Table of contents:

page
Agency . . . . . . . . . . . . . . .1-2
Partnership . . . . . . . . . . . . 2-3
Land Titles . . . . . . . . . . . . .3-13
Torts & Damages . . . . . . . . . .14-22
Oblicon . . . . . . . . . . . . . . .22-40
Sales . . . . . . . . . . . . . . . . 40-42
Succession . . . . . . . . . . . . . 43-49
Property . . . . . . . . . . . . . . 49-62
Persons . . . . . . . . . . . . . . 63-71

AGENCY
2000
VICTORIAS MILLING CO. v. CA (G.R. No. 117356, June 19, 2000)
Civil Law/Agency/Distinguished from Sale: The basis of agency is representation.
On the part of the principal, there must be an actual intention to appoint or a
n intention naturally inferable from his words or actions; and on the part of th
e agent, there must be an intention to accept the appointment and act on it, and
in the absence of such intent, there is generally no agency.
One factor which most clearly distinguishes agency from other legal conce
pts is control; one person the agent agrees to act under the control or directio
n of another the principal. Indeed, the very word "agency" has come to connote c
ontrol by the principal. Where the relation of agency is dependent upon the acts
of the parties, the law makes no presumption of agency, and it is always a fact
to be proved, with the burden of proof resting upon the persons alleging the ag
ency, to show not only the fact of its existence, but also its nature and extent
.
The question of whether a contract is one of sale or agency depends on th
e intention of the parties as gathered from the whole scope and effect of the la
nguage employed. Ultimately, what is decisive is the intention of the parties. I
n this case, the use of the words "sold and endorsed" in CSC s communication means
that STM and CSC intended a contract of sale, and not an agency. Also, the term
s and conditions clearly show that petitioner transferred title to the sugar to
the buyer or his assignee upon payment of the purchase price. Said terms clearly
establish a contract of sale, not a contract to sell. Petitioner is now estoppe
d from alleging the contrary.
1996
LIM v. CA (February 1996)
Contract of Agency/Validity & Enforceability: There are some provisions of the l
aw which require certain formalities for particular contracts:
1) When the form is required for the validity of the contract
2) When it is required to make the contract effective as against third part
ies (Arts. 1357 & 1358, Civil Code)
3) When form is required for the purpose of proving the existence of the co
ntract (Statute of Frauds).
A contract to sell on commission basis does not belong to any of these th
ree categories, hence, it is valid and enforceable in whatever form it may be en
tered into.
VELOSO v. CA (G.R. No. 102737, Aug. 21, 1996)
Civil Law/Agency & Land Titles/GPA to sell land & innocent purchaser for value:
Documents acknowledged before a notary have the evidentiary weight with respect
to their due execution. The questioned GPA and deed of sale, were notarized and
therefore, presumed to be valid and duly executed. While it is true that it was
denominated as a GPA, a perusal thereof revealed that it stated an authority to
sell. Thus, there was no need for a separate SPA as the document expressly autho
rized the agent to sell the subject property. The SPA can be included in the GPA
when it is specified therein the act or transaction for which the special power
is required.
As to the issue of forgery, the Court ruled that mere variance of the sig
natures is not conclusive proof of forgery for forgery cannot be presumed. (Teni
o-Obsequio v. CA, G.R. No. 107967, 1 Mar. 1994)
Even granting that petitioner s signature was falsified, and the GPA and deed of s
ale void, such would not revoke title subsequently issued in favor of private re
spondent, an innocent purchaser for value, one relying on the notarized GPA pres
ented by petitioner s wife. Being the wife of the owner and having with her the t
itle to the property, there was no reason for private respondent not to believe
in her authority.
COSMIC LUMBER v. CA (G.R.No. 114311, November 1996)
Civil Law/Agency Power to Sue and Compromise vis--vis Power to Sell Land: The expli
cit and exclusionary authority granted to the agent under the SPA for her to sue
to eject all persons found on the lots so that petitioner could take material p
ossession thereof, and for this purpose, to appear at pre-trial and enter into a
compromise agreement, but only insofar as this was protective of petitioner s rig
hts does not grant to the agent expressly or impliedly, the power to sell the lo
t or portion thereof. In the context of the grant of powers to the agent, aliena
tion by sale cannot be deemed protective of petitioner s rights, more so when the
land was being sold for P80/sq. m., very much less than its assessed value of P2
50.00/sq. m.
When the sale of a piece of land or any interest thereon is through an ag
ent, the authority of the latter shall be in writing; otherwise, the sale shall
be void. For the principal to confer the right upon an agent to sell real estat
e, a POA must so express the powers of the agent in clear and unmistakable langu
age. Where there is any reasonable doubt, no such construction shall be given t
he document. (citations omitted)
As the sale was void, so were the compromise agreement and the judgement
based thereon.
The principal is chargeable with and bound by the knowledge of or notice
to his agent received while the agent was acting as such. But the general rule
is intended to protect those who exercise good faith and not as a shield for unf
air dealing. Hence, there is a well-established exception to the general rule a
s where the conduct and dealings of the agent are such as to raise a clear presu
mption that he will not communicate to the principal the facts in controversy. (
Mutual Life v. Hilton Green, 241 US 613) The logical reason for this exception
is that where the agent is committing fraud, it would be contrary to common sens
e to expect that he would communicate this to the principal. Verily, when an ag
ent is engaged in the perpetration of fraud upon his principal, he is not really
acting for the principal but is acting for himself, entirely outside the scope
of his agency. (Aetna Casualty v. Local Bldg., 19P2d 612, 616)
1995
TOYOTA SHAW v. CA (244 SCRA 320, May 1995)
Civil Law/Agency/Sales/Contract to sell: A person dealing with an agent is put u
pon inquiry and must discover upon his peril the authority of the agent
Definiteness of price is essential element in formation of a binding cont
ract of sale.

PARTNERSHIP
2000
HEIRS OF TAN ENG KEE V. CA (3 Oct 2000)
Particular partnership distinguished from joint venture A particular partnership
is distinguished from joint venture, to wit:
1. a joint venture (an American concept similar to out joint account) is a sort
of informal partnership, with no firm name and no legal personality. In a joint
account, the participating merchants can transact business under their own name,
and can be individually liable therefore; and
2. usually, but not necessarily a joint venture is limited to a single transacti
on, although the business of pursuing to a successful termination may continue f
or a number of years; a partnership generally relates to a continuing business o
f various transactions of a certain kind.
It would seem that under the Philippine law, a joint venture is a form of
partnership, specifically particular partnership which has for its object speci
fic undertaking. The Supreme Court has however recognized a distinction between
these 2 business forms and has held that although a corporation cannot enter int
o a partnership, it may however engage in a joint venture with others.
TOCAO V. CA ( Oct 2000)
Existence of a partnership The issue of whether or not a partnership exists is a
factual matter which are within the exclusive domain of both the trial court an
d CA.
Since a contract of partnership is consensual, an oral contract of part
nership is a good as a written one; when no immovable property or real rights ar
e involved, what matters is that the parties have complied with the requisites o
f partnership.
The best evidence of the existence of the partnership, which is not yet
terminated (though in the winding up stage), are the unsold goods and uncollect
ed receivables.
A mere falling out or misunderstanding between the partners does not con
vert the partnership into a sham organization the partnership exists until disso
lved under the law.
Anyone of the partners, may at his own pleasure dictate a dissolution of
the partnership at will, though hew must however, act in good faith, not that a
ttendance of bad faith can prevent the dissolution of the partnership, but that
its can result in a liability for damages.
Even if one partner had effected her own withdrawal from the partnership
and considered herself as having ceased to be associated with the partnership i
n the carrying on of the business, the partnership was not terminated thereby,
it continues until the winding up of the business.
1999
AFISCO INSURANCE CORP. v. CA (Jan. 25, 1999)
Civil Law/Partnership/Creation Of/Requisites (1) Art. 1767 of the CC recognizes
the creation of a contract of partnership when 2 or more persons bind themselves
to contribute money, property, or industry to a common fund, with the intention
of dividing the profits among themselves. Its requisites are: (1) mutual contribu
tion to a common stock, and (2) a joint interest in the profits. In other words,
a partnership is formed when persons contract to devote to a common purpose eith
er money, property, or labor with the intention of dividing the profits between
themselves. Meanwhile, an association implies associates who enter into a joint en
terprise x x x for the transaction of business.
(2) Where in the case before us, the ceding companies entered into a Pool Agreem
ent or an association that would handle all the insurance businesses covered und
er their quota-share reinsurance treaty and surplus reinsurance treaty in Munich
, the following unmistakably indicates a partnership, or an association covered
by Section 24 of the NIRC
1998
IDOS v. CA (September 1998)
Civil Law/Partnership/Final 3 Stages: There are three final stages of a partners
hip: (1) dissolution; (2) winding-up; and (3) termination. Dissolution is the ch
ange in the relation of the partners caused by any partner ceasing to be associa
ted in the carrying on of the business. It is that point of time that the partne
rs cease to carry on the business together. Winding up is the process of settlin
g the business affairs after dissolution. Termination is the point in time after
all the partnership affairs have been wound up.
Art. 1829 of the NCC states that On dissolution, a partnership is not ter
minated, but continues until the winding up of partnership affairs is completed.
The best evidence of the existence of the partnership, which was not yet
terminated (though in the winding up stage) were the unsold goods and uncollect
ed receivables, which were presented to the trial court. Since the partnership h
as not been terminated, the petitioner and complainant remained as co-partners.
The check was thus issued by the petitioner to complainant as would a partner to
another, and not as payment from a debtor to a creditor.

LAND TITLES
2001
SEVILLE v. NATIONAL DEVELOPMENT COMPANY (G.R. No. 129401, February 2, 2001)
Civil Law/ Land Titles/ Public lands/Prescription: Based on the Regalian Doctrin
e that all lands of the public domain belong to the State, which is the source o
f any asserted right to ownership of land, all lands not otherwise appearing to
be clearly within private ownership are thus presumed to belong to the State. Un
less a public land is shown to have been reclassified as alienable or actually a
lienated by the State to a private person, that piece of land remains part of th
e public domain. Hence, occupation thereof, however long, cannot ripen into owne
rship.
CERVANTES v. CA (G.R. No. 118982, February 19, 2001)
Civil Law/ Land titles/ Certificate of registration: The certificate of title s
erves as evidence of an indefeasible and incontrovertible title to the property
in favor of the person whose name appears therein. A title once registered under
the Torrens System cannot be defeated even by adverse, open and notorious posse
ssion; neither can it be defeated by prescription. Petitioners cannot prove thei
r ownership of the subject parcels of land through tax declarations and correspo
nding tax receipts inasmuch as they are not conclusive evidence of ownership.
2000
DUARTE v. ONG (May 2000)
Civil Law/ Land Titles/ Validity of Adverse Claim: The Court upheld the Sajonas
v. CA (258 SCRA 79) ruling that a notice of adverse claim remains valid even aft
er the lapse of the 30-day period. For as long as there is yet no petition for i
ts cancellation, the notice of adverse claim remains subsisting.
The law provides that after the lapse of said period, the annotation of the adve
rse claim may be cancelled upon filing of a verified petition therefor by the pa
rty in interest. If the adverse claim has been automatically terminated by mere
lapse of time, the law would not have required the party in interest to do a use
less act.
In a petition for cancellation of adverse claim, a hearing must first be co
nducted. The hearing will afford the parties an opportunity to prove the proprie
ty or impropriety of the adverse claim. Petitioner in this case was unlawfully
denied this opportunity when the Registrar of Deeds automatically cancelled the
adverse claim. Needless to state, the cancellation of her adverse claim is inef
fective.
CORPUZ v. SPS. GROSPE (G.R. No. 135297, June 8, 2000)
Civil Law/ Land Titles/ Conveyance of Land Reform Rights: The sale, transfer or
conveyance of land reform rights are, as a rule, void in order to prevent a circ
umvention of agrarian reform laws except when the alienation is made in favor of
the government or through hereditary succession. This ruling is intended to pre
vent a reversion to the old feudal system in which the landowners reacquired vas
t tracts of land, thus negating the government's program of freeing the tenant f
rom the bondage of the soil.
Surrender of possession did not amount to an abandonment in this case bec
ause there was an obligation on the part of private respondents to return posses
sion upon full payment of the loan. Voluntary surrender, as a mode of extinguish
ment of tenancy relations, does not require court approval as long as it is conv
incingly and sufficiently proved by competent evidence. Petitioner's voluntary
surrender to the Samahang Nayon qualifies as a surrender or transfer to the gove
rnment because such action forms part of the mechanism for the disposition and t
he reallocation of farmholdings of tenant-farmers who refuse to become beneficia
ries of PD 27. what was prohibited was the perpetration of the tenancy or leaseho
ld relationship between the landlord and the farmer beneficiary.
SANTIAGO v. CA (G.R. No. 109111, June 28, 2000)
Civil Law/ Land Titles/ Property/ Ownership: A torrens certificate of title cove
rs only the land described therein together with improvements existing thereon,
if any, nothing more. The titles presented by petitioners covering as they do l
and adjacent to that claimed in MWSS application for registration, do not support
their claim, but even defeat it.
If petitioners predecessors were truly the owners of the subject parcels o
f land, they would have taken steps to have the land properly titled long ago. T
he land was possessed by MWSS long before World War II. Petitioners "slept on th
e rights" they claim to possess. Relief is denied to a claimant whose right has
become "stale" by reason of negligence or inattention for a long period of time.
By placing the pipelines under the land, there was material occupation of
the land by MWSS, subjecting the land to its will and control. [Under Article 5
31 of the Civil Code, "Possession is acquired by the material occupation of a th
ing or the exercise of a right, or by the fact that it is subject to the action
of our will, or by proper acts and legal formalities established for acquiring s
uch right."] Petitioners cannot argue that MWSS possession was not "open". The ex
istence of the pipes was indicated above the ground by "pilapils".
ALBERTO v. CA (June 30, 2000)
Civil Law/ Land Titles/Property/Lis pendens: The notice of lis pendens is an ann
ouncement to the whole world that a particular real property is in litigation, a
nd serves as a warning that one who acquires an interest over said property does
so at his own risk, or that he gambles on the result of the litigation over sai
d property. In Viewmaster Construction Corporation v. Maulit, this Court did not
confine the availability of lis pendens only to cases involving the title to or
possession of real property. A notice of lis pendens is proper in the following
cases, viz.:
a)....An action to recover possession of real estate;
b)....An action to quiet title thereto;
c)....An action to remove clouds thereon;
d)....An action for partition; and
e)....Any other proceedings of any kind in Court directly affecting the title to
the land or the use or occupation thereof or the buildings thereon."
REPUBLIC OF THE PHILIPPINES vs. CA (G.R. No. 130174, July 14, 2000)
Civil Law/ Land Titles/ Public Lands/ Res Judicata: An applicant seeking to esta
blish ownership over land must conclusively show that he is the owner thereof in
 fee simple, for the standing presumption is that all lands belong to the public
domain of the State, unless acquired from the Government either by purchase or
by grant, except lands possessed by an occupant and his predecessors since time
immemorial, for such possession would justify the presumption that the land had
never been part of the public domain or that it had been private property even b
efore the Spanish conquest.
The land in question is admittedly public. The applicant has no title at
all. Its claim of acquisition of ownership is solely based on possession. In fac
t, the parcels of land applied for were declared public land by decision of the
Cadastral Court. Such being the case, the application for voluntary registration
under P. D. No. 1529 [Formerly Act No. 496.] is barred by the prior judgment of
the Cadastral Court. The land having been subjected to compulsory registration
under the Cadastral Act and declared public land can no longer be the subject of
registration by voluntary application under Presidential Decree No. 1529. The s
econd application is barred by res-judicata. As previously held, "[W]here the ap
plicant possesses no title or ownership over the parcel of land, he cannot acqui
re one under the Torrens System of registration."
REPUBLIC OF THE PHILIPPINES v. ESTIPULAR (G.R. No. 136588, July 20, 2000)
Civil Law/ Land Titles/ Reconstitution of Title: Before the trial court can acqu
ire jurisdiction to hear and decide a reconstitution case, compliance with the f
ollowing requisites is imperative:
1. That the notice of the petition be published, at the expense of the peti
tioner, twice in successive issues of the Official Gazette, and posted on the ma
in entrance of the provincial building and of the municipal building of the muni
cipality or city in which the land is situated, at least thirty days prior to th
e date of hearing;
2. That the notice state among other things, the number of the lost or dest
royed certificates of title if known, the name of the registered owner, the name
of the occupants or persons in possession of the property, the owner of the adj
oining properties and all other interested parties, the location, area and bound
aries of the property, and the date on which all persons having any interest the
rein must appear and file their claim of objection to the petition;
3. That a copy of the notice also be sent, by registered mail or otherwise,
at the expense of the petitioner, to every person named therein (i.e. the occup
ants or persons in possession of the property, the owner of the adjoining proper
ties and all other interested parties) whose address is known at least thirty da
ys prior to the date of the hearing; and
4. That at the hearing, petitioner submit proof of publication, posting and
service of the notice as directed by the court.
These requisites are mandatory and compliance with them is jurisdictiona
l.
DE GUZMAN v. THE NATIONAL TREASURER OF THE REPUBLIC OF THE PHILIPPINES (G.R. No.
143281, August 3, 2000)
Civil law/Land Titles/Recovery from Assurance Fund under the Property Registrati
on Decree: The ff. persons may recover from the Assurance Fund:
1) Any person who sustains loss or damage under the following conditions:
a. that there was no negligence on his part; and
b. that the loss or damage sustained was through any omission, mistake or
malfeasance of the court personnel, or the Registrar of Deeds, his deputy, or o
ther employees of the Registry in the performance of their respective duties und
er the provisions of the Land Registration Act, now, the Property Registration D
ecree; or
2) Any person who has been deprived of any land or interest therein under t
he following conditions:
a. that there was no negligence on his part;
b. that he was deprived as a consequence of the bringing of his land or i
nterest therein under the provisions of the Property Registration Decree; or by
the registration by any other person as owner of such land; or by mistake, omiss
ion or misdescription in any certificate of owner's duplicate, or in any entry o
r memorandum in the register or other official book or by any cancellation; and
c. that he is barred or in any way precluded from bringing an action for
the recovery of such land or interest therein, or claim upon the same.
The Assurance Fund is intended to relieve innocent persons from the harsh
ness of the doctrine that a certificate is conclusive evidence of an indefeasibl
e title to land. That petitioners eventually lost the property to the original o
wners, however, does not entitle them to compensation under the Assurance Fund.
Petitioners' recourse is not against the Assurance Fund but against the rogues w
ho duped them.
NATIONAL IRRIGATION ADMINISTRATION vs. CA (G. R. No. 114348, September 20, 2000)
Civil Law/ Land Titles/ Property/ Easements/ Buyers in Good Faith: Under the Ori
ginal Certificate of Title, there was a reservation and condition that the land
is subject to all conditions and public easements and servitudes recognized and
prescribed by law This reservation, unlike the other imposed on the grant, was n
ot limited by any time period and thus is a subsisting condition. Section 112, C
ommonwealth Act No. 141, further provides that lands granted by patent shall fur
ther be subject to a right of way.
In the present case, we find and declare that a legal easement of a right
-of-way exists in favor of the government. The land was originally public land,
and awarded to respondent Manglapus by free patent. The ruling would be otherwis
e if the land were originally private property, in which case, just compensation
must be paid for the taking of a part thereof for public use as an easement of
a right of way.
As to the issue of good faith, one who deals with property registered und
er the Torrens system is charged with notice of burdens and claims that are anno
tated on the title
DOLFO v. REGISTER OF DEEDS (G.R. No. 133465, September 25, 2000)
Civil Law/ Land Titles/ Registration: The rule that a title issued under the Tor
rens System is presumed valid and, hence, is the best proof of ownership of a pi
ece of land does not apply where the certificate itself is faulty as to its purp
orted origin. It bears emphasis that the Torrens system does not create or vest
title but only confirms and records one already existing and vested. Thus, while
it may be true, as petitioner argues, that a land registration court has no jur
isdiction over parcels of land already covered by a certificate of title, it is
equally true that this rule applies only where there exists no serious controver
sy as to the authenticity of the certificate.
SPOUSES ZARAGOZA v. CA (G.R. No. 106401, September 29, 2000)
Civil Law/Land Titles/Certificate of Title Not Subject to Collateral Atta
ck: The certificate of title, in the absence of fraud, is the evidence of title
and shows exactly the real interest of its owner. The title once registered, wi
th very few exceptions, should not thereafter be impugned, altered, changed, mod
ified, enlarged or diminished, except in some direct proceeding permitted by law
. Otherwise, all security in registered titles would be lost. A Torrens title c
annot thus be collaterally attacked. The issue on the validity of title, i.e.,
whether or not it was fraudulently issued, can only be raised in an action expre
ssly instituted for that purpose.
1999
ITUTRALDE v. FALCASANTOS (Jan. 20, 1999)
Civil Law/ Land Titles/Forest Lands Not Subject to Private Ownership unless Decl
assified: As held in Republic v. Register of Deeds (244 SCRA 537), Forest land, l
ike mineral or timber lands which are public lands, are not subject to private o
wnership under the Constitution, become private properties. In the absence of s
uch classification, the land remains unclassified public land until released the
refrom and rendered open to disposition. Before any land may be declassified for
m the forest group and converted into alienable or disposable land for agricultu
ral or other purposes, there must be a positive act from the government. Even r
ules on the confirmation of imperfect titles do not apply unless and until the l
and classified as forest land is released in an official proclamation to that ef
fect so that it may form part of the disposable agricultural lands of the public
domain.
RP v CA (Jan. 21, 1999)
Civil Law/ Land Titles/ Government Immunity from Laches: As a general rule, esto
ppels against the public are not favored; they must be invoked only in rare and
unusual circumstances as they could operate to defeat the effective operation of
a policy adopted to protect the public. However, the government may not be all
owed to deal dishonorably or capriciously with its citizens. In the case at bar
, for nearly 20 years, petitioner failed to correct and recover the alleged incr
ease in the lands area of St. Jude. Its prolonged inaction strongly militates a
gainst its cause, as its is tantamount to laches.
URQUIAGA v. CA (Jan. 22, 1999)
Civil Law/ Land Titles/Public Lands/Only the State Can Institute Reversion Proce
edings: Even assuming that the land was acquired through fraud and misre
presentation, it is only the State which may institute reversion proceedings und
er Sec. 101 of the Public Land Act, considering the finding that the subject lot
was public land at the time of the sales applications.
DIR. OF LANDS v. CA (Feb. 23, 1999)
Civil Law/Land Titles/Land Registration/ Effect of Withdrawal of Applicat
ion for Land Registration: Section 37 of the Land Registration Act (Act 246) man
dates that the withdrawal of the application for land registration should not me
an that the conflicting interests of the parties ceased to exist and therefore t
he land registration proceedings must be pursued to its conclusion. An oppositor
who claims ownership over the property covered by the application, or part ther
eof, may now claim in his answer that the land be registered in his name in the
same proceeding. And if the Dir. Of Lands registers an adverse claim, the lower
court is bound to determine the conflicting interest of the claimant and the app
licant and incase neither succeeds through evidence of proper title for registra
tion, the court may dismiss the case. An opposition presented by the Dir. Of La
nds is for all intents and purposes, a conflicting interest as against that of t
he applicant or of the private oppositors, asserting a claim over the land regis
tered. Consequently, the withdrawal by either the applicant or any of the priva
te oppositors doesn t ipso fact obliterate the conflicting interests in the case.
Neither is the case terminated because under the law, as amended, the trial cou
rt is required to resolve the claims of the remaining parties, the withdrawal of
the application by the applicant and/or some private oppositors notwithstanding
.
VOLUNTAD v. SPS. DIZON (August 1999)
Civil Law/ Land Titles/Reliance on Reliance on Torrens Title/ Exception: The gen
eral rule is that a person dealing with a registered land has a right to rely on
the Torrens Certificate of Title without the need of inquiring further. But thi
s rule cannot apply when the party has actual knowledge of facts and circumstanc
es that would impel a reasonably cautious man to make such inquiry or when the p
urchaser has knowledge of a defect or lack of title in his vendor or of sufficie
nt facts to induce a reasonably prudent man to inquire into the status of the ti
tle of the property in litigation.

1998
SPS. MATHAY, JR v. CA (September 1998)
Civil Law/ Land Titles/ Sale of Registered Land/ Buyers in Good Faith /Two Trans
fer Certificates of Title on Same Land, Rule: In the three cases merged in thi
s one petition, petitioners, Sps. Mathay, claim title to three lots, which have
been also bought and thereafter occupied by three different parties. Petition di
smissed.
A purchaser in good faith is one who buys property of another, without no
tice that some other person has a right to, or interest in, such property and pa
ys a full and fair price for the same at the time of purchase, or before he has
notice of the claims or interest of some other person in the property. As a rule,
he who asserts the status of a purchaser in good faith and for value, has the b
urden of proving such assertion. Petitioners can t invoke good faith because at th
e time the property was sold to them, the private respondents were occupying and
cultivating the property.
As stated in the case of Baltazar v. CA, between two persons both of who
m are in good faith and both innocent of any negligence, the law must protect an
d prefer the lawful holder of registered title over the transferee of a vendor b
ereft of any transmissible rights. In the instant case, petitioners have no righ
ts against private respondents. Their recourse is against their vendors.
Where two transfer certificates of title have been issued on different d
ates, to two different persons, for the same parcel of land, even if both are pr
esumed to be titleholders in good faith, it does not necessarily follow that he
who holds the earlier title should prevail. The better approach, assuming a regu
larity in the issuance of the two titles, is to trace the original certificates
from which the disputed certificates of title were derived. Should there be only
one common original certificate, the transfer certificate issued on an earlier
date along the line must prevail, absent any anomaly or irregularity tainting t
he process of registration.
DAWSON v. REGISTER OF DEEDS (September 1998)
Civil Law/ Land Titles/ Land Registration/ Amendment and Alteration of Certifica
te of Title: The case revolves around the issue of whether Sec. 108 of PD 1529 (
Land Registration Act) applies in the instant case where a contract to sell is i
nvolved. The first buyer, Louis Dawson, died without having finished paying the
whole amount, which obligation was assumed by petitioners, his heirs. The RTC a
nd CA refused the cancellation of the certificate in the name of Louis Dawson an
d issuance of a new title in the name of petitioners.
The SC allowed the application of Sec 108 of PD 1529 contending that thi
s is a case of a contract to sell and not a contract of sale. In the case of Sal
azar v. CA, in a contract of sale, the title to the property passes to the vende
e upon the delivery of the thing sold; in a contact to sell, ownership is by agr
eement, reserved in the vendor and is not to pass to the vendee until full payme
nt of the purchase price. Thus, since Louis Dawson was unable to pay the whole p
rice, which was completely paid by petitioners, the property did not become part
of the estate of Louis Dawson. Partition is therefore not the proper remedy to
determine the ownership of the lot whose title had not been vested in Louis Daws
on during his lifetime as his death caused the loss of his juridical personality
, which is the fitness to be the subject of legal relations.
1997
SPOUSES PALOMO v. CA (G.R. No. 95608, Jan. 21, 1997)
Civil Law/Land Titles/Public Lands/ Adverse Possession/Grant of Title: The adver
se possession which may be the basis of a grant of title in confirmation of impe
rfect title cases applies only to alienable lands of the public domain. It is el
ementary in the law governing natural resources that forest land cannot be owned
by private persons. It is not registrable and possession thereof, no matter ho
w lengthy, cannot convert it into private property, unless such lands are reclas
sified and considered disposable and alienable. There is no question that the lo
ts here forming part of the forest zone were not alienable lands of the public d
omain.
As to the forfeiture of improvements introduced by petitioners, the fact
that the government failed to oppose the registration of the lots in question is
no justification for petitioners to plead good faith in introducing improvement
s on the lots.
HEIRS OF FELICIDAD CANQUE v. (July 1997)
Civil Law/Land Titles/Redemption of Titled Real Estate Foreclosed by a Rural Ban
k: The mortgagor of titled real estate acquired under the Public Land Act but fo
reclosed by a rural bank, may redeem said property within 2 years from registrat
ion of the sheriff's certificate of sale; and if said mortgagor fails to expire
such right, he or his heirs may still repurchase the land within 5 years from th
e expiration of the two-year redemption period.
THE DIRECTOR OF LANDS v. CA (July 1997)
Civil Law/Land Titles/Original Land Registration/Publication of Notice of initia
l Hearing: Newspaper publication of the notice of initial hearing in an original
land registration case is mandatory. Absent any publication in a newspaper of g
eneral circulation (NOGC), the land registration court cannot validly confirm an
d register the title. uirement in its detailed provision. It may be asked why pu
blication in a NOGC is mandatory when the law already requires notice by publica
tion in the OG, mailing and posting. The reason is due process and the reality
that the OG is not as widely read and circulated and is oftentimes delayed in it
s circulation.
Further, a land registration proceeding is in rem, hence it must be vali
dated essentially through publication.
ORTIGAS & CO. v. JUDGE VELASCO (August 1997)
Civil Law/Land Titles/Reconstitution: R.A. No. 26, 13, lays down the requisites
for acquisition by the court of jurisdiction over a proceeding for reconstituti
on of title:
1) Publication, at petitioner's expense, of notice of the petition for reco
nstitution twice in successive issues of the OG, and posting thereof on the main
entrance of the provincial building and of the municipal building of the munici
pality or city in which the land is situated, at least 30 days prior to the date
of hearing;
2) Specific statement in the notice of the number of the lost or destroyed
certificates of title if known, the name of the registered owner, the name of th
e occupants or persons in possession of the property, the owner of the adjoining
properties and all other interested parties, the location, area and boundaries
of the property, and the date on which all persons having any interest therein m
ust appear and file their claim or objection to the petition;
3) Sending, by registered mail or otherwise, at the expense of petitioner,
of a copy of the notice to every person named therein (i.e., the occupants or pe
rsons in possession of the property, the owner of the adjoining properties and a
ll other interested parties) whose address is known, at least 30 days prior to t
he date of the hearing; and
4) Submission by petitioner at the hearing of proof of the publication, pos
ting and service of notice as directed by the court.
CARVAJAL v. CA (G.R. No. 98328, October 1997)
Civil Law/Land Titles/Authority of Land Registration Court:
There was nothing irregular in the trial court s order to the LRA and DENR
to submit reports on the location of the land covered by petitioner s application
and private respondent s certificate of title. The authority of the land registr
ation court to require the filing of additional papers to aid it in its determin
ation of the propriety of the application is based on P.D. No. 1529, 21, from whi
ch, it is also clear that ocular inspection of the property was merely discretio
nary, not mandatory. Likewise, the land registration court was not obliged to o
rder the survey of the contested lot, especially when another government agency
had already submitted a report finding that the contested lot was identical with
that described in private respondent s certificate of title and recommending dism
issal of the application for registration.

LEGARDA v. CA (October 1997)

Civil Law/Land Titles/Reconveyance: One who deals with registered property under
the Torrens system need not go beyond the same, but only has to rely on the tit
le; he is charged with notice only of such burdens and claims as are annotated
on the title. (Sandoval v. CA, 260 SCRA 283 [1996]) Here, no notice of lis pend
ens was ever annotated on any of the titles. And even if there were such a noti
ce, it would not have created a lien over the property as the main office of a l
ien is to warn prospective buyers that the property they intend to purchase is t
he subject of a pending litigation. Therefore, since the property is already in
the hands of Luminlun, an innocent purchaser for value, it can no longer be ret
urned to Cabrera, much less to NCH.
VILLANUEVA v. CA (November 1997)
Civil Law/Land Titles/Notice of Lis Pendens:
In Magdalena Homeowners v. CA (184 SCRA 325, 329-30 [1990]), this Court
enumerated the cases where a notice of lis pendens is proper:
1) action to recover possession of real estate
2) action to quiet title
3) action to remove clouds
4) action for partition
5) any other proceeding of any kind in court directly affecting the
title to the land or the use or occupation thereof or the buildings thereon.
The elements to annotate a notice of lis pendens are that: (1) property
must be of such character as to be subject to the rule; (2) court must have juri
sdiction both over the person and the res; and (3) property or res involved must
be sufficiently described in the pleadings.
Although it is not necessary for the applicant to prove his ownership or
interest over the property sought to be affected by lis pendens, the applicant
must, in the complaint or answer filed in the case, assert a claim of possession
or title over the subject property in order to give due course to his applicati
on. As settled, lis pendens may be annotated only where there is an action or p
roceeding in court which affects the title to, or possession of, real property.
To require that an applicant must prove his ownership or his interest ov
er the property sought to be affected with the notice of lis pendens will unduly
restrict the scope of the rule. In such case, a party questioning the ownershi
p of the registered owner will litigate his or her case without an assurance tha
t the property will be protected from unwanted alienation or encumbrance during
the pendency of the action, thereby defeating the very purpose and rationale of
the registration.
CRUZ v. CA (November 1997)
Civil Law/Land Titles/Innocent Purchaser for Value: Although under Art. 1490, a
husband and wife cannot sell property to one another as a rule which, for policy
considerations requires that the prohibition apply to common-law relationships
(Calimlim v. Fortun, 129 SCRA 675 [1984]), petitioner can no longer seek reconve
yance of the property as it has already been acquired by an innocent purchaser f
or value (Vizconde). This is without prejudice to any appropriate remedy petitio
ner may take against her live-in companion Romy who sold the property to Vizcond
e .
REPUBLIC OF THE PHILIPPINES v. CA (November 1997)
Civil Law/Land Titles/Property/Encumbrance of a Free Patent Land/Reversion of Fo
reshore Land to Public Domain: The lease and/or mortgage of a portion of a realt
y acquired through free patent within 5 years from such grant constitute suffici
ent ground for the nullification of the grant, as the pledge and/or mortgage are
encumbrances for which the use and transfer of property is impaired.
A patent land becoming foreshore land can no longer be subject of a free
patent. Govt. v. Cabagis (53 Phil. 112, 115-16 [1929]) explained the rationale fo
r this proscription, i.e., where an owner has to all intents and purposes abando
ned the land and permitted it to be totally destroyed so as to become part of th
e seashore, the land passes on to the public domain but the owner thus disposses
sed does not retain any right to the natural products resulting from their new n
ature; it is a de facto case of eminent domain and not subject to indemnity. Wh
en the sea moved towards the estate and the tide invaded it, the invaded propert
y became foreshore land and passed to the realm of the public domain.
HEIRS OF NAGAO v. CA (November 1997)
Civil Law/Land Titles/Free Patent Over Private Land: A free patent issued over p
rivate land is void. Further, private respondents' claim of open, public, etc.,
possession since 1029 and its illegal inclusion in petitioners' free patent gav
e private respondents a cause of action for quieting of title, which is imprescr
iptible. Thus private respondents' complaint may thus likewise be considered an
action for quieting of title.
1996
GARBIN v. CA (February 1996)
Civil Law/Land Titles/ Adverse Claim: The registration of an adverse claim canno
t prevail over the title which was registered subsequent to the adverse claim. I
n the case at bench, what was registered was merely the adverse claim, and not t
he Deed of Sale. Therefore, there is still need to resolve the former's validity
in separate proceedings, as there is an absence of registration of the actual c
onveyance of the portion of land therein claimed by private respondents.
NEW DURAWOOD v. CA (February 1996)
Civil Law/Land Titles/ Reconstitution: As ruled in Demetriou v. CA (238 SCRA 158
, 162 [1994]), we ruled that if a certificate of title has not been lost but is
in fact in the possession of another person, the reconstituted title is void and
the court rendering the decision has not acquired jurisdiction. Consequently,
the decision may be attacked at any time. In case at bench, the owner's duplica
te certificates of title were not "lost or destroyed," hence, there was no neces
sity for the petition filed in the trial court for the "Issuance of New Owner's
Duplicate Certificates of Title x x x." The law provides that in case of the ref
usal or failure of the holder to surrender the owner's duplicate certificate of
title, the remedy is a petition in court to compel surrender thereof to the Regi
ster of Deeds, and not a petition for reconstitution.
STATE INVESTMENT HOUSE v. CA (March 1996)
Civil Law/Land Titles/Unregistered Sale Prevails Over Subsequent Registered Mort
gage: Petitioner's registered mortgage over the property is inferior to that of
respondents-spouses' unregistered right. The unrecorded sale between respondent
s-spouses and Solid is preferred for the reason that if the original owner (Soli
d) had parted with his ownership of the thing sold then he no longer had ownersh
ip and free disposal of that thing so as to be able to mortgage it again. Regist
ration of the mortgage is of no moment since it is understood to be without prej
udice to the better right of third parties.
As a general rule, where there is nothing in the certificate of title to
indicate any cloud or vice in the ownership of the property, or any encumbrance
thereon, the purchaser is not required to explore further than what the Torrens
Title upon its face indicates in quest for any hidden defect or inchoate right t
hat may subsequently defeat his right thereto. This rule, however, admits of an
exception as where the purchaser or mortgagee, has knowledge of a defect or lac
k of title in his vendor.
REPUBLIC v. CA (March 1996)
Civil Law/Land Titles/Public Lands/Registration of Patent/Reversion: Once a pate
nt is registered under Act No. 496 (now P.D. No. 1529) and the corresponding cer
tificate of title is issued, the land ceases to be part of the public domain and
becomes private property over which the Director of Lands will no longer have e
ither control or jurisdiction. (Dir. of Lands v. De Luna, 110 Phil. 28 [1960])
The Torrens Title issued on the basis of a free or homestead patent becomes as i
ndefeasible as one which was judicially secured upon the expiration of one year
from date of issuance of patent. However, even after the lapse of one year, the
State may still bring an action under 101 of the Public Land Act for the reversi
on to the public domain of lands which have been fraudulently granted to private
individuals. This has been the consistent ruling of this Court. (citations omi
tted)
HALILI v. CIR (May 1996)
Civil Law/Land Titles/Certificate of Title not subject to collateral attack/Inno
cent Purchaser For Value:The issue on the validity of title, i.e., whether or no
t it was fraudulently issued, can only be raised in an action expressly institut
ed for that purpose. Where innocent third persons, relying on the correctness of
the Certificate of Title thus issued, acquire rights over the property, the Cou
rt cannot disregard such rights and order the total cancellation of the certific
ate.
REPUBLIC v. CA (July 1996)
Civil Law/Land Titles/Claim by the State Even After A Year of the OCT s Transcript
ion/Prescription Against the State: The Republic w is not barred from claiming t
he property, even if one year after its transcription which is the date of its e
ffectivity said certificate of title became incontrovertible. First, the one-ye
ar period provided for in Section 38 of Act No. 496 merely refers to a petition
for review and is reckoned from the entry of decree. In the second place, there
are other remedies available to an aggrieved party after the said one-year peri
od, e.g., reconveyance, covered by Section 55 of Act No. 496 which, inter alia,
provides that "in all cases of registration procured by fraud, the owner may pur
sue all his legal and equitable remedies against the parties to such fraud, with
out prejudice, however, to the rights of any innocent holder for value of a cert
ificate of title." Likewise, an action for damages is sanctioned in cases where
the property has been transferred to an innocent purchaser for value, which may
be filed within four years from discovery of the fraud. Recourse may also be had
against the Assurance Fund. Finally, prescription never lies against the State
for the reversion of property which is part of the public forest or of a forest
reservation which was registered in favor of any party. Then too, public land r
egistered under the Land Registration Act may be recovered by the State at any t
ime. "Public land fraudulently included in patents or certificates of title may
be reverted to the state in accordance with Section 101 of the Public Land Act.
REPUBLIC v. CA (July 1996)
Civil Law/Land Titles/Tax Declarations as Proof of Ownership/Registration: Altho
ugh tax declarations not conclusive, they are good indicia of possession in conc
ept of owner. They constitute at least proof that the holder has a claim of titl
e over the property. Such an act strengthens one's bona fide claim of acquisiti
on of ownership.
Furthermore, registration does not vest title. It is merely evidence of s
uch title.
VDA. DE PANALIGAN v. CA (July 1996)
Civil Law/Land Titles/Public Land Act (C.A. No. 141/Redemption of Foreclosed Lan
d/Tender of Payment: Where the land mortgaged and foreclosed is granted under a
homestead or free patent, tender of payment of the repurchase price is not among
the requisites of the law and is therefore unnecessary. In PNB v. CA (179 SCRA
619 [1989]), the Court held that it was not even necessary for the preservation
 of the right of redemption to make an offer to redeem or tender of payment of p
urchase price within 5 years. The filing of an action to redeem within that per
iod is equivalent to a formal offer to redeem. There is not even a need for con
signation of the redemption price.
But where the land mortgaged and foreclosed is an ordinary parcel, the St
ate Investment House v. CA (215 SCRA 734 [1992]) ruling applies in that tender o
f payment of the repurchase price is necessary in exercising the right of redemp
tion. This is so because in this case, redemption is being exercised under Civil
Law provisions and not under 119, C.A. No. 141.
HEIRS OF GONZAGA v. CA (September 1996)
Civil Law/Land Titles/ Two Certificates of Title for the Same Land: In Pamintuan
v. San Agustin, this Court ruled that in a cadastral case the court has no juri
sdiction in an earlier land registration case and a second decree for the same l
and is null and void. Where two certificates of title purport to include the sa
me land, the earlier in date prevails. In successive registrations, where more t
han one certificate is issued in respect of a particular estate in land, the per
son claiming under the prior certificate is entitled to the estate. Lastly, a ce
rtificate is not conclusive evidence of title if it is shown that the same land
had already been registered and an earlier certificate for the same is in existe
nce.
ATOK BIG-WEDGE MINING v. IAC (G.R. No. 63528, September 1996)
Civil Law/Land Titles/Public Lands/Effect of Recording of Mining Claims: The rec
ording of mining claims could not have been intended to be the operative act of
classifying lands into mineral lands. The recording only operates to reserve to
the registrant exclusive rights to undertake mining activities upon the subject
land. The power to classify lands into mineral lands could not have been inten
ded under the Philippine Bill of 1902 to be vested in just anyone who records a
mining claim. This strengthens our holding that the rights of a mining claimant
are confined to possessing the land for purposes of extraction of minerals. Th
us, if no minerals are extracted, notwithstanding the recording of the claim, th
e land is not mineral land and registration thereof is not precluded by such rec
orded claim. Thus, in case at bench, the mining claimant, who had failed to com
ply with the annual minimum work requirement, could not, all the more, be expect
ed to have extracted minerals from the mining location.
Thus, it can be said (1) that the rights under the Philippine Bill of 190
2 of a mining claim holder has been made subject by the Bill itself to the stric
t requirement that he actually performs work or undertakes improvements on the m
ine every year and does not merely file his affidavit of annual assessment, whic
h requirement was correctly identified and declared in E.O. No. 141; and (2) Tha
t the same rights have been terminated by P.D. No. 1214, a police power enactmen
t, under which non-application for mining lease amounts to waiver of all rights
under the Philippine Bill of 1902 and application for mining lease amounts to wa
iver of the right under the Bill to apply for a patent. In light of these condi
tions upon the right of a mining claim holder under the Bill, there should remai
n no doubt now that such rights were not, in the first place, absolute or in the
nature of ownership, and neither were they intended to be so.

INTESTATE ESTATE OF THE LATE DON MARIANO SAN PEDRO y ESTEBAN v. CA (Dec. 18, 199
6)
Civil Law/Land Titles/Rights Under Spanish Titles and Grants/Remedial Law/Jurisd
iction of A Probate Court: A probate court's jurisdiction is not limited to the
determination of who the heirs are and what shares are due them as regards the d
ecedent's estate. Neither is it confirmed to the issue of the validity of wills
. Thus in Trinidad v. CA (202 SCRA 106, 116 [1991]), we held that questions of t
itle to any property apparently still belonging to the estate of the deceased ma
y be passed upon in probate with the consent of all parties, without prejudice t
o third persons. Parenthetically, questions of title pertaining to the determina
tion prima facie of whether certain properties ought to be included or excluded
from inventory and accounting may be resolved by the probate court. (Garcia v. G
arcia, 67 Phil. 353, 356-357 [1939])
Under P.D. 892 (effective 16 Feb. 1976), all holders of Spanish titles/gr
ants should cause their lands covered thereby to be registered under Act No. 496
within 6 months from date of effectivity or until 16 Aug. 1976. Otherwise, non
-compliance results in a re-classification of their land. Spanish titles can no
longer be countenanced as indubitable evidence of land ownership.
Petitioners, however, are not without recourse. P.D. 892 grants all hold
ers of Spanish titles the right to apply for registration of their lands under A
ct No. 496, within 6 months from the effectivity of P.D. 892. Thereafter, howev
er, any Spanish title, if utilized as evidence of possession, cannot be used as
evidence of ownership in any land registration proceedings under the Torrens sy
stem. All instruments affecting lands originally registered under the Spanish Mo
rtgage Law may be recorded under Section 194 of the Revised Administrative Code,
as amended by Act No. 3344.
1995
LIGON v. CA (244 SCRA 693)
Civil Law/Land Titles/Registration of Voluntary Instruments in the Register of D
eeds: No voluntary instrument shall be registered by the Register of Deeds unles
s the owner's duplicate certificate is presented together with such instrument,
except in some cases or upon court order.
IGNACIO v. COURT OF APPEALS (246 SCRA 242 [1995 July])
Civil Law/ Land Titles/ Action for Consolidation of Ownership/ Jurisdiction of R
TC as Land Registration Court: 1) An action for consolidation of ownership must
be filed as an ordinary civil action, not as a land registration case.
2) Whether a particular issue should be resolved by the RTC in its limited
jurisdiction as a land registration court is not a jurisdictional question but a
procedural question.
3) The distinction between the general jurisdiction vested in the RTC and i
ts limited jurisdiction when acting as a land registration court has been elimin
ated by P.D. No. 1529, to avoid multiplicity of suits. The RTCs now have the au
thority to act not only on applications for original registration but also over
all petitions filed after the original registration of title, with power to hear
and determine all questions arising from such applications or petitions. The l
and registration court can now hear and decide controversial and contentious cas
es and those involving substantial issues.
PILAPIL v. CA (G.R. No. 55134, Dec. 4, 1995)
Civil Law/Land Titles/ Sale of Land/ Registration: To affect the land sold, the
presentation of the deed of sale and its entry in the day book must be done with
the surrender of the owner's duplicate of the certificate of title. Production
of the owner's duplicate of the certificate of title is required by Section 55
of Act No. 496 (not Section 53 of P.D. No. 1529), and only after compliance with
this and other requirements shall actual registration retroact to the date of e
ntry in the day book. Nonproduction of the owner's duplicate of the certificate
of title, however, may not invalidate petitioners' claim of ownership over the l
ot involved considering the factual circumstances of this case, i.e., constructi
ve knowledge of the prior sale.

TORTS & DAMAGES

2000
MMTC v. CA (May 2000)
Torts; Vicarious Liability of Employers; Damages . X Company is the operator of
buses. Spouses Y sued the bus company for the death of their daughter who was
hit by one of the buses of X. . RTC found X & their driver guilty of negligence
& who ordered to pay actual, moral & exemplary damages, including atty's. fees
& costs of lawsuit.
RULINGS: Employers may be relieved of responsibility for the negligent acts
of their employees within the scope of their assigned tasks only if they can sho
w that "they observed all the diligence of a good father of a family to prevent
damage, both in the selection of the employee who committed the quasi-delict and
in the supervision of the performance of his duties.
Moral damages. - The award of moral damages is aimed at a restoration, w
ithin the limits of the possible, of the spiritual status quo ante; and therefor
e, it must be proportionate to the suffering inflicted.
Compensation for loss of earning capacity - Compensation of this nature i
s awarded not for loss of earnings but for loss of capacity to earn money. Ev
idence must be presented that the victim, if not yet employed at the time of dea
th, was reasonably certain to complete training for a specific profession. It i
s not necessary that education, as a guide to future earnings, relate to a spe
cific occupation like lawyer or doctor. Evidence of education in general studies
is admissible to ascertain future earning.
FOOD TERMINAL INC. vs. CA (G.R. No. 108397, June 21, 2000.)
Torts; Negligence; Damages
X engaged the services to Y company for the care and custody of X s goods.
The basic issue raised is whether or not the Y was negligent in the care and cus
tody of the goods during storage. Y practically admitted that it failed to maint
ain the agreed temperature of the cold storage area at 2 to 4 degrees centigrade
at all times, and this caused the deterioration of the yeast stored therein. Bu
t Y claimed that temperature was not the sole cause for the deterioration of the
goods. Since negligence has been established, Y is liable for damages.
PEOPLE V. LIBRANDO (GR No, 132251, July 6, 2000)
Damages as Earning Capacity - X killed Y and was convicted of murder. The heirs
of Y was awarded compensation for the loss of the earning capacity of Y.
The Sc has consistently fixed the indemnity for the loss of the earning
capacity of the deceased by taking into consideration the victim s net income at t
he time of his death and his probable life expectancy.
Net earning capacity =
2/3 (80- age of victim at time of his death) X net income (i.e. gross annual
income less living expenses)
In the absence of proof showing the deceased s living expenses, net incom
e is estimated to be 50% of the gross annual income.
RADIOWEALTH V. DEL ROSARIO (GR No. 138739, July 6, 2000)
Liquidated Damages - X executed a promissory note (PN) in favor of Y company. T
he PN provided for a late payment penalty of 2.5% monthly atty s fees equivalent t
o 25% of the amount due in case legal action is instituted and 10% of the same
as liquidated damages. X defaulted payment despite repeated demand. Y filed comp
laint against X.
Liquidated damages should no longer be imposed for being unconscionable.
Such damages should also be deemed included in the 2.5% monthly penalty. Y is e
ntitled only to atty. s fees, but only in a sum equal to 10% of the amount due w
hich the SC deem reasonable under the proven facts.
PEOPLE V. DAROY (Gr No. 118942, July 18, 2000)
Damages as Earning Capacity - X was convicted of murder for the death of Y. Heir
s of Y were awarded indemnity for loss of earning capacity despite absence of ev
idence to support the widow s claim for loss of earning capacity.
An indemnity for loss of earning capacity is justified, it appearing fro
m the testimony of the surviving spouse that the deceased was 40 years old at t
he time of his untimely death and earned P4,200 monthly. The testimony of the su
rviving spouse is sufficient to establish a basis from which the court can make
a fair and reasonable estimate of the damages for the loss of the earning capaci
ty of the victim.
PEOPLE V. DE LA TONGGA (GR No. 133246, July 31, 2000)
Damages, Actual and Temperate - X was found guilty by the trial court , of mur
dering Y. X was sentenced by the TC to pay the heirs of Y indemnity as well as
actual damages. X questioned the award of actual damages because other than the
testimony of the widow for hospital and funeral expenses, no documentary eviden
ce was presented by the prosecution to support this claim.
The SC agrees with X. To recover actual damages, it is necessary to prov
e the actual amount of loss with a reasonable degree of certainty, on the basis
of competent proof and the best evidence obtainable by the injured party. In th
is case, there were no such proof to sustain award of actual damages.
In lieu of actual damages, X should pay temperate damage. Art 2224 of th
e Civil Code provides that temperate damages may be recovered when the court fin
ds that some pecuniary loss has been suffered but its amount cannot, from the n
ature of the case be proved with certainty.
MAGAT V. CA (GR No. 124221, Aug 4, 2000)
Damages, Actual and Exemplary - X&Y entered into a contract whereon X would purc
hase for Y radio transreceivers from Japan. Y commenced operations after winnin
g a bid in Subic Naval Base without the transreceivers from Japan by borrowing r
adio units from third party. X thus cancelled his order with this Japanese suppl
ier. X filed complaint for breach of contract.
Damages cannot be awarded even if assuming there was breach. Damnum absq
ue injure.
There was no bad faith. Y borrowed the equipment because he was faced wi
th the danger of his bid with Subic cancelled if he did not commence operations
immediately. Exemplary damages is awarded only if breach is wanton, fraudulent,
oppressive, malevolent. Neither can actual damages be awarded. The amount of los
s must not only be capable of proof, but must be proven with a reasonable degre
e of certainty. The claim must be premised upon competent proof or upon best evi
dence obtainable, such as receipts or other documentary proof. Only the testimon
ies of X s witnesses were presented.
PEOPLE V. DIAZ (337 SCRA 521 August 9, 2000)
Crime of rape was committed. The award of civil indemnity to the victim
must be increased to P50,000 in accordance with current jurisprudence. In additi
on, moral damages in the amount of P50,000 must be awarded to the victim without
need of further proof other than tat rape was committed against the victim.
PEOPLE V. PACINA (GR No. 123150 August 16, 2000)
Moral damages, Rape - X was convicted of rape by the Trial Court. The TC grante
d P500,000 to the victim as moral damages.
SC ruled that the grant of moral damages amounting to P500,000 is unrea
sonable. Moral damages are not intended to enrich the victim, rather they are aw
arded to allow them to obtain means for diversion and amusement that could serve
to alleviate their moral and psychological sufferings.
ACE HAULERS CORP V. CA (GR No. 127934, 23 August 2000)
Civil liability in Criminal Cases
A vehicular mishap occurred involving a truck, a jeepney and a motorcycl
e. The motorcycle was bumped by the jeepney and X, the motorcycle rider was run
over by the truck. X died. Issue is whether or not in an action for damages aris
ing from a vehicular accident, X may recover damages against the employer of the
accused driver both in the criminal case (delict) and the civil case for damage
s based on culpa aquiliana.
In negligence case, the offended party has the option between an action
for enforcement of civil liability based on culpa criminal under RPC and action
for recovery of damages based on culpa aquiliana under the Civil Code. But he ca
nnot recover damages twice for the same negligent act or omission.
Consequently, a separate civil action for damages lies against the offen
der in a criminal act, whether or not he is criminally prosecuted and found guil
ty or acquitted, provided that the offended party is not allowed to recover dama
ges on both scores, and would be entitled only to the bigger amount of the 2, a
ssuming the awards vary in 2 cases.
PEOPLE V. TOQUERO (25 August 2000)
Award in Rape cases In rape cases, P50,000 is awarded as moral damages without n
eed of proof of mental and physical suffering. In addition, P50,000 is awarded t
o the complainant as civil indemnity ex-delicto.
PEOPLE V. DUBRIA (26 September 2000)
Loss of earning capacity as damages The fact that the prosecution did not presen
t documentary evidence to support its claim for damages for loss of earning capa
city of the deceased does not preclude recovery of said damages. The testimony o
f the mother of the victim, as to the earning capacity of her son, sufficiently
establishes the basis ofr making such an award.
1999
BORJAL v. CA (Jan. 14, 1999)
Civil Law/Damages: Damages cannot be awarded in the absence of ill-motive in the
filing of the complaint. Private respondent can t be said to have instituted the
present suit in abuse of the legal processes and with hostility to the press; or
that he acted maliciously, wantonly oppressively, fraudulently and for the sole
purpose of harassing petitioners, thereby entitling the latter to damages. On
the contrary, private respondent acted with his right to protect his honor from
what he perceived to be malicious imputations against him. Proof and motive th
at the institution of the action was prompted be a sinister design to vex and h
umiliate a person must be clearly and preponderantly established to entitle the
victim to damages. The law could not have meant to impose a penalty on the righ
t to litigate, nor should counsel s fees be awarded every time a party wins a suit
.
1998
BPI EXPRESS CARD CORPORATION v. CA
Civil Law/ Moral Damages/ Terms and Conditions of Credit Card and New Agreement/
Abuse of Right/ Damages and Injury Distinguished: This is a case where private
respondent, Marasigan, won an award in the trial court and in the CA for damages
allegedly sustained when his BPI credit card was rejected by a restaurant where
he was entertaining some guests on December 8, 1989. The SC reversed the CA and
held that there was no injury suffered by Marasigan as it was shown that he was
at fault why his credit card was dishonored. He was sent a letter by BPI inform
ing him that he was indebted to them and ordering him to pay his obligation. Mar
asigan did pay using a postdated check, dated December 15, 1989.
By using the postdated check as payment, Marasigan failed to comply with
his agreement with the bank to settle his account in order that his credit card
would not be suspended. Settled is the doctrine that a check is only a substitu
te for money and not money, the delivery of such an instrument does not, by itse
lf operate as payment. Thus, the BPI was justified in suspending his credit card
. As such, BPI did not abuse its right under the terms and conditions of the con
tract.
 The following are the elements for an abuse of right to exist: (1) there
is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole
intent of prejudicing or injuring another.
Lastly, there is a material distinction between damages and injury. Injur
y is the illegal invasion of a legal right; damage is the loss, hurt or harm whi
ch results from the injury; and damages are the recompense or compensation award
ed for the damages suffered. Thus, in cases where there is damage without injury
, in those instances in which the harm or loss was not the result of the violati
on of a legal duty, the injured party bears the consequences alone. The award fo
r tort damages is based on the premise that an individual was injured in contemp
lation of law. There must be a breach of a duty, which breach must primarily cau
se the injury.

1997
PNB v. CA (G.R. No. 116181, Jan. 6, 1997)
Civil Law/Damages/ Quantum Meruit: Quantum meruit allows recovery of the reasona
ble value regardless of any agreement as to value. It entitles the party to as
much as he reasonably deserves, as distinguished from quantum valebant, ot ro as
what is reasonably worth.
Unliquidated claims present a justiciable question ripe for judicial dete
rmination which is beyond the powers of COA to adjudicate. (See Phil. Operations
v. Auditor-General, 94 Phil. 868 [1954]) Recovery based on quantum meruit is i
n the nature of such claim because its settlement requires the application of ju
dgment and discretion and cannot be adjusted by simple arithmetical processes.
In Eslao, the Court found it necessary to refer to the COA the task of determini
ng the total compensation due to the claimants considering that the matter on th
e exact amount was not in issue and the determination thereof involves a review
of the factual findings and evidence in support thereof. On the other hand, the
lower court here, had already made a factual finding on the amount reasonably d
ue to petitioner and scrutinized the evidence to sustain the claim. Besides, th
ere is nothing in the cited cases which would imply that only the COA can determ
ine the specific amount due to a contractor guided by the established principle
of quantum meruit. As our courts are both courts of law and equity, they are no
t powerless to determine a factual matter in accordance with both standards.
DEL ROSARIO v. CA (G.R. No. 118325, Jan. 29, 1997)
Civil Law/ Contracts/ Negligence: There is merit in the petition. The issue is
whether or not MFC is answerable to petitioners for the damage caused to petitio
ners' residence when its roof, made of shingles purchased from and installed by
the former, was blown away by a typhoon. The Court rules that it is.
What matters here is that MFC's employees delivered and installed the shi
ngles. Thus, all the quibbling about whether Puno acted as agent of MFC or the
spouses, is pointless. The matter is not a factor in determining MFC's liabilit
y for its workers' use of inferior materials and their defective installation of
the shingles. What likewise matters is that MFC's employees, in installing the
shingles, used inferior materials and assembled them in a manner contrary to sp
ecifications, in bad faith and with gross negligence. Hence, MFC infringed and
is liable on its warranties.
PAL v. CA (July 1997)
Civil Law/ Commercial Law/Transportation Law/ Damages
Pantejo boarded a PAL plane in Manila and disembarked in Cebu City where he was
supposed to take his connecting flight to Surigao City. Due to a typhoon, the c
onnecting flight was cancelled. PAL gave each passenger a total of P300.00 cash
assistance for the 2-day stay in Cebu. Pantejo requested that he be billeted a
t PAL's expense as he did not have cash with him, but PAL refused. Pantejo lear
ned that the hotel expenses of 2 other passengers were reimbursed by PAL. Pante
jo told PAL's manager that he was going to sue for discrimination. It was only
then that PAL offered to pay Pantejo, but due to his ordeal and anguish, Pantejo
refused.
What makes PAL liable for damages here is its blatant refusal to accord
the amenities equally to all its stranded passengers. No compelling reason was
advanced to explain this discriminatory conduct.
Moral damages are not intended to enrich plaintiff, merely to obtain mea
ns, diversion or amusements that will serve to alleviate the moral suffering he
underwent due to defendant's culpable action and must, perforce, be proportional
to the suffering inflicted. However, substantial damages do not translate into
excessive damages.
The interest of 6% imposed by the CA should be computed from the date of
rendition of judgment and not from the filing of the complaint. This is because
at the time of the filing the complaint, the amount of damages to which plainti
ff may be entitled remains unliquidated and not known until definitely ascertain
ed, assessed and determined by the courts, and only after presentation of proof.
GARCIA-RUEDA v. PASCASIO (September 1997)
Civil Law/Torts/Medical Malpractice Cases: There are 4 elements involved in
medical negligence cases: duty, breach, injury and proximate causation.
When the victim employed the services of the doctors, a physician-patien
t relationship was created. In accepting the case, the doctors in effect repres
ented that, having the needed training and skill possessed by physicians and sur
geons practicing in the same filed, they will employ such training, care and ski
ll in the treatment of their patients. They have a duty to use at least the sam
e level of care that any other reasonably competent doctor would use to treat a
condition under the same circumstances. The breach of these professional duties
of skill and care, or their improper performance, by a physician surgeon whereb
y the patient is injured in body or in health, constitutes actionable malpractic
e. Thus, in the event that any injury results to the patient from want of due c
are or skill during the operation, the surgeons may be held answerable in damage
s for negligence.
Moreover, in malpractice or negligence cases involving the administratio
n of anaesthesia, the necessity of expert testimony and the availability of the
charge of res ipsa to the plaintiff, have been applied in actions against anaest
hesiologists to hold the defendant liable for the death or injury of a patient u
nder excessive or improper anaesthesia. Essentially, it requires 2-pronged evid
ence: evidence as to the recognized standards of the medical community in the p
articular kind of case, and a showing that the physician in question negligently
departed from this standard in his treatment.
Another element in medical negligence cases is causation which is divide
d into 2 inquiries: whether the doctor's actions in fact casued the harm to the
patient and whether these were the proximate cause of the patient's injury.
NEGROS NAVIGATION v. CA (November 1997)
Civil Law/ Commercial Law/Transportation Law/ Insurance/Torts and Damages: (1) P
rivate respondent need not prove presence of their relative-victims as passenge
rs on the ship There is no reason he should claim members of his family perishe
d merely to sue. People do not normally lie about so grave a matter as the loss
of dear ones. It would be more difficult to conceal relatives if they were ali
ve than it is for petitioner to show the contrary.
(2) Petitioner breached its duty to exercise extraordinary diligence. I
t was found in Mecenas v. CA (180 SCRA 83 [1989]) there that although proximate
cause was negligence of Tacloban City's crew, Don Juan's crew was equally negli
gent as its master was playing mahjong at the time of collision and the officer
on watch admitted that he failed to call the attention of the master to the immi
nent danger; further, the Don Juan was overloaded and not seaworthy as it sank
within 10 to 15 minutes of impact.
(3) A shipowner is liable notwithstanding total loss of the ship if faul
t can be attributed to the shipowner.
 (4) Petitioner's contention that the expenses for the erection of a monu
ment and other expenses for memorial services for the victim should be considere
d included in the death indemnity = without merit. Death indemnity is given to
compensate for violation of the rights to life and physical integrity of the dec
eased. Damages incidental to or arising out of such death are for pecuniary loss
es of the beneficiaries of the deceased.
CRUZ v. CA (November 1997)
Civil Law/Torts/Medical Malpractice Suit: A medical malpractice suit is the typ
e of claim which a victim has available to him or her to redress a wrong committ
ed by a medical professional which has caused bodily harm. (Garcia-Rueda v. Pasc
asio, G.R. No. 118141, 5 September 1997) In this jurisdiction, these claims are
most often brought as a civil action for damages under Art. 2176, NCC, and in s
ome instances, as a criminal case under Art. 365, RPC, with which the civil acti
on for damages is impliedly instituted.
The elements of reckless imprudence are: (1) the offender does or fails t
o do an act; (2) the doing or failure to do that act is voluntary; (3) that it b
e without malice; (4) that material damage results from the reckless imprudence;
and (5) that there is inexcusable lack of precaution on the part of the offende
r, considering his employment or occupation, degree of intelligence, physical co
ndition, and other circumstances regarding person, time and place.
Whether or not a physician has committed an "inexcusable lack of precaut
ion" in the treatment of his patient is to be determined according to the standa
rd of care observed by other members of the profession in good standing under si
milar circumstances bearing in mind the advanced state of the profession at the
time of treatment or the present state of medical science.
All 3 courts below bewailed the inadequacy of the facilities/supplies/pr
ovisions and untidiness of petitioner's clinic; the failure to subject the pati
ent to a cardio-pulmonary test prior to the operation; the omission of any form
of blood typing before the transfusion; and even the subsequent transfer of Ly
dia to the SPDH and the reoperation performed on her by petitioner. But while i
t may be true that the circumstances pointed out by the courts below seemed beyo
nd cavil to constitute reckless imprudence on the part of the surgeon, this conc
lusion is still best arrived at not through the educated surmises nor conjecture
s of laymen, including judges, but by the unquestionable knowledge of expert wit
nesses. For whether a physician or surgeon has exercised the requisite degree o
f skill and care in the treatment of his patients is, in the generality of cases
, a matter of expert opinion. The deference of courts to the expert opinion of
qualified physicians stems from its realization that the latter possess unusual
technical skills which laymen in most instances are incapable of intelligently e
valuating. Expert testimony should have been offered to prove that the circumsta
nces cited by the courts below constituted conduct falling below the standard of
care employed by other physicians in good standing when performing the same ope
ration.
1996
VALENZUELA v. CA (February 1996)
Civil Law/Torts & Damages/ Contributory Negligence/ Vicarious Liability: Was V g
uilty of contributory negligence in parking her car alongside Aurora Blvd., whic
h, L points out, is a no parking zone? No. When V discovered she had a flat ti
re, she stopped at a lighted place where she parked the car very close to the si
dewalk. Under these circumstances, V exercised the standard reasonably dictated
by the emergency and could not be considered to have contributed to the unfortu
nate circumstances. The emergency which lead her to park her car on a sidewalk
in Aurora Blvd. was not of her own making, and it was evidence that she had take
n all reasonable precautions.
The vicarious liability of L's employer is not based on the principle of
respondeat superior, which holds the master liable for acts of the servant, but
that of pater familias, in which the liability ultimately falls upon the employe
r, for his failure to exercise good father diligence in the selection and superv
ision of his employees.
When a company gives full use and enjoyment of a company car to its emplo
yee, it in effect guarantees that it is, like every good father, satisfied that
its employee will use the privilege reasonably and responsively.
As such, in providing for a company car, the company owes a responsibilit
y to the public to see to it that the managerial or other employees to whom it e
ntrusts virtually unlimited use of a company issued car are able to use the comp
any car capably and responsibly.
[There must be evidence] as to whether or not the company took the steps
necessary to determine or ascertain the driving proficiency and history of L, to
whom it gave full and unlimited use of a company car. Not having been able to
overcome the burden of demonstrating that it should be absolved of liability for
entrusting its company car to L, said company, based on the principal of bonus
pater familias, ought to be jointly and severally liable with the former for the
injuries sustained by V during the accident.
SPOUSES CUSTODIO v. CA (February 1996)
Civil Law/Torts & Damages/ Injury and Damage Distinguished/Damnum Absque Injuria
: Injury is the illegal invasion of a legal right; damage is the loss, hurt, or
harm which results from the injury; and damages are the recompense or compensa
tion awarded for the damage suffered. In order that the law will give redress fo
r an act causing damage, that act must be not only hurtful, but wrongful. There
must be damnum et injuria.
In case at bar, although there was damage, there was no injury.
Contrary to claim of private respondents, petitioners could not be said t
o have violated the principle of abuse of right. In order that said principle c
an be applied, the following requisites must concur: (1) the defendant ac
ted in a manner that is contrary to morals, good customs or public policy; (2)
the acts should be willful; and (3) there was damage or injury to the plaintiff.
(Art. 21, Civil Code)
Petitioners' act in constructing a fence within their lot is a valid exer
cise of their right as owners, hence not contrary to morals, etc. (see Art. 430,
Civil Code). At the time the fence was constructed, the lot was not subject to
any servitudes. There was no easement of way existing in favor of private resp
ondents, either by law or contract.
The proper exercise of a lawful right cannot constitute a legal wrong for
which an action will lie, although the act may result in damage to another, for
no legal right has been invaded. One may use any lawful means to accomplish a
lawful purpose and though the means adopted may cause damage another, no cause o
f action arises in the latter's favor. The courts can give no redress for hards
hip to an individual resulting from action reasonably calculated to achieve a la
wful end by lawful means.
MANIAGO v. CA (March 1996)
Civil law/Torts & Damage/Action for Damages: The right to bring an action for da
mages under the Civil Code must be reserved as required by Rule 111, 1, otherwise
it should be dismissed.
The right of the injured party to sue separately for the recovery of the
civil liability whether arising from crimes or quasi-delicts must be reserved ot
herwise, they will be deemed instituted with the criminal action. (Dulay v. CA,
243 SCRA 220 [1995]; Yakult v. CA, 190 SCRA 347 [1990])
TRANS-ASIA SHIPPING v. CA (March 1996)
Civil Law/ Torts & Damages/ Actual & Moral Damages: In the case at bench, privat
e respondent's delay was due to his insistence on disembarking, which forced the
vessel to return to its port of origin. Had he remained on the vessel, it woul
d have reached it destination, albeit, half a day late. Moreover, private respo
ndent failed to prove that he did not receive his salary, nor that his absence w
as not excused. Thus, no actual damages can be awarded.
 But moral and exemplary damages must be awarded as petitioner allowed its
vessel to leave the port of origin with full awareness that it was unseaworthy,
hence, it acted with bad faith and in a wanton and reckless manner.
MALALUAN v. COMELEC (March 1996)
Civil Law/Torts & Damages/ Actual Damages: In light of Arts. 2199 and 220
1, Civil Code, actual damages are appropriate only in breaches of obligations in
cases of contracts and quasi-contracts, and on the occasion of crimes and quasi
-delicts. Thus, the claim of a party in an election case for actual damages mus
t hinge upon these. In their absence, the claimant must be able to point out a
specific provision of law authorizing a money claim for election protest expense
s against the losing party. (Atienza, 239 SCRA 298) For instance, the claimant
may cite Arts. 19, 20 and 32(5), Civil Code, which create obligations not by con
tract, crime or negligence, but directly by law.
PEOPLE v. PATROLLA JR. y VEGA (March 1996)
Civil Law/Torts & Damages/ Exemplary Damages: Exemplary damages may be awarded i
n criminal cases where the crime was committed with one or more aggravating circ
umstances. No aggravating circumstance is present, other than treachery, which
qualified the killing to murder and abuse of superior strength which was however
absorbed in treachery, to warrant an award of thereof.
SABENA v. CA (March 1996)
Civil Law/ Torts & Damages/Loss of Luggage: Petitioner contends that the alleged
negligence of private respondent should be considered the primary cause of the
loss of her luggage, as despite her awareness that the flight ticket had been co
nfirmed only for Casablanca and Brussels, and that her flight from Brussels to M
anila had yet to be confirmed, she did not retrieve the luggage upon arrival at
Brussels.
It remained undisputed that private respondent's luggage was lost while i
n the custody of petitioner. When she discovered her bag was missing, she promp
tly accomplished and filed a Property Irregularity report, followed up her claim
, and even filed a formal letter-complaint. She felt relieved when she was advi
sed that her luggage had been found, with its contents intact when examined, and
that she could expect it to arrive 4 days later. The then waited anxiously onl
y to be told later that her luggage had been lost for the second time. Thus, it
was clear that petitioner was guilty of gross negligence.
As held in Alitalia v. IAC (192 SCRA 9, 16-18), the Hague Protocol amende
d the Warsaw Convention by removing the provision that if the airline took all n
ecessary steps to avoid the damage, it could exculpate itself completely, and de
clared the stated limits of liability not applicable 'if it is proved that the d
amage resulted from an act or omission of the carrier. The Convention does not t
hus operate as an exclusive enumeration of the instances of an airline's liabili
ty, or as an absolute limit of the extent of that liability.[I]t should be deeme
d a limit of liability only in those cases where the cause of death or injury to
person, or destruction, loss or damage to property or delay in its transport is
not attributable to or attended by any willful misconduct, etc.
PNB v. CA (April 1996)
Civil Law/ Torts Damages/ Moral & Exemplary Damages: Moral damages awarded must
be commensurate with the loss or injury suffered. Moral damages though incapable
of pecuniary estimations, are in the category of an award designed to compensat
e the claimant for actual injury suffered and not to impose a penalty on the wro
ngdoer. Moral damages are emphatically not intended to enrich a complainant at
the expense of the defendant. They are awarded only to enable the injured party
to obtain means, diversion or amusements that will serve to obviate the moral su
ffering he has undergone, by reason of the defendant's culpable action. Its awar
d is aimed at the restoration, within the limits of the possible, of the spiritu
al status quo ante, and it must be proportional to the suffering inflicted.
Exemplary damages are imposed not to enrich one party or impoverish anoth
er but to serve as a deterrent against or as a negative incentive to curb social
ly deleterious actions.
BALIWAG TRANSIT v. CA (May 1996)
Civil Law/ Commercial Law/ Transportation/ Common Carriers/ Torts/ Negligence: T
he use of a kerosene lamp substantially complies with Section 34 (g) of the Land
Transportation Code. Said law clearly allows the use not only of an EWD of the
triangular reflectorized plates variety but also parking lights or flares visibl
e one hundred meters away. No negligence, therefore, may be imputed to A & J Tr
ading and its driver.
To prove actual damages, the best evidence available to the injured party
must be presented. The court cannot rely on uncorroborated testimony whose tru
th is suspect, but must depend upon competent proof that damages have been actua
lly suffered.
In a breach of contract of carriage, moral damages are recoverable if the
carrier, through its agent, acted fraudulently or in bad faith. The evidence s
hows the gross negligence of the driver of Baliwag bus which amounted to bad fai
th.
PHILIPPINE AIRLINES v. CA (June 1996)
Civil Law/Commercial Law/ Transportation Law/ Damages: Moral damages are recover
able in suits predicated on breach of a contract of carriage where it is proved
that the carrier was guilty of fraud or bad faith. Inattention to and lack of ca
re for the interests of its passengers amount to bad faith. What the law consid
ers as bad faith which may furnish the ground for an award of moral damages woul
d be bad faith in securing the contract and in the execution thereof, as well as
in the enforcement of its terms, or any other kind of deceit. Such unprofessio
nal and proscribed conduct is attributable to petitioner airline.
It must, of course, be borne in mind that moral damages are not awarded t
o penalize the defendant but to compensate the plaintiff. In a contractual or q
uasi-contractual relationship, exemplary damages, on the other hand, may be awar
ded only if the defendant had acted in a wanton, fraudulent, reckless, oppressiv
e or malevolent manner. Attorney's fees in the concept of damages may be awarde
d where there is a finding of bad faith. The evidence on record amply sustains t
hat the awards assessed against petitioner are justified and reasonable.
FABRE v. CA (July 1996)
Civil Law/Damages: The CA erred in increasing the amount of compensatory damages
because private respondents did not question this award as inadequate. To the c
ontrary, the award of P500,000 by the RTC as actual damages is reasonable consid
ering the contingent nature of her income as a casual employee of a company and
as distributor of beauty products and the fact that the possibility that she mig
ht be able to work again has not been foreclosed.
With respect to the other awards:
1.) Moral damages are granted since the driver's gross negligence amounted to ba
d faith.
2.) Exemplary damages and attorney's fees proper. Error for CA to increase awar
d of moral damages and reduce attorney's fees, for same reason as compensatory d
amages.
3.) Bus driver and owners jointly and severally liable.
BALIWAG TRANSIT v. CA (G.R. No. 116624, September 1996)
Civil Law/Torts and Damages/ Employer's Vicarious Liability: 1) Circumstances sh
owing negligence of driver: he boarded the bus, sat on the driver's seat and was
at the steering wheel when the bus moved pinning down the deceased who was repa
ring the defective brake system below. The driver should have known that his br
ake system was being repaired as he was the one who told the deceased to do so.
The driver should have parked the bus properly and safely. After alighting fro
m the bus to tell the gasman to fill the tank, he should have placed a stopper o
r any hard object against a tire or two of the bus. But without taking the nece
ssary precautions, he boarded the bus, causing it to move, which lead to the acc
ident.
2) Presumption of negligence on employer's part in the selection of or supe
rvision over employee is rebuttable by clear showing of good father diligence.
Hence, to escape solidary liability for quasi-delict committed by an employee, t
he employer must adduce sufficient proof that it exercised such degree of care.
(citations omitted)
3) Damages awarded were the following: actual damages (life expectancy and
loss of earning capacity); pecuniary loss, loss of support and service; and mora
l and mental suffering. The loss of earning capacity is based on 2 factors: num
ber of years on the basis of which the damages shall be computed, and the rate a
t which the loss sustained by the heirs should be fixed [Gives Villa Rey formula
].
FOOD TERMINAL, INC. v. CA (September 1996)
Civil Law/Damages/Interest: When an obligation not constituting a loan or forbea
rance of money is breached then an interest on the amount of damages awarded may
be imposed at the court's discretion at the rate of 6% p.a. in accordance with
Art. 2209, NCC. However, as declared in Eastern Shipping v. CA (234 SCRA 78),
the interim period from the finality of the judgment awarding a monetary claim
and until payment thereof, is deemed to be equivalent to a forbearance of credit
. Thus, from the time the judgment becomes final until its full satisfaction, t
he applicable rate of legal interest shall be 12%.
The award of the trial court shall earn interest at the rate of 6% p.a. f
rom 15 May 1984 (the date fixed by the trial court) until fully satisfied, but b
efore judgment becomes final. From date of finality of judgment until the oblig
ation is totally paid, a rate of 12% is imposed.
PEOPLE v. SEQUIO (G.R. No. 117397, November 1996)
Civil Law/ Damages/ Award of Moral Exemplary Damages: There is no factual basis
for the award of moral and exemplary damages insofar as 2 of the private complai
nants are concerned since they did not ask for and testify thereon. Only 1 priv
ate complainant asked for moral damages of P50,000.00 for her worries due to the
death of her husband. As to exemplary damages, the law is clear that they are
recoverable in criminal cases only when the crime was committed with one or more
aggravating circumstances, none of which are proven here.
1995
FAR EAST BANK v. CA (241 SCRA 671 [Feb. 1995])
Civil Law/Torts & Damages: A quasi-delict can be the cause for breaching a contr
act that might thereby permit the application of applicable tort principles even
where there is a pre-existing contract between plaintiff and defendant.
CHUA v. CA (242 SCRA 341[Mar 1995])
Civil Law/Torts & Damages/ Damages for Malicious Prosecution: Malicious prosecut
ion has been expanded to include baseless civil suits which are meant to harass
or humiliate a defendant, but both malice and lack of probable cause must be cle
arly shown to justify an award of damages.
OBLIGATIONS AND CONTRACTS
2000

GOLDEN ROD INC. vs CA (May 2000)

Contracts; Sales; Rescission- Land dispute between Barreto Realty exec
uted an agreement w/ Golden Rod wherein Barreto accepted Golden Rod s offer to buy
the properties of Golden Rod which was subject to imminent foreclosure. Later o
n, Golden Rod informed Barreto, then its president, that it would not go through
 w/ the sale because of the denial of UCPB of its request for an extension of ti
me to pay the obligation. He also demanded the refund of the earnest money of P1
M which it gave to Barreto.
Art. 1385 of the CC provides that rescission creates the obligation to r
eturn the things which were the object of the contract together with their fruit
s and interest. The vendor is therefore obliged to return the purchase price pai
d to him by the buyer if the latter rescinds the sale, or when the transaction a
s called off and the subject property had already been sold to a 3rd person, as
what was obtained in this case. Therefore, by virtue of the extrajudicial rescis
sion of the contract to sell by the petitioner without opposition from private r
espondents who, in turn, sold the property to other persons, private respondent
Barreto Realty, as the vendor, had the obligation to return the earnest
money of P1M plus legal interest.
METROBANK v. CA (G.R. No. 122899, June 8, 2000)
Civil Law/Oblicon/ Estoppel: In Maneclang vs. Baun, this Court enumerated the re
quisites for estoppel by conduct to operate, to wit:
1. there must have been a representation or concealment of material facts;
2. the representation must have been with knowledge of the facts;
3. the party to whom it was made must have been ignorant of the truth of the mat
ter; and
4. it must have been with the intention that the other party would act upon it.
ROMAGO ELECTRIC CO. v. CA (G.R. No. 125947, June 8, 2000)
Civil Law/ Oblicon/ Contracts: There is no contract here. We are not convinced t
hat there was a meeting of the minds between Romago and TSI regarding the questi
on of sharing of payment of rentals and utilities charges, pending the consummat
ion of the Stock Purchase Agreement. There is no adequate showing that TSI conse
nted to any such verbal agreement. On the contrary, TSI through its General Mana
ger Severino Lim and Director Jorge Salazar denied the existence of such verbal
agreement or understanding.
YUCHENGCO v. REPUBLIC (G.R. No. 131127, June 8, 2000)
Civil Law/ Oblicon/ Constructive Trust: Constructive trust is that created by re
ason of equity to answer the demands of justice and prevent unjust enrichment. I
t arises against one, who, by fraud, duress or abuse of confidence, obtains or h
olds the legal right to property which he ought not, in equity and good conscien
ce, hold. Correspondingly, actions thereon prescribe after ten (10) years as pro
vided by Article 1144 of the Civil Code:
The following actions must be brought within ten (10) years from the time
the right of action accrues: (1) upon a written contract; (2) upon an obligatio
n created by law; and (3) upon a judgment.
Article 1154 of the Civil Code is applicable by parallelism: the period d
uring which the obligee was prevented by fortuitous event from enforcing his rig
ht is not reckoned against him.
JARDINE DAVIES INC. v. CA (G.R. No. 128066, June 19, 2000)
Civil Law/ Oblicon/ Condition: We distinguish between a condition imposed on the
perfection of a contract and a condition imposed merely on the performance of a
n obligation. While failure to comply with the first condition results in the fa
ilure of a contract, failure to comply with the second merely gives the other pa
rty options and/or remedies to protect his interests.
by the unilateral cancellation of the contract, the defendant has acted wi
th bad faith and this was further aggravated by the subsequent inking of a contr
act between defendant and co-defendant. It is very evident that (the defendant)
thought that by the expedient means of merely writing a letter would automatical
ly cancel or nullify the existing contract entered into by both parties after a
process of bidding. This, to the Court's mind, is a flagrant violation of the ex
press provisions of the law and is contrary to fair and just dealings to which e
very man is due.
ESPINA v. CA (G.R. No. 116805, June 22, 2000)
Civil Law/ Oblicon/ Novation/ Application of Payment: Novation is never presumed
; it must be proven as a fact either by express stipulation of the parties or by
implication derived from an irreconcilable incompatibility between old and new
obligations or contracts. Novation takes place only if the parties expressly so
provide, otherwise, the original contract remains in force. In other words, the
parties to a contract must expressly agree that they are abrogating their old co
ntract in favor of a new one.
Where there is no clear agreement to create a new contract in place of th
e existing one, novation cannot be presumed to take place, unless the terms of t
he new contract are fully incompatible with the former agreement on every point.
Thus, a deed of cession of the right to repurchase a piece of land does not sup
ersede a contract of lease over the same property.
Petitioner gave respondent a notice to vacate the premises and to pay his
back rentals. Failing to do so, respondent's possession became unlawful and his
eviction was proper. Now respondent contends that the petitioner's subsequent a
cceptance of such payment effectively withdrew the cancellation of the provision
al sale. We do not agree. Unless the application of payment is expressly indicat
ed, the payment shall be applied to the obligation most onerous to the debtor. I
n this case, the unpaid rentals constituted the more onerous obligation of the r
espondent to petitioner. As the payment did not fully settle the unpaid rentals,
petitioner's cause of action for ejectment survives.
VIEWMASTER CONSTRUCTION CORP vs. ROXAS (G.R. No. 133576, July 13, 2000)
Civil Law/ Contracts/ Statute of Frauds/ Implied Trusts/ Sales: The verbal agree
ment entered into between petitioner Viewmaster and respondent Allen Roxas was a
n agreement that by its terms is not to be performed within a year from the maki
ng thereof. To be taken out of the operation of the Statute of Frauds, the agre
ement must be fully performed on one side within one year from the making thereo
f. In the case at bar, since neither of the parties has fully performed their ob
ligations within the one-year period, then it behooves this Court to declare tha
t the case falls within the coverage of the Statute of Frauds. Also, as the sale
of fifty percent (50%) of Allen Roxas s shareholdings in State Investment would a
mount to more than five hundred pesos (P500.00), the contract must be in writing
to be enforceable.
There is no implied trust here for in order for the provisions of Articl
e 1448 to apply in the case at bar "the price is paid by another for the purpose
of having the beneficial interest of the property." It bears stressing that res
pondent Allen Roxas obtained a loan from First Metro Investments, Inc. not from
petitioner Viewmaster. It was FMIC that provided the funds with which Allen Roxa
s acquired the controlling interest in State Investment Trust, Inc. FMIC lent th
e money to Roxas because the latter needed the money and not to obtain any benef
icial interest in the shares of stock in State Investment. Viewmaster merely fac
ilitated the loan by acting as guarantor of the loan and nothing more.
ARRIOLA vs. DEMETRIO
Civil Law/ Contracts/ Fraud: The law, however, requires that in case one of the p
arties to a contract is unable to read and fraud is alleged, the person enforcin
g the contract must show that the terms thereof have been fully explained to the
former. Consent, having been obtained by fraud, the deed entered into could be
annulled.
PILIPINAS HINO vs. CA
Civil Law/ Oblicon/Application of Equity/ Sales: Obligations arising from contra
cts and agreements between parties not contrary to law, morals, good customs, pu
blic policy or public order have the force of law between the contracting partie
s and should be complied with in good faith.
Equity is applied only in the absence of, and never against, statutory la
w or judicial rules of procedure.
 Also, while this Court recognizes that in contracts to sell even if the c
ontract is terminated the seller can retain the sums already received or paid, s
uch can be done only if it is expressly provided for in the contract.
ACE HAULERS CORP. vs. CA
Civil Law/ Civil Liability/ Damages: Civil liability coexists with criminal resp
onsibility. In negligence cases, the offended party (or his heirs) has the optio
n between an action for enforcement of civil liability based on culpa criminal u
nder Article 100 of the Revised Penal Code and an action for recovery of damages
based on culpa aquiliana under Article 2176 of the Civil Code. Article 2177 of
the Civil Code, however, precludes recovery of damages twice for the same neglig
ent act or omission.
Consequently, a separate civil action for damages lies against the offend
er in a criminal act, whether or not he is criminally prosecuted and found guilt
y or acquitted, provided that the offended party is not allowed, if he is actual
ly charged also criminally, to recover damages on both scores, and would be enti
tled in such eventuality only to the bigger award of the two, assuming the award
s made in the two cases vary.
PRODUCERS BANK OF THE PHILIPPINES v. BPI (G.R. No. 125167, September 8, 2000)
Civil Law/ Oblicon/ Action for Written Contract: The nature of an action is dete
rmined by the allegations of the complaint. In this case, petitioners' complaint
alleges facts constituting its cause of action based on a written contract, the
deed of pledge. Hence, the prescriptive period is ten (10) years.
SBMA v. UNIVERSAL INTERNATIONAL GROUP OF TAIWAN (G.R. No. 131680, September 14,
2000)
Civil Law/ Oblicon/ Extrajudicial Rescission: A stipulation authorizing a party
to extrajudicially rescind a contract and to recover possession of the property
in case of contractual breach is lawful. But when a valid objection is raised, a
judicial determination of the issue is still necessary before a takeover may be
allowed. In the present case, however, respondents do not deny that there was s
uch a breach of the Agreement; they merely argue that the stipulation allowing a
rescission and a recovery of possession is void. Hence, the other party may val
idly enforce such stipulation.
PILIPINAS BANK v. CA (G.R. No. 141060, September 29, 2000)
Civil Law/ Oblicon/ Interpretation of Contracts: Section 9, Rule 130 of t
he Revised Rules of Court expressly requires that for parol evidence to be admis
sible to vary the terms of the written agreement, the mistake or imperfection th
ereof or its failure to express the true agreement of the parties should be put
in issue by the pleadings. Disallowance of parol evidence in the absence of an i
ntrinsic ambiguity, mistake or failure to express the true intent and agreement
of the parties is in accord with the rule that when the terms of an agreement ha
ve been reduced to writing, it is considered as containing all the terms agreed
upon and there can be, between the parties and their successorsininterest, no evid
ence of such other terms other than the contents of the written agreement.
TUAZON v. CA (G.R. No. 119794. October 3, 2000)
Civil Law/ Contracts/ Equitable Mortgage/ Reformation of Contract: Article 1602
of the Civil Code provides that a contact shall be presumed to be an equitable m
ortgage by the presence of any of the following:
'(1) When the price of a sale with right to repurchase is unusually inadequat
e;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another ins
trument extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intentio
n of the parties is that the transaction shall secure the payment of a debt or t
he performance of any other obligation.'"
Under Article 1604 of the New Civil Code, the provisions of Article 1602
shall also apply to a contract purporting to be an absolute sale. And for these
provisions of law to apply, two requisites must concur: that the parties entered
into a contract denominated as a contract of sale and that their intention was
to secure an existing debt by way of mortgage.
As to the reformation of contracts, Article 1365 applies only if there is
evidence, clear and convincing, that the parties did agree upon a mortgage of s
ubject property. Here, everything appears to be clear and unambiguous and nothin
g is doubtful, within the contemplation of Article 1602. When the words of the c
ontract are clear and readily understandable, there is no room for construction,
the contract being the law between the parties.
SINGSON v. CALTEX (PHILIPPINES) (G.R. No. 137798. October 4, 2000)
Civil Law/ Contracts/ Extraordinary Inflation: Article 1250 of the Civil
Code states that in case an extraordinary inflation or deflation of the currency
stipulated should supervene, the value of the currency at the time of the estab
lishment of the obligation shall be the basis of payment, unless there is an agr
eement to the contrary. Extraordinary inflation exists when there is a decrease
or increase in the purchasing power of the Philippine currency which is unusual
or beyond the common fluctuation in the value of said currency, and such increas
e or decrease could not have been reasonably foreseen or was manifestly beyond t
he contemplation of the parties at the time of the establishment of the obligati
on.
Erosion is indeed an accurate description of the trend of decline in the va
lue of the peso in the past three to four decades. Unfortunate as this trend may
be, it is certainly distinct from the phenomenon contemplated by Article 1250.
Moreover, the effects of extraordinary inflation are not to be applied wi
thout an official declaration thereof by competent authorities.

SANTOS v. HEIRS OF MARIANO (G.R. No. 143325. October 24, 2000)

Civil Law/ Contracts/ Sales: What determines the validity of a contract,
in general, is the meeting of the minds of the parties as to (1) consent of the
contracting parties; (2) object certain which is the subject matter of the contr
act; and (3) cause of the obligation which is established. Due execution of docu
ments representing a contract is one thing, but perfection of the contract is de
finitely another.
DBP v. CA (G.R. No. 137557. October 30, 2000)
Civil Law/ Contracts/ Breach/ Rescission: Under the Civil Code, parties to a con
tract can make stipulations therein provided they are not contrary to law, moral
s, good customs, public order or public policy. The interest and penalty charges
to be paid in case of delay in payments were expressly stipulated in the Condit
ional Contract of Sale. There being no question as to the validity of the Condit
ional Contract of Sale, the DBP correctly applied the provision on interests and
penalty charges when private respondents failed to pay on the dates agreed upon
. No further notice to private respondents had to be given to them.
Rescission of a contract will not be permitted for a slight or casual bre
ach, but only such substantial and fundamental breach as would defeat the very o
bject of the parties in making the agreement. Notwithstanding private respondent
s' delay in paying the amortizations, petitioner DBP unqualifiedly accepted the
payments made by them. Hence, petitioner lost its right to rescind the sale on t
he basis of such late payments.
PACULDO v. REGALADO (G.R. No. 123855. November 20, 2000)
Civil Law/ Contracts/ Application of Payments: The right to specify which among
his various obligations to the same creditor is to be satisfied first rests with
 the debtor.If the debtor accepts from the creditor a receipt in which an applic
ation of the payment is made, the former cannot complain of the same, unless the
re is a cause for invalidating the contract.
Also, under the law, if the debtor did not declare at the time he made th
e payment to which of his debts with the creditor the payment is to be applied,
the law provided the guideline--no payment is to be made to a debt that is not y
et due and the payment has to be applied first to the debt most onerous to the d
ebtor.
Assnt to the change in the manner of application of payment must be clea
r and unequivocal. Mere silence is not tantamount to consent.
PUA v. CA (G.R. No. 134992. November 20, 2000)
Civil Law/ Contracts/ Minors Entering Into Contracts/ Sales/ Simulated Contract:
Unemancipated minors, insane or demented persons, and deaf-mutes who do not kno
w how to write can not validly give consent to contracts. In the instant case, J
ohnny P. Uy could not have validly given his consent to the contract of sale, as
he was not even conceived yet at the time of its alleged perfection. For lack o
f consent of one of the contracting parties, the deed of sale is null and void
Without authority from the Court, no person can make a valid contract for
or on behalf of a minor. Coloma therefore could not have acted as representativ
e of Johnny P. Uy. Besides, petitioners themselves insist that Coloma was not ac
ting in a representative capacity when she purchased the subject, but rather, th
at she was acting in her own behalf as the actual buyer of said land.
An absolutely simulated contract is not susceptible of ratification.
SPOUSES BUENAFLOR v. CA (G.R. No. 142021. November 29, 2000)
Civil Law/ Obligations/ Payment/ Substantial Performance: In the Civil Law sense
, payment means not only the delivery of money but also the performance, in any
other manner, of the obligation.
Article 1234 of the Civil Code allows substantial performance in the paym
ent of obligations. In order that there may be substantial performance of an obl
igation, there must have been an attempt in good faith to perform, without any w
illful or intentional departure therefrom. This concept of substantial performan
ce may be applied by analogy in the determination of question on the proper paym
ent of the appellate docket fees.
AYALA CORPORATION v. ROSA-DIANA REALTY AND DEVELOPMENT CORPORATION (G.R. No. 134
284. December 1, 2000)
Civil Law/ Contracts/ Obligatory Force: Contractual obligations between parties
have the force of law between them and absent any allegation that the same are c
ontrary to law, morals, good customs, public order or public policy, they must b
e complied with in good faith. The party guilty of violating the deed restrictio
ns may only be held alternatively liable for substitute performance of its oblig
ation, that is, for the payment of damages.
ORTIGAS & CO. LTD. v. CA (G.R. No. 126102. December 4, 2000)
Civil Law/ Contracts/ Stipulations Contravening Law, Good Customs, etc: The cont
ractual stipulations annotated on the Torrens Title, on which Ortigas relies, mu
st yield to the ordinance. When that stretch of Ortigas Avenue from Roosevelt St
reet to Madison Street was reclassified as a commercial zone by the Metropolitan
Manila Commission in March 1981, the restrictions in the contract of sale betwe
en Ortigas and Hermoso, limiting all construction on the disputed lot to single-
family residential buildings, were deemed extinguished by the retroactive operat
ion of the zoning ordinance and could no longer be enforced. While our legal sys
tem upholds the sanctity of contract so that a contract is deemed law between th
e contracting parties, nonetheless, stipulations in a contract cannot contravene
"law, morals, good customs, public order, or public policy." Otherwise such sti
pulations would be deemed null and void.
LHUILLIER v. CA (G.R. No. 128058. December 19, 2000)
Civil Law/ Contracts/ Lease: A covenant to renew a lease, which makes no provisi
on on its terms, implies an extension or renewal subject to the same terms in th
e original lease contract. Since the parties did not make a new one, the terms a
nd conditions of the original except the provision on the rate and period of lea
se are deemed extended.
The parties agreed that all improvements introduced by the lessee would a
ccrue to the benefit of the owner at the end of the lease, without reimbursement
. This stipulation, not being contrary to law, morals, public order or public po
licy, binds the parties and is the law between them.
1999
CHUA v. CA (Jan. 21, 1999)
Civil Law/ Contracts/ Lease/ Power of Courts to Extend Lease/Improvements: (1)Th
e potestative authority of the courts to fix a longer term for a lease under Art
. 1687 of the CC applies only to cases where there is NO period fixed by the par
ties. Where the lease agreement between the parties has already expired, courts
are without jurisdiction to extend said lease, for to do so would in effect allo
w the courts to make a contract for the parties.
(2) Improvements made by lessees on the leased premises are not valid rea
sons for their retention thereof; otherwise, a lessee would improve his landlord o
ut of his property. Art. 448 of the CC, in relation to Art. 546, which provides
for full reimbursement of useful improvements and retention of the premises unti
l reimbursements us made, applies only to a possessor in good faith, i.e., one w
ho builds on a land in the belief that he is the owner thereof. Also, Art. 1678
merely grants to such a lessee making in good faith useful improvements the rig
ht to be reimbursed of the value of the improvements upon the termination of th
e lease, or, in the alternative, to remove the improvements if the lessor refuse
s to make reimbursement.
ABS-CBN v. CA (Jan. 21, 1999)
Civil Law/ Contracts/ Basis for the Award of Damages: (1) A contract is a meetin
g of the minds between two persons whereby one binds himself to give something o
r render some service to another for a consideration. In the instant case, ther
e was no acceptance of VIVA s offer for it was met by a counter-offer which substa
ntially varied the terms of the offer. ABS-CBN made no unqualified acceptance of
VIVA s offer hence, they underwent a period of bargaining.
(2) The award of moral damages cannot be granted in favor of a corporatio
n because being an artificial person and having existence only in legal contempl
ation, it has no feelings, no emotions, no senses.
(3) The claims of RBS against ABS-CBN are not based on contract, quasi-c
ontract, delict, or quasi-delict. Hence, the claims of moral and exemplary dama
ges can only be based on Articles 19, 20, and 21 of the CC. Verily then, malice
or bad faith is at the core of Articles 19, 20, 21. Malice or bad faith impli
es a conscious and intentional design to do a wrongful act for a dishonest purpo
se or moral obliquity. Such must be substantiated by evidence. There is no ade
quate proof that ABS-CBN was inspired by malice or bad faith. It was honestly c
onvinced of the merits of its cause after it had undergone serious negotiations
culminating in its formal submission of a draft contract. Settled is the rule th
at the adverse result of an action does not mean to impose a penalty on the righ
t to litigate. If damages result from a person s exercise of a right, it is damnu
m absque injuria.
DIZON v. CA (Jan. 28, 1999)
Civil Law/ Contracts/ Lease with Option to Purchase/ Exception of Period to Exer
cise Option:The other terms of the original contract of lease which are revived
in the implied new lease under Art.1670 of the CC are only those terms which are
germane to the lessee s right of continued enjoyment of the property leased. Th
erefore, an implied new lease does not ipso facto carry with it any implied revi
val of private respondent s option to purchase (as lessee thereof) the leased prem
ises. The provision entitling the lessee the option to purchase the leased prem
ises is not deemed incorporated in the impliedly renewed contract because it is
alien to the possession of the lessee. Private respondent s right to exercise th
e option to purchase expired with the termination of the original contract of le
ase for one year.
RAMOS v. CA (Feb. 3, 1999)
Civil Law/ Oblicon/ Principle of Relativity of Contracts/ Land Titles/ Prescript
ion or Adverse Possession: (1) In the absence of registration as to operate agai
nst the whole world, contracts bind only the parties who had entered it by virtu
e of the basic principle of relativity of contracts. This basic principle applie
s even if the sales were supposedly concluded at a time prior to the operation o
f the Torrens system of land registration over the properties involved.
(2) Under the Cadastral Act, the OCTs issued to the original registrant,
shall have the same effect as CTs granted to an application for registration of
land under the Land Registration Act, because no title to registered land in dero
gation to that of the registered owner shall be acquired by prescription or adve
rse possession.
CARCELLER v. CA (Feb. 10, 1999)
Civil Law/ Oblicon/ Contracts/ Option:(1) An option is a preparatory contract in
which one party grants to the other, for a fixed period and under specified cond
itions, the power to decide, WON to enter into a principal contract. It binds t
he party who has given the option, not to enter into the principal contract wit
h the one to who, the option was granted, if the latter should decide to use the
option. It is a separate agreement distinct from the contract which the partie
s may enter upon the consummation of the option.
(2) In the contractual relations, the law allows the parties leeway in t
he terms of their agreement, which is the law between them.
MISENA v. RONGAVILLA (Feb. 25, 1999)
Civil Law/ Contracts/ Sale of Real Property, When Presumed an Equitable Mortgage
Instead: Art. 1602 of the CC enumerates instances when a contract regardless of
its nomenclature may be presumed an equitable mortgage. It also applies to a co
ntract purporting to be an absolute sale, and the presence of any of the circums
tances in 1602 give rise to the presumption in favor of an equitable mortgage. H
ere, the CA confirmed that 3 circumstances were present and proven, to wit: (1)
the inadequacy of the consideration; (2) the respondent remained in possession o
f the land and (3) the subject property was charged as security for the loan.
LOGRONIO v. TALESEO (August 1999)
Civil Law/ Laches: Currit Tempus contra decides et sui juris contemptores (Time
runs against the slothful and those who neglect their rights). Through their ina
ction for 39 years, the petitioners were barred by laches from asserting ownersh
ip and possession of the property in dispute.
SPS. CO v. CA (August 1999)
Civil Law/ Contracts/Sale/Option Contract: An option contract is distinct from a
contract of sale, it is a contract granting a privilege to buy or sell within a
n agreed time and at a determined price. It is separate and distinct contract fr
om that which the parties may enter into upon the consummation of the option. It
must be supported by consideration. A contract of sale on the other hand is a c
onsensual contract and is perfected at the moment there is a meeting of the mind
s upon the thing which is the object of the contract and upon the price.
In the case at bar, the contract entered into was a Contract of sale and
not an Option Contract so that the proper remedy would be rescission.

LAPAT v. ROSARIO (August 1999)

Civil Law/ Contracts/Equitable Mortgage: Where the presumptions under the law th
at a contract is an equitable mortgage are present, it shall be considered as su
ch regardless of its nomenclature: (1) when the price of a sale with the right t
o repurchase is unusually inadequate; (2) when the vendor remains in possession
as lessee or otherwise; (3) when upon or after the expiration of the right to re
purchase another instrument extending the period of redemption or granting a new
period is executed; (4) when the purchaser retains a part of the purchase price
; (5) when the vendor binds himself to pay the taxes on the thing sold, and; (6)
in any other case where it may fairly be inferred that the real intention of th
e parties is that the transaction shall secure the payment of a debt or performa
nce of any other obligation.
In determining the nature of a contract, courts are not bound by its for
m or title but by the intention of the parties.
LAO v. MACAPUGAY (August 1999)
Civil Law/ Contracts/ Compromise: A compromise is a bilateral act or transaction
that is expressly acknowledged as a juridical agreement by the CC. Art 202 prov
ides that a compromise is a contract whereby the parties by making reciprocal con
cessions, avoid a litigation or put an end to one already commenced. The CC doe
s not only defines and authorizes compromises, it in fact encourages them in civ
il actions. They are generally to be favored and cannot be set aside if the part
ies acted in good faith and made reciprocal concessions to each other in order t
o terminate a case. However, the law abhors settlement of criminal liability so
that the compromise agreement cannot affect charges of violation of RA 3019, se
c 3(e) and (j) and Sec 4 and RPC Art 171, 172 par 2, Arts. 206 and 207.
HEIRS OF YAP v. CA (August 1999)
Civil Law/ Contracts/ Trusts: One basic distinction between an implied trust and
an express trust is that while the former may be established by parol evidence,
the latter cannot. Even then, in order to establish an implied trust in real pr
operty by parol evidence, the proof should be convincing as if the acts giving r
ise to the trust obligation are proven by an authentic document. An implied trus
t, in fine, cannot be established upon vague and inconclusive proof.
Not to be dismissed, however, is the long standing and broad doctrine of
clean hands that will not allow the creation or the use of a juridical relation
, a trust whether express or implied included, to perpetuate fraud or tolerate b
ad faith nor to subvert, directly or indirectly, the law.
SPS. BAUTISTA v. PILAR DEV T CORPORATION (August 1999)
Civil Law/ Contracts/ Novation: The extinguishment of an obligation by the subst
itution or change of the obligation by a subsequent one which extinguishes or mo
difies the first is a novation. It is made either by changing the object or prin
cipal conditions referred to as an objective or real novation; or by substitutin
g the person of the debtor or subrogating a 3rd person to the rights of the cred
itor, which is known as subjective or personal novation.
Novation may either be express or implied: Express, when the new obligati
on declares in unequivocal terms that the old obligation is extinguished. Implie
d, when the new obligation is on every point incompatible with the old one. In t
he case at bar, there was clearly an animus novandi, an express intention to nov
ate. The 1st promissory note which provides for an interest rate of 12% was canc
elled and replaced by a 2nd note which stipulated a higher interest of 21%. This
2nd note became the new contract governing the parties obligations.
1998
JAPAN AIRLINES v. CA (August 1998)
Civil Law/ Contracts/ Fortuitous Event/ Nominal Damages: Respondents are passeng
ers of Japan Airlines who were stranded for almost a week in Japan due to the Pi
natubo eruption which made NAIA inaccessible to airline traffic. As a result of
the refusal of JAL to pay for the accommodations of respondents during their who
le stay in Japan, they commenced an action for damages against JAL.
 As a general rule, common carriers are expected to follow a standard of c
are and diligence which is higher and different in kind to that of ordinary carr
iers. However, in the case at bar, JAL is not absolutely responsible for all inj
uries or damages suffered by respondents because such was caused by a fortuitous
event. They are liable for nominal damages to respondents though, for their fai
lure to make the necessary arrangements to transport respondents on the first av
ailable connecting flight to Manila. Nominal damages are adjudicated in order th
at a right of a plaintiff, which has been violated of invaded by the defendant,
may be vindicated or recognized, and not for the purpose of indemnifying any los
s suffered by him.
VALGOSONS REALTY INC. v. CA (September 1998)
Civil Law/ Lease/ Non-delivery of the Leased Premises: Under Art. 1654 of the NC
C, it is the duty of the lessor, in this case, petitioner VRI (Valgosons Realty
Inc), to deliver the thing which is the object of the contract . , failure to do so
constitutes a wrong to which petitioner exposes itself to legal action including
being held liable for damages. The fact that respondent Prudential Bank (PB), t
he former lessee of the same space, did not vacate the premises at the time the
new lessee (respondent UDB) was supposed to enter therein cannot exculpate petit
ioner VRI from its liability for the non-performance of its obligation to URB. M
oreover, UDB has no cause of action against the first lessee (PB) because there
is no privity of contract between the two respondents-lessees.
POLOTAN, SR. v. CA (September 1998)
Civil Law/ Contracts/ Binding Effect/ Escalation Clause/ Contract of Adhesion: P
etitioner is a holder of a credit card of Security Diners International Corporat
ion (Diners Club). He was adjudged by the RTC and CA to be indebted to the compa
ny for the use of the card.
The contract entered into between petitioner and the company is a contra
ct of adhesion. A contract of adhesion is one in which one of the contracting pa
rties imposes a ready-made form of contract which the other party may accept or
reject but cannot modify. Nevertheless, these types of contracts have been decla
red as binding as ordinary contracts, the reason being that the party who adhere
s to the contract is free to reject it entirely. The binding effect of any agree
ment between parties to a contract is premised on two settled principles: (1) th
at any obligation arising from a contract has the force of law between the parti
es; and (2) that there must be mutuality between the parties based on their esse
ntial equality. The court is therefore not precluded from ruling out blind adher
ence to their terms if the attendant facts and circumstances show that they shou
ld be ignored for being obviously too one-sided.
In the instant case, the claim of petitioner that the contract is one-si
ded has no basis. The fact that the contract allows for the escalation of intere
sts but does not provide for a downward adjustment of the same does not boost hi
s claim. There is nothing inherently wrong with escalation clauses, as long as t
hey are not merely potestative but based on reasonable and valid grounds. They a
re valid stipulations in commercial contracts to maintain fiscal stability and t
o retain the value of money in long term contracts. In this case, the interest r
ate is based on the fluctuation in the market rates, which is beyond the control
of the credit card company.
1997
ROBLETT INDUSTRIAL CONSTRUCTION CORP. v. CA (G.R. No. 116682, Jan. 2, 1997)
Civil Law/ Estoppel: Estoppel in pais arises when one, by his acts, representati
ons or admissions, or by his own silence when he ought to speak out, intentional
ly or through culpable negligence, induces another to believe certain facts to e
xist and such other rightfully relies and acts on such belief, so that he will b
e prejudiced if the former is permitted to deny the existence of such facts. (Pa
nay Electric v. CA, 174 SCRA 500 [1989]) This doctrine obtains here. A stateme
nt of account for P376,350.18 covering the period above mentioned was received f
rom respondent by petitioner with nary a protest from the latter. Neither did p
etitioner controvert the demand letter concerning the overdue account; on the co
ntrary, it asked for ample time to source funds to substantially settle the acco
unt.
TANGUILIG v. CA (G.R. No. 117190, Jan. 2, 1997)
Civil Law/Contracts/ Interpretation/ Payment/ Fortuitous Event/ Delay: (1) The
installation of a deep well was not included in petitioner's proposals to const
ruct a windmill system for respondent. While the words "deep well" and "deep we
ll pump" are mentioned in the proposals, these do not indicate that a deep well
is part of the windmill system. They merely describe the type of deep well pump
for which the proposed windmill would be suitable. Since the terms of the instr
uments are clear they should not be disturbed.
(2) In the absence of a creditor-debtor relationship, respondent cannot
claim the benefit of the law concerning payments made by a third person (Arts. 1
236 & 1237)..
(3) In order for a party to claim exemption from liability by reason of f
ortuitous event under Art. 1174, the event should be the sole and proximate caus
e of the loss or destruction of the object of the contract. In Nakpil v. CA (14
4 SCRA 596 [1986]), 4 requisites must concur: (a) the cause of the breach of the
obligation must be independent of the will of the debtor; (b) the event must be
either unforseeable or unavoidable; (c) the event must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner; and (d)
the debtor must be free from any participation in or aggravation of the credito
r's injury. A strong wind causing the collapse of the windmill cannot be conside
red fortuitous, for it must be present where windmills are constructed. There mu
st have been an inherent defect in the windmill itself.
(4) 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 incum
bent upon him. (Art. 1169) When the windmill failed to function properly it bec
ame incumbent upon petitioner to repair it in accordance with the stipulated gua
ranty. Thus, respondent cannot be said to have been in delay; instead, it is pe
titioner who should bear the expenses for the reconstruction of the windmill. A
rt. 1167 provides that if a person obliged to do something fails to do it, the s
ame shall be executed at his cost.
ACE-AGRO DEVELOPMENT CORP. v. CA (G.R. No. 119279, Jan. 21, 1997)
Civil Law/Contracts/Force Majeure: The temporary suspension of work did not meri
t an automatic extension of the period of the contract. (Victorias Milling v. V
ictorias Milling Planters Cooperative, 97 Phil. 318 [1955]) The fact is that th
e contract was subject to a resolutory period which relieved the parties of thei
r respective obligations but did not stop the running of the period of the contr
act. Petitioner may not be to blame for the failure to resume work after the fir
e (there were alleged intervening causes, e.g., labor problems due to the work s
toppage), but neither is private respondent.
HEIRS OF SUICO v. CA (G.R. No. 120615, Jan. 21, 1997)
Civil Law/ Contracts/Property/Lease: (1)The parties to the oral lease in questio
n did not fix a specified period therefor. However, since the rentals were paid
monthly, the lease may be deemed to be on a monthly basis, expiring at the end
of every month, pursuant to Arts. 1687 and 1673. In such case, a demand to vaca
te was not even necessary for judicial action after the expiration of every one
month.
(2) The power of a court to extend the term of the lease under the second
sentence of Art. 1687 is potestative, or more precisely, discretionary. The co
urt is not bound to extend it, and its exercise depends upon the circumstances s
urrounding the case. Basic common law principles of fairness and equity shun pro
perty entailment that borders on perpetuity to the exclusion of the owner.
(3) The value of the house is inconsequential since it was build in 1950,
and private respondents can remove it if petitioners opt not to retain it by pa
ying 1/2 of its value, pursuant to Art. 1678, which provides that the lessors wo
uld become the owner of the house constructed by reimbursing the lessees in said
amount. Petitioners-lessors are thus given the option to pay indemnity, while
private respondents-lessees do not have a right to demand that they be paid. If
the former refuses to reimburse, the latter's remedy is to remove the house, ev
en though petitioners' lot may suffer damage thereby, as long as the damage caus
ed is not more than reasonably necessary.
RAMOS v. CA (July 1997)
Civil Law/ Oblicon/ Supervening Inflation: (1) Failure to comply with a provisio
n deemed by the parties themselves as so important is a ground for the terminati
on of the contract.
(2) Art. 1250 requires for its application a declaration of inflation by
the Central Bank, without such declaration creditors cannot demand an increase o
f what is due them.
MATANGUIHAN v. CA (July 1997)
Civil Law/Equitable Mortgages: In order to judge the intention of the contractin
g parties, their contemporaneous and subsequent acts shall be principally consid
ered. Accordingly, there are instances where the form and stipulations of a con
tract must give way to reflect the true intention of the parties. This is best i
llustrated in the instances where contracts of sale, whether absolute, or one wh
ere the vendor reserves the right to repurchase the thing sold or a sale pacto d
e retro, are presumed to be an equitable mortgage. An equitable mortgage is def
ined as one which although lacking in some formality, or form or words, or other
requisites demanded by a statute, nevertheless reveals the intention of the par
ties to charge real property as security for a debt, and contains nothing impos
sible or contrary to law. Its essential requisites are: (1) That the parties en
tered into a contract denominated as a contract of sale; and (2) That their inte
ntion was to secure an existing debt by way of a mortgage.
Under the wise, just and equitable presumption in Article 1602, a documen
t which appears on its face to be a sale - absolute or with pacto de retro - may
be proven by the vendor or vendor-a-retro to be one of a loan with mortgage. In
this case, parol evidence becomes competent and admissible to prove that the in
strument was in truth and in fact given merely as a security for the payment of
a loan. And upon proof of the truth of such allegations, the court will enforc
e the agreement or understanding in consonance with the true intent of the parti
es at the time of the execution of the contract.
Sales with a right to repurchase are not favored. As before, instruments
shall not be construed to be sales with a right to repurchase, with the stringe
nt and onerous effects which follow, unless the terms of the document and the su
rrounding circumstances so require. Whenever, under the terms of the writing, a
ny other construction can be fairly and reasonably inferred, such construction w
ill be adopted and the contract construed as a mere loan unless the court sees t
hat, if enforced according to its terms, it is not an unconscionable pact.
NOOL v. CA (July 1997)
Civil Law/Void Contracts/Sales: (1) A contract of repurchase arising out of a co
ntract of sale where the seller did not have any title to the property "sold" is
not valid. Since nothing was sold, then there is also nothing to repurchase. A
void contract cannot give rise to a valid one.
(2) The right to repurchase presupposes a valid contract of sale between
the same parties.
(3) In light of the prohibition against unjust enrichment, if a void cont
ract has already been performed, the restoration of what has been given is in or
der. Corollarily, interest thereon will run only from the time of private respo
ndents' demand for the return of this amount in their counterclaim.
ONG v. CA (July 1997)
Civil Law/Contracts/Rescission: Arts 1191 and 1383 are inapplicable in this case
: Art 1191 refers to rescission applicable to reciprocal obligations which shoul
d be distinguished from rescission of contracts under Art 1383. Although both pr
esupposed contracts validly entered into and subsisting and both require mutual
restitution when proper, they are not entirely identical.
SPOUSES SANTIAGO v. CA (August 1997)
Civil Law/ Oblicon/ Simulated or Fictitious Contracts: Here, while petitioners (
buyers in a conditional deed of sale) were able to occupy the property allegedly
sold, they were relegated to a small bedroom without bath and toilet, while Arc
ega (seller) remained virtually in full possession of the house and lot, using t
he master's bedroom. If the transaction was indeed an absolute sale, then Arceg
a had no business remaining on the property. Also if petitioners were the legiti
mate owners, they would have collected rent from Arcega.
Since the transaction was used merely to facilitate a loan with the SSS
with petitioners using the property as collateral, the contract was absolutely s
imulated or fictitious, declared void as per Art. 1409, NCC. The fact that petit
ioners were able to secure a title in their names did not operate to vest owners
hip upon them. The Torrens system does not create nor vest title, but merely con
firms and records title already existing and vested.
BANGAYAN v. CA (August 1997)
Civil Law/Contracts/ Lease/ Novation: Art. 1311, NCC, provides that contracts ta
ke effect only between the parties, their assigns and heirs, except where the ri
ghts and obligations arising from contract are not transmissible by their nature
, or by stipulation or by provision of law. Here, paragraphs 4 and 5 of the lea
se contract provided that the right of first option was not transmissible, which
are consistent with Art. 1649, NCC that the lessee cannot assign the lease with
out the consent of the lessor, unless there is a stipulation to the contrary. Th
e lessor's consent is necessary as the assignment of the lease would involve the
transfer not only of rights, but also of obligations. It constitutes novation
by a substitution of the person of one of the parties.
It cannot be denied that Teofista's right of first option to buy the lea
sed property in case of its sale is but part of the bigger right to lease said p
roperty. The option was given to Teofista as she was the lessee. It was a comp
onent of the consideration of the lease. The option was by no means an independ
ent right which Teofista could exercise. It ought to follow that if Teofista wa
s barred by contract from assigning her right to lease the lot, she was similarl
y barred from assigning her right of first option to Angelita.
RAMOS v. CA (September 1997)
Civil Law/Contracts/ Sale with Assumption of Mortgage: In sales with assumption
of mortgage, the assumption of mortgage is a condition to the seller's consent s
o that without approval by the mortgagee, no sale is perfected.
SPOUSES PANGALINAN v. CA (September 1997)
Civil Law/Sales/Contract to Sell/Extrajudicial Rescission: Art. 1592, NCC,
requiring demand by suit or by notarial act in case the vendor of realty wants t
o rescind does not apply to a contract to sell but only to a contract of sale.
To argue that there was only a casual breach is to proceed from the assumption t
hat the contract is one of absolute sale, where non-payment is a resolutory cond
ition, which is not the case.
The applicable provision of law is Art. 1191, NCC. Pursuant to this, the
law makes it available to the injured party alternative remedies such as the po
wer to rescind or enforce fulfillment of the contract, with damages in either ca
se if the obligor does not comply with what is incumbent upon him.
The validity of the stipulation in the contract providing for automatic r
escission upon non-payment cannot be doubted. It is in the nature of an agreeme
nt granting a party the right to rescind a contract unilaterally in case of brea
ch without need of going to court. Thus, rescission under Art. 1191 was inevita
ble due to petitioners' failure to pay the stipulated price within the original
period fixed in the agreement.
TIGNO v. CA (October 1997)
Civil Law/ Contracts/ Implied Trusts: An implied trust is deducible by operation
of law from the nature of the transaction as matters of equity, independently o
f the particular intention of the parties. It arises where a person purchases la
nd with his own money and takes conveyance thereof in the name of another. In s
uch a case, the property is held on resulting trust in favor of the one furnishi
ng the consideration for the transfer, unless a different intent appears. The t
rust which results under such circumstances does not arise from a contract or an
agreement of the parties, but from the facts and circumstances; i.e., the trus
t results because of equity and it arises by implication or operation of law.
VILLAFLOR v. CA (October 1997)
Civil Law/Contracts/Simulated Contracts/Land Titles: (1) Petitioner's delivery o
f the certificate of ownership and execution of the deed of absolute sale were s
uspensive conditions, which gave rise to a corresponding obligation on the part
of private respondent, i.e., the payment of the last installment of the consider
ation mentioned in the first agreement. Such conditions did not affect the perf
ection of the contract or prove simulation. Neither did the mortgage.
Simulation occurs when an apparent contract is a declaration of a fictit
ious will, deliberately made by agreement of the parties, in order to produce, f
or the purpose of deception, the appearance of a juridical act which does not ex
ist or is different from that which was really executed. (Tongoy v. CA, 123 SCRA
99, 118 [1983]) Such an intention is not apparent in the agreements. The inte
nt to sell, on the other hand, is clear.
(2) At most, nonpayment only gives petitioner the right to sue for collec
tion. Generally, in a contract of sale, payment of the price is a resolutory co
ndition and the remedy of the seller is to exact fulfillment or, in case of subs
tantial breach, to rescind the contract under Art. 1191, NCC. However, failure
to pay is not even a breach, but merely an event which prevents the vendor's obl
igation to convey title from acquiring binding force. (Jacinto v. Kaparaz, 209 S
CRA 246, 254-55 [1992])
(3) The transfer of ownership via the 2 agreements and the relinquishmen
t of rights, being private contracts, were binding only between petitioner and p
rivate respondent. The Public Land Act finds no relevance as the disputed land
was covered by said Act only after issuance of the order of award in favor of pr
ivate respondent. Thus, possession of any disqualification by private responden
t under said Act is immaterial to the private contracts between the parties ther
eto. (We are not, however, suggesting a departure from the rule that laws are d
eemed written in contracts.)
BINGCOY v. CA (October 1997)
Civil Law/Prescription: Acquisitive prescription is in itself a mode of acquirin
g ownership over a parcel of land and does not require successional rights in or
der to ripen into ownership. There is nothing on the record that discloses even
an attempt by petitioners to rebut the evidence of private respondents as to the
ir peaceful, continuous, adverse and open possession in the concept of an owner
over the lots for 22 years. Under the law then, Act No. 190, 41 (Code of Civil P
rocedure), 10 years of continuous, actual adverse possession was sufficient.
YOBIDO v. CA (October 1997)
Civil Law/Oblicon/Fortuitous Event: The explosion of a newly installed tire of a
passenger vehicle causing the vehicle to fall in the ravine is not a fortuitous
event that exempts the carrier from liability for the death of a passenger. To
be considered a fortuitous event: (a) the cause of the unforeseen and unexpected
occurrence must be independent of human will; (b) it must be impossible to for
esee the event which constitutes the caso fortuito, or if it could be foreseen,
must have been impossible to avoid; (c) the occurrence must be such as to render
it impossible for the debtor to fulfill his obligation in a normal manner; (d)
 obligor must be free from any participation in the aggravation of the creditor'
s injury; (e) entire exclusion of human agency from the cause of injury or loss
.
Under the circumstances here, there are human factors involved. The fac
t that the tire was new (in fact, grooves/tread were still visible) did not impl
y that it was entirely free from manufacturing defects or that it was properly m
ounted on the vehicle. Neither may the fact that the tire bought and used vehic
le is of a brand name noted for qualify, resulting in the conclusion that it cou
ld not explode within 5 days' use. Be that as it may, it is settled that an acc
ident caused either by defects in the automobile or through the negligence of it
s driver is not a caso fortuito that would exempt the carrier from liability for
damages.
MURLI SADHWANI v. CA (October 1997)
Civil Law/Contracts/Lease/Sublease: Under Art. 1650, NCC, when the lease contrac
t does not expressly forbid a sublease, the lessee may sublet the thing leased.
The rule is different, however, re: assignments of lease. Art. 1649 provides th
at the lessee cannot assign the lease without the consent of the lessor, unless
there is a stipulation to the contrary..
Indeed, the consent of the lessor is necessary because the assignment of
lease would involve the transfer not only of rights, but also of obligations.
Such assignment would constitute novation by substitution of one of the parties,
i.e., the lessee. There is no evidence here showing that Sawit subsequently agr
eed to a substitution of petitioners in place of Orient as lessee.
1996
DOMINGO v. CA (March 1996)
Civil Law/ Contracts/ Compromise: A compromise is a contract whereby the parties
, by making reciprocal concessions, avoid a litigation or put an end to one alre
ady commenced. Essentially, it is a contract perfected by mere consent. Once an
agreement is stamped with judicial approval, it becomes more than a contract bi
nding upon the parties; having the sanction of the court and entered as its det
ermination of the controversy, it has the force and effect of any other judgment
.
PCIB v. CA (March 1996)
Civil Law/ Contracts/ Absolution from Liability: A stipulation embodied in the s
tandard application for/receipt furnished by petitioner for the purchase of a te
legraphic transfer which relieves it of any liability resulting from loss caused
by errors or delays in the course of the discharge of its services cannot absol
ve the petitioner from liability, where it has acted fraudulently and in bad fai
th. In Geraldez v. CA (230 SCRA 320 [1994]), it was unequivocally declared that
notwithstanding the enforceability of a contractual limitation, responsibility f
rom a fraudulent act cannot be exculpated because the same is contrary to public
policy. (See Art. 21, Civil Code.) Freedom of contract is subject to the limi
tation that the agreement must not be against public policy and any agreement m
ade in violation of this rule is not binding and will not be enforced. (17 Am Ju
r. 2d, Contracts 257)
PNB v. CA (April 1996)
Civil Law/ Oblicon/ Payment/ Exemplary Damages: (1)When the court ordered petiti
oner to pay private respondent the amount of P32,480.00, it had the obligation t
o deliver the same to him. Under Art. 1233 of the Civil Code, a debt shall not
be understood to have been paid unless the thing or service in which the obligat
ion consists has been completely delivered or rendered. The burden of proof of s
uch payment lies with the debtor. (Pinon v. Osorio, 30 Phil. 365)
(2) Jurisprudence has set down the requirements for exemplary damages to
be awarded:
1. they may be imposed by way of example in addition to compensator
y damages, and only after the claimant's right to them has been established;
2. they cannot be recovered as a matter of right, their determinati
on depending upon the amount of compensatory damages that may be awarded to the
claimant;
3. the act must be accompanied by bad faith or done in a wanton man
ner. (Octol v. Ybaez, 111 SCRA 79 [1982]; De Leon v. CA, 165 SCRA 166 [1988])
In the case at bench, while there is a clear breach of petitioner's oblig
ation to pay there is no evidence that it acted in a fraudulent manner. Furtherm
ore, there is no award of compensatory damages which is a prerequisite before ex
emplary damages may be awarded.
SPOUSES ALMEDA v. CA (April 1996)
Civil Law/Contracts/Obligatory Force/Interest/Escalation Clause: (1)The binding
effect of any agreement between parties to a contract is premised on two settled
principles: (a) that any obligation arising from contract has the force of law
between the parties; and (b) that there must be mutuality between the parties ba
sed on their essential equality. Any contract which appears to be heavily weighe
d in favor of one of the parties so as to lead to an unconscionable result is vo
id. Any stipulation regarding the validity or compliance of the contract which
is left solely to the will of one of the parties, is likewise, invalid.
PNB unilaterally altered the terms of its contract with petitioners by in
creasing the interest rates on the loan without prior assent of the latter. Arti
cle 1956 stipulates that "No interest shall be due unless it has been expressly
stipulated in writing."
(2)Escalation clauses are not basically wrong or legally objectionable as
long as they are not solely potestative but based on reasonable and valid groun
ds.
WILLEX PLASTIC v. CA(April 1996)
Civil Law/ Oblicon/Accessory Obligations/Sureties/Retroactivity of Sureties: The
consideration necessary to support a surety obligation need not pass directly t
o the surety, a consideration moving to the principal alone being sufficient.
Moreover, as we held in BPI v. Foerster, although a contract of suretys
hip is ordinarily not to be construed as retrospective, in the end the intention
of the parties as revealed by the evidence is controlling. In this case, the pa
rties clearly provided that the guaranty would cover "sums obtained and/or to be
obtained.
YNSON v. CA; YULIENCO v. CA (June 1996)
Civil Law/ Remedial Law/Compromise: Since the parties entered into this compromi
se agreement freely without any vice of consent, the same must govern the relati
ons of the parties. A judicial compromise has the force of law and is conclus
ive between the parties. A compromise upon its perfection becomes binding upon t
he parties and has the effect and authority of res judicata even if not judicial
ly approved.
VILLA v. CA (G.R. No. 119850, June 20, 1996)
Civil Law/ Oblicon/ Stipulation Pour Autrui/ Torts:(1)The "Agreement" entered in
to by petitioner and Bankard, provides inter alia that the merchant shall honor
validly issued PCCCI credit cards provided that the card expiration date has not
elapsed and the card number does not appear on the latest cancellation bulletin
of lost, suspended and canceled PCCCI credit cards and, no signs of tampering a
ppear on the face of the credit card.
While de Jesus may not be a party to the said agreement, the above-quoted
stipulation conferred a favor upon de Jesus, a holder of a credit card validly
issued by Bankard. This is a stipulation pour autri and under Article 1311 of t
he Civil Code de Jesus may demand its fulfillment provided he communicated his a
cceptance to the petitioner before its revocation. In this case, de Jesus' offer
to pay by means of his Bankard constitutes not only an acceptance of the said s
tipulation but also an explicit communication of his acceptance to the obligor.
 (2)The test for determining the existence of negligence in a particular
case may be stated as follows: Did the defendant in doing the alleged negligent
act use the reasonable care and caution which an ordinary prudent person would
have used in the same situation? If not, then he is guilty of negligence. While
it is true that de Jesus did not have sufficient cash on hand this fact alone d
oes not constitute negligence on his part. Neither can it be claimed that the s
ame was the proximate cause of his damage. We take judicial notice of the curre
nt practice among major establishments to accept payment by means of credit card
s in lieu of cash.
ABELLA v. CA (June 1996)
Civil Law/Interpretation of Contracts: It is a cardinal rule in the interpretati
on of contracts that "if the terms are clear, the literal meaning of its stipula
tions shall control." No amount of extrinsic aids are required.
INCIONG v. CA (June 1996)
Civil Law/Contracts/Fraud/ Credit Transactions/ Solidary Obligations v. Suretysh
ip/ Joint Obligations: (1) Fraud must be established by clear and convincing evi
dence, mere preponderance of evidence, not even being adequate. Petitioner's att
empt to prove fraud must, therefore, fail as it was evidenced only by his own un
corroborated and, expectedly, self-serving testimony.
(2) Petitioner signed the promissory note as a solidary co-maker and not
as a guarantor. A solidary or joint and several obligation is one in which each
debtor is liable for the entire obligation, and each creditor is entitled to dem
and the whole obligation. While a guarantor may bind himself solidarily with the
principal debtor, the liability of a guarantor is different from that of a soli
dary debtor. "A guarantor who binds himself in solidum does not become a solida
ry co-debtor to all intents and purposes. There is a difference between a solid
ary co-debtor and a fiador in solidum (surety). The latter, outside of the liab
ility he assume to pay the debt before the property of the principal debtor has
been exhausted, retains all other rights, actions and benefits which pertain to
him by reason of the fiansa; while a solidary co-debtor has no other rights tha
n those bestowed upon him in Section 4, Chapter 3, Title I Book IV of the Civil
Code
(3) Under Art. 1207 thereof, when there are two or more debtors in one an
d the same obligation, the presumption is that the obligation is joint so that e
ach of the debtors is liable only for a proportionate part of the debt. There i
s solidary liability only when the obligation expressly so states, when the law
so provides or when the nature of the obligation so requires.
Because the promissory note involved in this case expressly states that t
he three signatories therein are jointly and severally liable, any one, some or
all of them may be proceeded against for the entire obligation. The choice is le
ft to the solidary creditor to determine whom he will enforce collection.
NATIONAL WATERWORKS (now MWSS) v. NLRC (July 1996)
Civil Law/Contracts/Prescription: Article 1155 of the Civil Code provides the sp
ecific instances when the period of prescription may be interrupted. Any such i
nterruption is a factual matter to be properly supported by evidence. Private re
spondents' claims herein are not barred by prescription, the period having been
interrupted by the written extrajudicial demands made by private respondents, co
upled with petitioner's own pleas for time within which to pay the claims.
AMERICAN HOME ASSURANCE v. NLRC (July 1996)
Civil Law/ Oblicon/ Condition: Petitioners denied the grant of the bonus to priv
ate respondent because the condition for its grant is that the employee must ret
ire under the SERP. Yet, it was the unjust denial of his applications that prev
ented private respondent from complying with such condition for early retirement
. As petitioners, being employers-obligors, voluntarily prevented fulfillment o
f the condition by their own acts, private respondent is deemed to have fulfille
d the condition for early retirement.
PNB v. CA (July 1996)
Civil Law/Oblicon/Compensation: What petitioner bank is effectively saying is th
at since the respondent appellate court ruled that petitioner bank could not do
a shortcut and simply intercept funds being coursed through it, for transmittal
to another bank, and eventually to be deposited to the account of an individual
who happens to owe some money to petitioner, and because respondent court ordere
d petitioner bank to return the intercepted amount to said individual, who in tu
rn was found by the appellate court to be indebted to petitioner bank, therefore
, there must now be legal compensation of the amounts each owes the other, hence
, there is no need for petitioner bank to actually return the amount, and finall
y, that petitioner bank ends up in exactly the same position as when it first to
ok the improper and unwarranted shortcut by intercepting the said money transfer
, notwithstanding the assailed decision saying that this could not be done! Ther
e is here a clever ploy to use this Court to validate an improper act of petitio
ner bank, with the not impossible intention of using this case as precedent for
similar acts of interception in the future.
BRILLO HANDICRAFTS v. CA (G.R. No. 109090, Aug. 7, 1996)
Civil Law/Contracts/Estoppel: Estoppel has set in where petitioner had partially
paid the amount and acquiesced to the respondent s rate.
CUIZON v. CA (G.R. No. 102096, Aug. 22, 1996)
Civil Law/Oblicon/Interpretation/Fraud: (1) In contractual relations, the law al
lows the parties much leeway and considers their agreement to be the law between
them. This is because "courts cannot follow one every step of his life and ext
ricate him from bad bargains xxx relieve him from one-sided contracts, or annul
the effects of foolish acts." (Vales v. Villa, 35 Phil. 769)
(2) Where the parties have given a practical construction by their conduc
t, as by acts in partial performance, such construction may be considered by the
court in determining its meaning and ascertaining the mutual intention of the p
arties at the time of the contracting. (Javier v. CA, 183 SCRA 171) If it were
true as private respondents claim that their agreement was for the transfer of t
he subject lots only upon payment of the full consideration, why then did privat
e respondents execute a deed of sale over one [of six] lot[s] although they knew
too well that a partial amount only of the purchase price was paid? No credibl
e explanation was given by private respondents.
(3) In construing a written agreement, the reason behind and the circumst
ances surrounding its execution are of paramount importance to place the interpr
eter in the situation occupied by the parties concerned at the time the writing
was executed. (Vicente v. Shotwell, 38 SCRA 107) Admittedly, the intention of t
he contracting parties should always prevail because their will has the force of
law between them. (Kasilag v. Rodriguez, 69 Phil. 217)
(4) We do not find it proper to use the fair market value as the price of
one lot. This is not in accord with the contract between the parties. It is n
ot the province of the court to alter a contract by construction or to make a ne
w contract for the parties; its duty is confined to the interpretation of the o
ne which they have made for themselves without regard to its wisdom or folly as
the court cannot supply material stipulations or read into the contract words wh
ich it does not contain. (Bacolod Murcia v. Banco Nacional, 74 Phil. 675)
(5) Fraud is the deliberate or intentional evasion of the normal fulfillm
ent of an obligation. (8 Manresa 72) The mere failure of private respondents to
execute a deed of sale because they demanded first an accounting of the lots us
ed as collateral by petitioner and amount of loans secured could not be consider
ed as fraud. Fraud is never presumed; it must be alleged and proven. (Atilano v
. Inclan, 45 Phil. 246) Fraud is negated when private respondents partially per
formed their obligation when they executed a deed of sale over 1 lot.
RIZAL SURETY v. CA & TRANSOCEAN TRANSPORT (G.R. No. 96727, Aug. 28, 1996)
Civil Law/ Contracts/Trusts: In Mindanao Devt. Authority v. CA (113 SCRA 429, 43
6-437 [1982]), this Court held the elements of an express trust:
1) Competent trustor and trustee;
2) An ascertainable trust res; and
3) Sufficiently certain beneficiaries.
There is no need for stilted formalities. There must be a present and com
plete disposition of the trust propoerty, notwithstanding that the enjoyment in
the beneficiary will take place in the future. Also, the purpose must be an acti
ve one to prevent trust from being executed into a legal estate or interest, and
one not in contravention of some prohibition of statute or rule of public polic
y.
Power of administration must be other than a mere duty to perform a contr
act although the contract is for a 3rd party beneficiary. A declaration of term
s is essential, and these must be stated with reasonable certainty in order that
the trustee may administer, and the court, if called upon to do so, may enforce
the trust.
INTER-ASIA SERVICES CORP. v. CA (G.R. No. 106427, October 1996)
Civil Law/ Contracts/ Lease/ Renewal v. Extension: To renew means the old contra
ct is extinguished, thus a new one must be executed, and vice-versa. In this cas
e, there was only an extension where after the contract expired on 14 July 1990,
agreements were entered into for petitioner to stay on the leased premises up to
1 January 1991 and subsequently up to 1 March 1991. In Fernandez v. CA (166 SCRA
577 [1988]), this Court held that an alleged verbal assurance of renewal of a l
ease is inadmissible to qualify the terms of the written lease agreement under t
he parole evidence rule and unenforceable under the Statute of Frauds.

PHIL. INTL. TRADING CORP. v. ANGELES (G.R. No. 108461, October 1996)
Civil Law/Publication of Laws: In Taada v. Tuvera (146 SCRA 446 [1986]), we ruled
that executive issuances meant to enforce and implement an existing law pursuan
t to a valid delegation, must be published.
SECURITY BANK & TRUST CO. v. RTC (G.R. No. 113926, October 1996)
Civil Law/Interest/Usury: Should the rate of interest on a loan as stipul
ated in a contract (23% here), far in excess of the ceiling prescribed under or
pursuant to the Usury Law prevail over 2 of CB Circular No. 905 which prescribes
that the rate of interest thereof shall continue to be 12% per annum?
Circular No. 905 merely suspended the effectivity of the Usury Law. Where
the rate of interest was agreed upon by the parties freely, it is not for respo
ndent court to change the stipulations in the contract where it is not illegal.
Further, Art. 1306, NCC provides that contracting parties may establish stipulat
ions as they deem convenient, provided they are not contrary to law, etc. We fi
nd no valid reason for the respondent court to impose a 12% interest rate on the
principal balanc. In a loan, the interest due should be that stipulated in writ
ing, and in the absence thereof, the rate shall be 12% p.a. (Eastern Shipping v
. CA, 234 SCRA 78) Hence, only in the absence of a stipulation can the court im
pose the 12% interest rate.
MACTAN CEBU INTL. AIRPORT AUTHORITY v. CA (G.R. No. 121506, October 1996)
Civil Law/Contracts/Statute of Frauds: Under Art. 1403, NCC, a contract for the
sale of real property shall be unenforceable unless the same or some note or mem
orandum thereof be in writing and subscribed the party charged or his agent. Ev
idence of the agreement cannot be received without the writing, or a secondary e
vidence of its contents. In case at bench, the deed of sale and verbal agreemen
t allowing the right of repurchase should be considered an integral whole. The
deed of sale relied upon by petitioner is in itself the note or memorandum evide
ncing the contract. Thus, the requirement of the Statute of Frauds has been suf
ficiently complied with. Moreover, the principle of the Statute of Frauds only a
pplies to executory contracts and not to contract either partially or totally pe
rformed (Victoriano v. CA, 194 SCRA 19), as in this case, where the sale has bee
n consummated; hence, the same is taken out of the scope of the Statute of Frau
ds.
As the deed of sale has been consummated, by virtue of which, petitioner
accepted some benefits thereunder, it cannot now deny the existence of the agree
ment. (Art. 1405, NCC) The Statute of Frauds was enacted for the purpose of pre
venting fraud and should not be made the instrument to further them. (National B
ank v. Phil. Vegetable Oil, 49 Phil. 857)
PHIL. NATIONAL BANK v. CA (G.R. No. 123643, October 1996)
Civil Law/Damages/Interest: The 12% interest rate referred to in Circ. 416 appli
es only to loans or forbearance of money, or where money is transferred from one
person to another and the obligation to return the same or a portion thereof is
adjudged. xxx (FTI v. CA & TAO Devt., G.R. No. 120097, 23 Sept. 1996)
Therefore, the proper rate of interest referred to in the judgment under
execution is only 6%, to be computed from the time of the filing of the complain
t considering that the amount adjudged can be established with reasonable certai
nty (P98,691.90).
CONSTANTINO v. CA (G.R. No. 116018, November 1996)
Civil Law/Contracts/Land Titles/Fraud: We find respondents allegation that they s
igned the deed prior to the survey worthy of credit. As found by the trial cour
t, petitioner s contrary contention was contradicted by petitioner s own witness who
positively asserted in court that the survey was conducted 6 days after the sig
ning. Obviously, when respondents signed the deed, it was still incomplete sice
petitioner who caused it to be prepared left several spaces blank, regarding th
e dimensions of the property to be sold. The heirs were persuaded to sign the d
ocument only upon assurance of petitioner that Roque would be present when the p
roperty would be surveyed. But this turned out to be a ruse of petitioner to in
duce respondents to sign the deed. (See Periquet v. IAC, 238 SCRA 697 [1994])
Thus all elements of fraud vitiating consent for purposes of annulling a contrac
t concur: (a) employed by a contracting party upon the other; (b) induced the ot
her party to enter into the contract; (c) serious; and (d) resulted in damage an
d injury to the party seeking annulment. (Alcasid v. CA, 237 SCRA 419 [1994])
Perhaps, another reason to annul the document is that the second page man
ifests that the number of the subdivision plan and the respective area of the lo
t were merely handwritten while the rest of the statements were typed, which lea
ds us to conclude that the handwritten figures were not available at the time th
e document was formalized.
CATHOLIC BISHOP OF BALANGA v. CA (G.R. No. 112519, November 1996)
Civil Law/Contracts/Land Titles/Laches: The elements of laches are:
1) Defendant s conduct giving rise to the situation complained of;
2) Delay in asserting complainant s right after he had knowledge of defendant s
conduct and after he had opportunity to sue;
(a) knowledge of defendant s action;
(b) opportunity to sue defendant after obtaining such knowledge; and
(c) delay in suing
3) Lack of knowledge or notice on defendant s part that complainant would ass
ert the right on which he based his suit; and
4) Injury or prejudice to defendant if relief is accorded to complainant. (
citations omitted)
In this case, petitioner sued only after 49 years since the donation, wit
hout explanation for this long delay making petitioner guilty of laches.
Further, while petitioner is still the registered owner, and jurisprudenc
e is settled as to the imprescriptibility of a Torrens Title, there is equally a
n abundance of cases where we categorically ruled that a registered landower may
lose his right to recover the possession of his registered property by reason o
f laches. (citations omitted)
SPOUSES FLORENDO v. CA (G.R. No. 101771, Dec. 17, 1996)
Civil Law/Contracts/Escalation Clauses: In Banco Filipino v. Navarro (152 SCRA 3
46,353 [1987]), we ruled that in general, there is nothing inherently wrong with
escalation clauses. In IBAA v. Spouses Salazar (159 SCRA 133, 137 [1988]), the
Court reiterated the rule that escalation clauses are valid in commercial contr
acts.
ManCom Resolution 85-08, which is neither a rule nor a CB resolution, can
not be used as basis for escalation in lieu of CB issuances, since par. (f) of t
he mortgage contract categorically specifies that any interest rate increase be
in accordance with prevailing rules, regulations and circulars of the CB. The Ba
nco Filipino and PNB doctrines thus apply four-square, that without such CB issu
ances, any proposed increased rate will never become effective.
It will not be amiss also to point out that the unilateral determination
and imposition of increased interest rates by LBP violates the principle of mutu
ality of contracts (Art. 1308, NCC).
1995
DEL MUNDO v. CA (240 SCRA 348 [1995])
Civil Law/Damages: Actual and moral damages cannot be dealt with in the aggregat
e, each must be separately identified and independently justified.
CASTELO v. CA (244 SCRA 180 [May 1995])
Civil Law/Oblicon/ Damages/ Interest: In case of ambiguity in language of contra
ct, that interpretation which establishes a less onerous transmission of rights
or permits greater reciprocity is to be adopted. In delay in discharging an obli
gation consisting of a payment of a sum of money, the appropriate measure of dam
ages is payment of penalty interest. Under Art. 2209, use the rate agreed upon,
if none, pay additional interest at a rate equal to the regular or monetary inte
rest, if none, legal interest of 6% or 12% (latter if loan or forbearance of mon
ey).
RAPANUT v. CA (246 SCRA 323 [July 1995])
Civil Law/Oblicon/Contracts Involving Installment Payments/Estoppel: (1)
Failure to exercise the right to rescission after petitioner's alleged default c
onstitutes a waiver, further, continued acceptance of the installment payments c
onstitutes estoppel.
(2) In a contract involving installment payment with interest chargeable
against the remaining balance of the obligation, it is the duty of the creditor
to inform the debtor of the amount of interest that falls due and that he is app
lying the installment payments to cover said interest. Otherwise, the creditor
cannot apply the payments to the interest and then hold the debtor in default fo
r non-payment of installments on the principal (Art. 1253, Civil Code).
DBP v. CA (G.R. No. 110053, Oct. 16, 1995)
Civil Law/Oblicon/Void Contracts/Restoration: If both parties have no fault or a
re not guilty, the restoration of what was given by each of them to the other is
in order. The declaration of nullity of a contract which is void ab initio ope
rates to restore things to the state and condition in which they were found befo
re the execution thereof.
AG & P v. CA (G.R. Nos. 114841-42, Oct. 20, 1995)
Civil Law/Contracts/Damages/Interest: When an obligation not constituting a loan
or forbearance of money is breached, interest on the amount of the damages awar
ded may be imposed at the rate of six percent (6%) per annum. No interest shall
be adjudged on unliquidated claims unless the same can be established with reas
onable certainty.
The actual base for the computation of such legal interest, however, shal
l be the amount as finally adjudged by this Court. Furthermore, when our judgme
nt herein becomes final and executory, the rate of legal interest shall be twelv
e percent (12%) from such finality until the satisfaction of the total judgment
account, the interim period being effectively equivalent to a forbearance of cre
dit.
SALES
2001
HEIRS OF SANDEJAS, SR v. LINA (G.R. No. 141634, February 5, 2001)
Civil Law/ Sales/Contract to Sell: (1) A contract of sale is not invalidated by
the fact that it is subject to probate court approval. The transaction remains b
inding on the seller-heir, but not on the other heirs who have not given their c
onsent to it.
(2) In a contract to sell, the payment of the purchase price is a positiv
e suspensive condition. The vendor's obligation to convey the title does not bec
ome effective in case of failure to pay. When a contract is subject to a suspens
ive condition, its birth or effectivity can take place only if and when the cond
ition happens or is fulfilled.
The suspensive condition did not reduce the conditional sale between Elio
doro Sr. and respondent to one that was and a definite, clear and absolute docum
ent of sale," as contended by petitioners. Upon the occurrence of the condition,
the conditional sale became a reciprocally demandable obligation that is bindin
g upon the parties.
SPOUSES LORBES v. CA (G.R. No. 139884, February 15, 2001)
Civil Law/ Sales/Equitable Mortgage: There is no conclusive test to determine wh
ether a deed absolute on its face is really a simple loan accommodation secured
by a mortgage. "The decisive factor in evaluating such agreement is the intenti
on of the parties, as shown not necessarily by the terminology used in the contr
act but by all the surrounding circumstances, such as the relative situation of
the parties at that time, the attitude, acts, conduct, declarations of the parti
es, the negotiations between them leading to the deed, and generally, all pertin
ent facts having a tendency to fix and determine the real nature of their design
and understanding. As such, documentary and parol evidence may be submitted and
admitted to prove the intention of the parties.
The conditions which give way to a presumption of equitable mortgage, as
set out in Article 1602 of the Civil Code, apply with equal force to a contract
purporting to be one of absolute sale. Moreover, the presence of even one of the
circumstances laid out in Article 1602, and not a concurrence of the circumstan
ces therein enumerated, suffices to construe a contract of sale to be one of equ
itable mortgage. This is simply in consonance with the rule that the law favors
the least transmission of property rights.
ROSALES v. CA (G.R. No. 137566, February 28, 2001)
Civil Law/Sales/Judicial Sale/Inadequacy of Price: Mere inadequacy of the price
per se will not set aside a judicial sale of real property. But where the inadeq
uacy is purely shocking to the conscience, such that the mind revolts at it and
such that a reasonable man would neither directly nor indirectly be likely to co
nsent to it, the sale shall be declared null and void.

2000
INTEGRATED PACKAGING CORP. v. CA (G.R. No. 115117, June 8, 2000)
Civil Law/Sales/Contracts/Reciprocal Obligations/Damages: Reciprocal obligations
are to be performed simultaneously, so that the performance of one is condition
ed upon the simultaneous fulfillment of the other. Note that in the contract, pe
titioner is not even required to make any deposit, down payment or advance payme
nt, hence, the undertaking of private respondent to deliver the materials is con
ditional upon payment by petitioner within the prescribed period.
True, indemnification for damages comprehends not only the loss suffered,
that is to say actual damages (damnum emergens), but also profits which the obl
igee failed to obtain, referred to as compensatory damages (lucrum cessans). How
ever, to justify a grant of actual or compensatory damages, it is necessary to p
rove with a reasonable degree of certainty, premised upon competent proof and on
the best evidence obtainable by the injured party, the actual amount of loss. M
oral damages, meanwhile, may be awarded when in a breach of contract the defenda
nt acted in bad faith, or was guilty of gross negligence amounting to bad faith,
or in wanton disregard of his contractual obligation.
LAFORTEZA v. MACHUCA (G.R. No. 137552, June 16, 2000)
Civil Law/Sales/Contracts/Rescission: Rescission cannot prosper here. A seller c
annot unilaterally and extrajudicially rescind a contract of sale where there is
no express stipulation authorizing him to extrajudicially rescind. Neither was
there a judicial demand for the rescission thereof, a requisite for the rescissi
on of a contract of sale of an immovable property under Art. 1592. Also, resciss
ion of a contract will not be permitted for a slight or casual breach, but only
such substantial and fundamental breach as would defeat the very object of the p
arties in making the agreement. In this case, considering that the six-month per
iod was merely an approximation of the time it would take to reconstitute the lo
st title and was not a condition imposed on the perfection of the contract and c
onsidering further that the delay in payment was only thirty days which was caus
ed by the respondents justified but mistaken belief that an extension to pay was
granted to him the delay of one month in payment was a mere casual breach that wo
uld not entitle the respondents to rescind the contract. Moreover, the failure o
f the respondent to consign is not tantamount to a breach of the contract for by
the fact of tendering payment, he was willing and able to comply with his oblig
ation.
REPUBLIC OF THE PHILIPPINES v. SALEM INVESTMENT CORPORATION (June 23, 2000)
Civil Law/Contracts/Sales/Subrogation: The contention that the Deed of Absolute
Sale excluded the portion expropriated by the government is untenable. The unde
rscored phrase does not say that the expropriated portion of the lot was exclude
d from the sale. Rather, it states that the entire property, consisting of 4,075
square meters, was being sold free from all liens and encumbrances except the l
ien in favor of the government over the portion being expropriated by it. Stated
in another way, Guerrero was buying the entire property free from all claims of
third persons except those of the government.
Evidently, Lot 834 was conveyed in 1994 to Guerrero by virtue of the Deed
of Absolute Sale. This contract was registered in the Register of Deeds and, ac
cordingly, a new transfer certificate of title was issued to Guerrero. Pursuant
thereto, and by virtue of subrogation, the latter became the rightful owner enti
tled to receive the just compensation from the Republic.
SAN MIGUEL PROPERTIES PHILIPPINES, INC. v. SPOUSES HUANG (G.R. No. 137290, July
31, 2000)
Sales; Option Contracts- It can not be said a definite and firm sales agreement
between the parties had been perfected over the lot in question. Indeed, this C
ourt has already ruled before that a definite agreement on the manner of payment
of the purchase price is an essential element in the formation of a binding and
enforceable contract of sale. The fact, therefore, that the petitioners deliver
ed to the respondent the sum of P10,000 as part of the down-payment that they ha
d to pay cannot be considered as sufficient proof of the perfection of any purch
ase and sale agreement between the parties herein under Art. 1482 of the new Civ
il Code, as the petitioners themselves admit that some essential matter the term
s of the payment still had to be mutually covenanted.
Thus, it is not the giving of earnest money, but the proof of the concurr
ence of all the essential elements of the contract of sale which establishes the
existence of a perfected sale.
SANTOS v. CA (G.R. No. 120820, August 1, 2000)
Civil Law/Sales/ Contract of Sale v. Contract to Sell: In a contract to sell, ti
tle remains with the vendor and does not pass on to the vendee until the purchas
e price is paid in full, Thus, in contract to sell, the payment of the purchase
price is a positive suspensive condition. Failure to pay the price agreed upon i
s not a mere breach, casual or serious, but a situation that prevents the obliga
tion of the vendor to convey title from acquiring an obligatory force. This is
entirely different from the situation in a contract of sale, where non-payment o
f the price is a negative resolutory condition. The effects in law are not ident
ical. In a contract of sale, the vendor has lost ownership of the thing sold and
cannot recover it, unless the contract of sale is rescinded and set aside. In
a contract to sell, however, the vendor remains the owner for as long as the ven
dee has not complied fully with the condition of paying the purchase. If the ven
dor should eject the vendee for failure to meet the condition precedent, he is e
nforcing the contract and not rescinding it. When the petitioners in the instant
case repossessed the disputed house and lot for failure of private respondents
to pay the purchase price in full, they were merely enforcing the contract and n
ot rescinding it.
DISTAJO vs. CA
Civil Law/Sales/Persons Prohibited from Purchasing: Art. 1491. The following per
sons cannot acquire by purchase, even at a public or judicial auction, either in
person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under guardia
nship;
(2) Agents, the property whose administration or sale may have been entrusted to
them, unless the consent of the principal has been given;
(3) Executors and administrators, the property of the estate under administratio
n; x x x
Under paragraph (2) of the above article, the prohibition against agents
purchasing property in their hands for sale or management is not absolute. It do
es not apply if the principal consents to the sale of the property in the hands
of the agent or administrator.
BAYOCA v. NOGALES (G.R. No. 138201, September 12, 2000)
Sales: In fine, the main issue is who has the superior right to the par
cel of land sold to different buyers at different times by its former owners.
Article 1544 of the Civil Code governs the preferential rights of vendees in cas
es of multiple sales, in the double sales of immovables, ownership is transferre
d in the order hereunder stated to
(a) the first registrant in good faith;
(b) the first in possession in good faith; and
(c) the buyer who presents the oldest title in good faith.
The second buyer must act in good faith in registering the deed. Thus, it
has been held that in cases of double sale of immovables, what finds relevance
and materiality is not whether or not the second buyer was a buyer in good faith
but whether or not said second buyer registers such second sale in good faith,
that is, without knowledge of any defect in the title of the property sold.
1998
SPOUSES RAET v. CA (September 1998)
Civil Law/ Sales/ Requisites for Perfection of Contract: There was no contract o
f sale perfected between the buyers and PVDHC. There was no meeting of the minds
as to the terms thereof, especially with respect to the price. Furthermore, Gat
us, the negotiator, was not an agent of PVDHC. Also, Art. 1874 of the NCC requir
es for the validity of a sale involving land that the agent should have an autho
rization in writing, which Gatus did not have. At the most, it is became only a
 proposal to sell. They did not go beyond the negotiation phase of the a contrac
t, which is the period from the time the prospective contracting parties indicat
e interest on the contract to the time the contract comes into existence the per
fection stage.

SUCCESSION
GENERAL PROVISIONS (774-782)
NUFABLE v. NUFABLE (July 1997)
For the purpose of transmission of rights, it does not matter when the wi
ll of the decedent was approved. When the subject property of their father was m
ortgaged, the other heirs had already acquired successional rights over said pro
perty. This is pursuant to the principle contained in Art 777 of the CC to the
effect that the rights to succession are transmitted from the moment of death of
the decedent.
As co-owner of the subject property, the right to sell, assign or mortgag
e is limited to that portion that may be allotted to the co-owner upon terminati
on of the co-ownership. Further, the other co-owners do not lose their share whe
n their shares were mortgaged by a co-owner without their consent. It has likew
ise been ruled that the mortgage of the inherited property is not binding agains
t co-heirs who never benefited. Moreover, in a case of foreclosure of property m
ortgaged by a co-owner, it affects only his share of the property. As regards th
e remaining pro-indiviso shares, the same was held in trust by the winning bidde
r for the parties rightfully entitled thereto.
RABADILLA v. CA (G.R. No. 113725. June 29, 2000)
Under Article 776 of the New Civil Code, inheritance includes all the pro
perty, rights and obligations of a person, not extinguished by his death. Confor
mably, whatever rights Rabadilla had by virtue of subject Codicil were transmitt
ed to his forced heirs, at the time of his death. And since obligations not exti
nguished by death also form part of the estate of the decedent; corollarily, the
obligations imposed by the Codicil on the deceased Rabadilla were likewise tran
smitted to his compulsory heirs upon his death.
In the said Codicil, testatrix X devised Lot 1 to Rabadilla, subject to t
he condition that the usufruct thereof would be delivered to the private respond
ent every year. Upon the death of Rabadilla, his compulsory heirs succeeded to h
is rights and title over the said property, and they also assumed his obligation
to deliver the fruits of the lot involved to private respondent. Such obligatio
n of the instituted heir reciprocally corresponds to the right of private respon
dent over the usufruct.
LEGITIMES (886-914)
VILLANUEVA-MIJARES v. CA (G.R. No. 108921. April 12, 2000)
A, son of X, died before the effectivity of New Civil Code of the Philipp
ines. Hence, the old Civil Code governs the distribution and disposition of his
intestate estate. Thereunder, the legitime of the children and descendants consi
sted of two-thirds (2/3) of the hereditary estate of the father and of the mothe
r (first paragraph, Article 808); and the widower or widow, as the case may be,
who, at the time of death of his or her spouse, was not divorced or if divorced,
due to the fault of the deceased spouse, was entitled to a portion in usufruct
equal to that which pertains as legitime to each of the legitimate children or d
escendants not bettered (Article 834, 1st paragraph.)
FRANCISCO v. FRANCISCO-ALFONSO (G.R. No. 138774. March 8, 2001.)
There was no cause or consideration for the sale, the same was a simulati
on and hence, null and void. Even if the kasulatan was not simulated, it still v
iolated the Civil Code provisions insofar as the transaction affected respondent
's legitime. The sale was executed in 1983, when the applicable law was the Civi
l Code, not the Family Code.
The legitime of legitimate children and descendants consists of one-half
of the hereditary estate of the father and of the mother. The latter may freely
dispose of the remaining half subject to the rights of illegitimate children and
of the surviving spouse as hereinafter provided. Respondent s compulsory heir can
not be deprived of her share in the estate save by disinheritance as prescribed
by law.
TESTAMENTARY SUCCESSION (783-837)
CODOY v. CALUGAY (August 1999)
In this petition, the petitioners ask whether the provisions of Art 811 o
f the CC are permissive or mandatory. The article provides, as a requirement for
the probate of a contested holographic will, that at least three witnesses expl
icitly declare that the signature in the will is the genuine signature of the te
stator.
We are convinced that it is mandatory, the word "shall" connotes a mandat
ory order. We have ruled that "shall" in a statute commonly denotes an imperativ
e obligation and is inconsistent with the idea of discretion and that the presum
ption is that the word "shall" when used in a statute is mandatory.
CONDITIONS AND TERMS (871-885)
RABADILLA v. CA (G.R. No. 113725. June 29, 2000)
Substitution is the designation by the testator of a person or persons to
take the place of the heir or heirs first instituted. Under substitutions in ge
neral, the testator may either (1) provide for the designation of another heir t
o whom the property shall pass in case the original heir should die before him/h
er, renounce the inheritance or be incapacitated to inherit, as in a simple subs
titution, or (2) leave his/her property to one person with the express charge th
at it be transmitted subsequently to another or others, as in a fideicommissary
substitution. The Codicil sued upon contemplates neither of the two.
In simple substitutions, the second heir takes the inheritance in default
of the first heir by reason of incapacity, predecease or renunciation. In the c
ase under consideration, the provisions of subject Codicil do not provide that s
hould Rabadilla default due to predecease, incapacity or renunciation, the testa
trix's near descendants would substitute him. What the Codicil provides is that,
should Rabadilla or his heirs not fulfill the conditions imposed in the Codicil
, the property referred to shall be seized and turned over to the testatrix's ne
ar descendants.
Neither is there a fideicommissary substitution here. In a fideicommissar
y substitution, the first heir is strictly mandated to preserve the property and
to transmit the same later to the second heir. In the case under consideration,
the instituted heir is in fact allowed under the Codicil to alienate the proper
ty provided the negotiation is with the near descendants or the sister of the te
statrix. Thus, a very important element of a fideicommissary substitution is lac
king; the obligation clearly imposing upon the first heir the preservation of th
e property and its transmission to the second heir. Without this obligation to p
reserve clearly imposed by the testator in his will, there is no fideicommissary
substitution. Also, the near descendants' right to inherit from the testatrix i
s not definite. The property will only pass to them should Rabadilla or his heir
s not fulfill the obligation to deliver part of the usufruct to private responde
nt.
Another important element of a fideicommissary substitution is also missi
ng here. Under Article 863, the second heir or the fideicommissary to whom the p
roperty is transmitted must not be beyond one degree from the first heir or the
fiduciary. A fideicommissary substitution is therefore, void if the first heir i
s not related by first degree to the second heir. In the case under scrutiny, th
e near descendants are not at all related to the instituted heir, Rabadilla.
Article 882 of the New Civil Code is the provision of law in point. The i
nstitution of an heir in the manner prescribed in Article 882 is what is known i
n the law of succession as an institucion sub modo or a modal institution. In a
modal institution, the testator states (1) the object of the institution, (2) th
e purpose or application of the property left by the testator, or (3) the charge
imposed by the testator upon the heir. A "mode" imposes an obligation upon the
heir or legatee but it does not affect the efficacy of his rights to the success
ion. On the other hand, in a conditional testamentary disposition, the condition
must happen or be fulfilled in order for the heir to be entitled to succeed the
testator. The condition suspends but does not obligate; and the mode obligates
but does not suspend. To some extent, it is similar to a resolutory condition.
Then too, since testamentary dispositions are generally acts of liberalit
y, an obligation imposed upon the heir should not be considered a condition unle
ss it clearly appears from the Will itself that such was the intention of the te
stator. In case of doubt, the institution should be considered as modal and not
conditional.
DEVICES AND LEGACIES (924-959)
MANUEL v. FERRER (247 SCRA 476)
When the law speaks of brothers and sisters, nephews and nieces as legal heirs o
f an illegitimate child, it refers to illegitimate brothers and sisters as well
as to the children, whether legitimate or illegitimate, of such brothers and sis
ters.

RIGHT OF REPRESENTATION (970-977)

SAYSON v. CA (205 SCRA 322. January 23, 1992 )
While it is true that an adopted child shall be deemed to be a legitimate
child and have the same right as the latter, these rights do not include the ri
ght of representation. The relationship created by the adoption is between only
the adopting parents and the adopted child and does not extend to the blood rela
tives of either party.
BAGUNU v. PIEDAD (G.R. No. 140975. December 8, 2000.)
The rule on proximity is a concept that favors the relatives nearest in d
egree to the decedent and excludes the more distant ones, except when and to the
extent that the right of representation can apply. In every inheritance, the re
lative nearest in degree excludes the more distant ones, saving the right of rep
resentation when it properly takes place. Relatives in the same degree shall inh
erit in equal shares, subject to the provisions of article 1006 with respect to
relatives of the full and half blood, and of article 987, paragraph 2, concernin
g division between the paternal and maternal lines.
By right of representation, a more distant blood relative of a decedent i
s, by operation of law, raised to the same place and degree of relationship as t
hat of a closer blood relative of the same decedent. The representative thereby
steps into the shoes of the person he represents and succeeds, not from the latt
er, but from the person to whose estate the person represented would have succee
ded.
In the direct line, right of representation is proper only in the descend
ing, never in the ascending, line. In the collateral line, the right of represen
tation may only take place in favor of the children of brothers or sisters of th
e decedent when such children survive with their uncles or aunts.
The right of representation does not apply to other collateral relatives
within the fifth civil degree who are sixth in order of preference following, fi
rstly, the legitimate children and descendants, secondly, the legitimate parents
and ascendants, thirdly, the illegitimate children and descendants, fourthly, t
he surviving spouse, and fifthly, the brothers and sisters/nephews and nieces, o
f the decedent. Among collateral relatives, except only in the case of nephews a
nd nieces of the decedent concurring with their uncles or aunts, the rule of pro
ximity is an absolute rule.
Among the other collateral relatives, i.e. the sixth in the line of succe
ssion, no preference or distinction shall be observed by reason of relationship
by the whole blood. In fine, a maternal aunt can inherit alongside a paternal u
ncle, and a first cousin of the full blood can inherit equally with a first cous
in of the half blood, but an uncle or an aunt, being a third-degree relative, ex
cludes the cousins of the decedent, being in the fourth-degree of relationship;
the latter, in turn, would have priority in succession to a fifth-degree relativ
e.
INTESTATE SUCCESSION (960-969, 978-1014)
ARMAS v. CALISTERIO (GR. No. 136467. April 6, 2000)
The successional right in intestacy of a surviving spouse over the net es
tate of the deceased, concurring with legitimate brothers and sisters or nephews
and nieces (the latter by right of representation), is one-half of the inherita
nce. The brothers and sisters or nephews and nieces, however, can only succeed b
y right of representation in the presence of unless and aunts; alone, upon the o
ther hand, nephews and nieces can succeed in their own right which is to say tha
t brothers and sisters exclude nephews and nieces except only in representation
by the latter of their parents who predecease or are incapacitated to succeed.

MALANG v. MOSON (G.R. No. 119064. August 22, 2000)

What law governs the succession to the estate of a Muslim who died after
the Muslim Code and family Code took effect? (1) It is the Muslim Code which sho
uld determine the identification of the heirs in the order of intestate successi
on and the respective shares of the heirs. (2) The status and capacity to succee
d on the part of the individual parties who entered into each and every marriage
ceremony will depend upon the law in force at the time of the performance of th
e marriage rite. (3) Status and capacity of the children will depend upon the la
w in force at the time of conception or birth of the child. (4) Provisions on le
gal succession in the Muslim Code will apply. Sharers to an inheritance include:
the husband and wife, the parents, grandparents, descendants, full-blood brothe
rs and sisters, consanguine brothers and sisters (half-bro/sis by father s side),
and the uterine brothers and sisters (half-bro/sis by mother s side).
COLLATION (907-911, 1061-1077)
SANCHEZ v. CA (September 1997)
The deeds of sale were not gratuitous transfers of future inheritance. Th
ey were contracts of sale perfected by decedents during their lifetime. Hence th
e properties conveyed thereby are not collationable because, essentially, Art. 1
601 of the CC contemplates properties conveyed inter vivos by the decedent to an
heir by way of donation or other gratuitous title.
IMPERIAL v. CA (316 SCRA 393. October 8, 1999)
A claim for legitime does not amount to a claim of title. What is brought
to collation is not the donated property itself but the value of the property a
t the time it was donated. Donation is a real alienation which conveys ownership
upon its acceptance. Hence, any increase in value or deterioration or loss is f
or the account of the heir/donee.
Ordinary rules of prescription because the reduction of donations which h
inges upon the allegation of impairment of legitime are not controlled by a part
icular prescriptive period. For actions upon an obligation created by law, ten (
10) years from the time the right of action accrues is the ordinary prescriptive
period. In this case, the cause of action accrues upon the death of the donor-d
ecedent, for only then may the net estate and legitimes be ascertained.
 The rules of succession require that, in determining legitimes, the follo
wing steps must be taken: (1) the net estate of the decedent be ascertained by d
educting all payable obligations and charges from the value of the property owne
d by the deceased at the time of his death; (2) the value of all donations subje
ct to collation would be added to it (and not the property donated). Where colla
table property is an immovable, what may be received is: (1) the equivalent, as
much as possible, in property of the same nature, class and quality; (2) if prac
ticable, equivalent value of the impaired legitime in cash or marketable securit
ies; (3) in the absence of cash or securities in the estate, so much of such oth
er property as may be necessary to be sold in public auction.
NAZARENO v. CA (343 SCRA 637. October 18, 2000).
The estate of a deceased person is a juridical entity that has a personal
ity of its own. Though Romeo represented at one time the estate of Maximo, Sr.,
the latter has a separate and distinct personality from the former. Hence, the j
udgment in case no. 123 regarding the ownership of Maximo, Jr. over Lot A binds
Romeo only, and not the estate of Maximo, Sr., which also has a right to recove
r properties which were wrongfully disposed.
It cannot be denied that Maximo, Sr. intended to give the six Quezon City
lots to X. As Romeo testified, their parents executed the Deed of Sale in favor
of X because the latter was the only female and the only unmarried member of the
family. She was thus entrusted with the real properties in behalf of her sibling
s. As she herself admitted, she intended to convey lots b and c to Y in the even
t the latter returned from abroad. There was thus an implied trust constituted i
n her favor. Art 1449 of the CC states: there is also an implied trust when a do
nation is made to a person but it appears that although the legal estate is tran
smitted to the donee, he nevertheless is either to have no beneficial interest o
r only a part thereof. There being an implied trust, the lots in question are th
erefore subject to collation in accordance with Art. 1061 which staes: Every com
pulsory heir who succeeds with other compulsory heirs, must bring into the mass
of the estate any property or right which he nay have received from the decedent
, during the lifetime of the latter, by way of donation, or any other gratuitous
title, in order that it may be computed in the determination of the legitime of
each heir, and in the account of the partition.
ALLOWANCE OF WILLS (838-839, 809)
SAN PEDRO v. CA (G.R. No. 106496. December 18, 1996)
Petitioners-heirs contend that the lower court had no jurisdiction as an
intestate/probate court to resolve the question of title over the subject proper
ty. Public respondent argues that when the Republic questioned the existence of
the estate of San Pedro, the lower court became duty-bound to rule on the genui
neness and validity of the title which purportedly covers the said estate.
A probate court's jurisdiction is not limited to the determination of who
the heirs are and what shares are due them as regards the decedent's estate. N
either is it confirmed to the issue of the validity of wills. We held in Manigat
v. Castillo (75 Phil. 532) that the main function of a probate court is to sett
le and liquidate the estates of deceased persons either summarily or through the
process of administration. This function necessarily includes the examination
of the properties of the deceased so as to rule on whether or not the inventory
of the estate properly included them for purposes of distribution. Thus in Trin
idad v. CA (202 SCRA 106) we held that questions of title to any property appare
ntly still belonging to the estate of the deceased may be passed upon in probate
with the consent of all parties, without prejudice to third persons. Questions
of title pertaining to the determination prima facie of whether certain properti
es ought to be included or excluded from inventory and accounting may be resolve
d by the probate court. (Garcia v. Garcia, 67 Phil. 353)
REYES v. CA (October 1997)
As a general rule, probate courts are limited to pass only upon the extri
nsic validity of the will sought to be probated. Thus the court merely inquires
on its due execution, whether or not it complies with the formalities prescribed
by law, and the testamentary capacity of the testator. It does not determine n
or even by implication prejudge the validity or efficacy of the will's provision
s. However, where the parties agree that the intrinsic validity be first determi
ned, the probate court may do so. The rule on probate is not inflexible and abs
olute. Under exceptional circumstances, the probate court is not powerless to d
o what the situation constrains it to do and pass upon certain provisions of the
will.
In the probate proceeding here, the only issues were whether the testator
had animus testandi; whether vices of consent attended the execution of the wil
l; and whether formalities of the will had been complied with. Thus, the lower
court was not asked to rule upon the intrinsic validity or efficacy of the will
's provisions. As a result, the declaration of the testator that X was his wife
did not have to be scrutinized during probate. The propriety of the institutio
n of X as one of the devisees/legatees already involved the will's intrinsic val
idity which did not have to be inquired into by the probate court.
The probate court erroneously invoked Nepomuceno v. CA (139 SCRA 206), wh
ere the testator himself acknowledged his illicit relationship with the devisee.
Thus the very tenor of the will invalidated the legacy as the testator admitted
he was disposing of the properties to a person with whom he had been living in
concubinage. To remand the case would only be a waste of time and money since th
e illegality or defect was already patent. But here, the testator merely stated
in his will that he was bequeathing some of his properties to his wife X. There
was never an open admission of any illicit relationship, unlike in Nepomuceno.
REYES v. REYES (G.R. No. 139587. November 22, 2000.)
The jurisdiction of the probate court merely relates to matters having to
do with the settlement of the estate and the probate of wills of deceased perso
ns, and the appointment and removal of administrators, executors, guardians and
trustees. The question of ownership is as a rule, an extraneous matter which the
probate court cannot resolve with finality. Thus, for the purpose of determinin
g whether a certain property should or should not be included in the inventory o
f estate proceeding, the probate court may pass upon the title thereto, but such
determination is provisional, not conclusive, and is subject to the final decis
ion in a separate action to resolve title.
The probate court exercises but limited jurisdiction, thus it has no powe
r to take cognizance of and determine the issue of title to property claimed by
a third person adversely to the decedent, unless the claimant and all other part
ies having legal interest in the property consent, expressly or impliedly, to th
e submission of the question to the probate court for adjudgment, or the interes
ts of third persons are not thereby prejudiced.
LLORENTE v. CA (G.R. No. 124371. November 23, 2000 )
Article 17 of the CC provides: the forms and solemnities of contracts, wi
lls, and other public instruments shall be governed by the laws of the country i
n which they are executed. When the acts referred to are executed before the dip
lomatic or consular officials of the Republic of the Philippines in a foreign co
untry, the solemnities established by Philippine laws shall be observed in their
execution.
The clear intent of testator X to bequeath his property to his second wif
e and children by her is glaringly shown in the will he executed. We do not wish
to frustrate his wishes, since he was a foreigner, not covered by our laws on fa
mily rights and duties, status, condition and legal capacity.
Whether the will is intrinsically valid and who shall inherit from X are
issues best proved by foreign law which must be pleaded and proved. Whether the
will was executed in accordance with the formalities required is answered by ref
erring to Philippine law. In fact, the will was duly probated. As a guide, howev
er, the trial court should note that whatever public policy or good customs may
be involved in our system of legitimes, Congress did not intend to extend the sa
me to the succession of foreign nationals. Congress specifically left the amount
of successional rights to the decedent s national law.
EXECUTORS AND ADMINISTRATORS (1058-1060)
CIR v. CA (G.R. No. 123206. March 22, 2000.)
Administration expenses, as an allowable deduction from the gross estate
of the decedent for purposes of arriving at the value of the net estate, have be
en construed by the federal and state courts of the United States to include all
expenses essential to the collection of the assets, payment of debts or the dist
ribution of the property to the persons entitled to it. Expenditures incurred fo
r the individual benefit of the heirs, devisees or legatees are not deductible.

ALIPIO v. CA (G.R. No. 134100. September 29, 2000.)

After the death of either of the spouses, no complaint for the collection
of indebtedness chargeable against the conjugal partnership can be brought agai
nst the surviving spouse. Instead, the claim must be made in the proceedings for
the liquidation and settlement of the conjugal property. The reason for this is
that upon the death of one spouse, the powers of administration of the survivin
g spouse ceases and is passed to the administrator appointed by the court having
jurisdiction over the settlement of estate proceedings. Indeed, the surviving s
pouse is not even a de facto administrator such that conveyances made by him of
any property belonging to the partnership prior to the liquidation of the mass o
f conjugal partnership property is void.
PARTITION (1078-1105)
SALVATIERRA v. CA (G.R. No. 107797. August 26, 1996)
The law is clear that where there are two or more heirs, the whole estate
of the decedent is, before partition, owned in common by such heirs. Hence, the
effect of the alienation or the mortgage, with respect to the co-owners, shall
be limited to the portion that may be allotted to him in the division upon termi
nation of the co-ownership.
MAGLUCOT_AW v. MAGLUCOT (G.R. No. 132518. March 28, 2000.)
In this jurisdiction, an action for partition is comprised of two phases:
first, an order for partition which determines whether a co-ownership in fact e
xists, and whether partition is proper; and, second, a decision confirming the s
ketch or subdivision submitted by the parties or the commissioners appointed by
the court, as the case may be.
The first phase of the partition and/or accounting suit is taken up with
the determination of whether or not a co-ownership in fact exists (i.e., not oth
erwise legally proscribed) and may be made by voluntarily agreement of all the p
arties interested in the property. This phase may end with a declaration that pl
aintiff is not entitled to have a partition either because a co-ownership does n
ot exist, or partition is legally prohibited. It may end, upon the other hand, w
ith an adjudgement that a co-ownership does in truth exist, partition is proper
in the premises and an accounting of rents and profits received by the defendant
from the real estate in question is in order. In the latter case, the parties m
ay make partition among themselves by proper instruments of conveyance, and the
court shall confirm the partition so agreed upon.
The second phase commences when it appears that the parties are unable to
agree upon the partition directed by the court. In that event, partition shall be
done for the parties by the court with the assistance of not more than three (3
) commissioners.
The present rule on the question of finality and appealability of a decis
ion or order decreeing partition is that it is final and appealable.
Parties to a partition proceeding, who elected to take under partition, a
nd who took possession of the portion allotted to them, are estopped to question
 title to portion allotted to another party. A person cannot claim both under an
d against the same instrument. Regardless of whether a parol partition or agreem
ent to partition is valid and enforceable at law, equity will in proper cases, w
here the parol partition has actually been consummated by the taking of possessi
on in severalty and the exercise of ownership by the parties of the respective p
ortions set off to each, recognize and enforce such parol partition and the righ
ts of the parties thereunder.
AVELINO v. CA (G.R. No. 115181 March 31, 2000)
Petitioner submits that no partition of the estate is possible in the ins
tant case as no determination has yet been made of the character and extent of t
he decedent s estate. A complete inventory of the estate may be done during the pa
rtition proceedings, especially since the estate has no debts. Hence the CA comm
itted no reversible error in converting petitioner s action for letters of adminis
tration into an action for judicial partition. Where the more expeditious remedy
of partition is available to the heirs, then the heirs or the majority of them
may not be compelled to submit to administration proceedings.
SPOUSES ZARAGOZA v. CA (G.R. No. 106401. September 29, 2000)
Was the partition done during the lifetime of X valid? It is basic in the
law of succession that a partition inter vivos may be done for as long as legit
imes are not prejudiced. Article 1080 of the CC is clear on this. The legitime o
f compulsory heirs is determined after collation, as provide for in Article 1061
.
Every compulsory heir, who succeeds with other compulsory heirs, must bri
ng into the mass of the estate any property or right which he may have received
from the decedent, during the lifetime of the latter, by way of donation, or any
other gratuitous title in order that it may be computed in the determination of
the legitime of each heir, and in the account of the partition.
Unfortunately, collation cannot be done in this case where the original p
etition for delivery of inheritance share only impleaded one of the other compul
sory heirs. The petition must be dismissed without prejudice to the institution
of a new proceeding where all the indispensable parties are present for the righ
tful determination of their respective legitime and if the legitimes were prejud
iced by the partitioning inter vivos.

PROPERTY
KINDS
LIGHT RAIL TRANSIT AUTHORITY v. CENTRAL BOARD OF ASSESSMENT APPEALS
(G.R. No. 127316. October 12, 2000)
LRT s subject carriageways and stations may be considered real property und
er Article 415 of the Civil Code. However, it resolutely argues that the same ar
e improvements, not of its properties, but of the government-owned national road
s to which they are immovably attached. They are thus not taxable as improvement
s under the Real Property Tax Code. In essence, it contends that to impose a tax
on the carriageways and terminal stations would be to impose taxes on public ro
ads.
The New Civil Code divides the properties into property for public and pa
trimonial property (Art. 423), and further enumerates the property for public us
e as provincial road, city streets, municipal streets, squares, fountains, publi
c waters, public works for public service paid for by said [provinces], cities o
r municipalities; all other property is patrimonial without prejudice to provisi
ons of special laws. (Art. 424)
The character of petitioner's property, be it an improvements as otherwis
e distinguished by petitioner, needs no further classification when the law alre
ady classified it as patrimonial property that can be subject to tax. This is in
line with the old ruling that if the public works is not for such free public s
ervice, it is not within the purview of the first paragraph of Art. 424 if the N
ew Civil Code.
EASEMENTS
FLORE v. LLENADO (June 1995)
Requisites under Arts. 649 & 650: (1) Burden to prove existence of requis
ites lies on owner of dominant estate; (2) Mere convenience of dominant estate i
s not what is required by law as basis to set up a compulsory easement.
QUIMEN v. CA (May 1996 )
That where the way is shortest and will cause least prejudice shall be ch
osen. However, if the two circumstances do not concur in a single tenement, the
way where damage will be least shall be used even if not the shortest route. Th
is is so because least prejudice over shortest distance. This means that the co
urt is not bound to establish what is the shortest distance; a longer way may be
adopted to avoid injury to the servient estate, such as when there are construc
tions or walls which can be avoided by a round about way, or to secure the inter
est of the dominant owner, such as when the shortest distance would place the wa
y on a dangerous decline.
The conditions sine qua non for a valid grant of an easement of right of
way are: (a) the dominant estate is surrounded by other immovable without an ad
equate outlet to a public highway; (b) the dominant estate is willing to pay th
e proper indemnity; (c) the isolation was not due to the acts of the dominant e
state; and, (d) the right of way being claimed is at a point least prejudicial t
o the servient estate.
The criterion of least prejudice to the servient estate must prevail over
the criterion of shortest distance although this is a matter of judicial apprec
iation. While shortest distance may ordinarily imply least prejudice, it is not
always so as when there are permanent structures obstructing the shortest dista
nce; while on the other hand, the longest distance may be free of obstructions a
nd the easiest or most convenient to pass through. In other words, where the ea
sement may be established on any of several tenements surrounding the dominant e
state, the one where the way is shortest and will cause the least damage should
be chosen. However if these two (2) circumstances do not concur in a single ten
ement, the way which will cause the least damage should be used, even if it will
not be the shortest. This is the test. As between a right of way that would de
molish a store of strong materials to provide egress to a public highway, and an
other right of way which although longer will only require an avocado tree to be
cut down, the second alternative should be preferred.
LA VISTA ASSOCIATION, INC. v. CA, SOLID HOMES, INC. (September 1997)
Is there an easement of right-of-way over Mangyan Road (La Vista, Q.C.):
From the facts here, it is apparent that the parties and their respective predec
essors-in-interest intended to establish an easement of right-of-way over Mangya
n Road for their mutual benefit, both as dominant and servient estates, and like
any other contract, the same may only be extinguished by mutual agreement or re
nunciation of the owner of the dominant estate.
When the court says an easement exists, it is not creating one. For, eve
n an injunction cannot be used to create one as there is no such thing as a judi
cial easement. As here, a court merely declares the existence of an easement cr
eated by the parties. Petitioner's argument that there are other routes to Loyo
la from Mangyan Road is likewise meritless. The opening of an adequate outlet t
o a highway can extinguish only legal or compulsory easements, not voluntary eas
ements such as here. The fact that an easement by grant may have also qualified
as an easement of necessity does not detract from its permanency as a property
right, which survives the termination of the necessity.
When the easement here was established by contract, the parties unequivoc
ally made provisions for its observance by all who in the future might succeed t
hem in dominion.
ALMENDRAS v. CA (August 1998)
For petitioner to be able to demand a right of way through the neighborin
g estates, the owners of all surrounding estates should be heard with respect to
two matters: (1) at which point establishment of the easement would be least pr
ejudicial to the owners of the servient estates and (2) at which point the dista
nce of the right of way to the public highway would be shortest. However, as hel
d in the case of Quimen v. CA, (I)f these two (2) circumstances do not concur in
a single tenement, the way which will cause the least damage should be used, eve
n if it will not be the shortest. To be able to determine this fact, in the case
at bar, all the surrounding property owners should be heard, precisely the reaso
n why the case is to be remanded.
VILLANUEVA v. VELASCO
(G.R. No. 130845. November 27, 2000)
The easement in the instant petition is both (1) an easement by grant or
a voluntary easement, and (2) an easement by necessity or a legal easement. A le
gal easement is one mandated by law, constituted for public use or for private i
nterest, and becomes a continuing property right. As a compulsory easement, it i
s inseparable from the estate to which it belongs, as provided for in said Artic
le 617 of the Civil Code. The essential requisites for an easement to be compuls
ory are: (1) the dominant estate is surrounded by other immovables and has no ad
equate outlet to a public highway; (2) proper indemnity has been paid; (3) the i
solation was not due to acts of the proprietor of the dominant estate; (4) the r
ight of way claimed is at a point least prejudicial to the servient estate; and
(5) to the extent consistent with the foregoing rule, where the distance from th
e dominant estate to a public highway may be the shortest.
The small house occupying one meter of the two-meter wide easement obstru
cts the entry of private respondents' cement mixer and motor vehicle. One meter
is insufficient for the needs of private respondents. It is well-settled that th
e needs of the dominant estate determine the width of the easement. Conformably
then, petitioner ought to demolish whatever edifice obstructs the easement in vi
ew of the needs of private respondents' estate.
POSSESSION
BARANGAY SAN ROQUE v. HEIRS OF PASTOR (G.R. No. 138896, June 20, 2000.)
We are not persuaded by respondents' argument that the present action inv
olves the title to or possession of a parcel of land. To emphasize, the question
in the present suit is whether the government may expropriate private property
under the given set of circumstances. The government does not dispute respondent
s' title to or possession of the same. Indeed, it is not a question of who has a
better title or right, for the government does not even claim that it has a tit
le to the property. It merely asserts its inherent sovereign power to "appropria
te and control individual property for the public benefit, as the public necessi
ty, convenience or welfare may demand.
SPOUSES ARENAS v. CA ( G.R. No. 126640. November 23, 2000)
In an unlawful detainer case, the issue is the right to physical possessi
on of the premises or possession de facto.
OWNERSHIP
ACAP v. CA (G.R. No. 118114, Dec. 7, 1995)
[A]n asserted right or claim to ownership or a real right over a thing arising f
rom a juridical act is not per se sufficient to give rise to ownership over the
res. That right or title must be completed by fulfilling certain conditions imp
osed by law. Hence, ownership and real rights are acquired only pursuant to a le
gal mode or process. While title is the juridical justification, mode is the act
ual process of acquisition or transfer of ownership over a thing in question.
Under Art. 712, the modes of acquiring ownership are generally classified
 into 2 classes: original (occupation, acquisitive prescription, law or intelle
ctual creation) and derivative (succession mortis causa, tradition as a result o
f certain contracts, e.g., sale, barter, donation, assignment or mutuum).
Hence, there is a marked difference between a sale and waiver of heredita
ry rights. The former presumes the existence of a contract or deed of sale betw
een the parties. The latter, technically speaking, is a mode of extinction of o
wnership ... in favor of other persons who are co-heirs in the succession. Priv
ate respondent, being a stranger to the succession of the decedent, cannot concl
usively claim ownership over the subject lot on the sole basis of the waiver doc
ument which neither recites the elements of either a sale, or a donation, or any
other derivative mode of acquiring ownership.
VDA. DE ESCONDE v. CA (February 1996)
The rule that a trustee cannot acquire by prescription ownership over property e
ntrusted to him until and unless he repudiates the trust applies to express trus
ts and resulting implied trusts. (citations omitted) However, in constructive i
mplied trusts, prescription may supervene even if the trustee does not repudiate
the relationship.
REPUBLIC v. DOLDOL (September 1998)
The decision of the CA was reversed for the reason that Doldol did not ac
quire imperfect title to the property since he did not occupy the lot before Jun
e 12, 1945, which is the requirement of PD 1073, amending RA 1942. (RA 1942 prov
ided for a simple 30-year prescriptive period of occupation by an applicant for
judicial confirmation of imperfect title.)
In Republic v. CA, it was stated that the Public Land Act (CA 141) requir
es that the applicant must prove (a) that the land is alienable public land and
(b) that his open, continuous, exclusive and notorious possession and occupation
of the same must either be since time immemorial or for the period prescribed i
n the Public Land Act. CA 141, however, has been superseded by RA 1942, which in
turn has been amended by PD 1073.
Not having complied with all the conditions set by law, Doldol cannot be
said to have acquired a right to the land in question as to segregate the same f
rom the public domain. Oral partition of property valid where evidence supports
the same; Written proof of oral partition not required in Art. 1403; A TCT merel
y evidences and is not constitutive title; Proof needed for damages
SPOUSES REYES v. DE LA PAZ (September 1998)
Petitioners contend ownership of a parcel of land characterized as forest
land, through prescription, as their ancestors were issued a homestead patent an
d also had possession thereof.
This contention was rejected by the SC which ruled that a homestead paten
t issued on a property which at the time of issuance was part of public domain i
s void. No prescription runs against the government. Moreover, a subsequent rele
ase of the land as alienable does not cure such defect.
Under the Regalian doctrine, all lands of the public domain belong to the
State. Hence, the burden of proof in overcoming the presumption of State owners
hip of lands of the public domain is on the person applying for registration. Pe
titioners failed to do so.
GARCIA v. CA (August 1999)
Ownership and Possession are 2 distinct legal concepts. Ownership exists
when a thing pertaining to 1 person is completely subjected to his will in a ma
nner not prohibited by law and is consistent with the rights of others. Possessi
on is the holding of the thing or enjoyment of a right. Literally, to posses mea
ns to actually and physically occupy a thing with or without right. Possession m
ay be had in 2 ways: in the concept of an owner or in the concept of a holder.
A possessor in the concept of an owner may be the owner himself or one who claim
s to be so. On the other hand, one who possesses as a mere holder acknowledges o
n another a superior right which he believes to be ownership, whether his belief
 be right or wrong. More so, possession by another through the owner s tolerance d
oes not affect the owner s right to transfer ownership of the property.
PISUENA v. HEIRS OF UNATING (August 1999)
Petitioner at bar claims full ownership of the subject lot which he asser
ted to be the paraphernal property of the mother of the vendors as against repso
ndent s contention that said lot was conjugal so that the vendors could have only
sold of the said land. Properties acquired during the marriage are presumed conj
ugal. However, this prima facie presumption cannot prevail over the cadastral co
urt s specific finding, reached in adversarial proceedings, that the lot was inher
ited by the vendee from her mother.
The 1980 reconstitution of the title in the name of Petra Unating, marrie
d to Aquilino Argamaso was notice to the whole world, including her heirs and su
ccessors-in-interest, that it belonged to Petra as paraphernal property. The wor
ds married to were merely descriptive of Petra s status at the time the it was award
ed and registered in her name.
CRUZ vs. SEC. OF ENVIRONMENT AND NATURAL RESOURCES
(G.R. No. 135385. December 6, 2000)
Although highly bent on communal ownership, customary law on land also sa
nctions individual ownership. The residential lots and terrace rice farms are go
verned by a limited system of individual ownership. It is limited because while
the individual owner has the right to use and dispose of the property, he does n
ot possess all the rights of an exclusive and full owner as defined under our Ci
vil Code. Under Kalinga customary law, the alienation of individually-owned land
is strongly discouraged except in marriage and succession and except to meet su
dden financial needs due to sickness, death in the family, or loss of crops. Mor
eover, land to be alienated should first be offered to a clan-member before any
village-member can purchase it, and in no case may land be sold to a non-member.
Land titles do not exist in the indigenous peoples' economic and social
system. The concept of individual land ownership under the civil law is alien to
them. Inherently colonial in origin, our national land laws and governmental po
licies frown upon indigenous claims to ancestral lands. Communal ownership is lo
oked upon as inferior, if not inexistent.
CO-OWNERSHIP
MERCADO v. CA (1995)
A co-owner can only alienate his pro-indiviso share in the co-owned property, th
us, 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 consen
t
IMPERIAL v. CA (July 1996)
Where an heir who owns one-half undivided share of the area of two lots sell one
of the lots without giving to his co-heir the latter's share of the proceeds, m
ay the latter lay exclusive claim to the remaining lot as his own?
Inasmuch as the terms of the agreement between Adela and Melanio provide
for one-half undivided share for petitioner over Lots 1091 and 1052, and petitio
ner in effect waived his rights over one-half of the remaining Lot 1091 when he
sold and appropriated solely as his own the entire proceeds from the sale of Lot
1052, law (Art. 485, 2nd par., NCC presumes equal portions unless the contrary
is proved) and equity dictate that Lot 1091 should now belong to the estate of t
he late Adela. (1091 is bigger than 1052 by 3 sq. meters, a difference not signi
ficant enough to compel an exact division between opposing claimants.)
CATAPUSAN v. CA (G.R. No. 109262, November 1996 )
In actions for partition, the court cannot properly issue an order to divide the
property, unless it first makes a determination as to the existence of co-owner
ship. The court must initially settle the issue of ownership, the first stage i
n an action for partition. (De Mesa v. CA, 231 SCRA 773) An action for partiti
on will not lie if the claimant has no rightful interest over the property. In
fact, 1, Rule 69 requires the party filing the action to state in his complaint t
he nature and extent of his title. Until the issue of ownership is definitely r
esolved, it would be premature to effect a partition of the properties. (Fabrica
v. CA, 146 SCRA 250)
ACCRETION
VDA. DE NAZARENO v. CA (June 1996)
Accretion, as a mode of acquiring property requires the concurrence of th
ese requisites: (a) that the deposition of soil or sediment be gradual and imper
ceptible; (2) that it be the result of the action of the waters of the river (or
sea); and (3) that the land where accretion takes place is adjacent to the bank
s of rivers (or the sea coast). These are called the rules on alluvion which if
present in a case, give to the owners of lands adjoining the banks of rivers or
streams any accretion gradually received from the effects of the current of wat
ers.
Petitioners admit that the accretion was formed by the dumping of boulder
s, soil and other filling materials on portions of the Balacanas Creek and the C
agayan River bounding their land. It cannot be claimed, therefore, that the acc
umulation of such boulders was gradual and imperceptible, resulting from the act
ion of the waters or the current. The word "current" indicates the participation
of the body of water in the ebb and flow of waters due to high and low tide.
The accretion in question was man-made or artificial. Alluvion must be th
e exclusive work of nature; If man-made accretion, it is part of the public doma
in.
BAGAIPO v. CA (G.R. No. 116290. December 8, 2000)
The rule is well-settled that accretion benefits a riparian owner when th
e following requisites are present: 1) That the deposit be gradual and impercept
ible; 2) That it resulted from the effects of the current of the water; and 3) T
hat the land where accretion takes place is adjacent to the bank of the river. I
n the absence of evidence that the change in the course of the river was sudden
or that it occurred through avulsion, the presumption is that the change was gra
dual and was caused by alluvium and erosion.
BUILDER IN GOOD FAITH
PECSON v. CA (May 1995)
Art. 448 does not apply to a case where the owner of the land is the builder, so
wer, or planter, who then later loses ownership of the land by sale or donation.
But the provisions of Art. 448 on indemnity may be applied by analogy to a cas
e where one loses ownership of the land on which he earlier built an apartment.

PLEASANTVILLE v. CA (February 1996)

Is a lot buyer who constructs improvements on the wrong property erroneously del
ivered by the owner's agent, a builder in good faith: Good faith consists in the
belief of the builder that the land he is building on is his and his ignorance
of any defect or flaw in his title.
GEMINIANO v. CA (July 1996)
While the right to let property is an incident of title and possession, a person
may be a lessor and occupy the position of a landlord to the tenant although he
is not the owner of the premises let. After all, ownership of the property is
not being transferred, only temporary use and enjoyment thereof.
Art. 448, in relation to Art. 546, which allows full reimbursement of use
ful improvements and retention of the premises until reimbursement is made, appl
ies only to a possessor in good faith, i.e., one who builds on land with the bel
ief that he is the owner thereof. It does not apply where one's only interest i
s that of a lessee under a rental contract; otherwise, it would always be in th
e power of the tenant to "improve" his landlord out of his property.
It must be stressed, however, that the right to indemnity under Art. 1678
arises only if the lessor opts to appropriate the improvements. Since petition
ers refused to exercise that option, private respondents cannot compel them to r
eimburse the onehalf value of the house and improvements. Neither can they retai
n the premises until reimbursement is made. The private respondents' sole right
then is to remove the improvements without causing any more impairment upon the
property leased than is necessary.
SPOUSES BENITEZ v. CA & SPOUSES MACAPAGAL (G.R. No. 104828, Jan. 16, 1997)
The jurisdictional requirements for ejectment, as borne out by the facts, are: a
fter conducting a relocation survey, private respondents discovered that a porti
on of their land was encroached by petitioners' house; notices to vacate were se
nt to petitioners, the last one being dated 26 Oct. 1989; and private responden
ts sued for ejectment within 1 year from last demand.
Private respondents' cause of action springs from Rule 70, 1 xxx That peti
tioners occupied the land prior to private respondents' purchase thereof does no
t negate the latter's case for ejectment. Prior possession is not always a cond
ition sine qua non in ejectment. This is one distinction between forcible entry
and unlawful detainer. In the former, the plaintiff is deprived of physical pos
session through FISTS, thus, he must allege and prove prior possession. In the
latter, the defendant unlawfully withholds possession after the expiration or te
rmination of his right thereto under any contract, express or implied. In such
a case, prior physical possession is not required.
Possession can also be acquired, not only by material occupation, but als
o by the fact that a thing is subject to the action of one's will or by the prop
er acts and legal formalities established for acquiring such right. (citation om
itted) Possession of land can be acquired upon the execution of the deed of sal
e by the vendor. Actual or physical occupation is not always necessary.
DONATIONS
CENTRAL PHILIPPINE UNIVERSITY v. CA (246 SCRA 511)
When time within which the condition should be fulfilled depends upon the exclus
ive will of the donee, its absolute acceptance and acknowledgment of its obligat
ion are sufficient to prevent the statute of limitations from barring the action
for annulment of the donation.
Davide, dissent: What is a modal donation? The word "conditions" is used diffe
rently under the law on contracts and the law on donations.
SPOUSES EDUARTE v. CA (February 1996)
Falsification of the Deed of Donation is a valid ground for revocation under Art
. 765 (1): Offense Against Donor. Tolentino writes that this includes "[a]ll c
rimes which offend the donor show ingratitude and are causes for revocation."
One such instance is where the certificate of title was already transferr
ed from the name of the true owner to the forger, and while it remained that way
, the land was subsequently sold to an innocent purchaser. For then, the vendee
had the right to rely upon what appeared in the certificate.
Bring an action for damages against those who caused the fraud, or if the
y are insolvent, an action against the Treasurer of the Philippines for recovery
of damages against the Assurance Fund. (PNB v. CA, 187 SCRA 735 [1990])
CITY OF ANGELES v. CA & TIMOG SILANGAN DEVT. CORP.
(G.R. No. 97882, Aug. 28, 1996)
The language of 31, P.D. 957, as amended by2, P.D. 1216, is not precise, but it ca
n be easily inferred that the phrase "gross area" refers to the entire subd
 f open spaces, P.D. 1216 itself requires that the ope
n space devoted to parks are non-alienable public land and non-buildable. Howev
er, there is no prohibition in either P.D. 957 or P.D. 1216 against imposing con
ditions on such donation (in this case, devoting the land to building a sports c
omplex, not a drug rehab center). Any condition may be imposed, so long as it is
not contrary to law, etc. Petitioners' contention that the donation should be
unconditional because it is mandatory has no basis. To rule otherwise would be
to unlawfully expand the provisions of the decree.
QUIJADA v. CA (May 2000)
It has been ruled that when a person donates land to another on the condition th
at the latter would build upon the land of a school, the condition imposed is no
t a condition precedent or a suspensive condition but a resolutory one. So long
as the resolutory condition subsists and is capable of fulfillment the donation
remains efffective and the donee continues to be the owner subject only to the
rights of the donor or his successors-in-interest under the deed of donation.
Since no period was imposed by the donor on when must the donee comply wi
th the condition within a reasonable period. Such period, however, became irrel
evant herein when the donee- Municipality manifested through a resolution that i
t cannot comply with the condition of building a school and the same was made kn
own to the donor. Only then - when the non-fulfillment of the resolutory condit
ion was brought to the donor's knowledge - that ownership of the donated propert
y reverted to the donor as provided in the automatic reversion clause of the dee
d of donation.
During the time that ownership of the land has not reverted to her the do
nor has an inchoate interest in the donated property. Such inchoate interest may
be the subject of contracts including a contract of sale. In this case, howeve
r, what the donor sold was the land itself which she no longer owns. It would h
ave been different if the donor-seller sold her interests over the property unde
r the deed of donation which is subject to the possibility of reversion of owner
ship arising from the non-fulfillment of the resolutory condition.
SPS. GESTOPA v. CA (G.R. No. 111904. October 5, 2000)
In ascertaining the intention of the donor, all of the deed's provisions must be
read together. An acceptance clause is a mark that the donation is inter vivos.
Acceptance is a requirement for donations inter vivos. Donations mortis causa,
being in the form of a will, are not required to be accepted by the donees durin
g the donors' lifetime.
A limitation on the right to sell during the donors' lifetime implied tha
t ownership had passed to the donees and donation was already effective during t
he donors' lifetime. The attending circumstances in the execution of the subject
donation also demonstrated the real intent of the donor to transfer the ownersh
ip over the subject properties upon its execution.
A valid donation, once accepted, becomes irrevocable, except on account o
f officiousness, failure by the donee to comply with the charges imposed in the
donation, or ingratitude. The donor-spouses did not invoke any of these reasons
in the deed of revocation.
PARTITION
TAN v. LIM (September 1998)
It is ruled that there was already partition of the subject property. An oral pa
rtition is valid when evidence supports the same. In the case at bar, the fact t
hat the heirs of Victoriano alone leased to petitioner Tan exactly of the dispu
ted property point to the fact that that they exercised the right of ownership o
ver the said portion to the exclusion of the heirs of Joaquin, considering that
the lease agreement was executed without the consent of the latter. Such act of
leasing the property is an act of strict ownership. Moreover, although there was
no note or memorandum or any deed of partition offered in evidence, such partit
ion is valid. A contract is obligatory in whatever form they may have been enter
ed into provided all essential requisites are present. Written proof of oral par
tition is not required under Art. 1403 of the NCC. In addition to that, neither
a transfer certificate of title nor a subdivision plan is essential for its vali
dity. A transfer certificate of title merely evidences and is not constitutive o
f title. Such certificate can t confer title where no title had been vested by som
e of the means provided by law. A transfer certificate of title is not one of th
e means of acquiring ownership of the property.
QUIETING OF TITLE
VDA. DE AVILES v. CA (G.R. No. 95748, November 1996)
Quieting of title is a common law remedy to remove any cloud upon or doubt or un
certainty with respect to title to real property. (citing VITUG) The NCC author
izes it under Art. 476. To avail of this remedy, a plaintiff must show that ther
e is an instrument, record, claim or encumbrance or proceeding which constitutes
or casts a cloud, doubt, question or shadow upon the owner's title to or intere
st in real property. Thus, petitioners have wholly misapprehended the import of
the foregoing rule by claiming that respondent CA erred in holding that there w
as "no evidence of any muniment of title, proceeding, written contract," and tha
t there were, as a matter of fact, 2 such contracts xxx However, these document
s in no way constitute a cloud or cast doubt upon petitioners' title. Rather, t
he uncertainty arises from the parties' failure to situate and fix the boundary
between their respective properties.
An action to quiet title or to remove any cloud may not be brought for th
e purpose of settling a boundary dispute.
STA. ANA, JR. v. CA (November 1997)
The courts below correctly found that the action for reconveyance had already pr
escribed. Petitioner cannot escape the onset of prescription by arguing now tha
t his action for reconveyance was really once that sought quieting of title (hen
ce imprescriptible) and not one based on implied or constructive trust. From th
e complaint, it was evident that petitioner's theory was based on implied or con
structive trust, as it was alleged therein that "the property in question is wit
hin the property in trust for the plaintiffs." A party cannot subsequently take
a position contrary to, or inconsistent with, his pleadings. Thus a party is b
ound by the theory he adopts and by the cause of action he stands on and cannot
be permitted after having lost to repudiate his theory and adopt another.
Petitioner's contention that the prescriptive period should be reckoned f
rom actual knowledge must fail. It is settled that an action for reconveyance b
ased on an implied trust prescribes in 10 years from issuance of the Torrens tit
le.
ALEJANDRINO v. CA (September 1998)
Under a co-ownership, the ownership of an undivided thing or right belongs to d
ifferent persons. Each co-owner of property which is held pro-indiviso exercises
his rights over the whole property and may use and enjoy the same with no other
limitation than that he shall not injure the interests of his co-owners. The un
derlying rationale is that until a division is made, the respective share of eac
h cannot be determined and every co-owner exercises, together with his co-partic
ipants, joint ownership over the pro-indiviso property, in addition to his use a
nd enjoyment of the same. As such, as long as the estate has not been fully sett
led and partitioned, a co-owner can exercise his right of ownership over such in
choate right.
Partition of the estate of a decedent may only be effected by (1) the hei
rs themselves extrajudicially, (2) the court in an ordinary action for partition
, or in the course of administration proceedings, (3) the testator himself, and
(4) the third person designated by the testator. The trial court therefore, may
not order partition of an estate in an action for quieting of title. However, in
this case, evidence on the extrajudicial settlement of estate was offered befor
e the trial court. Thus, this can become the basis for segregation of the proper
ty sold to Nique. When a co-owner sells his inchoate right in the co-ownership,
he expresses his intention to put an end to indivision among (his) co-heirs.
BERNARDO v. CA (G.R. No. 111715, June 8, 2000)
The Torrens system of land registration does not create or vest title; it has ne
ver been recognized as a mode of acquiring ownership. Reconstitution of title is
simply the reissuance of a new duplicate certificate of title allegedly lost or
destroyed in its original form and condition.
Reconstitution of title does not pass upon the ownership of the land cove
red by the lost or destroyed title. Possession of a lost certificate of title is
not necessarily equivalent to ownership of the land covered by it. The certific
ate of title, by itself, does not vest ownership; it is merely an evidence of ti
tle over a particular property. Even if the reconstitution proceedings had not b
een instituted, the Bernardos are not precluded from establishing by other evide
nce, such as the certificate of sale allegedly issued to Tomas Bernardo, the req
uisite proof of validity of TCT No. 12658.
REPUBLIC v. THE HEIRS OF MAGDATO (G.R. No. 137857, September 11, 2000)
In an action for quieting of title, recovery of possession and ownership of a pa
rcel of land, and damages, the mortgagee of the equipment and other improvements
located on the land is not an indispensable party, if the said mortgagee does n
ot claim any right to ownership or possession of such real estate. Hence, the no
n-joinder of the mortgagee in such suit does not justify an annulment of the jud
gment thereon on the ground of extrinsic fraud.
That the action for recovery of possession necessarily includes the remov
al of equipment located thereon does not make APT an indispensable party. As not
ed earlier, FILMARCO, not APT or DBP, was the owner of the said equipment. Hence
, respondents acted correctly in impleading FILMARCO, not APT or DBP. Certainly,
if the claim of APT is adversely affected by the removal or transfer of the pro
perty to another place, it should proceed against FILMARCO, not against responde
nts. Such transfer or removal is the concern of FILMARCO, not the respondents. I
n any event, it should be underscored that the civil action seeks the recovery o
f the land, not of the equipment thereon.
EJECTMENT
VALENCIA vs. VALENA
It is well settled that the sheriff s duty in the execution of a writ issued by a
court is purely ministerial. The Sheriff is also responsible for the speedy and
efficient implementation of writs of execution. This duty becomes more signifi
cant in ejectment cases where the rule is that the judgments therein must be exe
cuted immediately when it is in favor of the plaintiff.
AZCUNA, JR. v. CA (March 1996)
In an ejectment suit, petitioner was ordered to vacate by the MTC and ordered to
pay rental for continued use beyond the expiry of the lease and P3,000.00 per d
ay, by way of damages for his failure to turn over peacefully the three (3) comm
ercial spaces from expiry of the lease until such time as petitioner actually va
cated the premises. Before the SC, petitioner questions the award of damages, c
laiming that the only damages that can be recovered in an ejectment suit are the
fair rental value for the use and occupation of the real property -- other dama
ges must be claimed in an ordinary action.
Petitioner's reliance on such doctrine is misplaced, as said cases dealt with ad
ditional damages and charges other than liquidated damages, i.e., those agreed u
pon by the parties to a contract to be paid in case of breach thereof. Here, th
e MTC was merely enforcing paragraph 10 of the lease contract. The freedom of t
he contracting parties to make stipulations in their contract provided they are
not contrary to law, etc. is settled.
TALA REALTY v. BANCO FILIPINO (G.R. No. 137980, June 20, 2000.)
Since the unpaid rentals demanded by petitioner were based on a new rate which i
t unilaterally imposed and to which respondent did not agree, there lies no grou
nd for ejectment. In such a case, there could still be ground for ejectment base
d on non-payment of rentals. The lessor was correct in asking for the ejectment
of the delinquent lessee. Moreover, he should be granted not only the current re
ntals but also all the rentals in arrears. This is so even if the lessor himself
did not appeal because as ruled by this Court, there have been instances when s
ubstantial justice demands the giving of the proper reliefs.
Thus, when respondent stopped paying any rent at all it gave petitioner goo
d ground for instituting ejectment proceedings. Cited case: if ever petitioner t
ook exception to the unilateral or illegal increase in rental rate, it should no
t have completely stopped paying rent but should have deposited the original ren
t amount with the judicial authorities or in a bank in the name of, and with not
ice to, petitioner.
TUBIANO vs. RAZO (July 13, 2000)
As this Court explained in Co Tiamco v. Diaz, 78 Phil. 672 (1946), Rule 70, sect
ion 2 requires previous demand only when the action is for failure to pay rent du
e or to comply with the conditions for his lease. Where the action is to terminat
e the lease because of the expiration of its term, no such demand is necessary.
In the latter case upon the expiration of the term of the lease, the landlord ma
y go into the proeprty and occupy it, and if the lessee refuses to vacate the pr
emises, an action for unlawful detainer may immediately be brought against him e
ven before the expiration of the fifteen or five days provided in Rule 70, secti
on 2.
Accordingly, upon the expiration of the lease in this case, petitioner b
ecame a deforciant unlawfully withholding possession of the property. There was
no need for a demand to be served on him, except to negate any inference that re
spondent, as lessor, had agreed to an extension of the term of the lease under a
rticle 1687 of the Civil Code.
Verily, demand to vacate is not a jurisdictional requirement when the gro
und for ejectment is expiration of term of the lease contract. Notice/demand to
vacate serves no other purpose than to make known the lessor s intention to termin
ate the lease contract. Accordingly, even if petitioner did not receive the Sept
ember 7, 1994 notice of private respondent, the ejectment case filed against pet
itioner cannot be deemed to be premature considering that even as early as Augus
t 1994, petitioner was already informed that private respondent will no longer r
enew the subject lease contract.

ACCION PUBLICIANA
CUTANDA vs. HEIRS OF CUTANDA (G.R. No. 109215, July 11, 2000)
We hold that prescription, not laches, is the proper ground for holding private
respondent s action to be barred. Art. 1106 of the Civil Code provides that by pre
scription, one acquires ownership and other real rights through the lapse of tim
e, in the manner and under the conditions laid down by law. In the same way, rig
hts and actions are lost by prescription. There are thus two kinds of prescripti
on: (1) the acquisition of a right by the lapse of time, or acquisitive prescrip
tion; and (2) the loss of a right of action by the lapse of time, or extinctive
prescription.
Private respondents action was an accion publiciana to recover the right o
f possession and to be declared owners of the subject lands. Their complaint squ
arely put in issue the ownership of the lands in dispute. It may thus be properl
y treated as an accion reivindicatoria. As found by the Court of Appeals and by
the trial court, however, petitioners predecessor-in-interest, Anastacio Cutanda,
acquired possession of said lands in 1933. On the other hand, private responden
ts did not assert ownership over the lands until 1988 or 55 years later, when th
ey filed their present complaint for recovery of possession. It is settled that
the remedies of accion publiciana or accion reivindicatoria must be availed of w
ithin 10 years from dispossession. Under Art. 555(4) of the Civil Code, the real
right of possession is lost after the lapse of 10 years. [Art. 555 (4) provides
: A possessor may lose his possession: (4) By the possession of another, subjec
t to the provisions of Art. 537, if the new possession has lasted longer than on
e year. But the real right of possession is not lost till after the lapse of ten
years.] In this case, an action for recovery of possession and ownership of l
ands was brought only after 26 years had elapsed. Hence, insofar as petitioners
are concerned, private respondents cause of action was barred, not by laches, bu
t by extinctive prescription, regardless of whether their complaint is considere
d as an accion publiciana or an accion reivindicatoria. As regards the private r
espondents who did not appeal from the ruling of the Court of Appeals, this ques
tion is now final.
HLURB JURISDICTION
ARRANZA v. B.F. HOMES, INC. (G.R. No. 131683. June 19, 2000.)
What complicated the jurisdictional issue in this case is the fact that petition
ers are primarily praying for the retention of respondent's obligations under th
e Memorandum of Agreement that Receiver Orendain had entered into with them but
which the present Board of Receivers had revoked.
The HLURB should take jurisdiction over petitioners' complaint because it
pertains to matters within the HLURB's competence and expertise. The HLURB shou
ld view the issue of whether the Board of Receivers correctly revoked the agreem
ents entered into between the previous receiver and the petitioners from the per
spective of the homeowners' interests, which P.D. No. 957 aims to protect. Whate
ver monetary awards the HLURB may impose upon respondent are incidental matters
that should be addressed to the sound discretion of the Board of Receivers charg
ed with maintaining the viability of respondent as a corporation. Any controvers
y that may arise in that regard should then be addressed to the SEC.
Thus, the proceedings at the HLURB should not be suspended notwithstandin
g that respondent is still under receivership. The TRO that this Court has issue
d should accordingly continue until such time as the HLURB shall have resolved t
he controversy.
ESTOPPEL
SERG S PRODUCTS vs. PCI LEASING AND FINANCE, INC.
The Court has held that contracting parties may validly stipulate that a real pr
operty be considered as personal. After agreeing to such stipulation, they are c
onsequently estopped from claiming otherwise. Under the principle of estoppel, a
party to a contract is ordinarily precluded from denying the truth of any mater
ial fact found therein.
While the parties are bound by the Agreement, third persons acting in goo
d faith are not affected by its stipulation characterizing the subject machinery
as personal.
PRESCRIPTION
HEIRS OF MIRANDA v. CA (March 1996)
As the question was whether petitioners' action was barred by prescription xxx t
here was no need for the reception of oral evidence. xxx Since their complaint
was filed only xxx after almost 35 years, it was clear that acquisitive prescrip
tion had set in.
Ownership and other real rights over immovable property are acquired by o
rdinary prescription through possession for 10 years if the adverse possession i
s by virtue of a title and it is in good faith. Without need of title or of good
faith, ownership and other real rights over immovable[s] also prescribe through
uninterrupted adverse possession for 30 years. For possession to constitute th
e foundation of a prescriptive right, it must be under a claim of title or it mu
st be adverse or in the concept of owner.
Petitioners contend that under Art. 1391 of the Civil Code they had 4 yea
rs within which to bring an action for annulment and this commenced to run only
xxx when they allegedly discovered the fraud committed against them. Art. 1391
presupposes, however, that no acquisitive prescription has set in, for after the
favorable effects of acquisitive prescription have set in, rights of ownership
over a property are rendered indisputable.
RES JUDICATA
RAMIREZ v. CA (APRIL 1996)
Does the judgment in a land registration case denying the application filed in c
ourt in 1957 by the parents of the herein petitioner for the registration of lan
d allegedly formed by alluvial deposits, which judgment was eventually affirmed
by the Court of Appeals in 1968 and became final, constitute res judicata as to
bar a subsequent application by the herein petitioner to register the same prope
rty: It is evident that one of the elements of res judicata is lacking xxx Resp
ondent Court declared that "identity of causes of action xxx exist since they bo
th sought registration of the land formed by alluvial deposits", but failed to r
ecognize that the basis for claiming such registration was different in each cas
e. In Case No. B-46, applicants-spouses xxx (herein petitioner's parents) claim
ed that their possession of the land, tacked to that of their predecessors xxx w
as sufficient to vest title in them by acquisitive prescription. On the other h
and, in LRC Case No. B-526, petitioner claimed that the duration of possession b
y his parents (commencing allegedly in 1958), combined with his own possession (
counted from 1988 when he purchased the accretion from his parents) gave him suf
ficient title thereto by acquisitive prescription.
In other words, because of the different relevant periods of possession b
eing referred to, the basis of the application in Case No. B-46 is actually diff
erent from that in Case No. 526.
ADVERSE CLAIMS
SAJONAS v. CA (July 1996)
While it is the act of registration which is the operative act which conveys or
affects the land insofar as third persons are concerned, it is likewise true, th
at the subsequent sale of property covered by a Certificate of Title cannot prev
ail over an adverse claim, duly sworn to and annotated on the certificate of tit
le previous to the sale. While it is true that under the Property Registration D
ecree, deeds of conveyance only take effect as a conveyance to bind the land upo
n its registration, and that a purchaser is not required to explore further than
what the Torrens title, upon its face, indicates in quest for any hidden defect
or inchoate right that may subsequently defeat his right thereto, nonetheless,
this rule is not absolute. Thus, one who buys from the registered owner need no
t have to look behind the certificate of title, he is, nevertheless, bound by th
e liens and encumbrances annotated thereon. One who buys without checking the v
endor's title takes all the risks and losses consequent to such failure.
Sentence three, paragraph two of 70 of P.D. 1529 provides: "The adverse c
laim shall be effective for a period of thirty days from the date of registratio
n."
At first blush, the provision in question would seem to restrict the effe
ctivity of the adverse claim to thirty days. But the above provision cannot and
should not be treated separately, but should be read in relation to the sentenc
e following, which reads: "After the lapse of said period, the annotation of ad
verse claim may be cancelled upon filing of a verified petition therefor by the
party in interest."
 If the rationale of the law was for the adverse claim to ipso facto lose
force and effect after the lapse of thirty days, then it would not have been nec
essary to include the foregoing caveat to clarify and complete the rule. For th
en, no adverse claim need be cancelled. If it has been automatically terminated
by mere lapse of time, the law would not have required the party in interest to
do a useless act.
LEASE
CHUA v. CA (February 1995 )
There being no ambiguity in the lease contract, there is no basis to allow oral
testimony to prove that petitioner was given verbal assurance of a renewal of th
e lease.
NASSER v. CA (June 1995)
The trial court had authority to fix the reasonable value for the continued use
and occupancy of the leased premises after the termination of the lease contract
.
DE VERA v. CA (G.R. No. 110297, August 7, 1996)
The issue in this case is whether the oral contract of lease was on a month-to-m
onth basis which is terminated at the end of every month. We hold that it is.
We have already ruled that a lease on a month-to-month basis is, under Art. 1687
, a lease with a definite period, upon the expiration of which upon demand made
by the lessor on the lessee to vacate, the ejectment of the lessee may be ordere
d.
Thus, what has been suspended by the Rent Control Law is Art. 1673, not
Art. 1687. The efect of the suspension on Art. 1687 is only that the lessor can
not eject the tenant by reason alone of the expiration of the period of lease as
provided in Art. 1687. Otherwise, Art. 1687 itself has not been suspended. He
ncem, it can be used to determine the period of a lease agreement. As petitioner
was notified of the expiration of the lease efective December 30, 1990, her rig
ht to stay in the premises came to an end.
SANDEL v. CA (G.R. No. 117250, September 1996 )
Private respondent's reliance on De Rivera v. Halili and Dy Sun v. Brillante is
misplaced, for these were decided before the effectivity of B.P. 129. The forme
r held that the assertion of the parties of their respective right to own the pr
operties in controversy converted the litigation into an inquiry into the nullit
y of the presented documents,or from a mere detainer suit to one that was incapa
ble of pecuniary estimation, thus beyond the Justice of the Peace's jurisdiction
. This rule has since been modified.
33, BP 129 provides: Even if the defendant sets up the matter of ownershi
p, such is of no moment, because, the MTC is competent to determine ownership, f
or the purpose of determining possession de facto, though without prejudice to a
plenary action to determine ownership.
A reading of the complaint shows that the action is for unlawful detainer
, since what is sought is the recovery of possession of the leased premises, fol
lowing the lapse of the term of the lease agreement. After the lapse of the lea
se contract, the lessee has no more right to remain in possession of the propert
ies. It becomes his obligation to turn over the same to the lessor. (Arts. 1669
& 1673, NCC)
INTER-ASIA SERVICES CORP. v. CA (G.R. No. 106427, October 1996)
To renew means the old contract is extinguished, thus a new one must be executed
, and vice-versa; and in this case, there was only an extension]
Thus, petitioner failed to establish its right to the issuance of the wri
t of preliminary injunction. In fact, the act being enjoined [ejectment] was no
t a unilateral act on the part of private respondent as the lower court conclude
d but a logical consequence of the expiration of the lease contract, an act mutu
ally agreed upon by the parties.
In Fernandez v. CA (166 SCRA 577 [1988]), this Court held that an alleged
verbal assurance of renewal of a lease is inadmissible to qualify the terms of
the written lease agreement under the parole evidence rule and unenforceable und
er the Statute of Frauds.
SAN ANDRES v. CA (G.R. No. 94516, December 6, 1996)
The question is whether this constitutes a demand to vacate as required by Rule
70, 2, sufficient to confer jurisdiction on the MeTC. We rule in the negative.
First, the lease between petitioner and private respondents' predecessor-in-inte
rest, Go Co, was not terminated by the dath of Go Co. The fact is that the part
ies here so regarded the contract and therefor continued the lease even aftter G
o Co's death in 1974. It was only in 1987, 13 years later, when petitioner dema
nded execution of a new contract on ground that the lease had been terminated by
Go Co's death.
The demand must be either to pay the rents or comply with the terms of th
e contract. But petitioner's letter makes neither demand. Instead, the letter
demands execution of a new lease on the mistaken theory that the lease had been
terminated by Go Co's death; further, the lease with Go Co provided for transfe
r of ownership of the buildings built upon the land upon expiration of the lease
in 2003.
The question is whether the prohibition against the sublease of the land
extends to the building. Because the lessee, Go Co, ran out of funds to finish
the construction of the building, he was forced to borrow money from Land Center
, to pay for which he allowed the latter the free use of the building. Land Cen
ter, in turn, subsequently leased the building for a 5-year term to Kookaburra I
ndustrial.
However, for the purpose of enforcing the "no-sublease" provision of the
lease contract here, it is clear not only from the text of the agreement which u
nequivocally speaks of the sublease of "the land leased herein," but also from i
ts context that it does not apply to the lease of the building which the lessee
had constructed on the land leased. (citing Arts. 1370, 1373 & 1374) This is be
cause the term of the lease is for 30 years. The purpose of the lease is for th
e lessee to have a place on which to construct a building or a factory. The bui
lding could be a tenement house or a factory, either of which could be for comme
rcial purposes. A stipulation that upon the expiration of the lease the buildin
g constructed by the lessee will become the property of the land owner is usual
with respect to commercial buildings, the lessee calculating that the building w
ill bring him income sufficient to cover his investment for a fair return. It i
s thus unlikely that, in entering into the 30-year lease here, the parties conte
mplated imposing restrictions on private respondents' rights of ownership of the
building, by prohibiting even the lease of the building constructed by the less
ee. The most natural and logical construction of the "no sublease" provision is
that it refers only to the land leased but not to the building or factory which
the lessee was authorized to construct on the land.
HEIRS OF SUICO v. CA (G.R. No. 120615, January 21, 1997)
It has been held that the power of a court to extend the term of the lease under
the second sentence of Art. 1687 is potestative, or more precisely, discretiona
ry. The court is not bound to extend it, and its exercise depends upon the circ
umstances surrounding the case.
Private respondents and their parents had been in possession of the premi
ses for 43 years when the ejectment case was filed. Further, despite the relati
vely large premises, private respondents were paying a meager sum as rental. Th
us, the arrangement obviously worked in favor of private respondents, who receiv
ed greater benefits while petitioners were unable to have full use and enjoyment
of a substantial portion of their property. The need to balance these interest
s did not sanction an extension of the term.
The value of the house is inconsequential since it was build in 1950, and
private respondents can remove it if petitioners opt not to retain it by paying
 1/2 of its value, pursuant to Art. 1678, which provides that the lessors would
become the owner of the house constructed by reimbursing the lessees in said amo
unt. Petitioners-lessors are thus given the option to pay indemnity, while priv
ate respondents-lessees do not have a right to demand that they be paid. If the
former refuses to reimburse, the latter's remedy is to remove the house, even t
hough petitioners' lot may suffer damage thereby, as long as the damage caused i
s not more than reasonably necessary.
BANGAYAN v. CA, (August 1997)
Art. 1311, NCC, provides that contracts take effect only between the parties, th
eir assigns and heirs, except where the rights and obligations arising from cont
ract are not transmissible by their nature, or by stipulation or by provision of
law. Here, paragraphs 4 and 5 of the lease contract provided that the right of
first option was not transmissible, which are consistent with Art. 1649, NCC th
at the lessee cannot assign the lease without the consent of the lessor, unless
there is a stipulation to the contrary. We have held that the lessor's consent
is necessary as the assignment of the lease would involve the transfer not only
of rights, but also of obligations. It constitutes novation by a substitution o
f the person of one of the parties.
It cannot be denied that Teofista's right of first option to buy the leas
ed property in case of its sale is but part of the bigger right to lease said pr
operty. The option was given to Teofista as she was the lessee. It was a compo
nent of the consideration of the lease. The option was by no means an independe
nt right which Teofista could exercise. It ought to follow that if Teofista was
barred by contract from assigning her right to lease the lot, she was similarly
barred from assigning her right of first option to Angelita.
SADHWANI v. CA (October 1997)
Whether under their contracts with Orient, petitioners had a right of first refu
sal (RFR) in case the property was sold. To begin, it is fundamental that a con
tract binds only the parties to it (Art. 1311, NCC). The RFR was embodied in th
e lease contract between Sawit and Orient, to which petitioners were not a party
to.
The rule is different, however, regarding assignments of lease. Art. 164
9 provides that the lessee cannot assign the lease without the consent of the le
ssor, unless there is a stipulation to the contrary. Indeed, the consent of the
lessor is necessary because the assignment of lease would involve the transfer
not only of rights, but also of obligations. Such assignment would constitute n
ovation by substitution of one of the parties, i.e., the lessee.
CHUA v. CA, IBARRA (January 21, 1999)
Court have no power to extend lease with a term.-As there was no longer any leas
e to speak of which could be extended, the MTC was in effect making a contract f
or the parties which it obviously did not have the power to do. The potestative
authority of the courts to fix a longer term for a lease under Art. 1687 of the
CC applies only to cases where there is no period fixed by the parties.
Improvements made by lessees on the leased premises are not valid reasons
for their retention thereof; otherwise, a lessee would improve his landlord out o
f his property. The fact that petitioners allegedly made repairs on the premises
in question is not a reason for them to retain the possession of the premises.
There is no provision of law which grants the lessees a right of retention over
the leased premises on that ground. Art. 448 of the CC, in relation to Art. 54
6, which provides for full reimbursement of useful improvements and retention of
the premises until reimbursements us made, applies only to a possessor in good
faith, i.e., one who builds on a land in the belief that he is the owner thereof
. In a number of cases, the Court has held that this right does not apply to a
mere lessee, otherwise, it would always be in his power to improve his landlord o
ur of the latter s property. Art. 1678 merely grants to such a lessee making in g
ood faith useful improvements the right to be reimbursed of the value of the im
provements upon the termination of the lease, or, in the alternative, to remove
the improvements if the lessor refuses to make reimbursement.
LHUILLIER, vs. CA, et al. (G.R. No. 128058. December 19, 2000)
A covenant to renew a lease, which makes no provision on its terms, implies an e
xtension or renewal subject to the same terms in the original lease contract. Si
nce the parties did not make a new one, the terms and conditions of the original
except the provision on the rate and period of lease are deemed extended. Corol
larily, Art. 1678 of the Civil Code did not apply. 9 The parties agreed that all
improvements introduced by the lessee would accrue to the benefit of the owner
at the end of the lease, without reimbursement. 10 This stipulation, not being c
ontrary to law, morals, public order or public policy, binds the parties and is
the law between them.

PERSONS & FAMILY RELATIONS

2001
REPUBLIC v. DAGDAG (G.R. No. 109975, February 2001)
Civil Law/Persons/ Psychological incapacity/Molina Guidelines: A marriage contra
cted by any party who, at the time of the celebration, was psychologically incap
acitated to comply with the essential marital obligations of marriage, is void e
ven if such incapacity becomes manifest only after its solemnization. And whethe
r or not psychological incapacity calling for annulment exists depends crucially
on the facts of the case.
The Court reaffirms Republic v. CA & Molina, where it laid the following
GUIDELINES in the interpretation and application of Article 36 of the Family Cod
e:
(1) The burden of proof to show the nullity of the marriage belongs to the plain
tiff. Any doubt should be resolved in favor of the existence and continuation of
the marriage and against its dissolution and nullity.
(2) The root cause of the psychological incapacity must be: (a) medically or cli
nically identified, (b) alleged in the complaint, (c) sufficiently proven by exp
erts and (d) clearly explained in the decision. Article 36 of the Family Code re
quires that the incapacity must be psychological not physical, although its mani
festations and/or symptoms may be physical. The evidence must convince the court
that the parties, or one of them, was mentally or psychically ill to such an ex
tent that the person could not have known the obligations he was assuming, or kn
owing them, could not have given valid assumption thereof. The root cause must b
e identified as a psychological illness and its incapacitating nature fully expl
ained. Expert evidence may be given by qualified psychiatrists and clinical psyc
hologists.
(3) The incapacity must be proven to be existing at "the time of the celebration
" of the marriage, when the parties exchanged their "I do's." Its manifestation
need not be perceivable at such time, but the illness itself must have attached
at such moment, or prior thereto.
(4) Such incapacity must also be shown to be medically or clinically permanent o
r incurable. Such incurability may be absolute or even relative only in regard t
o the other spouse, not necessarily absolutely against everyone of the same sex.
Furthermore, such incapacity must be relevant to the assumption of marriage obl
igations, not necessarily to those not related to marriage, like the exercise of
a profession or employment in a job.
(5) Such illness must be grave enough to bring about the disability of the party
to assume the essential obligations of marriage. Thus, "mild characteriological
peculiarities, mood changes, occasional emotional outbursts" cannot be accepted
as root causes. The illness must be shown as downright incapacity or inability,
 not a refusal, neglect or difficulty, much less ill will. In other words, there
is a natal or supervening disabling factor in the person, an adverse integral e
lement in the personality structure that effectively incapacitates the person fr
om really accepting and thereby complying with the obligations essential to marr
iage.
(6) The essential marital obligations must be those embraced by Articles 68 up t
o 71 of the Family Code 20 as regards the husband and wife as well as Articles 2
20, 221 and 225 of the same Code 21 in regard to parents and their children. Suc
h non-complied marital obligation(s) must also be stated in the petition, proven
by evidence and included in the text of the decision.
(7) Interpretations given by the National Appellate Matrimonial Tribunal of the
Catholic Church in the Philippines, while not controlling or decisive, should be
given great respect by the courts.
(8) The trial court must order the prosecuting attorney or fiscal and the Solici
tor General to appear as counsel for the state. No decision shall be handed down
unless the Solicitor General issues a certification, which will be quoted in th
e decision, briefly stating therein his reasons for his agreement or opposition,
as the case may be, to the petition. The Solicitor-General, along with the pros
ecuting attorney, shall submit to the court such certification within fifteen (1
5) days from the date the case is deemed submitted for resolution of the court.
The Solicitor-General shall discharge the equivalent function of the defensor vi
nculi contemplated under Canon 1095.
CARIO v. CARIO (G.R. No. 132529, February 2, 2001)
Civil Law/Persons/Contracting Second Marriage/Property Regime: (1) Under Article
40 of the Family Code, a prior and separate declaration of nullity of a marriag
e is an all important condition precedent only for purposes of remarriage. That
is, if a party who is previously married wishes to contract a second marriage, h
e or she has to obtain first a judicial decree declaring the first marriage void
, before he or she could contract said second marriage, otherwise the second mar
riage would be void. The same rule applies even if the first marriage is patentl
y void because the parties are not free to determine for themselves the validity
or invalidity or their marriage.
However, for purposes other than remarriage, no judicial action is necess
ary to declare a marriage an absolute nullity. For other purposes, such as but n
ot limited to the determination of heirship, legitimacy or illegitimacy of a chi
ld, settlement of estate, dissolution of property regime, or a criminal case for
that matter, the court may pass upon the validity of marriage even after the de
ath of the parties thereto, and even in a suit not directly instituted to questi
on the validity of said marriage, so long as it is essential to the determinatio
n of the case. In such instances, evidence must be adduced, testimonial or docum
entary, to prove the existence of grounds rendering such a previous marriage an
absolute nullity. These need not be limited solely to an earlier final judgment
of a court declaring such previous marriage void.
(2) One of the effects of the declaration of nullity of marriage is the s
eparation of the property of the spouses according to the applicable property re
gime. Considering that the two marriages are void ab initio, the applicable pro
perty regime would not be absolute community or conjugal partnership of property
, but rather, be governed by the provisions of Articles 147 and 148 of the Famil
y Code on "Property Regime of Unions Without Marriage."
Under Article 148 of the Family Code, which refers to the property regime
of bigamous marriages, adulterous relationships, relationships in a state of co
ncubinage, relationships where both man and woman are married to other persons,
and multiple alliances of the same married man, only the properties acquired by
both of the parties through their actual joint contribution of money, property,
or industry shall be owned by them in common in proportion to their respective c
ontributions. In this property regime, the properties acquired by the parties th
rough their actual joint contribution shall belong to the co-ownership. Wages an
d salaries earned by each party belong to him or her exclusively. Then too, cont
ributions in the form of care of the home, children and household, or spiritual
or moral inspiration, are excluded in this regime.
In contrast, under Article 147, wages and salaries earned by either part
y during the cohabitation shall be owned by the parties in equal shares and will
be divided equally between them, even if only one party earned the wages and th
e other did not contribute thereto.
Conformably, even if the disputed "death benefits" were earned by the dec
eased alone as a government employee, Article 147 creates a co-ownership in resp
ect thereto, entitling the petitioner to share one-half thereof. Thus, one-half
of the subject "death benefits" under scrutiny shall go to the petitioner as her
share in the property regime, and the other half pertaining to the deceased sha
ll pass by, intestate succession, to his legal heirs, namely, his children with
Susan Nicdao.
BORJA-MANZANO v. SANCHEZ (A.M. No. MTJ-00-1329. March 8, 2001)
Civil Law/Persons/Marriage/Requirements/ Exceptions: For the provision on legal
ratification of marital cohabitation to apply (Art 34, FC), the following requis
ites must concur:
1. The man and woman must have been living together as husband and wife for
at least five years before the marriage;
2. The parties must have no legal impediment to marry each other;
3. Absence of legal impediment between the parties must be present at the t
ime of marriage;
4. The parties must execute an affidavit stating that they have lived toget
her for at least five years [and are without legal impediment to marry each othe
r]; and
5. The solemnizing officer must execute a sworn statement that he had ascertaine
d the qualifications of the parties and that he had found no legal impediment to
their marriage.
2000
FRANCISCO v. CA (May 2000)
Civil Law/Persons/ Conjugal Nature of Property: Spouse invoking the conjugal nat
ure of property must prove that it was acquired during the marriage. Properties
acquired by lucrative title during the marriage are the exclusive properties of
the husband and that certificate of title issued to one spouse "married" to the
other spouse does not prove that the property was acquired during their marriage
. Further, that the husband is handicapped due to a leg injury sustained in a bi
cycle accident is not a sufficient ground to render him incapacitated to perform
acts of administration over his own properties
MOSSESGELD v. CA (May 2000)
Civil Law/Persons/Rights of illegitimate Children: As provided in Art 176, FC, i
llegitimate children shall use the surname and shall be under the parental autho
rity of their mother, and shall be entitled to support. This is the rule regardl
ess of whether or not the father admits paternity. Consequently, the Local Civi
l Registrar correctly refused to register the certificate of live birth of petit
ioner's illegitimate child using the surname of the alleged father, even with th
e latter's consent. Of course, the putative father, though a much married man,
may legally adopt his own illegitimate child. In case of adoption, the child sha
ll be considered a legitimate child of the adopter, entitled to use his surname.
The Family Code has effectively repealed the provisions of Article 366 of t
he Civil Code of the Philippines giving a natural child acknowledged by both par
ents the right to use the surname of the father. The Family Code has limited th
e classification of children to legitimate and illegitimate, thereby eliminating
the category of acknowledged natural children and natural children by legal fic
tion.
REPUBLIC v. CA (May 2000)
Civil Law/ Persons/ Legitimate Children/ Surnames: The touchstone for the grant
of a petition for change of surname is that there be proper and reasonable cause
 for which the change is sought. In this case, the Court is not persuaded to de
part from the applicability of the general rule that requires that legitimate ch
ildren shall principally use the surname of their father.
BABIERA v. CATOTAL (G.R. No. 138493. June 15, 2000)
Civil Law/Persons/Action to Annul Birth Certificate: A birth certificate may be
ordered cancelled upon adequate proof that it is fictitious. Thus, void is a cer
tificate which shows that the mother was already fifty-four years old at the tim
e of the child is birth and which was signed neither by the civil registrar nor
by the supposed mother. Because her inheritance rights are adversely affected, t
he legitimate child of such mother is a proper party in the proceedings for the
cancellation of the said certificate. As the birth certificate was void ab initi
o, the action to nullify it does not prescribe.
Article 171, FC applies to instances in which the father impugns the legi
timacy of his wife's child and presupposes that the child was the undisputed off
spring of the mother. It does not contemplate a situation, like in the instant c
ase, where a child is alleged not to be the child of nature or biological child
of a certain couple. Thus, under Article 166, it is the husband who can impugn t
he legitimacy of said child by proving: (1) it was physically impossible for him
to have sexual intercourse, with his wife within the first 120 days of the 300
days which immediately preceded the birth of the child; (2) that for biological
or other scientific reasons, the child could not have been his child; (3) that i
n case of children conceived through artificial insemination, the written author
ization or ratification by either parent was obtained through mistake, fraud. Vi
olence, intimidation, or undue influence. Articles 170 and 171 reinforce this re
ading as they speak of the prescriptive period within which the husband or any o
f his heirs should file the action impugning the legitimacy of said child.
MALLILIN v. CASTILLO (G.R. No. 136803. June 16, 2000)
Civil law/Persons/Property Relations: Art. 144 of the Civil Code provides: When a
man and a woman live together as husband and wife, but they are not married, or
their marriage is void from the beginning, the property acquired by either or b
oth of them through their work or industry or their wages and salaries shall be
governed by the rules on co-ownership. This provision applies only to cases in wh
ich a man and a woman live together as husband and wife without the benefit of m
arriage provided they are not incapacitated or are without impediment to marry e
ach other, or in which the marriage is void ab initio, provided it is not bigamo
us. Art. 144, therefore, does not cover parties living in an adulterous relation
ship.
However, Art. 148 of the Family Code now provides for a limited co-owners
hip in cases where the parties in union are incapacitated to marry each other. I
t states: In cases of cohabitation not falling under the preceding article, only
the properties acquired by both of the parties through their actual joint contr
ibution of money, property or industry shall be owned by them in common in propo
rtion to their respective contributions. In the absence of proof to the contrary
, their contributions and corresponding shares are presumed to be equal. The sam
e rule and presumption shall apply to joint deposits of money and evidence of cr
edits. It was thus error for the trial court to rule that, because the parties i
n this case were not capacitated to marry each other at the time that they were
alleged to have been living together, they could not have owned properties in co
mmon. The legal relation of the parties is already specifically covered by Art.
148 of the Family Code.
On the premise that he is a co-owner, he can validly seek the partition o
f the properties in co-ownership and the conveyance to him of his share.
BOBIS v. BOBIS (G.R. No. 138509, July 31, 2000)
Civil Law/Persons/Declaration of Nullity of a Void Marriage: Parties should not
be permitted to judge for themselves the nullity of their marriage, for the same
must be submitted to the determination of competent courts. Only when the nulli
ty of the marriage is so declared can it be held as void, and so long as there i
s no such declaration, the presumption is that the marriage exists. No matter ho
w obvious, manifest or patent the absence of an element is, the intervention of
the courts must always be resorted to. That is why Article 40 of the Family Code
requires a "final judgment," which only the courts can render. Thus, as ruled i
n Landicho v. Relova, he who contracts a second marriage before the judicial dec
laration of nullity of the first marriage assumes the risk of being prosecuted f
or bigamy, and in such a case the criminal case may not be suspended on the grou
nd of the pendency of a civil case for declaration of nullity for the pendency o
f a civil case for declaration of nullity of marriage is not a prejudicial quest
ion.
MERCADO v. TAN (G.R. No. 137110. August 1, 2000)
Civil Law/Persons/ Declaration of Nullity of Previous Marriage: The court reite
rates that a judicial declaration of nullity of a previous marriage is necessary
before a subsequent one can be legally contracted. One who enters into a subseq
uent marriage without first obtaining such judicial declaration is guilty of big
amy. This principle applies even if the earlier union is characterized by statut
e as "void."
In the instant case, petitioner contracted a second marriage although the
re was yet no judicial declaration of nullity of his first marriage. In fact, he
instituted the Petition to have the first marriage declared void only after com
plainant had filed a letter-complaint charging him with bigamy. By contracting a
second marriage while the first was still subsisting, he committed the acts pun
ishable under Article 349 of the Revised Penal Code. That he subsequently obtain
ed a judicial declaration of the nullity of the first marriage was immaterial. T
o repeat, the crime had already been consummated by then.
ALIPIO v. CA (G.R. No. 134100, September 29, 2000)
Civil Law/Persons/ Conjugal Partnerships: After the death of either spouses, no
complaint for the collection of indebtedness chargeable against the conjugal par
tnership can be brought against the surviving spouse. Instead, the claim must be
made in the proceedings for the liquidation and settlement of the conjugal prop
erty. The reason for this is that upon the death of one spouse, the powers of ad
ministration of the surviving spouse ceases and is passed to the administrator a
ppointed by the court having jurisdiction over the settlement of estate proceedi
ngs. While in many cases as in the instant one, even after the death of one of t
he spouses, there is no liquidation of the conjugal partnership. This does not
mean, however, that the conjugal partnership continues. And the creditor cannot
be said to have no remedy. Under Sec. 6, Rule 78 of the Revised Rules of Court
, he may apply in court for letters of administration in his capacity as a princ
ipal creditor of the deceased . . . if after thirty (30) days from his death, pe
titioner failed to apply for administration or request that administration be gr
anted to some other person.
TE v. CA (G.R. No. 126746. November 29, 2000)
Civil Law/ Persons/ Declaration of Nullity of Previous Marriage/ Bigamy: The out
come of a civil case for annulment of marriage has no bearing upon the determina
tion of innocence or guilt in the criminal case for bigamy, because all that is
required for the charge of bigamy to prosper is that the first marriage be subsi
sting at the time the second marriage is contracted. Petitioner's argument that
the nullity of his marriage to private respondent had to be resolved first in th
e civil case before the criminal proceedings could continue, because a declarati
on that their marriage was void ab initio would necessarily absolve him from cri
minal liability, is untenable. Applying Art 40, for purposes of remarriage, in t
he absence of a final judgment declaring the previous marriage or voidable, the
marriage is deemed valid and subsisting.
1999
DE ASIS v. CA (Feb. 15, 1999)
Civil Law/Persons/Support/ Renunciation/ Compromise/Filiation: (1) The right to
receive support cannot be renounced; neither can future support be the subject o
f compromise, Art. 301, CC. The agreement for the dismissal of the case for supp
ort amounted to a renunciation and a compromise which cannot be countenanced.
(2) Filiation or lack of it cannot be left to the will or agreement of th
e parties. While it is true that in order to claim support, filiation and/or pa
ternity must 1st be shown between the claimant and the parent, however, paternit
y and filiation or lack of it is a relationship that must be judicially establis
hed and it is for the court to declare its existence or absence. Although in th
is case, the admission may be binding upon the respondent, such an admission is
at most evidentiary and does not conclusively establish lack of filiation.
1998
CANG v. CA (September 1998)
Civil Law/Persons/ Adoption/ Consent of Natural Parent Indispensable/ Abandonmen
t Defined/ Financial Consideration in Awarding Custody: (1) The written consent
of the natural father remains indispensable for the validity of the decree of ad
option EXCEPT if the father has abandoned the child or is insane or hopelessly in
temperate. However, the trial court has to primarily determine the issue of aband
onment in case the father opposes the adoption primarily because his consent the
reto was not sought. Only upon failure of the oppositor natural father to prove
to the satisfaction of the court that he did not abandon his child may the petit
ion for adoption be considered on its merits.
(2) Abandonment refers to any conduct of the parent which evinces a settl
ed purpose to forego all parental duties and relinquish all parental claims to t
he child. It means neglect or refusal to perform the natural and legal obligations
of care and support which parents owe their children. Petitioner s conduct however
, does not amount to abandonment, as it was evidenced that despite being in the
US, he regularly communicated with his wife and children and sent money for thei
r support.
(3) Financial support is not the paramount consideration in granting the
petition for adoption. There should be a holistic approach to the matter, takin
g into account the physical, mental, emotional, psychological, social and spirit
ual needs of the child.
(4) As a result of their legal separation, custody was awarded to petiti
oner s wife and mother of the 3 children sought to be adopted. Though all-embracin
g, this award does not include the authority to place the children up for adopti
on.
1997
SILVA v. CA (July 1997)
Civil Law/Family Code/Parental Authority/Visitation Rights of Parents: The visit
ation right referred to is the right of access of a non-custodial parent to his
or child or children. There is, despite a dearth of specific legal provisions, e
nough recognition on the inherent and natural right of parents over their childr
en (Arts. 150 and 220, FC; Art. II, 12, Constitution). There is nothing conclusi
ve to indicate that these provisions are meant to solely address themselves to l
egitimate relationships. Indeed, although in varying degrees, the laws on suppo
rt and successional rights, by way of examples, clearly go beyond the legitimate
members of the family and so explicitly encompass illegitimate relationships as
well. (Arts. 176 and 195, FC) Then, too, and most importantly, in the declarat
ion of nullity of marriages, a situation that presupposes a void or inexistent m
arriage, Art. 49, FC provides for appropriate visitation rights to parents who a
re not given custody of their children.
AGAPAY v. PALANG (July 1997)
Civil Law/Family Code/Property Regime of Unions Without Marriage/Heirs/ Proof of
Filation: (1) Under Art. 148, only properties acquired by both of the parties t
hrough their actual joint contribution of money, property or industry shall be o
wned by them in common in proportion to their respective contributions. It must
be stressed that actual contribution is required by Art. 148, in contrast to Ar
t. 147 which states that efforts in the care and maintenance of the family and h
ousehold, are regarded as contributions to the acquisition of common property by
one who has no salary or income or work or industry. If actual contribution of
the party is not proved, there will be no co-ownership and no presumption of eq
ual shares. Even assuming that the property was bought before cohabitation, th
e rules of co-ownership would still apply and proof of actual contribution would
still be essential.
(2) Questions as to who are the heirs of the decedent, proof of filiatio
n of illegitimate children and the determination of the estate of the decedent a
nd claims thereto should be ventilated in the proper probate court or in a speci
al proceeding instituted for the purpose and cannot be adjudicated in the instan
t ordinary civil action which is for recovery of ownership and possession.
TISON v. CA
Civil Law/Family Code/Paternity and Filiation/Succession: There is no presumptio
n in law more firmly established than the presumption that children born in wedl
ock are legitimate. And it is settled that the issue of legitimacy cannot be at
tacked collaterally. Thus, the issue of whether petitioners are the legitimate c
hildren of the decedent cannot be properly controverted in this action for recon
veyance; moreover, private respondent, as a mere transferee of decedent's surviv
ing spouse, is not the proper party to impugn filiation of petitioners.
Burden of proof is on private respondent- party denying the presumption
bears burden to overthrow presumption by substantial and credible evidence. Pres
umption of legitimacy is so strong that its effect is to shift the burden to oth
er party; unless rebutted, a presumption may stand in lieu of evidence and suppo
rt a finding or decision.
MANACOP v. CA (August 1997)
Civil Law/Family Code/Family Home: A writ of execution of a final and executory
judgment issued before the effectivity of the Family Code can be executed on a h
ouse and lot constituted as a family home under the Family Code. This is so beca
use Art. 153, FC has no retroactive effect. In other words, prior to 3 August 19
88, the procedure mandated by the Civil Code had to be followed for a family hom
e to be constituted as such. There being absolutely no proof that the subject p
roperty was judicially or extrajudicially constituted as a family home, it follo
ws that the FC s protective mantle cannot be availed of by petitioner.
The list of beneficiary-occupants of a family home is restricted to thos
e enumerated in the Code. Occupancy of the family home either by the owner ther
eof or by any of its beneficiaries must be actual. The enumeration of beneficia
ries in Art. 154 excludes maids and overseers, not being beneficiaries contempla
ted by the FC.
DELGADO VDA. DE DELA ROSA v. CA (October 1997)
Civil Law/Family Code/Illegitimate Children: As to the status of the interven
or as an acknowledged child of male decedent, Art. 175, in conjunction with Arts
. 173 and 172, FC, provide for the means of proving filiation. The cases relied
upon by the trial court, pointing to a child's action for establishing filiation
even beyond the putative parent's death are modified by the enactment of the ab
ove provisions of the FC, which cite definite periods within which such actions
must be interposed.
1996
REPUBLIC v. HERNANDEZ (February 1996)
Civil Law/Persons/Adoption: The law allows the adoptee, as a matter of right and
obligation, to bear the surname of the adopter, upon issuance of the decree of
adoption. It is the change of the adoptee's surname to follow that of the adopt
er which is the natural and necessary consequence of a grant of adoption and mus
t be specifically contained in the order of the court, in fact, even if not pray
ed for by petitioner. However, the given or proper name (a.k.a. the first or Ch
ristian name), of the adoptee must remain as it was originally registered in the
civil register.
The name of the adoptee as recorded in the civil register should be used
in the adoption proceedings in order to vest the court with jurisdiction to hear
and determine the same (Cruz v. Republic, 17 SCRA 693 [1966]), and shall contin
ue to be so used until the court orders otherwise. Changing the first name of a
person as recorded in the civil register is a substantial change in one's offic
ial or legal name and cannot be authorized without a judicial order.
ARUEGO v. CA (March 1996)
Civil Law/Family Code/Illegitimate Child/ Recognition: Private respondent's acti
on for compulsory recognition as an illegitimate child was brought under Art. 28
5, Civil Code while petitioners submit that with the advent of the New Family Co
de, the trial court lost jurisdiction over the complaint on the ground of prescr
iption. The Court upheld Tayag v. CA (209 SCRA 665 [1992]) wherein the right of
action of the minor child has been deemed vested by the filing of the complaint
in court under the regime of the Civil Code prior to the effectivity of the Fami
ly Code. As in Republic v. CA (205 SCRA 356 [1992]), the fact of filing of the
petition already vested in the petitioner her right to file it and to have the s
ame proceed to final adjudication in accordance with the law in force at the tim
e, and such right can no longer be prejudiced or impaired by the enactment of a
new law.
PEREZ v. CA (March 1996)
Civil Law/Family Code/Application of Art 213: When the parents of the child are
separated, Art. 213, FC is the applicable law. Since the Code does not qualify t
he word "separation" to mean "legal separation" decreed by a court, couples who
are separated in fact are covered within its terms.
NAVARRO v. DOMAGTOY (July 1996)
Civil Law/Family Code/Declaration of Presumptive Death/ Authority of Solemnizing
Officer:
(1) Even if the spouse present has a well-founded belief that the absent
spouse was already dead, a summary proceeding for the declaration of presumptive
death is necessary in order to contract a subsequent marriage, a mandatory requ
irement which has been precisely incorporated into the Family Code.
(2) A marriage can be held outside of the judge's chambers or courtroom
only in the following instances: (a) at the point of death; (b) in remote places
in accordance with Art. 29; or (c) upon request of both parties in writing in a
sworn statement to this effect.
(3) A priest who is commissioned and allowed by his local ordinary to mar
ry the faithful, is authorized to do so only within the area of the diocese or p
lace allowed by his Bishop. An appellate court Justice or a Justice of this Cou
rt has jurisdiction over the entire Philippines to solemnize marriages, regardle
ss of venue, as long as the requisites of the law are complied with. However, j
udges who are appointed to specific jurisdictions, may officiate weddings only w
ithin said areas and not beyond. Where s/he solemnizes outside his court's juri
sdiction, there is a resultant irregularity in the formal requisite laid down in
Art. 3, which while it may not affect the validity of the marriage, may subject
the officiating official to administrative liability.
VALDES v. RTC (July 1996)
Civil Law/Family Code/Property Regime under Arts 147 & 148: In a void marriage,
regardless of cause, the property relations during the period of cohabitation i
s governed by Art. 147 or Art. 148, FC, as the case may be. This peculiar kind o
f co-ownership under Art 147 applies when a man and a woman, suffering no legal
impediment to marry each other, so exclusively live together as husband and wife
 under a void marriage or without the benefit of marriage. The term "capacitate
d" in the provision (in the first paragraph of the law) refers to the legal capa
city of a party to contract marriage, i.e., any "male or female of the age of ei
ghteen years or upwards not under any of the impediments mentioned in Articles 3
7 and 38 of the Code.
Under this property regime, property acquired by both spouses through the
ir work and industry shall be governed by the rules on equal co-ownership. Any
property acquired during the union is prima facie presumed to have been obtained
through their joint efforts. A party who did not participate in the acquisitio
n of the property shall still be considered as having contributed thereto jointl
y if said party's efforts consisted in the care and maintenance of the family ho
usehold. (Art. 147, FC) Unlike the CPG, the fruits of the couple's separate pro
perty are not included in the co-ownership.
In addition, the law now expressly provides that:-
a) Neither party can dispose, etc. his or her share in co-ownership propert
y, without consent of the other, during the period of cohabitation; and
b) In case of a void marriage, any party in bad faith shall forfeit his/her
share in the co-ownership in favor of their common children; in default thereof
or waiver by any or all of the common children, each vacant share shall belong
to the respective surviving descendants, or still in default thereof, to the inn
ocent party. The forfeiture shall take place upon termination of the cohabitati
on (Art. 147, FC) or declaration of nullity of the marriage. (Arts. 43, 50 & 51,
FC)
Meanwhile, under Art 148, FC, when the common-law spouses suffer from a l
egal impediment to marry or when they do not live exclusively with each other (a
s husband and wife), only the property acquired by both of them through their ac
tual joint contribution of money, property or industry shall be owned in common
and in proportion to their respective contributions. Such are prima facie presu
med to be equal. The share of any party who is married to another shall accrue
to the AC or CP, as the case may be, if so existing under a valid marriage. If
the party who has acted in bad faith is not validly married to another, his or h
er share shall be forfeited in the manner already expressed.

CHI MING TSOI v. CA (G.R. No. 119190, Jan. 16, 1997)

Civil Law/Family Code/Annulment of Marriage/Psychological Incapacity: (1) To pre
vent collusion, the NCC provides that no judgment annulling a marriage shall be
promulgated upon a stipulation of facts or by confession of judgment (Arts. 88 &
101[2]) and the Rules of Court prohibit annulment without trial. The case has r
eached this Court because petitioner does not want their marriage annulled. Thi
s only shows that there is no collusion.
(2) As to the issue of psychological incapacity, since the action to decl
are the marriage void may be filed by either party, i.e., even the psychological
ly incapacitated, the question of who refuses to have sex with the other becomes
immaterial. Senseless and protracted refusal to have sex is equivalent to psych
ological incapacity. (PINEDA, citing VELOSO) Evidently, one of the essential mar
ital obligations under the FC is to procreate. Constant non-fulfillment of this
obligation will finally destroy the integrity of the marriage. In his case, th
e senseless and protracted refusal of one of the parties to fulfill this marital
obligation is equivalent to psychological incapacity.
(3) While the law provides that the spouses are obliged to live together,
etc. (Art. 68, FC), the sanction therefor is actually the spontaneous, mutual a
ffection between them, and not any legal mandate or court order (Cuaderno, 120 P
hil. 1298).
SAGALA-ESLAO v. CA (G.R. No. 116773, Jan. 16, 1997)
Civil Law/Family Code/Parental Authority: In Santos v. CA (242 SCRA 407 [
1995]), we held that parental authority is a mass of rights and obligations whic
h the law grants to parents for the purpose of the children's physical preservat
ion and development, etc. As regards parental authority, there is no power, but
 a task; no sovereignty but a sacred trust for the welfare of the minor. Parent
al authority and responsiblity are inalienable and may not be transferred renoun
ced except in cases authorized by law. The right attached to parental authority
being purely personal, the law allows a waiver only in cases of adoption, guard
ianship, and surrender to a children's home or orphanage. (Arts. 222-224; Act N
o. 3094) When a parent entrusts the custody of a minor to another, such as a fr
iend or godfather, even in a document, what is given is merely temporary custody
and does not constitute renunciation of parental authority. (Celis v. Cafuir, 8
6 Phil. 555) Even if a definite renunciation is manifest, the law still disallo
ws the same. (Art. 210, FC)
SPS. ESTONINA v. CA (G.R. No. 111547, Jan. 27, 1997)
Civil Law/Family Code/Presumption of Conjugal Property: Proof of acquisition dur
ing the marriage is a condition sine qua non for the operation of the presumptio
n in favor of the conjugal partnership. The words "married to" on the certificat
e of title are merely descriptive of civil status (Jocson v. CA, 170 SCRA 333 [1
989]).
1995
SANTOS v. CA (240 SCRA 20 [1995])
Civil Law/Family Code/Psychological Incapacity: Husband argues that the wife's f
ailure to return home (from the States), or at the very least to communicate wit
h him, for more than 5 years are circumstances that show psychological incapacit
y. Petition denied.
Psychological incapacity must be characterized by (a) gravity (b) juridic
al antecedence, and (c) incurability. The incapacity must be grave or serious s
uch that the party would be incapable of carrying out the ordinary duties requir
ed in marriage; it must be rooted in the history of the party antedating the ma
rriage, although the overt manifestations may emerge only after the marriage; a
nd it must be incurable or, even if it were otherwise, the cure would be beyond
the means of the party involved.
Psychological incapacity was not meant to comprehend all such possible c
ases of psychoses as extremely low intelligence, immaturity and like circumstanc
es. Art. 36 should refer to no less than a mental (not physical) incapacity tha
t causes a party to be truly incognitive of the basic marital covenants that con
comitantly must be assumed and discharged by the parties in the marriage. The i
ntendment of the law was to confine the meaning of the phrase to the most seriou
s cases of personality disorders clearly demonstrative of an utter insensitivity
or inability to give meaning and significance to the marriage. This psychologi
cal condition must exist at the time the marriage is celebrated. The law does n
ot evidently envision an inability of the spouse to have sexual relations with t
he other.
ESPIRITU v. CA (242 SCRA 362 [February 1995])
Civil Law/Family Code/Custody of Children: The best interests of the child must
be determined as of the time that either parent is chosen to be the custodian, b
ut the matter of custody is not permanent and unalterable.
SANTOS, SR. v. CA (242 SCRA 407 [February 1995])
Civil Law/Family Code/Substitute Parental Authority: Only in case of parents' de
ath, absence or unsuitability may substitute parental authority be exercised by
the surviving grandparent.
ATIENZA v. BRILLANTES, JR. (243 SCRA 32 [March 1995])
Civil Law/Family Code/Application of Art 40: Article 40, FC is applicable to rem
arriages entered into after the effectivity of the FC on August 3, 1988 regardle
ss of the date of the first marriage, said article being a procedural rule where
there is no impairment of vested rights.
SALVADOR v. CA (243 SCRA 239 [March 1995])
Civil Law/Family Code/Presumption of Conjugal Property: The Court reiterates the
rule that all property of marriage presumed to belong to the conjugal partnersh
ip, unless proven otherwise.
PEOPLE v. TEEHANKEE, JR. (G.R. No. 111206-08, October 6, 1995)
Civil Law/Family Code/Right to Damages of Adoptive Parent: Under the Family Code
which was already in effect at the time of Maureen's death, Anders Hultman, tho
ugh an adoptive father, was entitled to the award of damages made by the trial c
ourt [See Art. 190 (2) and (5)].
DAVID v. CA (G.R. No. 111180, Nov. 16, 1995)
Civil Law/Family Code/Support & Custody of Minors: (1) While it is true that the
determination of the right to the custody of minor children is relevant in case
s where the parents, who are married to each other, are for some reason separate
d from each other, it does not follow, however, that it cannot arise in any othe
r situation. For example, in Salvaa v. Gaela (55 Phil. 680 [1931]), it was held
that the writ of habeas corpus is the proper remedy to enable parents to regain
custody of a minor daughter even though she was in the custody of a third person
of her free will because her parents were compelling her to marry a man against
her will. Indeed, Rule 102, 1 makes no distinction between the case of a mother
who is separated from her husband and is entitled to the custody of her child an
d that of a mother of an illegitimate child who, by law, is vested with sole par
ental authority, but is deprived of her rightful custody of her child.
The fact that V has recognized C may be a ground for ordering him to give
support to C, but not custody. Under Art. 213, Family Code, "no child under se
ven ... shall be separated from the mother unless the court finds compelling rea
sons ..."
(2) The order for payment of allowance need not be conditioned on the gra
nt of custody. Under Art. 204, FC, a person obliged to give support can fulfill
his obligation either by paying the allowance or by receiving and maintaining in
the family dwelling the person who is entitled to support. In the case at bar,
C, being less than 7 at the time the case was decided by the RTC, cannot be take
n from the mother's custody. Even now that the child is over 7, the mother's cu
stody will have to be upheld because the child categorically expressed preferenc
e to live with his mother.

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