1.
) CRISTOBAL vs MELCHOR
FACTS:
- The plaintiff was formerly employed as a private secretary in the President's Private Office,
Malacañang, Manila, having been appointed to that position on July 1, 1961 with a salary of P4,188.00
per annum. He is a third grade civil service eligible.
- Secretary Amelito R. Mutuc, by means of a letter dated January 1, 1962, informed the
plaintiff that his services as private secretary in the President's Private Office were "terminated
effective today."
- Sometime in May 1962, when the civil action filed by Raul R. Ingles, et als. was still pending
in the Court of First Instance of Manila. the dismissed employees who filed said action were recalled
to their positions in the Office of the President, plaintiff was one of those who had not been fortunate
enough to be reappointed to any positions as befits his qualifications.
- He waited for Secretary Mutuc to make good his assurance that he would be recalled to the
service, until Secretary Mutuc was replaced by other executive secretaries who likewise assured the
plaintiff of assistance to be reemployed at "the opportune time."
ISSUE:
Is the principle of laches or non-compliance with the "Statute of Limitations" applicable against
appellant?
HELD:
No. Laches not applicable to Appellant.
- Laches is 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 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.
- There are certain exceptional circumstances attending which take this case out of the rule enunciated
above and lead Us to grant relief to appellant.
1. There was no acquiescence to or inaction on the part of Jose Cristobal amounting to a bandonment
of his right to reinstatement in office.Cristobal, with the other dismissed employees, sought
reconsideration in a letter dated January 3, 1962, calling inter alia the attention of then Executive
Secretary Amelito Mutuc that he (Cristobal) was a civil eligible employee with eight years of service
in the government and consequently entitled to security of tenure under the Constitution. This was
followed by another letter of January 26, 1962.Cristobal was not one of the plaintiffs in the civil case,
it is true, but his non-participation is not fatal to his cause of action. During the pendency of the civil
case Cristobal continued to press his request for reinstatement together with the other employees who
had filed the complaint and was in fact promised reinstatement.
The essence of laches is not merely lapse of time. It is essential that there be also acquiescence in the
alleged wrong or lack of diligence in seeking a remedy. Here plaintiffs, or others representing them,
protested ... and ever since they have ... persisted in the diligent pursuit of a remedy ... Where the
cause of action of such a nature that a suit to enforce it would be brought on behalf, not only the
Plaintiff, bit of all persons similarly situated, it is not essential that etch such person should intervened
in the suit brought order that the be deemed thereafter free from the laches which bars those no sleep
on the rights.
2. It was an act of the government through its responsible officials more particularly then Executive
Secretary Amelito Mutuc and his successors which contributed to the alleged delay in the filing of
Cristobal's present complaint for reinstatement.
The evidence of Cristobal establish the following: After the Ingles suit was filed in court, the
dismissed employees, Cristobal included, continued to seek reconsideration of their dismissal. It was
then that Executive Secretary Mutuc assured the employees that without prejudice to the continuation
of the civil action, he would work for their reinstatement. It was this continued promise of the
government officials concerned which led Cristobal to bide his time and wait for the Office of the
President to comply with its commitment. Furthermore, he had behind him the decision of the
Supreme Court in Ingles vs. Mutuc which he believed should be applied in his favor. But when
Cristobal, in answer to his various letters, received the letter of May 19, 1971 from the Office of the
President denying his reinstatement and declaring the matter "definitely closed" because of his failure
to file an action in court within one year from his separation, it was only then that he, set the necessity
of seeking redress from the courts.
2.) SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS and
DISTRICT ENGINEER CELESTINO R. CONTRERAS, Petitioners,
vs.
SPOUSES HERACLEO and RAMONA TECSON, Respondents.
DECISION
PERALTA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Court of
Appeals (CA) Decision1 dated July 31, 2007 in CA-G.R. CV No. 77997. The assailed decision
affirmed with modification the Regional Trial Court (RTC)2 Decision3 dated March 22, 2002 in Civil
Case No. 208-M-95.
The case stemmed from the following factual and procedural antecedents:
Respondent spouses Heracleo and Ramona Tecson (respondents) are co-owners of a parcel of land
with an area of 7,268 square meters located in San Pablo, Malolos, Bulacan and covered by Transfer
Certificate of Title (TCT) No. T-430064 of the Register of Deeds of Bulacan. Said parcel of land was
among the properties taken by the government sometime in 1940 without the owners’ consent and
without the necessary expropriation proceedings and used for the construction of the MacArthur
Highway.5
In a letter6 dated December 15, 1994, respondent spouses Tecson demanded the payment of the fair
market value of the subject parcel of land. Petitioner Celestino R. Contreras (petitioner Contreras),
then District Engineer of the First Bulacan Engineering District of petitioner Department of Public
Works and Highways (DPWH), offered to pay the subject land at the rate of P0.70 per square meter
per Resolution of the Provincial Appraisal Committee (PAC) of Bulacan.7 Unsatisfied with the offer,
respondent spouses Tecson demanded for the return of their property or the payment of compensation
at the current fair market value.8
As their demand remained unheeded, respondent spouses Tecson filed a Complaint9 for recovery of
possession with damages against petitioners, praying that they be restored to the possession of the
subject parcel of land and that they be paid attorney’s fees.10 Respondents claimed that the subject
parcel of land was assessed at P2,543,800.00.11
Instead of filing their Answer, petitioners moved for the dismissal of the complaint on the following
grounds: (1) that the suit is against the State which may not be sued without its consent; (2) that the
case has already prescribed; (3) that respondents have no cause of action for failure to exhaust
administrative remedies; and (4) if respondents are entitled to compensation, they should be paid only
the value of the property in 1940 or 1941. 12
On June 28, 1995, the RTC issued an Order13 granting respondents’ motion to dismiss based on the
doctrine of state immunity from suit. As respondents’ claim includes the recovery of damages, there is
no doubt that the suit is against the State for which prior waiver of immunity is required. When
elevated to the CA,14 the appellate court did not agree with the RTC and found instead that the
doctrine of state immunity from suit is not applicable, because the recovery of compensation is the
only relief available to the landowner. To deny such relief would undeniably cause injustice to the
landowner. Besides, petitioner Contreras, in fact, had earlier offered the payment of compensation
although at a lower rate.Thus, the CA reversed and set aside the dismissal of the complaint and,
consequently, remanded the case to the trial court for the purpose of determining the just
compensation to which respondents are entitled to recover from the government.15 With the finality of
the aforesaid decision, trial proceeded in the RTC.
The Branch Clerk of Court was initially appointed as the Commissioner and designated as the
Chairman of the Committee that would determine just compensation, 16 but the case was later referred
to the PAC for the submission of a recommendation report on the value of the subject property. 17 In
PAC Resolution No. 99-007,18the PAC recommended the amount of P1,500.00 per square meter as the
just compensation for the subject property.
19
On March 22, 2002, the RTC rendered a Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the Department of Public Works and Highways or its
duly assigned agencies are hereby directed to pay said Complainants/Appellants the amount
of One Thousand Five Hundred Pesos (P1,500.00) per square meter for the lot subject matter
of this case in accordance with the Resolution of the Provincial Appraisal Committee dated
December 19, 2001.
SO ORDERED.20
On appeal, the CA affirmed the above decision with the modification that the just compensation stated
above should earn interest of six percent (6%) per annum computed from the filing of the action on
March 17, 1995 until full payment.21
In its appeal before the CA, petitioners raised the issues of prescription and laches, which the CA
brushed aside on two grounds: first, that the issue had already been raised by petitioners when the case
was elevated before the CA in CA-G.R. CV No. 51454. Although it was not squarely ruled upon by
the appellate court as it did not find any reason to delve further on such issues, petitioners did not
assail said decision barring them now from raising exactly the same issues; and second, the issues
proper for resolution had been laid down in the pre-trial order which did not include the issues of
prescription and laches. Thus, the same can no longer be further considered. As to the propriety of the
property’s valuation as determined by the PAC and adopted by the RTC, while recognizing the rule
that the just compensation should be the reasonable value at the time of taking which is 1940, the CA
found it necessary to deviate from the general rule. It opined that it would be obviously unjust and
inequitable if respondents would be compensated based on the value of the property in 1940 which
is P0.70 per sq m, but the compensation would be paid only today. Thus, the appellate court found it
just to award compensation based on the value of the property at the time of payment. It, therefore,
adopted the RTC’s determination of just compensation of P1,500.00 per sq m as recommended by the
PAC. The CA further ordered the payment of interest at the rate of six percent (6%) per annum
reckoned from the time of taking, which is the filing of the complaint on March 17, 1995.
Aggrieved, petitioners come before the Court assailing the CA decision based on the following
grounds:
I.
THE COURT OF APPEALS GRAVELY ERRED IN GRANTING JUST COMPENSATION TO
RESPONDENTS CONSIDERING THE HIGHLY DUBIOUS AND QUESTIONABLE
CIRCUMSTANCES OF THEIR ALLEGED OWNERSHIP OF THE SUBJECT PROPERTY.
II.
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING JUST COMPENSATION TO
RESPONDENTS BECAUSE THEIR COMPLAINT FOR RECOVERY OF POSSESSION AND
DAMAGES IS ALREADY BARRED BY PRESCRIPTION AND LACHES.
III.
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURT’S
DECISION ORDERING THE PAYMENT OF JUST COMPENSATION BASED ON THE
CURRENT MARKET VALUE OF THE ALLEGED PROPERTY OF RESPONDENTS. 22
Petitioners insist that the action is barred by prescription having been filed fifty-four (54) years after
the accrual of the action in 1940. They explain that the court can motu proprio dismiss the complaint if
it shows on its face that the action had already prescribed. Petitioners likewise aver that respondents
slept on their rights for more than fifty years; hence, they are guilty of laches. Lastly, petitioners claim
that the just compensation should be based on the value of the property at the time of taking in 1940
and not at the time of payment.23
The petition is partly meritorious.
The instant case stemmed from an action for recovery of possession with damages filed by
respondents against petitioners. It, however, revolves around the taking of the subject lot by petitioners
for the construction of the MacArthur Highway. There is taking when the expropriator enters private
property not only for a momentary period but for a permanent duration, or for the purpose of devoting
the property to public use in such a manner as to oust the owner and deprive him of all beneficial
enjoyment thereof.24
It is undisputed that the subject property was taken by petitioners without the benefit of expropriation
proceedings for the construction of the MacArthur Highway. After the lapse of more than fifty years,
the property owners sought recovery of the possession of their property. Is the action barred by
prescription or laches? If not, are the property owners entitled to recover possession or just
compensation?
As aptly noted by the CA, the issues of prescription and laches are not proper issues for resolution as
they were not included in the pre-trial order. We quote with approval the CA’s ratiocination in this
wise:
Procedurally, too, prescription and laches are no longer proper issues in this appeal. In the pre-trial
order issued on May 17, 2001, the RTC summarized the issues raised by the defendants, to wit: (a)
whether or not the plaintiffs were entitled to just compensation; (b) whether or not the valuation would
be based on the corresponding value at the time of the taking or at the time of the filing of the action;
and (c) whether or not the plaintiffs were entitled to damages. Nowhere did the pre-trial order indicate
that prescription and laches were to be considered in the adjudication of the RTC. 25
To be sure, the pre-trial order explicitly defines and limits the issues to be tried and controls the
subsequent course of the action unless modified before trial to prevent manifest injustice.26
Even if we squarely deal with the issues of laches and prescription, the same must still fail. Laches is
principally a doctrine of equity which is applied to avoid recognizing a right when to do so would
result in a clearly inequitable situation or in an injustice.27 This doctrine finds no application in this
case, since there is nothing inequitable in giving due course to respondents’ claim. Both equity and the
law direct that a property owner should be compensated if his property is taken for public
use.28 Neither shall prescription bar respondents’ claim following the long-standing rule "that where
private property is taken by the Government for public use without first acquiring title thereto either
through expropriation or negotiated sale, the owner’s action to recover the land or the value thereof
does not prescribe."29
When a property is taken by the government for public use, jurisprudence clearly provides for the
remedies available to a landowner. The owner may recover his property if its return is feasible or, if it
is not, the aggrieved owner may demand payment of just compensation for the land taken.30 For failure
of respondents to question the lack of expropriation proceedings for a long period of time, they are
deemed to have waived and are estopped from assailing the power of the government to expropriate or
the public use for which the power was exercised. What is left to respondents is the right of
compensation.31 The trial and appellate courts found that respondents are entitled to compensation.
The only issue left for determination is the propriety of the amount awarded to respondents.
Just compensation is "the fair value of the property as between one who receives, and one who desires
to sell, x x x fixed at the time of the actual taking by the government." This rule holds true when the
property is taken before the filing of an expropriation suit, and even if it is the property owner who
brings the action for compensation.32
The issue in this case is not novel.
In Forfom Development Corporation [Forfom] v. Philippine National Railways [PNR],33 PNR entered
the property of Forfom in January 1973 for public use, that is, for railroad tracks, facilities and
appurtenances for use of the Carmona Commuter Service without initiating expropriation
proceedings.34 In 1990, Forfom filed a complaint for recovery of possession of real property and/or
damages against PNR. In Eusebio v. Luis,35 respondent’s parcel of land was taken in 1980 by the City
of Pasig and used as a municipal road now known as A. Sandoval Avenue in Pasig City without the
appropriate expropriation proceedings. In 1994, respondent demanded payment of the value of the
property, but they could not agree on its valuation prompting respondent to file a complaint for
reconveyance and/or damages against the city government and the mayor. In Manila International
Airport Authority v. Rodriguez,36 in the early 1970s, petitioner implemented expansion programs for
its runway necessitating the acquisition and occupation of some of the properties surrounding its
premises. As to respondent’s property, no expropriation proceedings were initiated.1âwphi1 In 1997,
respondent demanded the payment of the value of the property, but the demand remained unheeded
prompting him to institute a case for accion reivindicatoria with damages against petitioner. In
Republic v. Sarabia,37 sometime in 1956, the Air Transportation Office (ATO) took possession and
control of a portion of a lot situated in Aklan, registered in the name of respondent, without initiating
expropriation proceedings. Several structures were erected thereon including the control tower, the
Kalibo crash fire rescue station, the Kalibo airport terminal and the headquarters of the PNP Aviation
Security Group. In 1995, several stores and restaurants were constructed on the remaining portion of
the lot. In 1997, respondent filed a complaint for recovery of possession with damages against the
storeowners where ATO intervened claiming that the storeowners were its lessees.
The Court in the above-mentioned cases was confronted with common factual circumstances where
the government took control and possession of the subject properties for public use without initiating
expropriation proceedings and without payment of just compensation, while the landowners failed for
a long period of time to question such government act and later instituted actions for recovery of
possession with damages. The Court thus determined the landowners’ right to the payment of just
compensation and, more importantly, the amount of just compensation. The Court has uniformly ruled
that just compensation is the value of the property at the time of taking that is controlling for purposes
of compensation. In Forfom, the payment of just compensation was reckoned from the time of taking
in 1973; in Eusebio, the Court fixed the just compensation by determining the value of the property at
the time of taking in 1980; in MIAA, the value of the lot at the time of taking in 1972 served as basis
for the award of compensation to the owner; and in Republic, the Court was convinced that the taking
occurred in 1956 and was thus the basis in fixing just compensation. As in said cases, just
compensation due respondents in this case should, therefore, be fixed not as of the time of payment
but at the time of taking, that is, in 1940.
The reason for the rule has been clearly explained in Republic v. Lara, et al., 38 and repeatedly held by
the Court in recent cases, thus:
x x x "The value of the property should be fixed as of the date when it was taken and not the
date of the filing of the proceedings." For where property is taken ahead of the filing of the
condemnation proceedings, the value thereof may be enhanced by the public purpose for
which it is taken; the entry by the plaintiff upon the property may have depreciated its value
thereby; or, there may have been a natural increase in the value of the property from the time
it is taken to the time the complaint is filed, due to general economic conditions. The owner
of private property should be compensated only for what he actually loses; it is not intended
that his compensation shall extend beyond his loss or injury. And what he loses is only the
actual value of his property at the time it is taken x x x.39
Both the RTC and the CA recognized that the fair market value of the subject property in 1940
was P0.70/sq m.40Hence, it should, therefore, be used in determining the amount due respondents
instead of the higher value which is P1,500.00. While disparity in the above amounts is obvious and
may appear inequitable to respondents as they would be receiving such outdated valuation after a very
long period, it is equally true that they too are remiss in guarding against the cruel effects of belated
claim. The concept of just compensation does not imply fairness to the property owner alone.
Compensation must be just not only to the property owner, but also to the public which ultimately
bears the cost of expropriation.41
Clearly, petitioners had been occupying the subject property for more than fifty years without the
benefit of expropriation proceedings. In taking respondents’ property without the benefit of
expropriation proceedings and without payment of just compensation, petitioners clearly acted in utter
disregard of respondents’ proprietary rights which cannot be countenanced by the Court. 42 For said
illegal taking, respondent spouses Tecson are entitled to adequate compensation in the form of actual
or compensatory damages which in this case should be the legal interest of six percent (6%) per
annum on the value of the land at the time of taking in 1940 until full payment.43 This is based on the
principle that interest runs as a matter of law and follows from the right of the landowner to be placed
in as good position as money can accomplish, as of the date of taking. 44
WHEREFORE, premises considered, the pet1t10n is PARTIALLY GRANTED. The Court of Appeals
Decision dated July 31, 2007 in CAG.R. CV No. 77997 is MODIFIED, in that the valuation of the
subject property owned by respondents shall be F0.70 instead of P1,500.00 per square meter, with
interest at six percent ( 6o/o) per annum from the date of taking in 1940 instead of March 17, 1995,
until full payment.
3.) Development Bank of the Philippines (DBP) vs. Adil, 161 SCRA 307, No. L-48889, May 11,
1989
G.R. No. L-48889 May 11, 1989
DEVELOPMENT BANK OF THE PHILIPPINES (DBP), petitioner,
vs.
THE HONORABLE MIDPAINTAO L. ADIL, Judge of the Second Branch of the Court of First
Instance of Iloilo and SPOUSES PATRICIO CONFESOR and JOVITA
VILLAFUERTE,respondents.
GANCAYCO, J.:
The issue posed in this petition for review on certiorari is the validity of a promissory note which was
executed in consideration of a previous promissory note the enforcement of which had been barred by
prescription.
On February 10, 1940 spouses Patricio Confesor and Jovita Villafuerte obtained an agricultural loan
from the Agricultural and Industrial Bank (AIB), now the Development of the Philippines (DBP), in
the sum of P2,000.00, Philippine Currency, as evidenced by a promissory note of said date whereby
they bound themselves jointly and severally to pay the account in ten (10) equal yearly amortizations.
As the obligation remained outstanding and unpaid even after the lapse of the aforesaid ten-year
period, Confesor, who was by then a member of the Congress of the Philippines, executed a second
promissory note on April 11, 1961 expressly acknowledging said loan and promising to pay the same
on or before June 15, 1961. The new promissory note reads as follows —
I hereby promise to pay the amount covered by my promissory note on or before June 15, 1961. Upon
my failure to do so, I hereby agree to the foreclosure of my mortgage. It is understood that if I can
secure a certificate of indebtedness from the government of my back pay I will be allowed to pay the
amount out of it.
Said spouses not having paid the obligation on the specified date, the DBP filed a complaint dated
September 11, 1970 in the City Court of Iloilo City against the spouses for the payment of the loan.
After trial on the merits a decision was rendered by the inferior court on December 27, 1976, the
dispositive part of which reads as follows:
WHEREFORE, premises considered, this Court renders judgment, ordering the defendants Patricio
Confesor and Jovita Villafuerte Confesor to pay the plaintiff Development Bank of the Philippines,
jointly and severally, (a) the sum of P5,760.96 plus additional daily interest of P l.04 from September
17, 1970, the date Complaint was filed, until said amount is paid; (b) the sum of P576.00 equivalent to
ten (10%) of the total claim by way of attorney's fees and incidental expenses plus interest at the legal
rate as of September 17,1970, until fully paid; and (c) the costs of the suit.
Defendants-spouses appealed therefrom to the Court of First Instance of Iloilo wherein in due course a
decision was rendered on April 28, 1978 reversing the appealed decision and dismissing the complaint
and counter-claim with costs against the plaintiff.
A motion for reconsideration of said decision filed by plaintiff was denied in an order of August 10,
1978. Hence this petition wherein petitioner alleges that the decision of respondent judge is contrary to
law and runs counter to decisions of this Court when respondent judge (a) refused to recognize the law
that the right to prescription may be renounced or waived; and (b) that in signing the second
promissory note respondent Patricio Confesor can bind the conjugal partnership; or otherwise said
respondent became liable in his personal capacity. The petition is impressed with merit. The right to
prescription may be waived or renounced. Article 1112 of Civil Code provides:
Art. 1112. Persons with capacity to alienate property may renounce prescription already obtained, but
not the right to prescribe in the future.
Prescription is deemed to have been tacitly renounced when the renunciation results from acts which
imply the abandonment of the right acquired.
There is no doubt that prescription has set in as to the first promissory note of February 10, 1940.
However, when respondent Confesor executed the second promissory note on April 11, 1961 whereby
he promised to pay the amount covered by the previous promissory note on or before June 15, 1961,
and upon failure to do so, agreed to the foreclosure of the mortgage, said respondent thereby
effectively and expressly renounced and waived his right to the prescription of the action covering the
first promissory note.
This Court had ruled in a similar case that –
... when a debt is already barred by prescription, it cannot be enforced by the creditor. But a new
contract recognizing and assuming the prescribed debt would be valid and enforceable ... . 1
Thus, it has been held —
Where, therefore, a party acknowledges the correctness of a debt and promises to pay it after the same
has prescribed and with full knowledge of the prescription he thereby waives the benefit of
prescription. 2
This is not a mere case of acknowledgment of a debt that has prescribed but a new promise to pay the
debt. The consideration of the new promissory note is the pre-existing obligation under the first
promissory note. The statutory limitation bars the remedy but does not discharge the debt.
A new express promise to pay a debt barred ... will take the case from the operation of the statute of
limitations as this proceeds upon the ground that as a statutory limitation merely bars the remedy and
does not discharge the debt, there is something more than a mere moral obligation to support a
promise, to wit a – pre-existing debt which is a sufficient consideration for the new the new promise;
upon this sufficient consideration constitutes, in fact, a new cause of action. 3
... It is this new promise, either made in express terms or deduced from an acknowledgement as a legal
implication, which is to be regarded as reanimating the old promise, or as imparting vitality to the
remedy (which by lapse of time had become extinct) and thus enabling the creditor to recover upon his
original contract. 4
However, the court a quo held that in signing the promissory note alone, respondent Confesor cannot
thereby bind his wife, respondent Jovita Villafuerte, citing Article 166 of the New Civil Code which
provides:
Art. 166. Unless the wife has been declared a non compos mentis or a spend thrift, or is under civil
interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property
of the conjugal partnership without, the wife's consent. If she ay compel her to refuses unreasonably to
give her consent, the court m grant the same.
We disagree. Under Article 165 of the Civil Code, the husband is the administrator of the conjugal
partnership. As such administrator, all debts and obligations contracted by the husband for the benefit
of the conjugal partnership, are chargeable to the conjugal partnership. 5 No doubt, in this case,
respondent Confesor signed the second promissory note for the benefit of the conjugal partnership.
Hence the conjugal partnership is liable for this obligation.
WHEREFORE, the decision subject of the petition is reversed and set aside and another
decision is hereby rendered reinstating the decision of the City Court of Iloilo City of December
27, 1976, without pronouncement as to costs in this instance. This decision is immediately
executory and no motion for extension of time to file motion for reconsideration shall be
granted.
SO ORDERED.
4.) Insular Government v. Aldecoa
Prescription
Facts: The Attorney-General filed a complaint for the recovery of possession of two parcels of land,
belonging to the public use and domain, which were at present occupied by defendant Aldecoa & Co.
The latter claims to have the full and absolute ownership of said land by virtue of a verbal permit from
the politico-military governor of Surigao. Defendant constructed on said land a retaining wall, a pier
or wharf, a railway, and warehouses for the storage of coal, for its exclusive use and benefit.
The court rendered judgment and found that the land in question was public land and belonged to
the State, and ordered defendant to return it to plaintiff.
From the proceedings, it was clearly proved that nearly all the land in question was low land and
swampy, with aquatic bushes growing upon it; that it had been gradually raised by the action of the
sea.
It is, then, incontrovertible that the land in question is of the public domain and belongs to the State,
inasmuch as at the present time it is partly shore land and in part land formed by the action of the
sea.
Issue: Whether or not land reclaimed from the sea is susceptible of appropriation
Ruling: No. The shores and the lands reclaimed from the sea, while they continue to be devoted to
public uses and no grant whatever has been made of any portion of them to private persons, remain a
part of the public domain and are for public uses. Such shores and lands are not susceptible of
prescription, as they do not pertain to the commerce of men.
So long as the land in litigation belongs to the national domain and is reserved for public uses, it is not
capable of being appropriated by any private person, except through express authorization granted in
due form by a competent authority — a requisite which defendant was unable to prove for the purpose
of legalizing his possession.
The politico-military governor of Surigao having had no authority or power to grant the possession or
ownership of the said two parcels of land, could not have authorized their occupancy under a title of
ownership.
5.) SOTERA PAULINO MARCELO, GABRIELA M. ANGELES, SIMEONA CUENCO,
EMILIA MARCELO and RUBEN MARCELO, petitioners, vs. HON. COURT OF APPEALS,
FERNANDO CRUZ and SERVANDO FLORES, respondents.
DECISION
VITUG, J.:
The reversal of the 28th November 1996 decision[1] of the Court of Appeals setting aside that of the
Regional Trial Court (RTC), Branch 19, of Malolos, Bulacan, is sought in this petition for review on
certiorari. Petitioners seek the reinstatement of the RTC decision which has ordered respondents
Fernando Cruz and Servando Flores to return the ownership and possession of a portion of
unregistered and untitled land located in Sta. Lucia, Angat, Bulacan, to herein petitioners.
It would appear that on 06 October 1982, herein petitioners, heirs of the deceased Jose Marcelo, filed
with the Regional Trial Court of Malolos, Bulacan, an action for the recovery of a portion of
unregistered land in Sta. Lucia, Angat, Bulacan. The complaint, later amended on 12 October 1983,
averred that two parcels of land in Sta. Lucia, declared for taxation purposes under Tax Declarations
No. 2880 and No. 2882, owned by the late Jose Marcelo and his spouse, Sotera Paulino-Marcelo, had
been encroached, to the extent of 7,540[2] square meters thereof, by respondents Fernando Cruz and
Servando Flores.
In their answer, respondent Cruz and Flores denied the allegations of petitioners, assailing at the same
time the jurisdiction of the trial court to act on the complaint which, it was claimed, had effectively
asserted a cause of action for ejectment (unlawful detainer).
The appellate court adopted the summary of evidence made by the trial court; thus:
Evidence adduced by the plaintiffs through the testimony of plaintiff Gabriela Angeles showed that the
parcel of land subject of litigation covering Lot 3098 and embraced under Tax Declaration No. 2882
(Exh. A) was originally owned by spouses Jose Marcelo and Sotera Paulino and they had been in
continuous possession of said property since 1939.Following the death of plaintiffs father in 1965,
they discovered in 1967 that a portion of said property had been encroached by defendant Fernando
Cruz. Plaintiffs caused the relocation survey of said property and per plan of Lot 3096 and Lot 3098 of
the Angat Cadastre as surveyed for the heirs of Jose Marcelo (Exh. B), 7540 square meters of Lot
3098 had been encroached by defendant Fernando Cruz as indicated in the shaded portion of said plan
(Exh. B-1).
Defendant Fernando Cruz sold his property with an area of 13,856 square meters to defendant
Servando Flores pursuant to a deed of sale (Kasulatan ng Bilihan) dated November 3, 1968 (Exh. C)
which sale, includes the encroached portion (7,540 square meters of plaintiffs property) Defendant
Fernando Cruz heretofore purchased the said property from Engracia dela Cruz and Vicente Marta and
Florentino all surnamed Sarmiento, pursuant to a Kasulatan ng Partisyon sa Labas ng Hukuman at
Bilihang Patulayandated November 19, 1960 (Exh. D) covering an area of 6,000 square meters. The
Tax Declaration No. 4482 (Exh. E) covering the property in the name of Jorge Sarmiento and Engracia
Cruz covered an area of 6,800[3] square meters. As soon as the said property was sold to Fernando
Cruz, the adjoining property described and classified as parang with an area of 7,856 square meters
was declared by said Fernando Cruz in his name which circumstance, increased his landholding to
13,856 square meters (Exh. F). The said property was subsequently sold by defendant Fernando Cruz
to defendant Servando Flores.
According to Gabriela, they attempted to cultivate the disputed portion sometime in 1968, but were
barred from doing so by defendant Servando Flores who claimed that the area was part of the land he
bought from co-defendant Fernando Cruz.
On the other hand, both defendants testified to refute plaintiffs evidence. They invariably declared that
the portion sought to be recovered by plaintiffs is part of the land which defendant Fernando Cruz
acquired in 1960 from the Heirs of Jorge Sarmiento; that as stated in their document (Exh 2), the land
sold to defendant Fernando Cruz contained 6,000 square meters of palayero or riceland and 7,856
square meters of parang or pasture land; that defendant Fernando Cruz caused the entire parcel to be
surveyed sometime in 1967 (Exhs. 3 & 4), which he then declared for taxation purposes under Tax
Declaration No. 8505 (Exh. F); that on November 3, 1968 defendant Fernando Cruz sold the whole lot
to defendant Servando Flores (Exh. I), who thereupon occupied and cultivated it.[4]
Evaluating the evidence of the contending parties, the trial court found and ratiocinated:
The crux of the matter at issue apparently resolves on the so-called pasture land (parang) supposedly
sold by the Sarmientos and Engracia de la Cruz to defendant Fernando Cruz. The said 'parang' was
never included and/or embraced in the Tax Declaration No. 4882 (Exh. E) of the Sarmientos at the
time of the said sale in favor of defendant Fernando Cruz pursuant to an extrajudicial partition with
sale dated November 19, 1960 (Exh. D). This is evident as indicated by the fact that the same was only
declared by Fernando Cruz in his name in 1961 as evidenced by the tax declaration issued in his favor
(Exh. F). On the other hand, the said parang is a part and parcel of plaintiffs property to which they
had been in possession thereof prior to World War II and evidenced by Tax Declaration No. 2882
(Exh. A). The plan of Lot 3096 and Lot 3098 of the Angat Cadastre (Exhs. B and B-1) inevitably
indicated that what has been encroached by defendants refers to the parang of 7,540 square meters
which defendant Fernando Cruz declared the same in his name in 1961. This explains the unnecessary
increase of his property from 6,000 square meters which he purchased from the Sarmientos pursuant to
extrajudicial partition with sale and embraced under Tax Declaration No. 4882 (Exh. E), to 13,856
square meters.[5]
The trial court thereupon ruled in favor of petitioners; the dispositive portion of its decision concluded:
WHEREFORE, judgment is hereby rendered against the defendants ordering the following:
a. To return the ownership and possession of 7,540 square meters to the plaintiffs as indicated in the
relocation survey plan; and
b To pay attorneys fees in the amount of P5,000.00;
No actual and/or moral damages (sic) is awarded for lack of factual evidence.
The counterclaim is hereby dismissed for lack of factual and/or legal basis.[6]
Respondents Cruz and Flores went to the Court of Appeals; in its now assailed decision, the appellate
court reversed the judgment of the court a quo. Petitioners moved for a consideration; the motion,
however, was denied.
In this latest recourse, petitioners assail the holding of the Court of Appeals that the action initiated in
1982 by petitioners against respondent Flores would not prosper on the theory that Flores already has
acquired ownership of the disputed land by ordinary acquisitive prescription. Petitioners argue that
1. The respondent court erred in not applying the doctrine laid down by this Honorable Court in Tero
vs. Tero, 131 SCRA 105 considering that respondents never acquired the 7,540 square meters
lawfully, as the respondent court already stated that what was sold to respondent Cruz was the 6,800
square meters which he then sold to respondent Flores, hence respondents can not account as to how
they acquire said lot, whereas the petitioner proved the 7,540 square meters formed part of 19,231
square meters of their parents in their possession since 1939.
2. The respondent court erred in disregarding the findings of facts of the trial court, and substitute its
own perception of the facts contrary to the incontrovertible evidence.[7]
Petitioners assert that the property sold by the Sarmientos to respondent Cruz on 19 November 1960,
under a Kasulatan ng Partisyon sa Labas ng Hukuman at Bilihang Patuluyan, covers only the palayero
or riceland, which measure about 6,000 square meters, and that the parang, containing 7,856 square
meters, has not been included.
The petition must be denied.
Contrary to the insistence of petitioners, the Kasulatan ng Partisyon sa Labas ng Hukuman at Bilihang
Patuluyan. executed on 19 March 1960 by Engracia dela Cruz (widow of Jorge Sarmiento) and her
children Vicente Sarmiento, Maria Sarmiento and Florentino Sarmiento, pertained not only to the
palayero but also to the parang as well; this agreement provided thus:
1. Na akong si Engracia de la Cruz at ang aking yumao ng asawang si Jorge Sarmiento (nuong
nabubuhay ito) ay nakapagpundar ng isang lupa na ang buong description ay gaya ng sumusunod:
Isang parselang lupang PALAYERO na may kasamang PARANG (Cogonales) na matatagpuan sa
Barrio Ng Santa Lucia, Angat, Bulacan, P.I.
Ang Palayero ay may sukat na 6,000 metros cuadrados, klasipikado 2-b, amillarado P270.00 Tax No.
4482; at ang parang ay may sukat na 7,856 metros cuadrados.Humahangga sa Norte, kay Antonio de
la Rosa; Este, kina Fabian Garcia at Juan Geronimo; Sur, Kina Miguel Illescas, Ciriaco Reyes, y Juan
de la Cruz; Oeste, Juan de la Cruz hoy Jose Marcelo y Mariano de la Cruz hoy Felip de Leon. Walang
mejoras at ang hangganan sa paligid ay makikilala sa pamamagitan ng matutuwid na sikang o pilapil
na buhay.
2. Ayon sa Tax No. 4482 ay lupang palayero lamang ang nakatala, subalit itoy mayroong kasamang
parang na hindi lamang naipatala niyang nakaraang pasukan ng lupa sa tanggapan ng Assessor
Provincial, kayat ngayon ay magalang naming hinihiling na matala ang naturang parang.[8] (Emphasis
supplied)
Shortly after the execution of the deed of sale in his favor, respondent Cruz declared both parcels, i.e.,
the palayero and the parang, for taxation purposes in 1960 in the Office of the Provincial Assessor and
forthwith a new tax declaration was issued in his name for the entire 13,856 square meter property.
The trial court itself likewise found that the sale by the Sarmientos to respondent Cruz covered both
the riceland and the pasture land; it said:
x x x. It is worthy to note that the ownership of the adjoining property by defendant Fernando Cruz
originated from an extrajudicial partition with sale (Kasulatan ng Partisyon sa Labas ng Hukuman at
Bilihang Patuluyan dated November 19, 1960 x x x. Under the said document, Engracia de la Cruz and
her children Vicente, Marta, and Florentino, all surnamed Sarmiento, sold to defendant Fernando Cruz
a rice land containing an area of 6,000 square meters and embraced under Tax Declaration No. 4482
and a pasture land (parang) containing an area of 7,856 square meters. x x x[9]
In turn, respondent Cruz sold, on 03 November 1968, the 13,856 square meters of land to respondent
Flores under a Kasulatan ng Bilihan. Respondent Flores immediately took possession of the property
to the exclusion of all others and promptly paid the realty taxes thereon. From that time on, Flores had
been in possession of the entire area in the concept of an owner and holding it in that capacity for
almost fourteen (14) years before petitioners initiated their complaint on 06 October 1982.
Acquisitive prescription is a mode of acquiring ownership by a possessor through the requisite lapse of
time. In order to ripen into ownership, possession must be in the concept of an owner, public peaceful
and uninterrupted.[10] Thus, mere possession with a juridical title, such as, to exemplify, by a
usufructuary, a trustee, a lessee, an agent or a pledgee, not being in the concept of an owner, cannot
ripen into ownership by acquisitive prescription,[11] unless the juridical relation is first expressly
repudiated and such repudiation has been communicated to the other party.[12] Acts of possessory
character executed due to license or by mere tolerance of the owner would likewise be inadequate.[13]
Possession, to constitute the foundation of a prescriptive right, must be en concepto de dueno, or, to
use the common law equivalent of the term, that possession should be adverse; if not, such possessory
acts, no matter how long, do not start the running of the period of prescription.[14]
Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary. Ordinary
acquisitive prescription requires possession of things in good faith and with just title for the time fixed
by law;[15] without good faith and just title, acquisitive prescription can only be extraordinary in
character.
As regards, real or immovable property, Article 1134 of the Civil Code provides:
ART. 1134. Ownership and other real rights over immovable property are acquired by ordinary
prescription through possession of ten years.
Ordinary acquisitive prescription demands, as aforesaid, that the possession be in good faith and with
just title.[16] The good faith of the possessor consists in the reasonable belief that the person from
whom the thing is received has been the owner thereof and could thereby transmit that ownership.[17]
There is, upon the other hand, just title when the adverse claimant comes into possession of the
property through any of the modes recognized by law for the acquisition of ownership or other real
rights, but that the grantor is neither the owner nor in a position to transmit the right.[18] In Doliendo
vs. Biarnesa,[19] the Supreme Court has explained the law in Article 1130 of the Civil Code which
states that the title for prescription must be true and valid. Thus:
We think that this contention is based on a misconception of the scope and effect of the provisions of
this article of the Code in its application to ordinary prescription. It is evident that by a titulo
verdadero y valido in this connection we are not to understand a titulo que por si solo tiene fuerza de
transferir el dominio sin necesidad de la prescricion (a title which of itself is sufficient to transfer the
ownership without the necessity of the lapse of the prescription period); and we accept the opinion of a
learned Spanish law writer who holds that the titulo verdadero y valido as used in this article of the
code prescribes a titulo colorado and not merely putativo; a titulo colorado being one which a person
has when he buys a thing, in good faith, from one whom he believes to be the owner, and a titulo
putativo being one which is supposed to have preceded the acquisition of a thing, although in fact it
did not, as might happen when one is in possession of a thing in the belief that it had been bequeathed
to him. (Viso Derecho Civil, Parte Segunda, p. 541)[20]
The records of the case amply supports the holding of the appellate court that the requirements for
ordinary prescription hereinabove described have indeed been duly met; it explained:
In the instant case, appellant Servando Flores took possession of the controverted portion in good faith
and with just title. This is so because the said portion of 7,540 square meters was an integral part of
that bigger tract of land which he bought from Fernando Cruz under public document (Exh. I) As
explicitly mentioned in the document of sale (Exh. I) executed in 1968, the disputed portion referred to
as parang was included in the sale to appellant Flores. Parenthetically, at the time of the sale, the
whole area consisting of the riceland and pasture land was already covered by a tax declaration in the
name of Fernando Cruz (Exh. F) and further surveyed in his favor (Exhs. 3&4). Hence, appellant
Flores possession of the entire parcel which includes the portion sought to be recovered by appellees
was not only in the concept of an owner but also public, peaceful and uninterrupted. While it is true
that the possession of the entire area by his predecessor-in-interest (Fernando Cruz) may not have been
peaceful as it was indeed characterized with violence which resulted in the death of Jose Marcelo, this
cannot be said of appellant Flores possession of the property, in respect of which no evidence to the
contrary appears on record.[21]
This Court finds no cogent reasons to reverse the above findings of the appellate court and thus gives
its affirmance to the assailed decision.
WHEREFORE, the petitioner for review on certiorari is DENIED. No costs.
SO ORDERED.
Romero, (Chairman), Panganiban, Purisima, and Gonzaga-Reyes, JJ., concur.
6.) LARROBIS JR VS. PHILIPPIN VETERANS BANK 440 SCRA 34 (2004)
FACTS:
➢ On march 3, 1980, petitioner spouses contracted a monetary loan with respondent Philippine
Veterans Bank in the amount of P135,000,
➢ Evidenced by a promissory note, due and demandable on February 27, 1981,
➢ Secured b a Real Estate Mortgage executed on their lot together with the improvements,
➢ On March 23, 1985, the respondent bank went bankrupt and was placed under
receivership/liquidation b the Central Bank from April 23, 1985 until august 1992,
➢ On August 23, 185, the bank through Francisco Go, sent the spouses a demand letter for
“accounts receivable in the total amount of P6345 as of August 15, 1984, which pertains to the
insurance premiums advanced by respondent bank over the mortgaged property of petitioners,
➢ On august 23, 1995, more than 14 years from the time the load become due and demandable,
➢ Respondent bank filed a petition for extra judicial foreclosure of mortgage of petitioner’s
property.
Issue:
➢ WON the period within which the bank was placed under receivership and liquidation was a
fortuitous event which suspended the running of the ten year prescriptive period in bringing actions.
HELD:
➢ Wherefore, premises considered judgment is hereby rendered dismissing the complaint for
lack of merit. Likewise the compulsory counter claim of defendant is dismissed for being
unmeritorious.
➢ It reasoned that defendant bank was placed under receivership by the Central Bank fro April
1985 until 1992,
➢ From april 1985 until July 1992, defendant bank was restrained from doing its business.
➢ The defendant banks right to foreclosure the mortgaged property prescribes in 10 years but
sch period was interrupted when it was placed under receivership.
➢ Article 1154 of the NCC to this effective provides the period during which the obliged was
prevented by a fortuitous event from enforcing his right is not reckoned against him.
8.) SPS. SALUSTIANO OCA and FLORA O. OCA, petitioner,
vs.
COURT OF APPEALS, REPUBLIC PLANTERS BANK (formerly Republic Bank) and the
PROVINCIAL SHERIFF OF RIZAL, respondents.
NOCON, J.:
This is a petition for review on certiorari by Spouses Salustiano R. Oca and Flora O. Oca from the
decision 1 dated June 30, 1988 of the Court of Appeals in CA-G.R. No. 11445, the dispositive of which
reads, as follows:
WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE and a new one
entered authorizing:
(1) the Republic Planters Bank and the Provincial Sheriff of Rizal, or their agents and/or representative
to proceed with the sale on foreclosure of the property described in Exhibit F;
(2) the spouses Salustiano R. Oca and Flora O. Oca to jointly and severally pay the appellant's
counterclaim in the amount of P7,924,844.32 plus 12% interests [sic] per annum from August 11,
1978 until fully paid but deducting therefrom whatever amount the appellant Bank may mortgaged
property; and
(3) herein spouses-appellees to pay the equivalent of five per centum (5%) of the total amount due as
attorney's fees. Costs against appellees.
SO ORDERED. 2
The instant petition stems from the complaint for damages with preliminary injunction filed by
petitioners against private respondent Republic Planters Bank before the Court of First Instance of
Pasig, Rizal, Branch XXV.
There is no dispute in the findings of fact made by the Court of Appeals, which We quote as follows:
On January 1963, Salustiano Oca executed a general loan and collateral agreement which constitutes a
"continuing agreement, applying to any and all future as well as existing transactions" of plaintiffs-
appellees with the defendant-appellant bank pursuant to which "as security for any and all loans,
advances, credits, etc." the plaintiffs gave a lien on property of any kind, which may come to the
possession or custody of the Bank (Exhibit 1-A, p. 144, Records).
On February 12, 1963, plaintiffs-appellees spouses Oca executed a mortgage in favor of appellant
Bank over two (2) parcels of lands covered by T.C.T. 66428 (Manila) and TCT 106211 (Rizal) as
security for a loan in the amount of P200,000.00 as principal and "those that the mortgagee may
extend to the mortgagors, including interest and expenses or other obligations owing to the mortgagee"
as well as "the credit accommodations obtained from the mortgagee by S.R. Oca Logging Industry,
Inc." (Exhibit A, pp. 3945, Records).
On April 27, 1966, a resolution was passed by the Board of Directors of Salustiano R. Oca Logging
Industry, Inc. authorizing Salustiano R. Oca to consolidate all credit accommodations extended by the
Bank to Salustiano Oca and/or Salustiano R. Oca Logging Industry, Inc., and/or Oca Electric Co., Inc.
into one (1) promissory note in favor the Bank (Exh. 2. 115, Original Records).
On May 11, 1966, a promissory note in the sum of P3,017,721.66 was signed by Salustiano Oca in his
capacity as President of S.R. Oca Logging Industry, Inc. and in his own behalf, together with his wife
Flora O. Oca in her own behalf. Said promissory note is payable on or before May 11, 1967 (Exh. 3, p.
116, Ibid.). The corporation's and the personal undertaking of the spouses Oca's obligation covered by
the promissory note was transferred into a time loan designated as time loan No. 043.
Subsequent to the execution of said promissory note, Salustiano R. Oca Logging Industry, Inc.,
obtained other credit accommodations, in the form of letters of credit from the Bank as follows:
(1) In 1969, LC-6910108 D in the amount of P50,000.00 as principal, with 12% interest thereon per
annum plus trust commission; LC-6910106 D in the amount of P76,655.81 as principal, with interests
thereon at the rate of 12% per annum plus trust commission (Exhibit 9-B, p. 124, Ibid.).
(2) In 1972, another letter of credit was opened in the amount of P66,600.00 with 12% interest per
annum plus trust commission (Original Records).
On August 12, 1971, the Bank sent a demand letter for the payment of time loan No. 043 in the sum of
P4,830,478.95 as of July 31, 1971 to S.R. Oca Logging Industry, Inc. (Exhibit, 9-B, p. 124, Ibid.).
On July 13, 1977, the Bank sent a demand letter to "Mr. Salustiano R. Oca, President and General
Manager of North Mindanao Bay Woods Exports" for the payment of the promissory note dated May
11, 1966 in the amount of 7,889,269.29 computed as of June 8, 1977 (Exhibit 5, p. 118, Ibid.).
On August 4, 1977, Salustiano R. Oca as President of North Mindanao Bay Woods Exports sent a
letter to the bank acknowledging receipt of the Bank's July 13, 1977 letter and at the same time
requesting for an extension of 45 days within which its accounts will be settled (Exhibit 6, 0.
119,Ibid.).
In May of 1978, the property located in Manila covered by TCT 103316 was foreclosed and sold at
public auction for the sum of P195,000.00 with the Bank as the highest bidder (p. 4, Brief for
Plaintiffs-Appellees, p. 53, Rollo; p. 7, Brief of the Defendant-Appellant, p. 48, Rollo, and, Exhibit B,
p. 46, Original Records).
Subsequent to the above auction sale, the Bank applied for extrajudicial foreclosure of the lot covered
by TCT 106211 (Rizal). The Deputy Sheriff of Rizal scheduled the sale for July 28, 1978 at 10:00
A.M. Said foreclosure sale was restrained by the lower court upon commencement of the legal action
for damages with preliminary injunction filed by the Oca spouses. 3
After trial on the merits, the trial court ruled in favor of the petitioners and held that the real estate
mortgage was constituted to secure only the personal obligations of the petitioners, and that
respondent Bank is barred from foreclosing the real estate mortgage over T.C.T. No. 106211.
Not satisfied with the decision, respondent Bank appealed the decision to the Court of Appeals,
alleging, among others, that the trial court erred (1) in holding that its action to foreclosure the
mortgage is barred by prescription; and (2) in not holding the mortgage as a continuing security for all
credit accommodations extended to petitioners and/or S.R. Oca Logging Industry, Inc.
The Court of Appeals found the appeal meritorious and reversed and set aside the decision of the trial
court. After their motion for reconsideration was denied, petitioners filed the instant petition, arguing
that the Court of Appeals erred (1) in holding that the real estate mortgage is a continuing security not
only for loans extended by respondent Bank to them but also to those extended to S.R. Oca Logging
Industry, Inc.; (2) in holding that the additional conditions found on the dorsal portion of the real
estate mortgage is binding upon them; (3) in not ruling that the right of respondent Bank to
extrajudicially foreclosure the mortgage had prescribed; and (4) in reversing the decision of the trial
court.
We find the petition unmeritorious.
In support of their first two assigned errors, petitioners argued that the real estate mortgage was
executed to secure a loan in the amount of P200,000.00 obtained by the spouses from respondent
Bank, as well as other loans the spouses may obtain in their personal capacity.
Petitioners further argue that the additional condition found at the back of the real estate mortgage
(also known as the Addendum) does not bind them since these conditions were not embodied in the
document proper itself, nor was there any reference made to said conditions in deed. Moreover, the
additional conditions did not have the prior conformity of the petitioners.
We are unimpressed by petitioners' arguments. While it may be true that at the time the mortgage was
constituted, it was intended to secure a loan obtained by petitioners in their personal capacities from
respondent Bank, subsequent events show that the same was converted into a continuing security for
credit accommodations extended by respondent Bank to S.R. Oca Logging Industry, Inc. The most
significant of these events was the resolution adopted by the Board of Directors of S.R. Oca Logging
Industry, Inc. during its special meeting held on April 27, 1966, which resolution states, to wit:
RESOLVED, that the President of the corporation [petitioner Salustiano R. Ocal], shall have the
power and authority to enter into negotiations with the Republic Bank, to borrow and negotiate for
loans, to execute promissory notes or any evidences of indebtedness, and in connection therewith, to
consolidated all credit accommodations granted in the names of Salustiano R. Oca and/or S.R. Oca
Logging Industry, Inc. by the said bank into one promissory note in favor of said Republic Bank, the
same to be executed in the name of the corporation by its President and Vice President. 4
Shortly thereafter, on May 11, 1966, petitioners signed a promissory
note 5 wherein they and S.R. Oca Logging Industry, Inc. jointly and severally promised to pay
respondent Bank the sum of P3,017,721.66 on or before May 11, 1967.
Thus, it can be seen from the two events that petitioners intended to make their properties as securities
for whatever credit accommodations respondents Bank might extend to S.R. Oca Logging Industry,
Inc.
Even if this Court were to agree with petitioner's contentions that the real estate mortgage they
executed in 1963 was only to answer for their personal obligations to respondents Bank and their
assertion that the Addendum found at the dorsal portion of the real estate mortgage did not bind them,
the fact remains that petitioners signed the promissory note of May 11, 1966 (also known as Time
Loan No. 43) as joint and solidary debtors along with S.R. Oca Logging Industry, Inc. We quote the
promissory note in full:
P3,017,721,66 Manila, May 11, 1966
On or before May 11, 1967, for value received, I/we, jointly and severally, promise to pay the
REPUBLIC BANK, or order, at its office at 227 Escolta, Manila, Philippines, the sum of THREE
MILLION SEVENTEEN THOUSAND SEVEN TWENTY ONE & 66/100 PESOS (P3,017,721,66).
Philippines Currency, with interest at the rate of twelve per centum (12%) per annum. Before the date
of maturity, I/we hereby bind myself/ourselves to make partial payments, the first payment to be made
on June 11, 1966, and the subsequent payments on the 11th day of every month thereafter, and each of
all such payments shall be THIRTY THOUSAND PESOS (P30,000.00), or an amount equivalent to
Forty per centum (40%) of the proceeds from our exports/local sales, whichever amount is higher,
which shall cover amortization on the principal and interest at the above mentioned rate. All unpaid
amortizations shall bear interest at the rate of Twelve per centum (12%) per annum, as liquidated
damages.
In is to be understood that we shall pay whatever unpaid balance remains — on the due date of this
note.
In case of non-payment of the amount of this note or any portion of it on demand, when due, or any
other amount or amounts due on the account of this note, the entire obligation shall become due and
demandable and if, for enforcement of the payment thereof the REPUBLIC BANK is constrained to
entrust the case to its attorneys, I/we, jointly and severally, bind myself/ourselves to pay for attorneys
fees, as provided for in the mortgage contract, in addition to the legal fees and other incidental
expenses.
In the S.R. OCA LOGGING,
Presence of: INDUSTRY, INC.
(Unintelligible) by: (sgd.)
(Unintelligible) SALUSTIANO R. OCA
President
(sgd.)
SALUSTIANO R. OCA
In his own behalf
(sgd.)
FLORA O. OCA
In her own behalf 6
This gave effect to the portion of the real estate mortgage which estates:
That for and in consideration of certain loans, overdrafts and other credit accommodations obtained,
from the Mortgagee, and to secure the payment of the same and those that may hereafter obtained, the
principals of all of which is hereby fixed at TWO HUNDRED THOUSAND PESOS (P200,000.00),
Philippine currency, as well as those that the Mortgagee may extend to the Mortgagor, including
interest and expenses or any other obligation owing to the Mortgagee, whether direct or indirect,
principal or secondary, as appears in the accounts, books and records of the Mortgagee . . . . 7
The question that now remains to be settled is whether the right of respondent Bank to foreclose the
mortgage had already prescribed.
Under the terms found therein. Time Loan No. 43 matured on May 12, 1967. The tolling of the
prescriptive period within which respondent Bank had to file the foreclosure action began to run on
said date, when petitioners failed to fully pay the time loan.
On August 12, 1971, respondent Bank made an extrajudicial demand upon S.R. Oca Logging Industry,
Inc. to settle the time loan, 8 a copy of which was furnished petitioner Salustiano R. Oca by registered
mail. 9 Two other demand letters were sent by respondent Bank: one dated March 13, 1973 addressed
to S.R. Oca Logging Industry, Inc., 10 and another dated July 13, 1977 addressed to petitioner
Salustiano R. Oca as President and General Manager of North Mindanao Bay Woods Exports. 11
These letters sent by respondent Bank to petitioners and/or S.R. Oca Logging Industry, Inc. effectively
stopped the tolling of the prescriptive period. As correctly observed by the Court of Appeals:
It is true that the mortgage actions prescribe after ten (10) years (Article 1142, New Civil Code).
However, its running has effectively been interrupted by written demands from the Bank as well as the
written acknowledgment issued by Salustiano Oca himself. Article 1155 of the new Civil Code
provides:
Art. 1155. The prescription of actions is interrupted when they are filed before the court, when there is
a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the
debt by the debtor. (1973a). 12
Thus, the institution of extrajudicial foreclosure proceedings by respondent Bank in 1977 was not yet
barred by prescription.
Given Our foregoing discussion of the merits of the case, We hold that the Court of Appeals
committed no error in reversing the decision of the trial court.
WHEREFORE, the decision appealed from is hereby affirmed in toto. Costs against petitioners.
SO ORDERED.
Nocon, Regalado, Feliciano and Campos Jr., JJ., concur.
Navasa, C.J., is on leave.
9.) WILLIAM ALAIN MIAILHE, petitioner, vs. COURT OF APPEALS and REPUBLIC OF
THE PHILIPPINES, respondents.
DECISION
PANGANIBAN, J.:
Actions for the annulment of contracts prescribe in four years. If the ground for annulment is
vitiation of consent by intimidation, the four-year period starts from the time such defect ceases.The
running of this prescriptive period cannot be interrupted by an extrajudicial demand made by the party
whose consent was vitiated. If the facts demonstrating the lapse of the prescriptive period are apparent
from the records, the complaint should be dismissed.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing
the February 12, 1993 Decision[1] of the Court of Appeals (CA) in CA-GR SP No. 29327. The
dispositive part of the assailed Decision reads:
WHEREFORE, the Petition for Certiorari is hereby GRANTED. The Order dated September 11, 1992
of the Regional Trial Court of Manila, Branch II in Civil Case No. 90-52519 is ANNULLED and SET
ASIDE and a new one is entered dismissing the complaint on the ground of prescription.
SO ORDERED.[2]
 The Facts
The undisputed facts are summarized by the appellate court as follows:
On March 23, 1990, [Petitioner] William Alain Miailhe, on his own behalf and on behalf of Victoria
Desbarats-Miailhe, Monique Miailhe-Sichere and Elaine Miailhe-Lencquesaing filed a Complaint for
Annulment of Sale, Reconveyance and Damages against [Respondent] Republic of the Philippines and
defendant Development Bank of the Philippines before the [trial] court. It was alleged, to wit:
xxxxxxxxx
4. That plaintiffs were the former registered owners of three parcels of land located at J.P.
Laurel St., San Miguel, Manila with an aggregate area of 5,574.30 square meters, and a one
(1) storey building erected thereon, formerly covered by Transfer Certificate of Title No.
80645 of the Register of Deeds of Manila;
5. That the above-mentioned properties had been owned by and in the possession of
plaintiffs and their family for over one hundred (100) years until August 1, 1976;
6. That on August 1, 1976, during the height of the martial law regime of the late President
Ferdinand Marcos, [Respondent] Republic of the Philippines, through its armed forces,
forcibly and unlawfully took possession of the aforesaid properties from defendants;
7. That [Respondent] Republic of the Philippines, through its armed forces, continued its
lawful and forcible occupation of the premises from August 1, 1976 to August 19, 1977
without paying rentals, despite plaintiffs demands therefor;
8. That meanwhile, the Office of the President showed interest in the subject properties and
directed defendant DBP to acquire for the government the subject properties from plaintiff;
9. That on or about August 19, 1977, through threats and intimidation employed by
defendants, plaintiffs, under duress, were coerced into selling the subject properties to
defendant DBP for the grossly low price of P2,376,805.00 or about P400.00 per square
meter;
10. That defendant DBP, in turn, sold the subject properties to [Respondent] Republic of
the Philippines, through the Office of the President, in 1982;
11. That the only factor which caused plaintiffs to sell their properties to defendant DBP
was the threats and intimidation employed upon them by defendants;
12. That after the late President Marcos left the country on February 24, [sic] 1986 after the
EDSA revolution, plaintiffs made repeated extrajudicial demands upon defendants for [the]
return and reconveyance of subject properties to them, the last being the demand letters
dated 24 October 1989, copies of which are attached and made integral parts hereof as
Annexes A and A-1;
13. That despite demands, defendants unjustifiably failed and refused, and still unjustifiably
fail and refuse, to return and reconvey the subject properties to plaintiff;
xxxxxxxxx
(par. 4-13 of the Complaint, pp. 28-29, Rollo).
On May 25, 1990, [respondent] filed its Answer denying the substantial facts alleged in the complaint
and raising, as special and affirmative defenses, that there was no forcible take-over of the subject
properties and that the amount paid to private respondents was fair and reasonable. Defendant DBP
also filed its Answer raising as Special and Affirmative Defense that [petitioners] action had already
prescribed.
On August 3, 1990, the [trial] court issued an Order setting the pre-trial on September 20,
1990. Petitioner and private respondents filed their respective pre-trial briefs.
On March 5, 1992, [respondent] filed a Motion to Dismiss the complaint on the ground that the action
ha[d] prescribed pursuant to Article (1)391 in relation to Article (1)390 of the Civil Code.Defendant
DBP likewise filed a Motion for Preliminary Hearing of the Affirmative Defense raising the same
ground of prescription as contained in the [respondents] Motion to Dismiss.
On September 11, 1992, the [trial] court issued an Order, the dispositive portion of which reads, as
follows:
WHEREFORE, the motion for a preliminary hearing is hereby denied and the resolution of the motion
to dismiss is deferred until trial x x x. (pp. 23-26, rollo).[3]
Respondent herein thus filed a Petition for Certiorari with the appellate court.
Ruling of the Court of Appeals
The CA ruled that petitioners action had prescribed. A suit to annul a voidable contract may be
filed within four (4) years from the time the defect ceases. As alleged in paragraph 12 of the
Complaint, there is a clear indication that the alleged threat and intimidation employed against
petitioner ceased when then President Ferdinand E. Marcos left the country on February 24,
1986.From February 24, 1986 to March 23, 1990, when the Complaint for Annulment of Sale was
filed, more than four (4) years had elapsed. The CA also ruled that Article 1155 of the Civil Code,
according to which a written extrajudicial demand by the creditors would interrupt prescription,
referred only to a creditor-debtor relationship, which is not the case here.
Hence, this Petition.[4]
The Issues
These are the issues presented before us:
 Whether the Court of Appeals committed gross reversible error in finding that the trial court
acted with grave abuse of discretion tantamount to lack of jurisdiction.
Whether the Court of Appeals committed gross reversible error in setting aside the trial courts
order of 11 September 1992 and in finding that:
i. petitioners action had prescribed; and,
ii. petitioners extrajudicial demands did not interrupt prescription. [5]
In the main, the Court will determine whether the action for the annulment of the Contract of
Sale has prescribed.
The Courts Ruling
The Petition has no merit.
Main Issue: Prescription
Section 3, Rule 16 of the Rules of Court which was in effect at the time, expressly allowed the
trial court to defer the hearing and determination of the motion [to dismiss] until the trial if the ground
alleged therein does not appear to be indubitable. Under the 1997 Rules of Civil Procedure, the rule
now reads as follows:
Sec. 2. Hearing of motion. -- At the hearing of the motion, the parties shall submit their arguments on
the questions of law and their evidence on the questions of fact involved except those not available at
that time. Should the case go to trial, the evidence presented during the hearing shall automatically be
part of the evidence of the party presenting the same.
SEC. 3. Resolution of motion. -- After the hearing, the court may dismiss the action or claim, deny the
motion, or order the amendment of the pleading.
The court shall not defer the resolution of the motion for the reason that the ground relied upon is not
indubitable.
In every case, the resolution shall state clearly and distinctly the reasons therefor. (3a)
In the present case, the trial court deferred until trial the resolution of the Motion to Dismiss,
because it found that the Complaint did not show on its face that the action had already prescribed.It
deemed it better to allow the parties to present their evidence in a full-blown trial.
We disagree. The CA correctly set aside the Order of the trial court. In Gicano v. Gegato,[6] this
Court held that a complaint may be dismissed when the facts showing the lapse of the prescriptive
period are apparent from the records. In its words:
x x x. We have ruled that trial courts have authority and discretion to dismiss an action on the ground
of prescription when the parties pleadings or other facts on record show it to be indeed time-barred; x
x x and it may do so on the basis of a motion to dismiss, or an answer which sets up such ground as an
affirmative defense; or even if the ground is alleged after judgment on the merits, as in a motion for
reconsideration; or even if the defense has not been asserted at all, as where no statement thereof is
found in the pleadings, or where a defendant has been declared in default. What is essential only, to
repeat, is that the facts demonstrating the lapse of the prescriptive period, be otherwise sufficiently and
satisfactorily apparent on the record; either in the averments of the plaintiffs complaint, or otherwise
established by the evidence.
The records in this case indubitably show the lapse of the prescriptive period, thus warranting the
immediate dismissal of the Complaint.
The suit before the trial court was an action for the annulment of the Contract of Sale on the
alleged ground of vitiation of consent by intimidation. The reconveyance of the three parcels of land,
which the petitioner half-heartedly espouses as the real nature of the action, can prosper only if and
when the Contract of Sale covering the subject lots is annulled. Thus, the reckoning period for
prescription would be that pertaining to an action for the annulment of contract; that is, four years
from the time the defect in the consent ceases.[7]
A perusal of the Complaint shows that the threat and intimidation ceased after then President
Marcos left the country on February 24, 1986. In fact, it was only then that petitioner was allegedly
able to muster the courage to make extrajudicial demands on the Republic of the
Philippines. Paragraph 12 of the Complaint states:
12. That after the late president Marcos left the country on February 24, 1986 after the EDSA
revolution, plaintiffs made repeated extrajudicial demands upon defendants for [the] return and
reconveyance of subject properties to them, the last being the demand letters dated 24 October
1989, copies of which are attached and made integral parts hereof as Annexes A and A-1;[8]
The foregoing was reiterated in the following statements in petitioners Pretrial Brief:[9]
x x x. During the height of the martial law era, the late President Ferdinand E. Marcos, through his
armed forces, forcibly and unlawfully took possession of the property and after a year, directed the
defendant Development Bank of the Philippines (DBP) to buy the same from the plaintiffs. Plaintiffs
were forced to sell the property for the measly sum of P2,376,805.00, which [translated] to
about P400.00 per square meter. The property was later sold by defendant DBP to the defendant
Republic of the Philippines [Republic], acting through the Office of the President. Plaintiffs pray the
Honorable Court to declare their sale null and void and to order reconveyance of the property.
Moreover, courts were functioning after Marcos left the country. There was no hiatus in the
judicial system. This is manifest in then Acting Chief Justice Claudio Teehankees Circular No. 2,
which is reproduced hereunder:
TO: ALL JUSTICES OF THE INTERMEDIATE APPELLATE COURT AND
SANDIGANBAYAN; AND ALL JUDGES OF THE COURT OF TAX
APPEALS, REGIONAL TRIAL COURTS, METROPOLITAN TRIAL
COURTS IN CITIES, MUNICIPAL TRIAL COURTS, MUNICIPAL
CIRCUIT TRIAL COURTS AND SHARIA COURTS
 Reports have been received that some justices and judges have ceased or suspended performing
their duties pending action on the courtesy resignations submitted by them in compliance with
the call of the President of the Philippines.
Courts are expected to continue discharging their judicial functions without interruption and
delay in order to ensure the speedy disposition of their pending cases. You are, therefore,
directed to continue with your regular sessions and the hearing and adjudication of cases and the
proper discharge of your functions, until further notice from this court.
Strict compliance thereof is hereby enjoined.
(Sgd) CLAUDIO TEEHANKEE Acting Chief Justice
The foregoing clearly shows that the alleged threat and intimidation, which vitiated petitioners
consent, ceased when Marcos left the country on February 24, 1986. Since an action for the annulment
of contracts must be filed within four years from the time the cause of vitiation ceases, the suit before
the trial court should have been filed anytime on or before February 24, 1990. In this case, petitioner
did so only on March 23, 1990. Clearly, his action had prescribed by then.
Interruption of Prescription
Petitioner asserts that the extrajudical demands pleaded in paragraph 12 of the Complaint legally
interrupted prescription in accordance with Article 1155 of the Civil Code, which states:
ART. 1155. The prescription of actions is interrupted when they are filed before the court, when there
is extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by
the debtor.
In other words, petitioner claims that because he is covered by the term creditor, the above-
quoted provision is applicable to him.
We are not persuaded. Petitioner himself avers that the use of the terms creditor and/or debtor in
Article 1155 of the Civil Code must relate to the general definition of obligations. [10] He then asserts
that an obligation is a juridical relation whereby a person (called the creditor) may demand from
another (called the debtor) the observance of a determinate conduct, and in case of breach, may obtain
satisfaction from the assets of the latter.[11] He also defines credit as the right to demand the object of
the obligation. From his statements, it is clear that for there to be a creditor and a debtor to speak of, an
obligation must first exist.
In the present case, there is as yet no obligation in existence. Respondent has no obligation to
reconvey the subject lots because of the existing Contract of Sale. Although allegedly voidable, it is
binding unless annulled by a proper action in court. [12] Not being a determinate conduct that can be
extrajudically demanded, it cannot be considered as an obligation either. Since Article 1390 of the
Civil Code states that voidable contracts are binding, unless they are annulled by a proper action in
court, it is clear that the defendants were not obligated to accede to any extrajudicial demand to annul
the Contract of Sale.[13]
In the absence of an existing obligation, petitioner cannot be considered a creditor, and Article
1155 of the Civil Code cannot be applied to his action. Thus, any extrajudicial demand he made did
not, or will not, interrupt the prescription of his action for the annulment of the Contract of Sale.
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of
Appeals AFFIRMED. Costs against petitioner.
SO ORDERED.
Melo, (Chairman), Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.
Vitug, J., no part; partys relation a former client.
10.) PEDRO ELCANO and PATRICIA ELCANO, in their capacity as Ascendants of Agapito
Elcano, deceased
vs.
REGINALD HILL, minor, and MARVIN HILL, as father and Natural Guardian of said minor
G.R. No. L-24803 May 26, 1977
Facts:
Reginald Hill, a minor, caused the death of Agapito (son of Elcano). Elcano filed acriminal
case against Reginald but Reginald was acquitted for “lack of intent coupled with mistake.” Elcano
then filed a civil action against Reginald and his dad (Marvin Hill) for damages based on Article 2180
of the Civil Code. Hill argued that the civil action is barred by his son’s acquittal in the criminal case;
and that if ever, his civil liability as a parent has been extinguished by the fact that his son is already
an emancipated minor by reason of his marriage.
isSUE: Whether or not Marvin Hill may be held civilly liable under Article 2180.
HELD: Yes. The acquittal of Reginald in the criminal case does not bar the filing of a separate civil
action. A separate civil action lies against the offender in a criminal act, whether or not he is
criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if
accused is actually charged also criminally, to recover damages on both scores, and would be entitled
in such eventuality only to the bigger award of the two, assuming the awards made in the two cases
vary. In other words, the extinction of civil liability referred to in Par. (e) of Section 3, Rule 111, refers
exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil
liability for the same act considered as a quasi-delict only and not as a crime is not extinguished even
by a declaration in the criminal case that the criminal act charged has not happened or has not been
committed by the accused. Briefly stated, culpa aquiliana includes voluntary and negligent acts which
may be punishable by law.
11.) BELAMALA VS POLINAR
Facts: this is an appeal from judgment of the Court of First Instance allowing a money claim of
appellee Belamala against the estate of the deceased Mauricio Polinar, for damages caused to the
claimant.
The claimant Buenaventura Belamala is the same offended party in Criminal Case against the same
Mauricio Polinar for Frustrated Murder; COURT OF FIRST INSTANCE OF BOHOL rendered a
decision thereof, convicting the said Mauricio Polinar of the crime of serious physical injuries and
sentenced him to pay to the offended party Buenaventura Belamala. The accused (the late Mauricio
Polinar) appealed, However, while the appeal of said Mauricio Polinar was pending before the Court
of Appeals, he died; and no Notice or Notification of his death has ever been filed in the said Court of
Appeals. The CA then affirmed the decision of the CFI.
The appellant, contended that the claim should have been prosecuted by separate action against the
administrator, and not to be enforced by filing a claim against the estate.
Issue: W/N the appellant Polinar’s contention is correct.
Held: Yes. The appellant, however, is correct in the contention that the claim should have been
prosecuted by separate action against the administrator, as permitted by sections 1 and 2 of Revised
Rule 87, since the claim is patently one "to recover damages for an injury to person or property" (Rule
87, sec. 1). Belamala's action can not be enforced by filing a claim against the estate under Rule 86,
because section 5 of that rule explicitly limits the claims to those for funeral expenses, expenses for
last sickness, judgments for money and "claims against the decedent, arising from contract, express or
implied;" and this last category (the other three being inapposite) includes only "all purely personal
obligations other than those which have their source in delict or tort" (Leung Ben vs. O'Brien, 38 Phil.
182, 189-194) and Belamala's damages manifestly have a tortious origin.
12.) LEUNG BEN VS. P. J. O'BRIEN
G.R. No. L-13602 April 6, 1918
FACTS:
P. J. O'Brien instituted an action in the Court of First Instance of the city of Manila to recover the sum
of P15,000 alleged to have been lost by Leung Ben to P.J. O’Brien in a series of gambling, banking
and percentage games. In Leung Ben’s verified complaint, O’Brien asked for an attachment against
the property of Leung Ben on the ground that the latter was about to depart from the Philippine Islands
with intent to defraud his creditors. This attachment was issued, and acting under that authority
thereof, the sheriff attached the sum of P15,000 which had been deposited by O’Brien with the
International Banking Corporation.
Leung Bien filed a motion to quash the attachment, which was dismissed by the court. Hence this
application for a writ of certiorari, the purpose of which was to quash an attachment issued from the
Court of First Instance of the City of Manila.
ISSUE:
(1) Supposing that the Court of First Instance has granted an attachment for which there is no statutory
authority, can the SC entertain the present petition and grant the desired relief?
(2) Is the statutory obligation to restore money won at gaming an obligation arising from "contract,
express or implied?"
HELD:
On the first issue, Yes; under section 514 of the Code of Civil Procedure the Supreme Court has
original jurisdiction by the writ of certiorari over the proceedings of Courts of First Instance,
wherever said courts have exceeded their jurisdiction and there is no plaint, speedy, and adequate
remedy. When a court issues a writ of attachment for which there is no statutory authority, it is acting
irregularly and in excess of its jurisdiction, that sense justifies the Supreme Court in granting relief by
the writ of certiorari.
On the second issue, Where Act 1757 of the Philippine Commission recognizing the right to recover
money lost in gambling, arises the cause of action for recovery of money lost. In this case, the remedy
was resorted from historical antecedents and juris prudential sources of the common law as basis of
Code of Civil Procedure on determining sources of obligation. And the court came up with the
recognition of this remedy at one logical proper. That the duty of the defendant to refund the money
which he won from the plaintiff at gaming is a duty imposed by statute. It therefore arises ex lege (by
virtue of law). By all the criteria which the common law supplies, this a duty in the nature of debt and
is properly classified as an implied contract. The law adopted the fiction of promise in order to bring
the obligation within the scope of the action of assumpsit.
The cause of action stated in the complaints in the lower court is based on a contract, express or
implied and is therefore of such nature that the court had authority to issue writ of attachment. The
application for the writ of certiorari must therefore be denied and the proceedings dismissed.
13.) MALAYAN INSURANCE CO, INC. VS CA
FACTS:
 Aurelio Lacson ,owner of a Toyota NP Land Cruiser, Model 1972, bearing Plate No. NY-362 and
with engine Number F-374325 insured with Malayan Insurance Co
 Dec. 1, 1975: Aurelio brought it to the shop of Carlos Jamelo for repair
 Dec. 2, 1975: Rogelio Mahinay, together with Johnny Mahinay, Rogelio Macapagong and
Rogelio Francisco took and drove the Toyota Land Cruiser and it met an accident with Bo
 Carlos reported the incident to the police and instituted a criminal case for Qualified Theft against
his employees
 Rogelio Mahinay pleaded guilty and was convicted of theft
 Aurelio was not allowed to claim on the ground that the claim is not covered by the policy
inasmuch as the driver of the insured vehicle at the time of the accident was not a duly licensed
driver
 Trial Court: favored Aurelio
 CA: Affirmed
ISSUE: W/N the taking of the vehicle by another person without permission or authority from the
owner or person-in-charge thereof is sufficient to place it within the ambit of the word theft in the
policy
HELD: YES.
 The damages therefore were sustained in the course of the unlawful taking
 Bacolod IFCs interest in the insured vehicle was in the amount of P2,000.00 only compared to
plaintiff's P26,000.00 it is well to presume that Bacolod IFC did not deem it wise to be impleaded
as party-plaintiff in this case. This inaction on the part of BIFC will only show that it was not
really interested to intervene.

14.) SANTOS VENTURA HOCORMA FOUNDATION, INC., petitioner, 
vs.
ERNESTO V.
SANTOS and RIVERLAND, INC., respondents.
QUISUMBING, J.
Facts:
Ernesto V. Santos and Santos Ventura Hocorma Foundation, Inc. (SVHFI) were plaintiff and
defendant, respectively, in several civil cases. On October 26, 1990, the parties executed a
Compromise Agreement wherein Foundation shall pay Santos P14.5 Million in the following manner:
a. P1.5 Million immediately upon the execution of this agreement; and
b. The balance of P13 Million shall be paid, whether in lump sum or in installments,
at the discretion of the Foundation, within a period of not more than two (2) years from the
execution of this agreement.
In compliance, Santos moved for the dismissal of the cases, while SVHFI paid the initial P1.5 million.
After several demands, SVHFI failed to pay the balance of P13 million, prompting Santos to apply for
the issuance of a writ of execution of the compromise judgment of the RTC dated September 30, 1991.
Twice, SVHFI’s properties were auctioned and sold to Riverland, Inc. On June 2, 1995, Santos and
Riverland Inc. filed a Complaint for Declaratory Relief and Damages alleging delay on the part of
SVHFI in paying the balance. They further alleged that under the Compromise Agreement, the
obligation became due on October 26, 1992, but payment of the remaining balance was effected only
on November 22, 1994. Thus, respondents prayed that petitioner be ordered to pay legal interest on the
obligation, penalty, attorney's fees and costs of litigation.
SVHFI alleged that the legal interest on account of fault or delay was not due and payable, considering
that the obligation had been superseded by the compromise agreement. Moreover, SVHFI argued that
absent a stipulation, Santos must ask for judicial intervention for purposes of fixing the period.
Issue:
Whether or not SVHFI incurred in delay based on the compromise agreement and thereby liable for
legal interest
Ruling:
SVHFI is liable for legal interest as penalty on account of delay.
The Compromise Agreement was entered into on October 26, 1990. It was judicially approved on
September 30, 1991. Applying existing jurisprudence, the compromise agreement as a consensual
contract became binding between the parties upon its execution and not upon its court approval.
Hence, the two-year period should have begun on October 26, 1990.
In this case, there was non-fulfillment of the obligation with respect to time. The requisites of mora
were all met:
(1) that the obligation be demandable and already liquidated—the two-year period already
lapsed and the amount of payment was already determined;
(2) that the debtor delays performance—SVHFI paid the balance beyond the two-year
period; and finally,
(3) that the creditor requires the performance judicially or extra-judicially—a demand letter
was sent in accordance with the extra-judicial demand as contemplated by law.
When the debtor knows the amount and period when he is to pay, interest as damages is generally
allowed as a matter of right. The legal interest for loan as forbearance of money is 12% per annum to
be computed from the time the demand was made under the provisions of Article 1169 of the Civil
Code.
Fallo:
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated January 30,
2002 of the Court of Appeals and its April 12, 2002 Resolution in CA-G.R. CV No. 55122 are
AFFIRMED. Costs against petitioner.
SO ORDERED.
15.) LYDIA L. GERALDEZ vs. COURT OF APPEALS and KENSTAR TRAVEL
CORPORATION
G.R. No. 108253
February 23, 1994
FACTS: Petitioner Geraldez filed an action for damages by reason of contractual breach against respondent Kenstar Travel
Corp.
Petitioner booked the Volare 3 tour with Kenstar. The tour covered a 22-day tour of Europe for $2,990.00 which
she paid the total equivalent amount of P190,000.00 charged by private respondent for her and her sister, Dolores. At the tour,
petitioner claimed that what was alleged in the brochure was not what they experienced. There was no European tour
manager as stated in the brochure, the hotels where they stayed in which were advertised as first class were not, the UGC
leather factory which was specifically included as a highlight of the tour was not visited and The Filipino tour guide provided
by Kenstar was a first timer thus inexperienced. The Quezon City RTC rendered a decision ordering respondent Kenstar to
pay moral, nominal, and exemplary damages totalling P1,000,000 and P50,000 attorney’s fees. On appeal, respondent Court
of Appeals deleted the award for moral and exemplary damages and reduced the nominal damages and attorney’s fees to
P30,000 and P10,000 respectively.
ISSUES: (1) Whether or not Kenstar acted in bad faith or with gross negligence in discharging its
obligations in the contract?
 (2)Whether or not the Court of Appeals erred in removing the moral and exemplary
damages

HELD: (1) Yes, Kenstar acted in bad faith and with gross negligence in discharging its obligation.

Kenstar’s choice of the tour guide is a manifest disregard of its specific assurances to the tour
group, and which deliberate omission is contrary to the rules of good faith and fair play.
Providing the Volare 3 group with an inexperienced first timer as a tour guide, Kenstar manifested
indifference to the satisfaction, convenience and peace of mind to its clients. The election of the tour
guide was a deliberate and conscious choice on the part of Kenstar in order to afford her on-the job-
training making the tour group her unknowing guinea pigs, furthermore the inability to visit the UGC
leather factory is reflective of the ineptness and neglect of the tour guide. The failure of Kenstar to
provide a European Tour Manager although it specifically advertised and promised to do so is also a
contractual breach. Kenstar expressly stated in its advertisement that a European Tour Manager would
be present. Kenstar’s contention that the European Tour Manager does not refer to a natural person but
a juridical personality does not hold because a corporate entity could not possibly accompany the tour
group. Lastly Kenstar committed grave misrepresentation when it assured in its tour package that the
hotels provided would provide complete amenities and would be conveniently located along the way
for the daily itineraries. Testimonies by petitioner and private respondent show that the hotels were
unsanitary and sometimes did not even provide towels and soap. Further testimonies claim that the
hotels were also located in locations far from the city making it difficult to go to. The fact that Kenstar
could only book them in such hotels because of budget constraints is not the fault of the tour group.
Kenstar should not have promised such accommodations if they couldn’t afford it. Kenstar should
have increased the price to ensure accommodations.

(2) Yes, the Court of Appeals erred in removing the moral and exemplary damages.
Moral damages may be awarded in breaches of contract where the obligor acted fraudulently
or in bad faith. Kenstar can be faulted with fraud in the inducement which is employed by a party in
securing the consent of the other. This fraud or dolo which is present or employed at the time of birth
or perfection of the contract may either be dolo causante or dolo incidente. The first, or causal fraud
referred to in Article 1338 are those deceptions or misrepresentations of a serious character employed
by one party and without which the other party would not have entered into the contract, Dolo
incidente, or incidental fraud which is referred to in Article 1344, are those which are not serious in
character and without which the other party would still have entered into the contract. In either case,
whether Kenstar has committed dolo causante or dolo incidente, it is liable for damages both moral
and exemplary.