G.R. No.

177168, August 03, 2015 NAVY OFFICERS' VILLAGE ASSOCIATION,

INC. (NOVAI), Petitioner, v. REPUBLIC OF THE PHILIPPINES, Respondent.

BRION, J.:

Under Section 6 of C.A. No. 141, the President of the Republic of the Philippines,
upon the recommendation of the Secretary of Agriculture and Natural Resources,
may, from time to time, classify lands of the public domain into alienable or
disposable, timber and mineral lands, and transfer these lands from one class to
another for purposes of their administration and disposition.

Lands of the public domain classified as alienable and disposable are further
classified, under Section 9 of C.A. No. 141, according to their use or purpose
into: (1) agricultural; (2) residential, commercial, industrial, or for similar
productive purposes; (3) educational, charitable, or other similar purposes; and
(4) reservations for townsites and for public and quasi-public uses. Section 9 also
authorizes the President to make the classifications and, at any time, transfer
lands from one class to another.

Section 83 of C.A. No. 141 defines public domain lands classified as reservations
for public and quasi-public uses as "any tract or tracts of land of the public
domain x x x these "reserved tract or tracts of lands shall be non-alienable and
shall not be subject to occupation, entry, sale, lease or other disposition until
again declared alienable under the provisions of [CA No. 141] or by proclamation
of the President."

As the property remains a reserved public domain land, it is outside the

commerce of man. Property which are intended for public or quasi- public use or
for some public purpose are public dominion property of the State and are
outside the commerce of man. NOVAI, therefore, could not have validly
purchased the property in 1991.

Since the sale of the property, in this case, is void, the title issued to NOVAI is
similarly void ab initio. It is a well-settled doctrine that registration under the
Torrens System does not, by itself, vest title as it is not a mode of acquiring
ownership; that registration under the Torrens System merely confirms the
registrant's already existing title.

Accordingly, the indefeasibility of a Torrens title does not apply in this case and
does not attach to NOVAI's title. The principle of indefeasibility does not apply
when the sale of the property and the title based thereon are null and void.
Hence, the Republic's action to declare the nullity of NOVAI's void title has not
prescribed. NOVAI insists that the deed of sale carries the presumption of
regularity in the performance of official duties as it bears all the earmarks of a
valid deed of sale and is duly notarized. While we agree that duly notarized
deeds of sale carry the legal presumption of regularity in the performance of
official duties, the presumption of regularity in the performance of official duties,
like all other disputable legal presumptions, applies only in the absence of clear
and convincing evidence establishing the contrary. When, as in this case, the
evidence on record shows not only that the property was reserved for public use
or purpose, and thus, non-disposable - a fact that on its own defeats all the
evidence which the petitioner may have had to support the validity of the sale -
but also shows that the sale and the circumstances leading to it are void in form
and in substance, the disputable presumption of regularity in the performance of
official duties certainly cannot apply.

January 13, 2016 G.R. No. 198745 BANCO DE ORO UNIBANK, INC. (Formerly
Banco De Oro-EPCI, Inc.), Petitioner, vs. SUNNYSIDE HEIGHTS
HOMEOWNERS ASSOCIATION, INC., Respondent.

REYES, J.:

the HLURB has jurisdiction over complaints arising from contracts between the
subdivision developer and the lot buyer, or those aimed at compelling the
developer to comply with its contractual and statutory obligations.

As the agency tasked to oversee the specific compliance by developers with their
contractual and statutory obligations, such as maintaining the open space as
non-alienable and non-buildable, there is no doubt that the HLURB is
empowered to annul the subject mortgage.

The Court has long recognized and upheld the rationale behind P.D. No. 957,
which is to protect innocent lot buyers from scheming developers, buyers who
are by law entitled to the enjoyment of an open space within the subdivision.
Thus, this Court has broadly construed HLURB's jurisdiction to include
complaints to annul mortgages of condominium or subdivision units.

G.R. No. 175542 June 5, 2013 GREEN ACRES HOLDINGS, INC., Petitioner, vs.
VICTORIA P. CABRAL, SPS. ENRIQUE T. MORAGA and VICTORIA SORIANO,
FILCON READY MIXED, INC., DEPARTMENT OF AGRARIAN REFORM
ADJUDICATION BOARD (DARAB), and REGISTRY OF DEEDS OF BULACAN,
MEYCAUA YAN BRANCH, Respondents.
x-----------------------x
G.R. No. 183205 VICTORIA P. CABRAL, Petitioner, vs. PROVINCIAL
ADJUDICATOR, JOSEPH NOEL C. LONGBOAN I OFFICE OF THE AGRARIAN
REFORM ADJUDICATOR, GREEN ACRES HOLDINGS, INC., SPOUSES
ENRIQUE T. MORAGA and VICTORIA SORIANO and FILCON READY MIXED,
INC., Respondents.

VILLARAMA, JR., J.:

An action for declaration of nullity of title and recovery of ownership of real

property, or re-conveyance, is a real action but it is an action in personam, for it
binds a particular individual only although it concerns the right to a tangible thing.
Any judgment therein is binding only upon the parties properly impleaded.

Since they were not impleaded, it is beyond dispute that Green Acres was not
made a party in the DARAB case. Consequently, the January 17, 2001 DARAB
decision cannot bind Green Acres. Likewise, the binding effect of the DARAB
decision cannot be extended to Green Acres by the mere issuance of a writ of
execution against it. No one shall be affected by any proceeding to which he is a
stranger, and strangers to a case are not bound by any judgment rendered by the
court. In the same manner, a writ of execution can be issued only against a party
and not against one who did not have his day in court. Only real parties in
interest in an action are bound by the judgment therein and by writs of execution
and demolition issued pursuant thereto.

Moreover, a Torrens title, as a general rule, is irrevocable and indefeasible, and

the duty of the court is to see to it that this title is maintained and respected
unless challenged in a direct proceeding. Section 48 of P.D. No. 1529 provides:

SEC. 48. Certificate not subject to collateral attack. – A certificate of title shall not
be subject to collateral attack. It cannot be altered, modified, or cancelled except
in a direct proceeding in accordance with law. (Emphasis supplied.)

An action is deemed an attack on a title when the object of the action or

proceeding is to nullify the title, and thus challenge the judgment pursuant to
which the title was decreed. The attack is direct when the object of the action is
to annul or set aside such judgment, or enjoin its enforcement. On the other
hand, the attack is indirect or collateral when, in an action to obtain a different
relief, an attack on the judgment is nevertheless made as an incident thereof.

In the instant case, Cabral seeks the execution of a final and executory DARAB
decision that directs the cancellation of the TCTs in the name of the Spouses
Moraga and Filcon. Nowhere in the said decision is Green Acres or its TCTs
mentioned. x x x Clearly, seeking the cancellation of the titles of Green Acres by
a mere Motion for Issuance of Writ of Execution of a decision rendered in a case
where said titles were not in issue constitutes a collateral attack on them which
this Court cannot allow.
x x x only the decision of the DARAB as embodied in the dispositive portion of
the decision can be implemented by a writ of execution.

A reading of the fallo of the DARAB decision would show that nothing in it directs
the cancellation of the titles issued in favor of Green Acres. To subscribe to
Cabral’s prayer in her motion is tantamount to modifying or amending a decision
that has already attained finality in violation of the doctrine of immutability of
judgment.

Green Acres is considered an innocent purchaser for value. It relied on the

certificates of title of Filcon, free from any liens and encumbrances. The only
annotation on them was a cancelled real estate mortgage in favor of PCI Bank.
Thus, as held by the CA, Green Acres was under no obligation to investigate
beyond Filcon’s titles as Green Acres had all the reason to believe that said titles
were free from any lien, claim or encumbrance.

x x x It is settled that a void title may be the source of a valid title in the hands of
an innocent purchaser for value. An innocent purchaser for value is one who,
relying on the certificate of title, bought the property from the registered owner,
without notice that some other person has a right to, or interest in such property
and pays a full and fair price for the same at the time of such purchase or before
he has notice of the claim or interest of some other person in the property.

Green Acres is considered an innocent purchaser for value. It relied on the

certificates of title of Filcon, free from any liens and encumbrances. The only
annotation on them was a cancelled real estate mortgage in favor of PCI Bank.
Thus, as held by the CA, Green Acres was under no obligation to investigate
beyond Filcon’s titles as Green Acres had all the reason to believe that said titles
were free from any lien, claim or encumbrance.

If there is anyone to be blamed for Cabral’s failure to recover the subject

properties, it is Cabral herself, who, due to her own negligence, failed to annotate
a notice of lis pendens on the titles of the Spouses Moraga and Filcon and thus
give notice to future transferees. x x x Had her adverse claim been annotated on
said titles, said notice would have served as a warning to Green Acres or other
purchasers of the properties that any right they acquire would be subject to the
outcome of the litigation before the DARAB. Having failed to make such
annotation, this Court has no choice but to uphold the titles of Green Acres, an
innocent purchaser for value.

For an action to quiet title to prosper, two indispensable requisites must concur:
(1) the plaintiff or complainant has a legal or equitable title or interest in the real
property subject of the action; and (2) the deed, claim, encumbrance, or
proceeding claimed to be casting a cloud on his title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal
efficacy.
A cloud on title consists of (1) any instrument, record, claim, encumbrance or
proceeding; (2) which is apparently valid or effective; (3) but is in truth and in fact
invalid, ineffective, voidable, or unenforceable; and (4) may be prejudicial to the
title sought to be quieted.

the DARAB decision in favor of Cabral satisfies all four elements of a cloud on
title.

x x x it is ineffective and unenforceable against Green Acres because Green

Acres was not properly impleaded in the DARAB proceedings nor was there any
notice of lis pendens annotated on the title of Filcon so as to serve notice to
Green Acres that the subject properties were under litigation. As such, Green
Acres is an innocent purchaser for value.

x x x one of the proper remedies of a person who was not impleaded in the
proceedings declaring null and void the title from which his title to the property
had been derived, is an action for quieting title.

G.R. No. 184589 June 13, 2013 DEOGENES O. RODRIGUEZ, Petitioner, vs.
HON. COURT OF APPEALS and PHILIPPINE CHINESE CHARITABLE
ASSOCIATION, INC.,Respondents.

LEONARDO-DE CASTRO, J.:

In view of the foregoing, issuing an OCT covering the subject property to

Rodriguez would give rise to a third certificate of title over the same property.
Such act would only cause more confusion and complication, rather than the
preservation, of the Torrens system of registration.

In this case, PCCAI is the registered owner of the subject property under TCT
No. 482970, which could be traced back to TCT No. 16781 issued to Landicho.
As between PCCAI and Rodriguez, the former is better entitled to the protection
of the Torrens system. PCCAI can rely on its TCT No. 482970 until the same has
been annulled and/or cancelled.

If Rodriguez wants to have a decree of registration and OCT issued in his (or
even in Landicho’s name) for the subject property, he should have directly
challenged the validity of the extant TCT No. 482970 of PCCAI for the very same
property in an action specifically instituted for such purpose (i.e., petition for
annulment and/or cancellation of title, petition for quieting of title) and pray the
said certificate of title be annulled or canceled. The proper court in an appropriate
action can try the factual and legal issues involving the alleged fatal defects in
Landicho’s TCT No. 167681 and/or its derivative TCTs, including TCT No.
482970 of PCCAI; the legal effects of Landicho’s sale of the subject property to
BCPI (the predecessor-in-interest of PCCAI) in 1971 and also to Rodriguez in
1996; and the good faith or bad faith of PCCAI, as well as Rodriguez, in
purchasing the subject property. The resolution of these issues will ultimately be
determinative of who between Rodriguez and PCCAI is the rightful owner of the
subject property.

The LRA, in this case, filed the Manifestation dated February 4, 2008 to inform
the RTC that the subject property is already covered by two TCTs, both
"uncancelled and extant[;]" and for this reason, the LRA cannot comply with the
RTC Order dated April 10, 2007, directing the issuance of a decree of registration
and an OCT for the same property in Landicho’s name, as it would "further
aggravate the already existing problem of double titling." In filing said
Manifestation, the LRA was only faithfully pursuing its mandate to protect the
Torrens system and performing its function of extending assistance to the RTC
as regards Land Reg. Case No. N-5098. Contrary to Rodriguez’s assertion, the
Court of Appeals did not abdicate its jurisdiction when it granted the Petition for
Certiorari and Prohibition of PCCAI largely based on the Manifestation of the
LRA, since the LRA filed such a Manifestation as an officer of the court.

The subject property is presently covered by TCT No. 482970 in the name of
PCCAI. As the registered owner, PCCAI clearly has a legal interest in the subject
property. The issuance of another certificate of title to Rodriguez will adversely
affect PCCAI, constituting a cloud on its TCT No. 482970.
G.R. Nos. 193383-84, January 14, 2015 CBK POWER COMPANY LIMITED,
Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. [G.R.
NOS. 193407-08] COMMISSIONER OF INTERNAL REVENUE, Petitioner, v.
CBK POWER COMPANY LIMITED,
Respondent.

PERLAS-BERNABE, J.:

x x x the underlying principle of prior application with the BIR becomes moot in
refund cases – as in the present case – where the very basis of the claim is
erroneous or there is excessive payment arising from the non-availment of a tax
treaty relief at the first instance.

x x x the BIR should not impose additional requirements that would negate the
availment of the reliefs provided for under international agreements, especially
since said tax treaties do not provide for any prerequisite at all for the availment
of the benefits under said agreements.

x x x the application for a tax treaty relief from the BIR should merely operate to
confirm the entitlement of the taxpayer to the relief. Since CBK Power had
requested for confirmation from the ITAD on June 8, 2001 and October 28, 2002
before it filed on April 14, 2003 its administrative claim for refund of its excess
final withholding taxes, the same should be deemed substantial compliance with
RMO No. 1-2000, as in Deutsche Bank. To rule otherwise would defeat the
purpose of Section 229 of the NIRC in providing the taxpayer a remedy for
erroneously paid tax solely on the ground of failure to make prior application for
tax treaty relief. As the Court exhorted in Republic v. GST Philippines, Inc., while
the taxpayer has an obligation to honestly pay the right taxes, the government
has a corollary duty to implement tax laws in good faith; to discharge its duty to
collect what is due to it; and to justly return what has been erroneously and
excessively given to it.

x x x Had CBK Power awaited the action of the Commissioner on its claim for
refund prior to taking court action knowing fully well that the prescriptive period
was about to end, it would have lost not only its right to seek judicial recourse but
its right to recover the final withholding taxes it erroneously paid to the
government thereby suffering irreparable damage.

Nowhere and in no wise does the law imply that the Collector of Internal
Revenue must act upon the claim, or that the taxpayer shall not go to court
before he is notified of the Collector’s action. x x x. We understand the filing of
the claim with the Collector of Internal Revenue to be intended primarily as a
notice of warning that unless the tax or penalty alleged to have been collected
erroneously or illegally is refunded, court action will follow.

G.R. No. 235511, June 20, 2018 METROPOLITAN BANK AND TRUST
COMPANY, Petitioner, v. JUNNEL'S MARKETING CORPORATION,
PURIFICACION DELIZO, AND BANK OF COMMERCE, Respondents. G.R. No.
235565, June 20, 2018 BANK OF COMMERCE, Petitioner, v. JUNNEL'S
MARKETING CORPORATION, PURIFICACION DELIZO, AND METROPOLITAN
BANK AND TRUST COMPANY, Respondents.

VELASCO JR., J.:

rule on the sequence of recovery

The instant case involves the unauthorized payment of valid checks, i.e., the
payment of checks to persons other than the payee named therein or his order.
The subject checks herein are considered valid because they are complete and
bear genuine signatures.

The instant case involves eleven (11) crossed checks that were drawn against
Metrobank (the drawee bank) and made payable to the orders of Jardine and
Premiere (the designated payees). These checks were deposited with Bankcom
(the collecting bank) under Account No. 0015-32987-7 (an account that does not
belong to either payee or their indorsees). The checks were then presented to
Metrobank, which honored it, resulting to loss on the part of JMC (the drawer.)
Metrobank, as drawee bank, is liable to return to JMC the amount of the subject
checks.
A drawee bank is contractually obligated to follow the explicit instructions of its
drawer-clients when paying checks issued by them. The drawer's instructions-
including the designation of the payee or to whom the check should be paid-are
reflected on the face and by the terms thereof. When a drawee bank pays a
person other than the payee named on the check, it essentially commits a breach
of its obligation and renders the payment it made unauthorized. In such cases
and under normal circumstances, the drawee bank may be held liable to the
drawer for the amount charged against the latter's account.

once an unauthorized payment on a check has been made, the resulting liability
of the drawee bank to the drawer for such payment attaches even if the former
had acted merely upon the guarantees of a collecting bank. Indeed, it is only
when the unauthorized payment of a check had been caused or was attended by
the fault or negligence of the drawer himself can the drawee bank be excused,
whether wholly or partially, from being held liable to the drawer for the said
payment.

In the present case, it is apparent that Metrobank had breached JMC's

instructions when it paid the value of the subject checks to Bankcom for the
benefit of a certain Account No. 0015-32987-7. The payment to Account No.
0015-32987-7 was unauthorized as it was established that the said account does
not belong to Jardine or Premiere, the payees of the subject checks, or to their
indorsees. In addition, causal or concurring negligence on the part of JMC had
not been proven. Under such circumstances, Metrobank is clearly liable to return
to JMC the amount of the subject checks.

Bankcom is Liable to Metrobank

A collecting or presenting bank-i.e., the bank that receives a check for deposit
and that presents the same to the drawee bank for payment-is an indorser of
such check. When a collecting bank presents a check to the drawee bank for
payment, the former thereby assumes the same warranties assumed by an
indorser of a negotiable instrument pursuant to Section 66 of the Negotiable
Instruments Law. These warranties are: (1) that the instrument is genuine and in
all respects what it purports to be; (2) that the indorser has good title to it; (3) that
all prior parties had capacity to contract; and (4) that the instrument is, at the time
of the indorsement, valid and subsisting. If any of the foregoing warranties turns
out to be false, a collecting hank becomes liable to the drawee bank for
payments made under such false warranty.

Here, it is clear that Bankcom had assumed the warranties of an indorser when it
forwarded the subject checks to PCHC for presentment to Metrobank. By such
presentment, Bankcom effectively guaranteed to Metrobank that the subject
checks had been deposited with it to an account that has good title to the same.
This guaranty, however, is a complete falsity because the subject checks were, in
truth, deposited to an account that neither belongs to the payees of the subject
checks nor to their indorsees. Hence, as the subject checks were paid under
Bankcom's false guaranty, the latter-as collecting bank-stands liable to return the
value of such checks to Metrobank.

Under the PCHC Rules and Regulations, the stamped tracer/ID band of
Bankcom signifies that the checks had been deposited with it and that Bankcom
indorsed the said checks and sent them to PCHC. In the present case, all the
subject checks have been transmitted by Bankcom to the PCHC for clearing and
presentment to Metrobank. As earlier adverted to, all of the said checks also bear
the PCHC machine sprayed tracer/ID band of Bankcom. Such circumstances,
pursuant to prevailing banking practices as laid out under the PCHC Rules and
Regulations, are enough to fix the liability of Bankcom as an indorser of the
subject checks even sans the stamp "ALL PRIOR ENDORSEMENTS AND/OR
LACK OF ENDORSEMENT GUARANTEED" and "NON-NEGOTIABLE." As the
stamping of such guarantees are not required before the warranties of an
indorser could attach against Bankcom, we find the latter liable to reimburse
Metrobank the value of all the subject checks.

Recourse of Bankcom

In the event that it is made to reimburse the drawee bank, the collecting bank can
seek similar reimbursement from the very persons who caused the checks to be
deposited and received the unauthorized payments. Such persons are the ones
ultimately liable for the unauthorized payments and their liability rests on their
absolute lack of valid title to the checks that they were able to encash.

Doctrine of Comparative Negligence Does Not Apply to the Instant Case

Here, no negligence similar to that committed by the drawee banks in Bank of

the Philippine Islands and Allied Banking Corporation-whether in type or in
magnitude-can be attributed to Metrobank. Metrobank, though guilty of the
unauthorized check payments, only acted upon the guarantees deemed made by
Bankcom under prevailing banking practices. While Metrobank's reliance upon
the guarantees of Bankcom did not excuse it from being answerable to JMC,
such reliance does enable Metrobank to seek reimbursement from Bankcom on
the ground of the breach in the latter's warranties as a collecting bank. Under
such circumstances, we cannot deny Metrobank's right to seek reimbursement
from Bankcom.

Interests

Applying the foregoing guidelines to the case at bench, we fix the legal interests
due against Metrobank and Bankcom thusly:
1. The liability of Metrobank to JMC consists in returning the amount it
charged against JMC's current account. Current accounts, like all bank deposits,
are considered under the law as loans. Normally, current accounts are interest-
bearing by express contract. However, the actual interest rate, if any, for the
current account opened by JMC with Metrobank was not given in evidence.

Under these circumstances, we find it proper to subject Metrobank's principal

liability to JMC to a legal interest of 6% per annum from 28 January 2002 until full
satisfaction. The date 28 January 2002 is the date when JMC filed its complaint
with the RTC.

2. The liability of Bankcom to Metrobank, on the other hand, consists in

returning the amount it was paid by Metrobank. This stems from a breach by
Bankcom of its warranties as a collecting bank.

Accordingly, we find it proper to subject Bankcom's principal liability to Metrobank

to a legal interest of 6% per annum from 5 March 2003 until full satisfaction. The
date 5 March 2003 is the date when Metrobank filed its answer with cross-claim
against Bankcom.

G.R. No. 209969, September 27, 2017 JOSE SANICO AND VICENTE CASTRO,
Petitioners, v. WERHERLINA P. COLIPANO, Respondent.

CAGUIOA, J.:

Since the cause of action is based on a breach of a contract of carriage, the

liability of Sanico is direct as the contract is between him and Colipano. Castro,
being merely the driver of Sanico's jeepney, cannot be made liable as he is not a
party to the contract of carriage.

Since Castro was not a party to the contract of carriage, Colipano had no cause
of action against him and the pomplaint against him should be dismissed.
Although he was driving the jeepney, he was a mere employee of Sanico, who
was the operator and owner of the jeepney. The obligation to carry Colipano
safely to her destination was with Sanico. In fact, the elements of a contract of
carriage existeid between Colipano and Sanico: consent, as shown when Castro,
as employee of Sanico, accepted Colipano as a passenger when he allowed
Colipano to board the jeepney, and as to Colipano, when she boarded the
jeepney;cause or consideration, when Colipano, for her part, paid her fare;
and,object, the transportation of Colipano from the place of departure to the
place of destination.

Being an operator and owner of a common carrier, Sanico was required to

observe extraordinary diligence in safely transporting Colipano. When Colipano's
leg was injured while she was a passenger in Sanico's jeepney, the presumption
of fault or negligence on Sanico's part arose and he had the burden to prove that
he exercised the extraordinary diligence required of him. He failed to do this.
ART. 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof,
are liable for damages.

In Magat v. Medialdea, the Court ruled: "The phrase 'in any manner contravene
the tenor' of the obligation includes any illicit act or omission which impairs the
strict and faithful fulfillment of the obligation and every kind of defective
performance." There is no question here that making Colipano sit on the empty
beer case was a clear showing of how Sanico contravened the tenor of his
obligation to safely transport Colipano from the place of departure to the place of
destination as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, and with due regard for all the circumstances.

Colipano could not have clearly and unequivocally waived her right to claim
damages when she had no understanding of the right she was waiving and the
extent of that right. Worse, she was made to sign a document written in a
language she did not understand.

For a waiver to be valid and effective, it must not be contrary to law, morals,
public policy or good customs. To uphold a supposed waiver of any right to claim
damages by an injured passenger, under circumstances like those exhibited in
this case, would be to dilute and weaken the standard of extraordinary diligence
exacted by the law from common carriers and hence to render that standard
unenforceable. We believe such a purported waiver is offensive to public policy. x

x x Thus, in instances of injury or death, a waiver of the right to claim damages is

strictly construed against the common carrier so as not to dilute or weaken the
public policy behind the required standard of extraordinary diligence.

x x x testimonial evidence cannot be objected to on the ground of being self-

serving x x x

Colipano was subjected to cross-examination and both the RTC and CA believed
her testimony on her age and annual income. In fact, as these are questions of
facts, these findings of the RTC and CA are likewise binding on the Court.

x x x The loss of earning capacity commenced when Colipano's leg was crushed
on December 25, 1993.

The loss of earning capacity commenced when Colipano's leg was crushed on
December 25, 1993. Further, although as a general rule, documentary evidence
is required to prove loss of earning capacity, Colipano's testimony on her annual
earnings of P12,000.00 is an allowed exception. There are two exceptions to the
general rule and Colipano's testimonial evidence falls under the second
exception, viz.:
By way of exception, damages for loss of earning capacity may be awarded
despite the absence of documentary evidence when (1) the deceased is self-
employed earning less than the minimum wage under current labor laws, and
judicial notice may be taken of the fact that in the deceased's line of work no
documentary evidence is available; or (2) the deceased is employed as a daily
wage worker earning less than the minimum wage under current labor laws.

G.R. No. 203883, November 10, 2015 HOMEOWNERS ASSOCIATION OF

TALAYAN VILLAGE INC., Petitioner, v. J.M. TUASON & CO., INC., TALAYAN
HOLDINGS, INC., QUEZON CITY MAYOR AND EQUITABLE BANKING
CORPORATION (NOW BANCO DE ORO BANKING CORPORATION),
Respondents. G.R. NO. 203930 J.M. TUASON & CO., AND TALAYAN
HOLDINGS, INC., Petitioner, v.HOMEOWNERS ASSOCIATION OF TALAYAN
VILLAGE, INC. AND QUEZON CITY MAYOR, Respondent.

PEREZ, J.:

Passed on 14 October 1977, however, said law was correctly found by the CA to
be inapplicable to the case at bench since Talayan Village was developed in the
1950s. Considering that P.D. 1216 does not provide for the retroactive application
of its provisions, moreover, the CA cannot be faulted for ruling that the applicable
law is the Land Registration Act whose lack of requirement for' the reservation of
open spaces in subdivisions was filled in by the requirement for the same in the
ordinances passed by the Quezon City government. Having already designated
sufficient open spaces for the Sta. Mesa Heights subdivision to an excess of
48,679.040 square meters, J.M. Tuason was admitted by the parties to have
complied with said ordinances by executing the Deed of Donation over Block 494
in favor of the Quezon City government.

The purpose of the formal requirement for acceptance of a donation is to ensure

that such acceptance is duly communicated to the donor. Since the donation is
considered perfected only upon the moment the donor is apprised of such
acceptance, it has been ruled that lack of such acceptance, as expressly
provided under the law, renders the donation null and void.

absent a deed of donation or legitimate acquisition thereof by the government,

the area claimed to have been reserved for public use and/or as an open space
still pertained to the subdivision developer.

Although there is no dispute regarding the fact that J.M. Tuason later endeavored
to donate Block 494 to the Quezon City government, the transfer was not
efficacious not only for lack of notarization of the document embodying the same
but, more importantly, for failure of the donee to accept the donation. Not having
been thus segregated and/or transferred, it necessarily follows that Block 494
was not removed from the commerce of man.

Since the Block 494 remained in private ownership, HATVI has neither factual
nor legal basis to question the sale thereof by the Quezon City government for
tax delinquency. As highest bidder at the tax delinquency sale, J.M. Tuason was
acting well within its rights when it sold the property to THI which had the right to
rely on what appears on the title covering the same. After the expiration of the
redemption period, after all, a property acquired pursuant to a tax delinquency
sale, like that purchased from a public auction sale, passes to the purchaser, free
from any encumbrance or third party claim not inscribed on the certificate of title.
Also, having purchased the property from J.M. Tuason, THI was likewise acting
well-. within its rights to cause the subdivision thereof, offer the same to the
general public and to utilize the same as security for the loan it obtained from
Equitable Bank. Given that the property was purchased at a tax delinquency
sale, on the other hand, Equitable Bank cannot be considered in bad faith when it
primarily relied on what appeared on the title over the property.

The rule is long and well-settled that every person dealing with registered land
has a right to rely on the face of the title when determining its ownership. A
mortgagee has a right to rely in good faith on the certificate of title of the
mortgagor of the property given as security and has no obligation to undertake
further investigation in the absence of any sign that might arouse suspicion.
Since their business is imbued with public interest, banks are, concededly, are
expected to be more cautious than ordinary individuals in dealing with lands,
even registered ones. Before approving a loan, it has become the practice of
banks and other financial institutions to conduct an ocular inspection of the
property offered to be mortgaged and verify the genuineness of the title to
determine the real owners thereof. The record shows that, despite being
confronted with THI's clean titles, Equitable Bank nevertheless caused an ocular
inspection of Block 494. Considering the validity of the mortgage THI executed in
its favor, however, there is no need to resolve the issue of whether or not
Equitable Bank was in good faith in proceeding with the mortgage despite the
visible improvements on the property.

1/2 G.R. No. 202414 June 4, 2014 JOSEPHINE WEE, Petitioner, vs. FELICIDAD
MARDO, Respondent.

MENDOZA, J.:

Based on these legal parameters, applicants for registration of title under Section
14(1) must sufficiently establish: (1) that the subject land forms part of the
disposable and alienable lands of the public domain; (2) that the applicant and
his predecessors-in-interest have been in open, continuous, exclusive and
notorious possession and occupation of the same; and (3) that it is under a bona
fide claim of ownership since June 12, 1945 or earlier.

A more important consideration, however, is that the subject land is already

registered under OCT No. OP-1840 (Patent No. 042118-03-6111) of the Registry
of Deeds of Cavite, under the name of respondent Felicidad Gonzales.

A public land patent, when registered in the corresponding Register of Deeds, is

a veritable Torrens title, and becomes as indefeasible upon the expiration of one
(1) year from the date of issuance thereof. Said title, like one issued pursuant to
a judicial decree, is subject to review within one (1) year from the date of the
issuance of the patent.

Accordingly, respondent’s registered patent in the corresponding Registry of

Deeds is a veritable Torrens title and becomes as indefeasible as a Torrens title
upon the expiration of one (1) year from the date of its issuance.

For said reason, the order of the RTC directing the Administrator of LRA to issue
a corresponding decree in petitioner’s name is null and void. A land registration
court has no jurisdiction to order the registration of land already decreed in the
name of another in an earlier land registration case. A second decree for the
same land would be null and void, since the principle behind the original
registration is to register a parcel of land only once.

Verily, once a title is registered, as a consequence either of judicial or

administrative proceedings, the owner may rest secure, without the necessity of
waiting in the portals of the court sitting in the mirador de su casa to avoid the
possibility of losing his land. The certificate of title cannot be defeated by
adverse, open and notorious possession. Neither can it be defeated by
prescription. As provided under Sec. 47 of PD 1529, no title to registered land in
derogation of the title of the registered owner shall be acquired by prescription or
adverse possession.

It is settled in this jurisdiction that the issue of the validity of title can only be
assailed in an action expressly instituted for such purpose.

In Lagrosa v. Court of Appeals, it was stated that it is a well-known doctrine that

the issue as to whether title was procured by falsification or fraud as advanced by
petitioner can only be raised in an action expressly instituted for the purpose. A
Torrens title can be attacked only for fraud, within one year after the date of the
issuance of the decree of registration. Such attack must be direct, and not by a
collateral proceeding. The title represented by the certificate cannot be changed,
altered, modified, enlarged, or diminished in a collateral proceeding. In this case,
the petitioner is contesting the indefeasibility of title on the ground of fraud and
misrepresentation. Applying the abovementioned doctrine, even assuming that
the petitioner’s allegations are true, the same are considered as collateral
attacks, and such must be raised in an action expressly instituted for such
purpose and in a proper proceeding.

Remedy of the petitioner is to file a separate proceeding such as an action for

specific performance or for reconveyance.

The issue of fraudulent alienation raised in the second application for registration
of the subject property is collateral attack which should be directly raised in a
separate proceeding filed for such purpose. It cannot be entertained in this
proceeding. In several cases, the Court has ruled that an attack is indirect or
collateral when, in an action to obtain a different relief, an attack on the judgment
or proceeding is nevertheless made as an incident thereof.

Ownership is different from a certificate of title. The fact that a person was able to
secure a title in his name did not operate to vest ownership upon him of the
subject land. Registration of a piece of land under the Torrens System does not
create or vest title, because it is not a mode of acquiring ownership.

x x x Its issuance in favor of a particular person does not foreclose the possibility
that the real property may be co-owned with persons not named in the certificate,
or that it may be held in trust for another person by the registered owner.

Reconveyance is based on Section 55 of Act No. 496, as amended by Act No.

3322, which states that in all cases of registration procured by fraud the owner
may pursue all his legal and equitable remedies against the parties to such fraud,
without prejudice, however, to the rights of any innocent holder for value of a
certificate of title. It is an action in personam available to a person whose
property has been wrongfully registered under the Torrens system in another's
name. It does not seek to set aside the decree but, respecting it as
incontrovertible and no longer open to review, seeks to transfer or reconvey the
land from the registered owner to the rightful owner. Reconveyance is always
available as long as the property has not passed to an innocent third person for
value.

THIRD DIVISION G.R. No. 178842, January 30, 2017 RENE H. IMPERIAL AND
NIDSLAND RESOURCES AND DEVELOPMENT CORPORATION, Petitioners,
v. HON. EDGAR L. ARMES, PRESIDING JUDGE OF BRANCH 4, REGIONAL
TRIAL COURT, 5TH JUDICIAL REGION, LEGAZPI CITY AND ALFONSO B.
CRUZ, JR., Respondents. G.R. No. 195509 ALFONSO B. CRUZ, Petitioner, v.
RENE IMPERIAL AND NIDSLAND RESOURCES AND DEVELOPMENT
CORPORATION,
Respondent.

JARDELEZA, J.:
The core issue is whether RTC Legazpi City has jurisdiction to declare the nullity
of the Decision of the SEC. To resolve this issue, we once again clarify the
apparent clash of jurisdiction between the SEC and the ordinary courts in cases
involving Presidential Decree No. 902-A (PD 902-A).

x x x the issue of whether the SEC has the power to hear and decide a case
depends on two determinants: (1) the status or relationship of the parties; and (2)
the nature of the question that is the subject of their controversy.

By way of illustration, in Union Glass we ruled that the action filed by the
dissenting stockholders against their corporation Pioneer Glass Manufacturing
(Pioneer) questioning its dacion en pago of Pioneer's plant in favor of Union
Glass is an intra-corporate dispute as it clearly pertained to the internal affairs of
the corporation. However, we held that the recovery of the possession of the
plant should have been filed with the trial court because the SEC possesses no
jurisdiction over Union Glass (the third-party purchaser) because it has no intra-
corporate relationship with any of the parties.

x x x "[t]he determination whether a contract is simulated or not is an issue that

could be resolved by applying pertinent provisions of the Civil Code, particularly
those relative to obligations and contracts. Disputes concerning the application of
the Civil Code are properly cognizable by courts of general jurisdiction."

Applying these principles to this case, we rule that the SEC does not have
jurisdiction to order the cancellation of the sale between Napal and Cruz. It also
has no jurisdiction to cancel Cruz's TCT and order its transfer to NIDSLAND.

To assail the validity of the sale, Imperial and NIDSLAND sought to prove that the
sale to Cruz was simulated. This involves the application of the law on sales. As
we have already held in Intestate Estate of Alexander T. Ty, the issue of whether
a sale is simulated falls within the jurisdiction of ordinary civil courts. It does not
concern an adjudication of the rights of Imperial, NIDSLAND and Napal under the
Corporation Code and the internal rules of the corporation. The resolution of
these questions requires the application of an entire gamut of laws that goes well
beyond the expertise of the SEC.

Meanwhile, the question of whether Cruz's TCT should be cancelled goes into
the proper application of Presidential Decree No. 1529 and related doctrines.
Specifically, there is a need to take into consideration whether the SEC Petition is
a collateral attack on the certificate of title which goes against the well-
established rule of indefeasibility. The resolution of this question demands the
application of our laws on land title and deeds, a matter outside the ambit of the
SEC's special competence.

Indeed, our jurisprudence has leaned in favor of recognizing the jurisdiction of

quasi-judicial bodies. However, this jurisdiction must always be viewed within the
context of its grant. The law vests quasi-judicial powers to administrative bodies
over matters that require their particular competence and specialized expertise.
This grant of jurisdiction is not and should not be justification to deprive courts of
law of their jurisdiction as determined by law and the Constitution.

The SEC also does not possess the expertise to go into the reception of
evidence and the conduct of hearings geared for the purpose of resolving issues
proper for a civil action. The resolution of a civil action requires preponderance of
evidence as a burden of proof. On the other hand, cases before quasi-judicial
bodies require only substantial evidence. Hence, the propriety of annulling a sale
and cancelling a Torrens title-which are in the nature of a civil action-on the basis
merely of substantial evidence determined by an administrative body raises due
process concerns.

The SEC also does not possess the expertise to go into the reception of
evidence and the conduct of hearings geared for the purpose of resolving issues
proper for a civil action. The resolution of a civil action requires preponderance of
evidence as a burden of proof. On the other hand, cases before quasi-judicial
bodies require only substantial evidence. Hence, the propriety of annulling a sale
and cancelling a Torrens title-which are in the nature of a civil action-on the basis
merely of substantial evidence determined by an administrative body raises due
process concerns.

Hence, because the SEC Decision was issued with grave abuse of discretion
and is therefore void, all acts emanating from it have no force and effect. Thus,
the Deed of Conveyance issued pursuant to it has no legal effect.

Nevertheless, while the certificates of title issued in the name of NIDSLAND

arose from a void judgment, this Court cannot nullify them in these proceedings.
The indefeasibility of a Torrens title prevents us from doing so. Further, we are
bound by rules on jurisdiction and the nature of the proceedings before us.

x x x The stability and reliability of the Torrens system is so important that we

cannot, in this case, undermine it for the sake of expediency.

Hence, we cannot order the direct cancellation of the certificates of title issued to
NIDSLAND even if they are the direct result of a void decision. The nullity of the
certificates of title should be threshed out in a petition for cancellation of title
brought before the proper court.
G.R. No. 206806, June 25, 2014 ARCO PULP AND PAPER CO., INC. AND
CANDIDA A. SANTOS, Petitioners, v. DAN T. LIM, DOING BUSINESS UNDER
THE NAME AND STYLE OF QUALITY PAPERS & PLASTIC PRODUCTS
ENTERPRISES, Respondent.

LEONEN, J.:

Novation must be stated in clear and unequivocal terms to extinguish an

obligation. It cannot be presumed and may be implied only if the old and new
contracts are incompatible on every point.

x x x the original contract between the parties was for respondent to deliver scrap
papers worth P7,220,968.31 to petitioner Arco Pulp and Paper. The payment for
this delivery became petitioner Arco Pulp and Paper’s obligation. By agreement,
petitioner Arco Pulp and Paper, as the debtor, had the option to either (1) pay the
price or (2) deliver the finished products of equivalent value to respondent.

x x x the obligation between the parties as an alternative obligation, whereby

petitioner Arco Pulp and Paper, after receiving the raw materials from
respondent, would either pay him the price of the raw materials or, in the
alternative,deliver to him the finished products of equivalent value.

For novation to take place, the following requisites must concur:

1) There must be a previous valid obligation.
2) The parties concerned must agree to a new contract.
3) The old contract must be extinguished.
4) There must be a valid new contract.

The test of incompatibility is whether the two obligations can stand together, each
one with its own independent existence.

novatio non praesumitur — that novation is never presumed.

There is nothing in the memorandum of agreement that states that with its
execution, the obligation of petitioner Arco Pulp and Paper to respondent would
be extinguished. It also does not state that Eric Sy somehow substituted
petitioner Arco Pulp and Paper as respondent’s debtor. It merely shows that
petitioner Arco Pulp and Paper opted to deliver the finished products to a third
person instead.

The consent of the creditor must also be secured for the novation to be valid.

In this case, respondent was not privy to the memorandum of agreement, thus,
his conformity to the contract need not be secured.
If the memorandum of agreement was intended to novate the original agreement
between the parties, respondent must have first agreed to the substitution of Eric
Sy as his new debtor. The memorandum of agreement must also state in clear
and unequivocal terms that it has replaced the original obligation of petitioner
Arco Pulp and Paper to respondent. Neither of these circumstances is present in
this case.

Petitioner Arco Pulp and Paper’s act of tendering partial payment to respondent
also conflicts with their alleged intent to pass on their obligation to Eric Sy. When
respondent sent his letter of demand to petitioner Arco Pulp and Paper, and not
to Eric Sy, it showed that the former neither acknowledged nor consented to the
latter as his new debtor. These acts, when taken together, clearly show that
novation did not take place.

Since there was no novation, petitioner Arco Pulp and Paper’s obligation to
respondent remains valid and existing. Petitioner Arco Pulp and Paper, therefore,
must still pay respondent the full amount of P7,220,968.31.

Under Article 2220 of the Civil Code, moral damages may be awarded in case of
breach of contract where the breach is due to fraud or bad faith.

x x x The breach must be wanton, reckless, malicious or in bad faith, and

oppressive or abusive.

requisites for the recovery of moral damages:

(1) first, there must be an injury, whether physical, mental or psychological,
clearly sustained by the claimant;
(2) second, there must be culpable act or omission factually established;
(3) third, the wrongful act or omission of the defendant is the proximate cause of
the injury sustained by the claimant; and
(4) fourth, the award of damages is predicated on any of the cases stated in
Article 2219 of the Civil Code.

Here, the injury suffered by respondent is the loss of P7,220,968.31 from his
business. This has remained unpaid since 2007. This injury undoubtedly was
caused by petitioner Arco Pulp and Paper’s act of refusing to pay its obligations.

When the obligation became due and demandable, petitioner Arco Pulp and
Paper not only issued an unfunded check but also entered into a contract with a
third person in an effort to evade its liability. This proves the third requirement.

As to the fourth requisite, Article 2219 of the Civil Code provides that moral
damages may be awarded in the following instances:

Article 2219. Moral damages may be recovered in the following and analogous
cases:
Article 2219, therefore, is not an exhaustive list of the instances where moral
damages may be recovered since it only specifies, among others, Article 21.
When a party reneges on his or her obligations arising from contracts in bad
faith, the act is not only contrary to morals, good customs, and public policy; it is
also a violation of Article 1159. Breaches of contract become the basis of moral
damages, not only under Article 2220, but also under Articles 19 and 20 in
relation to Article 1159.

Moral damages, however, are not recoverable on the mere breach of the
contract. Article 2220 requires that the breach be done fraudulently or in bad
faith.

x x x Hence, the person claiming bad faith must prove its existence by clear and
convincing evidence for the law always presumes good faith. Bad faith does not
simply connote bad judgment or negligence. It imports a dishonest purpose or
some moral obliquity and conscious doing of a wrong, a breach of known duty
through some motive or interest or ill will that partakes of the nature of fraud. It is,
therefore, a question of intention, which can be inferred from one’s conduct
and/or contemporaneous statements.

When petitioner Arco Pulp and Paper issued a check in partial payment of its
obligation to respondent, it was presumably with the knowledge that it was being
drawn against a closed account. Worse, it attempted to shift their obligations to a
third person without the consent of respondent.

Petitioner Arco Pulp and Paper’s actions clearly show “a dishonest purpose or
some moral obliquity and conscious doing of a wrong, a breach of known duty
through some motive or interest or ill will that partakes of the nature of fraud.”
Moral damages may, therefore, be awarded.

Exemplary damages may also be awarded.

The purpose of exemplary damages is to serve as a deterrent to future and

subsequent parties from the commission of a similar offense.

Also known as ‘punitive’ or ‘vindictive’ damages, exemplary or corrective

damages are intended to serve as a deterrent to serious wrong doings, and as a
vindication of undue sufferings and wanton invasion of the rights of an injured or
a punishment for those guilty of outrageous conduct.

The requisites for the award of exemplary damages are as follows:

(1) they may be imposed by way of example in addition to compensatory
damages, and only after the claimant's right to them has been established;
(2) that they cannot be recovered as a matter of right, their determination
depending upon the amount of compensatory damages that may be awarded to
the claimant; and
(3) the act must be accompanied by bad faith or done in a wanton, fraudulent,
oppressive or malevolent manner.

Business owners must always be forthright in their dealings. They cannot be

allowed to renege on their obligations, considering that these obligations were
freely entered into by them. Exemplary damages may also be awarded in this
case to serve as a deterrent to those who use fraudulent means to evade their
liabilities.

Since the award of exemplary damages is proper, attorney’s fees and cost of the
suit may also be recovered.

A director, officer or employee of a corporation is generally not held personally

liable for obligations incurred by the corporation.

Before a director or officer of a corporation can be held personally liable for

corporate obligations, however, the following requisites must concur:
(1) the complainant must allege in the complaint that the director or officer
assented to patently unlawful acts of the corporation, or that the officer was guilty
of gross negligence or bad faith; and
(2) the complainant must clearly and convincingly prove such unlawful acts,
negligence or bad faith.

Under the doctrine, the corporate existence may be disregarded where the entity
is formed or used for non-legitimate purposes, such as to evade a just and due
obligation, or to justify a wrong, to shield or perpetrate fraud or to carry out similar
or inequitable considerations, other unjustifiable aims or intentions, in which
case, the fiction will be disregarded and the individuals composing it and the two
corporations will be treated as identical.

Petitioner Santos cannot be allowed to hide behind the corporate veil. When
petitioner Arco Pulp and Paper’s obligation to respondent became due and
demandable, she not only issued an unfunded check but also contracted with a
third party in an effort to shift petitioner Arco Pulp and Paper’s liability. She
unjustifiably refused to honor petitioner corporation’s obligations to respondent.
These acts clearly amount to bad faith. In this instance, the corporate veil may be
pierced, and petitioner Santos may be held solidarily liable with petitioner Arco
Pulp and Paper.

In view, however, of the promulgation by this court of the decision dated August
13, 2013 in Nacar v. Gallery Frames, the rate of interest due on the obligation
must be modified from 12% per annum to 6% per annum from the time of
demand.

According to these guidelines, the interest due on the obligation of

P7,220,968.31 should now be at 6% per annum, computed from May 5, 2007,
when respondent sent his letter of demand to petitioners. This interest shall
continue to be due from the finality of this decision until its full satisfaction.

G.R. No. 204866 January 21, 2015 RUKS KONSULT AND

CONSTRUCTION,Petitioner, vs. ADWORLD SIGN AND ADVERTISING
CORPORATION* and TRANSWORLD MEDIA ADS, INC., Respondents.

PERLAS-BERNABE, J.:

Under Article 2194 of the Civil Code, joint tortfeasors are solidarily liable for the
resulting damage. In other words, joint tortfeasors are each liable as principals, to
the same extent and in the same manner as if they had performed the wrongful
act themselves."

There is no contribution between joint [tortfeasors] whose liability is solidary since

both of them are liable for the total damage. Where the concurrent or successive
negligent acts or omissions of two or more persons, although acting
independently, are in combination the direct and proximate cause of a single
injury to a third person, it is impossible to determine in what proportion each
contributed to the injury and either of them is responsible for the whole injury. x x
x. (Emphases and underscoring supplied)

G.R. No. 228799, January 10, 2018 MACTAN ROCK INDUSTRIES, INC. AND
ANTONIO TOMPAR,Petitioners, v. BENFREI S. GERMO, Respondent.

PERLAS-BERNABE, J.:

More importantly, MRII and Tompar's statements in their Answer constitute

judicial admissions, which are legally binding on them. Case law instructs that
even if such judicial admissions place a party at a disadvantageous position, he
may not be allowed to rescind them unilaterally and that he must assume the
consequences of such disadvantage, as in this case.

Thus, before a director or officer of a corporation can be held personally liable for
corporate obligations, the following requisites must concur:
(1) the complainant must allege in the complaint that the director or officer
assented to patently unlawful acts of the corporation, or that the officer was guilty
of gross negligence or bad faith; and
(2)the complainant must clearly and convincingly prove such unlawful acts,
negligence or bad faith.

In this case, Tompar's assent to patently unlawful acts of the MRII or that his acts
were tainted by gross negligence or bad faith was not alleged in Germo's
complaint, much less proven in the course of trial. Therefore, the deletion of
Tompar's solidary liability with MRII is in order.

G.R. No. 167615 January 11, 2016 SPOUSES ALEXANDER AND JULIE LAM,
Doing Business Under the Name and Style "COLORKWIK LABORATORIES"
AND "COLORKWIK PHOTO SUPPLY", Petitioners, vs. KODAK PHILIPPINES,
LTD., Respondent.

LEONEN, J.:

Under Article 1522 of the Civil Code, in the event the buyer accepts incomplete
delivery and uses the goods so delivered, not then knowing that there would not
be any further delivery by the seller, the buyer shall be liable only for the fair
value to him of the goods received. In other words, the buyer is still liable for the
value of the property received.

Defendants were under obligation to pay the amount of the unit. Failure of
delivery of the other units did not thereby give unto them the right to suspend
payment on the unit delivered.

Indeed, in incomplete deliveries, the buyer has the remedy of refusing payment
unless delivery is first made.

In this case though, payment for the two undelivered units have not even
commenced; the installments made were for only one (1) unit.

Hence, Kodak is right to retrieve the unit delivered.

The Lam Spouses were under obligation to pay for the amount of one unit, and
the failure to deliver the remaining units did not give them the right to suspend
payment for the unit already delivered. However, the trial court held that since
Kodak Philippines, Ltd. had elected to cancel the sale and retrieve the delivered
unit, it could no longer seek payment for any deterioration that the unit may have
suffered while under the custody of the Lam Spouses.

1/6 G.R. No. 183794, June 13, 2016 SPOUSES JAIME AND MATILDE POON,
Petitioners, v. PRIME SAVINGS BANK REPRESENTED BY THE PHILIPPINE
DEPOSIT INSURANCE CORPORATION AS STATUTORY LIQUIDATOR,
Respondent.

SERENO, C.J.:

The issues to be resolved are whether (1) respondent may be released from its
contractual obligations to petitioners on grounds of fortuitous event under Article
1174 of the Civil Code and unforeseen event under Article 1267 of the Civil Code;
(2) the proviso in the parties' Contract allowing the forfeiture of advance rentals
was a penal clause; and (3) the penalty agreed upon by the parties may be
equitably reduced under Article 1229 of the Civil Code.

We DENY the Petition.

It is clear from the allegations in paragraphs 12 and 13 of the Complaint that

respondent's right of action rested on the alleged abuse by petitioners of their
right under paragraph 24 of the Contract. Respondent's theory before the trial
court was that the tenacious enforcement by petitioners of their right to forfeit the
advance rentals was tainted with bad faith, because they knew that respondent
was already insolvent. In other words, the action instituted by respondent was for
the rescission of reciprocal obligations under Article 1191. The lower courts,
therefore, correctly ruled that Articles 1381 and 1382 were inapposite.

The closure of respondent's business was neither a fortuitous nor an unforeseen

event that rendered the lease agreement functus officio.

The period during which the bank cannot do business due to insolvency is not a
fortuitous event, unless it is shown that the government's action to place a bank
under receivership or liquidation proceedings is tainted with arbitrariness, or that
the regulatory body has acted without jurisdiction.

The theory of rebus sic stantibus in public international law is often cited as the
basis of the above article. Under this theory, the parties stipulate in light of certain
prevailing conditions, and the theory can be made to apply when these
conditions cease to exist. The Court, however, has once cautioned that Article
1267 is not an absolute application of the principle of rebus sic stantibus,
otherwise, it would endanger the security of contractual relations. After all, parties
to a contract are presumed to have assumed the risks of unfavorable
developments. It is only in absolutely exceptional changes of circumstance,
therefore, that equity demands assistance for the debtor.

x x x requisites for the application of Article 1267:

1. The event or change in circumstance could not have been foreseen at the time
of the execution of the contract.
2. It makes the performance of the contract extremely difficult but not impossible.
3. It must not be due to the act of any of the parties.
4. The contract is for a future prestation.

The difficulty of performance should be such that the party seeking to be

released from a contractual obligation would be placed at a disadvantage by the
unforeseen event. Mere inconvenience, unexpected impediments, increased
expenses, or even pecuniary inability to fulfil an engagement, will not relieve the
obligor from an undertaking that it has knowingly and freely contracted.
In a reciprocal contract such as the lease in this case, one obligation of
respondent as the lessee was to pay the agreed rents for the whole contract
period. It would be hard-pressed to complete the lease term since it was already
out of business only three and a half years into the 10-year contract period.
Without a doubt, the second and the fourth requisites mentioned above are
present in this case.

The first and the third requisites, however, are lacking. It must be noted that the
lease agreement was for 10 years.

Clearly, the closure of respondent's business was not an unforeseen event. As

the lease was long-term, it was not lost on the parties that such an eventuality
might occur, as it was in fact covered by the terms of their Contract. Besides, as
We have previously discussed, the event was not independent of respondent's
will.

The forfeiture clause in the Contract is penal in nature.

It is settled that a provision is a penal clause if it calls for the forfeiture of any
remaining deposit still in the possession of the lessor, without prejudice to any
other obligation still owing, in the event of the termination or cancellation of the
agreement by reason of the lessee's violation of any of the terms and conditions
thereof. This kind of agreement may be validly entered into by the parties. The
clause is an accessory obligation meant to ensure the performance of the
principal obligation by imposing on the debtor a special prestation in case of
nonperformance or inadequate performance of the principal obligation.

It is evident from the above-quoted testimony of Jaime Poon that the stipulation
on the forfeiture of advance rentals under paragraph 24 is a penal clause in the
sense that it provides for liquidated damages.

In effect, the penalty for the premature termination of the Contract works both
ways. As the CA correctly found, the penalty was to compel respondent to
complete the 10-year term of the lease. Petitioners, too, were similarly obliged to
ensure the peaceful use of their building by respondent for the entire duration of
the lease under pain of losing the remaining advance rentals paid by the latter.

The forfeiture clauses of the Contract, therefore, served the two functions of a
penal clause, i.e., (1) to provide for liquidated damages and (2) to strengthen the
coercive force of the obligation by the threat of greater responsibility in case of
breach. As the CA correctly found, the prestation secured by those clauses was
the parties' mutual obligation to observe the fixed term of the lease. For this
reason, We sustain the lower courts' finding that the forfeiture clause in
paragraph 24 is a penal clause, even if it is not expressly labelled as such.
A reduction of the penalty agreed upon by the parties is warranted under Article
1129 of the Civil Code.

The general rule is that courts have no power to ease the burden of obligations
voluntarily assumed by parties, just because things did not turn out as expected
at the inception of the contract.

It must be noted, however, that this case was initiated by the PDIC in furtherance
of its statutory role as the fiduciary of Prime Savings Bank. As the state-
appointed receiver and liquidator, the PDIC is mandated to recover and conserve
the assets of the foreclosed bank on behalf of the latter's depositors and
creditors. In other words, at stake in this case are not just the rights of petitioners
and the correlative liabilities of respondent lessee. Over and above those rights
and liabilities is the interest of innocent debtors and creditors of a delinquent
bank establishment. These overriding considerations justify the 50% reduction of
the penalty agreed upon by petitioners and respondent lessee in keeping with
Article 1229 of the Civil Code x x x

No proof of the supposed expenses they have incurred for the improvement of
the leased premises and the payment of respondent's unpaid utility bills can be
found in the records. Actual and compensatory damages must be duly proven
with a reasonable degree of certainty.

To recover moral and exemplary damages where there is a breach of contract,

the breach must be palpably wanton, reckless, malicious, in bad faith,
oppressive, or abusive. Attorney's fees are not awarded even if a claimant is
compelled to litigate or to incur expenses where no sufficient showing of bad faith
exists. None of these circumstances have been shown in this case.

Finally, in line with prevailing jurisprudence, legal interest at the rate of 6% per
annum is imposed on the monetary award computed from the finality of this
Decision until full payment.

G.R. No. 184458 January 14, 2015 RODRIGO RIVERA, Petitioner, vs.
SPOUSES SALVADOR CHUA AND VIOLETA S. CHUA, Respondents. x - - - - - -
- - - - - - - - - - - - - - - - - x G.R. No. 184472 SPS. SALVADOR CHUA and
VIOLETA S. CHUA, Petitioners, vs. RODRIGO RIVERA, Respondent.

PEREZ, J.:

The Promissory Note in this case is made out to specific persons, herein
respondents, the Spouses Chua, and not to order or to bearer, or to the order of
the Spouses Chua as payees. However, even if Rivera’s Promissory Note is not
a negotiable instrument and therefore outside the coverage of Section 70 of the
NIL which provides that presentment for payment is not necessary to charge the
person liable on the instrument, Rivera is still liable under the terms of the
Promissory Note that he issued.

The Promissory Note is unequivocal about the date when the obligation falls due
and becomes demandable—31 December 1995. As of 1 January 1996, Rivera
had already incurred in delay when he failed to pay the amount of ₱120,000.00
due to the Spouses Chua on 31 December 1995 under the Promissory Note.

In reciprocal obligations, neither party incurs in delay if the other does not comply
or is not ready to comply in a proper manner with what is incumbent upon him.
From the moment one of the parties fulfills his obligation, delay by the other
begins. (Emphasis supplied)

There are four instances when demand is not necessary to constitute the debtor
in default: (1) when there is an express stipulation to that effect; (2) where the
law so provides; (3) when the period is the controlling motive or the principal
inducement for the creation of the obligation; and (4) where demand would be
useless. In the first two paragraphs, it is not sufficient that the law or obligation
fixes a date for performance; it must further state expressly that after the period
lapses, default will commence.

Article 2209 is specifically applicable in this instance where: (1) the obligation is
for a sum of money; (2) the debtor, Rivera, incurred in delay when he failed to
pay on or before 31 December 1995; and (3) the Promissory Note provides for
an indemnity for damages upon default of Rivera which is the payment of a
5%monthly interest from the date of default.

We do not consider the stipulation on payment of interest in this case as a penal

clause although Rivera, as obligor, assumed to pay additional 5% monthly
interest on the principal amount of ₱120,000.00 upon default.

The penalty may be enforced only when it is demandable in accordance with the
provisions of this Code. The penal clause is generally undertaken to insure
performance and works as either, or both, punishment and reparation. It is an
exception to the general rules on recovery of losses and damages. As an
exception to the general rule, a penal clause must be specifically set forth in the
obligation.

In high relief, the stipulation in the Promissory Note is designated as payment of

interest, not as a penal clause, and is simply an indemnity for damages incurred
by the Spouses Chua because Rivera defaulted in the payment of the amount of
₱120,000.00. The measure of damages for the Rivera’s delay is limited to the
interest stipulated in the Promissory Note. In apt instances, in default of
stipulation, the interest is that provided by law.
Stipulated interest rates are illegal if they are unconscionable and the Court is
allowed to temper interest rates when necessary. Since the interest rate agreed
upon is void, the parties are considered to have no stipulation regarding the
interest rate, thus, the rate of interest should be 12% per annum computed from
the date of judicial or extrajudicial demand.

G.R. No. 185798 January 13, 2014 FIL-ESTATE PROPERTIES, INC. AND FIL-
ESTATE NETWORK INC., Petitioners, vs. SPOUSES CONRADO AND MARIA
VICTORIA RONQUILLO, Respondents.

PEREZ, J.:

Three issues are presented for our resolution: 1) whether or not the Asian
financial crisis constitute a fortuitous event which would justify delay by
petitioners in the performance of their contractual obligation; 2) assuming that
petitioners are liable, whether or not 12% interest was correctly imposed on the
judgment award, and 3) whether the award of moral damages, attorney’s fees
and administrative fine was proper.

x x x the Asian financial crisis is not a fortuitous event that would excuse
petitioners from performing their contractual obligation; second, as a result of the
breach committed by petitioners, respondents are entitled to rescind the contract
and to be refunded the amount of amortizations paid including interest and
damages; and third, petitioners are likewise obligated to pay attorney’s fees and
the administrative fine.

Indeed, the non-performance of petitioners’ obligation entitles respondents to

rescission under Article 1191 of the New Civil Code x x x

Conformably with these provisions of law, respondents are entitled to rescind the
contract and demand reimbursement for the payments they had made to
petitioners.

Also, we cannot generalize that the Asian financial crisis in 1997 was
unforeseeable and beyond the control of a business corporation. It is unfortunate
that petitioner apparently met with considerable difficulty e.g. increase cost of
materials and labor, even before the scheduled commencement of its real estate
project as early as 1995. However, a real estate enterprise engaged in the pre-
selling of condominium units is concededly a master in projections on
commodities and currency movements and business risks. The fluctuating
movement of the Philippine peso in the foreign exchange market is an everyday
occurrence, and fluctuations in currency exchange rates happen everyday, thus,
not an instance of caso fortuito.
Finally, we sustain the award of moral damages. In order that moral damages
may be awarded in breach of contract cases, the defendant must have acted in
bad faith, must be found guilty of gross negligence amounting to bad faith, or
must have acted in wanton disregard of contractual obligations. The Arbiter found
petitioners to have acted in bad faith when they breached their contract, when
they failed to address respondents’ grievances and when they adamantly refused
to refund respondents' payment.

G.R. No. 188145, April 18, 2016 SPOUSES PRIMO INALVEZ AND JULIANA
INALVEZ, Petitioners, v. BAYANG NOOL, ALLAN NOOL AND CELESTINO
NOOL, Respondents.

REYES, J.:

x x x whether co-ownership by the petitioners and the respondents over the

subject property continued even after the subject property was purchased by
TDB and title thereto transferred to its name, and even after it was eventually
bought back by the petitioners from TDB.

In this case, the petitioners' cause of action for recovery of possession is

grounded on their alleged exclusive ownership of the subject property which they
merely purchased from TDB. They contend that TDB's consolidation of
ownership over the subject property effectively ended and terminated the co-
ownership. The respondents, however, counter that they are co-owners of the
subject property and their co-ownership was by virtue of their inheritance, which
was registered in the names of the petitioners by way of an agreement. Bayang
also asserted that she never sold her share to the petitioners and Zamora nor
was she aware of any mortgage over the subject property.

Here, records show that the subject property was originally owned by Juliana and
Bayang's father, Cleto Macayanan under Original Certificate of Title No. 1665.
"Pursuant to Article 1451 of the Civil Code, when land passes by succession to
any person and he causes the legal title to be put in the name of another, a trust
is established by implication of law for the benefit of the true owner." Bayang,
being an heir and a co-owner, is thus entitled to the possession of the subject
property. x x x Evidently, a co-ownership existed between the parties prior to the
foreclosure and consolidation of title in favor of TDB and the subsequent re-
acquisition thereof by the petitioners.

Indeed, a co-owner does not lose his part ownership of a co-owned property
when his share is mortgaged by another co-owner without the former's
knowledge and consent as in the case at bar. The mortgage of the inherited
property is not binding against co-heirs who never benefited. As correctly
emphasized by the CA, the petitioners' right in the subject property is limited only
to their share in the co-owned property. When the subject property was sold to
and consolidated in the name of TDB, the latter merely held the subject property
in trust for the respondents. When the petitioners and Spouses Baluyot bought
back the subject property, they merely stepped into the shoes of TDB and
acquired whatever rights and obligations appertain thereto.

x x x Failure and intentional omission to disclose the fact of actual physical

possession by another person during registration proceedings constitutes actual
fraud. Likewise, it is fraud to knowingly omit or conceal a fact, upon which benefit
is obtained to the prejudice of a third person.

x x x a resolution on the issue of ownership does not subject the Torrens title
issued over the disputed realties to a collateral attack. It must be borne in mind
that what cannot be collaterally attacked is the certificate of title and not the title
itself. "Mere issuance of the certificate of title in the name of any person does not
foreclose the possibility that the real property may be under co-ownership with
persons not named in the certificate, or that the registrant may only be a trustee,
or that other parties may have acquired interest over the property subsequent to
the issuance of the certificate of title." The alleged incontrovertibility of title cannot
be successfully invoked by the petitioners because certificates of title merely
confirm or record title already existing and cannot be used as a shield for the
commission of fraud.

In Vda. de Cabrera v. CA, the Court held that where the transferees of an
undivided portion of the land allowed a co-owner of the property to occupy a
definite portion thereof and had not disturbed the same for a period too long to be
ignored, the possessor is in a better condition or right than said transferees.
(Potior est conditio possidentis) Such undisturbed possession had the effect of a
partial partition of the co-owned property which entitles the possessor to the
definite portion which he occupies. Conformably, the respondents are entitled to
the subject property, having enjoyed uninterrupted possession thereof for more
than 35 years.

x x x Since the mortgage of the co-owned property was done without the
respondents' consent, they cannot be deemed to have lost their share as a
consequence of the subsequent foreclosure and sale of the co-owned property.
In the same way, the petitioners, as mere co-owners, had no right to mortgage
the entire property for their right to do so is limited only to that portion that may
be allotted to them upon termination of the co-ownership.
PEN DEVELOPMENT CORPORATION AND LAS BRISAS RESORT
CORPORATION, Petitioners, v. MARTINEZ LEYBA, INC., Respondent

DEL CASTILLO, J.:

On this basis, respondent filed Civil Case No. 97-4386. Respondent's main
evidence is the said Verification Survey Plan Vs-04-000394, which is a public
document. As a public document, it is admissible in evidence even without further
proof of its due execution and genuineness, and had in its favor the presumption
of regularity, To contradict the same, there must be evidence that is clear,
convincing and more than merely preponderant, otherwise the document should
be upheld. The certification and approval by the Regional Technical Director of
Lands signifies the "technical correctness of the survey plotted in the said plan."

Although "[i]n overlapping of titles disputes, it has always been the practice for
the [trial] court to appoint a surveyor from the government land agencies [such
as] the Land Registration Authority or the DENR to act as commissioner," this is
not mandatory procedure; the trial court may rely on the parties' respective
evidence to resolve the case. In this case, respondent presented the results of a
verification survey conducted on its lands. On the other hand, petitioners did not
present proof like the results of a survey conducted upon their initiative to
contradict respondent's evidence; nor did they move for the appointment by the
trial court of government or private surveyors to act as commissioners. Their sole
defense is that they acquired their land in good faith and for value; but this does
not squarely address respondent's claim of overlapping.

On the issue of being a builder in bad faith, there is no question that petitioners
should be held liable to respondent for their obstinate refusal to abide by the
latter's repeated demands to cease and desist from continuing their construction
upon the encroached area. Petitioners' sole defense is that they purchased their
property in good faith and for value; but this does not squarely address the issue
of encroachment or overlapping. To repeat, while petitioners may have been
innocent purchasers for value with respect to their land, this does not prove that
they are equally innocent of the claim of encroachment upon respondent's lands.
The evidence suggests otherwise: despite being apprised of the encroachment,
petitioners turned a blind eye and deaf ear and continued to construct on the
disputed area. They did not bother to conduct their own survey to put the issue to
rest, and to avoid the possibility of being adjudged as builders in bad faith upon
land that did not long to them.

x x x For their part, petitioners are not entitled to reimbursement for necessary
expenses. Indeed, under Article 452 of the Civil Code,the builder, planter or
sower in bad faith is entitled to reimbursement for the necessary expenses of
preservation of the land. However, in this case, respondent's lands were not
preserved: petitioners' construction and use thereof in fact caused damage,
which must be undone or simply endured by respondent by force of law and
circumstance. Respondent did not in any way benefit from petitioners' occupation
of its lands.

Finally, on the question of laches, the CA correctly held that as owners of the
subject property, respondent has the imprescriptible right to recover possession
thereof from any person illegally occupying its lands. Even if petitioners have
been occupying these lands for a significant period of time, respondent as the
registered and lawful owner has the right to demand the return thereof at any
time.

Jurisprudence consistently holds that 'prescription and laches cannot apply to

registered land covered by the Torrens system' because 'under the Property
Registration Decree, no title to registered land in derogation to that of the
registered owner shall be acquired by prescription or adverse possession.'

G.R. No. 198356, April 20, 2015 ESPERANZA SUPAPO AND THE HEIRS OF
ROMEO SUPAPO, NAMELY: ESPERANZA, REX EDWARD, RONALD TROY,
ROMEO, JR., SHEILA LORENCE, ALL SURNAMED SUPAPO, AND SHERYL
FORTUNE SUPAPO-SANDIGAN, Petitioners, v. SPOUSES ROBERTO AND
SUSAN DE JESUS, MACARIO BERNARDO, AND THOSE PERSONS
CLAIMING RIGHTS UNDER THEM, Respondent.

BRION, J.:

Accion Publiciana and the Jurisdiction of the MeTC

Accion publiciana is an ordinary civil proceeding to determine the better right of

possession of realty independent of title. It refers to an ejectment suit filed after
the expiration of one year from the accrual of the cause of action or from the
unlawful withholding of possession of the realty.

In the present case, the Spouses Supapo filed an action for the recovery of
possession of the subject lot but they based their better right of possession on a
claim of ownership.

This Court has held that the objective of the plaintiffs in accion publiciana is to
recover possession only, not ownership. However, where the parties raise the
issue of ownership, the courts may pass upon the issue to determine who
between the parties has the right to possess the property.

This adjudication is not a final determination of the issue of ownership; it is only

for the purpose of resolving the issue of possession, where the issue of
ownership is inseparably linked to the issue of possession. The adjudication of
the issue of ownership, being provisional, is not a bar to an action between the
same parties involving title to the property. The adjudication, in short, is not
conclusive on the issue of ownership.

In this regard, the complaint must allege the assessed value of the real property
subject of the complaint or the interest thereon to determine which court has
jurisdiction over the action. This is required because the nature of the action and
the court with original and exclusive jurisdiction over the same is determined by
the material allegations of the complaint, the type of relief prayed for by the
plaintiff, and the law in effect when the action is filed, irrespective of whether the
plaintiffs are entitled to some or all of the claims asserted therein.

In the present case, the Spouses Supapo alleged that the assessed value of the
subject lot, located in Metro Manila, is P39,980.00. This is proven by the tax
declaration issued by the Office of the City Assessor of Caloocan. The
respondents do not deny the genuineness and authenticity of this tax declaration.

Given that the Spouses Supapo duly complied with the jurisdictional
requirements, we hold that the MeTC of Caloocan properly acquired jurisdiction
over the complaint for accion publiciana.

The cause of action has not prescribed

In a long line of cases, we have consistently ruled that lands covered by a title
cannot be acquired by prescription or adverse possession. We have also held
that a claim of acquisitive prescription is baseless when the land involved is a
registered land because of Article 1126 of the Civil Code in relation to Act 496
[now, Section 47 of Presidential Decree (PD) No. 1529.

The Spouses Supapo (as holders of the TCT) enjoy a panoply of benefits under
the Torrens system. The most essential insofar as the present case is concerned
is Section 47 of PD No. 1529 x x x

In addition to the imprescriptibility, the person who holds a Torrens Title over a
land is also entitled to the possession thereof. The right to possess and occupy
the land is an attribute and a logical consequence of ownership. Corollary to this
rule is the right of the holder of the Torrens Title to eject any person illegally
occupying their property. Again, this right is imprescriptible.

In Bishop v. CA, we held that even if it be supposed that the holders of the
Torrens Title were aware of the other persons' occupation of the property,
regardless of the length of that possession, the lawful owners have a right to
demand the return of their property at any time as long as the possession was
unauthorized or merely tolerated, if at all.

Even if the defendant attacks the Torrens Title because of a purported sale or
transfer of the property, we still rule in favor of the holder of the Torrens Title if the
defendant cannot adduce, in addition to the deed of sale, a duly-registered
certificate of title proving the alleged transfer or sale.

The action is not barred by prior judgment

First, there is no identity of parties. The criminal complaint, although initiated by

the Spouses Supapo, was prosecuted in the name of the people of the
Philippines. The accion publiciana, on the other hand, was filed by and in the
name of the Spouses Supapo.

Second, there is no identity of subject matter. The criminal case involves the
prosecution of a crime under the Anti-Squatting Law while the accion publiciana
is an action to recover possession of the subject property.

And third, there is no identity of causes of action. The people of the Philippines
filed the criminal case to protect and preserve governmental interests by
prosecuting persons who violated the statute. The Spouses Supapo filed the
accion publiciana to protect their proprietary interests over the subject property
and recover its possession.

As already explained, there is no identity of parties between the criminal

complaint under the Anti-Squatting law and the civil action for accion publiciana.
For this reason alone, "collusiveness of judgment" does not apply.

Even if we assume, for the sake of argument, that there is identity of parties,
"conclusiveness of judgment" still does not apply because there is no identity of
issues. The issue in the criminal case is whether the respondents (accused
therein) committed the crime alleged in the information, while the only issue in
accion publiciana is whether the Spouses Supapo have a better right than the
respondents to possess and occupy the subject property.

For all these reasons, the defense of res judicata is baseless.

G.R. No. 173140, January 11, 2016 MACTAN CEBU INTERNATIONAL AIRPORT
AUTHORITY [MCIAA], Petitioner, v. HEIRS OF GAVINA IJORDAN, NAMELY,
JULIAN CUISON, FRANCISCA CUISON, DAMASTNA CUISON, PASTOR
CUISON, ANGELINA CUISON, MANSUETO CUISON, BONIFACIA CUISON,
BASILIO CUISON, MOISES CUISON, AND FLORENCIO CUISON,
Respondents.

BERSAMIN, J.:
A sale of jointly owned real property by a co-owner without the express authority
of the others is unenforceable against the latter, but valid and enforceable
against the seller.

Hence, the conveyance by Julian of the entire property pursuant to the Deed did
not bind the respondents for lack of their consent and authority in his favor. As
such, the Deed had no legal effect as to their shares in the property. Article 1317
of the Civil Code provides that no person could contract in the name of another
without being authorized by the latter, or unless he had by law a right to
represent him; the contract entered into in the name of another by one who has
no authority or legal representation, or who has acted beyond his powers, is
unenforceable, unless it is ratified, expressly or impliedly, by the person on
whose behalf it has been executed, before it is revoked by the other contracting
party. But the conveyance by Julian through the Deed had full force and effect
with respect to his share of 1/22 of the entire property consisting of 546 square
meters by virtue of its being a voluntary disposition of property on his part.

The doctrine of estoppel applied only to those who were parties to the contract
and their privies or successors-in-interest. Moreover, the respondents could not
be held to ratify the contract that was declared to be null and void with respect to
their share, for there was nothing for them to ratify. Verily, the Deed, being null
and void, had no adverse effect on the rights of the respondents in the subject
lot.

Under the Torrens System, no adverse possession could deprive the registered
owners of their title by prescription.The real purpose of the Torrens System is to
quiet title to land and to stop any question as to its legality forever. Thus, once
title is registered, the owner may rest secure, without the necessity of waiting in
the portals of the court, or sitting on the mirador su casa to avoid the possibility of
losing his land.

G.R. No. 203770, November 23, 2016 MANUELA AZUCENA MAYOR, Petitioner,
v. EDWIN TIU AND DAMIANA CHARITO MARTY, Respondents.

MENDOZA, J.:

Thus, the probate court should have recognized the incontestability accorded to
the Torrens title of Primrose over Marty's arguments of possible dissipation of
properties. In fact, in the given setting, even evidence purporting to support a
claim of ownership has to yield to the incontestability of a Torrens title, until after
the same has been set aside in the manner indicated in the law itself. In other
words, the existence of a Torrens title may not be discounted as a mere incident
in special proceedings for the settlement of the estate of deceased persons. Put
clearly, if a property covered by Torrens title is involved, "the presumptive
conclusiveness of such title should be given due weight, and in the absence of
strong compelling evidence to the contrary, the holder thereof should be
considered as the owner of the property in controversy until his title is nullified or
modified in an appropriate ordinary action, particularly, when as in the case at
bar, possession of the property itself is in the persons named in the title."

the respondent court should have denied the motion of the respondent
administrator and excluded the property in question from the inventory of the
property of the estate. It had no authority to deprive such third persons of their
possession and ownership of the property.

July 11, 2016 G.R. No. 194121 TORRES-MADRID BROKERAGE, INC.,

Petitioner vs. FEB MITSUI MARINE INSURANCE CO., INC. and BENJAMIN P.
MANALAST AS, doing business under the name of BMT TRUCKING SERVICES,
Respondents

BRION, J.:

A brokerage may be considered a common carrier if it also undertakes to deliver

the goods for its customers.

Common carriers are persons, corporations, firms or associations engaged in the

business of transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public. By the nature of their
business and for reasons of public policy, they are bound to observe
extraordinary diligence in the vigilance over the goods and in the safety of their
passengers.

That TMBI does not own trucks and has to subcontract the delivery of its clients’
goods, is immaterial. As long as an entity holds itself to the public for the
transport of goods as a business, it is considered a common carrier regardless of
whether it owns the vehicle used or has to actually hire one.

Lastly, TMBI’s customs brokerage services – including the transport/delivery of

the cargo – are available to anyone willing to pay its fees. Given these
circumstances, we find it undeniable that TMBI is a common carrier.

For all other cases - such as theft or robbery – a common carrier is presumed to
have been at fault or to have acted negligently, unless it can prove that it
observed extraordinary diligence.

Simply put, the theft or the robbery of the goods is not considered a fortuitous
event or a force majeure. Nevertheless, a common carrier may absolve itself of
liability for a resulting loss: (1) if it proves that it exercised extraordinary diligence
in transporting and safekeeping the goods; or (2) if it stipulated with the
shipper/owner of the goods to limit its liability for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary diligence.

However, a stipulation diminishing or dispensing with the common carrier’s

liability for acts committed by thieves or robbers who do not act with grave or
irresistible threat, violence, or force is void under Article 1745 of the Civil Code
for being contrary to public policy.

In the present case, the shipper, Sony, engaged the services of TMBI, a common
carrier, to facilitate the release of its shipment and deliver the goods to its
warehouse. In turn, TMBI subcontracted a portion of its obligation – the delivery
of the cargo – to another common carrier, BMT. Despite the subcontract, TMBI
remained responsible for the cargo. Under Article 1736, a common carrier’s
extraordinary responsibility over the shipper’s goods lasts from the time these
goods are unconditionally placed in the possession of, and received by, the
carrier for transportation, until they are delivered, actually or constructively, by the
carrier to the consignee.

That the cargo disappeared during transit while under the custody of BMT –
TMBI’s subcontractor – did not diminish nor terminate TMBI’s responsibility over
the cargo. Article 1735 of the Civil Code presumes that it was at fault.

TMBI and BMT are not solidarily liable to Mitsui Notably, TMBI’s liability to Mitsui
does not stem from a quasi-delict (culpa aquiliana) but from its breach of contract
(culpa contractual). The tie that binds TMBI with Mitsui is contractual, albeit one
that passed on to Mitsui as a result of TMBI’s contract of carriage with Sony to
which Mitsui had been subrogated as an insurer who had paid Sony’s insurance
claim. The legal reality that results from this contractual tie precludes the
application of quasi-delict based Article 2194.

A third party may recover from a common carrier for quasi-delict but must prove
actual negligence.

In culpa contractual, the plaintiff only needs to establish the existence of the
contract and the obligor’s failure to perform his obligation. It is not necessary for
the plaintiff to prove or even allege that the obligor’s non-compliance was due to
fault or negligence because Article 1735 already presumes that the common
carrier is negligent. The common carrier can only free itself from liability by
proving that it observed extraordinary diligence. It cannot discharge this liability
by shifting the blame on its agents or servants.

On the other hand, the plaintiff in culpa aquiliana must clearly establish the
defendant’s fault or negligence because this is the very basis of the action.
Moreover, if the injury to the plaintiff resulted from the act or omission of the
defendant’s employee or servant, the defendant may absolve himself by proving
that he observed the diligence of a good father of a family to prevent the
damage.

In the present case, Mitsui’s action is solely premised on TMBI’s breach of

contract. Mitsui did not even sue BMT, much less prove any negligence on its
part. If BMT has entered the picture at all, it is because TMBI sued it for
reimbursement for the liability that TMBI might incur from its contract of carriage
with Sony/Mitsui. Accordingly, there is no basis to directly hold BMT liable to
Mitsui for quasi-delict.

BMT is liable to TMBI for breach of their contract of carriage

x x x By subcontracting the cargo delivery to BMT, TMBI entered into its own
contract of carriage with a fellow common carrier.

The cargo was lost after its transfer to BMT' s custody based on its contract of
carriage with TMBI.

Following Article 1735, BMT is presumed to be at fault. Since BMT failed to prove
that it observed extraordinary diligence in the performance of its obligation to
TMBI, it is liable to TMBI for breach of their contract of carriage.

In these lights, TMBI is liable to Sony (subrogated by Mitsui) for breaching the
contract of carriage. In tum, TMBI is entitled to reimbursement from BMT due to
the latter's own breach of its contract of carriage with TMBI. The proverbial buck
stops with BMT who may either: (a) absorb the loss, or (b) proceed after its
missing driver, the suspected culprit, pursuant to Article 2181.

November 20, 2017 G.R. No. 211564 BENJAMIN EVANGELISTA, Petitioner vs.
SCREENEX, INC., represented by ALEX

SERENO, CJ.:

A check is discharged by any other act which will discharge a simple contract for
the payment of money.

In BP 22 cases, the action for the corresponding civil obligation is deemed

instituted with the criminal action. The criminal action for violation of BP 22
necessarily includes the corresponding civil action, and no reservation to file
such civil action separately shall be allowed or recognized.

This notwithstanding, the civil action deemed instituted with the criminal action is
treated as an "independent civil liability based on contract."
x x x Section 119 of the NIL, however, states that a negotiable instrument like a
check may be discharged by any other act which will discharge a simple contract
for the payment of money, x x x

A check therefore is subject to prescription of actions upon a written contract.

Art. 1144

Barring any extrajudicial or judicial demand that may toll the 10-year prescription
period and any evidence which may indicate any other time when the obligation
to pay is due, the cause of action based on a check is reckoned from the date
indicated on the check.

If the check is undated, however, as in the present petition, the cause of action is
reckoned from the date of the issuance of the check. This is so because
regardless of the omission of the date indicated on the check, Section 17 of the
Negotiable Instruments Law instructs that an undated check is presumed dated
as of the time of its issuance.

Given the foregoing, the cause of action on the checks has become stale, hence,
time-barred. No written extrajudicial or judicial demand was shown to have been
made within 10 years which could have tolled the period. Prescription has indeed
set in.

It is a settled rule that the creditor's possession of the evidence of debt is proof
that the debt has not been discharged by payment. It is likewise an established
tenet that a negotiable instrument is only a substitute for money and not money,
and the delivery of such an instrument does not, by itself, operate as payment.
Thus, in BPI v. Spouses Royeca, we ruled that despite the lapse of three years
from the time the checks were issued, the obligation still subsisted and was
merely suspended until the payment by commercial document could actually be
realized.

However, payment is deemed effected and the obligation for which the check
was given as conditional payment is treated discharged, if a period of 10 years or
more has elapsed from the date indicated on the check until the date of
encashment or presentment for payment. The failure to encash the checks within
a reasonable time after issue, or more than 10 years in this instance, not only
results in the checks becoming stale but also in the obligation to pay being
deemed fulfilled by operation of law.

x x x While it is true that the delivery of a check produces the effect of payment
only when it is cashed, pursuant to Art. 1249 of the Civil Code, the rule is
otherwise if the debtor is prejudiced by the creditor's unreasonable delay in
presentment. The acceptance of a check implies an undertaking of due diligence
in presenting it for payment, and if he from whom it is received sustains loss by
want of such diligence, it will be held to operate as actual payment of the debt or
obligation for which it was given. x x x

Similarly in this case, we find that the delivery of the checks, despite the
subsequent failure to encash them within a period of 10 years or more, had the
effect of payment. Petitioner is considered discharged from his obligation to pay
and can no longer be pronounced civilly liable for the amounts indicated thereon.

January 13, 2016 G.R. No. 176986 NISSAN CAR LEASE PHILS., INC.,
Petitioner, vs. LICA MANAGEMENT, INC. and PROTON PILIPINAS, INC.,
Respondents.

JARDELEZA, J.:

As a rule, a corporation has a separate and distinct personality from its directors
and officers and can only exercise its corporate powers through its board of
directors. Following this rule, a verification and certification signed by an
individual corporate officer is defective if done without authority from the
corporation’s board of directors.

The requirement of verification being a condition affecting only the form of the
pleading, this Court has, in a number of cases, held that: [T]he following officials
or employees of the company can sign the verification and certification without
need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the
President of a corporation, (3) the General Manager or Acting General Manager,
(4) Personnel Officer, and (5) an Employment Specialist in a labor case.

In this case, Banson was President of NCLPI at the time of the filing of the
petition. Thus, and applying the foregoing ruling, he can sign the verification and
certification against forum shopping in the petition.

Validity of Extrajudicial Rescission of Lease Contract

Rule 70 of the Rules of Court sets forth the procedure in relation to the filing of
suits for forcible entry and unlawful detainer. The action filed by LMI against
NCLPI, however, is one for the recovery of a sum of money. Clearly, Section 2 of
Rule 70 is not applicable.

In fact, it does not appear that it was even necessary for LMI to eject NCLPI from
the leased premises. NCLPI had already vacated the same as early as October
11, 1996 when it surrendered possession of the premises to Proton, by virtue of
their Memorandum of Agreement, so that the latter can commence renovations.

It is true that NCLPI and LMI’s Contract of Lease does not contain a provision
expressly authorizing extrajudicial rescission. LMI can nevertheless rescind the
contract, without prior court approval, pursuant to Art. 1191 of the Civil Code.
Art. 1191 provides that the power to rescind is implied in reciprocal obligations, in
cases where one of the obligors should fail to comply with what is incumbent
upon him. Otherwise stated, an aggrieved party is not prevented from
extrajudicially rescinding a contract to protect its interests, even in the absence of
any provision expressly providing for such right.

x x x Otherwise, the party injured by the other's breach will have to passively sit
and watch its damages accumulate during the pendency of the suit until the final
judgment of rescission is rendered when the law itself requires that he should
exercise due diligence to minimize its own damages.

Having established that LMI can extrajudicially rescind its contract with NCLPI
even absent an express contractual stipulation to that effect, the question now to
be resolved is whether this extrajudicial rescission was proper under the
circumstances.

The Contract of Lease shows that the parties did not stipulate an applicable
interest rate in case of default in the payment of rentals. Thus, and following this
Court’s ruling in Nacar v. Gallery Frames, the foregoing amount of rental
arrearages shall earn interest at the rate of six percent (6%) per annum
computed from October 18, 1996, the date of LMI’s extrajudicial demand, until
the date of finality of this judgment. The total amount shall thereafter earn interest
at the rate of six percent (6%) per annum from such finality of judgment until its
satisfaction.

x x x the evidence shows that it was [NCLPI] which misrepresented itself to

PROTON as being a lessee of good standing, so that it could induce the latter to
occupy and renovate the premises when at that time the negotiations were
underway, the lease between [LMI] and [NCLPI] had already been terminated.

1/2 G.R. No. 175863, February 18, 2015 NATIONAL POWER CORPORATION,
Petitioner, v. LUCMAN M. IBRAHIM, ATTY. OMAR G. MARUHOM, ELIAS G.
MARUHOM, BUCAY G. MARUHOM, MAMOD G. MARUHOM, FAROUK G.
MARUHOM, HIDJARA G. MARUHOM, ROCANIA G. MARUHOM, POTRISAM G.
MARUHOM, LUMBA G. MARUHOM, SINAB G. MARUHOM, ACMAD G.
MARUHOM, SOLAYMAN G. MARUHOM, MOHAMAD M. IBRAHIM,
CAIRONESA M. IBRAHIM AND MACAPANTON K. MANGONDATO,
Respondents.

PEREZ, J.:

No Bad Faith On The Part of Petitioner

Petitioner is correct. No “bad faith” may be taken against it in paying Mangondato

the rental fees and expropriation indemnity due the subject land.
A finding of bad faith, thus, usually assumes the presence of two (2) elements:
first, that the actor knew or should have known that a particular course of action
is wrong or illegal, and second, that despite such actual or imputable knowledge,
the actor, voluntarily, consciously and out of his own free will, proceeds with such
course of action. Only with the concurrence of these two elements can we begin
to consider that the wrong committed had been done deliberately and, thus, in
bad faith.

that petitioner’s payment to Mangondato of the rental fees and expropriation

indemnity x x x was required by the final and executory decision in the said two
cases and was compelled thru a writ of garnishment issued by the court that
rendered such decision.

x x x Since petitioner was only acting under the lawful orders of a court in paying
Mangondato, we find that no bad faith can be taken against it, even assuming
that petitioner may have had prior knowledge about the claims of the Ibrahims
and Maruhoms upon the subject land and the TRO issued in Civil Case No. 967-
93.

Sans Bad Faith, Petitioner Cannot Be Held Liable to the Ibrahims and Maruhoms

regardless of who between Mangondato, on one hand, and the Ibrahims and
Maruhoms, on the other, turns out to be the real owner of the subject land.62
Either way, petitioner cannot be made liable to the Ibrahims and Maruhoms:

First. If Mangondato is the real owner of the subject land, then the obligation by
petitioner to pay for the rental fees and expropriation indemnity due the subject
land is already deemed extinguished by the latter’s previous payment under the
final judgment in Civil Case No. 605-92 and Civil Case No. 610-92. This would be
a simple case of an obligation being extinguished through payment by the debtor
to its creditor.63 Under this scenario, the Ibrahims and Maruhoms would not even
be entitled to receive anything from anyone for the subject land. Hence, petitioner
cannot be held liable to the Ibrahims and Maruhoms.

Second. We, however, can reach the same conclusion even if the Ibrahims and
Maruhoms turn out to be the real owners of the subject land.

Should the Ibrahims and Maruhoms turn out to be the real owners of the subject
land, petitioner’s previous payment to Mangondato pursuant to Civil Case No.
605-92 and Civil Case No. 610-92—given the absence of bad faith on petitioner’s
part as previously discussed—may nonetheless be considered as akin to a
payment made in “good faith” to a person in “possession of credit” per Article
1242 of the Civil Codethat, just the same, extinguishes its obligation to pay for
the rental fees and expropriation indemnity due for the subject land.
G.R. No. 190016 October 2, 2013 FREDERICK VENTURA, MARITES
VENTURA-ROXAS, and PHILIP VENTURA (HEIRS OF DECEASED DOLORES
C. VENTURA), Petitioners, vs. HEIRS OF SPOUSES EUSTACIO T. ENDAYA
and TRINIDAD L. ENDAYA, namely, TITUS L. ENDAYA, ENRICO L. ENDAYA,
and JOSEPHINE ENDAYA-BANTUG, Respondents.

PERLAS-BERNABE, J.:

A contract to sell is 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 latter upon his fulfillment of the conditions agreed upon, i.e., the
full payment of the purchase price and/or compliance with the other obligations
stated in the contract to sell. Given its contingent nature, the failure of the
prospective buyer to make full payment and/or abide by his commitments stated
in the contract to sell prevents the obligation of the prospective seller to execute
the corresponding deed of sale to effect the transfer of ownership to the buyer
from arising.

x x x In a contract to sell, the fulfillment of the suspensive condition will not

automatically transfer ownership to the buyer although the property may have
been previously delivered to him. The prospective seller still has to convey title to
the prospective buyer by entering into a contract of absolute sale. On the other
hand, in a conditional contract of sale, the fulfillment of the suspensive condition
renders the sale absolute and the previous delivery of the property has the effect
of automatically transferring the seller’s ownership or title to the property to the
buyer.

Keeping with these principles, the Court finds that respondents had no obligation
to petitioners to execute a deed of sale over the subject properties. As aptly
pointed out by the CA, aside from the payment of the purchase price and 12%
interest p.a. on the outstanding balance, the contract to sell likewise imposed
upon petitioners the obligation to pay the real property taxes over the subject
properties as well as 12% interest p.a. on the arrears. However, the summary of
payments as well as the statement of account submitted by petitioners clearly
show that only the payments corresponding to the principal obligation and the
12% interest p.a. on the outstanding balance were considered in arriving at the
amount of ₱952,152.00. x x x Hence, the reasonable conclusion would therefore
be that petitioners indeed failed to comply with all their obligations under the
contract to sell x x x
G.R. No. 166790 November 19, 2014 JUAN P. CABRERA, Petitioner, vs. HENRY
YSAAC, Respondent. LEONEN, J.:

Unless all the co-owners have agreed to partition their property, none of them
may sell a definite portion of the land. The co-owner may only sell his or her
proportionate interest in the co-ownership. A contract of sale which purports to
sell a specific or definite portion of unpartitioned land is null and void ab initio.

We find that there was no contract of sale. It was null ab initio.

As defined by the Civil Code, "[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." For there to be a valid contract, there must be
consent of the contracting parties, an object certain which is the subject matter of
the contract, and cause of the obligation which is established. Sale is a special
contract. The seller obligates himself to deliver a determinate thing and to
transfer its ownership to the buyer. In turn, the buyer pays for a price certain in
money or its equivalent. A "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." The seller and buyer must agree as to the certain thing that will be subject
of the sale as well as the price in which the thing will be sold. The thing to be sold
is the object of the contract, while the price is the cause or consideration.

If the alienation precedes the partition, the co-owner cannot sell a definite portion
of the land without consent from his or her co-owners. He or she could only sell
the undivided interest of the co-owned property.

The undivided interest of a co-owner is also referred to as the "ideal or abstract

quota" or "proportionate share." On the other hand, the definite portion of the
land refers to specific metes and bounds of a co-owned property.

The object of the sales contract between petitioner and respondent was a definite
portion of a co-owned parcel of land. At the time of the alleged sale between
petitioner and respondent, the entire property was still held in common. This is
evidenced by the original certificate of title, x x x

There was no showing that respondent was authorized by his coowners to sell
the portion of land occupied by Juan Cabrera, the Espiritu family, or the Borbe
family. Without the consent of his co-owners, respondent could not sell a definite
portion of the co-owned property. Respondent had no right to define a 95-square-
meter parcel of land, a 439-square-meter parcel of land, or a 321-square-meter
parcel of land for purposes of selling to petitioner. The determination of those
metes and bounds are not binding to the co-ownership and, hence, cannot be
subject to sale, unless consented to by all the co-owners.
The ruling in Pamplonadoes not apply to petitioner. There was no evidence
adduced during the trial that respondent’s co-owners acquiesced or tolerated the
sale to petitioner. The co-owners tolerated petitioner’s possession of a portion of
their land because petitioner was a lessee over a 95-square-meter portion of the
property, not the buyer of the 321-squaremeter portion.

There was also no evidence of consent to sell from the co-owners. When
petitioner approached respondent in 1995 to enforce the contract of sale,
respondent referred him to Franklin Ysaac, the administrator over the entire
property. Respondent’s act suggests the absence of consent from the co-owners.
Petitioner did not show that he sought Franklin Ysaac’s consent as administrator
and the consent of the other co-owners. Without the consent of the co-owners,
no partial partition operated in favor of the sale to petitioner.

At best, the agreement between petitioner and respondent is a contract to sell,

not a contract of sale. A contract to sell is a promise to sell an object, subject to
suspensive conditions. Without the fulfillment of these suspensive conditions, the
sale does not operate to determine the obligation of the seller to deliver the
object.

A co-owner could enter into a contract to sell a definite portion of the property.
However, such contract is still subject to the suspensive condition of the partition
of the property, and that the other co-owners agree that the part subject of the
contract to sell vests in favor of the co-owner’s buyer. Hence, the co-owners’
consent is an important factor for the sale to ripen.

A non-existent contract cannot be a source of obligations, and it cannot be

enforced by the courts.

The absence of a contract of sale means that there is no source of obligations for
respondent, as seller, orpetitioner, as buyer. Rescission is impossible because
there is no contract to rescind. The rule in Article 1592 that requires a judicial or
notarial act to formalize rescission of a contract of sale of an immovable property
does not apply. This court does not need to rule whether a letter is a valid method
of rescinding a sales contract over an immovable property because the question
is moot and academic.

Even if we assume that respondent had full ownership of the property and that he
agreed to sell a portion of the property to petitioner, the letter was enough to
cancel the contract to sell. Generally, "[t]he power to rescind obligations is
implied in reciprocal ones, in case one of the obligors should not comply with
what is incumbent on him."

Art. 1592
This provision contemplates (1) a contract of sale of an immovable property and
(2) a stipulation in the contract that failure to pay the price at the time agreed
upon will cause the rescission of the contract. The vendee or the buyer can still
pay even after the time agreed upon, if the agreement between the parties has
these requisites. This right of the vendee to pay ceases when the vendor or the
seller demands the rescission of the contract judicially or extra judicially. In case
of an extra judicial demand to rescind the contract, it should be notarized.

Hence, this provision does not apply if it is not a contract of sale of an immovable
property and merely a contract to sellan immovable property. A contract to sell is
"where the ownership or title is retained by the seller and is not to pass until the
full payment of the price, such payment being a positive suspensive condition
and failure of which is not a breach, casual or serious, but simply an event that
prevented the obligation of the vendor to convey title from acquiring binding
force."

x x x The law does not require notarization for a letter to rescind a contract to sell
immovable property. Notarization is only required if a contract of sale is being
rescinded.

The question of double sale also becomes moot and academic. There was no
valid sale between petitioner and respondent, while there was a valid sale
between the local government of Naga City and respondent and his co-owners.
Since there is only one valid sale, the rule on double sales under Article 1544 of
the Civil Code does not apply.

x x x petitioner is entitled to the return of the amount of money because he paid it

as consideration for ownership of the land. Since the ownership of the land could
not be transferred to him, the money he paid for that purpose must be returned to
him. Otherwise, respondent will be unjustly enriched.

x x x Without a valid contract that stipulates his rights, petitioner risked litigation
in order to determine if he has rights, and not to protect rights that he currently
has. Hence, the award of attorney's fees and litigation costs was not properly
justified.

G.R. No. 160107 October 22, 2014 SPOUSES JAIME SEBASTIAN AND
EVANGELINE SEBASTIAN, Petitioners, vs. BPI FAMILY BANK, INC.,
CARMELITA ITAPO AND BENJAMIN HAO, Respondents.

BERSAMIN, J.:

The protection of Republic Act No. 6552 (Realty Installment Buyer Protection Act)
does not cover a loan extended by the employer to enable its employee to
finance the purchase of a house and lot. The law protects only a buyer acquiring
the property by installment, not a borrower whose rights are governed by the
terms of the loan from the employer.

Republic Act No. 6552 was enacted to protect buyers of real estate on
installment payments against onerous and oppressive conditions. x x x

x x x In their case, however, the monthly amortizations represented the

installment payments of a housing loan that BPI Family had extended to them as
an employee’s benefit. The monthly amortizations they were liable for was
derived from a loan transaction, not a sale transaction, thereby giving rise to a
lender-borrower relationship between BPI Family and the petitioners.

x x x Republic Act No. 6552 aimed to protect buyers of real estate on installment
payments, not borrowers or mortgagors who obtained a housing loan to pay the
costs of their purchase of real estate and used the real estate as security for their
loan. The "financing of real estate in installment payments" referred to in Section
3, supra, should be construed only as a mode of payment vis-à-vis the seller of
the real estate, and excluded the concept of bank financing that was a type of
loan. Accordingly, Sections 3, 4 and 5, supra, must be read as to grant certain
rights only to defaulting buyers of real estate on installment, which rights are
properly demandable only against the seller of real estate.

The Act even in residential properties recognizes and reaffirms the vendor's right
to cancel the contract to sell upon breach and non-payment of the stipulated
installments but requires a grace period after at least two years of regular
installment payments (of one month for every one year of installment payments
made, but to be exercise by the buyer only once in every five years of the life of
the contract) with a refund of certain percentages of payments made on account
of the cancelled contract (starting with fifty percent with gradually increasing
percentages after five years of installments). In case of industrial and commercial
properties, as in the case at bar, the Act recognizes and reaffirms the Vendor's
right unqualifiedly to cancel the sale upon the buyer's default.

The petitioners purchased the realestate from PHILVILLE Realty, not from BPI
Family. Without the buyer-seller relationship between them and BPI Family, the
provisions of Republic Act No. 6552 were inapplicable and could not be invoked
by them against BPI Family.

x x x To reiterate, their reliance on Republic Act No. 6552 was misplaced

because its provisions could not extend to a situation bereft of any seller-buyer
relationship. Hence, they could not escape the consequences of the maturity of
their obligation by invoking the grace period provided in Section 3, supra.

x x x It is settled that foreclosure is valid only when the debtor is in default in the
payment of his obligation. Here, the records show that the petitioners were
defaulting borrowers, x x x
x x x the terms and conditions of the loan agreement, promissory notes and the
real estate mortgage contract, do not partake of a contract of adhesion. It must
be noted that appellants are personnel of the bank.

x x x The freedom to enter into contracts is protected by law and the courts are
not quick to interfere with such freedom unless the contract is contrary to law,
morals, good customs, public policy or public order. Courts are not authorized to
extricate parties from the necessary consequences of their acts, and the fact that
the contractual stipulations may turn out to be financially disadvantageous will
not relieve parties thereto of their obligations, x x x x

Assuming, arguendo, that appellee bank indeed refused to accept the

subsequent payment from appellants, they could have consigned the same
before the Court. They failed to do so. There was no effort on their part to
continue paying their obligations.

Thus, having signed a deed of mortgage in favor of appellee bank, appellants

should have foreseen that when their principal obligation was not paid when due,
the mortgagee has the right to foreclose the mortgage and to have the property
seized and sold with a view to applying the proceeds to the payment of the
principal obligation.

The foreclosure of a mortgage is but the necessary consequence of the non-

payment of an obligation secured by the mortgage. Where the parties have
stipulated in their agreement, mortgage contract and promissory note that the
mortgagee is authorized to foreclose the mortgage upon the mortgagor's default,
the mortgagee has a clear right to the foreclosure in case of the mortgagor's
default. Thereby, the issuance of a writ of preliminary injunction upon the
application of the mortgagor to prevent the foreclosure will be improper. As such,
the lower courts did not err in dismissing the injunction complaint of the
petitioners.
G.R. No. 193787 April 7, 2014 SPOUSES JOSE C. ROQUE AND BEATRIZ
DELA CRUZ ROQUE, with deceased Jose C. Roque represented by his
substitute heir JOVETTE ROQUE-LIBREA, Petitioners, vs. MA. PAMELA P.
AGUADO, FRUCTUOSO C. SABUG, JR., NATIONAL COUNCIL OF
CHURCHES IN THE PHILIPPINES (NCCP), represented by its Secretary
General SHARON ROSE JOY RUIZ-DUREMDES, LAND BANK OF THE
PHILIPPINES (LBP), represented by Branch Manager EVELYN M. MONTERO,
ATTY. MARIO S.P. DIAZ, in his Official Capacity as Register of Deeds for Rizal,
Morong Branch, and CECILIO U. PULAN, in his Official Capacity as Sheriff,
Office of the Clerk of Court, Regional Trial Court, Binangonan, Rizal,
Respondents.

PERLAS-BERNABE, J.:

The essence of an action for reconveyance is to seek the transfer of the property
which was wrongfully or erroneously registered in another person’s name to its
rightful owner or to one with a better right. Thus, it is incumbent upon the
aggrieved party to show that he has a legal claim on the property superior to that
of the registered owner and that the property has not yet passed to the hands of
an innocent purchaser for value.

x x x [I]n contracts to sell the obligation of the seller to sell becomes demandable
only upon the happening of the suspensive condition, that is, the full payment of
the purchase price by the buyer. It is only upon the existence of the contract of
sale that the seller becomes obligated to transfer the ownership of the thing sold
to the buyer. Prior to the existence of the contract of sale, the seller is not
obligated to transfer the ownership to the buyer, even if there is a contract to sell
between them.

Here, it is undisputed that Sps. Roque have not paid the final installment of the
purchase price. As such, the condition which would have triggered the parties’
obligation to enter into and thereby perfect a contract of sale in order to
effectively transfer the ownership of the subject portion from the sellers (i.e.,
Rivero et al.) to the buyers (Sps. Roque) cannot be deemed to have been
fulfilled. Consequently, the latter cannot validly claim ownership over the subject
portion even if they had made an initial payment and even took possession of the
same.

x x x Instead, Sps. Roque waited 26 years, reckoned from the execution of the
1977 Deed of Conditional Sale, to institute an action for reconveyance (in 2003),
and only after Lot 18089 was sold to Land Bank in the foreclosure sale and title
thereto was consolidated in its name. Thus, in view of the foregoing, Sabug, Jr. –
as the registered owner of Lot 18089 borne by the grant of his free patent
application – could validly convey said property in its entirety to Aguado who, in
turn, mortgaged the same to Land Bank. x x x In fine, Sps. Roque failed to
establish any superior right over the subject portion as against the registered
owner of Lot 18089, i.e., Land Bank, thereby warranting the dismissal of their
reconveyance action, without prejudice to their right to seek damages against the
vendors, i.e., Rivero et al.

x x x In a contract to sell, there being no previous sale of the property, a third

person buying such property despite the fulfilment of the suspensive condition
such as the full payment of the purchase price, for instance, cannot be deemed a
buyer in bad faith and the prospective buyer cannot seek the relief of
reconveyance of the property. There is no double sale in such case. Title to the
property will transfer to the buyer after registration because there is no defect in
the owner-seller’s title per se, but the latter, of course, may be sued for damages
by the intending buyer. (Emphasis supplied)

Art. 1544 Elements of Double Sale:

(a) The two (or more) sales transactions in 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 same seller.

1/7 G.R. No. 196251 July 9, 2014 OLIVAREZ REALTY CORPORATION and DR.
PABLO R. OLIVAREZ, Petitioner, vs. BENJAMIN CASTILLO, Respondent.

LEONEN, J.:

Trial may be dispensed with and a summary judgment rendered if the case can
be resolved judiciously by plain resort to the pleadings, affidavits, depositions,
and other papers filed by the parties.

x x x Under Section 3, Rule 35 of the 1997 Rules of Civil Procedure, summary

judgment may be rendered except as to the amount of damages. Thus, the Court
of Appeals "violated the procedural steps in rendering summary judgment."

In this case, Olivarez Realty Corporation admitted that it did not fully pay the
purchase price as agreed upon inthe deed of conditional sale. As to why it
withheld payments from Castillo, it set up the following affirmative defenses:
First, Castillo did not filea case to void the Philippine Tourism Authority’s title to
the property; second,Castillo did not clear the land of the tenants; third, Castillo
allegedly sold the property to a third person, and the subsequent sale is currently
being litigated beforea Quezon City court.

Contrary to petitioners’ claim, there is no "obvious ambiguity" as to which should

occur first — the payment of the disturbance compensation or the clearing of the
land within six months from the signing of the deed of conditional sale. The
obligations must be performed simultaneously. In this case, the parties should
have coordinated to ensure that tenants on the property were paid disturbance
compensation and were made to vacate the property six months after the signing
of the deed of conditional sale.

On one hand, pure obligations, or obligations whose performance do not depend

upon a future or uncertainevent, or upon a past event unknown to the parties, are
demandable at once. On the other hand, obligations with a resolutory period also
take effect at once but terminate upon arrival of the day certain.

Olivarez Realty Corporation’s obligation to pay disturbance compensation is a

pure obligation. The performance of the obligation to pay disturbance
compensation did not depend on any condition. Moreover, the deed of
conditional sale did not give the corporation a period to perform the obligation. As
such, the obligation to pay disturbance compensation was demandable at once.
Olivarez RealtyCorporation should have paid the tenants disturbance
compensation upon execution of the deed of conditional sale.

With respect to Castillo’s obligation to clear the land of the tenants within six
months from the signing of the contract, his obligation was an obligation with a
resolutory period. The obligation to clear the land of the tenants took effect at
once, specifically, upon the parties’ signing of the deed of conditional sale.
Castillo had until October 2, 2000, six months from April 5, 2000 when the parties
signed the deed of conditional sale, to clear the land of the tenants.

Olivarez Realty Corporation, therefore, had no right to withhold payments of the

purchase price. As the trial court ruled, Olivarez Realty Corporation "can only
claim non-compliance [of the obligation to clear the land of the tenants in]
October 2000." x x x

Castillo’s alleged prayer for the irreconcilable reliefs of rescission of contract and
reformation of instrument is not a ground to dismiss his complaint. A plaintiff may
allege two or more claims in the complaint alternatively or hypothetically, either in
one cause of action or in separate causes of action per Section 2, Rule 8 of the
1997 Rules of Civil Procedure. It is the filing of two separate cases for each of
the causes of action that is prohibited since the subsequently filed case may be
dismissed under Section 4, Rule 2 of the 1997 Rules of Civil Procedure on
splitting causes of action.

Castillo is entitled to cancel the contract of conditional sale

Since Olivarez Realty Corporation illegally withheld payments of the purchase

price, Castillo is entitled to cancel his contract with petitioner corporation.
However, we properly characterize the parties’ contract as a contract to sell, not a
contract of conditional sale.
In both contracts to sell and contracts of conditional sale, title to the property
remains with the seller until the buyer fully pays the purchase price. Both
contracts are subject to the positive suspensive condition of the buyer’s full
payment of the purchase price. In a contract of conditional sale, the buyer
automatically acquires title to the property upon full payment of the purchase
price. This transfer of title is "by operation of law without any further act having to
be performed by the seller."

In a contract to sell, transfer of title to the prospective buyer is not automatic.

"The prospective seller [must] convey title to the property [through] a deed of
conditional sale."

x x x In contracts of conditional sale, our laws on sales under the Civil Code of
the Philippines apply. On the other hand, contracts to sell are not governed by
our law on sales but by the Civil Code provisions on conditional obligations.

Specifically, Article 1191 of the Civil Code on the right to rescind reciprocal
obligations does not apply to contracts to sell. As this court explained in Ong v.
Court of Appeals, failure to fully pay the purchase price in contracts to sell is not
the breach of contract under Article 1191. Failure to fully pay the purchase price
is "merely an event which prevents the [seller’s] obligation to convey title from
acquiring binding force." This is because "there can be no rescission of an
obligation that is still nonexistent, the suspensive condition not having
[happened]."

In this case, Castillo reserved his title to the property and undertook to execute a
deed of absolute sale upon Olivarez Realty Corporation’s full payment of the
purchase price. Since Castillo still has to execute a deed of absolute sale to
Olivarez RealtyCorporation upon full payment of the purchase price, the transfer
of title is notautomatic. The contract in this case is a contract to sell.

As this case involves a contract to sell, Article 1191 of the Civil Code of the
Philippines does not apply. The contract to sell is instead cancelled, and the
parties shall stand as if the obligation to sell never existed. Olivarez Realty
Corporation shall return the possession of the property to Castillo. Any
improvement that Olivarez Realty Corporation may have introduced on the
property shall be forfeited in favor of Castillo per paragraph I of the deed of
conditional sale x x x

As for prospective sellers, this court generally orders the reimbursement of the
installments paid for the property when setting aside contracts to sell. This is true
especially if the property’s possession has not been delivered to the prospective
buyer prior to the transfer of title.
In this case, however, Castillo delivered the possession of the property to
Olivarez Realty Corporation prior to the transfer of title. We cannot order the
reimbursement of the installments paid.

In this case, Olivarez Realty Corporation failed to fully pay the purchase price for
the property. It only paid ₱2,500,000.00 out of the ₱19,080,490.00 agreed
purchase price. Worse, petitioner corporation has been in possession of
Castillo’s property for 14 years since May 5, 2000 and has not paid for its use of
the property.

Similar to the ruling in Gomez, we order the ₱2,500,000.00 forfeited in favor of

Castillo as reasonable compensation for Olivarez Realty Corporation’s use of the
property.

Olivarez Realty Corporation is liable for moral and exemplary damages and
attorney’s fees

Nonetheless, we hold that Castillo is entitled to moral damages, exemplary

damages, and attorney’s fees. Moral damages may be awarded in case the
claimant experienced physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury. As for exemplary damages, they are awarded in addition to moral
damages by way of example or correction for the public good. Specifically in
contracts, exemplary damages may be awarded if the defendant acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner.

Under the deed of conditional sale, Olivarez Realty Corporation may only
suspend the monthly down payment in case Castillo fails to clear the land of the
tenants six months from the signing of the instrument. Yet, even before the sixth
month arrived, Olivarez Realty Corporation withheld payments for Castillo’s
property. It even used as a defense the fact that no case was filed against the
PhilippineTourism Authority when, under the deed of conditional sale, Olivarez
Realty Corporation was clearly responsible for initiating action against the
Philippine Tourism Authority. These are oppressive and malevolent acts, and we
find Castillo entitled to ₱500,000.00 moral damages and ₱50,000.00 exemplary
damages x x x Moral damages in favor of plaintiff is clearly justified . . . [Castillo]
is also entitled to ₱50,000.00 as exemplary damages to serve as a deterrent to
other parties to a contract to religiously comply with their prestations under the
contract.

x x x Castillo is entitled to attorney’s fees in addition to the exemplary damages.

Considering that Olivarez Realty Corporation refused to satisfy Castillo’splainly
valid, just, and demandable claim, the award of ₱50,000.00 as attorney’s fees is
in order.
x x x Dr. Pablo R.Olivarez is not solidarily liable with Olivarez Realty Corporation
for the amount of damages.

Under Article 1207 of the Civil Code of the Philippines, there is solidary liability
only when the obligation states it or when the law or the nature of the obligation
requires solidarity. In case of corporations, they are solely liable for their
obligations. The directors or trustees and officers are not liable with the
corporation even if it is through their acts that the corporation incurred the
obligation. This is because a corporation is separate and distinct from the
persons comprising it.

As an exception to the rule, directors or trustees and corporate officers may be

solidarily liable with the corporation for corporate obligations if they acted "in bad
faith or with gross negligence in directing the corporate affairs."

In this case, we find that Castillo failed to prove with preponderant evidence that
it was through Dr. Olivarez’s bad faith or gross negligence that Olivarez Realty
Corporation failed to fully pay the purchase price for the property. Dr. Olivarez’s
alleged act of making Castillo sign the deed of conditional sale without explaining
to the latter the deed’s terms in Tagalog is not reason to hold Dr. Olivarez
solidarily liable with the corporation. Castillo had a choice not to sign the deed of
conditional sale. He could have asked that the deed of conditional sale be written
in Tagalog. Thus, Olivarez Realty Corporation issolely liable for the moral and
exemplary damages and attorney’s fees to Castillo.

The trial court acquired jurisdiction over Castillo’s action as he paid the correct
docket fees

In De Leon v. Court of Appeals, this court held that an action for rescission of
contract of sale of real property is an action incapable of pecuniary estimation. In
De Leon, the action involved a real property. Nevertheless, this court held that "it
is the nature of the action as one for rescission of contract which is controlling."
Consequently, the docket fees to be paid shall be for actions incapableof
pecuniary estimation, regardless if the claimant may eventually recover the real
property.

x x x an action to cancel a contract to sell, similar to an action for rescission of

contract of sale, is an action incapable of pecuniary estimation. Like any action
incapable of pecuniary estimation, an action to cancel a contract to sell
"demands an inquiry into other factors" aside from the amount of money to be
awarded to the claimant. Specifically in this case, the trial court principally
determined whether Olivarez Realty Corporation failed to pay installments of the
property’s purchase price as the parties agreed upon in the deed of conditional
sale. The principal nature of Castillo’s action, therefore, is incapable of pecuniary
estimation.
All told, there is no issue that the parties in this case entered into a contract to
sell a parcel of land and that Olivarez Realty Corporation failed to fully pay the
installments agreed upon. Consequently, Castillo is entitled to cancel the contract
to sell.

G.R. No. 182349 July 24, 2013 REMAN RECIO, Petitioner, vs. HEIRS OF THE
SPOUSES AGUEDO and MARIA ALTAMIRANO, namely: ALEJANDRO,
ADELAIDA, CATALINA, ALFREDO, FRANCISCO, all surnamed ALTAMIRANO;
VIOLETAALTAMIRANO OLFATO, and LORETAALTAMIRANO VDA. DE
MARALIT and SPOUSES LAURO and MARCELINA LAJARCA,Respondents.

REYES, J.:

At the core of the present petition is the validity of the verbal contract of sale
between Alejandro and the petitioner; and the Deed of Absolute Sale between
the Altamiranos and the Spouses Lajarca involving the subject property.

A valid contract of sale requires: (a) a meeting of minds of the parties to transfer
ownership of the thing sold in exchange for a price; (b) the subject matter, which
must be a possible thing; and (c) the price certain in money or its equivalent.

In the instant case, all these elements are present. The records disclose that the
Altamiranos were the ones who offered to sell the property to Nena but the
transaction did not push through due to the fault of the respondents. Thereafter,
the petitioner renewed Nena’s option to purchase the property to which
Alejandro, as the representative of the Altamiranos verbally agreed. x x x It
cannot be denied that the oral contract of sale entered into between the petitioner
and Alejandro was valid.

However, the CA found that it was only Alejandro who agreed to the sale. There
is no evidence to show that the other co-owners consented to Alejandro’s sale
transaction with the petitioner. Hence, for want of authority to sell Lot No. 3, the
CA ruled that Alejandro only sold his aliquot share of the subject property to the
petitioner.

x x x Given the expressed requirement under the Articles 1874 and 1878 of the
Civil Code that there must be a written authority to sell an immovable property,
the petitioner’s arguments must fail. The petitioner asserts that since TCT No. T-
102563 contained a notice of lis pendens, the Altamiranos very well knew of the
earlier sale to him by Alejandro. While this may be true, it does not negate the
fact that Alejandro did not have any SPA. It was a finding that need not be
disturbed that Alejandro had no authority from his co-owners to sell the subject
property.
Moreover, the fact that Alejandro allegedly represented a majority of the co-
owners in the transaction with the Spouses Lajarca, is of no moment. The Court
cannot just simply assume that Alejandro had the same authority when he
transacted with the petitioner.

x x x In other words, when the petitioner relied only on the words of respondent
Alejandro without securing a copy of the SPA in favor of the latter, the petitioner
is bound by the risk accompanying such trust on the mere assurance of
Alejandro.

x x x In the instant case, the sale to the Spouses Lajarca and other transactions
where Alejandro allegedly represented a considerable majority of the co-owners
transpired after the sale to the petitioner; thus, the petitioner cannot rely upon
these acts or conduct to believe that Alejandro had the same authority to
negotiate for the sale of the subject property to him.

Indeed, the petitioner can only apply the principle of apparent authority if he is
able to prove the acts of the Altamiranos which justify his belief in Alejandro’s
agency; that the Altamiranos had such knowledge thereof; and if the petitioner
relied upon those acts and conduct, consistent with ordinary care and prudence.

x x x the sale between the petitioner and Alejandro is valid insofar as the aliquot
share of respondent Alejandro is concerned. Being a co-owner, Alejandro can
validly and legally dispose of his share even without the consent of all the other
co-heirs. Since the balance of the full price has not yet been paid, the amount
paid shall represent as payment to his aliquot share. This then leaves the sale of
the lot of the Altamiranos to the Spouses Lajarca valid only insofar as their
shares are concerned, exclusive of the aliquot part of Alejandro x x x

G.R. No. 200602 December 11, 2013 ACE FOODS, INC., Petitioner, vs. MICRO
PACIFIC TECHNOLOGIES CO., LTD.,Respondent.

PERLAS-BERNABE, J.:

The essential issue in this case is whether ACE Foods should pay MTCL the
purchase price for the subject products.

A contract is what the law defines it to be, taking into consideration its essential
elements, and not what the contracting parties call it. The real nature of a
contract may be determined from the express terms of the written agreement and
from the contemporaneous and subsequent acts of the contracting parties.
However, in the construction or interpretation of an instrument, the intention of
the parties is primordial and is to be pursued. The denomination or title given by
the parties in their contract is not conclusive of the nature of its contents. The
very essence of a contract of sale is the transfer of ownership in exchange for a
price paid or promised. x x x

Art. 1458

A contract of sale may be absolute or conditional. (Emphasis supplied) Corollary

thereto, a contract of sale is classified as a consensual contract, which means
that the sale is perfected by mere consent. No particular form is required for its
validity. Upon perfection of the contract, the parties may reciprocally demand
performance, i.e., the vendee may compel transfer of ownership of the object of
the sale, and the vendor may require the vendee to pay the thing sold.

x x x A contract of sale may be absolute or conditional. (Emphasis supplied)

Corollary thereto, a contract of sale is classified as a consensual contract, which

means that the sale is perfected by mere consent. No particular form is required
for its validity. Upon perfection of the contract, the parties may reciprocally
demand performance, i.e., the vendee may compel transfer of ownership of the
object of the sale, and the vendor may require the vendee to pay the thing sold.

In contrast, a contract to sell is defined as a bilateral contract whereby the

prospective seller, while expressly reserving the ownership of the property
despite delivery thereof to the prospective buyer, binds himself to sell the
property exclusively to the prospective buyer upon fulfillment of the condition
agreed upon, i.e., the full payment of the purchase price. A contract to sell may
not even be considered as a conditional contract of sale where the seller may
likewise reserve title to the property subject of the sale until the fulfillment of a
suspensive condition, because in a conditional contract of sale, the first element
of consent is present, although it is conditioned upon the happening of a
contingent event which may or may not occur.

x x x Bearing in mind its consensual nature, a contract of sale had been

perfected at the precise moment ACE Foods, as evinced by its act of sending
MTCL the Purchase Order, accepted the latter’s proposal to sell the subject
products in consideration of the purchase price of ₱646,464.00. From that point
in time, the reciprocal obligations of the parties – i.e., on the one hand, of MTCL
to deliver the said products to ACE Foods, and, on the other hand, of ACE Foods
to pay the purchase price therefor within thirty (30) days from delivery – already
arose and consequently may be demanded.

Art. 1475

x x x To be sure, novation, in its broad concept, may either be extinctive or

modificatory. It is extinctive when an old obligation is terminated by the creation
of a new obligation that takes the place of the former; it is merely modificatory
when the old obligation subsists to the extent it remains compatible with the
amendatory agreement. In either case, however, novation is never presumed,
and the animus novandi, whether totally or partially, must appear by express
agreement of the parties, or by their acts that are too clear and unequivocal to be
mistaken.

In the present case, it has not been shown that the title reservation stipulation
appearing in the Invoice Receipt had been included or had subsequently
modified or superseded the original agreement of the parties. The fact that the
Invoice Receipt was signed by a representative of ACE Foods does not, by and
of itself, prove animus novandi since: (a) it was not shown that the signatory was
authorized by ACE Foods (the actual party to the transaction) to novate the
original agreement; (b) the signature only proves that the Invoice Receipt was
received by a representative of ACE Foods to show the fact of delivery; and (c)
as matter of judicial notice, invoices are generally issued at the consummation
stage of the contract and not its perfection, and have been even treated as
documents which are not actionable per se, although they may prove sufficient
delivery. Thus, absent any clear indication that the title reservation stipulation
was actually agreed upon, the Court must deem the same to be a mere unilateral
imposition on the part of MTCL which has no effect on the nature of the parties’
original agreement as a contract of sale. Perforce, the obligations arising thereto,
among others, ACE Foods’s obligation to pay the purchase price as well as to
accept the delivery of the goods, remain enforceable and subsisting.

G.R. No. 199648 January 28, 2015 FIRST OPTIMA REALTY

CORPORATION,Petitioner, vs. SECURITRON SECURITY SERVICES,
INC.,Respondent

DEL CASTILLO, J.:

In a potential sale transaction, the prior payment of earnest money even before
the property owner can agree to sell his property is irregular, and cannot be used
to bind the owner to the obligations of a seller under an otherwise perfected
contract of sale; to cite a well-worn cliche, the carriage cannot be placed before
the horse. The property owner-prospective seller may not be legally obliged to
enter into a sale with a prospective buyer through the latter's employment of
questionable practices which prevent the owner from freely giving his consent to
the transaction; this constitutes a palpable transgression of the prospective
seller's rights of ownership over his property, an anomaly which the Court will
certainly not condone.

It cannot be denied that there were negotiations between the parties conducted
after the respondent’s December 9, 2004 letter-offer and prior to the February 4,
2005 letter. These negotiations culminated in a meeting between Eleazar and
Young whereby the latter declined to enter into an agreement and accept cash
payment then being tendered by the former. Instead, Young informed Eleazar
during said meeting that she still had to confer with her sister and petitioner’s
board of directors; in turn, Eleazar told Young that respondent shall await the
necessary approval.

x x x The stages of a contract of sale are: (1) negotiation, starting from the time
the prospective contracting parties indicate interest in the contract to the time the
contract is perfected; (2) perfection, which takes place upon the concurrence of
the essential elements of the sale; and (3) consummation, which commences
when the parties perform their respective undertakings under the contract of sale,
culminating in the extinguishment of the contract.

In the present case, the parties never got past the negotiation stage. Nothing
shows that the parties had agreed on any final arrangement containing the
essential elements of a contract of sale, namely, (1) consent or the meeting of
the minds of the parties; (2) object or subject matter of the contract; and (3) price
or consideration of the sale.

Respondent’s subsequent sending of the February 4, 2005 letter and check to

petitioner – without awaiting the approval of petitioner’s board of directors and
Young’s decision, or without making a new offer – constitutes a mere reiteration
of its original offer which was already rejected previously; thus, petitioner was
under no obligation to reply to the February 4, 2005 letter. It would be absurd to
require a party to reject the very same offer each and every time it is made;
otherwise, a perfected contract of sale could simply arise from the failure to reject
the same offer made for the hundredth time. Thus, said letter cannot be
considered as evidence of a perfected sale, which does not exist in the first
place; no binding obligation on the part of the petitioner to sell its property arose
as a consequence. The letter made no new offer replacing the first which was
rejected.

Since there is no perfected sale between the parties, respondent had no

obligation to make payment through the check; nor did it possess the right to
deliver earnest money to petitioner in order to bind the latter to a sale. As
contemplated under Art. 1482 of the Civil Code, "there must first be a perfected
contract of sale before we can speak of earnest money." "Where the parties
merely exchanged offers and counter-offers, no contract is perfected since they
did not yet give their consent to such offers. Earnest money applies to a
perfected sale."

x x x petitioner’s failure to return the purported earnest money cannot mean that
it agreed to respondent’s offer.

x x x common sense and logic dictate that if any payment is made under the
supposed sale transaction, it should have been made directly to Young or
coursed directly through her office, since she is the officer directly responsible for
negotiating the sale, as far as respondent is concerned and considering the
amount of money involved; no other ranking officer of petitioner can be expected
to know of the ongoing talks covering the subject property.

An agreement where the prior free consent of one party thereto is withheld or
suppressed will be struck down, and the Court shall always endeavor to protect a
property owner’s rights against devious practices that put his property in danger
of being lost or unduly disposed without his prior knowledge or consent. x x x

G.R. No. 204160 September 22, 2014 SPOUSES MICHELLE M. NOYNAY and
NOEL S. NOYNAY, Petitioners, vs. CITIHOMES BUILDER AND
DEVELOPMENT, INC., Respondent.

MENDOZA, J.:

Well-established is the rule that the assignee is deemed subrogated to the rights
as well as to the obligations of the seller/assignor. By virtue of the deed of
assignment, the assignee is deemed subrogated to the rights and obligations of
the assignor and is bound by exactly the same conditions as those which bound
the assignor. What can be inferred from here is the effect on the status of the
assignor relative to the relations established by a contract which has been
subsequently assigned; that is, the assignor becomes a complete stranger to all
the matters that have been conferred to the assignee.

In this case, the execution of the Assignment in favor of UCPB relegated

Citihomes to the status of a mere stranger to the jural relations established under
the contractto sell. With UCPB as the assignee, it is clear that Citihomes has
ceased tohave any right to cancel the contract to sell with Spouses Noynay.
Without this right,which has been vested in UCPB, Citihomes undoubtedly had
no cause ofaction against Spouses Noynay.

This is not to say that Citihomes lost all interest over the property. To be clear,
what were assigned covered only the rights inthe Contract to Sell and not the
property rights over the house and lot, which remained registered under
Citihomes’ name. Considering, however, that the unlawful detainer case involves
mere physical or materialpossession of the property and is independent of any
claim of ownership by any of the parties, the invocation of ownership by
Citihomes is immaterial in the just determination of the case.

x x x still upholds the right of the Spouses Noynay to remain undisturbed in the
possession of the subject property. The reason is simple – Citihomes failed to
comply with the procedures for the proper cancellation of the contract to sell as
prescribed by Maceda Law.

x x x the cancellation of the contract by the seller must be in accordance with

Section 3 (b) of the Maceda Law, which requires the notarial act of rescission and
the refund to the buyer of the full payment of the cash surrender value of the
payments made on the property. The actual cancellation of the contract takes
place after thirty (30) days from receipt by the buyer of the notice of cancellation
or the demand for rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer, to wit: (b) If the contract is
cancelled, the seller shall refund to the buyer the cash surrender value of the
payments on the property equivalent to fifty percent of the total payments made
and, after five years of installments, an additional five percent every year but not
to exceed ninety percent of the total payments made: Provided, That the actual
cancellation of the contract shall take place 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 and upon full payment of the cash surrender value to the buyer.

x x x To reiterate, Section 3(b) of the Maceda Law requires that for an actual
cancellation to take place, the notice of cancellation by notarial act and the full
payment of the cash surrender value must be first received by the buyer. Clearly,
no payment of the cash surrender value was made to Spouses Noynay.
Necessarily, no cancellation of the contract to sell could be considered as validly
effected.

Without the valid cancellation of the contract, there is no basis to treat the
possession of the property by Spouses Noynay as illegal. x x x

Principles in Remedial Law

x x x these judicial admissions are legally binding on the party making the
admissions. Similar to pre-trial admissions in a pre-trial order in ordinary civil
cases, the contents of the record of a preliminary conference control the
subsequent course of the action, thereby, defining and limiting the issues to be
tried. A contrary ruling would render useless the proceedings during the
preliminary conference and would, in fact, be antithetical to the very purpose of a
preliminary conference, which is, among others, to allow the parties to admit and
stipulate on a given set of facts and to simplify the issues involved.

x x x The allegations, statements or admissions contained in a pleading are

conclusive as against the pleader. A party cannot subsequently take a position
contrary of or inconsistent with what was pleaded.
January 18, 2017 G.R. No. 211175 ATTY. REYES G. GEROMO, FLORENCIO
BUENTIPO, JR., ERNALDO YAMBOT and LYDIA BUSTAMANTE, Petitioners,
vs. LA PAZ HOUSING AND DEVELOPMENT CORPORATION and
GOVERNMENT SERVICE INSURANCE SYSTEM, Respondents.

MENDOZA, J.:

Under the Civil Code, the vendor shall be answerable for warranty against hidden
defects on the thing sold x x x

Art. 1561 in rel to Art. 1566

For the implied warranty against hidden defects to be applicable, the following
conditions must be met:

a. Defect is Important or Serious

i. The thing sold is unfit for the use which it is intended
ii. Diminishes its fitness for such use or to such an extent that the buyer would
not have acquired it had he been aware thereof

b. Defect is Hidden

c. Defect Exists at the time of the sale

d. Buyer gives Notice of the defect to the seller within reasonable time.

Here, the petitioners observed big cracks on the walls and floors of their
dwellings within two years from the time they purchased the units. The damage
in their respective houses was substantial and serious. They reported the
condition of their houses to La Paz, but the latter did not present a concrete plan
of action to remedy their predicament. They also brought up the issue of water
seeping through their houses during heavy rainfall, but again La Paz failed to
properly address their concerns. The structural cracks and water seepage were
evident indications that the soil underneath the said structures could be unstable.
Verily, the condition of the soil would not be in the checklist that a potential buyer
would normally inquire about from the developer considering that it is the latter's
prime obligation to ensure suitability and stability of the ground.

La Paz remained unconcerned even after receiving incident reports of structural

issues from homeowners and despite constant follow-ups from them for many
years. In fact, the petitioners took it upon themselves to build a riprap/retaining
wall due to La Paz's indifference.

One of the purposes of P.D. No. 957, also known as The Subdivision and
Condominium Buyers' Protective Decree, is to discourage and prevent
unscrupulous owners, developers, agents, and sellers from reneging on their
obligations and representations to the detriment of innocent purchasers.

Considering the nature of the damage sustained by the structures, even without
the findings of the local governmental agency and the MGB-DENR, La Paz is still
liable under the doctrine of res ipsa loquitur. x x x

x x x under the doctrine of res ipsa loquitur, which means, literally, the thing or
transaction speaks for itself, or in one jurisdiction, that the thing or instrumentality
speaks for itself, the facts or circumstances accompanying an injury may be such
as to raise a presumption, or at least permit an inference of negligence on the
part of the defendant, or some other person who is charged with negligence.

x x x where it is shown that the thing or instrumentality which caused the injury
complained of was under the control or management of the defendant, and that
the occurrence resulting in the injury was such as in the ordinary course of things
would not happen if those who had its control or management used proper care,
there is sufficient evidence, or, as sometimes stated, reasonable evidence, in the
absence of explanation by the defendant, that the injury arose from or was
caused by the defendant's want of care.

x x x for the res ipsa loquitur doctrine to apply, it must appear that the injured
party had no knowledge or means of knowledge as to the cause of the accident,
or that the party to be charged with negligence has superior knowledge or
opportunity for explanation of the accident. Under the said doctrine, expert
testimony may be dispensed with to sustain an allegation of negligence if the
following requisites obtain: a) the event is of a kind which does not ordinarily
occur unless someone is negligent; b) the cause of the injury was under the
exclusive control of the person in charge; and c) the injury suffered must not
have been due to any voluntary action or contribution on the part of the person
injured.

In this case, the subdivision plan/layout was prepared and approved by La Paz.
The actual excavation, filling and levelling of the subdivision grounds were
exclusively done under its supervision and control. There being no contributory
fault on the part of the petitioner, there can be no other conclusion except that it
was the fault of La Paz for not properly compacting the soil, which used to be an
old creek.

It should have taken adequate measures to ensure the structural stability of the
land before they started building the houses thereon. The uneven street
pavements and visible cracks on the houses were readily apparent yet La Paz
did not undertake any corrective or rehabilitative work.
On Damages

Due to the indifference and negligence of La Paz, it should compensate the

petitioners for the damages they sustained. On actual damages, the standing
rule is that to be entitled to them, there must be pleading and proof of actual
damages suffered.

Actual damages, to be recoverable, must not only be capable of proof, but must
actually be proved with a reasonable degree of certainty. Courts cannot simply
rely on speculation, conjecture or guesswork in determining the fact and amount
of damages. To justify an award of actual damages, there must be competent
proof of the actual amount of loss, credence can be given only to claims which
are duly supported by receipts.

In this regard, the petitioners failed to prove with concrete evidence the amount
of the actual damages they suffered. For this reason, the Court does not have
any basis for such an award.

Nevertheless, temperate or moderate damages may be recovered when some

pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be proved with certainty. The amount thereof is usually left to the discretion
of the courts but the same should be reasonable, bearing in mind that temperate
damages should be more than nominal but less than compensatory. In this case,
the petitioners suffered some form of pecuniary loss due to the impairment of the
structural integrity of their dwellings. In view of the circumstances obtaining, an
award of temperate damages amounting to ₱200,000.00 is just and reasonable.

The petitioners are also entitled to moral and exemplary damages. Moral
damages are not meant to be punitive but are designed to compensate and
alleviate the physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar harm unjustly caused to a person. To be entitled to such an award, the
claimant must satisfactorily prove that he indeed suffered damages and that the
injury causing the same sprung from any of the cases listed in Articles 2219 and
2220 of the Civil Code. Moreover, the damages must be shown to be the
proximate result of a wrongful act or omission. Moral damages may be awarded
when the breach of contract was attended with bad faith, or is guilty of gross
negligence amounting to bad faith. Obviously, the uncaring attitude of La Paz
amounted to bad faith. For said reason, the Court finds it proper to award moral
damages in the amount of ₱150,000.00.

Petitioners are also entitled to exemplary damages which are awarded when a
wrongful act is accompanied by bad faith or when the guilty party acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner" under Article
2232 of the Civil Code. The indifference of La Paz in addressing the petitioners'
concerns and its subsequent failure to take remedial measures constituted bad
faith.

Considering that the award of moral and exemplary damages is proper in this
case, attorney's fees and cost of the suit may also be recovered as provided
under Article 2208 of the Civil Code.

GSIS not liable

x x x because it was never a party in the contracts between La Paz and the
petitioners. The housing loan agreements that the petitioners entered into with
GSIS were separate and distinct from the purchase contracts they executed with
La Paz. GSIS merely agreed to pay the purchase price of the housing unit that
each petitioner purchased from La Paz. It was merely the lender, not the
developer.

January 13, 2016 G.R. No. 206147 MICHAEL C. GUY, Petitioner, vs. ATTY.
GLENN C. GACOTT, Respondent. MENDOZA, J.:

ISSUE THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR IN HOLDING THAT PETITIONER GUY IS SOLIDARILY LIABLE WITH
THE PARTNERSHIP FOR DAMAGES ARISING FROM THE BREACH OF THE
CONTRACT OF SALE WITH RESPONDENT GACOTT.

A partner must be separately and distinctly impleaded before he can be bound by

a judgment.

Although a partnership is based on delectus personae or mutual agency,

whereby any partner can generally represent the partnership in its business
affairs, it is non sequitur that a suit against the partnership is necessarily a suit
impleading each and every partner. It must be remembered that a partnership is
a juridical entity that has a distinct and separate personality from the persons
composing it.

x x x the partners could not be held liable for the obligations of the partnership
unless it was shown that the legal fiction of a different juridical personality was
being used for fraudulent, unfair, or illegal purposes.

x x x a partner must first be impleaded before he could be prejudiced by the

judgment against the partnership.

Here, Guy was never made a party to the case. He did not have any participation
in the entire proceeding until his vehicle was levied upon and he suddenly
became QSC’s “co-defendant debtor” during the judgment execution stage. x x x
Without any showing that Guy himself acted maliciously on behalf of the
company, causing damage or injury to the complainant, then he and his personal
properties cannot be made directly and solely accountable for the liability of
QSC, the judgment debtor, because he was not a party to the case.

Partners’ liability is subsidiary and generally joint; immediate levy upon the
property of a partner cannot be made

Art. 1816 of the Civil Code

This provision clearly states that, first, the partners’ obligation with respect to the
partnership liabilities is subsidiary in nature. It provides that the partners shall
only be liable with their property after all the partnership assets have been
exhausted. x x x The subsidiary nature of the partners’ liability with the
partnership is one of the valid defenses against a premature execution of
judgment directed to a partner.

In this case, had he been properly impleaded, Guy’s liability would only arise
after the properties of QSC would have been exhausted. x x x

Clearly, no genuine efforts were made to locate the properties of QSC that could
have been attached to satisfy the judgment − contrary to the clear mandate of
Article 1816. Being subsidiarily liable, Guy could only be held personally liable if
properly impleaded and after all partnership assets had been exhausted.
Second, Article 1816 provides that the partners’ obligation to third persons with
respect to the partnership liability is pro rata or joint. Liability is joint when a
debtor is liable only for the payment of only a proportionate part of the debt. In
contrast, a solidary liability makes a debtor liable for the payment of the entire
debt. In the same vein, Article 1207 does not presume solidary liability unless: 1)
the obligation expressly so states; or 2) the law or nature requires solidarity. With
regard to partnerships, ordinarily, the liability of the partners is not solidary. The
joint liability of the partners is a defense that can be raised by a partner
impleaded in a complaint against the partnership.

Art. 1821 of the Civil Code

A careful reading of the provision shows that notice to any partner, under certain
circumstances, operates as notice to or knowledge to the partnership only.
Evidently, it does not provide for the reverse situation, or that notice to the
partnership is notice to the partners. Unless there is an unequivocal law which
states that a partner is charged in a complaint against the partnership, the
constitutional right to due process takes precedence and a partner must first be
impleaded before he can be considered as a judgment debtor. x x x
Articles 1822, 1823 and 1824 of the Civil Code (solidary in nature):

In essence, these provisions articulate that it is the act of a partner which caused
loss or injury to a third person that makes all other partners solidarily liable with
the partnership because of the words "any wrongful act or omission of any
partner acting in the ordinary course of the business," "one partner acting within
the scope of his apparent authority" and "misapplied by any partner while it is in
the custody of the partnership." The obligation is solidary because the law
protects the third person, who in good faith relied upon the authority of a partner,
whether such authority is real or apparent.

In the case at bench, it was not shown that Guy or the other partners did a
wrongful act or misapplied the money or property he or the partnership received
from Gacott. A third person who transacted with said partnership can hold the
partners solidarily liable for the whole obligation if the case of the third person
falls under Articles 1822 or 1823. Gacott’s claim stemmed from the alleged
defective transreceivers he bought from QSC, through the latter's employee,
Medestomas. It was for a breach of warranty in a contractual obligation entered
into in the name and for the account of QSC, not due to the acts of any of the
partners. For said reason, it is the general rule under Article 1816 that governs
the joint liability of such breach, and not the exceptions under Articles 1822 to
1824. Thus, it was improper to hold Guy solidarily liable for the obligation of the
partnership.

x x x Accordingly, whether QSC was an alleged ostensible corporation or a duly

registered partnership, the liability of Guy, if any, would remain to be joint and
subsidiary because, as previously stated, all partners shall be liable pro rata with
all their property and after all the partnership assets have been exhausted for the
contracts which may be entered into in the name and for the account of the
partnership.

Principles in Remedial Law

Under Section 11, Rule 14 of the 1997 Revised Rules of Civil Procedure, when
the defendant is a corporation, partnership or association organized under the
laws of the Philippines with a juridical personality, the service of summons may
be made on the president, managing partner, general manager, corporate
secretary, treasurer, or in-house counsel. Jurisprudence is replete with
pronouncements that such provision provides an exclusive enumeration of the
persons authorized to receive summons for juridical entities.

The records of this case reveal that QSC was never shown to have been served
with the summons through any of the enumerated authorized persons to receive
such, namely: president, managing partner, general manager, corporate
secretary, treasurer or in-house counsel. Service of summons upon persons
other than those officers enumerated in Section 11 is invalid. Even substantial
compliance is not sufficient service of summons.

Nevertheless, while proper service of summons is necessary to vest the court

jurisdiction over the defendant, the same is merely procedural in nature and the
lack of or defect in the service of summons may be cured by the defendant’s
subsequent voluntary submission to the court’s jurisdiction through his filing a
responsive pleading such as an answer. In this case, it is not disputed that QSC
filed its Answer despite the defective summons. Thus, jurisdiction over its person
was acquired through voluntary appearance.

In relation to the rules of civil procedure, it is elementary that a judgment of a

court is conclusive and binding only upon the parties and their successors-in-
interest after the commencement of the action in court. A decision rendered on a
complaint in a civil action or proceeding does not bind or prejudice a person not
impleaded therein, for no person shall be adversely affected by the outcome of a
civil action or proceeding in which he is not a party. The principle that a person
cannot be prejudiced by a ruling rendered in an action or proceeding in which he
has not been made a party conforms to the constitutional guarantee of due
process of law.

x x x The effect of a judgment could not be extended to non-parties by simply

issuing an alias writ of execution against them, for no man should be prejudiced
by any proceeding to which he was a stranger.

x x x It is a basic principle of law that money judgments are enforceable only

against the property incontrovertibly belonging to the judgment debtor. Indeed,
the power of the court in executing judgments extends only to properties
unquestionably belonging to the judgment debtor alone. An execution can be
issued only against a party and not against one who did not have his day in
court. The duty of the sheriff is to levy the property of the judgment debtor not
that of a third person. For, as the saying goes, one man's goods shall not be sold
for another man's debts.

October 19, 2015 G.R. No. 214057 FLORENTINA BAUTISTASPILLE

represented by her Attorney-in-fact, Manuel B. Flores, Jr.,Petitioner vs. NICORP
MANAGEMENT ND DEVELOPMENT CORPORATION, BENJAMIN G.
BAUTISTA and INTERNATIONAL EXCHANGE BANK, Respondents

MENDOZA, J.:

The well-established rule is when a sale of a parcel of land or any interest therein
is through an agent, the authority of the latter shall be in writing, otherwise the
sale shall be void. x x x
Articles 1874 and 1878 of the Civil Code

From the foregoing, it is clear that an SPA in the conveyance of real rights over
immovable property is necessary.

x x x A special power of attorney is necessary to enter into any contract by which

the ownership of an immovable is transmitted or acquired either gratuitously or
for a valuable consideration. x x x

x x x Thus, when the authority is couched in general terms, without mentioning

any specific power to sell or mortgage or to do other specific acts of strict
dominion, then only acts of administration are deemed conferred.

In the case at bench, the only evidence adduced by NICORP to prove Benjamin's
authority to sell petitioner's property was the document denominated as General
Power of Attorney, dated June 20, 1996. x x x

Doubtless, there was no perfected contract to sell between petitioner and

NICORP. Nowhere in the General Power of Attorney was Benjamin granted,
expressly or impliedly, any power to sell the subject property or a portion thereof.
The authority expressed in the General Power of Attorney was couched in very
broad terms covering petitioner's businesses and properties. Time and again, this
Court has stressed that the power of administration does not include acts of
disposition, which are acts of strict ownership. As such, an authority to dispose
cannot proceed from an authority to administer, and vice versa, for the two
powers may only be exercised by an agent by following the provisions on agency
of the Civil Code.

In the same vein, NICORP cannot be considered a purchaser in good faith. The
well-settled rule is that a person dealing with an assumed agent is bound to
ascertain not only the fact of agency but also the nature and extent of the agent's
authority. The law requires a higher degree of prudence from one who buys from
a person who is not the registered owner. He is expected to examine all factual
circumstances necessary for him to determine if there are any flaws in the title of
the transferor, or in his capacity to transfer the land. x x x

Here, the Court agrees with the RTC that NICORP was fully aware that Benjamin
was not properly authorized to enter into any transaction regarding the sale of
petitioner's property. In fact, in the contract to sell, NICORP required Benjamin to
secure the SPA from petitioner within ninety (90) days from the execution of the
contract and even imposed a substantial amount of penalty in the amount of
P150,000.00 a month in case of non- compliance plus suspension of payment of
the balance of the contract price.

x x x Moreover, there was no evidence that petitioner ratified Benjamin's act of

selling the subject property. On the contrary, immediately after the execution of
the contract to sell, petitioner wrote NICORP, IE Bank and Benjamin to inform
them of her opposition to the sale of the subject property and of his lack of
authority to sell it and demand the return of the certificate of title. Clearly,
NICORP was negligent in its dealings with Bautista.

x x x The consent of petitioner in the contract to sell was not obtained, hence, not
enforceable. Furthermore, because NICORP is considered a builder in bad faith,
it has no right to be refunded the value of whatever improvements it introduced
on the subject property.

September 16, 2015 G.R. No. 173186 ANICETO UY, Petitioner, vs. COURT OF
APPEALS, MINDANAO STATION, CAGAYAN DE ORO CITY, CARMENCITA
NAVAL-SAI, REP. BY HER ATTORNEY-INFACT RODOLFO FLORENTINO,
Respondents.

JARDELEZA, J.:

The nature of Naval-Sai’s action is an action for reconveyance based on a void

contract, which does not prescribe.

x x x the action of Naval-Sai is one for reconveyance. Although the designation of

the complaint is annulment of deed, and does not include reconveyance, the
facts alleged and reliefs sought show that reconveyance is the end goal. What
determines the nature of the action are the allegations in the complaint. The
cause of action in a complaint is not determined by the designation given by the
complaint, but by what the allegations in the body of the complaint define or
describe, as well as the character of the relief sought.

An action for reconveyance is a legal and equitable remedy granted to the rightful
owner of land which has been wrongfully or erroneously registered in the name
of another for the purpose of compelling the latter to transfer or reconvey the land
to him. In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property, which has
been wrongfully or erroneously registered in another person’s name, to its rightful
and legal owner, or to one with a better right. However, such recourse cannot be
availed of once the property has passed to an innocent purchaser for value. For
an action for reconveyance to prosper, the property should not have passed into
the hands of an innocent purchaser for value. x x x

Here, Naval-Sai does not only seek to annul the purported deed of sale but also
to cancel TCTs No. T-62446 and No. 62447 in the name of petitioner. If the reliefs
are granted and the TCTs are cancelled, the titles to the lots will revert to Naval-
Sai as she was the previously registered owner. Thus, a ruling in favor of Naval-
Sai would be equal to what an action for reconveyance seeks to accomplish.
The law creates the obligation of the trustee to reconvey the property and its title
in favor of the true owner. Correlating Section 53, paragraph 3 of PD No. 1529
and Article 1456 of the Civil Code with Article 1144 (2) of the Civil Code, the
prescriptive period for the reconveyance of fraudulently registered real property is
ten (10) years reckoned from the date of the issuance of the certificate of title.
This ten-year prescriptive period begins to run from the date the adverse party
repudiates the implied trust, which repudiation takes place when the adverse
party registers the land. An exception to this rule is when the party seeking
reconveyance based on implied or constructive trust is in actual, continuous and
peaceful possession of the property involved. Prescription does not commence to
run against him because the action would be in the nature of a suit for quieting of
title, an action that is imprescriptible.

x x x Under Article 1390 of the Civil Code, a contract is voidable when the
consent of one of the contracting parties is vitiated by mistake, violence,
intimidation, undue influence or fraud. When the consent is totally absent and not
merely vitiated, the contract is void. An action for reconveyance may also be
based on a void contract. When the action for reconveyance is based on a void
contract, as when there was no consent on the part of the alleged vendor, the
action is imprescriptible. The property may be reconveyed to the true owner,
notwithstanding the TCTs already issued in another’s name. The issuance of a
certificate of title in the latter’s favor could not vest upon him or her ownership of
the property; neither could it validate the purchase thereof which is null and void.
Registration does not vest title; it is merely the evidence of such title. Our land
registration laws do not give the holder any better title than what he actually has.
Being null and void, the sale produces no legal effects whatsoever.

Whether an action for reconveyance prescribes or not is therefore determined by

the nature of the action, that is, whether it is founded on a claim of the existence
of an implied or constructive trust, or one based on the existence of a void or
inexistent contract. x x x

Moreover, laches is a doctrine in equity, and applied only in the absence of, and
never against, statutory law. The positive mandate of Article 1410 of the Civil
Code conferring imprescriptibility to actions or defense for the declaration of the
inexistence of a contract should pre-empt and prevail over all abstract arguments
based only on equity.

Principles in Remedial Law

There was substantial compliance with the requirements on certification against

forum shopping.

A certification against forum shopping is a peculiar and personal responsibility of

the party, an assurance given to the court or other tribunal that there are no other
pending cases involving basically the same parties, issues and causes of action.
It must be executed by the party-pleader, not by his counsel. If, however, for
reasonable or justifiable reasons, the party-pleader is unable to sign, he must
execute a Special Power of Attorney (SPA) designating his counsel of record to
sign on his behalf.

x x x an amended complaint supersedes the original complaint. For all intents

and purposes, therefore, the original complaint and its verification and
certification ceased to exist. This, notwithstanding, we find there was still
substantial compliance with the Rules.

x x x because it served the purpose of the Rules of informing the Court of the
pendency of another action or proceeding involving the same issues.

x x x the prima facie merits of the case serve as a special circumstance or a

compelling reason to relax the rules on certification against forum shopping.

x x x the general rule is that non-compliance or a defect in the certification is not

curable by its subsequent submission or correction. However, there are cases
where we exercised leniency and relaxed the rules on the ground of substantial
compliance, the presence of special circumstances or compelling reasons. The
rules on forum-shopping are designed to promote and facilitate the orderly
administration of justice and "should not be interpreted with such absolute
literalness as to subvert its own ultimate and legitimate objective or the goal of all
rules of procedure— which is to achieve substantial justice as expeditiously as
possible."

G.R. No. 205915, November 10, 2015 ASSET POOL A (SPV-AMC), INC.,
Petitioner, v. CLARK DEVELOPMENT CORPORATION, Respondent.
JUDGMENT [BASED ON COMPROMISE AGREEMENT]

BERSAMIN, J.:

A compromise agreement is a contract whereby the parties, by making reciprocal

concessions, avoid a litigation or put an end to one already commenced.

According to Article 2029 of the Civil Code, the court shall endeavor to persuade
the parties in a civil case to agree upon some fair compromise. The contracting
parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided such stipulations, clauses, terms and conditions
are not contrary to law, morals, good customs, public order, or public policy. Once
the parties have entered into a compromise, their agreement has the effect and
authority of res judicata, but there shall be no execution except in compliance
with a judicial compromise. Such means of dispute settlement is an accepted,
even desirable and encouraged, practice in courts of law and administrative
tribunals.
G.R. No. 154609 April 24, 2009 MA. CORAZON SAN JUAN, Petitioner, vs.
CELESTE M. OFFRIL, Respondent.

TINGA, J.:

x x x both parties have made representations, admissions and omissions

adversely affecting their respective allegations in this case. This Court considers
both parties to have commonly declared in Exhibit 2 (Deed of Absolute Sale) and
Exhibit Q (the Deed of Partition) not only their intention but also the extent of their
rights over the property subject matter of this case. It is interesting to note that
after the execution of the Deed of Partition on May 2, 1990, no other document
was executed to cover the sale of the other lots.

In sum, the evidence considered by the Court point to the finding that plaintiff has
sold to defendant Lots 20-A and 20-B covered by TCT Nos. 170403 and 170404
only. There is no legal basis by which titles to Lot Nos. 20-C, 20-D, 20-E, and 20-
F could have been Transferred [sic] to defendant Ma. Corazon San Juan, the two
(2) deeds Exhibits 3 and 4 being spurious.

Principles in Remedial Law

x x x While indeed, a notarized document enjoys this presumption, the fact that a
deed is notarized is not a guarantee of the validity of its contents. The
presumption is not absolute and may be rebutted by clear and convincing
evidence to the contrary. The presumption cannot be made to apply in this case
because the regularity in the execution of the documents was challenged in the
proceedings below where their prima facie validity was overthrown by the highly
questionable circumstances pointed out by both trial and appellate courts.

x x x The Supreme Court will not interfere with the trial court's determination of
the credibility of witnesses, unless there appears on record some fact or
circumstance of weight and influence which has been overlooked or the
significance of which has been misinterpreted. The reason for this is that the trial
court is in a better position to do so because it heard the witnesses testify before
it and had every opportunity to observe their demeanor and deportment on the
witness stand.

x x x While Offril did in fact forget the names of her other children, her address,
the date when San Juan started leasing the apartment, or the amount of the rent,
it was clear that she knew and considered San Juan as a mere tenant in her
apartment, and she was certain that she never sold the five-door apartment to
San Juan, nor received any amount corresponding to the value of the said
property. She likewise denied having signed the deed purporting to sell the five-
door apartment to San Juan. Thus, on all matters material to her complaint, the
Court finds that Offril’s testimony was clear, equivocal and consistent.
July 1, 2015 G.R. No. 160033 TAGAYTAY REALTY CO., INC., Petitioners, vs.
ARTURO G. GACUTAN, Respondent.

BERSAMIN, J.:

The Court reiterates the right of the installment buyer of a subdivision lot to
withhold payment of his amortizations for the duration that the subdivision
developer has not complied with its contractual undertaking to build the promised
amenities in the subdivision.

x x x was the petitioner released from its obligation to construct the amenities in
the Foggy Heights Subdivision? 1.Petitioner was not relieved from its statutory
and contractual obligations to complete the amenities.

Under Section 20 of Presidential Decree No. 957, all developers, including the
petitioner, are mandated to complete their subdivision projects, including the
amenities, within one year from the issuance of their licenses.

Pursuant to Section 30 of Presidential Decree No. 957, the amenities, once

constructed, are to be maintained by the developer like the petitioner until a
homeowners’ association has been organized to manage the amenities.

There is no question that the petitioner did not comply with its legal obligation to
complete the construction of the subdivision project, including the amenities,
within one year from the issuance of the license. Instead, it unilaterally opted to
suspend the construction of the amenities to avoid incurring maintenance
expenses. In so opting, it was not driven by any extremely difficult situation that
would place it at any disadvantage, but by its desire to benefit from cost savings.
Such cost-saving strategy dissuaded the lot buyers from constructing their
houses in the subdivision, and from residing therein.

x x x For Article 1267 to apply, the following conditions should concur, namely: (a)
the event or change in circumstances could not have been foreseen at the time
of the execution of the contract; (b) it makes the performance of the contract
extremely difficult but not impossible; (c) it must not be due to the act of any of
the parties; and (d) the contract is for a future prestation. The requisites did not
concur herein because the difficulty of performance under Article 1267 of the Civil
Code should be such that one party would be placed at a disadvantage by the
unforeseen event. Mere inconvenience, or unexepected impediments, or
increased expenses did not suffice to relieve the debtor from a bad bargain.

And, secondly, the unilateral suspension of the construction had preceded the
worsening of economic conditions in 1983; hence, the latter could not reasonably
justify the petitioner’s plea for release from its statutory and contractual
obligations to its lot buyers, particularly the respondent. Besides, the petitioner
had the legal obligation to complete the amenities within one year from the
issuance of the license (under Section 20 of Presidential Decree No. 957), or
within two years from July 15, 1976 (under the express undertaking of the
petitioner). Hence, it should have complied with its obligation by July 15, 1978 at
the latest, long before the worsening of the economy in 1983.

2. Respondent as installment buyer should pay the annual interest but not the
penalty.

The imposition of the annual or amortization interest on the price for the
purchase of a lot on installment was valid and enforceable.

x x x which authorizes the payment of interest when contractually stipulated for

by the parties or when implied in recognized commercial custom or usage.

Vendor and vendee are legally free to stipulate for the payment of either the cash
price of a subdivision lot or its installment price. Should the vendee opt to
purchase a subdivision lot via the installment payment system, he is in effect
paying interest on the cash price, whether the fact and rate of such interest
payment is disclosed in the contract or not. The contract for the purchase and
sale of a piece of land on the installment payment system in the case at bar is
not only quite lawful; it also reflects a very wide spread usage or custom in our
present day commercial life.

Under Tamayo v. Huang, the buyer has the option to demand the reimbursement
of the total amounts paid, or to await the further development of the subdivision;
when the buyer opts for the latter alternative, he may suspend the payment of his
installments until the time when the developer has fulfilled its obligation to him;
should the developer persist in refusing to complete the facilities, the National
Housing Authority may take over or cause the development and completion of
the subdivision at the expense of the developer.

3. Claim of respondent was not barred by laches.

Laches is the failure of or neglect for an unreasonable and unexplained length of

time to do that which by exercising due diligence could or should have been done
earlier, or to assert a right within a reasonable time. It warrants a presumption
that the party entitled thereto has either abandoned it or declined to assert it.

The CA correctly declared that laches did not set in to bar the claim of the
respondent because he had made periodic written demands upon the petitioner
that indicated that he had not abandoned or declined to assert the claim. In 1979,
he manifested the intention to avail himself of his right to suspend the payment of
his amortizations pursuant to the undertaking. Since then until 1984, he had
continuously requested the petitioner for updates on the progress of the
construction of the amenities so that he could resume his amortizations. The
petitioner did not respond to his requests. His efforts to have the petitioner
construct the amenities so that he would already pay for the lot demonstrated his
prudence and alacrity in insisting on his rights, negating any hint of bad faith or of
lack of diligence on his part.

March 13, 2017 G.R. No. 206037 PHILIPPINE NATIONAL BANK, Petitioner vs
LILIBETH S. CHAN, Respondent

DEL CASTILLO, J.:

In the present Petition, PNB raises the following issues for the Court's resolution:
first, whether PNB properly consigned the disputed rental payments in the
amount of ₱l,348,643.92 with the Office of the Clerk of Court of the MeTC of
Manila; second, whether PNB incurred delay in the payment of rentals to the
respondent, making it liable to pay legal interest to the latter; and third, whether
PNB is entitled to the disputed rental proceeds in order to cover the alleged
deficiency in payment of the respondent's liability after the foreclosure
proceedings.

"Consignation is the act of depositing the thing due with the court or judicial
authorities whenever the creditor cannot accept or refuses to accept payment.

[ I]t generally requires a prior tender of payment."

Under Article 1256 of the Civil Code, consignation alone is sufficient even without
a prior tender of payment a) when the creditor is absent or unknown or does not
appear at the place of payment; b) when he is incapacitated to receive the
payment at the time it is due; c) when, without just cause, he refuses to give a
receipt; d) when two or more persons claim the same right to collect; and e)
when the title of the obligation has been lost.

For consignation to be valid, the debtor must comply with the following
requirements under the law:
1) there was a debt due;
2) valid prior tender of payment, unless the consignation was made because of
some legal cause provided in Article 1256;
3) previous notice of the consignation has been given to the persons interested in
the performance of the obligation;
4) the amount or thing due was placed at the disposal of the court; and,
5) after the consignation had been made, the persons interested were notified
thereof.

"Failure in any of the requirements is enough ground to render a consignation

ineffective."
Note that PNB's deposit of the subject monthly rentals in a non-drawing savings
account is not the consignation contemplated by law, precisely because it does
not place the same at the disposal of the court. Consignation is necessarily
judicial; it is not allowed in venues other than the courts. Consequently, PNB's
obligation to pay rent for the period of January 16, 2005 up to March 23, 2006
remained subsisting, as the deposit of the rentals cannot be considered to have
the effect of payment.

It is important to point out that PNB's obligation to pay the subject monthly rentals
had already fallen due and demandable before PNB consigned the rental
proceeds with the MeTC on May 31, 2006. Although it is true that consignment
has a retroactive effect, such payment is deemed to have been made only at the
time of the deposit of the thing in court or when it was placed at the disposal of
the judicial authority. Based on these premises, PNB's payment of the monthly
rentals can only be considered to have been made not earlier than May 31, 2006.

Given its belated consignment of the rental proceeds in court, PNB clearly
defaulted in the payment of monthly rentals to the respondent for the period
January 16, 2005 up to March 23, 2006, when it finally vacated the leased
property, As such, it is liable to pay interest in accordance with Article 2209 of the
Civil Code.

Article 2209 provides that if the debtor incurs delay in the performance of an
obligation consisting of the payment of a sum of money, he shall be liable to pay
the interest agreed upon, and in the absence of stipulation, the legal interest at
6% per annum. There being no stipulated interest in this case, PNB is liable to
pay legal interest at 6% per annum, from January 16, 2005 up to May 30, 2006.

x x x It is settled that a mortgagee has the light to recover the deficiency resulting
from the difference between the amount obtained in the sale at public auction
and the outstanding obligation of the mortgagor at the time of the foreclosure
proceedings.

G.R. No. 191189 January 29, 2014 MANLAR RICE MILL, INC., Petitioner, vs.
LOURDES L. DEYTO, doing business under the trade name "J.D. Grains Center"
and JENNELITA DEYTO ANG, a.k.a. "JANET ANG," Respondents.

DEL CASTILLO, J.:

As a general rule, a contract affects only the parties to it, and cannot be enforced
by or against a person who is not a party thereto.

x x x "Well-entrenched is the rule that solidary obligation cannot lightly be

inferred. There is a solidary liability only when the obligation expressly so states,
when the law so provides or when the nature of the obligation so requires."
x x x As a general rule, a contract affects only the parties to it, and cannot be
enforced by or against a person who is not a party thereto. "It is a basic principle
in law that contracts can bind only the parties who had entered into it; it cannot
favor or prejudice a third person." Under Article 1311 of the Civil Code, contracts
take effect only between the parties, their assigns and heirs. Thus, Manlar may
sue Ang, but not Deyto, who the Court finds to be not a party to the rice supply
contract.

Principles in Remedial Law

It is a basic rule in evidence that he who alleges must prove his case or claim by
the degree of evidence required.

In civil cases, the quantum of proof required is preponderance of evidence, which

connotes "that evidence that is of greater weight or is more convincing than that
which is in opposition to it. It does not mean absolute truth; rather, it means that
the testimony of one side is more believable than that of the other side, and that
the probability of truth is on one side than on the other."

x x x copies of JD Grains Center’s certificate of registration, business permit, and

certificates of title covering Deyto’s landholdings – are public documents which
Manlar could readily obtain from appropriate government agencies; it is
improbable that Deyto provided Manlar with copies of these documents in order
to induce the latter to contract with her. Considering that both Manlar and Deyto
were in the same line of business in the same province, it may be said that
Manlar knew Deyto all along without the latter having to supply it with actual
proof of her creditworthiness.

G.R. No. 207348 August 19, 2014 ROWENA R. SALONTE, Petitioner, vs.
COMMISSION ON AUDIT, CHAIRPERSON MA. GRACIA PULIDO-TAN,
COMMISSIONER JUANITO G. ESPINO, JR., COMMISSIONER HEIDI L.
MENDOZA, and FORTUNATA M. RUBICO, DIRECTOR IV, COA COMMISSION
SECRETARIAT, in their official capacities,Respondents.

VELASCO, JR., J.:

The resolution of the present controversy rests on the determination of a sole

issue: who between the City ofMandaue and F.F. Cruz owned during the period
material the properties that were demolished.

A plain reading of the Contract of Reclamation reveals that the six (6)-year period
provided for project completion, or, with like effect, termination of the contract
was a mere estimateand cannot be considered a period or a "day certain" in the
context of the aforequoted Art. 1193. To be clear, par. 15 of the Contract of
Reclamation states: "[T]he project is estimated to be completed in six (6) years."
As such, the lapse of six (6) years from the perfection of the contract did not, by
itself, make the obligation to finish the reclamation project demandable, such as
to put the obligor in a state of actionable delay for its inability to finish. Thus, F.F.
Cruz cannot be deemed to be in delay. x x x

Put a bit differently, the lapse of six (6) years from the perfection of the subject
reclamation contract, without more, could not have automatically vested
Mandaue City, under the MOA, with ownership of the structures.

Moreover, even if we consider the allotted six (6) years within which F.F. Cruz
was supposed to completethe reclamation project, the lapse thereof does not
automatically mean thatF.F. Cruz was in delay. As may be noted, the City of
Mandaue never madea demand for the fulfillment of its obligation under the
Contract of Reclamation.

Art. 1169

In this jurisdiction, the following requisites must be present in order that the
debtor may be in default:
(1) that the obligation be demandable and already liquidated;
(2) that the debtor delays performance; and
(3) that the creditor requires the performance judicially or extrajudicially.
(emphasis supplied)

x x x In the instant case, the records are bereft of any document whence to
deduce that the City of Mandaue exactedfrom F.F. Cruz the fulfillment of its
obligation under the reclamation contract. And to be sure, not one of the
exceptions to the requisite demand under Art. 1169 is established, let alone
asserted. On the contrary, the then city mayor of Mandaue, no less, absolved F.F.
Cruz from incurring under the premises in delay.

x x x Clearly, the completion of the project is a suspensive condition that has yet
to be fulfilled. Until the condition arises, ownership of the structures properly
pertains to F .F. Cruz.

To be clear, the MOA does not state that the structures shall inure in ownership to
the City of Mandaue after the lapse of six ( 6) years from the execution of the
Contract of Reclamation. What the MOA does provide is that ownership of the
structures shall vest upon, or ipso facto belong to, the City of Mandaue when the
Contract of Reclamation shall have been completed. Logically, before such time,
or until the agreed reclamation project is actually finished, F.F. Cruz owns the
structures. The payment of compensation for the demolition thereof is justified. x
xx