Case Digests Civil Law

Case Digests in Civil Law EFFECT AND APPLICATION OF LAWS CARIDAD MAGKALAS vs. NHA

G.R. No. 138823, September 17, 2008 FACTS:

P.D. No. 1315 was issued expropriating certain lots at Bagong Barrio, Caloocan City. In the same Decree, the National Housing Authority (NHA) was named Administrator of the Bagong Barrio Urban Bliss Project. After conducting studies of the area, the NHA determined that the area where petitioner’s structure structure is located should be classified as an area center (open space). The NHA thereafter sent a Notice of Lot Assignment to petitioner recognizing the latter as a Censused Owner of a structure identified for relocation. She was told to remove the structure she erected on the area within 30 days and to transfer her residence pursuant to P.D. No. 1472.Petitioner now avers that P.D. No. 1315 and P.D. No.1472 were impliedly repealed by R.A. No. 7279, otherwise known as the Urban Development and Housing Act of 1992. She contends that while P.D. No. 1315 and P.D. No. 1472 authorized the NHA to eject without the necessity of a judicial order all squatter colonies in government resettlement projects, R.A. No. 7279 discouraged such eviction and demolition without a court order. According to petitioner, R.A. No. 7279, being the later law, impliedly repealed the former laws, i.e. P.D. No. 1315 and P.D. No. 1472, following the legal axiom that when a later law is passed with provisions contrary to the former law, an implied repeal of the former law takes effect. ISSUE:

Whether or not R.A. No. 7279impliedly repealed P.D. No. 1315 and P.D. No. 1472. HELD:

It is a well-settled rule of statutory construction that repeals by implication are not favored. We find no irreconcilable irreconcilable conflict or repugnancy between Section Section 28 of R.A. No. 7279 and P.D. No.1315 and No. 1472, rather, they can be read together and harmonized to give effect to their provision. It should be stressed that Section 28 of R.A. No. 7279 does not totally and absolutely prohibit prohibit eviction and demolition without a judicial order as in fact it provides for exceptions. Pursuant to established doctrine, the three (3) statutes should be construed in the light of the objective to be achieved and the evil or mischief to be suppressed by the said laws, and they should be given such construction as will advance the object, suppress the mischief and secure the benefits intended. It is worthy to note that the three laws (P.D. No. 1315, P.D. No. 1472 and R.A. No. 7279) have a common objective – to address the housing problems of the country by establishing a comprehensive urban development and housing program for the homeless. For this reason, the need to harmonize these laws all the more becomes imperative.

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Case Digests in Civil Law CONFLICT OF LAWS BPI SECURITIES CORPORATION vs. EDGARDO GUEVARA

G.R. No. 167052, March 11, 2015 FACTS:

The U.S. District Court issued an Order on March 13, 1990 in Civil Action No. H-86-440 ordering petitioner, AIFL, and ATHONA, to pay respondent the sum of US$49,450.00 as sanction for filing a frivolous suit suit against respondent, in violation violation of Rule 11 of the U.S. Federal Rules of Civil Procedure. The said Order became final when its reinstatement was no longer appealed by petitioner, AIFL, and/or ATHONA. Petitioner now opposes the enforcement of the said Order on the very same allegations, arguments, and evidence presented before and considered by the U.S. District Court when it rendered its verdict imposing the Rule 11 sanction. Petitioner avers that it is necessary for the Philippine courts to look into the merits of the Order because the U.S. District Court committed clear mistake of law and fact in issuing the same. ISSUE:

Whether or not the limited review by Philippine courts of foreign judgments or final orders shall apply. HELD:

A Philippine court will not substitute its own interpretation of any provision of the law or rules of procedure of another country, nor review and pronounce its own judgment on the sufficiency of evidence presented before a competent court of another jurisdiction. Any purported mistake petitioner attributes to the U.S. District Court in the latter’s issuance of the Order dated March 13, 1990 would merely constitute an error of judgment in the exercise of its legitimate jurisdiction, which could have been corrected by a timely appeal before the U.S. Court of Appeals.In an action for enforcement of foreign judgment, the Court has ha s limited review rev iew over the decision rendered ren dered by the foreign tribunal. tr ibunal. The Th e Philippine Philippin e courts cannot pass upon the merits of the case pursuant to the incorporation clause of the Constitution, unless there is proof of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

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Case Digests in Civil Law CONFLICT OF LAWS BPI SECURITIES CORPORATION vs. EDGARDO GUEVARA

G.R. No. 167052, March 11, 2015 FACTS:

The U.S. District Court issued an Order on March 13, 1990 in Civil Action No. H-86-440 ordering petitioner, AIFL, and ATHONA, to pay respondent the sum of US$49,450.00 as sanction for filing a frivolous suit suit against respondent, in violation violation of Rule 11 of the U.S. Federal Rules of Civil Procedure. The said Order became final when its reinstatement was no longer appealed by petitioner, AIFL, and/or ATHONA. Petitioner now opposes the enforcement of the said Order on the very same allegations, arguments, and evidence presented before and considered by the U.S. District Court when it rendered its verdict imposing the Rule 11 sanction. Petitioner avers that it is necessary for the Philippine courts to look into the merits of the Order because the U.S. District Court committed clear mistake of law and fact in issuing the same. ISSUE:

Whether or not the limited review by Philippine courts of foreign judgments or final orders shall apply. HELD:

A Philippine court will not substitute its own interpretation of any provision of the law or rules of procedure of another country, nor review and pronounce its own judgment on the sufficiency of evidence presented before a competent court of another jurisdiction. Any purported mistake petitioner attributes to the U.S. District Court in the latter’s issuance of the Order dated March 13, 1990 would merely constitute an error of judgment in the exercise of its legitimate jurisdiction, which could have been corrected by a timely appeal before the U.S. Court of Appeals.In an action for enforcement of foreign judgment, the Court has ha s limited review rev iew over the decision rendered ren dered by the foreign tribunal. tr ibunal. The Th e Philippine Philippin e courts cannot pass upon the merits of the case pursuant to the incorporation clause of the Constitution, unless there is proof of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

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Case Digests in Civil Law HUMAN RELATIONS UNJUST ENRICHMENT R.V. SANTOS COMPANY, INC. vs. BELLE CORPORATION

G.R. Nos. 159561-62, October 3, 2012 FACTS:

Belle and RVSCI entered into a Construction Contract wherein RVSCI undertook to construct a detailed underground electrical network for Belle’s Tagaytay Woodlands Condominium Project. RVSCI commenced work on the project and later on submitted its Progress Billing to Belle, claiming 53.3% accomplishment of the project. Purportedly relying on RVSCI’s representations, Belle’s project engineer recommended approval of the Progress Billing.Subsequently, Billing.Subsequently, however, Belle made its own assessment of the work accomplished by RVSCI and came up with a different amount. In Belle’s view, it had overpaid RVSCI. While negotiations were allegedly ongoing between the parties regarding the payment of the Progress Billing, Belle claimed that RVSCI unceremoniously abandoned the project without prior notice. ISSUE:

Whether or not Belle is entitled to its claims for overpayment. HELD:

This is consistent with the law against unjust enrichment under Article 22 of the Civil Code. Expounding on this provision in a recent case, we have held that "the principle of unjust enrichment essentially contemplates payment when there is no duty to pay, and the person who receives the payment has no right to receive it."In the case at bar, we uphold the CIAC’s factual finding that the value of the total work accomplished by RVSCI amounted to a total of P6,658,885.86. On the other hand, Belle had made payments in the total amount of P11,598,994.44. It is thus undeniable that RVSCI had received payments from Belle in excess of the value of its work accomplishment. In light of this overpayment, it seems specious for RVSCI to claim that it has suffered damages from Belle’s refusal to pay its Progress Billing, which had been proven to be excessive and inaccurate. Bearing in mind the law and jurisprudence on unjust enrichment, we hold that RVSCI is indeed liable to return what it had received beyond the actual value of the work it had done for Belle.

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Case Digests in Civil Law PSYCHOLOGICAL INCAPACITY AZCUETA V. REPUBLIC OF THE PHILIPPINES AND CA

G.R. No. 180668, May 26, 2009 FACTS:

Marietta Azcueta filed a petition for declaration of absolute nullity of her marriage to Rodolfo Azcueta before the RTC on the ground of Rodolfo’s psychologically incapacity. She averred that despite her encouragement, Rodolfo never bothered to look for a job and always depended on his mother for financial assistance and for his decisions. They had sex only once a month which Marietta never enjoyed. When they discussed this, Rodolfo told Marietta that sex was sacred and should not be enjoyed or abused. Rodolfo also told her he was not ready for a child. The psychiatrist testified that she found the petitioner to be mature, independent, focused, responsible, had a direction and ambition in life, and was not psychologically incapacitated to perform the duties and responsibilities of marriage. The same psychiatrist found Rodolfo to be suffering from Dependent Personality Disorder characterized by loss of self-confidence, constant self-doubt, inability to make his own decisions and dependency on other people. The psychiatrist stated that the problem was severe, because he would not be able take on the responsibilities of a spouse, and incurable, because it began in early development and had been deeply ingrained in his personality. She, thus concluded that Rodolfo was psychologically incapacitated to perform his marital duties and responsibilities. The RTC declared the marriage void. ISSUE:

Whether or not personal examination is required in determining the respondent’s psychological incapacity HELD:

No, in Marcos v. Marcos, it was held that there is no requirement that the defendant/respondent spouse should be personally examined by a physician or psychologist as a condition sine qua non for the declaration of nullity of marriage based on psychological incapacity. What matters is whether the totality of evidence presented is adequate to sustain a finding of psychological incapacity. Ta

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Case Digests in Civil Law OCHOSA V. ALANO

G.R. No. 167459, January 26, 2011 FACTS:

Petitioner Jose and respondent Bona met when Jose was a young lieutenant in the AFP while Bona was a seventeen-year-old college drop-out. They got intimate and eventually married. While Jose was out on missions, it appears that Bona would have illicit relations with other men. In 1987, Jose was incarcerated in Camp Crame for rebellion for the alleged participation of the failed coup d’etat. He heard circulation of rumors of Bona getting caught having sex with his driver, Corporal Gagarin. He got a military pass from his jail warden and confronted Bona about the rumors, which she and Gagarin admitted. Since then they were separated, and their foundling, Ramona Celeste, stayed with Bona in Basilan until 1994 to live with Jose. He filed a Petition for the Declaration of Nullity of Marriage seeking to nullify his marriage to Bona based on the ground of the latter’s psychological incapacity to fulfill the essential marital obligations of marriage. The psychiatrist concluded that Bona was suffering from histrionic personality disorder, and it was traceable to her family history. The RTC declared the marriage of Jose and Bona void ab initio on the ground of psychological incapacity of the respondent under Article 36 of the Family Code. The Court finds that Bona’s illness exhibited gravity, antecedence, and incurability. ISSUE:

Whether or not Bona should be deemed psychologically incapacitated to comply with the essential marital obligations? HELD:

No, Bona is not psychologically incapacitated to comply with the essential marital obligations. Bona’s alleged psychological incapacity did not satisfy the jurisprudential requisite of “juridical antecedence”. Her persistent sexual infidelity and abandonment are not badges of psychological incapacity nor can it be traced to the inception of their marriage. The psychiatrist’s conclusion about Bona’s HPD which made her prone to promiscuity and sexual infidelity existed before her marriage to Jose, cannot be taken as credible proof of antecedence since the method by which such an inference was reached leaves much to be desired in terms of meeting the standard of evidence required in determining psychological incapacity. Article 36 of the Family Code is not to be confused with a divorce law that cuts the marital bond at the time the causes therefore manifest themselves. It refers to a serious psychological illness afflicting a party even before the celebration of the marriage. It is a malady so grave and so permanent as to deprive one of awareness of the duties and responsibilities of the matrimonial bond one is about to assume. These marital obligations are those provided under Article 68 to 71, 220, 221 and 225 of the Family Code.

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Case Digests in Civil Law PROPERTY RELATIONS OF THE SPOUSES HEIRS OF DOMINGO HERNANDEZ, SR. V . MINGOA, SR.

G.R. No. 146548, December 18, 2009 FACTS:

Domingo Hernandez, Sr. and his spouse were awarded a piece of real property in 1958 by the Philippine Homesite and Housing Corporation (PHHC) as part of the government’s housing program at the time. Title over the said property was issued in 1966 in the name of Hernandez, Sr., after full payment for the property was received by the PHHC. Hernandez, Sr. died intestate in April 1983, and it was only after his burial that his heirs found out that their title to the real property has already been cancelled a year before, and in lieu thereof, was issued to the respondents, by virtue of a Deed of Absolute Sale. The petitioners filed a complaint with the RTC of Quezon City, for the annulment and/or declaration of nullity of the transfer certificate title issued in favor of respondent Mingoa. RTC ruled in favor of the petitioners. Upon appeal, CA reversed and set aside the RTC’s decision. ISSUE:

Whether or not the consent of the spouse is necessary for the validity of alienation of conjugal property? HELD:

No. The consent of Domingo Hernandez, Sr. to the contract is undisputed, thus, the sale of his ! share in the conjugal property was valid. With regard to the consent of his wife, Sergia Hernandez, to the sale involving their conjugal property, the trial court found that it was lacking because said wife’s signature on the SPA was falsified. However, Sergia’s lack of consent to the sale did not render the transfer of her share invalid. It bears stressing that the subject matter herein involves conjugal property. Said property was awarded to Domingo Hernandez, Sr. in 1958. Title in the name of Domingo Hernandez, Sr. covering the subject property was issued on May 23, 1966. The sale of the property to Melanie Mingoa and the issuance of a new title in her name happened in 1978. Since all these events occurred before the Family Code took effect in 1988, the provisions of the New Civil Code govern these transactions. Article 173 of the Civil Code provides that the disposition of conjugal property without the wife's consent is not void but merely voidable. Thus, the failure of Sergia Hernandez to file with the courts an action for annulment of the contract during the marriage and within ten (10) years from the transaction necessarily barred her from questioning the sale of the subject property to third persons.

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Case Digests in Civil Law PROPERTY OWNERSHIP DECALENG VS BISHOP

G. .R. No. 171209, June 27, 2012 FACTS:

PEC-EDNP filed before the RTC a Complaint for Accion Reinvindicatoria and Accion Publiciana against Ambrosio Decaleng and Fabian Lopez. PEC-EDNP alleged that it is the owner of two parcels of land in the Municipality of Sagada, located in areas commonly known as Ken-geka and Ken-gedeng. According to PEC-EDNP, the Ken-geka property is covered by Certificate of Title No. 1 issued in the name of U.S. Episcopal Church. Ambrosio Decaleng and Lopez stated in their Answer that Certificate of Title No. 1 was inaccurate and depicted a parcel of land much bigger than that generally believed to be owned by PEC-EDNP and that there is no Certificate of Title No.1 in the Register of Deeds of Mountain Province. ISSUE:

Whether or not a torrens title can be attacked collaterally. HELD:

No, a torrens title cannot be attacked collaterally. The Torrens system requires the government to issue a certificate of title stating that the person named in the title is the owner of the property described therein, subject to liens and encumbrances annotated on the title or reserved by law. The certificate of title is indefeasible. Section 48 provieds - Certificate not subject to collateral attack - A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. The issue on its validity can be raised only in an action expressly instituted for that purpose. A collateral attack is made when, in another action to obtain a different relief, the certificate of title is assailed as an incident in said action. In this case, the original complaint filed by PEC-EDNP before the RTC is for accion publiciana and accion reinvindicatoria(for recovery of possession and ownership) of the Ken-geka and Ken-gedeng properties. In said complaint, PEC-EDNP alleged ownership of the Ken-geka property as evidenced by Certificate of Title No. 1. In their defense, the spouses Decaleng raised issues as to the validity of Certificate of Title No. 1 (by asserting in their Answer that Certificate of Title No. 1 covered an area much larger than that actually owned by PEC-EDNP), and as to the existence of Certificate of Title No. 1 (by presenting Mountain Province Register of Deeds Dailay-Papas certification that Certificate of Title No. 1 does not appear in the record of registered titles). Nevertheless, the spouses Decaleng only sought the dismissal of the complaint of PEC-EDNP, plus the grant of their counterclaim for the payment of moral damages, exemplary damages, litigation expenses, and attorneys fees; and they conspicuously did not pray for the annulment or cancellation of Certificate of Title No. 1. Evidently, the spouses Decalengs attack on the validity, as well as the existence of Certificate of Title No. 1 is only incidental to their defense against the accion publicianaand accion reinvindicatoria instituted by PEC-EDNP, hence, merely collateral.

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Case Digests in Civil Law SYJUCO VS. BONIFACIO


Petitioners Imelda, Leonardo, Fidelino, Azucena, Anita, and Syjuco discovered that the land in question, covered by their TCT No.T-108530, was being sold by Respondent Bonifacio who claimed ownership over the latter through her own TCT No. 285313. Petitioners therefore filed a petition praying for the declaration of nullity and cancellation of Respondent’s TCT as it was issued fraudulently and in spite of the fact that they have been in continuous and open possession of the disputed land since 1926. Respondent in turn raised as a defense that her title was valid as she had acquired it pursuant to a court order by another branch of the same RTC. The latter held in favor of Respondent hence Petitioner appealed. On appeal, the CA affirmed on the ground that the petition was a collateral attack on Respondent’s valid title in violation of Sec. 48 PD No. 1529. Being denied on appeal, petitioners appealed before the Court hence this case. Petitioners maintain that the CA erred in its ruling as their undisturbed possession of the subject property gave them a continuing right to seek the aid of the court. ISSUE:

Whether or not Petitioners are prohibited by Sec. 48 of PD 1529 from attacking Respondent’s title. HELD: NO. Petitioners’ action is not a prohibited collateral attack on the TCT of Respondent over the disputed land as contemplated by Sec. 48 of PD 1529.

The Court held that an attack is direct when the object of an action is to annul a judgment or enjoin its enforcement. It is indirect when, in an action obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof. Petitioners’ complaint for quieting of title, they specifically prayed for the declaration of nullity of Respondent’s TCT No. 265778 over the subject land. The relief sought by the action is feasible given that the objective of an action to quiet title was to remove, invalidate, and annul a cloud on title to real property or any interest therein by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid. Under land ownership disputes, it is well established that the filing of an action to quiet title is imprescriptible if the disputed real property was in the possession of the plaintiff. One in actual possession, in the concept of an owner, may wait until his possession or title is disturbed or attacked before taking steps to vindicate his right. This is so because his undisturbed possession gives him a continuing right to seek the court’s aid.

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Case Digests in Civil Law DE GUZMAN VS. TABANGAO REALTY, INC.

G.R. No. 154262, February 11, 2015 FACTS:

In 1980, a complaint for sum of money was filed against Serafin and Josefino de Guzman for failure to pay their credit purchases in a transaction with Filipinas Shell Petroleum Corporation. The RTC of Manila rendered judgment ordering spouses to pay their outstanding obligations. RTC-Manila granted the motion of Filipinas Shell and ordered the issuance of a writ of execution. A parcel of land, situated in Trece Martires City, Cavite, was levied upon and was sold in public auction and a certificate of sale was issued. Petitioners filed a Complaint for quieting of title against respondent alleging that petitioners were heirs of the spouses de Guzman, and the certificates of sale to Tabangao Realty are apparently valid and subsisting but in fact and in law, they are void and ineffective or otherwise had been terminated and extinguished or barred by prescription, estoppel and laches. Specifically, the Certificate of Sale, annotated on TCT No. 3531 was void since there was no such Sheriff’s Sale conducted public auction date and it was legally impossible to do the levy and execution sale on the same date. The RTC of Trece Martires ruled in favor of Tabangao Realty. ISSUE:

Whether or not the action for quieting of title will prosper HELD:

No, the action for quieting of title will not prosper. There is an absence of any allegation in the Complaint that Serafin and/or Josefino or their successors-ininterest redeemed the subject property from respondent within the one-year redemption period. The period of redemption is not a prescriptive period but a condition precedent provided by law to restrict the right of the person exercising redemption. If no redemption is made in the manner and within the period prescribed, Rule 39, Section 33 of the 1997 Rules of Court. Respondent was already substituted to and acquired all the rights, title, interest, and claim of the Spouses De Guzman to the subject property on April 13, 1989, when the one-year redemption period expired. Upon the deaths of Amelia de Guzman on January 1, 1997 and her husband Serafin de Guzman on April 23, 2001, they had no more rights, title, interest, and claim to the subject property to pass on by succession to petitioners as their heirs. All rights, title, interest, and claim of the spouses De Guzman to the subject property was already acquired by respondent upon the expiration of the one-year redemption period without redemption being made. The execution of the final deed of sale and/or conveyance to respondent is a mere formality and confirmation of the title already vested in respondent.

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Case Digests in Civil Law POSSESSION CAHILIG VS. TERENCIO

G.R. No. 164470, November 28, 2011 FACTS:

In this case, Petitioners Cahilig and Sinel Jr. were assailing the writ of possession issued to Mercantile Credit Resources Co. The said writ was issued after the latter won in a public auction a parcel of land owned by Petitioners’ mother, Soterania Sinel, who used the said parcel as mortgage for 2 promissory notes she issued back in April 14, 1997. Petitioners contend that the issuance of the writ was improper because the latter cannot be issued after an extrajudicial foreclosure of real estate mortgage when there is a third person in actual possession of the property adverse to the mortgagor. ISSUE:

Whether or not the issuance of the writ of possession was proper. HELD: YES, the issuance was proper.

The Court noted that a writ of possession is an order of the court commanding the sheriff to place a person in possession of a real or personal property. It may be issued in an extra judicial foreclosure of a real estate mortgage under Sec. 7, Act. 3135 as amended by Act. 4118 either 1) within the 1-year redemption period, upon filing of a bond; or 2) after the lapse of the redemption period, without need of a bond or of a separate and independent action. Given the fact that the Petitioners’ mother failed to redeem the property within the period given thus prompting the Sheriff to issue a final deed of sale in the name of Private Respondent, the latter was well within its right to file a petition for the issuance of a writ of possession. It was the ministerial duty of courts to issue a writ upon proper application and proof of title. While this duty ceases to be ministerial once it appears that there is a third party in possession of the property who is claiming a right adverse to that of the mortgagor, such a situation does not apply to the case at bar.

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Case Digests in Civil Law OBLIGATIONS EXTINGUISHMENT SPOUSES DELA CRUZ VS. SPOUSES SEGOVIA

G.R. No. 149801, June 26, 2008 FACTS:

Sometime in July, 1985, wanting to purchase two lots, one apartment and the other a residential house, Petitioner Florinda dela Cruz asked her sister Respondent Leonila Segovia to contribute P36,000.00 in order to meet the purchase price of P180,000.00. Both agreed that Lot 503, the apartment, would belong to Leonila and her family upon full payment of its purchase price which was P80,000.00, while Lot 505, the house, would belong to Florinda. An agreement was executed in September 9, 1991 recognizing the Respondent Spouses indebted of P34,000.00 payable in monthly installments with a period of 10 years and putting Lot 505 as security for the indebtedness. In 1996, Petitioner Spouses then a complaint for Nullity of the Contract executed on September 9, 1991, contending that the same had no force and effect since Florinda’s husband, Renato dela Cruz, did not sign the Agreement. They ground their argument under Art. 124 of the Family C ode. ISSUE:

Whether or not the Agreement executed in 1991 was invalid. HELD: NO, its not invalid.

While Art. 124 provides necessarily the written consent of the other spouse, or authority of the court for the disposition or encumbrance of conjugal partnership property without which, the disposition or encumbrance will be void, such a provision has no application in the case at bar. The transaction between Florinda and Leonila in fact was the acquisition of two lots sold together for P180,000.00. With money pooled together, the sisters agreed that Lot 503 be valued at P80,000.00 while Lot 505 be valued at P100,000.00. The P36,000.00 contributed by Leonila was applied to Lot 503 which upon full payment of the remaining balance of P44,000.00 w hich was advanced by Florinda would belong to Leonila. On the other hand, from the P144,000.00 of Florinda, P100,000.00 was considered as full payment of the purchase price of Lot 505 w hile the remaining P44,000.00 was loaned to Leonila. To secure the payment of the loan, Lot 503 was provisionally registered in the name of Petitioners. Thus, from the onset Lot 503 was never intended to e part of the conjugal asset of the petitions but only as a security for the payment of the P44,000.00 due from respondents.

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Case Digests in Civil Law REPUBLIC VS. DE GUZMAN

G.R. No. 175021, June 15, 2011 FACTS:

The complaint stemmed from the alleged failure of Petitioner PNP to pay Respondent for the delivery of certain construction materials it procured from Respondent pursuant to a Contract of Agreement amounting to P2,288,562.60. Petitioner contends that both the CA and the RTC were in error by ruling that there was no extinguishment of its obligation to pay the Respondent pursuant to the Contract of Agreement when in fact they had issued a check and a receipt was issued for it. ISSUE:

Whether or not there Petitioner’s obligation to pay was extinguished. HELD:

NO, petitioner did not properly extinguish its obligation i.e. to pay the Private Respondent. In general, a payment in order to be effective to discharge an obligation, must be made to the proper person. Thus, payment must be made to the obligee himself or to an agent having authority, express or implied, to receive the particular payment. Payment made to one having apparent authority to receive the money will, as a rule, be treated as though actual authority had been given for its receipt. Likewise, if payment is made to one who by law is authorized to act for the creditor, it will work a discharge. The receipt of money due on a judgment by an officer authorized by law to accept it will, therefore, satisfy the debt. The respondent was able to establish that the LBP check was not received by her or by her authorized personnel. The PNP’s own records show that it was claimed and signed for by Cruz, who is openly known as being connected to Highland Enterprises, another contractor. Hence, absent any showing that the respondent agreed to the payment of the contract price to another person, or that she authorized Cruz to claim the check on her behalf, the payment, to be effective must be made to her.

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Case Digests in Civil Law UNION BANK OF THE PHILS. VS. SPOU SES TIU

G.R. Nos. 173090-91, September 7, 2011 FACTS:

Respondent Spouses Rodolfo and Victoria Tiu owed Union Bank $3,632,000. from September 22, 1997 to March 26, 1998. On December 21, 1999, the parties entered into a Debt R estructuring Agreement wherein Respondents 1) confirmed their debt; 2) redenominated their debt from USD to PHP, amounting to P155,364,800.00 ; and 3) executed a Real Estate Mortgage over a lot covered by TCT No. T-11951. Petitioner, however, proceeded with extrajudicial foreclosure of the aforementioned lot due to the Respondents’ alleged failure to comply with the payment scheme under the Debt Restructuring Agreement. The Respondents opposed contending that they had in fact paid their indebtedness amounting to P89,407,546.79. Respondents thus filed a complaint with the RTC of Mandaue seeking to annul the extrajudicial proceedings on the ground that their obligation had been extinguished. They contended that since the loan was originally in pesos, their previous payment was proper and in accordance with the DRA. The RTC however ruled against them since they could not present any detailed accounting as to the total amount they had paid after the execution of the Debt Restructuring Agreement. The RTC further held that their outstanding liability was P104,668.741.00 and that the house built on the lot could not be included in the foreclosure proceeding as it did not belong the Respondents. ISSUE:

Whether or not Respondent’s debt obligation was extinguished HELD:

No, the Court held that Respondents failed to present evidence indicating actual payment. While respondent Rodolfo Tiu appeared to have identified during his testimony a computation of the alleged payments made to Union Bank, the same was not formally offered in evidence. Moreover, even if such computation were admitted in evidence, the same is self-serving and cannot be given probative weight. In the case at bar, the records do not contain even a single receipt evidencing payment to Union Bank.

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Case Digests in Civil Law CONTRACTS ESSENTIAL REQUISITES MCA-MBF COUNTDOWN CARDS PHILIPPINES INC., et al vs. MBf CARD INTERN ATIONAL LIMITED INC., et al.

G.R. NO. 173586, MARCH 14, 2012. FACTS:

The parties entered into negotiations for the execution of a Joint Venture Agreement sometime in the second half of 1993, before they could agree on the drafts and while pending negotiations thereon, the petitioner wrote to the respondent informing that they had incorporated on October 1993. However, without any authority from the respondents, and while the parties were still discussing and negotiating on the terms and conditions of the said agreement, the petitioners began to promote, market and sell the Countdown discount cards to the public, using “Countdown” name, logo and trademark. On March 7 and 8, 1994 the respondents requested to freeze all selling activities until the pertinent agreements have been signed; wherein, the petitioners allegedly complied therewith. Not long, on March 30 and April 3, 1994, again, petitioner failed to heed on the request to temporarily stop the selling of the same, wherein the said party illegally caused the two (2) separate incidents of publication of two advertisements in the Manila Bulletin, promoting and selling the said discount card without prior authority and misrepresenting that they had executed a prior agreement wherein, in truth and in fact, there is none. The respondent prayed for injunction to enjoin the petitioner from further engaging into selling, promoting and marketing the said card to their prejudice, but the petitioners responded that notwithstanding the agreement, the contract has already been perfected; although there has been no written agreement executed by the parties. The RTC ruled in favor of the respondents, which was concurred by the CA as well, holding that there has been no perfected contract between them. ISSUE:

Whether or not there has been a valid, binding and a perfected contract between the parties. HELD:

Art. 1315 of the Civil Code provides that contracts are perfected by mere consent and in correlation with Art. 1356 of the same code which provides that contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. The contention of the petitioner is correct insofar as the law does not require the existence of a written contract between them and as long as the consent of the parties has been acquired in order for it to be binding between them, but the absence of the written contract between them constitutes a convincing circumstantial proof that they are still in the process of negotiation. When there is as yet no meeting of the minds as to the subject matter, or the cause or consideration of the contract being negotiated, the same cannot and will never be considered to “have been perfected”. The negotiation stage implies that there has been no concurrence or meeting of the minds between the parties as to the object and the cause of the contract, hence, it will not be taken as if there has been a perfected contract already as what the petitioner is contending. Petition for Certiorari dismissed.

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Case Digests in Civil Law KINDS OF CONTRACTS SALVADOR A. FERNANDEZ vs. CRISTINA D. AMAGNA

G.R NO. 152614, SEPTEMBER 30, 2009. FACTS:

The respondent filed a case for unlawful detainer against the petitioner, stating in the complaint that she is the owner of a property located at Pandacan, Manila City. A portion of the said property is being leased by the petitioner on a month-to-month basis at the rate of P1,300.00. In July 1995, the petitioner failed to pay the monthly rentals, which prompted the respondent to send a demand letter on April 11, 1996 to pay and vacate, but instead, the petitioner refused. The respondent insisted that they will need the property as they were also leasing in another place. The petitioner contended that he has already leased the property for almost fifty (50) years and alleging also that he had made substantial improvement on the lot; that he was one of the lessees of the property represented by their association known as “Barangay 843 Neighborhood Association”; that the monthly rental was only P420.00 and not the aforementioned P1,300.00; that the respondent was transacting through the association and according to the petitioner, she has already acknowledged the existence of the association; that there was no agreement stated in the lease as to the period of the same. On October 13, 1997 the MeTC, Manila rendered decision in favor of respondent which was subsequently affirmed by the RTC and the CA. The 3 courts ruled that the respondent has the right to terminate the contract since the leasing agreement was on a “month-to-month” basis. ISSUE:

Whether or not the contract may be terminated by the failure of a party to pay the monthly rentals as stated in the agreement, considering the contract has no definite period for its efficacy. HELD:

Yes, the contract maybe terminated by the failure to pay the monthly rentals. Article 1687 of the Civil Code provides that “If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily”. Lease agreements which has no specified period, but in which rentals are paid monthly, are considered on a month-to-month basis. They are for a definite period and expire after the last day of the 30 day month, upon proper notice and demand by the lessor to vacate. A lease on a month-to-month basis provides for a definite period and may be terminated at the end of any month, hence, by the failure of the lessees to pay the rents due for a particular month, the lease contract is deemed terminated as of the end of that month. Applying this principle, the lease contract in the instant case was deemed terminated at the end of the month when the petitioner, as lessee, failed to pay the rents due. As to the alleged increase, it is an elementary rule that one who alleges must prove the same; the receipts presented are for rentals paid for December 1993 and February 1994. The bone of contention here is the rental starting from July 1995. On the other hand, as shown by the records, the respondent-appellee was able to establish that the agreed rental since March 1995 is P1,300.

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Case Digests in Civil Law ROLANDO CATUNGAL, ET AL. VS. ERLINDA RODRIGUEZ, ET AL.

G.R. NO. 146839, MARCH 23, 2011. FACTS:

The petitioner entered into a contract to sell with the respondent, which was subsequently “upgraded” into a Conditional Deed of Sale involving a property in Talamban, Cebu City for an amount of P250M. The stipulations contained in the contract are stated as follows: An amount of P500K will be considered as down-payment upon the date of the contract; The balance of the amount will be paid in 5 separate checks wherein it was stated that the first check after the down-payment should be in the amount of P4.5M; while the remainder should be paid in the amount of P5M each will be payable only after the respondent has successfully negotiated, secured and provided a right of way. The stipulation of the contract stated also that the Right of Way (ROW for brevity) should be the sole responsibility of the respondent to secure the same and all costs relevant thereto. Later on, the petitioners asked for an amount of P5M due to personal reasons, the defendant refused to pay since it was too substantial and it was not provided for their agreement, due to their refusal it was subsequently disclosed that the petitioner is offering the same property to 3rd persons who are willing to pay more than the contract price between them. Instead of assisting the respondent in negotiating the ROW, the petitioner adopted means that will defeat the respondent’s efforts in order to justify rescission of the contract; then a subsequent demand was made by the petitioners pressuring the respondent to make up their mind since they needed the money for their personal needs. Afterwards, a letter has been sent by the petitioners informing them that the contract has been terminated. The petitioners contended that the termination was valid since the respondent failed to comply with his obligation stated in the contract as to the fixing of ROW; and his refusal to pay for the amount of P5M demanded by them. The RTC ‘s judgment was affirmed by the CA and thus ruled in favor of the respondents. ISSUE:

Whether or not the stipulation provided for a potestative condition which justified the termination of the contract. HELD:

NO. The condition stated in the contract as to the payment after the negotiation of ROW is not a condition sine qua non for the perfection and validity of the contract as well as its compliance thereof under Art. 1308 of the Civil Code. The condition imposed is for the respondent’s obligation to pay the balance thereof; also it is not to be considered as a pure potestative condition, since it is not dependent on the sole will of the debtor but also on the will of 3rd persons who owned the adjacent lands and from whom the ROW shall be negotiated. The condition is more like of a chance, since there is no guaranty that the respondent and the owners would come to an agreement concerning ROW. This is a mixed condition allowed by Art. 1182. Although there was no period provided for the respondent to negotiate the ROW, still the absence of such period will not justify the termination of the contract, which if allowed by the court, would be a clear violation of the principle of mutuality of contracts between the parties; hence such termination was unjustified under the circumstances.

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Case Digests in Civil Law INTERPRETATION OF CONTRACTS HEIRS OF THE DECEASED CARMEN CRUZ-ZAMORA VS. MULTIWOOD INTERNATIONAL INC.

G.R. NO. 146248, JANUARY 19, 2009 FACTS:

The late Carmen Zamora filed a complaint against the respondents regarding a Marketing Agreement to act as agent of Multiwood. As agent thereof, she received compensations and emoluments amounting to 10% as commission for the said projects. Zamora claimed that the respondents defaulted in the payment for her services regarding 3 projects contracted by the respondents thru her efforts, amounting to P254,089.52 and hence, she was compelled to file the necessary action for the collection of the amount. In its answer, the respondent averred that the 3 projects were not related to her services and functions, and it is in the nature of “construction contracts” while their agreement was only for the sale of Multiwood products. The RTC ruled in favor of Zamora, by holding that their Marketing Agreement includes construction contracts by interpreting the intent of the parties, where the respondent has made “partial payments” on the commission of the said projects as evidenced by certain vouchers. On appeal, the CA overruled the decision by the RTC by ruling that she was not authorized to receive any commission since it was not a part of their Marketing Agreement which is limited to the solicitation of products and thus excluding other services (construction). Hence, this appeal. ISSUE:

Whether or not the contention made by the petitioner is proper under the circumstances. HELD:

It is not proper, When the terms of the agreement are clear and explicit, such that they do not justify an attempt to read into them any alleged intention of the parties, the terms are to be understood literally just as they appear on the face of the contract. It is only in instances when the language of a contract is ambiguous or obscure that courts ought to apply certain established rules of construction in order to ascertain the supposed intent of the parties. However, these rules will not be used to make a new contract for the parties or to rewrite the old one, even if the contract is inequitable or harsh. They are applied by the court merely to resolve doubts and ambiguities within the framework of the agreement. Bearing in mind the aforementioned guidelines, we find that the CA committed no reversible error when it ruled that the construction projects solicited by Zamora for Multiwood were outside the coverage of the Marketing Agreement so as preclude the former from claiming a ten percent (10%) commission. The plain import of the text of the Marketing Agreement leaves no doubt as to the true intention of the parties in executing the Marketing Agreement. As mandated by Article 1370 of the Civil Code, if the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.

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Case Digests in Civil Law DEFECTIVE CONTRACTS VICENTE MANZANO, JR. VS. MARCELINO GARCIA

G.R. NO. 179323, NOVEMBER 28, 2011 FACTS:

This case involves a parcel of land issued in the name of the respondent which has an area of 6,951 sq. m. The said property became the subject of a pacto de retro sale allegedly executed by the respondent in favor of the petitioner’s brother for the amount of P80,500.00. Under the said contract, the respondent reserved the right to repurchase the property for the same price within a period of 3 months from the date of the instrument. The brother of the petitioner died and all of his properties including the property in dispute were adjudicated in favor of his heirs, the petitioner was named the administrator of the intestate estate of his brother. Since the respondent failed to exercise his right to redeem the said property, the petitioner instituted a petition for consolidation of ownership over the property. Garcia filed an opposition and answer, alleging that the document evidencing the pacto de retro sale was a forgery. He claimed that he and his wife were in the United States of America (USA) from June 1, 1988 to November 14, 1992, and therefore could not have possibly executed the said pacto de retro sale on May 26, 1992. Two witnesses was presented by the respondent, both of them including the person who notarized the sale, said that the person who introduced himself as the respondent is not the same person who filed the complaint. The RTC ruled in favor of petitioner since the respondent failed to present sufficient proof to support his theory; by requiring that he should have presented an expert witness to prove his allegation; on appeal, the CA overturned the decision of the RTC stating that there is no need to provide for the presentation of an expert witness. ISSUE:

Whether or not the contract is valid and it complied with the requirements of the law. HELD:

No, the contract is invalid. It is plainly apparent to this Court that the alleged signature of Garcia in the pacto de retro sale is utterly dissimilar from his customary signature appearing in the evidence on record, as well as in the verifications of the pleadings before this Court and the courts a quo. From this circumstance alone, we are constrained to affirm the ruling of the Court of Appeals finding that the pacto de retro sale was forged and, therefore, void ab initio. There are two types of void contracts: (1) those where one of the essential requisites of a valid contract as provided for by Article 1318 of the Civil Code is totally wanting; and (2) those declared to be so under Article 1409 of the Civil Code. Conveyances by virtue of a forged signature are void ab initio. The absence of the essential requisite of consent and cause or consideration in these cases rendered the contract inexistent. Since it was proven that the signature is forged, hence it could not be said that there was concurrence of the minds of the parties as to the object and cause of the contract.

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Case Digests in Civil Law PHILNICO INDUSTRIAL CO., VS. PRIVATIZATION AND MANAGEMENT OFFICE

G.R. NO. 199432, AUGUST 27, 2014 FACTS:

PMO, PIC (then still the Philnico Mining and Industrial Corporation), and PPC executed a contract, denominated as the Amended and Restated Definitive Agreement (ARDA), which laid down the terms and conditions of the purchase and acquisition by PIC from PMO of 22,500,000 shares of stock of PPC (representing 90% of ownership of PPC), as well as receivables of PMO from PPC. Under the ARDA, PIC agreed to pay PMO the peso equivalent of US$333,762,000.00 as purchase price, payable in installments and in accordance with the schedule also set out in the ARDA. Three years later, PMO notified PIC that the latter had defaulted in the payment of its obligations and demanded that PIC settle its unpaid amortizations in the total amount of US$275,000.00 within 90 days, or on or about February 5, 2003, or else the PMO would enforce the automatic reversion of the PPC shares of stock under the ARDA. The RTC ruled that the automatic reversion amounts to a pactum commisorium, hence it is contrary to law, but when it reached the CA it disagreed with the RTC, holding that their agreement with regards to the automatic conversion does not pose a pactum commisorium. ISSUE:

Whether or not the assailed Section 8.02 which provides for an automatic conversion of the PPC shares of stock to PIMO in case of default by PIC constitutes Pactum Commisorium HELD:

Article 1305 of the Civil Code allows contracting parties to establish such stipulation, clauses, terms, and conditions as they may deem convenient, provided, however, that they are not contrary to law, morals, good customs, public order, or public policy. Pactum commissorium is among the contractual stipulations that are deemed contrary to law. It is defined as "a stipulation empowering the creditor to appropriate the thing given as guaranty for the fulfillment of the obligation in the event the obligor fails to live up to his undertakings, without further formality, such as foreclosure proceedings, and a public sale. It is expressly prohibited by the Art. 2088 of the Civil Code. There are two elements for pactum commissorium to exist: (1) that there should be a pledge or mortgage wherein a property is pledged or mortgaged by way of security for the payment of the principal obligation; and (2) that there should be a stipulation for an automatic appropriation by the creditor of the thing pledged or mortgaged in the event of nonpayment of the principal obligation within the stipulated period. Section 8.02 of the ARDA provides for the ipso facto reversion of the pledged shares of PIC to PMO in case of default on the part of the former, which as explained above, is prohibited by Article 2088 of the Civil Code.

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Case Digests in Civil Law RESCISSION OF CONTRACTS FONTANA RESORT AND COUNTRY CLUB INC. & RN DEVELOPMENT VS. SPOUSES ROY S. TAN AND SUSAN C. TAN


Spouses Tan bought from RN Development Corporation (RNDC) two class “D” shares of stock for Fontana Resort and Country Club (FRCCI), worth P387,300.00, enticed by the promises of RNDC’s sales agents; that FRCCI would construct a park with first-class leisure facilities called Fontana Leisure Park (FLP) Two (2) years later, Spouses Tan filed a cases in the Securities and Exchange Commission (SEC), seeking refund since according to the Spouses Tan, they were deceived into buying FRCCI shares because of fraudulent misrepresentations, FLP turned out still unfinished. Spouses Tan narrated that they were able to book and avail themselves of the free accommodations. However, when they reserved again for their daughter’s 18th birthday, they were told that they already consumed their free stay since they only have 5 free weekdays, 1 free Saturday and 1 free Sunday. Spouses Tan again tried to reserve and this time, they were confirmed. However, FLP called them, saying that their reservation was cancelled. The SEC hearing officer ruled in favor of Spouses Tan. The Court of Appeals ruled that Fontana should refund Spouses Tan upon returning their certificates of shares for incurring delay in the construction of the facilities. ISSUE:

Whether or not the Spouses Tan are entitled to refund from Fontana HELD:

No, the Spouses Tan are not entitled to refund from Fontana. Based upon the allegation of the Spouses Tan’s complaint, they state a cause of action for the annulment of a voidable contract of sale based on fraud under Article 1390 and Article 1191 of the New Civil Code of the Philippines. However, Spouses Tan miserably failed to prove how Fontana employed fraud to induce them to buy FRCCI shares. Hence, there being no fraud, the contract is not voidable. The Supreme Court granted Fontana’s petition. In effect, there is nothing to restore by parties (Article 1398) since the contract is valid.

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Case Digests in Civil Law SALES EXTINGUISHMENT OF SALES REPUBLIC OF THE PHILIPPINES VS. MARAWI-MARANTAO GENERAL HOSPITAL INC. AND ATTY. MACAPANTO K. MANGONDATO


The Marawi-Marantao General Hospital Inc. (MMGHI) obtained a loan from Social Security Services (SSS) secured by a real estate mortgage. For failure of the MMGHI to pay the monthly amortizations, the SSS extrajudicially foreclosed on the mortgage. The mortgaged property was subsequently sold in a public auction where the SSS was the highest bidder. The sheriff’s certificate of sale was registered. Sometime in 1992, Atty. Mangondato, Acting Chairman of the MMGHI board of directors and representing MMGHI, negotiated with the SSS for the repurchase of the property and asked for an additional six (6) months within which to make the redemption. After further negotiation, the Social Security Commission (SSC) approved Atty. Mangondato’s offer to redeem the property. Consequently, a deed of conditional sale of the subject property was executed by MMGHI. Thereafter, Atty. Mangondato demanded the SSS to immediately implement the transfer of the subject property. However, the SSS informed Atty. Mangondato that the conditional sale was a nullity. Aggrieved by the action of the SSS, the MMGHI and Atty. Mangondato filed a complaint for specific performance and damages against the SSS in the RTC. The trial court ruled in favor of MMGHI and Atty. Mangondato. The CA affirmed then RTC’s decision. Hence, this present appeal. SSS basically argues that no valid redemption could have been effected by entering into the deed of conditional sale as the period of redemption had already expired. ISSUE:

Whether or not MMGHI and Atty. Mangondato validly redeemed the property under the deed of conditional sale HELD:

Yes, MMGHI and Atty. Mangondato validly redeemed the property. The alleged nullity of the deed of conditional sale because the period of redemption had expired is wrong. The right of legal redemption must be exercised within specified time limits. However, the statutory period of redemption can be extended by agreement of the parties. Allowing a redemption after the lapse of the statutory period, when the buyer at the foreclosure does not object but even consents to the redemption, will uphold the policy of the law recognized in such cases as Javellana v. Mirasol and Nuñez, and in the more recent case of Tibajia, et al. v. Honorable Court of Appeals, et al., which is to aid rather than defeat the right of redemption.

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Case Digests in Civil Law

PARTNERSHIP FEDERICO JARANTILLA, JR. VS ANTONIETA JARAN TILLA, ET. AL.


The Jarantilla heirs extrajudicially partitioned amongst themselves the real properties of their deceased parents. With the exception of the real property adjudicated to Pacita Jarantilla, the heirs also agreed to allot the produce of the said real properties for the years 1947-1949 for the studies of Rafael and Antonieta Jarantilla. Sps. Rosita Jarantilla and Vivencio Deocampo entered into an agreement with the spouses Buenaventura Remotigue and Conchita Jarantilla to provide mutual assistance to each other by way of financial support to any commercial and agricultural activity on a joint business arrangement. This proved to be successful as they were able to establish a manufacturing and trading business, acquire real properties, and construct buildings, among other things. The same ended in 1973 upon their voluntary dissolution. The spouses Buenaventura and Conchita Remotigue executed a document Acknowledgement of Participating Capital stating the participating capital of of their co-owners as of the year 1952, with Antonieta Jarantilla stated as P8,000.00 and Federico Jarantilla, Jr.s as P5,000.00. The controversy started when Antonieta filed a complaint against Buenaventura, Cynthia, Doroteo and Tomas, for the accounting of the assets and income of the co-ownership, for its partition and the delivery of her share corresponding to eight percent (8%), and for damages. She alleged that the initial contribution of property and money came from the heirs inheritance, and her subsequent annual investment of P7,500.00 as additional capital came from the proceeds of her farm. Respondents denied having formed a partnership. They did not deny the existence and validity of the "Acknowledgement of Participating Capital" and in fact used this as evidence to support their claim that Antonietas 8% share was limited to the businesses enumerated therein. Petitioner Federico Jr joined his aunt Antonieta and likewise asserted his share in the supposed partnership. ISSUE:

Whether or not the petitioners are entitled to profits over the businesses not listed in the Acknowledgement HELD:

No, the petitioners are not entitled to the profits. Under Article 1767 of the Civil Code, there are two essential elements in a contract of partnership: (a) an agreement to contribute money, property or industry to a common fund; and (b) intent to divide the profits among the contracting parties. It is not denied that all the parties in this case have agreed to contribute capital to a common fund to be able to later on share its profits. They have admitted this fact, agreed to its veracity, and even submitted one common documentary evidence to prove such partnership - the Acknowledgement of Participating Capital. The Acknowledgement of Participating Capital is a duly notarized document voluntarily executed by Conchita Jarantilla-Remotigue and Buenaventura Remotigue in 1957. Petitioner does not dispute its contents and is actually relying on it to prove his participation in the partnership. Pursuant to Article 1797 of the Civil Code, in the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to what he may have contributed, but the industrial partner shall not be liable for the losses. The petitioner himself claims his share to be 6%, as stated in the Acknowledgement of Participating Capital.

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AGENCY COUNTRY BANKERS INSURANCE CORPORATION VS KEPPEL CEBU SHIPYARD

G.R. No. 166044, JUNE 18, 2012 FACTS:

Unimarine transacted with Cebu Shipyard (now Keppel). In compliance with their agreement, Unimarine, through agent Rodriguez, obtained a surety bond with petitioner through Bethoven Quinain, petitioner’s agent. Unimarine failed to pay Cebu Shipyard, prompting the latter to demand from petitioner to comply with its obligation as surety. The petitioner failed to comply with its obligation, and alleged that the surety issued by Quinain was in excess of his authority as agent. ISSUE:

Whether or not the surety bond was validly issued by Quinain. HELD:

No, the surety bond was not validly issued by Quinain. Our law mandates an agent to act within the scope of his authority. The scope of an agent’s authority is what appears in the written terms of the power of attorney granted upon him. Under Article 1878(11) of the Civil Code, a special power of attorney is necessary to obligate the principal as a guarantor or surety. In the case at bar, the principal could be held liable even if the agent exceeded the scope of his authority only if the agent’s act of issuing the Surety Bond is deemed to have been performed within the written terms of the power of attorney he was granted. However, the Special Power of Attorney accorded to the agent in this case clearly states the limits of his authority and particularly provides that in case of surety bonds, it can only be issued in favor of the Department of Public Works and Highways, the National Power Corporation, and other government agencies.

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Case Digests in Civil Law TRUST MARIA TORBELA, REPRESENTED BY HER HEIRS vs SPOUSES ANDRES T. ROSARIO


Valeriano Semilla gave a lot to her sister Marta Semilla, married to Eugenio Torbela. Upon the death of the spouses Torbela, the lot was adjudicated in equal shares by the heirs. The heirs transferred the lot in the name of Dr Rosario. Rosario then executed a quitclaim, and declared that he is only borrowing property. Meanwhile, Rosario acquired several loans with several banks and secured them by mortgage over the property. The siblings filed for recovery of ownership over the land. One bank extrajudicially foreclosed the mortgage. The Rosario spouses filed a case for annulment of the foreclosure. The Torbela heirs attempted to redeem the land but to no avail. ISSUE:

Whether or not the Torbela heirs have the right to redeem the property HELD:

Yes, the Torbela heirs have the right to redeem the property. Dr. Rosario only held the property in trust of the Express trusts are created by direct and positive acts of the parties, by some writing or deed, or will, or by words either expressly or impliedly evincing an intention to create a trust. Under Article 1444 of the Civil Code, [n]o particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended. It is possible to create a trust without using the word trust or trustee. Conversely, the mere fact that these words are used does not necessarily indicate an intention to create a trust. The question in each case is whether the trustor manifested an intention to create the kind of relationship which to lawyers is known as trust. It is immaterial whether or not he knows that the relationship which he intends to create is called a trust, and whether or not he knows the precise characteristics of the relationship which is called a trust. A trust may have a constructive or implied nature in the beginning, but the registered owners subsequent express acknowledgement in a public document of a previous sale of the property to another party, had the effect of imparting to the aforementioned trust the nature of an express trust. The same situation exists in this case. When Dr. Rosario was able to register Lot No. 356-A in his name under TCT No. 52751 on December 16, 1964, an implied trust was initially established between him and the Torbela siblings under Article 1451 of the Civil Code. Dr. Rosario’s execution of the Deed of Absolute Quitclaim on December 28, 1964, containing his express admission that he only borrowed Lot No. 356-A from the Torbela siblings, eventually transformed the nature of the trust to an express one. The express trust continued despite Dr. Rosario stating in his Deed of Absolute Quitclaim that he was already returning Lot No. 356-A to the Torbela siblings as Lot No. 356A remained registered in Dr. Rosario’s name under TCT No. 52751 and Dr. Rosario kept possession of said property, together with the improvements thereon.

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Case Digests in Civil Law GOVERNMENT SERVICE INSURANCE SYSTEM ET AL. VS COMMISSION ON AUDIT


Pursuant to an earlier decision of the Court in the same case between GSIS and COA, GSIS sent out demand letters and asked the beneficiaries to refund the amounts they have received under GSIS Retirement/Financial Plan. The GSIS RFP was declared void as it is against the Teves Retirement Law. The Movants, who are also beneficiaries, asked the Court that they should be allowed to retain the amounts they received in good faith. ISSUE:

Whether or not the beneficiaries should refund the amounts they received under the void GSIS RFP HELD:

Yes, the beneficiaries should pay the amount they received under the GSIS RFP. The payees received the disallowed benefits with the mistaken belief that they were entitled to the same under the GSIS RFP. Article 1456 of the C ivil Code, which provides that “If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.” A constructive trust is substantially an appropriate remedy against unjust enrichment. It is raised by equity in respect of property, which has been acquired by fraud, or where although acquired originally without fraud, it is against equity that it should be retained by the person holding it. Thus, the payees, who acquired the retirement benefits under the GSIS RFP, are considered as trustees of the disallowed amounts, as although they committed no fraud in obtaining these benefits, it is against equity and good conscience for them to continue holding on to them.

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Case Digests in Civil Law CREDIT TRANSACTIONS LOAN PHILIPPINE NATIONAL BANK VS. MERELO B. AZNAR

G.R. No. 171805. May 30, 2011 FACTS:

RISCO ceased operation due to business reverses. In plaintiffs' desire to rehabilitate RISCO, they contributed an amount, which was used in the purchase of the three parcels of land. After the purchase of the above lots, titles were issued in the name of RISCO. The amount contributed by plaintiffs constituted as liens and encumbrances on the aforementioned properties as annotated in the titles of said lots. Such annotation was made pursuant to the Minutes. Thereafter, various subsequent annotations were made on the same titles, including the Notice of Attachment and Writ of Execution in favor of herein defendant PNB. As a result, a Certificate of Sale was issued in favor of PNB, being the lone and highest bidder of the three parcels of land. Plaintiffs thereafter filed a complaint contending that the subsequent writs and processes annotated on the titles are all null and void for w ant of valid service upon RISCO and on them, as stockholders. The trial court rendered the Decision, which ruled against PNB on the basis that there was an express trust created over the subject properties whereby RISCO was the trustee and the stockholders, Aznar, et al., were the beneficiaries or the cestui que trust. The Court of Appeals opined that the monetary contributions made by Aznar, et al., to RISCO can only be characterized as a loan secured by a lien on the subject lots, rather than an express trust. ISSUE:

Whether or not there was a trust contract between RISCO and Aznar, et al. HELD:

No, there is no trust contract between RISCO and Aznar et al. No such reasonable certitude in the creation of an express trust obtains in the case at bar. In fact, a careful scrutiny of the plain and ordinary meaning of the terms used in the Minutes does not offer any indication that the parties thereto intended that Aznar, et al., become beneficiaries under an express trust and that RISCO serve as trustor. Verily, Aznar, et al., who are stockholders of RISCO, cannot claim ownership over the properties at issue in this case on the strength of the Minutes which, at most, is merely evidence of a loan agreement between them and the company. There is no indication or even a suggestion that the ownership of said properties were transferred to them which would require no less that the said properties be registered under their names. For this reason, the complaint should be dismissed since A znar, et al., have no cause to seek a quieting of title over the subject properties. At most, what Aznar, et al., had was merely a right to be repaid the amount loaned to RISCO. Unfortunately, the right to seek repayment or reimbursement of their contributions used to purchase the subject properties is already barred by prescription.

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Case Digests in Civil Law REAL MORTGAGE NATIONAL HOUSING AUTHORITY VS. AUGUSTO BASA, JR., LUZ BASA ET AL

G.R. No. 149121, April 20, 2010 FACTS:

Spouses Augusto and Luz Basa loaned from NHA secured by a real estate mortgage. Spouses Basa did not pay the loan despite repeated demands. The NHA, on filed a verified petition for extrajudicial foreclosure of mortgage. After notice and publication, the properties were sold at public auction where NHA emerged as the highest bidder. The sheriff’s certificate of sale was registered and annotated only on the owner’s duplicate copies of the titles in the hands of the respondents, since the titles in the custody of the Register of Deeds were among those burned down when a fire gutted the building. The redemption period expired, without respondents having redeemed the properties. Shortly thereafter, NHA executed an Affidavit of Consolidation of Ownership over the foreclosed properties, and the same was inscribed by the Register of Deeds on the certificates of title in the hand of NH A. ISSUE:

Whether the annotation of the sheriff’s certificate of sale on the owner’s duplicate certificate of titles is sufficient registration considering that the inscription on the original certificates could not be made as the same got burned. HELD:

Yes. The prevailing rule is that there is effective registration once the registrant has fulfilled all that is needed of him for purposes of entry and annotation, so that what is left to be accomplished lies solely on the register of deeds. Since entry of the certificate of sale was validly registered, the redemption period accruing to respondents commenced therefrom, since the one-year period of redemption is reckoned from the date of registration of the certificate of sale. In the case under consideration, NHA presented the sheriff’s certificate of sale to the Register of Deeds and the same was entered and said entry was further annotated in the owner’s transfer certificate of title. A year later and after the mortgagors did not redeem the said properties, respondents filed with the Register of Deeds an Affidavit of Consolidation of Ownership after which the same instrument was presumably entered into in the day book as the same was annotated in the owner’s duplicate copy. It was not NHA’s fault that the certificate of sale was not annotated on the transfer certificates of title which were supposed to be in the custody of the Registrar, since the same were burned. Neither could NHA be blamed for the fact that there were no reconstituted titles available during the time of inscription as it had taken the necessary steps in having the same reconstituted as early as July 1988. NHA did everything within its power to assert its right.

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Case Digests in Civil Law CENTURY SAVINGS BANK VS. SPOUSES DANILO T. SAMONTE AND ROSALINDA M. SAMONTE

G.R. No. 176212, October 20, 2010 FACTS:

The present controversy stemmed from the two loans, extended by petitioner to respondents. Each loan was secured by a promissory note and deed of real estate mortgage executed by respondents in favor of petitioner. When respondents defaulted in the payment of their loans by the latter part of 1999, petitioner initiated before the notary public extrajudicial foreclosure proceedings over the mortgaged properties, pursuant to Act No. 3135, as amended. Petitioner then caused the publication of a Notice of Sale, prepared by Notary Public, in the Challenger News a weekly newspaper of general circulation on November 15, 22, and 29, 1999. The public auction sale took place, with petitioner as the winning and highest bidder. Notary Public Magpantay subsequently issued a Certificate of Sale,covering the subject properties, in favor of petitioner. A few months later, respondents filed a Complaint, seeking the annulment of the extrajudicial foreclosure sale of their real properties. Among respondents contentions was that the extrajudicial foreclosure proceedings initiated by petitioner failed to comply with the posting requirements under Section 3 of Act No. 3135, as amended. On the other hand, petitioner insisted that the extrajudicial foreclosure sale was duly conducted in accordance with law. ISSUE:

Whether the legal requirements on the notice of sale were complied with and thereby the extrajudicial foreclosure sale of respondents’ mortgaged properties was valid. HELD:

Yes, the legal requirements for extrajudicial foreclosure of mortgage have been complied with. Respondents did not present any evidence at all to establish that the notices of sale were not posted as required under Section 3 of Act No. 3135, as amended. There is also no basis to require the notary public’s certificate to exactly state that the notices of sale were posted at “public places.” Notary Public Magpantay’s use of the words “conspicuous places” in his certificate already satisfactorily complies with the legal requirement for posting. The adjective “public” may refer to that which is “exposed to general view,” and “conspicuous” is a synonym thereof. Moreover, it bears to stress that the Certificate of Posting is actually evidence presented by the petitioner to establish that copies of the Notice of Sale were indeed posted as required by Act No. 3135, as amended. In addition, despite any defect in the posting of the Notice of Sale, the Court reiterates its ruling in previous jurisprudence that the publication of the same notice in a newspaper of general circulation is already sufficient compliance with the requirement of the law.

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Case Digests in Civil Law BPI FAMILY SAVINGS BANK, INC. VS. MA. ARLYN T. AV ENIDO & PACIFICO A AVENIDO

G.R. No. 175816 , December 7, 2011 FACTS:

BPI Family filed with the RTC a Complaint for Collection of Deficiency of Mortgage Obligation with Damages against the spouses Avenido. BPI Family alleged in its Complaint that pursuant to a Mortgage Loan Agreement, the spouses Avenido obtained from the bank a loan, secured by a real estate mortgage on a parcel of land. The spouses Avenido failed to pay their loan obligation despite demand, prompting BPI Family to institute before the Sheriff of Bais City extrajudicial foreclosure proceedings over the mortgaged property. At the public auction sale, BPI Family was the highest bidder for the foreclosed property. BPI Family prayed that the RTC order the spouses Avenido to pay the deficiency of their mortgage obligation. The spouses Avenido filed their Answer and averred therein that they had already paid a substantial amount to BPI Family but due to the imposition by BPI Family of unreasonable charges and penalties on their principal obligation, their payments seemed insignificant. The spouses Avenido sought the dismissal of the Complaint. ISSUE:

Whether or not BPI Family is entitled to deficiency judgment," which includes "a determination of the existence of the right to recover deficieny” HELD:

The well-entrenched rule that a creditor is not precluded from recovering any unpaid balance on the principal obligation if the extrajudicial foreclosure sale of the property subject of the real estate mortgage results in a deficiency, to w it: It is settled that if “the proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure of mortgage, the mortgagee is entitled to claim the deficiency from the debtor. While Act No. 3135, as amended, does not discuss the mortgagee’s right to recover the deficiency, neither does it contain any provision expressly or impliedly prohibiting recovery. If the legislature had intended to deny the creditor the right to sue for any deficiency resulting from the foreclosure of a security given to guarantee an obligation, the law would expressly so provide. Absent such a provision in Act No. 3135, as amended, the creditor is not precluded from taking action to recover any unpaid balance on the principal obligation simply because he chose to extrajudicially foreclose the real estate mortgage.”

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Case Digests in Civil Law BANK OF THE PHILIPPINE ISLANDS, AS SUCCESSOR-IN-INTEREST OF FAR EAST BANK & TRUST COMPANY VS. CYNTHIA L. REYES


Defendant Reyes borrowed, renewed and received from Far East Bank. In support of such allegation, four promissory notes were presented during the course of the trial of the case. As security for the obligation, defendant Reyes executed Real Estate Mortgage Agreements involving 22 parcels of land. When the debt became due and demandable, the defendant failed to settle her obligation and the plaintiff was constrained to foreclose the properties. As alleged, after due publication, the mortgaged properties were sold at public auction. At the public auction, the mortgaged properties were awarded to BPI. After applying the proceeds of the public auction to the outstanding obligation, there remains to be a deficiency and defendant Reyes is still indebted. After due trial, the trial court rendered its decision in favor of plaintiff BPI. Respondent filed a motion for reconsideration but the same was denied. The respondent filed an appeal with the CA and this resulted in a reversal of the trial court’s decision. ISSUE:

Whether or not the gross inadequacy of price will make the execution sale inavlid. HELD:

No, the gross inadequacy of price does not nullify an execution sale. In an ordinary sale, for reason of equity, a transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shocks one’s conscience as to justify the courts to interfere; such does not follow when the law gives the owner the right to redeem as when a sale is made at public auction, upon the theory that the lesser the price, the easier it is for the owner to effect redemption. When there is a right to redeem, inadequacy of price should not be material because the judgment debtor may re-acquire the property or else sell his right to redeem and thus recover any loss he claims to have suffered by reason of the price obtained at the execution sale. Thus, respondent stood to gain rather than be harmed by the low sale value of the auctioned properties because it possesses the right of redemption.

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Case Digests in Civil Law PABLO P. GARCIA vs. YOLANDA VALDEZ VILLAR

G.R. No. 158891, June 27, 2012 FACTS:

Galas was the original owner of a piece of property (subject property) located at Malindang St., Quezon City. Galas, with her daughter, Pingol, as co-maker, mortgaged the subject property to Villar as security for a loan. After sometime, Galas, again with Pingol as her co-maker, mortgaged the same subject property to Pablo P. Garcia to secure her loan. Later Galas sold the subject property to Villar and declared in the Deed of Sale that such property was "free and clear of all liens and encumbrances of any kind whatsoever." Garcia then filed with the RTC alleging that when Villar purchased the subject property, she acted in bad faith and with malice. Garcia further claimed that when Villar purchased the subject property, Galas was relieved of her contractual obligation and the characters of creditor and debtor were merged in the person of V illar. Therefore, Garcia argued, he, as the second mortgagee, was subrogated to Villar’s original status as first mortgagee, which is the creditor with the right to foreclose. ISSUES:

1. 2.

Whether or not the second mortgage to Garcia was valid; Whether or not the sale of the subject property to Villar was in violation of the prohibition on pactum comissorium.

HELD:

1.

Yes, the second mortgage was valid. While it is true that the annotation of the first mortgage to Villar on Galas’s TCT contained a restriction on further encumbrances without the mortgagee’s prior consent, this restriction was nowhere to be found in the Deed of Real Estate Mortgage. As this Deed became the basis for the annotation on Galas’s title, its terms and conditions take precedence over the standard, stamped annotation placed on her title. If it were the intention of the parties to impose such restriction, they would have and should have stipulated such in the Deed of Real Estate Mortgage itself.

2.

No, the sale of the mortgaged property did not violate the prohibition on pactum commissorium. The power of attorney provision in favor of Villar did not provide that the ownership over the subject property would automatically pass to Villar upon Galas’s failure to pay the loan on time. What it granted was the mere appointment of Villar as attorney-in-fact, with authority to sell or otherwise dispose of the subject property, and to apply the proceeds to the payment of the loan. Finally, Villar did not obligate herself to replace the debtor in the principal obligation upon his buying of the mortgaged property, and could not do so in law without the creditor’s consent. Therefore, the obligation to pay the mortgage indebtedness remains with the original debtors Galas and Pingol.

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Case Digests in Civil Law DRAGNET CLAUSE RAMONA RAMOS AND THE ESTA TE OF LUIS T. RAMOS VS. PNB ET AL

G.R. No. 178218. December 14, 2011 FACTS:

In 1973, Luis Ramos obtained a credit line under an agricultural loan account from the Philippine National Bank (PNB), for P83,000.00. To secure the loan, the parties executed a Real Estate Mortgage. Luis Ramos and PNB entered into a Credit Line Agreement in the amount of P50,000,000.00 under the banks sugar quedan financing program. Luis Ramos eventually failed to settle his sugar quedan financing loans amounting to P15,600,000.00. He issued an Authorization in favor of PNB, stating that in consideration of his Sugar Quedan Financing line granted by PNB, he authorizes the PNB to dispose and sell all the Quedan Receipts (Warehouse Receipts) pledged to said bank, after maturity date of the Sugar Quedan Financing line. The spouses Luis Ramos and Ramona Ramos (spouses Ramos) also obtained an agricultural loan of P160,000.00 from PNB. Said loan was evidenced by a promissory note issued by the spouses on even date. The said loan was secured by the real estate mortgage previously executed by the parties. The spouses Ramos fully settled the agricultural loan of P160,000.00. They then demanded from PNB the release of the real estate mortgage. PNB, however, refused to heed the spouses demand. ISSUE:

Whether or not the scope and coverage of the real estate mortgage excluded the sugar quedan financing loan. HELD:

No, the coverage of the real estate mortgage does not exclude the sugar quedan financing. As a general rule, a mortgage liability is usually limited to the amount mentioned in the contract. However, the amounts named as consideration in a contract of mortgage do not limit the amount for which the mortgage may stand as security if, from the four corners of the instrument, the intent to secure future and other indebtedness can be gathered. This stipulation is valid and binding between the parties and is known as the "blanket mortgage clause" also known as the "dragnet clause. Here, it cannot be denied that the real estate mortgage executed by the parties provided that it shall stand as security for any "subsequent promissory note or notes either as a renewal of the former note, as an extension thereof, or as a new loan, or is given any other kind of accommodations such as overdrafts, letters of credit, acceptances and bills of exchange, releases of import shipments on Trust Receipts, etc." The same real estate mortgage likewise expressly covered "any and all other obligations of the Mortgagor to the Mortgagee of whatever kind and nature whether such obligations have been contracted before, during or after the constitution of this mortgage." Thus, from the clear and unambiguous terms of the mortgage contract, the same has application even to future loans and obligations of the mortgagor of any kind, not only agricultural crop loans.

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Case Digests in Civil Law JUST COMPENSATION LAND BANK OF THE PHILIPPINES vs. EMILIANO R. SANTIAGO, JR.


Respondent Emiliano R. Santiago, Jr. (respondent) is one of the heirs of Emiliano F. Santiago (Santiago), the registered owner of an 18.5615-hectare parcel of land (subject property) in Laur, Nueva Ecija. Pursuant to the government’s Operation Land Transfer (OLT) Program under Presidential Decree No. 27, the Department of Agrarian Reform (DAR) acquired 17.4613 hectares of the subject property. Respondent, as a co-owner and administrator of the subject property, filed a petition for the "approval and appraisal of just compensation" due on the subject property. ISSUE:

What should be the computation of just compensation. RULING:

The constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value of the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary course of legal action and competition or the fair value of the property as between one who receives, and one who desires to sell, if fixed at the time of the actual taking by the government. If property is taken for public use before compensation is deposited with the court having jurisdiction over the case , the final compensation must include interest on its just value to be computed from the time the property is taken to the time when compensation is actually paid or deposited with the court. In fine , between the taking of the property and the actual payment, legal interests accrue in order to place the owner in a position as good as (but not better than) the position he was in before the taking occurred. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. This Court therefore deems it proper to impose a 12% legal interest per annum, computed from the date of the "taking" of the subject property on the just compensation to be determined by the SAC, due to respondent, less whatever he and his co-owners had already received.

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Case Digests in Civil Law LEASE CEBU BIONIC BUILDERS SUPPLY, INC. and LYDIA SIA vs. DEVELO PMENT BANK OF THE PHILIPPINES ET AL


The spouses Rudy and Elizabeth Robles entered into a mortgage contract with DBP to secure a loan from the said bank. The properties mortgaged were a parcel of land together with all the existing improvements, and the commercial building to be constructed thereon. Rudy Robles executed a contract of lease in favor of petitioner Cebu Bionic, whereby the lease is on a month to month basis. The contract was not registered by the parties thereto with the Registry of Deeds. DBP acquired the property in the foreclosure sale. DBP subsequently sent a letter to Bonifacio Sia, the husband of petitioner Lydia Sia who was then President of Cebu Bionic, notifying the latter of DBP’s acquisition of the property. No contract of lease was executed between DBP and Cebu Bionic. In 1990, respondents To Chip, Yap and Balila purchased subject properties. Despite notice, Cebu Bionic still paid monthly rentals to DBP. In 1991, respondent To Chip wrote a letter to the counsel of Cebu Bionic, insisting that he and his co-respondents Yap and Balila urgently needed the subject properties to pursue their business plans. He also reiterated their demand for Cebu Bionic to vacate the premises. Petitioners sought the rescission of the contract of sale between DBP and respondents To Chip, Yap and Balila. ISSUE:

1. 2.

Whether or not there was a contract of lease between petitioners and DBP Whether or not the contract between Robles and petitioner was terminated

HELD:

1.

No, there was no contract of lease executed between petitioner and DBP. Under Article 1305 of the Civil Code, "[a] contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service." In the case at bar, there was no concurrence of offer and acceptance vis-à-vis the terms of the proposed lease agreement. In fact, after the reply of petitioners' counsel dated July 7, 1987, there was no indication that the parties undertook any other action to pursue the execution of the intended lease contract. Petitioners even admitted that they merely waited for DBP to present the contract to them, despite being instructed to come to the bank for the execution of the same.

2.

Yes, the lease contract between Robles and petitioner was terminated. The well-entrenched principle is that a lease from month-to-month is with a definite period and expires at the end of each month upon the demand to vacate by the lessor. As no new contract was in fact executed between petitioners and DBP within the 30-day period, the directive to vacate, thus, took effect. DBP's letter constituted the written notice that was required to terminate the lease agreement between petitioners and Rudy Robles. From then on, the petitioners' continued possession of the subject property could be deemed to be without the consent of DBP. The subsequent acceptance by the lessor of rental payments does not, absent any circumstance that may dictate a contrary conclusion, legitimize the unlawful character of their possession.||| (Cebu Bionic Builders Supply, Inc. v. Development Bank of the Phils., G.R. No. 154366, [November 17, 2010])

%$ Case Digests in Civil Law MANILA INTERNATIONAL AIRPORT AUTHORITY vs DING VELAYO SPORTS CENTER, INC.,


Petitioner and Salem Investment Corporation (Salem) entered into a Contract of Lease whereby petitioner leased in favor of Salem a parcel of land. The term of the lease and renewal shall be for a period of Twenty-Five (25) years, commencing from the date of receipt of approval of this Contract by the Secretary of Public Works and Communications, and at the option of the LESSEE, renewable for another TwentyFive (25) years. More than 60 days prior to the expiration of the lease between petitioner and respondent, the latter sent the former a Letter stating that respondent was interested in renewing the lease for another 25 years. Petitioner declined to renew the lease, ordered respondent to vacate the subject property within five days. Respondent essentially prayed for the RTC to order the renewal of the Contract of Lease between the parties for another 25-year term. Petitioner was not bound to renew the Contract of Lease with respondent. The renewal provision under paragraph 17 of the Contract was not automatic but merely directory and procedural and that, in any event, Velayo, the former President of respondent, already conceded to the non-renewal of the Contract. The RTC granted the renewal of the lease. ISSUE:

Whether or not the respondent has the right to renew the lease HELD:

Yes, the respondent has the right to renew the lease. The Contract of Lease between petitioner and respondent solely granted to respondent the option of renewing the lease of the subject property, the only express requirement was for respondent to notify petitioner of its decision to renew the lease within 60 days prior to the expiration of the original lease term. It has not been disputed that said Contract of Lease was willingly and knowingly entered into by petitioner and respondent. Thus, petitioner freely consented to giving respondent the exclusive right to choose whether or not to renew the lease. In case the lessee chooses to renew the lease but there are no specified terms and conditions for the new contract of lease, the same terms and conditions as the original contract of lease shall continue to govern.

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Case Digests in Civil Law LAND TITLES AND DEEDS JURISDICTION OF DARAB PEDRO GABRIEL et al vs. MURMURAY JAMIAS et al

G.R. No. 156482. September 17, 2008 FACTS:

The heirs of Martin Jamias partitioned among themselves the whole property at 1/7. Eventually, the heirs were issued their separate and individual titles corresponding to their respective portions of the estate. Delfina Jamias died. However, in 1981, the whole Jamias Estate was covered by Operation Land Transfer (OLT) pursuant to Presidential Decree (P.D.) No. 27. Having been identified by the Department of Agrarian Reform (DAR) as farmer-beneficiaries, herein petitioners (tenants on the said land) were issued Certificates of Land Transfer (CLTs). Claiming that their landholdings were erroneously covered by OLT since they already have individual Torrens titles covering the same, respondents filed, with the DAR a petition/application for exemption/retention of seven (7) hectares each of the Jamias Estate and for the cancellation of the CLTs issued to the petitioners covering portions thereof. During the pendency of the said petition, emancipation patents were issued and distributed by the DAR to the petitioners. Then DAR Secretary Benjamin Leong issued in his Order that the cancellation/revocation of the emancipation patents which were issued to the tenants within the retained areas should be made before a proper court. ISSUE

Whether or not the DARAB has jurisdiction over the case. HELD:

Yes, the DARAB has jurisdiction over the case It is well-settled that the DAR, through its adjudication arm, i.e., the DARAB and its regional and provincial adjudication boards, exercises quasi-judicial functions and jurisdiction on all matters pertaining to an agrarian dispute or controversy and the implementation of agrarian reform laws. Pertinently, it is provided in the DARAB Revised Rules of Procedure that the DARAB has primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) and related agrarian reform laws. Such jurisdiction shall extend to cases involving the issuance, correction and cancellation of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents which are registered with the Land Registration Authority.

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Case Digests in Civil Law JURISDICTION BASES CONVERSION DEVELOPMENT AUTHORITY VS. PROVINCIAL AGRARIAN REFORM OFFICER OF PAMPANGA

G.R. Nos. 155322-29. June 27, 2012 FACTS:

Executive Order No. 80 was issued, authorizing the establishment of the Clark Development Corporation (CDC) to act as the operating and implementing arm of the BCDA with regard to the management of the Clark Special Economic Zone (CSEZ). Proclamation No. 163 was issued creating and designating the areas covered by the CSEZ as those consisting of the Clark m ilitary reservations and excluding the areas covered by previous Presidential Proclamations, the areas turned over to the Department of Agrarian Reform (DAR), and the areas in the reverted baselands for military use. CDC, the Land Registration Authority (LRA), the Bureau of Local Government Finance (BLGF), and the DENR Region III, entered into a Memorandum of Agreement, wherein they created a CSEZ Technical Research Committee to conduct a technical research of properties . The Committee discovered that titles over parcels of land within the CSEZ, which had just been transferred to the BCDA, had already been issued in the names of private individuals. The BCDA filed with the RTC separate Complaints for Cancellation of Title against the private respondents, the PARO, and the Register of Deeds of Angeles City, Pampanga. ISSUE:

Whether or not the RTC has jurisdiction over the case. HELD:

Yes, the RTC has jurisdiction over the case. This Court agrees with the BCDA for this case to fall within the ambit of DARABs jurisdiction, the issue must be one that involves an agrarian dispute, which is not attendant in the instant case. It is a basic rule that jurisdiction is determined by the allegations in the complaint. The BCDAs complaints did not contain any allegation that would, even in the slightest, imply that the issue to be resolved in this case involved an agrarian dispute. In the action filed by the BCDA, the issue to be resolved was who between the BCDA and the private respondents and their purported predecessors-ininterest, have a valid title over the subject properties in light of the relevant facts and applicable laws. The case thus involves a controversy relating to the ownership of the subject properties, which is beyond the scope of the phrase agrarian dispute. The RTC, therefore, gravely erred when it dismissed the complaints on the grounds that they w ere prematurely filed. The action filed by the BCDA was cognizable by regular courts.

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Case Digests in Civil Law TORRENS SYSTEM PHILIPPINE TRUST COMPANY VS. COURT OF APPEALS


FDC (Forfom Development Corp.) is engaged in agricultural business and is the registered owner of two parcels of land in the present controversy under TCT Nos. 10896 and 64884. FDC received a letter in 1989 from DAR that the said properties were transferred in the names of Limcauco’s. On that same year, plaintiff caused the annotation of its adverse claim on TCT No. 75533. NBI’s investigation revealed that the Limcauco’s were fictitious names used by Honora Dizon in the Deed of Sale of the parcels of land under controversy, not to mention that it was mortgaged by spouses Claveria (subsequent owners) to the Philippine Trust Company. RTC decided in favor of the FDC and ordered the reinstatement of the TCT’s and it was affirmed by the CA . ISSUE:

Whether or not Philtrust is a mortgagee in good or bad faith. HELD:

Philtrust is a mortagagee in bad faith. The rule that persons dealing with registered lands can rely solely on the certificate of title does not apply to banks. Consequently, Philtrust should prove that it exercised extraordinary diligence required of it in approving the mortgage contract in favor of the spouses Claveria. Had Philtrust properly conducted a credit investigation of the spouses Claveria, it would have easily discovered that they did not reside and never resided in the address declared by them, as revealed in the investigation by the NBI and declared by the association of homeowners in the New Alabang subdivision.

$)

Case Digests in Civil Law REPUBLIC OF THE PHILIPPINES VS GLORIA JARALVE, ET AL


Jaralve et al., filed an Application with the RTC for the registration in their names of Lot Sgs-07-000307 (subject property), under Presidential Decree No. 1529. Jaralve, et al. declared that they were the coowners in fee simple of the subject property, with an area of 731,380 square meters, belonging to Cadastral Lot 18590. They claimed that they had acquired ownership over the subject property by way of purchase from predecessors-in-interest who had been in continuous, open, adverse, public, uninterrupted, exclusive, and notorious possession thereof for more than thirty (30) years. To prove that the subject property is alienable and disposable land of the public domain, they presented the CENRO Certificate dated March 20, 1996. The Republic opposed the application on the ground that the applicants failed to prove that the land sought to be registered is alienable and disposable. The Republic also argued that the CENRO Certificate that Jaralve, et al. relied on was erroneously issued; thus, it did not afford them any vested right. The RTC ruled in favor of Jaralve, et al. On appeal, the CA affirmed the RTC. ISSUE

Whether or not the grant of Jaralve, et al.s application for registration of title to the subject property was proper under the law and jurisprudence HELD:

No, the application for registration of title was improper. This Court agrees with the petitioner that the respondents failed to prove in accordance with law that the subject property is within the alienable and disposable portion of the public domain. The Public Land Act or Commonwealth Act No. 141, until this day, is the existing general law governing the classification and disposition of lands of the public domain, except for timber and mineral lands. Under the Regalian doctrine embodied in our Constitution, land that has not been acquired from the government, either by purchase, grant, or any other mode recognized by law, belongs to the State as part of the public domain. Land classification or reclassification cannot be assumed. It must be proved.

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Case Digests in Civil Law DEOGENES RODRIGUEZ VS CA and PHILIPPINE CHINESE CHARITABLE ASSOCIATION

G.R. No. 184589, June 13, 2013 FACTS:

Several owners of parcel of lands executed instruments of conditional sale in favor of Landicho in 1965 and all of which executed jointly a final deed of sale. One of the vendors testified that he and the covendors have been in possession of the parcel of land since 1930 and it has also been established that the land is within the alienable and disposable block of San Mateo, Rizal. The CFI confirmed the title to Landicho but the Registry of Deeds issued TCT rather an OCT, and the land was sold for a number of times. Then ADRDI (A. Doronila Resources Dev., Inc.) instituted a case and asserted ownership over the property and they were able to have its notice of adverse claim over the property which they subsequently transferred to Araneta in 1983. Meanwhile in 1996 Landicho executed a Deed of Sale over the property in favor of the peitioner (Rodriguez). In 2006, PCCAI alleged that the certificate of Rodriguez was fictitious. ISSUE:

Who is or who should be the real owner of the subject land HELD:

A strong presumption exists that Torrens titles are regularly issued and that they are valid. In this case, PCCAI is the registered owner of the subject property under TCT No. 482970, w hich could be traced back to TCT No. 16781 issued to Landicho. As between PCCAI and Rodriguez, the former is better entitled to the protection of the Torrens system. PCCAI can rely on its TCT No. 482970 until the same has been annulled and/or cancelled. PCCAI bought the subject property from WPFI on November 13, 1973 and was issued TCT No. 482970 for the same on July 15, 1975; while Rodriguez bought the subject property from Landicho on November 14, 1996.

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Case Digests in Civil Law REGISTRATION DURAWOOD CONSTRUCTION AND LUMBER SUPPLY VS CANDICE BONA

G.R. No. 179884. January 25, 2012 FACTS:

In 2004, petitioner Durawood filed an action against LLB Construction and its President for sum of money plus damages and a prayer for writ of attachment before the RTC of Antipolo. The RTC granted Durawood’s prayer for the issuance of writ of attachment. The Sheriff levied the attached parcel of land in Antipolo under the TCT No. R-17571 and a notice of levy was attached. Respondent Bona alleged that LBB had sold the property to her and her siblings. RTC granted Bona’s motion to intervene. The RTC rendered a decision in favor or the petitioner Durawood but only to discover in 2005 that the TCT No. R17571 was cancelled and a new TCT was issued under the respondent’s name. RTC decided in favor of Durawood and the Register of Deeds of Antipolo is directed to reinstate the notice of levy on attachment in TCT NO. R-22522. CA decided in favor of respondent Bona, ISSUE:

Whether or not there was grave abuse of discretion in the RTC's order to reinstate the notice of levy on attachment in TCT No. R-22522. HELD:

No, the RTC was, in fact, acting properly when it ordered the reinstatement of the Notice of Levy on Attachment in TCT No. R-22522. Current doctrine thus seems to be that entry alone produces the effect of registration, whether the transaction entered is a voluntary or an involuntary one, so long as the registrant has complied with all that is required of him for purposes of entry and annotation, and nothing more remains to be done but a duty incumbent solely on the register of deeds.

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Case Digests in Civil Law REPUBLIC OF THE PHILIPPINES VS. LYDIA CAPCO DE TENSUAN


In 1998, Aruelo representing Tensuan filed for an application for registration of Lots. 1109-A and 1109-B and stated that these lands were inherited by her father Felix Capco and alleged as well that they had been in an open, continuous, exclusive and notorious possession and occupation of the said lands under a bona fide claim of ownership since June 12, 1945 and many years earlier. In 1998, Tensuan filed a motion to withdraw Lot 1109-B from the application and to amend such because a portion of the said lot was a legal easement and MeTC granted Tensuan’s motion. The Republic, through the OSG filed an opposition to Tensuan’s application arguing that neither Tensuan nor her predecessor-in-interest had been in an open, continuous, exclusive and notorious possession and occupation of the said lands under a bona fide claim of ownership since June 12, 1945 and the subject property form part of the public domain not subject of private appropriation. The Laguna Lake Development Authority also filed its opposition which according to them the land sought to be registered remains inalienable and indisposable in the absence of declaration by the Director of Lands as required by law. In 2004 MeTC granted Tensuan’s Application for Registration and was affirmed by the CA. ISSUE:

Whether or not Tensuan has complied the requirement of an open, continuous, exclusive and notorious possession and occupation of the said lands under a bona fide claim of ownership since June 12, 1945 HELD:

No, Tensuan has not complied with the requirement for possession and occupation of said lands. It is not enough for the PENRO or CENRO to certify that a land is alienable and disposable. The applicant for land registration must prove that the DENR Secretary had approved the land classification and released the land of the public domain as alienable and disposable, and that the land subject of the application for registration falls within the approved area per verification through survey by the PENRO or CENRO. The CENRO is not the official repository or legal custodian of the issuances of the DENR Secretary declaring public lands as alienable and disposable. The CENRO should have attached an official publication of the DENR Secretary's issuance declaring the land alienable and disposable. Given the lack of evidence that the subject property is alienable and disposable, it becomes unnecessary for us to determine the other issue in this case, i.e., whether Tensuan has been in open, continuous, exclusive and notorious possession and occupation; and that such possession is under a bona fide claim of ownership since June 12, 1945 or earlier. Regardless of the character and length of her possession of the subject property, Tensuan cannot acquire registrable title to inalienable public land.

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Case Digests in Civil Law CLT REALTY DEVELOPMENT CORPORATION vs. PHIL-VILLE DEVELOPMENT AND HOUSING CORPORATION ET AL

G.R. No. 160728, March 11, 2015 FACTS:

Respondent Phil-Ville claims that is is the registered owner and actual possessor of sixteen (16) parcels of land in Baesa, Caloocan City and that they had been in “actual, open, notorious, public, physical and continuous possession before 1980 up to the present. Respondent alleged that the TCT No. T-177013 that was issued to the petitioner overlaps Phil-VIlle’s parcels of land and that the TCT is valid and ineffective and will prejudice the Phil-VIlle’s title to 16 parcel of lands. RTC declared respondent Phil-VIlle as “the true, absolute and legitimate owner of the sixteen parcels of land ..” and orders the cancellation of the petitioner’s title. CA affirmed the decision of the RTC. ISSUE:

Whether or not petitioner's TCT No. T-177013 imposes a cloud on respondent Phil-Ville's titles to the 16 parcels of land subject matter of this case. HELD:

Yes, it imposes a cloud on the Phil-VIlle’s title. The cloud on title consists of: (1) any instrument, record, claim, encumbrance or proceeding; (2) which is apparently valid or effective; (3) but is in truth and in fact invalid, ineffective, voidable, or unenforceable; and (4) may be prejudicial to the title sought to be quieted. Both requisites in order for an action for quieting of title to prosper have been met in this case: (1) respondent Phil-Ville had established its equitable title or interest in the 16 parcels of land subject of the action; and (2) TCT No. T-177013, found to overlap titles to said properties of respondent Phil-Ville, was previously declared invalid. The RTC and the Court of Appeals both arrived at the conclusion that respondent Phil-Ville had a valid title to the 16 parcels of land subject of the complaint, and that petitioner's title is invalid despite its prima facie appearance of validity.

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Case Digests in Civil Law HEIRS OF LOPEZ VS. ALFONSO SANDOVAL G.R. No. 146262, March 18, 2015 FACTS:

Sandoval and Ozaeta filed an application for registration of title in the RTC. RTC subsequently granted their request. The heirs of Enriquez filed a motion alleging that Sandoval and Ozaeta sold the lots in question to their deceased father, Eugenio Lopez, Sr. However, the decision of the RTC on the application for registration of Sandoval and Ozaeta being final and executory, the LRA issued titles in their names. The petitioners (heirs) filed a motion to nullify said OCTs. They also applied with the Register of Deeds for the annotation of the notice of lis pendens on the back of the OCTs. The LRA denied said application on the basis of the notice not being registrable solely because of the motion to nullify the OCTs. CA affirmed the LRA’s decision. ISSUE:

Whether or not the petitioner’s motion to declare void the decrees issued by the LRA is a proper basis for filing the notice of lis pendens HELD:

No. As decreed by Section 76 of PD 1529, a notice of lis pendens should contain a statement of the institution of an action or proceeding, the court where the same is pending, and the date of its institution. A notice of lis pendens should also contain a reference to the number of the certificate of title of the land, an adequate description of the land affected and its registered owner. The Register of Deeds denied registration of the notice of lis pendens because "the application was bereft of the original petition or complaint upon which this office will base its action."

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Case Digests in Civil Law THE BAGUIO REGREENING MOVEMENT, INC. VS. A TTY. BRAIN MASWENG


Respondents inherited from their ancestors several parcels of land which is now known as Busol Watershed Reservation and they are filing TRO and injunction against the petitioners from fencing the said watershed as the said action would impede their access to and from their residences, farmlands, water sources and will dispossess them of the areas where they hold their ceremonies. NCIP granted the TRO against the petitioners and afterwards the injunction was granted by Atty. Masweng. CA affirms the decision as they stated that the NCIP has the jurisdiction as they are responsible for the protection of the respondent’s right to their ancestral domains. ISSUE:

Does the NCIP have the power to issue a TRO against government infrastructure projects? HELD:

Yes, the NCIP has the jurisdiction to issue a TRO. Republic Act No. 8975, Section 3 provides - No court, except the Supreme Court, shall issue any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the government, or any of its subdivisions, officials or any person or entity, whether public or private, acting under the government’s direction, to restrain, prohibit or compel the following acts…xxx…” It is clear from the foregoing provisions that the prohibition covers only judges, and does not apply to the NCIP or its hearing officers. Lastly, however, this Court ruled that although the NCIP has the authority to issue temporary restraining orders and writs of injunction, it was not convinced that private respondents were entitled to the relief granted by the Commission. Proclamation No. 15 does not appear to be a definitive recognition of private respondents’ ancestral land claim, as it merely identifies the claimants to a portion of the Busol Forest Reservation, but does not acknowledge vested rights over the same. Since it is required before the issuance of a writ of preliminary injunction that claimants show the existence of a right to be protected, this Court, previously, ultimately granted the petition of the City Government of Baguio and set aside the writ of preliminary injunction issued therein.

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Case Digests in Civil Law INNOCENT PURCHASER FOR VALUE SPOUSES CHING VS. SPOUSES ENRILE


In 1985, the spouses Ching purchased a 370 sqm. lot in Las Pinas covered by TCT No. 83618 from a certain Raymunda La Fuente. After providing the necessary certificates the spouses Ching took physical possession of the property. But the conveyance was not registered in the Registry of Deeds, instead the spouses Ching executed an Affidavit of Adverse Claim which was recorded at the back of TCT No. 83618. Three years after they purchased the property, they received a Notice of Levy on Attachment and Writ of Execution issued by the RTC of Pasig in favor of the respondents the Enrile spouses in the civil case against La Fuente. In 1990, the spouses Ching filed a Petition to Remove Cloud on or Quiet Title to Real Property asserting ownership to the disputed property. The RTC rendered judgment in favor of the spouses Ching upholding their superior right over the property. The CA reversed the decision upholding the respondent’s preferential right over the disputed property. ISSUE:

Whether or not the levy on attachment which was annotated in a later date shall prevail over the adverse claim by the petitioners which was earlier annotated by the mere lapse of 30 days and even without any petition in court for its cancellation. HELD:

No, the levy on attachment cannot prevail over an earlier annotation of adverse claim. The general rule is that a person dealing with registered land is not required to go behind the register to determine the condition of the property. In that case, such person is charged with notice of the burden on the property which is noted on the face of the register or certificate of title. Petitioners' adverse claim is annotated at the back of the title coupled with the fact that they are in possession of the disputed property. To us, these circumstances should have put respondents on guard and required them to ascertain the property being offered to them has already been sold to another to prevent injury to prior innocent buyers. A person who deliberately ignores a significant fact which would create suspicion in an otherwise reasonable man is not an innocent purchaser for value. It is a well-settled rule that a purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor.

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Case Digests in Civil Law ADORACION RUFLOE ET AL VS LEONARDA BURGOS ET AL


Spouses Rufloe acquired a parcel of land at Muntinlupa. In 1978, respondent Elvira Delos Reyes forged the signature of the spouses to make it appear that the spouses sold the land to her the disputed property and she succeeded in obtaining the title under her name. The Rufloes files a complaint for damages against Delos Reyes, alleging the Deed of Sale was falsified and the signatures were forged because Angel Rufloe (one of the spouses) died in 1974, which was four (4) years before the alleged sale in favor of Delos Reyes. During the pendency of the case Delos Reyes sold the land to the respondent siblings wherein a new title was made TCT No. 135860. And in 1985 the Burgos siblings sold the property to their Aunt Leonarda Burgos however, the sale was not registered and no title was issued under her name. The Burgos siblings continued to pay the real estate taxes. The RTC in 1989, declared that the Deed of Sale in favor of Delos Reyes was falsified as the signature of the Spouses were forged. The decision became final and executory. The Rufloes afterwards filed in a separate RTC a complaint for Declaration of Nullity of Contract and Cancellation of Transfer Certificate of Titles against respondents Leonarda and the Burgos siblings, and Delos Reyes. ISSUE:

Whether respondents were innocent purchasers in good faith and for value despite the forged deed of sale of their transferor Delos Reyes. HELD:

No, Leonarda cannot be categorized as a purchaser in good faith. Since it was the Rufloes who continued to have actual possession of the property, Leonarda should have investigated the nature of their possession. We cannot ascribe good faith to those who have not shown any diligence in protecting their rights. Respondents had knowledge of facts that should have led them to inquire and investigate in order to acquaint themselves with possible defects in the title of the seller of the property. However, they failed to do so. Thus, Leonarda, as well as the Burgos siblings, cannot take cover under the protection the law accords to purchasers in good faith and for value. They cannot claim valid title to the property.

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Case Digests in Civil Law THE HEIRS OF ROMANA SAVES VS THE HEIRS OF ESCOLASTICO SAVES


Several persons, among them Severo Chaves and Benedicta Chaves, who filed their claim for Lot No. 382 filed for the titling of the lands they occupy, together with Escolastico Saves, Maximo Saves, Romana Saves, Rafaela Saves, and Januaria Saves. The Saves partitioned the lot and the heirs conveyed their own shares to Gaudencia Valencia. Meleriana Saves, who was a relative of the Saves, wrote them asking to verify from the Register of Deeds information pertaining to Lot No. 382, as they were among the heirs entitled to said property. An action for reconveyance, partition and damages was filed before the RTC alleging that Lot No. 382 was fraudulently acquired by Gaudencia Valencia and that the lot was fictitiously sold to Enriqueta Chavez Abella. They also claim that Abella w as a purchaser in bad faith, for failing to exercise prudence and caution in buying the property in question. Furthermore, they allege that she did not investigate closely the basis of the ownership of Valencia, which a buyer in good faith should have done. ISSUE:

Whether or not Abella was a purchaser in bad faith HELD:

No, the Court ruled that Abella is an innocent purchaser in good faith and for value. It is a well settled doctrine that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely on the certificates of title. A purchaser in good faith is one who buys the property without notice that some other person has a right or interest in such property and pays its fair price before he has notice of the adverse claims and interest of other person in the same property. In the case at bar, the TCT presented by Abella as proof of her ownership of Lot No. 382, did not contain any encumberance of annotation that was transferred from its title of origin. The burden to prove that Abella had notice of any defect in the title of her predecessor lies with the plaintiffs. Plaintiffs failed to prove their contention and on the contrary, their own evidence tended to prove that Abella was a purchaser in good faith. Settled also is the rule that the buyer of real property in possession of persons other than the seller must be wary and should investigate the rights of those in possession, for without such inquiry, the buyer cannot be regarded as a buyer in good faith and cannot have a right over the property. Valencia had already been occupying said property prior to its sale to Abella. The petitioners were never in possession of such property, therefore the rule does not apply in the case at bar. Petition denied.

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Case Digests in Civil Law REMEDIES GREGORIO ARANETA UNIVERSITY FOUNDATION VS THE REGIONAL TRIAL COURT OF CALOOCAN CITY

GR. No. 139672, March 4, 2009 FACTS:

The Gonzales estate in Malabon, Rizal, was expropriated by the Republic with the understanding that the Government would resell the property to its occupants in a civil case decided by the CFI and affirmed by the Supreme Court. In view of the failure of the Government and its instrumentality People’s Homesite and Housing Corporation (PHHC), the occupants and tenants of the estate filed a complaint to compel PHHC to sell to the tenants their respective occupied portions of the Gonzales estate. The then Araneta Institute of Agriculture, now Gregorio Araneta University Foundation (GAUF) sought to intervene on the ground that 52 tenants of the property and the Araneta Institute of Agriculture entered into an agreement where the tenants conveyed to Araneta their priority rights to purchase a portion of the estate. On the basis of this agreement, a compromise agreement was submitted to the court and was duly approved by the court. Included in this compromise agreement are Lots 75 and 54 awarded to Gregorio Bajamonde. On the basis of this agreement and the forged compromise, Araneta University was able to register in its name transfer certificates of title for Lots 75 and 54, which had been awarded to Gregorio Bajamonde. The Court of First Instance and the Court of Appeals declared the compromise agreement entered into by Araneta University and the tenants null and void for being a forgery. Upon motion of the heirs of Bajamonde, the lower court issued a joint order declaring that Lots 75 and 54 belonged to Gregorio Bajamonde and to cancel the Transfer Certificate of Title issued in the name of Araneta and issue a new Transfer Certificate of Title in the name of Gregorio Bajamonde. The lower court also issued a writ of execution for the enforcement of the joint order with a restraining order against people occupying Lots 75 and 54. Heirs of Bajamonde soon sold a portion of Lot 54 to private respondent, Remington Realty Development. GAUF filed a petition for annulment of the joint order claiming that the orders issued by the trial court without jurisdiction because it constituted a collateral attack on its Certificate of Title in violation of Section 48 of PD 1529, the Property Registration Decree. ISSUE:

Whether or not there is a collateral attack on Araneta University’s certificate of title HELD:

No, the Court ruled that it is not considered a collateral attack on Araneta University’s certificate of title. An action or proceeding is deemed an attack on a title when the object of the action is to nullify the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of the action is to annul or set aside such judgment or enjoin its enforcement. On the other hand, it is indirect or collateral, when in an action or proceeding to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof. While the Civil Case No. C-760 (compromise agreement) was originally an action for specific performance and damages, the case cannot constitute a collateral attack on petitioner’s certificate of title was already irregularly and illegally issued. The rule that a title issued under the Torrens system is presumed valid and it is the best proof of ownership does not apply where the very certificate itself is faulty as to its purported origin, as provided in this case. The Court also reiterated that well-settled is the rule that the indefeasibility of the title does not attach to titles secured by fraud and misrepresentation.

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Case Digests in Civil Law SPOUSES MORRIS CARPO AND SOCORRO CARPOVS AYALA LAND, INC.

GR. No. 166577, February 3, 2010 FACTS:

Spouses Carpo filed an action to quiet title against Ayala Corporation, claiming that they are the owners of a parcel of land covered by Transfer Certificate of Title issued in their names. They allege that Ayala Corporation was claiming to have titles over the property covered by the Carpos and that Ayala Corporation had made such property to be its equity contribution to Ayala Property Ventures Corporation to be developed into a residential subdivision. The complaint alleges that the transfer certificates of title have been issued in the name of Ayala and cover the property of the petitioners, already indefeasible and incontrovertible. Petitioners impleaded respondent Ayala Land, Incorporated (ALI) in lieu of Ayala Corporation as the title of subject property was registered in name of ALI. ALI claims that the areas covered by the TCTs do not overlap with the Carpos claimed property. ALI claimed that it is the true owner of the property as as it traces baack its title to the OCT issued in 1950 while Carpos’ title is derived from OCT issued in 1980. The OCT issued to ALI’s predecessor in interest was issued on May 7, 1950 while the OCT issued to Carpos was on March 10, 1995 or 45 years later than that of ALI’s title. ISSUE:

Whether or not petitioners claim and cause of action is barred by laches and by prescription HELD:

Yes, the Court upheld the ruling of the Court of Appeals that the claim of the petitioners has already been barred not only by prescription but also by laches. Although the complaint of the petitioners is for quieting of title, it is in essence and action for reconveyance based on an implied or constructive trust, as the spouses Carpo were contending that there was a serious mistake or fraud in the issuance of the OCT of ALI’s predecessor-in-interest. predecessor-in-interest. An action for reconveyance is a legal remedy granted to the landowner whose property has been wrongfully or erroneously registered in another’s name, must be filed within 10 years from the issuance of the title, as the issuance already serves as constructive notice. As the title of ALI is traced to an OCT issued in 1950, the 10 year prescriptive period already lapsed in 1960. Laches is the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it already has abandoned or declined to assert it. In said case, there was no judicial steps taken to nullify the OCT of which ALI’s title was derived for 45 years. Therefore, spouses Carpo cannot anymore avail of the action for reconveyance.

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Case Digests in Civil Law EMERITA MUNOZ VS ATTY. VICTORIANOYABUT

G.R. No. 142676, June 6, 2011 FACTS:

The subject property is owned by Yee Ching who is married to Emilia Ching, the sister of Munoz. Munoz lived in the house with them. For the valuable services rendered by Munoz, Yee Ching agreed to have the subject property transferred to Munoz. Yee seemingly executed a Deed of Absolute Sale and Munoz acquired a TCT in her name. However, in another deed of sale, Munoz purportedly sold the subject property to her sister, Emilia Ching. The TCT issued in Munoz’s name was cancelled and a new one was issued in Emilia Ching’s name. Ching sold the property to spouses Go and a TCT was issued in their name. Munoz then registered her adverse claim to the subject property. She also filed a complaint to annul the deeds of absolute sale and caused the annotation of a notice of lis pendens on the TCT of spouses Go. RTC ruled in favor of spouses Go, and Munoz was driven out of the subject property. Spouses Go mortgaged the property and it was foreclosed. Spouses Go failed to exercise their right of redemption. BPI Family registered the property and they subsequently sold to Spouses Chan the subject property. property. Civil Case Q-28580 involved Munoz’s complaint for the annulment of sale and the cancellation of the TCTs of the Spouses Go. However, in her appeal to the CA, she also asked for the cancellation of the TCT of the spouses Chan. ISSUE:

Whether or not Munoz can ask for the cancellation of title of spouses Chan HELD:

No, the civil case is an action for reconveyance. An action for reconveyance is an action in personam available to the party whose property has been wrongfully registered under the Torrens system. An action for declaration of nullity of title and recovery of ownership of real property, or re-conveyance, is a real action but it is an action in personam, for it binds a particular individual only although it concerns the right to a tangible thing. Any judgment therein is binding only upon the parties properly impleaded. Since they were not impleaded as parties and given the opportunity to participate in Civil Case No. Q-28580, the final judgment in said case cannot bind BPI Family and the spouses Chan. Furthermore, it clearly provides in Section 48 of PD 1529 that a certificate of title shall not be subject to a collateral attack. It cannot be altered, modified, cancelled except in a direct proceeding in accordance with law. The judgment in Civil Case No. Q-28580 only specifically challenged the titles of Ching and spouses Go. To have the present certificate of title of the spouses Chan cancelled, Munoz must institute another case directly attacking the validity of the same. The legal remedy of Munoz was to directly assail in a separate action the validity of the certificates of title of BPI Family and Spouses Chan.

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JOSE FERNAN F ERNANDO, DO, JR., JR ., ET AL VS LEO N ACUN A, ET AL AL


The subject property is a parcel of land covered by Original Certificate of Title registered in the names of Jose Fernando and Antonia Fernando. They died intestate and the property remained undivided. undivided . Petitioners are the heirs and successors-in-interest of the deceased registered owners. The petitioners failed to agree on the division of the property. Petitioners filed a complaint for partition against heirs of Germogena Fernando, one of the heirs. Leon Acuna intervened in the case and claimed that in a decision dated November 29, 1929 by the cadastral court of Bulacan, there was already adjudication between the registered owners. The respondent Hermogenes claimed that according to the November 29, 1929 Decision, portions of Lot 1303 was designated as Lots 1303-A, 1303-B, 1303-C and 1303-D which were adjudicated to certain persons, persons, including Jose Fernando, while the rest of Lot 1303 was adjudicated to his parents, Antonio A. Fernando married to Felisa Camacho. According to respondent Hermogenes, his family's tenant and the latter's children occupied the portion of Lot 1303 allotted to his (Hermogenes) parents while the rest of Lot 1303 was occupied by the persons named in the said November 29, 1929 Decision. However, it was contended that the decision was never executed or implemented. ISSUE:

Whether or not the ownership of Lot 1303 should revert to petitioners HELD:

No, the Court ruled that the ownership of Lot 1303 should not revert to the petitioners. Petitioners do not dispute the November 29, 1929 decision of the cadastral court. While jurisprudence has already settled that the Torrens title is indefeasible and incontrovertible, the Court has also ruled that registered owners may lose their right to recover possession of property through the equitable principle of laches. In view of respondents' decades long possession and/or ownership of their respective lots by virtue of a court judgment and the th e erstwhile erstwhil e registered owners' inaction i naction and neglect ne glect for an unreasonable unrea sonable and unexplained un explained length of time in pursuing the recovery of the land, assuming they retained any right to recover the same, it is clear that respondents' possession possession may no longer be disturbed. Furthermore, Furthermore, reconveyance sought by the respondents has not prescribed. prescribed. An action for reconveyance of registered land based on implied trust prescribes in ten (10) years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property. However, this Court has ruled that the ten-year prescriptive period applies only when the person enforcing the trust is not in possession of the property. If a person claiming to be its owner is in actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. In the case at bar, respondents who have been in possession of the subject property, can still seek to recover ownership of the respective subject lot.

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Case Digests in Civil Law REPUBLIC OF THE PHILIPPINES VS CONCEPCION LORENZO

G.R. No 172338, December 10, 2012 FACTS:

Pedro Fontanilla and Concepcion Lopez, husband and wife, acquired a parcel of residential land. The subject parcel of land is identical to Lot 18 of the Echague Cadastre 210, covered and embraced under an OCT , in the name of Antonia Pascua as her paraphernal property and the mother of Pedro Fontanilla. The lot as covered by the aforementioned certificate of title was settled and adjudicated among Concepcion Lorenzo and the relatives of Pedro Fontanilla because of Pedro Fontanilla’s death. The owner’s duplicate of OCT no. 3980 was handed and delivered to Pedro Fontanilla and Concepcion Lorenzo and was eaten by white ants (anay). The original copy of OCT No. 3980 is not available as the same was burned and lost beyond recovery when the Registry of Deeds of Isabela was razed by fire. Since both the original copy and owner’s copy of OCT no. 3980 was non-existent, respondents instituted an action for reconstitution of lost or destroyed Torrens certificate of title. Petitioner Republic of the Philippines opposed such petition as the claim that the respondents failed to present substantial proof to support their basis for reconstitution of certificate of title. The trial court granted the reconstitution to the private respondents. ISSUE:

Whether or not reconstitution of OCT no. 3980 was valid HELD:

No, the Court ruled that the reconstitution of OCT No. 3980 was invalid. The relevant law that governs the reconstitution of a lost or destroyed Torrens certificate of title is RA 26, Section 2 which enumerates the valid sources for judicial reconstitution of title. In the case at bar, the respondents were unable to present any of the documents mentioned in Section 2 of RA 26. What should be shown before an order of reconstitution can validly issue, namely: (a) the certificate of title had been lost or destroyed; (b) that the documents presented by the petitioner are sufficient and proper to warrant reconstitution of the lost or destroyed certificate of title; (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 and those contained in the lost or destroyed certificate of title. In the case at bar, the respondents Lorenzo were unable to discharge the burden of proof prescribed by law and jurisprudence for the reconstitution of lost or destroyed Torrens certificate of title.

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Case Digests in Civil Law PRESCRIPTION HEIRS OF DOMINGO VALIENTES VS. HON, RAMAS

G.R. No. 157852. September 15, 2010. FACTS:

Petitioners claim that they are the heirs of Valientes who, before his death, was the owner of a parcel of land in Zamboanga del Sur. In 1939, Valientes mortgaged the subject property to secure his loan to the spouses Belen. In the 1950s, the Valientes family purportedly attempted, but failed, to retrieve the subject property from the spouses Belen. Through an allegedly forged document captioned Venta Definitiva purporting to be a deed of sale of the subject property between Valientes and the spouses Belen, the latter obtained title over the land. The legitimate children of the late Valientes, had their Affidavit of Adverse Claim. Upon the death of the spouses Belen, their surviving heirs executed an extra-judicial settlement with partition and sale in favor of private respondent Minor, the present possessor of the subject property. Minor filed with the then CFI a petition for cancellation of memorandum of encumbrance appearing in the title in her possession which the RTC granted. On the other hand, petitioners filed a complaint for the cancellation of the title in Minor’s possession and its reconveyance to them. The CA, which although found that there was no forum shopping nor litis pendentia, dismissed the case on the ground of prescription and laches. ISSUE:

Whether or not prescription or laches has already set in to bar the filing of the case at hand. HELD:

Yes. When the plaintiff is in possession of the subject property, the action, being in effect that of quieting of title to the property, does not prescribe. In the case at bar, petitioners are not in possession of the subject property. In this case, if it were to be considered as that of enforcing an implied trust, should have therefore been filed within ten years from the issuance of TCT to spouses Belen. But, the case was instituted beyond the prescriptive period. As to the alternative defense of petitioners, applying Arts. 1141, 1134 and 1137 of the Civil Code, thus entitling them to a 30 year period to assail the title, the Court ruled that the applicable law in this instant case is Presidential Decree No. 1529, otherwise known as the Property Registration Decree (since it is more specific that the general rules of the above mentioned articles of the Civil Code). Under the Torrens System as enshrined in P.D. No. 1529, the decree of registration and the certificate of title issued become incontrovertible upon the expiration of one year from the date of entry of the decree of registration, without prejudice to an action for damages against the applicant or any person responsible for the fraud. It took petitioners 28 years before filing this case. This period is unreasonably long for a party seeking to enforce its right to file the appropriate case. Thus, petitioners claim that they had not slept on their rights is patently unconvincing.

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Case Digests in Civil Law PUBLIC LAND ACT CAPISTRANO VS. LIMCUANDO G.R. No. 152413. February 13, 2009. FACTS:

Petitioner owned a parcel of land in Laguna pursuant to a free patent issued on 1977. She sold said parcel of land with right to repurchase to Spouses Zuasola and Subida. Later on, she sold ! of the same parcel of land to respondents in the amount of P75,000.00 with the understanding that P10,000.00 will be paid as initial payment and the balance will be paid on installment basis. Upon receipt of the initial payment, the petitioner signed the deed of absolute sale. Subsequently, respondents failed to pay the installment despite repeated demands made by the petitioner. The respondents claimed that they have fully satisfied the consideration of the sale of the land in question according to the terms and conditions of the sale. Later on, respondents learned that the subject land was already sold by the petitioner to Spouses Zuasola and Subida. Petitioner repurchased the subject land from Spouses Zuasola and Subida. She also offered to repurchase from respondents the ! parcel of the land in question but was refused. A certificate of title was issued in favor of the respondents. Petitioner filed a complaint for the annulment of the deed of sale. She also invoked Sec. 119 of the Public Land Act as an alternative cause of action. The RTC sustained the validity of the deed of sale and denied the petitioner’s right to repurchase the subject land. The CA affirmed the decision of the RTC. Hence, this petition for review. ISSUE:

Whether or not petitioner may still repurchase the land. HELD:

No. Sec. 119 subject said land’s alienation, impliedly after the expiration of the prohibitive period, upon a right of repurchase by the homesteader, his widow, or heirs, w/in a period of 5 yrs from the date of its conveyance. The Court ruled that the Petitioner’s right to repurchase the 1/2 portion of the property no longer exists. The prohibition against the alienation of the land acquired by petitioner by free patent ended on 1983 or 5 years from its issuance. Thus, when petitioner sold the one-half (1/2) portion of the property to respondents on 1989, the redemption period contemplated by Section 119 of the Public Land Act, no longer finds application. When petitioner sold the subject property to the respondents, she no longer had any right to do so for having previously sold the same property to other vendees. It is undeniable then that petitioner fraudulently obtained the consent of respondents in the execution of the assailed deed of sale. Certainly, petitioner’s action for annulment of the subject deed should be dismissed based on Art. 1397 of the Civil Code which provides that the person who employed fraud cannot base his action for the annulment of contracts upon such flaw of the contract. Petitioner is, therefore, precluded from seeking the annulment of the said contract based on the fraud which she herself has caused.

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Case Digests in Civil Law MORLA VS. BELMONTE

G.R. No. 171146. December 7, 2011. FACTS:

Spouses Nisperos were the original homesteaders of an 80,873-square meter tract of public land in Burgos, Isabela, by virtue of OCT No. P-1542. The Nisperos spouses sold the subject land to the Morla brothers for the sum of !250,000.00. Morla brothers confirmed in writing that they had bought from the Nisperos spouses the subject land, and that they had agreed to give the Nisperos spouses a period of 10 years within which to repurchase the subject land for the price of 275,000.00. In 1994, the Nisperos spouses filed a Complaint for Repurchase and/or Recovery of Ownership Plus Damages against the Morla brothers. The Morla brothers claimed that the Nisperos spouses had no cause of action, as the repurchase of the subject land was improper for being outside the five-year period provided under Section 119 of Commonwealth Act No. 141. The parties settled that the only issue to be resolved by the RTC was whether the 1988 contract executed by the parties, wherein it was stipulated that the Nisperos spouses may repurchase the land sold to the Morla brothers within a period of ten (10) years, was valid or not. ISSUE:

Whether or not the parties may extend the period to repurchase the subject land in a contract executed by them HELD:

Yes. Nowhere in Commonwealth Act No. 141 does it say that the right to repurchase under Section 119 thereof could not be extended by mutual agreement of the parties involved. Neither would extending the period in Section 119 be against public policy as the evident purpose of the Public Land Act, especially the provisions thereof in relation to homesteads, is to conserve ownership of lands acquired as homesteads in the homesteader or his heirs. What cannot be bartered away is the homesteaders right to repurchase the homestead within five years from its conveyance, as this is what public policy by law seeks to preserve. The 1988 contract neither shortens the period provided under Section 119 nor does away with it. Instead, it gives the Nisperos spouses more time to reacquire the land that the State gratuitously gave them. The 1988 contract therefore is not contrary to law; instead it is merely in keeping with the purpose of the homestead law. Since the 1988 contract is valid, it should be given full force and effect.

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Case Digests in Civil Law TENANCY TARONA, ET, AL. VS. COURT OF APPEALS

G.R. No. 170182, June 18, 2009 FACTS:

Private respondents filed a complaint for recovery of possession of the subject landholding with the Provincial Agrarian Reform Adjudication Board in Dinalupihan, Bataan, against petitioners. Essentially, private respondents alleged that they are co-owners of the land subject of the case which they inherited from their late mother in whose name said property is titled. Private respondents claimed that the petitioners are not lawful and bona fide tenants of the subject landholding because they have no legal or valid document evidencing tenancy or any proof of rental payments. The purported lease agreement executed by their father in favor of one Juanito Tarona was void for their father had no authority to deal with their mother’s paraphernal property. They likewise alleged that during the lifetime of their mother, the land was administered by another person. It was after Antonia’s death that petitioners entered the land and took possession of the same. Since barangay conciliation and mediation proceedings conducted by the Municipal Agrarian Reform Office of Morong failed, and subsequent demands for petitioners to vacate the land likewise proved futile, private respondents were thus constrained to file the complaint. ISSUE:

Whether or not a tenancy relationship was created by virtue of petitioners’ continuous and uninterrupted possession and cultivation of the land since 1957 without any disturbance from the private respondents. HELD:

No. Private respondents proved the impossibility of personal cultivation. Petitioners have already left the place where the subject land lies in Morong, Bataan, and now live in another locality which is in Caloocan City. Since Bataan is of a considerable distance from Caloocan City, it would undeniably be physically impossible for the petitioners to personally cultivate the landholding. A tenant is not required to be physically present in the land at all hours of the day and night, however such doctrine cannot be stretched to apply to a case wherein the supposed tenant has chosen to reside in another place so far from the land to be cultivated that it would be physically impossible to be present therein with some degree of constancy as to allow the tenant to cultivate the same. There is no tenancy relationship between the private respondents and petitioners due to the absence of personal cultivation of the subject landholding by the latter.

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Case Digests in Civil Law TORTS AND DAMAGES TORTFEASOR VALLACAR TRANSIT, INC. VS. CATUBIG

G.R. No. 175512. May 30, 2011. FACTS:

Cabanilla was employed as regular bus driver by Vallacar Transit, Inc. He got involved in a collision with Catubig and Emparado, who were thrown from the motorcycle. Catubig died on the spot and Emparado died while being rushed to the hospital. Cabanilla was charged with reckless imprudence resulting in double homicide. MCTC ruled that Cabanilla was not criminally liable because there was no negligence on his part. The wife of Catubig filed a complaint for damages w ith RTC, which eventually ruled in favor of petitioner, finding that the proximate cause of the collision was the negligence of the driver of the motorcycle. When appealed to the CA, it ruled that both Catubig and Cabanilla were negligent in driving their respective vehicles. ISSUE:

Whether or not Vallavar Transit, Inc. should be held liable for the negligence of its employees. HELD:

No. Article 2180 of the Civil Code imputing fault of negligence on the part of the employer for the fault of its employees does not apply to petitioner since the fault of negligence of Cabanilla was never established. The presumption that employers are negligent under Article 2180 flows from the negligence of their employees. Since there was no fault or negligence in the part of Cabanilla, then such presumption of fault or negligence on the part of petitioner does not even arise.

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Case Digests in Civil Law MORAL DAMAGES PEOPLE VS. TEJERO

G.R. No. 187744, June 20, 2012 FACTS:

Tejero was convicted of 3 counts of rape and was ordered to pay AAA P50,000.00 as moral damages. Tejero appealed but the appellate court affirmed judgment of conviction and modified said judgment by adding an additional amount of P50,000.00 as civil indemnity. In view of the penalty imposed, the case was elevated to the Supreme Court. ISSUE:

Whether or not the awards of damages are proper. HELD:

Yes. The award of civil indemnity to the rape victim is mandatory upon finding that rape took place. Moral damages, on the other hand, are awarded to rape victims without need of proof other than the fact of rape under the assumption that the victim suffered moral injuries from the experience she underwent. Based on the prevailing jurisprudence, the awards of damages are proper.

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Case Digests in Civil Law EXEMPLARY OR CORRECTIVE DAMAGES PEOPLE OF THE PHILIPPINES VS. GARY ALINAO


This is an appeal from the Decision of the Court of Appeals which affirmed with modification the Decision of the Regional Trial Court of Luna, Apayao finding Gary Alinao guilty beyond reasonable doubt of the crime of murder. It was established that Alinao, in razing Antonio Ardet’s house in order to drive him out and shooting him the moment he appears at his front door, clearly had a previously and carefully crafted plan to kill his victim. The time it took Alinao and his son to device their plan, plot where the gasoline should be poured, and procure the gasoline and the firearms, as well as the time it took to go to Ardet’s house, and even the time when they waited for Ardet to come out of the house, all afforded Alinao sufficient opportunity to reflect upon the consequences of his act to kill his brother-inlaw and his determination to commit the cold-blooded deed from the time of its conception until it was carried out. ISSUE:

Whether or not evident premeditation should be considered to award exemplary damages. HELD:

Yes, evident premeditation as an aggravating circumstance should be considered to award exemplary damages. In the case at bar, the qualifying circumstance of evident premeditation was duly alleged in the Information and proved during the trial. Therefore, in line with current jurisprudence, we reinstate the trial court’s award of the amount of P30,000.00 as exemplary damages to heirs of the victim, Antonio Ardet.

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Case Digests in Civil Law ATTORNEY’S FEES SOLEDAD SUATENGCO AND ANTONIO SUATENGCO VS. CARMENCITA REYES


This is an action for Sum of Money with Damages filed by Carmencita O. Reyes against Spouses Soledad Leonor Pea and Antonio Esteban Suatengco, wherein Reyes claimed that sometime in the first quarter of 1994, Soledad approached her for the purpose of borrowing a sum of money in order to pay her obligation to Philippine Phosphate Fertilizer Corporation (Philphos for brevity). Plaintiff paid Philphos the amount of P1,336,313.00 and by reason thereof defendants Spouses Sautengco executed a Promissory Note binding themselves jointly and severally to pay Reyes the said amount in 31 monthly installments beginning June 30, 1994. Of the amount, however, only one (1) payment in the amount of P15,000.00 on July 27, 1994 have been made by defendants. That pursuant to a specific clause in the Promissory Note, defendants have unequivocally waived the necessity of demand to be made upon them to pay as well as a Notice of Dishonor and presentation with acceleration clause. As of March 31, 1995 defendants owe plaintiff P1,321,313.00 exclusive of interest, other charges which is already due and demandable but remains unpaid, hence this collection suit with prayer for m oral damages and attorney’s fees. ISSUE:

Whether or not the award of attorney’s fees is proper. HELD:

The attorney’s fees herein litigated are in the nature of liquidated damages and not the attorney’s fees recoverable as between attorney and client enunciated and regulated by the Rules of Court. Liquidated damages are those agreed upon by the parties to a contract to be paid in case of breach thereof. The attorney’s fees so provided are awarded in favor of the litigant, not his counsel. In this case, there is a contractual stipulation in the Promissory Note that in case of petitioners default on the terms and conditions of the said Promissory Note by failing to pay any installment due, then this will render the entire balance of the obligation immediately due and payable. We find it improper for both the RTC and the CA to increase the award of attorney’s fees despite the express stipulation contained in the said Promissory Note which we deem to be proper under these circumstances, since it is not intended to be compensation for respondents counsel but was rather in the nature of a penalty or liquidated damages.

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Case Digests in Civil Law LAW FIRM OF RAYMUNDO A. ARMOVIT VS. CA AND BENGSON COMMERCIAL BUILDING


It appears that Atty. Armovit was engaged as counsel for the private respondent in a complaint to have an extrajudicial foreclosure of certain properties by the Government Service Insurance System declared null and void; that the parties allegedly agreed that the private respondent shall pay P15,000.00 as initial compensation and twenty percent in contingent fees. However, upon the turnover of the money to the private respondent, Mrs. Brenda Bengson, wife of Romualdo Bengzon delivered to Atty. Armovit the sum of P300,000.00 only. Armovit protested and demanded the amount of P552,000.0 twenty percent of P2,760,000.00), for which Mrs. Bengzon made assurances that he will be paid the balance. ISSUE:

Whether or not Atty. Armovit is entitled to the sum of P252,000.00 more, in addition to the sum P300,000.00 already paid him by the private respondent. HELD:

Obviously, the private respondent's effort to downgrade Atty. Armovit's performance is a wild, if not cheap, shot of a client out to evade its obligations to its lawyer. The fact that Atty. Armovit may have been paid substantially (in initial fees) while the case was dragging is no justification for denying him the full amount under their agreement. It has been held that initial fees and fees paid in the progress of litigation are independent of the contingent fees. That the retainer agreement was never approved by the board of the corporation is also a poor excuse because the fact of the matter is that the private respondent did deliver to Atty. Armovit the sum of P300,000.00 in partial payment, and the private respondent cannot now deny him the balance bay alleging lack of authority of the Bengson spouses. Contingent fees are valid in this jurisdiction. It is true that attorney's fees must at all times be reasonable; however, we do not find Atty. A rmovit's claim for "twenty percent of all recoveries" to be unreasonable. In the case of A ro v. Nañawa, decided in 1969, this Court awarded the agreed fees amid the efforts of the client to deny him fees by terminating his services. In parallel vein, we are upholding Atty. Armovit's claim for P252,000.00 more — pursuant to the contingent fee agreement — amid the private respondent's own endeavours to evade its obligations. Several times, we have come down hard on erring practitioners. We will not however be slow either, in coming to the rescue of aggrieved brother-lawyers in protecting the integrity of the bar from unscrupulous litigants.

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Case Digests in Civil Law DBP VS. TRAVERSE DEVELOPMENT CORPORATION AND CENTRAL SURETY AND INSURANCE COMPANY


The Development of the Philippines (DBP)-Tarlac Branch granted a Real Estate Loan of !910,000.00 to Traverse Development Corporation (Traverse) for the construction of its three-storey commercial building. To secure the payment of this loan, Traverse constituted a mortgage on the land on which the building was to be built. Among the conditions imposed by DBP in the mortgage contract was Traverses acquisition of an insurance coverage for an amount not less than the loan, to be endorsed in DBP’s favor. Traverse obtained an insurance with FGU. However, as DBP had already transferred the buildings insurance to Central Surety & Insurance Company (Central), for the same terms, under Fire Insurance Policy, issued on May 7, 1982, it returned the FGU Policy to Traverse. On August 9, 1982, during the effectivity of Policy, a fire of undetermined origin razed and gutted Traverses building. The following day, Traverse informed Central of the mishap and requested it to immediately conduct the necessary inspection, evaluation, and investigation. Traverse submitted to Central written proof of the loss sustained by its building, together with its claim in the amount of !1 Million. Central proposed to settle Traverses claim on the basis of cost of repairs of the affected parts of the building for !230,748.00. Believing that this was highly inequitable and unreasonable, Traverse denied such proposal. Having failed to arrive at a settlement, Traverse filed a Complaint before the RTC, against Central and DBP for payment of its claim and damages. ISSUE:

Whether or not Traverse Development Corporation is entitled to attorney’s fees. HELD:

Yes, Traverse Development is entitled to attorney’s fees. The award of attorney’s fees is the exception rather than the rule and the court must state explicitly the legal reason for such award. As we held in ABS-CBN Broadcasting Corporation v. Court of Appeals, the general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit. The power of the court to award attorneys fees under Article 2208 demands factual, legal, and equitable justification. Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not be awarded where no sufficient showing of bad faith could be reflected in a party’s persistence in a case other than an erroneous conviction of the righteousness of his cause. It should be remembered that Traverses insurance policy was assigned to DBP. While it is true that DBP still had the real estate mortgage to ensure the payment of Traverses loan, it would be in its favor to facilitate Centrals payment on Policy No. TAR 1056 rather than go through the process of foreclosing Traverses lot or having to demand payment again, albeit from Traverse this time. Moreover, Traverses own evidence shows that DBP had tried its best to facilitate and coordinate meetings between Traverse and Central. DBP Tarlac even suggested to its main office to have Central blacklisted from its roster of accredited insurance companies as an effect of its handling of the Traverse fire insurance claim. It was not DBP’s act of facilitating the transfer of Traverses insurance policy from FGU to Central that compelled Traverse to litigate its claims, but rather Centrals persistent refusal to pay such claims. Thus, only Central should be held liable for the payment of attorney’s fees and costs of suit.

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Case Digests in Civil Law GRADUATION OF DAMAGES PEOPLE OF THE PHILIPPINES VS. ARNOLD GARCHITORENA

G.R. No. 175605, August 28, 2009 FACTS:

For automatic review is the Decision of the Court of Appeals which affirmed an earlier Decision of the Regional Trial Court of Binan City finding accused-appellants Arnold Garchitorena y Gamba, a.k.a. "Junior," Joey Pamplona, a.k.a. "Nato," and Jessie Garcia y Adorino guilty beyond reasonable doubt of murder and sentencing them to suffer the penalty of death and to indemnify jointly and severally the heirs of the victim in the amount of P50,000.00 as civil indemnity, P50,000.00 as moral damages, P50,000.00 as exemplary damages, P16,700.00 as actual damages, P408,000.00 for loss of earning capacity and to pay the costs of the suit. ISSUE:

Whether or not the lower court erred in awarding moral and exemplary damages in the absence of evidence therefore. HELD:

No. Award of damages is not dependent on the actual imposition of the death penalty, but on the fact that qualifying circumstances warranting the imposition of the death penalty attended the commission of the crime. Hence, we modify the award of civil indemnity by the trial court from P50,000.00 to P75,000.00. Civil indemnity is mandatory and granted to the heirs of the victim without need of proof other than the commission of the crime. Likewise the award of P50,000.00 for moral damages is modified and increased to P75,000.00, consistent with recent jurisprudence on heinous crimes where the imposable penalty is death, it is reduced to reclusion perpetua pursuant to R.A. 9346. The award of moral damages does not require allegation and proof of the emotional suffering of the heirs, since the emotional wounds from the vicious killing of the victim cannot be denied. The trial court's award of exemplary damages in the amount of P50,000.00 shall, however, be reduced to P30,000.00, also pursuant to the latest jurisprudence on the matter. As to the award of actual damages amounting to P16,700.00, we modify the same. When actual damages proven by receipts during the trial amount to less than P25,000.00, as in this case, the award of temperate damages for P25,000.00 is justified in lieu of actual damages of a lesser amount." In the light of such ruling, the victim's heirs in the present case should, therefore, be awarded temperate damages in the amount of P25,000.00. The award for loss of earning capacity is justified. As a rule, documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity. By way of exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when (1) the deceased is self-employed and earning less than the minimum wage under current labor laws, in which case judicial notice may be taken of the fact that in the deceased's line of work no documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws. It cannot be disputed that the victim, at the time of his death, was self-employed and earning less than the minimum wage under current labor laws. The computation arrived at by the trial court was in accordance with the formula for computing the award for loss of earning capacity.

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Case Digests Civil Law

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