JESSICA P. MAITIM a.k.a. "JEAN GARCIA", petitioner, vs. MARIA THERESA P.

AGUILA,
respondent.
G.R. No. 218344. March 21, 2022, SECOND DIVISION (Hernando, J.)

DOCTRINE
Res ipsa loquitur is literally translated as "the thing or the transaction speaks for
itself." The doctrine res ipsa loquitur means that "where the thing which causes injury is
shown to be under the management of the defendant, and the accident is such as in the
ordinary course of things does not happen if those who have the management use proper
care, it affords reasonable evidence, in the absence of an explanation by the defendant, that
the accident arose from want of care." It is simply "a recognition of the postulate that as a
matter of common knowledge and experience, the very nature of certain types of occurrences
may justify an inference of negligence on the part of the person who controls the
instrumentality causing the injury in the absence of some explanation by the defendant who is
charged with negligence. It is grounded in the superior logic of ordinary human experience
and on the basis of such experience or common knowledge, negligence may be deduced from
the mere occurrence of the accident itself.

When an injury is caused by the negligence of the employee, there instantly arises a
presumption of law that there was negligence on the part of the master or employer either in
the selection of the servant or employee, or in supervision over him after selection or both.
The liability of the employer under Article 2180 is direct and immediate; it is not conditioned
upon prior recourse against the negligent employee and a prior showing of the insolvency of
such employee

Q: Petitioner Jessica Maitim and respondent Maria Theresa P. Aguila were residents
of Grand Pacific Manor Townhouse. Their respective townhouse units are
approximately nine meters apart, separated only by a driveway jointly used by the
townhouse unit owners.

Maitim was on board her vehicle, registered under her name, which was being
driven by Santos, her driver for 12 years. While they were driving along the common
driveway, Angela, the six-year old daughter of Aguila, was sideswiped by Maitim's
vehicle. Angela was dragged for about three meters resulting to her right leg being
fractured.
Angela was diagnosed to have suffered swelling, hematoma, multiple abrasions, and
displaced, complete fracture on the right leg. Thus, she underwent operation at
Asian Hospital and was in a wheelchair. Thus, Aguila filed the instant action for
damages based on quasi-delict before the RTC. Is Maitim solidarily liable under the
doctrine of vicarious liability?
A: YES. The doctrine of res ipsa loquitur finds application in vehicular accidents, wherein it
is sufficient that the accident itself be established, and once established through the
admission of evidence, whether hearsay or not, the rule on res ipsa loquitur already starts
to apply.
Here, the fact that Angela was hit by a moving vehicle owned by Maitim and driven by
Santos is undisputed, and the same is supported by the Traffic Accident Investigation
Report. The fact that Angela sustained injuries in her collision with Maitim's vehicle is also
not in question. Thus, since it is clearly established that there was a vehicular accident that
caused injuries, then the rule on res ipsa loquitur shall apply. An inference of negligence on
the part of Santos, the person who controls the instrumentality (vehicle) causing the injury,
arises, and he has the burden of presenting proof to the contrary.
Santos failed to discharge this burden and consequently, the presumption of negligence
lodged towards him shall stand. There is nothing natural about a child getting dragged for
three meters and her leg being completely fractured by a slow-moving vehicle, especially if
a reasonably prudent man was driving the vehicle with care.
The finding of negligence against Santos gave rise to the presumption of negligence on the
part of Maitim in the latter's selection and/or supervision of the former. Maitim's attempt
to deflect liability clearly falls short as she was not able to present concrete proof that she
exercised the care and diligence of a good father of a family in the selection and supervision
of her employee, Santos. Therefore, the presumption of negligence against her stands, and
she must be held solidarily liable with Santos.
Q: Is there was contributory negligence on the part of Aguila?
A: NO. The driveway was a common area to both parties' townhouse units, which meant
that the driveway is as much a part of Aguila's residence as it is of Maitim's. It was also
found that Angela was not just running or loitering around but was actually on her way to
board their car. Given these circumstances, this Court sees no negligence on the part of
Aguila when she allowed Angela to exit their door and walk towards their garage. There is a
reasonable expectation of safety, considering that the driveway is still within the premises
of their residence and not on the street where vehicles ordinarily drive by. Moreover, given
the location and relatively narrow profile of the driveway, it can be reasonably expected
that anyone who traverses such driveway with a motor vehicle would drive slowly and
with utmost caution. (Maitim v. Aguila, G.R. No. 218344, March 21, 2022as penned by J.
Hernando)
 PRYCE PROPERTIES CORP. (now PRYCE CORPORATION), petitioner, vs. NARCISO R.
NOLASCO, JR., respondent.
G.R. No. 203990, August 24, 2020, SECOND DIVISION (Hernando, J.)

DOCTRINE
In case where less than two years of installments were paid, the seller shall give the
buyer a grace period of not less than sixty days from the date the installment became due.

If the buyer fails to pay the installments due at the expiration of the grace period, the
seller may cancel the contract after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act.

On the other hand, the buyer shall have the right to pay in advance any installment or
the full unpaid balance of the purchase price any time without interest and to have such full
payment of the purchase price annotated in the certificate of title covering the property.

Q: In 1995, Nolasco purchased three lots from Pryce. He deposited a total amount of
P393,435.00 through check payments in favor of Pryce; the latter did not deliver to
Nolasco the copies of the lots' certificates of title and their sales agreement. He was
dismayed when he finally received the sales agreement, as it contained unacceptable
conditions to which he conveyed his objections to Pryce. Nolasco had not yet signed
the sales agreement, and despite demands for refund of his deposit payments, Pryce
failed to comply.
Pryce filed an Answer with Counterclaims, and countered that Nolasco could not yet
be issued certificates of title since their transaction was not a contract of sale but a
contract to sell. Nolasco was allegedly furnished a copy of the Contract to Sell as early
as November 8, 1995, which he signed and even requested for an amended Contract
to Sell to reflect a new amortization schedule. Nolasco, under RA 6552 (Maceda Law),
was not entitled to a refund of his deposits since he failed to complete the payments
within the grace period provided by Pryce, resulting in their forfeiture and the
rescission of the contract to sell. Was the contract between Pryce and Nolasco
rescinded in accordance with RA 6552 (Maceda Law)?
A: NO. Section 4 of RA 6552 requires four (4) conditions before the seller may actually
cancel the contract thereunder: first, the defaulting buyer has paid less than two (2)
years of installments; second, the seller must give such defaulting buyer a sixty (60)-day
grace period, reckoned from the date the installment became due; third, if the buyer fails
to pay the installments due at the expiration of the said grace period, the seller must give
the buyer a notice of cancellation and/or a demand for rescission by notarial act;
and fourth, the seller may actually cancel the contract only after the lapse of thirty (30)
days from the buyer's receipt of the said notice of cancellation and/or demand for
rescission by notarial act.
First, the highlighted conditions in the Contract to Sell conflict with RA 6552, which
dictates "receipt" and not "service" of the notice of rescission to the buyer as the
reckoning point of the thirty (30)-day period before actual cancellation.
Pryce's Contract to Sell even dispensed with this legal requirement of receipt by deeming
mere service by registered mail as sufficient proof of service and constructive receipt. For
being contrary to Section 4 of RA 6552, these stipulations are rendered null and void, and
the general provisions governing a contract to sell under RA 6552 shall govern.
Moreover, it was not signed by Nolasco. Even if so signed, the Contract to Sell was not
worded to effect its automatic cancellation upon Nolasco's default.
There was compliance with the first and second requisites when Pryce sent Nolasco, a
defaulting buyer whose payments did not amount to two years' worth of installments, its
December 5, 1998 letter giving him sixty (60) days to make good on his obligation. Pryce,
however, did not meet the last two conditions. As properly determined by the CA, there
was no notice of notarial rescission served upon Nolasco . Necessarily, thirty (30) days
could not have lapsed from a non-existent service of such notice.
Q: Was Pryce's Answer with Counterclaims deemed as a notarial rescission under RA
6552 (Maceda Law)?
A: NO. An act or a deed of rescission is distinct and separate from an allegation of
rescission, an allegation being an assertion, declaration, or statement of a party to an
action, contained generally in an affidavit or a legal pleading, setting out what is yet to be
proven. Under notarial rules, acknowledgments cover written deeds and acts,
whereas jurats confirm affidavits and pleadings.
Here, Pryce only alleged the fact of rescission in its Answer with Counterclaims without
further evidence that would adequately determine its truth. It is not the independent
notarial rescission contemplated by RA 6552.
Even the Answer with Counterclaims is deemed as a deed of rescission, jurats will not
suffice for its conversion into a notarial act of rescission under RA 6552. Pryce, through its
Senior Vice-President, had its Answer with Counterclaims notarized via a jurat. The
notarial act converting the private notice of cancellation into a public one must be an
acknowledgment
Q: Should Pryce refund Nolasco?
A: YES. A defaulting buyer of real property on installments, whether or not she or he has
paid two (2) years of installments has three (3) common legal remedies in the
absence of a valid rescission, granted by Section 6 of RA 6552 and jurisprudence:
(a) Pay in advance any installment at any time, necessarily without interest;
(b) Pay the full unpaid balance of the purchase price at any time without interest,
and to have such full payment of the purchase price annotated in the certificate of title
covering the real property subject of the transaction under RA 9552; or
(c) Claim an equitable refund of prior payments and/or deposits made by the
defaulting buyer to the seller pertinent to their transaction under RA 9552, if any. (Pryce
Properties Corp. v. Nolasco, Jr., G.R. No. 203990, August 24, 2020 as penned by J. Hernando)
 PHILIPPINE NATIONAL BANK, petitioner, vs. LORENZO T. BAL, JR., respondent.
G.R. No. 207856. November 18, 2020, THIRD DIVISION (Hernando, J.)

DOCTRINE
Solidarity is never presumed. There is solidary liability when the obligation so states,
or when the law or the nature of the obligation requires the same, which are unavailing in the
instant case.

Q: PNB is engaged in the banking business. Bal was the manager of PNB's
Caloocan Branch. The Branch had a depositor by the name of Tan. PNB filed a
complaint for sum of money against Tan and Bal. PNB claimed that Bal approved
various cash withdrawals by Tan against several checks without waiting for them to
be cleared. When these checks were dishonored, PNB claimed that Bal allowed Tan
to deposit several checks to partially cover Tan's various cash withdrawals.
Nevertheless, these new checks were also dishonored for insufficient funds.

PNB alleged that Bal violated the bank's policy on the prohibition against drawing on
uncollected deposits pursuant to its General. In addition, PNB claimed that Bal
violated and exceeded his limited authority to approve encashment of other bank
checks under its Manual of Signing Authority. In view of the foregoing violations, PNB
averred that it incurred losses in the amount of P520,000.00 and that Bal is
personally liable to the bank pursuant to its Manual of Policies on Cash, Checks and
Other Cash Items and Deposits. PNB prayed that Tan and Bal be held jointly and
severally liable to the bank in the amount of P520,000.00, plus interest and damages.
On the other hand, Bal argued that the trial court had no jurisdiction over the
complaint against him because it amounted to an administrative action. He further
pointed out that he was already administratively penalized by the Administrative
Adjudication Panel of the bank for his alleged violations with a four-month
suspension. Should Bal be held personally liable on the drawings against uncollected
check deposits in the amount of P520,000.00 in view of his violation of the existing
policies of PNB?
A: NO. Firstly, Bal’s act of approving the withdrawals against the uncollected deposits had
been a mere act of accommodation to the valued clients of the bank, such as Tan. Bal's
questioned acts were therefore made within his discretion as branch manager. As to the
uncollected check deposits, the bank may honor the check at its discretion in favor of
clients. Bal's position as branch head entails the exercise of such discretion.
Secondly, the PNB Administrative Adjudication Panel already penalized Bal for the same
infraction. The PNB Administrative Adjudication Panel penalized Bal with four (4) months
suspension without prejudice to the filing of an appropriate court action on the part of the
bank. Moreover, PNB's Administrative Adjudication Panel's pronouncement that its
disposition finding Bal guilty of serious misconduct — "without prejudice to the filing of
the appropriate action in court to protect the interests of the bank, including the recovery
of the amounts involved"— referred only to the recovery of the amount involved from
the one who actually benefited from the fraud, that is, Tan. It is therefore Tan who
must be pursued by PNB for the amount that it claims to have lost. In fact, PNB itself asserts
that Tan had expressly acknowledged owing P520,000.00 to the bank and had in fact
issued a couple of promissory notes to PNB as to such obligation.
In any case, since Bal was already penalized by PNB for his violations by way of a four-
month long suspension, making him personally accountable for the liability that Tan had
already acknowledged to be his would be tantamount to penalizing him twice for the same
offense.
Lastly, Bal may not be held personally or solidarily liable. Settled is the rule that solidarity
is never presumed. There is solidary liability when the obligation so states, or when the law
or the nature of the obligation requires the same, which are unavailing in the instant case.
(Philippine National Bank v. Bal, Jr., G.R. No. 207856, November 18, 2020 as penned by J.
Hernando)
 PANACAN LUMBER CO., ANTONIO B. GO, MA. TERESA C. GO AND DOROTEA B. GO,
PETITIONERS, VS. SOLIDBANK CORP.
G.R. No. 226272, September 16, 2020, Second Division (Hernando, J.)

DOCTRINE
Well-settled is the rule that personal notice to the mortgagor in extrajudicial
foreclosure proceedings is not necessary. Section 3 of Act No. 3135, as amended by Act No.
4118, requires only the posting of the notice of sale in three public places and the publication
of that notice in a newspaper of general circulation. An exception to this rule is when the
parties stipulate that personal notice is additionally required to be given to the mortgagor.
Failure to abide by the general rule or its exception renders the foreclosure proceedings null
and void.

Q: Solidbank issued a FLC in favor of PLC to finance the latter's importation of

lumber allegedly secured by a Domestic Letter of Credit valued at P4,240,000.00
issued by Philippine Commercial and Industrial Bank. However, when the shipment
arrived in Davao City, Solidbank refused to release the shipping documents
necessary for the discharge of the goods for failure of PLC to pay the amount under
the FLC. PLC made partial payments of US$60,000.00. Meanwhile, PLC obtained a
loan from Solidbank in the amount of P700,000.00 which would pay for the taxes,
duties, and insurance premium on said lumber importation. As a security,
petitioners Antonio and Teresa executed a real estate mortgage over their property.
They were allegedly made to sign blank forms purporting to be a deed of REM with a
principal amount of P2,000,000.00.

Solidbank agreed to renew PLC's loan for another P700,000.00 after payment of
interests and other charges by petitioners. However, petitioners failed to pay the
balance of the total obligation which resulted in the extra-judicial foreclosure of
mortgage over the property with a principal obligation of P700,000.00. Solidbank
later amended its Petition for Extra-Judicial Foreclosure of Mortgage to increase the
loan obligation to P1,140,245.10. It then filed a Second Amended Petition to include
petitioner PLC's obligation under the FLC which resulted in the total loan obligation
of P9,151,667.89. A public auction was held where Solidbank was adjudged as the
highest bidder for the bid price of P2,637,600.00. Was the extra-judicial foreclosure
of the REM null and void?

A: YES. Well-settled is the rule that personal notice to the mortgagor in extrajudicial
foreclosure proceedings is not necessary. Section 3 of Act No. 3135, as amended by Act No.
4118, requires only the posting of the notice of sale in three public places and the
publication of that notice in a newspaper of general circulation. An exception to this rule is
when the parties stipulate that personal notice is additionally required to be given to the
mortgagor. Failure to abide by the general rule or its exception renders the foreclosure
proceedings null and void.

A perusal of the records reveals that petitioners were notified of the foreclosure
proceedings by Solidbank through the Application of Extra-Judicial Foreclosure of
Mortgage filed by the bank in 1998. However, Solidbank twice amended the said petition
for extra-judicial foreclosure which consequently resulted in the increase of PLC's
mortgage indebtedness from P797,806.18 to P9,151,667.89. In both instances, Solidbank
did not send petitioners a personal notice of the two amended petitions. Instead, it
proceeded with the foreclosure of mortgage as per Notice of Extra-Judicial Sale dated
September 7, 1999.

The provision clearly establishes that personal notice is required before Solidbank may
proceed with the foreclosure of the subject property. Thus, Solidbank's act of proceeding
with the foreclosure despite the absence of personal notice to petitioners violated the said
deed of REM which accordingly renders the foreclosure null and void. If indeed the parties
did not intend to require personal notice in addition to the statutory requirements of
posting and publication, then the said provision should not have been included in the
mortgage contract.
MUNICIPALITY OF CORELLA, represented by MAYOR JOSE NICANOR D. TOCMO v.
PHILKONSTRAK DEVELOPMENT CORPORATION and VITO RAPAL
G.R. No. 218663, February 28, 2022, Second Division, (Hernando, J.)

DOCTRINE 
Quantum meruit literally means, “as much as he deserves.” This legal principle is
predicated on equity and states that a person may recover a reasonable value of the thing he
delivered or the service he rendered. It is a device to prevent undue enrichment based on the
equitable postulate that it is unjust for a person to retain a benefit without praying for it. In
this case, despite the invalidity of the municipal ordinance, which in turn rendered the
contract between Corella and Philkonstrak invalid, the latter is still entitled to receive
payment for the services it rendered for the local government of Corella. Corella cannot be
unjustly enriched and allowed to retain the benefits of the services rendered by Philkonstrak
without properly paying for it. 

Q: The municipality of Corella conducted a public bidding for the rehabilitation and
improvement of its municipal waterworks system project and Philkonstrak emerged
as the winning bidder. Through then mayor Rapal, Corella entered into a contract
agreement with Philkonstrak for a total amount of P15, 997, 732.63. Philkonstrak
accomplished more than 50% of the work essential for the project and expended the
amount of P8, 233, 000.00. Corella, through Tocmo, refused to pay and denied
liability. Philkonstrak was forced to suspend its construction works and sent Corella,
through Tocmo, a formal demand to pay for actual expenses incurred and a letter of
demand to Rapal was also made. Tocmo denied liability and questioned the validity
of the contract averring that Rapal had no authority to enter into such contract
during his term as mayor of Corella.  According to Rapal, he was authorized to enter
into a contract with Philkonstrak in accordance with Municipal Ordinance No. 2010-
02 or “An Ordinance Appropriating the Amount of Twenty-Seven Million Pesos (P27,
000, 000.00) for the Purchase of the Following Heavy Equipment: One Unit Brand
New Road Grader, One Unit Reconditioned Road Roller, and
Rehabilitation/Improvement on the Existing Waterworks System of the Local
Government Unit. Corella asserted that the contract is not binding because the
Municipal Ordinance was in violation of Article 107(g) of the IRR of RA 7160 or the
LGC of 1991. Corella contended that Rapal was in bad faith since he knew that the
ordinance was defective and thus he was not legally authorized to enter into a
contract with Philkonstrak. The Court ruled that the municipal ordinance is void and
therefore the contract entered into between then Mayor Rapal and Philkonstrak is
not binding. Can Philkonstrak recover expenses incurred pursuant to the void
contract?

A: YES. The contract between Philkonstrak and Corella is not valid and binding. However,
Corella is obliged to pay Philkonstrak based on the principle of quantum meruit. Quantum
meruit literally means, “as much as he deserves.” This legal principle is predicated on
equity and states that a person may recover a reasonable value of the thing he delivered or
the service he rendered. It is a device to prevent undue enrichment based on the equitable
postulate that it is unjust for a person to retain a benefit without praying for it. In this case,
despite the invalidity of the municipal ordinance, which in turn rendered the contract
between Corella and Philkonstrak invalid, the latter is still entitled to receive payment for
the services it rendered for the local government of Corella. Corella cannot be unjustly
enriched and allowed to retain the benefits of the services rendered by Philkonstrak
without properly paying for it. Philkonstrak sufficiently established its right to be
compensated based on quantum meruit. The Court finds that Philkonstrak entered the
contract in good faith and for the good interest of Corella. (Municipality of Corella v.
Philkonstrak, G.R. No. 218663, February 28, 2022, as penned by J. Hernando)
PASCUAL PURISIMA, JR., LEONARDO PURISIMA, EUFRATA PURISIMA, AND ESTELITA
DAGUIO v. MACARIA PURISIMA AND SPOUSES ERLINDA AND DANIEL MEDRANO
G.R. No. 200484, November 18, 2020, Third Division, (Hernando, J.) 

DOCTRINE
The Statute of Frauds affects merely the enforceability of the contract. By Article 1403
(2) (e) of the Civil Code, a verbal contract for the sale of real property is unenforceable, unless
ratified. For such contract offends the Statute of Frauds. But long accepted and well settled is
the rule that the Statute of Frauds is applicable only to executory contracts - not to contracts
either totally or partially performed. It matters not that neither the receipt for the
consideration nor the sale itself was in writing. Because "oral evidence of the alleged
consummated sale of the land" is not forbidden by the Statute of Frauds and may not be
excluded in court.

Q: Sps Medrano and Macaria Purisima filed a complaint for reconveyance,

cancellation and quieting of title against their late brother's heirs. Sps Medrano and
Macaria alleged that their brother, Pascual Purisima Sr., owned Lot 71 located in
Cagumitan, Tuao, Cagayan. Pascual Sr. sold portions of the aforesaid property to Sps
Medrano and Macaria to answer for his medical bills. At the time of the sale, the
whole land was not yet titled but it was surveyed for a patent application under
Purisima Sr.'s name by the Land Management Bureau. Banking on mutual trust, the
survey as well as the sale was not recorded by the parties. Prior to the death of
Purisima Sr., Spouses Medrano and Macaria had been in open, continuous and
exclusive possession of the apportioned properties. They had been paying realty
taxes thereon and had their own tenants tilling their respective portions of land. The
heirs of Pascual Sr., executed an Extrajudicial Settlement of Estate of Deceased,
Pascual Purisima and Sale over the unregistered property of their father which
included the sale of the properties apportioned to the Sps Medrano and Macaria.
Purisima Jr. was granted a Free Patent under the name of "Heirs of Pascual
Sr."covering the whole Lot including the portions that were already sold. An OCT was
issued in favor of the heirs .The Heirs of Purisima Sr. countered that there was no
sale that transpired at any given time. They argued that while they all signed
the Extrajudicial Settlement of Estate of Deceased, Pascual Purisima, Sr. and Sale,
they did not understand its import and were convinced by the Sps and Macaria that
the document was merely an evidence of their indebtedness. They did not appear
before a notary public in the execution thereof nor were they given a copy of the said
document. The RTC dismissed the complaint and ruled that even if there were a sale
that transpired, it was not enforceable since it was not embodied in a written
document. The CA ruled that reconveyance was proper and held that the
1978 Extrajudicial Settlement of Estate of Deceased, Pascual Purisima, Sr. and
Sale confirmed that the apportioned properties were sold to the Sps Medrano and
Macaria and the signatures of the heirs of Purisima Sr. therein clearly signified their
conformity to the sale. Also, the Statute of Frauds requiring a written instrument for
the enforceability of certain contracts, applies only to executory contracts, not to
consummated contracts. Was the ruling of the CA correct?
A: YES. The Statute of Frauds affects merely the enforceability of the contract. In the early
case of Iñigo v. Estate of Adriana Maloto, the Court held that by Article 1403 (2)(e) of the
Civil Code, a verbal contract for the sale of real property is unenforceable, unless ratified
for such contract offends the Statute of Frauds. However, long accepted and well settled is
the rule that the Statute of Frauds is applicable only to executory contracts - not to
contracts either totally or partially performed. It matters not that neither the receipt for the
consideration nor the sale itself was in writing.  The "oral evidence of the alleged
consummated sale of the land" is not forbidden by the Statute of Frauds and may not be
excluded in court. Here, the oral sale was already fully consummated as evidenced by the
1978 Extrajudicial Settlement of Estate of Deceased, Pascual Purisima, & and Sale which
was undisputed and acknowledged by the heirs themselves, and as established by the
pieces of evidence presented by the Sps Medrano and Macaria such as the testimonies of
their tenants and other documentary evidence. There can be no escaping the fact that the
sale between the Sps Medrano and Macaria and Purisima Sr. was consummated and that
the Statute of Frauds has no application in the case. Hence, the CA decision granting the
action for reconveyance in favor of Sps Medrano and Macaria as owners of the apportioned
properties is proper. (Purisima, Jr. v. Purisima, G.R. No. 200484, November 18, 2020, as
penned by J. Hernando)
 DORIS MARIE S. LOPEZ v. ANICETO G. SALUDO, JR.
G.R. No. 233775, September 15, 2021, Second Division, (Hernando, J.)

DOCTRINE 
Trust is the legal relationship between one person having an equitable ownership in
property and another person owning the legal title to such property, the equitable ownership
of the former entitling him to the performance of certain duties and the exercise of certain
powers by the latter. The Civil Code provides that an implied trust is created when a property
is sold to one party but paid for by another for the purpose of having beneficial interest in
said property. Moreover, Article 1456 of the Civil Code pertinently provides: If property is
acquired through mistake or fraud, the person obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the person from whom the property comes.

An implied trust arises, not from any presumed intention of the parties, but by
operation of law in order to satisfy the demands of justice and equity and to protect against
unfair dealing or downright fraud. The burden of proving the existence of a trust is on the
party asserting its existence, and such proof must be clear and satisfactorily, show the
existence of the trust and its elements.

Q: Saludo filed an Action for Reconveyance and Damages with a Prayer for a
Temporary Restraining Order and/or Preliminary Injunction against Lopez.
According to Saludo, Lopez told him that she knows of two parcels of land that were
being offered for sale at a reasonable price. Saludo was eventually convinced to
purchase the subject properties due to the persistent assurances of Lopez that: (a)
the titles thereto were clean; (b) the TCT would be issued in his name after the
execution of the sale; and (c) that the offered selling price was very reasonable and
even bordering on a bargain sale considering the location of the properties and their
proximity to business centers. Lopez then offered to pose as the buyer because the
seller, who was her close friend, allegedly wanted to deal only with her to keep his
financial constraints within his close family friends. After the execution of the sale,
Saludo noticed that Lopez started evading him and did not give any update as to the
registration of the sale in his name. When respondent inquired on the status of the
properties, he found out that the properties were already registered in the name of
Lopez pursuant to a Deed of Absolute Sale executed by BRC in favor of Lopez. This
prompted Saludo to immediately assume possession of the properties and introduce
major renovations on the house amounting to a total of P9,000,000.00. He likewise
paid the real property taxes thereon for 13 years. As the occupant thereof, he is also
the one paying the homeowner's association dues. He then filed the instant
Complaint imputing bad faith on the part of Lopez. He claimed that he is the true
owner of the subject properties and that Lopez merely holds the same in trust for
him. In support thereof, he presented the four checks that he issued in the name of
petitioner for the payment of the purchase price. He also reiterated that he has been
in actual possession of the properties in question from the time he had fully paid
them up to the filing of the instant complaint. The RTC declared Saludo as the true
and rightful owner of the subject properties and held that while the sale was made
through Lopez, she was merely a trustee of the subject properties, the true and direct
owner of the same is Saludo. The CA denied the appeal of Lopez and affirmed the RTC
Decision. Did Saludo sufficiently prove that an implied trust was created between
him and Lopez? 

A: YES. The Article 1448 of the Civil Code provides that an implied trust is created when a
property is sold to one party but paid for by another for the purpose of having beneficial
interest in said property. Moreover, Article 1456 pertinently provides that “if property is
acquired through mistake or fraud, the person obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the person from whom the property comes.”
An implied trust arises, not from any presumed intention of the parties, but by operation of
law in order to satisfy the demands of justice and equity and to protect against unfair
dealing or downright fraud. The burden of proving the existence of a trust is on the party
asserting its existence, and such proof must be clear and satisfactorily, show the existence
of the trust and its elements. Saludo had actually adduced, evidence to prove his intention
to purchase the subject properties by paying the purchase price thereof, through Lopez,
with the attendant expectation that she would later on reconvey the same to him. There is
no cogent reason to revisit these well-supported conclusions of the lower courts. (Lopez v.
Saludo, Jr., G.R. No. 233775, September 15, 2021, as penned by J. Hernando)
 LAND BANK OF THE PHILIPPINES v. DEL MORAL, INC
G.R. No. 187307, October 14, 2020, Second Division (Hernando, J.)

DOCTRINE
Out of regard for the DAR's expertise as the concerned implementing agency, courts
should henceforth consider the factors stated in Section 17 of RA 6657, as amended, as
translated into the applicable DAR formulas in their determination of just compensation for
the properties covered by the said law. If, in the exercise of their judicial discretion, courts find
that a strict application of said formulas is not warranted under the specific circumstances of
the case before them, they may deviate or depart therefrom, provided that this departure or
deviation is supported by a reasoned explanation grounded on the evidence on record. In
other words, courts of law possess the power to make a final determination of just
compensation.

Q: Respondent Del Moral, Inc. (Del Moral) is a domestic family corporation and the
registered owner of several parcels of land situated in different municipalities in
Pangasinan with a total area of 125.2717 hectares. These parcels of land were
originally tobacco farmlands. 102.9766 hectares of Del Moral's property were later
placed under the coverage of the agrarian reform program under Presidential
Decree (P.D.) No. 27. On July 17, 1987, Executive Order (E.O.) No. 2284 was issued
which (1) provided for the full land ownership to qualified farmer-beneficiaries
covered by P.D. No. 27; (2) determined the value of remaining unvalued rice and com
lands subject to P.D. No. 27; and (3) provided for the manner of payment by the
farmer beneficiary and mode of compensation to the landowner. Pursuant to Section
2 of E.O. No. 228, the Department of Agrarian Reform (DAR) computed the just
compensation to be paid to Del Moral in the total amount of P342,917.81. In 1992,
petitioner Land Bank of the Philippines (LBP) informed Del Moral of the approval of
its monetary claim pertaining to the 102.9766 hectares of farmlands which were
placed under the coverage of P.D. No. 27. The LBP assigned the original total
valuation in the amount of P342,917.81 or roughly P3,329.30 per hectare as just
compensation to Del Moral. However, Del Moral found the assigned valuation made
by the DAR and the LBP to be grossly inadequate and unreasonably low. Thus, Del
Moral filed a petition on April 26, 2002 before the RTC for the proper determination
of just compensation.

The RTC rendered its Decision computing the just compensation based on the
recent fair market value of the property, instead of using the prevailing factors at the
time of the taking. The CA in CA-G.R. SP No. 983739 affirmed the RTC's computation
for just compensation but reduced the award for temperate and nominal damages to
P10 million and P1 million, respectively. Is the award of damages proper?
A: NO. Regarding the award of temperate and nominal damages, we hold that temperate or
moderate damages may be recovered if pecuniary loss has been suffered but the amount
cannot be proved with certainty from the nature of the case.34 The trial and appellate
courts found that Del Moral was unable to use productively the 102 hectares of its
landholdings after it was deprived of its possession in 1972. With the passage of time, it is,
however, impossible to determine Del Moral's losses with any certainty. Thus, considering
the particular circumstances of this case, the award of P10 million as temperate damages is
reasonable.
Although res judicata applies in this case, for the greater interest of justice, nominal
damages of P1 million should be deleted as temperate and nominal damages are
incompatible and thus, cannot be granted concurrently. We affirm the imposition of legal
interest of six percent (6%) per annum from the time this judgment becomes final and
executory until this judgment is wholly satisfied. (Land Bank of the Philippines v. Del Moral,
Inc., G.R. No. 187307, October 14, 2020, as penned by J. Hernando)
 LORENZO WILLY, substituted by his heirs, namely: FELICIDAD D. WILLY, BETTY
WILLY CADANGEN, TONY WILLY, COSME WILLY, ROSARIO WILLY-ARMAS, ERLINDA
WILLY-DAPYAWON, JOHNNY WILLY, JOSE WILLY, RODOLFO WILLY, SWINIE WILLY,
ISABEL WILLY, NEDA CACANANDO, and BENITA WILLY, herein represented by their
Attorneys-in-fact, MARIA APRILA WILLY CRUZ and BETTY WILLY CADANGEN v.
REMEDIOS F. JULIAN, GEORGE F. JULIAN, JOAN J. AGUIRRE, EMILY J. BUSTARDE, and
WILLIAM F. JULIAN
G.R. No. 207051, December 1, 2021, Second Division (Hernando, J.)

DOCTRINES
1. The Statute of Frauds, Article 1403 (2) of the Civil Code, is not applicable to totally or
partially performed contracts. To emphasize, the November 1968 survey to segregate Lots 1
and 2, Ricardo's portion of the subject property, amounts to partial performance sufficient to
take the matter away from the operation of the Statute of Frauds.

2. There was constructive delivery of Lots 1 and 2 to Ricardo. One thing that militates against
petitioners' claim that the 1963 Agreement is unenforceable is Ricardo's possession of Lots 1
and 2 in the concept of owner and receipt of fruits thereof. The fact that Ricardo did not
physically possess the purchased lots is of no moment since at the time of sale to him in 1969,
Ricardo's possession was exercised by Lorenzo, Modesto's son, in his behalf.

Q: In 1963, Modesto executed a written agreement (1963 Agreement) conveying

portions of the subject property to three individuals, who rendered services to
Modesto in connection therewith, which includes Emilio Dongpaen, Modesto’s agent.
In 1968, the subject property was surveyed for the benefit of a prospective buyer,
Ricardo, to whom Dongpaen sold his portion, Lot 1, (10,000 sqm.) of the subject
property. A portion of Modesto’s property, Lot 2, which is an additional 5,000 sqm.
was sold first by Dongpaen to Ricardo on June 17,1969, and then sold by Modesto to
Dongpaen on June 24, 1969, as evidenced by a notarized Deed of Sale. Pursuant to an
arrangement with Modesto and his son, Lorenzo, who offered to cultivate Ricardo's
portion of the subject property, Ricardo saw no need to occupy Lots 1 and 2, and
simply allowed Lorenzo's possession thereof. In return, Lorenzo remitted to Ricardo
his share of the fruits thereof. Modesto died. Heirs of Modesto had attempted to sell
Lots 1 and 2. Hence, Ricardo filed a complaint for partition of Property against the
heirs of Modesto before the MCTC. Petitioners denied Ricardo's ownership of Lots 1
and 2, and argued that the deeds of sale covering the series of conveyances,
beginning from Modesto to Dongpaen, and Dongpaen to Ricardo, of Lots 1 and 2, are
all void since the originating document, the 1963 Agreement, was unenforceable for
failure to comply with the formalities of the contract under Article 1403 of the Civil
Code. Whether the 1963 Agreement and the two Deeds of Sale respectively dated
June 17 and 24, 1969 are unenforceable contracts under Article 1403 of the Civil
Code?

A: NO. The series of transfers among Modesto, Dongpaen and Ricardo were valid
conveyances. The deeds of sale were fully executed by the parties thereto. In the case at
bench, we find that all the requisites for a valid contract are present in all the questioned
deeds of sale, specifically: (1) consent of the parties; (2) object or subject matter,
comprised of Lots 1 and 2 of the subject property; and (3) the various consideration listed
in the 1963 Agreement and the purchase price for Lots 1 and 2 paid by Ricardo. The 1963
Agreement is not purely a sales contract, but is an innominate contract reflecting a sales
contract, a contract of agency to sell the subject property, and contract to transfer
ownership of property in exchange for services.

In this case, Dongpaen merely holds title to the subject property as Modesto's sales agent
for the further sale of a portion thereof. And thus, in furtherance of their arrangement, the
November 1968 survey, undertaken at the behest and for the benefit of Ricardo, amounts
to partial performance sufficient to take the matter away from the operation of the Statute
of Frauds. The contemporaneous acts of Modesto, Dongpaen and Ricardo, after the
execution of the 1963 Agreement, albeit unnotarized, point to a meeting of the minds for
the ultimate sale and transfer to Ricardo of Lots 1 and 2, comprised of Dongpaen's initial
10,000-square meter portion and the subsequent sale to him by Modesto of an additional
5,000 square meters of the subject property. (Willy v. Julian, G.R. No. 207051, December 1,
2021, as penned by J. Hernando)
ARLOS J. VALDES, GABRIEL A.S. VALDES, FATIMA DELA CONCEPTION AND ASUNCION
V. MERCADO v. LA COLINA DEVELOPMENT CORPORATION (LCDC), PHILIPPINE
COMMUNICATION SATELLITE, INC. (PHILCOMSAT), LA COLINA RESORTS
CORPORATION (LCRC), MONTEMAR RESORTS AND DEVELOPMENT CORPORATION
(MRDC), JOSE MARI CACHO, HONORIO A. POBLADOR III, and ALFREDO L. AFRICA
G.R. No. 208140, July 12, 2021, Third Division (Hernando, J.)

DOCTRINES
1. Under Article 1458 of the Civil Code, the elements of a contract of sale are: (a) consent or
meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b)
determinate subject matter; and (c) price certain in money or its equivalent.

2. For a valid novation to take place, the following requisites must concur: "(1) a previous
valid obligation; (2) the agreement of all the parties to the new contract; (3) the
extinguishment of the old contract; and (4) validity of the new one. There must be consent of
all the parties to the substitution, resulting in the extinction of the old obligation and the
creation of a valid new one."

3. Rescission is a remedy granted by law to the contracting parties, and even to third persons,
to secure the reparation of damages caused to them by a contract, even if it should be valid by
reason of external causes resulting in a pecuniary prejudice to one of the contracting parties
or their creditors, the result of which, is the restoration of things to their condition at the
moment prior to the celebration of said contract. The kinds of rescissible contracts are the
following: first, those rescissible because of lesion or prejudice; second, those rescissible on
account of fraud or bad faith; and third, those which, by special provisions of law, are
susceptible to rescission.

Q: Carlos Valdes, Sr. and his sons are stockholders of BARECO, which owned a large
tract of land in Bagac, Bataan. In 1974, Carlos, Sr. and Francisco Cacho carried out the
Montemar Project, which included the development of a beach resort (Montemar
Beach Club), and the remaining area into a residential subdivision (Montemar
Villas). To implement the project, the Valdeses transferred their BARECO shares in
favor of LCDC, a fully-owned corporation of the Cacho family, through a Deed of Sale
for P20 Million. LCDC paid partially P2.5 Million. The remaining P17.5 Million was to
be paid by way of 40% of the net proceeds from the sale of the Montemar Villas lots
inside BARECO. Wanting to invest in the Montemar Project, Philcomsat presented a
Memorandum of Intent, where Philcomsat will invest on the project, and,
concurrently, bailing out LCDC and LCRC from their loan obligations. In
consideration thereof, the ownership over the properties of LCDC and LCRC,
including their shares in MBCI, would be transferred to MRDC, a new corporation to
develop the villas into a golf course and sports complex.

Gabriel, attorney-in-fact of Carlos, Sr. agreed through a letter of conformity to the

conditions set by Philcomsat, where Philcomsat will invest and bail out LCDC, LCRC,
the Valdeses and the Cachos from their indebtedness to their creditors, but they will
incorporate MRDC, where Philcomsat will own 70% of it, the Valdeses will own 7.5%,
and the Cachos and creditors GCC will own the remaining 22.5%. The Valdeses are
now seeking to annul the agreement where Philcomsat entered as an investor.
Philcomsat argued that there has been a valid novation of the initial agreement
between LCDC and the Valdeses. Whether there was a valid novation of the initial
agreement between LCDC and the Valdeses to develop and sell the Montemar Villas
lots, which thereby extinguished LCDC's original obligation to the Valdeses?

YES. For a valid novation to take place, the following requisites must concur: "(1) a
previous valid obligation; (2) the agreement of all the parties to the new contract; (3) the
extinguishment of the old contract; and (4) validity of the new one. Pursuant to Art. 1292
that "the cancellation of the old obligation by the new one is a necessary element of
novation which may be effected either expressly or impliedly. In this case, the new concept
of the Montemar Project would entail the development of a golf course or sports complex
on the unsold lots of the Montemar Villas. Necessarily, the implementation of this new
concept is incompatible with the old obligation of LCDC under their previous agreement.
The construction of these new sports facilities will effectively halt the development and
eventual sale of the Montemar Villas lots and render unavailing LCDC's original obligation
to remit to the Valdeses' their 40% share in the proceeds derived from the sale of the said
lots.

What was required for the validity of the new concept was Valdeses' express conformity
thereto, with full knowledge that its implementation will denote that their rights to the
40% share of the proceeds derived from the sale of the Montemar Villa lots will be novated
and converted into a 7.5% equity in MRDC. In this case, Gabriel, as the representative of the
Valdeses, had knowledge of the new concept of the Montemar Project, and with Gabriel’s
express conformity to the new concept of the Montemar Project, the obligation of LCDC to
sell the Montemar Villas lots, and remit the proceeds to the Valdeses has been extinguished.
(Valdes v. La Colina Development Corp., G.R. No. 208140, July 12, 2021, as penned by J.
Hernando)
 SPS. TORRECAMPO v. WEALTH DEVELOPMENT BANK CORP.
G.R. No. 221845, March 21, 2022, Second Division, Hernando, J.:
DOCTRINE:
Act No. 3135 only applies when the one-year redemption period has not yet lapsed.
The general rule is that in extra-judicial foreclosures, a writ of possession may be issued to the
purchaser in two different instances, and based on two different sources: (1) within the
redemption period, in accordance with Act No. 3135, particularly Section 7, as amended; and
(2) after the lapse of the redemption period, based on the purchaser's right of ownership. 

Q: Sps. Torrecampo entered into a housing loan agreement with Wealth

Development Bank Corp. The housing loan agreement was secured by a REM over a
property owned by the spouses Torrecampo.  The aggregate amount of the loan is
P10.5 Million. Subsequently, the spouses Torrecampo defaulted on the payment of
their loan obligation. Thus, respondent bank commenced an action to foreclose the
REM extra-judicially under the provisions of Act No. 3135, or an Act to Regulate the
Sale of Property under Special Powers Inserted in or Annexed to Real-Estate
Mortgages, as amended. A certificate of sale was issued on June 11, 2010 and was
duly registered with the Register of Deeds of Cebu City on June 24, 2010. After the
lapse of the one-year redemption period without any attempt on the part of the
spouses Torrecampo to redeem the mortgaged property, the ownership of the lot
was then consolidated in favor of Wealth Development Bank Corp. as the purchaser
in the auction sale. The TCT in the name of the spouses Torrecampo was cancelled
and a new TCT was issued by the Register of Deeds of Cebu City in the name of
Wealth Development Bank Corp. When Sps. Torrecampo refused to vacate the
property upon the demand of Wealth Development Bank Corp, the latter filed an ex-
parte petition for the issuance of a writ of possession, which was granted by the RTC.
A notice to vacate was issued by the sheriff. RTC denied petitioners' motion for
reconsideration of the RTC's Order granting the application for a writ of possession.
Subsequently, the writ of possession was successfully implemented and Sps.
Torrecampo were evicted from the property. The petitioners filed a motion to set
aside the extra-judicial foreclosure sale and cancel the writ of possession with
prayer for damages on the ground that there was no violation of the mortgage
contract. Should Act No. 3135 apply to the case at bar?
A: NO. The provisions of Act No. 3135 should not apply in the case at bar. 
Act No. 3135 only applies when the one-year redemption period has not yet lapsed.
The general rule is that in extra-judicial foreclosures, a writ of possession may be issued to
the purchaser in two different instances, and based on two different sources: (1) within the
redemption period, in accordance with Act No. 3135, particularly Section 7, as amended;
and (2) after the lapse of the redemption period, based on the purchaser's right of
ownership.  
In the first instance, Section 7 of Act No. 3135 provides that the purchaser in a foreclosure
sale may apply for a writ of possession by filing an ex parte motion under oath. The
provision also requires that a bond be furnished and approved, and no third person is
involved.  
On the other hand, Section 8 of the same Act, as amended, provides the remedy available to
the debtor, that is, the opportunity to contest the transfer of possession but only within the
period of redemption.  
A writ of possession may also be issued after consolidation of ownership of the property in
the name of the purchaser or, in this case, the respondent bank. The purchaser becomes the
absolute owner of the property purchased in the foreclosure sale, if it is not redeemed
during the one-year period after the registration of the sale. After consolidation of
ownership in the purchaser's name and issuance of a new TCT, possession of the land too
becomes an absolute right of the purchaser. Thus, the issuance of the writ of possession to
the purchaser, upon proper application and proof of title, merely becomes a ministerial
duty of the court which cannot be enjoined or restrained, even by the filing of a civil case
for the declaration of nullity of the foreclosure and consequent auction sale. Any question
regarding the regularity or validity of the mortgage or its foreclosure cannot be raised as a
justification for opposing the issuance of the writ. 
In the case at bar, the respondent bank registered the foreclosure sale on June 24, 2010.
After the lapse of one year or after June 24, 2011, the provisions of Act No. 3135 no
longer applied to the parties. Wealth Development Bank Corp. became the absolute
owner of the subject property as a matter of right. In line with this, the writ of possession
was issued as a ministerial duty of the trial court. It was issued to the respondent bank as a
matter of right, a mere incident of the bank's ownership, and not in accordance with the
remedy provided under Section 8. (Spouses Torrecampo v. Wealth Development Bank
Corp., G.R. No. 221845, March 21, 2022, as penned by HERNANDO, J.:)
 SPOUSES CALVIN LUTHER R. GENOTIVA and VIOLET S. GENOTIVA v. EQUITABLE-PCI
BANK (now BANCO DE ORO UNIBANK, INC.)
G.R. No. 213796, June 28, 2021, Third Division (Hernando, J.)

DOCTRINE
Applying the foregoing to this case, it is obvious that BDO's supposed "threat," i.e., its
withholding of Violet's retirement benefits, is not the intimidation referred to by law. The
records show that the bank was unable to release Violet's clearance for the release of her
retirement benefits for the simple reason that she had an existing liability to the bank arising
from the Deed of Suretyship that she executed with her husband and other stockholders of
Goldland. Clearly, such act is neither unjust nor unlawful. Contrary to the spouses Genotiva's
claim that they were intimidated by BDO into signing the subject contract, the records show
that it was actually them who willingly offered to execute the subject contract in exchange for
the release of Violet's retirement benefits.

In the same vein, the Genotivas had an option: they could have desisted from offering
to mortgage the subject property and resorted to other means, such as through judicial
action, to obtain or process the release of Violet's retirement benefits. Instead, they willingly
mortgaged the subject property to sway BDO to release Violet's retirement benefits. The bank
could not be blamed for accepting what appeared to it as a reasonable offer. The fact that the
couple felt compelled, under the circumstances, to mortgage the subject property did not
negate the voluntariness of their act.

Obviously, the creditor's right to proceed against the surety does not give him any
right to deprive said surety of his property without due process of the law. It does not
contemplate a situation where the creditor is allowed to take by force or without consent the
property of the surety. Much like collecting from the principal debtor, the creditor may
recover only through lawful means. The creditor may not simply take the law in his own
hands and summarily take the property of the debtor or surety.

Here, while the Court agreed that the bank is entitled to collect from the spouses
Genotiva, they being solidarily liable under the Deed of Suretyship, BDO may not precipitously
deprive them of their property without due process of the law. The manner by which it
enforced the surety contract violates the basic principle of due process. BDO claims that it
rejected the offer for redemption. However, the Court finds nothing on record to support such
claim. What is apparent is that after the Genotivas made the offer, BDO responded through its
January 31, 2001 Letter simply stating that “the amount of P500,000.00 remitted to BDO has
been applied to past due interest."

Q: Sometime in 1997, Goldland applied for a "clean loan" with BDO at its Cagayan de
Oro City Branch where petitioner Violet Genotiva (Violet) was an employee. BDO
granted the loan in the amount of P2,000,000.00. 

When Violet retired on October 15, 1998, she requested for the payment of her
retirement benefits and for the release of the owner's copy of Transfer Certificate of
Title No. 77966 (subject property) which was retained by BDO in relation to Violet's
earlier housing loan which loan was already fully paid. However, BDO allegedly
refused to release her retirement benefits unless she and her husband would
execute a real estate mortgage over the subject property to secure Goldland's loan.
Being pressed for money, they had no choice but to accede to BDO's demands and to
sign the Real Estate Mortgage dated March 17, 1999 (subject contract) in favor of
BDO.

According to the spouses Genotiva, sometime after the subject contract was
executed, they offered to pay BDO the amount of P500,000.00 to redeem the
collateral. However, instead of applying the P500,000.00 for the redemption, BDO
applied it to the payment of the interest due on Goldland's loan. Further, when
Goldland defaulted in its payment of the loan, BDO wrongfully foreclosed the subject
property and scheduled its auction sale.

1. Is the Real Estate Mortgage valid in view of the spouses Genotiva’s claim of
vitiated consent?
2. Is BDO correct in retaining the P500,000.00 under the Deed of Suretyship.

A: 
1. YES. The subject contract is valid.

Duress or intimidation is present when one of the contracting parties is compelled

by a reasonable and well-grounded fear of an imminent and grave evil upon their
person or property, or upon the person or property of their spouse, descendants or
ascendants, to give their consent.

BDO's supposed "threat," i.e., its withholding of Violet's retirement benefits, is not
the intimidation referred to by law. The records show that the bank was unable to
release Violet's clearance for the release of her retirement benefits for the simple
reason that she had an existing liability to the bank arising from the Deed of
Suretyship that she executed with her husband and other stockholders of Goldland. 

In the same vein, the Genotivas had an option: they could have desisted from
offering to mortgage the subject property and resorted to other means, such as
through judicial action, to obtain or process the release of Violet's retirement
benefits. Instead, they willingly mortgaged the subject property to sway BDO to
release Violet's retirement benefits. The bank could not be blamed for accepting
what appeared to it as a reasonable offer. The fact that the couple felt compelled,
under the circumstances, to mortgage the subject property did not negate the
voluntariness of their act.

1. NO. BDO has no right to apply the P500,000.00 to Goldland’s loan.

The creditor's right to proceed against the surety does not give him any right to
deprive said surety of his property without due process of the law. It does not
contemplate a situation where the creditor is allowed to take by force or without
consent the property of the surety. Much like collecting from the principal debtor,
the creditor may recover only through lawful means. The creditor may not simply
take the law in his own hands and summarily take the property of the debtor or
surety. (Sps. Genotiva v. Equitable-PCI Bank, G.R. No. 213796, June 28, 2021, as
penned by J. Hernando)
 GUILLERMA S. SILVA v. CONCHITA S. LO
G.R. No. 206667, June 23, 2021 (Hernando, J.)

DOCTRINE
We are not unaware of the basic principle in the law of co-ownership, both under the
present Civil Code as in the Code of 1889, that no individual co-owner can claim title to any
definite portion of the land or thing owned in common until the partition thereof. Prior to
that time, all that the co-owner has is an ideal, or abstract, quota or proportionate share in
the entire thing owned in common by all the co-owners.

Q: Sometime in 2006, the surviving spouse of Carlos Sandico Jr., Concepcion,

representing herself and the other defendants-heirs, executed a second agreement
with the tenants of the subject property designated as "Kasunduan sa
Pagwawakas/Pagtatapos ng Relasyon bilang May-ari ng Lupa at mga
Ortilano/Kasama ng Lupa" (2006 Kasunduan). The 2006 Kasunduan, however, did
not contain the signatures of all the heirs: Enrica's, Teodoro's and Conchita's who
now repudiates her mother's, Concepcion's, signature on her behalf. As such, the
2006 Kasunduan is being sought to be declared a nullity, in violation of Rule 69 of
the Rules of Court.

Is the 2006 Kasunduan valid?

A: YES. As correctly ruled by the trial court, albeit plaintiffs Enrica and Teodoro did not
sign the Kasunduan, they acquiesced to the partition and distribution of the subject
property, the qualified tenants receiving half thereof. In fact, Enrica filed a Manifestation
dated December 18, 2006 that she and Teodoro will not object to the 2006 Kasunduan as
long as they will be given their preferred portion of the subject property. Truly indicative of
Enrica's and Teodoro's acquiescence to the 2006 Kasunduan is the fact that neither of them
have questioned it nor have they intervened in CA-G.R. SP No. 116979 and in this appeal.

As regards the absence of Conchita's signature to the 2006 Kasunduan after she has
purportedly repudiated the agency relationship with her mother in 2000, we rule that the
2006 Kasunduan is effective as against Conchita. (Guillerma S. Silva v. Conchita S. Lo, G.R.
No. 206667, June 23, 2021, as penned by J. Hernando).
 CRISTINA SEMING v. EMELITA ALAMAG, et al.
G.R. No. 202284, March 17, 2021, Second Division (Hernando, J.)

DOCTRINE
It is well settled that the object of every contract must be determinate. For there to be
an existing contract of sale, there must likewise be a price certain in money.

Q: Cristina filed a complaint for specific performance against Natividad,

alleging that the latter sold to her a 700 sq. m. parcel of land. As evidence of such
sale, Cristina presented two identical receipts allegedly signed by Natividad with the
following writing: “[RECEIVED] THE AMOUNT OF SIX THOUSAND PESOS (P6,000.00)
FROM CRISTINA, AS PARTIAL PAYMENT OF THE SAID LAND. THIS AMOUNT IS PAYMENT
ONLY FOR TWO LOTS.” Was there a perfected contract of sale?

A: NO. The object of the supposed sale in the instant case is ambiguous. It is well settled
that the object of every contract must be determinate. The phrase "[t]his amount is
payment only for two lots" renders the object of the sale ambiguous as it does not even
define the metes and bounds of the lots which are supposedly the subject of the sale.
(Seming v. Alamag, et al., G.R. No. 202284, March 17, 2021, as penned by J. Hernando)
 REX RICO v. UNION BANK OF THE PHILIPPINES
G.R. No. 210928, February 14, 2022, Second Division (Hernando, J.)

DOCTRINE
The use of a credit card to pay for a purchase is only an offer to the credit card
company to enter into a loan agreement with the credit card holder. Before the credit card
issuer accepts this offer, no obligation relating to the loan agreement exists between them.
Although the credit card company may disapprove the card holder's credit card transaction,
it shall do so justifiably and within the bounds of laws and the credit card membership
agreement. 

While Rico suffered humiliation or embarrassment from the disapproval of his credit
card at Gourdo's Restaurant in front of his two guests, We are constrained to reverse the that
Union Bank was grossly negligent in revoking Rico's credit card privileges. Rico failed to
convince Us that Union Bank breached any obligation that would make it answerable for his
humiliation or embarrassment.

Q: Rico was the holder of a Union Bank Visa credit card. Rico used the card to
purchase airline tickets online. However, since there were no available seats for the
return flight, Rico sought a refund from the airline company. The latter declined the
same since the tickets were non-refundable. Rico thus demanded Union Bank to
credit the amount back to his account. While the dispute was pending, Rico used the
credit card to pay for his meal at a restaurant. The credit card, however, was
dishonored since the card was in “past due” status. This was because the airline
tickets were still unpaid for and were still reflected in Rico’s statements of account.
Rico sued Union Bank for the embarrassment he suffered when his card was
declined in the restaurant. Is he entitled to damages?

A: NO. Union Bank had the right to revoke Rico's credit card privileges, and consequently
disapprove the restaurant transaction. Insofar as Union Bank is concerned, Rico offered to
enter into a loan agreement with Union Bank to pay for his airline tickets and Union Bank,
when it allowed the said transactions, accepted Rico's offer. Subsequently, a contract
between Union Bank and the airline arose, such that, the former is obliged to pay the latter
the amount of airline tickets purchased by Rico. In reviewing and investigating the alleged
cancelled sales agreement between Rico and the airline, Union Bank is justified to protect
itself as a business for profit.

Nobody can be faulted for Rico's alleged humiliation or embarrassment in Gourdo's

Restaurant but himself. Damnum absque injuria — there can be no damage without injury
when the loss or harm was not the result of a violation of a legal duty. In order for Rico to
maintain an action for the injuries which he claims to have sustained, he must establish
that such injuries resulted from a breach of duty which Union Bank owed to him.   (Rico v.
Union Bank of the Philippines, G.R. No. 210928, Feb. 14, 2022, as penned by J. Hernando)
 REYNALDO REYES v. SPS. WILFREDO AND MELITA GARCIA
G.R. No. 225159, March 21, 2022, Second Division (Hernando, J.)

DOCTRINE
Petitioner's recourse of filing a complaint for nullification of sale and recovery of
ownership is not the proper action. This Court explained in Bailon-Casilao v. Court of Appeals
that the appropriate remedy is not a nullification of the sale or for the recovery of the thing
owned in common but a division of the common property.

Q: Julian died leaving behind half of a parcel of land, which was divided among his
heirs, including Reynaldo and Isidoro. Isidoro sold a quarter of the parcel of land to
the Spouses Garcia. Reynaldo filed a complaint for recovery of possession and
annulment of deed of sale with the RTC, arguing that a sale by Isidoro was null and
void since the parcel of land was co-owned by all of the heirs of Julian. Was
Reynaldo’s choice of remedy correct? Was the sale between Isidoro and the Spouses
Garcia void.

A: NO. Reynaldo’s recourse of filing a complaint for nullification of sale and recovery of
ownership is not the proper action. The appropriate remedy is not a nullification of the sale
or for the recovery of the thing owned in common but a division of the common property.

The fact that the sale executed by Isidoro in favor of the spouses Garcia was made prior to
the partition of the subject property will not render the sale null and void. Nonetheless,
despite the validity of the sale, the spouses Garcia only acquired Isidoro's inchoate interest
in the subject property and not a definite portion thereof. (Reyes v. Spouses Garcia., G.R. No.
225159, March 21, 2022, as penned by J. Hernando)
 KLM ROYAL DUTCH AIRLINES v. DR. JOSE M. TIONGCO
G.R. No. 212136, October 4, 2021, Second Division (Hernando, J.)

DOCTRINE
The nature of the business which involves the transportation of persons or goods
makes a contract of carriage imbued with public interest. It is therefore bound to observe not
just the due diligence of a good father of a family but that of "extraordinary" care in the
vigilance over the goods as required under Article 1733 of the Civil Code. In an action based
on a breach of contract of carriage, the aggrieved party does not need to prove that the
common carrier was at fault or was negligent. He or she is only required to prove the
existence of the contract and its non-performance by the carrier.  There is no dispute that
KLM and Dr. Tiongco entered into a contract of carriage. Dr. Tiongco purchased tickets from
the airline for his trip to Almaty, Kazakhstan. KLM, however, breached its contract with Dr.
Tiangco when it failed to deliver his checked-in suitcase at the designated place and time. The
suitcase contained his clothing for the conference where he was a guest speaker, a copy of his
speech, and his resource materials. Worse, Dr. Tiangco's suitcase was never returned to him
even after he arrived in Manila from Almaty. Thus, KLM’s liability for the lost suitcase was
sufficiently established as it failed to overcome the presumption of negligence.

Q: Respondent Dr. Jose M. Tiongco (Dr. Tiongco ), a prominent surgeon and one of
the founders of the Medical Mission Group Hospital and Health Services in Davao
City, was invited by the United Nations - "World Health Organization (UN-WHO) to be
a keynote speaker in the 20th Anniversary of Alma-Ata Declaration to be held in
Almaty, Kazakhstan from November 27-28, 1998. Thus, Dr. Tiongco secured his visa
for Kazakhstan and purchased tickets for his flights. There being no direct flight
from Manila to Kazakhstan, Dr. Tiangco had to fly to Singapore via Singapore Airlines
where he would then take two connecting flights to Almaty on board petitioner KLM,
his main carrier. When he arrived in NAIA, he went to the counter of Singapore
Airlines and checked-in a suitcase containing a copy of his speech, resource
materials, clothing for the event, and other personal items. Singapore Airlines
departed from Manila as scheduled. Upon arrival in Singapore, Dr. Tiongco
proceeded to the KLM counter to check in for his flight to Amsterdam, Netherlands.
Dr. Tiongco arrived at Amsterdam the next day in time for his third flight to
Frankfurt, Germany. However, his flight to Frankfurt departed from Amsterdam 45
minutes late, or at 9:00 o'clock in the morning. As a result, Dr. Tiongco missed his
fourth flight, i.e. from Frankfurt to Almaty. Upon his arrival to Frankfurt, he found a
KLM employee whom he informed at once about his missed flight to Almaty, as well
as his speaking engagement and his checked-in suitcase. The employee assured him
that his suitcase would be travelling with him. He also instructed the doctor to
approach a Turkish Airlines employee to assist with the logistics of his trip to
Almaty. The KLM employee then took Dr. Tiongco's boarding pass and gave him a
new itinerary. Before the passengers of Turkish Airlines boarded, its personnel
asked them to identify their luggages on the tarmac. Dr. Tiongco looked for his
suitcase but could not locate it. He asked Mr. Osman Bey (Bey) of Turkish Airlines to
ask Miss Chizem to find his missing suitcase. Thirty minutes passed and yet his
suitcase was not in sight.

When Dr. Tiongco arrived in Almaty, nobody from KLM, Lufthansa, or Turkish
Airlines assisted him. His suitcase was still nowhere to be found. He then exited the
airport, hailed a taxi cab, and proceeded to Regency Hotel where the UN-WHO
convention would be held. Upon arrival in the hotel, Dr. Tiongco took a shower and
changed into a pair of slacks and a sweatshirt. He went downstairs where the
conference would be held. Initially, however, Dr. Tiongco was not allowed entry into
the venue because of his inappropriate attire. Dr. Tiongco explained to the
organizers that his suitcase containing his clothes and important materials for his
speech got lost during his flight. It was only then that he was allowed inside the
venue. Dr. Tiongco then delivered his lecture without any of his visual aids and
despite being inappropriately attired. When he finished his speech, some of the
attendees approached him and asked for his resource materials. However, he was
unable to give them the materials since these were also in his missing suitcase. Dr.
Tiongco then returned to the Philippines. Three months passed and still there was
no news about what happened to his luggage. Thus, he wrote to Singapore Airlines,
KLM and Lufthansa, demanding for compensation for his lost luggage and the
inconvenience he suffered. Lufthansa denied his claim for compensation while KLM
and Singapore Airlines, in separate letters, asked for time to investigate the incident.
In a letter Singapore Airlines denied any liability. KLM, unfortunately, did not write
back to Dr. Tiongco. Thus, Dr. Tiongco filed a Complaint for Damages and Attorney's
Fees against KLM, Turkish Airlines, Singapore Airlines, and Lufthansa. The RTC ruled
that KLM is solely liable for the damages suffered by Dr. Tiongco on account of his
lost suitcase which the appellate court agreed with. Is there a violation of contract of
carriage by KLM, making them liable for the loss of Dr. Tiongco’s suitcase?

A: YES. The nature of the business which involves the transportation of persons or goods
makes a contract of carriage imbued with public interest. It is therefore bound to observe
not just the due diligence of a good father of a family but that of "extraordinary" care in the
vigilance over the goods as required under Article 1733 of the Civil Code. In an action based
on a breach of contract of carriage, the aggrieved party does not need to prove that the
common carrier was at fault or was negligent. He or she is only required to prove the
existence of the contract and its non-performance by the carrier.  There is no dispute that
KLM and Dr. Tiongco entered into a contract of carriage. Dr. Tiongco purchased tickets
from the airline for his trip to Almaty, Kazakhstan. KLM, however, breached its contract
with Dr. Tiangco when it failed to deliver his checked-in suitcase at the designated place
and time. The suitcase contained his clothing for the conference where he was a guest
speaker, a copy of his speech, and his resource materials. Worse, Dr. Tiangco's suitcase was
never returned to him even after he arrived in Manila from Almaty. Thus, KLM’s liability for
the lost suitcase was sufficiently established as it failed to overcome the presumption of
negligence. (KLM ROYAL DUTCH AIRLINES v. DR. JOSE M. TIONGCO, G.R. No. 212136, October
4, 2021, as penned by J. Hernando)
 Jacinto v. Litonjua
G.R. No. 207675. January 20, 2021, Third Division (Hernando, J.)

DOCTRINE
The payment of respondents' attorney's fees can neither be charged against nor
collected from the Compromise Agreement. Moreover, respondents' attorney's lien cannot be
effected against the judgment of the RTC Baguio. 

Q: Ramon and Marilene Jacinto are legitimate children of the Spouses Fernando and
Bernardina Jacinto, decedents in separate probate proceedings pending before the
Regional Trial Court of Muntinlupa City. To recover the decedents' properties
fraudulently alienated to Forward Properties, Inc. (FPI) and subsequently mortgaged
by it to EPCIB as security for a loan, Ramon filed an action for annulment of sale and
mortgage with damages and injunction against the defendants before the RTC of
Baguio City. Upon the fraudulent transfer of the subject properties to FPI by virtue of
a deed of sale purportedly executed by Fernando, Transfer Certificates of Title (TCT)
in the names of the Spouses Jacinto were cancelled. The Register of Deeds of Baguio
City then issued new titles to FPI. Significantly, Fernando died in the State of Hawaii,
United States of America followed by his wife, Bernardina.

At the proceedings before the RTC, the then administratrix of the Spouses Jacinto's
estate, Marilene, intervened in Civil Case No. 5751-R. She was represented by herein
respondents, Attorneys Litonjua and Solis. 

In 2007, the RTC Baguio ruled in favor of the Jacinto siblings declaring void: (a) the
October deed of sale between Fernando Jacinto and defendant FPI; (b) the real estate
mortgage between defendants EPCIB and FPI, and (c) the subsequent sale of the
subject properties on foreclosure to EPCIB. 

Only defendant EPCIB appealed to the CA. Meanwhile, respondents filed a Notice of
Attorney's Lien before the RTC Baguio claiming attorney's fees in the amount
pursuant to their engagement contract with Marilene. 

During the pendency of the EPCIB's appeal to the CA, Ramon and EPCIB jointly moved
for the approval of a Compromise Agreement. The Compromise Agreement was
made and executed by and among Ramon, EPCIB, FPI and the Estate of the Spouses
Jacinto. 
Respondents filed an Opposition to the Joint Motion for Approval of Compromise
Agreement attaching their Notice of Attorney's Lien, and arguing that: (1) the
agreement violates law, morals, good customs, public order or public policy for
failure to include the respondents' attorney's lien; and (2) the value of RTC Baguio's
judgment of P154,085,400.00 should be the basis of the 25% contingency fee due to
them. 
The appellate court approved the Compromise Agreement but denied respondents'
claim for attorney's fees. It ruled that a charging lien requires as a condition sine qua
non the execution of a judgment for money. 
Are attorney's fees proper to be charged against the supposed amicable settlement
amount contemplated by the Compromise Agreement between Ramon and the
EPCIB?

A: NO. 

First. Civil Case No. 5751-R is an action to recover and enforce registered ownership
over real property. There is no dispute that the subject properties properly belonged to
the Estate of the Spouses Jacinto. Verily, even without delving into the finality of the
monetary awards to Ramon and Marilene, respondent lawyers have no claim to the
judgment amount in favor of EPCIB. It was erroneous for the appellate court to set the
amount of P154,085,400.00 on which to deduct respondents claimed 25% attorney's fees.
Perforce, the Notice of Attorney's Lien filed by respondents before the RTC Baguio was a
superfluity and did not relate to the judgment amount in favor of EPCIB on its cross-claim
against FPI. Article 2208 of the Civil Code provides: In the absence of stipulation,
attorney's fees and expenses of litigation, other than judicial costs, cannot be
recovered, except: x x x In all cases, the attorney's fees and expenses of litigation must
be reasonable. Clearly, respondents are precluded from propounding a claim of attorney's
fees beyond that what they prayed for, and that awarded by the RTC Baguio in Civil Case
No. 5751-R. 

Second. Respondents have no direct and preferential claim over the subject
properties or the value thereof. In settlement of estate proceedings, the ultimate
objective is the distribution and partition of the decedent's estate under Rule 90 of the
Rules of Court. In this regard, the suit filed by Ramon and Marilene for the recovery of the
subject properties was undertaken on behalf of the Spouses Jacinto's estate and in
connection with its final settlement and distribution thereof to the Jacinto heirs.  Legal
costs for the recovery of the subject properties, including attorney's fees, are expenses of
administration which respondents could have claimed against the estate of the Spouses
Jacinto or in a separate action. Prior to distribution and partition of the estate, Marilene,
even as administratrix, cannot encumber a significant portion of the estate without
providing recourse to other heirs, who are co-owners of the estate.  An administrator,
although a putative heir of the decedent, does not hold the properties of the estate in the
concept of absolute owner. The general rule is that an administrator has all the powers
necessary for administration of the estate and which powers he can exercise without leave
of court. However, as regards the sale, mortgage or other encumbrances on the estate, the
provisions of Rule 89 apply. In this case, respondents' claim of attorney's fees over the
recovered properties and the succeeding compromise agreement cannot override Ramon's
acts of administration over the decedents' estate. Respondents cannot then litigate and
assert their claim of attorney's fees, actually evade payment of proper filing fees, receive
relief beyond what they prayed for, and that already adjudged with finality by the trial
court. 

Last. The Compromise Agreement had multiple causes and consideration. As earlier
adverted, payment of respondents' attorney's fees cannot be claimed in the compromise
agreement.  Article 2028 of the Civil Code states that "a compromise is a contract whereby
the parties, by making reciprocal concessions, avoid a litigation or put an end to one
already commenced." The CA ruling is a myopic view of the various considerations for
entering into a contract and the extinguishment of obligations.  Given the relationship
between the parties, with Ramon as administrator of the Spouses Jacinto's estate and
President of FPI, the compromise agreement had both an onerous and remunerative cause.
(Jacinto v. Litonjua, G.R. No. 207675, January 20, 2021, as penned by J. Hernando)
 Integrated Credit and Corporate Services v. Cabreza
G.R. No. 203420. February 15, 2021, Third Division (Hernando, J.)

DOCTRINE
In fine, the MOA is still valid and subsisting when ICCS sold the subject property to the
spouses Gan. The lower courts annulled the Deed of Sale with the spouses Gan for differing
reasons. Considering these, and in order to lay to rest this long running dispute over the
subject property, the Court resolves to dispose this aspect of the case in an equitable manner,
thereby upholding the validity of the Deed of Sale to the spouses Gan. The Court draws
support from Orbe v. Filinvest Land, Inc., where a refund of the partial payments to the
defaulting buyer was allowed as the property has already been sold to a third party while
there was no valid rescission of the contract. 

Q:  Cabreza was the registered owner of a house and lot covered by Transfer
Certificate of Title. In 1990, he applied for the opening of a credit line with Citibank
and secured it by a real estate mortgage over the subject property. Cabreza failed to
pay prompting Citibank to institute foreclosure proceedings on the real estate
mortgage. Public auction was deferred as they agreed on restructuring Cabreza's
liability to Citibank. Cabreza again defaulted under the restructured loan, thus,
public auction was finally conducted and ICCS emerged as the highest bidder. 

Cabreza's sister, Rosalinda, negotiated with ICCS for the repurchase of the subject
property. Two days prior to the expiration of the redemption period, Cabreza sent
ICCS a letter offering the redemption of the subject property by paying the
redemption price of P10 million to be paid in installments. Subsequently, the parties
entered into a Memorandum of Agreement. The MOA stipulated that ICCS agreed to
postpone the consolidation of title to the subject property and that it allowed
Cabreza, with spouses Aguilar as guarantors, to redeem the subject property on an
agreed redemption price. Notably though, the MOA provided in evidence was not
dated. 

Pursuant to the MOA, Rosalinda issued several checks. The first three checks were
deposited, cleared, and credited to the bank account of ICCS. The fourth check,
however, was dishonored due to insufficient funds. Hence, ICCS sent Cabreza and the
spouses Aguilar a letter demanding payment of the amount of the fourth check, and
failure of which will constrain ICCS to consolidate title to the subject property.
Despite the non-payment, Rosalinda still issued the fifth check in favor of ICCS. The
fifth check was surprisingly cleared and credited to the bank account of ICCS. The
succeeding checks were no longer encashed by ICCS. 

ICCS subsequently informed Cabreza and the spouses Aguilar through a letter that it
had already consolidated its title to the subject property, thereby requiring them to
vacate the premises. ICCS then sold the subject property to the spouses Gan. The
foregoing prompted Cabreza and the spouses Aguilar to file the instant Complaint
against ICCS, spouses Gan, and Citibank. 
Cabreza and the spouses Aguilar argued that the failure to pay the amount of the
fourth check merely gave ICCS the right to rescind the MOA; but the latter lost this
right when it deposited the fifth check to its account. They added that ICCS' act of
selling the subject property to the spouses Gan constituted double sale. The spouses
Gan were purchasers in bad faith because they were previously informed of Cabreza
and spouses Aguilar's claim on the subject property. 

ICCS and Citibank filed a joint Answer. ICCS stated that the fifth check was deposited
by mere inadvertence as its check custodian was not informed of the cancellation of
the MOA. ICCS further argued that the consolidation of title over the subject property
to its name was valid, thereby it had every right to transfer ownership to the spouses
Gan. 

For their part, the spouses Gan filed a separate Answer with a cross- claim against
ICCS. They contended that they were purchasers in good faith. And on the
assumption that there was a double sale, the Gans argued that they have superior
rights as they were first to register the sale with the Registry of Deeds. 

1. Is the MOA between ICCS and Cabreza with the spouses Aguilar as guarantors is a
contract of sale?

2 Did the ICCS validly rescind the MOA?

 
A:
1. YES. The MOA, however, was not dated, making it doubtful as to when a voluntary
agreement for the extension of the redemption period was reached by the parties. 

The redemption period has already lapsed and ICCS became the absolute owner of the
subject property. As provided in jurisprudence, the purchaser of a foreclosed property in a
public auction becomes the absolute owner of the property upon expiration of the
redemption period without a valid redemption exercised by the mortgagor.

The MOA nevertheless remains to be a valid agreement that is in the form of a contract of
sale of real property in installments. Article 1458 of the Civil Code defines a contract of sale
to be a contract where "one of the contracting parties obligates himself to transfer the
ownership and to deliver a determinate thing, and the other to pay therefor a price certain
in money or its equivalent." The essential elements of a contract of sale are: (a) consent; (b)
object; and (c) price in money or its equivalent. Here, the MOA contains all the essential
elements of a contract of sale. The CA, therefore, is correct in finding that the Maceda Law is
applicable as the MOA is a contract of sale of real property in installments. 

2. NO. The requisites of the Maceda Law were not complied with. 

The Maceda Law protects buyers of real estate against onerous and oppressive conditions.
Section 4 in particular provides remedies for the defaulting buyer who has paid less than
two years of installments in a purchase of real property.
MOA was not validly rescinded but not on the same ground as held by the appellate court.
The Court finds that there was no valid rescission because the requirements of the Maceda
Law were not complied with; which requires that the seller must give a notice or a demand
for rescission by notarial act. 

In the instant case, the letter is not notarized. It is not accompanied by an acknowledgment
or even a jurat. It is a simple letter addressed to Cabreza and the spouses Aguilar, and
signed by the managing partner of ICCS. 

Further, the Maceda Law provides that actual cancellation can only be effected after 30
days from buyer's receipt of the notarial rescission. In this case, there is no showing that
this requirement was observed by ICCS as it intended that the letter dated December 23,
1994 to be the termination of the MOA. 

In fine, the MOA is still valid and subsisting when ICCS sold the subject property to the
spouses Gan. The lower courts annulled the Deed of Sale with the spouses Gan for differing
reasons. Considering these, and in order to lay to rest this long running dispute over the
subject property, the Court resolves to dispose this aspect of the case in an equitable
manner, thereby upholding the validity of the Deed of Sale to the spouses Gan. Where a
refund of the partial payments to the defaulting buyer was allowed as the property has
already been sold to a third party while there was no valid rescission of the contract.
(Integrated Credit and Corporate Services v. Cabreza, G.R. No. 203420, February 15, 2021, as
penned by J. Hernando)
 Home Guaranty Corp. v. Manlapaz
G.R. No. 202820. January 13, 2021, Third Division (Hernando, J.)

DOCTRINE
Since Manlapaz already fully paid the purchase price, she is entitled to the issuance of
the deed of absolute sale and the transfer certificate of title in her favor, even if the disputed
property has already been transferred to HGC's name due to FLPPI's default in the third
contract. By virtue of the Memorandum of Agreement and the third contract, HGC not only
acquired the rights to the assets, but also the obligations attached thereto. Since Manlapaz
paid the full price, FLPPI, as the seller when the second contract was executed, should issue
the title in her favor.

Q: In 1995, Vive Eagle Land, Inc. (VELI), Planters Development Bank, and petitioner
HGC entered into the VELI Asset Pool Formation and Trust Agreement or the
development of the lots in Eagle Crest Village in Baguio City which included the
property in dispute. HGC extended a P130 Million guaranty on the Participation
Certificates in the event the Asset Pool fails to service the interest due to the
investors or to redeem the said Certificates upon maturity. Due to the delay in the
project's development, the Asset Pool was declared in default. Consequently, the
investors, through the Bank, called on HGC's guaranty. After HGC's payment of the
guaranty, the Bank assigned and transferred the possession and ownership of the
assets of the Asset Pool to HGC through a Deed of Assignment and Conveyance.
Notably, this included the contested land. 

Prior thereto, VELI entered into a Contract to Sell with First La Paloma Properties,
Inc. (FLPPI) involving the bulk of the properties in the Village which included the
property in question. FLPPI, through its President, Marcelino Yumol entered into a
Contract to Sell with respondent Manlapaz over the disputed property.

VELI, FLPPI and HGC entered into a Memorandum of Agreement (superseding the
Contract to Sell dated January 8, 1998 and other agreements between FLPPI and
VELI) in which FLPPI assumed to pay HGC the value of the properties in the total
amount of P153,029,200.00. 

When FLPPI failed to pay, HGC informed FLPPI in a letter addressed to Yumol that it
is invoking its right to cancel their contract. Meanwhile, after failing to secure the
title to the disputed land, Manlapaz filed a Complaint for delivery of title with prayer
for damages with the Legal Services Group (LSG) of the Housing and Land Use
Regulatory Board (HLURB). 

The LSG-HLURB found that Manlapaz has a cause of action against HGC. When HGC
entered into a Memorandum of Agreement with FLPPI and VELI, and the Contract to
Sell with FLPPI, HGC became aware of the Contract to Sell between VELI and FLPPI.
The HLURB held that the intention of PD No. 957 is to protect innocent lot buyers
from scheming subdivision developers. IS, HGC is liable to execute the deed of sale
and to deliver the title to Manlapaz?

A: YES. It is clear that FLPPI sold the contested property to Manlapaz prior to the
declaration of default of the Asset Pool and before the Bank issued the Deed of Assignment
and Conveyance to HGC. The sale to Manlapaz likewise occurred prior to the execution of
the Memorandum of Agreement among VELI, FLPPI and HGC, and before the execution of
the Contract to Sell (third contract) between HGC and FLPPI pursuant to the said
memorandum. Even so, HGC cancelled the Contract to Sell with FLPPI due to the latter's
failure to fulfill its obligations. 

Since it duly entered the Memorandum of Agreement and the third contract with full
knowledge of the inclusion of the aforementioned provisions, HGC cannot feign ignorance
of the fact that VELI sold the bulk of the properties, including the disputed property, to
FLPPI. The first contract between VELI and FLPPI authorized the latter to sell to Manlapaz,
which eventually came to fruition through the second contract. Thus, after the execution of
the Memorandum of Agreement, there is already a presumption that HGC was aware of the
previous transactions made by VELI, and especially FLPPI. Withal, there is no basis to
declare that the second contract contravened the Memorandum of Agreement and the third
contract since the second contract was executed by FLPPI and Manlapaz even before the
said memorandum and the third contract came into the picture. 

According to Article 1311 of the Civil Code: 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. x x x
HGC cannot expect Manlapaz to meddle in its dealings with VELI and FLPPI as she has no
business doing so, and, as she alleged, she was not made aware of these developments in
the first place. Notably, Manlapaz remitted all her installment payments to FLPPI and
eventually paid the purchase price for the disputed property in full. This is another
indication that she did not have knowledge of the subsequent transactions involving FLPPI,
VELI and HGC, as she solely transacted with FLPPI. Indeed, "in a long line of cases, the Court
has defined a purchaser in good faith or innocent purchaser for value as one who buys
property and pays a full and fair price for it at the time of the purchase or before any notice
of some other person's claim on or interest in it." 

Since Manlapaz already fully paid the purchase price, she is entitled to the issuance of the
deed of absolute sale and the transfer certificate of title in her favor, even if the disputed
property has already been transferred to HGC's name due to FLPPI's default in the third
contract. By virtue of the Memorandum of Agreement and the third contract, HGC not only
acquired the rights to the assets, but also the obligations attached thereto. Since Manlapaz
paid the full price, FLPPI, as the seller when the second contract was executed, should issue
the title in her favor. However, given that the assets were already transferred to HGC, it is
now HGC's obligation to turn over the disputed property to Manlapaz and then issue the
corresponding deed of absolute sale and certificate of title in her name. One of the purposes
of P.D. No. 957 is to discourage and prevent unscrupulous owners, developers, agents and
sellers from reneging on their obligations and representations to the detriment of innocent
purchasers. (Home Guaranty Corp. v. Manlapaz, G.R. No. 202820, Januaru 13, 2021, as
penned by J. Hernando
 Heirs of Marquez v. Heirs of Hernandez
G.R. Nos. 236826. March 23, 2022, Second Division (Hernando, J.)

DOCTRINE
The contract of sale was consummated even before Epifania made full payment
of the purchase price, and that Herminio transferred ownership over the said property
when he allowed Epifania and respondents to continue their occupation thereon
consequent to the execution of the agreement. 

Q: In 1967, the spouses Sakay and the spouses Cruz sold the 1,417-square meter
property to Herminio. In 1985, Herminio sold to Epifania the 200-square meter
portion of the land or which her house was built for P400.00 per square meter. In
view of this sale agreement, Epifania supposedly undertook to pay Herminio the
total price of the subject property within the year of its purchase, or sometime
before the end of 1985. In the event that Epifania failed to comply with the terms, the
sale agreement would be considered or treated as a lease contract, and the amounts
paid by Epifania would be treated as rentals or advances to Herminio under a
continuing lease of the subject property. Epifania made an initial payment to
Herminio in the amount of P2,000.00 as evidenced by a provisional receipt. Epifania
then made payment by way of installment to Herminio by depositing certain
amounts of money in a joint account between them with the Rural Bank of Del Pilar,
Inc. Epifania also paid Herminio through various Metrobank Checks all of which
were in the amounts of P500.00 each. According to respondents, Epifania was able to
pay in full the agreed purchase for the subject property before her death on July 28,
1995. Sometime in March 2000, respondents executed an Extrajudicial Settlement of
the Heirs of Epifania Hernandez which stated, in part, that the proceeds of the joint
savings account of their mother and Herminio with the Rural Bank of Del Pilar, Inc.
shall be considered as full payment for the subject property. Notably, Herminio
signified his conformity to the above-quoted provision in the said extrajudicial
settlement between respondents by affixing his signature thereon.  Subsequently,
the Rural Bank of Del Pilar, Inc. ceased operations. After processing the deposit
insurance claim with the Philippine Deposit Insurance Corporation (PDIC), a check
in the amount of P61,429.87 was released by PDIC, which was received by Herminio
on June 16, 2000.  Meanwhile, on December 15, 1999and July 17, 2000, respondents
received from Marquez demand letters to vacate the premises of the subject
property. It appears that on August 4, 1994, Marquez and Herminio executed an
Extrajudicial Settlement of Estate with Waiver of Rights whereby Herminio waived
all his rights, interest and participation over the 1,417-square meter property in
favor of Marquez. Despite respondents' demands, Herminio allegedly refused to
execute a deed of absolute sale over the subject property in favor of Epifania. Thus,
respondents' complaint for specific performance against Herminio. Marquez, being
the registered owner of the 1,417-square meter property, which is covered by
Transfer Certificate of Title No. (TCT) T-81516, respondents filed an amended
complaint impleading Marquez as a defendant. In the said amended complaint,
respondents prayed that judgment be rendered directing Herminio and Marquez to
cause the execution of a deed of absolute sale for the subject property in favor of
respondents and that title over the subject property be transferred to their names.

In his answer, Herminio argued that when Epifania reneged on her obligation
complete payment of the purchase price in 1985, their initial agreement became one
of lease, and not a contract of sale. He also averred that he is not the real party-in-
interest as the title over the 1,417-square meter property was already transferred
to Marquez as early as 1996. Marquez for her part, alleged in her answer that
Epifania did not make any subsequent payments after her initial payment of
P2,000.00 to Herminio. Moreover, all amounts accepted by Herminio from Epifania
are considered as rental payments for the use and occupancy of the subject property.
Is there was a valid contract of sale between Herminio and Epifania?

A: YES. There exists a perfected contract of sale between Epifanio and Herminio based on
the following pieces of evidence:

First, the October 23, 1985 provisional receipt signed by Herminio wherein he stated that
he acknowledged receipt from Epifania Hernandez the amount of P2,000.00 as initial
payment for the subject property; second, the checks issued to Herminio as partial
payments for to subject property; third, the acknowledgment receipt dated July 16, 2000
from the PDIC stating that Herminio received from the PDIC a Landbank of the Philippines
(LBP) Check No. 97969 in the amount of P61,429.87 as payment of insured deposit from
his Rural Bank of Del Pilar, Inc. joint savings account with Epifania; and fourth, the Extra-
Judicial Settlement of the Heirs of Epifania stating that the proceeds of the joint savings
account served as full payment from Epifania of the subject property, which was conformed
to and signed by Herminio.

Notably, respondents have been consistent in raising the aforementioned factual evidence
before the RTC and the CA. They also maintained the theory that Herminio sold the subject
property to Epifania, and that their mother paid the purchase price in full before her death
in 1995. In fact, there is evidence to prove the existence of the sale agreement between
Herminio and Epifania by virtue of the Extra-Judicial Settlement of the Heirs of
Epifania Hernandez, which, as stated above, was signed by and conformed to by Herminio. 

Marquez, on the other hand, failed to question the document's authenticity, including the
contents thereof and due execution. The Court is thus inclined to, as it does, give credence
to respondents' assertion that a sale agreement was entered into by Herminio and Epifania
involving the subject property.

Taking all the pieces of evidence together, there is no doubt that both Herminio and
Epifania intended to, and did in fact, enter into a contract of sale of the subject property.
The contract of sale was consummated even before Epifania made full payment of the
purchase price, and that Herminio transferred ownership over the said property when he
allowed Epifania and respondents to continue their occupation thereon consequent to the
execution of the agreement. (Heirs of Marquez v. Heirs of Hernandez, G.R. No. 236826, March
23, 2022, as penned by J. Hernando)
 THE HEIRS OF ANSELMA GODINES v.  DEMAYMAY
G.R. No. 230573, June 28, 2021, Third Division, Hernando,J.:
DOCTRINE:
Article 1305: A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
Article 1356: Contracts shall be obligatory, in whatever form they may have been
entered into, provided all the essential requisites for their validity are present. However, when
the law requires that a contract be in some form in order that it may be valid or enforceable,
or that a contract be proved in a certain way, that requirement is absolute and indispensable.
In such cases, the right of the parties stated in the following article cannot be exercised. 
Q: Marlon, Francisco, Roque, Rosa, and Alma, all surnamed Godines, claim to be the
forced heirs of Anselma Yuson Godines who died leaving a parcel of residential lot 
However, spouses Demaymay are in possession of the land in question considering
that during her lifetime, Anselma obtained a loan from Matilde and in consideration
thereof, the spouses Demaymay were allowed to use the land for a period of 15
years. However, this agreement was not reduced into writing.  Petitioners went to
the Office of the Provincial Assessor to inquire about the status of the lease contract
between Anselma and the spouses Demaymay. Petitioners then found out that Tax
Declaration in the name of Anselma was cancelled and the Tax Declaration was
issued under the name of Matilde Demaymay by virtue of a Deed of Confirmation of
Sale supposedly executed by petitioner Alma.  Moreover, it was found out after an
actual survey that the area of 68 square meters indicated in Tax Declaration was not
the correct and true area of the land in question; the correct area thereof was 332
square meters which appears in Tax Declaration in the name of Matilde.  Petitioners
filed a Complaint for Recovery of Ownership and Possession and Declaration of the
Deed of Confirmation as Null and Void with Damages against the spouses Demaymay
before the RTC. Petitioners argued that it was impossible for Alma to execute the
Deed of Confirmation of Sale because she was in Cebu from 1969 to 1975, and that
she was only 14 years old when the alleged Deed of Confirmation of Sale was
executed as she was born in 1956. Petitioners also claimed that in obtaining the said
Deed, the spouses Demaymay acted in bad faith, fraudulently and illegally,
prejudicial to the rights and interests of the petitioners causing them to suffer
mental torture, wounded feelings and social humiliation.  Whether the heirs of
Anselma are bound by the oral contract of sale allegedly executed in favor of the
spouses Demaymay? 
A: YES. The Court has long recognized the validity of oral contracts, including oral contracts
of sale. Article 1305 of the Civil Code provides the following definition of a contract: A
contract is a meeting of minds between two persons whereby one binds himself, with respect
to the other, to give something or to render some service. Article 1356 of the Civil
Code provides: Contracts shall be obligatory, in whatever form they may have been entered
into, provided all the essential requisites for their validity are present. However, when the
law requires that a contract be in some form in order that it may be valid or enforceable, or
that a contract be proved in a certain way, that requirement is absolute and indispensable.
The Statute of Frauds is inapplicable in the present case as the verbal sale between
Anselma and the spouses Demaymay had already been partially consummated when the
former received the initial payment from the latter. In fact, the said sale was already totally
executed upon receipt of the balance. Furthermore, from the time the verbal sale happened,
the spouses Demaymay were in possession of the property for more than the 15-year
period of their purported lease contract with Anselma. Such property was eventually tax
declared under Matilde's name after Alma had executed the Deed of Confirmation of Sale in
1970 upon receipt of the full purchase price. Indeed, possession of the property and
payment of real property taxes may serve as indicators that an oral sale of a piece of land
has been performed or executed.  Considering that the oral sale between Anselma and the
spouses Demaymay is valid, petitioners, being the heirs of Anselma, are legally bound by
the said oral sale. (Heirs of Godines v. Demaymay, G.R. No. 230573, June 28, 2021, as
penned by HERNANDO,J.:)
 HEIRS OF ELISEO BAGAYGAY v. HEIRS OF ANASTACIO PACIENTE
G.R. No. 212126. August 4, 2021, Second Division, HERNANDO,J.:
DOCTRINE: Laches does not apply to void ab initio contracts. Laches cannot prevail over the
law that actions to assail a void contract are imprescriptible, being based on equity. 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.
Q: Anastacio Paciente, Sr. was granted a homestead patent over a parcel of land with
an aggregate area of 7.9315 hectares situated in Province of Cotabato. Accordingly,
OCT was issued in his name. Thereafter, 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 3 lots. On March 7, 1989, Anastacio died.  Two
years later, Eliseo likewise passed away. His wife, petitioner Anecita P. Bagaygay and
his children took possession of the subject land upon his death. 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. Respondents alleged that sometime in 1956, Eliseo, taking
advantage of the financial distress of Anastacio, was able to obtain the latter's title
and take possession of his land; that despite repeated demands by Anastacio, Eliseo
refused to return the title and possession of the land; that Eliseo caused the
cancellation of Anastacio's title through a fictitious Deed of Sale; that Anastacio
never sold the subject land; and that the said Deed of Sale was likewise void as it was
executed during the five (5)-year period of prohibition under Section 118 of
the Public Land Act.  Petitioners moved to dismiss the complaint on the grounds of
failure to state a cause of action, prescription, and laches but the same was
unavailing.  Petitioners thus filed their Answer with compulsory counterclaim
arguing that respondents have no cause of action against them as the subject land
was validly purchased by their father. Petitioners likewise raised defenses
prescriptions and laches. Should the principle of laches apply to the respondents?
A: NO. Laches does not apply to void ab initio contracts. Laches cannot prevail over the law
that actions to assail a void contract are imprescriptible, being based on equity. 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. 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. Certainly, laches cannot set
up to resist the enforcement of an imprescriptible legal right, and petitioners can validly
vindicate their inheritance despite the lapse of time. (Heirs of Bagaygay v. Heirs of
Paciente, G.R. No. 212126, August 4, 2021, as penned by HERNANDO,J.:)
 GOLDWELL PROPERTIES TAGAYTAY, INC. v. METROPOLITAN BANK AND TRUST
COMPANY
G.R. No. 209837, May 12, 2021, Third Division, Hernando,J.:
DOCTRINE:
Article 2089 of the Civil Code states that: A pledge or mortgage is indivisible, even
though the debt may be divided among the successors in interest of the debtor or of the
creditor. Therefore, the debtor's heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is not completely
satisfied. Neither can the creditor's heir who received his share of the debt return the pledge
or cancel the mortgage, to the prejudice of the other heirs who have not been paid.
Q: Petitioner Goldwell Properties Tagaytay, Inc. obtained loans from respondent
Metrobank in 2001 covered by several promissory notes and secured by real estate
mortgages and a continuing surety agreement. Petitioner Nova Northstar Realty
Corporation also obtained loans from Metrobank under PN and secured by a real
estate mortgage and continuing surety agreement.  When Nova and Goldwell (debtor
companies) experienced financial difficulties, both requested Metrobank to modify
their interest payment scheme from monthly to quarterly. According to Metrobank,
when the debtor companies made the request, a branch manager of Metrobank
immediately referred the matter to its executive committee. Roughly a month and a
half later, Metrobank's executive committee approved the request.  On the other
hand, the petitioners, in a letter alleged that it took the bank four months to reduce
the approval in writing, which resulted in the accumulation of interest and in their
failure to pay. Hence, the debtor companies requested for the restructuring of their
outstanding loans. The parties executed two Debt Settlement Agreements (DSAs)
both dated August 15, 2003. One was between Metrobank and Nova as debtor-
mortgagor, with spouses Hernandez as sureties. The other involved Metrobank and
Goldwell as borrower-mortgagor, Nova and Nova Northstar Service Apartment Hotel
Co., Inc. as third-party mortgagors, and the spouses Hernandez as sureties. In Nova's
DSA, Nova and the spouses Hernandez acknowledged that as of July 31, 2003, they
had a total outstanding obligation of P19,539,999.33 to Metrobank. Similarly, in
Goldwell's DSA, Goldwell and the spouses Hernandez acknowledged that as of July
31, 2003, they had a total outstanding obligation of P55,477,836.22 to Metrobank,
Pursuant to the DSAs, the debtor companies' total restructured balance. Thus,
Goldwell and Nova executed PNs both in favor of Metrobank. The figures represented
the principal, as well as the capitalized and recomputed outstanding interests plus
the corresponding VAT thereto.  At this point, Metrobank confirmed in a letter
addressed to an officer of Pag-IBIG Fund that the petitioners had good credit
standing and were valued customers of the bank. According to the debtor companies,
they still paid their dues until August 2004. However, Metrobank clarified that they
only paid the interest amortizations and/or penalty charges. In addition, the bank
presented commercial loans note/maintenance history inquiry Logs to show that the
petitioners' last amortization payments were made on August 2, 2004. Whether
Metrobank should be ordered to allow and make a partial release of the mortgages?
A: The petition is partly meritorious. Partial release of the collaterals cannot be
allowed. Article 2089 of the Civil Code states that: A pledge or mortgage is indivisible, even
though the debt may be divided among the successors in interest of the debtor or of the
creditor. Therefore, the debtor's heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is not
completely satisfied. Neither can the creditor's heir who received his share of the debt
return the pledge or cancel the mortgage, to the prejudice of the other heirs who have not
been paid. From these provisions is excepted the case in which, there being several things
given in mortgage or pledge, each one of these guarantees only a determinate portion of the
credit. The debtor, in this case, shall have the right to the extinguishment of the pledge or
mortgage as the portion of the debt for which each thing is specially answerable is
satisfied.  
Under this provision, the "debtor cannot ask for the release of any portion of the mortgaged
property or of one or some of the several lots mortgaged unless and until the loan thus
secured has been fully paid, notwithstanding the fact that there has been a partial
fulfillment of the obligation. Hence, it is provided that the debtor who has paid a part of the
debt cannot ask for the proportionate extinguishment of the mortgage as long as the debt is
not completely satisfied." Thus, the fact that petitioners paid for the loan value of the Pasay
properties is immaterial; the mortgage would still be in effect since the loans have not been
fully settled. Although Metrobank allowed the release of some properties from mortgage in
the past, such would not bind the bank to grant the same concession every single time,
particularly when it is evident that the petitioners were having difficulties settling their
total obligation. To do so would place the bank in a disadvantageous position because it
would have less collaterals to cover for the total accountability of the petitioners. More so
when the petitioners suddenly refused to include the Alabang properties as additional
collateral to cover the loans. Stated differently, to allow the release of the Pasay properties
without full payment of the loans would be detrimental to Metrobank's status as a secured
creditor. The bank's previous practice of releasing the collaterals without full payment of
the loan could not develop into an iron-clad rule, as a mere practice could not supersede
what the law mandates. (Goldwell Properties Tagaytay, Inc. v. Metropolitan Bank and
Trust Co., G.R. No. 209837, May 12, 2021, as penned by HERNANDO,J.:)
 PASTORA GANANCIAL v. BETTY CABUGAO
G.R. No. 203348, July 6, 2020, Second Division (Hernando, J.)

DOCTRINE
Mere formal infirmities in the notarization of the instrument will not invalidate the
mortgage.

Q: Ganancial owed Cabugao the amount of P130,000.00, agreed to be payable within

three years. To guarantee her indebtedness, Ganancial entrusted to Cabugao the TCT
No. 168803 and Tax Declaration No. 641, both covering a 397-square-meter parcel of
land located in Balangobong, Binalonan, Pangasinan, which Ganancial owns in her
name.  

Subsequently, Cabugao filed a case for foreclosure of real estate mortgage against
Ganancial. The latter, in turn, filed against the former a complaint for declaration of
the deed of mortgage as null and void, with damages. These cases were eventually
ordered consolidated. Ganancial assailed the authenticity of the Deed of Mortgage.
While she entrusted TCT No. 168803 with Cabugao, Ganancial averred that she never
executed the supposed Deed of Mortgage nor appeared for its notarization. Cabugao
allegedly required Ganancial and her children to affix their signatures on a blank
bond paper, which Cabugao filled out only later. Ganancial learned of the existence of
the Deed of Mortgage for the first time during her confrontation with Cabugao before
the barangay captain. 

The RTC ruled in favor of Cabugao. The CA denied Ganancial's appeal and ruled that
mere irregularities in the notarization do not affect the genuineness and due
execution of the document. Is the CA correct?

A: YES. An irregular notarization merely reduces the evidentiary value of a document to

that of a private document, which requires proof of its due execution and authenticity to be
admissible as evidence. The irregular notarization — or, for that matter, the lack of
notarization — does not thus necessarily affect the validity of the contract reflected in the
document. 

It bears noting that Ganancial had alleged that fraud invalidated her consent to the
mortgage. While she had worded her arguments as an attack on the existence of the
mortgage, vitiation of consent by means of fraud is a ground for the annulment of a
voidable contract, and not for the nullification of a void contract. Even if the present case is
one for annulment of contract, the fraud alleged to have vitiated Ganancial's consent to the
mortgage must still be proven by clear and convincing evidence. (Ganancial v. Cabugao, Jr.,
G.R. No. 203348, July 6, 2020, as penned by J. Hernando)
 ESTATE OF SUSANO J. RODRIGUEZ v. REPUBLIC OF THE PHILIPPINES
G.R. No. 214590, April 27, 2022, Second Division (Hernando, J.)

DOCTRINE
Article 1144 of the Civil Code provides that all actions upon a written contract shall be
brought within ten (10) years from accrual of the right of action. The estate's complaint filed
in 2007 is well within the prescriptive period, which is 10 years from the lapse of the period
within which the Republic could file a motion for revival of judgment of Civil Case No. P-86 in
2005. As correctly ruled by the CA, the cause of action accrued only from the time of the
alleged violation of the Republic, that is, its failure to comply with its obligation to not lease,
let, encumber or dispose any portion of the donated property, i.e., its failure to move for
execution or revival of judgment.

Q: Rodriguez executed a deed of conditional donation in favor of the Republic over a

parcel of land covered by TCT No. 7800 for the purpose of constructing thereon a
mental facility, subject to the condition that the donee shall construct and erect the
different concrete buildings of mental hospital within 2 years and to not lease, let,
convey, dispose, or encumber the property donated or any part or portion thereof to
any person or entity, except with the prior and express knowledge and approval of
the donor. The estate filed a complaint against the Republic for revocation of the
donation and forfeiture of improvements. It alleged that the Republic allowed a
portion of the donated property to be used for residential and commercial purposes
in violation of the condition. 

Thereafter, a judgment favorable to the Republic was rendered by the RTC that was
affirmed by the CA in its February 28, 1995 Decision. It became final and executory
on March 27, 1995. However, the Republic failed to have the Decision in Civil Case
No. P-86 executed by filing a motion for execution within five years or a motion to
revive the judgment within 10 years from the finality of Civil Case No. P-86. The
Republic alleged that the estate's cause of action had already prescribed. Is the
complaint filed by the Republic barred by prescription?

A: NO. In the case at bar, the donation involved is an onerous one since the burden imposed
upon the donee is to build a mental hospital on the donated property. Thus, the provisions
of the Civil Code on the rules on contracts shall govern. Article 1144 of the Civil Code
provides that all actions upon a written contract shall be brought within ten (10) years
from accrual of the right of action. Petitioner's complaint for revocation of the donation
therefore has not yet prescribed since the cause of action accrued only upon the alleged
failure of the Republic to comply with any or all of the conditions of the donation. The
Republic failed to have the Decision in Civil Case No. P-86 executed by filing a motion for
execution within five years or a motion to revive the judgment within 10 years from the
finality of Civil Case No. P-86. Hence, the estate's complaint filed in 2007 is well within the
prescriptive period, which is 10 years from the lapse of the period within which the
Republic could file a motion for revival of judgment of Civil Case No. P-86 in 2005. (Estate
of Rodriguez v. Republic of the Philippines,, G.R. No. 214590, April 27, 2022, as penned by J.
Hernando)
 EQUITABLE PCI BANK (formerly INSULAR BANK OF ASIA & AMERICA/PHIL.
COMMERCIAL AND INDUSTRIAL BANK) vs. MANILA ADJUSTERS & SURVEYORS, INC.,
ILOCOS SUR FEDERATION OF FARMERS COOPERATIVES, INC., ESTATE OF NG YEK
KIONG and ERNESTO COKAI,
G.R. No. 166726, November 25, 2019, Second Division (Hernando, J.)

DOCTRINE
Interestingly, the Bank was not able to completely establish if the practice of utilizing
a metered machine was already being enforced when the documents were presented,
considering that the incident happened in 1975. The Bank did not even submit an affidavit or
offer the testimony of the bank manager during trial in order to debunk MASCO's assertion
that he or she actually received the documents. In addition, the contention that the
Federation instructed the Bank not to pay MASCO suggested that the Bank, regardless of
receipt of the documents, would not pay MASCO immediately. Unfortunately, it would be
difficult to either prove or debunk the parties' allegations since more than 40 years had
already passed.

Q: Federation and Philam, represented by MASCO, executed a Deed of Sale involving

salvaged fertilizers which were stored in warehouses in San Fernando, La Union,
where the Federation would pay foor the stocks of fertilizers in installments in
accordance with an agreed schedule for the total amount of P5,159,725.00. The
Federation was also required to open an irrevocably confirmed without recourse
Letter of Credit (LOC) amounting to P1,000,000.00 which will be forfeited in favor of
MASCO in case of the Federation's non-compliance with the terms and conditions of
the contract.
Apparently, the Federation already availed of Domestic LOC dated June 23, 1975
from petitioner Equitable PCI Bank with a face value of P1,000,000.00 in favor of
MASCO. According to the Bank, the following documents were needed to claim from
the LOC: "(1) letter of default and demand for payment of the proceeds of the [LOC];
(2) the original copy of the [LOC]; (3) the original copy of the advice of [LOC]
amendment extending the expiry date; (4) the original of the draft drawn with the
Bank; and 5) the certification of default."

Incidentally, the Federation only managed to pay the first installment of P300,000.00
and part of the second installment amounting to P200,000.00 out of the total amount
of P5,159,725.00. MASCO likewise signified its resolve to demand for the proceeds of
the LOC from the Bank, by sending to the latter the required documents.

Is MASCO entitled to the proceeds of the LOC?

A: YES. The Bank was not able to overturn such finding as it merely denied receipt of the
same without corroborating evidence, except for an allegation that all documents received
by the Bank should go through a metered machine which was not found on those
documents submitted by MASCO. Contrariwise, MASCO averred that the official papers
were personally handed over to the manager of the Bank at the time, which could explain
why it did not pass through the metered machine or the usual procedure in the Bank's
reception. Interestingly, the Bank was not able to completely establish if the practice of
utilizing a metered machine was already being enforced when the documents were
presented, considering that the incident happened in 1975. The Bank did not even submit
an affidavit or offer the testimony of the bank manager during trial in order to debunk
MASCO's assertion that he or she actually received the documents. In addition, the
contention that the Federation instructed the Bank not to pay MASCO suggested that the
Bank, regardless of receipt of the documents, would not pay MASCO immediately.
Unfortunately, it would be difficult to either prove or debunk the parties' allegations since
more than 40 years had already passed. (Equitable PCI Bank v. Manila Adjusters &
Surveyors, Inc., G.R. No, 166726, November 25, 2019, as penned by J. Hernando).
AMLAYON ENDE and QUEZON ENDE, SURVIVING CHILDREN AND LEGITIMATE HEIRS
OF SPOUSES BUTAS ENDE AND DAMAGI AROG, represented by their co-heir,
Attorney-In-Fact, LETECIA ENDE-BACALSO vs. ROMAN CATHOLIC PRELATE OF THE
PRELATURE NULLIUS OF COTABATO, INC., FR. RONILO VILLAMOR and/or JOSE
RABANG, WELHILMINA * VDA. DE GENERALLA, JESUS ACOSTA, ELIZA DIAZ, and/or
JUANITO ** DIAZ and FLORENTINO KINTANAR, both represented by FELIPE
VINLUAN, SR., PRIMO BAGASMAS and JESSIE FLORES and/or CORAZON FLORES
G.R. No. 191867, December 6, 2021, Second Division (Hernando, J.)

DOCTRINE
Well-settled is the rule that "a purchaser of real estate with knowledge of any defect or
lack of title of the vendor cannot claim that he has acquired title thereto in good faith as
against the true owner of the land or interest therein." The same rule also applies to those
with knowledge of facts that should have put one on inquiry and investigation as might be
necessary to be acquainted with the defects in the title of the vendor, as in the case at bar. The
respondents' willful refusal to believe that a defect exists in the vendors' title or the possibility
of its existence will not make them innocent purchasers for value if a defect indeed occurs. A
buyer of registered land is expected to act with the diligence of a prudent man, otherwise, he
or she cannot be deemed as a purchaser in good faith.

Q: Can a buyer who has knowledge of facts relating to possible defects in the title of
the vendor be considered an innocent purchaser for value in the event that defect in
fact exists?

A: NO. Well-settled is the rule that "a purchaser of real estate with knowledge of any defect
or lack of title of the vendor cannot claim that he has acquired title thereto in good faith as
against the true owner of the land or interest therein." The same rule also applies to those
with knowledge of facts that should have put one on inquiry and investigation as might be
necessary to be acquainted with the defects in the title of the vendor, as in the case at bar.
The respondents' willful refusal to believe that a defect exists in the vendors' title or the
possibility of its existence will not make them innocent purchasers for value if a defect
indeed occurs. A buyer of registered land is expected to act with the diligence of a prudent
man, otherwise, he or she cannot be deemed as a purchaser in good faith. (Amlayon Ende
and Quezon Ende vs. Roman Catholic Prelate of the Prelature Nullius of Cotabato, Inc., et.al.,
G.R. No. 191867, December 6, 2021, as penned by J. Hernando)
 ATTY. ARISTOTLE T. DOMINGUEZ vs. BANK OF COMMERCE, as purported transferee
of Traders Royal Bank, and SPOUSES CARMELO, JR. and ELIZABETH AFRICA
G.R. No. 225207, September 29, 2021, Second Division (Hernando, J.)

DOCTRINE
The language of Section 70 of the Property Registration Decree (PD1529) is clear; it
does not limit the issues that may be resolved by the trial court in a petition for cancellation
of adverse claim.

Q: In 2007, the services of Atty. Dominguez was engaged by Carmelo Africa and his
brothers in one case to prevent the Bank of Commerce from taking possession of
their family homes in Marikina City, Antipolo City, and Quezon City, with a total
redemption price of 25 million, where Atty. Dominguez charged P250,000.00 or one
percent (1%) of the redemption price as his acceptance fee. In 2009, Carmelo and his
brothers once again sought the legal services of Atty. Dominguez in a suit involving
Hanjin Heavy Industries and Construction Co., Ltd.

Meanwhile, BOC filed a petition for cancellation of adverse claim on Transfer

Certificate of Title (TCT) Nos. 473882 and 473883. This petition was opposed by the
spouses Carmelo and Elizabeth Africa (spouses Africa) through Atty. Dominguez. In
October 2012, Atty. Dominguez filed before the trial court a Request for Admission of
the aforesaid allegations. A month later, Atty. Dominguez manifested that he was no
longer representing the spouses Africa as oppositors in the petition for cancellation
of adverse claim.

In January 2013, Atty. Dominguez filed a Motion to Fix Attorney's Fees and to
Approve Charging (Attorney's) Lien with Motion for Production of Compromise
Agreement (Motion to Fix Attorney's Fees). However, the lower courts denied his
motion, ruling that trial courts cannot adjudicate money claims in petitions for
cancellation of adverse claim and are restricted in the determination of the property
of cancelling and adverse claim.

Can trial courts rule on money judgments in a petition for cancellation of adverse
claim?

A: YES. The trial court may rule on money judgments such as attorney's fees and record
and enforce attorney's lien in a petition for cancellation of adverse claim or in a separate
action, at the option of the counsel claiming the same. To distinguish, registration or
recording of attorney's lien merely recognizes the right of the lawyer to claim from the
judgment of the suit, whereas the lien can only be enforced when the money judgment in
favor of the counsel's client becomes final and executory. It is to be noted that among the
prayers of Atty. Dominguez in his Motion to Fix Attorney's Fees is to register a statement of
his lien before the rendition of judgment. If a lien may be enforced in said petition when the
money judgment has become final, then the registration of the lien may be granted even
prior to the judgment in order to establish the lawyer's claim. The determination and the
fixing of attorney's fees may be deferred until the resolution of the case and the finality of
the money judgment in favor of the lawyer's client.

The language of Section 70 of the Property Registration Decree (PD1529) is clear; it does
not limit the issues that may be resolved by the trial court in a petition for cancellation of
adverse claim. (Atty. Aristotle T. Dominguez vs. Bank of Commerce and Spouses Africa, G.R.
No. 225207, September 29, 2021, as penned by J. Hernando)
DEVELOPMENT BANK OF THE PHILIPPINES vs. HEIRS OF JULIETA L. DANICO, namely,
ROGELIO L. DANICO, CORAZON D. EMETERIO, NENITA D. YBAÑEZ, RODRIGO L.
DANICO, DANILO L. DANICO, DANIEL L. DANICO, GLORIA ESCRUPULO, VILMA
MOSQUEDA, and NATIONAL POWER CORPORATION
G.R. No. 196476, September 28, 2020, Second Division (Hernando, J.)

DOCTRINE
The contract is the law between the parties. Thus, it should be interpreted according
to their literal meaning and should not be interpreted beyond their obvious intendment.

Payment of monetary interest is allowed only if: (1) there was an express stipulation
for the payment of interest; and (2) the agreement for the payment of interest was reduced in
writing

Q: When is monetary interest considered due?

A: Article 1956 of the Civil Code states that no interest shall be due unless it has been
expressly stipulated in writing. As can be gleaned from the foregoing provision, payment of
monetary interest is allowed only if: (1) there was an express stipulation for the payment
of interest; and (2) the agreement for the payment of interest was reduced in writing. The
concurrence of the two conditions is required for the payment of monetary interest. Thus,
We have held that collection of interest without any stipulation therefor in writing is
prohibited by law. (Development Bank of the Philippines vs. Heirs of Julieta L. Danico and
National Power Corporation, G.R. No. 196476, September 28, 2020, as penned by J.
Hernando)
 DANIEL v. MAGKAISA
G.R. No. 203815, December 7, 2020, Third Division (Hernando, J.)

DOCTRINE
A trust is the legal relationship between one person having an equitable ownership of
property and another person owning the legal title to such property, the equitable ownership
of the former entitling him to the performance of certain duties and the exercise of certain
powers by the latter. 

Notably, Efraim is not a party to this trust and he only signed the document evidencing
the trust as Nelidia's husband. Nonetheless, there is no dispute that Efraim readily admitted
the due execution and validity of the Declaration of Trust. Thus, as a signatory, he is bound by
the intent and contents of the said document and thus should honor the directives contained
therein.

Q: Respondents are the grandchildren of Consuelo Jimenez Oda (Consuelo). During

her lifetime, Consuelo owned three parcels of land in Cavite. Consuelo supposedly
sold these properties to her sister, Nelidia, as reflected in a Deed of Sale. Apparently,
Consuelo instructed Nelidia that upon her (Nelidia's) death, the properties should be
transferred to Consuelo's grandchildren, specifically herein respondents. To comply
with Consuelo's instruction, Nelidia executed a Declaration of Trust with the
conformity of Efraim (Nelidia’s husband), who likewise signed therein. In the said
document, Nelidia acknowledged that she held in trust the three parcels of land in
favor of the respondents. Eventually, Nelidia caused the issuance of new TCTs in her
name. When Nelidia died, it was only then that the respondents discovered the
existence of the Declaration of Trust. Since then, Efraim purportedly had possession
over the properties and refused to surrender the titles to the respondents. Hence,
respondents filed a Complaint for Reconveyance Plus Damages against Efraim. Are
the respondents are entitled to the reconveyance of the subject properties in their
favor?

A: YES. According to case law, "[a] trust is the legal relationship between one person having
an equitable ownership of property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the performance of certain
duties and the exercise of certain powers by the latter." In this case, Nelidia, as the trustee,
had the duty to properly manage the properties for the benefit of the beneficiaries,
respondents herein. Notably, Efraim is not a party to this trust and he only signed the
document evidencing the trust as Nelidia's husband. Nonetheless, there is no dispute that
Efraim readily admitted the due execution and validity of the Declaration of Trust. Thus, as
a signatory, he is bound by the intent and contents of the said document and thus should
honor the directives contained therein. There is no contest that since the trust is now
considered as terminated after the trustee's (Nelidia) death, the properties should be
transferred to the names of the respondents as the beneficiaries of the said trust. (Daniel v.
Magkaisa, G.R. No. 203815, December 7, 2020, as penned by J. Hernando) 
 DACQUEL v. SPOUSES SOTELO
G.R. No. 203946, August 4, 2021, Second Division (Hernando, J.)

DOCTRINE
Decisive for the proper determination of the true nature of the transaction between
the parties is their intent, shown not merely by the contract's terminology but by the totality
of the surrounding circumstances, such as the relative situations of the parties at that time;
the attitudes, acts, conduct, and declarations of the parties; the negotiations between them
leading to the deed; and generally, all pertinent facts having a tendency to fix and determine
the real nature of their design and understanding. When in doubt, courts are generally
inclined to construe a transaction purporting to be a sale as an equitable mortgage, which
involves a lesser transmission of rights and interests over the property in controversy.

Title may be nullified and real property may be reconveyed in case of equitable
mortgage. Mortgagees are bound by the prohibition against pactum commissorium as
embodied in Article 2088 of the Civil Code which provides that the creditor cannot
appropriate the things given by way of pledge or mortgage, or dispose of them. Any
stipulation to the contrary is null and void. The mortgagee's consolidation of ownership over
the mortgaged property upon the mortgagor's mere failure to pay the obligation is the
essence of pactum commissorium.

Q: In 1994, the Sotelos began the construction of a 7-door apartment on the subject
land. Due to budget constraints, the Sotelos had to borrow the amount of
P140,000.00 from Dacquel, who was Flora Sotelo's (Flora) brother. The construction
of the apartment was completed in 1997. The Sotelos claimed that the debt of
P140,000.00 was agreed to be payable in double the said amount or P280,000.00, to
be collected from the rental income of four out of the seven apartment units. There
was no agreed period within which to pay the loan and the interests. Dacquel also
required the Sotelos to cede to him the subject land as security for the loan.
Consequently, on September 1, 1994, the parties executed a Deed of Sale in
consideration of the amount of P140,000.00. The TCT in the names of the Sotelos was
thereafter cancelled and a TCT was issued, constituting Dacquel as the new
registered owner of the subject land. In March 2000, when Dacquel had collected the
full amount of P280,000.00 in rental income from the four apartment units, the
Sotelos asked for the return of the subject lot. Dacquel, however, allegedly held on to
the title and refused to yield the subject lot to the Sotelos. Did the September 1, 1994
Deed of Sale between Dacquel and Spouses Sotelo constitute an equitable mortgage?

A: YES. There are two badges of fraud against Dacquel – gross inadequacy of price in the
Deed of Sale and continued possession of the subject property by Spouses Sotelo as debtors
of Dacquel.

First, there was gross inadequacy in the purchase price. The Deed of Absolute Sale shows
that the consideration for the subject property was only Php140,000.00. While no evidence
definitely establishes this as the market value of the property for 1994, both parties agree
that the proper consideration for the same should be in the amount of at least Php 1
Million. Second, the Spouses Sotelo, as vendors of the subject property, remained in
possession of the same. Since the Deed was signed in 1994, Spouses Sotelo possessed the
property by actual possession thereof, as when they had supervised the construction of the
apartment, and subsequently, as lessors, when they entered into lease contracts with
tenants and received payment therefor. 

Consequently, the title may be nullified and real property may be reconveyed in case of
equitable mortgage. As the transaction herein was an equitable mortgage, Dacquel did not
become owner of the subject property but a mere mortgagee thereof. As such, Dacquel was
bound by the prohibition against pactum commissorium as embodied in Article 2088 of the
Civil Code which provides that the creditor cannot appropriate the things given by way of
pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void. The
mortgagee's consolidation of ownership over the mortgaged property upon the
mortgagor's mere failure to pay the obligation is the essence of pactum commissorium. The
mortgagor's default does not operate to automatically vest on the mortgagee the
ownership of the encumbered property. This Court has repeatedly declared such
arrangements as contrary to morals and public policy and thus void. The transaction is
consequently rendered void, and title to the subject property should be reverted to Spouses
Sotelo. (Dacquel v. Spouses Sotelo, G.R. No. 203946, August 4, 2021, as penned by J.
Hernando) 
 CITY OF TANAUAN v. MILLONTE
G.R. No. 219292, June 28, 2021, Third Division (Hernando, J.)

DOCTRINE
Case law provides that "forgery cannot be presumed and must be proved by clear,
positive and convincing evidence by the party alleging the same." Hence, Millonte bears the
burden to prove that the signatures of the Gonzagas were forgeries because they had died
prior to the execution of the Deed of Absolute Sale.

As long as one contracting party to the contract is proven with evidence to be dead at
the time of the execution of the contract - in this case, Ambrosio - the Deed of Absolute Sale
should be considered as definitely simulated. Thus, it produced no legal effect.

Q: The Gonzaga siblings (Marcelo, Eleuteria, Pantaleona, Ambrosio, and Lucio) are
the registered owners of the lot covered by an OCT. The mother of Millonte Gloria
Millonte, Florencia Gonzaga Arroyo, was the daughter of Lucio. Hence, Millonte is
Lucio's granddaughter and direct descendant. Millonte filed a Complaint against
petitioner City of Tanauan, praying for the declaration of nullity of the Deed of
Absolute Sale, among others. The contested property is presently occupied by the
Tanauan Water District. Supposedly, the City of Tanauan acquired the lot for
P30,000.00 pursuant to a Deed of Absolute Sale allegedly signed by the Gonzagas, as
vendors, and the then Municipality of Tanauan, represented by then Mayor Sebastian
Carandang, as vendee. In her Complaint, Millonte asserted that by virtue of the Deed
of Absolute Sale, the OCT was cancelled and a TCT was subsequently issued in favor
of the Municipality of Tanauan on July 16, 1993 (23 years after the alleged sale).
Upon examination of the Deed of Absolute Sale, however, Millonte realized that the
Gonzaga siblings were already dead when the said deed was executed, hence, they
could not have signed the document. Thus, there was no valid agreement, and the
Deed of Absolute Sale was void. City of Tanauan countered that, among others,
Millonte did not show that Lucio was already dead when the deed was executed. Is
the Deed of Absolute Sale is null and void.

A: YES. Case law provides that "forgery cannot be presumed and must be proved by clear,
positive and convincing evidence by the party alleging the same." Hence, Millonte bears the
burden to prove that the signatures of the Gonzagas were forgeries because they had died
prior to the execution of the Deed of Absolute Sale.

Millonte submitted a Certification indicating the fact of death of Ambrosio, one of the
purported vendors. Likewise, she presented Certifications stating that the death certificates
of Pantaleona, Lucio, Marcelo, and Eleuteria could not be produced or located due to the
fire during the war, which burned the records of the Local Civil Registrar of Tanauan.
Moreover, the testimonies of Rolando and Florentino, and even Millonte herself,
established that Lucio, Ambrosio, and Eleuteria passed away many years before 1970,
when the Deed of Absolute Sale was allegedly executed.
As relatives of the deceased, their information was derived from their personal experiences
or conversations with those who knew or were familiar with the Gonzaga siblings. In view
of these, Millonte's resort to secondary evidence was proper, as the original documents
(the death certificates of the other Gonzaga siblings) were unavailable because these were
destroyed by the fire. Hence, the deaths of the Gonzagas, the supposed contracting parties,
prior to the execution of the Deed of Absolute Sale were sufficiently established.

As long as one contracting party to the contract is proven with evidence to be dead at the
time of the execution of the contract - in this case, Ambrosio - the Deed of Absolute Sale
should be considered as definitely simulated. Thus, it produced no legal effect. (City of
Tanauan v. Millonte, G.R. No. 219292, June 28, 2021, as penned by J. Hernando) 
 LAURO CARDINEZ, ISIDRO CARDINEZ, JESUS CARDINEZ, VIRGIE CARDINEZ, FLORA
LACONSAY and AIDA DELA CRUZ v. SPOUSES PRUDENCIO and CRESENCIA CARDINEZ
G.R. No. 213001, August 4, 2021 (Hernando, J.)

DOCTRINE
Donation is an act of liberality whereby a person disposes gratuitously of a thing or
right in favor of another, who accepts it. An agreement between the donor and the donee is
essential like in any other contract. As such, the requisites of a valid contract under Article
1318 of the Civil Code must concur, namely: (1) consent of the contracting parties, that is
consent to donate the subject land to petitioners; (2) object certain which is the subject
matter of the contract; (3) cause of the obligation which is established.

Consent is absent in the instant case. Consent, to be valid, must have the following
requisites: (1) intelligent or with an exact notion of the matter to which it refers; (2) free; and
(3) spontaneous. The parties' intention should be clear; otherwise, the donation is rendered
void in the absence thereof or voidable if there exists a vice of consent.

The Deed of Donation is an absolute nullity hence it is subject to attack at any time. Its
defect, i.e., the absence of consent of respondents, is permanent and incurable by ratification
or prescription. In other words, the action is imprescriptible. This is in accord with Article
1410 of the Civil Code which states that an action to declare the inexistence of a void contract
does not prescribe.

Q: The late Simeona owned a parcel of land which was inherited by her sons,
Prudencio, Florentino, and Valentin. They divided it equally among themselves and a
TCT was issued in the name of the brothers as co-owners. In 1994, Valentin
requested Prudencio to donate the ten-square meter portion of his land being
encroached by the former's balcony. Prudencio agreed to Valentin's request out of
his love and trust for his brother. Valentin then asked Prudencio and his wife
Cresencia to sign a document that was written in English. Prudencio and Cresencia
were unable to understand the contents. Fourteen years later, Prudencio found out
that a survey of the land was being conducted. He was informed by the children of
Valentin that he already donated his inherited portion to them through the
document that he allegedly executed with Cresencia. 

Subsequently, Sps. Prudencio and Cresencia filed a complaint for Annulment of

Document with Recovery of Possession and Damages. They averred that Valentin
used machinations and misrepresentations to induce them to sign the document
which turned out to be a Deed of Donation. The children of Valentin on the other
hand denied the allegations of the Spouses. They averred that Prudencio purchased
the subject land sometime in 1972 and then donated it to the children of Valentin as
evidenced by the Deed of Donation. They contend that the action had already
prescribed since 10 years had lapsed from the execution of the Deed of Donation, a
written contract. Is the contention of the children of Valentin correct?
A: NO. Donation is an act of liberality whereby a person disposes gratuitously of a thing or
right in favor of another, who accepts it. An agreement between the donor and the donee is
essential like in any other contract. As such, the requisites of a valid contract under Article
1318 of the Civil Code must concur, namely: (1) consent of the contracting parties, that is
consent to donate the subject land to petitioners; (2) object certain which is the subject
matter of the contract; (3) cause of the obligation which is established.

Consent is absent in the instant case. Consent, to be valid, must have the following
requisites: (1) intelligent or with an exact notion of the matter to which it refers; (2) free;
and (3) spontaneous. The parties' intention should be clear; otherwise, the donation is
rendered void in the absence thereof or voidable if there exists a vice of consent.

In this case, the spouses did not give their consent to the donation of their land to
petitioners. Hence, no valid donation had transpired between the parties.

Further, the Deed of Donation is an absolute nullity hence it is subject to attack at any time.
Its defect, i.e., the absence of consent of respondents, is permanent and incurable by
ratification or prescription. In other words, the action is imprescriptible. This is in accord
with Article 1410 of the Civil Code which states that an action to declare the inexistence of
a void contract does not prescribe. (Cardinez v. Spouses Cardinez, G.R. No. 213001, August 4,
2021, as penned by J. Hernando)
 SOCORRO P. CABILAO v. MA. LORNA Q. TAMPAN, rep. by her Attorney-in-Fact JUDITH
TAMPAN-MONTINOLA & DANILO TAMPAN
G.R. No. 209702, March 23, 2022 (Hernando, J.)

DOCTRINE
Transfer of the certificate of title in the name of the buyer and transfer of ownership to
the buyer are two different concepts. As correctly held by the CA, between the seller and
buyer, ownership is transferred not by the issuance of the new certificate of title in the name
of the buyer but by the execution of the instrument of sale in a public document. Article 1498
of the New Civil Code provides that:

Art. 1498. When the sale is made through a public instrument, the execution thereof
shall be equivalent to the delivery of the thing which is the object of the contract, if from the
deed the contrary does not appear or cannot clearly be inferred.

Q: Lorna purchased a residential house and lot from Socorro through a Deed of Sale
in the amount of P10,000.00. Since Lorna was in the United States, her mother,
Antonieta, purchased the property on her behalf. In 1995, Lorna decided to have TCT
No. T-59 registered in her name but she discovered that the owner's duplicate got
lost while it was kept by Judith in the house. When Lorna, through Judith, filed a
petition for the issuance of a new owner's duplicate, Lelita opposed her petition on
the ground that they were in possession of the said title after buying the same from
Socorro. Thus, Lorna's petition was dismissed. After being informed of the petition
for the issuance of a new owner's copy of the title, Socorro denied having sold the
subject property to Lorna. She repurchased the subject property and the owner's
duplicate was surrendered back to her. 

Socorro filed an action for Annulment or Cancellation of Document, Quieting of

Title/Recovery of Ownership and Possession against Lorna and Danilo Tampan. She
alleged that she was the absolute and registered owner of the subject property
covered by TCT No. T-59 which was in her possession. She argues that there was
absence of consent on her part since her signature thereon was obtained through
fraud, or under the guise of a contract of loan. Lorna on the other hand presented
testimonial and documentary evidence, i.e., the notarized Deed of Sale, tax
declaration, and tax receipts and maintained that she owned the subject property.
She claimed that Socorro was in full possession of her mental faculties when they
signed the Deed of Sale before the notary public; that they have been paying the real
estate taxes on the subject property, as well as the utility bills. Is the Deed of Sale
between Lorna and Socorro valid?

A: YES. Article 1305 of New Civil Code provides that a contract is "a meeting of minds
between two persons whereby one binds himself, with respect to the other, to give
something or to render some service." The essential requisites are: (1) consent of the
contracting parties; (2) object certain which is the subject matter of the contract; and (3)
cause of the obligation which is established. In the present case, all the elements of a valid
contract are present. 

In the case at bar, the Deed of Sale validly transferred the ownership over TCT No. T-59
from Socorro to Lorna in consideration of P10,000.00. Arguing the absence of consent on
her part, Socorro claims that the Deed of Sale is null and void since her signature thereon
was obtained through fraud, or under the guise of a contract of loan. However, the evidence
on record belies her theory. 

As between the assertion of Socorro that she did not intend to sell the property, and the
testimonial and documentary evidence of respondents, i.e., the notarized Deed of Sale, tax
declaration, and tax receipts, the latter evidence prevails. Testimonial evidence is
susceptible to fabrication and there is very little room for choice between testimonial
evidence and documentary evidence. Thus, in the weighing of evidence, documentary
evidence prevails over testimonial evidence. Taking into account the totality of evidence in
the present case, is inclined to rule in favor of Lorna. (Cabilao v. Tampan, G.R. No. 209702,
March 23, 2022, as penned by J. Hernando)
 BANK OF THE PHILIPPINE ISLANDS v. CENTRAL BANK OF THE PHILIPPINES (NOW
BANGKO SENTRAL NG PILIPINAS) and CITIBANK, N.A. 
G.R. No. 197593, October 12, 2020 (Hernando, J.)

DOCTRINE
The State in the performance of its governmental functions is liable only for the
tortuous acts of its special agents. On the other hand, the State becomes liable as an ordinary
employer when performing its proprietary functions.

Q: BPI and Citibank are both members of the Clearing House established and
supervised by the Bangko Sentral ng Pilipinas (BSP). Both banks maintained demand
deposit balances with the CBP for their clearing transactions with other commercial
banks coursed through the said clearing facilities. BSP’s Bookkeeper and Janitor-
Messenger Manuel and Jesus, respectively, are among the members of an organized
criminal syndicate using a scheme known as "pilferage scheme" committed a bank
fraud.

When BPI discovered outstanding discrepancies in its inter-bank reconciliation

statements in BSP in the amount of P9 million made through the bank fraud, it
requested BSP to credit back to its demand deposit account the amount of P9 million
with interest. It argued that BSP’s function of operating clearing house facilities for
regional checks is proprietary in character as the same may be assigned to, and
exercised by private entities. BSP, on the other hand, argues that its operation of the
clearing facility was purely governmental in nature. To make BSP liable under
Article 2180 of the Civil Code, it must be established that the injurious or tortuous
act was committed while the employee was performing his or her functions.
However, Manuel and Jesus were not acting within the scope of their duties when
they committed the bank fraud. Is BSP's contention correct?

A: YES. BSP is a corporate body performing governmental functions. Operating a clearing

house facility for regional checks is within CBP's governmental functions and duties as the
central monetary authority. Undoubtedly, the function of the BSP as the central monetary
authority is a purely governmental function. It bears stressing that establishing clearing
house facilities for the member banks is a necessary incident to its primary governmental
function of administering monetary, banking and credit system of the Philippines as per
Section 107 of RA 265, as amended. Nonetheless, while the CBP performed a governmental
function in providing clearing house facilities, it is not immune from suit as its Charter, by
express provision, waived its immunity from suit. 

Anent the issue of whether BSP is liable for the torts committed by its employees Manuel
and Jesus, the test of liability depends on whether or not the employees, acting in behalf of
CBP, were performing governmental or proprietary functions. The State in the performance
of its governmental functions is liable only for the tortuous acts of its special agents. On the
other hand, the State becomes liable as an ordinary employer when performing its
proprietary functions. A special agent is defined as one who receives a definite and fixed
order or commission, foreign to the exercise of the duties of his office. 
Evidently, both Manuel and Jesus are not considered as special agents of BSP during their
commission of the fraudulent acts against BPI as they were regular employees performing
tasks pertaining to their offices, namely, bookkeeping and janitorial-messenger. Thus, BSP
cannot be held liable for any damage caused to BPI by reason of Manuel and Jesus’ unlawful
acts. (Bank of the Philippine Islands v. Central Bank of the Philippines (Now Bangko Sentral
ng Pilipinas) and Citibank, N.A., G.R. No. 197593, October 12, 2020, as penned by J.
Hernando)
 BANCO DE ORO UNIBANK, INC. (now BDO UNIBANK, INC.) v. EDGARDO C. YPIL, SR.,
CEBU SUREWAY TRADING CORPORATION, and LEOPOLDO KHO
G.R. No. 212024, October 12, 2020 (Hernando, J.)

DOCTRINE
It is settled that "compensation is a mode of extinguishing to the concurrent amount
the debts of persons who in their own right are creditors and debtors of each other. The object
of compensation is the prevention of unnecessary suits and payments thru the mutual
extinction by operation of law of concurring debts." The said mode of payment is
encapsulated in Article 1279 of the Civil Code, viz.: 

ARTICLE 1279. In order that compensation may be proper, it is necessary:

1. That each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other;
2. That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated;
3. That the two debts be due;
4. That they be liquidated and demandable;
5. That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.
Q: Lylia, representing Master Sunny Trading Corporation (MSTC), offered a proposal
to Gabriel to invest in the Prudentialife Plan — Millionaires in Business scheme.
Gabriel acquiesced and Odette was able to solicit the total amount of P300,000.00
from him. Eventually, though, Gabriel opted to get a refund of the amounts he paid
and manifested such intent. However, MSTC or Odette did not answer. Gabriel sent
several oral and written demands to Odette, but it was never answered. Gabriel then
filed a complaint before the RTC, and the RTC granted his prayer for the ex-parte
issuance of an attachment order. Afterwards, the trial court issued a Writ of
Preliminary Attachment. Sheriff Melvyn then issued a notice of Garnishment of the
amount of P300,000.00 plus lawful expenses from the accounts of MSTC and/or
Odette addressed to the Manager and/or Cashier of BDO Pasig City Branch. The bank
received the notice and informed Sheriff Melvyn that MSTC and/or Odette have no
available garnishable funds because BDO already debited from MSTC’s savings and
current accounts some amounts to offset its (MSTC’s) outstanding obligation with
BDO under a lone agreement.

BDO argued that since MSTC defaulted in its obligations to the bank as embodied in
the credit agreement and promissory note, its entire obligation immediately became
due and demandable without need of demand or notice. In other words, it asserted
that since the Bank and CSTC were creditors and debtors of each other, legal
compensation already took effect. Odette counters that BDO unilaterally withdrew
P301,838.27 from MTC’s account six days after the Notice of Garnishment was served
upon it and that it (Bank) failed to provide the exact date when CSTC allegedly
defaulted on its obligation to pay the Bank. Did legal compensation already took
effect?

A: NO.  Legal compensation did not take place ipso jure as between the Bank and CSTC
when CSTC defaulted in its obligations to the Bank. It is settled that "compensation is a
mode of extinguishing to the concurrent amount the debts of persons who in their own
right are creditors and debtors of each other. The object of compensation is the prevention
of unnecessary suits and payments thru the mutual extinction by operation of law of
concurring debts." The said mode of payment is encapsulated in Article 1279 of the Civil
Code, viz.: 
ARTICLE 1279. In order that compensation may be proper, it is necessary:
1. That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other;
2. That both debts consist in a sum of money, or if the things due are consumable,
they be of the same kind, and also of the same quality if the latter has been
stated;
3. That the two debts be due;
4. That they be liquidated and demandable;
5. That over neither of them there be any retention or controversy, commenced by
third persons and communicated in due time to the debtor.
In relation to this, Article 1290 of the Civil Code states that "when all the requisites
mentioned in Article 1279 are present, compensation takes effect by operation of law, and
extinguishes both debts to the concurrent amount, even though the creditors and debtors
are not aware of the compensation." Relevantly, this is the Bank's main contention.

In this case, BDO failed to specify the date when MSTC actually defaulted in its obligation or
particularly pinpoint which installment it failed to pay. The BDO merely revealed that
MSTC owed it the amount of P3,823,000.00 without presenting a detailed computation or
proof thereof except for the Promissory Note. BDO only stated that CSTC has not been
paying its monthly obligations which is not particular enough, even if the Promissory Note
indicates that MSTC's obligation will immediately become due after default and without
need of notice. (Banco De Oro Unibank, Inc. (now BDO UNIBANK, INC.) v. Edgardo C. Ypil, Sr.,
Cebu Sureway Trading Corporation, and Leopoldo Kho, G.R. No. 212024, October 12, 2020, as
penned by J. Hernando)
 DIOSCORO POLIÑO BACALA, Substitute Judicial Guardian of Incompetent AQUILINO O.
POLIÑO v. HEIRS OF SPOUSES JUAN POLIÑO AND CORAZON ROM, namely: RUBEN R.
POLIÑ O, BRENDO R. POLIÑ O, CARLITO R. POLIÑ O, and BANDY R. POLIÑ O, represented by
RUBEN R. POLIÑO
G.R. No. 200608, February 10, 2021 (Hernando, J.)

DOCTRINE
The "complementary contracts construed together" doctrine incarnates the
spirit of Art. 1374 of the Civil Code, which states that: 

Art. 1374. The various stipulations of a contract shall be interpreted

together, attributing to the doubtful ones that sense which may result from
all of them taken jointly. 

On the other hand, equity is applied as a means of resolving justiciable cases only in
the absence of statutory law or rules of procedure. Such class of jurisdiction is rooted in
Article 9 of the Civil Code, which expressly mandates the courts to make a ruling despite
the "silence, obscurity or insufficiency of the laws" to "fill the open spaces in the law." 
Q: Gabriel and Maria were the registered owners of a parcel of land with coconuts.
They died intestate and were survived by their sons and their sole heir, Danerie and
Johnmar, who were mentally incapacitated. In 1992, Gabriel and Juan allegedly
executed a Deed of Sale and an Agreement ceding unto Juan the subject property for
a consideration of P15,000.00, while the Agreement stipulated that during Gabriel's
lifetime, Juan shall allow Gabriel to enjoy the usufruct of the subject property, and
that upon Gabriel's death, Juan shall continue to support and provide financial
assistance to Danerie and Johnmar. The Agreement further provided that breach of
its terms shall render the Deed of Sale non-effective and nugatory. 

Analiza was granted guardianship over Danerie and Johnmar. She filed a complaint
against Juan seeking for the nullification of the Deed of Sale and Agreement. She
posits that both documents are fictitious and without consideration. She claimed that
it was incongruous for Gabriel to sell the subject property for P15,000.00 when it
had a market value of at least P150,000.00 at the time of sale. Juan maintained that
Gabriel sold the subject property to him; and that he has in his possession the title to
the subject property but it has yet to be transferred to his name. Does gross
inadequacy of the price nullify the contract between Gabriel and Juan?

A: NO. Gross inadequacy of the price did not invalidate the subject contract. First, a
contract enjoys the presumption that it is supported by an existing and lawful cause or
consideration. This presumption is disputable and may be overthrown by preponderance
of evidence to the contrary. Preponderance of evidence is the weight, credit, and value of
the aggregate evidence on either side and is usually considered to be synonymous with the
term "greater weight of evidence" or "greater weight of credible evidence." Second,
notarized documents, being public in nature, require no further proof of their authenticity
and due execution. They are entitled to full faith and credit on its face and are prima facie
evidence of the facts stated therein. To overturn this presumption of regularity, clear and
convincing proof is required.

The Deed of Sale states in plain terms that the subject property is being sold for
P15,000.00. Gabriel had expressly acknowledged in the Deed of Sale his receipt of the said
amount as consideration of the contract. No further issue on the regularity of the
notarization was raised on appeal. To debunk the existence of consideration in the Deed of
Sale, there must be more than mere preponderant evidence showing that Gabriel did not
truly execute the disputed document or that the parties had not truly intended a contract of
sale.

However, whether preponderant, clear, or convincing, Analiza never submitted any

controverting evidence. She only stated that Gabriel had told her that the sale was
simulated and that no consideration was paid. Aside from what Analzia stated, nothing else
was presented in support of the claim that the amount of P15,000.00 was fabricated or
actually unpaid. Settled is the rule that bare allegations have no probative value.  (Dioscoro
Poliño Bacala, Substitute Judicial Guardian of Incompetent Aquilino O. Poliño v. Heirs of
Spouses Juan Poliño and Corazon Rom, namely: Ruben R. Poliño, Brendo R. Poliño, Carlito
R. Poliño, And Bandy R. Poliño, represented by Ruben R. Poliño, G.R. No. 200608, February
10, 2021, as penned by J. Hernando)
 EDUARDO ATIENZA v. GOLDEN RAM ENGINEERING SUPPLIES & EQUIPMENT
CORPORATION AND BARTOLOME TORRES, RESPONDENTS
G.R. No. 205405, June 28, 2021, Third Division, (HERNANDO, J.)
 
DOCTRINE
Solidary liability cannot be lightly inferred. "There is solidary liability when the
obligation expressly so states, when the law so provides, or when the nature of the obligation
so requires. Settled is the rule that a director or officer shall only be personally liable for the
obligations of the corporation, if the following conditions concur: (1) the complainant alleged
in the complaint that the director or officer assented to patently unlawful acts of the
corporation, or that the officer was guilty of gross negligence or bad faith; and (2) the
complainant clearly and convincingly proved such unlawful acts, negligence or bad faith."

Q: Atienza was engaged in the business of operating MV Ace I, a passenger vessel

plying the Batangas-Mindoro route. Respondent Golden Ram Engineering Supplies
and Equipment Corporation (GRESEC) is a dealer and distributor of engines and
heavy equipment. Its President and Manager is respondent Bartolome Torres.

In 1993, Atienza bought the two vessel engines from GRESEC and as proof of his
purchase, he was issued a Proforma Invoice which stated therein the warranty
period, for a period of 12 months, reckoned from date of commissioning, but not
longer than 18 months after notification of readiness for delivery ex-warehouse
Manila. The warranty period is farther limited to 2000 hours of operation. Atienza
forthwith paid the amount of P2.5 Million Pesos, after which the two engines were
delivered and commissioned by GRESEC sometime in March 1994.

On 26 September 1994, the engine on the right side of MV Ace I suffered a major
dysfunction, the diagnosis of which revealed that the connecting rod had split
resulting in engine stuck up. Atienza immediately reported the incident to GRESEC
which sent a certain Engineer Torres, its Sales and Service Engineer, to inspect and
determine the extent of the damage. Engr. Torres confirmed that the "defect was
inherent being attributable to factory defect". This finding was reported to MAN
B&W Diesel, Singapore Pte. Ltd. (MAN Diesel), the foreign supplier. In turn, the latter
promised that the engine which suffered the malfunction would be replaced in
accordance with the warranty.

Thereafter, Atienza made pleas for the replacement of the engine but his entreaties
fell on deaf ears. Inevitably, he suffered losses for failure to operate since 26
September 1994. 

Was respondents' denial of Atienza's warranty claim for the defective vessel engines
was done in bad faith as to hold Bartolome solidarity liable with GRESEC?

A: YES. Solidary liability cannot be lightly inferred. "There is solidary liability when the
obligation expressly so states, when the law so provides, or when the nature of the
obligation so requires. Settled is the rule that a director or officer shall only be personally
liable for the obligations of the corporation, if the following conditions concur: (1) the
complainant alleged in the complaint that the director or officer assented to patently
unlawful acts of the corporation, or that the officer was guilty of gross negligence or bad
faith; and (2) the complainant clearly and convincingly proved such unlawful acts,
negligence or bad faith."
In Tramat Mercantile v. Court of Appeals, the Court ruled that personal liability of a
corporate director, trustee or officer along (although not necessarily) with the corporation
may so validly attach, as a rule, only when:
1. He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or
gross negligence in directing its affairs, or (c) for conflict of interest, resulting in
damages to the corporation, its stockholders or other persons;
2. He consents to the issuance of watered stocks or who, having knowledge thereof,
does not forthwith file with the corporate secretary his written objection thereto;
3. He agrees to hold himself personally and solidarity liable with the corporation; or
4. He is made, by a specific provision of law, to personally answer for his corporate
action.
Consistent with the foregoing principles, the Supreme Court disagreed with the CA's
pronouncement absolving respondent Bartolome from liability to the damages incurred by
Atienza. Atienza established sufficient and specific evidence to show that Bartolome had
acted in bad faith or gross negligence in the sale of the defective vessel engine and the
delivery and installation of demo units instead of a new engine which Atienza paid for.
(Atienza v. Golden Ram, G.R. No. 205405, June 28, 2021 as penned by J. Hernando)
 
 ASSET POOL A (SPV-AMC), INC. v. SPOUSES BUENAFRIDO AND FELISA BERRIS
G.R. No. 203194, April 26, 2021, Third Division, (HERNANDO, J.)

DOCTRINE
  In sum, petitioner may institute two alternative remedies against the spouses Berris:
either a personal action for the collection of the promissory notes issued under the
Discounting Line or a real action to foreclose the mortgage, but not both, simultaneously or
successively. Although we recognize the right of the mortgage creditor to recover the
deficiency when the mortgaged properties are not enough to satisfy the entire obligation, the
action is only instituted after the termination of the foreclosure proceedings and not during
its pendency, so as not to violate the prohibition against splitting of cause of action.
 
Q: In 1995, FEBTC and B. Berris Merchandising (BBM), a sole proprietorship owned
by Buenafrido, entered into a Loan Agreement for the total amount of P5,000,000.00.
To secure the loan, the spouses Berris executed a real estate mortgage on two
parcels of land, a chattel mortgage on their rice mill, and a Comprehensive Surety
Agreement.
FEBTC also granted BBM a Discounting Line facility in the total amount of
P15,000,000.00. 
Meanwhile, the spouses Berris, for and in behalf of BBM, executed a Promissory Note
(PN) in the total amount of P5,000,000.00 due on April 16, 2001. Thereafter, the
spouses Berris, for and in behalf of BBM, executed the several PNs. All PNs bore
similar provisions which entitled FEBTC to 25% of the amount due by way of
attorney's fees in case of default. 
The spouses Berris failed to pay their obligations under the PNs. Hence, on August 5,
1998, FEBTC sent a letter demanding payment of the total amount of P21,055,555.54
representing both their Discounting Line and Loan Agreement availments, exclusive
of interest, penalties another charges. 
On August 19, 1999, the bank filed a Petition for Extra-Judicial Foreclosure of Real
Estate Mortgage under Act No. 3135, as amended, before the RTC.
Thereafter, on August 30, 1999, FEBTC filed its complaint for the collection of the
amounts due. 
Did the appellate court gravely err in ruling that a previous filing of extrajudicial
foreclosure of real estate mortgage barred a personal action for the collection of debt
incurred by the spouses Berris?

A: NO. The parties executed two loan agreements, namely: (a) Loan Agreement dated
November 15, 1995 with the total amount of P5,000,000.00; and (b) Discounting Line
which was renewed on July 3, 1997 and on February 16, 1998 with a total amount of
P15,000,000.00 and P18,000,000.00, respectively, and valid until July 31, 1998. These two
loan facilities granted to the spouses Berris are separate and distinct from each other.

Verily, the fact that both the Loan Agreement and the Discounting Line required the
spouses Berris to execute PNs in favor of the bank for each availment or drawing, does not
necessarily prove that they are one and the same obligation. In the absence of evidence to
the contrary, the Term Loan Agreement should be regarded as a separate and distinct
obligation of the spouses Berris although the same was also covered by a promissory note
upon each drawing.
Being separate and distinct contracts, FEBTC, as the mortgage creditor, may institute either
a personal action for the collection of debt, or a real action to foreclose the mortgage under
the Loan Agreement. Obviously, FEBTC chose to elect a personal action to recover the
amount due on PN No. 2-104-961106/TLS by filing the herein complaint as it is not barred
by nor violative of the rule on prohibition against splitting of cause of action.
Furthermore, the real estate mortgage is just an accessory contract, thus, it does not control
the principal agreements, i.e. the Loan Agreement and the Discounting Line, as it is only
dependent upon the latter obligations. Hence, even if the real estate mortgage secured all of
the obligations of the spouses Berris to the bank, whether existing or future indebtedness,
it will not modify nor change the fact that they entered into two separate and distinct
obligations which give rise to separate actions regardless of whether they become due and
demandable at the same time or not.  (Asset Poil v. Berris, G.R. No. 203194, April 26,
2021 as penned by J. Hernando)
 ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION v. MERO STRUCTURES,
INC.
G.R. No. 221147, September 29, 2021, Second Division, (HERNANDO J.)

DOCTRINE
Novation extinguishes an obligation between two parties when there is a substitution
of objects or debtors or when there is subrogation of the creditor. It occurs only when the new
contract declares so "in unequivocal terms" or that "the old and the new obligations be on
every point incompatible with each other.”
 
Q: In line with the 100th anniversary celebration of the Philippine independence
from Spanish colonial rule in 1998, First Centennial Clark Corporation (FCCC) was
created for the purpose of designing, constructing, operating, and managing the
Philippines' National Centennial Exposition to be held in the Clark Special Economic
Zone (CSEZ) located in Clark Field, Pampanga.

On March 16, 1998, FCCC entered into a Construction Agreement with petitioner

Asian Construction and Development Corporation (Asiakonstrukt). On even date,
respondent MERO Structures, Inc. (MERO), an American corporation, submitted a
Materials Only Proposal to for the supply of materials in constructing a special
Philippine flag structure in the Expo Filipino. Asiakonstrukt accepted the Materials
Only Proposal. 

On August 10, 1998, Asiakonstrukt sought payment for the spaceframe, which had
been delivered to the intended site, and the 50% downpayment for its installation
and lighting, both due since June 17, 1998.  MERO sought payment of the spaceframe
from Asiakonstrukt.  MERO requested that it be paid directly by the FCCC and that
Asiakonstrukt notify FCCC that the work is complete and satisfactory and that full
payment should be made.  

On October 13, 1999, MERO requested that it be paid directly by the FCCC and that
Asiakonstruk't notify FCCC that the work is complete and satisfactory and that full
payment should be made. By way of a  response, Asiakonstrukt stated that it
interposed no objection to MERO's request to collect payment directly from the FCCC.
Did the court err when it failed and refused to consider the letter of MERO dated
October 13, 1999 and the response letter of Asiakonstrukt dated November 8, 1999
as a new written contract?
 
A: NO. There was no new contract borne of the letters exchanged by MERO and
Asiakonstrukt. At most, the said exchanges merely show Asiakonstrukt's approval of
MERO's extraordinary efforts in helping the former fulfill its obligation to the latter. In any
event, Asiakonstrukt's approval of MERO's request to collect directly from the FCCC did not
extinguish Asiakonstrukt's obligation to pay MERO.
 
There are two (2) relevant contracts in this case, namely: 1) The Construction
Agreement between the FCCC and Asiakonstrukt dated March 16, 1998, and 2) MERO's
Materials Only Proposal dated March 16, 1998 that was accepted by Asiakonstrukt on
March 17, 1998. While Asiakonstrukt is a common party in these contracts, MERO and
FCCC have no contractual relationship with each other.
 
Novation extinguishes an obligation between two parties when there is a substitution of
objects or debtors or when there is subrogation of the creditor. It occurs only when the
new contract declares so "in unequivocal terms" or that "the old and the new obligations be
on every point incompatible with each other.”
 
Novation may also be express or implied. It is express when the new obligation declares in
unequivocal terms that the old obligation is extinguished. It is implied when the new
obligation is incompatible with the old one on every point. The test of incompatibility is
whether the two obligations can stand together, each one with its own independent
existence.
 
Applying the foregoing to the instant case, it is evident that there was neither an express
nor implied novation through the letters exchanged between MERO and Asiakonstrukt.
 
First, there is nothing in the letters that unequivocally states that the obligation of
Asiakonstrukt to pay MERO would be extinguished. Second, there is also no mention that
MERO would substitute or subrogate Asiakonstrukt as FCCC's payee/obligee as the letters
merely show that MERO was allowed by Asiakonstrukt to try collecting from FCCC directly.
Lastly, using the test of incompatibility, Asiakonstrukt's non-objection to MERO's request
to collect from FCCC directly is not incompatible with the obligation of Asiakonstrukt to pay
MERO. It merely provided an alternative mode in collecting payment to MERO, which is not
even valid as far as FCCC is concerned since the latter did not even consent to the same, not
to mention there is no existing contractual relationship between MERO and FCCC. (Asia
Construction v. MERO, G.R. No. 221147, September 29, 2021 as penned by J.
Hernando)
 
 
 MARIA V. AROMIN v. HEIRS OF SPOUSES WILFREDO AND LEONILA SOMIS,
G.R. No. 204447, May 03, 2021, Third Division, (HERNANDO, J.)
DOCTRINE 
Article 1305 of the Civil Code provides that a contract is a meeting of the minds
between two persons, whereby one is bound to give something or to render some service to
the other. A valid contract requires the concurrence of the following essential elements
pursuant to Article 1318 of the same Code:

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established

The Compromise Agreement was clear that the contracting parties mutually agreed to
transfer to each other the properties indicated therein. Even if it was Maria's counsel who
prepared the written instrument, she or her representative was expected to exercise due
diligence in reviewing the entries therein before signing the instrument. Moreover, if indeed
there was a mistake on which property should be transferred to the spouses Somis, Maria
should have availed of her remedies immediately.

Q: Maria Aromin alleged that she and her deceased husband Rufmo owned three (3)
parcels of land. Maria instructed her son to pay the realty tax for the foregoing lots.
Briccio then discovered that Lots A and C were sold to the spouses Wilfredo and
Leonila (spouses Somis), through a Deed of Sale with the Right to Repurchase dated
May 20, 1971, allegedly signed by Maria and Rufino.

On June 18, 2007, Maria filed a Complaint for Annulment of Documents with
Damages, alleging that she did not sign the Deed of Sale transferring Lot C to the
spouses Somis, hence it is void. Subsequently, on November 28, 2007, the parties
entered into a Compromise Agreement. The Trial Court approved.

On July 8, 2008, Maria filed a motion to set aside the Order granting the issuance of
the writ of execution. She claimed that she intended to give Lot C (and not Lot B) to
the spouses Somis. She asserted that the description or PIN of the property given to
the spouses Somis under the Compromise Agreement was erroneous. 

The RTC granted the Motion. However, the Court of Appeals, upon Petition for
Certiorari filed by Spouses Somis, reinstated the Compromise Agreement. 

In 2010, Maria filed a Motion to Annul the Compromise Agreement. However, in its
June 8, 2010 Order, the trial court denied the Motion for being moot and academic.
The trial court pointed out that the Compromise Agreement has become final and
executory in light of the January 22, 2010 Decision of the appellate court in CA. 
Is the Compromise Agreement between the parties is valid and binding?
A: YES. When a decision becomes final and executory, it becomes valid and binding upon
the parties and their successors in interest. Such decision or order can no longer be
disturbed or reopened no matter how erroneous it may have been.

It is beyond dispute that the Compromise Agreement was approved by the trial court in its
January 17, 2008 Decision which decision became final. Consequently, a Writ of Execution
was issued on June 27, 2008. The final and executory nature of the Compromise Agreement
was likewise reiterated in the appellate court's January 22, 2010 Decision in CA-G.R. SP No.
109076. Thus, in view of the finality of the trial court's January 17, 2008 Decision which
upheld the Compromise Agreement, the latter is binding between and among the parties.
(Aromin v. Spouses Somis, G.R. No. 204447, May 03, 2021 as penned by J. Hernando)
 
 ARAKOR CONSTRUCTION AND DEVELOPMENT CORPORATION v. TERESITA G. STA.
MARIA, ET AL.
G.R. No. 215006, January 11, 2021, Third Division, (HERNANDO, J.)
 
DOCTRINE "If any one party to a supposed contract was already dead at the time of Its
execution, such contract is undoubtedly simulated and false, and, therefore, null and void by
reason of its having been made after the death of the party who appears as one of the
contracting parties therein." Indeed, "no one can give what one does not have; nemo dat
quod non habet. One can sell only what one owns or is authorized to sell, and the buyer can
acquire no more right than what the seller can transfer legally." Considering that Felicidad's
signatures were forged, the Deeds of Absolute Sale are null and void and convey no title to
Arakor. Thus, the TCTs which were issued in favor of Arakor "by virtue of the said spurious
and forged document are also null and void." In fact, "all the transactions subsequent to the
alleged sale are likewise void."
 
Q: The Spouses Fernando Gaddi, Sr. (Fernando Sr.) and Felicidad Nicdao Gaddi
(Felicidad) owned the five contested parcels of land. Felicidad died intestate and was
survived by Fernando Sr. and her eight children, herein respondents. Felicidad's
heirs inventoried her properties but they did not initiate its partition; thus, the
parcels of land remained in the name of the Spouses Gaddi. In 1996, Fernando Sr.
passed away, followed by Efren, on of the heirs. After the deaths of Fernando, Sr. and
Efren, Atty. Greli Legaspi (Atty. Legaspi), the president of petitioner Arakor
Construction and Development Corporation (Arakor), informed the Gaddis that their
parents had already sold the contested five parcels of land to Arakor for P400,000.00
as evidenced by two undated Deeds of Absolute Sale and that the titles to the
properties have already been transferred to Arakor's name. Thus, the Gaddis filed a
Complaint for Annulment of Deeds of Absolute Sale and Transfer Certificates of Title
against Arakor. They alleged that the two contracts of sale were forged and the
conveyance of the properties was fraudulent since Felicidad could not have signed
the documents and given her consent thereon since she has been dead for seven
years before the alleged execution of the said contracts. Are the Deeds of Absolute
Sale null and void for being forged and fictitious?

A: YES. As regards the validity of the Deeds of Absolute Sale, the Court noted that Arakor
acknowledged Gaddis' allegation that Felicidad's signatures in the Deeds of Absolute Sale
were forged since her death occurred prior to the execution of the said contracts. In fact,
Arakor alleged that Fernando Sr. and Efren also sold a property to Matulac in spite of
Felicidad's death, stressing that It was also a victim of fraud. Case law provides that
"forgery cannot be presumed and must be proved by clear, positive and convincing
evidence by the party alleging the same." In this case, the Gaddis satisfactorily discharged
this burden by submitting in evidence the Certificate of Death of Felicidad to prove that her
demise preceded the execution of the contracts of sale. This is in addition to Arakor's
admission that Felicidad's death occurred before the sale transpired. Obviously, she could
not have signed any document which leads to no other conclusion than that her signatures
in the deeds were forged. (Arakor v. Sta. Maria, G.R. No. 215006, January 11, 2021
penned by J. Hernando)
 ALLIED BANKING CORPORATION AND GUILLERMO DIMOG v. SPOUSES MARIO
ANTONIO MACAM & ROSETRINIDAD MACAM, SPOUSES WILLAR FELIX AND MARIBEL
CAÑA AND SPOUSES MELCHOR AND HELEN GARCIA
G.R. No. 200635, February 1, 2021, Third Division (Hernando, J.)

DOCTRINE
Allied Bank is expected to act with extraordinary diligence required of banks. We
cannot overemphasize that the highest degree of diligence required of banks likewise
contemplates such diligence in the selection and supervision of its employees. The very nature
of their work which involves handling millions of pesos in daily transactions requires a degree
of responsibility, care and trustworthiness that is far greater than those expected from
ordinary clerks and employees. The bank must not only exercise "high standards of integrity
and performance," it must also insure that its employees do likewise because this is the only
way to insure that the bank will comply with its fiduciary duty.

The authority of a corporate officer or agent in dealing with third persons may be
actual or apparent. The apparent authority to act for and to bind a corporation may be
presumed from acts of recognition in other instances, wherein the power was exercised
without any objection from its board or shareholders. Caña's act of approving the P46 Million
fund transfer and the subsequent transfers to different accounts in various branches of Allied
Bank leading to the P1,590,000.00 transfer to the account of the Spouses Mario Macam all
appear to have been clothed with authority. Indeed, the subsequent transfers (of funds) were
approved by several Branch Heads.

Q: Caña, the head at the Allied Bank-Alabang Las Piñas Branch (AB-ALP), informed
bank teller Melissa Berras to anticipate a deposit by Helen in the amount of P46
Million. Caña likewise instructed the Branch Operating Officer, Milani Mamalayan, to
arrange for two armored vans to pick up the P46 Million deposit. 

Mamalayan informed Caña of the arrival of the armored vans. Thereupon, Caña gave
Berras five filled out and approved fund transfer receipts in the total amount of P46
Million. The fund transfer receipts bore only Caña's signature and ostensibly
indicated Helen's deposit account as the source of the P46 Million fund transfer. The
amounts were credited to the five deposit accounts, including Valeria's, in the
amount of P10 Million. 

Valerio withdrew P1,722,500.00 from her deposit account at AB-Pasay. Via

electronic fund transfer, Valerio deposited P1,590,000.00 to the account of Mario's
brother Manuel and the latter's wife and Sheila Macam. On that same date, the
Spouses Mario Macam opened Savings Account No. 1850-06565-2 at Allied Bank-
Pasong Tamo (AB-PT) Branch.

Later, Mamalayan received an SMS from Caña that the P46 Million deposit had been
cancelled. 
Caña instructed Mamalayan to book the amount of P20.3 Million under "Accounts
Receivable" corresponding to the unrecovered amount from the P46 Million which
had been earlier transferred to various deposit accounts. On February 19, 2003,
Angela Barcelona, Region Head, Retail Banking Group for Allied Bank's South Metro
Manila Branches, ordered the debit of the remaining P1.1 Million from the account of
the Spouses Mario Macam which resulted in the closure thereof.
 
The Spouses Mario Macam learned of the closure after they were unable to withdraw
from their account. Hence, the Spouses Mario Macam filed the complaint for
Damages against the bank and the ABPT Branch Head, Dimog. 

Is Allied Bank liable for unilaterally debiting and closing the deposit account of the
Sps. Mario Macam’s account?

A: YES. Its liability under the deposit agreement with the Spouses Mario Macam is primary
and not vicarious.

Allied Bank is expected to act with extraordinary diligence required of banks. The highest
degree of diligence required of banks likewise contemplates such diligence in the selection
and supervision of its employees. The very nature of their work which involves handling
millions of pesos in daily transactions requires a degree of responsibility, care and
trustworthiness that is far greater than those expected from ordinary clerks and
employees. The bank must not only exercise "high standards of integrity and performance,"
it must also insure that its employees do likewise because this is the only way to insure that
the bank will comply with its fiduciary duty.
 
Cañ a's act of approving the P46 Million fund transfer and the subsequent transfers to
different accounts in various branches of Allied Bank leading to the P1,590,000.00 transfer
to the account of the Spouses Mario Macam all appear to have been clothed with authority.
Indeed, the subsequent transfers (of funds) were approved by several Branch Heads.  
(Allied Banking Corp. v. Spouses Macam, G.R. No. 200635, February 01, 2021, as penned by J.
Hernando)
 AGRO FOOD AND PROCESSING CORP. v. VITARICH CORPORATION
G.R. No. 217454, January 11, 2021, Third Division (Hernando, J.)

DOCTRINE
It bears stressing that the existence of apparent authority may be ascertained not only
through the "general manner in which the corporation holds out an officer or agent as having
the apparent authority to act in general," but also through the corporation's "acquiescence in
his acts of a particular nature, with actual or constructive knowledge thereof, whether within
or beyond the scope of his ordinary powers."

Q: Agro and Vitarich simultaneously executed two agreements: first, a Memorandum

of Agreement (MOA) under which Vitarich offered to buy Agro's chicken dressing
plant located in Bulacan; and second, a Toll Agreement under which Agro agreed to
dress the chickens supplied by Vitarich for a toll fee.
 
Pursuant to the MOA, Vitarich paid P20 million as deposit to Agro. Vitarich formally
made its offer to purchase, but Agro did not accept the offer. Thus, Agro needed to
return the P20 million deposit.
 
The parties agreed that the manner of returning the P20 million deposit shall be
through deductions of fifteen percent (15%) of the gross receipts on the weekly
billings of the toll fees.

Vitarich filed a complaint for sum of money with damages against Agro alleging that
Agro was liable for the amount of P4,770,916.82 plus interest, representing the
balance from the P20 million deposit. This was based not only on the toll fees
reflected on the original Toll Agreement, but also on the verbal amendments to the
toll fees made and implemented by the parties thrice from 1996 to 1997. 

In its Petition, Agro argues that the appellate court erroneously applied the doctrine
of apparent authority, which is determined based on the acts of the principal and not
by the acts of the agent. Since the CA relied on the weekly billings prepared by del
Castillo and his testimony that he was authorized to implement the amendments,
and not on Agro's conduct per se, it erred in applying the doctrine of apparent
authority.
 
Vitarich counters that the CA correctly applied the doctrine of apparent authority as
shown by Agro's conduct of preparing over eighty-nine (89) billings reflecting the
amendments, never contesting the payment of such billings, and never questioning
the authority of del Castillo to agree to the amendments in their two (2) years of
doing business together. According to Vitarich, the totality of Agro's acts and conduct
belie Agro's claim of lack of authority on the part of del Castillo. Is the CA correct in
applying the doctrine of apparent authority?

A: YES. It bears stressing that the existence of apparent authority may be ascertained not
only through the "general manner in which the corporation holds out an officer or agent as
having the apparent authority to act in general," but also through the corporation's
"acquiescence in his acts of a particular nature, with actual or constructive knowledge
thereof, whether within or beyond the scope of his ordinary powers."

Here, it is easy to see that Agro, reasonably appearing to have knowledge of the
amendments, acquiesced to the same. Indeed, Agro never contested nor protested the
amendments; on the contrary, it even accepted the benefits arising therefrom. "When a
corporation intentionally or negligently clothes its officer with apparent authority to act in
its behalf, it is estopped from denying its officer's apparent authority as to innocent third
parties who dealt with this officer in good faith." (Agro Food and Processing Corp. v. Vitarich
Corp., G.R. No. 217454, January 11, 2021, as penned by J. Hernando)
 LINO DOMILOS v. SPOUSES JOHN AND DOROTHEA PASTOR, AND JOSEPH PASTOR
G.R. No. 207887, March 14, 2022, Second Division (Hernando, J.)

DOCTRINE
“In contracts creating real rights, third persons who come into possession of the object
of the contract are bound thereby, subject to the provisions of the Mortgage Law and the
Land Registration Laws."

Q: Lino and Palichang, Nabunat’s mother-in-law, entered into a compromise

agreement dividing the property among five different parties, including themselves.
Lino, Nabunat, and Palichang sold different portions of the property to different
parties. Nabunat sold a portion of his share to Spouses Pastor and Joseph Pastor. A
few years after, Lino and Palichang executed a revocation and cancellation of the
compromise agreement. The Pastors filed suit against Lino, Palichang and Nabunat.
Lino argued that the Pastors are not parties to the compromise agreement. As such,
they are without legal personality to sue Lino for revoking the same. Is Lino's
contention correct?

A: NO. The compromise agreement was a contract that created real rights as it was a
contract for division of property. The third persons, Pastors, who came into possession of
the object of the contract are thus, bound by the contract or compromise agreement.
Furthermore, rescission or revocation of the compromise agreement cannot take place
because the objects of the contract are already in the legal possession of the Pastors who
did not act in bad faith. At the time the compromise agreement was revoked by Lino and
Palichang, the Pastors were already legal co-owners of the property by virtue of a valid
sale. As such, their respective shares in the disputed property may not be validly included
in the revocation of the compromise agreement without their knowledge and consent.
Although it is clear that the Pastors are not parties to the compromise agreement, their
objection to its revocation can be treated as an adverse claim over the disputed property.
(Lino Domilos vs. Spouses John and Dorothea Pastor, and Joseph Pastor, G.R. No. 207887,
March 14, 2022, as penned by J.Hernando)
 BUREAU OF INTERNAL REVENUE v. TICO INSURANCE COMPANY, INC, GLOWIDE
ENTERPRISES INC, AND ASIA PACIFIC MILLS
G.R. No. 204226, April 18, 2022, Second Division, Hernando, J:

DOCTRINE
A successful litigant who has secured a final judgment in its favor cannot later be
impleaded by its defeated adversary in an interpleader suit and compelled to prove its claim
anew against other adverse claimants, as that would in effect be a collateral attack upon the
judgment. An action for interpleader may not be utilized to circumvent the immutability of a
final and executory judgment. It is settled that when a decision has attained finality.

Duties, taxes, and fees due the Government enjoy priority only when they are with
reference to a specific movable property, under Article 2241 (1) of the Civil Code, or
immovable property, under Article 2242 (1) of the same Code. However, with reference to the
other real and personal property of the debtor, sometimes referred to as "free property," the
taxes and assessments due the National Government, other than those in Articles 2241 (1)
and 2242 (1) of the Civil Code, will come only in ninth place in the order of preference.

Q: ABC Insurance issued fire insurance to cover properties of Company Z.

However, ABC failed to pay the amount of insurance proceeds when Z made a claim.
Z filed a complaint for sum of money and damages and prayed for a writ of
preliminary attachment against ABC’s condominium unit. Z was able to obtain a
favorable judgment for the attachment of property and payment of money, which
judgment became final and executory.

On the other hand, the Insurance Commission placed ABC under liquidation. The BIR
also served on ABC several final assessment notices for the alleged deficiency of ABC
in internal revenue taxes, i.e. income tax, annual registration fee, value added tax.

ABC filed a relief from judgment alleging preference for BIR’s tax assessments over
Z’s claim. The trial court denied the petition and ruled that Z’s claims are preferred
over the BIR’s claims. The said decision in favor of Z became final and executory.
Still, the BIR caused annotation of the notice of tax lien on ABC’s condominium for
the unpaid revenue taxes.

Subsequently, the said condominium of ABC was sold to Z as the highest bidder. ABC
did not exercise any redemption of the property and a final deed of sale was issued
in favor of Z after the period of redemption lapsed.

ABC filed a complaint for interpleader to determine who between Z and the BIR has a
superior right over the condominium unit. Will the complaint for interpleader
prosper and does BIR’s claims enjoy preference over that of Z?

A: NO. ABC’s interpleader complaint is improper because it amounts to a collateral attack

on the final and executed judgment in favor of Z. There was a belated attempt on ABC’s part
to assail the final and executed judgment in favor of Z. Z had already obtained a final and
executory judgment for the payment for sum of money and for the preference of their
claims to that of BIR’s claims. An action for interpleader may not be utilized to circumvent
the immutability of a final and executory judgment.

Duties, taxes, and fees due the Government enjoy priority only when they are with
reference to a specific movable property, under Article 2241 (1) of the Civil Code, or
immovable property, under Article 2242 (1) of the same Code. Z’s rights over the
condominium units are superior to the BIR’s claim and are thus entitled to possession and
conveyance of the condominium units. The tax claim is only an ordinary preferred credit
under Article 2244 because it is not based on taxes due on the condominium units but on
ABC’s deficiency in payment of its income tax, annual registration fees, value-added tax. On
the other hand, Z’s claim is a special preferred credit under Article 2242 (7) of the Civil
Code, and thus superior to BIR's tax claim which is only an ordinary preferred credit. (BIR
v. Tico Insurance, Glowide Inc and Asia Pacific Mills, G.R. No. 204226, April 18, 2022, Second
Division, as penned by J. Hernando)
 THE HEIRS OF ZENAIDA B. GONZALES, represented by ARNEL B. GONZALES, vs.
SPOUSES DOMINADOR AND ESTEFANIA BASAS AND ROMEO MUNDA,
G.R. No. 206847, June 15, 2022, (Hernando, J.)

DOCTRINE

One is considered a purchaser in good faith if he or she buys the property of another
without notice that some other person has a right to or interest in such property, and pays its
full and fair price before he or she has notice of the adverse claims and interest of another
person in the same property. Conversely, one is considered a buyer in bad faith when he or she
purchases a property despite knowledge of a defect or lack of title in his or her seller or when
he or she has knowledge of facts which should have cautioned him or her to conduct further
inquiry or investigation.

Q: X bought a property from Y as evidenced by DOAS and Agreement which contain all the
three requisites of a contract of sale (by virtue of the Agreement being a contract of sale, the
subject property was constructively delivered to X, even if Y remained in possession under a
different capacity). However, after a year from said sale, Y sold again the same property to Z,
whom have the property immediately registered under his name despite knowing of its
previous sale. Does X have a better right over the said property between X and Z?

A: YES. X has a better right to the subject property since Z was a buyer and registrant in bad faith.
One is considered a purchaser in good faith if he or she buys the property of another without notice
that some other person has a right to or interest in such property, and pays its full and fair price
before he or she has notice of the adverse claims and interest of another person in the same
property. Conversely, one is considered a buyer in bad faith when he or she purchases a property
despite knowledge of a defect or lack of title in his or her seller or when he or she has knowledge of
facts which should have cautioned him or her to conduct further inquiry or investigation.
Furthermore, purchasers must continuously possess their status as buyers in good faith from the
time they acquired the property until they register the property under their name. Prior
registration of the disputed property by the second buyer does not by itself confer ownership or a
better right over the property. Article 1544 requires that such registration must be coupled with
good faith. (Heirs of Gonzales v. Spouses Basas, G.R. No. 206847, June 15, 2022, as penned by J.
Hernando)