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 an intention naturally inferable from
his words or actions; and on the part of the 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 concepts is control;
one person — the agent — agrees to act under the control or direction of another — the
principal. Indeed, the very word "agency" has come to connote control 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 agency, 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 the intention of
the parties as gathered from the whole scope and effect of the language employed. Ultimately,
what is decisive is the intention of the parties. In 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 terms 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 estopped from alleging the
contrary.

1996

LIM v. CA (February 1996)

Contract of Agency/Validity & Enforceability: There are some provisions of the law 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 parties (Arts. 1357 &
1358, Civil Code)
3) When form is required for the purpose of proving the existence of the contract (Statute of
Frauds).
A contract to sell on commission basis does not belong to any of these three categories,
hence, it is valid and enforceable in whatever form it may be entered into.

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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 authorized 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 signatures is not
conclusive proof of forgery for forgery cannot be presumed. (Tenio-Obsequio v. CA, G.R. No.
107967, 1 Mar. 1994)
Even granting that petitioner’s signature was falsified, and the GPA and deed of sale void, such
would not revoke title subsequently issued in favor of private respondent, an innocent purchaser
for value, one relying on the notarized GPA presented by petitioner’s wife. Being the wife of the
owner and having with her the title 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-à-vis Power to Sell Land: The explicit 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 possession 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 rights does not grant to the agent expressly or impliedly, the power to
sell the lot or portion thereof. In the context of the grant of powers to the agent, alienation 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 P250.00/sq. m.
When the sale of a piece of land or any interest thereon is through an agent, 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 estate, a POA must so express the powers of the
agent in clear and unmistakable language. Where there is any reasonable doubt, no such
construction shall be given the 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 unfair dealing. Hence, there is a well-
established exception to the general rule as where the conduct and dealings of the agent are
such as to raise a clear presumption 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 sense to expect that
he would communicate this to the principal. Verily, when an agent 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 upon inquiry and
must discover upon his peril the authority of the agent
Definiteness of price is essential element in formation of a binding contract of sale.

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 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 transaction, although
the business of pursuing to a successful termination may continue for a number of
years; a partnership generally relates to a continuing business of 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 specific undertaking. The Supreme
Court has however recognized a distinction between these 2 business forms and has held that
although a corporation cannot enter into 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 and CA.
Since a contract of partnership is consensual, an oral contract of partnership is a good
as a written one; when no immovable property or real rights are involved, what matters is that
the parties have complied with the requisites of 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 uncollected receivables.
A mere falling out or misunderstanding between the partners does not convert the
partnership into a sham organization – the partnership exists until dissolved 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 attendance 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 in 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 contribution to a common stock, and (2) a joint
interest in the profits.” In other words, a partnership is formed when persons contract “to devote

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to a common purpose either money, property, or labor with the intention of dividing the profits
between themselves.” Meanwhile, an association implies associates who enter into a “joint
enterprise x x x for the transaction of business.”
(2) Where in the case before us, the ceding companies entered into a Pool Agreement or an
association that would handle all the insurance businesses covered under 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 partnership: (1)
dissolution; (2) winding-up; and (3) termination. Dissolution is the change in the relation of the
partners caused by any partner ceasing to be associated in the carrying on of the business. It is
that point of time that the partners cease to carry on the business together. Winding up is the
process of settling 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 terminated, 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 uncollected receivables, which
were presented to the trial court. Since the partnership has 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.

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 resolved by the probate court. (Garcia v. Garcia, 67 Phil. 353, 356-357 [1939])
Under P.D. 892 (effective 16 Feb. 1976), all holders of Spanish titles/grants 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 holders of Spanish
titles the right to apply for registration of their lands under Act No. 496, within 6 months from the
effectivity of P.D. 892. Thereafter, however, any Spanish title, if utilized as evidence of
possession, cannot be used as evidence of ownership in any land registration proceedings
under the Torrens system. All instruments affecting lands originally registered under the
Spanish Mortgage 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 Deeds: No
voluntary instrument shall be registered by the Register of Deeds unless 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 RTC 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 its limited
jurisdiction when acting as a land registration court has been eliminated by P.D. No. 1529, to
avoid multiplicity of suits. The RTCs now have the authority 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 land
registration court can now hear and decide controversial and contentious cases 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 entry
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 lot involved considering the factual
circumstances of this case, i.e., constructive knowledge of the prior sale.

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 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 show 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, within the
limits of the possible, of the spiritual status quo ante; and therefore, it must be proportionate to
the suffering inflicted.
Compensation for loss of earning capacity - Compensation of this nature is awarded not
for loss of earnings but for loss of capacity to earn money. Evidence must be presented that
the victim, if not yet employed at the time of death, was reasonably certain to complete training
for a specific profession. It is not necessary that education, as a guide to future earnings, relate
to a specific 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 custody of the goods during
storage. Y practically admitted that it failed to maintain 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. But 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 the 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 income 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. The PN
provided for a late payment penalty of 2.5% monthly atty’s fees equivalent to 25% of the amount

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due in case legal action is instituted and 10% of the same as liquidated damages. X defaulted
payment despite repeated demand. Y filed complaint 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 entitled only to
atty.’s fees, but only in a sum equal to 10% of the amount due which 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. Heirs of Y were
awarded indemnity for loss of earning capacity despite absence of evidence to support the
widow’s claim for loss of earning capacity.
An indemnity for loss of earning capacity is justified, it appearing from the testimony of
the surviving spouse that the deceased was 40 years old at the time of his untimely death and
earned P4,200 monthly. The testimony of the surviving 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 capacity 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 murdering 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 evidence was presented by the prosecution to support this
claim.
The SC agrees with X. To recover actual damages, it is necessary to prove 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 this 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 the Civil Code
provides that temperate damages may be recovered when the court finds that some pecuniary
loss has been suffered but its amount cannot, from the nature of the case be 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 purchase for
Y radio transreceivers from Japan. Y commenced operations after winning a bid in Subic Naval
Base without the transreceivers from Japan by borrowing radio units from third party. X thus
cancelled his order with this Japanese supplier. X filed complaint for breach of contract.
Damages cannot be awarded even if assuming there was breach. Damnum absque
injure.
There was no bad faith. Y borrowed the equipment because he was faced with 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 loss must not only be capable of
proof, but must be proven with a reasonable degree of certainty. The claim must be premised
upon competent proof or upon best evidence obtainable, such as receipts or other documentary
proof. Only the testimonies 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 addition, moral damages in

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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 granted P500,000
to the victim as moral damages.
SC ruled that the grant of moral damages amounting to P500,000 is unreasonable.
Moral damages are not intended to enrich the victim, rather they are awarded 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 motorcycle. 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 arising 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 damages 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 cannot recover damages twice for the same
negligent act or omission.
Consequently, a separate civil action for damages lies against the offender in a criminal
act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the
offended party is not allowed to recover damages on both scores, and would be entitled only to
the bigger amount of the 2, assuming 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 need of
proof of mental and physical suffering. In addition, P50,000 is awarded to 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 present
documentary evidence to support its claim for damages for loss of earning capacity of the
deceased does not preclude recovery of said damages. The testimony of 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 that the
institution of the action was prompted be a sinister design to vex and humiliate a person must
be clearly and preponderantly established to entitle the victim to damages. The law could not

8
have meant to impose a penalty on the right 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
informing him that he was indebted to them and ordering him to pay his obligation. Marasigan
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 substitute for money and not money,
the delivery of such an instrument does not, by itself 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 contract.
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. 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 compensation awarded 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 violation of a legal duty, the injured party bears the consequences alone.
The award for tort damages is based on the premise that an individual was injured in
contemplation of law. There must be a breach of a duty, which breach must primarily cause the
injury.

1997

PNB v. CA (G.R. No. 116181, Jan. 6, 1997)

Civil Law/Damages/ Quantum Meruit: Quantum meruit allows recovery of the reasonable 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 determination 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 in the nature of such claim because its
settlement requires the application of judgment 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
determining the total compensation due to the claimants considering that the matter on the
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 due to petitioner and scrutinized the evidence
to sustain the claim. Besides, there is nothing in the cited cases which would imply that only the
COA can determine the specific amount due to a contractor guided by the established principle

9
of quantum meruit. As our courts are both courts of law and equity, they are not 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 petitioners' 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 shingles. 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 liability 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
specifications, 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 connecting 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 at PAL's expense as he did not have cash with
him, but PAL refused. Pantejo learned that the hotel expenses of 2 other passengers were
reimbursed by PAL. Pantejo 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 means, 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 plaintiff may be entitled remains unliquidated and
not known until definitely ascertained, 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-patient relationship
was created. In accepting the case, the doctors in effect represented that, having the needed
training and skill possessed by physicians and surgeons practicing in the same filed, they will
employ such training, care and skill in the treatment of their patients. They have a duty to use at
least the same 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 whereby the patient is injured in
body or in health, constitutes actionable malpractice. Thus, in the event that any injury results

10
to the patient from want of due care or skill during the operation, the surgeons may be held
answerable in damages for negligence.
Moreover, in malpractice or negligence cases involving the administration 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 anaesthesiologists to hold the defendant liable
for the death or injury of a patient under excessive or improper anaesthesia. Essentially, it
requires 2-pronged evidence: evidence as to the recognized standards of the medical
community in the particular 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 divided 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) Private
respondent need not prove presence of their relative-victims as passengers on the ship There
is no reason he should claim members of his family perished 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 alive than it is for petitioner to show the contrary.
(2) Petitioner breached its duty to exercise extraordinary diligence. It 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 negligent 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 imminent 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 fault can be attributed to
the shipowner.
(4) Petitioner's contention that the expenses for the erection of a monument and other
expenses for memorial services for the victim should be considered 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 deceased. Damages incidental to or arising out of such death
are for pecuniary losses of the beneficiaries of the deceased.

CRUZ v. CA (November 1997)

Civil Law/Torts/Medical Malpractice Suit: A medical malpractice suit is the type of claim which a
victim has available to him or her to redress a wrong committed by a medical professional which
has caused bodily harm. (Garcia-Rueda v. Pascasio, 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 some instances, as a criminal case under Art. 365, RPC, with which the civil
action for damages is impliedly instituted.
The elements of reckless imprudence are: (1) the offender does or fails to do an act; (2)
the doing or failure to do that act is voluntary; (3) that it be 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 offender, considering his employment or occupation, degree of
intelligence, physical condition, and other circumstances regarding person, time and place.
Whether or not a physician has committed an "inexcusable lack of precaution" in the
treatment of his patient is to be determined according to the standard of care observed by other
members of the profession in good standing under similar circumstances bearing in mind the
advanced state of the profession at the time of treatment or the present state of medical
science.

11
 All 3 courts below bewailed the inadequacy of the facilities/supplies/provisions and
untidiness of petitioner's clinic; the failure to subject the patient 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 Lydia to the SPDH and the reoperation performed on her by petitioner.
But while it may be true that the circumstances pointed out by the courts below seemed beyond
cavil to constitute reckless imprudence on the part of the surgeon, this conclusion is still best
arrived at not through the educated surmises nor conjectures of laymen, including judges, but
by the unquestionable knowledge of expert witnesses. For whether a physician or surgeon has
exercised the requisite degree of 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 evaluating. Expert testimony
should have been offered to prove that the circumstances cited by the courts below constituted
conduct falling below the standard of care employed by other physicians in good standing when
performing the same operation.

1996

VALENZUELA v. CA (February 1996)

Civil Law/Torts & Damages/ Contributory Negligence/ Vicarious Liability: Was V guilty of
contributory negligence in parking her car alongside Aurora Blvd., which, L points out, is a no
parking zone? No. When V discovered she had a flat tire, she stopped at a lighted place where
she parked the car very close to the sidewalk. Under these circumstances, V exercised the
standard reasonably dictated by the emergency and could not be considered to have
contributed to the unfortunate 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 taken
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 employer, for his failure to exercise good father diligence in
the selection and supervision of his employees.
When a company gives full use and enjoyment of a company car to its employee, 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 responsibility to the public
to see to it that the managerial or other employees to whom it entrusts virtually unlimited use of
a company issued car are able to use the company 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 compensation awarded for the damage suffered. In
order that the law will give redress for 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.

12
 Contrary to claim of private respondents, petitioners could not be said to have violated
the principle of abuse of right. In order that said principle can be applied, the following
requisites must concur: (1) the defendant acted 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 exercise 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 respondents, 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 of action arises in the latter's favor. The courts can give
no redress for hardship to an individual resulting from action reasonably calculated to achieve a
lawful end by lawful means.

MANIAGO v. CA (March 1996)

Civil law/Torts & Damage/Action for Damages: The right to bring an action for damages 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 otherwise, 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, private
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 would have reached it destination, albeit,
half a day late. Moreover, private respondent failed to prove that he did not receive his salary,
nor that his absence was 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 2201, 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 must 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
expenses 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 contract, 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 in
criminal cases where the crime was committed with one or more aggravating circumstances.
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.

13
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 confirmed only for Casablanca and
Brussels, and that her flight from Brussels to Manila 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 in the custody of
petitioner. When she discovered her bag was missing, she promptly accomplished and filed a
Property Irregularity report, followed up her claim, and even filed a formal letter-complaint. She
felt relieved when she was advised 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
only 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 amended the
Warsaw Convention by removing the provision that if the airline took all necessary steps to
avoid the damage, it could exculpate itself completely, and declared the stated limits of liability
not applicable 'if it is proved that the damage resulted from an act or omission of the carrier. The
Convention does not thus operate as an exclusive enumeration of the instances of an airline's
liability, or as an absolute limit of the extent of that liability.[I]t should be deemed 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 compensate the claimant for actual
injury suffered and not to impose a penalty on the wrongdoer. 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 suffering he has undergone, by reason of the defendant's culpable action. Its award is
aimed at the restoration, within the limits of the possible, of the spiritual status quo ante, and it
must be proportional to the suffering inflicted.
Exemplary damages are imposed not to enrich one party or impoverish another but to
serve as a deterrent against or as a negative incentive to curb socially deleterious actions.

BALIWAG TRANSIT v. CA (May 1996)

Civil Law/ Commercial Law/ Transportation/ Common Carriers/ Torts/ Negligence: The 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 visible one hundred meters away. No negligence, therefore, may be
imputed to A & J Trading 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 truth is suspect, but must
depend upon competent proof that damages have been actually 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 shows the gross negligence of the
driver of Baliwag bus which amounted to bad faith.

14
PHILIPPINE AIRLINES v. CA (June 1996)
Civil Law/Commercial Law/ Transportation Law/ Damages: Moral damages are recoverable 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 care for the interests of its passengers amount to
bad faith. What the law considers as bad faith which may furnish the ground for an award of
moral damages would 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 unprofessional and
proscribed conduct is attributable to petitioner airline.
It must, of course, be borne in mind that moral damages are not awarded to penalize the
defendant but to compensate the plaintiff. In a contractual or quasi-contractual relationship,
exemplary damages, on the other hand, may be awarded only if the defendant had acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner. Attorney's fees in the concept
of damages may be awarded where there is a finding of bad faith. The evidence on record
amply sustains that 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 contrary, the award of
P500,000 by the RTC as actual damages is reasonable considering 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 might 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 bad faith.
2.) Exemplary damages and attorney's fees proper. Error for CA to increase award of moral
damages and reduce attorney's fees, for same reason as compensatory damages.
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 showing
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 reparing the defective brake system
below. The driver should have known that his brake 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 from the bus to tell the gasman to fill the tank, he should have placed a
stopper or any hard object against a tire or two of the bus. But without taking the necessary
precautions, he boarded the bus, causing it to move, which lead to the accident.
2) Presumption of negligence on employer's part in the selection of or supervision over
employee is rebuttable by clear showing of good father diligence. Hence, to escape solidary
liability for quasi-delict committed by an employee, the 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 moral and mental suffering.
The loss of earning capacity is based on 2 factors: number of years on the basis of which the
damages shall be computed, and the rate at 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 forbearance 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

15
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,
the applicable rate of legal interest shall be 12%.
The award of the trial court shall earn interest at the rate of 6% p.a. from 15 May 1984
(the date fixed by the trial court) until fully satisfied, but before judgment becomes final. From
date of finality of judgment until the obligation is totally paid, a rate of 12% is imposed.

PEOPLE v. SEQUIÑO (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 complainants are concerned
since they did not ask for and testify thereon. Only 1 private 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 contract 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 prosecution 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 clearly 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 executed 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 on, 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 time to pay the obligation. He also demanded the refund of the
earnest money of P1M which it gave to Barreto.
Art. 1385 of the CC provides that rescission creates the obligation to return the things
which were the object of the contract together with their fruits and interest. The vendor is
therefore obliged to return the purchase price paid to him by the buyer if the latter rescinds the
sale, or when the transaction as 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 rescission
of the contract to sell by the petitioner without opposition from private respondents 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.

16
METROBANK v. CA (G.R. No. 122899, June 8, 2000)
Civil Law/Oblicon/ Estoppel: In Maneclang vs. Baun, this Court enumerated the requisites 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 matter; 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 that there was a
meeting of the minds between Romago and TSI regarding the question of sharing of payment of
rentals and utilities charges, pending the consummation of the Stock Purchase Agreement.
There is no adequate showing that TSI consented to any such verbal agreement. On the
contrary, TSI through its General Manager 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 reason of equity to
answer the demands of justice and prevent unjust enrichment. It arises against one, who, by
fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought
not, in equity and good conscience, hold. Correspondingly, actions thereon prescribe after ten
(10) years as provided 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 obligation created by law; and (3) upon
a judgment.
Article 1154 of the Civil Code is applicable by parallelism: the period during which the
obligee was prevented by fortuitous event from enforcing his right 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 an obligation. While failure to
comply with the first condition results in the failure of a contract, failure to comply with the
second merely gives the other party options and/or remedies to protect his interests.
…by the unilateral cancellation of the contract, the defendant has acted with bad faith
and this was further aggravated by the subsequent inking of a contract between defendant and
co-defendant. It is very evident that (the defendant) thought that by the expedient means of
merely writing a letter would automatically 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
express provisions of the law and is contrary to fair and just dealings to which every 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
contract in favor of a new one.
Where there is no clear agreement to create a new contract in place of the existing one,
novation cannot be presumed to take place, unless the terms of the 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 supersede a contract of lease over the same property.

17
 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 acceptance of such payment effectively
withdrew the cancellation of the provisional sale. We do not agree. Unless the application of
payment is expressly indicated, the payment shall be applied to the obligation most onerous to
the debtor. In this case, the unpaid rentals constituted the more onerous obligation of the
respondent 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 agreement entered
into between petitioner Viewmaster and respondent Allen Roxas was an agreement that by its
terms is not to be performed within a year from the making thereof. To be taken out of the
operation of the Statute of Frauds, the agreement must be fully performed on one side within
one year from the making thereof. In the case at bar, since neither of the parties has fully
performed their obligations within the one-year period, then it behooves this Court to declare
that 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 amount 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 Article 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 respondent Allen Roxas obtained a loan from
First Metro Investments, Inc. not from petitioner Viewmaster. It was FMIC that provided the
funds with which Allen Roxas acquired the controlling interest in State Investment Trust, Inc.
FMIC lent the money to Roxas because the latter needed the money and not to obtain any
beneficial interest in the shares of stock in State Investment. Viewmaster merely facilitated 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 parties to a
contract is unable to read and fraud is alleged, the person enforcing 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 contracts and
agreements between parties not contrary to law, morals, good customs, public policy or public
order have the force of law between the contracting parties and should be complied with in good
faith.
Equity is applied only in the absence of, and never against, statutory law or judicial rules
of procedure.
Also, while this Court recognizes that in contracts to sell even if the contract is
terminated the seller can retain the sums already received or paid, such 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 responsibility. In
negligence cases, the offended party (or his heirs) has the option between an action for
enforcement of civil liability based on culpa criminal under Article 100 of the Revised Penal
Code and an action for recovery of damages based on culpa aquiliana under Article 2176 of the

18
Civil Code. Article 2177 of the Civil Code, however, precludes recovery of damages twice for the
same negligent act or omission.
Consequently, a separate civil action for damages lies against the offender in a criminal
act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the
offended party is not allowed, if he is actually charged also criminally, to recover damages on
both scores, and would be entitled in such eventuality only to the bigger award of the two,
assuming the awards 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 determined 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 such 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 validly 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 the Revised Rules
of Court expressly requires that for parol evidence to be admissible to vary the terms of the
written agreement, the mistake or imperfection thereof 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 intrinsic 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
have been reduced to writing, it is considered as containing all the terms agreed upon and there
can be, between the parties and their successors-in-interest, no evidence 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 mortgage by the presence of
any of the following:
'(1) When the price of a sale with right to 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 repurchase another instrument
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 intention of the parties is
that the transaction shall secure the payment of a debt or the 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

19
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 subject property. Here, everything
appears to be clear and unambiguous and nothing is doubtful, within the contemplation of
Article 1602. When the words of the contract 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 establishment of the obligation shall be the basis of
payment, unless there is an agreement 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 increase or decrease
could not have been reasonably foreseen or was manifestly beyond the contemplation of the
parties at the time of the establishment of the obligation.
“Erosion” is indeed an accurate description of the trend of decline in the value 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 without 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 contract; and (3) cause of the obligation which is established.
Due execution of documents representing a contract is one thing, but perfection of the contract
is definitely another.

DBP v. CA (G.R. No. 137557. October 30, 2000)

Civil Law/ Contracts/ Breach/ Rescission: Under the Civil Code, parties to a contract can make
stipulations therein provided they are not contrary to law, morals, 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 Conditional Contract of Sale. There being no question as to the
validity of the Conditional 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 breach, but only such
substantial and fundamental breach as would defeat the very object of the parties in making the
agreement. Notwithstanding private respondents' delay in paying the amortizations, petitioner
DBP unqualifiedly accepted the payments made by them. Hence, petitioner lost its right to
rescind the sale on the 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 application of the payment is made, the former cannot
complain of the same, unless there is a cause for invalidating the contract.

20
 Also, under the law, if the debtor did not declare at the time he made the 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 yet due and the payment has to be applied first to
the debt most onerous to the debtor.
Assnt to the change in the manner of application of payment must be clear 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 know how to
write can not validly give consent to contracts. In the instant case, Johnny 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 of 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 representative of Johnny P. Uy. Besides,
petitioners themselves insist that Coloma was not acting in a representative capacity when she
purchased the subject, but rather, that 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 payment of
obligations. In order that there may be substantial performance of an obligation, there must
have been an attempt in good faith to perform, without any willful or intentional departure
therefrom. This concept of substantial performance may be applied by analogy in the
determination of question on the proper payment of the appellate docket fees.

AYALA CORPORATION v. ROSA-DIANA REALTY AND DEVELOPMENT CORPORATION

(G.R. No. 134284. 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 contrary to law, morals, good
customs, public order or public policy, they must be complied with in good faith. The party guilty
of violating the deed restrictions may only be held alternatively liable for substitute performance
of its obligation, 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 contractual
stipulations annotated on the Torrens Title, on which Ortigas relies, must yield to the ordinance.
When that stretch of Ortigas Avenue from Roosevelt Street to Madison Street was reclassified
as a commercial zone by the Metropolitan Manila Commission in March 1981, the restrictions in
the contract of sale between Ortigas and Hermoso, limiting all construction on the disputed lot to
single-family residential buildings, were deemed extinguished by the retroactive operation of the
zoning ordinance and could no longer be enforced. While our legal system upholds the sanctity
of contract so that a contract is deemed law between the contracting parties, nonetheless,
stipulations in a contract cannot contravene "law, morals, good customs, public order, or public
policy." Otherwise such stipulations would be deemed null and void.

21
LHUILLIER v. CA (G.R. No. 128058. December 19, 2000)
Civil Law/ Contracts/ Lease: A covenant to renew a lease, which makes no provision on its
terms, implies an extension or renewal subject to the same terms in the original lease contract.
Since 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.
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. This stipulation, not being
contrary to law, morals, public order or public policy, 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)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. 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 allow the courts to make a contract for the parties.
(2) Improvements made by lessees on the leased premises are not valid reasons for
their retention thereof; otherwise, a lessee would “improve” his landlord out 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 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.
Also, Art. 1678 merely grants to such a lessee making in good faith useful improvements the
right to be reimbursed ½ of the value of the improvements upon the termination of the lease, or,
in the alternative, to remove the improvements if the lessor refuses to make reimbursement.

ABS-CBN v. CA (Jan. 21, 1999)

Civil Law/ Contracts/ Basis for the Award of Damages: (1) A contract is a meeting of the minds
between two persons whereby one binds himself to give something or render some service to
another for a consideration. In the instant case, there was no acceptance of VIVA’s offer for it
was met by a counter-offer which substantially 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 corporation because
being an artificial person and having existence only in legal contemplation, it has no feelings, no
emotions, no senses.
(3) The claims of RBS against ABS-CBN are not based on contract, quasi-contract,
delict, or quasi-delict. Hence, the claims of moral and exemplary damages 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 implies a conscious and intentional design to do a wrongful act
for a dishonest purpose or moral obliquity. Such must be substantiated by evidence. There is
no adequate proof that ABS-CBN was inspired by malice or bad faith. It was honestly
convinced 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 that the adverse result of an action does
not mean to impose a penalty on the right to litigate. If damages result from a person’s exercise
of a right, it is damnum absque injuria.

DIZON v. CA (Jan. 28, 1999)

Civil Law/ Contracts/ Lease with Option to Purchase/ Exception of Period to Exercise
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

22
continued enjoyment of the property leased. Therefore, an implied new lease does not ipso
facto carry with it any implied revival of private respondent’s option to purchase (as lessee
thereof) the leased premises. The provision entitling the lessee the option to purchase the
leased premises 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 the option to
purchase expired with the termination of the original contract of lease for one year.

RAMOS v. CA (Feb. 3, 1999)

Civil Law/ Oblicon/ Principle of Relativity of Contracts/ Land Titles/ Prescription or Adverse
Possession: (1) In the absence of registration as to operate against the whole world, contracts
bind only the parties who had entered it by virtue of the basic principle of relativity of contracts.
This basic principle applies even if the sales were supposedly concluded at a time prior to the
operation of 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 derogation to that of the registered owner shall be
acquired by prescription or adverse 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 conditions, the power to decide, WON
to enter into a principal contract. It binds the party who has given the option, not to enter into
the principal contract with 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 parties may enter
upon the consummation of the option.
(2) In the contractual relations, the law allows the parties leeway in the 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 contract purporting to be an absolute
sale, and the presence of any of the circumstances in 1602 give rise to the presumption in favor
of an equitable mortgage. Here, the CA confirmed that 3 circumstances were present and
proven, to wit: (1) the inadequacy of the consideration; (2) the respondent remained in
possession of 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 inaction for 39 years, the
petitioners were barred by laches from asserting ownership 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 an agreed time and at a determined price.
It is separate and distinct contract from 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 consensual contract and is perfected at the moment there is a meeting of the
minds upon the thing which is the object of the contract and upon the price.

23
 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 that a contract
is an equitable mortgage are present, it shall be considered as such regardless of its
nomenclature: (1) when the price of a sale with the right to 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 repurchase 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 the parties is that the transaction shall
secure the payment of a debt or performance of any other obligation.
In determining the nature of a contract, courts are not bound by its form 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 provides that “a
compromise is a contract whereby the parties by making reciprocal concessions, avoid a
litigation or put an end to one already commenced. The CC does not only defines and
authorizes compromises, it in fact encourages them in civil actions. They are generally to be
favored and cannot be set aside if the parties acted in good faith and made reciprocal
concessions to each other in order to terminate a case. However, the law abhors settlement of
criminal liability so that the compromise agreement cannot affect charges of violation of RA
3019, sec 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 property by parol evidence, the proof should be
convincing as if the acts giving rise to the trust obligation are proven by an authentic document.
An implied trust, 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 bad 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 substitution or
change of the obligation by a subsequent one which extinguishes or modifies the first is a
novation. It is made either by changing the object or principal conditions referred to as an
objective or real novation; or by substituting the person of the debtor or subrogating a 3 rd person
to the rights of the creditor, which is known as subjective or personal novation.
Novation may either be express or implied: Express, when the new obligation declares in
unequivocal terms that the old obligation is extinguished. Implied, when the new obligation is on
every point incompatible with the old one. In the case at bar, there was clearly an animus
novandi, an express intention to novate. The 1st promissory note which provides for an interest
rate of 12% was cancelled and replaced by a 2 nd note which stipulated a higher interest of 21%.
This 2nd note became the new contract governing the parties’ obligations.

24
 1998

JAPAN AIRLINES v. CA (August 1998)

Civil Law/ Contracts/ Fortuitous Event/ Nominal Damages: Respondents are passengers of
Japan Airlines who were stranded for almost a week in Japan due to the Pinatubo 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 whole stay in Japan, they commenced an action
for damages against JAL.
As a general rule, common carriers are expected to follow a standard of care and
diligence which is higher and different in kind to that of ordinary carriers. However, in the case at
bar, JAL is not absolutely responsible for all injuries or damages suffered by respondents
because such was caused by a fortuitous event. They are liable for nominal damages to
respondents though, for their failure to make the necessary arrangements to transport
respondents on the first available connecting flight to Manila. Nominal damages are adjudicated
in order that 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 loss suffered by him.

VALGOSONS REALTY INC. v. CA (September 1998)

Civil Law/ Lease/ Non-delivery of the Leased Premises: Under Art. 1654 of the NCC, 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), the 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 petitioner VRI
from its liability for the non-performance of its obligation to URB. Moreover, 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: Petitioner is a
holder of a credit card of Security Diners International Corporation (Diners Club). He was
adjudged by the RTC and CA to be indebted to the company for the use of the card.
The contract entered into between petitioner and the company is a contract of adhesion.
A contract of adhesion is one in which one of the contracting parties 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 declared as binding as ordinary contracts, the reason being
that the party who adheres to the contract is free to reject it entirely. The binding effect of any
agreement between parties to a contract is premised on two settled principles: (1) that any
obligation arising from a contract has the force of law between the parties; and (2) that there
must be mutuality between the parties based on their essential equality. The court is therefore
not precluded from ruling out blind adherence to their terms if the attendant facts and
circumstances show that they should be ignored for being obviously too one-sided.
In the instant case, the claim of petitioner that the contract is one-sided has no basis.
The fact that the contract allows for the escalation of interests but does not provide for a
downward adjustment of the same does not boost his claim. There is nothing inherently wrong
with escalation clauses, as long as they are not merely potestative but based on reasonable and
valid grounds. They are valid stipulations in commercial contracts to maintain fiscal stability and
to retain the value of money in long term contracts. In this case, the interest rate is based on the
fluctuation in the market rates, which is beyond the control of the credit card company.

1997

25
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, representations or
admissions, or by his own silence when he ought to speak out, intentionally or through culpable
negligence, induces another to believe certain facts to exist and such other rightfully relies and
acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence
of such facts. (Panay Electric v. CA, 174 SCRA 500 [1989]) This doctrine obtains here. A
statement of account for P376,350.18 covering the period above mentioned was received from
respondent by petitioner with nary a protest from the latter. Neither did petitioner controvert the
demand letter concerning the overdue account; on the contrary, it asked for ample time to
source funds to substantially settle the account.

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 construct a windmill system for
respondent. While the words "deep well" and "deep well 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 instruments 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. 1236 & 1237)..
(3) In order for a party to claim exemption from liability by reason of fortuitous event
under Art. 1174, the event should be the sole and proximate cause of the loss or destruction of
the object of the contract. In Nakpil v. CA (144 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 creditor's injury. A strong wind causing the
collapse of the windmill cannot be considered fortuitous, for it must be present where windmills
are constructed. There must 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 incumbent upon him. (Art. 1169) When
the windmill failed to function properly it became incumbent upon petitioner to repair it in
accordance with the stipulated guaranty. Thus, respondent cannot be said to have been in
delay; instead, it is petitioner who should bear the expenses for the reconstruction of the
windmill. Art. 1167 provides that if a person obliged to do something fails to do it, the same
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 merit an
automatic extension of the period of the contract. (Victorias Milling v. Victorias Milling Planters
Cooperative, 97 Phil. 318 [1955]) The fact is that the contract was subject to a resolutory period
which relieved the parties of their respective obligations but did not stop the running of the
period of the contract. Petitioner may not be to blame for the failure to resume work after the fire
(there were alleged intervening causes, e.g., labor problems due to the work stoppage), 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 question 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

26
and 1673. In such case, a demand to vacate 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 court is not bound to extend it,
and its exercise depends upon the circumstances surrounding the case. Basic common law
principles of fairness and equity shun property 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 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 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, even though
petitioners' lot may suffer damage thereby, as long as the damage caused is not more than
reasonably necessary.

RAMOS v. CA (July 1997)

Civil Law/ Oblicon/ Supervening Inflation: (1) Failure to comply with a provision deemed by the
parties themselves as so important is a ground for the termination 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 of what is due them.

MATANGUIHAN v. CA (July 1997)

Civil Law/Equitable Mortgages: In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered. Accordingly, there are
instances where the form and stipulations of a contract must give way to reflect the true
intention of the parties. This is best illustrated in the instances where contracts of sale, whether
absolute, or one where the vendor reserves the right to repurchase the thing sold or a sale
pacto de retro, are presumed to be an equitable mortgage. An equitable mortgage is defined 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 parties to charge real property as security
for a debt, and contains nothing impossible or contrary to law. Its essential requisites are: (1)
That the parties entered into a contract denominated as a contract of sale; and (2) That their
intention was to secure an existing debt by way of a mortgage.
Under the wise, just and equitable presumption in Article 1602, a document 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 instrument 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
enforce the agreement or understanding in consonance with the true intent of the parties 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 stringent and onerous effects which
follow, unless the terms of the document and the surrounding circumstances so require.
Whenever, under the terms of the writing, any other construction can be fairly and reasonably
inferred, such construction will be adopted and the contract construed as a mere loan unless the
court sees that, if enforced according to its terms, it is not an unconscionable pact.

NOOL v. CA (July 1997)

27
Civil Law/Void Contracts/Sales: (1) A contract of repurchase arising out of a contract 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 contract has already
been performed, the restoration of what has been given is in order. Corollarily, interest thereon
will run only from the time of private respondents' 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 should be distinguished from
rescission of contracts under Art 1383. Although both presupposed 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 Arcega (seller) remained virtually in full
possession of the house and lot, using the master's bedroom. If the transaction was indeed an
absolute sale, then Arcega had no business remaining on the property. Also if petitioners were
the legitimate 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 simulated or fictitious, declared void
as per Art. 1409, NCC. The fact that petitioners were able to secure a title in their names did not
operate to vest ownership upon them. The Torrens system does not create nor vest title, but
merely confirms and records title already existing and vested.

BANGAYAN v. CA (August 1997)

Civil Law/Contracts/ Lease/ Novation: Art. 1311, NCC, provides that contracts take effect only
between the parties, their assigns and heirs, except where the rights 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 lease 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
without the consent of the lessor, unless there is a stipulation to the contrary. 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 of the person of one of
the parties.
It cannot be denied that Teofista's right of first option to buy the leased property in case
of its sale is but part of the bigger right to lease said property. The option was given to Teofista
as she was the lessee. It was a component of the consideration of the lease. The option was
by no means an independent 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.

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 so that without approval by the
mortgagee, no sale is perfected.

28
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 to 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 that the contract is one of absolute sale, where non-payment is a
resolutory condition, 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 power to rescind or enforce
fulfillment of the contract, with damages in either case if the obligor does not comply with what is
incumbent upon him.
The validity of the stipulation in the contract providing for automatic rescission upon non-
payment cannot be doubted. It is in the nature of an agreement granting a party the right to
rescind a contract unilaterally in case of breach without need of going to court. Thus, rescission
under Art. 1191 was inevitable 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 of the particular intention of the
parties. It arises where a person purchases land with his own money and takes conveyance
thereof in the name of another. In such a case, the property is held on resulting trust in favor of
the one furnishing the consideration for the transfer, unless a different intent appears. The trust
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 trust 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 of the certificate of
ownership and execution of the deed of absolute sale were suspensive conditions, which gave
rise to a corresponding obligation on the part of private respondent, i.e., the payment of the last
installment of the consideration mentioned in the first agreement. Such conditions did not affect
the perfection of the contract or prove simulation. Neither did the mortgage.
Simulation occurs when an apparent contract is a declaration of a fictitious will,
deliberately made by agreement of the parties, in order to produce, for the purpose of
deception, the appearance of a juridical act which does not exist 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 intent to sell, on the other hand, is clear.
(2) At most, nonpayment only gives petitioner the right to sue for collection. Generally,
in a contract of sale, payment of the price is a resolutory condition and the remedy of the seller
is to exact fulfillment or, in case of substantial 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 obligation to convey title from acquiring binding force. (Jacinto v. Kaparaz, 209 SCRA
246, 254-55 [1992])
(3) The transfer of ownership via the 2 agreements and the relinquishment of rights,
being private contracts, were binding only between petitioner and private 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 private respondent. Thus, possession of any
disqualification by private respondent under said Act is immaterial to the private contracts
between the parties thereto. (We are not, however, suggesting a departure from the rule that
laws are deemed written in contracts.)

29
BINGCOY v. CA (October 1997)
Civil Law/Prescription: Acquisitive prescription is in itself a mode of acquiring ownership over a
parcel of land and does not require successional rights in order 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 their 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 Procedure), 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 foresee 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 fact that the tire
was new (in fact, grooves/tread were still visible) did not imply that it was entirely free from
manufacturing defects or that it was properly mounted on the vehicle. Neither may the fact that
the tire bought and used vehicle is of a brand name noted for qualify, resulting in the conclusion
that it could not explode within 5 days' use. Be that as it may, it is settled that an accident
caused either by defects in the automobile or through the negligence of its 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 contract 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 that 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 agreed 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 already commenced. Essentially,
it is a contract perfected by mere consent. Once an agreement is stamped with judicial
approval, it becomes more than a contract binding upon the parties; having the sanction of the
court and entered as its determination 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 standard
application for/receipt furnished by petitioner for the purchase of a telegraphic transfer which
relieves it of any liability resulting from loss caused by errors or delays in the course of the

30
discharge of its services cannot absolve the petitioner from liability, where it has acted
fraudulently and in bad faith. In Geraldez v. CA (230 SCRA 320 [1994]), it was unequivocally
declared that notwithstanding the enforceability of a contractual limitation, responsibility from 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 limitation that the agreement must not be
against public policy and any agreement made in violation of this rule is not binding and will not
be enforced. (17 Am Jur. 2d, Contracts 257)

PNB v. CA (April 1996)

Civil Law/ Oblicon/ Payment/ Exemplary Damages: (1)When the court ordered petitioner to pay
private respondent the amount of P32,480.00, it had the obligation to 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 obligation consists has been completely delivered or rendered. The
burden of proof of such 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 compensatory damages,
and only after the claimant's right to them has been established;
2. they cannot be recovered as a matter of right, their determination depending
upon the amount of compensatory damages that may be awarded to the claimant;
3. the act must be accompanied by bad faith or done in a wanton manner. (Octol v.
Ybañez, 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 obligation to pay there
is no evidence that it acted in a fraudulent manner. Furthermore, there is no award of
compensatory damages which is a prerequisite before exemplary 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 based on their essential equality. Any contract which appears
to be heavily weighed in favor of one of the parties so as to lead to an unconscionable result is
void. 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 increasing the
interest rates on the loan without prior assent of the latter. Article 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 grounds.

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 to the surety, a consideration
moving to the principal alone being sufficient.
Moreover, as we held in BPI v. Foerster, although a contract of suretyship 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 parties clearly provided that the guaranty would cover
"sums obtained and/or to be obtained.”

YNSON v. CA; YULIENCO v. CA (June 1996)

31
Civil Law/ Remedial Law/Compromise: Since the parties entered into this compromise
agreement freely without any vice of consent, the same must govern the relations of the parties.
A judicial compromise has the force of law and is conclusive between the parties. A compromise
upon its perfection becomes binding upon the parties and has the effect and authority of res
judicata even if not judicially approved.

VILLA v. CA (G.R. No. 119850, June 20, 1996)

Civil Law/ Oblicon/ Stipulation Pour Autrui/ Torts:(1)The "Agreement" entered into 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 appear 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 the Civil Code de Jesus may demand its
fulfillment provided he communicated his acceptance 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 stipulation 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 does not constitute negligence on his part. Neither can it be claimed that the
same was the proximate cause of his damage. We take judicial notice of the current practice
among major establishments to accept payment by means of credit cards in lieu of cash.

ABELLA v. CA (June 1996)

Civil Law/Interpretation of Contracts: It is a cardinal rule in the interpretation of contracts that "if
the terms are clear, the literal meaning of its stipulations shall control." No amount of extrinsic
aids are required.

INCIONG v. CA (June 1996)

Civil Law/Contracts/Fraud/ Credit Transactions/ Solidary Obligations v. Suretyship/ Joint
Obligations: (1) Fraud must be established by clear and convincing evidence, mere
preponderance of evidence, not even being adequate. Petitioner's attempt to prove fraud must,
therefore, fail as it was evidenced only by his own uncorroborated 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 demand 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 solidary debtor. "A guarantor who binds himself in solidum does not become a solidary co-
debtor to all intents and purposes. There is a difference between a solidary co-debtor and a
fiador in solidum (surety). The latter, outside of the liability 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 than 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 and the same
obligation, the presumption is that the obligation is joint so that each of the debtors is liable only
for a proportionate part of the debt. There is solidary liability only when the obligation expressly
so states, when the law so provides or when the nature of the obligation so requires.

32
 Because the promissory note involved in this case expressly states that the 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 left 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 specific instances
when the period of prescription may be interrupted. Any such interruption is a factual matter to
be properly supported by evidence. Private respondents' claims herein are not barred by
prescription, the period having been interrupted by the written extrajudicial demands made by
private respondents, coupled 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 private respondent
because the condition for its grant is that the employee must retire under the SERP. Yet, it was
the unjust denial of his applications that prevented private respondent from complying with such
condition for early retirement. As petitioners, being employers-obligors, voluntarily prevented
fulfillment of the condition by their own acts, private respondent is deemed to have fulfilled the
condition for early retirement.

PNB v. CA (July 1996)

Civil Law/Oblicon/Compensation: What petitioner bank is effectively saying is that 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 ordered petitioner bank to return the intercepted amount to said
individual, who in turn 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 finally, that petitioner bank
ends up in exactly the same position as when it first took the improper and unwarranted shortcut
by intercepting the said money transfer, notwithstanding the assailed decision saying that this
could not be done! There is here a clever ploy to use this Court to validate an improper act of
petitioner 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 allows 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 extricate 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 conduct, 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 parties 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 the subject lots only upon payment of the full consideration, why then did
private respondents execute a deed of sale over one [of six] lot[s] although they knew too well

33
that a partial amount only of the purchase price was paid? No credible explanation was given
by private respondents.
(3) In construing a written agreement, the reason behind and the circumstances
surrounding its execution are of paramount importance to place the interpreter 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 the 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 not the province of the court to alter a
contract by construction or to make a new contract for the parties; its duty is confined to the
interpretation of the one 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 which it
does not contain. (Bacolod Murcia v. Banco Nacional, 74 Phil. 675)
(5) Fraud is the deliberate or intentional evasion of the normal fulfillment 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 used as collateral by petitioner and amount of loans
secured could not be considered 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
performed 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, 436-437
[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 complete
disposition of the trust propoerty, notwithstanding that the enjoyment in the beneficiary will take
place in the future. Also, the purpose must be an active 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 policy.
Power of administration must be other than a mere duty to perform a contract although
the contract is for a 3rd party beneficiary. A declaration of terms 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 contract is
extinguished, thus a new one must be executed, and vice-versa. In this case, 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 lease is inadmissible to qualify the terms of the written lease
agreement under the 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 Tañada v. Tuvera (146 SCRA 446 [1986]), we ruled that
executive issuances meant to enforce and implement an existing law pursuant to a valid
delegation, must be published.

34
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 stipulated 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 respondent court to change the
stipulations in the contract where it is not illegal. Further, Art. 1306, NCC provides that
contracting parties may establish stipulations as they deem convenient, provided they are not
contrary to law, etc. We find 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 writing, 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 impose 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 memorandum thereof be in
writing and subscribed the party charged or his agent. Evidence of the agreement cannot be
received without the writing, or a secondary evidence of its contents. In case at bench, the
deed of sale and verbal agreement 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
evidencing the contract. Thus, the requirement of the Statute of Frauds has been sufficiently
complied with. Moreover, the principle of the Statute of Frauds only applies to executory
contracts and not to contract either partially or totally performed (Victoriano v. CA, 194 SCRA
19), as in this case, where the sale has been consummated; hence, the same is taken out of
the scope of the Statute of Frauds.
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 agreement. (Art. 1405, NCC)
The Statute of Frauds was enacted for the purpose of preventing fraud and should not be made
the instrument to further them. (National Bank 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 applies 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 complaint considering that the amount
adjudged can be established with reasonable certainty (P98,691.90).

CONSTANTINO v. CA (G.R. No. 116018, November 1996)

Civil Law/Contracts/Land Titles/Fraud: We find respondents’ allegation that they signed the
deed prior to the survey worthy of credit. As found by the trial court, 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 signing. Obviously, when respondents signed the deed,
it was still incomplete sice petitioner who caused it to be prepared left several spaces blank,
regarding the dimensions of the property to be sold. The heirs were persuaded to sign the
document only upon assurance of petitioner that Roque would be present when the property
would be surveyed. But this turned out to be a ruse of petitioner to induce 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 contract concur: (a) employed by a contracting party upon

35
the other; (b) induced the other party to enter into the contract; (c) serious; and (d) resulted in
damage and 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 manifests that
the number of the subdivision plan and the respective area of the lot were merely handwritten
while the rest of the statements were typed, which leads us to conclude that the handwritten
figures were not available at the time the 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 assert 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, without explanation
for this long delay making petitioner guilty of laches.
Further, while petitioner is still the registered owner, and jurisprudence is settled as to
the imprescriptibility of a Torrens Title, there is equally an 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 of 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 346,353
[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 contracts.
ManCom Resolution 85-08, which is neither a rule nor a CB resolution, cannot be used
as basis for escalation in lieu of CB issuances, since par. (f) of the mortgage contract
categorically specifies that any interest rate increase be in accordance with prevailing rules,
regulations and circulars of the CB. The Banco Filipino and PNB doctrines thus apply four-
square, that without such CB issuances, 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 mutuality 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 aggregate, each
must be separately identified and independently justified.

36
CASTELO v. CA (244 SCRA 180 [May 1995])
Civil Law/Oblicon/ Damages/ Interest: In case of ambiguity in language of contract, that
interpretation which establishes a less onerous transmission of rights or permits greater
reciprocity is to be adopted. In delay in discharging an obligation consisting of a payment of a
sum of money, the appropriate measure of damages 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 interest, if none, legal interest of 6% or 12% (latter if loan or forbearance of money).

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 constitutes a waiver, further, continued
acceptance of the installment payments constitutes 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 applying the installment payments to cover said
interest. Otherwise, the creditor cannot apply the payments to the interest and then hold the
debtor in default for 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 are 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 operates to restore things to the state and condition in which
they were found before 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 awarded 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 reasonable certainty.
The actual base for the computation of such legal interest, however, shall be the amount
as finally adjudged by this Court. Furthermore, when our judgment herein becomes final and
executory, the rate of legal interest shall be twelve percent (12%) from such finality until the
satisfaction of the total judgment account, the interim period being effectively equivalent to a
forbearance of credit.

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 binding on the seller-heir, but not on
the other heirs who have not given their consent to it.
(2) In a contract to sell, the payment of the purchase price is a positive suspensive
condition. The vendor's obligation to convey the title does not become effective in case of failure
to pay. When a contract is subject to a suspensive condition, its birth or effectivity can take
place only if and when the condition happens or is fulfilled.
The suspensive condition did not reduce the conditional sale between Eliodoro Sr. and
respondent to one that was and a definite, clear and absolute document of sale," as contended
by petitioners. Upon the occurrence of the condition, the conditional sale became a reciprocally
demandable obligation that is binding upon the parties.

37
SPOUSES LORBES v. CA (G.R. No. 139884, February 15, 2001)
Civil Law/ Sales/Equitable Mortgage: There is no conclusive test to determine whether 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 intention of the parties, as shown not
necessarily by the terminology used in the contract but by all the surrounding circumstances,
such as the relative situation of the parties at that time, the attitude, acts, conduct, declarations
of the parties, the negotiations between them leading to the deed, and generally, all pertinent
facts having a tendency to fix and determine the real nature of their design and understanding.
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 circumstances therein enumerated, suffices to construe a contract
of sale to be one of equitable 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 inadequacy 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 consent 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 conditioned upon the simultaneous
fulfillment of the other. Note that in the contract, petitioner is not even required to make any
deposit, down payment or advance payment, hence, the undertaking of private respondent to
deliver the materials is conditional 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 obligee failed to obtain, referred
to as compensatory damages (lucrum cessans). However, to justify a grant of actual or
compensatory damages, it is necessary to prove 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. Moral damages, meanwhile, may be awarded when in a breach of
contract the defendant 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 cannot
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 rescission of a contract of sale of an immovable property under Art.
1592. Also, rescission 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 parties in

38
making the agreement. In this case, considering that the six-month period was merely an
approximation of the time it would take to reconstitute the lost title and was not a condition
imposed on the perfection of the contract and considering further that the delay in payment was
only thirty days which was caused 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 would not entitle the respondents to rescind the contract. Moreover, the failure of
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 obligation.

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 underscored phrase does not say
that the expropriated portion of the lot was excluded 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 lien 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, accordingly, a new transfer
certificate of title was issued to Guerrero. Pursuant thereto, and by virtue of subrogation, the
latter became the rightful owner entitled 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 Court 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 delivered to the respondent the sum of P10,000 as part of the down-payment that
they had to pay cannot be considered as sufficient proof of the perfection of any purchase and
sale agreement between the parties herein under Art. 1482 of the new Civil Code, as the
petitioners themselves admit that some essential matter — the terms of the payment — still had
to be mutually covenanted.
Thus, it is not the giving of earnest money, but the proof of the concurrence 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, title remains with the
vendor and does not pass on to the vendee until the purchase 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 is not a mere breach, casual or serious, but a situation that prevents
the obligation of the vendor to convey title from acquiring an obligatory force. This is entirely
different from the situation in a contract of sale, where non-payment of the price is a negative
resolutory condition. The effects in law are not identical. In a contract of sale, the vendor has
lost ownership of the thing sold and cannot recover it, unless the contract of sale is rescinded
and set aside. In a contract to sell, however, the vendor remains the owner for as long as the
vendee has not complied fully with the condition of paying the purchase. If the vendor should
eject the vendee for failure to meet the condition precedent, he is enforcing the contract and not
rescinding it. When the petitioners in the instant case repossessed the disputed house and lot

39
for failure of private respondents to pay the purchase price in full, they were merely enforcing
the contract and not rescinding it.

DISTAJO vs. CA
Civil Law/Sales/Persons Prohibited from Purchasing: Art. 1491. The following persons 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 guardianship;
(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 administration;” 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 does 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 parcel 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 cases of multiple
sales, in the double sales of immovables, ownership is transferred 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 of 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, Gatus, the negotiator, was not an agent of
PVDHC. Also, Art. 1874 of the NCC requires for the validity of a sale involving land that the
agent should have an authorization 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 contract,
which is the period from the time the prospective contracting parties indicate interest on the
contract to the time the contract comes into existence – the perfection stage.

40
 SUCCESSION

GENERAL PROVISIONS (774-782)

NUFABLE v. NUFABLE (July 1997)

For the purpose of transmission of rights, it does not matter when the will of the
decedent was approved. When the subject property of their father was mortgaged, the other
heirs had already acquired successional rights over said property. 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 mortgage is limited to that
portion that may be allotted to the co-owner upon termination of the co-ownership. Further, the
other co-owners do not lose their share when their shares were mortgaged by a co-owner
without their consent. It has likewise been ruled that the mortgage of the inherited property is
not binding against co-heirs who never benefited. Moreover, in a case of foreclosure of property
mortgaged by a co-owner, it affects only his share of the property. As regards the remaining
pro-indiviso shares, the same was held in trust by the winning bidder 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 property, rights and
obligations of a person, not extinguished by his death. Conformably, whatever rights Rabadilla
had by virtue of subject Codicil were transmitted to his forced heirs, at the time of his death. And
since obligations not extinguished by death also form part of the estate of the decedent;
corollarily, the obligations imposed by the Codicil on the deceased Rabadilla were likewise
transmitted to his compulsory heirs upon his death.
In the said Codicil, testatrix X devised Lot 1 to Rabadilla, subject to the condition that the
usufruct thereof would be delivered to the private respondent every year. Upon the death of
Rabadilla, his compulsory heirs succeeded to his 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
obligation of the instituted heir reciprocally corresponds to the right of private respondent 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 Philippines. Hence, the
old Civil Code governs the distribution and disposition of his intestate estate. Thereunder, the
legitime of the children and descendants consisted of two-thirds (2/3) of the hereditary estate of
the father and of the mother (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 descendants 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 simulation and hence,
null and void. Even if the kasulatan was not simulated, it still violated the Civil Code provisions
insofar as the transaction affected respondent's legitime. The sale was executed in 1983, when
the applicable law was the Civil Code, not the Family Code.

41
 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 cannot 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 of 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 explicitly declare that the signature in the will is the
genuine signature of the testator.
We are convinced that it is mandatory, the word "shall" connotes a mandatory order. We
have ruled that "shall" in a statute commonly denotes an imperative obligation and is
inconsistent with the idea of discretion and that the presumption 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 general, the testator may either (1) provide
for the designation of another heir to whom the property shall pass in case the original heir
should die before him/her, renounce the inheritance or be incapacitated to inherit, as in a simple
substitution, or (2) leave his/her property to one person with the express charge that 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 case under consideration, the
provisions of subject Codicil do not provide that should Rabadilla default due to predecease,
incapacity or renunciation, the testatrix'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 near
descendants.
Neither is there a fideicommissary substitution here. In a fideicommissary 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 property provided the negotiation is with the near descendants or the
sister of the testatrix. Thus, a very important element of a fideicommissary substitution is
lacking; the obligation clearly imposing upon the first heir the preservation of the property and its
transmission to the second heir. Without this obligation to preserve clearly imposed by the
testator in his will, there is no fideicommissary substitution. Also, the near descendants' right to
inherit from the testatrix is not definite. The property will only pass to them should Rabadilla or
his heirs not fulfill the obligation to deliver part of the usufruct to private respondent.
Another important element of a fideicommissary substitution is also missing here. Under
Article 863, the second heir or the fideicommissary to whom the property 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 is not related by first degree to the second heir. In the case under
scrutiny, the near descendants are not at all related to the instituted heir, Rabadilla.

42
 Article 882 of the New Civil Code is the provision of law in point. The institution of an heir
in the manner prescribed in Article 882 is what is known in 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) the 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 succession. 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 liberality, an obligation
imposed upon the heir should not be considered a condition unless it clearly appears from the
Will itself that such was the intention of the testator. 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 of an
illegitimate child, it refers to illegitimate brothers and sisters as well as to the children, whether
legitimate or illegitimate, of such brothers and sisters.

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 right 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 relatives 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 degree 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 relative nearest in degree excludes the more
distant ones, saving the right of representation when it properly takes place. Relatives in the
same degree shall inherit 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, concerning division
between the paternal and maternal lines.
By right of representation, a more distant blood relative of a decedent is, by operation of
law, raised to the same place and degree of relationship as that 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 latter, but from the person to whose estate the person represented
would have succeeded.
In the direct line, right of representation is proper only in the descending, never in the
ascending, line. In the collateral line, the right of representation may only take place in favor of
the children of brothers or sisters of the 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, firstly, the legitimate children and
descendants, secondly, the legitimate parents and ascendants, thirdly, the illegitimate children
and descendants, fourthly, the surviving spouse, and fifthly, the brothers and sisters/nephews

43
and nieces, of the decedent. Among collateral relatives, except only in the case of nephews and
nieces of the decedent concurring with their uncles or aunts, the rule of proximity is an absolute
rule.
Among the other collateral relatives, i.e. the sixth in the line of succession, 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 uncle, and a first cousin of the full blood can inherit equally
with a first cousin of the half blood, but an uncle or an aunt, being a third-degree relative,
excludes 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 relative.

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 estate of the
deceased, concurring with legitimate brothers and sisters or nephews and nieces (the latter by
right of representation), is one-half of the inheritance. The brothers and sisters or nephews and
nieces, however, can only succeed by right of representation in the presence of unless and
aunts; alone, upon the other hand, nephews and nieces can succeed in their own right which is
to say that 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 should determine the
identification of the heirs in the order of intestate succession and the respective shares of the
heirs. (2) The status and capacity to succeed 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 the marriage rite. (3) Status and capacity of the children will depend upon the
law in force at the time of conception or birth of the child. (4) Provisions on legal succession in
the Muslim Code will apply. Sharers to an inheritance include: the husband and wife, the
parents, grandparents, descendants, full-blood brothers 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. They were
contracts of sale perfected by decedents during their lifetime. Hence the properties conveyed
thereby are not collationable because, essentially, Art. 1601 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 at 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 for the account of the heir/donee.
Ordinary rules of prescription because the reduction of donations which hinges upon the
allegation of impairment of legitime are not controlled by a particular prescriptive period. For
actions upon an obligation created by law, ten (10) years from the time the right of action

44
accrues is the ordinary prescriptive period. In this case, the cause of action accrues upon the
death of the donor-decedent, for only then may the net estate and legitimes be ascertained.
The rules of succession require that, in determining legitimes, the following steps must
be taken: (1) the net estate of the decedent be ascertained by deducting all payable obligations
and charges from the value of the property owned by the deceased at the time of his death; (2)
the value of all donations subject to collation would be added to it (and not the property
donated). Where collatable 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
practicable, equivalent value of the impaired legitime in cash or marketable securities; (3) in the
absence of cash or securities in the estate, so much of such other 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 personality 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 judgment 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 recover 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 siblings. As she herself admitted, she intended to convey lots b
and c to Y in the event the latter returned from abroad. There was thus an implied trust
constituted in her favor. Art 1449 of the CC states: there is also an implied trust when a donation
is made to a person but it appears that although the legal estate is transmitted to the donee, he
nevertheless is either to have no beneficial interest or only a part thereof. There being an
implied trust, the lots in question are therefore subject to collation in accordance with Art. 1061
which staes: Every compulsory 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 property. 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 genuineness 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. Neither is it confirmed to the issue
of the validity of wills. We held in Maniñgat v. Castillo (75 Phil. 532) that the main function of a
probate court is to settle 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 Trinidad v. CA (202 SCRA 106) we held that
questions of title to any property apparently 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 properties ought

45
to be included or excluded from inventory and accounting may be resolved 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 extrinsic 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 nor even by implication prejudge the validity or efficacy of the will's
provisions. However, where the parties agree that the intrinsic validity be first determined, the
probate court may do so. The rule on probate is not inflexible and absolute. Under exceptional
circumstances, the probate court is not powerless to do 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 will; 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 institution of X as
one of the devisees/legatees already involved the will's intrinsic validity which did not have to be
inquired into by the probate court.
The probate court erroneously invoked Nepomuceno v. CA (139 SCRA 206), where 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 the 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 persons, 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 determining whether a certain property should or should not be included in the
inventory of estate proceeding, the probate court may pass upon the title thereto, but such
determination is provisional, not conclusive, and is subject to the final decision in a separate
action to resolve title.
The probate court exercises but limited jurisdiction, thus it has no power 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 parties having legal interest in the property
consent, expressly or impliedly, to the submission of the question to the probate court for
adjudgment, or the interests 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, wills, and other
public instruments shall be governed by the laws of the country in which they are executed.
When the acts referred to are executed before the diplomatic or consular officials of the
Republic of the Philippines in a foreign country, the solemnities established by Philippine laws
shall be observed in their execution.

46
 The clear intent of testator X to bequeath his property to his second wife 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 “family 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 referring to Philippine law. In fact, the will was duly
probated. As a guide, however, 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
same 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 been 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 distribution of the property to the persons entitled to it.
Expenditures incurred for 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 against 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 surviving spouse ceases and is passed to the administrator appointed by
the court having jurisdiction over the settlement of estate proceedings. Indeed, the surviving
spouse 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 of 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 termination 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 exists, and whether partition is
proper; and, second, a decision confirming the sketch 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 otherwise legally proscribed) and may
be made by voluntarily agreement of all the parties interested in the property. This phase may
end with a declaration that plaintiff is not entitled to have a partition either because a co-
ownership does not exist, or partition is legally prohibited. It may end, upon the other hand, with

47
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 may 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 decision or order
decreeing partition is that it is final and appealable.
Parties to a partition proceeding, who elected to take under partition, and 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 and against the same instrument. Regardless
of whether a parol partition or agreement to partition is valid and enforceable at law, equity will
in proper cases, where the parol partition has actually been consummated by the taking of
possession in severalty and the exercise of ownership by the parties of the respective portions
set off to each, recognize and enforce such parol partition and the rights 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 instant case as no
determination has yet been made of the character and extent of the decedent’s estate. A
complete inventory of the estate may be done during the partition proceedings, especially since
the estate has no debts. Hence the CA committed no reversible error in converting petitioner’s
action for letters of administration 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 legitimes are not prejudiced. Article 1080
of the CC is clear on this. The legitime of compulsory heirs is determined after collation, as
provide for in Article 1061.
Every compulsory heir, who succeeds with other compulsory heirs, must bring 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 petition for
delivery of inheritance share only impleaded one of the other compulsory heirs. The petition
must be dismissed without prejudice to the institution of a new proceeding where all the
indispensable parties are present for the rightful determination of their respective legitime and if
the legitimes were prejudiced 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 under Article
415 of the Civil Code. However, it resolutely argues that the same are improvements, not of its
properties, but of the government-owned national roads to which they are immovably attached.

48
They are thus not taxable as improvements 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 roads.
The New Civil Code divides the properties into property for public and patrimonial
property (Art. 423), and further enumerates the property for public use as provincial road, city
streets, municipal streets, squares, fountains, public waters, public works for public service paid
for by said [provinces], cities or municipalities; all other property is patrimonial without prejudice
to provisions of special laws. (Art. 424)
The character of petitioner's property, be it an improvements as otherwise distinguished
by petitioner, needs no further classification when the law already 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 service, it is not within the purview of the first paragraph of Art. 424 if the
New Civil Code.

EASEMENTS

FLORE v. LLENADO (June 1995)

Requisites under Arts. 649 & 650: (1) Burden to prove existence of requisites lies on
owner of dominant estate; (2) Mere convenience of dominant estate is 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 chosen. 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. This is so because least prejudice over
shortest distance. This means that the court 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 constructions or walls which can be avoided by a round about way, or to secure the
interest of the dominant owner, such as when the shortest distance would place the way 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 adequate outlet to a public
highway; (b) the dominant estate is willing to pay the proper indemnity; (c) the isolation was not
due to the acts of the dominant estate; and, (d) the right of way being claimed is at a point least
prejudicial to 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 appreciation. While shortest distance may
ordinarily imply least prejudice, it is not always so as when there are permanent structures
obstructing the shortest distance; while on the other hand, the longest distance may be free of
obstructions and the easiest or most convenient to pass through. In other words, where the
easement may be established on any of several tenements surrounding the dominant estate,
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 tenement, 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 demolish a store of strong materials to provide egress to a public
highway, and another 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 predecessors-in-interest intended

49
to establish an easement of right-of-way over Mangyan 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 renunciation of the owner of the dominant estate.
When the court says an easement exists, it is not creating one. For, even an injunction
cannot be used to create one as there is no such thing as a judicial easement. As here, a court
merely declares the existence of an easement created by the parties. Petitioner's argument that
there are other routes to Loyola from Mangyan Road is likewise meritless. The opening of an
adequate outlet to a highway can extinguish only legal or compulsory easements, not voluntary
easements 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 unequivocally made
provisions for its observance by all who in the future might succeed them in dominion.

ALMENDRAS v. CA (August 1998)

For petitioner to be able to demand a right of way through the neighboring 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 prejudicial to the owners of the servient estates
and (2) at which point the distance of the right of way to the public highway would be shortest.
However, as held 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, even 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 reason 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 legal easement is one
mandated by law, constituted for public use or for private interest, and becomes a continuing
property right. As a compulsory easement, it is inseparable from the estate to which it belongs,
as provided for in said Article 617 of the Civil Code. The essential requisites for an easement to
be compulsory are: (1) the dominant estate is surrounded by other immovables and has no
adequate outlet to a public highway; (2) proper indemnity has been paid; (3) the isolation was
not due to acts of the proprietor of the dominant estate; (4) the right 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 the dominant estate to a public highway may be the shortest.
The small house occupying one meter of the two-meter wide easement obstructs 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 the needs of the dominant estate determine
the width of the easement. Conformably then, petitioner ought to demolish whatever edifice
obstructs the easement in view 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 involves 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 respondents' 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

50
title to the property. It merely asserts its inherent sovereign power to "appropriate and control
individual property for the public benefit, as the public necessity, 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 possession 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 from 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 imposed by law. Hence, ownership and real rights are acquired
only pursuant to a legal mode or process. While title is the juridical justification, mode is the
actual 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 intellectual creation) and derivative
(succession mortis causa, tradition as a result of certain contracts, e.g., sale, barter, donation,
assignment or mutuum).
Hence, there is a marked difference between a sale and waiver of hereditary rights. The
former presumes the existence of a contract or deed of sale between the parties. The latter,
technically speaking, is a mode of extinction of ownership ... in favor of other persons who are
co-heirs in the succession. Private respondent, being a stranger to the succession of the
decedent, cannot conclusively claim ownership over the subject lot on the sole basis of the
waiver document 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 entrusted to him
until and unless he repudiates the trust applies to express trusts and resulting implied trusts.
(citations omitted) However, in constructive implied 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 acquire imperfect
title to the property since he did not occupy the lot before June 12, 1945, which is the
requirement of PD 1073, amending RA 1942. (RA 1942 provided 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) requires 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 in 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 from 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 merely evidences and is not constitutive title; Proof needed for
damages

SPOUSES REYES v. DE LA PAZ (September 1998)

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 Petitioners contend ownership of a parcel of land characterized as forestland, through
prescription, as their ancestors were issued a homestead patent and also had possession
thereof.
This contention was rejected by the SC which ruled that a homestead patent issued on a
property which at the time of issuance was part of public domain is void. No prescription runs
against the government. Moreover, a subsequent release 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 ownership of lands of the public
domain is on the person applying for registration. Petitioners 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 manner not prohibited by law and
is consistent with the rights of others. Possession is the holding of the thing or enjoyment of a
right. Literally, to posses means to actually and physically occupy a thing with or without right.
Possession may 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 claims to be so. On
the other hand, one who possesses as a mere holder acknowledges on 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 does 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 asserted to be the
paraphernal property of the mother of the vendors as against repsondent’s contention that said
lot was conjugal so that the vendors could have only sold ½ of the said land. Properties
acquired during the marriage are presumed conjugal. However, this prima facie presumption
cannot prevail over the cadastral court’s specific finding, reached in adversarial proceedings,
that the lot was inherited by the vendee from her mother.
The 1980 reconstitution of the title in the name of Petra Unating, married to Aquilino
Argamaso was notice to the whole world, including her heirs and successors-in-interest, that it
belonged to Petra as paraphernal property. The words “married to” were merely descriptive of
Petra’s status at the time the it was awarded 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 sanctions
individual ownership. The residential lots and terrace rice farms are governed 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 not possess all the rights of an exclusive and full
owner as defined under our Civil Code. Under Kalinga customary law, the alienation of
individually-owned land is strongly discouraged except in marriage and succession and except
to meet sudden financial needs due to sickness, death in the family, or loss of crops. Moreover,
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 policies frown upon indigenous claims to
ancestral lands. Communal ownership is looked upon as inferior, if not inexistent.

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CO-OWNERSHIP

MERCADO v. CA (1995)
A co-owner can only alienate his pro-indiviso share in the co-owned property, thus, a co-owner
does not lose his part ownership of a co-owned property when his share is mortgaged by
another co-owner without the former's knowledge and consent

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, may 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 petitioner 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 the late Adela. (1091 is bigger than 1052 by 3 sq. meters, a difference not
significant 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-ownership. The court must initially settle
the issue of ownership, the first stage in an action for partition. (De Mesa v. CA, 231 SCRA
773) An action for partition 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 the nature and
extent of his title. Until the issue of ownership is definitely resolved, 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 these requisites:
(a) that the deposition of soil or sediment be gradual and imperceptible; (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 banks 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 waters.
Petitioners admit that the accretion was formed by the dumping of boulders, soil and
other filling materials on portions of the Balacanas Creek and the Cagayan River bounding their
land. It cannot be claimed, therefore, that the accumulation of such boulders was gradual and
imperceptible, resulting from the action 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 the exclusive
work of nature; If man-made accretion, it is part of the public domain.

BAGAIPO v. CA (G.R. No. 116290. December 8, 2000)

The rule is well-settled that accretion benefits a riparian owner when the following
requisites are present: 1) That the deposit be gradual and imperceptible; 2) That it resulted from
the effects of the current of the water; and 3) That the land where accretion takes place is
adjacent to the bank of the river. In the absence of evidence that the change in the course of the

53
river was sudden or that it occurred through avulsion, the presumption is that the change was
gradual 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, sower, 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 case 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 delivered 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 useful improvements
and retention of the premises until reimbursement is made, applies only to a possessor in good
faith, i.e., one who builds on land with the belief that he is the owner thereof. It does not apply
where one's only interest is that of a lessee under a rental contract; otherwise, it would always
be in the 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 petitioners refused to exercise that option,
private respondents cannot compel them to reimburse the one-half value of the house and
improvements. Neither can they retain 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: after conducting a
relocation survey, private respondents discovered that a portion of their land was encroached by
petitioners' house; notices to vacate were sent to petitioners, the last one being dated 26 Oct.
1989; and private respondents sued for ejectment within 1 year from last demand.
Private respondents' cause of action springs from Rule 70, §1 xxx That petitioners
occupied the land prior to private respondents' purchase thereof does not negate the latter's
case for ejectment. Prior possession is not always a condition sine qua non in ejectment. This
is one distinction between forcible entry and unlawful detainer. In the former, the plaintiff is
deprived of physical possession through FISTS, thus, he must allege and prove prior
possession. In the latter, the defendant unlawfully withholds possession after the expiration or
termination 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 also by the fact
that a thing is subject to the action of one's will or by the proper acts and legal formalities
established for acquiring such right. (citation omitted) Possession of land can be acquired upon
the execution of the deed of sale by the vendor. Actual or physical occupation is not always
necessary.

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DONATIONS

CENTRAL PHILIPPINE UNIVERSITY v. CA (246 SCRA 511)

When time within which the condition should be fulfilled depends upon the exclusive will of the
donee, its absolute acceptance and acknowledgment of its obligation 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 differently 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 crimes which offend the donor show
ingratitude and are causes for revocation."
One such instance is where the certificate of title was already transferred 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 they 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 by§2, P.D. 1216, is not precise, but it can be easily
inferred that the phrase "gross area" refers to the entire subd
f open spaces, P.D. 1216 itself requires that the open space devoted to parks are non-alienable
public land and non-buildable. However, there is no prohibition in either P.D. 957 or P.D. 1216
against imposing conditions on such donation (in this case, devoting the land to building a
sports complex, 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 that the latter
would build upon the land of a school, the condition imposed is not 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 with the
condition within a reasonable period. Such period, however, became irrelevant herein when the
donee- Municipality manifested through a resolution that it cannot comply with the condition of
building a school and the same was made known to the donor. Only then - when the non-
fulfillment of the resolutory condition was brought to the donor's knowledge - that ownership of
the donated property reverted to the donor as provided in the automatic reversion clause of the
deed of donation.
During the time that ownership of the land has not reverted to her the donor 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, however, what the donor sold was the land itself which
she no longer owns. It would have been different if the donor-seller sold her interests over the

55
property under the deed of donation which is subject to the possibility of reversion of ownership
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 during the donors' lifetime.
A limitation on the right to sell during the donors' lifetime implied that ownership had
passed to the donees and donation was already effective during the donors' lifetime. The
attending circumstances in the execution of the subject donation also demonstrated the real
intent of the donor to transfer the ownership over the subject properties upon its execution.
A valid donation, once accepted, becomes irrevocable, except on account of
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 partition is valid when
evidence supports the same. In the case at bar, the fact that the heirs of Victoriano alone leased
to petitioner Tan exactly ½ of the disputed property point to the fact that that they exercised the
right of ownership over 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 partition is valid. A contract is obligatory in
whatever form they may have been entered into provided all essential requisites are present.
Written proof of oral partition 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 validity. A transfer
certificate of title merely evidences and is not constitutive of title. Such certificate can’t confer
title where no title had been vested by some of the means provided by law. A transfer certificate
of title is not one of the 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 uncertainty with
respect to title to real property. (citing VITUG) The NCC authorizes it under Art. 476. To avail of
this remedy, a plaintiff must show that there 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 interest in real property. Thus, petitioners have wholly misapprehended the import of the
foregoing rule by claiming that respondent CA erred in holding that there was "no evidence of
any muniment of title, proceeding, written contract," and that there were, as a matter of fact, 2
such contracts xxx However, these documents in no way constitute a cloud or cast doubt upon
petitioners' title. Rather, the 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 the purpose of
settling a boundary dispute.

56
STA. ANA, JR. v. CA (November 1997)
The courts below correctly found that the action for reconveyance had already prescribed.
Petitioner cannot escape the onset of prescription by arguing now that his action for
reconveyance was really once that sought quieting of title (hence imprescriptible) and not one
based on implied or constructive trust. From the complaint, it was evident that petitioner's
theory was based on implied or constructive trust, as it was alleged therein that "the property in
question is within 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 bound 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 from actual
knowledge must fail. It is settled that an action for reconveyance based on an implied trust
prescribes in 10 years from issuance of the Torrens title.

ALEJANDRINO v. CA (September 1998)

Under a co-ownership, the ownership of an undivided thing or right belongs to different
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 underlying rationale is that until a division is made, the
respective share of each cannot be determined and every co-owner exercises, together with his
co-participants, joint ownership over the pro-indiviso property, in addition to his use and
enjoyment of the same. As such, as long as the estate has not been fully settled and partitioned,
a co-owner can exercise his right of ownership over such inchoate right.
Partition of the estate of a decedent may only be effected by (1) the heirs 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 before the
trial court. Thus, this can become the basis for segregation of the property 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 never 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 covered 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 certificate of title, by itself, does not vest ownership; it
is merely an evidence of title over a particular property. Even if the reconstitution proceedings
had not been instituted, the Bernardos are not precluded from establishing by other evidence,
such as the certificate of sale allegedly issued to Tomas Bernardo, the requisite 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 parcel 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 not claim any right to ownership or
possession of such real estate. Hence, the non-joinder of the mortgagee in such suit does not
justify an annulment of the judgment thereon on the ground of extrinsic fraud.

57
 That the action for recovery of possession necessarily includes the removal of
equipment located thereon does not make APT an indispensable party. As noted 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 property to another place, it should proceed against
FILMARCO, not against respondents. Such transfer or removal is the concern of FILMARCO,
not the respondents. In any event, it should be underscored that the civil action seeks the
recovery of 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 significant in ejectment cases where the rule is that the
judgments therein must be executed 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 day, by way of damages for his
failure to turn over peacefully the three (3) commercial spaces from expiry of the lease until
such time as petitioner actually vacated the premises. Before the SC, petitioner questions the
award of damages, claiming 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 damages must
be claimed in an ordinary action.

Petitioner's reliance on such doctrine is misplaced, as said cases dealt with additional damages
and charges other than liquidated damages, i.e., those agreed upon by the parties to a contract
to be paid in case of breach thereof. Here, the MTC was merely enforcing paragraph 10 of the
lease contract. The freedom of the 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 it unilaterally
imposed and to which respondent did not agree, there lies no ground for ejectment. In such a
case, there could still be ground for ejectment based 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 rentals 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 substantial justice
demands the giving of the proper reliefs.
Thus, when respondent stopped paying any rent at all…it gave petitioner good ground
for instituting ejectment proceedings. Cited case: if ever petitioner took exception to the
unilateral or illegal increase in rental rate, it should not have completely stopped paying rent but
should have deposited the original rent amount with the judicial authorities or in a bank in the
name of, and with notice to, petitioner.

TUBIANO vs. RAZO (July 13, 2000)

As this Court explained in Co Tiamco v. Diaz, 78 Phil. 672 (1946), Rule 70, section 2 requires
previous demand only when the action is ‘for failure to pay rent due or to comply with the
conditions for his lease.’ Where the action is to terminate 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

58
lease, the landlord may go into the proeprty and occupy it, and if the lessee refuses to vacate
the premises, an action for unlawful detainer may immediately be brought against him even
before the expiration of the fifteen or five days provided in Rule 70, section 2.
Accordingly, upon the expiration of the lease in this case, petitioner became 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 respondent, as lessor, had agreed to an
extension of the term of the lease under article 1687 of the Civil Code.
Verily, demand to vacate is not a jurisdictional requirement when the ground 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 terminate the lease contract. Accordingly,
even if petitioner did not receive the September 7, 1994 notice of private respondent, the
ejectment case filed against petitioner cannot be deemed to be premature considering that even
as early as August 1994, petitioner was already informed that private respondent will no longer
renew 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 prescription, one acquires
ownership and other real rights through the lapse of time, in the manner and under the
conditions laid down by law. In the same way, rights and actions are lost by prescription. There
are thus two kinds of prescription: (1) the acquisition of a right by the lapse of time, or
acquisitive prescription; 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 of possession
and to be declared owners of the subject lands. Their complaint squarely put in issue the
ownership of the lands in dispute. It may thus be properly 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 respondents did not assert ownership over the lands until 1988 or 55 years later, when
they filed their present complaint for recovery of possession. It is settled that the remedies of
accion publiciana or accion reivindicatoria must be availed of within 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, subject to the provisions of Art. 537, if the new possession has lasted
longer than one 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 lands was brought only
after 26 years had elapsed. Hence, insofar as petitioners are concerned, private respondents’
cause of action was barred, not by laches, but by extinctive prescription, regardless of whether
their complaint is considered as an accion publiciana or an accion reivindicatoria. As regards
the private respondents who did not appeal from the ruling of the Court of Appeals, this question
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 petitioners are primarily
praying for the retention of respondent's obligations under the Memorandum of Agreement that

59
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 should view the issue of
whether the Board of Receivers correctly revoked the agreements entered into between the
previous receiver and the petitioners from the perspective of the homeowners' interests, which
P.D. No. 957 aims to protect. Whatever monetary awards the HLURB may impose upon
respondent are incidental matters that should be addressed to the sound discretion of the Board
of Receivers charged with maintaining the viability of respondent as a corporation. Any
controversy that may arise in that regard should then be addressed to the SEC.
Thus, the proceedings at the HLURB should not be suspended notwithstanding that
respondent is still under receivership. The TRO that this Court has issued should accordingly
continue until such time as the HLURB shall have resolved the controversy.

ESTOPPEL

SERG’S PRODUCTS vs. PCI LEASING AND FINANCE, INC.

The Court has held that contracting parties may validly stipulate that a real property be
considered as personal. After agreeing to such stipulation, they are consequently estopped from
claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily precluded
from denying the truth of any material fact found therein.
While the parties are bound by the Agreement, third persons acting in good 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 there 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 prescription had set in.
Ownership and other real rights over immovable property are acquired by ordinary
prescription through possession for 10 years if the adverse possession is 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 the foundation of a prescriptive right, it must be under a claim of title or
it must be adverse or in the concept of owner.
Petitioners contend that under Art. 1391 of the Civil Code they had 4 years 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 court in 1957 by
the parents of the herein petitioner for the registration of land 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 property: It is evident that one of the elements of res judicata is lacking xxx
Respondent Court declared that "identity of causes of action xxx exist since they both sought

60
registration of the land formed by alluvial deposits", but failed to recognize that the basis for
claiming such registration was different in each case. In Case No. B-46, applicants-spouses xxx
(herein petitioner's parents) claimed that their possession of the land, tacked to that of their
predecessors xxx was sufficient to vest title in them by acquisitive prescription. On the other
hand, in LRC Case No. B-526, petitioner claimed that the duration of possession by his parents
(commencing allegedly in 1958), combined with his own possession (counted from 1988 when
he purchased the accretion from his parents) gave him sufficient title thereto by acquisitive
prescription.
In other words, because of the different relevant periods of possession being referred to,
the basis of the application in Case No. B-46 is actually different 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, that the subsequent sale of property
covered by a Certificate of Title cannot prevail over an adverse claim, duly sworn to and
annotated on the certificate of title previous to the sale. While it is true that under the Property
Registration Decree, deeds of conveyance only take effect as a conveyance to bind the land
upon 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 not have to look behind the certificate of title, he is,
nevertheless, bound by the liens and encumbrances annotated thereon. One who buys without
checking the vendor'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 claim shall
be effective for a period of thirty days from the date of registration."
At first blush, the provision in question would seem to restrict the effectivity 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 sentence following, which reads: "After the
lapse of said period, the annotation of adverse 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 necessary to include the foregoing
caveat to clarify and complete the rule. For then, 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 the 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-month basis
which is terminated at the end of every month. We hold that it is. We have already ruled that a

61
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 ordered.
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 cannot 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. Hencem, 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 right 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 former held that the assertion of the
parties of their respective right to own the properties in controversy converted the litigation into
an inquiry into the nullity of the presented documents,or from a mere detainer suit to one that
was incapable 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 ownership, such is of
no moment, because, the MTC is competent to determine ownership, for 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, following the lapse of the term of
the lease agreement. After the lapse of the lease contract, the lessee has no more right to
remain in possession of the properties. 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 writ of preliminary
injunction. In fact, the act being enjoined [ejectment] was not a unilateral act on the part of
private respondent as the lower court concluded but a logical consequence of the expiration of
the lease contract, an act mutually 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 under 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-interest, Go Co, was not terminated by the
dath of Go Co. The fact is that the parties here so regarded the contract and therefor continued
the lease even aftter Go Co's death in 1974. It was only in 1987, 13 years later, when petitioner
demanded 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 the 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 transfer of ownership of the buildings built upon the land upon
expiration of the lease in 2003.

62
 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 Center, in turn, subsequently leased the building for a 5-year term to
Kookaburra Industrial.
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 unequivocally speaks of the
sublease of "the land leased herein," but also from its 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 because the term of the lease is for 30 years. The purpose of the lease is for the
lessee to have a place on which to construct a building or a factory. The building could be a
tenement house or a factory, either of which could be for commercial purposes. A stipulation
that upon the expiration of the lease the building 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 will bring him income sufficient to cover his investment for a fair return. It is
thus unlikely that, in entering into the 30-year lease here, the parties contemplated imposing
restrictions on private respondents' rights of ownership of the building, by prohibiting even the
lease of the building constructed by the lessee. 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, discretionary. The court is not bound to
extend it, and its exercise depends upon the circumstances surrounding the case.
Private respondents and their parents had been in possession of the premises for 43
years when the ejectment case was filed. Further, despite the relatively large premises, private
respondents were paying a meager sum as rental. Thus, the arrangement obviously worked in
favor of private respondents, who received greater benefits while petitioners were unable to
have full use and enjoyment of a substantial portion of their property. The need to balance
these interests 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 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, even though
petitioners' lot may suffer damage thereby, as long as the damage caused is not more than
reasonably necessary.

BANGAYAN v. CA, (August 1997)

Art. 1311, NCC, provides that contracts take effect only between the parties, their assigns and
heirs, except where the rights 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 lease 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 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 of the person of one of the parties.
It cannot be denied that Teofista's right of first option to buy the leased property in case
of its sale is but part of the bigger right to lease said property. The option was given to Teofista

63
as she was the lessee. It was a component of the consideration of the lease. The option was
by no means an independent 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 refusal (RFR) in case
the property was sold. To begin, it is fundamental that a contract binds only the parties to it (Art.
1311, NCC). The RFR was embodied in the lease contract between Sawit and Orient, to which
petitioners were not a party to.
The rule is different, however, regarding assignments of lease. Art. 1649 provides that
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.

CHUA v. CA, IBARRA (January 21, 1999)

Court have no power to extend lease with a term.-As there was no longer any lease to speak of
which could be extended, the MTC was in effect making a contract for 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 of 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.
546, 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 our of the latter’s property. Art. 1678 merely grants to such a lessee
making in good faith useful improvements the right to be reimbursed ½ of the value of the
improvements 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 extension or
renewal subject to the same terms in the original lease contract. Since 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. Corollarily, 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 contrary to
law, morals, public order or public policy, binds the parties and is the law between them.

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 PERSONS & FAMILY RELATIONS

2001

REPUBLIC v. DAGDAG (G.R. No. 109975, February 2001)

Civil Law/Persons/ Psychological incapacity/Molina Guidelines: A marriage contracted by any
party who, at the time of the celebration, was psychologically incapacitated to comply with the
essential marital obligations of marriage, is void even if such incapacity becomes manifest only
after its solemnization. And whether 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 Code:
(1) The burden of proof to show the nullity of the marriage belongs to the plaintiff. 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 clinically identified,
(b) alleged in the complaint, (c) sufficiently proven by experts and (d) clearly explained in the
decision. Article 36 of the Family Code requires that the incapacity must be psychological — not
physical, although its manifestations 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
extent that the person could not have known the obligations he was assuming, or knowing them,
could not have given valid assumption thereof. The root cause must be identified as a
psychological illness and its incapacitating nature fully explained. Expert evidence may be given
by qualified psychiatrists and clinical psychologists.
(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 or incurable.
Such incurability may be absolute or even relative only in regard to the other spouse, not
necessarily absolutely against everyone of the same sex. Furthermore, such incapacity must be
relevant to the assumption of marriage obligations, 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
element in the personality structure that effectively incapacitates the person from really
accepting and thereby complying with the obligations essential to marriage.
(6) The essential marital obligations must be those embraced by Articles 68 up to 71 of the
Family Code 20 as regards the husband and wife as well as Articles 220, 221 and 225 of the
same Code 21 in regard to parents and their children. Such 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 Solicitor 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 the 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 prosecuting attorney, shall submit to the court such certification within fifteen (15) days

65
from the date the case is deemed submitted for resolution of the court. The Solicitor-General
shall discharge the equivalent function of the defensor vinculi contemplated under Canon 1095.

CARIÑO v. CARIÑO (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 marriage 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, he 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 marriage would be void. The same rule applies even if the first marriage is patently 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 necessary to declare a
marriage an absolute nullity. For other purposes, such as but not limited to the determination of
heirship, legitimacy or illegitimacy of a child, settlement of estate, dissolution of property regime,
or a criminal case for that matter, the court may pass upon the validity of marriage even after
the death of the parties thereto, and even in a suit not directly instituted to question the validity
of said marriage, so long as it is essential to the determination of the case. In such instances,
evidence must be adduced, testimonial or documentary, 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 separation of the
property of the spouses according to the applicable property regime. Considering that the two
marriages are void ab initio, the applicable property 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 Family 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 concubinage, 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
contributions. In this property regime, the properties acquired by the parties through their actual
joint contribution shall belong to the co-ownership. Wages and salaries earned by each party
belong to him or her exclusively. Then too, contributions 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 party 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 the other did not contribute thereto.
Conformably, even if the disputed "death benefits" were earned by the deceased alone
as a government employee, Article 147 creates a co-ownership in respect 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 shall 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 requisites 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;

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3. Absence of legal impediment between the parties must be present at the time of marriage;
4. The parties must execute an affidavit stating that they have lived together for at least five
years [and are without legal impediment to marry each other]; and
5. The solemnizing officer must execute a sworn statement that he had ascertained 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 nature 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 bicycle 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, illegitimate children
shall use the surname and shall be under the parental authority of their mother, and shall be
entitled to support. This is the rule regardless of whether or not the father admits paternity.
Consequently, the Local Civil Registrar correctly refused to register the certificate of live birth of
petitioner's illegitimate child using the surname of the alleged father, even with the 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 shall 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 the Civil Code of
the Philippines giving a natural child acknowledged by both parents the right to use the surname
of the father. The Family Code has limited the classification of children to legitimate and
illegitimate, thereby eliminating the category of acknowledged natural children and natural
children by legal fiction.

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 depart from the applicability of the general
rule that requires that legitimate children 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 certificate which shows that the mother
was already fifty-four years old at the time 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, the 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 initio, the action to nullify it
does not prescribe.
Article 171, FC applies to instances in which the father impugns the legitimacy of his
wife's child and presupposes that the child was the undisputed offspring of the mother. It does
not contemplate a situation, like in the instant case, 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 the legitimacy of said child by proving: (1) it was physically impossible for him to

67
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 in case of children conceived through artificial
insemination, the written authorization or ratification by either parent was obtained through
mistake, fraud. Violence, intimidation, or undue influence. Articles 170 and 171 reinforce this
reading as they speak of the prescriptive period within which the husband or any of 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 both 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 which a man and a woman live together as husband and wife
without the benefit of marriage provided they are not incapacitated or are without impediment to
marry each other, or in which the marriage is void ab initio, provided it is not bigamous. Art. 144,
therefore, does not cover parties living in an adulterous relationship.
However, Art. 148 of the Family Code now provides for a limited co-ownership in cases
where the parties in union are incapacitated to marry each other. It states: In cases of
cohabitation not falling under the preceding article, 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 contributions. In the absence of proof to the
contrary, their contributions and corresponding shares are presumed to be equal. The same rule
and presumption shall apply to joint deposits of money and evidence of credits. It was thus error
for the trial court to rule that, because the parties in 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 common. 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 of 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 nullity of the marriage is so declared can it be
held as void, and so long as there is no such declaration, the presumption is that the marriage
exists. No matter how 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 in Landicho v. Relova, he who
contracts a second marriage before the judicial declaration of nullity of the first marriage
assumes the risk of being prosecuted for bigamy, and in such a case the criminal case may not
be suspended on the ground of the pendency of a civil case for declaration of nullity for the
pendency of a civil case for declaration of nullity of marriage is not a prejudicial question.

MERCADO v. TAN (G.R. No. 137110. August 1, 2000)

Civil Law/Persons/ Declaration of Nullity of Previous Marriage: The court reiterates 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 subsequent marriage without first obtaining such
judicial declaration is guilty of bigamy. This principle applies even if the earlier union is
characterized by statute as "void."

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 In the instant case, petitioner contracted a second marriage although there 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 complainant had filed a letter-complaint charging him with
bigamy. By contracting a second marriage while the first was still subsisting, he committed the
acts punishable under Article 349 of the Revised Penal Code. That he subsequently obtained a
judicial declaration of the nullity of the first marriage was immaterial. To 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 partnership can be brought
against 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 surviving spouse ceases and is passed to the
administrator appointed by the court having jurisdiction over the settlement of estate
proceedings. While in many cases as in the instant one, even after the death of one of the
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 principal creditor of the deceased . . . if after thirty (30) days from his death,
petitioner failed to apply for administration or request that administration be granted 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 outcome of a civil
case for annulment of marriage has no bearing upon the determination 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 subsisting 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 the civil
case before the criminal proceedings could continue, because a declaration that their marriage
was void ab initio would necessarily absolve him from criminal liability, is untenable. Applying
Art 40, for purposes of remarriage, in the 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 of compromise, Art. 301, CC.
The agreement for the dismissal of the case for support 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 the parties. While it is
true that in order to claim support, filiation and/or paternity must 1 st be shown between the
claimant and the parent, however, paternity and filiation or lack of it is a relationship that must
be judicially established and it is for the court to declare its existence or absence. Although in
this 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)

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Civil Law/Persons/ Adoption/ Consent of Natural Parent Indispensable/ Abandonment Defined/
Financial Consideration in Awarding Custody: (1) The written consent of the natural father
remains indispensable for the validity of the decree of adoption EXCEPT if the father has
abandoned the child or is “insane or hopelessly intemperate.” However, the trial court has to
primarily determine the issue of abandonment in case the father opposes the adoption primarily
because his consent thereto 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 petition for
adoption be considered on its merits.
(2) Abandonment refers to “any conduct of the parent which evinces a settled purpose to
forego all parental duties and relinquish all parental claims to the 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 their support.
(3) Financial support is not the paramount consideration in granting the petition for
adoption. There should be a holistic approach to the matter, taking into account the physical,
mental, emotional, psychological, social and spiritual needs of the child.
(4) As a result of their legal separation, custody was awarded to petitioner’s wife and
mother of the 3 children sought to be adopted. Though all-embracing, this award does not
include the authority to place the children up for adoption.

1997

SILVA v. CA (July 1997)

Civil Law/Family Code/Parental Authority/Visitation Rights of Parents: The visitation 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, enough recognition on the inherent and natural
right of parents over their children (Arts. 150 and 220, FC; Art. II, §12, Constitution). There is
nothing conclusive to indicate that these provisions are meant to solely address themselves to
legitimate relationships. Indeed, although in varying degrees, the laws on support 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 declaration of nullity of marriages, a situation that presupposes
a void or inexistent marriage, Art. 49, FC provides for appropriate visitation rights to parents who
are 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 through their actual joint
contribution of money, property or industry shall be owned 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 Art. 147 which states that efforts in the care and maintenance of the family
and household, 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 equal shares. Even assuming that the
property was bought before cohabitation, the 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 filiation of illegitimate
children and the determination of the estate of the decedent and claims thereto should be
ventilated in the proper probate court or in a special proceeding instituted for the purpose and

70
cannot be adjudicated in the instant 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 presumption in law more
firmly established than the presumption that children born in wedlock are legitimate. And it is
settled that the issue of legitimacy cannot be attacked collaterally. Thus, the issue of whether
petitioners are the legitimate children of the decedent cannot be properly controverted in this
action for reconveyance; moreover, private respondent, as a mere transferee of decedent's
surviving 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. Presumption of legitimacy is so
strong that its effect is to shift the burden to other party; unless rebutted, a presumption may
stand in lieu of evidence and support 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 house and lot constituted
as a family home under the Family Code. This is so because Art. 153, FC has no retroactive
effect. In other words, prior to 3 August 1988, the procedure mandated by the Civil Code had to
be followed for a family home to be constituted as such. There being absolutely no proof that
the subject property was judicially or extrajudicially constituted as a family home, it follows that
the FC’s protective mantle cannot be availed of by petitioner.
The list of beneficiary-occupants of a family home is restricted to those enumerated in
the Code. Occupancy of the family home either by the owner thereof or by any of its
beneficiaries must be actual. The enumeration of beneficiaries in Art. 154 excludes maids and
overseers, not being beneficiaries contemplated by the FC.

DELGADO VDA. DE DELA ROSA v. CA (October 1997)

Civil Law/Family Code/Illegitimate Children: As to the status of the intervenor 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 above 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 adopter which is the natural and necessary
consequence of a grant of adoption and must be specifically contained in the order of the court,
in fact, even if not prayed for by petitioner. However, the given or proper name (a.k.a. the first
or Christian 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 continue 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 official or legal name and cannot be authorized without a judicial order.

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ARUEGO v. CA (March 1996)
Civil Law/Family Code/Illegitimate Child/ Recognition: Private respondent's action for
compulsory recognition as an illegitimate child was brought under Art. 285, Civil Code while
petitioners submit that with the advent of the New Family Code, the trial court lost jurisdiction
over the complaint on the ground of prescription. 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 Family 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 same proceed to final adjudication in accordance
with the law in force at the time, 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 the 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 requirement 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 marry the faithful,
is authorized to do so only within the area of the diocese or place allowed by his Bishop. An
appellate court Justice or a Justice of this Court has jurisdiction over the entire Philippines to
solemnize marriages, regardless of venue, as long as the requisites of the law are complied
with. However, judges who are appointed to specific jurisdictions, may officiate weddings only
within said areas and not beyond. Where s/he solemnizes outside his court's jurisdiction, 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 is governed by Art. 147 or Art.
148, FC, as the case may be. This peculiar kind of 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 "capacitated" in the provision (in the first paragraph of the law) refers to the legal capacity
of a party to contract marriage, i.e., any "male or female of the age of eighteen years or
upwards not under any of the impediments mentioned in Articles 37 and 38 of the Code.
Under this property regime, property acquired by both spouses through their 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 acquisition of the property shall still be considered as having
contributed thereto jointly if said party's efforts consisted in the care and maintenance of the

72
family household. (Art. 147, FC) Unlike the CPG, the fruits of the couple's separate property 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 property, 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 innocent party. The forfeiture shall take place upon termination of
the cohabitation (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 legal
impediment to marry or when they do not live exclusively with each other (as husband and wife),
only the property acquired by both of them through their actual joint contribution of money,
property or industry shall be owned in common and in proportion to their respective
contributions. Such are prima facie presumed 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 her
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 prevent
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 reached this Court because petitioner does not
want their marriage annulled. This only shows that there is no collusion.
(2) As to the issue of psychological incapacity, since the action to declare the marriage
void may be filed by either party, i.e., even the psychologically incapacitated, the question of
who refuses to have sex with the other becomes immaterial. Senseless and protracted refusal
to have sex is equivalent to psychological incapacity. (PINEDA, citing VELOSO) Evidently, one of
the essential marital obligations under the FC is to procreate. Constant non-fulfillment of this
obligation will finally destroy the integrity of the marriage. In his case, the 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 affection between them, and not
any legal mandate or court order (Cuaderno, 120 Phil. 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 which the law grants to parents
for the purpose of the children's physical preservation 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. Parental authority and responsiblity are inalienable and may not be transferred
renounced 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, guardianship, and surrender
to a children's home or orphanage. (Arts. 222-224; Act No. 3094) When a parent entrusts the
custody of a minor to another, such as a friend or godfather, even in a document, what is given
is merely temporary custody and does not constitute renunciation of parental authority. (Celis v.
Cafuir, 86 Phil. 555) Even if a definite renunciation is manifest, the law still disallows the same.
(Art. 210, FC)

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SPS. ESTONINA v. CA (G.R. No. 111547, Jan. 27, 1997)
Civil Law/Family Code/Presumption of Conjugal Property: Proof of acquisition during the
marriage is a condition sine qua non for the operation of the presumption in favor of the conjugal
partnership. The words "married to" on the certificate of title are merely descriptive of civil status
(Jocson v. CA, 170 SCRA 333 [1989]).

1995

SANTOS v. CA (240 SCRA 20 [1995])

Civil Law/Family Code/Psychological Incapacity: Husband argues that the wife's failure to return
home (from the States), or at the very least to communicate with him, for more than 5 years are
circumstances that show psychological incapacity. Petition denied.
Psychological incapacity must be characterized by (a) gravity (b) juridical antecedence,
and (c) incurability. The incapacity must be grave or serious such that the party would be
incapable of carrying out the ordinary duties required in marriage; it must be rooted in the
history of the party antedating the marriage, although the overt manifestations may emerge only
after the marriage; and 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 cases of
psychoses as extremely low intelligence, immaturity and like circumstances. Art. 36 should
refer to no less than a mental (not physical) incapacity that causes a party to be truly incognitive
of the basic marital covenants that concomitantly must be assumed and discharged by the
parties in the marriage. The intendment of the law was to confine the meaning of the phrase to
the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or
inability to give meaning and significance to the marriage. This psychological condition must
exist at the time the marriage is celebrated. The law does not evidently envision an inability of
the spouse to have sexual relations with the 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, but 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' death, 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 remarriages entered
into after the effectivity of the FC on August 3, 1988 regardless 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 partnership, 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, though an adoptive father,
was entitled to the award of damages made by the trial court [See Art. 190 (2) and (5)].

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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 cases where the parents, who are
married to each other, are for some reason separated from each other, it does not follow,
however, that it cannot arise in any other situation. For example, in Salvaña 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 and that of a mother of an illegitimate child who, by
law, is vested with sole parental 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 seven ... shall be separated from
the mother unless the court finds compelling reasons ..."
(2) The order for payment of allowance need not be conditioned on the grant 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 taken from the mother's custody. Even now that the child is over 7, the mother's
custody will have to be upheld because the child categorically expressed preference to live with
his mother.

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