Obligations and Contracts | Third Meeting Case Digest | February 15, 2024
1. [G.R. No. 108991. March 20, 2001.]
WILLIAM ALAIN MIAILHE, petitioner,
vs. COURT OF APPEALS and
REPUBLIC OF THE PHILIPPINES,
respondents.
Case: Annulment of a contract of sale
between the petitioner and the respondent
Republic of the Philippines.
Facts:
The petitioner claimed to have been forced to
sell his properties to the Development Bank
of the Philippines (DBP) for Php. 2,376,
805.00 or about Php. 400 per square meter
under threats and intimidation during the
martial law regime of former President
Marcos. The DBP later sold the properties to
the Republic. The petitioner filed a complaint
for annulment of sale, reconveyance, and
damages in 1990.
Issue:
Whether the action for annulment of sale,
reconveyance, and damages has prescribed.
Ruling:
The Supreme Court denied the petitioner’s
appeal and affirmed the Court of Appeals’
decision. The action had prescribed after four
years from the time the defect of consent
ceased, which was when Marcos left the
country in 1986. The petitioner’s
extrajudicial demands did not interrupt the
prescription of his action, as there was no
existing obligation on the part of the
respondent to reconvey the properties.
Ratio:
The prescriptive period starts from the time
the defect in consent ceases.
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In this case, the alleged threat and
intimidation ceased when President Marcos
left the country on February 24, 1986.
The complaint was filed on March 23, 1990,
more than four years after the alleged
cessation of the defect.
The Court held that the trial court should have
dismissed the complaint based on the
apparent lapse of the prescriptive period.
The extrajudicial demands made by the
plaintiffs did not interrupt prescription
because there was no existing obligation that
could be demanded.
The contract of sale, although allegedly
voidable, was still binding unless annulled by
a proper action in court.
Therefore, the defendants were not obligated
to accede to any extrajudicial demand to
annul the contract.
2. [G.R. No. L-24803. May 26, 1977.]
PEDRO ELCANO and PATRICIA
ELCANO, in their capacity as
Ascendants of Agapito Elcano, deceased,
plaintiffs-appellants,
vs. REGINALD HILL, minor, and
MARVIN HILL, as father and
Natural Guardian of said minor,
defendants-appellees.
Facts:
The plaintiffs-appellants, Pedro and Patricia
Elcano, sued the defendants-appellees,
Reginald and Marvin Hill.
The lawsuit was for damages for the killing
of their son Agapito by Reginald.
Reginald was acquitted in the criminal case
on the ground of lack of intent to kill and
mistake. This acquittal led to the question of
whether a civil action for damages based on
quasi-delict or culpa aquiliana could still be
pursued.
 Obligations and Contracts | Third Meeting Case Digest | February 15, 2024
Another point of contention was the liability
of Reginald’s father, Marvin, especially
considering that Reginald had been
emancipated by marriage.
Issue:
Whether the acquittal of Reginald in the
criminal case bars the civil action for
damages based on quasi-delict or culpa
aquiliana, and whether his father Marvin is
still liable despite the emancipation by
marriage of Reginald.
Ruling:
The civil action for quasi-delict is not
extinguished by the acquittal of the defendant
in the criminal case. This means that despite
Reginald’s acquittal in the criminal case, the
civil case for damages can still proceed.
The father’s liability is only subsidiary to that
of his emancipated son. This implies that
Marvin Hill, Reginald’s father, can still be
held liable for the damages caused by his son,
despite the latter’s emancipation by marriage.
However, this liability is secondary, meaning
it comes into play if Reginald is unable to
fulfill his obligations.
Legal Doctrines:
The Court reiterated the dual character of
fault or negligence as a source of obligation
under the Penal Code and the Civil Code, and
clarified that Article 2176 of the Civil Code
covers not only acts of negligence but also
intentional and voluntary acts that are
criminal in character1. The Court also applied
Article 2180 of the Civil Code to the father’s
responsibility for the damages caused by his
minor son who lived with him, and ruled that
such responsibility is not terminated by the
emancipation by marriage of the son.
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3. [G.R. No. 135706. October 1, 2004.] SPS.
CESAR A. LARROBIS, JR. and
VIRGINIA S. LARROBIS , petitioners, vs.
PHILIPPINE VETERANS BANK,
respondent
Facts:
The case involves petitioner spouses Cesar A.
Larrobis, Jr. and Virginia S. Larrobis, and the
respondent Philippine Veterans Bank.
On March 3, 1980, the petitioner spouses
contracted a monetary loan with the
respondent bank in the amount of
₱135,000.00, evidenced by a promissory
note, due and demandable on February 27,
1981. This loan was secured by a Real Estate
Mortgage executed on their lot together with
the improvements thereon.
On March 23, 1985, the respondent bank
went bankrupt and was placed under
receivership/liquidation by the Central Bank
from April 25, 1985 until August 1992.
On August 23, 1985, the bank, through
Francisco Go, sent the spouses a demand
letter for “accounts receivable in the total
amount of ₱6,345.00 as of August 15, 1984,”
which pertains to the insurance premiums
advanced by the respondent bank over the
mortgaged property of the petitioners.
On August 23, 1995, more than fourteen
years from the time the loan became due and
demandable, the respondent bank filed a
petition for extrajudicial foreclosure of the
mortgage of the petitioners’ property.
On October 18, 1995, the property was sold
in a public auction by Sheriff Arthur Cabigon
with the Philippine Veterans Bank as the lone
bidder.
On April 26, 1996, the petitioners filed a
complaint with the Regional Trial Court
 Obligations and Contracts | Third Meeting Case Digest | February 15, 2024
(RTC), Cebu City, to declare the extra-
judicial foreclosure and the subsequent sale
thereof to the respondent bank null and void.
Issue:
1. Whether or not the period within
which the bank was placed under
receivership and liquidation was a
fortuitous event which suspended the
running of the ten-year prescriptive
period in bringing actions.
2. Whether the demand letter sent by the
bank’s representative for the
insurance premiums constituted a
valid extra-judicial demand.
Ruling:
The Supreme Court reversed the decision of
the Regional Trial Court (RTC), Cebu City,
Branch 24, dated April 17, 1998. The RTC
had dismissed the complaint for lack of merit
and also dismissed the compulsory
counterclaim of the defendant.
The Supreme Court held that the foreclosure
was null and void, as it was barred by
prescription. The Court ruled that the period
of receivership and liquidation was not a
fortuitous event that prevented the bank from
exercising its right to foreclose. The Court
also ruled that the demand letter for the
insurance premiums did not pertain to the
principal loan obligation secured by the
mortgage, and therefore, did not constitute a
valid extra-judicial demand.
4.G.R. No. L-84841 October 30, 1992 SPS.
SALUSTIANO OCA and FLORA O.
OCA, petitioner, vs. COURT OF
APPEALS, REPUBLIC PLANTERS
BANK (formerly Republic Bank) and the
PROVINCIAL SHERIFF OF RIZAL,
respondents.
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Facts:
In January 1963, Salustiano Oca executed a
general loan and collateral agreement with
the Republic Planters Bank. This agreement
was a continuing agreement for all future and
existing transactions.
On February 12, 1963, the spouses Oca
executed a mortgage in favor of the bank over
two parcels of land as security for a loan of
P200,000.00.
On April 27, 1966, a resolution was passed by
the Board of Directors of Salustiano R. Oca
Logging Industry, Inc. authorizing Salustiano
R. Oca to consolidate all credit
accommodations extended by the Bank into
one promissory note.
On May 11, 1966, a promissory note in the
sum of P3,017,721.66 was signed by
Salustiano Oca in his capacity as President of
S.R. Oca Logging Industry, Inc. and in his
own behalf, together with his wife Flora O.
Oca in her own behalf.
On August 12, 1971, the bank made an
extrajudicial demand upon S.R. Oca Logging
Industry, Inc. to settle the time loan.
Issue:
Whether the real estate mortgage was a
continuing security for all credit
accommodations extended by the bank to the
spouses.
Whether the bank’s right to foreclose the
mortgage had prescribed, or in other words,
whether the bank had waited too long to
enforce its rights under the mortgage.
Ruling:
The Supreme Court of the Philippines
affirmed the decision of the Court of Appeals,
reversing the trial court’s ruling in favor of
 Obligations and Contracts | Third Meeting Case Digest | February 15, 2024
the spouses Oca1. The court held that the real
estate mortgage was a continuing security for
all credit accommodations extended by the
bank to the spouses Oca and/or S.R. Oca
Logging Industry, Inc.
The court also ruled that the bank’s right to
foreclose the mortgage had not prescribed, or
in other words, whether the bank had waited
too long to enforce its rights under the
mortgage. The court authorized the Republic
Planters Bank and the Provincial Sheriff of
Rizal, or their agents and/or representative to
proceed with the sale on foreclosure of the
property.
The spouses Salustiano R. Oca and Flora O.
Oca were ordered to jointly and severally pay
the appellant’s counterclaim in the amount of
P7,924,844.32 plus 12% interests per annum
from August 11, 1978 until fully paid but
deducting therefrom whatever amount the
appellant Bank may receive from the sale of
the mortgaged property.
5. G.R. No. L-67583 July 31, 1987
BASILISA S. ESCONDE, petitioner, vs.
HON. SAMILO N. BARLONGAY and
RAMON V. DELFIN, respondents.
Facts:
Private respondent Ramon V. Delfin applied
for the registration of a parcel of land on April
14, 1969, which was granted on December 8,
1969.
The land, covering an area of 2,273 sq. m., is
now covered by OCT No.-05002 issued on
January 23, 1971.
On February 13, 1978, Delfin filed a
“Petition for Writ of Possession” against the
spouses Francisco and Basilisa Esconde.
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On March 6, 1978, Judge Crispin V. Bautista
denied the opposition filed by the Esconde
spouses to the petition for Writ of Possession.
On September 26, 1978, Judge Avelino M.
Constantino issued an Order for a writ of
possession against the Esconde spouses.
On October 6, 1978, Basilisa Esconde filed a
complaint for reconveyance against Delfin.
On October 14, 1978, Esconde filed an
Amended Complaint with prayer for stay of
execution of judgment in LRC Case No. V-
710.
Delfin moved for the dismissal of the case on
the grounds of res judicata, insufficient cause
of action for reconveyance, and prescription
or laches.
On April 16, 1984, the Regional Trial Court
of Valenzuela, Bulacan, dismissed Esconde’s
complaint.
Issue:
Whether the cause of action of the petitioner,
Basilisa S. Esconde, is barred by res judicata.
Whether the complaint fails to state sufficient
cause or causes of action for reconveyance.
Whether the plaintiff is barred by prescription
or laches from filing the case.
Ruling:
The Supreme Court denied the petition and
affirmed the lower court’s order. The court
held that the petitioner’s cause of action was
barred by res judicata and prescription, and
that reconveyance was not the proper remedy.
The principle of res judicata states that a
matter that has been adjudicated by a
competent court and therefore may not be
pursued further by the same parties.
Prescription, on the other hand, refers to the
 Obligations and Contracts | Third Meeting Case Digest | February 15, 2024

expiration of the right to enforce a claim or Issue:

right after a certain period.
Whether his claim for compensation for the
It is a settled doctrine that when a decree of portion of his property, which was taken by
registration has been obtained by fraud, the the government for road purposes, had
party defrauded has only one year from entry already prescribed.
of the decree to file a petition for review
Ruling:
before a competent court, provided that the
land has not been transferred to an innocent The petitioner’s claim was denied by the
purchaser for value. The court also stated that Auditor General, Commissioner of Public
under Section 38 of Act 496, every decree of Highways, and the Secretary of Public Works
registration shall bind the land, and quiet title and Communications.
thereto.
The respondents base their defense of
6. G.R. No. L-25859 July 13, 1967 prescription on Jaen vs. Agregado.
FRANCISCO LOPEZ, petitioner, vs. THE
AUDITOR GENERAL, The petitioner cites Alfonso vs. Pasay City, in
COMMISSIONER OF PUBLIC which a lot owner was allowed to bring an
HIGHWAYS, THE SECRETARY OF action to recover compensation for the value
PUBLIC WORKS AND of his land, which the Government had taken
COMMUNICATIONS, respondents. for road purposes, despite the lapse of thirty
years.
Facts:
The petitioner, Francisco Lopez, is the
registered owner of a parcel of land in Lopez,
Quezon.
In 1937, the municipal government of Lopez
used a portion of his property to build a road,
which subsequently was converted into the
Lopez-Calauag section of the Manila South
Road.
The petitioner claims that he agreed to allow
the municipality to take a portion of his
property in exchange for a piece of town
property.
On May 2, 1959, the petitioner presented a
claim for compensation for the portion of his
property which, he averred, had been taken
“without any deed of conveyance or right of
way,” but his claim was denied on the ground
that it had prescribed.

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