LEONEN’s CASES IN CIVIL LAW

PERSONS & FAMILY RELATIONS

Article 6, NCC-WAIVER

It is a general rule that a person may waive any matter which affects his property, and any
alienable right or privilege of which he is the owner or which belongs to him or to which he is
legally entitled whether secured by contract, conferred with statute, or guaranteed by
constitution, provided such rights and privileges rest in the individual, are intended for his sole
benefit, do not infringe on the right of others, and further, provided the waiver of the right or
privilege is not forbidden by law, and does not contravene public policy.

Here, the decision of Col. Otamias to waive a portion of his retirement benefits does not
infringe on the right of third persons, but even protects the right of his family to receive
support. The Deed of Assignment executed by him was not contrary to law. It was in
accordance with the provisions on support in the Family Code. (Otamias v. Republic, 2016)

In Saudia Airlines v. Rebecenscio, 2015, the Supreme Court held that while our law
recognizes the fundamental principle of autonomy of contracts, such must not be so permissive
as to lose sight of considerations of law, morals, good customs, public order, or public policy
that underlie the contract central to the controversy. Here, the filipino women who were cabin
attendants of Saudia Airlines were asked to tender resignation because of pregnancy. Saudia's
policy entails the termination of employment of cabin attendants who become pregnant. They
were also required to execute quitclaims after having been unfairly given an ultimatum to
resign or be terminated (and forfeit their benefits).

The Saudia policy that compelled them to resign and the quitclaims violate Article II,
Section 14 of the 1987 Constitution which provides that the State ... shall ensure the
fundamental equality before the law of women and men.

Apart from the constitutional policy on the fundamental equality before the law of men
and women, it is settled that contracts relating to labor and employment are impressed with
public interest. Article 1700 of the Civil Code provides that "[t]he relation between capital and
labor are not merely contractual. They are so impressed with public interest that labor
contracts must yield to the common good."

Art. 7, NCC- IMPLIED REPEALS

Implied repeals are not favored and the failure to add specific repealing clause indicates
that the intent was not to repeal existing law. (Sunset Garden v. CA, 2015) The intent must be
manifest. Repeal of laws should be made clear and expressed. Repeals by implication are not
favored as laws are presumed to be passed with deliberation and full knowledge of all laws
existing on the subject. Such repeals are not favored for a law cannot be deemed repealed
unless it is clearly manifest that the legislature so intended it. The failure to add a specific
repealing clause indicates that the intent was not to repeal any existing law, unless an
irreconcilable inconsistency and repugnancy exist in the terms of the new and old laws.

CONFLICT OF LAWS; FORUM NON CONVENIENS

Conflict of Laws refers to that part of municipal law of a state which directs its courts,
when confronted with a legal problem involving as foreign element, whether or not they should
apply a foreign law.
 Literally means the forum is not convenient. This doctrine applies in conflicts of law cases.
It gives courts the choice of not assuming jurisdiction when it appears that it is not the most
convenient forum and the parties may seek redress in another one. It is a device designed to
frustrate illicit means of securing advantages and vexing litigants that would otherwise be
possible if the venue of litigation (or dispute resolution) were left entirely to the whim of either
party. On the other hand, courts may choose to assume jurisdiction subject to the following
requisites (1) the Philippine Court is one to which the parties may conveniently resort to; (2)
that the Philippine Court is in a position to make an intelligent decision as to the law and the
facts; and (3) that the Philippine Court has or likely to have power to enforce its decision. A
mere invocation of the doctrine of forum non conveniens or an ease averment that foreign
elements exist cannot operate to automatically divest the court of jurisdiction. (PNCC v.
Asiavest, 2015)

Saudia asserts that Philippine courts and/or tribunals are not in a position to make an
intelligent decision as to the law and the facts. This is because respondents' Cabin Attendant
contracts require the application of the laws of Saudi Arabia, rather than those of the
Philippines. It claims that the difficulty of ascertaining foreign law calls into operation the
principle of forum non conveniens, thereby rendering improper the exercise of jurisdiction by
Philippine tribunals.

A choice of law governing the validity of contracts or the interpretation of its provisions
does not necessarily imply forum non conveniens. Choice of law and forum non conveniens are
entirely different matters.

Choice of law provisions are an offshoot of the fundamental principle of autonomy of

contracts. Article 1306 of the Civil Code firmly ensconces this:

Article 1306. The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.

Contractual choice of law is not determinative of jurisdiction. Stipulating on the laws of a

given jurisdiction as the governing law of a contract does not preclude the exercise of
jurisdiction by tribunals elsewhere. (Saudia Airlines v. Rebesencio, 2015)

Art, 15 and 17, NCC- NATIONALITY PRINCIPLE

Under the nationality principle, Philippine Laws continue to apply to Filipino citizens when
it comes to their "family rights and duties . . . status, condition and legal capacity" even if they
do not reside in the Philippines. In the same manner, the Philippines respects the national
personal laws of aliens and defers to them when it comes to succession issues and "the intrinsic
validity of testamentary provisions."

However, the probate of a will only involves its extrinsic validity and does not delve into
its intrinsic validity, unless there are exceptional circumstances which would require the
probate court to touch upon the intrinsic validity of the will. When it comes to the form and
solemnities of wills, which are part of its extrinsic validity, the Civil Code provides that the law
of the country of execution shall govern:

ARTICLE 17. The forms and solemnities of contracts, wills, and other public instruments shall
be governed by the laws of the country in which they are executed.

When the acts referred to are executed before the diplomatic or consular officials of the
Republic of the Philippines in a foreign country, the solemnities established by Philippine Laws shall
be observed in their execution.

Prohibitive laws concerning persons, their acts or property, and those which have for their
object public order, public policy and good customs shall not be rendered ineffective by laws or
judgments promulgated, or by determinations or conventions agreed upon in a foreign country.
 Even if we assume that the foreign law applies, it does not necessarily mean that the
Philippine court loses jurisdiction. Foreign law, when relevant, must still be proven as a fact by
evidence, as Philippine courts do not take judicial notice of foreign laws. (Gaspi v. Pacis-
Trinidad, 2020)

Note that, our laws do not prohibit the probate of wills executed by foreigners abroad
although the same have not as yet been probated and allowed in the countries of their
execution. A foreign will can be given legal effects in our jurisdiction. Article 816 of the Civil
Code states that the will of an alien who is abroad produces effect in the Philippines if made in
accordance with the formalities prescribed by the law of the place where he resides, or
according to the formalities observed in his country.

Further, Article 817 does not exclude the participation of Philippine courts in the probate
of an alien's will, especially when the will passes real property in the Philippines. It provides an
option to the heirs or the executor: to use Philippine Law, or plead and prove foreign law. Thus,
it does not remove jurisdiction from the Philippine court.

ARTICLE 817. A will made in the Philippines by a citizen or subject of another country, which
is executed in accordance with the law of the country of which he is a citizen or subject, and which
might be proved and allowed by the law of his own country, shall have the same effect as if
executed according to the laws of the Philippines.

Article 817 provides that a will by an alien executed in the Philippines shall be treated as if
it were executed according to Philippine Laws, if it was validly executed and accordingly could
have been probated under the laws of the alien's country of nationality.

Art. 22, NCC- PRINCIPLE OF UNJUST ENRICHMENT

The principle of unjust enrichment has two conditions. First, a person must have been
benefited without a real or valid basis or justification. Second, the benefit was derived at
another person’s expense or damage. (Loria v. Munoz, 2011) Here, Carlos received 2M from
Ludolfo for a project that did not push through. When Carlos retained the money without basis
or justification, he was unjustly enriched.

Art. 46, NCC- JURIDICAL PERSONS

While Capitol Golf and Country Club is a juridical person, it exists for the utility and
benefit of its members. While legal title in its properties is vested in Capitol, beneficial use
redounds to its membership.

Persons who entered into a contract with a juridical entity may assert their rights against
the winning bidder in a tax delinquency sale including those involve in the sale namely, city
treasurer, and register of deeds of juridical entity’s property when such sale may deprive them
their rights in accordance with the contract, encumbrances or easements they have with
juridical entity. (Alvarado v. Ayala Land, 2017).

Art. 26, FC- FOREIGN DIVORCE

The Certificate of Acceptance of the Report of Divorce was accompanied by an

Authentication issued by Consul of the Embassy of the Philippines in Tokyo, Japan. Considering
that the Certificate of Acceptance of the Report of Divorce was duly authenticated, the divorce
was validly obtained according to foreign spouse’ law. (Racho v. Tanaka, 2018)
 Philippine Courts do not take judicial notice of foreign judgments and laws. They must be
proven as fact under our rules on evidence. A divorce decree obtained abroad is deemed a
foreign judgment, hence the indispensable need to have it pleaded and proved before its legal
effects may be extended to the Filipino spouse. (Toyo v. Toyo, 2019) Here, Genevieve obtained
a divorce in Japan and then filed before the RTC a petition for judicial recognition of foreign
divorce and declaration of capacity to remarry. However, it was denied because they failed to
submit a copy of Japan’s law and its translation as authenticated by the Philippine Consul.

Art. 34, FC- LEGAL RATIFICATION OF MARITAL COHABITATION

Based on law and the Guidelines on the Solemnization of Marriage by the Members of the
Judiciary, the person who notarizes the contracting parties’ affidavit of cohabitation cannot be
the judge who will solemnize the parties’ marriage. As a solemnizing officer, the judge’s only
duty involving the affidavit of cohabitation is to examine whether the parties have indeed lived
together for at least five years without legal impediment to marry.

Affidavit of cohabitation are documents not connected with the judge’s official function
and duty to solemnize marriage. Notarizing affidavits of cohabitation is inconsistent with the
duty to examine the parties’ requirement for marriage. (Tupal v. Rojo, 2014)

Art. 41, FC- JUDICIAL DECLARATION OF PRESUMPTIVE DEATH

When subsequent marriages are contracted after a judicial declaration of presumptive

death, a presumption arises that the first spouse is already dead and that the second marriage
is legal. This presumption should prevail over the continuance of the marital relations with the
first spouse. The second marriage is presumed valid. The burden of proof to show that the first
marriage was not properly dissolved rests on the persons assailing the validity of the second
marriage.

A subsequent marriage contracted in bad faith, even if it was contracted after a court
declaration of presumptive death, lacks the requirement of a well-founded belief that the
spouse is already dead. The first marriage will not be considered as validly terminated.
Therefore, the party who contracted the subsequent marriage in bad faith is also not immune
from an action to declare his subsequent marriage void for being bigamous. Here, the husband
misrepresented before the Court and claimed that his wife was presumptively dead because
she did return after leaving their alleged residence in Tarlac. The truth was they did not reside
in Tarlac. She never leave their residence in Quezon City.

However, a petition for declaration of nullity of void marriages may be filed solely by the
husband or wife. Therefore, for the purpose of not only terminating the subsequent marriage
but also of nullifying the effects of the declaration of presumptive death and the subsequent
marriage, mere filing of an affidavit of reappearance would not suffice. Here, the petitioner’s
choice to file an action for annulment of judgment will, therefore, lie. (Santos v. Santos, 2011)

Art. 122, FC- DEBTS CONTRACTED BY ONE SPOUSE WITHOUT THE CONSENT OF
THE OTHER

A spouse’s consent is indispensable for the disposition or encumbrance of conjugal

properties. Art. 122 applies to debts that were contracted by a spouse and redounded to the
benefit of the family. Since the loaned money is used in the husband’s business, there is a
presumption that it redounded to the benefit of the family; hence the conjugal partnership may
be held liable for the loan amount. In the latter case, the conjugal partnership can be held
liable. The lower courts may have declared the mortgage void but the principal obligation is not
affected. It remains valid. (PNB v. Reyes, 2016)

Art. 172, FC- PERIOD TO CLAIM FILIATION

The action to claim filiation may be brought during the lifetime of the child and shall be
transmitted to his heirs if he should die during minority or in a state of insanity. In these cases,
the heirs shall have a period of five years within which to institute the action. The action
already commenced by the child shall survive notwithstanding the death of either or both of
the parties.

Note that, when the action is based on the second paragraph of Art. 172, the action must
be brought during the lifetime of the alleged parent. The simple reason is that when the parent
is already dead, he can no longer be heard on the claim of the alleged son’s filiation. (Gracia v.
Pizarro, 2017)

SUPPORT and FILIATION

The obligation to give support shall only be demandable from the time the person
entitled to it needs it for maintenance, but it shall not be paid except from the date of judicial
or extrajudicial demand.

An illegitimate child, conceived and born outside a valid marriage is entitled to support.
To claim it, however, a child should have first been acknowledged by the putative parent or
must have otherwise previously established his or her filiation with the putative parents. When
filiation is beyond question, support shall then follow as a matter of obligation. (Abella v.
Cabanero, 2017)

The person obliged to give support shall have the option to fulfill the obligation either by
paying the allowance fixed, or by receiving and maintaining in the family dwelling the person
who has a right to receive support. The latter alternative cannot be availed of in case there is a
moral or legal obstacle thereto. (Art. 204, FC)

FILIATION IN WILLS

Judicial imprimatur on the holographic will is no longer required before the paternal
filiation based thereon may be established. It is sufficient that the child is recognized in the will.
The law instantly recognizes the father’s recognition of his child the moment he executed his
will. (Miller v. Espenida, 2019)

ADOPTION

The law on adoption requires that the adoption by the father of a child born out of
wedlock must be with the consent of his wife (despite their de facto separation) and of his
legitimate children. (Castro v. Gregorio, 2014)
 PROPERTY

Art. 422, NCC- PROPERTY OF PUBLIC DOMINION

For land of the public domain to be converted into patrimonial property, there must be
an express declaration in the form of a law enacted by Congress or a Presidential Proclamation
in cases where the President is duly authorized by law- that the public dominion property is no
longer intended for public service or the development of the national wealth or that the
property has been converted into patrimonial. However, a mere indorsement of the executive
secretary is not the law or presidential proclamation required for converting land of the public
domain into patrimonial property and rendering susceptible to prescription. (Heirs of Delfin v.
NHA, 2016)

UNLAWFUL DETAINER

A demand is a pre-requisite to an action for unlawful detainer, when the action is based
on "failure to pay rent due or to comply with the conditions of his lease," but not where the
action is to terminate the lease because of the expiration of its term. (Lanuza v. Munoz, 2004)

Possession of a property belonging to another may be tolerated or permitted, even

without a prior contract between the parties, as long as there is an implied promise that the
occupant will vacate upon demand. Refusal to vacate despite demand will give rise to an action
for summary ejectment. Thus, prior demand is a jurisdictional requirement before an action for
forcible entry or unlawful detainer may be instituted.

The property in this case is owned by petitioner. Respondents had a month-to-month

lease with petitioner's predecessor-in-interest. Petitioner contends that no prior demand was
necessary in this case since her Complaint was premised on the expiration of respondents'
lease, not on the failure to pay rent due or to comply with the conditions of the lease.

The jurisdictional requirement of prior demand is unnecessary if the action is premised on

the termination of lease due to expiration of the terms of contract. The complaint must be
brought on the allegation that the lease has expired and the lessor demanded the lessee to
vacate, not on the allegation that the lessee failed to pay rents. The cause of action which
would give rise to an ejectment case would be the expiration of the lease. Thus, the
requirement under Rule 70, Section 2 of a prior "demand to pay or comply with the conditions
of the lease and to vacate" would be unnecessary. (Cruz v. Spouses Christensen, 2017)

POSSESSION

A person who occupies the land of another at the latter’s tolerance or permission without
any contract between them is necessarily bound by an implied promise that he will vacate upon
demand, failing which a summary action for ejectment is the proper remedy against him.

Here, Intramuros tolerance of respondent’s occupation and use of the leased premises
after the end of the lease contracts does not give the latter a permanent and indefeasible right
of possession in its favor. When a demand to vacate has been made, as what petitioner had
done, respondent’s possession became illegal and it should have left the leased premises.
(Intramuros Administration v. Offshore Construction, 2018)

ACCESSION

The ownership of property gives the right by accession to everything which is produced
thereby, or which is incorporated or attached thereto, either naturally or artificially.(Art. 440,
NCC) Whatever is built, planted or sown on the land of another and the improvements or
repairs

made thereon, belong to the owner of the land. (Art. 445, NCC). Thus, even if the land was
being leased when the roads were constructed, the ownership of the improvement belongs to
the owner of the land. (Provincial Assessor v. Filipinas Palm Oil, 2016)

EASEMENT

Easement of right of way shall be established at the point least prejudicial to the servient
estate, and, insofar as consistent with this rule, where the distance from the dominant estate to
a public highway may be the shortest. Where there are several tenements surrounding the
dominant estate, and the estate may be established on any of them, the one where the way is
shortest and will cause the least damage should be chosen. The conditions of least damage and
shortest distance are both established in one tenement.

The convenience of the dominant estate’s owner is not the basis for granting an
easement of right of way, especially if the owner’s needs may be satisfied without imposing the
easement. The court is not bound to establish what the shortest distance is; a longer way may
be adopted to avoid injury to the servient estate. The criterion of least prejudice to the servient
estate must prevail over the criterion of shortest distance although this is a matter of judicial
appreciation. (Reyes v. Ramos, 2015)

SUCCESSION

RIGHT OF HEIRS TO INHERITANCE

No judicial declaration of heirship is necessary in order that an heir may assert his or her
right to the property of the deceased. The right to assert a cause of action as an heir, although
he has not been judicially declared to be so, if duly proven, is well settled in this jurisdiction.
The property of the deceased person, both real and personal, becomes the property of the heir
by the mere fact of death of his predecessor in interest, and as such can deal with it precisely
the same way in which the deceased could have dealt, subject only to the limitations which by
law or by contract may be imposed upon the deceased himself. (Capablanca v. Heirs of Bas,
2017) Remember, that under the principle of relativity of contracts, contracts take effect
between the parties which includes the heirs and assigns. (Art. 1311, NCC)

OBLIGATIONS & CONTRACTS

Art. 1191, NCC- RESCISSION

Where there is no just cause for the fixing of the period, the Court may order rescission.
Art. 1197 allows the Court to fix the duration of the period when from the nature and
circumstances of the obligation a period was intended; and the fulfillment of the obligation
itself cannot be demanded until after the court has fixed the period for compliance therewith.
(Camp John Hay v. Charter Chemical, 2019)

The failure of one the parties to comply with the reciprocal obligation allows the wronged
party to seek the remedy of Art. 1191. The wronged party is entiled to rescission under Art.
1191, and even the payment of damages. Rescission under Art. 1191 is a principal action
because it is a remedy for the violation of the principal prestation.
 Arts. 1381 and 1383 pertain to rescission where creditors or even third persons not privy
to the contract can file an action due to lesion or damage as a result of the contract. Rescission
or resolution under Art. 1191, therefore is a principal action due to lesion or damage as a result
of the contract and it is a principal action that is immediately available to the party at the time
that the reciprocal prestation was breached. (Wellex Group v. U-Land Airlines, 2015)

Art. 1279/1281, NCC- COMPENSATION

Compensation is a mode of extinguishing in the concurrent amount of the obligation of

those persons who are reciprocally debtors and creditors of each other. (Castan)

A judgment upon a compromise is rendered based on the parties’ reciprocal concessions.

With all the more reason should a judgment upon a compromise be complied with in good faith
considering that the parties themselves crafted its terms.

Compensation may be total or partial. When the two debts are of the same amount,
there is total compensation. (Team Image v. Solar Team, 2017) Take note that, compensation
takes effect by operation of law when all the requisites under Art. 1279 are present. Otherwise,
compensation make take place by agreement of the parties. For instance, parties may agree
upon compensation of debts which are not yet due. (Art. 1282, NCC)

Art. 1293, NCC- NOVATION

Novation must be stated in clear and unequivocal terms to extinguish an obligation. It

cannot be presumed and may be implied only if the old and new contracts are incompatible on
every point. (Arco Pulp v. Lim, 2011)

In order to give novation its legal effect, the law requires that the creditor should consent
to the substitution of a new debtor. While novation, which consists in substituting a new debtor
in the place of the original one may be made even without the knowledge or against the will of
the latter, it must be with the consent of the creditor. The general rule is that, in the absence
of an authority from the board of directors, no person not even the officers of the corporation,
can validly bind the corporation. Here, aside from Ongpin being the concurrent head of DBP
and NDC at the time the MOA was executed, there was no proof presented that Ongpin was
duly authorized by the DBP to give consent to the substitution by NDC as co-guarantor of
Galleon’s debts. Ongpin is not DBP, therefore, it is wrong to assume that DBP impliedly gave its
consent to the substitution simply by virtue of the personality of its Governor. Novation is never
presumed. The animus novandi, whether total or partial, must appear by express agreement of
the parties, or by their acts which are too clear and unequivocal to be mistaken. (DBP v. Sta.
Ines, 2017)

ELEMENTS OF A CONTRACT

The meeting of the minds need not always be put in writing, and the fact that the
documents have not yet been signed or notarized does not mean that the contract has not
been perfected. A binding contract may exist even if the signatures have not yet been affixed
because acceptance may be express or implied. Thus, the parties have become bound to
consummate the contract such that the failure by one party to comply with its obligations
under the contract entitles the other party to damages.

Here, there is a perfected contract between MRT and Gammon. MRT has already
awarded the contract to Gammon, and Gammon’s acceptance of the award was communicated
to MRT before MRT rescinded the contract. The first letter shows that Gammon’s acceptance is
also manifested in its undertakings to mobilize resources, to prepare the Performance and
Advance Payment Bonds, and to procure materials necessary for the Project. All that remained
was the
formality of returning the contract documents and the Letter of Comfort, which eventually was
complied with by Gammon. Thus, there is already mutual consent on the object of the contract
and its consideration, and an absolute acceptance of the offer. (MRT v. Gammon, 2017)

Art. 1159, NCC- ENFORCEABILITY OF CONTRACTS

The fundamental principle that a contract is the law between the parties. Absent any
showing that its provisions are contrary to law, morals, good customs, public order, or public
policy, it should be enforced to the letter. Contracts cannot be altered for the benefit of one
party and to the detriment of another. (NAPOCOR v. Southern Philippines Power Corp., 2016)
Here, the power company was required to produce 50MW plus an additional 5MW. Since it was
not specified in the Agreement that the additional 5MW must be produced only from the
original generating units, the omission binds NAPOCOR.

CONSENT TO CREDIT CARD TERMS

When issuing a pre-screened or pre-approved credit card, the credit card provider must
prove that its client read and consented to the terms and conditions governing the credit card.
Failure to prove consent means that the client cannot be bound by the provisions of the terms
and conditions, despite admitted use of the credit card. (Yulo v. BPI, 2019) This is true even if
the client did not deny availing of the credit card by charging purchases on it. Thus, the credit
card client may only be charged with legal interest. The client should not be condemned to pay
the interests and charges provided in the Terms and Conditions on the mere claim of the credit
card provider without any proof of the former’s conformity and acceptance of the stipulations
contained therein. (Yulo v. BPI, 2019)

FORMS

A contract may be encompassed in several instruments even though every instrument is

not signed by the parties, since it is sufficient if the unsigned instruments are clearly identified
or referred to and made part of the signed instrument or instruments. Similarly, a written
agreement of which there are two copies, one signed by each of the parties, is binding on both
to the same extent as though there had been only one copy of the agreement and both signed
it. (Dee Hwa v. Asiamed Supplies, 2017)

REFORMATION

Reformation of an instruments may be allowed if subsequent and contemporaneous acts

of the parties show that their true intention was not accurately reflected in the written
instrument. It is a remedy in equity where a valid existing contract is allowed by law to be
revised to express the true intentions of the contracting parties. The rationale is that it would
be unjust to enforce a written instrument which does not truly reflect the real agreement of the
parties. (Makati Tuscany v. Multi-realty, 2018)

INTERPRETATION OF CONTRACTS

CECON and ACI should not be bound by the supposed lump-sum fixed price arrangement.
There was never a meeting of minds on the contract price, and the contention of ACI with
regard to supposed immutability of the stipulated contract sum should fall. Advertisements for
bidders are simply invitations to make proposals, and the advertiser is not bound to accept the
highest or lowest bidder, unless the contrary appears. The exchanges of offers between CECON
and ACI failed to satisfy the requirement of absolute and unqualified acceptance as to comply
with the essential requisite of consent in the perfection of a contract. In order to judge the
intention of the contracting parties, the contemporaneous and subsequent acts shall be
principally considered. It should be mentioned that ACI had drastically changed the scope and
character of
the agreement. To tie down CECON to the unit prices for the proposal for a different scope of
work would be grossly unfair. Reference to prevailing industry practices in the valuation of the
project cost was also warranted and necessary because of the absence of definitive governing
instruments. Under Arts. 1375 and 1376 of the NCC, the nature and object of the contract as
well as the usage or custom of the place shall be borne in mind in the interpretation of the
ambiguities of the contract, and shall fill the omission of stipulations which are ordinarily
established. (CE Construction v. Araneta Center, 2017)

Art. 1344, NCC-FRAUD

There are two types of fraud contemplated in the performance of contracts; dolo
incidente or incidental fraud and dolo causante or fraud serious enough to render a contract
voidable. The distinction between fraud as a ground for rendering a contract voidable or as
basis for the award of damages is provided in Art. 1344: In order that fraud may make a
contract voidable, it should be serious and should not have been employed by both contracting
parties. Incidental fraud only obliges the person employing it to pay damages.

If the fraud did not compel the imputing party to give his or her consent, it may not serve
as the basis to annul the contract, which exhibits dolo causante. Here, Tankeh seemed to be
fully aware of the magnitude of his undertaking. He was aware of the financial reverses that the
company had been undergoing. Furthermore, his background as a doctor, as a bank organizer,
and as a businessman with experience should have apprised him of the irregularity in the
contract that he would be undertaking. This means that at the time he gave his consent to
become part of the corporation, he had been fully aware of the circumstances and the risk of
his participation. However, the party alleging the existence of fraud may prove the existence of
dolo incidente. Incidental fraud is defined as those which are not serious in character and
without which the other party would still have entered into the contract. (Tankeh v. DBP, 2013)

RESCISSION OF CONTRACTS; VITIATED CONSENT BY FRAUD

Banks are required to observe a high degree of diligence in their affairs. This encompasses
their dealings concerning properties offered as security for loans. A bank that wrongly
advertises the area of a property acquired through foreclosure because it failed to dutifully
ascertain the property’s specifications is grossly negligent as to practically be in bad faith in
offering that property to prospective buyers. Any sale made on this account is voidable for
causal fraud. In actions to void such sales, banks cannot hide under the defense that a sale was
made on as-is-where-is basis. As-is-where-is stipulations can only encompass physical features
that are readily perceptible by an ordinary person possessing no specified skills. (Blunden v.
Union Bank, 2017) Here, the bank advertised a condo unit with an area of 95square meters.
After the sale and having occupied the unit, the buyer found out that the actual size was only
70square meters.

RATIFICATION OF UNAUTHORIZED OBLIGATION

A corporation’s repeated payment of an allegedly unauthorized obligation contracted by

one of its officers effectively ratifies that corporate officer’s alleged unauthorized act. A
corporation’s repeated payment of an allegedly unauthorized obligation contracted by one of
its officers effectively ratifies that corporate officer’s allegedly unauthorized act. (TERP
Construction v. Banco Filipino, 2019)

Art. 1156, NCC- IMPLIED TRUST

An action for reconveyance based on implied or constructive trust prescribed in ten years
from the alleged fraudulent registration or date of issuance of the certificate of title over the
property. It is now well-settled that the prescriptive period to recover property obtained by
fraud
or mistake, giving rise to an implied trust under Art. 1456 of the Civil Code, is 10 years pursuant
to Art. 1144. This ten year prescriptive period begins to run from the date the adverse party
repudiates the implied trust, which repudiation takes place when the adverse party registers
the land.

Registration of the property is a constructive notice to the whole world. Thus, in

registering the property, the adverse party repudiates the implied trust. Necessarily, the cause
of action accrues upon registration. (Cabarrus v. Po, 2017)

SPECIAL CONTRACTS

Art. 1458, NCC- CONDITIONAL SALE

In a contract of conditional sale, the buyer automatically acquires title to the property
upon full payment of the purchase price. This transfer of title is by operation of law without any
further act having to be performed by the seller. In a contract to sell, transfer of title to the
prospective buyer is not automatic. The prospective seller must convey title to the property
through a deed of conditional sale.

In contracts of conditional sale, our laws on sales under the Civil Code apply. On the other
hand, contracts to sell are not governed by our laws on sales but by the Civil Code provisions on
conditional obligations. Specifically, Art. 1191 of the Civil Code on the right to rescind reciprocal
obligations does not apply to contract to sell. Failure to fully pay the purchase price is merely an
event which prevents the seller’s obligations to convey title from acquiring binding force. This is
because there can be no rescission of an obligations that is still non-existent, the suspensive
condition (the condition of having the buyer pay the full purchase price) having not happened.
(Olivarez Realty v. Castillo, 2014)

Arts. 1459 and 1459, NCC

A seller can only sell what he or she owns, or that which he or she does not own but has
authority to transfer, and a buyer can only acquire what the seller can legally transfer. Articles
1458 and 1459 of the NCC require the seller to have a right to convey ownership of the thing at
the time it is delivered in order to comply with his obligation under a contract of sale. In this
case, by virtue of succession, Gregorio, Simplicio, Severino and Enrique, became co-owners of
the property, each entitled to an undivided quarter portion of the property. Under Art. 493,
NCC, Enrique therefore had no right to sell the undivided portions belonging to his siblings or
their respective heirs, and the sale to Yabut should be void with respect to the shares of the
other heirs who did not give consent thereto. The affidavit of self-adjudication which proved to
be false, was of no moment. (Lopez v. DBP, 2014)

Art. 1592, NCC- SALE BY A CO-OWNER

A sale by a co-owner of a definite portion of an undivided property is void. At the time of

the alleged sale, the entire property was still held in common. The rules allow respondent to
sell his undivided interest in the co-ownership. However, a co-owner has no right to sell or
alienate a concrete, specific or determinate part of the thing owned in common, because his
right over the thing is represented by quota or ideal portion without any physical adjudication.
(Cabrera v. Isaac, 2014)
MACEDA LAW

When the Maceda law speaks of paying “at least two years of installments” in order for
the benefits under its Sec. 3 to become available, it refers to the buyer’s payment of two years
worth of the stipulated fractional, periodic payments due to the seller. When the buyer’s
payments fall short of the equivalent of two years’ worth of installments, the benefits that the
buyer may avail of are limited to those under Sec. 4. (Orbe v. Filinvest Land, 2017)

Section 3. In all transactions or contracts involving the sale or financing of real estate on installment
payments, including residential condominium apartments but excluding industrial lots, commercial
buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as
amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least
two years of installments, the buyer is entitled to the following rights in case he defaults in the payment
of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace period
earned by him which is hereby fixed at the rate of one month grace period for every one year of
installment payments made: Provided, That this right shall be exercised by the buyer only once in every
five years of the life of the contract and its extensions, if any.

(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the
payments on the property equivalent to fifty per cent of the total payments made, and, after five years
of installments, an additional five per cent every year but not to exceed ninety per cent of the total
payments made: Provided, That the actual cancellation of the contract shall take place after thirty days
from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a
notarial act and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the
total number of installment payments made.

Section 4. In case where less than two years of installments were paid, the seller shall give the buyer
a grace period of not less than sixty days from the date the installment became due.

If the buyer fails to pay the installments due at the expiration of the grace period, the seller may
cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act.

Section 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to
another person or to reinstate the contract by updating the account during the grace period and before
actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

REDEMPTION

The period to redeem a property sold in an extrajudicial foreclosure sale is not extendible.
A pending action to annul the foreclosure sale does not toll the running of the one year period
of redemption under RA 3135. (Mahinay v. Dura Tire, 2017)

ASSIGNMENT OF CREDIT

Through the assignment of credit, the new creditor is entitled to the rights and remedies
available to the previous creditor. Moreover, under Art. 1627, NCC, the assignment of a credit
includes all the accessory rights, such as a guaranty, mortgage, pledge or preference. (MBTC v.
G &P Builders, 2015)
LEASE

The disconnection of electrical service over the leased premises on May 14, 2004 was not
just an act of physical disturbance but one that is meant to remove respondents from the
leased premises and disturb their legal possession as lessees. Ordinarily, this would have
entitled respondents to invoke the right accorded by Art 1658, NCC. However, this rule will not
apply in the present case because the lease had already expired when petitioner requested for
the temporary disconnection of electrical service.

Art. 1658. The lessee may suspend the payment of the rent in case the lessor fails to make the necessary
repairs or to maintain the lessee in peaceful and adequate enjoyment of the property leased.

Here, instead of surrendering the premises to petitioner, respondents unlawfully withheld

possession of the property. Respondents continued to stay in the premises until they moved to
their new residence. At that point, petitioner was no longer obligated to maintain respondents
in the peaceful possession and adequate enjoyment of the lease for the entire duration of the
contract. (Racelis v. Javier, 2018)

CONTRACT FOR A PIECE OF WORK

Art. 1724. The contractor who undertakes to build a structure or any other work for a
stipulated price, in conformity with plans and specifications agreed upon with the land owner,
can neither withdraw from the contract nor demand an increase in the price on account of the
higher cost of labor or materials, save when there has been a change in the plans and
specifications, provided: (1) such change has been authorized by the proprietor in writing; and
(2) the additional price to be paid to the contractor has been determined in writing by both
parties. (Metro Bottled Water Corp. v. Andrada Construction, 2019)

AGENCY

In a contract of agency, a person binds himself to render some service or to do something

in representation or on behalf of another, with the consent or authority of the latter.
Furthermore, Art. 1884, NCC, provides that the agent is bound by his acceptance to carry out
the agency, and is liable for the damages which, through his non-performance, the principal
may suffer.

A bilateral contract that depends upon the agency is considered an agency coupled with
an interest, making it an exception to the general rule of revocability at will. Here, in the
promissory note with chattel mortgage, the Spouses Briones authorized petitioner to claim,
collect, and apply the insurance proceeds towards the full satisfaction of their loan if the
mortgaged vehicle were lost or damaged. Clearly, a bilateral contract existed between the
parties, making the agency irrevocable. (International Exchange Bank v. Performance Foreign
Exchange Corp, 2018)

A principal who gives broad and unbridled authorization to his or her agent cannot later
hold third persons who relied on that authorization liable for damages that may arise from the
agent’s fraudulent acts. (Cancio v. Performance Foreign Exchange Corp., 2018)

DOCTRINE OF APPARENT AUTHORITY.

When a principal intentionally or negligently clothes its agent with apparent authority to
act in its behalf, it is estopped from denying its agent’s apparent authority as to innocent third
parties who dealt with this agent in good faith. (Calubad v. Ricarcen Devt. Corp., 2017)
COMPROMISE

A judicial compromise agreement is in the nature of both an agreement between the

parties and a judgment on the merits. It is covered by the Civil Code provisions on contracts. It
can be avoided on grounds that may avoid an ordinary contract (e.g., it is not in accord with the
law; lack of consent by a party; and existence of fraud or duress). (Gadrinab v. Salamanca, 2014)

A conditional settlement of a judgment award may be treated as a compromise

agreement and a judgment on the merits of the case if it turns out to be highly prejudicial to
one of the parties. Here, the parties entered into a compromise agreement when they executed
a Conditional Satisfaction of Judgment Award. While the general rule is that a valid compromise
agreement has the power to render a pending case moot and academic, being a contract, the
parties may opt to modify the legal effects of their compromise agreement to prevent the
pending case from becoming moot. (Magsaysay Maritime Corp. v. De Jesus, 2017)

Note that, Courts can neither amend nor modify the terms and conditions of a
compromise validly entered into by the parties. A writ of execution that varies the respective
obligations of the parties under a judicially approved compromise agreement is void. (Chiquita
Brands Inc. v. Omelio, 2017)

INTEREST

The right to interest arises only by virtue of a contract or by virtue of damages for delay or
failure to pay the principal loan on which interest is demanded. Interest fixed by the parties for
the use or forbearance of money is referred to as monetary interest.

Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates
that no interest shall be due unless it has been expressly stipulated in writing. Thus, the
payment of monetary interest is allowed only if: (1) there was an express stipulation for the
payment of interest; and (2) the agreement for the payment of interest was reduced in writing.

There are instances in which an interest may be imposed even in the absence of express
stipulation, verbal or written, regarding payment of interest. This is what is referred to as
compensatory interest. Article 2209 of the Civil Code states that if the obligation consists in the
payment of a sum of money, and the debtor incurs delay, a legal interest of 12% (now 6% ) per
annum may be imposed as indemnity for damages if no stipulation on the payment of interest
was agreed upon. Likewise, Article 2212 of the Civil Code provides that interest due shall earn
legal interest from the time it is judicially demanded, although the obligation may be silent on
this point. The interest under those two instances may be imposed only as a penalty or
damages for breach of contractual obligations.

Whether a penalty charge is reasonable or iniquitous is addressed to the sound discretion

of the courts and determined according to the circumstances of the case. The reasonableness
or unreasonableness of a penalty would depend on such factors as the type, extent and
purpose of the penalty, the nature of the obligation, the mode of breach and its consequences,
the supervening realities, the standing and relationship of the parties. (ERME Industries v.
Security Bank, 2017)
UNJUST ENRICHMENT

Unjust enrichment has two (2) elements: (a) person is benefited without a real or valid
basis or justification and (b) the benefit was at another person’s expense or damage. (Rodriguez
v. Your Own Dev”t. Corp., 2018). Here, the checks issued were deposited into the wrong
account. Accordingly, Metrobank, as the drawee bank, upon learning that the checks were not
paid to the correct payees, returned the full amounts of the checks.

NEGLIGENCE

Negligence may either result in culpa aquiliana or culpa contractual. Culpa aquiliana is the
"the wrongful or negligent act or omission which creates a vinculum juris and gives rise to an
obligation between two persons not formally bound by any other obligation," and is governed
by Article 2176 of the Civil Code:

Article 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict and is governed by the provisions of
this Chapter.

Negligence in culpa contractual, on the other hand, is "the fault or negligence incident in
the performance of an obligation which already-existed, and which increases the liability from
such already existing obligation."[48] This is governed by Articles 1170 to 1174 of the Civil Code:

Article 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for
damages.

Article 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of
an action for future fraud is void.

Article 1172. Responsibility arising from negligence in the performance of every kind of
obligation is also demandable, but such liability may be regulated by the courts, according to the
circumstances.

Article 1173. The fault or negligence of the obligor consists in the omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows bad faith, the provisions of articles
1171 and 2201, paragraph 2, shall apply.

If the law or contract does not state the diligence which is to be observed in the performance,
that which is expected of a good father of a family shall be required.

Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared
by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall
be responsible for those events which could not be foreseen, or which, though foreseen, were
inevitable.

Actions based on contractual negligence and actions based on quasi-delicts differ in terms
of conditions, defenses, and proof. They generally cannot co-exist. Once a breach of contract is
proved, the defendant is presumed negligent and must prove not being at fault. In a quasi-
delict, however, the complaining party has the burden of proving the other party's negligence.

In quasi-delict, negligence is direct, substantive and independent, while in breach of

contract, negligence is merely incidental to the performance of the contractual obligation;
there is a pre-existing contract or obligation, In quasi-delict, the defense of "good father of a
family" is a complete and proper defense insofar as parents, guardians and employers are
concerned, while in breach of contract, such is not a complete and proper defense in the
selection and supervision of employees. In quasi-delict, there is no presumption of negligence
and it is incumbent upon the

injured party to prove the negligence of the defendant, otherwise, the former's complaint will
be dismissed, while in breach of contract, negligence is presumed so long as it can be proved
that there was breach of the contract and the burden is on the defendant to prove that there
was no negligence in the carrying out of the terms of the contract; the rule of respondeat
superior is followed.

Art. 2176, NCC, does not apply when the party’s negligence occurs in the performance of
an obligation. The negligent act would give rise to a quasi-delict only when it may be the basis
for an independent action were the parties not otherwise bound by a contract. If a contracting
party's act that breaches the contract would have given rise to an extra-contractual liability had
there been no contract, the contract would be deemed breached by a tort, and the party may
be held liable under Article 2176 and its related provisions.

The existence of a contract between the parties does not bar the commission of a tort by
the one against the order and the consequent recovery of damages therefor. Indeed, this view
has been in effect, reiterated in a comparatively recent case. Thus, in Air France vs. Carrascoso,
involving an airplane passenger who, despite his first-class ticket, had been illegally ousted from
his first-class accommodation, and compelled to take a seat in the tourist compartment, was
held entitled to recover damages from the air-carrier, upon the ground of tort on the latter's
part, for, although the relation between a passenger and the carrier is "contractual both in
origin and nature . . . the act that breaks the contract may also be a tort".

However, if the act complained of would not give rise to a cause of action for a quasi-
delict independent of the contract, then the provisions on quasi-delict or tort would be
inapplicable. (Orient Freight v. Keihen-everett, 2017)

An electric distribution company is a public utility presumed to have the necessary

expertise and resources to enable a safe and effective installation of its facilities. Absent an
indication of fault or negligence by other actors, it is exclusively liable for fires and other
damages caused by its haphazardly installed posts and wires. (Visayan Electric v. Alfeche, 2017)

Art. 2180, NCC- VICARIOUS LIABILITY

The burden of proving that a negligent act of an employee was performed within the
scope of his or her assigned tasks rests with the plaintiff. When the plaintiff has discharged this
burden, the presumption that the employer was negligent arises, and the employer must put
forward evidence showing that he or she had exercised the due diligence of a good father of a
family in the selection and supervision of the employee. Failing to dispute this presumption
renders the employer solidarily liable with employee for the quasi-delict. Though vicarious, the
liability of employers under Art. 2180 is personal and direct. (Imperial v. Heirs of Bayaban,
2018)

In cases where both the registered owner rule and Art. 2180 apply, the plaintiff must first
establish that the employer is the registered owner of the vehicle in question. Once the plaintiff
successfully proves ownership, there arises a disputable presumption that the requirements of
Art. 2180 have been proven. As a consequence, the burden of proof shifts to the defendant to
show that no liability under Art. 2180 has arisen. (Caravan Travel v. Abejar, 2016)

DAMAGES
 Actual damages are compensation for an injury that will put the injured party in a position
where it was before the injury. They pertain to such injuries or losses that are actually sustained
and susceptible of measurement. Actual damages constitute compensation for sustained
pecuniary loss. Nevertheless, a party may only be awarded actual damages when the pecuniary
loss he or she had suffered was duly proven.

Actual damages cannot be presumed and courts, in making an award, must point out
specific facts which could afford a basis for measuring whatever compensatory or actual
damages are borne. An award of actual damages is dependent upon competent proof of the
damages suffered and actual amount thereof. The award must be based on evidence
presented, not on the personal knowledge of the court; and certainly not on flimsy, remote,
speculative and unsubstantial proof. (Guy v. Tulfo, 2019)

Reward for Loss of Earning Capacity. Art. 2206 provides that the amount of actual
damages for death caused by a crime or quasi-delict shall be at least 50,000 even though there
may have been mitigating circumstances. In addition, the defendant shall be liable, among
others, for the loss of the earning capacity of the deceased, and the indemnity shall be paid to
the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court,
unless the deceased on account of permanent physical disability not caused by the defendant,
had no earning capacity at the time of his death. The indemnity for the deceased’s lost earning
capacity is meant to compensate the heirs for the income they would have received had the
deceased continued to live. (Torreon v. Aparra, 2017)

Liability for damages in contractual obligations. Articles 2200 and 2201 of the Civil Code
provide for the liability for damages in contractual obligations:

Article 2200. Indemnification for damages shall comprehend not only the value of the loss
suffered, but also that of the profits which the obligee failed to obtain.

Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in
good faith is liable shall be those that are the natural and probable consequences of the breach of
the obligation, and which the parties have foreseen or could have reasonably foreseen at the time
the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to the non-performance of the obligation.

Article 2200 of the Civil Code establishes the rule that prospective profits may be
recovered as damages, while article 2201 of the same Code provides that the damages
recoverable for the breach of obligations not originating in fraud (dolo) are those which were or
might have been foreseen at the time the contract was entered into.

The general rule is that a plaintiff may recover compensation for any gain which he can
make it appear with reasonable certainty the defendant's wrongful act prevented him from
acquiring.

In the letter dated June 6, 2002, Matsushita pre-terminated its In-House Brokerage
Service Agreement with plaintiff Keihin for violation of the terms of said contract. Its President,
KenGo Toda, stated that because of the incident that happened on April 17, 2002 involving
properties which the plaintiff failed to inform them, Matsushita has lost confidence in plaintiff's
capability to handle its brokerage and forwarding requirements. There was clearly a breach of
trust as manifested by plaintiff's failure to disclose facts when it had the duty to reveal them
and it constitutes fraud. Moreover, the negligence of plaintiff personnel cannot be tolerated as
Matsushita is bound to protect the integrity of the company.

It could be reasonably foreseen that the failure to disclose the true facts of an incident,
especially when it turned out that a crime might have been committed, would lead to a loss of
trust and confidence in the party which was bound to disclose these facts. Petitioner caused the
loss of trust and confidence when it misled respondent and Matsushita into believing that the
incident had been irresponsibly reported and merely involved a stalled truck. Thus, petitioner is
liable to respondent for the loss of profit sustained due to Matsushita's termination of the In-
House Brokerage Service Agreement.(Orient Freight v. Keihen-Everett, 2017)

Moral damages. The amount of moral damages that courts may award depends upon the
set of circumstances for each case. There is no fixed standard to determine the amount of
moral damages to be given. Courts are given the discretion to fix the amount to be awarded in
favor of the injured party, so long as there is sufficient basis for awarding such amount.

Moral damages may be recovered in cases of libel, slander or defamation. (Guy v. Tulfo)

Withholding the disability rating from an employee can entitled the latter to moral
damages. By withholding such disability rating from employee, the latter was compelled to seek
out opinion from his private doctors thereby causing him mental anguish, serious anxiety, and
wounded feelings, thus entitling him to moral damages. ( Sharpe Sea Personnel Inc. v.
Mabunay, 2017)

There Is no standing doctrine that corporations are, as a matter of right, entitled to moral
damages. The existing rule is that moral damages are not awarded to a corporation since it is
incapable of feelings or mental anguish. Exceptions, if any, only apply pro hac vice. “for this
occasion only” (BNI Management Corp. v. Uy, 2019)

Exemplary damages may be awarded even in the absence of aggravating circumstances, It

may be awarded where the circumstances of the case show the highly reprehensible or
outrageous conduct of the offender. (Guy v. Tulfo)

Exemplary damages, which cannot be recovered as a matter of right, may not be awarded
if no moral, temperate or compensatory damages have been granted. Since exemplary
damages cannot be awarded, the award of attorney’s fees should likewise be deleted.
(MERALCO v. Nordec Phils., 2018)

Temperate damages. Under Art. 2224, NCC, temperate damages may be awarded when
there is finding that some pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be proved with certainty. The amount of temperate damages to be awarded
in each case is discretionary upon the courts as long as it is reasonable under the
circumstances. Thus, where the complainant clearly suffered some pecuniary loss as a result of
the burning of his nipa hut. However, he failed to substantiate the actual damages that he
suffered. Nevertheless, he is entitled to be indemnified under the circumstances. (Bacerra v.
People, 2017)

LAND REGISTRATION

INCLUSION OF LANDS IN THE COMPREHENSIVE AGRARIAN REFORM ACT.

The Comprehensive Agrarian Reform Law covers all public and private agricultural lands
including other lands of the public domain suitable for agriculture, regardless of tenurial
arrangement and commodity produced. However, a maximum of five hectares of the
landowner’s compact or continuous landholdings may not be distributed to qualified
beneficiaries as it is within the landowner’s rights to retain this area. (Salas v. Cabungcal, 2017)
 The DAR has taken cognizance of cases involving either the issuance or cancellation of
certificates of land ownership award and emancipation patents. Cases involving registered
certificates of land ownership awards, emancipation patents, and titles emanating from them
are agrarian reform disputes, of which the DAR Adjudication Board takes cognizance.
Meanwhile, cases involving unregistered ones are agrarian law implementation cases, put
under the jurisdiction of the Regional Directors and the Secretary of the DAR. (Secretary of DAR
v. Heirs of Abucay, 2019)

RECLASSIFICATION OF PUBLIC LAND.

Public land remains inalienable unless it is shown to have been reclassified and alienated
to a private person. An applicant has the burden of proving that the public land has been
classified as alienable and disposable. To do this, the applicant must show a positive act from
the government declassifying the land from the public domain and converting it into an
alienable and disposable land. (Republic v. Spouses Go, 2017)

ALIENABLE AND DISPOSABLE LAND.

Although respondents were able to present a CENRO certification, a DENR-CENRO report

with the testimony of the DENR officer who made the report, and the survey plan showing that
the property is already considered alienable and disposable, these pieces of evidence are still
not sufficient to prove that the land sought to be registered is alienable and disposable. Absent
the DENR Secretary’s issuance declaring the land alienable and disposable, the land remains
part of the public domain. (Republic v. Javier, 2018)

PUBLIC LAND; HOMESTEAD PATENT.

In classifying lands of the public domain as alienable and disposable, there must be a
positive act from the government declaring them as open for alienation and disposition. Only
lands of the public domain which have been classified as public agricultural lands may be
disposed of through homestead settlement.

A homestead patent is a gratuitous grant from the government designed to distribute

disposable agricultural lots of the State to land-destitute citizens for their home and cultivation.
Being a gratuitous grant, a homestead patent applicant must strictly comply with the
requirements laid down by the law.

The issuance of the homestead patent pursuant to the Public Land Act did not by itself
reclassify a particular lot into alienable and disposable public agricultural land. As a rule, a
certificate of title issued pursuant to a homestead patents partakes the nature of a certificate of
title issued through judicial proceeding and becomes incontrovertible upon the expiration of
one year. However, this is subject to the proviso that the land is a disposable public land within
the contemplation of the Public Land Law.

When the property covered by a homestead patent is part of the inalienable land of the
public domain, the title issued pursuant to it is null and void, and the rule on indefeasibility of
title will not apply. The State may still file an action for reversion of a homestead land that was
granted in violation of the law. (Republic v. Heirs of Daquer, 2018)

REQUIREMENT OF POSSESSION

The period of possession prior to the declaration that land is alienable and disposable
agricultural land is included in the computation of possession for purposes of acquiring
registration rights over a property if the land has already been declared as such at the time of
the application for registration. (AFP Retirement v. Republic, 2014)
 Possession is broader than occupation because it includes constructive possession. When,
therefore the law adds the word occupation, it seeks to delimit the all encompassing effect of
constructive possession. Taken together with the words open, continuous, exclusive and
notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his
possession must not be a mere fiction. Actual possession of a land consists in the manifestation
of acts of dominion over it of such a nature as a party would naturally exercise over his own

property. Moreover, to qualify as open, continuous, exclusive, and notorious possession and
occupation, the possession must be of the following character. Possession is open when it is
patent, visible, apparent, notorious and not clandestine. It is continuous when uninterrupted,
unbroken, and not intermittent or occasional; exclusive when the adverse possessor can show
exclusive dominion over the land and an appropriation of it to his own use and benefit; and
notorious when it is conspicuous that it is generally known and talked of by the public or the
people in the neighborhood. (Canlas v. Republic, 2014)

IMPERFECT TITLE.

When an applicant in the registration of property proves his or her open, continuous,
exclusive, and notorious possession of a land for the period required by law, he or she has
acquired an imperfect title that may be confirmed by the State. The State may not, in the
absence of controverting evidence and in a pro forma opposition, indiscriminately take a
property without violating due process. (Republic v. Spouses Noval, 2017)

A court confronted with an application for judicial confirmation of imperfect title cannot
casually rely on the expedient aphorism that real property tax declarations are not conclusive
evidence of ownership as a catch-all key to resolving the application. Instead, it must carefully
weigh competing claims and consider the totality of evidence, bearing in mind the recognition
in jurisprudence that payment of real property taxes is, nevertheless, ‘good indicia of
possession in the concept of an owner, and when coupled with continuous possession, it
constitutes strong evidence of title.’(Kawayan Hills v. CA, 2018)

FREE PATENT.

The burden of proving that respondent employed fraud in her free patent application falls
on petitioners who made this assertion. The law allowing fraud as a ground for a review or
reopening of a land registration decree contemplates actual and extrinsic fraud. Actual fraud
proceeds from an intentional deception practiced by means of the misrepresentation or
concealment of a material fact. Extrinsic fraud is employed to deprive parties of their day in
court and thus prevent them from asserting their right to the property registered in the name
of the applicant. (Mendoza v. Valte, 2015)

A judgment approving the subdivision of a parcel of land does not preclude other parties
with a better right from institution free patent applications over it. Entitlement to agricultural
lands of the public domain requires a clear showing of compliance with the provisions of CA 141
as amended, otherwise known as the Public Land Act. (Taar v. Lawan, 2017)

INDEFEASIBILITY OF A CERTIFICATE OF LAND OWNERSHIP AWARD;

PROHIBITION AGAINST COLLATERAL ATTACK.

A certificate of land ownership award becomes indefeasible and incontrovertible upon

the expiration of one year from the date of registration with the Office of the Registry of Deeds.
Similar to a certificate of title issued in registration proceedings, the registration of a certificate
of land ownership places the subject land under the operation of the Torrens system. Once
under the Torrens system, a certificate of land ownership award or certificate of title may only
be attacked through a direct proceeding before the court. (Padillo v. Villanueva, 2018)

DIRECT AND COLLATERAL ATTACK.

The attack is considered direct when the object of an action is to annul or set aside such
proceeding, or enjoin its enforcement. Conversely, an attack is indirect or collateral when, in an
action to obtain a different relief, an attack on the proceeding is nevertheless made as an
incident thereof. Such action to attack a certificate of title may be an original action or a
counterclaim, in which a certificate of title is assailed as void. (Heirs of Cascayan v. Spouses
Gumallaoi, 2017)

TORRENS TITLE.

The presumption that a holder of a torrens title is an innocent purchaser for value is
disputable and may be overcome by contrary evidence. Once a prima facie case disputing the
presumption is established, the adverse party cannot simply rely on the presumption of good
faith and must put forward evidence that the property was acquired without notice of any
defect in its title. (Sindophil v. Republic, 2018)

MORTGAGEE IN GOOD FAITH.

The rule on innocent purchasers or mortgages for value is applied more strictly when the
purchaser or mortgagee is a bank. Banks are expected to exercise higher degree of diligence in
their dealings, including those involving lands. Banks may not rely simply on the face of the
certificate of title. (LBP v. Musni, 2017)

ADVERSE CLAIM.

The purpose of annotations of adverse claims on title is to apprise the who world of the
controversy involving property. These annotations protect the adverse claimant’s rights before
or during the pendency of a case involving a property. It notifies third persons that rights that
may be acquired with respect to a property are subject to the results of the case involving it.
(Cathay Metal v. Laguna West, 2014)

LIEN.

A lien, until discharged, follows the property. Hence, when petitioner acquired the
property, the bank also acquired the liabilities attached to it, among them, being the tax liability
to the Bureau of Internal Revenue. (DBP v. Clarges Corp., 2016)

ASSURANCE FUND.

The Assurance Fund is part of our property registration system coverd by Pd 1529. Its
purpose is to protect individuals who rely on a property’s certificate of title as evidence of
ownership. A claim from the fund must meet the strict requirements of PD 1529. (Register of
Deeds v. Anglo Sr., 2015)