San Beda 2000-2001 Memory Aid

SUMMARY OF DOCTRINES
I. PERSONS AND FAMILY RELATIONS
Art. 26, NCC
The philosophy behind Art. 26, NCC underscores the necessity for its inclusion in
our Civil Law. The Code Commission stressed in no uncertain terms that the human
personality be exalted. Thus, under this article, the rights of a person are amply
protected, and damages are provided for violations of a persons dignity, personality,
privacy and peace of mind. Further, the violations mentioned in this codal provision
are not exclusive but merely examples and do not preclude other similar or analogous
acts such as the one involved in this case. (CONCEPCION vs. COURT OF APPEALS, G.R.
No. 120706, January 31, 2000)
Prejudicial Question
A prejudicial question is one that arises in a case the resolution of which is a
logical antecedent of the issue involved therein, and the cognizance of which pertains
to another tribunal. The prejudicial question must be determinative of the case before
the court but the jurisdiction to try and resolve the question must be lodged in another
court or tribunal.
More simply, for the court to appreciate the pendency of a prejudicial question,
the law requires the concurrence of two essential requisites, to wit:
a) The civil action involves an issue similar or intimately related to the issue raised in
the criminal action; and
b) The resolution of such issue determines whether or not the criminal action may
proceed. (CHING vs. COURT OF APPEALS, G.R. No. 110844, April 27, 2000)
Pendency of a civil action for nullity of marriage does not pose a prejudicial
question in a criminal case for concubinage. The rationale behind the principle of
prejudicial question is to avoid two conflicting decisions. For a civil case to be
considered prejudicial to a criminal action as to cause the suspension of the latter
pending the final determination of the civil case, it must appear not only that the said
civil case involves the same facts upon which the criminal prosecution would be
based, but also that in the resolution of the issue or issues raised in the aforesaid civil
action, the guilt or innocence of the accused would necessarily be determined.
(BELTRAN vs. PEOPLE, G.R. No. 137567, June 20, 2000)
Property Regime of Unions Without Marriage (Art. 148, FC); Support; Retroactive
Application of the Family Code
Actual contribution is required by Art. 148 of the Family Code, in contrast to Art.
147 . which states that efforts in the care and maintenance of the family and
household are regarded as contributions to the acquisition of common property by
one who has no salary or income or work or industry. The care given by one party [to]
the home, children, and household, or spiritual or moral inspiration provided to the
other, is not included in Art.148. Hence, if actual contribution of the party is not proved,
there will be no co-ownership and no presumption of equal shares
The right to support (for shelter) of illegitimate children does not prevail over the right
of the spouses to eject them. Article 203 of the Family Code expressly provides that the

obligation to give support shall be demandable from the time the person who has the
right to receive the same needs it for maintenance, but it shall not be paid except from
the date of the judicial or extra-judicial demand. (TUMLOS vs. FERNANDEZ, G.R. No.
137650, April 12, 2000)
Judicial Declaration of Presumptive Death of a Spouse
Since the marriage was contracted in 1958, the applicable provision is Art. 83,
NCC which provides that a subsequent marriage contracted during the lifetime of the
first spouse is illegal and void ab initio unless the prior marriage is first annulled or
dissolved, except when the first spouse (1) has been absent for seven consecutive
years at the time of the second marriage without the spouse present having news of
the absentee being alive, or (2) if absent for less than seven years, is generally
considered as dead and believed to be so by the spouse present at the time of
contracting such subsequent marriage, or (3) is presumed dead according to Articles
390 and 391 of the Civil Code. For the exception to apply, the subsequent marriage
must have been made in good faith. A judicial declaration of absence of the
absentee spouse is not necessary as long as the prescribed period of absence is met.
The marriage under these exceptional cases is deemed to be valid until declared null
and void by a competent court. In contrast, under the 1988 Family Code, in order
that a subsequent bigamous marriage may exceptionally be considered valid, the
following conditions must concur: (a) the prior spouse of the contracting party must
have been absent for four consecutive years, or two years where the danger of death
under the circumstances in Article 391 of the Civil Code at the time of disappearance;
(b) the spouse present has a well founded belief that the absent spouse is already
dead; and (c) there is, unlike the old rule, a judicial declaration of presumptive death
of the absentee for which purpose the spouse present can institute a summary
proceeding in court to ask for that declaration. (ARMAS vs. CALISTERIO, G. R. No.
136467, April 6, 2000)
Validity of Marriage; Marriage License Required
A marriage license is a formal requirement, its absence renders the marriage void
ab initio. Absence any claim of an exceptional character, the purported marriage
between the parties could not be classified among those exempt from the marriage
license requirement. (SY vs. COURT OF APPEALS , G.R. No. 127263, April 12, 2000)
Exemption from Marriage License; Declaration of Nullity of a Void Marriage
The five-year period provided by law in order to exempt the future spouses from
securing a marriage license should be computed on the basis of a cohabitation as
"husband and wife" where the only missing factor is the special contract of marriage to
validate the union. In other words, the five-year common-law cohabitation period,
which is counted back from the date of celebration of marriage, should be a period of
legal union had it not been for the absence of the marriage. This 5-year period should
be the years immediately before the day of the marriage and it should be a period of
cohabitation characterized by exclusivity meaning no third party was involved at
any time within the 5 years and continuity that is unbroken. Otherwise, if that
continuous 5-year cohabitation is computed without any distinction as to whether the
parties were capacitated to marry each other during the entire five years, then the law
would be sanctioning immorality and encouraging parties to have common law
relationships and placing them on the same footing with those who lived faithfully with
their spouse.

The Family Code is silent as to who can file a petition to declare the nullity of a
marriage. A void marriage can be attacked collaterally and can be questioned even
after the death of either party. That is why the action or defense for nullity is
imprescriptible. Any proper interested party may attack a void marriage. (NIAL vs.
BAYADOG, G.R. No. 133778, March 14, 2000)
Property Relations of Unions Without Marriage
The co-ownership in Article 144 of the Civil Code requires that the man and
woman living together as husband and wife without the benefit of marriage must not in
any way be incapacitated to marry. If the property is acquired during the time when
the other party to the cohabitation has a subsisting marriage, such property is
presumed to be conjugal unless it be proved that it pertains exclusively to the husband
or to the wife. (ADRIANO vs. COURT OF APPEALS, G.R. No. 124118, March 27, 2000)
II. PROPERTY
Property of Public Dominion
Like public street, public parks are beyond the commerce of man and, thus,
could not be the subject of a lease contract. (LANSANG vs. COURT OF APPEALS, G.R.
No. 102667, February 23, 2000)
Builder in Good Faith
Both Article 448 and Article 546, NCC which allow full reimbursement of useful
improvements and retention of the premises until reimbursement is made, apply only to
a possessor in good faith, i.e., one who builds on land with the belief that he is the
owner thereof. Verily, persons whose occupation of a realty is by sheer tolerance of its
owners are not possessors in good faith. Neither did the promise of the alleged owners
that they were going to donate the premises to petitioners convert them into builders in
good faith for at the time the improvements were built on the premises, such promise
was not yet fulfilled, i.e., it was a mere expectancy of ownership that may or may not
be realized. (VERONA PADA-KILARIO vs. COURT OF APPEALS, G.R. No. 134329,
January 19, 2000)
Quieting of Title; Termination of Co-ownership by Prescription
An action to quiet title, under Art. 476, NCC, is a common-law remedy for the
removal of any cloud or doubt or uncertainty on the title to real property. It is essential
for the plaintiff or complainant to have a legal or an equitable title to or interest in the
real property which is the subject matter of the action. Also, the deed, claim,
encumbrance or proceeding that is being alleged as a cloud on plaintiff's title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity
or legal efficacy.
It is a fundamental principle that a co-owner cannot acquire by prescription the share
of the other co-owners, absent any clear repudiation of the co-ownership. In order that
the title may prescribe in favor of a co-owner, the following requisites must concur: (1)
the co-owner has performed unequivocal acts of repudiation amounting to an ouster
of the other co-owners; (2) such positive acts of repudiation have been made known
to the other co-owners; and (3) the evidence thereof is clear and convincing. (ROBLES
vs. COURT OF APPEALS, G.R. No. 123509, March 14, 2000)

Quieting of Title; Laches; Freedom to Enter into Contracts; Waiver of Rights

Persons having legal as well as equitable title to or interest in a real property may
bring an action for quieting of title and "title" here does not necessarily denote a
certificate of title issued in favor of the person filing the suit.
Moreover, if the plaintiff in an action for quieting of title is in possession of the
property being litigated, such action is imprescriptible. One who is in actual possession
of a land, claiming to be the owner thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right because his undisturbed
possession gives him a continuing right to seek the aid of the courts to ascertain the
nature of the adverse claim and its effects on his title. Although prescription and laches
are distinct concepts, nonetheless in some instances, the doctrine of laches is
inapplicable where the action was filed within the prescriptive period provided by law.
Moreover, since laches is a creation of equity, acts or conduct alleged to constitute
the same must be intentional and unequivocal so as to avoid injustice. Laches
operates not really to penalize neglect or sleeping on one's rights, but rather to avoid
recognizing a right when to do so would result in a clearly inequitable situation.
The act of registration of a voluntary instrument is the operative act which
conveys or affects registered land insofar as third persons are concerned. Hence, even
without registration, the contract (oral partition) is still valid as between the parties.
Neither a Transfer Certificate of Title nor a subdivision plan is essential to the validity of
an oral partition.
Quitclaims are valid contracts of waiver of property rights. The freedom to enter
into contracts, such as the quitclaims, is protected by law and the courts are not quick
to interfere with such freedom unless the contract is contrary to law, morals, good
customs, public policy or public order. Quitclaims, being contracts of waiver, involve
the relinquishment of rights, with knowledge of their existence and intent to relinquish
them. The intent to waive rights must be clearly and convincingly shown. Moreover,
when the only proof of intent is the act of a party, such act should be manifestly
consistent and indicative of an intent to voluntarily relinquish a particular right such that
no other reasonable explanation of his conduct is possible. ( MAESTRADO vs. COURT OF
APPEALS, G.R. No. 133345 & 133324, March 9, 2000)
Preference of Possession; Ownership
Between the claimants, ownership shall be vested to the one who has proven
acquisitive prescription. Tax receipts and declarations of ownership for taxation, when
coupled with proof of actual possession of the property, can be the basis of a claim for
ownership through prescription.
It is settled that ownership cannot be acquired by mere occupation. Unless it is
hostile, occupation and use, however long, will not confer title by prescription or
adverse possession. The tax declarations and receipts are only prima facie, not
conclusive, evidence of ownership in the absence of actual public and adverse
possession.(CEQUENA vs. BOLANTE, G. R. No. 137944, April 6, 2000)
Donation Inter Vivos; Repudiation Of Inheritance; Escheat
There are 3 essential elements of a donation: (a) the reduction of the patrimony
of the donor; (b) the increase in the patrimony of the donee; and (c) the intent to do
an act of liberality or animus donandi. When applied to a donation of an immovable
property, the law further requires that the donation be made in a public document and
that there should be an acceptance thereof made in the same deed of donation or in a
separate public document. In cases where the acceptance is made in a separate

instrument, it is mandated that the donor should be notified thereof in an authentic

form, to be noted in both instruments.
The inexistence of a donation does not render the repudiation of the inheritance
valid. There is no valid repudiation of inheritance as there was already an acceptance
and where there is no showing that such acceptance was made thru any of the
causes which vitiate consent or there is no proof of the existence of an unknown will.
Art. 1056 of the Civil Code provides The acceptance or repudiation of an
inheritance is irrevocable and cannot be impugned except when it was made thru any
of the causes that vitiate consent or when and unknown will appears.
Nevertheless, the nullity of the repudiation does not ipso facto operate to
convert the parcels of land into res nullius to be escheated in favor of the Government.
The repudiation, being of no effect whatsoever, the parcels of land should revert to
their private owner, who although being an American citizen is qualified by hereditary
succession to own the property subject of the litigation. (REPUBLIC vs. GUZMAN, G.R.
No.132964, Feb. 18,2000)
Donation Inter Vivos
A donation as a mode of acquiring ownership results in an effective transfer of
title over the property from the donor to the donee and the donation is perfected from
the moment the donor knows of the acceptance by the donee. And once a donation
is accepted, the donee becomes the absolute owner of the property
donated. (VELASQUEZ vs. COURT OF APPEALS, G.R. No. 126996, February 15,2000)
PRESCRIPTION
Real actions over immovables prescribe after thirty years. Good faith consists in
the reasonable belief that the person from whom the possessor received the thing was
its owner but could not transmit the ownership thereof. (SERASPI vs. COURT OF APPEALS,
G.R. No. 135602, April 28, 2000)
Prescription in Action for Reconveyance
Prescription cannot be invoked in an action for reconveyance when the
claimant is in possession of the land to be reconveyed. (MILLENA vs. COURT OF
APPEALS, G.R. No. 127797, January 31, 2000)
Ownership Through Acquisitive Prescription
Together with actual possession of the land, tax declarations constitute strong
evidence of ownership of the land occupied by a person. Uninterrupted adverse
possession of the land for more than 30 years could only ripen into ownership of the
land through acquisitive prescription which is a mode of acquiring ownership and other
real rights over immovable property. Prescription requires public, peaceful,
uninterrupted and adverse possession of the property in the concept of an owner for
ten (10) years, in case the possession is in good faith and with a just title. (DBP vs. COURT
OF APPEALS, G.R. No. 129471. April 28, 2000.)
III. SUCCESSION
Successional Rights; Transmission of; Scope
It is a general rule under the law on succession that successional rights are
transmitted from the moment of death of the decedent and compulsory heirs are

called to succeed by operation of law. Under Article 776 NCC, inheritance includes all
the property, rights and obligations of a person, not extinguished by his death.
In a modal institution, the testator states (1) the object of the institution, (2) the
purpose or application of the property left by the testator, or (3) the charge imposed
by the testator upon the heir. A "mode" imposes an obligation upon the heir or legatee
but it does not affect the efficacy of his rights to the succession. On the other hand, in a
conditional testamentary disposition, the condition must happen or be fulfilled in order
for the heir to be entitled to succeed the testator. The condition suspends but does not
obligate; and the mode obligates but does not suspend. To some extent, it is similar to
a resolutory condition.
Substitution is the designation by the testator of a person or persons to take the place
of the heir or heirs first instituted. Under substitutions in general, the testator may either
(1) provide for the designation of another heir to whom the property shall pass in case
the original heir should die before him/her, renounce the inheritance or be
incapacitated to inherit, as in a simple substitution, or (2) leave his/her property to one
person with the express charge that it be transmitted subsequently to another or others,
as in a fideicommissary substitution.
A Will is a personal, solemn, revocable and free act by which a person disposes
of his property, to take effect after his death. Since the Will expresses the manner in
which a person intends how his properties be disposed, the wishes and desires of the
testator must be strictly followed. Thus, a Will cannot be the subject of a compromise
agreement which would thereby defeat the very purpose of making a Will. (RABADILLA
vs. COURT OF APPEALS, G.R. No. 129471. April 28, 2000.)
Partition; Preterition
Every act intended to put an end to indivision among co-heirs and legatees or
devisees would be a partition although it would purport to be a sale, an exchange, a
compromise, a donation or an extrajudicial settlement. The deed of donation and
deed of extra-judicial settlement consolidated the title solely to one of the heirs and
ceased the co-ownership.
The exclusion of one of the children of the decedent from the deed of
extrajudicial settlement has the effect of preterition. This kind of preterition, in the
absence of proof and bad faith, does not justify a collateral attack on the new TCT. The
relief instead rests on Art.1104, NCC to the effect that where the preterition is not
attended by bad faith and fraud, the partition shall not be rescinded but the preterited
heir shall be paid the value pertaining to her. (VIADO NON vs. COURT OF APPEALS, G.R.
No. 137287, February 15, 2000)
Formal Requirements of a Valid Partition
The intrinsic validity of partition not executed in a public instrument is not
undermined when no creditors are involved. The partition of inherited property need
not be embodied in a public document so as to be effective as regards the heirs that
participated therein. The requirement of Article 1358 of the Civil Code that acts which
have for their object the creation, transmission, modification or extinguishment of real
rights over immovable property, must appear in a public instrument, is only for
convenience, non-compliance with which does not affect the validity or enforceability
of the acts of the parties as among themselves. And neither does the Statute of Frauds
under Article 1403 of the New Civil Code apply because partition among heirs is not
legally deemed a conveyance of real property, considering that it involves not a
transfer of property from one to the other but rather, a confirmation or ratification of
title or right of property that an heir is renouncing in favor of another heir who accepts

and receives the inheritance. (VERONA PADA-KILARIO vs. COURT OF APPEALS, G.R. No.
134329, January 19, 2000)
IV. OBLIGATIONS AND CONTRACTS
Novation
Novation is never presumed; it must be proven as a fact either by express
stipulation of the parties or by implication derived from an irreconcilable incompatibility
between old and new obligations or contracts. Otherwise, the original contract
remains in force. (ESPINA vs. COURT OF APPEALS, G.R. No. 116805 June 22, 2000)
Relativity of Contracts
The general rule under Article 1311, NCC is that heirs are bound by contracts
entered into by their predecessors-in-interest except when the rights and obligations
arising therefrom are not transmissible by (1) their nature, (2) stipulation or (3) provision
of law.
A good measure for determining whether a contract terminates upon the death of
one of the parties is whether it is of such character that it may be performed by the
promissors personal representative. Furthermore, the subject matter of the contract is
a lease, which is a property right. The death of a party does not excuse
nonperformance of a contract which involves a property right, and the rights and
obligations thereunder pass to the personal representatives of the deceased. Similarly,
nonperformance is not excused by the death of the party when the other party has a
property interest in the subject matter of the contract. (DKC HOLDINGS CORP. vs.
COURT OF APPEALS, G. R. No. 118248, April 5, 2000)
Onerous Contract
The fact that no renewal was granted removed the basis for the continued
payment of the monthly royalty fee. It is the essence of a royalty fee that it is paid in
consideration of an existing right. In its ordinary acceptation, royalties refer to payments
made to the owner for permitting another to use his property. Royalties are similar to
the rents payable for the use or right to use an invention and after the right to use it has
terminated there is no obligation to make further royalty payments.
The MOA is an onerous contract, wherein the contracting parties are obliged to
render reciprocal prestations. Entitlement to the royalty fee is wholly dependent upon
the existence and subsistence of the right for which the royalty was granted. If the
reason which gave rise to the contract has ceased to exist, the result is that the
obligation too, has ceased to exist. (GOLDEN DIAMOND vs. COURT OF APPEALS, G.R. No.
131436, May 31, 2000)
Power to Rescind in Reciprocal Obligations
The power to rescind or resolve is given to the injured party. More, the rescission of
the contracts requires the parties to restore to each other what they have received by
reason of the contracts. The rescission has the effect of abrogating the contracts in all
parts. (RELIANCE COMMODITIES INC. vs. INTERMEDIATE APPELLATE COURT, G.R. No.
74729, May 31, 2000)

The right to rescind a contract involving reciprocal obligations is provided for in

Article 1191 of the Civil Code. The law speaks of the right of the "injured party" to
choose between rescission or fulfillment of the obligation, with the payment of
damages in either case. The parties should not be allowed to rescind the contract
where they themselves did not perform their essential obligation thereunder. It should
be emphasized that a contract of sale involves reciprocity between the
parties. (CENTRAL BANK OF THEPHILIPPINES vs. BICHARA, G.R. No. 131074, March 27,
2000)
Contract to Sell; Rescission
Article 1191,NCC on rescission, speaks of obligations already existing. In a
contract to sell, the full payment of the purchase price is a positive suspensive
condition, the failure of which is not considered a breach, casual or serious, but simply
an event which prevented the obligation of the vendor to convey title from acquiring
any obligatory force. There can be no rescission of an obligation that is non-existent,
considering that the suspensive condition therefor has not yet happened. (PADILLA vs.
PAREDES, G.R. No. 124874, March 17, 2000)
Interpretation of Contracts; Rescission
The various stipulations in a contract should be interpreted together. Ambiguous
ones should be so construed as to conform to the sense that would result if all the
provisions are comprehended jointly.
The act of treating a contract as cancelled or rescinded on account of infractions by
the other contracting party is always provisional; that is, contestable and subject to
judicial determination. When one party resolved or rescinded the Agreement without
previous court action, it proceeded at its own risk. Only the final judgment of a court
will conclusively and finally settle whether such recourse was correct in law.
If breach is insubstantial, rescission is not justified. (PHIL. NATIONAL CONSTRUCTION
CORP. vs. MARS CONSTRUCTION ENT., G.R. No.133909, February 15, 2000)
Badges of Fraud
Under Article 1381(3) of the Civil Code, contracts which are undertaken in fraud
of creditors when the latter cannot in any manner collect the claims due them, are
rescissible. The existence of fraud with intent to defraud creditor may either be
presumed in accordance with Article 1387, NCC or duly proved in accordance with
the ordinary rules of evidence. Hence, the law presumes that there is fraud of creditors
when: a)
There is alienation of property by gratuitous title by the debtor who has not
reserved sufficient property to pay his debts contracted before such alienation; or b)
There is alienation of property by onerous title made by a debtor against whom some
judgment has been rendered in any instance or some writ of attachment has been
issued. The decision or attachment need not refer to the property alienated and need
not have been obtained by the party seeking rescission.
In determining whether or not a certain conveyance is fraudulent, the question in
every case is whether the conveyance was a bona fide transaction or a trick and
contrivance to defeat creditors or whether it conserves to the creditor to the debtor or
a special right. It is not sufficient that it is founded on good considerations or is made
with bona fide intent. It must have both elements. If defective in either of these,
although good between the parties, it is voidable as to creditors. The question as to
whether or not the conveyance is fraudulent is: does it prejudice the rights of the
creditors? The mere fact that the conveyance was founded on valuable consideration

does not necessarily negate the presumption of fraud under Art. 1387, NCC. There has
to be a valuable consideration and the transaction must have been made bona
fide. (China Banking Corp. vs. Court of Appeals, G.R. No. 129644, March 7, 2000)
Void and Voidable Contracts
Under Art. 1409 (2),NCC, one type of contract which can be declared void and
inexistent is that which is absolutely simulated or fictitious, as when there are several
badges of simulation proving that the sale between the parties was not intended to
have any legal effect between them..
Nonetheless, a sale of the entire property by a co-heir is unenforceable having
been entered into in behalf of the co-heirs who gave no authority or legal
representation. However, such a contract is susceptible of ratification. Where there is a
ratification, then the sale is considered valid and binding. (SEN PO EK MARKETING
CORP. vs. MARTINEZ, G.R. No. 134117, February 9, 2000)
Capacity to Enter into Contract
A person is not incapacitated to contract merely because of advanced years of
AGE or by reason of physical infirmities. Only when such age or infirmities impair his
mental faculties to such extent as to prevent him from properly, intelligently, and fairly
protecting his property rights is he considered incapacitated. (LOYOLA vs. COURT OF
APPEALS, G.R. No. 115734, February 23, 2000)
Unenforceable Contract
Article 1529 of the old Civil Code, which was the prevailing law in 1948 and thus
governed the questioned Deed of Sale, clearly provided that a contract is
unenforceable when there is an absence of authority on the part of one of the
contracting parties. The mere lapse of time cannot give efficacy to such a contract.
The defect is such that it cannot be cured except by the subsequent ratification of the
unenforceable contract by the person in whose name the contract was
executed. (VILLANUEVA-MIJARES vs. COURT OF APPEALS, G.R. No. 108921, April 12,
2000)
Simulation of Contracts
Simulation is the declaration of a fictitious will deliberately made by agreement
of the parties, in order to produce, for the purposes of deception, the appearances of
a juridical act which does not exist or is different what that which does not exist or is
different what that which was really executed. Characteristic of simulation is that the
apparent contract is not really desired or intended to produce legal effect or in any
way alter the judicial situation of the parties. The requisites for simulation are: (a) an
outward declaration of will different from the will of the parties; (b) the false
appearance must have been intended by mutual agreement; and (c) the purpose is
to deceive third persons. (LOYOLA vs. COURT OF APPEALS, G.R. No. 115734, February
23, 2000)
Laches; Prescription
While a review of the decree of registration is no longer available after the
expiration of the one-year period from entry thereof pursuant to the doctrine of res
judicata, an equitable remedy is still available. Those wrongfully deprived of their

property may initiate an action for reconveyance of the property.(VILLANUEVAMIJARES vs. COURT OF APPEALS, G.R. No. 108921, April 12, 2000)
The essence of laches is the failure, or neglect, for an unreasonable and
unexplained length of time to do that which, by exercising due diligence, could or
should have been done earlier; it is the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it. (GASTON vs. COURT OF APPEALS, G.R. No.
116340 June 29, 2000)
TRUST
Express Trust
Trust is the right to the beneficial enjoyment of property, the legal title to which is
vested in another. It is a fiduciary relationship that obliges the trustee to deal with the
property for the benefit of the beneficiary. Trust relations between parties may either
be express or implied. An express trust is created by the intention of the trustor or of the
parties. An implied trust comes into being by operation of law. Under Art. 1444, NCC
no particular words are required for the creation of an express trust, it being sufficient
that a trust is clearly intended.
While no time limit is imposed for the enforcement of rights under express trusts,
prescription may, however, bar a beneficiarys action for recovery, if a repudiation of
the trust is proven by clear and convincing evidence and made known to the
beneficiary. (SECUYA vs. VDA. DE SELMA, G.R. No. 136021, February 22, 2000)
SALES AND LEASE
Elements of a Contract of Sale
Since the lot subsequently sold is said to adjoin the "previously paid lot" on three
sides thereof, the subject lot is capable of being determined without the need of any
new contract. The fact that the exact area of these adjoining residential lots is subject
to the result of a survey does not detract from the fact that they are determinate or
determinable. Concomitantly, the object of the sale is certain and determinate. Under
Article 1460,NCC, a thing sold is determinate if at the time the contract is entered into,
the thing is capable of being determined without necessity of a new or further
agreement between the parties.
There is also no reservation of ownership nor a stipulation providing for a unilateral
rescission by either party. The stipulation that the "payment of the full consideration
based on a survey shall be due and payable in five (5) years from the execution of a
formal deed of sale" is not a condition which affects the efficacy of the contract of
sale. It merely provides the manner by which the full consideration is to be computed
and the time within which the same is to be paid. But it does not affect in any manner
the effectivity of the contract. (SAN ANDRES vs. RODRIGUEZ, G.R. No. 137287, February
15, 2000)
Option Money vs. Earnest Money
An option contract is a preparatory contract in which one party grants to the other, for
a fixed period and under specified conditions, the power to decide, whether or not to
enter into a principal contract, it binds the party who has given the option not to enter
into the principal contract with any other person during the period designated, and
within that period, to enter into such contract with the one to whom the option was

granted, if the latter should decide to use the option. It is a separate agreement
distinct from the contract to which the parties may enter upon the consummation of
the option. An option contract is therefore a contract separate from and preparatory
to a contract of sale which, if perfected, does not result in the perfection or
consummation of the sale.
IN THIS CASE, AFTER THE PAYMENT OF THE 10% OPTION MONEY, THE OFFER TO
PURCHASE PROVIDES FOR THE PAYMENT ONLY OF THE BALANCE OF THE PURCHASE
PRICE, IMPLYING THAT THE "OPTION MONEY" FORMS PART OF THE PURCHASE PRICE. THIS
IS PRECISELY THE RESULT OF PAYING EARNEST MONEY UNDER ART. 1482 OF THE CIVIL
CODE. IT IS CLEAR THEN THAT THE PARTIES IN THIS CASE ACTUALLY ENTERED INTO A
CONTRACT OF SALE, PARTIALLY CONSUMMATED AS TO THE PAYMENT OF THE
PRICE. (CAVITE DEVELOPMENT BANK VS. CYRUS LIM, G.R. NO. 131679, FEBRUARY 1,
2000)
Delivery in Contract of Sale
For while a contract of sale is perfected by the meeting of minds upon the thing
which is the object of the contract and upon the price, the ownership of the thing sold
is not transferred to the vendee until actual or constructive delivery of the property.
Hence, the maxim non nudis pactis, sed traditione dominiadominica rerum
transferuntur (not mere agreements but tradition transfers the ownership of
things).(SERASPI vs. COURT OF APPEALS, G.R. No. 135602, April 28, 2000)
Under Article 1497, NCC, a thing sold shall be understood as delivered when it is
placed in the control or possession of the vendee. Delivery is generally evidenced by
a written acknowledgment of a person that he or she has actually received the thing
or the goods, as in delivery receipts. A bill of lading cannot substitute for a delivery
receipt. This is because it is a written acknowledgment of the receipt of the goods by
the carrier and an agreement to transport and deliver them at a specific place to a
person named or upon his order. It does not evidence receipt of the goods by the
consignee or the person named in the bill of lading; rather, it is evidence of receipt by
the carrier of the goods from the shipper for transportation and delivery. Likewise, a
factory consignment invoice is not evidence of actual delivery of the goods. An
invoice is nothing more than a detailed statement of the nature, quantity and cost of
the thing sold. It is not proof that the thing or goods were actually delivered to the
vendee or the consignee. (LAO vs. COURT OF APPEALS, G.R. No. 47013, 60647 & 6095859, February 17, 2000)
Sale with Right of Repurchase
The mere fact that the price is inadequate does not prove support the
conclusion that the contract was a loan or that the property was not at all sold. The
price fixed in the sale with a right to repurchase is not necessarily the true value of the
land sold. The rationale is that the vendor has the right to fix a relatively reduced price,
although not a grossly inadequate one, in order to afford the vendor a retro every
facility to redeem the land. Thus, inadequacy of the price is not sufficient to set aside a
sale unless it is grossly inadequate or purely shocking to the conscience. (ABAPO vs.
COURT OF APPEALS, GR No. 128677, March 2, 2000)

Consolidation of Title in Pacto de Retro Sale

Art. 1607, NCC requiring a judicial order for the consolidation of the ownership in
the vendee a retro to be recorded in the Registry of Property is intended to minimize
the evils which the pacto de retro sale has caused in the hands of usurers. A judicial
order is necessary in order to determine the true nature of the transaction and to
prevent the interposition of buyers in good faith while the determination is being
made. Notwithstanding Art. 1607, the recording in the Registry of Property of the
consolidation of ownership of the vendee is not a condition sine qua non to the transfer
of ownership. The essence of the pacto de retro sale is that title and ownership of the
property sold are immediately vested in the vendee a retro, subject to the resolutory
condition of repurchase by the vendor a retro within the stipulated period. Failure thus
of the vendor a retro to perform said resolutory condition vests upon the vendee by
operation of law absolute title and ownership over the property sold. As title is already
vested in the vendee a retro, his failure to consolidate his title under Article 1607, NCC
does not impair such title or ownership for the method prescribed thereunder is merely
for the purpose of registering the consolidated title. (CRUZ vs. LEIS, G.R. No. 125233,
March 9, 2000)
DOUBLE SALE
The prior registration of the disputed property by the second buyer does not by
itself confer ownership or a better right over the property. Article 1544,NCC requires that
such registration must be coupled with good faith. Primus tempore, potior jure (first in
time, stronger in right). Knowledge gained by the first buyer of the second sale cannot
defeat the first buyer's rights except where the second buyer registers in good faith the
second sale ahead of the first. Such knowledge of the first buyer does not bar him from
availing of his rights under the law, among them, to register first his purchase as against
the second buyer. But in converso, knowledge gained by the second buyer of the first
sale defeats his rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith. This is the price exacted by Art.
1544 for the second buyer being able to displace the first buyer; that before the
second buyer can obtain priority over the first, he must show that he acted in good
faith throughout (i.e. in ignorance of the first sale and of the first buyer's rights) from
the time of acquisition until the title is transferred to him by registration or failing
registration, by delivery of possession. The second buyer must show continuing good
faith and innocence or lack of knowledge of the first sale until his contract ripens into
full ownership through prior registration as provided by law. To merit protection under
Art. 1544, the second buyer must act in good faith from the time of the sale until the
registration of the same.(BARICUATRO, JR. vs. COURT OF APPEALS, G.R. No. 105902,
February 9, 2000)
Under Article 1544 of the Civil Code before the second buyer can obtain priority over
the first, he must show that he acted in good faith throughout (i.e., in ignorance of the
first sale and of the first buyer's rights) from the time of acquisition until title is
transferred to him by registration or failing registration, by delivery of
possession. Knowledge gained by the second buyer of the first sale defeats his rights
even if he is first to register the second sale, since such knowledge taints his prior
registration with bad faith. (ANGEL BAUTISTA vs. COURT OF APPEALS,
G.R. No. 123655, January 19, 2000)

Legal Redemption
A letter given by the vendee notifying the co-owner of the sale of the co-owned
property cannot be considered compliance with the notice requirement of Art. 1623,
NCC for purposes of legal redemption. Art. 1623 of the Civil Code is clear in requiring
that thewritten notification should come from the vendor or prospective vendor, not
from any other person. In the second place, it makes sense to require that thenotice
required in Art. 1623 be given by the vendor and by nobody else. The vendor of an
undivided interest is in the best position to know who are his co-owners who under the
law must be notified of the sale. It is the notification from the seller, not from anyone
else, which can remove all doubts as to the fact of the sale, its perfection, and its
validity, for in a contract of sale, the seller is in the best position to confirm whether
consent to the essential obligation of selling the property and transferring ownership
thereof to the vendee has been given. (FRANCISCO vs. BOISER, G.R. No. 137677, May
31, 2000)
Validity of Stipulations in a Lease Contract
Jurisprudence supports the view that when parties to a contract expressly reserve
an option to terminate or rescind a contract upon the violation of a resolutory
condition, notice of resolution must be given to the other party when such right is
exercised. In Zulueta vs. Mariano, the SC ruled that resort to courts may be necessary
when the right involves the retaking of property which is not voluntarily surrendered by
the other party. The rationale for such ruling is based on the thesis that no one should
take the law into his own hands. In this sense, the stipulation is legally vulnerable.
Permitting the use of unqualified force to repossess the property and without condition
of notice upon the lessee is fraught with dangerous possibilities. Such a broad
stipulation cannot be sanctioned for the reason that it would allow the lessor/owner to
take the law into his own hands, and undermine the philosophy behind the remedy of
forcible entry which is to prevent breach of the peace and criminal disorder and to
compel the party out of possession to respect and resort to the law alone to obtain
what he claims to be his. (CAMPO ASSETS CORP. vs. CLUB X. O. COMPANY, G.R. No.
134986, March 17, 2000)
Nature of Lease of Chattels
In the lease of chattels, the lessor loses complete control over the chattel leased
although the lessee cannot be reckless in the use thereof, otherwise, he would be
responsible for the damages to the lessor. In the case of jeepney owners/operators
and jeepney drivers, the former exercise supervision and control over the latter.
The management of the business is in the owners hands. The owner as holder of the
certificate of public convenience must see to it that the driver follows the route
prescribed by the franchising authority and the rules promulgated as regards its
operations. This relationship may be applied by analogy to taxi owners/operators and
taxi drivers. (JARDIN vs. NLRC, G.R. No. 119268, February 23, 2000)
Right of First Refusal of a Lessee
Art. 1622, NCC which only deals with small urban lands that are bought for
speculation where only adjoining lot owners can exercise the right of pre-emption or
redemption is not available to one who is not an adjoining lot owner, but a lessee
trying to buy the land that it was leasing. Indeed the right of first refusal may be
provided for in a lease contract. However, such grant of the right of first refusal must be

clearly embodied in a written contract. (SEN PO EK MARKETING CORP. vs. MARTINEZ,

G.R. No. 134117, February 9, 2000)
Renewal of Term of Lease
Pursuant to Art. 1196, NCC, the period of the lease contract is deemed to have
been set for the benefit of both parties. Renewal of the contract may be had only
upon their mutual agreement or at the will of both of them. It is the owner-lessors
prerogative to terminate the lease at its expiration. The continuance, effectivity and
fulfillment of a contract of lease cannot be made to depend exclusively upon the free
and uncontrolled choice of the lessee between continuing the payment of the rentals
or not, completely depriving the owner of any say in the matter. Mutuality does not
obtain in such a contract of lease and no equality exists between the lessor and the
lessee since the life of the contract would be dictated solely by the lessee.(BUCE vs.
COURT OF APPEALS, G.R. No. 136913, May 12, 2000)
Extension of Lease
The provisions of a contract should not be read in isolation from the rest of the
instrument but, on the contrary, interpreted in the light of the other related provisions in
order to fix the meaning of any of its parts. Furthermore, in a reciprocal contract like a
lease, the period of the lease must be deemed to have been agreed upon for the
benefit of both parties, absent language showing that the term was deliberately set for
the benefit of the lessee or lessor alone. (UNIVERSITY PHYSICIANS SERVICES, INC. vs. CA,
G.R. No. 115045, January 31, 2000)
Concept of Implied New Lease
The prescriptive period for an action of reformation should be counted from the
date of execution of the lease contract and not from the date of extension of the
same. First, Art. 1670 speaks of an implied new lease (tacita reconduccion) where at
the end of the contract, the lessee continues to enjoy the thing leased "with the
acquiescence of the lessor", so that the duration of the lease is "not for the period of
the original contract, but for the time established in Article 1682 and 1687." Hence, if the
extended period of lease was expressly agreed upon by the parties, then the term
should be exactly what the parties stipulated, not more, not less. Second, even if the
supposed 4-year extended lease be considered as an implied new lease under Art.
1670, "the other terms of the original contract" contemplated in said provision are only
those terms which are germane to the lessees right of continued enjoyment of the
property leased. The prescriptive period of 10 years provided for in Art. 1144 for
reformation of an instrument applies by operation of law, not by the will of the
parties. (ROSELLO-BENTIR vs. LEANDA, G.R. No. 128991, April 12, 2000)
V. TORTS AND DAMAGES
Damages
In seeking recovery for actual damages it is necessary that the claimant produce
competent proof or the best evidence obtainable such as receipts to justify an award
therefor. Actual or compensatory damages cannot be presumed but must be proved
with reasonable degree of certainty. Only substantiated and proven expenses or those
which appear to have been genuinely incurred in connection with the death, wake or
burial of the victim will be recognized by the court.

Civil indemnity (ex delicto) requires no proof other than the fact of death of the
victim and assailants responsibility therefor.
Compensation for lost income is in the nature of damages and as such requires
due proof of the damages suffered; there must be unbiased proof of the deceaseds
average income. (PEOPLE vs. EREO, G.R. 1224706, Feb. 22, 2000)
The award authorized by criminal law as civil indemnity (ex delicto) for the
offended party is mandatory upon the finding of the fact of rape; it is distinct from and
should not be denominated as moral damages which are based on different jural
foundation and assessed by the court in the exercise of sound discretion. (PEOPLE vs.
MENDIONA, G.R. No. 129056, Feb. 21, 2000)
As a general rule, moral damages are not recoverable in actions for damages
predicated on a breach of contract for it is not one of the items enumerated under Art.
2219 of the Civil Code. As an exception, such damages are recoverable: (1) in cases in
which the mishap results in the death of a passenger, as provided in Art. 1764, in
relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty
of fraud or bad faith, as provided in Art. 2220. (CALALAS vs. COURT OF APPEALS, G.R.
No. 122039, May 31, 2000)
Indemnity for death is presently fixed at P50,000.00. As to actual damages. Art.
2199,NCC provides that "except as provided by law or by stipulation, one is entitled to
an adequate compensation only for such pecuniary loss suffered by him as he has duly
proved."
The civil liability of accused for indemnity for death and actual and moral
damages is solidary
Under Art. 2230,NCC, "exemplary damages as a part of the civil liability may be
imposed when the crime was committed with one or more aggravating
circumstances." (PEOPLE vs. BAUTISTA, G.R. No. 131840, April 27, 2000)
As to the matter of moral damages, the law clearly states that one may only
recover moral damages if they are the proximate result of the other partys wrongful
act or omission. Two elements are required. First, the act or omission must be the
proximate result of the physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation and similar
injury. Second, the act must be wrongful. The rule has always been that moral
damages cannot be recovered from a person who has filed a complaint against
another in good faith.
Where a party is not entitled to actual or moral damages, an award of
exemplary damages is likewise baseless.
No premium should be placed on the right to litigate and not every winning
party is entitled to an automatic grant of attorneys fees. The party must show that he
falls under one of the instances enumerated in Article 2208 of the Civil Code. Where
the award of moral and exemplary damages is eliminated, so must the award for
attorneys fees be deleted. (OROSA vs. COURT OF APPEALS, G. R. No. 111080, April 5,
2000)
The amount of indemnity for loss of earning capacity is based on the income at
the time of death and the probable life expectancy of the victim. It should be stressed
that the amount recoverable is not the entire earnings, but only that portion which the
beneficiaries would have received. Thus, indemnity for lost income refers to the victim's
total earnings minus the necessary living expenses. (PEOPLE vs. CABANDE, G.R. No.
132747, February 8, 2000)

Any person who seeks to be awarded actual or compensatory damages due to acts
of another has the burden of proving said damages as well as the amount thereof.
Actual damages cannot be allowed unless supported by evidence on the record. The
court cannot rely on speculation, conjectures or guesswork as to the fact and amount
of damages. To justify a grant of actual or compensatory damages, it is necessary to
prove with a reasonable degree of certainty, the actual amount of loss.
Moral damages may be recovered in cases involving acts referred to in Art. 21,
NCC. As a rule, a public official may not recover damages for charges of falsehood
related to his official conduct unless he proves that the statement was made with
actual malice. (BAAS, JR. vs. COURT OF APPEALS, G.R. No. 102967, February 10, 2000)
The Court can only grant such amount for expenses if they are supported by
receipts. In the absence thereof, no award for actual damages can be
granted. (PEOPLE vs. ALAGON, G.R. Nos. 126536-37, February 10, 2000)
The heirs are also entitled to receive a compensation for the loss of earning
capacity of the victim. The formula for computing the same as established in decided
cases is as follows:
Gross Necessary
Net Earning = Life x Annual Living
Capacity Expectancy
Income
Expenses.
(PEOPLE vs. DANDO, G.R. No. 120646, February 14, 2000)
Attorney's fees may be awarded if one who claims it is compelled to litigate with
third persons or to incur expenses to protect one's interests by reason of an unjustified
act or omission on the part of the party from whom it is sought. (INDUSTRIAL INSURANCE
COMPANY vs. BONDAD, G.R. No. 136722, April 12, 2000)
The requisites for an action for damages based on malicious prosecution are: (1)
the fact of the prosecution and the further fact that the defendant was himself the
prosecutor, and that the action was finally terminated with an acquittal; (2) that in
bringing the action, the prosecutor acted without probable cause; and (3) the
prosecutor was actuated or impelled by legal malice. (BAYANI vs. PANAY ELECTRIC
CO., G.R. No. 139680, April 12, 2000)
The adverse result of an action does not make the prosecution thereof wrongful
neither does it subject the action to payment of damages. The law does not impose a
penalty to the right to litigate. Resort to judicial processes, by itself, is not an evidence
of ill will. As the mere act of filing criminal complaint does not make the complainant
liable for malicious prosecution. There must be proof that the suit was performed by
legal malice, an inexcusable intent to oppress, vex, annoy or humiliate. A contrary rule
would discourage peaceful resources to the court and unjustly penalize the exercise of
a citizens right to litigate. Where the action is filed in good faith, no penalty should be
imposed thereon. (VILLANUEVA vs. UNITED COCONUT PLANTERS BANK, G.R. No. 138291,
March 7, 2000)
Recovery of Damages in Negligent Acts
In quasi-delict, the negligence or fault should be clearly established because it is
the basis of the action, whereas in breach of contract, the action can be prosecuted
merely by proving the existence of the contract and the fact that the obligor, in this

case the common carrier, failed to transport his passenger safely

destination. (CALALAS vs. COURT OF APPEALS, G.R. No. 122039, May 31, 2000)

to

his

Negligence; Easement
Even if the heavy rains constituted an act of God, one may still be held liable for
damages to the other. The event was not occasioned exclusively by an act of God or
force majeure; a human factor negligence or imprudence had intervened. The
effect then of the force majeure in question may be deemed to have, even if only
partly, resulted from the participation of man. Thus, the whole occurrence was thereby
humanized, as it were, and removed from the rules applicable to acts of God.
Article 637, NCC provides that lower estates are imposed the obligation to receive
the waters which naturally and without the intervention of man descend from higher
estates. However, where the waters which flow from a higher state are those which are
artificially collected in man-made lagoons, any damage occasioned thereby entitles
the owner of the lower or servient estate to compensation. (REMMAN ENTERPRISES vs.
COURT OF APPEALS, G. R. No. 125018, April 6, 2000)
Rule Against Double Recovery in Negligence Cases
In negligence cases, the aggrieved party has the choice between (1) an action
to enforce civil liability arising from crime under Article 100 of the Revised Penal Code;
and (2) a separate action for quasi delict under Article 2176 of the Civil Code. Once
the choice is made, the injured party can not avail himself of any other remedy
because he may not recover damages twice for the same negligent act or omission of
the accused. This is the rule against double recovery. In other words, the same act or
omission can create two kinds of liability on the part of the offender, that is, civil
liability ex delicto, and civil liability quasi delicto, either of which may be enforced
against the culprit, subject to the caveat under Article 2177 of the Civil Code that the
offended party can not recover damages under both types of liability. (RAFAEL REYES
TRUCKING CORPORATION vs. PEOPLE, G.R. No. 129029, April 3, 2000)
Liability of an Educational Institution
It is the contractual obligation of the school to timely inform and furnish sufficient
notice and information to each and every student as to whether he or she had already
complied with all the requirements for the conferment of a degree or whether they
would be included among those who will graduate. The negligent act of professor who
fails to observe the rules of the school, for instance by not promptly submitted a
students grade, is not only imputable to the professor but is an act of the school, being
his employer. Educational institutions are duty-bound to inform the student of their
academic status and not wait for the latter to inquire from the former. The conscious
indifference of a person to the rights or welfare of the person/persons who may be
affected by his act or omission can support a claim for damages.Want of care to the
conscious disregard of civil obligation coupled with a conscious knowledge the cause
naturally calculated to produce them would make the erring party liable. (UNIVERSITY
OF THE EAST vs. JADER, G.R. NO. 132344, February 17, 2000)

VI. CREDIT TRANSACTIONS

Escalation Clause; Interest
Pursuant to P.D. No. 1684 which became effective March 1980 wherein to be valid,
escalation clauses should provide: 1) that there can be an increase in interest if
increased by law or by the Monetary Board; and 2) in order for such stipulation to be
valid, it must include a provision for the reduction of the stipulated interest in the event
that the maximum rate of interest is reduced by law or by the Monetary Board. Despite
the validity of the escalation clause, the contracting party may not, however, increase
the stipulated interest pursuant to the Central Bank Circular 494 from 12% to 17%. CB
Circular 494, although it has the force and effect of law, is not a law and is not the law
contemplated by the parties.(BANCO FILIPINO SAVINGS & MORTGAGE BANK vs. COURT
OF APPEALS, G.R. No. 129227, May 30, 2000)
Real Estate Mortgage
In a real estate mortgage contract, it is essential that the mortgagor be the
absolute owner of the property to be mortgaged; otherwise, the mortgage is void.
Buyers of unregistered real property, especially banks, must exert due diligence in
ascertaining the titles of mortgagors and sellers, lest some innocent parties be
prejudiced. Failure to observe such diligence may amount to bad faith and may result
in the nullity of the mortgage, as well as of the subsequent foreclosure and/or auction
sale. (ROBLES vs. COURT OF APPEALS, G.R. No. 123509, March 14, 2000)
Rights of a Mortgagee
A mortgage is a contract entered into in order to secure the fulfillment of a
principal obligation. It is constituted by recording the document in which it appears
with the proper Registry of Property, although, even if it is not recorded, the mortgage is
nevertheless binding between the parties. Thus, the only right granted by law in favor of
the mortgagee is to demand the execution and the recording of the document in
which the mortgage is formalized. As a general rule, the mortgagor retains possession
of the mortgaged property since a mortgage is merely a lien and title to the property
does not pass to the mortgagee. However, even though a mortgagee does not have
possession of the property, there is no impairment of his security since the mortgage
directly and immediately subjects the property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the obligation for whose security it was
constituted. If the debtor is unable to pay his debt, the mortgage creditor may institute
an action to foreclose the mortgage, whether judicially or extrajudicially, whereby the
mortgaged property will then be sold at a public auction and the proceeds therefrom
given to the creditor to the extent necessary to discharge the mortgage loan.
Regardless of its possessor, the mortgaged property may still be sold, with the
prescribed formalities, in the event of the debtor's default in the payment of his loan
obligation.(ISAGUIRRE vs. DE LARA, G.R. No. 138053, May 31, 2000)
Legal Redemption; Mortgage
Under RA No. 3844, Section 12, "In case the landholding is sold to a third person
without the knowledge of the agricultural lessee, the latter shall have the right to
redeem the same at a reasonable price and consideration. Provided, that the entire
landholding sold must be redeemed. Provided further, that where there are two or
more agricultural lessees, each shall be entitled to said right of redemption only to the

extent of the area actually cultivated by him. The right of redemption under this section
may be exercised within two (2) years from the registration of the sale and shall have
priority over any other right of legal redemption." (PHILBANCOR FINANCE vs. COURT OF
APPEALS, G.R. No. 129572, June 26, 2000)
Concurrence and Preference of Credit
Art. 2242, NCC provides that the claims of contractors engaged in the
construction, reconstruction or repair of buildings or other works shall be preferred with
respect to the specific building or other immovable property constructed. However,
this provision only finds application when there is a concurrence of credits, i.e. when
the same specific property of the debtor is subjected to the claims of several creditors
and the value of such property of the debtor is insufficient to pay in full all the creditors.
In such a situation, the question of preference will arise, that is, there will be a need to
determine which of the creditors will be paid ahead of the others. This statutory lien
should only be enforced in the context of some kind of a procedure where the claims
of all preferred creditors may be bindingly adjudicated, such as in insolvency
proceedings. (J.L. BERNARDO CONSTRUCTION vs. COURT OF APPEALS, G.R. No. 105827,
January 31, 2000)
VII. LAND TITLES AND DEEDS/AGRICULTURAL TENANCY LAWS
Registration of Land Under the TorrensSystem
Registration has never been a mode of acquiring ownership over an immovable
property. The purpose of the Land Registration Act is not to create or vest title but to
confirm and register already created and already vested. (DBP vs. COURT OF APPEALS,
G.R. No. 129471, April 28, 2000)
Proof required in Land Registration Proceedings
The burden of proof in land registration cases is incumbent on the applicant who
must show that he is the real and absolute owner in fee simple of the land applied for.
On him also rests the burden to overcome the presumption that the land sought to be
registered forms part of the public domain considering that the inclusion in a title of a
part of the public domain nullifies the title.
The declaration by the applicant that the land applied for has been in the
possession of her predecessor-in-interest for a certain period, does not constitute the
"well-nigh incontrovertible" and "conclusive" evidence required in land registration.
Further, it should be noted that tax declaration, by itself, is not considered conclusive
evidence of ownership in land registration cases. Rosario should have substantiated her
claim with clear and convincing evidence specifically showing the nature of her claim.
The applicant must likewise prove the identity of the land. It must be borne in mind that
what defines a piece of land is not the size or area mentioned in its description, but the
boundaries therein laid down, as enclosing the land and indicating its limits.
Considering that the writ of possession was sought by Rosario against persons
who were in "actual possession under claim of ownership," the latter's possession raises a
disputable presumption of ownership. This unrebutted presumption militates against the
claim of Rosario, especially considering the evidentiary rule under Article 434 of the Civil
Code that a claimant of a parcel of land, such as Rosario, must rely on the strength of
his title and not on the weakness of the defendant's claim. (MARIANO TURQUESA, ET AL.
vs. ROSARIO VALERA, G.R. No. 76371, January 20, 2000)

Evidence of Ownership
A Torrens Certificate of Title covers only the land described therein together with
improvements existing thereon, if any, nothing more.
True, tax declarations do not prove ownership. However, tax declarations can be
strong evidence of ownership when accompanied by possession for a period sufficient
for prescription. (SANTIAGO vs. COURT OF APPEALS, G.R. No. 109111, June 28, 2000)
Grant of Title/Confirmation of Imperfect Title on Lands
Under the Regalian doctrine, all lands of the public domain belong to the State,
and that the State is the source of any asserted right to ownership in land and charged
with conservation of such patrimony. This same doctrine also states all lands not
otherwise appearing to be clearly within private ownership are presumed to belong to
the State. Hence, the burden of proof in overcoming the presumption of State
ownership of lands of the public domain is on the person applying for registration. The
applicant must also show that the land subject of the application is alienable or
disposable. The adverse possession which may be the basis of a grant of title or
confirmation of an imperfect title refers only to alienable or disposable portions of the
public domain. (BRACEWELL vs. COURT OF APPEALS, G.R. No. 107427, January 25,
2000)
Remedies Available to Aggrieved Party in Registration Proceedings
In land registration proceedings, the rule is that whoever first acquires title to a
piece of land shall prevail. This rule refers to the date of the certificate of title and not to
the date of filing of the application for registration of title. Hence, even though an
applicant precedes another, he may not be deemed to have priority of right to register
title. As such, while his application is being processed, an applicant is duty-bound to
observe vigilance and to take care that his right or interest is duly protected.
An applicant for registration has but a one-year period from the issuance of the
decree of registration in favor of another applicant, within which to question the
validity of the certificate of title issued pursuant to such decree. Once the one-year
period has lapsed, the title to the land becomes indefeasible. However the aggrieved
party is without a remedy at law. If the property has not yet passed to an innocent
purchaser for value, an action for reconveyance is still available. If the property has
passed into the hands of an innocent purchaser for value, the remedy is an action for
damages against those who employed the fraud, and if the latter are insolvent, an
action against the Treasurer of the Philippines for recovery against the Assurance Fund.
Recognizing the futility of these actions, aggrieved applicants sought protection under
the provisions of the Rules of Court by an action for revival and execution of judgment.
However, the provisions of the Rules are merely suppletory to special laws governing
land registration proceedings and hence, cannot prevail over the latter. (HEIRS OF
PEDRO LOPEZ vs. DE CASTRO, G.R. No. 112905, February 3, 2000)
Grant/Transfer of Friar Lands
In case the holder of the certificate shall have sold his interest in the land before
having complied with all the conditions thereof, the purchaser from the holder of the
certificate shall be entitled to all the rights of the holder of the certificate upon
presenting his assignment to the Chief of the Bureau of Public Lands for registration. In
order that a transfer of the rights of a holder of a certificate of sale of friar lands may be
legally effective, it is necessary that a formal certificate of transfer be drawn up and

submitted to the Chief of the Bureau of Public Lands for his approval and registration.
The law authorizes no other way of transferring the rights of a holder of a certificate of
sale of friar lands. (DELA TORRE vs. COURT OF APPEALS, G.R. No. 113095, February 8,
2000)
Free Patent
In the light of their open, continuous and notorious possession and occupation of
the land, petitioners are deemed to have acquired by operation of law, a right to a
grant, a government grant without a necessity of a certificate of title being issued. The
land was segregated from the public domain. Accordingly, the Director of Lands had
no authority to issue a free patent thereto in favor of another person. Verily,
jurisprudence holds that free patent covering private land is void. (ROBLES vs. COURT
OF APPEALS, G.R. No. 123509, March 14, 2000)
Presumptive Conclusiveness of Torrens Title
If a property covered by Torrens title is involved, the presumptive conclusiveness
of such title should be given due weight, and in the absence of strong compelling
evidence to the contrary, the holder thereof should be considered as the owner of the
property in controversy until his title is nullified or modified in an appropriate ordinary
action, particularly, when possession of the property itself is in the persons named in the
title. (LIM vs. COURT OF APPEALS, G.R. No. 124715, January 24, 2000)
Tenancy
The requisites of a tenancy relationship are: (1) the parties are the landowner
and the tenant; (2) the subject is agricultural land; (3) there is consent by the
landowner; (4) there is personal cultivation; and (5) there is sharing of harvest. Tenancy
relationship can only be created with the consent of the true and lawful landholder
who is either the owner, lessee, usufructuary or legal possessor of the land, and not thru
the acts of the supposed landholder who has no right to the land subject of the
tenancy. (BAUTISTA vs. ARANETA, G.R. No. 135829, February 22, 2000)
A tenant is defined under Section 5 (a) of Republic Act No. 1199 as a person who
himself and with the aid available from within his immediate farm household cultivates
the land belonging to or possessed by another, with the latter's consent, for purposes of
production, sharing the produce with the landholder under the share tenancy system,
or paying to the landholder a price certain or ascertainable in produce or in money or
both under the leasehold tenancy system. Briefly stated, for this relationship to exist, it is
necessary that:
1. The parties are the landowner and the tenant;
2. The subject is agricultural land;
3. There is consent;
4. The purpose is agricultural production;
5. There is personal cultivation; and
6. There is sharing of harvests.
Upon proof of the existence of the tenancy relationship, a tenant could avail of
the right of redemption under RA 3844. This right of redemption is validly exercised upon
compliance with the following requirements: a) the redemptioner must be an
agricultural lessee or share tenant; b) the land must have been sold by the owner to a
third party without prior written notice of the sale given to the lessee or lessees and the
DAR in accordance with Sec. 11, RA 3844, as amended; c) only the area cultivated by

the agricultural lessee may be redeemed; d) the right of redemption must be exercised
within 180 days from notice; and e) there must be an actual tender or valid
consignation of the entire amount which is the reasonable price of the land sought to
be redeemed.(RUPA, SR. vs. COURT OF APPEALS, G.R. No. 80129, January 25, 2000)
The right of tenancy attaches to the landholding by operation of law. The
leasehold relation is not extinguished by the alienation or transfer of the legal possession
of the landholding. (PHILBANCOR FINANCE vs. COURT OF APPEALS, G.R. No. 129572,
June 26, 2000)
RA 3844 allows only one heir to succeed to the tenancy of the deceased tenant
in the order of preference prescribed by Section 9 of the said law. However, where
the land is not cultivated by one tenant alone (predecessor of the present claimants)
but with other tenants who are likewise qualified and who are related to him, this
provision does not apply. Thus, it can be said that the entitlement of the other
possessors is not by virtue of succession to the rights of a predecessor-in-interest, but in
their individual capacity as tenants therein simultaneously with an ascendant.
Under Section 22 of RA 6657, the Comprehensive Agrarian Reform Law, those
entitled to the award of the land are: Section 22. Qualified Beneficiaries the lands
covered by the CARP shall be distributed as much as possible to landless residents of
the same barangay or in the absence thereof, landless residents of the same
municipality in the following order of priority:
a.)
agricultural lessees and share tenants
b.)
regular farm workers
c.)
seasonal farmworkers
d.)
other farmworkers
e.)
actual tillers or occupants of public lands
f.) collective or cooperatives of the above beneficiaries
g.)
others directly working on the land.
(GREENFIELD REALTY CORP. vs. CARDAMA, G.R. No. 129246, January 25, 2000)
Preferential Rights of Tenants under P.D. 1517
Sale to one tenant alone, among the many tenants, is sufficient compliance with
P.D. 1517 where the landowner had offered his tenants the chance to buy the land
which they respectively occupied. (DEEv. COURT OF APPEALS, G.R. No.108205, February
15, 2000)
Jurisdictional Requirements for Reconstitution of Title
The requirements for reconstitution of title, under R.A. 26, Secs. 12 and 13, are
the following: That the petition must state (1) the nature and description of the
buildings and improvements, if any, which do not belong to the owner of the land, and
the names and addresses of the owners of such building and improvements, (2) the
names and addresses of the occupants of the adjoining properties and of all persons
who may have any interest in the property, and (3) that no deeds or other instrument
affecting the property may have been presented for registration; and That there should
be notice and publication of said petition. The failure to comply with the requirements
of publication and posting of notices prescribed in RA 26 Sec. 12 & 13 is fatal to the
jurisdiction of the court. Hence, non-compliance with the jurisdictional requirements
renders its decision approving the reconstitution and all proceedings therein utterly null
and void. (HEIRS OF EULALIO RAGUA vs. COURT OF APPEALS, G.R. 88521-22 & 89366-67,
January 31, 2000)

CASE DIGESTS
I. PERSONS AND FAMILY RELATIONS
ART. 26, NCC
CONCEPCION vs. COURT OF APPEALS
G.R. No. 120706, January 31, 2000
Facts: Spouses Nestor and Allem Nicolas reside in an apartment leased to them by
Florence Concepcion. The spouses engage in a joint venture by supplying government
agencies with office supplies and equipment. Sometime in July 1985, petitioner
Rodrigo, brother of the deceased husband of Florenceaccosted Nestor and accused
him of conducting an adulterous relationship with Florence. As a result of the incident,
Nestor felt extreme embarrassment and shame that he could no longer face his
neighbors. Consequently, Nestor demanded public apology and payment of
damages. Rodrigo ignored the demand for which reason, the Spouses Nicolas filed a
civil suit. The RTC ordered Rodrigo to pay for moral and exemplary damages. CA
affirmed the award.
Issue:

Is there a legal basis for the award of damages?

Held: Yes. The incident charged of Rodrigo was no less than an invasion on the right
of Nestor as a person. The philosophy behind Art. 26, NCC underscores the necessity
for its inclusion in our Civil Law. The Code Commission stressed in no uncertain terms
that the human personality be exalted. Thus, under this article, the rights of a person
are amply protected, and damages are provided for violations of a persons dignity,
personality, privacy and peace of mind. Further, the violations mentioned in this codal
provision are not exclusive but merely examples and do not preclude other similar or
analogous acts such as the one involved in this case.
Prejudicial Question
CHING vs. COURT OF APPEALS, G.R. No. 110844, April 27, 2000
Facts: On 04 February 1992, petitioner Ching was charged before the RTC of Makati
with four counts of estafa punishable under Article 315 par. 1(b) of the Revised Penal
Code, in relation to Presidential Decree 115, otherwise known as the "Trust Receipts
Law". On 05 March 1992, Ching, together with Philippine Blooming Mills Co. Inc., filed a
case before the RTC of Manila for declaration of nullity of documents and for
damages docketed as Civil Case No. 92-60600, entitled "Philippine Blooming Mills, Inc.
et. al. vs. Allied Banking Corporation."
On 07 August 1992, Ching filed a petition before the RTC-Makati, for the
suspension of the criminal proceedings on the ground of prejudicial question in a civil
action. Said court denied the petition to suspend.
Issue: Does the pendency of a civil action for damages and declaration of nullity of
documents constitute a prejudicial question as to warrant the suspension of criminal
proceedings?
Held: NO. As defined, a prejudicial question is one that arises in a case the resolution
of which is a logical antecedent of the issue involved therein, and the cognizance of
which pertains to another tribunal. The prejudicial question must be determinative of
the case before the court but the jurisdiction to try and resolve the question must be
lodged in another court or tribunal. It is a question based on a fact distinct and

separate from the crime but so intimately connected with it that it determines the guilt
or innocence of the accused, and for it to suspend the criminal action, it must appear
not only that said case involves facts intimately related to those upon which the
criminal prosecution would be based but also that in the resolution of the issue or issues
raised in the civil case, the guilt or innocence of the accused would necessarily be
determined. It comes into play generally in a situation where a civil action and a
criminal action are both pending and there exists in the former an issue which must be
preemptively resolved before the criminal action may proceed, because howsoever
the issue raised in the civil action is resolved would be determinative juris et de jure of
the guilt or innocence of the accused in the criminal case.
More simply, for the court to appreciate the pendency of a prejudicial question,
the law requires the concurrence of two essential requisites, to wit:
a) The civil action involves an issue similar or intimately related to the issue raised in
the criminal action; and
b) The resolution of such issue determines whether or not the criminal action may
proceed.
Verily, under the prevailing circumstances, the alleged prejudicial question in the civil
case for declaration of nullity of documents and for damages, does not juris et de jure
determine the guilt or innocence of the accused in the criminal action for estafa.
Assuming arguendo that the court hearing the civil aspect of the case adjudicates that
the transaction entered into between the parties was not a trust receipt agreement,
nonetheless the guilt of the accused could still be established and his culpability under
penal laws determined by other evidence. To put it differently, even on the assumption
that the documents are declared null, it does not ipso facto follow that such
declaration of nullity shall exonerate the accused from criminal prosecution and
liability.
Therefore, the civil action for declaration of nullity of documents and for
damages does not constitute a prejudicial question to the criminal cases for estafa
filed against petitioner.
BELTRAN vs. PEOPLE
G.R. No. 137567, June 20, 2000
Facts: Petitioner Meynardo Beltran sought a declaration of nullity of his marriage on
the ground of psychological incapacity before the RTC of QC. His wife, Charmaine
Felix alleged that it was petitioner who abandoned the conjugal home and lived with a
certain woman named Milagros Salting. Later on, upon complaint of Charmaine, a
criminal case for concubinage was instituted before the Metropolitan TC of Mkti. City
against petitioner and his paramour. Petitioner moved to defer the proceedings
arguing that the pendency of the civil case for declaration of nullity of his marriage
posed a prejudicial question to the determination of the criminal case.
Issue: Does a pending petition for declaration of nullity of marriage constitute a
prejudicial question that should merit the suspension of the criminal case for
concubinage?
Held: NO. Pendency of a civil action for nullity of marriage does not pose a
prejudicial question in a criminal case for concubinage.
The rationale behind the principle of prejudicial question is to avoid two
conflicting decisions. It has two essential elements: (a) the civil action involves an issue
similar or intimately related to the issue raised in the criminal action; and (b) the
resolution of such issue determines whether or not the criminal action may

proceed. For a civil case to be considered prejudicial to a criminal action as to cause

the suspension of the latter pending the final determination of the civil case, it must
appear not only that the said civil case involves the same facts upon which the criminal
prosecution would be based, but also that in the resolution of the issue or issues raised
in the aforesaid civil action, the guilt or innocence of the accused would necessarily be
determined.
In a case for concubinage, the accused, like the herein petitioner need not
present a final judgment declaring his marriage void for he can adduce evidence in
the criminal case of the nullity of his marriage other than proof of a final judgment
declaring his marriage void. Article 40 of the Family Code provides:
"The absolute nullity of a previous marriage may be invoked for purposes of
remarriage on the basis solely of a final judgment declaring such previous marriage
void."
In Domingo vs. CA, this Court ruled that the import of said provision is that for purposes
of remarriage, the only legally acceptable basis for declaring a previous marriage an
absolute nullity is a final judgment declaring such previous marriage void, whereas, for
purposes of other than remarriage, other evidence is acceptable.
With regard to petitioner's argument that he could be acquitted of the charge of
concubinage should his marriage be declared null and void, suffice it to state that
even a subsequent pronouncement that his marriage is void from the beginning is not
a defense. Parties to the marriage should not be permitted to judge for themselves its
nullity, for the same must be submitted to the judgment of the competent courts and
only when the nullity of the marriage is so declared can it be held as void, and so long
as there is no such declaration the presumption is that the marriage exists for all intents
and purposes. Therefore, he who cohabits with a woman not his wife before the judicial
declaration of nullity of the marriage assumes the risk of being prosecuted for
concubinage.
Property Regime of Unions Without Marriage (Art. 148, FC); Support; Retroactive
application of the Family Code
TUMLOS vs. FERNANDEZ, G.R. No. 137650, April 12, 2000
Facts: Respondent-spouses Mario and Lourdes Fernandez filed an action for
ejectment against petitioner Guillerma Tumlos and her two children. In her Answer,
Guillerma averred that the Fernandez spouses had no cause of action against her,
since she is a co-owner of the subject premises as evidenced by a Contract to Sell
wherein it was stated that she is a co-vendee of the property in question together with
Mario. The MTC ruled for the spouses Fernandez. Upon appeal to the RTC, Guillerma
alleged that Mario and Guillerma had an amorous relationship, and that they
acquired the property in question as their love nest, that they lived together in the
apartment building subject of the ejectment suit with their 2 children for around 10
years, and that Guillerma administered the property by collecting rentals from the
lessees of the other apartments, until she discovered that Mario deceived her as to the
annulment of his marriage. The RTC ruled that Guillerma and Mario acquired the
property during their cohabitation as husband and wife, although without the benefit
of marriage, it concluded that Guillerma Tumlos was a co-owner of the subject
property and could not be ejected therefrom.
Issues: 1. Did Guillerma have the right of co-ownership over the property in question?
2. Does the right to support (for shelter) of illegitimate children prevail over the right
of the spouses to eject them?

Held: 1. NO. There was no proof of actual contribution by Guillerma in the purchase
of the subject property. Her only evidence was her being named in the Contract to Sell
as the wife of Mario. Since she failed to prove that she contributed money to the
purchase price of the subject apartment building, there is no basis to justify her coownership with Mario. The said property is thus presumed to belong to the conjugal
partnership property of Mario and Lourdes Fernandez, it being acquired during the
subsistence of their marriage and no other proof to the contrary. It is clear that actual
contribution is required by Art. 148 of the Family Code, in contrast to Art. 147 . which
states that efforts in the care and maintenance of the family and household are
regarded as contributions to the acquisition of common property by one who has no
salary or income or work or industry. The care given by one party [to] the home,
children, and household, or spiritual or moral inspiration provided to the other, is not
included in Art.148. Hence, if actual contribution of the party is not proved, there will
be no co-ownership and no presumption of equal shares
2. NO. Article 203 of the Family Code expressly provides that the obligation to
give support shall be demandable from the time the person who has the right to
receive the same needs it for maintenance, but it shall not be paid except from the
date of the judicial or extra-judicial demand. Thus, it cannot be presumed. No demand
was made by Guillerma to make the obligation to give support for dwelling
demandable.
Judicial Declaration of Presumptive Death of a Spouse
ARMAS vs. CALISTERIO, G. R. No. 136467, April 6, 2000
Facts: On April 24, 1992, Teodorico Calisterio died intestate, leaving parcels of land.
He was survived by his wife, respondent Marietta Calisterio. Teodorico was the second
husband of Marietta who had previously been married to James William Bounds on
January 13, 1946. James disappeared without a trace on February 11, 1947. Eleven
years after, Mariettafound a new romance in the loving arms of Teodorico when the
two got married on May 8, 1958, withoutMarietta having priorly secured a court
declaration that James was presumptively dead.
On October 9, 1992, herein petitioner Antonia, a surviving sister of Teodorico, filed
with the RTC of Quezon City a petition for the granting of letters of administration,
claiming herself to be the sole surviving heir of Teodorico, the marriage between the
latter and respondent Marietta being allegedly bigamous and thereby null and void.
The trial court rendered a judgment declaring Antonia as the sole heir of the estate of
Teodorico.
Issue: Was the subsequent marriage between Teodorico and Marietta invalid due
to Mariettas failure to secure the judicial declaration of the presumptive death of
James?
Held: NO. The subsequent marriage was valid. When the marriage between
Teodorico and Mariettawas solemnized on May 8, 1958, the law in force at that time
was the Civil Code, not the Family Code which took effect only on August 3, 1988.
Article 256 of the Family Code itself limited its retroactive application only to cases
where it thereby would not prejudice or impair vested or acquired rights in accordance
with the Civil Code or other laws.
Hence, the applicable provision is Art. 83, NCC which provides that a subsequent
marriage contracted during the lifetime of the first spouse is illegal and void ab initio
unless the prior marriage is first annulled or dissolved, except when the first spouse (1)

has been absent for seven consecutive years at the time of the second marriage
without the spouse present having news of the absentee being alive, or (2) if absent for
less than seven years, is generally considered as dead and believed to be so by the
spouse present at the time of contracting such subsequent marriage, or (3) is presumed
dead according to Articles 390 and 391of the Civil Code. For the exception to apply,
the subsequent marriage must have been made in good faith. A judicial declaration
of absence of the absentee spouse is not necessary as long as the prescribed period of
absence is met. The marriage under these exceptional cases is deemed to be valid
until declared null and void by a competent court. In contrast, under the 1988 Family
Code, in order that a subsequent bigamous marriage may exceptionally be
considered valid, the following conditions must concur: (a) the prior spouse of the
contracting party must have been absent for four consecutive years, or two years
where the danger of death under the circumstances in Article 391 of the Civil Code at
the time of disappearance; (b) the spouse present has a well founded belief that the
absent spouse is already dead; and (c) there is, unlike the old rule, a judicial
declaration of presumptive death of the absentee for which purpose the spouse
present can institute a summary proceeding in court to ask for that declaration.
In the case at bar, Mariettas first husband, James Bounds, has been absent or had
disappeared for more than eleven years before she entered into a second marriage
with Teodorico. This second marriage, having been contracted during the regime of
the Civil Code, should thus be deemed valid notwithstanding the absence of a judicial
declaration of presumptive death of James Bound. Moreover, there is no finding that
the said second marriage was contracted in bad faith.
Validity of Marriage; Marriage License Required
SY vs. COURT OF APPEALS, G.R. No. 127263, April 12, 2000
Facts: Filipina Sy filed a petition for the declaration of absolute nullity of her marriage
to Fernando Sy on the ground of psychological incapacity. To show the manifestations
of her husbands psychological incapacity, she presented the following proofs: 1) final
judgment rendered in her favor, in her previous petitions for separation of property and
legal separation; 2) Fernando's infliction of physical violence on her which led to the
previous conviction of her husband for slight physical injuries; 3) habitual alcoholism; 4)
refusal to live with her without fault on her part, choosing to live with his mistress instead;
and 5) refusal to have sex with her, performing the marital act only to satisfy himself. The
petition was denied.
Hence the present petition whereby Filipina raises for the first time the nullity of their
marriage on the ground of the lack of marriage license at the time of the celebration
of the marriage.
Issue:
Is the marriage between Filipina and Fernando void from the beginning for
lack of a marriage license at the time of the ceremony?
Held: The documents (marriage certificate, photocopies of birth certificates of their
children, marriage license) and pleadings submitted by Filipina show the incongruity
between the date of the actual celebration of their marriage (November 15, 1973) and
the date of the issuance of their marriage license (September 17, 1974). The
ineluctable conclusion is that the marriage was indeed contracted without a marriage
license. A marriage license is a formal requirement, its absence renders the marriage
void ab initio.

There being no claim of an exceptional character, the purported marriage between

Filipina and Fernando could not be classified among those exempt from the marriage
license requirement.
Exemption from Marriage License; Declaration of Nullity of a Void Marriage
Nial vs. Bayadog, G.R. No. 133778, March 14, 2000
Facts: Pepito Nial was married to Teodulfa Bellones on September 26, 1974. Out of
their marriage were born herein petitioners. Teodulfa was shot by Pepito resulting in her
death on April 24, 1985. One year and eight months thereafter Pepito and Norma
Badayog got married without any marriage license. In line thereof, Pepito and Norma
executed an affidavit stating that they have lived together at least five years and more
thus exempt for securing a marriage license. Pepito died in a car accident. After their
fathers death, petitioners filed a petition for declaration of nullity of the marriage of
Pepito and Norma alleging that said marriage was void for lack of marriage license.
Norma filed a motion to dismiss on the ground that the petitioners have no cause of
action since they are not among the persons who can file action for annulment of
marriage under Article 47 of the Family Code.
Issues: 1. What nature of cohabitation is contemplated by law to warrant the
counting of the five-year period in order to exempt the future spouses from securing a
marriage license?
2. Do the petitioners have the personality to file a petition to declare their
fathers marriage void ab initio after his death?
Held: The 5-year period should be computed on the basis of a cohabitation as
husband and wife where the only missing factor is the special contract of marriage to
validate the union.
The two marriages involved herein having been solemnized prior to the effectivity
of the Family Code (FC), the applicable law to determine their validity is the Civil Code
which was the law in effect at the time of their celebration. A valid marriage license is
a requisite of marriage under Art. 53 of the Civil Code, the absence of which renders
the marriage void ab initio. However there are several instances recognized by the Civil
Code wherein a marriage license is dispensed with, one of which is that provided in Art.
76, referring to the marriage of a man and a woman who have lived together and
exclusively with each other as husband and wife for a continuous and unbroken period
of at least five years before the marriage. There is no dispute that the marriage of
petitioners' father to respondent Norma was celebrated without any marriage license.
In lieu thereof, they executed an affidavit stating that "they have attained the age of
majority, and, being unmarried, have lived together as husband and wife for at least
five years, and that we now desire to marry each other." Working on the assumption
that Pepito and Norma have lived together as husband and wife for five years without
the benefit of marriage, that five-year period should be computed on the basis of a
cohabitation as "husband and wife" where the only missing factor is the special
contract of marriage to validate the union. In other words, the five-year common-law
cohabitation period, which is counted back from the date of celebration of marriage,
should be a period of legal union had it not been for the absence of the marriage. This
5-year period should be the years immediately before the day of the marriage and it
should be a period of cohabitation characterized by exclusivity meaning no third
party was involved at any time within the 5 years and continuity that is unbroken.
Otherwise, if that continuous 5-year cohabitation is computed without any distinction
as to whether the parties were capacitated to marry each other during the entire five

years, then the law would be sanctioning immorality and encouraging parties to have
common law relationships and placing them on the same footing with those who lived
faithfully with their spouse.
2. YES. Petitioners have the personality to file the petition. Having determined
that the second marriage involved in this case is not covered by the exception to the
requirement of a marriage license, it is void ab initio because of the absence of such
element. The Family Code is silent as to who can file a petition to declare the nullity of a
marriage. A void marriage can be attacked collaterally and can be questioned even
after the death of either party. That is why the action or defense for nullity is
imprescriptible. Any proper interested party may attack a void marriage. Contrary to
the trial court's ruling, the death of petitioner's father extinguished the alleged marital
bond between him and respondent. The conclusion is erroneous and proceeds from a
wrong premise that there was a marriage bond that was dissolved between the two. It
should be noted that their marriage was void hence it is deemed as if it never existed
at all and the death of either extinguished nothing.
Property Relations of Unions Without Marriage
ADRIANO vs. COURT OF APPEALS, G.R. No. 124118, March 27, 2000.
Facts: The testator Lucio Adriano, married Gliceria Dorado in 1933 and they had 3
children, herein private respondents. Sometime in 1942 or prior thereto, Lucio
cohabited with Vicenta Villa, with whom he had 8 children. All his children by Vicenta
are the named petitioners in the instant case, with the exception of Jose Vergel, who
died before the inception of the proceedings.
After the death of Gliceria in 1968, Lucio married Vicenta. In 1980, Lucio
executed a will disposing of all his properties to his second wife Vicenta and all his
children by his first and second marriages. While estate settlement proceedings were
pending before the RTC, petitioners instituted an action for annulment of Lucios will. In
the complaint, petitioners alleged that before the marriage of Lucio and their mother,
Vicenta, the two lived together as husband and wife and as such, acquired properties
which became the subject of inventory and administration in the petition for probate of
the will. Petitioners claimed that the properties bequeathed in Lucio's will are undivided
"civil partnership and/or conjugal properties of Lucio and Vicenta ", and thus, the will
sought to be probated should be declared void and ineffective insofar as it disposes of
the rightful share or properties of Vicenta.
The trial court favored the evidence of private respondents, which indicated that the
purchase money for the contested properties came from the earnings of Lucio during
the subsistence of his marriage to Gliceria.
Issue: Is Vicenta a co-owner with respect to of the properties in question or does the
entire property belong to the conjugal partnership of Lucio and Gliceria?
Held: NO. Petitioners' insistence that a co-ownership of properties existed between
Lucio and Vicenta during their period of cohabitation before their marriage in 1968 is
without lawful basis considering that Lucio's marriage with Gliceria was then subsisting.
The co-ownership in Article 144 of the Civil Code requires that the man and woman
living together as husband and wife without the benefit of marriage must not in any
way be incapacitated to marry. Considering that the property was acquired in 1964, or
while Lucio's marriage with Gliceria subsisted, such property is presumed to be conjugal
unless it be proved that it pertains exclusively to the husband or to the wife.

In Belcodero vs. CA, the SC held that property acquired by a man while living
with a common-law wife during the subsistence of his marriage is conjugal property,
even when the property was titled in the name of the common-law wife. In such cases,
a constructive trust is deemed to have been created by operation of Article 1456 of
the Civil Code over the property which lawfully pertains to the conjugal partnership of
the subsisting marriage.
In Vicenta's case, it is clear that her designation as a co-owner of the property in
the TCT is a mistake which needs to be rectified by the application of the foregoing
provisions of Article 1456 and the ruling in Belcodero. The principle that a trustee who
takes aTorrens title in his or her name cannot repudiate the trust by relying on the
registration, is a well-known exception to the principle of conclusiveness of a certificate
of title.
PROPERTY
Property of Public Dominion
LANSANG vs. COURT OF APPEALS, G.R. No. 102667, February 23, 2000
Facts: Private respondents General Assembly of the Blind, Inc. (GABI) and Jose
Iglesias were allegedly given office and library space as well as kiosks area for sale of
food and drinks in Rizal Park through an alleged verbal contract of lease awarded in
1970 by the National Parks Development Committee (NPDC).
To clean up Rizal Park, the new chairman of the NPDC sent a written notice to GABI
and Iglesias of the termination of the so-called verbal agreement and the demand for
the latter to vacate the premises and the kiosks.
Issue: Did petitioner Amado Lansang abuse his authority in ordering the ejectment of
private respondents GABI and Iglesias?
Held: NO. There is no evidence of abuse of authority on the part of the petitioner.
Like public street, public parks are beyond the commerce of man and, thus, could
not be the subject of a lease contract. Admittedly, there was no written contract. That
private respondents were allowed to occupy office and kiosk spaces in the park was
only a matter of accommodation by the previous administrator. This being so,
petitioner may validly discontinue the accommodation to private respondents, who
may be ejected from the park when necessary. Private respondents cannot and does
not claim a vested right to continue to occupy Rizal Park.
Builder in Good Faith
VERONA PADA-KILARIO vs. COURT OF APPEALS, G.R. No. 134329, January 19, 2000.
Facts: One Jacinto Pada died intestate leaving 6 children. His estate included a
parcel of land located at Poblacion, Matalom, Leyte.
During the lifetime of Jacinto Pada, his half-brother, Feliciano Pada, obtained
permission from him to build a house on the northern portion of subject land. When
Feliciano died, his son, Pastor, continued living in the house together with his 8 children.
Petitioner Verona Pada-Kilario, one of Pastor's children, has been living in that house
since 1960.
In 1993, private respondent Silverio Pada bought the co-ownership right over the
subject land of one of the heirs of Jacinto. Thereafter, he demanded that petitioner
spouses vacate the northern portion of the subject land so his family can utilize the said
area. They went through a series of meetings with the barangay officials concerned for

the purpose of amicable settlement, but all earnest efforts toward that end, failed.
Consequently, Silverio instituted a complaint for ejectment with prayer for damages
against petitioner spouses. The petitioner spouses were eventually ordered to remove
their house at their expense unless Silverio exercises the option of acquiring the same.
Issue: Are the petitioner spouses Pada-Kilario builders in good faith as to be entitled
to reimbursement for improvements made on the property?
Held:
No. Petitioner spouses explicitly admitted in their Answer that they had been
occupying the subject property since 1960 without ever paying any rental as they only
relied on the liberality and tolerance of the Pada family. Considering that they were in
possession of the subject property by sheer tolerance of its owners, they knew that their
occupation of the premises may be terminated any time. Thus, they cannot be
considered possessors nor builders in good faith. It is well-settled that both Article 448
and Article 546, NCC which allow full reimbursement of useful improvements and
retention of the premises until reimbursement is made, apply only to a possessor in
good faith, i.e., one who builds on land with the belief that he is the owner thereof.
Verily, persons whose occupation of a realty is by sheer tolerance of its owners are not
possessors in good faith. Neither did the promise of the alleged owners that they were
going to donate the premises to petitioners convert them into builders in good faith for
at the time the improvements were built on the premises, such promise was not yet
fulfilled, i.e., it was a mere expectancy of ownership that may or may not be realized.
As such, petitioner spouses cannot be said to be entitled to the value of the
improvements that they built on the said lot.
Builder in Bad Faith
ISAGUIRRE vs. DE LARA, G.R. No. 138053, May 31, 2000
Facts: Petitioner Isaguirre and respondent De Lara were parties in a case involving a
parcel of land wherein there was dispute as to its ownership as well as the nature of the
transaction they entered into regarding the disputed land. The case was resolved by
the Supreme Court which declared that De Lara was the lawful owner of the land and
held that the contract they entered into was an equitable mortgage and not a sale.
On the basis of the Courts decision, De Lara filed a motion for execution with the
trial court for the delivery of possession of the land. Isaguirre opposed the motion,
asserting that, as mortgagee, he had the right of retention over the property until
payment of the value of the improvements, arguing that he is builder in good faith with
respect to the said improvements he made before the transaction was declared to be
an equitable mortgage.
Issue:

Can Isaguirre be considered a builder in good faith?

HELD: NO. ISAGUIRRE IS NOT A BUILDER IN GOOD FAITH. HE IS A POSSESSOR IN BAD

FAITH. IT IS EVIDENT THAT PETITIONER KNEW FROM THE VERY BEGINNING THAT THERE WAS
REALLY NO SALE AND THAT HE HELD RESPONDENT'S PROPERTY AS MERE SECURITY FOR
THE PAYMENT OF THE LOAN OBLIGATION THEREFORE, PETITIONER MAY CLAIM
REIMBURSEMENT ONLY FOR NECESSARY EXPENSES; HOWEVER, HE IS NOT ENTITLED TO
REIMBURSEMENT FOR ANY USEFUL EXPENSES WHICH HE MAY HAVE INCURRED.

Quieting of Title; Termination of Co-ownership by Prescription

ROBLES vs. COURT OF APPEALS, G.R. No. 123509, March 14, 2000
Facts: The property subject of this case is originally owned by Leon Robles. When he
died, it passed to his son Silvino who declared the property in his name and paid the
taxes thereon. Upon the latters death, his widow and children inherited the property.
Petitioners Lucio Robles, et al. were the children of Silvino, and Hilario Robles is their halfbrother. The task of cultivating was assigned to Lucio while the payment of the land
taxes was entrusted to Hilario. For unknown reason, the tax declaration of the parcel of
land in the name of Silvino was cancelled and transferred to Exequiel Ballena. Ballena
secured a loan from Antipolo Rural Bank using the tax declaration as security.
Somehow the tax declaration was transferred to the name of Antipolo Rural Bank and
later was transferred to the name of respondent- spouses Hilario and Andrea Robles.
Andrea secured a loan from Cardona Rural Bank using the tax declaration as security.
For failure to pay the mortgage debt, the property was foreclosed with Cardona Rural
Bank emerging as the highest bidder. The bank sold the property to spouses Vergel
and Ruth Santos. In Sept. 1987, petitioners discovered the mortgage and attempted to
redeem the property but was unsuccessful. In 1988, the spouses Santostook possession
of the propertry and was able to secure a Free Patent. Petitioners then filed an action
for quieting of title. Respondents questioned their standing to sue for quieting of title,
contending that petitioners no longer have any interest to the property in question due
to the mortgage effected by Hilario and the consequent foreclosure thereof by the
Bank. Respondents argued that Hilario had become the absolute owner of the
property at the time he mortgaged the same. The CA ruled that the several transfers of
the tax declaration of the property in question from Silvino until to the
spouses Santos had the effect of divesting petitioners of their title by prescription to
Hilario.
Issues: 1. Do the petitioners have appropriate title that will entitle them to the
remedy of the quieting of title?
2. Did Hilario acquire the share of his co-owners in the disputed property by
prescription?
Held: 1. YES. An action to quiet title, under Art. 476, NCC, is a common-law remedy
for the removal of any cloud or doubt or uncertainty on the title to real property. It is
essential for the plaintiff or complainant to have a legal or an equitable title to or
interest in the real property which is the subject matter of the action. Also, the deed,
claim, encumbrance or proceeding that is being alleged as a cloud on plaintiff's title
must be shown to be in fact invalid or inoperative despite its prima facie appearance
of validity or legal efficacy. That there is an instrument or a document which, on its
face, is valid and efficacious is clear in the present case. Petitioners allege that their
title as owners and possessors of the disputed property is clouded by the tax
declaration and, subsequently, the free patent thereto granted to Spouses Santos.
Petitioners anchor their claim on their open and continuous possession as owners.
Spouses Santos, on the other hand, trace their claims to Exequiel, and then to Hilario
who mortgaged the same to the Bank as absolute owner. It was from Exequiel that
Hilarios claim is rooted. However, in this case, there is a failure to show Exequiels title
to the property in question. When Hilario, therefore, mortgaged the property, he did so
in his capacity as mere co-owner thereof. Consequently, the said transaction did not
divest the petitioner of the title to the property at the time of the institution of the
complaint for quieting of title.

2. NO. Hilario effected no clear and evident repudiation of the co-ownership. It is

a fundamental principle that a co-owner cannot acquire by prescription the share of
the other co-owners, absent any clear repudiation of the co-ownership. In order that
the title may prescribe in favor of a co-owner, the following requisites must concur: (1)
the co-owner has performed unequivocal acts of repudiation amounting to an ouster
of the other co-owners; (2) such positive acts of repudiation have been made known
to the other co-owners; and (3) the evidence thereof is clear and convincing. In the
present case, Hilario did not have possession of the subject property; neither did he
exclude the petitioners from the use and the enjoyment thereof, as they had
indisputably shared in its fruits. Likewise, his act of entering into a mortgage contract
with the bank cannot be construed to be a repudiation of the co-ownership. As
absolute owner of his undivided interest in the land, he had the right to alienate his
share, as he in fact did. Neither should his payment of land taxes in his name, as
agreed upon by the co-owners, be construed as a repudiation of the co-ownership.
The assertion that the declaration of ownership was tantamount to repudiation was
belied by the continued occupation and possession of the disputed property by the
petitioners as owners.
Quieting of Title; Laches; Freedom to Enter into Contracts; Waiver of Rights
MAESTRADO vs. COURT OF APPEALS, G.R. No. 133345 & 133324, March 9, 2000.
Facts: The spouses Ramon and Rosario Chaves died intestate leaving several
properties. They were survived by their six children who later entered into a project of
partition which was approved by the court. Accordingly, the estate was divided and
distributed to the heirs. Lot 5872, for some reason however, was not included in the
project of partition, nor in the inventory. During the actual partition in 1956, Lot5872 was
delivered to petitioners Josefa Maestrado and her children, one of the heirs. The noninclusion of said lot was discovered only in 1976. In an effort to set things right,
petitioners prepared a quitclaim in their favor to confirm to the alleged oral
agreement, which notarized quitclaim was signed by the other heirs. Six years after the
execution of said quitclaim, or in 1983, respondents, children of the other heirs,
discovered that Lot 5872 is still in the name of the deceased spouses Chaves. They
requested that the property be divided and distributed to the heirs. In response,
petitioners filed an action for quieting of title. Respondents argued, among others, that
petitioners have no standing to sue for the quieting of title and that their action is
barred by laches. They likewise assailed the validity and due execution of the
quitclaim. The trial court declared that Lot 5872 is still common property and ordered its
division among the heirs.
Issues: 1. Do the petitioners have the legal standing to sue for quieting of title? If so,
is such action barred by laches?
2. Is Lot No. 5872 still a common property?
Held: 1. YES. Petitioners are proper parties to bring an action for quieting of title.
Persons having legal as well as equitable title to or interest in a real property may bring
such action and "title" here does not necessarily denote a certificate of title issued in
favor of the person filing the suit. Moreover, if the plaintiff in an action for quieting of
title is in possession of the property being litigated, such action is imprescriptible. One
who is in actual possession of a land, claiming to be the owner thereof may wait until
his possession is disturbed or his title is attacked before taking steps to vindicate his right
because his undisturbed possession gives him a continuing right to seek the aid of the
courts to ascertain the nature of the adverse claim and its effects on his title. Although

prescription and laches are distinct concepts, nonetheless in some instances, the
doctrine of laches is inapplicable where the action was filed within the prescriptive
period provided by law. Thus, laches does not apply in this case because petitioners'
possession of the subject lot has rendered their right to bring an action for quieting of
title imprescriptible and, hence, not barred by laches. Moreover, since laches is a
creation of equity, acts or conduct alleged to constitute the same must be intentional
and unequivocal so as to avoid injustice. Laches operates not really to penalize
neglect or sleeping on one's rights, but rather to avoid recognizing a right when to do
so would result in a clearly inequitable situation. In the case at bench, the cloud on
petitioners' title to the subject property came about only on December 1, 1983 when
Angel Chaves transmitted respondents' letters to petitioners, while petitioners' action
was filed on December 22, 1983. Clearly, no laches could set in under the
circumstances since petitioners were prompt and vigilant in protecting their rights.
2. NO. Lot No. 5872 is no longer common property of the heirs of the deceased
spouses Chaves. Petitioners' ownership over said lot was acquired by reason of the oral
partition agreed upon by the deceased spouses' heirs sometime before 1956. That oral
agreement was confirmed by the notarized quitclaims executed by the said heirs.
Nevertheless, respondent court was convinced that Lot No. 5872 is still common
property of the heirs of the spouses Chaves because the TCT covering the said property
is still registered in the name of the said spouses. Unfortunately, respondent court was
oblivious to the doctrine that the act of registration of a voluntary instrument is the
operative act which conveys or affects registered land insofar as third persons are
concerned. Hence, even without registration, the contract is still valid as between the
parties. Neither a Transfer Certificate of Title nor a subdivision plan is essential to the
validity of an oral partition. Since the oral partition has been duly established, the
notarized quitclaims confirmed such prior oral agreement as well as the petitioners' title
of ownership over the subject Lot No. 5872. More importantly, independent of such oral
partition, the quitclaims in the instant case are valid contracts of waiver of property
rights. The freedom to enter into contracts, such as the quitclaims, is protected by law
and the courts are not quick to interfere with such freedom unless the contract is
contrary to law, morals, good customs, public policy or public order. Quitclaims, being
contracts of waiver, involve the relinquishment of rights, with knowledge of their
existence and intent to relinquish them. The intent to waive rights must be clearly and
convincingly shown. Moreover, when the only proof of intent is the act of a party, such
act should be manifestly consistent and indicative of an intent to voluntarily relinquish a
particular right such that no other reasonable explanation of his conduct is possible. In
the instant case, the terms of the subject quitclaims are clear; and the heirs' signatures
thereon have no other significance but their conformity thereto resulting in a valid
waiver of property rights.
Preference of Possession; Ownership
CEQUENA vs. BOLANTE, G. R. No. 137944, April 6, 2000
Facts: Since 1926, a parcel of land was declared in the name of Sinforoso Mendoza,
father of respondent Bolante. When Sinforoso died in 1930, his brother Margarito
Mendoza, father of petitioners Cequena and Lirio, took possession of the land and
cultivated it with his son Miguel (brother of petitioners). At the same time, respondent
and her mother continued residing in the lot. When respondent came of age in 1948,
she paid realty taxes for the years 1932-1948, and thereafter. On the basis of an
affidavit allegedly signed by respondent and her mother, the tax declaration in the
name of Sinforoso of the contested lot was cancelled and subsequently declared in

the name of Margarito in 1953 who paid its realty taxes beginning 1952. When
Margarito died, Miguel continued cultivating the land until 1985 when he was physically
ousted by the respondent.
Based on the foregoing, the trial court resolved the issue of lawful ownership and
possession favor of petitioners.
Issue: As between the claimants, who is the preferred possessor and the lawful owner
of the subject parcel of land?
Held: Respondent is the preferred possessor and lawful owner of the disputed land.
Despite their dispossession in 1985, the petitioners did not lose legal possession because
possession cannot be acquired through force or violence. A possessor, even if
physically ousted, is still deemed the legal possessor. However, possession by the
petitioners does not prevail over that of the respondent. Their possession before 1985
was not exclusive, as the latter also acquired it before 1985. Petitioners father and
brother, as well as the respondent and her mother were simultaneously in adverse
possession of the land. Based on Article 538 of the Civil Code, respondent is the
preferred possessor because, benefiting from her fathers tax declaration of the subject
lot since 1926, respondent has been in possession thereof for a longer period. On the
other hand, petitioners father acquired joint possession only in 1952.
As to the issue of ownership, respondent argues that she was legally presumed to
possess the subject land with a just title since she possessed it in the concept of owner.
Under Article 541 of the Civil Code, she could not be obliged to show or prove such
title. This is untenable since the presumption in Article 541 is merely disputable. Article
538 settles only the question of possession, and possession is different from ownership.
Ownership in this case should be established in one of the ways provided by law.
Between the claimants, ownership shall be vested to the one who has proven
acquisitive prescription. Respondents possession was not disturbed until 1953 when
petitioners father claimed the land. But by then, her possession, which was in the
concept of owner public, peaceful, and uninterrupted had already ripened into
ownership. Furthermore she herself declared and paid realty taxes for the disputed
land. Tax receipts and declarations of ownership for taxation, when coupled with proof
of actual possession of the property, can be the basis of a claim for ownership through
prescription. In contrast, petitioners did not acquire ownership despite 32 years (19531985) of farming the subject land. It is settled that ownership cannot be acquired by
mere occupation. Unless it is hostile, occupation and use, however long, will not confer
title by prescription or adverse possession. Moreover, the petitioners cannot claim that
their possession was public, peaceful and uninterrupted. Although their father and
brother arguably acquired ownership through extraordinary prescription because of
their adverse possession of 32 years, this supposed ownership can not extend to the
entire disputed lot, but must be limited to the portion that they actually farmed. The
tax declarations and receipts of petitioners are only prima facie, not conclusive,
evidence of ownership in the absence of actual public and adverse possession.

Donation Inter Vivos; Repudiation Of Inheritance; Escheat

REPUBLIC vs. GUZMAN, G.R. No.132964, Feb. 18, 2000
Facts: Respondent David Rey Guzman, a natural born American citizen is the son of
spouses Simeon Guzman , naturalized American citizen and Helen Meyers Guzman,
American citizen. In 1968, Simeon died living to his sole heirs Helen and David an estate
consisting of several parcels of land located in Bulacan. Thereafter, Helen and David
executed a Deed of Extrajudicial settlement dividing and adjudicating to themselves
the property belonging to the estate of Simeon. The document was registered in the
Register of Deeds and the parcels of land were accordingly registered in the name of
Helen and David in undivided equal shares. In 1981, Helen executed a Quitclaim Deed
conveying to David her undivided interest on said lands. On Aug. 9, 1989, she
executed another Deed of Quitclaim confirming the earlier quitclaim in 1981 as well as
modifying the document to encompass all her other property in the Philippines. More
than a week later, David executed a Special Power of Attorney (SPA) where he
acknowledged that he became the owner of the parcels of land subject of the Aug.
9, 1989 Deed of Quitclaim and empowering Atty. Abella to sell or otherwise dispose of
the lot. On Feb. 1, 1990, Atty. Abella, upon instruction of Helen, paid donors taxes to
facilitate the registry of the parcels of land in the name of David.
In 1994, upon information furnished by a certain Atty. Batongbacal, showing that
Davids ownership of of Simeons estate was defective, the Government filed before
the RTC of Bulacan a petition for escheat praying that of Davids interest in each of
the subject parcels of land be forfeited in its favor. Petitioner anchors its argument on
Art. XII, Secs. 7 & 8 of the Constitution, which sets the rule that only Filipino citizen can
acquire private lands in thePhilippines. The exceptions are in the case of hereditary
succession and if he was formerly a natural-born Filipino citizen who lost his Filipino
citizenship. Since Davids acquisition of said lands does not fall under any of these
exceptions, David could not validly acquire interest in each of the subject parcels of
land in dispute by way of the two Deed of Quitclaims as they are in reality donation
inter vivos. David maintains, on the other hand, that he acquired the property by right
of accretion and not by way of donation.
Issue: Should respondents interest of the disputed parcels of land be escheated in
favor of the government?
Held:

NO. Escheat is not proper under the circumstances.

In the first place, there is no valid donation. There are 3 essential elements of a
donation: (a) the reduction of the patrimony of the donor; (b) the increase in the
patrimony of the donee; and (c) the intent to do an act of liberality or animus
donandi. When applied to a donation of an immovable property, the law further
requires that the donation be made in a public document and that there should be an
acceptance thereof made in the same deed of donation or in a separate public
document. In cases where the acceptance is made in a separate instrument, it is
mandated that the donor should be notified thereof in an authentic form, to be noted
in both instruments. Not all the elements of a donation of an immovable property are
present in the instant case. The transfer of the property by virtue of the Deed of
Quitclaim executed by Helen resulted in the reduction of her patrimony as donor and
the consequent increase in the patrimony of David as donee. However, Helens
intention to perform an act of liberality in favor of David was not sufficiently
established. A perusal of the Deeds of Quitclaim reveals that Helen intended to
convey to her son David certain parcels of land located in thePhilippines, and to reaffirm the quitclaim she executed in 1981 which likewise declared a waiver and

renunciation of her rights over the parcels of land . The language of the Deed is clear
that Helen merely contemplated a waiver of her rights, title and interest over the land
in favor of David, and not a donation. The element of animus donandi, therefore, was
missing. Likewise the two Deeds of Quitclaim may have been in the nature of a public
document but they lacked the essential element of acceptance in the proper form
required by law to make the donation valid. The SPA does not qualify as an implied
acceptance by David of the alleged donation but merely acknowledges that David
owns the property referred to and that he authorizes Atty. Abella to sell the same in his
name. There is no intimation, expressly or impliedly, that Davids acquisition of the
parcels of land is by virtue of Helens possible donation to him and we cannot look
beyond the language of the document to make a contrary construction. Moreover, it
is mandated that if an acceptance is made in a separate public writing the notice of
acceptance must be noted not only in the document containing the acceptance but
also in the Deed of Donation. These requisites have not been complied with and no
proof of compliance appears in the record. .The 2 Quitclaims set out the conveyance
of the parcels of land by Helen in favor of David but its acceptance by David does not
appear in the Deeds, nor in the SPA.
However, the inexistence of a donation does not render the repudiation made
by Helen in favor of David valid. There is no valid repudiation of inheritance as Helen
had already accepted her share of the inheritance when she together with David
executed a Deed of Extrajudicial Settlement of the Estate of Simeon. By virtue of such
extrajudicial settlement, the parcels of land were registered in her and her sons name
in undivided equal share and for 11 years they possessed the lands in the concept of
owner. Art. 1056 of the Civil Code provides The acceptance or repudiation of an
inheritance is irrevocable and cannot be impugned except when it was made thru any
of the causes that vitiate consent or when and unknown will appears. Nothing on
record shows that Helens acceptance of her inheritance from Simeon was made thru
any of the causes which vitiated her consent nor is there any proof of the existence of
an unknown will executed by Simeon. Thus, Helen cannot belatedly execute an
instrument which has the effect of revoking or impugning her previous acceptance of
her share. Hence, the 2 Quitclaims which she executed 11 years after her
acceptance have no legal force and effect.
Nevertheless, the nullity of the repudiation does not ipso facto operate to
convert the parcels of land into res nullius to be escheated in favor of the Government.
The repudiation, being of no effect whatsoever, the parcels of land should revert to
their private owner, Helen, who although being an American citizen is qualified by
hereditary succession to own the property subject of the litigation.
Donation Inter Vivos
VELASQUEZ vs. COURT OF APPEALS, G.R. No. 126996, February 15, 2000
Facts: The spouses Cornelio Aquino and Leoncia de Guzman acquired six pieces of
real properties during their marriage. They were childless and died intestate. Leoncia
de Guzman was survived by her sisters Anatalia and Tranquilina. The heirs of Anatalia
filed a complaint for partition of the six properties against the heirs of Cesario Velasquez
(son of Tranquilina). In their answer, the heirs of Cesario were able to adduce
uncontroverted
documentary evidences showing that during the lifetime of the spouses Aquino, they
had already disposed of four of the six properties in favor of their predecessors-ininterest through donation or conveyance.

Issue: Did the heirs of Cesario acquire absolute ownership over the property in
dispute as to bar an action for partition?
Held: YES. The heirs of Cesario have acquired absolute and exclusive ownership over
the property in question. A donation as a mode of acquiring ownership results in an
effective transfer of title over the property from the donor to the donee and the
donation is perfected from the moment the donor knows of the acceptance by the
donee. And once a donation is accepted, the donee becomes the absolute owner of
the property donated. The donation of the first parcel made by the Aquino spouses to
petitioners Jose and Anastacia Velasquez who were then minors was accepted
through their father Cesario Velasquez, and the acceptance was incorporated in the
body of the same deed of donation and made part of it, and was signed by the donor
and the acceptor. Legally speaking there was delivery and acceptance of the deed,
and the donation existed perfectly and irrevocably. The donation inter vivos may be
revoked only for the reasons provided in Articles 760, 764 and 765 of the Civil Code.
The donation propter nuptias in favor of Cesario Velasquez and Camila de Guzman
over the third and sixth parcels including a portion of the second parcel became the
properties of the spouses Velasquez since 1919. The deed of donation propter nuptias
can be revoked by the non-performance of the marriage and the other causes
mentioned in article 86 of the Family Code. The alleged reason for the repudiation of
the deed, i.e., that the Aquino spouses did not intend to give away all their properties
since Anatalia (Leoncia's sister) had several children to support is not one of the
grounds for revocation of donation either inter vivos or propter nuptias, although the
donation might be inofficious.
PRESCRIPTION
SERASPI vs. COURT OF APPEALS, G.R. No. 135602, April 28, 2000
Facts: Marcelino Recasa was the owner of two parcels of land. During his lifetime,
Marcelino contracted 3 marriages. At the time of his death in 1943, he had 15 children
from his three marriages. In 1948, his intestate estate was partitioned into three parts by
his heirs, each part corresponding to the share of the heirs in each marriage. The heirs
of the first marriage, sold their share to Dominador Recasa, an heir of the second
marriage. Dominador, representing the heirs of the second marriage, in turn sold the
share of the heirs to Quirico and Purificacion Seraspi whose heirs are the present
petitioners. In 1958, the Seraspis obtained a loan from the Kalibo Rural Bank, Inc. (KRBI)
on the security of the lands in question to finance improvements on the lands. However,
they failed to pay the loan for which reason the mortgage was foreclosed and the
lands were sold to KRBI as the highest bidder. Subsequently, the lands were sold by KRBI
to Manuel Rata, brother-in-law of Quirico Seraspi. It appears that Rata, as owner of the
property, allowed Quirico Seraspi to administer the property.
In 1974, private respondent Simeon Recasa, Marcelinos child by his third wife,
taking advantage of the illness of Quirico Seraspi, forcibly entered the lands in question
and took possession thereof. In 1983, the Seraspis purchased the lands from Manuel
Rata and afterwards filed a complaint against Simeon Recasa for recovery of
possession of the lands.
Issues: 1. Is the action for recovery of possession ( accion publiciana) barred by
extinctive prescription?
2. Has Simeon acquired the ownership of the land by prescription?

Held:
1. NO. Art. 1141 NCC provides that real actions over immovables prescribe
after thirty years. From 1974 to April 12, 1987 when the action was filed, only thirteen
years has elapsed.
2. NO. Simeon has no just title or not in good faith to acquire the land by
acquisitive prescription. Private respondent could not have acquired ownership over
the property through occupation since, under Art. 714 of the Civil Code, the ownership
of a piece of land cannot be acquired by occupation. Nor can he base his ownership
on succession for the property was not part of those distributed to the heirs of the third
marriage, to which private respondent belongs. It must be remembered that in the
partition of the intestate estate of Marcelino Recasa, the properties were divided into
three parts, each part being reserved for each group of heirs belonging to one of the
three marriages Marcelino entered into. Since the contested parcels of land were
adjudicated to the heirs of the first and second marriages, it follows that private
respondent, as heir of the third marriage, has no right over the parcels of land. While, as
heir to the intestate estate of his father, private respondent was co-owner of all of his
fathers properties, such co-ownership rights were effectively dissolved by the partition
agreed upon by the heirs of Marcelino Recasa. Neither can private respondent claim
good faith in his favor. Good faith consists in the reasonable belief that the person from
whom the possessor received the thing was its owner but could not transmit the
ownership thereof. Private respondent entered the property without the consent of the
previous owner. For all intents and purposes, he is a mere usurper.
Prescription in Action for Reconveyance
MILLENA vs. COURT OF APPEALS, G.R. NO. 127797, JANUARY 31, 2000
Facts: In 1926, a parcel of land in Daraga, Albay (Lot 1874) was divided between
Gregoria Listana and Potenciana Maramba: was given to Gregoria and to
Potenciana. The portion owned by Gregoria was sold to Gaudencia Jacob who
entered the same and started harvesting the coconuts found therein. In 1966, the land
was passed on to Gaudencias daughter, Felisa Jacob by virtue of an extrajudicial
settlement. Sometime in 1981, Felisa discovered that Potencianas son (Florencio) was
able to acquire a free patent over the entire lot including the portion adjudicated to
her. Notwithstanding Felisas protest filed before the Bureau of Lands, the heirs of
Florencio sold the entire lot to Alejandro Millena. In 1992, Felisa filed a complaint
against Alejandro for annulment of title and reconveyance of the portion owned by
the former. RTC ordered the reconveyance of the portion of the land. CA affirmed
the TC.
Issue:

Is the action for reconveyance barred by prescription?

Held: NO. Prescription cannot be invoked in an action for reconveyance when the
claimant is in possession of the land to be reconveyed. Apparently, Felisa Jacob met
the requisite elements of possession. She exercised control over the parcel of land in
litigation through her caretaker. Moreover, her declaration that the land was her
property and the payment of real property taxes manifested clearly that she was in
possession of the land. Consequently, Alejandro may not validly invoke prescription as
defense against Felisa.

Ownership Through Acquisitive Presciption

DBP vs. COURT OF APPEALS, G.R. No. 129471. April 28, 2000.
Facts: The land in dispute consisting of 19.4 hectares was originally owned by Ulipiano
Mumar, whose ownership since 1917 was evidenced by Tax Declaration No. 3840. In
1950, Mumar sold the land to respondent Cajes who was issued Tax Declaration No. R1475 that same year. Cajes occupied and cultivated the said land. In 1969, unknown to
Cajes, Jose Alvarez succeeded in obtaining the registration of a parcel of land with an
area of 1,512, 468.00 square meters, in his name for which he was issued OCT No. 546
on June 16, 1969. The parcel of land included the 19.4 hectares occupied by
respondent. Alvarez never occupied nor introduced improvements on said land.
In 1972, Alvarez sold the land to the spouses Gaudencio and Rosario Beduya to whom
TCT No. 10101 was issued. That same year, the spouses Beduya obtained a loan from
petitioner DBP for P526,000.00 and, as security, mortgaged the land covered by TCT No.
10101 to the bank. In 1978, the SAAD Investment Corp., and the SAAD Agro-Industries,
Inc., represented by Gaudencio Beduya, and the spouses Beduya personally executed
another mortgage over the land in favor of DBP to secure a loan of P1,430,000.00. The
spouses Beduya later failed to pay their loans, as a result of which, the mortgage on the
property was foreclosed and sold to DBP as the highest bidder. As the spouses Beduya
failed to redeem the property, DBP consolidated its ownership. It appears that Cajes
had also applied for a loan from DBP in 1978, offering his 19.4 hectare property under
Tax Declaration No. D-2247 as security for the loan. Cajes loan application was later
approved. However, it was found that the land mortgaged by Cajes was included in
the land covered by TCT No. 10101 in the name of the spouses Beduya. DBP, therefore,
cancelled the loan and demanded immediate payment of the amount. Cajes paid
the loan to DBP for which the former was issued a Cancellation of Mortgage releasing
the property in question from encumbrance. DBP asked Cajes to vacate the property.
As the latter refused to do so, DBP filed a complaint for recovery of possession with
damages against him. The RTC of Tagbilaran City declared DBP the lawful owner of
the entire land covered by TCT No. 10101 on the ground that the decree of registration
was binding upon the land.
Issue:

Who has better right to the land in dispute, DBP or Cajes?

Held: Cajes has better right. In the present case, Cajes has been in actual, open,
peaceful and continuous possession of the property since 1950. His claim based on
actual occupation of the land is bolstered by the Tax Declarations issued in his name.
Together with his actual possession of the land, these tax declarations constitute strong
evidence of ownership of the land occupied by him. More importantly, it was
established that respondent, having been in possession of the land since 1950, was the
owner of the property when it was registered by Jose Alvarez in 1969, his possession
tacked to that of his predecessor-in-interest, Mumar, which dates back to 1917.
Clearly, more than 30 year had elapsed before a decree of registration was issued in
favor of Alvarez. This uninterrupted adverse possession of the land for more than 30
years could only ripen into ownership of the land through acquisitive prescription which
is a mode of acquiring ownership and other real rights over immovable property.
Prescription requires public, peaceful, uninterrupted and adverse possession of the
property in the concept of an owner for ten (10) years, in case the possession is in good
faith and with a just title. Accordingly, the land in question must be reconveyed in favor
of Cajes, the true and actual owner thereof, reconveyance being clearly the proper
remedy in this case.

II. SUCCESSION
Successional Rights; Transmission of; Scope
RABADILLA vs. COURT OF APPEALS, G.R. No. 113725, June 29, 2000
Facts: In a Codicil appended to the will of testatrix Aleja Belleza, Dr. Jorge Rabadilla
was instituted as a devisee of a parcel of land in Bacolod City with the obligation to
deliver 100 piculs of sugar yearly to private respondent Marlena Belleza. Such
obligation is likewise imposed upon the heirs of Dr. Rabadilla and their buyer, lessee, or
mortgagee should they sell, lease, mortgage or otherwise negotiate the property
involved. The Codicil further provides that in case of failure to comply with such
obligation, private respondent shall seize the subject property and shall turn it over to
the near descendants of the testatrix. The Codicil allows the alienation of the property
but only to the testatrixs near descendants and sister.
The lot was transferred to Dr. Rabadilla, who died in 1983 and was survived by his
wife and children, one of which is petitioner herein. In 1989, private respondent sought
before the RTC of Bacolod City, the reconveyance of the property to the surviving heirs
of the testatrix. During pre-trial, parties admitted that in 1998, the private respondent
and a certain Alan Azurin, a lessee of the property, arrived at an amicable settlement
and assumed the obligation to deliver one hundred piculs of sugar. There was no
compliance with the agreement.
In 1991, the RTC dismissed the complaint for lack of cause action. On appeal,
the CA reversed the decision of the TC. The CA ordered reconveyance of the lot to
the estate of Aleja Belleza on the ground of non-compliance of petitioner, as heirs of
the modal heir Rabadilla, of the obligation under the codicil, since 1985. Hence this
petition.
Issue: Does the private respondent have a cause of action to institute the present
case for reconveyance of the land in controversy against petititoner?
Held: YES. Private respondent has a cause of action against petitioner. It is a general
rule under the law on succession that successional rights are transmitted from the
moment of death of the decedent and compulsory heirs are called to succeed by
operation of law. The petitioner, his mother and sisters, as compulsory heirs of the
instituted heir, Dr. Rabadilla, succeeded the latter by operation of law, without need of
further proceedings, and the successional rights were transmitted to them from the
moment of death of the decedent. Under Article 776 NCC, inheritance includes all
the property, rights and obligations of a person, not extinguished by his death.
Conformably, whatever rights and obligations Dr. Rabadilla had by virtue of subject
Codicil were transmitted to his forced heirs, at the time of his death. Such obligation of
the instituted heir reciprocally corresponds to the right of private respondent over the
usufruct, the fulfillment or performance of which is now being demanded by the latter
through the institution of the case at bar.
Modal Institution vs. Conditional institution; Substitution
Issue:

Is the testamentary institution of Dr. Rabadilla a modal institution?

Held:
YES. The institution of Dr. Rabadilla under subject Codicil is in the nature of a
modal institution.
In a modal institution, the testator states (1) the object of the institution, (2) the
purpose or application of the property left by the testator, or (3) the charge imposed

by the testator upon the heir. A "mode" imposes an obligation upon the heir or legatee
but it does not affect the efficacy of his rights to the succession. On the other hand, in a
conditional testamentary disposition, the condition must happen or be fulfilled in order
for the heir to be entitled to succeed the testator. The condition suspends but does not
obligate; and the mode obligates but does not suspend. To some extent, it is similar to
a resolutory condition. The manner of institution of Dr. Rabadilla under subject Codicil is
evidently modal in nature because it imposes a charge upon the instituted heir without,
however, affecting the efficacy of such institution. Further, since testamentary
dispositions are generally acts of liberality, an obligation imposed upon the heir should
not be considered a condition unless it clearly appears from the Will itself that such was
the intention of the testator. In case of doubt, the institution should be considered as
modal and not conditional.
The Codicil sued upon does not contemplate a substitution. Substitution is the
designation by the testator of a person or persons to take the place of the heir or heirs
first instituted. Under substitutions in general, the testator may either (1) provide for the
designation of another heir to whom the property shall pass in case the original heir
should die before him/her, renounce the inheritance or be incapacitated to inherit, as
in a simple substitution, or (2) leave his/her property to one person with the express
charge that it be transmitted subsequently to another or others, as in a fideicommissary
substitution. The provisions of subject Codicil do not provide that should Dr. Rabadilla
default due to predecease, incapacity or renunciation, the testatrix's near
descendants would substitute him. What the Codicil provides is that, should Dr.
Rabadilla or his heirs not fulfill the conditions imposed in the Codicil, the property
referred to shall be seized and turned over to the testatrix's near descendants. Neither is
there a fideicommissary substitution. In a fideicommissary substitution, the first heir is
strictly mandated to preserve the property and to transmit the same later to the
second heir. In this case, the instituted heir is in fact allowed under the Codicil to
alienate the property provided the negotiation is with the near descendants or the
sister of the testatrix. Also, the near descendants' right to inherit from the testatrix is not
definite. The property will only pass to them should Dr. Rabadilla or his heirs not fulfill the
obligation to deliver part of the usufruct to private respondent. Under Article 863, the
second heir or the fideicommissary to whom the property is transmitted must not be
beyond one degree from the first heir or the fiduciary. In this case, the near
descendants are not at all related to the instituted heir, Dr. Rabadilla.
Wills
Issue: Can the provisions of a Codicil be a valid subject of an amicable settlement
subsequently entered into between the private respondent and the lessee of the
subject land which effectively relieves the petitioner from the obligation?
Held: NO. The amicable settlement whereby the lessee assumed the obligation in the
codicil, cannot be deemed to be a substantial and constructive compliance of
petitioners obligation therein as to effectively release the latter from his obligation. A
Will is a personal, solemn, revocable and free act by which a person disposes of his
property, to take effect after his death. Since the Will expresses the manner in which a
person intends how his properties be disposed, the wishes and desires of the testator
must be strictly followed. Thus, a Will cannot be the subject of a compromise
agreement which would thereby defeat the very purpose of making a Will.

Partition; Preterition
VIADO NON VS. COURT OF APPEALS, G.R. No. 137287, February 15, 2000
Facts: During their lifetime, spouses Julian and Virginia Viado owned a house and lot
in Quezon City.Virginia died in 1982, while Julian died in 1985. Surviving them were their
four children Nilo, Leah, Rebecca, and Delia. Nilo and Leah both died in 1987. The
property was occupied and shared by Rebecca, Delia and the heirs of Nilo. In 1988,
petitioners Rebecca and Delia filed a case for partition against the heirs of Nilo. The
latter claimed absolute ownership based on two documents, (1) a deed of donation
executed by Julian covering his one-half conjugal share of the property in favor of Nilo
and (2) a deed of extrajudicial settlement in which Julian, Leah and Rebecca waived
in favor of Nilo their rights and interests over their share of the property inherited from
Virginia, which documents were the basis of the cancellation of OCT and the issuance
of a TCT in the their name. Petitioners attacked the validity of the foregoing instruments,
contending that Nilo employed forgery and undue influence to coerce Julian to
execute the deed of donation. Rebecca averred that Nilo employed fraud to procure
her signature to the deed of extrajudicial settlement. She added that the exclusion of
her retardate sister, Delia, in the extrajudicial settlement, resulted in the latter's
preterition that should warrant its annulment.
Issues: 1. Did the heirs of Nilo acquire absolute ownership over the property in
question?
2. What is the effect of the exclusion of Delia in the extrajudicial settlement?
Held: 1. When Virginia died intestate in 1982, her part of the conjugal property was
transmitted to her heirs her husband Julian and their children. The inheritance, which
vested from the moment of death of the decedent, remained under a co-ownership
regime among the heirs until partition. Every act intended to put an end to indivision
among co-heirs and legatees or devisees would be a partition although it would
purport to be a sale, an exchange, a compromise, a donation or an extrajudicial
settlement.The deed of donation and deed of extra-judicial settlement consolidated
the title solely to Nilo and ceased the co-ownership.
2. The exclusion of Delia Viado from the deed of extrajudicial settlement has the
effect of preterition. This kind of preterition, in the absence of proof and bad faith, does
not justify a collateral attack on the new TCT. The relief instead rests on Art.1104, NCC to
the effect that where the preterition is not attended by bad faith and fraud, the
partition shall not be rescinded but the preterited heir shall be paid the value pertaining
to her. Therefore, the value of the property must be ascertained to determine the
amount due to Delia.
Formal requirements of a valid partition
VERONA PADA-KILARIO vs. COURT OF APPEALS, G.R. No. 134329, January 19, 2000.
Facts: Sometime in May, 1951, the heirs of Jacinto Pada entered into an extra-judicial
partition of his estate which includes a parcel of land in Leyte. The partition was not
registered as it was written in a private document. The land was allocated to 2 of the
heirs, Ananias and Marciano. Meanwhile, petitioner spouses occupied the northern
portion of the subject land with the consent of the heirs of Jacinto.

In 1993, Maria Pada sold the co-ownership right of her father, Marciano to private
respondent, Silverio Pada. Thereafter, Silverio demanded that petitioner spouses
vacate the northern portion of the subject land so his family can utilize the said area.
When conciliation proceedings failed, Silverio filed in the MCTC of Matalom, Leyte, a
complaint for ejectment against petitioner spouses.
The MCTC sustained the possession of petitioner spouses and held that the extrajudicial partition was not valid since it was executed in a private document and was
never registered. On appeal, the RTC reversed the decision of the lower court holding
that Maria Pada was the legal owner of the property sold. The CA affirmed the
decision of the RTC holding that the 1951 extrajudicial partition being legal and
effective as among Jacintos heirs, Maria Pada validly transferred her ownership rights
over the subject land to Silverio.
Issue: Is it necessary for the validity of the extrajudicial partition that the same be
embodied in a public instrument?
Held: No. The intrinsic validity of partition not executed in a public instrument is not
undermined when no creditors are involved. The partition of inherited property need
not be embodied in a public document so as to be effective as regards the heirs that
participated therein. The requirement of Article 1358 of the Civil Code that acts which
have for their object the creation, transmission, modification or extinguishment of real
rights over immovable property, must appear in a public instrument, is only for
convenience, non-compliance with which does not affect the validity or enforceability
of the acts of the parties as among themselves. And neither does the Statute of Frauds
under Article 1403 of the New Civil Code apply because partition among heirs is not
legally deemed a conveyance of real property, considering that it involves not a
transfer of property from one to the other but rather, a confirmation or ratification of
title or right of property that an heir is renouncing in favor of another heir who accepts
and receives the inheritance.
III. OBLIGATIONS AND CONTRACTS
Novation
ESPINA vs. COURT OF APPEALS, G.R. No. 116805, June 22, 2000
Facts: Petitioner Mario Espina is the registered owner of a Condominium Unit in
Antipolo, Rizal. In 1987, the condominium unit in question was leased to respondent
Rene Diaz. In 1991 while Diaz occupied the premises as lessee, Mario executed a
Provisional Deed of Sale whereby he agreed to sell the condominium unit to
respondent for the initial downpayment of P100,000.00 to be paid upon the execution
of the contract and the balance to be paid in 6 installments through PCI Bank
postdated checks. Diazs checks all bounced and were dishonored upon presentment
for the reason that the bank account was closed. Consequently, on July 26, 1992,
Mario terminated the provisional deed of sale by a notarial notice of cancellation.
Nonetheless, Diaz continued to occupy the premises, as lessee, but failed to pay the
rentals due. On October 28, 1992, Diaz made a payment of P100,000.00 which was
accepted by Mario. On February 24, 1993, Mario filed with the MTC-Antipolo Rizal, an
action for unlawful detainer against Diaz. The TC ordered Diaz to vacate the premises
and to pay back & current rentals, attorneys fees and costs. On appeal to the RTC, the
latter court affirmed the decision of the MTC. Diaz filed with the CA a petition for
review. The CA reversed the appealed decision and dismissed the complaint for

unlawful detainer. MFR filed by Mario was denied. Hence, this appeal via petition for
review on certiorari.
Issue:

Did the provisional deed of sale novate the existing lease contract?

Held: NO. The provisional deed of sale that was subsequently executed by the
parties did not novate the original existing contract of lease.
Novation is never presumed; it must be proven as a fact either by express
stipulation of the parties or by implication derived from an irreconcilable incompatibility
between old and new obligations or contracts. Otherwise, the original contract
remains in force.
Relativity of Contracts
DKC HOLDINGS CORP. vs. COURT OF APPEALS, G. R. No. 118248, April 5, 2000
Facts: On March 16, 1988, petitioner corporation entered into a Contract of Lease
with Option to Buy with Encarnacion Bartolome, whereby petitioner was given the
option to lease or lease with purchase the subject land.
Petitioner regularly paid
the monthly P3,000.00 reservation fee until the death of Encarnation in January 1990.
Thereafter, petitioner coursed its payment to private respondent Victor Bartolome, the
sole heir of Encarnacion. Victor, however, refused to accept. On March 14, 1990,
petitioner served upon Victor a written notice that it was exercising its option to lease
the property. Again, Victor refused to accept the rental fee and to surrender
possession of the property to petitioner. Petitioner thus opened a savings account with
a bank in the name of Victor Bartolome and deposited therein the aforesaid rental fee
as well as P6,000.00 reservation fees. Petitioner then filed a Complaint for specific
performance and damages against Victor.
The trial court dismissed the complaint, holding that the subject contract was
terminated upon the death of Encarnacion Bartolome and did not bind Victor
because he was not a party thereto.
Issue: Was the Contract of Lease with Option to Buy entered into by Encarnacion
with petitioner terminated upon her death, hence not binding upon Victor?
Held: NO. The contract was not terminated upon Encarnacions death. It remains
binding upon Victor. The general rule under Article 1311, NCC is that heirs are bound
by contracts entered into by their predecessors-in-interest except when the rights and
obligations arising therefrom are not transmissible by (1) their nature, (2) stipulation or
(3) provision of law. In the case at bar, there is neither contractual stipulation nor legal
provision making the rights and obligations under the contract intansmissible. In fact,
the nature of the rights and obligations therein are, by their nature, transmissible.
A good measure for determining whether a contract terminates upon the death of
one of the parties is whether it is of such character that it may be performed by the
promissors personal representative. In the case at bar, there is no personal act
required from the late Encarnacion Bartolome. Rather, the obligation of Encarnaction
in the contract to deliver the possession of the subject property to petitioner upon the
exercise by the latter of its option to lease the same may very well be performed by her
heir Victor. There exists a privity of interest between Victor and his deceased mother.
Victor cannot escape the legal consequence of a transaction entered into by his
predecessor-in-interest because he has inherited the property subject to the liability
affecting the latter.

Furthermore, the subject matter of the contract is a lease, which is a property right.
The death of a party does not excuse nonperformance of a contract which involves a
property right, and the rights and obligations thereunder pass to the personal
representatives of the deceased. Similarly, nonperformance is not excused by the
death of the party when the other party has a property interest in the subject matter of
the contract.
Onerous Contract
GOLDEN DIAMOND vs. COURT OF APPEALS, G.R. No. 131436, May 31, 2000
Facts: Petitioner Golden Diamond, Inc. (GDI) entered into a Dealer Agreement with
International Family Food Services, Inc. (IFFSI), the exclusive licensee in the Philippines of
Shakey's U.S.A., for the operation of Shakey's pizza parlors in Caloocan Cityfor a period
of ten years, from February 1981 to February 1991 renewable for another ten years. GDI
subsequently entered into a Memorandum of Agreement (MOA) with private
respondent Cheng, whereby GDI assigned to the latter, its rights, interests and
obligations under its agreement with IFFSI over the Shakey's outlet at Gotesco Grand
Central, in exchange for the payment of a monthly royalty fee of five per cent (5%) of
the gross dealer sales for a period of five (5) years, from August 1988 to August 1993.
On February 1991, Cheng stopped payment of the royalty fees on the ground
that the contract between GDI and IFFSI had expired. Cheng insisted that his payment
of the royalty fees is conditioned on the existence of the agreement between
petitioner GDI and IFFSI.
Issue: Is Cheng obliged to pay the royalty fee to GDI even after the expiration of
GDIs area franchise?
Held: NO. Cheng is no longer obliged to pay the royalty fee. The fact that no
renewal was granted removed the basis for the continued payment of the monthly
royalty fee. It is the essence of a royalty fee that it is paid in consideration of an existing
right. In its ordinary acceptation, royalties refer to payments made to the owner for
permitting another to use his property. Royalties are similar to the rents payable for the
use or right to use an invention and after the right to use it has terminated there is no
obligation to make further royalty payments.
The MOA is an onerous contract, wherein the contracting parties are obliged to
render reciprocal prestations. GDI is entitled to receive the royalty fee in return for
Chengs use of its (GDI) exclusive right to the Shakey's outlet at the Gotesco Grand
Central. Indelibly, the very reason which impelled Cheng to assume the obligation to
pay the royalty fee was that of GDIs representation that it has the exclusive right to
operate the outlet. To expect Cheng to continue paying the royalty fee after February
1991, or until August 1993, when what GDI assigned no longer exists is legally
untenable. GDIs entitlement to the royalty fee is wholly dependent upon the
existence and subsistence of the right for which the royalty was granted. If the reason
which gave rise to the contract has ceased to exist, the result is that the obligation too,
has ceased to exist.

Power to Rescind in Reciprocal Obligations

RELIANCE COMMODITIES INC. vs. INTERMEDIATE APPELLATE COURT,
G.R. No. 74729, May 31, 2000
Facts: Respondent Marvin Paez entered into contract with Reliance Commodities,
Inc. (RCI) whereby the latter agreed to provide the former with funds and equipment
for the operation of a manganese mining claim. Subsequently, Paez and his wife
executed a deed of first real estate mortgage (REM) on their property in favor of RCI as
security for more cash advances needed to sustain the mining operation. RCI then
made cash advances to Paez until subsequently, a difference arose between Paez
and RCI concerning these cash advances. Later, for failure to repay, RCI foreclosed
extrajudicially the mortgage executed by Paez in its favor.
The spouses Paez thereafter filed an action to annul the Deed of First Real Estate
Mortgage, and for damages. The trial court ordered Paez to pay RCI the cash
advances they received and lifted the TRO as to the foreclosure, allowing RCI to
proceed with the extrajudicial foreclosure of the mortgage should Paez fails to pay.
The CA however, declared the REM and the contract between the parties void,
finding that it is RCI which gave cause for the rescission of the contract, and that
restitution is not available in rescission. RCI now claims that the violation of the
contracts came from the Paez spouses because they failed to deliver at all the
manganese ores stipulated in the contract according to the schedule outlined. Hence,
they were not entitled to rescind the contracts or recover damages and by reason of
which RCI was entitled to foreclose on the security constituted.
Issue:
Does RCI have the power to rescind the contract? If so, is restitution
available?
Held: YES. RCI has the power to rescind the contract, it having been established that
Paez failed to comply with his obligation under the contract. Under the agreement of
RCI with Paez, the former was to pay Paez P70.00 for every ton of manganese ores
delivered. On the other hand, Paez failed to make even a single delivery of
manganese ores to the stockpile yard at Gabaldon. In fact, there was no mining
operation at all.
Consequently, RCI rescinded the contracts. The power to rescind or resolve is
given to the injured party. More, the rescission of the contracts requires the parties to
restore to each other what they have received by reason of the contracts. The
rescission has the effect of abrogating the contracts in all parts.
CENTRAL BANK OF THE PHILIPPINES vs. BICHARA, G.R. No. 131074, March 27, 2000
Facts: On July 19, 1983, respondents Spouses Alfonso and Anacleta Bichara sold 2 lots
in LegazpiCity, with an aggregate area of 811 sq. m. to petitioner CENTRAL BANK OF
THE PHILIPPINES (CBP). The deed of sale contained the following pertinent stipulations:
that the purchase price shall be paid only after the Deed of Sale has been duly
registered and a clean title issued in the name of the vendee and; that the vendors
shall undertake to fill the parcels of land with an escombro free from waste materials
compacted to the street level upon the signing of the Deed to suit the ground for the
construction of the regional office of CBP.
Title over the property was issued in CBP's name on September 6, 1983. Despite
the issuance of the title, CBP failed to pay the spouses. The latter did not fill up the lot
with escombro despite several demands made by the former. CBP was thus
constrained to undertake the filling up of the said lots, by contracting the services of

BGV Construction. The filling up of the lots cost CBP P45,000.00, which amount was
deducted from the purchase price payable to the spouses.
CBP, however, still did not pay the spouses. Consequently, on September 7, 1992,
the spouses filed an action for rescission or specific performance with damages,
against CBP before the RTC of Legazpi City, alleging that CBP failed to pay the
purchase price despite demand.
Issues:

Is rescission of the contract of sale a proper remedy available to the Spouses?

Held: No. The right to rescind a contract involving reciprocal obligations is provided
for in Article 1191 of the Civil Code. The law speaks of the right of the "injured party" to
choose between rescission or fulfillment of the obligation, with the payment of
damages in either case. Here, the spouses claim to be the injured party and they aver
that they are entitled to cancel the obligation altogether in view of CBP's failure to pay
the purchase price when the same became due. CBP disputes the spouses stand,
claiming that it was entitled to withhold payment of the purchase price because of
the latters failure to comply with their contractual obligations.
By law, "[t]he vendee is bound to accept the delivery and to pay the price of the
thing sold at the time and place stipulated in the contract." In the case at bench,
CBP's obligation to pay arose as soon as the deed of sale was registered and a clean
title was issued. CBP justifies non-payment on the spouses' breach of several stipulations
in the contract, such as: non-payment of tax and the occupation by squatters of the
premises. However, CBPs obligation to pay was not subject to the foregoing
"conditions," only that its demandability is suspended until the opportune time. That
arrived upon the registration of the deed of sale and the issuance of a clean title in its
favor.
The Spouses should not be allowed to rescind the contract where they
themselves did not perform their essential obligation thereunder. Evidently, the spouses
were guilty of non-performance of an essential contractual obligation. The deed of
sale expressly stipulated that the vendors were to undertake, at their expense, the filling
up of the lots with escombro free from waste material compacted to the street level.
This was required in order to make the site suitable for the construction of a substantial
edifice which will house the regional office of CBP. This was to be accomplished upon
the signing of the contract and insofar as CBP was concerned, the spouses obligation
was demandable at once.
It should be emphasized that a contract of sale involves reciprocity between the
parties. Since the spouses were in bad faith, they may not seek the rescission of the
agreement they themselves breached.
Contract to Sell; Rescission
PADILLA vs. PAREDES, G.R. No. 124874, March 17, 2000
Facts: Petitioner Albert Padilla and private respondents Floresco and Adelina Paredes
entered into a contract to sell a parcel of land in San Juan, La Union. The land was
untitled although the Spouses Paredes were paying taxes thereon. Under the contract,
Padilla undertook to secure title to the property in Spouses Paredes names. Of the
P312,840.00 purchase price, petitioner was to pay a downpayment of P50,000.00 upon
signing of the contract, and the balance was to be paid within 10 days from the
issuance of a court order directing issuance of a decree of registration for the
property. Padilla failed to pay the balance of the purchase price within the period set.
Later Spouses Paredes offered to sell to Padilla of the property for all the payments
the latter had made, subject to the condition that if Padilla will not agree, they would

enforce the automatic rescission of the contract. Padilla did not accept the proposal.
Instead, he offered to pay the balance in full for the entire property, plus interest and
attorney's fees, which the spouses refused. Padilla then instituted an action for specific
performance against the spouses, alleging that he had already substantially complied
with his obligation under the contract to sell.
Issue: Are the Spouses Paredes entitled to rescind their "contract to sell" the land to
Padilla?
Held: YES. The spouses may validly cancel the contract to sell their land to Padilla.
However, the reason for this is not that the spouses have the power to rescind such
contract, but because their obligation thereunder did not arise. Article 1191 of the Civil
Code, on rescission, speaks of obligations already existing. In a contract to sell, the full
payment of the purchase price is a positive suspensive condition, the failure of which is
not considered a breach, casual or serious, but simply an event which prevented the
obligation of the vendor to convey title from acquiring any obligatory force. There can
be no rescission of an obligation that is non-existent, considering that the suspensive
condition therefor has not yet happened. Because of Padilla's failure to fully pay the
purchase price, the obligation of the spouses to convey title to the property did not
arise. Thus, they are under no obligation, and may not be compelled, to convey title to
Padilla and receive the full purchase price.
Interpretation of Contracts; Rescission
PHIL. NATIONAL CONSTRUCTION CORP. vs. MARS CONSTRUCTION ENT.
G.R. No.133909, February 15, 2000
Facts: Mars Construction Enterprises, Inc. (Mars) entered into a contract with the Phil.
National Construction Corp. (PNCC) for the supply of approximately 70,000 cubic
meters of aggregates but with out specification as to the volume of each of the items
mentioned therein. The two parties subsequently amended the contract by specifying
the volume for three of the items, totaling the originally agreed 70,000 cubic meters of
aggregate, except the fourth item, the volume of which was not specified.
Because the delivery of aggregates was delayed for 8 months, PNCC was
constrained to obtain necessary materials from other sources, incurring additional costs
representing the difference between the agreed price in the contract and the pricing
of outside sources, which was reimbursed by Mars in accordance with the default
clause under the contract. When Mars delivered 17,000 cubic meters of washed
gravel, PNCC refused to accept, on the following grounds:
1. Mars has already delivered aggregates 45% over and above the required volume in
the amended contract and PNCC had no more need for the same;
2. PNCC has already informed Mars in a letter of the final quantities of concrete
aggregates to be delivered and that it would not accept any further deliveries from
Mars;
3. Mars has defaulted on its contractual obligations.
Issue: May PNCC be compelled to accept the delivery of the 17,000 cu. m. of
washed gravel?
Held:

YES. PNCC may be compelled to accept.

(1) The amendment made the agreement ambiguous because the quantity of
sub-base 2 minus crusher run was not specified. If said aggregate were included
however, the total would definitely be in excess of 70,000 cu. m. PNCC had ordered

from Mars more than what was specified in the agreement. This act signified that the
maximum limit of 70,000 cu. m. was disregarded because of PNCC's needs. What then
would be the significance of the quantities stated in the amendment? We interpret
that these are the minimum quantities that must be delivered by Mars. Both parties are
bound by these figures. In this way, both parties would know exactly how much to
demand from each other to be able to comply with their respective obligations. The
various stipulations in a contract should be interpreted together. Ambiguous ones
should be so construed as to conform to the sense that would result if all the provisions
are comprehended jointly.
(2) By saying that the quantity specified in the letter was its last order, PNCC
unilaterally amended its Contract with the Mars. The act of treating a contract as
cancelled or rescinded on account of infractions by the other contracting party is
always provisional; that is, contestable and subject to judicial determination. When
PNCC resolved or rescinded the Agreement without previous court action, it
proceeded at its own risk. Only the final judgment of a court will conclusively and finally
settle whether such recourse was correct in law.
3) The default was an insubstantial breach. The contract specifically provided
that if Mars failed to deliver the required aggregates, PNCC could procure them from
other sources so as not to jeopardize the entire construction project. Since PNCC was
already compensated for Mars defaults, such defaults cannot be considered as a
substantial breach that justified the rescission of the Contract and the refusal to
accept the questioned delivery. Furthermore, when PNCC exercised its options in case
of delay or default on the part of Mars, the former waived its right to rescind and was
thus estopped from rescinding the Contract by reason of such short delivery.
Badges of Fraud
China Banking Corp. vs. Court of Appeals, G.R. No. 129644, March 7, 2000
Facts: In connection with a civil case filed by Metropolitan Bank against Alfonso
Roxas Chua , a notice of levy affecting the residential land of Alfonsoand his wife was
issued. Meanwile, in 1985, the trial court rendered another decision in favor of China
Banking Corporation against Alfonso in a collection case. A certificate of sale covering
of the undivided portion of the property was executed in favor of Metro Bank. In
1988, Alfonso executed Assignment of Right to Redeem to his son Paulino who
redeemed the said property on the same day. On the other hand, another levy on
execution in favor of China Bank was issued on the same property. Thereafter, a
certificate of sale on execution was issued to China Bank in 1992. Paulino instituted a
civil case arguing that he has a better right over the title of China Bank, the property
having been redeemed by him in 1988 while China Bank acquired its right in 1991. The
trial court ruled that the assignment was made for a valuable consideration and was
executed two years before China Bank levied the conjugal share of Chua. China Bank
argued that the assignment of right of redemption made by Alfonso to Paulino was
done in fraud of creditors and may be rescinded under Article 1387, NCC.
Issue: Was the assignment by Alfonso to Paulino of the right of redemption done to
defraud his creditors and may be rescinded under Art. 1387, NCC?
Held: YES. The assignment was done in fraud of creditors. China Bank is, therefore
entitled to rescind the same. Under Article 1381(3) of the Civil Code, contracts which
are undertaken in fraud of creditors when the latter cannot in any manner collect the
claims due them, are rescissible. The existence of fraud with intent to defraud creditor
may either be presumed in accordance with Article 1387,NCC or duly proved in

accordance with the ordinary rules of evidence. Hence, the law presumes that there is
fraud of creditors when:
a) There is alienation of property by gratuitous title by the debtor who has not
reserved sufficient property to pay his debts contracted before such alienation; or
b) There is alienation of property by onerous title made by a debtor against whom
some judgment has been rendered in any instance or some writ of attachment has
been issued. The decision or attachment need not refer to the property alienated and
need not have been obtained by the party seeking rescission.
Inasmuch as the judgment of the trial court in favor of China Bank against
Alfonso was rendered as early as 1985, there is a presumption that the 1988 sale of his
property, in this case the right of redemption, is fraudulent under Article 1387 of the Civil
Code. The fact that private respondent Paulino redeemed the property and caused its
annotation on the TCT more than two years ahead of petitioner China Bank is of no
moment. The Court of Appeals maintained that although the transfer was made
between father and son, the conveyance was not fraudulent since Paulino has indeed
paid the redemption fee of P1,463,375.39 to Metrobank and the sum of P100,000 to his
father. In determining whether or not a certain conveyance is fraudulent, the question
in every case is whether the conveyance was a bona fide transaction or a trick and
contrivance to defeat creditors or whether it conserves to the creditor to the debtor or
a special right. It is not sufficient that it is founded on good considerations or is made
with bona fide intent. It must have both elements. If defective in either of these,
although good between the parties, it is voidable as to creditors. The question as to
whether or not the conveyance is fraudulent is: does it prejudice the rights of the
creditors? The mere fact that the conveyance was founded on valuable consideration
does not necessarily negate the presumption of fraud under Art. 1387, NCC. There has
to be a valuable consideration and the transaction must have been made bona fide.
In the case at bar, the presumption that the conveyance is fraudulent has not been
overcome. At the time a judgment was rendered in favor of China Bank against
Alfonso, Paulino was still living with his parents in the subject property. Paulino himself
admitted that he knew his father was heavily indebted and could not afford to pay his
debts. The transfer was undoubtedly made between father and son at the the time
when the father was insolvent and had no other property to pay his creditors. Hence, it
is of no consequence whether or not Paulino had given valuable consideration for the
conveyance.
Void and Voidable Contracts
SEN PO EK MARKETING CORP. vs. MARTINEZ, G.R. No. 134117, February 9, 2000
Facts: Sofia Martinez was the registered owner of 2 parcels of land who leased the
lots to Yu Siong, father of the president and stockholders of petitioner Sen Po Ek for a
period of 10 years. When the lease expired it was later renewed several times, the last
renewal being on March 1982 which is to expire on Jan. 1987. In the
meantime, Sofia sold the lots and the building to her daughter, respondent Teodora
Martinez. After the lease contract expired in Jan. 1987, it was no longer renewed by
the parties. Sen Po Ek, however, continued to possess and occupy the leased
properties, and regularly paid the monthly rentals to Sofia until her death, and then to
her heirs through Teodora. On November 11, 1989, Teodora sent a letter to petitioner
Sen Po Ek informing it of her intention to sell the leased premises and authorizing a
broker to negotiate the sale "with any and all interested parties." Sen Po Ek offered to
purchase the poperty. Another buyer, Tiu Uyping, was also interested. Sen Po Ek then
filed a complaint for the annulment of the sale executed by Sofia in favor of Teodora.

Days later, the property was sold to Tiu Uyping. Sen Po Ek amended its complaint,
praying for the nullity of the second sale transaction.
Issue:

Were the two disputed sale transactions valid?

Held: The first sale is void. The second sale, however, is valid and binding. The first
sale between Sofia and Teodora was void for being fictitious. Under Art. 1409 (2),NCC,
one type of contract which can be declared void and inexistent is that which is
absolutely simulated or fictitious, and this was established by several badges of
simulation proving that the sale between Sofia and Teodora was not intended to have
any legal effect between them.The combination of all of these events leads one to the
inescapable conclusion that the first sale transaction was absolutely simulated, hence
void.
Nonetheless, the sale between Teodora and the Tiu Uyping, is valid. Teodora, as
only one of the co-heirs of Sofia, had no authority to sell the entire lot to the Tiu Uyping.
She can only sell her undivided portion of the property. Thus, when she sold the leased
premises to Tiu Uyping, the sale is unenforceable having been entered into by Teodora
in behalf of her co-heirs who, however, gave no authority or legal representation.
However, such a contract is susceptible of ratification. In this case, the ratification
came in the form of "Confirmation of Sale of Land and Improvements" executed by
the other heirs of Sofia. Since the sale by Teodora of the leased premises to Tiu Uyping
was ratified by her co-heirs, then the sale is considered valid and binding
Capacity to Enter into Contract
LOYOLA vs. COURT OF APPEALS, G.R. No. 115734, February 23, 2000
Facts: Three years before her death, Gaudencia Zarraga sold to private respondents,
the children of one her siblings, her share in Lot 115-A-1 for P34,000.00. The sale was
evidenced by a notarized document denominated as Bilihang Tuluyan ng Kalahati ng
isang Lagay na Lupa. Her other siblings assail the validity of the execution of the deed
of the absolute sale suggesting that the deed of sale is not valid because Gaudencia
was old and senile and incapable of independent and clear judgment.
Issue: Is the deed of absolute sale invalid on the ground of Gaudencias incapacity?
Held: NO. A person is not incapacitated to contract merely because of advanced
years of by reason of physical infirmities. Only when such age or infirmities impair his
mental faculties to such extent as to prevent him from properly, intelligently, and fairly
protecting his property rights is he considered incapacitated. Petitioners show no proof
that Gaudencia had lost control of her mental faculties at the time of the sale. The
notary public who interviewed her, testified that when he talked to Gaudencia before
preparing the deed of sale, she answered correctly and he was convinced that
Gaudencia was mentally fit and knew what she was doing.

Unenforceable Contract
VILLANUEVA-MIJARES vs. COURT OF APPEALS, G.R. No. 108921, April 12, 2000
Facts: Petitioners are the legitimate children of the late Leon Villanueva. Leon was
one of eight children of Felipe Villanueva, predecessor-in-interest of the parties in the
present case. During his lifetime, Felipe, owned real property situated in Kalibo, Aklan.
Upon Felipes death, ownership of the land was passed on to his children. Pedro, one
of the children of Felipe got his share equivalent to one-sixth (1/6) of the property and
had it declared under his name. The remaining undivided portion of the land was held
in trust by Leon for his co-heirs. During Leons lifetime, his co-heirs made several
seasonable and lawful demands upon him to subdivide and partition the property, but
for one reason or another, no subdivision took place.
After the death of Leon in August 1972, private respondents discovered that the
shares of four of the heirs of Felipe were purchased by Leon as evidenced by a Deed of
Sale executed on August 25, 1946 but registered only in 1971. It also came to light
that Leonhad, sometime in July 1970, executed a sale and partition of the property in
favor of his own children, herein petitioners.
Issue: Are the petitioners the legal owners of the property in question in accordance
with the individual titles issued to them?
Held: No. The Deed of Sale of August 25, 1946 was "unenforceable and thus did not
make the petitioners the legal owners of the property in question in accordance with
the individual titles issued to them.
Article 1529 of the old Civil Code, which was the prevailing law in 1948 and thus
governed the questioned Deed of Sale, clearly provided that a contract is
unenforceable when there is an absence of authority on the part of one of the
contracting parties. The mere lapse of time cannot give efficacy to such a contract.
The defect is such that it cannot be cured except by the subsequent ratification of the
unenforceable contract by the person in whose name the contract was executed. In
the instant case, there is no showing of any express or implied ratification of the assailed
Deed of Sale by the private respondents.
Simulation of Contracts
LOYOLA vs. COURT OF APPEALS, G.R. No. 115734, February 23, 2000
Facts: Three years before her death, Gaudencia Zarraga sold to private respondents,
the children of one her siblings, her share in Lot 115-A-1 for P34,000.00. The sale was
evidenced by a notarized document denominated as Bilihang Tuluyan ng Kalahati ng
isang Lagay na Lupa. Her other siblings assail the validity of the execution of the deed
of the absolute sale suggesting that the deed of sale is simulated.
Issue: Is the deed of absolute sale simulated?
Held: NO. Simulation is the declaration of a fictitious will deliberately made by
agreement of the parties, in order to produce, for the purposes of deception, the
appearances of a juridical act which does not exist or is different what that which does
not exist or is different what that which was really executed. Characteristic of
simulation is that the apparent contract is not really desired or intended to produce
legal effect or in in any way alter the judicial situation of the parties. Perusal of the
questioned deed will show that the sale of the property would convert the co-owners

to vendors and vendees, a clear alteration of the judicial relationships. This is contrary
to the requisite of simulation that the apparent contract was not really meant to
produce any legal effect. Also in a simulated contract, the parties have no intention to
be bound by the contract. But in this case, the parties clearly intended to be bound by
the contract of sale, an intention they do not deny. The requisites for simulation are: (a)
an outward declaration of will different from the will of the parties; (b) the false
appearance must have been intended by mutual agreement; and (c) the purpose is
to deceive third persons. None of these are present in the assailed transaction.
Laches; Prescription
VILLANUEVA-MIJARES vs. COURT OF APPEALS, G.R. No. 108921, April 12, 2000
Facts: Petitioners are the legitimate children of the late Leon Villanueva. Leon was
one of eight children of Felipe Villanueva, predecessor-in-interest of the parties in the
present case. During his lifetime, Felipe, owned real property situated in Kalibo, Aklan.
Upon Felipes death, ownership of the land was passed on to his children. Pedro, one
of the children of Felipe got his share equivalent to one-sixth (1/6) of the property and
had it declared under his name. The remaining undivided portion of the land was held
in trust by Leon for his co-heirs. During Leons lifetime, his co-heirs made several
seasonable and lawful demands upon him to subdivide and partition the property, but
for one reason or another, no subdivision took place.
After the death of Leon in August 1972, private respondents discovered that the
shares of four of the heirs of Felipe were purchased by Leon as evidenced by a Deed of
Sale executed on August 25, 1946 but registered only in 1971. It also came to light
that Leonhad, sometime in July 1970, executed a sale and partition of the property in
favor of his own children, herein petitioners.
Issue: Is the claim by private respondents to recover the property in question barred
by laches, estoppel, prescription and res judicata?
Held: NO. At the time of signing of the Deed of Sale of August 26, 1948, private
respondents Procerfina, Prosperidad, Ramon and Rosa were minors. Even if the case
was brought more than 29 years later, they could not be faulted for their failure to file a
case to recover their inheritance from their uncle Leon, since up to the age of majority,
they believed and considered Leon their co-heir and administrator. Upon learning of
their uncles actions, they filed an action for recovery. Hence, the doctrine of stale
demands formulated in Tijam vs. Sibonghanoy cannot be applied here. They did not
sleep on their rights, contrary to petitioners assertion.
Moreover, there is no impled ratification in the instant case because no benefit
accrued to the children of Maria Baltazar, thus the action is not barred by prescription.
While a review of the decree of registration is no longer available after the
expiration of the one-year period from entry thereof pursuant to the doctrine of res
judicata, an equitable remedy is still available. Those wrongfully deprived of their
property may initiate an action for reconveyance of the property.
GASTON vs. COURT OF APPEALS, G.R. No. 116340, June 29, 2000.
Facts: In 1972, private respondent Gertrudes Medel filed a complaint before the RTC
of Silay City, against petitioner Cecilia Gaston's mother Sofia de Oca vda. De Gaston
and other defendants for recovery of her share over certain parcels of land ofTalisay
Cadastre, claiming that, as her mother is the daughter of Mariano de Oca by his first
marriage, she (Gertrudes) is entitled to the properties left by Mariano de Oca. RTC

dismissed the same. On appeal, the CA reversed the TCs decision. The CA ordered
the defendants, Sofia Gaston, et. al, to partition the properties involved to include the
share of private respondent Medel within 60 days from the finality of the said decision.
As the said defendants had not complied with the said CAs order, despite the lapse of
the period indicated therein and inspite of representations made by Medel to the
defendants to submit the project of partition, the private respondent filed with the
respondent RTC on November 27, 1991, a motion to require the defendants to submit a
project of partition. Acting on the said motion, the respondent court in its order of
December 3, 1991, required the defendants' counsel to comment thereon within 5 days
from receipt thereof, with warning 'otherwise the court will partition'. The defendants
also ignored the said order of the respondent court. Thus, the respondent court, in its
order dated January 17, 1992, acted on the ex-parte motion of the private respondent
to partition the properties.
Issue: Is the petition for nullification of the questioned order dated Jan. 17, 1992 timebarred?
Held:

YES.
The questioned order of the respondent court is dated January 17, 1992 but the
petition was filed only on December 29, 1992 or almost a year after the issuance of the
questioned order. The yardstick to measure the timeliness of a petition for certiorari is
the reasonableness of the length of time that had expired from the commission of the
actuation complained of up to the institution of the proceeding to amend the same.
Failure to file the certiorari petition within a reasonable time renders the petitioner
susceptible to the adverse legal consequences of laches.
The essence of laches is the failure, or neglect, for an unreasonable and
unexplained length of time to do that which, by exercising due diligence, could or
should have been done earlier; it is the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it. This Court has ruled that an interval of seven (7)
months after rendition of the last order sought to be set aside is definitely barred by
laches. A petition brought after 99 days is also barred by laches. The special civil
action for certiorari under Rule 65 of the Rules of Court must be filed within a
reasonable period of only 3 months.
TRUSTS: Express Trust
SECUYA vs. VDA. DE SELMA, G.R. No. 136021, February 22, 2000
Facts: The present petition is rooted in an action for quieting of title filed before the
RTC by petitioners, all surnamed Secuya against Gerarda De Selma.
The parcel of land subject of this case is a portion of Lot 5679 of the TalisayMinglanilla Friar Lands Estate. The lot was originally sold to Maxima Caballero Vda. De
Carino. During the lifetime of the latter, she entered into an Agreement of Partition
dated January 5, 1938 with Paciencia Sabellona, whereby Maxima bound herself to
part with 1/3 of Lot5679 in favor of Paciencia upon the approval of her application for
patent. Paciencia took possession and occupation of said portion adjudicated to her.
Later she sold the 3,000 sq. m. portion thereof to Dalmacio Secuya on October
20,1953. After said purchase, Dalmacio and his siblings took physical possession of the
land and cultivated the same. The petitioners herein are the heirs of Dalmacio. In
1975, Gerarda bought a bulk of Lot 5679, which embraced and included the land
bought by Dalmacio.

Issue: Do petitioners have the requisite title that would enable them to avail
themselves of the remedy of quieting of title?
Held: NO. Petitioners do not have the requisite title to pursue an action for quieting
of title. Petitioners anchor their claim of ownership on the Agreement of Partition.
Notwithstanding its nomenclature, the Agreement is not one of partition, because there
was no property to partition and the parties were not co-owners. Rather, it is in the
nature of a trust agreement. Trust is the right to the beneficial enjoyment of property,
the legal title to which is vested in another. It is a fiduciary relationship that obliges the
trustee to deal with the property for the benefit of the beneficiary. Trust relations
between parties may either be express or implied. An express trust is created by the
intention of the trustor or of the parties. An implied trust comes into being by operation
of law.
The present Agreement involves an express trust. Under Art. 1444 of the Civil Code,
no particular words are required for the creation of an express trust, it being sufficient
that a trust is clearly intended.
While no time limit is imposed for the enforcement of rights under express trusts,
prescription may, however, bar a beneficiarys action for recovery, if a repudiation of
the trust is proven by clear and convincing evidence and made known to the
beneficiary. There was a repudiation of the express trust when the heirs of Maxima
failed to deliver or transfer the property to Paciencia, and instead sold the same to a
3rd person not privy to the Agreement. The Agreement was not registered, thus, it could
not bind 3rd persons. Consequently, the subsequent sales transactions involving the land
in dispute, which ultimately led to its purchase by Gerarda, and the titles covering it
must be upheld, in the absence of proof that the said transactions were fraudulent and
irregular.
SALES AND LEASE: Elements of a Contract of Sale
SAN ANDRES vs. RODRIGUEZ, G.R. No. 135634, May 31, 2000
Facts: Juan San Andres sold a parcel of land with an area of 345 square meters to
respondent Vicente Rodriguez. The sale is evidenced by a Deed of Sale. When San
Andres died, the judicial administrator of the decedent's estate undertook a survey of
the entire land owned by the decedent including the land sold to Rodriguez. It was
found that respondent had enlarged the area which he purchased from San Andres by
509 square meters. Accordingly, the judicial administrator demanded that Rodriguez
vacate the portion allegedly encroached by him. When Rodriguez refused to leave,
the judicial administrator thereafter brought an action for the recovery of possession of
the 509-square meter lot
Rodriguez claims the disputed portion was also subsequently the subject of an
absolute sale to him as shown by a receipt signed by the late San Andres, which reads
in full as follows: Received from Vicente Rodriguez the sum of Five Hundred (P500.00)
Pesos representing an advance payment for a residential lot adjoining his previously
paid lot on three sides excepting on the frontage with the agreed price of Fifteen
(15.00) Pesos per square meter and the payment of the full consideration based on a
survey shall be due and payable in five (5) years period from the execution of the
formal deed of sale.
Issue: Was there a perfected contract of absolute sale for the portion of the disputed
509 sq.m.-land?

Held: YES. There was a perfected contract of sale. Since the lot subsequently sold to
Rodriguez is said to adjoin the "previously paid lot" on three sides thereof, the subject lot
is capable of being determined without the need of any new contract. The fact that
the exact area of these adjoining residential lots is subject to the result of a survey does
not detract from the fact that they are determinate or determinable. Concomitantly,
the object of the sale is certain and determinate. Under Article 1460,NCC, a thing sold
is determinate if at the time the contract is entered into, the thing is capable of being
determined without necessity of a new or further agreement between the parties.
Here, this definition finds realization. Thus, all of the essential elements of a contract of
sale are present, i.e., that there was a meeting of the minds between the parties, by
virtue of which San Andres undertook to transfer ownership of and to deliver a
determinate thing for a price certain in money. Without any doubt, the receipt
profoundly speaks of a meeting of the mind between San Andres and Rodriguez for the
sale of the property adjoining portion previously sold to Rodriguez. The price is certain,
which is P15.00 per square meter. Evidently, this is a perfected contract of sale on a
deferred payment of the purchase price. All the pre-requisite elements for a valid
purchase transaction are present.
There is also no reservation of ownership nor a stipulation providing for a unilateral
rescission by either party. The stipulation that the "payment of the full consideration
based on a survey shall be due and payable in five (5) years from the execution of a
formal deed of sale" is not a condition which affects the efficacy of the contract of
sale. It merely provides the manner by which the full consideration is to be computed
and the time within which the same is to be paid. But it does not affect in any manner
the effectivity of the contract.
Option Money vs. Earnest Money
CAVITE DEVELOPMENT BANK VS. CYRUS LIM, G.R. No. 131679, February 1, 2000
Facts: A certain Rodolfo Guansing obtained a loan from Cavite Development Bank
(CDB), to secure which he mortgaged a parcel of land. As Rodolfo defaulted in the
payment of his loan, CDB foreclosed the mortgage. At the foreclosure sale held on
March 15, 1984, the mortgaged property was sold to CDB as the highest bidder and
later title to the property was issued in its name. On June 16, 1988, private respondent
Lolita Chan Lim offered to purchase the property from CDB. Pursuant to the terms of the
offer, Lim paid CDB P30,000.00 as Option Money. However, after some time following
up the sale, Lim discovered that the title of subject property was originally registered in
the name of Perfecto Guansing, father of mortgagor Rodolfo, and that title of Rodolfo
was cancelled on March 23, 1984 by the RTC of Q.C as it was fraudulently secured by
the latter. This decision has since become final and executory. Lim filed an action for
specific performance and damages against CDB and its mother company FEBTC for
the latters alleged misrepresentation on their ability to sell the property.
CDB deny that a contract of sale was ever perfected between them and Lolita
Chan Lim. They contend that Lim's letter-offer clearly states that the sum of P30,000.00
was given as option money, not as earnest money. They thus conclude that the
contract between CDB and Lim was merely an option contract, not a contract of sale.
The trial court ruled in favor of Lim.
Issue:

Is there a perfected contract of sale between Lim and CDB?

Held:
Yes. The sum of P30,000.00, although denominated in the offer to purchase as
"option money," is actually in the nature of earnest money or down payment when
considered with the other terms of the offer. In determining the nature of a contract,

the courts are not bound by the name or title given to it by the contracting parties. In
Carceler v. CA, the SC has explained the nature of an option contract:
An option contract is a preparatory contract in which one party grants to the other,
for a fixed period and under specified conditions, the power to decide, whether or not
to enter into a principal contract, it binds the party who has given the option not to
enter into the principal contract with any other person during the period designated,
and within that period, to enter into such contract with the one to whom the option
was granted, if the latter should decide to use the option. It is a separate agreement
distinct from the contract to which the parties may enter upon the consummation of
the option. An option contract is therefore a contract separate from and preparatory
to a contract of sale which, if perfected, does not result in the perfection or
consummation of the sale.
In this case, after the payment of the 10% option money, the Offer to Purchase
provides for the payment only of the balance of the purchase price, implying that the
"option money" forms part of the purchase price. This is precisely the result of paying
earnest money under Art. 1482 of the Civil Code. It is clear then that the parties in this
case actually entered into a contract of sale, partially consummated as to the
payment of the price.
Delivery in Contract of Sale
SERASPI vs. COURT OF APPEALS, G.R. No. 135602, April 28, 2000
Facts: Marcelino Recasa was the owner of two parcels of land. During his lifetime,
Marcelino contracted 3 marriages. At the time of his death in 1943, he had 15 children
from his three marriages. In 1948, his intestate estate was partitioned into three parts by
his heirs, each part corresponding to the share of the heirs in each marriage. The heirs
of the first marriage, sold their share to Dominador Recasa, an heir of the second
marriage. Dominador, representing the heirs of the second marriage, in turn sold the
share of the heirs to Quirico and Purificacion Seraspi whose heirs are the present
petitioners. In 1958, the Seraspis obtained a loan from the Kalibo Rural Bank, Inc. (KRBI)
on the security of the lands in question to finance improvements on the lands. However,
they failed to pay the loan for which reason the mortgage was foreclosed and the
lands were sold to KRBI as the highest bidder. Subsequently, the lands were sold by KRBI
to Manuel Rata, brother-in-law of Quirico Seraspi. It appears that Rata, as owner of the
property, allowed Quirico Seraspi to administer the property.
In 1974, private respondent Simeon Recasa, Marcelinos child by his third wife, taking
advantage of the illness of Quirico Seraspi, forcibly entered the lands in question and
took possession thereof. In 1983, the Seraspis purchased the lands from Manuel Rata
and afterwards filed a complaint against Simeon Recasa for recovery of possession of
the lands.
Issue:

Did the petitioners acquire ownership over the property in question?

Held: NO. For while a contract of sale is perfected by the meeting of minds upon the
thing which is the object of the contract and upon the price, the ownership of the thing
sold is not transferred to the vendee until actual or constructive delivery of the
property. Hence, the maxim non nudis pactis, sed traditione dominia dominica rerum
transferuntur (not mere agreements but tradition transfers the ownership of things).
Consequently, petitioners are not the owners of the property since it has not been
delivered to them. At the time they bought the property from Rata in 1983, the property
was in the possession of private respondent.

LAO vs. COURT OF APPEALS, G.R. No. 47013, 60647 & 60958-59, February 17, 2000
Facts: The Associated Anglo-American Tobacco Corporation (Associated) entered
into a Contract of Sales Agent with petitioner Andres Lao where Lao would sell
cigarettes manufactured and delivered by Associated. Lao would in turn remit the sale
proceeds to the corporation. During the effectivity of the contract, Lao failed to
accomplish his monthly sales report despite a demand letter sent by Associated.
Associated stopped its shipments to Lao.
Lao filed a complaint for accounting and damages against Associated. The CFI
ruled in favor of Lao and ordered both parties to undergo a court supervised
accounting of their respective account with the view of establishing the true and
correct accountability of Lao to Associated. The Audit Committee submitted its report
to the court. The committee excluded shipments by Associated covered by bill of
lading and factory invoices but without the corresponding delivery receipts.
Issue: Was the committee correct in excluding the shipments not supported by
delivery receipts although covered by bills of lading and factory consignment invoices?
Held: YES. Under Article 1497, NCC, a thing sold shall be understood as delivered
when it is placed in the control or possession of the vendee. The Audit Committee was
correct when it adopted as guideline that accountability over the goods shipped was
transferred from the corporation to Andres Lao only upon actual delivery of the goods
to him. For it is only when the goods were actually delivered to and received by Lao,
did Lao have control and possession over subject goods, and only when he had
control and possession over said goods could he sell the same.
Delivery is generally evidenced by a written acknowledgment of a person that
he or she has actually received the thing or the goods, as in delivery receipts. A bill of
lading cannot substitute for a delivery receipt. This is because it is a written
acknowledgment of the receipt of the goods by the carrier and an agreement to
transport and deliver them at a specific place to a person named or upon his order. It
does not evidence receipt of the goods by the consignee or the person named in the
bill of lading; rather, it is evidence of receipt by the carrier of the goods from the
shipper for transportation and delivery. Likewise, a factory consignment invoice is not
evidence of actual delivery of the goods. An invoice is nothing more than a detailed
statement of the nature, quantity and cost of the thing sold. It is not proof that the thing
or goods were actually delivered to the vendee or the consignee.
However, as to shipments covered only by bills of lading and factory
consignment invoices but were reported in Laos sales reports, the Audit Committee
correctly considered them in Lao's account. The fact that Lao included them in his sales
reports is an implied admission that subject goods were actually delivered to him, and
that he received the said goods for resale.
Sale with Right of Repurchase
ABAPO vs. COURT OF APPEALS, GR No. 128677, March 2, 2000
Facts: Crispula Abapo and Santiago Abapo executed in favor of Teodulfo Quimada
a contract denominated as Deed of Sale under Pacto de Retro. Under the contract,
the land was sold for P500.00 with right of repurchase within five (5) years, failing which
the conveyance would become absolute and irrevocable without the necessity of
drawing up a new deed. No redemption was made. More than seven years later,
Teodulfo Quimada sold the property to Crispula and husband Pedro Bacalao for
P500.00 . Upon the death of the spouses Bacalao, the land was alloted to their heirs in

equal individual shares and succeeded the possessions and enjoyment of the land and
paid each real estate taxes thereon to the exclusion of Santiago Abapo.
In 1990, Santiago instituted a petition for reconstitution of original certificate of title
over the property. The petition was granted. Upon the discovery of the said
reconstitution of title, the private respondents interposed a petition to surrender owners
copy of the reconstituted title in the hands ofSantiago. The trial court dismissed the
petition without prejudice to the filing of the appropriate action. Private respondents
instituted the complaint for Quieting of Title with damages. In his
answer, Santiago assailed the due execution of both the deed of sale under Pacto de
Retro and the Deed of Absolute Sale.Santiago argues that what he entered in 1967
may be considered only as an equitable mortgage in view of the unusually inadequate
consideration of P500 which was the same consideration in the Deed of Absolute Sale
in favor of spouse Bacalao executed in 1975.
Issue: Should the Deed of Absolute Sale under Pacto de Retro be considered an
equitable mortgage due to the alleged inadequacy of price?
Held: NO. The price of P500 is not unusually inadequate. The record reveals that the
assessed value of the land in dispute in 1970 was only P400. Thus, at the time of sale in
1967, the price of P500 is inadequately over and above the assessed value of P400.
Besides, the mere fact that the price is inadequate does not prove support the
conclusion that the contract was a loan or that the property was not at all sold to
Teodulfo Quimada. The price fixed in the sale with a right to repurchase is not
necessarily the true value of the land sold. The rationale is that the vendor has the right
to fix a relatively reduced price, although not a grossly inadequate one, in order to
afford the vendor a retro every facility to redeem the land. Thus, inadequacy of the
price is not sufficient to set aside a sale unless it is grossly inadequate or purely shocking
to the conscience.
Consolidation of Title in Pacto de Retro Sale
CRUZ vs. LEIS, G.R. No. 125233, March 9, 2000
Facts: Gertrudes Isidro, mother or respondents Leis, et al. obtained a loan from the
petitioner-spouses Alexander and Adelaida Cruz. The loan was secured by a mortgage
over the property covered by TCT No. 43100. Unable to pay her outstanding obligation
after the debt became due and payable, Gertrudes executed two contracts in favor
of Alexander. The first is denominated as Kasunduan which the parties concede is a
Pacto de Retro sale granting Gertrudes one year to repurchase the property. The
second is a Kasunduan ng Tuwirang Bilihan, a Deed of Absolute Sale covering the
same property per the price of P39,083.00, the same amount stipulated in the
Kasunduan. For failure of Gertrudes to repurchase the property, ownership was
therefore consolidated in the name of Alexander in whose name a new TCT was
issued. Gertrudes died. Thereafter, her heirs received demands to vacate the premises
from spouses Cruz, the new owners of the property. The private respondents responded
by filing a complaint for the nullification of sale. The trial court court ruled that the
"Kasunduan," providing for a sale con pacto de retro, had superseded the "Kasunduan
ng Tuwirang Bilihan," the deed of absolute sale. It was likewise found that Gertrudes as
well as private respondents failed to repurchase the property within the period
stipulated and has lost all their rights to it. Nonetheless, the trial court and the CA
found for private respondents. It rationalized that spouses Cruz failed to comply with
the provisions of Article 1607 of the Civil Code requiring a judicial order for the

consolidation of the ownership in the vendee a retro to be recorded in the Registry of

Property.
Issue: Is the recording in the Registry of Property of the consolidation of ownership of
the vendee a condition sine qua non to the transfer of ownership?
Held: NO. Art. 1607, NCC requiring a judicial order for the consolidation of the
ownership in the vendee a retro to be recorded in the Registry of Property is intended
to minimize the evils which the pacto de retro sale has caused in the hands of usurers.
A judicial order is necessary in order to determine the true nature of the transaction
and to prevent the interposition of buyers in good faith while the determination is being
made. Notwithstanding Art. 1607, the recording in the Registry of Property of the
consolidation of ownership of the vendee is not a condition sine qua non to the transfer
of ownership. Petitioners are the owners of the subject property since neither Gertrudes
nor the co-owners redeemed the same within one year stipulated in the Kasunduan.
The essence of the pacto de retro sale is that title and ownership of the property sold
are immediately vested in the vendee a retro, subject to the resolutory condition of
repurchase by the vendor a retro within the stipulated period. Failure thus of the vendor
a retro to perform said resolutory condition vests upon the vendee by operation of law
absolute title and ownership over the property sold. As title is already vested in the
vendee a retro, his failure to consolidate his title under Article 1607, NCC does not
impair such title or ownership for the method prescribed thereunder is merely for the
purpose of registering the consolidated title.
DOUBLE SALE
BARICUATRO, JR. vs. COURT OF APPEALS, G.R. No. 105902, February 9, 2000
Facts: On October 16, 1968, petitioner Severino Baricuatro, Jr., bought 2 lots on an
installment basis from respondent Constantino Galeos. Baricuatro, however, was
unable to pay the full amount to Galeos. At the time the original action for quieting of
title was filed in the trial court, Baricuatro had an unpaid balance of P4,000.00. The titles
to the said lots remained in the name of Galeos. The contract of sale involving Lot No.
10 expressly provided that "the parties both agree that a final deed of sale shall be
executed, in favor of the buyer upon full and complete payment of the total purchase
price agreed upon." After the sale, Baricuatro introduced certain improvements on the
said lots and started to reside therein in 1970. Since then he has been in actual and
physical possession of the 2 lots. However, on December 7, 1968, Galeos sold the
entire subdivision, including the 2 lots, to Eugenio Amores. Subsequently, Baricuatro was
informed by Galeos about the sale to Amores and was advised to pay the balance of
the purchase price of the 2 lots directly to Amores. After the sale of the entire
subdivision to Amores, he allegedly took possession thereof and developed the same
for residential purposes and registered the deed of sale.
Thereafter, Amores sold the 2 lots to the spouses Mariano and Felisa Nemenio. Prior
to the sale, however, Baricuatro was informed through a letter by Amores about the
impending sale of the lots but the former failed to respond. The spouses Nemenio
caused the transfer of the titles to the said lots and the issuance of tax declarations in
their names. Thereafter, the spouses Nemenio demanded from Baricuatro to vacate
the said lots but the latter refused to do so.
Issue:

Who has better right over the lots in dispute?

Held: Petitioner Baricuatro as the first buyer has better right over the disputed lots.
Although Amores as the second buyer had caused the registration of the Deed of Sale,
the prior registration of the disputed property by the second buyer does not by itself
confer ownership or a better right over the property. Article 1544,NCC requires that
such registration must be coupled with good faith. Primus tempore, potior jure(first in
time, stronger in right). Knowledge gained by the first buyer of the second sale cannot
defeat the first buyer's rights except where the second buyer registers in good faith the
second sale ahead of the first. Such knowledge of the first buyer does not bar him from
availing of his rights under the law, among them, to register first his purchase as against
the second buyer. But in converso, knowledge gained by the second buyer of the first
sale defeats his rights even if he is first to register the second sale, since such knowledge
taints his prior registration with bad faith. This is the price exacted by Art. 1544 for the
second buyer being able to displace the first buyer; that before the second buyer can
obtain priority over the first, he must show that he acted in good faith throughout (i.e. in
ignorance of the first sale and of the first buyer's rights) from the time of acquisition
until the title is transferred to him by registration or failing registration, by delivery of
possession. The second buyer must show continuing good faith and innocence or lack
of knowledge of the first sale until his contract ripens into full ownership through prior
registration as provided by law. It does not appear that Amores was in good faith when
he registered the sale.
Assuming arguendo that Amores was in good faith, there is no showing in the
assailed decision that he continued to act in good faith as required by Art. 1544. A
careful and thorough scrutiny of the records of this case reveals that Amores did not
act in good faith when he registered his title. Moreover, the preponderance of
evidence supports the finding that he already had knowledge of the previous sale of
the disputed lots to Baricuatro. Such knowledge tainted his registration with bad faith.
To merit protection under Art. 1544, the second buyer must act in good faith from the
time of the sale until the registration of the same.
DOUBLE SALE; INTERPRETATION OF CONTRACT
ANGEL BAUTISTA vs. COURT OF APPEALS, G.R. No. 123655, January 19, 2000
Facts: On April 13, 1977, respondents Atienzas sold to petitioner Angel Bautista a
parcel of land inTagaytay City, for P1.5M. At the time of the sale, the lot was still
registered in the names of the deceased parents of the Atienzas. The sale is subject to
the following terms and conditions, to wit:
a. P10,000.00 upon signing of the contract;
b. P90,000.00 upon the Atienzas presentation to Bautista of a new certificate of title of
the property subject of the sale, registered in their name. However, the buyer may
advance the necessary amount to the sellers for payment of their taxes which might be
required by the Register of Deeds of Tagaytay City before the TCT from the registered
owners to the sellers can be effected but not exceeding P90,000.00. Any and all cash
advances made by the buyer to the sellers shall be deducted from the second
payment of P90,000.00. Bautista made the initial payment of P10,000.00.
In July 1977, the Atienzas wrote a letter to Bautista, asking P50,000.00 for the
inheritance and realty taxes due on the subject property and other incidental expenses
to facilitate the transfer of the title of the subject property in their names. Bautista
refused to give the additional money arguing that advance payment would be
discretionary on his part. Hence, the Atienzas cancelled the contract to sell the subject
land.

Meanwhile, Bautista discussed with the Chairman of the Board of Realty Baron
Corporation (RBC) the possible sale of the subject property in favor of RBC which
however, did not push through.
In October, 1978 the Atienzas were able to secure title over subject land.
Thereafter, they sold a portion of the land to RBC. TCT was issued in the name of RBC.
Issues: 1. Do the Atienzas have the right to rescind the contract of sale because of
Bautista's refusal to advance the payment intended to pay for taxes and other fees?
2. Is the sale of a portion of the land by the Atienzas to RBC valid?
Held:

1. No. The Atienzas have no right to rescind the contract.

The rule is that where the language of a contract is plain and unambiguous, its
meaning should be determined without reference to extrinsic facts or aids. The
intention of the parties must be gathered from that language, and from that language
alone unless some good reason can be assigned to show that the words used should
be understood in a different sense. In the case at bar, the provision of the Contract of
Sale is plain and unambiguous that Bautista as buyer MAY advance to the Atienzas as
sellers the necessary amount (not exceeding P90,000.00) for the payment of such taxes
as may be required before the TCT in favor of the sellers can be effected. The use of
the word MAY meant that Bautista has the discretion whether or not to advance the
P90,000.00. He has no duty to do it. It is purely optional on his part. Thus, Bautista did not
violate the contract when he refused to pay the advance money.
2. No. Under Article 1544 of the Civil Code before the second buyer can obtain
priority over the first, he must show that he acted in good faith throughout (i.e., in
ignorance of the first sale and of the first buyer's rights) from the time of acquisition
until title is transferred to him by registration or failing registration, by delivery of
possession. RBC cannot pretend to be a buyer in good faith. In Uraca vs. Court of
Appeals, the SC held that " . . . knowledge gained by the second buyer of the first sale
defeats his rights even if he is first to register the second sale, since such knowledge
taints his prior registration with bad faith. There is no dispute that RBC knew that Bautista
was the first buyer of the subject lot. Its initial plan was to buy the whole lot from
Bautista. It changed its plan only when it found squatters on the hilly portion of the
property. Thus, it cannot claim the right of an innocent purchaser for value.
"One who purchases real estate with knowledge of a defect or lack of title in his
vendor cannot claim good faith as well as one who has knowledge of facts which
should have put him upon such inquiry or investigation as might be necessary to
acquaint him with the defects in the title of his vendor. . . His mere refusal to believe
that such defect exists, or his willful closing of his eyes to the possibility of existence of a
defect in the vendor's title, will not make him an innocent purchaser for value if it
afterwards develop that title was in fact defective and it appears that he had such
notice of defect as would have led to its discovery had he acted with that measure of
precaution which may reasonably be required of a prudent man in a like situation."

VOID CONTRACT OF SALE AND ITS EFFECTS

CAVITE DEVELOPMENT BANK VS. CYRUS LIM, G.R. No. 131679, February 1, 2000
Facts: A certain Rodolfo Guansing obtained a loan from Cavite Development Bank
(CDB), to secure which he mortgaged a parcel of land. Upon default of Rodolfo in the
payment of his loan, the mortgaged property was sold to CDB in a foreclosure sale held
in March, 1984. In June, 1988, private respondent Lolita Chan Lim offered to purchase
the property from CDB. Pursuant to the terms of the offer, Lim paid CDB P30,000.00 as
Option Money. However, after some time following up the sale, Lim discovered that the
title of subject property was originally registered in the name of Perfecto Guansing,
father of mortgagor Rodolfo, and that title of Rodolfo was cancelled on March 23, 1984
by the RTC of Q.C as it was fraudulently secured by the latter. This decision has since
become final and executory. Spouses Lim filed an action for specific performance and
damages against CDB and its mother company FEBTC for the latters alleged
misrepresentation on their ability to sell the property. The trial court rendered a decision
in favor of spouses Lim. It held CDB and FEBTC liable for damages (P250,000.00 as moral
damages; P50,000.00 as exemplary and P30,000.00 as attoryneys fees) arising from the
impossibility of the performance of their obligation under the perfected contract of
sale.
Issue: Is the contract of sale between petitioners CDB and FEBTC and respondents Lim
valid? If not, what is the effect of the nullity of the contract?
Held: No. CDB does not have a valid title over the property sold. Under Art. 1459
NCC, at the time of delivery or consummation stage of the sale, it is required that the
seller be the owner of the thing sold. Otherwise, he will not be able to comply with his
obligation to transfer ownership to the buyer.
The foreclosure sale from which CDB derived its title over the property cannot be
given effect: 1) Rodolfo, the mortgagor did not have a valid title over the property
sold. Being a sale, the rule that the seller must be the owner of the thing sold also
applies in a foreclosure sale. This is the reason Art. 2085 NCC, requires, among other
things, that the mortgagor or pledgor be the absolute owner of the thing pledged or
mortgaged, in anticipation of a possible foreclosure sale should the mortgagor default
in the payment of the loan; and 2) Neither can the foreclosure sale be given effect
based on the doctrine of the mortgagee in good faith which provides the rule that all
persons dealing with property covered by a Torrens Certificate of Title, as buyers or
mortgagees, are not required to go beyond what appears on the face of the title.
CDB cannot be considered a mortgagee in good faith because it failed to observe its
duty of diligence in ascertaining the validity of Rodolfos title, as is required of banking
institutions. It appears that Rodolfo obtained his fraudulent title by executing an ExtraJudicial Settlement of the Estate With Waiver where he made it appear that he and
Perfecto were the only surviving heirs entitled to the property, and that Perfecto had
waived all his rights thereto. This self-executed deed should have placed CDB on guard
against any possible defect in or question as to the mortgagor's title. Indeed, CDB and
FEBTC admit that they are aware that the subject land was being occupied by persons
other than Rodolfo and that said persons, who are the heirs of Perfecto, contest the title
of Rodolfo.
Pursuant to Article 1412(2) of the Civil Code, spouses Lim, being the non-guilty
parties, are entitled to recover the P30.000.00 option money paid by them with interest
at the legal rate to be computed from the date of the filing of the complaint.
However, under this provision, prior demand is necessary in order that the obligation to
return what was given becomes legally demandable. The filing of the action for

damages against CDB and FEBTC amounted to a demand by respondents Lim for the
return of their money. Considering CDB's negligence, the latter is liable to pay moral
damages on the basis of Arts. 21 and 2219 of the Civil Code and the SCs ruling in Tan v.
CA that moral damages may be recovered even if a bank's negligence is not
attended with malice and bad faith. However, the sum of P250,000.00 awarded by the
trial court is excessive. Moral damages are only intended to alleviate the moral
suffering undergone by respondents Lim, not to enrich them at the expense of CDB and
FEBTC. Accordingly, the award of moral damages must be reduced to P50,000.00.
Likewise, the award of P50,000.00 as exemplary damages and P30,000 as attorneys
fees, although justified under the Civil Code is reduced for being excessive.
Legal Redemption
FRANCISCO vs. BOISER, G.R. No. 137677, May 31, 2000
Facts: Petitioner Adalia Francisco, three of her sisters, and their mother Adela Blas,
were co-owners of land on which stands a commercial building. On August 1986,
without the knowledge of the other co-owners, Adela Blas sold her 1/5 share to
respondent Zenaida Boiser.
On August 5, 1992, Francisco received summons concerning a complaint filed by Boiser
demanding her share in the rentals from the tenants of the building. Francisco then
informed Boiser that she was exercising her right of redemption. On August 12, 1992, she
deposited the redemption price with the Court.
On September 14, 1995, Francisco filed a case in court for legal redemption alleging
that the 30-day period for redemption under Art. 1623, NCC had not yet expired since
the vendor, Blas, never informed her and the other owners about the sale to
respondent. Boiser, however, claims that Francisco had knowledge of the sale as early
as May 30, 1992 when she sent Francisco a letter with a copy of the deed of sale
between her (Boiser) and Blas attached, informing petitioner of the sale and
demanding that rentals corresponding to her 1/5 share of the property be remitted to
her. The trial court dismissed the complaint for legal redemption holding that Art. 1623
does not prescribe any form of notifying co-owners about a sale of co-owned property
to enable them to exercise legal redemption. The court considered the May 30,1992
letter with the copy of the deed of sale as substantial compliance with the required
notice under Art. 1623. Consequently, the 30-day period of redemption should be
counted not from August 5, 1992, when petitioner received the summons, but at the
latest from June 8, 1992, the date petitioner wrote the tenants of the building advising
them to continue paying rentals in full to her.
Issue: Can the May 30, 1992 letter by Boiser to Francisco notifying her of the sale of be
considered compliance with the notice requirement of Art. 1623 for the purposes of
legal redemption?
Held: NO. Art. 1623 of the Civil Code is clear in requiring that the written notification
should come from the vendor or prospective vendor, not from any other person. There
is, therefore, no room for construction. Indeed, the principal difference between Art.
1524 of the former Civil Code and Art. 1623 of the present one is that the former did not
specify who must give the notice, whereas the present one expressly says the notice
must be given by the vendor. Effect must be given to this change in statutory
language. In the second place, it makes sense to require that the notice required in
Art. 1623 be given by the vendor and by nobody else. The vendor of an undivided
interest is in the best position to know who are his co-owners who under the law must
be notified of the sale. It is the notification from the seller, not from anyone else, which

can remove all doubts as to the fact of the sale, its perfection, and its validity, for in a
contract of sale, the seller is in the best position to confirm whether consent to the
essential obligation of selling the property and transferring ownership thereof to the
vendee has been given.
Now, it is clear that by not immediately notifying the co-owner, the vendor can
effectively prevent the exercise of right of redemption. In the present case, the sale
took place in 1986 but kept secret until 1992. It is, therefore, unjust when the subject sale
has already been established before both lower courts and now, before this Court, to
further delay petitioner's exercise of her right of legal redemption by requiring that
notice be given by the vendor before petitioner can exercise her right. For this reason,
we rule that the receipt by petitioner of summons on August 5, 1992 constitutes actual
knowledge on the basis of which petitioner may now exercise her right of redemption
within 30 days from finality of this decision.
Validity of Stipulations in a Lease Contract
CAMPO ASSETS CORP. vs. CLUB X. O. COMPANY, G.R. NO. 134986, MARCH 17, 2000
Facts: Alma Arambulo (Arambulo) used to operate a food and entertainment
business establishment inPasay City pursuant to a Memorandum of Agreement (MOA)
executed in 1991 between her husband and Campo Assets which had a contract of
lease with the owner of the subject premises. The MOA was renewed in 1993. It appears
that sometime in June, 1994, Arambulo and Chan York Gui (Allan) entered into a
partnership registered as Club X.O. Company, for the operation of the business. Club
X. O. operated the business and introduced improvements thereon. In 1996, Campo
Assets took possession of the club's premises, claiming that Arambulo had abandoned
the premises and that the re-taking was pursuant to Paragraph VI of the MOA between
Arambulo and Campo Assets, which reads:
"VI. In case the premises shall be deserted or vacated before the expiration of
this Agreement, the FIRST PARTY shall have the right to enter the same as the agent of
the SECOND PARTY either by force or otherwise, without being liable to any prosecution
thereof, and the FIRST PARTY shall furthermore have the option to retake and operate
the business itself or relet the same as agent of the SECOND PARTY xxx.
Consequently, Club X. O. represented by Allan filed a complaint for forcible entry
to recover possession of the premises and damages.
The case was dismissed for lack of merit. The court held that the act of Campo
Assets in taking possession is pursuant to Par. VI of the MOA, which stipulation is valid,
being in the nature of a resolutory condition which is not proscribed by law.
Issue: Is the stipulation in Par. VI of the lease contract void for being contrary to
public order and public policy?
Held: YES. The stipulation is void. Although Par. VI of the MOA employs the prefatory
words "in case the premises shall be deserted or vacated before the expiration of the
Agreement", which would restrict the operation of the clause to situations wherein the
premises are in fact vacated already, and would therefore imply that the re-entry with
the use of force if at all, is against property only, the stipulation would not proscribe retaking by use of force against persons despite the fact that the premises are still in the
actual possession of another, albeit under a questioned right. Moreover, there is no
requirement of notice before re-entry. Jurisprudence supports the view that when
parties to a contract expressly reserve an option to terminate or rescind a contract
upon the violation of a resolutory condition, notice of resolution must be given to the
other party when such right is exercised. In Zulueta vs. Mariano, the SC ruled that resort
to courts may be necessary when the right involves the retaking of property which is

not voluntarily surrendered by the other party. The rationale for such ruling is based on
the thesis that no one should take the law into his own hands. In this sense, the
stipulation is legally vulnerable. Permitting the use of unqualified force to repossess the
property and without condition of notice upon the lessee is fraught with dangerous
possibilities. Such a broad stipulation cannot be sanctioned for the reason that it would
allow the lessor/owner to take the law into his own hands, and undermine the
philosophy behind the remedy of forcible entry which is to prevent breach of the
peace and criminal disorder and to compel the party out of possession to respect and
resort to the law alone to obtain what he claims to be his.
Nature of Lease of Chattels
JARDIN vs. NLRC, G.R. No. 119268, February 23, 2000
Facts: Petitioners were drivers of private respondent, Philjama International, Inc. (PII),
a domestic corporation engaged in the operation of Goodman Taxi. Petitioners
used to drive PIIs taxicabs every other day on a 24-hr. work schedule under the
boundary system. Under this arrangement, the petitioners earned an average of P400
daily. Nevertheless, PII deducts from said daily earnings P30.00 for the washing of the
taxi units. Believing that the deduction is illegal, petitioners decided to form a labor
union to protect their rights, however their plans were cut short by their dismissal.
Petitioners filed a complaint for unfair labor practice and illegal dismissal with the labor
arbiter, who dismissed said complaint. On appeal, the NLRC dismissed the case on the
ground of lack of jurisdiction over the case as petitioners and private respondent have
no employer-employee relationship but rather a leasehold agreement which is
covered under the Civil Code.
Issue:

Is there a lessor-lessee relationship between petitioners and PII?

Held: NO. In the lease of chattels, the lessor loses complete control over the chattel
leased although the lessee cannot be reckless in the use thereof, otherwise, he would
be responsible for the damages to the lessor. In the case of jeepney owners/operators
and jeepney drivers, the former exercise supervision and control over the latter. The
management of the business is in the owners hands. The owner as holder of the
certificate of public convenience must see to it that the driver follows the route
prescribed by the franchising authority and the rules promulgated as regards its
operations. This relationship may be applied by analogy to taxi owners/operators and
taxi drivers.
Right of First Refusal of a Lessee
SEN PO EK MARKETING CORP. vs. MARTINEZ, G.R. No. 134117, February 9, 2000
Facts: Sofia Martinez was the registered owner of 2 parcels of land who leased the
lots to Yu Siong, father of the president and stockholders of petitioner Sen Po Ek for a
period of 10 years. When the lease expired it was later renewed several times, the last
renewal being on March 1982 which is to expire on Jan. 1987. In the
meantime, Sofia sold the lots and the building to her daughter, respondent Teodora
Martinez. After the lease contract expired in Jan. 1987, it was no longer renewed by
the parties. Sen Po Ek, however, continued to possess and occupy the leased
properties, and regularly paid the monthly rentals to Sofia until her death, and then to
her heirs through Teodora. In 1989, Teodora sent a letter to petitioner Sen Po Ek
informing it of her intention to sell the leased premises and authorizing a broker to

negotiate the sale "with any and all interested parties." Sen Po Ek offered to purchase
the poperty. Another buyer, Tiu Uyping, was also interested. Sen Po Ek then filed a
complaint for the annulment of the sale executed by Sofia in favor of Teodora, invoking
its alleged right of first refusal or preferential right to buy the leased premises Days later,
the property was sold to Tiu Uyping. Sen Po Ek amended its complaint, praying for the
nullity of the second sale transaction.
Issue:

Does petitioner Sen Po Ek have a right of first refusal?

Held: NO. Sen Po Ek does not have a right of first refusal to assert against private
respondents. Neither any law nor any contract grants it preference in the purchase of
the leased premises. Petitioner cites P.D. No. 1517, R.A. No. 1162 and Art. 1622,NCC but
they are not applicable to the case at bar. P.D. No. 1517(The Urban Land Reform Act)
pertains to areas proclaimed as urban land reform zones. The lots in dispute are
located in Tacloban City, which has not been declared as an urban land reform zone.
R.A. No. 1162, on the other hand, only deals with expropriation of parcels of land
located in the City of Manila, which the leased premises are not. Finally, Art. 1622, NCC
only deals with small urban lands that are bought for speculation where only adjoining
lot owners can exercise the right of pre-emption or redemption. Sen Po Ek is not an
adjoining lot owner, but a lessee trying to buy the land that it was leasing. Indeed the
right of first refusal may be provided for in a lease contract. However in this case, such
right was never stipulated in any of the several lease contracts between Sen Po Ek and
Sofia. Sen Po Ek claims that it was Teodora herself who assured them that they can
have the first priority to buy the subject parcels of land, but there is absolutely no proof
of this. Such grant of the right of first refusal must be clearly embodied in a written
contract, but there is none in the present case.
Renewal of Term of Lease
BUCE vs. COURT OF APPEALS, G.R. No. 136913, May 12, 2000
Facts: Petitioner entered into a lease contract over a parcel of land with private
respondents Tiongcos for a period of 15 years to commence on June 1979 and to end
on June 1994 "subject to renewal for another 10 years, under the same terms and
conditions." Petitioner then constructed a building and paid the required monthly
rentals. When private respondents later demanded an increase in the rent, petitioner
offered to pay the previous lower rental which the former refused to accept.
On August 1993, petitioner filed with the RTC a complaint for specific performance
praying that private respondents be ordered to accept the rentals she tendered and
to respect the lease of fifteen years, which was renewable for another ten years.
Issue: Can it be reasonably inferred that the parties intended an automatic renewal
of the lease contract when they stipulated that the lease shall be for a period of 15
years "subject to renewal for another 10 years"?
Held: NO. There is nothing in the stipulations in the contract and the parties
actuation that shows that the parties intended an automatic renewal or extension of
the term of the contract. The fact that the lessee was allowed to introduce
improvements on the property is not indicative of the intention of the lessors to
automatically extend the contract. Neither the filing of the complaint a year before the
expiration of the 15-year term has any bearing on the intention of the parties regarding
renewal. In the case at bar, it was not specifically indicated who may exercise the
option to renew, neither was it stated that the option was given for the benefit of herein
petitioner. Thus, pursuant to Art. 1196, NCC, the period of the lease contract is deemed

to have been set for the benefit of both parties. Renewal of the contract may be had
only upon their mutual agreement or at the will of both of them. It is the owner-lessors
prerogative to terminate the lease at its expiration. The continuance, effectivity and
fulfillment of a contract of lease cannot be made to depend exclusively upon the free
and uncontrolled choice of the lessee between continuing the payment of the rentals
or not, completely depriving the owner of any say in the matter. Mutuality does not
obtain in such a contract of lease and no equality exists between the lessor and the
lessee since the life of the contract would be dictated solely by the lessee.
Extension of Lease
UNIVERSITY PHYSICIANS SERVICES, INC. vs. COURT OF APPEALS
G.R. No. 115045, January 31, 2000
Facts: Spouses Lourdes and Fausto Mabanta and University Physicians Services, Inc.
(UPSI) entered into a lease agreement, commencing on June 1, 1973 and ending on
May 31, 1983, with a provision that the period of this lease may be extended for
another period of 5 years subject only to re-negotiation of rentals, which renegotiations should start not less than 6 months prior to the termination of the original
period of this lease.
On May 12, 1983, UPSI informed the spouses that it is exercising its option to extend
the lease for another period of 5 years and that it is willing to negotiate the rentals. The
spouses, through their lawyers, answered that since there was no renegotiation on the
rentals which should have started not less than 6 months prior to the termination of the
original period, there are no rights which have arisen thereunder. UPSI insisted on its
right to extend the lease.
Meanwhile, the lease was terminated upon the filing of the unlawful detainer case
by the spouses, which was ultimately resolved against UPSI in the IAC.
On November 21, 1985, Spouses Mabanta filed a complaint for Compensation and
Damages against UPSI before the RTC of Pasig claiming that despite the lapse of the
original period of the lease, the latter continuously occupied and used the leased
premises without paying the necessary rent. The trial court granted the claim of the
spouses. On appeal, the CA affirmed the decision of the trial court with some
modifications. Hence, this appeal.
Issue: Does UPSI have the right to extend the duration of the lease under the terms of
the lease agreement?
Held: NO. The provisions of a contract should not be read in isolation from the rest of
the instrument but, on the contrary, interpreted in the light of the other related
provisions in order to fix the meaning of any of its parts. A careful reading of the
renewal clause yields no basis for recognizing an exclusive unilateral right on the part of
the lessee to extend the term of the lease for another 5 years. The word extended
was qualified by the word may be which connotes possibility; it does not connote
certainty. The extension clearly was premised on the act of both parties, i.e.,
renegotiation of rentals, which should start not less than 6 months prior to the
termination of the original period of the lease. Furthermore, in a reciprocal contract
like a lease, the period of the lease must be deemed to have been agreed upon for
the benefit of both parties, absent language showing that the term was deliberately set
for the benefit of the lessee or lessor alone.
UPSI failed to comply with the 6 month
period, hence, no extension of the lease in its favor has arisen.

Concept of Implied New Lease

ROSELLO-BENTIR vs. LEANDA, G.R. No. 128991, April 12, 2000
Facts: Respondent Leyte Gulf Traders, Inc. (LGTI) entered into a contract of lease of a
parcel of land with Bentir for a period of 20 years starting May 5, 1968, which was
extended for another 4 years or until May 31, 1992. In 1989, Bentir sold the leased
premises to spouses Pormada. LGTI questioned the sale alleging that it had a right of
first refusal. On May 15, 1992, LGTI filed a complaint for reformation of the expired
contract of lease to incorporate therein, the verbal agreement between the parties
that in the event Bentir leases or sells the lot after the expiration of the lease, LGTI has
the right of first refusal or the right to equal the highest offer. The complaint was
dismissed on the ground of prescription. On LGTIs motion for reconsideration,
respondent judge reversed the order of dismissal on the ground that the action for
reformation had not yet prescribed.
Bentir and Spouses Pormada filed a petition for certiorari to the CA seeking the
annulment of the order of respondent court. In holding that the action for reformation
has not prescribed, the CA upheld the ruling of the trial court that the 10-year
prescriptive period should be reckoned not from the execution of the contract of lease
in 1968, but from the date of the alleged 4-year extension of the lease contract after it
expired in 1988. Consequently, when the action for reformation of instrument was filed
in 1992 it was within 10 years from the extended period of the lease. LGTI theorized, and
the CA agreed, that the extended period of lease was an "implied new lease" within
the contemplation of Article 1670 of the Civil Code, under which provision, the other
terms of the original contract were deemed revived in the implied new lease.
Issue: Has the complaint for reformation of instrument filed by respondent Leyte Gulf
Traders, Inc. prescribed?
Held: YES. The prescriptive period should be counted from the date of execution of
the lease contract and not from the date of extension of the same. First, Art. 1670
speaks of an implied new lease (tacita reconduccion) where at the end of the
contract, the lessee continues to enjoy the thing leased "with the acquiescence of the
lessor", so that the duration of the lease is "not for the period of the original contract,
but for the time established in Article 1682 and 1687." Hence, if the extended period of
lease was expressly agreed upon by the parties, as in the present case, then the term
should be exactly what the parties stipulated, not more, not less. Second, even if the
supposed 4-year extended lease be considered as an implied new lease under Art.
1670, "the other terms of the original contract" contemplated in said provision are only
those terms which are germane to the lessees right of continued enjoyment of the
property leased. The prescriptive period of 10 years provided for in Art. 1144 for
reformation of an instrument applies by operation of law, not by the will of the parties.
Therefore, the right of action for reformation accrued from the date of execution of the
contract of lease in 1968. As the action was filed only in 1992 or 24 years after the
cause of action accrued, the same has become stale, hence, time-barred.

CREDIT TRANSACTIONS
Escalation Clause; Interest
BANCO FILIPINO SAVINGS & MORTGAGE BANK vs. COURT OF APPEALS
G.R. No. 129227, May 30, 2000
Facts: Respondent-spouses Arcilla obtained loans secured by real estate mortages
from the petitioner Banco Filipino Savings and Mortgage Bank (BANK) where the BANK
may increase the rate of interest on said loans, within the limits allowed by law, as its
Board of Directors may prescribe for its borrowers. At that time, under the Usury Law, as
amended, the maximum rate of interest for loans secured by real estate mortgages
was 12% per annum.
On January 1976, the Central Bank of thePhilippines issued CB Circular No. 494,
increasing the maximum interest rate at 19% per annum. On October 1978, spouses
Arcilla received from the BANK their "Statement of Account" on their loan accounts with
interest computed computed at 17% per annum. It turned out that the BANK
unilaterally increased the rate of interest on the loan account from 12% as provided in
their REM agreement to 17% based on the authority of the aforequoted CB Circular.
Upon failure of the spouses Arcilla to pay the amortizations due, the bank then filed a
petition for extrajudicial foreclosure, where at the auction, the bank purchased the
property.
On September 1985, the spouses Arcilla filed a complaint for the annulment of
the loan contracts and foreclosure sale. They contend, among others, that the loan
contracts and mortgages between the parties were null and void because: (a) the
rate of interests charged by the BANK were usurious; (b) that they are entitled to the
refund inasmuch as the escalation clause incorporated in the loan contracts do not
have a corresponding de-escalation clause and is therefore illegal.
Issue: Is the unilateral increase in interest rate made by petitioner based on an
escalation clause in their contract valid?
Held: NO. The unilateral increase in interest is not valid. The loan contracts with real
estate mortgage entered into by and between the petitioner and respondents stated
that the petitioner may increase the interest on said loans, within the limits allowed by
law, as petitioner's Board of Directors may prescribe for its borrowers. At the time the
contracts were entered into, said escalation clause was valid. It was only pursuant to
P.D. No. 1684 which became effective March 1980 wherein to be valid, escalation
clauses should provide: 1) that there can be an increase in interest if increased by law
or by the Monetary Board; and 2) in order for such stipulation to be valid, it must
include a provision for the reduction of the stipulated interest in the event that the
maximum rate of interest is reduced by law or by the Monetary Board. Despite the
validity of the escalation clause, the petitioner may not, however, increase the
stipulated interest pursuant to the Central Bank Circular 494 from 12% to 17%. CB
Circular 494, although it has the force and effect of law, is not a law and is not the law
contemplated by the parties which authorizes the petitioner to unilaterally raise the
interest rate of the loan. Consequently, the reliance by the petitioner on Central Bank
Circular 494 to unilaterally raise the interest rates on the loan in question was without
any legal basis.

Real Estate Mortgage

ROBLES vs. COURT OF APPEALS, G.R. No. 123509, March 14, 2000
Facts: The property subject of this case is originally owned by Leon Robles. When he
died, it passed to his son Silvino who declared the property in his name and paid the
taxes thereon. Upon the latters death, his widow and children inherited the property.
Petitioners Lucio Robles, et al. were the children of Silvino, and Hilario Robles is their halfbrother. The task of cultivating was assigned to Lucio while the payment of the land
taxes was entrusted to Hilario. For unknown reason, the tax declaration of the parcel of
land in the name of Silvino was cancelled and transferred to Exequiel Ballena. Ballena
secured a loan from Antipolo Rural Bank using the tax declaration as security.
Somehow the tax declaration was transferred to the name of Antipolo Rural Bank and
later was transferred to the name of respondent- spouses Hilario and Andrea Robles.
Andrea secured a loan from Cardona Rural Bank using the tax declaration as security.
For failure to pay the mortgage debt, the property was foreclosed with Cardona Rural
Bank emerging as the highest bidder. The bank sold the property to spouses Vergel
and Ruth Santos. In Sept. 1987, petitioners discovered the mortgage and attempted to
redeem the property but was unsuccessful. In 1988, the spouses Santostook possession
of the propertry and was able to secure a Free Patent. Petitioners then filed an action
for quieting of title. Respondents questioned their standing to sue for quieting of title,
contending that petitioners no longer have any interest to the property in question due
to the mortgage effected by Hilario and the consequent foreclosure thereof by the
Bank. Respondents argued that Hilario had become the absolute owner of the
property at the time he mortgaged the same.
Issue:

Is the real estate mortgage constituted by Hilario valid?

Held: NO. In a real estate mortgage contract, it is essential that the mortgagor be
the absolute owner of the property to be mortgaged; otherwise, the mortgage is void.
In the present case, it is apparent that Hilario was not the absolute owner of the entire
subject property; and that the Rural Bank of Cardona, Inc., in not fully ascertaining his
title thereto, failed to observe due diligence and, as such, was a mortgagee in bad
faith. Buyers of unregistered real property, especially banks, must exert due diligence in
ascertaining the titles of mortgagors and sellers, lest some innocent parties be
prejudiced. Failure to observe such diligence may amount to bad faith and may result
in the nullity of the mortgage, as well as of the subsequent foreclosure and/or auction
sale. Considering that Hilario can be deemed to have mortgaged the disputed
property not as absolute owner but only as a co-owner, he can be adjudged to have
disposed to the Rural Bank of Cardona, Inc., only his undivided share therein. The said
bank, being the immediate predecessor of the Santos spouses, was a mortgagee in
bad faith. Thus, justice and equity mandate the entitlement of the Santos spouses, who
merely stepped into the shoes of the bank, only to what legally pertains to the latter
Hilario's share in the disputed property.
Rights of a Mortgagee
ISAGUIRRE vs. DE LARA, G.R. No. 138053, May 31, 2000
Facts: Petitioner Isaguirre and respondent De Lara were parties in a case involving a
parcel of land wherein there was dispute as to its ownership as well as the nature of the
transaction they entered into regarding the disputed land. The case was resolved by

the Supreme Court which declared that De Lara was the lawful owner of the land and
held that the contract they entered into was an equitable mortgage and not a sale.
On the basis of the Courts decision, De Lara filed a motion for execution with the
trial court for the delivery of possession of the land. Isaguirre opposed the motion,
asserting that, as mortgagee, he had the right of retention over the property pending
actual payment of the loan by De Lara.
Issue: Is Isaguirre, as mortgagee, entitled to retain possession of the subject property
until payment of the loan?
HELD: NO. A MORTGAGE IS A CONTRACT ENTERED INTO IN ORDER TO SECURE THE
FULFILLMENT OF A PRINCIPAL OBLIGATION. IT IS CONSTITUTED BY RECORDING THE
DOCUMENT IN WHICH IT APPEARS WITH THE PROPER REGISTRY OF PROPERTY, ALTHOUGH,
EVEN IF IT IS NOT RECORDED, THE MORTGAGE IS NEVERTHELESS BINDING BETWEEN THE
PARTIES. THUS, THE ONLY RIGHT GRANTED BY LAW IN FAVOR OF THE MORTGAGEE IS TO
DEMAND THE EXECUTION AND THE RECORDING OF THE DOCUMENT IN WHICH THE
MORTGAGE IS FORMALIZED. AS A GENERAL RULE, THE MORTGAGOR RETAINS
POSSESSION OF THE MORTGAGED PROPERTY SINCE A MORTGAGE IS MERELY A LIEN AND
TITLE TO THE PROPERTY DOES NOT PASS TO THE MORTGAGEE. HOWEVER, EVEN THOUGH
A MORTGAGEE DOES NOT HAVE POSSESSION OF THE PROPERTY, THERE IS NO
IMPAIRMENT OF HIS SECURITY SINCE THE MORTGAGE DIRECTLY AND IMMEDIATELY
SUBJECTS THE PROPERTY UPON WHICH IT IS IMPOSED, WHOEVER THE POSSESSOR MAY BE,
TO THE FULFILLMENT OF THE OBLIGATION FOR WHOSE SECURITY IT WAS CONSTITUTED. IF
THE DEBTOR IS UNABLE TO PAY HIS DEBT, THE MORTGAGE CREDITOR MAY INSTITUTE AN
ACTION TO FORECLOSE THE MORTGAGE, WHETHER JUDICIALLY OR EXTRAJUDICIALLY,
WHEREBY THE MORTGAGED PROPERTY WILL THEN BE SOLD AT A PUBLIC AUCTION AND
THE PROCEEDS THEREFROM GIVEN TO THE CREDITOR TO THE EXTENT NECESSARY TO
DISCHARGE THE MORTGAGE LOAN. REGARDLESS OF ITS POSSESSOR, THE MORTGAGED
PROPERTY MAY STILL BE SOLD, WITH THE PRESCRIBED FORMALITIES, IN THE EVENT OF THE
DEBTOR'S DEFAULT IN THE PAYMENT OF HIS LOAN OBLIGATION.
Legal Redemption; Mortgage
PHILBANCOR FINANCE vs. COURT OF APPEALS, G.R. No. 129572, June 26, 2000
Facts:
Petitioner Vicente Hizon, Jr. is the owner of agricultural lands located in
Balite, San Fernando, Pampanga and the private respondents Alfredo Pare, Pablo
Galang and Amado Vie are the legitimate and bona fide tenants thereof. The said
lands were mortgaged by Hizon to petitioner Philbancor which were later on
extrajudicially foreclosed upon default of Hizon in the payment of his obligations.
Subsequently, the lands were sold at public auction to petitioner Philbancor. Seven
years after the registration of the sale with the Register of Deeds, private respondents
filed with the Provincial Agrarian Reform Adjudication Board (PARAB) a complaint for
maintenance of possession with redemption and tenancy right of pre-emption against
petitioners Philbancor and Hizon. Petitioner Philbancor alleged, among others, that it
has no tenancy or agricultural relationship with private respondents considering that it
acquired ownership over the disputed lots by virtue of an extrajudicial foreclosure sale
& that private respondents right to redeem the lots in question, if there is any, has
already expired in accordance with Section 12 of R. A. 3844. PARAB allowed legal
redemption of the subject lands in favor of private respondents. This decision was
affirmed by the Department of Agrarian Reform Adjudication Board (DARAB).
Petitioners appealed to the CA. The appeal was dismissed as well as the MFR which
was subsequently filed. Hence, this appeal.

Issue: Can the private respondents still exercise their legal right of redemption over
the subject lands considering that they invoked their right to redeem only on July 14,
1992, seven years after the date of registration of the certificate of sale with the
Register of Deeds?
Held: NO. Private respondents can no longer redeem the subject lands.
RA No. 3844, Section 12, provides as follows: "In case the landholding is sold to a third
person without the knowledge of the agricultural lessee, the latter shall have the right
to redeem the same at a reasonable price and consideration. Provided, that the entire
landholding sold must be redeemed. Provided further, that where there are two or
more agricultural lessees, each shall be entitled to said right of redemption only to the
extent of the area actually cultivated by him. The right of redemption under this section
may be exercised within two (2) years from the registration of the sale and shall have
priority over any other right of legal redemption."
Concurrence and Preference of Credit
J.L. BERNARDO CONSTRUCTION vs. COURT OF APPEALS,
G.R. No. 105827, January 31, 2000
Facts: The municipal government of San Antonio, Nueva Ecija, awarded to J.L.
Bernardo Construction (BC), the construction of the San Antonio Public Market. The
municipality agreed to assume the expenses for the demolition, clearing and site filling
of the construction site. These expenses were advanced by BC. The municipality
refused to pay the same despite repeated demands and that the public market was
almost complete. Thus, BC filed a complaint for specific performance with prayer for
preliminary attachment and enforcement of contractors lien.
The lower court issued the writ of preliminary attachment and it also granted the
right to maintain possession of the public market and to operate the same. It held that
since BC has not been reimbursed, it stands in the position of an unpaid contractor and
as such is entitled pursuant to Art. 2242 & 2243 NCC to a lien upon the public market
which it constructed.
Issue:

May the contractors lien be enforced?

Held:
NO. Art. 2242, NCC provides that the claims of contractors engaged in the
construction, reconstruction or repair of buildings or other works shall be preferred with
respect to the specific building or other immovable property constructed. However,
this provision only finds application when there is a concurrence of credits, i.e. when
the same specific property of the debtor is subjected to the claims of several creditors
and the value of such property of the debtor is insufficient to pay in full all the creditors.
In such a situation, the question of preference will arise, that is, there will be a need to
determine which of the creditors will be paid ahead of the others. This statutory lien
should only be enforced in the context of some kind of a procedure where the claims
of all preferred creditors may be bindingly adjudicated, such as in insolvency
proceedings.
The action filed by petitioner does not partake of the nature of an insolvency
proceeding, but is basically for specific performance and damages. Thus, even if it is
finally adjudicated that BC is entitled to invoke the contractors lien, such lien cannot
be enforced in the present action for there is no way of determining whether or not
there exist other preferred creditors with claims over the public market.

IV. TORTS AND DAMAGES

Damages
PEOPLE vs. TOREJOS, G.R. No. 132217, Feb. 18, 2000
Facts: On April 25, 1997, accused Bonifacio Torejos was convicted for raping Mary
Cris Cerna and was meted the supreme penalty of death. The victim was, at the time
of the commission of the crime, only 3 years old and nine days. The judgment of the
RTC of Davao City, finding him guilty beyond reasonable doubt of the crime of rape,
and ordering him to pay the parents of Mary Cris Cerna, Luciano and Rosalie Cerna,
the amount of P30,000.00 as civil indemnity pursuant to Art. 100 in relation to Art.
104,RPC, is now before the Supreme Court on automatic review.
Issue: How much and to whom should the civil indemnity and moral damages be
awarded?
Held: Considering that the crime was committed under circumstances which justify
the imposition of death penalty, i.e., the victim is a child below 7 years old, the
amount of civil indemnity is increased to P75,000.00. Moreover, accused Torejos is also
ordered to pay moral damages in the amount P50,000.00. Finally, the civil indemnity
and moral damages should be awarded to Mary Cris as the offended party.
PEOPLE vs. GONZALO PENASO, G.R. No. 121980, February 23, 2000
Facts: Gonzalo Penaso was found guilty by the RTC of Tagbilaran of the crime of
rape and sentenced to suffer an imprisonment of reclusion perpetua and to pay the
victim indemnity and moral damages in the amount of P50,000.00 The victim was 15
years old at the time the offense was committed.
Issue:

Is the award of damages proper?

Held: NO. Pursuant to current jurisprudence, the award of P50,000.00 as civil indemnity
is mandatory upon the finding of the fact of rape. In addition, moral damages
amounting to P50,000.00 at the least should be imposed in rape cases involving young
and immature girls between the ages of 13 and 14, without need of further proof.
Hence, the amount of damages awarded should be P100,000.00.
PEOPLE vs. EREO, G.R. 1224706, Feb. 22, 2000
Facts: On the night of June 21, 1995, an altercation over a flashlight led to the
untimely death of Rosanna Honrubia. The victim died by reason of the stab wounds
she sustained at the back and at the chest. An eyewitness sufficiently identified the
assailant as the accused Carlito Ereo. The mother of Rosanna claimed she spent
P24,000.00 in connection with her death and burial. She was also claiming
P187,200.00 by way of lost income which Rosanna could have earned had she not
been untimely killed. There was also a claim for moral damages brought by the pain
and sorrow caused by Rosannas demise.
The trial court found accused guilty of murder and ordered him to pay to the heirs of
Rosanna P24,000.00 for expenses incurred in connection with her death and burial;
P50,000.00 for loss of the victims life and P50,000.00 by way of moral damages. The
claim for loss income was however denied.

Issue: Is the award of damages and the denial of the award for loss of income
proper and correct under the circumstances?
Held:
As to actual damages, NO. In seeking recovery for actual damages it is
necessary that the claimant produce competent proof or the best evidence
obtainable such as receipts to justify an award therefor. Actual or compensatory
damages cannot be presumed but must be proved with reasonable degree of
certainty. Only substantiated and proven expenses or those which appear to have
been genuinely incurred in connection with the death, wake or burial of the victim will
be recognized by the court. The list of expenses incurred for the wake, funeral and
burial of the victim amounting to P24, 700.00 submitted by the victims mother is selfserving and not substantiated. The Supreme Court cannot, therefore, affirm the trial
courts award of P24,000.00 as actual expenses.
As to the civil indemnity, YES. In line with current jurisprudence the award of
P50,000.00 as civil indemnity (ex delicto) is sustained, which requires no proof other than
the fact of death of the victim and assailants responsibility therefor.
As to the moral damages, YES. The award of P50,000.00 by way of moral
damages for the pain and sorrow suffered by the victims family in connection with
Rosannas death is sustained. Such award is adequate reasonable and with sufficient
basis taking into consideration the pain and mental anguish suffered by the victims
family.
As to denial of the award for loss of income, YES. The court a quo correctly
denied for lack of factual basis the claim of the victims mother for an award for loss of
income or earning capacity of the deceased estimated by her at P600 per day or
P15,600.00 a month or P187,200.00 a year. This handwritten estimate of the
deceaseds daily income as a self- employed fish vendor during the past eight years
prior to her death submitted by the victims mother in the course of her testimony in
court is not supported by competent evidence like income tax returns or receipts. It
bears stress that compensation for lost income is in the nature of damages and as such
requires due proof of the damages suffered; there must be unbiased proof of the
deceaseds average income. In the instant case the victims mother gave only a selfserving hence unreliable statement of her deceased daughters income. Moreover,
the award for lost income refers to the net income of the deceased, that is, her total
income less her average expenses. No proof of the victims average expenses was
presented. Hence, there can be no reliable estimate of the deceaseds lost income.
N.B.

The SC held the accused guilty only of the crime of homicide.

PEOPLE vs. DE GUZMAN, G.R. No.118670, Feb. 22, 2000

Facts: Accused Renato de Guzman, et al. were found guilty by the RTC of Baguio
City of the crime of robbery with homicide committed against the person of Dr.
Amadeo Belmonte and the house helper Teresa Hape. On the civil aspect, they were
ordered to restore or pay the value of the stolen properties, to indemnify P50,000.00
each victim in accordance with Art. 2206, NCC; P46,200,000.00 representing the lost
earnings of Dr. Belmonte for 25 years since he was only 35 years old when killed and the
life expectancy of an average Filipino is 60 years old, P274,809 representing actual and
compensatory damages, P1,000,000 as moral damages and P100,000.00 as exemplary
damages to the heirs of Dr. Belmonte; and P100,000.00 exemplary damages to the heirs
of Hape.
Issue:

Is the award of damages proper and correct under the circumstances?

Held: The award given by the trial court for loss of earnings is erroneous. As
established, Dr. Belmonte was earning an average of P150,000.00 as practicing
physician; P20,000 as professor of medicine per month or P2,088,000 per year. It was
likewise established that Dr. Belmonte was only 35 years old at the time of his death.
Loss of earning capacity is computed on the following formula:
Net
Life expectancy
Earning = [(2/3) (80-35)]
x
Capacity at death
=[(2/3) (80-35)]
x
=[(2/3) (45)]
x
= 30 x P1,044,000.00
=P31,320,000.00

Gross
annual
income (GAI )
P2,088,000.00
P1,044,000.00

Living
_
expenses
( 50% of GAI)
P1,044.000.00

Thus the award for loss of earning is reduced to P31,320,000.00.

As regards the award for actual damages the same is reduced from P274,809 to
P113,709.75 since this is the amount that was proved and duly receipted.
The award for moral damages to the legal heirs of Dr. Belmonte is likewise
reduced to P50,000.00 in line with prevailing jurisprudence. The lower court should have
awarded moral damages for the killing of Teresa Hape considering its finding that
aggravating circumstances attended the robbery-killing, in accordance with Art. 2230
of the Civil Code. Thus, the award of P50,000.00 as moral damages is warranted under
the circumstances. Likewise the award for exemplary damages is reduced to
P20,000.00 each for the heirs of Dr. Belmonte and Teresa Hape.
PEOPLE vs. MENDIONA, G.R. No. 129056, Feb. 21, 2000
Facts: Accused Liberato Mendiona was convicted of the crime of rape, and
sentenced to suffer the supreme penalty of death. He was also ordered to pay the
offended party, Maricel Capongcol, the amount of P50,000.00 as moral damages.
Issue: Should the P50,000.00 awarded to the offended party be classified as moral
damages?
Held: NO. We correct the trial courts erroneous classification of the award of
P50,000.00 as moral damages. The award authorized by criminal law as civil indemnity
(ex delicto) for the offended party is mandatory upon the finding of the fact of rape; it
is distinct from and should not be denominated as moral damages which are based on
different jural foundation and assessed by the court in the exercise of sound discretion.
Further, our more recent rulings hold that the indemnification for the victim shall be in
the increased amount of P75,000.00 if the crime of rape is committed or effectively
qualified by any of the circumstances under which the death penalty is authorized by
law. Applying the foregoing ruling, the civil indemnity to be awarded to the
complainant is P75,000.00.
CALALAS vs. COURT OF APPEALS, G.R. No. 122039, May 31, 2000
Facts: On the way to Poblacion Sibulan, Negros Occidental, petitioner Vicente
Calalas passenger jeepney was bumped by an Isuzu truck. Private respondent Eliza
Sunga, a passenger in the jeepney sustained injuries. Eliza filed a complaint for
damages against Vicente based on breach of contract of carriage by the latter in

failing to exercise the diligence required of him as a common carrier. Vicente was
adjudged liable for damages to Eliza, including P50,000 as moral damages.
Issue:

Is the award of moral damages proper?

Held:
NO. As a general rule, moral damages are not recoverable in actions for
damages predicated on a breach of contract for it is not one of the items enumerated
under Art. 2219 of the Civil Code. As an exception, such damages are recoverable: (1)
in cases in which the mishap results in the death of a passenger, as provided in Art.
1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the
carrier is guilty of fraud or bad faith, as provided in Art. 2220.
In this case, there is no legal basis for awarding moral damages since there was
no factual finding by the appellate court that petitioner acted in bad faith in the
performance of the contract of carriage.
PEOPLE vs. MAGAT, G.R. No. 130026, May 31, 2000
Facts: Before this court for automatic review is the joint decision of the RTC of QC, in 2
criminal cases, finding accused Antonio Magat guilty of raping his daughter, Ann Fideli
Magat, on two occasions and sentencing him to suffer the extreme penalty of death
for each case, and to pay the sum of P50,000.00 as compensatory damages,
P200,000.00 as moral damages and, P500,000 00 as exemplary and corrective
damages.
Issue:

Is the award of damages proper?

Held: The sum awarded as compensatory damages should be increased from

P50,000.00 to P75,000.00. The SC has previously held that if the crime of rape is
committed or effectively qualified by any of the circumstances under which the death
penalty is authorized by the present amended law, the indemnity of the victim shall be
in the increased amount of not less than P75,000.00. In the 2 ndcriminal case however,
while appellant was sentenced to reclusion perpetua, as the crime of rape was
committed when the victim is already above 18 years old, the compensatory damage
should be the same (P75,000.00). The trauma, ignominy, pain and shame suffered by
the complainant can not be treated or regarded any lesser.
In crimes of rape, moral damages may additionally be awarded to the victim in
the criminal proceeding, in such amount as the Court deems just, without the need for
pleading or proof of the basis thereof. The fact that complainant has suffered the
trauma of mental, physical and psychological sufferings which constitute the bases for
moral damages are too obvious to still require the recital thereof at the trial by the
victim, since the Court itself even assumes and acknowledges such agony on her part
as a gauge of her credibility. Nevertheless, the award of P200,000.00 as moral
damages is excessive. An award of P50,000.00 for each count of rape is more
reasonable.
The award of exemplary or corrective damages is deleted in the absence of any
legal basis therefor.
PEOPLE vs. BAUTISTA, G.R. No. 131840, April 27, 2000
Facts: The RTC of Rizal found Henry and Nilo Bautista guilty of murder and sentenced
them to suffer the penalty of reclusion perpetua and to pay jointly the amounts of
P24,839.00 as actual damages and P30,000.00 as civil indemnity to the heirs of the
victim, Igmidio Grajo. The prosecution witness Richard Grajo, son of the victim, testified

on the commission of the crime by the accused. Purita Grajo testified on the amount of
damages: funeral expenses, earning capacity, hospital bill amounting to P24,839.00.
Issue: What are the nature and the amount of damages that may be awarded by
the court?
Held: Every person criminally liable for a felony is also civilly liable. The amount and
nature of damages to be awarded are:
1. Indemnity for Death. Art. 2206,NCC provides for the payment of indemnity for
death caused by a crime. Initially fixed in Art. 2206 at P3,000.00, the amount of
indemnity for death has, through the years, been gradually increased in view of the
declining value of the peso. It is presently fixed at P50,000.00. Hence, the trial court
correctly awarded indemnity for death to the heirs of Igmidio in this amount.
2. Actual Damages. Art. 2199,NCC provides that "except as provided by law or
by stipulation, one is entitled to an adequate compensation only for such pecuniary
loss suffered by him as he has duly proved." The prosecution submitted receipts and
presented the testimony of Purita, the widow of Igmidio, showing that his family
incurred expenses in the total amount of P24,839.00 for his wake and burial. Hence, the
trial court likewise correctly awarded actual damages to the heirs of Igmidio in this
amount.
The civil liability of accused for indemnity for death and actual and moral
damages, however, is solidary and not joint as ruled by the trial court.
3. Moral Damages. Under Art. 2206,NCC, the spouse, legitimate and illegitimate
descendants and ascendants of the deceased are entitled to moral damages "for
mental anguish by reason of the death of the deceased." Purita testified that she
suffered pain from the death of her husband. Thus, in accordance with recent
decisions of this Court, accused should be liable to pay the additional amount of
P50,000.00 as moral damages.
4. Exemplary Damages. Under Art. 2230,NCC, "exemplary damages as a part of
the civil liability may be imposed when the crime was committed with one or more
aggravating circumstances." In this case, the aggravating circumstance of abuse of
superior strength should be appreciated against Nilo. Thus, accused Nilo Bautista
should be ordered to pay the heirs of Igmidio the additional sum of P30,000.00 as
exemplary damages.
N.B. Accused were found guilty of homicide not murder.
PEOPLE VS. PASCUAL, G.R. No. 127761, April 28, 2000
Facts: The accused, Pedro R. Pascual, and a certain John Doe were charged with the
crime of murder. Pascual was found guilty of killing Dr. Picio by testimony of
prosecution witness Marissa Robles. Rosalinda S.Picio, wife of the late Dr.Picio, testified
on the civil aspect of the case. She stated she spent around P300,000 for the wake and
funeral service. She also declared that her husband used to receive a monthly salary of
P13,000 as municipal health officer in addition to the P240,000 annual income he used
to earn in farming and grains business.
Issue:

What are the nature and the amount of damages that may be awarded?

Held: In view of the death of the victim, Dr. Maximino Picio, Jr., his forced heirs are
entitled to P50,000.00 representing civil indemnity ex delicto. They are also entitled to
P50,000.00 by way of moral damages inasmuch as the widow of the victim, Rosalinda

Picio, testified on how she felt over the loss of her husband. Additionally, the accused is
liable to pay to the heirs of the victim damages for loss of earning capacity of the
deceased. However, actual damages may not be awarded in view of the absence of
competent evidence to support the same.
It appears that Dr. Picio was 64 years old at the time of his death on March 14,
1995. Her widow testified that he used to receive a monthly salary of P13,000.00 as
Municipal Health Officer of San Manuel, Isabela. In accordance with the American
Expectancy Table of Mortality which was adopted by the Court, the loss of earning
capacity shall be computed as follows:
Net Earning Capacity (X) = Life Expectancy x (Gross Annual Income Living Expenses
e.g. 50% of annual gross income)
= 2 (80-64)
x (156,000.00-78,000.00)

3
= 10.667 x 78,000.00
= P832,026.00
OROSA vs. COURT OF APPEALS, G. R. No. 111080, April 5, 2000
Facts: Petitioner Jose Orosa purchased a Ford Sedan on installment from Fiesta
Motor Sales Corporation (FMSC), executing and delivering to the latter a promissory
note payable in monthly installments. To secure payment, he executed a chattel
mortgage over the subject motor vehicle in favor of FMSC which in turn assigned the
promissory note and chattel mortgage to private respondent FCP Credit Corporation.
Orosa failed to pay part of an installment as well as three (3) other consecutive
installments. Consequently, FCP Credit Corporation demanded from him payment of
the entire outstanding balance of the obligation with accrued interest and to surrender
the vehicle which petitioner was allegedly detaining. As Orosa failed to do so, FMSC
filed a complaint for replevin and damages in the RTC of Manila against the former. It
was able to provisionally secure the writ.
The trial court ruled that FMSC is not entitled to the writ of replevin since Orosa
already made payments on the installments, albeit late and irregular. It ordered the
return of the subject vehicle, or its equivalent, to petitioner. It likewise granted
petitioners counterclaim for moral damages, exemplary damages, and attorneys
fees.
Issue:

Is Orosa entitled to moral damages, exemplary damages, and attorneys fees?

Held: NO. Orosas claim must be denied. As to the matter of moral damages, the
law clearly states that one may only recover moral damages if they are the proximate
result of the other partys wrongful act or omission. Two elements are required. First, the
act or omission must be the proximate result of the physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation and similar injury. Second, the act must be wrongful.
According to Orosa, the car subject of this case was being used by his daughter,
married to Jose Concepcion III, a scion of a prominent family. He maintains that when
the complaint was filed against him, he suffered untold embarrassment as he had to
explain the suit to his daughters in-laws. However, that could have been avoided had
he not assigned the car to his daughter and had he been faithful and prompt in paying
the installments required. Orosa brought the situation upon himself and cannot now
complain that FMSC is liable for the mental anguish and humiliation he suffered.
Further, FMSC brought the complaint only to exercise a legal right, believing that it had
a meritorious cause of action clearly borne out by a mere perusal of the promissory

note and chattel mortgage. The rule has always been that moral damages cannot be
recovered from a person who has filed a complaint against another in good faith.
Anent the award of exemplary damages, jurisprudence provides that where a
party is not entitled to actual or moral damages, an award of exemplary damages is
likewise baseless.
In the matter of attorneys fees, it should likewise be denied. No premium should
be placed on the right to litigate and not every winning party is entitled to an
automatic grant of attorneys fees. The party must show that he falls under one of the
instances enumerated in Article 2208 of the Civil Code. This, Orosa failed to do.
Furthermore, where the award of moral and exemplary damages is eliminated, so must
the award for attorneys fees be deleted.
PEOPLE vs. CABANDE, G.R. No. 132747, February 8, 2000
Facts: Vicente Trinidad and Victor Trinidad and accused Cabande, had serious
misunderstanding over Lot No. 1990 of the Buenavista Estate in Bulacan. In convicting
Cabande, the trial court relied on the eyewitness account of Christopher Trinidad, son
of Victor, who was five years old when the crime was committed and who was then
riding the jeepney together with the two victims. The court a quo also noted that there
was a feud between accused and the victims over the ownership of a parcel of land. It
concluded that the killing was qualified by treachery, because the victims "were totally
defenseless and had no opportunity to defend themselves or retaliate when shot." The
trial court likewise ordered the accused to pay P50,000.00 as civil indemnity,
P100,000.00 for the wake and burial expenses, moral damages and exemplary
damages each to the heirs of the victims, as well as indemnity for loss of income in the
amount of P1.5 million to the heirs of Victor and P337,000.00 to the heirs of Vicente.
Issue: Is the award of damages and civil indemnity proper and correct under the
circumstances?
Held: In line with current jurisprudence, we affirm the award of indemnity ex delicto
to the heirs of each victim in the sum of P50,000 or a total of P100,000. This may be
awarded without need of proof other than the commission of the crime. Likewise, we
sustain the award of P100,000.00 to the heirs of each victim for the wake and burial
expenses, for these were duly proven. Although the records show that they were
entitled to moral damages, we hold that the award should be reduced to P100,000 or
P50,000 for each set of heirs of the victims.
We cannot sustain, however, the award of exemplary damages, which are
awarded only in the presence of one or more aggravating circumstances. None was
established in this case.
Likewise, we hold that the trial court erred in awarding the amount of P1.5 million and
P337,000. as loss of income. The amount of indemnity for loss of earning capacity is
based on the income at the time of death and the probable life expectancy of the
victim. It should be stressed that the amount recoverable is not the entire earnings, but
only that portion which the beneficiaries would have received. Thus, indemnity for lost
income refers to the victim's total earnings minus the necessary living expenses. In the
case of Victor, his wife testified that the annual income from their piggery business was
P300,000. Considering that the two of them operated and managed the business, the
profits should be divided equally between them. Accordingly, the annual income of
Victor, who was 39 years old at the time of his death, was P150,000. Considering that his
living expenses have not been proven, the Court exercises the discretion to ascertain
and fix the same. Under the circumstances, we-find the amount of P50,000 as
reasonable living expenses.

BAAS, JR. vs. COURT OF APPEALS, G.R. No. 102967, February 10, 2000
Facts: A sale of land and nonpayment of income tax thereon resulted to the filing by
BIR Regional Director Aquilino Larin of a criminal complaint for tax evasion against
petitioner Banas. Such filing of the case against him was publicized in several
newspapers. Reacting to the complaint for tax evasion and the news reports, Banas
filed with the RTC of Manila an action for damages against respondents Larin, et al. for
extortion and malicious publication of the BIR's tax audit report. He claimed that the
filing of criminal complaints against him for violation of tax laws were improper because
he had already availed of the tax amnesty laws.
The trial court decided in favor of the respondents and awarded Larin
P200,000.00 as actual damages.
Issue:

Is the award of damages to Larin proper?

Held: NO. Any person who seeks to be awarded actual or compensatory damages
due to acts of another has the burden of proving said damages as well as the amount
thereof. Larin says the extortion cases filed against him hampered his immediate
promotion, caused him strong anxiety and social humiliation. The trial court awarded
him actual damages. However, the appellate court stated that, despite pendency of
this case, Larin was given a promotion at the BIR. Said respondent court found nothing
on record, to show that he suffered loss of seniority that allegedly barred his promotion.
In fact, he was promoted to his present position despite the pendency of the instant
case Moreover, the records of the case contain no statement whatsoever of the
amount of the actual damages sustained by the respondents. Actual damages cannot
be allowed unless supported by evidence on the record. The court cannot rely on
speculation, conjectures or guesswork as to the fact and amount of damages. To
justify a grant of actual or compensatory damages, it is necessary to prove with a
reasonable degree of certainty, the actual amount of loss. Since we have no basis
with which to assess, with certainty, the actual or compensatory damages counterclaimed by Larin, the award of such damages should be deleted.
Moral damages may be recovered in cases involving acts referred to in Art. 21,
NCC. As a rule, a public official may not recover damages for charges of falsehood
related to his official conduct unless he proves that the statement was made with
actual malice.
PEOPLE vs. ALAGON, G.R. Nos. 126536-37, February 10, 2000
Facts: The RTC of Pasig City found accused Alagon and Rafael guilty of two counts
of murder for the death of Magno and Barcelona and ordered them to pay actual,
moral and exemplary damages, as well as indemnity for the deaths to the heirs of the
two victims.
Issue: Is the award of damages and indemnity proper and correct under the
circumstances?
Held: As to actual damages, NO. We cannot sustain the award of actual damages
in favor of the heirs of Magno for failure to substantiate the bare assertion of the widow
with other corroborative evidence. The Court can only grant such amount for expenses
if they are supported by receipts. In the absence thereof, no award for actual
damages can be granted. For the same reason, the award of actual damages to the

heirs of Isidro Barcelona should be reduced as the amount duly supported by

documentary evidence.
As to the award of P50,000.00 each to the heirs of the victims as indemnity for
the deaths of Magno and Barcelona, YES. We affirm such award as this is in accord
with prevailing jurisprudence.
As to moral and exemplary damages, NO. The trial court erred in awarding to
the heirs of the two victims lump sums of P100,000.00 each for moral and exemplary
damages. These are separate in nature and require separate determination.
Considering that the heirs of the victims asked for it and testified that they experienced
moral suffering, moral damages in the amount of P50,000.00 is awarded to the heirs of
the victims to compensate them for the injuries to their feelings. The award for
exemplary damages must be deleted, considering the crime was committed without
any other aggravating circumstances.
Finally, we must also add the award for loss of earning capacity. The sister of the
deceasedBarcelona testified that the victim was earning P145.00 a day or P4,350.00
per month and the records reveal that he was 27 years old at the time of his death. On
the other hand, it was established that Magno was 31 years old at the time of his death
and earning P4,500.00 per month.
PEOPLE vs. DANDO, G.R. No. 120646, February 14, 2000.
Facts: The RTC of Laguna found accused PO3 Apolinar Dando guilty of murder for
the killing of Cesar Castro and awarded to the heirs of the victims civil indemnity for the
death of Castro, reimbursement for actual expenses incurred for the wake and burial,
as well as indemnity for loss of earning capacity in the amount of P1,620,000.00.
Issue: Is the award of damages and indemnity proper and correct under the
circumstances?
Held: As to the amount of P50,000 as indemnity for the death for Castro, YES. Said
amount is awarded, without need of further proof other than the death of the victim.
In addition, the heirs are also entitled to receive a compensation for the loss of earning
capacity of the victim. The formula for computing the same as established in decided
cases is as follows:
Gross Necessary
Net Earning = Life x Annual Living
Capacity Expectancy
Income
Expenses
The life expectancy is equivalent to two thirds (2/3) multiplied by the difference
of 80 and the age of the deceased. Since Castro was 47 years old at the time of his
death, his life expectancy was 22 more years. Celso, Castros son, testified that his
father earned P3,000.00 monthly or P36,000.00 annually from the sash factory. In
addition, the victim's annual income from farming as found by the trial court was
P53,000.00. The gross annual income of the deceased was P89,000.00. Allowing for
necessary living expenses of fifty percent (50%) of his gross earnings, his total net
earning capacity amounts to P979,000.00. 39
As to the expenses actually incurred by the family of the victim for the wake and
burial, Celso was able to prove during trial that they incurred the sum of P39,974.00. The
amount of P35,974.00 awarded by the trial court as reimbursement of funeral expenses
is, accordingly, increased to P39,974.00.

Attorneys Fees in the Concept of Damages

INDUSTRIAL INSURANCE COMPANY vs. BONDAD, G.R. No. 136722, April 12, 2000
Facts: The present Petition finds its roots in an incident which involved three vehicles:
a Galant Sigma car driven by Grace Morales, a packed passenger jeepney originally
driven by Ligorio Bondad, and a DM Transit Bus driven by Eduardo Mendoza. The
respondents asserted that their vehicle was on full stop because of a flat tire and it was
the bus which hit Morales' car. Moreover, they contended that petitioner had acted in
bad faith in impleading them and that, contrary to its allegation, no prior demand had
been made upon them.
The trial court exculpated the Bondads and ordered petitioner to pay them
actual, moral and exemplary damages, as well as attorney's fees.
Issue: May attorneys fees and other litigation expenses be awarded if one who
claims it is compelled to litigate with third persons?
Held: YES. Attorney's fees may be awarded if one who claims it is compelled to
litigate with third persons or to incur expenses to protect one's interests by reason of an
unjustified act or omission on the part of the party from whom it is sought. In justifying
the award of attorney's fees and other litigation expenses, the court held that
respondents were compelled to litigate an unfounded suit because of petitioner's
negligence and lack of prudence in not verifying the facts before filing this action. The
facts of this case clearly show that petitioner was motivated by bad faith in impleading
respondents. Indeed, a person's right to litigate, as a rule, should not be penalized. This
right, however, must be exercised in good faith. Absence of good faith in the present
case is shown by the fact that petitioner clearly has no cause of action against
respondents but it recklessly filed suit anyway and wantonly pursued pointless appeals,
thereby causing the latter to spend valuable time, money and effort in unnecessarily
defending themselves, incurring damages in the process. In this case, the records show
that petitioner's suit against respondents was manifestly unjustified.
LIABILITY FOR DAMAGES IN ACTION BASED ON MALICIOUS PROSECUTION
BAYANI vs. PANAY ELECTRIC CO., G.R. No. 139680, April 12, 2000
Facts: In March 1996, Panay Electric Company, Inc. (PECO) discontinued supplying
electrical services to two pension houses owned by petitioner. Alleging that it had
discovered theft of electricity in petitioner's business establishments, PECO filed two
complaints for violation of R.A. No. 7832 against petitioner with the City Prosecutor of
Iloilo City. The City Prosecutor dismissed the complaints on August 8, 1996 and August
19, 1996, respectively. PECO appealed the dismissal to the Secretary of Justice.
On October 10, 1996, petitioner filed with the RTC of Iloilo City an action for
injunction and damages arising from malicious prosecution, then amended his
complaint to add a prayer for writ of preliminary prohibitory injunction to make PECO
desist from making "false imputations that plaintiff allegedly continued to commit
violations" of R.A. No. 7832. PECO filed a motion to dismiss the amended complaint, but
said motion was denied. On September 2, 1997, the trial court granted petitioner's
request for the issuance of a writ of preliminary mandatory injunction. On November
17, 1997, PECO filed a petition for certiorari and prohibition with the Court of Appeals,

praying that the appellate court declare the orders of the trial court denying the
motion to dismiss and grant of writ of PMI null and void and likewise sought the dismissal
of herein petitioner's complaint in the lower court.
The Secretary of Justice upheld the dismissal of the complaints for violations of
R.A. No. 7832 on March 4, 1998. The CA dismissed the complaint for injunction and
damages filed by Bayani.
Issue:

Is the action for malicious prosecution premature?

Held: YES. The requisites for an action for damages based on malicious prosecution
are: (1) the fact of the prosecution and the further fact that the defendant was himself
the prosecutor, and that the action was finally terminated with an acquittal; (2) that in
bringing the action, the prosecutor acted without probable cause; and (3) the
prosecutor was actuated or impelled by legal malice. Considering the facts in this
case, we agree with the appellate court that one of the elements for an action based
on malicious prosecution, the element of final termination of the action resulting in an
acquittal, was absent at the time petitioner filed civil case. The records show that
petitioner's action for injunction and damages was filed on October 10, 1996, whereas
the Secretary of Justice dismissed with finality PECO's criminal complaints against herein
petitioner only on March 4, 1998. Hence, the civil case for malicious prosecution was
prematurely filed.
VILLANUEVA vs. UNITED COCONUT PLANTERS BANK, G.R. No. 138291, March 7, 2000
Facts: Herminigildo Villanueva, father of the petitioner, applied for and was granted
a loan by UCPB which at the time was managed by Bobby Caf. In the course of the
bank audit, certain fraud, anomalies and irregularities were discovered in the
application, processing and quantity of said amount which prompted UCPB to
conduct investigation on the matter. UCPB filed criminal complaints which resulted to
the acquittal of the defendants. In view of the acquittal, Hector Villanueva filed an
action for damages on the ground of alleged malicious prosecution with RTC. In its
answer, UCPB denied the allegation in the complaint and asserted that there is no
cause of action since the filling of the criminal complaint was not tainted with malice.
Issue:

Is UCPB liable for damages?

Held: NO. The adverse result of an action does not make the prosecution thereof
wrongful neither does it subject the action to payment of damages. The law does not
impose a penalty to the right to litigate. Resort to judicial processes, by itself, is not an
evidence of ill will. As the mere act of filing criminal complaint does not make the
complainant liable for malicious prosecution. These must be proof that the suit was
performed by legal malice. An inexcusable intent to oppress, vex, annoy or humiliate.
A contrary rule would discourage peaceful resources to the court and unjustly penalize
the exercise of a citizens right to litigate. Where the action is filed in good faith, no
penalty should be imposed thereon.
Recovery of Damages in Negligent Acts
CALALAS vs. COURT OF APPEALS, G.R. No. 122039, May 31, 2000
Facts: On the way to Poblacion Sibulan, Negros Occidental, Petitioner Vicente
Calalas passenger jeepney was bumped by an Isuzu truck owned by Francisco Salva.
Private respondent Eliza Sunga, a passenger in the jeepney sustained injuries. Eliza filed

a complaint for damages against Vicente based on breach of contract of carriage by

the latter in failing to exercise the diligence required of him as a common carrier.
Vicente, on the other hand, filed a 3rd party complaint againt Francisco.
The lower court rendered judgment, against Francisco and absolved Vicente of
liability. It took cognizance of another case (Civil Case No. 3490) filed by Vicente
against Francisco and his driver Verena, for quasi-delict, in which the latter were held
jointly liable to Vicente for the damage to his jeepney.
On appeal to the CA, the ruling of the lower court was reversed on the ground
that Elizas cause of action was based on a contract of carriage, not quasi-delict, and
that the common carrier failed to exercise the diligence required under the Civil Code.
The appellate court dismissed the third-party complaint against Francisco and
adjudged Vicente liable for damages to Eliza.
Issue: Is Eliza bound by the ruling in the earlier case (Civil Case No. 3490) finding the
driver and the owner of the truck liable for quasi-delict?
Held: NO. The issue in the former case (Civil Case No. 3490) is not the same as those
in the present. The issue in Civil Case No. 3490 was whether Salva and his driver Verena
were liable for quasi-delict for the damage caused to petitioner's jeepney. On the
other hand, the issue in this case is whether petitioner is liable on his contract of
carriage. The first, quasi-delict, also known as culpa aquiliana or culpa extra
contractual, has as its source the negligence of the tortfeasor. The second, breach of
contract or culpa contractual, is premised upon the negligence in the performance of
a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly
established because it is the basis of the action, whereas in breach of contract, the
action can be prosecuted merely by proving the existence of the contract and the
fact that the obligor, in this case the common carrier, failed to transport his passenger
safely to his destination.
Negligence; Easement
REMMAN ENTERPRISES vs. COURT OF APPEALS, G. R. No. 125018,

April 6, 2000

Facts: Petitioner REMMAN Enterprises, Inc. (REMMAN) and private respondent Crispin
Lat are owners of adjoining lots. Lats land is agricultural and planted mostly with fruit
tress, while REMMAN devotes its land to its piggery business. REMMANs land is 1
meters higher in elevation than that of respondent Lat. Sometime in July 1984, Lat
noticed that REMMANs waste disposal lagoon was already overflowing and
inundating his plantation. He made several representations with REMMAN but the latter
fell on deaf ears. On March 14, 1985, after almost one hectare of Lats plantation was
already inundated with ankle-deep water containing pig manure, as a result of which
trees growing on the flooded portion started to wither and die, Lat filed a complaint for
damages with preliminary mandatory injunction against REMMAN. REMMAN denied
the allegations and argued that additional measures such as the construction of
additional lagoons were already adopted to contain the waste water coming from its
piggery to prevent any damage to the adjoining estates.
The trial court held REMMAN liable for damages. In this petition, REMMAN contends
that its negligence and liability for damages were not sufficiently established. It also
raises the defense of fortuitous event (heavy rains) which caused the inundation of
Lats plantation, and the supposed natural easement imposed upon Lats property.
Issue:

Is REMMAN negligent and should be held liable for damages?

Held: YES. REMMANs negligence was clearly established. Lats property was
practically made a catch basin of polluted water and other noxious substances
emptying from REMMANs piggery which could have been prevented had it not been
for the negligence of appellant arising from its: (a) failure to monitor the increases in the
level of water in the lagoons before, during and after the heavy downpours; (b) failure
to augment the existing lagoons prior to the incident, notwithstanding the fact that at
the time of the flooding, the piggery had grown to a capacity of 11,000 heads, and
considering that it was reasonably foreseeable that the existing waste disposal facilities
were no longer adequate to accommodate the increasing volume of waste matters;
and (c) the repeated failure to comply with its promise to private respondent.
REMMANs assertion that the damages, if any, were due to a fortuitous event is not
well taken. Even if the heavy rains constituted an act of God, REMMAN was still guilty
of negligence. The event was not occasioned exclusively by an act of God or force
majeure; a human factor negligence or imprudence had intervened. The effect
then of the force majeure in question may be deemed to have, even if only partly,
resulted from the participation of man. Thus, the whole occurrence was thereby
humanized, as it were, and removed from the rules applicable to acts of God.
As regards the contended natural easement imposed upon Lats property, Article
637 provides that lower estates are imposed the obligation to receive the waters which
naturally and without the intervention of man descend from higher estates. However,
where the waters which flow from a higher state are those which are artificially
collected in man-made lagoons, any damage occasioned thereby entitles the owner
of the lower or servient estate to compensation.
Rule Against Double Recovery in Negligence Cases
RAFAEL REYES TRUCKING CORPORATION vs. PEOPLE, G.R. No. 129029, April 3, 2000
Facts:
Petitioner Rafael Reyes Trucking Corporation is a domestic corporation
engaged in the business of transporting beer products for San Miguel Corporation.
Among its fleet of vehicles is a truck driven by the accused Romeo Dunca who met an
accident in Isabela with a Nissan Pick-up. Duncas vehicle rammed the Nissan, causing
severe damages to it and the instant death to its driver, Balcita, and passenger, Dy.
An Information was filed in the RTC of Isabela against Romeo Dunca for reckless
imprudence resulting in double homicide and damage to property. Offended parties,
heirs of the two deceased, made a reservation to file a separate civil action against
the accused arising from the offense charged. Thereafter, they actually filed with the
RTC of Isabela a complaint against petitioner Corporation, as employer of Romeo
Dunca, based on quasi delict. Petitioner settled the claim of heirs of Balcita. The heirs
of Dy opted to continue with the criminal and civil actions. Later, they withdrew their
reservation to file a separate civil action ex delicto against the accused and
manifested their intention to prosecute the same in the criminal action. They did not,
however, withdraw the separate civil action based on quasi delict against petitioner.
Upon agreement of the parties, both criminal and civil cases were consolidated.
The trial court found Dunca guilty and ordered him to indemnify private
respondents with damages. Petitioner corporation was ordered to pay private
respondents actual damages. Private respondents moved for amendment of the
dispositive portion to hold petitioner subsidiarily liable for all the damagesex
delicto awarded to them in the event of insolvency of the accused.

Issue: May petitioner be held subsidiarily liable for the damages awarded to the
offended parties in the criminal action against the accused despite the filing of a
separate civil action against said petitioner?
Held:
NO. Petitioner cannot be held subsidiarily liable. In negligence cases, the
aggrieved party has the choice between (1) an action to enforce civil liability arising
from crime under Article 100 of the Revised Penal Code; and (2) a separate action for
quasi delict under Article 2176 of the Civil Code. Once the choice is made, the injured
party can not avail himself of any other remedy because he may not recover
damages twice for the same negligent act or omission of the accused. This is the rule
against double recovery. In other words, the same act or omission can create two
kinds of liability on the part of the offender, that is, civil liability ex delicto, and civil
liability quasi delicto, either of which may be enforced against the culprit, subject to
the caveat under Article 2177 of the Civil Code that the offended party can not
recover damages under both types of liability.
In the instant case, the offended parties elected to file a separate civil action for
damages against petitioner under Article 2176,NCC to hold him vicariously liable for the
fault or negligence of the accused-employee, based on quasi delict. Having made
such choice, private respondents cannot now recover their claim in a civil action for
damages ex delicto primarily against the accused, and subsidiarily against petitioner.
Based on the foregoing, and on Rule 111, Sec. 1, par. 3 of the 1985 Rules on
Criminal Procedure which provides that the reservation to file or the filing of a separate
civil action results in a waiver of other available civil actions arising from the same act
or omission of the accused, the trial court grievously erred in holding, and the court of
Appeals in affirming, that petitioner is subsidiarily liable for damages arising from crime
(ex delicto) in the criminal action. There would be no occasion to rule on the
accuseds ex delicto civil liability, and petitioners subsidiary liability, because of the
aforesaid waiver and proscription against double recovery.
Liability of an Educational Institution
UNIVERSITY OF THE EAST V. JADER, G.R. NO. 132344, February 17, 2000
Facts: Respondent was enrolled in the plaintiffsCollege of Law. In the first semester of
his senior year, he failed to take the regular final examination inPractice Court I for
which he was given an incomplete grade. He enrolled for the second semester as
senior student and on February 1, 1988 he filed an application for the removal of the
incomplete grade given by Professor Carlos Ortega which was approved by Dean
Tiongson after payment of the required fee. He took the examination on March 28,
1988. On May 30, 1988, Professor Ortega flunked the respondent.
The respondents name appeared in the Tentative List of Candidates for
graduation. The respondent attended the investiture ceremonies.
Respondent thereafter prepared himself for the bar examination. He took a leave
of absence without pay from his job and enrolled at the pre-bar review class in Far
Eastern University. Having learned of his deficiency he dropped his review class and
was not able to take the bar examinations.
Issues: 1. May an educational institution be held liable for damages for misleading a
student into believing that the latter had satisfied all the requirements for graduation?
2. May he be awarded moral damages?

Held: 1. Yes. It is the contractual obligation of the school to timely inform and furnish
sufficient notice and information to each and every student as to whether he or she
had already complied with all the requirements for the conferment of a degree or
whether they would be included among those who will graduate. Although
commencement exercises are but a formal ceremony, it nonetheless is not an ordinary
occasion, since such ceremony is the educational institutions way of announcing to
the whole world that the students included in the list of those who will be conferred a
degree during the ceremony have satisfied all the requirements for such degree.
The negligent act of professor who fails to observe the rules of the school, for
instance by not promptly submitted a students grade, is not only imputable to the
professor but is an act of the school, being his employer. Educational institutions are
duty-bound to inform the student of their academic status and not wait for the latter to
inquire from the former. The conscious indifference of a person to the rights or welfare
of the person/persons who may be affected by his act or omission can support a claim
for damages.Want of care to the conscious disregard of civil obligation coupled with a
conscious knowledge the cause naturally calculated to produce them would make
the erring party liable.
2. NO. While petitioner was guilty of negligence and thus liable for respondent for
actual damages, we hold that respondent should not be awarded moral damages. It
behooves upon respondent to verify for himself whether he has completed all
necessary requirements to be eligible for the bar examinations. As a senior law student,
respondent should have been responsible enough to ensure that all his affairs,
specifically those pertaining to his academic achievement, are in order.
VI. LAND TITLES AND DEEDS/AGRICULTURAL TENANCY LAWS
Registration of Land Under the TorrensSystem
DBP vs. COURT OF APPEALS, G.R. No. 129471, April 28, 2000
Facts: The land in dispute consisting of 19.4 hectares was originally owned by Ulpiano
Mumar, whose ownership since 1917 was evidenced by Tax Declaration No. 3840. In
1950, Mumar sold the land to respondent Cajes who was issued Tax Declaration No. R1475 that same year. Cajes occupied and cultivated the said land. In 1969, unknown to
Cajes, Jose Alvarez succeeded in obtaining the registration of a parcel of land with an
area of 1,512, 468.00 square meters, in his name for which he was issued OCT No. 546
on June 16, 1969. The parcel of land included the 19.4 hectares occupied by
respondent. Alvarez never occupied nor introduced improvements on said land.
In 1972, Alvarez sold the land to the spouses Gaudencio and Rosario Beduya to whom
TCT No. 10101 was issued. That same year, the spouses Beduya obtained a loan from
petitioner DBP for P526,000.00 and, as security, mortgaged the land covered by TCT No.
10101 to the bank. In 1978, the SAAD Investment Corp., and the SAAD Agro-Industries,
Inc., represented by Gaudencio Beduya, and the spouses Beduya personally executed
another mortgage over the land in favor of DBP to secure a loan of P1,430,000.00. The
spouses Beduya later failed to pay their loans, as a result of which, the mortgage on the
property was foreclosed and sold to DBP as the highest bidder. As the spouses Beduya
failed to redeem the property, DBP consolidated its ownership. It appears that Cajes
had also applied for a loan from DBP in 1978, offering his 19.4 hectare property under
Tax Declaration No. D-2247 as security for the loan. Cajes loan application was later
approved. However, it was found that the land mortgaged by Cajes was included in
the land covered by TCT No. 10101 in the name of the spouses Beduya. DBP, therefore,
cancelled the loan and demanded immediate payment of the amount. Cajes paid

the loan to DBP for which the former was issued a Cancellation of Mortgage releasing
the property in question from encumbrance. DBP asked Cajes to vacate the property.
As the latter refused to do so, DBP filed a complaint for recovery of possession with
damages against him. The RTC of Tagbilaran City declared DBP the lawful owner of
the entire land covered by TCT No. 10101 on the ground that the decree of registration
was binding upon the land.
Issue: Is registration of land under the Torrens System a mode of acquiring ownership
over an immovable?
Held: NO. Registration has never been a mode of acquiring ownership over an
immovable property. The purpose of the Land Registration Act is not to create or vest
title but to confirm and register already created and already vested.
Proof required in land registration proceedings
MARIANO TURQUESA, ET AL. vs. ROSARIOVALERA, G.R. No. 76371 January 20, 2000
Facts: More than half a century ago, private respondent Rosario Valera applied for
the registration of 2 parcels of land located in Barrio Pulot, Laguyan, Abra. Lot 1 has an
area of 210,767 sq. m. and Lot 2 has an area of 22,141 sq. m. In support of her
application, private respondent presented documents showing that she bought Lot 1
during the years 1929-1932 from Cristeta Trangued and the heirs of Juan Valera Rufino
who were allegedly in possession thereof since the Spanish regime in the concept of
owners and who declared it in their name for taxation purposes. From 1929, she
continued possession of said land in the concept of owner and continued to pay the
tax thereon in her name. The Director of Lands together with petitioners and other
persons opposed the application of Rosario.
Rosario was adjudged to have a registrable title over the 2 lots. The Director of
Lands' opposition was denied for failure to substantiate his claim that the subject lands
were part of the public domain. After this decision became final and
executory, Rosario filed with the trial court a motion for the issuance of writ of
possession over the lots. Portions of Lot 1 were respectively claimed by Santiago
Partolan (not an oppositor in the land registration case) and Crispin Baltar (one of the
oppositors). The Motion was denied. On appeal, the then IAC issued the writ.
Issue: Is private respondent Rosario Valera properly entitled to a writ of possession of
portions of Lot 1 occupied by Partolan and Baltar?
Held: No. Rosario failed to show evidence of her rightful claim whether possessory or
proprietary over the subject areas. The burden of proof in land registration cases is
incumbent on the applicant who must show that he is the real and absolute owner in
fee simple of the land applied for. On him also rests the burden to overcome the
presumption that the land sought to be registered forms part of the public domain
considering that the inclusion in a title of a part of the public domain nullifies the title.
The declaration by the applicant that the land applied for has been in the
possession of her predecessor-in-interest for a certain period, does not constitute the
"well-nigh incontrovertible" and "conclusive" evidence required in land registration.
Further, it should be noted that tax declaration, by itself, is not considered conclusive
evidence of ownership in land registration cases. Rosario should have substantiated her
claim with clear and convincing evidence specifically showing the nature of her claim.
The applicant must likewise prove the identity of the land. It must be borne in mind that

what defines a piece of land is not the size or area mentioned in its description, but the
boundaries therein laid down, as enclosing the land and indicating its limits.
Considering that the writ of possession was sought by Rosario against persons
who were in "actual possession under claim of ownership," the latter's possession raises a
disputable presumption of ownership. This unrebutted presumption militates against the
claim of Rosario, especially considering the evidentiary rule under Article 434 of the Civil
Code that a claimant of a parcel of land, such as Rosario, must rely on the strength of
his title and not on the weakness of the defendant's claim.
Evidence of Ownership
SANTIAGO vs. COURT OF APPEALS, G.R. No. 109111, June 28, 2000
Facts: In 1980, the MWSS filed with the RTC of Rizal an application for registration of
title of eleven (11) parcels of land, situated in San Mateo, Rizal. An aqueduct pipeline
belonging to MWSS was buried under the subject lands long before World War II. MWSS
further alleged ownership of the subject properties since 1945. Petitioners opposed
claiming ownership over certain portions of the properties and supported their
respective claims by presenting certificates of title. TC decided in favor of petitioners,
relying mainly on the certificates of title presented. MWSS appealed to the CA which
ruled differently. Reasoning: 1) the property covered by the certificates of title
presented by petitioners merely adjoins and are adjacent to the property claimed by
MWSS. Such is shown by the technical descriptions in the certificates of title presented.
The parcels of land covered by the certificates of title do not overlap or encroach on
the property claimed by MWSS. 2) the aqueducts were installed and buried long before
WW II, under untitled land, giving rise to the presumption that such land was "public
land". 3) MWSS acquired ownership by prescription. It is a matter of public knowledge
and judicial notice that the pipes existed and were buried under the land before WW II
and its existence was indicated above the ground by " pilapils".
Issue: Is the MWSS the owner of the lands in controversy?
Held: YES.
The titles presented by petitioners, while showing ownership, is not of the land claimed,
but over the adjoining parcels of land. The technical descriptions in the titles presented
by petitioners betray them as adjacent and adjoining owners of the land claimed by
MWSS for registration. A torrens certificate of title covers only the land described therein
together with improvements existing thereon, if any, nothing more.
MWSS presented tax declarations to buttress its ownership of the land. True, tax
declarations do not prove ownership. However, tax declarations can be strong
evidence of ownership when accompanied by possession for a period sufficient for
prescription. Since MWSS possessed the land in the concept of owner for more than
thirty (30) years preceding the application, MWSS acquired ownership by prescription.
By placing the pipelines under the land, there was material occupation of the land by
MWSS, subjecting the land to its will and control. Petitioners cannot argue that MWSS'
possession was not "open". The existence of the pipes was indicated above the ground
by " pilapils". Even assuming arguendo that the pipes were "hidden" from sight,
petitioner cannot claim ignorance of the existence of the pipes. The possession must be
public in order to be the basis for prescription. Petitioners also cannot claim that MWSS
abandoned its possession. There is no showing that by discontinuing the use of the
pipes, MWSS voluntarily renounced its claim over the land. Petitioners did not prove that
the spes recuperendi was gone and the animus revertendi was given up.

Grant of Title/Confirmation of Imperfect Title on Lands

BRACEWELL vs. COURT OF APPEALS, G.R. No. 107427, January 25, 2000
Facts: In 1908, Maria Cailles acquired certain parcels of land in Las Pinas, Metro
Manila. In 1961, Cailles sold the same to her son, petitioner James Bracewell, Jr. In
1963, Bracewell filed before the CFI an action for confirmation of imperfect title under
Sec 48(b) of CA No. 141. The Solicitor General opposed petitioners application on the
grounds that neither he nor his predecessors-in-interest possessed sufficient title to the
subject land nor have they been in open, continuous, exclusive and notorious
possession and occupation of the same for at least thirty (30) years prior to the
application, and that the subject parcels of land were only classified as alienable or
disposable on March 27, 1972.
Issue: Are the lands in question alienable or disposable at the time of the application
for confirmation of imperfect title?
Held: NO. Under the Regalian doctrine, all lands of the public domain belong to the
State, and that the State is the source of any asserted right to ownership in land and
charged with conservation of such patrimony. This same doctrine also states all lands
not otherwise appearing to be clearly within private ownership are presumed to belong
to the State. Hence, the burden of proof in overcoming the presumption of State
ownership of lands of the public domain is on the person applying for registration. The
applicant must also show that the land subject of the application is alienable or
disposable. This Bracewell failed to do. On the contrary, it was conclusively shown by
the government that the same were only classified as alienable or disposable on
March 27, 1972. Thus, even granting that Bracewell and his predecessors-in-interest
had occupied the same since 1908, he still cannot claim title thereto by virtue of such
possession since the subject parcels of land were not yet alienable land at that time
nor capable of private appropriation. The adverse possession which may be the basis
of a grant of title or confirmation of an imperfect title refers only to alienable or
disposable portions of the public domain.
Remedies Available to Aggrieved Party in Registration Proceedings
HEIRS OF PEDRO LOPEZ vs. DE CASTRO, G.R. No. 112905, February 3, 2000
Facts: Two applications for registration of the same parcel of land were filed 12 years
apart in different branches of the same CFI, but a certificate of title was issued in one
case while the other is still pending appeal. The first application was filed in 1956 by
Pedro Lopez, et. al. with Branch III of the CFI ofCavite. An order for the issuance of
decree for registration was promulgated which became final in 1980. The second
application was filed by private respondents Honesto de Castro, et. al. in 1967 before
Branch IV of the same CFI in Tagaytay City. In 1981, the certificate of title in favor of the
De Castros were discovered in the course of the examination of the records for the
purpose of the issuance of the decree of registration in favor of Lopez, et. al.
Consequently, the trial court declared that it has lost jurisdiction over the registration
proceedings in view of the title issued by the Tagaytay Branch in favor of the De
Castros over the same land.

Seven (7) years later, or in 1988, the heirs of Pedro Lopez, et al. filed a complaint
for execution of judgment and cancellation of land titles of De Castro, et. al. before the
RTC of Cavite at Tagaytay City. They alleged that the Tagaytay Branch could not have
acquired jurisdiction over the registration proceeding as the res is already within the
jurisdiction of the Cavite Branch. De Castro, et. al. interposed the defenses of
prescription, laches and/or estoppel and failure to state a cause of action. The
complaint was denied. On appeal, the CA stressing the indefeasibility of title under
the Torrens System of land registration, echoed the lower court's ruling that the decree
of registration in favor of respondents cannot be reopened or set aside in a "collateral
proceeding such as the one in the case at bar which has for its objective the execution
of a judgment which apparently has become dormant."
Issue:

Should the Torrens Certificate of Title issued in favor of De Castro be nullified?

Held: NO. First, the Court is not persuaded that the registration proceedings instituted
by De Castro, et. al. should be nullified by reason of the fact that theCavite City branch
of the same court was already proceeding with another registration case for the same
piece of land. In land registration proceedings, the rule is that whoever first acquires
title to a piece of land shall prevail. This rule refers to the date of the certificate of title
and not to the date of filing of the application for registration of title. Hence, even
though an applicant precedes another, he may not be deemed to have priority of
right to register title. As such, while his application is being processed, an applicant is
duty-bound to observe vigilance and to take care that his right or interest is duly
protected.
Second, Lopez, et. al. failed to exercise the due diligence required of them as
applicants for land registration. They let almost 7 years to pass from discovery of the
registration of the land in favor of De Castro, et. al. before they acted to revive what
already was a dormant judgment. They were guilty of laches as they neglected or
omitted to assert a right within a reasonable time. An applicant for registration has but
a one-year period from the issuance of the decree of registration in favor of another
applicant, within which to question the validity of the certificate of title issued pursuant
to such decree. Once the one-year period has lapsed, the title to the land becomes
indefeasible. However the aggrieved party is without a remedy at law. If the property
has not yet passed to an innocent purchaser for value, an action for reconveyance is
still available. If the property has passed into the hands of an innocent purchaser for
value, the remedy is an action for damages against those who employed the fraud,
and if the latter are insolvent, an action against the Treasurer of thePhilippines for
recovery against the Assurance Fund. Recognizing the futility of these actions,
aggrieved applicants sought protection under the provisions of the Rules of Court by
an action for revival and execution of judgment. However, the provisions of the Rules
are merely suppletory to special laws governing land registration proceedings and
hence, cannot prevail over the latter.
GRANT/TRANSFER OF FRIAR LANDS
DELA TORRE vs. COURT OF APPEALS, G.R. No. 113095, February 8, 2000
Facts: This case involves a tract of friar land titled in the name of the government
which was bought by Mamerto dela Torre for P110.00 payable in installments. Mamerto
then occupied the subject land until his death. Meanwhile, respondent Isabelo dela
Torre obtained from the Director of Lands a Deed of Conveyance executed in his favor
covering the subject property, on the strength of a Joint Affidavit, executed by his

father, Feliciano, and then minor nephew, petitioner Eliseo dela Torre, certifying that he
bought the subject parcel of land from Mamerto for P400. Thus, a TCT was issued in
Isabelos name.
Issue: Was there a valid grant of the disputed friar lands in favor of Isabelo?
Held:
NO. The grant made by the government of the subject property in favor of
Isabelo was invalid. In case the holder of the certificate shall have sold his interest in the
land before having complied with all the conditions thereof, the purchaser from the
holder of the certificate shall be entitled to all the rights of the holder of the certificate
upon presenting his assignment to the Chief of the Bureau of Public Lands for
registration. In order that a transfer of the rights of a holder of a certificate of sale of
friar lands may be legally effective, it is necessary that a formal certificate of transfer be
drawn up and submitted to the Chief of the Bureau of Public Lands for his approval
and registration. The law authorizes no other way of transferring the rights of a holder of
a certificate of sale of friar lands. In the case at bar, no such assignment or formal
certificate of transfer was submitted to the Bureau of Public Lands for its approval and
registration.
Free Patent
ROBLES vs. COURT OF APPEALS, G.R. No. 123509, March 14, 2000
Facts: The property subject of this case is originally owned by Leon Robles. When he
died, it passed to his son Silvino who declared the property in his name and paid the
taxes thereon. Upon the latters death, his widow and children inherited the property.
Petitioners Lucio Robles, et al. were the children of Silvino, and Hilario Robles is their halfbrother. The task of cultivating was assigned to Lucio while the payment of the land
taxes was entrusted to Hilario. For unknown reason, the tax declaration of the parcel of
land in the name of Silvino was cancelled and transferred to Exequiel Ballena. Ballena
secured a loan from Antipolo Rural Bank using the tax declaration as security.
Somehow the tax declaration was transferred to the name of Antipolo Rural Bank and
later was transferred to the name of respondent- spouses Hilario and Andrea Robles.
Andrea secured a loan from Cardona Rural Bank using the tax declaration as security.
For failure to pay the mortgage debt, the property was foreclosed with Cardona Rural
Bank emerging as the highest bidder. The bank sold the property to spouses Vergel
and Ruth Santos. In 1988, the spouses Santos took possession of the property and was
able to secure a Free Patent. Petitioners then filed an action for quieting of title.
Issue:

Is the free patent issued to the spousesSantos valid?

Held: NO. The free patent issued is not valid. In the light of their open, continuous
and notorious possession and occupation of the land, petitioners are deemed to have
acquired by operation of law, a right to a grant, a government grant without a
necessity of a certificate of title being issued. The land was segregated from the public
domain. Accordingly, the Director of Lands had no authority to issue a free patent
thereto in favor of another person. Verily, jurisprudence holds that free patent covering
private land is void.
Presumptive Conclusiveness of Torrens Title
LIM vs. COURT OF APPEALS, G.R. No. 124715, January 24, 2000
Facts:
Petitioner Rufina Lim is the surviving spouse of the late Pastor Lim whose
estate is the subject of estate proceedings. Private respondents Auto Truck Corp., et al.

are domestic corporations which owned real properties covered under

theTorrens system. These properties were included in the inventory of the estate of
Pastor. Respondent corporations filed a motion for the lifting of the lis pendens and the
exclusion of said properties from the estate of the decedent. Rufina, on the other
hand, argued that said properties must be included because the assets, capital, and
equity of respondent corporations are personally owned by Pastor.
Issue: Should the properties in question be included in the inventory of the estate of
Pastor?
Held:
NO. If a property covered by Torrens title is involved, the presumptive
conclusiveness of such title should be given due weight, and in the absence of strong
compelling evidence to the contrary, the holder thereof should be considered as the
owner of the property in controversy until his title is nullified or modified in an
appropriate ordinary action, particularly, when possession of the property itself is in the
persons named in the title. A perusal of the records would reveal that no strong
compelling evidence was ever presented by petitioner to bolster her bare assertions as
to the title of the deceased Pastor Lim over the properties. Even so, P.D. 1529 (The
Property Registration Decree) proscribes collateral attack on Torrens Title. It provides
that 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.
Inasmuch as the real properties included in the inventory of the estate of Pastor
are in the possession of and are registered in the name of private respondent
corporations, which under the law possess a personality separate and distinct from their
stockholders, and in the absence of any cogency to shred the veil of corporate fiction,
the presumption of conclusiveness of said titles in favor of private respondents should
stand undisturbed. Therefore, the properties in question should not be included from
the inventory of the property of the estate.
Tenancy
BAUTISTA vs. ARANETA, G.R. No. 135829, February 22, 2000
Facts: In 1978, petitioner Bayani Bautista allegedly entered into an oral tenancy
agreement with Gregorio Araneta II and had since then, cultivated and possessed the
land in an open, peaceful and continuous manner. Bayanis possession however was
disturbed when in 1991, a group of armed men sent by respondent, Patricia Araneta,
successor of GA II, ordered Bayani to vacate the land. Bayani filed a complaint
praying for injunctive relief and for recognition of his right as tenant. Patricia, on the
other hand, filed a counterclaim to dismiss the complaint and eject Bayani.
The Provincial Adjudicator decided in favor of Bayani. The CA reversed the same.
It held that Bayani has not been constituted as a tenant by the landowner.
Issue: Is respondent Patricia Araneta bound by the alleged oral leasehold
agreement between Bayani and Gregorio Araneta II?
Held: NO. The requisites of a tenancy relationship are: (1) the parties are the
landowner and the tenant; (2) the subject is agricultural land; (3) there is consent by
the landowner; (4) there is personal cultivation; and (5) there is sharing of harvest.
Bayani is not a tenant of the disputed land. Bayani admitted in his own testimony that
he does not even know the landowner as he was not introduced to the same. Further,
Bayani did not establish that Gregorio, whom he has known and believed as the owner
of the land, became or was ever, the landowner. Since he hinges his right on his

alleged agreement with Gregorio, it follows that his position is untenable since it was
never shown that Gregorio has a right on the landholding. In Lastimosa vs. Blanco, the
SC has ruled that tenancy relationship can only be created with the consent of the
true and lawful landholder who is either the owner, lessee, usufructuary or legal
possessor of the land, and not thru the acts of the supposed landholder who has no
right to the land subject of the tenancy.
RUPA, SR. vs. COURT OF APPEALS, G.R. No. 80129, January 25, 2000
Facts: Claiming that he was the agricultural share tenant and overseer of parcels of
coconut lands, petitioner Gerardo Rupa commenced an action for redemption on
March 26, 1981 against private respondent Magin Salipot, the vendee in the sale made
by spouses Vicente and Patrocinia Lim in January 1981 without any prior written or
verbal notice required by law. Rupa came to know about the sale when he was
informed in writing by the former landowner on February 16, 1981.
Both the RTC and CA shared the view that Rupa is not a share tenant and
accordingly dismissed the complaint for redemption.
Issue:

Is Rupa a share tenant so as to be entitled to the right of redemption?

Held:
YES. A tenant is defined under Section 5 (a) of Republic Act No. 1199 as a
person who himself and with the aid available from within his immediate farm
household cultivates the land belonging to or possessed by another, with the latter's
consent, for purposes of production, sharing the produce with the landholder under the
share tenancy system, or paying to the landholder a price certain or ascertainable in
produce or in money or both under the leasehold tenancy system. Briefly stated, for this
relationship to exist, it is necessary that:
1. The parties are the landowner and the tenant;
2. The subject is agricultural land;
3. There is consent;
4. The purpose is agricultural production;
5. There is personal cultivation; and
6. There is sharing of harvests.
Upon proof of the existence of the tenancy relationship, Rupa could avail of the
right of redemption under RA 3844. This right of redemption is validly exercised upon
compliance with the following requirements: a) the redemptioner must be an
agricultural lessee or share tenant; b) the land must have been sold by the owner to a
third party without prior written notice of the sale given to the lessee or lessees and the
DAR in accordance with Sec. 11, RA 3844, as amended; c) only the area cultivated by
the agricultural lessee may be redeemed; d) the right of redemption must be exercised
within 180 days from notice; and e) there must be an actual tender or valid
consignation of the entire amount which is the reasonable price of the land sought to
be redeemed.
The statements of Rupa in the criminal case that he is an administrator of the
landowners are not sufficient basis to overcome the rights of the petitioner as provided
in the Constitution and Agrarian statutes. The essence of agricultural tenancy lies in the
establishment of owner-cultivatorship and the economic family-size farm as the basis
of Philippine agriculture, and as a consequence, divert landlord capital in agriculture to
industrial development. Rupas evidence to prove the tenancy relationship consisted
of his own testimony and those of his witnesses from whose declarations it appears that
the petitioner has physically possessed the landholding continuously until he was
ejected from it. Rupa lives on the landholding and he has built a house next to the
copra kiln. It has also been established that Rupa has cultivated the land from the time

he has taken possession thereof, although there may have already been existing
coconut trees in the landholding. The fact that Rupa has been planting coconut
seedlings and minor crops in the vacant portions of the subject land as well as cleaning
and gathering coconuts to process them into copra is borne out by the records. Further
indicating the tenancy relationship between the landlord and Rupa is their agreement
to share 50/50. The sharing arrangement taken together with other factors
characteristic of tenancy shown to be present in the case at bar, strengthens the claim
of Rupa that indeed, he is a tenant.
PHILBANCOR FINANCE vs. COURT OF APPEALS, G.R. No. 129572, June 26, 2000
Facts:
Petitioner Vicente Hizon, Jr. is the owner of agricultural lands located in
Balite, San Fernando, Pampanga and the private respondents Alfredo Pare, Pablo
Galang and Amado Vie are the legitimate and bona fide tenants thereof. The said
lands were mortgaged by Hizon to petitioner Philbancor which were later on
extrajudicially foreclosed upon default of Hizon in the payment of his obligations.
Subsequently, the lands were sold at public auction to petitioner Philbancor. Seven
years after the registration of the sale with the Register of Deeds, private respondents
filed with the Provincial Agrarian Reform Adjudication Board (PARAB) a complaint for
maintenance of possession with redemption and tenancy right of pre-emption against
petitioners Philbancor and Hizon.
Issue:

Can the private respondents maintain their possession of the subject lands?

Held: YES. Private respondents may continue in possession and enjoyment of the
land in question as legitimate tenants because the right of tenancy attaches to the
landholding by operation of law. The leasehold relation is not extinguished by the
alienation or transfer of the legal possession of the landholding.
GREENFIELD REALTY CORP. vs. CARDAMA, G.R. No. 129246, January 25, 2000
Facts: Private respondents Loreto Cardama, et al. claim to have succeeded their
father Hermogenes Cardama who died in 1989 in the latters tenancy rights, and
should be declared as leasehold tenants and actual tillers of the subject irrigated rice
land. It is alleged that the leasehold tenancy began in 1978 through a verbal
agreement entered into by and between Independent Realty Corp. (IRC) and the late
Hermogenes wherein the former had designated the latter to take over the
maintenance of said landholding which was then undeveloped and uncultivated but
with the aid of the immediate members of their respective families became
productive as irrigated rice land. To prove their contention, the Cardamas submitted
their up-to-date payment of the lease rentals as evidenced by the receipts issued by
IRC and petitioner Greenfield Realty Corp. (GRC).
Issue:
land?

Are the private respondents bona fide tenants of the subject irrigated rice

Held: YES. The DARAB ruled that Loreto, et al. cannot simultaneously claim the right
to succeed since RA 3844 allows only one heir to succeed to the tenancy of the
deceased tenant in the order of preference prescribed by Section 9 of the said law. In
this case however, the land is not cultivated by Hermogenes alone but with other
tenants who are likewise qualified and who are related to him. Thus, it can be said that
the entitlement of the other possessors is not by virtue of succession to the rights of a
predecessor-in-interest, but in their individual capacity as tenants therein simultaneously

with an ascendant. It is to be noted that the land herein involved is more than 10
hectares which cannot be personally cultivated by Hermogenes alone.
Under Section 22 of RA 6657, the Comprehensive Agrarian Reform Law, those
entitled to the award of the land are: Section 22. Qualified Beneficiaries the lands
covered by the CARP shall be distributed as much as possible to landless residents of
the same barangay or in the absence thereof, landless residents of the same
municipality in the following order of priority:
h.)
agricultural lessees and share tenants
i.) regular farm workers
j.) seasonal farmworkers
k.)
other farmworkers
l.) actual tillers or occupants of public lands
m.) collective or cooperatives of the above beneficiaries
n.)
others directly working on the land
Being the agricultural lessees on the land, Loreto et al. are qualified beneficiaries
absent any showing that they have been validly ejected or removed therefrom.
Preferential Rights of Tenants under P.D. 1517
DEE v. COURT OF APPEALS, G.R. No.108205, February 15, 2000
Facts: Petitioners are occupants of the lands that belonged to Alejandro Castro.
Upon Castros death, his wife and son sold the lands for P500 per square meter to Cesar
Gatdula, a tenant of the land. Pending the transfer of the titles, Gatdula offered to sell
the disputed lots at P3,000 per square meter to each of the petitioners who were
occupants of the lands.. Petitioners did not buy at the price offered. They filed a
complaint against Gatdula for the exercise of their preferential right to purchase the
lands under Sec.6 of P.D. 1517, which grants pre-emptive rights to (1) legitimate tenants
who have resided on the land for ten years or more who have built their homes on the
land and (2) residents who have legally occupied the land by contract, continuously
for the last ten years.
Issue: Was the sale to Gatdula alone, among the many tenants sufficient
compliance with P.D. 1517?
Held:
YES. The Castro heirs offered petitioners the chance to buy the land which
they respectively occupied. Gatdula, a tenant, expressed his intention to buy the land
provided he be given time to raise the funds. Petitioners stopped paying rent after the
death of Alejandro Castro, and they offered no proof that they did pay. They also
failed to show that they have resided on the land for ten years or more. Nor have they
shown that they are residents who have legally occupied the land by contract,
continuously for the last ten years and were entitled to benefit from the provisions of
P.D. 1517. With their failure to establish entitlement thereto, the offer and sale of the
land to Gatdula could not be said to be outside the pale of the Decree.
Jurisdictional Requirements for Reconstitution of Title
HEIRS OF EULALIO RAGUA vs. COURT OF APPEALS,
G.R. 88521-22 & 89366-67, January 31, 2000
Facts: A petition for reconstitution of title was filed by Eulalio Ragua in 1964 covering
439 hectares of land situated in QC. He averred that the owners duplicate of the OCT
was lost and destroyed in 1945 when his personal effects and papers were eaten by

termites. The petition was opposed by several parties contending that there was failure
to comply with the jurisdictional requirements for judicial reconstitution under RA 26 Sec.
12 & 13. The lower court ordered the Register of Deeds to reconstitute in the name of
Eulalio. However, the CA reversed the decision, holding that the TC had no jurisdiction
because of Eulalios failure to comply with the requirements of the said law and that
the latters action is also barred by laches.
Issue:
title?

Did the trial court acquire jurisdiction over the proceedings for reconstitution of

Held: Petitioners admittedly did not comply with the requirements of Sec. 12 (d), (e)
and (g), namely: The petition did not state (1) the nature and description of the
buildings and improvements, if any, which do not belong to the owner of the land, and
the names and addresses of the owners of such building and improvements, (2) the
names and addresses of the occupants of the adjoining properties and of all persons
who may have any interest in the property, and (3) that no deeds or other instrument
affecting the property may have been presented for registration. Neither do this data
appear in the notice of hearing. Besides, petitioners also did not comply with the
notice and publication under Sec. 13 because the order directed that the notice be
posted at theCaloocan City Hall, not in QC, where the land is situated.
We have ruled that the failure to comply with the requirements of publication and
posting of notices prescribed in RA 26 Sec. 12 & 13 is fatal to the jurisdiction of the
court. Hence, non-compliance with the jurisdictional requirements renders its decision
approving the reconstitution and all proceedings therein utterly null and void.
Moreover, petitioners filed the petition for reconstitution 19 years after the title was
allegedly lost or destroyed. Hence, petitioners are guilty of laches.