appeals.

ISSUE: Whether a judicial declaration of nullity of marriage is necessary to establish

the invalidity of a void ab initio marriage in a bigamy prosecution.

The Supreme Court clarified that when both the prior and subsequent
marriages were contracted prior to the effectivity of the Family Code, a void ab
initio marriage can be raised as a defense in a bigamy case even without a
judicial declaration of its nullity. Nonetheless, the Court recognized that an action
for nullity of the second marriage is a prejudicial question to the criminal
prosecution for bigamy.

However, for purposes of contracting a subsequent marriage, a judicial

declaration of nullity of a prior marriage contracted before the effectivity of the
Family Code is necessary. Thus, Article 40 of the Family Code will have a
retroactive application since it does not prejudice nor impair vested or acquired
rights.

Article 40 of the Family Code only requires a judicial declaration of absolute

nullity for purposes of remarriage but not as a defense in Bigamy. Article 40 does
not categorically withhold from the accused the right to invoke the defense of a
void ab initio marriage even without a judicial decree of absolute nullity in criminal
prosecution for bigamy. The Court explained that it would be unfair to bar the
accused in a bigamy case from raising the defense of the nullity of his previous
marriage in the bigamy case, when Article 40 does not explicitly say so.
 7

Thus, in a criminal prosecution for bigamy, the parties may still raise the
defense of a void ab initio marriage even without obtaining a judicial declaration
of absolute nullity if the first marriage was celebrated before the effectivity of the
Family Code. Such is still governed by the rulings in Mendoza, Aragon, and
Odayat which are more in line with the rule that procedural rules are only given
retroactive effect insofar as they do not prejudice or impair vested or acquired
rights.

Here, Pulido's marriage with Arcon was celebrated when the Civil Code
was in effect while his subsequent marriage with Baleda was contracted during
the effectivity of the Family Code. Hence, Pulido is required to obtain a judicial
decree of absolute nullity of his prior void ab initio marriage but only for purposes
of remarriage. As regards the bigamy case, however, Pulido may raise the
defense that his prior marriage with Arcon is void ab initio even without obtaining
a judicial declaration of absolute nullity.

REPUBLIC v. VILLACORTA G.R. No. 249953, June 23, 2021, First Division (Caguioa,
J.)

Melvin and Janufi met in March of 1996 while they were both studying in
Cebu City. They became sweethearts but ended their relationship in 2000. Melvin
later heard that Janufi began dating someone who was working near the
establishment where she was then employed. For several months, Melvin and
Janufi did not communicate with one another.

Sometime in March of 2001, Melvin visited Janufi and eventually asked her
about the rumor that she was dating someone else. Janufi denied the same and
insisted that "no one touched her" and nothing happened between her and any
third party. Thus, Melvin and Janufi reconciled. In April of 2001, Melvin learned that
Janufi was pregnant. Melvin was "surprised" and "doubtful" to learn Janufi was
already one month pregnant because they had sexual intercourse only in March
of 2001. Although Melvin doubted the paternity of the child, Janufi supposedly
assured him that he was the only person she had sexual intercourse with.

On December 1, 2001, Janufi gave birth to a baby girl named Mejan Dia
and she and Melvin then began living together and eventually got married in
August 2004.

In October 2004, Janufi gave birth to a second child named Javen. The
couple often quarreled about the issue of Mejan’s paternity. The worst was when
Melvin and Janufi quarreled during a family dinner party where the issue of
Mejan’s paternity was brought up in the presence of their relatives. This drove
Melvin to finally take a deoxyribonucleic acid (DNA) Parentage Examination
(DNA test) at Hi-Precision Diagnostics.
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In November of 2010, the results of the DNA test were released, which
revealed that there was a 0.0% probability that Melvin was the father of Mejan
Dia. Janufi later admitted that she had no intention to deceive Melvin into
acknowledging paternity of Mejan and that it happened only once with another
man while she was drunk.

Melvin filed a petition for annulment of marriage on the ground of fraud

under Article 45(3) in relation to Article 46(2) of the Family Code.

ISSUE: Whether or not the marriage should be annulled on the ground of fraud.

The Supreme Court held that the facts do not warrant annulment under
Article 45(3) in relation to Article 46(2) of the Family Code.

Article 45(3) of the Family Code provides that a marriage may be annulled
for any of the following causes, existing at the time of the marriage: xxx (3) That
the consent of either party was obtained by fraud, unless such party afterwards,
with full knowledge of the facts constituting the fraud, freely cohabited with the
other as husband and wife."

To constitute fraud that warrants the annulment of the marriage under

Article 46(2): 1) the wife must have been pregnant by a man other than her
husband at the time of the marriage and 2) the wife must have fraudulently
concealed the same.

In this regard, the concealed pregnancy, which vitiates consent, must have
existed at the time of the marriage. Justice Eduardo Caguioa explains that "[t]he
essence of the fraud in this case is the non-disclosure of the present pregnancy of
the wife x x x the pregnancy must exist at the time of the celebration of the
marriage, thus, if the wife had previous relations with other men and as a
consequence of which she became pregnant or bore a child previously, the
concealment thereof will not be a ground for annulling the marriage if at the time
the marriage was celebrated the wife was not pregnant.

It is the concealment of the fact of pregnancy by another man at the time

of marriage that constitutes fraud as a ground for annulment. "No other
misrepresentation or deceit as to character, health, rank, fortune or chastity shall
constitute such fraud as will give grounds for action for the annulment of
marriage.

In the instant case, the facts readily reveal that the child Mejan was
already almost three years old when Melvin and Janufi got married in 2004. As
Janufi was not pregnant at the time of the marriage, any purported fraud she
may have committed to induce Melvin to marry her cannot be considered the
 9

fraudulent concealment contemplated under Article 46(2). Indeed, the Court has
held that not all fraudulent acts can be invoked to annul a marriage. The
circumstances of fraud under Article 45(3) are exclusive and restrictive.

CORDOVA v. EDWARD TY G.R. No. 246255. February 3, 2021, Third Division (Delos
Santos, J.)

Chi Tim, the husband of Teresita Cordova, became a defendant in a BP 22

case filed against him and his co-defendant Young before the MeTC. The trial
court rendered judgment finding Chi Tim and Young solidarily liable to respondent
Ty for the value of the checks .

After the judgment attained finality, Ty moved for the issuance of a writ of
execution which was granted by the MeTC. Among the properties levied upon
are a parcel of land which was alleged to be the paraphernal property of Teresita
and a condominium covered by a CCT which is their alleged family home.

Teresita and her daughter filed a Very Urgent Motion to Exclude their
Properties from the Auction Sale before the MeTC but the court did not act on
the motion which impelled petitioners to file a Petition for Prohibition and Prayer
for Issuance of a Writ of Preliminary Injunction and/or Restraining Order before the
RTC.

Teresita claims that the BP 22 case arose from a corporate obligation and
her husband should not be held personally liable therefore. As regards the claim
for exemption, petitioners alleged that the land was exclusively owned by
Teresita, which she purchased using funds donated to her by her father; while the
condominium was the Cordova family home and presently, utilized by their
daughter Jean as her own family home.

Petitioners argued that the appellate court erred in holding the subject
properties liable to the personal obligation of Chi Tim on the basis of conjugality
alone. Citing Article 121 of the Family Code, they aver that before the conjugal
partnership is made liable for the personal debt of one of the spouses, it must be
shown to have redounded to the benefit of the family. Further, petitioners added
that under Article 160 of the Family Code, certain facts must be established
before a family home is subjected to execution. Having failed to establish these
aforementioned facts, the subject properties may not be levied upon and
executed to satisfy Chi Tim's civil liability.

ISSUES

(1) Whether the subject properties, are part of the conjugal assets of Chi
Tim and Teresita.
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(2)Whether or not the subject properties may be subject to execution to

satisfy the civil liability of Chi Tim arising from the B.P. 22 case.

The Supreme Court ruled that since the parties were married before the
effectivity of the Family Code and they did not execute any antenuptial
agreement, their property relations is governed by conjugal partnership of gains.
Under the provisions of Article 160 of the Civil Code "all property of the marriage
is presumed to belong to the conjugal partnership, unless it be proved that it
pertains exclusively to the husband or to the wife." It is not even necessary to prove
that the properties were acquired with funds of the partnership. Even when the
manner in which the properties were acquired does not appear, the presumption
will still apply, and the properties will still be considered conjugal. In order to rebut
the presumptive conjugal nature of the property, a movant must present strong,
clear and convincing evidence of exclusive ownership of one of the spouses. The
burden of proving that the property belongs exclusively to the wife or to the
husband rests upon the party asserting it.

The Supreme Court held that based on Article 160, the parcel of land was
not the paraphernal property of Teresita since it was acquired during her marriage
with Chi Tim. Even if Teresita was identified as the sole vendee and registered
owner in the Deed of Absolute Sale and a copy of the title respectively, it did not
destroy its conjugal nature as the registration of the property is not conclusive
evidence of the exclusive ownership of the husband or the wife. Even if the
property appears to be registered solely in the name of either spouse, it has the
inherent character of conjugal property if it was acquired for valuable
consideration during the marriage.

With regard to the condominium unit, the Court held that petitioners failed
to prove that it was the family home. In order for the property to be considered
as a family home, the requisites must be established: (a) it must be the house
where he and his family actually reside and the lot on which it is situated; (b) the
family home must be part of the properties of the absolute community or the
conjugal partnership, or of the exclusive properties of either spouse with the
latter's consent, or on the property of the unmarried head of the family; and (c)
the actual value of the family home shall not exceed, at the time of its
constitution, the amount of P300,000.00 in urban areas and P200,000.00 in rural
areas.

It must be emphasized that the law requires for purposes of determining a

family home that the residence must be actual. It explicitly mandates that the
occupancy of the family home, either by the owner or by any of its beneficiaries,
must be actual. This occupancy must be real, or actually existing, as opposed to
something merely possible, or that which is merely presumptive or constructive.”
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In this case, Jean merely testified that she lived with her parents under one roof
without even specifying that it was in the subject condominium unit.

The Court, however, held that Ty cannot obtain satisfaction by executing

upon the subject properties. Settled is the rule that conjugal property cannot be
held liable for the personal obligation contracted by one spouse, unless some
advantage or benefit is shown to have accrued to the conjugal partnership.
While Chi Tim directly received the money from the bounced checks, there was
no showing that it was used in the business or in the exercise of his profession for
the legal presumption that it redounded to the benefit of the family to apply. It
must be recalled that in the MeTC Decision, the court held that there was no proof
that the money obtained from the encashed checks were issued to pay the
suppliers of Wood Technology. Instead, the circumstances of the case revealed
that these checks were drawn by Chi Tim and Young for rediscounting for their
personal benefit. It can thus be deduced from the foregoing that the loans
obtained from Ty were not used by Chi Tim in his business or in the exercise of his
profession.

The Supreme Court, however, clarified that while fines and indemnities
imposed upon either spouse by reason of a crime or quasi-delict may be charged
against the conjugal property pursuant to Article 122, it must be shown that all the
liabilities under Article 121 have been covered and that the spouse liable has no
exclusive property or the same is insufficient. Citing Pana v. Heirs of Juanite, Sr.
and Dewara v. Spouses Lamela, the Court said that the ruling in those two cases
will not apply, because in the present case – the criminal case against Chi Tim
was dismissed so the civil liability adjudged does not come within the purview of
“fines and indemnities” but of a “debt”.

SPS. ANASTACIO SR v. HEIRS OF COLOMA G.R. No. 224572, August 27, 2020, First
Division (Caguioa, J.)

Juan Coloma is the registered owner of a parcel of land in Tarlac which is

the subject of this case. The TCT shows Juan as the registered owner thereof since
January 14, 1965, with the certificate of title likewise carried the inscription of his
marriage to Juliana. Both Juan and Juliana are now deceased, leaving Rudy P.
Coloma and Marcela C. Reyes, respondents, as their legitimate heirs.

Respondents who are the heirs of Juan, alleged that petitioners are in
possession of the land by mere tolerance of their parents. Respondents
demanded the return of the property upon the demise of their parents but
petitioners refused, prompting them to file a case for Recovery of Possession and
Title against them. In their Answer, petitioners claimed right of ownership over the
subject property by virtue of an alleged Deed of Absolute Sale dated October 7,
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2004 executed by Juan during his lifetime. On account of such claim of ownership,
the MCTC dismissed the said case.

Respondents later filed the Complaint before the RTC, this time for
Annulment of Document, Recovery of Ownership and Possession with Prayer for
Writ of Preliminary injunction, claiming that the Deed of Absolute Sale allegedly
executed by their father in favor of petitioners is void on two grounds: (1) that the
signature of their father, Juan, is a forgery; and (2) that there is no conformity or
consent given by their mother, Juliana, to the alleged sale. Petitioners countered
that the consent of Juliana was not necessary to effect a valid sale since the
subject property was the sole property of Juan, having inherited the same from
his paternal ancestors and the spouses had long been separated from bed and
board.

Respondents presented, among others, a handwriting expert who testified

that the questioned signature of Juan was indeed forged. On the other hand,
petitioners harped on the alleged separation from bed and board of Juan and
Juliana and presented Juan's alleged paramour since 1978. Said witness testified
that during the lifetime of Juan, he mortgaged, and subsequently sold the subject
property to petitioners which testimony was later on confirmed by Romeo
Anastacio.

ISSUES : Whether the sale of the subject property by Juan in favor of petitioners
contemplated in the Deed of Absolute Sale is valid

The Court ruled that the sale is void. Petitioners’ argument that the consent
of Juliana to the sale is not required because the land is exclusive to Juan is
without merit.

Article 105 of the Family Code provides that the provisions of Conjugal
Partnership of Gains (CPG), shall also apply to CPG already established before
the effectivity of the Family Code, without prejudice to vested rights already
acquired in accordance with the Civil Code or other laws. It will be recalled that
based on the stipulations of the parties, the subject property was acquired in 1965
during the lifetime of Juan and Juliana while they were married, and it was
registered in the name of Juan married to Juliana.

In 1965, the prevailing property regime between husband and wife was the
CPG. There being no evidence to the contrary, the property regime between
Juan and Juliana was the CPG. A rebuttable presumption is established in Article
116 of the Family Code and the party who invokes that presumption must first
establish that the property was acquired during the marriage because the proof
of acquisition during the marriage is a condition sine qua non for the operation of
the presumption in favor of the conjugal partnership. It is not necessary to prove
 13

that the property was acquired with conjugal funds and the presumption still
applies even when the manner in which the property was acquired does not
appear. Once the condition sine qua non is established, then the presumption
that all properties acquired during the marriage, whether the acquisition appears
to have been made, contracted or registered in the name of one spouse or both
spouses, are conjugal, remains until the contrary is proved.

Given the very stipulations made during the Pre-Trial and TCT No. 56899,
respondents had laid the predicate for the presumption under Article 116 to be
invoked. To overcome the presumption in favor of the conjugal partnership,
petitioners were required to prove the contrary. Unfortunately, petitioners'
evidence that TCT No. 56899 was registered in the name of Juan married to
Juliana and the sale from the previous owner, Valete, to Juan only mentioned
Juan as the buyer fell short to overcome the presumption.

Since petitioners have not presented strong, clear, convincing evidence

that the subject property was exclusive property of Juan, its alienation to them
required the consent of Juliana to be valid. Given that the subject property was
the conjugal property of Juan and Juliana, the CA correctly ruled that the sale of
the subject property by Juan without the consent of Juliana in favor of petitioners
is void.

DR. RUBEN C. BARTOLOME v. REPUBLIC OF THE PHILIPPINES G.R. No. 243288, 28

August 2019, Second Division (Caguioa, J.)

In 2014, Dr. Ruben Bartolome filed a petition for change of name under
Rule 103 of the Rules of Court before the RTC, seeking "to correct the name
'Feliciano Bartholome' as appearing in his birth certificate. He stated that he has
been using the name 'Ruben Cruz Bartolome' since his childhood.”

After posting and publication, Bartolome presented the pieces of

documentary evidence like his diploma; Certificate for Medical examiners; PRC
ID, Marriage Contract and Passport among others.

The RTC denied the petition for failure to exhaust administrative remedies,
insufficiency of evidence, and improper venue. On appeal, the CA affirmed the
RTC ruling. The CA noted that petitioner was seeking to change his first name and
to correct his surname as indicated in his birth certificate. Thus, the CA held that
petitioner should have filed a petition for the correction of entries in his birth
certificate under R.A. 9048, instead of a Rule 103 petition for change of name.

Bartolome filed the instant Petition insisting that Rule 103 is the proper
remedy. In its Comment, OSG claims that petitioner should have first filed a
petition before the local civil registrar pursuant to R.A. 9048 in order to change his
 14

first name and to correct the spelling of his last name. The OSG claims that there
was no splitting of cause of action as both reliefs are covered by R.A. 9048.

ISSUE Whether the change/correction sought in petitioner's first name, middle

name, and surname, as appearing in his birth certificate, from "Feliciano
Bartholome" to "Ruben Cruz Bartolome" should be filed under R.A. 9048, Rule 103,
or Rule 108 of the Rules.

The Supreme Court ruled that the changes prayed for by the petitioner are
all covered by an administrative proceeding under R.A. 9048. Republic Act No.
9048 amended Articles 376 and 412 of the Civil Code, effectively removing
clerical errors and changes of the name outside the ambit of Rule 108 and putting
them under the jurisdiction of the civil registrar.

Petitioner seeks to change his first name, to include his middle name, and
to correct the spelling of his surname, i.e., from "Feliciano Bartholome" as stated in
his birth certificate to "Ruben Cruz Bartolome". The changes and corrections are
covered by Section 1 of R.A. 9048 as amended by R.A. 10172, which provides:

Section 1. Authority to Correct Clerical or Typographical Error and Change

of First Name or Nickname. — No entry in a civil register shall be changed or
corrected without a judicial order, except for clerical or typographical errors
and change of first name or nickname, the day and month in the date of
birth or sex of a person where it is patently clear that there was a clerical or
typographical error or mistake in the entry, which can be corrected or
changed by the concerned city or municipal civil registrar or consul general
in accordance with the provisions of this Act and its implementing rules and
regulations.

Contrary to petitioner's claims therefore, the change sought is covered by

R.A. 9048 and should have been filed with the local civil registry of the city or
municipality where the record being sought to be corrected or changed is kept.

The inclusion of petitioner's middle name as well as the correction of his

misspelled surname are covered by R.A. 9048, as amended. While substantial
corrections of entries in the civil register are still covered by Rule 108,
typographical or clerical corrections must now be filed under R.A. 9048.
Misspelled names or missing entries are clerical corrections if they are visible to the
eyes or obvious to the understanding and if they may be readily verified by
referring to the existing records in the civil register. They must not, however, involve
any change in nationality, age or status. To obviate any further confusion on the
matter, the Court categorically holds that typographical or clerical errors in a
person's surname must likewise be corrected through the administrative
proceeding under R.A. 9048.
 15

FRANCIS LUIGI G. SANTOS v. REPUBLIC OF THE PHILIPPINES G.R. No. 250520, May 5,
2021, First Division (Caguioa, J.)

Petitioner Francis Luigi G. Santos filed a petition for change of name under
Rule 103 of the Rules of Court seeking to change his surname from "Santos" to
"Revilla" in his Certificate of Live Birth. He alleged that sometime in 1991, his
parents, Lovely Maria T. Guzman and Jose Marie Bautista, Jr., also known as
Ramon Bong Revilla, Jr., met and engaged in an intimate relationship. He was
later born in Quezon City on January 9, 1992 as "Francis Luigi Guzman.” Lovely
Guzman and Bong Revilla were never married as the latter was already married
to Lani Mercado. Thus, petitioner's Certificate of Live Birth did not bear the Revilla
surname and his father was marked as unknown.

In 1999, Lovely Guzman married Patrick Joseph P. Santos, who, in turn,

legally adopted petitioner. Thus, petitioner's name was changed from "Francis
Luigi Guzman" to "Francis Luigi G. Santos." Although petitioner lived with his
mother, he grew up close to Bong Revilla and the latter's wife and children and
was treated by the family as a legitimate son. He also claimed that he used the
name "Luigi Revilla" when he entered show business. Thus, he filed the instant
petition in order to "avoid confusion," "to show his sincere and genuine desire to
associate himself to Bong Revilla and to the Revillas," and to ensure that his
records show his true identity as Bong Revilla's son.

The RTC denied the petition. On appeal, the CA affirmed the decision of
the RTC.

ISSUE: Whether the petition to change petitioner's surname from "Santos" to

"Revilla" should be granted.

The Supreme Court ruled in the negative. To justify a change of name, a

person "must show not only some proper or compelling reason but also that he
will be prejudiced by the use of his true and official name." Unfortunately, none of
these reasons justify, in law, the desired change. The Court agrees with the RTC
that the use of the surname "Revilla" would create further confusion rather than
avoid it, given that: (1) petitioner has never legally used the name "Revilla" despite
having been acknowledged in 1996; (2) he was legally adopted by Patrick Santos
in 2001; (3) he has used the name "Santos'' for all documentary purposes since his
adoption; (4) although he is publicly known to be the son of Bong Revilla, he is
known by his peers as "Luigi Santos"; (5) even after a change of surname, Patrick
Santos shall continue to be the father named in his birth certificate; and (5) he
only began using the surname "Revilla" when he entered show business.
Moreover, as adoption severs all legal ties between the adoptee and his or her
biological parents, there is no basis to allow petitioner to change his name to
 16

"Revilla" simply because he is, biologically, the son of Bong Revilla and wants to
associate himself with the Revilla family.

Rule 103 governs petitions for change of name which is a separate and
distinct remedy from that provided under Rule 108, which involves cancellations
and corrections of entries in the civil registry.

Notably, the foregoing rules were modified by the enactment of R.A. 9048,
which amended Articles 376 and 412 of the Civil Code and vested primary
jurisdiction over the correction of certain clerical or typographical errors and
changes of first name with the civil registrar. In 2012, R.A. 10172 expanded the
coverage of the summary administrative procedure provided under R.A. 9048 to
include clerical corrections in the day and/or month in the date of birth, or in the
sex of the person, where it is patently clear that there was a clerical or
typographical error or mistake in the entry. Presently therefore, when an entry falls
within the coverage of R.A. 9048 as amended by R.A. 10172, a person may only
avail of the appropriate judicial remedies under Rule 103 or Rule 108 after the
petition in the administrative proceedings is first filed and later denied. Failure to
comply with the administrative procedure generally renders the petition
dismissible for failure to exhaust administrative remedies and for failure to comply
with the doctrine of primary jurisdiction.

PROPERTY & LAND TITLES

AMA LAND, INC., vs. WACK WACK RESIDENTS' ASSOCIATION, INC. G.R. No. 202342.
July 19, 2017, First Division (Caguioa, J.)

Petitioner AMALI embarked on project in the mid-1990’s to construct a

commercial and residential building at EDSA corner Fordham Street in Wack
Wack Village, Mandaluyong City. After securing the necessary licenses and
permits for construction, AMALI notified the Wack Wack Homeowner’s
Association of its intention to use Fordham St. as an access road and staging area
for the project. Since AMALI received no response from Wack Wack, it
temporarily enclosed the job site and set up a field office along Fordham. Wack
Wack exerted all efforts to remove the field office of AMALI but all efforts proved
futile.

AMALI filed a petition before the RTC, wherein they prayed that they be
allowed temporary use of Fordham Street as an access road to AMALI's
construction site of its AMA Tower project pursuant to Article 656 of the Civil Code.
AMALI also sought to establish a permanent easement of right of way in its favor
over a portion of Fordham Street pursuant to Article 649 of the Civil Code.
 17

The RTC granted the writ of preliminary mandatory injunction "directing

Wack Wack to allow AMALI to use Fordham Street through a temporary easement
of right of way." However, the Court of Appeals granted Wack Wack’s
application for a TRO and AMALI was ordered to cease and desist from the
construction of the commercial and residential condominium project located
along EDSA corner Fordham Street in Wack Wack Village.

ISSUE: Whether AMALI, as owner of the dominant estate, may validly claim against
Wack Wack a compulsory permanent right of way under Articles 649 and 650 of
the Civil Code, or, a temporary right of way under Article 656 of the Civil Code.

The Court ruled that as to whether AMALI, as owner of the dominant estate,
may validly claim a compulsory permanent right of way under Articles 649 and
650 of the Civil Code against Wack Wack , will depend on a finding that AMALI
has established the existence of the following requisites, namely: (1) the dominant
estate is surrounded by other immovables; (2) it is without adequate outlet to a
public highway; (3) after the proper indemnity has been paid; (4) the isolation
was not due to the proprietor of the dominant estate's own acts; and (5) the right
of way claimed is at a point least prejudicial to the servient estate. A sixth requisite
is that the right of way must be absolutely necessary for the normal enjoyment of
the dominant estate by its owner. There must be a real, not fictitious or artificial,
necessity for the right of way, and the right cannot be claimed merely for the
convenience of the owner of the enclosed estate. The burden of proving the
existence of the foregoing requisites lies on AMALI, being the owner of the
dominant estate.

On the other hand, with regard to the question of whether AMALI is entitled
to a temporary easement of right of way, the Court said that Article 656 of the
Civil Code provides that this can be granted only after the payment of the proper
indemnity by AMALI, and only if AMALI has established that the easement is
indispensable for the construction of its AMA Tower Project.

The SC noted that the RTC decision failed to identify the specific portion of
Fordham Street that would be subject to the temporary easement and it therefore
erred when it granted AMALI's application for preliminary mandatory injunction
because, in so doing, it prematurely decided disputed facts and disposed of the
merits of the case without the benefit of a full-blown trial.

Article 656 requires proof of indispensability and receipt of payment of the

proper indemnity for the damage caused by the owner of the dominant estate
before the owner of the servient estate can be compelled to grant a temporary
easement of right of way. Being preconditions, they are akin to suspensive
conditions that must be fulfilled before the obligation on the part of Wack Wack
to allow the easements can arise. Until the preconditions are met, AMALI has no
 18

legal basis to use a portion of Fordham Street as an access road and staging area
of its AMA Tower project.

To stress, the temporary easement of right of way under Article 656 of the
Civil Code, similar to the permanent easement of right of way pursuant to its
Articles 649 and 650, can only be granted after proof of compliance with the
prerequisites set forth in the articles duly adduced during a full-blown trial.

REPUBLIC OF THE PHILIPPINES, vs. THE HEIRS OF MEYNARDO CABRERA G.R. No.
218418. November 8, 2017, Second Division (Caguioa, J.)

Meynardro Cabrera obtained a Free Patent over two (2) parcels of land in
1971 and transfer certificates of title were issued to him. Thereafter, Lot 1-A was
transferred to Consolacion Cabrera and TCT No. 16580 was issued to Consolacion
in 1982. Consolacion later sold portions of Lot 1-A to several purchasers.

The De Castros who claim to be the actual possessors of Lot 1-A filed a
petition before the DENR to conduct an investigation to determine Lot 1-A's land
classification status.

The DENR through the DENR Land Management Office, issued a Final
Report that the lands covered by the Free Patent No. 516197, covering Lots 1, 1-
A, and 2 (collectively, Roxas Properties), forms part of the public domain since the
lands covered had been reclassified as forest lands as early as 1949. The Free
Patent issued to Meynardo was declared null and void.

The Republic filed a complaint for the annulment and/or cancellation of

Free Patent No. 516197, OCT No. RP-132 (P-9193), and TCT No. 16580 against the
respondents and prayed for the reversion of the Roxas Properties to the State.
The RTC ruled against the Republic and held that it failed to prove that the Roxas
Properties have been reclassified as forest land. Citing Republic v. Animas, the
RTC ruled that in order to prove reversion of alienable and disposable land to
forest land, a positive government act evincing the same is necessary.

In this Petition, the Republic argued that the Court's ruling in Animas cannot
be applied to the present case, since, in Animas, the fact sought to be established
was the classification of forest land to alienable and disposable land, and not the
other way around, as in this case. It added that the Court's ruling in Animas did
not have the effect of making a positive executive act a necessary requirement
for the purpose of proving the reclassification of alienable and disposable land.

The Republic posits that Animas affirms its right to institute reversion
proceedings in instances where portions of forest land are erroneously included
within the scope of land patents. Moreover, the Republic argues that in reversion
 19

proceedings, the State should not be made to bear the burden of proving that
the land in question constitutes public domain (i.e., forest land). In any case, the
Republic posits that the documentary and testimonial evidence it had presented
sufficiently proved such fact.

ISSUE: Whether a positive act of government is necessary to evince the

reclassification of land from alienable and disposable to forest.

The Supreme Court ruled in the affirmative. The CA did not err when it
affirmed the RTC, as the Republic failed to establish that the Roxas Properties were
classified as forest land at the time Free Patent No. 516197 was issued.

The power to classify and reclassify land lies solely with the Executive
Department. All lands of the public domain belong to the State, and that, as a
consequence thereof, any asserted right of ownership over land necessarily
traces back to the State. At present, Section 3, Article XII of the 1987 Constitution
classifies lands of the public domain into five (5) categories — forest lands,
agricultural lands, timber lands, mineral lands, and national parks. In the absence
of any prior classification by the State, unclassified lands of the public domain
assume the category of forest lands not open to disposition.

In turn, the classification of unclassified lands of the public domain, and the
reclassification of those previously classified under any of the categories set forth
in the 1987 Constitution (such as the Roxas Properties), are governed by
Commonwealth Act No. 141 otherwise known as the Public Land Act. The
classification and reclassification of public lands into alienable or disposable, is
the exclusive prerogative of the Executive Department and is exercised by the
latter through the President. Since the power to classify and reclassify lands are
executive in nature, such acts, effected without executive authority, are void,
and essentially ultra vires.

A land registration proceeding is the manner through which an applicant

confirms title to real property and he bears the burden of overcoming the
presumption of State ownership. Accordingly, the applicant is bound to establish,
through incontrovertible evidence, that the land sought to be registered had
been declared alienable or disposable through a positive act of the State.

Conversely, reversion proceeding is the manner through which the State

seeks to revert land to the mass of the public domain; it is proper when public
land is fraudulently awarded and disposed of in favor of private individuals or
corporations, or when a person obtains a title under the Public Land Act which
includes, by oversight, lands which cannot be registered under the Torrens system
as they form part of the public domain.
 20

In reversion proceedings, the State bears the burden of proving that the
property in question was inalienable at the time it was decreed or adjudicated in
favor of the defendant. The SC ruled that the Republic failed to show that the
Roxas Properties (including Lot 1-A) were classified as forest land at the time Free
Patent No. 516197 was issued in Meynardo's favor. The DENR Final Report, the
National Mapping and Resource Information Certifications and the LC Map do
not constitute a positive act of reclassification by the Executive Department.

The testimonies confirm that the alleged reclassification of the Roxas

Properties is bereft of basis, as it was done by Engineer Mendez on his sole
account, without any prior directive from the President, or a duly authorized
officer from the Executive Department. In fact, the annotation appearing on LC
Map 209 upon which the Republic relies does not even state upon whose
authority the alleged reclassification had been made, placing the annotation's
validity, veracity and worth in serious doubt. Ultimately, the Republic failed to
prove that the Roxas Properties (including Lot 1-A) were classified as forest land
when they were decreed in Meynardo's favor in 1971.

REPUBLIC v. CAPITAL RESOURCES CORPORATION G.R. No. 217210. November 7,

2016, First Division (Caguioa, J.)

It appears that a Homestead Patent was granted to Vitaliano Dumuk in

1924 which resulted in the issuance of an OCT in his name. The OCT was
superseded by a TCT in the name of spouses Milo. In 1982, Capital Resources
Corporation (CRC) and Romeo Roxas acquired the subject property from
Spouses Milo resulting in the cancellation of the title of the Spouses Milo and the
issuance of a new one under TCT No. 23343 in the name of the respondents.

Respondents Capital Resources and Roxas later caused the subdivision of

the subject property via the subdivision plan prepared by Engr. Mercado and it
was divided into several blocks, among which are Block 35 and Block 36. The plan
indicated that Block 35 is a "salvage zone" while a portion of Block 36 appeared
to overlap a portion of the China Sea. The subdivision plan was approved but was
subsequently cancelled pursuant to an Order of Cancellation issued by the DENR.

In 1987, the town of Bauang, La Union was cadastrally surveyed and based
on the Cadastral Survey Map, Block 35 and Block 36 were projected therein as
part of the identified foreshore land and seabed, respectively.

Sometime in 2003, a certain Hidalgo filed a Foreshore Lease Application

over a land in Bauang. The Capital Resources and Roxas opposed the
application on the ground that the parcel of land being applied for encroaches
upon a portion of the subject property. In turn, Hidalgo filed a counter Protest
assailing the validity of respondents’ TCT on the ground that: (1) it covers foreshore
 21

land, salvage zone (the area of land measuring 20 meters landward from the
interior limit of the shoreline), and portions of the South China Sea; and (2) his right
to the foreshore land is prejudiced by the existence of this fraudulent title.

An investigation was thereafter conducted by the DENR and the

Committee concluded that that respondent Capital Resources may not validly
acquire the subject property pursuant to Section 119 of Act No. 2874 (Public Land
Act) and the 1973 Constitution. Thus, the Committee recommended that
Homestead Patent H-6811 issued to Dumuk be declared null and void and that
an appropriate reversion proceedings be filed to effect the cancellation of OCT
No. 137 and its derivative titles.

In 2007, the DENR-Regional Executive Director Ancheta recommended the

institution of an action for the cancellation of the respondents title and for the
reversion of Blocks 35 and 36 to the State.

Consequently, the Republic of the Philippines filed a Complaint for

Cancellation of Title and Reversion against respondents and the Register of Deeds
of La Union before the Regional Trial Court. The Republic alleged that from the
time that Homestead Survey Plan was approved until the cadastral survey, the
northwestern portion of the subject property had been washed out and eaten up
by the sea waters. Per the ocular inspection, Blocks 35 to 36 formed part of the
public domain. The Republic prayed for judgment that the respondents’ title be
declared null and void and that the subject property be reverted to the public
domain.

The RTC ruled that Blocks 35 and 36 form part of the public domain and
ordered their reversion to the State. In their Motion for Reconsideration before the
RTC the Republic raised the issue that since respondent Capital Resources is a
corporation, it is ineligible to acquire the subject property under the Public Land
Act.

On appeal, the Republic prayed for the reversion of the entire property of
the respondents. The CA affirmed the RTC decision. The CA went on further to
order the resurvey of the entire property covered by the respondents’ title, the
cancellation of their title and the reissuance of a new title reflecting the technical
description of the resurvey upon approval.

ISSUES (1) Whether or not the respondent Capital Resources, being a corporation,
is ineligible to acquire the subject property under the Public Land Act; and 2)
Whether or not the remaining portion of the Subject Property (being foreshore
and salvaged zones) may be reverted to the public domain.
 22

The Supreme Court held that a judicious review of the records reveals that
while the Republic's Complaint prayed for the reversion of the entire Subject
Property, the allegations are predicated merely on their assertion that Blocks 35
and 36 have become foreshore lands. In this regard, basic is the rule that it is the
allegations of the complaint and not the prayer that determines the basis of the
plaintiffs relief.

The Court ruled that Section 121 of the Public Land Act pertains to
acquisitions of public land by a corporation from a grantee of the patent. In this
particular case, the original grantee was Vitaliano Dumuk and he subsequently
transferred the subject property to Spouses Cecilio and Laura Milo. In turn, the
spouses Milo were the ones who sold the subject property to Capital Resources
and Romeo Roxas. Evidently, Capital Resources did not acquire the subject
property from the original grantee. Even assuming that Capital Resources is
ineligible to be a transferee, the fact remains that the subject property was
purchased by Capital Resources and Romeo Roxas and the latter is an individual
who is not barred from acquiring the subject property.

As to the provision of the 1973 Constitution proscribing corporations from

acquiring "alienable lands" of the public domain, the consistent ruling of the
Supreme Court is that the prohibition will not apply if the property acquired by the
corporation is private property and not alienable lands of the public domain. The
rule is that once a patent is registered and the corresponding certificate of title is
issued, the land covered by it ceases to be part of the public domain and
becomes private property. In the present case, the subject property became
private property upon the issuance of the OCT to Vitaliano Dumuk. Necessarily,
when the respondents acquired the subject property in 1982, the same was no
longer a part of the alienable lands of the public domain but a private property.
Hence the prohibition will not apply.

While petitioner Republic was able to show its entitlement to the reversion
of Blocks 35 and 36 to the public domain, it failed to do the same with respect to
the remaining portion of the Subject Property.

SPOUSES ABRAHAM AND MELCHORA ERMINO vs. GOLDEN VILLAGE HOMEOWNERS

ASSOCIATION, INC. G.R. No. 180808, August 15, 2018, Second Division (Caguioa,
J.)

Spouses Ermino are residents of Alco Homes, a subdivision located beside

Golden Village Subdivision in Cagayan de Oro City. Sometime in mid-1995, there
was continuous heavy rain which caused a large volume of water to fall from the
Hilltop Subdivision to the subdivisions below including Alco Homes. The volume of
water directly hit Spouses Ermino's house and damaged their fence, furniture,
appliances and car. Spouses Ermino filed a complaint for damages against the
 23

developer of Hilltop City Subdivision, E.B. Villarosa, and Golden Valley

Homeowners Association (GVHAI). The Hilltop City Subdivision is found at the
upper portion of Alco Homes, making it a higher estate, while Golden Village is
located beside Alco Homes, which makes both Alco Homes and Golden Village
lower estates vis-à-vis Hilltop City Subdivision.

Spouses Ermino ascribed negligence on the part of E.B. Villarosa for failing
to observe DENR rules and regulations and to provide retaining walls and other
flood control devices which could have prevented the softening of the earth and
consequent inundation. They likewise claimed that GVHAI committed a wrongful
act in constructing the concrete fence which diverted the flow of water to Alco
Homes, hence, making it equally liable with E.B. Villarosa.

GVHAI averred that the construction of the concrete fence was in the
exercise of its proprietary rights and that it was done in order to prevent outsiders
from using the steel grille from entering the subdivision. It likewise asserted that
they "should not be made inutile and lame-duck recipients of whatever waters
and/or garbage" that come from Alco Homes. GVHAI attributed sole liability on
E.B. Villarosa for having denuded Hilltop City Subdivision and for its failure to
provide precautionary measures.

The RTC ruled in favor of Ermino and held both E.B. Villarosa and GVHAI
jointly and severally liable to the Spouses Ermino. Only GVHAI appealed. The
Court of Appeals reversed the trial court insofar as it held GVHAI liable to the
Erminos. The appellate court ruled that GVHAI merely exercised its proprietary
rights when it constructed the concrete fence and that it was not negligent.

ISSUES: Whether GVHAI is liable to the petitioners for constructing its concrete
fence and whether it is liable under Article 637 of the Civil; and whether E.B.
Villarosa is responsible for the damage suffered by the Erminos.

The Court ruled that when GVHAI replaced the steel grille gate with a
concrete fence, the construction was not intended to obstruct whatever waters
that may naturally flow from the higher estates. The concrete fence was made to
ward off undesirable elements from entering the subdivision. Such act was within
the legitimate exercise of GVHAI's proprietary rights over its property. The law
recognizes in the owner the right to enjoy and dispose of a thing, without other
limitations than those established by law. Article 430 of the Civil Code provides
that "(e)very owner may enclose or fence his land or tenements by means of walls,
ditches, live or dead hedges, or by any other means without detriment to
servitudes constituted thereon."

GVHAI cannot also be liable under Article 637 of the Civil Code. Both Alco
Homes and Golden Village are lower in elevation than the Hilltop City Subdivision,
 24

and thus, are legally obliged to receive waters which naturally flow from the latter,
as provided under Article 637 of the Civil Code and Article 50 of the Water Code.
An easement or servitude is "a real right constituted on another's property,
corporeal and immovable, by virtue of which the owner of the same has to
abstain from doing or to allow somebody else to do something on his property for
the benefit of another thing or person." The statutory basis of this right is Article 613
of the Civil Code.

In this regard, Hilltop City Subdivision is the dominant estate because it is

the immovable in favor of which the easement is established; while Alco Homes
and Golden Village, those that are subject of the easement, are the servient
estates. However, there is a concomitant responsibility on the part of Hilltop City
Subdivision not to make the obligation of these lower/servient estates more
onerous. Under Article 627 of the Civil Code, the owner of the dominant estate
may make, at his own expense, on the servient estate any works necessary for the
use and preservation of the servitude, but without altering it or rendering it more
burdensome.

Based on the ocular of the Hilltop City Subdivision, the area was bulldozed
and the hills were flattened but no retaining walls were constructed to prevent
the water from flowing down the lower estates. This flattening of the area due to
bulldozing changed the course of water, which ultimately led to the passing of
said water to the house of Spouses Ermino.

Thus, the SC ruled that the bulldozing and construction works done by E.B.
Villarosa, not to mention the denudation of the vegetation at the Hilltop City
Subdivision, made Alco Homes and Golden Village's obligation, as lower estates,
more burdensome than what the law contemplated. Lower estates are only
obliged to receive water naturally flowing from higher estates and such should be
free from any human intervention. In the instant case, what flowed from Hilltop
City Subdivision was not water that naturally flowed from a higher estate. The
bulldozing and flattening of the hills led to the softening of the soil that could then
be easily carried by the current of water whenever it rained. Alco Homes and
Golden Village are not anymore obligated to receive such waters and earth
coming from Hilltop City Subdivision. Therefore, E.B. Villarosa is responsible for the
damage suffered by Spouses Ermino since its negligence is the proximate cause
of the injury suffered by the Erminos.

REPUBLIC v. ASUNCION G.R. No. 200772. February 17, 2021, First Division, GAERLAN,
J:

The spouses Felipe and Paciencia Asuncion were the registered owners of
a 27.3 hectare parcel of land in Bulacan which is located on the banks of the
Wawang Dapdap River. Paciencia Asuncion and her children later filed an
 25

application for original registration over nine parcels of land located in Bambang,
Bulacan with the CFI. They claimed fee simple ownership of the aforementioned
lands by inheritance, accretion, and open, continuous, exclusive, and notorious
possession under color of title for at least 30 years.

The Republic opposed the application on the ground that the lands
covered by the application were unclassified forest lands within the public
domain. The Molina-Enriquez group also opposed the Asuncions’ application for
registration on ground that certain parts of the lands covered by the application
belong to them and their predecessors-in-interest.

Paciencia died and after the settlement of her estate, she was substituted
by her children. The Molina-Enriquez group later withdrew their Opposition to the
application for registration of the Asuncions after forging a Compromise
Agreement with them which was approved by the trial court.

The RTC rendered its decision in favor of the Asuncions in view of the failure
of the Republic’s failure to present its sole witness. The Court of Appeals ruled for
the Asuncions as they gave credence to the photographic evidence and the
testimonies of Pedro and Carlos which tend to prove that the parcels sought to
be registered were in the open, public, and continuous possession of the Asuncion
family; and that said parcels were accretions upon the western portion of the
land covered by OCT No. O-243/TCT No. RT-30648, a parcel of land which is
undisputedly owned by the spouses Asuncion. The CA also noted that the
Asuncions were able to prove that the lands were alienable and disposable at
the time of the filing of their application for registration.

Before the SC, the Asuncions claim that the accretion is the product of the
alluvial action of the Wawang Dapdap river on the mother property. The
Republic, on the other hand, claims that the accretion happened on the
seashore as it was solely attributable to the action of Manila Bay. The Republic
argues that the accretion could not have been the product of alluvial action
because the material was deposited on the southwest side of the property,
instead of the southeast side, where the property adjoins the river. Consequently,
the Republic argues, the accretion could only have been the product of the
action of the sea upon the shore and the petition for registration must fail.

ISSUE: Whether the Asuncions need to prove that the lands were alienable and
disposable at the time of the filing of the application for registration? Whether the
parcels of land in question can be registered in the name of the Asuncions?

With respect to the first issue, the SC ruled that alluvial accretions are
governed by paragraph (3), Article 457 of the Civil Code which vests ownership
of the accretion gradually received by lands adjoining the banks of rivers in the
 26

owners of such lands. Consequently, the riparian owner whose land receives the
accretion does not need to make an express act of possession, because it is the
law itself that pronounces the alluvium to belong to the riparian owner from the
time that the deposit created by the current of the water becomes manifest. From
the principle of automatic ownership of alluvial accretion, it also follows that if the
riparian owner applies for registration of the accretion, they need not prove the
alienable and disposable status of the land, for it was never part of the public
domain in the first place, being private, albeit unregistered, land.

The Court held that in order to qualify under paragraph (3), the riparian
owner must prove the fact of alluvial accretion. Based on Article 457 of the Civil
Code and as explained by jurisprudence, alluvial accretion has three requisites:
first, the accretion must be gradual and imperceptible; second, the accretion
must be made through the effects of the current of the water; and third, the land
where accretion takes place must be adjacent to a riverbank. On the other hand,
littoral accretions are considered inalienable lands of the public domain.
Moreover, since they are formed on seashores, they are considered foreshore
lands, which may only be disposed of by lease.

The Court ruled that Asuncions can only claim the rights under Article 457
with respect to two parcels of land out of the nine which they applied for
registration, since these are the only lots which are adjacent to the north bank of
the Wawang Dapdap River as shown on the 1999 Broad Map and the survey
plans. Being located along the riverbank, these are the only areas which can be
safely presumed to have been formed through the accretion received by the
banks of the mother property. Likewise, the other parcels which are not located
along the riverbank, or bordering the shoreline of Manila Bay, cannot be
registered, since the source of the accretion from these areas cannot be
established with certainty; and in accordance with Article 4 of the 1866 Law on
Waters, the Constitution, and our earlier findings, these must be presumed to be
part of the public domain, either as foreshore lands or unclassified lands. Article
457 of the Civil Code only contemplates accretions received by "banks of rivers."
If the alluvion, despite being carried by the flow of a river, be deposited (or as the
Code puts it, "received") along the seashore as the river merges into the sea, such
alluvion cannot be considered an accretion under the Civil Code.

SPS. TEDY GARCIA AND PILAR GARCIA v. LORETA T. SANTOS, WINSTON SANTOS AND
CONCHITA TAN G.R. No. 228334, June 17, 2019, En Banc (Caguioa, J.)

Spouses Garcia (petitioners) filed a Complaint for easements of light, air

and view, lateral support, and intermediate distances and damages with prayer
for writ of preliminary injunction and/or issuance of TRO against the respondents
Spouses Santos and Conchita Tan before the RTC of Iloilo City.
 27

It appears that the Sps. Garcia bought a one-storey residential house and
lot located at Lot 2, Blk. 1, San Jose St. Iloilo from the respondent Santos in 1998
and that they have occupied it for eleven years. Lot 1 which adjoins the Garcia’s
property is an idle land which was also owned by the Sps. Santos. In 2009, the Sps.
Santos started constructing a two-storey house on Lot 1 but the petitioners were
informed by the construction workers that respondent Conchita Tan was the new
owner of Lot 1.

The building constructed on Lot 1 is taller than the Sps. Garcia's one-storey
residential house. As such, the Sps. Santos' building allegedly obstructed the Sps.
Garcia's right to light, air, and view. The Sps. Garcia lamented that prior to the
construction on Lot 1, they received enough bright and natural light from their
windows. The construction allegedly rendered the Sps. Garcia's house dark such
that they are unable to do their normal undertakings in the bedroom, living room
and other areas of the house without switching on their lights. The Sps. Garcia
argued that the house on Lot 1 was constructed a distance of less than three
meters from the boundary line of their property which violated their easement.
Finally, the Garcias added that the Sps. Santos caused the excavations on Lot 1
without providing sufficient lateral support to their concrete perimeter fence.

For their part, the Sps. Santos argued that the mere presence of windows
on the one-storey house of the Sps. Garcia in itself does not give rise to an
easement by title, stressing that there was no tenement standing on Lot 1 at the
time of the construction of the one-storey house standing on the subject property.
The respondents Santos asseverated that the Sps. Garcia also failed to acquire
an easement by prescription because they never alleged that they made a
formal prohibition of the construction of a taller structure on Lot 1.

With respect to the Sps. Garcia's claims on easement of lateral and

subjacent support, the respondents maintained that such claims are baseless
because the excavation works were all made within Lot 1 and were not deep
enough to deprive the Sps. Garcia subjacent and lateral support.

The RTC dismissed the complaint of the Sps. Garcia and ruled that they
never acquired any easement of light and view either by title or by prescription.
On appeal, the CA affirmed the RTC decision. The Sps. Garcia filed a Motion for
Reconsideration, but it was denied by the CA. Hence, the instant Petition for
Review on Certiorari filed by the Sps. Garcia under Rule 45 of the Rules of Court.

ISSUES

1. Whether Sps. Garcia have acquired an easement of light and view by title
despite the lack of any formal notice or prohibition made upon the owner of the
servient estate?
 28

2. Whether respondents should therefore remove from Lot 1 their building or

structure which blocks or impedes petitioners' air, light and view?

As a general rule, an easement of light and view is a positive one if the

window or opening is situated in a party wall, while it is a negative one if the
window or opening is thru one's own wall, i.e., thru a wall of the dominant estate.
In the instant case, it is not disputed that the windows and other openings, which
are allegedly now prevented from receiving light and view due to the structure
built by the Sps. Santos on Lot 1, are made in the wall of Sps. Garcia's one-storey-
house. There is no party wall alleged to be co-owned by the parties.

In the very early case of Cortes v. Yu-Tibo, the Court held that the easement
of light and view in the case of windows opened in one's own wall is negative. As
such easement is a negative one, it cannot be acquired by prescription except
where sufficient time of possession has elapsed after the owner of the dominant
estate, by a formal act, has prohibited the owner of the servient estate from doing
something which would be lawful but for the easement.

The phrase "formal act" would require not merely any writing, but one
executed in due form and/or with solemnity. This is expressly stated in Article 668
of the Civil Code which states that the period of prescription for the acquisition of
an easement of light and view shall be counted: (1) from the time of the opening
of the window, if it is through a party wall; or (2) from the time of the formal
prohibition upon the proprietor of the adjoining land or tenement, if the window
is through a wall on the dominant estate.

It is not disputed that the Sps. Garcia never sent the Sps. Santos any formal
notice or notarial prohibition enjoining the latter from constructing any building of
higher height on Lot 1 which became the basis of the RTC and the CA in ruling
that the Sps. Garcia did not acquire the easement of light and view.

The Supreme Court held the RTC and the CA erred in view of Article 624 of
the Civil Code.

Easements may likewise be acquired through title. The term "title" does not
necessarily mean a document but to a juridical act or law sufficient to create the
encumbrance. One such legal proviso which grants title to an easement is found
in Article 624 of the Civil Code.

Article 624 finds application in situations wherein two or more estates were
previously owned by a singular owner, or even a single estate but with two or
more portions being owned by a singular owner. Originally, there is no true
easement that exists as there is only one owner. Hence, at the outset, no other
owner is imposed with a burden. Subsequently, one estate or a portion of the
 29

estate is alienated in favor of another person, wherein, in that estate or portion of

the estate, an apparent visible sign of an easement exists. According to Article
624, there arises a title to an easement of light and view, even in the absence of
any formal act undertaken by the owner of the dominant estate, if this apparent
visible sign, such as the existence of a door and windows, continues to remain
and subsist, unless, at the time the ownership of the two estates is divided, ( 1) the
contrary should be provided in the title of conveyance of either of them, or (2)
the sign aforesaid should be removed before the execution of the deed.

This is precisely the situation in this case. Prior to the purchase of the subject
property by the Sps. Garcia in 1998, the subject property and its adjoining lot, i.e.,
Lot 1, were both owned by the Sps. Santos. On the subject property, a one-storey
house laden with several windows and openings was built and the windows and
openings remained open until it was alienated in favor of the Sps. Garcia.

Jurisprudence instructs that in a situation wherein Article 624 of the Civil

Code applies, there arises an easement if an apparent sign of the existence of
an easement, i.e., the existence of windows and openings on the dominant
estate, continues to remain even after the transfer of the property to the new
owner, unless such apparent sign is removed or if there is an agreement to the
contrary.

Hence, in accordance with Article 624 of the Civil Code, from the time the
Sps. Santos transferred the subject property to the Sps. Garcia, there arose by title
an easement of light and view, placing a burden on the servient estate, i.e., Lot
1, to allow the Sps. Garcia's residence unobstructed access to light and view,
subject to certain limitations.

With regard to the issue of whether or not the respondents should remove
the building from Lot 1 which obstructs the petitioners light and view, the SC ruled
that under Article 673 whenever by any title a right has been acquired to have
direct views, balconies or belvederes overlooking an adjoining property, the
owner of the servient estate cannot build thereon at less than a distance of three
meters from the property line, to be measured in the manner provided in Article
6711. Article 673 is an exception to the general rule in Article 6702 which provides
that when a window or any similar opening affords a direct view of an adjoining
land, the distance between the wall in which such opening is made and the
border of the adjoining land should be at least two meters.

1
Article 671 provides the mechanism by which the two-meter distance is to be measured, to wit: "[t]he distances x x x shall be measured in cases of direct views from the outer line of the
wall when the openings do not project, from the outer line of the latter when they do, and in cases of oblique views from the dividing line between the two properties."

2
Article 670 of the Civil Code, which provides: "[n]o windows, apertures, balconies, or other similar projections which afford a direct view upon or towards an adjoining land or tenement
can be made, without leaving a distance of two meters between the wall in which they are made and such contiguous property."
 30

In a situation wherein an easement is established or recognized by title or

prescription, affording the dominant estate the right to have a direct view
overlooking the adjoining property, i.e., the servient estate, which is the exact
situation in the instant case, the two-meter requirement under Article 670 is not
applicable. Instead, Article 673 is the applicable rule as it contemplates the exact
circumstance attendant in the instant case, i.e., wherein an easement of view is
created by virtue of law. The distance between the structures erected on the
servient estate and the boundary line of the adjoining estate must be at least
three meters.

In the instant case, the records show that the distance between the
structure erected by the Sps. Santos on Lot 1 and the boundary line of the Sps.
Garcia’s property is only two meters, which is less than the three-meter distance
required under Article 673.

Therefore, considering that the Sps. Garcia have acquired by title an

easement of light and view in accordance with Article 624 of the Civil Code, the
Sps. Santos should necessarily demolish or renovate portions of their residential
building so that the three-meter distance rule as mandated under Article 673 of
the Civil Code is observed.

SUCCESSION

SPOUSES ISIDRO AND CONRADA C. SALITICO vs. HEIRS OF RESURRECCION FELIX

AND THE REGISTER OF DEEDS G.R. No. 240199, April 10, 2019, En Banc (Caguioa, J.)

Amanda Burgos is the registered owner of a parcel of land in Bambang,

Bulacan. Amanda bequeathed the subject land to her niece Resurreccion by
virtue or her Huling Habilin dated May 7, 1986. Thereafter, Resurreccion, as the
new owner of the subject property, sold the land to the Spouses Salitico in a
document entitled Bilihang Tuluyan ng Lupa dated November 10, 1998. The latter
then took physical possession of the subject property.

Subsequently, a proceeding for the probate of Amanda’s will (Huling

Habilin) was undertaken before the RTC. Respondent Recaredo was appointed
as the executor of the Huling Habilin. The Probate Court approved the will and
issued a Certificate of Allowance on January 12, 2009.

A year after, the Sps. Salitico received a demand letter requiring them to
vacate the subject property and surrender possession over it to the respondents
heirs of Resurreccion . To protect their interest over the subject property, Sps.
Salitico executed an Affidavit of Adverse Claim which was however denied
registration by the respondent Register of Deeds.
 31

Spouses Salitico filed a Complaint for Specific performance against the

respondents and prayed for the delivery and return in their favor of the owner's
duplicate copy of OCT P- 1908 and the execution of the corresponding Deed of
Absolute Sale by way of confirming the Bilihang Tuluyan ng Lupa. They likewise
prayed that OCT P-1908 be cancelled and a new one be issued in their names.

The RTC found that Resurreccion had indeed validly sold the subject
property which she inherited from Amanda to the petitioners Sps. Salitico.
Nevertheless, the RTC dismissed the Complaint for Specific Performance the sole
reason that the petitioners Sps. Salitico's cause of action had supposedly not yet
accrued, as the Estate of Amanda has not yet been fully settled by the Probate
Court. On appeal, the CA dismissed the appeal due to the pendency of the
probate proceedings. The petitioners Sps. Salitico filed their MR which was denied
by the CA. Hence, this appeal via Petition for Review on Certiorari.

ISSUES

1. Whether an heir can sell her inherited property during the pendency of
the probate proceedings?

2. Whether the Register of Deeds may already be compelled to cancel the

title in the name of the decedent Amanda and issue a new title in the name of
the buyers of the heir’s inheritance?

The SC ruled that Article 777 operates at the very moment of the
decedent's death meaning that the transmission by succession occurs at the
precise moment of death and, therefore, at that precise time, the heir is already
legally deemed to have acquired ownership of his/her share in the inheritance,
"and not at the time of declaration of heirs, or partition, or distribution." Thus, there
is no legal bar to an heir disposing of his/her hereditary share immediately after
such death.

Upon the death of Amanda, Resurreccion became the absolute owner of

the devised subject property, subject to a resolutory condition that upon
settlement of Amanda's Estate, the devise is not declared inofficious or excessive.
Hence, there was no legal obstacle for Resurreccion to sell her share to the Sps.
Salitico over the subject property.

As a consequence of the valid contract of sale entered into by the parties,

Resurreccion had the obligation to deliver the subject property to the petitioners
Sps. Salitico. In fact, it is not disputed that the physical delivery of the subject
property to the petitioners Sps. Salitico had been done, with the latter
immediately entering into possession of the subject property after the execution
of the Bilihang Tuluyan ng Lupa.
 32

However, the existence of a valid sale in the instant case does not
necessarily mean that the Register of Deeds may already be compelled to
cancel OCT P-1908 and issue a new title in the name of the petitioners Sps. Salitico.

Under the applicable provisions of PD 1529 and the Rules of Court, it is only
upon the issuance by the testate or intestate court of the final order of distribution
of the estate or the order in anticipation of the final distribution that the certificate
of title covering the subject property may be issued in the name of the
distributees.

In the instant case, there is no showing that, in the pendency of the

settlement of the Estate of Amanda, the Probate Court had issued an order of
final distribution or an order in anticipation of a final distribution, both of which the
law deems as requirements before the Register of Deeds can issue a new
certificate of title in the name of the petitioners Sps. Salitico.

Hence, reading Article 777 of the Civil Code together with the pertinent
provisions of PD 1529 and the Rules of Court, while an heir may dispose and
transfer his/her hereditary share to another person, before the transferee may
compel the issuance of a new certificate of title covering specific property in
his/her name, a final order of distribution of the estate or the order in anticipation
of the final distribution issued by the testate or intestate court must first be had.

Therefore, despite the existence of a valid contract of sale between

Resurreccion and the petitioners Sps. Salitico, which ordinarily would warrant the
delivery of the owner's duplicate copy of OCT P-1908 in favor of the latter,
pending the final settlement of the Estate of Amanda, and absent any order of
final distribution or an order in anticipation of a final distribution from the Probate
Court, the Register of Deeds cannot be compelled at this time to cancel OCT P-
1908 and issue a new certificate of title in favor of the petitioners Sps. Salitico.

TIROL v. NOLASCO G.R. No. 230103, August 27, 2020, First Division (Caguioa, J.)
SUCCESSION, ARTICLE 887, 972

Gloria Tirol and Roberto, Sr. died testate. Gloria died in 1991 ahead of her
husband Roberto Sr. (2002). Roberto Sr. was survived by their children namely:
Ruth, Cecilia, Marilou, Ciriaco and Anna and his four grandchildren from their son
Roberto Jr. who died in 1995. When Roberto Jr. died in 1995 he was survived by
his four children from his marriage with Cecilia, namely Martin, Zharina, Francis
and Daniel. However, at the time of Roberto Jr.'s death, his marriage with Cecilia
had been annulled.
 33

Martin, Cecilia, and Ciriaco filed before the RTC a petition to probate the
wills of Gloria and Roberto Sr. The Wills were admitted to probate and Martin was
appointed as the administrator of their estates.

Respondent Sol Nolasco filed a Motion for Intervention. She alleged that as
the surviving spouse of Roberto Jr., she has a legal interest in the estate of Gloria
and Roberto Sr.

Sol argued that her husband Roberto Jr. is entitled to at least 1/7 of the
estate of his late mother and as the surviving spouse of Roberto Jr., she is entitled
to that portion belonging to Roberto Jr. which is equivalent to the legitime of the
legitimate children of the decedent. She argued that she is a compulsory heir
pursuant to Article 887 of the Civil Code and has an interest or claim in the estate
of her late husband.

Martin opposed the motion and argued that Sol has no legal interest in the
probate of the wills of Gloria and Roberto Sr. and could not represent Roberto Jr.,
not being a blood relative. The oppositors also refused to recognize Sol as the
legal wife of Roberto Jr.

Later on, respondent Sol also filed a motion for intervention in the intestate
settlement of Roberto Sr.'s estate proceedings which was granted.

The RTC then denied Sol’s motion to intervene in the testate proceedings
of Gloria and Roberto, Sr. It was held that she has no legal interest in the case. On
appeal, the CA stated that respondent Sol should be allowed to intervene
because she is the widow of Roberto Jr. and has an interest or claim in her
husband's estate, which consists, in part, of the latter's share in the estate of his
deceased mother Gloria. The CA clarified that respondent Sol does not anchor
her motion for intervention on her status as daughter-in-law but rather as an heir
of Roberto Jr. The CA concluded that Sol has an interest or claim in her husband's
estate, which consists, in part, of the latter's share in the estate of his deceased
mother Gloria.

In this Petition, Martin argues that respondent Sol's rights and interests, if any,
can be fully protected in the settlement of Roberto Jr.'s estate proceeding, which
directly involves the settlement of Roberto Jr.'s intestate estate. Thus, her
intervention in the testate proceedings which involves the wills of Gloria and
Roberto Sr., is completely unnecessary and superfluous.

ISSUE: Whether or not Sol has an interest in the settlement of the estate of Roberto
Sr. and Gloria which would justify her motion for intervention. Whether the CA
erred in failing to consider whether respondent Sol's alleged rights and interests
 34

over the estate of Roberto Jr. may be fully protected in the settlement of the
latter’s estate proceeding, which directly involves said estate

The SC ruled that Sol has no interest in the settlement of the estate of
Roberto Sr. and Gloria.

Roberto Jr. died after his mother's death but he predeceased his father
Roberto Sr. When Gloria died, Roberto Jr. would have inherited from her as a
compulsory heir by virtue of Article 887(1) of the Civil Code, which states:

ART. 887. The following are compulsory heirs:

(1) Legitimate children and descendants, with respect to their

legitimate parents and ascendants;
(2) In default of the foregoing, legitimate parents and ascendants, with
respect to their legitimate children and descendants;

(3) The widow or widower;

(4) Acknowledged natural children, and natural children by legal
fiction; (5) Other illegitimate children referred to in Article 287.

As far as respondent Sol is concerned, she would inherit from Roberto Jr.
pursuant to Article 887(3) and part of his estate would be his share in the estate
of her mother, Gloria. However, Sol could not inherit from the Estate of Roberto Sr
because Roberto Jr. predeceased his father, and only the children of Roberto Jr.
would succeed by right of representation from their grandfather pursuant to
Article 972 of the Civil Code. Moreover, respondent Sol is not related by blood,
but only by affinity, to Roberto Sr.

Since intervention is not a matter of right but depends on the sound

discretion of the court, respondent Sol's intervention in the probate proceeding is
unnecessary because her right or interest in the estate of Roberto Jr. can be fully
protected in a separate proceeding - namely, the settlement of Roberto Jr.' s
estate proceeding pending before RTC-10. The second parameter to be
considered in granting of intervention under Section 1, Rule 19 - whether the
intervenor's right may not be fully protected in a separate proceeding - is wanting
in the instant case.

DR. NIXON L. TREYES v. ANTONIO L. LARLAR, REV. FR. EMILIO L. LARLAR, et.al. G.R.
No. 232579, September 8, 2020, En Banc (Caguioa, J.)

Rosie Larlar Treyes, the wife of Dr. Nixon Treyes, died intestate and without
issue. Rosie was survived by her seven siblings. At the time of her death, Rosie left
 35

behind 14 real estate properties, which she owned together with Dr. Nixon as their
conjugal properties.

Dr. Nixon executed two Affidavits of Self- Adjudication, transferring the

estate of Rosie unto himself, claiming that he was the sole heir of his deceased
spouse. Hence, the respondents as siblings of Rosie filed before the RTC a
Complaint for annulment of the Affidavits of Self- Adjudication, cancellation of
TCTs, reconveyance of ownership and possession, partition, and damages.

Dr. Nixon moved to dismiss the complaint for lack of jurisdiction over his
person but a re-service of summons was made upon him. He then filed another
Motion to Dismiss arguing that the private respondents' Complaint should be
dismissed on the following grounds: (1) improper venue; (2) prescription; and (3)
lack of jurisdiction over the subject matter. The RTC denied the same. When the
case reached the CA, the case was dealt with just the same.

In this Petition, Dr. Nixon now argues that the RTC has no jurisdiction to hear,
try, and decide the subject matter of the private respondents' Complaint
because the determination of the status of the legal heirs in a separate special
proceeding is a prerequisite to an ordinary suit for recovery of ownership and
possession of property instituted by the legal heirs.

ISSUE: Whether or not the determination of the status of the legal heirs in a
separate special proceeding is a prerequisite to an ordinary suit for recovery of
ownership and possession of property instituted by the legal heirs

The Supreme Court ruled in the negative. Article 777 of the Civil Code states
that the rights of succession are transmitted from the moment of the death of the
decedent. The operation of Article 777 occurs at the very moment of the
decedent's death – the transmission by succession occurs at the precise moment
of death and, therefore, the heir is legally deemed to have acquired ownership
of his/her share in the inheritance at that very moment, and not at the time of
declaration of heirs, or partition, or distribution.

Hence, the Court has held that the title or rights to a deceased person's
property are immediately passed to his or her heirs upon death. The heirs' rights
become vested without need for them to be declared ‘heirs’. In partition cases,
even before the property is judicially partitioned, the heirs are already deemed
co-owners of the property. Thus, the heirs are deemed real parties in interest
without a prior separate judicial determination of their heirship. Similarly, in the
summary settlement of estates, the heirs may undertake the extrajudicial
settlement of the estate of the decedent amongst themselves through the
execution of a public instrument even without a prior declaration in a separate
judicial proceeding that they are the heirs of the decedent.
 36

The Civil Code identifies certain relatives who are deemed compulsory heirs
and intestate heirs. They refer to relatives that become heirs by virtue of
compulsory succession or intestate succession, as the case may be, by operation
of law.

In the instant case, Article 1001 states that brothers and sisters, or their
children, who survive with the widow or widower, shall be entitled to one-half of
the inheritance, while the surviving spouse shall be entitled to the other half.

Hence, subject to the required proof, without any need of prior judicial
determination, the private respondents siblings of Rosie, by operation of law, are
entitled to one-half of the inheritance of the decedent. Thus, in filing their
Complaint, they do not seek to have their right as intestate heirs established, for
the simple reason that it is the law that already establishes that right. What they
seek is the enforcement and protection of the right granted to them under Article
1001 in relation to Article 777 of the Civil Code by asking for the nullification of the
Affidavits of Self-Adjudication that disregard and violate their right as intestate
heirs.

To stress once more, the successional rights of the legal heirs of Rosie are
not merely contingent or expectant — they vest upon the death of the decedent.
By being legal heirs, they are entitled to institute an action to protect their
ownership rights acquired by virtue of succession and are thus real parties in
interest in the instant case. To delay the enforcement of such rights until heirship is
determined with finality in a separate special proceeding would run counter to
Article 777 of the Civil Code which recognizes the vesting of such rights
immediately — without a moment's interruption — upon the death of the
decedent.

By this Decision now, the Court so holds, and firmly clarifies, that the latter
formulation is the doctrine which is more in line with substantive law, i.e., Article
777 of the Civil Code is clear and unmistakable in stating that the rights of the
succession are transmitted from the moment of the death of the decedent even
prior to any judicial determination of heirship. As a substantive law, its breadth
and coverage cannot be restricted or diminished by a simple rule in the Rules.

THELMA ESGUERRA GUIA v. JOSE M. COSICO, JR., MANUEL M. COSICO, MINERVA

M. COSICO, and ELEANOR M. COSICO-CHAVEZ G.R. No. 246997, May 5, 2021,
Second Division (Lazaro-Javier, J.)

Cecilia Cosico is the daughter of Jose and Corazon and she was born
crippled (lumpo) in 1932 . Cecilia’s mother Corazon passed away when Cecilia
was just one (1) year old and she was left in the care and custody of her maternal
aunt, Mercedes. Mercedes raised Cecilia in their home together with Mercedes'
 37

legally adopted daughter, herein petitioner Thelma Guia. Because of her physical
condition, Cecilia spent most of her days in her bedroom. She never attended
school nor learned to read or write.

In 1996, Cecilia executed her last will and testament. Through Thelma's
balae Liberato, Cecilia asked Atty. Bueser, then a notary public, for assistance in
preparing the last will. Atty. Bueser and Liberato went to Cecilia's house. Atty.
Bueser and Cecilia talked inside the latter's bedroom while Liberato stayed
outside by the door. Liberato heard Cecilia call Mercedes whom she directed to
collect documents from the steel cabinet. Mercedes complied and handed over
the documents to Atty. Bueser.

Thereafter, Atty. Bueser and Liberato returned to Cecilia's house with the
finished copy of her last will and testament denominated Huling Habilin at
Pagpapasiya which consisted of four (4) pages. Also present at Cecilia’s house
were her neighbor Ricardo and the son of Cecilia’s helper, Reynaldo. In the
presence of Liberato, Reynaldo, and Ricardo who served as notarial witnesses to
Cecilia's Huling Habilin at Pagpapasiya, Atty. Bueser read the contents of the
document to Cecilia and carefully explained to her its effects and consequences.
He then asked her if she fully understood its contents and whether it was done
according to her wishes. Cecilia confirmed. After Atty. Bueser read and explained
the contents of the Huling Habilin at Pagpapasiya, Cecilia affixed her thumbmark
to the will on top of her printed name and on the lower left portion of the first and
second pages of the document — all in the presence of Atty. Bueser and her
notarial witnesses.

When Cecilia died, Thelma filed a Petition for probate of Cecilia's will and
for her appointment as administrator but the respondents, who are Cecilia’s half-
siblings opposed and alleged that the formalities for the execution of a valid will
under Articles 805 to 809 of the Civil Code were not complied with. Respondents
argue that the Huling Habilin at Pagpapasiya was supposedly fatally defective
for not having been read twice: once, by one of the subscribing witnesses; and
again by the notary public before whom it was acknowledged in view of Cecilia's
illiteracy.

ISSUE Whether the Huling Habilin at Pagpapasiya was executed in compliance

with Article 808 of the Civil Code.

Yes. Article 808 of the Civil Code requires that the contents of a last will
and testament be read to the testator twice, once by one of the subscribing
witnesses, and again, by the notary. While the law imposes the requirement only
when the testator is blind, the Court has expanded its coverage to those who are
illiterate. Alvarado elucidates that Art. 808 applies not only to blind testators but
also to those who, for one reason or another, are "incapable of reading their wills.
 38

Here, Cecilia was not blind but a lumpo. Though Alvarado seemingly
extended the application of Article 808 to cover not just the blind but also
illiterates, the same case also recognized an exception to the rule — substantial
compliance. The Court found that this exception applies to the instant case.

Notably, Atty. Bueser read and explained the contents of the Huling Habilin
at Pagpapasiya to Cecilia. Meanwhile, Liberato and Reynaldo listened and
understood the explanation of Atty. Bueser. It is also undisputed that Cecilia made
no denial or correction to what she had heard. The Court said that the underlying
protection of Article 808 had been fulfilled here. The Court also refused to
entertain such a possibility of fraud because Atty. Bueser, aside from having
observed all other formalities, handed copies of the Huling Habilin at
Pagpapasiya to the notarial witnesses for their signatures. This gave them the
opportunity to read a short four (4)- page document which they all flipped
through from pages one (1) through four (4) to affix their respective signatures,
essentially negating any possibility of fraud, trickery, or misrepresentation.
Moreover, the notarial witnesses heard Atty. Bueser read and explain to Cecilia
her Huling Habilin at Pagpapasiya which gave both Cecilia and themselves the
opportunity to object to any provision in the will that may not have been
according to her wishes. As it was, no objections were made. To be sure, Reynaldo
knew and understood Cecilia's testamentary act and disposition of her properties.
The will was admitted to probate.

RIVERA v. VILLANUEVA and PACHECO G.R. No. 197310, June 23, 2021, First Division
(Carandang, J.)

Donato, Sr. was legally married to Anatacia Santos and they had two
children, namely: Emerenciana and Milagros. Emerenciana was married to Tiglao.
Milagros, on the other hand, has two children, herein petitioners (Daniel and
Elpidio).

During his marriage to Anatacia, Donato, Sr. had illicit relation with Emiliana
dela Cruz. They begot four children, namely: Flora, Donato Jr., Ruperto, and
Virgilio all surnamed Pacheco. Flora and Donato, Jr., now deceased, are
substituted by their heirs in the present action. On August 21, 1956, Donato, Sr.
died intestate, leaving several properties he acquired during his lifetime.

Emerenciana took over the management of the business of their father but
after she died in 1964, the administration and management of the properties was
transferred to her sister Milagros.

In the settlement proceedings of Emerenciana's estate, respondents

(illegitimate children of Donato Sr.) intervened therein alleging that the properties
of the late Donato, Sr. were included as part of the estate of Emerenciana.
 39

In 2011, the RTC rendered its decision holding that there is no dispute that
respondents are the illegitimate children of Donato, Sr and the legitime of each
illegitimate child shall consist of one-half (1/2) of the legitime of legitimate child.

On appeal, the CA affirmed the RTC decision upholding the right of the
respondents to inherit from Donato, SR. The CA stressed that the filiation of
respondents to the late Donato, Sr., as their putative father, has been duly proven.
As such, the inevitable legal consequence thereof is that they are entitled to
inherit from the intestate estate of Donato, Sr., and are thus, deemed co-owners,
together with Emerenciana and Milagros, of the properties left by their common
father.

Petitioners appealed to the SC. They argued that since Donato, Sr. died on
August 12, 1956, what applies should be Article 983 in relation to Article 895 of the
Civil Code which provides that the share of an illegitimate child shall be equal,
among others, in every case to 4/5 of the legitime of an acknowledged natural
child. If Article 176 Family Code is applied, petitioners claim that their rights will be
impaired because instead of the illegitimate children getting a smaller share, they
get more at the expense of the legitimate children.

ISSUE: Whether the legitime of each illegitimate child shall consist of one-half of
the legitime of a legitimate child in this case given that Donato Sr. died in 1956.

The Supreme Court held that the Civil Code and not the Family Code
provisions apply considering that Donato, Sr. died on August 21, 1956 during the
effectivity of the Civil Code and respondents became co-owners of the
properties of Donato, Sr. upon the latter's death. While Article 256 of the Family
Code provides that it shall have retroactive effect, this is insofar as it does not
prejudice or impair vested or acquired rights in accordance with the Civil Code
or other laws. Petitioners have already acquired vested rights as to their share in
the legitime, which consists of one-half of the hereditary estate as provided in
Article 888 of the Civil Code.

The Court ruled that both the RTC and the CA erred in ruling that the
legitime of Flora, Ruperto, Virgilio and Donato, Jr. shall consist of 1/2 of the legitime
of each of the legitimate children.

Article 895(2) of the Civil Code provides that the legitime of an illegitimate
child who is neither an acknowledged natural, nor a natural child by legal fiction,
shall be equal in every case to four-fifths of the legitime of an acknowledged
natural child.

Flora, Ruperto, Virgilio and Donato, Jr. cannot be considered as

acknowledged natural children of Donato, Sr. because the latter was married to
 40

Anatacia at the time that all the respondents were born. Only children born
outside wedlock of parents who, at the time of the conception of the former,
were not disqualified by any impediment to marry each other, are natural.
Respondents were acknowledged illegitimate children on Donato Sr. but they are
not natural children.

Pursuant to the second paragraph of Article 895, the legitime of Flora,

Ruperto, Virgilio and Donato, Jr., being illegitimate children, shall consist of 4/5 of
the legitime of an acknowledged natural child. The legitime of an acknowledged
natural child shall consist of 1/2 of the legitime of each of the legitimate children
or descendants. Thus, the legitime of Flora, Ruperto, Virgilio and Donato, Jr., shall
consist of 4/5 of the legitime of an acknowledged natural child.

ARACELI MAYUGA, vs. ANTONIO ATIENZA G.R. No. 208197. January 10, 2018

Araceli Mayuga instituted a petition for Cancellation and Recall of Free

Patent Application and Reconveyance against Antonio Atienza. Araceli,
alleged, that she, Benjamin Sr. and Armando, are the surviving legitimate, legal
and forced heirs of the late Perfecto Atienza who died intestate on June 1, 1978.

She alleged that through manipulation and misrepresentation with intent to

defraud a co-heir, her brother Benjamin and her nephew Antonio L. Atienza [son
of predeceased Armando Atienza] were both able to secure Free Patents.
Araceli was not notified of the application filed with public respondent CENRO
nor any notice of hearings of proceedings as required by law, being a co-heir
and party- in-interest. Thus, she prayed that the Free Patent issued to Antonio and
Benjamin be cancelled and the two lots be divided into among the three of them
( Araceli, Benjamin and Armando) as the forced heirs of the deceased Perfecto
Atienza.

Respondents assert that the basis for their Application for Free Patent with
the CENRO is a Confirmation Affidavit of Distribution of Real Estate executed by
their father, Perfecto Atienza, confirming partition in 1960.

The RTC ordered the herein respondents to reconvey the 1/3 share of
Araceli A. Mayuga as the compulsory heir of the late Perfecto Atienza on Lot 9819
which is identical to Lot 61-A and 9820 which is identical to Lot 61-B. The Court of
Appeals reversed.

ISSUES
1. Whether the complaint of the petitioner for cancellation of free patent
and reconveyance should be dismissed.
2. Whether Araceli can claim preterition.
 41

The Supreme Court ruled that petitioner's allegation of fraud and

misrepresentation in the execution of the Confirmation Affidavit by their father
Perfecto Atienza have not been proven. Being a notarized document, it is imbued
with the legal presumption of validity, its due execution and authenticity not
having been impugned by the mere self-serving allegations of the petitioner.

Also, the Court said that an action for reconveyance involving land that is
titled pursuant to a free patent is one that seeks to transfer property, wrongfully
registered by another, to its rightful and legal owner or to one with a better title.
As such, two facts must be alleged in the complaint and proved during the trial,
namely: (1) the plaintiff was the owner of the land or possessed it in the concept
of owner, and (2) the defendant illegally divested him of ownership and
dispossessed him of the land. Araceli failed to allege, much less prove that she
was entitled to 1/3 of the two lots in dispute by succession. Apparently, she had
taken the position that being one of the surviving compulsory heirs of their late
father, Perfecto, she was entitled to 1/3 of the disputed lots on the assumption
that the decedent left only three legal heirs and that the disputed lots were part
of the inheritance left by their father when he died in 1978. Araceli, however,
overlooked the fact that Perfecto executed the Confirmation Affidavit almost five
years prior to his death on June 1, 1978. Araceli did not even bother to provide
the Court a copy thereof so that the Court could make a determination of its legal
import. And the CA correctly accorded the Confirmation Affidavit the legal
presumption of validity, being a duly notarized document, where its validity could
not be impugned by mere self-serving allegations.

Assuming that Perfecto owned the disputed lots and the Confirmation
Affidavit was a deed of partition, Perfecto could have legally partitioned his
estate during his lifetime. Under Article 1080 of the Civil Code, "should a person
make a partition of his estate by an act inter vivos, or by will, such partition shall
be respected, insofar as it does not prejudice the legitime of the compulsory
heirs."

Since the Civil Code allows partition inter vivos, it is incumbent upon the
compulsory heir questioning its validity to show that his legitime is impaired.
Unfortunately, Araceli has not shown to what extent the Confirmation Affidavit
prejudiced her legitime.

As to the issue of whether Araceli can claim preterition, the Court ruled in
the negative.

Although Araceli was a compulsory heir in the direct descending line, she
could not have been preterited. Firstly, Perfecto left no will. As contemplated in
Article 854, the presence of a will is necessary. Secondly, before his death,
Perfecto had several other properties which was almost 50 hectares, part of which
 42

was developed for residential and agricultural purposes. Araceli could not have
been totally excluded in the inheritance of Perfecto even if she was not allegedly
given any share in the disputed two lots.

If Araceli's share in the inheritance of Perfecto as claimed by her was

indeed impaired, she could have instituted an action for partition or a settlement
of estate proceedings instead of her complaint for cancellation of free patent
and reconveyance.

Furthermore, as the persons who applied for and were awarded free
patents, the respondents are the rightful, legal owners of the disputed lots. The
free patents having been issued by the Department of Environment and Natural
Resources and recorded in the Book of Entries at the Office of the Registry of
Deeds the respondents' certificates of title have already become indefeasible
pursuant to Section 32 of the Property Registration Decree, which pertinently
provides: "Upon the expiration of said period of one year [from and after the date
of entry of the decree of registration], the decree of registration and the
certificate of title issued shall become incontrovertible.

AQUINO vs. AQUINO G.R. No. 208912 December 7, 2021 (Leonen)

Miguel T. Aquino (Miguel), died intestate on July 5, 1999, leaving personal and real
properties. Miguel’s first wife, Amadea died in on September 27, 1977 and her
estate was already settled. Miguel was survived by his two sons in his first marriage,
Abdulah and Rodolfo; and Enerie B. Aquino, his second wife; the heirs of his
predeceased son, Wilfredo. Miguel was also predeceased by another son with
Amadea, Arturo.

Alleging that she was Arturo’s only child, Angela Aquino moved that she be
included in the distribution and partition of Miguel's estate. She presented a July
5, 2003 Certification from the hospital, stating that she was Arturo and Susan
Kuan's daughter. According to Angela, Arturo died on January 10, 1978, before
she was born on October 9, 1978. While her parents were not married, they did
not suffer from any impediment to marry. She further alleged that her grandfather
Miguel took care of her mother's expenses during her pregnancy with her and
that Miguel supported her education. Miguel also gave instructions that Angela
was among the heirs who would receive portions of her estate. She added that
since her birth, her father's relatives had continuously recognized her as Arturo's
natural child. Angela presented her baptismal certificate.

Miguel’s son, Rodolfo, opposed Angela’s motion and claimed that Arturo never
recognized Angela and that she failed to present sufficient evidence of her
filiation to Arturo.
 43

The RTC granted Angela’s motion for Distribution of the Residue of Miguel’s estate
saying that the heirs are estopped to deny Angela’s filiation. Rodolfo filed a
petition for Certiorari before the CA but the CA denied the petition.

Abdulah also appealed to the CA. The CA held that Angela failed to prove her
filiation in accordance with Articles 172 and 175 of the Family Code. Moreover,
she failed to present birth records showing Arturo's paternity or any document
signed by Arturo admitting her filiation. Since Arturo died before she was born,
Angela cannot also establish open and continuous possession of her status as
Arturo's child, under Article 172(3) of the Family Code. Thus, Miguel's or the Aquino
clan's overt acts cannot translate to legal recognition of her status as Arturo's
child. The appellate court added that even if Angela were able to establish her
filiation, the Court of Appeals ruled that she could not inherit ab intestato from
Miguel pursuant to Art. 992.

Angela appealed to the SC and argued that the presumed antagonism under
Art. 992 should only apply to immediate families and not to relatives in the
ascending line but only to collateral relatives. A grandfather cannot be presumed
to hate his own grandchild. She asserted that Art. 992 is unconstitutional for
violating the equal protection clause.

The Supreme Court ruled citing Art. 990 and 989 held that these articles do not
prohibit succession of a nonmarital child whose parent is nonmarital as well:

“ARTICLE 989. If, together with illegitimate children, there should survive
descendants of another illegitimate child who is dead, the former shall succeed
in their own right and the latter by right of representation. “

“ARTICLE 990. The hereditary rights granted by the two preceding articles to
illegitimate children shall be transmitted upon their death to their descendants,
who shall inherit by right of representation from their deceased grandparent.”

Because of this, the reciprocity in intestate succession of nonmarital children now

depends on their parents' marital status. The parity granted to nonmarital children
is more illusory than real.

The SC ruled that they now adopt the construction that Article 992 that makes
children regardless of circumstances of birth qualified to inherit from their direct
ascendant by right of representation. The Court abandons the presumption in
In re Grey, Corpus, Diaz, and In re Suntay, among others, that nonmarital children
are products of illicit relationships or that they are automatically placed in a
hostile environment perpetrated by the marital family.
 44

Both marital and nonmarital children whether from whether born from a marital
or nonmarital child, are blood relatives of their parents and other ascendants.
Nonmarital children are removed from their parents and ascendants in the same
degree as marital children. Nonmarital children of marital children are also
removed from their parents and ascendants in the same degree as nonmarital
children of nonmarital children. This interpretation likewise makes Article 992 more
consistent with the changes introduced by the Family Code on obligations of
support among and between the direct line of blood relatives. This interpretation
of Article 992 is also supported by the Family Code. Particularly, it is consistent with
the provisions of Article 195 of the Family Code which makes support mandatory
from grandparents to grandchildren regardless of status. It reflects the evolution
of the legal view towards illegitimate children.

Grandchildren regardless of their status and the status of their parents should be
able to inherit from their grandparent by right of representation in the same way
that they are also (regardless of status) required to support their grandparent.
When a nonmarital child seeks to represent their deceased parents to succeed
from their grandparents’ estate, it is Article 982 which applies. Art. 982 does not
make any distinction and it will protect the right of the predeceased child to the
legitime.

This ruling will apply only when the illegitimate child has a right of representation
to their parent's share in her grandparent's legitime. It is silent on collateral relatives
where the nonmarital child may inherit by themself. We are not now ruling on the
extent of the right of a nonmarital child to inherit in their own right. Those will be
the subject of a proper case and, if so minded, may also be the subject of more
enlightened and informed future legislation.

OBLIGATIONS AND CONTRACTS

D.M. RAGASA ENTERPRISES, INC. vs. BANCO DE ORO, INC. G.R. No. 190512, June
20, 2018, (Caguioa, J.)

On January 30, 1998, Ragasa and then Equitable Bank executed a Lease
Contract over the ground and second floors of a commercial building for a period
of five years, commencing on February 1, 1998 up to January 31, 2003, with a
monthly rental of P122,607.00. Meanwhile, Equitable Bank entered into a merger
with PCI Bank thereby forming Equitable PCI Bank, Inc. The latter would
eventually, pending the present case, merge with Banco de Oro, Inc. to form the
respondent bank. As a result of the merger, one of the branches which had to be
closed is the branch located in the subject premises.

For this reason, the bank sent a notice informing Ragasa that the former
was pre- terminating their Lease Contract effective June 30, 2001. Ragasa
 45

responded with a demand letter for payment of monthly rentals for the remaining
term of the Lease Contract from July 1, 2001 to January 31, 2003 totaling
P3,146,596.42, inasmuch as there is no express provision in the Lease Contract
allowing pre-termination. The bank countered, through a letter dated June 26,
2001, that its only liability for pre-terminating the contract is the forfeiture of its
security deposit pursuant to item 8 (m) of the Lease Contract. On June 30, 2001,
the bank vacated the subject premises without heeding Ragasa's demand for
payment.

Ragasa filed with the RTC the Complaint for Collection of Sum of Money
and Damages. Ragasa argued that under the Lease Contract, the forfeiture of
the bank's security deposit does not exempt it from payment of the rentals for the
remaining term of the lease because the bank's act of pre-terminating the
contract was a major breach of its terms. Moreover, item 8 (m) expressly provides
that the security deposit shall not be applied to the rentals.

The bank argued that item 8 (m) of the Lease Contract is actually a penalty
clause which, in line with Article 1226 of the Civil Code, takes the place of
damages and interests in case of breach. Hence, for breaching the Lease
Contract by pre-terminating the same, the bank is liable to forfeit its security
deposit in favor of Ragasa but would not be liable for rentals corresponding to
the remaining life of the Contract.

ISSUES:
1. Whether Ragasa can insist on the payment of rental for the unexpired
portion of the lease?
2. To what extent should the bank be held liable to Ragasa?

In the case at bar, there is no question that the bank breached the Lease
Contract when it served upon Ragasa the Notice of Pre-termination effective
June 30, 2001 and vacated the subject premises on said date. The lease contract
was for a term of five-years and the contract does not contain any provision on
pre-termination.

Generally, if the lessor or the lessee should not comply with their obligations,
the aggrieved party may ask for either the rescission of the contract and
indemnification for damages, or only the latter, allowing the contract to remain
in force.

In the present case, there is an express stipulation in item 8 (p) of the Lease
Contract that "[b]reach or non-compliance of any of the provisions of this
Contract, especially non- payment of two consecutive monthly rentals on time,
shall mean the termination of this Contract." Pursuant to the automatic
termination clause of the Lease Contract the Lease Contract was terminated
 46

upon its unauthorized pre-termination by the bank on June 30, 2001. With the
lease having been automatically resolved or terminated by agreement of the
parties, Ragasa is entitled only to indemnification for damages.

The provision or clause that is applicable in case of non-compliance of the

Term or period of the Lease Contract is item 8 (m) which mandates that the full
deposit of P367,821.00 or the equivalent of three months rentals shall be forfeited.

Par. 8 (m) is a penal clause it specifies the stipulated amount of liquidated

damages — the full deposit — to be awarded to the injured party in case of
breach of the Term or period of the principal obligation. Since the herein parties
have agreed on a specific amount of penalty, P367,821.00 or the full deposit, the
Court will not even second guess whether it is substantial enough to insure the
compliance of the lease period.

As a rule, the penalty is fixed by the contracting parties as a compensation or

substitute for damages in case of breach of the obligation; and it is, therefore,
clear that the penalty in its compensatory aspect is the general rule, while the
penalty in its strictly penal aspect is the exception. It is also clear from paragraph
1 of Article 1226 that when an obligation or a contract contains a penal clause,
the penalty shall substitute the indemnity for damages and the payment of
interests in case of noncompliance with or breach of the principal obligation.

Clearly, the requisites for the demandability of the penal clause are present in
this case. These are: (1) that the total non-fulfillment of the obligation or the
defective fulfillment is chargeable to the fault of the debtor; and (2) that the
penalty may be enforced in accordance with the provisions of law. As to the
second requisite, the penalty is demandable when the debtor is in mora in regard
to obligations that are positive (to give and to do) where demand may be
necessary unless it is excused; and with regard to negative obligations, when an
act is done contrary to that which is prohibited.

In conclusion, Ragasa cannot insist on the payment of rentals for the unexpired
portion of the lease because the contract was automatically terminated upon
the breach committed by the bank when it served the notice of pre-termination.
However, pursuant to the penalty clause, the entire deposit of the bank shall be
forfeited in favor of Ragasa and attorney’s fees pursuant to the stipulation in the
lease contract that in the event of court litigation between the parties due to non-
compliance with the provisions of the contract, the aggrieved party shall be paid
attorney’s fees of not less than P15,000.00.
 47

HEIRS OF BAGAYGAY v. HEIRS OF PACIENTE G.R. No. 212126, August 4, 2021,

Second Division (Hernando, J.)

In 1953, Anastacio Paciente, Sr. was granted a homestead patent over a

parcel of land situated in Bañga, Province of Cotabato. An OCT V2423 was issued
in his name. By virtue of a Deed of Sale allegedly executed by Anastacio in favor
of his brother-in-law, Eliseo Bagaygay, the latter took possession of the subject
land, transferred the title under his name, and later caused the subdivision of the
entire land into three (3) lots. Anastacio died in 1989 while Eliseo died in 1991.

Eliseo’s wife, Anecita, and their children who are the petitioners in this case
took possession of the subject land upon his death.

In 1999, the respondents who are the heirs of Anastacio filed before the
RTC, an action for Declaration of Nullity of the Deed of Sale and the titles,
Recovery of Ownership and Possession, Accounting and Damages, against the
heirs of Eliseo (petitioners). They alleged that 1956, Eliseo, took advantage of the
financial distress of Anastacio, was able to obtain the latter's title and take
possession of his land. They added that Eliseo caused the cancellation of
Anastacio's title through a fictitious Deed of Sale. Respondents added that
assuming that there was a sale, the sale was void as it was executed during the
5-year period of prohibition under the Public Land Act.

Respondents Paciente presented as witness the Registrar of Deeds to testify

that the original of OCT No. V-2423 as well as the copy of the Deed of Sale
executed by Anastacio in favor of Eliseo had been lost and could no longer be
produced. The Register of Deeds also testified to identify the Primary Entry Book
as secondary evidence, and to prove that the Deed of Sale was executed by the
Anastacio on November 28, 1956 which is within prohibited period under the
Public Land Act.

Petitioners refuted the date of execution stated in the Primary Entry Book
presented by the respondents. They testified that Anastacio sold the land to their
father to defray the expenses for the wedding of his son (respondent Meregildo)
in 1958. To corroborate these testimonies, petitioners submitted as evidence the
Marriage Contract of respondent Meregildo showing that the latter was married
on June 8, 1958.

The RTC dismissed the complaint for lack of merit. It gave credence to the
testimonies of the petitioners that the sale was made in 1958 and not 1956 and
therefore outside of the prohibited period.

On appeal, the CA reversed and ruled that since a copy of the Deed of
Sale was no longer available, the date indicated in the Primary Entry Book the
 48

Register of Deeds of South Cotabato as the true and correct date of execution
of the Deed of Sale. Hence, it declared the Deed of Sale void ab initio having
been executed on November 28, 1956 or within the 5-year prohibitory period.

ISSUE Whether the CA seriously erred in not ruling and applying the principle of
laches on the part of respondents.

No, the Court of Appeals did not commit an error in refusing to apply the
principle of laches. In the Heirs of Alido v. Campano, the Court made it clear that
laches does not apply to void ab initio contracts. In Heirs of Ingjug-Tiro v. Spouses
Casals, the Court expounded that laches cannot prevail over the law that actions
to assail a void contract are imprescriptible it being based on equity, to wit:

In actions for reconveyance of property predicated on the fact that

the conveyance complained of was null and void ab initio, a claim of
prescription of action would be unavailing. "The action or defense for the
declaration of the inexistence of a contract does not prescribe." Neither
could laches be invoked in the case at bar. Laches is a doctrine in equity
and our courts are basically courts of law and not courts of equity. Equity,
which has been aptly described as "justice outside legality," should be
applied only in the absence of, and never against, statutory law. Aequetas
[nunquam] contravenit legis. The positive mandate of Art. 1410 of the New
Civil Code conferring imprescriptibility to actions for declaration of the
inexistence of a contract should pre-empt and prevail over all abstract
arguments based only on equity.

Thus, no error was committed by the CA when it declared the Deed of Sale
executed by Anastacio void ab initio.

BENEDICTO V. YUJUICO, vs. FAR EAST BANK AND TRUST COMPANY G.R. No. 186196.
August 15, 2018, (Caguioa, J.)

Far East Bank and Trust Company (Bank,) approved the renewal an
Omnibus Credit Line (OCL) of P35M in favor of GTI Sportswear Corporation.
Petitioner Yujuico, the President of GTI signed a Comprehensive Surety Agreement
in his personal capacity to guarantee the obligation of GTI.

Sometime in May 1995, negotiations were undertaken to settle GTI's trust

receipt obligation under the OCL. GTI made known to the bank its request for the
conversion of its peso loan to US dollar-denominated loan. An exchange of
communications concerning the conversion transpired but no definite
agreement on the said conversion was put into writing.
 49

On June 26, 1995, Yujuico and Lazatin, signed a Loan Restructuring

Agreement (LRA), the subject of which was GTI's outstanding balance on its
Omnibus Credit Line. The agreement expressly stated that the restructured loan
continues to be secured by the Comprehensive Surety Agreement previously
executed by Yujuico in favor of the bank. The bank denied the request for
conversion of the peso loan to US dollar-denominated loan and informed Yujuico
that the conversion was not deemed workable.

Yujuico and GTI filed a Complaint for Specific Performance with Preliminary
Injunction against the bank before the RTC. They alleged that during the signing
of the loan restructuring agreement, they were assured by the officers of the bank
that after a few payments on its obligation, GTI's peso loan would be converted
to US dollars.

Hence, Yujuico prayed that the bank be directed to convert GTI's loan to
US dollars retroactively effective October 1, 1996 and that bank be directed to
pay them P2.84M representing savings that could have accrued in their favor
terms of the difference in interest payments. They also prayed for exemplary
damages and attorney's fees.

The RTC ruled that the bank indeed agreed to convert to US dollar GTI's
peso loan obligation and that the conversion resulted in the novation of GTI's loan
obligation. The RTC concluded that Yujuico was accordingly released from his
obligations as surety pursuant to Article 1215 of the New Civil Code in conjunction
with paragraph 1 of Article 1291.

The CA partially granted the appeal. It ruled that the Omnibus Credit Line
and the Loan Restructuring Agreement between GTI and the bank were not
novated, thus, Yujuico remained to be liable as a surety under the
Comprehensive Surety Agreement.

ISSUES:

1 Whether there was novation of GTI’s obligation to the bank;

2) Whether Yujuico remains liable as surety of the obligation of GTI.

The SC ruled there was no novation. Novation has been defined as the
substitution or alteration of an obligation by a subsequent one that cancels or
modifies the preceding one.

Here, the attendant facts do not make out a case of novation in the sense
of a total or extinctive novation. There is no document that states in unequivocal
terms that the agreement to convert the loan from peso to US dollar would
abrogate the loan restructuring agreement or the omnibus credit line. Instead
 50

what is readily apparent from the exchange of communications concerning the

request for conversion is that the parties recognize the subsistence of the loan
restructuring agreement.

Neither was there any substantial incompatibility between the obligations

of the parties under the restructuring agreement and the agreement to convert
the loan as to warrant a finding of an implied novation. Implied novation
necessitates that the incompatibility between the old and new obligations be
total on every point such that the old obligation is completely superseded by the
new one. This is not the case here. The only modification that the conversion
agreement introduced was that [GTI's and petitioner Yujuico's] loan obligation
would be payable in US dollars instead of Philippine pesos. Incidentally, the
applicable interest rate is lower on account of the change in currency. These
alterations, however, do not suffice to constitute novation.

The agreement to convert the Peso-denominated restructured loan into a

US Dollar- denominated one is an implied or tacit, partial, modificatory novation.
There was merely a change in the method of payment.

Without a total or extinctive novation, the surety agreement subsists. Also,

Yujuico executed a comprehensive or continuing surety, one which is not limited
to a single transaction, but which contemplates a future course of dealing,
covering a series of transactions, generally for an indefinite time or until revoked."
Indubitably, these provisions are broad enough to include the loan obligation
under the loan restructuring agreement even after its conversion to US dollar.

While Article 1215 of the Civil Code provides that novation, compensation
or remission of the debt, made by any of the solidary creditors or with any of the
solidary debtors, shall extinguish the obligation, the novation contemplated
therein is a total or extinctive novation of the old obligation. Thus, Yujuico remains
liable as surety for GTI.

SALES

HEIRS OF VILLEZA v. ALIANGANG.R. No. 244667-69, December 2, 2020, First Division

(Caguioa, J.)

Corazon Villeza was the registered owner of three (3) parcels of land with
improvements located at Angadanan, Isabela (Centro 1, Bunay, Poblacion). It
is alleged that Corazon, during her lifetime, sold the subject properties to sisters
Elizabeth and Rosalina, respondents herein. However, Corazon died without
executing any deed of conveyance. Respondents filed three (3) separate
Amended Complaints for “Specific Performance and Damages,” to compel
petitioners Heirs of Corazon Villeza, to execute the subject deeds.
 51

It appears that on January 10, 2006, respondents Elizabeth and Rosalina, as

buyers, and Corazon and Rosario, as sellers, entered into a Deed of Conditional
Sale (DCS) for the sale of a residential house and an undivided parcel of land,
(Centro 1) located in Isabela. At the time of the execution of the Deed, the Centro
1 property was part of a larger tract of land covered by a TCT registered in the
name of Inocencio.

It was only on November 14, 2006, Inocencio’s TCT was cancelled and a
new TCT (now only covering the 540.5 sq.m. Centro I property) was issued in
Corazon's name. Thereafter, Elizabeth and Rosalina went back to Canada where
they sent monthly remittances of P10,000.00 from February 2006 to December
2007 to Rosario as partial payments for the Centro I property. Rosario also
acknowledged receiving a total amount of P184k duly witnessed and signed by
Corazon, for the Centro I property. Respondents averred that they continued
sending monthly remittances to Rosario from January to April 2008.

Corazon and Rosario both died in 2009 without transferring the title to the
Centro 1 property in the name of the respondents. Alleging that they have fully
paid for the property, respondents asked the heirs of Corazon to honor the DCS
dated January 10, 2006.

Petitioners repudiated the DCS and argued that the same is void because
at the time of the execution of the DCS, Inocencio was till the registered owner of
the Centro 1 property and a title was issued in Corazon’s name only in November
of 2006. They added that Corazon was the sole registered owner of TCT No. T-
356999, whatever amount received and acknowledged by Rosario, if any, could
never bind Corazon's property; and (c) respondents, being Canadian citizens, are
disqualified under the Constitution from owning real property in the Philippines. As
to the Bunay Property, petitioners denied the existence of any oral contract of
sale of the Bunay property between Corazon and Elizabeth. They maintained that
the two (2) remittance receipts are not evidence to prove the sale, are self-
serving and hearsay. As to the Poblacion Property, petitioners denied the
authenticity of the oral contract of sale of the Poblacion property between
Corazon and Rosalina.

The RTC ruled in favor of respondents. The RTC ratiocinated that the totality
of evidence adduced proved that Corazon, during her lifetime, indeed sold the
subject properties to respondents. The CA affirmed.

ISSUE: Whether the petitioners may be compelled to comply with the obligations
to deliver and transfer ownership of the subject properties and to execute the
corresponding Deeds of Sale in favor of respondents. Whether the Statute of
Frauds is applicable.
 52

The SC ruled in the affirmative. The stipulation: "that the corresponding

Deed of Absolute Sale shall be executed by the VENDORS upon full payment of
the balance" is sanctioned by Article 1478 of the Civil Code, which allows the
parties to stipulate that the ownership in the thing shall not pass to the purchaser
until he has fully paid the price. In a contract where the seller agrees to execute
a deed of absolute sale when the buyer has paid in full the purchase price is a
contract to sell and not a contract of sale.

The DCS is, therefore, a contract to sell as correctly ruled by the CA. That
the DCS is a contract to sell does not in any way compromise its validity and
enforceability, given the fact that the essential requisites of a perfected contract
are evident from the DCS.

In view of the payment in full of the purchase price by the buyers, the DCS
has been performed or consummated. At that point, had the sellers, Corazon and
Rosario, been still alive, they could be compelled by court action to execute the
DAS over the Centro I property, which they contractually promised to execute
upon full payment of the purchase price.

While the Centro 1 property was still registered in Inocencio’s name at the
time Corazon executed the DCS on January 10, 2006, the title over the property
was subsequently transferred in her name already on November 14, 2006. The
fact that the seller is not the owner of the object of the sale at the time it is sold
and delivered does not prevent title or ownership from passing to the buyer.
Article 1434 provides that when a person who is not the owner sells or alienates a
thing but subsequently acquires title thereto, such title passes by operation of law
to the buyer or grantee.

Regarding the Bunay and Poblacion properties, the SC ruled that under
Article 1483 of the Civil Code, "subject to the provisions of the Statute of Frauds
and of any other applicable statute, a contract of sale may be made in writing,
or by word of mouth, or partly in writing and partly by word of mouth, or may be
inferred from the conduct of the parties."

Under the Statute of Frauds, which is provided in Article 1403 (2) of the Civil
Code, an agreement for the sale of real property or of an interest therein is
unenforceable by action, unless the same, or some note or memorandum
thereof, be in writing, and subscribed by the party charged, or by his agent; and
evidence of the agreement cannot be received without the writing, or a
secondary evidence of its contents.

When Corazon received the full consideration of the sales from Elizabeth
and Rosalina, there was ratification of the oral contracts of sale by acceptance
of benefits, making them enforceable. With the complete payment of the
 53

consideration by respondents, the oral contracts of sale covering the Bunay and
Poblacion properties have been "partially executed," rendering the Statute of
Frauds inapplicable.

The obligations of the sellers in the DCS and the two oral contracts of sale
were transmitted upon the death of Corazon and Rosario to petitioners pursuant
to Article 1311 which provides: "Contracts take effect only between the parties,
their assigns and heirs, except in case where the rights and obligations arising from
the contract are not transmissible by their nature, or by stipulation or by provision
of law. The heir is not liable beyond the value of the property he received from
the decedent. The petitioners are therefore bound to comply with the obligations
to deliver and transfer ownership of the Centro I property to respondents, the
Bunay property to Elizabeth, and the Poblacion property to Rosario. Likewise,
since a public document is required to be registered with the Registry of Deeds to
effect the transfer of the certificates of title covering the said properties to the
buyers, petitioners and the other defendants can be compelled to execute the
necessary public documents for that purpose pursuant to Article 1357 of the Civil
Code.

CREDIT TRANSACTIONS

ELENA R. QUIAMBAO v. CHINA BANKING CORPORATION G.R. No. 238462, May

12, 2021, (Lopez, M., J.)

Elena R. Quiambao borrowed P1.4M from China Banking Corporation

(CBC) to increase the working capital of her general merchandising business.
Elena and her common-law husband and business partner Daniel S. Sy executed
a Real Estate Mortgage over a parcel of land as security for the loan. Later, the
REM was amended several times increasing the loan to P1.77M on April 29, 1993;
P2.6M on April 28, 1995; and P4.0M on April 29, 1997. The amendments contained
a "blanket mortgage clause" stating that the REM would secure the payment of
obligations already incurred or which may be subsequently incurred.

Chinabank filed a petition for foreclosure of the REM with the RTC alleging
that Elena and Daniel obtained P5,000,000.00 succeeding loan accommodations
covered by eight promissory notes. The RTC issued a notice of extra-judicial sale
and the notice was published in a newspaper of general circulation and posted
in public places. At the public auction sale, the mortgaged property was sold to
Chinabank for the amount of P5.25M The Certificate of Sale was issued to
Chinabank. Since Elena and Daniel failed to redeem the property, title was later
consolidated in the name of the bank.

Elena filed a petition to annul the mortgage and the extra-judicial

foreclosure proceedings against Chinabank with prayer for injunctive relief before
 54

the RTC. She argued that the REM only covered the loan and its amendments but
not her succeeding loans for P5,000,000.00. Chinabank, on the other hand,
maintained that Elena's loan on April 3, 1990, was extended and renewed up to
March 2004. Yet, Elena merely paid the interests but not the principal.

At the trial, Elena testified that she was made to sign blank documents and
blank PNs when she transacted with China Banking Corporation. The last
mortgage document that she signed was on April 29, 1997. On the other hand,
China Banking Corporation's loan assistant testified that PN No. 001071438693
executed on March 19, 2004 was not subject of the REM.

The RTC ruled in favor of Elena and declared the 1997 REM as well as the
Extrajudicial Foreclosure on May 5, 2005 void. The CA reversed and ruled that the
REM was intended to secure all succeeding obligations in view of the blanket
mortgage clause.

ISSUE: Whether the "blanket mortgage clause" in the latest amendment to the
REM dated April 29, 1997 covers the P5,000,000.00 succeeding loans under the
eight PNs for which the mortgage was foreclosed.

The SC ruled, no. Inarguably, the amendments to the REM are contracts of
adhesion. In a contract of adhesion, one imposes a ready-made contract to the
other whose sole participation is either to accept or reject the agreement. The
parties do not bargain on equal footing in the execution of this kind of contract
given that the debtor is limited "to take it or leave it" option and there is no room
for negotiation. However, such contract is not entirely prohibited. The one
adhering is free to give his consent inasmuch as he is also free to reject it
completely. In this case, Chinabank drafted and prepared the standard forms on
which Elena and Daniel merely affixed their signatures. At the trial, it was
established that Elena and Daniel signed the amendments to the REM in blank.
They presented pro forma blank documents that China Banking Corporation is
giving to all borrowers for signature. Corollarily, any ambiguity in the provisions of
these documents must be interpreted against China Banking Corporation.

A "blanket mortgage clause" or "dragnet clause" subsumes all debts of past

or future origins and makes additional funds available to a borrower without the
need to execute separate security documents, thus, saving time, costs, and other
resources. Jurisprudence recognizes the validity of this clause but its terms must
still be judiciously examined. A mortgage containing a dragnet clause will not be
extended to cover future advances, unless the document evidencing the
subsequent advance refers to the mortgage as providing security therefor, or
unless there are clear and supportive evidence to the contrary.
 55

Here, the eight PNs likewise failed to allude to Elena and Daniel's liability
under the latest amendment to the REM dated April 29, 1997. The PNs do not even
make any reference to the REM as a security. Further, Chinabank did not adduce
any evidence proving that the REM and its amendments secured these
obligations. Worse, China Banking Corporation's loan assistant categorically
testified that one of the PNs was not subject of the REM. Hence, the doubt on
whether the rest of the PNs are secured or not must be construed against China
Banking Corporation or the party who prepared the contracts. Thus, the latest
amendment to the REM cannot be interpreted to cover the P5,000,000.00
succeeding loans under the eight PNs for which the mortgage was foreclosed. As
such, the foreclosure proceedings are void. The bank cannot validly foreclose a
mortgage based on non-payment of unsecured PNs.

PHILIPPINE NATIONAL BANK v. AIC CONSTRUCTION CORPORATION, SPOUSES

RODOLFO C. BACANI AND MA. AURORA C. BACANI G.R. No. 228904, October 13,
2021, (Leonen, J.)

Respondent AIC Construction opened a current account with Philippine

National Bank (PNB). About a year later, PNB granted AIC Construction an
Omnibus Credit Line in the amount of P10 million. The interest stipulation in the
agreement provides that the borrowers agree to pay on each availment the rate
of interest per annum which is determined by PNB as the bank’s prime rate plus
applicable spread in effect as of the date of the relevant availment.

Through the years, the AIC’s credit line increased little by little. By the time
the loan matured in September 1998, it amounted to P65 million, with P40 million
as principal and P25 million as interest charges capitalized by the Philippine
National Bank into principal. AIC Corporation negotiated for the restructuring of
the loan by offering to pay it in full through a dacion en pago of their various
properties. When they failed to agree on the dacion en pago, PNB made its final
demand on April 30, 2001 to AIC Construction for the full payment of the loan.

AIC Construction filed a complaint against PNB, the ex-officio sheriff of

Mandaluyong, and the sheriff of Makati for annulment of interest and penalty
increases, accounting, exemption of family home and damages. It alleged,
among others, that the imposed interest and penalty charges should be declared
void for being excessive, exorbitant, and unconscionable.

PNB asserted that the interest and penalty charges were valid because AIC
freely, intelligently, and voluntarily entered into the loan contract with full
knowledge of the interest charges. It claimed that AIC is estopped from
questioning the interest as they have been availing of the credit line for more than
a decade through several renewals.
 56

The RTC dismissed AIC Construction's complaint. The CA modified the RTC
ruling. It held that the applied interest rates were unreasonable, usurious, and
unconscionable. Furthermore, the provision on interest violated the principle of
mutuality of contracts under Article 1308 of the Civil Code. It applied the legal
rate of interest under Nacar v. Gallery Frames. It also struck down the penalty
charge of 24% per annum as the parties did not agree that penalties would be
included in the secured amount.

ISSUE: Whether the interest charges imposed by PNB against AIC and the spouses
Bacani are usurious and unconscionable and whether the CA erred in applying
legal interest to the loan.

The SC ruled that the CA correctly applied the legal rate of interest to the
loan.

Article 1308 of the Civil Code states: "The contract must bind both
contracting parties; its validity or compliance cannot be left to the will of one of
them."

The principle of mutuality of contracts is premised on the condition that

there must be an essential equality between the parties so that obligations arising
from contracts may have the force of law between them. If a condition in the
contract depends solely on the will of one of the contracting parties, it is void.

This principle applies to interest rates. Monetary interest is always agreed

upon by the parties and they are free to stipulate on the rates that will apply to
their loans. However, if there is no true parity between the parties, courts may
equitably reduce iniquitous or unconscionable interest charges.

The facts of this case are similar to the facts in Spouses Silos v. PNB3. The
interest rates are yet to be determined through a subjective and one-sided
criterion and are no longer subject to the approval of respondents. The parties
did not agree on the interest rate, but the interest rate was imposed by PNB and
respondents were left with no choice but to agree to it. This arrangement violates
Republic Act No. 3765 or the Truth in Lending Act, which requires creditors to fully
disclose to the debtor all amounts incidental to the extension of the credit,
including interests, discounts or fees, to protect debtors from a lack of awareness
of the true cost of credit.

Interest and penalties cannot be charged to unjustly enrich a person at the

expense of another. Thus, the Court of Appeals correctly applied the legal rate of

3
738 Phil. 156 (2014)
 57

interest in the credit agreement. The computation of interest on the principal loan
obligation of P65 million shall be at the rate of 12% per annum, computed from
effectivity of the loan agreement up to November 17, 2003, the date of issuance
of the certificate of sale by the Ex-Officio Sheriff of Mandaluyong City. Interest rate
on the conventional interest shall be at the rate of 12% per annum from January
21, 2002, the date of judicial demand, to November 17, 2003.

MEGALOPOLIS PROPERTIES, INC. (NOW, KAIZEN BUILDERS, INC.), FAJARDO & SPS.
APOSTOL v. D'NHEW LENDING CORPORATION G.R. No. 243891, May 7, 2021, (Delos
Santos, J.)

Megalopolis Properties, Inc. (MPI) obtained a loan from D'Nhew Lending

Corporation (DLC) in the amount of P4M as evidenced by a promissory note
payable in monthly installments with an add-on interest at a rate of 3% per month.
The loan was secured by a REM dated May 15, 2008 thru Spouses Apostol, in their
capacity as President and Chief Executive Officer of MPI and Geraldine Fajardo
as the mortgagor. The Sps. Apostol also bound themselves solidarily liable with MPI
in a Continuing Surety Agreement they executed in favor of DLC.

Simultaneous to the execution of the foregoing contracts, MPI issued 12

postdated checks amounting to P453,333.33 each (representing the monthly
payments with P333,333.33 as principal and P120,000.00 as added interest) drawn
against its account with Allied Bank. Upon presentment for payment, the first two
checks were dishonored for having been drawn against insufficient funds and a
closed account, respectively. The petitioners paid the value of the dishonored
check and entered into a re-structuring agreement with DLC which was
embodied in a new promissory note. Petitioners agreed to capitalize the unpaid
interest on the dishonored checks and delivered 24 new checks to DLC to cover
the amortizations on the restructured loan agreement.

The first seven checks issued by petitioners were either cleared by the
drawee bank or paid in cash. However, the subsequent checks were all
dishonored upon presentment for having been drawn against insufficient funds.
Petitioners MPI and Sps. Apostol filed a Complaint with the RTC for nullification of
the interest rate.

ISSUE: Whether the 3% interest per month imposed on the loan between the
parties is valid.

The Court ruled that the interest is not valid. It held that willingness of the
debtor in assuming an unconscionable rate of interest is inconsequential to its
validity. The imposition of an unconscionable rate of interest on a money debt,
even if knowingly and voluntarily assumed, is immoral and unjust. It is tantamount
 58

to a repugnant spoliation and an iniquitous deprivation of property, repulsive to

the common sense of man.

Interest rates must be appreciated in light of the fundamental nature of

interest as compensation to the creditor for money lent to another, which he or
she could otherwise have used for his or her own purposes at the time it was lent.
It is not the default vehicle for predatory gain. As such, interest need only be
reasonable. It ought not be a supine mechanism for the creditor's unjust
enrichment at the expense of another. In cases where stipulated interest is more
than twice the prevailing legal rate of interest, it is for the creditor to prove that
this rate is required by prevailing market conditions.

The rate of 36% per annum, which is three times more than the prevailing
legal rate of interest at the time the loan was contracted, far greater than those
previously upheld by the Court. The same is excessive and unconscionable. Thus,
the 3% monthly interest rate on the Promissory Note is declared invalid, and in lieu
thereof, the prevailing rate of legal interest at the time Promissory Note was
executed (October 16, 2008), or 12% per annum, is hereby imposed. In
accordance with Nacar v. Gallery Frames, in the absence of an express
stipulation as to the rate of interest for loans or forbearance of money, the
prevailing rate of legal interest shall apply (i.e., 12% per annum for loans
contracted before July 1, 2013 or 6% per annum for those contracted from July 1,
2013 onwards). This is because the legal rate of interest is the presumptive
reasonable compensation for borrowed money.

TAN v. MALAYAN LEASING AND FINANCE CORP. G.R. No. 254510, June 16, 2021,
First Division (Caguioa, J.)

In December 2000, New Unitedware Marketing Corporation (United)

obtained a P5M loan from First Malayan Leasing and Finance Corporation
(Malayan) as evidenced by the Promissory Note executed on even date.

To secure the loan, United assigned in favor of Malayan, its fire insurance
claim proceeds from Philippine Charter Insurance Corporation (PCIC) by virtue of
a Deed of Assignment dated July 2, 2001. As added security two separate
Continuing Surety Undertakings were executed by United’s Board of Directors,
Merrie Anne L. Tan, and Edward Yao (July 2001) and the other by Merrie’s
husband, Wilson Tan and Samson Ding (November 2002) in favor of Malayan.

United defaulted on the payment of its loan. Malayan declared that as of

November 17, 2004, the remaining balance on the loan was Php2.94M exclusive
of 5% penalty charges and interests. Malayan’s demands on United as well as its
sureties went unheeded. Thus, Malayan filed a Complaint for Sum of Money and
Damages with Prayer for Preliminary Attachment. Oct. 21, 2005
 59

While the case was pending before the RTC, Merrie Tan discovered that
Samson Ding, in behalf of another corporation, and Edward Yao, in behalf of
United, had entered into a Compromise Agreement with PCIC, where Ding and
Yao were paid the amounts of P55.57M and P75.86M respectively, as payments
for the fire insurance policy claim, the proceeds of which were earlier assigned
by United in favor of Malayan.

Premised on the said Compromise Agreement, Merrie argued that Ding

and Yao should be made exclusively liable for Malayan's claim since they were
the ones who received the proceeds from the fire insurance claim, which was
intended to pay for the outstanding loan obligation of United to Malayan.

Yao, for his part, denied that he received the proceeds of the fire insurance
claim from PCIC, and contended that the indemnity checks which PCIC paid
were merely endorsed by him in his official capacity to the bank for encashment,
but that the proceeds of the checks were delivered by the bank to Ding and Willy
Tan. Yao finally added that he already settled with Malayan his share of United's
obligation when he paid Malayan the amount of P980,000.00, in exchange of
which the latter executed a "Receipt and Release" in his favor.

The RTC ruled in favor of Malayan and ordered United and its sureties,
Merrie and Willy Tan, and Ding to jointly and severally pay Malayan the sum of
P2.94M with interests at the legal rate. It held that Yao’s release did not operate
to extinguish the liability of the other sureties to Malayan. CA affirmed.

ISSUE: Whether the release executed by Malayan in favor of Yao operates as a

novation of the solidary obligation to release Spouses Tan and Ding as sureties for
United?

The SC ruled, No. The obligation of the Spouses Tan and Ding remain
solidary despite the release of Yao from the same. Article 2047 of the Civil Code
provides that “By guaranty a person, called the guarantor, binds himself to the
creditor to fulfill the obligation of the principal debtor in case the latter should fail
to do so If a person binds himself solidarily with the principal debtor xxx [i]n such
case the contract is called a suretyship.”

Although the suretyship itself is a contract that is ancillary to the main

financial accommodation contract between the principal and the creditor, what
sets the surety apart from a mere guaranty is that in a suretyship, the surety is
principally liable, as opposed to a guarantor who is only secondarily liable. So
much so that with a suretyship agreement securing the loan transaction, a
creditor may go directly against the surety even without a prior demand on the
principal debtor, although the latter may be solvent or otherwise able to pay. A
 60

surety's liability stands irrespective of the principal debtor's ability to perform his
obligations under the contract which is subject of the suretyship.

In the instant case, Merrie Tan, along with Yao executed a "Continuing
Surety Undertaking". Under the "Continuing Surety Undertaking" Malayan may
seek to recover from United, or from Merrie Tan or Ding, consistent with Article
1216 of the Civil Code which provides that "The creditor may proceed against
any one of the solidary debtors or some or all of them simultaneously."

In fact, the Receipt and Release executed by Malayan in favor of Yao

categorically provides for the reservation of its option to proceed against the
remaining co-sureties Spouses Tan and Ding.

Therefore, Merrie Tan's submissions that (i) Malayan is estopped from

treating her and the remaining co-sureties as solidary obligors since it accepted
partial payment of United's outstanding loan obligation from Yao; and (ii) that
said acceptance and subsequent release amounted to a novation which
converted the suretyship into a divisible obligation are both misplaced.

Malayan was well within its rights as a creditor to proceed against either
United or any one or more, or all of the co-sureties for the collection of United's
outstanding loan. That it chose to first proceed against Yao and not against the
other co- sureties did not operate as an estoppel on it from subsequently
proceeding against the remaining co-sureties. Neither will Malayan’s
acceptance of partial amount of the loan obligation and its subsequent release
of Yao operate to bar it from proceeding against the remaining co-sureties to
ensure full satisfaction of the debt. Merrie Tan’s liability remains solidary with
United, regardless of partial payment by Yao, precisely because the kind of
security she undertook was one of suretyship.

THE MERCANTILE INSURANCE CO., INC. v. DLCI (DMCI-LAING CONSTRUCTION,

INC.) G.R. No. 205007, September 16, 2019, J. Caguioa

Rockwell Land Corporation entered into an agreement with DLCI, as the

general contractor, for the construction of their condominium towers. Part of
DLCI’s work was the supply and installation of glazed aluminum and curtain
walling. Also part of their contract was the appointment of Altech as a sub-
contractor to DLCI. Pursuant to this project, Altech secured a performance bond
from Mercantile, as surety, for the amount of PHP90,448,941.60. The effectivity of
the bond was extended from September 5, 1999 to March 5, 2000. (The original
date of the bond was Sept. 5, 1997 to Sept. 5 1999)
 61

DLCI called Altech’s attention to the poor progress of works. Later on, DLCI
was constrained to undertake the completion and rectification of unfinished and
sub-par works, which were charged against Altech.

On September 3, 1999, DLCI sent a letter to Mercantile demanding the

liquidation of the bond with 2% per month interest, but without indicating the
exact amount claimed. DLCI later terminated the sub-contract with Altech
effective February 21, 2000. DLCI again reiterated its demand for liquidation after
negotiation between DLCI and Altech failed. However, Mercantile denied DLCI’s
claim on the ground that the bond was already expired on March 5, 2000.

DLCI filed a complaint against Altech and Mercantile before the

Construction Industry Arbitration Commission (CIAC).

The CIAC dismissed DLCI’s complaint on these grounds: (1) Mercantile

should be released from its obligation under the performance bond pursuant to
Article 2080 of the Civil Code since DLCI’s delay had deprived it of the opportunity
to exercise its right of subrogation against Altech, and (2) DLCI’s first call was not
a valid demand because no specific amount was indicated.

The CA reversed the CIAC and held that Mercantile is liable to DLCI under
the performance bond. It ruled that under Article 2047 Mercantile, as surety,
guaranteed the performance and completion by Altech of its sub- contracted
works, and in case of Altech's failure to complete the [P]roject according to the
terms of the Sub-Contract x x x, Mercantile's liability, as surety, sets in. The CA
noted that Altech had already been in default even prior to DLCI’s call on the
performance bond. By reason of said default, liability attached to Altech and as
a consequence, the liability of Mercantile as surety had arisen. It added that
DLCI’s first call was valid despite its failure to reflect the specific amount claimed
as it was already understood by the terms of the bond. Mercantile moved for a
reconsideration but was denied.

Issues:
1. Whether or not DLCI’s demand for liquidation was valid
2. Whether or not Article 2080 of the Civil Code shall apply

The SC ruled that DLCI’s demand for liquidation was valid. By the terms of
the performance bond, Mercantile obliged itself to pay DLCI immediately upon
demand. Thus, it stands as a contract of surety contemplated under Article 2047
of the Civil Code.

Through a contract of suretyship, one party called the surety, guarantees

the performance by another party, called the principal or obligor, of an
obligation or undertaking in favor of another party, called the obligee. While the
 62

contract of surety stands secondary to the principal obligation, the surety’s liability
is direct, primary and absolute. This liability attaches the moment a demand for
payment is made by the creditor.

While the bond is “conditioned” upon DLCI’s first demand, a close reading
of its terms unequivocally indicates that Mercantile’s liability thereunder consists
of a pure obligation since such liability attaches immediately upon demand, and
is neither dependent upon any future or uncertain event, nor a past event
unknown to the parties. Thus, the performance bond is one that is callable on
demand, wherein mere demand triggers Mercantile’s obligation (as surety) to
indemnify DLCI (the obligee) the amount for which said bond was issued, that is,
PHP90,448,941.60.

With regard to the applicability of Article 2080, the Court ruled that a plain
reading of Article 2080 indicates that the article applies to guarantors.
Mercantile’s position that the provision applies with equal force to sureties fails to
appreciate the fundamental distinctions between the respective liabilities of a
guarantor and a surety.

Article 2080. The guarantors, even though they be solidary, are released
from their obligation whenever by some act of the creditor they cannot be
subrogated to the rights, mortgages, and preference of the latter.

A surety binds himself to perform if the principal does not, without regard to
his ability to do so. A guarantor, on the other hand, does not contract that the
principal will pay, but simply that he is able to do so. In other words, a surety
undertakes directly for the payment and is so responsible at once if the principal
debtor makes default, while a guarantor contracts to pay if, by the use of due
diligence, the debt cannot be made out of the principal debtor. Article 2080
applies only with respect to the liability of a guarantor. Verily, a surety’s liability
stands without regard to the debtor’s ability to perform his obligations under the
contract subject of the suretyship. Mercantile’s reliance on Article 2080 is thus
misplaced.

TORTS AND DAMAGES

COCA-COLA BOTTLERS PHILS., INC., vs. ERNANI GUINGONA MEÑEZ G.R. No.
209906. November 22, 2017, Second Division (Caguioa, J.)

Respondent Meñez was a frequent customer of Rosante Bar and

Restaurant (RBR) in Dumaguete City. Sometime in March 1995, he went to RBR
and ordered pizza and a bottle of "Sprite." Meñez then took a bite of pizza and
drank from the straw the contents of the Sprite bottle. He noticed that the taste
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of the softdrink was not one of Sprite but of a different substance repulsive to taste.
The substance smelled of kerosene. He then felt a burning sensation in his throat
and stomach and could not control the urge to vomit. He left his table for the
toilet to vomit but was unable to reach the toilet room. Instead, he vomited on
the lavatory found immediately outside the said toilet. Upon returning to the table,
he picked up the bottle of Sprite and brought it to the place where the waitresses
were and angrily told them that he was served kerosene. Meñez even handed
the bottle to the waitresses who passed it among themselves to smell it. All of the
waitresses confirmed that the bottle smelled of kerosene and not of Sprite.

Meñez then went outside and requested a person manning the traffic
(Ovas) to accompany him to the Silliman University Medical Center. While at the
Emergency Room, Meñez again vomited before the hospital staff could examine
him. He was confined in the hospital for three (3) days.

Later, Meñez came to know that a representative from RBR came to the
hospital and informed the hospital staff that RBR would take care of the hospital
and medical bills. Meñez filed a complaint against petitioner Coca-Cola and RBR
and prayed for the actual, moral, and exemplary damages and attorney’s fees.

Rosante Bar argued that Meñez has no cause of action against it as it

merely received said bottle of Sprite allegedly containing kerosene from Coca-
Cola as a matter of routinary procedure. It argued that RBR is not expected to
open and taste each and every bottle in order to make sure it is safe for every
customer. Coca-Cola for its part filed a motion to dismiss the complaint. It argued
that a perusal of the complaint revealed that there is no allegation therein which
states that Coca-Cola uses noxious or harmful substance in the manufacture of
its products. What the complaint repeatedly stated is that the bottle with the
name SPRITE on it contained a substance which was later identified as pure
kerosene. Further, Coca-Cola cited Republic Act No. 3720, and that pursuant to
the law, Meñez failed to avail of and exhaust an administrative remedy by filing
a complaint before the Bureau of Food and Drug prior to a filing of a suit in court.
Coca-Cola added that the doctrine of strict liability tort on product liability is but
a creation of American Jurisprudence, as clearly shown by the cases cited in
support thereof, and never before adopted as a doctrine of the Supreme Court.
Hence, it submits that at most it only has a persuasive effect and should not be
used as a precedent in fixing the liability of Coca-Cola.

The RTC dismissed the complaint for insufficiency of evidence. It ruled that
Meñez failed to categorically establish the chain of custody of the "Sprite" bottle
which was the very core of the evidence in his complaint for damages. The CA
reversed the RTC and held that an administrative remedy is not a condition
precedent in pursuing a case for damages under Article 2187 of the Civil Code
which is the basis of Meñez's complaint for damages.
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ISSUES
1. Whether the CA is correct in holding that Meñez did not violate the
doctrine of exhaustion of administrative remedies and prior resort to the Bureau
of Food and Drugs (BFD) is not necessary.
2. Whether the CA erred in awarding moral damages, exemplary damages
and attorney’s fees to Meñez.

The CA correctly ruled that prior resort to the Bureau of Food and Drugs is
not necessary for a suit for damages under Article 2187 of the Civil Code to
prosper. Article 2187 provides:

ART. 2187. Manufacturers and processors of foodstuffs, drinks, toilet

articles and similar goods shall be liable for death or injuries caused
by any noxious or harmful substances used, although no
contractual relation exists between them and the consumers.

Quasi-delict being the source of obligation upon which Meñez bases his
cause of action for damages against Coca-Cola, the doctrine of exhaustion of
administrative remedies is not applicable.

The Supreme Court ruled the CA committed an error in awarding moral

damages. The cases when moral damages may be awarded are specific. Unless
the case falls under the enumeration as provided in Article 2219, which is
exclusive, and Article 2220 of the Civil Code, moral damages may not be
awarded.

ART. 2219. Moral damages may be recovered in the following and

analogous cases:

xxx xxx xxx

(2) Quasi-delicts causing physical injuries;

Article 2220 provides the following additional legal grounds for awarding
moral damages: (1) willful injury to property if the court should find that, under the
circumstances, such damages are justly due; and (2) breaches of contract where
the defendant acted fraudulently or in bad faith.

Apparently, the only ground which could sustain an award of moral

damages in favor of Meñez is Article 2219 (2) — quasi-delict under Article 2187
causing physical injuries. However, Meñez has not presented evidence to prove
that he suffered physical injuries when he allegedly ingested kerosene from the
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"Sprite" bottle in question. Nowhere in the CA Decision is the physical injury of

Meñez discussed. The statements of the doctors who tended to the medical
needs of Meñez were equivocal. "Physical effects on the body" and "adverse
effect on his body" are not very clear and definite as to whether or not Meñez
suffered physical injuries and if these statements indicate that he did, what their
nature was or how extensive they were. Consequently, in the absence of sufficient
evidence on physical injuries that Meñez sustained, he is not entitled to moral
damages.

As to exemplary or corrective damages, these may be granted in quasi-

delicts if the defendant acted with gross negligence pursuant to Article 2231 of
the Civil Code. In awarding exemplary damages, the CA relied on the principle
of strict liability and that it applies even if the manufacturer has exercised all
possible care and that proof of negligence is not necessary.

The SC ruled that the CA's reasoning is not in accord with the gross
negligence requirement for an award of exemplary damages in a quasi-delict
case. Meñez has failed to establish that Coca-Cola acted with gross negligence.
Other than the opened "Sprite" bottle containing pure kerosene allegedly served
to him at the RBR, Meñez has not presented any evidence that would show Coca-
Cola’s purported gross negligence. He failed to categorically establish the chain
of custody of the "Sprite" bottle which was the very core of the evidence in his
complaint for damages and that, considering that the "Sprite" bottle allegedly
contained pure kerosene, it was quite surprising why the employees of RBR did
not notice its distinct, characteristic smell. Thus, Meñez is not entitled to exemplary
damages absent the required evidence.

On the award of attorney’s fees, the SC ruled that the CA awarded

attorney's fees only because it awarded exemplary damages. In any event,
based on Article 2208 of the Civil Code, Meñez is not entitled to attorney's fees as
he has not established any other ground that would justify this award.

VDM TRADING, INC. & SPOUSES DOMINGO v. CARUNGCONG and WACK WACK
TWIN TOWERS CONDOMINIUM ASSOCIATION, INC. G.R. No. 206709, February 6,
2019

VDM Trading is an owner of a unit located at Wack Wack Twin Towers while
petitioner Nena Domingo is the majority stockholder of VDM and the occupant
of the unit together with her husband Luis Domingo. While Sps. Domingo were in
the United States, Nena’s sister discovered that soapy water was heavily
penetrating through the ceiling of their unit. Nena’s sister reported this matter to
the Domingos and their atty-in-fact, Atty. Villareal, and Wack Wack’s building
administrator.
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Atty. Villareal coordinated with the building administrator who revealed

that the strong leak apparently came from the unit directly above them which
was owned by respondent Carungcong but was being leased to another at that
time. The building administrator explained that the leak was caused by
unauthorized piping and plumbing works, which were in violation of the Wack
Wack’s rules and regulations. Based on the report, Atty. Villareal demanded that
respondents Wack Wack and Carungcong make restoration works and/or pay
for the damages caused to the unit of the Domingos. However, no action was
taken by Wack Wack and Carungcong.

Sps. Domingo filed their complaint for damages against respondents

Carungcong and Wack-Wack. Respondent Wack Wack contended that policies
on the use and occupancy of units lied solely with Golden Dragon. In its
crossclaim, Wack Wack alleged that if there was indeed any damage caused on
the unit, it would have been due to respondent Carungcong’s failure to diligently
and regularly monitor her tenant’s activities.

The RTC held Wack Wack solidarily liable with Carungcong.

On appeal, the CA reversed the RTC and ruled in favor the the respondents
Wack-Wack and Carungcong on the ground that there was no evidence
showing that the damage to the Domingo’s unit was caused by the plumbing
works done in the unit directly above them.

Issue: Whether or not respondents are liable for damages to the Domingos

The SC ruled in the negative. Article 2176 provides that whoever by act or
omission causes damage to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict.

A quasi-delict has the following elements: a) the damage suffered by the

plaintiff; b) the act or omission of the defendant supposedly constituting fault or
negligence; and c) the causal connection between the act and the damage
sustained by the plaintiff, or proximate cause.

The Court noted that the full extent of the damage caused to the
petitioners’ unit was not sufficiently proven. There was no sufficient evidence
presented to show the extent of the damage caused to the unit. Photographs
offered merely depict a wet bed, wet floor, and wet cabinet. No photographs
were presented to prove the full extent of the damage caused to the unit.

Second, the fault or negligence on the part of Wack-Wack was not proven.
The Court has held that in a cause of action based on quasi-delict, the
negligence or fault should be clearly established by the plaintiff, to whom the
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burden of proof is placed. In this case, the burden of proving fault or negligence
was clearly not discharged by the Domingos. No evidence was presented that
suggests that such plumbing works are illegally or negligently made or prohibited
or disallowed.

Third, the proximate cause between the supposed damage caused and
the plumbing works undertaken was not established. Proximate cause is that
cause which, in natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury and without which the result would not
have occurred. However, the subject plumbing works are isolated in the balcony
area of the unit above Domingos’ unit. They do not dispute that the said area is
separated from the other areas of the unit and sealed off by a wall and beam.
Petitioner did not present any witness or document establishing causal link
between the plumbing works and the damage done. Lastly, in a case previously
filed by the petitioners before the HLURB against Golden Dragon, petitioners
allege in their complaint that way before the installation of the subject plumbing
works, they had already discovered water leaks in the unit.

All in all, the Domingos failed to prove the existence of the elements of a
quasi-delict in the instant case. The decision of the CA is affirmed.

BNL MANAGEMENT CORPORATION and DAVID v. REYNALDO UY, RODIEL BALOY,

ATTY. LUALHATI CRUZ, ALBERTO WONG, TERESITA PASIA, ROLAND INGEL and
MARISSA SEVILLA G.R. No. 210297, April 3, 2019

Petitioner BNL Management owned 6 condominium units at the Imperial

Bayfront Tower Condominium and held exclusive rights to 3 parking spaces
therein.

BNL Management, through its President, David, wrote to the building

administrator of Imperial bringing up concerns over: (1) the general cleanliness
and maintenance of common areas; (2) security; (3) building insurance; (4)
encroachment of 2 of the parking spaces; and (5) the annotation of the parking
spaces on the mother title.

In a follow-up letter, BNL Management declared that it would withhold

paying monthly dues and instead deposit them and its arrears in a bank as
escrow, which could be withdrawn by the Imperial Bayfront Tower Condominium
Association only after it has complied with the demands in the letter.

In response, the building administrator of Imperial explained that the failure

to annotate ownership of parking spaces was due to the failure BNL Management
to submit the necessary documents to the Association. It added that the
maintenance issues were due to lack of funds as a result of BNL Management’s
nonpayment of association dues, specifically amounting to PHP180,981.80.
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Still, BNL Management did not pay the arrears. Thus, the Association’s Board
of Directors (respondents) resolved to disconnect the lighting facilities in the 6 units
owned by BNL Management and later on, the water services as well. Despite the
letter of BNL for the restoration of their electricity and water, the Association
refused.

BNL filed a complaint for damages and specific performance with

preliminary mandatory/prohibitory injunction against respondents Uy, et al.

The RTC dismissed the complaint. It found that a homeowners’ association

depended on the dues paid by its members to deliver services such as building
maintenance. It held that respondents were justified in disconnecting BNL
Management’s power and water services under the Association’s House Rules
and Regulations, which were based on its Master Deed and Declaration of
Restrictions under Sec. 9 of the Condominium Act. The CA dismissed BNL’s appeal
as well as motion for reconsideration.

Hence, this petition. BNL and David argue that they are entitled to actual,
moral, and exemplary damages.

Issue: Whether or not petitioners are entitled to damages for the disconnection
of water and electricity utilities from the units they own at Imperial Bayfront

The Court held that petitioners are not entitled to the damages they prayed
for. For moral damages to be awarded, the following requisites must be present:
(1) there must be an injury, whether physical, mental or psychological, clearly
sustained by the claimant; (2) there must be a culpable act or omission factually
established; (3) the wrongful act or omission of the defendant is the proximate
cause of the injury sustained by the claimant; and (4) the award of damages is
predicated on any of the cases stated in Article 2219.

Here, respondents Uy were not found to have committed any culpable act
or omission that would warrant an award of moral damages for petitioner David.
Clearly, the injury he allegedly sustained was caused by his own failure –
corporation’s nonpayment of dues.

Also, petitioner BNL Management, being a corporation, is not entitled to

moral damages. A corporation is not a natural person. It is a creation of legal
fiction and "has no feelings, no emotions, no senses." A corporation is incapable
of fright, anxiety, shock, humiliation, and physical or mental suffering. "Mental
suffering can be experienced only by one having a nervous system and it flows
from real ills, sorrows, and griefs of life." A corporation, not having a nervous system
or a human body, does not experience physical suffering, mental anguish,
embarrassment, or wounded feelings. Thus, a corporation cannot be awarded
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moral damages. As an exception, "a corporation may have a good reputation

which, if besmirched, may also be a ground for the award of moral damages."

There is no showing here that an exception should apply pro hac vice in
favor of petitioner BNL Management. Moreover, exemplary damages may only
be awarded if a party proves entitlement to temperate, liquidated, actual, or
moral damages. Petitioners have already admitted that they will not quantify the
actual damages they sustained. They have also neither sought for nor been
granted temperate or liquidated damages. Accordingly, petitioner BNL
Management cannot be awarded exemplary damages.