Civil Law - Hernando CDD 2023

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CASE DIGESTS
PERSONS AND FAMILY RELATIONS
Mixed Marriages and Foreign Divorce

Republic v. Kikuchi 1
Void Marriages
Santos-Macabata v. Macabata 3
Pugoy-Solidum v. Republic 6
Carullo v. Padua 9
Effect of Defective Marriages

Republic v. Ponce-Pilapil 13
Pulido v. People 15
Paternity and Filiation

Spouses Park v. Liwanag 17
PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

Ownership
Gemina v. Heirs Of Espejo, Jr. 19
Actions to Recover Ownership and Possession of Property

Heirs Of Eñano v. San Pedro Cineplex Properties Inc. 22
Heirs Of Marquez v. Heirs Of Hernandez 25
Heir Of Magsaysay v. Sps. Perez 27
Co-Ownership
Reyes v. Spouses Garcia 29
Possession
Republic v. Manuel Caraig 31
Viloria v. Heirs Of Gaetos 33
Donation
Cardinez v. Sps Cardinez 36
Prescription
Ende v. Roman Catholic Prelate Of The Prelature Nullius Of Cotabato, Inc. 39
CASE DIGESTS
LAND TITLES AND DEEDS
Original Registration (PD 1529)

Republic v. Tapay 42
Republic v. Philippine National Police 44
An Act Improving the Confirmation Process for Imperfect Land Titles (RA
11573), amending CA 141 and PD 1529
Concepcion Chua Gaw v. Suy Ben Chua And Felisa Chua 47
Certificate of Title 49
Garcia v. Esclito
Non-Registrable Properties
Alde v. City of Zamboanga 51
Dealings With Unregistered Lands

Valdez v. Heirs Of Catabas 54
Republic v. Herederos De Ciriaco Chunaco Disteleria Incorporada 56
Heirs Of Latoja v. Heirs Of Latoja 59
Heirs Of Gonzales v. Spouses Basas 62
Reconstitution of Title
Republic v. Abellanosa 65
Republic Of The Philippines v. Heirs Of Booc 68
SUCCESSION AND WILLS
Testamentary Succession
Tanchanco v. Santos 71
OBLIGATIONS AND CONTRACTS
Obligations: General Provisions

Seming v. Alamag 75
Spouses De Vera v. Catungal 78
Nature and Effects of Obligations

Estate Of Rodriguez v. Republic 80
CASE DIGESTS
Different Kinds of Obligations

Philippine National Bank v. Lorenzo Bal Jr. 83
Extinguishment of Obligations
Banco De Oro Unibank, Inc (Bdo Unibank, Inc.) v. Edgardo Ypil, Sr. Et Al 85
Purificacion v. Gobing 88
Valdes v. La Colina Development Corp. 90
Asian Construction And Development Corp. v. Mero Structures Inc. 95
Contracts: General Provisions

Agro Food And Processing Corp v. Vitarich Corp 97
Basic Principles of Contracts

Development Bank Of The Philippines v. Heirs Of Danico 99
Domilos v. Spouses Pastor 101
Home Guaranty Corp v. Manlapaz 103
Defective Contracts
Bacala v. Heirs Of Polino 107
Heirs Of Godines v. Sps. Demaymay 110
Willy v. Julian 113
Ganancial v. Cabugao 116
Arakor Construction And Development Corp. v. Sta. Maria 118
City Of Tanauan v. Millonte 120
Heirs Of Bagaygay v. Heirs Of Paciente 123
SALES AND LEASE
Definition and Essential Requisites

125
Cabilao v. Tampan
129
Pascual Purisima, Jr, Et Al v. Macaria Purisima, Et Al.
Contract of Sale
132
Sps. Ponce v. Aldanese
135
Heirs Of Gonzales v. Spouses Basas
139
Heirs Of Marquez v. Heirs Of Hernandez
Breach of Contract of Sale

142
Integrated Credit And Corporate Services v. Cabreza
144
Pryce Properties Corp. v. Nolasco
CASE DIGESTS
Equitable Mortgage 146

Dacquel v. Sps. Sotelo
Other Concepts 149

Atienza v. Golden Ram Engineering Supplies & Equipment, Corp.
AGENCY, TRUSTS, AND PARTNERSHIPS

153
Agency 155
Daniel v. Magkaisa
Lopez v. Saludo Jr.
CREDIT TRANSACTIONS
Interest 158
Allied Banking Corporation v. Spouses Mario Antonio Macam 161
Asset Pool A (SPV-AMC), Inc. v. Spouses Berris
Guaranty and Suretyship 163

Sps. Genotiva v. Equitable Pci Bank (Now Banco De Oro Unibank, Inc)
Real Estate Mortgage 166

Philippine National Bank v. Fontanoza 169
Panacan Lumber Co. v. Solidbank Corp. 172
Goldwell Property Tagaytay v. Metrobank 174
Spouses Torrecampo v. Wealth Development Bank Corp.
QUASI-CONTRACTS
Solutio Indebiti 176

Lumauan v. Commission On Audit
TORTS AND DAMAGES
Principles 179
PNTC Colleges, Inc. v. Time Realty, Inc.
Classification of Torts 182

The Real Bank (A Thrift Bank), Inc. v. Maningas
CASE DIGESTS
Res Ipsa Loquitur

184
Maitim v. Aguila
Damages
187
Ganancial v. Cabugao
189
Land Bank Of The Philippines v. Del Moral Inc.
191
Manila Electric Co. v. Aaa Cryogenics Philippines, Inc.
193
Philam Homeowners Association, Inc. v. De Luna
195
KLM Royal Dutch Airlines v. Tiongco
197
Manila International Ports Terminal, Inc. v. Philippine Ports Authority
200
Rico v. Union Bank Of The Philippines
CASE DOCTRINES
Republic v. Kikuchi 204

Santos-Macabata v. Macabata 204

Void Marriages
Pugoy-Solidum v. Republic 205

Void Marriages
Carullo v. Padua 206

Void Marriages
Republic v. Ponce-Pilapil 206

Pulido v. People 207

Spouses Park v. Liwanag 207

Paternity and Filiation
Gemina v. Heirs Of Espejo, Jr. 208

Ownership
Heirs Of Eñano v. San Pedro Cineplex Properties Inc. 209

Heirs Of Marquez v. Heirs Of Hernandez 209

Heir Of Magsaysay v. Sps. Perez 210

Reyes v. Spouses Garcia 211

Co-Ownership
Republic v. Manuel Caraig 211

Possession
Viloria v. Heirs Of Gaetos 212

Possession
CASE DOCTRINES
Cardinez v. Sps Cardinez 213

Donation
Ende v. Roman Catholic Prelate Of The Prelature Nullius Of Cotabato, 214

Inc.
Prescription
215
Republic v. Tapay
Original Registration (PD 1529) 216
Republic v. Philippine National Police

Original Registration (PD 1529)
217
Concepcion Chua Gaw v. Suy Ben Chua And Felisa Chua
An Act Improving the Confirmation Process for Imperfect Land
Titles (RA 11573), amending CA 141 and PD 1529
218
Garcia v. Esclito
Certificate of Title
219
Alde v. City of Zamboanga
220
Valdez v. Heirs Of Catabas
220
Republic v. Herederos De Ciriaco Chunaco Disteleria Incorporada
221
Heirs Of Latoja v. Heirs Of Latoja
222
223
Republic v. Abellanosa
223
Republic Of The Philippines v. Heirs Of Booc
CASE DOCTRINES
Tanchanco v. Santos 225

Testamentary Succession
Seming v. Alamag 226

Spouses De Vera v. Catungal 227

Estate Of Rodriguez v. Republic 227

Nature and Effects of Obligations
Philippine National Bank v. Lorenzo Bal Jr. 228

Banco De Oro Unibank, Inc (Bdo Unibank, Inc.) v. Edgardo Ypil, Sr. 229
Et Al
229
Purificacion v. Gobing
230
Valdes v. La Colina Development Corp.
231
Asian Construction And Development Corp. v. Mero Structures Inc.
231
Agro Food And Processing Corp v. Vitarich Corp
232
Development Bank Of The Philippines v. Heirs Of Danico
232
Domilos v. Spouses Pastor
233
Home Guaranty Corp v. Manlapaz
233
Bacala v. Heirs Of Polino
Defective Contracts
CASE DOCTRINES
Heirs Of Godines v. Sps. Demaymay 234

Defective Contracts
Willy v. Julian 234

Defective Contracts

Defective Contracts
Arakor Construction And Development Corp. v. Sta. Maria 235

Defective Contracts
City Of Tanauan v. Millonte 236

Defective Contracts
Heirs Of Bagaygay v. Heirs Of Paciente 237

Defective Contracts
Cabilao v. Tampan 237

Pascual Purisima, Jr, Et Al v. Macaria Purisima, Et Al. 238

Sps. Ponce v. Aldanese 239

Contract of Sale
239
Contract of Sale
241
Heirs Of Marquez v. Heirs Of Hernandez
Contract of Sale
Integrated Credit And Corporate Services v. Cabreza 241

Pryce Properties Corp. v. Nolasco 242

Dacquel v. Sps. Sotelo 242

Equitable Mortgage
CASE DOCTRINES
Atienza v. Golden Ram Engineering Supplies & Equipment, Corp. 243

Other Sales Concepts
Daniel v. Magkaisa 244

Agency
Lopez v. Saludo Jr. 244

Agency
Allied Banking Corporation v. Spouses Mario Antonio Macam 245

Loans, Interest
Asset Pool A (SPV-AMC), Inc. v. Sps. Berris 246

Loans, Interest
Sps. Genotiva v. Equitable Pci Bank (Now Banco De Oro Unibank, 246
Inc)
Guaranty and Suretyship
247
Philippine National Bank v. Fontanoza
Panacan Lumber Co. v. Solidbank Corp.
Goldwell Property Tagaytay v. Metrobank
Spouses Torrecampo v. Wealth Development Bank Corp.
Lumauan v. Commission On Audit
Solutio Indebiti 250
PNTC Colleges, Inc. v. Time Realty, Inc.
Principles of Torts and Damages
251
The Real Bank (A Thrift Bank), Inc. v. Maningas
Classification of Torts
251
Maitim v. Aguila
Res Ipsa Loquitur
CASE DOCTRINES

Damages
Land Bank Of The Philippines v. Del Moral Inc. 253

Damages
Manila Electric Co. v. Aaa Cryogenics Philippines, Inc. 254

Damages
Philam Homeowners Association, Inc. v. De Luna 255

Damages
Kim Royal Dutch Airlines v. Tiongco 255

Damages
Manila International Ports Terminal, Inc. v. Philippine Ports 256

Authority
Damages
Rico v. Union Bank Of The Philippines 257

Damages
civil LAW
civil LAW
CIVIL LAW
CIVIL LAW
CIVIL LAW
CIVIL LAW
CIVIL LAW
caseS
CIVIL LAW

BURDEN OF PROOF AND QUANTUM OF EVIDENCE
REPUBLIC V. KIKUCHI
HERNANDO, J.
GR No. 243646 June 22, 2022
FOREIGN DIVORCE (ART. 26, FAMILY CODE)
DOCTRINE
Before a foreign divorce decree can be recognized by the court, the party pleading
it must first prove the fact of divorce and its conformity to the foreign law allowing it. As
both of these purport to be official acts of a sovereign authority, the required proof are
their official publications or copies attested by the officers having legal custody thereof,
pursuant to Section 24, Rule 132 of the Rules of Court.
FACTS
In 2015, Jocelyn filed before the trial court a petition for judicial recognition of
foreign divorce. She alleged that she was married to Fumio in 1993, and in 2007, they
jointly filed for divorce before the City Hall of Sakado City, Saitama Prefecture. As the
divorce was accepted, Jocelyn sought the recognition thereof here in the Philippines.
During the presentation of evidence, the following documents, among others, were
presented: (1) the Acceptance Certificate issued by the Mayor of Sakado City, Saitama
Prefecture, Japan; (2) an Authentication from the Vice Consul of Philippine Embassy in
Tokyo, Japan; and (3) a photocopy of the Civil Code of Japan in English text. The
Republic, through the OCP, did not object to the presentation and offer of such evidence
and manifested that it will not be adducing controverting evidence.
To prove the fact of divorce, Jocelyn submitted the Acceptance Certificate stating
that her and Fumio’s written notification of divorce had been accepted.
The Republic assails the Acceptance Certificate for being insufficient to establish
the fact of divorce, arguing that the foreign judgement itself should have been presented.
The Commissioner rendered a Report recommending that the petition be granted

considering that Jocelyn was able to successfully establish the fact of divorce and the law
of Japan. The RTC granted the petition and held that Jocelyn indeed was able to establish
the fact of divorce and the national law of Japan. Aggrieved, the Republic, through the
OSG, moved for reconsideration but this was denied. The CA held that Jocelyn was able to
present documents proving the fact of divorce and the law of Japan.
1
The Republic opposed the petition arguing that Jocelyn failed to comply with the
requirements of authentication and proof of documents concerning the said documents,
and that foreign law had not been proven.
ISSUE
Is Jocelyn entitled to a Judicial recognition of foreign divorce?
HELD
No, Under Article 26 of Executive Order No. 209, series of 1987, as amended, or
The Family Code of the Philippines, a divorce between a foreigner and a Filipino may be
recognized in the Philippines as long as it was validly obtained according to the foreign
spouse's national law. Before a foreign divorce decree can be recognized by the court, the
party pleading it must first prove the fact of divorce and its conformity to the foreign law
allowing it. Jocelyn was able to establish the fact of divorce but was unable to establish
the law of Japan on divorce.
The Acceptance Certificate was accompanied by an Authentication from the

Philippine Embassy in Tokyo, Japan. According the the case of Morana v. Republic, a
divorce report issued by the Office of the Mayor is sufficient as it is deemed as an act of
an official body in Japan. By whatever name it is called, the Divorce Report is clearly the
equivalent of the "Divorce Decree" in Japan, hence, the best evidence of the fact of
divorce obtained by petitioner and her former husband.
In addition, the Supreme Court in Racho v. Seiichi Tanaka, had already ruled that
an authentication form the Embassy of the Philippines in Japan is admissible as evidence
of the fact of divorce.
To prove that the divorce was valid under Japanese laws, Jocelyn submitted a
photocopy of the English translation of the Civil Code of Japan, published by
Eibun-Horei-Sha, Inc. and stamped with "LIBRARY, Japan Information and Culture Center,
Embassy of Japan, 2627 Roxas Boulevard, Pasay City." In Nullada v. Civil Registrar of Manila
and Arreza v. Toyo, the Court held that the submission of the same document does not
constitute sufficient compliance with the rules on proof of Japan's law on divorce and that
the translations by the publisher of the document submitted by Jocelyn are not advertised
as a source of official translations of Japanese laws. Not being an official translation, the
document submitted by Jocelyn does not prove the existing law on divorce in Japan.
Unfortunately, without such evidence, there is nothing on record to establish that the
divorce between Jocelyn and Fumio was validly obtained and is consistent with the
Japanese law on divorce.
The case was remanded since Jocelyn was able to prove the fact of divorce but not
the Japanese law on divorce.
2
Void Marriages
NULLITY OF MARRIAGE: ART. 36 (PSYCHOLOGICAL INCAPACITY)
SANTOS-MACABATA V. MACABATA
HERNANDO, J.
GR No. 1237524 April 06, 2022
NULLITY OF MARRIAGE: ART. 36, FAMILY CODE
DOCTRINE
This Court commiserates with the parties who find themselves in an unsatisfactory
marriage, but the Court emphasises that a petition for declaration of nullity of marriage
on the ground of psychological incapacity under Article 36 of the Family Code is limited to
cases where there is a downright incapacity or inability to assume and fulfil the basic
marital obligations, not a mere refusal, neglect or difficulty, much less, ill will, on the
part of the errant spouse. Expert opinion may be persuasive but, ultimately, the totality
of evidence must show that an adverse integral element in the personality structure of
the respondent effectively incapacitates him from accepting, and thereby complying with
his essential marital obligations, and such incapacity must be proven to exist prior to, or
at the time of celebration, of the marriage of the parties. Absent any such clear and
convincing evidence, the petition must be denied.
FACTS
This case involves a petition for review on certiorari on the decision of the RTC
which declared the marriage of petitioner Bebery Santos-Macabata (Bebery) and
respondent Flaviano Macabata Jr. (Flaviano) null and void on the ground of the latter’s
psychological incapacity.
Sometime in October 1996, spouses Bebery Macabata and Flaviano Macabata

(respondent) were working as factory workers in separate electronic companies in Taiwan.
Shortly after their introduction to each other, the spouses started dating. Even after
expressing her traumatic past relationships, Flaviano said that he accepts Bebery. After
the termination of their employment contracts in Taiwan, spouses returned to the
Philippines.
They got married on June 19, 1997 then moved to a rented house in Caloocan
City.The two would often argue and Flaviano would often bring up Bebery’s past.
Respondent Flaviano would eventually find work as an entertainer in Japan where he
represented himself as single in his passport. Flaviano contacted Bebery for the first time
in 2 years where he told Bebery that he will no longer be coming back and that he has
found another partner.
Bebery filed before the RTC a petition seeking the declaration of nullity of her
marriage on the ground of psychological incapacity. She further submitted evidence of a
3
report of Flaviano’s psychological incapacity from the expert opinion of a clinical
psychologist (antisocial personality disorder). This was based on the information provided
by Bebery and the couple’s two children as well as a visit to the residence of Flaviano.
Since Flaviano was not home, Dr. Tayag concluded in her report that Flaviano suffered
from antisocial personality disorder stemming from his childhood years, which was the
reason behind the latter’s lack of depth when it came to his marital duties and
obligations.
RTC granted the petition. The RTC relied on the findings in the report and held
that the petitioner provided sufficient evidence to prove that respondent is
psychologically incapacitated. CA reversed the RTC ruling and said that the totality of the
evidence was insufficient in proving Flaviano’s psychological incapacity.
ISSUE
Did the CA err when it reversed the Decision of the RTC and issued a Decision
finding that petitioner failed to provide sufficient evidence that respondent is
psychologically incapacitated to perform his marital obligations?
HELD
No. The CA did not commit an error when it ruled that Bebery failed to provide
sufficient evidence to declare Flaviano psychologically incapacitated.
In the case of Tan-Andal, the court abandoned the second Molina guideline i.e.,
that it must be sufficiently proven by experts. Psychological incapacity is neither a mental
capacity nor a personality disorder that must be proven through expert opinion.
Indeed, the respondent has clearly failed to fulfil his essential obligations to his
wife and children when he abandoned his family. Petitioner admits that respondent
stopped providing sufficient support to his family starting June 2002, informed his wife
that he will not return to their home, and that he is in a relationship with another
woman, and he continues to hide from his wife and cease all contact with his family.
However, the totality of evidence does not show that such failure to fulfil his essential
marital obligations is caused by a genuinely serious and incurable psychic cause which
exists prior to or at the time of celebration of the marriage of the parties.
It was shown that mere disagreements between spouses, uncorroborated by any

other evidence, are not indicative of the presence of psychological incapacity. The
children of the parties both confirm that they barely remember their father since the
eldest was two years old and the youngest was 2 months old when their father left in the
Philippines to work in Japan. From the foregoing, it is apparent that there are
inconsistencies in the information provided in the report, and the conclusion of the
clinical psychologist therein. A thorough reading of the report would show that the
conclusion therein is grounded on general observations nitpicked from certain aspects of
respondent's life and based primarily on petitioner's assessment of his upbringing, none of
which are fully supported by the information provided by respondent's younger brother
who grew up with the respondent. Hence, there is doubt as to whether the report is
4
sufficient evidence to show that the acts of respondent are manifestations of a certain
form of psychological incapacity, and that the alleged psychological incapacity of the
respondent exists prior to, or at the time of, celebration of the marriage of the parties.
Applying the Molina guideline, Bebery failed to prove and substantiate by clear and
convincing evidence that her husband suffers from psychological incapacity. For such to
show that he is incapable of fulfilling his essential marital obligations due to a genuinely
serious and incurable psychic cause which exists prior to or at the time of celebration of
the marriage of the parties, the Court is compelled to deny the petition.
5
PUGOY-SOLIDUM V. REPUBLIC
HERNANDO, J.
GR No. 213954 February 20, 2022
DOCTRINE
The expert testimony is not always mandatory as long as the totality of evidence is
sufficient to sustain a finding of psychological incapacity. The totality of evidence must
still be sufficient to prove that the incapacity was grave, incurable and existing prior to
the time of the marriage.
FACTS
This is a petition for review on certiorari under Rule 45 assailing the Decision last
2014 and the 2014 Resolution by the Court of Appeals which granted the petition for
nullity of marriage filed by petitioner Hannamer against her husband, Grant.
Hannamer and Grant were sweethearts from highschool. Hannamer got pregnant
and her mother convinced her to get married with Grant and the marriage was solemnized
byJudge Abragan of the Iligan City RTC. Hannamer spent for her wedding and child
baptismal since Grant was unemployed and unable to contribute for their living expenses.
Hannamer’s mother moved in with the couple then the couple’s relationship turned sour.
This caused Hannamer to leave their house; Grant never visited nor sent financial support
for Hannamer and their child. Eventually, Hannamer lost contact with Grant when she
moved to another town with her mother and child.
On January 2010, Hannamer filed for a petition for declaration of nullity of

marriage under Art. 36 of the Family Code before the RTC of Tagaytay City. It was alleged
that Grant was psychologically incapacitated to comply with all the essential marital
obligations. Grant showed complete lack of understanding of his duties and
responsibilities as a husband and father during their marriage. He never worked and
depended on his older sibling for support. Grant spent most of his time and money on
gambling and going to cockfights, instead of caring for his family. On the scheduled date
of the hearing, only Hannamer appeared. The Asst. Provincial Prosecutor filed a report
that she was not in position to conclude whether collusion existed between the parties,
due to Grant’s absence.
During the trial, Hannamer testified on her behalf. Dr. Revita diagnosed Grant with
narcissistic personality disorder with anti-social and dependent traits that is characterized
by an overwhelming and grandiose sense of self importance. Dr. Revita also testified that
she was not able to personally examine Grant because the latter failed to respond to her
request for a psychological evaluation.
6
The RTC granted the petition and declared the marriage between Hannamer and
Grant void ab initio. In the resolution made by the CA, it was held that Hannamer failed
to prove that Grant’s failure to fulfill his marital obligations was rooted on an incurable
psychological illness existing at the time of marriage. It ruled that Dr. Revita’s
psychological report and testimony failed to trace the history of Grant’s alleged
personality disorder, how it developed into a psychological illness prior to their marriage
and how it rendered Grant incapable of fulfilling his essential and marital obligations.
ISSUE
Is Grant and Hannamer’s marriage void on the ground of psychological incapacity?
HELD
Yes. The Court affirmed the validity of marriage between Hannamer and Grant. To
render a marriage void ab initio under Art. 36 of the Family Code, psychological
incapacity must be characterized by:
1. Gravity, i.e., it must be grave and serious that such party would be
incapable of carrying out the ordinary duties required in the marriage
2. Juridical antecedence, i.e., it must be rooted in the history of the party
antedating the marriage, although the overt manifestations may emerge
only after the marriage.
3. Incurability, i.e., it must be incurable, or even if it were otherwise, the
cure would be beyond the means of the party involved.
The expert testimony is not always mandatory as long as the totality of evidence is
sufficient to sustain a finding of psychological incapacity. The petitioner bears the burden
in showing gravity, juridical antecedence, and incurabilty.
The following parameters as provided under the case of Tan-Andal was used in this
case:
1. The psychological incapacity must be shown to have been existing at the
time of the celebration of marriage;
2. Cause by a durable aspect of one’s personality structure, one that was
formed prior to their marriage;
3. Cause by a genuinely serious psychic cause; and
4. Proven by clear and convincing evidence.
Tan-Andal further enunciates that psychological incapacity is not a mental

incapacity nor a personality disorder that must be proven through an expert witness. It
also modified the requirement on “incurability” that is must now be incurable, not in the
medical, but in the legal sense. Thus, it must be so enduring and persistent with respect
to a specific partner, that the only result of the union would be the inevitable and
irreparable breakdown of the marriage.
With this, the Court finds that Hannamer failed to sufficiently prove that Grant is
psychologically incapacitated to comply with one’s essential marital obligation. It failed
7
to prove Grant’s personality structure that manifested itself through clear acts of
dysfunctionality that rendered him unable to discharge the marital obligations.
There was no evidence on record proving that Grant’s alleged psychological

incapacity existed prior to their marriage. The totality of evidence must still be sufficient
to prove that the incapacity was grave, incurable and existing prior to the time of the
marriage.
The totality of evidence must be sufficient to prove that the incapacity was grave,
incurable and existing prior to the marriage. Apart from the testimonies of Hannamer and
Dr. Revita and the latter’s psychological report, there is no other evidence presented to
support the allegation of Grant’s psychological incapacity.
8
CARULLO V. PADUA
HERNANDO, J.
GR No. 208258 April 27, 2022
DOCTRINE
As categorically declared by the Court, expert testimony or the testimony of a
psychologist/psychiatrist is no longer required to prove psychological incapacity. Ordinary
witnesses who have been present in the spouses' lives before they contracted marriage
may testify on their observations as to the incapacitated spouse's behaviour. What is
important is that the totality of evidence is sufficient to support a finding of psychological
incapacity.
Similarly, juridical antecedence of psychological incapacity may be proven by

ordinary witnesses who can describe the incapacitated spouse's past experiences or
environment while growing up which may have triggered one's particular behaviour. At any
rate, the gravity of psychological incapacity must be shown to have been caused by a
genuinely serious psychic cause. Thus, "mild characterological peculiarities, mood
changes, occasional emotional outbursts" are still not accepted grounds that would
warrant a finding of psychological incapacity under Article 36 of the Family Code.
FACTS
The present petition deals with a review on certiorari which seeks to set aside the
decision of the Court of Appeals which denied the petition for declaration of nullity of
marriage filed by Maria Vicia Carullo-Padua (Maria) against Joselito.
Maria and Joselito were married in a civil ceremony on February 5, 1982.On July
17, 1997, Maria filed a petition for declaration of absolute nullity of their marriage with
the trial court anchored on Article 36 of the Family Code. Maria alleged that at the time
of the celebration of their marriage, Joselito was psychologically incapacitated to
perform his marital obligations. During their cohabitation, Joselito exhibited excessive
sexual desire and forced her to perform oral and anal sex with him; that there were
occasions when respondent attempted to sexually molest her sister, nieces and their
household help who were staying with them; that respondent admitted to said attempts
of molestations but begged her to keep said incidents a secret; that Joselito
misrepresented himself as a Roman Catholic when he was actually a born-again Christian;
that when Maria refused to convert to Joselito's religion, he began insulting her religious
beliefs, and that at one point, at the heat of their quarrel, Joselito attempted to kill
Maria by threatening to stab her with a letter opener.
Maria also alleged that Joselito failed to provide financial support for her and their
child; that right after they got married, Joselito insisted that they stay in her parents'
house so that he can give half of his salary to his own parents; that they were dependent
9
on Maria's parents for support; and that Joselito never bothered to share in the household
expenses while they were living at her parents' house. Maria further claimed that when
Joselito lost his job in 1985, he remained unemployed for six months because he did not
try to find work until she asked him to look for one.
Joselito also failed to provide emotional and psychological support to their child.
He preferred staying in their room rather than to spend time with their only son.
Occasionally, he would physically harm their child when the latter would attempt to play
with him.
Maria further averred that in 1990, Joselito left for Italy to work without
consulting her. While working abroad, Joselito stopped sending financial support to her
and their son after settling the huge debt he incurred here in the Philippines.
Consequently, Maria raised and supported their son all by herself. Later, in 1992, Joselito
sent a letter admitting to his shortcomings on their marital relationship and making known
of his decision to sever ties with her and their son. However, when Joselito returned to
the Philippines in 1997, he sought custody of their child who was under her care.
During trial, petitioner presented herself and psychiatrist Dr. Cecilia Villegas as
witnesses. Maria testified on the allegations contained in her petition. while Dr. Villegas
testified on the personality evaluation report she prepared.
Dr. Villegas testified that she diagnosed Joselito with a personality disorder of a
sexual deviant or perversion based on Maria's narrations. Joselito's preference for anal and
oral sex, as well as the molestations he committed against Maria's relatives and
housemaid, were manifestations of Joselito's perversion. The root cause of Joselito's
personality disorder is traceable to his wretched childhood. Inasmuch as Joselito spent his
youth with a cruel father and a very protective mother, the unbalanced relationship
between Joselito's parents developed some emotional confusion on him. As a result,
Joselito's sexual development did not mature. Dr. Villegas added that the psychological
disorder of Joselito is grave, serious and not clinically curable which rendered him
psychologically incapacitated to perform his marital obligations.
The RTC denied the petition holding that the evidence adduced by Maria failed to
overcome the legal presumption in favor of the validity of her marriage with respondent.
Maria appealed before the appellate court.
The CA sustained the ruling of the RTC and held that the grounds relied upon by
Maria to support her petition to declare the nullity of her marriage with Joselito. I.e.,
Joselito's attempt against her life, and sexual infidelity, assuming said circumstances to be
true, are not grounds for annulment of the marriage but at best valid grounds for legal
separation under Article 55 of the Family Code.
10
ISSUE
Did the totality of evidence presented by Maria be sufficient to prove that Joselito
is is psychologically incapacitated to perform his essential marital obligations, meriting
the dissolution of his marriage with Maria?
HELD
No. We reviewed the totality of evidence presented by Maria and found that the
same was miserably wanting to sustain the conclusion that Joselito was psychologically
incapacitated to perform the basic obligations of marriage.
ART. 36. A marriage contracted by any party who, at the time of the celebration,
was psychologically incapacitated to comply with the essential marital obligations of
marriage, shall likewise be void even if such incapacity becomes manifest only after its
solemnization.
Republic v. Iyoy instructs that the psychological incapacity must be characterized

by:
a. Gravity — It must be grave or serious such that the party would be
incapable of carrying out the ordinary duties required in a marriage;
b. Juridical Antecedence — It must be rooted in the history of the party
antedating the marriage, although the overt manifestations may emerge
only after the marriage; and
c. Incurability — It must be incurable or, even if it were otherwise, the cure
would be beyond the means of the party involved.
In concluding that the husband was psychologically incapacitated, we used the

following parameters (Tan-Andal guidelines) in determining what constitutes psychological
incapacity:
1. The psychological incapacity must be shown to have been existing at the

time of the celebration of marriage;
2. Caused by a durable aspect of one's personality structure, one that was
formed prior to their marriage;
3. Caused by a genuinely serious psychic cause; and
4. Proven by clear and convincing evidence.
Moreover, psychological incapacity is now neither a mental incapacity nor a

personality disorder that must be proven by expert opinion, viz.:
The Court abandons the second Molina guideline. Psychological incapacity is

neither a mental incapacity nor at personality disorder that must be proven through
expert opinion. There must be proof, however, of the durable or enduring aspects of a
person's personality, called "personality structure," which manifests itself through clear
acts of dysfunctionality that undermines the family. The spouse's personality structure
must make it impossible for him or her to understand and, more important, to comply
with his or her essential marital obligations.
11
Proof of these aspects of personality need not be given by an expert. Ordinary
witnesses who have been present in the life of the spouses before the latter contracted
marriage may testify on behaviours that they have consistently observed from the
supposedly incapacitated spouse. From there, the judge will decide if these behaviours
are indicative of a true and serious incapacity to assume the essential marital obligations.
In this way, the Code Committee's intent to limit the incapacity to "psychic causes"
is fulfilled. Furthermore, there will be no need to label a person as having a mental
disorder just to obtain a decree of nullity. A psychologically incapacitated person need
not be shamed and pathologized for what could have been a simple mistake in one's
choice of intimate partner, a mistake too easy to make as when one sees through
rose-coloured glasses. A person's psychological incapacity to fulfil his or her marital
obligations should not be at the expense of one's dignity, because it could very well be
that he or she did not know that the incapacity existed in the first place.
Thus, as categorically declared by the Court, expert testimony or the testimony of

a psychologist/psychiatrist is no longer required to prove psychological incapacity.
Ordinary witnesses who have been present in the spouses' lives before they contracted
marriage may testify on their observations as to the incapacitated spouse's behaviour.
What is important is that the totality of evidence is sufficient to support a finding of

environment while growing up which may have triggered one's particular behavior. At any
Tan-Andal also modified the requirement on insurability — that psychological

incapacity under Article 36 of the Family Code must now be incurable, not in the medical,
but in the legal sense.
12
EFFECT OF DEFECTIVE MARRIAGES
REPUBLIC V. PONCE-PILAPIL
HERNANDO, J.
GR No. 219185 November 25, 2020
DECLARATION OF PRESUMPTIVE DEATH OF SPOUSE
DOCTRINE
One of the requisites for the grant of a petition for declaration of presumptive
death under Art. 41 of the Family Code is that the present spouse has a well-founded
belief that the absentee spouse is dead. This requisite is met upon showing of proper and
honest-to-goodness inquiries and efforts to ascertain not only the absent spouse’s
whereabouts, but also whether they are still alive or already dead. The mere fact of the
spouse’s absence is not enough to yield a presumption of his or her death.
FACTS
Josephine Ponce-Pilapil (Josephine) filed a petition to have her husband, Agapito
S. Pilapil, Jr. (Agapito) presumptively dead. It was established during the trial that
Agapito and Josephine were married in Mandaue City on June 5, 2000, and that a few
months later, or sometime in November 2005, Agapito left without giving any information
as to where he was going. She also stated that she has no idea why Agapito left, and that
he had a cyst in his right jaw which had been getting bigger. As Agapito’s parents were
already deceased, she inquired with his only surviving relative, Lydia Bueno Pilapil (Lydia),
through a letter that was hand-carried and delivered by one of her witnesses, Marites
Longakit Toong, and was told that she did not know nor have any idea as to Agapito’s
whereabouts. Josephine also inquired from their friends if they saw or heard from
Agapito, but all answered in the negative. Josephine stated that she honestly believes
that her husband is already dead, considering that six years have lapsed without there
being any information as to his whereabouts, and that she filed the petition as she desires
to remarry.
The Regional Trial Court granted the petition and declared Agapito presumptively
dead pursuant to Art. 41 of the Family Code upon finding that Josephine had sufficiently
established the fact that Agapito had been absent for six years with his whereabouts
unknown. The Republic of the Philippines, through the Office of the Solicitor General
(OSG) filed a petition for certiorari under Rule 65 before the Court of Appeals, which
petition was denied for being an improper remedy.
ISSUE
Was Josephine able to establish the fact of a “well-founded belief” that Agapito
was already dead?
13
HELD
No. Jurisprudence sets out four requisites for the grant of a petition for
declaration of presumptive death, which are the following:
1. The absent spouse has been missing for four consecutive years, or two
consecutive years if the disappearance occurred where there is danger of
death under the circumstances laid down in Art. 391 of the Civil Code;
2. The present spouse wishes to remarry;
3. The present spouse has a well-founded belief that the absentee is dead;
4. The present spouse files for a summary proceeding for the declaration of
presumptive death of the absentee.
In the case of Republic vs. Orcelino-Villanueva, the Court highlighted the

importance of the exercise of “diligent efforts” in determining whether the present
spouse’s belief that the absent spouse was already dead was well founded or not. The
Court ruled in that case that the stringent requirement of “well-founded belief” can only
be met upon the showing of proper and honest-to-goodness inquiries and efforts to
ascertain not only the absent spouse’s whereabouts, but more importantly, whether the
absent spouse is still alive or already dead.
In this case, the Court found that Josephine’s acts were lackadaisical, as she did
not present a medical document or expert testimony to prove that Agapito had been
suffering from a terminal illness prior to his disappearance. Her informers were also found
to be unreliable as she did not present the people she had inquired from in court, nor
identified the others. She also did not seek police assistance, and while this is not
indicative of a diligent search, a document could have been presented to show that she
had diligently tried to locate her husband. The Court found that Josephine’s efforts to
search for her husband were too flimsy to serve as a concrete basis of a well-founded
belief that Agapito was already dead. Thus, she was not able to establish the fact of a
“well-founded belief” that her husband was already dead.
The petition to declare Agapito Pilapil presumptively dead was dismissed.
14
PULIDO V. PEOPLE
HERNANDO, J.
GR No. 220149 July 27, 2021
JUDICIAL DECLARATION OF ABSOLUTE NULLITY IN BIGAMY CASES
DOCTRINE
Other than for purposes of remarriage, no judicial action is necessary to declare a
marriage an absolute nullity. For other purposes, such as but not limited to determination
of heirship, legitimacy or illegitimacy of a child, settlement of estate, dissolution of
property regime, or a criminal case for that matter, the court may pass upon the validity
of marriage even in a suit not directly instituted to question the same so long as it is
essential to the determination of the case.
FACTS
Luisito G. Pulido (Pulido) and Rowena U. Baleda (Baleda) were charged before the
RTC with Bigamy in an Information filed by complainant Nora S. Arcon (Arcon).
Records show that on September 5, 1983, then 16-year old Pulido married his
teacher, then 22-year old private complainant Nora S. Arcon (Arcon) in a civil ceremony at
the Municipal Hall of Rosario, Cavite solemnized by then Mayor Calixto D. Enriquez. Their
marriage was blessed with a child born in 1984.
The couple lived together until 2007 when Pulido stopped going home to their
conjugal dwelling. When confronted by Arcon, Pulido admitted to his affair with Baleda.
Arcon likewise learned that Pulido and Baleda entered into marriage on July 31, 1995
which was solemnized by Reverend Conrado P. Ramos. Their Marriage Certificate indicated
Pulido's civil status as single.
Hurt by the betrayal, Arcon charged Pulido and Baleda with Bigamy on December
4, 2007. In his defense, Pulido insisted that he could not be held criminally liable for
bigamy because both his marriages were null and void. He claimed that his marriage with
Arcon in 1983 is null and void for lack of a valid marriage license while his marriage with
Baleda is null and void for lack of a marriage ceremony.
Baleda, on the other hand, claimed that she only knew of Pulido's prior marriage
with Arcon sometime in April 2007. She alleged that even prior to the filing of the bigamy
case, she already filed a Petition to Annul her marriage with Pulido before the RTC of
Imus, Cavite docketed as Civil Case No. 1586-07. In a Decision dated October 25, 2007,
the RTC declared her marriage with Pulido as null and void for being bigamous in nature.
In its June 22, 2009 Decision, the trial court convicted petitioner of Bigamy and
acquitted Baleda. The appellate court, in its assailed March 17, 2015 Decision, sustained
petitioner's conviction but modified the penalty. The CA also found that all the elements
15
of bigamy were present since Pulido entered into a second marriage with Baleda while his
prior marriage with Arcon was subsisting, and without first having obtained a judicial
declaration of the nullity of the prior marriage with Arcon.
ISSUE
Is a judicial declaration of nullity of marriage necessary to establish the invalidity
of a void ab initio marriage in a bigamy prosecution?
HELD
No. We hold that a judicial declaration of absolute nullity is not necessary to prove
a void ab initio prior and subsequent marriages in a bigamy case. Consequently, a judicial
declaration of absolute nullity of the first and/or second marriages presented by the
accused in the prosecution for bigamy is a valid defense, irrespective of the time within
which they are secured.
In a criminal prosecution for bigamy, the parties may still raise the defense of a
void ab initio marriage even without obtaining a judicial declaration of absolute nullity if
the first marriage was celebrated before the effectivity of the Family Code. Such is still
governed by the rulings in Mendoza, Aragon and Odayat which are more in line with the
rule that procedural rules are only given retroactive effect insofar as they do not
prejudice or impair vested or acquired rights.
In this case, Pulido's marriage with Arcon was celebrated when the Civil Code was
in effect while his subsequent marriage with Baleda was contracted during the effectivity
of the Family Code. Hence, Pulido is required to obtain a judicial decree of absolute
nullity or his prior void ab initio marriage but only for purposes of remarriage. As regards
the bigamy case, however, Pulido may raise the defense of a void ab initio marriage even
without obtaining a judicial declaration of absolute nullity.
When the prior marriage was contracted prior to the effectivity of the Family Code
while the subsequent marriage was contracted during the effectivity of the said law, the
Court recognizes the retroactive application of Article 40 of the Family Code but only
insofar as it does not prejudice or impair vested or acquired rights.
Pulido was acquitted.
16
Adopted Children
INTER-COUNTRY ADOPTION
SPOUSES PARK V. LIWANAG
HERNANDO, J.
G.R. No. 248035 November 27, 2019
INTER-COUNTRY ADOPTION
DOCTRINE
Any alien possessing the same qualifications for Filipino nationals may adopt under
the Domestic Adoption Act. Provided, that he has been living in the Philippines for at least
three (3) continuous years prior to the filing of the petition for adoption and maintains
such residence until the adoption decree is entered.
FACTS
Spouses Joon Hyung Park (Park) and Kyung Ah Lee (Lee) are American citizens
residing in the Philippines. They applied for a Petition for Adoption with Change of Name
Of the minor Mayca Alegado (Innah) before the Regional Trial Court (RTC) of Makati City.
Park has been residing in the Philippines since 2007, while Lee, since 2009. They
have been employed in the Philippines for almost the same length of time that they have
been residing in the country. Park was the President of two Philippine Economic Zone
Authority (PEZA) corporations while Lee was the Senior Adviser of Banco De Oro’s (BDO)
Korean Desk.
Innah was barely 22 days old when she was under the custody of the Department
of Social Welfare and Development (DSWD) after being rescued from trafficking. When
Innah turned six years old, custody was officially bestowed by the DSWD upon Park and
Lee through a Pre-Adoption Placement Authority. Park and Lee also adopted another girl,
Hannah, through domestic adoption. Hannah was considered by Innah as her older sister.
The RTC found that since the petitioners are both foreigners, the Petition for
Adoption with Change of Name of the minor Innah presented a proper case of
inter-country adoption, instead of considering said petition as being filed under the
Domestic Adoption Act.
Park and Lee asserted that contrary to the pronouncement of the RTC, the instant
case is not appropriate for inter-country adoption proceedings. This is because, according
to the Inter-Country Adoption Act of 1995, it applies to aliens who permanently reside
abroad.
17
The petitioners filed a petition for certiorari before the CA. The Court of Appeals
denied the petition and subsequently denied the motion for reconsideration on procedural
grounds.
ISSUE
Does the Domestic Adoption Act apply to Park and Lee?
HELD
Yes. The Domestic Adoption Act enumerates persons who are qualified to adopt.
Section 4 (1) of the said act provides that
“Any Filipino citizen of legal age, in possession of full civil capacity and legal
rights, of good moral character, has not been convicted of any crime involving moral
turpitude; who is emotionally and psychologically capable of caring for children, at least
sixteen (16) years older then the adoptee, and who is in a position to support and care for
his children in keeping with the means of the family.”
Further, Section 4 (2) of the same Act provides that:

Any alien possessing the same qualifications as above-stated for Filipino nationals:
provided, that he has been living in the Philippines for at least three (3) continuous years
prior to the filing of the petition for adoption and maintains such residence until the
adoption decree is entered, that he has been certified by his diplomatic or consular office
or any appropriate government agency to have the legal capacity to adopt in his country,
and that his government allows the adoptee to enter his country as his adopted child.
In this case, Park and Lee, who are both American citizens, have been residing and
gainfully employed in the Philippines for at least three continuous years prior to the filing
of the petition for adoption as required by the Domestic Adoption Act.
In addition, the court also took note of Park and Lee’s effort during the
proceedings in the trial court as far as securing authenticated copies of the relevant
California laws on adoption, US immigration laws and the submission of several documents
through written interrogatories.
Thus, the court held that since the case fall under the Domestic Adoption Act, it is
for the best interest of the child that the instant case be speedily disposed by continuing
the proceedings in the trial court for the determination of whether petitioners are indeed
qualified to adopt the child, instead of inappropriately referring the instant domestic
adoption case to the ICAB where the proceedings may have to start anew and might be
referred back to the trial court for the continuation of the domestic adoption
proceedings. Settled is the rule that in adoption proceedings, the welfare of the child is
of paramount interest.
18
PROPERTY
Bundle of Rights
OWNERSHIP
GEMINA V. HEIRS OF ESPEJO, JR.
HERNANDO, J.
GR No. 232682 September 13, 2021
OWNERSHIP
DOCTRINE
When the party-defendant is present, the absence of his counsel during pre-trial
shall not ipso facto result in the plaintiffs ex parte presentation of evidence.
The identity of the property and the title of the claimant must be ascertained in
the action to recover possession of real property pursuant to Article 434 of the Civil Code.
FACTS
Gemina claims that he purchased the lot in controversy located in Batasan, Quezon
City. He claims to have occupied the land with his family, and possessed the property
openly, continuously, peacefully, and in the concept of an owner since 1978. Gemina
presented the following documents: (1) Deed of Absolute sale dated May 16, 1978; (2)
pictures of fruit bearing trees that he planted on the property; (3) Building Permit as
proof that he constructed a residential house on the property; (4) Notice of Assessment of
Real Property; (5) Sworn Statement of the value of real property; (6) Tax Declaration No.
C-139-07819; (7) several Real Property Tax Bill-Receipt; (8) TCT No. 252774 in the Name of
the vendor Ana DE Guia San Pedro; (9) Deed of Conditional Sale between Ana and Gemina;
(10) Information Sheet of the BHHAI that he held the Director and the Treasurer positions
of the homeowners association where the subject property is located; and (11)
photocopies of billings or statement of accounts to bolster his claim of actual presence on
the property.
The Heirs of Espejo on the other hand averred that they are co-owners of the
subject property covered by TCT No. 93809 in the names of Gerardo and Nenafe Espejo as
well as a tax declaration of the subject property in the name of Gerardo and Nenafe.
The Heirs of Espejo sent Gemina a demand letter asserting ownership over the
property and demanding Gemina and his family to vacate the property because they have
been unlawfully occupying the lot. Gemina refused to vacate, therefore the heirs of
Espejo resorted to legal action. The heirs of Espejo initially filed a Complaint for Unlawful
detainer which they later withdrew. The Espejos later filed an action for recovery of
possession and prayed for the trial court to order Gemina and all persons claiming in his
19
behalf to vacate and surrender possession of the subject property, and to pay reasonable
compensation from the time that their possession became unlawful, among others.
During the pre-trial, Gemina’s counsel failed to attend. As a result, the trial court
reset the schedule for the last time and directed Gemina to inform his counsel of the new
schedule. GRmina’s counsel still failed to attend but the court allowed the Heirs of Espejo
to present their evidence ex parte. Gemina’s counsel later filed a Withdrawal of Counsel
with Attached Motion for Reconsideration citing health reasons as justification for the
withdrawal and invoking the trial court's compassion so as not to prejudice Gemma's cause
due to the heirs of Espejo's ex parte presentation of evidence.
The trial court granted the withdrawal and directed Gemina to secure the services
of new counsel. The Trial Court regarded the motion for reconsideration a mere scrap of
paper since it lacked the requisite notice of hearing. Meantime, the heirs of Espejo's ex
parte presentation of evidence proceeded as scheduled. The Court of Appeals affirmed.
ISSUE
Was the CA incorrect in affirming the ruling against Gemina despite the Heirs of
Espejos’ failure to prove the identity of the land?
HELD
Yes. In view of the procedural infirmities of this ease to the prejudice of Gemina
(who essentially was deprived of his chance to present the merits of his defense as a
result of the order assenting to the ex parte presentation of plaintiffs evidence and the
eventual resolution of the case on the basis thereof), We deem it appropriate to remand
the case to the court of origin for further proceedings, to hear and receive evidence.
If only to shed light on a few questions of law to serve as guide, Article 434 of the
Civil Code is controlling in this case. It provides that "in an action to recover, the property
must be identified, and the plaintiff" must rely on the strength of his title and not on the
weakness of the defendant's claim." It is hornbook doctrine that the entitlement to the
possession of real property belongs to its registered owner. However, the registered owner
must seek proper judicial remedy and comply with the requisites of the chosen action in
order to recover possession of a real property from the occupant who has actual and
physical possession thereof.
It appears on record that the identity of the subject property was ascertained by
the trial court and the appellate court based on the technical description stated in TCT
93809 and the Judicial Affidavit of Ma. Teresa R. Espejo which merely identified TCT
93809 as one registered in the names of Gerardo and Nenafe. What is more, while the
subject property was identified to be the land located at 156 Session Road, Woodcrest
Homes, Talanay, Area B, Batasan Hills, Quezon City, however, the fallo of the trial court's
Decision refers to another property, the one situated in 156 Session Road, Garland
Subdivision, Talanay, Area B, Batasan Hills, Quezon City. This all the more created
ambiguity as to the exact identity of the disputed property.
20
Hence, to finally resolve the conflicting claims of the parties, Gemina must be
given the chance to present his evidence.
21
QUIETING OF TITLE
HEIRS OF EÑANO V. SAN PEDRO CINEPLEX PROPERTIES INC.
HERNANDO, J.
GR No. 236619 April 6, 2022
QUIETING OF TITLE
DOCTRINE
In an action for quieting of title, the objective is for the competent court to
remove the cloud by determining the rights of the parties so that the ones entitled to the
subject property may exercise said rights without fear, disturbance, or interference from
those who have no right over the same.
Two requisites must be established in order that a complaint for quieting of title
may prosper. First, the plaintiff must have a legal or equitable title or interest in the
property subject of the complaint. Second, the deed, claim, encumbrance, or proceeding
allegedly casting doubt over one's title must be proven to be in truth invalid, void or
inoperative despite the prima facie appearance of validity.
FACTS
Jennifer Eñano Bote, daughter of Manuel H. Eñano (Manuel), was the
representative of the latter's legal heirs. She authorized her husband Virgilio A. Bote
(Virgilio) through a Special Power of Attorney to file a Complaint for Quieting of Title with
Damages involving a parcel of land located at Barangay Landayan, San Pedro, Laguna
(subject property).
Petitioners contended that Manuel is the registered owner of the subject property
evidenced by TCT No. T-35050. Manuel had been in open and continuous possession of the
subject property since 1966 until his demise in 1987 when his heirs had taken possession
of the same. In June 2006, while Virgilio was in possession of the subject property, he
received a Complaint for Forcible Entry filed by San Pedro Cineplex Properties, Inc.
(respondent) claiming that it is the registered owner of the subject property by virtue of
Transfer Certificate of Title Nos. T-309608, T-309609, and T-309610. After verification
with the Register of Deeds of Calamba City, petitioners discovered that TCT Nos.
T-309608, T-309609 and T-309610 were fictitious, creating a cloud over Manuel's title over
the subject property.
Version of Petitioners
On May 13, 1965, Manuel bought the subject property from the Spouses Gliceria
Kasubuan (Gliceria) and Apolonio Morando as evidenced by a Deed of Absolute Sale. As a
result of the sale, TCT No. T-35050 was issued in the name of Manuel on even date. The
subject property was likewise covered by Tax Declaration No. 24-0007-12938.
22
Version of Respondents
First, Gliceria owned the subject property as her paraphernal property evidenced
by OCT No. 0-217.
Second, Gliceria sold the subject property to the Spouses Antonio Sibulo and
Rosario Islan (Spouses Sibulo) in 1964, and consequently TCT No. T-31852 was issued in
their favor.
Third, the Spouses Sibulo sold Lots 2-B and 2-C to Doña Crisanta Investment and
Development Corporation (Doña Crisanta Investment) in 1966, hence, TCT No. T-27112
was issued in its favor. Then in 1967, the Spouses Sibulo sold Lot 2-A to Doña Crisanta
Investment to whom TCT No. T-18811 was issued.
Fourth, Doña Crisanta Investment sold Lots 2-A, 2-B and 2-C to La Paz Housing as
evidenced by a Deed of Sale with Mortgage in 1985. As a result of such transaction, TCT
Nos. T-129577, T-129578, and T-129579 were issued in favor of La Paz Housing.
Fifth, La Paz Housing sold the subject property covered by TCT Nos. T-129577,
T-129578, and T-129579 to respondent evidenced by a Deed of Sale in 1994.
Consequently, La Paz Housing's certificates of title were cancelled and TCT Nos. T-309608,
T-309609, and T-309610 were issued in favor of respondent.
The RTC of San Pedro resolved that the petitioners are the exclusive owners,
having a better right than respondent, over the subject property. That Manuel legally
acquired the subject property through an Absolute Deed of Sale dated May 13, 1965, and
he was in continuous and peaceful possession of the property from the time of said sale.
The Court of Appeals reversed the trial court's findings and dismissed the
complaint for lack of merit. The petitioners failed to prove by preponderance of evidence
that they have a legal or an equitable title over the subject property.
ISSUE
Do the petitioners have better right over the property?
HELD
NO. In an action for quieting of title, the objective is for the competent court to
remove the cloud by determining the rights of the parties so that the ones entitled to the
subject property may exercise said rights without fear, disturbance, or interference from
those who have no right over the same.
From the foregoing provisions, two requisites must be established in order that a
complaint for quieting of title may prosper. First, the plaintiff must have a legal or
equitable title or interest in the property subject of the complaint. Second, the deed,
claim, encumbrance, or proceeding allegedly casting doubt over one's title must be
23
proven to be in truth invalid, void or inoperative despite the prima facie appearance of
validity.
The petitioners failed to prove that they hold a legal or equitable title over the
subject property. On one hand, legal title means registered ownership, where the subject
property is registered under the name of the complainant in an action to quiet title,
which may be evidenced by presenting the certificate of title in the latter's name. On the
other hand, equitable title denotes beneficial ownership, which is "ownership recognized
by law and capable of being enforced in the courts at the suit of the beneficial owner."
Similarly, the second requisite was not ascertained since the certificates of title in
the name of respondent and the origin of the same were precisely demonstrated through
the chain of transactions which led to respondent's ownership of the subject property.
Therefore, the alleged cloud created by respondent's certificates of title did not exist.
The petition was denied.
24
HEIRS OF MARQUEZ V. HEIRS OF HERNANDEZ
HERNANDO, J.
GR No. 236826 March 23, 2022
QUIETING OF TITLE
DOCTRINE
The two indispensable requisites must concur for an action to quiet title would
proper: (1) the plaintiff or complainant has a legal or an equitable title to or interest in
the real property subject of the action; and (2) the deed, claim, encumbrance, or
proceeding claimed to be casting cloud. His or her title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.
FACTS
The Heirs of Epifania M. Hernandez (Heirs of Hernandez), respondents, filed a
complaint for specific performance against Herminio Marquez (Herminio) and Alma Marie
Marquez (Marquez), petitioner, to cause the execution of a deed of absolute sale for an
area of 200 square meters (subject property) in their favor and that title over the subject
property be transferred to their names.
Since 1955, Epifania Hernandez (Epifania) and her heirs have been occupying a
parcel of land the subject property. The subject property forms part of a 1,417-square
meter property previously owned by Spouses Anastacio and Lourdes Sakay (Spouses
Sakay), and Spouses Godofredo and Florsita Cruz (Spouses Cruz). Epifania and her heirs
built their house on the subject property with the consent and tolerance of its previous
owners. In 1967, however, Spouses Sakay and Spouses Cruz sold the 1,417-square meter
property to Herminio. Subsequently, Herminio sold to Epifania the subject property in
1985 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 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. Accordingly, Epifania made an initial payment to Herminio in the
amount of P2,000.00 as evidenced by a provisional receipt.
The Heirs of Hernandez claim that Epifania was able to pay in full the agreed
purchase for the subject property before her death. They also executed an Extrajudicial
Settlement 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 such and
received a check in the amount of P61,429.87. Even so, Marquez sent a demand letter to
the Heirs of Hernandez to vacate the premises of the subject property.
25
It appears that 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. Marquez claims
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.
Herminio died and was substituted by Marquez.
Despite respondent’s demands, Herminio allegedly refused to execute a deed of

absolute sale over the subject property in favor of Epifania. Thus, the respondents filed a
complaint for specific performance against Herminio.
The RTC ruled in favor of the Heirs of Hernandez and declared the sale between
Herminio and Epifania valid. It also treated the complaint as one for quieting of title. The
CA also affirmed the findings of the RTC that a perfected contract of sale existed
between Herminio and Epifania. The CA, however, held that the RTC had no jurisdiction to
order the partition of the 1,417-square meter property between Epifania and Marquez
since partition of real property is a special proceeding and not an ordinary civil action.
Hence, this petition.
ISSUE
Can the complaint of the Heirs of Hernandez be considered as one for quieting of
title and not only for specific performance?
HELD
YES, the complaint of the Heirs of Hernandez is not only for specific performance
but also for quieting of title. For an action to quiet to prosper, two indispensable
requisites must concur, namely: "(1) the plaintiff or complainant has a legal or an
equitable title to or interest in the real property subject of the action; and (2) the deed,
claim, encumbrance, or proceeding claimed to be casting cloud on his[/her] title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy."
In the instant case, ownership over the subject property was transferred to
Epifania as early as 1985 by virtue of its delivery by Herminio. Respondents, as heirs of
Epifania, thus acquired an equitable title to the subject property. However, the
Extrajudicial Settlement of Estate with Waiver of Rights presented by Marquez, which
resulted in the issuance of TCT No. T-81516 in the latter's name, was casting a cloud on
the said equitable title of respondents over the said property. It is for this reason that
respondents filed the present action against petitioner to, once and for all, remove such
cloud or to quiet the title.
26
HEIR OF MAGSAYSAY V. SPOUSES PEREZ
HERNANDO, J.
GR No. 225426 June 28, 2021
RECONVEYANCE OF PROPERTY
DOCTRINE
A complaint for reconveyance is an action which admits the registration of title of
another party but claims that such registration was erroneous or wrongful. It seeks the
transfer of the title to the rightful and legal owner, or to the party who has a superior
right over it, without prejudice to innocent purchasers in good faith. The relief prayed for
may be granted on the basis of intrinsic fraud — fraud committed on the true owner
instead of fraud committed on the procedure amounting to lack of jurisdiction.
As per Art. 434 of the New Civil Code: In an action to recover, the property must
be identified, and the plaintiff must rely on the strength of his title and not on the
weakness of the defendant's claim. Thus, the person who claims a better right of
ownership to the property sought to be recovered must prove two things: first, the
identity of the land claimed, and second, his title thereto.
FACTS
Petitioners Heirs of Jesus P. Magsaysay (the heirs), filed a complaint for
reconveyance of lots covered by 15 separate titles. These titles were in the names of Sps.
Zaldy and Annaliza Perez, Sps. Wilmer and Jocelyn Domingo, Sps. Eduardo and Gilda
Rosca, Sps. Fernando and Gemma Bacolongan, Jeffrey M. De Leon, Miguel Tolentino III,
Sps. Antonio and Abdula Decio, Sps. Felix and Annabel Angcot, Sps. Manuel Jr. and
Annamarie Novio, Sps. Arsenio Jr. and Ma. Lourdes Naylon, Kristen Joy Rosca, Mark Jason
Rosca, Sps. Benjamin and Analyn Catada, and Sps. Danilo and Flordeliza Bulan
(respondents). The heirs alleged that their predecessor-in-interest, the late Jesus P.
Magsaysay (Jesus) was in lawful possession in the concept of an owner of a parcel of land
identified as Cadastral Lot No. 1177, a pasture land with a total land area of 800,000
sq.m. situated in Malaplap, Castillejos, Zambales. In 1960, this parcel of land was first
declared for taxation purposes in the name of Jesus under Tax Declaration (TD) No.
27254. Sometime in 2003, the Heirs filed a complaint for forcible entry against
respondents on the ground that the latter, by means of stealth, entered a portion of the
subject land and planted mango trees. Accordingly, respondents Sps. Eduardo and Gilda
Rosca vacated said portion of land. Thereafter, said respondents applied for the
administrative titling of Cadastral Lot No. 1377, an orchard land with a total land area of
708,124 sq. m. situated in San Agustin, Castillejos, Zambales.
The Heirs of Magsaysay allege that the Torrens titles described above are void as
respondents purportedly falsified and committed fraud in their respective applications of
the issuance of the patent as they have never been in actual and physical possession of
the subject land.
27
Respondents raised the affirmative defense that the heirs have no cause of action
as the subject matter was already adjudicated in administrative proceedings wherein they
were both parties.
The RTC declared respondents' land titles as void and directed the reversion of the
subject parcels of land covered by such titles to the public domain. The appellate granted
respondents' appeal finding that Lot No. 1177 being claimed by the heirs was not the same
parcel of land as Lot No. 1377 being claimed by respondents, as these two lots were
located in different places with different boundaries, and thus, the heirs' suit for
reconveyance must necessarily fail.
ISSUE
Are petitioners entitled to reconveyance?
HELD
No, petitioners are not entitled to reconveyance.
A complaint for reconveyance is an action which admits the registration of title of

another party but claims that such registration was erroneous or wrongful. It seeks the
transfer of the title to the rightful and legal owner, or to the party who has a superior
right over it, without prejudice to innocent purchasers in good faith. The party seeking to
recover the property must prove, by clear and convincing evidence, that he or she is
entitled to the property, and that the adverse party has committed fraud in obtaining his
or her title. Bare allegations of fraud are not enough.
Article 434 of the New Civil Code provides that the person who claims a better
right of ownership to the property sought to be recovered must prove two things: first,
the identity of the land claimed, and second, his title thereto.
As applied in this case, petitioners utterly failed to prove the identity of the land
they are claiming and also their title thereto. The uncorroborated and self serving
affidavit of Mario Magsaysay, who is in fact one of the petitioners, fails to clearly convince
that fraud was present. Furthermore, as extensively discussed above, there is no identity
in the subject lands. Consequently, there can be no fraud or misrepresentation if the
property being applied for by respondents in the administrative proceedings were
different from the property being claimed by petitioners.
Thus, the petition filed by the heirs was denied and the complaint for
reconveyance was denied.
28
CO-OWNERSHIP
REYES V. SPOUSES GARCIA
HERNANDO, J.
GR No. 225159, March 21, 2022
CO-OWNERSHIP
DOCTRINE
A co-owner has the right to alienate his pro indiviso share in the co-owned
property even without the consent of the other co-owners. But such alienation is limited
only to the portion which may be allotted to him in the division upon the termination of
the co-ownership under the principle of nemo dat quod non habet (No one can give what
he does not have have).
FACTS
Julian and Marcela died leaving nine children, namely, Vitaliano, Maria, Felicidad,
Ireneo, Isidoro, Anastacio, Julia, Vicente and Isadora. The heirs executed a “Partihan at
Bilihan nang Kalahating Bahagi ng Lupang Tirahan sa Labas ng Hukuman,” and sold half of
the subject property to Anastacio. The remaining quarter was occupied by Vitaliano’s
children, namely, petitioner and Fermin, while the other quarter was sold by Isidoro to
respondent Spouses Garcia. Thereafter, respondent Spouses Garcia filed an ejectment
case against Fermin for the ¼ of the subject property.
Petitioner filed a complaint for recovery of ownership, quieting of title and

annulment of deed of sale against the spouses Garcia alleging that the Deed of Sale is void
since Isidoro is not the true and real owner of the subject property which originally
belongs to Julian’s estate. On the other hand, respondent Spouses Garcia countered that
the complaint should be dismissed on the ground of res judicata, failure to state a cause
of action, and to implead indispensable parties, non-compliance with a condition
precedent, and extinguishment of claim by reason of waiver and abandonment. Spouses
Gracia also argued that the heirs had already agreed to divide the property among
themselves when they allowed a portion of the property to be occupied by the heirs of
Vitaliano.
The RTC rendered its Decision dismissing petitioner’s complaint and respondent’s
counterclaim for lack of merit. The CA affirmed RTC’s ruling.
ISSUE
Was the Deed of Sale null and void insofar as the interests of the other heirs are
concerned?
HELD
Yes. It is undisputed that the subject property belongs to Julian, and that upon the
demise of Julian and his wife Marcela, the heirs executed Partihan at Bilihan nang
29
Kalahating Bahagi ng Lupang Tirahan sa Labas ng Hukuman which sold half of the subject
property to tier co-heirs Anastacio. As to the remaining half of the subject property, the
same remains in the estate of Julian and Marcela.
Nonetheless, a co-owner may alienate an inchoate portion of the subject property

which belongs to him or her. Article 493 of the Civil Code provides for the rights of the
co-owners over a co-owned property.
Thus, Isidoro, as one of the heirs of Julian and Marcela, has the right to alienate
his pro indiviso share in the co-owned property even without the consent of the other
co-heirs. However, as a mere part owner, he cannot alienate the shares of the other
co-owners. Nemo dat quod non habet. No one can give what he does not have. Hence, as
correctly ruled by the courts a quo, Isidoro’s sale of the remaining half of the subject
property will only affect his own share but not those of the other co-owners who did not
consent to the sale. The spouses Garcia will not only get Isidoro’s undivided share in the
subject property.
However, Reynaldo Reyes’ recourse should have been a division of the common
property. To demand a partition or division of the common property is in accord with
Article 494 of the Civil Code, that is, no co-owner shall be obliged to remain in the
co-ownership and that each co-owner may demand at any time partition of the thing
owned in common insofar as his or her share is concerned. The spouses Garcia, as
co-owner of the 231.5 sqm subject property by virtue of the deed of sale dated August 16,
19893 1 executed by Isidoro in their favor, cannot claim a specific portion of the subject
property prior to its partition. With the subsistence of co-ownership, the spouses Garcia
only owns Isidoro' s undivided aliquot share of the subject property. The spouses Garcia
and all the co-owners cannot adjudicate to himself or herself title to any definite portion
of the subject property until its actual partition by agreement or judicial decree.
Apropos, 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 deed of sale
dated August 16, 1989 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.
30
POSSESSION
REPUBLIC V. MANUEL CARAIG
HERNANDO, J.
G.R. No. 197389 October 12, 2020
POSSESSION IN THE CONCEPT OF AN OWNER
DOCTRINE
The possession and occupation as bona fide owner of Sellers can be tacked to the
possession of the Buyer who acquired property by virtue of a Deed of Absolute Sale
executed by the Seller in the Buyer's favor.
FACTS
Evaristo Navarro (Evaristo) owned a property in Batangas wherein he planted
coffee and bananas. He eventually donated the property to his son Reynaldo Navarro
(Reynaldo) who then sold a portion of his property to Respondent Manuel Caraig (Caraig)
in 1989. Reynaldo and Caraig executed a Deed of Absolute Sale in relation to the portion
of the property owned by Reynaldo. Thereafter, Caraig through his Atty-in-fact Nelson
filed for an Application for Original Registration of Title. He also built his house and
planted crops in Lot 5525B.
Caraig complied with the proper procedures in registering new lands, he presented
certificates from CENRO which dates back from 1925 (Project 30) where it shows that the
property was indeed classified as alienable and disposable land of public domain. He also
had his neighbors stand before the judge to vouch for the ownership and continuous
possession of Evaristo and his predecessors in interest.
The OSG (petitioner) representing the Republic contradicts that Lot 5525B is
alienable and disposable hence, cannot be owned by private individuals and that there
was no competent proof that Caraig was in possession of the land for at least 30 years to
allow the same to be registered under his name.
The MTC ruled in favor of Caraig after finding that his ownership over the property
had been sufficiently established. Upon appeal to the CA, the OSG alleged there was no
competent proof of possession to allow registration under Caraig’s name and that the
testimonies of the witnesses presented were mere hearsay. The CA affirmed the decision
of the MTC.
ISSUE
1. Were the CENRO Certificates can be sufficient proof that Lot No. 5525-B is
alienable and disposable; (LTD/Property)
2. Did Caraig sufficiently prove that he and his predecessors-in-interest were
in continuous, peaceful, notorious and exclusive possession in the concept
of an owner of the subject land; (LTD/Property)
31
3. Was Nelson as an Atty-in-fact incompetent to identify the contents of the
Deed of Absolute Sale and the Deed of Donation. (Agency)
HELD
1. Yes. The requirements under Section 14 (1) of Presidential Decree (P.D.) No.
1529 were duly met by Caraig. The two (2) CENRO Certificates dated 2003 sufficiently
showed that the government executed a positive act of declaration that Lot No. 5525-B is
alienable and disposable land of public domain as of December 31, 1925. Neither the Land
Registration Authority nor the DENR opposed Caraig's application on the ground that the
subject lot is inalienable. Hence, since no substantive rights stand to be prejudiced, the
benefit of the Certifications should therefore be equitably extended in favor of Caraig.
The OSG failed to contradict the said act of the government. Hence, the certificates
enjoy the presumption of regularity in the absence of contradictory evidence. Thus, with
the presentation of the CENRO certificates as evidence, together with the documentary
evidence, Caraig substantially complied with the legal requirement that the land must be
proved to be an alienable and disposable part of the public domain.
2. Yes. Caraig had sufficiently established his possession in the concept of owner
of the property since June 12, 1945, or earlier. The testimonies of the witnesses are
credible enough to support Caraig's claim of possession. Worthy to note that the witnesses
unswervingly declared that Evaristo, in the concept of an owner, occupied and possessed
Lot No. 5525 even before June 12, 1945. The SC held that the possession and occupation
as bona fide owner of Evaristo and Reynaldo can be tacked to the possession of Caraig
who acquired Lot No. 5525-B by virtue of a Deed of Absolute Sale dated September 25,
1989 executed by Reynaldo in Caraig's favor.
3. No. In the appeal of OSG to CA, the latter affirmed the MTC Decision. It opined
that Nelson, as the attorney-in-fact, was authorized to file the application on behalf of
Caraig, to represent him in the proceedings, to testify and to present documentary
evidence during the trial, and to do any acts in furtherance thereof.
32
VILORIA V. HEIRS OF GAETOS
HERNANDO, J.
G.R. No. 206240 May 12, 2021
QUIETING OF TITLE
DOCTRINE
In an action for quieting of title, the plaintiff has the burden to show by
preponderance of evidence that they have a legal and equitable title to or interest in the
real property subject of the action. For an action to quiet title to prosper, two
indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal
or an equitable title to or interest in the real property subject of the action; and (2) the
deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy.
FACTS
Petitioners Josefina Quejado-Viloria, Remedios Quejado-Gaerlan (Remedios),
Benjamin F. Quejado, Demetrio F. Quejado (Demetrio) and Felicitas F. Quejado (the
Quejados) filed before the trial court a complaint for Quieting of Title with Damages.
They claimed ownership over a 10,000-square meter lot located in San Juan, La Union
(subject property), having inherited the subject property from their
predecessor-in-interest who had openly, publicly, continuously and peacefully possessed
the same without interruption for more than 30 years in the concept of an owner. They
alleged that the respondent heirs of Segunda Gaetos (the Gaetos heirs) surreptitiously and
without their knowledge and consent caused the subject property to be surveyed for the
purpose of claiming ownership. Their acts disturbed and put a cloud on their ownership,
possession, and title over the subject property. Efforts toward amicable settlement
between parties were exerted before the barangay council but failed. The Gaetos heirs
denied the allegations of the heirs of Quejado. They insisted that the Quejados were not
the owners of the subject property. They maintained that the Gaetos family owned the
property in dispute by virtue of succession from a common ancestor several years before
World War II.
During trial, the Quejado heirs presented testimonial evidence pointing to their
ownership and possession of the subject property. The testimonies of a tenant and a
neighbor were also presented who both acknowledged the ownership of the Quejados over
the subject property. To fortify the veracity of their claim of ownership over the land,
they also averred that their mother mortgaged the subject property on several occasions
with various banks. Pieces of documentary evidence, like the mortgages and their
cancellation and Tax Declaration Nos. 13457 and 15859 were also presented to support
their claim of ownership.
On the other hand, the heirs of Gaetos adduced the testimony of Isabelo Laurea,
who testified that the subject property was near his place and its original owner was the
33
grandfather of Francisco Gaetos. Teresita Ganaden, granddaughter of Francisco Gaetos,
also testified. She recalled that the subject property was originally owned by Leon Gaetos
and Praxedes Pascua, who had six children who were already deceased when the case was
instituted. She likewise presented the San Juan, La Union Cadastre Cad 739-D to show
that the subject property was partitioned among the six children of Leon and Praxedes
Gaetos. To bolster their claim, Teresita also presented receipts of expropriation payments
for the properties ordered expropriated by the Court of First Instance of La Union,
including the decision in the said case involving the subject property. The properties, as
apportioned, were subsequently transferred to individual persons, as evidenced by
current tax declarations in their names presented before the court.
The trial court rendered judgement in favor of Gaetos and found that the evidence
of the Quejados did not convincingly establish that they possessed the property publicly,
exclusively, and peacefully in the concept of owners. The trial court also noted that they
did not have the requisite title to pursue an action for quieting of title. On appeal, the
appellate court denied the appeal and affirmed the decision of the trial court in toto.
ISSUE
Are tax declarations, receipts and testimonial evidence sufficient to establish
equitable title over the property?
HELD
No, tax declarations and receipts are not conclusive evidence of ownership or of the right
to possess land when not supported by other evidence. Mere allegation of open,
continuous, and exclusive possession of the property in dispute without substantiation
does not meet the requirements of the law.
In an action for quieting of title, the plaintiff has the burden to show by preponderance of
evidence that they have a legal and equitable title to or interest in the real property
subject of the action. For an action to quiet title to prosper, two indispensable requisites
must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to
or interest in the real property subject of the action; and (2) the deed, claim,
encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be
in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy.
Here, petitioners did not have a legal title to the subject property. There were no
certificates of title in their respective names. Moreover, based on the findings of the
lower courts, they also failed to substantiate their claim of having equitable title as well.
The tax declarations under the names of their predecessor-in-interests, documentation
alluding to mortgages, and the testimonial evidence they have presented did not
convincingly establish their equitable title over the subject property. Hence, based on the
foregoing, petitioners failed at the outset to establish the first requirement of having
legal or equitable title over the property in dispute. Their cause of action for quieting of
title simply cannot prosper.
34
In view of their lack of title, legal or equitable, there is no cloud to be prevented or
removed and there is no case of quieting of title to speak of.
35
Different Modes of Acquiring Ownership
DONATION
CARDINEZ V. SPOUSES CARDINEZ
HERNANDO, J.
G.R. No. 213001 August 4, 2021
DONATION: ART. 1318
DOCTRINE
1. 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.
2. 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.
FACTS
The late Simeona Cardinez owned a 1,950-square meter parcel of land in La Union.
Upon her demise, her sons, Prudencio, Florentino, and Valentin inherited the land and
equally divided it among themselves. On April 23, 1986, Transfer Certificate of Title (TCT)
No. T-26701 covering the land was issued in the name of the brothers as co-owners.
Prudencio's share in the land was the middle portion which he registered for taxation
purposes under Tax Declaration No. (TD) 18237.
In 1994, Valentin asked Prudencio to donate a 10 sq.m. portion of his land

encroached by Valentin’s balcony. This was agreed to by Prudencio who, along with his
wife, was made to sign a document written in english, without understanding its contents.
Fourteen years later,Prudencio found out that a survey of the land was being conducted.
He then inquired if his inherited portion of the land was still in his name. To Prudencio's
surprise, Valentin's children, Lauro Cardinez (Lauro), Isidro Cardinez (Isidro), Jesus
Cardinez, Virgie Cardinez, Flora Laconsay, and Aida Dela Cruz (Aida), (collectively,
36
petitioners) informed him that he already donated his inherited portion to them through
the document that he allegedly executed with Cresencia.
Henry, Prudencio’s son, inquired from the Register of Deeds in San Fernando,
Pampanga about the Deed of Donation. However, he was informed that a copy of the
original TCT covering his father's land was among those burnt when the Bureau of Lands
was caught on fire. He then went to the Bacnotan Assessor's Office where he discovered
that TCT No. T-26701 no longer bore his father's name as one of the co-owners. Instead, it
bore the name of Lauro, Valentin's son, by virtue of the Deed of Donation. This fact was
confirmed by the notary public indicated on the document.
Prudencio and Crescencia filed a Complaint for Annulment of Document with

Recovery of Possession and Damages.They averred that Valentin took advantage of their
low level of education when he made them believe that the document they were signing
were for the partition of the inherited land, cancellation of TCT No. T-26701, and transfer
of their shares in their respective names. Valentin therefore used machinations and
misrepresentations to induce them to sign the document which turned out to be a Deed of
Donation.
Petitioners denied the allegations of respondents and asserted that respondents

voluntarily executed the Deed of Donation and had understood its contents. They insisted
that respondents can fully comprehend and understand English. In fact, Cresencia was
even a Barangay Kagawad in their barangay. Also, respondents even affixed their
signatures in the Deed and personally appeared before the notary public. Lastly,
petitioners contended that the action had already prescribed since 10 years had lapsed
from the execution of the Deed of Donation, a written contract.
The RTC ruled in favor of Prudencio and Cresencia and found that there was
evidence sufficient to prove that the Deed of Donation was executed through fraudulent
means. Upon appeal, the CA affirmed the decision of the RTC but modified the nullity of
the same to cover only the share of Prudencio and Cresencia.
ISSUE
1. Was the donation valid?
2. Had the action instituted by the respondents already prescribed?
HELD
1. No. The Deed of Donation is void ab initio in the absence of the respondent’
consent.
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
37
Prudencio categorically and firmly stated that he did not know that the document
which Valentin asked him to sign was a Deed of Donation. In fact, Prudencio did not read
the document before affixing his signature because he trusted his brother that it was for
the partition of their inherited land and the cancellation of its title. Valentin neither read
the contents of the document to respondents nor gave them a copy thereof. The notary
public likewise did not explain its contents to respondents and only asked them to affix
their signatures therein. To debunk the claim of respondents that they are not highly
educated since they only finished Grade 3, petitioners averred that Cresencia could not
have become a Barangay Kagawad if she and her husband did not understand and
comprehend the English language. However, their allegation was not supported by any
evidence which could have proved their claim.
It is therefore clear that respondents did not donate their land to petitioners. They
never understood the full import of the document because it was neither shown to them
nor read by either Valenin or the notary public. Considering that they did not give their
consent at all to the Deed of Donation, it is therefore null and void.
2. No. The action for annulment of the Deed of Donation 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. 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.
Since the Deed of Donation is void ab initio due to the illegality in its execution,
the disputed land is deemed to be simply held by petitioners in trust for respondents who
are the real owners. Respondents therefore have the right to institute a case against
petitioners for the reconveyance of the property at any time. The well-settled rule is that
"[a]s long as the land wrongfully registered under the Torrens system is still in the name of
the person who caused such registration, an action in personam will lie to compel him to
reconvey the property to the real owner."
38
Prescription
PRINCIPLE OF LACHES
ENDE V. ROMAN CATHOLIC PRELATE OF THE PRELATURE NULLIUS OF COTABATO, INC.
HERNANDO, J.
GR No. 191867 December 06, 2021
PRINCIPLE OF LACHES
DOCTRINE
The essential elements of laches are, namely: (1) conduct on the part of the
defendant, or of one under whom he claims, giving rise to the situation complained of; (2)
delay in asserting complainant's right after he had knowledge of the defendant's conduct
and after he has an opportunity to sue; (3) lack of knowledge or notice on the part of the
defendant that the complainant would assert the right on which he bases his suit; and (4)
injury or prejudice to the defendant in the event relief is accorded to the complainant.
FACTS
Spouses Butas Ende (Butas) and Damagi Arog (Damagi) collectively spouses Ende,
were the registered owners of a lot with an area around 2 hectares located in Sudapin,
Kidapawan, Cotabato covered by OCT No. P-46114. However, portions of the subject
property around 16 hectares are presently occupied by respondents Roman Catholic;
Welhilmina; Eliza and Juanito Diaz; and Jessie and Corazon Flores. Amado, Daniel, Felipe,
and Pilar, the nephews, and nieces of the spouses Ende, claiming to be the surviving heirs
of the spouses Ende, filed a complaint to have OCT No. P-46114 and regaining custody of
it while paying damages. They asserted that respondents deceitfully acquired parts of the
subject property over time by taking advantage of the spouses Ende's ignorance and
illiteracy, and they claimed that the spouses Ende's legitimate heirs had signed an
extrajudicial settlement of estate that includes the subject property.
Respondents Roman Catholic; Welhilmina; Eliza and Juanito Diaz; and Jessie and
Corazon Flores (Roman Catholic et al), filed a motion to dismiss claiming that they
acquired ownership over their respective portions of the subject property totalling around
16 hectares, from Damagi or from third persons who, in turn, acquired the same from
Damagi and invoked acquisitive prescription claiming that their possession of the
respective portions of the subject property spanned at least 30 years to at most 50 years
already. Since petitioners failed to assert their alleged rights over the subject property,
laches already set in that barred their recovery thereof.
Petitioners Amalayon and Quezon, claiming to be the surviving children and

legitimate heirs of the spouses Ende, intervened in a case filed by the supposedly legal
heirs of the Spouses Ende, Amado, Daniel, Felipe, and Pilar. They asserted in their
answer-in-intervention that Amado, Daniel, Felipe, and Pilar are merely imposters and
that they are the children and rightful heirs of the spouses Ende, they were expelled from
39
the subject property by the spouses Ende's nephews, Incara Ende, which prevented them
from exercising their rights to it after the couple's passing. They averred that Amado,
Daniel, Felipe, and Pilar are not real parties-in-interest in the quieting of OCT No.
P-46114. Thus, petitioners prayed for the nullity of the extrajudicial settlement of estate
of the spouses Ende and the dismissal of the complaint for quieting of title.
The RTC dismissed Amado, Daniel, Felipe, and Pilar's complaint for quieting of title
and recovery of possession. The RTC, however, granted the petitioners Amlayon and
Quezon's claim after they provided evidence that they are the spouses Ende's children and
thus the latter's legitimate heirs.
The Court of Appeals ruled that the petitioners' inaction to claim as alleged
rightful heirs of the spouses Ende begs for the application of the doctrine of laches. A
motion for reconsideration was filed by the petitioner Amlayon and Quezon, but it was
denied by the CA, hence this petition.
ISSUE
1. Did respondents Roman Catholic, Welhilmina, Acosta, Eliza and Juanito, Kintanar,
Bagasmas, and Jessie and Corazon, validly acquired ownership over the respective
portions of the subject property covered by OCT No. P-46114.
2. Petitioners Amlayon and Quezon are barred by the principle of laches to recover
the ownership and possession of the subject property covered by OCT No. P-46114.
HELD
1. No. Respondents did not acquire ownership over the respective portions of the
subject property, Damagi can only validly transfer her rights on the subject property to
the extent of her share. Art. 493 of the Civil Code states that “Each co-owner shall have
the full ownership of his part and of the fruits and benefits pertaining thereto, and he
may therefore alienate, assign, or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or
the mortgage, with respect to the co-owners, shall be limited to the portion which may
be allotted to him in division upon the termination of the co-ownership.”
Upon the death of Butas, his wife Damagi, and his legitimate children, Amlayon
and Quezon, became the undivided co-owners of subject property each with an undivided
share in the subject property, Damagi is entitled only to 11 hectares of the subject
property which implies that she cannot validly transfer any right more than such area to
any person. Hence, any disposition of any part thereof without the consent of the others
shall have no effect except as to the portion that pertains to those who made them.
2. No. The principle of laches is not proper in this case. Laches which is defined as
"such neglect or omission to assert a right, taken in conjunction with lapse of time and
other circumstances causing prejudice to an adverse party, as will operate as a bar in
equity." The essential elements of laches are, namely: (1) conduct on the part of the
40
Petitioners Amlayon and Quezon were prevented from going into the subject
property because of Inacara's threats. However, upon Inacara's death, petitioners
gradually prepared the documents needed to recover the subject property and asked
advice from certain individuals and institutions. Laches does not imply that a case in court
must be filed in order that it may not be successfully invoked. It merely requires "delay in
asserting the complainant's right after he had knowledge of the defendant's conduct and
after he has an opportunity to sue."
Petitioners Amlayon and Quezon are not to blame for not filing immediately in
court since they were still in the process of collating the necessary documents in support
of their right. To note, they immediately intervened in the case after having knowledge of
the case filed by herein supposedly heirs of Amado, Daniel, Felipe, and Pilar's. This shows
that petitioners Amlayon and Quezon sufficiently proved that they did not sleep on their
rights and were serious in asserting their right against the herein plaintiffs, who were
claiming to be the alleged heirs of the spouses Ende and in the recovery of the subject
property from respondents.
41
LAND TITLES AND DEEDS
Original Registration (P.D. 1529)
CADASTRAL PROCEEDINGS
REPUBLIC V. TAPAY
HERNANDO, J.
GR No. 157719 March 02, 2022
CADASTRAL PROCEEDINGS
DOCTRINE
For sure, it would be the height of injustice for respondents to be held hostage or
punished by reason of the plain scarcity of the records on file with the government
agencies concerned. It is certainly illegal, immoral, and against public policy and order
for respondents who have been vested with a legal right to be precluded from exercising
it, sans any real remedy under the law.
FACTS
Flora and Clemente Tapay (respondents) filed an application for registration of a
lot before the RTC of Lipa City. They alleged that Francisca Cueto had been in possession
of the property since 1925 until it was sold to Teofila Lindog, respondents’ predecessor.
Teofila died intestate and the respondents inherited the property.
Respondents' application for registration was opposed by the Republic of the

Philippines through the OSG arguing that the documents submitted by respondents (such
as the muniments of title, tax declaration, and receipt of tax payments) did not
constitute competent evidence of acquisition of property; that neither did respondents'
open, continuous, exclusive, and notorious possession of the land in the concept of an
owner constitute the same; that respondents' claim of ownership based on a Spanish title
or grant can no longer be availed of since respondents failed to file the appropriate
application within the period set by Presidential Decree No. 892; and that the parcel of
land applied for is part of public domain.
Notice of the application for registration was posted, published, and served on the
adjoining property owners. RTC thereafter issued an order of general default against the
whole world.
During the course of the proceedings, the LRA issued a report stating that the said
lot was previously the subject of registration in another case and had already been
adjudicated to another person, but the cadastral court has yet to issue a decree of
registration. The LRC, however, was unable to determine the identity of the person to
whom the property was adjudicated because the records of the case, including the copy
42
of the decision, were not available. Despite the report of the LRC, the RTC adjudicated
the land to the respondents. After the decision became final, the RTC directed the LRC to
issue the decree of registration and the corresponding certificate of title. LRC, instead of
complying with the order, submitted a supplemental report reiterating that the subject
land was previously the subject of registration proceedings. LRC then recommended that
the cadastral court’s decision be nullified so that it can issue a decree of registration in
favor of the respondents. Respondents also filed a motion to set aside the decision in the
Cadastral Case in order to give effect to the Decision of the RTC.
RTC granted the motion. Petitioner appealed to the CA arguing that the RTC had
no authority to set aside the decision of the cadastral court as it amounted to
interference with the authority of another co-equal court. CA denied the petition.
ISSUE
Whether or not the CA erred in affirming the RTC’s Order?
HELD
No. CA did not err in affirming the RTC’s order. While the Court agrees with
petitioner that a regional trial court has no power to nullify or interfere with the decision
of a co-equal court pursuant to the law and the doctrine of judicial stability. Applying the
doctrine to this case, petitioner is correct in postulating that the August 14, 1996 Order of
RTC Lipa City is void and thus, the cadastral court's decision in Cadastral Case No. 33
remains valid and subsisting as of this time. However, the foregoing presupposes that
Cadastral Case No. 33 really existed and that there actually is a decision in that case.
Unfortunately for the petitioner, aside from the single entry "Cadastral Case No. 33, LRC
(GLRO) Cadastral Record No. 1305," no other record, including a copy of the decision,
exists to support the theory.
Key information, such as the identity of the parties in the case and of the court
that rendered the decision, as well as the outcome thereof, has remained unknown
despite the lapse of more than 40 years since the LRC submitted its report. No one, aside
from the Republic, has even come forward to claim any interest arising from the supposed
case. The Court therefore agrees with the CA that the doctrine of judicial stability finds
no application in this case. Practical considerations now demand that the proceedings in
the RTC be no longer disturbed and the August 14, 1996 Order no longer set aside.
Based on jurisprudence, one of the key considerations for allowing the subsequent
registration was the fact that a long time had passed since the trial court ordered the
issuance of a registration decree. To reverse such a decision would run counter to the
purpose of land registration, which is to finally settle title to real property. Here, it is in
keeping with the purpose of land registration to finally allow respondents to be granted a
registration decree.
43
REPUBLIC V. PHILIPPINE NATIONAL POLICE
HERNANDO, J.
G.R. No. 1982779 February 08, 2021
ORIGINAK REGISTRATION (P.D. 1529)
DOCTRINE
An applicant for land registration must prove that the land is an alienable and
disposable land of the public domain pursuant to Presidential Decree (P.D. 1529). An
applicant must submit the required twin certifications to prove its claim. These
certifications are: (1) City/Provincial Environment and Natural Resources Office
(CENRO/PENRO) Report and (2) A copy of the original classification approved by the DENR
Secretary certified as true copy by the legal custodian of the official records. The rule on
strict compliance must be observed, not just substantial compliance.
FACTS
The Philippine National Police (PNP) filed an application for land registration of
lots in Iba, Zambales. In support of its application, it submitted a tracing cloth plan,
technical descriptions, approved sketch plan and tax declarations. The RTCgranted the
application finding that PNP was able to prove that it possessed all the qualifications and
none of the disqualification to have the subject lots registered in its name. On appeal at
the CA, the Republic argued that the PNP failed to prove the subject lots are alienable
and disposable lands. The Republic pointed out that the lots are unregistrable in the
absence of a positive act from the government withdrawing the lots from being reserved
for military purposes. The CA affirmed the ruling of the RTC and held that the CENRO
Report cannot be considered as a piece of evidence as its introduction would violate the
right to due process of PNP which had no opportunity to examine it.
ISSUE
Was the PNP able to prove that the subject lots are alienable and disposable lands
of the public domain?
HELD
No. PNP failed to prove that the subject lots are alienable and disposable lands of
the public domain.
An applicant for land registration must prove that the land is an alienable and
disposable land of the public domain pursuant to Presidential Decree (P.D. 1529). It
provides for the instances when a person may file for an application for registration of
title over a parcel of land:
Section 14. Who May Apply. - The following persons may file in the proper Court of
First Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
44
1. Those who by themselves or through their predecessors-in-interest have
been in open, continuous, exclusive and notorious possession and
occupation of alienable and disposable lands of the public domain under a
bona fide claim of ownership since June 12, 1945, or earlier.
2. Those who have acquired ownership of private lands by prescription under
the provision of existing laws.
For registration under Section 14(1) to prosper, the applicant for original
registration of title to land must establish the following:
a. that the subject land forms part of the disposable and alienable lands of
the public domain;
b. that the applicants by themselves and their predecessors-in-interest have
been in open, continuous, exclusive, and notorious possession and
occupation thereof; and
c. that the possession is under a bona fide claim of ownership since June 12,
1945, or earlier.
On the other hand, registration under Section 14(2) requires the applicant to
establish the following requisites:
a. the land is an alienable and disposable, and patrimonial property of the
public domain;
b. the applicant and its predecessors-in-interest have been in possession of
the land for at least 10 years, in good faith and with just title, or for at
least 30 years, regardless of good faith or just title; and
c. the land had already been converted to or declared as patrimonial property
of the State at the beginning of the said 10-year or 30-year period of
possession.
It has been repeatedly ruled that certifications issued by the CENRO, or specialists
of the DENR, as well as Survey Plans prepared by the DENR containing annotations that
the subject lots are alienable, do not constitute incontrovertible evidence to overcome
the presumption that the property sought to be registered belongs to the inalienable
public domain. Rather, this Court stressed the importance of proving alienability by
presenting a copy of the original classification of the land approved by the DENR Secretary
and certified as true copy by the legal custodian of the official records.
Here, the prevailing rule during the pendency of the application of PNP with the
RTC was that a DENR Certification stating that a land for registration is entirely within the
alienable and disposable zone constitutes as substantial compliance. This was not
complied with by the PNP. Moreover, the PNP failed to submit the required twin
certifications to prove its claim.
These certifications are: (1) City/Provincial Environment and Natural Resources

Office (CENRO/PENRO) Report and (2) A copy of the original classification approved by the
DENR Secretary certified as true copy by the legal custodian of the official records. The
rule on strict compliance must be observed, not just substantial compliance.
45
Respondent's reliance on the subject lots' subdivision plan, without the
corresponding DENR certification stating that they are entirely within the alienable and
disposable zone, which was the prevailing rule during the pendency of its application with
the RTC, proved fatal to its case. In short,the respondents failed to substantially prove
that the subject lots are alienable and disposable lands of the public domain. PNP also
failed to refute the CENRO Report by submitting the twin certifications. An applicant for
land registration bears the burden of proving that the land applied for registration is
alienable and disposable.
Therefore, PNP failed to prove that the subject lots are alienable and disposable
lands of the public domain.
46
AN ACT IMPROVING THE CONFIRMATION PROCESS FOR IMPERFECT LAND
TITLES (R.A. NO. 11573), AMENDING C.A. 141 AND P.D.
1529
CONCEPCION CHUA GAW V. SUY BEN CHUA AND FELISA CHUA
HERNANDO, J.
GR No. 206404 February 14, 2022
AN ACT IMPROVING THE CONFIRMATION PROCESS FOR IMPERFECT LAND TITLES: IMPLIED
RESULTING TRUST
DOCTRINE
There is no implied trust if the enforcement of the trust would be against law or
public policy.
FACTS
Pedro Santos, Netorio Santos, et.al (the Santoses) executed a deed of absolute
sale over the 3 lots located in Hagonoy, Bulacan in favor of Lu Pieng. Lu Pieng rented
these lots to spouses Chua Chin and Chan Chi, Chinese nationals with seven children,
including petitioner Concepcion Chua Gaw (Concepcion), respondent Suy Ben Chua (Ben),
Chua Sioc Huan (Juanita). Lu Pieng sold the three lots to Lucio, which was later sold to
Juanita, the child of spouses Chua Chin and Chan Chi. Later on, Juanita donated one of
the lots, Lot No. 5370-A, and sold the other 2 lots (5662, and 5663) to respondent Ben.
The Lot No. 5370-A remained unregistered even after the death of their parents.
Ben filed an application for registration and confirmation of land title in his name
since he bought the subject lots. He claimed ownership in fee simple over Lot 5370-A,
alleging that he and his predecessors-in-interest had occupied the same since time
immemorial without any reservation or known lien, mortgage, burden, or encumbrance.
Further, he asserted his entitlement to all the benefits under Commonwealth Act No. 141,
otherwise known as The Public Land Act.
Concepcion, joined by her spouse, Antonio Gaw, filed a complaint for

reconveyance and damages against Ben and his spouse and co-respondent, Felisa Chua
(Felisa). Concepcion contended that their parents had actually purchased the subject lots
with the understanding that the buyer or transferee shall only hold legal and beneficial
ownership in trust of the legal heirs. Further, Concepcion contended that Lu Pieng only
acted as the trustee and tagapag-ingat of the three subject lots and was to transfer the
same to the heirs of Chua Chin and Chan Chi when they became Filipino citizens.
The RTC denied Ben’s application for registration and confirmation of land titles in
his name and granted Concepcion's complaint for reconveyance and damages. The RTC
47
also declared Chua Chin as the true and actual buyer of the three subject lots. CA
affirmed the denial of Ben’s application but the Court also dismissed Concepcion’s
complaint. The CA ruled that Lu Pieng owned the subject lots, and, necessarily,
Concepcion cannot claim any hereditary share therein as the same shall be excluded from
Chua Chin and Chan Chi's estates.
ISSUE
Was an implied trust established in fact and in law over Lot Nos. 5370-A, 5662, and
5663?
HELD
No, there was no implied trust. Implied trust is not not an exception to the
Constitutional ban against ownership of Philippine lands by a non-Filipino. Concepcion's
evidence do not prove the existence of an implied trust.
Article 1448 of the Civil Code provides that there is an implied trust when property
is sold, and the legal estate is granted to one party but the price is paid by another for
the purpose of having the beneficial interest of the property. The former is the trustee,
while the latter is the beneficiary.
Here, Lu Pieng practically held and exercised full ownership over the subject
properties. To give rise to a purchase money resulting trust, it is essential that there be 1.
an actual payment of money, property or services, or an equivalent, constituting valuable
consideration; and 2. such consideration must be furnished by the alleged beneficiary of a
resulting trust, which was not present in this case.
Further, in view of the Constitutional prohibition, the implied trust was

ineffective, and Chua Chin acquired no right of ownership whatsoever over the subject
properties because non-Filipinos cannot acquire or hold title to private lands or to lands
of the public domain, except only by way of legal succession. Due to the Constitutional
proscription against foreign ownership of lands and the evidentiary requirements in
establishing legal claims, Concepcion's claim of implied trust over the subject lots.
Hence, there is no implied trust if the enforcement of the trust would be against
law or public policy.
48
CERTIFICATE OF TITLE
GARCIA V. ESCLITO
HERNANDO, J.
GR No. 207210 March 21, 2022
DOCTRINE
A Certificate of Title shall not be subject to a collateral attack and cannot be
altered, modified or cancelled except in a direct proceeding in accordance with law. A
collateral attack transpires when, in an action to obtain a different relief, an attack is
incidentally made against the judgement. Such action is prohibited because the integrity
of land titles and their indefeasibility are guaranteed by the Torrens system of
registration. An attack on a deed of sale pursuant to which a certificate of title was
issued as an impermissible collateral attack on the certificate of title.
FACTS
Petitioner Antonio Garcia (Garcia) purchased from Conchita Matute a 29-hectare
parcel of land through a deed of sale. Afterwards, Antonio Garcia divided the land and
donated some of its portions amongst his children and grandchildren through transfer of
rights. To solidify their claim, they filed with the Department of Environment and Natural
Resources (DENR) applications for the issuance of land titles pursuant to the DENR's
Handog Titulo program. Afterwards, they were issued their respective patents and
thereafter certificates of title upon registration.
Respondents and company who are holders of certificates of land ownership award
(CLOA) issued by the Department of Agrarian Reform (DAR) on December 19, 1998, argued
that Garcia and company filed a petition for the annulment/declaration of nullity of deed
of sale and all the deeds, documents and proceedings before the Office of the Provincial
Adjudicator of the Department of Agrarian Reform Adjudication Board (DARAB). They
added that the sale between Garcia and Matute is in violation of Section 6 of Republic Act
No. (RA) 6657 or the Comprehensive Agrarian Reform Law of 1988.
Under the Provincial Adjudicator, it dismissed respondent’s petition agreeing with

Garcia’s petition that the land was outside the coverage of RA 6657. Additionally, it
expressed that the validity of title cannot be attacked collaterally, and ultimately, the
annulment of the deed of sale constitutes a collateral attack as it is the link between the
original owner and the petitioners.
On appeal under the Department of Agrarian Reform Adjudication Board (DARAB),

it declared the sale between Garcia and Matute as null and void. It argued that since the
area has more than five hectares, the deed of sale should have been registered as
49
required by Section 6 of RA 6657. SInce the deed was not registered, it is therefore void
and does not bind third persons.
Petitioners, not satisfied with the decision, elevated the decision to the Court of
Appeals. The Court of Appeals however agreed with the decision of DARAB, which pushed
Garcia to launch a motion for reconsideration but was denied anyway. Now this case is
now instigated by Garcia for a petition under Rule 65 of the Rules of Court.
ISSUE
Did the Court of Appeals commit grave abuse of discretion amounting to lack or
excess of jurisdiction in rendering the assailed Decision and Resolution?
HELD
Yes. The Court recognizes that Garcia and company are holders of certificates of
title registered under the Torrens system, which means that their certificates can only be
attacked directly.
Section 43 of Presidential Decree No. 1529, or the Property Registration Decree,
states that a certificate of title shall not be subject to a collateral attack and cannot be
altered, modified, or cancelled except in a direct proceeding in accordance with law.
Despite these factors, respondents launched a collateral attack in their petition

before the Provincial Adjudicator which was shown when they sought for the nullification
of the deed of sale. To attack the deed of sale would be to effectively attack the
certificates of title.
A collateral attack is prohibited because the integrity of land titles and their
indefeasibility are guaranteed by the Torrens system of registration. The Torrens system
was adopted precisely to quiet titles to lands and to put a stop forever to any question of
legality of the titles, except claims which were noted at the time of registration or which
may arise subsequent thereto. By guaranteeing the integrity of land titles and their
indefeasibility, the Torrens system gives the registered owners complete peace of mind.
DARAB, by allowing the appeal to transpire and allowing a prohibited collateral

attack, it has gravely abused its discretion. In fact, it openly recognized petitioners'
Torrens certificates of title which were derived from the DENR's grant of patents and not
from any CARP-related award such as CLOAs or emancipation patents, over which the
DARAB may have jurisdiction to be invalid.
Since the Court of Appeals seems to have denied Garcia’s request to reconsider
DARAB’s decision, it has committed grave abuse of discretion amounting to lack or excess
of jurisdiction in uplifting DARAB’s decision. Not only was it grave abuse for the DARAB to
give due course to respondents' appeal, it was also beyond its jurisdiction to effectively
declare them void. This results with the Court of Appeals being reversed and reinstating
the decision made by the Provincial Adjudicator.
50
NON-REGISTRABLE PROPERTIES
ALDE V. CITY OF ZAMBOANGA
HERNANDO, J.
GR No. 214981 November 04, 2020
NECESSITY OF PROCLAMATION OF CLASSIFICATION AS ALIENABLE LAND
DOCTRINE
There is no argument that there must be some sort of a presidential declaration
that a piece of land classified under Section 59(d) of the Public Land Act is no longer
necessary for public use or public service before it can be leased to private parties or
private entities or private corporations. However, we hold that the same need not be
exclusively in the form of a presidential proclamation. Any other form of presidential
declaration is acceptable.
FACTS
The petitioner Eulogio Alde filed a Miscellaneous Lease Application to CENRO for
two lots in Zamboanga City in 2001. The lots were originally leased by the Bureau of
Buildings and Real Property Management to a certain Clarita Chan but were transferred
the control and possession of the lots to the Department of Environment and Natural
Resources (DENR) by Executive Order No. 285.
The Office of the Regional Executive Director (RED) ordered the appraisal of the
subject lots covered by the MLA and the Appraisal Committee reported that the lots are
classified as commercial properties in the Zoning Ordinance under DO No. 145-95 of the
Department of Finance. The Committee determined the rental rate per annum in
accordance with Section 37 of CA No. 141 or "The Public Land Act"
The RED of DENR-Region IX approved the appraisal and granted the authority to
lease the land in accordance with the Public Land Act. However, the City Government of
Zamboanga eventually opposed the lease application and filed a verified opposition with
the DENR claiming that the awarded lots were needed for public use and that the posting
and publication requirements of the notice of lease, were not complied with. A
committee was formed to investigate the matter and submitted a report to the DENR
recommending the dismissal of the opposition and for the lease application of Alde to be
approved. The committee found that there were no objections from the Department of
Public Works and Highways and that the process of leasing the lots was properly observed.
Upon appeal, the DENR Secretary denied Zamboanga City’s opposition. The Office
of the President affirmed the DENR Secretary’s decision. However, the Court of Appeals
reversed the Decision of the OP and ruled in favor of City of Zamboanga, ruling that a
presidential proclamation is necessary to declare that a parcel of public land is not
51
necessary for public service before it can be disposed, even for those lands referred to in
Section 59(d) of CA 141. Hence, the award was null and void.
ISSUE
Is a presidential proclamation required in declaring that lands under Section 59(d)
of the are necessary for public use or public service before they can be leased to private
entities?
HELD
No, the Court holds that there is no absolute necessity for a presidential
proclamation in declaring that lands classified under Section 59(d) of the Public Land Act
are no longer necessary for public use or public service before they can be leased to
private parties or private entities or private corporations.
Section 63, in relation to Section 61, of CA 141 gives leeway to the President and
the DENR Secretary in choosing the manner, mechanism or instrument in which to declare
certain alienable or disposable public lands as unnecessary for public use or public service
before these are disposed through sale or lease to private parties, entities or
corporations. Hence, all alienable and disposable lands enumerated in Section 59, from
(a) to (d), suitable for residence, commercial, industrial or other productive purposes
other than agricultural, under Chapter VIII of the same CA 141, must be subject to a
presidential declaration that such are exempt from public use or public service before
they can be sold or leased, as the case may be, but such need not be solely through a
presidential proclamation.
To prove that a public land is alienable and disposable, what must be clearly
established is the existence of a positive act of the government. This is not limited to a
presidential proclamation. Such fact could additionally be proven through an executive
order; an administrative action; investigative reports of Bureau of Lands investigators;
and a legislative act or a statute
Although presidential edict is required to declare that the subject lots that are
classified under Section 59(d) of CA 141 as not necessary for public use or for public
service before they can be leased to Alde, it does not have to be in the form of a
presidential Proclamation.
In the case at bar, the OP, upon the recommendation of the DENR Secretary, validly
declared the subject lots disposable through lease, through an administrative action, one
of the modes that is expressly recognized for said purpose. Hence, Alde validly complied
with the administrative requirements which led to the issuance of the Order of Award for
the Lease by the OP upon the recommendation of the DENR Secretary.
Any form of presidential declaration, such as an administrative action by the

Office of the President, is acceptable as long as it declares that the land is alienable and
disposable and not necessary for public use or public service. The Court also holds that
52
there was substantial compliance with the posting and publication requirement under the
Public Land Act.
53
DEALINGS WITH UNREGISTERED LANDS
VALDEZ V. HEIRS OF CATABAS
HERNANDO, J.
GR No. 201655 August 04, 2020
DOCTRINE
A possessor or occupant of property may be a possessor in the concept of an owner
prior to the determination that the property is alienable and disposable agricultural land.
Thus, the computation of the period of possession may include the period of adverse
possession prior to the declaration that the land is alienable and disposable. Though at
the time of his application, the subject property was not yet classified as alienable and
disposable, the subsequent declaration thereof should be considered in his favour whose
free patent application was still pending and subsisting at that time and is not yet
cancelled.
FACTS
Antero Catabas filed for a Free Patent Application for a lot pursuant to
Proclamation No. 427 in 1949. His application was recommended for approval with
ordering of the required posting of notices. However, the controversy of the case arose
when Valdez, et al. filed sales patent applications which included that of Catabas.
The heirs of Catabas filed a protest later on alleging that the lot in question was
already covered by a subsisting free patent application filed by Antero who acquired a
vested right over it by reason of his early possession since 1929. According to them,
Antero has claimed his title or interest over the property since 1935 in a cadastral case
however at that time the lot was declared as public land hence the dismissal of Antero’s
case for lack of due prosecution.
On the other hand, Valdez, et al., claimed that in 1953, they bought the lot from a
certain Maria Cavinian. At the time of Antero's application for free patent in 1949, the lot
was part of the Agricultural Farm School which is an inalienable public land. It was only
declared as alienable public land open for disposition to qualified claimants in 1956
pursuant to Proclamation No. 247.
ISSUE
Who between the parties has a superior right to the lot in controversy?
HELD
The heirs of Catabas have a superior right to the lot.
A possessor or occupant of property may be a possessor in the concept of an owner

prior to the determination that the property is alienable and disposable agricultural land.
Thus, the computation of the period of possession may include the period of adverse
54
possession prior to the declaration that the land is alienable and disposable. Though at
the time of his application, the subject property was not yet classified as alienable and
disposable, the subsequent declaration thereof should be considered in his favour whose
free patent application was still pending and subsisting at that time and is not yet
cancelled.
Before the issuance of Proclamation No. 247 in 1956, Antero already filed his claim
through free patent application which was later amended in 1952. Under Section 11 of
C.A. No. 141, there are two modes of disposing public lands through confirmation of
imperfect or incomplete titles: (1) by judicial confirmation; and (2) by administrative
legalisation, otherwise known as the grant of free patents. In the present case, Antero
chose to file a free patent application which was governed by Section 44 of C.A. However,
at the time Antero's amended free patent application was filed in 1952, Republic Act
(R.A.) No. 78231 was enacted.
Notwithstanding the fact that when Antero filed his free patent application, the
subject property was not yet declared as alienable and disposable public land, the court
is persuaded to give preference to his since 1929 over the Valdez et al’s claims or interest
which arose later. The subsequent declaration of the lot as open for disposition to
qualified claimants effectively cured the defect of Antero's free patent application.
Therefore, the heirs of Catabas have a superior right to the lot.
55
REPUBLIC V. HEREDEROS DE CIRIACO CHUNACO DISTILERIA INCORPORADA
HERNANDO, J.
GR No. 200863 October 14, 2020
DETERMINATION OF VALIDITY OF SALE
DOCTRINE
Private corporations, even if wholly-owned by Filipino citizens, were prohibited
from acquiring alienable lands of the public domain. At present, the 1987 Constitution
continues the prohibition against private corporations from acquiring any kind of alienable
land of the public domain.
An applicant for land registration must prove that the land sought to be registered
has been declared by the President or the DENR Secretary as alienable and disposable
land of the public domain. Specifically, an applicant must present a copy of the original
classification approved by the DENR Secretary and certified as a true copy by the legal
custodian of the official records. A certificate of land classification status issued by the
CENRO or PENRO of the DENR and approved by the DENR Secretary must also be presented
to prove that the land subject of the application for registration is alienable and
disposable, and that it falls within the approved area per verification survey by the PENRO
or CENRO. A CENRO or PENRO certification alone is insufficient to prove the alienable and
disposable nature of the land sought to be registered. It is the original classification by
the DENR Secretary or the President which is essential to prove that the land is indeed
FACTS
Herederos de Ciriaco Chunaco Disteleria Incorporada (HCCDI), a domestic
corporation applied for land registration of a parcel of land with the MTC of Guinobatan,
Albay and eventually claimed ownership and actual possession of said lot on the ground of
its continuous, adverse, public and uninterrupted possession in the concept of an owner
since 1976 by virtue of a Deed of Assignment executed by the Heirs of Chunaco who, in
turn, had been in continuous, adverse, public, and uninterrupted possession of the
subject lot in the concept of an owner since 1945 or earlier. HCCDI attached the following
documents in its application: (a) Tracing Cloth of Lot No. 3246 (b) Technical Description of
Lot No. 3246; and (c) Certificate in Lieu of the Lost Surveyor's Certificate.
Republic of the Philippines,through OSG, opposed HCCDI's application and alleged

that neither HCCDI nor its predecessors-in-interest, the Heirs of Chunaco, had been in
open, continuous, exclusive and notorious possession and occupation of the subject lot for
a period of not less than 30 years. The subject parcel of land has not been classified as
alienable and disposable land of the public domain for at least 30 years prior to the filing
of the subject application. Moreover, the muniments of title and/or the tax declarations
and tax payment receipts of HCCDI, if any, attached to or alleged in the application for
land registration, did not constitute as competent and sufficient evidence of a bona fide
56
acquisition of the subject lot or of its open, continuous, exclusive and notorious
possession, and occupation thereof, in the concept of an owner, for a period of not less
than 30 years. Lastly, the claim of ownership in fee simple on the basis of a Spanish title
or grant can no longer be availed of by HCCDI because it failed to file an appropriate
application for registration within six months from February 16, 1976 as required by
Presidential Decree No. 892.
The Land Management Office (LMO) of the Department of Environment and Natural
Resources conducted an ocular inspection. In their reports, the property is within the
alienable and disposable zone and outside of the forest zone or forest reserve or
unclassified public forest, existing civil or military reservation, or watershed or other
establishment reservation. Also, the subject lot has never been forfeited in favor of the
government for non-payment of taxes nor confiscated as bond in connection with any civil
or criminal case.
MTC granted HCCDI's application for land registration and confirming its title to Lot
No. 3246 and found that HCCDI's evidence sufficiently established HCCDI's and its
predecessors-in-interest's actual, continuous, open, public, peaceful, adverse, and
exclusive possession. CA affirmed.
ISSUE
Can HCCDI validly own Lor No. 3246 by sufficiently proving thathas been in open,
continuous, exclusive possession and occupation of the subject lot since June 12, 1945 or
earlier?
HELD
No, aside from failing to prove that its predecessors-in-interest had already
acquired a vested right to a judicial confirmation of title by virtue of their open,
continuous, and adverse possession in the concept of an owner for at least 30 years,
HCCDI, as a private corporation, cannot apply for the registration of Lot No. 3246 in its
name due to the prohibition under the 1973 Constitution. Hence, its application for
registration of Lot No. 3246 must necessarily fail.
Although Lot No. 3246 forms part of the alienable and disposable land of the public
domain. HCCDI did not present: (a) a copy of the original classification approved by the
DENR Secretary or the President and certified as a true copy by the legal custodian of the
official records; and (b) a certificate of land classification status issued by the CENRO or
PENRO and approved by the DENR Secretary.
57
or CENRO. A CENRO or PENRO certification alone is insufficient to prove the alienable and
Despite the stringent rule held in Republic v. TAN. Properties, Inc. (T.A.N.
Properties) that the absence of the twin certifications justifies the denial of an
application for registration, our subsequent rulings in Republic v. Vega (Vega) and Republic
v. Serrano (Serrano) allowed the approval of the application based on substantial
compliance. Even so, Vega and Serrano were mere pro hac vice rulings and did not in any
way abandon nor modify the rule on strict compliance pronounced in T.A.N. Properties.
In this case, despite the absence of a certification by the CENRO and a certified
true copy of the original classification by the DENR Secretary or the President, HCCDI
substantially complied with the requirement to show that the subject property is indeed
alienable and disposable based on the evidence on record.
HCCDI, having acquired Lot No. 3246 through a Deed of Assignment executed in
1976, was prohibited to acquire any kind of alienable and disposable land of the public
domain under the 1973 Constitution. Under the 1935 Constitution, there was no
prohibition against corporations from acquiring agricultural land. Private corporations
could acquire public agricultural lands not exceeding 1,024 hectares while individuals
could acquire more than 144 hectares. However, when the 1973 Constitution took effect,
it limited the alienation of lands of the public domain to individuals who were citizen of
the Philippines. Private corporations, even if wholly-owned by Filipino citizens, were
prohibited from acquiring alienable lands of the public domain9 At present, the 1987
Constitution continues the prohibition against private corporations from acquiring any
kind of alienable land of the public domain.
58
HEIRS OF LATOJA V. HEIRS OF LATOJA
HERNANDO, J.
GR No. 195500, March 17, 2021
ACTION FOR RECONVEYANCE OF A LAND SUBJECT OF FREE PATENT
DOCTRINE
An action for reconveyance based on fraud has two requisites. First, that the
individual seeking reconveyance must prove entitlement or ownership over the property
in question, and second, that fraud must be established by clear and convincing evidence,
not just based on mere surmises or conjectures.
FACTS
This petition involved a 4,125.99-square meter lot (Lot 5366) located in Villareal,
Samar, allegedly possessed, resided, and cultivated by the spouses Tomas and Leonarda
Latoja in 1903. In 1945, Leonarda declared said lot for taxation purposes. When the
spouses died, their five children inherited said lot.
On the other hand, Friolan, respondent, a relative and representative of the Heirs
of Gavino, purportedly occupied and administered Lot 5366. He applied for a free patent
over said lot through the assistance of Elmer Tabio (Elmer), Land Inspector of the
Community Environment and Natural Resources Office (CENRO) of Basey, Samar. When
Friolan approached Elmer in the field, the latter readily received and accepted the free
patent application, absent a personal inspection of the lot. On the succeeding day, Elmer
personally posted the Notice of Application in Villareal, processed the application in the
office and conducted a confirmatory report. By virtue of the award of the free patent,
OCT 20783 was subsequently secured and registered in the name of the Heirs of Gavino,
as represented by Friolan.
Distressed upon knowing of this development, the Heirs of Leonarda instituted

before the RTC a complaint for declaration of nullity of title, reconveyance and damages
contending that they inherited Lot 5366 from their predecessors-in-interest who are the
real owners and possessors of the lot since time immemorial. They asserted that the Heirs
of Gavino and Friolan obtained the free patent and the consequent OCT 20783 through
fraud and false representation that they were owners and possessors of Lot 5366. They
also avowed that the posting of notice of the free patent application as required under
the Public Land Act was not complied with. Due to this non-compliance, the Heirs of
Leonarda failed to take action against the free patent application.
The Heirs of Gavino argued that there was compliance with the substantial and
procedural requirements set forth in the Public Land Act; that the Heirs of Leonarda
failed to discharge their burden of proof; that the OCT is already indefeasible because
more than one year had already elapsed since the date of their issuance; that under
59
Section 101 of the Public Land Act, all actions for reversion to the government of lands of
public domain must be instituted by the Solicitor General or an officer in his stead.
The trial court ruled in favor of the heirs of Leonarda and held that they
sufficiently proved that Friolan committed misrepresentation coupled with bad faith in
the application for free patent; That despite knowing that the heirs of Leonarda were in
actual possession of the lot 5366, Friolan represented in the application that Gavino
occupied said lot since 1920. Friolan even testified he did not reside in Lot 5366 but in the
adjacent Lot 5367.
Upon appeal, the Court of Appeals reversed the decision of the trial court and held
that the trial court erred when it disregarded the indefeasibility of title; That there was
no showing that the Heirs of Gavino employed actual and extrinsic fraud in applying for
the free patent and the resulting certificate of title.
ISSUE
(1) May an action for reconveyance still prosper despite the title arising from the
award of free patent becoming indefeasible.
(2) May a private individual, aside from the Office of the Solicitor General, seek
direct reconveyance of a land subject of a free patent where the latter was fraudulently
obtained.
HELD
(1) Yes. Despite the title’s indefeasibility, an action for reconveyance may still
prosper. A title under the Torrens System may only be cancelled, altered or modified
through a direct attack where the objective of the action is to annul or set aside the
judgement or enjoin its enforcement. An action for reconveyance based on fraud is a
direct attack on a Torrens title and must have two requisites. First, that the individual
seeking reconveyance must prove entitlement or ownership over the property in question,
and second, that fraud must be established by clear and convincing evidence, not just
based on mere surmises or conjectures.
Applying these requisites to the case, the Heirs of Leonarda’s evidence on record
established that Leonarda was the lawful owner and possessor of lot 5366 since time
immemorial.
In relation to the second requisite, fraud had been sufficiently proven by the heirs
of Leonarda. Perusing the records, it is once apparent that Friolan made false statements
in his application for free patent notwithstanding his knowledge and awareness that the
heirs of Leonarda were the actual occupants of Lot 5366 at the time when he applied for
free patent. The contradictory and inconsistent statements in his testimony with the
claim in the application, declaration in the Land Data Record Sheet and Affidavit that he
is the actual occupant and possessor of the subject lot bolster his penchant for twisting
60
the truth constituting fraud in order to secure a free patent that eventually led to the
issuance of OCT 20783.
(2) Yes. A private individual may institute an action for reconveyance of a parcel
of land even if the title thereof was issued through a free patent. In Hortizuela v. Tagufa,
the Court expounded on Section 101 of the Public Land Act which admits of an exception
when a private individual may institute an action for reconveyance from defendant of
public land unlawfully and in breach of trust titled by him, on the principle of
enforcement of a constructive trust.
The same ruling was applied in Larzano v. Tabayag, Jr., where it was written that a
private individual may bring an action for reconveyance of a parcel of land even if the
title thereof was issued through a free patent since such action does not aim or purport
to re-open the registration proceeding and set aside the decree of registration, but only
to show that the person who secured the registration of the questioned property is not
the real owner thereof.
The foregoing discourse clarified that the heirs of Leonarda are allowed to
institute an action for reconveyance of Lot 5366 considering the fraudulent scheme
employed by the Heirs of Gavino, represented by Friolan, in securing the free patent
which resulted into the registration of the OCT 20783 under the latter’s names.
Considering that the heirs of Leonarda alleged in their complaint that they are the
rightful owners and possessors of Lot 5366 and that they were deprived of the same
through the misrepresentation of Friolan in the application of free patent, then they have
initiated the proper remedy which is an action for reconveyance which was correctly
adjudicated by the trial court in their favor.
61
HEIRS OF GONZALES V. SPOUSES BASAS
HERNANDO, J.
GR No. 206847 June 15, 2022
DEALINGS WITH REGISTERED LANDS
DOCTRINE
It is a well-settled rule that every person dealing with registered land may safely
rely on the correctness of the certificate of title issued therefor and the law will in no
way oblige him [or her] to go beyond the certificate to determine the condition of the
property. "However, this rule shall not apply when the party has actual knowledge of facts
and circumstances that would impel a reasonably cautious man or woman to make such
inquiry or when the purchaser has knowledge of a defect or the lack of title in the vendor
or of sufficient facts to induce a reasonably prudent person to inquire into the status of
the title of the property in litigation."
FACTS
The late Zenaida Gonzales purchased from respondents, Spouses Basas, a parcel of
land including the house thereon. An annotation in the title indicates that the consent of
the National housing authority is necessary for the disposal of the same. Zenaida and the
Spouses Basas executed the following documents namely: Contract to Sell, Deed of
Absolute Sale, and Agreement to purchase and sell. According to the petitioners, once the
foregoing documents were executed, the spouses Basas requested Zenaida to allow them
to stay in the subject property until such time that they can transfer to another place, at
an agreed monthly rental rate of Php 3,500.00.
However, they have not paid any rental to Zenaida. Petitioners further alleged that
the spouses Basas promised to procure the written consent of the NHA for the sale of the
subject property. In the meantime, pursuant to their mutual agreement on the sale and
purchase of the same, Zenaida paid the Basas couple an aggregate amount of more than
P800,000.00, as evidenced by receipts. Once the spouses Basas received the said amount
they promised to deliver the title of the subject property to Zenaida as soon as they
secured the NHA's consent. Meanwhile, the spouses Basas borrowed the certificate of title
of the property which at that time was already in the possession of Zenaida after she paid
them the amount of P650,000.00, so they can work on the cancellation of the mortgage
on the subject property.
Petitioners point out that Zenaida has not paid the balance of the selling price
because the spouses Basas have not yet obtained NHA's written consent to the sale. On
January 4, 1997, Zenaida sent a written demand to the spouses Basas. Despite Zenaida's
verbal and written demands for the spouses Basas to comply with their foregoing
obligation, the latter failed to do so. In view of this, Zenaida brought the matter to the
barangay, but the parties failed to settle. In addition, Zenaida filed an affidavit of adverse
claim on the subject property. Eventually, Zenaida discovered that the spouses Basas
62
subsequently sold the subject property to respondent Romeo Munda (Munda) who
immediately occupied the property. Petitioners asserted that the second sale of the
subject property by the Basas to Munda was done maliciously and in bad faith. They
averred that the same was done with deliberate disregard of Zenaida's right over the
subject property. As a result, Zenaida caused the annotation of her affidavit of adverse
claim on the title of the subject property on October 29, 1997. In addition, petitioners
claimed that Munda was a buyer in bad faith because he was aware of the first sale of the
subject property to Zenaida. When Zenaida learned of the second sale by the Spouses
Basas to Munda, she and her son, Andres Rico Gonzales, went to the subject property and
found out that the same was already being occupied by Munda. While thereat, they were
informed by Munda's wife that she and her husband already purchased the property, and
she further told Zenaida that the latter's contract was only a contract to sell while their
contract was an absolute deed of sale. In view of the foregoing, Zenaida filed a complaint
for nullity of sale, specific performance, and damages against respondents. Zenaida died
on April 30, 2012, and was eventually substituted by her heirs, petitioners herein.
On the other hand, the spouses Basas argued that Zenaida did not purchase the
subject property. They pointed out that the August 14, 1996 Agreement superseded the
two previously signed documents. They asserted that there was a novation of the
contracts, and the latter document reflected the final and true intentions of the parties.
The spouses Basas further posited that it was the agreement of the parties that until the
balance of the purchase price as reflected in the Agreement is fully paid, they will
continue to occupy the subject property. They continued to hold the TCT because Zenaida
had not fully paid the purchase price of the subject property, and there was no
consummated sale yet. They did not deem it necessary to inform Munda of the existence
of the Agreement because there was no consummated sale between them and Zenaida.
Meanwhile, Munda argued that he purchased the subject property in good faith
and for value. He was not aware of any previous transactions between the spouses Basas
and Zenaida. The RTC ruled in favor of petitioners. Respondents filed an appeal with the
CA. The CA reversed the findings of the RTC and found Munda as a buyer in good faith and
for value. Petitioners moved for reconsideration but it was denied by CA. Hence, this
petition.
ISSUE
1) Are the petitioners is the rightful owner of the subject property?
2) Is Munda a buyer and registrant in bad faith?
HELD
(1) Yes. Petitioner is the rightful owner of the subject property. Petitioners
sufficiently proved that the spouses Basas sold the subject property to their
predecessor-in-interest, Zenaida, and that ownership of the same was constructively
delivered to the latter pursuant to said sale upon execution of the May 13, 1996 Deed of
Absolute Sale, and later reinforced by the August 14, 1996 Agreement, subject to the
resolutory conditions stated in the latter. Consequently, the spouses Basas had no right
over the subject property which they could transfer to Munda on August 25, 1997. It was
63
of no moment that Munda was able to register the land under his name in the Register of
Deeds because registration is not a mode of acquiring ownership and moreover, he was a
buyer and registrant in bad faith.
(2) Yes. Munda is a buyer and registrant in bad faith. It is a well-settled rule that
every person dealing with registered land may safely rely on the correctness of the
certificate of title issued therefor and the law will in no way oblige him [or her] to go
beyond the certificate to determine the condition of the property. "However, this rule
shall not apply when the party has actual knowledge of facts and circumstances that
would impel a reasonably cautious man [or woman] to make such inquiry or when the
purchaser has knowledge of a defect or the lack of title in [the] vendor or of sufficient
facts to induce a reasonably prudent [person] to inquire into the status of the title of the
property in litigation." In the instant case, Munda failed to show that he continuously
possessed his status as a buyer and registrant in good faith. Thus, he unsuccessfully
convinced the court that he acted in good faith all throughout, from the time of his
acquisition of the subject property until the title is transferred to him for registration.
Firstly, Munda failed to refute petitioners' claim that Zenaida and her son went to
his house and informed him and his wife that Zenaida had earlier purchased the subject
property, but that Munda's wife replied that Zenaida's contract was merely a contract to
sell while theirs was a contract of sale. This in itself should have prompted Munda to
further inquire about the status of the subject property and the title of the spouses Basas
as sellers.
Secondly, on or before October 8, 1997, Zenaida and the spouses Basas had a
mediation conference before the Punong Barangay and Pangkat ng Tagapagsundo in
relation to the subject property, but settlement failed which caused the Office of the
Lupong Tagapamayapa to issue a certification to file action dated October 8, 1997 in
Barangay Case No. 97-28. Since Munda himself was living on the subject property and on
the same barangay where the mediation occurred, he could have further investigated on
the status of the subject property even before he took steps to procure the consent of the
NHA, and before he paid the transfer fee thereof.
Therefore, even if the provision on double sales were to be applied in th instant

case, it remains that Zenaida, the predecessor-in-interest of petitioners, had a better
right of ownership over the subject property since Munda failed to acquire the property
and register his title in good faith.
Lastly and most importantly, when Munda procured NHA' s December 1, 1997
consent/approval and paid on January 30, 1998 the transfer fee thereof, and submitted
the foregoing documents to the Register of Deeds to fully comply with his application for
registration, he already had knowledge of the defect of the title of the spouses Basas as
sellers in view of the annotation on October 29, 1997 of the adverse claim of Zenaida,
which certainly would have prompted him to further inquire or investigate. Since Munda
proceeded to register his title despite knowledge of Zenaida's adverse claim, he is
deemed a buyer and registrant in bad faith.
64
RECONSTITUTION OF TORRENS TITLE
REPUBLIC V. ABELLANOSA
HERNANDO, J.
GR No. 205817 October 06, 2021
RECONSTITUTION OF TORRENS TITLE
DOCTRINE
Amendments which do not affect the nature of the action that necessitates
another posting and publication. Hence, the earlier posting and publication of the petition
for reconstitution prior to the amendment were sufficient for the RTC to acquire
jurisdiction on the subject matter of the case.
SECTION 2. Original certificates of title shall be reconstituted from such of the

sources hereunder enumerated as may be available, in the following order:
(a) The owner's duplicate of the certificate of title;
(f) Any other document which, in the judgement of the court, is sufficient and
proper basis for reconstituting the lost or destroyed certificate of title.
FACTS
The instant case stemmed from the filing of a petition for reconstitution. In the
petition for reconstitution, the spouses Manalo claimed that they were once registered
owners of two parcels of land in Barangay Bocohan, Lucena City, Quezon Province. They
sold the subject lots to one Marina Valero (Valero). Valero later on sold the lot to FEPI,
while another lot was developed into a first class subdivision with FEPI as the developer.
However, Valero was unable to surrender the owner's duplicate copy of the titles to FEPI
because the documents were lost beyond retrieval per the September 16, 2005
Certification of the Register of Deeds of Lucena City, which states that the titles of the
subject lots "are among those presumed burned during the fire that razed the City Hall
Building of the City of Lucena on August 30, 1983."
Respondents sought to amend (first amendment) the petition for reconstitution by

attaching thereto the respective sketch plans of the subject lots including the technical
descriptions thereof. The RTC set the petition for reconstitution for hearing and directed
the posting and publication of the notices in the Official Gazette.
The counsel for respondents filed a motion to admit a second amended petition
(second amendment) to propose the substitution of parties by impleading Valero as
co-petitioner following the death of the spouses Manalo and to use the LRA-verified plans
and technical descriptions of the subject lots as bases for the reconstitution of the lost
titles.
65
In its Order, the RTC found merit in the petition for reconstitution. However, the
Republic of the Philippines, through the Office of the Solicitor General (petitioner), filed a
notice of appeal assailing the said Order. It claimed that the RTC did not acquire
jurisdiction over the case since the second amendment of the Petition for Reconstitution
was not posted and published. Petitioner also contended that there was no sufficient basis
for the reconstitution of the titles of the subject lots because the grounds for the
reconstitution of titles indicated in the second amendment, such as plans and technical
descriptions, are not grounds for filing a petition for reconstitution.. However, the CA
dismissed the petitioner's appeal.
ISSUE
1) Whether the RTC did not acquire jurisdiction over the case since the second
amendment of the Petition for Reconstitution was not posted and published?
2) Whether the CA erred when it ruled that there is sufficient basis for
reconstitution?
HELD
1) No, the RTC has jurisdiction over the case.
The following requisites must be complied with for an order for reconstitution to
be issued: (a) that the certificate of title had been lost or destroyed; (b) that the
documents presented by petitioner are sufficient and proper to warrant reconstitution of
the lost or destroyed certificate of title; (c) that the petitioner is the registered owner of
the property or had an interest therein; ( d) that the certificate of title was in force at
the time it was lost and destroyed; and (e) that the description, area and boundaries of
the property are substantially the same as those contained in the lost or destroyed
certificate of title.
Petitioner claims that the RTC did not acquire jurisdiction over the case because
the second amended petition contained substantial changes and annexes and yet said
petition was not posted and published as required under Sections 12 and 13 of RA 26.
The Supreme Court finds that the second amendment does not affect the nature of
the action that necessitates another posting and publication. The revisions merely refer
to the substitution of the parties in view of the deaths of the spouses Manalo and the
mention of RA 26 as the applicable law. These are minor matters that simply tend to assist
and guide the RTC in conducting the proceeding. Hence, the earlier posting and
publication of the petition for reconstitution prior to the second amendment were
sufficient for the RTC to acquire jurisdiction on the subject matter of the case.
Nevertheless, assuming that another posting and publication was necessary in view
of the second amendment, the absence of the same does not divest the RTC of its
jurisdiction that it validly acquired in the first instance. Settled is the rule that
jurisdiction once acquired is not lost upon the instance of the parties but continues until
66
the case is terminated. Moreover, the use of the technical descriptions as embodied in the
blue prints and such other documents adduced as bases for the production of the new
title, likewise does not necessitate another posting and publication because while they
were newly mentioned in the second amendment, the same were already available for
the court to scrutinize during the first amendment.
The reconstitution of title is an action in rem, which means it is one directed not
only against particular persons, but against the thing itself. The essence of posting and
publication is to give notice to the whole world that such a petition has been filed and
that interested parties may intervene or oppose in the case. This purpose was achieved in
this case when notices on the first and second amendments were duly served upon the
parties in interest of the case and proper posting and publication was made to the original
petition for reconstitution.
2) No, there is a sufficient basis for reconstitution.
For the judicial reconstitution of an existing and valid original certificate of

Torrens title, Section 2 of RA 26 has expressly listed the acceptable bases:
SECTION 2. Original certificates of title shall be reconstituted from such of

the sources hereunder enumerated as may be available, in the following order:
xxxx
(f) Any other document which, in the judgement of the court, is sufficient
and proper basis for reconstituting the lost or destroyed certificate of title.
In the instant case, the contents of the second amendment and the original
petition for reconstitution, along with their respective supporting documents, were
considered collectively by the RTC. Thus, the bases for the reconstitution of the title
were not only the plans and technical descriptions but also the legible duplicate copies of
the titles and a host of other official documents.
67
REPUBLIC OF THE PHILIPPINES V. HEIRS OF BOOC
HERNANDO, J.
GR No. 207159 February 28, 2022
SOURCES FROM WHICH RECONSTITUTION OF LOST OR DESTROYED ORIGINAL CERTIFICATES OF
TITLE MAY BE BASED
DOCTRINE
The following order are the sources from which reconstitution of lost or destroyed
original certificates of title may be based on:
(b) The co-owner's, mortgagee's, or lessee's duplicate of the certificate of title;
(c) A certified copy of the certificate of title, previously issued by the register of
deeds or by a legal custodian thereof;
(d) An authenticated copy of the decree of registration or patent, as the case may
be, pursuant to which the original certificate of title was issued;
(e) A document, on file in the Registry of Deeds by which the property, the description
of which is given in said document, is mortgaged, leased or encumbered, or an
authenticated copy of said document showing that its original has been registered;
and
(f) Any other document which, in the judgment of the court, is sufficient and proper
basis for reconstituting the lost or destroyed certificate of title.
FACTS
In 1998, The Heirs of the Boocs (Heirs) filed a petition for reconstitution of OCT of
Lot Nos. 4749, 4765, and 4777 alleging that sometime in 1930, the Court of First Instance
of Cebu rendered three January 20, 1930 Decisions declaring the late Eduardo Booc,
Mercedes Booc, Aurelia Booc, Pedro Booc and Florentino Boce (collectively, the Boocs) to
be the registered owners of the subject property. As a result thereof, in 1934, the
CPI-Cebu issued separate decrees directing the registration of the subject lots in the
name of the Boocs.
Unfortunately, the OCTs were lost or destroyed during the World War II as
evidenced by the Certification dated June 26, 1998 issued by the Register of Deeds of
Lapu-Lapu City. The Heirs exerted diligent efforts to recover the certificates of title but
still failed to find the same. They further alleged that the certificates of title were still in
force at the time they were lost or destroyed. Also, no co-owner’s, mortgagee's, or
lessee's duplicate certificates of title were issued.
As RTC was about to schedule the first hearing for the petition, Mactan-Cebu
International Airport Authority (MCIAA) filed its opposition. MCIAA asserted that the
government, through the Civil Aeronautics Administration (CAA), owned the subject lots.
The CAA bought the said lots from Julian Cuizon (Julian), Modesta Cuizon (Modesta), and
Paulino Cuizon (Paulino), as evidenced by three Deeds of Absolute Sale. Since then, the
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government has been in continuous, uninterrupted, and adverse possession of the subject
lots which it declared for taxation purposes under multiple Tax Declaration The ownership
of the subject lots were then transferred to MCIAA pursuant to Republic Act No. (RA)
6985.
The Heirs of Booc avers that averring that Julian, Modesta, and Paulino, were not
the legal heirs of the Boocs; hence, they cannot sell the subject lots. That MCIAA was a
possessor in bad faith since it grossly neglected its duty to determine who the actual
owners of the subject lots were before purchasing the same. They also insisted that since
the subject lots are covered by Torrens certificates of title, the action relative thereto is
imprescriptible.
The RTC held that respondents sufficiently proved that the OCTs of the subject lots
were issued in the name of the Boocs and that these were lost or destroyed during the
war. Thus, reconstitution of the same is in order.
The CA ruled that the failure to mention the numbers of the lost OCTs of Lot Nos.
47 49, 47,65 and 4777 is not a fatal defect to the reconstitution thereof. The CA held that
the existence of the decisions and decrees awarding the subject lots to the Boocs, and the
Register of Deeds' certification stating that the OCT was lost or destroyed, are sufficient
to warrant the reconstitution of the purported lost or destroyed certificates of title.
Hence, this instant petition for certiorari.
ISSUE
Was there sufficient evidence for the OCTs for the subject properties to be
reconstituted?
HELD
No. There is insufficient evidence showing that OCTs in the name of the Boocs
exist.
Under Section 2 of RA 26, in the following order are the sources from which
reconstitution of lost or destroyed original certificates of title may be based on:
(e) A document, on file in the Registry of Deeds by which the property, the
description of which is given in said document, is mortgaged, leased or
encumbered, or an authenticated copy of said document showing that its
original has been registered; and
(f) Any other document which, in the judgement of the court, is sufficient and
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The heirs of Booc based their petitions heavily on section 2(d) and 2(f) attaching
the following evidences: (a) decisions of the CFI-Cebu awarding the subject lots to the
Boocs; (b) decrees issued by the cadastral court pursuant to which an original certificate
of title of the subject lots was issued in favor of the Boocs; (c) Register of Deeds'
certification; (d) technical description of the subject lots; and (e) certifications from the
Branch Clerk of court, and Branch Clerks of Court of Branch Nos. 27, 53 and 54 of RTC of
Lapu-Lapu City stating that no application for reconstitution of original certificate of title
for the subject lots was filed before the said trial courts; and
(f) sketch plans of the subject lots
Unfortunately, these pieces of evidence is insufficient proof that certificates of

title were in fact issued to the Boocs, and the same were in force at the time they were
lost or destroyed. At best, the CPI-Cebu decisions and Decree only proved that the lots
were awarded to the Boocs and that the lots were to be registered in their names
pursuant to Land Registration Act. Neither can the Register of Deeds' certification be
considered as competent evidence as it simply states that the Original Certificate of Title
as per records on file has been lost or destroyed during the last Global War.
Their failure to present any competent evidence, private or official, indicating the
number of the purported OCTs of the subject lots is a fatal defect which warrants the
dismissal of their petition for reconstitution. The court also finds their non-submission of
an affidavit of loss a reason for doubt if the certificates of title of the subject lots in the
name of the Boocs exist. They also did not submit any tax declarations relative to the
subject lots. While a tax declaration does not prove ownership, payment of realty tax is
an exercise of ownership over the said lots and is the payor' s unbroken chain of claim of
ownership over it.
Moreover, respondents are guilty of laches. Laches is negligence or omission to

asse1i a right within a reasonable time, warranting the presumption that the partyy
entitled to assert it either has abandoned or declined to assert it. Here, respondents only
filed the petition for reconstitution 12 years after they first discovered that the titles
were allegedly lost or destroyed.
70
WILLS AND SUCCESSION
FORM OF NOTARIAL AND HOLOGRAPHIC WILLS

TANCHANCO V. SANTOS
HERNANDO, J.
GR No. 204793 June 08, 2020
FORMALITIES OF A WILL AND SUBSTANTIAL COMPLIANCE
DOCTRINE
Article 809 presupposes that the defects in the attestation clause can be cured or
supplied by the text of the will or a consideration of matters apparent therefrom which
would provide the data not expressed in the attestation clause or from which it may
necessarily be gleaned or clearly inferred that the acts not stated in the omitted textual
requirements were actually complied with in the execution of the will. In other words,
the defects must be remedied by intrinsic evidence supplied by the will itself.
FACTS
Consuelo was married to Anastacio Garcia (Anastacio) who passed away. They had
two daughters, Remedios Garcia Tanchanco (Remedios) and Natividad Garcia Santos
(Natividad). Remedios predeceased Consuelo in 1985 and left behind her children, which
included Catalino Tanchanco (Catalino) and Ronaldo Tanchanco (Ronaldo, collectively
Tanchancos). Consuelo died at the age of 91, leaving behind an estate consisting of
several personal and real properties.
Catalino filed a petition before the RTC to settle the intestate estate of Consuelo
alleging that the legal heirs of Consuelo are: Catalino, Ricardo, Ronaldo and Carmela, all
surnamed Tanchanco (children of Remedios), and Melissa and Gerard Tanchanco (issues of
Rodolfo Tanchanco, Remedios' son who predeceased her and Consuelo), and Natividad, the
remaining living daughter of Consuelo. Catalino additionally alleged that Consuelo's
properties are in the possession of Natividad and her son, Alberto G. Santos (Alberto),
who have been dissipating and misappropriating the said properties. Catalino prayer for
his appointment as the special administrator of Consuelo's intestate estate and the
issuance of letters of administration in his favor; for Natividad and all other heirs who are
in possession of the estate's properties to surrender the same and to account for the
proceeds of all the sales of Consuelo's assets made during the last years of her life; and
for Natividad to produce Consuelo's alleged will to determine its validity amongst others.
Natividad filed a motion to dismiss stating that she already filed a petition for the
probate of the Last will and testament of Consuelo.
The Tanchancos filed an Opposition to Natividad’s petition for probate alleging

that the will’s attestation clause did not state the number of pages and that will was
71
written in Tagalog and not the English language usually used by Consuelo in most of her
legal documents. They further alleged that with Consuelo’s failing health, she could not
have gone to Makati where the purported will was notarized.
Natividad countered that there was a substantial compliance with Article 805 of
the Civil Code. Although the attestation clause did not state the number of pages
comprising the will, the same was indicated in the acknowledgment portion.
The subject will was witnessed by Atty. Kenny Tantuico (Atty. Tantuico), Atty. Ma.
Isabel Lallana (Atty. Lallana) and Atty. Aberico Paras (Atty. Paras) and notarized by Atty.
Nunilo Marapao (Atty. Marapao).
Atty. Tantuico stated that although Consuelo’s will was written in Tagalog,
Consuelo understood the will that she had signed.
Atty. Lallana narrated that Consuelo possessed the full mental capacities during
the execution of the will as shown by her responses to the questions propounded to her.
Furthermore, she averred that Consuelo was in good physical condition appropriate for
her age. Further, Consuelo was alleged to be alone with the attesting witnesses and the
notary public during the signing of the will.
Lastly, she states that Consuelo purposely used Tagalog to obviate any potential
issues or questions regarding Consuelo’s ability to understand the nature and contents of
the will.
RTC found that the purported will was replete with aberrations. Because, first,
nobody among Consuelo’s relatives witnessed the execution of the alleged will and
second, the will’s acknowledgement clause showed that Consuelo’s residence was in
Makati City and not in Pasay City where she resided most of her life.
CA declared that the will should be allowed probate ruling that the Civil Code
preferred testacy over intestacy and the due execution and authenticity of a private
document such as a will must be proved either by anyone who saw the document
executed or written or by evidence of the genuineness of the signature or handwriting of
the maker. The Tanchancos failed to prove that Consuelo was of unsound mind when she
executed the contested will. Likewise, they only presented self-serving allegations
without presenting an expert witness that an 81-year-old woman does not have the legal
testamentary capacity to distribute her properties to her heirs upon her death.
The Tanchancos insist Natividad is not fit to act as executrix given that she
dissipated the properties of the estate; is not physically present most of the time in the
Philippines as she stays in San Francisco, California; and is almost 90 years old. Natividad
insists that the will conforms to the formalities required under Article 805 of the Civil
Code since the trial court and the CA held that the attestation clause substantially
complied with the directive of the aforementioned provision. The acknowledgment
portion specifically mentioned that the necessary signatures were affixed on every page
of the will and referred to the number of pages the will was written. She avers that the
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execution of the will was not attended by bad faith, forgery or fraud, or undue influence
and improper pressure.
ISSUE
Did the will satisfy the formalities required by law?
HELD
Yes. It is settled that "the law favors testacy over intestacy". Hence, "the probate
of the will cannot be dispensed with. Article 838 of the Civil Code provides that no will
shall pass either real or personal property unless it is proved and allowed in accordance
with the Rules of Court. Thus, unless the will is probated, the right of a person to dispose
of his property may be rendered nugatory."
An examination of Consuelo’s will shows that it complied with the formalities

required by law, except that the attestation clause failed to indicate the total number of
pages upon which the will was written.
The rule on substantial compliance in Article 809 presupposes that the defects in
the attestation clause can be cured or supplied by the text of the will or a consideration
of matters apparent therefrom which would provide the data not expressed in the
attestation clause or from which it may necessarily be gleaned or clearly inferred that the
acts not stated in the omitted textual requirements were actually complied with in the
execution of the will. In other words, the defects must be remedied by intrinsic evidence
supplied by the will itself.
In this case, the attestation clause omitted to mention the number of pages
comprising the will. The acknowledgment portion of the will supplied the omission by
stating that the will has five pages. Such substantially complied with Article 809 of the
Civil Code. Mere reading and observation of the will, without resorting to other extrinsic
evidence, yields to the conclusion that there are actually five pages even if the said
information was not provided in the attestation clause. Lawyers are not disqualified from
being witnesses to a will: the subscribing witnesses testified to the due execution of the
will.
The Tanchancos did not explain how Consuelo could have been forced into
executing the will, as they merely focused on her alleged physical inability to go to the
Quasha Law Office in Makati City. They did not present witnesses who could prove that
she was forced into making the will, or that she signed it against her own wishes and
volition.
The Tanchancos insisted that Consuelo intended to divide her properties equally
between her two daughters, Natividad and Remedios. Yet, based on the testimony of
Natividad and the deposition of Atty. Lallana, Consuelo, during her lifetime, already
apportioned the prime properties to her two daughters and retained some properties for
her own use and support. Hence, what properties she had left, Consuelo could dispose of
in any way she desired, as long as the rules on legitime and preterition are observed.
73
Article 820 of the Civil Code provides that, "any person of sound mind and of the
age of eighteen years or more, and not blind, deaf or dumb, and able to read and write,
may be a witness to the execution of a will mentioned in Article 805 of this Code."
Here, the attesting witnesses to the will in question are all lawyers equipped with
the aforementioned qualifications. In addition, they are not disqualified from being
witnesses under Article 821 of the Civil Code, even if they all worked at the same law
firm at the time. As pointed out by Natividad, these lawyers would not risk their
professional licences by knowingly signing a document which they knew was forged or
executed under duress; moreover, they did not have anything to gain from the estate
when they signed as witnesses. All the same, petitioners did not present controverting
proof to discredit them or to show that they were disqualified from being witnesses to
Consuelo's will at the time of its execution.
Thus, the court held that the will of Consuelo should be allowed probate as it
complied with the formalities required by law.
74
ESSENTIAL REQUISITES
SEMING V. ALAMAG
HERNANDO, J.
GR No. 202284 March 17, 2021
ESSENTIAL REQUISITES OF A CONTRACT
DOCTRINE
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. A contract of sale is a consensual
contract. Under Article 1475 of the Civil Code, the contract of sale is perfected at the
moment there is a meeting of minds upon the thing which is the object of the contract
and upon the price.
FACTS
Spouses Cristina and Eutiquio Seming alleged that sometime in 1977, they
purchased Jesusa's share of in Lot 512-C, which consisted of 771 square meters or one-half
portion of the property. They then took possession of the said portion by constructing
their conjugal dwelling thereon. Jesusa subsequently executed a Deed of Sale in their
favor. Petitioner Cristina Seming (Cristina) further alleged that, in the same year, she and
her husband entered into a verbal agreement with the spouses Angel Pamat and Natividad
Pamat (Spouses Pamat; Natividad) concerning the purchase of the other half portion of
the land also measuring. Spouses Seming admitted that, at that time, the parties did not
execute any written agreement reflecting the sale of the subject property in their favor.
Meanwhile, a complaint for quieting of title (Civil Case No. 744) respecting the subject
land was filed by a Maria Aguilar Avecilla against Jesusa and the spouses Pamat. Cristina
averred that, with the consent of Jesusa and the Pamats, she agreed to shoulder all
expenses of the litigation. The amount of litigation expenses spent by petitioner shall
then be treated as part of petitioner's payment for the purchase price of the subject
property. Sometime in 1983, the trial court's decision in Civil Case No. 744 reached its
finality. Natividad, whose litigation expenses in Civil Case No. 744 were shouldered by
petitioner, agreed to pay the latter with another 200-square meter portion of the subject
property. Petitioner and her husband, at this point, were able to acquire 600 square
meters out of the 771-square meter area of the subject property.
Sometime in 2002, petitioner offered to buy from the spouses Pamat the remaining
171-square meter portion of the subject property for P10,000.00, and further requested
that the sale of the 600-square meter portion thereof be embodied in a Deed of Sale.
However, the Pamats refused to sell the remaining 171-square meter portion of the
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subject property and execute the said Deed of Sale, claiming that they never sold any
portion of their share in Lot 512-C.
On November 4, 2009, the RTC rendered a Decision which ordered respondents to

execute a Deed of Absolute Sale in favor of Crisitina covering 600 square meters of Lot
No. 512-C. The RTC held that there was a perfected contract of sale between petitioner
and Natividad. In a Decision dated July 22, 2011, the CA reversed the ruling of the RTC
and held that no contract of sale existed between the spouses Pamat and petitioner.
ISSUE
Whether there was a perfected and valid contract of sale?
HELD
No. There is no contract of sale between Crisitina and Natividad.
"A contract of sale is a consensual contract. Under Article 1475 of the Civil Code,
the contract of sale is perfected at the moment there is a meeting of minds upon the
thing which is the object of the contract and upon the price."
Natividad did not consent to enter into any contract of sale involving her half
portion of Lot 512-C. There was in reality no meeting of the minds with respect to the
alleged sale of the subject property. There is no clear and convincing evidence that
Natividad definitely sold the subject property to Cristina. Aside from the bare allegations
of the latter, there is total lack of evidence which would establish that Natividad
expressly agreed to the arrangement that the financial aid extended to her would be
treated as consideration for the sale of the subject property. Crisitna’s argument that her
occupation and consequent construction of a permanent and substantial improvement on
the subject property proves her ownership thereof, fails to persuade. Jesusa specifically
testified that the concrete pavement supposedly constructed by Crisitina is only 10 to 12
meters in size 64 out of the 771-square meter property. This structure does not constitute
a substantial and permanent improvement on the property that would otherwise indicate
actual ownership of the portion claimed to be her own.
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 requisite that a thing be
determinate is satisfied if at the time the contract is entered into, the thing is capable of
being made determinate without the necessity of a new or further agreement between
the parties." The exact portion of Lot 512-C allegedly sold to Cristina was not specified in
the receipts issued. 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.
The price for the sale of the subject property is also uncertain. Other than her
bare testimonies, Crisitna’s claim that she extended financial aid to Natividad was not
supported by corroborating evidence. Although the litigation expenses spent by Cristina
form part of the purchase price of the subject property, she did not present any receipt of
expenses which would aid the Court to determine the exact amount thereof. This
76
undetermined amount of expenses all the more renders the price or consideration of the
sale ambiguous.
77
SPOUSES DE VERA V. CATUNGAL
HERNANDO, J.
G.R. No. 211687 February 10, 2021
CONSENT
DOCTRINE
Article 1332. When one of the parties is unable to read, or if the contract is in a
language not understood by him, and mistake or fraud is alleged, the person enforcing the
contract must show that the terms thereof have been fully explained to the former.
FACTS
Fausta Catungal (Fausta), complainant, filed a complaint for Declaration of Nullity
of Documents, Recovery of Ownership, Reconveyance, and Damages, with Prayer for Writ
of Preliminary Injunction and/or Temporary Restraining Order against Spouses De Vera
(Sps. De Vera), respondent.
Vicente Catungal, owner of two parcels of land, was survived by five children
including Fausta Catungal (Fausta) and Genaro Catungal (Genaro). Fausta and Genaro
executed a Deed, adjudicated and transferred the ownership of the parcel of land to Sps.
De Vera for a consideration of 30 000.
Fausta alleged that Sps. De Vera took advantage of her illiteracy and old age by
succeeding in making her affix her thumb mark on the said Deed which she thought was a
mere evidence of her indebtedness. Being illiterate and of old age, Fausta did not
understand the contents of the Deed. Moreover, Fausta claimed that the Deed is null and
void for it did not reflect the true agreement of the parties.
Sps. De Vera then filed their answer contending that the Deed was valid and
binding and does not appear to have been tainted with fraud and deceit. Furthermore,
they claimed that the allegations of deceit, false pretense, and fraudulent
misrepresentation were mere conjectures and surmises.
The RTC ruled that Fausta failed to prove by preponderance of evidence that her
thumb mark on the Deed was procured through deceit, false pretenses and fraudulent
misrepresentations. The CA reversed the RTC’s ruling. The CA ruled that Fausta, being
illiterate, did not fully understand the contract when she affixed her thumb mark thus the
presence of fraud or mistake in the execution of the Deed.
ISSUE
Did Fasuta freely give her consent to the Deed?
HELD
No. Fausta did not give her consent to the Deed.
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The Court ruled that the Deed is voidable since Fausta's consent was vitiated by
fraud. The Court cited Article 1332 of the Civil Code. (CC)
“Article 1332. When one of the parties is unable to read, or if the contract is in a
language not understood by him, and mistake or fraud is alleged, the person enforcing the
contract must show that the terms thereof have been fully explained to the former.”
The Court said that when one of the contracting parties is illiterate, and fraud is
alleged, fraud or mistake in obtaining consent of that party is presumed. Article 1332
protects contracting parties that are illiterate and unable to read from being taken
advantage of.
For the protection afforded by Article 1332 to be operative, the contracting party
who alleges that there is any defect or vitiated consent must establish the same by full,
clear and convincing evidence. The party must show that his personal circumstances
warrant the application of Article 1332; he must show, by clear and convincing evidence,
that he is unable to read at the time of execution of the contract. It is only then that the
presumption in Article 1332 will arise and the burden will shift to the other contracting
party to rebut it.
To rebut the presumption, the other contracting party must show, by clear and
convincing evidence, that the terms and contents of the contract were explained to the
contracting party who is unable to read. Naturally, the burden to show that the other
party fully understood the contract is on the party that seeks to enforce the contract.
Fausta was able to prove that she was illiterate and that the contents of the Deed
were not explained to her when she affixed her thumbmark, thereby making the
presumption of fraud or mistake under Article 1332 of the CC operative. The Sps. De Vera
failed to rebut this by clear and convincing evidence. Consequently, fraud or mistake was
present. Therefore, the Deed, despite being notarized, was defective. The Deed cannot
enjoy the presumption of regularity as it was alleged and proven that the consent of
Fausta was vitiated.
79
BREACHES OF OBLIGATIONS
ESTATE OFRODRIGUEZ V. REPUBLIC
HERNANDO, J.
G.R. No. 214590 April 27, 2022
BREACH OF CONDITIONAL DONATION
DOCTRINE
The deed of conditional donation expressly provided for the automatic revocation
and/or reversion in case of breach of any of the conditions therein. If the donee fails The
deed of conditional donation expressly provided for the automatic revocation and/or
reversion in case of breach of any of the conditions therein. If the donee fails to comply
with or violate any of the conditions stated in the donation, the title over the subject
property shall ipso facto revert to the donor, his heirs, successors or assigns and all
improvements, structures or buildings thereon shall be forfeited in favor of the donor.
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.
FACTS
The estate of Susano Rodriguez seeks for the reconveyance of real properties
against the Republic, which was a 32-hectare property supposedly donated to the latter
for the establishment of a mental hospital under a conditional donation, initially given by
Susano Rodriguez to the Republic. Such a donation however, was subject to several
conditions in order for the Republic to keep the donated plots of land, which the Estate of
Susano Rodriguez insists were broken. According to this arrangement, breaking one or
some of these conditions grants the estate and its heirs the ability to reacquire the plots
of land and the forfeiture of any improvements thereon.
An important condition stated in the Donation Contract was that the Donee should
not “under any circumstance or in any manner Lease, Let, Convey, Dispose, or Encumber
the property herein donated or any part or portion thereof to any person or entity, except
with the prior and express knowledge and approval of the DONOR, it being the desire and
intention of the latter to have the said property for the exclusive use of the said hospital”
The Republic however, challenges such charges claiming that 1:) RTC had no
jurisdiction over petitioner's complaint as an estate has no legal capacity to sue and could
not be a party to a court action, 2:) the estate's cause of action had already been
prescribed, stating that in accordance with Art. 1144 of the New Civil Code, an action
upon a written contract must be brought within 10 years from the time the right of action
accrues. They had argued that since the deed of conditional donation was executed on
September 12, 1968, an action to enforce the conditions therein prescribed on September
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12, 1978. Hence, the estate's filing of the instant complaint in 2008 is already barred by
prescription.
Regional Trial Court for the estate ordering with the revocation and cancellation of
the deed of conditional donation in so far as the 27 hectares of the 32 hectares subject of
donation. Additionally, the estate's cause of action accrued when the Republic failed to
have the RTC's Decision in a civil case which was an ejectment suit filed by the Republic
against the informal settlers in the subject property, which was decided in favor of the
Republic.
The Court of Appeals reversed the RTC decision and stated that the Estate has a
legal personality to institute the action against the Republic. As for the alienation of the
property, since the deed of conditional donation did not specify any duration of the
prohibition, it is considered an impossible condition under Art. 727 of the Civil Code and
therefore cannot be imposed. Additionally, the presence of informal settlers (which were
already present during the execution of the donation) does not equate to allowing them
to lease, let, convey, dispose, or encumber the property, meaning there was no breach of
contract. Despite the informal settlers being situated on the land, the main purpose of
establishing a mental hospital was still established, meeting the purpose of this donation.
ISSUE
Was there a breach of conditional donation that warrants revocation of the
donation when only 5 hectares is used for the mental hospital and the remaining 27
hectares is used as residences or business places of the informal settlers?
HELD
No, there was no breach of conditional donation. The Republic met that condition when it
filed an ejectment case against the informal settlers in order to use the whole portion of
the donated property for the exclusive use of the mental hospital in accordance with the
condition imposed by the donor as stated in the deed of conditional donation. The failure
to execute the case within 10 years from March 27, 1995 is not considered a violation of
this particular condition.
The mere presence of informal settlers does not mean that the Republic allowed the
former to settle in the property. It also does not help when the informal settlers are
violent regarding any case involving their ejection.
The tolerance of the Republic to the informal settlers does not mean they have broken
the stated condition to not allow any other person to lease the property, and such an
issue does not constitute breach under Art 1191 of the New Civil Code, which allows the
power to recede an agreement between reciprocal obligations incase of any breach from
any of the obligors.
Furthermore, the breach must be substantial and fundamental as to defeat the object of
the parties in making the agreement and not merely a slight or casual breach of contract.
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Moreover, it was not required of the Republic to undertake a recovery of possession of the
portion of the donated property from these informal settlers.
The main object of this donation was the establishment of a mental hospital and for it to
be connected to the National Highway, which the Republic has achieved. There was no
need for the entire property to be used to establish the facility, as there was no detailed
plan or feature present in the agreement that would lay out the details on what
dimensions the mental hospital should be built on. The Republic for all intents and
purposes, successfully met its obligations and has not violated any of the conditions as set
out in the contract.
82
DIFFERENT KINDS OF OBLIGATIONS
PHILIPPINE NATIONAL BANK V. LORENZO BAL JR.
HERNANDO, J.
GR No. 207856 November 18, 2020
SOLIDARY LIABILITY
DOCTRINE
Solidarity is never presumed.There is solidarity liability when the obligation states,
or when the law or the nature of the obligation requires the same.
In Tan v. People, We held that as to the uncollected cheek deposits, the bank may
honor the check at its discretion in favor of clients.
FACTS
PNB filed a complaint for a sum of money against Adriano Tan (Tan) and Lorenzo
Bal Jr. (Bal). Tan maintained an account in PNB Caloocan Branch in which Bal was then
the manager. Bal approved various cash withdrawals by Tan against several checks without
for them to be cleared. The checks were subsequently dishonored for insufficient funds.
PNB alleged that Bal violated the bank's policy on the prohibition against drawing
on uncollected deposits and that Bal violated and exceeded his limited authority to
approve encashment of other bank checks under its Manual of Signing Authority. PNB
averred that it incurred losses in the amount of P520,000.00 and that Bal is personally
liable to the bank. PNB prayed that Tan and Bal be held jointly and severally liable to the
bank in the amount.
Bal argued that the complaint against him amounted to an administrative action.
He was already administratively penalized for his alleged violations with a four-month
suspension. He neither made any acknowledgement of the obligation nor participated in
the business transactions that led to the obligation and that Tan should be held solely
liable to the bank.
RTC dismissed the complaint against Bal but held Tan solely liable for the entire
amount of P520,000.00. CA held that PNB failed to satisfactorily prove that Bal financially
gained from his act of accommodating Tan or that any collusion existed. Bal is not
personally liable for his acts as officer of the bank. Only Tan who actually received the
money and acknowledged said obligation to PNB through the execution of a promissory
note in favor of said bank should be liable.
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ISSUE
Whether Bal may 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?
HELD
No. Bal has not incurred any personal liability on the drawings against the
uncollected bank deposits in question. 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. Bal was called upon to approve the encashment of the dishonored checks, he made
a judgment call based on his appraisal of Tan’s banking history with PNB and the regularity
of the checks presented on payment. These acts are made within his discretion as branch
manager.
Bal was already penalized with four month suspension by the PNB Administrative
Adjudication Panel already penalized Bal for the same infraction. The trial court
correctly interpreted the 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.
Making Bal personally accountable for the liability that Tan had already
acknowledged to be his would be tantamount penalizing him twice for the same offense.
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.
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COMPENSATION
BANCO DE ORO UNIBANK, INC V. EDGARDO YPIL, SR. ET AL
HERNANDO, J.
GR No. 212024 October 12, 2020
LEGAL COMPENSATION
DOCTRINE
Creditor's failure to specify the date when debtor actually defaulted, the
indebtedness cannot be considered as due and liquidated.
FACTS
Cebu Sureway Trading Corporation (CSTC) represented by its Executive Vice
President Leopoldo Kho (Kho) asked Edgardo Ypil Sr. (Ypil) to invest in its scheme. Ypil
acquiesced and Kho was able to solicit P300k from Ypil. Eventually, Ypil opted for a refund
of the P300k and manifested via written and oral demands but was left unheeded. Due to
this, Ypil filed a complaint for Specific Performance with Attachment, Damages and
Attorney's Fees against CSTC and Kho in RTC Cebu, asking for the P300k plus interest.
RTC favored Ypil, and Sheriff Pascual Guaren of RTC Cebu Br. 7 issued a Notice of
Garnishment of the P300k plus lawful expenses from the accounts of CSTC and Kho
addressed to the Bank Manager or Cashier of Bank's North Mandaue Branch. The Bank
received notice on February 4, 2004, same day as the notice were sent but Bank Manager
Cyrus Polloso (Polloso) replied on February 10, 2004 stating that there are no available
garnishable funds in the account of CSTC and Kho.
RTC subpoenaed Polloso thrice in 2007, all of which he failed to testify except
February 1, 2008. RTC discovered that the bank already debited from CSTC's account
some amounts to offset CSTC's debts under a loan agreement with the bank.
RTC issued an order directing the Bank through Polloso to show cause why it should
not be held guilty of indirect contempt for debiting money from the accounts of CSTC and
Kho which were under custodia legis.
The Bank insists that all the requisites of legal compensation under Article 1279 of
the Civil Code are present in this case. It highlights that the Promissory Note stipulated
that in the event of default, CSTC's remaining obligations with the Bank will immediately
become due and payable even without a demand notice. It points out that CSTC had
already defaulted on its obligations under the Promissory when the Notice of Garnishment
was served to the Bank. Hence, the Bank asserts that it acted correctly when it formally
debited CSTC's deposit to reflect the legal compensation which automatically took place
even prior to the service of the Notice of Garnishment on February 4, 2004. Moreover, the
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Bank contends that since legal compensation occurs by operation of law, the deposits
could not have been the proper subject of the Notice of Garnishment and could not be
placed in custodia legis.
Ypil counters that the Bank unilaterally withdrew P301,838.27 from CSTC'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.
CSTC avers that when the Notice of Garnishment was served upon the Bank on
February 4, 2004, it has an existing deposit since its checking account has not yet been
closed by the Bank. It alleges that on February 10, 2004, the Bank belatedly informed the
trial court that there was no available garnishable amount. Thus, it can be inferred that
on or before February 4, 2004, the Bank did not initiate the application of legal
compensation and only invoked this option after receipt of the Notice of Garnishment.
CSTC additionally asserts that the Bank did not present any document to prove the date
when CSTC's loan obligation became due and demandable. Furthermore, when the Notice
of Garnishment was served, it placed the Bank on notice regarding the case filed by Ypil
against CSTC.
ISSUE
Did the CA err in not holding the disputed deposit in this case had been the
subject of legal compensation prior to the service of the Notice of Garnishment to Bank
and that such service of notice did not put the said deposit in custodia legis?
HELD
No. 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
through the mutual extinction by operation of law of concurring debts." The said mode of
payment is encapsulated in Article 1279 and in relation to Article 1290 NCC states that
"when all 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."
SC stated that they do not agree with the Bank's contention that the executed
Compromise Agreement between Ypil and CSTC are tainted with bad faith due to the
existing contest regarding the garnished funds. The funds were validly garnished through
an order of the trial court with competent jurisdiction. More importantly, no legal
compensation took place which could have rendered CSTC's deposits unavailable for
garnishment. If, as the Bank claims, CSTC's deposits amounted to only P294,436.68 and
not P300,000.00 as provided in the Compromise Agreement, then such is a matter which
Ypil has to settle with CSTC and Kho, and necessarily, the Bank. Nonetheless, this should
likewise be considered in view of Ypil's assertion that on the day the Notice of
Garnishment was served upon the Bank, CSTC had a deposit of more than P300,000.00
(based on bank records marked as exhibits) which was more than enough to cover the
subject amount of the garnishment.
86
As a final reminder, jurisprudence states that "the diligence required of banks is
more than that of a good father of a family. Banks are required to exercise the highest
degree of diligence in their banking transactions." In view of this, BDO Unibank, Inc.
should recognize that it should be diligent and circumspect in its dealings with its clients,
especially with regard to transactions that involve loans and credits. If only it had
properly monitored the accounts of its clients, BDO Unibank, Inc. would not have been
remiss in assuring that CSTC fulfils its end of the loan or even in exercising its option to
offset the company's deposits with that of its outstanding obligations in order to protect
the Bank's interests. Unfortunately, it has to face the consequences of its inattention to
detail.
87
PURIFICACION V. GOBING
HERNANDO, J.
GR No. 191359 November 11, 2020
COMPENSATION IN BREACH OF CONTRACTUAL OBLIGATION
DOCTRINE
The amount of compensation awarded to Purificacion was based on the extent of
the damages she had suffered and the principle of full compensation, which requires that
the compensation awarded should put the victim in the same position as if the contract
had been performed. This means that Purificacion was entitled to be compensated for any
losses she incurred as a result of Gobing's breach of contract, including any costs she
incurred in finding alternative arrangements and any loss of income or profits she suffered
as a result of Gobing's failure to fulfill his obligations.
FACTS
In this case, Lucila Purificacion and her late husband were tenants on a 35,882
square meter parcel of agricultural land located in Anabu I, Imus, Cavite. The land was
sold in May 1993 by Atty. Jaime Villanueva, representing the former landowners, to
Charles Gobing of Charles Builders, Inc. The Purificacion spouses received disturbance
compensation in the amount of Pl,046,460.00, but Lucila claimed that she and her late
husband also had an agreement with Atty. Villanueva and Gobing that they would
relinquish their tenancy rights over the subject lot except for a 1,000 square meter
portion where their house was located. Lucila presented a May 20, 1993 Letter and an
unnotarized Malayang Salaysay as evidence of this agreement.
Respondents argued that Lucila was already well compensated and had no legal
right to demand additional compensation in the form of a 1,000 square meter lot. They
also claimed that the Purificacion spouses' Malayang Salaysay indicated that they had
relinquished all their rights to the subject lot in exchange for the disturbance
compensation.
ISSUE
Was Lucila Purificaion properly compensated?
HELD
Yes. The Court found that Lucila Purificacion was properly compensated for
disturbance compensation in the amount of Php 1,046,460.00 as agreed upon between her
and the respondents. The court cites section 16 of the DAR AO No. 1, series of 1990,
which states that disturbance compensation must be paid in cash or in kind or both to
tenants, farm workers, or bona fide occupants affected by land conversion. If the parties
do not agree on the amount of disturbance compensation, the issue can be brought before
the DAR Adjudication Board for resolution. The court found that the compensation was
properly paid to Lucila and that the respondents have fulfilled their obligation to pay
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disturbance compensation. The court also found that the May 20, 1993 Letter from Atty.
Villanueva to Gobing and the Notarized Malayang Salaysay presented by Lucila as evidence
did not provide substantial proof that she was entitled to a 1,000-square meter portion of
the subject lot as disturbance compensation in addition to the Php 1,046,460.00 she
already received.
89
NOVATION
VALDES V. LA COLINA DEVELOPMENT CORP.
HERNANDO, J.
GR No. 208140 July 12, 2021
NOVATION
DOCTRINE
In the absence of an express provision to this effect, a contract may still be
considered as novated if it passes the test of incompatibility, that is, whether the
contracts can stand together, each one having an independent existence.
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 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.
FACTS
On April 6, 1993, Carlos Valdes (Carlos, Sr.) and his children including one Gabriel
A.S. Valdes (Gabriel), herein petitioners, filed before the RTC a Complaint for
Reconveyance, Annulment and/or Rescission of Contract, Specific Performance and
Damages with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction
against La Colina Resorts Corporation (LCRC), La Colina Development Corporation (LCDC),
Montemar Beach Club, Inc. (MBCI), Philippine Communication Satellite, Inc. (Philcomsat),
Montemar Resort and Development Corporation (MRDC), Jose Mari, including Poblador
and Alfredo L. Africa (Africa), in their capacities as officers for Philcomsat and MRDC.
The Valdeses are the stockholders of Bataan Resorts Corporation (BARECO), which
owned a large tract of land in Bagac, Bataan. Sometime in 1974, Carlos, Sr. invited
Francisco Cacho (Francisco) and his son, individual respondent Jose Mari Cacho (Jose
Mari), to visit and assess the property's suitability for a beach resort project (Montemar
Project). Having received a favorable response from Francisco, both Carlos, Sr. and
Francisco proceeded to carry out the Montemar Project, which included the development
and improvement of the beach basin as a beach resort (Montemar Beach Club), and the
conversion of the remaining land area into a residential subdivision (Montemar Villas)
To implement the project, the Valdeses transferred and conveyed their shares of
stock in BARECO in favor of LCDC, a fully-owned corporation of the Cacho family, through
a Deed of Sale dated May 24, 1975, for a consideration of P20 Million. LCDC then made a
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partial payment thereof in the amount of P2.5 Million from February 1975 to December
1979, while the remaining balance amounting to P17.5 Million was covered by promissory
notes.
The P17.5 Million was to be paid by way of an Assignment of Rights dated October
30, 1975, wherein LCDC: (1) assigned to the Valdeses three million worth of shares in
LCRC, the corporation established by LCDC to market and sell the shares of the beach
resort; and (2) undertook to pay the Valdeses (50%) of the net proceeds (later reduced
40%) from the sale of the Montemar Villas lots inside BARECO, as previously acquired by
LCDC.
By virtue of the aforementioned Assignment of Rights, LCDC and Carlos, Sr.

became seventy percent (70%) and thirty percent (30%) shareholders of LCRC,
respectively.
LCDC obtained loans to finance the construction and development of the

Montemar Villas, including the building and facilities in the Montemar Beach Club. The
loans were obtained from the Development Bank of the Philippines (DBP) — subsequently
the Asset Privatization Trust (APT), Metrobank, and General Credit Corporation (GCC),
formerly the Commercial Credit Corporation.
During the years 1981 up to 1985, there was a delay in the remittances of the
shares to the Valdeses in the net proceeds from the sale of the Montemar Villas lots. The
records, however, would bear that a portion of the purchase price of P20 Million, or
P16,125,717.31, was eventually paid to the Valdeses.
Pursuant to a letter agreement dated February 21, 1990, LCDC vowed to continue
to undertake the marketing of the Montemar Villas lots for the purpose of remitting to the
Valdeses their 40% share in the sale of the said lots until full payment of the purchase
price of BARECO shares amounting to P20 Million.
Meanwhile, as the loans obtained by LCDC from DBP/APT remained unpaid, the
mortgaged properties of LCDC, LCRC, and MBCI were eventually foreclosed by DBP/ATP.
Sometime in 1992, LCDC and LCRC initiated negotiations with Philcomsat, a

prospective investor of the Montemar Project. In this regard, Philcomsat presented a
Memorandum of Intent dated August 18, 1992, which embodied the terms and conditions
agreed upon by LCDC, LCRC, MBCI, and Philcomsat. This was with a view toward the latter
investing on the project, and, concurrently, bailing out LCDC, LCRC and MBCI from their
loan obligations with APT, GCC, and Philcomsat. The Memorandum of Intent was
presented in the board and stockholders' meeting of MBCI.
Meanwhile, to obtain from APT an extension of the period to pay the outstanding
obligation of LCDC and LCRC, Philcomsat paid APT the amount of P4 Million. During the
extension period, Philcomsat eventually decided to invest in the new project, subject to
conditions, particularly, that the Valdeses: (1) give their conformity to the new project;
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and (2) forego their claim to the proceeds of the sale of the Montemar Villas lots.
Thereafter, pursuant to the Memorandum of Intent dated August 18, 1992 and the
letter-conformity dated August 27, 1992, Philcomsat, together with LCDC, LCRC, and MBCI
executed a Memorandum of Agreement dated September 3, 1992 essentially identical to
the Memorandum of Intent dated August 18, 1992 executed by and between LCDC, LCRC,
MBCI, and Philcomsat. Meanwhile, on August 31, 1992, LCRC and LCDC, through a
Consolidated Deed of Absolute Sale, conveyed and sold to MRDC all their real and personal
properties situated in Bagac, Bataan.
RTC ruling:
On October 26, 2009, the trial court rendered a Decision declaring the
Memorandum of Agreement dated September 3, 1992 and the Consolidated Deed of
Absolute Sale dated August 31, 1992 null and void. The RTC found that the Valdeses and
LCDC entered into a joint venture agreement. The RTC held that the 2 agreements are
null and void for the lack of consent on the part of the Valdeses to the said contracts and
the evident bad faith by LCDC.
CA Ruling:
On October 31, 2012, the CA rendered its assailed Decision, which reversed and
set aside the aforesaid RTC ruling. The CA found that the Deed of Sale dated May 24,
1975, promissory notes executed by LCDC, and the Assignment of Rights dated October
30, 1975, negated the existence of a joint venture agreement between the Valdeses and
LCDC. The CA held that the relationship between the Valdeses and LCDC was, instead, one
of vendor-vendee. As explained by the appellate court, "there was no contract to
contribute properties to a common fund so as to share the profits between themselves.
ISSUE
1. Was there a valid novation of the Deed of Sale between LCDC and the
Valdeses that resulted in the extinguishment of LCDC’s liability to the
Valdeses
2. Is the agreement entered into by the parties a contract of sale?
3. Were respondents Philcomsat and MRDC in bad faith in executing the
September 3, 1992 Memorandum of Agreement and the August 31, 1992
Consolidated Deed of Sale?
4. Can the petitioners avail the remedy of rescission under the Civil Code?
HELD
YES. There was a valid novation.
This Court finds that the CA committed no error in setting aside the October 26,
2009 Decision of the RTC. The Court, therefore, denies the instant Petition.
The Valdeses and LCDC did not enter into a joint venture agreement. The
agreement entered into by the parties is a contract of sale. 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.
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This Court finds that Gabriel, as the representative of the Valdeses, had knowledge
of the new concept of the Montemar Project, and consented to the entry of Philcomsat as
a new investor, this finding is based on the following established facts: The August 27,
1992 letter-conformity which bore Gabriel's signature on the conforme portion thereof;
several minutes of the board meetings of MBCI, where MBCI directors, including Gabriel,
discussed the entry of Philcomsat as a possible investor of the Montemar Project; and the
notices sent to the LCRC stockholders and directors of scheduled meetings for the purpose
of discussing the proposed new concept of the said project.
We agree with the findings of the CA that the wordings in the notices sent to
Gabriel sufficiently apprised him of the changes in the Montemar Project.
2. YES. As embodied in Article 1370 of the Civil Code, the cardinal rule in the
interpretation of contracts is that when the terms of the contract are clear, its literal
meaning shall control.
"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."
Thus, in interpreting the agreement between the Valdeses and LCDC, the inquiry is
not what contract the parties intended to enter into, but what contract did they enter
into. Notably, the Deed of Sale, if read in conjunction with the promissory notes issued to
the Valdeses and the Assignment of Rights dated October 30, 1975, leaves no room for
interpretation as to the exact intention of the parties – they entered into a contract of
sale.
In contrast, a joint venture, therefore, is akin to a partnership, the essential

elements of which are as follows: (1) an agreement to contribute money, property, or
industry to a common fund; and (2) an intent to divide the profits among the contracting
parties.
3. NO. Jurisprudence has shown that in order to constitute :fraud that provides
basis to annul contracts, it must fulfill two conditions: "First, the fraud must be dolo
causante or it must be fraud in obtaining the consent of the party," and "[s]econd, the
fraud must be proven by clear and convincing evidence and not merely by a
preponderance thereof."
A perusal of the Assignment of Rights and the February 21, 1990 letter agreement
clearly shows that the Valdeses' share in the sale of the subdivision lots was the manner of
paying, or mode of payment of the P20 Million consideration for the 4,000 BARECO shares.
While we understand that this type of provision may be peculiar to a contract of sale, this
profit-sharing scheme, as explained by LCDC, was a means for the latter to acquire the
necessary funds to develop and improve the said lots.
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4. NO. "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 celebration of said contract." "The kinds
of rescissible contracts are the following: first, those rescissible because of lesion or
which, by special provisions of law, are susceptible to rescission."
None of the above circumstances are present in this case. As discussed above, the
records of the case are replete with evidence that the Valdeses, through Gabriel, gave
their express conformity to the new concept of the Montemar Project and the entrance of
Philcomsat as new investor for the said project.
Having expressed their consent to the changes brought about by these new
contracts, and having been made aware of the effects thereof, the Valdeses cannot now
feign ignorance and assert that they were prejudiced in their rights and interests. While
they feel shorthanded as they will cease receiving their 40% income share from the sale of
the Montemar Villas lots, the fact of the matter is that they would have maintained a
share or interest in the new Montemar Project, which, however, the Valdeses opted to sell
to respondent Philcomsat. Notably, it appears that nothing has materialised from their
negotiations.
94
ASIAN CONSTRUCTION AND DEVELOPMENT CORP V. MERO STRUCTURES INC
HERNANDO, J.
NOVATION
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.69 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."
FACTS
First Centennial Clark Corporation (FCCC) entered into a Construction Agreement
with petitioner Asian Construction and Development Corporation (Asiakonstrukt) for the
finalization of the architectural concept, design, and storyline approved by the National
Centennial Commission and to undertake all the necessary construction works for the
Exposition Theme Park. On even date, respondent MERO Structures, Inc. (MERO), an
American corporation, submitted a Materials Only Proposal to Asiakonstrukt for the supply
of materials in constructing a special Philippine flag structure in the Expo Filipino.
Asiakonstrukt submitted to FCCC a proposal for the design, supply, and installation
of the flag structure using MERO's spaceframe. FCCC approved Asiakonstrukt's proposal,
subject to the pricing, terms, and conditions in the latter's proposal. Asiakonstrukt
informed MERO that FCCC awarded to Asiakonstrukt the contract for the design supply,
and installation of the flag structure and the latter would pay MERO after FCCC's payment
of the materials
In a letter to Asiakonstrukt, MERO requested that it be paid directly by the FCCC.

By way of a response, Asiakonstrukt, stated that it interposed no objection to MERO's
request to collect payment directly from the FCCC. However, FCCC failed to pay MERO
despite the demands made by MERO and made a final demand on Asiakonstrukt for its
principal obligation plus 1.5% interest per month or 18% annually. Despite this,
Asiakonstrukt still failed to pay, prompting MERO to institute before the Regional Trial
Court (RTC) a Complaint for sum of money.
According to Asiakonstrukt, a new contract was entered into by it and MERO,

wherein MERO waives its rights to collect from Asiakonstrukt and is subrogated to
Asiakonstrukt's place to collect directly from FCCC and NDC.
The trial court rendered a Decision50 upholding MERO's right to collect from
Asiakonstrukt and FCCC. Dissatisfied, MERO and Asiakonstrukt filed separate appeals with
the CA. In a Decision, the CA denied both appeals and affirmed the RTC Decision.
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ISSUE
Was the letter of MERO and the response letter of Asiakonstrukt constitute as a
novation of the original contract?
HELD
No, no new contract was borne of the letters exchanged by MERO and
Asiakonstrukt.
Novation extinguishes an obligation between two parties when there is a

substitution of objects or debtors or when there is subrogation of the creditor.69 It occurs
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.
With regard to the last point, it must be stressed that the consent of the third
party, which is FCCC in this case, must also be secured for the novation to be valid. Again,
FCCC was never a part of the letters exchanged between MERO and Asiakonstrukt. Thus,
FCCC clearly could have not consented to any substitution or subrogation of the parties.
If the exchange of letters between MERO and Asiakonstrukt was intended to novate
the original agreement between the parties, FCCC must have first agreed to the
substitution of MERO as the new payee/creditor, at least to the extent of the
US$570,000.00 representing the payment for the flag. The exchange of letters must have
also stated in clear and unequivocal terms that it has replaced the original obligation of
Asiakonstrukt to MERO. Neither of these circumstances is present in this case.
Since there was clearly no novation, Asiakonstrukt's obligation to MERO remains

valid and existing. Asiakonstrukt, therefore, must still pay respondent the full amount of
US$570,000.00 with the applicable interest.
96
FORM OF CONTRACTS
AGRO FOOD AND PROCESSING CORP V. VITARICH CORP
HERNANDO, J.
GR No. 217454 January 11, 2021
FORM OF CONTRACTS
DOCTRINE
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.
FACTS
Agro and Vitarich simultaneously executed two agreements: first, a Memorandum
of Agreement (MOA) under which Vitarich offered to buy Agro's chicken dressing plant and
second, a Toll Agreement under which Agro agreed to dress the chickens supplied by
Vitarich for a toll fee. Vitarich paid P20 million as deposit to Agro and was given a period
of forty-five (45) days within which to evaluate the dressing plant facilities. At the end of
the period, Vitarich formally made its offer to purchase, but Agro did not accept the
offer. Thus, Agro needed to return the P20 million deposit. Vitarich was obligated to pay
toll fees to Agro pursuant to the Toll agreement, the parties agreed on returning the P20
million deposit by way of continuously offsetting with fifteen percent of the toll fees paid
by Vitarich until the obligation is satisfied. During the period, Vitarich also sold on credit
live broiler chickens to Agro.
Vitarich filed a complaint for sum of money with damages two years later against
Agro for the balance of the P20 million deposit and the balance on the sale of live broiler
chickens to Agro. Regarding the balance from the P20 million deposit Vitarich stated that
it 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.
Agro disputed the computation made by Vitarich arguing that the amount was
inaccurate based on the fact that the alleged verbal amendments were not binding on
Agro.
RTC held that the amendments did not bind Agro considering the lack of signature
or conforme to the documentary evidence presented by Vitarich. The CA set aside the
decision of the RTC and held that verbal amendments to the toll fees were binding and
97
obligatory on Agro, pursuant to the principle that contracts were obligatory in whatever
form they may have been entered into. It found that Vitarich was able to establish the
existence of the amendments based on the eighty nine (89) weekly billings reflecting such
amendments, which billings were notably prepared by Agro, as well as from the testimony
of Agro's President who admitted that his firm prepared such billings.
ISSUE
Are the verbal amendments to the toll fees binding and obligatory?
HELD
YES, the verbal amendments to the toll fees are binding and obligatory.
Art. 1356 provides that contracts shall be obligatory, in whatever form they may
have been entered into, provided all the essential requisites for their validity are present.
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
Agro disputed the computation made by Vitarich arguing that the amount was
inaccurate as it was based on the alleged verbal amendments to the toll fees which were
not binding on Agro. Agro cannot deny that the amended fees were concurred by the
Board of Directors since Agro prepared the billing statements and Vita Rich did not
participate in the preparation of such statements. The billing statements were sent
weekly in a span of two years it was presumed that the Board of Directors concurred in
the amendments; since the defendant-appellee Agro accepted the benefits of the reduced
fees, then defendant-appellee Agro was bound by the oral amendments and cannot
repudiate the same; in the original agreement, defendant-appellee Agro Food was
supposed to apply 15% of the gross receipts as partial payment for the Php20,000,000.00
deposit, but because of the verbal agreements, defendant-appellee Agro Food deducted
from the gross receipts a lower percentage.
It was incredulous to assert that defendant-appellee Agro Food only committed a

mistake; the preparation and submission of the billings were presumed to be regular, and
defendant-appellee Agro Food failed to overthrow the presumption of regularity of the
transactions.
98
BASIC PRINCIPLES OF CONTRACTS
DEVELOPMENT BANK PHILIPPINES V. HEIRS
OF THE OF DANICO
HERNANDO, J.
OBLIGATORY FORCE OF A CONTRACT
DOCTRINE
Article 1370 of the Civil Code provides that if the terms of a contract are clear and
leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulation shall control. 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 intent.
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.
FACTS
Spouses Danico (Sps Danico) obtained an agricultural loan from Development Bank
of the Philippines (DBP) which was secured by a real estate mortgage (REM) over their 4
real properties. Later on, the Department of Agrarian Reform (DAR) issued a Certification
seizing 3 of the mortgaged real properties and placed them under the coverage of
Presidential Decree No. 27 (Operation Land Transfer). For failure of the Sps Danico to pay
their loan obligation, DBP foreclosed the sole remaining real property. Subsequently, Sps
Danico sold their lots to National Power Corporation (NPC) and entered into two deeds of
sale. Their contracts state that the subject lands are mortgaged DBP and that the
consideration of the sale shall be applied to the remaining balance in their loan obligation
specifying the existence of two Statements of Account. DBP agreed to the sale between
NPC and Sps Danico on such conditions. However, NPC paid DBP only a portion. When NPC
requested for the release of the land titles, DBP refused on the ground that the obligation
had not yet been fully paid. NPC persistently insisted that their only obligation to DBP is
the amount as shown in one Statement of Account.
ISSUE
1) Is NPC liable to DBP in one Statement of Account only as it claims?
2) Is NPC liable to pay Interest?
99
HELD
1) NO. NPC is liable to both Statements of Account as clearly stipulated in its
contract with Sps Danico.
Article 1370 of the Civil Code provides that if the terms of a contract are clear and
leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulation shall control. 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 intent.
If, indeed, the stipulations in the said two deeds of sale did not express the true
intention of the parties, both the Sps. Danico and the NPC could have filed the
corresponding action for reformation of the contract. But they did not do so. Besides,
both deeds of sale had been executed on the same day. Thus, they knew at the time of
their execution the existence of the two Statements of Account as stipulated in the
contracts. They cannot now impugn the existence of the other Statement of Account
when the words of both contracts are clear and readily understandable.
Therefore, NPC is liable to both Statements of Account as clearly stipulated in its

contract with Sps Danico.
2) NO. As to respondent NPC's liability to pay interest, 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.
In the case at bar, it is clearly apparent that the two deeds of sale do not contain
any stipulation as to the payment of monetary interest. Contrary to the contention of
petitioner DBP, the stipulation as to interest in the original agricultural loan dated April
22, 1977 and the Deed of Conditional Sale dated October 10, 1985 are not applicable to
NPC as the latter is not privy to the said contracts.
100
DOMILOS V. SPOUSES PASTOR
HERNANDO, J.
G.R. No. 207887 March 14, 2022
OBLIGATORY FORCE OF CONTRACTS
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.
FACTS
Lino filed a complaint for forcible entry against Nabunat. The City Court of Baguio
ordered Nabunat to vacate the subject property and remove his house. The Court of First
Instance of Baguio sustained the decision of the lower court. Several years after, or in
November 1986, Lino and Palichang, Nabunat’s mother-in-law, entered into a compromise
agreement, dividing the property among five different parties.
Lino, Nabunat, and Palichang sold different portions of the property to different
parties, including herein respondent spouses Pastor. On May 9, 1989, Lino sought to
execute the 1977 decision of the City Court of Baguio. On May 15, 1989, Lino and
Palichang executed a revocation and cancellation of compromise agreement. The City
Court of Baguio granted Lino’s motion which resulted in the demolition of some of the
properties of spouses Pastor. Thus, the spouses Pastor and Joseph filed a suit for
annulment of the revocation of compromise, among others.
The Pastors claimed that Lino wrongfully sold a portion of his property even if he
had none left to sell, according to the compromise agreement. As such, they have no
legal personality to sue Lino for revoking the same.
ISSUE
Does the revocation of the compromise agreement bind the spouses who were not
parties to the same?
HELD
Yes. The subject compromise agreement, being a contract that has the force of
law, is also governed by the requisites and principles of contracts under Title II of the Civil
Code particularly Articles 1312, 1315 and 1385.
The compromise agreement was a contract that created real rights as it was a
contract for division of property. The third persons, the Pastors, who came into possession
of the object of the contract are thus, bound by the contract or compromise agreement.
101
Furthermore, rescission, or in this case, revocation or cancellation 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.
102
BINDING EFFECT OF A CONTRACT
HOME GUARANTY CORP V. MANLAPAZ
HERNANDO, J.
G.R. No. 202820 January 13, 2021
CONTRACT TO SELL
DOCTRINE
Contracts take effect only between the parties, their assigns and heirs, except in
case where the rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heir is not liable beyond the
value of the property he received from the decedent.
If a contract should contain some stipulation in favor of a third person, he may

demand its fulfillment provided he communicated his acceptance to the obligor before its
revocation. A mere incidental benefit or interest of a person is not sufficient. The
contracting parties must have clearly and deliberately conferred a favor upon a third
person.
FACTS
This case involves a series of contracts to sell which is stated in the timeline
below:
(1) September 20, 1995 — VELI, HGC and the Bank entered into an Asset Pool
Formation and Trust Agreement (Asset Pool) for the development of the Village. Under
said Asset Pool, VELI had the authority to sell the parcels of land, and housing
development participation certificates were floated and sold to investors for the
development of the Village, while HGC guaranteed to answer for failure of the Asset Pool
to service the interests due to investors or redeem the certificates upon maturity, and the
Bank acted as trustee and held the properties of the Asset Pool.
(2) January 8, 1998 — VELI entered into a contract to sell with FLPPI for the sale of
the parcels of land in the Village.
(3) June 22, 1998 — FLPPI entered into a contract to sell with Manlapaz over the
subject lot.
(4) August 19, 1998 — HGC paid the Bank the guaranty call as the Asset Pool was
declared in default due to the delay in the development of the project. As a
consequence,[the Bank transferred to HGC, through a Deed of Assignment and
Conveyance, the parcels of land in the Village.
(5) October 8, 1998 — Since a substantial part of the assigned real properties to
HGC was sold by VELI to FLPPI, VELI, FLPPI, and HGC entered into a Memorandum of
103
Agreement whereby FLPPI agreed to assume to pay to HGC the parcels of land in the
Village sold to it by VELI.
(6) October 15, 1998 — HGC and FLPPI entered into a contract to sell to put into
effect the October 8, 1998 Memorandum of Agreement.
(7) November 15, 2000 — HGC canceled the contract to sell it executed with FLPPI
because of the latter's failure to pay its obligation.
Manlapaz, after failing to secure the title to the disputed land, filed a complaint
for delivery of title with prayer for damages with LSG and HLURB. The Bank contended
that Manlapaz had no cause of action against it since it was not privy to the contract with
FLPPI and that the property in question had already been a subject of the Deed of
Assignment and Conveyance between the Bank and HGC.
HGC averred that Manlapaz has no cause of action against it since it is also an
unpaid seller based on the Contract to Sell it entered into with FLPPI and asserted that
Manlapaz be reimbursed by FLPPI for the awarded amounts and value required to cover
the issuance of the title. VELI asserted that Manalapaz has no cause of action against it
since it was not privy to the contract to sell between Manlapaz and FLPPI.
LSG-HLURB ruled that FLPPI has the obligation to deliver the title to Manlapaz
upon full payment. Manlapaz has no cause of action against the Bank since the trusteeship
agreement had been terminated and the possession of the TCT for the contested lot was
transferred to HGC. On the other hand Manlapaz has a cause of action against HGC since
it became aware of the contract to sell between VELI and FLPPI when HGC entered into a
Memorandum Agreement with FLPPI and VELI. HGC's claim that the Contract to Sell
between Manlapaz and FLPPI violated the Contract to Sell between HGC and FLPPI has no
merit since the contract between Manlapaz and FLPPI was executed before the contract
between HGC and FLPPI.
BOC-HLURB dismissed the complaint filed by Manlapaz. It ruled that under the
contract between HGC and FLPPI, FLPPI was not authorized to sell the properties covered
thereby without the purchase price first being fully paid to the HGC. Thus, HGC is not
under any obligation to honor the contract between FLPPI and Manlapaz; Hence, FLPPI is
the only one liable. Manlapaz’s motion for reconsideration was denied by the BOC-HLURB.
OP affirmed in toto the decision of the BOC_HLURB. CA set aside the ruling of the
OP stating that the ruling of the LSG-HLURB was correct and that Manalapaz should be
protected from the effects of the transactions entered into by HGC, VELI and FLPPI in
which Manalapaz had no participation. CA denied the motion for a reconsideration of
HGC.
ISSUE
Should HGC execute a deed of absolute sale and cause the transfer of the
certificate of title to the contested lot in favor of Manlapaz?
104
HELD
YES, HGC should execute a deed of absolute sale and transfer of certificate of
title of the contested lot to Manalapaz.
Art. 1311 provides that 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 xxx
Indeed, "'where there is no privity of contract, there is likewise no obligation or

liability to speak about."' 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. She has been religiously paying the installments to FLPPI and completed the
payments in November 1999. 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.
Jurisprudence teaches that "the parties to a contract are the real

parties-in-interest in an action upon it." As such, "[t]he basic principle of relativity of
contracts is that contracts can only bind the parties who entered into it, and cannot favor
or prejudice a third person, even if he is aware of such contract and has acted with
knowledge thereof'
Indeed, "[i]n 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"
A "contract to sell is textually defined as a 'bilateral contract whereby the

prospective seller, while expressly reserving the ownership of the subject property despite
delivery thereof to the prospective buyer, binds himself to sell the said property
exclusively to the prospective buyer upon fulfilment of the condition agreed upon.' The
obligation of the prospective seller, which is in the nature of an obligation to do, is to sell
the property to the prospective buyer upon the happening of the positive suspensive
condition, that is, the full payment of the purchase price."
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.
105
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. As found by the
CA, "Manlapaz, who had fully paid the purchase price of the property, should not be made
to suffer the consequences of the default of the Asset Pool, including the failure of FLPPI
to comply with its obligation to HGC under their contract to sell (3rd contract)."
Given that Manlapaz had fully paid the purchase price of the contested lot, the
property should now be transferred in her name. It is settled that "the seller's obligation
to deliver the corresponding certificates of title is simultaneous and reciprocal to the
buyer's full payment of the purchase price."
106
Defective Contracts
RESCISSIBLE CONTRACTS
BACALA V. HEIRS OF POLINO
HERNANDO, J.
G.R. No. 200608 February 10, 2021
RESCISSION OF CONTRACTS
DOCTRINE
Gross inadequacy of the price alone cannot invalidate a contract. A contract
enjoys 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.
Substantial breaches of contract are fundamental violations as would defeat

the very object of the parties in making the agreement. The happening of a resolutory
condition is a substantial breach that may give either party thereto the option to bring
an action to rescind the contract and/or seek damages
As a general rule, the power to rescind an obligation must be invoked judicially

and cannot be exercised solely on a party's own judgment that the other has
committed a breach of the obligation. As an exception, an injured party need not
resort to court action in order to rescind a contract when the contract itself provides
that it may be revoked or cancelled upon violation of its terms and conditions.
FACTS
Spouses Anecito and Clara Polino owned a land with coconuts in Davao Oriental
(subject property). They have two children, Aquilino and Ducepino, who were both
mentally incapacitated. When Sps. Polino died, a deed of sale (P15,000) involving the
subject property surfaced stating that Anecito ceded the subject property to his brother
Juan to enjoy usufruct and financially support Anecito’s children. The deed’s validity was
assailed for allegedly being fictitious and without consideration (market value more than
P100,000) as Juan had no financial means to purchase it. The Regional Trial Court (RTC)
nullified the deed stating that it would be illogical for someone to sell his property
without considering its market value. On the other hand, the Court of Appeals, reversed
the RTC ruling stating that the arguments against the validity was only hearsay and that it
was not proved that the price was grossly inadequate.
ISSUE
1) Will gross inadequacy of the price nullify the deed of sale?
2) Was the contract between Anecito and Juan a sale subject to a resolutory
condition?
107
3) Does the deed of sale and the agreement remain valid?
HELD
1) NO. Gross inadequacy of the price alone cannot invalidate a contract.
A contract enjoys 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 which was not met in this case.
The elements of a contract of sale are: (1) consent or meeting of the minds, that
is, consent to transfer ownership in exchange for the price; (2) determinate subject
matter; and (3) price certain in money or its equivalent.
The Deed of Sale contains all the three basic requisites of a contract of sale. All
three elements were established, since no issue was raised as to any vice tainting
Anecito's and Juan's consent to the transaction conveying ownership over the subject
property. The price therefor, the third element, was also stated as the consideration in
the Deed of Sale. As earlier discussed, the gross inadequacy of the purchase price did not
invalidate the Deed of Sale and the Agreement.
Here, there is nothing else presented to support the claim that the price was
fabricated or not actually paid. Settled is the rule that bare allegations have no probative
value.
Therefore, the alleged gross inadequacy of the price in deed of sale of the subject
property does not nullify it.
2) YES. A resolutory condition extinguishes a transaction that, for a time, existed

and discharges the obligations created thereunder.
It was stipulated in the Agreement that Anecito shall enjoy the usufruct of the
subject property, and that upon Anecito's death, Juan shall support and give financial
assistance to Aquilino and Ducepino. These stipulations in the Agreement are resolutory as
Anecito and Juan also agreed that breach of the terms and conditions of the Agreement
shall render the Deed of Sale non-effective and nugatory.
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.
Hence, doubtful stipulations must obtain for the doctrine to aid the courts in
construing related contracts. The stipulations in the Deed of Sale and Agreement at hand
are too clear for the doctrine to operate thereon. Even if the case necessitates the
108
application of the doctrine, the contracts already state in uncertain terms that Anecito
bound himself to sell the subject property to Juan for the price of P15,000.00, under the
conditions that Anecito shall retain enjoyment of the fruits of the subject property and
that Juan shall support Aquilino and Ducepino after Anecito's death. In the same vein, the
Court desists from exercising its equity jurisdiction as a means of determining the nature
of the Deed of Sale and Agreement Suffice it to state that the Court finds no such open
space in the law within which to exercise its equity jurisdiction.
3) YES. Substantial breaches of contract are fundamental violations as would

defeat the very object of the parties in making the agreement.
The happening of a resolutory condition is a substantial breach that may give

either party thereto the option to bring an action to rescind the contract and/or seek
damages. Article 1191 of the Civil Code provides:
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case
one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission, even
after he has chosen fulfillment, if the latter should become impossible. The court shall
decree the rescission claimed, unless there be just cause authorizing the fixing of a
period.

and cannot be exercised solely on a party's own judgment that the other has committed a
breach of the obligation. As an exception, an injured party need not resort to court action
in order to rescind a contract when the contract itself provides that it may be revoked or
cancelled upon violation of its terms and conditions. The exception appears to hold in this
case, as the Agreement clearly directed as follows:
That the parties to this Agreement likewise agree and stipulate that they will
abide with the terms and conditions therein set forth and that in case of breach thereof
then the Deed of Sale shall be rendered non-effective and nugatory
The Agreement already provided a self-terminating clause upon a breach of the

conditions therein. Nonetheless, the Court is still left to decide whether the said
conditions have indeed been met to warrant the dissolution of the Deed of Sale.
Since the inception of this case, Aproniana had always insisted on the ineffectivity
of the Deed of Sale and the Agreement due to Juan's failure to comply with the twin
conditions therein. The necessity of proving, however, lies with the person who sues.
Aproniana had never adduced any concrete evidence that Anecito, during his lifetime,
had never received any income produced by the subject property. Nothing on record also
shows that Juan truly left Aquilino and Ducepino to fend on their own after the death of
Anecito, or that Juan's neglect caused Ducepino's death as Aproniana had insinuated.
109
UNENFORCEABLE CONTRACTS
HEIRS OF GODINES V. SPOUSES DEMAYMAY
HERNANDO, J.
G.R. No. 230573 June 28, 2021
ORAL SALE AND STATUTE OF FRAUDS
DOCTRINE
While the Statute of Frauds aims to safeguard the parties to a contract from fraud
or perjury, its non-observance does not adversely affect the intrinsic validity of their
agreement. The form prescribed by law is for evidentiary purposes, non-compliance of
which does not make the contract void or voidable, but only renders the contract
unenforceable by any action. In fact, contracts which do not comply with the Statute of
Frauds are ratified by the failure of the parties to object to the presentation of oral
evidence to prove the same, or by an acceptance of benefits under them.
FACTS
A 68 square meter parcel of land with Tax Dec. No. 6111 located in Cawayan,
Masbate was left by Anselma to heirs who are the petitioners in this case namely, Marlon,
Francisco, Roque, Rosa, and Alma, all surnamed Godines.
The subject lot was in possession of Sps. Demaymay considering that during the
lifetime of Anselma, the latter obtained a loan from Matilde Demaymay and in
consideration thereof, Sps. Demaymay were allowed to use the land for a period of 15
years. However, the agreement was not reduced into writing.
Later, the Heirs of Godines went to the assessor to inquire of the status of the
lease contract between Anselma and Sps. Demaymay but they late found out that the Tax
Dec. in favor of Anselma was cancelled and Tax Dec. in the name of Matilde Demaymay
(Tax Dec. No. 7194) was issues by virtue of a Deed of Confirmation of sale supposedly
executed bt Alma in 1970. It was also found that the area indicated in Tax Dec. 6111 was
incorrect and that the correct area of 332 sq. m. in Tax Dec. 7194 is the correct one.
The Heirs of Godines contended that it would be impossible for Alma to have
executed the Deed of Confirmation of Sale because at that time she was in Cebu from
1969 to 1975, and would have only been 14 years old when the deed was executed as
Alma was born in 1956. They also claimed that in obtaining the said Deed, Sps. 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.
110
Sps. Demaymay denied the allegations and contended that the action had already
prescribed. Sps. Demaymay further claims that they are the absolute owners and actual
possessors of the subject land which they acquired through sale. They also averred that
Alma was estoped from questioning the documents conveying the land in question, as she
was the one who received the last installment for the land and voluntari ly executed the
confirmation due to the untimely demise of her parents. The daughter of Sps. Demaymay
also testified that Anselma indeed sold the subject property to the spouses Demaymay for
P1,460.00 in January 1967 amd claimed that she was present when her parents gave the
initial payment of P1,010.00, but no contract of sale was executed since Anselma was
about to give birth at that time.
The MCTC ruled in favor of the Heirs of Godines and was affirmed by the RTC. The
CA revered the decision of the MCTC ruling in favor of Sps. Demaymay.
ISSUE
Was the CA incorrect in ruling that the heirs of Anslema are bound by the oral
contract of sale allegedly executed in favor of Sps. Demaymay?
HELD
No. The CA was correct in ruling in favor of Sps. Demamy. The lower courts were
fixated on the validity and due execution of the Deed of Confirmation of Sale despite the
primary issue being the validity of the sale itself, which was claimed to be an oral or
verbal sale.
Our jurisdiction has long recognized the validity of oral contracts, including oral
contracts of sale under Art. 1305 of the Civil Code. Art. 1356 further provide that,
“Contracts shall be obligatory, in whatever form they may have been entered into,
provided all the essential requisites for their validity are present.”. Indeed, contracts that
have all the essential requisites for their validity are obligatory regardless of the form
they are entered into, except when the law requires that a contract be in some form to
be valid or enforceable.
Art. 1358 of the Civil Code provides that sales of real property or of an interest
therein must appear in a public instrument and shall be reduced into writing as required
by Art. 1403(2) such requires that sale of real property must be evidenced by a written
document as an oral sale of immovable property is unenforceable.
However, this does not necessarily mean that oral contracts of sale of real
property are void or invalid. As held in the case of The Estate of Pedro C. Gonzales v. The
Heirs of Perez that failure to observe the prescribed form of contracts does not invalidate
the transaction, stating that the form required under Article 1358 is not essential to the
validly or enforceability of the transaction, but merely for convenience. The Court agrees
with the CA in holding that a sale of real property, though not consigned in a public
instrument or formal writing, is, nevertheless, valid and binding among the parties, for
the time-honored rule is that even a verbal contract of sale of real estate produces legal
effects between the parties.
111
The term "Statute of Frauds" is descriptive of statutes which require certain
classes of contracts to be in writing. The Statute does not deprive the parties of the right
to contract with respect to the matters therein involved, but merely regulates the
formalities of the contract necessary to render it enforceable. The purpose of the Statute
is to prevent fraud and perjury in the enforcement of obligations depending for their
evidence on the unassisted memory of witnesses, by requiring certain enumerated
contracts and transactions to be evidenced by a writing signed by the party to be
charged.
Considering the above discussion, the Court agrees with the observations of the CA
that the Statute of Frauds is inapplicable in the present case as the verbal sale between
Anselma and the Sps. Demaymay had already been partially consummated when the
former received the initial payment of P1,010.00 from the latter. In fact, the said sale
was already totally executed upon receipt of the balance of P450.00.
Furthermore, from the time the verbal sale happened in 1967, the Sps. Demaymay
were in possession 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.
112
WILLY V. JULIAN
HERNANDO, J.
G.R. No. 207051 December 1, 2021
STATUTE OF FRAUDS
DOCTRINE
The Statute of Frauds, Article 1403 (2) of the Civil Code, is not applicable to
totally or partially performed contracts.
Article 1477 provides that the thing sold shall be understood as delivered, when it
is placed in the control and possession of the vendee.
FACTS
The controversy between the parties is traced to an unregistered land located at
Beckel, Sto. Tomas, Tuba, Sablan, Benguet, owned by Modesto Willy (Modesto). Modesto
executed a written agreement (1963 Agreement) conveying portions of the subject
property to three individuals who rendered services to Modesto in connection therewith.
The subject property was surveyed anew for the benefit of a prospective buyer,
Ricardo, to whom Modesto's agent, Emilio Dongpaen (Dongpaen), offered for sale his
portion of the subject property.
Subsequently, on various dates, a series of sale transactions occurred among

Modesto, Dongpaen, and Ricardo for the sale of Lots 1 and 2 to Ricardo:
1. On January 27, 1969, Dongpaen sold to Ricardo the 10,000-square meter
portion of the subject property initially conveyed to Dongpaen by Modesto
under the 1963 Agreement.
2. On June 17, 1969, Dongpaen sold to Ricardo an additional 5,000 square meters
of the subject property.
3. On June 24, 1969,20 Modesto sold to Dongpaen an additional 5,000 square
meters of the subject property ostensibly covered by a Deed of Sale21 which
was notarized on the following day, June 25, 1969.
When Modesto died and upon learning that petitioners had attempted to sell even
his portion of the subject property,26 Ricardo began resorting to administrative remedies
to protect and effect his ownership over Lots I and 2. In addition, Ricardo persistently
demanded from petitioners the partition of the subject property and the actual
conveyance of his portion, Lots l and 2, to no avail.
Consequently, Ricardo filed the complaint for Partition of Property and Damages,
against the heirs of Modesto before the MCTC staking his ownership over Lots 1 and 2 and
asking for its segregation from the subject property.
113
The MCTC ruled in favor of Ricardo and ordered the segregation of his portion of
the subject property. However, the RTC reversed the ruling of the MCTC. Ricardo
appealed to the CA. The CA reversed the RTC ruling and reinstated the Decision of the
MCTC.
Petitioners are adamant that the deeds of sale covering the series of conveyances,
beginning from Modesto to Dongpaen, and Dongpaen to Ricardo, of Lots I and 2, spanning
15,000 square meters of the subject property, are all void since the originating document,
the 1963 Agreement, was unenforceable and failed to comply with the formalities of the
contract under Article 1403 of the Civil Code.
ISSUE
1) Is the 1963 Agreement enforceable since it failed to comply with the formalities
of the contract under Article 1403 of the Civil Code?
2) Is there a constructive delivery of Lots 1 and 2 to Ricardo?
HELD
1) NO. The 1963 Agreement is valid and enforceable.
The Court restated the general rule found in Article 1483 of the Civil Code that
"subject to the provisions of the Statute of Frauds and of any other applicable statute, a
contract of sale may be made in writing, or by word of mouth, or partly in writing and
partly by word of mouth, or may be inferred from the conduct of the parties." The Statute
of Frauds covers an agreement for the sale of real property or of an interest therein. The
Statute of Frauds, Article 1403 (2) of the Civil Code, is not applicable to totally or
partially performed contracts.
All contracts invoked in this case have been either partially or totally performed
by Modesto, Dongpaen and Ricardo. Perforce, the contracts are removed from the ambit
of the Statute of Frauds and cannot be considered as unenforceable contracts.
2) YES. There is a constructive delivery of Lots 1 and 2 to Ricardo.
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. Modesto proposed to Ricardo, who consented
thereto, that Lorenzo will till the subject property, including the portion Ricardo had
purchased and deliver the fruits thereof to Ricardo.
With this arrangement, under Article 1477 of the Civil Code, Ricardo's ownership of
Lots 1 and 2 was perfected upon delivery. Article 14 77 provides that the thing sold shall
be understood as delivered, when it is placed in the control and possession of the vendee.
In this case, title passed to Ricardo from the moment Lots 1 and 2 were placed in
his possession. Corollary thereto, Ricardo's indicia of ownership of Lots 1 and 2 are his
possession in the concept of owner and his receipt of fruits from the cultivation of the
114
land which Lorenzo regularly remitted to him, in contrast to that of Lorenzo, as tenant
farmer, a legal possessor of the land.
115
VOID CONTRACTS
GANANCIAL V. CABUGAO
HERNANDO, J.
G.R. No. 203348 July 06, 2020
ABSOLUTE SIMULATION OF CONTRACTS
DOCTRINE
Under Article 1409 of the Civil Code, absolute simulation voids a contract. In
absolute simulation, there appears a colorable contract but there actually is none, as the
parties thereto have never intended to be bound by it. In determining the true nature of a
contract, the primary test is the intention of the parties. Such intention is determinable
not only from the express terms of their agreement, but also from the contemporaneous
and subsequent acts of the parties.
FACTS
Pastora Ganancial (Ganancial) owed Betty Cabugao (Cabugao) the amount og
P130,000 to be payable within 3 years. To guarantee her indebtedness, Ganancial
entrusted to Cabugao the Title and Tax Declration of a parcel of land located in
Pangasinan, which Ganancial owns in her name. Betty and Cabugao’s transaction
thereafter turned sour which prompted the parties to file respective lawsuits against each
other. Cabugao filed a case for foreclosure of real estate mortgage against Ganancial, the
latter in turn, filed against Cabugao a complaint for the deed of mortgage as null and
void. These cases were consolidated before the RTC.
Cabugao alleged that Ganancial executed a Deed of Mortgage over the subject
land as a collateral for her loan. Despite the lapse of three years from the date of the
mortgage and repeated demands Ganancial failed and refused to pay the amount she
owed Cabugao.
Ganancial on the other hand, assailed the authenticity of the Deed of Mortgage.
She averred that she never executed the supposed Deed of Mortgage nor appeared for its
notarization. Ganancial only learned of the existence of the Deed of Mortgage for the first
time during her confrontation with Cabugao before the barangay captain regarding her
unpaid debt and where Cabugao threatened to foreclose the subject land.
The RTC ruled in favor of Cabugao declaring that Gnancial’s contentions against
the authenticity of the Deed of Mortgage were not proven by clear and convincing
evidence. The names of the children were so well-placed on the Deed of Mortgage for the
court to believe that they merely signed a blank bond paper.
The CA concurred with the disposition of the RTC that forgery or falsification must
be proved with clear, positive and convincing evidence by the party who alleges the same.
116
ISSUE
Did Ganancial prove by clear and convincing evidence the non-existence or the
absolute simulation of the Deed of Mortgage?
HELD
NO. Ganancial failed to discharge the burden of proof in showing that the subject
document was fabricated or falsified. The deed in question is a notarized document. To
successfully impugn a notarized document, the party concerned must present a strong,
complete and conclusive proof of its falsity, lest the validity thereof must be sustained in
full force and effect. Sadly in this case, the appellant failed to support her claim.
Even assuming that Ganancial’s complaint for the declaration of nullity of the
Deed of Mortgage was truly grounded on its non-existence or absolute simulation, it would
still have no basis in fact and in law.
Under Article 1409 of the Civil Code, absolute simulation voids a contract. In
absolute simulation, there appears a colorable contract but there actually is none, as the
parties thereto have never intended to be bound by it. In determining the true nature of a
contract, the primary test is the intention of the parties. Such intention is determinable
not only from the express terms of their agreement, but also from the contemporaneous
and subsequent acts of the parties.
In this case,the totality of the circumstances negates the contention that the Deed
of Mortgage was absolutely simulated. Ganancial having absolute ownership and full
disposal of the property in issue, admittedly conveyed the property’s title to Cabugao to
secure her indebtedness in the amount of P130,000.00.
Further, the signatures of Ganancial and her children appear exactly above their
typewritten names, lending weak support to the claim that they had been made to sign a
blank piece of paper that Cabugao later completes as a Deed of Mortgage. There is an
undisputed presumption of regularity enjoyed by notarized contracts, and the mere fact
that two public documents are covered by the same notarial entry neither identifies with
sufficient definiteness which one of them was fake, nor does it determine if any of them
was spurious in the first place.
117
ARAKOR CONSTRUCTION AND DEVELOPMENT CORP V. STA. MARIA
HERNANDO, J.
GR No. 215006 January 11, 2021
VOID OR INEXISTENT CONTRACTS
DOCTRINE
It is apt to mention that Article 1410 of the Civil Code states that "[t]he action or
defense for the declaration of the inexistence of a contract does not prescribe." Simply
put, "an action that is predicated on the fact that the conveyance complained of was null
and void ab initio is imprescriptible.
FACTS
The Spouses Fernando Gaddi, Sr (Fernando Sr) and Felicidad Nicdao Gaddi
(Felicidad) (Collectively Spouses Gaddi)owned five contested parcels of land located in
Hermosa, Bataan. Felicidad died intestate on November 18, 1985, and was survived by
Fernando Sr and her eight children. Felicidad’s heirs inventoried her properties but they
did not partition, thus the parcels of land remained in the name of Spouses Gaddi. On
February 7, 1996, Fernando Sr. passed away followed by Efren (one of the eight children)
on May 8, 1998. After the said deaths 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 as
evidence by two undated Deeds of Absolute Sale and that the titles have been transferred
to Arakor’s name.
The Gaddi’s filed a Complaint for Annulment of Deed[s] of Absolute Sale and
Transfer Certificates of Title against Arakor, alleging that the two contracts of sale were
forged and the conveyance of the properties were fraudulent since Felicidad could not
have signed the documents and given her consent since she has been dead for seven years
before the alleged execution of the said contracts.
Arakor denied employing fraud. It contended that the Deeds of Absolute Sale were
already signed and notarized when Fernando Sr and Efren delivered them to the office of
Atty. Legaspi on September 8, 1992. Atty. Legaspi also disclaimed any knowledge about
the death of Felicidad and contended that the eight children already assigned their rights
to Fernando Sr. through the execution two Joint Waiver Claim and/or right making
Fernando Sr. the full owner of the property making the signature of Felicidad in the Deeds
of Absolute Sale no longer material in determining the sales’s validity.
In November 16, 2011, the RTC declared the Deeds of Absolute Sale as void for
being fictitious because Felicidad had already passed away when the documents were
executed. It ruled that Arakor was not a buyer in good faith. It ordered the Gaddi’s to
return to Arakor the amount of P400,000 with interest chargeable to Fernando’s estate.
The CA affirmed the RTC’s ruling.
118
ISSUE
Can the Gaddis assail the validity of the Deeds of Absolute Sale?
HELD
YES. It is apt to mention that Article 1410 of the Civil Code states that "[t]he
action or defense for the declaration of the inexistence of a contract does not prescribe."
Simply put, "an action that is predicated on the fact that the conveyance complained of
was null and void ab initio is imprescriptible." Hence, the Gaddis could assail the validity
of the Deeds of Absolute Sale and they rightly did so, in spite of Arakor's claim that they
failed to question the sale several years after Arakor secured the titles to the properties.
Lack of immediate challenge on the part of the Gaddis did not negate the fact that the
contracts were null and void and assailable anytime due to the imprescriptibility of the
action.
Similarly, Arakor cannot invoke laches as a defense given that the action is
imprescriptible. The Gaddis cannot be estopped from assailing the validity of the deeds
precisely because Felicidad's signatures were forged and therefore produced no legal
effect.
119
CITY TANAUAN V. MILLONTE
OF
HERNANDO, J.
GR No. 219292 June 28, 2021
VOID CONTRACTS
DOCTRINE
Forgery cannot be presumed and must be proved by clear, positive and convincing
evidence by the party alleging the same.
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.
An action that is predicated on the fact that the conveyance complained of was
null and void ab initio is imprescriptible.
Jurisprudence teaches that "the 'declaration of nullity of a contract which is void

ab initio operated to restore things to the state and condition in which they were found
before the execution thereof.'"
FACTS
The Gonzaga Siblings, namely: Marcelo, Eleuteria, Pantaleona, Ambrosio, and
Lucio were owners of a lot located in the City of Tanauan covered by OCT No. 3243.
Respondent Millonte in the case at bar, being the granddaughter of Ambrosio Gonzaga,
makes her a direct descendant of one of the owners. On May 12, 2004, Millonte sought the
nullification of the Deed of Absolute Sale dated February 10, 1970 as well as TCT No.
T-42198 issued in favor of the City of Tanauan on July 16, 1993, which cancelled OCT No.
3243.
The contested property is presently occupied by the Tanauan Water District and
was supposedly acquired by the City of Tanauan pursuant to the aforementioned Deed of
Absolute Sale allegedly signed by the Gonzagas as vendors and the Municipality of Tanuan,
represented by then Mayor Carandang, as vendee.
Millonte argued, upon examination of the Deed, that the Gonzaga siblings were
already deceased when it was executed and therefore such could not be considered a
valid agreement thus making the Deed of Absolute Sale void.
The City of Tanauan contended that the action for annulment had already
prescribed since more than 34 years have passed since the execution of the deed and
more than 14 years from the registration of the sale. The City of Tanauan also argued that
it has been in continuous, exclusive, adverse, and notorious possession and occupation of
120
the lot since 1960 and that Millonte did not present any evidence that Lucio Gonzaga was
already dead at the time of the execution of the deed.
Millonte later presented a certification from the City Civil Registrar certifying the
death of Ambrosio on December 29, 1959. While Millonte claimed that Pantaleona, Lucio,
Marcelo and Eleuteria died between 1938 and 1944 but could not present the documents
as the records were burned during World War II but instead presented certifications from
the Civil Registrar confirming the claim of Millonte. As for the death of Lucio, a grandson
of his testified that he knew of his grandfathers’ death but the record of the same was
destroyed during the war.
The City of Tanuan contended, through the testimony of Guevarra, that then Mayor
Gonzales asked for the council to search for the owners of the lot but failed to do so.
Later, Lirio, the then Vice Mayor testified that when Mayor Gonzales summoned him to
the latters office he saw several people who were purportedly the owners of the lot but
Lirio admitted that he failed to verify their identities.
The Trial Court ruled in favor of Millonte finding the Deed of Abolute Sale null and
void seeing as the Gonzaga siblings were already deceased at the time of the execution of
the deed on February 10, 1970. The Trial Court found that the evidence presented by
Millonte was sufficient to prove the death of the Gonzaga siblings.
The Court of Appeals affirmed the decision of the Trial Court, hence this petition.
ISSUE
1) Was the Deed of Absolute Sale between the Gonzagas and the City of Tanauan null
and void.
2) Can Millonte, as an heir, assail the validity of the Deed of Absolute Sale even years
after the execution of the document, and even if the title of the property has
already been transferred in the name of the City of Tanauan?
HELD
1) YES. The Deed of Absolute Sale between the Gonzagas and the City of Tanauan
was null and void.
Case law provides that "forgery cannot be presumed and must be proved by clear,
positive and convincing evidence by the party alleging the same." Millonte, alleging the
invalidity of the document, had 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 validating the death of Ambrosio. Millonte also

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 down the Local Civil Registrar. Moreover, testimonies of the grandchildren of some
of the Gonzaga siblings stating the fact of the deaths of Lucia, Ambrosio, and Eleuteria
121
many years before 1970 was sufficient as secondary evidence as the original documents
pertaining to their deaths 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.
The City of Tanauan could not even claim to be an innocent purchaser for value
since it did not show that it fully ascertained the identities and genuineness of the
signatures of the purported vendors. It did not diligently search nor verify the true
identities of the true owners of the lot. The City of Tanauan also cannot claim due
execution of the document simply because it was notarized.
2) YES. As for its contention that the action has already prescribed, Art. Article
1410 of the Civil Code relevantly states that "the action or defense for the declaration of
the inexistence of a contract does not prescribe."
In other words, "an action that is predicated on the fact that the conveyance
complained of was null and void ab initio is imprescriptible." Therefore, Millonte, as an
heir, could assail the validity of the Deed of Absolute Sale even years after the execution
of the document, and even if the title of the property has already been transferred in the
name of the City of Tanauan. The passage of time in this case could not defeat the legal
principle that a null and void contract can be assailed anytime due to the
imprescriptibility of the action. In like manner, given that the action is imprescriptible,
the petitioner cannot invoke laches as a defense. Undeniably, Millonte is not estopped
from assailing the Deed of Absolute Sale specifically since the signatures of the Gonzaga
siblings were forged and without any binding or legal effect.

before the execution thereof.'" If the Court were to permit the City of Tanauan to retain
ownership of the property notwithstanding the void nature of the contract of sale, such
would result in unjust enrichment as the petitioner would continue to benefit from the
lot. This is regardless of the undisputed fact that the Tanauan Water District stands on the
contested property.
122
HEIRS OF BAGAYGAY V. HEIRS OF PACIENTE
HERNANDO, J.
GR No. 212126 August 04, 2021
LACHES IN VOID AB INITIO CONTRACTS
DOCTRINE
Reversion under Section 101 of the Public Land Act is not automatic as the Office
of the Solicitor General must first file an action for reversion.
In the case of Heirs of Alido v. Campano, the Court held that laches do not apply to
void ab initio contract, it being based on equity.
FACTS
On October 8, 1953, Anastacio Paciente, Sr. (Anastacio) was granted a homestead
patent over a parcel of land with an aggregate area of 7.9315 hectares in Cotabato and an
Original Certificate of Title (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
(Eliseo), the latter took possession of the subject land, transferred the title under his
name, and later caused the subdivision of the entire land into three (3) lots.
Anastacio died, and two years later, Eliseo likewise passed away. Eliseo’s wife,
petitioner Anecita P. Bagaygay (Anecita), and his children took possession of the subject
land upon his death. The heirs of Anastacio, herein respondents, filed before the Regional
Trial Court (RTC) an action for Declaration of Nullity of the Deed of Sale and the titles,
Recovery of Ownership and Possession, Accounting and Damages against the heirs of Eliseo
(petitioners).
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, on the other hand,
argued that respondents have no cause of action against them as the subject land was
validly purchased by their father, and also raised as defenses prescription and laches.
Since a copy of the Deed of Sale could no longer be found, respondents presented
as witness the Registrar of Deeds of Kidapawan, South Cotabato, Atty. Casabar, to identify
in court as secondary evidence the Primary Entry Book of the Registry of Deeds of South
Cotabato and prove that the original of OCT No. V-2423 and the copy of the Deed of Sale
executed by Anastacio in favor of Eliseo was executed on November 28, 1956, within the
5-year prohibitory period.
123
To refute the date of execution stated in the Primary Entry Book, petitioners on
the other hand, presented testimonies declaring that the Deed of Sale was notarized by
Judge Rendon on November 28, 1958 and that purchase price was used by Anastacio to
defray the wedding expenses of his son, respondent Meregildo, in June 1958. To
corroborate these testimonies, petitioners submitted as evidence the Marriage Contract of
Meregildo to show that his marriage was celebrated on June 6, 1958 and the bio-data of
Judge Rendon to show that he was admitted to the bar only in 1957, and thus, could not
have notarized the document in 1956.
The RTC ruled that the land was validly transferred to Eliseo, but on appeal, the
Court of Appeals (CA) reversed and set aside the RTC Decision and found the entries in the
Primary Book of Entry, being an official record of all the instruments submitted to the
Register of Deeds, as prima facie evidence of the facts stated therein. CA considered the
date indicated in the Primary Entry Book of the Register of Deeds of South Cotabato as the
true and correct date of execution of the Deed of Sale. Hence, it declared the Deed of
Sale void ab initio having been executed on November 28, 1956 or within the 5-year
prohibitory period.
ISSUE
1) Whether respondents are entitled to the possession of the land subject to the right
of the government to institute reversion proceedings?
2) Whether laches apply to void ab initio contracts?
HELD
1) YES. Having been executed within the five-year prohibitory period, the Deed of
Sale is void ab initio. Also, under prevailing jurisprudence, the property should rightly be
returned to respondents considering that the government has not yet filed an action for
reversion. Reversion under Section 101 of the Public Land Act is not automatic as the
Office of the Solicitor General must first file an action for reversion.
The Court likewise held that the CA correctly ordered respondents to reimburse
petitioners the purchase price of the sale since the Deed of Sale is void ab initio. As to the
improvements made on the land and the interests on the purchase price, these are
compensated by the fruits petitioners had received from their long possession of the
homestead pursuant to the ruling of the Court in the case of Sps. Maltos v. Heirs of
Eusebio Borromeo.
2) NO. Likewise without merit is petitioners' defense of laches. In the case of Heirs
of Alido v. Campano, the Court held that laches do not apply to void ab initio contract, it
being based on equity. Therefore, a sale of a parcel of land is in violation of the five-year
prohibition on the alienation of land acquired via free patent application is void and
produces no legal effect.
124
SALES
DEFINITION AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE

CABILAO V. TAMPAN
HERNANDO, J.
GR No. 209702 March 23, 2022
VALIDITY OF A NOTARIZED DEED OF SALE
DOCTRINE
Article 1305 of New Civil Code (NCC) 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.
However, for Article 1332 to be applicable, the contracting party who alleges fraud
or vitiated consent must establish the same by full, clear and convincing evidence. The
party must show clear and convincing evidence of one's personal circumstances and that
he or she is unable to read at the time of execution of the contested contract.
Gross inadequacy of price does not affect the validity of a contract of sale, unless
it signifies a defect in the consent or that the parties actually intended a donation or
some other contract. Inadequacy of cause will not invalidate a contract unless there has
been fraud, mistake or undue influence.
Transfer of the certificate of title in the name of the buyer and transfer of
ownership to the buyer are two different concepts.
FACTS
Socorro Cabilao (Socorro) sold a residential house to Lorna Tampan-Nadoza (Lorna)
on April 7, 1988 evidenced by a Deed of Absolute Sale in the amount of P10,000. In 1995,
Cabilao attempted to register the title under her name but discovered that the property
was already sold to the Spouses Buyser, who opposed the issuance of the new certificate
of title.
On April 1996, Lorna lodged a complaint for declaration of nullity of a pacto de

retro sale entered into by Socorro and the spouses Buyser. On May 5, 1996, Socorro filed
an action for Quieting the Title & Recovery of Ownership against Lorna and Danila Tampan
alleging that she was the absolute and registered owner of the subject property. In her
answer, Lorna maintains that the Deed of Sale was valid and Socorro received a
consideration of P100,000 and not just P10,000 (adjusted to avoid higher tax payment).
125
This was witnessed by Atty Mantilla who was also the notary public. Socorrow then
countered Lorna’s assertions by saying that the Deed of Sale could not have been signed
by Lorna as she was in the US,instead it was signed by Lorna’s mother Antonieta.
The RTC decided in favor of Socorro stating that a torrens title is indefeasible and
the Deed of Sale was unenforceable considering that Lorna was in the US at the time it
was signed. Lastly, the RTC questioned the timing of the registration, which took 7 years
after the sale.
The CA reversed the decision stating that Socorro did not prove satisfactorily that
the Deed of Sale between Socorro and Lorna was void due to fraud and deception.
ISSUE
Is the deed of sale between Lorna and Socorro valid?
HELD
NO. The deed of sale between Lorna and Socorro is not valid
Article 1305 of New Civil Code (NCC) 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 Pl 0,000.00.
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.
It is a well-settled rule that a duly notarized document enjoys the prima facie
presumption of authenticity and due execution, as well as the full faith and credence
attached to a public instrument.45 Thus, a party assailing the authenticity and due
execution of a notarized document is required to present evidence that is clear,
convincing and more than merely preponderant.Here, Socorro failed to overcome this
burden. Aside from her self-serving allegation that she did not know that she was signing
a Deed of Sale, there is nothing else on record that supports her assertion.
While Socorro claims that she is an illiterate person, she failed to prove this fact.
When a party claims that one is unable to read or is otherwise illiterate, and fraud is
alleged, a presumption that there is fraud or mistake in obtaining consent of that pa1iy
arises under Article 1332 of the NCC, which provides:
When one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract
must show that the terms thereof have been fully explained to the former.
126
he or she is unable to read at the time of execution of the contested contract. Here,
there is nothing in Socorro's testimony showing that she cannot read English or that she
was illiterate. To the contrary, the pacto de retro sales that she entered into with
Enriqueta and Lelita, respectively, indicate that she is able to read, affix her signature,
freely give her consent and enter into contracts.
Thus, the presumption of fraud did not arise and Socorro had the burden of
proving that the Tampans fraudulently secured her signature under the guise of another
loan document which she would usually sign whenever she borrowed money. However, she
failed to do so. In fact, such purported loan documents were not even offered in
evidence.
It is also of no moment that the consideration was in the amount of Pl 0,000.00.

Gross inadequacy of price does not affect the validity of a contract of sale, unless it
signifies a defect in the consent or that the parties actually intended a donation or some
other contract. Inadequacy of cause will not invalidate a contract unless there has been
fraud, mistake or undue influence. As earlier stated, fraud was not proven. Hence, the
consideration in the amount of Pl0,000.00 did not invalidate the sale.
We likewise note that the title over the subject property remained under Socorro's
name despite the execution of the Deed of Sale. However, this does not also affect the
validity of the deed of sale. 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.
Therefore, contrary to Soccoro's assertion, it is of no moment that the title was

only registered seven years after the deed of sale was executed. The sale was already
perfected upon the execution of the Deed of Sale before Atty. Mantilla. The
non-registration of the title was also aptly explained by Judith in that the money given by
Loma, who was in the United States, was only enough for the purchase of the property.
Hence, it took some time before the same could be registered and transferred in Lornas's
name.
While Socorro was able to enter into pacto de retro sales for being in possession of
the owner's duplicate of the TCT, this fact cannot overturn the evidentiary weight of the
notarized Deed of Sale in favor of Loma. In fact, Enriqueta testified that the proceeds of
127
the pacto de retro sale were given to Danilo for his construction company. During cross
examination, Soccoro confinned this and stated that it was Danilo and his dad Felicisimo
who requested to mortgage the property. Precisely because the title was still in Socorro's
name despite the sale, it is logical to conclude that the Tampans had to ask Socorro to
enter into a contract with Enriqueta to borrow money.
If indeed the pacto de retro sale was entered into because Danilo borrowed from
Socorro as the latter claims, it would have been prudent if the loan was put into writing
and presented as evidence. However, such is not the case.
128
PASCUAL PURISIMA JR., ET AL V. MACARIA PURISIMA, ET AL
HERNANDO, J.
GR No. 200484 November 18, 2020
FORM OF CONTRACT OF SALE
DOCTRINE
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
A contract of sale, whether oral or written, is classified as a consensual contract,

which means that the sale is perfected by mere consent and no particular form is required
for its validity.
FACTS
Macaria Purisima, et al (Macaria) filed a complaint for reconveyance, cancellation
and quieting of title against Pascual Purisima, Jr. (Purisima Jr.), et al. Pascual Purisima Sr.
(Pascual Sr) sold portions Lot 71-A, Pls-D and Lot 71-B, Pls-631-D of his property to
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. The sale
and survey was not recorded to Macaria. Purisima Jr and with his co-heirs executed an
Extrajudicial Settlement of Estate of Deceased, Pascual Purisima Sr. and Sale over the
unregistered property of their father which included the sale of the properties
apportioned to Macaria. Free Patent and subsequently an Original Certificate of Title was
issued under the name of "Heirs of Pascual Sr.. This includes the subject portion. Macaria
filed before the RTC to remove the cloud on their title over the subject portions and for
their ownership to be not disturbed.
Pascual Jr countered that there was no sale that transpired. Macaria gave the
amounts for financial help. They went through the legal process in applying for a Free
patent and OCT. They only allowed possession of Macaria to the property was only after
the OCT issuance and it was a mere tolerance and a form of payment for the financial
help.
RTC dismissed the complaint for lack of written evidence of sale of the properties
and even if there were a sale that transpired, it was not enforceable since it was not
embodied in a written document.CA held that 1. Macaria was the rightful owners of the
subject portion; 2. The 1978 Extrajudicial Settlement of Estate of Deceased confirmed the
sale of the subject portions to Macaria; 3. The 1960 sale is valid despite that it was not
reduced into writing and; 4. The certificate of title to Purisima Jr did not create or vest a
title on the heirs.
129
ISSUE
1) Was there a contract of sale?
2) Was the OCT issued indefeasible thereby created vested title or right to
Purisima Jr?
HELD
1) Yes. The sale between the respondents and Purisima Sr. was consummated and
that the Statute of Frauds has no application in the case.
There was a valid consideration in the sale that transpired in 1960.The testimonies
of the parties were consistent that Purisima Sr. received the amounts for the purchase of
the apportioned lots. Further, The payments of Macaria was made because Purisima, Sr.
was in dire need of money due to his poor health condition. We do not see how this would
affect or be in conflict with the validity of the payment already given. Hence, for all
intents and purposes, payment for the purchase price of the property was already given.
The Statute of Frauds affects merely the enforceability of the contract. In the
early case of Iñigo v. Estate of Adriana Maloto,37 this Court elucidated on when the
Statute of Frauds vis-a-vis a contract of sale would be inapplicable:
By Article 1403 (2) (e) of the Civil Code, a verbal contract for the sale of real
property is unenforceable, unless ratified. For such a 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.The complaint here states that the deceased Adriana Maloto sold the disputed
house and land to plaintiff; that consideration thereof was paid; that by reason of such
sale, plaintiff performed acts of ownership thereon. The facts thus alleged are
constitutive of a consummated contract. 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
Verily, a contract of sale, whether oral or written, is classified as a consensual

contract, which means that the sale is perfected by mere consent and no particular form
is required for its validity.
2) No. While the certificate of title in favor of Purisima Jr. is indefeasible,

unassailable and binding against the whole world, including government itself, it does not
create or vest title. It merely confirms or records title already existing and vested. It
cannot be used to protect a usurper from the true owner, nor can it be used as shield for
the commission of fraud; neither does it permit one to enrich himself at the expense of
others. Although a review of the decree of registration is no longer available on account
of the expiration of the one-year period from entry thereof, an equitable remedy is still
available to plaintiffs-appellants who were "wrongfully deprived of their property, i.e., to
compel defendants-appellees to reconvey the property to the former, provided that the
same has not yet been transferred to innocent persons for value.
130
The Court has ordered reconveyance of property to the true owner or to one with
a better right, where the property had been erroneously or fraudulently titled in another
person's name. After all, the Torrens system was not designed to shield and protect one
who had committed fraud or misrepresentation and thus holds the title in bad faith. The
registered property is deemed to be held in trust for the real owners by the person in
whose name it has been registered. In this action for reconveyance, the decree of
registration is respected as incontrovertible. What is sought instead is the transfer of the
property, in this case, the title thereof, which has been wrongfully or erroneously
registered in another person's name to its rightful and legal owners.
131
CONTRACT OF SALE
SPOUSES PONCE V. ALDANESE
HERNANDO, J.
GR No. 216587 August 04, 2021
CONTRACT OF SALE
DOCTRINE
1) We have repeatedly stressed that "no one can give what one does not have." "A
seller can only sell what he or she owns, or that which he or she does not own but has
authority to transfer, and a buyer can only acquire what the seller can legally transfer."
2) While the tax declaration is not conclusive proof of ownership, it is an

indication however that he possesses the property in the concept of an owner for nobody
in his or her right mind would be paying taxes for a property that is not in his or her
actual or constructive possession.
3) Prescription has not yet set in since the complaint was filed within the 30-year
prescriptive period for real actions over immovable properties.
FACTS
Under dispute is a parcel of unregistered land known as Lot No. 6890, an
unregistered land which consists of 3.9030 hectares that is located in Dugo-an, Sibonga,
Cebu.
In 1973, respondent Jesus Aldanese (Jesus) inherited Lot No. 6890 from his father,
Teodoro Aldanese, Sr. He diligently paid its real property taxes from that time on under
Tax Declaration No. (TD) 13003 which is in his name. TD 13003 was subsequently
cancelled and TD 13163-A was issued by the Municipal Assessor of Sibonga, still in Jesus'
name, as the owner and possessor thereof.
Jesus stayed in the city because of his business. In August 1996, he was surprised
when he discovered that the Spouses Ponce encroached upon the entire portion of his lot.
He immediately demanded that they vacate his land and to return it to him. However, the
Spouses Ponce refused to heed Jesus' demand on the ground that Lot No. 6890 is part of
the land that they bought from his brother Teodoro Aldanese, Jr. (Teodoro, Jr.).
Jesus then asked his brother Teodoro, Jr., about the purported sale of his land.
However, Teodoro, Jr., denied selling his brother's land to the Ponces. He explained to
Jesus that what he sold to the Spouses Ponce was a parcel of land that he owned known
as Lot No. 11203 located in Masa, Dumanjug, Cebu. Lot No. 11203 is adjacent to Lot No.
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6890 of Jesus. Teodoro, Jr., then showed Jesus a photocopy of the Deed of Absolute Sale
dated March 13, 1976.
Thereafter, Jesus and the spouses Ponce met at the barangay for conciliation. The
latter nonetheless refused to vacate his land. During the barangay proceedings, the
Spouses Ponce admitted encroaching on Lot No. 6890 because Lot No. 11203 which they
bought from Teodoro, Jr., in Masa, Dumanjug, Cebu contained less than the area stated in
the Deed of Absolute Sale. The Ponces also remained firm in possessing the subject land.
As a result, Jesus filed a Complaint for recovery of possession and damages with
receivership against them before the RTC.
During trial, Jesus testified that he owned Lot No. 6890 and that it was not part of
the land sold by his brother Teodoro, Jr., to the Spouses Ponce. Teodoro corroborated his
brother's testimony. It was only Lot No. 11203, the land that he owned and inherited
which was situated in Masa, Dumanjug, Cebu, that was sold to the Spouses Ponce in the
Deed of Absolute Sale.
The Ponce couple insist that they own and have the right to possess Lot No. 6890
pursuant to the Deed of Absolute Sale which they entered into with Teodoro, Jr. Assuming
the land was not included therein, they are still entitled to the land as possessors in good
faith since 1976 or for more than 20 years.
ISSUE
Was Jesus the absolute owner of Lot No. 6890 to be entitled of possession thereof?
HELD
Yes. In the case at bench, Lot No. 6890 remained untitled as evidenced by a
Certification dated October 28, 1997 issued by the Department of Environment and
Natural Resources-Land Management Sector of Argao, Cebu. To prove his ownership over
the lot, Jesus presented Tax Declaration No. 13163-A in his name. He likewise presented
as evidence two Certificates dated November 7, 1997 and November 11, 1997 issued by
the Office of the Municipal Treasurer of Sibonga, Cebu which state that he is the declared
owner of the subject land and that he has been paying realty taxes thereon as early as
1980 as owner of the property.
Indeed, while the tax declaration is not conclusive proof of ownership of Jesus
over the subject land, it is an indication however that he possesses the property in the
concept of an owner for nobody in his or her right mind would be paying taxes for a
property that is not in his or her actual or constructive possession.
Interestingly, the Ponces failed to present any proof of ownership such as payment
of real property taxes or a certificate of title in their names over Lot No. 6890. True, the
Spouses Ponce presented TD 22-006688 to support their claim over the land. However, it
did not state the lot number of the land for which it was issued. Moreover, a careful
perusal of the declaration reveals that the land for which it was issued is located in Masa,
Dumanjug, Cebu and has different boundaries compared to Lot No. 6890.
133
It also held that prescription has not yet set in since the complaint was filed within
the 30-year prescriptive period for real actions over immovable properties. It also held
that the land sold to the Ponces does not include Lot No. 6890 since it was specifically
stated in the Deed of Absolute Sale that it only covers the land in Masa, Dumanjug, Cebu.
Lastly, Jesus sufficiently proved his ownership over the subject land as shown by the tax
declaration in his name.
Besides, assuming that Teodoro, Jr., sold Lot No. 6890 to the Ponces, the sale
would be invalid as it was owned by Jesus. We have repeatedly stressed that "no one can
give what one does not have." "A seller can only sell what he or she owns, or that which
he or she does not own but has authority to transfer, and a buyer can only acquire what
the seller can legally transfer."
134
CONTRACT OF SELL
HERNANDO, J.
GR No. 206847 June 15, 2022
CONTRACT TO SELL AND CONTRACT OF SALE
DOCTRINE
In a contract to sell, title remains with the vendor and does not pass on to the
vendee until the purchase price is paid in full. Thus, in a contract to sell, the payment of
the purchase price is a positive suspensive condition. Failure to pay the price agreed upon
is not a mere breach, casual or serious, but a situation that prevents the obligation of the
vendor to convey title from acquiring an obligatory force. This is entirely different from
the situation in a contract of sale, where non-payment of the price is a negative
resolutory condition. The effects in law are not identical. In a contract of sale, the vendor
has lost ownership of the thing sold and cannot recover it, unless the contract of sale is
rescinded and set aside. xxx For purposes of validity of the sale, the mutual agreement of
the parties on the subject matter of the sale and its price would suffice and no required
form is necessary.
In order for the foregoing provision on double sale to apply, the following
circumstances must concur:"(a) the two (or more) sales transactions in the issue must
pertain to exactly the same subject matter, and must be valid sales transactions; (b) the
two (or more) buyers at odds over the rightful ownership of the subject matter must each
represent conflicting interests; and (c) the two (or more) buyers at odds over the rightful
ownership of the subject matter must each have bought from the very same seller." Thus,
the rule on double sales "applies when the same thing is sold to multiple buyers by one
seller but not to sales of the same thing by multiple sellers."
FACTS
The late Zenaida Gonzales purchased from respondents, spouses Basas, a parcel of
land including the house thereon. An annotation in the title indicates that the consent of
the National housing authority is necessary for the disposal of the same. Zenaida and the
spouses Basas executed the following documents namely: Contract to Sell, Deed of
Absolute Sale, and Agreement to purchase and sell. According to the petitioners, once the
foregoing documents were executed, the spouses Basas requested Zenaida to allow them
to stay in the subject property until such time that they can transfer to another place, at
an agreed monthly rental rate of Php 3,500.00.
However, they have not paid any rental to Zenaida. Petitioners further alleged that
the spouses Basas promised to procure the written consent of the NHA for the sale of the
subject property. In the meantime, pursuant to their mutual agreement on the sale and
purchase of the same, Zenaida paid the Basas couple an aggregate amount of more than
135
P800,000.00, as evidenced by receipts. Once the spouses Basas received the said amount
they promised to deliver the title of the subject property to Zenaida as soon as they
secured the NHA's consent. Meanwhile, the spouses Basas borrowed the certificate of title
of the property which at that time was already in the possession of Zenaida after she paid
them the amount of P650,000.00, so they can work on the cancellation of the mortgage
on the subject property.
Petitioners point out that Zenaida has not paid the balance of the selling price
because the spouses Basas have not yet obtained NHA's written consent to the sale. On
January 4, 1997, Zenaida sent a written demand to the spouses Basas. Despite Zenaida's
verbal and written demands for the spouses Basas to comply with their foregoing
obligation, the latter failed to do so. In view of this, Zenaida brought the matter to the
barangay, but the parties failed to settle.
Eventually, Zenaida discovered that the spouses Basas subsequently sold the
subject property to respondent Romeo Munda (Munda) who immediately occupied the
property. Petitioners asserted that the second sale of the subject property by the Basas to
Munda was done maliciously and in bad faith. They averred that the same was done with
deliberate disregard of Zenaida's right over the subject property. As a result, Zenaida
caused the annotation of her affidavit of adverse claim on the title of the subject
property on October 29, 1997. In addition, petitioners claimed that Munda was a buyer in
bad faith because he was aware of the first sale of the subject property to Zenaida. When
Zenaida learned of the second sale by the Spouses Basas to Munda, she and her son,
Andres Rico Gonzales, went to the subject property and found out that the same was
already being occupied by Munda.
While thereat, they were informed by Munda's wife that she and her husband
already purchased the property, and she further told Zenaida that the latter's contract
was only a contract to sell while their contract was an absolute deed of sale. In view of
the foregoing, Zenaida filed a complaint for nullity of sale, specific performance, and
damages against respondents. Zenaida died on April 30, 2012, and was eventually
substituted by her heirs, petitioners herein.
On the other hand, the spouses Basas argued that Zenaida did not purchase the
subject property. They pointed out that the August 14, 1996 Agreement superseded the
two previously signed documents. They asserted that there was a novation of the
contracts, and the latter document reflected the final and true intentions of the parties.
The spouses Basas further posited that it was the agreement of the parties that until the
balance of the purchase price as reflected in the Agreement is fully paid, they will
continue to occupy the subject property. They continued to hold the TCT because Zenaida
had not fully paid the purchase price of the subject property, and there was no
consummated sale yet. They did not deem it necessary to inform Munda of the existence
of the Agreement because there was no consummated sale between them and Zenaida.
Meanwhile, Munda argued that he purchased the subject property in good faith
and for value. He was not aware of any previous transactions between the spouses Basas
136
and Zenaida. The RTC ruled in favor of petitioners. Respondents filed an appeal with the
CA. The CA reversed the findings of the RTC and found Munda as a buyer in good faith and
for value. Petitioners moved for reconsideration but it was denied by CA. Hence, this
petition.
ISSUE
1) Was the contract between Zenaida and Spouses Basa is a contract of sale?
2) Is the provision of Article 1544 of the Civil Code on double sale inapplicable?
HELD
1) Yes. The contract between Zenaida and Spouses Basas is a contract of sale. In a
contract to sell, title remains with the vendor and does not pass on to the vendee until
the purchase price is paid in full. Thus, in a contract to sell, the payment of the purchase
price is a positive suspensive condition. Failure to pay the price agreed upon is not a mere
breach, casual or serious, but a situation that prevents the obligation of the vendor to
convey title from acquiring an obligatory force. This is entirely different from the
situation in a contract of sale, where non-payment of the price is a negative resolutory
condition. The effects in law are not identical.
In a contract of sale, the vendor has lost ownership of the thing sold and cannot
recover it, unless the contract of sale is rescinded and set aside. Xxx For purposes of
validity of the sale, the mutual agreement of the parties on the subject matter of the sale
and its price would suffice and no required form is necessary. Undoubtedly, the Deed of
Absolute Sale transferred the ownership of the subject property from the spouses Basas to
Zenaida.
An examination of the entries in the Agreement shows that it is actually a contract

of sale subject to the resolutory conditions stated therein, i.e., the spouses Basas to
procure the consent/approval of the NHA for the transfer of the subject property and the
subsequent payment of the balance of the purchase price by Zenaida. Thus, the court
finds that both the Deed of Absolute Sale and Agreement contain all the three requisites
of a contract of sale.
Moreover, by virtue of the Agreement being a contract of sale, the subject

property was constructively delivered to Zenaida subject to the resolutory conditions
stated therein, even though the spouses Basas remained in possession of the subject
property, albeit in a different capacity.
2) Yes. The provisions of Article 1544 of the Civil Code on double sale is
inapplicable. In order for the foregoing provision on double sale to apply, the following
137
In the instant case, the spouses Basas sold the subject property to Zenaida in 1996,
and sold the same as well to Munda on August 25, 1997. However, the foregoing requisites
of a double sale are absent because the sale of the subject property by the Basas to
Munda was not a valid sale transaction since by that time, the spouses Basas were no
longer the owners of the property, and thus, they had no right to transfer the same.
The Civil Code provides that in a contract of sale, the seller binds himself to
transfer the ownership of the thing sold, and thus consequently, he must have the right to
convey ownership of the thing at the time of its delivery. Settled is the rule that "no one
can give what one does not have; nemo dat quad non habet. One can sell only what he
owns or is authorised to sell, and the buyer can acquire no more right than what the seller
can transfer legally."
In the case at bar, since ownership of the subject property had already been
transferred by the spouses Basas to Zenaida, then no right could be transmitted on to
Munda on the second sale.
138
HERNANDO, J.
GR No. 236826 March 23, 2022
CONTRACT OF SALE
DOCTRINE
Consummated Contract of Sale: Ownership of the thing sold shall be transferred to
the vendee upon the actual or constructive delivery thereof. This is understood as
delivered when it is placed in the control and possession of the vendee. Payment of the
purchase price is not essential to the transfer of ownership as long as the property sold
has been delivered; and such delivery (traditio) operated to divest the vendor of title to
the property which may not be regained or recovered until and unless the contract is
resolved or rescinded in accordance with law.
FACTS
The Heirs of Epifania M. Hernandez (Heirs of Hernandez), respondents, filed a
complaint for specific performance against Herminio Marquez (Herminio) and Alma Marie
Marquez (Marquez), petitioner, to cause the execution of a deed of absolute sale for an
area of 200 square meters (subject property) in their favor and that title over the subject
property be transferred to their names.
Since 1955, Epifania Hernandez (Epifania) and her heirs, have been occupying a
parcel of land the subject property. The subject property forms part of a 1,417-square
meter property previously owned by Spouses Anastacio and Lourdes Sakay (Spouses
Sakay), and Spouses Godofredo and Florsita Cruz (Spouses Cruz). Epifania and her heirs
built their house on the subject property with the consent and tolerance of its previous
owners. In 1967, however, Spouses Sakay and Spouses Cruz sold the 1,417-square meter
property to Herminio. Subsequently, Herminio sold to Epifania the subject property in
1985 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 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. Accordingly, Epifania made an initial payment to Herminio in the
amount of P2,000.00 as evidenced by a provisional receipt.
The Heirs of Hernandez claim that Epifania was able to pay in full the agreed
purchase for the subject property before her death. They also executed Extrajudicial
Settlement 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 such and
received a check in the amount of P61,429.87. Even so, Marquez sent a letter to the Heirs
of Hernandez to vacate the premises of the subject property.
139
It appears that 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. Marquez claims
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.
Herminio died and was substituted by Marquez.
The RTC ruled in favor of the Heirs of Hernandez and declared the sale between
Herminio and Epifania valid. It also treated the complaint as one for quieting of title. The
CA also affirmed the findings of the RTC that a perfected contract of sale existed
between Herminio and Epifania. The CA, however, held that the RTC had no jurisdiction to
order the partition of the 1,417-square meter property between Epifania and Marquez
since partition of real property is a special proceeding and not an ordinary civil action.
Hence, this petition.
ISSUE
Was there a valid contract of sale between Heminio and Epifania?
HELD
YES, there was a valid contract of sale between Herminio and Epifania. 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.
Ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof. The thing is understood as delivered when it is placed in
the control and possession of the vendee. Ergo, and even assuming, for the sake of
argument that there is no full satisfaction of the stipulated purchase price, the actual
turn-over of the possession of the property renders the contract consummated, albeit
partially. This is true since the payment of the purchase price is not essential to the
transfer of ownership as long as the property sold has been delivered; and such delivery
(traditio) operated to divest the vendor of title to the property which may not be
regained or recovered until and unless the contract is resolved or rescinded in accordance
with law. Consequently, when Herminio allowed Epifania to occupy the subject property,
he voluntarily relinquished whatever claim he has over the real property, particularly over
the piece of land where Epifania built her house.
In addition, as a rule, a co-owner cannot sell a definite portion of a land without

the consent from his or her co-owners. This is based on the principle that a sale of a
portion of the property is considered an alteration of the thing owned in common, and,
therefore, requires the unanimous consent of the other co-owners. However, in the case
at bar, even if the 1,417-square meter property was owned in common by Herminio and
Marquez, the sale of a definite Portion thereof by Herminio to Epifania is entirely valid.
This is because the moment Herminio pointed out the boundaries of the subject property,
and Marquez made no objection thereto, there is, in effect a partial partition of the
140
co-owned property. Accordingly, the sale of a definite portion thereof can no longer be
questioned or assailed by Marquez.
141
MACEDA LAW
INTEGRATED CREDIT CORPORATE SERVICES V. CABREZA
AND
HERNANDO, J.
GR No. 203420 February 15, 2021
MACEDA LAW
DOCTRINE
Essential elements of a contract of sale : (1) consent, (2) object, and (3) price in
money or its equivalent.
RA No. 6552 (Maceda Law)

Sec. 4 (2) : 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.
The notarial rescission contemplated in the law "is a unilateral cancellation by a

seller of a perfected contract thereunder acknowledged by a notary public and
accompanied by competent evidence of identity.
FACTS
Rolando Cabreza (Cabreza), Rolando and Fernando Aguilar (Sps. Aguilar),
respondents, filed a complaint for Annulment of Sale, Reconveyance, Sum of Money and
Damages against petitioners Integrated Credit and Corporate Services (ICCS), spouses
Estela and Vicente Gan (Sps. Gan), and Citibank.
Cabreza was the registered owner of a house and lot. Cabreza applied for an
opening credit line with Citibank and secured the property by a real estate mortgage
(Rem). Sometime after availing of the credit line, Cabreza failed to pay. This prompted
Citibank to institute foreclosure proceedings over the Rem. However, the public auction
was deferred as there was an agreement to restructure the liability of Cabreza to
Citibank. Under the restructured loan, Cabreza defaulted once again and this led to ICCS
winning the public auction.
Rosalinda, Cabreza’s sister, negotiated with ICCS for the repurchase of the
property. Both parties entered into a Memorandum of Agreement (MOA) which stipulated
that ICCS agreed to postpone the consolidation of the title and that it allowed Cabreza,
with Sps. Aguilar as guarantors, to redeem the property for 10,000,000 to be paid in
installments. Moreover, it stipulated that such agreement would be deemed automatically
terminated upon default or non-compliance by Cabreza or Sps. Aguilar.
The first three checks were credited to the bank account of ICCS. However, the
fourth check was dishonored due to insufficient funds. This prompted ICCS to send a
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letter demanding payment to Cabreza and Sps. Aguilar, as failure to settle would
constrain ICCS to consolidate the title of the property.
Despite the non-payment, Rosalinda still issued a fifth check which was surprisingly
credited to the account of ICCS. The succeeding checks were no longer encashed by ICCS.
ICCS then informed Cabreza and Sps. Aguilar that they consolidated its title to the
property and that they already sold the property to Sps. Gan. The foregoing prompted
Cabreza and Sps. Aguilar to file the Complaint against ICCS, Sps. Gan and Citibank.
RTC ruled that the MOA is a Contract of sale. Moreover, the RTC ruled that ICCS
deemed to have waived its right to rescind when it received proceeds of the fifth check
after the dishonor of the fourth check. Furthermore, the RTC ordered the annulment of
the Deed of Sale between ICCS and Sps. Gan. The CA likewise ruled that the MOA is a
Contract of sale making the Maceda Law applicable.
ISSUE
1) Is the MOA between ICCS and Cabreza with Sps. Aguilar as guarantors, a
contract of sale?
2) Did ICCS validly rescind the MOA?
HELD
1) YES; The SC affirmed that the MOA between ICCS and Cabreza with the Sps.
Aguilar as the guarantors was a contract of sale of real property in installments. The SC
ruled that MOA contains all the essential elements of a contract of sale : (1) consent, (2)
object, and (3) price in money or its equivalent.
2) NO; ICCS did not validly rescind the MOA. The non compliance of the
requirements of the Maceda Law served as the basis for such ruling. The letter dated
December 23, 1994 informing Cabreza and the Sps. Aguilar that the ICCS is already
"consolidating title to the subject property," should have effectively cancelled the MOA;
the said letter, however, did not comply with the Maceda Law which requires that the
seller must give a notice or a demand for rescission by notarial act. The notarial rescission
contemplated in the law "is a unilateral cancellation by a seller of a perfected contract
thereunder acknowledged by a notary public and accompanied by competent evidence of
identity." In the instant case, the letter is not notarized. Therefore, the MOA remains
valid and subsisting.
In the end, the SC nonetheless ruled on the basis of equity that the Deed of Sale
between ICCS and the Sps. Gan, and the corresponding TCT No. 199445 under the latter's
names remain valid and subsisting.
143
PRYCE PROPERTIES CORP V. NOLASCO
HERNANDO, J.
GR No. 203990 August 24, 2020
MACEDA LAW
DOCTRINE
Pursuant to Section 4 of the Maceda Law, there are 4 conditions before a seller
may actually cancel the contract thereunder: (1) the defaulting buyer has paid less than 2
years of instalments; (2) the seller must give such defaulting buyer a 60-day grace period,
reckoned from the date the instalment became due; (3) if the buyer fails to pay the
instalments 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 (4) the seller
may actually cancel the contract only after the lapse of 30 days from the buyer's receipt
of the said notice of cancellation and/or demand for rescission by notarial act.
FACTS
Narciso Nolasco (Nolasco) alleged that he purchased three lots from Pryce
Properties Corp. (Pryce) and made deposits through check payments. Nolasco was
frustrated and dismayed that Pryce could not immediately deliver to him the lots’
certificates of title. Rather, he only received the sales agreement which contained
unacceptable conditions. He conveyed his objections to Pryce and demanded refund of his
deposit payments arguing that since he had not yet signed the sales agreement, there was
still no meeting of the minds between him and Pryce. Pryce failed to comply.
Pryce 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. Pryce said that Nolasco
was given a copy of the Contract to Sell which he signed and even requested for an
amended version to reflect a new amortisation schedule. Pryce also argued that Nolasco,
under Republic Act No. 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 forfeiture and rescission of the contract to sell.
In claiming that it had validly rescinded its contract to sell with Nolasco, Pryce
relies on two documents: (1) the written Contract to Sell which sets out an automatic
cancellation provision in case of default and which Pryce alleges that Nolasco impliedly
agreed to, and (2) its denial of the refund as asserted in its Answer with Counterclaims
against Nolasco's Complaint before the trial court.
ISSUE
Was the contract between Pryce and Nolasco rescinded in accordance with the
Maceda Law?
144
HELD
No. The contract to sell was not validly cancelled.
Pursuant to Section 4 of the Maceda Law, there are 4 conditions before a seller
may actually cancel the contract thereunder: (1) the defaulting buyer has paid less than 2
years of instalments; (2) the seller must give such defaulting buyer a 60-day grace period,
reckoned from the date the instalment became due; (3) if the buyer fails to pay the
instalments 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 (4) the seller
may actually cancel the contract only after the lapse of 30 days from the buyer's receipt
of the said notice of cancellation and/or demand for rescission by notarial act.
Here, there was compliance with the first and second requisites when Pryce sent
Nolasco, a defaulting buyer whose payments did not amount to 2 years' worth of
instalments, the Contract to Sell, giving him 60 days to make good on his obligation.
Pryce, however, did not meet the last two conditions. There was no notice of notarial
rescission served upon Nolasco. Necessarily, the 30 days could not have lapsed from a
non-existent service of such notice.
In the absence of a lawful rescission of a contract governed by the Maceda Law,

the same remains valid and subsisting. Nolasco is entitled to a refund.
145
EQUITABLE MORTGAGE
DACQUEL V. SPOUSES SOTELO
HERNANDO, J.
GR No. 203946 August 04, 2021
EQUITABLE MORTGAGE AND PROHIBITION AGAINST PACTUM COMMISSORIUM
DOCTRINE
1) According to Article 1602 of the Civil Code, the contract shall be presumed to
be an equitable mortgage when the price of a sale with a right to repurchase is unusually
inadequate; when the vendor remains in possession as lessee or otherwise; and in any
other case where it may be fairly inferred that the real intention of the parties is that the
transaction shall secure the payment of a debt or the performance of any other
obligation. Article 1604 of the same Code states that Article 1602 shall also apply to a
contract purporting to be an absolute sale. 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.
2) According to Article 2088 of the Civil Code which embodies the prohibition
against pactum commissorium, the mortgagor's mere failure to pay the obligation does
not operate to automatically vest on the mortgagee the ownership of the encumbered
property, as it is contrary to morals and public policy and thus void. If a mortgagee in
equity desires to obtain title to a mortgaged property, the mortgagee's proper remedy is
to cause the foreclosure of the mortgage in equity and buy it at a foreclosure sale.
FACTS
In 1994, the Sotelos began the construction of a 7-door apartment on the subject
land, but due to budget constraints, they borrowed the amount of P140,000.00 from
Dacquel, who was Flora’s brother. The Sotelos claimed that they agreed to pay the debt in
double, and that payment was to be collected from the rental income of four out of the
seven apartment units. Dacquel required them to cede to him the subject land as security
for the loan, and so the parties executed a Deed of Sale, thus the title in the names of
the Sotelos was cancelled and another title was issued and registered under Dacquel’s
name. Allegedly, when the Sotelos’ obligation was paid, they asked for the return of the
subject lot but Dacquel refused. Thus, the Sotelos filed a Complaint for annulment of title
and reconveyance against Dacquel alleging that Dacquel held the title to the subject land
only as security for the loan and in trust for the Sotelos, who remained the beneficial
owners of the subject lot.
Dacquel, on the other hand, claimed that the Sotelos' debts to him totaled
P1,000,000.00, which he had recorded in a black diary. As payment for their debts, the
146
Sotelos had actually offered to sell to him the subject land and he had accepted their
offer. They reduced the said agreement into writing as a Deed of Sale for the true
consideration of P1,000,000.00, and the amount of P140,000.00 was indicated on the
Deed of Sale only for the purpose of reducing the tax liabilities for the transaction.
The RTC ruled in favor of Dacquel and held that the registration of property in
one's name for billing purposes, when in reality the same property is owned by another, is
common practice in the country.
The CA reversed the RTC decision and applied Articles 1602 and 1604 of the Civil
Code, ruling the Deed of Sale to be one of equitable mortgage. It found two badges of
fraud: (1) gross inadequacy of the price because the market value of the property in 1994
was P1,750,000.00 but it was sold in the Deed of Sale for only P140,000.00; and (2) the
continued possession by the Sotelos of the property, considering their supervision of the
apartment's construction, their execution of lease contracts over the units, and Dacquel's
failure to prove that he had instructed the Sotelos to act in his stead. CA ruled that since
Dacquel remained a mortgagee in the transaction, the issuance of TCT in his favor did not
vest upon him ownership of the property and does not preclude its cancellation.
ISSUE
1) Whether or not the Deed of Sale between petitioner and respondents-spouses
constituted an equitable mortgage?
2) Whether or not the petitioner's title to the subject property should be nullified
and reconveyed to respondents-spouses?
HELD
1) YES. The CA was correct in finding the two badges of fraud against petitioner —
gross inadequacy of price in the Deed of Sale and continued possession of the subject
property by respondents-spouses as debtors of petitioner. According to Article 1602 of the
Civil Code, the contract shall be presumed to be an equitable mortgage when the price of
a sale with a right to repurchase is unusually inadequate; when the vendor remains in
possession as lessee or otherwise; and in any other case where it may be fairly inferred
that the real intention of the parties is that the transaction shall secure the payment of a
debt or the performance of any other obligation.
Article 1604 of the same Code states that Article 1602 shall also apply to a
contract purporting to be an absolute sale. Thus, the CA correctly declared the subject
transaction between petitioner and respondents-spouses as an equitable mortgage. 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.
2) YES. The transaction in this case was found to be one of equitable mortgage,
petitioner did not become owner of the subject property but a mere mortgagee thereof.
As such, petitioner was bound by the prohibition against pactum commissorium as
embodied in Article 2088 of the Civil Code which states that, “The creditor cannot
147
appropriate the things given by way of pledge or mortgage, or dispose of them. Any
stipulation to the contrary is null and void.” Pursuant to Article 2088, the mortgagor's
mere failure to pay the obligation does not operate to automatically vest on the
mortgagee the ownership of the encumbered property, as it is contrary to morals and
public policy and thus void. If a mortgagee in equity desires to obtain title to a mortgaged
property, the mortgagee's proper remedy is to cause the foreclosure of the mortgage in
equity and buy it at a foreclosure sale.
In this case, when petitioner caused the cancellation of the Sotelo’s title to the
mortgaged property and its transfer to his name without availing of the remedy of
foreclosure, petitioner is guilty of the prohibited practice of pactum commissorium.
Therefore, the transaction is consequently rendered void, and title to the subject
property should be reverted to respondents-spouses.
148
WARRANTY
ATIENZA V. GOLDEN RAM ENGINEERING SUPPLIES AND EQUIPMENT, CORP.
HERNANDO, J.
GR No. 205405 June 28, 2021
WARRANTY
DOCTRINE
In a contract of sale there is an implied warranty that the thing shall be free from
hidden defects. A hidden defect is one which is unknown or could not have been known to
the vendee. Corollarily, Articles 1561 and 1566 of the same Code set forth the
responsibility of the vendor against hidden defect.
This provision shall not apply if the contrary has been stipulated, and the vendor
was not aware of the hidden faults or defects in the thing sold. The court found no
persuasive reason to depart from the factual finding of the RTC that the engine
malfunction was due to a hidden defect which was unknown to Atienza at the time he
bought the engine.
FACTS
Eduardo 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 BartoLome T. Torres who is the respondent.
Asserting his claim for damages arising from breach of warranty. Atienza filed a
Complaint, averring that Torres offered for sale two vessel engines amounting to P3.5
Million Pesos to be installed in MV Ace I. On 24 August 1993, Atienza bought the two vessel
engines from GRESEC and as proof of his purchase, he was issued a Proforma Invoice and
paid the amount of P2.5 Million Pesos, after which the two engines were delivered and
commissioned by GRESEC.
In 1994, the engine on the right side of MV Ace I suffered a major dysfunction for
which Atienza immediately reported to Engineer Tores to inspect and determine the
extent of the damages. 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. On 28 October 1994, Atienza wrote GRESEC a Demand Letter
offering two alternatives for the company – one, replace the engine or reimburse him for
the losses he had incurred, or two, retrieve the two engines and refund the cost with
interest plus payment for losses. However, GRESEC paid no heed to his demand prompting
him to lodge a Complaint for damages.
149
In their Answer, the defendants admitted the breakdown of the engine but
confuted Atienza's assertion that Engr. Torres had confirmed that "defect was inherent
being attributable to factory defect."
Atienza did not receive any written report about the repairs that were done on the
starboard engine. It was their understanding that it was Bartolome Torres and Engr.
Raymond Torres who will maintain the engines, all instructions by them were being
followed by Manila Ace crew. When the right engine broke down, Atienza was verbally
assured that respondents will replace the engine. Rolando Casipi, oiler of Manila Ace,
testified that Engr. Raymond Torres told them when to change oil and that they cannot
change oil without Raymond Torres present or supervising it.
Atienza testified that he received no written report about the repairs that were
done and that it was their understanding that it was Bartolome Torres and Engr. Raymond
Torres who will maintain the engines, all instructions by them were being followed by
Manila Ace crew. Respondents did not require from Atienza a written complaint whenever
they fixed the engine. Respondents acted in bad faith when it required a written
complaint from Atienza after MAN Singapore had allegedly denied the claim on the
warranty. They did not even inform Atienza that they will refer the matter to MAN
Singapore.
The RTC found that Atienza proved by preponderance of evidence that he

sustained damages because respondents, GRESEC and Bartolome, breached the warranty
against hidden defects in the sale of the two (2) vessel engines. The RTC noted that
despite repeated demands, respondents gave Atienza a run around and failed to
seasonably replace the starboard engine. The trial court found respondents GRESEC and
Bartolome to be in bad faith in their refusal to replace the vessel engines and declared.
The CA affirmed with modification the RTC's ruling. According to CA, respondents'
denial of Atienza's warranty claim was done in good faith based on their honest belief that
the claim did not comply with Item XI of the Warranty Conditions of the contract of sale
and the malfunctioning engine had not been properly maintained. In the same vein,
absent a demonstration of respondents' bad faith. The appellate court exculpated
Bartolome from solidary liability with GRESEC as the latter is a separate juridical
personality. Consistent with its finding of respondents' lack of bad faith and gross
negligence, the appellate court ruled that the separate corporate personality of GRESEC
which entered into the sales transaction with Atienza could not be disregarded as to
solidarity bind Bartolome for the breach of warranty.
ISSUE
Is the showing of bad faith, malice and intent to cause damage committed by
Bartolome Torres as Director, Stockholder, of GRESEC, hence resulting in his liability with
the respondent corporation IN SOLIDUM?
150
HELD
There is lack of evidence to show that the engine malfunctioned due to Atienza's
negligence in its maintenance. Atienza discharged the burden of proof by a
preponderance of evidence that there were hidden defects in the engines sold by
respondents. The appellate court affirmed the trial court's ruling as follows:
A warranty is a statement or representation made by the seller of goods,

contemporaneously and as part of the contract of sale, having reference to the character,
quality or title of the goods, and by which he promises to insure that certain facts are or
shall be as he represents them to be.
It is not disputed that there is no express agreement between the parties as to the
coverage of the warranty. In the absence of an express stipulation between the parties,
the applicable provision is paragraph 2, Article 1547 of the Civil Code which states that in
a contract of sale there is an implied warranty that the thing shall be free from hidden
defects. A hidden defect is one which is unknown or could not have been known to the
vendee. Corollarily, Articles 1561 and 1566 of the same Code set forth the responsibility
of the vendor against hidden defects:
Art. 1561. The vendor shall be responsible for warranty against the hidden
defects which the thing sold may have, should they render it unfit for the use for
which it is intended, or should they diminish its fitness for such use to such an
extent that, had the vendee been aware thereof, he would not have acquired it or
would have given a lower price for it; but said vendor shall not be answerable for
patent defects or those which may be visible, or for those which are not visible if
the vendee Is an expert who, by reason of his trade or profession, should have
known them.
Art. 1566. The vendor is responsible to the vendee for any hidden faults or
defects in the thing sold, even though he was not aware thereof.
bought the engine.
Undoubtedly, respondent’s unjustified denial of Atienza’s warranty claim

compelled him to litigate. Under Article 2208 (2) (5) of the Civil Code, attorney’s fees and
expenses of litigation may be recovered:
(2) When the defendant’s act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiffs plainly valid, just and demandable claim;
151
However, solidary liability to Atienza for damages, the trial court's Decision did not
contain a discussion on the solidary liability of Bartolome with GRESEC. The RTC simply
ordered respondents to pay, in solidum, the monetary awards to Atienza.
152
AGENCY
TRUSTS
DANIEL V. MAGKAISA
HERNANDO, J.
GR No. 203815 December 07, 2020
TRUSTS
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.
FACTS
Consuelo Jimenez Oda (Consuelo) owned three parcels of land located in Cavite.
Consuelo supposedly sold these parcels of land to her sister, Nelidia Daniel and allegedly
instructed Nelidia that upon her (Nelidia’s) death, the properties should be transferred to
her grandchildren, Nancy, Cecilia, and Imelda, all surnamed Magkaisa (Magkaisas) and
Marissa Oda (Oda). To comply with Consuelo’s instructions, Nelidia executed a Declaration
of Trust wherein she acknowledged that she held the three parcels of land held in trust
for the Magkaisas and Oda with the conformity of her husband Efraim Daniel (Efraim).
Efraim had likewise signed the document. The Magkaisas and Oda did not find out about
the trust until the death of Nelidia, when the Declaration was discovered.
The Magkaisas and Oda then filed a complaint for reconveyance plus damages,
with prayer for preliminary injunction against Efraim, alleging that Efraim was about to
transfer the parcels of land in his name or was about to do so with the intention of
disposing of them, to their damage and prejudice. Efraim admitted the existence of the
trust in his answer, but presented an unsigned document entitled Revocation of
Declaration of Trust. He also argued that there was no showing that the Magkaisas and
Oda accepted the trust, and it was also not registered with the Registry of Deeds as to
bind third parties.
The Regional Trial Court ruled in favor of the Magkaisas and Oda, ruling that there
is no dispute to the validity of the Declaration of Trust as Efraim himself admitted to its
existence and due execution, and that since the document provides that Nelidia merely
held the properties in trust for the Magkaisas and Oda, to be turned over to them upon
her death, Efraim was bound to honor this condition. The trial court also ruled that
according to Art. 1446 of the New Civil Code, acceptance of the trust is dispensed with if
153
the trust imposes no onerous condition on the beneficiaries, which is the situation in this
case. The Court of Appeals affirmed the ruling of the Regional Trial Court.
ISSUE
Are the Magkaisas and Oda entitled to the reconveyance of the three parcels of
land?
HELD
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, which are the Magkaisas and Oda in this
case. Efraim is not a party to this trust and only signed the document as Nelidia’s
husband, but there is no dispute that Efraim admitted the due execution and validity of
the Declaration of Trust, and as a signatory, he is bound to honor the intent and contents
of the said document and should honor the directives contained in it. The trust is now
considered terminated after Nelidia’s death, and the properties should be transferred to
the names of the Magkaisas and Oda as beneficiaries of the said trust.
A complaint for reconveyance seeks the transfer of the title to the rightful and
legal owner, or to the party who has a superior right over it, without prejudice to
innocent purchasers in good faith, and the Magkaisas and Oda have a superior right to
reconveyance of the subject properties pursuant to the Declaration of Trust.
The decision ordering the reconveyance of the subject properties in favour of the
Magkaisas was upheld.
154
LOPEZ V. SALUDO JR.
HERNANDO, J.
IMPLIED TRUST
DOCTRINE
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.
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. While implied trusts may be proven by oral evidence, the evidence must
be trustworthy and received by the courts with extreme caution, and should not be made
to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required
because oral evidence can easily be fabricated.
FACTS
Respondent Aniceto G. Saludo (Saludo) prayed that he be declared the true owner
of the two parcels of land in question and to have said properties reconveyed to him.
Saludo bought the property through petitioner, Doris Lopez (Lopez). Lopez offered
to pose as the buyer because the seller allegedly wanted to deal only with her. Saludo
then entrusted to petitioner the purchase price with the agreement that petitioner would
be the signatory in the Deed of Sale but will hold the properties in trust for, and
subsequently reconvey the same to, respondent.
After the execution of the sale, respondent noticed that petitioner started evading
him and did not give any update as to the registration of the sale in his name. When the
respondent inquired on the status of the properties, he found out that the properties
were already registered in the name of the petitioner. This prompted respondents to
immediately assume possession of the properties and introduce major renovations on the
house, pay the real property taxes, be in actual possession of the properties, and pay the
homeowner's association dues. Respondent made several demands, both oral and written,
upon petitioner to reconvey the subject properties to him, but to no avail.
Hence, Saludo filed an Affidavit of Adverse Claim against Lopez over the properties
and had it annotated on the TCTs. Respondent filed the instant Complaint for
Reconveyance and Damages imputing bad faith on the part of petitioner. He claimed that
he is the true owner of the subject properties and that petitioner merely holds the same
155
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.
Lopez claimed that she purchased the subject properties pursuant to a Deed of
Sale under Pacto de Retro. Since the properties were not repurchased by the
vendor-a-retro, a Deed of Absolute Sale was executed in her favor for the two lots, By
virtue of the said sale, TCTs were issued in her name. Thereafter, petitioner effected
major renovations on the house constructed thereon. Lopez claimed that respondents
volunteered to finance the renovation of the house on account of their special
relationship. Thereafter, the respondent and his family occupied the said properties.
However, when their relationship turned sour, Saludo surreptitiously filed an adverse
claim over the subject properties with the Register of Deeds of Pasig City, falsely claiming
ownership thereof. This prompted the petitioner to file a complaint with the barangay
against respondent for "Pagpapaalis sa tinitirahang bahay o Ejectment ''.
The RTC rendered a Decision declaring respondent as the true and rightful owner
of the subject properties. The CA affirmed the RTC’s decision.
ISSUE
Did Saludo sufficiently prove that an implied trust was created between him and
Lopez?
HELD
Yes, Saludo sufficiently proves that an implied trust was created between him and
Lopez.
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:
Article 1448. There is an implied trust when property is sold, and the legal estate
is granted to one party but the price is paid by another for the purpose of having the
beneficial interest of the property. The former is the trustee, while the latter is the
beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or
illegitimate, of the one paying the price of the sale, no trust is implied by law, it being
disputably presumed that there is a gift in favor of the child.
Art. 1456. 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.
156
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. While implied trusts may be proven by
oral evidence, the evidence must be trustworthy and received by the courts with extreme
caution, and should not be made to rest on loose, equivocal or indefinite declarations.
Trustworthy evidence is required because oral evidence can easily be fabricated.
In the case at bar, both the CA and the RTC declared that based on the evidence
on record, an implied trust relation arose between respondent and petitioner. Respondent
had actually adduced evidence to prove his intention to purchase the subject properties
by paying the purchase price thereof, through petitioner, with the attendant expectation
that petitioner would later on reconvey the same to him. This Court sees no cogent
reason to revisit these well-supported conclusions of the lower courts.
The preponderance of evidence established positive acts of respondent indicating,

without doubt, that he considered the subject properties as his exclusive properties.
First, he entered into actual possession of the properties in question immediately after his
full payment of the purchase price and remained in possession thereof until the filing of
the Complaint before the lower court. Second, he spent millions for the renovation of the
house constructed on the premises. Finally, he had the tax declarations transferred in his
name and faithfully paid the realty taxes thereon.
From the foregoing, this Court is convinced that an implied resulting trust existed
between the parties. The pieces of evidence presented demonstrate respondent's
intention to acquire the subject properties for his own account and benefit. The
surrounding circumstances as to its acquisition speak of the intent that the equitable or
beneficial ownership of the properties should belong to respondent.
157
CREDIT TRANSACTION
INTEREST
ALLIED BANKING CORP V. SPOUSES MARIO ANTONIO MACAM
HERNANDO, J.
GR No. 200635 February 01, 2021
INTEREST
DOCTRINE
The doctrine of "apparent authority," with special reference to banks, has long
been recognized in this jurisdiction. Apparent authority is derived not merely from
practice. Its existence may be ascertained through 1) the general manner in which the
corporation holds out an officer or agent as having the power to act, or in other words,
the apparent authority to act in general, with which it clothes him; or 2) the
acquiescence in his acts of a particular nature, with actual or constructive knowledge
thereof, within or beyond the scope of his ordinary powers.
FACTS
This is a Petition for Review on Certiorari which assails the Decision of the Court of
Appeals (CA) which affirmed in toto the Decision of the Regional Trial Court (RTC) of
Makati City, finding petitioners Allied Banking Corporation (Allied Bank) and Guillermo
Dimog (Dimog) solidarily liable for damages to the Spouses Mario Antonio and Rose
Trinidad Macam (Spouses Mario Macam).
Mario Macam (Mario), on the recommendation of his brother Manuel and

facilitation of Elena Valerio (Valerio), invested P1,572,000.00 in the cellular card business
of respondent Helen Garcia (Helen). Valerio was a Unit Manager in Helen's business,
soliciting investments and promising weekly interest payments of 2.29%.
On November 4, 2002, Mario deposited P1,572,000.00 in Valerio's Savings Account 4

with Allied Bank-Pasay Road Branch (AB-Pasay). In turn, Valerio issued Bank of the
Philippine Island Check No. 3090-045359 to Mario covering the principal amount of his
investment.
On February 6, 2003, a series of transactions occurred at the Allied Bank-Alabang

Las Piñas Branch (AB-ALP), headed by respondent Maribel Caña (Caña). At 8:45 a.m., Caña
informed bank teller Melissa Berras (Berras) to anticipate a deposit by Helen in the
amount of P46 Million. Caña likewise instructed the Branch Operating Officer, Milani
Mamalayan (Mamalayan), to arrange for two armored vans to pick up the P46 Million
deposit.
158
Due to the significant discrepancy, Allied Bank investigated the branch, AB-ALP,
and its transactions on February 6, 2003. Allied Bank was able to recover more than half
of the amount, leaving a balance of P9,800,000.00. On March 3, 2003, 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 AB PT Branch Head, Dimog.
As the trial court had done, the appellate court likewise found that Allied Bank is
liable to the Spouses Mario Macam for breach of contract, or culpa contractual. It held
that Allied Bank reneged on its contractual obligation to the Spouses Mario Macam to pay
their money in deposit on demand. The appellate court held that given the fiduciary
nature of the relationship between a bank and its depositors, a bank is under obligation to
treat the accounts of its depositors with meticulous care. In the performance of that
obligation, the appellate court found Allied Bank to have failed and thus liable to the
Spouses Mario Macam for damages. Hence, this appeal by certiorari of Allied Bank positing
grave error in the ruling of the appellate court.
ISSUE
Was Allied Bank liable for unilaterally debiting and closing the deposit account of
the Spouses Mario Macam?
HELD
YES. Allied Bank is expected to act with extraordinary diligence required of banks.
We cannot overemphasise 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 doctrine of "apparent authority," with special reference to banks, has long
been recognized in this jurisdiction. Apparent authority is derived not merely from
practice. Its existence may be ascertained through 1) the general manner in which the
corporation holds out an officer or agent as having the power to act, or in other words,
the apparent authority to act in general, with which it clothes him; or 2) the
Article 2209 of the Civil Code solidifies the consequence of payment of interest as
an indemnity for damages when the obligor incurs in delay.
Art. 2209. If the obligation consists in the payment of a sum of money, and the
debtor incurs in delay, the indemnity for damages, there being no stipulation to the
159
contrary, shall be the payment of the interest agreed upon, and in the absence of
stipulation, the legal interest, which is six percent per annum.
In this case, at the time the interest accrued on the deposit of the Spouses Mario
Macam on February 19, 2003, the date of default when the account was closed, the then
prevailing rate of legal interest was twelve percent (12%) per annum under Central Bank
(CB) Circular No. 416 in cases involving the loan or forbearance of money.
However, the twelve percent (12%) per annum rate of legal interest is only
applicable until June 30, 2013, before the advent and effectivity of Bangko Sentral ng
Pilipinas (BSP) Circular No. 799, Series of 2013 reducing the rate of legal interest to six
percent (6%) per annum. Pursuant to our ruling in Nacar v. Gallery Frames , BSP Circular
No. 799 is prospectively applied from July 1, 2013.
Thus, the lower courts' ruling was modified on the applicable rate of legal interest,
to wit: (1) twelve percent (12%) per annum from February 19, 2003 to June 30, 2013; and
(2) six percent (6%) per annum from July 1, 2013 to date when this Decision becomes final
and executory.
The Court likewise imposed interest on interest due based on Article 2212 of the
Civil Code which provides that "interest due shall earn legal interest from the time it is
judicially demanded, although the obligation may be silent upon this point."
Consequently, interest on interest due is imposed at the rate of (1) twelve percent (12%)
per annum from July 17, 2003 to June 30, 2013; and (2) six percent (6%) per annum from
July 1, 2013 until this Decision becomes final and executory.
160
ASSET POOL A (SPV-AMC), INC. V. SPOUSES BERRIS
HERNANDO, J.
GR No. 203194 April 26, 2021
INTEREST
DOCTRINE
The reference of one contract to the other does not automatically make them a
single contract in the absence of evidence to the contrary, express or implied.
The mortgage creditor has the right to recover the deficiency when the mortgaged
properties are not enough to satisfy the entire obligation, but the action can only be
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.
FACTS
On November 15, 1995, Far East Bank and Trust Company (FEBTC) and B.Berris
Merchandising (BBM) entered into a Loan Agreement. To secure the loan,the spouses
Berris executed a real estate mortgage on parcels of land, a chattel mortgage on their
rice mill, and a Comprehensive Surety Agreement. FEBTCalso granted BBM a Discounting
Line facility.
The spouses Berris, for and on behalf of BBM, executed four (4) promissory notes.
The spouses Berris failed to pay their obligations under the promissory notes. Hence,
FEBTC sent a letter demanding payment of the total amount of Php 21,055,555.54
representing both their Discounting Line and Loan Agreement availments. The bank sent
another letter to the spouses Berries reiterating its demand for payment of the same
amount exclusive of interest,penalties and other charges. FEBTC sent a Final Demand
Letter to the spouses Berris before filing a Petition for Extrajudicial Foreclosure of Real
EstateMortgage.
The spouses Berris filed a Complaint for the Annulment of Sale assailing
theextra-judicial foreclosure of mortgage. Meanwhile, the Securities and
ExchangeCommission (SEC) approved the merger of the Bank of Philippine Islands (BPI)and
FEBTC. BPI then assigned the loans of BBM, to Asset Pool. The Makati RTCgranted
petitioner Asset Pool's motion for substitution of parties in order to continue the
proceedings of the case in lieu of FEBTC. The Berrises were subsequently declared in
default.
ISSUE
Was the remedy by Asset Pool as the mortgage creditor proper?
161
HELD
NO. There is nothing illegal or irregular with several contracts or agreements
having similar stipulations with respect to the maturity dates and/or acceleration clauses.
The parties are free to stipulate on the terms and conditions of the obligation which they
deem convenient provided they are not contrary to law, morals, good customs, public
order, or public policy, which in this case, the maturity of all obligations in case of default
on either of them. The reference of one contract to the other does not automatically
make them a single contract in the absence of evidence to the contrary, express or
implied.
Having arrived at the conclusion that the Loan Agreement and the Discounting Line
are separate and distinct obligations of the spouses Berris, we now come to the resolution
of whether the institution of the extrajudicial foreclosure of mortgage barred the filing of
the herein collection suit.
Petitioner cannot claim that only PN Nos. 2-104-90258 BDC and 2-104-980888 BDC
were due and demandable at that time as their demand letters clearly show otherwise.
Also, with the application of the acceleration clause, all the PNs became due and
demandable even before its maturity upon the happening of the default by the spouses
Berris.
Petitioner cannot split its cause of action on the Discounting Line by first filing a
petition for extrajudicial foreclosure of the real estate mortgage on PN Nos. 2-104-980258
BDC and 2-104-980888 BDC and then institute a personal action for the collection of the
other four PNs (PN Nos. 2-104-980259/bdc, 2-104-980296/bdc, 2-104-980975 BD/C and
2-104-981149/BDC) without violating the proscription against splitting a single cause of
action.
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.
162
GUARANTY AND SURETYSHIP
SPOUSES GENOTIVA V. EQUITABLE PCI BANK (NOW BANCO DE ORO UNIBANK, INC)
HERNANDO, J.
GR No. 213796 June 28, 2021
CREDITORS RIGHT TO PROCEED AGAINST SURETY
DOCTRINE
Under Article 1216 of the Civil Code, the creditor may proceed against any one of
the solidary debtors or some or all of them simultaneously. The rule, therefore, is that if
the obligation is joint and several, the creditor has the right to proceed even against the
surety alone. The right of the creditor to proceed against the surety refers to the right to
sue the surety independently of the right to sue the principal or the other sureties. By
"proceed," the law means to "sue" or to "institute proceedings" for collection or
enforcement of the surety contract. However, 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.
FACTS
Spouses Calvin Luther Genotiva and Violet Genotiva (spouses Genotiva),
complainants, alleged that Calvin Genotiva (Calvin) together with his business colleagues,
ventured into the commercial production of hollow blocks and concrete pavers under the
registered name Goldland Equity, Inc. (Goldland). Upon application, BDO Cagayan de Oro
City Branch, where Violet was an employee, granted a “clean loan” of P2,000,000 to
Goldland.
The Genotivas further alleged that when Violet retired as employee, 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. 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. Thus, they
acceded to BDO's demands and to sign the Real Estate Mortgage (subject contract) in
favor of BDO.
BDO averred that it withheld the issuance of Violet's clearance, a condition for the
release of her retirement benefits, because of her existing obligation to the bank arising
from the Deed of Suretyship which was applied for the P2,000,000.00 loan in 1996.
The RTC held that the subject contract was voidable considering that it was
executed by the spouses Genotiva under BDO's undue influence. As to the P500,000.00,
163
the trial court ordered the amount to be returned to the Genotivas for having been
invalidly applied to the interest on Goldland's loan. On appeal, the CA set aside the
August 31, 2010 Decision of the RTC holding that the bank as a creditor has the right to
proceed against the spouses Genotiva as sureties. As to the P500,000.00 deposit offered
by the Genotivas for redemption purposes, the CA held that BDO, as a creditor, had the
right to option to reject the offer and applied the said amount to Goldland's due interest.
ISSUE
1) Is the subject contract valid in view of the spouses Genotiva's claim of vitiated
consent?
2) Does BDO have the right to retain the P500,000 under the Deed of Suretyship?
HELD
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." 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.
Similarly, there was no undue influence as found by the RTC. There is undue
influence "when a person takes improper advantage of his power over the will of another,
depriving the latter of a reasonable freedom of choice." We have held that "[f]or undue
influence to be present, the influence exerted must have so overpowered or subjugated
the mind of a contracting party as to destroy [their] free agency, making [them] express
the will of another rather than [their] own." There is no evidence of such degree of
influence exerted by BDO on the spouses Genotiva in this case.
2) NO. BDO has no right to apply the P500,000.00 to Goldland's loan. Under Article
1216 of the Civil Code, the creditor may proceed against any one of the solidary debtors
or some or all of them simultaneously. The right of the creditor to proceed against the
surety refers to the right to sue the surety independently of the right to sue the principal
or the other sureties. By "proceed," the law means to "sue" or to "institute proceedings"
for collection or enforcement of the surety contract. However, 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. Here, while We agree 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 record shows that after the Genotivas made the offer, BDO responded
through its January 31, 2001 Letter simply stating that "[t]he amount of [P]500,000.00
remitted to [BDO] has been applied to past due interest." BDO may not set-off the
amounts without the consent of the spouses Genotiva because consent is required for
164
conventional compensation. Accordingly, said amount must be returned to the spouses
Genotiva as prayed for and as adjudged by the RTC.
165
REAL ESTATE MORTGAGE
PHILIPPINE NATIONAL BANK V. FONTANOZA
HERNANDO, J.
GR No. 213673 March 02, 2022
FORECLOSURE OF REAL ESTATE MORTGAGE
DOCTRINE
Generally, "once title to the property has been consolidated in the buyer's name
upon failure of the mortgagor to redeem the property within the one-year redemption
period, the writ of possession becomes a matter of right belonging to the buyer.
Consequently, the buyer can demand possession of the property at any time. Its right of
possession has then ripened into the right of a confirmed absolute owner and the issuance
of the writ becomes a ministerial function that does not admit of the exercise of the
court's discretion. The court, acting on an application for its issuance, should issue the
writ as a matter of course and without any delay."
However, there are exceptions to the rule that the trial court's duty to issue the
writ of possession in favor of the purchaser is ministerial. "In Nagtalon v. United Coconut
Planters Bank, the Court enumerated the following jurisprudential exceptions: (a) gross
inadequacy of the purchase price; (b) third party claiming right adverse to the
mortgagor/debtor, and; (c) failure to pay the surplus proceeds of the sale to the
mortgagor."
FACTS
Spouses Salvador and Alma (Alma) Fontanoza obtained a loan from the Ozamiz
Branch of the Philippine National Bank (PNB). To secure the loan, they mortgaged a parcel
of land located at Barangay Dao, Mahayag, Zamboanga del Sur. Since the Fontanozas
failed to pay, PNB foreclosed the property. On January 8, 2002, as the sole bidder in the
public auction, PNB acquired the lot for P236,000.00. PNB registered the sale on January
28, 2002. However, the Fontanozas failed to redeem the property. More than nine years
later, specifically on July 18, 2011, PNB filed an ex-parte petition for issuance of writ of
possession before the RTC.
RTC held that any question regarding the validity of the mortgage or its
foreclosure cannot be used as a legal ground to refuse the issuance of a writ of
possession. Even if there is a pending suit for annulment of the mortgage or foreclosure,
the purchaser is entitled to a writ of possession without prejudice to the outcome of the
annulment case. In other words, allowing an opposition based on any ground in order to
hold in abeyance the issuance of a writ of possession is tantamount to an injunction
prohibiting the said issuance. Thus, what cannot be done directly cannot be done
indirectly.
166
CA ruled that the instant case is similar to Barican. Aside from PNB's delay in
applying for a writ, Alma remained in possession of the property. Although she is not a
third person to the mortgage, Alma is claiming the property as a purchaser and no longer
as a mortgagor. Hence, the issuance of the writ of possession in favor of PNB is unjust, as
the issue of repurchase has not yet been settled.
ISSUE
Can a writ of possession issued under a Resolution that has already become Final
and Executory still be disturbed by the filling of a motion to recall or by subsequent Court
of Appeals Decision ordering the Trial Court's denial of the said motion to recall to be set
aside?
HELD
No. Generally, "once title to the property has been consolidated in the buyer's
name upon failure of the mortgagor to redeem the property within the one-year
redemption period, the writ of possession becomes a matter of right belonging to the
buyer. Consequently, the buyer can demand possession of the property at any time. Its
right of possession has then ripened into the right of a confirmed absolute owner and the
issuance of the writ becomes a ministerial function that does not admit of the exercise of
the court's discretion. The court, acting on an application for its issuance, should issue
the writ as a matter of course and without any delay."
mortgagor." The first and third exceptions cannot apply to this case since there are no
allegations referring to either the purchase price or surplus proceeds of the sale, if any.
The Court stresses that as a rule, a final judgement is immutable and unalterable.
Notably, there are established exceptions to the foregoing rule, namely: (i) the correction
of clerical errors; (ii) presence of nunc pro tunc entries, which cause no prejudice to any
party; (iii) void judgement; and, (iv) whenever circumstances transpire after the finality
of the judgement which renders the execution unjust and inequitable.
Here, the aforementioned exceptions are not present. To stress, the August 17,
2011 Resolution of the RTC which granted PNB's petition for the issuance of a writ of
possession already became final and executory on September 15, 2011, as evidenced by a
Certificate of Finality dated November 21, 2011. Alma filed an opposition more than two
months after the issuance of the writ became final and executory. Although this matter
was not immediately raised in the RTC, it is a vital point which must not be overlooked
since it demonstrated that Alma cannot simply object to the issuance of the writ by filing
a mere opposition or motion.
167
To conclude, while Alma can no longer question the issuance of a writ of
possession in PNB's favor, she is not without recourse.She can still assert her claims in the
separate suit which she filed before the trial court. Otherwise stated, the ruling in this
case will not be conclusive on her claim of repurchase. Thus, it is within the trial court's
discretion in the separate case to make a final determination regarding Alma's allegation
of ownership over the property.
168
PANACAN LUMBER CO. V. SOLIDBANK CORP.
HERNANDO, J.
FORECLOSURE OF REAL ESTATE MORTGAGE
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.
FACTS
Solidbank issued a Foreign Letter of Credit (FLC) worth US$168,000.00 in favor of
petitioner Panacan Lumber Co. (PLC) to finance the latter's importation of lumber which
was allegedly secured by a Domestic Letter of Credit (DLC) valued at P4,240,000.00 issued
by Philippine Commercial and Industrial Bank (PCIB).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 of US$168,000.00 under the
FLC. PLC made partial payments of US$60,000.00 on its obligation under the FLC.
Meanwhile, PLC obtained a loan from Solidbank in the amount of P700k which
would pay for the taxes, duties and insurance premium on said lumber importation. As a
security for the said loan, petitioners Antonio and Teresa executed a real estate mortgage
(REM). They were allegedly made to sign blank forms purporting to be a deed of REM with
a principal amount of P2M. Solidbank agreed to renew PLC's loan for another P700k 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 P700k.
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.
The RTC ordered Solidbank to pay the petitioners and likewise nullified the
foreclosure proceedings and sale of the subject property and registered under MBTC.
However, the CA reversed and set aside the RTC ruling.
169
ISSUE
1) Was the extra-judicial foreclosure of the [REM] null and void due to the lack of
personal notice to petitioners of the two amended petitions for extra-judicial
foreclosure filed by Solidbank?
2) Did the mortgage contract include PLC's other loan obligations?
HELD
1) Yes. The Court held that 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. However, Solidbank twice amended the said petition for
extrajudicial 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
2) No. the stipulation extending the coverage of a mortgage to advances or loans

other than those already obtained or specified in the contract is valid and has been
commonly referred to as a "blanket mortgage" or "dragnet" clause.
Although a blanket mortgage or a dragnet clause is generally recognized as valid,

these other obligations, past or future, secured by the REM must be specifically described
within the terms of the mortgage contract.
The Deed of REM is clear and explicit that it only covers certain loans and other
accommodations obtained from Solidbank without reference to its past obligations such as
the FLC.
The terms of the Deed of REM are plain and clear that it only secures the loan or
credit accommodation granted by Solidbank to PLC upon the execution of PN and those
which may thereafter be granted, i.e., the renewal PN. No reference has been made in
the REM that past obligations of PLC, i.e., the FLC, is also secured by the same Deed of
REM. Further, the Deed of REM has a maximum limit of P2M. Plainly, the obligation under
FLC, i.e., US$168,000.00, exceeds this benchmark of P2M considering the exchange rate
prevailing in 1997.
Although the parties are not prohibited to secure the FLC with the Deed of REM,
the provisions thereof bear no evidence of their intention for its inclusion. Thus, in the
170
absence of clear and satisfactory evidence of a contrary intention, the Deed of REM does
not extend to PLC's past obligations specifically, the FLC.
171
GOLDWELL PROPERTY TAGAYTAY V. METROBANK
HERNANDO, J.
GR No. 209837 May 12, 2021
ARTICLE 2089, CIVIL CODE: INDIVISIBILITY OF A MORTGAGE
DOCTRINE
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 fulfilment 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.
FACTS
Petitioner Goldwell Properties Tagaytay, Inc. (Goldwell) obtained loans from
respondent Metropolitan Bank and Trust Company (Metrobank) in 2001 covered by several
promissory notes (PN) and secured by real estate mortgages and a continuing surety
agreement. Goldwell wants to reacquire some of the property mortgaged in Pasay by
paying partial amounts of the loan however Metrobank refuses. After many negotiations,
Goldwell asked the Bangko Sentral ng Pilipinas (BSP) for mediation however both parties
failed to come up with an agreement.
Goldwell pointed out that it was unfortunate that notwithstanding the

independent appraisal reports, Metrobank still refused to allow the partial release of the
collaterals. Based on the independent appraisal reports, and if partial release was done,
the remaining collateral would still be enough to secure their unpaid obligations.
Metrobank argues that the petitioners never intended to pay their obligation and
merely delayed the process when they feigned ignorance and tried to change previously
agreed upon terms. Metrobank denies petitioners' claim that it prevented them from
selling their mortgaged properties to interested third persons. The bank reasoned that its
refusal to partially release the mortgaged properties did not amount to a prohibition
against alienating the real properties sought to be released. If the bank agreed to this, it
would not have only resulted in a drastic reduction of its collateral cover but it would
have also been contrary to law in view of the indivisibility of mortgage pursuant to Article
2089 of the Civil Code.
The RTC ruled that petitioners could not force Metrobank to accept the revised
appraisal of the mortgaged properties long after the loans were granted and became past
due especially since they already assented to the bank's appraisal prior to the approval of
the loan applications. Upon appeal, the CA agreed with the RTC that Metrobank could not
172
be obligated to accept the petitioners' appraisal of the mortgaged properties, which was
conducted long after the loans were granted and became past due. It additionally noted
that during the trial, the petitioners were aware that the appraised values of their
properties were lower than the appraisal made by the independent appraisers. However,
the petitioners still proceeded to obtain loans from Metrobank and accepted the
valuations notwithstanding their alleged objections. Hence, Metrobank justifiably
required for additional collaterals in exchange for the release of the mortgage on the
Pasay properties.
ISSUE
Was the partial release of collaterals allowed?
HELD
No. Partial release of collaterals is not allowed.
Under Article 2089 of the Civil Code, 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.
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.
173
SPOUSES TORRECAMPO V. WEALTH DEVELOPMENT BANK CORP.
HERNANDO, J.
GR No. 221845 March 21, 2022
1 YEAR REDEMPTION PERIOD
DOCTRINE
As a general rule, a writ of possession may be issued to the purchaser in
extra-judicial foreclosure in two different instances, and based on two different sources:
(1) within the redemption period, in accordance with Sec. 7 of Act 3135, as amended; and
(2) after the lapse of the redemption period, based on the purchaser’s right of ownership.
Under the second instance, 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.
FACTS
Spouses Gemma and Jaime Torrecampo (Spouses Torrecampo) entered into a
housing loan agreement with Wealth Development Bank Corp (the Bank) which was
secured by a real estate mortgage over a property owned by the spouses. Spouses
Torrecampo defaulted on the payment of their loan, prompting the Bank to foreclose the
real estate mortgage extra-judicially under the provisions of Act 3135 or an Act to
Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real-Estate
Mortgages, as amended.
After the lapse of the one-year redemption period without any attempt of the
spouses Torrecampo to redeem the mortgaged property, the ownership of the lot was then
consolidated in favor of the Bank as purchaser in the auction sale and a new title was
issued in its favor. The Bank filed a petition for the issuance of a writ of possession after
the spouses’ refusal to vacate. The same was granted by the RTC and a notice to vacate
was issued by the sheriff.
When the spouses were evicted from the property, they moved to set aside the
extra-judicial foreclosure and cancel the writ of possession, arguing that the
extra-judicial foreclosure sale did not conform to the prescribed procedures as no notice
was sent to them. In addition, they alleged that the ex-parte petition for writ of
possession filed by the bank was fatally defective due to the lack of an allegation as to
the the posting and publication of the first and second notices of extra-judicial
foreclosure sale, nor the sending of such notices at their given address.
The bank countered that there was no violation of the real estate mortgage
contract as the same contained an acceleration clause which stipulated that the entire
obligation immediately becomes due and payable upon default. Thus, the bank had a right
to foreclose the mortgage, to have the property seized and sold, and to apply the
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proceeds to the obligation. They also followed the requirements on posting and
publication of the notice of extra-judicial foreclosure under Act 3135
The RTC denied the spouses’ motion to set aside the extra-judicial foreclosure sale
and cancel the writ of possession with prayer for damages. On appeal, CA denied the
appeal on the ground that Section 8 of Act 3135 is only applicable until the period of
redemption. Once redemption lapses and consolidation of the purchaser’s title ensues,
Act 3135 is no longer applicable. Hence, Spouses Torrecampo's recourse was misplaced.
ISSUE
Would the remedies provided under Act 3135 still apply even after the period of
redemption?
HELD
No. Act 3135 only applies when the one-year redemption period has not yet
lapsed.
A writ of possession may be issued to the purchaser in extra-judicial foreclosure in

two different instances, and based on two different sources: (1) within the redemption
period, in accordance with Sec. 7 of Act 3135, as amended; and (2) after the lapse of the
redemption period, based on the purchaser’s right of ownership. In the first instance,
under Act 3135, the purchaser in a foreclosure sale may apply for a writ of possession by
filing an ex parte motion under oath. Said Act provides for the remedy of the debtor to
contest the transfer of possession but only within the period of redemption.
Under the second instance, which is what happened in this case, a writ of
possession may also be issued after consolidation of ownership of the property in the
name of the purchaser. 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. 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.
Here, the provisions of Act 3135 no longer applied to the parties after one year
from the time the Bank registered the foreclosure sale. The Bank became the absolute
owner of the subject property as a matter of right. The writ was issued to the Bank as a
matter of right and not in accordance with the remedy in Act 3135. Thus, the CA was
correct in ruling that the remedy sought by the spouses under Act 3135 was misplaced.
Thus, the decision of the CA affirming the RTC in dismissing the motion to set
aside the extra-judicial foreclosure sale and cancel the writ of possession with prayer for
damages was affirmed.
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QUASI-CONTRACTS
SOLUTIO INDEBITI
LUMAUAN V. COMMISSION ON AUDIT
HERNANDO, J.
GR No. 218304 December 9, 2020
UNJUST ENRICHMENT AND SOLUTIO INDEBITI
DOCTRINE
The rules on return of disallowed amounts are based on the civil law principles of
unjust enrichment and solutio indebiti, and which apply regardless of the good faith of
the recipients. However, there may be certain situations which may constitute bona fide
exceptions to the application of solutio indebiti, one of which is that the disallowed
benefits were genuinely given in consideration of services rendered (or to be rendered),
negating the application of unjust enrichment and solutio indebiti. Other exceptions are
that there will be undue prejudice, or social justice considerations.
FACTS
The Board of Directors of the Metropolitan Tuguegarao Water District (MTWD), a
government-owned and controlled corporation (GOCC) issued board resolutions approving
the payment of accrued Cost of Living Allowance (COLA) to qualified MTWD employees for
the years 1992 to 1997. However, after post-audit, the payment of the COLA was
disallowed for lack of legal basis as the COLA was already deemed integrated into the
basic salary of the employees pursuant to Sec. 12 of RA 6758 or the Compensation and
Position Classification Act of 1989, and the Department of Budget and Management (DBM)
Corporate Compensation Circular (CCC) No. 10. Ninia Lumauan (Lumauan), the Acting
General of the MTWD, and a recipient of the disallowed COLA, was among the employees
held liable to return the paid amounts. She appealed the disallowance to the COA
Regional Director, who denied the appeal for lack of merit, as the payment of the COLA
was prohibited since it was already integrated into the basic salary. As to her defense of
good faith, the Regional Director found it bereft of merit as the payment of the benefit
had already been prohibited for a while. She again appealed to the COA-Commission
Proper (COA-CP), which also denied the appeal.
Petitioner insists that the payment of COLA should not have been disallowed
because the employees of GOCCs, whether incumbent or not, are entitled to COLA from
1989 to 1999 as a matter of right. And even if the payment of COLA was correctly
disallowed, petitioner argues that since the disbursement was made in good faith, she
cannot be made liable to refund the same. Respondent maintains that the disallowance
was proper because it was made pursuant to law and prevailing jurisprudence.
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ISSUE
Should Lumauan be held liable to return the amounts she received that were
disallowed?
HELD
Yes. Petitioner can be held personally liable for the disallowed benefit to the
extent of the amount she actually and individually received.
The Court laid down the rules on return of disallowed amounts in Madera v.
Commission on Audit:
1. If a Notice of Disallowance is set aside by the Court, no return shall be required
from any of the persons held liable therein;
2. If a Notice of Disallowance is upheld, the rules on return are as follows:
a. Approving and certifying officers who acted in good faith, regular
performance of official functions, and with the diligence of a good father
of the family are not civilly liable to return;
b. Approving and certifying officers who are clearly shown to have acted in
bad faith, malice, or gross negligence are solidarily liable to return only the
net disallowed amount;
c. Recipient - whether approving or certifying officers or mere passive
recipients - are liable to return the disallowed amounts respectively
received by them unless they are able to show that the amounts they
received were genuinely given in consideration of services rendered;
d. The court may likewise excuse the return of recipients based on undue
prejudice, social justice considerations, and other bona fide exceptions as
it may determine on a case to case basis.
Lumauan, as Acting General Manager of MTWD, was not the one who approved the
grant of the accrued COLA or certified for its funding availability. It was the Board of
Directors of MTWD through Board Resolution Nos. 2009-005346 and 2009-012247 that
approved the payment of the accrued COLA.
Petitioner is only a recipient or a passive payee of the allowance. She thus falls
under category 2(c) of the above-cited rules on return.
These rules on return are based on the civil law principles of unjust enrichment
and solutio indebiti, and which apply regardless of the good faith of the recipients.
However, there may be certain situations which may constitute bona fide exceptions to
the application of solutio indebiti, one of which is that the disallowed benefits were
genuinely given in consideration of services rendered (or to be rendered), negating the
application of unjust enrichment and solutio indebiti. Other exceptions are that there will
be undue prejudice, or social justice considerations.
In this case, however, the benefit that was wrongly received is accrued COLA, to
which Lumauan and the other recipients are not entitled to as it is already incorporated
in the standardized salary rates of government employees. It was also not proved that
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undue prejudice will result in asking them to return the amounts, or that there are social
justice considerations present.
178
TORTS AND DAMAGES
UNJUST ENRICHMENT
PNTC COLLEGES, INC. V. TIME REALTY, INC.
HERNANDO, J.
CONTRACTS AS LAW BETWEEN THE PARTIES; UNJUST ENRICHMENT
DOCTRINE
Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. The parties are allowed by law to enter
into stipulations, clauses, terms and conditions they may deem convenient which bind the
parties as long as they are not contrary to law, morals, good customs, public order or
public policy. There is unjust enrichment when a person unjustly retains a benefit to the
loss of another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience.
FACTS
PNTC Colleges, Inc. (PNTC) and Time Realty, Inc. (Time Realty) entered into a
Contract of Lease wherein Time Realty leased to PNTC the Extremadura Streets in
Sampaloc, Manila, from 2005 to 2007. As the term of the lease ended, the contract was
impliedly renewed. With the acquiescence of Time Realty, PNTC continued to occupy the
premises. Eventually, Time Realty notified PNTC of its intent not to extend the lease
anymore. PNTC informed Time Realty of its decision to terminate the lease.
Thereafter, PNTC commenced the transfer of its operations to its new site.
However, Time Realty alleged that PNTC did so without settling its outstanding rentals and
service charges. Hence, Time Realty ordered PNTC to cease its moving out operations,
then retained the remaining properties of PNTC in the premises.
Time Realty averred that its retention of PNTC's properties as security was in
accordance with the Contract of Lease. It contended that pursuant to the lease contract,
it had the right to withhold the properties to cover PNTC's payables and damages caused
to the property. By way of counterclaim, Time Realty prayed for the payment of the
unpaid rentals and service charges with interest. PNTC filed a Complaint for Delivery of
Personal Properties with Damages before the RTC alleging that it suffered serious losses
due to Time Realty's unjustified withholding of its properties. It insists that unjust
enrichment would result if Time Realty's counterclaims would be granted, especially when
proper accounting and valuation of the properties have not been made.
The RTC found that PNTC violated the Contract of Lease when it vacated the
premises without settling all of its obligations. Because PNTC did not tender rental and
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service charge payments since the lease was terminated, the RTC held that it did not
comply with the contract in good faith. Thus, Time Realty was justified in seizing PNTC's
properties. However, the CA reversed the ruling of the RTC and pointed out that a claim
for unjust enrichment fails when the entity who will benefit, like Time Realty, has a valid
right therein. It noted that Time Realty retained PNTC's personal properties because of
the unpaid obligations and that such withholding was made pursuant to the lease
contract.
ISSUE
Is there unjust enrichment to speak of when Time Realty withheld the properties
of PNTC because of the latter’s failure to settle its outstanding rentals and service
charges?
HELD
NO, there is no unjust enrichment to speak of when Time Realty withheld the
properties of PNTC because of the latter’s failure to settle its outstanding rentals and
service charges.
Time Realty only withheld the properties of PNTC pursuant to the Contract of
Lease, a provision which PNTC knowingly agreed to. In other words, Time Realty retained
the said properties as security to compel PNTC to pay and not to unduly enrich itself. The
circumstances in the instant case do not show that Time Realty unjustly benefitted from
the retention of the properties without valid basis, as it merely acted in accordance with
the lease contract to ensure recovery of what is due to it.
An assessment of the records affirms the finding that PNTC is liable to Time Realty
for rental arrears and service charges. PNTC even acknowledged this, thus its obligations
must be fulfilled in accordance with law and the lease contract. Particularly, PNTC
incurred liabilities because it violated the provisions of the Contract of Lease which it
willingly signed.
In view of this, it is well to remember that a contract is the law between the
parties. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. The parties are allowed by law to enter
into stipulations, clauses, terms and conditions they may deem convenient which bind the
parties as long as they are not contrary to law, morals, good customs, public order or
public policy.
PNTC incurred the obligations mainly because of the Contract of Lease which
states that Time Realty can retain PNTC's properties as security for unpaid rentals and
other charges. Even while Time Realty exercised its right under the contract, PNTC still
filed a Complaint to recover its properties. By doing so and yet still refusing to pay, PNTC
preempted Time Realty's option to file its own case in order to collect from the former. As
Time Realty was forced to resort to the measures specified in the contract to protect its
interests, its counterclaims should be granted. This is because these counterclaims are
180
intimately related to the subject matter of the Complaint, particularly the personal
properties of PNTC, which have been withheld and stored by Time Realty.
181
Classification of Torts
STRICT LIABILITY
THE REAL BANK (A THRIFT BANK), INC. V. MANINGAS
HERNANDO, J.
GR No. 211837 March 16, 2022
STRICT LIABILITY
DOCTRINE
The liability of the drawee bank is based on its contract with the drawer and its
duty to charge to the latter's accounts only those payables authorized by him. A drawee
bank is under strict liability to pay the check only to the payee or to the payee's order.
When the drawee bank pays a person other than the payee named in the check, it does
not comply with the terms of the check and violates its duty to charge the drawer's
account only for properly payable items.
FACTS
A complaint was filed by respondent Dalmacio Cruz Maningas (Maningas) against
petitioner The Real Bank (A Thrift Bank), Inc. (Real Bank), and Metropolitan Bank and
Trust Co. (Metrobank) for the recovery of a sum of money with damages.
Maningas, a Filipino-British national in London, who maintained a savings account

and a checking account with Metrobank, issued two crossed checks in favor of his friend
Rosaria as payment for a parcel of land, and the name written on the checks was
BIENVINIDO ROSARIA as payee. Rosaria instructed Maningas to mail the checks to Rosaria's
sister with a request to deposit the checks to Rosaria's account. A week later, Maningas
inquired if the checks were received; Rosaria said no, but the amount was already
deducted from Maningas' account.
A person named BIENVINIDO ROSARIA used the checks to open an account with Real
Bank, where the full amount was withdrawn. The impostor was referred by a retired
manager of the Real Bank branch for the opening of the account, and passed the
interview and ID checks. The opening was approved, the checks deposited, and money
withdrawn after clearing. Maningas and Metrobank tried to get the money from Real Bank,
but both were ignored. Maningas then filed a complaint, contending that both banks were
negligent.
Real Bank filed an answer, saying that Maningas had no legal standing to file;
Rosaria is the payee, and so is the real party in interest. Real Bank insisted that it
followed all rules and regulations following the opening of the account as well as the
deposit and encashment of checks. The impostor presented proofs of identity and the
amount was withdrawn after the checks were cleared by Metrobank. In its Answer,
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Metrobank argued that reimbursement should be directed solely against Real Bank, as it
was the latter's duty to verify the indorsements.
ISSUE
Is Real Bank liable to return the amount of checks to respondent Maningas?
HELD
Yes. It is clear that the instant case is a case of unauthorized payment to a person
other than the intended payee named on the check. Both the RTC and the CA determined
that the intended payee of the checks was indeed Rosaria. As found, the checks made
their way to the hands of an impostor who used the name BIENVENIDO ROSARIA for
encashment; the intended payee never received the checks.
The Court agrees with the CA that Maningas was not negligent at that time. The
RTC and the CA did not rule that Maningas was negligent on the issuance of the checks. As
the CA duly noted, the contention that Maningas was negligent is not supported by
evidence. The RTC also stated that "Real Bank did not offer any proof to countervail the
claim of Maningas that it was sheer inadvertence on his part" in misspelling the name of
Rosaria. In other words, Real Bank failed to overcome the presumption that Maningas is
not negligent in issuing the checks. Thus, the Court finds no reason to disturb these
findings of fact by the RTC and CA.
183
RES IPSA LOQUITUR
MAITIM V. AGUILA
HERNANDO, J.
GR No. 218334 March 21, 2022
RES IPSA LOQUITUR; VICARIOUS LIABILITY
DOCTRINE
As held in the case of Solidum Vs. People, 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."
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. To fend off vicarious liability, employers must submit
concrete proof, including documentary evidence that they complied with everything that
was incumbent on them.
FACTS
Jessica Maitim (Maitim) and Maria Theresa P. Aguila (Aguila) were residents of
Grand Pacific Manor Townhouse. Their respective townhouse units are separated only by a
driveway jointly used by the townhouse unit owners.
In 2006, Maitim was on board her vehicle registered under her name, which was
being driven by Restituto Santos (Santos), her driver.
While they were driving along the common driveway, Angela Aserehet P. Aguila
(Angela), the six-year old daughter of Aguila, was sideswiped by Maitim's vehicle. Angela
was dragged for about three meters resulting in her right leg being fractured. Maitim and
Santos did not immediately take Angela to the hospital after the incident. She was only
brought to St. Luke's Medical Center after the insistence of Angela's grandmother, Lirio
Aguila.
Angela was diagnosed to have complete fracture on the right leg. Thus, she
underwent an operation at Asian Hospital and was in a wheelchair for almost three
months.
The incident was referred to the barangay for conciliation but only Aguila
appeared. At this point, Aguila's actual expenses amounted to P169,187.32. Aguila then
sent demand letters to Maitim and Santos to no avail. Thus, Aguila filed an action for
damages based on quasi-delict before the Regional Trial Court (RTC).
184
In her defense, Maitim denied Aguila' s accusations and claimed that on the day of
the incident, while she was in her vehicle being driven slowly by Santos, Angela suddenly
came running and due to this, the latter's right leg was sideswiped and got fractured.
Furthermore, Maitim maintained that Santos, who was her driver for 12 years, was
driving with care at the time of the incident, and thus, Maitim should not be made liable
for vicarious liability because she exercised due diligence in the selection and supervision
of her employee.
RTC held that Santos was presumed to be negligent, applying the doctrine of res
ipsa loquitur, and that Maitim was vicariously liable for her failure to prove that she
exercised due diligence in the selection and supervision of her employee, Santos.
CA affirmed RTC ruling further stating that Maitim and Santos are solidarily liable
for damages, and that there was no contributory negligence on the part of Aguila and her
daughter. Aguila did not commit any negligence in allowing Angela to exit their door
towards the car garage since they were still within the premises of their residence, and
not on the street where vehicles ordinarily drive by.
ISSUE
1) Was the doctrine of Res Ipsa Locquitur properly applied?
2) Was the CA correct in holding Maitim vicariously liable for the incident?
HELD
1) Yes. RTC correctly applied the doctrine of res ipsa loquitur when it ruled that
Santos should be presumed negligent, and thus, had the burden of proving such
presumption otherwise.
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.
UCPB General Insurance Co. Vs Pascual Liner Inc. reiterated the applicability of res
ipsa loquitur 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.
185
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 vehicle causing the injury, arises, and he has
the burden of presenting proof to the contrary.
The court found Santos negligent based on the following grounds:

a) If Santos truly drove slowly and with care, he should have been able to have
ample opportunity to brake or otherwise steer the vehicle out of trouble, both
of which did not happen in this case;
b) Even if a running child were to get hit by a slow-moving vehicle, it is highly
unlikely that the same would result to injuries so severe that it required
surgery and afterwards being confined to a wheelchair for more than two
months; and
c) Angela would not have been 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.
Hence, due to the failure of Maitim to provide evidence to the contrary, the
presumption of negligence on the part of Santos stands and is deemed conclusive.
2) Yes. Maitim is Vicariously liable for the incident.
Under Article 2180 of the Civil Code, the obligation imposed by article 2176 is
demandable not only for one's own acts or omissions, but also for those of persons for
whom one is responsible. Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry.
Furthermore, jurisprudence held that "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. To fend off
vicarious liability, employers must submit concrete proof, including documentary evidence
that they complied with everything that was incumbent on them.
In this case, 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. Therefore, it is incumbent upon Maitim to prove that she exercised the diligence
of a good father of a family in the selection and supervision of her employee, Santos.
Hence, due to her failure to prove otherwise, she is vicariously liable with Santos for the
damages.
186
KINDS OF DAMAGES
HERNANDO, J.
GR No. 203348 July 06, 2020
DAMAGES
DOCTRINE
The person claiming moral damages must prove the existence of bad faith by clear
and convincing evidence for the law always presumes good faith. It is not enough that one
merely suffered sleepless nights, mental anguish, serious anxiety as the result of the
actuations of the other party. Invariably such action must be shown to have been willfully
done in bad faith or with ill motive. Mere allegations of besmirched reputation,
embarrassment and sleepless nights are insufficient to warrant an award for moral
damages.
FACTS
Pastora Ganancial (Ganancial) owed Betty Cabugao (Cabugao) the amount of
P130,000 to be payable within 3 years. To guarantee her indebtedness, Ganancial
entrusted to Cabugao the Title and Tax Declaration of a parcel of land located in
Pangasinan, which Ganancial owns in her name. Ganancial and Cabugao’s transaction
thereafter turned sour which prompted the parties to file respective lawsuits against each
other. Cabugao filed a case for foreclosure of real estate mortgage against Ganancial, the
latter in turn, filed against Cabugao a complaint for the deed of mortgage as null and
void. These cases were consolidated before the RTC.
Cabugao alleged that Ganancial executed a Deed of Mortgage over the subject
land as a collateral for her loan. Despite the lapse of three years from the date of the
mortgage and repeated demands, Ganancial failed and refused to pay the amount she
owed Cabugao.
Ganancial on the other hand, assailed the authenticity of the Deed of Mortgage.
She averred that she never executed the supposed Deed of Mortgage nor appeared for its
notarization. Ganancial only learned of the existence of the Deed of Mortgage for the first
time during her confrontation with Cabugao before the barangay captain regarding her
unpaid debt and where Cavugao threatened to foreclose the subject land.
The RTC awarded moral and exemplary damages in favor of Cabugao by concluding
that there was bad faith on Ganancial’s part.
The CA concurred with the disposition of the RTC.
187
ISSUE
Was the RTC correct in awarding moral damages to Cabugao?
HELD
No. According to Francisco v. Ferrer, the person claiming moral damages must
prove the existence of bad faith by clear and convincing evidence for the law always
presumes good faith. It is not enough that one merely suffered sleepless nights, mental
anguish, serious anxiety as the result of the actuations of the other party. Invariably such
action must be shown to have been willfully done in bad faith or with ill motive. Mere
allegations of besmirched reputation, embarrassment and sleepless nights are insufficient
to warrant an award for moral damages.
Cabugao made declarations in open court stating that she suffered anxiety and
sleepless nights. However, the court ruled that a robotic allegation that one “suffered
anxiety and sleepless nights," or a seemingly haphazard conversion of these disturbed
feelings into some pecuniary equivalent, without more, will not automatically entitle a
party to moral damages.
On the other hand, Ganancial's refusal to pay her indebtedness was grounded on
her firm belief that the subject Deed of Mortgage was fake. She was unwavering in her
claim that she had a sound cause against Cabugao, and the honesty in her legal pursuit is
reflected in the consistency of her allegations throughout the proceedings.
Ganancial's actuations as testified to by Cabugao cannot be seen as being

motivated by a corrupt purpose, some moral obliquity and conscious doing of a wrong, or
a breach of known duty through some other motive or interest or ill will that partakes of
the nature of fraud to merit an award of moral damages.
188
LAND BANK OF THE PHILIPPINES V. DEL MORAL INC.
HERNANDO, J.
GR No.187307 October 14, 2020
DETERMINATION OF TEMPERATE, NOMINAL DAMAGES
DOCTRINE
Temperate and Nominal damages are incompatible and thus, cannot be granted
concurrently.
FACTS
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 hectares. These parcels of land were originally
tobacco farmlands. 102 hectares of Del Moral's property were later placed under the
coverage of the agrarian reform program under P.D. No. 27.
On July 17, 1987, E.O. No. 228 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 corn 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 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. Del Moral filed a petition in 2002 before the RTC for the proper
determination of just compensation.
RTC ruled in favor of Del Moral, computing just compensation based on the recent
fair market value of the property, instead of the prevailing factors at the time of the
taking and fixed the amount of just compensation to P216,104,385.00. In addition RTC
awarded Del Moral P90 million as temperate damages and P10 million as nominal
damages. RTC also imposed a legal interest of six percent (6%) per annum to be computed
from the finality of judgement until the amount is fully paid.
CA affirmed the RTC's computation for just compensation but reduced the award
for temperate and nominal damages to P10 million and P1 million, respectively. The CA
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ratiocinated that Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law, should be applied in computing just compensation because its
passage into law came before the completion of Del Moral's agrarian reform process.
While the expropriation proceeding for the subject properties was initiated under P.D. No.
27, the process was still incomplete considering that the just compensation has yet to be
settled.
ISSUE
1) Is LBP bound by the final and executory judgement against the DAR regarding the
computation of just compensation and the award for temperate and nominal
damages?
2) Are the awards for temperate and nominal damages, as well as the legal interest
imposed are proper?
HELD
1) Yes. SC held that the CA correctly affirmed the findings of the RTC. The
argument of LBP with regards to mandatory adherence to the provisions of the law and
administrative orders must fail. LBP is bound to RTC's judgement and should be given due
respect as an exercise of its legal duty to arrive at a final determination of just
compensation.
2) No. SC held that the award for temperate damages may be recovered if
pecuniary loss has been suffered but the amount cannot be proved with certainty from
the nature of the case. The RTC and CA found that Del Moral was unable to utilize the 102
hectares of its landholdings after it was deprived of its possession in 1972. With the
passage of time, it is impossible to determine Del Moral's losses with 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 is deleted because temperate
and nominal damages are incompatible thus cannot be granted concurrently. Legal
interest of six percent (6%) per annum is affirmed until the judgement becomes final and
executory until judgement is wholly satisfied.
190
MANILA ELECTRIC CO. V. AAA CRYOGENICS PHILIPPINES, INC
HERNANDO, J.
GR No. 207429 November 18, 2020
AWARD OF DAMAGES
DOCTRINE
Under Article 2199 of the Civil Code, "[e]xcept as provided by law or by
stipulation, one is entitled to an adequate compensation only for such pecuniary loss
suffered by [them] as [they have] duly proved." Jurisprudence instructs that "[t]he
claimant must prove the actual amount of loss with a reasonable degree of certainty
premised upon competent proof and on the best evidence obtainable.
Under Article 2224 of the Civil Code, "temperate or moderate damages, which are
more than nominal but less than compensatory damages, may be recovered when the
court finds that some pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be provided with certainty.
FACTS
AAA Cryogenics Philippines, Inc. (AAA) filed an action for injunction and damages
against Manila Electric Company (Meralco) seeking to collect the amount of
P21,092,760.00 representing its losses due to power fluctuations and interruptions, among
other damages. AAA is engaged in the production of liquid forms of gasses and a stable
source of power was crucial to AAA's operations. AAA stopped paying its electrical bills
until its total accountabilities reached P13,657,141.56 after Meralco could not remedy the
situation despite their reports. Now, Meralco filed a complaint for collection of a sum of
money representing the AAA’s unpaid electric bill.
RTC found that Meralco failed to provide any concrete explanation as to the root
cause of the power fluctuations and interruptions and found Meralco liable for actual
damages arising from its failure to deliver constant energy supply to AAA amounting to
P21,092,760.00, for exemplary damages amounting to P300,000.00 and attorney’s fees
amounting to P 200,000.00. RTC held AAA liable for its unpaid electricity bills amounting
to P10,453,477.55, as well as attorney's fees amounting to 20% of the unpaid bills. The
RTC further ordered the parties' respective liabilities to be offset.
CA affirmed decision of RTC, it further affirmed the award of actual damages and
exemplary damages to AAA but removed attorney’s fees.
According to Meralco, AAA failed to prove the occurrence of the power

fluctuations and interruptions, and that the same were caused by Meralco. There was no
evidence of fraud, bad faith, or wanton disregard of its contractual obligations to warrant
the RTC's award of exemplary damages. In addition, Meralco argues that it is entitled to
attorney's fees in view of AAA's unjustified refusal to pay its bills.
191
AAA argued that the occurrence was adequately supported by evidence. AAA avers
that exemplary damages was proper considering Meralco's wanton disregard of its
responsibilities. As to the attorney's fees, the award of attorney's fees to both parties was
deleted for having no factual or legal basis.
ISSUE
1) Is AAA entitled to actual damages for losses suffered because of the power
fluctuations and interruptions caused by Meralco
2) Should Meralco be liable for exemplary damages?
3) Should Meralco be entitled to attorney's fees?
HELD
1) Yes. The occurrence of the power fluctuations and interruptions is
well-supported by evidence. The findings were adequately supported not only by the
testimony of Cruz, but also by Meralco's conduct. Power fluctuations and interruptions
occurred, and were caused by Meralco. However, AAA failed to prove with a reasonable
degree of certainty the amount of actual damages it suffered despite the occurrence of
the power fluctuations and interruptions in the electricity delivered by Meralco.
Under Article 2199 of the Civil Code, “except as provided by law or by stipulation,
one is entitled to an adequate compensation only for such pecuniary loss suffered by
[them] as [they have] duly proved." Jurisprudence instructs that "[t]he claimant must
prove the actual amount of loss with a reasonable degree of certainty premised upon
competent proof and on the best evidence obtainable.
AAA is still entitled to three-fourths of AAA's claim, or P15,819,570.00.Meralco

cannot escape liability for the reason of absence of reasonable degree of certainty. Under
Article 2224 of the Civil Code, "temperate or moderate damages, which are more than
nominal but less than compensatory damages, may be recovered when the court finds
that some pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be provided with certainty."
2) Yes. The award of exemplary damages was properly awarded. Despite Meralco's
repeated assurance of better electric supply, and despite knowledge of the serious
production losses experienced by AAA due to the power fluctuations and interruptions, it
still failed to provide any remedy, in wanton disregard of its contractual obligation to
deliver energy "at reasonably constant potential and frequency." As a public utility vested
with vital public interest, Meralco should be reminded of its "obligation to discharge its
functions with utmost care and diligence.
3) No. Deletion of attorney's fees is proper. Jurisprudence instructs that "the

award of attorney's fees is an exception rather than the general rule; thus, there must be
compelling legal reason to bring the case within the exceptions provided under Article
2208 of the Civil Code to justify the award." We simply find no compelling legal reason
here.
192
PHILAM HOMEOWNERS ASSOCIATION, INC V. DE LUNA
HERNANDO, J.
GR No. 209437 March 17, 2021
NOMINAL DAMAGES
DOCTRINE
When the dismissal is based on a just cause under Article 282 of the Labor Code,
such as loss of trust and confidence, but the termination was procedurally infirm, the
sanction against the employer for such a violation is tempered. This is because the
dismissal was initiated by an act imputable to the employee compared to when the
dismissal was initiated by the employer through the enumerated authorized causes under
the Labor Code, where the sanction is stiffer and the amount of nominal damages is
higher.
FACTS
During an audit of PHAI's books of accounts sometime in September 2008, several
irregularities were discovered such as issuance of unauthorized official and provisional
receipts, unrecorded and undeposited collections, and encashment of personal checks.
The Investigating Committee disclosed that De Luna and Bundoc were involved in said
fraudulent activities particularly in the disbursement of PHAI's funds. On January 20,
2009, De Luna and Bundoc participated in the probe before the investigating committee.
During the audit process, Bundoc took a leave of absence for 30 days. On February
17, 2009, PHAI required an explanation from Bundoc regarding the issuance of
unauthorized provisional receipts. However, as there was a standing instruction from
Bundoc not to receive any correspondence from PHAI, the letter was sent through
registered mail instead. PHAI then terminated the services of Bundoc on February 26,
2009.
After submission of the final audit report, PHAI required De Luna and Bundoc to
appear before the investigating committee and to explain the irregularities and anomalies
as well as to account for the total amount misappropriated. PHAI asserted that despite
said opportunity given to De Luna and Bundoc, they still failed to participate and attend
in the investigation.
On May 23, 2009, PHAI's Board of Directors issued a Memorandum addressed to De

Luna demanding payment and informing her of her dismissal from service by reason of
dishonesty, misappropriation and malversation of funds. De Luna and Bundoc then
initiated separate complaints, contending that they were subjected to an investigation
and were made to answer questions without the documents supporting the alleged
irregularities they committed.
193
In an April 30, 2010 Decision, the Labor Arbiter found that the termination of both
De Luna and Bundoc was legal. On July 26, 2010, the NLRC affirmed in toto the findings of
the Arbiter. De Luna and Bundoc appealed the case to the NLRC, claiming, among others
that they were not afforded due process before their termination.
The appellate court affirmed the ruling of the NLRC with modification as to the
monetary award. It found that PHAI failed to comply with the procedural due process
requirement as regards Bundoc. The letter informing Bundoc that she could no longer
transact business on behalf of PHAI and that she had to turn over the keys of PHAI's
properties did not constitute as notice of her infractions. This procedural misstep
rendered PHAI liable to pay Bundoc P30,000.00 as nominal damages.
ISSUE
Did the CA err in modifying the NLRC Decision insofar as the award of nominal
damages?
HELD
No. The employer must furnish the employee with two written notices before the
termination of employment can be effected: (1) the first apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the second informs
the employee of the employer's decision to dismiss him. The appellate court found that
PHAI failed to prove that Bundoc was notified and given the chance to explain and to
refute the accusations against her. Bundoc was not notified of the charges leveled against
her or of her termination. This clearly amounted to a violation of Bundoc's right to
procedural due process.
For PHAI's failure to accord due process in terminating her employment, Bundoc is
entitled to nominal damages. The CA correctly awarded P30,000.00 in favor of Bundoc in
line with the prevailing jurisprudence. When the dismissal is based on a just cause under
Article 282 of the Labor Code, such as loss of trust and confidence, but the termination
was procedurally infirm, the sanction against the employer for such a violation is
tempered; hence, the award of P30,000.00 instead of P50,000.00 as nominal damages.
This is because the dismissal was initiated by an act imputable to the employee compared
to when the dismissal was initiated by the employer through the enumerated authorized
causes under the Labor Code, where the sanction is stiffer and the amount of nominal
damages is higher.
194
KLM ROYAL DUTCH AIRLINES V. TIONGCO
HERNANDO, J.
GR No. 2121367 October 04, 2021
DAMAGES: ART. 2220, CIVIL CODE
DOCTRINE
Article 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are justly
due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith.
The award of moral damages is proper to enable the injured party to obtain means
of diversion or amusement that will serve to alleviate the moral suffering they underwent
because of another's culpable action.
FACTS
Respondent Dr. Jose M. Tiongco (Dr. Tiongco), a prominent surgeon, was invited by
the United Nations - World Health Organization (UN-WHO) to be a keynote speaker in
Almaty, Kazakhstan. There being no direct flight from Manila to Kazakhstan, Dr. Tiongco
had to fly to Singapore via Singapore Airlines where he would then take two connecting
flights to Almaty on board petitioner KLM.
Dr. Tiongco arrived at the Ninoy Aquino International Airport in Manila and went to
the counter of Singapore Airlines and checked-in a suitcase. 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. KLM flight departed as
scheduled. Dr. Tiongco arrived at Amsterdam the next day in time for his third flight to
Frankfurt, Germany. However, his flight to Frankfurt on board KLM departed from
Amsterdam 45 minutes late. As a result, Dr. Tiongco missed his fourth flight from
Frankfurt to Almaty.
Upon his arrival in Frankfurt, Dr. Tiongco 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. Dr. Tiongco then boarded Lufthansa German Airlines (Lufthansa) from
Frankfurt to Istanbul.
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. The Turkish
Airlines personnel then instructed its passengers to board the plane. So as not to miss his
flight, Mr. Bey told Dr. Tiongco to go on board without his suitcase. When Dr. Tiongco
arrived in Almaty, nobody from KLM, Lufthansa, or Turkish Airlines assisted him. His
suitcase was still nowhere to be found. Dr. Tiongco then delivered his lecture without any
of his visual aids and despite being inappropriately attired.
195
Dr. Tiongco returned to the Philippines. Three months passed and still there was no
news about what happened to his luggage. Thus, Dr. Tiongco filed a Complaint for
Damages and Attorney's Fees against KLM, Turkish Airlines, Singapore Airlines, and
Lufthansa.
RTC ruled that KLM is solely liable for the damages suffered by Dr. Tiongco on
account of his lost suitcase. KLM failed to exercise extraordinary care in handling the
suitcase of Dr. Tiongco. The appellate court agreed with the trial court on KLM's liability
for breach of contract of carriage. However, it modified the awards of damages for being
excessive.
ISSUE
Were KLM's actions attended by gross negligence, bad faith and willful misconduct
to justify the award of moral and exemplary damages?
HELD
Yes. KLM's actions were attended by gross negligence, bad faith and willful
misconduct to justify the award of moral and exemplary damages.
The Supreme Court agrees with the RTC and the CA that KLM acted in bad faith. It
is undisputed that Dr. Tiongco's luggage went missing during his flight, Even after his
return to the Philippines, Dr. Tiongco's suitcase was still missing. Nobody from KLM's
personnel updated him on what happened to the search. It was only when Dr. Tiongco
wrote KLM a demand letter that the latter reached out to him asking for time to
investigate the matter. Yet, it did not even notify him of the result of the purported
investigation.
because of another's culpable action. Here, KLM displayed indifference to the plight and
inconvenience suffered by Dr. Tiongco when he lost his luggage. It made empty promises
that his luggage would be travelling with him and even failed to inform Dr. Tiongco that
his suitcase had been found. Moreover, it did not return the luggage to him even after it
was found. Undeniably, KLM's bad faith, gross negligence, and lack of care warrant the
award of moral damages in accordance with Article 2220 of the Civil Code, to wit:
Article 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are justly
due. The same rule applies to breaches of contract where the defendant acted
196
MANILA INTERNATIONAL PORTS TERMINAL, INC. V. PHILIPPINE PORTS AUTHORITY
HERNANDO, J.
GR No. 196199 December 07, 2021
ACTUAL, NOMINAL, AND EXEMPLARY DAMAGES
DOCTRINE
Under Articles 2199 and 2200 of the Civil Code, actual or compensatory damages
are those awarded in satisfaction of or in recompense for loss or injury sustained. They
proceed from a sense of natural justice and are designed to repair the wrong that has
been done.
There are two kinds of actual or compensatory damages: one is the loss of what a
person already possesses, and the other is the failure to receive as a benefit that which
would have pertained to him. In the latter instance, the familiar rule is that damages
consisting of unrealized profits, frequently referred to as "ganacias frustradas" or "lucrum
cessans," are not to be granted on the basis of mere speculation, conjecture, or surmise,
but rather by reference to some reasonably definite standard such as market value,
established experience, or direct inference from known circumstances.
Depreciated replacement cost approach is the "method of valuation which provides

the current cost of replacing an asset with its modern equivalent asset less deductions for
all physical deterioration and all relevant forms of obsolescence and optimisation."
Depreciated replacement cost is a method of appraising assets that are usually not
exposed to the open market.
FACTS
Presidential Decree No. 634 granted the franchise for Manila International Ports
Termina (MIPTI) to build, operate, and maintain port related services at North Harbor. It
was later amended by Presidential Decree No. 1284 where MIPTI was given permission to
operate and manage all buildings,in the Manila International Ports Terminal Complex
(MIPTC) at North Harbor for a period of twenty-five (25) years, unless earlier modified,
suspended, or terminated. MIPTI began operating at the MIPTC on July 1, 1979, under an
interim procedure promulgated by PPA.
MIPTI and PPA executed a Memorandum of Agreement providing for the rules in the
operation and management of the MIPTC at North Harbor as well as detailing the rights
and obligations of the parties under the franchise.
Thereafter, Executive Order (EO) No. 30 revoked MIPTI's franchise due to
substantial violations of the MOA, and authorized PPA to undertake the cargo-handling
operation at North Harbor. Consequently, PPA sent a letter to MIPTI informing it of its plan
to take over its business and properties. It soon handed the cargo-handling operation to
Metrostar.
197
MIPTI filed a civil action for damages against PPA, alleging that PPA violated its
rights to due process of law and non-impairment of contract when it recommended the
revocation of its franchise without first conducting an investigation or inquiry on the
alleged complaints, there should be a notice and hearing before the same could be
suspended or revoked; and that PPA's transfer of the cargo-handling operation to
Metrostar and the latter's continued use of its seized properties were illegal.
The RTC concluded that EO 30 was unconstitutional and invalid, and PPA's takeover
of MIPTI's business operations, facilities, and equipment was illegal; hence, MIPTI is
entitled to the reliefs it prayed for.
The CA denied the appeal and affirmed with modification the RTC Decision. It
held that MIPTI was denied due process of law when its franchise to operate port services
was arbitrarily revoked and its properties and equipment unjustly seized. The CA
observed that there was a predetermined plan to drive MIPTI out of business based on the
swift turn of events and even categorized the same as injustice.
The CA found MIPTI entitled to its claims. However, since it was no longer practical
to order the restoration or restitution of the equipment and other properties, the CA
adjudged MIPTI entitled to actual or compensatory damages in the modified amount of
P19,049,710.00. The CA found the amount of P180,000,000.00 awarded by the RTC not
proper as the same was based on the current price of the equipment. On the other hand,
the CA opined that depreciation of the equipment must be considered, and it also noted
that MIPTI itself recorded in its financial statement ending December 31, 1986 the value
of its equipment at P19,049,710.00.
Anent the award for lost income, the CA opined that the RTC should not have
pegged the amount based on MIPTI's gross income, but on its net income after tax which
specifically determines the company's profitability. Neither should the same be based on
ICTSI's profitability since MIPTI and ICTSI do not stand on equal footing. Thus, as
recomputed, the CA awarded MIPTI the amount of P250,000.00 per month representing
lost profits. The CA deleted the award for rentals based on its finding that the equipment
was no longer serviceable. On the other hand, the CA sustained the awards for exemplary
damages, attorney's fees, and costs of suit.
ISSUE
Did the CA correctly affirm with modifications the award of damages?
HELD
In the Unrealized Profits, NO, Since the total amount of rentals exceeds
P19,049,710.00 by P15,646,933.27, it follows that the CA's award of P19,049,710.00
should be deleted. Further, as an equitable relief, MIPTI should return the excess to the
government through PPA. Here, the RTC ordered PPA to pay MIPTI unrealized profits after
it determined that the latter was unable to operate and earn income from its operations
due to the unlawful takeover. This was affirmed by the CA. However, the RTC and the CA
198
seem to have overlooked the fact that the takeover was ordered by President Aquino; it
was not undertaken by PPA on its own authority. Given that the validity of EO 30 is
presumed, PPA cannot be faulted for merely enforcing it. Thus, it cannot be held liable
for the profits MIPTI failed to obtain by reason of the said enforcement.
In Nominal Damages, YES. As previously discussed, there was a violation of MIPTI's

rights under Section 4 (c) of PD 1284 and Section 14.01 of the MOA. This entitles MIPTI to
nominal damages pursuant to Article 2221 of the Civil Code. Given the value of the
properties in this case, amounting to millions of pesos, the court finds the amount of 1
Million peso to be reasonable.
In the Interest, NO. The court reduced the interest imposed after finality of the
decision from 12% to 6% since PPA is correct in pointing out that the accrued interest
should be reckoned not from the date of filing of the complaint but from the date of the
RTC decision when the right to claim and the amount of damages can be established with
reasonable certainty.
199
RICO V. UNION BANK OF THE PHILIPPINES
HERNANDO, J.
GR No. 210928 February 14, 2022
KINDS OF DAMAGES
DOCTRINE
Article 2234 of the NCC, While the amount of the exemplary damages need not be
proved, the plaintiff must show that he is entitled to moral, temperate or compensatory
damages before the court may consider the question of whether or not exemplary
damages should be awarded. In case liquidated damages have been agreed upon, although
no proof of loss is necessary in order that such liquidated damages may be recovered,
nevertheless, before the court may consider the question of granting exemplary in
addition to the liquidated damages, the plaintiff must show that he would be entitled to
moral, temperate or compensatory damages were it not for the stipulation for liquidated
damages
It is also required that a culpable act or omission was factually established, that
proof that the wrongful act or omission of the defendant is shown as the proximate cause
of the damage sustained by the claimant and that the case is predicated on any of the
instances expressed or envisioned by Arts. 2219 and 2220 of the Civil Code.
FACTS
Union Bank issued Rico a Union Bank Visa credit card with a credit limit of Php
150,000.00 and cash advance limit of Php 75,000.00.
Rico filed a complaint for damages before the RTC claiming that Union Bank
negligently handled his credit card account. He alleged that Union Bank: (a) charged him
in an amount for “U-Protect Premium Plan,” an insurance coverage against unauthorized
use of others in case of loss or theft; (b) charged him USD20.00 as Expedia Service Fees in
his Statement of Account (SOA) dated June 10, 2005; (c) declined his transaction with
Tiger Airways when he used the credit card to purchase airline tickets online on June 18,
2005; (d) imposed late payment charges and interests despite having paid his credit car
bill for SOA dated May 2005 on June 15, 2005; (e) imposed an annual membership fee
despite its guarantee that he would not be charged thereof; (f) charged him an amount of
Php30,076.79 in his SOA dated October 15, 2005 when he only used his credit card to pay
for a Php347.00 meal in a Sushi restaurant during the billing period.
Rico also averred that Union Bank dishonored his credit card for alleged
non-payment of an overdue account which consequently caused his card to be declined
when he tried to pay his bill at a restaurant in November 2005. Rico claimed that his SOA
dated November 15, 2005, stated a balance of Php 1,228.84 when he did not use his
credit card during the covered billing period. Even if Union Bank reversed all charges and
admitted its error, Rico claims that he suffered embarrassment, social humiliation, mental
200
anguish, serious anxieties, besmirched reputation, and wounded feelings when his card
was dishonored.
Union Bank asserted that it handled Rico’s credit card account diligently in good
faith and claimed that the “U-Protect Premium Plan” is automatically offered to
cardholders who meet certain criteria. However, considering Rico’s request for
cancellation sent via mail, it took time for the bank to process the request. Thus, Rico
was still billed for the insurance coverage in the meantime.
As regards the Expedia Service Fee, Union Bank averred that Rico was
electronically charged thereof as a result of his online purchase. Rico’s credit card was
declined when he tried to purchase a ticket online with Tiger Airways because his account
was already in “past due” status. Union Bank also alleged that Rico only paid his May 2005
SOA on June 14, 2005, which was way past its due date. Union Bank added that the annual
membership fee was waived only for the first year after its issuance.
Moreover, the SOA dated October 16, 2005, still included the transaction with
Tiger Airways amounting to Php 20,376.79, in addition to the Php 347.00 he paid in a Sushi
restaurant because although the said airline transaction was disputed, it had not yet been
resolved when October 16, 2005, SOA was issued. However, Rico only paid Php 347.00 for
his SOA dated October 16, 2005, instead of the minimum payment due of Php 500. Thus,
when Rico used his credit card on November 20, 2005, it was dishonored because his
account was already in “past due” status for failure to pay the minimum amount due.
Union Bank averred that it should not be held liable for damages since it was Rico
who failed to comply with the terms and conditions of the credit card and prayed for
attorney’s fees and litigation expenses against Rico.
RTC ruled that the dishonor of Rico’s credit card on November 20, 2005 was
without any valid reason and Union Bank’s contention regarding Rico’s failure to pay the
minimum amount due was untenable. The RTC also found that Union Bank’s wrongful act
was accompanied by bad faith and done in a reckless manner.
The CA then affirmed RTC’s Decision with modification as to the amount of

damages awarded.
ISSUE
1) Is Rico entitled to moral damages, exemplary damages, and attorney’s fees due to
the alleged gross negligence of Union Bank when it dishonored Rico’s credit card
purchase request, which caused him embarrassment and humiliation in the
restaurant?
2) Is Union Bank obliged to approve all the purchase requests of Rico by virtue of the
issuance of the credit card?
HELD
NO to both issues.
201
A credit card is a form of credit accommodation granted by the credit card
company to the cardholder for the latter’s use in the purchase of goods and services. The
contract between the card company and the credit card holder is a simple loan
arrangement. In line with Article 1319 of the Civil Code, the creditor-debtor relationship
herein arises when the cardholder uses his or her credit card to pay for purchases and
when the card company approves the purchase request entering into a binding loan
agreement.
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. When Union Bank issued a Visa credit card to Rico, the parties entered into a
contractual relationship governed by the terms and conditions found in the card
membership agreement which constitute the law between the parties. Hence, in case of
breach thereof, damages may be recovered if any of the parties is shown to have acted
The Terms and Conditions did not expressly state that Union Bank would honor all
purchase requests of Rico at all times. Although the credit card company may disapprove
the card holder’s credit card transaction, it shall do so justifiable and within the bounds
of laws and the credit card membership agreement. Moreover, a perusal of records would
show that Union Bank disapprved Rico’s use of credit card on November 20, 2005 due to
the latter’s failure to pay the minimum amount due of his SOA.
The Court found that the disapproval of Rico’s credit card on November 20, 2005
as justified and done in good faith. Union Bank neither breached its contract with Rico
nor acted with willful intent to cause harm when it revoked Rico’s credit card privileges
when he failed to pay the minimum amount due on his SOA.
Nobody can be faulted for Rico’s alleged humiliation or embarrassment but

himself. It is also required that a culpable act or omission was factually established, that
of the damage sustained by the claimant. 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.
202
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doctrines
CIVIL LAW
REPUBLIC V. KIKUCHI
G.R. NO. 243646 |JUNE 22,2022
SUMMARY & DOCTRINE

Jocelyn filed a Petition for judicial recognition of foreign divorce. The Republic of
the Philippines, argued that Jocelyn failed to comply with the requirements of
authentication and proof of documents concerning the Acceptance Certificate and the
Authentication by the Philippine Embassy.
DOCTRINE: Before a foreign divorce decree can be recognized by the court, the
party pleading it must first prove the fact of divorce and its conformity to the foreign law
allowing it. As both of these purport to be official acts of a sovereign authority, the
required proof are their official publications or copies attested by the officers having
legal custody thereof, pursuant to Section 24, Rule 132 of the Rules of Court.
NOTE
The petitioner submitted a Divorce Report (not a judgement of divorce) to prove
the fact of divorce. While both the trial and appellate courts rejected the document for
not being a "divorce judgement," the Court accepted it considering that the divorce was
coursed not through Japanese courts, but through the Office of the Mayor ofFukuyama
City which issues such document with respect to divorce filings.
Void Marriages
SANTOS-MACABATA V. MACABATA, JR.
G.R. NO. 237524 |APRIL 6, 2022
NULLITY OF MARRIAGE - ARTICLE 36
SUMMARY & DOCTRINE

Spouses Bebery Macabata (petitioner) and Flaviano Macabata (respondent) were
working as factory workers in separate electronic companies in Taiwan and subsequently
dated and married. Flaviano would later work in Japan while Bebery stayed in the
Philippines.
DOCTRINE: This Court commiserates with the parties who find themselves in an
unsatisfactory marriage, but the Court emphasizes that a petition for declaration of
204
nullity of marriage on the ground of psychological incapacity under Article 36 of the
Family Code is limited to cases where there is a downright incapacity or inability to
assume and fulfil the basic marital obligations, not a mere refusal, neglect or difficulty,
much less, ill will, on the part of the errant spouse. Expert opinion may be persuasive
but, ultimately, the totality of evidence must show that an adverse integral element in
the personality structure of the respondent effectively incapacitates him from accepting,
and thereby complying with his essential marital obligations, and such incapacity must be
proven to exist prior to, or at the time of celebration, of the marriage of the parties.
Absent any such clear and convincing evidence, the petition must be denied.
NOTE
The case is about the importance of totality of evidence when proving
PUGOY-SOLIDUM V. REPUBLIC
G.R. NO. 213954 | APRIL 20, 2022
NULLITY OF MARRIAGE
SUMMARY & DOCTRINE

Hannamer, the petitioner, filed for a nullity of marriage under Art. 36 of the
Family Code against her husband, Grant. The evidence presented were: 1) her testimony
on her behalf; and 2) testimony from an expert.
DOCTRINE: The expert testimony is not always mandatory as long as the totality
of evidence is sufficient to sustain a finding of psychological incapacity. The totality of
evidence must still be sufficient to prove that the incapacity was grave, incurable and
existing prior to the time of the marriage.
NOTE
In the Tan-Andal case, it further enunciates that psychological incapacity is not a
mental incapacity nor a personality disorder that must be proven through an expert
witness. It also modified the requirement on “incurabilty” that is must now be incurable,
not in the medical, but in the legal sense.
205
CARULLO-PADUA V. PADUA
G.R. NO. 208258 | APRIL 27, 2022
VOID MARRIAGES
SUMMARY & DOCTRINE

Maria and Joselito were married in a civil ceremony on February 5, 1982. On July
17, 1997, Maria filed a petition for declaration of absolute nullity of their marriage based
on Article 36 of the Family Code. Maria alleged that at the time of the celebration of
their marriage, Joselito was psychologically incapacitated to perform his marital
obligations due to alleged sexual molestation and failure of providing financial support.
Dr. Villegas testified that she diagnosed Joselito with a personality disorder of a sexual
deviant or perversion based on Maria's narrations.
DOCTRINE: Expert testimony or the testimony of a psychologist/psychiatrist is no

longer required to prove psychological incapacity. Ordinary witnesses who have been
present in the spouses' lives before they contracted marriage may testify on their
observations as to the incapacitated spouse's behaviour. What is important is that the
totality of evidence is sufficient to support a finding of psychological incapacity.

environment while growing up which may have triggered one's particular behaviour. At any

REPUBLIC V. PONCE-PILAPIL
G.R. NO. 219185 | NOVEMBER 25, 2020
DECLARATION OF PRESUMPTIVE DEATH
SUMMARY & DOCTRINE

Josephine Ponce-Pilapil filed a petition to have her husband, Agapito Pilapil, Jr.,
declared presumptively dead, as he had been absent for six years, and upon inquiring with
his only surviving relative, and with their friends, all of them had no idea where he went,
or where he was.
206
DOCTRINE: One of the requisites for the grant of a petition for declaration of
presumptive death under Art. 41 of the Family Code is that the present spouse has a
well-founded belief that the absentee spouse is dead. This requisite is met upon showing
of proper and honest-to-goodness inquiries and efforts to ascertain not only the absent
spouse’s whereabouts, but also whether they are still alive or already dead. The mere
fact of the spouse’s absence is not enough to yield a presumption of his or her death.
PULIDO VS. PEOPLE

G.R. NO. 220149 | JULY 27, 2021
EFFECT OF DEFECTIVE MARRIAGE, ART. 4 (FAMILY CODE)
SUMMARY & DOCTRINE

Luisito G. Pulido (Pulido) and Rowena U. Baleda (Baleda) were charged before the
RTC with Bigamy in an Information filed by complainant Nora S. Arcon (Arcon). Pulido
married Nora Arcon in 1983, however, he stopped coming home to the conjugal dwelling
and began an affair with Baleda and eventually married her in 1995.
DOCTRINE: Other than for purposes of remarriage, no judicial action is necessary

to declare a marriage an absolute nullity. For other purposes, such as but not limited to
determination of heirship, legitimacy or illegitimacy of a child, settlement of estate,
dissolution of property regime, or a criminal case for that matter, the court may pass
upon the validity of marriage even in a suit not directly instituted to question the same so
long as it is essential to the determination of the case.
NOTE
In this case, Pulido's marriage with Arcon was celebrated when the Civil Code was
in effect while his subsequent marriage with Baleda was contracted during the effectivity
of the Family Code. Hence, Pulido is required to obtain a judicial decree of absolute
nullity or his prior void ab initio marriage but only for purposes of remarriage. As regards
the bigamy case, however, Pulido may raise the defense of a void ab initio marriage even
without obtaining a judicial declaration of absolute nullity.
When the prior marriage was contracted prior to the effectivity of the Family Code
while the subsequent marriage was contracted during the effectivity of the said law, the
Court recognizes the retroactive application of Article 40 of the Family Code but only
insofar as it does not prejudice or impair vested or acquired rights.
207
Domestic Administrative Adoption and Alternative Child Care Act (R.A. No.
11642)
SPOUSES PARK V. LIWANAG
G.R. NO. 248035 | NOVEMBER 27,2019
DOMESTIC ADMINISTRATIVE ADOPTION AND ALTERNATIVE CHILD CARE ACT
SUMMARY & DOCTRINE

Spouses Park and Lee are American Citizens residing in the Philippines. They
applied for a Petition for Adoption with Change of name for their adopted child, Innah.
However, due to their citizenship, the RTC ruled that the proper petition should be an
inter-country adoption.
DOCTRINE: Any alien possessing the same qualifications for Filipino nationals may
adopt under the Domestic Adoption Act. Provided, that he has been living in the
Philippines for at least three (3) continuous years prior to the filing of the petition for
adoption and maintains such residence until the adoption decree is entered.
PROPERTY
Ownership
GEMINA VS. HEIRS OF ESPEJO, JR.
G.R. NO. 232682 | SEPTEMBER 13, 2021
OWNERSHIP
SUMMARY & DOCTRINE

Gemina claimed to be the owner of a parcel of land located in Batasan, Quezon
City while the Heirs of Espejo were claiming to be owners of the same both parties
presenting the evidence of their claim. Due to the failure of the counsel of Gemina to
appear in court, an order allowing the Heirs of Espejo to present their evidence ex parte
was made by the lower courts therefore denying Gemina no chance to present his
evidence.
DOCTRINE: When the party-defendant is present, the absence of his counsel

during pre-trial shall not ipso facto result in the plaintiffs ex parte presentation of
evidence.
The identity of the property and the title of the claimant must be ascertained in
go action to recover possession of real property pursuant to Article 434 of the Civil Code.
208
NOTE
Hornbook Doctrine - the entitlement to the possession of real property belongs to
its registered owner.
Quieting of Title
HEIRS OF EÑANO V. SAN PEDRO CINEPLEX PROPERTIES, INC.
G.R. NO. 236619 | APRIL 6, 2022
QUIETING OF TITLE
SUMMARY & DOCTRINE

Jennifer Eñano Bote, daughter of Manuel H. Eñano (Manuel), was the
representative of the latter's legal heirs. She authorized her husband Virgilio A. Bote
(Virgilio) through a Special Power of Attorney to file a Complaint for Quieting of Title
with Damages involving a parcel of land located at Barangay Landayan, San Pedro,
Laguna (subject property).
DOCTRINE: In an action for quieting of title, the objective is for the competent
court to remove the cloud by determining the rights of the parties so that the ones
entitled to the subject property may exercise said rights without fear, disturbance, or
interference from those who have no right over the same.
From the foregoing provisions, two requisites must be established in order that
a complaint for quieting of title may prosper.
1. First, the plaintiff must have a legal or equitable title or interest in the
property subject of the complaint.
2. Second, the deed, claim, encumbrance, or proceeding allegedly casting doubt
over one's title must be proven to be in truth invalid, void or inoperative
despite the prima facie appearance of validity.

G.R. NO. 236826 | MARCH 23, 2022
QUIETING OF TITLE
SUMMARY & DOCTRINE

The case involves a sale of undivided land co-owned by several owners. The Heirs
of Epifania M. Hernandez (Heirs of Hernandez), respondents, filed a complaint for specific
performance against Herminio Marquez (Herminio) and Alma Marie Marquez (Marquez),
petitioner, to cause the execution of a deed of absolute sale for an area of 200 square
209
meters (subject property) in their favor and that title over the subject property be
transferred to their names.
DOCTRINE: The two indispensable requisites must concur for an action to quiet
title would proper: (1) the plaintiff or complainant has a legal or an equitable title to or
interest in the real property subject of the action; and (2) the deed, claim, encumbrance,
or proceeding claimed to be casting cloud. His or her title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.
HEIRS OF MAGSAYSAY VS. SPS. PEREZ

G.R. NO. 225426 | JUNE 28, 2021
RECONVEYANCE OF PROPERTY; ART. 434 CIVIL CODE
SUMMARY & DOCTRINE

A complaint for reconveyance of lots covered by 15 separate Torrens titles was
filed by petitioners Heirs of Jesus P. Magsaysay. Petitioners allege that the disputed
Torrens titles are void as respondents purportedly falsified and committed fraud in their
respective applications of the issuance of the patent as they have never been in actual
and physical possession of the subject land. The Court found that the property being
claimed by petitioners to be in their and their predecessors-in-interest's possession is not
identical to the property titled to respondents.
DOCTRINE: A complaint for reconveyance is an action which admits the

registration of title of another party but claims that such registration was erroneous or
wrongful. It seeks the transfer of the title to the rightful and legal owner, or to the party
who has a superior right over it, without prejudice to innocent purchasers in good faith.
The relief prayed for may be granted on the basis of intrinsic fraud — fraud committed on
the true owner instead of fraud committed on the procedure amounting to lack of
jurisdiction.
As per Art. 434 of the New Civil Code: In an action to recover, the property must
be identified, and the plaintiff must rely on the strength of his title and not on the
weakness of the defendant's claim. Thus, the person who claims a better right of
ownership to the property sought to be recovered must prove two things: first, the
identity of the land claimed, and second, his title thereto.
NOTE
The case emphasized more on the procedural process of identifying the subject
properties.
210
Co-Ownership
REYES V. SPOUSES GARCIA
G.R. NO. 225159 | MARCH 21, 2022
CO-OWNERSHIP
SUMMARY & DOCTRINE

The petition arose when respondents filed an ejectment case against petitioners
concerning the property inherited by them which was occupied by the other heirs. It was
argued that the Deed of Sale is void since the heir who sold the said property is not the
true and real owner of the subject property.
DOCTRINE: A co-owner has the right to alienate his pro indiviso share in the
co-owned property even without the consent of the other co-owners. But such alienation
is limited only to the portion which may be allotted to him in the division upon the
termination of the co-ownership under the principle of nemo dat quod non habet (No one
can give what he does not have).
Possession
REPUBLIC V. CARAIG
G.R. NO. 197389 | OCTOBER 12, 2020
POSSESSION IN THE CONCEPT OF AN OWNER; ARTICLE 525
SUMMARY & DOCTRINE

Caraig alleged that he bought Lot No. 5525-B from Reynaldo S. Navarro (Reynaldo)
as evidenced by a Deed of Absolute Sale dated September 25, 1989. Reynaldo and his
predecessors-in-interest had been in open, peaceful, continuous, and exclusive possession
of the land prior to June 12, 1945 under a bona fide claim of ownership.
DOCTRINE: The possession and occupation as bona fide owner of Seller/s can be
tacked to the possession of the Buyer who acquired property by virtue of a Deed of
Absolute Sale executed by the Seller in the Buyer's favor.
NOTE
Reynaldo and his predecessors-in-interest's possession of Lot No. 5525 can be
transferred to Manuel but only as regards to Lot No. 5525-B, the sold portion and land
subject of the application for registration.
The fact that the earliest tax declaration on record is 1955 does not necessarily
show that the predecessors were not in possession of Lot No. 5525 since 1945.
211
VILLORIA VS. HEIRS OF GAETOS
G.R. NO 206240 | MAY 12, 2021
QUIETING OF TITLE - ART. 476, ART. 477
SUMMARY & DOCTRINE

The Quejados and the Gaetos both claimed ownership over a 10,000-square meter
lot located in San Juan, La Union. The Quejados alleged that the heirs of Gaetos caused
the subject property to be surveyed for the purpose of claiming ownership which put a
cloud on their ownership, possession, and title over the same. The Court ruled that the
Quejados failed to establish the first requirement of having legal or equitable title over
the property in dispute.
DOCTRINE: In an action for quieting of title, the plaintiff has the burden to show
by preponderance of evidence that they have a legal and equitable title to or interest in
the real property subject of the action. For an action to quiet title to prosper, two
indispensable requisites must concur, namely:
(1) The plaintiff or complainant has a legal or an equitable title to or interest in the
real property subject of the action; and
(2) The deed, claim, encumbrance, or proceeding claimed to be casting cloud on his
title must be shown to be in fact invalid or inoperative despite its prima facie
appearance of validity or legal efficacy.
NOTE
Tax declarations and receipts are not conclusive evidence of ownership or of the
right to possess land when not supported by other evidence. Mere allegation of open,
continuous, and exclusive possession of the property in dispute without substantiation
does not meet the requirements of the law.
212
Donation
CARDINEZ VS. SPS. CARDINEZ
G.R. NO. 213001 | AUGUST 4, 2021
DONATION; ART. 1318 (CIVIL CODE)
SUMMARY & DOCTRINE

Prudencio, Florentino and Valentin are siblings and co-owns a parcel of land which
the siblings inherited from their deceased mother. Valentin, in his desire to obtain a mere
10 square meters of the parcel of land owned by Prudencio, fraudulently obtained the
signature of Prudencio by executing a deed of donation by asking the latter to sign a
document that was written in English. Prudencio signed the document out of his love and
trust for his brother. However, Prudencio and his wife Cresencia were unable to
understand the contents of the document. Prudencio now contends the validity of the
document which was a deed of donation. The Court ruled that the Deed of Donation is
void ab initio in the absence of the donor’s consent. Prudencio categorically and firmly
stated that he did not know that the document which Valentin asked him to sign was a
Deed of Donation.
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.
NOTE
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.
213
Prescription
ENDE V. ROMAN CATHOLIC PRELATE OF THE PRELATURE NULLIUS OF
COTABATO INC.
G.R NO. 191867 | DEC. 6, 2021
LACHES
SUMMARY & DOCTRINE

Spouses Ende owned a parcel of law which was occupied by the Roman Catholic
and the rest of the respondents. Supposed nephews and nieces of spouses Ende contends
that the respondents deceitfully acquired parts of the subject property over time by
taking advantage of the spouses Ende's ignorance and illiteracy, and the property was
already subjected to extrajudicial settlement of estate. Respondent Roman Catholic
contend that they acquired the property through acquisitive prescription claiming that
their possession of the respective portions of the subject property spanned at least 30
years to at most 50 years already. Amalayon and Quezon, claiming to be the surviving
children and legitimate heirs of the spouses Ende, intervened in a case claiming that
supposed nephews and nieces of spouses Ende are merely imposters and prevented them
from exercising their rights to it after the couple's passing. Hence, the prayer for the
nullity of the extrajudicial settlement of estate and the dismissal of the complaint for
quieting of title.
The Court held that laches does not imply that a case in court must be filed in
order that it may not be successfully invoked. It merely requires "delay in asserting the
complainant's right after he had knowledge of the defendant's conduct and after he has an
opportunity to sue."
Petitioners Amalayon and Quezon are not to blame for not filing immediately in
court since they were still in the process of collating the necessary documents in support
of their right. They immediately intervened in the case after having knowledge of the
case filed by the imposter heirs. This sufficiently proved that they did not sleep on their
rights and were serious in asserting such against them who were claiming to be the
alleged heirs of the spouses Ende and in the recovery of the subject property from
respondents.
DOCTRINE:
Co-ownership
Art. 493 of the Civil Code states that “Each co-owner shall have the full ownership
of his part and of the fruits and benefits pertaining thereto, and he may therefore
alienate, assign, or mortgage it, and even substitute another person in its enjoyment,
except when personal rights are involved. But the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion which may be
allotted to him in division upon the termination of the co-ownership.”
214
Principle of Laches
The essential elements of laches are, namely: (1) conduct on the part of the
NOTE
Laches vs. Prescription
Original Registration (P.D. 1529)

REPUBLIC V. TAPAY
G.R. NO. 157719 | MARCH 2, 2022
CADASTRAL PROCEEDING
SUMMARY & DOCTRINE

RTC granted the motion to set aside the decision in the Cadastral Case in order to
give effect to the Decision of the RTC to issue the decree of registration to the
respondents.
DOCTRINE: For sure, it would be the height of injustice for respondents to be

held hostage or punished by reason of the plain scarcity of the records on file with the
government agencies concerned. It is certainly illegal, immoral, and against public policy
and order for respondents who have been vested with a legal right to be precluded from
exercising it, sans any real remedy under the law.
NOTE
Unfortunately for petitioner, aside from the single entry "Cadastral Case No. 33,
LRC (GLRO) Cadastral Record No. 1305," no other record, including a copy of the decision,
exists to support the theory. Key information, such as the identity of the parties in the
case and of the court that rendered the decision, as well as the outcome thereof, has
remained unknown despite the lapse of more than 40 years since the LRC submitted its
report. No one, aside from the Republic, has even come forward to claim any interest
arising from the supposed case. The Court therefore agrees with the CA that the doctrine
of judicial stability finds no application in this case. Practical considerations now demand
that the proceedings in the RTC be no longer disturbed and the August 14, 1996 Order no
longer set aside.
215
REPUBLIC V. PHILIPPINE NATIONAL POLICE
G.R. NO. 198277 | FEBRUARY 8, 2021
ORIGINAL REGISTRATION
SUMMARY & DOCTRINE

PNP filed for land registration over lots in Iba, Zambales but failed to substantially
prove that the subject lots are alienable and disposable lands of the public domain. PNP
also failed to refute the CENRO Report by submitting the twin certifications. An applicant
for land registration bears the burden of proving that the land applied for registration is
The Court held that It has been repeatedly ruled that certifications issued by the
CENRO, or specialists of the DENR, as well as Survey Plans prepared by the DENR
containing annotations that the subject lots are alienable, do not constitute
incontrovertible evidence to overcome the presumption that the property sought to be
registered belongs to the inalienable public domain. Rather, this Court stressed the
importance of proving alienability by presenting a copy of the original classification of the
land approved by the DENR Secretary and certified as true copy by the legal custodian of
the official records
DOCTRINE: An applicant for land registration must prove that the land is an
alienable and disposable land of the public domain pursuant to Presidential Decree (P.D.
1529). An applicant must submit the required twin certifications to prove its claim. These
certifications are: (1) City/Provincial Environment and Natural Resources Office
(CENRO/PENRO) Report and (2) A copy of the original classification approved by the DENR
Secretary certified as true copy by the legal custodian of the official records. The rule on
strict compliance must be observed, not just substantial compliance.
216
An Act Improving the Confirmation Process for Imperfect Land Titles
(RA 11573), amending CA 141 and PD 1529
CONCEPCION CHUA GAW VS. SUY BEN CHUA AND FELISA CHUA
G.R. NO. 160855 |APRIL 16, 2008
AN ACT IMPROVING CONFIRMATION PROCESS FOR IMPERFECT LAND TITLES (RA 11573),
THE
AMENDING CA 141 AND PD 1529; ART. 1448, CIVIL CODE
SUMMARY & DOCTRINE

Ben, one of the children of Chua Chin and Chan Chi, deceased Chinese nationals,
claimed to have owned the three subject lots since time immemorial without any
reservation or known lien, mortgage, burden, or encumbrance. Concepcion, Ben's sibling,
filed a complaint for reconveyance and damages against the latter, contending that their
parents had actually purchased the subject lots with the understanding that the buyer or
transferee would only hold legal and beneficial ownership in trust for the legal heirs.
The Court held that Implied trust is not not an exception to the Constitutional ban
against ownership of Philippine lands by a non-Filipino.
DOCTRINE: There is no implied trust if the enforcement of the trust would be

against law or public policy.
NOTE
To give rise to a purchase money resulting trust, it is essential that there be: 1) an
actual payment of money, property or services, or an equivalent, constituting valuable
consideration; and 2) such consideration must be furnished by the alleged beneficiary of a
resulting trust.
Our fundamental law dictates that non-Filipinos cannot acquire or hold title to
private lands or to lands of the public domain, except only by way of legal succession. The
primary purpose of the Constitutional provision is the conservation of the national
patrimony in the hands of Filipino citizens. Not even ownership in trust is allowed.
An implied trust simply is not a mode of legal succession. Their main distinction is
that implied trusts take effect upon agreement by the parties to constitute the same,
whereby legal succession ensue at the moment of death of the decedent.
217
Certificate of Title
GARCIA V. ESCLITO
G.R. NO. 207210 |MARCH 21, 2022
SUMMARY & DOCTRINE

Antonio Garcia and his heirs are caught in a feud with respondents over a plot of
land. The former insists that the deed of sale for the plots of land granted to them as
authorised by the DENR under the Handog Titulo is valid and binding, while respondents
and company argue that such sale is null and void because it violates Section 6 of the
Comprehensive Agrarian Reform Law of 1988.
Doctrine: A Certificate of Title shall not be subject to a collateral attack and

cannot be altered, modified or cancelled except in a direct proceeding in accordance
with law. A collateral attack transpires when, in an action to obtain a different relief, an
attack is incidentally made against the judgement. Such action is prohibited because the
integrity of land titles and their indefeasibility are guaranteed by the Torrens system of
registration. An attack on a deed of sale pursuant to which a certificate of title was
issued as an impermissible collateral attack on the certificate of title.
NOTE
Jurisprudence has recognized an attack on a deed of sale pursuant to which a
certificate of title was issued as an impermissible collateral attack on the certificate of
title. In Vicente v. Avera, the petitioner Spouses Vicente sought an injunction to prevent
the execution of a prior court decision which allowed the respondents to interfere with
the spouses' rights as registered owners of the property. In defense, the respondents
questioned the validity of the deed of sale pursuant to which the spouses' certificate of
title was issued. However, the Court, speaking through then Chief Justice Reynato Puno,
held that the attack on the deed of sale constitutes a collateral attack on the certificates
of title and is therefore prohibited by law.
218
ALDE V. CITY OF ZAMBOANGA
G.R. NO. 214981 | NOVEMBER 4, 2020
SUMMARY & DOCTRINE

Eulgo Alde filed a Miscellaneous Lease Application for two lots which were
originally leased by the Bureau of Buildings and Real Property to a certain Clarita Chan
but were transferred to the Department of Environment and Natural Resources (DENR) by
Executive Order. However, City of Zamboanga opposed the application claiming that the
awarded lots were needed for public use and that the posting and publication
requirements of the notice of lease, were not complied with. The CA ruled in favour of
the City of Zamboanga and held that a presidential proclamation is necessary to declare
that a parcel of public land is not necessary for public service before it can be disposed,
even for those lands referred to in Section 59(d) of CA 141. Hence, the award was null
and void.
The Supreme Court held that to prove that a public land is alienable and
disposable, what must be clearly established is the existence of a positive act of the
government. This is not limited to a presidential proclamation. Such fact could
additionally be proven through an executive order; an administrative action; investigative
reports of Bureau of Lands investigators; and a legislative act or a statute. In the case at
bar, the OP, upon the recommendation of the DENR Secretary, validly declared the subject
lots disposable through lease, through an administrative action, one of the modes that is
expressly recognized for said purpose. Hence, Alde validly complied with the
administrative requirements which led to the issuance of the Order of Award for the Lease
by the OP upon the recommendation of the DENR Secretary.
DOCTRINE: There is no argument that there must be some sort of a presidential

declaration that a piece of land classified under Section 59(d) of the Public Land Act is no
longer necessary for public use or public service before it can be leased to private parties
or private entities or private corporations. However, we hold that the same need not be
exclusively in the form of a presidential proclamation. Any other form of presidential
declaration is acceptable.
NOTE
Any form of presidential declaration, such as an administrative action by the
Office of the President, is acceptable as long as it declares that the land is alienable and
disposable and not necessary for public use or public service. The Court also holds that
there was substantial compliance with the posting and publication requirement under the
Public Land Act.
219
Dealings with Unregistered Lands
VALDEZ VS. HEIRS OF CATABAS
GR NO. 201655 | AUGUST 24, 2020
SUMMARY & DOCTRINE

Antero Catabas filed for a free patent application of a land which was not yet
declared as alienable during the time of application. However, Valdez, et al. filed sales
patent applications which included that of Catabas claiming that they bought the lot and
the time of Antero's application for free patent, the lot was part of the Agricultural Farm
School which is an inalienable public land and it was only subsequently declared as
alienable public land open for disposition to qualified claimants in pursuant to
Proclamation No. 247.
The Court held that Antero acquired a vested right over the subject property
based on his approved free
patent application and his heirs have a superior right to the lot
DOCTRINE: A possessor or occupant of property may be a possessor in the concept

of an owner prior to the determination that the property is alienable and disposable
agricultural land. Thus, the computation of the period of possession may include the
period of adverse possession prior to the declaration that the land is alienable and
disposable. Though at the time of his application, the subject property was not yet
classified as alienable and disposable, the subsequent declaration thereof should be
considered in his favour whose free patent application was still pending and subsisting at
that time and is not yet cancelled.
REPUBLIC V. HEREDEROS DE CIRIACO CHUNACO DESTILERIA

INCORPORADA
G.R. NO. 200863 | OCTOBER 14, 2020
DETERMINATION OF VALIDITY OF SALE
SUMMARY & DOCTRINE

Herederos de Ciriaco Chunaco Disteleria Incorporada, a domestic corporation
applied for land registration of a parcel of land claiming ownership and actual possession
of said lot on the ground of its continuous, adverse, public and uninterrupted possession
in the concept of an owner however, the Republic of the Philippine opposed on the
grounds that neither HCCDI nor its predecessors-in-interest had been in open, continuous,
exclusive and notorious possession and occupation of the subject lot for a period of not
less than 30 years and that the tax receipts presented are not sufficient evidence of a
220
bona fide acquisition of the subject lot or of its open, continuous, exclusive and notorious
possession, and occupation.
The Court held that aside from failing to prove that its predecessors-in-interest
had already acquired a vested right to a judicial confirmation of title by virtue of their
open, continuous, and adverse possession in the concept of an owner for at least 30 years,
HCCDI, as a private corporation, cannot apply for the registration of Lot No. 3246 in its
name due to the prohibition under the 1973 Constitution. Hence, its application for
registration of Lot No. 3246 must necessarily fail.
DOCTRINE: Private corporations, even if wholly-owned by Filipino citizens, were

prohibited from acquiring alienable lands of the public domain. At present, the 1987
Constitution continues the prohibition against private corporations from acquiring any
kind of alienable land of the public domain.
or CENRO.
A CENRO or PENRO certification alone is insufficient to prove the alienable and

HEIRS OF LATOJA VS. HEIRS OF LATOJA

G.R. NO. 195500 | MARCH 17, 2021
ORIGINAL REGISTRATION (PD 1529)
SUMMARY & DOCTRINE

The Heirs of Leonarda instituted before the RTC a complaint for declaration of
nullity of title, reconveyance and damages contending that they inherited Lot 5366 from
their predecessors-in-interest who are the real owners and possessors of the lot since time
immemorial. They asserted that the Heirs of Gavino and Friolan obtained the free patent
and the consequent OCT 20783 through fraud and false representation. The heirs of
Gavino argued that the OCT already became indefeasible because more than one year had
already elapsed since the date of their issuance. The Court ruled that an action for
reconveyance based on fraud may prosper despite the title’s indefeasibility.
221
DOCTRINE: An action for reconveyance based on fraud has two requisites. First,
that the individual seeking reconveyance must prove entitlement or ownership over the
property in question, and second, that fraud must be established by clear and convincing
evidence, not just based on mere surmises or conjectures.
NOTE
A land titled by virtue of a fraudulent and defective free patent, disregarding the
provisions of the Public Land Act, may be reconveyed to the rightful owner by an action
for reconveyance instituted by the latter.

G.R. NO. 206847 | JUNE 15, 2022
DEALINGS WITH REGISTERED LANDS
SUMMARY & DOCTRINE

Zenaida Gonzales and Spouses Basas executed the following documents namely
Contract to Sell, Deed of Absolute Sale, and Agreement to purchase and sell on a parcel
of land including the house. Eventually, Zenaida found out that the said property was
subsequently sold to Respondent Romeo Munda who immediately occupied the property.
DOCTRINE: It is a well-settled rule that every person dealing with registered land
may safely rely on the correctness of the certificate of title issued therefor and the law
will in no way oblige him [or her] to go beyond the certificate to determine the condition
of the property. "However, this rule shall not apply when the party has actual knowledge
of facts and circumstances that would impel a reasonably cautious man or woman to make
such inquiry or when the purchaser has knowledge of a defect or the lack of title in the
vendor or of sufficient facts to induce a reasonably prudent person to inquire into the
status of the title of the property in litigation.
NOTE
Petitioners sufficiently proved that the spouses Basas sold the subject property to
their predecessor-in-interest, Zenaida, and that ownership of the same was constructively
222
REPUBLIC V. ABELLANOSA
G.R. NO. 205817 | OCTOBER 6, 2021
RECONSTITUTION OF TITLE
SUMMARY & DOCTRINE

The counsel for respondents filed a motion to admit a second amended petition
(second amendment) to propose the substitution of parties by impleading Valero as
co-petitioner following the death of the spouses Manalo and to use the LRA-verified plans
and technical descriptions of the subject lots as bases for the reconstitution of the lost
titles.
DOCTRINES:
1. Amendments which do not affect the nature of the action that necessitates
another posting and publication. Hence, the earlier posting and publication of the petition
for reconstitution prior to the amendment were sufficient for the RTC to acquire
jurisdiction on the subject matter of the case.
2. SECTION 2. Original certificates of title shall be reconstituted from such of the

sources hereunder enumerated as may be available, in the following order:
(f) Any other document which, in the judgment of the court, is sufficient and
REPUBLIC V. HEIRS OF BOOC

G.R. NO. 207159 | FEBRUARY 28, 2022
RECONSTITUTION OF TITLE
SUMMARY & DOCTRINE

The heirs of Booc filed a petition for reconstitution of OCT of Lot Nos. 4749, 4765,
and 4777 Unfortunately, the same OCTs were lost or destroyed during the World War II
and despite exerted diligent efforts to recover the certificates of title but still failed to
find the same, and that the certificates of title were still in force at the time they were
lost or destroyed and no co-owner’s, mortgagee's, or lessee's duplicate certificates of title
were issued. However, MCIAA asserted that the government, through the Civil Aeronautics
Administration (CAA), owned the subject lots having bought the said lots from and the
government has been in continuous, uninterrupted, and adverse possession of the lots.
223
The Supreme Court held that the Booc’s failure to present any competent
evidence, private or official, indicating the number of the purported OCTs of the subject
lots is a fatal defect which warrants the dismissal of their petition for reconstitution.
Their non-submission of an affidavit of loss a reason for doubt if the certificates of title of
the subject lots in the name of the Boocs exist. They also did not submit any tax
declarations relative to the subject lots. While a tax declaration does not prove
ownership, payment of realty tax is an exercise of ownership over the said lots and is the
payor' s unbroken chain of claim of ownership over it.
DOCTRINE: The following order are the sources from which reconstitution of lost
or destroyed original certificates of title may be based on:
(e) A document, on file in the Registry of Deeds by which the property, the
description of which is given in said document, is mortgaged, leased or
encumbered, or an authenticated copy of said document showing that its
original has been registered; and
(f) Any other document which, in the judgment of the court, is sufficient and
NOTE
In Republic v. Tuastumban, it was laid down that the requirements for an order for
reconstitution to be issued are: (a) that the certificate of title had been lost or destroyed;
(b) that the documents presented by petitioner are sufficient and proper to warrant
reconstitution of the lost or destroyed certificate of title; (c) that the petitioner is the
registered owner of the property or had an interest therein; ( d) that the certificate of
title was in force at the time it was lost or destroyed; and ( e) that the description, area
and boundaries of the property are substantially the same as those contained in the lost
or destroyed certificate of title.
224
WILLS AND SUCCESSION
Form of Notarial and Holographic Wills
TANCHANCO V. SANTOS
G.R. NO. 204793 | JUNE 8, 2020
FORMALITIES OF A WILL - ARTICLES 805,809 & 820
SUMMARY & DOCTRINE

Consuelo passed away leaving behind personal and real properties. Her heirs
questioned the validity of the will alleging that it did not comply with the formalities
provided by law because the will’s attestation clause did not state the number of pages.
The Supreme Court held that the will of Consuelo should be allowed probate as it
complied with the formalities required by law. In this case, the attestation clause omitted
to mention the number of pages comprising the will. The acknowledgment portion of the
will supplied the omission by stating that the will has five pages. Such substantially
complied with Article 809 of the Civil Code. Mere reading and observation of the will,
without resorting to other extrinsic evidence, yields to the conclusion that there are
actually five pages even if the said information was not provided in the attestation
clause.
DOCTRINE: Article 809 presupposes that the defects in the attestation clause can
be cured or supplied by the text of the will or a consideration of matters apparent
therefrom which would provide the data not expressed in the attestation clause or from
which it may necessarily be gleaned or clearly inferred that the acts not stated in the
omitted textual requirements were actually complied with in the execution of the will. In
other words, the defects must be remedied by intrinsic evidence supplied by the will
itself.
NOTE
Lawyers are not disqualified from being witnesses to a will, i.e., the subscribing
witnesses that testify to the due execution of the will.
Article 820 of the Civil Code provides that, "any person of sound mind and of the
age of eighteen years or more, and not blind, deaf or dumb, and able to read and write,
may be a witness to the execution of a will mentioned in Article 805 of this Code."
225
Essential Elements
SEMING VS. ALAMAG
G.R. NO. 202284 | MARCH 17, 2021
ESSENTIAL ELEMENTS
SUMMARY & DOCTRINE

Spouses Seming bought a parcel of land owned by Spouses Samat but no written
agreement was executed to reflect the said sale. Spouses Pamat eventually alleged that
they did not sell their land to Spouses Seming. The Supreme Court held that there is no
contract of sale between Crisitina and Natividad because aside from Natividad not
consenting to enter into any contract of sale involving her half portion of Lot 512-C, the
price for the sale of the subject property is also uncertain. Hence, there is no valid
contract of sale between petitioner and Natividad, the
DOCTRINE:
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.
A contract of sale is a consensual contract. Under Article 1475 of the Civil Code,
thing which is the object of the contract and upon the price.
NOTE
A contract of sale is a consensual contract. Under Article 1475 of the Civil Code,
thing which is the object of the contract and upon the price.
It is well settled that the object of every contract must be determinate. The
requisite that a thing be determinate is satisfied if at the time the contract is entered
into, the thing is capable of being made determinate without the necessity of a new or
further agreement between the parties.
226
SPOUSES DE VERA V. CATUNGAL
G.R NO. 211687 | FEB. 10, 2021
CONSENT
SUMMARY & DOCTRINE

An old and illiterate woman entered into a contract. However, the terms and
clauses of the contract were not explained to her. Thus, not understanding the contents
of the Deed led to the vitiation of her consent.
DOCTRINE: Article 1332. When one of the parties is unable to read, or if the
contract is in a language not understood by him, and mistake or fraud is alleged, the
person enforcing the contract must show that the terms thereof have been fully explained
to the former.
NOTE
Art. 1332 - Consent - Content
Vices of Consent (Art. 1330) : Consent may be vitiated by any of the ff : (a)
mistake, (2) violence, (3) intimidation, (4) undue influence, and (5) fraud.
Breaches of Obligations
ESTATE OF RODRIGUEZ V. REPUBLIC
G.R. NO. 214590 | APRIL 27, 2022
BREACHES OF OBLIGATIONS
SUMMARY & DOCTRINE

The Estate of Susano Rodriguez has sued for the reconveyance of real properties
against the Republic, which was a 32-hectare property supposedly donated to the latter
for the establishment of a mental hospital under a conditional donation, initially given by
Susano Rodriguez to the Republic. Such a donation however, was subject to several
conditions in order for the Republic to keep the donated plots of land, which the Estate of
Susano Rodriguez insists were broken, and thus entitled to its reclamation.
Doctrine: The deed of conditional donation expressly provided for the automatic
revocation and/or reversion in case of breach of any of the conditions therein. If the
donee fails to comply with or violate any of the conditions stated in the donation, the
title over the subject property shall ipso facto revert to the donor, his heirs, successors or
assigns and all improvements, structures or buildings thereon shall be forfeited in favour
of the donor.
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.
227
NOTE
Four types of donation: (a) pure or simple; (b) remuneratory or compensatory; (c)
conditional or modal; and (d) onerous
ARTICLE 727. Illegal or impossible conditions in simple and remuneratory donations

shall be considered as not imposed.
ARTICLE 733. Donations with an onerous cause shall be governed by the rules on
contracts and remuneratory donations by the provisions of the present Title as regards
that portion which exceeds the value of the burden imposed.
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case
one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission, even
after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.
The mere presence of informal settlers does not mean that the Republic allowed
the former to settle in the property. It also does not help when the informal settlers are
violent regarding any case involving their ejection. Furthermore, the breach must be
substantial and fundamental as to defeat the object of the parties in making the
agreement and not merely a slight or casual breach of contract.

PHILIPPINE NATIONAL BANK V. LORENZO BAL, JR.
GR NO. 207856 | NOVEMBER 18, 2020
DIFFERENT KINDS OF OBLIGATIONS
SUMMARY & DOCTRINE

PNB filed a complaint for a sum of money against Adriano Tan (Tan) and Lorenzo
Bal Jr. r (Bal). Bal, the PNB Branch Manager approved various cash withdrawals by Tan
against several checks without for them to be cleared. The checks were subsequently
dishonoured for insufficient funds in which PNB allegedly incurred a loss amounting to
P520,000.00. The Supreme Court held that making Bal personally accountable for the
liability that Tan had already acknowledged to be his would be tantamount to penalising
228
him twice for the same offence. Bal may not be held personally or solidarily liable.
Settled is the rule that solidarity is never presumed.
DOCTRINE: Solidarity is never presumed.There is solidarity liability when the

obligation states, or when the law or the nature of the obligation requires the same.
Compensation
BANCO DE ORO UNIBANK, INC (BDO UNIBANK, INC.) VS EDGARDO
YPIL, SR. ET AL
G.R. NO. 212024, OCTOBER 12, 2020
COMPENSATION
SUMMARY & DOCTRINE

Bank is a creditor to CSTC and Kho, even after knowledge about the Notice of
Garnishment putting the existing account of CSTC to custodia legis, the Bank prioritized
to offset the debt of CSTC under their loan agreement without proving that the
indebtedness of CSTC are demandable and liquidated.
DOCTRINE: Creditor's failure to specify the date when debtor actually defaulted,
the indebtedness cannot be considered as due and liquidated.
NOTE
A claim is liquidated when the amount and time of payment is fixed.
PURIFICACION V. GOBING
G.R. NO. 191359 | NOVEMBER 11, 2020
COMPENSATION
SUMMARY & DOCTRINE

The Purificacion spouses received disturbance compensation in the amount of
Pl,046,460.00, but Lucila claimed that she and her late husband also had an agreement
with Atty. Villanueva and Gobing that they would relinquish their tenancy rights over the
subject lot except for a 1,000 square meter portion where their house was located.
DOCTRINE: The amount of compensation awarded to Purificacion was based on the

extent of the damages she had suffered and the principle of full compensation, which
requires that the compensation awarded should put the victim in the same position as if
229
the contract had been performed. This means that Purificacion was entitled to be
compensated for any losses she incurred as a result of Gobing's breach of contract,
including any costs she incurred in finding alternative arrangements and any loss of
income or profits she suffered as a result of Gobing's failure to fulfill his obligations.
Novation
VALDES VS. LA COLINA DEVELOPMENT CORP.
G.R. NO. 208140 | JULY 12, 2021
NOVATION
SUMMARY & DOCTRINE

The Valdeses and the Cachos started the Montemar Project. The Valdeses
transferred and conveyed their shares of stock in BARECO in favor of LCDC, a fully-owned
corporation of the Cacho family, through a Deed of Sale. The Supreme Court held that the
Valdeses and the LCDC entered into a contract of sale, not a joint venture. 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.
DOCTRINE: In the absence of an express provision to this effect, a contract may

still be considered as novated if it passes the test of incompatibility, that is, whether the
contracts can stand together, each one having an independent existence.
"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 celebration of said contract." "The kinds of
rescissible contracts are the following: first, those rescissible because of lesion or
which, by special provisions of law, are susceptible to rescission.
NOTE
● The RTC held that the Valdeses and LCDC entered a joint venture
agreement
● The CA set aside the ruling of the RTC and held that the relationship
between the Valdeses and LCDC is one of vendor-vendee.
230
ASIAN CONSTRUCTION AND DEVELOPMENT CORP. V. MERO
STRUCTURES, INC.
G.R. NO. 221147 | SEPTEMBER 29, 2021
EXPRESS AND IMPLIED NOVATION
SUMMARY & DOCTRINE

Asiakonstrukt submitted to FCCC a proposal for the design, supply, and installation
of the flag structure using MERO's spaceframe. FCCC approved Asiakonstrukt's proposal,
subject to the pricing, terms, and conditions in the latter's proposal. In a letter to
Asiakonstrukt, MERO requested that it be paid directly by the FCCC. By way of a response,
Asiakonstrukt, stated that it interposed no objection to MERO's request to collect payment
directly from the FCCC.
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

AGRO FOOD AND PROCESSING CORP VS VITARICH CORP
G.R. NO. 217454 | JANUARY 11, 2021
SUMMARY & DOCTRINE

Agro Food and Processing Corp was to pay VitaRich corporation for the balance of
the P20 million deposit pursuant to the MOA under which Vitarich offered to buy Agro’s
chicken dressing plant and a Toll Agreement under which Agro agreed to dress the
chickens supplied by Vitarich for a Toll Fee and the balance on the sale of live broiler
chickens to Agro. VitaRich filed a complaint for sum of money with damages regarding the
first amount based not only on the toll fees on the original toll agreement but also on the
verbal amendments to the toll fees that were implemented by the parties. Agro disputed
the computation arguing that the verbal amendments on the toll fees were not binding.
DOCTRINE: Art. 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
231
Obligatory Force of a Contract
DEVELOPMENT BANK OF THE PHILIPPINES VS. HEIRS
OF DANICO
GR NO. 196476 | SEPTEMBER 28, 2020
SUMMARY & DOCTRINE

Sps Danico and National Power Corporation (NPC) entered into deeds of sale in
consideration of the Sps Danico’s loan obligation with Development Bank of the
Philippines (DBP). The deeds clearly stipulate the existence of Sps Danico’s two
Statements of Account with DBP but NPC later argues that it shall only be liable to one.
DOCTRINE: Article 1370 of the Civil Code provides that if the terms of a contract
are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulation shall control. 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 intent.
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.
DOMILOS V. SPOUSES PASTOR

G.R. NO. 207887 | MARCH 14, 2022
SUMMARY & DOCTRINE

Lino filed a complaint for forcible entry against Nabunat. The city Court ordered
Nabuhat to vacate the subject property and remove his house.
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.
232
Binding Effect of a Contract
HOME GUARANTY CORP VS MANLAPAZ
G.R. NO. 202820 | JANUARY 13, 2021
PRIVITY OF CONTRACT
SUMMARY & DOCTRINE

FLPPI entered into a contract to sell with Manlapaz over the subject lot which is in
an Asset Pool between VELI, HGC and the Bank for the development of a village. After
Manlapaz made full payment of the subject lot, the title was not delivered to her nor was
it transferred under her name. Manlapaz filed a complaint for delivery of title with prayer
for damages.
DOCTRINE: Article 1311. Contracts take effect only between the parties, their
assigns and heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by provision of law. The
heir is not liable beyond the value of the property he received from the decedent.
If a contract should contain some stipulation in favor of a third person, he may

demand its fulfillment provided he communicated his acceptance to the obligor before its
revocation. A mere incidental benefit or interest of a person is not sufficient. The
contracting parties must have clearly and deliberately conferred a favor upon a third
person.
Rescissible Contracts
BACALA V. HEIRS OF POLINO
G.R. NO. 200608 | FEBRUARY 10, 2021
BREACH OF CONTRACT OF SALE; RESCISSION
SUMMARY & DOCTRINE

Aneclito sold to his brother his land with the price of P15,000 when the market
value is more than P100,000.
DOCTRINE: Gross inadequacy of the price alone cannot invalidate a contract. A

contract enjoys 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.
Substantial breaches of contract are fundamental violations as would defeat the

very object of the parties in making the agreement. The happening of a resolutory
condition is a substantial breach that may give either party thereto the option to bring an
action to rescind the contract and/or seek damages
233
and cannot be exercised solely on a party's own judgment that the other has committed a
breach of the obligation. As an exception, an injured party need not resort to court action
in order to rescind a contract when the contract itself provides that it may be revoked or
cancelled upon violation of its terms and conditions.
Unenforceable Contracts
HEIRS OF GODINES VS. DEMAYMAY
G.R. NO. 230573 | JUNE 28, 2021
BINDING EFFECT OF A CONTRACT
SUMMARY & DOCTRINE

A 68 square meter parcel of land with Tax Dec. No. 6111 located in Cawayan,
Masbate was left by Anselma to heirs who are the petitioners in this case namely, Marlon,
Francisco, Roque, Rosa, and Alma, all surnamed Godines. The subject lot was in
possession of Sps. Demaymay considering that during the lifetime of Anselma, the latter
obtained a loan from Matilde Demaymay and in consideration thereof, Sps. Demaymay
were allowed to use the land for a period of 15 years. However, the agreement was not
reduced into writing.
DOCTRINE: While the Statute of Frauds aims to safeguard the parties to a

contract from fraud or perjury, its non-observance does not adversely affect the intrinsic
validity of their agreement. The form prescribed by law is for evidentiary purposes,
non-compliance of which does not make the contract void or voidable, but only renders
the contract unenforceable by any action. In fact, contracts which do not comply with the
Statute of Frauds are ratified by the failure of the parties to object to the presentation of
oral evidence to prove the same, or by an acceptance of benefits under them.
WILLY V. JULIAN
G.R. NO. 207051 | DECEMBER 1, 2021
UNENFORCEABLE CONTRACTS
SUMMARY & DOCTRINE

Modesto executed a written agreement (1963 Agreement) conveying portions of
the subject property to three individuals who rendered services to Modesto in connection
therewith. Petitioners claim the 1963 Agreement was unenforceable and failed to comply
with the formalities of the contract under Article 1403 of the Civil Code.
234
DOCTRINE: The Statute of Frauds, Article 1403 (2) of the Civil Code, is not
applicable to totally or partially performed contracts.
Article 1477 provides that the thing sold shall be understood as delivered, when it
is placed in the control and possession of the vendee.
Void Contracts
G.R. NO. 203348 | JULY 6, 2020
SUMMARY & DOCTRINE

Ganancial was indebted to Cabugao. The former executed a Deed of Mortgage over
her property as a collateral to her loan to guarantee her indebtedness. However,
Ganancial assailed the authenticity of the Deed of Mortgage alleging that she never
executed nor appeared for its notarization.
DOCTRINE: Under Article 1409 of the Civil Code, absolute simulation voids a
contract. In absolute simulation, there appears a colorable contract but there actually is
none, as the parties thereto have never intended to be bound by it. In determining the
true nature of a contract, the primary test is the intention of the parties. Such intention
is determinable not only from the express terms of their agreement, but also from the
contemporaneous and subsequent acts of the parties.
NOTE
Contracts in general, require no form to exist. Article 2085 of the Civil Code
specifies the elements of a valid contract of mortgage: a) that they be constituted to
secure the fulfillment of a principal obligation; b) that the mortgagor be the absolute
owner of the thing mortgaged and; c) that the persons constituting the mortgage have the
free disposal of their property and in the absence thereof, that they be legally authorized
for the purpose.
ARAKOR CONSTRUCTION AND DEVELOPMENT CORP. VS STA. MARIA

G.R. NO. 215006 | JANUARY 11, 2021
VOID CONTRACTS
SUMMARY & DOCTRINE

Fernando Gaddi Sr. and Efren (one of the eight children of Sps Gaddi) entered into
a Contract of Absolute Sale with Arakor Construction and Development Corporation selling
235
five parcels of land to Arakor. After the death of Fernando Gaddi Sr. the Gaddi’s filed a
Complaint of Annulment of Absolute Sale and Transfer of Certificate of Title claiming that
the sale was void ab initio due since it is forged/fictitious.
DOCTRINE: It is apt to mention that Article 1410 of the Civil Code states that
"[t]he action or defense for the declaration of the inexistence of a contract does not
prescribe." Simply put, "an action that is predicated on the fact that the conveyance
complained of was null and void ab initio is imprescriptible.
CITY OF TANAUAN VS. MILLONTE

G.R. NO. 219292 | JUNE 28, 2021
VOID CONTRACTS
SUMMARY & DOCTRINE

A petition for the nullification of a Deed of Absolute Sale between the City of
Tanauan and the Gonzaga siblings was sought by Millonte, a direct descendant of one of
the Gonzagas, on the ground that such execution of the deed was made after the death of
the Gonzaga siblings and therefore could not have been made and is therefore null and
void. Millonte presented several certifications validating the death of the Gonzagas as
well as testimony of other grandchildren of the Gonzagas to validate the claim of the
death of the Gonzagas before 1970.
DOCTRINE: Forgery cannot be presumed and must be proved by clear, positive and
convincing evidence by the party alleging the same.
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.
An action that is predicated on the fact that the conveyance complained of was
null and void ab initio is imprescriptible.

before the execution thereof.'"
NOTE
The case emphasizes on the sufficiency of evidence presented by Millonte in
proving that the signatures of her predecessors in a Deed of Absolute Sale between the
later and the City of Tanuan were forgeries making the contract null and void ab initio.
Jurisprudence teaches that "the 'declaration of nullity of a contract which is void ab initio
236
operated to restore things to the state and condition in which they were found before the
execution thereof.'"
HEIRS OF BAGAYGAY VS. HEIRS OF PACIENTE

G.R. NO. 212126 | AUGUST 4, 2021
VOID CONTRACTS
SUMMARY & DOCTRINE

Anastacio was granted a homestead patent over the subject land. Allegedly,
Anastacio executed a Deed of Sale in favor of Eliseo, thus the latter took possession of the
land and transferred the title under his name; and upon the death of both Anastacio and
Eliseo, the heirs of Eliseo took possession of the land that of which was being assailed by
the heirs of Anastacio in this case.
DOCTRINE: Reversion under Section 101 of the Public Land Act is not automatic as
the Office of the Solicitor General must first file an action for reversion.
In the case of Heirs of Alido v. Campano, the Court held that laches do not apply to
void ab initio contract, it being based on equity.
SALES
Definition and Essential Requisites of a Contract of Sale
CABILAO V. TAMPAN
G.R. NO. 209702 | MARCH 23, 2022
DEFINITION AND ESSENTIAL REQUISITES
SUMMARY & DOCTRINE

Socorro Cabilao (Socorro) sold a residential house to Lorna Tampan-Nadoza (Lorna)
on April 7, 1988 evidenced by a Deed of Absolute Sale in the amount of P10,000. In 1995,
Cabilao attempted to register the title under her name but discovered that the property
was already sold to the Spouses Buyser, who opposed the issuance of the new certificate
of title.
DOCTRINE: Article 1305 of New Civil Code (NCC) 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)
237
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.
he or she is unable to read at the time of execution of the contested contract.
Gross inadequacy of price does not affect the validity of a contract of sale, unless
it signifies a defect in the consent or that the parties actually intended a donation or
some other contract. Inadequacy of cause will not invalidate a contract unless there has
been fraud, mistake or undue influence.
Transfer of the certificate of title in the name of the buyer and transfer of
ownership to the buyer are two different concepts.
PASCUAL PURISIMA, JR, ET AL V. MACARIA PURISIMA, ET AL.

GR NO. 200484 | NOVEMBER 18, 2020
SUMMARY & DOCTRINE

Macaria Purisima, et al (Macaria) filed a complaint for reconveyance, cancellation
and quieting of title against Pascual Purisima, Jr. (Purisima Jr.), et al. This rooted from
the issuance of Free Patent and OCT of Lot 71 in favor of Purisima Jr and his co-heirs.
Portions Lot 71-A, Pls-D and Lot 71-B, Pls-631-D of Lot 71 was sold sometime in 1960 by
the father (Purisima Sr) of Purisima Jr to Macaria.
DOCTRINE: 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
A contract of sale, whether oral or written, is classified as a consensual contract,

which means that the sale is perfected by mere consent and no particular form is required
for its validity.
NOTE
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.The complaint here states that the deceased Adriana Maloto sold the disputed
house and land to plaintiff; that consideration thereof was paid; that by reason of such
sale, plaintiff performed acts of ownership thereon. The facts thus alleged are
238
constitutive of a consummated contract. 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.
Contract of Sale
SPS. PONCE VS. ALDANESE
G.R. NO. 216587 | AUGUST 4, 2021
SUMMARY & DOCTRINE

Jesus Aldanese inherited Lot No. 6890, an unregistered parcel of land, and has
diligently paid its real property taxes. Spouses Ponce alleged that Lot No. 6890 is
covered by the contract of sale that spouses Ponce entered into with Teodoro Jr., the
brother of Jesus Aldanaese. Teodoro Jr., stated that it was only Lot No. 11203, the land
that he owned and inherited which was situated in Masa, Dumanjug, Cebu, that was sold
to the Spouses Ponce in the Deed of Absolute Sale.
DOCTRINE: We have repeatedly stressed that "no one can give what one does not
have." "A seller can only sell what he or she owns, or that which he or she does not own
but has authority to transfer, and a buyer can only acquire what the seller can legally
transfer."
NOTE
While the tax declaration is not conclusive proof of ownership of Jesus over the
subject land, it is an indication however that he possesses the property in the concept of
an owner for nobody in his or her right mind would be paying taxes for a property that is
not in his or her actual or constructive possession.
Prescription has not yet set in since the complaint was filed within the 30-year
prescriptive period for real actions over immovable properties.

G.R. NO. 206847 | JUNE 15, 2022
CONTRACT OF SALE
SUMMARY & DOCTRINE

Zenaida Gonzales and Spouses Basas executed the following documents namely
Contract to Sell, Deed of Absolute Sale, and Agreement to purchase and sell on a parcel
239
of land including the house. Eventually, Zenaida found out that the said property was
subsequently sold to Respondent Romeo Munda who immediately occupied the property.
DOCTRINE: In a contract to sell, title remains with the vendor and does not pass
on to the vendee until the purchase price is paid in full. Thus, in a contract to sell, the
payment of the purchase price is a positive suspensive condition. Failure to pay the price
agreed upon is not a mere breach, casual or serious, but a situation that prevents the
obligation of the vendor to convey title from acquiring an obligatory force. This is entirely
different from the situation in a contract of sale, where non-payment of the price is a
negative resolutory condition. The effects in law are not identical. In a contract of sale,
the vendor has lost ownership of the thing sold and cannot recover it, unless the contract
of sale is rescinded and set aside. xxx For purposes of validity of the sale, the mutual
agreement of the parties on the subject matter of the sale and its price would suffice and
no required form is necessary.
In order for the foregoing provision on double sale to apply, the following
NOTE
Petitioners sufficiently proved that the spouses Basas sold the subject property to
their predecessor-in-interest, Zenaida, and that ownership of the same was constructively
240
Contract to Sell
G.R. NO. 236826 | MARCH 23, 2022
CONSUMMATED CONTRACT OF SALE
SUMMARY & DOCTRINE

The case involves a sale of undivided land co-owned by several owners. The Heirs
of Epifania M. Hernandez (Heirs of Hernandez), respondents, filed a complaint for specific
performance against Herminio Marquez (Herminio) and Alma Marie Marquez (Marquez),
petitioner, to cause the execution of a deed of absolute sale for an area of 200 square
meters (subject property) in their favor and that title over the subject property be
transferred to their names.
DOCTRINE: Ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof. This is understood as delivered when it is
placed in the control and possession of the vendee. Payment of the purchase price is not
essential to the transfer of ownership as long as the property sold has been delivered; and
such delivery (traditio) operated to divest the vendor of title to the property which may
not be regained or recovered until and unless the contract is resolved or rescinded in
accordance with law.
Maceda Law
INTEGRATED CREDIT AND CORPORATE SERVICES V.
CABREZA G.R NO. 203420 FEB. 15, 2021
MACEDA LAW
SUMMARY & DOCTRINE

Following the repurchase of a property, two parties entered into a MOA in the form
of a contract of sale. When the debtor defaulted on her payment, the creditor rescinded
the MOA. Such rescission was non compliant with the Maceda Law thus invalidating the
rescission.
DOCTRINE: Essential elements of a contract of sale : (1) consent, (2) object, and
(3) price in money or its equivalent.
RA No. 6552 (Maceda Law)

Sec. 4 (2) : If the buyer fails to pay the instalments 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.
241
The notarial rescission contemplated in the law "is a unilateral cancellation by a
seller of a perfected contract thereunder acknowledged by a notary public and
accompanied by competent evidence of identity.
NOTE
Maceda law v. Recto Law
PRYCE PROPERTIES CORP. VS. NOLASCO

GR NO. 203990 | AUGUST 24, 2020
MACEDA LAW
SUMMARY & DOCTRINE

Nolasco and Pryce entered into a Contract to Sell over several lots. Nolasco said
that the conditions in the contract were unacceptable so he demanded a refund but Pryce
did not comply arguing that the contract had already been automatically cancelled by
virtue of its automatic cancellation provision.
DOCTRINE: Pursuant to Section 4 of the Maceda Law, there are 4 conditions before
a seller may actually cancel the contract thereunder: (1) the defaulting buyer has paid
less than 2 years of instalments; (2) the seller must give such defaulting buyer a 60-day
grace period, reckoned from the date the instalment became due; (3) if the buyer fails to
pay the instalments 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 (4)
the seller may actually cancel the contract only after the lapse of 30 days from the
buyer's receipt of the said notice of cancellation and/or demand for rescission by notarial
act.
Equitable Mortgage
DACQUEL VS. SPS. SOTELO
G.R. NO. 203946 | AUGUST 4, 2021
EQUITABLE MORTGAGE
SUMMARY & DOCTRINE

The Sotelos borrowed money from Dacquel, and as security for such loan, they
were required to execute a Deed of Sale, and the title of the subject land was
subsequently transferred to Dacquel. Upon the payment of the obligation, the Sotelos
asked for the return of the subject land but Dacquel refused arguing that he is now the
owner of such land, and not a mere mortgagee.
242
DOCTRINE: According to Article 1602 of the Civil Code, the contract shall be
presumed to be an equitable mortgage when the price of a sale with a right to repurchase
is unusually inadequate; when the vendor remains in possession as lessee or otherwise;
and in any other case where it may be fairly inferred that the real intention of the parties
is that the transaction shall secure the payment of a debt or the performance of any other
obligation. Article 1604 of the same Code states that Article 1602 shall also apply to a
contract purporting to be an absolute sale. 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.
According to Article 2088 of the Civil Code which embodies the prohibition against
pactum commissorium, the mortgagor's mere failure to pay the obligation does not
operate to automatically vest on the mortgagee the ownership of the encumbered
property, as it is contrary to morals and public policy and thus void. If a mortgagee in
equity desires to obtain title to a mortgaged property, the mortgagee's proper remedy is
to cause the foreclosure of the mortgage in equity and buy it at a foreclosure sale.
Contract of Sale
ATIENZA VS. GOLDEN RAM ENGINEERING SUPPLIES & EQUIPMENT
CORP.
G.R. NO. 205405 | JUNE 28, 2021
CONTRACT OF SALE
SUMMARY & DOCTRINE

Eduardo Atienza was engaged in the business of a passenger vessel. The bad faith
of respondents in refusing to repair and subsequently replace a defective engine which
already underperformed during sea trial and began malfunctioning six (6) months after its
commissioning has been clearly established. Respondents' uncaring attitude towards fixing
the engine which relates to MV Ace I's seaworthiness amounts to bad faith. Thus, the RTC's
grant of moral damages, attorney's fees and costs of suit has sufficient basis.
DOCTRINE: In a contract of sale there is an implied warranty that the thing shall
be free from hidden defects. A hidden defect is one which is unknown or could not have
been known to the vendee. Corollarily, Articles 1561 and 1566 of the same Code set forth
the responsibility of the vendor against hidden defect.
bought the engine.
243
NOTE
The 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.
AGENCY
Concept of Agency
DANIEL V. MAGKAISA
G.R. NO. 203815 | DECEMBER 07, 2020
AGENCY
SUMMARY & DOCTRINE

Nelidia Daniel executed a Declaration of Trust, stating therein that she is holding
three parcels of land in trust for the grandchildren of Consuelo Jimenez Oda, and upon
her death, the grandchildren filed a complaint for reconveyance of the parcels of land
against Nelidia’s husband, Efraim Daniel, who had refused to turn over the properties.
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.
LOPEZ V. SALUDO, JR.

G.R. NO. 233775 | SEPTEMBER 15, 2021
AGENCY
SUMMARY & DOCTRINE

Respondent Aniceto G. Saludo (Saludo) prayed that he be declared the true owner
of the two parcels of land in question and to have said properties reconveyed to him.
DOCTRINE: 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.
244
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. While implied trusts may be proven by oral evidence, the evidence must
be trustworthy and received by the courts with extreme caution, and should not be made
to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required
because oral evidence can easily be fabricated.
CREDIT TRANSACTIONS
Interest
ALLIED BANKING CORPORATION V. SPOUSES MACAM
G.R. NO. 200635 | FEBRUARY 1, 2021
LOANS, INTEREST
SUMMARY & DOCTRINE

Given the fiduciary nature of the relationship between a bank (Allied Bank) and its
depositors (Sps. Macam), a bank is under obligation to treat the accounts of its depositors
with meticulous care. In the performance of that obligation, the appellate court found
Allied Bank to have failed and thus liable to the Spouses Mario Macam for damages.
DOCTRINE: The doctrine of "apparent authority," with special reference to banks,

has long been recognized in this jurisdiction. Apparent authority is derived not merely
from practice. Its existence may be ascertained through 1) the general manner in which
the corporation holds out an officer or agent as having the power to act, or in other
words, the apparent authority to act in general, with which it clothes him; or 2) the
NOTE
Art. 2209. If the obligation consists in the payment of a sum of money, and the
debtor incurs in delay, the indemnity for damages, there being no stipulation to the
contrary, shall be the payment of the interest agreed upon, and in the absence of
stipulation, the legal interest, which is six percent per annum.
245
ASSET POOL A (SPV-AMC), INC. V SPS. BERRIS
G.R. NO. 203194 | APRIL 26, 2021
LOANS
SUMMARY & DOCTRINE

(Special Contracts) The reference of one contract to the other does not
automatically make them a single contract in the absence of evidence to the contrary,
express or implied.
(Remedial) The mortgage creditor has the right to recover the deficiency when the
mortgaged properties are not enough to satisfy the entire obligation, but the action can
only be 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.
Guaranty and Suretyship

SPS. GENOTIVA VS.
EQUITABLE PCI BANK (NOW BANCO DE ORO
UNIBANK, INC.)
G.R. NO. 213796 | JUNE 28, 2021
VOID CONTRACTS
SUMMARY & DOCTRINE

Spouses Genovita obtained a loan from BDO under the name of Goldland, Inc.
When petitioner Violeta requested for the payment of her retirement benefits, BDO
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. They acceded
to BDO's demands and to sign the Real Estate Mortgage (subject contract) in favor of BDO.
Further, the Spouses offered to pay BDO the amount of P500,000.00 to redeem the
collateral but BDO applied it instead to the payment of the interest due on Goldland's
loan.
DOCTRINE: Under Article 1216 of the Civil Code, the creditor may proceed against
any one of the solidary debtors or some or all of them simultaneously. The rule,
therefore, is that if the obligation is joint and several, the creditor has the right to
proceed even against the surety alone. The right of the creditor to proceed against the
surety refers to the right to sue the surety independently of the right to sue the principal
or the other sureties. By "proceed," the law means to "sue" or to "institute proceedings"
for collection or enforcement of the surety contract. However, 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
246
like collecting from the principal debtor, the creditor may recover only through lawful
means.
NOTE
Vitiated Consent
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." For intimidation to vitiate consent, the following requisites must be
present: (1) that the intimidation must be the determining cause of the contract, or must
have caused the consent to be given; (2) that the threatened act be unjust or unlawful;
(3) that the threat be real and serious, there being an evident disproportion between the
evil and the resistance which all men can offer, leading to the choice of the contract as
the lesser evil; and (4) that it produces reasonable and well-grounded fear from the fact
that the person from whom it comes has the necessary means or ability to inflict the
threatened injury.
Real Estate Mortgage

PHILIPPINE NATIONAL BANK V. FONTANOZA
G.R. NO. 213673 | MARCH 2, 2022
SUMMARY & DOCTRINE

Fontanoza obtained a loan from the PNB. To secure the loan, they mortgaged a
parcel of land Since the Fontanozas failed to pay, PNB foreclosed the property. As the sole
bidder in the public auction, PNB acquired the lot. PNB registered the sale. However, the
Fontanozas failed to redeem the property. More than nine years later, PNB filed an
ex-parte petition for issuance of writ of possession before the RTC.
DOCTRINE: Generally, "once title to the property has been consolidated in the
buyer's name upon failure of the mortgagor to redeem the property within the one-year
redemption period, the writ of possession becomes a matter of right belonging to the
buyer. Consequently, the buyer can demand possession of the property at any time. Its
right of possession has then ripened into the right of a confirmed absolute owner and the
issuance of the writ becomes a ministerial function that does not admit of the exercise of
the court's discretion. The court, acting on an application for its issuance, should issue
the writ as a matter of course and without any delay."
247
mortgagor."
PANDACAN LUMBER CO. V. SOLIDBANK CORP.

G.R. NO. 226272 | SEPTEMBER 16, 2020
SUMMARY & DOCTRINE

PLC obtained a loan from Solidbank in the amount of P700k which would pay for
the taxes, duties and insurance premium on said lumber importation, and as a security for
the said loan, petitioners Antonio and Teresa executed a real estate mortgage (REM).
TSolidbank agreed to renew PLC's loan for another P700k 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 P700k.
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.
GOLDWELL PROPERTY TAGAYTAY VS METROBANK

G.R. NO. 209837 | MAY 12, 2021
SUMMARY & DOCTRINE

Petitioner Goldwell Properties Tagaytay, Inc. (Goldwell) obtained loans from
respondent Metropolitan Bank and Trust Company (Metrobank) in 2001 covered by several
promissory notes (PN) and secured by real estate mortgages and a continuing surety
agreement. Goldwell pointed out that it was unfortunate that notwithstanding the
independent appraisal reports, Metrobank still refused to allow the partial release of the
collaterals and if partial release was done, the remaining collateral would still be enough
to secure their unpaid obligations.
DOCTRINE: 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
248
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.
SPOUSES TORRECAMPO V. WEALTH DEVELOPMENT BANK CORP.

G.R. NO. 221845 | MARCH 21, 2022
1 YEAR REDEMPTION PERIOD
SUMMARY & DOCTRINE

After defaulting in their housing loan agreement with Wealth Development Bank
Corp., spouses Torrecampo’s property that was subject of a real estate mortgage was
foreclosed extra-judicially under Act 3135. The ownership of the property was
consolidated in favor of the Bank after one year and the spouses, having been ejected
from their property, contested the transfer of possession.
DOCTRINE: As a general rule, a writ of possession may be issued to the purchaser

in extra-judicial foreclosure in two different instances, and based on two different
sources: (1) within the redemption period, in accordance with Sec. 7 of Act 3135, as
amended; and (2) after the lapse of the redemption period, based on the purchaser’s
right of ownership.
Under the second instance, 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.
NOTE
In Mallari v. Banco Filipino Savings & Mortgage Bank (2008), while the petitioner in
that case had filed a declaration of nullity of the extra-judicial proceedings within the
redemption period, but during its pendency, the RTC in another case had issued a writ of
possession in favor of the purchaser, the Supreme Court held that appeal mandated under
Act 3135 was the proper remedy and not a petition for certiorari under Rule 65 that
petitioner used to contest the issuance of the writ. The rule remained the same that Act
3135 cannot apply when the redemption period has already expired. At that point, the
issuance of a writ of possession, upon proper application, becomes merely a ministerial
function of the court.
249
COMPROMISE
Solutio Indebiti
LUMAUAN V. COMMISSION ON AUDIT
G.R. NO. 218304 | DECEMBER 09, 2020
SOLUTIO INDEBITI
SUMMARY & DOCTRINE

The Board of Directors of the Metropolitan Tuguegarao Water District, a
government-owned and controlled corporation, erroneously approved the payment of
accrued Cost of Living Allowances (COLA) to qualified employees, among which Ninia
Lumauan was a recipient. The COLA was subsequently disallowed, and Lumauan and the
other recipients were ordered to return the amounts paid to them, but she refused,
claiming good faith.
DOCTRINE: The rules on return of disallowed amounts are based on the civil law
principles of unjust enrichment and solutio indebiti, and which apply regardless of the
good faith of the recipients. However, there may be certain situations which may
constitute bona fide exceptions to the application of solutio indebiti, one of which is that
the disallowed benefits were genuinely given in consideration of services rendered (or to
be rendered), negating the application of unjust enrichment and solutio indebiti. Other
exceptions are that there will be undue prejudice, or social justice considerations.
TORTS AND DAMAGES

Unjust Enrichment
PNTC COLLEGES VS. TIME REALTY, INC.
G.R. NO. 219698 | SEPTEMBER 27, 2021
UNJUST ENRICHMENT
SUMMARY & DOCTRINE

PNTC Colleges, Inc. (Lessee) and Time Realty, Inc. (Lessor) entered into a Contract
of Lease. Upon the termination of the Contract of Lease, Time Realty alleged that PNTC
did not settle its outstanding obligations. Hence, Time Realty retained the remaining
properties of PNTC.
DOCTRINE: Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. The parties are allowed by
250
law to enter into stipulations, clauses, terms and conditions they may deem convenient
which bind the parties as long as they are not contrary to law, morals, good customs,
public order or public policy. There is unjust enrichment when a person unjustly retains a
benefit to the loss of another, or when a person retains money or property of another
against the fundamental principles of justice, equity and good conscience.
NOTE
The principle of unjust enrichment under Article 33 requires two conditions: (1)
that a person is benefited without a valid basis or justification, and (2) that such benefit
is derived at another's expense or damage. There is no unjust enrichment when the
person who will benefit has a valid claim to such benefit.
Strict Liability
THE REAL BANK (A THRIFT BANK), INC. V. MANINGAS
G.R. NO. 211837 | MARCH 1, 2022
STRICT LIABILITY
SUMMARY & DOCTRINE

Maningas maintained a savings account and a checking account with Metrobank.
Rosaria used the checks to open an account with Real Bank, where the full amount was
drawn.
DOCTRINE: The liability of the drawee bank is based on its contract with the
drawer and its duty to charge to the latter's accounts only those payables authorized by
him. A drawee bank is under strict liability to pay the check only to the payee or to the
payee's order. When the drawee bank pays a person other than the payee named in the
check, it does not comply with the terms of the check and violates its duty to charge the
drawer's account only for properly payable items.
Res Ipsa Loquitur

MAITIM V. AGUILA
G.R. NO. 218344 | MARCH 17, 2022
RES IPSA LOQUITUR
SUMMARY & DOCTRINE

The six-year old daughter of Aguila was sideswiped by Maitim’s vehicle which was
driven by her employee, Santos. Angela was diagnosed to have suffered swelling,
hematoma, multiple abrasions, and displaced, complete fracture on the right leg. Thus,
251
she underwent operation at Asian Hospital and was in a wheelchair for almost three
months.
DOCTRINE:
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. To fend off vicarious liability, employers must submit
concrete proof, including documentary evidence that they complied with everything that
was incumbent on them.
NOTE
Under Article 2180 of the Civil Code, the obligation imposed by article 2176 is
demandable not only for one's own acts or omissions, but also for those of persons for
whom one is responsible. Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry.
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. To fend off vicarious liability, employers
must submit concrete proof, including documentary evidence that they complied with
everything that was incumbent on them.
252
Kinds of Damages
G.R. NO. 203348 | JULY 6, 2020
MORAL DAMAGES
SUMMARY & DOCTRINE

Ganancial and Cabugao filed respective lawsuits against each other over a dispute
involving a Deed of Mortgage. The RTC granted moral damages to Cabugao after stating in
open court that she suffered anxiety and sleepless nights over the alleged bad faith on
the part of Ganancial.
DOCTRINE: The person claiming moral damages must prove the existence of bad
faith by clear and convincing evidence for the law always presumes good faith. It is not
enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the
result of the actuations of the other party. Invariably such action must be shown to have
been willfully done in bad faith or with ill motive. Mere allegations of besmirched
reputation, embarrassment and sleepless nights are insufficient to warrant an award for
moral damages.
NOTE
Art. 2217. Moral damages include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury. Though incapable of pecuniary computation, moral
damages may be recovered if they are the proximate result of the defendant's wrongful
act or omission.
LAND BANK OF THE PHILIPPINES VS DEL MORAL INC.

G.R. NO. 187307 | OCTOBER 14, 2020
NOMINAL DAMAGES, TEMPERATE OR MODERATE DAMAGES
SUMMARY & DOCTRINE

Del Moral was unable to use the 102 hectares of its landholdings after it was
deprived of its possession in 1972. The Court computed the awards for just compensation
and damages at the time payment was judicially determined and not at the time of taking
in 1972.
DOCTRINE: Temperate and Nominal damages are incompatible and thus, cannot
be granted concurrently.
253
MANILA ELECTRIC CO. V. AAA CRYOGENICS PHILIPPINES, INC.
GR NO. 207429 | NOVEMBER 18, 2020
WHEN DAMAGES MAY BE RECOVERED
SUMMARY & DOCTRINE

AAA Cryogenics Philippines, Inc. (AAA) filed an action for injunction and damages
against Manila Electric Company (Meralco) seeking to collect the amount of
P21,092,760.00 representing its losses due to power fluctuations and interruptions, among
other damages. AAA stopped paying its electrical bills until its total accountabilities
reached P13,657,141.56 after Meralco could not remedy the situation despite their
reports. Meralco then filed a complaint for collection of a sum of money representing the
AAA’s unpaid electric bill.
DOCTRINE: Under Article 2199 of the Civil Code, except as provided by law or by
stipulation, one is entitled to an adequate compensation only for such pecuniary loss
suffered by them as they have duly proved." the claimant must prove the actual amount
of loss with a reasonable degree of certainty premised upon competent proof and on the
best evidence obtainable.
Under Article 2224 of the Civil Code, "temperate or moderate damages, which are
more than nominal but less than compensatory damages, may be recovered when the
court finds that some pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be provided with certainty.
NOTE
"The award of attorney's fees is an exception rather than the general rule; thus,
there must be compelling legal reason to bring the case within the exceptions provided
under Article 2208 of the Civil Code to justify the award."We simply find no compelling
legal reason here.
(BVI) Limited v. Ray Burton Development Corporation: The calculation of

temperate damages is usually left to the sound discretion of the courts. We observe the
limit that in giving recompense, the amount must be reasonable, bearing in mind that the
same should be more than nominal, but less than compensatory. In jurisprudence, this
Court has pegged temperate damages to an amount equivalent to a certain percentage of
the actual damages claimed by the injured party.
254
PHILAM HOMEOWNERS ASSOCIATION, INC. VS. DE LUNA
G.R. NO. 209437 | MARCH 17, 2021
NOMINAL DAMAGES
SUMMARY & DOCTRINE

Philam Homeowners Association, Inc (PHAI) terminated the services of De Luna and
Bundoc after finding that the two were involved in the irregularities in PHAI's books of
accounts. Bundoc alleged that she was not afforded due process before their termination,
making her entitled to nominal damages.
DOCTRINE: When the dismissal is based on a just cause under Article 282 of the
Labor Code, such as loss of trust and confidence, but the termination was procedurally
infirm, the sanction against the employer for such a violation is tempered. This is because
the dismissal was initiated by an act imputable to the employee compared to when the
dismissal was initiated by the employer through the enumerated authorized causes under
the Labor Code, where the sanction is stiffer and the amount of nominal damages is
higher.
NOTE
The employer must furnish the employee with two written notices before the
termination of employment can be effected: (1) the first apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the second informs
the employee of the employer's decision to dismiss him.
KLM ROYAL DUTCH AIRLINES V. TIONGCO

G.R. NO. 212136 | OCTOBER 04, 2021
WHEN DAMAGES MAY BE RECOVERED
SUMMARY & DOCTRINE

Dr. Tiongco had to fly to Singapore via Singapore Airlines where he would then take
two connecting flights to Almaty on board petitioner KLM. KLM failed to exercise
extraordinary care in handling the suitcase of Dr. Tiongco. Moreover, it did not return the
luggage to him even after it was found.
DOCTRINE: Article 2220. Willful injury to property may be a legal ground for
awarding moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract where the
defendant acted fraudulently or in bad faith.
255
because of another's culpable action.
MANILA INTERNATIONAL PORTS TERMINAL, INC. V. PHILIPPINE PORTS

AUTHORITY
G.R. NO. 196199 | DECEMBER 07, 2021
ACTUAL AND COMPENSATORY DAMAGES
SUMMARY & DOCTRINE

MIPTI and PPA executed a Memorandum of Agreement providing for the rules in the
operation and management of the MIPTC at North Harbor as well as detailing the rights
and obligations of the parties under the franchise.
DOCTRINE: Under Articles 2199 and 2200 of the Civil Code, actual or
compensatory damages are those awarded in satisfaction of or in recompense for loss or
injury sustained. They proceed from a sense of natural justice and are designed to repair
the wrong that has been done. There are two kinds of actual or compensatory damages:
one is the loss of what a person already possesses, and the other is the failure to receive
as a benefit that which would have pertained to him. In the latter instance, the familiar
rule is that damages consisting of unrealized profits, frequently referred to as "ganacias
frustradas" or "lucrum cessans," are not to be granted on the basis of mere speculation,
conjecture, or surmise, but rather by reference to some reasonably definite standard such
as market value, established experience, or direct inference from known circumstances.
Depreciated replacement cost approach is the "method of valuation which provides

the current cost of replacing an asset with its modern equivalent asset less deductions for
all physical deterioration and all relevant forms of obsolescence and optimisation."
Depreciated replacement cost is a method of appraising assets that are usually not
exposed to the open market.
NOTE
Even though unrealized profits as part of actual or compensatory damages may be

normally be awarded to a person for “failure to receive as benefit that which would have
pertained to him/her.” this does not apply when the source of benefit is a franchise which
continued subsistence is not guaranteed as there can be no such thing as a vested right to
expectation of future profits which can be gained from possession of a franchise.
256
RICO V. UNION BANK
G.R. NO. 210928 | FEBRUARY 14, 2022
EXEMPLARY DAMAGES
SUMMARY & DOCTRINE

Union Bank issued Rico a Visa credit card with a credit limit of P150,000.00, which
was increased to P250,000.00. Both parties admitted that the credit card was disapproved
when Rico used it in payment for a meal in Gourdo's Restaurant on November 20, 2005.
DOCTRINE: Article 2234 of the NCC, While the amount of the exemplary damages
need not be proved, the plaintiff must show that he is entitled to moral, temperate or
compensatory damages before the court may consider the question of whether or not
exemplary damages should be awarded. In case liquidated damages have been agreed
upon, although no proof of loss is necessary in order that such liquidated damages may be
recovered, nevertheless, before the court may consider the question of granting
exemplary in addition to the liquidated damages, the plaintiff must show that he would
be entitled to moral, temperate or compensatory damages were it not for the stipulation
for liquidated damages.
It is also required that a culpable act or omission was factually established, that
of the damage sustained by the claimant and that the case is predicated on any of the
instances expressed or envisioned by Arts. 2219 and 2220 of the Civil Code.
257

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THAT IN ALL THINGS, GOD MAY BE GLORIFIED

Publication, reproduction, dissemination, and distribution, or

Material includes both cases penned by Justice Hernando and recent

PERSONS AND FAMILY RELATIONS

Mixed Marriages and Foreign Divorce

Effect of Defective Marriages

Paternity and Filiation

PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

Actions to Recover Ownership and Possession of Property

LAND TITLES AND DEEDS

Original Registration (PD 1529)

Dealings With Unregistered Lands

SUCCESSION AND WILLS

OBLIGATIONS AND CONTRACTS

Obligations: General Provisions

Nature and Effects of Obligations

Different Kinds of Obligations

Contracts: General Provisions

Basic Principles of Contracts

SALES AND LEASE

Deﬁnition and Essential Requisites

Breach of Contract of Sale

Equitable Mortgage 146

Other Concepts 149

AGENCY, TRUSTS, AND PARTNERSHIPS

Guaranty and Suretyship 163

Real Estate Mortgage 166

Solutio Indebiti 176

TORTS AND DAMAGES

Classiﬁcation of Torts 182

Res Ipsa Loquitur

Republic v. Kikuchi 204

Santos-Macabata v. Macabata 204

Pugoy-Solidum v. Republic 205

Carullo v. Padua 206

Republic v. Ponce-Pilapil 206

Pulido v. People 207

Spouses Park v. Liwanag 207

Gemina v. Heirs Of Espejo, Jr. 208

Heirs Of Eñano v. San Pedro Cineplex Properties Inc. 209

Heirs Of Marquez v. Heirs Of Hernandez 209

Heir Of Magsaysay v. Sps. Perez 210

Reyes v. Spouses Garcia 211

Republic v. Manuel Caraig 211

Viloria v. Heirs Of Gaetos 212

Cardinez v. Sps Cardinez 213

Ende v. Roman Catholic Prelate Of The Prelature Nullius Of Cotabato, 214

Republic v. Philippine National Police

Tanchanco v. Santos 225

Seming v. Alamag 226

Spouses De Vera v. Catungal 227

Estate Of Rodriguez v. Republic 227

Philippine National Bank v. Lorenzo Bal Jr. 228

Heirs Of Godines v. Sps. Demaymay 234

Willy v. Julian 234

Ganancial v. Cabugao 235

Arakor Construction And Development Corp. v. Sta. Maria 235