CIVIL LAW

O M N I B U S N O T E S
AUSL BAR OPERATIONS COMMISSION

2023
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 ARELLANO UNIVERSITY SCHOOL OF LAW

ATTY. DOMINGO M. NAVARRO

Dean, AUSL

ATTY. ERIK LAZO

Assistant Dean, AUSL

CENTER FOR LEGAL EDUCATION AND RESEARCH

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 CIVIL LAW

KENNETH A. DIANO
Commissioner

ALBERT JOHN RANOCO DIANE ROYO

Deputy Commissioner Deputy Commissioner

SUBJECT HEADS

KRISTEL ANNE T. LIWAG PRECIOUS CLAIRE F. FORMAREJO

Preliminary Title, and Persons and Succession
Family Relations

ROWELL MANUEL ROSETE GEE MARIE G. GALANG

Obligations and Contracts Sales

ROMALYN E. SERVANEZ ETHEL JOI MENDOZA

Lease, Partnership, Agency Credit Transactions I and II

MADELEINE LUKBAN NANCY C. DIMALALUAN

Torts and Damages Property

MAUREEN N. RAMOS
Land Titles and Deeds

MEMBERS

SHARMAINE F. CABANTING AILEEN JOYCE B. PACIS

CLAIRE CHELCEE R. CALADIAO BIEN LOUIS M. MANGACU
SHAYRIE WYNNE A. CAMBRONERO ZIA DANICA C. MARCOS
ANA SALERA C. CRUZ TOM F. MENDIGUARIN
SHERISH JOYCE G. CRUZ SHIELA MAY M. NOCEDA
LOREN MARCIANA B. DIWA ANN BERNADETTER MARIE A. OCENAR
CHRISTINE MAE DULAY ISMAEL D. OLIMPAIN
CLARISSE ELAURIA ELLEN JANE L. ORMITA
JOYMICA G. FERRER JOHN ROBERT M. ORTEGA
LOUISE GALE JOYCE B. PAN-OY
ALLAN R. GANAT MA. CRIZENA M. REMO
PATRISHIA NICOLE GUIBONE MARY ANTONETTE C. ROSARIO
PAULINE KAROL G. GUIYAB IRISH ANA A. SALINAS
IBLI BERNADETTE L. INDUCTIVO KAZELWIN SAMIN
SHELINE JASMINE B. LEGASPI SAMIRAH JANINE R. TAMAYO
GLADYS LOJO
 TABLE OF CONTENTS

PERSONS AND FAMILY RELATIONS

I. PERSONS
A. Conflict of Laws
• Uy-Belleza v The Civil Registrar of Tacloban City, G.R. No. 218354.
September 15, 2021 .................................................................1
B. Rules Governing Persons Who are Absent
• Republic vs. Ponce-Pilapil, G.R. No. 219185, November 25, 2020 1

II. MARRIAGE
A. Mixed Marriages and Foreign Divorce
I. Republic of the Philippines vs. Kikuchi, G.R. No. 243646, June 22,
2022 ..........................................................................................2
B. Void Marriages
I. Pulido vs. People of the Philippines, G.R. No. 220149. July 27, 2021
.................................................................................................3
C. Voidable Marriages
I. Carullo-Padua vs. Padua, G.R. No. 208258, April 27, 2022 ............3

PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

I. BUNDLE OF RIGHTS
A. Actions to Recover Ownership and Possession of Property
• Viloria vs. Heirs of Pablo Gaetos, G.R. No. 206240, May 12, 2021 ..4
• Spouses Liu vs. Espinosa, G.R. No. 238513, July 31, 2019 ............4
.................................................................................................
• Gemina vs. Heirs of Espejo, Jr., G.R. No. 232682, September 13, 2021
.................................................................................................5
• People vs. Constantino, G.R. No. 251636, February 14, 2022 ........5
B. Co-Ownership
• Silva vs. Lo, G.R. No. 206667, June 23, 2021 ...............................6
• Reyes vs. Spouses Garcia, G.R. No. 225159, March 21, 2022 ........6
C. Possession
• Spouses Ponce vs. Aldanese, G.R. No. 216587, August 4, 2021 ....7

II. DIFFERENT MODES OF ACQUIRING OWNERSHIP

A. Prescription
• Heirs of Bagaygay vs. Heirs of Paciente, G.R. No. 212126, August 4,
2021 ..........................................................................................8

III. LAND TITLES AND DEEDS

A. Torrens System
• Estate of Rodriguez vs. Republic of the Philippines, G.R. No. 214590,
April 27, 2022 ............................................................................8
B. Regalian Doctrine
• Valdez vs. Heirs of Catabas, G.R. No. 201655, August 24, 2020 ....9
C. An Act Improving the Confirmation Process for Imperfect Land Titles (RA
11573), amending CA 141 and PD 1529
• Republic vs. Herederos De Ciriaco Chunaco Disteleria Incorporada,
G.R. No. 200863, October 4, 2020 ...............................................9
• Valdez vs. Heirs of Antero Catabas, G.R. No. 201655, August 24, 2020
.................................................................................................11
 •
Republic vs. Philippine National Police, G.R. No. 198277, February 8,
2021 ..........................................................................................11
• Republic vs. Herederos de Ciriaco Chunaco Disteleria Incorporada,
G.R. No. 200863, October 4, 2020 ...............................................12
• Republic v. Caraig, G.R. No. 197389, October 12, 2020 ................13
D. Reconstitution of Title
• Republic vs. Abellanosa, G.R. No. 205817, October 6, 2020 .................13
• Heirs of Latoja vs. Heirs of Latoja, G.R. No. 195500, March 17, 2021 ...14
• Garcia vs. Esclito, G.R. No. 207210, March 21, 2022 ............................15
• Gaoiran vs. Court of Appeals, G.R. No. 215925, March 21, 2022 ..........15
• Republic vs. Heirs of Booc, G.R. No. 207159, February 28, 2022 ..........16

IV. WILLS AND SUCCESSION

A. Testamentary Succession
• Tanchanco vs. Santos, G.R. No. 204793, June 08, 2020 ................17

OBLIGATIONS AND CONTRACTS

I. OBLIGATIONS
A. Different Kinds of Obligations
• Philippine National Bank vs. Bal, Jr., G.R. No. 207856, November 18, 2020
........................................................................................................
........................................................................................................17
• Atienza vs. Golden Ram Engineering Corp., G.R. No. 203405, June 28,
2021.................................................................................................
........................................................................................................18
B. Extinguishment of Obligations
• Valdes vs. La Colina Development Corp, G.R. 208140, July 12, 2021 ....18
• Banco de Oro Unibank, Inc. vs. Edgardo C. Ypil, Sr., G.R. No. 212024,
October 12, 2020 ..............................................................................19
• Asian Construction and Development Corporation vs. Mero Structures, Inc.,
G.R. No. 221147, September 29, 2021................................................19
• Bureau of Internal Revenue v. TICO Insurance Co., Inc, G.R. No. 204226,
April 18, 2022 ...................................................................................20

II. CONTRACT
A. Basic Principles of Contracts
• Bacala vs. Heirs of Spouses Rom, G.R. No. 200608, February 19, 2021 20
B. Essential Requisites of a Contract
• Heirs of Godines v. Demaymay, G.R. No. 230573, June 28, 2021 .........20
C. Defective Contracts
• Cardinez vs. Spouses Cardinez, G.R. No. 213001, August 4, 2021 ........21
• Spouses De Vera vs. Catungal, GR No. 211687, February 10, 2021 ......21
• Spouses Genotiva vs. Equitable PCI Bank, G.R. No. 213796, June 28, 2021
........................................................................................................21
• City of Tanauan vs. Millonte, G.R. No. 219292, June 28, 2021 ..............22
• Pryce Properties Corp. v. Nolasco, Jr., G.R. No. 203990, August 24, 2020
........................................................................................................22

SPECIAL CONTRACTS
I. SALE
A. Definition and Essential Requisites
• Purisima vs. Purisima, G.R. No. 200484, November 18, 2020 ........23
 •
Willy vs. Julian, G.R. No. 207051, December 1, 2021 ....................23
•
Cristina Seming vs. Emelita Alamag, et al.,G.R. No. 202284, March 17,
2021 ..........................................................................................23
• Bacala vs. Heirs of Poliño, G.R. No. 200608, February 10, 2021 .....24
B. Contract of Sale
• Valdes vs. La Colina Development Corp, G.R. 208140, July 12, 2021
.................................................................................................24
• Heirs of Gonzales vs. Spouses Dominador, G.R. No. 206847, June 15,
2022 ..........................................................................................25
C. Risk of Loss
• Ende v. Roman Catholic Prelate of the Prelature Nullius of Cotabato,
Inc.,G.R. No. 191867, December 6, 2021 .....................................26
D. Extinguishment of the Sale
• Arakor Construction and Development Corp. v. Teresita Sta. Maria, et
al. G.R. No. 215006, January 11, 2021 .........................................26
E. Equitable Mortgage
• Dacquel vs Spouses Sotelo, G.R. No. 203946, August 4, 2021 .......26
F. Pacto de Retro Sales
• Cabilao vs. Tampan, G.R. No. 209702, March 23, 2022 .................27

II. AGENCY
• Lopez vs. Saludo, Jr., G.R. No. 233775, September 15, 2021 .......27
• Daniel vs. Magkaisa, G.R. No. 203815, December 7, 2020 ...........28

III. CREDIT TRANSACTIONS

A. Loans
• Development Bank of the Philippines vs. Heirs of Julieta Danico, G.R.
No. 196476, September 28, 2020 ...............................................28
• Rex Rico vs. Union Bank of the Philippines, G.R. No. 210928, February
14, 2022 ....................................................................................29
• Asset Pool A (SPV-AMC), Inc. v. Spouses Berris, G.R. No. 203194,
April 26, 2021 ............................................................................30
B. Deposit
• Allied Banking Corp. v. Spouses Macam, G.R. No. 200635, February 1,
2021 ..........................................................................................30
C. Guaranty and Suretyship
• Spouses Genotiva vs. Equitable PCI Bank, G.R. No. 213796, June 28,
2021 ..........................................................................................30
D. Mortgage
• Panacan Lumber Co. vs. Solidbank Corp., G.R. No. 226272,
September 16, 2020 ...................................................................31
• Ganancial vs. Cabugao, G.R. No. 203348, June 6, 2020 ................32
• Spouses Torrecampo v. Wealth Development Bank Corp., G.R. No.
221845, March 21, 2022 .............................................................32
• Goldwell Properties Tagaytay, Inc. vs. Metropolitan Bank and Trust
Co., G.R. No. 209837, May 12, 2021 ............................................32

IV. COMPROMISE
• Aromin vs. Heirs of Spouses Somis, G.R. No. 204447, May 3, 2021
.................................................................................................33
• Jacinto v. Litonjua , G.R. No. 207675, January 20, 2021 ...............34
• Domilos v. Spouses Pastor, G.R. No. 207887, March 14, 2022 .......34
V. QUASI-CONTACTS
A. Solutio Indebiti
 • Municipality of Corella vs. Philkonstrak Development Corporation, G.R.
No. 218663, February 28, 2022 ...................................................34

VI. TORTS AND DAMAGES

A. Vicarious Liability
• Maitim vs. Garcia, G.R. No. 218344, March 21, 2022 ....................35
• Bank of the Philippine Islands vs. Central Bank of the Philippines (now
Bangko Sentral ng Pilipinas), G.R. No. 197593, October 12, 2020 ..35
B. Damages
• Land Bank of the Philippines vs. Del Moral, Inc., G.R. No. 187307,
October 14, 2020 .......................................................................36
• Rex Rico vs. Union Bank of the Philippines, G.R. No. 210928, February
14, 2022 ....................................................................................36
• KLM Royal Dutch Airlines vs. Dr. Tiongco, G.R. No. 212136, October 4,
2021 ..........................................................................................37
1. Samantha filed a Petition for Correction of
Entry in the Civil Registry before the RTC
seeking for the correction of the entry in her
birth certificate stating that the nationality of
her mother is "Chinese" instead of "Filipino".
The RTC gave due course to the petition and
ordered its publication in a newspaper of
general circulation for three consecutive weeks
and to furnish the OSG a copy of the petition.
After the publication, Samantha submitted her
documentary evidence and took the stand to
attest to the Filipino citizenship of her mother.
The latter herself testified that she is an
illegitimate daughter of Cris Tiu, a Chinese
national and Maria Clara, a Filipino citizen and
that her failure to present her birth certificate
was because she was born in 1942 during
World War II and thus could not have
registered her birth. Does the requirement of
electing Filipino citizenship when a child
reached the age of majority under Article IV,
Section 1 of the 1935 Constitution, the
governing law when such child was born and
Section 1 of Commonwealth Act No. 625, apply
only to legitimate children?
Yes. This would not apply in the case of an
illegitimate child, who is born out of wedlock of
a Filipino and foreign parents. As such, such
child is not required to comply with said
constitutional and statutory requirements to
become a Filipino citizen. By being an
illegitimate child of a Filipino such child
automatically became a Filipino upon birth.
Stated differently, such child is a Filipino since
birth without having to elect Filipino citizenship
when she reached the age of majority. (Uy-
Belleza vs. The Civil Registrar of Tacloban City,
G.R. No. 218354. September 15, 2021, J.
Hernando)
2. Adeline filed a Petition for Correction of Entry
in the Civil Registry before the RTC seeking for
the correction of the entry in her birth
certificate stating that the nationality of her
mother is "Chinese" instead of "Filipino". The
RTC granted the petition. Dissatisfied, the
Office of the Solicitor General (OSG) filed a
Motion for Reconsideration contending that the
totality of the evidence presented by the
petitioner did not prove that her mother is a
Filipino citizen. Accordingly, other than the bare
allegation of Adelaida that she was the
illegitimate daughter of a Chinese father and a
Filipino mother, there was no other evidence
presented to prove this claim. In dismissing the
Motion for Reconsideration, the trial court gave
weight to the Philippine passport and voter’s
certification issued to Adelaida to prove her
citizenship. The RTC likewise noted that
passports are not indiscriminately issued by the
Department of Foreign Affairs without proof of
Filipino citizenship. On appeal, the OSG
contended, among others, that a Philippine
passport is insufficient to prove Adelaida’s
citizenship considering that she did not submit
a birth certificate when she submitted her
application but merely executed an affidavit.
Neither can a voter’s certification prove Filipino
citizenship since an exercise by a person of the
rights and/or privileges granted to Filipino
citizens is not conclusive proof of Filipino
citizenship. The Court of Appeals reversed the
decision of the RTC. In ruling that the appellee
had satisfactorily proven her mother Adelaida’s
citizenship as a Filipino, the trial court gave
much weight to the fact that she was issued a
Philippine passport. Adeline, unhappy with the
reversal, brought the case before the SC. Is the
government's issuance of a Philippine passport
to person a recognition of her Filipino
citizenship?
Yes. A passport is "a document Issued by the
Philippine government to its citizens requesting
other governments to allow its citizens to pass
safely and freely, and in case of need, to give
him/her all lawful aid and protection." It is an
official document of identity of Philippine
citizenship of the holder issued for travel
purposes. A passport proves that the country
which issued it recognizes the person named
therein as its national. In fact, the very first
page of a Philippine passport explicitly
recognizes the bearer as its citizen. (Uy-Belleza
vs. The Civil Registrar of Tacloban City, G.R. No.
218354. September 15, 2021, J. Hernando)
3. AA, the present spouse, sought for the
declaration of presumptive death of his
husband who had been absent for more than
six (6) years in order to remarry. To inquire of
his whereabouts, letters were sent to the
known friends and relatives of his husband, but
1
all yielded negative results. AA claims that her
absent spouse had a cyst in his right jaw and
with his absence, AA believes that his absent
spouse was already dead. Was AA able to
establish that his absent spouse is already dead
based on a well-founded belief and in turn will
her petition prosper?
No. Jurisprudence sets out four requisites for a
grant of a petition for declaration of
presumptive death under Article 41 of the
Family Code: first, the absent spouse has been
missing for four consecutive years, or two
consecutive years if the disappearance
occurred where there is danger of death under
the circumstances laid down in Article 391 of
the Civil Code; second, the present spouse
wishes to remarry; third, the present spouse
has a well-founded belief that the absentee is
dead; and fourth, the present spouse files for a
summary proceeding for the declaration of
presumptive death of the absentee. The third
requirement of a "well-founded belief" proves
most difficult to establish in seeking to declare
an absent spouse presumptively dead. In this
case, AA’s efforts to search for her absent
spouse only consisted of inquiries which were
not even done personally but by mere letter-
correspondence. It has been held that the
“well-founded belief” requirement under Art. 41
of the Family Code requires that the absence of
the spouse was the result of diligent and
reasonable efforts to locate the absent spouse.
The premise of Art. 41 of the Family Code
places upon the present spouse the burden of
complying with the stringent requirement of
well-founded belief which can only be
discharged upon a showing of proper and
honest-to-goodness inquiries and efforts. The
fact that the absent spouse is merely missing
will never yield a judicial presumption of the
absent spouse’s death. (Republic vs. Ponce-
Pilapil, G.R. No. 219185, November 25, 2020, J.
Hernando)
4. Jorella filed before the trial court a petition
for judicial recognition of foreign divorce. She
alleged that she was married to Daniel in 1993,
and in 2007, they jointly filed for divorce before
the City Hall of Sakado City, Saitama Prefecture.
As the divorce was accepted, Jorella sought the
recognition thereof here in the Philippines.
During the presentation of evidence, the
following documents, among others, were
presented: (1) the Acceptance Certificate
issued by the Mayor of Sakado City, Japan; (2)
an Authentication from the Vice Consul of
Philippine Embassy in Tokyo; and (3) a
photocopy of the Civil Code of Japan in English
Text. However, the translation of the Civil Code
of Japan was not an official translation. The
Republic opposed the petition arguing that
Jorella failed to comply with the requirements
of authentication and proof of documents
concerning the said documents, and that
foreign law had not been proven.
A. Can a foreign divorce decree be recognized
in the Philippines?
B. Can a foreign law on divorce be proved by a
photocopy of the English Translation of such
law?
A. Yes. Under Article 26 of the Family Code, a
divorce between a foreigner and a Filipino may
be recognized in the Philippines as long as it
was validly obtained according to the foreign
spouse’s national law. However, before a
foreign divorce decree can be recognized by the
court, the party pleading it must first prove the
fact of divorce and its conformity to the foreign
law allowing it.
B. No. The court ruled that the Acceptance
Certificate, accompanied by an Authentication
from the Philippine Embassy in Tokyo, suffices
as proof of the fact of divorce. However, a
photocopy of the English translation of the Civil
Code of Japan is devoid of any probative value.
In Nullada v. Civil Registrar of Manila and
Arreza v. Toyo, the Court held that the
submission of the same document does not
constitute sufficient compliance with the rules
on proof of Japan’s law on divorce and that the
translations by the publisher of that document
are not advertised as a source of official
translations of Japanese laws. Not being an
official translation, the document submitted
does not prove the existing law on divorce in
Japan. Without such, there is nothing in the
record to establish that the divorce was validly
obtained and is consistent with the Japanese
law on divorce. (Republic of the Philippines vs.
Kikuchi, G.R. No. 243646, June 22, 2022, J.
Hernando)
2
5. On September 5, 1983, Popoy married his
teacher named Basha in a civil ceremony at the
Municipal Hall of Rosario, Cavite solemnized by
then Mayor Dela Cruz. The couple lived
together until 2007 when Popoy stopped going
home to their conjugal dwelling. When
confronted by Basha, Popoy admitted his affair
with Kristine. Basha likewise learned that Popoy
and Kristine entered into marriage on July 31,
1995. Hurt by the betrayal, Basha charged
Popoy and Kristine with Bigamy. The RTC
convicted Popoy and Kristine. The CA affirmed
and found that all the elements of bigamy were
present since Popoy entered into a second
marriage with Kristine while his prior marriage
with Basha was subsisting, and without first
having obtained a judicial declaration of the
nullity of the prior marriage with Basha. In his
defense, Popoy contends that a judicial
declaration of Nullity of Marriage is unnecessary
to establish the invalidity of a void ab initio
marriage in a bigamy case. Is the defense of
Popoy tenable?
Yes. In a criminal prosecution for bigamy, the
parties may still raise the defense of a void ab
initio marriage even without obtaining a judicial
declaration of absolute nullity if the first
marriage was celebrated before the effectivity
of the Family Code. Such is still governed by the
rulings in Mendoza, Aragon and Odayat which
are more in line with the rule that procedural
rules are only given retroactive effect insofar as
they do not prejudice or impair vested or
acquired rights. Here, Popoy's marriage with
Basha was celebrated when the Civil Code was
in effect while his subsequent marriage with
Kristine was contracted during the effectivity of
the Family Code. Hence, Popoy is required to
obtain a judicial decree of absolute nullity or his
prior void ab initio marriage but only for
purposes of remarriage. As regards the bigamy
case, however, Popoy may raise the defense of
a void ab initio marriage even without obtaining
a judicial declaration of absolute nullity. (Pulido
vs. People of the Philippines, G.R. No. 220149.
July 27, 2021, J. Hernando)
6. Marina and Juancho got married in 1982. In
1997, Maria filed a petition for declaration of
absolute nullity of their marriage. Marina
alleged that at the time of the celebration of
their marriage, Juancho was psychologically
incapacitated to perform his marital obligations.
During their cohabitation, Juancho exhibited
excessive sexual desire and forced her to
perform oral and anal sex with him; that there
were occasions when Joselito attempted to
sexually molest her sister, nieces and their
household help who were staying with them;
that Joselito admitted to said attempts of
molestations but begged her to keep said
incidents a secret; among others. During trial,
Marina presented herself and Dr. Santos, a
psychiatrist, as witnesses. Dr. Santos testified
that she diagnosed Juancho with a personality
disorder of a sexual deviant or perversion based
on Marina's narrations. Dr. Santos added that
the psychological disorder of Joselito is grave,
serious and not clinically curable which
rendered him psychologically incapacitated to
perform his marital obligations. Is the totality of
evidence presented by Marina sufficient to
prove that Juancho is psychologically
incapacitated to perform his essential marital
obligations, meriting the dissolution marriage?
No. With the recent promulgation of Tan-Andal
vs. Andal (Tan-Andal), the Court has modified
the Molina guidelines to prevent its stringent
application in previous nullity cases which is
antithetical to the way the concept of
psychological incapacity was created. The Tan-
Andal guidelines for determining what
constitutes psychological incapacity are the
following: (1) The psychological incapacity
must be shown to have been existing at the
time of the celebration of marriage; (2) Caused
by a durable aspect of one's personality
structure, one that was formed prior to their
marriage; (3) Caused by a genuinely serious
psychic cause; and; (4) Proven by clear and
convincing evidence. Psychological incapacity is
neither a mental incapacity nor a personality
disorder that must be proven through expert
opinion. There must be proof, however, of the
durable or enduring aspects of a person's
personality, called "personality structure,"
which manifests itself through dear acts of
dysfunctionality that undermines the family.
What is important is that the totality of evidence
is sufficient to support a finding of psychological
incapacity. In this case, the personality
evaluation report prepared by Dr. Santos
carried a finding that Juancho suffers from a
3
sexual deviant personality disorder or
perversion was based solely on Marina's
narrations. The totality of evidence presented
by Marina and found that the same was
miserably wanting to sustain the conclusion
that Juancho was psychologically incapacitated
to perform the basic obligations of marriage.
(Carullo-Padua vs. Padua, G.R. No. 208258,
April 27, 2022, J. Hernando)
7. A filed a complaint before the trial court for
Quieting of Title with Damages against B. He
alleges having inherited the subject property
from their predecessor-in-interest who had
openly, publicly, continuously and peacefully
possessed the same without interruption for
more than 30 years in the concept of an owner.
His claim is supported by documentary
evidence, like mortgages and their cancellation,
and tax declarations. B, on the other hand,
claimed denied the allegations and insisted that
A was not the owner of the subject property but
B’s family.
A. Will A’s action for Quieting of Title prosper?
B. Are tax declarations and receipts conclusive
evidence of ownership?
A. No, the case for quieting of title will not
prosper for failure to establish legal or equitable
title or interest. Under Art. 476 and 477 of the
Civil Code 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. Legal title denotes registered
ownership, while equitable title means
beneficial ownership. In this case, the absence
of such legal or equitable title, or interest, there
is no cloud to be prevented or removed. Mere
allegation of open, continuous, and exclusive
possession of the property in dispute without
substantiation does not meet the requirements
of the law.
B. No, tax declarations and receipts are not
conclusive evidence of ownership or of the right
to possess land when not supported by other
evidence. Mere allegation of open, continuous,
and exclusive possession of the property in
dispute without substantiation does not meet
the requirements of the law. (Viloria vs. Heirs
of Pablo Gaetos, G.R. No. 206240, May 12,
2021, J. Hernando)
8. A, married to B, owns a parcel of land
covered by a TCT. They acquired said land from
C who merely tolerated the occupation of the
property by D and E who currently occupies the
land. After title was transferred to Spouses A
and B, they likewise tolerated the presence of
D&E upon the understanding that they will
peacefully vacate the land once their need to
use the same arises. However, when Spouses
A&B already requested D&E to vacate the
property, they refused to do so. The last
demand was made on February 12, 2013. On
August 6, 2013, Spouses A&B filed a complaint
for Unlawful Detainer against D and E. Will the
suit prosper?
Yes, the suit will prosper. An action for unlawful
detainer will stand if the following requisites are
present: (1) initially, the possession of property
by the defendant was by contract with or by
tolerance of the plaintiff; (2) eventually, such
possession became illegal upon notice by
plaintiff to defendant of the termination of the
latter's right of possession; (3) thereafter, the
defendant remained in possession of the
property and deprived the plaintiff of the
enjoyment thereof; and (4)within one year
from the last demand on defendant to vacate
the property, the plaintiff instituted the
complaint for ejectment. In this case, it is clear
that Spouses A and B are the registered owners
of the property, as evidenced by the TCT and
that the D and E's occupation of the said
property was merely tolerated initially by C and
likewise by Spouses A&B (after the title was
transferred to them) based on the
understanding that D&E will peacefully vacate
the same once Spouses A&B’s need to use the
land arises. The occupation then became illegal
when D&E refused to follow petitioners'
demands to vacate the subject property, the
last of which was dated February 12, 2013. The
complaint for unlawful detainer, filed on August
6, 2013, was made within one year from the
4
time the last formal demand to vacate was
made. All the requisites needed for an action
for unlawful detainer to stand are present
hence the suit will prosper. (Spouses Liu vs.
Espinosa, G.R. No. 238513, July 31, 2019, J.
Hernando)
9. A claims that he purchased, owned, occupied
with his family, and possessed the subject
property openly, continuously, peacefully, and
in the concept of an owner since 1978. On the
other hand, B is also claiming that they are co-
owner of the subject property which is covered
by a TCT and Tax Declaration. The identity of
the subject property was ascertained by the
trial court and the appellate court based on the
technical description stated in TCT 93809 and
the Judicial Affidavit of C which merely
identified TCT 93809 as one registered in the
names of D and E. Is the identity of the land
properly proven?
No, Article 434 of the Civil Code which
controlling in this case, provides that " in an
action to recover, the property must be
identified, and the plaintiff must rely on the
strength of his title and not on the weakness of
the defendant's claim." It is hornbook doctrine
that the entitlement to the possession of real
property belongs to its registered owner.
However, the registered owner must seek
proper judicial remedy and comply with the
requisites of the chosen action in order to
recover possession of a real property from the
occupant who has actual and physical
possession thereof. Furthermore, it must be
emphasized that the plaintiff must not bank on
the weakness of the defendant's title, hence,
must establish his title and the identity of the
property because of the possibility that neither
the plaintiff nor the defendant is entitled or
even more the true owner of the property in
dispute. The technical description that provides
for the metes and bounds of a parcel of land
cannot stand alone, much more be considered
as a foolproof evidence exactly pointing to the
subject property. The identity of the disputed
land sought to be recovered or of the subject
property in this case may be established
through a survey plan of the said property.
Absent such evidence or any other proof to
such effect, the Court cannot subscribe hook,
line and sinker to the conclusion that the
subject property had been sufficiently
identified. (Gemina vs. Heirs of Espejo, Jr., G.R.
No. 232682, September 13, 2021, J. Hernando)
10. A & B were charged before the MTCC with
violation of PD 1067 (Water Code of the
Philippines) due to unauthorized occupancy of
the foreshore area without the necessary
permit. In January 2009, A&B occupied the
foreshore area of Barangay San Pedro, Panabo
City and constructed sheds, cottages, and other
structures, and operated sari-sari stores
without lease application having been approved
by DENR, or the necessary business permit
issued by Panabo City. Panabo City sent
individual notices to A&B to vacate the subject
foreshore area which they ignored. A&B
claimed that they filed a foreshore lease
application with the CENRO-DENR for the
establishment of a beach resort. They insisted
that they did not know that they needed to
secure a permit to set up stores and conduct
business activities in the subject area. However,
they contended that their occupation and
economic activities are lawful pending their
foreshore lease application. They also claimed
that the MTCC, Panabo City authorized their
continued possession of the subject area as per
the injunctive relief issued on November 8,
2009, and the December 4, 2009, Decision in
an action for forcible entry filed by A&B which
ultimately restored them to their possession of
the subject foreshore area. Is the restoration
of A&B’s possession of the subject foreshore
area in a forcible entry case filed before the
MTCC a valid defense to their unauthorized
occupancy of the foreshore land without the
necessary permit?
No, the restoration of A&B’s possession in a
forcible entry case filed before MTCC is not a
valid defense. A&B admitted that they occupied
and constructed various structures on the
foreshore land without the necessary permit,
and during the pendency of their foreshore
lease application with the DENR. Intent is
immaterial. Hence despite the restoration of
their possession in a forcible entry case, the
offense is already committed which warrants
the application and implementation of PD 1067.
5
(People vs. Constantino, G.R. No. 251636,
February 14, 2022, J. Hernando)
11. X died intestate leaving behind a sizeable
estate to his spouse, A and children. An
Extrajudicial Settlement of Estate was executed
which provided that all properties of the
decedent shall be owned in common, pro
indiviso by his heirs. B, one of the heirs filed an
action for partition before the RTC. The
defendant heirs asserted A’s usufructuary rights
over the estate’s real properties and alleged
that use of properties should be physically
divided. Through negotiation, the heirs agreed
on the manner of division of each property-via
raffle. The RTC issued an Order of Partition but
some properties of the estate remained
undivided and not distributed to them but were
distributed to parties who are neither heirs nor
successors-in-interest of the decedent. Some
of the estate's agricultural lands were covered
by CARL for distribution to tenant- farmers.
Thus, the heirs, represented by A, executed a
1999 Kasunduan with the
tenants. Subsequently, A executed a 2006
Kasunduan and filed a Motion to Order Register
of Deeds to Enter New Titles. C opposed the
Motion on the ground that the 2006 Kasunduan
is void, as it lacked her signature. In all, absent
the signature of the heirs, the 2006 Kasunduan
cannot be the basis for issuance of new titles
covering the subject property. RTC confirmed
the 2006 Kasunduan. On the other hand, the
Court of Appeals, annulled the entire partition,
and the sale of half, of the subject property to
the tenants.
A. Is the sale of half valid?
B. Can co-owners alienate their pro indiviso
shares even without the knowledge and
consent of their co-owner?
A. Yes. Articles 493-495 and 498 of the Civil
Code, in sum, allow for alienation by a co-owner
of his or her share in the co-owned property,
termination of the co-ownership, and partition
of the property. The basic principle in the law
of co-ownership is that no individual co-owner
can claim title to any definite portion of the land
or thing owned in common until the partition
thereof. Prior to that time, all that the co-owner
has is an ideal, or abstract, quota or
proportionate share in the entire thing owned
in common by all the co-owners. Each of the
co-owners holds the property pro indiviso and
exercises his or her rights with the entire
property; thus, 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. 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.
B. Yes. The Court ruled pursuant to Article 493
of the Civil Code that 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." (Silva vs. Lo,
G.R. No. 206667, June 23, 2021, J. Hernando)
12. Spouses J and M left behind a parcel of
land to their nine children when they passed
away in 1944 and 1964 respectively. In 1975,
their children executed a deed of extrajudicial
settlement appropriating the property unto
themselves. They then agreed to sell one-half
of the property to one of their siblings, A. One-
fourth of the property was occupied by two
siblings, B and C. The other quarter of the
property was sold by another sibling, D, to
spouses X and Y without the knowledge and
consent of his siblings. When B came to know
of the sale, he filed a complaint for recovery of
ownership and annulment of deed of sale
against the spouses X and Y alleging that the
deed of sale was void since D is not the true
and real owner of the subject property which
originally belongs to the estate of their parents,
J and M. He also argued against any move to
partition the property because it would render
it practically useless and unserviceable.
A. Can the new co-owners, Sps. X and Y, claim
a specific portion of the property representing
their share in the co-owned property?
6
B. May co-owner alienate his share in the
property?
C. May co-owner demand partition of the
property?
A. No. Co-ownership among the heirs results
when a person dies intestate (without a will). In
the absence of a will or any partition plan
executed by an estate owner, the children
become co-owners of all properties owned by
the estate owner. With the subsistence of the
co-ownership, the spouses X and Y only own
D’s undivided fractional share of the subject
property. Spouses X and Y and all the co-
owners cannot adjudicate to his/her title to any
definite portion of the subject property 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 co-owners. (Reyes vs. Spouses Garcia, G.R.
No. 225159, March 21, 2022, J. Hernando)
B. Yes, a co-owner has the right to alienate his
pro indiviso share in the co-owned property
even without the consent of the other co-heirs.
However, as mere part owner, he cannot
alienate the shares of the other co-owners.
Nemo dat quod non habet. No one can give
what he does not have. Hence, a sale of the
remaining half of the subject property will only
affect his own share but not those of the other
co-owners who did not consent to the sale. The
buyer will only get a co-owner's undivided share
in the subject property. (Reyes vs. Spouses
Garcia, G.R. No. 225159, March 21, 2022, J.
Hernando)
C. Yes. To demand a partition or division of the
common property is in accord with Article 494
of the Civil Code, that is, no co-owner shall be
obliged to remain in the co-ownership and that
each co-owner may demand at any time
partition of the thing owned in common insofar
as his or her share is concerned. (Reyes vs.
Spouses Garcia, G.R. No. 225159, March 21,
2022, J. Hernando)
13. A filed a Complaint for recovery of
possession and damages with receivership
against Sps. B and C before the RTC. Sps. B and
C allegedly encroached upon the entire portion
of A’s lot. He immediately demanded that they
vacate the premises, but Sps. B and C refused.
They argued that the Lot is part of the land that
they bought from his brother, D. However, D
denied selling his brother's land explaining that
what he sold to the Spouses B and C was a
parcel of land that he owned known located in
Masa, Dumanjug, Cebu which was adjacent to
lot of A. Thereafter, A and the Spouses B and C
met at the barangay for conciliation, but the
latter still refused to vacate. However, the
Spouses B and C admitted encroaching on the
Lot because the Lot which they bought from D,
in Masa, Dumanjug, Cebu contained less than
the area stated in the Deed of Absolute Sale. A,
diligently paid its real property taxes from that
time on under Tax Declaration No. 13003 which
was in his name. Subsequently, TD 13003 was
cancelled and TD 13163-A6 was issued still in
A’s name.
A. Whether A is the absolute owner of the lot
encroached by Spouses B and C?
B. Do Sps. B and C have the right to possess
the property?
A. Yes, the Supreme Court ruled that to prove
his ownership over the lot, A presented Tax
Declaration No. 13163-A in his name. He
likewise presented two Certificates issued by
the Office of the Municipal Treasurer of
Sibonga, Cebu declaring him as owner of the
subject land and that he has been paying realty
taxes thereon as early as 1980. Indeed, while
the tax declaration is not conclusive proof of
ownership of A over the subject land, it is an
indication however that he possesses the
property in the concept of an owner for nobody
in his or her right mind would be paying taxes
for a property that is not in his or her actual or
constructive possession. Being the lawful owner
of the subject property, A is entitled to the
possession of lot. (Spouses Ponce vs.
Aldanese, G.R. No. 216587, August 4, 2021, J.
Hernando)
B. No. In the absence of competent evidence
showing that the lot is covered by the Deed of
Absolute Sale, Sps. B and C have no right to
possess the property, much less in the concept
of an owner. Moreover, they cannot be deemed
possessors in good faith since they were aware
7
that the subject land is not part of the land that
D sold to them. Even assuming that D sold Lot
to the Sps. B and C, the sale would be invalid
as it was owned by A. The Court had repeatedly
stressed that "no one can give what one does
not have." "A seller can only sell what he or
she owns, or that which he or she does not own
but has authority to transfer, and a buyer can
only acquire what the seller can legally
transfer”. (Spouses Ponce vs. Aldanese, G.R.
No. 216587, August 4, 2021, J. Hernando)
14. A parcel of land was obtained via free
patent application and was sold within 5-year
prohibitory period after it was acquired. Does
the principle of laches apply considering that it
took the respondents 44 years before they filed
a case in Court assailing such sale of land, and
after all the original parties to the deed of sale
were all dead?
No, principle of laches does not apply. A sale of
a parcel of land is in violation of the five-year
prohibition on the alienation of land acquired
via free patent application is void and produces
no legal effect. Laches does not apply to void
ab initio contracts. Laches cannot prevail over
the law that actions to assail a void contract are
imprescriptible, being based on equity. In
actions for reconveyance of property predicated
on the fact that the conveyance complained of
was null and void ab initio, a claim of
prescription of action would be unavailing. The
action or defense for the declaration of the
inexistence of a contract does not prescribe.
Neither could laches be invoked in the case at
bar. Certainly, laches cannot set up to resist the
enforcement of an imprescriptible legal right,
and petitioners can validly vindicate their
inheritance despite the lapse of time. (Heirs of
Bagaygay vs. Heirs of Paciente, G.R. No.
212126, August 4, 2021, J. Hernando)
15. On September 12, 1968, S executed a deed
of conditional donation in favor of the Republic
over a parcel of land for the purpose of
constructing a mental facility, subject to
conditions. On September 29, 2008, the estate,
represented by its attorney-in-fact, filed a
complaint against the Republic for revocation of
the donation and forfeiture of improvements. It
alleged that the Republic allowed a portion of
the donated property to be used for residential
and commercial purposes in violation of the
fifth condition in the deed of conditional
donation. The Republic alleged that the estate's
cause of action had already prescribed. Article
1144 of the Civil Code provides that an action
upon a written contract must be brought within
10 years from the time the right of action
accrues. The Republic argued that since the
deed of conditional donation was executed on
September 12, 1968, an action to enforce the
conditions prescribed on September 12, 1978.
A. Can the Republic invoke prescription as
defense in this case?
B. The Republic filed an ejectment case against
informal settlers and received favorable
judgment over a donated property duly
registered under the Torrens System. Is the
failure of the Republic to move for the
execution of the judgment tantamount to
relinquishment of its ownership over a donated
property in favor of the informal settlers?
A. No. First, the deed of conditional donation
expressly provided for the automatic revocation
and/or reversion in case of breach of any of the
conditions therein. Further, the donation
involved is an onerous one since the burden
imposed upon the donee is to build a mental
hospital on the donated property. In this case,
the provisions of the Civil Code on the rules on
contracts shall govern. Article 1144 of the Civil
Code provides that all actions upon a written
contract shall be brought within ten (10) years
from accrual of the right of action. The estate’s
complaint for revocation of the donation has
not yet prescribed since the cause of action
accrued only upon the alleged failure of the
Republic to comply with any or all of the
conditions of the donation. A perusal of the
records reveals that five out of the 32 hectares
of land subject of the donation are being used
by the Republic for the operation of its mental
hospital, while a portion of the land is occupied
by the informal settlers. Although the Republic
filed an ejectment case and received a
favorable judgement, the Republic failed to
execute the Decision. Hence, the estate's
complaint filed in 2007 is well within the
prescriptive period, which is 10 years from the
lapse of the period within which the Republic
8
could file a motion for revival of judgment of
Civil Case in 2005.
B. No. Prescription and laches cannot apply to
registered land covered by the Torrens system
because under 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. (Estate
of Rodriguez vs. Republic of the Philippines,
G.R. No. 214590, April 27, 2022, J. Hernando)
16. B et.al, who are the claimants of the lots
originally form part of Lot No. 3, filed a sales
patent applications and claims over the lots
distributed to them by virtue of Proc. No. 247
in 1956. The heirs of C filed a protest against
the sales patent applications and other claims
of B et. al. over Lot No. 3 as the lots in question
were covered by a subsisting free patent
application filed by C. The heirs of C alleged
that C acquired a vested right over it by reason
of his early possession since 1929 as evidenced
by Tax Declaration No. 12942 dated February
15, 1929 and Tax Declaration No. 13666 dated
October 1, 1930 and the corresponding
payments of the real estate taxes ever since.
However, it was revealed that when C filed Free
Patent Application (FPA) for his lot in 1949,
such lot was still an inalienable public land and
was only declared as alienable public land open
for disposition to qualified claimants in 1956 by
virtue of Proc. No. 247. Can C’ s occupation and
possession of Lot No. 3 be considered in
granting his free patent application even when
the lot has not yet been declared as alienable
and disposable at the time of such application?
Yes. The Court held that a possessor or
occupant of property may be a possessor in the
concept of an owner prior to the determination
that the property is alienable and disposable
agricultural land. Thus, the computation of the
period of possession may include the period of
adverse possession prior to the declaration that
the land is alienable and disposable. Though at
the time of his application, the subject property
was not yet classified as alienable and
disposable, the subsequent declaration thereof
should be considered in C's favor whose free
patent application was still pending and
subsisting at that time and is not canceled up
to this time. Further, under Section 11 of C.A.
No. 141, there are two modes of disposing
public lands through confirmation of imperfect
or incomplete titles: (1) by judicial
confirmation; and (2) by administrative
legalization, otherwise known as the grant of
free patents. In the present case, C chose to
file a free patent application which was
governed by Section 44 of C.A. No. 141. An
applicant for a free patent does not claim the
land as his or her private property but
acknowledges that the land is still part of the
public domain. However, at the time C’s filed
his amended FPA, Sec. 44 of C.A. No. 141 was
amended, which requires that the applicant is
required to prove continuous occupation and
cultivation of agricultural land subject to
disposition since July 4, 1945. In this case, C’s
possession of the lot as evidenced by the
payment by real estate taxes starting the year
1929 strengthened his continuous and
notorious possession of the lot which is earlier
than July 4, 1945. (Valdez vs. Heirs of Catabas,
G.R. No. 201655, August 24, 2020, J.
Hernando)
17. ABC, domestic corporation applied for land
registration and claimed ownership and actual
possession of Lot No. 3246 on the ground of its
continuous, adverse, public and uninterrupted
possession in the concept of an owner since
1976. Also, the subject lot has never been
forfeited in favor of the government for non-
payment of taxes nor confiscated as bond in
connection with any civil or criminal case. The
ocular inspection conducted showed that the
subject property located about six kilometers
away from the poblacion, is a coconut
plantation occupied and/or possessed by ABC.
It does not encroach upon an established
watershed, riverbed, or riverbank protection,
creek, right of way, park site or any area
devoted to general public use such as, public
roads, plaza, canals, streets, etc., or devoted to
public service such as, town walls or fortresses.
Lastly, the subject property is covered by: (a)
survey plan and (b) Tax Declaration as payment
for real property taxes. However, it was
opposed that the application and the said Lot
No. 3246 has not been classified as alienable
and disposable land of the public domain for at
least 30 years prior to the filing of the subject
9
application. Does Lot No. 3246 form part of the certificates of title or patents under a bona
alienable and disposable land of the public fide claim of ownership for at least 20 years
domain? immediately preceding the filing of the
application for confirmation” shall be
sufficient for purposes of judicial
confirmation of title, and shall entitle the
Yes. An applicant for land registration must
applicant to a decree of registration. The
prove that the land sought to be registered has
shortened 20-year period under the new
been declared by the President or the DENR
Section 14(1) grants possessors the right to
Secretary as alienable and disposable land of
seek registration without having to comply
the public domain. Specifically, an applicant
with the longer period of 30 years possession
must present a copy of the original classification
required for acquisitive prescription under
approved by the DENR Secretary and certified
the Civil Code.
as a true copy by the legal custodian of the
official records. A certificate of land
The final proviso of the new Sec. 14(1) that,
classification status issued by the CENRO or
“They shall be conclusively presumed to have
PENRO of the DENR and approved by the DENR
performed all the conditions essential to a
Secretary must also be presented to prove that
Government grant and shall be entitled to a
the land subject of the application for
certificate of title under this section.”
registration is alienable and disposable, and
unequivocally confirms that the classification
that it falls within the approved area per
of land as alienable and disposable
verification survey by the PENRO or CENRO. A
immediately places it within the commerce of
CENRO or PENRO certification alone is
man, and renders it susceptible to private
insufficient to prove the alienable and
acquisition through adverse possession.
disposable nature of the land sought to be
registered. It is the original classification by the
Presentation of additional evidence on
DENR Secretary or the President which is
land classification status
essential to prove that the land is indeed
alienable and disposable. Despite the absence
The RTC and CA are directed, upon proper
of a certification by the CENRO and a certified
motion or motu proprio, to permit the
true copy of the original classification by the
presentation of additional evidence on land
DENR Secretary or the President, ABC
classification status based on the parameters
substantially complied with the requirement to
set forth in Sec. 7 of RA 11573. a. Sec. 7
show that the subject property is indeed
supersedes the requirements in T.A.N.
alienable, and disposable based on the
Properties and Hanover. At present, the
evidence on record. Further, the LRA and other
presentation of the (i) approved survey plan
concerned government agencies never raised
(ii) bearing a certification signed by a duly
the issue that the land subject of registration
designated DENR geodetic engineer (iii)
was not alienable and disposable. Absence of
stating that the land subject of the
any effective opposition from the government
application for registration forms part of the
together with the applicant's other pieces of
alienable and disposable agricultural land of
evidence on record substantially proved that
the public domain, shall be sufficient proof of
the subject property is alienable and
its qualification as such, Provided that (iv)
disposable. (Republic vs. Herederos De Ciriaco
the certification bears references to: (a) the
Chunaco Disteleria Incorporada, G.R. No.
relevant issuance (e.g., Forestry
200863, October 4, 2020, J. Hernando)
Administrative Order, DENR Administrative
Note: Pursuant to the amendment brought Order, Executive Order, or Proclamation);
by Republic Act 11573 entitled “An Act and (b) the LC Map number covering the
Improving the Confirmation Process for subject land. b. Absence of copy of relevant
Imperfect Land Titles”, beginning September issuance, certification of DENR geodetic
1, 2021, proof of “open, continuous, engineer must state: (i) the LC Map number;
exclusive and notorious possession and (ii) the Project Number; and (iii) the date of
occupation of alienable and disposable lands release indicated in the LC Map; and (iv) the
of the public domain not covered by existing fact that the LC Map forms part of the

10
 records of the NAMRIA and is therefore being
used by DENR as such. c. The DENR geodetic
engineer must be presented as witness for
proper authentication of the certification in
accordance with the Rules of Court.
(Republic vs. Pasig Rizal Co. Inc., G.R. No.
213207, February 15, 2022)
18. A filed an application for free patent in
1949. However, at the time, one of the lots was
inalienable public land as it was part of an
agricultural farm school. Said lot was only
declared as alienable public land in 1956. Later,
V filed sales patent applications over some lots
which originally formed part of A’s lots and were
also included in the latter’s free patent
application. A filed his protest claiming that
although a free patent has not yet been issued
to him, he acquired a vested right over the lots
by reason of his early possession since 1929,
evidenced by tax declarations and the
corresponding payments of real estate taxes
ever since. May A’s occupation and possession
of the lot since 1929 be considered in granting
his free patent application filed in 1949 when
the subject property is not yet declared as
alienable and disposable?
Yes, A’s possession of the property, evidenced
by the payment of real estate taxes from 1929,
strengthened his continuous and notorious
possession. In Republic v. Roasa, the Court
clarified that a possessor or occupant of
property may be a possessor in the concept of
an owner prior to the determination that the
property is alienable and disposable agricultural
land. Thus, the computation of the period of
possession may include the period of adverse
possession prior to the declaration that the land
is alienable and disposable. Here, although at
the time of A’s application, the subject property
was not yet classified as alienable and
disposable, the subsequent declaration thereof
should be considered in his favor whose free
patent application was still pending and
subsisting at that time and is not canceled up
to this time. (Valdez v. Heirs of Antero Catabas,
G.R. No. 201655, August 24, 2020, J.
Hernando)
Note: See discussion pertaining to
amendment.
19. The PNP filed an application for land title
registration of some lots on the basis of
possession for more than 30 years. In support
of its application, it submitted, among others, a
subdivision plan which bore the annotation that
the survey falls “within alienable and disposable
land”. The RTC granted the application finding
it sufficient. The OSG appealed, claiming that
the PNP failed to prove that the subject lots
were alienable and disposable lands of the
public domain. It argued that PNP’s possession
of more than 30 years is irrelevant as the lots
were inalienable because, based on a CENRO
Report, the lots were reserved for military
purposes pursuant to an Executive Order.
A. Should the application be granted?
B. What does the applicant for original
registration need to provide to prove that a
property is an alienable and disposable land of
the public domain?
C. Distinguish the requisites for original
registration of title to land under Section 14(1)
and under Section 14(2) of P.D. N. 1529, or the
Property Registration Decree.
A. No, the application must be denied for PNP’s
failure to observe the requirements on land
registration. Before an applicant can adduce
evidence of open, continuous, exclusive, and
notorious possession and occupation of the
property in question, he must first prove that
the land belongs to the alienable and disposable
lands of the public domain. Here, PNP failed to
substantially prove its alienability by only
relying on the subject lots’ subdivision plan,
without the corresponding DENR certification
stating that they are entirely within the
alienable and disposable zone. PNP, therefore,
failed to present any evidence showing that the
DENR Secretary had indeed released the
subject lots as alienable and disposable lands of
the public domain.
B. An application for original registration must
be accompanied by (1) a CENRO or PENRO
Certification; and (2) a copy of the original
classification approved by the DENR Secretary
and certified as a true copy by the legal
custodian of the official records.
11
C. For registration under Section 14(1) to
prosper, the applicant must establish the
following: (1) that the subject land forms part
of the disposable and alienable lands of the
public domain; (2) that the applicants by
themselves and their predecessors-in-interest
have been in open, continuous, exclusive, and
notorious possession and occupation thereof;
and (3) that the possession is under a bona fide
claim of ownership since June 12, 1945, or
earlier. On the other hand, registration under
Section 14(2) requires the applicant to establish
the following requisites: (a) the land is an
alienable and disposable, and patrimonial
property of the public domain; (b) the applicant
and its predecessors-in-interest have been in
possession of the land for at least 10 years, in
good faith and with just title, or for at least 30
years, regardless of good faith or just title; and
(c) the land had already been converted to or
declared as patrimonial property of the State at
the beginning of the said 10-year or 30-year
period of possession. The bases for registration
under the two provisions differ. Registration
under Section 14(1) is based on possession;
whereas registration under Section 14(2) is
based on prescription. Thus, under Section
14(1), it is not necessary for the land applied
for to be alienable and disposable at the
beginning of the possession on or before June
12, 1945— Section 14(1) only requires that the
property sought to be registered is alienable
and disposable at the time of the filing of the
application for registration. However, in Section
14(2), the alienable and disposable character of
the land, as well as its declaration as
patrimonial property of the State, must exist at
the beginning of the relevant period of
possession. (Republic v. Philippine National
Police, G.R. No. 198277, February 8, 2021, J.
Hernando)
Note: See discussion pertaining to
amendment.
20. H, a domestic corporation, applied for land
registration of a lot, claiming ownership and
actual possession on the ground of its
continuous, adverse, public and uninterrupted
possession in the concept of an owner since
1976 by virtue of a Deed of Assignment
executed by the Heirs of C, who, in turn, had
been in continuous, adverse, public and
uninterrupted possession of the same in the
concept of an owner since 1945 or earlier.
Among the evidence H submitted were tax
declarations from 1980 onwards. Republic
opposed, claiming that the earliest tax
declaration payment had only been in 1980, or
four years after the Heirs of C executed the
Deed of Assignment in 1976 in favor of H; and
neither did the predecessors-in-interest declare
the lot for taxation purposes during their
alleged possession and occupation from 1943
until 1946. The lower courts ruled in favor of H;
the fact that the lot had been declared for
taxation purposes only in 1980 does not
necessarily negate the open, continuous,
exclusive and notorious possession of H and its
predecessors-in-interest since 1943.
A. Should the application for the registration of
title by H be granted?
B. May a private corporation acquire alienable
lands of the public domain?
C. Did the rulings in Republic v. Vega and
Republic v. Serrano modify the rule in Republic
v. T.A.N. Properties on strict compliance of the
twin certifications of DENR Secretary’s original
classification of the property and
CENRO/PENRO’s land classification?
A. No, H’s application must fail due to non-
compliance with Section 14(1) of P.D. No. 1529.
Section 14(1) requires the applicant and its
predecessors-in-interest to prove that they
have been in open, continuous, exclusive
possession and occupation of the land under a
bona fide claim of ownership since June 12,
1945 or earlier. Here, although H claims that it
possessed the lot through its predecessors-in-
interest since 1943, the earliest date of the tax
declaration presented by H was from 1980. This
gives rise to the presumption that H claimed
ownership or possession of the subject lot
starting in the year 1980 only. H presented only
the tax declarations to prove its alleged actual
and physical possession of the lot. This
intermittent and sporadic assertion of alleged
ownership does not prove open, continuous,
exclusive and notorious possession, and
occupation. In the absence of other competent
evidence, tax declarations do not conclusively
establish either possession or declarant's right
to registration of title. Thus, HCCDI has no right
under Section 14(1) of P.D. No. 1529.
12

B. No, a corporation cannot apply for
registration of the land of the public domain
pursuant to Section 3, Article XII of the 1987
Constitution and in Director of Lands v
Intermediate Appellate Court. While there was
no prohibition against corporations from
acquiring agricultural land under the 1935
Constitution, the 1973 Constitution limited the
alienation of lands of the public domain to
individuals who were citizens of the Philippines.
Private corporations, even if wholly-owned by
Filipino citizens, were prohibited from acquiring
alienable lands of the public domain. At
present, the 1987 Constitution continues the
prohibition against private corporations from
acquiring any kind of alienable land of the
public domain.
C. No. In T.A.N. Properties, the Court held that
the absence of the twin certifications justifies
the denial of an application for registration.
However, in Vega and Serrano, the Court
allowed the approval of the application based
on substantial compliance. Even so, Vega and
Serrano were mere pro hac vice rulings and did
not in any way abandon nor modify the rule on
strict compliance pronounced in T.A.N.
Properties. In Vega, the Court was mindful of
the fact that the trial court rendered its decision
on November 13, 2003, way before the rule on
strict compliance was laid down in T.A.N.
Properties on June 26, 2008. Thus, the trial
court was merely applying the rule prevailing at
the time, which was substantial compliance.
Thus, even if the case reached the Supreme
Court after the promulgation of T.A.N.
Properties, the Court allowed the application of
substantial compliance, because there was no
opportunity for the registrant to comply with
the Court's ruling in T.A.N. Properties, the trial
court and the CA already having decided the
case prior to the promulgation of T.A.N.
Properties. (Republic vs. Herederos de Ciriaco
Chunaco Disteleria Incorporada, G.R. No.
200863, October 4, 2020, J. Hernando)
Note: See discussion pertaining to
amendment.
21. A filed an application for original
registration of title for Lot 27 located in
Batangas. He alleged that he bought this land
from B who has been in open, peaceful,
continuous, and exclusive possession of the
land prior to June 12, 1945 under a bona fide
claim of ownership. In his application, A
attached the following documents: (a) Tax
Declaration in his name; (b) Deed of Absolute
Sale executed by B in his favor; (c) Subdivision
Plan of Lot 27; (d) Technical Description of Lot
27 and (e) Certification in lieu of Geodetic
Engineer's Certificate for registration purposes.
The OSG filed its opposition on the ground that
the evidence attached to the application
insufficiently and incompetently proved his
acquisition of the land. During Trial, C, a
witness, submitted a certification issued by the
DENR CENRO of Batangas City, which states
that Lot 27 is not covered by any public land
application or patent. Will A’s application
prosper?
Yes, A’s application for original registration of
title will prosper. An applicant must prove the
following requirements for the application for
registration of a land under Section 14(1) to
prosper: (1) that the subject land forms part of
the disposable and alienable lands of the public
domain; (2) that the applicants by themselves
and their predecessors-in-interest have been in
open, continuous, exclusive, and notorious
possession and occupation thereof; and (3) that
the possession is under a bona fide claim of
ownership since June 12, 1945, or earlier. Here,
A adequately met all these requirements.
Further, there is substantial proof that the
subject land is disposable and alienable. The
CENRO certificate sufficiently showed that the
government executed a positive act of
declaration that Lot 27 is alienable and
disposable land of public domain. (Republic vs.
Caraig, G.R. No. 197389, October 12, 2020, J.
Hernando)
Note: See discussion pertaining to
amendment.
21. Spouses Mendoza claimed that they were
once registered owners of Lot 1 and Lot 2
(subject lots) in Quezon Province. They sold the
subject lots to Velasquez for which the
corresponding tax declaration was issued under
the latter's name. Velasquez later sold Lot 1 to
FEPI, while Lot 2 was developed into a first
class subdivision with FEPI as the developer.
13
However, Velasquez was unable to surrender
the owner's duplicate copy of the titles to FEPI
because the documents were lost beyond
retrieval as certified by the Register of Deeds
due to a fire. On May 17, 2006, Spouses
Mendoza sought to amend the petition for
reconstitution by attaching a respective sketch
plans of the subject lots including the technical
descriptions thereof. The RTC later issued the
June 16, 2006 Order acknowledging the
amended petition for reconstitution. On April
28, 2008, Spouses Mendoza filed a motion to
admit a second amended petition to propose
the substitution of parties by impleading
Velasquez as co-petitioner following the death
of Spouses Mendoza and to use the LRA-
verified plans and technical descriptions of' the
subject lots as bases for the reconstitution of
the lost titles. The RTC found merit in the
petition for reconstitution and the CA affirmed.
However, the Republic appealed. Is there a
sufficient basis for reconstitution?
Yes. Section 2 of RA 26 enumerated the
acceptable bases for the judicial reconstitution
of an existing and valid original certificate of
Torrens title, original certificates of title shall be
reconstituted from such of the sources
hereunder enumerated as may be available, in
the following order: (a) The owner's duplicate
of the certificate of title; (b) The co-owner's,
mortgagee's, or lessee's duplicate of the
certificate of title; (c) A certified copy of the
certificate of title, previously issued by the
register of deeds or by a legal custodian
thereof; (d) An authenticated copy of the
decree of registration or patent, as the case
may be, pursuant to which the original
certificate of title was issued; (e) A document,
on file in the registry of deeds, by which the
property, the description of which is given in
said document, is mortgaged, leased or
encumbered, or an authenticated copy of said
document showing that its original had been
registered; and (f) Any other document which,
in the judgment of the court, is sufficient and
proper basis for reconstituting the lost or
destroyed certificate of title. In the instant case,
the contents of the second amendment and the
original petition for reconstitution, along with
their respective supporting documents, were
considered collectively by the RTC. Thus, the
bases for the reconstitution of the title were not
only the plans and technical descriptions but
also the legible duplicate copies of the titles and
a host of other official documents. In sum, the
Court finds that there was sufficient basis for
the RTC to grant the petition for reconstitution.
(Republic vs. Abellanosa, G.R. No. 205817,
October 6, 2020, J. Hernando)
22. In 1903, Spouses AB allegedly possessed,
resided, and cultivated a lot located in Samar.
In 1945, the spouses declared said lot for
taxation purposes. When the spouses died, C,
their son inherited the lot. On the other hand,
D, a relative, applied for a free patent over said
lot through the assistance of E, a land inspector
of CENRO. He readily received and accepted the
free patent application, absent a personal
inspection of the lot. The next day, E personally
posted the notice of application in Samar,
processed the application in the office, and
conducted a confirmatory report. Hence, a
Katibayan ng Orihinal na Titulo was
subsequently secured and registered in the
name of D. C instituted a complaint for
declaration of nullity of title, reconveyance and
damages contending that he inherited the lot
from his predecessors-in-interest who are the
real owners and possessors of the lot since time
immemorial. Likewise, C claimed that D
obtained the title from fraud and false
representation. RTC ruled that the title granted
to D is already indefeasible and can no longer
be attacked.
A. Will the action of C prosper?
B. What are the requisites for an allegation of
fraud in an action for reconveyance?
A. Yes, the action of C will prosper. Despite the
title's indefeasibility, an action for reconveyance
may still prosper. With the emergence of the
Torrens System, the integrity and
conclusiveness of a certificate of title may be
guaranteed and preserved. However, this
system frowns upon those who fraudulently
secure a certificate of title to the prejudice of
the real owner of the land. Hence, usurpers
who intend to enrich themselves cannot hide
under the mantle of the Torrens System which
may only be cancelled, altered or modified
through a direct attack where the objective of
the action is to annul or set aside the judgment
14
or enjoin its enforcement. An action for
reconveyance based on fraud is a direct attack
on a Torrens title. It follows that despite the
finality accorded to a Torrens title,
reconveyance may prosper as an equitable
remedy given to the rightful owner of a land
that was erroneously registered in the name of
another. This action recognizes the validity of
the registration and its incontrovertible nature;
it does not question the indefeasibility of the
Torrens title.
B. An allegation of fraud in an action for
reconveyance must have two requisites. First,
that the individual seeking reconveyance must
prove entitlement or ownership over the
property in question, and second, that fraud
must be established by clear and convincing
evidence, not just based on mere surmises or
conjectures. (Heirs of Latoja vs. Heirs of Latoja,
G.R. No. 195500, March 17, 2021, J. Hernando)
23. A purchased a land from B located in
Laguna. A divided this land and donated
portions of it to his children to which respective
patents and thereafter certificate of titles were
issued. C, who is a holder of a CLOA issued by
DAR filed a petition for the
annulment/declaration of nullity of deed of sale
and all the deeds, documents and proceedings
relying thereon before the Office of the
Provincial Adjudicator of the DARAB. The
Provincial Adjudicator dismissed respondents'
petition for lack of jurisdiction and held that the
validity of title cannot be attacked collaterally.
A. Is the Provincial Adjudicator correct?
B. What is a direct attack and a collateral
attack?
C. Why are collateral attacks prohibited?
A. Yes, the provincial adjudicator is correct.
Section 43 of Presidential Decree No. 1529, or
the Property Registration Decree, states that a
certificate of title shall not be subject to a
collateral attack and cannot be altered,
modified, or cancelled except in a direct
proceeding in accordance with law. Here,
petitioners are holders of certificates of title
registered under the Torrens system. Thus,
their certificates can only be attacked directly.
The provincial adjudicator properly dismissed
the petition.
B. A direct attack is an action whose main
objective is to annul, set aside, or enjoin the
enforcement of a judgment pursuant to which
a registration decree is issued, if the judgment
has not yet been implemented, or if already
implemented, to seek the recovery of the
property. On the other hand, a collateral attack
transpires when, in an action to obtain a
different relief, an attack is incidentally made
against the judgment.
C. A collateral attack is prohibited because the
integrity of land titles and their indefeasibility
are guaranteed by the Torrens system of
registration. The Torrens system was adopted
precisely to quiet titles to lands and to put a
stop forever to any question of legality of the
titles, except claims which were noted at the
time of registration or which may arise
subsequent thereto. By guaranteeing the
integrity of land titles and their indefeasibility,
the Torrens system gives the registered owners
complete peace of mind. (Garcia vs. Esclito,
G.R. No. 207210, March 21, 2022, J. Hernando)
24. T sold to G a property in Laoag City upon
the representation that he was authorized by
his wife to sell the same. On the same day, G
paid the purchase price and in exchange, T
surrendered the first owner’s duplicate copy of
TCT and undertook to deliver the deed of
absolute sale before October 22, 2009.
Meanwhile, the trustee-niece of T’s wife prayed
before the RTC of Laoag City that the owner’s
duplicate copy of TCT, which was entrusted to
her, should be declared null and void as it had
been lost. She likewise prayed for the issuance
of a new owner’s duplicate copy.
A. Should the RTC issue the second owner’s
duplicate copy of the subject TCT?
B. What does a reconstitution of a certificate of
title mean?
A. No, the RTC should not issue a new owner’s
duplicate copy of the TCT. Under Section 109
of PD 1529, for an order of reconstitution to be
issued, it must be clearly shown that the
certificate of title had been lost or destroyed. If
15
a certificate of title has not been lost, but is in
fact in the possession of another person, then
the reconstituted title is void and the court that
rendered the decision had no jurisdiction. Here,
as shown by evidence, the first owner’s
duplicate copy of the TCT was not actually lost,
but was in the possession of the wife all along,
after it was surrendered to her by T.
B. The reconstitution of a certificate of title
denotes restoration in the original form and
condition of a lost or destroyed instrument
attesting the title of a person to a piece of land.
The purpose of the reconstitution of title is to
have, after observing the procedures
prescribed by law, the title reproduced in
exactly the same way it has been when the loss
or destruction occurred. It presupposes the
existence of an original certificate of title which
was lost or destroyed. (Gaoiran vs. Court of
Appeals, G.R. No. 215925, March 7, 2022, J.
Hernando)
25. The heirs of Daez filed a petition for
reconstitution of Original Certificate of Title of
Lot Nos. 1, 2 and 3, alleging that sometime in
1930, the Court of First Instance of Cebu
rendered three decisions declaring the late
Eduard Daez and four others as the registered
owners of the lots. At present, the lots were in
the material possession of the MEPZA and
MIAA. The possessors filed its opposition. They
alleged that they bought the lots from Julian,
Marina, and Pamela, as evidenced by three
Deeds of Absolute Sale. In the heirs of Daez’s
petition, they failed to indicate the addresses of
MEPZA and MIAA. They failed to state in their
petition any building or improvements in the
lots which do not belong to them and failed to
state the encumbrances affecting the property.
Further, they failed to indicate the number of
the lost or destroyed OCTs.
A. Are the heirs of Daez entitled to the
reconstitution of the OCTs of the subject lots?
B. What are the requirements for an order of
reconstitution to be issued?
C. What is the importance of proving that the
title sought to be restored in a reconstitution
proceeding was indeed issued to the petitioner?
A. No, the trial court did not acquire jurisdiction
over the petition for reconstitution since the
mandatory requirements and procedures laid
down in Republic Act 26 have not been strictly
complied with. The requirements under Section
12, on the contents of the petition, and Section
13, on the publication of the notice of petition,
are mandatory and jurisdictional in nature.
Hence, non-observance thereof fatally affects
the whole proceedings in all its aspects and
renders the same void. In the present case, the
petition did not comply with Section 12 since
they did not indicate the present addresses of
the occupants, MEPZA and MIAA. They did not
stipulate if a building or improvement which do
not belong to them are erected in the subject
lots. They also did not state the encumbrances
affecting the property which are the deeds of
absolute sale in favor of MCIAA. Further, the
fact that they failed to identify the exact title
number defeats the purpose of the twin notice
and publication requirements. Aside from that,
the respondents failed to adduce competent
evidence that the OCTs of the lots existed and
were indeed issued in the name of the Daez.
Thus, before any reconstitution may be made,
there should be sufficient and competent proof
that the title sough to be reconstituted had
actually existed.
B. Section 12 of RA 26, otherwise known as
“Special Procedure for Reconstitution of Lost or
Destroyed Torrens Certificate of Title” requires
that the contents of the petition for
reconstitution of title shall state: (a) that the
certificate of title had been lost or destroyed;
(b) that the documents presented by petitioner
are sufficient and proper to warrant
reconstitution of the lost or destroyed
certificate of title; (c) that the petitioner is the
registered owner of the property or had an
interest therein; (d) that the certificate of title
was in force at the time it was lost or destroyed;
and (e) that the description, area and
boundaries of the property are substantially the
same as those contained in the lost or
destroyed certificate of title. Section 13 of the
same Act also requires notice and publication of
the notice of publication. These requirements
under Section 12 and 13 are mandatory and
jurisdictional in nature. Hence, non-observance
thereof fatally affects the whole proceedings in
all its aspects and renders the same void.
16
C. Reconstitution proceedings under RA 26 has
for their purpose the restoration in the original
form and condition of a lost or destroyed
instrument attesting the title of a person to a
piece of land. Thus, reconstitution must be
granted only upon clear proof that the title
sought to be restored was indeed issued to the
petitioner. Strict observance of this rule is vital
to prevent parties from exploiting reconstitution
proceedings as a quick but illegal way to obtain
Torrens certificates of titles over parcels of land
which turn out to be already covered by existing
titles. (Republic v. Heirs of Booc, G.R. No.
207159, February 28, 2022, J. Hernando)
26. Mark and Chenie Santos had 2 daughters
namely Mikki and Lynssey. When Chenie died,
Lynssey followed predeceasing and leaving her
children. Thereafter, Mark died leaving several
properties. Angelo, son of Lynssey, filed a
petition to settle the intestate estate of Mark
alleging that Mark's heirs include Lynssey's
children and Mikki. He also said that Mark's
properties are in the possession of Mikki and
her son Gerald, who have been
misappropriating the properties. Thereafter,
Mikki filed a motion to dismiss stating that she
already filed for the probate of Mark's will. Mikki
asked that the will be allowed and approved
and as the named executrix in the will, she
prayed that letters testamentary be issued in
her favor. The Santoses filed an Opposition to
Mikki's petition for probate alleging that the
will's attestation clause did not state the
number of pages of the will. Mikki countered
that in the acknowledgment portion, the will
supplied that it contains five pages. The subject
will was witnessed by Atty. Tan, Atty. Laz, and
Atty. Panes and notarized by Atty. Mars. They
admitted signing the will in the presence of
each other and Mark in a conference room of
Marina Law Office in Makati City. They alleged
that during that time, Mark was very alert and
sane and was not suffering from any physical
ailment.
A. Is there a compliance to the formalities
required under Art. 805 of the New Civil Code?
B. Are lawyers qualified from being witnesses
to a will?
A. Yes. There is compliance to the formalities
required under Art. 805 of the New Civil Code.
Case law has it that although there should be a
strict compliance with the substantial
requirements of the law in order to ensure the
authenticity of the will, the formal imperfections
should be brushed aside when they do not
affect its purpose and which, when taken into
account, may only defeat the testator's will.
Here, probate of the will must be allowed even
if the number of pages of the will was
mentioned in the last part of the body of the
will and not in the attestation clause. This is to
prevent the will of the testator from being
defeated by purely technical considerations.
B. Yes. Lawyers are qualified from being
witnesses to a will. Article 820 of the New Civil
Code provides that, any person of sound mind
and of the age of eighteen years or more, and
not blind, deaf or dumb, and able to read and
write, may be a witness to the execution of a
will mentioned in Article 805 of the NCC. In
addition, they are not disqualified from being
witnesses under Article 821 of the New Civil
Code, even if they all worked at the same law
firm at the time. (Tanchanco vs. Santos, G.R.
No. 204793, June 08, 2020, J. Hernando)
27. A, a branch manager of XYZ Bank,
approved cash withdrawals of B against several
checks without waiting for them to be cleared.
When the checks were dishonored, A allowed B
to deposit several checks to partially cover the
latter’s cash withdrawals. B had already
acknowledged his obligation to the bank and
executed a promissory note. To confirm this
acknowledgement, B issued another
promissory note in favor of XYZ Bank. However,
B failed to pay the bank. Will A be held
personally or solidarily liable on the drawings
against uncollected check deposits?
No. A will not be personally or solidarily liable
on the drawings against uncollected check
deposits. As to the uncollected check deposits,
the bank may honor the check at its discretion
in favor of clients. Solidarity is never presumed.
There is solidary liability when the obligation so
states, or when the law or the nature of the
obligation requires the same. A’s position as
branch head entails the exercise of such
17
discretion. (Philippine National Bank vs. Bal, Jr.,
G.R. No. 207856, November 18, 2020, J.
Hernando)
28. Edgardo bought an engine from Blazer
Corp. However, the engine suffered a major
dysfunction. Edgardo immediately reported the
incident to Blazer Corp which sent an engineer
to inspect and determine the extent of the
damage. The engineer confirmed that defect
was inherent being attributable to factory
defect. The Foreign supplier promised that the
engine which suffered the malfunction would
be replaced in accordance with the warranty.
Edgardo demanded for the replacement of the
engine but his demands were unheeded and
suffered losses for failure to operate. Edgardo
filed a complaint for damages. Blazer Corp and
the engineer admitted the breakdown of the
engine but denied the fact that the defect was
inherent being attributable to factory defect
and also denied replacement of the engine.
They contend that Blazer Corp was merely an
agent of the foreign supplier which had the
authority to grant or deny warranty claims. Is
the engineer solidarily liable with Blazer Corp?
Yes. There is solidary liability when the
obligation expressly so states, when the law so
provides, or when the nature of the obligation
so requires. Settled is the rule that a director or
officer shall only be personally liable for the
obligations of the corporation, if the following
conditions concur: (1) the complainant alleged
in the complaint that the director or officer
assented to patently unlawful acts of the
corporation, or that the officer was guilty of
gross negligence or bad faith; and (2) the
complainant clearly and convincingly proved
such unlawful acts, negligence or bad faith."
Edgardo established sufficient and specific
evidence to show that the engineer had acted
in bad faith or gross negligence in the sale of
the defective vessel engine and the delivery and
installation of demo units instead of a new
engine which Edgardo paid for. (Atienza vs.
Golden Ram Engineering Corp., G.R. No.
203405, June 28, 2021, J. Hernando)
29. Patrick and Adrian Palomo carried out the
Montemar Project, which included the
development of the Montemayor Beach Club
and Montemayor Villas. To implement the
project, they transferred their shares in favor of
MNDZ, a fully-owned corporation of the Mendez
family. MNDZ paid partially P2.5 Million. The
remaining P17.5 Million was to be paid by way
of an Assignment of Rights wherein MNDZ: (1)
assigned to the Palomos P3 Million worth of
shares in MNDZ, which is created by MNDZ to
sell the shares of the beach resort; and (2)
would pay the Palomos (40%) of the net
proceeds from the sale of the Montemayor
Villas lots. MNDZ vowed to continue to
undertake the marketing of the Montemayor
Villas for the purpose of remitting to the
Palomos their 40% share in the sale of the said
lots until full payment of the P20 Million. As the
loans obtained by MNDZ from Development
Bank remained unpaid, the mortgaged
properties of MNDZ were eventually foreclosed
by the bank. Wanting to invest in the
Montemayor Project, Philcomsat presented a
Memorandum of Intent, which embodied the
terms agreed upon by the parties where
Philcomsat will invest on the project, and,
concurrently, bailing out the parties from their
loan obligations with the creditors. In
consideration thereof, the ownership over the
properties, including their shares in MNDZ,
would be transferred to MLDG, a new
corporation to develop the villas into a golf
course and sports complex. Patrick agreed and
a letter-conformity was finalized, without any
provision regarding the Assignment of Rights.
Is there a valid novation of the initial agreement
between MNDZ and the Palomos to develop and
sell the Montemayor Villas lots, which thereby
extinguished MNDZ's original obligation to the
Palomos?
Yes. For a valid novation to take place, the
following requisites must concur: (1) a previous
valid obligation; (2) the agreement of all the
parties to the new contract; (3) the
extinguishment of the old contract; and (4)
validity of the new one. There must be consent
of all the parties to the substitution, resulting in
the extinction of the old obligation and the
creation of a valid new one. In this case, the
implementation of this new concept is
incompatible with the old obligation of MNDZ
under their previous agreement. The
construction of these new sports facilities will
18
effectively halt the development and eventual
sale of the Montemayor Villas lots and render
unavailing MNDZ's original obligation to remit
to the Palomos' their 40% share in the proceeds
derived from the sale of the said lots. What was
required for the validity of the new concept was
Palomos' express conformity thereto, with full
knowledge that its implementation will denote
that their rights to the 40% share of the
proceeds derived from the sale of the
Montemayor Villa lots will be novated and
converted into a 7.5% equity in MLDG. (Valdes
vs. La Colina Development Corp, G.R. 208140,
July 12, 2021, J. Hernando)
30. Mr. X, representing ABC Corporation,
offered a proposal to Mr. Y to invest in his
insurance business. Mr Y agreed and invested
the amount of P300,000.00. Eventually, Mr. Y
opted to get a refund of the amounts he paid.
However, Mr. X or ABC Corp. did not answer
despite several demands of Mr. Y. Mr. Y filed a
complaint for specific performance against Mr.
X and ABC Corp. where the court issued a writ
of preliminary attachment. The sheriff issued a
Notice of Garnishment of the amount of
P300,000.00 plus lawful expenses from the
accounts of Mr. X and ABC Corp. addressed to
the Manager and/or Cashier of the XYZ Bank.
The bank informed the that Mr. X and ABC
Corp. have no available garnishable funds.
However, it was discovered that XYZ Bank
already debited from ABC Corp’s savings and
current accounts some amounts to offset its
outstanding obligation with the bank under a
loan agreement. Is there legal compensation
between the bank and ABC Corp?
No. There is no legal compensation between
the bank and ABC Corp. It is settled that
compensation is a mode of extinguishing to the
concurrent amount the debts of persons who in
their own right are creditors and debtors of
each other. The object of compensation is the
prevention of unnecessary suits and payments
thru the mutual extinction by operation of law
of concurring debts. As guided by the
conditions stated in Article 1279 of the Civil
Code, there is no dispute that the Bank and ABC
Corp are both creditors and debtors of each
other and the debts consist in or involve a sum
of money. Notably, the Bank argues that ABC's
debts became due given that it defaulted in its
loan obligations even without need of demand
pursuant to the Promissory Note. Neither
categorically refuted that ABC indeed defaulted.
However, the flaw in the Bank's argument is its
failure to specify the date when ABC actually
defaulted in its obligation or particularly
pinpoint which installment it failed to pay. The
Bank merely revealed that ABC owed it the
amount without presenting a detailed
computation or proof thereof except for the
Promissory Note. (Banco de Oro Unibank, Inc.
vs. Edgardo C. Ypil, Sr., G.R. No. 212024,
October 12, 2020, J. Hernando)
31. FCCC entered into a construction
agreement with A Corp for an Exposition Theme
Park. B Corp submitted a proposal to supply the
construction material to A Corp which the latter
accepted. A Corp informed B Corp that the
former will pay the latter upon payment of
FCCC. B Corp requested that it be paid directly
by FCCC to which A Corp did not object. Is there
a novation between A Corp and B Corp?
No, novation occurs 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.” The test of
incompatibility is whether the two obligations
can stand together, each one with its own
independent existence. Applying the foregoing,
there is nothing in the communication that
unequivocally states that the obligation of A
Corp to pay B Corp would be extinguished.
Second, there is also no mention that B Corp
would substitute or subrogate A Corp as FCCC's
payee/obligee as the letters merely show that
B Corp was allowed by A Corp to try collecting
from FCCC directly. Lastly, using the test of
incompatibility, A Corp’s non-objection to B
Corp’s request to collect from FCCC directly is
not incompatible with the obligation of A Corp
to pay B Corp. It merely provided an alternative
mode in collecting payment to B Corp, which is
not even valid as far as FCCC is concerned since
the latter did not even consent to the same, not
to mention there is no existing contractual
relationship between B Corp and FCCC. (Asian
Construction and Development Corporation vs.
19
Mero Structures, Inc., G.R. No. 221147,
September 29, 2021, J. Hernando)
32. A obtained a fire insurance policy from B
for several properties, including condominium
units, owned by the former. While the
insurance policy was in effect, a fire broke out
that destroyed said properties. Due to B’s
failure to pay the full amount of the insurance
proceeds, A filed a complaint for sum of money
and damages. Meanwhile, C, a government
agency, served B a final assessment notices for
allegedly deficiency in internal revenue taxes.
Is the C’s claim, as government agency, on
deficiency payment of internal revenue taxes
(tax claim) enjoys preference over the claim of
the A as special preferred creditor of B?
No. The tax claim is only an ordinary preferred
credit under Article 2244 since it is not based
on taxes due on the condominium units but on
B’s deficiency in payment of its internal revenue
taxes. On the other hand, A’s claim is a special
preferred credit under Article 2242 (7) of the
Civil Code, and thus superior to C’s tax claim
which is only an ordinary preferred credit.
Under the system of concurrence and
preference of credits, which finds application in
insolvency proceedings, credits are classified
into three general categories: (a) special
preferred credits listed in Articles 2241 and
2242, (b) ordinary preferred credits listed in
Article 2244, and (c) common credits under
Article 2245. Special preferred credits enjoy
preference with respect to a specific movable
or immovable property, exclude all others to the
extent of the value of the property. Credits
which are specially preferred because they
constitute liens (tax or non-tax) take
precedence over ordinary preferred credits in
so far as the property to which the liens have
attached (Bureau of Internal Revenue vs. TICO
Insurance Co., Inc, G.R. No. 204226, April 18,
2022, J. Hernando).
33. What does the “complementary contracts
construed” doctrine together mean?
The doctrine mandates that the stipulations,
terms, and conditions of both the principal and
accessory contracts must be construed
together in order to arrive at the true intention
of the parties. The "complementary contracts
construed together" doctrine incarnates the
spirit of Art. 1374 of the Civil Code, which states
that the various stipulations of a contract shall
be interpreted together, attributing to the
doubtful ones that sense which may result from
all of them taken jointly. (Bacala vs. Heirs of
Spouses Rom, G.R. No. 200608, February 19,
2021, J. Hernando)
34. The Spouses De Mesa were allowed to use
the land for a period of 15 years due to loan
obtained from them by Angela. However, this
agreement was not reduced into writing.
Sometime in August 1987, forced heirs of
Angela went to the Office of the Provincial
Assessor of Masbate to inquire about the status
of the lease contract between Angela and the
Spouses De Mesa. The Heirs of Angela then
found out that the Tax Declaration in the name
of Angela was cancelled and the Tax
Declaration was issued under the name of
Marciano De Mesa by virtue of a Deed of
Confirmation of Sale supposedly executed by
Angela. Are the heirs of Angela bound by the
oral contract of sale allegedly executed in favor
of the Spouses De Mesa?
Yes. The Courts has long recognized the validity
of oral contracts, including oral contracts of
sale. Article 1356 of the Civil Code provides
contracts shall be obligatory, in whatever form
they may have been entered into, provided all
the essential requisites for their validity are
present. However, when the law requires that
a contract be in some form in order that it may
be valid or enforceable, or that a contract be
proved in a certain way, that requirement is
absolute and indispensable. In such cases, the
right of the parties stated in the following article
cannot be exercised. Indeed, contracts that
have all the essential requisites for their validity
are obligatory regardless of the form they are
entered into, except when the law requires that
a contract be in some form to be valid or
enforceable (Heirs of Godines v. Demaymay,
G.R. No. 230573, June 28, 2021, J. Hernando).
20
35. A and B are siblings. A requested B to
donate a ten-square meter portion of land
being encroached by former’s balcony. B
agreed to A out of his love and trust for his
brother. A then asked B and his spouse C to
sign a document that was written in English.
Spouses B and C were unable to understand the
contents of the document. As they were
convinced by A’s explanation and trusted him,
Spouses B and C signed the document without
even reading and understanding its contents.
The spouses B and C were not given a copy of
the document after it was signed. Four years
later, to B’s surprise, A’s children informed him
that he already donated his land portion to
them through the document that was allegedly
executed with D. Spoused B and C contended
that A took advantage of their low-level
education when he made them believe that the
document they were signing were for the
partition of the inherited land.
A. Whether or not the donation is valid?
B. Is an action for annulment of a void ab initio
Deed of donation is imprescriptible?
A. Yes. Deed of Donation is void ab initio in the
absence of consent. Donation is an act of
liberality whereby a person disposes
gratuitously of a thing or right in favor of
another, who accepts it. Consent, to be valid,
must have the following requisites: (1)
intelligent or with an exact notion of the matter
to which it refers; (2) free; and (3)
spontaneous. The parties' intention should be
clear; otherwise, the donation is rendered void
in the absence thereof or voidable if there exists
a vice of consent. In this case, Spouses B and
C’s absence of consent, and not just a mere
vitiation thereof, to donate their land has been
satisfactorily established. Hence, no valid
donation had transpired between the parties.
B. Yes. The Deed of Donation which is an
absolute nullity is subject to attack at any time.
Its defect, i.e., the absence of consent of
respondents, is permanent and incurable by
ratification or prescription. In other words, the
action is imprescriptible. This is in accord with
Article 1410 of the Civil Code which states that
an action to declare the inexistence of a void
contract does not prescribe. (Cardinez vs.
Spouses Cardinez, G.R. No. 213001, August 4,
2021, J. Hernando)
36. A, owner of a parcel of land who is unable
to read, executed a Deed transferring
ownership of the property to Sps. W and H. A
affixed her thumbmark in lieu of her signature.
It has been found out later on that the Deed
executed was done with fraud or mistake.
According to A, the spouses took advantage of
her illiteracy by employing deceit and false
misrepresentations. Is the contract they
entered between A and Sps W and H valid?
No, such contract is voidable. When one of the
contracting parties is illiterate, and fraud is
alleged, presumption of fraud or mistake in
obtaining consent arises. The burden of proof
is on the party that seeks to enforce the
contract. He must present clear and convincing
evidence, that he was able to explain to the
illiterate party the terms and contents of the
contract. (Spouses De Vera vs. Catungal, GR
No. 211687, February 10, 2021, J. Hernando)
37. W, is an employee of Bank AAA. Her
husband, H was doing business under the name
of B Inc. B Inc, obtained a loan from Bank AAA.
W resigned from Bank AAA, however, Bank AAA
refused to release W’s retirement benefits
unless the spouses would execute a real estate
mortgage to secure its business loan.
Thereafter, the spouses offered to pay an
amount of P500,000 to redeem the collateral.
Instead of applying the payment for
redemption, the Bank applied it to the payment
of interest due on B, Inc. Moreover, when B,
Inc. defaulted in its payment for the loan, Bank
AAA erroneously foreclosed its property.
A. Is the contract valid in view of vitiated
consent of the Sps.?
B. What are the requisites of valid intimidation?
A. Yes. Intimidation is present when one of the
contracting parties is compelled by a
reasonable and well-grounded fear of an
imminent and grave evil upon their person or
property, or upon the person or property of
their spouse, descendants or ascendants, to
give their consent. Withholding of W’s
retirement benefits does not constitute to
21
intimidation referred to by law. In this case, it
is obvious that Bank AAA’s supposed "threat,"
i.e., its withholding of W's retirement benefits,
is not the intimidation referred to by law. The
records show that the bank was unable to
release W’s clearance for the release of her
retirement benefits for the simple reason that
she had an existing liability to the bank arising
from the Deed of Suretyship that she executed
with her husband and other stockholders of B
Inc. Clearly, such act is neither unjust nor
unlawful.
B. Requisites of a valid Intimidation according
to law: (1) that the intimidation must be the
determining cause of the contract, or must
have caused the consent to be given; (2) that
the threatened act be unjust or unlawful; (3)
that the threat be real and serious, there being
an evident disproportion between the evil and
the resistance which all men can offer, leading
to the choice of the contract as the lesser evil;
and (4) that it produces reasonable and well-
grounded fear from the fact that the person
from whom it comes has the necessary means
or ability to inflict the threatened injury.
(Spouses Genotiva vs. Equitable PCI Bank, G.R.
No. 213796, June 28, 2021, J. Hernando)
38. The Gonzaga siblings are the registered
owners of a lot covered by an Original
Certificate of Title. The subject property is
presently occupied by the water district of
Tanauan. The same was allegedly acquired by
the City Government of Tanauan for
P300,000.00 pursuant to a Deed of Absolute
Sale allegedly signed by the Gonzagas, as
vendors, and the then Municipality of Tanauan,
as represented by its Mayor. Millonte, a direct
descendant of one of the Gonzaga siblings,
prayed for the declaration of nullity of the Deed
of Absolute Sale, on the ground that the
signatures of the vendors were forgeries
because they had died prior to the execution of
the Deed. To support her claim, she submitted
the death certificates of the purported vendors,
and testimonies of their relatives. If you were
the judge, how would you rule on the case?
I will declare the Deed of Absolute Sales as null
and void. Case law provides that forgery cannot
be resumed and must be proved by clear,
positive, and convincing evidence by the party
alleging the same. In this case, Millonte bears
the burden to prove that the signatures of the
Gonzagas were forgeries because they had died
prior to the execution of the Deed of Absolute
Sale. The submission of the death certificates
and testimonies satisfied the requirement of
law. Considering that the purported vendors
could not have signed the Deed of Absolute
Sale, the said contract is null and void. (City of
Tanauan vs. Millonte, G.R. No. 219292, June
28, 2021, J. Hernando)
39. Noli purchased three lots located in
Cagayan de Oro City from Prince Corporation
and deposited a total amount of P393,435.00
through check payments in favor of Prince
Corporation, however, Prince did not deliver
the copies of the lots' certificates of title and
their sales agreement. Noli claimed that he was
surprised, frustrated, and dismayed when he
finally received the sales agreement, as it
contained unacceptable conditions to which he
conveyed his objections to Prince. Since he had
not yet signed the sales agreement, Noli alleged
that there was still no meeting of the minds
between him and Prince and that despite
demands for refund of his deposit payments,
Prince failed to comply. Prince countered that
Noli could not yet be issued certificates of title
since their transaction was not a contract of
sale but a contract to sell. Prince maintains that
Noli impliedly agreed to the unsigned Contract
to Sell and harks on the applicability of RA 6552
or the Maceda Law. It posits that Noli is not
entitled to a refund of his installment payments
because there was a valid rescission of the
Contract to Sell. Is the contention of Prince
valid?
No. The Contract to sell between Prince and
Noli was not validly cancelled. Section 4 of RA
6552 or the Maceda requires four (4) conditions
before the seller may actually cancel the
contract thereunder: first, the defaulting buyer
has paid less than two (2) years of installments;
second, the seller must give such defaulting
buyer a sixty (60)-day grace period, reckoned
from the date the installment became due;
third, if the buyer fails to pay the installments
due at the expiration of the said grace period,
the seller must give the buyer a notice of
cancellation and/or a demand for rescission by
22
notarial act; and fourth, the seller may actually
cancel the contract only after the lapse of thirty
(30) days from the buyer's receipt of the said
notice of cancellation and/or demand for
rescission by notarial act. In this case, there
was compliance with the first and second
requisites when Prince sent Noli, a defaulting
buyer whose payments did not amount to two
years' worth of installments, its December 5,
1998 letter giving him sixty (60) days to make
good on his obligation. Prince, however, did not
meet the last two conditions. There was no
notice of notarial rescission served upon Noli.
Necessarily, thirty (30) days could not have
lapsed from a non-existent service of such
notice. RA 6552 dictates “receipt” and not
“service” of the notice of rescission to the buyer
as the reckoning point of the 30-day period
before actual cancellation. For being contrary to
Section 4 of RA 6552, these stipulations are
rendered null and void, and the general
provisions governing a contract to sell under RA
6552 shall govern. (Pryce Properties Corp. v.
Nolasco, Jr., G.R. No. 203990, August 24, 2020,
J. Hernando)
40. A sold a portion of his land to B. However,
the sale was not recorded by the parties. After
A died, the heirs of A executed an Extrajudicial
Settlement of Estate of the Deceased and the
sale over the property which included the sale
of the apportioned property to B. Thereafter,
AAA, one of the heirs of A, was granted a Free
Patent which covered the whole property
including the portion that was already sold to B.
B filed an action for reconveyance, cancellation
and quieting of title. Can the heirs of A invoke
the defense of Statute of Frauds as a defense
that the sale was unenforceable?
No. The heirs of A cannot invoke the Statute of
Frauds as a defense that the sale was
unenforceable. By Article 1403(2)(e) of the Civil
Code, a verbal contract for the sale of real
property is unenforceable, unless ratified. For
such contract offends the Statute of Frauds. But
Statute of Frauds is applicable only to executory
contracts - not to contracts either totally or
partially performed. It matters not that neither
the receipt for the consideration nor the sale
itself was in writing. Because "oral evidence of
the alleged consummated sale of the land" is
not forbidden by the Statute of Frauds and may
not be excluded in court. Here, the sale was
consummated, and the Statute of Frauds does
not apply in the case at bar. (Purisima vs.
Purisima, G.R. No. 200484, November 18,
2020, J. Hernando)
41. A executed a written agreement conveying
portions of his land to B, C and D. B offered to
sell his portion of the land to E. Subsequently,
a survey was conducted for the benefit of E.
The portion of the land was segregated. It was
designated as Lot 1 and Lot 2 which were sold
to E. E saw no need to occupy the lots and
allowed A’s son to cultivate his lots and remit to
him his shares of the fruits thereof. After A died,
his heirs attempted to sell the property
including E’s portion of the land. E filed a case
to protect his ownership over the lots. Is the
agreement an unenforceable contract under
Art. 1403?
No, the Statute of Fraud is not applicable to
totally or partially performed contracts. The
acts of A, B and E after the execution of the
agreement, albeit un-notarized, point to a
meeting of the minds for the sale of the subject
property. In furtherance of their agreement, a
survey was undertaken at the behest and for
the benefit of E, which identified the portion of
the land to be sold to him. Hence, the
agreement has been either partially or totally
performed, thus removing the agreement from
the ambit of Statute of Fraud. (Willy vs. Julian,
G.R. No. 207051, December 1, 2021, J.
Hernando)
42. The spouses Singsong alleged that in 1977,
they purchased Jessa Santos’ share in Lot 512-
C consisting of 771 sq. m. or one-half of the
property. Cristy Singsong further alleged that in
the same year, she and her husband entered a
verbal agreement with the spouses Pamintuan
for the purchase of the other half portion of the
lot, but the spouses Singson admitted that the
parties did not execute any written agreement
reflecting the alleged sale. In the meantime, a
complaint for quieting of title concerning Lot
512-C was filed by a certain Maria Teresa
against Jessa and the spouses Pamintuan.
Petitioner Cristy averred that she agreed to
23
shoulder all the expenses of the litigation, with
the alleged agreement that such expenses
would be deemed part of the purchase price of
the half owned by the spouses Pamat. In the
sale of an undivided parcel of land, is there a
determinate subject matter when the
acknowledgement of receipt of payment states:
“this amount is payment only for two lots?”
No. Under Article 1460 of the Civil Code, the
requisite that a thing be determinate is satisfied
if at the time the contract is entered into, the
thing is capable of being made determinate
without the necessity of a new or further
agreement between the parties. The object of
the supposed sale is ambiguous. It is well
settled that the object of every contract must
be determinate.The phrase "this amount is
payment only for two lots" renders the object
of the sale ambiguous as it does not even
define the metes and bounds of the lots which
are supposedly the subject of the sale. (Cristina
Seming vs. Emelita Alamag, et al.,G.R. No.
202284, March 17, 2021, J. Hernando)
43. Spouses A and C were the registered
owners of a parcel of land planted with
coconuts. They died intestate and was survived
by their two sons and sole heirs, Akila and
Ducit, who are both mentally incapacitated. A
deed of sale and an agreement executed by and
between A and J on April 13, 1992, however
surfaced and spawned a legal controversy
among the family members. In the Deed of
Sale, A allegedly ceded unto J the subject
property for a consideration of P15,000.00,
while the Agreement stipulated that during A's
lifetime, J shall allow A to enjoy the usufruct of
the subject property, and that upon A's death,
J shall continue to support and provide financial
assistance to Akil and Ducit. The Agreement
further provided that breach of its terms shall
render the Deed of Sale non-effective and
nugatory. Amanda applied for the issuance of
letters of guardianship over Akila and Ducit
which was granted upon filing a bond of
P20,000.00. While the guardianship
proceedings were pending, J executed a Deed
of Voluntary Transfer conveying the subject
property to his children. Amanda then instituted
a complaint for nullity and/or annulment of sale
seeking the nullification of the Deed of Sale and
Agreement, among other reliefs, against J and
in behalf of siblings Akila and Ducit. Amanda
assailed the validity of both documents for
being fictitious and without consideration. She
claimed that it was incongruous for A to sell the
subject property for P15,000.00 when it had a
market value of at least P150,000.00 at the
time of sale. Moreover, J allegedly could not
afford to pay the real value of the subject
property as he
had no known means of livelihood. She claimed
that the transaction was in reality a donation
mortis causa, and since it was not executed in
accordance with the formalities of the law, it
was null and void. May gross inadequacy of the
price invalidate a contract of sale?
No. First, a contract enjoys the presumption
that it is supported by an existing and lawful
cause or consideration. This presumption is
disputable and may be overthrown by
preponderance of evidence to the contrary.
Preponderance of evidence is the weight,
credit, and value of the aggregate evidence on
either side and is usually considered to be
synonymous with the term "greater weight of
evidence" or "greater weight of credible
evidence." Second, notarized documents, being
public in nature, require no further proof of
their authenticity and due execution. They are
entitled to full faith and credit on its face and
are prima facie evidence of the facts stated
therein. To overturn this presumption of
regularity, clear and convincing proof is
required. (Bacala vs. Heirs of Poliño, G.R. No.
200608, February 10, 2021, J. Hernando)
44. Patrick and Adrian Palomo carried out the
Montemayor Project, which included the
development of the Montemayor Beach Club
and Montemayor Villas. To implement the
project, they transferred their shares in favor of
MNDZ, a fully-owned corporation of the Mendez
family. MNDZ paid partially P2.5 Million. The
remaining P17.5 Million was to be paid by way
of an Assignment of Rights wherein MNDZ: (1)
assigned to the Palomos P3 Million worth of
shares in MNDZ, which is created by MNDZ to
sell the shares of the beach resort; and (2)
would pay the Palomos (40%) of the net
proceeds from the sale of the Montemayor
Villas lots. MNDZ vowed to continue to
24
undertake the marketing of the Montemayor
Villas for the purpose of remitting to the
Palomos their 40% share in the sale of the said
lots until full payment of the P20 Million. Is the
contract entered by the Palomos and MNDZ a
joint venture agreement?
No, the Palomos and MNDZ entered a contract
of sale, and not a joint venture agreement.
Under Article 1370 of the Civil Code, the
cardinal rule in the interpretation of contracts is
that when the terms of the contract are clear,
its literal meaning shall control. If the words
appear to be contrary to the evident intention
of the parties, the latter shall prevail over the
former. In interpreting the agreement between
the parties, the inquiry is not what the parties
intended to enter into, but what contract they
entered into. Nothing in the documents, nor in
any of the subsequent contracts between the
parties that indicates that the transaction
entered by and between them was a joint
venture. A joint venture, therefore, is akin to a
partnership, the essential elements of which are
as follows: (1) an agreement to contribute
money, property, or industry to a common
fund; and (2) an intent to divide the profits
among the contracting parties. (Valdes vs. La
Colina Development Corp, G.R. 208140, July
12, 2021, J. Hernando)
45. The late Zenith purchased from Spouses
Domingo and Spouses Batas a parcel of land
including the house thereon. An annotation in
the title indicates that the consent of the
National Housing Authority (NHA) is necessary
for the disposal of the same. Zenith and the
Spouses Batas executed documents to reflect
their mutual agreement on the sale and
purchase of the subject property. They further
asserted that the Agreement was executed by
the parties because the Spouses Batas were
apprehensive that Zenith might not pay the
remaining balance. It was further alleged that
the Spouses Batas promised to procure the
written consent of the NHA for the sale of the
subject property. In the meantime, pursuant to
their mutual agreement on the sale and
purchase of the same, Zenith paid the Batas
couple an aggregate amount of more than
P800,000.00, as evidenced by receipts. Once
the spouses Batas received the said amount,
they promised to deliver the title of the subject
property to Zenith as soon as they secured the
NHA's consent. Meanwhile, the spouses Batas
borrowed the certificate of title of the property
which at that time was already in the
possession of Zenith after she paid them the
amount of P650,000.00, so they can work on
the cancellation of the mortgage on the subject
property. The Heirs of Zenith point out that
Zenith has not paid the balance of the selling
price because the spouses Batas have not yet
obtained NHA's written consent to the sale.
A. What is the difference between contract to
sell and contract of sale with regards to the
ownership of the thing?
B. In double sale of property, is prior
registration by the second buyer confer
ownership or better right over the property?
A. In a contract to sell, title remains with the
vendor and does not pass on to the vendee until
the purchase price is paid in full. Thus, in a
contract to sell, the payment of the purchase
price is a positive suspensive condition. Failure
to pay the price agreed upon is not a mere
breach, casual or serious, but a situation that
prevents the obligation of the vendor to convey
title from acquiring an obligatory force. This is
entirely different from the situation in a contract
of sale, where non-payment of the price is a
negative resolutory condition. The effects in law
are not identical. In a contract of sale, the
vendor has lost ownership of the thing sold and
cannot recover it, unless the contract of sale is
rescinded and set aside. In a contract to sell,
however, the vendor remains the owner for as
long as the vendee has not complied fully with
the condition of paying the purchase price.
B. No. The prior registration of the disputed
property by the second buyer does not by itself
confer ownership or a better right over the
property. Article 1544 of the Civil Code requires
that such registration must be coupled with
good faith. Jurisprudence teaches us that "the
governing principle is primus tempore, potior
jure (first in time, stronger in right). Knowledge
gained by the first buyer of the second sale
cannot defeat the first buyer's rights except
where the second buyer registers in good faith
the second sale ahead of the first, as provided
25
by the Civil Code. Such knowledge of the first
buyer does not bar her [or him] from availing
of her [or his] rights under the law, among
them, to register first her [or his] purchase as
against the second buyer. But in converso,
knowledge gained by the second buyer of the
first sale defeats his [or her] rights even if he
[or she] is first to register the second sale, since
such knowledge taints his [or her] prior
registration with bad faith. This is the price
exacted by Article 1544 of the Civil Code for the
second buyer being able to displace the first
buyer; that before the second buyer can obtain
priority over the first, he or she must show that
he or she acted in good faith throughout (i.e.,
in ignorance of the first sale and of the first
buyer's rights) — from the time of acquisition
until the title is transferred to him or her by
registration or failing registration, by delivery of
possession". (Heirs of Gonzales vs. Spouses
Dominador, G.R. No. 206847, June 15, 2022, J.
Hernando)
46. The spouses Indi, both Manobo natives,
were the registered owners of a lot located
in Sudapin, Kidapawan, Cotabato covered by
OCT No. P-46114. However, portions of the
subject property are presently occupied by
Roman Catholic, Willy, Liza and Julia. The
surviving heirs of the spouses Indi later on filed
a complaint for quieting of OCT No. P-46114
and recovery of possession thereof with
damages and attorney's fees. They claimed
that, taking advantage of the ignorance and
illiteracy of the spouses Inde, Roman Catholic,
Willy, Liza and Julia gradually took possession
of portions of the subject property through
deceitful machinations. In addition, they
alleged that the lawful heirs of the spouses Inde
had executed an extrajudicial settlement of
estate which includes the subject property.
They likewise claimed that ownership of Roman
Catholic, Willy, Liza and Julia over the portions
of the subject property was merely evidenced
by tax declarations and that the purported
conveyances of said respective portions were
never annotated on OCT No. P-46114. May a
buyer merely rely on the declarations of the
sellers that the property to be bought is free
from any encumbrances?
No. Well-settled is the rule that "purchaser of
real estate with knowledge of any defect or lack
to title of the vendor cannot claim that he has
acquired title thereto in good faith as against
the true owner of the land or interest therein."
The same rule also applies to those with
knowledge of facts that should have put one on
inquiry and investigation as might be necessary
to be acquainted with the defects in the title of
the vendor, as in the cases at bar. The
respondents' willful refusal to believe that a
defect exists in the vendors' title or the
possibility of its existence will not make them
innocent purchaser for value if a defect indeed
occurs A buyer of registered land is expected to
act with purchaser in good faith. (Ende v.
Roman Catholic Prelate of the Prelature Nullius
of Cotabato, Inc.,G.R. No. 191867, December
6, 2021, J. Hernando)
47. May an action for the declaration of nullity
of a contract of sale be barred by laches?
No. Article 1410 of the Civil Code states that the
action or defense for the declaration of the
inexistence of a contract does not prescribe. An
action that is predicated on the fact that the
conveyance complained of is null and void ab
initio is imprescriptible. Hence, the validity of
the Sale can be assailed of inspite of failure to
question the sale after several years. Lack of
immediate challenge did not negate the fact
that the contract of sale is null and void and
assailable anytime due to the imprescriptibility
of an action. Similarly, laches cannot be invoke
as a defense given that an action is
imprescriptible. (Arakor Construction and
Development Corp. v. Teresita Sta. Maria, et al.
G.R. No. 215006, January 11, 2021, J.
Hernando)
48. When is a transaction, denominated as a
sale agreement, an equitable mortgage?
Under Article 1602 of the Civil Code, the
contract shall be presumed to be an equitable
mortgage, in any of the following cases: (1)
When the price of a sale with a right to
repurchase is unusually inadequate; (2) When
the vendor remains in possession as lessee or
otherwise; (3) When upon or after the
26
expiration of the right to repurchase another
instrument extending the period of redemption
or granting a new period is executed; (4) When
the purchaser retains for himself a part of the
purchase price; (5) When the vendor binds
himself to pay the taxes on the thing sold; and
(6) In any other case where it may be fairly
inferred that the real intention of the parties is
that the transaction shall secure the payment
of a debt or the performance of any other
obligation.Decisive for the proper
determination of the true nature of the
transaction between the parties is their intent,
shown not merely by the contract's terminology
but by the totality of the surrounding
circumstances, such as the relative situations of
the parties at that time; the attitudes, acts,
conduct, and declarations of the parties; the
negotiations between them leading to the
deed; and generally, all pertinent facts having
a tendency to fix and determine the real nature
of their design and understanding. When in
doubt, courts are generally inclined to construe
a transaction purporting to be a sale as an
equitable mortgage, which involves a lesser
transmission of rights and interests over the
property in controversy. (Dacquel vs Spouses
Sotelo, G.R. No. 203946, August 4, 2021, J.
Hernando)
49. Liza purchased a residential house and lot
from Samuel covered by TCT No. T-59, through
a Deed of Absolute Sale in the amount of
P10,000.00. Since Liza was in the United States,
her mother purchased the property on her
behalf. Later on, Liza decided to have title
registered in her name but she discovered that
the owner's duplicate got lost while it was kept
by Jade in the house. Thereafter, Liza, through
Jade, filed a petition for the issuance of a new
owner's duplicate. However, Spouses Lumawag
opposed her petition on the ground that they
were in possession of the said title after buying
the same from Samuel. Thus, Liza’s petition
was dismissed.When Spouses Lumawag
informed Samuel about the petition for the
issuance of a new owner's copy of the title, the
latter denied having sold the subject property
to Liza. However, due to the controversy,
Samuel repurchased the subject property and
the owner's duplicate was surrendered back to
her. In 1996, Liza and Jade lodged a complaint
for declaration of nullity of a pacto de retro sale
entered into between Samuel and Spouses
Lumawag. Does the Deed of Sale validly
transfer the ownership of property even if
there's no transfer of the certificate of title in
the name of the buyer?
Yes. Under Article 1498 of the Civil Code, 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. Even if the
property remained in the name of the seller
despite the execution of Deed of Sale, it does
not affect the validity of the latter. Transfer of
the certificate of title in the name of the buyer
and transfer of ownership to the buyer are two
different concepts. The ownership is
transferred not by the issuance of the new
certificate of title in the name of the buyer but
by execution of the instrument of sale in a
public document. (Cabilao vs. Tampan, G.R.
No. 209702, March 23, 2022, J. Hernando)
50. A convinced B to purchase two lots from
her friend. B agreed to buy the two (2) lots after
the persistent assurances of A that the transfer
certificate of titles would be issued under B’s
name after the execution of the sale. A then
offered to pose as the buyer because the seller,
who was her close friend, allegedly wanted to
deal only with her to keep his financial
constraints within his close family friends. B
then entrusted to A the purchase price
amounting to P15,000,000.00, with the
agreement that A would be the signatory in the
Deed of Sale but will hold the properties in trust
for, and subsequently reconvey the same to B.
When B inquired on the status of the properties,
he found out that the properties were already
registered in the name of A. This prompted B to
assume possession of the properties, paid the
tax declaration and introduce major
renovations on the house amounting to a total
of P9,000,000.00. Is there an implied trust that
exists between A and B?
Yes. There is an implied trust that exists
between A and B. As provided under Article
1448 of the New Civil Code, there is an implied
27
trust when property is sold, and the legal estate
is granted to one party, but the price is paid by
another for the purpose of having the beneficial
interest of the property. The former is the
trustee, while the latter is the beneficiary.
However, if the person to whom the title is
conveyed is a child, legitimate or illegitimate, of
the one paying the price of the sale, no trust is
implied by law, it being disputably presumed
that there is a gift in favor of the child.
Moreover, Article 1456 of the New Civil Code
pertinently provides that if the property is
acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the
person from whom the property comes. An
implied trust arises, not from any presumed
intention of the parties, but by operation of law
in order to satisfy the demands of justice and
equity and to protect against unfair dealing or
downright fraud. The burden of proving the
existence of a trust is on the party asserting its
existence, and such proof must be clear and
satisfactorily, show the existence of the trust
and its elements. Here, B had actually adduced,
evidence to prove his intention to purchase the
subject properties by paying the purchase price
thereof, through A, with the attendant
expectation that A would later on reconvey the
same to him. The preponderance of evidence
established positive acts of respondent
indicating, without doubt, that he considered
the subject properties as his exclusive
properties. First, he entered into actual
possession of the properties in question
immediately after his full payment of the
purchase price and remained in possession
thereof until the filing of the Complaint before
the lower court. Second, he spent millions for
the renovation of the house constructed on the
premises. Finally, he had the tax declarations
transferred in his name and faithfully paid the
realty taxes thereon. (Lopez vs. Saludo, Jr.,
G.R. No. 233775, September 15, 2021, J.
Hernando)
51. A sold three (3) parcels of land to B who is
married to C. A instructed B that upon B’s
death, these properties would be transferred to
A’s grandchildren. To comply, B executed a
Declaration of Trust acknowledging that B held
in trust these land in favor of A’s grandchildren
which was with the conformity of C. Upon B’s
death, A’s grandchildren filed a Complaint for
Reconveyance with Damages against C for its
refusal to surrender the titles to the
grandchildren. C admitted the existence of
trust. However, in his defense, C alleged that
the Declaration was revoked by a Revocation of
Declaration of Trust which was not signed by B.
Are A’s grandchildren entitled to the
reconveyance of the parcels of land given by
their grandfather?
Yes. A’s grandchildren are entitled to the
reconveyance of the parcels of land given by
their grandfather. Jurisprudence provides that
a trust is the legal relationship between one
person having an equitable ownership of
property and another person owning the legal
title to such property, the equitable ownership
of the former entitling him to the performance
of certain duties and the exercise of certain
powers by the latter. In this case, B, as the
trustee, had the duty to properly manage the
properties for the benefit of A’s grandchildren.
Notably, C is not a party to this trust, and he
only signed the document evidencing the trust
as C’s husband. There is also no question that
C admitted the due execution and validity of the
Declaration of Trust. Thus, as a signatory
thereto, he is bound by the indent and contents
of the said document and thus should honor the
directives contained therein. (Daniel vs.
Magkaisa, G.R. No. 203815, December 7, 2020,
J. Hernando)
52. In 1977, Spouses Tinagan obtained an
agricultural loan from XYZ Bank, with a
stipulation of the payment of interests in
writing. The loan was secured by a real estate
mortgage over their four (4) parcels of land. In
1985, two (2) of the subject properties were
bought by ABC Corporation. XYZ Bank agreed
to the sale on the condition that the proceeds
from the sale would be applied to the
outstanding obligations of Spouses Tinagan.
However, ABC Corporation did not remit to XYZ
Bank the said proceeds. The latter sued the
corporation for the payment of the proceeds,
including interests and penalties. Is ABC
corporation liable to pay the interest and
penalty charges?
28
No. Article 1956 of the Civil Code states that no
interest shall be due unless it has been
expressly stipulated in writing. As can be
gleaned from the foregoing provision, payment
of monetary interest is allowed only if: (1) there
was an express stipulation 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,
collection of interest without any stipulation
therefor in writing is prohibited by law. The
stipulation of interest in the original agricultural
loan dated April 22, 1977 and the Deed of
Conditional Sale dated October 10, 1985 are
not applicable to ABC Corporation as the latter
is not privy to the said contracts. (Development
Bank of the Philippines vs. Heirs of Julieta
Danico, G.R. No. 196476, September 28, 2020,
J. Hernando)
53. UB Bank issued Mr. R a UB Bank Visa credit
card. Mr. R filed a complaint for damages
alleging that UB Bank declined his transaction
with T Airways when he used the credit card to
purchase airline tickets online. Further, he
claimed that he suffered embarrassment, social
humiliation, mental anguish, serious anxieties,
besmirched reputation, and wounded feelings
when his card was dishonored at G Restaurant.
For its part, UB Bank explained that Mr. R’s
credit card was declined when he tried to
purchase online a ticket with T Airways because
his account was already in "past due" status. It
was further dishonored at G Restaurant
because the account was already in “past due”
status for failure to pay the minimum amount
due.
A. Is there a loan agreement between UB Bank
and Mr. R upon issuance in his favor of the
credit card?
B. What are the contracts involved in every
credit card transaction?
A. No. The use of a credit card to pay for a
purchase is only an offer to the credit card
company to enter into a loan agreement with
the credit card holder. Before the credit card
issuer accepts this offer, no obligation relating
to the loan agreement exists between them.
Thus, UB Bank has no obligation to enter into a
loan agreement with Mr. R when the latter
tendered his offer by using his UB Bank Visa
credit card to pay for his purchases. Mr. R,
cannot, therefore demand from UB Bank to loan
him or to pay for his purchases by virtue of the
issued Visa credit card. While it is true that with
the issuance of the credit card to Mr. R, UB
Bank granted him a credit facility or a pre-
approved amount which the card holder may
use in his purchase of goods and services, this
is not a demandable right which the card holder
may hold against the credit card company as if
he is entitled to be granted a loan whenever he
or she wants to, or that the bank owes him or
her money by the mere issuance of a credit
card. Hence, UB Bank may or may not approve
Mr. R's purchase requests based on the latter's
credit standing, credit card history, and
financial capability. The Terms and Conditions
did not expressly state that UB Bank would
honor all purchase requests of Mr. R at all
times. Union Bank cannot also be considered
grossly negligent when it automatically revoked
Mr. R’s credit card account when the latter
failed to pay the minimum amount due pending
the resolution of the disputed transactions.
B. Notably, "every credit card transaction
involves three contracts, namely: (a) the sales
contract between the credit card holder and the
merchant or the business establishment which
accepted the credit card; (b) the loan
agreement between the credit card issuer and
the credit card holder; and lastly, (c) the
promise to pay between the credit card issuer
and the merchant or business establishment."
(Rex Rico vs. Union Bank of the Philippines,
G.R. No. 210928, February 14, 2022, J.
Hernando)
54. FX Bank and B Merchandise entered in loan
agreement. Also, FX Bank granted BBM a
Discounting Line Facility in the amount of 15M.
To secure the loan, B Merchandise executed a
real estate mortgage on two parcels of land, a
chattel mortgage on their rice mill, and a
Comprehensive Surety Agreement. FX Bank
also granted B Merchandise a Discounting Line
facility, the discounting accommodation shall be
partially secured by a real estate mortgage on
TCTs and the chattel mortgage on the rice mill.
Meanwhile, spouses BB, for an behalf of B
Merchandise, executed a Promissory Note (PN)
29
carrying the same provisions as the Term Loan
Agreement. The spouses BB failed to pay their
obligations under the PNs. FX Bank sent a letter
demanding payment of the total amount due
representing both their Discounting Line and
Loan Agreement availments, exclusive of
interest, penalties another charges which was
followed by a Final Demand Letter. Therefore,
FX Bank filed a Petition for Extra-Judicial
Foreclosure of Real Estate Mortgage under Act
No. 3135 for the loans covered by the PNs.
Thereafter, FX Bank filed again its complaint for
the collection of the amounts due. Did the
previous filing of extrajudicial foreclosure of
REM bar the personal action for the collection
of debt?
No. The parties executed two loan agreements,
namely: (a) Loan Agreement; and (b)
Discounting Line. These two loan facilities are
separate and distinct from each other; thus, it
follows that the Loan Agreement and the
Discounting Line are separate and distinct
obligations of the spouses BB. In effect, there
could be no violation of the prohibition against
splitting a cause of action when FX Bank
instituted a foreclosure of mortgage on the
TCTs for the PNs drawn against the Discounting
Line and successively filed a collection suit to
recover the debt due under the PN which was
drawn against the Loan Agreement. Being
separate and distinct contracts, FX Bank, as the
mortgage creditor, may institute either a
personal action for the collection of debt, or a
real action to foreclose the mortgage under the
Loan Agreement. Obviously, FX Bank chose to
elect a personal action to recover the amount
due on the PN drawn against the loan
agreement by filing the herein complaint.
Furthermore, the REM is just an accessory
contract, thus, it does not control the principal
agreements, i.e. the Loan Agreement and the
Discounting Line, as it is only dependent upon
the latter obligations. Hence, even if the REM
secured all of the obligations of the spouses BB
to the bank, whether existing or future
indebtedness, it will not modify nor change the
fact that they entered into two separate and
distinct obligations which give rise to separate
actions regardless of whether they become due
and demandable at the same time or not.
(Asset Pool A (SPV-AMC), Inc. v. Spouses
Berris, G.R. No. 203194, April 26, 2021, J.
Hernando).
55. Vanzuela withdrew P1,722,500.00 from her
deposit account at Allied Bank-Pasay. Via
electronic fund transfer, she deposited
P1,590,000.00 to the account of Spouses
Mendez. Spouses Mendez then opened a
savings account at Allied Bank-Pasong Tamo
(AB-PT) Branch. In subsequent and separate
instances, the Spouses were able to make
withdrawals in the total amount of
P490,000.00, leaving a balance of P1.1 Million
in their savings account with AB-PT. Later on,
The Region Head, Retail Banking Group for
Allied Bank's South Metro Manila Branches,
ordered the debit of the remaining P1.1 Million
from the account of the Spouses which resulted
in the closure thereof. The Spouses Mendez
learned of the closure after they were unable to
withdraw from their account. Hence, the
Spouses filed the complaint for damages
against the bank. Is Allied Bank liable for
unilaterally debiting and closing the deposit
account of the Spouses Mendez?
Yes. There is a deposit agreement between
Allied Bank and the Spouses Mendez. The
savings deposit agreement between the bank
and the depositor is the contract that
determines the rights and obligations of the
parties as in a simple loan. In contemplation of
the fiduciary nature of a bank-depositor
relationship, the law imposes on the bank a
higher standard of integrity and performance in
complying with its obligations under the
contract of simple loan, beyond those required
of non-bank debtors under a similar contract of
simple loan. Allied Bank cannot obliquely
repudiate the resulting banking relationship
with the Spouses and the fiduciary nature
thereof when it accepted the spouses' initial
deposit of P1,590,000.00. It cannot belatedly
claim ignorance of its performance of a core
banking function, i.e., accepting or creating
demand deposits. (Allied Banking Corp. v.
Spouses Macam, G.R. No. 200635, February 1,
2021, J. Hernando)
56. G Company applied for a "clean loan" with
B BANK where Mrs. V was an employee. B BANK
30
granted the loan in the amount of
P2,000,000.00 as evidenced by a Promissory
Note. When Mrs. V retired, she requested for
the payment of her retirement benefits and for
the release of the owner's copy of Transfer
Certificate of Title No. 77966 (subject property)
which was retained by B BANK in relation to
Mrs. V’s earlier housing loan which loan was
already fully paid. However, B BANK allegedly
refused to release her retirement benefits
unless she and her husband would execute a
real estate mortgage over the subject property
to secure G Company's loan. Being pressed for
money, Mrs. V had no choice but to accede to
B BANK's demands and to sign the Real Estate
Mortgage (REM) in favor of B BANK. After the
REM was executed, they offered to pay B BANK
the amount of P500,000.00 to redeem the
collateral. However, instead of applying the
P500,000.00 for the redemption, B BANK
applied it to the payment of the interest due on
G Company's loan. Further, when G Company
defaulted in its payment of the loan, B BANK
wrongfully foreclosed the subject property and
scheduled its auction sale. Does B Bank have
the right to retain the P500,000.00 under the
Deed of Suretyship?
No. B BANK has no right to apply the
P500,000.00 to G Company’s loan. In retaining
the P500,000.00 and applying the same to the
payment of G Company's interest, B BANK
invokes its right as a creditor to proceed against
Mrs. V who is solidarily liable under the Deed of
Suretyship. Article 1216 of Civil Code provides
that the creditor may proceed against any one
of the solidary debtors or some or all of them
simultaneously. By "proceed," the law means to
"sue" or to "institute proceedings" for collection
or enforcement of the surety contract. The
creditor's right to proceed against the surety
does not give him any right to deprive said
surety of his property without due process of
the law. It does not contemplate a situation
where the creditor is allowed to take by force
or without consent the property of the surety.
Much like collecting from the principal debtor,
the creditor may recover only through lawful
means. The creditor may not simply take the
law in his own hands and summarily take the
property of the debtor or surety.
Here, while the Court agreed that B bank is
entitled to collect from Mrs. V, she being
solidarily liable under the Deed of Suretyship, B
BANK may not precipitously deprive them of
their property without due process of the law.
What is apparent is that after Mrs. V made the
offer, B BANK responded through its Letter
simply stating that “the amount of P500,000.00
remitted to B BANK has been applied to past
due interest." B BANK took a shortcut in
collecting from Mrs. V. (Spouses Genotiva vs.
Equitable PCI Bank, G.R. No. 213796, June 28,
2021, J. Hernando)
57. ABC Company obtained a loan from XYZ
Bank. As a security for the said loan, AAA and
BBB executed a real estate mortgage over their
property. It was agreed that all correspondence
relative to the mortgage shall be sent by the
bank to the company. XYZ Bank agreed to
renew ABC Company’s loan. However, AAA and
BBB failed to pay the balance of their obligation
which resulted to an extra-judicial foreclosure
over their property. They were notified of the
foreclosure proceedings by the bank through
the Application of Extra-Judicial Foreclosure of
Mortgage filed by the bank. However, the bank
twice amended the petition for extra-judicial
foreclosure and did not send a personal notice
of the two amended petitions to the company.
Is the foreclosure proceeding valid?
No. The foreclosure proceeding is null and void.
A personal notice to the mortgagor in
extrajudicial foreclosure proceedings is not
necessary. Section 3 of Act No. 3135, as
amended by Act No. 4118, requires only the
posting of the notice of sale in three public
places and the publication of that notice in a
newspaper of general circulation. An exception
to this rule is when the parties stipulate that
personal notice is additionally required to be
given to the mortgagor. Failure to abide by the
general rule or its exception renders the
foreclosure proceedings null and void. Here,
XYZ Bank proceeded with the foreclosure of the
property without sending the required personal
notice rendering the foreclosure proceeding
null and void. (Panacan Lumber Co. vs.
Solidbank Corp., G.R. No. 226272, September
16, 2020, J.Hernando)
31
58. X alleged that Y executed a Deed of
Mortgage over two (2) parcels of land as a
collateral for her loan, which was payable within
three (3) years. Despite the lapse of 3 years
from the date of the mortgage, and despite
repeated demands, Y failed and refused to pay
the amount. Y alleged that X required her and
her children to affix their signatures on a blank
bond paper, and thus, Y assailed the
authenticity of the Deed. Is the Deed of
Mortgage absolutely simulated?
No, the totality of the circumstances negates
the contention that the Deed of Mortgage was
absolutely simulated. Under Article 1409 of the
Civil Code, absolute simulation voids a contract.
In absolute simulation, there appears a
colorable contract but there actually is none, as
the parties thereto have never intended to be
bound by it. Such intention is determinable not
only from the express terms of their agreement,
but also from the contemporaneous and
subsequent acts of the parties. (Ganancial vs.
Cabugao, G.R. No. 203348, June 6, 2020, J.
Hernando)
59. A entered into a housing loan with B Bank,
the loan was secured by a real estate mortgage
owned by A. Eventually, A defaulted on the
payment of his loan obligation. Thus, B Bank
commenced an action to foreclose the real
estate mortgage extra-judicially under the
provisions of Act. 3135 (Act to Regulate the
Sale of Property under Special Powers Inserted
in or Annexed to Real-Estate Mortgages as
amended). After the lapse of 1 year redemption
period without any attempt on the part of A to
redeem the mortgaged property, the ownership
of the property was consolidated in favor of B
Bank. A refused to vacate the property, B Bank
filed an ex parte petition for the issuance of writ
of possession. One of the contentions of A is
that under Act. 3135, the remedy available to
the debtor is the opportunity to contest the
transfer of possession. Is the contention of A
that provisions of Act No. 3135 (Act to Regulate
the Sale of Property under Special Powers
Inserted in or Annexed to Real-Estate
Mortgages as amended) still applicable
although the period of 1 year redemption has
already lapsed?
No, provisions of Act No. 3135 is no longer
applicable, the contention of A is not tenable.
The general rule is that in extra-judicial
foreclosures, a writ of possession may be issued
to the purchaser in two different instances, and
based on two different sources: (1) within the
redemption period, in accordance with Act No.
3135, particularly Section 7, as amended; and
(2) after the lapse of the redemption period,
based on the purchaser's right of ownership.
Under the second instance, which is what
happened in the case at bar, a writ of
possession may be issued after consolidation of
ownership of the property in the name of the
purchaser. The purchaser becomes the
absolute owner of the property purchased in
the foreclosure sale, if it is not redeemed during
the one-year period after the registration of the
sale. The provisions of Act No. 3135,
particularly the remedy provided under Section
8 thereof, apply only during the period of
redemption. After the lapse of the redemption
period and the title of the purchaser is
consolidated, Act No. 3135 finds no application.
Hence, provisions of Act No. 3135 no longer
applied to the parties. B Bank became the
absolute owner of the subject property as a
matter of right (Spouses Torrecampo v. Wealth
Development Bank Corp., G.R. No. 221845,
March 21, 2022, J. Hernando).
60. Petitioners GW Properties and N Realty
obtained loans from M Bank covered by
promissory notes and secured by real estate
mortgage and a continuing surety agreement.
When both debtor companies experienced
financial difficulties, both requested M Bank to
modify their interest payment scheme from
monthly to quarterly which was later approved
but such approval was made only after four
months resulting to the accumulation of
interest and in their failure to pay. In a letter,
petitioners submitted a modified proposal for
the payment of their loan and asked for the
release of some collateral upon payment of a
partial amount. They also undertook to put up
their Alabang property as additional collateral
for their loans and further requested the bank
to stop charging interests and penalties while
negotiations were ongoing.
32
A. Can Metrobank be compelled to allow and
make a partial release of the mortgages over
the subject properties?
B. Distinguish Monetary interest from
compensatory/penalty interest.
A. No. Partial release of the collaterals cannot
be allowed. Article 2089 of the Civil Code states
that a pledge or mortgage is indivisible, even
though the debt may be divided among the
successors in interest of the debtor or of the
creditor. Therefore, the debtor's heir who has
paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or
mortgage as long as the debt is not completely
satisfied. An exception from this provision is a
case where, there being several things given in
mortgage or pledge, each one of these
guarantees only a determinate portion of the
credit. The debtor who has paid a part of the
debt cannot ask for the proportionate
extinguishment of the mortgage as long as the
debt is not completely satisfied. Thus, the fact
that petitioners paid for the loan value of the
Pasay properties is immaterial; the mortgage
would still be in effect since the loans have not
been fully settled. Although M Bank allowed the
release of some properties from mortgage in
the past, such would not bind the bank to grant
the same concession every single time,
particularly when it is evident that the
petitioners were having difficulties settling their
total obligation. To do so would place the bank
in a disadvantageous position because it would
have less collaterals to cover for the total
accountability of the petitioners. More so when
the petitioners suddenly refused to include the
Alabang properties as additional collateral to
cover the loans.
B. Monetary interest is a type of interest as a
compensation fixed by the parties for the use
or forbearance of money while compensatory
interest is an interest that may be imposed by
law or by courts as penalty for damages. As
regards monetary interest, although the parties
are free to stipulate their preferred rate, the
courts are allowed to equitably temper interest
rates that are found to be excessive, iniquitous,
unconscionable, and/or exorbitant. Thus,
stipulated interest rates of 3% per month or
higher is considered as excessive or
unconscionable. Alternatively, as per settled
jurisprudence, a 24% per annum (or 2% per
month) rate is not unconscionable.
Penal/compensatory interest, on the other
hand, is characterized as an undertaking
attached to a principal obligation and has two
purposes: firstly, to provide for liquidated
damages; and secondly, to strengthen the
coercive force of the obligation by the threat of
greater responsibility in the event of breach of
obligation. Moreover, a penal clause is a
substitute indemnity for damages and the
payment of interests in case of noncompliance,
unless there is a stipulation to the contrary,
pursuant to Article 1226 of the Civil Code.
However, if the parties stipulate that there is a
penalty interest separate from monetary
interest, these two kinds of interest should be
treated different and distinct from each other
and may be demanded separately. (Goldwell
Properties Tagaytay, Inc. vs. Metropolitan Bank
and Trust Co., G.R. No. 209837, May 12, 2021,
J. Hernando)
61. W owned parcels of land (Lot A, B and C)
which was later discovered that Lot A and C
were sold to Spouses Somis through a deed of
sale allegedly signed by W and H. W filed a
complaint for annulment of the document
alleging that she did not sign the deed of sale
transferring Lot C to Spouses Somis.
Subsequently, W and Spouses Somis entered
into a compromise agreement transferring Lot
B to Spouses Somis which the trial court
approved. However, W filed a motion to set
aside the issuance of writ of execution as she
claimed that she intended to give Lot C (and
not Lot B) to Spouses Somis. She asserted that
the description given by Spouses Somis was
erroneous. Whether or not the compromise
agreement is valid and binding?
Yes, it correctly ruled that the Compromise
Agreement was valid and binding since there
was a meeting of the minds between the
parties. Article 1305 of the Civil Code provides
that a contract is a meeting of the minds
between two persons, whereby one is bound to
give something or to render some service to the
other. The Compromise Agreement was clear
that the contracting parties mutually agreed to
transfer to each other the properties indicated
33
therein. Even if it was W's counsel who
prepared the written instrument, she or her
representative was expected to exercise due
diligence in reviewing the entries therein before
signing the instrument. Moreover, if indeed
there was a mistake on which property should
be transferred to the Spouses Somis, W should
have availed of her remedies immediately.
(Aromin vs. Heirs of Spouses Somis, G.R. No.
204447, May 3, 2021, J. Hernando)
62. A filed a Notice of Attorney's Lien before
the RTC claiming attorney's fees in the amount
pursuant to their engagement contract with B.
Later on, A filed an Opposition to the Joint
Motion for Approval of Compromise Agreement
attaching their Notice of Attorney's Lien, and
arguing that: (1) the agreement violates law,
morals, good customs, public order or public
policy for failure to include the respondents'
attorney's lien; and (2) the value of RTC’s
judgment should be the basis of the 25%
contingency fee due to them. Can the
attorney’s fee be charged against a
Compromise agreement?
No. Payment of respondents' attorney's fees
cannot be claimed in the compromise
agreement. Article 2208 of the Civil Code
provides, “In the absence of stipulation,
attorney's fees and expenses of litigation, other
than judicial costs, cannot be recovered…”
Additionally, Article 2028 of the Civil Code
states that "a compromise is a contract
whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to
one already commenced." Clearly, A is
precluded from propounding a claim of
attorney's fees. (Jacinto v. Litonjua , G.R. No.
207675, January 20, 2021, J. Hernando)
63. A and B entered into a compromise
agreement dividing the property among five
different parties. Eventually, A and B sold
different portions of the property to different
parties, including C. Later on, A and B executed
a revocation and cancellation of compromise
agreement which resulted to demolition of
some of the properties of C. Thus, C filed for
annulment of the revocation of compromise,
among others. Will the revocation of
compromise agreement bind C who is not a
party to the same?
Yes. The compromise agreement was a
contract that created real rights as it was a
contract for division of property. The third
persons who came into possession of the object
of the contract are thus, bound by the contract
or compromise agreement. At the time the
compromise agreement was revoked by A and
B, C was already legal co-owner of the property
by virtue of a valid sale. As such, his respective
share in the disputed property may not be
validly included in the revocation of the
compromise agreement without his knowledge
and consent (Domilos v. Spouses Pastor, G.R.
No. 207887, March 14, 2022, J. Hernando).
64. Municipality of Eastridge, under then Mayor
Eren, conducted a public bidding for the
rehabilitation and improvement of its municipal
waterworks system project. MOSHY emerged
as the winning bidder. By the end of the year,
MOSHY accomplished more than 50% of the
work essential for the project and expended the
amount of P8M. The present Mayor of Eastridge
by that time was Mayor Armin who refused to
pay the said amount. MOSHY filed a complaint
for the collection of sum of money to the
Construction Industry Arbitration Commission
(CIAC). Mayor Eren averred that he was
authorized to enter into a contract with MOSHY
in accordance with Municipal Ordinance (MO)
No. 2023-01 or “An Ordinance Appropriating
the Amount of Twenty-Seven Million Pesos
(P27, 000, 000.00) for the Purchase of Heavy
Equipment: One Unit Brand New Road Grader
for the Rehabilitation/Improvement on the
Existing Waterworks System of the [Local
Government Unit]. Such MO was passed based
on the quorum of the Sanggunian members
present at that time. On the other hand, Armin
asserted that the contract is not binding
because the Municipal Ordinance was in
violation of Article 107(g) of the IRR of RA 7160
or the LGC of 1991 which provides that no
ordinance or resolution shall be passed by the
Sanggunian without prior approval of a majority
of all the members present. CIAC, as also
affirmed in finality by the Court, ordered in
favor of MOSHY to pay the said obligation.
34
Assuming that Mayor Eren is not legally
authorized, did the Court erred in its decision in
affirming the decision of CIAC for Eastridge to
pay MOSHY?
No, Eastridge is obliged to pay MOSHY on the
basis of the principle of quantum meruit.
Quantum meruit literally means, “as much as
he deserves.” This legal principle is predicated
on equity and states that a person may recover
a reasonable value of the thing he delivered or
the service he rendered. It is a device to
prevent undue enrichment based on the
equitable postulate that it is unjust for a person
to retain a benefit without paying for it. In this
case, despite the invalidity of the municipal
ordinance, which in turn rendered the contract
between Corella and Philkonstrak invalid, the
latter is still entitled to receive payment for the
services it rendered for the local government of
Corella. Corella cannot be unjustly enriched and
allowed to retain the benefits of the services
rendered by Philkonstrak without properly
paying for it. (Municipality of Corella vs.
Philkonstrak Development Corporation, G.R.
No. 218663, February 28, 2022, J. Hernando)
65. Two neighbors (Maitim and Aguila) lived
next to each other with a shared driveway.
Maitim's driver hit and injured Aguila's six-year-
old daughter while driving along the driveway.
Aguila sued Maitim and her driver for damages,
claiming that Maitim was responsible for her
driver's actions. The court ruled in Aguila's
favor, stating that the driver was negligent, and
Maitim was liable for not exercising due
diligence in selecting and supervising her
driver. The higher court affirmed the decision,
holding Maitim and her driver solidarily liable for
damages, and concluding that Aguila and her
daughter were not negligent.
A. Is Maitim solidarily liable under the doctrine
of vicarious liability?
B. Is there a contributory negligence on the part
of Aguila?
A. Yes. Maitim is solidarily liable under the
doctrine of vicarious liability. Under the doctrine
of vicarious liability, an employer may be held
liable for the wrongful acts committed by its
employees in the course of their employment.
In this case, Maitim is the owner of the truck
involved in the accident, and it was being driven
by his employee, Tiburcio. As such, Maitim may
be held solidarily liable for the damages caused
by the accident, even if he was not personally
present at the scene of the accident.
B. Yes. There is a contributory negligence on
the part of Aguila. Contributory negligence
refers to the failure of the plaintiff to exercise
due care for his own safety, which contributes
to his own injury. In this case, Aguila was riding
his motorcycle without a helmet, which is a
violation of traffic laws and a failure to exercise
due care for his own safety. As such, Aguila
may be found to have contributed to his own
injuries, which may affect the amount of
damages he is entitled to receive. (Maitim vs.
Garcia, G.R. No. 218344, March 21, 2022, J.
Hernando)
66. A bank fraud organized by a syndicate in
connivance with CBP employees called
“pilferage scheme” was discovered by the NBI
The involves (a) the infiltration of the Clearing
Division of the CBP with the connivance of some
personnel of the CBP Clearing House (b) the
pilferage of "out-of-town" checks; (c) the
tampering of vital banking documents, such as
clearing manifests and clearing statements; (d)
the opening of Current Accounts by members
of the syndicate with the BPI Laoag City Branch
and Citibank, Greenhills Branch; and (e) the
withdrawal of funds through checks deposited
with Citibank and drawn against BPI. As a
result, certain employees of CBP were charged
with Estafa thru falsification of public
documents. BPI claims compensation for the
damages but CBP refused to credit back the
amount subject of fraud. Is CBP liable for the
acts of its employees Valentino and Estacio?
No. CBP is not liable for the acts of its
employees Valentino and Estacio.
Jurisprudence provides that the State in the
performance of its governmental functions is
liable only for the tortious acts of its special
agents. On the other hand, the State becomes
liable as an ordinary employer when performing
35
its proprietary functions. Here, both Valentino
and Estacio (Bookkeeper and Janitor-
Messenger) are not considered as special
agents of CBP during their commission of the
fraudulent acts against BPI as they were regular
employees performing tasks pertaining to their
offices. Thus, CBP cannot be held liable for any
damage caused to petitioner BPI by Valentino
and Estacio's unlawful acts. Even on the
assumption that CBP is performing proprietary
functions, still, it cannot be held liable because
Valentino and Estacio acted beyond the scope
of their duties. The remedy, therefore, of
petitioner BPI lies against the parties
responsible for the tampering with and pilfering
of the subject checks and other bank
documents. (Bank of the Philippine Islands vs.
Central Bank of the Philippines (now Bangko
Sentral ng Pilipinas), G.R. No. 197593, October
12, 2020, J. Hernando)
67. Del Moral owns several parcels of land with
a total area of 125 hectares which were
originally tobacco farmlands. 103 hectares of
which were later placed under the coverage of
the agrarian reform program under P.D. No. 27.
DAR computed the just compensation to be
paid to Del Moral in the total amount of
P342,917.81. Land Bank approved Del Moral’s
monetary claim to the 103 hectares of
farmlands placed under P.D. No. 27, and
assigned the original total valuation to
P342,917.81 or P3,329.30 per hectare as just
compensation to Del Moral. However, Del Moral
found the assigned valuation made by the DAR
and the LBP to be grossly inadequate and
unreasonably low. Del Moral filed a petition on
April 26, 2002 before the RTC for the proper
determination of just compensation. RTC fixed
the amount of just compensation at
P216,104,385.00; awarded Del Moral P90
million as temperate damages, PhP10 million as
nominal damages, and imposed legal interest
on the monetary awards at 6% per annum to
be computed from the finality of judgment until
the amount is actually and fully paid. Are the
awards for temperate and nominal damages, as
well as the legal interest imposed proper?
No. The awards are proper only as to temperate
and legal interest, and that nominal damages
should be deleted. The New Civil Code provides
that temperate or moderate damages may be
recovered if pecuniary loss has been suffered
but the amount cannot be proved with certainty
from the nature of the case. Here, Del Moral
was unable to productively use the 102
hectares of its landholdings rendering it
impossible to determine Del Moral's losses with
any certainty. Thus, the award of P10 million as
temperate damages is reasonable, while
nominal damages of P1 million should be
deleted as temperate and nominal damages are
incompatible and thus, cannot be granted
concurrently. The imposition of legal interest of
6% per annum is wholly satisfied. (Land Bank
of the Philippines vs. Del Moral, Inc., G.R. No.
187307, October 14, 2020, J. Hernando)
68. Union Bank issued Rico a Union Bank Visa
credit card, to which Rico used to purchase an
airplane ticket online with Tiger Airways and
had transactions in restaurants. Later on, Rico
was allegedly charged by the said Bank for
numerous fees and charges, declined payment
for the said airplane ticket, and that the Bank
dishonored his credit card for alleged non-
payment of his overdue account. Rico
maintained that he suffered embarrassment,
social humiliation, mental anguish, serious
anxieties, besmirched reputation, and wounded
feelings to allow him to recover for damages. Is
Rico entitled to moral damages when
Unionbank dishonored Rico's credit card
purchase request?
No. Rico is not entitled to moral damages. As
provided under the prevailing jurisprudence,
before one may be entitled to moral damages
it is required that a culpable act or omission was
factually established. Also there is a need for a
proof that the wrongful act or omission of the
defendant is the proximate cause of the
damage sustained by the claimant, and that the
case is predicated on any of the instances
expressed or envisioned by Arts. 2219 and 2220
of the New Civil Code. Further, Damnum
absque injuria provides that, there can be no
damage without injury when the loss or harm
was not the result of a violation of a legal duty.
In this case, Rico failed to prove that Union
Bank breached any obligation that would make
it answerable for his humiliation or
36
embarrassment. As to his flight with Tiger
Airways, records show that it was Rico who
canceled it as he did not want to pursue his
travel anymore, which was the proximate cause
of his embarrassing and humiliating experience.
With the absence of moral damages, there can
be no basis for the award of exemplary
damages as it can only be awarded if Rico is
entitled to moral, temperate, or compensatory
damages. In addition, the award of attorney's
fees and costs of litigation cannot prosper as
Rico failed to show that he falls under one of
the instances enumerated in Article 2208 of the
New Civil Code. (Rex Rico vs. Union Bank of the
Philippines, G.R. No. 210928, February 14,
2022, J. Hernando)
69. Dr. Tiongo had a speaking engagement for
an UN-WHO event in Kazakhstan. He purchased
tickets from KLM Royal Dutch Airlines for his
connecting flights from Singapore going to
Kazakhstan. However, one of the connecting
flights of KLM got delayed, which resulted to a
missed flight and lost luggage containing his
speech materials and clothing. He delivered his
speech wearing a sweatshirt. Months passed
after the incident, no update was relayed to
him. He wrote to KLM, Singapore Airlines and
Lufthansa demanding compensation. Singapore
Airlines and Lufthansa denied claims for
compensation while KLM asked for time to
investigate. The RTC awarded Dr. Tiongco
nominal damages considering his failure to
sufficiently prove the amount of actual
damages he suffered. On appeal, this was
modified by the appellate court. KLM averred
that there are no bases for the amount of
damages. Is Dr. Tiongco entitled to nominal
damages?
injury or actual damages whatsoever have been
or can be shown." On the other hand, Article
2224 of the same Code states that temperate
damages 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 provided with certainty. Simply
put, temperate damages are awarded when the
injured party suffered some pecuniary loss, but
the amount thereof cannot, from the nature of
the case, be proven with certainty. In this case,
Dr. Tiongco incurred pecuniary loss when his
suitcase containing his personal belongings was
lost during his flight and was never returned.
Unfortunately, he did not present any actual
receipt that would have proved the actual
amount due, as mandated under Article 2199
of the Civil Code, so as to entitle him to the
award of actual damages. This, however, does
not preclude Dr. Tiongco from recovering
temperate damages, and not nominal
damages, since the exact amount of damage or
pecuniary loss he sustained was not duly
established by competent evidence. (KLM Royal
Dutch Airlines vs. Dr. Tiongco, G.R. No. 212136,
October 4, 2021, J. Hernando)

No. Dr. Tiongco is not entitled to nominal

damages but to temperate damages. Article
2221 of the Civil Code states that nominal
damages may be awarded in order that the
plaintiff's right, which has been violated or
invaded by the defendant, may be vindicated or
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered.
They are "recoverable where a legal right is
technically violated and must be vindicated
against an invasion that has produced no actual
present loss of any kind or where there has
been a breach of contract and no substantial

37