CIVIL LAW UPDATES

BAR 2022
UNIVERSITY OF THE EAST
Dean Viviana M. Paguirigan

PERSONS AND FAMILY RELATIONS

RAEMARK S. ABEL v. MINDY P. RULE G.R. No. 234457, May 12, 2021, Third Division
(Leonen, J.)

Raemark S. Abel, an American citizen, married Mindy P. Rule, a Filipino citizen, in

California. On November 18, 2008, Abel and Rule jointly sought the summary dissolution of
their marriage before the Los Angeles Superior Court. They neither acquired community assets
or liabilities nor bore any children during the time they were married. Their Joint Petition for the
summary dissolution of marriage was timely filed within five years from the date of their
marriage. They also waived their rights to appeal, move for a new trial, and ask for spousal
support in their petition. The Superior Court of California dissolved Abel and Rule's marriage.

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Meanwhile, Abel reacquired his Filipino citizenship and became a dual citizen of the
Philippines and the United States of America on December 3, 2008. On the other hand, Rule
became a citizen of the United States of America on September 21, 2012. On January 10, 2017,
an authenticated California judgment dissolving Abel and Rule's marriage was recorded with the
City Registry Office of Manila. Abel then filed a Petition for the judicial recognition of foreign
divorce and correction of civil entry before the Regional Trial Court. On February 22, 2017, the
RTC found the Petition to be sufficient in form and substance. The Office of the Solicitor
General filed an Opposition to Abel's petition. It claimed that the divorce sought to be recognized
was not obtained by the alien spouse, contrary to law, because Abel and Rule jointly filed the
petition for summary dissolution of marriage.

ISSUE: Whether a divorce decree jointly obtained by a Filipino and their alien spouse can be
judicially recognized in the Philippines.

YES. In Republic v. Manalo and succeeding cases, it was consistently held that it is
irrelevant if the foreign or Filipino spouse initiated the foreign divorce proceeding. Article 26(2)
of the Family Code, when read together with Section 19 of Republic Act No. 9710 (Magna Carta
of Women), can only be interpreted to mean that it is immaterial who initiated the divorce
proceedings abroad. In a concurring opinion to Manalo, it was emphasized that once a divorce
decree is issued, the foreign spouse is deemed to have 'obtained' a divorce which capacitates him
or her to remarry. The same status should therefore be afforded to the Filipino spouse.

Here, petitioner Abel and private respondent Fule jointly filed for the summary
dissolution of their marriage and their petition was granted by the Superior Court of California.
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A clear and plain reading of Article 26 shows that what is only required is that the divorce must
have been validly obtained abroad by the alien spouse. It does not impose an additional
requirement for the alien spouse to solely obtain the divorce.

Moreover, the reality of joint petitions for divorce was acknowledged in Galapon v.
Republic. In Galapon, the Supreme Court through Justice Caguioa ruled that Article 26(2)
applies to mixed marriages where the divorce decree is: (i) obtained by the foreign spouse; (ii)
obtained jointly by the Filipino and foreign spouse; and (iii) obtained solely by the Filipino
spouse. Applying Manalo and the later case of Galapon to the present case, it is immaterial that
the divorce decree was obtained jointly by petitioner, then a citizen of the United States of
America, and private respondent, then a Filipino citizen. They are deemed to have obtained the
divorce as required in Article 26(2) of the Family Code, capacitating them to remarry under the
Philippine law.

TAN-ANDAL v. ANDAL G.R. No. 196359|May 11, 2021

Mario Andal married Rosanna in 1995. Mario was 33 while Rosanna was 31. They
separated de facto in 2000. Mario filed a petition for custody of their daughter while Rosanna
filed a petition to declare their marriage void alleging that Mario was psychologically
incapacitated to comply with essential marital obligations. It appears that Mario was addicted to
drugs and refused to find a job and even caused the siphoning of funds from the company that
Rosanna set-up to support his drug use.

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The RTC declared the marriage void but the CA reversed the decision and ruled that the
psychiatric report presented by Rosanna’s expert witness was unscientific and unreliable.
Rosanna interposed an appeal to the Supreme Court.

The Supreme Court through Justice Leonen unanimously modified the interpretation of
the requirements of psychological incapacity as a ground for declaration of nullity of marriage
found in Article 36 of the Family Code.

It pronounced that psychological incapacity is not a medical but a legal concept, that the
word mental is not synonymous with psychological. Psychological incapacity refers to a
personal condition that prevents a spouse to comply with the fundamental marital obligations
only in relation to a specific partner that may exist at the time of the marriage but may have
revealed through behavior subsequent to the celebration thereof. Psychological incapacity
consists of clear acts of dysfunctionality that show a lack of understanding and concomitant
compliance with one's essential marital obligations due to psychic causes. It is not a medical
illness that has to be medically or clinically identified; hence, expert opinion is not required.

The Court added that the psychological incapacity need not be a permanent incurable
condition. Thus, the testimony of a psychologist or psychiatrist is not mandatory in all cases,
instead the totality of the evidence must show clear and convincing evidence the one or both
were incapable of complying with marital obligations for causes psychological in nature. Based
on these parameters, Mario is psychologically incapacitated, hence their marriage is void.
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Being capacitated to marry each other and having lived exclusively with each other albeit
under a void marriage, the Court held that Article 147 of the Family Code governs the property
relationship of Mario and Rosanna.

With respect to properties acquired during their cohabitation, the rules on co-ownership
under the Civil Code govern. Therefore, a property acquired during the parties' cohabitation shall
be presumed to have been acquired through the parties' joint efforts. For purposes of Article 147,
"joint efforts" includes a party's care and maintenance of the family and of the household. With
this presumption, the parties are deemed to own the property in equal shares. However, if a piece
of property was obtained through the efforts, work, or industry of only one party, and there is
proof that the other did not contribute through the care and maintenance of the family and of the
household, the property acquired during the cohabitation shall be solely owned by the party who
actually worked to acquire the property.

In this case, there is proof that the Paranaque property which the parties used as their
dwelling was not obtained by Mario and Rosanna's joint efforts, work, or industry. Rosanna's
aunt, donated the 315-square meter lot to Rosanna and her father, Rodolfo M. Tan. Thus,
Rosanna exclusively owns half of the 315-square meter Paranaque lot. Mario has no share in this
property because he did not care for and maintain the family and the household.

IRENE CONSTANTINO DATU v. ALFREDO FABIAN DATU G.R. No. 209278,

September 15, 2021 (Leonen, J.)

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Respondent Alfredo was previously employed in the United States Navy but he was
discharged only after 14 months because he was found to be suffering from schizophrenia. His
friends from the church introduced him to Irene and they later became intimate. At one time,
Irene’s older sister dropped by the latter’s house and saw Alfredo sleeping on Irene’s bed and
Irene’s sister demanded they get married. The parties tied the knot in December 1980.

After 25 years or more specifically in 2005, Alfredo filed before the RTC a Complaint for
declaration of nullity of marriage due to his psychological incapacity. Alfredo also offered in
evidence, among others, the expert opinion of clinical psychologist Dela Cruz who testified that
Alfredo's psychosis was due to schizophrenia, paranoid type. She likewise said that there was no
cure for Alfredo's psychosis.

Irene admitted that she and Alfredo have different religious beliefs, and that Alfredo
believed himself to be the son of God who can have as many wives as he pleases. Irene also said
that Alfredo indeed believed that wives should be submissive to their husbands. As for their
children, Irene admitted that her children are on speaking terms with their father and that he
gives them money personally.

The Regional Trial Court declared the marriage void and ruled that Alfredo was
psychologically incapacitated to comply with his essential marital obligations to Irene. The trial
court stated that the multiple expert opinions Alfredo offered in evidence sufficiently proved that
he had schizophrenia even before he married Irene, and that the mental disorder was a
manifestation of his psychological incapacity.
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Irene filed a Motion for New Trial on the ground of collusion, conflict of interest on the
part of Alfredo's counsel, and fraud, but this was denied by the trial court. On appeal, the Court
of Appeals echoed the trial court's findings, and affirmed the finding that Alfredo suffered from
schizophrenia and that his condition justified the marriage’s dissolution.

Irene argues that the characteristics of psychological incapacity — gravity, juridical

antecedence, and incurability— are not present. With no competent evidence of Alfredo's
schizophrenia, she contends that gravity and incurability were not proven. Furthermore, with no
evidence that, prior to his marriage, Alfredo was discharged from the United States Navy due to
schizophrenia, Irene says juridical antecedence was likewise absent.

Alfredo maintains that his psychological condition rendered him psychologically

incapacitated to comply with his essential marital obligations. He argues that he has clearly
shown that his inability was attended by gravity, juridical antecedence, and incurability.

ISSUES: Whether the elements of psychological incapacity have been proven to render the
marriage of Alfredo and Irene void.

YES. The lower courts' factual findings that Alfredo suffered from schizophrenia is
sufficiently supported by evidence. The Supreme Court held that even if they disregard the
purportedly unauthenticated documents issued by United States Veteran Affairs Office and Dr.
Soriano, the testimony of the expert witness sufficiently proved that Alfredo suffered from

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schizophrenia. In fact, Irene herself, on re-cross examination admitted that she receives pension
from the Veterans Affairs Office because of Alfredo's schizophrenia.

Consequently, Alfredo and Irene’s marriage is void due to Alfredo’s psychological

incapacity.

Psychological incapacity, as clarified in Tan-Andal v. Andal, is a legal concept. Instead

of being a medical illness, psychological incapacity is a durable or enduring aspect of a person's
personality, called 'personality structure,' which manifests itself through clear acts of
dysfunctionality that undermines the family. The spouse's personality structure must make it
impossible for him or her to understand and, more important, to comply with his or her essential
marital obligations.

As a legal concept, psychological incapacity cannot be characterized as incurable.

Instead, it is permanent relative to a specific partner. The incapacity must be shown to be due to
a genuinely serious psychic cause. And, as explicitly required by the law, the incapacity must
have existed before or during the celebration of the marriage.

The Court declared that Alfredo is psychologically incapacitated to comply with his
essential marital obligations, not because he suffers from schizophrenia per se, but because his
psychosis has been found to be an enduring part of his personality structure. This psychosis, in
turn, led him to do clear acts of dysfunctionality that undermined Irene and their family. As the
lower courts found, Alfredo believes himself to be the son of God. In his mind, his refusal to live
with Irene and to provide for the family was God's will. He also believes that he can have as
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many wives as he wants, which is not only illegal but is in utter disrespect and disregard of his
marital vow to Irene. His incapacity is grave, not a "mild characterological peculiarity," a "mood
change," or an "occasional emotional outburst"; his psychosis was grave enough for him to be
discharged from military service. Thus, the Court ruled that the marriage is void by reason of
Alfredo’s psychological incapacity.

LUISITO G. PULIDO v. PEOPLE OF THE PHILIPPINES G.R. No. 220149, July 27,
2021, En Banc (Hernando, J.)

On September 5, 1983, then 16-year old petitioner Luisito Pulido married his teacher,
then 22-year old private complainant Nora Arcon in a civil ceremony at the Municipal Hall of
Rosario, Cavite solemnized by then Mayor Calixto D. Enriquez.

In 2007, Pulido admitted that he was having an affair with Rowena Baleda, to whom he
was also married in 1995. This resulted in the filing of a criminal charge of Bigamy against
Pulido and Baleda.

In his defense, Pulido claimed that he could not be criminally liable for bigamy since
both his marriages were null and void. As for his marriage with Arcon, it lacked a valid marriage
license. While his marriage with Baleda lacked a marriage ceremony.

On the part of Baleda, she puts forth by way of defense that she only gained knowledge

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of Pulido’s prior marriage in April 2007. She later filed a Petition to Annul her marriage which
was granted by the Regional Trial Court (RTC) on October 25, 2007. Hence, her marriage with
Pulido was already annulled even before the filing of the bigamy case.

The RTC convicted Pulido and acquitted Baleda. This decision was affirmed by the Court
of Appeals.

ISSUE: Whether a judicial declaration of nullity of marriage is necessary to establish the

invalidity of a void ab initio marriage in a bigamy prosecution.

The Supreme Court clarified that when both the prior and subsequent marriages were
contracted prior to the effectivity of the Family Code, a void ab initio marriage can be raised as a
defense in a bigamy case even without a judicial declaration of its nullity. Nonetheless, the Court
recognized that an action for nullity of the second marriage is a prejudicial question to the
criminal prosecution for bigamy.

However, for purposes of contracting a subsequent marriage, a judicial declaration of

nullity of a prior marriage contracted before the effectivity of the Family Code is necessary.
Thus, Article 40 of the Family Code will have a retroactive application since it does not
prejudice nor impair vested or acquired rights.

Article 40 of the Family Code only requires a judicial declaration of absolute nullity for
purposes of remarriage but not as a defense in Bigamy. Article 40 does not categorically
withhold from the accused the right to invoke the defense of a void ab initio marriage even
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without a judicial decree of absolute nullity in criminal prosecution for bigamy. The Court
explained that it would be unfair to bar the accused in a bigamy case from raising the defense of
the nullity of his previous marriage in the bigamy case, when Article 40 does not explicitly say
so.

Thus, in a criminal prosecution for bigamy, the parties may still raise the defense of a
void ab initio marriage even without obtaining a judicial declaration of absolute nullity if the first
marriage was celebrated before the effectivity of the Family Code. Such is still governed by the
rulings in Mendoza, Aragon, and Odayat which are more in line with the rule that procedural
rules are only given retroactive effect insofar as they do not prejudice or impair vested or
acquired rights.

Here, Pulido's marriage with Arcon was celebrated when the Civil Code was in effect
while his subsequent marriage with Baleda was contracted during the effectivity of the Family
Code. Hence, Pulido is required to obtain a judicial decree of absolute nullity of his prior void ab
initio marriage but only for purposes of remarriage. As regards the bigamy case, however, Pulido
may raise the defense that his prior marriage with Arcon is void ab initio even without obtaining
a judicial declaration of absolute nullity.

REPUBLIC v. VILLACORTA G.R. No. 249953, June 23, 2021, First Division (Caguioa, J.)

Melvin and Janufi met in March of 1996 while they were both studying in Cebu City.

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They became sweethearts but ended their relationship in 2000. Melvin later heard that Janufi
began dating someone who was working near the establishment where she was then employed.
For several months, Melvin and Janufi did not communicate with one another.

Sometime in March of 2001, Melvin visited Janufi and eventually asked her about the
rumor that she was dating someone else. Janufi denied the same and insisted that "no one
touched her" and nothing happened between her and any third party. Thus, Melvin and Janufi
reconciled. In April of 2001, Melvin learned that Janufi was pregnant. Melvin was "surprised"
and "doubtful" to learn Janufi was already one month pregnant because they had sexual
intercourse only in March of 2001. Although Melvin doubted the paternity of the child, Janufi
supposedly assured him that he was the only person she had sexual intercourse with.

On December 1, 2001, Janufi gave birth to a baby girl named Mejan Dia and she and
Melvin then began living together and eventually got married in August 2004.

In October 2004, Janufi gave birth to a second child named Javen. The couple often
quarreled about the issue of Mejan’s paternity. The worst was when Melvin and Janufi quarreled
during a family dinner party where the issue of Mejan’s paternity was brought up in the presence
of their relatives. This drove Melvin to finally take a deoxyribonucleic acid (DNA) Parentage
Examination (DNA test) at Hi-Precision Diagnostics.

In November of 2010, the results of the DNA test were released, which revealed that
there was a 0.0% probability that Melvin was the father of Mejan Dia. Janufi later admitted that
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she had no intention to deceive Melvin into acknowledging paternity of Mejan and that it
happened only once with another man while she was drunk.

Melvin filed a petition for annulment of marriage on the ground of fraud under Article
45(3) in relation to Article 46(2) of the Family Code.

ISSUE: Whether or not the marriage should be annulled on the ground of fraud.

The Supreme Court held that the facts do not warrant annulment under Article 45(3) in
relation to Article 46(2) of the Family Code.

Article 45(3) of the Family Code provides that a marriage may be annulled for any of the
following causes, existing at the time of the marriage: xxx (3) That the consent of either party
was obtained by fraud, unless such party afterwards, with full knowledge of the facts constituting
the fraud, freely cohabited with the other as husband and wife."

To constitute fraud that warrants the annulment of the marriage under Article 46(2): 1)
the wife must have been pregnant by a man other than her husband at the time of the marriage
and 2) the wife must have fraudulently concealed the same.

In this regard, the concealed pregnancy, which vitiates consent, must have existed at the
time of the marriage. Justice Eduardo Caguioa explains that "[t]he essence of the fraud in this

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case is the non-disclosure of the present pregnancy of the wife x x x the pregnancy must exist at
the time of the celebration of the marriage, thus, if the wife had previous relations with other
men and as a consequence of which she became pregnant or bore a child previously, the
concealment thereof will not be a ground for annulling the marriage if at the time the marriage
was celebrated the wife was not pregnant.

It is the concealment of the fact of pregnancy by another man at the time of marriage that
constitutes fraud as a ground for annulment. "No other misrepresentation or deceit as to
character, health, rank, fortune or chastity shall constitute such fraud as will give grounds for
action for the annulment of marriage.

In the instant case, the facts readily reveal that the child Mejan was already almost three
years old when Melvin and Janufi got married in 2004. As Janufi was not pregnant at the time of
the marriage, any purported fraud she may have committed to induce Melvin to marry her cannot
be considered the fraudulent concealment contemplated under Article 46(2). Indeed, the Court
has held that not all fraudulent acts can be invoked to annul a marriage. The circumstances of
fraud under Article 45(3) are exclusive and restrictive.

CORDOVA v. EDWARD TY G.R. No. 246255. February 3, 2021, Third Division (Delos
Santos, J.)

Chi Tim, the husband of Teresita Cordova, became a defendant in a BP 22 case filed
against him and his co-defendant Young before the MeTC. The trial court rendered judgment
finding Chi Tim and Young solidarily liable to respondent Ty for the value of the checks .
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After the judgment attained finality, Ty moved for the issuance of a writ of execution
which was granted by the MeTC. Among the properties levied upon are a parcel of land which
was alleged to be the paraphernal property of Teresita and a condominium covered by a CCT
which is their alleged family home.

Teresita and her daughter filed a Very Urgent Motion to Exclude their Properties from
the Auction Sale before the MeTC but the court did not act on the motion which impelled
petitioners to file a Petition for Prohibition and Prayer for Issuance of a Writ of Preliminary
Injunction and/or Restraining Order before the RTC.

Teresita claims that the BP 22 case arose from a corporate obligation and her husband
should not be held personally liable therefore. As regards the claim for exemption, petitioners
alleged that the land was exclusively owned by Teresita, which she purchased using funds
donated to her by her father; while the condominium was the Cordova family home and
presently, utilized by their daughter Jean as her own family home.

Petitioners argued that the appellate court erred in holding the subject properties liable to
the personal obligation of Chi Tim on the basis of conjugality alone. Citing Article 121 of the
Family Code, they aver that before the conjugal partnership is made liable for the personal debt
of one of the spouses, it must be shown to have redounded to the benefit of the family. Further,
petitioners added that under Article 160 of the Family Code, certain facts must be established
before a family home is subjected to execution. Having failed to establish these aforementioned

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facts, the subject properties may not be levied upon and executed to satisfy Chi Tim's civil
liability.

ISSUES

(1) Whether the subject properties, are part of the conjugal assets of Chi Tim and
Teresita.

(2)Whether or not the subject properties may be subject to execution to satisfy the civil
liability of Chi Tim arising from the B.P. 22 case.

The Supreme Court ruled that since the parties were married before the effectivity of the
Family Code and they did not execute any antenuptial agreement, their property relations is
governed by conjugal partnership of gains. Under the provisions of Article 160 of the Civil
Code "all property of the marriage is presumed to belong to the conjugal partnership, unless it
be proved that it pertains exclusively to the husband or to the wife." It is not even necessary to
prove that the properties were acquired with funds of the partnership. Even when the manner in
which the properties were acquired does not appear, the presumption will still apply, and the
properties will still be considered conjugal. In order to rebut the presumptive conjugal nature of
the property, a movant must present strong, clear and convincing evidence of exclusive
ownership of one of the spouses. The burden of proving that the property belongs exclusively to
the wife or to the husband rests upon the party asserting it.
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The Supreme Court held that based on Article 160, the parcel of land was not the
paraphernal property of Teresita since it was acquired during her marriage with Chi Tim. Even
if Teresita was identified as the sole vendee and registered owner in the Deed of Absolute Sale
and a copy of the title respectively, it did not destroy its conjugal nature as the registration of the
property is not conclusive evidence of the exclusive ownership of the husband or the wife. Even
if the property appears to be registered solely in the name of either spouse, it has the inherent
character of conjugal property if it was acquired for valuable consideration during the marriage.

With regard to the condominium unit, the Court held that petitioners failed to prove that it
was the family home. In order for the property to be considered as a family home, the requisites
must be established: (a) it must be the house where he and his family actually reside and the lot
on which it is situated; (b) the family home must be part of the properties of the absolute
community or the conjugal partnership, or of the exclusive properties of either spouse with the
latter's consent, or on the property of the unmarried head of the family; and (c) the actual value
of the family home shall not exceed, at the time of its constitution, the amount of P300,000.00 in
urban areas and P200,000.00 in rural areas.

It must be emphasized that the law requires for purposes of determining a family home
that the residence must be actual. It explicitly mandates that the occupancy of the family home,
either by the owner or by any of its beneficiaries, must be actual. This occupancy must be real, or
actually existing, as opposed to something merely possible, or that which is merely presumptive
or constructive.” In this case, Jean merely testified that she lived with her parents under one roof

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without even specifying that it was in the subject condominium unit.

The Court, however, held that Ty cannot obtain satisfaction by executing upon the
subject properties. Settled is the rule that conjugal property cannot be held liable for the personal
obligation contracted by one spouse, unless some advantage or benefit is shown to have accrued
to the conjugal partnership. While Chi Tim directly received the money from the bounced
checks, there was no showing that it was used in the business or in the exercise of his profession
for the legal presumption that it redounded to the benefit of the family to apply. It must be
recalled that in the MeTC Decision, the court held that there was no proof that the money
obtained from the encashed checks were issued to pay the suppliers of Wood Technology.
Instead, the circumstances of the case revealed that these checks were drawn by Chi Tim and
Young for rediscounting for their personal benefit. It can thus be deduced from the foregoing that
the loans obtained from Ty were not used by Chi Tim in his business or in the exercise of his
profession.

The Supreme Court, however, clarified that while fines and indemnities imposed upon
either spouse by reason of a crime or quasi-delict may be charged against the conjugal property
pursuant to Article 122, it must be shown that all the liabilities under Article 121 have been
covered and that the spouse liable has no exclusive property or the same is insufficient. Citing
Pana v. Heirs of Juanite, Sr. and Dewara v. Spouses Lamela, the Court said that the ruling in
those two cases will not apply, because in the present case – the criminal case against Chi Tim
was dismissed so the civil liability adjudged does not come within the purview of “fines and
indemnities” but of a “debt”.
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SPS. ANASTACIO SR v. HEIRS OF COLOMA G.R. No. 224572, August 27, 2020, First
Division (Caguioa, J.)

Juan Coloma is the registered owner of a parcel of land in Tarlac which is the subject of
this case. The TCT shows Juan as the registered owner thereof since January 14, 1965, with the
certificate of title likewise carried the inscription of his marriage to Juliana. Both Juan and
Juliana are now deceased, leaving Rudy P. Coloma and Marcela C. Reyes, respondents, as their
legitimate heirs.

Respondents who are the heirs of Juan, alleged that petitioners are in possession of the
land by mere tolerance of their parents. Respondents demanded the return of the property upon
the demise of their parents but petitioners refused, prompting them to file a case for Recovery of
Possession and Title against them. In their Answer, petitioners claimed right of ownership over
the subject property by virtue of an alleged Deed of Absolute Sale dated October 7, 2004
executed by Juan during his lifetime. On account of such claim of ownership, the MCTC
dismissed the said case.

Respondents later filed the Complaint before the RTC, this time for Annulment of
Document, Recovery of Ownership and Possession with Prayer for Writ of Preliminary
injunction, claiming that the Deed of Absolute Sale allegedly executed by their father in favor of
petitioners is void on two grounds: (1) that the signature of their father, Juan, is a forgery; and (2)
that there is no conformity or consent given by their mother, Juliana, to the alleged sale.

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Petitioners countered that the consent of Juliana was not necessary to effect a valid sale since the
subject property was the sole property of Juan, having inherited the same from his paternal
ancestors and the spouses had long been separated from bed and board.

Respondents presented, among others, a handwriting expert who testified that the
questioned signature of Juan was indeed forged. On the other hand, petitioners harped on the
alleged separation from bed and board of Juan and Juliana and presented Juan's alleged paramour
since 1978. Said witness testified that during the lifetime of Juan, he mortgaged, and
subsequently sold the subject property to petitioners which testimony was later on confirmed by
Romeo Anastacio.

ISSUES : Whether the sale of the subject property by Juan in favor of petitioners contemplated
in the Deed of Absolute Sale is valid

The Court ruled that the sale is void. Petitioners’ argument that the consent of Juliana to
the sale is not required because the land is exclusive to Juan is without merit.

Article 105 of the Family Code provides that the provisions of Conjugal Partnership of
Gains (CPG), shall also apply to CPG already established before the effectivity of the Family
Code, without prejudice to vested rights already acquired in accordance with the Civil Code or
other laws. It will be recalled that based on the stipulations of the parties, the subject property
was acquired in 1965 during the lifetime of Juan and Juliana while they were married, and it was
registered in the name of Juan married to Juliana.
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In 1965, the prevailing property regime between husband and wife was the CPG. There
being no evidence to the contrary, the property regime between Juan and Juliana was the CPG. A
rebuttable presumption is established in Article 116 of the Family Code and the party who
invokes that presumption must first establish that the property was acquired during the marriage
because the proof of acquisition during the marriage is a condition sine qua non for the operation
of the presumption in favor of the conjugal partnership. It is not necessary to prove that the
property was acquired with conjugal funds and the presumption still applies even when the
manner in which the property was acquired does not appear. Once the condition sine qua non is
established, then the presumption that all properties acquired during the marriage, whether the
acquisition appears to have been made, contracted or registered in the name of one spouse or
both spouses, are conjugal, remains until the contrary is proved.

Given the very stipulations made during the Pre-Trial and TCT No. 56899, respondents
had laid the predicate for the presumption under Article 116 to be invoked. To overcome the
presumption in favor of the conjugal partnership, petitioners were required to prove the contrary.
Unfortunately, petitioners' evidence that TCT No. 56899 was registered in the name of Juan
married to Juliana and the sale from the previous owner, Valete, to Juan only mentioned Juan as
the buyer fell short to overcome the presumption.

Since petitioners have not presented strong, clear, convincing evidence that the subject
property was exclusive property of Juan, its alienation to them required the consent of Juliana to
be valid. Given that the subject property was the conjugal property of Juan and Juliana, the CA

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correctly ruled that the sale of the subject property by Juan without the consent of Juliana in
favor of petitioners is void.

DR. RUBEN C. BARTOLOME v. REPUBLIC OF THE PHILIPPINES G.R. No. 243288,

28 August 2019, Second Division (Caguioa, J.)

In 2014, Dr. Ruben Bartolome filed a petition for change of name under Rule 103 of the
Rules of Court before the RTC, seeking "to correct the name 'Feliciano Bartholome' as appearing
in his birth certificate. He stated that he has been using the name 'Ruben Cruz Bartolome' since
his childhood.”

After posting and publication, Bartolome presented the pieces of documentary evidence
like his diploma; Certificate for Medical examiners; PRC ID, Marriage Contract and Passport
among others.

The RTC denied the petition for failure to exhaust administrative remedies, insufficiency
of evidence, and improper venue. On appeal, the CA affirmed the RTC ruling. The CA noted that
petitioner was seeking to change his first name and to correct his surname as indicated in his
birth certificate. Thus, the CA held that petitioner should have filed a petition for the correction
of entries in his birth certificate under R.A. 9048, instead of a Rule 103 petition for change of
name.

Bartolome filed the instant Petition insisting that Rule 103 is the proper remedy. In its
Comment, OSG claims that petitioner should have first filed a petition before the local civil
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registrar pursuant to R.A. 9048 in order to change his first name and to correct the spelling of his
last name. The OSG claims that there was no splitting of cause of action as both reliefs are
covered by R.A. 9048.

ISSUE Whether the change/correction sought in petitioner's first name, middle name, and
surname, as appearing in his birth certificate, from "Feliciano Bartholome" to "Ruben Cruz
Bartolome" should be filed under R.A. 9048, Rule 103, or Rule 108 of the Rules.

The Supreme Court ruled that the changes prayed for by the petitioner are all covered by
an administrative proceeding under R.A. 9048. Republic Act No. 9048 amended Articles 376
and 412 of the Civil Code, effectively removing clerical errors and changes of the name outside
the ambit of Rule 108 and putting them under the jurisdiction of the civil registrar.

Petitioner seeks to change his first name, to include his middle name, and to correct the
spelling of his surname, i.e., from "Feliciano Bartholome" as stated in his birth certificate to
"Ruben Cruz Bartolome". The changes and corrections are covered by Section 1 of R.A. 9048 as
amended by R.A. 10172, which provides:

Section 1. Authority to Correct Clerical or Typographical Error and Change of First Name
or Nickname. — No entry in a civil register shall be changed or corrected without a
judicial order, except for clerical or typographical errors and change of first name or
nickname, the day and month in the date of birth or sex of a person where it is patently

JURISTS Paguirigan
clear that there was a clerical or typographical error or mistake in the entry, which can be
corrected or changed by the concerned city or municipal civil registrar or consul general in
accordance with the provisions of this Act and its implementing rules and regulations.

Contrary to petitioner's claims therefore, the change sought is covered by R.A. 9048 and
should have been filed with the local civil registry of the city or municipality where the record
being sought to be corrected or changed is kept.

The inclusion of petitioner's middle name as well as the correction of his misspelled
surname are covered by R.A. 9048, as amended. While substantial corrections of entries in the
civil register are still covered by Rule 108, typographical or clerical corrections must now be
filed under R.A. 9048. Misspelled names or missing entries are clerical corrections if they are
visible to the eyes or obvious to the understanding and if they may be readily verified by
referring to the existing records in the civil register. They must not, however, involve any change
in nationality, age or status. To obviate any further confusion on the matter, the Court
categorically holds that typographical or clerical errors in a person's surname must likewise be
corrected through the administrative proceeding under R.A. 9048.

FRANCIS LUIGI G. SANTOS v. REPUBLIC OF THE PHILIPPINES G.R. No. 250520,

May 5, 2021, First Division (Caguioa, J.)

Petitioner Francis Luigi G. Santos filed a petition for change of name under Rule 103 of
the Rules of Court seeking to change his surname from "Santos" to "Revilla" in his Certificate of
Live Birth. He alleged that sometime in 1991, his parents, Lovely Maria T. Guzman and Jose
13

Marie Bautista, Jr., also known as Ramon Bong Revilla, Jr., met and engaged in an intimate
relationship. He was later born in Quezon City on January 9, 1992 as "Francis Luigi Guzman.”
Lovely Guzman and Bong Revilla were never married as the latter was already married to Lani
Mercado. Thus, petitioner's Certificate of Live Birth did not bear the Revilla surname and his
father was marked as unknown.

In 1999, Lovely Guzman married Patrick Joseph P. Santos, who, in turn, legally adopted
petitioner. Thus, petitioner's name was changed from "Francis Luigi Guzman" to "Francis Luigi
G. Santos." Although petitioner lived with his mother, he grew up close to Bong Revilla and the
latter's wife and children and was treated by the family as a legitimate son. He also claimed that
he used the name "Luigi Revilla" when he entered show business. Thus, he filed the instant
petition in order to "avoid confusion," "to show his sincere and genuine desire to associate
himself to Bong Revilla and to the Revillas," and to ensure that his records show his true identity
as Bong Revilla's son.

The RTC denied the petition. On appeal, the CA affirmed the decision of the RTC.

ISSUE: Whether the petition to change petitioner's surname from "Santos" to "Revilla" should be
granted.

The Supreme Court ruled in the negative. To justify a change of name, a person "must
show not only some proper or compelling reason but also that he will be prejudiced by the use of

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his true and official name." Unfortunately, none of these reasons justify, in law, the desired
change. The Court agrees with the RTC that the use of the surname "Revilla" would create
further confusion rather than avoid it, given that: (1) petitioner has never legally used the name
"Revilla" despite having been acknowledged in 1996; (2) he was legally adopted by Patrick
Santos in 2001; (3) he has used the name "Santos'' for all documentary purposes since his
adoption; (4) although he is publicly known to be the son of Bong Revilla, he is known by his
peers as "Luigi Santos"; (5) even after a change of surname, Patrick Santos shall continue to be
the father named in his birth certificate; and (5) he only began using the surname "Revilla" when
he entered show business. Moreover, as adoption severs all legal ties between the adoptee and
his or her biological parents, there is no basis to allow petitioner to change his name to "Revilla"
simply because he is, biologically, the son of Bong Revilla and wants to associate himself with
the Revilla family.

Rule 103 governs petitions for change of name which is a separate and distinct remedy
from that provided under Rule 108, which involves cancellations and corrections of entries in the
civil registry.

Notably, the foregoing rules were modified by the enactment of R.A. 9048, which
amended Articles 376 and 412 of the Civil Code and vested primary jurisdiction over the
correction of certain clerical or typographical errors and changes of first name with the civil
registrar. In 2012, R.A. 10172 expanded the coverage of the summary administrative procedure
provided under R.A. 9048 to include clerical corrections in the day and/or month in the date of
birth, or in the sex of the person, where it is patently clear that there was a clerical or
typographical error or mistake in the entry. Presently therefore, when an entry falls within the
14

coverage of R.A. 9048 as amended by R.A. 10172, a person may only avail of the appropriate
judicial remedies under Rule 103 or Rule 108 after the petition in the administrative proceedings
is first filed and later denied. Failure to comply with the administrative procedure generally
renders the petition dismissible for failure to exhaust administrative remedies and for failure to
comply with the doctrine of primary jurisdiction.

PROPERTY & LAND TITLES

AMA LAND, INC., vs. WACK WACK RESIDENTS' ASSOCIATION, INC. G.R. No.
202342. July 19, 2017, First Division (Caguioa, J.)

Petitioner AMALI embarked on project in the mid-1990’s to construct a commercial and

residential building at EDSA corner Fordham Street in Wack Wack Village, Mandaluyong City.
After securing the necessary licenses and permits for construction, AMALI notified the Wack
Wack Homeowner’s Association of its intention to use Fordham St. as an access road and
staging area for the project. Since AMALI received no response from Wack Wack, it
temporarily enclosed the job site and set up a field office along Fordham. Wack Wack exerted
all efforts to remove the field office of AMALI but all efforts proved futile.

AMALI filed a petition before the RTC, wherein they prayed that they be allowed
temporary use of Fordham Street as an access road to AMALI's construction site of its AMA

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Tower project pursuant to Article 656 of the Civil Code. AMALI also sought to establish a
permanent easement of right of way in its favor over a portion of Fordham Street pursuant to
Article 649 of the Civil Code.

The RTC granted the writ of preliminary mandatory injunction "directing Wack Wack to
allow AMALI to use Fordham Street through a temporary easement of right of way." However,
the Court of Appeals granted Wack Wack’s application for a TRO and AMALI was ordered to
cease and desist from the construction of the commercial and residential condominium project
located along EDSA corner Fordham Street in Wack Wack Village.

ISSUE: Whether AMALI, as owner of the dominant estate, may validly claim against Wack
Wack a compulsory permanent right of way under Articles 649 and 650 of the Civil Code, or, a
temporary right of way under Article 656 of the Civil Code.

The Court ruled that as to whether AMALI, as owner of the dominant estate, may validly
claim a compulsory permanent right of way under Articles 649 and 650 of the Civil Code
against Wack Wack , will depend on a finding that AMALI has established the existence of the
following requisites, namely: (1) the dominant estate is surrounded by other immovables; (2) it is
without adequate outlet to a public highway; (3) after the proper indemnity has been paid; (4) the
isolation was not due to the proprietor of the dominant estate's own acts; and (5) the right of way
claimed is at a point least prejudicial to the servient estate. A sixth requisite is that the right of
way must be absolutely necessary for the normal enjoyment of the dominant estate by its owner.
There must be a real, not fictitious or artificial, necessity for the right of way, and the right
cannot be claimed merely for the convenience of the owner of the enclosed estate. The burden of
15

proving the existence of the foregoing requisites lies on AMALI, being the owner of the
dominant estate.

On the other hand, with regard to the question of whether AMALI is entitled to a
temporary easement of right of way, the Court said that Article 656 of the Civil Code provides
that this can be granted only after the payment of the proper indemnity by AMALI, and only if
AMALI has established that the easement is indispensable for the construction of its AMA
Tower Project.

The SC noted that the RTC decision failed to identify the specific portion of Fordham
Street that would be subject to the temporary easement and it therefore erred when it granted
AMALI's application for preliminary mandatory injunction because, in so doing, it prematurely
decided disputed facts and disposed of the merits of the case without the benefit of a full-blown
trial.

Article 656 requires proof of indispensability and receipt of payment of the proper
indemnity for the damage caused by the owner of the dominant estate before the owner of the
servient estate can be compelled to grant a temporary easement of right of way. Being
preconditions, they are akin to suspensive conditions that must be fulfilled before the obligation
on the part of Wack Wack to allow the easements can arise. Until the preconditions are met,
AMALI has no legal basis to use a portion of Fordham Street as an access road and staging area
of its AMA Tower project.

JURISTS Paguirigan
To stress, the temporary easement of right of way under Article 656 of the Civil Code,
similar to the permanent easement of right of way pursuant to its Articles 649 and 650, can only
be granted after proof of compliance with the prerequisites set forth in the articles duly adduced
during a full-blown trial.

REPUBLIC OF THE PHILIPPINES, vs. THE HEIRS OF MEYNARDO CABRERA G.R.

No. 218418. November 8, 2017, Second Division (Caguioa, J.)

Meynardro Cabrera obtained a Free Patent over two (2) parcels of land in 1971 and
transfer certificates of title were issued to him. Thereafter, Lot 1-A was transferred to
Consolacion Cabrera and TCT No. 16580 was issued to Consolacion in 1982. Consolacion later
sold portions of Lot 1-A to several purchasers.

The De Castros who claim to be the actual possessors of Lot 1-A filed a petition before
the DENR to conduct an investigation to determine Lot 1-A's land classification status.

The DENR through the DENR Land Management Office, issued a Final Report that the
lands covered by the Free Patent No. 516197, covering Lots 1, 1-A, and 2 (collectively, Roxas
Properties), forms part of the public domain since the lands covered had been reclassified as
forest lands as early as 1949. The Free Patent issued to Meynardo was declared null and void.

The Republic filed a complaint for the annulment and/or cancellation of Free Patent No.
516197, OCT No. RP-132 (P-9193), and TCT No. 16580 against the respondents and prayed for
16

the reversion of the Roxas Properties to the State. The RTC ruled against the Republic and held
that it failed to prove that the Roxas Properties have been reclassified as forest land. Citing
Republic v. Animas, the RTC ruled that in order to prove reversion of alienable and disposable
land to forest land, a positive government act evincing the same is necessary.

In this Petition, the Republic argued that the Court's ruling in Animas cannot be applied
to the present case, since, in Animas, the fact sought to be established was the classification of
forest land to alienable and disposable land, and not the other way around, as in this case. It
added that the Court's ruling in Animas did not have the effect of making a positive executive act
a necessary requirement for the purpose of proving the reclassification of alienable and
disposable land.

The Republic posits that Animas affirms its right to institute reversion proceedings in
instances where portions of forest land are erroneously included within the scope of land patents.
Moreover, the Republic argues that in reversion proceedings, the State should not be made to
bear the burden of proving that the land in question constitutes public domain (i.e., forest land).
In any case, the Republic posits that the documentary and testimonial evidence it had presented
sufficiently proved such fact.

ISSUE: Whether a positive act of government is necessary to evince the reclassification of land
from alienable and disposable to forest.

JURISTS Paguirigan
The Supreme Court ruled in the affirmative. The CA did not err when it affirmed the
RTC, as the Republic failed to establish that the Roxas Properties were classified as forest land at
the time Free Patent No. 516197 was issued.

The power to classify and reclassify land lies solely with the Executive Department. All
lands of the public domain belong to the State, and that, as a consequence thereof, any asserted
right of ownership over land necessarily traces back to the State. At present, Section 3, Article
XII of the 1987 Constitution classifies lands of the public domain into five (5) categories —
forest lands, agricultural lands, timber lands, mineral lands, and national parks. In the absence of
any prior classification by the State, unclassified lands of the public domain assume the category
of forest lands not open to disposition.

In turn, the classification of unclassified lands of the public domain, and the
reclassification of those previously classified under any of the categories set forth in the 1987
Constitution (such as the Roxas Properties), are governed by Commonwealth Act No. 141
otherwise known as the Public Land Act. The classification and reclassification of public lands
into alienable or disposable, is the exclusive prerogative of the Executive Department and is
exercised by the latter through the President. Since the power to classify and reclassify lands are
executive in nature, such acts, effected without executive authority, are void, and essentially ultra
vires.

A land registration proceeding is the manner through which an applicant confirms title to
real property and he bears the burden of overcoming the presumption of State ownership.
Accordingly, the applicant is bound to establish, through incontrovertible evidence, that the land
17

sought to be registered had been declared alienable or disposable through a positive act of the
State.

Conversely, reversion proceeding is the manner through which the State seeks to revert
land to the mass of the public domain; it is proper when public land is fraudulently awarded and
disposed of in favor of private individuals or corporations, or when a person obtains a title under
the Public Land Act which includes, by oversight, lands which cannot be registered under the
Torrens system as they form part of the public domain.

In reversion proceedings, the State bears the burden of proving that the property in
question was inalienable at the time it was decreed or adjudicated in favor of the defendant. The
SC ruled that the Republic failed to show that the Roxas Properties (including Lot 1-A) were
classified as forest land at the time Free Patent No. 516197 was issued in Meynardo's favor. The
DENR Final Report, the National Mapping and Resource Information Certifications and the LC
Map do not constitute a positive act of reclassification by the Executive Department.

The testimonies confirm that the alleged reclassification of the Roxas Properties is bereft
of basis, as it was done by Engineer Mendez on his sole account, without any prior directive
from the President, or a duly authorized officer from the Executive Department. In fact, the
annotation appearing on LC Map 209 upon which the Republic relies does not even state upon
whose authority the alleged reclassification had been made, placing the annotation's validity,
veracity and worth in serious doubt. Ultimately, the Republic failed to prove that the Roxas

JURISTS Paguirigan
Properties (including Lot 1-A) were classified as forest land when they were decreed in
Meynardo's favor in 1971.

REPUBLIC v. CAPITAL RESOURCES CORPORATION G.R. No. 217210. November 7,

2016, First Division (Caguioa, J.)

It appears that a Homestead Patent was granted to Vitaliano Dumuk in 1924 which
resulted in the issuance of an OCT in his name. The OCT was superseded by a TCT in the name
of spouses Milo. In 1982, Capital Resources Corporation (CRC) and Romeo Roxas acquired the
subject property from Spouses Milo resulting in the cancellation of the title of the Spouses Milo
and the issuance of a new one under TCT No. 23343 in the name of the respondents.

Respondents Capital Resources and Roxas later caused the subdivision of the subject
property via the subdivision plan prepared by Engr. Mercado and it was divided into several
blocks, among which are Block 35 and Block 36. The plan indicated that Block 35 is a "salvage
zone" while a portion of Block 36 appeared to overlap a portion of the China Sea. The
subdivision plan was approved but was subsequently cancelled pursuant to an Order of
Cancellation issued by the DENR.

In 1987, the town of Bauang, La Union was cadastrally surveyed and based on the
Cadastral Survey Map, Block 35 and Block 36 were projected therein as part of the identified
foreshore land and seabed, respectively.
18

Sometime in 2003, a certain Hidalgo filed a Foreshore Lease Application over a land in
Bauang. The Capital Resources and Roxas opposed the application on the ground that the parcel
of land being applied for encroaches upon a portion of the subject property. In turn, Hidalgo filed
a counter Protest assailing the validity of respondents’ TCT on the ground that: (1) it covers
foreshore land, salvage zone (the area of land measuring 20 meters landward from the interior
limit of the shoreline), and portions of the South China Sea; and (2) his right to the foreshore
land is prejudiced by the existence of this fraudulent title.

An investigation was thereafter conducted by the DENR and the Committee concluded
that that respondent Capital Resources may not validly acquire the subject property pursuant to
Section 119 of Act No. 2874 (Public Land Act) and the 1973 Constitution. Thus, the Committee
recommended that Homestead Patent H-6811 issued to Dumuk be declared null and void and
that an appropriate reversion proceedings be filed to effect the cancellation of OCT No. 137 and
its derivative titles.

In 2007, the DENR-Regional Executive Director Ancheta recommended the institution

of an action for the cancellation of the respondents title and for the reversion of Blocks 35 and 36
to the State.

Consequently, the Republic of the Philippines filed a Complaint for Cancellation of Title
and Reversion against respondents and the Register of Deeds of La Union before the Regional
Trial Court. The Republic alleged that from the time that Homestead Survey Plan was approved

JURISTS Paguirigan
until the cadastral survey, the northwestern portion of the subject property had been washed out
and eaten up by the sea waters. Per the ocular inspection, Blocks 35 to 36 formed part of the
public domain. The Republic prayed for judgment that the respondents’ title be declared null and
void and that the subject property be reverted to the public domain.

The RTC ruled that Blocks 35 and 36 form part of the public domain and ordered their
reversion to the State. In their Motion for Reconsideration before the RTC the Republic raised
the issue that since respondent Capital Resources is a corporation, it is ineligible to acquire the
subject property under the Public Land Act.

On appeal, the Republic prayed for the reversion of the entire property of the
respondents. The CA affirmed the RTC decision. The CA went on further to order the resurvey
of the entire property covered by the respondents’ title, the cancellation of their title and the
reissuance of a new title reflecting the technical description of the resurvey upon approval.

ISSUES (1) Whether or not the respondent Capital Resources, being a corporation, is ineligible
to acquire the subject property under the Public Land Act; and 2) Whether or not the remaining
portion of the Subject Property (being foreshore and salvaged zones) may be reverted to the
public domain.

The Supreme Court held that a judicious review of the records reveals that while the
Republic's Complaint prayed for the reversion of the entire Subject Property, the allegations are
predicated merely on their assertion that Blocks 35 and 36 have become foreshore lands. In this
19

regard, basic is the rule that it is the allegations of the complaint and not the prayer that
determines the basis of the plaintiffs relief.

The Court ruled that Section 121 of the Public Land Act pertains to acquisitions of public
land by a corporation from a grantee of the patent. In this particular case, the original grantee
was Vitaliano Dumuk and he subsequently transferred the subject property to Spouses Cecilio
and Laura Milo. In turn, the spouses Milo were the ones who sold the subject property to Capital
Resources and Romeo Roxas. Evidently, Capital Resources did not acquire the subject property
from the original grantee. Even assuming that Capital Resources is ineligible to be a transferee,
the fact remains that the subject property was purchased by Capital Resources and Romeo Roxas
and the latter is an individual who is not barred from acquiring the subject property.

As to the provision of the 1973 Constitution proscribing corporations from acquiring

"alienable lands" of the public domain, the consistent ruling of the Supreme Court is that the
prohibition will not apply if the property acquired by the corporation is private property and not
alienable lands of the public domain. The rule is that once a patent is registered and the
corresponding certificate of title is issued, the land covered by it ceases to be part of the public
domain and becomes private property. In the present case, the subject property became private
property upon the issuance of the OCT to Vitaliano Dumuk. Necessarily, when the respondents
acquired the subject property in 1982, the same was no longer a part of the alienable lands of the
public domain but a private property. Hence the prohibition will not apply.

JURISTS Paguirigan
While petitioner Republic was able to show its entitlement to the reversion of Blocks 35
and 36 to the public domain, it failed to do the same with respect to the remaining portion of the
Subject Property.

SPOUSES ABRAHAM AND MELCHORA ERMINO vs. GOLDEN VILLAGE

HOMEOWNERS ASSOCIATION, INC. G.R. No. 180808, August 15, 2018, Second
Division (Caguioa, J.)

Spouses Ermino are residents of Alco Homes, a subdivision located beside Golden
Village Subdivision in Cagayan de Oro City. Sometime in mid-1995, there was continuous
heavy rain which caused a large volume of water to fall from the Hilltop Subdivision to the
subdivisions below including Alco Homes. The volume of water directly hit Spouses Ermino's
house and damaged their fence, furniture, appliances and car. Spouses Ermino filed a complaint
for damages against the developer of Hilltop City Subdivision, E.B. Villarosa, and Golden
Valley Homeowners Association (GVHAI). The Hilltop City Subdivision is found at the upper
portion of Alco Homes, making it a higher estate, while Golden Village is located beside Alco
Homes, which makes both Alco Homes and Golden Village lower estates vis-à-vis Hilltop City
Subdivision.

Spouses Ermino ascribed negligence on the part of E.B. Villarosa for failing to observe
DENR rules and regulations and to provide retaining walls and other flood control devices which
could have prevented the softening of the earth and consequent inundation. They likewise
claimed that GVHAI committed a wrongful act in constructing the concrete fence which diverted
the flow of water to Alco Homes, hence, making it equally liable with E.B. Villarosa.
20

GVHAI averred that the construction of the concrete fence was in the exercise of its
proprietary rights and that it was done in order to prevent outsiders from using the steel grille
from entering the subdivision. It likewise asserted that they "should not be made inutile and
lame-duck recipients of whatever waters and/or garbage" that come from Alco Homes. GVHAI
attributed sole liability on E.B. Villarosa for having denuded Hilltop City Subdivision and for its
failure to provide precautionary measures.

The RTC ruled in favor of Ermino and held both E.B. Villarosa and GVHAI jointly and
severally liable to the Spouses Ermino. Only GVHAI appealed. The Court of Appeals reversed
the trial court insofar as it held GVHAI liable to the Erminos. The appellate court ruled that
GVHAI merely exercised its proprietary rights when it constructed the concrete fence and that it
was not negligent.

ISSUES: Whether GVHAI is liable to the petitioners for constructing its concrete fence and
whether it is liable under Article 637 of the Civil; and whether E.B. Villarosa is responsible for
the damage suffered by the Erminos.

The Court ruled that when GVHAI replaced the steel grille gate with a concrete fence, the
construction was not intended to obstruct whatever waters that may naturally flow from the
higher estates. The concrete fence was made to ward off undesirable elements from entering the
subdivision. Such act was within the legitimate exercise of GVHAI's proprietary rights over its

JURISTS Paguirigan
property. The law recognizes in the owner the right to enjoy and dispose of a thing, without other
limitations than those established by law. Article 430 of the Civil Code provides that "(e)very
owner may enclose or fence his land or tenements by means of walls, ditches, live or dead
hedges, or by any other means without detriment to servitudes constituted thereon."

GVHAI cannot also be liable under Article 637 of the Civil Code. Both Alco Homes and
Golden Village are lower in elevation than the Hilltop City Subdivision, and thus, are legally
obliged to receive waters which naturally flow from the latter, as provided under Article 637 of
the Civil Code and Article 50 of the Water Code. An easement or servitude is "a real right
constituted on another's property, corporeal and immovable, by virtue of which the owner of the
same has to abstain from doing or to allow somebody else to do something on his property for
the benefit of another thing or person." The statutory basis of this right is Article 613 of the Civil
Code.

In this regard, Hilltop City Subdivision is the dominant estate because it is the immovable
in favor of which the easement is established; while Alco Homes and Golden Village, those that
are subject of the easement, are the servient estates. However, there is a concomitant
responsibility on the part of Hilltop City Subdivision not to make the obligation of these
lower/servient estates more onerous. Under Article 627 of the Civil Code, the owner of the
dominant estate may make, at his own expense, on the servient estate any works necessary for
the use and preservation of the servitude, but without altering it or rendering it more
burdensome.
21

Based on the ocular of the Hilltop City Subdivision, the area was bulldozed and the hills
were flattened but no retaining walls were constructed to prevent the water from flowing down
the lower estates. This flattening of the area due to bulldozing changed the course of water,
which ultimately led to the passing of said water to the house of Spouses Ermino.

Thus, the SC ruled that the bulldozing and construction works done by E.B. Villarosa, not
to mention the denudation of the vegetation at the Hilltop City Subdivision, made Alco Homes
and Golden Village's obligation, as lower estates, more burdensome than what the law
contemplated. Lower estates are only obliged to receive water naturally flowing from higher
estates and such should be free from any human intervention. In the instant case, what flowed
from Hilltop City Subdivision was not water that naturally flowed from a higher estate. The
bulldozing and flattening of the hills led to the softening of the soil that could then be easily
carried by the current of water whenever it rained. Alco Homes and Golden Village are not
anymore obligated to receive such waters and earth coming from Hilltop City Subdivision.
Therefore, E.B. Villarosa is responsible for the damage suffered by Spouses Ermino since its
negligence is the proximate cause of the injury suffered by the Erminos.

REPUBLIC v. ASUNCION G.R. No. 200772. February 17, 2021, First Division,
GAERLAN, J:

The spouses Felipe and Paciencia Asuncion were the registered owners of a 27.3 hectare
parcel of land in Bulacan which is located on the banks of the Wawang Dapdap River. Paciencia

JURISTS Paguirigan
Asuncion and her children later filed an application for original registration over nine parcels of
land located in Bambang, Bulacan with the CFI. They claimed fee simple ownership of the
aforementioned lands by inheritance, accretion, and open, continuous, exclusive, and notorious
possession under color of title for at least 30 years.

The Republic opposed the application on the ground that the lands covered by the
application were unclassified forest lands within the public domain. The Molina-Enriquez group
also opposed the Asuncions’ application for registration on ground that certain parts of the lands
covered by the application belong to them and their predecessors-in-interest.

Paciencia died and after the settlement of her estate, she was substituted by her children.
The Molina-Enriquez group later withdrew their Opposition to the application for registration of
the Asuncions after forging a Compromise Agreement with them which was approved by the
trial court.

The RTC rendered its decision in favor of the Asuncions in view of the failure of the
Republic’s failure to present its sole witness. The Court of Appeals ruled for the Asuncions as
they gave credence to the photographic evidence and the testimonies of Pedro and Carlos which
tend to prove that the parcels sought to be registered were in the open, public, and continuous
possession of the Asuncion family; and that said parcels were accretions upon the western
portion of the land covered by OCT No. O-243/TCT No. RT-30648, a parcel of land which is
undisputedly owned by the spouses Asuncion. The CA also noted that the Asuncions were able
to prove that the lands were alienable and disposable at the time of the filing of their application
for registration.
22

Before the SC, the Asuncions claim that the accretion is the product of the alluvial action
of the Wawang Dapdap river on the mother property. The Republic, on the other hand, claims
that the accretion happened on the seashore as it was solely attributable to the action of Manila
Bay. The Republic argues that the accretion could not have been the product of alluvial action
because the material was deposited on the southwest side of the property, instead of the southeast
side, where the property adjoins the river. Consequently, the Republic argues, the accretion could
only have been the product of the action of the sea upon the shore and the petition for registration
must fail.

ISSUE: Whether the Asuncions need to prove that the lands were alienable and disposable at the
time of the filing of the application for registration? Whether the parcels of land in question can
be registered in the name of the Asuncions?

With respect to the first issue, the SC ruled that alluvial accretions are governed by
paragraph (3), Article 457 of the Civil Code which vests ownership of the accretion gradually
received by lands adjoining the banks of rivers in the owners of such lands. Consequently, the
riparian owner whose land receives the accretion does not need to make an express act of
possession, because it is the law itself that pronounces the alluvium to belong to the riparian
owner from the time that the deposit created by the current of the water becomes manifest. From
the principle of automatic ownership of alluvial accretion, it also follows that if the riparian
owner applies for registration of the accretion, they need not prove the alienable and disposable
status of the land, for it was never part of the public domain in the first place, being private,

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albeit unregistered, land.

The Court held that in order to qualify under paragraph (3), the riparian owner must
prove the fact of alluvial accretion. Based on Article 457 of the Civil Code and as explained by
jurisprudence, alluvial accretion has three requisites: first, the accretion must be gradual and
imperceptible; second, the accretion must be made through the effects of the current of the water;
and third, the land where accretion takes place must be adjacent to a riverbank. On the other
hand, littoral accretions are considered inalienable lands of the public domain. Moreover, since
they are formed on seashores, they are considered foreshore lands, which may only be disposed
of by lease.

The Court ruled that Asuncions can only claim the rights under Article 457 with respect
to two parcels of land out of the nine which they applied for registration, since these are the only
lots which are adjacent to the north bank of the Wawang Dapdap River as shown on the 1999
Broad Map and the survey plans. Being located along the riverbank, these are the only areas
which can be safely presumed to have been formed through the accretion received by the banks
of the mother property. Likewise, the other parcels which are not located along the riverbank, or
bordering the shoreline of Manila Bay, cannot be registered, since the source of the accretion
from these areas cannot be established with certainty; and in accordance with Article 4 of the
1866 Law on Waters, the Constitution, and our earlier findings, these must be presumed to be
part of the public domain, either as foreshore lands or unclassified lands. Article 457 of the Civil
Code only contemplates accretions received by "banks of rivers." If the alluvion, despite being
carried by the flow of a river, be deposited (or as the Code puts it, "received") along the seashore
23

as the river merges into the sea, such alluvion cannot be considered an accretion under the Civil
Code.

SPS. TEDY GARCIA AND PILAR GARCIA v. LORETA T. SANTOS, WINSTON

SANTOS AND CONCHITA TAN G.R. No. 228334, June 17, 2019, En Banc (Caguioa, J.)

Spouses Garcia (petitioners) filed a Complaint for easements of light, air and view, lateral
support, and intermediate distances and damages with prayer for writ of preliminary injunction
and/or issuance of TRO against the respondents Spouses Santos and Conchita Tan before the
RTC of Iloilo City.

It appears that the Sps. Garcia bought a one-storey residential house and lot located at
Lot 2, Blk. 1, San Jose St. Iloilo from the respondent Santos in 1998 and that they have occupied
it for eleven years. Lot 1 which adjoins the Garcia’s property is an idle land which was also
owned by the Sps. Santos. In 2009, the Sps. Santos started constructing a two-storey house on
Lot 1 but the petitioners were informed by the construction workers that respondent Conchita
Tan was the new owner of Lot 1.

The building constructed on Lot 1 is taller than the Sps. Garcia's one-storey residential
house. As such, the Sps. Santos' building allegedly obstructed the Sps. Garcia's right to light, air,
and view. The Sps. Garcia lamented that prior to the construction on Lot 1, they received enough
bright and natural light from their windows. The construction allegedly rendered the Sps.

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Garcia's house dark such that they are unable to do their normal undertakings in the bedroom,
living room and other areas of the house without switching on their lights. The Sps. Garcia
argued that the house on Lot 1 was constructed a distance of less than three meters from the
boundary line of their property which violated their easement. Finally, the Garcias added that the
Sps. Santos caused the excavations on Lot 1 without providing sufficient lateral support to their
concrete perimeter fence.

For their part, the Sps. Santos argued that the mere presence of windows on the one-
storey house of the Sps. Garcia in itself does not give rise to an easement by title, stressing that
there was no tenement standing on Lot 1 at the time of the construction of the one-storey house
standing on the subject property. The respondents Santos asseverated that the Sps. Garcia also
failed to acquire an easement by prescription because they never alleged that they made a formal
prohibition of the construction of a taller structure on Lot 1.

With respect to the Sps. Garcia's claims on easement of lateral and subjacent support, the
respondents maintained that such claims are baseless because the excavation works were all
made within Lot 1 and were not deep enough to deprive the Sps. Garcia subjacent and lateral
support.

The RTC dismissed the complaint of the Sps. Garcia and ruled that they never acquired
any easement of light and view either by title or by prescription. On appeal, the CA affirmed the
RTC decision. The Sps. Garcia filed a Motion for Reconsideration, but it was denied by the CA.
Hence, the instant Petition for Review on Certiorari filed by the Sps. Garcia under Rule 45 of the
Rules of Court.
24

ISSUES

1. Whether Sps. Garcia have acquired an easement of light and view by title despite the lack of
any formal notice or prohibition made upon the owner of the servient estate?
2. Whether respondents should therefore remove from Lot 1 their building or structure which
blocks or impedes petitioners' air, light and view?

As a general rule, an easement of light and view is a positive one if the window or

opening is situated in a party wall, while it is a negative one if the window or opening is
thru one's own wall, i.e., thru a wall of the dominant estate. In the instant case, it is not disputed
that the windows and other openings, which are allegedly now prevented from receiving light
and view due to the structure built by the Sps. Santos on Lot 1, are made in the wall of Sps.
Garcia's one-storey-house. There is no party wall alleged to be co-owned by the parties.

In the very early case of Cortes v. Yu-Tibo, the Court held that the easement of light and
view in the case of windows opened in one's own wall is negative. As such easement is a
negative one, it cannot be acquired by prescription except where sufficient time of possession
has elapsed after the owner of the dominant estate, by a formal act, has prohibited the owner of
the servient estate from doing something which would be lawful but for the easement.

The phrase "formal act" would require not merely any writing, but one executed in due
form and/or with solemnity. This is expressly stated in Article 668 of the Civil Code which states

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that the period of prescription for the acquisition of an easement of light and view shall be
counted: (1) from the time of the opening of the window, if it is through a party wall; or (2) from
the time of the formal prohibition upon the proprietor of the adjoining land or tenement, if the
window is through a wall on the dominant estate.

It is not disputed that the Sps. Garcia never sent the Sps. Santos any formal notice or
notarial prohibition enjoining the latter from constructing any building of higher height on Lot 1
which became the basis of the RTC and the CA in ruling that the Sps. Garcia did not acquire the
easement of light and view.

The Supreme Court held the RTC and the CA erred in view of Article 624 of the Civil
Code.

Easements may likewise be acquired through title. The term "title" does not necessarily
mean a document but to a juridical act or law sufficient to create the encumbrance. One such
legal proviso which grants title to an easement is found in Article 624 of the Civil Code.

Article 624 finds application in situations wherein two or more estates were previously
owned by a singular owner, or even a single estate but with two or more portions being owned
by a singular owner. Originally, there is no true easement that exists as there is only one owner.
Hence, at the outset, no other owner is imposed with a burden. Subsequently, one estate or a
portion of the estate is alienated in favor of another person, wherein, in that estate or portion of
the estate, an apparent visible sign of an easement exists. According to Article 624, there arises a
title to an easement of light and view, even in the absence of any formal act undertaken by the
25

owner of the dominant estate, if this apparent visible sign, such as the existence of a door and
windows, continues to remain and subsist, unless, at the time the ownership of the two estates is
divided, ( 1) the contrary should be provided in the title of conveyance of either of them, or (2)
the sign aforesaid should be removed before the execution of the deed.

This is precisely the situation in this case. Prior to the purchase of the subject property by
the Sps. Garcia in 1998, the subject property and its adjoining lot, i.e., Lot 1, were both owned
by the Sps. Santos. On the subject property, a one-storey house laden with several windows and
openings was built and the windows and openings remained open until it was alienated in favor
of the Sps. Garcia.

Jurisprudence instructs that in a situation wherein Article 624 of the Civil Code applies,
there arises an easement if an apparent sign of the existence of an easement, i.e., the existence of
windows and openings on the dominant estate, continues to remain even after the transfer of the
property to the new owner, unless such apparent sign is removed or if there is an agreement to
the contrary.

Hence, in accordance with Article 624 of the Civil Code, from the time the Sps. Santos
transferred the subject property to the Sps. Garcia, there arose by title an easement of light and
view, placing a burden on the servient estate, i.e., Lot 1, to allow the Sps. Garcia's residence
unobstructed access to light and view, subject to certain limitations.

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With regard to the issue of whether or not the respondents should remove the building
from Lot 1 which obstructs the petitioners light and view, the SC ruled that under Article 673
whenever by any title a right has been acquired to have direct views, balconies or belvederes
overlooking an adjoining property, the owner of the servient estate cannot build thereon at less
than a distance of three meters from the property line, to be measured in the manner provided in
Article 6711. Article 673 is an exception to the general rule in Article 670 2 which provides that
when a window or any similar opening affords a direct view of an adjoining land, the distance
between the wall in which such opening is made and the border of the adjoining land should be
at least two meters.

In a situation wherein an easement is established or recognized by title or prescription,

affording the dominant estate the right to have a direct view overlooking the adjoining property,
i.e., the servient estate, which is the exact situation in the instant case, the two-meter requirement
under Article 670 is not applicable. Instead, Article 673 is the applicable rule as it contemplates
the exact circumstance attendant in the instant case, i.e., wherein an easement of view is created
by virtue of law. The distance between the structures erected on the servient estate and the
boundary line of the adjoining estate must be at least three meters.

1
Article 671 provides the mechanism by which the two-meter distance is to be measured, to wit: "[t]he distances x x x shall be measured in cases of direct views from the outer line of the wall when the openings
do not project, from the outer line of the latter when they do, and in cases of oblique views from the dividing line between the two properties."

2
Article 670 of the Civil Code, which provides: "[n]o windows, apertures, balconies, or other similar projections which afford a direct view upon or towards an adjoining land or tenement can be made, without
leaving a distance of two meters between the wall in which they are made and such contiguous property."
26

In the instant case, the records show that the distance between the structure erected by the
Sps. Santos on Lot 1 and the boundary line of the Sps. Garcia’s property is only two meters,
which is less than the three-meter distance required under Article 673.

Therefore, considering that the Sps. Garcia have acquired by title an easement of light
and view in accordance with Article 624 of the Civil Code, the Sps. Santos should necessarily
demolish or renovate portions of their residential building so that the three-meter distance rule as
mandated under Article 673 of the Civil Code is observed.

SUCCESSION

SPOUSES ISIDRO AND CONRADA C. SALITICO vs. HEIRS OF RESURRECCION

FELIX AND THE REGISTER OF DEEDS G.R. No. 240199, April 10, 2019, En Banc
(Caguioa, J.)

Amanda Burgos is the registered owner of a parcel of land in Bambang, Bulacan.

Amanda bequeathed the subject land to her niece Resurreccion by virtue or her Huling Habilin
dated May 7, 1986. Thereafter, Resurreccion, as the new owner of the subject property, sold the
land to the Spouses Salitico in a document entitled Bilihang Tuluyan ng Lupa dated November
10, 1998. The latter then took physical possession of the subject property.

Subsequently, a proceeding for the probate of Amanda’s will (Huling Habilin) was

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undertaken before the RTC. Respondent Recaredo was appointed as the executor of the Huling
Habilin. The Probate Court approved the will and issued a Certificate of Allowance on January
12, 2009.

A year after, the Sps. Salitico received a demand letter requiring them to vacate the
subject property and surrender possession over it to the respondents heirs of Resurreccion . To
protect their interest over the subject property, Sps. Salitico executed an Affidavit of Adverse
Claim which was however denied registration by the respondent Register of Deeds.

Spouses Salitico filed a Complaint for Specific performance against the respondents and
prayed for the delivery and return in their favor of the owner's duplicate copy of OCT P- 1908
and the execution of the corresponding Deed of Absolute Sale by way of confirming the Bilihang
Tuluyan ng Lupa. They likewise prayed that OCT P-1908 be cancelled and a new one be issued
in their names.

The RTC found that Resurreccion had indeed validly sold the subject property which she
inherited from Amanda to the petitioners Sps. Salitico. Nevertheless, the RTC dismissed the
Complaint for Specific Performance the sole reason that the petitioners Sps. Salitico's cause of
action had supposedly not yet accrued, as the Estate of Amanda has not yet been fully settled by
the Probate Court. On appeal, the CA dismissed the appeal due to the pendency of the probate
proceedings. The petitioners Sps. Salitico filed their MR which was denied by the CA. Hence,
this appeal via Petition for Review on Certiorari.

ISSUES
27

1. Whether an heir can sell her inherited property during the pendency of the probate
proceedings?

2. Whether the Register of Deeds may already be compelled to cancel the title in the
name of the decedent Amanda and issue a new title in the name of the buyers of the heir’s
inheritance?

The SC ruled that Article 777 operates at the very moment of the decedent's death
meaning that the transmission by succession occurs at the precise moment of death and,
therefore, at that precise time, the heir is already legally deemed to have acquired ownership of
his/her share in the inheritance, "and not at the time of declaration of heirs, or partition, or
distribution." Thus, there is no legal bar to an heir disposing of his/her hereditary share
immediately after such death.

Upon the death of Amanda, Resurreccion became the absolute owner of the devised
subject property, subject to a resolutory condition that upon settlement of Amanda's Estate, the
devise is not declared inofficious or excessive. Hence, there was no legal obstacle for
Resurreccion to sell her share to the Sps. Salitico over the subject property.

As a consequence of the valid contract of sale entered into by the parties, Resurreccion
had the obligation to deliver the subject property to the petitioners Sps. Salitico. In fact, it is not
disputed that the physical delivery of the subject property to the petitioners Sps. Salitico had

JURISTS Paguirigan
been done, with the latter immediately entering into possession of the subject property after the
execution of the Bilihang Tuluyan ng Lupa.

However, the existence of a valid sale in the instant case does not necessarily mean that
the Register of Deeds may already be compelled to cancel OCT P-1908 and issue a new title in
the name of the petitioners Sps. Salitico.

Under the applicable provisions of PD 1529 and the Rules of Court, it is only upon the
issuance by the testate or intestate court of the final order of distribution of the estate or the order
in anticipation of the final distribution that the certificate of title covering the subject property
may be issued in the name of the distributees.

In the instant case, there is no showing that, in the pendency of the settlement of the
Estate of Amanda, the Probate Court had issued an order of final distribution or an order in
anticipation of a final distribution, both of which the law deems as requirements before the
Register of Deeds can issue a new certificate of title in the name of the petitioners Sps. Salitico.

Hence, reading Article 777 of the Civil Code together with the pertinent provisions of PD
1529 and the Rules of Court, while an heir may dispose and transfer his/her hereditary share to
another person, before the transferee may compel the issuance of a new certificate of title
covering specific property in his/her name, a final order of distribution of the estate or the order
in anticipation of the final distribution issued by the testate or intestate court must first be had.
28

Therefore, despite the existence of a valid contract of sale between Resurreccion and the
petitioners Sps. Salitico, which ordinarily would warrant the delivery of the owner's duplicate
copy of OCT P-1908 in favor of the latter, pending the final settlement of the Estate of Amanda,
and absent any order of final distribution or an order in anticipation of a final distribution from
the Probate Court, the Register of Deeds cannot be compelled at this time to cancel OCT P-1908
and issue a new certificate of title in favor of the petitioners Sps. Salitico.

TIROL v. NOLASCO G.R. No. 230103, August 27, 2020, First Division (Caguioa, J.)
SUCCESSION, ARTICLE 887, 972

Gloria Tirol and Roberto, Sr. died testate. Gloria died in 1991 ahead of her husband
Roberto Sr. (2002). Roberto Sr. was survived by their children namely: Ruth, Cecilia, Marilou,
Ciriaco and Anna and his four grandchildren from their son Roberto Jr. who died in 1995. When
Roberto Jr. died in 1995 he was survived by his four children from his marriage with Cecilia,
namely Martin, Zharina, Francis and Daniel. However, at the time of Roberto Jr.'s death, his
marriage with Cecilia had been annulled.

Martin, Cecilia, and Ciriaco filed before the RTC a petition to probate the wills of Gloria
and Roberto Sr. The Wills were admitted to probate and Martin was appointed as the
administrator of their estates.

Respondent Sol Nolasco filed a Motion for Intervention. She alleged that as the surviving

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spouse of Roberto Jr., she has a legal interest in the estate of Gloria and Roberto Sr.

Sol argued that her husband Roberto Jr. is entitled to at least 1/7 of the estate of his late
mother and as the surviving spouse of Roberto Jr., she is entitled to that portion belonging to
Roberto Jr. which is equivalent to the legitime of the legitimate children of the decedent. She
argued that she is a compulsory heir pursuant to Article 887 of the Civil Code and has an interest
or claim in the estate of her late husband.

Martin opposed the motion and argued that Sol has no legal interest in the probate of the
wills of Gloria and Roberto Sr. and could not represent Roberto Jr., not being a blood relative.
The oppositors also refused to recognize Sol as the legal wife of Roberto Jr.

Later on, respondent Sol also filed a motion for intervention in the intestate settlement of
Roberto Sr.'s estate proceedings which was granted.

The RTC then denied Sol’s motion to intervene in the testate proceedings of Gloria and
Roberto, Sr. It was held that she has no legal interest in the case. On appeal, the CA stated that
respondent Sol should be allowed to intervene because she is the widow of Roberto Jr. and has
an interest or claim in her husband's estate, which consists, in part, of the latter's share in the
estate of his deceased mother Gloria. The CA clarified that respondent Sol does not anchor her
motion for intervention on her status as daughter-in-law but rather as an heir of Roberto Jr. The
CA concluded that Sol has an interest or claim in her husband's estate, which consists, in part, of
the latter's share in the estate of his deceased mother Gloria.
29

In this Petition, Martin argues that respondent Sol's rights and interests, if any, can be
fully protected in the settlement of Roberto Jr.'s estate proceeding, which directly involves the
settlement of Roberto Jr.'s intestate estate. Thus, her intervention in the testate proceedings which
involves the wills of Gloria and Roberto Sr., is completely unnecessary and superfluous.

ISSUE: Whether or not Sol has an interest in the settlement of the estate of Roberto Sr. and
Gloria which would justify her motion for intervention. Whether the CA erred in failing to
consider whether respondent Sol's alleged rights and interests over the estate of Roberto Jr. may
be fully protected in the settlement of the latter’s estate proceeding, which directly involves said
estate

The SC ruled that Sol has no interest in the settlement of the estate of Roberto Sr. and
Gloria.

Roberto Jr. died after his mother's death but he predeceased his father Roberto Sr. When
Gloria died, Roberto Jr. would have inherited from her as a compulsory heir by virtue of Article
887(1) of the Civil Code, which states:

ART. 887. The following are compulsory heirs:

(1) Legitimate children and descendants, with respect to their legitimate parents and
ascendants;

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(2) In default of the foregoing, legitimate parents and ascendants, with respect to
their legitimate children and descendants;

(3) The widow or widower;

(4) Acknowledged natural children, and natural children by legal fiction; (5) Other
illegitimate children referred to in Article 287.

As far as respondent Sol is concerned, she would inherit from Roberto Jr. pursuant to
Article 887(3) and part of his estate would be his share in the estate of her mother, Gloria.
However, Sol could not inherit from the Estate of Roberto Sr because Roberto Jr. predeceased
his father, and only the children of Roberto Jr. would succeed by right of representation from
their grandfather pursuant to Article 972 of the Civil Code. Moreover, respondent Sol is not
related by blood, but only by affinity, to Roberto Sr.

Since intervention is not a matter of right but depends on the sound discretion of the court,
respondent Sol's intervention in the probate proceeding is unnecessary because her right or
interest in the estate of Roberto Jr. can be fully protected in a separate proceeding - namely, the
settlement of Roberto Jr.' s estate proceeding pending before RTC-10. The second parameter to
be considered in granting of intervention under Section 1, Rule 19 - whether the intervenor's
right may not be fully protected in a separate proceeding - is wanting in the instant case.

DR. NIXON L. TREYES v. ANTONIO L. LARLAR, REV. FR. EMILIO L. LARLAR,

et.al. G.R. No. 232579, September 8, 2020, En Banc (Caguioa, J.)
30

Rosie Larlar Treyes, the wife of Dr. Nixon Treyes, died intestate and without issue.
Rosie was survived by her seven siblings. At the time of her death, Rosie left behind 14 real
estate properties, which she owned together with Dr. Nixon as their conjugal properties.

Dr. Nixon executed two Affidavits of Self- Adjudication, transferring the estate of Rosie
unto himself, claiming that he was the sole heir of his deceased spouse. Hence, the respondents
as siblings of Rosie filed before the RTC a Complaint for annulment of the Affidavits of Self-
Adjudication, cancellation of TCTs, reconveyance of ownership and possession, partition, and
damages.

Dr. Nixon moved to dismiss the complaint for lack of jurisdiction over his person but a
re-service of summons was made upon him. He then filed another Motion to Dismiss arguing
that the private respondents' Complaint should be dismissed on the following grounds: (1)
improper venue; (2) prescription; and (3) lack of jurisdiction over the subject matter. The RTC
denied the same. When the case reached the CA, the case was dealt with just the same.

In this Petition, Dr. Nixon now argues that the RTC has no jurisdiction to hear, try, and
decide the subject matter of the private respondents' Complaint because the determination of the
status of the legal heirs in a separate special proceeding is a prerequisite to an ordinary suit for
recovery of ownership and possession of property instituted by the legal heirs.

ISSUE: Whether or not the determination of the status of the legal heirs in a separate special

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proceeding is a prerequisite to an ordinary suit for recovery of ownership and possession of
property instituted by the legal heirs

The Supreme Court ruled in the negative. Article 777 of the Civil Code states that the
rights of succession are transmitted from the moment of the death of the decedent. The operation
of Article 777 occurs at the very moment of the decedent's death – the transmission by
succession occurs at the precise moment of death and, therefore, the heir is legally deemed to
have acquired ownership of his/her share in the inheritance at that very moment, and not at the
time of declaration of heirs, or partition, or distribution.

Hence, the Court has held that the title or rights to a deceased person's property are
immediately passed to his or her heirs upon death. The heirs' rights become vested without need
for them to be declared ‘heirs’. In partition cases, even before the property is judicially
partitioned, the heirs are already deemed co-owners of the property. Thus, the heirs are deemed
real parties in interest without a prior separate judicial determination of their heirship. Similarly,
in the summary settlement of estates, the heirs may undertake the extrajudicial settlement of the
estate of the decedent amongst themselves through the execution of a public instrument even
without a prior declaration in a separate judicial proceeding that they are the heirs of the
decedent.

The Civil Code identifies certain relatives who are deemed compulsory heirs and intestate
heirs. They refer to relatives that become heirs by virtue of compulsory succession or intestate
succession, as the case may be, by operation of law.
31

In the instant case, Article 1001 states that brothers and sisters, or their children, who
survive with the widow or widower, shall be entitled to one-half of the inheritance, while the
surviving spouse shall be entitled to the other half.

Hence, subject to the required proof, without any need of prior judicial determination, the
private respondents siblings of Rosie, by operation of law, are entitled to one-half of the
inheritance of the decedent. Thus, in filing their Complaint, they do not seek to have their right
as intestate heirs established, for the simple reason that it is the law that already establishes that
right. What they seek is the enforcement and protection of the right granted to them under Article
1001 in relation to Article 777 of the Civil Code by asking for the nullification of the Affidavits
of Self-Adjudication that disregard and violate their right as intestate heirs.

To stress once more, the successional rights of the legal heirs of Rosie are not merely
contingent or expectant — they vest upon the death of the decedent. By being legal heirs, they
are entitled to institute an action to protect their ownership rights acquired by virtue of
succession and are thus real parties in interest in the instant case. To delay the enforcement of
such rights until heirship is determined with finality in a separate special proceeding would run
counter to Article 777 of the Civil Code which recognizes the vesting of such rights immediately
— without a moment's interruption — upon the death of the decedent.

By this Decision now, the Court so holds, and firmly clarifies, that the latter formulation
is the doctrine which is more in line with substantive law, i.e., Article 777 of the Civil Code is

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clear and unmistakable in stating that the rights of the succession are transmitted from the
moment of the death of the decedent even prior to any judicial determination of heirship. As a
substantive law, its breadth and coverage cannot be restricted or diminished by a simple rule in
the Rules.

THELMA ESGUERRA GUIA v. JOSE M. COSICO, JR., MANUEL M. COSICO,

MINERVA M. COSICO, and ELEANOR M. COSICO-CHAVEZ G.R. No. 246997, May 5,
2021, Second Division (Lazaro-Javier, J.)

Cecilia Cosico is the daughter of Jose and Corazon and she was born crippled (lumpo)
in 1932 . Cecilia’s mother Corazon passed away when Cecilia was just one (1) year old and she
was left in the care and custody of her maternal aunt, Mercedes. Mercedes raised Cecilia in their
home together with Mercedes' legally adopted daughter, herein petitioner Thelma Guia. Because
of her physical condition, Cecilia spent most of her days in her bedroom. She never attended
school nor learned to read or write.

In 1996, Cecilia executed her last will and testament. Through Thelma's balae Liberato,
Cecilia asked Atty. Bueser, then a notary public, for assistance in preparing the last will. Atty.
Bueser and Liberato went to Cecilia's house. Atty. Bueser and Cecilia talked inside the latter's
bedroom while Liberato stayed outside by the door. Liberato heard Cecilia call Mercedes whom
she directed to collect documents from the steel cabinet. Mercedes complied and handed over the
documents to Atty. Bueser.
32

Thereafter, Atty. Bueser and Liberato returned to Cecilia's house with the finished copy
of her last will and testament denominated Huling Habilin at Pagpapasiya which consisted of
four (4) pages. Also present at Cecilia’s house were her neighbor Ricardo and the son of
Cecilia’s helper, Reynaldo. In the presence of Liberato, Reynaldo, and Ricardo who served as
notarial witnesses to Cecilia's Huling Habilin at Pagpapasiya, Atty. Bueser read the contents of
the document to Cecilia and carefully explained to her its effects and consequences. He then
asked her if she fully understood its contents and whether it was done according to her wishes.
Cecilia confirmed. After Atty. Bueser read and explained the contents of the Huling Habilin at
Pagpapasiya, Cecilia affixed her thumbmark to the will on top of her printed name and on the
lower left portion of the first and second pages of the document — all in the presence of Atty.
Bueser and her notarial witnesses.

When Cecilia died, Thelma filed a Petition for probate of Cecilia's will and for her
appointment as administrator but the respondents, who are Cecilia’s half-siblings opposed and
alleged that the formalities for the execution of a valid will under Articles 805 to 809 of the Civil
Code were not complied with. Respondents argue that the Huling Habilin at Pagpapasiya was
supposedly fatally defective for not having been read twice: once, by one of the subscribing
witnesses; and again by the notary public before whom it was acknowledged in view of Cecilia's
illiteracy.

ISSUE Whether the Huling Habilin at Pagpapasiya was executed in compliance with Article 808
of the Civil Code.

JURISTS Paguirigan
Yes. Article 808 of the Civil Code requires that the contents of a last will and testament
be read to the testator twice, once by one of the subscribing witnesses, and again, by the notary.
While the law imposes the requirement only when the testator is blind, the Court has expanded
its coverage to those who are illiterate. Alvarado elucidates that Art. 808 applies not only to blind
testators but also to those who, for one reason or another, are "incapable of reading their wills.

Here, Cecilia was not blind but a lumpo. Though Alvarado seemingly extended the
application of Article 808 to cover not just the blind but also illiterates, the same case also
recognized an exception to the rule — substantial compliance. The Court found that this
exception applies to the instant case.

Notably, Atty. Bueser read and explained the contents of the Huling Habilin at
Pagpapasiya to Cecilia. Meanwhile, Liberato and Reynaldo listened and understood the
explanation of Atty. Bueser. It is also undisputed that Cecilia made no denial or correction to
what she had heard. The Court said that the underlying protection of Article 808 had been
fulfilled here. The Court also refused to entertain such a possibility of fraud because Atty.
Bueser, aside from having observed all other formalities, handed copies of the Huling Habilin at
Pagpapasiya to the notarial witnesses for their signatures. This gave them the opportunity to read
a short four (4)- page document which they all flipped through from pages one (1) through four
(4) to affix their respective signatures, essentially negating any possibility of fraud, trickery, or
misrepresentation. Moreover, the notarial witnesses heard Atty. Bueser read and explain to
Cecilia her Huling Habilin at Pagpapasiya which gave both Cecilia and themselves the
opportunity to object to any provision in the will that may not have been according to her wishes.
33

As it was, no objections were made. To be sure, Reynaldo knew and understood Cecilia's
testamentary act and disposition of her properties. The will was admitted to probate.

RIVERA v. VILLANUEVA and PACHECO G.R. No. 197310, June 23, 2021, First Division
(Carandang, J.)

Donato, Sr. was legally married to Anatacia Santos and they had two children, namely:
Emerenciana and Milagros. Emerenciana was married to Tiglao. Milagros, on the other hand, has
two children, herein petitioners (Daniel and Elpidio).

During his marriage to Anatacia, Donato, Sr. had illicit relation with Emiliana dela Cruz.
They begot four children, namely: Flora, Donato Jr., Ruperto, and Virgilio all surnamed
Pacheco. Flora and Donato, Jr., now deceased, are substituted by their heirs in the present action.
On August 21, 1956, Donato, Sr. died intestate, leaving several properties he acquired during his
lifetime.

Emerenciana took over the management of the business of their father but after she died
in 1964, the administration and management of the properties was transferred to her sister
Milagros.

In the settlement proceedings of Emerenciana's estate, respondents (illegitimate children

of Donato Sr.) intervened therein alleging that the properties of the late Donato, Sr. were

JURISTS Paguirigan
included as part of the estate of Emerenciana.

In 2011, the RTC rendered its decision holding that there is no dispute that respondents
are the illegitimate children of Donato, Sr and the legitime of each illegitimate child shall
consist of one-half (1/2) of the legitime of legitimate child.

On appeal, the CA affirmed the RTC decision upholding the right of the respondents to
inherit from Donato, SR. The CA stressed that the filiation of respondents to the late Donato, Sr.,
as their putative father, has been duly proven. As such, the inevitable legal consequence thereof
is that they are entitled to inherit from the intestate estate of Donato, Sr., and are thus, deemed
co-owners, together with Emerenciana and Milagros, of the properties left by their common
father.

Petitioners appealed to the SC. They argued that since Donato, Sr. died on August 12,
1956, what applies should be Article 983 in relation to Article 895 of the Civil Code which
provides that the share of an illegitimate child shall be equal, among others, in every case to 4/5
of the legitime of an acknowledged natural child. If Article 176 Family Code is applied,
petitioners claim that their rights will be impaired because instead of the illegitimate children
getting a smaller share, they get more at the expense of the legitimate children.

ISSUE: Whether the legitime of each illegitimate child shall consist of one-half of the legitime of
a legitimate child in this case given that Donato Sr. died in 1956.
34

The Supreme Court held that the Civil Code and not the Family Code provisions apply
considering that Donato, Sr. died on August 21, 1956 during the effectivity of the Civil Code and
respondents became co-owners of the properties of Donato, Sr. upon the latter's death. While
Article 256 of the Family Code provides that it shall have retroactive effect, this is insofar as it
does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other
laws. Petitioners have already acquired vested rights as to their share in the legitime, which
consists of one-half of the hereditary estate as provided in Article 888 of the Civil Code.

The Court ruled that both the RTC and the CA erred in ruling that the legitime of Flora,
Ruperto, Virgilio and Donato, Jr. shall consist of 1/2 of the legitime of each of the legitimate
children.

Article 895(2) of the Civil Code provides that the legitime of an illegitimate child who is
neither an acknowledged natural, nor a natural child by legal fiction, shall be equal in every case
to four-fifths of the legitime of an acknowledged natural child.

Flora, Ruperto, Virgilio and Donato, Jr. cannot be considered as acknowledged natural
children of Donato, Sr. because the latter was married to Anatacia at the time that all the
respondents were born. Only children born outside wedlock of parents who, at the time of the
conception of the former, were not disqualified by any impediment to marry each other, are
natural. Respondents were acknowledged illegitimate children on Donato Sr. but they are not
natural children.

JURISTS Paguirigan
Pursuant to the second paragraph of Article 895, the legitime of Flora, Ruperto, Virgilio
and Donato, Jr., being illegitimate children, shall consist of 4/5 of the legitime of an
acknowledged natural child. The legitime of an acknowledged natural child shall consist of 1/2
of the legitime of each of the legitimate children or descendants. Thus, the legitime of Flora,
Ruperto, Virgilio and Donato, Jr., shall consist of 4/5 of the legitime of an acknowledged natural
child.

ARACELI MAYUGA, vs. ANTONIO ATIENZA G.R. No. 208197. January 10, 2018

Araceli Mayuga instituted a petition for Cancellation and Recall of Free Patent
Application and Reconveyance against Antonio Atienza. Araceli, alleged, that she, Benjamin Sr.
and Armando, are the surviving legitimate, legal and forced heirs of the late Perfecto Atienza
who died intestate on June 1, 1978.

She alleged that through manipulation and misrepresentation with intent to defraud a co-
heir, her brother Benjamin and her nephew Antonio L. Atienza [son of predeceased Armando
Atienza] were both able to secure Free Patents. Araceli was not notified of the application filed
with public respondent CENRO nor any notice of hearings of proceedings as required by law,
being a co-heir and party- in-interest. Thus, she prayed that the Free Patent issued to Antonio and
Benjamin be cancelled and the two lots be divided into among the three of them ( Araceli,
Benjamin and Armando) as the forced heirs of the deceased Perfecto Atienza.
35

Respondents assert that the basis for their Application for Free Patent with the CENRO is
a Confirmation Affidavit of Distribution of Real Estate executed by their father, Perfecto
Atienza, confirming partition in 1960.

The RTC ordered the herein respondents to reconvey the 1/3 share of Araceli A. Mayuga
as the compulsory heir of the late Perfecto Atienza on Lot 9819 which is identical to Lot 61-A
and 9820 which is identical to Lot 61-B. The Court of Appeals reversed.

ISSUES
1. Whether the complaint of the petitioner for cancellation of free patent and
reconveyance should be dismissed.
2. Whether Araceli can claim preterition.

The Supreme Court ruled that petitioner's allegation of fraud and misrepresentation in the
execution of the Confirmation Affidavit by their father Perfecto Atienza have not been proven.
Being a notarized document, it is imbued with the legal presumption of validity, its due
execution and authenticity not having been impugned by the mere self-serving allegations of the
petitioner.

Also, the Court said that an action for reconveyance involving land that is titled pursuant
to a free patent is one that seeks to transfer property, wrongfully registered by another, to its
rightful and legal owner or to one with a better title. As such, two facts must be alleged in the

JURISTS Paguirigan
complaint and proved during the trial, namely: (1) the plaintiff was the owner of the land or
possessed it in the concept of owner, and (2) the defendant illegally divested him of ownership
and dispossessed him of the land. Araceli failed to allege, much less prove that she was entitled
to 1/3 of the two lots in dispute by succession. Apparently, she had taken the position that being
one of the surviving compulsory heirs of their late father, Perfecto, she was entitled to 1/3 of the
disputed lots on the assumption that the decedent left only three legal heirs and that the disputed
lots were part of the inheritance left by their father when he died in 1978. Araceli, however,
overlooked the fact that Perfecto executed the Confirmation Affidavit almost five years prior to
his death on June 1, 1978. Araceli did not even bother to provide the Court a copy thereof so that
the Court could make a determination of its legal import. And the CA correctly accorded the
Confirmation Affidavit the legal presumption of validity, being a duly notarized document,
where its validity could not be impugned by mere self-serving allegations.

Assuming that Perfecto owned the disputed lots and the Confirmation Affidavit was a
deed of partition, Perfecto could have legally partitioned his estate during his lifetime. Under
Article 1080 of the Civil Code, "should a person make a partition of his estate by an act inter
vivos, or by will, such partition shall be respected, insofar as it does not prejudice the legitime of
the compulsory heirs."

Since the Civil Code allows partition inter vivos, it is incumbent upon the compulsory
heir questioning its validity to show that his legitime is impaired. Unfortunately, Araceli has not
shown to what extent the Confirmation Affidavit prejudiced her legitime.

As to the issue of whether Araceli can claim preterition, the Court ruled in the negative.
36

Although Araceli was a compulsory heir in the direct descending line, she could not have
been preterited. Firstly, Perfecto left no will. As contemplated in Article 854, the presence of a
will is necessary. Secondly, before his death, Perfecto had several other properties which was
almost 50 hectares, part of which was developed for residential and agricultural purposes.
Araceli could not have been totally excluded in the inheritance of Perfecto even if she was not
allegedly given any share in the disputed two lots.

If Araceli's share in the inheritance of Perfecto as claimed by her was indeed impaired,
she could have instituted an action for partition or a settlement of estate proceedings instead of
her complaint for cancellation of free patent and reconveyance.

Furthermore, as the persons who applied for and were awarded free patents, the
respondents are the rightful, legal owners of the disputed lots. The free patents having been
issued by the Department of Environment and Natural Resources and recorded in the Book of
Entries at the Office of the Registry of Deeds the respondents' certificates of title have already
become indefeasible pursuant to Section 32 of the Property Registration Decree, which
pertinently provides: "Upon the expiration of said period of one year [from and after the date of
entry of the decree of registration], the decree of registration and the certificate of title issued
shall become incontrovertible.

AQUINO vs. AQUINO G.R. No. 208912 December 7, 2021 (Leonen)

JURISTS Paguirigan
Miguel T. Aquino (Miguel), died intestate on July 5, 1999, leaving personal and real properties.
Miguel’s first wife, Amadea died in on September 27, 1977 and her estate was already settled.
Miguel was survived by his two sons in his first marriage, Abdulah and Rodolfo; and Enerie B.
Aquino, his second wife; the heirs of his predeceased son, Wilfredo. Miguel was also
predeceased by another son with Amadea, Arturo.

Alleging that she was Arturo’s only child, Angela Aquino moved that she be included in the
distribution and partition of Miguel's estate. She presented a July 5, 2003 Certification from the
hospital, stating that she was Arturo and Susan Kuan's daughter. According to Angela, Arturo
died on January 10, 1978, before she was born on October 9, 1978. While her parents were not
married, they did not suffer from any impediment to marry. She further alleged that her
grandfather Miguel took care of her mother's expenses during her pregnancy with her and that
Miguel supported her education. Miguel also gave instructions that Angela was among the heirs
who would receive portions of her estate. She added that since her birth, her father's relatives had
continuously recognized her as Arturo's natural child. Angela presented her baptismal certificate.

Miguel’s son, Rodolfo, opposed Angela’s motion and claimed that Arturo never recognized
Angela and that she failed to present sufficient evidence of her filiation to Arturo.

The RTC granted Angela’s motion for Distribution of the Residue of Miguel’s estate saying that
the heirs are estopped to deny Angela’s filiation. Rodolfo filed a petition for Certiorari before
the CA but the CA denied the petition.
37

Abdulah also appealed to the CA. The CA held that Angela failed to prove her filiation in
accordance with Articles 172 and 175 of the Family Code. Moreover, she failed to present birth
records showing Arturo's paternity or any document signed by Arturo admitting her filiation.
Since Arturo died before she was born, Angela cannot also establish open and continuous
possession of her status as Arturo's child, under Article 172(3) of the Family Code. Thus,
Miguel's or the Aquino clan's overt acts cannot translate to legal recognition of her status as
Arturo's child. The appellate court added that even if Angela were able to establish her filiation,
the Court of Appeals ruled that she could not inherit ab intestato from Miguel pursuant to Art.
992.

Angela appealed to the SC and argued that the presumed antagonism under Art. 992 should only
apply to immediate families and not to relatives in the ascending line but only to collateral
relatives. A grandfather cannot be presumed to hate his own grandchild. She asserted that Art.
992 is unconstitutional for violating the equal protection clause.

The Supreme Court ruled citing Art. 990 and 989 held that these articles do not prohibit
succession of a nonmarital child whose parent is nonmarital as well:

“ARTICLE 989. If, together with illegitimate children, there should survive descendants of
another illegitimate child who is dead, the former shall succeed in their own right and the latter
by right of representation. “

JURISTS Paguirigan
“ARTICLE 990. The hereditary rights granted by the two preceding articles to illegitimate
children shall be transmitted upon their death to their descendants, who shall inherit by right of
representation from their deceased grandparent.”

Because of this, the reciprocity in intestate succession of nonmarital children now depends on
their parents' marital status. The parity granted to nonmarital children is more illusory than real.

The SC ruled that they now adopt the construction that Article 992 that makes children
regardless of circumstances of birth qualified to inherit from their direct ascendant by right of
representation. The Court abandons the presumption in In re Grey, Corpus, Diaz, and In re
Suntay, among others, that nonmarital children are products of illicit relationships or that they
are automatically placed in a hostile environment perpetrated by the marital family.

Both marital and nonmarital children whether from whether born from a marital or nonmarital
child, are blood relatives of their parents and other ascendants. Nonmarital children are removed
from their parents and ascendants in the same degree as marital children. Nonmarital children of
marital children are also removed from their parents and ascendants in the same degree as
nonmarital children of nonmarital children. This interpretation likewise makes Article 992 more
consistent with the changes introduced by the Family Code on obligations of support among and
between the direct line of blood relatives. This interpretation of Article 992 is also supported by
the Family Code. Particularly, it is consistent with the provisions of Article 195 of the Family
Code which makes support mandatory from grandparents to grandchildren regardless of status.
It reflects the evolution of the legal view towards illegitimate children.
38

Grandchildren regardless of their status and the status of their parents should be able to inherit
from their grandparent by right of representation in the same way that they are also (regardless of
status) required to support their grandparent. When a nonmarital child seeks to represent their
deceased parents to succeed from their grandparents’ estate, it is Article 982 which applies. Art.
982 does not make any distinction and it will protect the right of the predeceased child to the
legitime.

This ruling will apply only when the illegitimate child has a right of representation to their
parent's share in her grandparent's legitime. It is silent on collateral relatives where the
nonmarital child may inherit by themself. We are not now ruling on the extent of the right of a
nonmarital child to inherit in their own right. Those will be the subject of a proper case and, if so
minded, may also be the subject of more enlightened and informed future legislation.

OBLIGATIONS AND CONTRACTS

D.M. RAGASA ENTERPRISES, INC. vs. BANCO DE ORO, INC. G.R. No. 190512, June
20, 2018, (Caguioa, J.)

On January 30, 1998, Ragasa and then Equitable Bank executed a Lease Contract over
the ground and second floors of a commercial building for a period of five years, commencing
on February 1, 1998 up to January 31, 2003, with a monthly rental of P122,607.00. Meanwhile,

JURISTS Paguirigan
Equitable Bank entered into a merger with PCI Bank thereby forming Equitable PCI Bank, Inc.
The latter would eventually, pending the present case, merge with Banco de Oro, Inc. to form the
respondent bank. As a result of the merger, one of the branches which had to be closed is the
branch located in the subject premises.

For this reason, the bank sent a notice informing Ragasa that the former was pre-
terminating their Lease Contract effective June 30, 2001. Ragasa responded with a demand letter
for payment of monthly rentals for the remaining term of the Lease Contract from July 1, 2001 to
January 31, 2003 totaling P3,146,596.42, inasmuch as there is no express provision in the Lease
Contract allowing pre-termination. The bank countered, through a letter dated June 26, 2001, that
its only liability for pre-terminating the contract is the forfeiture of its security deposit pursuant
to item 8 (m) of the Lease Contract. On June 30, 2001, the bank vacated the subject premises
without heeding Ragasa's demand for payment.

Ragasa filed with the RTC the Complaint for Collection of Sum of Money and Damages.
Ragasa argued that under the Lease Contract, the forfeiture of the bank's security deposit does
not exempt it from payment of the rentals for the remaining term of the lease because the bank's
act of pre-terminating the contract was a major breach of its terms. Moreover, item 8 (m)
expressly provides that the security deposit shall not be applied to the rentals.

The bank argued that item 8 (m) of the Lease Contract is actually a penalty clause which,
in line with Article 1226 of the Civil Code, takes the place of damages and interests in case of
breach. Hence, for breaching the Lease Contract by pre-terminating the same, the bank is liable
39

to forfeit its security deposit in favor of Ragasa but would not be liable for rentals corresponding
to the remaining life of the Contract.

ISSUES:
1. Whether Ragasa can insist on the payment of rental for the unexpired portion of the
lease?
2. To what extent should the bank be held liable to Ragasa?

In the case at bar, there is no question that the bank breached the Lease Contract when it
served upon Ragasa the Notice of Pre-termination effective June 30, 2001 and vacated the
subject premises on said date. The lease contract was for a term of five-years and the contract
does not contain any provision on pre-termination.

Generally, if the lessor or the lessee should not comply with their obligations, the aggrieved
party may ask for either the rescission of the contract and indemnification for damages, or only
the latter, allowing the contract to remain in force.

In the present case, there is an express stipulation in item 8 (p) of the Lease Contract that
"[b]reach or non-compliance of any of the provisions of this Contract, especially non- payment
of two consecutive monthly rentals on time, shall mean the termination of this Contract."
Pursuant to the automatic termination clause of the Lease Contract the Lease Contract was
terminated upon its unauthorized pre-termination by the bank on June 30, 2001. With the lease

JURISTS Paguirigan
having been automatically resolved or terminated by agreement of the parties, Ragasa is entitled
only to indemnification for damages.

The provision or clause that is applicable in case of non-compliance of the Term or period of
the Lease Contract is item 8 (m) which mandates that the full deposit of P367,821.00 or the
equivalent of three months rentals shall be forfeited.

Par. 8 (m) is a penal clause it specifies the stipulated amount of liquidated damages — the
full deposit — to be awarded to the injured party in case of breach of the Term or period of the
principal obligation. Since the herein parties have agreed on a specific amount of penalty,
P367,821.00 or the full deposit, the Court will not even second guess whether it is substantial
enough to insure the compliance of the lease period.

As a rule, the penalty is fixed by the contracting parties as a compensation or substitute for
damages in case of breach of the obligation; and it is, therefore, clear that the penalty in its
compensatory aspect is the general rule, while the penalty in its strictly penal aspect is the
exception. It is also clear from paragraph 1 of Article 1226 that when an obligation or a contract
contains a penal clause, the penalty shall substitute the indemnity for damages and the payment
of interests in case of noncompliance with or breach of the principal obligation.

Clearly, the requisites for the demandability of the penal clause are present in this case.
These are: (1) that the total non-fulfillment of the obligation or the defective fulfillment is
chargeable to the fault of the debtor; and (2) that the penalty may be enforced in accordance with
the provisions of law. As to the second requisite, the penalty is demandable when the debtor is in
40

mora in regard to obligations that are positive (to give and to do) where demand may be
necessary unless it is excused; and with regard to negative obligations, when an act is done
contrary to that which is prohibited.

In conclusion, Ragasa cannot insist on the payment of rentals for the unexpired portion of the
lease because the contract was automatically terminated upon the breach committed by the bank
when it served the notice of pre-termination. However, pursuant to the penalty clause, the entire
deposit of the bank shall be forfeited in favor of Ragasa and attorney’s fees pursuant to the
stipulation in the lease contract that in the event of court litigation between the parties due to
non-compliance with the provisions of the contract, the aggrieved party shall be paid attorney’s
fees of not less than P15,000.00.

HEIRS OF BAGAYGAY v. HEIRS OF PACIENTE G.R. No. 212126, August 4, 2021,

Second Division (Hernando, J.)

In 1953, Anastacio Paciente, Sr. was granted a homestead patent over a parcel of land
situated in Bañga, Province of Cotabato. An OCT V2423 was issued in his name. By virtue of a
Deed of Sale allegedly executed by Anastacio in favor of his brother-in-law, Eliseo Bagaygay,
the latter took possession of the subject land, transferred the title under his name, and later
caused the subdivision of the entire land into three (3) lots. Anastacio died in 1989 while Eliseo
died in 1991.
JURISTS Paguirigan
Eliseo’s wife, Anecita, and their children who are the petitioners in this case took
possession of the subject land upon his death.

In 1999, the respondents who are the heirs of Anastacio filed before the RTC, an action
for Declaration of Nullity of the Deed of Sale and the titles, Recovery of Ownership and
Possession, Accounting and Damages, against the heirs of Eliseo (petitioners). They alleged that
1956, Eliseo, took advantage of the financial distress of Anastacio, was able to obtain the latter's
title and take possession of his land. They added that Eliseo caused the cancellation of
Anastacio's title through a fictitious Deed of Sale. Respondents added that assuming that there
was a sale, the sale was void as it was executed during the 5-year period of prohibition under the
Public Land Act.

Respondents Paciente presented as witness the Registrar of Deeds to testify that the
original of OCT No. V-2423 as well as the copy of the Deed of Sale executed by Anastacio in
favor of Eliseo had been lost and could no longer be produced. The Register of Deeds also
testified to identify the Primary Entry Book as secondary evidence, and to prove that the Deed of
Sale was executed by the Anastacio on November 28, 1956 which is within prohibited period
under the Public Land Act.

Petitioners refuted the date of execution stated in the Primary Entry Book presented by
the respondents. They testified that Anastacio sold the land to their father to defray the expenses
for the wedding of his son (respondent Meregildo) in 1958. To corroborate these testimonies,
41

petitioners submitted as evidence the Marriage Contract of respondent Meregildo showing that
the latter was married on June 8, 1958.

The RTC dismissed the complaint for lack of merit. It gave credence to the testimonies
of the petitioners that the sale was made in 1958 and not 1956 and therefore outside of the
prohibited period.

On appeal, the CA reversed and ruled that since a copy of the Deed of Sale was no longer
available, the date indicated in the Primary Entry Book the Register of Deeds of South Cotabato
as the true and correct date of execution of the Deed of Sale. Hence, it declared the Deed of Sale
void ab initio having been executed on November 28, 1956 or within the 5-year prohibitory
period.

ISSUE Whether the CA seriously erred in not ruling and applying the principle of laches on the
part of respondents.

No, the Court of Appeals did not commit an error in refusing to apply the principle of
laches. In the Heirs of Alido v. Campano, the Court made it clear that laches does not apply to
void ab initio contracts. In Heirs of Ingjug-Tiro v. Spouses Casals, the Court expounded that
laches cannot prevail over the law that actions to assail a void contract are imprescriptible it
being based on equity, to wit:

JURISTS Paguirigan
In actions for reconveyance of property predicated on the fact that the conveyance
complained of was null and void ab initio, a claim of prescription of action would be
unavailing. "The action or defense for the declaration of the inexistence of a contract does
not prescribe." Neither could laches be invoked in the case at bar. Laches is a doctrine in
equity and our courts are basically courts of law and not courts of equity. Equity, which
has been aptly described as "justice outside legality," should be applied only in the absence
of, and never against, statutory law. Aequetas [nunquam] contravenit legis. The positive
mandate of Art. 1410 of the New Civil Code conferring imprescriptibility to actions for
declaration of the inexistence of a contract should pre-empt and prevail over all abstract
arguments based only on equity.

Thus, no error was committed by the CA when it declared the Deed of Sale executed by
Anastacio void ab initio.

BENEDICTO V. YUJUICO, vs. FAR EAST BANK AND TRUST COMPANY G.R. No.
186196. August 15, 2018, (Caguioa, J.)

Far East Bank and Trust Company (Bank,) approved the renewal an Omnibus Credit Line
(OCL) of P35M in favor of GTI Sportswear Corporation. Petitioner Yujuico, the President of
GTI signed a Comprehensive Surety Agreement in his personal capacity to guarantee the
obligation of GTI.
42

Sometime in May 1995, negotiations were undertaken to settle GTI's trust receipt
obligation under the OCL. GTI made known to the bank its request for the conversion of its peso
loan to US dollar-denominated loan. An exchange of communications concerning the conversion
transpired but no definite agreement on the said conversion was put into writing.

On June 26, 1995, Yujuico and Lazatin, signed a Loan Restructuring Agreement (LRA),
the subject of which was GTI's outstanding balance on its Omnibus Credit Line. The agreement
expressly stated that the restructured loan continues to be secured by the Comprehensive Surety
Agreement previously executed by Yujuico in favor of the bank. The bank denied the request
for conversion of the peso loan to US dollar-denominated loan and informed Yujuico that the
conversion was not deemed workable.

Yujuico and GTI filed a Complaint for Specific Performance with Preliminary Injunction
against the bank before the RTC. They alleged that during the signing of the loan restructuring
agreement, they were assured by the officers of the bank that after a few payments on its
obligation, GTI's peso loan would be converted to US dollars.

Hence, Yujuico prayed that the bank be directed to convert GTI's loan to US dollars
retroactively effective October 1, 1996 and that bank be directed to pay them P2.84M
representing savings that could have accrued in their favor terms of the difference in interest
payments. They also prayed for exemplary damages and attorney's fees.

JURISTS Paguirigan
The RTC ruled that the bank indeed agreed to convert to US dollar GTI's peso loan
obligation and that the conversion resulted in the novation of GTI's loan obligation. The RTC
concluded that Yujuico was accordingly released from his obligations as surety pursuant to
Article 1215 of the New Civil Code in conjunction with paragraph 1 of Article 1291.

The CA partially granted the appeal. It ruled that the Omnibus Credit Line and the Loan
Restructuring Agreement between GTI and the bank were not novated, thus, Yujuico remained
to be liable as a surety under the Comprehensive Surety Agreement.

ISSUES:

1 Whether there was novation of GTI’s obligation to the bank;

2) Whether Yujuico remains liable as surety of the obligation of GTI.

The SC ruled there was no novation. Novation has been defined as the substitution or
alteration of an obligation by a subsequent one that cancels or modifies the preceding one.

Here, the attendant facts do not make out a case of novation in the sense of a total or
extinctive novation. There is no document that states in unequivocal terms that the agreement to
convert the loan from peso to US dollar would abrogate the loan restructuring agreement or the
omnibus credit line. Instead what is readily apparent from the exchange of communications
concerning the request for conversion is that the parties recognize the subsistence of the loan
restructuring agreement.
43

Neither was there any substantial incompatibility between the obligations of the parties
under the restructuring agreement and the agreement to convert the loan as to warrant a finding
of an implied novation. Implied novation necessitates that the incompatibility between the old
and new obligations be total on every point such that the old obligation is completely superseded
by the new one. This is not the case here. The only modification that the conversion agreement
introduced was that [GTI's and petitioner Yujuico's] loan obligation would be payable in US
dollars instead of Philippine pesos. Incidentally, the applicable interest rate is lower on account
of the change in currency. These alterations, however, do not suffice to constitute novation.

The agreement to convert the Peso-denominated restructured loan into a US Dollar-

denominated one is an implied or tacit, partial, modificatory novation. There was merely a
change in the method of payment.

Without a total or extinctive novation, the surety agreement subsists. Also, Yujuico
executed a comprehensive or continuing surety, one which is not limited to a single transaction,
but which contemplates a future course of dealing, covering a series of transactions, generally for
an indefinite time or until revoked." Indubitably, these provisions are broad enough to include
the loan obligation under the loan restructuring agreement even after its conversion to US dollar.

While Article 1215 of the Civil Code provides that novation, compensation or remission
of the debt, made by any of the solidary creditors or with any of the solidary debtors, shall
extinguish the obligation, the novation contemplated therein is a total or extinctive novation of

JURISTS Paguirigan
the old obligation. Thus, Yujuico remains liable as surety for GTI.

SALES

HEIRS OF VILLEZA v. ALIANGANG.R. No. 244667-69, December 2, 2020, First Division

(Caguioa, J.)

Corazon Villeza was the registered owner of three (3) parcels of land with improvements
located at Angadanan, Isabela (Centro 1, Bunay, Poblacion). It is alleged that Corazon, during
her lifetime, sold the subject properties to sisters Elizabeth and Rosalina, respondents herein.
However, Corazon died without executing any deed of conveyance. Respondents filed three (3)
separate Amended Complaints for “Specific Performance and Damages,” to compel petitioners
Heirs of Corazon Villeza, to execute the subject deeds.

It appears that on January 10, 2006, respondents Elizabeth and Rosalina, as buyers, and
Corazon and Rosario, as sellers, entered into a Deed of Conditional Sale (DCS) for the sale of a
residential house and an undivided parcel of land, (Centro 1) located in Isabela. At the time of
the execution of the Deed, the Centro 1 property was part of a larger tract of land covered by a
TCT registered in the name of Inocencio.

It was only on November 14, 2006, Inocencio’s TCT was cancelled and a new TCT
(now only covering the 540.5 sq.m. Centro I property) was issued in Corazon's name. Thereafter,
Elizabeth and Rosalina went back to Canada where they sent monthly remittances of P10,000.00
from February 2006 to December 2007 to Rosario as partial payments for the Centro I property.
44

Rosario also acknowledged receiving a total amount of P184k duly witnessed and signed by
Corazon, for the Centro I property. Respondents averred that they continued sending monthly
remittances to Rosario from January to April 2008.

Corazon and Rosario both died in 2009 without transferring the title to the Centro 1
property in the name of the respondents. Alleging that they have fully paid for the property,
respondents asked the heirs of Corazon to honor the DCS dated January 10, 2006.

Petitioners repudiated the DCS and argued that the same is void because at the time of the
execution of the DCS, Inocencio was till the registered owner of the Centro 1 property and a title
was issued in Corazon’s name only in November of 2006. They added that Corazon was the sole
registered owner of TCT No. T- 356999, whatever amount received and acknowledged by
Rosario, if any, could never bind Corazon's property; and (c) respondents, being Canadian
citizens, are disqualified under the Constitution from owning real property in the Philippines. As
to the Bunay Property, petitioners denied the existence of any oral contract of sale of the Bunay
property between Corazon and Elizabeth. They maintained that the two (2) remittance receipts
are not evidence to prove the sale, are self-serving and hearsay. As to the Poblacion Property,
petitioners denied the authenticity of the oral contract of sale of the Poblacion property between
Corazon and Rosalina.

The RTC ruled in favor of respondents. The RTC ratiocinated that the totality of evidence
adduced proved that Corazon, during her lifetime, indeed sold the subject properties to

JURISTS Paguirigan
respondents. The CA affirmed.

ISSUE: Whether the petitioners may be compelled to comply with the obligations to deliver and
transfer ownership of the subject properties and to execute the corresponding Deeds of Sale in
favor of respondents. Whether the Statute of Frauds is applicable.

The SC ruled in the affirmative. The stipulation: "that the corresponding Deed of
Absolute Sale shall be executed by the VENDORS upon full payment of the balance" is
sanctioned by Article 1478 of the Civil Code, which allows the parties to stipulate that the
ownership in the thing shall not pass to the purchaser until he has fully paid the price. In a
contract where the seller agrees to execute a deed of absolute sale when the buyer has paid in full
the purchase price is a contract to sell and not a contract of sale.

The DCS is, therefore, a contract to sell as correctly ruled by the CA. That the DCS is a
contract to sell does not in any way compromise its validity and enforceability, given the fact
that the essential requisites of a perfected contract are evident from the DCS.

In view of the payment in full of the purchase price by the buyers, the DCS has been
performed or consummated. At that point, had the sellers, Corazon and Rosario, been still alive,
they could be compelled by court action to execute the DAS over the Centro I property, which
they contractually promised to execute upon full payment of the purchase price.

While the Centro 1 property was still registered in Inocencio’s name at the time Corazon
executed the DCS on January 10, 2006, the title over the property was subsequently transferred
45

in her name already on November 14, 2006. The fact that the seller is not the owner of the object
of the sale at the time it is sold and delivered does not prevent title or ownership from passing to
the buyer. Article 1434 provides that when a person who is not the owner sells or alienates a
thing but subsequently acquires title thereto, such title passes by operation of law to the buyer or
grantee.

Regarding the Bunay and Poblacion properties, the SC ruled that under Article 1483 of
the Civil Code, "subject to the provisions of the Statute of Frauds and of any other applicable
statute, a contract of sale may be made in writing, or by word of mouth, or partly in writing and
partly by word of mouth, or may be inferred from the conduct of the parties."

Under the Statute of Frauds, which is provided in Article 1403 (2) of the Civil Code, an
agreement for the sale of real property or of an interest therein is unenforceable by action, unless
the same, or some note or memorandum thereof, be in writing, and subscribed by the party
charged, or by his agent; and evidence of the agreement cannot be received without the writing,
or a secondary evidence of its contents.

When Corazon received the full consideration of the sales from Elizabeth and Rosalina,
there was ratification of the oral contracts of sale by acceptance of benefits, making them
enforceable. With the complete payment of the consideration by respondents, the oral contracts
of sale covering the Bunay and Poblacion properties have been "partially executed," rendering
the Statute of Frauds inapplicable.

JURISTS Paguirigan
The obligations of the sellers in the DCS and the two oral contracts of sale were
transmitted upon the death of Corazon and Rosario to petitioners pursuant to Article 1311 which
provides: "Contracts take effect only between the parties, their assigns and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by their nature, or
by stipulation or by provision of law. The heir is not liable beyond the value of the property he
received from the decedent. The petitioners are therefore bound to comply with the obligations to
deliver and transfer ownership of the Centro I property to respondents, the Bunay property to
Elizabeth, and the Poblacion property to Rosario. Likewise, since a public document is required
to be registered with the Registry of Deeds to effect the transfer of the certificates of title
covering the said properties to the buyers, petitioners and the other defendants can be compelled
to execute the necessary public documents for that purpose pursuant to Article 1357 of the Civil
Code.

CREDIT TRANSACTIONS

ELENA R. QUIAMBAO v. CHINA BANKING CORPORATION G.R. No. 238462, May

12, 2021, (Lopez, M., J.)

Elena R. Quiambao borrowed P1.4M from China Banking Corporation (CBC) to increase
the working capital of her general merchandising business. Elena and her common-law husband
and business partner Daniel S. Sy executed a Real Estate Mortgage over a parcel of land as
security for the loan. Later, the REM was amended several times increasing the loan to P1.77M
on April 29, 1993; P2.6M on April 28, 1995; and P4.0M on April 29, 1997. The amendments
46

contained a "blanket mortgage clause" stating that the REM would secure the payment of
obligations already incurred or which may be subsequently incurred.

Chinabank filed a petition for foreclosure of the REM with the RTC alleging that Elena
and Daniel obtained P5,000,000.00 succeeding loan accommodations covered by eight
promissory notes. The RTC issued a notice of extra-judicial sale and the notice was published in
a newspaper of general circulation and posted in public places. At the public auction sale, the
mortgaged property was sold to Chinabank for the amount of P5.25M The Certificate of Sale
was issued to Chinabank. Since Elena and Daniel failed to redeem the property, title was later
consolidated in the name of the bank.

Elena filed a petition to annul the mortgage and the extra-judicial foreclosure proceedings
against Chinabank with prayer for injunctive relief before the RTC. She argued that the REM
only covered the loan and its amendments but not her succeeding loans for P5,000,000.00.
Chinabank, on the other hand, maintained that Elena's loan on April 3, 1990, was extended and
renewed up to March 2004. Yet, Elena merely paid the interests but not the principal.

At the trial, Elena testified that she was made to sign blank documents and blank PNs
when she transacted with China Banking Corporation. The last mortgage document that she
signed was on April 29, 1997. On the other hand, China Banking Corporation's loan assistant
testified that PN No. 001071438693 executed on March 19, 2004 was not subject of the REM.

JURISTS Paguirigan
The RTC ruled in favor of Elena and declared the 1997 REM as well as the Extrajudicial
Foreclosure on May 5, 2005 void. The CA reversed and ruled that the REM was intended to
secure all succeeding obligations in view of the blanket mortgage clause.

ISSUE: Whether the "blanket mortgage clause" in the latest amendment to the REM dated April
29, 1997 covers the P5,000,000.00 succeeding loans under the eight PNs for which the mortgage
was foreclosed.

The SC ruled, no. Inarguably, the amendments to the REM are contracts of adhesion. In a
contract of adhesion, one imposes a ready-made contract to the other whose sole participation is
either to accept or reject the agreement. The parties do not bargain on equal footing in the
execution of this kind of contract given that the debtor is limited "to take it or leave it" option
and there is no room for negotiation. However, such contract is not entirely prohibited. The one
adhering is free to give his consent inasmuch as he is also free to reject it completely. In this
case, Chinabank drafted and prepared the standard forms on which Elena and Daniel merely
affixed their signatures. At the trial, it was established that Elena and Daniel signed the
amendments to the REM in blank. They presented pro forma blank documents that China
Banking Corporation is giving to all borrowers for signature. Corollarily, any ambiguity in the
provisions of these documents must be interpreted against China Banking Corporation.

A "blanket mortgage clause" or "dragnet clause" subsumes all debts of past or future
origins and makes additional funds available to a borrower without the need to execute separate
security documents, thus, saving time, costs, and other resources. Jurisprudence recognizes the
validity of this clause but its terms must still be judiciously examined. A mortgage containing a
47

dragnet clause will not be extended to cover future advances, unless the document evidencing the
subsequent advance refers to the mortgage as providing security therefor, or unless there are
clear and supportive evidence to the contrary.

Here, the eight PNs likewise failed to allude to Elena and Daniel's liability under the
latest amendment to the REM dated April 29, 1997. The PNs do not even make any reference to
the REM as a security. Further, Chinabank did not adduce any evidence proving that the REM
and its amendments secured these obligations. Worse, China Banking Corporation's loan
assistant categorically testified that one of the PNs was not subject of the REM. Hence, the doubt
on whether the rest of the PNs are secured or not must be construed against China Banking
Corporation or the party who prepared the contracts. Thus, the latest amendment to the REM
cannot be interpreted to cover the P5,000,000.00 succeeding loans under the eight PNs for which
the mortgage was foreclosed. As such, the foreclosure proceedings are void. The bank cannot
validly foreclose a mortgage based on non-payment of unsecured PNs.

PHILIPPINE NATIONAL BANK v. AIC CONSTRUCTION CORPORATION, SPOUSES

RODOLFO C. BACANI AND MA. AURORA C. BACANI G.R. No. 228904, October 13,
2021, (Leonen, J.)

Respondent AIC Construction opened a current account with Philippine National Bank
(PNB). About a year later, PNB granted AIC Construction an Omnibus Credit Line in the
amount of P10 million. The interest stipulation in the agreement provides that the borrowers

JURISTS Paguirigan
agree to pay on each availment the rate of interest per annum which is determined by PNB as
the bank’s prime rate plus applicable spread in effect as of the date of the relevant availment.

Through the years, the AIC’s credit line increased little by little. By the time the loan
matured in September 1998, it amounted to P65 million, with P40 million as principal and P25
million as interest charges capitalized by the Philippine National Bank into principal. AIC
Corporation negotiated for the restructuring of the loan by offering to pay it in full through a
dacion en pago of their various properties. When they failed to agree on the dacion en pago, PNB
made its final demand on April 30, 2001 to AIC Construction for the full payment of the loan.

AIC Construction filed a complaint against PNB, the ex-officio sheriff of Mandaluyong,
and the sheriff of Makati for annulment of interest and penalty increases, accounting, exemption
of family home and damages. It alleged, among others, that the imposed interest and penalty
charges should be declared void for being excessive, exorbitant, and unconscionable.

PNB asserted that the interest and penalty charges were valid because AIC freely,
intelligently, and voluntarily entered into the loan contract with full knowledge of the interest
charges. It claimed that AIC is estopped from questioning the interest as they have been availing
of the credit line for more than a decade through several renewals.

The RTC dismissed AIC Construction's complaint. The CA modified the RTC ruling. It
held that the applied interest rates were unreasonable, usurious, and unconscionable.
Furthermore, the provision on interest violated the principle of mutuality of contracts under
Article 1308 of the Civil Code. It applied the legal rate of interest under Nacar v. Gallery
48

Frames. It also struck down the penalty charge of 24% per annum as the parties did not agree
that penalties would be included in the secured amount.

ISSUE: Whether the interest charges imposed by PNB against AIC and the spouses Bacani are
usurious and unconscionable and whether the CA erred in applying legal interest to the loan.

The SC ruled that the CA correctly applied the legal rate of interest to the loan.

Article 1308 of the Civil Code states: "The contract must bind both contracting parties;
its validity or compliance cannot be left to the will of one of them."

The principle of mutuality of contracts is premised on the condition that there must be an
essential equality between the parties so that obligations arising from contracts may have the
force of law between them. If a condition in the contract depends solely on the will of one of the
contracting parties, it is void.

This principle applies to interest rates. Monetary interest is always agreed upon by the
parties and they are free to stipulate on the rates that will apply to their loans. However, if there
is no true parity between the parties, courts may equitably reduce iniquitous or unconscionable
interest charges.

The facts of this case are similar to the facts in Spouses Silos v. PNB 3. The interest rates

JURISTS Paguirigan
are yet to be determined through a subjective and one-sided criterion and are no longer subject to
the approval of respondents. The parties did not agree on the interest rate, but the interest rate
was imposed by PNB and respondents were left with no choice but to agree to it. This
arrangement violates Republic Act No. 3765 or the Truth in Lending Act, which requires
creditors to fully disclose to the debtor all amounts incidental to the extension of the credit,
including interests, discounts or fees, to protect debtors from a lack of awareness of the true cost
of credit.

Interest and penalties cannot be charged to unjustly enrich a person at the expense of
another. Thus, the Court of Appeals correctly applied the legal rate of interest in the credit
agreement. The computation of interest on the principal loan obligation of P65 million shall be at
the rate of 12% per annum, computed from effectivity of the loan agreement up to November 17,
2003, the date of issuance of the certificate of sale by the Ex-Officio Sheriff of Mandaluyong
City. Interest rate on the conventional interest shall be at the rate of 12% per annum from
January 21, 2002, the date of judicial demand, to November 17, 2003.

MEGALOPOLIS PROPERTIES, INC. (NOW, KAIZEN BUILDERS, INC.), FAJARDO &

SPS. APOSTOL v. D'NHEW LENDING CORPORATION G.R. No. 243891, May 7, 2021,
(Delos Santos, J.)

Megalopolis Properties, Inc. (MPI) obtained a loan from D'Nhew Lending Corporation
(DLC) in the amount of P4M as evidenced by a promissory note payable in monthly
3
738 Phil. 156 (2014)
49

installments with an add-on interest at a rate of 3% per month. The loan was secured by a REM
dated May 15, 2008 thru Spouses Apostol, in their capacity as President and Chief Executive
Officer of MPI and Geraldine Fajardo as the mortgagor. The Sps. Apostol also bound themselves
solidarily liable with MPI in a Continuing Surety Agreement they executed in favor of DLC.

Simultaneous to the execution of the foregoing contracts, MPI issued 12 postdated checks
amounting to P453,333.33 each (representing the monthly payments with P333,333.33 as
principal and P120,000.00 as added interest) drawn against its account with Allied Bank. Upon
presentment for payment, the first two checks were dishonored for having been drawn against
insufficient funds and a closed account, respectively. The petitioners paid the value of the
dishonored check and entered into a re-structuring agreement with DLC which was embodied in
a new promissory note. Petitioners agreed to capitalize the unpaid interest on the dishonored
checks and delivered 24 new checks to DLC to cover the amortizations on the restructured loan
agreement.

The first seven checks issued by petitioners were either cleared by the drawee bank or
paid in cash. However, the subsequent checks were all dishonored upon presentment for having
been drawn against insufficient funds. Petitioners MPI and Sps. Apostol filed a Complaint with
the RTC for nullification of the interest rate.

ISSUE: Whether the 3% interest per month imposed on the loan between the parties is valid.

JURISTS Paguirigan
The Court ruled that the interest is not valid. It held that willingness of the debtor in
assuming an unconscionable rate of interest is inconsequential to its validity. The imposition of
an unconscionable rate of interest on a money debt, even if knowingly and voluntarily assumed,
is immoral and unjust. It is tantamount to a repugnant spoliation and an iniquitous deprivation of
property, repulsive to the common sense of man.

Interest rates must be appreciated in light of the fundamental nature of interest as

compensation to the creditor for money lent to another, which he or she could otherwise have
used for his or her own purposes at the time it was lent. It is not the default vehicle for predatory
gain. As such, interest need only be reasonable. It ought not be a supine mechanism for the
creditor's unjust enrichment at the expense of another. In cases where stipulated interest is more
than twice the prevailing legal rate of interest, it is for the creditor to prove that this rate is
required by prevailing market conditions.

The rate of 36% per annum, which is three times more than the prevailing legal rate of
interest at the time the loan was contracted, far greater than those previously upheld by the Court.
The same is excessive and unconscionable. Thus, the 3% monthly interest rate on the Promissory
Note is declared invalid, and in lieu thereof, the prevailing rate of legal interest at the time
Promissory Note was executed (October 16, 2008), or 12% per annum, is hereby imposed. In
accordance with Nacar v. Gallery Frames, in the absence of an express stipulation as to the rate
of interest for loans or forbearance of money, the prevailing rate of legal interest shall apply (i.e.,
12% per annum for loans contracted before July 1, 2013 or 6% per annum for those contracted
from July 1, 2013 onwards). This is because the legal rate of interest is the presumptive
reasonable compensation for borrowed money.
50

TAN v. MALAYAN LEASING AND FINANCE CORP. G.R. No. 254510, June 16, 2021,
First Division (Caguioa, J.)

In December 2000, New Unitedware Marketing Corporation (United) obtained a P5M

loan from First Malayan Leasing and Finance Corporation (Malayan) as evidenced by the
Promissory Note executed on even date.

To secure the loan, United assigned in favor of Malayan, its fire insurance claim proceeds
from Philippine Charter Insurance Corporation (PCIC) by virtue of a Deed of Assignment dated
July 2, 2001. As added security two separate Continuing Surety Undertakings were executed by
United’s Board of Directors, Merrie Anne L. Tan, and Edward Yao (July 2001) and the other by
Merrie’s husband, Wilson Tan and Samson Ding (November 2002) in favor of Malayan.

United defaulted on the payment of its loan. Malayan declared that as of November 17,
2004, the remaining balance on the loan was Php2.94M exclusive of 5% penalty charges and
interests. Malayan’s demands on United as well as its sureties went unheeded. Thus, Malayan
filed a Complaint for Sum of Money and Damages with Prayer for Preliminary Attachment. Oct.
21, 2005

While the case was pending before the RTC, Merrie Tan discovered that Samson Ding,
in behalf of another corporation, and Edward Yao, in behalf of United, had entered into a
Compromise Agreement with PCIC, where Ding and Yao were paid the amounts of P55.57M

JURISTS Paguirigan
and P75.86M respectively, as payments for the fire insurance policy claim, the proceeds of
which were earlier assigned by United in favor of Malayan.

Premised on the said Compromise Agreement, Merrie argued that Ding and Yao should
be made exclusively liable for Malayan's claim since they were the ones who received the
proceeds from the fire insurance claim, which was intended to pay for the outstanding loan
obligation of United to Malayan.

Yao, for his part, denied that he received the proceeds of the fire insurance claim from
PCIC, and contended that the indemnity checks which PCIC paid were merely endorsed by him
in his official capacity to the bank for encashment, but that the proceeds of the checks were
delivered by the bank to Ding and Willy Tan. Yao finally added that he already settled with
Malayan his share of United's obligation when he paid Malayan the amount of P980,000.00, in
exchange of which the latter executed a "Receipt and Release" in his favor.

The RTC ruled in favor of Malayan and ordered United and its sureties, Merrie and Willy
Tan, and Ding to jointly and severally pay Malayan the sum of P2.94M with interests at the legal
rate. It held that Yao’s release did not operate to extinguish the liability of the other sureties to
Malayan. CA affirmed.

ISSUE: Whether the release executed by Malayan in favor of Yao operates as a novation of the
solidary obligation to release Spouses Tan and Ding as sureties for United?
51

The SC ruled, No. The obligation of the Spouses Tan and Ding remain solidary despite
the release of Yao from the same. Article 2047 of the Civil Code provides that “By guaranty a
person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal
debtor in case the latter should fail to do so If a person binds himself solidarily with the principal
debtor xxx [i]n such case the contract is called a suretyship.”

Although the suretyship itself is a contract that is ancillary to the main financial
accommodation contract between the principal and the creditor, what sets the surety apart from a
mere guaranty is that in a suretyship, the surety is principally liable, as opposed to a guarantor
who is only secondarily liable. So much so that with a suretyship agreement securing the loan
transaction, a creditor may go directly against the surety even without a prior demand on the
principal debtor, although the latter may be solvent or otherwise able to pay. A surety's liability
stands irrespective of the principal debtor's ability to perform his obligations under the contract
which is subject of the suretyship.

In the instant case, Merrie Tan, along with Yao executed a "Continuing Surety
Undertaking". Under the "Continuing Surety Undertaking" Malayan may seek to recover from
United, or from Merrie Tan or Ding, consistent with Article 1216 of the Civil Code which
provides that "The creditor may proceed against any one of the solidary debtors or some or all of
them simultaneously."

In fact, the Receipt and Release executed by Malayan in favor of Yao categorically

JURISTS Paguirigan
provides for the reservation of its option to proceed against the remaining co-sureties Spouses
Tan and Ding.

Therefore, Merrie Tan's submissions that (i) Malayan is estopped from treating her and
the remaining co-sureties as solidary obligors since it accepted partial payment of United's
outstanding loan obligation from Yao; and (ii) that said acceptance and subsequent release
amounted to a novation which converted the suretyship into a divisible obligation are both
misplaced.

Malayan was well within its rights as a creditor to proceed against either United or any
one or more, or all of the co-sureties for the collection of United's outstanding loan. That it chose
to first proceed against Yao and not against the other co- sureties did not operate as an estoppel
on it from subsequently proceeding against the remaining co-sureties. Neither will Malayan’s
acceptance of partial amount of the loan obligation and its subsequent release of Yao operate to
bar it from proceeding against the remaining co-sureties to ensure full satisfaction of the debt.
Merrie Tan’s liability remains solidary with United, regardless of partial payment by Yao,
precisely because the kind of security she undertook was one of suretyship.

THE MERCANTILE INSURANCE CO., INC. v. DLCI (DMCI-LAING

CONSTRUCTION, INC.) G.R. No. 205007, September 16, 2019, J. Caguioa

Rockwell Land Corporation entered into an agreement with DLCI, as the general
contractor, for the construction of their condominium towers. Part of DLCI’s work was the
supply and installation of glazed aluminum and curtain walling. Also part of their contract was
52

the appointment of Altech as a sub-contractor to DLCI. Pursuant to this project, Altech secured a
performance bond from Mercantile, as surety, for the amount of PHP90,448,941.60. The
effectivity of the bond was extended from September 5, 1999 to March 5, 2000. (The original
date of the bond was Sept. 5, 1997 to Sept. 5 1999)

DLCI called Altech’s attention to the poor progress of works. Later on, DLCI was
constrained to undertake the completion and rectification of unfinished and sub-par works, which
were charged against Altech.

On September 3, 1999, DLCI sent a letter to Mercantile demanding the liquidation of the
bond with 2% per month interest, but without indicating the exact amount claimed. DLCI later
terminated the sub-contract with Altech effective February 21, 2000. DLCI again reiterated its
demand for liquidation after negotiation between DLCI and Altech failed. However, Mercantile
denied DLCI’s claim on the ground that the bond was already expired on March 5, 2000.

DLCI filed a complaint against Altech and Mercantile before the Construction Industry
Arbitration Commission (CIAC).

The CIAC dismissed DLCI’s complaint on these grounds: (1) Mercantile should be
released from its obligation under the performance bond pursuant to Article 2080 of the Civil
Code since DLCI’s delay had deprived it of the opportunity to exercise its right of subrogation
against Altech, and (2) DLCI’s first call was not a valid demand because no specific amount was
indicated.
JURISTS Paguirigan
The CA reversed the CIAC and held that Mercantile is liable to DLCI under the
performance bond. It ruled that under Article 2047 Mercantile, as surety, guaranteed the
performance and completion by Altech of its sub contracted works, and in case of Altech's
failure to complete the [P]roject according to the terms of the Sub-Contract x x x, Mercantile's
liability, as surety, sets in. The CA noted that Altech had already been in default even prior to
DLCI’s call on the performance bond. By reason of said default, liability attached to Altech and
as a consequence, the liability of Mercantile as surety had arisen. It added that DLCI’s first call
was valid despite its failure to reflect the specific amount claimed as it was already understood
by the terms of the bond. Mercantile moved for a reconsideration but was denied.

Issues:
1. Whether or not DLCI’s demand for liquidation was valid
2. Whether or not Article 2080 of the Civil Code shall apply

The SC ruled that DLCI’s demand for liquidation was valid. By the terms of the
performance bond, Mercantile obliged itself to pay DLCI immediately upon demand. Thus, it
stands as a contract of surety contemplated under Article 2047 of the Civil Code.

Through a contract of suretyship, one party called the surety, guarantees the performance
by another party, called the principal or obligor, of an obligation or undertaking in favor of
another party, called the obligee. While the contract of surety stands secondary to the principal
53

obligation, the surety’s liability is direct, primary and absolute. This liability attaches the
moment a demand for payment is made by the creditor.

While the bond is “conditioned” upon DLCI’s first demand, a close reading of its terms
unequivocally indicates that Mercantile’s liability thereunder consists of a pure obligation since
such liability attaches immediately upon demand, and is neither dependent upon any future or
uncertain event, nor a past event unknown to the parties. Thus, the performance bond is one that
is callable on demand, wherein mere demand triggers Mercantile’s obligation (as surety) to
indemnify DLCI (the obligee) the amount for which said bond was issued, that is,
PHP90,448,941.60.

With regard to the applicability of Article 2080, the Court ruled that a plain reading of
Article 2080 indicates that the article applies to guarantors. Mercantile’s position that the
provision applies with equal force to sureties fails to appreciate the fundamental distinctions
between the respective liabilities of a guarantor and a surety.

Article 2080. The guarantors, even though they be solidary, are released from their
obligation whenever by some act of the creditor they cannot be subrogated to the rights,
mortgages, and preference of the latter.

A surety binds himself to perform if the principal does not, without regard to his ability to
do so. A guarantor, on the other hand, does not contract that the principal will pay, but simply

JURISTS Paguirigan
that he is able to do so. In other words, a surety undertakes directly for the payment and is so
responsible at once if the principal debtor makes default, while a guarantor contracts to pay if, by
the use of due diligence, the debt cannot be made out of the principal debtor. Article 2080
applies only with respect to the liability of a guarantor. Verily, a surety’s liability stands without
regard to the debtor’s ability to perform his obligations under the contract subject of the
suretyship. Mercantile’s reliance on Article 2080 is thus misplaced.

TORTS AND DAMAGES

COCA-COLA BOTTLERS PHILS., INC., vs. ERNANI GUINGONA MEÑEZ G.R. No.
209906. November 22, 2017, Second Division (Caguioa, J.)

Respondent Meñez was a frequent customer of Rosante Bar and Restaurant (RBR) in
Dumaguete City. Sometime in March 1995, he went to RBR and ordered pizza and a bottle of
"Sprite." Meñez then took a bite of pizza and drank from the straw the contents of the Sprite
bottle. He noticed that the taste of the softdrink was not one of Sprite but of a different substance
repulsive to taste. The substance smelled of kerosene. He then felt a burning sensation in his
throat and stomach and could not control the urge to vomit. He left his table for the toilet to
vomit but was unable to reach the toilet room. Instead, he vomited on the lavatory found
immediately outside the said toilet. Upon returning to the table, he picked up the bottle of Sprite
and brought it to the place where the waitresses were and angrily told them that he was served
kerosene. Meñez even handed the bottle to the waitresses who passed it among themselves to
smell it. All of the waitresses confirmed that the bottle smelled of kerosene and not of Sprite.
54

Meñez then went outside and requested a person manning the traffic (Ovas) to
accompany him to the Silliman University Medical Center. While at the Emergency Room,
Meñez again vomited before the hospital staff could examine him. He was confined in the
hospital for three (3) days.

Later, Meñez came to know that a representative from RBR came to the hospital and
informed the hospital staff that RBR would take care of the hospital and medical bills. Meñez
filed a complaint against petitioner Coca-Cola and RBR and prayed for the actual, moral, and
exemplary damages and attorney’s fees.

Rosante Bar argued that Meñez has no cause of action against it as it merely received said
bottle of Sprite allegedly containing kerosene from Coca-Cola as a matter of routinary procedure.
It argued that RBR is not expected to open and taste each and every bottle in order to make sure
it is safe for every customer. Coca-Cola for its part filed a motion to dismiss the complaint. It
argued that a perusal of the complaint revealed that there is no allegation therein which states
that Coca-Cola uses noxious or harmful substance in the manufacture of its products. What the
complaint repeatedly stated is that the bottle with the name SPRITE on it contained a substance
which was later identified as pure kerosene. Further, Coca-Cola cited Republic Act No. 3720,
and that pursuant to the law, Meñez failed to avail of and exhaust an administrative remedy by
filing a complaint before the Bureau of Food and Drug prior to a filing of a suit in court. Coca-
Cola added that the doctrine of strict liability tort on product liability is but a creation of

JURISTS Paguirigan
American Jurisprudence, as clearly shown by the cases cited in support thereof, and never before
adopted as a doctrine of the Supreme Court. Hence, it submits that at most it only has a
persuasive effect and should not be used as a precedent in fixing the liability of Coca-Cola.

The RTC dismissed the complaint for insufficiency of evidence. It ruled that Meñez
failed to categorically establish the chain of custody of the "Sprite" bottle which was the very
core of the evidence in his complaint for damages. The CA reversed the RTC and held that an
administrative remedy is not a condition precedent in pursuing a case for damages under Article
2187 of the Civil Code which is the basis of Meñez's complaint for damages.

ISSUES
1. Whether the CA is correct in holding that Meñez did not violate the doctrine of
exhaustion of administrative remedies and prior resort to the Bureau of Food and Drugs (BFD) is
not necessary.
2. Whether the CA erred in awarding moral damages, exemplary damages and attorney’s
fees to Meñez.

The CA correctly ruled that prior resort to the Bureau of Food and Drugs is not necessary
for a suit for damages under Article 2187 of the Civil Code to prosper. Article 2187 provides:

ART. 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles

and similar goods shall be liable for death or injuries caused by any noxious or
55

harmful substances used, although no contractual relation exists between them

and the consumers.

Quasi-delict being the source of obligation upon which Meñez bases his cause of action
for damages against Coca-Cola, the doctrine of exhaustion of administrative remedies is not
applicable.

The Supreme Court ruled the CA committed an error in awarding moral damages. The
cases when moral damages may be awarded are specific. Unless the case falls under the
enumeration as provided in Article 2219, which is exclusive, and Article 2220 of the Civil Code,
moral damages may not be awarded.

ART. 2219. Moral damages may be recovered in the following and analogous cases:

xxx xxx xxx

(2) Quasi-delicts causing physical injuries;

Article 2220 provides the following additional legal grounds for awarding moral
damages: (1) willful injury to property if the court should find that, under the circumstances,
such damages are justly due; and (2) breaches of contract where the defendant acted fraudulently
or in bad faith.

JURISTS Paguirigan
Apparently, the only ground which could sustain an award of moral damages in favor of
Meñez is Article 2219 (2) — quasi-delict under Article 2187 causing physical injuries. However,
Meñez has not presented evidence to prove that he suffered physical injuries when he allegedly
ingested kerosene from the "Sprite" bottle in question. Nowhere in the CA Decision is the
physical injury of Meñez discussed. The statements of the doctors who tended to the medical
needs of Meñez were equivocal. "Physical effects on the body" and "adverse effect on his body"
are not very clear and definite as to whether or not Meñez suffered physical injuries and if these
statements indicate that he did, what their nature was or how extensive they were. Consequently,
in the absence of sufficient evidence on physical injuries that Meñez sustained, he is not entitled
to moral damages.

As to exemplary or corrective damages, these may be granted in quasi-delicts if the

defendant acted with gross negligence pursuant to Article 2231 of the Civil Code. In awarding
exemplary damages, the CA relied on the principle of strict liability and that it applies even if
the manufacturer has exercised all possible care and that proof of negligence is not necessary.

The SC ruled that the CA's reasoning is not in accord with the gross negligence
requirement for an award of exemplary damages in a quasi-delict case. Meñez has failed to
establish that Coca-Cola acted with gross negligence. Other than the opened "Sprite" bottle
containing pure kerosene allegedly served to him at the RBR, Meñez has not presented any
evidence that would show Coca-Cola’s purported gross negligence. He failed to categorically
establish the chain of custody of the "Sprite" bottle which was the very core of the evidence in
his complaint for damages and that, considering that the "Sprite" bottle allegedly contained pure
56

kerosene, it was quite surprising why the employees of RBR did not notice its distinct,
characteristic smell. Thus, Meñez is not entitled to exemplary damages absent the required
evidence.

On the award of attorney’s fees, the SC ruled that the CA awarded attorney's fees only
because it awarded exemplary damages. In any event, based on Article 2208 of the Civil Code,
Meñez is not entitled to attorney's fees as he has not established any other ground that would
justify this award.

VDM TRADING, INC. & SPOUSES DOMINGO v. CARUNGCONG and WACK WACK
TWIN TOWERS CONDOMINIUM ASSOCIATION, INC. G.R. No. 206709, February 6,
2019

VDM Trading is an owner of a unit located at Wack Wack Twin Towers while petitioner
Nena Domingo is the majority stockholder of VDM and the occupant of the unit together with
her husband Luis Domingo. While Sps. Domingo were in the United States, Nena’s sister
discovered that soapy water was heavily penetrating through the ceiling of their unit. Nena’s
sister reported this matter to the Domingos and their atty-in-fact, Atty. Villareal, and Wack
Wack’s building administrator.

Atty. Villareal coordinated with the building administrator who revealed that the strong
leak apparently came from the unit directly above them which was owned by respondent

JURISTS Paguirigan
Carungcong but was being leased to another at that time. The building administrator explained
that the leak was caused by unauthorized piping and plumbing works, which were in violation of
the Wack Wack’s rules and regulations. Based on the report, Atty. Villareal demanded that
respondents Wack Wack and Carungcong make restoration works and/or pay for the damages
caused to the unit of the Domingos. However, no action was taken by Wack Wack and
Carungcong.

Sps. Domingo filed their complaint for damages against respondents Carungcong and
Wack-Wack. Respondent Wack Wack contended that policies on the use and occupancy of units
lied solely with Golden Dragon. In its crossclaim, Wack Wack alleged that if there was indeed
any damage caused on the unit, it would have been due to respondent Carungcong’s failure to
diligently and regularly monitor her tenant’s activities.

The RTC held Wack Wack solidarily liable with Carungcong.

On appeal, the CA reversed the RTC and ruled in favor the the respondents Wack-Wack
and Carungcong on the ground that there was no evidence showing that the damage to the
Domingo’s unit was caused by the plumbing works done in the unit directly above them.

Issue: Whether or not respondents are liable for damages to the Domingos

The SC ruled in the negative. Article 2176 provides that whoever by act or omission
causes damage to another, there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict.
57

A quasi-delict has the following elements: a) the damage suffered by the plaintiff; b) the
act or omission of the defendant supposedly constituting fault or negligence; and c) the causal
connection between the act and the damage sustained by the plaintiff, or proximate cause.

The Court noted that the full extent of the damage caused to the petitioners’ unit was not
sufficiently proven. There was no sufficient evidence presented to show the extent of the damage
caused to the unit. Photographs offered merely depict a wet bed, wet floor, and wet cabinet. No
photographs were presented to prove the full extent of the damage caused to the unit.

Second, the fault or negligence on the part of Wack-Wack was not proven. The Court has
held that in a cause of action based on quasi-delict, the negligence or fault should be clearly
established by the plaintiff, to whom the burden of proof is placed. In this case, the burden of
proving fault or negligence was clearly not discharged by the Domingos. No evidence was
presented that suggests that such plumbing works are illegally or negligently made or prohibited
or disallowed.

Third, the proximate cause between the supposed damage caused and the plumbing
works undertaken was not established. Proximate cause is that cause which, in natural and
continuous sequence, unbroken by any efficient intervening cause, produces the injury and
without which the result would not have occurred. However, the subject plumbing works are
isolated in the balcony area of the unit above Domingos’ unit. They do not dispute that the said
area is separated from the other areas of the unit and sealed off by a wall and beam. Petitioner

JURISTS Paguirigan
did not present any witness or document establishing causal link between the plumbing works
and the damage done. Lastly, in a case previously filed by the petitioners before the HLURB
against Golden Dragon, petitioners allege in their complaint that way before the installation of
the subject plumbing works, they had already discovered water leaks in the unit.

All in all, the Domingos failed to prove the existence of the elements of a quasi-delict in
the instant case. The decision of the CA is affirmed.

BNL MANAGEMENT CORPORATION and DAVID v. REYNALDO UY, RODIEL

BALOY, ATTY. LUALHATI CRUZ, ALBERTO WONG, TERESITA PASIA, ROLAND
INGEL and MARISSA SEVILLA G.R. No. 210297, April 3, 2019

Petitioner BNL Management owned 6 condominium units at the Imperial Bayfront

Tower Condominium and held exclusive rights to 3 parking spaces therein.

BNL Management, through its President, David, wrote to the building administrator of
Imperial bringing up concerns over: (1) the general cleanliness and maintenance of common
areas; (2) security; (3) building insurance; (4) encroachment of 2 of the parking spaces; and (5)
the annotation of the parking spaces on the mother title.

In a follow-up letter, BNL Management declared that it would withhold paying monthly
dues and instead deposit them and its arrears in a bank as escrow, which could be withdrawn by
the Imperial Bayfront Tower Condominium Association only after it has complied with the
demands in the letter.
58

In response, the building administrator of Imperial explained that the failure to annotate
ownership of parking spaces was due to the failure BNL Management to submit the necessary
documents to the Association. It added that the maintenance issues were due to lack of funds as a
result of BNL Management’s nonpayment of association dues, specifically amounting to
PHP180,981.80.

Still, BNL Management did not pay the arrears. Thus, the Association’s Board of
Directors (respondents) resolved to disconnect the lighting facilities in the 6 units owned by BNL
Management and later on, the water services as well. Despite the letter of BNL for the
restoration of their electricity and water, the Association refused.

BNL filed a complaint for damages and specific performance with preliminary
mandatory/prohibitory injunction against respondents Uy, et al.

The RTC dismissed the complaint. It found that a homeowners’ association depended on
the dues paid by its members to deliver services such as building maintenance. It held that
respondents were justified in disconnecting BNL Management’s power and water services under
the Association’s House Rules and Regulations, which were based on its Master Deed and
Declaration of Restrictions under Sec. 9 of the Condominium Act. The CA dismissed BNL’s
appeal as well as motion for reconsideration.

JURISTS Paguirigan
Hence, this petition. BNL and David argue that they are entitled to actual, moral, and
exemplary damages.

Issue: Whether or not petitioners are entitled to damages for the disconnection of water and
electricity utilities from the units they own at Imperial Bayfront

The Court held that petitioners are not entitled to the damages they prayed for. For moral
damages to be awarded, the following requisites must be present: (1) there must be an injury,
whether physical, mental or psychological, clearly sustained by the claimant; (2) there must be a
culpable act or omission factually established; (3) the wrongful act or omission of the defendant
is the proximate cause of the injury sustained by the claimant; and (4) the award of damages is
predicated on any of the cases stated in Article 2219.

Here, respondents Uy were not found to have committed any culpable act or omission
that would warrant an award of moral damages for petitioner David. Clearly, the injury he
allegedly sustained was caused by his own failure – corporation’s nonpayment of dues.

Also, petitioner BNL Management, being a corporation, is not entitled to moral damages.
A corporation is not a natural person. It is a creation of legal fiction and "has no feelings, no
emotions, no senses." A corporation is incapable of fright, anxiety, shock, humiliation, and
physical or mental suffering. "Mental suffering can be experienced only by one having a nervous
system and it flows from real ills, sorrows, and griefs of life." A corporation, not having a
nervous system or a human body, does not experience physical suffering, mental anguish,
embarrassment, or wounded feelings. Thus, a corporation cannot be awarded moral damages. As
an exception, "a corporation may have a good reputation which, if besmirched, may also be a
ground for the award of moral damages."
59

There is no showing here that an exception should apply pro hac vice in favor of
petitioner BNL Management. Moreover, exemplary damages may only be awarded if a party
proves entitlement to temperate, liquidated, actual, or moral damages. Petitioners have already
admitted that they will not quantify the actual damages they sustained. They have also neither
sought for nor been granted temperate or liquidated damages. Accordingly, petitioner BNL
Management cannot be awarded exemplary damages.

JURISTS Paguirigan