Civil Law - J. Hernando

Case Digests
PONENCIAS OF JUSTICE HERNANDO

By: USTFCL Dean’s Circle for AY 2022-2023
Civil Law
Case Digests
University of Santo Tomas
Faculty of Civil Law
Dean's Circle for AY 2022-2023
JESSICA P. MAITIM a.k.a. "JEAN GARCIA", petitioner,

vs. MARIA THERESA P. AGUILA, respondent.
G.R. No. 218344. March 21, 2022, SECOND DIVISION (Hernando, J.)
DOCTRINE
Res ipsa loquitur is literally translated as "the thing or the transaction speaks for itself."
The doctrine res ipsa loquitur means that "where the thing which causes injury is shown to be
under the management of the defendant, and the accident is such as in the ordinary course of
things does not happen if those who have the management use proper care, it affords
reasonable evidence, in the absence of an explanation by the defendant, that the accident arose
from want of care." It is simply "a recognition of the postulate that as a matter of common
knowledge and experience, the very nature of certain types of occurrences may justify an
inference of negligence on the part of the person who controls the instrumentality causing the
injury in the absence of some explanation by the defendant who is charged with negligence. It
is grounded in the superior logic of ordinary human experience and on the basis of such
experience or common knowledge, negligence may be deduced from the mere occurrence of the
accident itself.
When an injury is caused by the negligence of the employee, there instantly arises a
presumption of law that there was negligence on the part of the master or employer either in
the selection of the servant or employee, or in supervision over him after selection or both. The
liability of the employer under Article 2180 is direct and immediate; it is not conditioned upon
prior recourse against the negligent employee and a prior showing of the insolvency of such
employee.
FACTS
Petitioner Jessica Maitim and respondent Maria Theresa P. Aguila were residents of
Grand Pacific Manor Townhouse. Their respective townhouse units are approximately nine
meters apart, separated only by a driveway jointly used by the townhouse unit owners.
On April 25, 2006, Maitim was on board her vehicle, a Ford W-150 Chateau Wagon
registered under her name, which was being driven by Restituto Santos, her driver for 12
years. While they were driving along the common driveway, Angela, the six-year old
daughter of Aguila, was sideswiped by Maitim's vehicle. Angela was dragged for about three
meters resulting to her right leg being fractured.
Maitim and Santos did not immediately take Angela to the hospital after the incident;
she was only brought to St. Luke's Medical Center after the insistence of Angela's
grandmother, Lirio Aguila. Angela was diagnosed to have suffered swelling, hematoma,
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multiple abrasions, and displaced, complete fracture on the right leg. Thus, she underwent
operation at Asian Hospital and was in a wheelchair from April 25, 2006 to July 18, 2006.
The incident was referred to the barangay for conciliation but only Aguila appeared.
At this point, Aguila's actual expenses amounted to P169,187.32. Aguila then sent demand
letters to Maitim and Santos to no avail. Thus, Aguila filed the instant action for damages
based on quasi-delict before the RTC.
In her defense, Maitim denied Aguila's accusations and claimed that on, while she was
in her vehicle being driven slowly by Santos, Angela suddenly came running and due to this,
the latter's right leg was sideswiped and got fractured. Maitim alleged that her vehicle was
covered by a comprehensive insurance that included third-party liability, but she was not
able to file for insurance claim due to Aguila's refusal to submit the necessary documents, i.e.,
police report, medical report, and receipts of actual expenses. Furthermore, Maitim
maintained that Santos, who was her driver for 12 years, was driving with care at the time
of the incident, and thus, Maitim should not be made liable for vicarious liability because she
exercised due diligence in the selection and supervision of her employee.
RTC: RTC rendered judgment in favor of Aguila. The RTC held that Santos was presumed to
be negligent, applying the doctrine of res ipsa loquitur, and that Maitim was vicariously liable
for her failure to prove that she exercised due diligence in the selection and supervision of
her employee, Santos.
CA: CA denied Maitim's appeal and affirmed the RTC decision in toto. Maitim and Santos are
solidarily liable for damages, and that there was no contributory negligence on the part of
Aguila and her daughter. Aguila did not commit any negligence in allowing Angela to exit
their door towards the car garage since they were still within the premises of their residence,
and not on the street where vehicles ordinarily drive by. Moreover, the CA cited the case
of Jarco Marketing Corporation v. CA which established that children under nine years of age
are conclusively presumed in our jurisdiction to be incapable of contributory negligence.
This supported its conclusion that Angela, being merely six-years old at the time of the
incident, cannot be liable for contributory negligence as she is conclusively presumed to be
incapable of contributory negligence.
ISSUES
1. Whether Maitim is solidarily liable under the doctrine of vicarious liability.

2. Whether there was contributory negligence on the part of Aguila.
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RULING
1. YES. First, the RTC correctly applied the doctrine of res ipsa loquitur when it ruled that
Santos should be presumed negligent, and thus, had the burden of proving such presumption
otherwise.
In UPCB General Insurance Co. v. Pascual Liner, Inc., this Court reiterated the
applicability of res ipsa loquitur in vehicular accidents, wherein it is sufficient that the
accident itself be established, and once established through the admission of evidence,
whether hearsay or not, the rule on res ipsa loquitur already starts to apply.
As applied in the instant case, the fact that Angela was hit by a moving vehicle owned
by Maitim and driven by Santos is undisputed, and the same is supported by the Traffic
Accident Investigation Report dated April 25, 2006. The fact that Angela sustained injuries
in her collision with Maitim's vehicle is also not in question. Thus, since it is clearly
established that there was a vehicular accident that caused injuries, then the rule on res ipsa
loquitur shall apply. An inference of negligence on the part of Santos, the person who controls
the instrumentality (vehicle) causing the injury, arises, and he has the burden of presenting
proof to the contrary.
As will be discussed below, this Court finds that the lower courts justly held that
Santos failed to discharge this burden and consequently, the presumption of negligence
lodged towards him shall stand.
Ordinarily, driving inside a relatively narrow driveway shared by two houses would
not result to children being hit and their bones fractured. This is because a reasonably
prudent man, especially an alleged experienced driver, would have foreseen that the
residents of the houses may exit towards the common driveway anytime, including young
and playful children who may suddenly run across or along said driveway. Thus, a
reasonably prudent man is expected to drive with utmost caution when traversing the said
driveway, even if given a "clear" signal by a guard.
In fact, Maitim herself admits that there is a natural tendency to drive at a slow speed
when in a narrow driveway. However, her allegation that Santos was driving at a slow speed,
which is admittedly "natural," contradicts the circumstances surrounding Angela's injury. If
Santos truly drove slowly and with care, he should have been able to have ample opportunity
to brake or otherwise steer the vehicle out of trouble, both of which did not happen in this
case.
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Moreover, even if a running child were to get hit by a slow-moving vehicle, it is highly
unlikely that the same would result to injuries so severe that it required surgery and
afterwards being confined to a wheelchair for more than two months.
In sum, there is nothing natural about a child getting dragged for three meters and
her leg being completely fractured by a slow-moving vehicle, especially if a reasonably
prudent man was driving the vehicle with care. Thus, both the RTC and CA were right in
finding negligence on the part of Santos.
Furthermore, the presumption of negligence on the part of Santos was not overcome
by Maitim, who presented no rebuttal evidence and instead merely alleged that Santos was
driving with due care and was not speeding. This Court has repeatedly emphasized that
allegations, on their own, have no probative value and cannot be considered as proof.
Therefore, since Maitim failed to present any evidence to the contrary, the presumption of
negligence on the part of Santos stands and is deemed conclusive.
Maitim failed to prove that she

was not vicariously liable in this
case.
In relation to Article 2176, Article 2180 of the Civil Code provides the basis for the
concept of vicarious liability in our jurisdiction:
Article 2180. The obligation imposed by article 2176 is demandable not only for one's
own acts or omissions, but also for those of persons for whom one is responsible.
Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business or industry.
Jurisprudence has established that under Article 2180, "when an injury is caused by
the negligence of the employee, there instantly arises a presumption of law that there was
negligence on the part of the master or employer either in the selection of the servant or
employee, or in supervision over him after selection or both." "The liability of the employer
under Article 2180 is direct and immediate; it is not conditioned upon prior recourse against
the negligent employee and a prior showing of the insolvency of such employee."
Applying these concepts to the present case, the finding of negligence against Santos
gave rise to the presumption of negligence on the part of Maitim in the latter's selection
and/or supervision of the former. Therefore, it is incumbent upon Maitim to prove that she
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exercised the diligence of a good father of a family in the selection and supervision of her
employee, Santos.
In her petition, Maitim stubbornly insists that she cannot be held vicariously liable
because she alleges that Santos has an unblemished 12-year driving record, and that before
Santos was hired, he was required to submit a police clearance and an NBI clearance.
However, she presented no evidence to corroborate or support her bare, self-serving
allegations. This Court has constantly held that bare allegations cannot be considered as
proof, especially when, such as in this case, the records are barren of any evidence that would
support such allegations.
The quantum of proof in cases involving vicarious liability has been established by
jurisprudence.
In the selection of prospective employees, employers are required to examine them

as to their qualifications, experience and service records. In the supervision of employees,
the employer must formulate standard operating procedures, monitor their implementation
and impose disciplinary measures for the breach thereof. To fend off vicarious liability,
employers must submit concrete proof, including documentary evidence, that they complied
with everything that was incumbent on them.
Due diligence in the supervision of employees on the other hand, includes the
formulation of suitable rules and regulations for the guidance of employees and the issuance
of proper instructions intended for the protection of the public and persons with whom the
employer has relations through his or its employees and the imposition of necessary
disciplinary measures upon employees in case of breach or as may be warranted to ensure
the performance of acts indispensable to the business of and beneficial to their employer. To
this, we add that actual implementation and monitoring of consistent compliance with said
rules should be the constant concern of the employer, acting through dependable
supervisors who should regularly report on their supervisory functions.
In order that the defense of due diligence in the selection and supervision of
employees may be deemed sufficient and plausible, it is not enough to emptily invoke the
existence of said company guidelines and policies on hiring and supervision. As the
negligence of the employee gives rise to the presumption of negligence on the part of the
employer, the latter has the burden of proving that it has been diligent not only in the
selection of employees but also in the actual supervision of their work. The mere allegation
of the existence of hiring procedures and supervisory policies, without anything more, is
decidedly not sufficient to overcome such presumption.
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Given the above, Maitim's attempt to deflect liability clearly falls short as she was not
able to present concrete proof that she exercised the care and diligence of a good father of a
family in the selection and supervision of her employee, Santos. Therefore, the presumption
of negligence against her stands, and she must be held solidarily liable with Santos.
2. NO. There was no contributory negligence on the part of Aguila.
The driveway was a common area to both parties' townhouse units, which meant that
the driveway is as much a part of Aguila's residence as it is of Maitim's. It was also found that
Angela was not just running or loitering around but was actually on her way to board their
car. Given these circumstances, this Court sees no negligence on the part of Aguila when she
allowed Angela to exit their door and walk towards their garage. There is a reasonable
expectation of safety, considering that the driveway is still within the premises of their
residence and not on the street where vehicles ordinarily drive by. Moreover, given the
location and relatively narrow profile of the driveway, it can be reasonably expected that
anyone who traverses such driveway with a motor vehicle would drive slowly and with
utmost caution.
Therefore, there being no contributory negligence on the part of Angela and Aguila,
and with Maitim and Santos being unable to rebut the presumption of negligence lodged
towards them in their respective capacities, this Court sees no reason to depart from the
findings of the lower courts finding Maitim solidarily liable with Santos.
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LUCILA PURIFICACION, * petitioner, vs. CHARLES T. GOBING and ATTY. JAIME

VILLANUEVA, respondents.
G.R. No. 191359, November 11, 2020, THIRD DIVISION (Hernando, J.)
DOCTRINE
Disturbance compensation, in cash or in kind or both, shall be paid by the landowner or

the developer, as may be appropriate, to tenants, farmworkers, as bona fide occupants to be
affected by the conversion in such amounts or under such terms as may be mutually agreed
upon between them and the landowner or the developer, but which shall not be less than five
(5) times the average of the gross harvests on their landholding during the last five (5)
preceding calendar years, pursuant to Section 36 of RA 3844, as amended by Section 7 of RA
6389, particularly in the case of tenants.
FACTS
A 35,882 square meter parcel of agricultural land, located at Anabu I, Imus, Cavite,
was formerly owned by Elmer Virgil Villanueva, Francis Andrew Villanueva, Mine-O Jeno
Villanueva and Paul Frederick Villanueva (former landowners).
Petitioner Lucila and her late husband, Jacinto Purificacion (collectively, Purificacion
spouses) were tenants in the foregoing subject lot.
In May 1993, respondent Atty. Villanueva, representing the former landowners of the
subject lot, sold 33,882 square meters of the subject lot to respondent Charles Gobing of
Charles Builders, Inc. Respondent Gobing then converted the purchased lot into a residential
subdivision called Gold Lane Subdivision.
On July 1, 1993, Atty. Villanueva paid the Purificacion spouses a disturbance

compensation amounting to P1,046,460.00. However, Lucila claimed that in addition to the
foregoing amount, she and her late husband had a mutual agreement with Atty. Villanueva
and Gobing (collectively, respondents) that they will relinquish their tenancy rights over the
subject lot, except the 1,000-square meter portion where their house is located, as part
of the disturbance compensation. To support her claim, Lucila presented the following as
evidence: (a) May 20, 1993 Letter; and (b) an unnotarized Malayang Salaysay. However,
Lucila claimed that respondents did not fulfill their promise to give them 1,000 square
meters of the subject lot. Instead, Gobing demanded Lucila to vacate the land.
On January 3, 2000, Lucila filed a Complaint for Disturbance Compensation. Lucila

asserted that she and her late husband agreed to surrender their tenancy rights when the
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subject lot was sold because of their agreement with respondents that they will be paid
disturbance compensation in the amount of P1,000,000.00 plus a 1,000-square meter lot,
which is identified as Lot 13, Block 1 of the approved subdivision plan, covered by TCT No.
T-463035, registered in the name of Charles Builders Co., Inc., represented by Gobing.
Respondents mainly argued that Lucila has no legal right to demand an additional
disturbance compensation of 1,000 square meters of land because she had already been well
compensated on July 1, 1993 in the amount of P1,046,460.00, which was more than the
amount she can legally claim for pursuant to DAR AO No. 1, series of 1999. Furthermore,
respondents countered that based on the Malayang Salaysay of the Purificacion spouses
themselves dated July 1, 1993, which was notarized on July 16, 1993, there was no mention
about a 1,000-square meter portion to be given to them.
Provincial Agrarian Reform Adjudicator (PARAD): Rendered a Decision in favor of

respondents.
Department of Agrarian Reform Adjudication Board (DARAB): The DARAB reversed the
PARAD's Order. The DARAB mainly held that: (a) the tenancy relation between Lucila and
the owner of the subject lot has been severed when the land she once tenanted was
converted from agricultural into non-agricultural land (i.e., residential land). Thus, the
essential requisite of tenancy, wherein the land subject of the relationship must be an
agricultural land, is no longer present; (b) Section 36 (1) of RA No. 3844, as amended,
and DAR AO No. 1, series of 1999, hold that dispossessed tenants or displaced farmer-
beneficiaries in view of the conversion of the lands into non-agricultural use, ought to be paid
disturbance compensation equivalent to five times the average of the gross annual value of
the harvest for the last five preceding calendar years. Thus, respondents have complied with
their obligation to pay disturbance compensation since the P1,046,460.00 disturbance
compensation paid to Lucila in July 1, 1993 is more than the amount required by the law,
rules and regulations; (c) assuming for the sake of argument that Lucila is still entitled to
disturbance compensation of 1,000 square meters, the same has already prescribed. Section
38 of RA No. 3844 provides that any cause of action under said Code shall be barred if not
commenced within three years after such cause of action accrued. Lucila's cause of action
accrued in July 1993. However, it was only in January 2000, or after more than six years that
she instituted the action; and (d) the PARAD acted with grave abuse of discretion amounting
to lack or excess of jurisdiction when she issued the Order dated February 9, 2001. The
PARAD erred in ordering the surrender of TCT No. T-46035, which covers an area of 35,882
square meters, in the name of Charles Builders Co., Inc. and in directing the Register of Deeds
of Cavite to cancel the same and transfer it in the name of Lucila. Consequently, the PARAD
awarded to Lucila the entire area of the subject lot or the whole Goldlane Subdivision, and
yet Lucila was merely claiming for 1,000 square meters.
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CA: The appellate court upheld the findings of the DARAB. It noted that Lucila's action has
already prescribed. It also held that even if the petition were filed on time, it remains bereft
of merit since Lucila was already properly paid her disturbance compensation. The appellate
court further held that the additional compensation she is claiming on the basis of an alleged
promise by respondents was not substantially proved in evidence since the notarized July
16, 1993 Malayang Salaysay did not contain any stipulation regarding additional
compensation through a 1,000-square meter lot.
ISSUES
1. Whether Lucila’s action has prescribed.

2. Whether Lucila already received her own fair share of disturbance compensation.
RULING:
1. YES. Section 38 of RA No. 3844 (Agricultural Land Reform Code) provides:
SECTION 38. Statute of Limitations. — An action to enforce any cause of action under
this Code shall be barred if not commenced within three years after such cause of action
accrued.
Section 2, Rule 2 of the Rules of Court defines a cause of action as the "act or omission
by which a party violates a right of another." In the instant case, Lucila's cause of action arose
when the Purificacion spouses executed the notarized Malayang Salaysay dated July 1, 1993.
In the said document, the Purificacion spouses relinquished their tenancy rights in favor of
the former landowners in exchange for P1,046,460.00, representing their disturbance
compensation.
On January 3, 2000, or more than six years from the time they acknowledged having
received the foregoing amount as their disturbance compensation, Lucila filed the instant
complaint and claimed that the payment of the said disturbance compensation was
incomplete since Atty. Villanueva allegedly promised them a 1,000-square meter portion of
the subject lot as an additional disturbance compensation.
However, in view of the period prescribed under Section 38 of RA No. 3844, an action
to enforce any cause of action under the Code shall be barred if not commenced within three
years after such cause of action accrued. Therefore, Lucila's present action is barred by
prescription.
2. YES. This Court finds that even if the instant complaint were timely filed, the Petition
remains unmeritorious.
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Section 16 of DAR AO No. 1, series of 1999 provides that disturbance compensation

shall be paid to tenant, farm workers or bona fide occupants affected by the land conversion.
In view of the foregoing, this Court finds that respondents have already properly
compensated Lucila in the amount of P1,046,460.00 as disturbance compensation. We cite
in agreement the following findings of the DARAB:
Records show that [Lucila] Purificacion was paid P1,046,460.00 disturbance

compensation on 01 July 1993. However, the records did not disclose how this amount was
arrived at. Neither the plaintiff-appellee [Lucila] disclosed how much is the average annual
harvest of the landholding. On the contrary[, respondents herein] averred that the
P1,046,460.00 disturbance compensation paid to [Lucila] Purificacion was more than five
(5) times the average of the gross value of the harvest for the five (5) preceding calendar
years.
Assuming that the subject landholding then yielded an average gross harvest of 80
cavans per hectare per cropping, and there were two (2) cropping[s] per year, this Board
agrees with the [respondents] that indeed the P1,046,460.00 disturbance compensation paid
to [Lucila] Purificacion on 01 July 1993 is more than the amount required by law, rules and
regulations. Thus, [respondents] have already complied with their obligation to pay
disturbance compensation to [Lucila].
We note that the DARAB and the appellate court had made identical and sound
dispositions on the same issues posed by Lucila before them.
Well settled is the rule that findings of fact of administrative bodies, such as the
DARAB in the instant case, if based on substantial evidence, and especially if affirmed by the
appellate court, are controlling on the reviewing authority. Administrative decisions on
matters within their jurisdiction are entitled to respect and can only be set aside on proof of
grave abuse of discretion, fraud or error of law, none of which obtains in this case.
Notarized documents enjoy the
presumption of regularity.
To support her claim, Lucila presented the May 20, 1993 Letter and the Unnotarized
Malayang Salaysay which has the same narration as the Notarized Malayang Salaysay, except
for the stipulation that Lucila is entitled to a 1,000-square meter portion of the subject lot.
This Court finds that the appellate court correctly held that the foregoing documents
do not constitute substantial evidence that Lucila is entitled to claim the 1,000-square meter
portion of the subject lot as disturbance compensation in addition to the P1,046,460.00 she
already received.
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Firstly, the May 20, 1993 Letter from Atty. Villanueva to Gobing merely showed that
respondents were considering the allocation of a 1,000-square meter portion within the
subject lot for the Purificacion spouses, perhaps as the respondents' tentative plan for the
spouses' disturbance compensation. As aptly held by the CA, said letter did not
categorically grant the 1,000-square meter portion to the spouses. It may indeed be
part of the negotiations between the Purificacion spouses and the respondents regarding the
disturbance compensation, since it was dated much earlier than the notarized Malayang
Salaysay. However, said letter did not conclusively show that there was an agreement to
grant a 1,000-square meter portion of the subject lot to Lucila as disturbance compensation
in addition to the P1,046,460.00.
Secondly, the Notarized Malayang Salaysay is duly acknowledged before a notary

public. Settled is the rule that a notarized document "has in its favor the presumption of
regularity and it carries the evidentiary weight conferred upon it with respect to its due
execution. It is admissible in evidence without further proof of its authenticity and is entitled
to full faith and credit upon its face."
Being a notarized document, the Notarized Malayang Salaysay has in its favor the
presumption of regularity, as opposed to the Unnotarized Malayang Salaysay. Thus, to
overcome the presumption of regularity, "there must be evidence that is clear, convincing
and more than merely preponderant; otherwise, the document should be upheld." In the
instant case, Lucila's bare denials will not suffice to overcome the presumption of regularity
of the assailed Notarized Malayang Salaysay.
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LUISITO G. PULIDO, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.

G.R. No. 220149. July 27, 2021, EN BANC (Hernando, J.)
DOCTRINE
This case provides us the opportune occasion to revisit and examine our earlier
pronouncements that a judicial declaration of the absolute nullity of a prior void ab
initio marriage secured prior to remarriage is required before a prior void ab
initio marriage may be considered a valid defense in the prosecution of bigamy. For
resolution of this Court is the subsequent judicial declaration of the absolute nullity of Pulido's
first marriage with Arcon which he presented as a defense in the criminal prosecution for
bigamy against him.
There is enough basis to abandon our earlier pronouncement and now hold that
a void ab initio marriage is a valid defense in the prosecution for bigamy even without a
judicial declaration of absolute nullity. Consequently, a judicial declaration of absolute
nullity of either the first and second marriages obtained by the accused is considered a valid
defense in bigamy.
FACTS
Pulido and Rowena U. Baleda were charged before the RTC with Bigamy. Petitioner
pleaded not guilty to the crime charged.
On September 5, 1983, then 16-year old petitioner married his teacher, then 22-year
old private complainant Nora S. Arcon in a civil ceremony at the Municipal Hall of Rosario,
Cavite solemnized by then Mayor Calixto D. Enriquez. Their marriage was blessed with a
child born in 1984.
The couple lived together until 2007 when Pulido stopped going home to their
conjugal dwelling. When confronted by Arcon, Pulido admitted to his affair with Baleda.
Arcon likewise learned that Pulido and Baleda entered into marriage on July 31, 1995 which
was solemnized by Reverend Conrado P. Ramos. Their Marriage Certificate indicated
Pulido's civil status as single.
Hurt by the betrayal, Arcon charged Pulido and Baleda with Bigamy on December 4,
2007. In his defense, Pulido insisted that he could not be held criminally liable for bigamy
because both his marriages were null and void. He claimed that his marriage with Arcon in
1983 is null and void for lack of a valid marriage license while his marriage with Baleda is
null and void for lack of a marriage ceremony.
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Baleda, on the other hand, claimed that she only knew of Pulido's prior marriage with
Arcon sometime in April 2007. She alleged that even prior to the filing of the bigamy case,
she already filed a Petition to Annul her marriage with Pulido before the RTC of Imus, Cavite.
The RTC declared her marriage with Pulido as null and void for being bigamous in nature.
This ruling attained finality, there being no appeal filed thereto.
RTC: The trial court convicted petitioner of Bigamy and acquitted Baleda.
In so ruling, the RTC dismissed Pulido's claim that both his marriages are void. As to
the first marriage, the trial court noted that the certifications issued by the Civil Registrar
merely proved that the marriage license and marriage application could not be found,
not that they never existed or were never issued. It held that the marriage certificate which
reflected on its face the marriage license number of Pulido and Arcon's marriage has
a higher probative value than the certifications issued by the Civil Registrar.
Moreover, the trial court noted that the testimony of Pulido's witness shows only
irregularities in the formal requisites of Pulido's second marriage which did not affect its
validity. Thus, the RTC upheld the validity of Pulido's marriage with Arcon.
Pulido appealed his conviction to the appellate court on the ground that the first element of
the crime, i.e., the subsistence of a valid marriage, was absent. Pulido maintained that his first
marriage to Arcon is void ab initio for lack of a marriage license while his marriage with
Baleda is also void since there was no marriage ceremony performed. In any case, his
marriage with Baleda has already been judicially declared as void ab initio even before the
filing of the Information for Bigamy against him and Baleda with the trial court.
CA: The appellate court, sustained petitioner's conviction but modified the penalty. The CA
also found that all the elements of bigamy were present since Pulido entered into a second
marriage with Baleda while his prior marriage with Arcon was subsisting, and without first
having obtained a judicial declaration of the nullity of the prior marriage with Arcon.
The CA was not convinced of Pulido's contention that the first marriage was void for
lack of a marriage license. It noted that their Marriage Contract indicated a Marriage
License No. To be considered void due to lack of marriage license, it must be apparent on the
marriage contract and supported by a certification from the Civil Registrar that no such
marriage license was issued, which are not obtaining in the case at bar.
The Certification issued by the Civil Registrar did not specifically attest
that no marriage license was issued to Pulido and Arcon. Instead, the document merely
stated that there was no record of a marriage license and application of Pulido and Arcon on
account of a probable termite infestation of the documents from 1979-1983. Also, that the
marriage license was obtained only on the day of the marriage itself did not render the
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marriage void ab initio since it is merely an irregularity which does not affect the validity of
marriage.
The appellate court further ruled that even assuming that the first marriage was void
for lack of a marriage license, one may still be held liable for bigamy if he/she enters into a
subsequent marriage without first obtaining a judicial declaration of nullity of the prior
marriage. Bigamy was consummated the moment Pulido entered into the second marriage
without his marriage with Arcon being first judicially declared null and void.
The appellate court anchored its ruling on Article 40 of the Family Code which
requires one to first secure a judicial declaration of nullity of marriage prior to contracting a
subsequent marriage. It held that pursuant to Jarillo v. People, Article 40 applies even if the
marriage of Pulido with Arcon was governed by the Civil Code. Rules of procedure
should be given retroactive effect in so far as it does not prejudice or impair vested or
acquired rights. The bigamist cannot obtain and use the subsequent judicial declaration of
nullity of his or her prior marriage to avoid his or her prosecution for bigamy.
Likewise, the subsequent declaration of nullity of his second marriage with Baleda
would not exonerate him from criminal liability. Their Certificate of Marriage signed by both
Pulido and Baleda clearly indicated that they appeared before Reverend Conrado P. Ramos
on their own free will to take each other as husband and wife. As a public document, the
marriage contract is presumed to be prima facie correct pursuant to Section 44, Rule 130 of
the Rules of Court.
Moreover, the subsequent judicial declaration of the second marriage for being
bigamous in nature does not bar the prosecution of Pulido for the crime of bigamy.
Jurisprudence dictates that one may still be charged with bigamy even if the second marriage
is subsequently declared as null and void so long as the first marriage was still subsisting
during the celebration of the second marriage. This is to deter parties from deliberately and
consciously entering into a flawed marital contract and thus escape the consequences of
contracting multiple marriages.
The CA ultimately affirmed the Decision of the RTC but with modification as to the
penalty imposed. Pulido was sentenced to suffer an indeterminate prison term of two (2)
years, four (4) months and one (1) day of prision correccional, as minimum, to eight (8)
years and one (1) day of prision mayor as maximum.
Meanwhile, the RTC, of Imus, Cavite, declared Pulido's marriage to Arcon void from
the beginning. The said Decision became final and executor. Thereafter, the RTC issued the
Decree of Absolute Nullity of Marriage confirming the absolute nullity of marriage between
Pulido and Arcon.
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Petitioner's Arguments:
In the main, Pulido contends that the appellate court should have overturned his
conviction in view of the absence of an element of bigamy, i.e., that the offender's first
marriage be legally subsisting at the time he contracts the second marriage, since the first
marriage is void due to the absence of a marriage license. He asserts that the retroactive
application by the trial court and the appellate court of Article 40 of the Family Code to his
case, when the governing law at the time of his first marriage was the Civil Code, ran afoul of
the constitutional prohibition against ex post facto legislation.
Arguments of the OSG:
In its Comment, the OSG stresses that Article 40 of the Family Code applies to the
instant case since Pulido's subsequent and bigamous marriage was contracted in 1995 when
the Family Code was already in full effect. Thus, unlike the cases cited by petitioner wherein
both marriages were contracted prior to the effectivity of the Family Code, Pulido is required
to obtain a prior judicial declaration of nullity of his marriage with Arcon as a condition
precedent to contracting a subsequent marriage with Baleda. Hence, the fact that Pulido
secured a judicial declaration of nullity of his marriage is immaterial since the crime of
Bigamy has already been consummated.
The OSG maintains that the appellate court correctly ruled that the certificate of
marriage was the best evidence to prove that a marriage ceremony took place, and that the
subsequent judicial declaration of Pulido and Baleda's marriage may not be used to
exonerate himself from criminal liability.
ISSUES
1. What doctrine did the Supreme Court found it opportune to revisit and examine?
2. Whether Article 40 of the Family Code applies to the instant case, considering that
Pulido's first marriage was contracted during the Civil Code and his second marriage
was celebrated during the effectivity of the Family Code;
3. Is a judicial declaration of nullity of marriage necessary to establish the invalidity of
a void ab initio marriage in a bigamy prosecution?
4. Does the subsequent declaration of the nullity of the first and second marriages
constitute as valid defense in bigamy?
5. Did Art. 40 of the Family Code amend or repeal Art. 349 of the Revised Penal Code?
RULING:
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1. This case provides us the opportune occasion to revisit and examine our earlier
pronouncements that a judicial declaration of the absolute nullity of a prior void ab
initio marriage secured prior to remarriage is required before a prior void ab
initio marriage may be considered a valid defense in the prosecution of bigamy. For
resolution of this Court is the subsequent judicial declaration of the absolute nullity of
Pulido's first marriage with Arcon which he presented as a defense in the criminal
prosecution for bigamy against him.
There is enough basis to abandon our earlier pronouncement and now hold that
a void ab initio marriage is a valid defense in the prosecution for bigamy even without a
judicial declaration of absolute nullity. Consequently, a judicial declaration of absolute
nullity of either the first and second marriages obtained by the accused is considered a valid
defense in bigamy.
Hence, Pulido's acquittal from the crime of Bigamy is warranted.
Article 349 of the RPC defines and penalizes Bigamy. The rationale for prosecuting an
individual who contracted a second or subsequent marriage before the former marriage has
been legally dissolved, or before the absent spouse has been declared presumptively dead,
is to preserve and ensure the juridical tie of marriage established by law. For one to be held
guilty of bigamy, the prosecution must prove the following: (a) that the offender has been
legally married; (b) that the first marriage has not been legally dissolved, or in case his or
her spouse is absent, the absent spouse could not yet be presumed dead according to the
Civil Code; (c) that he or she contracts a second or subsequent marriage; and (d) that the
second or subsequent marriage has all the essential requisites for validity. It is vital in the
prosecution for bigamy that the alleged second marriage, having all the essential
requirements, would be valid were it not for the subsistence of the first marriage.
It is undisputed that Pulido married Arcon on September 5, 1983. Thereafter, he

contracted a second marriage with Baleda on July 31, 1995 without having his first marriage
with Arcon legally dissolved. Pulido and Baleda's marriage has all the essential requisites for
validity had it not for the existing first marriage.
Thereafter, Pulido's first marriage with Arcon and second marriage with Baleda were
judicially declared void for lack of a valid marriage license and for being bigamous,
respectively. Pulido interposed the defense that the subsequent judicial declaration of nullity
of his first marriage should exculpate him from criminal liability for bigamy.
Thus, the main issue for consideration of this Court is the necessity of securing a
judicial declaration of absolute nullity as a valid defense in the criminal prosecution for
bigamy.
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2. YES.
A. 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.
The validity of the second marriage is
a prejudicial question to the criminal
prosecution for bigamy.
Prior to the effectivity of the Family Code, the Court has inconsistent pronouncements
concerning the necessity of a judicial declaration of nullity of the prior void marriage as a
defense in a bigamy case.
In People v. Mendoza and in People v. Aragon, this Court ruled that no judicial decree
is necessary to establish the invalidity of a prior void marriage as a defense in the case of
Bigamy, as distinguished from mere annullable or voidable marriages. ATICcS
However, in Gomez v. Lipana and Vda. de Consuegra v. Government Service Insurance

System, the Court deviated from its previous pronouncements in Mendoza and Aragon when
it declared that a judicial declaration of nullity of the second marriage is necessary even
though it is presumed to be null and void for it was contracted during the subsistence of a
prior marriage. Subsequently, the Court again reverted to the doctrine laid down
in Mendoza and Aragon.
However, in Apiag v. Cantero and Ty v. Court of Appeals, this Court clarified that the
requirement of a judicial decree of nullity does not apply to marriages that were
celebrated before the effectivity of the Family Code, which continue to be governed
by Mendoza, Aragon and Odayat wherein a void ab initio marriage can be raised as a defense
in a bigamy case even without a judicial declaration of its nullity.
As to the nullity of the second marriage, Justice Caguioa pointed out that in People v.
Mora Dumpo and People v. Lara, the Court decided on the issue of the validity of the second
marriage in the same criminal proceeding for bigamy to determine the guilt of the
accused, i.e., if he contracted a valid second marriage during the subsistence of the first
marriage. Patently, the Court allowed the accused in Dumpo and Lara to interpose the
defense of a void ab initio second marriage other than it being bigamous in the criminal
However, in Merced v. Diez, the Court recognized the action to annul the second
marriage as a prejudicial question in a prosecution for bigamy. Determination of the
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validity of the second marriage is determinable in the civil action and must precede
the criminal action for bigamy.
In Zapanta v. Montesa, the Court suspended the proceedings in the criminal case for
bigamy because of a subsequent civil action filed by the accused to annul his second marriage
on the ground of vitiated consent.
Thus, 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.
b. Article 40 of the Family Code applies retroactively on marriages celebrated before

the Family Code insofar as it does not prejudice or impair vested or acquired rights.
Thus, a judicial declaration of nullity

is required for prior marriages
contracted before the effectivity of
the Family Code but only for
purposes of remarriage.
Upon the enactment of the Family Code on August 3, 1988, the doctrine laid down
in Gomez, Consuegra and Wiegel that there is a need for a judicial declaration of nullity of a
prior "void" marriage was encapsulated in Article 40, which reads:
Article 40. The absolute nullity of a previous marriage may be invoked for purposes
of remarriage on the basis solely of a final judgment declaring such previous marriage void.
The prevailing rule, therefore, is that even if the marriage is void, a final judgment
declaring it void for purposes of remarriage is required.
To repeat, Pulido's first marriage with Arcon was contracted in 1983 or before the
effectivity of the Family Code while his second marriage with Baleda was celebrated in 1995,
during the of effectivity of the said law. Pulido assails the retroactive application of Article
40 of the Family Code on his case which requires him to obtain a judicial declaration of
absolute nullity before he can contract another marriage.
When the prior marriage was contracted prior to the effectivity of the Family Code
while the subsequent marriage was contracted during the effectivity of the said law, we
recognize the retroactive application of Article 40 of the Family Code but only insofar as it
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does not prejudice or impair vested or acquired rights. Article 40, which is a rule of
procedure, should be applied retroactively because Article 256 of the Family Code
itself provides that said "Code shall have retroactive effect insofar as it does not
prejudice or impair vested or acquired rights."
Applying the foregoing jurisprudence and keeping in mind its purpose, we hold that
Article 40 has retroactive application on marriages contracted prior to the effectivity of the
Family Code but only for the purpose of remarriage, as the parties are not permitted to
judge for themselves the nullity of their marriage. In other words, in order to remarry, a
judicial declaration of nullity is required for prior marriages contracted before the
effectivity of the Family Code. Without a judicial declaration of absolute nullity of the first
marriage having been obtained, the second marriage is rendered void ab initio even though
the first marriage is also considered void ab initio. The only basis for establishing the validity
of the second marriage is the judicial decree of nullity of the first marriage.
3. NO. As differentiated with #2, however, 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.
In this case, 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 or his
prior void ab initio marriage but only for purposes of remarriage. As regards the bigamy
case, however, Pulido may raise the defense of a void ab initio marriage even without
obtaining a judicial declaration of absolute nullity.
4. YES. During the pendency of the bigamy case, Pulido obtained a judicial declaration
of absolute nullity of his first marriage with Arcon which he presented as his defense.
However, the courts a quo, relying on settled jurisprudence, denied the same and convicted
him of bigamy.
Jurisprudence has held that a judicial declaration of absolute nullity obtained prior to
the celebration of the second marriage is required as a valid defense in bigamy. Upon the
enactment of the Family Code, specifically the requirement laid down in Article 40, we
overturned our earlier rulings in Mendoza, Aragon and Odayat and declared that a
subsequent judicial declaration of nullity of the first marriage could not be considered as a
valid defense in the prosecution for bigamy. Corollary, a judicial declaration obtained
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subsequent to the celebration of the second marriage is considered immaterial in the

criminal prosecution for bigamy as relied upon by the courts a quo in the case at bar.
With regard to the second marriage, our earlier rulings in Dumpo and Lara were
likewise overturned. In effect, Merced, Zapanta and De la Cruz declaring that an action for
nullity of the second marriage is a prejudicial question to the prosecution for bigamy is
abandoned. The existing rule, therefore, is that a judicial declaration of nullity of the
second marriage is not a valid defense in bigamy nor a prejudicial question to a
criminal action for bigamy.
Now, this Court has the timely opportunity to review and revisit the rationale of our
earlier pronouncements, and therefore, adopt a more liberal view in favor of the accused. To
start, a brief examination of our earlier rulings is in order.
A thorough review of the prior rulings shows that the judicial declarations of absolute
nullity of the first and second marriages obtained subsequent to the celebration of the
second marriage are not valid defenses in the criminal prosecution for bigamy. The only valid
defense recognized by the Court in prior cases is a judicial declaration of absolute nullity of
the first marriage obtained by the accused prior to the celebration of the second marriage.
After a careful consideration, this Court is constrained to abandon our earlier

rulings that a judicial declaration of absolute nullity of the first and/or second
marriages cannot be raised as a defense by the accused in a criminal prosecution for
bigamy. We hold that a judicial declaration of absolute nullity is not necessary to
prove a void ab initio prior and subsequent marriages in a bigamy case. Consequently,
a judicial declaration of absolute nullity of the first and/or second marriages
presented by the accused in the prosecution for bigamy is a valid defense, irrespective
of the time within which they are secured.
The aforesaid conclusion is anchored on and justified by the retroactive effects of a

void ab initio marriage, the legislative intent of Article 40 of the Family Code and the
fundamental rules of construction governing penal laws.
Retroactive effects of a void ab initio

marriage in criminal prosecutions for
bigamy
The Family Code specifically provides that certain marriages are considered void ab
initio namely, Articles 35, 36, 37, 38, 44 and 53. These marriages are void from the beginning
due to the absence of any of the essential or formal requisites, for being incestuous, or by
reason of public policy. Void marriages, like void contracts, are inexistent from the very
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beginning. To all legal intents and purposes, the void ab initio marriage does not exist and
the parties thereto, under the lens of the law, were never married.
Thus, we ruled in Niñal v. Bayadog that under ordinary circumstances, the effect of a
void marriage, so far as concerns the conferment of legal rights upon the parties, is as
though no marriage had ever taken place. A void marriage produces no legal effects except
those declared by law concerning the properties of the alleged spouses, co-ownership or
ownership through actual joint contribution, and its effect on the children born to void
marriages as provided in Article 50 in relation to Articles 43 and 44 as well as Articles 51,
53, and 54 of the Family Code.
And therefore, being good for no legal purpose, its invalidity can be maintained in any
proceeding in which the fact of marriage may be material, either direct or collateral, in any
civil court between any parties at any time, whether before or after the death of either or
both the husband and the wife. Jurisprudence under the Civil Code states that no judicial
decree is necessary in order to establish the nullity of a marriage; the exception to this is
Article 40 of the Family Code, which expressly provides that there must be a judicial
declaration of the nullity of a previous marriage, though void, and such absolute nullity can
be based only on a final judgment to that effect. However, it must be borne in mind that the
requirement of Article 40 is merely for purposes of remarriage and does not affect the
accused's right to collaterally attack the validity of the void ab initio marriage in criminal
prosecution for bigamy. HESIcT
In contrast, voidable marriages under Article 45 of the Family Code are considered
valid and produces all its civil effects until it is set aside by a competent court in an action for
annulment. It is capable of ratification and cannot be assailed collaterally except in a direct
proceeding. It is considered valid during its subsistence and only ceases upon the finality of
the decree of annulment of a competent court. "Indeed, the terms "annul" and "null and void"
have different legal connotations and implications. Annul means to reduce to nothing;
annihilate; obliterate; to make void or of no effect; to nullity; to abolish; to do away with
whereas null and void is something that does not exist from the beginning. A marriage that
is annulled presupposes that it subsists but later ceases to have legal effect when it is
terminated through a court action. But in nullifying a marriage, the court simply declares a
status or condition which already exists from the very beginning." In this respect, the effects
of a declaration of the nullity of a void marriage by a competent court retroacts to the date of
the celebration thereof, since the spouses were considered never married under the lens of
the law.
Void and voidable marriages are distinguished as under the Civil Code, a void
marriage differs from a voidable marriage in the following ways: (1) a void marriage is
nonexistent — i.e., there was no marriage from the beginning — while in a voidable
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marriage, the marriage is valid until annulled by a competent court; (2) a void
marriage cannot be ratified, while a voidable marriage can be ratified by cohabitation;
(3) being nonexistent, a void marriage can be collaterally attacked, while a voidable
marriage cannot be collaterally attacked; (4) in a void marriage, there is no conjugal
partnership and the offspring are natural children by legal fiction, while in voidable marriage
there is conjugal partnership and the children conceived before the decree of annulment are
considered legitimate; and (5) "in a void marriage no judicial decree to establish the
invalidity is necessary," while in a voidable marriage there must be a judicial decree.
Being inexistent under the eyes of the law, the nullity of a void marriage can be
maintained in any proceeding in which the fact of marriage may be material, either direct or
collateral, in any civil court between any parties at any time, whether before or after the
death of either or both the spouses. A void marriage is ipso facto void without need of any
judicial declaration of nullity; the only recognized exception under existing law is Article 40
of the Family Code where a marriage void ab initio is deemed valid for purposes of
remarriage, hence necessitating a judicial declaration of nullity before one can contract a
subsequent marriage.
Clearly, when the first marriage is void ab initio, one of the essential elements of
bigamy is absent, i.e., a prior valid marriage. There can be no crime when the very act which
was penalized by the law, i.e., contracting another marriage during the subsistence of a prior
legal or valid marriage, is not present. The existence and the validity of the first marriage
being an essential element of the crime of bigamy, it is but logical that a conviction for said
offense cannot be sustained where there is no first marriage to begin with. Thus, an accused
in a bigamy case should be allowed to raise the defense of a prior void ab initio marriage
through competent evidence other than the judicial decree of nullity.
Apropos, with the retroactive effects or a void ab initio marriage, there is nothing to
annul nor dissolve as the judicial declaration of nullity merely confirms the inexistence of
such marriage. Thus, the second element of bigamy, i.e., that the former marriage has
not been legally dissolved or annulled, is wanting in case of void ab initio prior
marriage. What Article 349 of the RPC contemplates is contracting a subsequent
marriage when a voidable or valid first marriage is still subsisting. Hence, Article 349
should be construed to pertain only to valid and voidable marriages.
In effect, when the accused contracts a second marriage without having the first
marriage dissolved or annulled, the crime of bigamy is consummated as the valid or
voidable first marriage still subsists without a decree of annulment by a competent
court. In contrast, when the first marriage is void ab initio, the accused cannot be held
liable for bigamy as the judicial declaration of its nullity is not tantamount to
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annulment nor dissolution but merely a declaration of a status or condition

that no such marriage exists.
In the same manner, when the accused contracts a second or subsequent marriage
that is void ab initio, other than it being bigamous, he/she cannot be held liable for bigamy
as the effect of a void marriage signifies that the accused has not entered into a second or
subsequent marriage, being inexistent from the beginning. Thus, the element, "that he or she
contracts a second or subsequent marriage" is lacking. A subsequent judicial declaration of
nullity of the second marriage merely confirms its inexistence and shall not render the
accused liable for bigamy for entering such void marriage while the first marriage still
subsists. Consequently, the accused in bigamy may validly raise a void ab initio second or
subsequent marriage even without a judicial declaration of nullity.
True, a marriage is presumed to be valid even if the same is void ab initio without a
judicial declaration of its absolute nullity in view of Article 40 of the Family Code. However,
the accused in a bigamy case should not be denied the right to interpose the defense of a
void ab initio marriage, which effectively retroacts to the date of the celebration of the first
marriage.
5. NO. Article 40 of the Family Code requires a judicial declaration of absolute nullity for
purposes of remarriage but not as a defense in bigamy. Article 40 did not amend or repeal
Article 349 of the RPC.
The judicial declaration of absolute nullity may be invoked in other instances for
purposes other than remarriage, such as in action for liquidation, partition, distribution, and
separation of property, custody and support of common children and delivery of
presumptive legitimes. Nonetheless, Domingo declares that other evidence, testimonial or
documentary, may also prove the absolute nullity of the previous marriage in the said
instances. Hence, such previous void marriage need not be proved solely by an earlier final
judgment of court declaring it void. In other words, for purposes of remarriage, the only
evidence to prove a void marriage is the final judgment declaring its absolute nullity.
In other cases, the absolute nullity of a marriage may be proved by evidence other
than such judicial declaration. Thus, when one so desires to enter into another marriage
when his or her previous marriage is still subsisting, he is required by law to prove that the
previous one is an absolute nullity. In fact, the Family Code requires the parties to a marriage
to declare in the application for a marriage license if they were previously married; and how,
when and where the such previous marriage was dissolved and annulled.
Domingo did not specifically include criminal prosecutions for bigamy in the
enumeration of instances where the absolute nullity of a marriage may be proved by
evidence other than the judicial declaration of its nullity. However, the enumeration
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in Domingo did not purport to be an exhaustive list. Moreover, the discussion in the minutes
plainly shows that the Civil Law and Family Committees did not intend to deprive the
accused or defendant to raise the defense of the absolute nullity of a void ab initio marriage
in the same criminal proceeding. Thus, a void ab initio marriage can be subject of a
collateral attack even in a criminal case.
Well-settled is the rule that an implied repeal is disfavored by the law. The purpose
of Article 40 of the Family Code is not at all inconsistent nor irreconcilable with the criminal
prosecutions for bigamy defined and penalized under Article 349 of the RPC. Neither does
Article 40 explicitly or impliedly repeal Article 349 of the RPC.
Plainly, Article 40 of the Family Code 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. To adopt a contrary stringent
application would defy the principle that penal laws are strictly construed against the State
and liberally in favor of the accused. Granted, the State has the right to preserve and protect
the sanctity of marriage; this should not, however, be done at the expense of the presumption
of innocence of the accused. What is penalized under Article 349 of the RPC is the act of
contracting a subsequent marriage while the prior marriage was valid and subsisting. This
simply connotes that this provision penalizes contracting of a voidable or valid marriage and
not a void ab initio marriage. cTDaEH
Thus, a void ab initio marriage remains a valid defense in bigamy, and a prior and
separate judicial declaration of absolute nullity is not indispensable to establish the same.
We cannot simply disregard the effects of a void ab initio marriage and penalize the
accused for bigamy despite the clear absence of a valid prior marriage on the mere
speculation that this interpretation may be subject to abuse by those parties who
deliberately and consciously enter into multiple marriages knowing them to be void and
thereafter, evade prosecution on the pretext of a void ab initio marriage. It must be pointed
out and emphasized that these deliberate acts are already penalized under Article 350 of the
RPC.
Thus, an accused who contracts a void ab initio marriage may escape liability under
Article 349 as it strictly encompasses valid or voidable first and second marriages. However,
the accused in contracting a marriage knowing that the requirements of the law have not
been complied with or in disregard of a legal impediment may be covered and penalized
under Article 350 which addresses the predicament that to permit the accused to use the
defense of a void ab initio marriage or to present a judicial declaration of nullity in criminal
prosecution for bigamy would make a mockery of the sanctity of marriage by entering into
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multiple marriages knowing it to be void and thereafter escape punishment under Article
349.
All told, we hold that in criminal prosecutions for bigamy, the accused can
validly interpose the defense of a void ab initio marriage even without obtaining a
judicial declaration of absolute nullity. Consequently, a judicial declaration of
absolute nullity of the first and/or subsequent marriages obtained by the accused in
a separate proceeding, irrespective of the time within which they are secured, is a
valid defense in the criminal prosecution for bigamy.
Conclusion
Applying the foregoing, Pulido may validly raise the defense of a void ab
initio marriage in the bigamy charge against him. In fact, he assails the validity of his
marriage with Arcon on the absence of a valid marriage license as per the Certification issued
by the Registrar of Rosario, Cavite.
As can be gleaned from the foregoing, Pulido and Arcon applied for a marriage license.
However, the Registrar noted that there was no record of entry of: (a) the date of issuance of
a marriage license; and (b) the marriage license number in the record book for marriage
application. The original documents of the marriage license and marriage application cannot
be retrieved nor found in their custody. However, the Registrar states that these documents
could possibly be among those unnumbered marriage application and marriage license that
were destroyed due to termite infestation.
To note, the Registrar did not categorically declare that a marriage license was issued
to Pulido and Arcon nor that it was issued but was destroyed due to termite infestation. It
bears stressing that the Registrar found no entry of its date of issuance and
license number in its record book which will likely explain why the original document of the
marriage license could not be found in its custody. With the absence of a valid marriage
license, a reasonable doubt arises as to existence of a prior valid marriage, i.e., Pulido's first
marriage with Arcon, which is one of the elements of bigamy.
Verily, the marriage contract is the prima facie evidence of the facts stated therein.
However, while Pulido and Arcon's Marriage Contract bears a marriage license number,
there is doubt as to the fact of its existence and issuance as per the Certification, which
essentially affects the validity of their marriage. Thus, there exists a reasonable doubt
whether indeed Pulido and Arcon had a marriage license when they entered into marriage.
More importantly, during the pendency of this case, a judicial declaration of absolute
nullity of Pulido's marriage with Arcon due to the absence of a valid marriage license was
issued and attained finality. The RTC issued a Decree of Absolute Nullity of Marriage which
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effectively retroacts to the date of the celebration of Pulido and Arcon's marriage. This
connotes that Pulido and Arcon were never married under the eyes of the law.
Lacking an essential element of the crime of bigamy, i.e., a prior valid marriage, as per
the Certification and the subsequent judicial declaration of nullity of Pulido and Arcon's
marriage, the prosecution failed to prove that the crime of bigamy is committed. Therefore,
the acquittal of Pulido from the bigamy charge is warranted.
Needless to say, as to the absolute nullity of his second marriage with Baleda, it was
declared void ab initio because of being bigamous and not because it lacked any of the
essential requisites of a marriage. Hence, petitioner cannot use the same as a defense in his
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PRYCE PROPERTIES CORP. (now PRYCE CORPORATION), petitioner, vs. NARCISO R.

NOLASCO, JR., respondent.
G.R. No. 203990, August 24, 2020, SECOND DIVISION (Hernando, J.)
DOCTRINE
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.
On the other hand, the buyer shall have the right to pay in advance any installment or
the full unpaid balance of the purchase price any time without interest and to have such full
payment of the purchase price annotated in the certificate of title covering the property.
FACTS
The case stemmed from a complaint for recovery of a sum of money filed by Nolasco
on January 22, 1999 before the RTC against Pryce Corporation.
Nolasco alleged the following in his Complaint: in 1995, he purchased three lots
located in Cagayan de Oro City from Pryce; also in 1995, he deposited a total amount of
P393,435.00 through check payments in favor of Pryce; the latter did not deliver to Nolasco
the copies of the lots' certificates of title and their sales agreement; he was surprised,
frustrated, and dismayed when he finally received the sales agreement, as it contained
unacceptable conditions to which he conveyed his objections to Pryce; since he had not yet
signed the sales agreement, there was still no meeting of the minds between him and Pryce;
and that despite demands for refund of his deposit payments, Pryce failed to comply. Nolasco
also sought the amounts of P100,000.00 as moral damages, P50,000.00 as exemplary
damages, and P50,000.00 as attorney's fees.
Pryce filed an Answer with Counterclaims. It countered that Nolasco could not yet be
issued certificates of title since their transaction was not a contract of sale but a contract to
sell. Nolasco was allegedly furnished a copy of the Contract to Sell as early as November 8,
1995, which he signed and even requested for an amended Contract to Sell to reflect a new
amortization schedule. Nolasco, under RA 6552 (Maceda Law), was not entitled to a refund
of his deposits since he failed to complete the payments within the grace period provided by
Pryce, resulting in their forfeiture and the rescission of the contract to sell. By way of
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counterclaims, Pryce held Nolasco liable for P2,000,000.00 as moral damages, at least
P200,000.00 as exemplary damages, at least P100,000.00 as attorney's fees, and at least
P200,000.00 as litigation costs.
RTC: The RTC ruled in favor of Nolasco. It found that there had been a perfected contract of
sale between Nolasco and Pryce pursuant to Article 1482 of the Civil Code. It also ruled that
under the Maceda Law, Pryce can rescind the contract of sale for failure of Nolasco to pay at
least two (2) years of installments to Pryce. The latter, however, did not rescind the contract.
As regards the issue of refund of the payments he made to Pryce, the RTC declared Nolasco
as entitled thereto, citing jurisprudence and Article 1191 of the Civil Code.
Pryce appealed to the CA asserting that the contract in issue was a contract to sell and
not a contract of sale. It maintained that it had properly rescinded the contract in accordance
with RA 6552 and that Nolasco was not entitled to a refund.
CA: The CA affirmed the RTC in part. The CA found that the contract entered into by Pryce
and Nolasco was a contract to sell. The CA nonetheless upheld Nolasco's entitlement to a
refund, as Pryce did not exercise the remedy of cancellation under RA 6552 and under equity
considerations. The CA also updated the interest on the monetary award granted to Nolasco
pursuant to the pronouncement in Eastern Shipping Lines, Inc. v. Court of Appeals.
Petitioner's Arguments:
Petitioner Pryce maintains that respondent Nolasco impliedly agreed to the

unsigned Contract to Sell and harks on the applicability of RA 6552 or the Maceda Law. It
posits that Nolasco is not entitled to a refund of his installment payments because there was
a valid rescission of the Contract to Sell when Pryce sent Nolasco its December 5, 1998 letter
and raised the affirmative defense to deny Nolasco's claim for refund in its Answer with
Counterclaims to the Complaint before the RTC. Pryce thus maintains that Nolasco has
forfeited his deposit payments in favor of Pryce.
Respondent's Arguments:
Respondent Nolasco alleges that petitioner Pryce raised questions of fact, failed to
interpose any question of law, and did not claim any of the exceptions favoring a generally-
prohibited factual review under Rule 45. While admitting that he entered into a contract to
sell with Pryce, Nolasco asserts that the CA correctly found that he did not sign a
written Contract to Sell and that he is entitled to a refund of the down payments he made to
Pryce.
ISSUES
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1. Whether the contract between Pryce and Nolasco was rescinded in accordance
with RA 6552 (Maceda Law).
2. Whether Pryce's Answer with Counterclaims is deemed as a notarial rescission under
RA 6552 (Maceda Law).
3. Whether petitioner Pryce should refund respondent Nolasco.
4. What is the correct interest that should be imposed on the amount of refund?
RULING:
1. NO. The Contract to sell between Pryce and Nolasco was not validly cancelled.
The Realty Installment Buyer Protection Act, otherwise known as RA 6552 or

the Maceda Law, protects "buyers of real estate on installment payments against onerous
and oppressive conditions." One of the legal features of RA 6552 is Section 4 thereof, which
provides for the remedies of a defaulting buyer that has paid less than two years of
installment amortizations for a purchase of real property.
Section 4 of RA 6552 requires four (4) conditions before the seller may actually cancel
the contract thereunder: first, the defaulting buyer has paid less than two (2) years of
installments; second, the seller must give such defaulting buyer a sixty (60)-day grace
period, reckoned from the date the installment became due; third, if the buyer fails to pay
the installments due at the expiration of the said grace period, the seller must give the buyer
a notice of cancellation and/or a demand for rescission by notarial act; and fourth, the
seller may actually cancel the contract only after the lapse of thirty (30) days from the
buyer's receipt of the said notice of cancellation and/or demand for rescission by notarial
act.
In claiming that it had validly rescinded its contract to sell with Nolasco, Pryce relies
on two documents: a written Contract to Sell, which sets out an automatic cancellation
provision in case of default and which Pryce alleges that Nolasco impliedly agreed to, and its
denial of the refund as asserted in its Answer with Counterclaims against Nolasco's
Complaint before the RTC. Both documents, however, fail Pryce.
The written Contract to Sell is

ineffectual.
Pryce insists on the application of the written Contract to Sell. There is no dispute as
to whether the parties herein have forged and perfected an unwritten contract to sell. The
CA correctly decided this question in the affirmative. Contracts are created upon agreement
between consenting parties and generally do not require it to be reduced into writing to
validate its existence.
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Nonetheless, Pryce must be enlightened that the written Contract to Sell did not and
does not bind Nolasco for the following reasons.
First, the highlighted conditions in the Contract to Sell conflict with RA 6552,
which dictates "receipt" and not "service" of the notice of rescission to the buyer as the
reckoning point of the thirty (30)-day period before actual cancellation.
Pryce's Contract to Sell even dispensed with this legal requirement of receipt by deeming
mere service by registered mail as sufficient proof of service and constructive receipt. For
being contrary to Section 4 of RA 6552, these stipulations are rendered null and void, and
the general provisions governing a contract to sell under RA 6552 shall govern.
Moreover, it was not signed by Nolasco. Even if so signed, the Contract to Sell was
not worded to effect its automatic cancellation upon Nolasco's default. While the
word automatic cancellation implies unconditionality, the body of the above contractual
stipulation betrays its title. The entire provision practically mirrored the demands of Section
4 of RA 6552: defaulting buyer paid less than two (2) years of installments, a grace period of
sixty (60) days, a service of a notarial notice of cancellation or rescission, and a lapse of thirty
(30) days from the said service of notice of cancellation or rescission.
There was compliance with the first and second requisites when Pryce sent
Nolasco, a defaulting buyer whose payments did not amount to two years' worth of
installments, its December 5, 1998 letter giving him sixty (60) days to make good on his
obligation. Pryce, however, did not meet the last two conditions. As properly determined
by the CA, there was no notice of notarial rescission served upon Nolasco. Necessarily, thirty
(30) days could not have lapsed from a non-existent service of such notice.
2. NO. Pryce continues to argue that its Answer with Counterclaims to Nolasco's Complaint
contained the notarial rescission required by law. There was allegedly no opportunity for
Pryce to serve the same since Nolasco already filed his Complaint for refund even before
the sixty (60)-day grace period expired. We disagree.
A notarial rescission contemplated under RA 6552 is a unilateral cancellation by

a seller of a perfected contract thereunder acknowledged by a notary public and
accompanied by competent evidence of identity. This notarial notice of rescission has
peculiar technical requirements. We find that Pryce violated all of them.
Orbe v. Filinvest Land, Inc. declared that the notarial act converting the private notice
of cancellation into a public one must be an acknowledgment. An acknowledgment is the
act of one who has executed a deed in going before some competent officer or court and
declaring it to be his[/her] act or deed. This is specially so if the rescinding seller is a juridical
person acting through its officers, since acknowledgments, as defined under Section 1, Rule
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II of he 2004 Rules on Notarial Practice, particularly cover and validate such representative
capacity.
Pryce's Answer with Counterclaims, however, was notarized through a jurat.

A jurat is that part of an affidavit in which the notary certifies that before him or her, the
document was subscribed and sworn to by the executor.
Rescission is an act or a deed, directly or impliedly done, where a contract is cancelled,

annulled, or abrogated by the parties, one of them, or by the court. An act or a deed of
rescission is distinct and separate from an allegation of rescission, an allegation being an
assertion, declaration, or statement of a party to an action, contained generally in an affidavit
or a legal pleading, setting out what is yet to be proven. Under notarial rules,
acknowledgments cover written deeds and acts, whereas jurats confirm affidavits and
pleadings.
The foregoing thus defined, a deed of rescission notarized via acknowledgment is

already a piece of evidence all on its own. On the other hand, an allegation of rescission
contained in an affidavit or a pleading and confirmed by a notarial jurat still remains to be
proved; it merely implies that the signatory thereof sets out to prove the fact of the rescission
before a notary public.
Here, Pryce only alleged the fact of rescission in its Answer with Counterclaims
without further evidence that would adequately determine its truth. It is not the independent
notarial rescission contemplated by RA 6552.
Even if We deem the Answer with Counterclaims as a deed of rescission, jurats will
not suffice for its conversion into a notarial act of rescission under RA 6552. Pryce, through
its Senior Vice-President, had its Answer with Counterclaims notarized via a jurat.
Following Orbe, the delegated function of the Senior Vice President of executing a
purported notice of rescission in behalf of Pryce cannot be verified by a mere jurat, simply
because the wordings of jurats, unlike that of acknowledgments, do not allow or recognize
representative capacities.
Another fault is readily apparent from the immediately foregoing — the affiant for
Pryce's Answer with Counterclaims presented a Community Tax Certificate as his
competent evidence of identity. Community Tax Certificates, or cedulas, are documents
issued by a local government to every person or corporation upon payment of the
community tax, or to any person or corporation not subject to the community tax upon
payment of one peso (P1.00). Citing Baylon v. Almo, Orbe condemned cedulas as
impermissible proof of identity for its established unreliability and the considerable
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ease in securing its issuance, thereby justifying their eventual exclusion from the list
of competent evidence of identity that notaries public should use in ascertaining the
identity of persons appearing before them.
Having secured a mere jurat to notarize the supposed "notice of rescission" as

embodied in its Answer with Counterclaims and verifying the same upon an incompetent
proof of identity, Pryce executed a fatally infirm notarial rescission.
Even if these formal delinquencies were to be overlooked, the mode of rescission

itself as claimed by Pryce remains questionable.
The allegations contained in Pryce's Answer with Counterclaims cannot constitute as

substantial notice of rescission of its contract to sell with Nolasco. Suffice it to state that
nothing in the said pleading elicited a clear and positive notification to Nolasco that Pryce
was rescinding the contract to sell.
Moreover, allegations in a pleading must be proved. While Pryce appended to its

Answer with Counterclaims its December 5, 1998 letter to Nolasco, its wordings do not
firmly establish such claim of rescission.
Rescission unmakes a contract. Necessarily, the rights and obligations emanating

from a rescinded contract are extinguished. Being a mode of nullifying contracts and their
correlative rights and obligations, rescission thus must be conveyed in an unequivocal
manner and couched in unmistakable terms.
Here, both Nolasco and Pryce were left in a legal haze due to the vagueness of their
standing under the contract to sell. The effects of an absent notice of rescission are
predictably messy — Nolasco did not wait or expect to receive any notice of cancellation
from Pryce and immediately filed a claim for recovery of his deposit payments, and Pryce
now struggles in futility to establish a rescission that has actually failed to properly
materialize under RA 6552.
In the same vein, Pryce cannot assert that the service of its notice of rescission to
Nolasco was pre-empted when the latter filed his Complaint for recovery of a sum of money
before the lapse of the grace period in order to justify the use of the Answer with
Counterclaims as its notice of rescission to Nolasco.
The Answer with Counterclaims containing the alleged notice of rescission to Nolasco
had been filed more than four (4) months after the lapse of the sixty (60)-day grace period.
The more prudent action that Pryce should have undertaken was to send Nolasco an actual
and clear notice of rescission, executed separately from the Answer with Counterclaims and
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served on February 6, 1999 at the earliest, which was the first day after the expiration of the
grace period for payment granted to Nolasco. Alternatively, Pryce could have even appended
a separate notice of rescission to the Answer with Counterclaims at the latest. This is not the
situation at hand. Pryce's complacency and negligence cost its case.
3. YES. The basic remedies of a defaulting buyer under Section 6 of RA 6552: Claim
refund or pay in advance or in full.
It has been held that in the absence of a lawful rescission of a contract governed by RA
6552, the same remains valid and subsisting.
Thus, there must be a refund of the deposit payments made by Nolasco to Pryce. While
this buyer's option to claim refund is not explicitly mentioned in RA 6552, equity
considerations have already filled up this legal vacuum as declared in Orbe. In the said case,
the buyer therein failed to make at least two years of installment payments in consideration
of a purchase of a lot. The seller, however, failed to cancel their contract through a valid
notarial act and sold the lot in issue to a third person. The Court, finding the provisions of RA
6552 applicable to the transaction, ordered the refund of the amounts actually paid by the
buyer, justifying the same with equitable reasons as laid out by relevant jurisprudence.
It bears mentioning, however, that RA 6552 grants the following rights to real
property buyers on installment upon default, whether or not he/she has paid two (2) years'
worth of installment payments, as contained in Section 6.
The courts a quo left out the discussion of this option of the defaulting buyer to pay
advance installments or the full unpaid balance of the purchase price. Rightly so, since
Nolasco was firm in his choice to claim a refund by filing at the outset a case for recovery of
sum of money against Pryce.
A defaulting buyer of real property on installments, whether or not she or he has

paid two (2) years of installments has three (3) common legal remedies in the absence
of a valid rescission, granted by Section 6 of RA 6552 and jurisprudence:
(a) Pay in advance any installment at any time, necessarily without interest;
(b) Pay the full unpaid balance of the purchase price at any time without interest, and
to have such full payment of the purchase price annotated in the certificate of title covering
the real property subject of the transaction under RA 9552; or
(c) Claim an equitable refund of prior payments and/or deposits made by the
defaulting buyer to the seller pertinent to their transaction under RA 9552, if any.
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A defaulting buyer enjoys other rights in addition to the foregoing, depending on the
status of her or his payments and of the contract.
Under Section 3 of RA 6552, a defaulting buyer that has paid at least two years of
installments has the following options:
(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 cancelled, 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.
Under Section 4 of RA 6552, a defaulting buyer that has paid less than two years of
installments is entitled to the following:
(a) The seller shall give the buyer a sixty-day grace period of not less than sixty (60)
days to be reckoned from the date the installment became due;
(b) The seller must give the buyer a notice of cancellation/demand for rescission by
notarial act if the buyer fails to pay the installments due at the expiration of the said grace
period; and
(c) The seller may actually cancel the contract only after thirty (30) days from the
buyer's receipt of the said notice of cancellation/demand for rescission by notarial act.
4. Finally, a modification of the interest imposed on the amount of refund is proper. Pursuant
to Nacar v. Gallery Frames, the amount of P393,435.00 shall be subject to legal interest at the
rate of twelve percent (12%) per annum reckoned from the date of judicial demand on
January 22, 1999 until June 30, 2013; and six percent (6%) per annum from July 1, 2013 until
fully paid.
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PHILIPPINE NATIONAL BANK, petitioner, vs. LORENZO T. BAL, JR., respondent.

G.R. No. 207856. November 18, 2020, THIRD DIVISION (Hernando, J.)
DOCTRINE
Solidarity is never presumed. There is solidary liability when the obligation so states, or
when the law or the nature of the obligation requires the same, which are unavailing in the
instant case.
FACTS
PNB is engaged in the banking business. Lorenzo T. Bal, Jr. was then the manager of
PNB's Caloocan Branch at the time the incident occurred. The Branch had a depositor by the
name of Adriano S. Tan, who maintained thereat a Current Account in his name.
On October 12, 2000, PNB filed a complaint for sum of money against Tan and herein
respondent Bal. PNB claimed that Bal approved various cash withdrawals by Tan against
several checks without waiting for them to be cleared. When these checks were dishonored,
PNB claimed that Bal allowed Tan to deposit several checks to partially cover Tan's various
cash withdrawals. Nevertheless, these new checks were also dishonored for insufficient
funds.
PNB further asserted that Tan had already acknowledged his outstanding obligation
to the bank in the amount of P520,000.00 and executed a promissory note in its favor. To
confirm this acknowledgement, Tan issued another promissory note in favor of PNB in the
same amount. Despite demand, however, Tan failed to pay PNB the stipulated amount.
PNB alleged that Bal violated the bank's policy on the prohibition against drawing on
uncollected deposits pursuant to its General Circular No. 11-58/80 dated March 14, 1980. In
addition, PNB claimed that Bal violated and exceeded his limited authority to approve
encashment of other bank checks under its Manual of Signing Authority. In view of the
foregoing violations, PNB averred that it incurred losses in the amount of P520,000.00 and
that Bal is personally liable to the bank pursuant to its Manual of Policies on Cash, Checks
and Other Cash Items and Deposits. PNB prayed that Tan and Bal be held jointly and severally
liable to the bank in the amount of P520,000.00, plus interest and damages.
On the other hand, Bal argued that the trial court had no jurisdiction over the
complaint against him because it amounted to an administrative action. He further pointed
out that he was already administratively penalized by the Administrative Adjudication Panel
of the bank for his alleged violations with a four-month suspension. He likewise asserted that
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PNB had no valid cause of action against him because he neither made any acknowledgement
of the obligation nor participated in the business transactions that led to the obligation. Thus,
he argued that Tan should be held solely liable to the bank for the amount of P520,000.00.
RTC: The RTC dismissed the complaint against Bal but held Tan solely liable for the entire
amount of P520,000.00.
CA: The CA upheld the findings of the RTC. The appellate court pointed out that while it may
be true that Bal had exceeded his authority in accommodating several checks presented for
deposit by Tan, [PNB] failed to satisfactorily prove that Bal financially gained from his act of
accommodating Tan or that any collusion existed between [Tan and Bal]. [PNB] also failed
to present sufficient factual basis to hold Bal personally liable for his acts as officer of the
bank[.] Hence, the trial court correctly dismissed [PNB's] claim against Bal for recovery of
the amount based on insufficiency of evidence.
Moreover, the CA affirmed the RTC's findings that there was sufficient evidence that
Tan was the one who actually received the money and acknowledged said obligation to PNB
through the execution of a promissory note in favor of said bank.
Unsatisfied, PNB filed the instant Petition for Review on Certiorari under Rule 45 of
the Rules of Court. It mainly asserts that Bal's violations of several office orders and BSP
regulations were prejudicial to its interest and resulted to PNB's substantial losses. Thus, he
should be held liable for his tortious act and gross negligence amounting to bad faith.
ISSUE
Whether or not Bal may be held personally liable on the drawings against uncollected check
deposits in the amount of P520,000.00 in view of his violation of the existing policies of PNB.
RULING:
NO. Bal has not incurred any personal liability on the drawings against the uncollected bank
deposits in question.
Firstly, We validate Bal's claim that "[a]fter careful evaluation of the [track] record
and dealings of the depositor [he] decided to approve the check deposit." PNB had
acknowledged that Bal raised the same argument when he explained to the bank that his act
of approving the withdrawals against the uncollected deposits had been a mere act of
accommodation to the valued clients of the bank, such as Tan.
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The findings of the trial court are apt on this point when it held that "[a]t the time Bal
was called upon to approve the encashment of the dishonored checks, he made a judgment
call based on his appraisal of Tan's banking history with PNB and the regularity of the checks
presented on payment."
Bal's questioned acts were therefore made within his discretion as branch manager.
In Tan v. People, We held that as to the uncollected check deposits, the bank may honor the
check at its discretion in favor of clients. Bal's position as branch head entails the exercise of
such discretion.
Secondly, the PNB Administrative Adjudication Panel already penalized Bal for the
same infraction. The PNB Administrative Adjudication Panel penalized Bal with four (4)
months suspension without prejudice to the filing of an appropriate court action on the part
of the bank.
Moreover, the trial court correctly interpreted the PNB's Administrative Adjudication
Panel's pronouncement that its disposition finding Bal guilty of serious misconduct —
"without prejudice to the filing of the appropriate action in court to protect the interests of
the bank, including the recovery of the amounts involved"— referred only to the recovery
of the amount involved from the one who actually benefited from the fraud, that is,
Tan. It is therefore Tan who must be pursued by PNB for the amount that it claims to have
lost. In fact, PNB itself asserts that Tan had expressly acknowledged owing P520,000.00 to
the bank and had in fact issued a couple of promissory notes to PNB as to such obligation.
In any case, since Bal was already penalized by PNB for his violations by way of a four-
month long suspension, making him personally accountable for the liability that Tan had
already acknowledged to be his would be tantamount to penalizing him twice for the same
offense.
Lastly, Bal may not be held personally or solidarily liable. Settled is the rule that
solidarity is never presumed. There is solidary liability when the obligation so states, or
when the law or the nature of the obligation requires the same, which are unavailing in the
instant case.
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PANACAN LUMBER CO., ANTONIO B. GO, MA. TERESA C. GO AND DOROTEA B. GO,
PETITIONERS, VS. SOLIDBANK CORP.
G.R. No. 226272, September 16, 2020, Second Division (Hernando, J.)
DOCTRINE
Well-settled is the rule that personal notice to the mortgagor in extrajudicial foreclosure
proceedings is not necessary. Section 3 of Act No. 3135, as amended by Act No. 4118, requires
only the posting of the notice of sale in three public places and the publication of that notice in
a newspaper of general circulation. An exception to this rule is when the parties stipulate that
personal notice is additionally required to be given to the mortgagor. Failure to abide by the
general rule or its exception renders the foreclosure proceedings null and void.
FACTS
On March 7, 1997, Solidbank issued a FLC (US$168,000.00) in favor of PLC to finance

the latter's importation of lumber allegedly secured by a Domestic Letter of Credit dated
February 14, 1997 valued at P4,240,000.00 issued by Philippine Commercial and Industrial
Bank. However, when the shipment arrived in Davao City, Solidbank refused to release the
shipping documents necessary for the discharge of the goods for failure of PLC to pay the
amount under the FLC. In April 1997, PLC made partial payments of US$60,000.00.
Meanwhile, PLC obtained a loan from Solidbank in the amount of P700,000.00 which would
pay for the taxes, duties, and insurance premium on said lumber importation. As a security,
petitioners Antonio and Teresa executed a real estate mortgage over their property. They
were allegedly made to sign blank forms purporting to be a deed of REM with a principal
amount of P2,000,000.00.
Solidbank agreed to renew PLC's loan for another P700,000.00 after payment of
interests and other charges by petitioners. However, petitioners failed to pay the balance of
the total obligation which resulted in the extra-judicial foreclosure of mortgage over the
property with a principal obligation of P700,000.00. Solidbank later amended its Petition for
Extra-Judicial Foreclosure of Mortgage to increase the loan obligation to P1,140,245.10. It
then filed a Second Amended Petition to include petitioner PLC's obligation under the FLC
which resulted in the total loan obligation of P9,151,667.89.
A public auction was held where Solidbank was adjudged as the highest bidder for
the bid price of P2,637,600.00. Consequently, petitioners filed a complaint against Solidbank,
the Clerk of Court and Ex-Officio Sheriff of Manila, and Mario P. Villanueva, Sheriff-in-Charge,
with prayer for the issuance of a temporary restraining order and writ of preliminary
injunction claiming that they suffered damages by way of unrealized profits on account of
Solidbank's refusal to release the shipping documents pertaining to the lumber importation
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and that they were prejudiced by the subsequent foreclosure of mortgage over the property
covered by TCT No. T-217531, which wrongfully included the obligation under the FLC.
Solidbank opposed petitioners' application for a temporary restraining order and writ of
preliminary injunction.
The trial court issued a writ of preliminary injunction and enjoined respondent from
further executing acts towards consolidating Solidbank's ownership over the property.
Thereafter, trial on the merits ensued. Despite the issuance of a preliminary injunction,
Solidbank proceeded to consolidate its ownership over the subject property. Thus,
petitioners filed a Motion to Admit Supplemental Complaint to include Solidbank's
successor-in-interest, MBTC, the registered owner of the subject property. The trial court
granted the said motion. However, Solidbank failed to present any of its witnesses and file
its memorandum within the reglementary period. Thus, petitioners moved that the case be
submitted for decision. Nonetheless, the trial court allowed Solidbank to present its witness
over the objection of petitioners. Petitioners moved for the reconsideration and for the
inhibition of Judge Gregorio B. Clemeña. Consequently, Judge Clemeña inhibited from the
case but denied petitioners' motion for reconsideration.
Petitioners elevated the case on certiorari under Rule 65 before the CA. The appellate
court subsequently granted the petition. Meanwhile, Solidbank presented its bank manager,
Teresita Javellana, as witness and filed its formal offer of evidence. However, the trial court
refused to act on the said formal offer upon notice of this Court's ruling on the petition for
review on certiorari. Solidbank moved for the reconsideration which was denied. Hence,
Solidbank simply tendered its excluded evidence.
ISSUES
1. Was the extra-judicial foreclosure of the REM null and void?

2. Did the mortgage contract include PLC's other loan obligations?
3. Did Solidbank breach the contract when it amended the petition for foreclosure of
REM to include PLC's other loan obligations?
RULING
1. YES. Well-settled is the rule that personal notice to the mortgagor in extrajudicial
foreclosure proceedings is not necessary. Section 3 of Act No. 3135, as amended
by Act No. 4118, requires only the posting of the notice of sale in three public
places and the publication of that notice in a newspaper of general circulation. An
exception to this rule is when the parties stipulate that personal notice is
additionally required to be given to the mortgagor. Failure to abide by the general
rule or its exception renders the foreclosure proceedings null and void.
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A perusal of the records reveals that petitioners were notified of the foreclosure
proceedings by Solidbank through the Application of Extra-Judicial Foreclosure of Mortgage
filed by the bank in 1998. However, Solidbank twice amended the said petition for extra-
judicial foreclosure which consequently resulted in the increase of PLC's mortgage
indebtedness from P797,806.18 to P9,151,667.89. In both instances, Solidbank did not send
petitioners a personal notice of the two amended petitions. Instead, it proceeded with the
foreclosure of mortgage as per Notice of Extra-Judicial Sale dated September 7, 1999.
The provision clearly establishes that personal notice is required before Solidbank may
proceed with the foreclosure of the subject property. Thus, Solidbank's act of proceeding
with the foreclosure despite the absence of personal notice to petitioners violated the said
deed of REM which accordingly renders the foreclosure null and void. If indeed the parties
did not intend to require personal notice in addition to the statutory requirements of posting
and publication, then the said provision should not have been included in the mortgage
contract.
2. NO. As a general rule, a mortgage liability is usually limited to the amount

mentioned in the contract. However, the amounts named as consideration in a
contract of mortgage do not limit the amount for which the mortgage may stand
as security if from the four corners of the instrument the intent to secure future
and other indebtedness can be gathered.
Alternatively, while a real estate mortgage may exceptionally secure future loans or
advancements, these future debts must be specifically described in the mortgage contract.
An obligation is not secured by a mortgage unless it comes fairly within the terms of the
mortgage contract. The stipulation extending the coverage of a mortgage to advances or
loans other than those already obtained or specified in the contract is valid and has been
commonly referred to as a "blanket mortgage" or "dragnet" clause.
A mortgage that provides for a dragnet clause is in the nature of a continuing guaranty
and constitutes an exception to the rule that an action to foreclose a mortgage must be
limited to the amount mentioned in the mortgage contract. Although a blanket mortgage or
a dragnet clause is generally recognized as valid, these other obligations, past or future,
secured by the REM must be specifically described within the terms of the mortgage contract.
As can be gleaned from the records, the REM with maximum amount of P2,000,000.00 was
constituted by the parties to secure PLC's loan obligation in the amount of P700,000.00
under P.N. No. 96000251. The Deed of REM also includes all extensions or renewals of the
loan or credit accommodation granted to PLC as the mortgagor or debtor, i.e. renewal PN, in
the amount of P700,000.00.
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Thus, it cannot be denied that the REM covered not only PN No. 96000251 but the
renewal PN as well since the REM clearly provides that it shall stand as security for any
"extension(s) or renewal(s) of the loan or credit accommodation granted to the DEBTOR or
MORTGAGOR". There is no doubt, therefore, as to the inclusion of the renewal PN under the
coverage of the Deed of REM.
As to the FLC, the Deed of REM is bereft of any reference or provisions that it likewise
secured the aforesaid obligation. It bears noting that the FLC was executed by the parties
before the execution of PN No. 96000251 and the renewal PN. Although a REM may validly
secure past obligations executed by the parties, this is not the case herein. The Deed of REM
is clear and explicit that it only covers certain loans and other accommodations obtained
from Solidbank without reference to its past obligations such as the FLC.
3. The terms of the Deed of REM are plain and clear that it only secures the loan or
credit accommodation granted by Solidbank to PLC upon the execution of PN No.
96000251 and those which may thereafter be granted, i.e. the renewal PN. No
reference has been made in the REM that past obligations of PLC, i.e. the FLC, is
also secured by the same Deed of REM. Further, the Deed of REM has a maximum
limit of P2,000,000.00. Plainly, the obligation under FLC, i.e. US$168,000.00,
exceeds this benchmark of P2,000,000.00 considering the exchange rate
prevailing in 1997. Although the parties are not prohibited to secure the FLC with
the Deed of REM, the provisions thereof bear no evidence of their intention for its
inclusion. Thus, in the absence of clear and satisfactory evidence of a contrary
intention, the Deed of REM does not extend to PLC's past obligations specifically,
the FLC.
Despite the foregoing, We affirm the findings of the appellate court that PLC has an
outstanding obligation of P700,000.00 in favor of Solidbank under the renewal PN No.
96000251 which renewal was granted and executed after PLC paid its obligation of
P700,000.00 under the original PN No. 96000251. The declaration of nullity of this
foreclosure, however, is without prejudice to Solidbank's filing of another action to foreclose
the Deed of REM against PLC taking into account the rule on proper notice and the amount
of loan secured by the Deed of REM as stated in the renewal PN and applicable interest and
penalty charges, as well as other requirements for foreclosure of the REM. Nonetheless,
despite the nullity of the foreclosure sale as to the amount of P9,151,667.89, petitioners'
obligations to Solidbank under the FLC remain.
Evidently, Solidbank extended to PLC a FLC worth US$168,000.00. Petitioners claim that
Solidbank's refusal to release the documents of title of PLC's lumber importation despite
securing it with PCIB's DLC caused them substantial losses by way of unrealized profits.
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In this case, petitioner PLC, the buyer, procured the letter of credit from Solidbank and
obliged itself to pay the latter US$168,000.00 upon receipt of the documents of title. On the
other hand, Solidbank undertakes to pay the seller or the beneficiary of the credit instrument
upon receipt of the draft and proper documents of title and to surrender the documents to
PLC upon reimbursement. Finally, the seller or the beneficiary of the credit instrument,
Ricoland Resources SND BWD (Ricoland), ships the goods to the buyer and delivers the
documents of title and draft to the issuing bank to recover payment.
Undoubtedly, the seller, Ricoland, shipped the goods to Davao City, Philippines and
delivered the documents of title to Solidbank, which in turn refused to release said
documents of title to PLC for its failure to reimburse Solidbank the amount of US$168,000.00.
Admittedly, petitioners failed to pay its total obligation to Solidbank under the FLC. Thus,
Solidbank cannot be faulted when it denied releasing the documents of title pertaining to the
lumber importation.
Petitioners' claim that Solidbank is obliged to surrender the documents of title to

petitioners despite non-payment of their obligation under the FLC, it being secured by PCIB's
DLC, is untenable. Solidbank appropriately refused to rely on the PCIB's DLC when PLC
defaulted on its obligation. The stipulation clearly gives Solidbank the right to enforce
payment on the obligation of PLC under the FLC. Solidbank has the option to demand
payment directly from PLC upon the latter's default and is not obliged to first go after the
collateral security. In addition, Solidbank is not obliged under the agreement to surrender
the documents of title before PLC's payment of its obligation under the FLC. The collateral
security does not guarantee the release of documents of title to PLC, but rather the
reimbursement of US$168,000.00 as agreed upon by parties. Even so, PCIB's DLC, which was
allegedly issued to secure Solidbank's FLC, pertains to a different transaction. This,
furthermore justified the withholding by Solidbank of the documents of title before payment
of the total loan obligation by the PLC.
In conclusion, petitioners have no right to demand payment of damages from Solidbank

on the ground of substantial losses in its lumber importation caused by Solidbank's refusal
to release the documents of title. However, in view of PLC's partial payment in the amount
of US$60,000.00, its remaining loan obligation under the FLC is reduced to US$108,000.00.
The rate of exchange should be that prevailing at the time of payment.
Finally, we affirm the declaration of nullity of the consolidation of title over the
mortgaged property in the name of MBTC for being in violation of the writ of preliminary
injunction issued by the trial court. Consequently, we delete the appellate court's grant of
one (1) year period of redemption in favor of mortgagors Antonio and Ma. Teresa in view of
the nullity of the whole foreclosure proceedings.
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FROILAN NAGAÑO, et al. v. LUIS TANJANGCO, et al.

G.R. No. 204218, May 12, 2021, Third Division (Hernando, J.)
DOCTRINE
What is crucial is the coverage of the application for retention. Respondents' application
for retention pertained to areas in the entire 238.7949 hectares subject property, not just in the
95.5845-hectare portion originally allocated to them. By applying for retention of areas in the
entire subject property, respondents exercised their rights as owners thereof.
FACTS
The property which is the subject of this case is a 238.7949-hectare piece of land in
Nueva Ecija. On Oct. 21, 1972, the subject property was placed under the land transfer
program of the government pursuant to Presidential Decree 27 (PD 27), or the Tenants
Emancipation Decree.
At the time, the property was registered under the names of the spouses Jose
Tanjangco and Anita Suntay (Spouses Tanjangco) with respect to 144 hectares, and under
the names of respondents and their two other siblings, Federico Tanjangco (Federico) and
Antonio Tanjangco (Antonio) with respect to 95.5845 hectares. Pursuant to PD 27,
emancipation patents were issued in favor of the tenant-beneficiaries.
On April 7, 1983, the 144-hectare portion allocated to the Spouses Tanjangco was
transferred to respondents Luis Tanjangco et al. and their siblings.
On Oct. 5, 1999, the respondents filed an application for retention of five hectares for
each of them on the subject property pursuant to R.A. No. 6657 or the Comprehensive
Agrarian Reform Law of 1988 before the Department of Agrarian Reform (DAR) Regional
Office.
Petitioners Froilan Nagaño, et al., who claim to be transferees of the areas sought to
be retained by respondents, alleged that respondents were disqualified to retain,
considering that they each already owned more than 24 hectares of land on the subject
property.
During the pendency of the petition for retention, respondents and their siblings
executed a deed of partition dated July 4, 200, allocating 20 hectares to each respondent,
138.7949 hectares to Federico and 20 hectares to Antonio. As such, on said date, the
respondents each owned less than 24 hectares.
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Meanwhile, the DAR Regional Director on 2004 ruled that respondents were not
entitled to retention because they each owned more than 24 hectares of tenanted rice or
corn lands, in violation of the first ground provided in DAO 04-91. Upon denial of their
motion for reconsideration, respondents appealed to the DAR Secretary.
The DAR Secretary affirmed the Regional Director’s ruling but on another ground –
respondents each owned more than seven hectares of other agricultural lands. Upon motion
for reconsideration, the DAR Secretary reversed its earlier order and held that respondents
complied with the "compact and contiguous" requirement and are entitled to retention.
Petitioners filed a motion for reconsideration of the DAR Secretary’s resolution

granting respondents’ motion for reconsideration. This, however, was denied by the DAR
Secretary for being a prohibited pleading. Petitioners thus appealed to the Office of the
President (OP).
The OP reinstated the DAR Regional Director’s decision and held that respondents
were not entitled to retention. The OP further denied the respondents’ ensuing motion for
reconsideration.
The Court of Appeals (CA), however, reinstated the resolutions of the DAR secretary
granting the respondents’ application for retention on the following grounds: (1) petitioners’
appeal before the OP was belatedly filed; (2) petitioners were without personality to oppose
the application for retention because they were illegal transferees of the lots; and (3)
respondents each owned less than 24 hectares of land on the property as a result of the
partition.
ISSUES
(1) Whether the transfer of the lots to petitioners is valid. (NO.)

(2) Whether the respondents are entitled to retention. (NO.)
RULING
(1) NO. Any transfer made by a tenant-beneficiary in violation of PD 27 is void. This

is "to guarantee the continued possession, cultivation and enjoyment by the beneficiary of
the land that he tills x x x." Thus, in a number of cases, We struck down contracts of sale
executed in violation of PD 27.
The issue of whether EO 228 rendered the prohibition of transfers in PD 27 ineffective

was already resolved in Estate of Vda. de Panlilio v. Dizon, where We held that there is no
inconsistency between PD 27 and EO 228. There is no incompatibility between PD 27 and
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EO 228 because EO 228 "deals with payment of amortization and not on who qualify as legal
transferees of lands covered by PD 27." Thus, the prevailing rule is that lands covered by PD
27 can only be validly transferred by hereditary succession or to the government.
(2) NO. What is crucial here is the coverage of the application for retention.
Respondents' application for retention pertained to areas in the entire 238.7949 hectares
subject property, not just in the 95.5845-hectare portion originally allocated to them. By
applying for retention of areas in the entire subject property, respondents exercised their
rights as owners thereof.
And being co-owners of 238.7949 hectares, each of them owned more than 24
hectares. Clearly, they are covered by the disqualification in DAO 04-91. In other words, it
does not matter that on October 21, 1972, respondents only co-owned 95.5845 hectares
because in their application for retention, they included portions of 238.7949-hectare
subject property.
That respondents executed a Deed of Partition on July 4, 2000, which allocated to

them less than 24 hectares each on the subject property, is irrelevant considering that it was
executed after the application for retention was filed. What is important in this case is that
when they filed the application for retention on October 5, 1999, they owned the entire
subject property, and their application covered the entire subject property, not just 95.5845-
hectare portion thereof. Thus, during their application for retention, respondents each
owned more than 24 hectares of land on the subject property, resulting to their
disqualification to retain under DAO 04-91.
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MUNICIPALITY OF CORELLA, represented by MAYOR JOSE NICANOR D. TOCMO v.

PHILKONSTRAK DEVELOPMENT CORPORATION and VITO RAPAL
G.R. No. 218663, February 28, 2022, Second Division, (Hernando, J.)
DOCTRINE
Quantum meruit literally means, “as much as he deserves.” This legal principle is
predicated on equity and states that a person may recover a reasonable value of the thing he
delivered or the service he rendered. It is a device to prevent undue enrichment based on the
equitable postulate that it is unjust for a person to retain a benefit without praying for it. In
this case, despite the invalidity of the municipal ordinance, which in turn rendered the contract
between Corella and Philkonstrak invalid, the latter is still entitled to receive payment for the
services it rendered for the local government of Corella. Corella cannot be unjustly enriched and
allowed to retain the benefits of the services rendered by Philkonstrak without properly paying
for it.
FACTS
Corella is a municipality located in Bohol and represented by its municipal mayor,

Tocmo. Phallometric is a corporation duly organized and existing under Philippine laws and
is engaged in the business of design/build construction. Rapal was the former mayor of
Corella and during the pendency of the proceedings, he is the Vice-Mayor of Corella.
In 2009, Corella conducted a public bidding for the rehabilitation and improvement
of its municipal waterworks system project and Philkonstrak emerged as the winning
bidder. Through then mayor Rapal, Corella entered into a contract agreement with
Philkonstrak for a total amount of P15, 997, 732.63. Philkonstrak submitted progress reports
to the municipal engineer of Corella for coordination and supervision and likewise procured
materials, equipment, and labor force for the construction works.
As of December of 2009, Philkonstrak accomplished more than 50% of the work

essential for the project and expended the amount of P8, 233, 000.00. Corella, through
Tocmo, refused to pay and denied liability. Therefore, Philkonstrak was forced to suspend
its construction works and sent Corella, through Tocmo, a formal demand to pay for actual
expenses incurred and a letter of demand to Rapal was also made. In his reply, Tocmo denied
liability and questioned the validity of the contract averring that Rapal had no authority to
enter into such contract during his term as mayor of Corella.
On April 28, 2011, Philkonstrak filed before the CIAC a complaint for collection of sum
of money against Corella and Rapal. Philkonstrak claimed that it had already undertaken
more than 50% of the construction work causing it to incur the amount of P8, 233, 000.00,
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excluding other materials not yet installed as per completion report. It also argued that the
refusal to pay was because of the political differences of Tocmo with Rapal and that it had no
knowledge of underlying issues between the two administrations, and it merely complied
faithfully with the terms of the contract.
According to Rapal in his answer, he averred that he was authorized to enter into a
contract with Philkonstrak in accordance with Municipal Ordinance No. 2010-02 or “An
Ordinance Appropriating the Amount of Twenty-Seven Million Pesos (P27, 000, 000.00) for
the Purchase of the Following Heavy Equipment: One Unit Brand New Road Grader, One Unit
Reconditioned Road Roller, and Rehabilitation/Improvement on the Existing Waterworks
System of the [Local Government Unit].
Corella asserted that the contract is not binding because the Municipal Ordinance was
in violation of Article 107(g) of the IRR of RA 7160 or the LGC of 1991. Corella contended
that Rapal was in bad faith since he knew that the ordinance was defective and thus he was
not legally authorized to enter into a contract with Philkonstrak.
ISSUE
Whether or not Philkonstrak is entitled to be compensated for expenses incurred in

the construction works made in Corella.
RULING
YES. The SC granted the petition in part. The contract between Philkonstrak and
Corella is not valid and binding. However, Corella is obliged to pay Philkonstrak based
on the principle of quantum meruit.
The principle of quantum meruit is applicable in this case. Quantum meruit literally
means, “as much as he deserves.” This legal principle is predicated on equity and states that
a person may recover a reasonable value of the thing he delivered or the service he rendered.
It is a device to prevent undue enrichment based on the equitable postulate that it is unjust
for a person to retain a benefit without praying for it.
In this case, despite the invalidity of the municipal ordinance, which in turn rendered
the contract between Corella and Philkonstrak invalid, the latter is still entitled to receive
payment for the services it rendered for the local government of Corella. Corella cannot be
unjustly enriched and allowed to retain the benefits of the services rendered by Philkonstrak
without properly paying for it.
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Philkonstrak sufficiently established its right to be compensated on the basis of

quantum meruit. The Court finds that Philkonstrak entered into the contract in good faith
and for the good interest of Corella.
Hence, the petition is granted in part.
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DORIS MARIE S. LOPEZ v. ANICETO G. SALUDO, JR.

G.R. No. 233775, September 15, 2021, Second Division, (Hernando, J.)
DOCTRINE
Trust is the legal relationship between one person having an equitable ownership in
property and another person owning the legal title to such property, the equitable ownership
of the former entitling him to the performance of certain duties and the exercise of certain
powers by the latter. The Civil Code provides that an implied trust is created when a property
is sold to one party but paid for by another for the purpose of having beneficial interest in said
property. Moreover, Article 1456 of the Civil Code pertinently provides: If property is acquired
through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property comes.
An implied trust arises, not from any presumed intention of the parties, but by operation
of law in order to satisfy the demands of justice and equity and to protect against unfair dealing
or downright fraud. The burden of proving the existence of a trust is on the party asserting its
existence, and such proof must be clear and satisfactorily, show the existence of the trust and
its elements.
FACTS
Respondent Saludo filed an Action for Reconveyance and Damages with a Prayer for
a Temporary Restraining Order and/or Preliminary Injunction against petitioner.
Respondent prayed that he be declared the true owner of two parcels of land located in
Barrio Pineda, Pasig City, and to have said properties reconveyed to him. Respondent further
prayed for the payment of attorney's fees, litigation expenses and costs of suit.
Respondent alleged that sometime in April or May 1997, petitioner told him that she
knows of two parcels of land that were being offered for sale at a reasonable price. At first,
respondent was hesitant to buy the said lands. However, he was eventually convinced to
purchase the subject properties due to the persistent assurances of petitioner that: (a) the
titles thereto were clean; (b) the transfer certificates of title (TCT) would be issued in
respondent's name after the execution of the sale; and (c) that the offered selling price was
very reasonable and even bordering on a bargain sale considering the location of the
properties and their proximity to business centers.
Petitioner then offered to pose as the buyer because the seller, who was her close
friend, allegedly wanted to deal only with her to keep his financial constraints within his
close family friends. Respondent then entrusted to petitioner the purchase price amounting
to P15,000,000.00, with the agreement that petitioner would be the signatory in the Deed of
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Sale but will hold the properties in trust for, and subsequently reconvey the same to
respondent. After the execution of the sale, however, respondent noticed that petitioner
started evading him and did not give any update as to the registration of the sale in his name.
When respondent inquired on the status of the properties, he found out that the properties
were already registered in the name of petitioner as evidenced by TCTs issued by the
Register of Deeds of Pasig City, pursuant to a Deed of Absolute Sale dated May 25, 1999
executed by Bulalacao Realty Corporation (BRC) in favor of petitioner.
This prompted respondent to immediately assume possession of the properties and

introduce major renovations on the house amounting to a total of P9,000,000.00. He likewise
paid the real property taxes thereon for 13 years. Since then, he has been in actual possession
of the properties. As the occupant thereof, he is also the one paying the homeowner's
association dues.
Respondent made several demands, both oral and written, upon petitioner to
reconvey the subject properties to him, but to no avail. Hence, respondent filed an Affidavit
of Adverse Claim against petitioner over the properties and had it annotated on the TCTs.
On July 19, 2006, respondent filed the instant Complaint for Reconveyance and
Damages imputing bad faith on the part of petitioner. He claimed that he is the true owner of
the subject properties and that petitioner merely holds the same in trust for him. In support
thereof, he presented the four checks that he issued in the name of petitioner for the payment
of the purchase price. He also reiterated that he has been in actual possession of the
properties in question from the time he had fully paid them up to the filing of the instant
complaint.
In her Answer, petitioner claimed that she purchased the subject properties from BRC
pursuant to a Deed of Sale under Pacto de Retro. Since the properties were not repurchased
by the vendor-a-retro, a Deed of Absolute Sale was executed in her favor for the two lots.
Petitioner claimed that respondent volunteered to finance the renovation of the house on
account of their special relationship. However, when their relationship turned sour,
respondent surreptitiously filed an adverse claim over the subject properties with the
Register of Deeds of Pasig City, falsely claiming ownership thereof. This prompted petitioner
to file a complaint with the barangay against respondent for "Pagpapaalis sa tinitirahang
bahay or Ejectment" on June 9, 2006. However, despite due notice, respondent failed to
attend the barangay proceeding. Repeated demands made by petitioner upon respondent to
vacate the properties in question proved futile. Instead, respondent filed the instant
complaint against petitioner before the lower court.
The RTC declared respondent as the true and rightful owner of the subject properties.
Respondent was able to prove by preponderance of evidence that he was the one who paid
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the subject properties. The trial court also held that his actual possession of the properties
in question from the moment the purchase price had been paid in full is a clear proof of his
ownership over the disputed properties. While it is true that the sale was made through
petitioner, she was merely a trustee of the subject properties, the true and direct owner of
the same being herein respondent.
The CA denied the appeal of petitioner and affirmed the RTC Decision.
ISSUE
Whether respondent had sufficiently proved that an implied trust was created
between him and petitioner.
RULING
YES. The SC found that petitioner was able to prove his ownership over the subject
properties.
Trust is the legal relationship between one person having an equitable ownership in
powers by the latter.
The Civil Code provides that an implied trust is created when a property is sold to one
party but paid for by another for the purpose of having beneficial interest in said property:
Article 1448. There is an implied trust when property is sold, and the legal estate is
granted to one party but the price is paid by another for the purpose of having the
beneficial interest of the property. The former is the trustee, while the latter is the
beneficiary. However, if the person to whom the title is conveyed is a child, legitimate
or illegitimate, of the one paying the price of the sale, no trust is implied by law, it
being disputably presumed that there is a gift in favor of the child.
Moreover, Article 1456 of the Civil Code pertinently provides:
Art. 1456. If property is acquired through mistake or fraud, the person obtaining it
is, by force of law, considered a trustee of an implied trust for the benefit of the person
from whom the property comes.
An implied trust arises, not from any presumed intention of the parties, but by
operation of law in order to satisfy the demands of justice and equity and to protect against
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unfair dealing or downright fraud. The burden of proving the existence of a trust is on the
party asserting its existence, and such proof must be clear and satisfactorily, show the
existence of the trust and its elements. While implied trusts may be proven by oral evidence,
the evidence must be trustworthy and received by the courts with extreme caution, and
should not be made to rest on loose, equivocal or indefinite declarations. Trustworthy
evidence is required because oral evidence can easily be fabricated.
In the case at bar, both the CA and the RTC declared that based on the evidence on
record, an implied trust relation arose between respondent and petitioner. Respondent had
actually adduced, evidence to prove his intention to purchase the subject properties by
paying the purchase price thereof, through petitioner, with the attendant expectation that
petitioner would later on reconvey the same to him. This SC sees no cogent reason to revisit
these well-supported conclusions of the lower courts.
The preponderance of evidence established positive acts of respondent indicating,

without doubt, that he considered the subject properties as his exclusive properties. First, he
entered into actual possession of the properties in question immediately after his full
payment of the purchase price and remained in possession thereof until the filing of the
Complaint before the lower court. Second, he spent millions for the renovation of the house
constructed on the premises. Finally, he had the tax declarations transferred in his name and
faithfully paid the realty taxes thereon.
The pieces of evidence presented demonstrate respondent's intention to acquire the

subject properties for his own account and benefit. The surrounding circumstances as to its
acquisition speak of the intent that the equitable or beneficial ownership of the properties
should belong to respondent.
Since petitioner, in this case, insists that the purchase money for the properties was
gratuitously furnished by respondent, the formalities of a valid donation under Article 748
of the Civil Code should have been complied with, failing which, there could be no donation
to speak of. As in Carinan v. Spouses Cueto, petitioner never adduced evidence in support of
said argument. Thus, her claim of an alleged donation should necessarily fail.
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PASCUAL PURISIMA, JR., LEONARDO PURISIMA, EUFRATA PURISIMA, AND ESTELITA

DAGUIO v. MACARIA PURISIMA AND SPOUSES ERLINDA AND DANIEL MEDRANO
G.R. No. 200484, November 18, 2020, Third Division, (Hernando, J.)
DOCTRINE
The Statute of Frauds affects merely the enforceability of the contract. By Article 1403
(2) (e) of the Civil Code, a verbal contract for the sale of real property is unenforceable, unless
ratified. For such contract offends the Statute of Frauds. But long accepted and well settled is
the rule that the Statute of Frauds is applicable only to executory contracts - not to contracts
either totally or partially performed. It matters not that neither the receipt for the
consideration nor the sale itself was in writing. Because "oral evidence of the alleged
consummated sale of the land" is not forbidden by the Statute of Frauds and may not be
excluded in court.
FACTS
On November 8, 1999, herein respondents filed a complaint for reconveyance,

cancellation and quieting of title against their late brother's heirs, Purisima, Jr., Leonardo
Purisima, Eufrata Purisima and Estelita Daguio, herein petitioners. Respondents alleged that
their brother, Pascual Purisima Sr., owned Lot 71, PLS-631-D located in Cagumitan, Tuao,
Cagayan. However, sometime in 1960, Pascual Sr. sold portions of the aforesaid property to
respondents to answer for his medical bills. At the time of the sale, the whole land was not
yet titled but it was surveyed for a patent application under Purisima Sr.'s name by the Land
Management Bureau.
Banking on mutual trust, the survey as well as the sale was not recorded by the
parties. Since the 1960s and prior to the death of Purisima Sr., respondents had been in open,
continuous and exclusive possession of the apportioned properties. They had been paying
realty taxes thereon and had their own tenants tilling their respective portions of land.
On September 19, 1978, petitioners, as heirs of Pascual Sr., executed an Extrajudicial

Settlement of Estate of Deceased, Pascual Purisima and Sale over the unregistered property
of their father which included the sale of the properties apportioned to the respondents.
On December 16, 1991 Purisima Jr. was granted a Free Patent under the name of
"Heirs of Pascual Sr.". The free patent covered the whole of Lot 71, including the portions
that were already sold to the respondents. The Free Patent was later on registered with the
Registry of Deeds of Tuao, Cagayan and Original Certificate of Title was issued in favor of the
"Heirs of Pascual Purisima Sr. rep. by Pascual Purisima Jr."
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Respondents filed a case before the RTC to remove the cloud on their title over the
apportioned lots and for their ownership to be not disturbed. The petitioners countered that
there was no sale that transpired at any given time. The amounts given by the respondents
were due to the fact that their father was sick. Admittedly, while they all signed
the Extrajudicial Settlement of Estate of Deceased, Pascual Purisima, Sr. and Sale, they did
not understand its import and were convinced by the respondents, their aunts, that the
document was merely an evidence of their indebtedness. They did not appear before a notary
public in the execution thereof nor were they given a copy of the said document.
The RTC dismissed the complaint of respondents and ruled that even if there were a
sale that transpired, it was not enforceable since it was not embodied in a written document.
The CA reversed the RTC decision and ruled that reconveyance was proper. The CA held that
the 1978 Extrajudicial Settlement of Estate of Deceased, Pascual Purisima, Sr. and
Sale confirmed that the apportioned properties were sold to the respondents and the
signatures of the petitioners therein clearly signified their conformity to the sale. Also, the
Statute of Frauds, which requires a written instrument for the enforceability of certain
contracts, applies only to executory contracts, not to consummated contracts.
ISSUE
Whether the Statute of Frauds does not apply in the case at bar therefore the action
for reconveyance filed by respondents should prosper.
RULING
YES. The SC held that the CA was correct in not applying the Statute of Frauds in the
case at bar. The Statute of Frauds affects merely the enforceability of the contract. In the early
case of Iñigo v. Estate of Adriana Maloto, this Court elucidated on when the Statute of
Frauds vis-a-vis a contract of sale would be inapplicable:
By Article 1403 (2) (e) of the Civil Code, a verbal contract for the sale of real property
is unenforceable, unless ratified. For such contract offends the Statute of Frauds. But long
accepted and well settled is the rule that the Statute of Frauds is applicable only to executory
contracts - not to contracts either totally or partially performed. It matters not that neither
the receipt for the consideration nor the sale itself was in writing. Because "oral evidence of
the alleged consummated sale of the land" is not forbidden by the Statute of Frauds and may
not be excluded in court.
The 1960 oral sale was already fully consummated as evidenced by the
1978 Extrajudicial Settlement of Estate of Deceased, Pascual Purisima, & and Sale which was
undisputed and acknowledged by the petitioners themselves, and as established by the
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pieces of evidence presented by the respondents such as the testimonies of their tenants and
other documentary evidence. There can be no escaping the fact that the sale between the
respondents and Purisima Sr. was consummated and that the Statute of Frauds has no
application in the case. Verily, a contract of sale, whether oral or written, is classified as a
consensual contract, which means that the sale is perfected by mere consent and no
particular form is required for its validity. The 1960 oral sale thus stands and all its
consequences under the law are thus binding to the parties and their successors-in-interest.
Pursuant to Article 1458 of the Civil Code which defines a contract of sale, the transfer
of the properties to respondents arising from the 1960 sale by Purisima Sr. of the
apportioned properties effectively vested ownership to the respondents from that time.
Inasmuch as there was no dispute as to the fact that the apportioned properties were in the
possession of the respondents, the CA correctly ordered its reconveyance to the respondents,
notwithstanding the subsequent issuance of the OCT in favor of the petitioners. While the
certificate of title in favor of defendants-appellees is indefeasible, unassailable and binding
against the whole world, including government itself, it does not create or vest title. It merely
confirms or records the title already existing and vested. It cannot be used to protect a
usurper from the true owner, nor can it be used as shield for the commission of fraud; neither
does it permit one to enrich himself at the expense of others.
An action for reconveyance of property based on an implied or constructive trust is

the proper remedy of an aggrieved party whose property had been erroneously registered
in another's name. The prescriptive period for the reconveyance of registered property is
ten years, reckoned from the date of the issuance of the certificate of title. However, the ten-
year prescriptive period for an action for reconveyance is not applicable where the
complainant is in possession of the land to be reconveyed and the registered owner was
never in possession of the disputed property. In such a case, the action for reconveyance filed
by the complainant who is in possession of the disputed property would be in the nature of
an action to quiet title which is imprescriptible.
Hence, the petition for review on certiorari filed by petitioners is denied and the CA
decision granting the action for reconveyance in favor of respondents is affirmed.
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LAND BANK OF THE PHILIPPINES v. DEL MORAL, INC

G.R. No. 187307, October 14, 2020, Second Division (Hernando, J.)
DOCTRINE
Out of regard for the DAR's expertise as the concerned implementing agency, courts
should henceforth consider the factors stated in Section 17 of RA 6657, as amended, as
translated into the applicable DAR formulas in their determination of just compensation for the
properties covered by the said law. If, in the exercise of their judicial discretion, courts find that
a strict application of said formulas is not warranted under the specific circumstances of the
case before them, they may deviate or depart therefrom, provided that this departure or
deviation is supported by a reasoned explanation grounded on the evidence on record. In other
words, courts of law possess the power to make a final determination of just compensation.
FACTS
Respondent Del Moral, Inc. (Del Moral) is a domestic family corporation and the
registered owner of several parcels of land situated in different municipalities in Pangasinan
with a total area of 125.2717 hectares. These parcels of land were originally tobacco
farmlands. 102.9766 hectares of Del Moral's property were later placed under the coverage
of the agrarian reform program under Presidential Decree (P.D.) No. 27. On July 17, 1987,
Executive Order (E.O.) No. 2284 was issued which (1) provided for the full land ownership
to qualified farmer-beneficiaries covered by P.D. No. 27; (2) determined the value of
remaining unvalued rice and com lands subject to P.D. No. 27; and (3) provided for the
manner of payment by the farmer beneficiary and mode of compensation to the landowner.
Pursuant to Section 2 of E.O. No. 228, the Department of Agrarian Reform (DAR) computed
the just compensation to be paid to Del Moral in the total amount of P342,917.81. In 1992,
petitioner Land Bank of the Philippines (LBP) informed Del Moral of the approval of its
monetary claim pertaining to the 102.9766 hectares of farmlands which were placed under
the coverage of P.D. No. 27. The LBP assigned the original total valuation in the amount of
P342,917.81 or roughly P3,329.30 per hectare as just compensation to Del Moral. However,
Del Moral found the assigned valuation made by the DAR and the LBP to be grossly
inadequate and unreasonably low. Thus, Del Moral filed a petition on April 26, 2002 before
the RTC for the proper determination of just compensation.
The RTC rendered its Decision computing the just compensation based on the recent
fair market value of the property, instead of using the prevailing factors at the time of the
taking. The court a quo used the formula in DAR Administrative Order (A.O.) No. 5 (Series of
1998) and fixed the amount of just compensation at P216,104,385.00. In addition, it awarded
Del Moral P90 million as temperate damages and PhP10 million as nominal damages. The
RTC also imposed legal interest on the monetary awards at the rate of six percent (6%) per
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annum to be computed from the finality of judgment until the amount is actually and fully
paid.
The CA in CA-G.R. SP No. 983739 affirmed the RTC's computation for just
compensation but reduced the award for temperate and nominal damages to P10 million
and P1 million, respectively. Upon denial of its motion for reconsideration, the DAR filed a
Petition for Review on Certiorari, docketed as G.R. No. 181183, before this Court. However,
on June 4, 2008, this Court denied the said petition for failure to (1) state the material date
when it filed its motion for reconsideration; and (2) submit a verification of the petition, a
certificate of non-forum shopping, and an affidavit of service that shows competent evidence
of the affiants' identities. On October 28, 2008, this Resolution became final and executory
and the corresponding entry of judgment was issued. Prior to the finality of the denial of the
DAR's Petition for Review before this Court, the CA issued the assailed Decision denying the
LBP's appeal regarding the proper computation of just compensation. Aware of its earlier
pronouncement in CA-G.R. SP No. 98373, the CA similarly affirmed the RTC's computation
for just compensation and reduced the award for damages to conform to its previous ruling.
Hence, the LBP filed this present Petition. With the enactment of R.A. No. 9700, amending
R.A. No. 6657, the LBP argues that the issue as to which formula should be followed in
computing the just compensation is already mooted.
ISSUE
1. W/N the the CA correctly affirmed the findings of the RTC in relation to the
computation of just compensation.
2. W/N the award of temperate and nominal damages is proper.
RULING
1. YES. The determination of just compensation is a judicial function which cannot

be curtailed or limited by legislation, much less by an administrative rule.31
Section 57 of R.A. No. 6657 vests the Special Agrarian Courts the "original and
exclusive jurisdiction over all petitions for the determination of just compensation
to landowners." While Section 17 of R.A. No. 6657 requires the due consideration
of the formula prescribed by the DAR, the determination of just compensation is
still subject to the final decision of the proper court.
Out of regard for the DAR's expertise as the concerned implementing agency, courts
should henceforth consider the factors stated in Section 17 of RA 6657, as amended, as
translated into the applicable DAR formulas in their determination of just compensation for
the properties covered by the said law. If, in the exercise of their judicial discretion, courts
find that a strict application of said formulas is not warranted under the specific
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circumstances of the case before them, they may deviate or depart therefrom, provided that
this departure or deviation is supported by a reasoned explanation grounded on the
evidence on record. In other words, courts of law possess the power to make a final
determination of just compensation.
Thus, the CA correctly affirmed the findings of the RTC. The LBP's argument on
mandatory adherence to the provisions of the law and administrative orders must fail. The
RTC's judgment must be given due respect as an exercise of its legal duty to arrive at a final
determination of just compensation. We affirm the findings of the RTC regarding its
computation of the just compensation based on the present or current fair market value of
the subject properties founded on the evidence presented by Del Moral, that is, the Appraisal
Report dated March 21, 2005 prepared by the expert witness Manrico Alhama (Alhama), a
licensed real estate broker or appraiser. The RTC properly gave credence on the testimony
of Alhama as an expert witness and his appraisal report which considered the area, technical
descriptions stated in the title, boundaries, bodies of water surrounding the subject
properties, actual and potential use of the subject properties, distance to roads and
highways, agro industrial zones, hospitals, public market and other infrastructures. An
ocular inspection and interview of the residents and barangay officials were also conducted.
The appraisal report likewise considered the Land Usage Map of Rosales, Pangasinan-
Municipal Planning and Development Office to determine the comprehensive land use
planning and the proximity of the subject properties to the urban center of Rosales,
Pangasinan. The RTC properly disregarded the valuation presented by the LBP using the
formula provided in E.O. No. 228, that is, AGP (average gross production in 50 kilos for the
last three normal crop years prior to the effectivity of P.D No. 27 or in 1972) x 2.5 (constant
factor) x P35.00/cavan (the government support price for palay in 1972), because the said
formula was based solely on the production of the land without considering other factors
such as the value of the land.
0. NO. Regarding the award of temperate and nominal damages, we hold that temperate
or moderate damages may be recovered if pecuniary loss has been suffered but the amount
cannot be proved with certainty from the nature of the case.34 The trial and appellate courts
found that Del Moral was unable to use productively the 102 hectares of its landholdings
after it was deprived of its possession in 1972. With the passage of time, it is, however,
impossible to determine Del Moral's losses with any certainty. Thus, considering the
particular circumstances of this case, the award of P10 million as temperate damages is
reasonable.
Although res judicata applies in this case, for the greater interest of justice, nominal
damages of P1 million should be deleted as temperate and nominal damages are
incompatible and thus, cannot be granted concurrently. We affirm the imposition of legal
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interest of six percent (6%) per annum from the time this judgment becomes final and
executory until this judgment is wholly satisfied.
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LORENZO WILLY, substituted by his heirs, namely: FELICIDAD D. WILLY, BETTY

WILLY CADANGEN, TONY WILLY, COSME WILLY, ROSARIO WILLY-ARMAS, ERLINDA
WILLY-DAPYAWON, JOHNNY WILLY, JOSE WILLY, RODOLFO WILLY, SWINIE WILLY,
ISABEL WILLY, NEDA CACANANDO, and BENITA WILLY, herein represented by their
Attorneys-in-fact, MARIA APRILA WILLY CRUZ and BETTY WILLY CADANGEN v.
REMEDIOS F. JULIAN, GEORGE F. JULIAN, JOAN J. AGUIRRE, EMILY J. BUSTARDE, and
WILLIAM F. JULIAN
G.R. No. 207051, December 1, 2021, Second Division (Hernando, J.)
DOCTRINES
1. The Statute of Frauds, Article 1403 (2) of the Civil Code, is not applicable to totally or
partially performed contracts. To emphasize, the November 1968 survey to segregate Lots 1
and 2, Ricardo's portion of the subject property, amounts to partial performance sufficient to
take the matter away from the operation of the Statute of Frauds.
2. There was constructive delivery of Lots 1 and 2 to Ricardo. One thing that militates
against petitioners' claim that the 1963 Agreement is unenforceable is Ricardo's possession of
Lots 1 and 2 in the concept of owner and receipt of fruits thereof. The fact that Ricardo did not
physically possess the purchased lots is of no moment since at the time of sale to him in 1969,
Ricardo's possession was exercised by Lorenzo, Modesto's son, in his behalf.
FACTS
The subject property is a 67,635-square meter unregistered land located at Beckel,

Sto. Tomas, Tuba, Sablan, Benguet owned by Modesto Willy, the father of Lorenzo Willy, and
the grandfather of the petitioners.
On March 29, 1963, Modesto executed a written agreement (1963 Agreement)

conveying portions of the subject property to three individuals, who rendered services to
Modesto in connection therewith, which includes Emilio Dongpaen, Modesto’s agent. On
November 16, 1968, pursuant to the 1963 Agreement, the subject property was surveyed
anew for the benefit of a prospective buyer, Ricardo, to whom Dongpaen offered for sale his
portion (10,000 sqm.) of the subject property.
During the survey, at the direction of Modesto, with Dongpaen likewise present,
another surveyor, Engr. Jose Fernandez, delineated and segregated a total area of 15,000
sqm. for Ricardo's intended acquisition. The segregated portion was designated as Lot 1
(10,000 sqm.) and Lot 2, which is an additional 5,000 sqm. sold by Modesto to Dongpaen on
June 24, 1969, as evidenced by a notarized Deed of Sale and then sold by Dongpaen to
Ricardo on June 17,1969.
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Pursuant to an arrangement with Modesto and his son, Lorenzo, who offered to
cultivate Ricardo's portion of the subject property, Ricardo saw no need to occupy Lots 1 and
2, and simply allowed Lorenzo's possession thereof. Ricardo allowed Lorenzo to till Lots 1
and 2 on his behalf, and Lorenzo remitted to Ricardo his share of the fruits thereof.
In 1979, Modesto died. Thereafter, petitioners had attempted to sell even his portion
of the subject property, which compelled Ricardo to resort administrative remedies to
protect his ownership over Lots 1 and 2. In addition, Ricardo persistently demanded from
petitioners the partition of the subject property and the actual conveyance of his portion,
Lots 1 and 2, to no avail.
Hence, Ricardo filed a complaint for partition of Property and Damages, against the
heirs of Modesto before the MCTC, to take his ownership over Lots 1 and 2, the 15,000-
square meter eastern portion. Petitioners denied Ricardo's ownership of Lots 1 and 2, and
argued that the deeds of sale covering the series of conveyances, beginning from Modesto to
Dongpaen, and Dongpaen to Ricardo, of Lots 1 and 2, spanning 15,000 square meters of the
subject property, are all void since the originating document, the 1963 Agreement, was
unenforceable for failure to comply with the formalities of the contract under Article 1403
of the Civil Code.
The MCTC ruled in favor of Ricardo and ordered the segregation of his portion of the
subject property. The MCTC found that Modesto intended the sale of the subject property,
specifically, the portion thereof (Lots 1 and 2) sold to Ricardo, as evidenced by the November
16, 1968 survey of the subject property. The MCTC likewise found that the discrepancy in
the dates of notarization of the various Deeds of Sale were innocuous.
The RTC reversed the ruling of the MCTC, and ruled that the 1963 Agreement is a
private document which did not have the effect of constructive delivery to the intended
transferees, specifically Dongpaen, of their respective shares to the subject property. Also,
the prior execution of the June 17, 1969 Deed of Sale between Dongpaen and Ricardo
covering the additional 5,000 square meters of the subject property, did not validly convey
ownership thereof to Ricardo, the ultimate buyer, since Dongpaen, Modesto's sales agent,
only obtained ownership thereof upon the sale to him by Modesto, the original seller,
ostensibly covered by the June 24, 1969 Deed of Sale. Thus, the RTC declared that Ricardo
merely acquired the right to demand performance and delivery of Lots 1 and 2, which right
of action, however, had already prescribed.
Ricardo appealed to the CA. During the pendency of the appeal, Ricardo died and was
substituted by respondents. The CA reversed the RTC ruling and reinstated the September
20, 2010 Decision of the MCTC
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ISSUES
1. Whether the 1963 Agreement and the two Deeds of Sale respectively dated June 17
and 24, 1969 are unenforceable contracts under Article 1403 of the Civil Code?
2. Whether there was constructive delivery to Dongpaen of 10,000 square meters of the
subject property under the 1963 Agreement?
RULING
1. NO. The series of transfers among Modesto, Dongpaen and Ricardo were valid
conveyances. The deeds of sale were fully executed by the parties thereto. In the case at
bench, we find that all the requisites for a valid contract are present in all the questioned
deeds of sale, specifically: (1) consent of the parties; (2) object or subject matter, comprised
of Lots 1 and 2 of the subject property; and (3) the various consideration listed in the 1963
Agreement and the purchase price for Lots 1 and 2 paid by Ricardo. Firstly, the 1963
Agreement is not purely a sales contract, but is an innominate contract reflecting a sales
contract, a contract of agency to sell the subject property, and contract to transfer ownership
of property in exchange for services.
We restate the general rule found in Article 1483 of the Civil Code that "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." The Statute of Frauds covers an
agreement for the sale of real property or of an interest therein.
Under Art. 1307, “innominate contracts shall be regulated by the stipulations of the
parties, by the provisions of Titles I and II of this Book, by the rules governing the most
analogous nominate contracts, and by the customs of the place.” The peculiarity and nature
of the agreement among Modesto, Dongpaen, and Ricardo are limned from the 1963
Agreement's listing of the respective services of the three transferees, the surveyor, the
lawyer, and Dongpaen, the sales agent, as consideration for their allotted portions of the
subject property.
It is apparent that Dongpaen merely holds title to the subject property as Modesto's
sales agent for the further sale of a portion thereof. And thus, in furtherance of their
arrangement, the November 1968 survey, undertaken at the behest and for the benefit of
Ricardo, which identified and segregated Ricardo's 15,000-square meter portion of the
subject property. The contemporaneous acts of Modesto, Dongpaen and Ricardo, after the
execution of the 1963 Agreement, albeit unnotarized, point to a meeting of the minds for the
ultimate sale and transfer to Ricardo of Lots 1 and 2, comprised of Dongpaen's initial 10,000-
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square meter portion and the subsequent sale to him by Modesto of an additional 5,000
square meters of the subject property.
As such, the Statute of Frauds, Article 1403 (2) of the Civil Code, is not applicable to
totally or partially performed contracts. All contracts invoked in this case, from the 1963
Agreement to the documents of sale executed after the 1968 survey of Lots 1 and 2 of the
subject property, i.e., Dongpaen's sale to Ricardo of a total of 15,000 square meters of the
subject property on separate dates, January 27, 1969 and June 17, 1969, and the June 24,
1969 Deed of Sale between Modesto and Dongpaen of an additional 5,000 square meters of
the subject property to complete the latter's sale to Ricardo of Lots 1 and 2 which was already
effected by Dongpaen and Ricardo, have been either partially or totally performed by
Modesto, Dongpaen and Ricardo. Thus, the contracts are removed from the ambit of the
Statute of Frauds and cannot be considered as unenforceable contracts.
The 1963 agreement between Modesto and Dongpaen had long been consummated
and completed. In fact, the 1963 Agreement was continuously performed by Modesto and
Dongpaen which led to the November 1968 survey of the subject property for Ricardo's
benefit, and finally resulted in the sale of Lots 1 and 2 to Ricardo. More importantly, Modesto
and his successors-in-interest, including Lorenzo, ratified the agreement by the acceptance
of benefits thereunder.
The conduct of Modesto, Dongpaen and Ricardo subsequent to the execution of the
1963 Agreement and prior and simultaneous with the execution of the three 1969 deeds of
sale demonstrate their intent to transfer ownership of Lots 1 and 2 to Ricardo. To emphasize,
the November 1968 survey to segregate Lots 1 and 2, Ricardo's portion of the subject
property, amounts to partial performance sufficient to take the matter away from the
operation of the Statute of Frauds.
2. YES. There was constructive delivery of Lots 1 and 2 to Ricardo. One other thing
militates against petitioners' claim that the 1963 Agreement is unenforceable — Ricardo's
possession of Lots 1 and 2 in the concept of owner and receipt of fruits thereof. The fact that
Ricardo did not physically possess the purchased lots is of no moment since at the time of
sale to him in 1969, Ricardo's possession was exercised by Lorenzo, Modesto's son, in his
behalf. Modesto proposed to Ricardo, who consented thereto, that Lorenzo would till the
subject property, including the portion Ricardo had purchased and deliver the fruits thereof
to Ricardo.
With this arrangement, under Article 1477 of the Civil Code, Ricardo's ownership of
Lots 1 and 2 was perfected upon delivery. Article 1477 provides that the thing sold shall be
understood as delivered, when it is placed in the control and possession of the vendee. In
this case, title passed to Ricardo from the moment Lots 1 and 2 were placed in his possession.
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Corollary thereto, Ricardo's indicia of ownership of Lots 1 and 2 are his possession in the
concept of owner and his receipt of fruits from the cultivation of the land which Lorenzo
regularly remitted to him, in contrast to that of Lorenzo, as tenant farmer, a legal possessor
of the land.
Unequivocally, delivery to Ricardo of Lots 1 and 2 produced its natural effects in law,
the principal and most important of which being the conveyance of ownership. Therefrom,
Ricardo exercised the rights of ownership until acts of repudiation by Modesto's successors-
in-interest, herein petitioners, consisting in attempting to sell the whole of the subject
property, including the portion already conveyed to, and thus owned by, Ricardo.
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JOSEFINA Q. VILORIA, FELICITAS F. QUEJADO, HEIRS OF REMEDIOS Q. GAERLAN,

NAMELY: BIENVENIDO B. GAERLAN, KATHLEEN DEANNA G. SALAYOG, KAREN G.
LEWIS, BIENVENIDO GAERLAN, JR., MANUEL KING GAERLAN, AND RONALD GAERLAN,
HEIRS OF BENJAMIN F. QUEJADO, NAMELY: EDNA S. QUEJADO, JONATHAN S.
QUEJADO, ALLAN S. QUEJADO, AND PAMELA S. QUEJADO, HEIRS OF DEMETRIO F.
QUEJADO, NAMELY: ANGELITA V. QUEJADO, KATHRINA ANGELICA Q. ESTRADA, OLGA
DYAN Q. GARCIA, AND DEXTER JORDAN V. QUEJADO, v. HEIRS OF PABLO GAETOS,
NAMELY: HERMILINA G. GAETOS, HEIRS OF JUSTINIANO GAETOS, NAMELY: ZENAIDA
G. ABAGAM, OFELIA G. BUNGAY, ESTRELLA G. CATBAGAN, VIRGILIA G. LABSON,
REMEDIOS G. ADRIANO, ELVIE G. NAGMA, EDUVEJES G. VALDRIZ, ALFREDO Y.
GAETOS, CATALINA GAETOS, BENEDICT GAETOS, JASON GAETOS AND HEIRS OF
EUDOXIA GAETOS-SUBIDO AND HEIRS OF GALICANO GAETOS, ALL REPRESENTED BY
MILDRED MADAYAG
G.R. No. 206240, May 12, 2021, Third Division (Hernando, J.)
DOCTRINE
In an action for quieting of title, the plaintiff has the burden to show by
preponderance of evidence that they have a legal and equitable title to or interest in the real
property subject of the action.
Tax declarations and receipts are not conclusive evidence of ownership or of the right
to possess land when not supported by other evidence. Mere allegation of open, continuous,
and exclusive possession of the property in dispute without substantiation does not meet
the requirements of the law.
FACTS
Josefina Quejado-Viloria, Remedios Quejado-Gaerlan, Benjamin F. Quejado, Demetrio

F. Quejado, and Felicitas F. Quejado filed before the trial court a complaint for Quieting of
Title with Damages. They claimed ownership over a 10,000-square meter lot located in
Taboc, San Juan, La Union, having inherited the subject property from their predecessor-in-
interest who had openly, publicly, continuously and peacefully possessed the same without
interruption for more than 30 years in the concept of an owner.
The Quejados alleged that the heirs of Segunda Gaetos, Pablo and Salome Gaetos and
Justiniano Gaetos, and the children of Francisco Gaetos surreptitiously and without their
knowledge and consent caused the subject property to be surveyed for the purpose of
claiming ownership. Their acts disturbed and put a cloud on their ownership, possession,
and title over the subject property.
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The Gaetos heirs denied the allegations of the heirs of Quejado. They insisted that the
Quejados were not the owners of the subject property. They maintained that the Gaetos
family owned the property in dispute by virtue of succession from a common ancestor
several years before World War II.
During the trial, Demetrio and Remedios testified that upon the demise of their
parents, they took over the possession of the subject property. Eulogia Catbagan, a tenant of
the Quejados, and Vicente Laurea, Sr., a neighbor of the Quejados, both acknowledged the
ownership of the Quejados over the subject property. Pieces of documentary evidence, like
the mortgages and their cancellation and Tax Declaration Nos. 13457 and 15859 under the
name of Demetrio and Remedios' mother, were presented to support their claim of
ownership.
Meanwhile, Isabelo Laurea testified for the heirs of Gaetos that the subject property
was near his place and its original owner was the grandfather of Francisco Gaetos. The first
tenant of the subject property was Teodoro Laurea, his grandfather, who was succeeded by
Cosme Laurea and then his father, Laureano Laurea. The tenancy was later passed on to
Isabelo.
Teresita Ganaden, granddaughter of Francisco Gaetos, also testified that the subject
property was originally owned by Leon Gaetos and Praxedes Pascua, who had six children,
which includes Francisco. Teresita also presented receipts of expropriation payments for the
properties ordered expropriated by the CFI of La Union, including the decision in the said
case involving the subject property. The properties, as apportioned, were subsequently
transferred to individual persons, as evidenced by current tax declarations in their names
presented before the court.
The trial court dismissed the complaint of the Quejados, and found that the Quejados
did not convincingly establish that they possessed the property publicly, exclusively, and
peacefully in the concept of owners. As such, they did not have the requisite title to pursue
an action for quieting of title. The heirs of Quejado appealed to the CA, which was denied.
Hence, this Petition for Review on Certiorari.
ISSUE
Whether the action to quiet title filed by petitioners can prosper?
RULING
NO. Under Art. 476 and 477 of the Civil Code and pursuant to the ruling of the Court
in Spouses Basa v. Loy, for an action to quiet title to prosper, two indispensable requisites
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must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or
interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or
proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or legal efficacy.'
In an action for quieting of title, the plaintiff has the burden to show by
preponderance of evidence that they have a legal and equitable title to or interest in the real
property subject of the action. Legal title denotes registered ownership, while equitable title
means beneficial ownership. In the absence of such legal or equitable title, or interest, there
is no cloud to be prevented or removed.
In this case, petitioners did not have a legal title to the subject property. There were
no certificates of title in their respective names. Moreover, based on the findings of the lower
courts, they also failed to substantiate their claim of having equitable title as well. The tax
declarations under the names of their predecessor-in-interests, documentation alluding to
mortgages, and the testimonial evidence they have presented did not convincingly establish
their equitable title over the subject property.
Tax declarations and receipts are not conclusive evidence of ownership or of the right
to possess land when not supported by other evidence. Mere allegation of open, continuous,
and exclusive possession of the property in dispute without substantiation does not meet
the requirements of the law.
Hence, based on the foregoing, petitioners failed at the outset to establish the first
requirement of having legal or equitable title over the property in dispute. Their cause of
action for quieting of title simply cannot prosper. In view of their lack of title, legal or
equitable, there is no cloud to be prevented or removed and there is no case of quieting of
title to speak of.
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APOLINARIO VALDEZ, AMANDA ESPIRITU, AQUILINA HERNANDEZ, AND SALVADOR

PETINES, REPRESENTED BY THEIR HEIRS AND/OR SUCCESSORS-IN-INTEREST v.
HEIRS OF ANTERO CATABAS
G.R. No. 201655, August 24, 2020, Third Division (Hernando, J.)
DOCTRINE
In Republic v. Roasa, the Court clarified that a possessor or occupant of property may
be a possessor in the concept of an owner prior to the determination that the property is
alienable and disposable agricultural land. Thus, the computation of the period of possession
may include the period of adverse possession prior to the declaration that the land is alienable
and disposable. Though at the time of his application, the subject property was not yet classified
as alienable and disposable, the subsequent declaration thereof should be considered in
Antero's favor whose free patent application was still pending and subsisting at that time and
is not canceled up to this time.
FACTS
On September 8, 1949, Antero Catabas filed Free Patent Application (FPA) No. V-
85006 for Lot No. 4967, which was subdivided into three (3) lots pursuant to Proclamation
No. 427 in 1931. Lot Nos. 4967-A and 4967-B were reserved for public purposes, particularly
road and market site. Hence, on September 15, 1952 Antero amended his application to
cover only Lot No. 4967-C.
In 1956, Lot No. 4967-C was further subdivided by Proclamation No. 247 to several
lots for disposition to qualified claimants. Meanwhile, Antero's free patent application was
recommended for approval by Assistant Public Land Inspector Tomas Cruz, and was
received by the Director of Lands on October 7, 1952, who ordered the posting of the notices
of Antero's free patent application in different conspicuous places.
However, it bears stressing that at the time of Antero's application for free patent in
1949, Lot No. 4967-C was part of the Agricultural Farm School of Santiago which is an
inalienable public land. It was only declared as alienable public land open for disposition to
qualified claimants in 1956 pursuant to Proclamation No. 247.
The controversy arose when petitioners Apolinario, Amanda, and Aquilina, together
with Maria Dolores Valdez and Evangeline Franco filed sales patent applications over Lot
Nos. 316, 317, 500, 501-B, 498, 502, and 505. Similarly, petitioner Salvador, together with
Sofia Barrera and Laureana Bergonia, Lina, Cresencio Andungo, Artemio Valdez, Antonio
Valdez, Estrella Lachica and Alexander Valdez filed their respective claims over Lot Nos. 315,
318, 501, 499, 506, 507, 510, and 511, which lots originally formed part of Lot No. 4967-C
and were included in the FPA No. V-8500 filed by Antero.
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Hence, respondents, heirs of Antero, filed a protest against the sales patent applications and
other claims of petitioners and other claimants over Lot No. 4967-C, as the lots in question
were covered by a subsisting free patent application filed by Antero who acquired a vested
right over it by reason of his early possession since 1929 as evidenced by Tax Declaration
No. 12942 dated February 15, 1929 and Tax Declaration No. 13666 dated October 1, 1930
and the corresponding payments of the real estate taxes ever since. Respondents further
averred that the case of Municipality of Santiago, Isabela vs. Court of Appeals already
confirmed their possession and claim over the lots in dispute when it recognized that Antero
filed his Answer during the cadastral proceedings conducted for the Municipality of Santiago,
Isabela to record his claim on Lot No. 4967 while another claimant, Eulalio Bayaua,
petitioners' predecessor-in-interest, did not file any Answer thereto. Although a free patent
is yet to be issued to Antero, respondents claimed that Antero already acquired a vested right
over Lot No. 4967-C since FPA No. V-8500 was never canceled by the proper authority.
On the other hand, petitioner Apolinario together with Maria Dolores, Evangeline, and
Artemio, claimed that in 1953, Maria Dolores and Artemio bought from a certain Maria
Cavinian, the surviving spouse of Bayaua, a portion of 3,500 square meters of Lot No. 4967
and Lot No. 8000, Cad-211. Thereafter, in 1957, pursuant to Proclamation No. 247, the
Bureau of Lands subdivided Lot Nos. 1 and 4967 of Santiago Cadastre into small residential
lots, which included that portion of Lot Nos. 4967 and 8000 bought by the Valdezes from
Cavinian in 1953. Later on, Maria Dolores ceded and transferred these lots to Evangeline,
Estrella and Alexander. Consequently, miscellaneous sales patent applications were
approved in 1984 by the Bureau of Lands in favor of Arcadia, Luis, petitioner Apolinario,
petitioner Amanda, petitioner Aquilina, Maria Dolores and Evangeline. In addition, Lina
likewise filed a sales patent application over a lot that she bought from a certain Rumeriano
de la Cruz in March 1978.
After his investigation of the claims of the parties, Land Investigator Luis V. Salatan,
Sr. recommended the dismissal of respondents' protest. However, Despite Salatan’s
recommendation, the Regional Executive Director (RED) of DENR Region II, Tuguegarao,
Cagayan, found the issuance of petitioners' sales patent to be premature, illegal, fraudulent
and their possession over the subject lots characterized by bad faith considering that their
sales patents were issued while Antero's application was still subsisting.
Petitioners filed a motion for reconsideration which was however denied. Thus, they
elevated their case to the DENR Secretary, who affirmed the ruling of the RED. Petitioners
appealed to the Office of the President (OP) who found that Antero's FPA No. V-8500 had
already met all the requirements for the issuance of a free patent. Hence, Antero already
obtained vested rights over the subject property and can be regarded as the equitable owner
thereof.
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Petitioners filed a motion for reconsideration but this was later denied by the OP;
hence, they filed a petition for review before the CA. The CA denied the petition for review
for lack of merit, and ruled that the application of Antero should be given preference over
the claims of petitioners. Clearly, Antero's FPA No. V-8500 has not been canceled until this
time.
ISSUE
Whether Antero's occupation and possession of Lot No. 4967-C since 1929 be
considered in granting his free patent application filed in 1949 when the subject property is
not yet declared as alienable and disposable?
RULING
YES. It cannot be emphasized that before the issuance of Proclamation No. 247 in
1956, Antero already filed his claim on Lot No. 4967-C in 1949 through free patent
application which was later amended in 1952. Under Section 11 of C.A. No. 141, there are
two modes of disposing public lands through confirmation of imperfect or incomplete titles:
(1) by judicial confirmation; and (2) by administrative legalization, otherwise known as the
grant of free patents. In the present case, Antero chose to file a free patent application which
was governed by Section 44 of C.A. No. 141,
An applicant for a free patent does not claim the land as his or her private property
but acknowledges that the land is still part of the public domain. Antero, in choosing to apply
for free patent, acknowledged that the land covered by his application still belongs to the
government and is still part of the public domain. Under Section 44 of C.A. No. 141, he is
required to prove continuous occupation and cultivation of agricultural land subject to
disposition since July 4, 1926 or prior thereto and payment of real estate taxes while the land
has not been occupied by other persons.
However, at the time Antero's amended free patent application was filed in 1952,
Republic Act (R.A.) No. 78231 was enacted on June 21, 1952, amending Section 44 of C.A. No.
141, which reads:
Section 1. Any provision of law, rules and regulations to the contrary

notwithstanding, any natural born citizen of the Philippines who is not the owner of
more than twenty-four hectares, and who since July 4, 1945 or prior thereto, has
continuously occupied and cultivated, either by himself or through his predecessors
in interest, a tract or tracts of agricultural public lands subject to disposition, shall be
entitled, under the provisions of this Act, to have a free patent issued to him for such
tract or tracts of such land not to exceed twenty-four hectares.
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Notwithstanding the fact that when Antero filed his amended free patent application in 1952,
the subject property (Lot No. 4967-C) was not yet declared as alienable and disposable
public land, the Court gave preference to the possession of Antero since 1929 over the
petitioners' claims or interest which arose later than Antero's. The subsequent declaration
of Lot No. 4967-C as open for disposition to qualified claimants effectively cured the defect
of Antero's free patent application filed before the herein petitioners. Antero's possession of
the subject property as evidenced by the payment of real estate taxes starting the year
192932 strengthened his continuous and notorious possession of the subject property which
is earlier than July 4, 1945.
In Republic v. Roasa, the Court clarified that a possessor or occupant of property may
be a possessor in the concept of an owner prior to the determination that the property is
alienable and disposable agricultural land. Thus, the computation of the period of possession
may include the period of adverse possession prior to the declaration that the land is
alienable and disposable. Though at the time of his application, the subject property was not
yet classified as alienable and disposable, the subsequent declaration thereof should be
considered in Antero's favor whose free patent application was still pending and subsisting
at that time and is not canceled up to this time.
In addition, herein petitioners acquired their supposed right or interest over the
subject property from the widow of Bayaua. Notably, Bayaua had not filed his answer in the
cadastral proceedings of Lot No. 4967. Hence, Bayaua or his widow, Cavinian, had no right
or interest to over Lot No. 4967-C that they could transfer to petitioners.
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ARLOS J. VALDES, GABRIEL A.S. VALDES, FATIMA DELA CONCEPTION AND ASUNCION
V. MERCADO v. LA COLINA DEVELOPMENT CORPORATION (LCDC), PHILIPPINE
COMMUNICATION SATELLITE, INC. (PHILCOMSAT), LA COLINA RESORTS
CORPORATION (LCRC), MONTEMAR RESORTS AND DEVELOPMENT CORPORATION
(MRDC), JOSE MARI CACHO, HONORIO A. POBLADOR III, and ALFREDO L. AFRICA
G.R. No. 208140, July 12, 2021, Third Division (Hernando, J.)
,
DOCTRINES
1. Under Article 1458 of the Civil Code, the elements of a contract of sale are: (a) consent
or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b)
determinate subject matter; and (c) price certain in money or its equivalent.
2. For a valid novation to take place, the following requisites must concur: "(1) a
previous valid obligation; (2) the agreement of all the parties to the new contract; (3) the
extinguishment of the old contract; and (4) validity of the new one. There must be consent of
all the parties to the substitution, resulting in the extinction of the old obligation and the
creation of a valid new one."
3. Rescission is a remedy granted by law to the contracting parties, and even to third
persons, to secure the reparation of damages caused to them by a contract, even if it should be
valid by reason of external causes resulting in a pecuniary prejudice to one of the contracting
parties or their creditors, the result of which, is the restoration of things to their condition at
the moment prior to the celebration of said contract. The kinds of rescissible contracts are the
following: first, those rescissible because of lesion or prejudice; second, those rescissible on
account of fraud or bad faith; and third, those which, by special provisions of law, are
susceptible to rescission.
FACTS
Carlos Valdes, Sr. and his children, herein petitioners, are the stockholders of Bataan
Resorts Corporation (BARECO), which owned a large tract of land in Bagac, Bataan.
In 1974, Carlos, Sr. and Francisco carried out the Montemar Project, which included
the development of the beach basin as a beach resort (Montemar Beach Club), and the
remaining area into a residential subdivision (Montemar Villas). To implement the project,
the Valdeses transferred their BARECO shares in favor of LCDC, a fully-owned corporation
of the Cacho family, through a Deed of Sale for P20 Million. LCDC paid partially P2.5 Million.
The remaining P17.5 Million was to be paid by way of an Assignment of Rights wherein LCDC:
(1) assigned to the Valdeses P3 Million worth of shares in LCRC, which is created by LCDC to
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sell the shares of the beach resort; and (2) would pay the Valdeses (50%) of the net proceeds
(later reduced 40%) from the sale of the Montemar Villas lots inside BARECO.
Carlos, Sr. prepared a Deed of Partition to transfer to LCDC only the real properties
he intended to be part of the Montemar project, which were, in turn, transferred by LCDC to
LCRC in exchange for 50,000 LCRC shares issued in favor of LCDC. By virtue of the
Assignment of Rights, LCDC and Carlos, Sr. became 70% and 30% shareholders of LCRC,
respectively.
Meanwhile, LCDC, as sole shareholder, dissolved BARECO. MBCI, a non-stock, non-

profit club, was organized to develop the Montemar Project. LCDC then obtained loans from
DBP, APT, Metrobank, and GCC to finance the development of the Project.
The Montemar Beach Club was able to sustain regular operations. However, during
the years 1981 up to 1985, there was a delay in the remittances of the shares to the Valdeses
in the net proceeds from the sale of the Montemar Villas lots. A portion of the purchase price
of P20 Million, or P16,125,717.31, was eventually paid to the Valdeses. Carlos, Sr. filed a
Complaint for Annulment or Rescission of Contract or Specific Performance and Damages
against LCDC, which was however settled on a Joint Motion to Dismiss. LCDC vowed to
continue to undertake the marketing of the Montemar Villas for the purpose of remitting to
the Valdeses their 40% share in the sale of the said lots until full payment of the P20 Million.
As the loans obtained by LCDC from DBP/APT remained unpaid, the mortgaged properties
of LCDC, LCRC, and MBCI were eventually foreclosed by DBP/ATP. Wanting to invest in the
Montemar Project, Philcomsat presented a Memorandum of Intent, which embodied the
terms agreed upon by LCDC, LCRC, MBCI, and Philcomsat, where Philcomsat will invest on
the project, and, concurrently, bailing out LCDC, LCRC and MBCI from their loan obligations
with APT, GCC, and Philcomsat. In consideration thereof, the ownership over the properties
of LCDC and LCRC, including their shares in MBCI, would be transferred to MRDC, a new
corporation to develop the villas into a golf course and sports complex.
For an extension period to pay the outstanding obligation of LCDC and LCRC to APT,
Philcomsat paid APT the amount of P4 Million. Philcomsat eventually decided to invest in the
new project, subject to conditions, particularly, that the Valdeses: (1) give their conformity
to the new project; and (2) forego their claim to the proceeds of the sale of the Montemar
Villas lots.
To convince Gabriel, attorney-in-fact of Carlos, Sr. to conform to the conditions set by

Philcomsat, Rafael Cacho, Francisco’s brother, presented petitioner two options: 1) if he will
not agree, all the properties will be sold at public auction and they will be left with nothing,
or 2) if he agrees, Philcomsat will invest and bail out LCDC, MBCI, and the Valdeses and the
Cachos from their indebtedness to their creditors, but they will incorporate MRDC, where
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Philcomsat will own 70% of it, the Valdeses will own 7.5%, and the Cachos and creditors GCC
will own the remaining 22.5%.
Gabriel invoked the Assignment of Rights dated October 30, 1975, but it was rejected
by Philcomsat, LCDC, LCRC, and Cacho. As such, a letter-conformity dated August 27, 1992
was finalized, without any provision regarding the Assignment of Rights.
Pursuant to the Memorandum of Intent and the letter-conformity, Philcomsat,

together with LCDC, LCRC, and MBCI executed a Memorandum of Agreement essentially
identical to the Memorandum of Intent. Meanwhile, on August 31, 1992, LCRC and LCDC,
through a Consolidated Deed of Absolute Sale, conveyed and sold to MRDC all their real and
personal properties situated in Bagac, Bataan.
After executing the letter-conformity, Gabriel appointed Jose Mari and Rafael on to
sell the shareholdings of Carlo, Sr. in LCRC and other real properties of the Valdeses.
Philcomsat offered to purchase Carlo, Sr.'s shareholdings in LCRC and the Valdeses' other
real properties for a consideration of P24,771,800.00, which petitioners rebuffed.
As such, the Valdeses filed before the RTC a Complaint for Reconveyance, Annulment
and/or Rescission of Contract, Specific Performance and Damages with Prayer for TRO and
Writ of Preliminary Injunction against respondents LCDC, LCRC, Philcomsat, MRDC, Jose
Mari, including Poblador and Alfredo L. Africa, as officers for Philcomsat and MRDC.
The RTC declared the Memorandum of Agreement and the Consolidated Deed of
Absolute Sale null and void. The RTC found that the Valdeses and LCDC entered into a joint
venture agreement, where the proceeds of the sale of the Montemar Villas lots would then
be divided between them in the following manner: 60% to LCDC, and 40% to the Valdeses.
The RTC also found that despite the Valdeses' refusal to allow Philcomsat to take part in the
joint venture agreement, LCDC, LCRC, MBCI, and Philcomsat, unknowingly to the Valdeses,
executed the Memorandum of Agreement, which disregarded the Valdeses’ rights amounting
to 40% share in the proceeds of the sale of the Montemar Villas lots.
On appeal, the CA reversed and set aside the RTC ruling and found that the Deed of
Sale, promissory notes executed by LCDC, and the Assignment of Rights, negated the
existence of a joint venture agreement between the Valdeses and LCDC. The CA held that the
relationship between the Valdeses and LCDC was, instead, one of vendor-vendee. The CA also
ruled that considering Gabriel's express conformity to the new concept of the Montemar
Project, as embodied in the letter, the obligation of LCDC to sell the Montemar Villas lots and
remit the proceeds thereof to the Valdeses has been extinguished. Hence, this Petition for
Review on Certiorari.
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ISSUES
1. Whether the Valdeses and the LCDC entered into a joint venture agreement?
2. Whether there was a valid novation of the initial agreement between LCDC and the
Valdeses to develop and sell the Montemar Villas lots, which thereby extinguished
LCDC's original obligation to the Valdeses?
3. Whether petitioners can avail of the remedy of rescission under the Civil Code?
RULING
1. NO. The Valdeses and LCDC entered a contract of sale, and not a joint venture
agreement.
Under Article 1370 of the Civil Code, the cardinal rule in the interpretation of
contracts is that when the terms of the contract are clear, its literal meaning shall control. In
interpreting the agreement between the Valdeses and LCDC, the inquiry is not what contract
the parties intended to enter into, but what contract did they enter into. Notably, the Deed of
Sale, if read in conjunction with the promissory notes issued to the Valdeses and the
Assignment of Rights dated October 30, 1975, leaves no room for interpretation as to the
exact intention of the parties — they entered into a contract of sale.
Under Article 1458 of the Civil Code, the elements of a contract of sale are: (a) consent
or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b)
determinate subject matter; and (c) price certain in money or its equivalent. The Deed of Sale
executed by Carlos, Sr. and LCDC resulted in a perfected contract of sale, all its elements being
present. There was a mutual agreement between them, wherein 4,000 shares of stock of the
Valdeses in BARECO were sold to LCDC for a consideration of P20 Million. This amount was
paid in cash of P2.5 Million and the balance of P17.5 Million was covered by promissory notes
to be paid by way of an Assignment of Rights.
A perusal of the Assignment of Rights would show that the same constituted full
payment of the BARECO shares of stock, thus: "That the ASSIGNEE hereby accepts this
assignment in full payment of the aforementioned promissory note." There is, therefore, in
this case, an absolute transfer of ownership of the BARECO shares to LCDC for a
consideration of P20 Million.
Nothing in the abovementioned documents, nor in any of the subsequent contracts

between the parties that indicates that the transaction entered by and between them was a
joint venture. A joint venture, therefore, is akin to a partnership, the essential elements of
which are as follows: (1) an agreement to contribute money, property, or industry to a
common fund; and (2) an intent to divide the profits among the contracting parties.
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Contrary to the argument of the petitioners, The Assignment of Rights and the letter
agreement clearly show that the Valdeses' share in the sale of the subdivision lots was the
manner of paying, or mode of payment of the P20 Million consideration for the 4,000
BARECO shares. While we understand that this type of provision may be peculiar to a
contract of sale, this profit-sharing scheme, as explained by LCDC, was a means for the latter
to acquire the necessary funds to develop and improve the said lots.
Notably, LCDC was contractually obliged to remit to the Valdeses' their 40% share in
the sale of the Montemar Villas lots despite the fact that LCDC may be experiencing losses.
This runs counter to a partnership or joint venture relationship.
Thus, as the sole stockholder of BARECO, LCDC had full disposal of the BARECO
properties in Bataan, including the right to encumber and mortgage the same as attributes
of ownership. Since some of properties of LCDC were transferred and conveyed to LCRC,
LCRC likewise had every right to mortgage these properties. The rights and interests of the
Valdeses, lie only on the proceeds of the sale of the Montemar Villas lots. They could not also
question the mortgages constituted on the properties after the titles have already passed to
LCDC and LCRC.
As such, the Court cannot nullify the Memorandum of Agreement and the
Consolidated Deed of Sale on the sole ground that they were supposedly entered into in
violation of the joint venture between the Valdeses and LCDC, where, from the outset, such
relationship is clearly non-existent between the parties.
2. YES. For a valid novation to take place, the following requisites must concur: "(1) a
previous valid obligation; (2) the agreement of all the parties to the new contract; (3) the
extinguishment of the old contract; and (4) validity of the new one. There must be consent
of all the parties to the substitution, resulting in the extinction of the old obligation and the
creation of a valid new one." It is settled pursuant to Art. 1292 that "the cancellation of the
old obligation by the new one is a necessary element of novation which may be effected
either expressly or impliedly. While there is really no hard and fast rule to determine what
might constitute sufficient change resulting in novation, the touchstone, however, is
irreconcilable incompatibility between the old and the new obligations."
In this case, the new concept of the Montemar Project would entail the development
of a golf course or sports complex on the unsold lots of the Montemar Villas. Necessarily, the
implementation of this new concept is incompatible with the old obligation of LCDC under
their previous agreement. The construction of these new sports facilities will effectively halt
the development and eventual sale of the Montemar Villas lots and render unavailing LCDC's
original obligation to remit to the Valdeses' their 40% share in the proceeds derived from
the sale of the said lots.
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What was required for the validity of the new concept was Valdeses' express conformity
thereto, with full knowledge that its implementation will denote that their rights to the 40%
share of the proceeds derived from the sale of the Montemar Villa lots will be novated and
converted into a 7.5% equity in MRDC.
In this case, Gabriel, as the representative of the Valdeses, had knowledge of the new
concept of the Montemar Project, and consented to the entry of Philcomsat as a new investor,
as evidenced by: (1) the letter-conformity which bore Gabriel's signature on the conforme
portion thereof; (2) several minutes of the board meetings of MBCI, where MBCI directors,
including Gabriel, discussed the entry of Philcomsat as a possible investor; and (3) the
notices sent to the LCRC stockholders and directors of meetings to discuss the new concept
of the said project.
With the express conformity of Gabriel to the new concept of the Montemar Project,
the obligation of LCDC to sell the Montemar Villas lots, and remit the proceeds to the
Valdeses has been extinguished.
3. NO. Rescission is a remedy granted by law to the contracting parties, and even to
third persons, to secure the reparation of damages caused to them by a contract, even if it
should be valid by reason of external causes resulting in a pecuniary prejudice to one of the
contracting parties or their creditors, the result of which, is the restoration of things to their
condition at the moment prior to the celebration of said contract. The kinds of rescissible
contracts are the following: first, those rescissible because of lesion or prejudice; second,
those rescissible on account of fraud or bad faith; and third, those which, by special
provisions of law, are susceptible to rescission.
None of the above circumstances are present in this case. As discussed above, the
records of the case are replete with evidence that the Valdeses, through Gabriel, gave their
express conformity to the new concept of the Montemar Project and the entrance of
Philcomsat as new investor for the said project. Having expressed their consent to the
changes brought about by these new contracts, and having been made aware of the effects
thereof, the Valdeses cannot now feign ignorance and assert that they were prejudiced in
their rights and interests. While they feel shorthanded as they will cease receiving their 40%
income share from the sale of the Montemar Villas lots, the fact of the matter is that they
would have maintained a share or interest in the new Montemar Project, which, however,
the Valdeses opted to sell to respondent Philcomsat. Notably, it appears that nothing has
materialized from their negotiations.
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SHEILA MARIE G. UY-BELLEZA v. THE CIVIL REGISTRAR OF TACLOBAN CITY

G.R. No. 218354, 15 September 2021, Second Division (Hernando, J.)
DOCTRINE
The requirement of electing Filipino citizenship when a child reached the age of majority
under Article IV, Section 1 of the 1935 Constitution, the governing law when Adelaida was born
on November 24, 1942, and Section 1 of Commonwealth Act No. 625, applied only to legitimate
children. These would not apply in the case of Adelaida who is an illegitimate child, considering
that her Chinese father and Filipino mother were never married. As such, she was not required
to comply with said constitutional and statutory requirements to become a Filipino citizen. By
being an illegitimate child of a Filipino mother, Adelaida automatically became a Filipino upon
birth. Stated differently, she is a Filipino since birth without having to elect Filipino citizenship
when she reached the age of majority.
FACTS
Petitioner Uy-Belleza filed a Petition for Correction of Entry in the Civil Registry
before the Tacloban City RTC seeking for the correction of the entry in her birth certificate
stating that the nationality of her mother Adelaida Go Uy is "Chinese" instead of "Filipino".
The RTC gave due course to the petition and ordered its publication in a newspaper of
general circulation for three consecutive weeks and to furnish the OSG a copy of the petition.
After publication, the RTC ordered Atty. Roselyn Fallorina, OIC Clerk of Court, to receive the
evidence of petitioner and submit her report after the termination of the proceeding.
In support of the petition, petitioner submitted the following: 1. Petitioner's

Certificate of Live Birth (NSO); 2. Petitioner's Certificate of Birth (Local Civil Registrar); 3.
Marriage Contract of the petitioner's parents issued by the NSO showing that Adelaida Go is
a Filipino citizen; 4. Adelaida's Certificate of Registration as a Voter; 5. Certificate of Live
Birth of Jerome Uy, petitioner's brother, reflecting the citizenship of their mother Adelaida
as "Fil"; and 6. Adelaida's Expired Philippine Passport.
Aside from her documentary evidence, petitioner also took the stand to attest to the
Filipino citizenship of her mother, Adelaida. The latter herself testified that she is an
illegitimate daughter of Lino Go, a Chinese national and Teodora Guinto, a Filipino citizen
and that her failure to present her birth certificate was because she was born in 1942 during
World War II and thus could not have registered her birth.
The RTC granted the petition. The OSG filed a Motion for Reconsideration contending
that the totality of the evidence presented by petitioner did not prove that her mother is a
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Filipino citizen so as to warrant the correction sought. The OSG posited that other than the
bare allegation of Adelaida that she was the illegitimate daughter of a Chinese father and a
Filipino mother, there was no other evidence presented to prove this claim. The OSG's
motion for reconsideration was denied.
The trial court gave weight to the Philippine passport and voter's certification issued
to Adelaida to prove her citizenship. Coupled, with the fact that the OSG did not present any
countervailing evidence, the trial court ruled that preponderance of evidence tilts in favor of
the petitioner.
Thereafter, the OSG filed an appeal before the CA. The CA granted the appeal and
reversed the RTC ruling finding that the evidence of the appellee has not satisfactorily and
conclusively established that her mother Adelaida is a Filipino citizen so as to warrant the
petition to change the entry in her birth records.
ISSUE
Did the CA commit a grave error when it ruled that the pieces of evidence presented
were insufficient to support the correction of Adelaide's citizenship from "Chinese" to
"Filipino"?
RULING
YES. Records reveal that petitioner was able to sufficiently establish her petition for
correction of entry as to her mother Adelaide's citizenship.
First, Adelaida was issued a Philippine passport, the genuineness and authenticity of
which was not disputed at all by the OSG. The government's issuance of a Philippine
passport to Adelaida in effect, is a recognition of her Filipino citizenship.
A passport is "a document Issued by the Philippine government to its citizens

requesting other governments to allow its citizens to pass safely and freely, and in case of
need, to give him/her all lawful aid and protection." It is an official document of identity of
Philippine citizenship of the holder issued for travel purposes. A passport proves that the
country which issued it recognizes the person named therein as its national. In fact, the very
first page of a Philippine passport explicitly recognizes the bearer as its citizen.
The fact that Adelaida merely executed an affidavit when she applied for a passport,
instead of submitting a birth certificate, will not overturn the presumption of regularity in
its issuance. To successfully overcome such presumption of regularity, case law demands
that the evidence against it must be clear and convincing. Absent the requisite quantum of
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proof to the contrary, the presumption stands deserving of faith and credit. In this case, the
OSG did not present any evidence to overcome the presumption. The reliance on the
requirement of submission of a birth certificate or a baptismal certificate in applying for a
Philippine passport as set forth in Section 529 of RA 8239 is misplaced. Adelaida's passport
was issued in 1988, long before RA 8239 was enacted.
Second, the certificate of live birth of petitioner's brother, whose genuineness

and authenticity was also not disputed by the OSG, stated the citizenship of Adelaida
as "Fil". Hence, to disallow the correction in petitioner's birth record of her mother's
citizenship would perpetuate an inconsistency in the natal circumstances of the siblings who
are unquestionably natural children of the same mother and father.
Lastly, the testimony of Adelaida regarding her illegitimacy and the citizenship
of her mother, Teodora Guinto, was never questioned by the prosecutor. Verily,
records reveal that the prosecution did not file any opposition to the petition. In addition,
the prosecutor did not file any comment or opposition when petitioner filed her formal offer
of evidence. Also, the sufficiency of the evidence submitted before the trial court relating to
Adelaida's citizenship was never questioned. In fact, the prosecutor did not present any
countervailing evidence to defeat the petition for correction of entry.
Given the foregoing, the correction of entry in the Certificate of Live Birth of petitioner
involving the change of the citizenship of her mother Adelaida from "Chinese" to "Filipino"
is in order. Contrary to the findings of the appellate court and the contention of the OSG,
petitioner need not prove that her mother complied with the constitutional and statutory
requirements to become a Filipino citizen.
The requirement of electing Filipino citizenship when a child reached the age of
majority under Article IV, Section 1 of the 1935 Constitution, the governing law when
Adelaida was born on November 24, 1942, and Section 1 of Commonwealth Act No. 625,
applied only to legitimate children. These would not apply in the case of Adelaida who is an
illegitimate child, considering that her Chinese father and Filipino mother were never
married. As such, she was not required to comply with said constitutional and statutory
requirements to become a Filipino citizen. By being an illegitimate child of a Filipino mother,
Adelaida automatically became a Filipino upon birth. Stated differently, she is a Filipino since
birth without having to elect Filipino citizenship when she reached the age of majority.
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IN RE: PETITION FOR THE PROBATE OF THE WILL OF CONSUELO SANTIAGO GARCIA
CATALINO TANCHANCO AND RONALDO TANCHANCO VS. NATIVIDAD GARCIA SANTOS
G.R. No. 204793, 08 June 2020, Second Division (Hernando, J.)
DOCTRINE
The rule on substantial compliance in Article 809 presupposes that the defects in the
attestation clause can be cured or supplied by the text of the will or a consideration of matters
apparent therefrom which would provide the data not expressed in the attestation clause or
from which it may necessarily be gleaned or clearly inferred that the acts not stated in the
omitted textual requirements were actually complied with in the execution of the will. In other
words, the defects must be remedied by intrinsic evidence supplied by the will itself.
FACTS
Consuelo and Anastacio Santos had 2 daughters namely Natividad and Remedios.
When Anastacio died, Remedios followed predeceasing Consuelo and leaving her children.
Thereafter, Consuelo died leaving several properties. Catalino, son of Remedios, filed a
petition to settle the intestate estate of Consuelo alleging that Consuelo's heirs include
Remedios' children and Natividad. He also said that Consuelo's properties are in the
possession of Natividad and her son Alberto, who have been misappropriating the
properties. Catalino prayed 1) for his appointment as administrator of the estate, 2) for an
inventory to be made, 3) for Natividad and all other heirs who are in possession of the
estate's properties to surrender the same and to account for the proceeds of all the sales of
Consuelo's assets, 4) for all heirs and persons having control of Consuelo's properties be
prohibited from disposing the same without the court's prior approval, 5) for Natividad to
produce Consuelo's alleged will to determine its validity, 6) for Natividad to desist from
disposing the properties of Consuelo's estate, and 7) for other reliefs and remedies.
Thereafter, Natividad filed a motion to dismiss stating that she already filed for the probate
of Consuelo's will. Natividad asked that the will be allowed and approved and as the named
executrix in the will, she prayed that letters testamentary be issued in her favor.
The Tanchancos filed an Opposition to Natividad's petition for probate alleging that
the will's attestation clause did not state the number of pages and that the will was written
in Tagalog, and not the English language usually used by Consuelo in most of her legal
documents. They also pointed out that Consuelo could not have gone to Makati where the
purported will was notarized considering her failing health and the distance of her residence
in Pasay City. Moreover, they alleged that Consuelo's signature was forged. Thus, they prayed
for the disallowance of probate and for the proceedings to be converted into an intestate one.
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Natividad countered that there was substantial compliance with Article 805 of the
Civil Code. Although the attestation clause did not state the number of pages comprising the
will, the same was clearly indicated in the acknowledgment portion. Moreover, the
Tanchancos' allegations were not supported by proof. Thus, the Tanchancos rebutted that
the number of pages should be found in the body of the will and not just in the
acknowledgment portion.
The subject will was witnessed by Atty. Tantuico, Atty. Lallana, and Atty. Paras and
notarized by Atty. Marapao. They admitted signing the will in the presence of each other and
Consuelo in a conference room of Quasha Law Office in Makati City. They alleged that during
that time, Consuelo was very alert and sane and was not suffering from any physical ailment.
However, Ronaldo contended that it was unusual for Consuelo to execute a will in
Tagalog as she had always used the English language in her documents although she spoke
both English and Tagalog. He alleged that Consuelo told him that there was no need to draft
a will since the properties would just be divided between her two daughters. He also
mentioned other lawyers, such as Atty. Cornelio Hizon, whom Consuelo previously
transacted with but who were not affiliated with Quasha Law Office. Likewise, he also raised
that Consuelo was already ill and forgetful, and that she had a hard time walking due to a
previous accident. Thus, he asserted that the will was one-sided as most of the properties
would be given to Natividad and contrary to Consuelo's intention to equally distribute the
properties between her two daughters.
The RTC found the purported will replete with aberrations. It noted that nobody
among Consuelo's relatives witnessed the execution of the alleged will. Except for Natividad
and her lawyers, no one knew that Consuelo ever executed a will during her lifetime.
Moreover, the RTC noted that the will's acknowledgment clause showed that Consuelo's
residence was in Makati City and not in Pasay City where she actually resided most of her
life. It found it preposterous that Consuelo would change her residence from Pasay City to
Makati City just for the purpose of drafting a will, and then return to Pasay City after its
execution. The RTC gave credence to Ronaldo's testimony that Consuelo declared that she
had no will and that her properties would be equally divided between her two children.
The CA reversed the RTC ruling that the Civil Code preferred testacy over intestacy.
Also, in the Rules of Court, the due execution and authenticity of a private document such as
a will must be proved either by anyone who saw the document executed or written or by
evidence of the genuineness of the signature or handwriting of the maker. The CA held that
the positive testimonies of the witnesses established the due execution and authenticity of
the will especially when the Tanchancos could not present proof that the said witnesses are
not credible or competent. It added that the witnesses are all lawyers who are not
disqualified from being witnesses under the law except in cases relating to privileged
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communication arising from attorney-client relationship. Further, the CA found that the
Tanchancos failed to substantiate their claim that it was impossible for Consuelo to move
around outside her residence. It noted that Consuelo travelled to the United States on two
occasions more than a year before and then seven months after the contested will was
executed. Thus, it was not impossible for Consuelo to travel from her residence in Pasay City
to the law office in Makati City.
The CA also found that the Tanchancos failed to prove that Consuelo was of unsound
mind when she executed the contested will. Likewise, they only presented self-serving
allegations without presenting an expert witness. It similarly ruled that the Tanchancos did
not present proof that Consuelo could not understand Tagalog. The CA noted that while the
attestation clause did not state the number of pages comprising the will, still, it is verifiable
by examining the will itself, as the pages were duly numbered and signed by Consuelo and
the instrumental witnesses. Moreover, the acknowledgment portion of the contested will
states that "Ang HULING HABILING ito ay binubuo ng lima (5) na dahon, kasama ang dahong
kinaroroonan ng Pagpapatunay at Pagpapatotoong ito. SAKSI ang aking lagda at panatak
pangnotaryo." In fine, the appellate court found that there was substantial compliance with
the requirements of Article 805 of the Civil Code. It held that since Consuelo named Natividad
as the executrix of the will, such should be respected unless the appointed executor is
incompetent, refuses the trust, or fails to give bond in which case the court may appoint
another person to administer the estate. The Tanchancos filed a motion for reconsideration
but was denied. Hence, the case at bar.
ISSUE
Did the CA err in allowing the probate of Consuelo's will despite the fact that the will
does not conform to the formalities required by law under Art. 805?
RULING
NO. The Court concurs with the CA in holding that the trial court erred in lending
credence to the allegations of the Tanchancos which are bereft of substantiation that
Consuelo's signature was forged or that undue duress was employed in the execution of the
will in question.
It is settled that "the law favors testacy over intestacy" and hence, "the probate of the
will cannot be dispensed with. Article 838 of the Civil Code provides that no will shall pass
either real or personal property unless it is proved and allowed in accordance with the Rules
of Court. In this case, the will faithfully complied with the formalities required by law.
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The main issue which the court must determine in a probate proceeding is the due
execution or the extrinsic validity of the will. The probate court cannot inquire into the
intrinsic validity of the will or the disposition of the estate by the testator. Thus, due
execution is "whether the testator, being of sound mind, freely executed the will in
accordance with the formalities prescribed by law" as mandated by Articles 805 and 806 of
the Civil Code, as follows:
Art. 805. Every will, other than a holographic will, must be subscribed at the end
thereof by the testator himself or by the testator's name written by some other person
in his presence, and by his express direction, and attested and subscribed by three or
more credible witnesses in the presence of the testator and of one another.
The testator or the person requested by him to write his name and the instrumental
witnesses of the will, shall also sign, as aforesaid, each and every page thereof, except the
last, on the left margin, and all the pages shall be numbered correlatively in letters placed on
the upper part of each page.
The attestation shall state the number of pages used upon which the will is written,
and the fact that the testator signed the will and every page thereof, or caused some other
person to write his name, under his express direction, in the presence of the instrumental
witnesses, and that the latter witnessed and signed the will and all the pages thereof in the
presence of the testator and of one another. If the attestation clause is in a language not
known to the witnesses, it shall be interpreted to them.
The rule on substantial compliance in Article 809 presupposes that the defects in the
attestation clause can be cured or supplied by the text of the will or a consideration of
matters apparent therefrom which would provide the data not expressed in the attestation
clause or from which it may necessarily be gleaned or clearly inferred that the acts not stated
in the omitted textual requirements were actually complied with in the execution of the will.
In other words, the defects must be remedied by intrinsic evidence supplied by the will itself.
What is imperative for the allowance of a will despite the existence of omissions is that such
omissions must be supplied by an examination of the will itself, without the need of resorting
to extrinsic evidence. "However, those omissions which cannot be supplied except by
evidence aliunde would result in the invalidation of the attestation clause and ultimately, of
the will itself."
In the case, the attestation clause indisputably omitted to mention the number of
pages comprising the will. Nevertheless, the acknowledgment portion of the will supplied
the omission by stating that the will has five pages, to wit: "Ang HULING HABILING ito ay
binubuo ng lima (5) na dahon, kasama ang dahong kinaroroonan ng Pagpapatunay at
Pagpapatotoong ito." Undoubtedly, such substantially complied with Article 809 of the Civil
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Code. Mere reading and observation of the will, without resorting to other extrinsic evidence,
yields the conclusion that there are actually five pages even if the said information was not
provided in the attestation clause. In any case, the CA declared that there was substantial
compliance with the directives of Article 805 of the Civil Code.
When the number of pages was provided in the acknowledgment portion instead of
the attestation clause, "the spirit behind the law was served though the letter was not.
Although there should be strict compliance with the substantial requirements of the law in
order to insure the authenticity of the will, the formal imperfections should be brushed aside
when they do not affect its purpose and which, when taken into account, may only defeat the
testator's will.
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SPOUSES EUGENIO DE VERA and ROSALIA PADILLA v. FAUSTA CATUNGAL

G.R. No. 211687, 10 February 2021, Third Division (Hernando, J.)
DOCTRINE
When one of the contracting parties is unable to read or is otherwise illiterate, and fraud
is alleged, a presumption that there is fraud or mistake in obtaining consent of that party
arises. To rebut the presumption, the other contracting party must show, by clear and
convincing evidence, that the terms and contents of the contract were explained to the
contracting party who is unable to read. Naturally, the burden to show that the other party
fully understood the contract is on the party that seeks to enforce the contract.
FACTS
Vicente Catungal owned 2 parcels of unregistered land in Pangasinan. He died on

December 1, 1944 and was survived by 5 children, 2 of whom are Fausta and Genaro. In
1994, Fausta and Genaro executed a Deed adjudicating between themselves the 2 parcels of
land owned by Vicente and transferring ownership of the properties to the spouses De Vera
for P30,000.00. Fausta affixed her thumbmark in lieu of her signature. The Deed was signed
in the presence of witnesses Teodoro de Vera and Valentino de Vera. Consequently, new tax
declarations were issued in the name of the Spouses De Vera.
On July 23, 1997, Fausta filed before the RTC a complaint for Declaration of Nullity of
Documents, Recovery of Ownership, Reconveyance, and Damages, with Prayer for Writ of
Preliminary Injunction and/or Temporary Restraining Order alleging that Spouses De Vera
took advantage of her illiteracy and old age and succeeded in making her affix her
thumbmark on the Deed by employing deceit, false pretenses, and false misrepresentations.
She claimed that petitioners represented that the Deed is merely an evidence of her
indebtedness to them, when in fact, it transfers ownership of the parcels of land to them.
The RTC ruled that Fausta failed to prove by preponderance of evidence that her
thumbmark on the Deed was procured through deceit, false pretenses, and fraudulent
misrepresentations. No other evidence, except from her bare denial and her daughter
Lourdes' testimony, was presented to support the claim that the Deed was unduly executed.
The RTC declared that she should have presented Genaro, her co-vendor in the Deed, to
prove that it was unduly executed. The CA reversed the RTC ruling that the presumption of
mistake or fraud under Article 1332 of the Civil Code was not overcome since Fausta
admitted that she was illiterate at the time of the execution of the Deed, the presumption that
she did not comprehend the full import of the document to which she affixed her thumbmark
holds; consequently, there is fraud or mistake in the execution. Further, the CA ruled that the
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presumption of due execution of notarized documents is not applicable in this case.

Petitioners filed a motion for reconsideration, but it was subsequently denied.
ISSUE
Did Fausta freely give her consent to the Deed?
RULING
NO. The Deed is voidable since Fausta's consent was vitiated by fraud; consequently,
the Spouses De Vera shall restore the parcels of land to Fausta's and Genaro's heirs. The issue
on hand is one of fact, as the question of whether fraud attended the execution of a contract
is factual in nature. As a general rule, this Court is not a trier of facts, and will rely on the
CA's findings of fact. However, there are exceptions to this rule such as when the CA's
findings are contrary with that of the trial court, as in this case.
Article 1318 of the Civil Code provides the essential requisites of a contract: (1)
consent of the contracting parties; (2) object certain which is the subject matter of the
contract; and (3) cause of the obligation which is established. Consent is "manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are to constitute
the contract. " To create a valid contract, the meeting of the minds must be free, voluntary,
willful, and with a reasonable understanding of the various obligations the parties assumed
for themselves. Article 1332 of the Civil Code provides for an instance where a presumption
of fraud or mistake might arise in the matter of giving consent to a contract:
Article 1332. When one of the parties is unable to read, or if the contract is in
a language not understood by him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms thereof have been fully explained to
the former.
When one of the contracting parties is unable to read or is otherwise illiterate, and
fraud is alleged, a presumption that there is fraud or mistake in obtaining consent of that
party arises. Article 1332 contemplates a situation where "a contract is entered into but the
consent of one of the contracting parties is vitiated by mistake or fraud committed by the
other." This provision also modifies the principle that a party is presumed to know the
contents and import of a document to which he affixed his signature. To rebut the
presumption, the other contracting party must show, by clear and convincing evidence, that
the terms and contents of the contract were explained to the contracting party who is unable
to read. Naturally, the burden to show that the other party fully understood the contract is
on the party that seeks to enforce the contract.
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In the case at bench, the Court finds that Fausta was able to establish that she was
unable to read at the time of the execution of the Deed due to her illiteracy. She stated in her
testimony that she was an illiterate person. In addition, Lourdes's testimony corroborated
that of Fausta's. She testified in two instances that Fausta was illiterate at the time of the
execution of the Deed. Furthermore, Eugenio and Valentino, in their testimonies, admitted
that they knew that Fausta was illiterate at the time of the execution of the Deed.
Based on the foregoing, the testimonies of Fausta and Lourdes as bolstered by the
admissions of Eugenio and Valentino preponderantly established that Fausta was illiterate
at the time of the execution of the Deed. She was unable to read and write. Therefore, the
presumption of fraud or mistake mentioned in Article 1332 of the Civil Code becomes
operative for the benefit of Fausta. To rebut this presumption, the Spouses De Vera must
show, by clear and convincing evidence, that the contents of the Deed were sufficiently
explained to Fausta at that time. In this regard, they have failed. Fausta testified that her
children (specifically Lourdes, among others) were not present during the execution of the
Deed and that its contents were not explained to her when she affixed her thumbmark on it.
The records failed to show that the Spouses De Vera satisfactorily explained to Fausta
the contents of the Deed. That she was allegedly present during the execution of the Deed
does not mean that they explained to her the contents when she affixed her thumbmark to
the Deed. Consequently, we hold that Fausta's consent to the Deed was vitiated and must
perforce be annulled.
Finally, although notarized documents enjoy the presumption of regularity and are
accorded evidentiary weight as regards their due execution, this presumption, however, may
be rebutted by clear and convincing evidence. Nevertheless, we agree with the CA's
pronouncement that this presumption finds no application in this case because the
regularity of the execution of the Deed was challenged.
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SPOUSES EUGENIO PONCE and EMILIANA NEROSA v. JESUS ALDANESE

G.R. No. 216587, 4 August 2021, Second Division (Hernando, J.)
DOCTRINE
To prove his ownership over the lot, Jesus presented Tax Declaration No. 13163-A in his
name. He likewise presented two Certificates issued by the Office of the Municipal Treasurer of
Sibonga, Cebu declaring him as owner of the subject land and that he has been paying realty
taxes thereon as early as 1980. Indeed, while the tax declaration is not conclusive proof of
ownership of Jesus over the subject land, it is an indication however that he possesses the
property in the concept of an owner for nobody in his or her right mind would be paying taxes
for a property that is not in his or her actual or constructive possession.
FACTS
In 1973, Jesus Aldanese inherited Lot No. 6890 from his father, Teodoro Aldanese, Sr.
He diligently paid its real property taxes from that time on under Tax Declaration No. 13003
which was in his name. Subsequently, TD 13003 was cancelled and TD 13163-A6 was issued
still in Jesus’ name.
In August 1996, Jesus was surprised when he discovered that the Spouses Ponce
encroached upon the entire portion of his lot. He immediately demanded that they vacate
the premises, but Spouses Ponce refused. They argued that Lot No. 6890 is part of the land
that they bought from his brother Teodoro Jr. However, Teodoro Jr. denied selling his
brother's land explaining that what he sold to the Spouses Ponce was a parcel of land that he
owned known as Lot No. 11203 located in Masa, Dumanjug, Cebu which was adjacent to Lot
No. 6890 of Jesus. Thereafter, Jesus and the spouses Ponce met at the barangay for
conciliation, but the latter still refused to vacate. However, the Spouses Ponce admitted
encroaching on Lot No. 6890 because Lot No. 11203 which they bought from Teodoro Jr. in
Masa, Dumanjug, Cebu contained less than the area stated in the Deed of Absolute Sale. Jesus
filed a Complaint for recovery of possession and damages with receivership against Spouses
Ponce before the RTC.
The RTC ruled that Jesus sufficiently established that he owned Lot No. 6890 so as to
be entitled to its possession. Spouses Ponce appealed before the CA. The CA sustained the
findings of the RTC ruling that prescription has not yet set in since the complaint was filed
within the 30-year prescriptive period for real actions over immovable properties. It also
held that the land sold to the Ponces does not include Lot No. 6890 since it was specifically
stated in the Deed of Absolute Sale that it only covers the land in Masa, Dumanjug, Cebu.
Lastly, Jesus sufficiently proved his ownership over the subject land as shown by the
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tax declaration in his name. The Spouses Ponce filed a Motion for Reconsideration which
was denied. Hence, this Petition for Review on Certiorari.
ISSUES
Is Jesus the absolute owner of Lot No. 6890 and is he entitled to possession thereof?
RULING
YES. Jesus, being the lawful owner of the subject property, is entitled to the
possession of Lot No. 6890. In civil cases, the burden of proof rests upon the plaintiff who
must establish their case by preponderance of evidence. Once the plaintiff makes out a prima
facie case in his favor in the course of the trial, however, the duty or the burden of evidence
shifts to the defendant to controvert plaintiffs prima facie case, otherwise, a verdict must be
returned in favor of plaintiff.
In the case at bench, Lot No. 6890 remained untitled as evidenced by a Certification
dated October 28, 1997 issued by the DENR - Land Management Sector of Argao, Cebu. To
prove his ownership over the lot, Jesus presented Tax Declaration No. 13163-A in his name.
He likewise presented as evidence two Certificates issued by the Office of the Municipal
Treasurer of Sibonga, Cebu which state that he is the declared owner of the subject land and
that he has been paying realty taxes thereon as early as 1980 as owner of the property.
Indeed, while the tax declaration is not conclusive proof of ownership of Jesus over the
subject land, it is an indication however that he possesses the property in the concept of an
owner for nobody in his or her right mind would be paying taxes for a property that is not in
his or her actual or constructive possession.
Teodoro Jr., his brother, corroborated and bolstered his claim that Jesus owned the
subject land by way of inheritance from their father, Teodoro Aldanese. Interestingly, the
Ponces failed to present any proof of ownership such as payment of real property taxes or a
certificate of title in their names over Lot No. 6890. True, the Spouses Ponce presented TD
22-006688 to support their claim over the land. However, it did not state the lot number of
the land for which it was issued. Moreover, a careful perusal of the declaration reveals that
the land for which it was issued is located in Masa, Dumanjug, Cebu and has different
boundaries compared to Lot No. 6890.
As correctly found by the RTC and the CA, the Deed of Absolute Sale made no mention
of Lot No. 6890. Neither does the Deed of Confirmation of Oral Partition prove that Lot No.
6890 is included in the purchased land. What is clearly apparent from the two deeds is that
the land sold to the Ponces is situated in Masa, Dumanjug, Cebu, surrounded by different
boundaries, and covered by Tax Declaration No. 08765. On the contrary, Lot No. 6890 is
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located in Sibonga, Cebu, with different boundaries and under a different tax declaration.
Moreover, during trial, Teodoro Jr. categorically testified that the land covered by the Deed
of Absolute Sale did not include Lot No. 6890 and the Spouses Ponce admitted that the whole
parcel of land that they purchased from Teodoro Jr. is in Masa, Dumajug, Cebu. It was only
during cross-examination that he claimed Lot No. 6890 to be part of the land sold to them.
In the absence of competent evidence showing that Lot No. 6890 is covered by the
Deed of Absolute Sale, the Ponces have no right to possess the property, much less in the
concept of an owner. Moreover, they cannot be deemed possessors in good faith since they
were aware that the subject land is not part of the land that Teodoro Jr. sold to them. Besides,
assuming that Teodoro Jr. sold Lot No. 6890 to the Ponces, the sale would be invalid as it
was owned by Jesus. To stress "no one can give what one does not have. 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.
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SPS. TORRECAMPO v. WEALTH DEVELOPMENT BANK CORP.

G.R. No. 221845, March 21, 2022, Second Division, Hernando, J.:
DOCTRINE:
Act No. 3135 only applies when the one-year redemption period has not yet lapsed. The
general rule is that in extra-judicial foreclosures, a writ of possession may be issued to the
purchaser in two different instances, and based on two different sources: (1) within the
redemption period, in accordance with Act No. 3135, particularly Section 7, as amended; and
(2) after the lapse of the redemption period, based on the purchaser's right of ownership.
FACTS:
Petitioner Spouses Torrecampo entered into a housing loan

agreement with respondent bank, Wealth Development Bank Corp. The housing loan
agreement was secured by a real estate mortgage over a property owned by
the spouses Torrecampo known as Lot No. 5 of the consolidated subdivision plan. The
aggregate amount of the loan is P10.5 Million, evidenced by promissory notes. Subsequently,
the spouses Torrecampo defaulted on the payment of their loan obligation. Thus,
respondent bank commenced an action to foreclose the real estate mortgage extra-judicially
under the provisions of Act No. 3135, or an Act to Regulate the Sale of Property under Special
Powers Inserted in or Annexed to Real-Estate Mortgages, as amended. A certificate of sale
was issued on June 11, 2010 and was duly registered with the Register of Deeds of Cebu City
on June 24, 2010.
After the lapse of the one-year redemption period without any attempt on the part
of the spouses Torrecampo to redeem the mortgaged property, the ownership of the lot was
then consolidated in favor of Wealth Development Bank Corp. as the purchaser in the auction
sale. The TCT in the name of the spouses Torrecampo was cancelled and a new TCT was
issued by the Register of Deeds of Cebu City in the name of Wealth Development Bank Corp.
When Sps. Torrecampo refused to vacate the property upon the demand of Wealth
Development Bank Corp, the latter filed an ex-parte petition for the issuance of a writ of
possession, which was granted by the RTC. A notice to vacate was issued by the sheriff.
RTC denied petitioners' motion for reconsideration of the RTC's Order granting the
application for a writ of possession. Subsequently, the writ of possession was successfully
implemented and Sps. Torrecampo were evicted from the property. The petitioners filed a
motion to set aside the extra-judicial foreclosure sale and cancel the writ of possession with
prayer for damages on the ground that there was no violation of the mortgage contract.
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Sps. Torrecampo’s arguments: (1) the agreed maturity date of the loan has not yet
arrived; (2) the term loan agreement, the real estate mortgage contract, the promissory
notes and the disclosure statement of loan/credit transaction did not provide for the amount
of the monthly amortizations; and (3) no demand letter or statement of account of any
amount payable for any given month was sent at their address. Further, they alleged that the
extra-judicial foreclosure sale did not conform to the prescribed procedures as no notice was
sent at their given address. Also, petitioners averred that the respondent bank's ex-
parte petition for writ of possession is fatally defective as it contains no allegation as to the
posting and publication of the first and second notices of extra-judicial foreclosure sale, nor
the sending of such notices at their given address. Lastly, petitioners contended that they
suffered damages arising from the extra-judicial foreclosure of their property and their
eviction therefrom, which were both improper, unjust and oppressive.
Wealth Development Bank’s argument: there was no violation of the real estate
mortgage contract. The contract contains an acceleration clause to the effect that in any
event of default, the entire obligation immediately becomes due and payable. Thus, as a
consequence of such default, the mortgagee has the right to foreclose the mortgage, to have
the property seized and sold, and to apply the proceeds to the obligation. They followed the
requirements on posting and publication of the notice of extra-judicial foreclosure under Act
No. 3135. Finally, whatever damages petitioners may have suffered were due to their own
acts.
RTC: issued an Order denying petitioners' motion to set aside the extra-judicial
foreclosure sale and cancel the writ of possession with prayer for damages. The RTC ruled
that proceedings for the issuance of the writ of possession are non-litigious in nature such
that the court will not delve into the merits of the petition.
CA: CA denied the petitioners' appeal on the ground that the provisions of Act No.
3135, particularly Section 8, are only applicable until the period of redemption. Once
redemption lapses and consolidation of the purchaser's title ensues, Act No. 3135 is not
applicable anymore. Thus, petitioners' recourse to the law is misplaced.
ISSUE
Whether the CA err in not applying the provisions of Act No. 3135 to the case at bar?
RULING:
The Court rules in the negative. The CA did not err in not applying the provisions
of Act No. 3135 in its Decision. Act No. 3135 only applies when the one-year redemption
period has not yet lapsed. The general rule is that in extra-judicial foreclosures, a writ of
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possession may be issued to the purchaser in two different instances, and based on two
different sources: (1) within the redemption period, in accordance with Act No. 3135,
particularly Section 7, as amended; and (2) after the lapse of the redemption period, based
on the purchaser's right of ownership.
In the first instance, Section 7 of Act No. 3135 provides that the purchaser in a
foreclosure sale may apply for a writ of possession by filing an ex parte motion under oath.
The provision also requires that a bond be furnished and approved, and no third person is
involved.
On the other hand, Section 8 of the same Act, as amended, provides the remedy
available to the debtor, that is, the opportunity to contest the transfer of possession
but only within the period of redemption, to wit:
Sec. 8. The debtor may, in the proceedings in which possession was

requested, but not later than thirty days after the purchaser was given possession,
petition that the sale be set aside and the writ of possession cancelled, specifying the
damages suffered by him, because the mortgage was not violated or the sale was not
made in accordance with the provisions hereof, and the court shall take cognizance of
this petition in accordance with the summary procedure provided for in section 112
of Act No. 496; and if it finds the complaint of the debtor justified, it shall dispose in his
favor of all or part of the bond furnished by the person who obtained possession. Either
of the parties may appeal from the order of the judge in accordance with section 14
of Act No. 496; but the order of possession shall continue in effect during the pendency
of the appeal.
Under the second instance, which is what happened in the case at bar, a writ of
possession may also be issued after consolidation of ownership of the property in the name
of the purchaser or, in this case, the respondent bank. The purchaser becomes the absolute
owner of the property purchased in the foreclosure sale, if it is not redeemed during the one-
year period after the registration of the sale. After consolidation of ownership in the
purchaser's name and issuance of a new TCT, possession of the land too becomes an
absolute right of the purchaser. Thus, the issuance of the writ of possession to the
purchaser, upon proper application and proof of title, merely becomes a ministerial duty of
the court which cannot be enjoined or restrained, even by the filing of a civil case for the
declaration of nullity of the foreclosure and consequent auction sale. Any question regarding
the regularity or validity of the mortgage or its foreclosure cannot be raised as a justification
for opposing the issuance of the writ.
In the case at bar, the respondent bank registered the foreclosure sale on June
24, 2010. After the lapse of one year or after June 24, 2011, the provisions of Act No.
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3135 no longer applied to the parties. Wealth Development Bank Corp. became the
absolute owner of the subject property as a matter of right. In line with this, the writ of
possession was issued as a ministerial duty of the trial court. It was issued to the
respondent bank as a matter of right, a mere incident of the bank's ownership, and not in
accordance with the remedy provided under Section 8.
The CA was correct when it ruled that Sps. Torrecampo failed to redeem the
mortgaged property within the period of redemption and consequently, the ownership over
the property was consolidated in favor of the bank. Afterwards, a corresponding writ of
possession was issued by the trial court after the redemption period. However, the Sps.
Torrecampo still availed of the remedy under Section 8 of Act No. 3135 which is misplaced.
The provisions of Act No. 3135, particularly the remedy provided under Section 8 thereof,
apply only during the period of redemption. After the lapse of the redemption period
and the title of the purchaser is consolidated, Act No. 3135 finds no application.
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SPOUSES LIU v. ESPINOSA

G.R. No. 238513, July 31, 2019, Third Division (Hernando, J.)
DOCTRINE
Unlawful detainer is a summary action for the recovery of possession of real property.
This action may be filed by a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration or termination of
the right to hold possession by virtue of any contract, express or implied.
In unlawful detainer cases, the possession of the defendant was originally legal, as his
possession was permitted by the plaintiff on account of an express or implied contract between
them. However, defendant's possession became illegal when the plaintiff demanded that
defendant vacate the subject property due to the expiration or termination of the right to
possess under their contract, and defendant refused to heed such demand.
FACTS
Petitioner Belinda Y. Liu owns a parcel of land covered by a TCT in Davao City.
Petitioner Hsi Pin Liu is her husband. They acquired said land from their predecessor-in-
interest who, in turn, merely tolerated the occupation of the property by respondents. The
latter are the present occupants of the land.
After title was transferred to the petitioners, they likewise tolerated the presence of
the respondents upon the understanding that they will peacefully vacate the land once the
petitioners' need to use the same arises. When petitioners' demands to vacate the property
were made, however, the latest of which was on February 12, 2013, the respondents refused
to comply.
Thus, petitioners filed a complaint for Unlawful Detainer against them in the MTCC
which ruled in favor of the petitioners. On appeal to the RTC, the RTC affirmed in all respects
the MTCC's Decision. The CA however reversed the findings of the RTC. It held that
petitioners were unable to sufficiently prove the presence of tolerance of respondents'
occupation from the start of their possession of the subject property. Also, plaintiffs failed to
adduce evidence that would have shown when the respondents entered the property or who
gave them the permission to do the same. Thus, the Court of Appeals found that the
petitioners' bare claim of tolerance could not sustain their action for unlawful detainer.
ISSUE
Whether petitioners' action for unlawful detainer must be sustained.
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RULING
YES. Unlawful detainer is a summary action for the recovery of possession of real
property. This action may be filed by a lessor, vendor, vendee, or other person against whom
the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession by virtue of any contract, express or implied.
In unlawful detainer cases, the possession of the defendant was originally legal, as his
possession was permitted by the plaintiff on account of an express or implied contract
between them. However, defendant's possession became illegal when the plaintiff demanded
that defendant vacate the subject property due to the expiration or termination of the right
to possess under their contract, and defendant refused to heed such demand.
Thus, an action for unlawful detainer will stand if the following requisites are present:
(a) Initially, possession of property by the defendant was by contract with or by tolerance of
the plaintiff; (b) Eventually, such possession became illegal upon notice by plaintiff to
defendant of the termination of the latter's right of possession; (c) Thereafter, the defendant
remained in possession of the property and deprived the plaintiff of the enjoyment thereof;
and (d) Within one year from the last demand on defendant to vacate the property, the
plaintiff instituted the complaint for ejectment.
It is clear that petitioners are the registered owners of the subject property, as
evidenced by the TCT and that the respondents' occupation of the subject property was
merely tolerated by the petitioners' predecessor-in-interest and the petitioners themselves
based on the understanding that the said respondents will peacefully vacate the same once
the need to use the land by the petitioners arises.
Subsequently, this occupation became illegal when respondents refused to heed

petitioners' express and clear demands to vacate the subject property, the last of which was
dated February 12, 2013. It is evidently clear that the complaint for unlawful detainer, filed
on August 6, 2013, was made within one year from the time the last formal demand to vacate
was made.
Further, it should be pointed out that respondents would not have made an offer to
purchase the subject land from petitioners had they been truly in possession of the property
in the concept of an owner. Their claim is thus negated by the fact that the subject land is
registered in the name of the petitioners. It is settled that a Torrens title is evidence of an
indefeasible title to property in favor of the person in whose name the title appears. It is
conclusive evidence with respect to the ownership of the land described therein. Hence,
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petitioners as the titleholders are entitled to all the attributes of ownership of the property
including possession.
Even then, the respondents' claim of possession of the property in the concept of an
owner is a collateral issue that may not be decided upon in a case for unlawful detainer. To
stress, the only issue to be resolved in an unlawful detainer case is physical or material
possession of the property involved, independent of any claim of ownership by any of the
parties involved.
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SPOUSES CALVIN LUTHER R. GENOTIVA and VIOLET S. GENOTIVA v. EQUITABLE-PCI

BANK (now BANCO DE ORO UNIBANK, INC.)
G.R. No. 213796, June 28, 2021, Third Division (Hernando, J.)
DOCTRINE
Applying the foregoing to this case, it is obvious that BDO's supposed "threat," i.e., its
withholding of Violet's retirement benefits, is not the intimidation referred to by law. The
records show that the bank was unable to release Violet's clearance for the release of her
retirement benefits for the simple reason that she had an existing liability to the bank arising
from the Deed of Suretyship that she executed with her husband and other stockholders of
Goldland. Clearly, such act is neither unjust nor unlawful. Contrary to the spouses Genotiva's
claim that they were intimidated by BDO into signing the subject contract, the records show
that it was actually them who willingly offered to execute the subject contract in exchange for
the release of Violet's retirement benefits.
In the same vein, the Genotivas had an option: they could have desisted from offering to
mortgage the subject property and resorted to other means, such as through judicial action, to
obtain or process the release of Violet's retirement benefits. Instead, they willingly mortgaged
the subject property to sway BDO to release Violet's retirement benefits. The bank could not be
blamed for accepting what appeared to it as a reasonable offer. The fact that the couple felt
compelled, under the circumstances, to mortgage the subject property did not negate the
voluntariness of their act.
Obviously, the creditor's right to proceed against the surety does not give him any right
to deprive said surety of his property without due process of the law. It does not contemplate a
situation where the creditor is allowed to take by force or without consent the property of the
surety. Much like collecting from the principal debtor, the creditor may recover only through
lawful means. The creditor may not simply take the law in his own hands and summarily take
the property of the debtor or surety.
Here, while the Court agreed that the bank is entitled to collect from the spouses
Genotiva, they being solidarily liable under the Deed of Suretyship, BDO may not precipitously
deprive them of their property without due process of the law. The manner by which it enforced
the surety contract violates the basic principle of due process. BDO claims that it rejected the
offer for redemption. However, the Court finds nothing on record to support such claim. What
is apparent is that after the Genotivas made the offer, BDO responded through its January 31,
2001 Letter simply stating that “the amount of P500,000.00 remitted to BDO has been applied
to past due interest."
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FACTS
On February 13, 2003, the spouses Genotiva filed before the RTC a Complaint for
Declaration of Nullity of Contract, Reconveyance and Damages with Prayer for a Writ of
Preliminary Injunction and/or Temporary Restraining Order against BDO.
Sometime in 1997, Goldland applied for a "clean loan" with BDO at its Cagayan de Oro
City Branch where petitioner Violet Genotiva (Violet) was an employee. BDO granted the
loan in the amount of P2,000,000.00 as evidenced by a Promissory Note dated November 12,
1996.
The Genotivas further alleged that when Violet retired on October 15, 1998, she
requested for the payment of her retirement benefits and for the release of the owner's copy
of Transfer Certificate of Title No. 77966 (subject property) which was retained by BDO in
relation to Violet's earlier housing loan which loan was already fully paid. However, BDO
allegedly refused to release her retirement benefits unless she and her husband would
execute a real estate mortgage over the subject property to secure Goldland's loan. Being
pressed for money, they had no choice but to accede to BDO's demands and to sign the Real
Estate Mortgage dated March 17, 1999 (subject contract) in favor of BDO.
According to the spouses Genotiva, sometime after the subject contract was executed,
they offered to pay BDO the amount of P500,000.00 to redeem the collateral. However,
instead of applying the P500,000.00 for the redemption, BDO applied it to the payment of
the interest due on Goldland's loan. Further, when Goldland defaulted in its payment of the
loan, BDO wrongfully foreclosed the subject property and scheduled its auction sale.
Thus, in their Complaint, the spouses Genotiva prayed for the following: first, the
declaration of the subject contract as void for having been executed under duress in view of
BDO's withholding of Violet's retirement benefits; second, for an order releasing the
P500,000.00 deposit, the retention thereof by BDO not having any basis, as well an order
requiring BDO to pay damages; and third, for the issuance of a Temporary Restraining Order
(TRO) against the scheduled auction sale of the subject property.
BDO filed its Answer to the Complaint alleging that it withheld the issuance of Violet's
clearance, a condition for the release of her retirement benefits, because of her existing
obligation to the bank arising from the Deed of Suretyship dated November 7, 1996. Such
Deed of Suretyship was previously executed by the Genotivas and other stockholders when
Goldland applied for the P2,000,000.00 loan in 1996.
BDO further claimed that it was actually the spouses Genotiva who offered to secure
Goldland's loan by executing the subject contract in exchange for the release of Violet's
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retirement benefits. After the bank accepted the offer, Violet's retirement benefits were
released.
As to the spouses Genotiva's deposit of P500,000.00, BDO claimed that the same
constitutes their admission as to the existence and validity of the principal obligation and
the mortgage they subsequently executed. As a creditor, BDO properly applied the amount
to Goldland's past due interest.
In its August 31, 2010 Decision, the RTC held that the subject contract was voidable
considering that it was executed by the spouses Genotiva under BDO's undue influence.
In its assailed Decision, the CA granted BDO's appeal and set aside the August 31,
2010 Decision of the RTC. It held that the bank as a creditor has the right to proceed against
the spouses Genotiva as sureties.
The couple insist that their consent was vitiated when they signed the subject
contract since BDO would not release Violet's retirement benefits if she and her husband will
not secure Goldland's loan. Further, they assert that the P500,000.00 deposit intended for
the redemption of the subject property was wrongfully credited by BDO to another account
as to amount to unjust enrichment.
As for the Deed of Suretyship, the spouses Genotiva argue that their obligation under
the contract has already been extinguished through novation in view of BDO's application of
the P500,000.00 deposit to Goldland's interest.
In its Comment, the bank maintains that it did not force, intimidate, or exert undue
influence and duress upon the spouses when they executed the subject contract. The bank
claims that such allegation was merely self-serving and contrary to the evidence on record,
as the Genotiva couple in fact voluntarily and knowingly offered the subject property to
secure Goldland's loan, as evidenced by the correspondences between the parties.
Further, as to the application of the P500,000.00 deposit to Goldland's past due

interest, BDO posits that it had the option to reject the couple's offer of redemption, which
was what it in fact did. Its application of the deposit to Goldland's loan was merely an exercise
of its right as a creditor under the Deed of Suretyship.
Finally, as to the argument on novation, BDO claims that such argument was raised
for the first time on appeal and should therefore be disregarded by this Court.
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ISSUES
1. Whether the subject contract is valid in view of the spouses Genotiva’s claim of
vitiated consent.
2. Whether BDO has the right to retain the P500,000.00 under the Deed of Suretyship.
RULING
1. YES. The subject contract is valid..
Duress or intimidation is present when one of the contracting parties is compelled by

a reasonable and well-grounded fear of an imminent and grave evil upon their person or
property, or upon the person or property of their spouse, descendants or ascendants, to give
their consent. For intimidation to vitiate consent, the following requisites must be present:
(1) that the intimidation must be the determining cause of the contract, or must have caused
the consent to be given; (2) that the threatened act be unjust or unlawful; (3) that the threat
be real and serious, there being an evident disproportion between the evil and the resistance
which all men can offer, leading to the choice of the contract as the lesser evil; and (4) that it
produces reasonable and well-grounded fear from the fact that the person from whom it
comes has the necessary means or ability to inflict the threatened injury.
Applying the foregoing to this case, it is obvious that BDO's supposed "threat," i.e., its
withholding of Violet's retirement benefits, is not the intimidation referred to by law. The
records show that the bank was unable to release Violet's clearance for the release of her
retirement benefits for the simple reason that she had an existing liability to the bank arising
from the Deed of Suretyship that she executed with her husband and other stockholders of
Goldland. Clearly, such act is neither unjust nor unlawful. Contrary to the spouses Genotiva's
claim that they were intimidated by BDO into signing the subject contract, the records show
that it was actually them who willingly offered to execute the subject contract in exchange
for the release of Violet's retirement benefits.
The Genotivas, in executing the subject contract in exchange for the release of Violet's
retirement benefits, agreed to accept what they thought was a better option. Being
competent persons with experience in business and banking, they negotiated for the release
of Violet's retirement benefits which was unfortunately impeded by her existing liability to
the bank. They cannot simply change their minds and assail the validity of the subject
contract after they have received the benefits therefrom.
Similarly, there was no undue influence as found by the RTC. There is undue influence
when a person takes improper advantage of his power over the will of another, depriving the
latter of a reasonable freedom of choice. For undue influence to be present, the influence
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exerted must have so overpowered or subjugated the mind of a contracting party as to

destroy their free agency, making them express the will of another rather than their own.
There is no evidence of such degree of influence exerted by BDO on the spouses Genotiva in
this case. The latter may have desperately needed Violet's retirement benefits, but there was
no showing to any degree that they were deprived of free agency when they signed the
subject contract.
In the same vein, the Genotivas had an option: they could have desisted from offering
to mortgage the subject property and resorted to other means, such as through judicial
action, to obtain or process the release of Violet's retirement benefits. Instead, they willingly
mortgaged the subject property to sway BDO to release Violet's retirement benefits. The
bank could not be blamed for accepting what appeared to it as a reasonable offer. The fact
that the couple felt compelled, under the circumstances, to mortgage the subject property
did not negate the voluntariness of their act.
1. NO. BDO has no right to apply the P500,000.00 to Goldland’s loan.
In retaining the P500,000.00 and applying the same to the payment of Goldland's
interest, BDO invokes its right as a creditor to proceed against the spouses Genotiva who are
solidarily liable under the Deed of Suretyship.
Article 1216. The creditor may proceed against any one of the solidary debtors or
some or all of them simultaneously. The demand made against one of them shall not be an
obstacle to those which may subsequently be directed against the others, so long as the debt
has not been fully collected.
The right of the creditor to proceed against the surety refers to the right to sue the
surety independently of the right to sue the principal or the other sureties. By "proceed," the
law means to "sue" or to "institute proceedings" for collection or enforcement of the surety
contract.
In Philippine National Bank v. Macapanga Producers, Inc., the Court explained that the
consequence of the surety's being solidarily bound is that the creditor may sue any or all of
the solidary debtors.
Obviously, the creditor's right to proceed against the surety does not give him any
right to deprive said surety of his property without due process of the law. It does not
contemplate a situation where the creditor is allowed to take by force or without consent the
property of the surety. Much like collecting from the principal debtor, the creditor may
recover only through lawful means. The creditor may not simply take the law in his own
hands and summarily take the property of the debtor or surety.
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Here, while the Court agreed that the bank is entitled to collect from the spouses
Genotiva, they being solidarily liable under the Deed of Suretyship, BDO may not
precipitously deprive them of their property without due process of the law. The manner by
which it enforced the surety contract violates the basic principle of due process. BDO claims
that it rejected the offer for redemption. However, the Court finds nothing on record to
support such claim. What is apparent is that after the Genotivas made the offer, BDO
responded through its January 31, 2001 Letter simply stating that “the amount of
P500,000.00 remitted to BDO has been applied to past due interest."
If BDO indeed rejected the offer, the proper course of action for the bank was to return
the amount to the spouses Genotiva or inquire if the latter would be interested in applying
the payment to Goldland's due interest. BDO may not simply retain the money and apply it
to another account under the excuse that it was exercising its right as a creditor to collect
from the sureties. Again, while the bank indeed has the right to proceed against the spouses
Genotiva, it must do so through lawful means, i.e., through the institution of proceedings for
collection or enforcement of the surety contract.
What appears is that BDO took a shortcut in collecting from the Genotivas. It
unilaterally set-off the amount of P500,000.00 to answer for Goldland's due interest because
the Genotiva couple were solidarily liable for Goldland's loan anyway. However, BDO may
not set-off the amounts without the consent of the spouses Genotiva because consent is
required for conventional compensation. Neither can BDO invoke legal compensation
because the same requires each of the debtors to be bound principally, and in the case, while
the spouses Genotiva are directly liable for Goldland's loan, their liability stems not from a
principal contract, but a secondary one, i.e., the Deed of Suretyship. Thus, BDO's claim that
its retention of the P500,000.00 is allowed under the Deed of Suretyship lacks basis.
Accordingly, said amount must be returned to the spouses Genotiva as prayed for and as
adjudged by the RTC.
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GUILLERMA S. SILVA v. CONCHITA S. LO

G.R. No. 206667, June 23, 2021 (Hernando, J.)
DOCTRINE
We are not unaware of the basic principle in the law of co-ownership, both under the
present Civil Code as in the Code of 1889, that no individual co-owner can claim title to any
definite portion of the land or thing owned in common until the partition thereof. Prior to that
time, all that the co-owner has is an ideal, or abstract, quota or proportionate share in the
entire thing owned in common by all the co-owners.
FACTS
On May 20, 1975, Carlos, Jr. died intestate leaving behind a sizeable estate to his
compulsory heirs: the surviving spouse, Concepcion and their children, Ma. Enrica, Carlos III,
petitioner Guillerma, Lily, Pamela, respondent Conchita, and Teodoro. Sometime in 1976, the
heirs of Carlos Jr. executed an Extrajudicial Settlement of Estate which provided that all
properties of the decedent shall be owned in common, pro indiviso, by his heirs. In
September 1988, Carlos, Jr.'s heirs executed a Memorandum of Agreement for the physical
division of the estate. However, both agreements were never implemented, and the heirs
remained pro indiviso co-owners of the estate's properties.
On August 3, 1989, Enrica filed an action for partition docketed as Civil Case No. Q-
89-3137 before the RTC impleading all the other heirs, her mother, and siblings as
defendants. Eventually, Teodoro withdrew as defendant and joined suit as plaintiff-in-
intervention. Opposing the physical division of the properties, defendants therein primarily
asserted Concepcion’s usufructuary rights over the estate’s real properties. They further
alleged a diminished value and use of the properties should these be physically divided.
Given the unanimity of their defense against the complaint, Conchita and two other heirs
residing abroad, Lily and Pamela, executed a Special Power of Attorney (SPA) in favor of their
mother Concepcion and their sister, Guillerma, respectively.
The RTC issued numerous orders reflecting the negotiations during court hearings
for the distribution and partition of the estate among the heirs. The trial court encouraged
the heirs to arrive at a mutually acceptable partition and distribution of the estate's
properties. In the course of the trial, the heirs agreed on the manner of division of each
property — via raffle conducted by the trial court. The heirs drew lots for an aliquot of each
property of the estate, with Concepcion drawing first. For three years, under the supervision
of the RTC, the heirs negotiated the terms of the estate's partition to be embodied in a
compromise agreement. After the plaintiffs, Enrica and Teodoro, signed the final draft of the
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compromise agreement, the defendants, Concepcion and the rest of her children, tarried
signing thereof.
On January 11, 2000, the RTC issued an Order of Partition. On June 26, 2000, Conchita
executed a Revocation of the SPA. Conchita filed a copy of the Revocation with the RTC but
failed to furnish her agent, Concepcion, a copy thereof. The latest SPA dated June 8, 1999
issued by Conchita in favor of Concepcion.
Despite the RTC's January 11, 2000 Order of Partition, various properties of the estate
remained undivided and were not distributed among the heirs. Thus, on August 29, 2003,
Enrica filed a Motion to Appoint Commissioners to Make Partition. On September 10, 2003,
Atty. Tuason, counsel for the defendants, filed a Manifestation opposing the appointment of
commissioners on the ground that the agricultural land tenants have already agreed to the
subdivision of the agricultural lands.
On October 17, 2003, the RTC granted the Motion to Appoint Commissioners. Yet
again, the appointment of commissioners did not happen as plaintiffs appeared to have
acquiesced to the defendants' proposed subdivision of the agricultural lands, including the
herein subject property.
Sometime in 2006, Concepcion, representing herself and the other defendants-heirs,

executed a second agreement with the tenants of the subject property designated as
"Kasunduan sa Pagwawakas/Pagtatapos ng Relasyon bilang May-ari ng Lupa at mga
Ortilano/Kasama ng Lupa" (2006 Kasunduan). Thereafter, the defendants filed a Motion for
Approval of New Agreement and New Subdivision Plan of certain agricultural properties,
including the subject property, which motion the plaintiffs no longer opposed.
The RTC granted defendant’s motions: it approved the New Agreement and
Subdivision Plan and ordered the plaintiffs Enrica and Teodoro to sign the document. In
2009, to execute the RTC's Order and facilitate the issuance of new titles over the subject
property, Concepcion filed a Motion to Order Register of Deeds to Enter New Titles. On
November 6, 2009, through a different counsel, Conchita opposed Concepcion's Motion on
the ground that the 2006 Kasunduan is void. The RTC granted Concepcion’s motion and
ordered the Register of deeds of Pampanga to enter new titles in the names of the tenants
and the heirs of Carlos, Jr., ruling that the 2007 Order approving the subdivision of the
subject property and its distribution via raffle had already become final and executory after
the affected parties did not file the appropriate remedy. Conchita filed a petition for
Certiorari under Rules 65 before the CA.
The CA invalidated the 2006 Kasunduan because it lacked the signature of all the
heirs: Enrica's, Teodoro's and Conchita's who now repudiates her mother's, Concepcion's,
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signature on her behalf. The appellate court ruled that the 2006 Kasunduan did not conform
with the procedure laid down in Rule 69 of the Rules of Court on Partition.
ISSUES
1. Whether the RTC effectively distributed the estate to persons who are not heirs of the
decedent by approving the transfer of, and title to, half of the subject property to the
tenants;
2. Whether the 2006 Kasunduan partitioning the subject property is void because it was
not signed by all the heirs of the decedent; In the alternative, whether the 2006
Kasunduan is unenforceable as against Conchita.
RULING
1. YES. Even without going into the validity of Concepcion signing the 2006 Kasunduan
on Conchita's behalf, the appellate court could not void the sale and transfer of half of
the subject property to its qualified beneficiaries under a voluntary transfer
arrangement provided in the CARL.
First. As correctly ruled by the trial court, albeit plaintiffs Enrica and Teodoro did not
sign the Kasunduan, they acquiesced to the partition and distribution of the subject
property, the qualified tenants receiving half thereof. In fact, Enrica filed a
Manifestation dated December 18, 2006 that she and Teodoro will not object to the
2006 Kasunduan as long as they will be given their preferred portion of the subject
property. Truly indicative of Enrica's and Teodoro's acquiescence to the 2006
Kasunduan is the fact that neither of them have questioned it nor have they
intervened in CA-G.R. SP No. 116979 and in this appeal.
As regards the absence of Conchita's signature to the 2006 Kasunduan after she has
purportedly repudiated the agency relationship with her mother in 2000, we rule that
the 2006 Kasunduan is effective as against Conchita.
Second. The transfer and distribution of half of the subject property can be considered
as the share of Concepcion in the conjugal partnership property regime during her
marriage to the decedent.
Third. The CA mistakenly annulled the entire partition, and sale of half, of the subject
property to the tenants contrary to Articles 493-495 and 498 of the Civil Code which,
in sum, allow for alienation by a co-owner of his or her share in the co-owned
property, termination of the co-ownership, and partition of the property.
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Fourth. The CA makes much of the fact that Conchita revoked the SPA she had given
to her mother, Concepcion, who therefore no longer had authority to represent her
and sign the 2006 Kasunduan on her behalf. To begin with, Conchita failed to inform
her agent, Concepcion, of the fact of revocation. She continued to clothe her mother,
Concepcion, with apparent authority to act on her behalf in Civil Case No. Q-893137.
Moreover, Conchita's counsel, Atty. Tuason, who was likewise the counsel of the other
defendants in the case, validly represented her in the proceedings before the RTC
until his withdrawal as counsel for Conchita in 2009.
2. NO. Despite the lack of signatures of specifically three (3) heirs of the decedent, Enrica,
Teodoro and respondent Conchita, the 2006 Kasunduan is a valid partition of the subject
property which was correctly confirmed by the RTC in its April 13, 2007 Order. Even without
going into the finality of the April 13, 2007 Order, the antecedents herein which we have
painstakingly outlined will bear out that all the heirs have assented to the partition of the
subject property.
Page 109 of 307

Case Digests
EQUITABLE PCI BANK (formerly INSULAR BANK OF ASIA & AMERICA/PHIL.

COMMERCIAL AND INDUSTRIAL BANK) vs. MANILA ADJUSTERS & SURVEYORS, INC.,
ILOCOS SUR FEDERATION OF FARMERS COOPERATIVES, INC., ESTATE OF NG YEK
KIONG and ERNESTO COKAI,
G.R. No. 166726, November 25, 2019, Second Division (Hernando, J.)
DOCTRINE
Interestingly, the Bank was not able to completely establish if the practice of utilizing a
metered machine was already being enforced when the documents were presented, considering
that the incident happened in 1975. The Bank did not even submit an affidavit or offer the
testimony of the bank manager during trial in order to debunk MASCO's assertion that he or
she actually received the documents. In addition, the contention that the Federation instructed
the Bank not to pay MASCO suggested that the Bank, regardless of receipt of the documents,
would not pay MASCO immediately. Unfortunately, it would be difficult to either prove or
debunk the parties' allegations since more than 40 years had already passed.
FACTS
On June 27, 1975, the Ilocos Sur Federation of Farmers Cooperatives, Inc.
(Federation) and the Philippine American General Insurance Co., Inc. (Philam), represented
by its adjuster, Manila Adjusters and Surveyors, Company (MASCO), executed a Deed of Sale
involving salvaged fertilizers which were stored in warehouses in San Fernando, La Union.
The agreement provided that the Federation would pay for the stocks of fertilizers in
installments in accordance with an agreed schedule for the total amount of P5,159,725.00.
Moreover, the Federation would be accountable for the storage and warehousing charges.
The Federation was also required to open an irrevocably confirmed without recourse Letter
of Credit (LOC) amounting to P1,000,000.00 which will be forfeited in favor of MASCO in case
of the Federation's non-compliance with the terms and conditions of the contract.
Apparently, the Federation already availed of Domestic LOC dated June 23, 1975 from
petitioner Equitable PCI Bank (Bank) (then Insular Bank of Asia & America), with a face value
of P1,000,000.00 in favor of MASCO. The said LOC was amended on June 26, 1975 to extend
its expiry date from July 23, 1975 to October 22, 1975. According to the Bank, the following
documents were needed to claim from the LOC: "(1) letter of default and demand for
payment of the proceeds of the [LOC]; (2) the original copy of the [LOC]; (3) the original copy
of the advice of [LOC] amendment extending the expiry date; (4) the original of the draft
drawn with the Bank; and 5) the certification of default."
Incidentally, the Federation only managed to pay the first installment of P300,000.00
and part of the second installment amounting to P200,000.00 out of the total amount of
Page 110 of 307

Case Digests
P5,159,725.00. Although the Federation also tendered a personal check amounting to

P259,725.00, the same bounced due to insufficient funds. Thus, apart from its total previous
payment of P500,000.00, the Federation no longer made additional payments. MASCO
demanded payment from the Federation but it failed to settle its accountabilities.
On October 8, 1975, the date when the last installment became due, MASCO, through
its President and General Manager, Dominador Tiongco, wrote a letter to the Federation
informing the latter of its (Federation's) failure to fulfill its obligations. The letter-claim and
documents were purportedly personally delivered by MASCO's cashier to the Bank's branch
manager. MASCO likewise signified its resolve to demand for the proceeds of the LOC from
the Bank. Thereafter, MASCO allegedly sent to the Bank the following: a letter-claim dated
October 8, 1975 addressed to the Bank expressing MASCO's intent to draw from the LOC; the
original copy of LOC No. D-75126; the original copy of the advice of LOC amendment dated
June 26, 1975 (which extended the original expiry date); the original of the draft drawn with
the Bank; and the certification of default. However, the Bank refused to pay MASCO the
proceeds of the LOC.
On January 9, 1976, the Federation filed a Complaint for replevin with damages dated
December 18, 1975 against MASCO and Philam before the then Court of First Instance (CFI)
of Manila which was raffled to Branch VII thereof. The Federation asked to be placed in
physical possession and control of around 180 bags of fertilizers, in light of the parties' prior
sale agreement.
On November 10, 1995, the RTC held that the Federation did not comply with the
terms and conditions of the Deed of Sale, since it failed to pay the entire sum of
P5,159,725.00. On the other hand, the trial court found that MASCO properly filed its claim
against the LOC with the Bank. It further found that the Federation and the Bank did not
present sufficient evidence to overturn the said facts.
The CA affirmed the RTC findings and likewise found that MASCO complied with the
conditions to claim the proceeds of the LOC upon presentation of the required documents to
the Bank.
ISSUE
Whether or not MASCO submitted the required documents for it to be allowed to

draw from the proceeds of the LOC from the Bank.
RULING
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YES. Both the CA and the RTC found that MASCO properly presented the documentary
requirements of the Bank in order to claim from the LOC. The Bank was not able to overturn
such finding as it merely denied receipt of the same without corroborating evidence, except
for an allegation that all documents received by the Bank should go through a metered
machine which was not found on those documents submitted by MASCO. Contrariwise,
MASCO averred that the official papers were personally handed over to the manager of the
Bank at the time, which could explain why it did not pass through the metered machine or
the usual procedure in the Bank's reception. Interestingly, the Bank was not able to
completely establish if the practice of utilizing a metered machine was already being
enforced when the documents were presented, considering that the incident happened in
1975. The Bank did not even submit an affidavit or offer the testimony of the bank manager
during trial in order to debunk MASCO's assertion that he or she actually received the
documents. In addition, the contention that the Federation instructed the Bank not to pay
MASCO suggested that the Bank, regardless of receipt of the documents, would not pay
MASCO immediately. Unfortunately, it would be difficult to either prove or debunk the
parties' allegations since more than 40 years had already passed. To stress, We are limited
to the offered evidence from which the Court can draw its factual and legal conclusions.
Hence, given that MASCO was able to prove with preponderant evidence that it
submitted the documents which the Bank required in order to claim from the LOC, there is
basis to affirm the findings of the RTC and the CA that the Bank should release the proceeds
of the LOC amounting to P1,000,000.00 to MASCO.
Page 112 of 307

Case Digests
CRISTINA SEMING v. EMELITA ALAMAG, et al.

G.R. No. 202284, March 17, 2021, Second Division (Hernando, J.)
DOCTRINE
It is well settled that the object of every contract must be determinate. For there to be
an existing contract of sale, there must likewise be a price certain in money.
FACTS
In 2006, petitioner Cristina Seming (Cristina) and her spouse Eutiquio (collectively,
spouses Seming) filed before the Regional Trial Court (RTC) an action for specific
performance and damages against the spouses Angel and Natividad Pamat (collectively,
spouses Pamat). The case involved the one-half portion of a parcel of land Lot 512-C located
at Ligao City in Albay, covered by TCT No. T-134781 issued under the names of Jesusa Seming
Vda. De Lopez (Jesusa) and the spouses Pamat.
The spouses Seming alleged that in 1977, they purchased Jesusa’s share in Lot 512-C
consisting of 771 sq. m. or one-half of the property. Cristina further alleged that in the same
year, she and her husband entered a verbal agreement with the spouses Pamat for the
purchase of the other half portion of the lot, but the spouses Seming admitted that the parties
did not execute any written agreement reflecting the alleged sale.
In the meantime, a complaint for quieting of title concerning Lot 512-C was filed by a
certain Maria Aguilar Avecilla against Jesusa and the spouses Pamat. Petitioner Cristina
averred that she agreed to shoulder all the expenses of the litigation, with the alleged
agreement that such expenses would be deemed part of the purchase price of the half owned
by the spouses Pamat.
Cristina further alleged that sometime in 1990, she and Natividad Pamat agreed that
certain payments in cash and in kind shall serve as partial payment for a 200 sq. m. portion
of the subject property. Cristina supposedly executed a receipt whereby Natividad
acknowledged receipt from petitioner of the amount of P6,000. The receipt read as follows:
[RECEIVED] THE AMOUNT OF SIX THOUSAND PESOS (P6,000.00)

FROM MRS. CHRISTINA SEMING, AS PARTIAL PAYMENT OF THE SAID LAND
LOT NO. 512-C CONTAINING AREA 1542 TAX DECLARATION NO. 39. THIS
AMOUNT IS PAYMENT ONLY FOR TWO LOTS.
An identical receipt was allegedly executed in 1991 covering another 200 sq. m.
portion of the property, again signed by Natividad with Jesusa as witness.
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Case Digests
In 1983, after the aforementioned quieting of title case was resolved, Natividad
allegedly agreed to pay Cristina for the litigation expenses with another 200 sq. m. portion
of the property. At this point, according to Cristina, she and her husband were already able
to acquire 600 sq. m. out of the 771 sq. m. half owned by the spouses Pamat.
Sometime in 2002, Cristina offered to buy from the spouses Pamat the remaining 171
sq. m. portion of the property, but the spouses Pamat refused to sell nor execute a deed of
sale, claiming that they never sold any portion of their share in the lot.
In support of the alleged sale, petitioner Cristina Seming claimed that the spouses
Pamat never possessed any part of the property; never questioned the spouses Seming’s
right to possess the property; and that a compromise agreement dated 2006 states that the
spouses Seming were actually in possession over the alleged one-half portion sold to them.
Following trial, the RTC ordered respondents, heirs of the spouses Pamat, to execute
a deed of sale in favor of Cristina covering 600 sq. m., finding that there was a perfected
contract of sale between Cristina and Natividad. The RTC heavily relied on the two receipts
allegedly signed by Natividad in ruling that the element of consent was present.
As to the sale of the 200 sq. m. portion of the property, the RTC found that the same
was sold orally to Cristina by the spouses Pamat as payment for the aforementioned
litigation expenses. The RTC further gave credence to Cristina’s argument that the fact that
the respondents allowed her to construct a concrete pavement on the property and plant
trees thereon, as well as the payment of real property taxes, was sufficient proof that there
was indeed a sale.
The Court of Appeals (CA) reversed the ruling of the RTC and held that no contract of
sale existed covering the subject property due to the absence of meeting of the minds. The
CA noted petitioner's own admission that she rejected the offer of sale of Natividad when she
undertook to pay the litigation expenses.
The appellate court disregarded the two receipts due to Cristina’s failure to prove the
due execution and authenticity thereof. Even assuming the receipts are admitted in evidence,
the CA ruled that the documents do not prove the existence of a contract of sale as they do
not specifically state what the payments were for and they do not describe the exact portion
of the lot sold to the spouses Seming.
ISSUE
Whether there was a contract of sale between petitioner Cristina and Natividad.
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Case Digests
RULING
NO. The signatures of Natividad on the October 22, 1990 and January 23, 1991 receipts
are forgeries. There is no other documentary evidence offered by petitioner to prove that a
contract of sale was entered into by the parties aside from the October 22, 1990 and January
23, 1991 receipts. The only other evidence presented to prove the existence of a contract of
sale is the testimony of petitioner and Jesusa.
Jesusa admitted that while the parties intended to execute a document for the sale of
Lot 512-C after the resolution of Civil Case No. 744, said document of sale was only signed
and executed by and between Jesusa and petitioner. Jesusa then expressly admitted that
Natividad did not sign the document of sale insofar as her portion of Lot 512-C is concerned.
[Cristina’s testimony] also reveals that Jesusa and Natividad offered for sale to
petitioner only half of Lot 512-C, which petitioner even initially rejected. Moreover, in a
Compromise Agreement dated January 10, 2006 entered into by Jesusa, Natividad and
petitioner, it was expressly stated that petitioner and her husband were only in possession
of the one-half portion of the lot belonging to Jesusa.
The foregoing testimonies of Jesusa and petitioner may serve to indicate that while
there may have been initial talks as to the sale of Lot 512-C, no actual transfer or conveyance
of Natividad's portion of Lot 512-C ever took place. In fact, petitioner only occupied and built
her conjugal dwelling on Jesusa's portion of Lot 512-C.
Moreover, as mentioned by Jesusa in her testimony, a document of sale exists only

insofar as the latter's portion of the lot is concerned. It also bears emphasizing that the above
Compromise Agreement was executed in 2006, or almost three decades after the supposed
sale of Lot 512-C was entered into by Jesusa, the spouses Pamat, and petitioner. Interestingly,
petitioner, despite being a party to the Compromise Agreement, failed to mention therein
the supposed sale of Lot 512-C to her, or, at the very least, the alleged fact that she was
likewise in possession of Natividad's half-portion of Lot 512-C.
Simply put, there was in reality no meeting of the minds with respect to the alleged
sale of the subject property. There is no clear and convincing evidence that Natividad
definitely sold the subject property to petitioner. In this connection, We are also inclined to
agree with the appellate court that, aside from the bare allegations of petitioner, there is total
lack of evidence which would establish that Natividad expressly agreed to the arrangement
that the financial aid extended to her would be treated as consideration for the sale of the
subject property.
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Case Digests
The construction of a concrete pavement and payment of real property taxes does not
prove a contract of sale existed
Jesusa specifically testified that the concrete pavement supposedly constructed by

petitioner is only 10 to 12 meters in size 64 out of the 771-square meter property. This
structure does not constitute a substantial and permanent improvement on the property
that would otherwise indicate actual ownership of the portion claimed to be her own.
Further, petitioner's payment of real property taxes does not prove that the whole
area of Lot 512-C was sold to her. In any case, this Court cannot give probative or evidentiary
value to the tax receipts and tax certification presented by petitioner. Firstly, the tax receipts
presented date back to 2002 to 2007 only. Secondly, the tax certification presented by
petitioner showing that she had paid real property taxes on Lot 512-C since 1977 up to 2006
is a mere photocopy and not even a certified true copy of the original.
The object of the sale is ambiguous and the price is uncertain
The object of the supposed sale in the instant case is ambiguous. It is well settled that
the object of every contract must be determinate. Notably, even if we consider the receipts
presented by petitioner, the exact portion of Lot 512-C allegedly sold to petitioner was not
specified. The phrase "[t]his amount is payment only for two lots" renders the object of the
sale ambiguous as it does not even define the metes and bounds of the lots which are
supposedly the subject of the sale.
The price for the sale of the subject property is also uncertain. Other than her bare
testimonies, petitioner's claim that she extended financial aid to Natividad was not
supported by corroborating evidence. Although the litigation expenses spent by petitioner
form part of the purchase price of the subject property, no receipt of expenses was presented
by petitioner which would aid this Court to determine the exact amount thereof. This
undetermined amount of expenses all the more renders the price or consideration of the sale
ambiguous.
Page 116 of 307

Case Digests
REX RICO v. UNION BANK OF THE PHILIPPINES

G.R. No. 210928, February 14, 2022, Second Division (Hernando, J.)
DOCTRINE
The use of a credit card to pay for a purchase is only an offer to the credit card company
to enter into a loan agreement with the credit card holder. Before the credit card issuer accepts
this offer, no obligation relating to the loan agreement exists between them. Although the credit
card company may disapprove the card holder's credit card transaction, it shall do so justifiably
and within the bounds of laws and the credit card membership agreement.
While Rico suffered humiliation or embarrassment from the disapproval of his credit
card at Gourdo's Restaurant in front of his two guests, We are constrained to reverse the that
Union Bank was grossly negligent in revoking Rico's credit card privileges. Rico failed to
convince Us that Union Bank breached any obligation that would make it answerable for his
humiliation or embarrassment.
FACTS
Union Bank of the Philippines (Union Bank) issued petitioner Rex Rico (Rico) a Union
Bank Visa credit card. In 2006, Rico filed a complaint for damages before the Regional Trial
Court (RTC). He alleged, among others, that Union Bank, declined his transaction with Tiger
Airways when he used the credit card to purchase airline tickets online.
Further, he claimed that he suffered embarrassment, social humiliation, mental

anguish, serious anxieties, besmirched reputation, and wounded feelings when his card was
dishonored at Gourdo's Restaurant.
For its part, Union Bank explained that Rico’s credit card was declined when he tried
to purchase online a ticket with Tiger Airways because his account was already in "past due"
status. It was further dishonored at Gourdo’s Restaurant because the account was already in
“past due” status for failure to pay the minimum amount due.
The RTC ruled in favor of Rico, ruling that the dishonor of Rico’s credit card at
Gourdo’s Restaurant was without any valid reason. The RTC awarded moral damages,
exemplary damages and attorney’s fees in favor of Rico. The Court of Appeals (CA) affirmed
the RTC but modified the amount of damages awarded.
ISSUE
Page 117 of 307

Case Digests
Whether Rico is entitled to moral damages, exemplary damages and attorney’s fees
due to the alleged gross negligence of Union Bank.
RULING
NO. The use of a credit card to pay for a purchase is only an offer to the credit card
company to enter into a loan agreement with the credit card holder. Before the credit card
issuer accepts this offer, no obligation relating to the loan agreement exists between them.
Thus, Union Bank has no obligation to enter into a loan agreement with Rico when
the latter tendered his offer by using his Union Bank Visa credit card to pay for his purchase
at Gourdo's Restaurant. Rico, cannot, therefore demand from Union Bank to loan him or to
pay for his purchase at Gourdo's Restaurant by virtue of the issued Visa credit card. "A
demand presupposes the existence of an obligation between the parties."
While it is true that with the issuance of the credit card to Rico, Union Bank granted
him a credit facility or a pre-approved amount which the card holder may use in his purchase
of goods and services, this is not a demandable right which the card holder may hold against
the credit card company as if he is entitled to be granted a loan whenever he or she wants to,
or that the bank owes him or her money by the mere issuance of a credit card. Hence, Union
Bank may or may not approve Rico's purchase requests based on the latter's credit
standing, credit card history, and financial capability. Rico cannot demand that Union
Bank should pay for his purchase in Gourdo's Restaurant through the use of the Visa credit
card as if the bank is obliged to do so.
The Terms and Conditions did not expressly state that Union Bank would honor all
purchase requests of Rico at all times. Nonetheless, with the issuance of the credit card,
Union Bank granted Rico credit card privileges which the latter may use in payment for
goods and services. Thus, although the credit card company may disapprove the card
holder's credit card transaction, it shall do so justifiably and within the bounds of laws
and the credit card membership agreement. Otherwise, it would be futile to procure a
credit card without a reasonable expectation that the card company will approve the card
holder's purchase requests despite being in good credit standing and abiding by the terms
and conditions.
A further examination of the events that transpired before the disapproval of Rico's
credit card transaction on November 20, 2005 would reveal that the cause of the inadvertent
late payment charges and interests charged in the SOA dated October 16, 2005 was Rico's
use of the credit card to pay for his Tiger Airways airline tickets on June 20, 2005 and June
29, 2005, which he allegedly cancelled as he did not want to pursue his travel anymore.
Page 118 of 307

Case Digests
As per Rico's letter dated June 30, 2005 addressed to Tiger Airways, he did not want
to proceed with his flight to Singapore due to the absence of available seats when he tried to
modify or change his return flight to Manila. Hence, even when the said airline tickets were
already posted in his SOA dated July 15, 2005, Rico insisted that he cancelled the same
and demanded Union Bank to refund the amount.
However, as per Rico's letter dated July 4, 2005 to Tiger Airways, the airline refused
to grant his demand to cancel the airline tickets because they were non-refundable.
Thus, he stated in his letter that he would not pay his credit card for the allegedly cancelled
tickets nor any change fees.
As a result, Rico did not pay Union Bank for the amount corresponding to the Tiger
Airways airline tickets charged to his account. Clearly, he did not want to proceed with his
flight but Tiger Airways refused to cancel his non-refundable tickets. The only option for Rico
is to request the bank to cancel the transaction on the pretext of cancelled airline tickets.
In the August 15, 2005 and September 15, 2005 SOAs, the cancellation of the airline
tickets was not yet resolved which explains why Union Bank continued to charge Rico's
credit card account.
Granting that the cancellation of the airline ticket was finally resolved in Rico's favor,
it must be stressed that at the time of the purported embarrassing and humiliating incident,
i.e., November 20, 2005, the said disputed transaction was not yet resolved. Thus, Union
Bank had the right to revoke Rico's credit card privileges, and consequently disapprove
the transaction in Gourdo's Restaurant. Union Bank further explained that the reversal of the
amount of airline tickets was not considered as payment, and thus the bank system
automatically put his account on "past due status" which caused the disapproval of Rico's
transaction on November 20, 2005.
Notably, "every credit card transaction involves three contracts, namely: (a) the sales
contract between the credit card holder and the merchant or the business establishment
which accepted the credit card; (b) the loan agreement between the credit card issuer and
the credit card holder; and lastly, (c) the promise to pay between the credit card issuer and
the merchant or business establishment."
When Rico used his credit card to pay for his purchase of Tiger Airways airline tickets,
three contracts were created, namely: (a) sales contract between Rico and Tiger Airways; (b)
loan agreement between Rico and Union Bank; and (c) the promise to pay between Union
Bank and Tiger Airways. When the said transaction was executed, Union Bank's promise to
pay Tiger Airways arose. On the other hand, a creditor-debtor relationship was created
between Union Bank and Rico, respectively. Thus, Union Bank had the right to demand the
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Case Digests
payment of the amount of airline tickets against Rico which the bank did so as indicated in
its July, August, September, and October 2005 SOAs.
Union Bank cannot be faulted when it continued to charge Rico with the amount of
the airline tickets, pending investigation of the said disputed items. Rico knew fully well that
the disputed airline tickets were still under the process of investigation by Union Bank,
and that the said transactions were charged against his account.
Union Bank is a business, and not a charity. It would be absurd to assume that Union
Bank would simply accept Rico's representation that the disputed airline tickets were
already cancelled, without conducting its own review and investigation, and thereby, open
itself to a possible liability to Tiger Airways, when the debtor, Rico, refuses to pay Union Bank
and insists on its cancellation.
Union Bank cannot also be considered grossly negligent when it automatically

revoked Rico's credit card account when the latter failed to pay the minimum amount due
pending the resolution of the disputed transactions. Insofar as Union Bank is concerned, Rico
offered to enter into a loan agreement with Union Bank to pay for his Tiger Airways airline
tickets and Union Bank, when it allowed the said transactions, accepted Rico's offer.
Subsequently, a contract between Union Bank and Tiger Airways arose, such that, the former
is obliged to pay the latter the amount of airline tickets purchased by Rico. In reviewing and
investigating the alleged cancelled sales agreement between Rico and Tiger Airways, Union
Bank is justified to protect itself as a business for profit.
Damnum absque injuria
Nobody can be faulted for Rico's alleged humiliation or embarrassment in Gourdo's

Restaurant but himself. Damnum absque injuria — there can be no damage without injury
when the loss or harm was not the result of a violation of a legal duty. In order for Rico to
maintain an action for the injuries which he claims to have sustained, he must establish that
such injuries resulted from a breach of duty which Union Bank owed to him.
It is not enough that Rico merely suffered humiliation or embarrassment as a result

of Union Bank's disapproval of the credit card transaction on November 20, 2005. "It is also
required that a culpable act or omission was factually established, that proof that the
wrongful act or omission of the defendant is shown as the proximate cause of the damage
sustained by the claimant and that the case is predicated on any of the instances expressed
or envisioned by Arts. 2219 and 2220 of the Civil Code."
While Rico suffered humiliation or embarrassment from the disapproval of his credit
card at Gourdo's Restaurant in front of his two guests, We are constrained to reverse the
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Case Digests
findings of the RTC and the CA that Union Bank was grossly negligent in revoking Rico's
credit card privileges. Rico failed to convince Us that Union Bank breached any obligation
that would make it answerable for his humiliation or embarrassment.
Hence, as it was Rico's own action, i.e., his resolve to cancel his flight with Tiger
Airways, which was the proximate cause of his embarrassing and humiliating experience,
We find the award of moral damages by the RTC and the CA clearly unjustified. With the
deletion of the award of moral damages, we find no basis for the award of exemplary
damages as it can only be awarded if Rico is entitled to moral, temperate, or compensatory
damages.
Page 121 of 307

Case Digests
REYNALDO REYES v. SPS. WILFREDO AND MELITA GARCIA

DOCTRINE
Petitioner's recourse of filing a complaint for nullification of sale and recovery of

ownership is not the proper action. This Court explained in Bailon-Casilao v. Court of Appeals
that the appropriate remedy is not a nullification of the sale or for the recovery of the thing
owned in common but a division of the common property.
FACTS
Petitioner Reynaldo Reyes claimed that Julian Reyes (Julian) owned an unregistered
parcel of land in Taguig with a total area of 463 sq. m. Julian and his spouse Marcela had nine
children, including Anastacio, Vitaliano and Isidoro. On Aug. 30, 1975, after Julian and
Marcela’s deaths, their heirs executed a “Partihan at Bilihan nang Kalahating Bahagi ng
Lupang Tirahan sa Labas ng Hukuman,” and sold half of the property (231.5 sq. m.) to
Anastacio.
The remaining quarter of the subject property (116 sq. m.) was occupied by
Vitaliano’s children, including petitioner Reynaldo, while the other quarter was sold by
Isidoro to respondent Wilfredo and Melita Garcia (Sps. Garcia), as per a deed of sale.
In 1997, petitioner Reynaldo and his sibling Fermin learned of Isidoro’s sale of ¼ of
the subject property to respondent Sps. Garcia. Thus, petitioner filed a complaint for
recovery of ownership, quieting of title and annulment of deed of sale against the spouses
alleging that the deed of sale is void since Isidoro is not the true and real owner of the subject
property, which belongs to Julian’s estate.
The Regional Trial Court (RTC) dismissed the complaint, ruling that the subject
property is still co-owned by the heirs of Julian and Marcela. The RTC further held that
Isidoro may validly sell his pro indiviso share in the subject property as an heir of Julian and
Marcela, and co-owner of the subject property. Thus, the proper action should be partition
and not nullification or recovery of possession.
The Court of Appeals affirmed the RTC’s ruling, holding that the ruling in the present
case can only be limited to a recognition that a co- ownership exists. The parties' proper
remedy is to file an action for partition under Rule 69 of the Rules of Court. The spouses
Garcia are considered trustees of the portion not owned by Isidoro.
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Case Digests
In the instant petition, petitioner Reynaldo argues that the subject property’s
partition would be improper since it would render the same unserviceable. He further argues
that Isidoro’s sale of the property is void insofar as the share of the other co-heirs are
concerned.
ISSUES
(1) Whether the sale to the Spouses Garcia is void insofar as the interests of the other
heirs are concerned. (NO.)
(2) Whether the proper remedy of the parties is to partition the subject property.
(YES.)
RULING
(1) NO. Isidoro, as one of the heirs of Julian and Marcela, has the right to alienate his
pro indiviso share in the co-owned property even without the consent of the other co-heirs.
However, as mere part owner, he cannot alienate the shares of the other co-owners. Nemo
dat quod non habet. No one can give what he does not have. Hence, as correctly ruled by the
courts a quo, Isidoro's sale of the remaining half of the subject property will only affect his
own share but not those of the other co-owners who did not consent to the sale. The spouses
Garcia will only get Isidoro's undivided share in the subject property.
The fact that the agreement in question purported to sell a concrete portion of the
hacienda does not render the sale void, for it is a well-established principle that the binding
force of a contract must be recognized as far as it is legally possible to do so. "Quando res non
valet ut ago, valeat quantum valere potest."
Apropos, the fact that the sale executed by Isidoro in favor of the spouses Garcia was
made prior to the partition of the subject property will not render the deed of sale dated
August 16, 1989 null and void. Nonetheless, despite the validity of the sale, the spouses
Garcia only acquired Isidoro's inchoate interest in the subject property and not a definite
portion thereof.
(2) YES. [P]etitioner's recourse of filing a complaint for nullification of sale and
recovery of ownership is not the proper action. This Court explained in Bailon-Casilao v.
Court of Appeals that the appropriate remedy is not a nullification of the sale or for the
recovery of the thing owned in common but a division of the common property.
To demand a partition or division of the common property is in accord with Article

494 of the Civil Code, that is, no co-owner shall be obliged to remain in the co-ownership and
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Case Digests
that each co-owner may demand at any time partition of the thing owned in common insofar
as his or her share is concerned.
Petitioner's contention that the subject property, i.e., 231.5 sqm, would be rendered
unserviceable if it would be divided among the co-owners, is without legal merit. It bears
stressing that petitioner's issue is addressed by the provisions of Article 498 in relation
with Article 495. Thus, petitioner cannot argue that a declaration of nullity of the sale
between Isidoro and the spouses Garcia is warranted or else, a partition of the subject
property would render it unserviceable.
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REPUBLIC OF THE PHILIPPINES v. CLEMENTE TAPAY AND ALBERTO BARRION, as the

legal representative of the heirs of the deceased FLORA TAPAY
DOCTRINE
A regional trial court has no power to nullify or interfere with the decision of a co-equal
court pursuant to the law and the doctrine of judicial stability. However, the foregoing
presupposes that the decision of a co-equal cadastral court really existed and that there
actually is a decision in that case. The doctrine of judicial stability thus finds no application in
this case. Practical considerations now demand that the proceedings in the RTC be no longer
disturbed.
FACTS
Respondents Flora and Clemente Tapay filed an application for registration of Lot No.
10786 before the Regional Trial Court (RTC) of Lipa City. Their application was opposed by
the Republic of the Philippines through the Office of the Solicitor General (OSG).
During the course of the proceedings, the Land Registration Commission or LRC (now
the Land Registration Authority or the LRA) issued a report stating that based on the Books
of Cadastral Lots, the lot was previously the subject of registration in another case and had
already been adjusted to another person, but the cadastral court has yet to issue a decree of
registration.
The LRC, however, was unable to determine the identity of the person to whom the
property was adjudicated to because the records of the case, including a copy of the
decision, were not available.
Despite the report, the RTC adjudicated the land to respondents. When the decision
became final, the RTC directed the LRC to issue the decree of registration and the
corresponding certificate of title. However, instead of complying with the order, the LRC
submitted a supplemental report reiterating that the subject land was previously the subject
of registration proceedings in Cadastral Case No. 33.
The LRC then recommended that the cadastral court's decision be nullified so that it
can issue a decree of registration in favor of respondents. As such, respondents filed a motion
to set aside the decision in Cadastral Case No. 33. The motion was granted by the RTC.
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The Republic thus appealed before the Court of Appeals (CA), arguing that the RTC
had no authority to set aside the decision of the cadastral court as it amounted to
interference with the authority of another co-equal court.
The CA affirmed the RTC. While agreeing that the RTC has no authority to nullify the
decision of a co-equal court, the CA ruled that this doctrine finds no application in this case
considering that: (1) petitioner was unable to present the records of the cadastral case, (2)
LRC admitted that it could not determine the identity of the party to whom the subject lot
was adjudicated to, and (3) because the LRC, knowing that it could not execute the decision
in the cadastral proceedings as it never attained finality, recommended that the decision be
nullified by the RTC.
The CA also considered the fact that except for petitioner, no other person claimed
ownership over the subject property.
ISSUE
Whether the RTC’s order setting aside the decision of the cadastral court was proper,
considering that the RTC has no power to nullify or interfere with the decision of a co-equal
court.
RULING
YES. A regional trial court has no power to nullify or interfere with the decision of a
co-equal court pursuant to the law and the doctrine of judicial stability. Applying the doctrine
to this case, petitioner is correct in postulating that the August 14, 1996 Order of RTC Lipa
City is void and thus, the cadastral court's decision in Cadastral Case No. 33 remains valid
and subsisting as of this time.
However, the foregoing presupposes that Cadastral Case No. 33 really existed and
that there actually is a decision in that case. Unfortunately for petitioner, aside from the
single entry "Cadastral Case No. 33, LRC (GLRO) Cadastral Record No. 1305," no other record,
including a copy of the decision, exists to support the theory.
Key information, such as the identity of the parties in the case and of the court that
rendered the decision, as well as the outcome thereof, has remained unknown despite the
lapse of more than 40 years since the LRC submitted its report. No one, aside from the
Republic, has even come forward to claim any interest arising from the supposed case. The
Court therefore agrees with the CA that the doctrine of judicial stability finds no application
in this case. Practical considerations now demand that the proceedings in the RTC be no
longer disturbed and the August 14, 1996 Order no longer set aside.
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This ruling is supported by jurisprudence. In Republic v. Heirs of Sta. Ana, the Republic
opposed the application for registration filed by the heirs of Sta. Ana on the ground that the
property was previously the subject of another registration and that a prior decree of
registration had already been issued as reported by the LRA. However, similar to this case,
there were no available records of the supposed prior cadastral proceedings and no other
party has come forward to challenge the heirs' ownership. Consequently, the Court allowed
the registration of the property since “it would be the height of injustice for the heirs to be
held hostage or punished by reason of the plain scarcity of the records.”
Notably, in Republic v. Heirs of Sta. Ana, the LRA reported that a prior decree of
registration had already been issued, yet the Court still decided to allow the subsequent
registration because there was no way to verify the truthfulness of the alleged prior case.
Considering that it is the decree of registration that binds the land and quiets the title thereto,
and not the decision, the registration should be allowed with much more reason here where
no decree of registration covering the subject land had yet been issued and only the
existence of the supposed decision (which has not yet even attained finality) bars
respondents' application.
It is also worth noting that almost 40 years had passed since the trial court
determined that respondents are entitled to a registration decree. One of the respondents
even passed away while waiting for it. In Republic v. Heirs of Sta. Ana, one of the key
considerations for allowing the subsequent registration was the fact that a long time had
passed since the trial court ordered the issuance of a registration decree.
Res judicata does not apply
First, petitioner failed to establish the elements of res judicata, there being no
information about Cadastral Case No. 33 aside from the single entry in the Book of Cadastral
Lots. Second, the August 14, 1996 Order of the RTC merely effectuated the May 28, 1982
Decision of the RTC; it did not amend the same. Hence, petitioner's arguments must fail.
In fine, the Court believes that the higher interest of justice will be better served by
granting respondents' prayer for a registration decree. After all, even after the lapse of so
many years, no other person has come forward to dispute their claim.
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REPUBLIC v. PONCE-PILAPIL
G.R. No. 219185, November 25, 2020, Third Division (Hernando, J.)
DOCTRINE
The well-founded belief in the absentee's death requires the present spouse to prove that
his/her belief was the result of diligent and reasonable efforts to locate the absent spouse and
that based on these efforts and inquiries, he/she believes that under the circumstances, the
absent spouse is already dead. It necessitates exertion of active effort (not a mere passive one).
Mere absence of the spouse (even beyond the period required by law), lack of any news that the
absentee spouse is still alive, mere failure to communicate, or general presumption of absence
under the Civil Code would not suffice. The premise is that Article 41 of the Family Code places
upon the present spouse the burden of complying with the stringent requirement of well-
founded belief which can only be discharged upon a showing of proper and honest-to-goodness
inquiries and efforts to ascertain not only the absent spouse's whereabouts but, more
importantly, whether the absent spouse is still alive or is already dead.
FACTS
Josephine Ponce-Pilapil sought to declare her husband, Agapito S. Pilapil, Jr.,

presumptively dead in a petition filed before the RTC.
In support of the petition, Josephine testified that a few months after the marriage,
which was sometime in November 2000, Agapito left without information where he was
going. She knows of no reason why Agapito would leave her as they did not even quarrel
prior to that. Insofar as she knows, her husband had a cyst in his right jaw which was getting
bigger.
With this predicament, Josephine, after Agapito's disappearance, tried to look for him
from Agapito's only surviving relative, Lydia Bueno Pilapil. The latter told Josephine that she
does not have any knowledge or idea where Agapito was, in response to her letter. She also
inquired from their friends if they saw or heard from Agapito, but all answered in the
negative. She honestly believes that her husband Agapito is already dead considering that
more than six (6) years have lapsed without any information on his whereabouts. She filed
the instant petition for purposes of declaring her husband Agapito presumptively dead so
that she can remarry.
As second witness, Marites Longakit Toong, was presented and testified that she
knows Josephine, being a childhood friend and a neighbor. She also knows Agapito. Being
neighbors, she knew that Agapito left or disappeared sometime in November 2000. She tried
to help Josephine look for Agapito but, up to the present, they do not have any knowledge on
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his whereabouts. She met Lydia Bueno Pilapil in Ormoc City, who also told her that she does
not know where Agapito was.
The RTC declared Agapito as presumptively dead, pursuant to Article 41 of the Family
Code, in relation to Article 253 of the Civil Code. The CA affirmed the same.
ISSUE
Whether the CA erred in finding no grave abuse of discretion on the part of the RTC
and in affirming the RTC Order that granted Josephine's petition for declaration of
presumptive death of Agapito.
RULING
YES. Jurisprudence sets out four requisites for a grant of a petition for declaration of
presumptive death under Article 41 of the Family Code: first, the absent spouse has been
missing for four consecutive years, or two consecutive years if the disappearance occurred
where there is danger of death under the circumstances laid down in Article 391 of the Civil
Code; second, the present spouse wishes to remarry; third, the present spouse has a
wellfounded belief that the absentee is dead; and fourth, the present spouse files for a
summary proceeding for the declaration of presumptive death of the absentee.
The third requirement of a "well-founded belief" proves most difficult to establish in

seeking to declare an absent spouse presumptively dead. While this term enjoys flexible
meanings and depends heavily on the circumstances unique to each particular case,the Court
in Republic v. Orcelino-Villanueva has highlighted the exercise of "diligent efforts" in
determining whether the present spouse's belief that the absent spouse is already dead was
well-founded or not.
The well-founded belief in the absentee's death requires the present spouse to prove
that his/her belief was the result of diligent and reasonable efforts to locate the absent
spouse and that based on these efforts and inquiries, he/she believes that under the
circumstances, the absent spouse is already dead. It necessitates exertion of active effort (not
a mere passive one). Mere absence of the spouse (even beyond the period required by law),
lack of any news that the absentee spouse is still alive, mere failure to communicate, or
general presumption of absence under the Civil Code would not suffice. The premise is that
Article 41 of the Family Code places upon the present spouse the burden of complying with
the stringent requirement of well-founded belief which can only be discharged upon a
showing of proper and honest-to-goodness inquiries and efforts to ascertain not only the
absent spouse's whereabouts but, more importantly, whether the absent spouse is still alive
or is already dead.
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Josephine's efforts to search for Agapito only consisted of inquiries not even done
personally but by mere letter-correspondence facilitated by another person. Moreover,
Josephine's pursuit of Agapito is evidently lackadaisical based on the following
circumstances: (1) her personal knowledge of a growing cyst on Agapito's jaw does not
produce an inevitable conclusion that the latter was already suffering from some terminal
illness prior to his disappearance; (2) while Josephine attempted to find Agapito, her
supposed informers and their information were unreliable; (3) Josephine could have
resorted to police assistance in seeking out her husband.
Withal, the pieces of evidence on record were too bare and self-serving. Mere
allegation is not proof. Moreover, Josephine's acts fail to convince the Court that she indeed
went out of her way to locate Agapito, and her search for Agapito's whereabouts cannot be
said to have been diligently and exhaustively conducted. In all, Josephine's efforts were just
too flimsy to serve as concrete basis of a well-founded belief that Agapito is indeed dead.
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REPUBLIC v. PNP
G.R. No. 198277, February 8, 2021, Third Division (Hernando, J.)
DOCTRINE
Before an applicant can adduce evidence of open, continuous, exclusive and notorious
possession and occupation of the property in question, he must first prove that the land belongs
to the alienable and disposable lands of the public domain. Whether an applicant is seeking
registration under either Section 14(1) or 14(2) of P.D. No. 1529, it must satisfy the courts that
the land applied for is alienable and disposable.
FACTS
The PNP filed an application for land title registration of Lot Nos. 713-A to 713-F
(subject lots) of the Iba Cadastre before the RTC.
In support of its application for land registration, the PNP presented the following
witnesses, namely: (i) P/Supt. Romeo P. De Castro, who testified that as PNP's Deputy
Provincial Director for Operation, he has custody of the documents in relation to the subject
lots. He stated that the PNP has been in possession of the said lots for more than 30 years.
The subject lots were formerly used as a military reservation of the then Philippine
Constabulary and was transferred to the PNP in 1991 when the former office was dissolved.
He identified the tax declarations corresponding to the subject lots, as well as the approved
subdivision plan of Lot 713, Cad 191, Iba Cadastre; (ii) Santiago Paragas, who testified that
as per his knowledge, the camp belongs to the then Philippine Constabulary and was
transferred to the PNP when the former was disbanded.; and (iii) Rodemio Salazar, who
testified that as a retired member of the PNP and despite being a longtime resident of the
camp, he does not intend to file an opposition to the PNP's application for title because he
knows that the PNP owns the camp.
The RTC granted the PNP's application for land registration. The CA affirmed the
same.
ISSUE
Whether the PNP has proven that the subject lots are alienable and disposable lands
of the public domain.
RULING
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NO. An applicant for land registration must prove that the land is an alienable and
disposable land of the public domain.
For registration under Section 14(1) of PD 1529 to prosper, the applicant for original
registration of title to land must establish the following: (1) that the subject land forms part
of the disposable and alienable lands of the public domain; (2) that the applicants by
themselves and their predecessors-in-interest have been in open, continuous, exclusive, and
notorious possession and occupation thereof; and (3) that the possession is under a bona
fide claim of ownership since June 12, 1945, or earlier.
On the other hand, registration under Section 14(2) requires the applicant to
establish the following requisites: (a) the land is an alienable and disposable, and
patrimonial property of the public domain; (b) the applicant and its predecessors-in-interest
have been in possession of the land for at least 10 years, in good faith and with just title, or
for at least 30 years, regardless of good faith or just title; and (c) the land had already been
converted to or declared as patrimonial property of the State at the beginning of the said 10-
year or 30-year period of possession.
Registration under Section 14(1) is based on possession; whereas registration under

Section 14(2) is based on prescription. Thus, under Section 14(1), it is not necessary for the
land applied for to be alienable and disposable at the beginning of the possession on or
before June 12, 1945 - Section 14(1) only requires that the property sought to be registered
is alienable and disposable at the time of the filing of the application for registration.
However, in Section 14(2), the alienable and disposable character of the land, as well as its
declaration as patrimonial property of the State, must exist at the beginning of the relevant
period of possession.
Before an applicant can adduce evidence of open, continuous, exclusive and notorious
possession and occupation of the property in question, he must first prove that the land
belongs to the alienable and disposable lands of the public domain. Whether an applicant is
seeking registration under either Section 14(1) or 14(2) of P.D. No. 1529, it must satisfy the
courts that the land applied for is alienable and disposable.
The prevailing rule during the pendency of the PNP's application for registration of
land title in the RTC was that a DENR certification stating that the land subject for
registration is entirely within the alienable and disposable zone constitutes as substantial
compliance, which the PNP failed to comply with.
The OSG argues that the subject lots are incapable of registration pursuant to the
CENRO Report. It asserts that the PNP's possession of the subject lots for more than 30 years
is irrelevant because said lots are inalienable having been reserved for military purposes.
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Moreover, the PNP presented no evidence that the same had been released from their
classification as a military reservation. The OSG further contends that the annotation on the
subdivision plan is insufficient to prove that they are alienable and disposable lands of the
public domain.
When the PNP filed its application for land title registration on May 6, 2003 and
during the promulgation of the RTC Decision on January 20, 2006, the prevailing doctrine
then was that a DENR certification that a land subject for registration is entirely within the
alienable and disposable zone suffices to establish the nature of the property as alienable
and disposable land of the public domain; the said certification enjoyed the presumption of
regularity in the absence of a contradictory evidence.
However, during the pendency of the OSG's appeal with the appellate court and
during the promulgation of its August 16, 2011 Decision, the doctrine enunciated in Republic
v. T.A.N. Properties, Inc., which was promulgated on June 26, 2008, was the prevailing rule.
T.A.N. Properties requires that an application for original registration must be accompanied
by (1) a CENRO or Provincial Environment and Natural Resources Office (PENRO)
Certification; and (2) a copy of the original classification approved by the DENR Secretary
and certified as a true copy by the legal custodian of the official records.
The general rule of strict compliance enunciated in T.A.N. Properties is subject to the
exception subsequently pronounced in Republic v. Vega wherein this Court allowed the
registration of land titles despite the absence of the twin certifications on the ground that
T.A.N. Properties was promulgated only after the trial court's and appellate court's rendition
of their respective rulings in Vega.
In the instant case, the PNP did not submit a DENR Certification to the effect that the
subject lots are alienable and disposable lands of the public domain, which was the prevailing
requirement when its application for land registration was pending with the RTC. The PNP
merely submitted a subdivision plan of Lot No. 713, Cad 191, Iba Cadastre, which indicated
that the subject lots are alienable and disposable.
Here, the only evidence presented by respondents to prove the disposable and
alienable character of the subject land was an annotation by a geodetic engineer in a survey
plan. Although this was certified by the DENR, it clearly falls short of the requirements for
original registration.
Thus, as things stand, the present rule is that an application for original registration
must be accompanied by (1) a CENRO or PENRO Certification; and (2) a copy of the original
classification approved by the DENR Secretary and certified as a true copy by the legal
custodian of the official records.
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However, despite this pronouncement in T.A.N. Properties during the pendency of the
case in the appellate court, the PNP did not make any attempt to submit the required twin
certifications in order to prove that the subject lots have been classified as alienable and
disposable lands of the public domain.
In fine, We find that the respondent's evidence does not suffice to entitle it to register
the subject lots. The PNP failed to present any evidence showing that the DENR Secretary
had indeed released the subject lots as alienable and disposable lands of the public domain.
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REPUBLIC V. HEREDEROS DE CIRIACO CHUNACO DISTELERIA INCORPORADA

DOCTRINE
An applicant for land registration must prove that the land sought to be registered has
been declared by the President or the DENR Secretary as alienable and disposable land of the
public domain. Specifically, an applicant must present a copy of the original classification
approved by the DENR Secretary and certified as a true copy by the legal custodian of the
official records. A certificate of land classification status issued by the CENRO or PENRO of the
DENR and approved by the DENR Secretary must also be presented to prove that the land
subject of the application for registration is alienable and disposable, and that it falls within
the approved area per verification survey by the PENRO or CENRO. A CENRO or PENRO
certification alone is insufficient to prove the alienable and disposable nature of the land sought
to be registered. It is the original classification by the DENR Secretary or the President which is
essential to prove that the land is indeed alienable and disposable.
When the 1973 Constitution took effect, it limited the alienation of lands of the public
domain to individuals who were citizen of the Philippines. Private corporations, even if wholly-
owned by Filipino citizens, were prohibited from acquiring alienable lands of the public domain.
At present, the 1987 Constitution continues the prohibition against private corporations from
acquiring any kind of alienable land of the public domain.
FACTS
HCCDI, a domestic corporation, applied for land registration of Lot No. 3246 with the
MTC of Guinobatan, Albay. HCCDI claimed ownership and actual possession of Lot No. 3246,
on the ground of its continuous, adverse, public and uninterrupted possession in the concept
of an owner since 1976 by virtue of a Deed of Assignment executed by the heirs of Ciriaco
Chunaco (Heirs of Chunaco) who, in turn, had been in continuous, adverse, public, and
uninterrupted possession of the subject lot in the concept of an owner since 1945 or earlier.
Petitioner Republic, through the OSG, opposed HCCDI's application and alleged that
neither HCCDI nor its predecessors-in-interest, the Heirs of Chunaco, had been in open,
continuous, exclusive and notorious possession and occupation of the subject lot for a period
of not less than 30 years. Lot No. 3246 has not been classified as alienable and disposable
land of the public domain for at least 30 years prior to the filing of the subject application.
Moreover, the muniments of title and/or the tax declarations and tax payment receipts of
HCCDI, if any, attached to or alleged in the application for land registration, did not constitute
as competent and sufficient evidence of a bona fide acquisition of the subject lot or of its
open, continuous, exclusive and notorious possession, and occupation thereof, in the concept
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of an owner, for a period of not less than 30 years. Lastly, the claim of ownership in fee simple
on the basis of a Spanish title or grant can no longer be availed of by HCCDI because it failed
to file an appropriate application for registration within six months from February 16, 1976
as required by Presidential Decree (P.D.) No. 892.
As per the LMO's Report, the subject property is within the alienable and disposable
zone as classified on March 30, 1926 and outside of the forest zone or forest reserve or
unclassified public forest, existing civil or military reservation, or watershed or other
establishment reservation. Also, the subject lot has never been forfeited in favor of the
government for non-payment of taxes nor confiscated as bond in connection with any civil
or criminal case.
The ocular inspection conducted by Abaroa showed that the subject property located
about six kilometers away from the poblacion, is a coconut plantation occupied and/or
possessed by HCCDI. It does not encroach upon an established watershed, river bed, or
riverbank protection, creek, right of way, park site or any area devoted to general public use
such as, public roads, plaza, canals, streets, etc., or devoted to public service such as, town
walls or fortresses. Lastly, the subject property is covered by: (a) survey plan and (b) Tax
Declaration No. 2002-05-028-00872 as payment for real property taxes in 2004.
The MTC granted HCCDI's application for land registration and confirming its title to
Lot No. 3246. The CA affirmed the MTC Decision.
ISSUES
1) Does Lot No. 3246 form part of the alienable and disposable land of the public
domain?
2) Has respondent HCCDI sufficiently proven that it has been in open, continuous,
exclusive possession and occupation of the subject lot since June 12, 1945 or earlier?
3) Is respondent HCCDI prohibited from owning lands pursuant to Section 11, Article
XIV of the 1973 Constitution; Section 3, Article XII of the 1987 Constitution; and the
ruling of this Court in the Director of Lands v. Intermediate Appellate Court?
RULING
1. YES. An applicant for land registration must prove that the land sought to be
registered has been declared by the President or the DENR Secretary as alienable and
disposable land of the public domain. Specifically, an applicant must present a copy
of the original classification approved by the DENR Secretary and certified as a true
copy by the legal custodian of the official records. A certificate of land classification
status issued by the CENRO or PENRO of the DENR and approved by the DENR
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Secretary must also be presented to prove that the land subject of the application for
registration is alienable and disposable, and that it falls within the approved area per
verification survey by the PENRO or CENRO. A CENRO or PENRO certification alone
is insufficient to prove the alienable and disposable nature of the land sought to be
registered. It is the original classification by the DENR Secretary or the President
which is essential to prove that the land is indeed alienable and disposable.
However, despite the stringent rule held in Republic v. TA.N. Properties, Inc. (T.A.N.
Properties) that the absence of the twin certifications justifies the denial of an application for
registration, our subsequent rulings in Republic v. Vega (Vega) and Republic v. Serrano
(Serrano) allowed the approval of the application based on substantial compliance. Even so,
Vega and Serrano were mere pro hac vice rulings and did not in any way abandon nor modify
the rule on strict compliance pronounced in T.A.N. Properties. We explained in Republic v.
San Mateo as to the basis of our approval of the applications for land registration based on
substantial compliance, viz:
In Vega, the Court was mindful of the fact that the trial court rendered its decision on
November 13, 2003, way before the rule on strict compliance was laid down in T.A.N.
Properties on June 26, 2008. Thus, the trial court was merely applying the rule prevailing at
the time, which was substantial compliance. Thus, even if the case reached the Supreme
Court after the promulgation of T.A.N. Properties, the Court allowed the application of
substantial compliance, because there was no opportunity for the registrant to comply with
the Court's ruling in T.A.N. Properties, the trial court and the CA already having decided the
case prior to the promulgation of T.A.N. Properties.
Evidently, HCCDI did not present: (a) a copy of the original classification approved by
the DENR Secretary or the President and certified as a true copy by the legal custodian of the
official records; and (b) a certificate of land classification status issued by the CENRO or
PENRO and approved by the DENR Secretary. Nevertheless, it is worth noting that the trial
court rendered its decision on the application prior to June 26, 2008, the date of
promulgation of TA.N Properties. In this case, HCCDI cannot be required to comply with the
strict rules laid down in TA.N. Properties, as it had no opportunity to comply with its twin
certifications requirement.
Applying Vega and Serrano, We find that despite the absence of a certification by the
CENRO and a certified true copy of the original classification by the DENR Secretary or the
President, HCCDI substantially complied with the requirement to show that the subject
property is indeed alienable and disposable based on the evidence on record.
Lastly, the LRA and other concerned government agencies never raised the issue that the
land subject of registration was not alienable and disposable. In Vega, we declared that the
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absence of any effective opposition from the government together with the applicant's other
pieces of evidence on record substantially proved that the subject property is alienable and
disposable. From the foregoing, we find that the evidence presented by HCCDI and the
absence of any countervailing evidence by petitioner, substantially establishes that the land
applied for is alienable and disposable. Hence, both the trial court and appellate court
committed no reversible error in declaring that the subject property is alienable and
disposable land of the public domain.
HCCDI failed to prove its and its predecessors-in-interest's possession and

occupation of Lot No. 3246 under a bona fide claim of ownership since June 12, 1945 or
earlier.
2. NO. While we hold that Lot No. 3246 is part of alienable and disposable land of the
public domain, HCCDI's application must fail due to non-compliance with Section 14(1) of
P.D. No. 1529 which requires the applicant and its predecessors-in-interest to prove that
they have been in open, continuous, exclusive and notorious possession, and occupation of
the land under a bona fide claim of ownership since June 12, 1945 or earlier. In this case,
HCCDI and its predecessors-in-interest admittedly have been in possession of the subject lot
only from 1980, which is the earliest date of the tax declaration presented by HCCDI.
Although it claims that it possessed the subject lot through its predecessors-in-interest since
1943 as testified to by Leonides and Alekos, the tax declarations belie the same. While
belated declaration of a property for taxation purposes does not necessarily negate the fact
of possession, tax declarations or realty tax payments of property are, nevertheless, good
indicia of possession in the concept of an owner, for no one in his right mind would be paying
taxes for a property that is not in his actual or, at least constructive possession.
0. YES. HCCDI, as a corporation, cannot apply for registration of the land of the public
domain. Under the 1935 Constitution, there was no prohibition against corporations from
acquiring agricultural land. Private corporations could acquire public agricultural lands not
exceeding 1,024 hectares while individuals could acquire more than 144 hectares. However,
when the 1973 Constitution took effect, it limited the alienation of lands of the public domain
to individuals who were citizen of the Philippines. Private corporations, even if wholly-
owned by Filipino citizens, were prohibited from acquiring alienable lands of the public
domain. At present, the 1987 Constitution continues the prohibition against private
corporations from acquiring any kind of alienable land of the public domain.
In the case at bar, the evidence on record reveals that HCCDI acquired Lot No. 3246
through a Deed of Assignment executed by the Heirs of Chunaco in favor of HCCDI on August
13, 1976. To reiterate, both HCCDI and its predecessors-in-interest have not shown to have
been, as of date, in open, continuous, and adverse possession of Lot No. 3246 for 30 years
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since June 12, 1945 or earlier. In other words, when HCCDI acquired Lot No. 3246 through a
Deed of Assignment, the subject property was not yet private. Thus, the prohibition against
private corporation acquiring alienable land of the public domain under the 1973
Constitution applies.
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REPUBLIC V. HEIRS OF SPS. MAURO BORJA AND DEMETRIA BAJAO

G.R. No. 207647, January 11, 2021, Third Division (Hernando, J.)
DOCTRINE
The 60-day period was non-extendible and the CA no longer had the authority to grant
the motion for extension in view of A.M. No. 07-7-12-SC which amended Section 4 of Rule 65.
However, in Domdom v. Third and Fifth Division of the Sandiganbayan, this Court held
that the strict observance of the 60-day period to file a petition for certiorari is not absolute.
This Court ruled that absent any express prohibition under Rule 65, a motion for extension is
still permitted, subject to the Court's sound discretion. Therefore, the rule is that in filing
petitions for certiorari under Rule 65, a motion for extension is a prohibited pleading. However,
in exceptional or meritorious cases, the Court may grant an extension anchored on special or
compelling reasons.
FACTS
On September 17, 2003, respondent heirs of Spouses Mauro Borja and Demetria
Bajao filed with the RTC a Petition for Issuance of Original Certificate of Title (OCT) over Lot
No. 798 covered by Decree No. 347660 issued on March 25, 1926. Respondents alleged that
they are the lawful owners of the subject property by virtue of succession.
The RTC granted the petition. The OSG did not pursue its appeal. Hence, the CA
declared the case closed and terminated. On November 14, 2004, an Entry of Judgment was
issued. Acting on a Motion for Issuance of a Writ of Execution, the trial court directed the
Land Registration Authority (LRA) to issue the corresponding OCT. Despite said Order, the
LRA refused to comply, prompting the trial court to issue on June 8, 2007 a show cause
Order against the chief of the Docket Division of the LRA. This Order was reiterated on
October 9, 2009.
On January 5, 2010, the LRA filed a Manifestation, praying: (1) that the Order to cite
the Administrator for contempt of court be denied for lack of merit; and (2) that an order be
issued cancelling the previous Decree No. 347600 and directing the Administrator of the LRA
to re-issue new decree of registration in the name of the same decreed owner Spouses Borja.
Thereafter, a hearing was set on the Motion for Contempt. Said Motion was settled by
parties through counsels who jointly agreed that the judgment be amended, cancelling the
decree issued by the LRA on the land subject of this litigation. The Court granted the same,
provided, the respondents will submit to the RTC a certification to the effect that no OCT was
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ever issued on the land subject of this litigation, after which the same shall be deemed
submitted for the resolution of the Court.
In compliance with the agreement, respondents submitted a Certification. On January

18, 2011, the trial court issued a Resolution, cancelling the decree and directing the issuance
of the OCT.
The OSG filed a Motion for Reconsideration which was denied. Considering that the
OSG received a copy of the March 5, 2012 Resolution on March 19, 2012, it had had 60 days
or until May 18, 2012 within which to file a Petition for Certiorari before the appellate court.
Instead of filing the Petition on May 18, 2012, the OSG filed, on even date, a Motion for
Extension, praying for an additional 15 days within which to file the Petition. On June 4, 2012,
the OSG filed the Petition for Certiorari before the CA.
The CA dismissed the Petition for having been filed beyond the reglementary period.
The appellate court explained that pursuant to A.M. No, 07-7-12-SC as interpreted in Laguna
Metts Corporation v. Court of Appeals, there can no longer be any extension of the 60-day
period within which to file a Petition for Certiorari. The appellate court did not find any
justification in the case to warrant a relaxation of the rule.
ISSUE
Whether the appellate court committed a reversible error in dismissing outright

petitioner's Petition for Certiorari for having been filed late.
RULING
NO. It has been settled that the 60-day period within which a petition for certiorari
should be filed is non-extendible, except in meritorious cases.
A.M. No. 07-7-12-SC states that in cases where a motion for reconsideration was
timely filed, the filing of a petition for certiorari questioning the resolution denying the
motion for reconsideration must be made not later than sixty (60) days from the notice of
the denial of the motion. In Laguna Metts Corporation v. Court of Appeals, this Court held that
following A.M. No. 07-7-12-SC, petitions for certiorari must be filed strictly within 60 days
from the notice of judgment or from the order denying a motion for reconsideration. In
Laguna Metts Corporation, this Court stated the rationale for the strict observance of the 60-
day period to file a petition for certiorari, to wit:
The 60-day period is deemed reasonable and sufficient time for a party to mull over
to prepare a petition asserting grave abuse of discretion by a lower court. The period
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was specifically set to avoid any unreasonable delay that would violate the
constitutional rights of the parties to a speedy disposition of their case.
In Laguna Metts Corporation, this Court ruled that the 60-day period was non-
extendible and the CA no longer had the authority to grant the motion for extension in view
of A.M. No. 07-7-12-SC which amended Section 4 of Rule 65.
However, in Domdom v. Third and Fifth Division of the Sandiganbayan, this Court held
that the strict observance of the 60-day period to file a petition for certiorari is not absolute.
This Court ruled that absent any express prohibition under Rule 65, a motion for extension
is still permitted, subject to the Court's sound discretion. Therefore, the rule is that in filing
petitions for certiorari under Rule 65, a motion for extension is a prohibited pleading.
However, in exceptional or meritorious cases, the Court may grant an extension anchored on
special or compelling reasons.
To recapitulate, the recognized exceptions to the strict observance of the

aforementioned rule are encapsulated in the case of Labao v. Flores, viz,: (1) most persuasive
and weighty reasons; (2) to relieve a litigant from an injustice not commensurate with [their]
failure to comply with the prescribed procedure; (3) good faith of the defaulting party by
immediately paying within a reasonable time from the time of the default; (4) the existence
of special or compelling circumstances; (5) the merits of the case; (6) a cause not entirely
attributable to the fault or negligence of the party favored by the suspension of the rules; (7)
a lack of any showing that the review sought is merely frivolous and dilatory; (8) the other
party will not be unjustly prejudiced thereby; (9) fraud, accident, mistake, or excusable
negligence without appellant's fault; (10) peculiar legal and equitable circumstances
attendant to each case; (11) in the name of substantial justice and fair play; (12) importance
of the issues involved; and (13) exercise of sound discretion by the judge guided by all the
attendant circumstances. Thus, there should be an effort on the part of the party invoking
liberality to advance a reasonable or meritorious explanation for their failure to comply with
the rules.
The circumstances in this case do not fall under any of the exceptions to warrant a
relaxation of the rule. Petitioner invokes an understaffed office to justify the extension of the
60-day period. We find petitioner's explanation unacceptable. It bears emphasizing that
petitioner is represented by the OSG, which commands a battery of lawyers at its beck and
call. While the handling counsel resigned on April 27, 2012, the OSG had until May 18, 2012
within which to file the Petition. The OSG thus had a good number of days to file the Petition.
Therefore, we find its excuse that it was understaffed untenable.
It bears stressing that "the right to appeal is not a natural right but a statutory
privilege, and it may be exercised only in the manner and in accordance with the provisions
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of law. The party who seeks to avail of the same must comply with the requirements of the
Rules. Failing to do so, the right to appeal is lost."
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REPUBLIC OF THE PHILIPPINES v. JORGE CASTILLO, SOFIA SOLIS-ACHACOSA,

ALIPIO FERNANDEZ, SR., EMILIANA FERNANDEZ, CASIMERA FERNANDEZ,
CONCEPCION FERNANDEZ, JUANA GALVAN, ESTELA CORPUZ FERNANDEZ,
GERMANA SUAREZ, AND BENJAMIN FERNANDEZ
DOCTRINE
Since the expropriation proceedings in this case was initiated by petitioner RP on

September 5, 1980, property values on such month and year should be the basis for the proper
determination of just compensation. With the aforementioned principles in mind, the case is
remanded to the lower court for the proper determination of just compensation, that is, the full
and fair equivalent of the property taken from its owner by the expropriator which simply
means the property's fair market value at the time of the filing of the complaint, or "that sum
of money which a person desirous but not compelled to buy, and an owner willing but not
compelled to sell, would agree on as a price to be given and received therefor."
FACTS
On September 5, 1980, the Solicitor General, acting in behalf of petitioner Republic of

the Philippines (RP), filed a Complaint for Expropriation, which was docketed as Civil Case
No. D-5217, before the Court of First Instance (now RTC) of Dagupan City against
respondents Jorge Castillo (Jorge), Sofia SolisAchacoso (Sofia), Alipio Fernandez, Sr. (Alipio),
Emiliana Fernandez, Casimera Fernandez, Concepcion Fernandez, Benjamin Fernandez
(Benjamin), Juana Galvan (Juana), Estela Corpuz Fernandez (Estela) and Germana Suarez,
who are co-owners of the subject property located in Dagupan City with an area of 11,585
square meters (sqm). Meanwhile, during the pendency of the case before the trial court,
respondent Alipio died and was substituted by his spouse Fredesvinda F. Vda. De Fernandez
and his eleven (11) children.
The parties were ordered to file their respective pre-trial briefs. However, only
petitioner RP filed a pre-trial brief on January 18, 1989. Also, on February 2, 1989, petitioner
RP filed an Amended Complaint16 alleging that the Dagupan City National High School
(School) has been in continuous possession of the subject property since 1947 and that the
market value of the said properties during that time was fifty (50) centavos per sqm.
On May 26, 1992, the RTC rendered its Decision dismissing the Amended Complaint
and ordering petitioner RP to restore the possession of the subject property with a total area
of 2,000 sqm to the respondents.18 Aggrieved, petitioner RP filed an appeal with the CA
which was docketed as CA-G.R. CV No. 39872. On January 27, 1999, the CA reversed and set
aside the RTC Decision dated May 26, 1992. The case was remanded to the RTC for further
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proceedings and to compute just compensation in accordance with Rule 67 of the Rules of
Court and prevailing jurisprudence. The RTC rendered its Decision fixing the just
compensation in the amount of P15,000 per sqm which was the current fair market value as
of February 2, 1989, that is, the date of the filing of the Amended Complaint. The CA reversed
and set aside the RTC's Decision dated July 6, 2004. The CA remanded the case to the lower
court and directed it to conduct a trial for the determination of just compensation with the
aid of commissioners in accordance with Rule 67 of the Rules of Court. However, the CA
agreed with the RTC that the just compensation shall be determined based on the value of
the property on February 2, 1989, which is the date of the filing of the Amended Complaint
and not on the date of taking in 1947 which had not been proven.
ISSUE
What is the reckoning date of the computation of just compensation: (a) date of taking
in 1947; (b) date of the filing of the original Complaint in 1980; or (c) date of filing of the
Amended Complaint in 1989?
RULING
The date of the filing of the original Complaint in 1980. As correctly observed by
the CA, other than the testimonial evidence of Perla, no other evidence was presented by the
petitioner RP to establish that the taking of the subject property was in 1947. On the other
hand, the evidence of the respondents, that is, the tax declaration, clearly shows that until
the year 1990, they religiously paid the real property tax of the subject property which
means that they were not dispossessed of the use thereof. Thus, we find no error in the
appreciation of facts by the CA. As between the filing of the original Complaint and Amended
Complaint, we rule that the computation of just compensation should be reckoned from the
time of the filing of the original Complaint, that is, on September 5, 1980. Evidently, there
was no actual taking in this case prior to the filing of the Complaint, thus, the time of taking
should be reckoned from the filing of the Complaint. Hence, the value of the property at the
time of filing of the original Complaint on September 5, 1980, and not the filing of the
Amended Complaint in 1989, should be considered in determining the just compensation
due to the respondents.
Since the expropriation proceedings in this case was initiated by petitioner RP on

September 5, 1980, property values on such month and year should be the basis for the
proper determination of just compensation. With the aforementioned principles in mind, the
case is remanded to the lower court for the proper determination of just compensation, that
is, the full and fair equivalent of the property taken from its owner by the expropriator which
simply means the property's fair market value at the time of the filing of the complaint, or
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"that sum of money which a person desirous but not compelled to buy, and an owner willing
but not compelled to sell, would agree on as a price to be given and received therefor."
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REPUBLIC OF THE PHILIPPINES v. MANUEL M. CARAIG

DOCTRINE
Pursuant to the above-mentioned provisions, the applicant must prove the following
requirements for the application for registration of a land under Section 14(1) to prosper: (1)
that the subject land forms part of the disposable and alienable lands of the public domain; (2)
that the applicants by themselves and their predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation thereof; and (3) that the
possession is under a bona fide claim of ownership since June 12, 1945, or earlier.
FACTS
On September 2, 2002, Manuel, through his attorney-in-fact, Nelson N. Guevarra

(Nelson) filed an Application for Original Registration of Title over a 40,000-square meter
portion of Lot 5525, known as Lot No. 5525-B, which is located at Brgy. San Luis, Sto. Tomas,
Batangas. Lot No. 5525-B. Manuel alleged that he bought Lot No. 5525-B from Reynaldo S.
Navarro (Reynaldo) as evidenced by a Deed of Absolute Sale dated September 25, 1989.
Reynaldo and his predecessors-in-interest had been in open, peaceful, continuous, and
exclusive possession of the land prior to June 12, 1945 under a bona fide claim of ownership.
Manuel attached the following documents in his application: (a) Tax Declaration No. 017-
009919 in his name; (b) Deed of Absolute Sale dated September 25, 1989 executed by
Reynaldo in his favor; (c) Subdivision Plan of Lot No. 5525-B which was approved on July 3,
2002, together with its blue print, showing that it is a portion of Lot No. 5525; (d) Technical
Description of Lot 5525-B;12 and (e) Certification in lieu of Geodetic Engineer's Certificate
for registration purposes. The Office of the Solicitor General (OSG), representing the
Republic of the Philippines, filed its Opposition to the application. It sought the denial of
Manuel's application based on the following grounds: (a) the land is inalienable and part of
the public domain owned by the Republic; (b) Manuel and his predecessors-in-interest were
not in continuous, exclusive and notorious possession and occupation of the land since June
12, 1945 or prior thereto; and (c) the evidence attached to the application insufficiently and
incompetently proved his acquisition of the land or his continuous, exclusive and notorious
possession and occupation thereof. During the trial, Manuel presented the following
witnesses: (a) Nelson; (b) Arcadio Arcillas (Arcadio); (c) Epifanio Guevarra (Epifanio); (d)
Miguel Jaurigue Libot (Miguel); (e) Francisco Malleon (Francisco); and (f) Fermin Angeles
(Fermin).
The MTC granted Manuel's application for original registration after it was
sufficiently established that he is the owner of Lot No. 5525-B. The CA affirmed the MTC
Decision. It opined that Nelson, as the attorney-in-fact, was authorized to file the application
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in behalf of Manuel, to represent him in the proceedings, to testify and to present

documentary evidence during the trial, and to do any acts in furtherance thereof. Further,
Manuel's witnesses sufficiently proved that Manuel, and his predecessors-in-interest were
in open, continuous, exclusive, peaceful and adverse possession in the concept of an owner
prior to June 12, 1945.
ISSUE
W/N Manuel sufficiently proved that he and his predecessors-in-interest were in

continuous, peaceful, notorious and exclusive possession in the concept of an owner of the
subject land.
RULING
YES. Pursuant to the above-mentioned provisions, the applicant must prove the
following requirements for the application for registration of a land under Section 14(1) to
prosper: (1) that the subject land forms part of the disposable and alienable lands of the
public domain; (2) that the applicants by themselves and their predecessors-in-interest have
been in open, continuous, exclusive, and notorious possession and occupation thereof; and
(3) that the possession is under a bona fide claim of ownership since June 12, 1945, or earlier.
Manuel adequately met all these requirements. There is substantial proof that the subject
land is disposable and alienable. The CENRO Certificates dated February 11, 2003 and March
21, 2003 sufficiently showed that the government executed a positive act of declaration that
Lot No. 5525-B is alienable and disposable land of public domain as of December 31, 1925.
Remarkably, the OSG failed to controvert the said act of the government. Hence, the
certificates enjoy the presumption of regularity in the absence of contradictory evidence.
Thus, with the presentation of the CENRO certificates as evidence, together with the
documentary evidence, Manuel substantially complied with the legal requirement that the
land must be proved to be an alienable and disposable part of the public domain.
Manuel has likewise proved possession and occupation of the property under a bona
fide claim of ownership. Manuel had sufficiently established his possession in the concept of
owner of the property since June 12, 1945, or earlier. The testimonies of the witnesses are
credible enough to support Manuel's claim of possession. Worthy to note that the witnesses
unswervingly declared that Evaristo, in the concept of an owner, occupied and possessed Lot
No. 5525 even before June 12, 1945. Remarkably, Arcadio, who frequented the land since he
was a child, categorically testified that it was Evaristo who possessed and owned Lot No.
5525 as early as 1942. Evaristo performed specific acts of ownership such as planting banana
and coffee in the land, and hiring the services of other workers to help him till the soil.
Thereafter, Lot No. 5525 was transferred to Reynaldo, Evaristo's son, who continued to
cultivate the same. All told, there is no sufficient reason to reverse the findings of the MTC as
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affirmed by the CA. Lot No. 5525-B is duly proven to be alienable and disposable land of
public domain. Further, Manuel has been in continuous, open, notorious and exclusive
possession and occupation thereof even before June 12, 1945.
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REPUBLIC OF THE PHILIPPINES v. LUISA ABELLANOSA AND GENEROSO MANALO by

FILESTATE PROPERTIES, INC.
DOCTRINE
For the judicial reconstitution of an existing and valid original certificate of Torrens
title, Section 2 of RA 26 has expressly listed the acceptable bases:
SECTION 2. Original certificates of title shall be reconstituted from such of the sources
hereunder enumerated as may be available, in the following order:
(a) The owner's duplicate of the certificate of title; xxxx

(f) Any other document which, in the judgment of the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.
In the instant case, the contents of the second amendment and the original petition for
reconstitution, along with their respective supporting documents, were considered collectively
by the RTC. Thus, the bases for the reconstitution of the title were not only the plans and
technical descriptions but also the legible duplicate copies of the titles and a host of other
official documents.
FACTS
The instant case stemmed from the filing of a petition for reconstitution on January
12, 2006. In the petition for reconstitution, the spouses Manalo claimed that they were once
registered owners of two parcels of land (subject lots) in Barangay Bocohan, Lucena City,
Quezon Province, more particularly described as Lot Nos. 1457 and 1249. They sold the
subject lots to one Marina Valero (Valero) for which the corresponding tax declaration was
issued under the latter's name. Valero later on sold Lot No. 1457 to FEPI, while Lot No. 1249
was developed into a first class subdivision with FEPI as the developer. However, Valero was
unable to surrender the owner's duplicate copy of the titles to FEPI because the documents
were lost beyond retrieval per the September 16, 2005 Certification of the Register of Deeds
of Lucena City, which states that the titles of the subject lots "are among those presumed
burned during the fire that razed the City Hall Building of the City of Lucena on August 30,
1983." On May 17, 2006, respondents sought to amend (first amendment) the petition for
reconstitution by attaching thereto the respective sketch plans of the subject lots including
the technical descriptions thereof. The RTC later issued the June 16, 2006 Order
acknowledging the amended petition for reconstitution. Subsequently, the RTC set the
petition for reconstitution for hearing and directed the posting and publication of the notices
in the Official Gazette. On April 28, 2008, the counsel for respondents filed a motion to admit
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a second amended petition (second amendment) to propose the substitution of parties by

impleading Valero as co-petitioner following the death of the spouses Manalo and to use the
LRA-verified plans and technical descriptions of' the subject lots as bases for the
reconstitution of the lost titles. The RTC admitted the motion and the second amendment to
the petition as per Order dated May 5, 2008.
The RTC found merit in the petition for reconstitution. The Republic of the
Philippines, through the Office of the Solicitor General (petitioner), filed a notice of appeal
assailing the said Order. The CA dismissed petitioner's appeal. Petitioner moved for
reconsideration which the appellate court denied. Aggrieved, petitioner filed the instant
petition for review on certiorari under Rule 45 of the Rules of Court.
ISSUE
W/N the CA erred when it ruled that there is sufficient basis for reconstitution.
RULING
NO. For the judicial reconstitution of an existing and valid original certificate of
Torrens title, Section 2 of RA 26 has expressly listed the acceptable bases:
SECTION 2. Original certificates of title shall be reconstituted from such of the sources
hereunder enumerated as may be available, in the following order:
(a) The owner's duplicate of the certificate of title; xxxx

(f) Any other document which, in the judgment of the court, is sufficient and proper
basis for reconstituting the lost or destroyed certificate of title.
In the instant case, the contents of the second amendment and the original petition
for reconstitution, along with their respective supporting documents, were considered
collectively by the RTC. Thus, the bases for the reconstitution of the title were not only the
plans and technical descriptions but also the legible duplicate copies of the titles and a host
of other official documents. In sum, the Court finds that there was sufficient basis for the RTC
to grant the petition for reconstitution.
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KLM ROYAL DUTCH AIRLINES v. DR. JOSE M. TIONGCO

DOCTRINE
The nature of the business which involves the transportation of persons or goods makes
a contract of carriage imbued with public interest. It is therefore bound to observe not just the
due diligence of a good father of a family but that of "extraordinary" care in the vigilance over
the goods as required under Article 1733 of the Civil Code. In an action based on a breach of
contract of carriage, the aggrieved party does not need to prove that the common carrier was
at fault or was negligent. He or she is only required to prove the existence of the contract and
its non-performance by the carrier. There is no dispute that KLM and Dr. Tiongco entered into
a contract of carriage. Dr. Tiongco purchased tickets from the airline for his trip to Almaty,
Kazakhstan. KLM, however, breached its contract with Dr. Tiangco when it failed to deliver his
checked-in suitcase at the designated place and time. The suitcase contained his clothing for
the conference where he was a guest speaker, a copy of his speech, and his resource materials.
Worse, Dr. Tiangco's suitcase was never returned to him even after he arrived in Manila from
Almaty. Thus, KLM’s liability for the lost suitcase was sufficiently established as it failed to
overcome the presumption of negligence.
FACTS
In October 1998, respondent Dr. Jose M. Tiongco (Dr. Tiongco ), a prominent surgeon
and one of the founders of the Medical Mission Group Hospital and Health Services in Davao
City, was invited by the United Nations - "World Health Organization (UN-WHO) to be a
keynote speaker in the 20th Anniversary of Alma-Ata Declaration to be held in Almaty,
Kazakhstan from November 27-28, 1998. Thus, Dr. Tiongco secured his visa for Kazakhstan
and purchased tickets for his flights. There being no direct flight from Manila to Kazakhstan,
Dr. Tiangco had to fly to Singapore via Singapore Airlines where he would then take two
connecting flights to Almaty on board petitioner KLM, his main carrier. When he arrived in
NAIA, he went to the counter of Singapore Airlines and checked-in a suitcase containing a
copy of his speech, resource materials, clothing for the event, and other personal items.
Singapore Airlines departed from Manila as scheduled. Upon arrival in Singapore, Dr.
Tiongco proceeded to the KLM counter to check in for his flight to Amsterdam, Netherlands.
Dr. Tiongco arrived at Amsterdam the next day in time for his third flight to Frankfurt,
Germany. However, his flight to Frankfurt departed from Amsterdam 45 minutes late, or at
9:00 o'clock in the morning. As a result, Dr. Tiongco missed his fourth flight, i.e. from
Frankfurt to Almaty. Upon his arrival to Frankfurt, he found a KLM employee whom he
informed at once about his missed flight to Almaty, as well as his speaking engagement and
his checked-in suitcase. The employee assured him that his suitcase would be travelling with
him. He also instructed the doctor to approach a Turkish Airlines employee to assist with the
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logistics of his trip to Almaty. The KLM employee then took Dr. Tiongco's boarding pass and
gave him a new itinerary. Before the passengers of Turkish Airlines boarded, its personnel
asked them to identify their luggages on the tarmac. Dr. Tiongco looked for his suitcase but
could not locate it. He asked Mr. Osman Bey (Bey) of Turkish Airlines to ask Miss Chizem to
find his missing suitcase. Thirty minutes passed and yet his suitcase was not in sight.
When Dr. Tiongco arrived in Almaty, nobody from KLM, Lufthansa, or Turkish
Airlines assisted him. His suitcase was still nowhere to be found. He then exited the airport,
hailed a taxi cab, and proceeded to Regency Hotel where the UN-WHO convention would be
held. Upon arrival in the hotel, Dr. Tiongco took a shower and changed into a pair of slacks
and a sweatshirt. He went downstairs where the conference would be held. Initially,
however, Dr. Tiongco was not allowed entry into the venue because of his inappropriate
attire. Dr. Tiongco explained to the organizers that his suitcase containing his clothes and
important materials for his speech got lost during his flight. It was only then that he was
allowed inside the venue. Dr. Tiongco then delivered his lecture without any of his visual aids
and despite being inappropriately attired. When he finished his speech, some of the
attendees approached him and asked for his resource materials. However, he was unable to
give them the materials since these were also in his missing suitcase. Dr. Tiongco then
returned to the Philippines. Three months passed and still there was no news about what
happened to his luggage. Thus, he wrote to Singapore Airlines, KLM and Lufthansa,
demanding for compensation for his lost luggage and the inconvenience he suffered.
Lufthansa denied his claim for compensation while KLM and Singapore Airlines, in separate
letters, asked for time to investigate the incident. In a letter Singapore Airlines denied any
liability. KLM, unfortunately, did not write back to Dr. Tiongco. Thus, Dr. Tiongco filed a
Complaint for Damages and Attorney's Fees against KLM, Turkish Airlines, Singapore
Airlines, and Lufthansa.
The RTC ruled that KLM is solely liable for the damages suffered by Dr. Tiongco on
account of his lost suitcase. The appellate court agreed with the trial court on KLM' s liability
for breach of contract of carriage. However, it modified the awards of damages for being
excessive. KLM sought for reconsideration but it was denied by the CA. Hence, this petition
for review on certiorari.
ISSUE
W/N KLM acted in gross negligence, bad faith and wilful misconduct in relation to the
loss of Dr. Tiongco's suitcase so that the latter can be entitled to award of damages.
RULING
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YES. The nature of the business which involves the transportation of persons or goods
makes a contract of carriage imbued with public interest. It is therefore bound to observe
not just the due diligence of a good father of a family but that of "extraordinary" care in the
vigilance over the goods as required under Article 1733 of the Civil Code. In an action based
on a breach of contract of carriage, the aggrieved party does not need to prove that the
common carrier was at fault or was negligent. He or she is only required to prove the
existence of the contract and its non-performance by the carrier. There is no dispute that
KLM and Dr. Tiongco entered into a contract of carriage. Dr. Tiongco purchased tickets from
the airline for his trip to Almaty, Kazakhstan. KLM, however, breached its contract with Dr.
Tiangco when it failed to deliver his checked-in suitcase at the designated place and time.
The suitcase contained his clothing for the conference where he was a guest speaker, a copy
of his speech, and his resource materials. Worse, Dr. Tiangco's suitcase was never returned
to him even after he arrived in Manila from Almaty. Thus, KLM’s liability for the lost suitcase
was sufficiently established as it failed to overcome the presumption of negligence.
It is undisputed that Dr. Tiongco's luggage went missing during his flight, even after
his return to the Philippines, Dr. Tiongco's suitcase was still missing. Nobody from KLM's
personnel updated him of what happened to the search. It was only when Dr. Tiongco wrote
KLM a demand letter that the latter reached out to him asking for time to investigate the
matter. Yet, it did not even notify him of the result of the purpo1ted investigation. To make
matters even worse, the Customer Relations Officer of KLM, Arlene Almario, categorically
testified that the suitcase was eventually found in Almaty as shown in the baggage report
dated December 18, 1998 of Turkish Airlines. The said airline immediately notified KLM.
However, KLM did not bother to inform Dr. Tiongco that his suitcase had been found or took
the necessary steps to transport it back to Manila.
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Jacinto v. Litonjua
G.R. No. 207675. January 20, 2021, Third Division (Hernando, J.)
DOCTRINE
The payment of respondents' attorney's fees can neither be charged against nor
collected from the Compromise Agreement. Moreover, respondents' attorney's lien cannot be
effected against the judgment of the RTC Baguio.
FACTS
Ramon and Marilene Jacinto are legitimate children of the Spouses Fernando and
Bernardina Jacinto, decedents in separate probate proceedings pending before the Regional
Trial Court of Muntinlupa City.
To recover the decedents' properties fraudulently alienated to Forward Properties,

Inc. (FPI) and subsequently mortgaged by it to EPCIB as security for a loan, Ramon filed an
action for annulment of sale and mortgage with damages and injunction against the
defendants before the RTC of Baguio City.
Upon the fraudulent transfer of the subject properties to FPI by virtue of a deed of
sale purportedly executed by Fernando, Transfer Certificates of Title (TCT) in the names of
the Spouses Jacinto were cancelled. The Register of Deeds of Baguio City then issued new
titles to FPI.
Significantly, Fernando died in the State of Hawaii, United States of America followed
by his wife, Bernardina.
At the proceedings before the RTC Baguio, the then administratrix of the Spouses
Jacinto's estate, Marilene, intervened in Civil Case No. 5751-R. She was represented by herein
respondents, Attorneys Litonjua and Solis.
In 2007, the RTC Baguio ruled in favor of the Jacinto siblings declaring void: (a) the
October deed of sale between Fernando Jacinto and defendant FPI; (b) the real estate
mortgage between defendants EPCIB and FPI, and (c) the subsequent sale of the subject
properties on foreclosure to EPCIB.
Only defendant EPCIB appealed to the CA. Meanwhile, respondents filed a Notice of
Attorney's Lien before the RTC Baguio claiming attorney's fees in the amount pursuant to
their engagement contract with Marilene.
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During the pendency of the EPCIB's appeal to the CA, Ramon and EPCIB jointly moved
for the approval of a Compromise Agreement. The Compromise Agreement was made and
executed by and among Ramon, EPCIB, FPI and the Estate of the Spouses Jacinto.
Respondents filed an Opposition to the Joint Motion for Approval of Compromise

Agreement attaching their Notice of Attorney's Lien, and arguing that: (1) the agreement
violates law, morals, good customs, public order or public policy for failure to include the
respondents' attorney's lien; and (2) the value of RTC Baguio's judgment of P154,085,400.00
should be the basis of the 25% contingency fee due to them.
The appellate court approved the Compromise Agreement but denied respondents'
claim for attorney's fees. It ruled that a charging lien requires as a condition sine qua non the
execution of a judgment for money.
On motion for partial reconsideration of respondents, the appellate court rendered

the assailed Amended Decision allowing respondents' attorney's lien. Upon the denial of his
motion for reconsideration, Ramon filed this appeal by certiorari.
ISSUE
Whether the CA correctly allowed the respondents' attorney's fees to be charged

against the supposed amicable settlement amount contemplated by the Compromise
Agreement between Ramon and the EPCIB.
RULING
NO. The payment of respondents' attorney's fees can neither be charged against nor
collected from the Compromise Agreement. Moreover, respondents' attorney's lien cannot
be effected against the judgment of the RTC Baguio.
First. Civil Case No. 5751-R is an action to recover and enforce registered
ownership over real property.
There is no dispute that the subject properties properly belonged to the Estate of the
Spouses Jacinto. Verily, even without delving into the finality of the monetary awards to
Ramon and Marilene, respondent lawyers have no claim to the judgment amount in favor of
EPCIB. It was erroneous for the appellate court to set the amount of P154,085,400.00 on
which to deduct respondents claimed 25% attorney's fees.
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Perforce, the Notice of Attorney's Lien filed by respondents before the RTC Baguio
was a superfluity and did not relate to the judgment amount in favor of EPCIB on its cross-
claim against FPI.
Article 2208 of the Civil Code provides: In the absence of stipulation, attorney's
fees and expenses of litigation, other than judicial costs, cannot be recovered, except:
xxx
In all cases, the attorney's fees and expenses of litigation must be reasonable.
(Emphasis supplied)
Clearly, respondents are precluded from propounding a claim of attorney's fees

beyond that what they prayed for, and that awarded by the RTC Baguio in Civil Case No.
5751-R.
Second. Respondents have no direct and preferential claim over the subject
properties or the value thereof.
In settlement of estate proceedings, the ultimate objective is the distribution and

partition of the decedent's estate under Rule 90 of the Rules of Court. In this regard, the suit
filed by Ramon and Marilene for the recovery of the subject properties was undertaken on
behalf of the Spouses Jacinto's estate and in connection with its final settlement and
distribution thereof to the Jacinto heirs.
Legal costs for the recovery of the subject properties, including attorney's fees, are
expenses of administration which respondents could have claimed against the estate of the
Spouses Jacinto or in a separate action.
Prior to distribution and partition of the estate, Marilene, even as administratrix,

cannot encumber a significant portion of the estate without providing recourse to other
heirs, who are co-owners of the estate. An administrator, although a putative heir of the
decedent, does not hold the properties of the estate in the concept of absolute owner.
The general rule is that an administrator has all the powers necessary for
administration of the estate and which powers he can exercise without leave of court.
However, as regards the sale, mortgage or other encumbrances on the estate, the provisions
of Rule 89 apply.
In this case, respondents' claim of attorney's fees over the recovered properties and
the succeeding compromise agreement cannot override Ramon's acts of administration over
the decedents' estate. Respondents cannot then litigate and assert their claim of attorney's
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fees, actually evade payment of proper filing fees, receive relief beyond what they prayed for,
and that already adjudged with finality by the trial court.
Last. The Compromise Agreement had multiple causes and consideration.
As earlier adverted, payment of respondents' attorney's fees cannot be claimed in the

compromise agreement. Article 2028 of the Civil Code states that "a compromise is a
contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an
end to one already commenced."
The CA ruling is a myopic view of the various considerations for entering into a
contract and the extinguishment of obligations. Given the relationship between the parties,
with Ramon as administrator of the Spouses Jacinto's estate and President of FPI, the
compromise agreement had both an onerous and remunerative cause.
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Case Digests
Integrated Credit and Corporate Services v. Cabreza

G.R. No. 203420. February 15, 2021, Third Division (Hernando, J.)
DOCTRINE
In fine, the MOA is still valid and subsisting when ICCS sold the subject property to the
spouses Gan. The lower courts annulled the Deed of Sale with the spouses Gan for differing
reasons. Considering these, and in order to lay to rest this long running dispute over the subject
property, the Court resolves to dispose this aspect of the case in an equitable manner, thereby
upholding the validity of the Deed of Sale to the spouses Gan. The Court draws support from
Orbe v. Filinvest Land, Inc., where a refund of the partial payments to the defaulting buyer was
allowed as the property has already been sold to a third party while there was no valid
rescission of the contract.
FACTS
This case arose from a Complaint for Annulment of Sale, Reconveyance, Sum of Money
and Damages filed by respondents Rolando S. Cabreza and spouses Rosalinda and Fernando
Aguilar against petitioner Integrated Credit and Corporate Services (ICCS), spouses Estela
and Vicente Sy Gan and Citibank, N.A.
Cabreza was the registered owner of a house and lot covered by Transfer Certificate
of Title. In 1990, he applied for the opening of a credit line with Citibank and secured it by a
real estate mortgage over the subject property. Cabreza failed to pay prompting Citibank to
institute foreclosure proceedings on the real estate mortgage. Public auction was deferred
as they agreed on restructuring Cabreza's liability to Citibank. Cabreza again defaulted under
the restructured loan, thus, public auction was finally conducted and ICCS emerged as the
highest bidder.
Cabreza's sister, Rosalinda, negotiated with ICCS for the repurchase of the subject
property. Two days prior to the expiration of the redemption period, Cabreza sent ICCS a
letter offering the redemption of the subject property by paying the redemption price of P10
million to be paid in installments. Subsequently, the parties entered into a Memorandum of
Agreement. The MOA stipulated that ICCS agreed to postpone the consolidation of title to the
subject property and that it allowed Cabreza, with spouses Aguilar as guarantors, to redeem
the subject property on an agreed redemption price. Notably though, the MOA provided in
evidence was not dated.
Pursuant to the MOA, Rosalinda issued several checks. The first three checks were
deposited, cleared, and credited to the bank account of ICCS. The fourth check, however, was
dishonored due to insufficient funds. Hence, ICCS sent Cabreza and the spouses Aguilar a
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letter demanding payment of the amount of the fourth check, and failure of which will
constrain ICCS to consolidate title to the subject property. Despite the non-payment,
Rosalinda still issued the fifth check in favor of ICCS. The fifth check was surprisingly cleared
and credited to the bank account of ICCS. The succeeding checks were no longer encashed
by ICCS.
ICCS subsequently informed Cabreza and the spouses Aguilar through a letter that it
had already consolidated its title to the subject property, thereby requiring them to vacate
the premises. ICCS then sold the subject property to the spouses Gan. The foregoing
prompted Cabreza and the spouses Aguilar to file the instant Complaint against ICCS,
spouses Gan, and Citibank.
Cabreza and the spouses Aguilar argued that the failure to pay the amount of the
fourth check merely gave ICCS the right to rescind the MOA; but the latter lost this right when
it deposited the fifth check to its account. They added that ICCS' act of selling the subject
property to the spouses Gan constituted double sale. The spouses Gan were purchasers in
bad faith because they were previously informed of Cabreza and spouses Aguilar's claim on
the subject property.
ICCS and Citibank filed a joint Answer. ICCS stated that the fifth check was deposited
by mere inadvertence as its check custodian was not informed of the cancellation of the MOA.
ICCS further argued that the consolidation of title over the subject property to its name was
valid, thereby it had every right to transfer ownership to the spouses Gan.
For their part, the spouses Gan filed a separate Answer with a cross- claim against
ICCS. They contended that they were purchasers in good faith. And on the assumption that
there was a double sale, the Gans argued that they have superior rights as they were first to
register the sale with the Registry of Deeds.
The RTC ruled that the MOA was essentially a contract of sale for the reacquisition of
the subject property from ICCS. Being a contract of sale, the right to rescind due to substantial
breach is implied. In the instant case, Cabreza and Rosalinda's default with regard to the
fourth check constituted substantial breach.
The trial court ruled, however, that ICCS is deemed to have waived its right to rescind
when it received the proceeds of the fifth check after the dishonor of the fourth check. ICCS
had no right to sell the subject property to the spouses Gan. In this regard, the RTC found
that the spouses Gan are not purchasers in good faith as they were informed of the existence
of the MOA prior to the sale. The trial court concluded that the spouses Gan were also victims
of ICCS.
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The RTC ordered the annulment of the Deed of Sale between ICCS and the spouses
Gan, as well as the corresponding title issued thereof. It also ordered ICCS to reimburse the
purchase price the spouses Gan paid. Further, the RTC ordered Cabreza and the spouses
Aguilar were ordered to pay ICCS the remaining balance under the MOA, after which a deed
of absolute sale will be executed in their favor.
The CA affirmed with modifications the RTC Decision. The appellate court ordered
the deletion of the award of attorney's fees, and moral and exemplary damages. At the same
time, it ordered Cabreza to reimburse the spouses Gan the real property taxes and
association dues the latter have paid. Finally, the CA set a period for Cabreza and the spouses
Aguilar to pay the balance of the redemption price under the MOA; in the event of default,
ICCS may rescind the MOA under the Maceda Law and may therefore consolidate title in its
name.
Still aggrieved, ICCS filed the instant Petition praying that the validity of the following
be upheld: (a) termination and cancellation of the MOA pursuant to its automatic
termination clause; (b) consolidation of title to the subject property in the name of ICCS; and,
(c) Deed of Sale between ICCS and spouses Gan.
ISSUES
(1) Whether the MOA between ICCS and Cabreza with the spouses Aguilar as
guarantors is a contract of sale.
(2)Whether ICCS validly rescinded the MOA.
RULING
1. YES. There is no reason for this Court to disturb the finding of the RTC and CA that
it is a contract of sale. The MOA admitted in evidence, however, was not dated, making it
doubtful as to when a voluntary agreement for the extension of the redemption period was
reached by the parties.
As correctly found by the RTC, the redemption period has already lapsed and ICCS
became the absolute owner of the subject property. As provided in jurisprudence, the
purchaser of a foreclosed property in a public auction becomes the absolute owner of the
property upon expiration of the redemption period without a valid redemption exercised by
the mortgagor.
The MOA nevertheless remains to be a valid agreement that is in the form of a contract
of sale of real property in installments. Article 1458 of the Civil Code defines a contract of
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sale to be a contract where "one of the contracting parties obligates himself to transfer the
ownership and to deliver a determinate thing, and the other to pay therefor a price certain
in money or its equivalent." The essential elements of a contract of sale are: (a) consent; (b)
object; and (c) price in money or its equivalent. Here, the MOA contains all the essential
elements of a contract of sale. The CA, therefore, is correct in finding that the Maceda Law is
applicable as the MOA is a contract of sale of real property in installments.
2. NO. the Court finds that there is also no reason to disturb the ruling of the CA in
this issue that there was no valid rescission of the MOA, primarily for the reason that the
requisites of the Maceda Law were not complied with.
The Maceda Law protects buyers of real estate against onerous and oppressive
conditions. Section 4 in particular provides remedies for the defaulting buyer who has paid
less than two years of installments in a purchase of real property,
The Court agrees that the MOA was not validly rescinded but not on the same ground
as held by the appellate court. The Court finds that there was no valid rescission because the
requirements of the Maceda Law were not complied with; which requires that the seller must
give a notice or a demand for rescission by notarial act.
In the instant case, the letter is not notarized. It is not accompanied by an

acknowledgment or even a jurat. It is a simple letter addressed to Cabreza and the spouses
Aguilar, and signed by the managing partner of ICCS.
Further, the Maceda Law provides that actual cancellation can only be effected after
30 days from buyer's receipt of the notarial rescission. In this case, there is no showing that
this requirement was observed by ICCS as it intended that the letter dated December 23,
1994 to be the termination of the MOA.
In fine, the MOA is still valid and subsisting when ICCS sold the subject property to
the spouses Gan. The lower courts annulled the Deed of Sale with the spouses Gan for
differing reasons. Considering these, and in order to lay to rest this long running dispute over
the subject property, the Court resolves to dispose this aspect of the case in an equitable
manner, thereby upholding the validity of the Deed of Sale to the spouses Gan. The Court
draws support from Orbe v. Filinvest Land, Inc., where a refund of the partial payments to the
defaulting buyer was allowed as the property has already been sold to a third party while
there was no valid rescission of the contract.
Applying this to the instant case, the Court reverses the CA's ruling with regard to the
Deed of Sale between ICCS and the spouses Gan: it remains valid. The spouses Gan, therefore
remains to be the valid owners of the subject property pursuant to the Deed of Sale. There is
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no need for the cancellation of the transfer certificate of title under their names and the
issuance thereof under ICCS' name. It follows therefore that as the subject property is no
longer available after being sold to the spouses Gan, ICCS should, applying the resolution in
Orbe, return the payments made by Cabreza and the spouses Aguilar under the MOA subject
to legal interest.
Page 163 of 307

Case Digests
Home Guaranty Corp. v. Manlapaz

G.R. No. 202820. January 13, 2021, Third Division (Hernando, J.)
DOCTRINE
Since Manlapaz already fully paid the purchase price, she is entitled to the issuance of
the deed of absolute sale and the transfer certificate of title in her favor, even if the disputed
property has already been transferred to HGC's name due to FLPPI's default in the third
contract. By virtue of the Memorandum of Agreement and the third contract, HGC not only
acquired the rights to the assets, but also the obligations attached thereto. Since Manlapaz paid
the full price, FLPPI, as the seller when the second contract was executed, should issue the title
in her favor.
FACTS
In 1995, Vive Eagle Land, Inc. (VELI), Planters Development Bank, and petitioner HGC
entered into the VELI Asset Pool Formation and Trust Agreement or the development of the
lots in Eagle Crest Village in Baguio City which included the property in dispute. HGC
extended a P130 Million guaranty on the Participation Certificates in the event the Asset Pool
fails to service the interest due to the investors or to redeem the said Certificates upon
maturity.
Due to the delay in the project's development, the Asset Pool was declared in default.
Consequently, the investors, through the Bank, called on HGC's guaranty. After HGC's
payment of the guaranty, the Bank assigned and transferred the possession and ownership
of the assets of the Asset Pool to HGC through a Deed of Assignment and Conveyance.
Notably, this included the contested land.
Prior thereto, VELI entered into a Contract to Sell with First La Paloma Properties,
Inc. (FLPPI) involving the bulk of the properties in the Village which included the property
in question. FLPPI, through its President, Marcelino Yumol entered into a Contract to Sell
with respondent Manlapaz over the disputed property.
VELI, FLPPI and HGC entered into a Memorandum of Agreement (superseding the
Contract to Sell dated January 8, 1998 and other agreements between FLPPI and VELI) in
which FLPPI assumed to pay HGC the value of the properties in the total amount of
P153,029,200.00.
When FLPPI failed to pay, HGC informed FLPPI in a letter addressed to Yumol that it
is invoking its right to cancel their contract. Meanwhile, after failing to secure the title to the
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disputed land, Manlapaz filed a Complaint for delivery of title with prayer for damages with
the Legal Services Group (LSG) of the Housing and Land Use Regulatory Board (HLURB).
The LSG-HLURB found that Manlapaz has a cause of action against HGC. When HGC
entered into a Memorandum of Agreement with FLPPI and VELI, and the Contract to Sell
with FLPPI, HGC became aware of the Contract to Sell between VELI and FLPPI. The HLURB
held that the intention of PD No. 957 is to protect innocent lot buyers from scheming
subdivision developers. Ergo, HGC is liable to execute the deed of sale and to deliver the title
to Manlapaz. Aggrieved, HGC filed a Petition for Review before the Board of Commissioners
(BOC) of the HLURB.
The BOC-HLURB dismissed the complaint filed by Manlapaz. It ruled that "under the
contract to sell executed between HGC and FLPPI, the latter was not authorized to sell the
properties covered thereby without the purchase price first being fully paid to the HGC. Thus,
HGC is not under any obligation to honor the contract between FLPPI and Manlapaz. Under
the circumstances, only FLPPI is liable to the Manlapaz." Manlapaz filed a Motion for
Reconsideration. However, the BOC- HLURB denied her motion. Manlapaz then filed a Notice
of Appeal with the Office of the President (OP).
The OP affirmed in toto the October 5, 2005 Decision of the BOC-HLURB. The OP held
that FLPPI's right as a would-be seller was to be derived from the second contract with HGC.
However, because of FLPPI's failure to pay the purchase price, HGC cancelled the second
contract. As a consequence, FLPPI's authority to sell was likewise cancelled, including its sale
to Manlapaz. Undeterred, Manlapaz appealed to the CA via Rule 43 of the Rules of Court.
The CA granted Manlapaz's appeal, it held that PD No. 957 aims to protect innocent
lot buyers from fraudulent transactions. The CA ruled that Manlapaz's full payment of the
contract price justifies the execution of the deed of absolute sale in her favor and the transfer
in her name of the certificate of title covering the subject property pursuant to Section 25 of
PD No. 957. It held that the ruling of the LSG-HLURB was correct and that Manlapaz, as an
innocent purchaser for value, should be protected from the effects of the transactions
entered into by HGC, VELI and FLPPI in which Manlapaz had no participation.
HGC moved for a reconsideration which the CA denied. Discontented, HGC elevated
the case before the Supreme Court via this Petition for Certiorari.
ISSUE
Whether or not HGC should execute a deed of absolute sale and cause the transfer of
the certificate of title to the contested lot in favor of Manlapaz.
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RULING
YES. It is clear that FLPPI sold the contested property to Manlapaz prior to the
declaration of default of the Asset Pool and before the Bank issued the Deed of Assignment
and Conveyance to HGC. The sale to Manlapaz likewise occurred prior to the execution of
the Memorandum of Agreement among VELI, FLPPI and HGC, and before the execution of
the Contract to Sell (third contract) between HGC and FLPPI pursuant to the said
memorandum. Even so, HGC cancelled the Contract to Sell with FLPPI due to the latter's
failure to fulfill its obligations.
Since it duly entered the Memorandum of Agreement and the third contract with full
knowledge of the inclusion of the aforementioned provisions, HGC cannot feign ignorance of
the fact that VELI sold the bulk of the properties, including the disputed property, to FLPPI.
The first contract between VELI and FLPPI authorized the latter to sell to Manlapaz, which
eventually came to fruition through the second contract.
Thus, after the execution of the Memorandum of Agreement, there is already a

presumption that HGC was aware of the previous transactions made by VELI, and especially
FLPPI. Withal, there is no basis to declare that the second contract contravened the
Memorandum of Agreement and the third contract since the second contract was executed
by FLPPI and Manlapaz even before the said memorandum and the third contract came into
the picture.
According to Article 1311 of the Civil Code: 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. x
x x HGC cannot expect Manlapaz to meddle in its dealings with VELI and FLPPI as she has no
business doing so, and, as she alleged, she was not made aware of these developments in the
first place. Notably, Manlapaz remitted all her installment payments to FLPPI and eventually
paid the purchase price for the disputed property in full. This is another indication that she
did not have knowledge of the subsequent transactions involving FLPPI, VELI and HGC, as
she solely transacted with FLPPI.
Indeed, "in a long line of cases, the Court has defined a purchaser in good faith or
innocent purchaser for value as one who buys property and pays a full and fair price for it at
the time of the purchase or before any notice of some other person's claim on or interest in
it."
Since Manlapaz already fully paid the purchase price, she is entitled to the issuance of
the deed of absolute sale and the transfer certificate of title in her favor, even if the disputed
property has already been transferred to HGC's name due to FLPPI's default in the third
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Case Digests
contract. By virtue of the Memorandum of Agreement and the third contract, HGC not only
acquired the rights to the assets, but also the obligations attached thereto. Since Manlapaz
paid the full price, FLPPI, as the seller when the second contract was executed, should issue
the title in her favor.
However, given that the assets were already transferred to HGC, it is now HGC's
obligation to turn over the disputed property to Manlapaz and then issue the corresponding
deed of absolute sale and certificate of title in her name. One of the purposes of P.D. No. 957
is to discourage and prevent unscrupulous owners, developers, agents and sellers from
reneging on their obligations and representations to the detriment of innocent purchasers.
Nevertheless, HGC is not without recourse. In order to prevent unjust enrichment and
to abide by the intent of the Memorandum of Agreement and the third contract, FLPPI should
turn over Manlapaz's full payment to HGC , with legal interest in accordance with Nacar v.
Gallery Frames.
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Heirs of Marquez v. Heirs of Hernandez

G.R. Nos. 236826. March 23, 2022, Second Division (Hernando, J.)
DOCTRINE
The contract of sale was consummated even before Epifania made full payment of the
purchase price, and that Herminio transferred ownership over the said property when he
allowed Epifania and respondents to continue their occupation thereon consequent to the
execution of the agreement.
FACTS
The instant case stemmed from a complaint for specific performance with damages
filed by herein respondents Heirs of Epifania M. Hernandez; namely, Lourdes Hernandez-
Tiongson, Hernando H. Hernandez, Gliceria Hernandez-De Dios, Remedios Hernandez-
Castro, Dionisia Hernandez-Panopio, Aurora Hernandez-Pascual, and Oscar
M. Hernandez (collectively, respondents), on November 21, 2000 against
Herminio Marquez (Herminio). In their amended complaint respondents impleaded herein
petitioner Marquez.
Respondents are the children and legal heirs of Epifania Hernandez (Epifania). Since
1955, respondents and Epifania have been occupying a parcel of land located in Matungao,
Bulacan with an area of 200 square meters (subject property). The subject property forms
part of a 1,417-square meter property previously owned by the spouses Anastacio and
Lourdes Sakay (spouses Sakay), and spouses Godofredo and Florsita Cruz (spouses Cruz).
Epifania and respondents had built their house on the subject property with the consent and
tolerance of its previous owners.
In 1967, the spouses Sakay and the spouses Cruz sold the 1,417-square meter
property to Herminio.
In 1985, Herminio sold to Epifania the 200-square meter portion of the land or which
her house was built for P400.00 per square meter. In view of this sale agreement, Epifania
supposedly undertook to pay Herminio the total price of the subject property within the year
of its purchase, or sometime before the end of 1985. In the event that Epifania failed to
comply with the terms, the sale agreement would be considered or treated as a lease
contract, and the amounts paid by Epifania would be treated as rentals or advances to
Herminio under a continuing lease of the subject property.
Epifania made an initial payment to Herminio in the amount of P2,000.00 as

evidenced by a provisional receipt.
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Epifania then made payment by way of installment to Herminio by depositing certain

amounts of money in a joint account between them with the Rural Bank of Del Pilar, Inc.
Epifania also paid Herminio through various Metrobank Checks all of which were in the
amounts of P500.00 each. According to respondents, Epifania was able to pay in full the
agreed purchase for the subject property before her death on July 28, 1995.
Sometime in March 2000, respondents executed an Extrajudicial Settlement of the

Heirs of Epifania Hernandez which stated, in part, that the proceeds of the joint savings
account of their mother and Herminio with the Rural Bank of Del Pilar, Inc. shall be
considered as full payment for the subject property. Notably, Herminio signified his
conformity to the above-quoted provision in the said extrajudicial settlement between
respondents by affixing his signature thereon.
Subsequently, the Rural Bank of Del Pilar, Inc. ceased operations. After processing the
deposit insurance claim with the Philippine Deposit Insurance Corporation (PDIC), a check
in the amount of P61,429.87 was released by PDIC, which was received by Herminio on June
16, 2000.
Meanwhile, on December 15, 1999and July 17, 2000, respondents received

from Marquez demand letters to vacate the premises of the subject property. It appears that
on August 4, 1994, Marquez and Herminio executed an Extrajudicial Settlement of Estate
with Waiver of Rights whereby Herminio waived all his rights, interest and participation
over the 1,417-square meter property in favor of Marquez.
Despite respondents' demands, Herminio allegedly refused to execute a deed of

absolute sale over the subject property in favor of Epifania. Thus, respondents' complaint for
specific performance against Herminio.
Marquez, being the registered owner of the 1,417-square meter property, which is
covered by Transfer Certificate of Title No. (TCT) T-81516, respondents filed an amended
complaint impleading Marquez as a defendant. In the said amended complaint, respondents
prayed that judgment be rendered directing Herminio and Marquez to cause the execution
of a deed of absolute sale for the subject property in favor of respondents and that title over
the subject property be transferred to their names.
In his answer, Herminio argued that when Epifania reneged on her obligation
complete payment of the purchase price in 1985, their initial agreement became one of lease,
and not a contract of sale. He also averred that he is not the real party-in-interest as the title
over the 1,417-square meter property was already transferred to Marquez as early as 1996.
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Marquez for her part, alleged in her answer that Epifania did not make any
subsequent payments after her initial payment of P2,000.00 to Herminio. Moreover, all
amounts accepted by Herminio from Epifania are considered as rental payments for the use
and occupancy of the subject property.
Meanwhile, Herminio died and was substituted by his heir, herein petitioner.
ISSUES
Whether or not there was a valid contract of sale between Herminio and Epifania.
RULING
YES. There exists a perfected contract of sale between Epifanio and Herminio based
on the following pieces of evidence:
First, the October 23, 1985 provisional receipt signed by Herminio wherein he stated
that he acknowledged receipt from Epifania Hernandez the amount of P2,000.00 as initial
payment for the subject property; second, the checks issued to Herminio as partial payments
for to subject property; third, the acknowledgment receipt dated July 16, 2000 from the PDIC
stating that Herminio received from the PDIC a Landbank of the Philippines (LBP) Check No.
97969 in the amount of P61,429.87 as payment of insured deposit from his Rural Bank of
Del Pilar, Inc. joint savings account with Epifania; and fourth, the Extra-Judicial Settlement of
the Heirs of Epifania stating that the proceeds of the joint savings account served as full
payment from Epifania of the subject property, which was conformed to and signed by
Herminio.
Notably, respondents have been consistent in raising the aforementioned factual

evidence before the RTC and the CA. They also maintained the theory that Herminio sold the
subject property to Epifania, and that their mother paid the purchase price in full before her
death in 1995. In fact, there is evidence to prove the existence of the sale agreement between
Herminio and Epifania by virtue of the Extra-Judicial Settlement of the Heirs of
Epifania Hernandez, which, as stated above, was signed by and conformed to by Herminio.
Marquez, on the other hand, failed to question the document's authenticity, including
the contents thereof and due execution. The Court is thus inclined to, as it does, give credence
to respondents' assertion that a sale agreement was entered into by Herminio and Epifania
involving the subject property.
Taking all the pieces of evidence together, there is no doubt that both Herminio and
Epifania intended to, and did in fact, enter into a contract of sale of the subject property.
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The contract of sale was consummated even before Epifania made full payment of the
purchase price, and that Herminio transferred ownership over the said property when he
allowed Epifania and respondents to continue their occupation thereon consequent to the
execution of the agreement.
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Heirs of Magsaysay v. Spouses Perez

G.R. No. 225426. June 28, 2021, Third Division (Hernando, J.)
DOCTRINE
As a general rule, the quantum of proof in civil cases is preponderance of evidence, which
means that the evidence adduced by one side is, as a whole, superior to or has greater weight
than that of the other. It means evidence which is more convincing to the court as worthy of
belief than that which is offered in opposition thereto. Even if petitioners were able to present
more evidence than respondents, it does not necessarily mean that they have preponderant
evidence. What is important is the relative weight or probative value of the evidence on record.
In this case, while it may be true that petitioners have presented a greater number of
testimonial and documentary evidence, such evidence was not enough to discharge petitioners'
burden of proof.
FACTS
This case originated from a complaint for reconveyance of lots covered by 15 separate
Torrens titles filed by petitioners Heirs of Magsaysay with the RTC. These titles were in the
names of respondents Sps. Zaldy and Annaliza Perez and others. The respondents' respective
titles, which collectively cover a parcel of land located in San Agustin, Castillejos,
Zambales. The said titles were issued pursuant to free patents which were obtained by
respondents after administrative proceedings with the DENR covering Cadastral Lot No.
1377.
In their complaint, petitioners alleged that their predecessor-in-interest, the late

Jesus was in lawful possession in the concept of an owner of a parcel of land identified as
Cadastral Lot No. 1177. In 1960, this parcel of land was first declared for taxation purposes
in the name of Jesus under Tax Declaration (TD) No. 27254.
After Jesus died, petitioners, as heirs, retained possession of the said parcel of land,
allegedly introducing various improvements such as fruit trees, but were eventually
destroyed when Mt. Pinatubo erupted in 1992. They also declared the same property for tax
purposes in the name of Jesus in 1969, 1974, and 1980, although the said tax declarations
did not contain a specific cadastral lot number.
Jesus and petitioners alleged to be unaware of any claims by other parties on the
property, and hence, they instituted land registration proceedings with the then Court of
First Instance but their petition was withdrawn/dismissed because the area was mistakenly
described as Lot No. 1377 of the Castillejos Cadastre. The area bears the correct
identification as Lot No. 1177.
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Allegedly, after a tax mapping operation in 1984, the property was identified as
Cadastral Lot No. 1377. These changes in the description were reflected in petitioners' tax
declarations in 1984, 1985, 1994, and 2003.
Sometime in 2003, petitioners filed a complaint for forcible entry against respondents
on the ground that the latter, by means of stealth, entered a portion of the subject land and
planted mango trees. The MCTC and the RTC that handled the said forcible entry case
ordered respondents to vacate the subject property. Accordingly, respondents Sps. Eduardo
and Gilda Rosca vacated said portion of land.
Thereafter, said respondents applied for the administrative titling of Cadastral Lot
No. 1377, an orchard land. Torrens titles were issued to them as well as to the other
respondents. Thus, petitioners instituted the instant case, alleging that the Torrens titles
described above are void as respondents purportedly falsified and committed fraud in their
respective applications of the issuance of the patent as they have never been in actual and
physical possession of the subject land.
In their Answer, respondents Sps. Eduardo and Gilda Rosca and their children,
Kristen Joy Rosca, Mark Jason Rosca, and the Sps. Bulan denied petitioners' allegations
against them and raised the affirmative defense that petitioners have no cause of action as
the subject matter was already adjudicated in administrative proceedings wherein they were
both parties. The other respondents adopted this Answer, except the counterclaim
incorporated therein.
Attached to the Answer is an Order issued by the Office of the Regional Executive
Director of the Region III DENR, where it was found that Jesus, who was later on represented
by petitioners, caused the issuance of an Advanced Plan-03-002799 for Cadastral Lot No.
1377. He supposedly submitted TD Nos. 3303 and 3720, both of which do not bear any lot
number and described the said lot to have a land area of 80 hectares or 800,000 sq. m.
Upon verification from the Land Registration Authority, it was also found that
Jessmag, Inc. represented by its President, Mario P. Magsaysay, applied for Original
Registration of Title in Land Registration Case No. N-195-O, LRC Record No. N-56948, and
that Advanced Plan-03-002799 accompanied the said application, among other documents.
After considering the aforementioned facts, among others, including an actual ocular
inspection conducted during the course of investigation, the Region III DENR concluded that
respondents have preferential right over the subject land and thus, ordered the cancellation
of Advanced Plan-03-002799 and allowed respondent Gilda J. Rosca to cause a survey of
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Cadastral Lot No. 1377, Cad. 322-D, Castillejos Cadastre. This Order by the Region III DENR
was affirmed by both the DENR Secretary and the Office of the President.
ISSUES
(1) Whether or not petitioners were able to prove that the property covered by the tax
declarations of Jesus is the same property covered by the titles issued in favor of
respondents;
(2) Whether or not petitioners are not entitled to reconveyance.
RULING
1. NO. As a general rule, the quantum of proof in civil cases is preponderance of

evidence, which means that the evidence adduced by one side is, as a whole, superior to or
has greater weight than that of the other. It means evidence which is more convincing to the
court as worthy of belief than that which is offered in opposition thereto. Even if petitioners
were able to present more evidence than respondents, it does not necessarily mean that they
have preponderant evidence. What is important is the relative weight or probative value of
the evidence on record. In this case, while it may be true that petitioners have presented a
greater number of testimonial and documentary evidence, such evidence was not enough to
discharge petitioners' burden of proof.
Firstly, it must be noted that while petitioners' main piece of evidence, a mere
photocopy of TD No. 27254, might show that Jesus did declare a piece of land under his name
for tax purposes as early as 1960, the same does not help in proving that the land petitioners
are claiming is identical to the land titled to respondents. In fact, instead of bolstering
petitioners' argument, the photocopy of TD No. 27254 weakened the same, as the said TD
would clearly show that it covers a totally different parcel of land, with a different location,
for a different use, and with different boundaries from the parcel of land covered by
respondents' Torrens titles.
Other major pieces of evidence presented by petitioners were the 2 Summary Reports
of the Office of the Provincial Assessor: one dated June 27, 2003, and the other undated.
While in a vacuum, these two pieces of evidence may seem enough proof that the land
claimed by petitioners is identical to the one titled to respondents, we must consider the
probative value of these with the other evidence on record, especially since the summary
reports themselves merely contain conclusions and are, as the name implies, just
summaries.
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First, even assuming that the tax declarations of petitioners were already corrected
from 1984 onwards, it can be clearly seen that the technical description of the same still did
not match the technical description of the respondents' titled lands based on TD No. 008-
1201A. To add to the discrepancies in petitioners' evidence, it must be observed that TD No.
27254 contained a note that states: "The property covered by this tax declaration is not a
portion of public domain as per 1st indorsement dated January 27, 1960 of the Municipal
Treasurer Castillejos, Zambales." This patently contradicts the statement of the Municipal
Assessor in the undated Summary Report that the subject property is a public land.
Clearly, the other pieces of evidence presented by petitioners are inconsistent with
the conclusions of the undated summary report; no evidence presented by petitioners would
prove that the land they are seeking to recover is identical with respondents' titled lands.
Such inconsistent evidence could not outweigh respondents' Torrens titles, which is imbued
with the presumption of regularity, and the decision of the DENR, also imbued with the
presumption of regularity, that found petitioners to have no claim over Cadastral Lot No.
1377 and that it is respondents who have a preferential right over the said lot. Not to mention
that TD No. 008-1201A and the Deeds of Waiver in favor of respondents all consistently
point to the same land that was eventually registered under respondents' names.
2. NO. The person who claims a better right of ownership to the property sought to
be recovered must prove two things: first, the identity of the land claimed, and second, his
title thereto.
As applied in this case, petitioners utterly failed to prove the identity of the land they
are claiming (as extensively discussed earlier) and also their title thereto. In fact, the RTC,
despite ruling in favor of petitioners by declaring respondents' title to be void, appeared to
be unconvinced of petitioners' claim of ownership when it ruled that the parcel of land
covered by respondents' titles be reverted to public land.
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HEIRS OF LEONARDA LATOJA vs. HEIRS OF GAVINO LATOJA

G.R. No. 195500. March 17, 2021, Third Division, Hernando,J.:
DOCTRINE:
A certificate of title registered under the Torrens System serves as proof of an

incontrovertible title over the property in favor of the individual whose name appears on the
title. With the emergence of the Torrens System, the integrity and conclusiveness of a certificate
of title may be guaranteed and preserved. However, this system frowns upon those who
fraudulently secure a certificate of title to the prejudice of the real owner of the land. Hence,
usurpers who intend to enrich themselves cannot hide under the mantle of the Torrens
System which may only be cancelled, altered or modified through a direct attack where the
objective of the action is to annul or set aside the judgment or enjoin its enforcement.
FACTS:
This petition originates from a lot located in Villareal, Samar. In 1903, the spouses
Tomas Dalaruya and Leonarda Latoja allegedly possessed, resided, and cultivated the said
lot. In 1945, Leonarda declared said lot for taxation purposes. When the spouses died, their
five children, namely Anacleto, Dionesio, Balbina, Antonia and Sofronia inherited the lot. In
1960, Balbina sold her share to Antonia; Anacleto and Sofronia likewise sold their shares to
Antonia a month apart in 1967.
On the other hand, Friolan, a relative and representative of the Heirs of Gavino,
purportedly occupied and administered the said lot when his aunt died. He applied for a free
patent over said lot through the assistance of Elmer Talbo, the Land Inspector of the CENRO.
When Friolan approached Elmer in the field, the latter readily received and accepted the free
patent application, absent a personal inspection of the lot as he was already leaving for
Basey, Samar. On the succeeding day, Elmer personally posted the Notice of Application in
Villareal, processed the application in the office, and conducted a Confirmatory Report. By
virtue of the award of Patente, a Katibayan ng Orihinal na Titulo was subsequently secured
and registered in the name of the Heirs of Gavino, as represented by Friolan.
Distressed upon knowing of this development, the Heirs of Leonarda instituted before
the RTC a Complaint for Declaration of Nullity of Title, Reconveyance and
Damages contending that they inherited Lot 5366 from their predecessors-in-interest who
are the real owners and possessors of the lot since time immemorial. They asserted that the
Heirs of Gavino and Friolan obtained the free patent and the consequent OCT through fraud
and false representation that they were owners and possessors of Lot 5366. They also
avowed that the posting of notice of the free patent application as required under the Public
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Land Act was not complied with. Due to this non-compliance, the Heirs of Leonarda failed to
take action against the free patent application.
In their Answer with Counterclaim, the Heirs of Gavino interposed a general denial of
all allegations set forth in the complaint, and raised the following special and affirmative
defenses: that the trial court failed to acquire jurisdiction over the person of indispensable
heirs; that the Heirs of Leonarda have no legal capacity to sue or have a cause of action; that
there was an existing action involving the same parties and for the same cause; that the
claims of the Heirs of Leonarda have been waived or extinguished; and that a condition sine
qua non before the filing of the complaint was not complied with.
RTC: found that OCT 20783 had already become indefeasible when the Complaint
for Declaration of Nullity of Title, Reconveyance and Damages was filed. Nonetheless, it ruled
that while an action for reconveyance acknowledges the incontrovertible nature of a decree
of registration, the very essence of reconveyance is to transfer the property that was
erroneously registered in another's name back to the rightful owner or to the one with a
better right. Moreover, it held that Lot 5366 has remained in the possession of Leonarda and
her heirs to the exclusion of other persons as established by Petra's testimony, the Land Data
Chart which showcased that Lot 5366 was surveyed for Leonarda, and Antonia's continuous
payments of real property tax of the land in the name of her mother from 1945 to 1999.
CA: found the appeal of the Heirs of Gavino meritorious. It held that the trial court
erred when it disregarded the indefeasibility of title. Based on the appellate court's findings,
the assertion of fraud was unsubstantiated in evidence. It stressed that the law contemplates
extrinsic fraud as a ground to reopen a decree of registration. However, there
was no showing that the Heirs of Gavino employed actual and extrinsic fraud in applying for
the free patent and the resulting certificate of title.
ISSUE:
Whether the title arising from the award of free patent has become indefeasible so as
to foreclose the action for reconveyance?
Whether the Heirs of Gavino employed fraud paving the way for the reconveyance in
favor of the Heirs of Leonarda?
RULING:
The petition is meritorious. Despite the title's indefeasibility, an action

for reconveyance may still prosper. The principle of indefeasibility of a Torrens title has been
carved in case law edicts. This means that a certificate of title registered under the Torrens
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System serves as proof of an incontrovertible title over the property in favor of the individual
whose name appears on the title. With the emergence of the Torrens System, the integrity
and conclusiveness of a certificate of title may be guaranteed and preserved. However, this
system frowns upon those who fraudulently secure a certificate of title to the prejudice of
the real owner of the land. Hence, usurpers who intend to enrich themselves cannot hide
under the mantle of the Torrens System which may only be cancelled, altered or modified
through a direct attack where the objective of the action is to annul or set aside the judgment
or enjoin its enforcement.
An action for reconveyance based on fraud is a direct attack on a Torrens title. It

follows that despite the finality accorded to a Torrens title, reconveyance may prosper as an
equitable remedy given to the rightful owner of a land that was erroneously registered in the
name of another. This action recognizes the validity of the registration and its
incontrovertible nature; it does not question the indefeasibility of the Torrens title.
An allegation of fraud in an action for reconveyance must have two requisites. First,
that the individual seeking reconveyance must prove entitlement or ownership over the
property in question, and second, that fraud must be established by clear and convincing
evidence, not just based on mere surmises or conjectures.
The Court noted that OCT 20783 had already attained finality when the complaint
was lodged against the Heirs of Gavino. However, the indefeasibility of OCT 20783 as a
Torrens title does not bar an action for reconveyance involving land covered thereof. In fact,
an action for reconveyance is imprescriptible when the plaintiff, Heirs of Leonarda in this
case, is in possession of the land subject of reconveyance, and provided that the land in issue
has not yet passed to an innocent purchaser for value.
Despite the lapse of one year from the issuance of OCT 20783, the action for
reconveyance is still an appropriate and available remedy for the Leonarda heirs. Here, they
have also sufficiently complied with the two requisites for an action for reconveyance based
on fraud. Anent the first requisite, the Heirs of Leonarda's evidence on record established
that Leonarda was the lawful owner and possessor of Lot 5366 since time immemorial. Upon
her demise, said lot was inherited by her five children including Antonia who was adjudged
to be the rightful possessor of the 4/5 portion of Lot 5366 on the strength of a decision
rendered by the MCTC.
In relation to the second requisite, fraud had been sufficiently proven by the heirs of
Leonarda. While the findings of the trial court and the appellate court with regard to the
presence or absence of fraud are contrary to each other, the Court settled that the allegation
of fraud is real and evident on the records. Jurisprudence articulates what constitutes fraud.
It is characterized by an intentional omission of facts as required by law to be truthfully and
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correctly stated in the application for free patent or a statement of claim contrary to the
truth. It is hornbook doctrine that the party alleging fraud has the burden of proof, and has
to meet the quantum of proof which is clear and convincing evidence that is less than proof
beyond reasonable doubt but greater than preponderance of evidence. Furthermore, Section
91 of the Public Land Act is specific to the effect that omission of facts or false statements on
the material facts set forth in the application for patent shall ipso facto produce the
cancellation of the concession, title, or permit. Perusing the records, it is once apparent that
Friolan made false statements in his application for free patent notwithstanding his
knowledge and awareness that the Heirs of Leonarda were the actual occupants of Lot 5366
at the time when he applied for free patent.
The contradictory and inconsistent statements in his testimony with the claim in the
application, declaration in the Land Data Record Sheet and Affidavit that he is the actual
occupant and possessor of Lot 5366 bolster his penchant for twisting the truth constituting
fraud in order to secure a free patent that eventually led to the issuance of OCT 20783. To
repeat, Friolan was fully aware that the Heirs of Leonarda were the actual occupants of Lot
5366; but he nonetheless applied for a free patent over said lot.
The Court also affirmed the trial court's findings of the attendance of badges of fraud
in the issuance of OCT 20783 and in the application for free patent. First, Elmer testified that
he personally posted a Notice of Application in Villareal the next day after the application for
free patent was received. The allegation of compliance with the posting of a notice of
application was controverted by a Certification of Teofilo Obregon, Barangay Captain of
Barangay Pang-pang, Villareal, Samar. Said certification attests that there was no posting of
Friolan's free patent application for Lot 5366 in the barangay premises for the month of
March and April 1999. Even granting arguendo that a notice was posted, such notice
indicated that any adverse claim should be filed on or before March 23, 1999. However, OCT
20783 was already issued in the name of the Heirs of Gavino as early as March 12, 1999. The
expeditious processing of said OCT casts doubt on the proper compliance with the
requirements as provided by law.
In light of these documents and testimonies, it is evident that Patente Blg. 086021-99-
118 was secured through misrepresentation and fraud, and the consequent issuance of OCT
20783 was marked with undue haste in the name of the Heirs of Gavino as represented by
Friolan. Tersely, the two requisites of an action for reconveyance were complied with, and
the Heirs of Leonarda discharged their burden of proving through clear and convincing
evidence that misrepresentation and fraud attended the application and processing of the
free patent in favor of the Heirs of Gavino. Ergo, the appellate court's reversal of the trial
court's decision was unwarranted.
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Private individuals, aside from the Office of the Solicitor General, may seek
direct reconveyance of a land subject of a free patent where the latter was
fraudulently obtained. The Heirs of Gavino invoke Section 101 of the Public Land Act in
their attempt to finally defeat the action for reconveyance. Said provision states that all
actions for reversion to the government of lands of public domain shall be instituted by the
Solicitor General or an officer in his stead. On the other hand, a cause of action for
declaration of nullity of free patent and certificate of title would require allegations of
the plaintiff's ownership of the contested lot prior to the issuance of such free patent
and certificate of title as well as the defendant's fraud or mistake; as the case may be, in
successfully obtaining these documents of title over the parcel of land claimed by plaintiff. In
such a case, the nullity arises strictly not from the fraud or deceit but from the fact that the
land is beyond the jurisdiction of the Bureau of Lands to bestow and whatever patent or
certificate of title obtained therefor is consequently void ab initio. The real party in interest
is not the State but the plaintiff who alleges a pre-existing right of ownership over the parcel
of land in question even before the grant of title to the defendant. All told, a land titled by
virtue of a fraudulent and defective free patent, disregarding the provisions of the Public
Land Act, may be reconveyed to the rightful owner by an action for reconveyance instituted
by the latter. Since the Heirs of Leonarda, as actual possessors of Lot 5366, satisfactorily
proved by clear and convincing evidence that there was misrepresentation and fraud to their
prejudice, the action for reconveyance was correctly adjudicated by the trial court in their
favor.
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THE HEIRS OF ANSELMA GODINES v. DEMAYMAY

G.R. No. 230573, June 28, 2021, Third Division, Hernando,J.:
DOCTRINE:
Article 1305: A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
Article 1356: Contracts shall be obligatory, in whatever form they may have been
entered into, provided all the essential requisites for their validity are present. However, when
the law requires that a contract be in some form in order that it may be valid or enforceable, or
that a contract be proved in a certain way, that requirement is absolute and indispensable. In
such cases, the right of the parties stated in the following article cannot be exercised.
FACTS:
Petitioners Marlon, Francisco, Roque, Rosa, and Alma, all surnamed Godines, claim to
be the forced heirs of Anselma Yuson Godines who died leaving a parcel of residential
lot However, respondent spouses Demaymay are in possession of the land in
question considering that during her lifetime, Anselma obtained a loan from Matilde and in
consideration thereof, the spouses Demaymay were allowed to use the land for a period of
15 years. However, this agreement was not reduced into writing. Sometime in August 1987,
petitioners went to the Office of the Provincial Assessor of Masbate to inquire about the
status of the lease contract between Anselma and the spouses Demaymay. Petitioners then
found out that the Tax Declaration in the name of Anselma was cancelled and the Tax
Declaration was issued under the name of Matilde Demaymay by virtue of a Deed of
Confirmation of Sale supposedly executed by petitioner Alma in 1970. Moreover, it was
found out after an actual survey that the area of 68 square meters indicated in Tax
Declaration was not the correct and true area of the land in question; the correct area thereof
was 332 square meters which appears in Tax Declaration in the name of Matilde. Given this,
petitioners filed a Complaint for Recovery of Ownership and Possession and Declaration of
the Deed of Confirmation as Null and Void with Damages against the spouses Demaymay
before the RTC.
Petitioners argued that it was impossible for Alma to execute the Deed of
Confirmation of Sale because she was in Cebu from 1969 to 1975, and that she was only 14
years old when the alleged Deed of Confirmation of Sale was executed as she was born in
1956. Petitioners also claimed that in obtaining the said Deed, the spouses Demaymay acted
in bad faith, fraudulently and illegally, prejudicial to the rights and interests of the petitioners
causing them to suffer mental torture, wounded feelings and social humiliation. On the other
hand, the spouses Demaymay in their Answer denied petitioners' allegations and argued that
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there was no cause of action; that such action, if any, had already prescribed. They further
claimed that they were the absolute owners and actual possessors of the subject land which
they acquired through sale. They also averred that Alma was estopped from questioning the
documents conveying the land in question, as she was the one who received the last
installment for the land and voluntarily executed the confirmation due to the untimely
demise of her parents.
ISSUE:
Whether the heirs of Anselma are bound by the oral contract of sale allegedly
executed in favor of the spouses Demaymay?
RULING:
YES. The Courts has long recognized the validity of oral contracts, including oral
contracts of sale. Article 1305 of the Civil Code provides the following definition of a
contract: A contract is a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service.
Pertinently, Article 1356 of the Civil Code provides: Contracts shall be obligatory, in
whatever form they may have been entered into, provided all the essential requisites for
their validity are present. However, when the law requires that a contract be in some form
in order that it may be valid or enforceable, or that a contract be proved in a certain way,
that requirement is absolute and indispensable. In such cases, the right of the parties stated
in the following article cannot be exercised. Indeed, contracts that have all the essential
requisites for their validity are obligatory regardless of the form they are entered into, except
when the law requires that a contract be in some form to be valid or enforceable. Article
1358 of the Civil Code provides that the following must appear in a public
instrument: 1. Acts and contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property; sales of real
property or of an interest therein are governed by articles 1403, No. 2, and 1405.
Article 1403 (2) of the Civil Code, otherwise known as the Statute of Frauds, requires
that covered transactions must be reduced into writing; otherwise, the same would be
unenforceable by action. In other words, a sale of real property must be evidenced by a
written document as an oral sale of immovable property is unenforceable. However, this
does not necessarily mean that oral contracts of sale of real property are void or
invalid. While the Statute of Frauds aims to safeguard the parties to a contract from fraud or
perjury, its non-observance does not adversely affect the intrinsic validity of their
agreement. The form prescribed by law is for evidentiary purposes, non-compliance of which
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does not make the contract void or voidable, but only renders the contract unenforceable by
any action.
The Statute of Frauds is inapplicable in the present case as the verbal sale between
Anselma and the spouses Demaymay had already been partially consummated when the
former received the initial payment from the latter. In fact, the said sale was already totally
executed upon receipt of the balance. Furthermore, from the time the verbal sale happened,
the spouses Demaymay were in possession of the property for more than the 15-year period
of their purported lease contract with Anselma. Such property was eventually tax declared
under Matilde's name after Alma had executed the Deed of Confirmation of Sale in 1970 upon
receipt of the full purchase price. Indeed, possession of the property and payment of real
property taxes may serve as indicators that an oral sale of a piece of land has been performed
or executed. Considering that the oral sale between Anselma and the spouses Demaymay is
valid (and is actually enforceable by virtue of the partial, if not total consummation of the
contract), petitioners, being the heirs of Anselma, are legally bound by the said oral sale.
Having already been validly sold and transferred to the spouses Demaymay, the subject piece
of land described in Tax Declaration No. 7194 no longer formed part of Anselma's estate that
petitioners could have inherited.
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HEIRS OF ELISEO BAGAYGAY v. HEIRS OF ANASTACIO PACIENTE

G.R. No. 212126. August 4, 2021, Second Division, HERNANDO,J.:
DOCTRINE:
Laches does not apply to void ab initio contracts. Laches cannot prevail over the law
that actions to assail a void contract are imprescriptible, being based on equity. 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.
FACTS:
Anastacio Paciente, Sr. was granted a homestead patent over a parcel of land with an
aggregate area of 7.9315 hectares situated in the Province of Cotabato. Accordingly, OCT was
issued in his name. Thereafter, 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
3 lots. On March 7, 1989, Anastacio died. Two years later, Eliseo likewise passed away. His
wife, petitioner Anecita P. Bagaygay and his children took possession of the subject land
upon his death.
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. Respondents alleged that sometime in 1956, Eliseo, taking
advantage of the financial distress of Anastacio, was able to obtain the latter's title and take
possession of his land; that despite repeated demands by Anastacio, Eliseo refused to return
the title and possession of the land; that Eliseo caused the cancellation of Anastacio's title
through a fictitious Deed of Sale; that Anastacio never sold the subject land; and that the said
Deed of Sale was likewise void as it was executed during the five (5)-year period of
prohibition under Section 118 of the Public Land Act.
Petitioners moved to dismiss the complaint on the grounds of failure to state a cause
of action, prescription, and laches but the same was unavailing. Petitioners thus filed their
Answer with compulsory counterclaim arguing that respondents have no cause of action
against them as the subject land was validly purchased by their father. Petitioners likewise
raised as defenses prescription and laches.
Since a copy of the Deed of Sale could no longer be found, respondents presented as
witness the Registrar of Deeds, Atty. Casabar, to identify in court the Primary Entry Book of
the Registry of Deeds of South Cotabato and prove that the Deed of Sale was executed within
the 5-year prohibitory period, Eliseo's title, which contains the annotation of the
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Certification issued by the Register of Deeds of South Cotabato stating that the original copy
of the OCT was lost from the files and that as per record of Deed of Sale was executed by
Anastacio in favor of Eliseo, was also presented as evidence by respondents.
Respondent Meregildo testified that his father, Anastacio, lent to Eliseo the subject
land; that Eliseo and his heirs were in possession of the subject property since 1956; that his
father sent demand letters asking Eliseo to return the land but the latter refused to vacate
the same; and when he went to the Register of Deeds to get a copy of his father's title that he
learned that it was already cancelled and that a new one was issued under the name of
Eliseo. Respondent Arturo corroborated the testimony of respondent Meregildo that Eliseo
and his heirs were in possession of the subject land since 1956 and further testified that the
subject land only served as guarantee for the loan obtained by his father from Eliseo.
Anastacia, who was 84 years old at the time she took the witness stand, testified that
sometime in June 1958, Anastacio and Eliseo asked her to accompany them to Judge Rendon
who was then a Notary Public, because Anastacio wanted to sell his land to Eliseo. She said
that Anastacio needed money for the wedding of his son, respondent Meregildo. However,
when they got there, Judge Rendon told them that the subject land could not be sold because
of the five-year prohibition under the Public Land Act, and thus, advised them to return in
November. On cross-examination, Anastacia maintained that the sale took place in 1958 but
when she was asked about her birthday, the birthdates of her children, and the year her
husband died, she said she could no longer remember them.
Julia, who was 60 years old at the time she testified, corroborate the testimony of her
Aunt Anastacia that the subject land was sold by her uncle Anastacio to her father in 1958.
According to her, she was present when her father and her uncle were conversing about the
sale of the land; that her uncle needed money because respondent Meregildo was getting
married in Iloilo; that she was 14 years old at that time the sale took place; and that since
then, they have been in possession of the land and have been religiously paying the real
property taxes over the same.
She further testified that they could no longer present the Deed of Sale because after
her father passed away, all his documents, which included the Deed of Sale, were destroyed
when a fire gutted their house on March 31, 1994. However, she said that before it was
destroyed by fire, she was able to read the Deed of Sale and that she was certain that it was
executed in 1958 and notarized by Judge Rendon. She likewise testified that when the instant
case was filed against them by respondents, she went to see Judge Rendon to ask for a copy
of the Deed of Sale. Unfortunately, he no longer had a copy. He, however, confirmed that the
Deed of Sale was executed in 1958, not in 1956, because he was admitted to the bar only in
1957. They later learned that he passed away.
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Petitioner Anecita, who was then 91 years old at the time her testimony was taken,
narrated that she and her husband purchased the subject land from her brother, Anastacio,
in November 1958 for the amount of P5,000, and that the purchase price was used by
Anastacio for the wedding of his son, respondent Meregildo. She also denied receiving any
demand letter from respondents. On cross-examination, petitioner Anecita admitted that she
could no longer remember the year her husband died, the year they got married, and even
her birthday.
Finally, to show that the marriage of respondent Meregildo was celebrated on June 8,
1958, petitioners offered as evidence the Marriage Contract of respondent Meregildo.
ISSUE:
Whether the principle of laches should apply to respondents considering that it took
them 44 years before they filed a case in Court and after all the original parties to the deed
of sale were all dead?
RULING:
Respondents are entitled to the possession of the land subject to the right of the
government to institute reversion proceedings. Having been executed within the five-
year prohibitory period, the Deed of Sale is void ab initio. And under prevailing
jurisprudence, the property should rightly be returned to respondents considering that the
government has not yet filed an action for reversion. As the Court has consistently ruled,
reversion under Section 101 of the Public Land Act is not automatic as the Office of the
Solicitor General must first file an action for reversion. Respondents must reimburse
petitioners the purchase price of the sale since the Deed of Sale is void ab initio. As to the
improvements made on the land and the interests on the purchase price, these are
compensated by the fruits petitioners had received from their long possession of the
homestead.
Laches does not apply to void ab initio contracts. Laches cannot prevail over the law
that actions to assail a void contract are imprescriptible, being based on equity. 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. The positive mandate of Art. 1410 of the New Civil Code conferring
imprescriptibility to actions for declaration of the inexistence of a contract should
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pre-empt and prevail over all abstract arguments based only on equity.
Certainly, laches cannot set up to resist the enforcement of an imprescriptible legal right, and
petitioners can validly vindicate their inheritance despite the lapse of time.
A sale of a parcel of land is in violation of the five-year prohibition on the alienation of land
acquired via free patent application is void and produces no legal effect. All told, the Court
finds no error on the part of the CA in reversing the RTC Decision and in declaring the Deed
of Sale void ab initio.
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GOLDWELL PROPERTIES TAGAYTAY, INC. v. METROPOLITAN BANK AND TRUST

COMPANY
G.R. No. 209837, May 12, 2021, Third Division, Hernando,J.:
DOCTRINE:
Article 2089 of the Civil Code states that: A pledge or mortgage is indivisible, even
though the debt may be divided among the successors in interest of the debtor or of the creditor.
Therefore, the debtor's heir who has paid a part of the debt cannot ask for the proportionate
extinguishment of the pledge or mortgage as long as the debt is not completely satisfied. Neither
can the creditor's heir who received his share of the debt return the pledge or cancel the
mortgage, to the prejudice of the other heirs who have not been paid.
FACTS:
Petitioner Goldwell Properties Tagaytay, Inc. obtained loans from respondent

Metrobank in 2001 covered by several promissory notes and secured by real estate
mortgages and a continuing surety agreement. Petitioner Nova Northstar Realty Corporation
also obtained loans from Metrobank under PN and secured by a real estate mortgage and
continuing surety agreement.
When Nova and Goldwell (debtor companies) experienced financial difficulties, both
requested Metrobank to modify their interest payment scheme from monthly to quarterly.
According to Metrobank, when the debtor companies made the request, a branch manager
of Metrobank immediately referred the matter to its executive committee. Roughly a month
and a half later, Metrobank's executive committee approved the request.
On the other hand, the petitioners, in a letter alleged that it took the bank four months
to reduce the approval in writing, which resulted in the accumulation of interest and in their
failure to pay. Hence, the debtor companies requested for the restructuring of their
outstanding loans.
The parties executed two Debt Settlement Agreements (DSAs) both dated August 15,
2003. One was between Metrobank and Nova as debtor-mortgagor, with spouses Hernandez
as sureties. The other involved Metrobank and Goldwell as borrower-mortgagor, Nova and
Nova Northstar Service Apartment Hotel Co., Inc. as third-party mortgagors, and the spouses
Hernandez as sureties. In Nova's DSA, Nova and the spouses Hernandez acknowledged that
as of July 31, 2003, they had a total outstanding obligation of P19,539,999.33 to Metrobank.
Similarly, in Goldwell's DSA, Goldwell and the spouses Hernandez acknowledged that
as of July 31, 2003, they had a total outstanding obligation of P55,477,836.22 to Metrobank,
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Pursuant to the DSAs, the debtor companies' total restructured balance. Thus,
Goldwell and Nova executed PNs both in favor of Metrobank. The figures represented the
principal, as well as the capitalized and recomputed outstanding interests plus the
corresponding VAT thereto. At this point, Metrobank confirmed in a letter addressed to an
officer of Pag-IBIG Fund that the petitioners had good credit standing and were valued
customers of the bank.
According to the debtor companies, they still paid their dues until August
2004. However, Metrobank clarified that they only paid the interest amortizations and/or
penalty charges. In addition, the bank presented commercial loans note/maintenance
history inquiry Logs to show that the petitioners' last amortization payments were made on
August 2, 2004.
The petitioners requested Metrobank to allow them to pay the equivalent loan value
of their collaterals as full payment of the loan. However, Metrobank sent separate demand
letters to Nova and Goldwell for the payment of their past due accounts. The petitioners also
asked for the release of some of their collaterals equivalent to their loan values upon
payment of P20 Million. They added that (assuming that their obligation amounted to P60
Million) the balance of P40 Million would be payable in five years with quarterly interest
payments only for the first year and payment of the principal to start at the end of the first
quarter of the second year. Thereafter, in a letter dated May 25, 2005, petitioners requested
the bank to comment on the proposed release of the collaterals and full payment of the loan.
Supposedly, during a meeting, the representatives of the parties have already agreed on the
value assigned to each collateral. However, such was without the concurrence of the bank's
management. Petitioners claimed that they needed the properties as collateral for their loan
with the International Exchange Bank (I-Bank). They also alleged that Metrobank did not
agree to their proposal to consider the amount of P40 Million as full payment of their
outstanding balance; instead, it made a counter-proposal for petitioners to pay
P48,000,000.00. Purportedly, petitioners were amenable to this figure but they still needed
to secure the bank's conformity.
In a letter addressed to Metrobank, Jose Hernandez, one of the sureties, asked for
confirmation regarding the release of some collaterals from mortgage that would be
equivalent to the properties' loan values. He likewise cited the proposition to pay P48 Million
as full settlement of the loan (computed from a supposed balance of P60 Million less P12
Million or a 20% discount).
In a letter, petitioners submitted a modified proposal for the payment of their loan.
They asked for the release of some collateral upon payment of P35 Million and undertook to
put up their Alabang property as additional collateral for their loans. They likewise
requested the bank to stop charging interests and penalties while negotiations were ongoing.
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As such, they committed to pay within 30 days or less if their request would be approved,
especially when their other approved loan guarantee from Pag-IBIG Fund and Land Bank of
the Philippines (funded by I-Bank) will expire by July 2005.
ISSUES
Whether Metrobank should be ordered to allow and make a partial release of the
mortgages over TCT Nos. 132278 and 143411?
Whether the penalty charges on both the past due interest and principal amount of
obligation imposed by Metrobank are excessive. iniquitous and unconscionable?
RULING:
1. The petition is partly meritorious. Partial release of the collaterals cannot be

allowed. Article 2089 of the Civil Code states that: A pledge or mortgage is indivisible, even
though the debt may be divided among the successors in interest of the debtor or of the
creditor. Therefore, the debtor's heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is not completely
satisfied. Neither can the creditor's heir who received his share of the debt return the pledge
or cancel the mortgage, to the prejudice of the other heirs who have not been paid.
From these provisions is excepted the case in which, there being several things given
in mortgage or pledge, each one of these guarantees only a determinate portion of the credit.
The debtor, in this case, shall have the right to the extinguishment of the pledge or mortgage
as the portion of the debt for which each thing is specially answerable is satisfied. Hence, it
is provided that the debtor who has paid a part of the debt cannot ask for the proportionate
extinguishment of the mortgage as long as the debt is not completely satisfied." Thus, the fact
that petitioners paid for the loan value of the Pasay properties is immaterial; the mortgage
would still be in effect since the loans have not been fully settled.
Although Metrobank allowed the release of some properties from mortgage in the
past, such would not bind the bank to grant the same concession every single time,
particularly when it is evident that the petitioners were having difficulties settling their total
obligation. To do so would place the bank in a disadvantageous position because it would
have less collaterals to cover for the total accountability of the petitioners. More so when the
petitioners suddenly refused to include the Alabang properties as additional collateral to
cover the loans.
The parties entered into binding contracts. The principle of mutuality of contracts,
found in Article 1308 of the Civil Code, states that a "contract must bind both contracting
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parties; its validity or compliance cannot be left to the will of one of them." By inference, the
petitioners are bound by the valid terms and conditions of the DSAs as their representatives
willingly executed the said contracts. In accordance with this principle, when the execution
of the contract's terms is skewed in favor of one party, the contract must be rendered void.
This relates to the petitioners' claim that the DSAs were contracts of adhesion. However, the
Court does not completely agree. Accordingly, a contract duly executed is the law between
the parties, and they are obliged to comply fully and not selectively with its terms. A contract
of adhesion is no exception. Since the DSAs referred to the restructuring of the petitioners'
loans, such can hardly be considered as contracts of adhesion. The fact remains that the
petitioners still had unpaid loan obligations, and that they sought the restructuring to
eventually settle their admitted accountabilities. In the DSAs, the amount of their liabilities
was lowered in consideration of their financial difficulties. Since the provisions of the DSAs
are unambiguous, at least regarding the petitioners' obligation to pay the principal amount
of the loans and the interests applicable prior to the execution of the DSAs, as well as the
partial waiver and reduction parts of the prior interests, these are controlling and should be
enforced.
2. The monetary interest rate, penalty interest rate, and imposition of VAT are
iniquitous. While the principle of mutuality of contracts should prevail, Metrobank's
valuation and imposition of the interest rates in the DSAs should still be assessed.
There are two types of interest, namely, monetary interest and

compensatory/penalty interest. "Interest as a compensation fixed by the parties for the use
or forbearance of money is referred to as monetary interest, while interest that may be
imposed by law or by courts as penalty for damages is referred to as compensatory
interest."
As regards monetary interest, although the parties are "free to stipulate their
preferred rate," the courts are "allowed to equitably temper interest rates that are found to
be excessive, iniquitous, unconscionable, and/or exorbitant." Thus, stipulated interest rates
of "3% per month or higher is considered as excessive or unconscionable." Alternatively, as
per settled jurisprudence, a 24% per annum (or 2% per month) rate is not unconscionable.
Taking these into account, the interest rate of 14.25% per annum (or 1.1875% per month)
upon the principal obligation in the case at bench should is considered as a fair rate.
In this case, it is understood that the monetary interest rate would be repriced
quarterly (after the first year) based on the prevailing market rate. It is important to note
that the provision did not state which market-based reference would be used by the parties
for the repricing. The provision also did not indicate that the petitioners would be given
a written notice as regards the application of the repriced interest rate and
the opportunity to consent to the repricing, notwithstanding its dependency on the
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prevailing market rate at the time. As earlier mentioned, even if the interest rates would be
market-based, the reference rate should still be "stated in writing and must be agreed
upon by the parties." Based on the DSAs, Metrobank had the authority to unilaterally apply
the "prevailing market rate" without specifying the market-based reference and securing
the written assent of the petitioners, which is in violation of the principle of mutuality of
contracts. For this reason, the repriced monetary interest of 14.25% per annum should be
declared as void. Indeed, the imposition of the monetary interest rate should not be left
solely to the will and control of Metrobank absent the petitioners' express and written
agreement.
With regard to the penal/compensatory interest, it is characterized as "an

undertaking attached to a principal obligation" and has two purposes: "firstly, to provide for
liquidated damages; and, secondly, to strengthen the coercive force of the obligation by the
threat of greater responsibility in the event of breach of obligation." Moreover, "a penal
clause is a substitute indemnity for damages and the payment of interests in case of
noncompliance, unless there is a stipulation to the contrary," pursuant to Article 1226 of
the Civil Code. If the parties stipulate that there is a penalty interest separate from monetary
interest, these two kinds of interest should be treated different and distinct from each other
and may be demanded separately. A penalty interest is sanctioned by Article 2229 of
the Civil Code which states: If the obligation consists in the payment of a sum of money, and
the debtor incurs in delay, the indemnity for damages, there being no stipulation to the
contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation,
the legal interest, which is six per cent per annum. There is no dispute that the parties
specified that upon default, the petitioners would have to pay compensatory interest.
Nonetheless, considering the nullification of the repriced monetary interest and given that
the Court is allowed to temper unconscionable interest rates, the penalty interest rate of 18%
per annum stipulated in the DSAs should likewise be reduced to 6% in line with recent
jurisprudence.
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PATRICIO G. GEMINA v. HEIRS OF GERARDO V. ESPEJO, JR.

DOCTRINE
The identity of the property and the title of the claimant must be ascertained in an
action to recover possession of real property pursuant to Article 434 of the Civil Code.
FACTS
Gemina claims that he purchased, owned, occupied with his family, and possessed the
subject property openly, continuously, peacefully, and in the concept of an owner since 1978.
On the other hand, the heirs of Espejo averred that they are co-owners of the subject
property which is covered by a TCT and Tax Declaration. On December 15, 2004, the Espejo
heirs, through their representative, sent Gemina a demand letter asserting their ownership
over the subject property, and demanding him and his family to vacate said property because
they have been unlawfully occupying the lot where the latter's house was built. Gemina
refused to heed the demand to vacate the property. The Espejos filed an action for recovery
of possession and prayed for the trial court to order Gemina and all persons claiming in his
behalf to vacate and surrender possession of the subject property, and to pay reasonable
compensation from the time that their possession have become unlawful, among others.
On the scheduled date of pre-trial, Gemina was present but his counsel failed to
attend. As a result, the trial court reset the pre-trial for the last time and directed him to
inform his counsel of the schedule of hearing. Gemina's counsel still failed to attend the said
pre-trial schedule. However, the trial court allowed the heirs of Espejo to present their
evidence ex parte. Soon thereafter, Gemina's counsel filed a Withdrawal of Counsel with
Attached Motion for Reconsideration citing health reasons as justification for his withdrawal,
and invoking the trial court's compassion so as not to prejudice Gemina's cause due to the
heirs of Espejo's ex parte presentation of evidence. The trial court granted the withdrawal of
Gemina's counsel and directed Gemina to secure the services of a new counsel. However, the
trial court regarded the motion for reconsideration as a mere scrap of paper since it lacked
the requisite notice of hearing. Meantime, the heirs of Espejo's ex parte presentation of
evidence proceeded as scheduled.
The trial court deemed the following documents presented by the Espejo heirs as
sufficient proof as to the identity of the property: (a) the Judicial Affidavit of Ma. Teresa R.
Espejo; (b) the testimony of Teresa; (c) a Deed of Absolute Sale between Mariano J. Garcia
and Dr. Gerardo D. Espejo; (d) Transfer of Rights between Dr. Gerardo D. Espejo, Sr. and
Gerardo V. Espejo, Jr.; and (e) Tax declaration showing that the owner of the subject property
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is Gerardo. It concluded that there is no discrepancy as to the boundaries and description of

the subject property among these documents. The CA affirmed the ruling of the trial court.
ISSUE
Whether the CA gravely erred in affirming the ruling against the petitioner despite
respondents' failure to prove the identity of the land.
RULING
YES. Article 434 of the Civil Code is controlling in this case. It provides that "in an
action to recover, the property must be identified, and the plaintiff must rely on the strength
of his title and not on the weakness of the defendant's claim." It is hornbook doctrine that
the entitlement to the possession of real property belongs to its registered owner. However,
the registered owner must seek proper judicial remedy and comply with the requisites of
the chosen action in order to recover possession of a real property from the occupant who
has actual and physical possession thereof. Furthermore, it must be emphasized that the
plaintiff must not bank on the weakness of the defendant's title, hence, must establish his
title and the identity of the property because of the possibility that neither the plaintiff nor
the defendant is entitled or even more the true owner of the property in dispute.
It appears on record that the identity of the subject property was ascertained by the
trial court and the appellate court based on the technical description stated in TCT 93809
and the Judicial Affidavit of Ma. Teresa R. Espejo which merely identified TCT 93809 as one
registered in the names of Gerardo and Nenafe. The technical description that provides for
the metes and bounds of a parcel of land cannot stand alone, much more be considered as a
foolproof evidence exactly pointing to the subject property. The identity of the disputed land
sought to be recovered or of the subject property in this case may be established through a
survey plan of the said property. Absent such evidence or any other proof to such effect, the
Court cannot subscribe hook, line and sinker to the conclusion that the subject property had
been sufficiently identified.
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GARCIA v. SANTOS VENTURA HOCORMA FOUNDATION, INC.,

DOCTRINE
Factual findings of fact of quasi-judicial bodies, such as the DAR, which have acquired
expertise because their jurisdiction is confined to specific matters, are generally accorded not
only great respect but even finality. They are binding upon this Court unless there is a showing
of grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or
in utter disregard of the evidence on record.
FACTS
Respondent Santos Ventura Hocorma Foundation, Inc. (SVHFI) is the registered

owner of a parcel of land with an area of 25.5699 hectares under TCT No. 549661-R. On the
other hand, petitioners Orlando D. Garcia, Amado Q. Calalang, Fernando Q. Calalang, and
Bonifacio Q. Calalang are allegedly farmer-beneficiaries under the Comprehensive Agrarian
Reform Program (CARP) and recipients of Certificates of Land Ownership Award (CLOA).
On September 20, 2002, the Municipal Agrarian Reform Office (MARO) of Mabalacat,
Pampanga sent a Notice of Coverage and Field Investigation to SVHFI, through its Chief
Executive Officer, informing the latter that its above-described property had been identified
by the Department of Agrarian Reform (DAR) as a suitable lot for the CARP coverage under
the compulsory acquisition scheme. The respondent sent a letter-protest stating that the
property should be exempted from CARP coverage.
Sometime in July 2005, CLOAs were registered and distributed to farmer-

beneficiaries covering 6.4515 hectares of the subject property. However, it was discovered
that, per the Legal Report submitted by the DARPO-Legal Division, SVHFI had sold the land
to the Bases Conversion Development Authority (BCDA) two years after the issuance of the
Notice of Coverage.
The DAR Officer-in-Charge Regional Director Teofilo Q. Inocencio issued an Order

denying the letter-protest of respondent SVHFI on the ground that the subject landholding
is an agricultural land and within the coverage of CARP. However, the then DAR Secretary
issued an Order granting the application for exemption of SVHFI. Upon a review of the
records of the application and its supporting documents, the DAR Secretary sided with SVHFI
and ruled that the subject property had been reclassified to purposes other than agricultural
prior to June 15, 1988.
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ISSUE
Whether the subject property owned by herein respondent is exempt from CARP
coverage.
RULING
YES. R.A. No. 6657, or the Comprehensive Agrarian Reform Law (CARL), provides that
the agrarian reform program shall cover all public and private agricultural lands, including
other lands of the public domain suitable for agriculture, regardless of tenurial arrangement
and commodity produced. Thus, before a parcel of land can be deemed covered by the CARP,
a determination of the land's classification as either an agricultural or non-agricultural land
(e.g., industrial, residential, commercial, etc.) — and, as a consequence, whether the said land
falls under agrarian reform exemption — must first be preliminarily threshed out before the
DAR, particularly, before the DAR Secretary.
DAR Administrative Order (AO) No. 6, Series of 1994 vests the DAR Secretary the
authority to grant or deny the issuance of exemption clearances on the basis of Section 3 (c)
of RA 6657, as amended, and DOJ Opinion No. 44, Series of 1990. Meanwhile, DOJ Opinion
No. 44, Series of 1990 states that all lands that have already been classified as commercial,
industrial or residential before June 15, 1988 no longer need any conversion clearance from
the DAR in order to be exempt from CARP coverage. However, an exemption clearance from
the DAR, pursuant to DAR AO No. 6, Series of 1994, is still required to confirm or declare
their exempt status.
Considering his technical expertise on the matter, courts cannot simply brush aside
his pronouncements regarding the status of the land in dispute, i.e., as to whether it falls
under the CARP coverage. There exists no persuasive ground to disturb the findings of the
DAR Secretary, as affirmed by the OP and the CA, that the subject landholding is exempt from
CARP coverage. To reiterate, factual findings of fact of quasi-judicial bodies, such as the DAR,
which have acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only great respect but even finality. They are binding upon this Court
unless there is a showing of grave abuse of discretion or where it is clearly shown that they
were arrived at arbitrarily or in utter disregard of the evidence on record.
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GARCIA v. ESCLITO
DOCTRINE
A certificate of title shall not be subject to a collateral attack and cannot be altered,
modified, or cancelled except in a direct proceeding in accordance with law.
FACTS
In 1979, petitioner Antonio Garcia purchased from Conchita Matute a 29-hectare

parcel of land located at Barangay Magdug, Governor Generoso, Davao Oriental, through a
deed of sale. He divided the land and donated portions of it to his children and grandchildren
through deeds of transfer of rights. Petitioners then filed with the DENR applications for the
issuance of land titles pursuant to the DENR's Handog Titulo program. The petitioners were
issued their respective patents and thereafter certificates of title upon registration.
Respondents, who are holders of certificates of land ownership award (CLOA) issued
by the Department of Agrarian Reform (DAR) on December 19, 1998, filed a petition for the
annulment/declaration of nullity of deed of sale and all the deeds, documents and
proceedings relying thereon before the Office of the Provincial Adjudicator of the
Department of Agrarian Reform Adjudication Board (DARAB). Respondents alleged that the
1979 deed of sale was void for violating Section 6 of Republic Act No. (RA) 6657 or the
Comprehensive Agrarian Reform Law of 1988. According to respondents, since the 1979
Deed of Sale was not registered before the Registry of Deeds (RD) within three months from
the effectivity of RA 6657, the sale was void.
The Provincial Adjudicator dismissed respondents' petition for lack of jurisdiction

and held that the validity of title cannot be attacked collaterally. On appeal, the DARAB
reversed the Provincial Adjudicator's Decision. Unsatisfied, petitioners filed a motion for
reconsideration but it was denied by the DARAB for lack of merit. Hence, petitioners filed a
certiorari petition before the CA.
However, before the CA could issue the assailed Decision and Resolution, petitioners
filed a direct complaint for cancellation of certificates of title with the RTC of Lupon, Davao
Oriental, where they similarly questioned the validity of the deed of sale and the resulting
certificates of title. The CA affirmed the ruling of DARAB.
ISSUE
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Whether the CA committed grave abuse of discretion amounting to lack or excess of

jurisdiction in rendering the assailed Decision and Resolution.
RULING
YES. Section 43 of Presidential Decree No. 1529, or the Property Registration Decree,
states that a certificate of title shall not be subject to a collateral attack and cannot be altered,
modified, or cancelled except in a direct proceeding in accordance with law. A direct attack
is an action whose main objective is to annul, set aside, or enjoin the enforcement of a
judgment pursuant to which a registration decree is issued, if the judgment has not yet been
implemented, or if already implemented, to seek the recovery of the property. On the other
hand, a collateral attack transpires when, in an action to obtain a different relief, an attack is
incidentally made against the judgment.
Here, it is important to note that petitioners are holders of certificates of title

registered under the Torrens system. Thus, their certificates can only be attacked directly
yet respondents instituted a collateral attack in their petition before the Provincial
Adjudicator. The Provincial Adjudicator properly dismissed the petition. However, on
appeal, the DARAB reversed the Provincial Adjudicator and held that there was no direct
attack.
By giving due course to the appeal and therefore allowing a prohibited collateral
attack, the DARAB gravely abused its discretion. Again, petitioners' certificates of title, being
registered in the Torrens system, can only be attacked in an action expressly instituted for
that purpose. It cannot be assailed even incidentally in an action mainly seeking a different
relief, such as in respondents' petition to nullify the deed of sale. But aside from allowing a
collateral attack, the DARAB also went further and effectively declared the certificates void
based on the said collateral attack. Clearly, then, the CA is not justified in dismissing
petitioners' certiorari petition that questioned the DARAB's patently void Decision. For
doing so, the CA itself committed grave abuse of discretion amounting to lack or excess of
jurisdiction, rendering the assailed Decision a nullity as well.
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PASTORA GANANCIAL v. BETTY CABUGAO

G.R. No. 203348, July 6, 2020, Second Division (Hernando, J.)
DOCTRINE
Mere formal infirmities in the notarization of the instrument will not invalidate the
mortgage.
FACTS
Pastora Ganancial (Ganancial) owed Betty Cabugao (Cabugao) the amount of

P130,000.00, agreed to be payable within three years. To guarantee her indebtedness,
Ganancial entrusted to Cabugao the TCT No. 168803 and Tax Declaration No. 641, both
covering a 397-square-meter parcel of land located in Balangobong, Binalonan, Pangasinan,
which Ganancial owns in her name. On October 2, 2001, Cabugao filed a case for foreclosure
of real estate mortgage against Ganancial. On October 8, 2001, the latter, in turn, filed against
the former a complaint for declaration of the deed of mortgage as null and void, with
damages. These cases were eventually ordered consolidated.
Cabugao alleged Ganancial executed a Deed of Mortgage over the subject property as
collateral for her loan. Despite the lapse of three years from the date of the mortgage and
repeated demands, Ganancial failed and refused to pay the amount she owed Cabugao. A final
demand having proved futile, Cabugao sought the judicial foreclosure of the real estate
mortgage, plus interest, and the award of attorney's fees and litigation expenses.
Ganancial assailed the authenticity of the Deed of Mortgage. While she entrusted TCT
No. 168803 with Cabugao, Ganancial averred that she never executed the supposed Deed of
Mortgage nor appeared for its notarization. Cabugao allegedly required Ganancial and her
children to affix their signatures on a blank bond paper, which Cabugao filled out only later.
Ganancial learned of the existence of the Deed of Mortgage for the first time during her
confrontation with Cabugao before the barangay captain. Ganancial thus prayed for the
declaration of the Deed of Mortgage as null and void and claimed moral damages, exemplary
damages, litigation expenses, and costs of suit.
The RTC ruled in favor of Cabugao. The CA denied Ganancial's appeal and ruled that
mere irregularities in the notarization do not affect the genuineness and due execution of the
document.
ISSUE
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Whether the CA erred in affirming the decision of the RTC favoring Betty Cabugao
despite the glaring irregularity of the questioned deed of mortgage.
RULING
NO. An irregular notarization merely reduces the evidentiary value of a document to

that of a private document, which requires proof of its due execution and authenticity to be
admissible as evidence. The irregular notarization — or, for that matter, the lack of
notarization — does not thus necessarily affect the validity of the contract reflected in the
document. Errors in, or even absence of, notarization on a deed of mortgage will not
invalidate an already perfected mortgage agreement. If anything, these would only
depreciate the evidentiary value of the said written deed, as the same would be demoted
from a public document to a private one.
It bears noting that Ganancial had alleged that fraud invalidated her consent to the
mortgage. While she had worded her arguments as an attack on the existence of the
mortgage, vitiation of consent by means of fraud is a ground for the annulment of a voidable
contract, and not for the nullification of a void contract. Even if the present case is one for
annulment of contract, the fraud alleged to have vitiated Ganancial's consent to the mortgage
must still be proven by clear and convincing evidence.
Under Article 1409 of the Civil Code, absolute simulation voids a contract. In absolute
simulation, there appears a colorable contract but there actually is none, as the parties
thereto have never intended to be bound by it. In determining the true nature of a contract,
the primary test is the intention of the parties. Such intention is determinable not only from
the express terms of their agreement, but also from the contemporaneous and subsequent
acts of the parties. In this case, the totality of the circumstances negates the contention that
the Deed of Mortgage was absolutely simulated.
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ESTATE OF SUSANO J. RODRIGUEZ v. REPUBLIC OF THE PHILIPPINES

G.R. No. 214590, April 27, 2022, Second Division (Hernando, J.)
DOCTRINE
Article 1144 of the Civil Code provides that all actions upon a written contract shall be
brought within ten (10) years from accrual of the right of action. The estate's complaint filed
in 2007 is well within the prescriptive period, which is 10 years from the lapse of the period
within which the Republic could file a motion for revival of judgment of Civil Case No. P-86 in
2005. As correctly ruled by the CA, the cause of action accrued only from the time of the alleged
violation of the Republic, that is, its failure to comply with its obligation to not lease, let,
encumber or dispose any portion of the donated property, i.e., its failure to move for execution
or revival of judgment.
FACTS
On September 12, 1968, Susano J. Rodriguez executed a deed of conditional donation

in favor of the Republic over a parcel of land covered by TCT No. 7800 located in Barangay
Cadlan, Pili, Camarines Sur with an area of 322,839 sqm., for the purpose of constructing
thereon a mental facility, subject to conditions. On September 29, 2008, the estate,
represented by its attorney-in-fact Valenzuela, filed a complaint against the Republic for
revocation of the donation and forfeiture of improvements. It alleged that the Republic
allowed a portion of the donated property to be used for residential and commercial
purposes in violation of the fifth condition in the deed of conditional donation.
5. That the DONEE shall not under any circumstance or in any manner
Lease, Let, Convey, Dispose, or Encumber the property herein donated or any
part or portion thereof to any person or entity, except with the prior and express
knowledge and approval of the DONOR, it being the desire and intention of the
latter to have the said property for the exclusive use of the said hospital and
FINALLY.
The Republic alleged that the estate's cause of action had already prescribed. As an
onerous donation, the same is governed by the law on contracts. Article 1144 of the Civil
Code provides that an action upon a written contract must be brought within 10 years from
the time the right of action accrues. The Republic argued that since the deed of conditional
donation was executed on September 12, 1968, an action to enforce the conditions therein
prescribed on September 12, 1978. Hence, petitioner's filing of the instant complaint in 2008
is already barred by prescription.
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ISSUE
Whether the complaint is barred by prescription.
RULING
NO. The deed of conditional donation expressly provided for the automatic
revocation and/or reversion in case of breach of any of the conditions therein. If the donee
fails to comply with or violate any of the conditions stated in the donation, the title over the
subject property shall ipso facto revert to the donor, his heirs, successors or assigns and all
improvements, structures or buildings thereon shall be forfeited in favor of the donor.
However, if the donee challenges the propriety thereof, the Court can conclusively settle
whether the resolution is proper or not. The judicial intervention is not for the purpose of
obtaining a judicial declaration rescinding a contract already deemed rescinded by reason of
the parties' agreement but in order to determine whether or not the rescission was proper.
In the case at bar, the donation involved is an onerous one since the burden imposed
upon the donee is to build a mental hospital on the donated property. Thus, the provisions
of the Civil Code on the rules on contracts shall govern. Article 1144 of the Civil Code
provides that all actions upon a written contract shall be brought within ten (10) years from
accrual of the right of action. Petitioner's complaint for revocation of the donation therefore
has not yet prescribed since the cause of action accrued only upon the alleged failure of the
Republic to comply with any or all of the conditions of the donation.
A perusal of the records reveals that five out of the 32 hectares of land subject of the
donation are being used by the Republic for the operation of its mental hospital, while a
portion of the land is occupied by the informal settlers. In order to utilize the subject
property exclusively for the use of the mental hospital, the Republic filed an ejectment case
against the informal settlers in 1971. Thereafter, a judgment favorable to the Republic was
rendered by the RTC that was affirmed by the CA in its February 28, 1995 Decision. It became
final and executory on March 27, 1995. However, the Republic failed to have the Decision in
Civil Case No. P-86 executed by filing a motion for execution within five years or a motion to
revive the judgment within 10 years from the finality of Civil Case No. P-86. Hence, the
estate's complaint filed in 2007 is well within the prescriptive period, which is 10 years from
the lapse of the period within which the Republic could file a motion for revival of judgment
of Civil Case No. P-86 in 2005. As correctly ruled by the CA, the cause of action accrued only
from the time of the alleged violation of the Republic, that is, its failure to comply with its
obligation to not lease, let, encumber or dispose any portion of the donated property, i.e., its
failure to move for execution or revival of judgment of Civil Case No. P-86, which resulted in
the continuous occupation of the informal settlers on a portion of the donated property.
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ESPERANZA P. GAOIRAN v. THE HONORABLE COURT OF APPEALS, BRANCH 12

OF THE REGIONAL TRIAL COURT OF ILOCOS NORTE, SPS. TIMOTEO S. PABLO and
PERLITA PABLO, MARY NYRE DAWN S. ALCANTARA, and REGISTER OF DEEDS OF
LAOAG CITY
DOCTRINE
Verily, the reconstitution of a certificate of title denotes restoration in the original form
and condition of a lost or destroyed instrument attesting the title of a person to a piece of land.
The purpose of the reconstitution of title is to have, after observing the procedures prescribed
by law, the title reproduced in exactly the same way it has been when the loss or destruction
occurred.
The parties in the instant case did not impugn their respective titles to the property in
question. An examination of the petition for annulment of judgment before the CA reveals that
petitioner never questioned Perlita's ownership of the subject property. In fact, petitioner
acknowledged Perlita's ownership thereof. Neither did respondents Perlita and Mary in any
way challenge the genuineness and authenticity of the first owner's duplicate copy of TCT T-
34540 submitted by petitioner. To stress, what petitioner sought in her Rule 47 petition with
the CA was the annulment of the RTC Decision reconstituting TCT T-34540, on the ground that
the first owner's duplicate copy thereof was never lost but was in fact in her possession all along.
Petitioner only needed to show the fact that the owner's duplicate copy was not, in truth,
missing in order to determine the lack of jurisdiction of the trial court resulting in the
annulment of judgment thereof.
Reconstitution presupposes the existence of an original certificate of title which was lost
or destroyed. If there was no loss or destruction as in the case at bar, there is actually nothing
to reconstitute. Here, petitioner clearly alleged in her petition before the CA that, contrary to
the claim of Mary in the reconstitution proceeding, the owner's duplicate copy of TCT T-34540
was not really lost, as the same was surrendered to her by Timoteo and was in her possession
all along.
FACTS
Petitioner alleged that on September 22, 2009, her friends introduced to her a certain
Timoteo H. Pablo, Jr. who was allegedly looking for a buyer of a land registered under the
name of his wife, Perlita S. Pablo. Timoteo offered for sale the subject property to petitioner
and her husband. Timoteo was able to convince petitioner to purchase the said property
upon the representation that he was authorized by his wife, Perlita to sell the same. On the
same day, petitioner delivered the purchase price to Timoteo in the amount of P500,000.00
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and in exchange, Timoteo surrendered the first owner's duplicate copy of TCT T-34540 to
petitioner and undertook to deliver a deed of absolute sale signed by his wife on or before
October 22, 2009. Timoteo, however, did not make good his promise.
Demands were made by petitioner upon Timoteo to return the amount of

P500,000.00 or to deliver the appropriate deed of conveyance, but to no vail. This prompted
petitioner to institute before the Office of the City Prosecutor of Laoag City a complaint for
Estafa against Timoteo. Finding probable cause, an Information for Estafa was filed before
the RTC of Laoag City.
Meanwhile, on the claim that the owner's duplicate copy of the subject property's title
was missing, respondent Mary Nyre Dawn Alcantara (Mary), representing herself as the
niece of respondent Perlita, and the latter's trustee of TCT T-34540, filed before the RTC of
Laoag City on June 25, 2012 a petition praying that the owner's duplicate copy of TCT T-
34540 that had been lost be declared as null and void. She likewise prayed for the issuance
of a second owner's duplicate copy of TCT T-34540.
The petition for issuance of a new owner's duplicate certificate of title, the RTC of
Laoag City in its Decision dated August 28, 2012, ordered the issuance of a second owner's
duplicate copy of TCT T-34540. Pursuant to which, the RTC of Laoag City declared the lost
owner's duplicate copy as null and void.
On May 17, 2013, petitioner instituted before the CA a petition for annulment of
judgment seeking to annul the August 28, 2012 Decision of the RTC of Laoag City, which
granted Mary's petition for the issuance of a second owner's duplicate copy of TCT T-34540.
On August 15, 2014, the CA dismissed the petition for annulment of judgment
declaring that a petition under Rule 47 of the Rules of Court cannot be used to impugn the
second owner's duplicate certificate of title which was issued in the reconstitution
proceeding before the trial court for to do so would constitute a collateral attack upon the
issued certificate of title which is sanctioned by Section 48 of Presidential Decree No. (PD)
1529.
Petitioner insists that the existence of the owner's duplicate copy of TCT T-34540 in
her possession renders the RTC of Laoag City devoid of any jurisdiction to entertain Mary's
petition for issuance of a second owner's duplicate copy. Moreover, the petition for
annulment of judgment she filed before the CA is not an attack upon TCT T-34540, the main
purpose of which is the annulment of the August 28, 2012 Decision of the RTC of Laoag City
granting the reconstitution of TCT T-34540, despite the fact that the first owner's duplicate
copy thereof was never lost. Thus, the cancellation of the reconstituted title is only a
necessary consequence of the annulment of the assailed August 28, 2012 Decision. Since the
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first owner's duplicate copy of TCT T-34540 is not in fact lost, the CA committed grave abuse
of discretion amounting to lack or in excess of jurisdiction in not annulling the August 28,
2012 RTC Decision on the ground of lack of jurisdiction.
ISSUES
1. Whether the petition for annulment of judgement constitute a collateral attack upon
the issued certificate of title.
2. Whether the petition for reconstitution was properly granted.
RULING
1. NO. The Court finds that the CA erred in denying petitioner's petition for annulment of
judgment holding that the same was a subtle experiment to collaterally dispute the
owner's duplicate certificate of title which was issued in favor of Perlita in the
reconstitution proceeding before the RTC.
In Spouses Ibias v. Macabeo, citing Alonso v. Cebu Country Club, Inc. the Court described
reconstitution, thus:
The reconstitution of a title is simply the re-issuance of a lost duplicate

certificate of title in its original form and condition. It does not determine or
resolve the ownership of the land covered by the lost or destroyed title. A
reconstituted title, like the original certificate of title, by itself does not vest
ownership of the land or estate covered thereby.
Verily, the reconstitution of a certificate of title denotes restoration in the original

form and condition of a lost or destroyed instrument attesting the title of a person to a
piece of land. The purpose of the reconstitution of title is to have, after observing the
procedures prescribed by law, the title reproduced in exactly the same way it has been
when the loss or destruction occurred.
The parties in the instant case did not impugn their respective titles to the property
in question. An examination of the petition for annulment of judgment before the CA reveals
that petitioner never questioned Perlita's ownership of the subject property. In fact,
petitioner acknowledged Perlita's ownership thereof. Neither did respondents Perlita and
Mary in any way challenge the genuineness and authenticity of the first owner's duplicate
copy of TCT T-34540 submitted by petitioner. To stress, what petitioner sought in her Rule
47 petition with the CA was the annulment of the RTC Decision reconstituting TCT T-34540,
on the ground that the first owner's duplicate copy thereof was never lost but was in fact in
her possession all along. Petitioner only needed to show the fact that the owner's duplicate
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copy was not, in truth, missing in order to determine the lack of jurisdiction of the trial court
resulting in the annulment of judgment thereof.
0. NO. For an order of reconstitution to be issued, it must be clearly shown that the
certificate of title had been lost or destroyed. If a certificate of title has not been lost, but is
in fact in the possession of another person, then the reconstituted title is void and the court
that rendered the decision had no jurisdiction.
Indubitably, the fact of loss or destruction of the owner's duplicate certificate of title
is crucial in clothing the RTC with jurisdiction over the judicial reconstitution proceedings.
Reconstitution presupposes the existence of an original certificate of title which was

lost or destroyed. If there was no loss or destruction as in the case at bar, there is actually
nothing to reconstitute. Here, petitioner clearly alleged in her petition before the CA that,
contrary to the claim of Mary in the reconstitution proceeding, the owner's duplicate copy of
TCT T-34540 was not really lost, as the same was surrendered to her by Timoteo and was in
her possession all along. The alleged lost TCT was in fact offered in evidence by petitioner
before the CA and private respondents did not contest the genuineness and authenticity of
the same. Thus, with evidence that the first owner's duplicate copy of TCT No. T-34540 was
not lost but was actually in the possession of another, the RTC decision was null and void for
lack of jurisdiction.
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AMLAYON ENDE and QUEZON ENDE, SURVIVING CHILDREN AND LEGITIMATE HEIRS
OF SPOUSES BUTAS ENDE AND DAMAGI AROG, represented by their co-heir,
Attorney-In-Fact, LETECIA ENDE-BACALSO vs. ROMAN CATHOLIC PRELATE OF THE
PRELATURE NULLIUS OF COTABATO, INC., FR. RONILO VILLAMOR and/or JOSE
RABANG, WELHILMINA * VDA. DE GENERALLA, JESUS ACOSTA, ELIZA DIAZ, and/or
JUANITO ** DIAZ and FLORENTINO KINTANAR, both represented by FELIPE
VINLUAN, SR., PRIMO BAGASMAS and JESSIE FLORES and/or CORAZON FLORES
G.R. No. 191867, December 6, 2021, Second Division (Hernando, J.)
DOCTRINE
Well-settled is the rule that "a purchaser of real estate with knowledge of any defect or
lack of title of the vendor cannot claim that he has acquired title thereto in good faith as against
the true owner of the land or interest therein." The same rule also applies to those with
knowledge of facts that should have put one on inquiry and investigation as might be necessary
to be acquainted with the defects in the title of the vendor, as in the case at bar. The
respondents' willful refusal to believe that a defect exists in the vendors' title or the possibility
of its existence will not make them innocent purchasers for value if a defect indeed occurs. A
buyer of registered land is expected to act with the diligence of a prudent man, otherwise, he or
she cannot be deemed as a purchaser in good faith.
FACTS
The spouses Butas Ende and Damagi Arog (collectively, spouses Ende), both Manobo
natives, were the registered owners of a lot with an area of 223,877 square meters located
in Sudapin, Kidapawan, Cotabato covered by OCT No. P-46114. However, portions of the
subject property are presently occupied by respondents Roman Catholic Prelate of the
Prelature Nullius of Cotabato, Inc. (Roman Catholic) (11,356 sqm.); Welhilmina (112,023
sqm.); Eliza and Juanito Diaz (26,457 sqm.); and Jessie and Corazon Flores (12,500 sqm.)
On August 17, 1995, Amado, Daniel, Felipe, and Pilar, claiming to be the surviving
heirs of the spouses Ende, filed a complaint for quieting of OCT No. P-46114 and recovery of
possession thereof with damages and attorney's fees. They claimed that, taking advantage of
the ignorance and illiteracy of the spouses Ende, respondents gradually took possession of
portions of the subject property through deceitful machinations. In addition, they alleged
that the lawful heirs of the spouses Ende had executed an extrajudicial settlement of estate
which includes the subject property. They likewise claimed that respondents' ownership
over the portions of the subject property was merely evidenced by tax declarations and that
the purported conveyances of said respective portions were never annotated on OCT No. P-
46114.
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On January 9, 1996, petitioners Amalayon and Quezon, claiming to be the surviving

children and legitimate heirs of the spouses Ende, intervened. In their answer-in-
intervention, they claimed that they are the children and legitimate heirs of the spouses Ende
and that Amado, Daniel, Felipe, and Pilar, the plaintiffs in Civil Case No. 1069, are mere
impostors.
On September 3, 2003, the RTC dismissed the complaint for quieting of title and
recovery of possession of the subject property covered by OCT No. P-46114 filed by Amado,
Daniel, Felipe, and Pilar. The RTC, however, granted petitioners Amlayon and Quezon's claim
who, by preponderance of evidence, proved that they are the children of the spouses Ende
and therefore, the legal heirs of the latter.
On appeal, the CA rendered its assailed July 23, 2009 Decision reversing and setting
aside the RTC's ruling in favor of petitioners Amlayon and Quezon. However, the CA affirmed
the RTC's dismissal of the complaint for quieting of title filed by Amado, Daniel, Felipe, and
Pilar.
ISSUES
1. Whether petitioners Amlayon and Quezon are the legal heirs of the Endes;
2. Whether respondents Roman Catholic, Welhilmina, Acosta, Eliza and Juanito,
Kintanar, Bagasmas, and Jessie and Corazon, validly acquired ownership over the
respective portions of the subject property covered by OCT No. P-46114; and
3. Whether petitioners Amlayon and Quezon are barred by the principle of laches to
recover the ownership and possession of the subject property covered by OCT No. P-
46114.
RULING
1. YES. After a meticulous review of the records, we declare petitioners Amlayon and
Quezon to be the legal and rightful heirs of spouses Ende entitled to the latter's estate,
if any.
Article 265 of the Civil Code provides that the "filiation of legitimate children is
proved by the record of birth appearing in the Civil Register, or by an authentic
document or a final judgment." In the absence thereof, the filiation shall be proved by
the continuous possession of status of a legitimate child or by any other means
allowed by the Rules of Court and special laws. This action to claim one's legitimacy
may be brought by the child during his or her lifetime and shall be transmitted to his
or her heirs if he or she should die during his or her minority or in a state of
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insanity. The foregoing provisions in the Civil Code have been carried over to the
Family Code.
In the absence of the record of birth and admission of legitimate filiation, Article 267
of the Civil Code and Article 172 of the Family Code provide that filiation shall be
proved by any other means allowed by the Rules of Court and special laws, such as,
baptismal certificate, a judicial admission, a family bible in which his or her name has
been entered, common reputation respecting his or her pedigree, admission by
silence, the testimonies of witnesses and other kinds of proof admissible under Rule
130 of the Rules of Court.
Petitioners claim that they are the legitimate children of the spouses Ende. However,
petitioners' records of birth were not recorded in the Civil Register or their legitimate
filiation embodied in a public document or a private handwritten instrument signed
by the spouses Ende. Instead, petitioners offered testimonies of their relatives,
namely, Elena R. Birang, Laureana Bayawan, Cristina Birang Carbonel, and Marino
Icdang to prove that they are legitimate children of the spouses Ende.
We hold these testimonial evidence sufficient to establish petitioners' status as heirs

of the Ende couple. Both the Civil Code and Family Code recognize such other means
allowed by the Rules of Court to prove filiation or the legitimacy status of a person,
that includes testimonies of witnesses. Although no documentary evidence was
offered by petitioners to prove their legitimacy, the testimonies of the witnesses
presented preponderantly tipped the scales in their favor.
2. NO. From the above dispositions or deeds of sale, not one has been registered or duly
annotated in OCT No. P-46114. Since the title was duly issued on September 9, 1974, the
parties, who acquired their rights over the subject property by virtue of deeds of sale
executed after the issuance of title, cannot merely rely on the declarations of the alleged heirs
or sellers as the title patently states that it is registered in the name of Butas. The purchasers
should have examined the certificate of title and all factual circumstances necessary for them
to determine whether or not flaws existed that might invalidate their title, especially when
these purchasers acquired the subject property or a portion thereof from persons who are
not the registered owners and whose alleged rights were not registered or duly annotated
on the title.
Well-settled is the rule that "a purchaser of real estate with knowledge of any defect
or lack of title of the vendor cannot claim that he has acquired title thereto in good
faith as against the true owner of the land or interest therein." The same rule also
applies to those with knowledge of facts that should have put one on inquiry and
investigation as might be necessary to be acquainted with the defects in the title of
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the vendor, as in the case at bar. The respondents' willful refusal to believe that a
defect exists in the vendors' title or the possibility of its existence will not make them
innocent purchasers for value if a defect indeed occurs. A buyer of registered land is
expected to act with the diligence of a prudent man, otherwise, he or she cannot be
deemed as a purchaser in good faith.
Even prior to the issuance of OCT No. P-46114, the documents of sale and/or
disposition described the subject property as covered by a free patent application in
the name of Butas. Although it is not yet registered under the Torrens system, the
purchasers or herein respondents should have been apprised of the nature and status
of the subject property as to who are the legal heirs of Butas. In fact, numerous
extrajudicial settlements of estate were executed by Damagi and the other alleged
heirs of Butas to accommodate every buyer of a portion of the subject property, and
to create a semblance of legality and a false warranty. Even respondent Roman
Catholic admitted that several persons were claiming to be the legal heirs of the
subject property that resulted in them paying these alleged heirs in order not to be
disturbed in their possession.
In addition, respondents disclosed that they were not able to register their respective
documents of sale or dispositions or have them duly annotated as it was contested by
various individuals claiming to be the legal heirs of Butas. Also, respondents were not
unmindful of the fact that Butas, a known Datu in Sudapin, Cotabato, is a member of
an indigenous tribe, Manobo, which they should have taken into consideration in
dealing with the alleged legal heirs or third persons claiming to have acquired rights
over the subject property.
3. NO. Petitioner Amlayon testified that they failed to recover the subject property
immediately from the dispositions made by Inacara, Joseph, Ayan, and Ayonan because they
were driven away from the land and were threatened by the alleged heirs of Butas. This fact
was corroborated by Elena, Marino, Laureana, and Cristina and was unrebutted by
respondents. With petitioners Amlayon and Quezon not in possession of their land, they
could not have known the various dispositions made by Inacara, Joseph, Ayan, and Ayonan
after Damagi's death. Hence, they could not be expected to assert their right against the
herein respondent. Also, petitioners Amlayon and Quezon's lack proper education and did
not know the necessary legal procedures they should resort to in order to recover their land.
Nonetheless, petitioner Amlayon averred that after the death of Inacara, he

immediately went to the persons in possession of the subject property. His daughter
Leticia Bacalso (Leticia) supported the testimony of her father, Amlayon, that indeed
the latter went to respondent Wilhelmina to claim back the subject property. In 1980,
Wilhelmina and Amlayon were summoned by the Office for Southern Cultural
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Communities (OSCC) to settle and Wilhelmina even offered 10 hectares of land in

Indangan in exchange of the portion of the land occupied by them but petitioner
Amlayon did not agree with the proposal. Prior to that, in 1970, petitioner Amlayon
sought counsel from Ugalingan on how to recover their land as he had no knowledge
on legal matters. This was corroborated by the testimony of Laureana, Ugalingan's
daughter.
The foregoing acts of petitioners belie the claim that they slept on their rights. To
reiterate, petitioners Amlayon and Quezon were prevented from going into the
subject property because of Inacara's threats. However, upon Inacara's death,
petitioners gradually prepared the documents needed to recover the subject property
and asked advice from certain individuals and institution. Although they did not
immediately file a case in court, this does not mean that laches already set in against
their favor. It must be pointed out that petitioners consistently asserted their rights
as legal heirs of the spouses Ende outside of court but due to certain circumstances,
they were unable to properly file the same for the court's consideration.
Laches does not imply that a case in court must be filed in order that it may not be
successfully invoked. It merely requires "delay in asserting complainant's right after
he had knowledge of the defendant's conduct and after he has an opportunity to sue.
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ATTY. ARISTOTLE T. DOMINGUEZ vs. BANK OF COMMERCE, as purported transferee

of Traders Royal Bank, and SPOUSES CARMELO, JR. and ELIZABETH AFRICA
DOCTRINE
The language of Section 70 of the Property Registration Decree (PD1529) is clear; it

does not limit the issues that may be resolved by the trial court in a petition for cancellation of
adverse claim.
FACTS
In 2007, respondent Carmelo Africa Jr., together with his brothers Carlos and Chito,
engaged the legal services of Atty. Dominguez in order to prevent the Bank of Commerce
(BOC) from taking possession of their family homes in Marikina City, Antipolo City and
Quezon City with a total redemption price of P25 million, Atty. Dominguez charged
P250,000.00 or one percent (1%) of the redemption price as his acceptance fee.
Additionally, Carmelo and his brothers promised him a success fee corresponding to
twenty percent (20%) of the amount reduced from the original redemption price.
Meanwhile, it came to the knowledge of Atty. Dominguez that the initial redemption price
set by the BOC was P100 million. He averred that he failed to charge the proper acceptance
fee due to the misrepresentation of Carmelo and his brothers as to the redemption price of
the properties.
In 2009, Carmelo and his brothers once again sought the legal services of Atty.
Dominguez in a suit involving Hanjin Heavy Industries and Construction Co., Ltd. The lawyer
who previously handled the case emerged victorious up to the appellate court. However, his
services were terminated and was substituted by Atty. Dominguez who then initiated
execution proceedings against Hanjin. Notwithstanding his efforts, Atty. Dominguez's legal
services were likewise terminated.
Meanwhile, BOC filed a petition for cancellation of adverse claim on Transfer

Certificate of Title (TCT) Nos. 473882 and 473883. This petition was opposed by the spouses
Carmelo and Elizabeth Africa (spouses Africa) through Atty. Dominguez. During the hearing,
BOC manifested that there might be a settlement between the parties to which the spouses
Africa did not interpose any objections. In October 2012, Atty. Dominguez filed before the
trial court a Request for Admission of the aforesaid allegations. A month later, Atty.
Dominguez manifested that he was no longer representing the spouses Africa as oppositors
in the petition for cancellation of adverse claim.
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In January 2013, Atty. Dominguez filed a Motion to Fix Attorney's Fees and to Approve
Charging (Attorney's) Lien with Motion for Production of Compromise Agreement (Motion
to Fix Attorney's Fees). The trial court decreed that Atty. Dominguez had no personality to
appear in the case.
On reconsideration, Atty. Dominguez asserted that a Compromise Agreement was

entered into by BOC and the spouses Africa even if such was denied by the parties during
trial. At the same time, he interposed his right to be compensated for the legal services he
rendered resulting in the decrease of the redemption price and for preventing the BOC from
taking possession of the properties. However, the trial court denied Atty. Dominguez's
motion for reconsideration.
Atty. Dominguez filed a Petition for Certiorari before the CA ascribing grave abuse of
discretion on the part of the trial court in issuing the assailed Orders. On June 22, 2015, the
appellate court dismissed Atty. Dominguez's Petition for Certiorari after finding no grave
abuse on the part of the trial court. It held that trial courts cannot adjudicate money claims
in petitions for cancellation of adverse claim and are restricted in the determination of the
propriety of cancelling an adverse claim.
ISSUE
Whether or not the trial court can rule on money judgments in a petition for
cancellation of adverse claim.
RULING
YES. The trial court may rule on money judgments such as attorney's fees and record
and enforce attorney's lien in a petition for cancellation of adverse claim or in a separate
action, at the option of the counsel claiming the same. To distinguish, registration or
recording of attorney's lien merely recognizes the right of the lawyer to claim from the
judgment of the suit, whereas the lien can only be enforced when the money judgment in
favor of the counsel's client becomes final and executory. It is to be noted that among the
prayers of Atty. Dominguez in his Motion to Fix Attorney's Fees is to register a statement of
his lien before the rendition of judgment. If a lien may be enforced in said petition when the
money judgment has become final, then the registration of the lien may be granted even prior
to the judgment in order to establish the lawyer's claim. The determination and the fixing of
attorney's fees may be deferred until the resolution of the case and the finality of the money
judgment in favor of the lawyer's client.
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The language of Section 70 of the Property Registration Decree (PD1529) is clear; it

does not limit the issues that may be resolved by the trial court in a petition for cancellation
of adverse claim, viz.:
SECTION 70. Adverse Claim. — x x x.

xxx xxx xxx
[A]ny party in interest may file a petition in the Court of First Instance where
the land is situated for the cancellation of the adverse claim, and the court shall
grant a speedy hearing upon the question of the validity of such adverse claim,
and shall render judgment as may be just and equitable. If the adverse claim is
adjudged to be invalid, the registration thereof shall be ordered cancelled. If, in any
case, the court, after notice and hearing, shall find that the adverse claim thus
registered was frivolous, it may fine the claimant in an amount not less than one
thousand pesos nor more than five thousand pesos, in its discretion. x x x
While the trial court is directed to speedily hear the case on the validity of the adverse
claim, there is no prohibition or any restriction on the trial court from hearing issues on
money judgment particularly on matters concerning attorney's fees and lien. There is thus
no basis to BOCs argument that Atty. Dominguez could not assert the issue concerning his
legal fees in the petition for the cancellation of adverse claim itself. Since Atty. Dominguez
represented the spouses Africa as oppositors in the petition for cancellation of adverse claim,
he may then advance his claim thereon.
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DEVELOPMENT BANK OF THE PHILIPPINES vs. HEIRS OF JULIETA L. DANICO, namely,

ROGELIO L. DANICO, CORAZON D. EMETERIO, NENITA D. YBAÑEZ, RODRIGO L.
DANICO, DANILO L. DANICO, DANIEL L. DANICO, GLORIA ESCRUPULO, VILMA
MOSQUEDA, and NATIONAL POWER CORPORATION
DOCTRINE
The contract is the law between the parties. Thus, it should be interpreted according to
their literal meaning and should not be interpreted beyond their obvious intendment.
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
FACTS
On April 22, 1977, the Spouses Danico obtained an agricultural loan from petitioner
DBP in the total amount of P150,000.00 which was secured by: a) real estate mortgage (REM)
over their four (4) real properties covered by Original Certificate of Title (OCT) No. P-1439,
TCT No. T-8127, TCT No. T3278 and OCT No. P-537; and b) a chattel mortgage over one unit
of Massey Fergusson tractor and accessories.
On July 12, 1982, the Department of Agrarian Reform (DAR) issued a Certification
seizing the mortgaged real properties covered by OCT No. P-1439, TCT No. T-3278 and OCT
No. P-537 and placing them under the coverage of Presidential Decree No. 27, otherwise
known as the Operation Land Transfer.
On August 6, 1982, DBP extrajudicially foreclosed the real property covered by TCT
No. T-8127 for failure of the Spouses Danico to pay their loan obligation. Upon the expiration
of the redemption period on September 12, 1983, DBP consolidated the ownership of the
real property covered by TCT No. T-8127 as per Sheriff Certificate of Sale and Affidavit of
Consolidation of Ownership dated September 12, 1983. As a result, TCT No. T-8127 was
canceled and TCT No. T-19241 was issued in the name of DBP.
On September 9, 1985, NPC bought from the Spouses Danico the following: (a) Lot No.
861 which is covered by OCT No. P-1439; (b) Lot No. 857-B which is a portion of the land
covered by TCT No. T-3278, as the two lots are part of the NPC's Reservoir Area. As per the
Deed of Absolute Sale of Registered Land dated September 9, 1985, 10 Lot No. 861 covered
by OCT No. P-1439 was sold by the Danicos to NPC in the total amount of P511,290.00. On
the other hand, the Deed of Absolute Sale of a Portion of Registered Land states that Lot No.
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857-B covered by TCT No. T-3278 was sold by the Spouses Danico to NPC in the total amount
of P242,644.50.
DBP agreed to the sale of the two lots to NPC on the condition that a portion of the
proceeds would be applied to the Spouses Danico's outstanding obligation with DBP.
However, NPC paid DBP only the total amount of P92,003.47 from the proceeds of the sale
of a portion of land covered by TCT No. T-3278. NPC did not remit to DBP the amount
P301,350.50 from the proceeds of the sale of the land covered by OCT No. P-1439.
On February 24, 1987, NPC requested DBP to release the copy of OCT No. P-1439
(now TCT No. T-21793 in the name of NPC). However, payment to DBP was put on hold
pending compliance with the requirement of the Commission on Audit. On the same day, DBP
issued a Certification that it will only release the original copy of OCT No. P-1439 if the
proceeds of the sale of the said property in the amount of P301,350.50 had already been paid.
On January 10, 1999, Julieta Danico and her heirs filed a complaint against DBP and
NPC for the cancellation or release of mortgage over the four (4) properties covered by the
real estate mortgage. On May 7, 1999, petitioner DBP, on the other hand, filed with the same
trial court, a petition for the issuance of a writ of possession over the parcel of land now
covered by TCT No. T-19241 in the name of DBP.
On January 2, 2003, the RTC rendered its Decision declaring the extrajudicial
foreclosure of TCT No. T-8127 and its subsequent consolidation under TCT No. T-19241 in
the name of DBP as valid and legal. It also directed DBP to accept the amount of P301,350.50
as full payment of the Spouses Danico's loan obligation and declared NPC as without any
liability.
On December 2, 2010, the CA rendered its assailed Decision holding that respondent
NPC's obligation to petitioner DBP was only P393,353.97 and not P509,320.82 by reason of
the following: (a) the two deeds of sale of the real properties covered by OCT No. P-1439 and
TCT No. T-3278 stated that the obligation of the Spouses Danico as of December 31, 1985
was only P393,353.97; and (b) DBP's own admission in its Certification dated February 24,
1987 that it will only release the original copy of the OCT No. P-1439 upon payment by NPC
of the amount of P301,350.50, which is the difference after deducting NPC's first payment of
P92,003.47 from P393,353.97 which is the Spouses Danico's outstanding obligation as of
December 31, 1985.
As to the DBP's contention that NPC is liable to pay interest, penalties and interest
charges for the delay in the payment of P301,350.50, the appellate court held that since DBP
did not ask for interest charges when it signified its conformity with the two deeds of sale, it
cannot now ask for the payment of interest
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ISSUES
1. Is respondent NPC liable to pay the total amount of P902,674,79? and

2. Is respondent NPC liable to pay interest and penalty charges?
RULING
1. NO. The NPC and the Spouses Danico entered into two deeds of sale and stipulated
that of the two Statements of Account, the Statement of Account as of December 31,
1985 pertained to the first deed of sale while the Statement of Account as of April 30,
1985 pertained to the second deed of sale. Contrary to the ruling of the CA, the two
deeds of sale are clear and unambiguous as to the existence of the two statements of
account. In fact, both the Spouses Danico and the NPC adhered and agreed to the
terms, conditions and stipulations embodied in the two deeds of sale knowing fully
well the existence of the two statements of account.
Under the deeds of sale, the proceeds of the sale shall be applied to the outstanding
loan obligation of the Spouses Danico. However, NPC cannot be held liable in case the
proceeds of the sale of the subject properties are insufficient to satisfy the total loan
obligation of Spouses Danico.
The two deeds of sale very clearly indicate that NPC did not expressly assume the
obligations of the Spouses Danico under the agricultural loan dated April 22, 1977
and the Deed of Conditional Sale dated October 10, 1985. It merely intended to
purchase and acquire the two subject lots of the Spouses Danico which happened to
be mortgaged with the DBP. In fact, DBP signified its approval and conformity to the
said deeds of sale.
Nowhere is it stated in the said deeds of sale that respondent NPC assumed the total
obligation of the Spouses Danico. Hence, based on the foregoing, respondent NPC is
liable to pay DBP only the following amounts: (a) P301,350.50 out of the proceeds of
the first deed of sale in the fulfillment of the obligation of the Spouses Danico in the
total amount of P393,353.97 as per Statement of Account as of December 31, 1985;
and (b) P150,641.03 out of the proceeds of the second deed of sale in the fulfillment
of the Spouses Danico's obligation in the total amount of P509,320.82 as per
Statement of Account as of April 30, 1985.
2. NO. Article 1956 of the Civil Code states that no interest shall be due unless it has
been expressly stipulated in writing. As can be gleaned from the foregoing provision,
payment of monetary interest is allowed only if: (1) there was an express stipulation
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Case Digests
for the payment of interest; and (2) the agreement for the payment of interest was
reduced in writing. The concurrence of the two conditions is required for the payment
of monetary interest. Thus, We have held that collection of interest without any
stipulation therefor in writing is prohibited by law.
In the case at bar, it is clearly apparent that the two deeds of sale do not contain
any stipulation as to the payment of monetary interest. Contrary to the contention of
petitioner DBP, the stipulation as to interest in the original agricultural loan dated
April 22, 1977 and the Deed of Conditional Sale dated October 10, 1985 are not
applicable to NPC as the latter is not privy to the said contracts. DBP also approved
and agreed with the terms and conditions of the two deeds of sale which make the
below-quoted provisions of the mortgage instrument inapplicable as NPC's purchase
of the two mortgaged properties were made with petitioner DBP's written consent,
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Case Digests
DANIEL v. MAGKAISA
G.R. No. 203815, December 7, 2020, Third Division (Hernando, J.)
DOCTRINE
A trust is the legal relationship between one person having an equitable ownership of
powers by the latter.
Notably, Efraim is not a party to this trust and he only signed the document evidencing
the trust as Nelidia's husband. Nonetheless, there is no dispute that Efraim readily admitted the
due execution and validity of the Declaration of Trust. Thus, as a signatory, he is bound by the
intent and contents of the said document and thus should honor the directives contained
therein.
FACTS
Respondents are the grandchildren of Consuelo Jimenez Oda (Consuelo). Consuelo

had three sisters, namely, Nelidia J. Daniel (Nelidia), Esperanza Jimenez, and Josefina Jimenez
(Josefina). Only Josefina is alive, however. Petitioner Efraim D. Daniel (Efraim) is Nelidia's
husband, and the couple had no children.
During her lifetime, Consuelo owned three parcels of land in Cavite. The Manggahan
lots in Kawit and Medicion lot in Imus. Consuelo supposedly sold these properties to her
sister, Nelidia, as reflected in a Deed of Sale. Apparently, Consuelo instructed Nelidia that
upon her (Nelidia's) death, the properties should be transferred to Consuelo's grandchildren,
specifically herein respondents.
To comply with Consuelo's instruction, Nelidia executed a Declaration of Trust dated

September 6, 1993 with the conformity of Efraim, who likewise signed therein. In the said
document, Nelidia acknowledged that she held in trust the three parcels of land in favor of
the respondents. Eventually, Nelidia caused the issuance of new TCTs in her name.
When Nelidia died on November 1, 1996, it was only then that the respondents
discovered the existence of the Declaration of Trust. Since then, Efraim purportedly had
possession over the properties and refused to surrender the titles to the respondents. Hence,
respondents filed a Complaint for Reconveyance Plus Damages against Efraim. They alleged
that they received reliable information that Efraim has transferred the subject properties in
his name or is about to do so, with the intention of disposing the same, to their damage and
prejudice.
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During her testimony, Nancy Magkaisa admitted that her family is in actual
possession of the Manggahan lots. She averred, though, that Efraim exercised possession
over the Medicion lot by building a rest house therein. Efraim held the titles to all the
properties which he refused to surrender to the respondents.
Efraim, for his part, denied that he kept the titles to the properties or that he intended
to transfer possession or ownership to others. He asserted that Nelidia held the titles at the
time of the signing of the Declaration of Trust but that he had no idea if she still kept the said
titles up to the time of her death. Even so, he stated that Josefina had the titles since Nelidia
entrusted it to her.
ISSUE
Whether or not the respondents are entitled to the reconveyance of the subject
properties in their favor.
RULING
YES. According to case law, "[a] trust is the legal relationship between one person
having an equitable ownership of property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the performance of certain
duties and the exercise of certain powers by the latter." In this case, Nelidia, as the trustee,
had the duty to properly manage the properties for the benefit of the beneficiaries,
respondents herein. Notably, Efraim is not a party to this trust and he only signed the
document evidencing the trust as Nelidia's husband. Nonetheless, there is no dispute that
Efraim readily admitted the due execution and validity of the Declaration of Trust. Thus, as
a signatory, he is bound by the intent and contents of the said document and thus should
honor the directives contained therein.
There is no contest that since the trust is now considered as terminated after the
trustee's (Nelidia) death, the properties should be transferred to the names of the
respondents as the beneficiaries of the said trust. Both the RTC and the CA uniformly arrived
at this conclusion, and consequently ordered the transfer of possession of the lots to the
respondents. This finding, however, should not prejudice an action, if any, which would
involve the settlement of the estate of Consuelo and Nelidia, given that Efraim claimed (and
which Atty. Florentino mentioned) that disinheritance or preterition may occur. Such matter
should be resolved in a separate probate or intestate proceeding, whichever is applicable,
and not in the case at bench. Since this is a Complaint for reconveyance, it is "an action which
admits the registration of title of another party but claims that such registration was
erroneous or wrongful. It seeks the transfer of the title to the rightful and legal owner, or to
the party who has a superior right over it, without prejudice to innocent purchasers in good
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faith." Pursuant to the Declaration of Trust, the respondents have a superior right to
reconveyance of the subject properties in their favor.
Efraim's insistence that he does not have possession of the lots or its titles is a factual
issue which ought to have been threshed out and settled during the trial stage. We note that
both the trial court and the appellate court ordered Efraim to surrender the possession of
the properties to the respondents. Considering Nancy's admission that they are already in
possession of the Manggahan lots, we hold that Efraim should be ordered to surrender
possession only of the Medicion lot.
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Case Digests
DACQUEL v. SPOUSES SOTELO

G.R. No. 203946, August 4, 2021, Second Division (Hernando, J.)
DOCTRINE
Decisive for the proper determination of the true nature of the transaction between the
parties is their intent, shown not merely by the contract's terminology but by the totality of the
surrounding circumstances, such as the relative situations of the parties at that time; the
attitudes, acts, conduct, and declarations of the parties; the negotiations between them leading
to the deed; and generally, all pertinent facts having a tendency to fix and determine the real
nature of their design and understanding. When in doubt, courts are generally inclined to
construe a transaction purporting to be a sale as an equitable mortgage, which involves a lesser
transmission of rights and interests over the property in controversy.
Title may be nullified and real property may be reconveyed in case of equitable
mortgage. Mortgagees are bound by the prohibition against pactum commissorium as
embodied in Article 2088 of the Civil Code which provides that the creditor cannot appropriate
the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the
contrary is null and void. The mortgagee's consolidation of ownership over the mortgaged
property upon the mortgagor's mere failure to pay the obligation is the essence of pactum
commissorium.
FACTS
The property involved in this case is a parcel of land in Malabon City – formerly in the
name of Spouse Sotelo, later registered under the name of Dacquel. In 1994, the Sotelos
began the construction of a 7-door apartment on the subject land. Due to budget constraints,
the Sotelos had to borrow the amount of P140,000.00 from Dacquel, who was Flora Sotelo's
(Flora) brother. The construction of the apartment was completed in 1997.
The Sotelos claimed that the debt of P140,000.00 was agreed to be payable in double
the said amount or P280,000.00, to be collected from the rental income of four out of the
seven apartment units. There was no agreed period within which to pay the loan and the
interests. Dacquel also required the Sotelos to cede to him the subject land as security for the
loan. Consequently, on September 1, 1994, the parties executed a Deed of Sale in
consideration of the amount of P140,000.00. The TCT in the names of the Sotelos was
thereafter cancelled and a TCT was issued, constituting Dacquel as the new registered owner
of the subject land. In March 2000, when Dacquel had collected the full amount of
P280,000.00 in rental income from the four apartment units, the Sotelos asked for the return
of the subject lot. Dacquel, however, allegedly held on to the title and refused to yield the
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subject lot to the Sotelos. Thus, on May 29, 2000, the Sotelos filed a Complaint for annulment
of title and reconveyance against Dacquel.
Dacquel, on the other hand, asserted that the Sotelos’s debts to him totaled
P1,000,000.00, which he had recorded in a black diary. As payment for their debts, the
Sotelos had actually offered to sell to him the subject land and he had accepted their offer.
They reduced the said agreement into writing as a Deed of Sale on September 1, 1994 for the
true consideration of P1,000.000.00, and the amount of P140.000.00 was indicated on the
Deed of Sale only for the purpose of reducing the tax liabilities for the transaction.
ISSUES
1. Whether or not the September 1, 1994 Deed of Sale between Dacquel and Spouses
Sotelo constituted an equitable mortgage; and
2. Whether Dacquel's title to the subject property should be nullified and reconveyed to
Spouses Sotelo.
RULING
1. YES. The Deed of Sale between Dacquel and Spouses Sotelo constituted an equitable
mortgage.
Decisive for the proper determination of the true nature of the transaction between
the parties is their intent, shown not merely by the contract's terminology but by the totality
of the surrounding circumstances, such as the relative situations of the parties at that time;
the attitudes, acts, conduct, and declarations of the parties; the negotiations between them
leading to the deed; and generally, all pertinent facts having a tendency to fix and determine
the real nature of their design and understanding. When in doubt, courts are generally
inclined to construe a transaction purporting to be a sale as an equitable mortgage, which
involves a lesser transmission of rights and interests over the property in controversy.
Here, the CA applied these principles and aptly found two badges of fraud against
Dacquel – gross inadequacy of price in the Deed of Sale and continued possession of the
subject property by Spouses Sotelo as debtors of Dacquel.
First, there was gross inadequacy in the purchase price. The Deed of Absolute Sale
shows that the consideration for the subject property was only Php140,000.00. While no
evidence definitely establishes this as the market value of the property for 1994, both parties
agree that the proper consideration for the same should be in the amount of at least Php 1
Million. Spouses Sotelo averred that the price per square meter of the 350 square meter was
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Case Digests
Php5,000.00, while Dacquel stressed that the property was transferred to him in satisfaction
of Spouses Sotelo debts to him amounting to more that Php 1 Million.
It is also noteworthy that the property was mortgaged for the amount of
Php500,000.00, which Dacquel did not contest, and for which an annotation has been made
on Spouses Sotelo’s title. Furthermore, the stated Php140,000.00 included the
improvements already constructed at the time. Thus, in light of these, that only Php
140,000.00 was the agreed upon consideration for the subject property strikes Us as suspect
and grossly inadequate. Relevantly, Dacquel's version that the Spouses Sotelo owed him
debts amounting to more than P 1 Million, with the amount only being stated in the Deed of
Sale as a tax evasion device, fails to inspire belief as the alleged debts have not been duly
proved.
Second, the Spouses Sotelo, as vendors of the subject property, remained in

possession of the same. Since the Deed was signed in 1994, Spouses Sotelo possessed the
property by actual possession thereof, as when they had supervised the construction of the
apartment, and subsequently, as lessors, when they entered into lease contracts with tenants
and received payment therefor.
Even after the supposed execution of the Deed of Sale, Spouses Sotelo persisted in
exercising acts assertive of their ownership over the subject property. In Sps. Raymundo v.
Sps. Bandong, it was observed that it is contrary to human experience that a person would
easily part with his property after incurring a debt. Rather, he would first find means to settle
his obligation, and the selling of a property on which the house that shelters him and his
family stands, would only be his last resort. The actuations of Spouses Sotelo persuade that
they were preserving their hold on the subject property and had no intent at all to relinquish
their ownership over the same by sale. Moreover, Dacquel cannot simply claim that
respondent Ernesto had been acting only in representative capacity on the sole premise that
they are brothers-in-law. Close-knit familial relationships, whether by consanguinity or by
affinity, are not presumptive evidence of a contract of agency on their lonesome.
2. YES. The title may be nullified and real property may be reconveyed in case of
equitable mortgage.
As the transaction between the parties herein was demonstrated to be one of

equitable mortgage, Dacquel did not become owner of the subject property but a mere
mortgagee thereof. As such, Dacquel was bound by the prohibition against pactum
commissorium as embodied in Article 2088 of the Civil Code which provides that the creditor
cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any
stipulation to the contrary is null and void. The mortgagee's consolidation of ownership over
the mortgaged property upon the mortgagor's mere failure to pay the obligation is the
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Case Digests
essence of pactum commissorium. The mortgagor's default does not operate to automatically
vest on the mortgagee the ownership of the encumbered property. This Court has repeatedly
declared such arrangements as contrary to morals and public policy and thus void. If a
mortgagee in equity desires to obtain title to a mortgaged property, the mortgagee's proper
remedy is to cause the foreclosure of the mortgage in equity and buy it at a foreclosure sale.
Having proceeded to cause the cancellation of Spouses Sotelo’s title to the mortgaged
property and its transfer to his name without availing of the remedy of foreclosure, Dacquel
can be concluded to have dabbled in the prohibited practice of pactum commissorium. The
transaction is consequently rendered void, and title to the subject property should be
reverted to Spouses Sotelo.
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Case Digests
CITY OF TANAUAN v. MILLONTE

G.R. No. 219292, June 28, 2021, Third Division (Hernando, J.)
DOCTRINE
Case law provides that "forgery cannot be presumed and must be proved by clear,
positive and convincing evidence by the party alleging the same." Hence, Millonte bears the
burden to prove that the signatures of the Gonzagas were forgeries because they had died prior
to the execution of the Deed of Absolute Sale.
As long as one contracting party to the contract is proven with evidence to be dead at
the time of the execution of the contract - in this case, Ambrosio - the Deed of Absolute Sale
should be considered as definitely simulated. Thus, it produced no legal effect.
FACTS
The Gonzaga siblings (Marcelo, Eleuteria, Pantaleona, Ambrosio, and Lucio) are the
registered owners of the lot covered by an OCT. The mother of Millonte Gloria Millonte,
Florencia Gonzaga Arroyo, was the daughter of Lucio. Hence, Millonte is Lucio's
granddaughter and direct descendant. Millonte filed a Complaint against petitioner City of
Tanauan, praying for the declaration of nullity of the Deed of Absolute Sale, among others.
The contested property is presently occupied by the Tanauan Water District.

Supposedly, the City of Tanauan acquired the lot for P30,000.00 pursuant to a Deed of
Absolute Sale allegedly signed by the Gonzagas, as vendors, and the then Municipality of
Tanauan, represented by then Mayor Sebastian Carandang, as vendee.
In her Complaint, Millonte asserted that by virtue of the Deed of Absolute Sale, the
OCT was cancelled and a TCT was subsequently issued in favor of the Municipality of
Tanauan on July 16, 1993 (23 years after the alleged sale). Upon examination of the Deed of
Absolute Sale, however, Millonte realized that the Gonzaga siblings were already dead when
the said deed was executed, hence, they could not have signed the document. Thus, there was
no valid agreement, and the Deed of Absolute Sale was void.
City of Tanauan countered that, among others, Millonte did not show that Lucio was
already dead when the deed was executed. In response, Millonte submitted a Certification
from the City Civil Registrar of Tanauan, Batangas which indicated that Ambrosio died on
December 29, 1959. Millonte claimed that Pantaleona, Lucio, Marcelo and Eleuteria all died.
between 1938 and 1944 but she could not present their death certificates since the records
of the Local Civil Registrars of Tanauan City and Santo Tomas, Batangas were burned during
World War II. Instead, she submitted Certifications from the Local Civil Registrar stating that
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the documents which would show the dates of deaths of the other Gonzagas could not be
produced as these were destroyed.
As for the City of Tanauan, Francisco Lirio (Lirio), then the Vice Mayor of the
Municipality of Tanauan, stated that he became aware of the sale in 1970 because he was a
member of the municipal council which approved the purchase of the property.
Lirio narrated that sometime in February 1970, then Mayor Gonzales summoned him
to his office where he saw several people he was not familiar with. Mayor Gonzales then
showed him a signed Deed of Absolute Sale. Afterwards, Mayor Gonzales introduced him to
the people present in the room, who were purportedly the owners of the property being
bought by the municipality. Lirio read the deed and called out the names of all the persons
whose signatures were affixed in the document, and who all acknowledged having
voluntarily signed the document. Lirio admitted, however, that he did not verify the
identities of the individuals who raised their hands upon being called and that he did not
personally pay them the amount stated in the deed. Likewise, he admitted that he did not
witness the execution of the Deed of Absolute Sale and that he did not have personal
knowledge of the identities of the signatories in the deed.
ISSUE
Whether or not the Deed of Absolute Sale is null and void.
RULING
YES. Case law provides that "forgery cannot be presumed and must be proved by
clear, positive and convincing evidence by the party alleging the same." Hence, Millonte bears
the burden to prove that the signatures of the Gonzagas were forgeries because they had
died prior to the execution of the Deed of Absolute Sale.
Millonte submitted a Certification indicating the fact of death of Ambrosio, one of the
purported vendors. Likewise, she presented Certifications stating that the death certificates
of Pantaleona, Lucio, Marcelo, and Eleuteria could not be produced or located due to the fire
during the war, which burned the records of the Local Civil Registrar of Tanauan. Moreover,
the testimonies of Rolando and Florentino, and even Millonte herself, established that Lucio,
Ambrosio, and Eleuteria passed away many years before 1970, when the Deed of Absolute
Sale was allegedly executed.
As relatives of the deceased, their information was derived from their personal
experiences or conversations with those who knew or were familiar with the Gonzaga
siblings. In view of these, Millonte's resort to secondary evidence was proper, as the original
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documents (the death certificates of the other Gonzaga siblings) were unavailable because
these were destroyed by the fire. Hence, the deaths of the Gonzagas, the supposed
contracting parties, prior to the execution of the Deed of Absolute Sale were sufficiently
established.
More importantly, "[i]f any one party to a supposed contract was already dead at the
time of its execution, such contract is undoubtedly simulated and false and, therefore, null
and void by reason of its having been made after the death of the party who appears as one
of the contracting parties therein." The Certification pertaining to Ambrosio should be
considered as proof that he was already deceased long before the execution of the Deed of
Absolute Sale. As stated by the City Civil Registrar (of the Office of the City Civil Registrar of
Tanauan, Batangas) in the Certification, the office has a record of Ambrosio's death. This is
slightly different from the other Certifications stating that the records of deaths of the other
Gonzagas could not be retrieved because these were destroyed. All the same, as long as one
contracting party to the contract is proven with evidence to be dead at the time of the
execution of the contract - in this case, Ambrosio - the Deed of Absolute Sale should be
considered as definitely simulated. Thus, it produced no legal effect.
Considering that the Gonzagas could not have signed the Deed of Absolute Sale, the
said contract is null and void. In the same manner, the deed did not convey any legal title to
the petitioner. Consequently, the TCT which was issued in the name of the City of Tanauan
"by virtue of the said spurious and forged document[, is] also null and void." Furthermore,
"all the transactions, [if any], subsequent to the alleged sale are likewise void."
City of Tanauan could not even claim to be an innocent purchaser for value since it
did not show that it fully ascertained the identities and genuineness of the signatures of the
purported vendors. It did not diligently search for the real owners of the property and did
not verify if they were still alive or not. Curiously, what is apparent is that at the time of the
execution of the Deed of Absolute Sale in 1970, some individuals colluded with each other or
devised ways to make it appear to Lirio that those who were in the office of then Mayor
Gonzales were the owners of the lot. The City's representatives could have investigated
further so that they could determine with reasonable certainty whether the alleged sellers
were indeed the registered owners and had the capacity to sell the property.
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CARULLO-PADUA v. PADUA
G.R. No. 208258, April 27, 2022, Second Division (Hernando, J.)
DOCTRINE
As held in Tan-Andal v. Andal, expert testimony or the testimony of a

psychologist/psychiatrist is no longer required to prove psychological incapacity. Ordinary
witnesses who have been present in the spouses' lives before they contracted marriage may
testify on their observations as to the incapacitated spouse's behavior. What is important is
that the totality of evidence is sufficient to support a finding of psychological incapacity.
The testimonies of ordinary witnesses who have been present in the life of the spouses
before the latter contracted marriage should include behaviors that they have consistently
observed from the supposedly incapacitated spouse.
FACTS
Maria and Joselito were married in a civil ceremony on February 5, 1982 followed by
a church wedding on December 18, 1982. The spouses begot one son. On July 17, 1997, Maria
filed a petition for declaration of absolute nullity of their marriage anchored on Article 36 of
the Family Code. Maria alleged that at the time of the celebration of their marriage, Joselito
was psychologically incapacitated to perform his marital obligations. During their
cohabitation, Joselito exhibited excessive sexual desire and forced her to perform oral and
anal sex with him; that there were occasions when Joselito attempted to sexually molest her
sister, nieces and their household help who were staying with them; that Joselito admitted
to said attempts of molestations but begged her to keep said incidents a secret; among
others.
During trial, Maria presented herself and psychiatrist Dr. Cecilia Villegas (Dr. Villegas)
as witnesses. Maria testified on the allegations contained in her petition while Dr. Villegas
testified on the personality evaluation report she prepared. Dr. Villegas testified that she
diagnosed Joselito with a personality disorder of a sexual deviant or perversion based on
Maria's narrations. Joselito's preference for anal and oral sex, as well as the molestations he
committed against Maria's relatives and housemaid, were manifestations of Joselito's
perversion. The root cause of Joselito's personality disorder is traceable to his wretched
childhood. Inasmuch as Joselito spent his youth with a cruel father and a very protective
mother, the unbalanced relationship between Joselito's parents developed some emotional
confusion on him. As a result, Joselito's sexual development did not mature. Dr. Villegas
added that the psychological disorder of Joselito is grave, serious and not clinically curable
which rendered him psychologically incapacitated to perform his marital obligations.
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ISSUE
Whether the totality of evidence presented by Maria is sufficient to prove that Joselito
is psychologically incapacitated to perform his essential marital obligations, meriting the
dissolution of his marriage with Maria.
RULING
NO. With the recent promulgation of Tan-Andal v. Andal (Tan-Andal), the Court has
modified the Molina guidelines to prevent its stringent application in previous nullity cases
which is antithetical to the way the concept of psychological incapacity was created.
The Tan-Andal guidelines for determining what constitutes psychological incapacity

are the following:
1. The psychological incapacity must be shown to have been existing at the time of
the celebration of marriage;
2. Caused by a durable aspect of one's personality structure, one that was formed
prior to their marriage;
3. Caused by a genuinely serious psychic cause; and
4. Proven by clear and convincing evidence.
Psychological incapacity is neither a mental incapacity nor a personality disorder that

must be proven through expert opinion. There must be proof, however, of the durable or
enduring aspects of a person's personality, called "personality structure," which manifests
itself through dear acts of dysfunctionality that undermines the family.
Proof of these aspects of personality need not be given by an expert. Ordinary

witnesses who have been present in the life of the spouses before the latter contracted
marriage may testify on behaviors that they have consistently observed from the supposedly
incapacitated spouse.
Furthermore, there will be no need to label a person as having a mental disorder just
to obtain a decree of nullity.
Thus, as categorically declared by the Court, expert testimony or the testimony of a

psychologist/psychiatrist is no longer required to prove psychological incapacity. Ordinary
witnesses who have been present in the spouses' lives before they contracted marriage may
testify on their observations as to the incapacitated spouse's behavior. What is important is
that the totality of evidence is sufficient to support a finding of psychological incapacity.
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In this case, the personality evaluation report prepared by Dr. Villegas carried a
finding that Joselito suffers from a sexual deviant personality disorder or perversion.
Notably, this was based solely on Maria's narrations. The psychiatric examination on Maria
and interview on her regarding Joselito's family background merely established that the
cause of Joselito' s personality disorder is likely due to the contrasting parenting behavior of
Joselito's father and mother.
The psychiatrist's description of Joselito's parents' traits does not give this Court a
deeper intuitive understanding of Joselito's psychological state. Notably, there was no
information how Joselito reacted towards the supposed contrasting personalities of his
parents during his formative years. Neither was there any account as to how the said
contrasting parenting behavior affected Joselito's social, intellectual, moral, and emotional
growth.
To emphasize, the testimonies of ordinary witnesses who have been present in the
life of the spouses before the latter contracted marriage should include behaviors that they
have consistently observed from the supposedly incapacitated spouse. Here, not only was
there no interview or psychological test conducted upon Joselito, there was nobody who
testified on vital information regarding his personality structure, upbringing and childhood
such as members of his family, relatives, friends, and co-workers. The evaluation of Dr.
Villegas on Joselito was based merely on information, accounts and descriptions relayed
solely by Maria which glaringly and expectedly are biased.
Applying the amended guidelines in the Tan-Andal case, Maria should have presented
witnesses who have been present in their lives before they contracted marriage and who
could very well testify on the Joselito's behavior. As it stands, the evidence at hand is
insufficient to prove juridical antecedence.
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LAURO CARDINEZ, ISIDRO CARDINEZ, JESUS CARDINEZ, VIRGIE CARDINEZ, FLORA

LACONSAY and AIDA DELA CRUZ v. SPOUSES PRUDENCIO and CRESENCIA CARDINEZ
G.R. No. 213001, August 4, 2021 (Hernando, J.)
DOCTRINE
Donation is an act of liberality whereby a person disposes gratuitously of a thing or right

in favor of another, who accepts it. An agreement between the donor and the donee is essential
like in any other contract. As such, the requisites of a valid contract under Article 1318 of the
Civil Code must concur, namely: (1) consent of the contracting parties, that is consent to donate
the subject land to petitioners; (2) object certain which is the subject matter of the contract;
(3) cause of the obligation which is established.
Consent is absent in the instant case. Consent, to be valid, must have the following
requisites: (1) intelligent or with an exact notion of the matter to which it refers; (2) free; and
(3) spontaneous. The parties' intention should be clear; otherwise, the donation is rendered
void in the absence thereof or voidable if there exists a vice of consent.
The Deed of Donation is an absolute nullity hence it is subject to attack at any time. Its
defect, i.e., the absence of consent of respondents, is permanent and incurable by ratification or
prescription. In other words, the action is imprescriptible. This is in accord with Article 1410 of
the Civil Code which states that an action to declare the inexistence of a void contract does not
prescribe.
FACTS
The late Simeona Cardinez owned a parcel of land which was inherited by her sons,
Prudencio, Florentino, and Valentin, and was equally divided among themselves. In 1986,
TCT No. T-26701 covering the land was issued in the name of the brothers as co-owners.
Prudencio's share in the land was the middle portion which he registered for taxation
purposes under Tax Declaration No. (TD) 18237.
Sometime in 1994, Valentin requested Prudencio to donate the ten-square meter

portion of his land being encroached by the former's balcony. Prudencio agreed to Valentin's
request out of his love and trust for his brother. Valentin then asked Prudencio and his wife
Cresencia Cardinez (Cresencia) to sign a document that was written in English. Prudencio
and Cresencia were unable to understand the contents.
Hence, Valentin told the Cardinez couple that the purported document was for the
partition of the inherited land, cancellation of TCT No. T-26701, and transfer of their shares
in their respective names. As they were convinced by Valentin's explanation and trusted him,
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Prudencio and Cresencia signed the document without even reading and understanding its
contents. The spouses Cardinez were not given a copy of the document after it was signed.
Fourteen years later, or on June 8, 2008, Prudencio found out that a survey of the land
was being conducted. He then inquired if his inherited portion of the land was still in his
name. To Prudencio's surprise, the petitioners who are Valentin's children, informed him
that he already donated his inherited portion to them through the document that he allegedly
executed with Cresencia.
A notarized deed of donation was showed to the sons of Prudencio which stated that
respondents, as well as Florentino Cardinez married to Isabel Cardinez, and Valentin
Cardinez married to Eufrosina Cardinez, donated their respective portions of the land
covered by TCT No. T-26701 to the petitioners. All the donors including respondents signed
the purported document.
In 2008, respondents filed a Complaint for Annulment of Document with Recovery of

Possession and Damages. They averred that Valentin took advantage of their low level of
education when he made them believe that the document they were signing were for the
partition of the inherited land, cancellation of TCT No. T-26701, and transfer of their shares
in their respective names. Valentin therefore used machinations and misrepresentations to
induce them to sign the document which turned out to be a Deed of Donation.
Petitioners denied the allegations of respondents. They averred that Prudencio

purchased the subject land sometime in 1972 and then donated it to petitioners as evidenced
by the Deed of Donation. Consequently, TCT and TD was issued in the name of petitioners.
They contend that the action had already prescribed since 10 years had lapsed from the
execution of the Deed of Donation, a written contract.
RTC found respondents' evidence sufficient to prove that the Deed of Donation was
executed through fraudulent means. It held that respondents' consent was vitiated due to
the deceit employed by Valentin when the latter made it appear that the document they
signed was for the partition of their inherited land. Thus, the RTC declared that the Deed
of Donation was voidable or effective until set aside. Further, considering that
respondents instituted the complaint within four years from discovery of the fraudulent act,
the RTC further held that the action against petitioners had not yet prescribed.
The CA affirmed the findings of the RTC that petitioners did not freely give their land
to petitioners by virtue of a Deed of Donation. However, the CA ruled that the Deed of
Donation was void ab initio, and not just voidable as found by the trial court, since
respondents' consent, which is an indispensable element in donation, was totally absent. As
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a consequence thereof, the Deed of Donation has no force and effect and can be subject to
attack at any time.
Petitioners filed a Motion for Reconsideration but was denied. Hence, this Petition for
Review on Certiorari.
ISSUES
1. Whether the donation is valid; and

2. Whether the action instituted by respondents has already prescribed.
RULING
1. NO. The Supreme Court ruled that the Deed of Donation is void ab initio in the absence
of respondent’s consent.
Donation is an act of liberality whereby a person disposes gratuitously of a thing or

right in favor of another, who accepts it. An agreement between the donor and the donee is
essential like in any other contract. As such, the requisites of a valid contract under Article
1318 of the Civil Code must concur, namely: (1) consent of the contracting parties, that is
consent to donate the subject land to petitioners; (2) object certain which is the subject
matter of the contract; (3) cause of the obligation which is established.
Consent is absent in the instant case. Consent, to be valid, must have the following
requisites: (1) intelligent or with an exact notion of the matter to which it refers; (2) free;
and (3) spontaneous. The parties' intention should be clear; otherwise, the donation is
rendered void in the absence thereof or voidable if there exists a vice of consent.
The Court agrees with the appellate court that respondents did not give their consent
to the donation of their land to petitioners. Hence, no valid donation had transpired between
the parties.
It is settled that in civil cases, the one who alleges a fact has the burden of proving it
and a mere allegation is not evidence. Hence, respondents here must establish their case by
a preponderance of evidence, that is, evidence that has greater weight, or is more convincing
than those which petitioners offered in opposition to it.
The absence of consent, and not just a mere vitiation thereof, on the part of
respondents to donate their land has been satisfactorily established.
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In this case, Prudencio categorically and firmly stated that he did not know that the
document which Valentin asked him to sign was a Deed of Donation. In fact, Prudencio did
not read the document before affixing his signature because he trusted his brother that it
was for the partition of their inherited land and the cancellation of its title. Valentin neither
read the contents of the document to respondents nor gave them a copy thereof. The notary
public likewise did not explain its contents to respondents and only asked them to affix their
signatures therein.
The Court also finds it very perplexing why respondents would donate their portion
of the land which Prudencio inherited from his mother considering that Prudencio and
Cresencia have children of their own.
It is clear in this case that respondents did not donate their land to petitioners. They
never understood the full import of the document because it was neither shown to them nor
read by either Valentin or the notary public.
2. NO. The action for annulment of the Deed of Donation is imprescriptible.
The Deed of Donation is an absolute nullity hence it is subject to attack at any time. Its
defect, i.e., the absence of consent of respondents, is permanent and incurable by ratification
or prescription. In other words, the action is imprescriptible. This is in accord with Article
1410 of the Civil Code which states that an action to declare the inexistence of a void contract
does not prescribe.
In this case, since the Deed of Donation is void ab initio due to the illegality in its
execution, the disputed land is deemed to be simply held by petitioners in trust for
respondents who are the real owners. Respondents therefore have the right to institute a
case against petitioners for the reconveyance of the property at any time.
The well-settled rule is that "as long as the land wrongfully registered under the Torrens
system is still in the name of the person who caused such registration, an action in personam
will lie to compel him to reconvey the property to the real owner."
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SOCORRO P. CABILAO v. MA. LORNA Q. TAMPAN, rep. by her Attorney-in-Fact JUDITH

TAMPAN-MONTINOLA & DANILO TAMPAN
G.R. No. 209702, March 23, 2022 (Hernando, J.)
DOCTRINE
Transfer of the certificate of title in the name of the buyer and transfer of ownership to
the buyer are two different concepts. As correctly held by the CA, between the seller and buyer,
ownership is transferred not by the issuance of the new certificate of title in the name of the
buyer but by the execution of the instrument of sale in a public document. Article 1498 of the
New Civil Code provides that:
Art. 1498. When the sale is made through a public instrument, the execution thereof
shall be equivalent to the delivery of the thing which is the object of the contract, if from the
deed the contrary does not appear or cannot clearly be inferred.
FACTS
Respondent Lorna purchased a residential house and lot from petitioner Socorro
covered by TCT No. T-59, through a Deed of Absolute Sale in the amount of P10,000.00. Since
Lorna was in the United States, her mother, Antonieta, purchased the property on her behalf.
In 1995, Lorna decided to have TCT No. T-59 registered in her name but she
discovered that the owner's duplicate got lost while it was kept by respondent Judith in the
house. Thereafter, Lorna, through Judith, filed a petition for the issuance of a new owner's
duplicate. However, spouses Lapulapu and Lelita Buyser opposed her petition on the ground
that they were in possession of the said title after buying the same from Socorro. Thus,
Lorna's petition was dismissed.
When Lelita informed Socorro about the petition for the issuance of a new owner's
copy of the title, Socorro denied having sold the subject property to Lorna. However, due to
the controversy, Socorro repurchased the subject property and the owner's duplicate was
surrendered back to her.
In 1996, Lorna and Judith lodged a complaint for declaration of nullity of a pacto de
retro sale entered into between Socorro and spouses Buyser. The case was docketed as Civil
Case No. 4818.
In the same year, Socorro filed an action for Annulment or Cancellation of Document,
Quieting of Title/Recovery of Ownership and Possession against Lorna and Danilo Tampan
which was docketed as Civil Case No. 4826. She alleged that she was the absolute and
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registered owner of the subject property covered by TCT No. T-59 which was in her
possession. Moreover, she sold the subject property through a pacto de retro sale to
Enriqueta Baybayon (Enriqueta) for P89,000.00, and to Lelita on January 25, 1995. During
both transactions, she surrendered her owner's copy of TCT No. T-59 to Enriqueta and Lelita.
Lorna maintained that she owned the subject property and claimed that Socorro was
in full possession of her mental faculties when they signed the Deed of Sale before the notary
public.
The RTC dismissed Civil Case No. 4818 considering that Socorro had already
repurchased the property from Lelita and the latter already returned the owner's copy of
TCT No. T-59. Thus, the action for nullity of the pacto de retro sale had already become moot
and academic. As to Civil Case No. 4826, the RTC declared the Deed of Sale between Socorro
and Lorna as null and void. It held that since TCT No. T-59 is under the name of Socorro, it
was evidence of indefeasible title to the property.
Moreover, the title was in Socorro's possession which is contrary to the regular
course of business, if indeed it was sold to Lorna. The Deed of Sale between Lorna and
Socorro is unenforceable considering that Lorna did not sign the document as she was in the
United States at that time. While Antonieta signed on her behalf, there was nothing on record
to prove that Lorna authorized her mother to transact on her behalf. The price of P10,000.00
is grossly inadequate thereby rendering the contract questionable. Lastly, the RTC pointed
out that it took Lorna seven years before transferring the title to her name for no valid
reason. Hence, the timing was suspicious since Lorna wanted to transfer the title of the
property in her name while Socorro was away.
The CA reversed the RTC's findings. It held that while the Torrens title is evidence of
indefeasible title over the property, the execution of a deed of sale of such property transfers
the ownership thereof to the buyer even if the same remains under the name of the seller or
registered owner. Since Socorro assails the validity of the Deed of Sale to Lorna, she has
the burden of proving its invalidity. However, Socorro failed to substantiate her claim that
the Tampans employed fraud and deception in securing her signature on the Deed of Sale.
The Tampans were paying for the realty taxes over the property, thereby indicating strong
evidence of ownership.
The CA further held that the Deed of Sale between Socorro and Lorna, being a
notarized document, bears evidentiary weight with respect to its due execution and enjoys
a presumption of regularity. As to the gross inadequacy of the consideration, the CA ruled
that it does not affect the validity of the sale. Likewise, it held that the late or non-registration
of a deed of sale does not affect its validity.
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Socorro sought reconsideration but it was denied by the CA. Hence, this petition.
ISSUE
Whether the Deed of Sale between Lorna and Socorro is valid.
RULING
YES. The Supreme Court sustains the findings of the CA and uphold the validity of the
Deed of Sale between Lorna and Socorro.
Article 1305 of New Civil Code provides that a contract is "a meeting of minds
between two persons whereby one binds himself, with respect to the other, to give
something or to render some service." The essential requisites are: (1) consent of the
contracting parties; (2) object certain which is the subject matter of the contract; and (3)
cause of the obligation which is established. In the present case, all the elements of a valid
contract are present.
In the case at bar, the Deed of Sale validly transferred the ownership over TCT No. T-
59 from Socorro to Lorna in consideration of P10,000.00. Arguing the absence of consent on
her part, Socorro claims that the Deed of Sale is null and void since her signature thereon
was obtained through fraud, or under the guise of a contract of loan. However, the evidence
on record belies her theory. Reynaldo testified that he was present during the execution of
the Deed of Sale where he witnessed Antonieta and Socorro sign the document. He further
testified that Socorro gave Antonieta the owner's duplicate copy of the title the following
day.
More importantly, Atty. Mantilla, who prepared and notarized the Deed of Sale,
testified and categorically stated that Socorro signed the Deed of Sale and received the
consideration of P10,000.00 from Antonieta. At that instance, Socorro handed over a
photocopy of the duplicate copy of the title to Antonieta. When asked why Socorro only
handed over a photocopy of the TCT, she answered that the duplicate copy was still with a
certain Leon Danaque because of her outstanding loan with him.
It is also of no moment that the consideration was in the amount of P10,000.00. Gross
inadequacy of price does not affect the validity of a contract of sale, unless it signifies a defect
in the consent or that the parties actually intended a donation or some other contract.
Inadequacy of cause will not invalidate a contract unless there has been fraud, mistake or
undue influence. As earlier stated, fraud was not proven. Hence, the consideration in the
amount of P10,000.00 did not invalidate the sale.
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The Court likewise note that the title over the subject property remained under
Socorro's name despite the execution of the Deed of Sale. However, this does not also affect
the validity of the deed of sale. Transfer of the certificate of title in the name of the buyer and
transfer of ownership to the buyer are two different concepts. As correctly held by the CA,
between the seller and buyer, ownership is transferred not by the issuance of the new
certificate of title in the name of the buyer but by the execution of the instrument of
sale in a public document. Article 1498 of the New Civil Code provides that:
Art. 1498. When the sale is made through a public instrument, the execution
thereof shall be equivalent to the delivery of the thing which is the object of
the contract, if from the deed the contrary does not appear or cannot clearly
be inferred.
Therefore, contrary to Soccoro's assertion, it is of no moment that the title was only
registered seven years after the deed of sale was executed. The sale was already perfected
upon the execution of the Deed of Sale before Atty. Mantilla. The non-registration of the title
was also aptly explained by Judith in that the money given by Lorna, who was in the United
States, was only enough for the purchase of the property. Hence, it took some time before
the same could be registered and transferred in Lornas's name.
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BANK OF THE PHILIPPINE ISLANDS v. CENTRAL BANK OF THE PHILIPPINES (NOW

BANGKO SENTRAL NG PILIPINAS) and CITIBANK, N.A.
G.R. No. 197593, October 12, 2020 (Hernando, J.)
DOCTRINE
The State in the performance of its governmental functions is liable only for the tortuous
acts of its special agents. On the other hand, the State becomes liable as an ordinary employer
when performing its proprietary functions.
FACTS
Petitioner Bank of the Philippine Islands (BPI) and respondent Citibank, N.A.
(Citibank) are both members of the Clearing House established and supervised by the
Central Bank of the Philippines (CBP), now Bangko Sentral ng Pilipinas. Both banks
maintained demand deposit balances with the CBP for their clearing transactions with other
commercial banks coursed through the said clearing facilities.
BPI Laoag City Branch discovered outstanding discrepancies in its inter-bank

reconciliation statements in CBP in the amount of P9 million. Hence, petitioner BPI filed a
letter-complaint before the CBP on the latter's irregular charging of its demand deposit
account in the amount of P9 million. Both CBP and petitioner BPI agreed to refer the matter
to the National Bureau of Investigation (NBI) to conduct a separate investigation.
The results of the NBI Investigation Report showed that an organized criminal
syndicate using a scheme known as "pilferage scheme" committed the bank fraud in the
following manner: (a) the infiltration of the Clearing Division of the CBP with the connivance
of some personnel of the CBP Clearing House; (b) the pilferage of "out-of-town" checks; (c)
the tampering of vital banking documents, such as clearing manifests and clearing
statements; (d) the opening of Current Accounts by members of the syndicate with the BPI
Laoag City Branch and Citibank, Greenhills Branch in Mandaluyong City; and (e) the
withdrawal of funds through checks deposited with Citibank and drawn against BPI.
It was further disclosed that two accounts were opened by Bustamante and Desiderio
at BPI Laoag City Branch and Citibank Greenhills Branch, respectively. Thereafter, Citibank
Greenhills Branch received by way of deposit (a) two checks in the amounts of P498,719.70
and P501,260.30; (b) two checks in the total amount of P3 million; and (c) various checks in
the total amount of P5 million deposited on. All these checks were sent by Citibank Greenhills
Branch to the CBP Clearing House for clearing purposes.
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Upon arrival of the checks at the CBP Clearing House, Valentino, CBP's Bookkeeper,
with the assistance of Janitor-Messenger Estacio, intercepted and pilfered the BPI Laoag City
Branch checks, and tampered the clearing envelope. They reduced the amounts appearing
on the clearing manifest, the BPI clearing statement and the CBP manifest to conceal the fact
that the BPI Laoag City Branch checks showing the original amounts were deposited with
Citibank Greenhills Branch. Thereafter, the altered CBP manifest and clearing statement,
together with the clearing envelope which contained the checks intended for BPI Laoag City
Branch but without the pilfered checks were forwarded to CBP Laoag Clearing Center.
As a standard operating procedure, the CBP Laoag Clearing Center forwarded the said
documents to the drawee bank, BPI Laoag City Branch, which would then process the same
by either honoring or dishonoring the checks received by it. However, BPI Laoag City Branch
could neither honor nor dishonor the pilfered checks as they were not included in the
clearing envelope or in the tampered CBP manifest and clearing statement. BPI Laoag City
Branch was not given the chance to dishonor the pilfered checks as they were not presented
for payment. Thereafter, upon receipt of the original clearing manifest from CBP Laoag
Clearing Center with BPI's acknowledgement, Valentino added back the amount of the
pilfered checks so that the original manifest would tally with all the records in CBP.
On the other hand, the sending bank, Citibank Greenhills Branch, did not receive any
notice of dishonor within the period provided under the CBP regulations, thus, it presumed
that the checks deposited in MMC's Current Account had been presented in due course to the
drawee bank, BPI Laoag City Branch, and were consequently honored by the latter.
Thereafter, Citibank Greenhills Branch allowed the withdrawal of the checks in the total
amount of P9 million.
As a result of the aforesaid fraud committed against petitioner BPI, Desiderio and
Estacio, together with other personalities, were convicted of three (3) counts of Estafa thru
Falsification of Public Documents by the Sandiganbayan (SB). On the other hand, Valentino
was discharged and utilized as the main witness for the prosecution.
Thereafter, petitioner BPI requested CBP, to credit back to its demand deposit
account the amount of P9 million with interest. However, CBP credited only the amount of
P4.5 million to BPI's demand deposit account. Despite several requests made by BPI, CBP
refused to credit back the remaining amount of P4.5 million plus interest. Hence, petitioner
BPI filed a complaint for sum of money against CBP.
In its Answer, CBP denied any liability to BPI and demanded the latter to return the
P4.5 million it earlier credited to BPI as the said amount was allegedly held under a
"suspense account" pending the final outcome of the NBI investigation. CBP likewise filed a
third-party complaint against Citibank for the latter's negligence which caused the
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perpetration of the fraud. Citibank, on its part, denied any negligence in the supervision of
its employees. CBP further alleged, in its Amended Answer, that the fraud could not have
been committed without the connivance and collusion of certain employees of both
petitioner BPI and respondent Citibank.
The RTC ruled in favor of petitioner BPI. It gave credence to the NBI Investigation
Report that the immediate and proximate cause of the defraudation were the criminal acts
of CBP employees, Valentino and Estacio. The lower court ruled that CBP, as employer, shall
be liable for the damage caused by its employees, Valentino and Estacio, to petitioner BPI
under Articles 2176 and 2180 of the Civil Code.
The CA reversed and set aside the decision of the RTC. The appellate court dismissed
the complaint filed by petitioner BPI and ordered the cancellation of the payment made by
CBP in the amount of P4.5 million to BPI. It reasoned that under Article 2180 of the Civil
Code, the State is generally liable only for quasi-delicts in case the act complained of was
performed by a special agent. Both Valentino and Estacio were not special agents as neither
of them was duly empowered by a definite order or commission to perform some act or were
charged with some definite purpose which gives rise to the claim. They were employed in
accordance with ordinary rules and regulations governing civil service and assigned to carry
out tasks naturally related to their employment.
The appellate court clarified that the State may be held liable for quasi-delicts as an
ordinary employer when it is performing proprietary acts, citing Fontanilla v. Maliaman.
Even assuming that CBP, in operating and administering the clearing house is performing
proprietary functions, it still cannot be held liable for the acts of its employees as both
Valentino and Estacio were not acting within the scope of their employment when they
committed the fraud against petitioner BPI.
A motion for reconsideration was filed by petitioner BPI which was denied by the
appellate court. Hence, petitioner BPI filed a Petition for Review on Certiorari under Rule 45
before this Court.
ISSUE
1. Whether or not CBP is performing a proprietary function when it entered into

clearing operations of regional checks of its member institutions;
2. Whether or not CBP may be sued on its governmental and/or proprietary functions;
and
3. Whether or not CBP is liable for the acts of its employees Valentino and Estacio.
RULING
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1. NO. The Supreme Court held that CBP is a corporate body performing governmental
functions. Operating a clearing house facility for regional checks is within CBP's
governmental functions and duties as the central monetary authority.
One of the generally accepted principles of international law, which we have adopted
in our Constitution under Article XVI, Section 3 is the principle that a state may not be sued
without its consent, which principle is also embodied in the 1935 and 1973 Constitutions.
However, state immunity may be waived expressly or impliedly. Express consent may be
embodied in a general or special law. On the other hand, consent is implied when the state
enters into a contract or it itself commences litigation.
In the case of government agencies, the question of its suability depends on whether
it is incorporated or unincorporated. An incorporated agency has a Charter of its own with a
separate juridical personality while an unincorporated agency has none. In addition, the
Charter of an incorporated agency shall explicitly provide that it has waived its immunity
from suit by granting it with the authority to sue and be sued. This applies regardless of
whether its functions are governmental or proprietary in nature.
Sections 1 and 4 of RA 265, as amended, provided for the creation of the CBP, a
corporate body with certain corporate powers which include the authority to sue and be
sued. Its main function is to administer the monetary, banking and credit system of the
Philippines which is primarily governmental in nature. It has the following duties: (a) to
primarily maintain internal and external monetary stability in the Philippines, and to
preserve the international value of the peso and the convertibility of the peso into other
freely convertible currencies; and (b) to foster monetary, credit and exchange conditions
conducive to a balanced and sustainable growth of the economy.
Undoubtedly, the function of the CBP as the central monetary authority is a

purely governmental function. Prior to its creation, the supervision of banks, banking and
currency, and the administration of laws relating to coinage and currency of the Philippines
was lodged with the Bureau of Treasury under the immediate supervision of the Executive
Bureau (EB).
Contrary to the contention of petitioner BPI, CBP's clearing house facility for regional
checks is within its functions and duties as the central monetary authority mandated in its
Charter. This is true despite the existence of the Philippine Clearing House Corporation
(PCHC), a private corporation incorporated in July 1977, which also provides clearing
services for checks issued within Metro Manila during the time of petitioner BPI's
defraudation.
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It bears stressing that establishing clearing house facilities for the member banks is a
necessary incident to its primary governmental function of administering monetary, banking
and credit system of the Philippines as per Section 107 of RA 265, as amended.
2. YES. CBP is not immune to suit although it performed governmental functions.
Nonetheless, while the CBP performed a governmental function in providing clearing

house facilities, it is not immune from suit as its Charter, by express provision, waived its
immunity from suit. However, although the CBP allowed itself to be sued, it did not
necessarily mean that it conceded its liability. Petitioner BPI had been given the right to bring
suit against CBP, such as in this case, to obtain compensation in damages arising from torts,
subject, however, to the right of CBP to interpose any lawful defense.
3. NO. CBP is not liable for the acts of its employees because Valentino and Estacio
were not "special agents."
Anent the issue of whether CBP is liable for the torts committed by its employees
Valentino and Estacio, the test of liability depends on whether or not the employees, acting
in behalf of CBP, were performing governmental or proprietary functions. The State in the
performance of its governmental functions is liable only for the tortuous acts of its special
agents. On the other hand, the State becomes liable as an ordinary employer when
performing its proprietary functions. Thus, Articles 2176 and 2180 of the Civil Code provide
that:
Art. 2176. Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provisions of this Chapter.
Art. 2180. The obligation imposed by Article 2176 is demandable not only for
one's own acts or omissions, but also for those of persons for whom one is
responsible.
To reiterate, CBP's establishment of clearing house facilities for its member banks to
which Valentino and Estacio were assigned as Bookkeeper and Janitor-Messenger,
respectively, is a governmental function. As such, the State or CBP in this case, is liable only
for the torts committed by its employee when the latter acts as a special agent but not when
the said employee or official performs his or her functions that naturally pertain to his or her
office.
A special agent is defined as one who receives a definite and fixed order or
commission, foreign to the exercise of the duties of his office. Evidently, both Valentino and
Estacio are not considered as special agents of CBP during their commission of the fraudulent
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acts against petitioner BPI as they were regular employees performing tasks pertaining to
their offices, namely, bookkeeping and janitorial-messenger. Thus, CBP cannot be held liable
for any damage caused to petitioner BPI by reason of Valentino and Estacio's unlawful acts.
Nonetheless, even assuming that CBP is an ordinary employer, it still cannot be held
liable. Article 2180 of the Civil Code provides that an employer shall be liable for the damages
caused by their employees acting within the scope of their assigned tasks. An act is deemed
an assigned task if it is "done by an employee, in furtherance of the interests of the employer
or for the account of the employer at the time of the infliction of the injury or damage."
In this case, Valentino and Estacio's fraudulent acts of tampering with and pilfering
of documents are not in furtherance of CBP's interests nor done for its account as the said
acts were unauthorized and unlawful.
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BANCO DE ORO UNIBANK, INC. (now BDO UNIBANK, INC.) v. EDGARDO C. YPIL, SR.,
CEBU SUREWAY TRADING CORPORATION, and LEOPOLDO KHO
G.R. No. 212024, October 12, 2020 (Hernando, J.)
DOCTRINE
It is settled that "compensation is a mode of extinguishing to the concurrent amount the

debts of persons who in their own right are creditors and debtors of each other. The object of
compensation is the prevention of unnecessary suits and payments thru the mutual extinction
by operation of law of concurring debts." The said mode of payment is encapsulated in Article
1279 of the Civil Code, viz.:
ARTICLE 1279. In order that compensation may be proper, it is necessary:
1. That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other;
2. That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the latter
has been stated;
3. That the two debts be due;
4. That they be liquidated and demandable;
5. That over neither of them there be any retention or controversy, commenced
by third persons and communicated in due time to the debtor.
FACTS
Respondent Kho, representing Cebu Sureway Trading Corporation (CSTC), offered a

proposal to respondent Ypil to invest in the Prudentialife Plan — Millionaires in Business
scheme. Ypil acquiesced and Kho was able to solicit the total amount of P300,000.00 from
him. Eventually, though, Ypil opted to get a refund of the amounts he paid. However, CSTC or
Kho did not answer. Ypil likewise made several oral demands but to no avail. Subsequently,
Ypil's lawyer sent a demand letter to Kho but it was never answered.
Ypil thus filed a Complaint for Specific Performance against CSTC and Kho before the
RTC of Cebu City which was docketed as Civil Case No. CEB-29462. The RTC granted Ypil's
prayer for the ex-parte issuance of an attachment order. Afterwards, the trial court issued a
Writ of Preliminary Attachment.
In 2004, Sheriff Guaren of the RTC of Cebu issued a Notice of Garnishment of the
amount of P300,000.00 plus lawful expenses from the accounts of CSTC and/or Kho
addressed to the Manager and/or Cashier of the BDO's North Mandaue Branch. BDO received
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the said notice on the same day. The bank, through its branch head Polloso, informed Sheriff
Guaren that CSTC and/or Kho have no available garnishable funds.
During the pre-trial conference, the RTC discovered that BDO already debited from
CSTC's savings and current accounts some amounts to offset its (CSTC's) outstanding
obligation with the bank under a loan agreement. In view of this, the trial court directed the
Bank, through Polloso, to show cause why it should not be held guilty of indirect contempt
for debiting the money from the accounts of CSTC and Kho which was under custodia legis.
The Bank averred that since CSTC defaulted in its obligations to the Bank as embodied
in a Credit Agreement and Promissory Note, its entire obligation immediately became due
and demandable without need of demand or notice. In other words, it asserted that since
the Bank and CSTC were creditors and debtors of each other, legal compensation
already took effect.
CSTC and Kho argued that the provisions of the Promissory Note should not affect
third parties and court processes such as garnishment. They alleged that the Bank resorted
to legal compensation to frustrate the order of garnishment. Moreover, they averred that
legal compensation cannot take effect because CSTC's loan was not yet due and demandable.
Ypil on the other hand insisting that the trial court acquired jurisdiction over the Bank which
in turns became a forced intervenor upon receipt of the Notice of Garnishment. Withal, he
posited that the subject deposit was brought into custodia legis which the Bank cannot debit
in its favor.
The RTC absolved Polloso from the charge of indirect contempt but ordering the
Bank's North Mandaue Branch to make available the garnished deposits of CSTC and Kho
pursuant to the Notice of Garnishment. It ruled that "the bank, cannot, however, unilaterally
debit the defendants' [CSTC and Kho] accounts which are already in custodia legis, even
assuming for argument's sake that legal compensation ensued ipso jure. If the bank has any
claims against the defendants [CSTC and Kho], it must file the proper pleading for
intervention to protect whatever it claims to be its rights to include the right of legal
compensation."
Meanwhile, the RTC rendered a Judgment Based on Compromise Agreement.

Apparently, Ypil and Kho submitted a Compromise Agreement wherein Kho, in behalf of
CSTC, agreed to pay the garnished amount of P300,000.00 as full and final settlement of
CSTC's obligation, given that the said amount is more or less the same amount it owes Ypil.
Moreover, Ypil and Kho agreed to waive any other claims and counterclaims in the specific
performance case. Withal, the trial court, after finding that the Compromise Agreement did
not appear to be contrary to any law, morals, good customs, public policy or public order,
ordered the Bank to tender the garnished amount of P300,000.00 to Ypil.
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The Bank argued that the garnished amount is the subject of its pending certiorari
petition with the CA. As such, it requested the trial court to suspend any attempt to
implement the Judgment Based on Compromise Agreement insofar as the garnished amount
is concerned, at least until the CA resolves its certiorari petition.
The CA declared that the RTC did not commit grave abuse of discretion when it issued
the assailed Orders as it correctly held that the service of the Notice of Garnishment upon
the Bank effectively placed CSTC's deposits under custodia legis, notwithstanding the
debiting of CSTC's accounts by the Bank.
It ruled that CSTC and the Bank are, in their own right, creditors and debtors of each
other. However, not all the elements of legal compensation pursuant to Article 1279 of the
Civil Code are present in this case. This is because notwithstanding CSTC's indebtedness to
the Bank, there is no proof as to when the obligation became due, liquidated and
demandable. While the Bank relied on the Promissory Note executed by CSTC in its favor,
it (Bank) however failed to prove the exact date of the default which supposedly rendered
CSTC's obligations due and demandable.
Significantly, the CA found that the Bank debited CSTC's account only on February 10,
2004 or six days after the Notice of Garnishment. It added that the Bank conveniently failed
to mention that there was a stipulation in the Promissory Note giving it the option to offset
or not to offset the deposits of CSTC. The fact that CSTC had P301,838.27 in its savings and
checking accounts when the Notice of Garnishment was served showed that the Bank had
not yet opted to offset CSTC's deposits to pay for its obligations.
ISSUE
1. Whether legal compensation took place ipso jure as between the Bank and CSTC when
CSTC defaulted in its obligations to the Bank; and
2. Whether CSTC’s indebtedness is considered as due and liquidated.
RULING
1. NO. The Supreme Court held that legal compensation did not take place ipso jure as
between the Bank and CSTC when CSTC defaulted in its obligations to the Bank.
It is settled that "compensation is a mode of extinguishing to the concurrent amount

the debts of persons who in their own right are creditors and debtors of each other. The
object of compensation is the prevention of unnecessary suits and payments thru the mutual
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extinction by operation of law of concurring debts." The said mode of payment is

encapsulated in Article 1279 of the Civil Code, viz.:
ARTICLE 1279. In order that compensation may be proper, it is necessary:
That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other;
That both debts consist in a sum of money, or if the things due are consumable,
they be of the same kind, and also of the same quality if the latter has been stated;
That the two debts be due;
That they be liquidated and demandable;
That over neither of them there be any retention or controversy, commenced

by third persons and communicated in due time to the debtor.
In relation to this, Article 1290 of the Civil Code states that "when all the requisites
mentioned in Article 1279 are present, compensation takes effect by operation of law, and
extinguishes both debts to the concurrent amount, even though the creditors and debtors
are not aware of the compensation." Relevantly, this is the Bank's main contention.
As guided by the conditions stated in Article 1279 of the Civil Code and to supplement
the findings of the CA, the Court reiterates that there is no dispute that the Bank and CSTC
are both creditors and debtors of each other. Moreover, the debts consist in or involve a sum
of money, particularly CSTC's loan and its deposit with the Bank. Notably, the Bank argues
that CSTC's debts became due given that it defaulted in its loan obligations even without need
of demand pursuant to the Promissory Note. Neither CSTC nor Kho categorically refuted that
CSTC indeed defaulted.
However, similar to the CA's ruling, the flaw in the Bank's argument is its failure to
specify the date when CSTC actually defaulted in its obligation or particularly pinpoint which
installment it failed to pay. The Bank merely revealed that CSTC owed it the amount of
P3,823,000.00 without presenting a detailed computation or proof thereof except for the
Promissory Note. Although CSTC and Kho did not question the computation made by the
Bank, the fact remains that the actual date of default was not disclosed and verified with
corroborating preponderant proof. The Bank only stated that CSTC has not been paying its
monthly obligations prior to February 4, 2004 which is not particular enough, even if the
Promissory Note indicates that CSTC's obligation will immediately become due after default
and without need of notice.
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2. NO. CSTC's indebtedness cannot be considered as due and liquidated. It should be

emphasized that a claim is liquidated when the amount and time of payment is fixed. If
acknowledged by the debtor, although not in writing, the claim must be treated as
liquidated."
In this case, the time of default and the amount due were not specific and particular.
Without this information, a simple arithmetic computation cannot possibly be done without
risking errors especially with regard to the application of interest and penalties. Similarly,
despite CSTC's failure to contest the Bank's computation, its debt still cannot be considered
as liquidated. Further confirmation is necessary in order to treat CSTC's debt as due,
demandable and liquidated, which the Bank unfortunately did not bother to elaborate on.
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DIOSCORO POLIÑO BACALA, Substitute Judicial Guardian of Incompetent AQUILINO

O. POLIÑO v. HEIRS OF SPOUSES JUAN POLIÑO AND CORAZON ROM, namely: RUBEN
R. POLIÑO, BRENDO R. POLIÑO, CARLITO R. POLIÑO, and BANDY R. POLIÑO,
represented by RUBEN R. POLIÑO
G.R. No. 200608, February 10, 2021 (Hernando, J.)
DOCTRINE
The "complementary contracts construed together" doctrine incarnates the

spirit of Art. 1374 of the Civil Code, which states that:
Art. 1374. The various stipulations of a contract shall be interpreted together,

attributing to the doubtful ones that sense which may result from all of them
taken jointly.
On the other hand, equity is applied as a means of resolving justiciable cases only in
the absence of statutory law or rules of procedure. Such class of jurisdiction is rooted in
Article 9 of the Civil Code, which expressly mandates the courts to make a ruling despite the
"silence, obscurity or insufficiency of the laws" to "fill the open spaces in the law."
FACTS
Anecito and Clara were the registered owners of a parcel of land planted with
coconuts. They died intestate and was survived by their two sons and sole heirs, Aquilino
and Ducepino, who are both mentally incapacitated.
A deed of sale and an agreement executed by and between Anecito and Juan Poliño
on April 13, 1992, however surfaced and spawned a legal controversy among the family
members. In the Deed of Sale, Anecito allegedly ceded unto Juan the subject property for a
consideration of P15,000.00, while the Agreement stipulated that during Anecito's lifetime,
Juan shall allow Anecito to enjoy the usufruct of the subject property, and that upon Anecito's
death, Juan shall continue to support and provide financial assistance to Aquilino and
Ducepino. The Agreement further provided that breach of its terms shall render the Deed of
Sale non-effective and nugatory.
Aproniana applied for the issuance of letters of guardianship over Aquilino and
Ducepino which was granted upon filing a bond of P20,000.00. While the guardianship
proceedings were pending, Juan executed a Deed of Voluntary Transfer conveying the
subject property to his children. Aproniana then instituted a complaint for nullity and/or
annulment of sale seeking the nullification of the Deed of Sale and Agreement, among other
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reliefs, against the spouses Juan and Corazon and in behalf of siblings Aquilino and
Ducepino.
Aproniana assailed the validity of both documents for being fictitious and without
consideration. She claimed that it was incongruous for Anecito to sell the subject property
for P15,000.00 when it had a market value of at least P150,000.00 at the time of sale.
Moreover, Juan allegedly could not afford to pay the real value of the subject property as he
had no known means of livelihood. She claimed that the transaction was in reality a donation
mortis causa, and since it was not executed in accordance with the formalities of the law, it
was null and void.
In all, Aproniana, in behalf of Aquilino and Ducepino, sought to enjoin the spouses
Juan and Corazon from further gathering the fruits of the subject property and to compel
them to account for all the past harvests made thereon.
The spouses Juan and Corazon denied the accusations against them. They averred
that they have other means of income. Despite Aproniana's appointment as judicial guardian,
they continued to provide for the material needs of Aquilino and Ducepino who remained
under their custody since Aproniana was neglectful of her duties as the appointed guardian.
On cross-examination, Juan stated that the Deed of Sale was executed in the Office of the
Provincial Attorney. He and Anecito appeared before the notary public during its signing.
The subject property was valued at P15,000.00 at the time. Anecito surrendered to him the
title of the subject property.
Aproniana alone testified for the plaintiff's side. Aside from her allegations in the
complaint, she stated on the witness stand that Ducepino had passed away and that Aquilino
is residing at her house. On the other hand, Juan was the sole witness for the respondents. At
the time of the taking of his testimony, Aproniana and original co-defendant Corazon had
also passed away. While no substitution was made for Aproniana, Corazon was substituted
by Juan and their children
The RTC decided in favor of Aproniana. It gave credit to her testimony that the
supposed sale between Anecito and Juan involved no money and was not truly paid for. Juan
never rebutted this in his testimony or otherwise. He neither said that he had paid the
purchase price of P15,000.00, nor did he testify that he had the financial capacity to pay the
said amount. There being no cause or consideration, the RTC voided the Deed of Sale.
The RTC also found as illogical for any person to sell his property for P15,000.00 when
the market value per the 1993 tax declaration was P119,893.00. It held that the Deed of Sale
was null and void for lack of cause or consideration and for being fictitious and simulated
pursuant to Articles 1409, 1352, and 1346 of the Civil Code. The Agreement was also
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declared to be a nullity as its terms and conditions were derived from the Deed of Sale that
was likewise null and void. Moreover, the trial court found that Juan failed to prove that
Anecito enjoyed the usufruct of the subject property. It was also determined that Juan did
not take care of or provide financial support to the siblings after Anecito's death in 1994,
which neglect resulted in the death of Ducepino. Thus, the trial court concluded that Juan
failed to comply with his obligations under the Agreement, leading to the nullity of the Deed
of Sale.
The CA reversed the RTC. Citing Article 1354 of the Civil Code and the best evidence
rule, the appellate court presumed the existence of a cause and consideration in the Deed of
Sale in question. Aproniana had failed to prove that the amount of P15,000.00 was grossly
inadequate and her arguments were hearsay. Thus, the CA declared the Deed of Sale and
Agreement between Anecito and Juan valid. Likewise, the appellate court upheld the validity
of the Agreement and the Deed of Voluntary Land Transfer as their terms and conditions
were derived from the validity of the Deed of Sale.
The CA denied the Motion for Reconsideration, thus, this Petition by Dioscoro, as
Aproniana's substitute and Aquilino's representative.
ISSUES:
1. Whether gross inadequacy of the price nullify the contract between Anecito and Juan.
2. Whether the contract between Anecito and Juan is a donation mortis causa
3. Whether the contract between Anecito and Juan is valid.
RULING
1. NO. The Supreme Court ruled that gross inadequacy of the price did no invalidate the
subject contract.
First, a contract enjoys the presumption that it is supported by an existing and lawful
cause or consideration. This presumption is disputable and may be overthrown by
preponderance of evidence to the contrary. Preponderance of evidence is the weight, credit,
and value of the aggregate evidence on either side and is usually considered to be
synonymous with the term "greater weight of evidence" or "greater weight of credible
evidence." Second, notarized documents, being public in nature, require no further proof of
their authenticity and due execution. They are entitled to full faith and credit on its face and
are prima facie evidence of the facts stated therein. To overturn this presumption of
regularity, clear and convincing proof is required.
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The Deed of Sale states in plain terms that the subject property is being sold for
P15,000.00. Anecito had expressly acknowledged in the Deed of Sale his receipt of the said
amount as consideration of the contract. No further issue on the regularity of the
notarization was raised on appeal. To debunk the existence of consideration in the Deed of
Sale, there must be more than mere preponderant evidence showing that Anecito did not
truly execute the disputed document or that the parties had not truly intended a contract of
sale.
However, whether preponderant, clear, or convincing, petitioner never submitted

any controverting evidence. Aproniana only stated that Anecito had told her that the sale
was simulated and that no consideration was paid. Aside from what Aproniana stated,
nothing else was presented in support of the claim that the amount of P15,000.00 was
fabricated or actually unpaid. Settled is the rule that bare allegations have no probative
value.
2. NO. The Contract between Anecito and Juan was a sale subject to a resolutory
condition.
Petitioner advances the alternative theory that the transaction between Anecito and
Juan was in fact a donation mortis causa due to the following circumstances: (1) the gross
inadequacy of the price; (2) the stipulation that Anecito shall continue to enjoy the usufruct
of the subject property during his lifetime; (3) the condition that Juan shall provide financial
support to Aquilino and Ducepino after Anecito's death; and (4) the withholding of the
delivery of the subject property to Juan until Anecito's death and upon the suspensive
condition for Juan to provide the said financial assistance to Anecito's children.
The Court dismisses this theory. Gross inadequacy or simulation of price neither
affects nor invalidates a sale, but it can be shown that the parties may have really intended a
donation or some other act or contract. The burden of proof weighs on the party making the
allegation against these presumptions. The obtaining circumstances, however, do not lead to
a correct conclusion that the transaction between Anecito and Juan was a donation.
Donation has three indispensable elements: (1) the reduction of the patrimony of the
donor; (2) the increase in the patrimony of the donee; and (3) the intent to do an act of
liberality or animus donandi. Not all three are present. While Anecito's patrimony may have
decreased with the correlative increase in that of Juan by virtue of the Deed of Sale and
Agreement, it does not appear that this was impelled by liberality on the part of Anecito.
The CA determined that Anecito and Juan entered into a valid contract of sale. The
Court agrees, but with qualifications. The elements of a contract of sale are: (1) consent or
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meeting of the minds, that is, consent to transfer ownership in exchange for the price; (2)
determinate subject matter; and (3) price certain in money or its equivalent.
In this case, the Deed of Sale contains all the three basic requisites of a contract of
sale. All three elements were established, since no issue was raised as to any vice tainting
Anecito's and Juan's consent to the transaction conveying ownership over the subject
property. The price therefor, the third element, was also stated as the consideration in the
Deed of Sale. As earlier discussed, the gross inadequacy of the purchase price did not
invalidate the Deed of Sale and the Agreement.
Contrary to the findings of the CA, the contract of sale between Anecito and Juan is
not an absolute sale. A resolutory condition extinguishes a transaction that, for a time,
existed and discharges the obligations created thereunder. It was stipulated in the
Agreement that Anecito shall enjoy the usufruct of the subject property, and that upon
Anecito's death, Juan shall support and give financial assistance to Aquilino and Ducepino.
These stipulations in the Agreement are resolutory as Anecito and Juan also agreed that
breach of the terms and conditions of the Agreement shall render the Deed of Sale non-
effective and nugatory.
Petitioner continues to insist on the application of the "complementary contracts

construed together" doctrine and considerations of equity to determine the real intent
of the parties behind the Deed of Sale and the Agreement. To use this doctrine in this case,
however, militates against petitioner's position.
The "complementary contracts construed together" doctrine incarnates the

spirit of Art. 1374 of the Civil Code, which states that:
Art. 1374. The various stipulations of a contract shall be interpreted together,

attributing to the doubtful ones that sense which may result from all of them
taken jointly.
On the other hand, equity is applied as a means of resolving justiciable cases only in
the absence of statutory law or rules of procedure. Such class of jurisdiction is rooted in
Article 9 of the Civil Code, which expressly mandates the courts to make a ruling despite the
"silence, obscurity or insufficiency of the laws" to "fill the open spaces in the law."
Doubtful stipulations must obtain for the doctrine to aid the courts in construing
related contracts. The stipulations in the Deed of Sale and Agreement at hand are too clear
for the doctrine to operate thereon. Even if the case necessitates the application of the
doctrine, the contracts already state in uncertain terms that Anecito bound himself to sell
the subject property to Juan for the price of P15,000.00, under the conditions that Anecito
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shall retain enjoyment of the fruits of the subject property and that Juan shall support
Aquilino and Ducepino after Anecito's death. In the same vein, the Court desists from
exercising its equity jurisdiction as a means of determining the nature of the Deed of Sale
and Agreement. Suffice it to state that the Court finds no such open space in the law within
which to exercise its equity jurisdiction.
2. The Deed of Sale and the Agreement remain valid.
Substantial breaches of contract are fundamental violations as would defeat the very
object of the parties in making the agreement. The happening of a resolutory condition is a
substantial breach that may give either party thereto the option to bring an action to rescind
the contract and/or seek damages.
As a general rule, the power to rescind an obligation must be invoked judicially and
cannot be exercised solely on a party's own judgment that the other has committed a breach
of the obligation. As an exception, an injured party need not resort to court action in order
to rescind a contract when the contract itself provides that it may be revoked or cancelled
upon violation of its terms and conditions.
The Agreement already provided a self-terminating clause upon a breach of the

conditions therein. Nonetheless, the Court is still left to decide whether the said conditions
have indeed been met to warrant the dissolution of the Deed of Sale.
Since the inception of this case, Aproniana had always insisted on the ineffectivity of
the Deed of Sale and the Agreement due to Juan's failure to comply with the twin conditions
therein. The necessity of proving, however, lies with the person who sues. Aproniana had
never adduced any concrete evidence that Anecito, during his lifetime, had never received
any income produced by the subject property. Nothing on record also shows that Juan truly
left Aquilino and Ducepino to fend on their own after the death of Anecito, or that Juan's
neglect caused Ducepino's death as Aproniana had insinuated.
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Case Digests
EDUARDO ATIENZA v. GOLDEN RAM ENGINEERING SUPPLIES & EQUIPMENT

CORPORATION AND BARTOLOME TORRES, RESPONDENTS
G.R. No. 205405, June 28, 2021, Third Division, (HERNANDO, J.)
DOCTRINE
Solidary liability cannot be lightly inferred. "There is solidary liability when the
obligation expressly so states, when the law so provides, or when the nature of the obligation
so requires. Settled is the rule that a director or officer shall only be personally liable for the
obligations of the corporation, if the following conditions concur: (1) the complainant alleged
in the complaint that the director or officer assented to patently unlawful acts of the
corporation, or that the officer was guilty of gross negligence or bad faith; and (2) the
complainant clearly and convincingly proved such unlawful acts, negligence or bad faith."
FACTS
Petitioner Eduardo Atienza was engaged in the business of operating MV Ace I, a

passenger vessel plying the Batangas-Mindoro route. Respondent Golden Ram Engineering
Supplies and Equipment Corporation (GRESEC) is a dealer and distributor of engines and
heavy equipment. Its President and Manager is respondent Bartolome Torres.
In 1993, Atienza bought the two vessel engines from GRESEC and as proof of his
purchase, he was issued a Proforma Invoice which stated therein the warranty period, for a
period of 12 months, reckoned from date of commissioning, but not longer than 18 months
after notification of readiness for delivery ex-warehouse Manila. The warranty period is
farther limited to 2000 hours of operation. Atienza forthwith paid the amount of P2.5 Million
Pesos, after which the two engines were delivered and commissioned by GRESEC sometime
in March 1994.
On 26 September 1994, the engine on the right side of MV Ace I suffered a major
dysfunction, the diagnosis of which revealed that the connecting rod had split resulting in
engine stuck up. Atienza immediately reported the incident to GRESEC which sent a certain
Engineer Torres, its Sales and Service Engineer, to inspect and determine the extent of the
damage. Engr. Torres confirmed that the "defect was inherent being attributable to factory
defect". This finding was reported to MAN B&W Diesel, Singapore Pte. Ltd. (MAN Diesel), the
foreign supplier. In turn, the latter promised that the engine which suffered the malfunction
would be replaced in accordance with the warranty.
Thereafter, Atienza made pleas for the replacement of the engine but his entreaties
fell on deaf ears. Inevitably, he suffered losses for failure to operate since 26 September 1994.
On 28 October 1994, Atienza wrote GRESEC a Demand Letter offering two alternatives for
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the company – one, replace the engine or reimburse him for the losses he had incurred,
or two, retrieve the two engines and refund the cost with interest plus payment for losses.
However, GRESEC paid no heed to his demand prompting him to lodge a Complaint for
damages.
In their Answer, GRESEC and Torres admitted the breakdown of the engine but
confuted Atienza's assertion that Engr. Torres had confirmed that "defect was inherent being
attributable to factory defect". Contrariwise, they claimed that the cause of the damage to
the engine was improper maintenance on the part of Atienza. Defendants maintained that
they never promised to replace the engine and that MAN Diesel was liable only for
replacement of parts found to be defective on account of unsound material, faulty design or
poor workmanship. Inasmuch as the defect of the engine was brought about by improper
maintenance, the warranty claim must necessarily be denied as it was not within the
coverage thereof. Moreover, GRESEC was merely an agent of MAN Diesel which had the
authority to grant or deny warranty claims.
The RTC found that Atienza proved by preponderance of evidence that he sustained
damages because respondents, GRESEC and Bartolome, breached the warranty against
hidden defects in the sale of the two (2) vessel engines. The RTC noted that despite repeated
demands, respondents gave Atienza a run around and failed to seasonably replace the
starboard engine.
The CA affirmed with modification the RTC's ruling. While it agreed with the trial
court that Atienza established his cause of action against respondents by a preponderance
of evidence, the CA differed from the RTC's finding concerning Bartolome's solidary liability
with GRESEC, and whether the respondents were in bad faith which entitles Atienza to the
payment of moral damages, attorney's fees and cost of suit.
ISSUE
Whether respondents' denial of Atienza's warranty claim for the defective vessel
engines was done in bad faith as to hold Bartolome solidarity liable with GRESEC.
RULING
YES. As regards the trial court's finding of respondents' solidary liability to Atienza
for damages, we note that the trial court's Decision did not contain a discussion on the
solidary liability of Bartolome with GRESEC. The RTC simply ordered respondents to pay, in
solidum, the monetary awards to Atienza.
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Solidary liability cannot be lightly inferred. "There is solidary liability when the
obligation expressly so states, when the law so provides, or when the nature of the obligation
so requires. Settled is the rule that a director or officer shall only be personally liable for the
obligations of the corporation, if the following conditions concur: (1) the complainant alleged
in the complaint that the director or officer assented to patently unlawful acts of the
corporation, or that the officer was guilty of gross negligence or bad faith; and (2) the
complainant clearly and convincingly proved such unlawful acts, negligence or bad faith."
Basic is the principle that a corporation is vested by law with a personality separate
and distinct from that of each person composing or representing it. Equally fundamental is
the general rule that corporate officers cannot be held personally liable for the consequences
of their acts, for as long as these are for and in behalf of the corporation, within the scope of
their authority and in good faith. The separate corporate personality is a shield against the
personal liability of corporate officers, whose acts are properly attributed to the corporation.
In Tramat Mercantile v. Court of Appeals, the Court ruled that personal liability of a
corporate director, trustee or officer along (although not necessarily) with the corporation
may so validly attach, as a rule, only when:
1. He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or
gross negligence in directing its affairs, or (c) for conflict of interest, resulting in
damages to the corporation, its stockholders or other persons;
2. He consents to the issuance of watered stocks or who, having knowledge thereof,
does not forthwith file with the corporate secretary his written objection thereto;
3. He agrees to hold himself personally and solidarity liable with the corporation; or
4. He is made, by a specific provision of law, to personally answer for his corporate
action.
Consistent with the foregoing principles, the Supreme Court disagreed with the CA's
pronouncement absolving respondent Bartolome from liability to the damages incurred by
Atienza. Atienza established sufficient and specific evidence to show that Bartolome had
acted in bad faith or gross negligence in the sale of the defective vessel engine and the
delivery and installation of demo units instead of a new engine which Atienza paid for.
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Case Digests
ASSET POOL A (SPV-AMC), INC. v. SPOUSES BUENAFRIDO AND FELISA BERRIS

G.R. No. 203194, April 26, 2021, Third Division, (HERNANDO, J.)
DOCTRINE
In sum, petitioner may institute two alternative remedies against the spouses Berris:
either a personal action for the collection of the promissory notes issued under the Discounting
Line or a real action to foreclose the mortgage, but not both, simultaneously or successively.
Although we recognize the right of the mortgage creditor to recover the deficiency when the
mortgaged properties are not enough to satisfy the entire obligation, the action is only
instituted after the termination of the foreclosure proceedings and not during its pendency, so
as not to violate the prohibition against splitting of cause of action.
FACTS
In 1995, FEBTC and B. Berris Merchandising (BBM), a sole proprietorship owned by

Buenafrido, entered into a Loan Agreement for the total amount of P5,000,000.00 with
interest at prevailing market rates payable within a period of five years inclusive of a six-
month grace period via 18 quarterly amortizations on the principal balance and based on
diminishing principal balance and payable every quarter in arrears. To secure the loan, the
spouses Berris executed a real estate mortgage on two parcels of land, a chattel mortgage on
their rice mill, and a Comprehensive Surety Agreement.
FEBTC also granted BBM a Discounting Line facility in the total amount of
P15,000,000.00. On July 3, 1997, the discounting line was renewed for the same amount,
valid until July 31, 1998. On February 16, 1998, the parties increased the discounting facility
to P18,000,000.00 with the same expiry on July 31, 1998. It also provided that the
discounting accommodation shall be partially secured by a real estate mortgage on TCTs and
the chattel mortgage on the rice mill.
Meanwhile, on April 15, 1996, the spouses Berris, for and in behalf of BBM, executed
a Promissory Note (PN) in the total amount of P5,000,000.00 due on April 16, 2001 with an
interest of 14.5% per annum and carrying the same provisions as the Term Loan
Agreement, i.e. payable within a period of five years inclusive of six-month grace period via
18 quarterly amortizations on the principal balance and based on diminishing principal
balance and payable every quarter in arrears.
Thereafter, the spouses Berris, for and in behalf of BBM, executed the several PNs. All
PNs bore similar provisions which entitled FEBTC to 25% of the amount due by way of
attorney's fees in case of default. In addition, the last four PNs provided that FEBTC is entitled
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to liquidated damages of 1% for every 30 days or a fraction thereof on the amount due in
case of default.
The spouses Berris failed to pay their obligations under the PNs. Hence, on August 5,
1998, FEBTC sent a letter demanding payment of the total amount of P21,055,555.54
representing both their Discounting Line and Loan Agreement availments, exclusive of
interest, penalties another charges. The bank, on December 15, 1998, sent another letterto
the spouses Berris reiterating its demand for payment of the same amount exclusive of
interest, penalties and other charges. On February 3, 1999, FEBTC, through counsel, sent a
Final Demand Letter to the spouses Berris demanding that they pay their obligations
amounting P21,055,555.54 exclusive of interest, penalties and other charges, not later than
February 19, 1999.
On August 19, 1999, the bank filed a Petition for Extra-Judicial Foreclosure of Real
Estate Mortgage under Act No. 3135, as amended, before the RTC of Sta. Cruz, Laguna over
the properties covered by TCT Nos. T-129163 and 74496 for the loans covered by PN Nos.
2-104-980258 BDC and 2-104-980888 BDC.
Thereafter, on August 30, 1999, FEBTC filed its complaint for the collection of the
amounts due. On October 23, 2000, the spouses Berris filed a Complaint for the Annulment
of Sale with Prayer for Injunction and Restraining Order, docketed as Civil Case No. 3016-
2000-C with the RTC of Calamba, Laguna assailing the extra-judicial foreclosure of mortgage.
Later on, the RTC Makati found that the spouses Berris indeed failed to pay their
outstanding obligations under the PNs which constitute a contractual breach thereof. On
appeal, the appellate court reversed and set aside the August 29, 2008 Decision of the trial
court in its assailed Decision dated March 23, 2012.
ISSUE
Whether or not the appellate court gravely erred in ruling that a previous filing of
extrajudicial foreclosure of real estate mortgage barred a personal action for the collection
of debt incurred by the spouses Berris.
RULING
NO. The parties executed two loan agreements, namely: (a) Loan Agreement dated
November 15, 1995 with the total amount of P5,000,000.00; and (b) Discounting Line which
was renewed on July 3, 1997 and on February 16, 1998 with a total amount of
P15,000,000.00 and P18,000,000.00, respectively, and valid until July 31, 1998. These two
loan facilities granted to the spouses Berris are separate and distinct from each other.
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Verily, the fact that both the Loan Agreement and the Discounting Line required the
spouses Berris to execute PNs in favor of the bank for each availment or drawing, does not
necessarily prove that they are one and the same obligation. In the absence of evidence to
the contrary, the Term Loan Agreement should be regarded as a separate and distinct
obligation of the spouses Berris although the same was also covered by a promissory note
upon each drawing.
In fact, in the demand letters sent by FEBTC to the spouses Berris, the bank was
categorical that they sought to collect the outstanding principal balance of the spouses Berris
from both the Loan Agreement and Discounting Line. While the demand letters did not
specifically itemize the amount from each loan accommodation, i.e., the Loan Agreement and
Discounting Line, this did not necessarily mean that the spouses Berris had only one
obligation to the bank as evidenced by the promissory notes issued by them.
Also, the fact that both the Loan Agreement and the PNs issued under the Discounting
Line contained acceleration clauses, in that, failure to pay any amount due shall make all
contracts or credit accommodations granted to the spouses Berris due and demandable and
payable prior to the expiration of the stipulated term, do not make the two contracts one and
the same.
There is nothing illegal or irregular with several contracts or agreements having

similar stipulations with respect to the maturity dates and/or acceleration clauses. The
parties are free to stipulate on the terms and conditions of the obligation which they deem
convenient provided they are not contrary to law, morals, good customs, public order, or
public policy,60 which in this case, the maturity of all obligations in case of default on either
of them. The reference of one contract to the other does not automatically make them a single
contract in the absence of evidence to the contrary, express or implied.
Having arrived at the conclusion that the Loan Agreement and the Discounting Line
are separate and distinct obligations of the spouses Berris, we now come to the resolution of
whether the institution of the extrajudicial foreclosure of mortgage barred the filing of the
herein collection suit.
In sum, petitioner may institute two alternative remedies against the spouses Berris:
either a personal action for the collection of the promissory notes issued under the
Discounting Line or a real action to foreclose the mortgage, but not both, simultaneously or
successively. Although we recognize the right of the mortgage creditor to recover the
deficiency when the mortgaged properties are not enough to satisfy the entire obligation, the
action is only instituted after the termination of the foreclosure proceedings and not during
its pendency, so as not to violate the prohibition against splitting of cause of action.
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However, the foregoing rule against splitting of cause of action is not applicable to the
herein collection suit covering PN No. 2-104-961106/TLS which was drawn against the Loan
Agreement.
As earlier discussed, the Loan Agreement is separate and distinct from the
Discounting Line. Thus, there could be no violation of the prohibition against splitting a cause
of action when FEBTC instituted a foreclosure of mortgage on TCT Nos. 129163 and 74496
for PN Nos. 2-104-980258 BDC and 2-104-980888 BDC drawn against the Discounting Line
and successively filed a collection suit to recover the debt due under PN 2-104-961106/TLS
which was drawn against the Loan Agreement.
Being separate and distinct contracts, FEBTC, as the mortgage creditor, may institute
either a personal action for the collection of debt, or a real action to foreclose the mortgage
under the Loan Agreement. Obviously, FEBTC chose to elect a personal action to recover the
amount due on PN No. 2-104-961106/TLS by filing the herein complaint as it is not barred
by nor violative of the rule on prohibition against splitting of cause of action.
Furthermore, the real estate mortgage is just an accessory contract, thus, it does not
control the principal agreements, i.e. the Loan Agreement and the Discounting Line, as it is
only dependent upon the latter obligations. Hence, even if the real estate mortgage secured
all of the obligations of the spouses Berris to the bank, whether existing or future
indebtedness, it will not modify nor change the fact that they entered into two separate and
distinct obligations which give rise to separate actions regardless of whether they become
due and demandable at the same time or not.
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ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION v.

MERO STRUCTURES, INC.
G.R. No. 221147, September 29, 2021, Second Division, (HERNANDO J.)
DOCTRINE
Novation extinguishes an obligation between two parties when there is a substitution of

objects or debtors or when there is subrogation of the creditor. It occurs only when the new
contract declares so "in unequivocal terms" or that "the old and the new obligations be on every
point incompatible with each other.”
FACTS
In line with the 100th anniversary celebration of the Philippine independence from
Spanish colonial rule in 1998, First Centennial Clark Corporation (FCCC) was created for
the purpose of designing, constructing, operating, and managing the Philippines' National
Centennial Exposition to be held in the Clark Special Economic Zone (CSEZ) located in Clark
Field, Pampanga.
On March 16, 1998, FCCC entered into a Construction Agreement with petitioner
Asian Construction and Development Corporation (Asiakonstrukt) for the finalization of the
architectural concept, design, and storyline approved by the National Centennial
Commission and to undertake all the necessary construction works for the Exposition Theme
Park. On even date, respondent MERO Structures, Inc. (MERO), an American corporation,
submitted a Materials Only Proposal to for the supply of materials in constructing a special
Philippine flag structure in the Expo Filipino. On March 17, 1998, Asiakonstrukt accepted the
Materials Only Proposal.
In June 1998, FCCC approved Asiakonstrukt's proposal. Subsequently, Asiakonstrukt

informed MERO that FCCC awarded to Asiakonstrukt the contract for the design supply, and
installation of the flag structure and the latter would pay MERO after FCCC's payment of the
materials not later than June 26, 1998.
On August 10, 1998, Asiakonstrukt sought payment for the spaceframe, which had
been delivered to the intended site, and the 50% downpayment for its installation and
lighting, both due since June 17, 1998. MERO sought payment of the spaceframe from
Asiakonstrukt. MERO requested that it be paid directly by the FCCC and that Asiakonstrukt
notify FCCC that the work is complete and satisfactory and that full payment should be
made.
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In October 13, 1999, MERO requested that it be paid directly by the FCCC and that
Asiakonstruk't notify FCCC that the work is complete and satisfactory and that full payment
should be made By way of a response, Asiakonstrukt stated that it interposed no objection
to MERO's request to collect payment directly from the FCCC.
MERO attempted to seek assistance from the Department of Trade and Industry (DTI)
and Department of Finance (DOF). However, these attempts proved futile. On September 21,
2000, MERO, through counsel, made a final demand on Asiakonstrukt for its US$570,000.00
principal obligation plus 1.5% interest per month or 18% annually. Despite this,
Asiakonstrukt still failed to pay, prompting MERO to institute before the Regional Trial Court
(RTC) a Complaint for sum of money.
In 2011, the Regional Trial Court upheld MERO's right to collect from Asiakonstrukt
and FCCC, the former by virtue of a contract and the latter for having benefited from MERO's
fulfillment of its obligation to supply the spaceframe. However, the RTC dismissed the
complaint against NDC for lack of evidence. The CA denied both appeals and affirmed the
RTC Decision with modification.
ISSUE
Whether or not the CA seriously erred when it failed and refused to consider the letter
of MERO dated October 13, 1999 and the response letter of Asiakonstrukt dated November
8, 1999 as a new written contract.
RULING
NO. There was no new contract borne of the letters exchanged by MERO and
Asiakonstrukt. At most, the said exchanges merely show Asiakonstrukt's approval of MERO's
extraordinary efforts in helping the former fulfill its obligation to the latter. In any event,
Asiakonstrukt's approval of MERO's request to collect directly from the FCCC did not
extinguish Asiakonstrukt's obligation to pay MERO.
There are two (2) relevant contracts in this case, namely: 1) The Construction
Agreement 67 between the FCCC and Asiakonstrukt dated March 16, 1998, and 2) MERO's
Materials Only Proposal dated March 16, 1998 that was accepted by Asiakonstrukt on March
17, 1998. While Asiakonstrukt is a common party in these contracts, MERO and FCCC
have no contractual relationship with each other.
Novation extinguishes an obligation between two parties when there is a substitution

of objects or debtors or when there is subrogation of the creditor. It occurs only when the
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new contract declares so "in unequivocal terms" or that "the old and the new obligations be
on every point incompatible with each other.”
Novation may also be express or implied. It is express when the new obligation
declares in unequivocal terms that the old obligation is extinguished. It is implied when the
new obligation is incompatible with the old one on every point. The test of incompatibility is
whether the two obligations can stand together, each one with its own independent
existence.
Applying the foregoing to the instant case, it is evident that there was neither an
express nor implied novation through the letters exchanged between MERO and
Asiakonstrukt.
First, there is nothing in the letters that unequivocally states that the obligation of
Asiakonstrukt to pay MERO would be extinguished. Second, there is also no mention that
MERO would substitute or subrogate Asiakonstrukt as FCCC's payee/obligee as the letters
merely show that MERO was allowed by Asiakonstrukt to try collecting from FCCC directly.
Lastly, using the test of incompatibility, Asiakonstrukt's non-objection to MERO's request to
collect from FCCC directly is not incompatible with the obligation of Asiakonstrukt to pay
MERO. It merely provided an alternative mode in collecting payment to MERO, which is not
even valid as far as FCCC is concerned since the latter did not even consent to the same, not
to mention there is no existing contractual relationship between MERO and FCCC.
Page 266 of 307

Case Digests
MARIA V. AROMIN v. HEIRS OF SPOUSES WILFREDO AND LEONILA SOMIS,

G.R. No. 204447, May 03, 2021, Third Division, (HERNANDO, J.)
DOCTRINE
Article 1305 of the Civil Code provides that a contract is a meeting of the minds between
two persons, whereby one is bound to give something or to render some service to the other. A
valid contract requires the concurrence of the following essential elements pursuant to Article
1318 of the same Code:
Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established
The Compromise Agreement was clear that the contracting parties mutually agreed to
transfer to each other the properties indicated therein. Even if it was Maria's counsel who
prepared the written instrument, she or her representative was expected to exercise due
diligence in reviewing the entries therein before signing the instrument. Moreover, if indeed
there was a mistake on which property should be transferred to the spouses Somis, Maria
should have availed of her remedies immediately.
FACTS
Maria Aromin alleged that she and her deceased husband Rufmo owned three (3)
parcels of land. In February 2007, Maria instructed her son to pay the realty tax for the
foregoing lots. Briccio then discovered that Lots A and C were sold to the spouses Wilfredo
and Leonila (spouses Somis), through a Deed of Sale with the Right to Repurchase dated May
20, 1971, allegedly signed by Maria and Rufino.
On June 18, 2007, Maria filed a Complaint for Annulment of Documents with Damages,
alleging that she did not sign the Deed of Sale transferring Lot C to the spouses Somis, hence
it is void. Subsequently, on November 28, 2007, the parties entered into a Compromise
Agreement. The Trial Court approved.
On July 8, 2008, Maria filed a motion to set aside the Order granting the issuance of
the writ of execution. She claimed that she intended to give Lot C (and not Lot B) to the
spouses Somis. She asserted that the description or PIN of the property given to the spouses
Somis under the Compromise Agreement was erroneous.
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The RTC granted the Motion. However, the Court of Appeals, upon Petition for
Certiorari filed by Spouses Somis, reinstated the Compromise Agreement.
In 2010, Maria filed a Motion to Annul the Compromise Agreement. However, in its
June 8, 2010 Order, the trial court denied the Motion for being moot and academic. The trial
court pointed out that the Compromise Agreement has become final and executory in light
of the January 22, 2010 Decision of the appellate court in CA.
ISSUE
Whether or not the Compromise Agreement between the parties is valid and
binding.
RULING
YES. When a decision becomes final and executory, it becomes valid and binding upon
the parties and their successors in interest. Such decision or order can no longer be disturbed
or reopened no matter how erroneous it may have been.
It is beyond dispute that the Compromise Agreement was approved by the trial court
in its January 17, 2008 Decision which decision became final. Consequently, a Writ of
Execution was issued on June 27, 2008. The final and executory nature of the Compromise
Agreement was likewise reiterated in the appellate court's January 22, 2010 Decision in CA-
G.R. SP No. 109076. Thus, in view of the finality of the trial court's January 17, 2008 Decision
which upheld the Compromise Agreement, the latter is binding between and among the
parties.
Moreover, the appellate court soundly disposed of the instant case in its twin
Resolutions dated February 13, 2012 and November 12, 2012 in CA-G.R. SP No. 123064. It
correctly ruled that the Compromise Agreement was valid and binding since there was a
meeting of the minds between the parties.
Article 1305 of the Civil Code provides that a contract is a meeting of the minds
between two persons, whereby one is bound to give something or to render some service to
the other. A valid contract requires the concurrence of the following essential elements
pursuant to Article 1318 of the same Code:
Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established
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The Compromise Agreement was clear that the contracting parties mutually agreed
to transfer to each other the properties indicated therein. Even if it was Maria's counsel who
prepared the written instrument, she or her representative was expected to exercise due
diligence in reviewing the entries therein before signing the instrument. Moreover, if indeed
there was a mistake on which property should be transferred to the spouses Somis, Maria
should have availed of her remedies immediately.
The Court further noted that the trial court rendered its Decision on January 17, 2008
approving the Compromise Agreement, which immediately became final and executory and
for which the trial court issued a Writ of Execution on June 27, 2008. However, it was only
on July 8, 2008 when Maria filed a motion to set aside the Order granting the issuance of the
writ of execution.
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ARAKOR CONSTRUCTION AND DEVELOPMENT CORPORATION v. TERESITA G. STA.

MARIA, ET AL.
G.R. No. 215006, January 11, 2021, Third Division, (HERNANDO, J.)
DOCTRINE
"If any one party to a supposed contract was already dead at the time of Its execution,
such contract is undoubtedly simulated and false, and, therefore, null and void by reason of its
having been made after the death of the party who appears as one of the contracting parties
therein." Indeed, "no one can give what one does not have; nemo dat quod non habet. One can
sell only what one owns or is authorized to sell, and the buyer can acquire no more right than
what the seller can transfer legally." Considering that Felicidad's signatures were forged, the
Deeds of Absolute Sale are null and void and convey no title to Arakor. Thus, the TCTs which
were issued in favor of Arakor "by virtue of the said spurious and forged document are also null
and void." In fact, "all the transactions subsequent to the alleged sale are likewise void."
FACTS
The Spouses Fernando Gaddi, Sr. (Fernando Sr.) and Felicidad Nicdao Gaddi
(Felicidad) owned the five contested parcels of land located in Hermosa, Bataan. Felicidad
died intestate and was survived by Fernando Sr. and her eight children, herein respondents,
namely: Teresita G. Sta. Maria (Teresita), Alfredo N. Gaddi (Alfredo), Fernando N. Gaddi, Jr.
(Fernando Jr.), Marilyn G. Malixi (Marilyn), Evangeline G. Golicruz (Evangeline), Efren N.
Gaddi (Efren), Lilian G. Francisco (Lilian) and Lilibeth G. Paguio (Lilibeth) (collectively the
Gaddis). Felicidad's heirs inventoried her properties but they did not initiate its partition;
thus, the parcels of land remained in the name of the Spouses Gaddi.
In 1996, Fernando Sr. passed away, followed by Efren on May 8, 1998. After the
deaths of Fernando, Sr. and Efren, Atty. Greli Legaspi (Atty. Legaspi), the president of
petitioner Arakor Construction and Development Corporation (Arakor), informed the
Gaddis that their parents had already sold the contested five parcels of land to Arakor for
P400,000.00 as evidenced by two undated Deeds of Absolute Sale and that the titles to the
properties have already been transferred to Arakor's name.
Thus, the Gaddis filed a Complaint for Annulment of Deeds of Absolute Sale and
Transfer Certificates of Title against Arakor. They alleged that the two contracts of sale were
forged and the conveyance of the properties was fraudulent since Felicidad could not have
signed the documents and given her consent thereon since she has been dead for seven years
before the alleged execution of the said contracts.
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Arakor denied employing fraud. It contended that the Deeds of Absolute Sale were
already signed and notarized when Fernando Sr. and Efren delivered them to the office of
Atty. Legaspi on September 8, 1992. Atty. Legaspi also disclaimed any knowledge about the
death of Felicidad.
In 2011, the RTC declared the Deeds of Absolute Sale as void for being fictitious
because Felicidad had already passed away when the documents were executed.
Additionally, it ruled that Arakor was not a buyer in good faith. It thus ordered the Gaddis to
return to Arakor the amount of P400,000.00 with interest, chargeable to Fernando Sr.'s
estate. The CA affirmed the RTC's ruling.
ISSUE
Whether or not the appellate court correctly affirmed the findings of the trial court
that the Deeds of Absolute Sale are null and void for being forged and fictitious.
RULING
YES. As regards the validity of the Deeds of Absolute Sale, the Court noted that Arakor
acknowledged Gaddis' allegation that Felicidad's signatures in the Deeds of Absolute Sale
were forged since her death occurred prior to the execution of the said contracts. In fact,
Arakor alleged that Fernando Sr. and Efren also sold a property to Matulac in spite of
Felicidad's death, stressing that It was also a victim of fraud.
Case law provides that "forgery cannot be presumed and must be proved by clear,
positive and convincing evidence by the party alleging the same." In this case, the Gaddis
satisfactorily discharged this burden by submitting in evidence the Certificate of Death of
Felicidad to prove that her demise preceded the execution of the contracts of sale. This is in
addition to Arakor's admission that Felicidad's death occurred before the sale transpired.
Obviously, she could not have signed any document which leads to no other conclusion than
that her signatures in the deeds were forged.
More importantly, "[i]f any one party to a supposed contract was already dead at the
time of Its execution, such contract is undoubtedly simulated and false, and, therefore, null
and void by reason of its having been made after the death of the party who appears as one
of the contracting parties therein." Indeed, "no one can give what one does not have; nemo
dat quod non habet. One can sell only what one owns or is authorized to sell, and the buyer
can acquire no more right than what the seller can transfer legally." Considering that
Felicidad's signatures were forged, the Deeds of Absolute Sale are null and void and convey
no title to Arakor. Thus, the TCTs which were issued in favor of Arakor "by virtue of the said
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spurious and forged document are also null and void." In fact, "all the transactions
subsequent to the alleged sale are likewise void."
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ALLIED BANKING CORPORATION AND GUILLERMO DIMOG v. SPOUSES MARIO

ANTONIO MACAM & ROSETRINIDAD MACAM, SPOUSES WILLAR FELIX AND MARIBEL
CAÑA AND SPOUSES MELCHOR AND HELEN GARCIA
G.R. No. 200635, February 1, 2021, Third Division (Hernando, J.)
DOCTRINE
Allied Bank is expected to act with extraordinary diligence required of banks. We cannot
overemphasize that the highest degree of diligence required of banks likewise contemplates
such diligence in the selection and supervision of its employees. The very nature of their work
which involves handling millions of pesos in daily transactions requires a degree of
responsibility, care and trustworthiness that is far greater than those expected from ordinary
clerks and employees. The bank must not only exercise "high standards of integrity and
performance," it must also insure that its employees do likewise because this is the only way to
insure that the bank will comply with its fiduciary duty.
The authority of a corporate officer or agent in dealing with third persons may be actual
or apparent. The apparent authority to act for and to bind a corporation may be presumed
from acts of recognition in other instances, wherein the power was exercised without any
objection from its board or shareholders. Caña's act of approving the P46 Million fund transfer
and the subsequent transfers to different accounts in various branches of Allied Bank leading
to the P1,590,000.00 transfer to the account of the Spouses Mario Macam all appear to have
been clothed with authority. Indeed, the subsequent transfers (of funds) were approved by
several Branch Heads.
FACTS
Mario Macam (Mario), on the recommendation of his brother Manuel and facilitation
of Elena Valerio (Valerio), invested P1,572,000.00 in the cellular card business of respondent
Helen Garcia (Helen). Valerio was a Unit Manager in Helen's business, soliciting investments
and promising weekly interest payments of 2.29%.
On February 6, 2003, a series of transactions occurred at the Allied Bank-Alabang Las

Piñas Branch (AB-ALP), headed by respondent Maribel Caña (Caña). At 8:45 a.m., Caña
informed bank teller Melissa Berras (Berras) to anticipate a deposit by Helen in the amount
of P46 Million. Caña likewise instructed the Branch Operating Officer, Milani Mamalayan
(Mamalayan), to arrange for two armored vans to pick up the P46 Million deposit.
At 9:45 a.m., Mamalayan informed Caña of the arrival of the armored vans.
Thereupon, Caña gave Berras five filled out and approved fund transfer receipts in the total
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amount of P46 Million. The fund transfer receipts bore only Caña's signature and ostensibly
indicated Helen's deposit account as the source of the P46 Million fund transfer.
Since Helen had yet to make the promised deposit and her account balance did not
amount to P46 Million, Berras protested to Caña that she cannot credit the corresponding
amounts to the five accounts as indicated in the fund transfer receipts. Nonetheless, Caña
effected a local override and approved the fund transfer. Consequently, the amounts were
credited to the five deposit accounts, including Valeria's, in the amount of P10 Million.
Valerio withdrew P1,722,500.00 from her deposit account at AB-Pasay. Via electronic
fund transfer, Valerio deposited P1,590,000.00 to the account of Mario's brother Manuel and
the latter's wife and Sheila Macam. To prove the fund transfer to the Spouses Manuel
Macam's account, Valerio presented the deposit slip with her handwritten notation
addressed to Mario. On that same date, through Sheila's deposit of P1,590,000.00 by way of
a credit memo, the Spouses Mario Macam opened Savings Account No. 1850-06565-2 at
Allied Bank-Pasong Tamo (AB-PT) Branch. In subsequent and separate instances, the
Spouses Mario Macam were able to make withdrawals in the total amount of P490,000.00,
leaving a balance of P1.1 Million in their savings account with AB-PT.
Yet still on February 6, 2003, Caña instructed Berras to reverse the P10 Million fund
transfer to Yolanda Lim. Berras again inquired about the P46 Million deposit but was told by
Caña to wait. Later that day, Caña again instructed Berras to debit specific amounts from
different accounts.
Mamalayan received an SMS from Caña that the P46 Million deposit had been
cancelled.
Caña instructed Mamalayan to book the amount of P20.3 Million under "Accounts
Receivable" corresponding to the unrecovered amount from the P46 Million which had been
earlier transferred to various deposit accounts. Due to the significant discrepancy, Allied
Bank investigated the branch. Allied Bank was able to recover more than half of the amount,
leaving a balance of P9,800,000.00.
On February 19, 2003, Angela Barcelona, Region Head, Retail Banking Group for
Allied Bank's South Metro Manila Branches, ordered the debit of the remaining P1.1 Million
from the account of the Spouses Mario Macam which resulted in the closure thereof.
The Spouses Mario Macam learned of the closure after they were unable to withdraw
from their account. Hence, the Spouses Mario Macam filed the complaint for Damages against
the bank and the ABPT Branch Head, Dimog.
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The RTC ordered Allied Bank and Guillermo Dimog jointly and severally, to pay
respondents Mario Antonio Y. Macam and Rose Trinidad T. Macam, the amount of P1.1
Million with interest and the third-party defendants [Spouses] Willard Felix and Maribel
Caña and Spouses Melchor and Helen Garcia, jointly and severally to pay defendants and
third-party plaintiffs Allied Bank and Guillermo Dimog, the amount of P1.1 Million plus
interest.
As the trial court had done, the appellate court likewise found that Allied Bank is liable
to the Spouses Mario Macam for breach of contract, or culpa contractual. It held that Allied
Bank reneged on its contractual obligation to the Spouses Mario Macam to pay their money
in deposit on demand.
Allied Bank remains adamant and persists in its arguments that it holds valid title not
only to the P1.1 Million that it debited from the account of the Spouses Mario Macam but to
the entire P1,590,000.00 used to open the subject deposit account of the Spouses Mario
Macam with AB-PT Branch as well.
In framing its arguments, Allied Bank defines its banking relationship with the
Spouses Mario Macam in the negative as "not that which is ordinarily between a bank and its
depositor." The bank asseverates that it owns the funds which inadvertently found its way
into the Spouses Mario Macam's account.
ISSUE
Whether Allied Bank is liable for unilaterally debiting and closing the deposit account
of the Spouses Mario Macam.
RULING
YES. There is a deposit agreement between Allied Bank and the Spouses Mario
Macam. The savings deposit agreement between the bank and the depositor is the contract
that determines the rights and obligations of the parties as in a simple loan. In contemplation
of the fiduciary nature of a bank-depositor relationship, the law imposes on the bank a higher
standard of integrity and performance in complying with its obligations under the contract
of simple loan, beyond those required of non-bank debtors under a similar contract of simple
loan.
Allied Bank cannot obliquely repudiate the resulting banking relationship with the
Spouses Mario Macam and the fiduciary nature thereof when it accepted the spouses' initial
deposit of P1,590,000.00, the very same funds it now claims as its own. It cannot belatedly
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claim ignorance of its performance of a core banking function, i.e., accepting or creating
demand deposits.
With its acceptance of the Spouses Mario Macam's deposit and their opening of an
account with the bank's Pasong Tamo Branch on February 6, 2003, Allied Bank explicitly
recognized the spouses' ownership and title over the P1,590,000.00. Notably, the bank
repeatedly acknowledged the creditor-debtor relationship and its obligation to pay the
Spouses Mario Macam on demand when the latter withdrew money from the said account
on three separate occasions. Undoubtedly, Allied Bank is liable to the Spouses Mario Macam
for the P1.1 Million in their deposit account.
The deposit in the Spouses Mario Macam's account consisting of money is generic and
fungible. The quality of being fungible depends upon their possibility, because of their nature
or the will of the parties, of being substituted by others of the same kind, not having a distinct
individuality.
Allied Bank claims ownership of the equivalent amount of money, i.e., the value
thereof which it ultimately traces to the spurious credit of P46 Million to Helen's account,
and part thereof subsequently traced to the Spouses Mario Macam's account. Indeed, it
cannot claim the money itself which transferred accounts based on the false fund transfer
transactions effected by Caña on February 6, 2003.
It bears emphasizing that money bears no earmarks of peculiar ownership. Its

primary purpose is to pass from hand to hand as a medium of exchange, without other
evidence of its title. Money, which had passed through different transactions of a bank in the
general course of business, even if of traceable origin, is no exception. Clearly therefore,
Allied Bank's unilateral closure of the Spouses Mario Macam's deposit account violated their
savings deposit agreement.
To completely evade liability, Allied Bank ascribes all blame to the acts of its
employee, Caña, beginning with the credit of P46 Million to Helen's account without an actual
deposit of funds. The bank further muddles the issues, assumes all the injury and damage,
but none of the responsibility for its own negligence and that of its employee. It turns a blind
eye on its contractual obligation to, and the damage suffered by, its depositor.
Allied Bank belabors under a cloud of confusion. Its liability under the deposit
agreement with the Spouses Mario Macam is primary and not vicarious.
Articles 1172, 2176 and 2180 of the Civil Code lay down the following principles:
(1) the responsibility of the obligor arising from negligence in the performance of the
obligation is demandable;
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(2) the fault or negligence of the obligor causing damage to another obliges him to pay for
the damage done; and
(3) the obligation to pay for the damage is demandable not only for one's own acts or
omission, but also for those of persons for whom one is responsible.
Paragraph 5 of Article 2180 provides that "employers shall be liable for the damages
caused by their employees x x x acting within the scope of their assigned tasks x x x."
As admitted by the bank, the initial fund transfer transaction approved by Caña
snowballed into a series of unauthorized debit and credit transactions leading to the closure
of the Spouses Mario Macam's subject deposit account. All the tortuous acts of Caña occurred
and transpired within Allied Bank's network of branches and offices and during banking
hours. Allied Bank's other employees, Berras and even Mamalayan, likewise participated in
the fraudulent acts of their Branch Head, Caña.
From Allied Bank's narration of facts, a regular fund transfer transaction has a
corresponding debit memo and the fund transfer receipts must bear the signatures of the
Branch Head, Caña, the Branch Operating Officer, Mamalayan, and the teller who effected the
transactions, Berras.
However, Allied Bank is quick to admit that Caña overrode the verification
requirements and approved the P46 Million fund transfer transactions. Although the bank
was ultimately prejudiced by Caña's acts, it is primarily liable to the Spouses Mario Macam
for breaching the savings deposit agreement between them.
Allied Bank is expected to act with extraordinary diligence required of banks. We

cannot overemphasize that the highest degree of diligence required of banks likewise
contemplates such diligence in the selection and supervision of its employees. The very
nature of their work which involves handling millions of pesos in daily transactions requires
a degree of responsibility, care and trustworthiness that is far greater than those expected
from ordinary clerks and employees. The bank must not only exercise "high standards of
integrity and performance," it must also insure that its employees do likewise because this
is the only way to insure that the bank will comply with its fiduciary duty.
The authority of a corporate officer or agent in dealing with third persons may be
actual or apparent. The apparent authority to act for and to bind a corporation may be
presumed from acts of recognition in other instances, wherein the power was exercised
without any objection from its board or shareholders. Caña's act of approving the P46 Million
fund transfer and the subsequent transfers to different accounts in various branches of Allied
Bank leading to the P1,590,000.00 transfer to the account of the Spouses Mario Macam all
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appear to have been clothed with authority. Indeed, the subsequent transfers (of funds) were
approved by several Branch Heads.
The doctrine of "apparent authority," with special reference to banks,

has long been recognized in this jurisdiction. Apparent authority is derived
not merely from practice. Its existence may be ascertained through 1) the
general manner in which the corporation holds out an officer or agent as
having the power to act, or in other words, the apparent authority to act in
general, with which it clothes him; or 2) the acquiescence in his acts of a
particular nature, with actual or constructive knowledge thereof, within or
beyond the scope of his ordinary powers.
Prescinding from all the foregoing, the lower courts were correct in sustaining Allied
Bank's liability to the Spouses Mario Macam for culpa contractual.
The liability for damages of those who are negligent in the performance of their duty
is laid down in Article 1170 of the Civil Code.
As ruled by the lower courts, the date of default in this case is February 19, 2003 when
Allied Bank simultaneously debited the P1.1 Million funds from, and closed, the account of
the Spouses Mario Macam. Article 2209 of the Civil Code solidifies the consequence of
payment of interest as an indemnity for damages when the obligor incurs in delay:
Art. 2209. If the obligation consists in the payment of a sum of money,

and the debtor incurs in delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of the interest agreed upon,
and in the absence of stipulation, the legal interest, which is six percent per
annum.
In this case, at the time the interest accrued on the deposit of the Spouses Mario
Macam on February 19, 2003, the date of default when the account was closed, the then
prevailing rate of legal interest was twelve percent (12%) per annum under Central Bank
(CB) Circular No. 416 in cases involving the loan or forbearance of money.
However, the twelve percent (12%) per annum rate of legal interest is only applicable
until June 30, 2013, before the advent and effectivity of Bangko Sentral ng Pilipinas (BSP)
Circular No. 799, Series of 2013 reducing the rate of legal interest to six percent (6%) per
annum. Pursuant to our ruling in Nacar v. Gallery Frames, BSP Circular No. 799 is
prospectively applied from July 1, 2013.
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Thus we modify the lower courts' ruling on the applicable rate of legal interest, to wit:
(1) twelve percent (12%) per annum from February 19, 2003 to June 30, 2013; and (2) six
percent (6%) per annum from July 1, 2013 to date when this Decision becomes final and
executory.
We likewise impose interest on interest due based on Article 2212 of the Civil Code
which provides that "interest due shall earn legal interest from the time it is judicially
demanded, although the obligation may be silent upon this point." Consequently, interest on
interest due is imposed at the rate of (1) twelve percent (12%) per annum from July 17, 2003
to June 30, 2013; and (2) six percent (6%) per annum from July 1, 2013 until this Decision
becomes final and executory.
The total amount owing the Spouses Mario Macam set forth in this Decision shall
further earn legal interest at the rate of six percent (6%) per annum computed from its
finality until full payment thereof, the interim period being deemed to be a forbearance of
credit.
In addition, we award attorney's fees of P50,000.00 since the Spouses Mario Macam
were compelled to litigate and incur expenses to protect their interests.
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EULOGIO ALDE v. CITY OF ZAMBOANGA, as represented by CITY MAYOR CELSO

L. LOBREGAT
G.R. No. 214981, November 04, 2020, Third Division (Hernando, J.)
DOCTRINE
This Court has time and again ruled that to prove that a public land is alienable and
disposable, what must be clearly established is the existence of a positive act of the government.
This is not limited to a presidential proclamation. Such fact could additionally be proven
through an executive order; an administrative action; investigative reports of Bureau of Lands
investigators; and a legislative act or a statute.
In the case at bar, the OP, upon the recommendation of the DENR Secretary, validly
declared the subject lots disposable through lease, through an administrative action, one of the
modes that is expressly recognized for said purpose pursuant to our pronouncement in Republic
v. Jabson. Hence, Alde validly complied with the administrative requirements which led to the
issuance of the Order of Award for the Lease by the OP upon the recommendation of the DENR
Secretary.
FACTS
Petitioner Eulogio Alde (Alde) filed a Miscellaneous Lease Application (MLA) with the
Community Environment and Natural Resources Office (CENRO). With a combined area of
Eight Hundred and Five (805) square meters, the two lots were both in the name of the
Republic. These lots were originally leased by the now defunct Bureau of Buildings and Real
Property Management, Department of General Services to a certain Clarita Chan for a period
of twenty (20) years, or until July 17, 1994. Subsequently, Executive Order (EO) No. 285,
Series of 1987 was issued transferring the control and possession of the lots to the
Department of Environment and Natural Resources (DENR).
On May 17, 2002, the Appraisal Committee reported that the lots are classified as
commercial properties in the Zoning Ordinance under Department Order No. 145-95 of the
Department of Finance.
On May 23, 2002, the RED of DENR-Region IX approved the abovementioned

appraisal and granted the authority to lease the land in accordance with the Public Land Act.
Thereafter, the Chief of the Land Management Division issued a Notice of Lease for purposes
of bidding the subject lots. The Notice of Lease over the subject lots was published by the
National Printing Office in the Official Gazette as evidenced by a Certificate of Publication
dated October 11, 2002; and in a newspaper called Zamboanga Star, which was posted at the
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barangay hall where the subject lots are located. Alde, the lone bidder, was declared as
winner after submitting a bid of P174,250.00.
On July 2, 2003, the RED-DENR Region IX issued an Order of Award for the lease of
the subject lots in favor of Alde. The respondent City Government of Zamboanga objected to
the lease application of Alde over the subject lots. In two letters dated August 18, 2003 and
September 10, 2003, the City Government of Zamboanga claimed that the awarded lots were
needed for public use and that the posting and publication requirements of the notice of
lease, were not complied with. On March 1, 2005, the Committee submitted an Investigation
Report to the RED-DENR Region IX, recommending the dismissal of the Opposition of the
City Government and for the MLA of Alde to be given due course.
The City Government of Zamboanga appealed its case to the DENR Secretary. On May
27, 2007, the DENR Secretary issued a Decision in DENR Case No. 8361, denying the
Opposition filed by the City Government of Zamboanga and giving due course to the Order
of Award to Alde.
In its Decision in O.P. Case No. 09-I-423 dated June 18, 2010 and Resolution dated
March 1, 2011 the OP affirmed the May 27, 2007 Decision and the July 29, 2009 Order of the
DENR Secretary giving due course to the Order of Award to Alde. The OP affirmed the ruling
of the DENR that the commercial classification of the subject lots is based on EO No. 285 of
1987 and that the DENR's control and disposition over the subject properties are based also
on Sections 3 and 4 of the Public Land Act. It ratiocinated that:
The subject lots may be disposed of by lease even without a prior

declaration of non-necessity for public service considering that such is not a
condition sine qua non before disposition of lands falling under paragraph (d)
may be made. Clearly evident from Section 61 aforecited is that, unlike lands
classified under (a), (b) and (c) of Section 59 which needs a declaration that
the land is not necessary for public service prior to disposition, no such
requirement is provided for lands included in class (d), as subject lots herein.
In its assailed Decision, the appellate court ruled in favor of respondent City of
Zamboanga. It reversed and set aside the June 18, 2010 Decision of the OP. It also
declared as null and void the Order of Award by the RED-DENR Region IX dated July
2, 2003, for having been issued in excess or lack of jurisdiction. In fine, the CA ruled
that a presidential proclamation is necessary to declare that a parcel of public land is
not necessary for public service before it can be disposed, even for those lands
referred to in Section 59 (d) of CA 141.
ISSUE
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Whether a presidential proclamation is necessary to declare that a parcel of public

land is not necessary for public service before it can be disposed, even for those lands
referred to in Section 59 (d) of CA 141.
RULING
NO. This Court agrees with the CA that even lands classified under Section 59 (d) of
CA 141 must be established as unnecessary for public use or for public service before they
can be sold or leased to private parties or entities or private corporations. However, this
Court does not subscribe to the absolute necessity of a presidential proclamation for such
purposes.
SECTION 63. Whenever it is decided that lands covered by this chapter are not needed
for public purposes, the Director of Lands shall ask the Secretary of Agriculture and
Commerce for authority to dispose of the same. Upon receipt of such authority, the Director
of Lands shall give notice by public advertisement in the same manner as in the case of leases
or sales of agricultural public land, that the Government will lease or sell, as the case may be,
the lots or blocks specified in the advertisement, for the purpose stated in the notice and
subject to the conditions specified in this chapter.
In In re: Flordeliza, the Court ruled that the word decide is defined as "to form a
definite opinion" or "to render judgment." We now apply the same in the statute in question.
As long as a definite opinion or judgment is rendered that certain alienable or disposable
public lands are not needed for public use or public service or even for national wealth, then
the legal requirement under Section 63, in relation to Section 61, is deemed complied with.
Therefore, this Court infers that when the lawmakers used the word "decided" in Section 63,
this must be construed to mean that it admits of a legal scenario beyond the stricture of a
presidential proclamation requirement, contrary to the finding of the CA.
We hold that Section 63, in relation to Section 61, of CA 141 gives leeway to the
President and the DENR Secretary in choosing the manner, mechanism or instrument in
which to declare certain alienable or disposable public lands as unnecessary for public use
or public service before these are disposed through sale or lease to private parties, entities
or corporations.
Hence, all alienable and disposable lands enumerated in Section 59, from (a) to (d),
suitable for residence, commercial, industrial or other productive purposes other than
agricultural, under Chapter VIII of the same CA 141, must be subject to a presidential
declaration that such are exempt from public use or public service before they can be sold or
leased, as the case may be, but such need not be solely through a presidential proclamation.
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This Court has time and again ruled that to prove that a public land is alienable and
disposable, what must be clearly established is the existence of a positive act of the
government. This is not limited to a presidential proclamation. Such fact could additionally
be proven through an executive order; an administrative action; investigative reports of
Bureau of Lands investigators; and a legislative act or a statute.
In the case at bar, the OP, upon the recommendation of the DENR Secretary, validly
declared the subject lots disposable through lease, through an administrative action, one of
the modes that is expressly recognized for said purpose pursuant to our pronouncement in
Republic v. Jabson. Hence, Alde validly complied with the administrative requirements which
led to the issuance of the Order of Award for the Lease by the OP upon the recommendation
of the DENR Secretary.
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AGRO FOOD AND PROCESSING CORP. v. VITARICH CORPORATION

G.R. No. 217454, January 11, 2021, Third Division (Hernando, J.)
DOCTRINE
It bears stressing that the existence of apparent authority may be ascertained not only
through the "general manner in which the corporation holds out an officer or agent as having
the apparent authority to act in general," but also through the corporation's "acquiescence in
his acts of a particular nature, with actual or constructive knowledge thereof, whether within
or beyond the scope of his ordinary powers."
FACTS
On October 5, 1995, Agro and Vitarich simultaneously executed two agreements: first,
a Memorandum of Agreement (MOA) under which Vitarich offered to buy Agro's chicken
dressing plant located in Bulacan; and second, a Toll Agreement under which Agro agreed to
dress the chickens supplied by Vitarich for a toll fee.
Pursuant to the MOA, Vitarich paid P20 million as deposit to Agro and was given a
period of forty-five (45) days within which to evaluate the dressing plant facilities. At the
end of the period, Vitarich formally made its offer to purchase, but Agro did not accept the
offer. Thus, Agro needed to return the P20 million deposit.
Since Vitarich was obligated to pay toll fees to Agro pursuant to the Toll Agreement,
the parties agreed that the manner of returning the P20 million deposit shall be through
deductions of fifteen percent (15%) of the gross receipts on the weekly billings of the toll
fees. In other words, the P20 million deposit shall be continuously offset with fifteen percent
(15%) of the toll fees to be paid by Vitarich until the obligation is satisfied. During that
period, Vitarich also sold on credit live broiler chickens to Agro.
More than two (2) years later, Vitarich filed a complaint for sum of money with
damages against Agro before the RTC alleging that Agro was liable for the following amounts:
first, P4,770,916.82 plus interest, representing the balance from the P20 million deposit, and
second, P4,322,032.36 plus interest, representing the balance on the sale of live broiler
chickens to Agro.
Regarding the first amount, which is the relevant amount in the Petition, Vitarich
stated that it was based not only on the toll fees reflected on the original Toll Agreement, but
also on the verbal amendments to the toll fees made and implemented by the parties thrice
from 1996 to 1997.
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Agro disputed the computation made by Vitarich. It argued that the amount of
P4,770,916.82 was inaccurate as it was based on the alleged verbal amendments to the toll
fees, which amendments were not binding on Agro as they were entered into by Vitarich and
Agro's Finance Manager, Chito del Castillo (del Castillo), which allegedly had no authority to
amend the original Toll Agreement from Agro's board of directors.
In its Petition, Agro argues that the appellate court erroneously applied the doctrine
of apparent authority, which is determined based on the acts of the principal and not by the
acts of the agent. Since the CA relied on the weekly billings prepared by del Castillo and his
testimony that he was authorized to implement the amendments, and not on Agro's conduct
per se, it erred in applying the doctrine of apparent authority.
Vitarich counters that the CA correctly applied the doctrine of apparent authority as
shown by Agro's conduct of preparing over eighty-nine (89) billings reflecting the
amendments, never contesting the payment of such billings, and never questioning the
authority of del Castillo to agree to the amendments in their two (2) years of doing business
together. According to Vitarich, the totality of Agro's acts and conduct belie Agro's claim of
lack of authority on the part of del Castillo.
ISSUE
Whether the Court of Appeals committed a reversible error of law when it applied the
doctrine of apparent authority and held that the reduced toll dressing rates prepared by Mr.
Del Castillo are binding on Agro, despite the fact that the reduction of the toll dressing rates
were never authorized or ratified by Agro’s Bord of Directors.
RULING
NO. The Court find the appellate court's application of the doctrine of apparent
authority well-supported by the law and the evidence.
Agro is correct that "apparent authority is determined by the acts of the principal and
not by the acts of the agent." As applied to corporations, the doctrine of apparent authority
provides that "a corporation is estopped from denying the officer's authority if it knowingly
permits such officer to act within the scope of an apparent authority, and it holds him out to
the public as possessing the power to do those acts."
Thus, it is the corporation's acts which determine the existence of apparent authority,
i.e., whether the corporation knowingly permits its officer to act on its behalf and holds such
officer out to the public as having the authority to do those acts.
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The conduct by which Agro clothed del Castillo with authority is evident on the
following: first, in over a span of two (2) years, with over eighty nine (89) billings and three
(3) instances of amendments, Agro never contested the amended toll fees; second , even after
receipt of several demand letters from Vitarich, Agro never made an issue of the amended
toll fees, and only raised the same in its Answer; and third , Agro accepted the benefits arising
from the amendments through the extension of the period for its payment of the P20 million
deposit (brought about by the decrease in the percentage of billings to be deducted from the
P20 million deposit), not to mention Agro's corresponding increase in profits due to the
increase or amendment in the price of gallantina (type of chicken supplied by Agro) in the
third amendment.
It bears stressing that the existence of apparent authority may be ascertained not only
through the "general manner in which the corporation holds out an officer or agent as having
the apparent authority to act in general," but also through the corporation's "acquiescence
in his acts of a particular nature, with actual or constructive knowledge thereof, whether
within or beyond the scope of his ordinary powers."
Here, it is easy to see that Agro, reasonably appearing to have knowledge of the
amendments, acquiesced to the same. Indeed, Agro never contested nor protested the
amendments; on the contrary, it even accepted the benefits arising therefrom. "When a
corporation intentionally or negligently clothes its officer with apparent authority to act in
its behalf, it is estopped from denying its officer's apparent authority as to innocent third
parties who dealt with this officer in good faith."
Considering the foregoing, We do not find a reversible error in the appellate court's
finding that the amendments were binding on Agro under the doctrine of apparent authority.
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PEOPLE V. CONSTANTINO
DOCTRINE
What PD 1067 penalizes is the unauthorized occupancy of the "seashore" which

necessarily includes the "foreshore." Hence, although the Information charged accused-
appellants of building and constructing structures on "foreshore area" instead of "seashore"
without securing the necessary permit, accused-appellants cannot deny the fact that they
committed a violation of Article 91 (B) (3) of PD 1067. In fact, they admitted that they had a
pending foreshore lease application with the DENR which means that at the time of their
unauthorized occupancy, they knew that they needed to secure a permit before they could build
and construct various structures on the subject foreshore area.
FACTS
Accused-appellants were charged before the MTCC with violation of Article 91 (B) (3)
of PD 1067 or unauthorized occupancy of foreshore area without the necessary permit.
According to the prosecution, accused-appellants are members of the White Sand Bentol
Fishermen Cooperative (WSBFC). Sometime in January 2009, accused-appellants entered
and occupied the foreshore area of Barangay San Pedro, Panabo City, Davao del Norte. They
constructed sheds, cottages, and other structures, and operated sari-sari stores without
WSBFC's foreshore lease application having been approved by DENR, or the necessary
business permit issued by the Licensing Section of Panabo City.
Panabo City LGU interposed an objection to WSBFC's foreshore lease application and
subsequently sent individual notices to accused-appellants to vacate the subject foreshore
area which they ignored. Accused-appellants likewise disregarded the notices posted by
CENRO-DENR informing the public that no foreshore lease application was approved in
favor of any person or group in the subject area, and that a pending lease application filed by
any person or group does not authorize them to occupy and possess the area. Consequently,
the Building Official of the Office of the City Engineer issued a Certification stating that no one
among the accused-appellants had been issued a building permit.
Accused-appellants claimed that they filed a foreshore lease application with the
CENRO-DENR over an area of 93,497 square meters (sqm) for the establishment of a beach
resort. They insisted that they did not know that they needed to secure a permit to set up
stores and conduct business activities in the subject area. However, they contended that their
occupation and economic activities are lawful pending their foreshore lease
application. They also claimed that the MTCC, Panabo City authorized their continued
possession of the subject area as per the injunctive relief issued on November 8, 2009 and
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the December 4, 2009 Decision in Special Civil Case (SCC) No. 30-08, an action for forcible
entry filed by accused-appellants against Manuel W. Tan (Tan) and other defendants, which
ultimately restored accused-appellants to their possession of the subject foreshore area.
The MTCC convicted the accused-apellants of the crime charged. Both the RTC and CA
affirmed the conviction.
ISSUE
Whether XXX is guilty beyond reasonable doubt of the crimes charged.
RULING
YES. What PD 1067 penalizes is the unauthorized occupancy of the "seashore" which
necessarily includes the "foreshore." Hence, although the Information charged accused-
appellants of building and constructing structures on "foreshore area" instead of "seashore"
without securing the necessary permit, accused-appellants cannot deny the fact that they
committed a violation of Article 91 (B) (3) of PD 1067. In fact, they admitted that they had a
pending foreshore lease application with the DENR which means that at the time of their
unauthorized occupancy, they knew that they needed to secure a permit before they could
build and construct various structures on the subject foreshore area.
Even the restoration of their possession of the subject foreshore area against the
alleged rightful owners thereof in the forcible entry case filed before the MTCC in SCC No.
30-08 is not a valid defense to their unauthorized occupancy of the foreshore land without
the necessary permit. To reiterate, accused-appellants admitted that they occupied and
constructed various structures on the foreshore land without the necessary permit, and
during the pendency of their foreshore lease application with the DENR. Intent is immaterial.
Hence, despite their good intention, the pendency of their foreshore lease application, or the
restoration of their possession in a forcible entry case, the offense is already committed
which warrants the application and implementation of PD 1067.
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LINO DOMILOS v. SPOUSES JOHN AND DOROTHEA PASTOR, AND JOSEPH PASTOR
DOCTRINE
“In contracts creating real rights, third persons who come into possession of the object
of the contract are bound thereby, subject to the provisions of the Mortgage Law and the Land
Registration Laws."
FACTS
Lino filed a complaint for forcible entry against Nabunat. The City Court of Baguio
ordered Nabunat to vacate the subject property and remove his house. The Court of First
Instance of Baguio sustained the decision of the lower court. Several years after, or in
November 1986, Lino and Palichang, Nabunat’s mother-in-law, entered into a compromise
agreement, dividing the property among five different parties.
Lino, Nabunat, and Palichang sold different portions of the property to different
parties, including herein respondent spouses Pastor. On May 9, 1989, Lino sought to execute
the 1977 decision of the City Court of Baguio. On May 15, 1989, Lino and Palichang executed
a revocation and cancellation of compromise agreement. The City Court of Baguio granted
Lino’s motion which resulted in the demolition of some of the properties of spouses Pastor.
Thus, the spouses Pastor and Joseph filed a suit for annulment of the revocation of
compromise, among others.
The Pastors claimed that Lino wrongfully sold a portion of his property even if he had
none left to sell, according to the compromise agreement. On the other hand, Lino averred
that the spouses are not parties to the compromise agreement. As such, they have no legal
personality to sue Lino for revoking the same.
ISSUE
Whether the revocation of the compromise agreement by Lino binds the spouses who
were not parties to the same.
RULING
YES. The compromise agreement was a contract that created real rights as it was a
contract for division of property. The third persons, Pastors, who came into possession of
the object of the contract are thus, bound by the contract or compromise agreement.
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Furthermore, rescission or revocation of the compromise agreement cannot take

place because the objects of the contract are already in the legal possession of the Pastors
who did not act in bad faith. At the time the compromise agreement was revoked by Lino and
Palichang, the Pastors were already legal co-owners of the property by virtue of a valid sale.
As such, their respective shares in the disputed property may not be validly included in the
revocation of the compromise agreement without their knowledge and consent. Although it
is clear that the Pastors are not parties to the compromise agreement, their objection to its
revocation can be treated as an adverse claim over the disputed property.
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REPUBLIC OF THE PHILIPPINES v. HEIRS OF EDUARDO BOOC, et. al.

DOCTRINE
“The requirements under Section 12, on the contents of the petition, and Section 13, on
the publication of the notice of petition, are mandatory and jurisdictional in nature. Hence, non-
observance thereof fatally affects the whole proceedings in all its aspects and renders the same
void."
FACTS
The heirs of Booc filed a petition for reconstitution of Original Certificate of Title
(OCT) of Lot Nos. 4749, 4765, and 4777, alleging that sometime in 1930, the Court of First
Instance of Cebu rendered three decisions declaring the late Eduardo Booc and four others
(Boocs) as the registered owners of the lots. At present, the lots were in the material
possession of the MEPZA and MIAA. The possessors filed its opposition. They alleged that
they bought the lots from Julian, Modesta, and Paulino, as evidenced by three Deeds of
Absolute Sale.
In the heirs of Booc’s petition, they failed to indicate the addresses of MEPZA and
MIAA. They failed to state in their petition any building or improvements in the lots which
do not belong to them and failed to state the encumbrances affecting the property. Further,
they failed to indicate the number of the lost or destroyed OCTs.
ISSUE
Whether the heirs of Booc are entitled to the reconstitution of the OCTs of the subject
lots.
RULING
NO. The trial court did not acquire jurisdiction over the petition for reconstitution
since the mandatory requirements and procedures laid down in Republic Act 26 have not
been strictly complied with. The requirements under Section 12, on the contents of the
petition, and Section 13, on the publication of the notice of petition, are mandatory and
jurisdictional in nature. Hence, non-observance thereof fatally affects the whole proceedings
in all its aspects and renders the same void.
In the present case, the petition did not comply with Section 12 since they did not
indicate the present addresses of the occupants, MEPZA and MIAA. They did not stipulate if
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a building or improvement which do not belong to them are erected in the subject lots. They
also did not state the encumbrances affecting the property which are the deeds of absolute
sale in favor of MCIAA. Further, the fact that they failed to identify the exact title number
defeats the purpose of the twin notice and publication requirements. Aside from that, the
respondents failed to adduce competent evidence that the OCTs of the lots existed and were
indeed issued in the name of the Boocs. Thus, before any reconstitution may be made, there
should be sufficient and competent proof that the title sough to be reconstituted had actually
existed.
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Case Digests
REPUBLIC OF THE PHILIPPINES v. JOCELYN ASUSANO KIKUCHI

G.R. No. 243646, June 22, 2022, First Division (Hernando, J.)
DOCTRINE
“Before a foreign divorce decree can be recognized by the court, the party pleading it
must first prove the fact of divorce and its conformity to the foreign law allowing it."
FACTS
In 2015, Jocelyn filed before the trial court a petition for judicial recognition of foreign
divorce. She alleged that she was married to Fumio in 1993, and in 2007, they jointly filed
for divorce before the City Hall of Sakado City, Saitama Prefecture. As the divorce was
accepted, Jocelyn sought the recognition thereof here in the Philippines.
During the presentation of evidence, the following documents, among others, were
presented: (1) the Acceptance Certificate issued by the Mayor of Sakado City, Japan; (2) an
Authentication from the Vice Consul of Philippine Embassy in Tokyo; and (3) a photocopy of
the Civil Code of Japan in English Text. However, the translation of the Civil Code of Japan
was not an official translation. The Republic opposed the petition arguing that Jocelyn failed
to comply with the requirements of authentication and proof of documents concerning the
said documents, and that foreign law had not been proven.
ISSUE
Whether Jocelyn is entitled to a judicial recognition of foreign divorce.
RULING
NO. Under Article 26 of the Family Code, a divorce between a foreigner and a Filipino
may be recognized in the Philippines as long as it was validly obtained according to the
foreign spouse’s national law. However, before a foreign divorce decree can be recognized
by the court, the party pleading it must first prove the fact of divorce and its conformity to
the foreign law allowing it.
In the present case, Jocelyn was able to establish the fact of divorce but was unable to
establish the law of Japan on divorce. The Acceptance Certificate, accompanied by an
Authentication from the Philippine Embassy in Tokyo, suffices as proof of the fact of divorce.
However, the photocopy of the English translation of the Civil Code of Japan is devoid of any
probative value. In Nullada v. Civil Registrar of Manila and Arreza v. Toyo, the Court held that
the submission of the same document does not constitute sufficient compliance with the
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rules on proof of Japan’s law on divorce and that the translations by the publisher of that
document are not advertised as a source of official translations of Japanese laws. Not being
an official translation, the document submitted does not prove the existing law on divorce in
Japan. Without such, there is nothing in the record to establish that the divorce was validly
obtained and is consistent with the Japanese law on divorce.
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Case Digests
ANGELINA DAYRIT, represented by JULIE E. DAYRIT v. JOSE I. NORQUILLAS, ROGELIO

I. NORQUILLAS, ROMIE I. NORQUILLAS, HERDANNY I. NORQUILLAS, DANILO M.
NORQUILLAS, ANTHONY APUS, TECLO P. MUGOT, ALLAN A. OMPOC, JONI CLARIN,
CANDELARIA MEJORADA, LILIA 0. TAGANAS, SYLVIA SABAYANON, ARSENIO CATIIL,
VERONICO MAESTRE, and MARIO TAGAYLO
G.R. No. 201631 December 7, 2021, En Banc (Hernando, J.)
DOCTRINE
It should not be understood that jurisdiction on ejectment cases of whatever nature falls
on first-level courts; it should be read and understood to provide that first-level courts have
jurisdiction on ejectment cases even if the land is public in character as long as the case is not
an agrarian dispute. The public character of the land does not divest the courts of jurisdiction
over ejectment cases. However, if the ejectment case is found to be an agrarian dispute, the first-
level courts will be divested of jurisdiction in accordance with the CARL, as amended. The
controlling aspect, therefore, is the nature of the dispute (i.e., agrarian or not) and not the
character of the subject land.
FACTS
Angelina was the registered owner of two parcels of land located in Bolisong, El
Salvador, Misamis Oriental. In 1993, the parcels of land were placed under the coverage of
the CARP. Hence, Angelina's titles to the parcels of land were cancelled, and new titles
(pursuant to CLOAs) were issued in favor of respondents. Angelina filed a petition for the
annulment of the CLOAs before the DARAB. She also applied for exemption from CARP
coverage with the DAR.
While the appeal of the petition for annulment was pending in the DARAB Manila
Office, Angelina claimed that the respondents surreptitiously entered the property and
refused to vacate despite repeated demands. This prompted Angelina to file the instant
complaint for forcible entry.
Respondents, in their answer, acknowledged that Angelina was the previous owner
of the parcels of land. However, they alleged that Angelina lost her ownership the properties
when these were awarded to respondents as CARP beneficiaries. It follows that Angelina lost
her right of possession. Respondents also argued that they remain owners of the parcels of
land despite Angelina's pending petition for annulment of the CLOAs. Hence, Angelina cannot
claim forcible entry as she already lost her right of possession.
The MCTC ruled in favor of Angelina. Aggrieved, respondents appealed the case to the
RTC. The RTC affirmed the MCTC Decision in its entirety.
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With respondents still aggrieved, they further elevated the case to the CA. The CA
reversed and set aside the rulings of the MCTC and the RTC and dismissed the complaint.
The CA ruled that the DARAB has jurisdiction to try and decide any agrarian dispute or any
incident involving the implementation of the CARP. In the instant case, petitioner's parcels
of land in dispute were included in the CARP Portions were awarded to respondents
pursuant to the CLOAs that resulted to the issuance of new titles. As beneficiaries,
respondents occupied the parcels of land, which was considered by Angelina as unlawful
entry, resulting in the filing of the instant case to recover possession.
Angelina moved for reconsideration but was subsequently denied by the CA.
ISSUE
Whether or not the MCTC has jurisdiction on the instant complaint for forcible entry.
RULING
NO. The case of David v. Cordova (David) should not be understood that jurisdiction
on ejectment cases of whatever nature falls on first-level courts; it should be read and
understood to provide that first-level courts have jurisdiction on ejectment cases even if the
land is public in character as long as the case is not an agrarian dispute. The public character
of the land does not divest the courts of jurisdiction over ejectment cases. However, if the
ejectment case is found to be an agrarian dispute, the first-level courts will be divested of
jurisdiction in accordance with the CARL, as amended. The controlling aspect, therefore, is
the nature of the dispute (i.e., agrarian or not) and not the character of the subject land.
Then there is the more recent case of Chailese Development Company, Inc. v. Dizon
(Chailese), which clarifies the jurisdiction of the DARAB over agrarian disputes:
Thence, having settled that Section 19 of R.A. No. 9700 is applicable in this
controversy, the Court now proceeds with the examination of such amendment. Based on
the said provision, the judge or prosecutor is obligated to automatically refer the cases
pending before it to the DAR when the following requisites are present:
a. There is an allegation from any one or both of the parties that the case is agrarian in
nature; and
b. b. One of the parties is a farmer, farmworker, or tenant.
From this, the Court rules that the MCTC has no jurisdiction on the instant complaint
for forcible entry. As pointed out by Associate Justice Amy C. Lazaro-Javier, this case meets
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the two requirements for automatic referral, as set out by RA 9700 and as summarized in
Chailese. Thus, the Court finds that the case is cognizable by the DAR through the DARAB.
The first requirement is the presence of an allegation from any one or both of the
parties that the case is agrarian in nature. Here, despite the filing of the forcible entry case,
respondents have been consistent on alleging that the controversy is agrarian in nature. In
their answer filed before the MCTC, they alleged that the land in dispute were awarded to
them as CARP beneficiaries. The RTC, on appeal, also touched upon matters of allegations of
agrarian dispute in relation with jurisdiction of the courts. The CA also did the same and in
fact dismissed the complaint after finding that the issue of possession was linked to an
agrarian dispute brought by the issuance of CLOAs to respondents. In their comment filed
before this Court, respondents maintain that the case is an agrarian dispute.
As stated by RA 9700, mere allegation of the existence of an agrarian dispute is

enough. In this case, this requirement was met when respondents made consistent
allegations of the existence of an agrarian dispute pursuant to the CLOAs issued to them.
As to the second requirement, Chailese adds that proof must be adduced as to the
person's status as farmer, farmworker, or tenant. In this case, it is undisputed that
respondents are farmers of the subject lands. Indeed, the records did not expressly show any
agreement of whatever kind that respondents were farmers of Angelina's lands. However,
the CA and the DAR Secretary (in the exemption from CARP case) here recognized the status
of respondents as farmers.95 This was not disputed by Angelina. Further, their status as
farmers was cemented by the subsequent award of Angelina's lands to them by virtue of
CLOAs. This is also shown by the cases Angelina initiated regarding the annulment of CLOAs,
exemption from CARP coverage, and this forcible entry case. Thus, the second requirement
is met.
The Court, therefore, agrees with the CA in dismissing the complaint for lack of
jurisdiction. The DAR, through the DARAB, has jurisdiction over the instant case for forcible
entry for being an agrarian dispute.
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HEIRS OF JOSE DE LARA, SR. v. RURAL BANK OF JAEN, INC.

GR No. 212012, March 28, 2022, Second Division (Hernando, J.)
DOCTRINE
Tenancy relationship between the parties must exist for the DARAB to acquire
jurisdiction. The following indispensable elements should first be established: 1) that the parties
are landowner and tenant or agricultural lessee; 2) that the subject matter of the relationship
is an agricultural land; 3) that there is consent between parties to the relationship; 4) that the
purpose of the relationship is to bring about agricultural production; 5) that there is personal
cultivation on the part of the tenant or agricultural lessee; and 6) that harvest is shared
between landowner and tenant or agricultural lessee.
Although petitioners did not question DARAB’s jurisdiction, citing Heirs of Dela Cruz v.
Heirs of Cruz: “Jurisdiction over the nature and subject matter of an action is conferred by the
Constitution and the law, and not by the consent or waiver of the parties… ”
FACTS
Jose, a farmer-beneficiary under the Operation Land Transfer of PD No. 27, was
awarded a parcel of land. TCT No. EP-86727 under DAR Emancipation Patent (EP) No.
00735825 covering the subject land was issued in his favor.
Jose obtained a loan from respondent bank, secured by a mortgage over the land. He
failed to pay so it was foreclosed. A public auction was held; respondent bank was the highest
bidder. RTC issued a Certificate of Sale to respondent bank, and it registered said sale with
the Register of Deeds. A year passed but Jose or his heirs did not redeem the subject land.
Hence, respondent bank executed an Affidavit of Consolidation of Ownership.
Respondent bank filed a verified petition for cancellation of TCT No. EP-86727 before
PARAD. Petitioners sought its dismissal, arguing: 1) that PARAD did not acquire jurisdiction
over them for failure to implead necessary parties; 2) that the petition lacked cause of action
as the mortgage was void ab initio, it being executed within the 10-year prohibitory period
under Sec 27, RA 6657 (CARP); and 3) that the mortgage was void for being executed without
consent of Jose’s wife, Marcela.
PARAD granted respondent’s bank petition for cancellation and for a new one to be
issued in respondent bank’s name, Jose having failed to pay his obligation and them having
failed to present the mortgage contract to prove that it was not signed by Marcela. DARAB
reversed, holding that respondent bank’s act of consolidating ownership over the subject
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Case Digests
land is prohibited under agrarian laws. CA reversed, Jose and Marcela having fully paid Land
Bank their amortizations covering the land before it was mortgaged.
ISSUE
Whether the subject land covered by an EP can be foreclosed and its title canceled by
PARAD in favor of respondent bank
RULING
NO. DARAB has no jurisdiction over the case as there is no agrarian dispute between
the parties.
Tenancy relationship between the parties must exist for the DARAB to acquire
jurisdiction. The following indispensable elements should first be established: 1) that the
parties are landowner and tenant or agricultural lessee; 2) that the subject matter of the
relationship is an agricultural land; 3) that there is consent between parties to the
relationship; 4) that the purpose of the relationship is to bring about agricultural production;
5) that there is personal cultivation on the part of the tenant or agricultural lessee; and 6)
that harvest is shared between landowner and tenant or agricultural lessee.
These elements are not present. There was no tenancy relationship between
petitioners and respondent bank over the subject land. What is clear is that respondent
bank’s petition for cancellation of certificate of title stemmed from a foreclosure. There was
no agrarian dispute despite the land being an agricultural land. Thus, the petition should
have been dismissed by DARAB for lack of jurisdiction.
Although petitioners did not question DARAB’s jurisdiction, citing Heirs of Dela Cruz
v. Heirs of Cruz: “Jurisdiction over the nature and subject matter of an action is conferred by
the Constitution and the law, and not by the consent or waiver of the parties… ” Respondent
bank’s recourse should have been with the Register of Deeds pursuant to Sec 63 of PD 1529,
which states that “in case of non-redemption, purchaser at foreclosure sale shall file with the
Register of Deeds xxx”
Subject land is deemed non-transferrable under PD 27 and RA 6657, as amended by

RA 9700. PD 27 states that, “title to land acquired pursuant to this Decree or the Land Reform
Program of the Government shall not be transferable except by hereditary succession or to
the Government. These lands are “not subject to foreclosure, except by the Land Bank,
because foreclosure contemplates the transfer of ownership over the mortgaged lands.” This
is for the government to develop generations of farmers to attain its avowed goal to have an
adequate and sustained agricultural production.
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Sec 27 of RA 6657, as amended by RA 9700, states that, “Lands acquired by

beneficiaries under this Act or other agrarian reform laws shall not be sold, transferred, or
conveyed xxx for a period of 10 years. Hence, although Sec 71 & Sec 73-A of RA 6657 allows
banks and financial institutions in general to foreclose mortgages on agricultural lands, the
facts of the case impel the Court to invalidate the foreclosure sale to respondent bank.
Records show that at the time the foreclosure sale was held, only 4 years had passed from
the time he acquired said land in his name. There was a factual impediment to respondent’s
action to foreclose.
Pursuant to Art 1409 of the Civil Code, contracts whose cause, object, or purpose is
contrary to law, morals, good customs, public order, or public policy, are inexistent and void
from the beginning. Therefore, the sale by foreclosure to respondent is void ab initio.
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Case Digests
BUREAU OF INTERNAL REVENUE v. TICO INSURANCE COMPANY, INC, GLOWIDE

ENTERPRISES INC, AND ASIA PACIFIC MILLS
G.R. No. 204226, April 18, 2022, Second Division, Hernando, J:
DOCTRINE
A successful litigant who has secured a final judgment in its favor cannot later be
impleaded by its defeated adversary in an interpleader suit and compelled to prove its claim
anew against other adverse claimants, as that would in effect be a collateral attack upon the
judgment. An action for interpleader may not be utilized to circumvent the immutability of a
final and executory judgment. It is settled that when a decision has attained finality.
Duties, taxes, and fees due the Government enjoy priority only when they are with
reference to a specific movable property, under Article 2241 (1) of the Civil Code, or immovable
property, under Article 2242 (1) of the same Code. However, with reference to the other real
and personal property of the debtor, sometimes referred to as "free property," the taxes and
assessments due the National Government, other than those in Articles 2241 (1) and 2242 (1)
of the Civil Code, will come only in ninth place in the order of preference.
FACTS
TICO Insurance Company is engaged in the sale of insurance until it was placed under
liquidation by the Insurance Commission in 2002. Glowide and PMT are clients of TICO that
took out a fire insurance policy over several properties in 1997.
While Glowide and PMI’s fire insurance with TICO was in effect, a fire broke out that
destroyed the said properties. Due to TICO’s failure to pay the full amount of the insurance
proceeds, Glowide and PMI filed a Complaint for sum of money and damages, with prayer for
a writ of preliminary attachment against TICO’s Units 7A and 7B of Trafalgar Plaza
Condominium.
Meanwhile, on January 31, 2000, the BIR served on TICO several final assessment
notices for its alleged deficiency in internal revenue taxes, i.e. income tax, annual registration
fee, value-added tax, percentage tax, withholding tax on wages, expanded withholding tax,
and documentary stamp tax for years 1996 – 1997, amounting to a total of
PHP69,479,440.59.
On November 23, 2000, the court granted Glowide and PMI’s application for the
issuance of a writ of preliminary attachment to attach all properties of TICO sufficient to
satisfy the claim. On December 22, 2000, the notice of levy on attachment was issued on
TICO’s condominium units.
Page 301 of 307

Case Digests
On October 03, 2001, the RTC ordered TICO to pay Glowide and PMI the amount
of PHP5,442,209.97. On January 08, 2002, Glowide and PMI moved for execution of the
October 03 judgment. TICO has not filed a motion for reconsideration or appeal from said
judgment. The motion for execution was granted on June 03, 2002 and notices of levy on
execution were annotated on June 13, 2002.
On April 22, 2002, the Insurance Commission placed TICO under liquidation and
appointed Atty Rommel Frias as liquidator. TICO filed a petition for relief from judgment and
writ of execution claiming that it has tax assessments from 1996-1998 which enjoy
preference above all other credits. The petition for relief from judgment was denied being
filed out of time. On February 16, 2004, the RTC denied the petition and noted that
Glowide and PMI’s claims are preferred over the BIR’s claims because tax assessments
are not preferred credits in specific immovable property.
TICO assailed the February 2004 order of the RTC via a petition for certiorari. The CA
dismissed TICO’s petition finding no grave abuse of discretion committed by the RTC. TICO
no longer appealed the CA Decision.
The auction sale for the condo units were conducted on April 14, 2004 and were sold
to Glowide and PMI as the highest bidders. The certificate of sale was annotated on the title
of the property on April 15, 2004. On the other hand, on February 15, 2005, the BIR caused
the annotation of the notice of tax lien on the said condo units. BIR posited that it has a
superior claim over the condo units considering its claim for unpaid revenue taxes enjoys
absolute preference under the Civil Code and a tax lien over TICO’s properties had already
attached at the time the assessments were made on January 31, 2000.
TICO did not exercise any redemption of the property and the period of redemption
lapsed. A final deed of sale was issued in favor of Glowide and PMI on April 15, 2005.
On August 07, 2006, TICO filed a complaint for interpleader with the RTC Makati to
determine who between respondents Glowide and PMI, on one hand, and petitioner BIR on
the other hand, has a superior right over the two condominium units.
ISSUE:
1. Whether or not TICO’s complaint for interpleader is proper. (NO)
2. Whether or not BIR’s claim over the condominium units are superior to Glowide
and PMI in accordance with the system of concurrence and preference of credits. (NO)
Page 302 of 307

Case Digests
RULING
1. TICO’s interpleader complaint is improper because it amounts to a collateral attack on the

final and executed judgment in favor of Glowide and PMI.
The special civil action of interpleader is designed to protect a person against double
vexation in respect of a single liability. However, a successful litigant who has secured a final
judgment in its favor cannot later be impleaded by its defeated adversary in an interpleader
suit and compelled to prove its claim anew against other adverse claimants, as that would in
effect be a collateral attack upon the judgment. An action for interpleader may not be utilized
to circumvent the immutability of a final and executory judgment. It is settled that when a
decision has attained finality.
In light of the foregoing, the Court held that there was a belated attempt on TICO's
part to assail the final and executed judgment in favor of Glowide and PMI. Aside from the
October 3, 2001, which ruled in favor of Glowide and PMI, the RTC QC in its February 16,
2004 Order had previously ruled that Glowide and PMI's credits enjoy preference over BIR's
claim over the condominium units. This was then affirmed by the CA in a decision which
became final and executory. Moreover, despite knowledge of its unpaid tax liabilities with
the BIR, TICO failed to implead the BIR in the proceedings before the RTC QC, and initiated
the complaint for interpleader only after it was defeated in the said proceedings. As a result,
the interpleader suit has forced Glowide and PMI to defend their rights anew over the
condominium units, and has unduly deferred their right to a satisfaction of their claims under
a final court decision in their favor. Verily, the RTC Makati should not have allowed TICO to
disturb the final and executed ruling in Glowide and PMI's favor through an interpleader suit.
2. Glowide and PMI’s rights over the condominium units are superior to the BIR’s claim and
are thus entitled to possession and conveyance of the condominium units.
Under the system of concurrence and preference of credits, which finds application
in insolvency proceedings, credits are classified into three general categories: (a) special
preferred credits listed in Articles 2241 and 2242, (b) ordinary preferred credits listed in
Article 2244, and (c) common credits under Article 2245. The special preferred credits
enumerated in Articles 2241 (with respect to movable property) and 2242 (with respect to
immovable property) are considered as mortgages or pledges of real or personal property,
or liens within the purview of Act No. 1956. These credits, which enjoy preference with
respect to a specific movable or immovable property, exclude all others to the extent of the
value of the property. Credits which are specially preferred because they constitute liens (tax
or non-tax) in turn take precedence over ordinary preferred credits so far as the property to
which the liens have attached.
Page 303 of 307

Case Digests
The tax claim is only an ordinary preferred credit under Article 2244 since it is not
based on taxes due on the condominium units but on TICO's deficiency in payment of its
income tax, annual registration fees, value-added tax, percentage tax, withholding tax on
wages, expanded withholding tax, and documentary stamp tax. On the other hand, Glowide
and PMI's claim is a special preferred credit under Article 2242 (7) of the Civil Code, and thus
superior to BIR's tax claim which is only an ordinary preferred credit.
Duties, taxes, and fees due the Government enjoy priority only when they are with
reference to a specific movable property, under Article 2241 (1) of the Civil Code, or
immovable property, under Article 2242 (1) of the same Code. However, with reference to
the other real and personal property of the debtor, sometimes referred to as "free property,"
the taxes and assessments due the National Government, other than those in Articles 2241
(1) and 2242 (1) of the Civil Code, will come only in ninth place in the order of preference.
Page 304 of 307

Case Digests
THE HEIRS OF ZENAIDA B. GONZALES, represented by ARNEL B. GONZALES, vs.

SPOUSES DOMINADOR AND ESTEFANIA BASAS AND ROMEO MUNDA,
G.R. No. 206847, June 15, 2022, (Hernando, J.)
DOCTRINE
One is considered a purchaser in good faith if he or she buys the property of another
without notice that some other person has a right to or interest in such property, and pays its
full and fair price before he or she has notice of the adverse claims and interest of another
person in the same property. Conversely, one is considered a buyer in bad faith when he or she
purchases a property despite knowledge of a defect or lack of title in his or her seller or when
he or she has knowledge of facts which should have cautioned him or her to conduct further
inquiry or investigation.
FACTS
The late Zenaida B. Gonzales (Zenaida) purchased from respondents spouses

Dominador and Estefania Basas (collectively, spouses Basas), a parcel of land including the
house thereon, situated at No. 427 Espinola St., Block 6, Magsaysay Village, Tondo, Manila,
with an area of 152.98 square meters and covered by Transfer Certificate of Title No. (TCT)
187898 (subject property). An annotation in the title indicates that the consent of the
National Housing Authority (NHA) is necessary for the disposal of the same. Zenaida and the
spouses Basas executed the following documents to reflect their mutual agreement on the
sale and purchase of the subject property
They further asserted that the Agreement was executed by the parties because the
spouses Basas were apprehensive that Zenaida might not pay the remaining balance. Further
alleged that the spouses Basas promised to procure the written consent of the NHA for the
sale of the subject property. In the meantime, pursuant to their mutual agreement on the sale
and purchase of the same, Zenaida paid the Basas couple an aggregate amount of more than
P800,000.00, as evidenced by receipts.
Once the spouses Basas received the said amount, they promised to deliver the title
of the subject property to Zenaida as soon as they secured the NHA's consent. Meanwhile,
the spouses Basas borrowed the certificate of title of the property which at that time was
already in the possession of Zenaida after she paid them the amount of P650,000.00, so they
can work on the cancellation of the mortgage on the subject property. Petitioners point out
that Zenaida has not paid the balance of the selling price because the spouses Basas have not
yet obtained NHA's written consent to the sale.
Page 305 of 307

Case Digests
Petitioners further argued that the sale between the spouses Basas and Munda
showed that the selling price of the subject property in the amount of P100,000.00 was
grossly inadequate since the property is worth more than P1,000,000.00. Petitioners pointed
out that the second sale to Munda was spurious, and that respondents spouses Basas and
Munda (collectively, respondents) conspired to defraud the government by avoiding
payment of the required taxes in connection with the sale of the subject property.
Meanwhile, Munda argued that he purchased the subject property in good faith and for value.
He was not aware of any previous transactions between the spouses Basas and Zenaida.
RTC ruled in favor of petitioners. , the CA reversed the findings of the RTC and found
Munda as a buyer in good faith and for value.
ISSUE
Whether or not the sale between Zenaida and spouses Basas should be recognized as
having transferred the ownership of the subject property from the spouses Basas to Zenaida;
and whether or not the Munda is not an innocent purchaser for value.
RULING
YES. Petitioners sufficiently proved that the spouses Basas sold the subject property
to their predecessor-in-interest, Zenaida, and that ownership of the same was constructively
delivered to the latter pursuant to said sale upon execution of the May 13, 1996 DOAS, and
later reinforced by the August 14, 1996 Agreement, subject to the resolutory conditions
stated in the latter. Consequently, the spouses Basas had no right over the subject property
which they could transfer to Munda on August 25, 1997. In the case at bar, since ownership
of the subject property had already been transferred by the spouses Basas to Zenaida, then
no right could be transmitted on to Munda on the second sale. It was of no moment that
Munda was able to register the land under his name in the Register of Deeds because
registration is not a mode of acquiring ownership and moreover, he was a buyer and
registrant in bad faith.
In the instant case, the spouses Basas sold the subject property to Zenaida in 1996,
and sold the same as well to Munda on August 25, 1997. However, the foregoing requisites
of a double sale are absent because the sale of the subject property by the Basas to Munda
was not a valid sale transaction since by that time, the spouses Basas were no longer the
owners of the property, and thus, they had no right to transfer the same. Therefore, Zenaida,
as represented by petitioners, had a better right to the subject property since Munda was a
buyer and registrant in bad faith.
Page 306 of 307

Case Digests
The prior registration of the disputed property by the second buyer does not by itself
confer ownership or a better right over the property. Article 1544 requires that such
registration must be coupled with good faith. Jurisprudence teaches us that "(t)he governing
principle is primus tempore, potior jure (first in time, stronger in right). Knowledge gained
by the first buyer of the second sale cannot defeat the first buyer's lights except where the
second buyer registers in good faith the second sale ahead of the first, as provided by the
Civil Code. Such knowledge of the first buyer does not bar her [or him] from availing of her
[or his] rights under the law, among them, to register first her [or his] purchase as against
the second buyer. But in converso, knowledge gained by the second buyer of the first sale
defeats his [or her] rights even if he [or she] is first to register the second sale, since such
knowledge taints his [or her] prior registration with bad faith. This is the price exacted by
Article 1544 of the Civil Code for the second buyer being able to displace the first buyer; that
before the second buyer can obtain priority over the first, he [or she] must show that he [or
she] acted in good faith throughout (i.e., in ignorance of the first sale and of the first buyers
rights) — from the time of acquisition until the title is transferred to him [or her] by
registration or failing registration, by delivery of possession"
Page 307 of 307

Civil Law - J. Hernando

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Case Digests

PONENCIAS OF JUSTICE HERNANDO

JESSICA P. MAITIM a.k.a. "JEAN GARCIA", petitioner,

1. Whether Maitim is solidarily liable under the doctrine of vicarious liability.

Maitim failed to prove that she

In the selection of prospective employees, employers are required to examine them

LUCILA PURIFICACION, * petitioner, vs. CHARLES T. GOBING and ATTY. JAIME

Disturbance compensation, in cash or in kind or both, shall be paid by the landowner or

On July 1, 1993, Atty. Villanueva paid the Purificacion spouses a disturbance

On January 3, 2000, Lucila filed a Complaint for Disturbance Compensation. Lucila

Provincial Agrarian Reform Adjudicator (PARAD): Rendered a Decision in favor of

1. Whether Lucila’s action has prescribed.

1. YES. Section 38 of RA No. 3844 (Agricultural Land Reform Code) provides:

Section 16 of DAR AO No. 1, series of 1999 provides that disturbance compensation

Records show that [Lucila] Purificacion was paid P1,046,460.00 disturbance

Secondly, the Notarized Malayang Salaysay is duly acknowledged before a notary

LUISITO G. PULIDO, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.

Arguments of the OSG:

Hence, Pulido's acquittal from the crime of Bigamy is warranted.

It is undisputed that Pulido married Arcon on September 5, 1983. Thereafter, he

However, in Gomez v. Lipana and Vda. de Consuegra v. Government Service Insurance

b. Article 40 of the Family Code applies retroactively on marriages celebrated before

Thus, a judicial declaration of nullity

3. NO. As differentiated with #2, however, in a criminal prosecution for bigamy,

subsequent to the celebration of the second marriage is considered immaterial in the

After a careful consideration, this Court is constrained to abandon our earlier

The aforesaid conclusion is anchored on and justified by the retroactive effects of a

Retroactive effects of a void ab initio

annulment nor dissolution but merely a declaration of a status or condition

PRYCE PROPERTIES CORP. (now PRYCE CORPORATION), petitioner, vs. NARCISO R.

Petitioner Pryce maintains that respondent Nolasco impliedly agreed to the

The Realty Installment Buyer Protection Act, otherwise known as RA 6552 or

The written Contract to Sell is

A notarial rescission contemplated under RA 6552 is a unilateral cancellation by

Pryce's Answer with Counterclaims, however, was notarized through a jurat.

Rescission is an act or a deed, directly or impliedly done, where a contract is cancelled,

The foregoing thus defined, a deed of rescission notarized via acknowledgment is

Having secured a mere jurat to notarize the supposed "notice of rescission" as

Even if these formal delinquencies were to be overlooked, the mode of rescission

The allegations contained in Pryce's Answer with Counterclaims cannot constitute as

Moreover, allegations in a pleading must be proved. While Pryce appended to its

Rescission unmakes a contract. Necessarily, the rights and obligations emanating

A defaulting buyer of real property on installments, whether or not she or he has

PHILIPPINE NATIONAL BANK, petitioner, vs. LORENZO T. BAL, JR., respondent.

On March 7, 1997, Solidbank issued a FLC (US$168,000.00) in favor of PLC to finance

1. Was the extra-judicial foreclosure of the REM null and void?

2. NO. As a general rule, a mortgage liability is usually limited to the amount

Petitioners' claim that Solidbank is obliged to surrender the documents of title to

In conclusion, petitioners have no right to demand payment of damages from Solidbank

FROILAN NAGAÑO, et al. v. LUIS TANJANGCO, et al.

Petitioners filed a motion for reconsideration of the DAR Secretary’s resolution

(1) Whether the transfer of the lots to petitioners is valid. (NO.)

(1) NO. Any transfer made by a tenant-beneficiary in violation of PD 27 is void. This

The issue of whether EO 228 rendered the prohibition of transfers in PD 27 ineffective

That respondents executed a Deed of Partition on July 4, 2000, which allocated to

MUNICIPALITY OF CORELLA, represented by MAYOR JOSE NICANOR D. TOCMO v.

Corella is a municipality located in Bohol and represented by its municipal mayor,

As of December of 2009, Philkonstrak accomplished more than 50% of the work

Whether or not Philkonstrak is entitled to be compensated for expenses incurred in

Philkonstrak sufficiently established its right to be compensated on the basis of

Hence, the petition is granted in part.

DORIS MARIE S. LOPEZ v. ANICETO G. SALUDO, JR.

This prompted respondent to immediately assume possession of the properties and