Civil Law Notes

Survey of 2018-2019 SC Decisions in
CIVIL LAW
By: Dean Ed Vincent S. Albano
ARTICLE 19, NCC
Violation of Art. 19, NCC; cutting of water service without notice.

In Metroheights Subd. Homeowners Assn., Inc. v. CMS Construction & Dev. Corp., et al., G.R. No.
209359, October 17, 2018, Peralta, J, petitioner’s water service connection was cut off without notice to the
residents resulting in inconvenience to the residents. This was done, hence, an action for damages was filed.
This was done when respondent undertook the process of rehabilitating the water service to improve it,
hence, its defense that it was done in good faith thus, it interposed the defense of damnum absque injuria, but
this was not affirmed by the RTC because there was abuse of persons’ right as there was no notice to the
residents especially so that water is a basic necessity that the lack of it not only caused inconvenience but
posted health concerns. The CA reversed the RTC decision and ruled that the rehabilitation project was not
done without notice (but not proven) and its actions were merely consequential to the exercise of their rights
and obligations to manage and maintain the water supply system. Ruling otherwise, the SC
Held: There was no notice to the residents and there was abuse of right.
"Article 19 [of the New Civil Code] was intended to expand the concept of torts by granting adequate
legal remedy for the untold number of moral wrongs which is impossible for human foresight to provide,
specifically in statutory law. If mere fault or negligence in one's acts can make him liable for damages for
injury caused thereby, with more reason should abuse or bad faith make him liable. The absence of good faith
is essential to abuse of right. Good faith is an honest intention to abstain from taking any unconscientious
advantage of another, even through the forms or technicalities of the law, together with an absence of all
information or belief of fact which would render the transaction unconscientious. In business relations, it
means good faith as understood by men of affairs."
"While Article 19 [of the New Civil Code] may have been intended as a mere declaration of principle,
the 'cardinal law on human conduct' expressed in said article has given rise to certain rules, e.g. that where a
person exercises his rights but does so arbitrarily or unjustly or performs his duties in a manner that is not in
keeping with honesty and good faith, he opens himself to liability. The elements of an abuse of rights under
Article 19 are: (1) there is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of
prejudicing or injuring another."
It is an operating procedure to give letters to the homeowners, as well as the barangays affected,
regarding the objective of the project and calling for meetings was not also established by any documentary
evidence. It is, therefore, established that there was no notice, not even a generalized notice, given by
respondents to petitioner regarding the rehabilitation project.
Administrative case, a prejudicial question to civil case.

Technically, there would be no prejudicial question to speak of in this case, if we are to consider the
general rule that a prejudicial question comes into play in a situation where a civil action and a criminal
action are both pending and there exists in the former an issue which must be preemptively resolved before
the criminal action may proceed, because howsoever the issue in the civil action is resolved would be
determinative juris et de jure of the guilt or innocence of the accused in the criminal a case. However,
considering the rationale behind the principle of prejudicial question, being to avoid two conflicting
decisions, prudence dictates that we apply the principle underlying the doctrine of prejudicial question.
In the present case, the question of which between the Castro and the Nicolas factions are the de jure
board of directors of NUI was lodged before the SEC. The complaint before the RTC of Laoag meanwhile
alleged that petitioners, together with their co-defendants, comprised of the “Castro faction,” wrongfully
withdrew the amount of P1.4M from the account of NUI with Metrobank. Moreover, whether or not the
“Nicolas faction” is a duly elected member of the Board of NUI and thus with capacity to institute the
complaint in behalf of the NUI depends on the findings of the SEC in the case pending before it. It would
finally determine whether Castro, et al legally withdrew the subject amount from the bank and whether
Nicolas lawfully initiated the complaint in behalf of the herein respondent NUI. It is petitioner’s claim and that
the presence or absence of their liability for allowing the withdrawal of P1.4M from the account of NUI with
Metrobank in favor of the “Castro faction” is reliant on the findings of the SEC as to which of the two factions
is the de jure board of NUI is crucial to the resolution of the case before the RTC, hence, the trial court should
suspend its proceedings until the SEC comes out with its findings (Abacan, Jr. v. Northwestern Univ. Inc., 495
Phil. 123 [2005]; Alsons Dev. & Investment Corp., Heirs of Confessor, et al., G.R. No. 215671, September 19,
2018, Tijam, J citing Quiambao v. Osorio, 242 Phil. 41 [1988]).
Civil case a prejudicial question to another civil case.

Generally, a prejudicial question comes into play only in a situation where a civil action and a
criminal action are both pending and there exists in the former an issue which must be preemptively resolved
before the criminal action may proceed because the resolution of the civil action is determinative juris et de
1 |ABRC2020.SCD 2018-2019 in Civil Law (with insertions) revised (with additional cases) with insertions
jure of the guilt or innocence of the accused in the criminal case (Abacan, Jr. v. Northwestern Univ. Inc., 495
Phil. 123 [2005]). This, however, is not an ironclad rule. It is imperative that We consider the rationale behind
the principle of prejudicial question, i.e., to avoid two conflicting decisions (Dreamwork Const. Inc. v. Janiola,
et al., 609 Phil. 245 [2009]).
Undeniably, whether or not leasehold agreement should be cancelled at the instance of the
respondents is solely dependent upon the determination of whether or not respondents, in the first place,
have the right over the subject property. Respondents' right in both cases is anchored upon the Transfer
Certificate of Title (TCT) that they are invoking. If the RTC cancels respondents' TCT for being fake and
spurious, it proceeds then that respondents do not have any right whatsoever over the subject property and
thus, do not have the right to demand the leasehold's cancellation. If the RTC will rule otherwise and uphold
respondents' TCT, then respondents would have every right to demand the cancellation of the leasehold right
(Alsons Dev. & Investment Corp., Heirs of Confessor, et al., G.R. No. 215671, September 19, 2018, Tijam, J).
Basic reason for the rule.

Applying the wisdom laid in the case of Quiambao, indeed, the cancellation of the leasehold
agreement is the logical consequence of the determination of respondents' right over the subject property.
Further, to allow the cancellation thereof at the instance of the respondents notwithstanding the possibility of
finding that respondents have no right over the property subject thereof is a "sheer exercise in futility." For
what happens if we, for the time being, uphold respondents' title and allow the cancellation of the leasehold
agreement and later on in the civil case, the RTC rules to cancel respondents' TCT for being fake and spurious
and reverts the property to the public domain? It would then turn out that the cancellation was not proper.
That will be a clear case of conflicting decisions. On the other hand, if respondents will be proven to have a
clear right over the subject property, then they can proceed to exercise every power of dominion over the
same.
In fine, as the outcome of the civil case is determinative of the issue in the case at bar, by the dictates
of prudence, logic, and jurisprudence, the proper recourse is to wait for the resolution of the said civil case.
Certainly, at this point, delving into the issue on the propriety of IFPMA No. 21's cancellation is premature
(Alsons Dev. & Investment Corp. v. Heirs of Confessor, et al., G.R. No. 215671, September 19, 2018, Tijam, J).
Fetus can be considered a dependent.

A child does not need to be born to be considered a dependent because even during the period of
conception where the fetus is still inside the womb of the mother, it is already dependent upon her for
sustenance to survive. In fact, it is not necessary that the fetus be born inorder that he may die. It cannot be
said that only one with juridical personality can die and a dead fetus never acquired juridical personality.
That is not quite correct, for even the fetus already attains life during conception and can die in the womb of
the mother.
The unborn child can be considered as dependent under the CBA. A dependent is “one who relies on
another for support; one not able to exist or sustain oneself without the power or id of someone else.” Under
said general definition, even an unborn child is a dependent of its parents. The child could not have reached
38-39 weeks of its gestational life without depending upon its mother, for sustenance. Additionally, it is
explicit in the CBA provisions in question that the dependent may be the parent, spouse, or child of a married
employee; or the parent, brother, or sister of a single employee. The CBA did not provide a qualification for
the child dependent, such that the child must have been born or must have acquired civil personality, as
employer averred. Without such qualification, then child shall be understood in its more general sense, which
includes the unborn fetus in the mother’s womb (Continental Steel Manufacturing Corp. v. Hon. Accredited
Voluntary Arbitrator, et al., G.R. No. 182836, October 13, 2009).
Importance of marriage and duty of the state to preserve sanctity.

Marriage, as an inviolable social institution, is the foundation of the family and shall be protected by
the State (Sec.2, Article XV, Constitution)
Our Constitution clearly gives value to the sanctity of marriage. Marriage in this jurisdiction is not
only a civil contract, but it is a new relation, an institution the maintenance of which the public is deeply
interested (Mariategui v. Court of Appeals, 282Phil.348-356, 1992). Thus, the State is mandated to protect
marriage, being the foundation of the family, which in turn is the foundation of the nation (Jimenez v.
Canizares, 109Phil.273-276, 1960). The State has surrounded marriage with safeguards to maintain its purity,
continuity and permanence. The security and stability of the State are largely dependent upon it. It is the
interest of each and every member of the community to prevent the bringing about of a condition that would
shake its foundation and ultimately lead to its destruction (Sec.1, Art. XV, Constitution; Tilar v. Tilar, et al., GR
No. 214529, July 12, 2017, Peralta, J).
Starting 2018, new cases have evolved explaining Article 26, par. 2 of the Family Code.
Mixed marriage; Filipino obtained decree of divorce; can re-marry.
Paragraph 2 of Article 26 speaks of “a divorce x x x validly obtained abroad by the alien spouse
capacitating him or her to remarry.” Based on a clear and plain reading of the provision, it only requires that
there be a divorce validly obtained abroad. The letter of the law does not demand that the alien spouse should
be the one who initiated the proceeding wherein the divorce decree was granted. It does not distinguish
whether the Filipino spouse is the petitioner or the respondent in the foreign divorce proceeding. The Court
is bound by the words of the statute; neither can we put words in the mouths of the lawmakers
(Commissioner of Customs v. Manila Star Ferry, Inc., 298 Phil. 79, 86 [1993]). “The legislature is presumed to
know the meaning of the words, to have used words advisedly, and to have expressed its intent by the use of
such words as are found in the statute. Verba legis non est recedendum, or from the words of a statute there
should be no departure” (Globe-Mackay Cable and Radio Corp. v. NLRC, 283 Phil. 649, 660 [1992], as cited in
Victoria v. Commission on Elections, 299 Phil. 263, 268 [1994]; Enjay, Inc. v. NLRC, 315 Phil. 648, 656 [1995];
and Pioneer Texturizing Corp. v. NLRC, 345 Phil. 1057, 1073 [1997]).
Assuming, for the sake of argument, that the word “obtained” should be interpreted to mean that the
divorce proceeding must be actually initiated by the alien spouse, still the Court will not follow the letter of
the statute when to do so would depart from the true intent of the legislature or would otherwise yield
conclusions inconsistent with the general purpose of the act (Mariano, Jr. v. COMELEC, 312 Phil. 259, 268
[1995]). Laws have ends to achieve, and statutes should be so construed as not to defeat but to carry out such
ends and purposes. (League of Cities of the Phils., et al. v. COMELEC, et al., 623 Phil. 531, 564-565 [2009]; Rep. v.
Manalo, G.R. No. 220129, April 14, 2018, Peralta, J; Morisono v. Morisono, G.R. No. 226013, July 2, 2018, Perlas,
Bernabe, J)
Invocation of nationality principle; not absolute; erroneous; unjust.

Conveniently invoking the nationality principle is erroneous. Such principle, found under Article 15
of the Civil Code, is not an absolute and unbending rule. In fact, the mere existence of Paragraph 2 of Article
26 is a testament that the State may provide for an exception thereto. Moreover, blind adherence to the
nationality principle must be disallowed if it would cause unjust discrimination and oppression to certain
classes of individuals whose rights are equally protected by law. The courts have the duty to enforce the laws
of divorce as written by the Legislature only if they are constitutional (See Barretto Gonzales v. Gonzales, 58
Phil. 67, 72 [1933], as cited in Tenchavez v. Escaño, et al., supra).
The declared State policy that marriage, as an inviolable social institution, is the foundation of the
family and shall be protected by the State, should not be read in total isolation but must be harmonized with
other constitutional provisions. Aside from strengthening the solidarity of the Filipino family, the State is
equally mandated to actively promote its total development. It is also obligated to defend, among others, the
right of children to special protection from all forms of neglect, abuse, cruelty, exploitation, and other
conditions prejudicial to their development. The State cannot effectively enforce these obligations if We limit
the application of Paragraph 2 of Article 26 only to those foreign divorce initiated by the alien spouse. It is not
amiss to point that the women and children are almost always the helpless victims of all forms of domestic
abuse and violence. In fact, among the notable legislations passed in order to minimize, if not eradicate, the
menace are R.A. No. 6955 (prohibiting mail order bride and similar practices), R.A. No. 9262 (“Anti-Violence
Against Women and Their Children Act of 2004”), R.A. No. 9710 (“The Magna Carta of Women”), R.A. No. 10354
(“The Responsible Parenthood and Reproductive Health Act of 2012”), and R.A. No. 9208 (“Anti-Trafficking in
Persons Act of 2003”), as amended by R.A. No. 10364 (“Expanded Anti-Trafficking in Persons Act of 2012”).
Moreover, in protecting and strengthening the Filipino family as a basic autonomous social institution, the
Court must not lose sight of the constitutional mandate to value the dignity of every human person, guarantee
full respect for human rights, and ensure the fundamental equality before the law of women and men. (Rep. v.
Manalo, G.R. No. 220129, April 14, 2018, Peralta, J; Morisono v. Morisono, G.R. No. 226013, July 2, 2018, Perlas,
Bernabe, J)
Prohibitive view would do more harm than good.

A prohibitive view of Paragraph 2 of Article 26 would do more harm than good. If We disallow a
Filipino citizen who initiated and obtained a foreign divorce from the coverage of Paragraph 2 of Article 26
and still require him or her to first avail of the existing “mechanisms” under the Family Cod, any subsequent
relationship that he or she would enter in the meantime shall be considered as illicit in the eyes of the
Philippine law. Worse, any child born out of such “extra-marital” affair has to suffer the stigma of being
branded as illegitimate. Surely, these are just but a few of the adverse consequences, not only to the parent
but also to the child, if We are to hold a restrictive interpretation of the subject provision. The irony is that the
principle of inviolability of marriage under Section 2, Article XV of the Constitution is meant to be tilted in
favor of marriage and against unions not formalized by marriage, but without denying State protection and
assistance to live-in arrangements or to families formed according to indigenous customs. (Rep. v. Manalo,
G.R. No. 220129, April 14, 2018, Peralta, J; Morisono v. Morisono, G.R. No. 226013, July 2, 2018, Perlas, Bernabe, J)
Basic purpose of Art. 26[2], Family Code.

The idea of the amendment is to avoid the absurd situation of a Filipino as still being married to his
or her alien spouse although the latter is no longer married to the former because he or she had obtained a
divorce abroad that is recognized by his or her national law (See also Republic of the Phils. v. Orbecido III, as
cited in Fujiki v. Marinay). The aim was that it would solve the problem of many Filipino women who, under
the New Civil Code, are still considered married to their alien husbands even after the latter have already
validly divorced them under their (the husbands’) national laws and perhaps have already married again.
In 2005, the Court concluded that Paragraph 2 of Article 26 applies to a case where, at the time of the
celebration of the marriage, the parties were Filipino citizens, but later on, one of them acquired foreign
citizenship by naturalization, initiated a divorce proceeding, and obtained a favorable decree. In Republic of
the Phils. v. Orbecido III:
The jurisprudential answer lies latent in the 1998 case of Quita v. Court of Appeals.
In Quita, the parties were, as in this case, Filipino citizens when they got married. The wife
became a naturalized American citizen in 1954 and obtained a divorce in the same year. The
Court therein hinted, by way of obiter dictum, that a Filipino divorced by his naturalized
foreign spouse is no longer married under Philippine law and can thus remarry.
Thus, taking into consideration the legislative intent and applying the rule of reason,
we hold that Paragraph 2 of Article 26 should be interpreted to include cases involving
parties who, at the time of the celebration of the marriage were Filipino citizens, but later on,
one of them became naturalized as a foreign citizen and obtains a divorce decree. The
Filipino spouse should likewise be allowed to remarry as if the other party were a foreigner
at the time of the solemnization of the marriage. To rule otherwise would be to sanction
absurdity and injustice. (Rep. v. Manalo, G.R. No. 220129, April 14, 2018, Peralta, J; Morisono v.
Morisono, G.R. No. 226013, July 2, 2018, Perlas, Bernabe, J)
Twin elements for the application of Paragraph 2 of Article 26 as follows:

1. There is a valid marriage that has been celebrated between a Filipino citizen and a foreigner; and
2. A valid divorce is obtained abroad by the alien spouse capacitating him or her to remarry.
The reckoning point is not the citizenship of the parties at the time of the celebration of the
marriage, but their citizenship at the time a valid divorce is obtained abroad by the alien spouse
capacitating the latter to remarry. (Rep. v. Manalo, G.R. No. 220129, April 14, 2018, Peralta, J;
Morisono v. Morisono, G.R. No. 226013, July 2, 2018, Perlas, Bernabe, J)
DIVORCE
Foreign divorce; decree must be recognized as a fact; divorce decree a defense.

It is a fundamental principle in this jurisdiction that the burden of proof lies with the party who
alleges the existence of a fact or thing necessary in the prosecution or defense of an action (Garcia v. Recio,
418 Phil. 723, 735 [2001]). Since the divorce was a defense raised, it is incumbent upon him to show that it
was validly obtained in accordance with Maria Socorro's country's national law (Vda. De Catalan v. Catalan-
Lee, 681 Phil. 493, 500 [2012]). Stated differently, accused has the burden of proving the termination of the
first marriage prior to the celebration of the second (Marbella-Robis v. Bobis, 391 Phil. 648, 656 [2000]).
A divorce decree obtained abroad by an alien spouse is a foreign judgment relating to the status of a
marriage. As in any other foreign judgment, a divorce decree does not have an automatic effect in the
Philippines. Consequently, recognition by Philippine courts may be required before the effects of a divorce
decree could be extended in this jurisdiction (Fujiki v. Marinay, 712 Phil. 524, 546 [2013]). Recognition of the
divorce decree, however, need not be obtained in a separate petition filed solely for that purpose. Philippine
courts may recognize the foreign divorce decree when such was invoked by a party as an integral aspect of
his claim or defense (Van Dorn v. Romillo, 223 Phil. 357-363 (1985); Corpuz v. Sto. Tomas, 642 Phil. 420-432-
433 (2010); Noveras v. Noveras 741 Phil. 670, 682 (2014)).
Proof of the divorce decree.

Before the divorce decree can be recognized by our courts, the party pleading it must prove it as a
fact and demonstrate its conformity to the foreign law allowing it. Proving the foreign law under which the
divorce was secured is mandatory considering that Philippine courts cannot and could not be expected to
take judicial notice of foreign laws (Amor-Catalan v. Court of Appeals, 543 Phil. 568, 576 (2007)). For the
purpose of establishing divorce as a fact, a copy of the divorce decree itself must be presented and admitted
in evidence. This is in consonance with the rule that a foreign judgment may be given presumptive
evidentiary value only after it is presented and admitted in evidence (Vda. de Catalan v. Catalan-Lee, supra).
In particular, to prove the divorce and the foreign law allowing it, the party invoking them must
present copies thereof and comply with Sections 24 and 25, Rule 132 of the Revised Rules of Court. Pursuant
to these rules, the divorce decree and foreign law may be proven through (1) an official publication or (2) or
copies thereof attested to by the officer having legal custody of said documents. If the office which has
custody is in a foreign country, the copies of said documents must be (a) accompanied by a certificate issued
by the proper diplomatic or consular officer in the Philippine foreign service stationed in the foreign country
in which the record is kept; and (b) authenticated by the seal of his office (Rep. v. Florie Grace M. Cote, G.R.
No. 212860, March 14, 2018, Reyes, Jr., J).
Starting point of recognition of foreign judgment.

The starting point in any recognition of a foreign divorce judgment is the acknowledgement that our
courts do not take judicial notice of foreign judgments and laws. As a rule, “no sovereign is bound to give
effect within its dominion to a judgment rendered by a tribunal of another country.” This means that the
foreign judgment and its authenticity must be proven as facts under our rules on evidence, together with the
alien’s applicable national law to show the effect of the judgment on the alien himself or herself. The
recognition may be made in an action instituted specifically for the purpose or in another action where a
party invokes the foreign decree as an integral aspect of his claim or defense (Corpuz v. Sto. Tomas, et al., 642
Phil. 420, 432-433 (2010); Rep. v. Florie Grace M. Cote, G.R. No. 212860, March 14, 2018, Reyes, Jr., J).
ARTICLE 26
Filipino obtained divorce decree; effect.

While Philippine law does not allow absolute divorce, Article 26 of the Family Code allows a Filipino
married to a foreign national to contract a subsequent marriage if a divorce decree is validly obtained by the
alien spouse abroad.
Under the second paragraph of Article 26, the law confers jurisdiction on Philippine courts to extend
the effect of a foreign divorce decree to a Filipino spouse without undergoing trial to determine the validity of
the dissolution of the marriage. (Doreen Grace Parilla Medina v. Michiyuki Koike, 791 Phil. 645, 651 (2016)
In Corpuz v. Sto. Tomas, G.R. No. 186571, 642 Phil. 420, 432 (2010) and Garcia v. Recio, G.R. No. 138322,
418 Phil. 723, 725 (2001), the Court held that in any case involving recognition of a foreign divorce judgment,
both the Divorce Decree and the applicable national law of the alien spouse must be proven as facts under our
rules on evidence (Moraña v. Rep., G.R. No. 227605, December 5, 2019, Lazaro-Javier, J).
A foreign decree of divorce may be recognized in the Philippines although it was the Filipino spouse
who obtained the same.
Paragraph 2 of Article 26 speaks of "a divorce x x x validly obtained abroad by the alien spouse
capacitating him or her to remarry. Based on a clear and plain reading of the provision, it only requires that
there be a divorce validly obtained abroad. The letter of the law does not demand that the alien spouse should
be the one who initiated the proceeding wherein the divorce decree was granted. It does not distinguish
whether the Filipino spouse is the petitioner or the respondent in the foreign divorce proceeding.
Assuming, for the sake of argument, that the word "obtained' should be interpreted to mean that the
divorce proceeding must be actually initiated by the alien spouse, still, the Court will not follow the letter of
the statute when to do so would depart from the true intent of the legislature or would otherwise yield-
conclusions inconsistent with the general purpose of the act. Laws have ends to achieve, and statutes should
be so construed as not to defeat but to carry out such ends and purposes (League of Cities of the Phils. et al. v.
COMELEC et al.)
To reiterate, the purpose of Paragraph 2 of Article 26 is to avoid the absurd situation where the
Filipino spouse remains married to the alien spouse who, after a foreign divorce decree that is effective in the
country where it was rendered, is no longer married to the Filipino spouse. Whether the Filipino spouse
initiated the foreign divorce proceeding or not, a favorable decree dissolving the marriage bond and
capacitating his or her alien spouse to remarry will have the same result: The Filipino spouse will effectively
be without a husband or wife. A Filipino who initiated a foreign divorce proceeding is in the same place and in
like circumstances as a Filipino who is at the receiving end of an alien initiated proceeding. Therefore, the
subject provision should not make a distinction.
Moreover, blind adherence to the nationality principle must be disallowed if it would cause unjust
discrimination and oppression to certain classes of individuals whose rights are equally protected by law
(Moraña v. Rep., G.R. No. 227605, December 5, 2019, Lazaro-Javier, J).
Violation of the equal protection clause.

Paragraph 2 of Article 26 violates one of the essential requisites of the equal protection clause.
Particularly, the limitation of the provision only to a foreign divorce decree initiated by the alien spouse is
unreasonable as it is based on superficial, arbitrary, and whimsical classification.
There is no real and substantial difference between a Filipino who initiated a foreign divorce
proceedings and a Filipino who obtained a divorce decree upon the instance of his or her alien spouse. In the
eyes of the Philippine and foreign laws, both are considered as Filipinos who have the same rights and
obligations in (an) alien land. The circumstances surrounding them are alike. Were it not for Paragraph 2 of
Article 26, both are still married to their foreigner spouses who are no longer their wives/husbands. Hence,
to make a distinction between them based merely on the superficial difference of whether they initiated the
divorce proceedings or not is utterly unfair. Indeed, the treatment gives undue favor to one and unjustly
discriminate against the other (Moraña v. Rep., G.R. No. 227605, December 5, 2019, Lazaro-Javier, J; See:
Racho v. Tanaka, G.R. No. 199515, June 25, 2018).
Note: With this pronouncement of the Supreme Court, that portion of the Article 26(2) of the Family
Code which literally provides that the divorce decree be obtained by the foreigner spouse is contrary to the
Constitution as it violates the equal protection clause. The SC should have digged further into the law as it
provides “capacitating him or her to remarry” referring to the foreigner who obtained the decree of divorce.
This is still unfair to the Filipino because if the law of the country of the foreigner does not capacitate him/her
to remarry despite the decree of divorce obtained by the Filipino or the foreigner or jointly by them, the
Filipino is not capacitated to remarry. This does not resolve the unfair situation under Article 71 of the Civil
Code.
Bad effects if we interpret the law strictly.

A prohibitive view of Paragraph 2 of Article 26 would do more harm than good. If we disallow a
Filipino citizen who initiated and obtained a foreign divorce from the coverage of Paragraph 2 of Article 26
and still require him or her to first avail of the existing "mechanisms" under the Family Code, any subsequent
relationship that he or she would enter in the meantime shall be considered as illicit in the eyes of the
Philippine law. Worse, any child born out of such "extra-marital" affair has to suffer the stigma of being
branded as illegitimate. Surely, these are just but a few of the adverse consequences, not only to the parent
but also to the child, if we are to hold a restrictive interpretation of the subject provision. The irony is that the
principle of inviolability of marriage under Section 2, Article XV of the Constitution is meant to be tilted in
favor of marriage and against unions not formalized by marriage, but without denying State protection and
assistance to live-in arrangements or to families formed according to indigenous customs.
The Court should not turn a blind eye to the realities of the present time. It is recognized that not all
marriages are made in heaven and that imperfect humans more often than not create imperfect unions. It is
hypocritical to safeguard the quantity of existing marriages and, at the same time, brush aside the truth that
some of them are of rotten quality.
Marriage, being a mutual and shared commitment between two parties, cannot possibly be
productive of any good to the society where one is considered released from the marital bond while the other
remains bound to it.
Indeed, where the interpretation of a statute according to its exact and literal import would lead to
mischievous results or contravene the clear purpose of the legislature, it should be construed according to its
spirit and reason, disregarding as far as necessary the letter of the law. A statute may, therefore, be extended
to cases not within the literal meaning of its terms, so long as they come within its spirit or intent (Moraña v.
Rep., G.R. No. 227605, December 5, 2019, Lazaro-Javier, J).
Law on divorce in Japan; petitioner able to prove the applicable law on divorce in Japan.
The Japanese law on divorce must still be proved.
The burden of proof lies with the "party who alleges the existence of a fact or thing
necessary in the prosecution or defense of an action." In civil cases, plaintiffs have the
burden of proving the material allegations of the complaint when those are denied by the
answer; and defendants have the burden of proving the material allegations in their answer
when they introduce new matters. x x x
It is well-settled in our jurisdiction that our courts cannot take judicial notice of
foreign laws. Like any other facts, they must alleged and proved. x x x The power of judicial
notice must be exercised with caution, and every reasonable doubt upon the subject should
be resolved in the negative.
Here, what petitioner offered in evidence were mere printouts of pertinent portions of the Japanese
law on divorce and its English translation. There was no proof at all that these printouts reflected the existing
law on divorce in Japan and its correct English translation. Indeed, our rules require more than a printout
from a website to prove a foreign law. In Racho, the Japanese law on divorce was duly proved through a copy
of the English Version of the Civil Code of Japan translated under the authorization of the Ministry "Of Justice
and the Code of Translation Committee. At any rate, considering that the fact of divorce was duly proved in
this case, the higher interest of substantial justice compels that petitioner be afforded the chance to properly
prove the Japanese law on divorce, with the end in view that petitioner may be eventually freed from a
marriage in which she is the only remaining party. In Manalo, the Court, too, did not dismiss the case, but
simply remanded it to the trial court for reception of evidence pertaining to the existence of the Japanese law
on divorce (Moraña v. Rep., G.R. No. 227605, December 5, 2019, Lazaro-Javier, J).
Divorce obtained by Filipino can be recognized.

The rules on divorce prevailing in this jurisdiction can be summed up as follows: first, Philippine
laws do not provide for absolute divorce, and hence, the courts cannot grant the same; second, consistent
with Articles 15 and 17 of the Civil Code, the marital bond between two (2) Filipino citizens cannot be
dissolved even by an absolute divorce obtained abroad; third, an absolute divorce obtained abroad by a
couple, who are both aliens, may be recognized in the Philippines, provided it is consistent with their
respective national laws; and fourth, in mixed marriages involving a Filipino and a foreigner, the former
is allowed to contract a subsequent marriage in case the absolute divorce is validly obtained abroad
by the alien spouse capacitating him or her to remarry. (Rep. v. Manalo, G.R. No. 221029, April 24, 2018)
which is encapsulated in Article 26 (2) of the Family Code which reads:
Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry,
the Filipino spouse shall likewise. have capacity to remarry under Philippine law.
This provision confers jurisdiction on Philippine courts to extend the effect of a foreign divorce
decree to a Filipino spouse without undergoing trial to determine the validity of the dissolution of the
marriage. It authorizes our courts to adopt the effects of a foreign divorce decree precisely because the
Philippines does not allow divorce. Philippine courts cannot try the case on the merits because it is
tantamount to trying a divorce case. Under the principles of comity, our jurisdiction recognizes a valid divorce
obtained by a spouse of foreign nationality, but the legal effects thereof, e.g., on custody, care and support of
the children or property relations of the spouses, must still be determined by our courts. The rationale for
this rule is to avoid the absurd situation of a Filipino as still being married to his or her alien spouse, although
the latter is no longer married to the former because he or she had obtained a divorce abroad that is
recognized by his or her national law. In Corpuz v. Sto. Tomas,(642 Phil. 420 (2010) the Court held:
The provision was included in the law "to avoid the absurd situation where the Filipino
spouse remains married to the alien spouse who, after obtaining a divorce, is no longer
married to the Filipino spouse." The legislative intent is for the benefit of the Filipino spouse, by
clarifying his or her marital status, settling the doubts created by the divorce decree. Essentially, the
second paragraph of Article 26 of the Family Code provided the Filipino spouse a substantive
right to have his or her marriage to the alien spouse considered as dissolved, capacitating him
or her to remarry. Without the second paragraph of Article 26 of the Family Code, the judicial
recognition of the foreign decree of divorce, whether in a proceeding instituted precisely for that
purpose or as a related issue in another proceeding, would be of no significance to the Filipino
spouse since our laws do not recognize divorce as a mode of severing the marital bond; Article 17 of
the Civil Code provides that the policy against absolute divorces cannot be subverted by judgments
promulgated in a foreign country. The inclusion of the second paragraph in Article 26 of the Family
Code provides the direct exception to this rule and serves as basis for recognizing the dissolution of
the marriage between the Filipino spouse and his or her alien spouse.
Aside from recognition of divorce decree, court can rule on capacity of the former spouses to remarry.
Additionally, an action based on the second paragraph of Article 26 of the Family Code is not limited
to the recognition of the foreign divorce decree. If the court finds that the decree capacitated the alien
spouse to remarry, the courts can declare that the Filipino spouse is likewise capacitated to contract
another marriage. No court in this jurisdiction, however, can make a similar declaration for the alien spouse
(other than that already established by the decree), whose status and legal capacity are generally governed by
his national law.
According to Republic v. Orbecido III, (509 Phil. 1.08 (2005) the following elements must concur in
order for Article 26 (2) to apply, namely: (a) that there is a valid marriage celebrated between a Filipino
citizen and a foreigner; and (b) that a valid divorce is obtained abroad by the alien spouse capacitating him or
her to remarry. Article 26 (2) applies not only to cases where a foreigner was the one who procured a divorce
of his/her marriage to a Filipino spouse, but also to instances where, at the time of the celebration of the
marriage, the parties were Filipino citizens, but later on, one of them acquired foreign citizenship by
naturalization, initiated a divorce proceeding, and obtained a favorable decree.
In Republic v. Manalo (Manalo), the SC said:
When this Court recognized a foreign divorce decree that was initiated and obtained
by the Filipino spouse and extended its legal effects on the issues of child custody and
property relation, it should not stop short in likewise acknowledging that one of the usual and
necessary consequences of absolute divorce is the right to remarry. Indeed, there is no longer a
mutual obligation to live together and observe fidelity. When the marriage tie is severed and ceased
to exist, the civil status and the domestic relation of the former spouses change as both of them are
freed from the marital bond (Marilyn Nullada v. The City Registrar of Manila, et al., G.R. No. 224548,
January 23, 2019, A. Reyes, Jr.).
Law does not demand that divorce decree be obtained by the foreigner.
Paragraph 2 of Article 26 speaks of "a divorce x x x validly obtained abroad by the alien
spouse capacitating him or her to remarry." Based on a clear and plain reading of the provision, it
only requires that there be a divorce validly obtained abroad. The letter of the law does not
demand that the alien spouse should be the one who initiated the proceeding wherein the
divorce decree was granted. It does not distinguish whether the Filipino spouse is the
petitioner or the respondent in the foreign divorce proceeding. The Court is bound by the words
of the statute; neither can We put words in the mouths of the lawmakers. "The legislature is
presumed to know the meaning of the words, to have used words advisedly, and to have expressed
its intent by the use of such words as are found in the statute. Verba legis non est recedendum, or
from the words of a statute there should be no departure."
Assuming, for the sake of argument, that the word "obtained" should be interpreted to mean
that the divorce proceeding must be actually initiated by the alien spouse, still, the Court will not
follow the letter of the statute when to do so would depart from the true intent of the legislature or
would otherwise yield conclusions inconsistent with the general purpose of the act. Laws have ends
to achieve, and statutes should be so construed as not to defeat but to carry out such ends and
purposes. x x x.
The purpose of Paragraph 2 of Article 26 is to avoid the absurd situation where the Filipino
spouse remains married to the alien spouse who, after a foreign divorce decree that is effective in the
country where it was rendered, is no longer married to the Filipino spouse. The provision is a
corrective measure to address an anomaly where the Filipino spouse is tied to the marriage while the
foreign spouse is free to marry under the laws of his or her country. Whether the Filipino spouse
initiated the foreign divorce proceeding or not, a favorable decree dissolving the marriage
bond and capacitating his or her alien spouse to remarry will have the same result: the
Filipino spouse will effectively be without a husband or wife. A Filipino who initiated a foreign
divorce proceeding is in the same place and in like circumstance as a Filipino who is at the
receiving end of an alien initiated proceeding. Therefore, the subject provision should not
make a distinction. In both instance, it is extended as a means to recognize the residual effect
of the foreign divorce decree on Filipinos whose marital ties to their alien spouses are severed
by operation of the latter's national law.
A Filipino who is married to another Filipino is not similarly situated with a Filipino
who is married to a foreign citizen. There are real, material and substantial differences
between them. Ergo, they should not be treated alike, both as to rights conferred and
liabilities imposed. Without a doubt, there are political, economic, cultural, and religious
dissimilarities as well as varying legal systems and procedures, all too unfamiliar, that a Filipino
national who is married to an alien spouse has to contend with. More importantly, while a divorce
decree obtained abroad by a Filipino against another Filipino is null and void, a divorce decree
obtained by an alien against his or her Filipino spouse is recognized if made in accordance with the
national law of the foreigner.
On the contrary, there is no real and substantial difference between a Filipino who
initiated a foreign divorce proceedings and a Filipino who obtained a divorce decree upon the
instance of his or her alien spouse. In the eyes of the Philippine and foreign laws, both are
considered as Filipinos who have the same rights and obligations in an alien land. The
circumstances surrounding them are alike. Were it not for Paragraph 2 of Article 26, both are
still married to their foreigner spouses who are no longer their wives/husbands. Hence, to
make a distinction between them based merely on the superficial difference of whether they
initiated the divorce proceedings or not is utterly unfair. Indeed, the treatment gives undue
favor to one and unjustly discriminate against the other.
The declared State policy that marriage, as an inviolable social institution, is the foundation
of the family and shall be protected by the State, should not be read in total isolation but must be
harmonized with other constitutional provisions. Aside from strengthening the solidarity of the
Filipino family, the State is equally mandated to actively promote its total development. It is also
obligated to defend, among others, the right of children to special protection from all forms of
neglect, abuse, cruelty, exploitation, and other conditions prejudicial to their development. To our
mind, the State cannot effectively enforce these obligations if We limit the application of Paragraph 2
of Article 26 only to those foreign divorce initiated by the alien spouse. x x x.
A prohibitive view of Paragraph 2 of Article 26 would do more harm than good. If We
disallow a Filipino citizen who initiated and obtained a foreign divorce from the coverage of
Paragraph 2 of Article 26 and still require him or her to first avail of the existing "mechanisms" under
the Family Code, any subsequent relationship that he or she would enter in the meantime shall be
considered as illicit in the eyes of the Philippine law. Worse, any child born out of such "extra-
marital" affair has to suffer the stigma of being branded as illegitimate. Surely, these are just but a
few of the adverse consequences, not only to the parent but also to the child, if We are to hold a
restrictive interpretation of the subject provision. The irony is that the principle of inviolability of
marriage under Section 2, Article XV of the Constitution is meant to be tilted in favor of marriage and.
against unions not formalized by marriage, but without denying State protection and assistance to
live-in arrangements or to families formed according to indigenous customs.
This Court should not turn a blind eye to the realities of the present time. With the
advancement of communication and information technology, as well as the improvement of the
transportation system that almost instantly connect people from all over the world, mixed marriages
have become not too uncommon. Likewise, it is recognized that not all marriages are made in heaven
and that imperfect humans more often than not create imperfect unions. Living in a flawed world, the
unfortunate reality for some is that the attainment of the individual's full human potential and self-
fulfillment is not found and achieved in the context of a marriage. Thus, it is hypocritical to safeguard
the quantity of existing marriages and, at the same time, brush aside the truth that some of them are
of rotten quality.
Marriage, being mutual and shared commitment between two parties, cannot possibly
be productive of any good to the society where one is considered released from the marital
bond while the other remains bound to it.
Thus, pursuant to Manalo, foreign divorce decrees obtained to nullify marriages between a Filipino
and an alien citizen may already be recognized in this jurisdiction, regardless of who between the spouses
initiated the divorce; provided, of course, that the party petitioning for the recognition of such foreign divorce
decree – presumably the Filipino citizen – must prove the divorce as a fact and demonstrate its conformity to
the foreign law allowing it (Garcia v. Recio, 418 Phil. 723 (2001); Medina v. Koike, 791 Phil. 645 (2016);
Corpuz v. Sto. Tomas; Dayot v. Rep. Phil 59, 452 (2008); San Luis, 543 Phil. 275 (2007); Marilyn Nullada v.
The City Registrar of Manila, et al., G.R. No. 224548, January 23, 2019, A. Reyes, Jr.).
Proof necessary in recognition of the divorce decree.

Under prevailing rules and jurisprudence, the submission of the decree should come with adequate
proof of the foreign law that allows it. The Japanese law on divorce must then be sufficiently proved. "Because
our courts do not take judicial notice of foreign laws and judgment, our law on evidence requires that both
the divorce decree and the national law of the alien must be alleged and proven x x x like any other fact"
(Ando v. DFA, 742 Phil. 37 [2014]). In ATCI Overseas Corp., et al. v. Echin, 647 Phil. 43 [2010], the Court
reiterated the following rules on proof of foreign laws:
To prove a foreign law, the party invoking it must present a copy thereof and
comply with Sections 24 and 25 of Rule 132 of the Revised Rules of Court which read:
Sec. 24. Proof of official record. The record of public documents
referred to in paragraph (a) of Section 19, when admissible for any purpose,
may be evidenced by an official publication thereof or by a copy attested by
the officer having the legal custody of the record, or by his deputy, and
accompanied, if the record is not kept in the Philippines, with a certificate
that such officer has the custody. If the office in which the record is kept is
in a foreign country, the certificate may be made by a secretary of the
embassy or legation, consul general, consul, vice consul, or consular agent
or by any officer in the foreign service of the Philippines stationed in the
foreign country in which the record is kept, and authenticated by his seal of
office.
Sec. 25. What attestation of copy must state. Whenever a copy of a
document or record is attested for the purpose of the evidence, the
attestation must state, in substance, that the copy is a correct copy of the
original, if there be any, or if he be the clerk of court having a seal, under the
seal of such court.
There was failure to satisfy the foregoing requirements. The records only include a photocopy of
excerpts of The Civil Code of Japan, merely stamped LIBRARY, Japan Information and Culture Center,
Embassy of Japan, 2627 Roxas Boulevard, Pasay City 1300. This clearly does not constitute sufficient
compliance with the rules on proof of Japan's law on divorce. In any case, similar to the remedy that was
allowed by the Court in Manalo to resolve such failure, a remand of the case to the RTC for further
proceedings and reception of evidence on the laws of Japan on divorce is allowed, as it is hereby ordered by
the Court (Marilyn Nullada v. The City Registrar of Manila, et al., G.R. No. 224548, January 23, 2019, A. Reyes,
Jr.).
PSYCHOLOGICAL INCAPACITY
Sexual infidelity by itself is not sufficient proof of psychological incapacity.

Sexual infidelity, by itself, is not sufficient proof that a spouse is suffering from psychological
incapacity. It must be shown that the acts of unfaithfulness are manifestations of a disordered personality
which makes the spouse completely unable to discharge the essential obligations of marriage (Villalon v.
Villalon, 512Phil. 219, 227-228 (2005)). In Navales v. Navales 578Phil.826, 845-846, (2008) the Court still found
no factual basis for the husband’s claim that his wife, being flirtatious and sexually promiscuous, was
psychologically incapacitated, regardless of the submitted psychological report concluding that the wife was a
nymphomaniac. (Garlet v. Garlet, G.R. No. 193544, August 2, 2017, Leonardo-De Castro, J)
Marrying not out of love; not psychological incapacity.

That the husband married Olivia not out of love, but out of reverence for the latter's parents, does not
mean that Reghis is psychologically incapacitated in the context of Article 36 of the Family Code. In Republic v.
Albios, the Court held that:
Motives for entering into a marriage are varied and complex. The State does not and
cannot dictate on the kind of life that a couple chooses to lead. Any attempt to regulate their
lifestyle would go into the realm of their right to privacy and would raise serious
constitutional questions. The right to marital privacy allows married couples to structure their
marriages in almost any way they see fit, to live together or live apart, to have children or no
children, to love one another or not, and so on. Thus, marriages entered into for other
purposes, limited or otherwise, such as convenience, companionship, money, status, and title,
provided that they comply with all the legal requisites, are equally valid. Love, though the ideal
consideration in a marriage contract, is not the only valid cause for marriage. Other
considerations, not precluded by law, may validly support a marriage.
An unsatisfactory marriage is not a null and void marriage. Article 36 of the Family Code is not to be
confused with a divorce law that cuts the marital bond at the time the causes therefor manifest themselves. It
refers to a serious psychological illness afflicting a party even before the celebration of the marriage. It is a
malady so grave and so permanent as to deprive one of awareness of the duties and responsibilities of the
matrimonial bond one is about to assume. Resultantly, it has always been held that mere irreconcilable
differences and conflicting personalities in no wise constitute psychological incapacity (Alcazar v. Alcazar,
618 Phil. 616; Marcos v. Marcos, 397 Phil. 840 [2000]; Go-Yu v. Yu, G.R. No. 230443, April 3, 2019, Peralta, J,
citing Rep. v. Sps. Romero, 781 Phil. 737 [2016]; Cortez v. Cortez, G.R. No. 224638, April 10, 2019, Peralta, J).
Lastly, our Constitution "set out a policy of protecting and strengthening the family as the basic social
institution, and the marriage was the foundation of the family. Marriage, as an inviolable institution protected
by the State, cannot be dissolved at the whim of the parties. In petitions for declaration of nullity of marriage,
the burden of proof to show the nullity of marriage lies with the plaintiff. Unless the evidence presented
clearly reveals a situation where the parties, or one of them, could not have validly entered into a marriage by
reason of a grave and serious psychological illness existing at the time it was celebrated, the Court is
compelled to uphold the indissolubility of the marital tie" (Go-Yu v. Yu, G.R. No. 230443, April 3, 2019, Peralta,
J).
A married woman confessed her illicit relationship with a Japanese, but did not end it despite her
confession causing stress upon Liberator resulting in his hospitalization; after their reconciliation, she
introduced her lover as her brother and went along with her charade and allowed her to share bed with her
lover as she threatened to leave their house and even cohabited with her lover. Such acts constitute
psychological incapacity, making her incognitive of her marital responsibilities.
Psychological incapacity pertains to the inability to understand the obligations of marriage, as
opposed to a mere inability to comply with them x x x” (Antonio v. Reyes, 519 Phil. 337 [2006]).
The aberrant acts of the woman are actual manifestations of her histrionic personality disorder. A
person with such a disorder was characterized as selfish and egotistical, and demands immediate
gratification. These traits were especially reflected in Liezl's highly unusual acts of allowing her Japanese
boyfriend to stay in the marital abode, sharing the marital bed with his Japanese boyfriend and introducing
her husband as her elder brother, all done under the threat of desertion. Such blatant insensitivity and lack of
regard for the sanctity of the marital bond and home cannot be expected from a married person who
reasonably understand the principle and responsibilities of marriage.
Clearly, the woman did not recognize the marital responsibilities that came when she married
petitioner. The severance of their marital vinculum will better protect the state's interest to preserve the
sanctity of marriage and family, the importance of which seems utterly lost on respondent (Rep. v. Cruz, G.R.
No. 236629, July 21, 2018, Gesmundo, J).
Psychological incapacity; requisites

In Rep. v. Tecaq, G.R. No. 229272, November 19, 2018, Perlas-Bernabe, an action to declare a
marriage void on the ground of psychological incapacity was filed by Gina against her husband alleging that
he was maintaining an illicit affair with another woman while she was working abroad. The RTC declared
both of them psychologically incapacitated. The CA affirmed the RTC’s decision ruling that due to their
conditions and the root cause of their psychological incapacity had been medically and clinically identified
thus, making them unable to comply in their essential marital obligations hence, the Republic filed an appeal
to the SC which reversed the ruling and
Held: Psychological incapacity has a specific and peculiar denotation. It ought to pertain to only the most
serious cases of personality disorders that clearly demonstrate the party's/parties' utter insensitivity or
inability to give meaning and significance to the marriage. (Rep. v. Romero 781 Phil. 737 (2016) It should
refer to no less than a mental- not merely physical- incapacity that causes a party to be truly incognitive
of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the
marriage, which, as provided under Article 68 [31] of the Family Code, among others, include their mutual
obligations to live together, observe love, respect and fidelity, and render help and support.
The requirements for proving psychological incapacity can be traced in a long line of cases. In Lontoc-
Cruz v. Cruz, [GR. No. 201988, October 11, 2017] citing Republic v. De Gracia [726 Phil. 502 (2014)] and Santos
v. CA (Santos), (310 Phil. 21 (1995) the Court emphasized "that psychological incapacity must be
characterized by: (a) gravity (i.e., it must be grave and serious such that the party would be incapable of
carrying out the ordinary duties required in a marriage); (b) juridical antecedence (i.e., it must be rooted in
the history of the party antedating the marriage, although the overt manifestations may emerge only after the
marriage); and (c) incurability (i.e., it must be incurable, or even if it were otherwise, the cure would be
beyond the means of the party involved)." (Lontoc-Cruz v. Cruz; Go-Yu v. Yu, G.R. No. 230443, April 3, 2019,
Peralta, J; Rep. v. Deang, G.R. No. 236279, March 25, 2019).
Policy of the constitution on marriage.

In Rep. v. Deang, G.R. No. 236279, March 25, 2019, Perlas-Bernabe, J, it was alleged in a complaint for
declaration of nullity that the husband was failed to perform his marital obligations, engaged in extra-marital
affair, gamled and failed to support his family, irritable and abandoned his family, whether these constitute
psychological incapacity, the SC
Held: No. The policy of the Constitution is to protect and strengthen the family as the basic social institution
and marriage as the foundation of the family. Because of this, the Constitution decrees marriage as legally
inviolable and protects it from dissolution at the whim of the parties. Thus, the Court has consistently ruled
that psychological incapacity, as a ground to nullify the marriage under Article 36 of the Family Code,
as amended, should refer to the most serious cases of personality disorders clearly demonstrative of
an utter insensitivity or inability to give meaning and significance to the marriage. It should refer to no
less than a mental — not merely physical — incapacity that causes a party to be truly incognitive of the basic
marital covenants that concomitantly must be assumed and discharged by the parties to the marriage which,
as provided under Article 68 of the Family Code, among others, include their mutual obligations to live
together, observe love, respect and fidelity, and render help and support. In other words, it must be a malady
that is so grave and permanent as to deprive one of awareness of the duties and responsibilities of the
matrimonial bond one is about to assume.
For the above reasons, the Court has declared, in Santos v. CA, that psychological incapacity under
Article 36 of the Family Code must be characterized by: (a) gravity, i.e., it must be grave and serious such that
the party would be incapable of carrying out the ordinary duties required in a marriage; (b) juridical
antecedence, i.e., it must be rooted in the history of the party antedating the marriage, although the overt
manifestations may emerge only after the marriage; and (c) incurability, i.e., it must be incurable, or
otherwise the cure would be beyond the means of the party involved.
Guided by the foregoing considerations, the Court, in several cases (Del Rosario v. Del Rosario, 805
Phil. 978 [2017]), did not consider as tantamount to psychological incapacity the emotional immaturity,
irresponsibility, sexual promiscuity, and other behavioral disorders invoked by the petitioning spouses, for
the reason that these behaviors "do not by themselves warrant a finding of psychological incapacity, as these
may be due to a person's difficulty, refusal, or neglect to undertake the obligations of marriage that is not
rooted in some psychological illness that Article 36 of the Family Code addresses." Accordingly, the Court
dismissed the petitions for declaration of nullity of marriage.
In Toring v. Toring, 640 Phil. 434 [2010], the Court emphasized that "irreconcilable differences,
sexual infidelity or perversion, emotional immaturity and irresponsibility, and the like, do not by themselves
warrant a finding of psychological incapacity, as [these] may only be due to a person's difficulty, refusal[,] or
neglect to undertake the obligations of marriage that is not rooted in some psychological illness that Article
36 of the Family Code addresses." Accordingly, it cannot be said that either party is suffering from a grave and
serious psychological condition which rendered either of them incapable of carrying out the ordinary duties
required in a marriage.
ARTICLE 36
Histrionic personality disorder constitutes psychological incapacity.

Psychological incapacity pertains to the inability to understand the obligations of marriage, as
opposed to a mere inability to comply with them x x x” (Antonio v. Reyes, 519 Phil. 337 [2006]).
To entitle a spouse to a declaration of the nullity of his or her marriage, the totality of the evidence
must sufficiently prove that the respondent spouse's psychological incapacity was grave, incurable and
existing prior to the time of the marriage (Mendoza v. Rep., et al., 698 Phil. 241 [2012]). The incapacity must
be grave or serious such that the party would be incapable of carrying out the ordinary duties required in
marriage; it must be rooted in the history of the party antedating the marriage, although the overt
manifestations may emerge only after the marriage; and it must be incurable or, even if it were otherwise, the
cure would be beyond the means of the party involved (Santos v. CA). "There must be proof of a natal or
supervening disabling factor in the person - an adverse integral element in the personality structure that
effectively incapacitates the person from really accepting and thereby complying with the obligations
essential to the marriage which must be linked with the manifestations of the psychological incapacity" (Del
Rosario v. Del Rosario, G.R. No. 222541, February 15, 2017).
The wife's histrionic personality disorder was the cause of her inability to discharge her marital
obligations to love, respect and give concern, support and fidelity to her husband. The gravity of her disorder
is shown by appreciating the totality of her actions after she got married. She was unable to accommodate the
fact that she was already married into the way she wanted to live her life, and essentially treated petitioner as
a manipulable inconvenience that she could ignore or threaten to accede to her desires. It is clear that she is
truly incognitive of her marital responsibilities.
It is true that sexual infidelity and abandonment are grounds for legal separation. The courts a quo
duly connected such aberrant acts of the wife as actual manifestations of her histrionic personality disorder.
A person with such a disorder was characterized as selfish and egotistical, and demands immediate
gratification. These traits were especially reflected in her highly unusual acts of allowing her Japanese
boyfriend to stay in the marital abode, sharing the marital bed with his Japanese boyfriend and introducing
her husband as her elder brother, all done under the threat of desertion. Such blatant insensitivity and lack of
regard for the sanctity of the marital bond and home cannot be expected from a married person who
reasonably understand the principle and responsibilities of marriage.
The Court affirmed the declaration of respondent's marriage as void ab initio, even as it is clear from
the records how much petitioner must love his wife to endure the pain and humiliation she callously caused
him in the hope that their relationship could still work out. Clearly, she does not recognize the marital
responsibilities that came when she married petitioner. The severance of their marital vinculum will better
protect the state's interest to preserve the sanctity of marriage and family, the importance of which seems
utterly lost on respondent (Rep. v. Cruz, G.R. No. 236629, July 23, 2018, Gesmundo, J).
A person cannot unilaterally declare his marriage void.

The law provides that a judicial declaration of nullity is indispensable for the purposes of remarriage
(Art. 40, Family Code). In Teves v. People, 671 Phil. 825 (2011):
The Family Code has settled once and for all the conflicting jurisprudence on the
matter. A declaration of the absolute nullity of a marriage is now explicitly required either as
a cause of action or a ground for defense. Where the absolute nullity of a previous marriage
is sought to be invoked for purposes of contracting a second marriage, the sole basis
acceptable in law for said projected marriage to be free from legal infirmity is a final
judgment declaring the previous marriage void.
Prudencio cannot claim to have been in good faith in assuming that there was no legal impediment
for him to remarry based merely on the National Statistics Office's issuance of a Certificate of No Marriage
Record. Based on Prudencio and Arlene's Marriage Certificate, along with the photos of the wedding
ceremony, they were married on April 8, 1994. Thus, the Certificate of No Marriage Record is not enough for
Prudencio to assume that his previous marriage with Arlene has been voided.
Moreover, Prudencio claimed that the prosecution's failure to offer a copy of the marriage license is
fatal to its case. This contention lacks merit. “The presentation of the marriage license is not a sine qua non
requirement to establish the existence of a marriage as the certified true copy of the Marriage Certificate is
sufficient for such purpose."
Prudencio also claimed that the absence of the solemnizing officer's signature in the Marriage
Certificate renders the marriage void. It is worth noting that based on the trial court's findings, the
discrepancy was merely inadvertent since a copy of the Marriage Certificate under the Local Civil Registry
had been signed (De Guzman v. People, G.R. No. 22474, August 7, 2019, Leonen, J).
Declaration of Presumption Death
No petition for the declaration of presumptive death, solely to claim for the benefit under P.D. No.
1638 as amended.
The rule invoked by the latter is merely one of the evidence which permits the court to presume that
a person had been unheard from in seven years had been established. This presumption may arise and be
invoked and made in a case, either in an action or in a special proceeding, which is tried or heard by, and
submitted for decision to, a competent court. Independently of such an action or special proceeding, the
presumption of death cannot be invoked, nor can it be made the subject of an action or special
proceeding. In this case, there is no right to be enforced nor is there a remedy prayed for by the
petitioner against her absent husband. Neither is there a prayer for the final determination of his right or
status or for the ascertainment of particular fact, for the petition does not pray for the declaration that the
petitioner 's husband us dead, but merely asks for a declaration that he be presumed dead because he had
been unheard from in seven years. If there is any pretense at securing a declaration that the petitioner's
husband is dead, such a pretension cannot be granted because it is unauthorized (In re: Petition for the
Presumption of Death of Nicolai Szatraw; Lukban v. Republic, 98 Phil. 574 (1956) and Gue v. Republic, 107
Phil. 281 [1960]; Tade-Matias v. Republic, G.R. No. 230751, April 25, 2018).
In Tadeo-Matias v. Republic, G.R. No. 230751, April 25, 2018, Velasco, J, in a petition for the declaration
of presumptive death, petitioner categorically stated that the same was filed "not for any other purpose but
solely to claim for the benefit under P.D. No. 1638 as amended.”
Given that her petition for the declaration of presumptive death was not filed for the
purpose of remarriage, petitioner was clearly relying on the presumption of death
under either Article 390 or Article 391 of the Civil Code as the basis of her
petition. Articles 390 and 391 of the Civil Code express the general rule regarding
presumptions of death for any civil purpose, to wit:
Art. 390. After an absence of seven years, it being unknown
whether or not the absence still lives, he shall be presumed dead for all
purposes except for those of succession.
The absentee shall not be presumed dead for the purpose of
opening his succession till after an absence of five years shall be sufficient
in order that his succession may be opened.
Art. 391. The following shall be presumed dead for all purposes,
including the division of the estate among the heirs:
(1) A person on board a vessel lost during a sea voyage, or an
aeroplane which is missing, who has not been heard of for four
years since the loss of the vessel or aero plane;
(2) A person in the armed forces who has taken part in war, and has
been missing for four years;
(3) A person who has been in danger of death under other
circumstances and his existence has not been known for four years.
Verily, the RTC's use of Article 41 of the FC as its basis in declaring the presumptive death of Wilfredo
was misleading and grossly improper. The petition for the declaration of presumptive death filed by the
petitioner was based on the Civil Code, and not on Article 41 of the FC.
Petitioner's petition for declaration of presumptive death ought to have been dismissed; a petition
whose sole objective is to declare a person presumptively dead under the Civil Code, like that filed by
the petitioner before the RTC, is not a viable suit in our jurisdiction (Lukban v. Republic, 08 Phil. 574
(1956); Gue v. Republic, 107 Phil. 281 (1960)).
The true fault in the RTC's decision, however, goes beyond its misleading fallo. The decision itself is
objectionable.
Since the petition filed by the petitioner merely seeks the declaration of presumptive death of
Wilfredo under the Civil Code, the RTC should have dismissed such petition outright. This is because, in our
jurisdiction, a petition whose sole objective is to have a person declared presumptively dead under the Civil
Code is not regarded as a valid suit and no court has any authority to take cognizance of the same.
The above norm had its conceptual roots in the 1948 case of In re: Petition for the Presumption of
Death of Nicolai Szatraw. In the said case, it was held that a rule creating a presumption of death is merely one
of the evidence that-while may be invoked in any action or proceeding-cannot be the lone subject of an
independent action or proceeding. Szatraw explained:
The rule invoked by the latter is merely one of the evidence which permits the court
to presume that a person had been unheard from in seven years had been established. This
presumption may arise and be invoked and made in a case, either in an action or in a special
proceeding, which is tried or heard by, and submitted for decision to, a competent
court. Independently of such an action or special proceeding, the presumption of death
cannot be invoked, nor can it be made the subject of an action or special proceeding. In
this case, there is no right to be enforced nor is there a remedy prayed for by the
petitioner against her absent husband. Neither is there a prayer for the final
determination of his right or status or for the ascertainment of particular fact, for the
petition does not pray for the declaration that the petitioner 's husband us dead, but merely
asks for a declaration that he be presumed dead because he had been unheard from in seven
years. If there is any pretense at securing a declaration that the petitioner's husband is dead,
such a pretension cannot be granted because it is unauthorized. The petition is for a
declaration, even if judicially made, would not improve the petitioner's situation,
because such a presumption is already established by law. A judicial pronouncement
to that effect, even if final and executory, would be a prima facie presumption only. It
is still disputable. It is for that reason that it cannot be the subject of judicial
pronouncement or declaration, if it is that only question or matter involved in a case,
or upon which a competent court has to pass. The latter must decide finally the
controversy between the parties, or determine finally the right or status of a party or
establish finally a particular fact, out of which certain rights and obligations arise or may
arise; and once such controversy is decided by a final decree, then the judgment on the
subject of the controversy, or the decree upon the right or status of a party or upon the
existence of a particular fact, becomes res judicata, subject to no collateral attack, except in a
few rare instances especially provided by law. It is, therefore, clear that judicial declaration
that a person is presumptively dead, because he had been unheard from in seven years,
being a presumption juris tantum only, subject to contrary proof, cannot reach the stage of
finality or become final.
Dissecting the rulings of Szatraw, Gue and Lukban collectively, we are able to ascertain the
considerations why a petition for declaration of presumptive death based on the Civil Code was disallowed in
our jurisdiction, viz:
1. Articles 390 and 391 of the Civil Code merely express rules of evidence that only allow a
court or a tribunal to presume that a person is dead upon the establishment of certain
facts.
2. Since Articles 390 an d 391 of the Civil Code merely express rules of evidence, an action
brought exclusively to declare a person presumptively dead under either of the
said articles actually presents no actual controversy that a court could decide. In
such action, there would be no actual rights to be enforces, no wrong to be remedied nor
any status to be established.
3. A judicial pronouncement declaring a person presumptively dead under Article 390 or
Article 391 of the Civil Code, in an action exclusively based thereon, would never really
become "final" as the same only confirms that existence of a prima facie or disputable
presumption. The function of a court to render decisions that is supposed to
be final and binding between litigants is thereby compromised.
4. Moreover a court action to declare a person presumptively dead under Articles 390 and
391 of the Civil Code would be unnecessary. The presumption in the said articles is
already established by law.
Under prevailing case law, courts are without any authority to take cognizance of a petition that-like
the one filed by the petitioner in the case at bench-only seeks to have a person declared presumptively dead
under the Civil Code. Such a petition is not authorized by law. Hence, by acting upon and eventually granting
the petitioner's petition for the declaration of presumptive death, the RTC violated prevailing jurisprudence
and thereby committed grave abuse of discretion. The CA, therefore, was only correct in setting aside the
RTC's decision.
Effect if a spouse sells conjugal properties without the consent of the other spouse signature of other
spouse forged.
Article 165 of the Civil Code states that “[t]he husband is the administrator of the conjugal
partnership.” Article of the Civil Code provides that “[t]he wife cannot bind the conjugal partnership without
the husband’s consent, except in cases provided by law” (Fabrigas v. Del Monte, 512 Phil. 627 [2005]). In any
case, the Family Code also provides as follows:
Art. 96. The administration and enjoyment of the community property shall
belong to both spouses jointly. In case of disagreement, the husband’s decision shall
prevail, subject to recourse to the court by the wife for proper remedy, which must
be availed of within five years from the date of the contract implementing such
decision.
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the common properties, the other spouse may
assume sole powers of administration. These powers do not include disposition or
encumbrance without authority of the court or the written consent of the other
spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and may
be perfected as a binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both offerors.
Assuming arguendo that the signature was not forged, her signature alone would still not bind the
subject property, it being already established that the said transaction was made without the consent of her
husband plaintiff-appellee Alfredo” (Cotoner-Zacarias v. Sps. Revilla, G.R. No. 190901, November 12, 2014,
Leonen, J).
Donation Propter Nuptias
Donation propter nuptias governed by ordinary rules of donation.

Rules under the Family Code on Donation Propter Nuptias.
Article 129 of the Civil Code allowed acceptance of those donations to be made impliedly. Since that
provision is no longer part of the current Family Code, donations proper nuptias made thereafter are now
subject to the rules on ordinary donations including those on the formal requisites for validity. As a result,
donations of immovables under the Family Code, including those made by reason of marriage, must now be
expressly accepted by the donee in a public instrument.
More specifically the law provides:
Article 749. In order that the donation of an immovable may be valid, it must be
made in a public document, specifying therein the property donated and the value of the
charges which the done must satisfy.
The acceptance may be made in the same deed of donation or in a separate public
document, but it shall not take effect unless it is done during the lifetime of the donor. If
the acceptance is made in a separate instrument, the donor shall be notified thereof in an
authentic form, and this step shall be noted in both instruments (Sps. Cano, et al., v. Sps.
Cano, et al., G.R. No. 188666; Sps. Cano et al., v. Sps. Cano., et al., G.R. No. 190750, December
14, 2017).
Article 151, FC
Suit between immediate members of family; requirement.

Article 151 of the Family Code reads that no suit between members of the same family shall prosper
unless it should appear from the verified complaint or petition that earnest efforts toward a compromise have
been made, but that the same have failed. If it is shown that no such efforts were in fact made, the case must
be dismissed.
The wisdom behind the provision is to maintain sacred the ties among members of the same family.
"As pointed out by the Code Commission, it is difficult to imagine a sadder and more tragic spectacle than a
litigation between members of the same family. It is necessary that every effort should be made toward a
compromise before a litigation is allowed to breed hate and passion in the family and it is known that a
lawsuit between close relatives generates deeper bitterness than between strangers." Thus, a party's failure
to comply with this provision before filing a complaint against a family member would render such complaint
premature; hence, dismissible.
In Heirs of Favis, Sr. v. Gonzales it was said that non-compliance with the earnest effort requirement
under Article 151 of the Family Code is not a jurisdictional defect which would authorize the courts to dismiss
suits filed before them motu proprio. Rather, it merely partakes of a condition precedent such that the non-
compliance therewith constitutes a ground for dismissal of a suit should the same be invoked by the opposing
party at the earliest opportunity, as in a motion to dismiss or in the answer. Otherwise, such ground is
deemed waived (Now it can be invoked as affirmative defense). (Moreno v. Kahn, et al., G.R. No. 217744, July
30, 2018, Perlas-Bernabe, J)
FAMILY HOME
Family home is exempted from execution; there must be proof that it is a family home.
The family home is a real right which is gratuitous, inalienable and free from attachment, constituted
over the dwelling place and the land on which it is situated. It confers upon a particular family the right to
enjoy such properties (Ramos, et al. v. Pangilinan, et al., 639 Phil. 192, 198 (2010)). It cannot be seized by
creditors except in certain special cases (Josef v. Santos, 592 Phil. 438, 445 (2008), citing Taneo, Jr. v. CA, 363
Phil. 652, 663 (1999)).
However, the claim that the property is exempt from execution for being the movant's family home is
not a magic wand that will freeze the court's hand and forestall the execution of a final and executory ruling.
It is not sufficient for the claimant to merely allege that such property is a family home. Whether the claim is
premised under the Old Civil Code or the Family Code, the claim for exemption must be set up and proved
(Honrado v. CA, 512 Phil. 657, 666 (2005); Felicitas Salazar v. Remedios Felias, G.R. No. 213972, February 5,
2018, Reyes, Jr., J; Ramos, et al. v. Pangilinan, et al., 639 Phil. 192 [2010] citing Spouses Kelley, Jr. v. Planters
Products, Inc., et al., 579 Phil. 763 [2008])
Residence must be actual; if not, not exempt.

Residence in the family home must be actual. The law explicitly mandates that the occupancy of the
family home, either by the owner thereof, or by any of its beneficiaries must be actual. This occupancy must
be real, or actually existing, as opposed to something merely possible, or that which is merely presumptive or
constructive (Manacop v. CA, 342 Phil. 735, 744 (1997),).
Jurisprudential tenets, say that a person cannot conveniently claim that the subject property is her
family home, sans sufficient evidence proving her allegation. It is imperative that her claim must be backed
with evidence showing that the home was indeed (i) duly constituted as a family home, (ii) constituted jointly
by the husband and wife or by an unmarried head of a family, (iii) resided in by the family (or any of the
family home's beneficiaries), (iv) forms part of the properties of the absolute community or the conjugal
partnership, or of the exclusive properties of either spouse with the latter's consent, or property of the
unmarried head of the family, and (v) has an actual value of Php 300,000.00 in urban areas, and Php
200,000.00 in rural areas. If not proven, it is not exempt (Felicitas Salazar v. Remedios Felias, G.R. No. 213972,
February 5, 2018, Reyes, Jr., J).
Article 172
FILIATION
Signature/consent of mother of illegitimate child required for purposes of registration of birth.

In case of an illegitimate child, the birth certificate shall be signed and sworn to jointly by the parents
of the infant or only the mother if the father refuses.
Under Section 5 of Act No. 3753, the declaration of either parent of the [newborn] legitimate child
shall be sufficient for the registration of his birth in the civil register, and only in the registration of birth of an
illegitimate child does the law require that the birth certificate be signed and sworn to jointly by the parents
of the infant, or only by the mother if the father refuses to acknowledge the child (Calimag v. Heirs of
Macapaz, G.R. No. 191936, 1 June 2016, 791 SCRA 620).
Thus, it is mandatory that the mother of an illegitimate child signs the birth certificate of her child in
all cases, irrespective of whether the father recognizes the child as his or not. The only legally known parent
of an illegitimate child, by the fact of illegitimacy, is the mother of the child who conclusively carries the blood
of the mother (Dissenting Opinion of Justice Carpio in Tecson v. Commission on Elections, 468 Phil. 421, 624
[2004]). Thus, this provision ensures that individuals are not falsely named as parents (Ara v. Pizarro, G.R. No.
187273, 15 February 2017).
The mother must sign and agree to the information entered in the birth certificate because she has
the parental authority and custody of the illegitimate child. In Briones v. Miguel 483 Phil. 483 (2004), it was
held that an illegitimate child is under the sole parental authority of the mother, and the mother is entitled to
have custody of the child. The right of custody springs from the exercise of parental authority (Santos, Sr. v.
Court of Appeals, 312 Phil 482 [1995]). Parental authority is a mass of rights and obligations which the law
grants to parents for the purpose of the children’s physical preservation and development, as well as the
cultivation of their intellect and the education of their heart and senses (Id., citing Reyes v. Alvarez, 8 Phil. 732;
2 Manresa 21; Barcoleta v. Rep., et al., G.R. No. 222095, August 7, 2017, Carpio, J).
Effect if mother did not sign the birth certificate of illegitimate child.
If on the face of the subject birth certificates that the mother did not sign the documents, the local
civil registrar had no authority to register the subject birth certificates. Under the IRR of Act No. 3753, the
civil registrar shall see to it that the Certificate of Live Birth presented for registration is properly and
completely filled up, and the entries are correct. In case the entries are found incomplete or incorrect, the civil
registrar shall require the person concerned to fill up the document completely or to correct the entries, as
the case may be.
Clearly, the subject birth certificates were not executed consistent with the provisions of the law
respecting the registration of birth of illegitimate children. Aside from the fact that the entry in the subject
birth certificates as to the surname of the children is incorrect since it should have been that of the mother,
the subject birth certificates are also incomplete as they lacked the signature of the mother (Calimag v. Heirs
of Macapaz, G.R. No. 191936, 1 June 2016, 791 SCRA 620 citing Art. 5, NCC and Babiera v. Catotal, 389 Phil. 34
(2000); Barcoleta v. Rep., et al., G.R. No. 222095, August 7, 2017, Carpio, J).
Filiation/Support
Action for support of illegitimate child can be complexed with action for recognition.
An action for compulsory recognition may be filed ahead of an action for support, the direct filing of
an action for support, “where the issue of compulsory recognition may be integrated and resolved,” is an
equally valid alternative:
To be entitled to legal support, petitioner must, in proper action, first establish the
filiation of the child, if the same is not admitted or acknowledge. Since Dolina’s demand for
support for her son is based on her claim that he is Vallecera’s illegitimate child, the latter
is not entitled to such support if he had not acknowledge him, until Dolina shall have
proved his relation to him. The child’s remedy is to file through her mother a judicial
action for compulsory recognition. If filiation is beyond question, support follows as
matter of obligation. In short, illegitimate children are entitled to support and successional
rights but their filiation must be duly proved.
The mother’s remedy is to file for the benefit of her child an action against the
putative father for compulsory recognition in order to establish filiation and then demand
support. Alternatively, she may directly file an action for support, where the issue of
compulsory recognition may be integrated and resolved (Dolina v. Vallecera 653 Phil. 391
(2010)).
Indeed, an integrated determination of filiation is “entirely appropriate” to the action for support
filed by petitioner for her child. An action for support may very well resolve that ineluctable issue of paternity
if it involves the same parties, is brought before a court with the proper jurisdiction, prays to impel
recognition of paternal relations, and invokes judicial intervention to do so. This does not run afoul of any
rule. To the contrary, and consistent with Briz v. Briz, 43 Phil. 763 (1922) this is in keeping with the rules on
proper joinder of causes of action (Rule 2, Sec.5). This also serves the interest of judicial economy-avoiding
multiplicity of suits and cushioning litigants from the vexation and costs of a protracted pleading of their
cause (Richelle Abella v. Cabañero, G.R. No.206647, August 9, 2017, Leonen, J).
Determination of heirship; baptismal certificate, not proof of filiation.

In Heirs of Fabillar v. Paller, et al., G.R. No. 231459, January 21, 2019, Perlas-Bernabe, J, an action for
recovery of ownership of a property was filed where the plaintiff claimed to be an heir of the former owner
and as proof of filiation presented a baptismal certificate. The lower courts decided in favor of the plaintiff. On
the other hand, the defendant claimed to be an heir of the former owner. One issue is whether there is a need
for a special proceeding to determine the heirship of the parties. The SC
Held: No.
I. A special proceeding for declaration of heirship is not necessary in the present case, considering
that the parties voluntarily submitted the issue of heirship before the trial court.
Although the principal action in this case was for the recovery of ownership and possession of the
subject land, it is necessary to pass upon the relationship of Ambrosio to Marcelino for the purpose of
determining what legal rights he may have in the subject land which he can pass to his heirs, petitioners
herein. Notably, the issue of whether or not Ambrosio is one of the children of Marcelino was squarely raised
by both parties in their respective pre-trial briefs. Hence, insofar as the parties in this case are concerned, the
trial court is empowered to make a declaration of heirship, if only to resolve the issue of ownership.
While the Court, in Yaptinchay, ruled that a declaration of heirship can only be made in a special
proceeding inasmuch as what is sought is the establishment of a status or right, 363 Phil. 393 (1999) by way
of exception, the Court, in Heirs of Ypon v. Ricaforte,713 Phil. 570 (2013) declared that "the need to institute
a separate special proceeding for the determination of heirship may be dispensed with for the sake of
practicality, as when the parties in the civil case had voluntarily submitted the issue to the trial court
and already presented their evidence regarding the issue of heirship," and "the [trial court] had
consequently rendered judgment upon the issues it defined during the pre-trial,"(Rebusquillo v.
Gualvez, 735 Phil 434 (2014) as in this case. Indeed, recourse to administration proceedings to determine
who the heirs are is sanctioned only if there are good and compelling reasons for such recourse, which is
absent herein, as both parties voluntarily submitted the issue of Ambrosio's heirship with Marcelino before
the trial court and presented their respective evidence thereon. Thus, the case falls under the exception, and
there is no need to institute a separate special proceeding for the declaration of Ambrosio's heirship.
II. Ambrosio's baptismal certificate cannot be considered as competent proof of the claimed filiation
with Marcelino.
In the absence of the record of birth and admission of legitimate filiation, Article 172 of the Family
Code (Code) provides that filiation shall be proved by any other means allowed by the Rules of Court and
special laws. Such other proof of one's filiation may be a baptismal certificate, a judicial admission, a family
Bible in which his name has been entered, common reputation respecting his pedigree, admission by silence,
the testimonies of witnesses, and other kinds of proof admissible under Rule 130 of the Rules of Court
(Rules). Article 175 of the same Code also allows illegitimate children to establish their filiation in the same
way and on the same evidence as that of legitimate children.
However, it is jurisprudentially settled that a baptismal certificate has evidentiary value to
prove filiation only if considered alongside other evidence of filiation. Because the putative parent has
no hand in the preparation of a baptismal certificate, the same has scant evidentiary value if taken in
isolation; (Heirs of Roldan v. Heirs of Roldan, G.R. No. 202578, September 27, 2017, Makati Shangri-La Hotel
and Resort Inc. v. Harper, 693 Phil. 685; Heirs of Conti v. CA, 360 Phil. 536 (1998) while it may be considered
a public document, "it can only serve as evidence of the administration of the sacrament on the date specified,
but not the veracity of the entries with respect to the child's paternity."(Cabatania v. CA, 484 Phil. 42 (2004);
Macadangdan v. CA, 188 Phil. 192 (1980) As such, a baptismal certificate alone is not sufficient to resolve a
disputed filiation, and the courts must peruse other pieces of evidence instead of relying only on a canonical
record. (Heirs of Roldan v. Heirs of Roldan; Heirs of Fabillar v. Paller, et al., G.R. No. 231459, January 21, 2019,
Perlas-Bernabe, J).
Filiation cannot be collaterally attacked.

The legitimacy and filiation of children cannot be collaterally attacked in a petition for correction of
entries in the certificate of live birth.
The summary procedure for correction of entries in the civil registry under article
412 of the Civil Code and Rule 108 of the Rules of Court is confined to "innocuous or clerical
errors, such as misspellings and the like, errors that are visible to the eyes or obvious to the
understanding" or corrections that are not controversial and are supported by indubitable
evidence. (In Re: Barretto v. Local Civil Registrar of Manila, 165 Phil. 858 (1976) citing
Bayabayan v. Republic, 123 Phil. 230 (1966) JBL Reyes, J, Tiong v. Republic, 122 Phil. 651
(1965); Lim v. Republic, 101 Phil. 1235 (1957).
In Braza v. The City Civil Registrar of Himamaylan City, Negros Occidental, 622 Phil. 654 (2009), the
Court emphasized that "legitimacy and filiation can be questioned only in a direct action seasonably filed by
the proper party, and not through collateral attack." Moreover, impugning the legitimacy of a child is
governed by Article 171 of the Family Code, not Rule 108 of the Rules of Court (Miller, etc. v. Miller, et al., G.R.
No. 200344, August 28, 2019, Leonen, J).
CHILD CUSTODY
Child custody; best interest rule.

In Masbate v. Relucio, G.R No. 235498, July 30,2018, Perlas-Bernabe, J., Renalyn and Ricky James
lived together as husband and wife, a child was formed. The relationship however ended and Renalyn went to
Manila to pursue her studies leaving their child under the care and custody of her father. One day, Renalyn’s
parents took the child from school by refused to return the child to him showing a Special Power of Attorney
from Renalyn granting full parental rights, authority and custody over the child. A petition for habeas corpus
and child custody was filed by James. The RTC ruled that Renalyn has a better right of custody since the child
was below the age of 7 as James failed to present evidence that Renalyn was unfit to take custody of their
daughter. On appeal, the CA granted custody to Renalyn as she is an illegitimate child and granted visitation
rights to James. The CA however remanded the case to the lower court for the determination of whether
Renalyn neglected her child and whether the age presumption should be followed or not. Renalyn’s parents
contended that article 213. FC does not apply because the child is illegitimate and that it applies only if the
parents are married. They relied on the ruling in Gulaberto v. Gualberto, 500 Phil. 226 (2005) where it was:
Held: Article 213 and Rule 99 similarly contemplate a situation in which the parents of the minor are
married to each other, but are separated by virtue of either a decree of legal separation or a de facto
separation.
Pablo-Gualberto, is based on a previous child custody case, namely, Briones v. Miguel (Briones),
wherein the Court pertinently held as follows:
However, the CA erroneously applied Section 6 of Rule 99 of the Rules of Court.
This provision contemplates a situation in which the parents of the minor are married to
each other but are separated either by virtue of a decree of legal separation or because
they are living separately de facto. In the present case, it has been established that
petitioner and Respondent Loreta were never married. Hence, that portion of the CA
Decision allowing the child to choose which parent to live with is deleted, but without
disregarding the obligation of petitioner to support the child.
The relevant issue in Briones for which the stated excerpt was made is actually the application of
Section 6, Rule 99 of the Rules of Court insofar as it permits the child over ten (10) years of age to choose
which parent he prefers to live with. As the Court's ruling in Briones was prefaced: "[t]he Petition has no
merit. However, the assailed Decision should be modified in regard to its erroneous application of Section 6 of
Rule 99 of the Rules of Court." Accordingly, since the statement in Pablo-Gualberto invoked by petitioners, i.e.,
that "Article 213 and Rule 99 similarly contemplate a situation in which the parents of the minor are married
to each other x x x," was based on Briones, then that same statement must be understood according to its
proper context – that is, the issue pertaining to the right of a child to choose which parent he prefers to live
with. The reason as to why this statement should be understood in said manner is actually not difficult to
discern: the choice of a child over seven (7) years of age (first paragraph of Article 213 of the Family Code)
and over ten (10) years of age (Rule 99 of the Rules of Court) shall be considered in custody disputes only
between married parents because they are, pursuant to Article 211 of the Family Code, accorded joint
parental authority over the persons of their common children. On the other hand, this choice is not available
to an illegitimate child, much more one of tender age such as Queenie (second paragraph of Article 213 of the
Family Code), because sole parental authority is given only to the mother, unless she is shown to be unfit or
unsuitable (Article 176 of the Family Code). Thus, since the issue in this case is the application of the
exception to the tender-age presumption under the second paragraph of Article 213 of the Family Code, and
not the option given to the child under the first paragraph to choose which parent to live with, petitioners'
reliance on Pablo-Gualberto is grossly misplaced.
The second paragraph of Article 213 of the Family Code, which was the basis of the CA's directive to
remand the case, does not even distinguish between legitimate and illegitimate children – and hence, does not
factor in whether or not the parents are married – in declaring that "[n]o child under seven [(7)] years of age
shall be separated from the mother unless the court finds compelling reasons to order otherwise." "Ubi lex
non distinguit nec nos distinguere debemos. When the law makes no distinction, we (this Court) also ought
not to recognize any distinction." (Yu v. Samson – Tatad, 657 Phil. 431 (2011) As such, petitioners' theory that
Article 213 of the Family Code is inapplicable – and thus, negates the need for the ordered remand – is not
only premised on an erroneous reading of jurisprudence, but is also one that is fundamentally off-tangent
with the law itself.
Compelling reasons.
In matters of custody of an illegitimate child, it is not quite correct to contend that even if there are
compelling reasons to separate the child from her mother, pursuant to the second paragraph of Article 213 of
the Family Code, the father would still not acquire custody over their daughter because there is no provision
of law granting custody rights to an illegitimate father.
In the event that the mother is found unfit or unsuitable to care for her daughter, Article 214 of the
Family Code mandates that substitute parental authority shall be exercised by the surviving grandparent.
However, the same Code further provides in Article 216 that "[i]n default of parents or judicially appointed
guardian, the following persons shall exercise substitute parental authority over the child in the order
indicated:"
(1) The surviving grandparent as provided in Art. 214;
(2) The oldest brother or sister, over twenty-one years of age, unless unfit or disqualified; and
(3) The child's actual custodian, over twenty-one years of age, unless unfit or disqualified
(Section 13 of A.M. No. 03-04-04-SC, the "Rule on Custody of Minors and Writ of Habeas Corpus
in Relation to Custody of Minors).
Father of illegitimate child, in actual custody; effect; rule on best interest of the child.
In this case, the father was in actual physical custody of the child when the mother left for Manila to
pursue her studies until the instant controversy took place. As such, he had already assumed obligations and
enjoyed privileges of a custodial character, giving him a cause of action to file a case of habeas corpus to
regain custody as her actual custodian.
Indeed, it may be argued that Article 176 of the Family Code has effectively disqualified the father of
an illegitimate child from exercising substitute parental authority under Article 216 even if he were the actual
custodian of the child under the premise that no one is allowed to do indirectly what he is prohibited to do
directly. However, the Court cannot adopt a rigid view, without running afoul to the overarching
consideration in custody cases, which is the best interest of the minor. Even way back, Article 363 of the
Civil Code provides that in all questions relating to the care, custody, education and property of the children,
the latter's welfare is paramount. Under present rules, A.M. No. 03-04-04-SC explicitly states that "[i]n
awarding custody, the court shall consider the best interests of the minor and shall give paramount
consideration to [her] material and moral welfare. The best interests of the minor refer to the totality of the
circumstances and conditions as are most congenial to the survival, protection, and feelings of security of the
minor encouraging to [her] physical, psychological and emotional development. It also means the least
detrimental available alternative for safeguarding the growth and development of the minor." (Section 14 of
A.M No. 03-04-04-SC; Masbate v. Relucio, G.R No. 235498, July 30,2018, Perlas-Bernabe, J)
Trial necessary to determine best interest of the child.

In light of the foregoing, Queenie's best interest demands that a proper trial be conducted to
determine if she had, indeed, been neglected and abandoned by her mother, rendering the latter unfit to
exercise parental authority over her, and in the event that Renalyn is found unsuitable, whether it is in
Queenie's best interest that she be in the custody of her father rather than her grandparents upon whom the
law accords a far superior right to exercise substitute parental authority. In the case of Bagtas v. Santos,
which was a tug-of-war between the maternal grandparents of the illegitimate minor child and the actual
custodians of the latter, the Court faulted the trial court for hastily dismissing the petition for habeas corpus
and awarding the custody of the minor to the grandparents without conducting any trial. The import of such
decision is that the preference accorded by Article 216 of the Family Code does not automatically attach to
the grandparents, and is conditioned upon the determination of their fitness to take care of their grandchild.
In ruling as it did, the Court ratiocinated that the child's welfare being the most important consideration, it is
not bound by any legal right of a person over the child. Reiterating its pronouncement in the early case of
Sombong v. CA, (Sombong v. CA, 322 Phil. 737 (1996) the Court held that in passing on the writ in a child
custody case, the court deals with a matter of an equitable nature. Not bound by any mere legal right of
parent or guardian, the court gives his or her claim to the custody of the child due weight as a claim founded
on human nature and considered generally equitable and just Therefore, these cases are decided, not on the
legal right of the petitioner to be relieved from unlawful imprisonment or detention, as in the case of adults,
but on the court's view of the best interests of those whose welfare requires that they be in custody of one
person or another. Hence, the court is not bound to deliver a child into the custody of any claimant or of any
person, but should, in the consideration of the facts, leave it in such custody as its welfare at the time appears
to require. In short, the child's welfare is the supreme consideration.
Considering that the child's welfare is an all-important factor in custody cases, the Child and Youth
Welfare Code unequivocally provides that in all questions regarding the care and custody, among others, of
the child, his welfare shall be the paramount consideration. In the same vein, the Family Code authorizes the
courts to, if the welfare of the child so demands, deprive the parents concerned of parental authority over the
child or adopt such measures as may be proper under the circumstances.
The Court cannot close its eyes to the sad reality that not all fathers, especially those who have sired
children out of wedlock, have risen to the full height of a parent's responsibility towards his offspring. Yet,
here is a father of an illegitimate child who is very much willing to take on the whole gamut of parenting. He,
thus, deserves, at the very least, to be given his day in court to prove that he is entitled to regain custody of his
daughter. As such, the CA's order to remand the case is proper.
Temporary custody; when granted.

It should be stressed that Section 15 of A.M. No. 03-04-04-SC provides for temporary visitation rights,
not temporary custody.
Section 15. Temporary visitation rights. – The court shall provide in its order
awarding provisional custody appropriate visitation rights to the non-custodial parent or
parents, unless the court finds said parent or parents unfit or disqualified.
The temporary custodian shall give the court and non-custodial parent or parents
at least five days' notice of any plan to change the residence of the minor or take him out of
his residence for more than three days provided it does not prejudice the visitation rights
of the non-custodial parent or parents.
It is only after trial, when the court renders its judgment awarding the custody of the minor to the
proper party, that the court may likewise issue "any order that is just and reasonable permitting the parent
who is deprived of the care and custody of the minor to visit or have temporary custody," pursuant to Section
18 of A.M. No. 03-04-04-SC.
Section 18. Judgment. – After trial, the court shall render judgment awarding the
custody of the minor to the proper party considering the best interests of the minor.
If it appears that both parties are unfit to have the care and custody of the minor,
the court may designate either the paternal or maternal grandparent of the minor, or his
oldest brother or sister, or any reputable person to take charge of such minor, or to commit
him to any suitable home for children.
In its judgment, the court may order either or both parents to give an amount
necessary for the support, maintenance and education of the minor, irrespective of who
may be its custodian. In determining the amount of support, the court may consider the
following factors: (1) the financial resources of the custodial and non-custodial parent and
those of the minor; (2) the physical and emotional health, special needs, and aptitude of the
minor; (3) the standard of living the minor has been accustomed to; and (4) the non-
monetary contributions that the parents would make toward the care and well-being of the
minor (Masbate v. Relucio, G.R No. 235498, July 30,2018, Perlas-Bernabe, J).
The court may also issue any order that is just and reasonable permitting the parent who is deprived
of the care and custody of the minor to visit or have temporary custody.
By granting temporary albeit limited custody ahead of trial, the appellate court overturned the
tender-age presumption with nothing but Ricky James' bare allegations, to which the Court cannot give its
imprimatur. As earlier intimated, the issue surrounding Renalyn's fitness as a mother must be properly
threshed out in the trial court before she can be denied custody, even for the briefest of periods, over
Queenie.
In view of the disposition in Silva and Briones and the rules quoted above, the Court can only uphold
Ricky James' visitation rights, which shall be limited to two (2) days per week, without prejudice to Renalyn
allowing him additional days. However, consistent with the aforesaid cases, as well as the more recent case of
Grande v. Antonio, 727 Phil. 448 (2014) Ricky James may take Queenie out only upon the written consent of
Renalyn. Contrary to the posturing of the appellate court, the requirement for the consent of the mother is
consistent with the regime of sole maternal custody under the second paragraph of Article 213 of the Family
Code with respect to children under seven (7) years of age, which may be overcome only by compelling
evidence of the mother's unfitness.76 Until and unless Ricky James is able to substantiate his allegations, he
can only claim visitation rights over his daughter.
SUPPORT
When duty to give support demandable.

The obligation to give support shall only be demandable from the time the person entitled to it needs
it for maintenance, but it shall not be paid except from the date of judicial or extrajudicial demand. Support
pendent lite may also be claimed, in conformity with the manner stipulated by the Rules of Court.
An illegitimate child, “conceived and born outside a valid marriage,” is entitled to support. To claim it,
however, a child should have first been acknowledge by the putative parent or must have otherwise
previously established his or her filiation with the putative parent. When “filiation is beyond question,
support [shall then follow] as [a] matter of obligation.”
The judicial remedy to enable this is an action for compulsory recognition. Filiation proceedings do
not merely resolve the matter of relationship with a parent but also secure the legal rights associated with
that relationship: citizenship, support, and inheritance, among others.
The paramount consideration in the resolution of questions affecting a child is the child’s welfare,
and it is “[t]he policy of the Family Code to liberalize the rule on the investigation of the paternity and filiation
of children, especially of illegitimate children.” Nevertheless, in keeping with basic judicial principles, the
burden of proof in proceedings seeking to establish paternity is upon the “person who alleges that the
putative father is the biological father of the child.” Likewise, a liberal application of rules should not be
“without prejudice to the right of the putative parent to claim his or her own defenses” (Abella v. Cabañero,
G.R. No. 206647, August 9, 2014; Leonen, J).
Proof of filiation of illegitimate children.

Illegitimate children establish their filiation “in the same way and on the same evidence as legitimate
children,” that is, by:
(1) The record of birth appearing in the civil register or a final judgment; or
(2) An admission of legitimate filiation in a public document or a private handwritten
instrument and signed by the parent concerned.
In the absence of these, illegitimate filiation, as with legitimate filiation, may be established by:
(1) The open and continuous possession of the status of a legitimate child;
(2) Any other means allowed by the Rules of Court and special laws.
In keeping with these, the recognition of an illegitimate child through a birth certificate, a will, a
statement before a court of record, or in any authentic writing, has been held to be “in itself, a consummated
act of acknowledgment of the child, and no further court action is required” (Abella v. Cabañero, G.R. No.
206647, August 9, 2014; Leonen, J).
Adoption
Joint adoption of illegitimate child.

The basic question in a case is when may the father of an illegitimate child adopt such child especially
so if he is married. A relative is either a "kinsman" or "a person connected with another by blood or affinity."
Under the Civil Code, the degree of relationship is determined as follows:
ARTICLE 965. The direct line is either descending or ascending.
ARTICLE 966. In the line, as many degrees are counted as there are generations or persons,
excluding the progenitor.
In the direct line, ascent is made to the common ancestor. Thus, the child is one
degree removed from- the parent, two from the grandfather, and three from the great-
grandparent.
Pursuant to the foregoing, an illegitimate child is a relative within the first civil degree of
consanguinity of his biological mother. Unlike a nephew and niece, an illegitimate child belongs to the direct
maternal lineage, which is never uncertain, and which is not as remote as the nephew and niece. The word
"child' referred to in Article 966 of the Civil Code is used in a general term and is without qualification. This is
so because the provision contemplates blood relation, not status. When the provision does not distinguish
between legitimate and illegitimate relatives, we, too, must not. Let us adhere to the Latin maxim that
declares: ubi lex non distinguit, nec nos distinguera debemus (where the law does not distinguish, nor the
interpreter must distinguish).
Section 7(b)(ii) by including the term "legitimate" to describe the children contemplated by that
clause. Section 7(b)(i) and (iii) clearly covered both legitimate and illegitimate relatives as long as they were
within the fourth civil degree of consanguinity or affinity. (In Re: Petition for Adoption of Jan Aurel Maghanoy,
Sps. Kimura, petitioners, G.R. No. 205752, October 1, 2019, Bersamin, C.J.)
Consent of spouse and children necessary if a husband adopts his illegitimate children.
The law on adoption requires that the adoption by the father of a child born out of wedlock must
contain not only the consent of his wife but also the consent of his legitimate children.
The policy of the law is clear. In order to maintain harmony, there must be a showing of notice and
consent. This cannot be defeated by mere procedural devices. In all instances where it appears that a spouse
attempts to adopt a child out of wedlock, the other spouse and other legitimate children must be personally
notified through personal service of summons. It is not enough that they be deemed notified through
constructive service. (Maria Mata Castro and Joanne Benedicta Charissima M. Castro v. Gregorio, et al., G.R. No.
188801, October 15, 2014, Leonen, J)
Under Article III, Section 7 of Republic Act No. 8552, the husband must first obtain the consent of his
wife if he seeks to adopt his own children born out of wedlock. The law provides that the following may
adopt:
Husband and wife shall jointly adopt, except in the following cases:
(i) if one spouse seeks to adopt his/her own illegitimate son/daughter: Provided, however,
that the other spouse has signified, his/her consent thereto; or
The provision is mandatory. As a general rule, the husband and wife must file a joint petition for
adoption. The rationale for this is stated in In Re: Petition for Adoption of Michelle P. Lim, 606 Phil. 82 (2009).
The use of the word "shall" in the above-quoted provision means that joint adoption by the husband
and the wife is mandatory. This is in consonance with the concept of joint parental authority over the child
which is the ideal situation. As the child to be adopted is elevated to the level of a legitimate child, it is but
natural to require the spouses to adopt jointly. The rule also insures harmony between the spouses (The
policy of the law is clear. In order to maintain harmony, there must be a showing of notice and consent. This
cannot be defeated by mere procedural devices. In all instances where it appears that a spouse attempts to
adopt a child out of wedlock, the other spouse and other legitimate children must be personally notified
through personal service of summons. It is not enough that they be deemed notified through constructive
service. (Maria Mata Castro and Joanne Benedicta Charissima M. Castro v. Gregorio, et al., G.R. No. 188801,
October 15, 2014, Leonen, J).
Law not absolute.

The law provides for several exceptions to the general rule, as in a situation where a spouse seeks to
adopt his or her own children born out of wedlock. In this instance, joint adoption is not necessary. However,
the spouse seeking to adopt must first obtain the consent of his or her spouse.
In the absence of any decree of legal separation or annulment, the spouses remain legally married
despite their de facto separation. For the husband to be eligible to adopt his illegitimate children, the wife
must first signify her consent to the adoption, however, did not validly obtain Rosario's consent. His
submission of a fraudulent affidavit of consent in her name cannot be considered compliance of the requisites
of the law. Had the wife been given notice by the trial court of the proceedings, she would have had a
reasonable opportunity to contest the validity of the affidavit. Since her consent was not obtained, he was
ineligible to adopt.
Written consent of adopter’s children; reason.

The law requires the written consent of the adopter's children if they are 10 years old or older. In
Article III, Section 9 of Republic Act No. 8552:
After being properly counseled and informed of his/her right to give or withhold his/her
approval of the adoption, the written consent of the following to the adoption is hereby
required:
(c) The legitimate and adopted sons/daughters, ten (10) years of age or over, of the
adopter(s) and adoptee, if any.
The consent of the adopter's other children is necessary as it ensures harmony among the
prospective siblings. It also sufficiently puts the other children on notice that they will have to share their
parent's love and care, as well as their future legitimes, with another person.
For the adoption to be valid, petitioners' consent is required by Republic Act No. 8552. Personal
service of summons should have been effected on the spouse and all legitimate children to ensure that their
substantive rights are protected. It is not enough to rely on constructive notice as in this case. Surreptitious
use of procedural technicalities cannot be privileged over substantive statutory rights.
Since the trial court failed to personally serve notice on petitioners of the proceedings, it never
validly acquired jurisdiction. (Castro, et al. v. Gregorio, et al., G.R. No.188801, October 15, 2014, Leonen, J)
Effect of death of adopter; remedy.

Petitioners are left with no other remedy in law other than the annulment of the judgment
considering the death of adopter.
The fraud employed in this case has been to the prejudice of the legitimate child of the adopter. There
is reason to believe that she has grown up having never experienced the love and care of a father, her parents
having separated a year after her birth. She has never even benefited from any monetary support from her
father. Despite all these adversities, she was able to obtain a medical degree from the University of the
Philippines College of Medicine and is now working as a doctor in Canada. These accomplishments, however,
are poor substitutes if the injustice done upon her is allowed to continue (Maria Mata Castro and Joanne
Benedicta Charissima M. Castro v. Gregorio, et al., G.R. No. 188801, October 15, 2014, Leonen, J).
ART. 448
Builders in good faith; law that governs the right of the parties.
Article 448 of the Civil Code provides that if the landowner opts to “appropriate as his own the
works, sowing or planting,” he must pay indemnity to the builder, planter, or sower in good faith in
accordance with the relevant provisions of the Code:
ART. 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works, sowing
or planting, after payment of the indemnity provided for in articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who sowed, the
proper rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay reasonable
rent, if the owner of the land does not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
....
ART. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed therefor. Useful
expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding
the amount of the expenses or of paying the increase in value which the thing may have
acquired by reason thereof (Automat Realty & Dev. Corp. v. Sps. Dela Cruz, et al., G.R. No.
192026, October 1, 2014, Leonen, J).
When rules in Art. 448, NCC applicable.

Article 448 of the Civil Code on builders, planters, and sowers in good faith applies when these
parties have a claim of title over the property (Commodoties Cagayan, Inc. v. Nanol, G.R. No. 176791,
November 14, 2012). This provision covers only cases in which the builders, sowers or planters believe
themselves to be owners of the land or, at least, to have a claim of title thereto. It does not apply when the
interest is merely that of a holder, such as a mere tenant, agent or usufructuary. Good faith is identified by the
belief that the land is owned; or that — by some title — one has the right to build, plant, or sow thereon.
However, in some special cases, this Court has used Article 448 by recognizing good faith beyond this
limited definition. Thus, in Del Campo v. Abesia, this provision was applied to whose house — despite having
been built at the time he was still co-owner — overlapped with the land of another. This article was also
applied to cases wherein a builder had constructed improvements with the consent of the owner. The
law deemed the builder to be in good faith. In Sarmiento v. Agana, the builders were found to be in good faith
despite their reliance on the consent of another, whom they had mistakenly believed to be the owner of the
land (Sps. Macasaet v. Sps. Macasaet, 482 Phil. 853 [2004]; Automat Realty & Dev. Corp. v. Sps. Dela Cruz, et
al., G.R. No. 192026, October 1, 2014, Leonen, J.
QUIETING OF TITLE
Action for quieting of title; requisites.

In order that an action for quieting of title may prosper, it is essential that the plaintiff must have
legal or equitable title to, or interest in, the property which is the subject-matter of the action. Legal title
denotes registered ownership, while equitable title means beneficial ownership. In the absence of such legal
or equitable title or interest, there is no cloud to be prevented or removed.
An action for quieting of title is essentially a common law remedy grounded on equity. The
competent court is tasked to determine the respective rights of the complainant and other claimants, not only
to place things in their proper place, to make the one who has no rights to said immovable respect and not
disturb the other, but also for the benefit of both, so that he who has the right would see every cloud of doubt
over the property dissipated, and he could afterwards without fear introduce the improvements he may
desire, to use, and even to abuse the property as he deems best. But ‘for an action to quiet title to prosper, two
indispensable requisites 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’ (Mananquil v. Moico, 699 Phil. 120, 122, 126-127 (2012), citing
Eland Philippines, Inc. v. Garcia, 626 Phil. 735, 758 (2010), citing Baricualro, Jr. v. Court of Appeals, 382 Phil.
15, 25 (2000); Sps. Basa, et al., v. Vda. De Senly loy, et al., G.R. No. 204131, June 4, 2018, Del Castillo, J).
Action to quiet title, a direct attack, not collateral atack.

An action or proceeding is deemed an attack on a title when its objective is to nullify the title, thereby
challenging the judgment pursuant to which the title was decreed. The attack is direct when the objective is to
annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or
collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an
incident thereof (Sarmiento v. CA, 507 Phil. 101 [2005]).
An action to quiet title or to remove the clouds over a title is a special civil action governed by the
second paragraph of Section 1, Rule 63 of the Rules of Court. Specifically, an action for quieting of title is
essentially a common law remedy grounded on equity. The competent court is tasked to determine the
respective rights of the complainant and other claimants, not only to put things in their proper place, to make
the one who has no rights to said immovable respect and not disturb the other, but also for the benefit of
both, so that he who has the right would see every cloud of doubt over the property dissipated, and he could
afterwards without fear introduce: the improvements he may desire, to use, and even to abuse the property
as he deems best. For an action to quiet title to prosper, two indispensable requisites 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
(Mananquil v. Moico, 699 Phil. 120 [2012]; Filipinas Elson Mfg. Corp. v. Heirs of Basilio Llanes, G.R. No.
194114, March 27, 2019, Caguioa, J).
incident thereof.
Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting
title to real property. Whenever there is a cloud on title to real property or any interest in real property by
reason of any instrument, record, claim, encumbrance, or proceeding that is apparently valid or effective, but
is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an
action may be brought to remove such cloud or to quiet the title. In such action, the competent court is tasked
to determine the respective rights of the complainant and the other claimants, not only to place things in their
proper places, and to make the claimant, who has no rights to said immovable, respect and not disturb the
one so entitled, but also for the benefit of both, so that whoever has the right will see every cloud of doubt
over the property dissipated, and he can thereafter fearlessly introduce the improvements he may desire, as
well as use, and even abuse the property as he deems fit (Oño v. Lim, 628 Phil. 418 [2010]; Roman Catholic
Archbishop of San Fernando v. Soriano, Jr., 671 Phil. 308 [2011]).
Action for quieting of title not a collateral attack on TCT.

incident thereof (Sarmiento v. CA, 507 Phil. 101 [2005]).
An action to quiet title or to remove the clouds over a title is a special civil action governed by the
second paragraph of Section 1, Rule 63 of the Rules of Court. Specifically, an action for quieting of title is
essentially a common law remedy grounded on equity. The competent court is tasked to determine the
respective rights of the complainant and other claimants, not only to put things in their proper place, to make
the one who has no rights to said immovable respect and not disturb the other, but also for the benefit of
both, so that he who has the right would see every cloud of doubt over the property dissipated, and he could
afterwards without fear introduce: the improvements he may desire, to use, and even to abuse the property
as he deems best. For an action to quiet title to prosper, two indispensable requisites 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
(Mananquil v. Moico, 699 Phil. 120 [2012]).
incident thereof (Oño v. Lim, 628 Phil. 418 [2010]; Roman Catholic Archbishop of San Fernando v. Soriano, Jr.,
671 Phil. 308 [2011]; Filipinas Elson Mfg. Corp. v. Heirs of Basilio Llanes, G.R. No. 194114, March 27, 2019,
Caguioa, J).
CO-OWNERSHIP
Being a co-owner, petitioner cannot be ordered to vacate the house.

Being a co-owner of the property as heir cannot be ejected from the subject property. In a co-
ownership, the undivided thing or right belong to different persons, with each of them holding the property
pro indiviso and exercising [his] rights over the w hole property. Each co-owner may use and enjoy the
property with no other limitation than that he shall not injure the interests of his co-owners. The underlying
rationale is that until a division is actually made, the respective share of each cannot be determined, and
every co-owner exercises, together with his co-participants, joint ownership of the pro indiviso property, in
addition to his use and enjoyment of it.
Ultimately, co-owners do not have a cause of action to eject a co-owner based on tolerance because
the latter is also entitled to possess and enjoy the subject property. Corollarily, neither of the parties can
assert exclusive ownership and possession of the same prior to any partition. If at all, the action for unlawful
detainer only resulted in the recognition of co-ownership between the parties over the residential house
(Anzures v. Ventanilla, G.R. No. 222297, July 9, 2018, Gesmundo, J).
The parties, being co-owners of both the land and the building, the remedy of the respondents is to
file an action for partition. Article 494 of the New Civil Code reads:
No co-owner shall be obliged to remain in the co-ownership. Each co-owner may
demand at any time the partition of the thing owned in common, insofar as his share is
concerned.
A co-owner sold a specific portion of said property without the consent of the other co-owners; effect.
A co-owner could not enter into a contract to sell a definite portion of the property. However, such
contract is still subject to the suspensive condition of the partition of the property, and that the other co-
owners agree that the part subject of the contract to sell vests in favor of the co-owner's buyer. Hence, the co-
owners' consent is an important factor for the sale to ripen.
Effect if after the wife died, the husband sold one of the parcels of land even if the conjugal
partnership had not yet been liquidated.
The title may be pro-indiviso or inchoate but the moment the co-owner as vendor pointed out its
location and even indicated the boundaries over which the fences were to be erected without objection,
protest or complaint by the other co-owners, on the contrary they acquiesced and tolerated such alienation,
occupation and possession. A factual partition or termination of the co-ownership, although partial, was
created, and barred not only the vendor, the seller, but also his heirs, from asserting as against the vendees-
petitioners any right or title in derogation of the deed of sale (Pamplona v. Moreto, 185 Phil. 556 [1980];
Cabrera v. Ysaac, G.R. No. 166790, November 19, 2014, Leonen, J).
Effect if after the death of husband, one of the heirs occupied a particular portion of the estate.
There was partition. In general, a partition is the separation, division, and assignment of a thing held
in common among those to whom it may belong (Art. 1079, NCC). Every act intended to put an end to
indivision among co-heirs is deemed to be a partition (Art. 1082, NCC). In Hernandez v. Andal, 78 Phil. 196
[1946], it was explained:
On general principle, independent and in spite of the statute of frauds, courts of
equity have enforced oral partition when it has been completely or partly performed.
"Regardless of whether a parol partition or agreement to partition is valid and
enforceable at law, equity will in proper cases, where the parol partition has actually been
consummated by the taking of possession in severalty and the exercise of ownership by the
parties of the respective portions set off to each, recognize and enforce such parol partition
and the rights of the parties thereunder (Maglucot v. Maglucot, G.R. No. 132518, March 28,
2000; Quimpo v. Vda. de Beltran, G.R. No. 160956, February 13, 2008).
Partition of properties inter vivos; heir to prove prejudice.

Under Article 1080 of the Civil Code, “[s]hould a person make a partition of his estate by an act inter
vivos, or by will, such partition shall be respected, insofar as it does not prejudice the legitime of the
compulsory heirs.”
In reality, partition is simply making a concrete and particular the apportionment already previously
made by the testator in his will. Since our law now does not require a valid will in order that the partition
inter vivos may be valid and as we submit that the partition cannot make the designation of heirs or the
designation of shares but merely makes concrete, specific a designation previously made, according to what
designation will this partition inter vivos be made if there is no will of the testator? This designation shall be
in accordance with the laws of intestacy. Inasmuch as the deceased did not make a will, it is presumed that he
wanted the disposition in accordance with law, and this apportionment by the law must be interpreted to be
presumed will of the deceased; hence, the partition inter vivos must be in accordance with the designation
laid down by law in case of intestacy. Said partition shall be valid so long as it does not impair the legtimate of
the co-heirs in intestate succession has been previously explained inasmuch as whether the succession is
testamentary or legal, compulsory succession must always take place. From what has been explained, it is
clear that should the testator institute a stranger as heir, he cannot make a partition inter vivos without
making a designation by avalid will because the stranger cannot inherit by the laws of intestacy.
Since the Civil Code allows partition inter vivos, it is incumbent upon the compulsory heir questioning
its validity to show that his legitimate is impaired (Mayuga v. Atienza, et al., G.R. No. 208197, January 20,
2018, Caguioa, J).
Co-ownership
No need for judicial declaration of heirship for a co-owner to inherit.
As co-owner of a property, there is no need for judicial declaration of heirship to be entitled to the
property subject of co-ownership.
Being the daughter of the deceased the heir has an interest in the subject property as heir. The fact
that she was not judicially declared as heir is of no moment, as there was no need for a prior declaration of
heirship before heirs may commence an action arising from any right of their predecessor, such as one for
annulment of mortgage. “[N]o judicial declaration of heirship is necessary in order that an heir may assert his
or her right to the property of the deceased (Capablanca v. Bas, G.R. No. 224144, June 28, 2017; Gloria, et al., v.
Builders Savings and Loan Asso. Inc. G.R. No. 202324, June 4, 2018, Del Castillo, J).
Joint account is governed by the rule on co-ownership.

A joint account is one that is held jointly by two or more natural persons, or by two or more juridical
persons or entities. Under such setup, the depositors are joint owners or co-owners of the said account, and
their share in the deposits shall be presumed equal, unless the contrary is proved. The nature of joint
accounts is governed by the rule on co-ownership embodied in Article 485 of the Civil Code, to wit:
The share of the co-owners, in the benefits as well as in the charges, shall be
proportional to their respective interests. Any stipulation in a contract to the contrary
shall be void.
The portions belonging to the co-owners in the co-ownership shall be presumed
equal, unless the contrary is proved.
While the rule is that the shares of the owners of the joint account holders are equal, the same may
be overturned by evidence to the contrary. Hence, the mere fact that an account is joint is not conclusive of
the fact that the owners thereof have equal claims over the funds in question.
In line with this, it is also indispensable to consider whether or not there exists a survivorship
agreement between the co-depositors. In said agreement, the co-depositors agree that upon the death of
either of them, the share pertaining to the deceased shall accrue to the surviving co-depositor or he can
withdraw the entire deposit (In the Matter of the Intestate Estate of Reynaldo Rodriguez; Anita Ong Tan v.
Rolando Rodriguez, et al., G.R. No. 230404, January 31, 2018, Tijam, J).
Co-owner cannot be evicted.

Being a co-owner of the property, petitioner cannot be ejected from the subject property. In a co-
ownership, the undivided thing or right belong to different persons, with each of them holding the property
pro indiviso and exercising his rights over the whole property. Each co-owner may use and enjoy the property
with no other limitation than that he shall not injure the interests of his co-owners. The underlying rationale
is that until a division is actually made, the respective share of each cannot be determined, and every co-
owner exercises, together with his co-participants, joint ownership of the pro indiviso property, in addition to
his use and enjoyment of it (Quijano v. atty. Amante, 745 Phil. 40, 49 (2014).
No co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at any time
the partition of the thing owned in common, insofar as his share is concerned (Anzures v. Sps. Ventanilla, G.R.
No. 222297, July 9, 2018, Gesmundo, J).
EASEMENT
Requisites for the grant of an easement of right of way.

Whether an owner of the dominant estate, may validly claim a compulsory permanent right of way
under Articles 649 and 650 of the Civil Code, will depend on a finding that it has established the existence of
the following requisites, namely: (1) the dominant estate is surrounded by other immovables; (2) it is without
adequate outlet to a public highway; (3) after the proper indemnity has been paid; (4) the isolation was not
due to the proprietor of the dominant estate’s own acts; and (5) the right of way claimed is at a point least
prejudicial to the servient estate (See Costabella Corp. v. Court of Appeals, 271 Phil. 350-358, 1991). A sixth
requisite is that the right of way must be absolutely necessary for the normal enjoyment of the dominant
estate by its owner (Rivera v. Intermediate Appellate Court, 251 Phil. 287 (1989). There must be a real, not
fictitious or artificial, necessity for the right of way (Ramos, Sr. v. Gatchalian Reality, Inc., 238 Phil. 689-698,
(1987) and the right cannot be claimed merely for the convenience of the owner of the enclosed estate. The
burden of proving the existence of the foregoing requisites lies on the owner of the dominant estate (Land,
Inc. v. Wack Wack Residents Asso. Inc., G.R. No. 202342, July 19, 2017, Caquiua, J).
Easement of right of way

Under the Civil Code, the owner of the park has the right to enclose or fence his land or tenements by
means of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes
constituted thereon. It also has a right to exclude others from access to, and enjoyment of its property.
The owner’s legal right to block the access door is beyond doubt. Courts have no business in securing
the access of a person to another property absent any clear right on the part of the latter (North Greenhills
Asso. Inc. v. Atty. Morales, G.R. No. 22821, August 9, 2017, Mendoza, J).
PARTITION
This conclusion holds true even if the surviving spouse, had usufructuary rights over the property.
Usufruct, in essence, is nothing else but the right to enjoy another's property (Art. 562, NCC; Moralidad v.
Pernes, G.R. No. 152809, August 3, 2006). While this right to enjoy the property of another temporarily
includes both the jus utendi and the jus fruendi, the owner retains the jus disponendi or the power to alienate
the same. Having only the usufruct over the property, Servanda may only sell her right of usufruct over, and
not the title to, Lot No. 2560. Necessarily, her successors may acquire only such rights.
Assuming there was no partition, the co-ownership between Servanda and the heirs to the estate of
Laureano over the net remainder of the conjugal partnership subsisted.
Article 493 of the New Civil Code, which is a re-enactment of Article 399 of the Old Civil Code,
provides for the extent of a co-owner's right over his share in the co-ownership:
Art. 493. Each co-owner shall have the full ownership of his part and of the fruits
and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and
even substitute another person in its enjoyment, except when personal rights are involved.
But the effect of the alienation or the mortgage, with respect to the co-owners, shall be
limited to the portion which may be allotted to him in the division upon the termination of
the co-ownership.
In interpreting Article 493 of the New Civil Code, we said in Carvajal v. Court of Appeals, G.R. No. L-
44426, February 25, 1982, that:
While under Article 493 of the New Civil Code, each co-owner shall have the full
ownership of his part and of the fruits and benefits pertaining thereto and he may alienate,
assign or mortgage it, and even substitute another person in its enjoyment, the effect of the
alienation or the mortgage with respect to the co-owners, shall be limited, by mandate of
the same article, to the portion which may be allotted to him in the division upon the
termination of the co-ownership. He has no right to sell or alienate a concrete, specific,
or determinate part of the thing in common to the exclusion of the other co-owners
because his right over the thing is represented by an abstract or ideal portion
without any physical adjudication. An individual co-owner cannot adjudicate to himself
or claim title to any definite portion of the land or thing owned in common until its actual
partition by agreement or judicial decree. 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. What a co-owner may dispose of is only his undivided aliquot share, which
shall be limited to the portion that may be allotted to him upon partition. Before partition,
a co-heir can only sell his successional rights.
Donation
Effect if donation propter nuptias was not registered; not binding upon third persons.
Under Article 709 of the Civil Code, all rights over immovable property must be duly inscribed or
annotated on the Registry of Deeds before they can affect the rights of third persons.
The same rule is enunciated in Presidential Decree No. (P.D.) 1529, or the Property Registration
Decree, specifically Sections 51 and 52 thereof. In Gonzales v. Court of Appeals, the Court explained the
significance of the foregoing provisions to unregistered donations as follows (411 Phil. 232, 2001):
From the foregoing provisions, it may be inferred that as between the parties to a
donation of an immovable property, all that is required is for said donation to be contained
in a public document. Registration is not necessary for it to be considered valid and
effective. However, in order to bind third persons, the donation must be registered in
the Registry of Property (now Registry of Land Titles and Deeds). Although the non-
registration of a deed of donation shall not affect its validity, the necessity of
registration comes into play when the rights of third persons are affected, as in the
case at bar.
Since the donation propter nuptias was never registered, the conveyance of the property in their
favour is not considered binding on third persons, who had no participation in the deed or any actual
knowledge thereof (Sales v. Court of Appeals, G.R. No. L-40145, 29 July 1992, 211 SCRA 858; Sps. Cano, et al.,
v. Sps. Cano, et al., G.R. No. 188666, December 14, 2017).
Effect of no participation or actual knowledge of the deed of donation propter nuptias.

In order for prior unregistered interest to affect third persons despite the absence of registration, the
law requires actual knowledge of that interest. Nothing less would suffice. In Pineda v. Arcalas 563 Phil. 919
(2007) it was held that mere possession of the property is not enough:
True, that notwithstanding the preference given to a registered lien, this Court has
made an exception in a case where a party has actual knowledge of the claimant’s actual,
open, and notorious possession of the disputed property at the time the levy or attachment
was registered. In such situations, the actual notice and knowledge of a prior unregistered
interest, not the mere possession of the disputed property, was held to be equivalent to
registration (Sps. Cano, et al., v. Sps. Cano, et al., G.R. No. 188666, December 14, 2017).
Revocation of donation.
The breach was not material and substantial for the following reasons:
First, while an unregistered lease for more than one year is an encumbrance, the encumbrance was
not perpetual as it is time-bound to only 20 years, which is not an unreasonable period.
Second, the lease did not cover the entire donated 600-square meter lot and the building that
CASTEA constructed. Only a portion of the building was leased.
Third, the rentals that were being collected were being given to members of CASTEA as mutual aid and death
benefits. This is undoubtedly in keeping with the objective of the Deed of Donation — "the improvement and
upliftment of education and other matters related thereto." That the giving of mutual aid and death benefits
to teachers and employees is meant to improve their plight and is expected to contribute in the upliftment of
education cannot be disputed. Also, the Court notes that CASTEA needs funds for the upkeep repair and
maintenance of the building as well as the payment of real estate taxes due on the donated lot and the
building.
Fourth, CASTEA had already complied with its main prestation, which is the construction of the
intended building, and based on the language of the Deed of Donation.
Fifth, the building constructed by CASTEA and the donated lot continue to be owned by CASTEA and
continue to house its offices pursuant to the mandate of the Deed of Donation because only a portion of the
building was leased.
Sixth, if the prohibited acts: "sell, mortgage or [elncumber" are to be interpreted in the light of the
objective or "condition" of the donation, then in order for the breach to reach the threshold of substantiality
and fundamentality, the breach by CASTEA should be of a permanent character as to totally and perpetually
deprive CASTEA of the use of the donated lot and the building that it constructed (Camarines Sur Teachers
and Employees Asso. Inc. v. Province of Camarines Sur, G.R. No. 199666, October 7, 2019, Caguioa, J).
The Court's Third Division in Bodega Glassware awarded to the Province possession of the donated
property being then leased by Bodega Glassware, in full recognition of the foregoing Sections, to wit:
The core issue in this case is who between petitioner [the Province] and Bodega
[Glassware] has the right to the actual physical possession of the property. The resolution of
this issue requires us to look into the basis of their claims of possession. Essential to this is
the determination of the effect of the automatic revocation clause in the Deed of Donation.
We note, however, that an action for unlawful detainer pertains only to the issue of
possession de facto or actual possession. Thus, while we may rule on the basis of the parties'
claims of possession — which, in the case of the petitioner, involves an assertion of
ownership — this determination is only provisional and done solely to settle the question of
possession.
Deed of Donation involves four aspects.

(1) a prestation to do — "the DONEE shall use the above described portion of [the] land subject of the
present donation for no other purpose except the construction of its building to be owned and to be
constructed by the DONEE to house its offices to be used by the said Camarines Sur Teachers'
Association, Inc., in connection with its functions under its charter and by-laws and the Naga City
Teachers' Association as well as the Camarines Sur High School Alumni Association;"
(2) a prestation not to do - "the DONEE shall not sell, mortgage or [e]ncumber the property herein
donated including any and all improvements thereon in favor of any party;"
(3) a term or period for the prestation to do "the construction of the building or buildings referred to
above shall be commenced within a period of one (1) year from and after the execution of this
donation;" and,
(4) effect of the non-compliance "this donation shall be deemed automatically revoked and voided and
of no further force and effect."
The provisions clearly impose a burden on the donee which is onerous or burdensome in character.
Also, the provision imposes a restriction on the alienation and encumbrance by the donee of the donated
property.
The provision further contains an automatic revocation of the donation upon non-compliance thereof
by the donee resulting in its nullity (Camarines Sur Teachers and Employees Asso. Inc. v. Province of
Camarines Sur, G.R. No. 199666, October 7, 2019, Caguioa, J).
Given the different aspects of the donation, how should it be characterized.

It may be modal and onerous. From an obligation point of view, there are two prestations imposed on
CASTEA. One is to do, which is to use the donated property for the purpose intended and to construct the
required building, and the other is not to do, which is not to sell, mortgage or encumber it to any person. The
prestation to construct a building is undoubtedly modal in nature as it imposed a prestation or obligation on
CASTEA. Thus, the donation can properly be classified as a modal donation (because of the donee's obligation
to construct the required building) with a prestation not to alienate/encumber and an automatic revocation
clause. The donation may also be classified as an onerous donation because there is a burden imposed on the
donee in the absence of proof that the burden or charge (cost of the building) is superior or greater than the
value of the donated 600 square meters lot at the time of the donation. (Camarinez Sur Teachers and
Employees Asso. Inc. v. Province of Camarines Sur, G.R. No. 199666, October 7, 2019, Caguioa, J)
Nature of the donation, rules to govern.
Whether the donation in question is classified as modal or onerous, the rules governing contracts
should prevail in the interpretation of the Deed of Donation pursuant to Articles 732 and 733 of the Civil
Code.
Article 732 provides that "[donations which are to take effect inter vivos shall be governed by the
general provisions on contracts and obligations in all that is not determined in this Title [on Donation]" while
Article 733 provides that "[donations with an onerous cause shall be governed by the rules on contracts, and
remuneratory donations as regards that portion which exceeds the value of the burden imposed."
Whether the cost of construction of the building or its value is more or less than the value of the
donated lot at the time of donation, the provisions and rules on contracts and obligations should be applied in
determining the validity of the prestation to do imposed on donee. There is no doubt that the said prestation
is valid pursuant to the principle of autonomy of contracts expressly embodied in Article 1306 of the Civil
Code, which provides: "The contracting parties may establish such stipulations, clauses, terms and conditions
as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or
public policy." There is nothing contrary to law, morals, good customs, public order, or public policy in the
said prestation to do. In the same vein, the donee complied with it given the fact that the Province did not
interpose its violation by the donee (Camarines Sur Teachers and Employees Asso. Inc. v. Province of
Camarines Sur, G.R. No. 199666, October 7, 2019, Caguioa, J citing De Luna v. Abrigo, 260 Phil. 157 [1990]).
Applying the same principle of autonomy of contracts to the automatic revocation clause upon non-
compliance by CASTEA of the provision, the donation shall be deemed automatically revoked and voided and
of no further force and effect — there appears nothing legally repugnant to this as well (Camarines Sur
Teachers and Employees Asso. Inc. v. Province of Camarines Sur, G.R. No. 199666, October 7, 2019, Caguioa, J;
University of the Philippines v. De los Angeles, 146 Phil. 108 (1970) and Angeles v. Calasanz, 220 Phil. 10
(1985); Province of Camarines Sur v. Bodega Glassware).
Effect if the Donee contests the automatic revocation of the donation.

While the legality of automatic revocation or rescission clauses in deeds of donation is valid, the
courts are not precluded from determining whether their application or enforcement by the donors
concerned are proper if the donees contest the revocation or rescission. If the court sustains its propriety, the
court's decision is not the act that revokes the donation but would be merely declaratory of the validity of the
revocation. Such decision is merely confirmatory.
In this case, since the donee contested the propriety of the Province's revocation of the Deed of
Donation then the mere invocation by the Province of the automatic revocation clause is insufficient. A
judicial declaration of its propriety is, therefore, required before the continued possession by the donee, as
donee, can be declared unlawful. Since the present case is an unlawful detainer, the determination by the
Court on this issue will be merely provisional (Camarines Sur Teachers and Employees Asso. Inc. v. Province
of Camarines Sur, G.R. No. 199666, October 7, 2019, Caguioa, J).
Donation modal or onerous, provisions of law govern the revocation.

Since the donation in this case is either a modal or onerous one, which makes the rules on contract
controlling, the pertinent provisions of Article 1168 of the Civil Code, "[w]hen the obligation consists in not
doing and the obligor does what has been forbidden him, it shall also be undone at his expense," shall apply.
In obligations not to do (negative personal obligations), the object of the obligation
is fulfilled or realized so long as that which is forbidden is not done by the obligor. If the
obligor does what has been forbidden him, two remedies are available to the obligee — to
have it undone at the expense of the obligor in accordance with Art. 1168 and to ask for
damages in accordance with Art. 1170. x x x
The first remedy is logical because it is the only way by which the end or object of
the obligation may be effectively realized since what is demanded is not the performance of
an act but an omission. With respect to the second remedy, it must be noted that in
obligations of this type (not to do), delay or mora is not possible unlike positive obligations.
This is so because in negative obligations, the obligation is either fulfilled or not fulfilled
(Camarines Sur Teachers and Employees Asso. Inc. v. Province of Camarines Sur, G.R. No.
199666, October 7, 2019, Caguioa, J).
There are, however, certain cases where the remedy provided for in Art. 1168 is not
available. In the first place, there are those cases where the effects of the act which is
forbidden are definite in character, in which case, even if it is possible for the obligee to ask
that the act be undone at the expense of the obligor, consequences contrary to the object of
the obligation will have been produced which are permanent in character. In the second
place, there are those cases where it would be physically or legally impossible to undo what
has been done because of the very nature of the act itself, or because of a provision of the
law, or because of conflicting rights of third persons. Hence, in these cases, the only remedy
available to the obligee would be to proceed against the obligor for damages under Art. 1170
of the Civil Code.
Article 1170 of the Civil Code provides: "[t]hose who in the performance of their obligations are
guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for
damages (Camarines Sur Teachers and Employees Asso. Inc. v. Province of Camarines Sur, G.R. No. 199666,
October 7, 2019, Caguioa, J).
Effect of occupancy of part of co-ownership.

If after the death of her husband, one of the heirs occupied a particular portion of the estate of the
decedent by occupying said lot, partition occurred.
In general, a partition is the separation, division, and assignment of a thing held in common among
those to whom it may belong (Art. 1079, NCC). Every act intended to put an end to indivision among co-heirs
is deemed to be a partition (Art. 1082, NCC). In Hernandez v. Andal, 78 Phil. 196 [1946], it was explained:
On general principle, independent and in spite of the statute of frauds, courts of
equity have enforced oral partition when it has been completely or partly performed.
"Regardless of whether a parol partition or agreement to partition
is valid and enforceable at law, equity will in proper cases, where the parol
partition has actually been consummated by the taking of possession in
severalty and the exercise of ownership by the parties of the respective
portions set off to each, recognize and enforce such parol partition and the
rights of the parties thereunder. Thus, it has been held or stated in a
number of cases involving an oral partition under which the parties went
into possession, exercised acts of ownership, or otherwise partly performed
the partition agreement, that equity will confirm such partition and in a
proper case decree title in accordance with the possession in severalty.
"A parol partition may also be sustained on the ground that the
parties thereto have acquiesced in and ratified the partition by taking
possession in severalty, exercising acts of ownership with respect thereto,
or otherwise recognizing the existence of the partition (Heirs of Jarque v.
Marcial Jarque, et al., G.R. No. 196733, November 21, 2018, Jardeleza, J).
SUCCESSION
Death transmits successional rights; effect of sale.

Article 777 of the Civil Code, which is substantive law, states that the rights of the inheritance are
transmitted from the moment of the death of the decedent. Article 777 operates at the very moment of the
decedent's death meaning that the transmission by succession occurs at the precise moment of death and,
therefore, at that precise time, the heir is already legally deemed to have acquired ownership of his/her share
in the inheritance, "and not at the time of declaration of heirs, or partition, or distribution." Thus, there is no
legal bar to an heir disposing of his/her hereditary share immediately after such death (Testate Estate of
Josefa Tangco, et al. v. Tasiana de Borja, 150-B Phil. 486 [1972]). In Teves de Jakosalem v. Rafols, et al., 73 Phil.
628 [1942], it was explained that a sale made by a legal or intestate heir of his share in an inheritance does
not interfere with the administration of the estate.
Upon the death of her predecessor in interest, an heir became the absolute owner of the devised
subject property, subject to a resolutory condition that upon settlement of her Estate, the devise is not
declared inofficious or excessive. Hence, there was no legal bar preventing a co-owner from entering into a
contract of sale with respect to the former's share or interest over the subject property.
Nevertheless, the existence of a valid sale in the instant case does not necessarily mean that the RD
may already be compelled to cancel OCT P-1908 and issue a new title in the name of the buyer (Sps. Salitico v.
Heirs of Felix, et al., G.R. No. 240199, April 10, 2019, Caguioa, J).
Reading Article 777 of the Civil Code together with the pertinent provisions of PD 1529 and the Rules
of Court, while an heir may dispose and transfer his/her hereditary share to another person, before the
transferee may compel the issuance of a new certificate of title covering specific property in his/her name, a
final order of distribution of the estate or the order in anticipation of the final distribution issued by the
testate or intestate court must first be had.
Therefore, despite the existence of a valid contract of sale between the buyer and the seller, which
ordinarily would warrant the delivery of the owner's duplicate copy of the title in favor of the latter, pending
the final settlement of the Estate, and absent any order of final distribution or an order in anticipation of a
final distribution from the Probate Court, the RD cannot be compelled at this time to cancel the OCT and issue
a new certificate of title.
Effect if an heir sold her purported share of the estate; buyer compel the register of deeds to issue a
title.
The rights of the inheritance are transmitted from the moment of the death of the decedent. Article
777 operates at the very moment of the decedent's death meaning that the transmission by succession occurs
at the precise moment of death and, therefore, at that precise time, the heir is already legally deemed to have
acquired ownership of his/her share in the inheritance, "and not at the time of declaration of heirs, or
partition, or distribution." Thus, there is no legal bar to an heir disposing of his/her hereditary share
immediately after such death (Testate Estate of Josefa Tangco, et al. v. Tasiana de Borja, 150-B Phil. 486
[1972]). The Court, early on in Teves de Jakosalem v. Rafols, et al., 73 Phil. 628 [1942], explained that a sale
made by a legal or intestate heir of his share in an inheritance does not interfere with the administration of
the estate.
Nevertheless, the existence of a valid sale does not necessarily mean that the RD may already be
compelled to cancel the title and issue a new title in the name of the buyers. The proper action of the buyer is
to ask for partition or intervene in the settlement of estate as co-owner (Sps. Salitico v. Heirs of Felix, et al.,
G.R. No. 240199, April 10, 2019, Caguioa, J).
PRESCRIPTION
Prescription based on a written contract prescribes after 10 years; when there is interruption
Actions based upon a written contract should be brought within ten (10) years from the time the
right of action accrues. Indubitably, such right of action accrues from the moment the breach of right or duty
occurs. Prescription of actions is, nevertheless, interrupted when they are filed before the courts, when there
is a written extrajudicial demand by the creditors, and when there is any written acknowledgement of the
debt by the debtor. In the present case, the ten-year (10) prescriptive period on the enforcement of said
promissory notes that matured in 1982 - 1983, was timely interrupted by bank's demand letters to
defendant-appellant in November 1988, October 1991, February 1993, November 1994, January 1996 and
August 1998. Verily, every time the defendant received said demand letters, a new ten-year (10) period is
added, and the elapsed period is, thereby, eliminated. Indeed, a written extrajudicial demand wipes out the
period which has already elapsed, and it starts anew the prescriptive period (Heirs of Renato Dragon v.
Manila Banking Corp., G.R. No. 205068, March 6, 2019, Leonen, J).
LACHES
Concept and elements of laches.

Laches has been defined as “the failure or neglect, for an unreasonable and unexplained length of
time, to do that which — by the exercise of due diligence — could or should have been done earlier” (Dept. of
Education, Division of Albay v. Onate, 551 Phil. 633 [2007]).
The elements that need to be present and proven before an action is considered barred by laches are
the following:
The four basic elements of laches are: (1) conduct on the part of the defendant, or of
one under whom he claims, giving rise to the situation of which complaint is made and for
which the complaint seeks a remedy; (2) delay in asserting the complainant's rights, the
complainant having had knowledge or notice of the defendant’s conduct and having been
afforded an opportunity to institute suit; (3) lack of knowledge or notice on the part of the
defendant that the complainant would assert the right on which he bases his suit; and, (4)
injury or prejudice to the defendant in the event relief is accorded to the complainant or the
suit is not held to be barred (Heirs of Dumalig v. Serban, 545 Phil. 243 [2007]; Cotoner-
Zacarias v. Sps. Revilla, G.R. No. 190901, November 12, 2014, Leonen, J).
When rule on laches applies.

Doctrines of equity such as laches apply only in the absence of statutory law. The Civil Code clearly
provides that “[t]he action or defense for the declaration of the inexistence of a contract does not prescribe”
(Art. 1410, NCC).
Laches is a doctrine in equity and our courts are basically courts of law and not courts of equity.
Equity, which has been aptly described as "justice outside legality," should be applied only in the absence of,
and never against, statutory law. Aequetas nunguam contravenit legis. The positive mandate of Art. 1410 of
the New Civil Code conferring imprescriptibility to actions for declaration of the inexistence of a contract
should preempt and prevail over all abstract arguments based only on equity. Certainly, laches cannot be set
up to resist the enforcement of an imprescriptible legal right, and petitioners can validly vindicate their
inheritance despite the lapse of time (Heirs of Ingjug-Tiro v. Sps. Casals, 415 Phil. 665 [2001]; Cotoner-
Laches may prevent recovery of property; elements.

In Oropeza, et al. v. Allied Banking Corp., et al., G.R. No. 222078, April 1, 2019, Peralta, J, it was only
after 22 years after the lapse of the period to redeem a property after the foreclosure of a mortgage that an
action to annul the foreclosure was filed. Ruling that laches has already set in, the SC
Held: Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time,
to do that which, by exercising due diligence, could or should have been done earlier. It should be stressed
that laches is not concerned only with the mere lapse of time (Pineda v. Heirs of Guevarra, 544 Phil. 554
[2007]). The Court ruled in Heirs of Anacleto B. Nieto v. Municipality of Meycauayan, Bulacan, 564 Phil. 674
[2007] that:
Laches is not concerned only with the mere lapse of time. The following elements
must be present in order to constitute laches:
(1) conduct on the part of the defendant, or of one under whom he claims, giving
rise to the situation of which complaint is made for which the complaint seeks a remedy;
(2) delay in asserting the complainant's rights, the complainant having had
knowledge or notice, of the defendant's conduct and having been afforded an opportunity
to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the complainant
would assert the right on which he bases his suit; and
(4) injury or prejudice to the defendant in the event relief is accorded to the
complainant, or the suit is not held to be barred.
There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be
determined according to its particular circumstances, finds it just to rule that petitioners' present action is
already barred by laches. The essence of laches or "stale demands" is the failure or neglect for an
unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should
have been done earlier, thus, giving rise to a presumption that the party entitled to assert it either has
abandoned or declined to assert it. It is not concerned with mere lapse of time; the fact of delay, standing
alone, being insufficient to constitute laches.
As a general rule, an action to recover registered land may not be barred by laches; however, in
certain cases, allowed laches as a bar to recover a registered property under the Torrens system. Thus, this
Court ruled in Akang v. Municipality of Isulan, Sultan Kudarat Province, 72 Phil. 420 [2013]:
As a general rule, an action to recover registered land covered by the Torrens
System may not be barred by laches. Neither can laches be set up to resist the enforcement
of an imprescriptible legal right. In exceptional cases, however, the Court allowed laches as
a bar to recover a titled property. Thus, in Romero v. Natividad, the Court ruled that laches
will bar recovery of the property even if the mode of transfer was invalid. Likewise, in Vda.
de Cabrera v. CA, the Court ruled:
In our jurisdiction, it is an enshrined rule that even x x x registered
owners of property may be barred from recovering possession of property
by virtue of laches. Under the Land Registration Act (now the Property
Registration Decree), no title to registered land in derogation to that of the
registered owner shall be acquired by prescription or adverse possession.
The same is not true with regard to laches.
SUCCESSION
Exclusion of co-heir in extrajudicial partition makes the deed void; action is imprescriptible.
Where one heir was able – through the expedient of an extrajudicial settlement that was written in a
language that is not understood by one of her co-heirs - to secure a share in the estate of her parents that was
greater than that of her siblings, in violation of the principle in succession that heirs should inherit in equal
shares, the same is a simple case of exclusion in legal succession, where coheirs were effectively deprived of
their rightful share to the estate of their parents - who died without a will-· by virtue of a defective deed of
extrajudicial settlement or partition which granted a bigger share to one of the heirs and was prepared in
such a way that the other heirs would be effectively deprived of discovering and knowing its contents.
Under the law, "[t]he children of the deceased shall always inherit from him in their own right,
dividing the inheritance in equal shares” (CIVIL CODE, Article 980).
The partition was invalid because it excluded six of the nine heirs who were entitled to equal shares
in the partitioned property. Under the rule, 'no extra-judicial settlement shall be binding upon any person
who has not participated therein or had no notice thereof.' As the partition was a total nullity and did not
affect the excluded heirs, it was not correct for the trial court to hold that their right]; to challenge the
partition had prescribed after two years (Bautista v. Bautista, 556 Phil. 40, 46 [2007]; Segura v. Segura, 247-A
Phil. 449, 456 [1998]).
The deed of extra-judicial partition in the case at bar being invalid, the action to have it annulled does
not prescribe (Cruz, et al. v. Cruz, et al., G.R. No. 211153, February 28, 2018, Del Castillo, J).
When there is preterition.

Preterition consists in the omission in the testator’s will of a compulsory heir in the direct line or
anyone of them either because they are not mentioned therein or although mentioned they are neither
instituted as heir nor expressly disinherited. The act of totally depriving a compulsory heir of his legitimate
can take place either expressly or tacitly. The express deprivation of the legitime constitutes disinheritence.
The tacit deprivation of the same is called preterition. Id at 154-155, citing 6 Manresa, 6th ed., p. 340; Neri v.
Akutin, 74 Phil. 185 (1943).
In order that there be preterition, it is essential that the heir must be totally omitted. This is clear
from the wording of this article in conjunction with Article 906 which provides that:
“Any compulsory heir to whom the testator has left by any title less than the legitimate
belonging to him may demand that the same be fully satisfied.”
Summarizing, therefore, total omission means that the omitted compulsory heir receives nothing
under the will, whether as heir, legatee or devisee, has received nothing by way of donation inter vivos or
propter [nuptias], and will receive nothing by way of intestate succession (Sps. Cano, et al. v. Sps. Cano, et al.,
G.R. No. 188666, December 14, 2017).
OBLIGATIONS AND CONTRACTS

DELAY
Kinds and effect of delay.

Default or mora, which is a kind of voluntary breach of an obligation, signifies the idea of delay in the
fulfillment of an obligation with respect to time. In positive obligations, like an obligation to give, the obligor
or debtor incurs in delay from the time the obligee or creditor demands from him the fulfillment of the
obligation. Demand may be judicial — if the creditor files a complaint against the debtor for the fulfillment of
the obligation — or extrajudicial — if the creditor demands from the debtor the fulfillment of the obligation
either orally or in writing. Whether the demand is judicial or extrajudicial, if the obligor or debtor fails to
fulfill or perform his obligations, like payment of a loan, as in this case, he is in mora solvendi, and, thus, liable
for damages.
While delay was not triggered by an extrajudicial demand because petitioner had failed to so
establish receipt of her demand letter, this delay was triggered when petitioner judicially demanded the
payment of respondent's loan from petitioner. While the CA was correct in observing that default generally
begins from the moment the creditor demands the performance of the obligation, and without such demand,
judicial or extrajudicial, the effects of default will not arise (DBP v. Guarina agricultural & Realty Dev. Corp.,
724 Phil. 209 [2014]), it failed to acknowledge that when petitioner filed her complaint dated June 10, 2005,
such filing constituted the judicial demand upon respondent to pay the latter's principal obligation and the
interest thereon. Respondent, having thus incurred in delay (counted from the filing of the complaint), is
liable for damages pursuant to Article 1170 of the Civil Code (Pineda v. De Vega, G.R. No. 233774, April 10,
2019, Caguioa, J).
Nature/form of demand.
In Pineda v. De Vega, G.R. No. 233774, April 10, 2019, Caguioa, J, the basic issue is whether there was
delay in the performance of the obligation because there was no proof of receipt of the demand letter to pay.
There was however, an extrajudicial demand to comply with the terms and conditions of the contract. Such
failure to prove receipt of the demand letter resulted in the dismissal of the complaint. In reversing the lower
court’s ruling, the SC
Held: Default or mora, which is a kind of voluntary breach of an obligation, signifies the idea of delay in the
fulfillment of an obligation with respect to time. In positive obligations, like an obligation to give, the obligor
or debtor incurs in delay from the time the obligee or creditor demands from him the fulfillment of the
obligation. Demand may be judicial — if the creditor files a complaint against the debtor for the fulfillment of
the obligation — or extrajudicial — if the creditor demands from the debtor the fulfillment of the obligation
either orally or in writing. Whether the demand is judicial or extrajudicial, if the obligor or debtor fails to
fulfill or perform his obligations, like payment of a loan, as in this case, he is in mora solvendi, and, thus, liable
for damages.
While delay on the part of respondent was not triggered by an extrajudicial demand because
petitioner had failed to so establish receipt of her demand letter, this delay was triggered when petitioner
judicially demanded the payment of respondent's loan from petitioner. Default generally begins from the
moment the creditor demands the performance of the obligation, and without such demand, judicial or
extrajudicial, the effects of default will not arise (DBP v. Guarina agricultural & Realty Dev. Corp., 724 Phil.
209 [2014]), but when petitioner filed her complaint, such filing constituted the judicial demand upon
respondent to pay the latter's principal obligation and the interest thereon. Respondent, having thus incurred
in delay (counted from the filing of the complaint), is liable for damages pursuant to Article 1170 of the Civil
Code.
No demand for payment and foreclosure of mortgage; reason; solutio indebiti.

Demand for payment of an obligation and foreclosure of a mortgage cannot be successively done.
The settled rule is that these remedies of collection and foreclosure are mutually exclusive. The
invocation or grant of one remedy precludes the other.
Since Bachrach Motor Co., Inc. v. Icarañgal, 68 Phil. 287 [1939], the Court has consistently ruled (Bank
of America NT & SA v. American Realty Corp., 378 Phil. 1279 [1999]; Danao v. CA, 238 Phil. 447 [1987]) that:
In the absence of express statutory provisions, a mortgage creditor may institute
against the mortgage debtor either a personal action for debt or a real action to foreclose
the mortgage. In other words, he may pursue either of the two remedies, but not both. By
such election, his cause of action can by no means be impaired, for each of the two
remedies is complete in itself. Thus, an election to bring a personal action will leave open to
him all the properties of the debtor for attachment and execution, even including the
mortgaged property itself. And, if he waives such personal action and pursues his remedy
against the mortgaged property, an unsatisfied judgment thereon would still give him the
right to sue for a deficiency judgment, in which case, all the properties of the defendant,
other than the mortgaged property, are again open to him for the satisfaction of the
deficiency. In either case, his remedy is complete, his cause of action undiminished, and any
advantages attendant to the pursuit of one or the other remedy are purely accidental and
are all under his right of election. On the other hand, a rule that would authorize the
plaintiff to bring a personal action against the debtor and simultaneously or successively
another action against the mortgaged property, would result not only in multiplicity of
suits so offensive to justice (Soriano vs. Enriques, 24 Phil., 584) and obnoxious to law and
equity (Osorio vs. San Agustin, 25 Phil., 404), but also in subjecting the defendant to the
vexation of being sued in the place of his residence or of the residence of the plaintiff, and
then again in the place where the property lies (Pineda v. De Vega, G.R. No. 233774, April
10, 2019, Caguioa, J).
Rationale behind the rule.

The rationale as to the exclusive effect of the remedies or options is explained, thus:
For non-payment of a note secured by mortgage, the creditor has a single cause of
action against the debtor. This single cause of action consists in the recovery of the credit
with execution of the security. In other words, the creditor in his action may make two
demands, the payment of the debt and the foreclosure of the mortgage. But both demands
arise from the same cause, the non-payment of the debt, and, for that reason, they
constitute a single cause of action. Though the debt and the mortgage constitute separate
agreements, the latter is subsidiary to the former, and both refer to one and the same
obligation. Consequently, there exists only one cause of action for a single breach of that
obligation. Plaintiff, then, by applying the rule above stated, cannot split up his single cause
of action by filing a complaint for payment of the debt, and thereafter another complaint
for foreclosure of the mortgage. If he does so, the filing of the first complaint will bar the
subsequent complaint. By allowing the creditor to file two separate complaints
simultaneously or successively, one to recover his credit and another to foreclose his
mortgage, we will, in effect, be authorizing him plural redress for a single breach of
contract at so much cost to the courts and with so much vexation and oppression to the
debtor.
The creditor's cause of action is not only single but indivisible, although the
agreements of the parties, evidenced by the note and the deed of mortgage, may give rise to
different remedies. x x x The cause of action should not be confused with the remedy
created for its enforcement. And considering, that one of the two remedies available to the
creditor is as complete as the other, he cannot be allowed to pursue both in violation of
those principles of procedure intended to secure simple, speedy and unexpensive
administration of justice (See also: Cena v. CA, 292-A Phil. 649 [1993]; Pineda v. De Vega,
G.R. No. 233774, April 10, 2019, Caguioa, J).
RESCISSION
Void contract no need for rescission.

The absence of a contract of sale means that there is no source of obligations for the seller, or the
buyer. Rescission is impossible because there is no contract to rescind. The rule in Article 1592 that requires
a judicial or notarial act to formalize rescission of a contract of sale of an immovable property does not apply.
The court does not need to rule whether a letter is a valid method of rescinding a sales contract over an
immovable property because the question is moot and academic.
Generally, “the power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent on him (Art. 1191, NCC; Cabrera v. Ysaac, G.R. No. 166790,
November 19, 2014, Leonen, J).
Sale of immovable, law that governs its rescission.

For the sale of immovable property, the following provision governs its rescission:
In the sale of immovable property, even though it may have been stipulated that
upon failure to pay the price at the time agreed upon the rescission of the contract shall of
right take place, the vendee may pay, even after the expiration of the period, as long as no
demand for rescission of the contract has been made upon him either judicially or by
notarial act. After the demand, the court may not grant him a new term (Art. 1592, NCC).
This provision contemplates (1) a contract of sale of an immovable property and (2) a stipulation in
the contract that failure to pay the price at the time agreed upon will cause the rescission of the contract. The
vendee or the buyer can still pay even after the time agreed upon, if the agreement between the parties has
these requisites. This right of the vendee to pay ceases when the vendor or the seller demands the rescission
of the contract judicially or extrajudicially. In case of an extrajudicial demand to rescind the contract, it should
be notarized.
This provision does not apply if it is not a contract of sale of an immovable property and merely a
contract to sell an immovable property. A contract to sell is "where the ownership or title is retained by the
seller and is not to pass until the full payment of the price, such payment being a positive suspensive
condition and failure of which is not a breach, casual or serious, but simply an event that prevented the
obligation of the vendor to convey title from acquiring binding force" (Roque v. Lapuz, 185 Phil. 525 [1980];
Manuel v. Rodriguez, 109 Phil. 1 [1960]; Cabrera v. Ysaac, G.R. No. 166790, November 19, 2014, Leonen, J).
Law does not prescribe the form to rescind a contract to sell.

The law does not prescribe a form to rescind a contract to sell immovable property. The non-
payment operated to cancel the contract. If mere non-payment is enough to cancel a contract to sell, the letter
given to petitioner's lawyer is also an acceptable form of rescinding the contract. The law does not require
notarization for a letter to rescind a contract to sell immovable property. Notarization is only required if a
contract of sale is being rescinded Manuel v. Rodriguez, 109 Phil. 1 [1960]; Cabrera v. Ysaac, G.R. No. 166790,
November 19, 2014, Leonen, J).
Good faith doctrine applies to a buyer and mortgagee.

“When a mortgagee relies upon what appears on the face of a Torrens title and loans money in all
good faith on the basis of the title in the name of the mortgagor, only thereafter to learn that the latter’s title
was defective, being thus an innocent mortgagee for value, his or her right or lien upon the land mortgaged
must be respected and protected, even if the mortgagor obtained her title thereto through fraud." (Cabuhat v.
CA, 418 Phil. 451 (2001)
The good faith doctrine applies to innocent mortgagees for value. (Philippine Banking Corporation v.
Dy, G.R. No. 183774, November 14, 2012, 685 SCRA 567)
While it is settled that a simulated deed of sale is null and void and therefore, does
not convey any right that could ripen into a valid title, it has been equally ruled that, for
reasons of public policy, the subsequent nullification of title to a property is not a ground to
annul the contractual right which may have been derived by a purchaser, mortgagee or other
transferee who acted in good faith. (Manlan v. Beltran, G.R. No. 222530, October 16, 2019,
Inting, J)
Origin of the doctrine.

The doctrine protecting mortgagees and innocent purchasers in good faith emanates from the social
interest embedded in the legal concept granting indefeasibility of titles. The burden of discovery of invalid
transactions relating to the property covered by a title appearing regular on its face is shifted from the third
party relying on the title to the co-owners or the predecessors of the title holder. Between the third party and
the co-owners, it will be the latter that will be more intimately knowledgeable about the status of the
property and its history. The costs of discovery of the basis of invalidity, thus, are better borne by them
because it would naturally be lower. A reverse presumption will only increase costs for the economy, delay
transactions, and, thus, achieve a less optimal welfare level for the entire society.
The general rule allows every person dealing with registered land to rely on the face of the title when
determining its absolute owner (Cruz v. Bancom Finance Corp., 429 Phil. 225 [2003]). Thus, cases like Cabuhat
have held that "a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor of the
property given as security and in the absence of any sign that might arouse suspicion, has no obligation to
undertake further investigation." (Cabuhat v. CA); Andres, et al. v. PNB, G.R. No. 173548, October 15, 2014,
Leonen, J)
However, the banking industry belongs to a different category than private individuals. Banks are
considered businesses impressed with public interest, requiring "high standards of integrity and
performance." Consequently, banks must exercise greater care, prudence, and due diligence in their property
dealings. The standard operating practice for banks when acting on a loan application is "to conduct an ocular
inspection of the property offered for mortgage and to verify the genuineness of the title to determine the real
owner(s) thereof." (De La Peña v. Avida, G.R. No. 187490, February 8, 2012, 665 SCRA 553)
Payment
Delivery of the check produces the effect of payment when through fault of the creditor it has been
impaired.
The creditor’s possession of the evidence of debt is proof that the debt has not been discharged by
payment (Sps. Agner v. BPI Family Savings Bank, G.R. No. 182963, 3 June 2013 citing Tai Tong Chuache & Co. v.
Insurance Commission, 242 Phil. 104-112, (1988). It is likewise an established tenet that a negotiable
instrument is only a substitute for money and not money, and the delivery of such an instrument does not by
itself, operate as payment (BPI v. Sps Royeca, G.R. No. 176664, 21 July 2008, 559 SCRA 207-216, citing Philippine
Airlines, Inc. v. Court of Appeals, G.R. No. 49188, January 30, 1990, 181 SCRA 557-58). Thus, in BPI v. Sps Royeca,
it was ruled that despite the lapse of three years from the time checks were issued, the obligation still
subsisted and was merely suspended until the payment by commercial document could actually be realized.
However, payment is deemed effected and the obligation for which the check was given as
conditional payment is treated discharge, if a period of 10 years or more has elapsed from the date indicated
on the check until the date of encashment or presentment for payment. The failure to encash the checks
within a reasonable time after issue, or more than 10 years, not only results in the checks becoming stale but
also in the obligation to pay being deemed fulfilled by operation of law.
Art. 1249 of the Civil Code specifically provides that checks should be presented for payment within a
reasonable period after their issuance, to wit:
The delivery of promissory notes payable to order, or bills of exchange or other
mercantile documents shall produce the effect of payment only when they have been
cashed, or when through the fault of the creditor they have been impaired.
In the meantime, the action derived from the original obligation shall be held in
the abeyance.
NOVATION
Novation must be clear and irrevocable

In Heirs of Renato Dragon v. Manila Banking Corp., G.R. No. 205068, March 6, 2019, Leonen, J, Builders
Wood Products, Inc. obtained a loan from Manila Bank with Dragon as surety. When it failed to pay, an action
for sum of money was filed against it and Dragon. During the pendency of the action it ceded its timber
concession to Kalilid Wood of which Dragon was an officer and Kalilid assumed all the obligation of Builders
and the obligations of Dragon. There was, however no mention of Dragon’s personal obligation to Manila
Bank. Was there extinguishment of Dragon’s obligation by way of extinctive novation? The SC
Held: No, because what Kalilid assumed were Dragon’s liability as surety. There was no mention of his
personal obligations. Novation must be clear and unequivocal and is never presumed (Airco Pulp and Paper
Co., Inc. v. Lim, 737 Phil. 133 (2014), Leonen, J). It is the burden of the party asserting that novation has taken
place to prove that all the elements exits. (Crisostomo v. Garcia, Jr., 576 Phil. 743 (2006).
PAYMENT
Effect of contracts.
In Goldstar Rivermont, Inc. v. Advent Capital & Finance Corp., G.R. No. 211204, December 10, 2019,
J, Reyes, Jr., J, there was a loan agreement whereby Goldstar borrowed money from Advent secured by a
mortgage over real properties and chattels. Since it failed to pay its loan, it offered its mortgaged properties
as payment and signed a Dation en Pago with right of redemption. When Goldstar learned that Advent
previously assigned its receivables to DBP to secure its own loans, it contended that the Dation en Pago was
void as it was done prior to the Dation en Pago, hence, it filed a complaint for nullity of the contract. The RTC
dismissed the complaint on the ground that pursuant to the agreement between DBP and Advent, it remained
to be the creditor until it would default in the payment. Upon default, only then can DBP administer and
enforce its rights on the loans of the Investment Enterprises to which Advent lent money. The CA affirmed the
RTC decision as the transfer of rights and credits to DBP was conditioned on Advent’s default in payment. In
the absence of default, there was no transfer of rights to DBP, hence, appeal by certiorari to the SC which
denied it and
Held: Article 1159 of the New Civil Code states that "obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith." If the terms of a contract are clear
and leave no doubt as to the intention of the contracting parties, the literal meaning of its stipulations shall
control.
Goldstar's argument that Advent was no longer its creditor at the time the Dation in Payment and the
Memorandum were signed is untenable, because the Deed of Assignment specifically provides a condition
before DBP may exercise its rights as assignee. The deed clearly stated that Advent must be declared in
default before DBP may take over as assignee of the Project Loans. The condition was not met is persuasive
and binding upon the Court in the absence of substantial evidence to the contrary.
ESTOPPEL
Acceptance of late payment; estoppel.

When the debtors failed to pay their obligations and there was a demand for full payment, it accepted
monthly instalments, the creditor is bound by the principle of estoppel, and hence, it cannot foreclose the
mortgage.
Estoppel is a doctrine that prevents a person from adopting an inconsistent position, attitude, or
action if it will result in injury to another. One who, by his acts, representations or admissions, or by his own
silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe
certain facts to exist and such other rightfully relies and acts on such belief, can no longer deny the existence
of such fact as it will prejudice the latter. The doctrine of estoppel is based upon the grounds of public policy,
fair dealing, good faith and justice. It springs from equitable principles and the equities in the case. It is
designed to aid the law in the administration of justice where, without its aid, injustice might result (Orix
Metro Leasing & Finance Corp. v. M/V “Pilar-1”, et al., 615 Phil. 412).
Article 1235 of the Civil Code provides that when the creditor accepts performance, knowing its
incompleteness and irregularity without protest or objection, the obligation is deemed complied with.
Creditor accepted payment of her housing loan account for almost one year without any objection (Sps.
Loquellano v. HSBC, et al., G.R. No. 200553, December 10, 2018, Peralta, J).
SOLUTIO INDEBITI
Payment of rentals under protest; no solutio indebiti.
There is no solution indebiti if payment of increased rental was made under protest. Solutio indebiti
applies when payment was made on the erroneous belief of facts or law that such payment is due (Gonzalo
Puyat & Sons, Inc. v. City of Manila, 117 Phil. 985 [1963]).
Article 2154 of the Civil Code explains the concept of the quasi-contract of solutio indebiti:
If something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises. The quasi-contract of solutio
indebiti harks back to the ancient principle that no one shall enrich himself unjustly at the
expense of another (Power Commercial & Industrial Corp. v. CA, 340 Phil. 705 [1997].
In order to establish the application of solutio indebiti in a given situation, two conditions must
concur: (1) a payment is made when there exists no binding relation between the payor who has no duty
to pay, and the person who received the payment, and (2) the payment is made through mistake, and not
through liberality or some other cause (Moreno-Lentfer v. Hans Jurgen Wolff, 484 Phil. 552 [2004]; Domestic
Petroleum Retailer Corp. v. MIAA, G.R. No. 210641, March 27, 2019).
For the concept of solutio indebiti to apply, the undue payment must have been made by reason of
either an essential mistake of fact or a mistake in the construction or application of a doubtful or difficult
question of law. Mistake entails an error, misconception, or misunderstanding.
When there is there solutio indebiti.

Solutio indebiti applies when payment was made on the erroneous belief of facts or law that such
payment is due (Gonzalo Puyat & Sons, Inc. v. City of Manila, 117 Phil. 985 [1963]).
In order to establish the application of solutio indebiti in a given situation, two conditions must
concur: (1) a payment is made when there exists no binding relation between the payor who has no duty
to pay, and the person who received the payment, and (2) the payment is made through mistake, and not
through liberality or some other cause (Moreno-Lentfer v. Hans Jurgen Wolff, 484 Phil. 552 [2004]). In the
instant case, the Court finds that the essential requisites of solutio indebiti are not present.
For the concept of solutio indebiti to apply, the undue payment must have been made by reason of
either an essential mistake of fact or a mistake in the construction or application of a doubtful or difficult
question of law. Mistake entails an error, misconception, or misunderstanding (Domestic Petroleum Retailer
Corp. v. MIAA, G.R. No. 210641, March 27, 2019).
Prescription
Considering that cause of action is not based on a quasi-contract and is instead founded on the
enforcement of a contract.
Instead of the prescriptive period of six years for quasi-contracts, it is Article 1144 of the Civil Code
that finds application in the instant case. This Article provides that an action based on a written contract must
be brought within 10 years from the time the right of action accrues.
In Español v. Board of Administrators, Philippine Veterans Administration, 221 Phil. 667 [1985], as to
when the right of action of a party who claims payment from the government due to the nullification of an
administrative policy or issuance accrues, the Court held that the claimant has a cause of action for payment
against the government only from the time that the Court declared invalid the questioned
administrative policy. This is so because it is at that point when the presumption of legality of the
questioned administrative policy had been rebutted and thus it can be said with certainty that the
government infringed on the right of the claimant.
The prescriptive period is 10 years.
The right of action accrues when there exists a cause of action, which consists of 3 elements, namely:
a) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; b) an
obligation on the part of defendant to respect such right; and c) an act or omission on the part of such
defendant violative of the right of the plaintiff (Cole vs. Vda. de Gregorio, 116 SCRA 670 [1982]; Mathay vs.
Consolidated Bank & Trust Co., 58 SCRA 559 [1974]; Vda. de Enriquez vs. De la Cruz, 54 SCRA 1 [1973]). It is
only when the last element occurs or takes place that it can be said in law that a cause of action has arisen
(Cole vs. Vda. de Gregorio, supra).
Action to declare contract void; imprescriptible.

Article 1410 of the Civil Code states that an "action to declare the inexistence of a void contract does
not prescribe." In Fil-Estate Golf and Development, Inc. v. Navarro, it was held that a complaint for cancellation
of title based on the nullity of the deed of conveyance does not prescribe. In other words, an action that is
predicated on the fact that the conveyance complained of was null and void ab initio is imprescriptible. And if
the action is imprescriptible, it follows then that the defense of laches cannot be invoked. Thus:
Laches is a doctrine in equity and our courts are basically courts of law and not
courts of equity. Equity, which has been aptly described as "justice outside legality," should
be applied only in the absence of, and never against, statutory law. Aequetas nunguam
contravenit legis. The positive mandate of Art. 1410 of the New Civil Code conferring
imprescriptibility to actions for declaration of the inexistence of a contract should pre-
empt and prevail over all abstract arguments based only on equity. Certainly, laches cannot
be set up to resist the enforcement of an imprescriptible legal right, and petitioners can
validly vindicate their inheritance despite the lapse of time.
It is settled that the death of a person terminates contractual capacity. 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. There is no doubt, therefore, that the Deed of Sale is spurious and the
signature of the seller appearing thereon is forged. Suffice it to say, a forged deed is a nullity and conveys no
title. As a forged deed is null and void, and conveys no title, all the transactions subsequent to the alleged sale
are likewise void.
Since the Deed of Absolute Sale is null and void, it follows then that all the TCTs which were issued by
virtue of the said spurious and forged document are also null and void (Heirs of Tomas Arao v. Heirs of
Eclipse, G.R. No. 211425, November 189, 2018, J. Reyes, J).
CONTRACTS
Solidary liability of contractor, owner of a piece of work.

The contractor may be solidarily liable with the owner and the subcontractor for any unpaid
obligations to the subcontractor’s supplier despite the absence of a contract between the contractor and
supplier. Full payment to the subcontractor, however, serves as a valid defense against this liability.
Article 1729. Those who put their labor upon or furnish materials for a piece of work undertaken by
the contractor have an action against the owner up to the amount owing from the latter to the contractor at
the time the claim is made. However, the following shall not prejudice the laborers, employees and furnishers
of materials:
1. Payments made by the owner to the contractor before they are due;
2. Renunciation by the contractor of any amount due him from the owner (Noell Whessoe, Inc. v.
Independent Testing Consultants, Inc., et al., G.R. No. 199851, November 7, 2018, Leonen, J).
Article 1729 of the Civil Code is an exception to the general rule on the privity of contracts.
This provision imposes a direct liability on an owner of a piece of work in favor of suppliers of
materials (and laborers) hired by the contractor "up to the amount owing from the [owner] to the contractor
at the time the claim is made." Thus, to this extent, the owner's liability is solidary with the contractor, if both
are sued together. By creating a constructive vinculum between suppliers of materials (and laborers), on the one
hand, and the owner of a piece of work, on the other hand, as an exception to the rule on privity of contracts,
Article 1729 protects suppliers of materials (and laborers) from unscrupulous contractors and possible
connivance between owners and contractors. As the Court of Appeals correctly ruled, the supplier's cause of
action under this provision, reckoned from the time of judicial or extra-judicial demand, subsists so long as
any amount remains owing from the owner to the contractor. Only full payment of the agreed contract price
serves as a defense against the supplier's claim (Noell Whessoe, Inc. v. Independent Testing Consultants, Inc., et
al., G.R. No. 199851, November 7, 2018, Leonen, J citing JL Investment and Development, Inc. v. Tendon
Philippines, Inc., 541 Phil. 82 [2007]).
Article 1729 speaks of 3 parties.

Article 1729 talks of three (3) different parties: the owner, the contractor, and the supplier. In certain
situations, the supplier may also be referred to as a subcontractor to provide materials or services. There are
also situations where, as in this case, the subcontractor further subcontracts some materials and services to
another subcontractor. This sub-subcontractor would be considered the supplier of materials and services. In
this case, the owner is Liquigaz, the contractor is petitioner, the subcontractor is Petrotech, and the
supplier/sub-subcontractor is respondent Independent Testing Consultants.
Considering that the rationale behind the provision is to protect suppliers from possible connivance
between the owners and the contractors, there would be no reason to apply the same rationale when it was
the subcontractor that hired the supplier. The liability will extend from the owner to the contractor to the
subcontractor.
However, Article 1729, while serving as an exception to the general rule on the privity of contracts,
likewise provides for an exception to this exception. The contractor is solidarily liable with the owner and
subcontractor for any liabilities against a supplier despite the absence of contract between the contractor and
the supplier, except when the subcontractor has already been fully paid for its services (Noell Whessoe, Inc. v.
3 parties under Art. 1729, NCC.

Article 1729 talks of three (3) different parties: the owner, the contractor, and the supplier. In certain
situations, the supplier may also be referred to as a subcontractor to provide materials or services. There are
also situations where, as in this case, the subcontractor further subcontracts some materials and services to
another subcontractor. This sub-subcontractor would be considered the supplier of materials and services. In
this case, the owner is Liquigaz, the contractor is petitioner, the subcontractor is Petrotech, and the
supplier/sub-subcontractor is respondent Independent Testing Consultants.
Considering that the rationale behind the provision is to protect suppliers from possible connivance
between the owners and the contractors, there would be no reason to apply the same rationale when it was
the subcontractor that hired the supplier. The liability will extend from the owner to the contractor to the
subcontractor (Noell Whessoe, Inc. v. Independent Testing Consultants, Inc., et al., G.R. No. 199851, November
7, 2018, Leonen, J).
Rule not absolute.

Article 1729, while serving as an exception to the general rule on the privity of contracts, likewise
provides for an exception to this exception. The contractor is solidarily liable with the owner and
subcontractor for any liabilities against a supplier despite the absence of contract between the contractor and
the supplier, except when the subcontractor has already been fully paid for its services (Noell Whessoe, Inc. v.
Contract of adhesion is not void.

A contract of adhesion is one wherein one party imposes a ready-made form of contract on the other.
It is a contract whereby almost all of its provisions are drafted by one party, with the participation of the
other party being limited to affixing his or her signature or “adhesion” to the contract (Equitable PCI Bank v.
Ng Sheung Ngor, 565 Phil. 520, 536-537, 2007). However, contracts of adhesion are not invalid per se as they
are binding as ordinary contracts (see Cabanting v. BPI Family Savings Bank, Inc., G.R. No. 201927, February 17,
2016; Equitable PCI Bank v. Ng Sheung Ngor, id. at 537; and Sps. Poltan v. BPI Family Savings Bank, Inc., 546
Phil. 257-269, 2007). While the Court has occasionally struck down contracts of adhesion as void, it did so
when the weaker party has been imposed upon in dealing with the dominant bargaining party and reduced to
the alternative of taking it or leaving it, completely deprived of the opportunity to bargain equal footing
(Cabanting v. BPI, id.; and Sps. Poltan v. BPI Family Savings Bank, Inc., id. at 269). Thus, the validity or
enforceability of the impugned contracts will have to be determined by the peculiar circumstances obtained
in each case and the situation of the parties concerned (Encarnacion Construction and Industrial Corp. v.
Phoenix Ready Mix Concrete Dev. & Construction Corp., G.R. No. 725402, September 4, 2017, Perlas, Bernabe,
J).
Validity of accessory contract depends upon validity of principal.

The validity of accessory contracts mainly flows from the validity of the principal contracts. A real
estate mortgage is in the nature of an accessory contract. Thus, the validity of a mortgage contract that was
constituted to secure a loan obligation is affected by the validity of the loan contract.
As an accessory contract, a mortgage contract’s validity depends on the loan contract’s validity
(Naguiat v. Court of Appeals, 459 Phil. 237, 246 (2003). It is, thus, imperative for the Court to determine if the
contract of loan between petitioners and private respondent is valid. Th Court held in Pentacapital Investment
Corporation v. Mahinay, 637 Phil. 283 (2010) that “like any other contract, a contract of loan is subject to the
rules governing the requisites and validity of contracts in general” (Luntao, et al., v. BAP Credit Guaranty
Corp. et. al., G.R. No. 204412, September 20, 2017, Leonen, J).
NOVATION
When there is novation.

In order that an obligation may be extinguished by another which substitutes the same, it is
imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every
point incompatible with each other. (Art. 1292)
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.”
For novation to take place, the following requisites must concur:
1) There must be a previous valid obligation.
2) The parties concerned must agree to a new contract.
3) The old contract must be extinguished.
4) There must be a valid new contract. (The Wellex Group, Inc. v. U-Land Airlines Co. Ltd., G.R.
No. 167819, January 14, 2015, Leonen, J)
The kinds of novation.

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. (The Wellex Group, Inc. v. U-Land Airlines Co.
Ltd., G.R. No. 167819, January 14, 2015, Leonen, J)
Because novation requires that it be clear and unequivocal, it is never presumed, thus:
In the civil law setting, novatio is literally construed as to make new. So it is deeply
rooted in the Roman Law jurisprudence, the principle — novatio non praesumitur — that
novation is never presumed. At bottom, for novation to be a jural reality, its animus must be
ever present, debitum pro debito — basically extinguishing the old obligation for the new
one. (Arco Pulp and Paper Co. v. Lim)
Test of incompatibility in implied novation
No specific form is required for an implied novation, and all that is prescribed by law would be an
incompatibility between the two contracts. While there is really no hard and fast rule to determine what
might constitute to be a sufficient change that can bring about novation, the touchstone for contrariety,
however, would be an irreconcilable incompatibility between the old and the new obligations. (Quinto v.
People)
The test of incompatibility is whether or not the two obligations can stand together, each one having
its independent existence. If they cannot, they are incompatible and the latter obligation novates the first.
Corollarily, changes that breed incompatibility must be essential in nature and not merely accidental. The
incompatibility must take place in any of the essential elements of the obligation, such as its object, cause or
principal conditions thereof; otherwise, the change would be merely modificatory in nature and insufficient
to extinguish the original obligation.
There was no incompatibility between the original terms of the First Memorandum of Agreement
and the remittances made by respondent U-Land for the shares of stock. These remittances were actually
made with the view that both parties would subsequently enter into a share purchase agreement. It is clear
that there was no subsequent agreement inconsistent with the provisions of the First Memorandum of
Agreement. (The Wellex Group. Inc. v. U-Land Airlines Co. Ltd., G.R. No. 167519, January 14, 2015, Leonen, J)
Nature of the breach or violation which will entitle an injured party to rescind or resolve the
obligation.
The general rule is that rescission will not be permitted for a slight or casual breach of the contract,
but only for such breaches as are so substantial and fundamental as to defeat the object of the parties in
making the agreement (Song Fo & Co. v. Hawaiian Philippine Co., 47 Phil. 821 (1925)).
The right to rescind or resolve by the injured party is not absolute as the third paragraph of Article
1191 authorizes the court to fix a period; thus, rescission will not be granted in the following cases: (1) where
the breach is only slight or casual; (2) where there has been substantial compliance," and (3) where the court
finds valid reason for giving a period of fulfillment of the obligation. Likewise, the courts may deny revocation
of a donation based on non-fulfillment of "conditions" under Article 764 when the unperformed part is
insignificant.
Based on Article 764 and the pertinent provisions on obligations and contracts, the violation of
CASTEA in entering into the 20-year lease with Bodega Glassware should not be taken in isolation with the
other prestations and conditions in the Deed of Donation, especially the purpose of the donation. While under
Article 764, a single violation or non-fulfillment is sufficient to revoke a donation based on the phrase "any of
the conditions," its application must be circumscribed within the rules on obligations and contracts wherein
substantial and fundamental breach as to defeat the object of the parties in making the agreement and
substantial compliance are given due recognition and importance. Thus, a blind literal application of Article
764 without due consideration and regard to the peculiar circumstances of the donation at issue, bearing in
mind the specific intention or purpose of the donor vis-a-vis the tangible benefits of the donation to the
donee, is not adopted, bearing in mind the harshness of the consequence of revocation (Song Fo & Co. v.
Hawaiian Philippine Co., 47 Phil. 821 (1925); Camarines Sur Teachers and Employees Asso. Inc. v. Province of
Camarines Sur, G.R. No. 199666, October 7, 2019, Caguioa, J).
In Sps. Celones v. Metrobank, et al., G.R. No. 215691, November 21, 2018, Tijam, J, prior to the
expiration of the 1-year period of redemption of a foreclosed property, the Celones offered to redeem the
same which was approved by the bank. Atty. Dionido agreed to lend them the redemption amount which was
paid to Metrobank. Instead of executing a loan agreement, Sps. Celones, Metrobank and Atty. Dionido
executed a deed of subrogation of Atty. Dionido to all the rights and interests of Metrobank over the loan
obligation and the properties foreclosed.
The Sps. Celones demanded for the issuance of a certificate of redemption, but the bank refused
contending that it should be Atty. Dionido who should issue. In the meantime, Atty. Dionido demanded the
vacation of the premises. The spouses contended that the agreement between them and Atty. Dionido was
one of loan. The bank and Atty. Dionido contended that they were not able to redeem the property but the
Conditional Notice of Approval for Redemption (CNAR) has been novated by the MOA executed by the parties.
Under the MOA, the amount paid by Atty. Dionido to Metrobank was in consideration of the transfer and
assignment of rights of Metrobank to Atty. Dionido over the foreclosed properties. The SC disagreed and
Held: Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by
substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor.
In order that an obligation may be extinguished by another which substitute the same, it is imperative that it
be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible
with each other. Thus, "[n]ovation must be stated in clear and unequivocal terms to extinguish an obligation.
It cannot be presumed and may be implied only if the old and new contracts are incompatible on every point."
As held in the case of Salazar v. J.Y. Brothers Marketing Corp., 648 Phil. 314 [2010]:
x x x Novation is done by the substitution or change of the obligation by a
subsequent one which extinguishes the first, either by changing the object or principal
conditions, or by substituting the person of the debtor, or by subrogating a third person in
the rights of the creditor. Novation may:
[E]ither be extinctive or modificatory, much being dependent on
the nature of the change and the intention of the parties. Extinctive
novation is never presumed; there must be an express intention to
novate; in cases where it is implied, the acts of the parties must
clearly demonstrate their intent to dissolve the old obligation as the
moving consideration for the emergence of the new one. Implied
novation necessitates that the incompatibility between the old and
new obligation be total on every point such that the old obligation is
completely superceded by the new one. The test of incompatibility is
whether they can stand together, each one having an independent
existence; if they cannot and are irreconcilable, the subsequent
obligation would also extinguish the first.
An extinctive novation would thus have the twin effects of, first,
extinguishing an existing obligation and, second, creating a new one in its
stead. This kind of novation presupposes a confluence of four essential
requisites: (1) a previous valid obligation, (2) an agreement of all parties
concerned to a new contract, (3) the extinguishment of the old obligation,
and (4) the birth of a valid new obligation. Novation is merely
modificatory where the change brought about by any subsequent
agreement is merely incidental to the main obligation (e.g., a change in
interest rates or an extension of time to pay; in this instance, the new
agreement will not have the effect of extinguishing the first but would
merely supplement it or supplant some but not all of its provisions.)
(Foundation Specialists Inc. v. Betonval Ready Concrete, Inc., et al., 613
Phil. 303 [2009]).
The MOA showed no express stipulation as to the novation or extinction of the CNAR. Thus, for
implied novation to exist, it is necessary to determine whether the CNAR and the MOA are incompatible on
every point such that they cannot be reconciled and stand together.
Under the CNAR, it is provided that Metrobank approved the offer of Spouses Celones to redeem the
property in the amount of P55 Million. While under the MOA, Metrobank assigned all its rights and interests
to Atty. Dionido over the foreclosed properties including the issuance of a certificate of redemption.
CNAR only deals with the redemption right of Spouses Celones while the MOA deals with the
assignment of credit of Metrobank to Atty. Dionido. As such, the CNAR and the MOA can be reconciled and can
both stand together. Hence, there was no extinctive novation.
Atty. Dionido however is not left without any remedy or recourse against Spouses Celones. Under
Article 1236 of the Civil Code, it is provided that:
Art. 1236. The creditor is not bound to accept payment or performance by a third
person who has no interest in the fulfillment of the obligation, unless there is a stipulation
to the contrary.
Whoever pays for another may demand from the debtor what he has paid,
except that if he paid without the knowledge or against the will of the debtor, he can
recover only insofar as the payment has been beneficial to the debtor.
Thus, Atty. Dionido has the right to demand payment of the amount of P55 Million from Spouses
Celones since it is undisputed that such amount came from Atty. Dionido. It is unjust enrichment on the part
of Spouses Celones to acquire the amount ofP55 Million and not be required to pay the same. To save on the
time and resources of this Court and because of the possibility that this case will once again reach this Court,
although this case is not an action to recover a sum of money, it was deemed proper to rule on the propriety
of Atty. Dionido's right to recover the said sum from Spouses Celones. Thus, Spouses Celones should pay the
amount of P55 Million to Atty. Dionido with legal interest counted from the date of finality of this Decision.
Concept of the “plain meaning rule” or the “four corner rule”; rule in interpretation of contracts.
Under the law, if the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control.
If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over
the former. (Art. 1370, NCC)
The cardinal rule in the interpretation of contracts is embodied in the first paragraph of Article 1370
of the Civil Code: “[i]f the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control.” This provision is akin to the “plain
meaning rule” applied by Pennsylvania courts, which assumes that the intent of the parties to an instrument
is “embodied in the writing itself, and when the words are clear and unambiguous the intent is to be
discovered only from the express language of the agreement.” It also resembles the “four corners” rule, a
principle which allows courts in some cases to search beneath the semantic surface for clues to meaning. A
court's purpose in examining a contract is to interpret the intent of the contracting parties, as objectively
manifested by them. The process of interpreting a contract requires the court to make a preliminary inquiry
as to whether the contract before it is ambiguous. A contract provision is ambiguous if it is susceptible of two
reasonable alternative interpretations. Where the written terms of the contract are not ambiguous and can
only be read one way, the court will interpret the contract as a matter of law. If the contract is determined to
be ambiguous, then the interpretation of the contract is left to the court, to resolve the ambiguity in the light
of the intrinsic evidence. (Norton Resources and Dev. Corp. v. All Asia Bank Corp.)
The court must first determine whether a provision or stipulation contained in a contract is
ambiguous. Absent any ambiguity, the provision on its face will be read as it is written and treated as the
binding law of the parties to the contract. (The Wellex Group. Inc. v. U-Land Airlines Co. Ltd., G.R. No. 167519,
January 14, 2015, Leonen, J)
Presumed novation or implied novation is not deemed favorable.

“Novation by presumption has never been favored. To be sustained, it need be established that the
old and new contracts are incompatible in all points, or that the will to novate appears by express agreement
of the parties or in acts of similar import.” (Dungo v. Lopena; (United Pulp and Paper Co., Inc. v. Acropolis
Central Guaranty Corporation)
There being no novation of the First Memorandum of Agreement, respondent U-Land is entitled to
the return of the amount it remitted to petitioner Wellex. Petitioner Wellex is likewise entitled to the return
of the certificates of shares of stock and titles of land it delivered to respondent U-Land. This is simply an
enforcement of Section 9 of the First Memorandum of Agreement. Pursuant to Section 9, only the execution of
a final share purchase agreement within either of the periods contemplated by this stipulation will justify the
parties’ retention of what they received or would receive from each other. (The Wellex Group. Inc. v. U-Land
Airlines Co. Ltd., G.R. No. 167519, January 14, 2015, Leonen, J)
Applying Article 1185 of the Civil Code, the parties are obligated to return to each other all they have
received.
The condition that some event will not happen at a determinate time shall render the obligation
effective from the moment the time indicated has elapsed, or if it has become evident that the event cannot
occur is the legal basis for stipulation that if no agreement would be entered into, the parties would be freed
from responsibility.
If no time has been fixed, the condition shall be deemed fulfilled at such time as may have probably
been contemplated, bearing in mind the nature of the obligation. (Art. 1185, NCC)
Article 1185 provides that if an obligation is conditioned on the non-occurrence of a particular event
at a determinate time, that obligation arises (a) at the lapse of the indicated time, or (b) if it has become
evident that the event cannot occur.
It is the non-occurrence or non-execution of the share purchase agreement that would give rise to the
obligation to both parties to free each other from their respective undertakings. This includes returning to
each other all that they received in pursuit of entering into the share purchase agreement. (The Wellex Group.
Inc. v. U-Land Airlines Co. Ltd., G.R. No. 167519, January 14, 2015, Leonen, J)
SALES
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." For there to be a valid contract, there must be consent
of the contracting parties, an object certain which is the subject matter of the contract, and cause of the
obligation which is established (Art. 1318, NCC).
Sale is a special contract. The seller obligates himself to deliver a determinate thing and to transfer its
ownership to the buyer. In turn, the buyer pays for a price certain in money or its equivalent. A "contract of
sale is perfected at the moment there is a -meeting of minds upon the thing which is the object of the contract
and upon the price.'" The seller and buyer must agree as to the certain thing that will be subject of the sale as
well as the price in which the thing will be sold. The thing to be sold is the object of the contract, while the
price is the cause or consideration.
The object of a valid sales contract must be owned by the seller. If the seller is not the owner, the
seller must be authorized by the owner to sell the object (Francisco v. Chemical Bulk Carriers, Inc., G.R. No.
193577, September 7, 2011, 657 SCRA 355; Cabrera v. Ysaac, G.R. No. 166790, November 19, 2014, Leonen, J).
Specific rules attach when the seller co-owns the object of the contract. Sale of a portion of the
property is considered an alteration of the thing owned in common. Under the Civil Code, such disposition
requires the unanimous consent of the other co-owners. However, the rules also allow a co-owner to alienate
his or her part in the co-ownership (Cabrera v. Ysaac, G.R. No. 166790, November 19, 2014, Leonen, J).
When warranty against hidden defects apply.

In order for the implied warranty against hidden defects to be applicable, the following conditions
must be met:
a. Defect is Important or Serious
i. The thing sold is unfit for the use which it is intended
ii. Diminishes its fitness for such use or to such an extent that the buyer would
not have acquired it had he been aware thereof
b. Defect is Hidden
c. Defect Exists at the time of the sale
d. Buyer gives Notice of the defect to the seller within reasonable time. (Geromo v. La
Paz Housing and Dev. Corp., 803 Phil. 506 [2017]).
The redhibitory action pursued by the buyer is without basis. For one, it was not sufficiently proven
that the defects of the car door were important or serious. The hidden defect contemplated under Article
1561 of the Civil Code is an imperfection or defect of such nature as to engender a certain degree of
importance and not merely one of little consequence (Moles v. IAC, 251 Phil. 711 [1989]). Spouses Batalla
failed to prove that such defect had severely diminished the roadworthiness of the motor vehicle. In fact, they
admitted that they had no problem as to the road worthiness of the car. In addition, it cannot be ascertained
whether the defects existed at the time of the sale (Sps. Battalla v. Prudential Bank, et al., G.R. No. 200676,
March 25, 2019, J, Reyes, J).
When rule of being a buyer in good faith relevant.

The rule in land registration law that the issue of whether the buyer of realty is in good or bad faith is
relevant only where the subject of the sale is registered land and the purchase was made from the registered
owner whose title to the land is clean (Estate of Cabacungan v. Laigo, G.R. No. 175073, August 15, 2011). Our
laws have adopted the Torrens system to strengthen public confidence in land transactions:
[T]he Torrens system was adopted in this country because it was believed to be the
most effective measure to guarantee the integrity of land titles and to insure their
indefeasibility once the claim of ownership is established and recognized. If a person
purchases a piece of land on the assurance that the seller’s title thereto is valid, he should not
run the risk of losing his acquisition. If this were permitted, public confidence in the system
would be eroded and land transactions would have to be attended by complicated and not
necessarily conclusive investigations and proof of ownership (Vda. de Melencio v. CA, 560
Phil. 334).
Necessarily, those who rely in good faith on a clean title issued under the Torrens system for
registered lands must be protected. On the other hand, those who purchase unregistered lands do so at their
own peril (Estate of Cabacungan v. Laigo, supra; Cotoner-Zacarias v. Sps. Revilla, G.R. No. 190901, November
12, 2014, Leonen, J).
This good faith argument cannot be considered if the case involves unregistered land. (Cotoner-
Non-payment of price; not ground for nullity; rescission a remedy.

In Nuñez v. Moises-Palma, G.R. No. 224466, March 27, 2019, Caguioa, J, there was a contract of sale
over real property but for failure of the buyer to pay, the seller filed an action to nullify the contract. The
seller did not ask for specific performance to collect the unpaid purchase price.
For the sale of immovable property, the following provision governs its rescission:
Article 1592. In the sale of immovable property, even though it may have been
stipulated that upon failure to pay the price at the time agreed upon the rescission of the
contract shall of right take place, the vendee may pay, even after the expiration of the
period, as long as no demand for rescission of the contract has been made upon him either
judicially or by notarial act. After the demand, the court may not grant him a new term
(Cabrera v. Ysaac, 747 Phil. 187 [2014]).
This provision contemplates (1) a contract of sale of an immovable property and (2) a stipulation in
the contract that failure to pay the price at the time agreed upon will cause the rescission of the contract. The
vendee or the buyer can still pay even after the time agreed upon, if the agreement between the parties has
these requisites. This right of the vendee to pay ceases when the vendor or the seller demands the rescission
of the contract judicially or extrajudicially. In case of an extrajudicial demand to rescind the contract, it should
be notarized.
Hence, this provision does not apply if it is not a contract of sale of an immovable property and
merely a contract to sell an immovable property. A contract to sell is "where the ownership or title is retained
by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive
condition and failure of which is not a breach, casual or serious, but simply an event that prevented the
obligation of the vendor to convey title from acquiring binding force" (Roque v. Lapuz, 185 Phil. 525 [1980]).
The Court is mindful of the opinion of Justice J.B.L. Reyes in the consolidated cases of Sing, Yee &
Cuan, Inc. v. Santos, et al., No. 2081-R, January 20, 1950 (CA) 47 O.G. 6372) and Santos, et al. v. Sing Yee &
Cuan, Inc., No. 2082-R, January 20, 1950 (CA) 47 O.G. 6372) (Sing, Yee & Cuan, Inc.), viz.:
x x x [I]t is nevertheless clear that a distinction must be made between a contract
of sale in which title passes to the buyer upon delivery of the thing sold and a contract to
sell (or of "exclusive right and privilege to purchase," as in this case) where by agreement
the ownership is reserved in the seller and is not to pass until the full payment of the
purchase price is made. In the first case, non-payment of the price is a negative resolutory
condition; in the second place, full payment is a positive suspensive condition. Being
contraries, their effect in law cannot be identical. In the first case, the vendor has lost and
cannot recover the ownership of the land sold until and unless the contract of sale is itself
resolved and set aside. In the second case, however, the title remains in the vendor if the
vendee does not comply with the condition precedent of making payment at the time
specified in the contract. Hence, when the seller, because of noncompliance with the
suspensive condition stipulated, seeks to eject the buyer from the land object of the
agreement, said vendor is enforcing the contract and is not resolving the same. That article
1504 [(of the Civil Code of Spain or old Civil Code, now Article 1592 of the new Civil Code)]
refers to non-payment as a resolutory condition and does not contemplate an agreement to
sell in which title is reserved by the vendor until the vendee has complied first with
conditions specified, is clear from its terms:
"ART. 1504. In the sale of real property, even though it may have
been stipulated that in default of the payment of the price within the time
agreed upon, the resolution of the contract shall take place ipso jure, the
purchaser may pay even after the expiration of the period, at any time
before demand has been made upon him either by suit or by notarial act.
After such demand has been made the judge cannot grant him further time."
To summarize, the remedies of the unpaid seller, after ownership of the real property not covered by
Republic Act No. 6552 or the Maceda Law, has been vested to the buyer, are:
1. To compel specific performance by filing an action against the buyer for the agreed purchase
price; or
2. To rescind or resolve the contract of sale either judicially or t|y a notarial act; and
3. In either (1) or (2), to recover damages for the breach of the contract.
Distinctions between contract of sale and contract to sell.

In Royal Plains Inc. v. Mejia, G.R. No. 230832, November 12, 2018, J, Reyes, Jr., J, a contract of
conditional sale over a parcel of land consisting of 6 hectares was entered into with the agreement that upon
full payment of the agreed consideration, the vendor shall execute the Deed of Absolute Sale in favor of the
vendee. What is the nature of the contract? The SC
Held: It is a contract to sell, and not a contract of sale.
In a contract of sale, the title passes to the buyer upon the delivery of the thing sold. In a contract to
sell, the ownership is reserved in the seller and is not to pass until the full payment of the purchase price is
made. In the first case, non-payment of the price is a negative resolutory condition; in the second case, full
payment is a positive suspensive condition. In the first case, the vendor has lost and cannot recover the
ownership of the property until and unless the contract of sale is itself resolved and set aside. In the second
case, the title remains in the vendor if the vendee does not comply with the condition precedent of making
payment at the time specified in the contract (Ayala Life Assurance, Inc. v. Ray Burton Dev. Corp., 515 Phil.
431 [2006]; Heirs of Atienza v. Espidol, 642 Phil. 408 [2010]; Lim v. Court of Appeals, 182 SCRA 564 [1990]).
This stipulation evinces the intention of the parties for the vendor to reserve ownership of the land
and the same is not to pass until the remaining balance (payable in 40 monthly installments) has been fully
paid by the vendee. As fortified by this Court in the case of Diego v. Diego, 704 Phil. 373 [2013]:
It is settled jurisprudence, to the point of being elementary, that an agreement
which stipulates that the seller shall execute a deed of sale only upon or after full payment
of the purchase price is a contract to sell, not a contract of sale. In Reyes v. Tuparan, this
Court declared in categorical terms that where the vendor promises to execute a deed of
absolute sale upon the completion by the vendee of the payment of the price, the contract
is only a contract to sell. The aforecited stipulation shows that the vendors reserved title to
the subject property until full payment of the purchase price.
Maceda Law, not applicable.

However, contrary to the findings of the CA, the protection provided under R.A. No. 6552 (Maceda
Law) is not applicable. Notwithstanding the parties' stipulation for installment payments, wherein the
payment of the price is more than one, the parties' contract to sell does not automatically fall under the
coverage of the Maceda Law. R.A. No. 6552.
The buyer's protection under R.A. No. 6552 only applies to contracts of sale of real estate on
installment payments, including residential condominium apartments, but excluding industrial lots,
commercial buildings and sales to tenants. A purchase by a company involved in the real estate business, just
like the petitioners in this case, of a six-hectare lot can hardly be considered as residential. This is the same
interpretation conveyed in the case of Spouses Garcia v. Court of Appeals, 633 Phil. 294 [2010], when the Court
held that the subject lands, comprising five parcels and aggregating 69,028 square meters, do not comprise
residential real estate within the contemplation of the Maceda Law. Moreso in this case where it was shown
that petitioner Corporation is already engaged in the selling of the portions of the said lots to individual
buyers.
Rescission not a remedy in contract to sell.

To say that a contract to sell is rescissible is quite misplaced. Jurisprudence abounds with rulings that
the remedies of rescission, under Articles 1191 and 1592 of the Civil Code, are not available in contracts to
sell. This Court succinctly explains:
The respondent court did not err when it did not apply Articles 1191 and 1592 of
the Civil Code on rescission to the case at bar. The contract between the parties is not an
absolute conveyance of real property but a contract to sell. In a contract to sell real
property on installments, the full payment of the purchase price is a positive suspensive
condition, the failure of which is not considered a breach, casual or serious, but simply an
event which prevented the obligation of the vendor to convey title from acquiring any
obligatory force. The transfer of ownership and title would occur after full payment of the
purchase price (Rillo v. CA, 340 Phil. 570 [1997]).
Sale with right to repurchase; effect.

In a sale with right to repurchase (pacto de retro), the title and ownership of the property sold are
immediately vested in the vendee, subject to the resolutory condition of repurchase by the vendor within the
stipulated period. The right of repurchase agreed upon is one of conventional redemption governed by Article
1601, in relation to Article 1616 of the New Civil Code. This right is separate and distinct from the legal
redemption granted to co-owners under Article 1620 of the New Civil Code. More importantly, the right to
repurchase is separate from the title or ownership over the property subject of the sale with pacto de retro.
As a rule, the right to repurchase under Article 1601 may only be exercised by the vendor, or his
successors. If so exercised, the ownership of the property reverts back to the vendor or his successor. On the
other hand, if a third person redeems the property on behalf of the vendor, he or she does not become owner
of the property redeemed, but only acquires a lien over the property for the amount advanced for its
repurchase. As such, the third person’s right merely consists of the right to be reimbursed for the price paid
to the vendee (Heirs of Jarque v. Marcial Jarque, et al., G.R. No. 196733, November 21, 2018, Jardeleza, J).
Contract an equitable mortgage.

Even if a contract appears to be one of absolute sale, it is truly an equitable mortgage if the badges
are present:
a. after the sale, the seller remains in possession of the property;
b. the purchase price is inadequate;
c. the buyer retained the purchase price;
d. the sale is intended merely to secure the payment of debt.
An equitable mortgage is defined as one which although lacking in some formality, or form or words,
or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real
property as security for a debt, and contains nothing impossible or contrary to law. Its essential requisites
are: (1) that the parties entered into a contract denominated as a contract of sale; and (2) that their
intention was to secure an existing debt by way of a mortgage.
The presence of even one of the circumstances enumerated in Article 1602 suffices to convert a
purported contract of sale into an equitable mortgage (Vda. de Delfin v. Dellota, 566 Phil. 389 [2008]). The
existence of any of the circumstances defined in Article 1602 of the New Civil Code, not the concurrence nor
an overwhelming number of such circumstances, is sufficient for a contract of sale to be presumed an
equitable mortgage (Sps. Salonga v. Sps. Concepcion, 507 Phil. 287 [2005]; Sps. Sy, et al. v. De Vera, et al., G.R.
No. 239088, April 3, 2019, Caguioa, J).
A document which appears on its face to be a sale-absolute x x x may be proven by the vendor x x x to
be one of a loan with mortgage. In this case, parol evidence becomes competent and admissible to prove that
the instrument was in truth and in fact given merely as a security for the payment of a loan. And upon proof of
the truth of such allegations, the court will enforce the agreement or understanding in consonance with the
true intent of the parties at the time of the execution of the contract. Sales with a right to repurchase are not
favoured (Matanguihan v. CA, 34 Phil. 379 [1979]).
The nomenclature given by the parties to the contract is not conclusive of the nature and legal effects
thereof. Even if a document appears on its face to be a sale, the owner of the property may prove that the
contract is really a loan with mortgage, and that the document does not express the true intent of the parties
(Sps. Salonga v. Sps. Concepcion).
Sale in lump sum.

Article 1542 provides that when a contract of sale concerns the delivery of a determinate object,
particularly real estate, in consideration for a lump sum payment, the vendor has the obligation to deliver
everything within the boundaries even when it exceeds the area or number specified within the said
boundaries. Upon delivery, if the area of the real estate set forth in the contract does not coincide with the
actual area delivered within the boundaries, Article 1542 provides that there shall be no increase or decrease
in the price even if the area be more or less than that indicated in the contract of sale. Under Article 1542, the
determinate object of the contract of sale and the property to be delivered is the particular portion of the real
estate enclosed within the boundaries mentioned in the contract of sale.
If the sale of real estate should be made with a statement of its area, at the rate of a certain
price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the
latter should demand it, all that may have been stated in the contract; but, should this be not possible,
the vendee may choose between a proportional reduction of the price and the rescission of the contract,
provided that, in the latter case, the lack in the area be not less than one-tenth of that stated (Sps. Orozco v.
Lozano, et al., G.R. No. 222616, April 3, 2019, Caguioa, J).
The Court held that in a sale involving real estate the parties may choose between two types of
pricing agreements: a unit price contract under Article 1539 where the purchase price is determined by way
of reference to a stated rate per area (e.g., P1,000.00 per square meter), or a lump sum contract under Article
1542 which states a full purchase price for an immovable the area of which is based on the boundaries stated
in the contract of sale.
Where both the area and the boundaries of the immovable are declared, the
area covered within the boundaries of the immovable prevails over the stated area.
In cases of conflict between areas and boundaries, it is the latter which should
prevail. What really defines a piece of ground is not the area, calculated with more or
less certainty, mentioned in its description, but the boundaries therein laid down, as
enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is
well established that the specific boundaries stated in the contract must control over
any statement with respect to the area contained within its boundaries. It is not of
vital consequence that a deed or contract of sale of land should disclose the area with
mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient
precision to enable one to identify it. An error as to the superficial area is immaterial. Thus,
the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it
is the entirety thereof that distinguishes the determinate object (Esguerra v. Trinidad, 547
Phil. 99 [2007]; Rudolf Lietz, Inc. v. Court of Appeals, 514 Phil. 634 [2005]).
Q — The buyers were in possession of the property subject of the controversy. They filed an action for
quieting of title, but the defendants contended that it has already prescribed.
In ruling that it has not prescribed the SC
Held: In Sapto, et al. v. Fabiana, the Court, speaking through Justice J.B.L. Reyes, held that an action to quiet
title where the plaintiff under claim of ownership, is in actual possession of the land, does not prescribe, citing
American Jurisprudence, to wit:
The prevailing rule is that the right of a plaintiff to have his title to land quieted, as
against one who is asserting some adverse claim or lien thereon, is not barred while the
plaintiff or his grantors remain in actual possession of the land, claiming to be owners
thereof, the reason for this rule being that while the owner in fee continues liable to an
action, proceeding, or suit upon the adverse claim, he has a continuing right to the aid of a
court of equity to ascertain and determine the nature of such claim and its effect on his
title, or to assert any superior equity in his favor. He may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right. But the rule that
the statute of limitations is not available as a defense to an action to remove a cloud from
title can only be invoked by a complaint when he is in possession. One who claims property
which is in the possession of another must, it seems, invoke his remedy within the
statutory period.
In the present case, respondents are in possession of the subject land under claim of ownership.
Their action, being one for quieting of title, was not barred by prescription when it was filed in 1998. This is
because their cause of action to quiet title only accrued in 1997 when their possession was deemed to have
been disturbed by the issuance of TCT No. T-91543 over the subject land in petitioners' names.
Respondents were not guilty of laches so as to bar them from asserting their claim over the subject
land. In Go Chi Gun v. Co Cho, 96 Phil. 622 [1955], the Court enumerated the elements for the ground of laches
to bar an action as follows:
(1) conduct on the part of the defendant, or of one under whom claims, giving rise
to the situation of which complaint is made an for which the complaint seeks a remedy; (2)
delay in asserting the complainant's rights, the complainant having had knowledge or
notice of the defendant's conduct and having been afforded an opportunity to institute a
suit; (3) lack of knowledge or notice on the part of the defendant that the complainant
would assert the right on which he bases his suit; and (4) injury or prejudice to the
defendant in the event relief is accorded to the complainant, or the suit is not held to be
barred.
Article 1544 of the New Civil Code does not apply in the present case
Article 1544 of the New Civil Code provides:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession thereof
in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.
How ownership acquired.
Under Article 712 of the Civil Code, tradition as a consequence of contracts and succession are modes
of acquiring or transferring ownership, to wit:
Art. 712. Ownership is acquired by occupation and by intellectual creation.
Ownership and other real rights over property are acquired and transmitted by law, by
donation, by testate and intestate succession, and in consequence of certain contracts, by
tradition.
They may also be acquired by means of prescription.
Succession is a mode of acquisition by virtue of which the property, rights and obligations to the
extent of the value of the inheritance, of a person are transmitted through his death to another or others
either by his will or by operation of law. The inheritance includes all the property, rights and obligations of a
person which are not extinguished by his death. These provisions emphasize that what is passed by a
decedent to his heirs by succession are those which he owned at the time of his death. It follows then that his
heirs cannot inherit from him what he does not own anymore.
Under the law on sales, Article 1496 of the New Civil Code provides that "the ownership of the thing
sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles
1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the
vendor to the vendee." In particular, Article 1497 provides that "the thing sold shall be understood as
delivered, when it is placed in the control and possession of the vendee," while Article 1498 states that "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."
When there is buyer in Good Faith

In Amoguis v. Ballado, et al., G.R. No. 189626, August 20, 2018, Leonen, J, before petitioner brought a
parcel of land, they were informed of the ownership by another before they occupied the said property.
Despite knowledge of such ownership they continued to introduce improvements. Are the buyers in good
faith? Why?
Held: No, they are in bad faith. A buyer in good faith is one who purchases and pays fair price for a property
without notice that another has an interest over or right to it (Hemedes v. CA, 314 Phil. 692 (1999). If a land is
registered and is covered by a certificate of title, any person may rely on the correctness of the certificate of
title, and he or she is not obliged to go beyond the four (4) corners of the certificate to determine the
condition of the property. This rule does not apply, however, when the party has actual knowledge of facts
and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser
has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent
man to inquire into the status of the title of the property in litigation. (Sigaya v. Mayapa, 504 Phil. 600 (2005)
Implied warranty against hidden defects; defects in the door of car.

In order for the implied warranty against hidden defects to be applicable, the following conditions
must be met:
e. Defect is Important or Serious
iii. The thing sold is unfit for the use which it is intended
iv. Diminishes its fitness for such use or to such an extent that the buyer would
not have acquired it had he been aware thereof (Art. 1561, NCC)
f. Defect is Hidden
g. Defect Exists at the time of the sale
h. Buyer gives Notice of the defect to the seller within reasonable time. (Geromo v. La
Paz Housing and Dev. Corp., 803 Phil. 506 [2017]; Sps. Battalla v. Prudential Bank, et
al., G.R. No. 200676, March 25, 2019, J, Reyes, J).
The redhibitory action pursued by Spouses Batalla was without basis. For one, it was not sufficiently
proven that the defects of the car door were important or serious. The hidden defect contemplated under
Article 1561 of the Civil Code is an imperfection or defect of such nature as to engender a certain degree of
importance and not merely one of little consequence (Moles v. IAC, 251 Phil. 711 [1989]). Spouses Batalla
failed to prove that such defect had severely diminished the roadworthiness of the motor vehicle. In fact, they
admitted that they had no problem as to the road worthiness of the car. In addition, it cannot be ascertained
whether the defects existed at the time of the sale (Sps. Battalla v. Prudential Bank, et al., G.R. No. 200676,
March 25, 2019, J, Reyes, J).
Payment of earnest money in contract of sale not conclusive evidence of proof that contract of sale exists.
In a contract to sell, the payment of earnest money represents the seller’s opportunity cost of holding
in abeyance the search for other buyers or better deals. Absent proof of a clear agreement to the contrary, it
should be forfeited if the sale does not happen without the seller’s fault. The potential buyer bears the burden
of proving that the earnest money was intended other than as part of the purchase price and to be forfeited if
the sale does not occur without the seller’s fault.
Under Article 1482 of the Civil Code, whenever earnest money is given in a contract of sale (Chua v.
Court of Appeals, 449 Phil. 25,43 (2003) [Per J. Carpio, First Division]), it shall be considered as “proof of the
perfection of the contract.” However, this is a disputable presumption, which prevails in the absence of
contrary evidence. The delivery of earnest money is not conclusive proof that a contract of sale exists
(Philippine National Bank v. Court of Appeals, 330 Phil. 1048, 1072-1073 (1996) [Per J. Hermosisima, Jr.;
Racelis v. Sps. Javier, G.R. No. 189609, January 29, 2018, Leonen, J).
Effect of non-payment of purchase price in a contract of sale.

In a contract of sale, title to the property passes to the buyer upon delivery of the thing sold. In
contrast, in a contract to sell, ownership does not pass to the prospective buyer until full payment of the
purchase price. The title of the property remains with the prospective seller (Chua v. Court of Appeals, 449
Phil. 25, 41-42 (2003) [Per J. Carpio] citing Philippine National Bank v. Court of Appeals, 330 Phil. 1048, 1072-
1073 (1996) [Per J. Hermosisima, Jr.).
In a contract of sale, the non-payment of the purchase price is a resolutory condition that entitles the
seller to rescind the sale (Ayala Life Assurance, Inc. v. Ray Burton Development Corp., 515 Phil. 431, 438 (2006)
[Per J. Sandoval-Gutierrez). In a contract to sell, the payment of the purchase price is a positive suspensive
condition that gives rise to the prospective seller’s obligation to convey title (Chua v. Court of Appeals, 449
Phil. 25, 42 (2003) [Per J. Carpio). However, non-payment is not a breach of contract but “an event that
prevents the obligation of the vendor to convey title from becoming effective.” The contract would be deemed
terminated or cancelled, and (Diego v. Diego, 704 Phil. 373, 390-392 (2013) [Per J. Del Castillo) the parties
stand “as if the conditional obligation had never existed.” (Cheng v. Genato, 360 Phil. 891, 906 (1998) [Per J.
Martinez)
In this case, since prospective buyers failed to deliver the purchase price at the end of 2003, the
contract to sell was deemed cancelled. The contract’s cancellation entitles owner to retain the earnest money
given by prospective buyers.
Earnest money, under Article 1482 of the Civil Code, is ordinarily given in a perfected contract of
sale. However, earnest money may also be given in a contract to sell (Racelis v. Sps. Javier, G.R. No. 189609,
January 29, 2018, Leonen, J).
Opportunity Cost.
In a contract to sell, earnest money is generally intended to compensate the seller for the opportunity
cost of not looking for any other buyers. It is a show of commitment on the part of the party who intimates his
or her willingness to go through with the sale after a specified period or upon compliance with the conditions
stated in the contract to sell.
Opportunity cost is defined as “the cost of the foregone alternative” (See Reyes v. Valentin, G.R. No.
194488, February 11, 2015 [Per J. Leonen). In a potential sale, the seller reserves the property for a potential
buyer and foregoes the alternative of searching for other offers. The Court in Philippine National Bank v. Court
of Appeals 330 Phil. 1048 (1996) [Per J. Hermosisima) construed earnest money given in a contract to sell as
“consideration for [seller’s] promise to reserve the subject property for [the buyer].” The seller, “in excluding
all other prospective buyers from bidding for the subject property . . . [has given] up what may have been
more lucrative offers or better deals.”
Earnest, money therefore, is paid for the seller’s benefit. It is part of purchase price while at the same
time proof of commitment by the potential buyer. Absent proof of a clear agreement to the contrary, it is
intended to be forfeited if the sale does not happen without the seller’s fault. The potential buyer bears the
burden of proving that the earnest money was intended other than as part of the purchase price and to be
forfeited if the sale does not occur without the fault of the seller (Racelis v. Sps. Javier, G.R. No. 189609,
January 29, 2018, Leonen, J).
No unjust enrichment if initial payment is forfeited.

There is no unjust enrichment on the part of the seller should the initial payment be deemed
forfeited. After all, the owner could have found other offers or a better deal. The earnest money given by
respondents is the cost of holding this search in abeyance.
The prospective buyers were even unable to meet their own promise to pay the full amount of the
earnest payment. To rule that the partial earnest money should have even be returned is both inequitable and
would have dire repercussions as a precedent (Racelis v. Sps. Javier, G.R. No. 189609, January 29, 2018,
Leonen, J).
Sale with right to repurchase; ownership vested in vendee subject to resolutory condition.
In a sale with right to repurchase (pacto de retro), the title and ownership of the property sold are
immediately vested in the vendee, subject to the resolutory condition of repurchase by the vendor within the
stipulated period (David v. David, G.R. No. 162365, January 15, 2014, 713 SCRA 326, 335-336). The right of
repurchase agreed upon is one of conventional redemption governed by Article 1601, in relation to Article
1616, of the New Civil Code. This right is separate and distinct from the legal redemption granted to co-
owners under Article 1620 of the New Civil Code. More importantly, the right to repurchase is separate from
the title or ownership over the property subject of the sale with pacto de retro (See Gonzaga v. Garcia, 27 Phil.
7 (1914); Heirs of Jarque v. Jarque, et al., G.R. No. 196733, November 21, 2018, Jardeleza, J).
As a rule, the right to repurchase under Article 1601 may only be exercised by the vendor, or his
successors (Gallar v. Husain, G.R. No. L-20954, May 24, 1967, 20 SCRA 186, 191, citing Ordonez v. Villaroman, 78
Phil. 116 (1947). If so exercised, the ownership of the property reverts back to the vendor or his successor
(David v. David). On the other hand, if a third person redeems the property on behalf of the vendor, he or she
does not become owner of the property redeemed, but only acquires a lien over the property for the amount
advanced for its purchase (See Guinto v. Lim Bonfing and Abendan, 48 Phil. 884 (1926). As such, the third
person’s right merely consists of the right to be reimbursed for the price paid to the vendee (Heirs of Jarque v.
Jarque, et al., G.R. No. 196733, November 21, 2018, Jardeleza, J).
Rescission on account of breach.

The rescission on account of breach of stipulations is not predicated on injury to economic interests
of the party plaintiff but on the breach of faith by the defendant, that violates the reciprocity between the
parties. It is not a subsidiary action, and Article 1191 may be scanned without disclosing anywhere that the
action for rescission thereunder is subordinated to anything other than the culpable breach of his obligations
by the defendant. This rescission is a principal action retaliatory in character, it being unjust that a party be
held bound to fulfill his promises when the other violates his. As expressed in the old Latin aphorism: “Non
servanti fidem, non est fides servanda.” Hence, the reparation of damages for the breach is purely secondary.
On the contrary, in the rescission by reason of lesion or economic prejudice, the cause of action is
subordinated to the existence of that prejudice, because it is the raison detre as well as the measure of the
right to rescind. Hence, where the defendant makes good the damages caused, the action cannot be
maintained or continued, as expressly provided in Articles 1383 and 1384. But the operation of these two
articles is limited to the cases of rescission for lesión enumerated in Article 1381 of the Civil Code of the
Philippines, and does not apply to cases under Article 1191. (Universal Food Corp. v. CA)
Rescission or resolution under Article 1191, therefore, is a principal action that is immediately
available to the party at the time that the reciprocal prestation was breached. Article 1383 mandating that
rescission be deemed a subsidiary action cannot be applicable to rescission or resolution under Article 1191.
(The Wellex Group. Inc. v. U-Land Airlines Co. Ltd., G.R. No. 167519, January 14, 2015, Leonen, J citing the
concurring opinion of JBL Reyes in Universal Food Corporation v. Court of Appeals)
The jurisprudence relied upon by petitioner Wellex is not applicable.

Suria v. Intermediate Appellate Court is not applicable. In that case, the parties entered into a contract
of sale, and their reciprocal obligations had already been fulfilled.
The parties have fully complied with their part of the reciprocal obligation.
The buyer, in turn, fulfilled his end of the bargain when he executed the deed of
mortgage. The payments on an installment basis secured by the execution of a mortgage
took the place of a cash payment. In other words, the relationship between the parties is no
longer one of buyer and seller because the contract of sale has been perfected and
consummated. It is already one of a mortgagor and a mortgagee. In consideration of the
petitioners’ promise to pay on installment basis the sum they owe the respondents, the latter
have accepted the mortgage as security for the obligation.
The situation in this case is, therefore, different from that envisioned in the cited
opinion of Justice J.B.L. Reyes. The petitioners’ breach of obligations is not with respect to the
perfected contract of sale but in the obligations created by the mortgage contract. The
remedy of rescission is not a principal action retaliatory in character but becomes a
subsidiary one which by law is available only in the absence of any other legal remedy. (Art.
1384, Civil Code).
Foreclosure here is not only a remedy accorded by law but, as earlier stated, is a specific provision
found in the contract between the parties.
In Suria, what was applied rescission under Article 1384 and not rescission or resolution under
Article 1191. In addition, the First Memorandum of Agreement is not a contract to sell shares of stock. It is an
agreement to negotiate with the view of entering into a share purchase agreement. (The Wellex Group. Inc. v.
U-Land Airlines Co. Ltd., G.R. No. 167519, January 14, 2015, Leonen, J)
Non-payment of price/consideration, no suit for nullity of contract.

Villaflor v. Court of Appeals is not applicable either. Non-payment of consideration of contracts only
gave rise to the right to sue for collection, but this non-payment cannot serve as proof of a simulated contract.
The case did not rule that the vendor has no obligation to deliver the thing sold if the buyer fails to fully pay
the price required by the contract. In Villaflor:
Petitioner insists that nonpayment of the consideration in the contracts proves their
simulation. We disagree. Nonpayment, at most, gives him only the right to sue for collection.
Generally, in a contract of sale, payment of the price is a resolutory condition and the remedy
of the seller is to exact fulfillment or, in case of a substantial breach, to rescind the contract
under Article 1191 of the Civil Code. However, failure to pay is not even a breach, but merely
an event which prevents the vendor’s obligation to convey title from acquiring binding force.
(The Wellex Group. Inc. v. U-Land Airlines Co. Ltd., G.R. No. 167519, January 14, 2015, Leonen, J)
No rescission in a contact to sell.
There can be no rescission for an obligation that is non-existent like a contract to sell, considering
that the suspensive condition that will give rise to the obligation has not yet happened. In a contract to sell,
the failure of the buyer to pay renders the contract without effect. A suspensive condition is one whose non-
fulfillment prevents the existence of the obligation. Payment of the purchase price, therefore, constitutes a
suspensive condition in a contract to sell. Thus, this court held that non-remittance of the full price allowed
the seller to withhold the transfer of the thing to be sold. (The Wellex Group. Inc. v. U-Land Airlines Co. Ltd., G.R.
No. 167519, January 14, 2015, Leonen, J)
Petitioner Wellex was not guilty of fraud but of violating Article 1159 of the Civil Code.
No need to allege or prove fraud necessary in case of rescission under Article 1191, NCC.
Determining the existence of fraud is not necessary in an action for rescission or resolution under
Article 1191. The existence of fraud must be established if the rescission prayed for is the rescission under
Article 1381. What is applicable is Article 1159, NCC which provides that obligations arising from contracts
have the force of law between the contracting parties and should be complied with in good faith.
Good faith is an intangible and abstract quality with no technical meaning or statutory definition, and
it encompasses, among other things, an honest belief, the absence of malice and the absence of design to
defraud or to seek an unconscionable advantage. It implies honesty of intention, and freedom from
knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an
honest belief in the validity of one’s right, ignorance of a superior claim and absence of intention to overreach
another. (Ochoa v. Apeta)
The absence of fraud in a transaction does not mean that rescission under Article 1191 is not proper.
This case is not an action to declare the First Memorandum of Agreement null and void due to fraud at the
inception of the contract or dolo causante. This case is not an action for fraud based on Article 1381 of the
Civil Code. Rescission or resolution under Article 1191 is predicated on the failure of one of the parties in a
reciprocal obligation to fulfill the prestation as required by that obligation. It is not based on vitiation of
consent through fraudulent misrepresentations. (The Wellex Group. Inc. v. U-Land Airlines Co. Ltd., G.R. No.
167519, January 14, 2015, Leonen, J)
Sales
When the rule on double sales apply

The requisites of double sale are:
a. The two (or more) sales transactions in issue must pertain to exactly the same
subject matter, and must be valid sales transactions.
b. The two (or more) buyers at odds over the rightful ownership of the subject matter
must each represent conflicting interests; and
c. The two (or more) buyers at odds over rightful ownership of the subject matter
each have bought from the very same seller. (Cheng v. Genato, G.R. No. 129760,
December 29, 1998, Martinez, J)
In fine, there is double sale when the same thing is sold to different vendees by a single vendor. It
only means that Article 1544 has no application in cases where the sales involved were initiated not just by
one vendor but by several vendors. (Manlan v. Beltran, G.R. No. 222530, October 16, 2019, Inting, J)
LEASE
Effect if parties were allowed to stay in a property as caretakers and in turn, paid rent to the owners.
The acceptance of rental payments may be considered as ratification of an unwritten lease agreement
whose period depends upon the frequency of rental payments, thus, there is a civil law lease (Ganzon v. CA,
434 Phil. 626 [2002]).
Article 1643 of the Civil Code provides that “[i]n the lease of things, one of the parties binds himself to give to
another the enjoyment or use of a thing for a price certain, and for a period which may be definite or
indefinite. . . .”
The Civil Code accommodates unwritten lease agreements such as Article 1682 that provides: “The
lease of a piece of rural land, when its duration has not been fixed, is understood to have been for all the time
necessary for the gathering of the fruits which the whole estate leased may yield in one year, or which it may
yield once, although two or more years may have to elapse for the purpose.”
Under the statute of frauds, an unwritten lease agreement for a period of more than one year is
unenforceable unless ratified (Art. 1403, NCC; Automat Realty & Dev. Corp. v. Sps. Dela Cruz, et al., G.R. No.
192026, October 1, 2014, Leonen, J).
Implied new lease.

Article 1687 states that “[i]f the period for the lease has not been fixed, it is understood to be from
year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if
the rent is weekly; and from day to day, if the rent is to be paid daily. . . .” Applying this provision, “the
contract expires at the end of such month [year, week, or day] unless prior thereto, the extension of said term
has been sought by appropriate action and judgment is, eventually, rendered therein granting the relief” (Yap
v. CA, 406 Phil. 281 [2001]; Automat Realty & Dev. Corp. v. Sps. Dela Cruz, et al., G.R. No. 192026, October 1,
2014, Leonen, J).
Implied new lease.

Under Article 1670 of the Civil Code, “[i]f at the end of the contract the lessee should continue
enjoying the thing leased for fifteen days with the acquiescence of the lessor, and unless a notice to the
contrary by either party has previously been given, it is understood that there is an implied new lease, not for
the period of the original contract, but for the time established in Articles 1682 and 1687. The other terms of
the original contract shall be revived.” Thus, when petitioners’ written lease agreement with respondent
expired on June 1, 1987 and they did not vacate the subject properties, the terms of the written lease, other
than that covering the period thereof, were revived. The lease thus continued. In this sense, the prescriptive
periods cited by petitioners - as provided for in articles 1144 and 1145 of the Civil Code – are inapplicable. As
far as the parties are concerned, the lease between them subsisted and prescription did not even begin to set
in (Heirs of Jarque v. Jarque, et al., G.R. No. 196733, November 21, 2018, Jardeleza, J).
Secondly, even when the parties’ lease agreement ended and petitioners failed or refused to vacate
the premises, it may be said that a forced lease was thus created where petitioners were still obligated to pay
rent to respondent as reasonable compensation for the use and occupation of the subject properties. Indeed,
even when there is no lease agreement between the parties, or even when the parties – occupant and
property owner – are strangers as against each other, still the occupant is liable to pay rent to the property
owner by virtue of the forced lease that is created by the former’s use and occupation of the latter’s property.
Lessees “should be made liable for damages in the form of rent or reasonable compensation for the
occupation of the properties not only from the time of the last demand but starting from the time they have
been occupying the subject properties without paying for its rent.” Suffice it to state that, as correctly cited by
respondent, “the amount demandable and recoverable from a defendant in ejectment proceedings regardless
of its denomination as rental or reasonable compensation of the property involved and x x x is merely
incidental thereto” (Heirs of Jarque v. Jarque, et al., G.R. No. 196733, November 21, 2018, Jardeleza, J).
Physical disturbance of possession not a valid ground to suspend payment of rentals.

A contract of lease is a “consensual, bilateral, onerous and commutative contract by which the owner
temporarily grants the use of his property to another who undertakes to pay rents therefor.” (Lim Si v. Lim,
98 Phil. 868, 870 (1956)).
Article 1658 of the Civil Code allows a lessee to postpone the payment of rent if the lessor fails to
either (1) “make the necessary repairs” on the property or (2) “maintain the lessee in peaceful and adequate
enjoyment of the property leased.” This provision implements the obligation imposed on lessors under
Article 1654 (3) of the Civil Code (Madamba v. Araneta, 106 Phil. 103, 106 (1959) Per J. Concepcion; Civil Code,
art. 1654).
The failure to maintain the lessee in the peaceful and adequate enjoyment of the property leased
does not contemplate all acts of disturbance (See Goldestein v. Roces, 34 Phil. 562 (1916) [Per C.J. Arellano,
Second Division]). Lessees may suspend the payment of rent under Article 1658 of the Civil Code only if their
legal possession is disrupted (Chua Tee Dee v. Court of Appeals, 473 Phil. 446, 467 (2004) Per J. Callejo, Sr.;
Goldstein v. Roces 34 Phil. 562 (1916) [Per C.J. Arellano; Racelis v. Sps. Javier, G.R. No. 189609, January 29,
2018, Leonen, J).
Doctrine of Apparent Authority
Effect if an officer of a corporation enters into a contract without authority and the corporation
accepts payment of unauthorized obligation.
A corporation’s repeated payment of an allegedly unauthorized obligation contracted by one (1) of
its officers effectively ratifies that corporate officer’s allegedly unauthorized act.
"The authority of such individuals to bind the corporation is generally derived from law, corporate
by-laws or authorization from the board, either expressly or impliedly by habit, custom or acquiescence in the
general course of business.” (People’s Aircargo and Warehousing Company, Inc. v. Court of Appeals, 357 Phil.
850, 863 [1998])
The authority of the board of directors to delegate its corporate powers may either be: (1) actual; or
(2) apparent.
Actual authority may be express or implied. Express actual authority refers to the corporate powers
expressly delegated by the board of directors. Implied actual authority on the other hand, "can be measured
by his or her prior acts which have been ratified by the corporation or whose benefits have been accepted by
the corporation.” (Terp Construction Corp. v. Banco Filipino Savings and Mortgage Bank, G.R. No. 221771,
September 18, 2019, Leonen, J)
The corporation's subsequent act of twice paying the additional interest Escalona committed to
during the term of the Margarita Bonds is considered a ratification of Escalorpa's acts. Petitioner's only
defense that they were "erroneous since it never obligated itself from the start cannot stand. Corporations are
bound by errors of their own making.
The officer likewise had apparent authority to transact on behalf of petitioner. (Yao Ka Sir Trading v.
Court of Appeals, 285 Phil. 345 (1992) [Per J. Davide, Jr., Third Division])
The rule is of course settled that "[a]lthough an officer or agent acts without, or in
excess of, his actual authority if he acts within the scope of an apparent authority with which
the corporation has clothed him by holding him out or permitting him to appear as having
such authority, the corporation is bound thereby in favor of a person who deals with him in
good faith in reliance on such apparent authority, as where an officer is allowed to exercise
particular authority with respect to the business, or a particular branch of its continuously
and publicly, for a considerable time.” (The Wellex Group. Inc. v. U-Land Airlines Co. Ltd., G.R.
No. 167519, January 14, 2015, Leonen, J; Terp Construction Corp. v. Banco Filipino Savings and
Mortgage Bank, G.R. No. 221771, September 18, 2019, Leonen, J)
How apparent authority ascertained.

Apparent authority may be ascertained in two (2) ways: (1) the general manner by which
the corporation holds out an officer or agent as having power to act or, in other words, the apparent
authority with which it clothe him to act in general, or (2) the acquiescence in his acts of a particular
nature, with actual or constructive knowledge thereof, whether within or without the scope of his
ordinary powers. (Id. citing Fletcher, Cyclopedia of the Law of private Corporations, vol. 2 (Perm. Ed),
1969 Revised Volume, 354; Terp Construction Corp. v. Banco Filipino Savings and Mortgage Bank, G.R.
No. 221771, September 18, 2019, Leonen, J)
AGENCY
Nature of Agency
In general, an agency may be express or implied (Art.1869, NCC). However, an agent must possess a
special power of attorney if he intends to borrow money (Art. 1878 (7), NCC), in his principal’s behalf, to bind
him as a guarantor or surety (Art.1878 (11), NCC), or to create or convey real rights over immovable property
(Art.1878 (12), NCC), including real estate mortgages. While the special power of attorney may be either oral
or written, the authority given must be express (Lim Pin v. Liao Tan, 200 Phil. 685 (1982). In other words,
there must be “a clear mandate from the principal specifically authorizing the performance of the act,” not
merely overt acts from which an agency may be inferred. Consequently, the agent’s “authority must be duly
established by competent and convincing evidence other than the self-serving assertion of the party claiming
that such authority was verbally given. (Patrimonio v. Gutierrez, 735 Phil. 146 [2014]; Phil. International
Trading Corp., v. Threshold Pacific Corp., et al., G.R. No. 209119, October 3, 2018, Leonardo- de Castro, J)
Doctrine of apparent authority and negligence of banks.

Application of the doctrine of apparent authority.
When the action against the bank is premised on. breach of contractual obligations, a bank's liability
as debtor is not merely vicarious but primary, in that the defense of exercise of due diligence in the selection
anci supervision of its employees is not available (Far East Bank and Trust Co. (now Bank of the Philippine
Islands) v. Tentmakers Group, Inc., et al., 690 Phil. 134, 144 (2012)). Liability of banks is also primary and
sole when the loss or damage to its depositors is directly attributable to its acts, finding that the proximate
cause of the loss was due to the bank's negligence or breach (PCIB v. CA).
The bank, in its capacity as principal, may also be adjudged liable under the doctrine of apparent
authority. The principal's liability in this case, however, is solidary with that of his employee (Art. 1910, NCC).
The doctrine of apparent authority or what is sometimes referred to as the "holding out" theory, or
the doctrine of ostensible agency, imposes liability, not "as the result of the reality of a contractual relationship,
but rather because of the actions of a principal or an employer in somehow misleading the public into
believing that the relationship or the authority exists" (Sargasso Construction & Development Corp./Pick &
Shovel, lnc., Atlantic Erectors, Inc., (Joint Venture) v. PPA, 637 Phil. 259, 281-282 (2010)). It is defined as:
[T]he power to affect the legal relations of another person by transactions with
third persons arising from the other's manifestations to such third person such that the
liability of the principal for the acts and contracts of his agent extends to those which are
within the apparent scope of the authority conferred on him, although no actual authority
to do such acts or to make such contracts has been conferred.
The liability of a bank to third persons for acts done by its agents or employees is limited to the
consequences of the latter's acts which it has ratified, or those that resulted in performance of acts within the
scope of actual or apparent authority it has vested (Citystate Savings Bank v. Tobias, et al., G.R. No. 227990,
March 7, 2018, Reyes, Jr., J).
Doctrine of apparent authority; based on estoppel

A corporation exercises its powers and conducts its business through board of directors (Sec. 23,
Corporation Code).
However, the board of directors may validly delegate its functions and powers to its officers or
agents. The authority to bind the corporation is derived from law, its corporate by-laws, or directly from the
board of directors, “either expressly or impliedly by habit, custom or acquiescence in the general course of
business.” (People’s Aircargo and Warehousing Co., Inc. v. Court of Appeals, 357 Phil. 850, 863 (1998).
The general principles of agency govern the relationship between a corporation and its
representatives (University of Mindanao, Inc. v. Bangko Sentral ng Pilipinas, 778 SCRA 458, 500, G.R. No.
194964-65, January 11, 2016 Per J. Leonen). Article 1317 of the Civil Code similarly provides that the principal
must delegate the necessary authority before anyone can act on his or her behalf (Calubad v. Ricarcen
Develpoment Corp., G.R. No. 202364, August 30, 2017, Leonen, J).
Two (2) kinds of authority.

Law and jurisprudence recognize actual authority and apparent authority as the two (2) types of
authorities conferred upon a corporate officer or agent in dealing with third persons (Banate v. Philippine
Countryside Rural Bank (Liloan, Cebu), Inc., 639 Phil 35, 45-46 (2010) Per J. Brion).
Actual authority can either be express or implied. Express actual authority refers to the power
delegated to the agent by the corporation, while an agent’s implied authority can be measured by his or her
prior acts which have been ratified by the corporation or whose benefits have been accepted by the
corporation.
On the other hand, apparent authority is based on the principle of estoppel. The Civil Code provides:
Article 1431. Through estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved as against the
person relying thereon.
....
Article 1869. Agency may be express, or implied from the acts of the principal, from his
silence or lack of action, or his failure to repudiate the agency, knowing that another
person is acting on his behalf without authority.
Agency may be oral, unless the law requires a specific form.
Yao Ka Sin Trading v. Court of Appeals 285 Phil. 345, 367 (1992), instructed that an agent’s apparent
authority from the principal may also be ascertained through:
(1) The general manner by which the corporation holds out an officer or
agent as having power to act or, in other words, the apparent authority
with which it clothes him to act in general, or (2) the acquiescence in his
acts of a particular nature, with actual or constructive knowledge thereof,
whether within or without the scope of his ordinary powers.
The doctrine of apparent authority provides that even if no actual authority has been conferred on an
agent, his or her acts, as long as they are within his or her apparent scope of authority, bind the principal.
However, the principal’s liability is limited to third persons who are reasonably led to believe that the agent
was authorized to act for the principal due to the principal’s conduct (Banate v. Philippine Countryside Rural
Bank (Liloan, Cebu), Inc., 639 Phil. 35, 47 (2010).
Apparent authority is determined by the acts of the principal and not by the acts of the agent. Thus, it
is incumbent upon Calubad to prove how Ricarcen’s acts led him to believe that Marilyn was duly authorized
to represent it (Calubad v. Ricarcen Develpoment Corp., G.R. No. 202364, August 30, 2017, Leonen, J).
MORAL DAMAGES
Corporation may not be awarded moral damages.

A corporation is not a natural person. It is a creation of legal fiction and "has no feelings, no emotions,
no senses" (LBC Express v. CA, 306 Phil. 624 [1994]). A corporation is incapable of fright, anxiety, shock,
humiliation, and physical or mental suffering. "Mental suffering can be experienced only by one having a
nervous system and it flows from real ills, sorrows, and griefs of life" (Tamayo v. Univ. of Negros Occidental,
September 10, 1962). A corporation, not having a nervous system or a human body, does not experience
physical suffering, mental anguish, embarrassment, or wounded feelings. Thus, a corporation cannot be
awarded moral damages.
In Mambulao Lumber v. Philippine National Bank, 130 Phil. 366 [1968], a corporation may have a
good reputation which, if besmirched, may also be a ground for the award of moral damages” (Lambert v.
Heirs of Castillon, 492 Phil. 384 [2005]).
This same statement has appeared in People v. Manero, 291-A Phil. 93 [1993]. Mambulao Lumber and
Manero, however, were not meant to be used as basis to carve an exception to the rule. There is still no
definitive pronouncement by this Court of any existing exceptions to the rule. In ABS-CBN Broadcasting
Corporation v. Court of Appeals, 361 Phil. 499 [1999], it was clarified that the statement in Mambulao Lumber
and Manero was mere obiter dictum.
There is no standing doctrine that corporations are, as a matter of right, entitled to moral damages.
The existing rule is that moral damages are not awarded to a corporation since it is incapable of feelings or
mental anguish. Exceptions, if any, only apply pro hac vice (Noell Whessoe, Inc. v. Independent Testing
Consultants, Inc., et al., G.R. No. 199851, November 7, 2018, Leonen, J).
COMMON CARRIERS
Extraordinary diligence of common carrier, when it begins and when it ends.
Law and economics provide the policy justification of our existing jurisprudence. The extraordinary
diligence required by the law of common carriers is primarily due to the nature of their business, with the
public policy behind it geared toward achieving allocative efficiency between the parties to the transaction.
Allocative efficiency is an economic term that describes an optimal market where customers are
willing to pay for the goods produced. Thus, both consumers and producers benefit and stability is achieved.
The notion of common carriers is synonymous with public service under Commonwealth Act No. 146
or the Public Service Act (De Guzman v. CA, 250 Phil. 613 [1988]). Due to the public nature of their business,
common carriers are compelled to exercise extraordinary diligence since they will be burdened with the
externalities or the cost of the consequences of their contract of carriage if they fail to take the precautions
expected of them.
Here, petitioner is a common carrier obligated to exercise extraordinary diligence (Art. 1733, NCC)
over the goods entrusted to her. Her responsibility began from the time she received the soya beans from
respondent's broker and would only cease after she has delivered them to the consignee or any person with
the right to receive them (Art. 1736, NCC). Hence, the fact that good were abandone means that where were
undelivered making the common carrier liable for damage (Tan v. Great Harvest Enterprises, Inc., G.R. No.
220400, March 20, 2019, Leonen, J).
Furthermore, Article 1734 of the Civil Code holds a common carrier fully responsible for the goods
entrusted to him or her, unless there is enough evidence to show that the loss, destruction, or deterioration of
the goods falls under any of the enumerated exceptions:
ARTICLE 1734. Common carriers are responsible for the loss, destruction, or deterioration of
the goods, unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
Nothing in the records shows that any of these exceptions caused the loss of the soya beans.
Petitioner failed to deliver the soya beans to respondent because her driver absconded with them. She cannot
shift the blame for the loss to respondent's supposed diversion of the soya beans from the loading point to
respondent's warehouse, as the evidence has conclusively shown that she had agreed beforehand to deliver
the cargo to respondent's warehouse if the consignee refused to accept it.
Reliance on De Guzman v. Court of Appeals, 250 Phil. 613 is misplaced. There, the common carrier was
absolved of liability because the goods were stolen by robbers who used "grave or irresistible threat,
violence[,] or force" to hijack the goods. De Guzman viewed the armed hijack as a fortuitous event:
Under Article 1745 (6) above, a common carrier is held responsible — and will not
be allowed to divest or to diminish such responsibility — even for acts of strangers like
thieves or robbers, except where such thieves or robbers in fact acted "with grave or
irresistible threat, violence or force." We believe and so hold that the limits of the duty of
extraordinary diligence in the vigilance over the goods carried are reached where the
goods are lost as a result of a robbery which is attended by "grave or irresistible threat,
violence[,] or force."
In contrast to De Guzman, the loss of the soya beans here was not attended by grave or irresistible
threat, violence, or force. Instead, it was brought about by petitioner's failure to exercise extraordinary
diligence when she neglected vetting her driver or providing security for the cargo and failing to take out
insurance on the shipment's value.
Liability under the NCC is distinct from that of the RPC

In People v. Go, G.R. No. 210816, December 10, 2018, Reyes, A. J, the SC ruled that:
“Shipowner's liability based on the contract of carriage is separate and distinct from
the criminal liability of those who may be found negligent.”
Under Article 1755 of the Civil Code, a common carrier is bound to carry the
passengers safely as far as human care and foresight can provide using the utmost
diligence of very cautious persons with due regard for all the circumstances. Moreover,
under Article 1756 of the Civil Code, in case of death or injuries to passengers, a common
carrier is presumed to have been at fault or to have acted negligently, unless it proves that
it observed extraordinary diligence. In addition, pursuant to Article 1759 of the same Code,
it is liable for the death of or injuries to passengers through the negligence or willful acts of
the former's employees. These provisions evidently refer to a civil action based not on the
act or omission charged as a felony in a criminal case, but to one based on an obligation
arising from other sources, such as law or contract. Thus, the obligation of the common
carrier to indemnify its passenger or his heirs for injury or death arises from the contract
of carriage entered into by the common carrier and the passenger.
On the other hand, "the essence of the quasi offense of criminal negligence under [A]rticle 365 of the
RPC lies in the execution of an imprudent or negligent act that, if intentionally done, would be punishable as a
felony. The law penalizes, thus, the negligent or careless act, not the result thereof. The gravity of the
consequence is only taken into account to determine the penalty; it does not qualify the substance of the
offense.”
Consequently, in criminal cases for reckless imprudence, the negligence or fault should be
established beyond reasonable doubt because it is the basis of the action, whereas in breach of contract, the
action can be prosecuted merely by proving the existence of the contract and the fact that the common carrier
failed to transport his passenger safely to his destination. The first punishes the negligent act, with civil
liability being a mere consequence of a finding of guilt, whereas the second seeks indemnification for
damages. Moreover, the first is governed by the provisions of the RPC, and not by those of the Civil Code.
Thus, it is beyond dispute that a civil action based on the contractual liability of a common carrier is distinct
from an action based on criminal negligence.
In this case, the criminal action instituted against respondent involved exclusively the criminal and
civil liability of the latter arising from hi s criminal negligence as responsible officer of SLI. It must be
emphasized that there is a separate civil action instituted against SLI based on culpa contractual incurred by
it due to its failure to carry safely the passengers of Stars to their place of destination. The civil action against
a shipowner for breach of contract of carriage does not preclude criminal prosecution against its employees
whose negligence resulted in the death of or injuries to passengers.
AGENCY
There may be implied agency.

By the contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. Agency may be express, or
implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency,
knowing that another person is acting on his behalf without authority. Acceptance by the agent may also be
express, or implied from his acts which carry out the agency, or from his silence or inaction according to the
circumstances.
A contract of agency may be inferred from all the dealings between petitioner and respondent-
spouses. The question of whether an agency has been created is ordinarily a question which may be
established in the same way as any other fact, either by direct or circumstantial evidence. The question is
ultimately one of intention (Gonzales-Saldana v. Sps. Niamatali, G.R. No. 226587, November 21, 2018, J. Reyes,
J).
INTEREST
Compensatory interest to be paid if there is failure to comply with obligation.

Compensatory interest shall be paid if there is no compliance with an obligation to pay.
The kinds of interest that may be imposed in a judgment are the monetary interest and the
compensatory interest.
Interest is a compensation fixed by the parties for the use or forbearance of money.
This is referred to as monetary interest. Interest may also be imposed by law or by courts as
penalty or indemnity for damages. This is called compensatory interest. The right to interest
arises only by virtue of a contract or by virtue of damages for delay or failure to pay the
principal loan on which interest is demanded.
Article 1956 of the Civil Code, which refers to monetary interest, specifically
mandates that no interest shall be due unless it has been expressly stipulated in writing. As
can be gleaned from the foregoing provision, 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. 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 (Gonzales-Saldana v. Sps.
Niamatali, G.R. No. 226587, November 21, 2018, J. Reyes, J).
When interest imposed even without express agreement.

There are instances in which an interest may be imposed even in the absence of express stipulation,
verbal or written, regarding payment of interest. Article 2209 of the Civil Code states that if the obligation
consists in the payment of a sum of money, and the debtor incurs delay, a legal interest of 12% per annum
(now 6%) may be imposed as indemnity for damages if no stipulation on the payment of interest was agreed
upon. Likewise, Article 2212 of the Civil Code provides that interest due shall earn legal interest from the time
it is judicially demanded, although the obligation may be silent on this point.
All the same, the interest under these two instances may be imposed only as a penalty or damages for
breach of contractual obligations. It cannot be charged as a compensation for the use or forbearance of
money. In other words, the two instances apply only to compensatory interest and not to monetary interest.
(Siga-an v. Villanueva, 596 Phil. 760 (2009); Gonzales-Saldana v. Sps. Niamatali, G.R. No. 226587, November
21, 2018, J. Reyes, J)
Clearly and contrary to petitioner's assertion, the interest imposed by the CA is not monetary interest
because aside from the fact that there is no use or forbearance of money involved in this case, the subject
interest was not one which was agreed upon by the parties in writing. Further, the appellate court, after
citing Eastern Shipping Lines, Inc. v. Court of Appeals, 304 Phil. 236 (1994), wherein the Court synthesized the
rules on the award of interest, imposed an interest of 6% per annum which finds application in transactions
involving the payment of indemnities in the concept of damages arising from breach or a delay in the
performance of obligations in general. Hence, there can be no other conclusion than that the interest imposed
by the appellate court is in the nature of compensatory interest.
As a form of damages, compensatory interest is due only if the obligor is proven to have failed to
comply with his obligation (Sun Life of Canado (Phils.) Inc. v. Tan Kit, 745 Phil. 482 (2014). The obligation to
return the money is a consequence of her failure to comply with her principal obligation, the breach thereof
entitles respondent-spouses to the payment of interest at the rate of 6% per annum, which, as pronounced
in Eastern Shipping Lines and subsequently reiterated in Nacar v. Gallery Frames, 716 Phil. 267 (2013), is the
rate of interest applicable in transactions involving the payment of indemnities in the concept of damages
arising from the breach or a delay in the performance of obligations in general. The payment of interest
should be reckoned from the date of filing of the Complaint or on March 6, 2006.
LOAN/INTEREST
Two (2) kinds of interest.

Case law states that there are two (2) types of interest, namely, monetary interest and compensatory
interest. Monetary interest is the compensation fixed by the parties for the use or forbearance of money. On
the other hand, compensatory interest is that imposed by law or by the courts as penalty or indemnity for
damages. Accordingly, the right to recover interest arises only either by virtue of a contract (monetary
interest) or as damages for delay or failure to pay the principal loan on which the interest is demanded
(compensatory interest) (Pen v. Santos, G.R. No. 160408, January 11, 2016, 778 SCRA 56).
Anent monetary interest, the parties are free to stipulate their preferred rate. However, courts are
allowed to equitably temper interest rates that are found to be excessive, iniquitous, unconscionable, and/or
exorbitant, such as stipulated interest rates of three percent (3%) per month or higher (Chua v. Timan, 584
Phil. 144 (2008). In such instances, it is well to clarify that only the unconscionable interest rate is nullified
and deemed not written in the contract; whereas the parties' agreement on the payment of interest on the
principal loan obligation subsists (Limso v. PNB, G.R. No. 158633, January 27, 2016). It is as if the parties
failed to specify the interest rate to be imposed on the principal amount, in which case the legal rate of
interest prevailing at the time the agreement was entered into is applied by the Court (Sps. Abella v. Sps.
Abella, 763 Phil. 372 [2015]). This is because, according to jurisprudence, the legal rate of interest is the
presumptive reasonable compensation for borrowed money (Isla, et al. v. Estorga, G.R No. 233774, July 7,
2018, Perlas-Bernabe, J).
Money market placement; a loan.

The money market is a market dealing in standardized short-term credit instruments (involving
large amounts) where lenders and borrowers do not deal directly with each other but through a middle man
or dealer in the open market." It involves "commercial papers" which are instruments "evidencing
indebtedness of any person or entity ... which are issued, endorsed, sold or transferred or in any manner
conveyed to another person or entity, with or without recourse." The fundamental function of the money
market device in its operation is to match and bring together in a most impersonal manner both the "fund
users" and the "fund suppliers." The money market is an "impersonal market", free from personal
considerations. "The market mechanism is intended to provide quick mobility of money and securities."
The impersonal character of the money market device overlooks the individuals or entities
concerned. The issuer of a commercial paper in the money market necessarily knows in advance that it would
be expeditiously transacted and transferred to any investor/lender without need of notice to said issuer. In
practice, no notification is given to the borrower or issuer of commercial paper of the sale or transfer to the
investor (Perez v. CA, et al., 212 Phil. 587 [1984]; Abacus Capital & Investment Corp. v. Tabujara, G.R. No.
197674, July 23, 2018, Tijam, J).
Money market placement; loan.

Stating that a money market placement partakes of the nature of loan, Sesbreno v. CA, 310 Phil. 671
[1995], elucidated:
In money market placement, the investor is a lender who loans his money to a
borrower through a middleman or dealer. Petitioner here loaned his money to a borrower
through Philfinance. When the latter failed to deliver back petitioner's placement with the
corresponding interest earned at the maturity date, the liability incurred by Philfinance
was a civil one. As such, petitioner could have instituted against Philfinance before the
ordinary courts a simple action for recovery of the amount he had invested and he could
have prayed therein for damages. x x x.
Tabujara as the investor is the lender or the "funder" who loaned his P3,000,000.00 to IFSC through
Abacus. Thus, when the loaned amount was not paid together with the contracted interest, Tabajura may
recover from Abacus the amount so invested together with damages (Abacus Capital & Investment Corp. v.
Tabujara, G.R. No. 197674, July 23, 2018, Tijam, J).
MORTGAGE
Mortgage in good faith.

The doctrine of a mortgagee in good faith finds similar basis on the rule that persons dealing with
property covered by Torrens Certificates of Title, either as buyers or as mortgagees, are not required to go
beyond what appears on the face of the title. This doctrine, however, does not apply in this case.
The doctrine of mortgagee in good faith “presupposes that the mortgagor, who is not the rightful
owner of the property, has already succeeded in obtaining Torrens title over the property in his name and
that, after obtaining the said title, he succeeds in mortgaging the property to another who relies on what
appears on the title” (Bank of Commerce v. Sps. San Pablo, Jr., 550 Phil. 805 [2007]; PNB v. Sps. Anay, et al.,
G.R. No. 197831, July 9, 2018, Tijam, J).
FORECLOSURE OF MORTGAGE
10-year to foreclose mortgage.

An action to enforce a right arising from a mortgage should be enforced within ten (10) years
from the time the right of action accrues, i.e., when the mortgagor defaults in the payment of his
obligation to the mortgagee; otherwise, it will be barred by prescription and the mortgagee will lose
his rights under the mortgage (Cndo v. Sps. Olazo, 547 Phil. 630 [2007]). However, mere delinquency in
payment does not necessarily mean delay in the legal concept. To be in default is different from mere delay in
the grammatical sense, because it involves the beginning of a special condition or status which has its own
peculiar effects or results (SSS v. Moonwalk Dev. & Housing Corp., G.R. No. 73345, April 7, 1993).
In order that the debtor may be in default, it is necessary that: (a) the obligation be demandable and
already liquidated; (b) the debtor delays performance; and (c) the creditor requires the performance
judicially or extrajudicially (Cruz v. Gruspe, G.R. No. 191431, March 13, 2013), unless demand is not necessary
- i.e., when there is an express stipulation to that effect; where the law so provides; when the period is the
controlling motive or the principal inducement for the creation of the obligation; and where demand would
be useless. Moreover, it is not sufficient that the law or obligation fixes a date for performance; it must further
state expressly that after the period lapses, default will commence. Thus, it is only when demand to pay is
unnecessary in case of the aforementioned circumstances, or when required, such demand is made
and subsequently refused that the mortgagor can be considered in default and the mortgagee obtains
the right to file an action to collect the debt or foreclose the mortgage (DBP v. Licuanan, 545 Phil. 554
[2007]).
Effect at the time a mortgage over a real property, the owner was already dead.
Under Article 2085 of the Civil Code, a mortgage, to be valid, must have the following requisites,
namely: (a) that it be constituted to secure the fulfillment of a principal obligation; (b) that the mortgagor be
the absolute owner of the thing mortgaged; and (c) that the person constituting the mortgage has free
disposal of the property, and in the absence of the right of free disposal, that the person be legally authorized
for the purpose. (PNB v. Reblando, G.R. No. 177218, October 3, 2011, 658 SCRA 367). If at the time of the
mortgage, the owner is already dead, the contract is void (Tabuada v. Tabuada, et al., G.R. No. 196510,
September 12, 2018, Bersamin, C.J.)
TCT
Certification of title evidence of indefeasible title.

It is a fundamental principle in land registration that the certificate of title serves as evidence of
an indefeasible and incontrovertible title to the property in favor of the person whose name appears
therein. It becomes the best proof of ownership of a parcel of land. Such principle of indefeasibility has
long been well-settled in this jurisdiction and it is only when the acquisition of the title is attended with fraud
or bad faith that the doctrine finds no application.
A document evidencing a sale transaction, such as a deed of sale, which is duly notarized is
considered a public document and therefore enjoys the presumption of validity as to its authenticity and due
execution. Section 23, Rule 132 of the Rules of Court likewise state that public documents are prima facie
evidence of the fact which gave rise to their execution (Lagrosa v. Sps. Azares, et al., G.R. No. 217611, March
27, 2019, Caguioa, J).
ANTICHRESIS
Nature of a contract of antichresis.

By the contract of antichresis the creditor acquires the right to receive the fruits of an immovable of
his debtor, with the obligation to apply them to the payment of the interest, if owing, and thereafter to the
principal of his credit” (Art. 2132, NCC).
Antichresis involves an express agreement between parties such that the creditor will have
possession of the debtor’s real property given as security, and such creditor will apply the fruits of the
property to the interest owed by the debtor, if any, then to the principal amount (Diego v. Fernando, 109 Phil.
143 [1960]; JBL Reyes, J; Cotoner-Zacarias v. Sps. Revilla, G.R. No. 190901, November 12, 2014, Leonen, J).
The term, antichresis, has a Greek origin with “‘anti’ (against) and ‘chresis’ (use) denoting the action
of giving a credit ‘against’ the ‘use’ of a property.”
Requisites and effects of antichresis.

Antichresis requires delivery of the property to the antichretic creditor, but the latter cannot
ordinarily acquire this immovable property in his or her possession by prescription (Trillana v. Manansala, et
al., 96 Phil. 865 [1955]).
Similar to the prohibition against pactum commissorium (Martires v. Chua, G.R. No. 174240, March
20, 2013, 694 SCRA 38; Edralin v. Phil. Veterans Bank, G.R. No. 168523, March 9, 2011) since creditors cannot
“appropriate the things given by way of pledge or mortgage, or dispose of them” (Art. 2088, NCC), an
antichretic creditor also cannot appropriate the real property in his or her favor upon the non-payment of the
debt (Art. 2137, NCC).
Antichresis also requires that the amount of the principal and the interest be in writing for the
contract to be valid (Art. 2134, NCC; Bangis v. Heirs of Adolfo, G.R. No. 190875, June 13, 2012, 672 SCRA 468;
Cotoner-Zacarias v. Sps. Revilla, G.R. No. 190901, November 12, 2014, Leonen, J).
Child’s actual custodian has personality to sue for damages in case of death.
Having exercised substitute parental authority, Abejar suffered actual loss and is, thus, a real party in
interest. Her capacity to file a complaint against petitioner stems from her having exercised substitute
parental authority over Reyes.
Article 216 of the Family Code identifies the persons who exercise substitute parental authority like
the child’s actual custodian, over twenty-one years of age unless unfit or disqualified.
Article 233 of the Family Code provides for the extent of authority of persons exercising substitute
parental authority, shall have the same authority over the person of the child as the parents.
Both of Reyes' parents are already deceased. Reyes' paternal grandparents are also both deceased.
The whereabouts of Reyes' maternal grandparents are unknown. There is also no record that Reyes has
brothers or sisters. It was under these circumstances that respondent took custody of Reyes when she was a
child, assumed the role of Reyes' parents, and thus, exercised substitute parental authority over her. As Reyes'
custodian, respondent exercised the full extent of the statutorily recognized rights and duties of a parent.
Consistent with Article 220of the Family Code, respondent supported Reyes' education and provided for her
personal needs and she treated Reyes as if she were her own daughter (Caravan Travel & Tours, Int’l., Inc. v.
Abejar, G.R. No. 170631, February 10, 2016, Leonen, J).
Two (2) bases for to sue child’s actual custodian’s right to proceed against petitioner, therefore, is
based on two grounds.
First, respondent suffered actual personal loss. With her affinity for Reyes, it stands to reason that
when Reyes died, respondent suffered the same anguish that a natural parent would have felt upon the loss of
one's child. It is for this injury—as authentic and personal as that of a natural parent—that respondent seeks
to be indemnified.
Second, respondent is capacitated to do what Reyes' actual parents would have been capacitated to
do (Caravan Travel & Tours, Int’l., Inc. v. Abejar, G.R. No. 170631, February 10, 2016, Leonen, J).
In Metro Manila Transit Corporation v. Court of Appeals, 359 Phil. 18 [1998]; Tapdasan, Jr. v. People,
440 Phil. 864 [2002]; and Aguilar, Sr. v. Commercial Savings Bank, 412 Phil. 834 [2001], the court allowed
natural parents of victims to recover damages for the death of their children. Inasmuch as persons exercising
substitute parental authority have the full range of competencies of a child's actual parents, nothing prevents
persons exercising substitute parental authority from similarly possessing the right to be indemnified for
their ward's death.
Reyes was already 18 years old when she died. Having reached the age of majority, she was already
emancipated upon her death. While parental authority is terminated upon emancipation, respondent
continued to support and care for Reyes even after she turned eighteen (18). Except for the legal technicality
of Reyes' emancipation, her relationship with respondent remained the same. The anguish and damage
caused to respondent by Reyes' death was no different because of Reyes' emancipation.
Complaint anchored on an employer’s liability for quasi-delict; plaintiff did not present evidence that
the driver was acting within the scope of his authority.
No, since the complaint was anchored on quasi-delict under Art. 2180 in relation to Article 2176, NCC
which provide:
ARTICLE 2176. Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.
.....
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.
The father and, in case of his death or incapacity, the mother, are responsible for the
damages caused by the minor children who live in their company. Guardians are liable for
damages caused by the minors or incapacitated persons who are under their authority and
live in their company.
The owners and managers of an establishment or enterprise are likewise
responsible for damages caused by their employees in the service of the branches in which
the latter are employed or on the occasion of their functions.
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. x x x.
It is not fatal to plaintiff's cause that she herself did not adduce proof that the employee acted within
the scope of his authority. It was sufficient that there is proof that petitioner was the registered owner of the
van.
The resolution of this case must consider two (2) rules. First, Article 2180's specification that
"employers shall be liable for the damages caused by their employees . . . acting within the scope of their
assigned tasks." Second, the operation of the registered-owner rule that registered owners are liable for death
or injuries caused by the operation of their vehicles.
Aguilar, Sr. v. Commercial Savings Bank recognized the seeming conflict between Article 2180 and the
registered-owner rule and applied the latter (412 Phil. 834 [2001]).
These rules appear to be in conflict when it comes to cases in which the employer is also the
registered owner of a vehicle. Article 2180 requires proof of two things: first, an employment relationship
between the driver and the owner; and second, that the driver acted within the scope of his or her assigned
tasks. On the other hand, applying the registered-owner rule only requires the plaintiff to prove that the
defendant-employer is the registered owner of the vehicle.
The registered-owner rule was articulated as early as 1957 in Erezo, et al. v. Jepte, 102 Phil. 103
[1957], where the court explained that the registration of motor vehicles, as required by Section 5(a) of
Republic Act No. 4136, the Land Transportation and Traffic Code, was necessary "not to make said
registration the operative act by which ownership in vehicles is transferred, . . . but to permit the use and
operation of the vehicle upon any public highway." Its "main aim . . . is to identify the owner so that if any
accident happens, or that any damage or injury is caused by the vehicle on the public highways, responsibility
therefor can be fixed on a definite individual, the registered owner” (Erezo, et al. v. Jepte, supra).
Erezo notwithstanding, Castilex Industrial Corporation v. Vasquez, Jr., 378 Phil. 109 [1999], relied on
Article 2180 of the Civil Code even though the employer was also the registered owner of the vehicle. The
registered owner was not made liable because the driver was not acting within the scope of its authority at
the time of the accident (Caravan Travel & Tours Int’t., Inc. v. Abejar, G.R. No. 170631, February 10, 2016,
Leonen, J citing Aguilar v. Commercial Savings Bank, 412 Phil. 834 [2001]).
Plaintiff’s duty to prove employee acting within scope of assigned tasks.

It was incumbent upon the plaintiff to prove that the negligent employee was acting within the scope of
his assigned tasks otherwise the employer is not liable. The court outlined the process necessary for an
employer to be held liable for the acts of its employees and applied the process to the case:
Under the fifth paragraph of Article 2180, whether or not engaged in any business
or industry, an employer is liable for the torts committed by employees within the scope of
his assigned tasks. But it is necessary to establish the employer-employee relationship; once
this is done, the plaintiff must show, to hold the employer liable, that the employee was acting
within the scope of his assigned task when the tort complained of was committed. It is only
then that the employer may find it necessary to interpose the defense of due diligence in the
selection and supervision of the employee.
....
Since there is paucity of evidence that ABAD was acting within the scope of the
functions entrusted to him, petitioner CASTILEX had no duty to show that it exercised the
diligence of a good father of a family in providing ABAD with a service vehicle. Thus, justice
and equity require that petitioner be relieved of vicarious liability for the consequences of
the negligence of ABAD in driving its vehicle (Castilex Industrial Corp. v. Vasquez, 378 Phil.
109 [1999]; Caravan Travel & Tours Int’t., Inc. v. Abejar, G.R. No. 170631, February 10, 2016,
Leonen, J).
Basic purpose of registration of motor vehicle.

The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or
that any damage or injury is caused by the vehicle on the public highways, responsibility therefor can be fixed
on a definite individual, the registered owner....
A victim of recklessness on the public highways is usually without means to discover or identify the
person actually causing the injury or damage. He has no means other than by a recourse to the registration in
the Motor Vehicles Office to determine who is the owner. The protection that the law aims to extend to him
would become illusory were the registered owner given the opportunity to escape liability by disproving his
ownership.
The bank, as the registered owner of the vehicle, is primarily liable for Aguilar, Jr.'s death. The Court
of Appeals erred when it concluded that the bank was not liable simply because (a) petitioner did not prove that
Borja was acting as the bank's vice president at the time of the accident; and (b) Borja had, according to
respondent bank, already bought the car at the time of the mishap. For as long as the respondent bank
remained the registered owner of the car involved in the vehicular accident, it could not escape primary liability
for the death of petitioner's son (Aguilar Sr. v. Commercial Savings Bank, 412 Phil. 834 [2001]; Del Carmen, Jr.
v. Bacoy, 686 Phil. 799 [2012]; Caravan Travel & Tours Int’t., Inc. v. Abejar, G.R. No. 170631, February 10,
2016, Leonen, J).
Rule if there is application of both the registered-owner rule and Article 2180, NCC.
It is imperative to apply the registered-owner rule in a manner that harmonizes it with Articles 2176
and 2180 of the Civil Code. Rules must be construed in a manner that will harmonize them with other rules so
as to form a uniform and consistent system of jurisprudence. In light of this, the words used in Del Carmen are
particularly notable. There, this court stated that Article 2180 "should defer to" the registered-owner rule. It
never stated that Article 2180 should be totally abandoned.
Therefore, the appropriate approach is that in cases where both the registered-owner rule and
Article 2180 apply, the plaintiff must first establish that the employer is the registered owner of the vehicle in
question. Once the plaintiff successfully proves ownership, there arises a disputable presumption that the
requirements of Article 2180 have been proven. As a consequence, the burden of proof shifts to the defendant
to show that no liability under Article 2180 has arisen (Caravan Travel & Tours Int’t., Inc. v. Abejar, G.R. No.
170631, February 10, 2016, Leonen, J citing Filcar Transport Services v. Espinas, 688 Phil. 430 [2012];
Mendoza v. Sps. Gomez, G.R. No. 160110, June 18, 2014, 726 SCRA 505).
Inclusion of driver in the suit not necessary.

The liability imposed on the registered owner is direct and primary. It does not depend on the
inclusion of the negligent driver in the action. Agreeing to petitioner's assertion would render impotent the
rationale of the motor registration law in fixing liability on a definite person.
The driver is not an indispensable party under Rule 3, Section 7 of the 1997 Rules of Civil Procedure.
Rather, he is a necessary party under Rule 3, Section 8. Instead of insisting that driver—who was nothing
more than a necessary party—should not have been dropped as a defendant, or that petitioner, along with the
driver, should have been dropped, petitioner could have opted to file a cross-claim against Bautista as its
remedy.
The 1997 Rules of Civil Procedure spell out the rules on joinder of indispensable and necessary
parties. These are intended to afford "a complete determination of all possible issues, not only between the
parties themselves but also as regards to other persons who may be affected by the judgment."
However, while an exhaustive resolution of disputes is desired in every case, the distinction between
indispensable parties and necessary parties delineates a court's capacity to render effective judgment. As
defined by Rule 3, Section 7, indispensable parties are "[p]arties in interest without whom no final
determination can be had of an action[.]" Thus, their non-inclusion is debilitating: "the presence of
indispensable parties is a condition for the exercise of juridical power and when an indispensable party is not
before the court, the action should be dismissed" (Lucman v. Malawi, 540 Phil. 589 [2006]; Caravan Travel &
Tours Int’t., Inc. v. Abejar, G.R. No. 170631, February 10, 2016, Leonen, J).
Quasi-delict, concept.
Article 2176 defines "quasi-delict" as the fault or negligence that causes damage to another, there
being no pre-existing contractual relations between the parties. On the other hand, Article 2180 enumerates
persons who are vicariously liable for the fault or negligence of persons over whom they exercise control,
whether absolute or limited.
This Court explained the legal fiction of vicarious liability in Cangco v. Manila Railroad Co. 38 Phil. 768
(1918). Though involving Articles 1902 and 1903 of the Spanish Civil Code of 1889, Cangco's explanation of
the law's rationale remains relevant considering that Articles 1902 and 1903, and the present Articles 2176
and 2180 are similarly worded. In Cangco:
With respect to extra-contractual obligation arising from negligence, whether of act
or omission, it is competent for the legislature to elect—and our Legislature has so elected—
to limit such liability to cases in which the person upon whom such an obligation is imposed
is morally culpable or, on the contrary, for reasons of public policy, to extend that liability,
without regard to the lack of moral culpability, so as to include responsibility for the
negligence of those persons whose acts or omissions are imputable, by a legal fiction, to
others who are in a position to exercise an absolute or limited control over them. The
legislature which adopted our Civil Code has elected to limit extra contractual liability—with
certain well-defined exceptions—to cases in which moral culpability can be directly imputed
to the persons to be charged. This moral responsibility may consist in having failed to
exercise due care in one's own acts, or in having failed to exercise due care in the selection
and control of one's agents or servants, or in the control of persons who, by reason of their
status, occupy a position of dependency with respect to the person made liable for their
conduct.
Specifically for employers, they are deemed liable or morally responsible for the fault or negligence
of their employees but only if the employees are 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." (Filamer Christian Institute v.
IAC, 287 Phil. 704 (1992)
Filamer Christian Institute v. Court of Appeals, 268 Phil. 516 (1990), explained when an act is within
the scope of an employee's assigned tasks so as to hold an employer liable under Article 2180. In Filamer,
Daniel Funtecha (Funtecha) was a working scholar of Filamer Christian Institute (Filamer) and had the duty
of sweeping the school passages for two (2) hours every morning before his classes in exchange for free
tuition. On October 20, 1977, at about 6:30 p.m., Funtecha was driving the Pinoy jeep owned by Filamer along
Roxas Avenue in Roxas City when the jeep struck Potenciano Kapunan, Sr. (Kapunan), a pedestrian. Kapunan
sustained injuries and was hospitalized for 20 days.
Kapunan first filed a criminal case for reckless imprudence resulting in serious physical injuries
against Funtecha, reserving the right to file an independent civil action for damages. Funtecha was found
guilty as charged and was sentenced accordingly. As for the civil action for damages, Kapunan sued Funtecha,
Filamer, and the school director and president, Agustin Masa (Agustin).
The Regional Trial Court and the Court of Appeals both found Funtecha and Filamer liable. On appeal,
this Court reversed the lower courts and absolved Filamer for finding no employer-employee relationship
between them. According to this Court, driving the school's Pinoy jeep was outside the scope of Funtecha's
employment as sweeper within the school grounds.
On reconsideration, however, the Court reversed itself and found Filamer solidarily liable with
Funtecha. It found that Funtecha resided with the family of the school president whose son, was the school
guard and driver of the Pinoy jeep that served as school service. After driving the students home, Allan's duty
included going back to the school for his shift then driving home the school jeep so he could use it to fetch the
students the next morning. Under these circumstances, this Court said that Funtecha "was not having a joy
ride [and] not driving for the purpose of his enjoyment or for a 'frolic of his own' but ultimately, for the
service for which the jeep was intended by the ... school."
An employee's act was deemed outside his assigned tasks and his employer was absolved in Castilex
Industrial Corporation v. Vasquez, Jr., 378 Phil. 1009(199). In Castilex, a managerial employee of Castilex
Industrial Corporation (Castilex) was driving a company-issued pick up which collided with the motorcycle
driven by Romeo So Vasquez, who later died as a result of the accident. His parents sued the managerial
employee and Castilex for damages. The trial court and the Court of Appeals held Castilex solidarily liable
with the managerial employee, but on appeal, this Court reversed and absolved Castilex. The Court found that
the managerial employee was not acting within the scope of his assigned tasks when the accident happened.
It was 2:00 a.m., way beyond office hours, and the managerial employee had just got out of a restaurant
dubbed as a "haven for prostitutes, pimps, and drug pushers and addicts." In other words, the activity that the
managerial employee was doing when the accident happened was not for the account of Castilex or in
furtherance of the employee's assigned tasks.
One of the issues in Castilex was determining who had the burden of proving that the act was within
the scope of the employee's assigned tasks. On this issue, this Court said that the burden of proving the
existence of an employer-employee relationship and that the employee was acting within the scope of his or
her assigned tasks rests with the plaintiff under the Latin maxim "ei incumbit probatio qui dicit, non qui
negat" or "he who asserts, not he who denies, must prove." Therefore, it is not incumbent on the employer to
prove that the employee was not acting within the scope of his assigned tasks. Once the plaintiff establishes
the requisite facts, the presumption that the employer was negligent in the selection and supervision of the
employee arises, disputable with evidence that the employer has observed all the diligence of a good father of
a family to prevent damage (Art. 2176, NCC; Cagco v. Manila Railroad Co., 38 Phil. 768 (1918). Though
vicarious, the liability of employers under Article 2180 is personal and direct
Applying the foregoing, this Court finds that respondents have discharged the burden of proof
necessary to hold Imperial vicariously liable under Article 2180 of the Civil Code.
There is no question that Laraga was petitioner's driver, hence, his employee. Laraga was acting
within the scope of his assigned tasks at the time of the accident. Laraga was driving in Antipolo City, where,
as alleged by petitioner, his greenhouse and garden were located. It is worth noting that according to
petitioner, he loaned the van to Pascua for the maintenance of his greenhouse and the repair of the water line
pipes in his garden. The logical Laraga was driving the van in connection with the upkeep of petitioner's
Antipolo greenhouse and garden. Laraga was driving the van in furtherance of the interests of petitioner at
the time of the accident.
The accident happened because Laraga tried to overtake another vehicle and, in doing so, drove to
the opposite lane when the van collided with the approaching tricycle. Laraga was negligent in operating the
van. In Pleyto v. Lomboy, 476 Phil. 373 (2004), it was held:
A driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary
situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety. When a
motor vehicle is approaching or rounding a curve, there is special necessity for keeping to the right side of the
road and the driver does not have the right to drive on the left hand side relying upon having time to turn to
the right if a car approaching from the opposite direction comes into view. (Raul Imperial v. Heirs of Neil
Bayaban. Et al., G.R. No. 197626, October 3, 2008, Leonen, J)
Contributory Negligence; requisites.

It is not correct to impute contributory negligence on the part of the tricycle driver and Octa Viano
when the latter had violated a municipal ordinance that limits the number of passengers for each tricycle for
hire to three persons including the driver. Contributory negligence is conduct on the part of the injured party,
contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is
required to conform for his own protection (Valenzuela v. Court of Appeals, 323 Phil. 374, 388 (1996). To hold
a person as having contributed to his injuries, it must be shown that he performed an act that brought about
his injuries in disregard of warning or signs of an impending danger to health and body (Estacion v. Bernardo,
518 Phil. 388, 401-402 (2006); Anonuevo v. Court of Appeals, 483 Phil. 756, 773 (2004). To prove contributory
negligence, it is still necessary to establish a causal link, although not proximate, between the negligence of
the party and the succeeding injury. In a legal sense, negligence is contributory only when it contributes
proximately to the injury, and not simply a condition for its occurrence (Estacio v. Bernardo; Anonuevo v. CA).
In this case, the causal link between the alleged negligence of the tricycle driver and respondent Renato was
not established. Negligence per se, arising from the mere violation of a traffic statute, need not be sufficient in
itself in establishing liability for damages (Dela Cruz v. Octaviano, et al., G.R. No. 219649, July 26, 2017,
Peralta, J).
Moral Damages
A corporation may not be awarded moral damages.

A corporation is not a natural person. It is a creation of legal fiction and "has no feelings, no emotions,
no senses" (LBC Express v. CA, 306 Phil. 624 [1994]). A corporation is incapable of fright, anxiety, shock,
humiliation, and physical or mental suffering. "Mental suffering can be experienced only by one having a
nervous system and it flows from real ills, sorrows, and griefs of life" (Tamayo v. Univ. of Negros Occidental,
September 10, 1962). A corporation, not having a nervous system or a human body, does not experience
physical suffering, mental anguish, embarrassment, or wounded feelings. Thus, a corporation cannot be
awarded moral damages.
In Mambulao Lumber v. Philippine National Bank, 130 Phil. 366 [1968], a corporation may have a
good reputation which, if besmirched, may also be a ground for the award of moral damages” (Lambert v.
Heirs of Castillon, 492 Phil. 384 [2005]).
This same statement has appeared in People v. Manero, 291-A Phil. 93 [1993]. Mambulao Lumber and
Manero, however, were not meant to be used as basis to carve an exception to the rule. There is still no
definitive pronouncement by this Court of any existing exceptions to the rule. In ABS-CBN Broadcasting
Corporation v. Court of Appeals, 361 Phil. 499 [1999], it was clarified that the statement in Mambulao Lumber
and Manero was mere obiter dictum.
There is no standing doctrine that corporations are, as a matter of right, entitled to moral damages.
The existing rule is that moral damages are not awarded to a corporation since it is incapable of feelings or
mental anguish. Exceptions, if any, only apply pro hac vice (Noell Whessoe, Inc. v. Independent Testing
Consultants, Inc., et al., G.R. No. 199851, November 7, 2018, Leonen).
When moral damages recoverable.

Since breach of contract is not one of the items enumerated under Article 2219, moral damages, as a
general rule, are not recoverable in actions for damages predicated on breach contract (Japan Airline v.
Simangan).
As an exception, such damages are recoverable [in an action for breach of
contract] (1) in cases in which the mishap results in the death of a passenger, as provided
in Article 1764, in relation to Article 2206 (3) of the Civil Code; and (2) in x x x cases in
which the carrier is guilty of fraud or bad faith, as provided in Article 2220 (Sps. Estrada v.
Phil. Rabbit Bus Lines, Inc. et al., G.R. No. 203902, July 19, 2017, Del Castillo, J).
Entitlement to moral and exemplary damages.

Moral damages, x x x, may be awarded to compensate one for manifold injuries such as physical
suffering, mental anguish, serious anxiety, besmirched reputation, wounded feelings and social humiliation.
These damages must be understood to be in the concept of grants, not punitive or corrective in nature,
calculated to compensate the claimant for the injury suffered. Although incapable of exactness and no proof of
pecuniary loss is necessary in order that moral damages may be awarded, the amount of indemnity being left
to the discretion of the court, it is imperative, nevertheless, that (1) injury must have been suffered by the
claimant, and (2) such injury must have sprung from any of the cases expressed in Article 2219 and Article
2220 of the Civil Code, x x x Also known as “punitive” or “vindictive” damages, exemplary or corrective
damages are intended to serve as a deterrent to serious wrongdoings, and as a vindication of undue
sufferings and wanton invasion of the rights of an injured or a punishment for those guilty of outrageous
conduct. These terms are generally, but not always, used interchangeably. In common law, there is preference
in the use of exemplary damages when the award is to account for injury to feelings and for the sense of
indignity and humiliation suffered by a person as a result of an injury that has been maliciously and wantonly
inflicted, the theory being that there should be compensation for the hurt caused by the highly reprehensible
conduct of the defendant – associated with such circumstances as wilfulness, wantonness, malice, gross
negligence or recklessness, oppression, insult or fraud or gross fraud – that intensifies the injury. The terms
punitive or vindictive damages are often used to refer to those species of damages that may be awarded
against a person to punish him for his outrageous conduct. In either case, these damages are intended in good
measure to deter the wrongdoer and others like him from similar conduct in the future (Dela Cruz v.
Octoviano, G.R. No. 219649, July 26, 2017, Peralta).
Moral Damages are not recoverable in this case.

Allegations of bad faith and fraud must be proved by clear and convincing evidence (Sps. Palada v.
Solidbank Corporation, 668 Phil. 172, 174 (2011). They are never presumed considering that they are serious
accusations that can be so conveniently and casually invoked (Cathay Pacific Airways, Ltd. v. Sps. Vazquez).
And unless convincingly substantiated by whoever is alleging them, they amount to mere slogans or
mudslinging.
Bad faith, on the other hand, “does not simply connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of wrong, a breach of a known duty through
some motive or interest or ill will that partakes of the nature of fraud.
Philippine Rabbit did not induce Dionisio to enter into a contract of carried with the former through
insidious machination. Neither is there any indication or even an allegation of deceit or concealment or
omission of material facts by reason of which Dionisio boarded the bus owned by Philippine Rabbit. Likewise,
it was not shown that Philippine Rabbit’s breach of its known duty, which was to transport the passenger,
was attended by some motive, interest, or ill will. Hence, no fraud or bad faith can be attributed to Philippine
Rabbit.
Documentary proof id actual income cannot be dispensed otherwise an award for actual damages for
loss/impairment of earning capacity cannot be made (Sps. Estrada v. Phil. Rabbit Bus Lines, Inc. et al., G.R. No.
203902, July 19, 2017, Del Castillo, J).
Temperate damages.
The passengers lost his right arm, hence, temperate damages in lieu of actual damages for
loss/impairment of earning capacity may be awarded in his favour. Under Article 2224, “[t]emperate or
moderate damages, which are more than nominal but less than compensatory damages, may be recovered
when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be proved with certainty.”
The case of Tan v. OMC Carriers, Inc., enumerates several instances wherein the Court awarded
temperate damages in lieu of actual damages for loss of earning capacity, where earning capacity is plainly
established but no evidence was presented to support the allegation of the injured party’s actual income
(Pleno v. CA; Victory Liner v. Gammad); (Orix Metro Leasing and Finance Corporation v. Mangalinao, 680 Phil.
89 (2012); (People v. Salaherddin, G.R. No.206291, January 18, 2016, 781 SCRA 154; Sps. Estrada v. Phil.
Rabbit Bus Lines, Inc. et al., G.R. No. 203902, July 19, 2017, Del Castillo, J).
Moral Damages
Moral damages in libel cases.

The complainant is entitled to moral damages because the libelous act caused her to suffer ridicule,
sleepless nights, and moral damage. In Tulfo v. People, 587 Phil. 64 (2008), the Court explained that moral
damages can be recovered in cases of libel or slander, viz:
It was the articles of Tulfo that caused injury to Atty. So, and for that Atty. So
deserves the award of moral damages. Justification for the award of moral damages is
found in Art. 2219 (7) of the Civil Code, which states that moral damages may be
recovered in cases of libel, slander, or any other form of defamation. As the cases
involved are criminal cases of libel, they fall squarely within the ambit of Art, 2219 (7).
Moral damages can be awarded even in the absence of actual or compensatory
damages. The fact that no actual or compensatory damage was proven before the trial
court does not adversely affect the offended party’s right to recover moral damages.
For moral damages to be awarded proof of pecuniary loss is unnecessary but the factual basis of
damages and its causal connection to the defendant’s acts must be satisfactorily established (Almendras, Jr. v.
Almendras, 750 Phil. 634, 644-645 [2015]). In short, the complainant’s injury should have been due to the
actions of the offending party (Punungbayan Visitacion v. People, et al., G.R. No. 194214, January 10, 2018,
Martires, J).
Amount to be awarded
In Philippines Journalists, Inc. (People’s Journal) v. Thoenen, citing Guevarra v. Almario, the damages in
a libel case must depend upon the facts of the particular case and the sound discretion of the court,
although appellate courts were “more likely to reduce damages for libel than to increase them.”
Moral damages are not a bonanza. They are given to ease the defendant’s grief and suffering.
Moral damages should be reasonably approximate to the extent of the hurt caused and the gravity of
the wrong done (Yuchengco v. The Manila Chronicle Publishing Corporation, 677 Phil. 422 (2011)).
Mortgaging the property of dead not disrespect to the dead.

A non-owner of a property mortgaged the property of one already dead is not an act in considered as
disrespect to the dead, hence, the lower court committed a mistake in holding the mortgager for moral
damages on disrespect to the dead.
The Civil Code provision under Article 309 on showing “disrespect to the dead” as a ground for the
family of the deceased to recover moral and material damages, being under the title of Funerals, obviously
envisions the commission of the disrespect during the period of mourning over the demise of the deceased or
on the occasion of the funeral of the mortal remains of the deceased. The act of fraudulently representing the
late owner did not amount to disrespect to the dead as basis for the recovery of moral damages (Tabuada, et
al., v. Tabuada, et al., G.R. No. 196510, September 12, 2018, Bersamin, J).
Effect if a non-owner of a property mortgages the same even after the death of the owner, not liable
for moral damages.
The Civil Code provision under Article 309, NCC on showing "disrespect to the dead" as a ground for
the family of the deceased to recover moral and material damages, being under the title of Funerals, obviously
envisions the commission of the disrespect during the period of mourning over the demise of the deceased or
on the occasion of the funeral of the mortal remains of the deceased. The act of fraudulently representing the
late owner did not amount to disrespect to the dead as basis for the recovery of moral damages. (Tabuada v.
Tabuada, et al., G.R. No. 196510, Septmeber 12, 2018, Bersamin C.J.)
Award of moral damages.

Moral damages are compensatory damages for mental pain and suffering or mental anguish resulting
from a wrong. The award of moral damages is not punitive in nature but is instead a type of award designed
to compensate the claimant for actual injury suffered (Guy v. Tulfo, et al., G.R. No. 213023, April 10, 2019). And
although incapable of pecuniary estimation, moral damages must somehow be proportional to and in
approximation of the suffering inflicted. This is so because moral damages are in the category of an award
designed to compensate the claimant for actual injury suffered and not, as stated, just to impose as a penalty
on the wrongdoer (Equitable Leasing Corporation v. Suyom, 437 Phil. 244, 257 (2002); Corro v. Nasayao, G.R.
No. 235361, October 16, 2019, Inting, J).
In this case, complaint alleged that due to fraud, bad faith, and illegal manipulation of petitioner, he
sustained mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, and mental
shock. Yet, other than his bare allegations, respondent failed to present evidence supporting his assertions.
Well-settled is the rule that moral damages cannot be awarded, whether in a civil or criminal case, in the
absence of proof of physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, or similar injury. As in any award, the award of moral
damages must be solidly anchored on a definite showing that respondent actually experienced emotional and
mental sufferings. Mere allegations do not suffice as they must be substantiated by clear and convincing
proof. (Quezon City Government v. Dacara, 499 Phil. 228, 244 (2005); Corro v. Nasayao, et al., G.R. No. 235361,
October 16, 2019, Inting, J)
Nature of exemplary damages and when it may be awarded.

Exemplary or corrective damages are imposed by way of example or correction for the public good,
in addition to moral, temperate, liquidated, or compensatory damages. The award of exemplary damages is
allowed by law as a warning to the public and as a deterrent against the repetition of socially deleterious
actions. The following are the requisites for an award of exemplary damages, to wit:
First, they may be imposed by way of example or correction only in addition, among
others, to compensatory damages, and cannot be recovered as a matter of right, their
determination depending upon the amount of compensatory damages that may be awarded
to the claimant.
Second, the claimant must first establish his right to moral, temperate, liquidated, or
compensatory damages.
And third, the wrongful act must be accompanied by bad faith; and the award would
be allowed only if the guilty party acted in a wanted, fraudulent, reckless, oppressive, or
malevolent manner. (Corro v. Nasayao, et al., G.R. No. 235361, October 16, 2019, Inting, J)
Damages in libel.
As to the award of actual damages, the Court held, No, as Guy failed to prove entitlement to the same.
Actual damages are "compensation for an injury that will put the injured party in the position where
it was before the injury. They pertain to such injuries or losses that are actually sustained and susceptible of
measurement." Actual damages constitute compensation for sustained pecuniary loss. Nevertheless, a party
may only be awarded actual damages when the pecuniary loss he or she had suffered was duly proven. Thus:
Except as provided by law or by stipulation, a party is entitled to adequate compensation
only for such pecuniary loss as is duly proven. Basic is the rule that to recover actual
damages, not only must the amount of loss be capable of proof; it must also be actually
proven with a reasonable degree of certainty, premised upon competent proof or the best
evidence obtainable.
....
Actual damages cannot be presumed and courts, in making an award, must point out specific
facts which could afford a basis for measuring whatever compensatory or actual damages
are borne. An award of actual damages is "dependent upon competent proof of the damages
suffered and the actual amount thereof. The award must be based on the evidence
presented, not on the personal knowledge of the court; and certainly not on flimsy, remote,
speculative and unsubstantial proof." (International Container Terminals, Inc. v. Chua, 730
Phil. 475 (2014)
The award of unrealized profits cannot be based on the sole testimony of the party claiming it. (Metro
Rail Transit Dev. Corp. v. Gammon Phils. Inc., G.R. No. 200401, January 17, 2018, Leonen, J; Guy v. Tulfo, et al., G.R.
No. 213023, April 10, 2019, Leonen, J)
Temperate Damages
Notwithstanding the absence of any evidence on the amount of actual damages suffered, a party may
be awarded temperate damages should the court find that he or she has suffered some pecuniary loss even if
its amount cannot be determined with exact certainty.
Moral Damages
Moral damages are "compensatory damages awarded for mental pain and suffering or mental
anguish resulting from a wrong." They are awarded to the injured party to enable him to obtain means that
will ease the suffering he sustained from respondent's reprehensible act.
"Moral damages are not punitive in nature," but are instead a type of "award designed to compensate
the claimant for actual injury suffered (Equitable Leasing Corp. v. Suyom, 437 Phil. 244, (2002)." As explained
in Mangaliag v. Catubig-Pastoral:
It must be remembered that moral damages, though incapable of pecuniary estimation, are
designed to compensate and alleviate in some way the physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury unjustly caused a person. Moral damages are awarded to
enable the injured party to obtain means, diversions or amusements that will serve to
alleviate the moral suffering he/she has undergone, by reason of the defendant's culpable
action. Its award is aimed at restoration, as much as possible, of the spiritual status quo ante;
thus, it must be proportionate to the suffering inflicted. Since each case must be governed by
its own peculiar circumstances, there is no hard and fast rule in determining the proper
amount. (510 Phil. 637 [2005])
Similarly, in Equitable Leasing Corporation v. Suyom:

Moral damages are not punitive in nature, but are designed to compensate and alleviate in some way
the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury unjustly caused a person. Although incapable of pecuniary
computation, moral damages must nevertheless be somehow proportional to and in approximation of the
suffering inflicted. This is so because moral damages are in the category of an award designed to compensate
the claimant for actual injury suffered, not to impose a penalty on the wrongdoer.
Unlike actual and temperate damages, moral damages may be awarded even if the injured party
failed to prove that he has suffered pecuniary loss. As long as it was established that complainant's injury was
the result of the offending party's action, the complainant may recover moral damages. (Punongbayan-
Visitacion v. People, G.R. No. 194214, January 10, 2018)
Article 2219 of the Civil Code specifically states that moral damages may be recovered in cases of
libel, slander, or defamation. The amount of moral damages that courts may award depends upon the set of
circumstances for each case. There is no fixed standard to determine the amount of moral damages to be
given. Courts are given the discretion to fix the amount to be awarded in favor of the injured party, so long as
there is sufficient basis for awarding such amount.
Here, petitioner insists that he is entitled to moral damages in the amount of P5,000,000.00. He
argues that he suffered social humiliation and anxiety from the libelous article. His 77-year-old mother
castigated him for disgracing their family. His children questioned him after they had been interrogated in
school for the article about their father. Finally, petitioner claims that the article tainted his reputation,
prompting his clients and business associates to refuse to transact with him.
While this Court recognizes the embarrassment and unease suffered by petitioner, it must be
emphasized that moral damages may only be awarded when the claimant has sufficiently proved: (1) the
factual foundation of the award; and (2) the causal connection of petitioner's suffering to respondents' act. In
Kierulf v. Court of Appeals:
This Court cannot remind the bench and the bar often enough that in order that
moral damages may be awarded, there must be pleading and proof of moral suffering,
mental anguish, fright and the like. While no proof of pecuniary loss is necessary in order
that moral damages may be awarded, the amount of indemnity being left to the discretion of
the court, it is nevertheless essential that the claimant should satisfactorily show the
existence of the factual basis of damages and its causal connection to defendant's acts. This is
so because moral damages, though incapable of pecuniary estimation, are in the category of
an award designed to compensate the claimant for actual injury suffered and not to impose a
penalty on the wrongdoer. In Francisco vs. GSIS, the Court held that there must be clear
testimony on the anguish and other forms of mental suffering. Thus, if the plaintiff fails to
take the witness stand and testify as to his/her social humiliation, wounded feelings and
anxiety, moral damages cannot be awarded. In Cocoland Development Corporation vs.
National Labor Relations Commission, the Court held that "additional facts must be pleaded
and proven to warrant the grant of moral damages under the Civil Code, these being, . . .
social humiliation, wounded feelings, grave anxiety, etc., that resulted therefrom." (336 Phil.
414 (1997); See also Mendoza v. Sps. Gomez, 736 Phil. 460 (2004)
Exemplary damages
Under Article 2230 of the Civil Code, exemplary damages may be awarded only when the crime was
committed with one (1) or more aggravating circumstances.
Exemplary damages may be awarded even in the absence of aggravating circumstances. Where the
circumstances of the case show the highly reprehensible or outrageous conduct of the offender (People v.
Jugueta, 738 Phil. 806 (2016).
"Exemplary or corrective damages are imposed by way of example or correction for the public good."
"It is imposed as a punishment for highly reprehensible conduct" and serves as a notice to prevent the public
from "the repetition of socially deleterious actions." "Such damages are required by public policy, for wanton
acts must be suppressed. They are an antidote so that the poison of wickedness may not run through the body
politic." (Octot v. Ybañez, 197 Phil. 76)
Kierulf laid down the requirements that must be satisfied before exemplary damages may be
awarded:
Exemplary damages are designed to permit the courts to mould behavior that has socially
deleterious consequences, and its imposition is required by public policy to suppress the
wanton acts of an offender. However, it cannot be recovered as a matter of right. It is based
entirely on the discretion of the court. Jurisprudence sets certain requirements before
exemplary damages may be awarded, to wit:
(1) they may be imposed by way of example or correction only in addition, among others, to
compensatory damages, and cannot be recovered as a matter of right, their
determination depending upon the amount of compensatory damages that may be
awarded to the claimant;
(2) the claimant must first establish his right to moral, temperate, liquidated or
compensatory damages; and
(3) the wrongful act must be accompanied by bad faith, and the award would be allowed
only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner.
Here, respondents published the libelous article without verifying the truth of the allegations against
petitioner. As the Court of Appeals found, the Revenue Integrity Protection Service only investigates officials
of the Department of Finance and its attached agencies who are accused of corruption. Petitioner, on the
other hand, is no government official and, therefore, beyond the Revenue Integrity Protection Service's
jurisdiction. It only goes to show that respondents did not verify the information on which the article was
based.
Thus, to ensure that such conduct will no longer be repeated, and considering their profession,
respondents are directed to pay petitioner exemplary damages in the amount of P1,000,000.00.
Among the advantages brought by modern technology is the ease by which news can be shared and
disseminated through different social media outlets. News matters are now simultaneously cascaded in real-
time. Society is swamped with a myriad of information involving a wide array of topics. News dissemination
has always been in a constant state of flux. Occurrences across the globe, or the lack thereof, are immediately
subject of the news written by journalists.
More often than not, journalists are at the forefront of information publication and dissemination.
Owing to the nature of their work, they have the prerogative to shape the news as they see fit. This Court does
not turn a blind eye to some of them who twist the news to give an ambiguous interpretation that is in
reckless disregard of the truth.
Crafting inaccurate and misleading news is a blatant violation of the Society of Professional
Journalists Code of Ethics. The Society of Professional Journalists is a journalism organization dedicated
toward stimulating high standards of ethical behavior, promoting the free flow of information vital to a well-
informed citizenry, and inspiring and educating current and future journalists through professional
development. Its Code of Ethics espouses the practice that journalism should be accurate and fair, and
mandates accountability and transparency in the profession (Guy v. Tulfo, et al., G.R. No. 213023, April 10,
2019, Leonen, J).

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Survey of 2018-2019 SC Decisions in

ARTICLE 19, NCC

Violation of Art. 19, NCC; cutting of water service without notice.

Administrative case, a prejudicial question to civil case.

Civil case a prejudicial question to another civil case.

Basic reason for the rule.

Fetus can be considered a dependent.

Importance of marriage and duty of the state to preserve sanctity.

Invocation of nationality principle; not absolute; erroneous; unjust.

Prohibitive view would do more harm than good.

Basic purpose of Art. 26[2], Family Code.

Twin elements for the application of Paragraph 2 of Article 26 as follows:

Foreign divorce; decree must be recognized as a fact; divorce decree a defense.

Proof of the divorce decree.

Starting point of recognition of foreign judgment.

Filipino obtained divorce decree; effect.

Violation of the equal protection clause.

Bad effects if we interpret the law strictly.

Divorce obtained by Filipino can be recognized.

Proof necessary in recognition of the divorce decree.

Sexual infidelity by itself is not sufficient proof of psychological incapacity.

Marrying not out of love; not psychological incapacity.

Psychological incapacity; requisites

Policy of the constitution on marriage.

Histrionic personality disorder constitutes psychological incapacity.

A person cannot unilaterally declare his marriage void.

Declaration of Presumption Death

Donation Propter Nuptias

Donation propter nuptias governed by ordinary rules of donation.

Suit between immediate members of family; requirement.

Residence must be actual; if not, not exempt.

Signature/consent of mother of illegitimate child required for purposes of registration of birth.

Determination of heirship; baptismal certificate, not proof of filiation.

Filiation cannot be collaterally attacked.

Child custody; best interest rule.

Trial necessary to determine best interest of the child.

Temporary custody; when granted.

When duty to give support demandable.

Proof of filiation of illegitimate children.

Joint adoption of illegitimate child.

Law not absolute.

Written consent of adopter’s children; reason.

Effect of death of adopter; remedy.

When rules in Art. 448, NCC applicable.

Action for quieting of title; requisites.

Action to quiet title, a direct attack, not collateral atack.

Action for quieting of title not a collateral attack on TCT.

Being a co-owner, petitioner cannot be ordered to vacate the house.

Partition of properties inter vivos; heir to prove prejudice.

No need for judicial declaration of heirship for a co-owner to inherit.

Joint account is governed by the rule on co-ownership.

Co-owner cannot be evicted.

Requisites for the grant of an easement of right of way.

Easement of right of way

Effect of no participation or actual knowledge of the deed of donation propter nuptias.

Deed of Donation involves four aspects.

Given the different aspects of the donation, how should it be characterized.

Effect if the Donee contests the automatic revocation of the donation.