Ponencias of J. Caguioa in CIVIL LAW 2022

Case Digests
Ponencias of J. Caguioa in Civil Law

By: USTFCL Dean’s Circle for AY 21-22
UNIVERSITY OF SANTO TOMAS

Case Digests
REPUBLIC v. CAPITAL RESOURCES CORPORATION

G.R. No. 217210. November 7, 2016, First Division (Caguioa, J.)
DOCTRINE
Section 121 of the Public Land Act pertains to acquisitions of public land by a
corporation from a grantee. In this case, the original grantee was Dumuk and he
subsequently transferred the subject property to spouses Milo. In turn, the spouses were
the ones who sold the subject property to Capital Resources and Romeo Roxas. Evidently,
Capital Resources did not acquire the subject property from the original grantee.
As to the provision of the 1973 Constitution proscribing corporations from

acquiring "alienable lands" of the public domain, the consistent ruling of the Supreme
Court is that the prohibition will not apply if the property acquired by the corporation
is private property and not alienable lands of the public domain. The rule is that once a
patent is registered and the corresponding certificate of title is issued, the land covered
by it ceases to be part of the public domain and becomes private property.
FACTS
A Homestead Patent was granted to Dumuk which resulted in the issuance of an OCT.
The OCT was superseded by a TCT in the name of spouses Milo. Capital Resources
Corporation and Romeo Roxas (defendants-appellants) acquired the subject property from
spouses Milo resulting in the cancellation of the TCT and the issuance of a new one.
Defendants-appellants then caused the subdivision of the subject property via the
subdivision plan prepared by Engr. Mercado and it was subdivided into several blocks,
among which are Block 35 (18,079 sq.m.) and Block 36 (16,856 sq.m.). The plan indicated
that Block 35 is a "salvage zone" while a portion of Block 36 appeared to overlap a portion
of the China Sea. The subdivision plan was approved but was subsequently cancelled
pursuant to an Order of Cancellation issued by the DENR.
Based on the Cadastral Survey, Block 35 and Block 36 were projected therein as part
of the identified foreshore land and seabed, respectively. The DENR Committee investigated
and concluded that the submission by defendants-appellants of subdivision plan is
tantamount to an admission that the northwestern portion of the subject property was eaten
up and eroded due to the adverse effects of sea waters. It pointed out that Capital Resources
may not validly acquire the subject property pursuant to Section 119 of Act No. 2874 and the
1973 Constitution.
Consequently, the Republic of the Philippines, through the OSG, filed a Complaint for
Cancellation of Title and Reversion against defendants-appellants and the Register of Deeds
of La Union before the Regional Trial Court. The Republic alleged that from the time that
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Homestead Survey Plan was approved until the cadastral survey, the northwestern portion
of the subject property had been washed out and eaten up by the sea waters. Per the ocular
inspection, Blocks 35 to 36 formed part of the public domain. This fact is clearly supported
by subdivision submitted by defendants-appellants wherein the area already consumed by
the sea has already been demarcated or isolated. Thus, the Republic prayed for judgment:
(a) declaring the TCT and its derivative titles as null and void; (b) ordering defendants-
appellants to surrender the owner's duplicate of TCT for cancellation; (c) ordering the
defendants, their heirs, agents, assigns or anyone acting in their behalf to cease and desist
from exercising acts of ownership over the subject property and to vacate the same, if they
are in possession thereof; and (d) ordering the reversion of the subject land to the public
domain.
ISSUES
(1) Whether or not the Court may consider the issues raised by petitioner Republic;
and
(2) Whether or not the remaining portion of the Subject Property (being foreshore
and salvaged zones) may be reverted to the public domain.
RULING
1. NO. Petitioner Republic does not dispute the fact that it failed to raise the contested
issues in its Complaint and pre-trial brief. Instead, petitioner Republic argues that such
issues are "within the of the initial issues", being "germane to the sole purpose of cancelling
the TCT in its entirety". Petitioner Republic's contention is not well-taken.
While petitioner Republic's Complaint prayed for the reversion of
the entire Subject Property, the allegations are predicated merely on their assertion
that Blocks 35 and 36 have become foreshore lands. In this regard, basic is the rule that it
is the allegations of the complaint and not the prayer that determines the basis of the
plaintiff's relief. In the same vein, the prayer will not be construed as enlarging the
complaint so as to embrace a cause of action not pleaded therein.
While the Complaint prayed for the reversion of the entire Subject Property, the
allegations contained therein pertained only to Blocks 35 and 36. Hence, considering that
the body of the Complaint merely supported the reversion of Blocks 35 and 36, it is of no
moment that there was a general prayer for the reversion of the entire Subject Property.
Any relief granted beyond the allegations of the Complaint would be baseless and would
amount to grave abuse of discretion. Accordingly, contrary to the asseverations of
petitioner Republic, the issues raised in its Motion for Partial Reconsideration cannot be
considered as "within the bounds of the original issues".
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Moreover, considering the non-inclusion of the contested issues in the Pre-Trial

Order, such delimitation made by the RTC had effectively barred the consideration of the
said issues, whether during the trial or on appeal. Where the petitioners failed to have the
issue of prescription and laches included in the pre-trial order despite having raised it in
their Answer, this Court held that such issues could no longer be considered on appeal, the
parties being bound by the stipulations made during pre-trial.
2. NO. Petitioner Republic insists that the CA erred in ordering only the reversion of
the portion of the Subject Property pertaining to Blocks 35 and 36, on the ground that: (i)
there are inconsistencies in the land area of the Subject Property, specifically between the
TCT and subdivision plan; and (ii) respondent CRC is ineligible to be a "transferor" of a
homestead patent.
Anent the first issue, petitioner Republic makes much of the fact that the land area
of the Subject Property reflected in TCT is 158,345 square meters, while in subdivision
plan, the land area is 165,582 square meters. However, aside from such observations,
petitioner Republic failed to allege any legal basis that would warrant the outright
cancellation of the TCT and correspondingly, the reversion of the entire Subject Property.
With respect to the second issue, petitioner Republic insists that respondent CRC
is ineligible to acquire the Subject Property under the Public Land Act, which was the law
in force at the time the OCT was issued. Further, petitioner Republic argues that the
transfer of the Subject Property to respondent CRC is violative of Section 11 of the 1973
Constitution, which prohibits private corporations from holding alienable lands of the
public domain except through a lease agreement. Petitioner Republic is mistaken.
Section 121 of the Public Land Act pertains to acquisitions of public land by a
corporation from a grantee. In this particular case, the original grantee was Vitaliano
Dumuk and he subsequently transferred the subject property to spouses Cecilio and
Laura Milo. In turn, the spouses were the ones who sold the subject property to Capital
Resources and Romeo Roxas. Evidently, Capital Resources did not acquire the subject
property from the original grantee. Even if We were to assume that Capital Resources is
ineligible to be a transferee, the fact remains that the subject property was purchased by
Capital Resources and Romeo Roxas and the latter is an individual who is not barred from
acquiring the subject property.
As to the provision of the 1973 Constitution proscribing corporations from

acquiring "alienable lands" of the public domain, the consistent ruling of the Supreme
Court is that the prohibition will not apply if the property acquired by the corporation
is private property and not alienable lands of the public domain. The rule is that once a
patent is registered and the corresponding certificate of title is issued, the land covered by it
ceases to be part of the public domain and becomes private property. In the present case,
the subject property became private property upon the issuance of the OCT to Vitaliano
Dumuk. Necessarily, when the defendants-appellants acquired the subject property in
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1982, the same was no longer a part of the alienable lands of the public domain but a
private property. Hence the prohibition will not apply.
While petitioner Republic was able to show its entitlement to the reversion of
Blocks 35 and 36 to the public domain, it failed to do the same with respect to the remaining
portion of the Subject Property.
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Case Digests
HEIRS OF TOMAKIN v. HERIS OF NAVARES

G.R. No. 223624, July 17, 2019, Second Division (Caguioa, J.)
DOCTRINE
It is well-settled that a party may not change his theory of the case on appeal and this is
expressly adopted in Section 15, Rule 44 of the Rules. Defenses not pleaded in the answer may
not be raised for the first time on appeal. It is also well-settled that issues raised for the first
time on appeal and not raised in the proceedings in the lower court are barred by estoppel.
FACTS
The property in dispute is Lot No. 8467 originally owned by the late Jose Badana who
died without issue. He was survived by his two sisters Quirina Badana and Severina Badana.
Heirs of Celestino Navares, herein respondents, filed a Complaint for Reconveyance and
Damages against the Heirs of Leonarda Nadela Tomakin, herein petitioners, before the RTC
alleging that Quirina Badana as one of the heirs of Jose Badana, sold one-half of the Lot No.
8467 to spouses Remigio Navares and Cesaria Gaviola, the portion known as Lot No. 8467-B
as evidenced by Sale with Condition; that they inherited the lot as successors-in-interest of
the late souses Narvaes and that their predecessors has been religiously paying realty taxes;
that most of them had been occupying and residing on the property adversely and openly in
the concept of an owner; that Severina Badana, the other heir of Jose Badana, sold the other
half of the subject lot, known as Lot No. 8467-A, to the spouses Aaron and Felipa, the
predecessors-in-interest of petitioners Tomakin.
Petitioners sold a portion of the subject lot to spouses Alfred Dacua Jr. and Clarita
Bacalso as evidenced by a Deed of Absoute Sale. Respondents allege that with the sale, Dacua
Jr caused Lot No. 8467-A to be titled in his name; that the petitioners made it appear that one
Mauricia Bacus, a complete stranger to the property, executed a document denominated as
Extra Judicial Settlement of the Estate of Jose Badana with Confirmation of Sale for which
Dacua Jr. maliciously caused Lot No. 8467-B to be titled in the name of Leonarda Nadela
Tomakin and Lucas J. Nadela; that oral demands for reconveyance of the Lot No. 8467-B title
remained unheeded.
Petitioner Tomakin claimed that they are the heirs of Leonarda Tomakin and that Lot
No. 8467 was purchased by Aaron Nadela and Felipa Jaca from Severina Badana, sister-heir
of the late Jose Badana as evidenced by a Deed of absolute Sale; that Leonarda N. Tomakin
and her brother Lucas J. Nadela executed a Deed of Partition conveying Lot No. 8467 in favor
of Leonarda N. Tomakin; that before Leonarda died, she and Lucas sold one-half of Lot No.
8467 in favor of spouses Dacua Jr. and Bacalso. Leonarda and Lucas have been exercising
acts of ownership over Lot No. 8467 and Lot No. 8467-B; that respondents Navares are
barred by prescription and laches – 49 years having elapsed since the alleged sale of the one-
half portion of the property in 1955.
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The RTC ruled in favor of petitioner Tomakin but the CA granted respondents
Navares’ appeal and upheld the sale of Lot No. 8467-B to spouses Navares.
ISSUES
1. Whether the CA failed to appreciate that respondents Navares' possession was not
in the concept of an owner;
2. Whether the CA failed to appreciate the indefeasibility of the Torrens title;
3. Whether the CA failed to appreciate that respondents Navares in not previously

filing a case for declaration of heirship as heirs of spouses Remegio Navares and
Cesaria Gaviola have no cause of action against petitioners Tomakin; and
4. Whether the CA failed to appreciate that respondents Navares are guilty of laches
RULING
The petition is denied.
1. NO. The Court ruled that prescription does not run against the plaintiff in actual
possession of the disputed land because such plaintiff has a right to wait until his
possession is disturbed or his title is questioned before initiating an action to vindicate
his right. The action for reconveyance was filed by respondents Navares precisely
because they deemed themselves owner of the litigated property prior to the claim of
petitioners Tomakin. The filing of such action was an assertion of their title to the
property.
2. NO. Contrary to petitioners Tomakin's postulation, respondents Navares availed

themselves of the correct remedy of reconveyance. The Court stated that the sole remedy
of the land owner whose property has been wrongfully or erroneously registered in
another's name is, after one year from the date of the decree, not to set aside the decree,
but, respecting the decree as incontrovertible and no longer open to review, to bring an
ordinary action in the ordinary court of justice for reconveyance or, if the property has
passed into the hands of an innocent purchaser for value, for damages.
3. NO. Petitioners Tomakin never raised in their Answer the ground that respondents
Navares have no cause of action against them because the former had not previously filed
a petition for declaration of heirship as heirs of spouses Remigio Navares and Cesaria
Gaviola. This issue may no longer be raised by petitioners Tomakin nor ruled upon on
appeal as it is well-settled that a party may not change his theory of the case on appeal
and this is expressly adopted in Section 15, Rule 44 of the Rules.
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SEC. 15. Questions that may be raised on appeal. – Whether or not the appellant
has filed a motion for new trial in the court below, he may include in his
assignment of errors any question of law or fact that has been raised in the court
below and which is within the issues framed by the parties.
Defenses not pleaded in the answer may not be raised for the first time on appeal.
It is also well-settled that issues raised for the first time on appeal and not raised
in the proceedings in the lower court are barred by estoppel and as such, the Court
cannot pass upon the third issue.
4. NO. Respondents Navares, having been in possession of and exercising acts of

dominion over the subject property as found by the CA, cannot be deemed to be guilty of
laches because they cannot be said to have omitted or neglected to assert and exercise
their rights as owner thereof. The Court held that the undisturbed possession of
respondents Navares give them the continuing right to seek the aid of a court of equity to
determine the nature of the adverse claim of petitioners Tomakin and its effect on their
ownership of Lot No. 8467-B.
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Case Digests
REPUBLIC OF THE PHILIPPINES vs. POTENCIANO A. LARRAZABAL, SR.,

VICTORIA LARRAZABAL LOCSIN and BETTY LARRAZABAL MACATUAL
G.R. No. 204530, July 26, 2017, First Division (Caguioa, J.)
DOCTRINE
Just compensation is to be ascertained as of the time of the taking, which usually
coincides with the commencement of the expropriation proceedings. Where the institution of
the action precedes entry into the property, the just compensation is to be ascertained as of the
time of the filing of the complaint.
FACTS
Sometime in November 1991, heavy rains in Ormoc City caused the Malbasag River
to overflow resulting in a flashflood throughout the city. To avoid a similar tragedy, the
petitioner, through the Department of Public Works and Highways, undertook a massive
flood mitigation project at the Malbasag River, which required a right of way.
On September 15, 1999, petitioner filed a Complaint with the RTC for expropriation
of portions of three parcels of land that respondents Potenciano, Victoria, and Betty owned.
Respondent Potenciano's commercial property is Lot No. 844 located at Poblacion,

Municipality of Ormoc, Leyte. Respondents Victoria's and Betty's residential properties are
Lot No. 1 located at Barangay Can-adieng, Ormoc City, Leyte and Lot No. 2 in the same
barangay. Petitioner sought to expropriate 1,027 square meters of respondent Potenciano's
property, 575 square meters of respondent Victoria's property, and 4,638 square meters of
respondent Betty's property. Based on Resolution No. 8-98, the properties were appraised
at P1,000.00 per square meter for commercial lots and P800.00 for residential lots.
After the filing of the Complaint, petitioner was allowed to enter the properties,
demolish the improvements thereon, and to deposit the amounts corresponding to the
provisional payments for the properties. Subsequently, respondents filed their Answer
where they prayed that the just compensation for respondent Potenciano's property be fixed
at P25,000.00 per square meter, and P15,000.00 per square meter for respondents Victoria's
and Betty's properties.
The RTC appointed a set of Commissioners to evaluate and recommend the amount
of just compensation for the properties. On November 20, 2001, the Commissioners
submitted their Report with the estimated fair market values of the properties. The
Commissioners considered the three properties as commercial lots and found that one real
estate transaction — sale of the property of William Gothong and Aboitiz where the lot was
sold at P30,000.00 per square meter — nearly reflected the fair market value of commercial
lots in Ormoc City. The Commissioners found that the estimated fair market value of
Potenciano's property was P10,000.00 per square meter, and P4,000.00 per square meter
for Betty's and Victoria's properties.
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Petitioner then filed its Comment on the Commissioners' Report stating that the
appraisal values as stated in Resolution No. 8-98 should be applied instead of the just
compensation determined by the Commissioners.
In its Decision, the RTC approved the value of the properties as fixed by the
Commissioners in their Report. The RTC ruled that in eminent domain cases, the value of
the property as of the date of the filing of the complaint is generally determinative of the just
compensation. The RTC further ruled that "sales so taken in the neighborhood of the same
year of taking, have been considered fair enough as to reflect fair market value of the
property." As basis for approving the value fixed by the Commissioners, the RTC relied on
the sales of properties that were made on November 14, 1997 involving the property of
William Gothong and Aboitiz and on July 10, 2000 involving the property of Mariano Tan.
The CA in its Decision and Resolution affirmed the RTC Decision. The CA made an
extensive discussion on why the RTC correctly disregarded Republic Act (RA) No. 8974,
entitled An Act to Facilitate the Acquisition of Right-Of-Way, Site or Location for National
Government Infrastructure Projects and for Other Purposes and its IRR in determining the just
compensation to be paid to respondents for their properties. The CA ruled that RA No.
8974 was not applicable since it only applies prospectively. Since the Complaint was filed as
early as September 15, 1999, RA No. 8974 was not applicable because it was signed into law
on November 7, 2000 and became effective only on November 26, 2000.
ISSUE
1. Whether RA No. 8974 is applicable to the determination of the just compensation
to be paid to respondents for their properties, and
2. Whether the CA acted correctly in affirming the RTC Decision on the just
compensation for the properties.
RULING
1. NO. RA No. 8974 cannot be made to apply retroactively since it is a substantive law. There
is nothing in RA No. 8974 which expressly provides for retroactive application; and
retroactivity could not necessarily be implied from RA No. 8974. Here, since the complaint
for eminent domain was filed on September 15, 1999, or prior to the effectivity of RA No.
8974 on November 26, 2000, then RA No. 8974 and the standards indicated therein are not
applicable in determining the just compensation in the present case.
2. NO. The Court is constrained to order the remand of this case to the RTC for the proper
determination of just compensation.
The RTC's reliance on the sale of the properties of William Gothong and Mariano
Tan deviated from the settled rule that just compensation should be determined as of
the time of the taking. Just compensation is to be ascertained as of the time of the taking,
which usually coincides with the commencement of the expropriation proceedings. Where
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the institution of the action precedes entry into the property, the just compensation is to be
ascertained as of the time of the filing of the complaint.
Since the Complaint in this case was filed on September 15, 1999, with petitioner
being allowed entry to the property thereafter, the just compensation should therefore be
reckoned as of the time of the filing of the Complaint. The two sales relied upon by the RTC
were made on November 14, 1997 and July 10, 2000. These sales — the first being almost 2
years prior to, and the second, being 10 months after, the filing of the Complaint on
September 15, 1999 — were not and could not have been proper bases for determining the
just compensation for the properties. The same is true for the sale between Emmanuel Antig
and Marie Paz Kathryn Porciuncula as the sale was made on December 28, 1995, or almost
four years before the filing of the Complaint. Sales around the time of September 15, 1999,
or the year 1999, are the proper bases for determining the just compensation for the
properties, especially considering that no reasons can be found in the records as to
why no such sales during this period were considered by the Commissioners or the RTC.
More than this, however, the error of the RTC was exacerbated by its reliance solely
on comparative sales of other properties. Just compensation cannot be arrived at arbitrarily;
several factors must be considered such as, but not limited to, acquisition cost, current
market value of like properties, tax value of the condemned property, its size, shape, and
location. But before these factors can be considered and given weight, the same must be
supported by documentary evidence. The amount of just compensation could only be
attained by using reliable and actual data as bases for fixing the value of the condemned
property. A commissioners' report of land prices which is not based on any documentary
evidence is manifestly hearsay and should be disregarded by the court.
Here, the records reveal that the RTC's determination of just compensation did not
consider any of the foregoing factors. The RTC Decision miserably failed to even explain how
the amounts of P10,000.00 per square meter for respondent Potenciano's property, and
P4,000.00 per square meter for respondents Victoria's and Betty's properties were arrived
at. There was no consideration made of the acquisition cost, current market value of like
properties, the tax value of the properties of respondents, and the size, shape and location of
the properties. Clearly, in the absence of any actual and reliable data — and the abject failure
to explain this absence — there can be no other conclusion that can be drawn except that the
RTC's determination of just compensation was arbitrary.
In view of the foregoing, the Court is left with no option except to reverse and set
aside the CA Decision and Resolution that affirmed the RTC Decision. The Court, however, is
not in a position to fix the amount of just compensation for indeed, a review of the records
shows that there is no sufficient evidence to allow any determination of the proper just
compensation. In this regard, the Court cannot also rely only on Resolution No. 8-98 as this
cannot substitute for the judicial determination of just compensation, based on all the factors
mentioned above as jurisprudentially mandated.
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Case Digests
AMA LAND, INC., vs. WACK WACK RESIDENTS' ASSOCIATION, INC.

G.R. No. 202342. July 19, 2017, First Division (Caguioa, J.)
DOCTRINE
The temporary easement of right of way under Article 656 of the Civil Code, similar to
the permanent easement of right of way pursuant to its Articles 649 and 650, can only be
granted after proof of compliance with the prerequisites set forth in the articles duly adduced
during a full-blown trial.
FACTS
A commercial and residential building project located at EDSA corner Fordham Street
in Wack Wack Village, Mandaluyong City, was proposed by AMALI in the mid-1990s. The
latter proceeded to secure the needed licenses and permits for the construction of the
project. On March 18, 1996, AMALI notified WWRAI — a registered homeowners'
association of Wack Wack Village — of its intention to use Fordham Street as an access road
and staging area of the project. As AMALI received no response from WWRAI, the former
temporarily enclosed the job site and set up a field office along Fordham Street. WWRAI
claimed, however, that AMALI already converted part of the said street as barrack site and
staging area even before March 18, 1996. All subsequent attempts of WWRAI to remove the
said field office proved futile.
AMALI then filed a petition before the RTC, wherein it seeks the temporary use of
Fordham Street belonging to WWRAI as an access road to AMALI's construction site of its
AMA Tower project pursuant to Article 656of the Civil Code, and to establish a permanent
easement of right of way in its favor over a portion of Fordham Street pursuant to Article
649 of the Civil Code. The RTC granted the writ of preliminary mandatory injunction
"directing WWRAI to allow AMALI to use Fordham Street through a temporary easement of
right of way." The CA granted WWRAI's application for a temporary restraining order, and,
accordingly, AMALI was commanded to cease and desist from further committing the act
complained of, which is the construction of the commercial and residential condominium
project located along EDSA corner Fordham Street in Wack Wack Village.
ISSUE
1. Whether WWRAI is entitled to enjoin the construction of the AMA Tower pending
determination of the original petition for the declaration of temporary and
permanent easements of right of way over a portion of Fordham Street.
2. Whether AMALI, as owner of the dominant estate, may validly claim against
WWRAI a compulsory permanent right of way under Articles 649 and 650 of the Civil Code,
or, a temporary right of way under Article 656 of the Civil Code.
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RULING
1. NO. To be entitled to the injunctive writ, the petitioner must show that: (1) there exists a
clear and unmistakable right to be protected; (2) this right is directly threatened by the act
sought to be enjoined; (3) the invasion of the right is material and substantial; and (4) there
is an urgent and paramount necessity for the writ to prevent serious and irreparable
damage.
The grant or denial of the injunctive relief rests on the sound discretion of the court
taking cognizance of the case, since the assessment and evaluation of evidence towards that
end involves findings of fact left to the conclusive determination by such court; and the
exercise of judicial discretion by such court will not be interfered with, except upon a finding
of grave abuse of discretion. In the issuance of the injunctive writ, grave abuse of discretion
implies a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction; or
the exercise of power in an arbitrary or despotic manner by reason of passion, prejudice or
personal aversion amounting to an evasion of positive duty or to a virtual refusal to perform
the duty enjoined or to act at all in contemplation of law.
Guided by the foregoing principles, the CA erred in finding that the RTC committed
grave abuse of discretion in issuing its Orders, denying WWRAI's application for the issuance
of a temporary restraining order and writ of preliminary injunction. WWRAI's allegation
that its members' right to live in a peaceful, quiet and safe environment will be violated in
the event that the condominium project of AMALI will be erected is untenable. The alleged
noise and dust that may be caused by the construction is the natural consequence thereof.
However, this annoyance that may be brought by the construction is not permanent in nature
but is merely temporary and once the building is completed, said members' right to live in a
peaceful, quiet and safe environment will be restored without noise and dust. As to the
allegations that said members' privacy may be invaded for the reason that they may be
photographed or videotaped without their knowledge, these fears are merely speculative
and cannot be taken into consideration. As admitted by WWRAI's witness, the construction
activity is suspended, hence, there is nothing to restrain. There is no urgent and paramount
necessity for the writ to prevent serious damage.
Indeed, WWRAI was unable to convincingly demonstrate a clear and unmistakable

right that must be protected by the injunctive writ. The apprehensions of its members are,
as correctly ruled by the RTC, speculative and insufficient to substantiate the element of
serious and irreparable damage.
2. NO. The denial of WWRAI's application for a writ of preliminary injunction against the
construction of the AMA Tower does not necessarily translate to AMALI's entitlement to a
temporary easement of right of way over a portion of Fordham Street belonging to WWRAI
for use as an access road and staging area of its AMA Tower project before the resolution of
its petition for declaration of easement of right of way (original petition) by the RTC. WWRAI
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cannot be compelled at this stage of the proceedings to grant AMALI a temporary legal
easement of right of way over a portion of Fordham Street.
The question of whether or not AMALI, as owner of the dominant estate, may validly
claim against WWRAI a compulsory permanent right of way under Articles 649 and 650 of
the Civil Code, will depend on a finding that AMALI has established the existence of the
following requisites, namely: (1) the dominant estate is surrounded by other immovables;
(2) it is without adequate outlet to a public highway; (3) after the proper indemnity has been
paid; (4) the isolation was not due to the proprietor of the dominant estate's own acts; and
(5) the right of way claimed is at a point least prejudicial to the servient estate. A sixth
requisite is that the right of way must be absolutely necessary for the normal enjoyment of
the dominant estate by its owner. There must be a real, not fictitious or artificial, necessity
for the right of way, and the right cannot be claimed merely for the convenience of the owner
of the enclosed estate. The burden of proving the existence of the foregoing requisites lies
on AMALI, being the owner of the dominant estate. This issue has been correctly
recognized by the CA as still pending determination by the Regional Trial Court of
Pasig City assigned in San Juan (Metropolitan Manila) Branch 264, in Civil Case No.
65668.
In turn, as regards the question of whether AMALI is entitled to a temporary

easement of right of way, Article 656 of the Civil Code provides that this can be granted only
after the payment of the proper indemnity by AMALI, the owner of the dominant estate; and
only if AMALI has established that the easement is indispensable for the construction of its
AMA Tower Project.
The RTC did not even factor in its Order "directing WWRAI to allow AMALI to use
Fordham Street through a temporary easement right of way and set the compensation for
the use of Fordham Street to P50,000.00 per month of use" the fact that the front portion of
AMALI's property where the proposed AMA Tower project is situated is facing EDSA, which
AMALI describes as a main thoroughfare. The said Order also fails to identify the specific
portion of Fordham Street that would be subject to the temporary easement of right of
way. The RTC erred and/or gravely abused its discretion when it granted AMALI's
application for preliminary mandatory injunction because, in so doing, it prematurely
decided disputed facts and disposed of the merits of the case without the benefit of a full-
blown trial wherein testimonial and documentary evidence could be fully and exhaustively
presented, heard and refuted by the parties. As such, the RTC Order insofar as it granted a
temporary easement of right of way over Fordham Street in favor of AMALI is concerned is
declared void and of no force and effect. The RTC lacked jurisdiction to declare a temporary
easement of right of way arising from Article 656 of the Civil Code without a full-blown trial.
Article 656 requires proof of indispensability and receipt of payment of the proper
indemnity for the damage caused by the owner of the dominant estate before the owner of
the servient estate can be compelled to grant a temporary easement of right of way. AMALI
presented no witnesses to establish these prerequisites. Being preconditions, they are akin
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to suspensive conditions that must be fulfilled before the obligation on the part of WWRAI
to allow the easements can arise. Until the preconditions are met, AMALI has no legal basis
to use a portion of Fordham Street as an access road and staging area of its AMA Tower
project. To allow AMALI to do so would be in contravention of the legal provisions on the
establishment and grant of the legal easement of right of way under the Civil Code.
To stress, the temporary easement of right of way under Article 656 of the Civil Code,
similar to the permanent easement of right of way pursuant to its Articles 649 and 650, can
only be granted after proof of compliance with the prerequisites set forth in the articles duly
adduced during a full-blown trial.
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G. HOLDINGS, INC vs. CEPALCO

G.R. No. 226213. September 27, 2017, Second Division (Caguioa, J.)
DOCTRINE
Under Article 1345 of the Civil Code, simulation of a contract may be absolute, when the
parties do not intend to be bound at all, or relative, when the parties conceal their true
agreement. The characteristic of simulation is the fact that the apparent contract is not really
desired or intended to produce legal effects or in any way alter the juridical situation of the
parties. Thus, where a person, in order to place his property beyond the reach of his creditors,
simulates a transfer of it to another, he does not really intend to divest himself of his title and
control of the property; hence, the deed of transfer is but a sham. Further, rescissible contracts
and void or inexistent contracts belong to two mutually exclusive groups.
FACTS
From March 1990 CEPALCO, which operates a light and power distribution system in
Cagayan de Oro City, supplied power to the ferro-alloy smelting plant of FPI at the PHIVIDEC
Industrial Estate in Tagoloan, Misamis Oriental. When FPI defaulted in the payment of its
electric power bills, CEPALCO demanded payment thereof. FPI paid CEPALCO on three
separate dates, leaving a balance. FPI failed again to pay its subsequent electricity bills,
thereby increasing its unpaid electric bills. For failure to pay FPI's outstanding bills,
CEPALCO disconnected the electric power supply to FPI in May 1996. CEPALCO filed a
collection suit against FPI. RTC-Pasig rendered a Decision in favor of CEPALCO, ordering FPI
to pay CEPALCO. CEPALCO moved for execution pending appeal, which was granted by RTC-
Pasig. In the meantime, Sheriff Baron of RTC-Pasig issued notices of levy upon personal and
real properties and notices of sale on execution of personal and real properties.
GHI filed a case against Sheriff Baron, CEPALCO and FPI for Nullification of Sheriff's
Levy on Execution and Auction Sale, Recovery of Possession of Properties and Damages
before the RTC-CDO. GHI claimed that the levied ferro-alloy smelting facility, properties and
equipment are owned by it as evidenced by a Deed of Assignment executed by FPI. In the
unilateral Deed of Assignment, FPI, as the assignor, through its stockholders and Board of
Directors' duly authorized representative and Acting President, Juanito E. Figueroa, in
consideration of obligations conveyed absolutely in favor of GHI, as the assignee, "all of the
[assignor's] properties, equipment and facilities, located in Phividec Industrial Estate,
Tagoloan, Misamis Oriental. Prior to the Deed of Assignment, FPI sent to GHI a letter dated
February 28, 2003 wherein the manner by which the obligation of FPI amounting to
P50,366,926.71 (as of December 31, 2002) would be addressed per their earlier discussions
was confirmed.
CEPALCO filed its answer with compulsory counterclaim and cross-claim. In its
counterclaim, CEPALCO assailed the validity of the Deed of Assignment. CEPALCO contended
that the Deed of Assignment was null and void for being absolutely simulated and, as a dacion
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en pago, it did not bear the conformity of the creditor. GHI and FPI have substantially the
same directors. The Deed of Assignment was in fraud of FPI's creditors as it was made after
the RTC-Pasig had already rendered a partial judgment in favor of CEPALCO and was,
therefore, rescissible.
ISSUE
1. Whether the CA was correct in not dismissing CEPALCO's compulsory counterclaim for
non-payment of docket fees.
2. Whether the Deed of Assignment was absolutely simulated as it was done in fraud of
creditors and badges of fraud accompanied its execution, and is therefore not rescissible.
RULING
1. YES. CEPALCO's counterclaim and prayer for rescission of the Deed of Assignment can only
be viewed as a compulsory counterclaim because it "arises out of or is connected with the
transaction or occurrence constituting the subject matter of the opposing party's claim and
does not require for its adjudication the presence of third parties of whom the court cannot
acquire jurisdiction." Being a compulsory counterclaim, the CA was correct when it ruled
that as of the filing of CEPALCO's Answer with Compulsory Counterclaim and Cross-Claim, it
was not liable to pay filing fees on its compulsory counterclaim. Thus, on the first issue, the
CA committed no reversible error when it did not order the dismissal of CEPALCO's
counterclaim, which is compulsory, for non-payment of docket fees.
2. YES. The Deed of Assignment is being questioned for being both rescissible and, at the
same time, an absolute simulation (void or inexistent contracts).
Rescission and nullity can be distinguished in the following manner: (a) by reason of
the basis — rescission is based on prejudice, while nullity is based on a vice or defect of one
of the essential elements of a contract; (2) by reason of purpose — rescission is a reparation
of damages, while nullity is a sanction; (3) by reason of effects — rescission affects private
interest while nullity affects public interest; (4) by reason of nature of action — rescission is
subsidiary while nullity is a principal action; (5) by reason of the party who can bring action
— rescission can be brought by a third person while nullity can only be brought by a party;
and (6) by reason of susceptibility to ratification — rescissible contracts need not be ratified
while void contracts cannot be ratified.
They can likewise be distinguished as follows: (1) as to defect: In rescissible contracts,

there is damage or injury either to one of the contracting parties or to third persons; while
in void or inexistent contracts, one or some of the essential requisites of a valid contract are
lacking in fact or in law; (2) As to effect: The first are considered valid and enforceable until
they are rescinded by a competent court; while the latter do not, as a general rule, produce
any legal effect; (3) As to prescriptibility of action or defense: In the first, the action for
rescission may prescribe; while in the latter, the action for declaration of nullity or
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inexistence or the defense of nullity or inexistence does not prescribe; (4) As to susceptibility
of ratification: The first are not susceptible of ratification, but are susceptible of
convalidation; while the latter are not susceptible of ratification; (5) As to who may assail
contracts: The first may be assailed not only by a contracting party but even by a third person
who is prejudiced or damaged by the contract; while the latter may be assailed not only by a
contracting party but even by a third party whose interest is directly affected; (6) As to how
contracts may be assailed: the first may be assailed directly, and not collaterally; while the
latter may be assailed directly or collaterally.
The enumerations and distinctions above indicate that rescissible contracts and void
or inexistent contracts belong to two mutually exclusive groups. A void or inexistent contract
cannot at the same time be a rescissible contract, and vice versa. The latter, being valid and
until rescinded, is efficacious while the former is invalid. There is, however, a distinction
between inexistent contracts and void ones as to their effects. Inexistent contracts
produce no legal effect whatsoever in accordance with the principle "quod nullum est nullum
producit effectum." In case of void contracts where the nullity proceeds from the illegality of
the cause of object, when executed (and not merely executory) they have the effect of barring
any action by the guilty to recover what he has already given under the contract.
Under Article 1345 of the Civil Code, simulation of a contract may be absolute, when
the parties do not intend to be bound at all, or relative, when the parties conceal their true
agreement. The former is known as contracto simulado while the latter is known as contracto
disimulado. An absolutely simulated or fictitious contract is void while a relatively simulated
contract when it does not prejudice a third person and is not intended for any purpose
contrary to law, morals, good customs, public order or public policy binds the parties to their
real agreement. The characteristic of simulation is the fact that the apparent contract is not
really desired or intended to produce legal effects or in any way alter the juridical situation
of the parties. Thus, where a person, in order to place his property beyond the reach of his
creditors, simulates a transfer of it to another, he does not really intend to divest himself of
his title and control of the property; hence, the deed of transfer is but a sham.
In the Deed of Assignment, did FPI intend to divest itself of its title and control of the
properties assigned therein?
The lack of intention on the part of FPI to divest its ownership and control of "all of
its properties, equipment and facilities, located in Phividec Industrial Estate, Tagoloan,
Misamis Oriental" — in spite of the wordings in the Deed of Assignment that FPI "assigned,
transferred, ceded and conveyed them absolutely in favor of GHI" — is evident from the
letter dated February 28, 2003 which reveals the true intention of FPI and GHI.
In the letter, it is there provided that the right to the work process, "Outokumpo," was
to be retained by FPI and would only be made available to GHI under two options. One option
even gave FPI the option to operate the assigned assets with the obligation to pay GHI a
guaranteed revenue. While GHI was given the first crack to choose which of the two options
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to take, such chosen option would only last for three years, and subsequently, FPI would
make the choice and the option chosen by FPI would last for the next three years. The cycle
would then be repeated if the ferro-alloy plant would not be operated for six years from
assignment. What is evident, therefore, in the delineation of the different options available
to FPI and GHI in the settlement of FPI's obligations to the latter is that FPI did not intend to
really assign its assets "absolutely" to GHI. This letter belies the wordings of the Deed of
Assignment that, was executed a mere 11 days after the letter.
That there was no intention to absolutely assign to GHI all of FPI's assets was
confirmed by the finding of the RTC-CDO that, according to FPI's Acting President, Juanito E.
Figueroa, "GHI cannot operate the [equipment, machinery and smelting facilities] without
the patented 'Outokumpo' process and GHI has not been operating the same." Moreover, the
equipment and machinery remain physically in the plant premises, slowly depreciating with
the passage of time, and, worse, there also appears to be no effective delivery as the premises
on which these are located remain under the control of FPI which continues to employ the
security and skeletal personnel in the plant premises.
Thus, in executing the Deed of Assignment, FPI's intention was not to transfer
absolutely the assigned assets (admittedly valued at about P280 Million) to GHI in payment
of FPI's obligations to GHI amounting to P50,366,926.71. FPI did not really intend to divest
itself of its title and control of the assigned properties. FPI's real intention was to place them
beyond the reach of its creditor CEPALCO.
As to the presence of badges of fraud, which the RTC-CDO found to have existed and
affirmed by the CA, they do, in fact, confirm the intention of FPI to defraud CEPALCO. But
these findings do not thereby render as rescissible the Deed of Assignment under Article
1381 (3). Rather, they fortify the finding that the Deed of Assignment was "not really desired
or intended to produce legal effects or in any way alter the juridical situation of the parties"
or, put differently, that the Deed of Assignment was a sham, or a contracto simulado.
Thus, the Deed of Assignment is declared inexistent for being absolutely simulated or
fictitious. The CA was correct in ruling that the Deed of Assignment was absolutely simulated,
although it was in error in affirming the rescission ordered by the RTC-CDO because
rescissible contracts and void or inexistent contracts belong to two mutually exclusive
groups.
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PRIVATIZATION AND MANAGEMENT OFFICE vs. EDGARDO V. QUESADA, et. al.

G.R. No. 224507, September 20, 2017, Second Division (Caguioa, J.)
DOCTRINE
Section 107 contemplates ONLY two situations when a petition for surrender of
withheld duplicate certificate of title may be availed of. These are: (1) where it is necessary to
issue a new certificate of title pursuant to any involuntary instrument which divests the title of
the registered owner against his consent, and (2) where a voluntary instrument cannot be
registered by reason of the refusal or failure of the holder to surrender the owner's duplicate
certificate of title.
Further, Section 2 of P.D. No. 1529 has eliminated the distinction between the general
jurisdiction vested in the regional trial court and the limited jurisdiction conferred upon it by
the former law when acting merely as a cadastral court. Under the former law (Act No. 496 or
the Land Registration Act), all summary reliefs such as the instant action to compel surrender
of owner's duplicate of Title could only be filed with the RTC sitting as a land registration court
only if there was unanimity among the parties or there was no adverse claim or serious
objection on the part of any party in interest. Otherwise, if the case became contentious and
controversial, it should be threshed out in an ordinary action or in the case where the incident
properly belonged. Under the amended law, the court is now authorized to hear and decide not
only such non-controversial cases but even the contentious and substantial issues
FACTS
The Quesadas filed a Petition to Surrender TCT No. 27090 pursuant to Section 107 of
P.D. No. 1529. The Quesadas are the owners of a parcel of land situated in Quezon City under
TCT No. 27090. TCT No. 27090 as originally registered in the name of the Quesadas'
predecessors-in-interest and it was donated to them sometime in 1997. The original copy of
TCT No. 27090, on file with the Register of Deeds of Quezon City, was destroyed when the
interior of the Quezon City Hall was gutted by fire. This prompted the Quesadas'
predecessors-in-interest to file a Petition for Reconstitution of Title. The said original TCT,
which has not been reconstructed, may be reconstituted on the basis of the owner's copy
thereof. However, the said owner's copy of the TCT is presently in the possession of PMO,
the government agency that took over the functions of the Asset Privatization Trust. PMO got
hold of the said owner's copy of the TCT because it was delivered in 1983 to Golden Country
Farms, a defunct private corporation, to secure the performance by the Quesadas'
predecessors-in-interest of their obligation in a contract designated as Growership
Agreement which the Quesadas' predecessors-in-interest had entered into with Golden
Country Farms. Golden Country Farms, however, was later considered a crony corporation
and was sequestered by the APT.
Several demands were made to PMO to surrender the said title but the same were not
favorably acted upon by the said office. The Quesadas were constrained to file the instant
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petition to surrender the withheld duplicate certificates pursuant to Section 107 of P.D. No.
1529, otherwise known as the Property Registration Decree.
PMO insists that the original petition failed to state a cause of action because the
allegations therein do not fall under the two circumstances contemplated in Section 107
of P.D. No. 1529, and that the summary proceedings under the said Section do not empower
the RTC to resolve the conflicting claims of the parties. The Quesadas take the position that
the CA was correct in declaring that the instant case could be converted into an ordinary
action to avoid multiplicity of suits.
ISSUES
1. Whether the RTC can take cognizance of the petition to surrender the duplicate
copy of TCT No. 27090 pursuant to Section 107 of P.D. No. 1529.
2. Whether the RTC, as a land registration court, has jurisdiction to hear and decide
contentious and substantial issues over the original petition for surrender of withheld
duplicate certificate of title.
RULING
1. YES. The jurisdiction of the RTC as a land registration court over all petitions filed
after original registration of title, with power to hear and determine all questions
arising upon such applications or petitions is provided in Section 2 of P.D. No. 1529.
As correctly observed by PMO, Section 107 contemplates ONLY two situations when
a petition for surrender of withheld duplicate certificate of title may be availed of. These are:
(1) where it is necessary to issue a new certificate of title pursuant to any involuntary
instrument which divests the title of the registered owner against his consent, and (2) where
a voluntary instrument cannot be registered by reason of the refusal or failure of the holder
to surrender the owner's duplicate certificate of title.
Clearly, the original petition before the RTC does not allege an involuntary instrument
which intends to divest the title of the registered owner against his consent. TCT No. 27090
is registered in the name of the Quesadas' predecessors-in-interest and the Quesadas are not
divesting the title of their predecessors-in-interest against the latter's will. Rather, the
Quesadas require the surrender of the owner's duplicate of TCT No. 27090 in the possession
of PMO based on an alleged deed of donation in their favor.
Inasmuch as the original petition before the RTC seeks the surrender of the owner's
duplicate copy of TCT No. 27090 in the possession of PMO so that a voluntary instrument —
a Deed of Donation — can be registered but the registration cannot be made by reason of the
refusal of PMO, the holder, to surrender the same, a cause of action under Section 107
of P.D. No. 1529 has been sufficiently alleged in the original petition. Thus, a dismissal of the
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said petition on the ground that it fails to state a cause of action is not warranted.
Consequently, the RTC, as a land registration court, has jurisdiction over the original petition.
2. YES. With respect to the power of the RTC to hear and decide contentious and substantial
issues, such as, whether the obligation of the Quesadas' predecessors-in-interest under the
Growership Agreement had already been extinguished by prescription and whether the
Decision of the RTC of Pasay City declaring that the Quesadas' predecessors-in-interest
had no more liability to Golden Country Farms (now PMO) or that whatever liability there
might be against them could no longer be enforced, or those that affect the ownership of the
property covered by TCT No. 27090, Section 2 of P.D. No. 1529 confers a broad jurisdiction
upon the RTC "with power to hear and determine all questions arising upon such
[petition]." RTCs now have the power to hear and determine all questions, even contentious
and substantial ones, arising from applications for original registration of titles to lands and
petitions filed after such registration. The matter of whether the RTC resolves an issue in
the exercise of its general jurisdiction or of its limited jurisdiction as a special court is
only a matter of procedure and has nothing to do with the question of jurisdiction.
Indeed, the land registration court can now hear and decide controversial and
contentious cases and those involving substantial issues.
Considering the serious objection raised by PMO on the Quesadas’ claim, the issue
becomes contentious and the RTC albeit sitting as a land registration court, has the authority
not only to take cognizance of the said petition, but also to thresh out the issue in a full-blown
hearing, to receive evidence of both parties and to determine whether or not the Quesadas
are indeed entitled to the relief prayed for. Verily, after the parties have been duly heard in
a full-blown hearing, the RTC, being a court of general jurisdiction, can squarely address all
the issues to be raised by the parties and resolve their conflicting claims, applying
substantive law and jurisprudence. Indeed, this matter is procedural and not jurisdictional.
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REPUBLIC OF THE PHILIPPINES, vs. THE HEIRS OF MEYNARDO CABRERA

G.R. No. 218418. November 8, 2017, Second Division (Caguioa, J.)
DOCTRINE
The classification and reclassification of public lands into alienable or disposable,

mineral or forest land is the exclusive prerogative of the Executive Department, and is exercised
by the latter through the President. Furhter, owing to the nature of reversion proceedings and
the outcome which a favorable decision therein entails, the State bears the burden to prove that
the land previously decreed or adjudicated in favor of the defendant constitutes land which
cannot be owned by private individuals.
FACTS
Sometime in 1971, the Bureau of Lands issued Free Patent No. 516197 in favor of
Meynardo, covering two (2) lots. On the basis of said patent, the ROD issued Original
Certificate of Title covering both lots in Meynardo's name. Thereafter, Lot 1-A was
transferred to Consolacion. Thus, on April 6, 1982, TCT No. 16580 covering Lot 1-A was
issued in Consolacion's name. Later still, Consolacion sold portions of Lot 1-A to several
purchasers. Learning of the issuance of TCT No. 16580, the De Castros, claiming to be the
actual possessors of Lot 1-A, filed before the DENR a petition urging DENR to conduct an
investigation to determine Lot 1-A's land classification status.
Consequently, in the DENR Final Report issued by Erwin D. Talento of the DENR
Land Management Office, Free Patent No. 516197, covering Lots 1, 1-A, and 2
(collectively, Roxas Properties), was declared null and void for having been issued over
land forming part of the public domain (forest lands).
Later, the Republic filed against the Respondents a complaint for the annulment
and/or cancellation of Free Patent No. 516197, OCT No. RP-132 (P-9193), and TCT No.
16580. The Complaint also prayed for the reversion of the Roxas Properties in the State's
favor.
In this Petition, the Republic maintains that the Court's ruling in Animas did not
have the effect of making a positive executive act a necessary requirement for the
purpose of proving the reclassification of alienable and disposable land. Instead, the
Republic posits that Animas affirms its right to institute reversion proceedings in
instances where portions of forest land are erroneously included within the scope of land
patents. Moreover, the Republic argues that in reversion proceedings, the State should
not be made to bear the burden of proving that the land in question constitutes public
domain (i.e., forest land). In any case, the Republic posits that the documentary and
testimonial evidence it had presented sufficiently proved such fact.
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ISSUES
Whether the CA is correct when it held that a positive act of government is
necessary to evince the reclassification of land from alienable and disposable to forest.
RULING
YES. The CA did not err when it affirmed the RTC, as the Republic failed to
establish that the Roxas Properties were classified as forest land at the time Free
Patent No. 516197 was issued.
The power to classify and reclassify land lies solely with the Executive Department.
The Regalian Doctrine has long been recognized as the basic foundation of the
State's property regime, and has been consistently adopted under the 1935, 1973,
and 1987 Constitutions; it espouses that all lands of the public domain belong to the
State, and that, as a consequence thereof, any asserted right of ownership over land
necessarily traces back to the State. At present, Section 3, Article XII of the 1987
Constitution classifies lands of the public domain into five (5) categories — forest lands,
agricultural lands, timber lands, mineral lands, and national parks. In the absence of any
prior classification by the State, unclassified lands of the public domain assume the
category of forest lands not open to disposition.
In turn, the classification of unclassified lands of the public domain, and the
reclassification of those previously classified under any of the categories set forth in
the 1987 Constitution (such as the Roxas Properties), are governed by Commonwealth
Act No. 141 otherwise known as the Public Land Act.
The provisions thereof are clear and leave no room for interpretation — the
classification and reclassification of public lands into alienable or disposable, mineral or
forest land is the exclusive prerogative of the Executive Department, and is exercised by
the latter through the President, or such other persons vested with authority to exercise
the same on his behalf. Since the power to classify and reclassify land are executive in
nature, such acts, effected without executive authority, are void, and essentially ultra
vires.
In reversion proceedings, the State bears the burden of proving that the property in
question was inalienable at the time it was decreed or adjudicated in favor of the
defendant.
A land registration proceeding is the manner through which an applicant confirms

title to real property. In this proceeding, the applicant bears the burden of overcoming
the presumption of State ownership. Accordingly, the applicant is bound to establish,
through incontrovertible evidence, that the land sought to be registered had been
declared alienable or disposable through a positive act of the State. Conversely,
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reversion proceeding is the manner through which the State seeks to revert land to the
mass of the public domain; it is proper when public land is fraudulently awarded and
disposed of in favor of private individuals or corporations, or when a person obtains a
title under the Public Land Act which includes, by oversight, lands which cannot be
registered under the Torrens system as they form part of the public domain.
Owing to the nature of reversion proceedings and the outcome which a favorable
decision therein entails, the State bears the burden to prove that the land previously
decreed or adjudicated in favor of the defendant constitutes land which cannot be owned
by private individuals. Hence, to resolve this Petition, the Court must determine whether
the documentary and testimonial evidence offered by the Republic are sufficient to
sustain its cause.
The Complaint should be dismissed as the Republic failed to show that the Roxas
Properties (including Lot 1-A) were classified as forest land at the time Free
Patent No. 516197 was issued in Meynardo's favor.
To recall, the Republic presented the following pieces of evidence to support its
complaint for reversion: (i) DENR Final Report; (ii) NAMRIA certifications; and (iii) LC
Map 209. However, these documents, whether taken individually or collectively, do not
evince a positive act of reclassification by the Executive Department.
The testimonies confirm that the alleged reclassification of the Roxas Properties
is bereft of basis, as it was done by Engineer Mendez on his sole account, without any
prior directive from the President, or a duly authorized officer from the Executive
Department. In fact, the annotation appearing on LC Map 209 upon which the Republic
relies does not even state upon whose authority the alleged reclassification had been
made, placing the annotation's validity, veracity and worth in serious doubt.
Ultimately, the Republic failed to prove that the Roxas Properties (including Lot
1-A) were classified as forest land when they were decreed in Meynardo's favor in 1971.
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PADAYHAG vs. DIRECTOR OF LANDS

SOUTHERN MINDANAO COLLEGES, vs. THE HON. COURT OF APPEALS
G.R. No. 202872, G.R. No. 206062, November 22, 2017, Second Division (Caguioa, J.)
DOCTRINE
Anent the publication requirement in reconstitution proceedings under Section 13, RA

26, mere submission of the subject Official Gazette issues would evidence only the first element
— publication in two consecutive issues of the Official Gazette, and what must be proved is not
the content of the Order published in the Official Gazette but the fact of two-time publication in
successive issues at least 30 days before the hearing date. Further, the probative value of
certifications of the Director of the National Printing Office in reconstitution cases. The Court
even quoted therein the lower court's observation that the Official Gazette is an official
publication of the government and consequently, the Court can take judicial notice of its
contents.
FACTS
This case involves six (6) parcels of land. These lots are claimed by two (2) parties,
namely: the Heirs of Lourdes Padayhag, and Southern Mindanao Colleges (SMC). The first
two lots are the Santa Lucia Lots. The other four lots are the Lumbia Lots. The Director of
Lands, acting for and in behalf of the Government, instituted with the then Court of First
instance of Zamboanga del Sur Cadastral Case No. N-17, GLRO CAD Rec. No. N-468 pursuant
to the government's initiative to place all lands under the Cadastral System. The Padayhags
claim that the Spouses Federico and Lourdes Padayhag are the original owners of the Lumbia
Lots. These lots are part of the 5-hectare landholding of their father, Federico Padayhag. On
August 31, 1948, Spouses Federico and Lourdes Padayhag and Southern Mindanao Institute
entered into an Agreement Referring to Real Property conveying the possession of these lots
to SMI in consideration of 30 shares of stock of SMI. When SMC SMI, Lourdes Padayhag
wanted to return the shares of stock issued to them so that the Padayhags could get back the
land subject of the contract. As for the Sta. Lucia Lots the Padayhags claim that since 1927
they occupied 300 square meters of Lot [No.] 2102 and 412 square meters of Lot [No.] 2104.
However, when a cadastral survey was made on [L]ot [N]os. 2102 and 2104, they were not
able to object as they were not informed of such survey. They protested with the Bureau of
Lands asserting that there was error in the survey of the boundaries. On the other hand, SMC
argued that it bought [L]ot [N]o. 2102 from Mangacop Ampato evidenced by a Deed of
Conveyance of Real Estate executed on January 22, 1960; and [L]ot [N]o. 2104 from Adriano
Arang evidenced by a Deed of Absolute Sale. Likewise, the said conveyance was reflected in
the Status Book of the Bureau of Lands.
The RTC, sitting as Land Registration Court, rendered a Decision in favor of SMC.
Aggrieved by the RTC Decision, SMC appealed to the CA. The CA dismissed the appeal for lack
of merit and ruled that there being no indication at all from the records that notice of the
Order for Initial Hearing was published in the Official Gazette and in a newspaper of general
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circulation, the decision rendered by the RTC of Pagadian City is void ab initio for having
been rendered without jurisdiction. SMC filed a Motion for Reconsideration, which was
denied by the CA in its Resolution dated January 10, 2013 while the Padayhags filed their
Petition with the Court.
SMC filed an "Urgent Motion for Extension of Time to File Petition for Review
on Certiorari under Rule 45 of the Rules of Court". In a Resolution dated August 12, 2013, the
Court resolved to deny SMC's motion for extension for lack of payment of docket fees.
Thereafter, an Entry of Judgment was issued certifying that the said Resolution had become
final and executory. SMC filed a Petition for Certiorari (under Rule 65 of the Rules of Court).
ISSUES
1. Whether the CA erred in setting aside the RTC Decision and Resolution for want of
jurisdiction as no notice of the Order for Initial Hearing was published in the Official
Gazette and in a newspaper of general circulation
2. Whether the the Court can take judicial notice of the Official Gazette of the
Philippines.
3. Whether the RTC's failure to notify the OSG of the cadastral proceedings and the
orders therein deprived the State of due process and rendered the RTC Decision and
Resolution void;
4. Whether SMC's certiorari petition under Rule 65 is the proper remedy to assail the
CA Decision.
RULING
1. YES. A verification of the documents adverted to by the Padayhags, which bear a

certification by the University of the Philippines Library, Media Service Section, Diliman,
Quezon City that they are microfilm print-outs of the Official Gazette issues concerned,
reveals the presence of a Notice of Initial Hearing in Cadastral Case No. N-17, LRC Cadastral
Record No. N-468 before the then Court of First Instance of Zamboanga del Sur.
Given that the initial hearing based on the published notice was scheduled on January
16, 1967, the applicable laws were Act 496 and Act 2259 which required only the notice of
initial hearing to be published twice, in successive issues of the Official Gazette. Thus, it
was erroneous for the CA to have required an additional publication of the said notice in a
newspaper of general circulation. Such requirement was imposed only with the passage
of PD 1529.
As proof of the publication in two successive issues of the Official Gazette of the Notice
of Initial Hearing for Cadastral Case No. N-17, LRC Cadastral Record No. N-468, the
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Padayhags submitted to the Court microfilm print-outs of the issues of the Official Gazette
with certifications by the University of the Philippines. Adriano Arang, Mangacap Ampato,
and Federico Padayhag, Jr. appear in the said issues among the many claimants of the 1,409
lots with a combined area of 236,6925 hectares situated in the then Municipality of Pagadian,
Province of Zamboanga del Sur and designated as Pagadian Public Lands Subdivision Pls-
119, Case 1. Mangacap Ampato or "Mangacop Ampato" and Adriano Arang are allegedly
predecessors-in-interest of SMC. The case in the RTC is docketed as "CADASTRAL CASE NO.
N-17 LRC CAD. REC. NO. N-468 LOTS NOS. 2102, 2104, and 2883, 2888, 2921 and 2922, Pls-
119."
Given that Cadastral Case No. N-17, LRC Cad. Rec. No. N-468 does not only cover the
six lots in dispute in this case, but around 1,409 lots, the copies of the issues of the Official
Gazette where the Notice of the Order for Initial Hearing was published could have been
included in the records of the cadastral proceedings of the other lots included therein. Thus,
it was imprudent for the CA to rule that the Decision rendered by the RTC is void ab initio for
having been rendered without jurisdiction. The repercussion of such pronouncement by the
CA is far-reaching as it would cast doubt on the validity of the cadastral proceedings of the
1,409 lots in the then Municipality of Pagadian. At the very least, the CA should have required
the parties to present proof of the publication of the Order for Initial Hearing in the pertinent
issues of the Official Gazette.
In Republic v. CA, the Court noted that anent the publication requirement in
reconstitution proceedings under Section 13, RA 26, mere submission of the subject Official
Gazette issues would evidence only the first element — publication in two consecutive issues
of the Official Gazette, and what must be proved is not the content of the Order published in
the Official Gazette but the fact of two-time publication in successive issues at least 30 days
before the hearing date. The Court further stated therein that it has consistently accepted
the probative value of certifications of the Director of the National Printing Office in
reconstitution cases. The Court even quoted therein the lower court's observation that the
Official Gazette is an official publication of the government and consequently, the Court can
take judicial notice of its contents.
In this case, no certification from the Director of the National Printing Office was
presented. The certification alone without the copy of the Notice of Initial Hearing may not
suffice. There is a need to verify the contents of the said Notice to ensure that the subject
properties (6 lots) and parties/claimants are covered thereby. The Notice of Initial Hearing
was not only for subject properties and parties/claimants, but for 1,409 lots and numerous
claimants. If the Notice of Initial Hearing pertained to a specific registered property, as in the
case of the reconstitution of a title, then a certification of publication from the Director of the
National Printing Office in this wise would suffice.
2. YES. Given that the Official Gazette is the official publication of the government, the Court
can take judicial notice thereof pursuant to Section 2 of Rule 129, Rules of Court.
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Thus, the Court takes judicial notice of the publication of the Notice of Initial Hearing
for Cadastral Case No. N-17, LRC Cadastral Record No. N-468 in the issues of the Official
Gazette on October 24 and 31, 1966, Volume 62, Number 43, pages 8044 to 8047,
and Number 44, pages 8312 to 8315.
3. NO. Evidently, the herein cadastral proceedings were supposed to have been instituted by
the then Director of Lands represented by the Solicitor General. For the OSG to now deny
that it had no involvement in or that it had not been notified of the proceedings is not in
keeping with the nature of cadastral proceedings. The Court is not prepared to nullify the
cadastral proceedings involving the then municipality of Pagadian without due process being
accorded to all the claimants involved therein and without the OSG going thoroughly over
the records of the entire cadastral proceedings to verify whether it participated therein. It
must be noted that in these petitions, the RTC Decision was finally rendered on May 30, 2006
after 40 years from June 2, 1966, the date of the Notice of Initial Hearing. To summarily
nullify the cadastral proceedings at this juncture would be unjust. Suffice it say that for
purposes of these cases, the Court is relying on the presumption that official duty has been
regularly performed pursuant to Section 3 (m), Rule 131 of the Rules of Court.
4. YES. SMC availed of the wrong remedy. A petition for review on certiorari before the
Supreme Court under Rule 45 is the proper remedy of a party desiring to appeal
by certiorari a judgment, final order or resolution of the CA.
Also, SMC is not justified to avail itself of a Rule 65 certiorari petition after its earlier
attempt to avail of a Rule 45 certiorari petition had failed. SMC, prior to the filing of the SMC
Petition, attempted to comply with a Rule 45 certiorari petition when on February 5, 2013,
it filed an "Urgent Motion for Extension of Time to File Petition for Review
on Certiorari under Rule 45 of the Rules of Court". However, in its Resolution dated August
12, 2013, the Court resolved to deny SMC's motion for extension for lack of payment of
docket fees pursuant to Sections 2 and 3, Rule 45 in relation to Section 5 (c), Rule 56 of
the 1997 Rules of Civil Procedure. Thereafter, an Entry of Judgment was issued certifying
that the said Resolution had become final and executory on November 8, 2013.
Given that SMC resorted to successive Rule 45 and Rule 65 certiorari petitions to
question the CA Decision and Resolution and that the Rule 45 certiorari petition had already
been denied, the denial of the SMC Petition is in order because certiorari is not and cannot
be made a substitute for an appeal where the latter remedy is available but was lost through
fault or negligence as in this case where the appeal was lost due to non-payment of docket
fees. The denial of the SMC Petition is, however, of no moment since the instant cases are
being remanded to the CA and the CA will have to pass upon the respective claims of the
Padayhags and SMC on the lots in question in the resolution of the appeals before the CA on
the merits.
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COCA-COLA BOTTLERS PHILS., INC., vs. ERNANI GUINGONA MEÑEZ

G.R. No. 209906. November 22, 2017, Second Division (Caguioa, J.)
DOCTRINE
The cases when moral damages may be awarded are specific. Unless the case falls under
the enumeration as provided in Article 2219, which is exclusive, and Article 2220 of the Civil
Code, moral damages may not be awarded. As to exemplary or corrective damages, these may
be granted in quasi-delicts if the defendant acted with gross negligence pursuant to Article
2231 of the Civil Code.
FACTS
Research scientist Meñez was a frequent customer of Rosante Bar and Restaurant of
Dumaguete City. He ordered pizza and a bottle of "Sprite." Meñez then took a bite of pizza
and drank from the straw the contents of the Sprite bottle. He noticed that the taste of the
softdrink was not one of Sprite but of a different substance repulsive to taste. The substance
smelled of kerosene. He then felt a burning sensation in his throat and stomach and could
not control the urge to vomit. He left his table for the toilet to vomit but was unable to reach
the toilet room. Instead, he vomited on the lavatory found immediately outside the said
toilet. Upon returning to the table, he picked up the bottle of Sprite and brought it to the place
where the waitresses were and angrily told them that he was served kerosene. Meñez even
handed the bottle to the waitresses who passed it among themselves to smell it. All of the
waitresses confirmed that the bottle smelled of kerosene and not of Sprite.
Meñez reported the incident and requested the latter to accompany him to the
Silliman University Medical Center. Heading to SUMC for medical attention, Ovas brought the
bottle of Sprite with him. While at the Emergency Room, [Meñez] again vomited before the
hospital staff could examine him. [Meñez] had to be confined in the hospital for three (3)
days.
Later, [Meñez] came to know that a representative from [Rosante] came to the
hospital and informed the hospital staff that Rosante [would] take care of the hospital and
medical bills. [Meñez] filed a complaint against [CCBPI and Rosante] and prayed for the
actual, moral, and exemplary damages and attorney’s fees.
[Rosante] argued that [Meñez] has no cause of action against it as it merely received
said bottle of Sprite allegedly containing kerosene from [CCBPI], as a matter of routinary
procedure. It argued that Rosante is not expected to open and taste each and every [content]
in order to make sure it is safe for every customer. CCBPI for its part filed a motion to dismiss
the complaint. CCBPI interposed that a perusal of the complaint revealed that there
is no allegation therein which states that CCBPI uses noxious or harmful substance in the
manufacture of its products. What the complaint repeatedly stated is that the bottle with the
name SPRITE on it contained a substance which was later identified as pure kerosene.
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Further, CCBPI cited Republic Act No. 3720, and that pursuant to the law, [Meñez] failed to
avail of and exhaust an administrative remedy provided for prior to a filing of a suit in court.
From this provision, CCBPI concluded that an administrative remedy was existing and that
[Meñez] failed to avail thereof. CCBPI further argued that the doctrine of strict liability tort
on product liability is but a creation of American Jurisprudence, as clearly shown by the cases
cited in support thereof, and never before adopted as a doctrine of the Supreme Court. Hence,
it submits that at most it only has a persuasive effect and should not be used as a precedent
in fixing the liability of CCBPI.
ISSUES
1. Whether the CA is correct in holding that Meñez did not violate the doctrine of
exhaustion of administrative remedies and prior resort to the Bureau of Food and Drugs
(BFD) is not necessary.
2. Whether the CA erred in awarding moral damages, exemplary damages and
attorney’s fees to Meñez.
RULING
1. YES. The CA correctly ruled that prior resort to BFD is not necessary for a suit for damages
under Article 2187 of the Civil Code to prosper. Article 2187 provides:
ART. 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and
similar goods shall be liable for death or injuries caused by any noxious or harmful
substances used, although no contractual relation exists between them and the consumers.
Quasi-delict being the source of obligation upon which Meñez bases his cause of
action for damages against CCBPI, the doctrine of exhaustion of administrative remedies is
not applicable. Such is not a condition precedent required in a complaint for damages with
respect to obligations arising from quasi-delicts.
2. YES. The cases when moral damages may be awarded are specific. Unless the case falls
under the enumeration as provided in Article 2219, which is exclusive, and Article 2220 of
the Civil Code, moral damages may not be awarded. Article 2219 provides:
ART. 2219. Moral damages may be recovered in the following and analogous cases:
(2) Quasi-delicts causing physical injuries;
Article 2220 provides the following additional legal grounds for awarding moral
damages: (1) willful injury to property if the court should find that, under the circumstances,
such damages are justly due; and (2) breaches of contract where the defendant acted
fraudulently or in bad faith.
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Apparently, the only ground which could sustain an award of moral damages in favor
of Meñez and against CCBPI is Article 2219 (2) — quasi-delict under Article 2187 causing
physical injuries.
Unfortunately, Meñez has not presented evidence to prove that he suffered physical
injuries when he allegedly ingested kerosene from the "Sprite" bottle in question. Nowhere
in the CA Decision is the physical injury of Meñez discussed. The RTC Decision states the
diagnosis of the medical condition of Meñez in the medical abstract prepared by Dr. Abel
Hilario Gomez, who was not presented as a witness, and signed by Dr. Magbanua, Jr. "the
degree of poisoning on the plaintiff [Meñez] was mild, since the amount ingested was
minimal and did not have severe physical effects on his body." In his testimony, Dr.
Magbanua, Jr. stated: "To my mind, [Meñez] had taken in kerosene of exactly undetermined
amount, apparently or probably, only a small amount because the degree of adverse effect
on his body is very minimal knowing that if he had taken in a large amount he would have
been in very serious trouble and we would have seen this when we examined him." The
statements of the doctors who tended to the medical needs of Meñez were equivocal.
"Physical effects on the body" and "adverse effect on his body" are not very clear and definite
as to whether or not Meñez suffered physical injuries and if these statements indicate that
he did, what their nature was or how extensive they were. Consequently, in the absence of
sufficient evidence on physical injuries that Meñez sustained, he is not entitled to moral
damages.
As to exemplary or corrective damages, these may be granted in quasi-delicts if the

defendant acted with gross negligence pursuant to Article 2231 of the Civil Code.
The CA justified its award of exemplary damages in the following manner: “On the
liability of manufacturers, the principle of strict liability applies. It means that proof of
negligence is not necessary. It applies even if the defendant manufacturer or processor has
exercised all the possible care in the preparation and sale of his product. Extra-ordinary
diligence is required of them because the life of the consuming public is involved in the
consumption of the foodstuffs or processed products. “
Evidently, the CA's reasoning is not in accord with the gross negligence requirement
for an award of exemplary damages in a quasi-delict case. Moreover, Meñez has failed to
establish that CCBPI acted with gross negligence. Other than the opened "Sprite" bottle
containing pure kerosene allegedly served to him at the Rosante, Meñez has not presented
any evidence that would show CCBPI's purported gross negligence. There was failure on the
part of Meñez to categorically establish the chain of custody of the "Sprite" bottle which was
the very core of the evidence in his complaint for damages and that, considering that the
"Sprite" bottle allegedly contained pure kerosene, it was quite surprising why the employees
of Rosante did not notice its distinct, characteristic smell. Thus, Meñez is not entitled to
exemplary damages absent the required evidence. The only evidence presented by Meñez is
the opened "Sprite" bottle containing pure kerosene. Nothing more.
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Regarding attorney's fees, the CA Decision did not even provide the basis for the
award of P50,000.00 as attorney's fees and cost of suit. The award is found only in the
dispositive portion and, unlike the award of moral and exemplary damages, there
was no explanation provided in the body of the Decision. It can only be surmised that the CA
awarded attorney's fees only because it awarded exemplary damages. In any event, based on
Article 2208 of the Civil Code, Meñez is not entitled to attorney's fees and expenses of
litigation because, as with his claim for exemplary damages, he has not established any other
ground that would justify this award.
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ARACELI MAYUGA, vs. ANTONIO ATIENZA

G.R. No. 208197. January 10, 2018, Second Division (Caguioa, J.)
DOCTRINE
Assuming that Perfecto owned the disputed lots and the Confirmation Affidavit was a
deed of partition, Perfecto could have legally partitioned his estate during his lifetime. Under
Article 1080 of the Civil Code: "should a person make a partition of his estate by an act inter
vivos, or by will, such partition shall be respected, insofar as it does not prejudice the legitime
of the compulsory heirs."
FACTS
Araceli Mayuga instituted a petition for Cancellation and Recall of Free Patent
Application and Reconveyance against Antonio Atienza. In her Petition, Araceli, alleged, that
she, Benjamin A. Atienza, Sr. and Armando A. Atienza are the surviving legitimate, legal and
forced heirs of the late Perfecto Atienza who died intestate on June 1, 1978. She alleged that
through manipulation and misrepresentation with intent to defraud a co-heir, respondent
Antonio L. Atienza [son of deceased Armando Atienza, while respondent Benjamin A. Atienza
were both able to secure Free Patents. Araceli was not notified of the application filed with
public respondent CENRO nor any notice of hearings of proceedings as required by law,
being a co-heir and party- in-interest. Thus, she prayed for:
1. The recall and cancellation of Free patent issued to Antonio Atienza and also
the Free Patent issued to Benjamin Atienza.
2. The division of the two lots into three (3) equal parts among the three (3)
forced heirs, namely: Araceli, Benjamin and Armando.
According to defendants, the basis for their Application for Free Patent with the
CENRO is a Confirmation Affidavit of Distribution of Real Estate executed by their father,
Perfecto Atienza, confirming partition in 1960.
ISSUES
1. Whether the complaint of the petitioner for cancellation of free patent and reconveyance
should be dismissed.
2. Whether Araceli can claim preterition.
RULING
1. YES. The Court is not convinced with the petitioner's allegation of fraud and
misrepresentation in the execution of the Confirmation Affidavit by the petitioner's father,
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the late Perfecto Atienza). Being a notarized document, it is imbued with the legal
presumption of validity, its due execution and authenticity not having been impugned by the
mere self-serving allegations of the petitioner.
An action for reconveyance involving land that is titled pursuant to a free patent is
one that seeks to transfer property, wrongfully registered by another, to its rightful and legal
owner or to one with a better title. As such, two facts must be alleged in the complaint and
proved during the trial, namely: (1) the plaintiff was the owner of the land or possessed it in
the concept of owner, and (2) the defendant illegally divested him of ownership and
dispossessed him of the land.
Such facts were not only not alleged in the amended complaint, the petitioner
Araceli also failed to prove that she was entitled to 1/3 of the two lots in dispute by
succession. Apparently, Araceli had taken the position that being one of the surviving
compulsory heirs of their late father, Perfecto, she was entitled to 1/3 of the disputed lots on
the assumption that the decedent left only three legal heirs (his children Araceli, Benjamin,
Sr. and Armando) and that the disputed lots were part of the inheritance left by their father
when he died in 1978. Araceli, however, overlooked the fact that Perfecto executed the
Confirmation Affidavit almost five years prior to his death on June 1, 1978. Araceli did not
even bother to provide the Court a copy thereof so that the Court could make a determination
of its legal import. And the CA correctly accorded the Confirmation Affidavit the legal
presumption of validity, being a duly notarized document, where its validity could not be
impugned by mere self-serving allegations.
Assuming that Perfecto owned the disputed lots and the Confirmation Affidavit was a
deed of partition, Perfecto could have legally partitioned his estate during his lifetime. Under
Article 1080 of the Civil Code, "should a person make a partition of his estate by an act inter
vivos, or by will, such partition shall be respected, insofar as it does not prejudice the legitime
of the compulsory heirs."
Since the Civil Code allows partition inter vivos, it is incumbent upon the compulsory
heir questioning its validity to show that his legitime is impaired. Unfortunately, Araceli has
not shown to what extent the Confirmation Affidavit prejudiced her legitime.
2. NO. Araceli could not also claim preterition by virtue of the Confirmation Affidavit on the
assumption that the disputed two lots pertained to Perfecto's inheritance, he had only three
legal heirs and he left Araceli with no share in the two lots.
Although Araceli was a compulsory heir in the direct descending line, she could not
have been preterited. Firstly, Perfecto left no will. As contemplated in Article 854, the
presence of a will is necessary. Secondly, before his death, Perfecto had properties in Limon,
Rizal which was almost 50 hectares, part of which was developed for residential and
agricultural purposes, and in Odiongan. Araceli could not have been totally excluded in the
inheritance of Perfecto even if she was not allegedly given any share in the disputed two lots.
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If Araceli's share in the inheritance of Perfecto as claimed by her was indeed impaired,
she could have instituted an action for partition or a settlement of estate proceedings instead
of her complaint for cancellation of free patent and reconveyance.
Furthermore, as the persons who applied for and were awarded free patents, the
respondents are the rightful, legal owners of the disputed lots. The free patents having been
issued by the Department of Environment and Natural Resources and recorded in the Book
of Entries at the Office of the Registry of Deeds the respondents' certificates of title have
already become indefeasible pursuant to Section 32 of the Property Registration Decree,
which pertinently provides: "Upon the expiration of said period of one year [from and after
the date of entry of the decree of registration], the decree of registration and the certificate
of title issued shall become incontrovertible.
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REPUBLIC OF THE PHILIPPINES vs. FILEMON SAROMO

G.R. No. 189803. March 14, 2018, Second Division (Caguioa, J.)
DOCTRINE
Testimonial evidence on the physical layout or condition of the subject land — that it
was planted with coconut trees and beach houses had been constructed thereon — are not
conclusive on the classification of the subject land as alienable agricultural land. Rather, it is
the official proclamation releasing the land classified as public forest land to form part of
disposable agricultural lands of the public domain that is definitive. Such official proclamation,
if there is any, is conspicuously missing in the instant case.
FACTS
Respondent Saromo executed an Application for Free Patent covering the subject
property, which he filed with the Bureau of Lands, District Land Office. The application stated
among others that the land is an agricultural public land containing an area of 45,808 square
meters and that Saromo first occupied and cultivated the land by himself. Alberto A. Aguilar
executed an investigation report stating that he went to and examined the land applied for
by Saromo; that the land applied for is inside agricultural area.
The District Land Officer, issued an Order approving the application for free patent of
Saromo and ordering the issuance of Patent No. 17522 in his favor. The Order stated that the
land applied for has been classified as alienable and disposable; the investigation conducted
by Land Investigation/Inspector Alberto A. Aguilar revealed that the land applied for has
been occupied and cultivated by the applicant himself and/or his predecessors-in-interest.
The Original Certificate of Title was issued in the name of Filemon Saromo.
A certain Luis Mendoza filed with the Bureau of Lands a protest against the Free
Patent awarded to Saromo. An investigation team was created to verify and determine the
legality of the issuance of the Free Patent in the name of Saromo covering the subject parcel
of land. It found that the subject land was not alienable and disposable at the time of the
issuance thereof, as it was found upon investigation to be "inside unclassified public forest
and covered by Proclamation No. 1801 declaring the whole of Batangas Coastline as tourist
zone. The Republic filed this case for Reversion/Cancellation of Title before the RTC.
ISSUES
1. Whether the subject land is alienable and disposable at the time of issuance of free patent
title to Saromo.
2. Whether testimonial evidence on the physical layout or condition of the subject land —are
conclusive on the classification of the subject land as alienable agricultural land.
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3. Whether Section 91 of the Public Land Act on fraud and misrepresentation and the
attendant fraud and misrepresentation of Saromo in his free patent application should be
taken in consideration.
4. Whether the presumption of regularity in the performance of official duties of the officer
who issued Saromo's free patent should be applied.
RULING
1. NO. The subject land is unclassified public forest land.
The presidential declaration that the whole of the Batangas coastline is a tourist zone
and marine reserve is not sufficient to prove that the subject land is inalienable and non-
disposable. Unfortunately, the very survey plan that Saromo submitted to the then Bureau
of Lands as basis for his application for free patent and its approval contains a notation that
the subject land is "inside unclassified public forest land." To recall, the NOTE appearing at
the bottom left hand portion of the Survey Plan No. prepared by Engr. Guevara states: "This
survey is formerly a portion of China Sea. This survey is inside unclassified public forest
land.
As is, the NOTE qualifies as an admission of Saromo that the subject land is "inside
unclassified public forest land." Thus, unless Saromo is able to rebut in a clear and convincing
manner such admission or declaration, it will remain as an admission against his interest
and binding upon him.
2. NO. Both the RTC and the CA erred in unduly relying on the testimony of Engr. Guevara
because his observation as to the physical features of the subject land is not conclusive to
remove the subject land from its "unclassified forest land" classification and overturn the
NOTE that the area he surveyed was "inside unclassified public forest land." Similarly, the
testimonies of Engr. Guevara, Aguilar and Engr. Cabrera on their observations as to the
physical features of the subject land during their ocular inspection are not clear and
convincing proof that the subject land is alienable and disposable.
Forest land of the public domain in the context of both the Public Land Act and
the Constitution is a classification descriptive of its legal nature or status and does not have
to be descriptive of what the land looks like. Forests do not necessarily refer to large tracts
of wooded land or expanses covered by dense growths of trees and underbrushes. Unless
and until the land classified as "forest" is released in an official proclamation to that effect so
that it may form part of the disposable agricultural lands of the public domain, the rules on
confirmation of imperfect title do not apply.
From the foregoing, testimonial evidence on the physical layout or condition of the
subject land — that it was planted with coconut trees and beach houses had been
constructed thereon — are not conclusive on the classification of the subject land as
alienable agricultural land. Rather, it is the official proclamation releasing the land
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classified as public forest land to form part of disposable agricultural lands of the
public domain that is definitive. Such official proclamation, if there is any, is
conspicuously missing in the instant case.
The term "unclassified land" is likewise a legal classification and a positive act is
required to declassify inalienable public land into disposable agricultural land.
Without the official declaration that the subject land is alienable and disposable
or proof of its declassification into disposable agricultural land, the "unclassified
public forest land's" legal classification of the subject land remains.
3. YES. Reversion of the subject land is warranted under Section 91 of

Commonwealth Act No. (CA) 141.
There are several discrepancies in the documents relative to Saromo’s free patent
application, which indicate incorrect and misleading facts and statements. Taken together,
they can be considered as “false statements” on the essential conditions for the grant of the
free patent in favor of Saromo, and as such, they ipso facto justify the cancellation of the free
patent and the corresponding Torrens certificate of title issued to him.
4. NO. Even if Section 91 of CA 141 is ruled out, reversion is warranted based on

mistake or error on the part of government officials or agents.
Since, at the very least, the government officials concerned in the processing and
approval of Saromo's free patent application erred or were mistaken in granting a free patent
over unclassified public forest land, which could not be registered under the Torrens system
and over which the Director of Lands had no jurisdiction, the free patent issued to Saromo
ought to be cancelled. In the same vein, the Torrens title issued pursuant to the invalid free
patent should likewise be cancelled. Since the reversion of the subject land to the State is in
order, needless to say that the Regalian doctrine has been accordingly applied in the
resolution of this case.
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REPUBLIC OF THE PHILIPPINES vs. NORTHERN CEMENT CORPORATION

G.R. No. 200256, April 11, 2018, Second Division (Caguioa, J.)
DOCTRINE
The phrase "adverse, continuous, open, public, and in concept of owner," is a conclusion
of law. Burden of proof is on the person seeking original registration of land to prove by clear,
positive and convincing evidence that his possession and that of his predecessors-in-interest
was of the nature and duration required by law.
FACTS
On June 16, 2000, Northern Cement filed with the RTC an application for the
registration of title over the Subject Lot — a 58,617.96 square meters lot in Barangay
Labayug, Sison, Pangasinan — pursuant to Presidential Decree No. 1529 (PD 1529) and to
have the title thereto registered and confirmed under its name (Application).
To support its Application, Northern Cement offered, inter alia,the following

documents: (1) Deed of Sale dated December 28, 1968 executed by Chichioco in favor of
Northern Cement; (2) Affidavits of alleged adjoining landowners Eugenia Batnag and Placido
Saro attesting that Northern Cement is the owner and possessor of the Subject Lot; (3) seven
(7) Tax Declarations for various years from 1971 to 2003 in the name of Northern Cement
and a Tax Declaration for year 1970 in the name of Chichioco; (4) Tax Clearance
Certificate dated May 21, 2007; (5) Technical Description of the Subject Lot; (6) Approved
Plan certified by the Department of Environment and Natural Resources (DENR) stating that
the Subject Lot is "x x x inside alienable and disposable area as per project No. 63, L.C.
Map No. 698, certified on November 21, 1927.
The RTC granted the Application for registration of Northern Cement. The RTC ruled
that from the evidence presented, Northern Cement was able to prove, by preponderance of
evidence, its claim of ownership over the Subject Lot. The Republic appealed to the CA,
alleging that the RTC erred in granting the application for registration despite the failure of
Northern Cement to observe the requirements for original registration of title under PD
1529. The Republic pointed out, among others, that the CENRO Report and the Approved
Plan submitted in evidence by Northern Cement hardly suffice to prove that the Subject Lot
is an alienable portion of the public domain. The CA denied the Republic's appeal and
affirmed in toto the Decision of the RTC.
ISSUE
Whether the CA erred in affirming the RTC's Decision granting the application for
registration of title in favor of Northern Cement despite non-compliance with the
requirements under PD 1529.
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RULING
YES. The Republic, in its Petition, is correct in alleging that Northern Cement is not
qualified to have the Subject Lot registered in its name under Section 14 of PD 1529.
The Application itself does not enlighten as to whether it was filed under Section 14
(1) or Section 14 (2) of PD 1529. Northern Cement made no allegation nor presented
evidence that it had been in possession of the subject property since June 12, 1945 or earlier.
At any rate, the evidence reveal that the present controversy was filed and tried based on
Section 14 (2) of PD 1529. Thus, the Petition shall be resolved on Northern Cement's proof
of its acquisition of the Subject Lot by prescription.
Unlike Section 14 (1) which requires an open, continuous, exclusive, and notorious
manner of possession and occupation since June 12, 1945 or earlier, Section 14 (2) is silent
as to the nature and period of such possession and occupation necessary. This necessitates
a reference to the relevant provisions of the Civil Code on prescription. Prescription is
another mode of acquiring ownership and other real rights over immovable property. The
possession should be in the concept of an owner, public, peaceful, uninterrupted and
adverse. Possession is open when it is patent, visible, apparent, notorious and not
clandestine. It is continuous when uninterrupted, unbroken and not intermittent or
occasional; exclusive when the adverse possessor can show exclusive dominion over
the land and an appropriation of it to his own use and benefit; and notorious when it
is so conspicuous that it is generally known and talked of by the public or the people
in the neighborhood.
Here, the Court is unconvinced by the pieces of evidence submitted by Northern

Cement to prove compliance with the requirement of possession under Section 14 (2) of PD
1529 in relation to Articles 1137 and 1118 of the Civil Code for original registration of land.
The RTC erred in haphazardly concluding otherwise and the CA, in turn, erred in affirming
the RTC.
First,the seven (7) tax declarations in the name of Northern Cement and one (1) tax
declaration in the name of its predecessor-in-interest for a claimed possession of at least
thirty-two (32) years (1968-2000) do not qualify as competent evidence to prove the
required possession. It has been held that this type of intermittent and sporadic assertion of
alleged ownership does not prove open, continuous, exclusive and notorious possession and
occupation. The Court has, in a catena of cases, found as lacking, episodic and random
payments of realty taxes.
Moreover, Tax Declarations are not conclusive evidence of ownership but only a basis
for inferring possession. It is only when these tax declarations are coupled with proof of
actual possession of the property that they may become the basis of a claim of ownership.
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Second,even if it be assumed that Northern Cement had been in possession of the

subject property since 1968, it still failed to sufficiently demonstrate that its supposed
possession was of the nature and character contemplated by law.
The testimonies of the adjoining owners presented by Northern Cement do not

deserve serious consideration and they do not augment the inadequacy of the Tax
Declarations. The two witnesses, claiming to be heirs of the owners of the lands adjoining
the subject property, did not testify as to the specific acts of possession and ownership
exercised by Northern Cement and/or its predecessors-in-interest. They merely made a
uniform and sweeping claim that the subject property "is owned and possessed by [Northern
Cement]," which is a mere conclusion of law. This evidence is tenuous, at best.
Third,Northern Cement miserably failed to prove possession of the Subject Lot in the
concept of an owner, with the records bare as to any acts of occupation, development,
cultivation or maintenance by it over the property. Indeed, from the evidence presented, the
only "improvements" on the Subject Lot were "cogon" and "unirrigated rice."
Cogon grass is hardly the "improvement" contemplated by law to prove satisfaction

of the requirements of registering lands. It is a matter of common knowledge that cogon
grass grows casually on lands in this country, without need of cultivation, and hardly has
utility. More than anything, it is usually indicia that the land on which it grows is idle.
As for the unirrigated rice which appeared latest in the 1995 Tax Declaration, plain
common sense dictates that the fact of it being unirrigated and uncultivated further cements
the character of the land as idle.
The importance of exercising acts of dominion on a land sought to be registered

cannot be downplayed. In a plethora of cases, the Court has disallowed registration of lands
where, although plants and fruit-bearing trees existed on the contested lands, it
was not proven that they were cultivated by the registrant, or that they were actively and
regularly cultivated and maintained and not merely casually or occasionally tended to by the
registrant, or that they were planted by him or his predecessors-in-interest.
Evidently, this case where cogon and unirrigated rice appear to be the only things
standing on the Subject Lot and with no allegations or testimony that the same had been
planted or cultivated by Northern Cement, pales in comparison with the aforementioned
cases.
On a final note, this Court is well-aware that the Republic has raised issues bearing on
the registrable nature of the subject property, pursuant to the landmark and oft-quoted case
of Malabanan v. Republic in relation to the relevant Civil Code provisions, i.e., whether it was
validly and sufficiently declared alienable and disposable and, even so, if it was further
declared as no longer intended for public use or service or for the development of national
wealth and whether the latter declaration is necessary for the subject land to be registrable.
The Court deems it no longer necessary to address these matters as this case can be amply
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decided on the basis of the evident failure of Northern Cement to satisfy the required
possession under PD 1529, Section 14 (2) in relation to Articles 1137 and 1118 of the Civil
Code.Perhaps, that issue is fated to be scrupulously discussed in a more opportune case.
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ASTRID A. VAN DE BRUG vs. PHILIPPINE NATIONAL BANK

G.R. No. 207004, June 6, 2018, Second Division (Caguioa, J.)
DOCTRINE
In order to be liable for damages under the abuse of rights principle, the following
requisites must concur: (a) the existence of a legal right or duty; (b) which is exercised in bad
faith; and (c) for the sole intent of prejudicing or injuring another.
FACTS
The late spouses Aguilar used to be borrowing clients of PNB. The late spouses
Aguilar's sugar crop loans, which were obtained sometime between the late 1970's and the
early 1980's, were secured by real estate mortgage over four registered parcels of land.
However, for failure of the late spouses Aguilar to pay their obligations with PNB, the
mortgage was foreclosed in 1985 and subsequently, ownership of the subject four pieces of
property was consolidated under the name of PNB.
With the enactment of RA 7202, the late Romulus Aguilar wrote [PNB] on July 5, 1995,
and he stated: "Since our indebtedness with the PNB had been foreclosed, we are asking your
good Office for a reconsideration of our account based on the Sugar Restitution Law." After the
death of Romulus Aguilar, his spouse, the late Evelyn Aguilar, received a letter from [PNB]
during which occasion [PNB] informed the late Evelyn Aguilar that while the subject loan
account was covered by the provisions of RA 7202 and have been audited by the COA, the
late Evelyn Aguilar was still required to comply with certain PNB Requirements.
Hence, the case for implementation of RA 7202, with prayer for payment of moral
damages and exemplary damages was filed by the Aguilars.
The RTC justified the reconveyance or restitution of the residential lot in Sagay City
to the Aguilars by crediting in their favor the proceeds of the Voluntary Offer to Sell to the
DAR of the two agricultural lots. The RTC justified the judgment in favor of the Aguilars as in
keeping with public policy behind RA 7202.
The RTC found PNB guilty of malice and bad faith in not pursuing its duty in helping
the Aguilars avail of the benefits of RA 7202 and, pursuant to Articles 19 and 21 of the Civil
Code, justified the award of moral and exemplary damages as well as attorney's fees and
litigation expenses in favor of the Aguilars.
The CA granted the appeal and reversed the RTC Decision. In applying RA 7202, the
CA found that the account of the late spouses Aguilar qualified under the law because
indisputably, their sugar crop loans were obtained within the period covered by the
law. However, based on PNB's recomputation applying 12% per annum interest, which was
audited and certified by the COA, the Aguilars were not entitled to restitution absent any
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excess payment after recomputation. The CA did not credit the proceeds of the VOS to the
DAR in favor of the Aguilars, but it in effect considered the account of the late spouses Aguilar
as having been fully paid "through foreclosure of collateral" pursuant to Section 6 of the IRR.
Based on the Petition of the Aguilars, the computation of the CA is disputed by them
because it did not "include the sums and amounts which accrued to [PNB] from DAR's
payment on account of [their] properties." The Aguilars take the position that the total
amount which PNB received from the Land Bank should be deducted from their total
outstanding loan obligations (for RA 7202 and non-RA 7202 accounts) as of the date of
foreclosure of the collaterals. Based on PNB's recomputation which the CA upheld, there
is no excess payment made by the late spouses Aguilar that has to be restituted to the
Aguilars. The Aguilars further implore the Court, as they did unsuccessfully with the CA, to
compel PNB to extend to them the accommodation that PNB made with spouses Pfleider
wherein in the Compromise that PNB entered into with the spouses Pfleider, PNB credited
in favor of the spouses Pfleider the value of their agricultural lots that PNB had also
foreclosed and transferred via VOS to DAR. The Aguilars argue that "[they] are similarly
circumstanced as the Pfleiders[,] [and] [t]here was no reason for PNB to treat [them]
differently."
ISSUES
1. Whether the late spouses Aguilar had accounts that were covered by RA 7202.
2. Whether the CA erred in not including the sums and amounts which accrued to PNB from
DAR's payment on account of the properties of the Aguilars.
3. Whether PNB has an obligation to accord the Aguilars the same treatment as it accorded
the spouses Pfleider regarding the crediting of the VOS or CARP proceeds of their respective
agricultural lots against their respective sugar crop loans covered by RA 7202.
RULING
1. YES. At the core of the instant case is RA 7202, which was approved on February 29, 1992,
and its declared policy is "to restitute the losses suffered by the sugar producers due to
actions taken by government agencies in order to revive the economy in the sugar-producing
areas of the country."
The account of the late spouses Aguilar qualified under RA 7202 since indisputably,
the sugar crop loans of the late spouses Aguilar, which were considered fully paid upon
foreclosure of the mortgaged pieces of property, were obtained within the period covered
by the law. Succinctly, the sugar producer concerned was entitled to the benefit of
recomputation of his loan account, and if warranted, to restitution of any excess payment on
interests, penalties and surcharges, pursuant to Section 3 of RA 7202.
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Now that certain accounts of the late spouses Aguilar have been established to be
covered by RA 7202, the next question would be: what benefits does the law confer upon
the Aguilars?
As provided in Section 3 of RA 7202, the Aguilars are entitled to: (1) condonation of
interest charged in excess of 12% per annum and all penalties and surcharges; (2)
recomputation of their sugar crop loans, and if there is interest in excess of 12% per annum,
interests, penalties and surcharges, application of the excess payment as an offset and/or as
payment for the late spouses Aguilar's outstanding loan obligations; and (3) restructuring or
amortization of the recomputed loans for a period of 13 years inclusive of a three-year grace
period on the principal, effective upon the approval of RA 7202.
The CA found that PNB recomputed the RA 7202 accounts of the late spouses Aguilar,
which were audited and certified by the COA, and the recomputation resulted in the absence
of any excess payment
2 & 3. NO. The sources of obligations under Article 1157 of the Civil Code are: (1) law; (2)
contracts; (3) quasi-contracts; (4) acts or omissions punished by law; and (5) quasi-delicts.
Immediately, sources (2), (3) and (4) are inapplicable in this case. The Aguilars are not
privies to the Compromise Agreement between PNB and the spouses Pfleider. Regarding law,
as PNB's source of obligation, the CA correctly ruled that the Aguilars are not entitled to
restitution under RA 7202. Thus, RA 7202 cannot be invoked as the statutory basis to compel
PNB to treat the Aguilars similarly with the spouses Pfleider.
PNB has explained that there are differences in the circumstances of its two sugar
crop loan debtors which, to PNB, justify the different accommodations that it accorded to
them. PNB insists that the spouses Pfleider first gave their conformity to the recomputation
made by PNB (as audited by COA) on their loan accounts without crediting therein as loan
payments the value of the CARP proceeds of the agricultural lots. After recomputation of the
crop loans and condonation of interest in excess of 12% per annum, penalties and
surcharges, the spouses Pfleider confirmed and acknowledged as accurate the recomputed
balance on their loans and, thereafter they signed the Compromise Agreement with
PNB. The spouses Pfleider were then allowed to restructure their account for 13 years. On
PNB's part, it agreed that the value of the Escalante agricultural lots transferred by PNB to
DAR would be deducted from the aggregate amount due on the loans upon settlement by
DAR and/or LBP of the just compensation due PNB for the transfer of said lots to the Republic
of the Philippines. The settlement agreement between PNB and the spouses Pfleider was to
the effect that PNB would credit as payment the CARP proceeds of the foreclosed agricultural
properties in the Compromise Agreement provided that the case filed against PNB was
withdrawn.
According to PNB, the Aguilars, on the other hand, did not signify their conformity to
the recomputation as audited and certified by the COA and refused to sign the restructuring
agreement because they insisted that the CARP proceeds be first considered as loan
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payments and should be deducted from their loan accounts. PNB has taken the position that
if the CARP proceeds were to be credited to the loan accounts of the Aguilars in the
recomputation, then, the restructuring agreement would no longer be needed because the
CARP proceeds were more than enough to cover the net balance of their accounts and, if that
was allowed, there would be nothing to amortize.
PNB further contends that the Aguilars cannot invoke its Compromise Agreement
with the spouses Pfleider because: (1) the former are not parties thereto; (2) the principle of
relativity of contract would be violated; and (3) PNB's freedom to enter into contracts would
also be violated if PNB would be compelled to accommodate the Aguilars.
Given the foregoing explanation by PNB, it was incumbent upon the Aguilars, to make
PNB liable for damages based on the principle of abuse of rights, to prove that PNB acted in
bad faith and that its sole intent was to prejudice or injure them. The Aguilars, however,
failed in this regard.
Also, the Court notes from the duly notarized Compromise Agreement between the
spouses Pfleider and PNB dated December 30, 1999 that the accounts of the former to the
latter were crop loans ("sugar and sugar-related loans") and, thus, covered by RA 7202,
unlike the accounts of the Aguilars which included non-RA 7202 accounts, as mentioned in
the narration of facts. Since the Aguilars were delinquent in their accounts, including their
non-RA 7202 accounts, and the mortgaged properties of the Aguilars similarly secured the
non-RA 7202 accounts, PNB had no option but to foreclose the mortgage.
In order to be liable for damages under the abuse of rights principle, the following
requisites must concur: (a) the existence of a legal right or duty; (b) which is exercised in
bad faith; and (c) for the sole intent of prejudicing or injuring another.
In this case, the Aguilars failed to substantiate the above requisites to justify the
award of damages in their favor against PNB, who merely exercised its legal right as a
creditor pursuant to RA 7202.
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D.M. RAGASA ENTERPRISES, INC. vs. BANCO DE ORO, INC.

DOCTRINE
Article 1170 of the Civil Code mandates that those who, in the performance of their
obligations, are guilty of fraud, negligence, or delay, and those who, in any manner, contravene
the tenor thereof, are liable for damages. Thus, having contravened the tenor of the Lease
Contract regarding its term or period, the bank should be liable for damages. However, how
much in damages should the bank be liable? Generally, if the lessor or the lessee should not
comply with their obligations, the aggrieved party may ask for either the rescission of the
contract and indemnification for damages, or only the latter, allowing the contract to remain
in force.
A penal clause is an accessory obligation which the parties attach to a principal

obligation for the purpose of insuring the performance thereof by imposing on the debtor a
special prestation (generally consisting in the payment of a sum of money) in case the
obligation is not fulfilled or is irregularly or inadequately fulfilled. Evidently, the penal clause
may be considered either reparation, compensation or substitute for damages, on one hand, or
as a punishment in case of breach of the obligation, on the other. When considered as
reparation or compensation, the question as to the appropriate amount of damages is resolved
once and for all because the stipulated indemnity represents a legitimate estimate made by the
contracting parties of the damages caused by the nonfulfillment or breach of the obligation.
Proof of actual damages is, consequently, not necessary in order that the stipulated penalty may
be demanded. When considered as a punishment, the question of damages is not yet resolved
inasmuch as the right to damages, besides the penalty, still subsists. Thus, if the injured party
desires to recover the damages actually suffered by him in addition to the penalty, he must
prove such damages.
FACTS
On January 30, 1998, Ragasa and then Equitable Bank executed a Lease Contract, as
lessor and lessee, over the ground and second floors of a commercial building for a period of
five years, commencing on February 1, 1998 up to January 31, 2003, with a monthly rental
of P122,607.00. Meanwhile, Equitable Bank entered into a merger with PCI Bank thereby
forming Equitable PCI Bank, Inc. The latter would eventually, pending the present case,
merge with Banco de Oro, Inc. to form the respondent bank. As a result of the merger, one
of the branches which had to be closed is the branch located in the subject premises.
For this reason, the bank sent a notice informing Ragasa that the former was pre-
terminating their Lease Contract effective June 30, 2001. Ragasa responded with a demand
letter for payment of monthly rentals for the remaining term of the Lease Contract from July
1, 2001 to January 31, 2003 totaling P3,146,596.42, inasmuch as there is no express
provision in the Lease Contract allowing pre-termination. The bank countered, through a
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letter dated June 26, 2001, that its only liability for pre-terminating the contract is the
forfeiture of its security deposit pursuant to item 8 (m) of the Lease Contract. On June 30,
2001, the bank vacated the subject premises without heeding Ragasa's demand for payment.
Ragasa filed with the RTC the Complaint for Collection of Sum of Money and Damages.
Ragasa argued that under the Lease Contract, the forfeiture of the bank's security deposit
does not exempt it from payment of the rentals for the remaining term of the lease because
the bank's act of pre-terminating the contract was a major breach of its terms. Moreover,
item 8 (m) expressly provides that the security deposit shall not be applied to the rentals.
The bank argued that item 8 (m) of the Lease Contract is actually a penalty clause which, in
line with Article 1226 of the Civil Code, takes the place of damages and interests in case of
breach. Hence, for breaching the Lease Contract by pre-terminating the same, the bank is
liable to forfeit its security deposit in favor of Ragasa but would not be liable for rentals
corresponding to the remaining life of the Contract.
ISSUES
1. What is the liability of the bank, if any, for its act of pre-terminating the Lease
Contract?
2. Whether the bank can insist on paying only the penalty pursuant to the penalty
clause.
RULING
1. In the case at bar, there is no question that the bank breached the Lease Contract.
When it served upon Ragasa the Notice of Pre-termination effective June 30, 2001 and when
it, indeed, vacated the subject premises on said date, the bank, in effect, breached item 2 of
the Lease Contract, providing for a five-year term. It must be noted that the Lease Contract
does not contain a pre-termination clause.
Article 1170 of the Civil Code mandates that those who, in the performance of their
obligations, are guilty of fraud, negligence, or delay, and those who, in any
manner, contravene the tenor thereof, are liable for damages.
In the present case, there is an express stipulation in item 8 (p) of the Lease Contract
that "[b]reach or non-compliance of any of the provisions of this Contract, especially non-
payment of two consecutive monthly rentals on time, shall mean the termination of this
Contract." Pursuant to the automatic termination clause of the Lease Contract, which is in
furtherance of the autonomy characteristic of contracts, the Lease Contract was terminated
upon its unauthorized pre-termination by the bank on June 30, 2001. Ragasa is, thus,
precluded from availing of the second option which is to claim damages by reason of the
breach and allow the lease to remain in force. With the lease having been automatically
resolved or terminated by agreement of the parties, Ragasa is entitled only to
indemnification for damages. To force either party to continue with a contract that is
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automatically terminated in case of its breach by either party (pursuant to its express
provision) is not in furtherance of or sanctioned by the contract. Rather, it is a contravention
thereof and it negates the autonomy characteristic of contracts.
The provision or clause that is applicable in case of non-compliance of the Term or

period of the Lease Contract is item 8 (m) which mandates that the full deposit of
P367,821.00 or the equivalent of three months rentals shall be forfeited with the proviso that
the deposit cannot be applied to rental. Item No. 8 (m) is a penalty or penal clause. Item 8
(m) of the Lease Contract is an accessory obligation or prestation to the principal obligation
of lease. It specifies the stipulated amount of liquidated damages — the full deposit — to be
awarded to the injured party in case of breach of the Term or period of the principal
obligation. Since the herein parties have agreed on a specific amount of penalty, P367,821.00
or the full deposit, the Court will not even second guess whether it is substantial enough to
insure the compliance of the lease period. The Court will simply rule that it is reasonable. As
a rule, the penalty is fixed by the contracting parties as a compensation or substitute for
damages in case of breach of the obligation; and it is, therefore, clear that the penalty in its
compensatory aspect is the general rule, while the penalty in its strictly penal aspect is the
exception. It is also clear from paragraph 1 of Article 1226 that when an obligation or a
contract contains a penal clause, the penalty shall substitute the indemnity for damages and
the payment of interests in case of noncompliance with or breach of the principal obligation.
Clearly, the requisites for the demandability of the penal clause are present in this
case. These are: (1) that the total non-fulfillment of the obligation or the defective fulfillment
is chargeable to the fault of the debtor; and (2) that the penalty may be enforced in
accordance with the provisions of law. As to the second requisite, the penalty is demandable
when the debtor is in mora in regard to obligations that are positive (to give and to do) where
demand may be necessary unless it is excused; and with regard to negative obligations, when
an act is done contrary to that which is prohibited.
2. NO. In the present case, the bank pre-terminated the Lease Contract which is not
expressly allowed therein. For not complying with its Term or period, the bank did an act
contrary to what is not allowed in the Lease Contract. Additionally, the bank cannot insist on
paying only the penalty. This is proscribed under Article 1227.
There is nothing in the Lease Contract which provides that the bank can exempt itself
from the performance of any provision therein, including the Term or period, by simply
paying the penalty. Items 8 (m) and 10 do not contain any such exemption.
Ragasa cannot insist on the performance of the lease, i.e., for the lease to continue
until expiration of its term, because the lease has been automatically terminated when the
bank breached it by pre-terminating its terms. Thus, Ragasa is only entitled to damages.
That said, that is, even as items 8 (m) and 10 are considered strictly penal or
punishment, Ragasa, as the injured party, is nonetheless required to prove the "other
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damages" that it actually suffered before it can be entitled thereto. However, Ragasa simply
insisted that the bank should be liable for the amount representing the monthly rentals for
the unexpired term of the Lease Contract. Ragasa did not adduce any evidence to support its
claim that it actually suffered damages of such amount in terms of lost income. In this regard,
it must be emphasized that Ragasa could have leased the Leased Premises as early as July 1,
2001 because the bank had completely vacated the same as of June 30, 2001. That Ragasa
chose not to lease the Leased Premises and not earn any rental therefrom in the meantime
that its complaint for damages against the bank was being litigated was its own decision and
doing.
Article 2203 of the Civil Code provides that "[t]he party suffering loss or injury must
exercise the diligence of a good father of a family to minimize the damages resulting from
the act or omission." Ragasa likewise failed in this respect.
In conclusion, the Court rules that Ragasa is not entitled to the rental for the
unexpired period of the Lease Contract, and it is only entitled to the forfeiture of the full
deposit pursuant to item 8 (m) and P15,000.00 as attorney's fees pursuant to item 10.
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BENEDICTO V. YUJUICO, vs. FAR EAST BANK AND TRUST COMPANY

G.R. No. 186196. August 15, 2018, Second Division (Caguioa, J.)
DOCTRINE
Novation is governed principally by Articles 1291 and 1292 of the Civil Code, which
provide: ART. 1291. Obligations may be modified by: (1) Changing their object or principal
conditions; (2) Substituting the person of the debtor; (3) Subrogating a third person in the
rights of the creditor. Further, ART. 1292 provides that in order that an obligation may be
extinguished by another which substitutes the same, it is imperative that it be so declared in
unequivocal terms, or that the old and the new obligations be on every point incompatible with
each other.
FACTS
Far East Bank and Trust Company (appellant bank,) approved the renewal of appellee
GTI Sportswear Corporation's Omnibus Credit Line (OCL) with a total amount of
P35,000,000.00. This was secured by a Comprehensive Surety Agreement executed by
appellee Benedicto V. Yujuico in his personal capacity. He was also the president of appellee
GTI. Sometime in May 1995, negotiations were undertaken to settle appellee GTI's trust
receipt obligation under the OCL. During these negotiations, appellee GTI made known to
appellant bank its request for the conversion of its peso loan to US dollar-denominated loan.
An exchange of communications concerning the conversion transpired but no definite
agreement on the said conversion was put into writing.
On June 26, 1995, appellee Yujuico, in behalf of appellee GTI and in his personal
capacity as surety, and appellant's First Vice President Ricardo G. Lazatin, in behalf of
appellant bank, signed a Loan Restructuring Agreement (LRA), the subject of which was
appellee GTI's outstanding balance on its Omnibus Credit Line.The agreement expressly
stated that the restructured loan continues to be secured by the Comprehensive Surety
Agreement previously executed by appellee Yujuico in favor of appellant bank. Appellant
bank, however, denied the request and informed appellees that the conversion was not
deemed workable.
Appellees filed against appellant bank a Complaint for Specific Performance with
Preliminary Injunction with the Regional Trial Court of Makati City. Appellees alleged that
during the signing of the loan restructuring agreement, they were assured by the officers of
appellant bank that after a few payments on its obligation, appellee GTI's peso loan would
be converted to US dollars.
Hence, appellees prayed that appellant bank be directed to convert GTI's loan to US
dollars retroactively effective October 1, 1996 and that appellant bank be directed to pay
appellees P2,844,228.00 representing savings that could have accrued in favor of appellees
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in terms of the difference in interest payments. They also prayed for exemplary damages and
attorney's fees.
Petitioner Yujuico argues that "in converting the restructured Omnibus Credit
Line/loan of GTI Sportswear Corporation from Philippine Peso to United States Dollar
denominated [respondent] has clearly and definitely partially executed the
judgment/decision of the Trial Court and/or has voluntarily acquiesced or ratified partially
the execution of the judgment/decision of the Trial Court."
ISSUES
1. Whether the CA has legal basis to entertain the appeal as respondent had already
performed a partial execution of the Decision of the RTC which prevents and/or precludes
respondent from questioning and/or appealing the judgment/Decision of the RTC.
2. Whether the CA has legal basis to resolve and declare that there was no novation between
GTI and respondent;
3. Whether the CA has legal basis to resolve and declare that petitioner Yujuico remains
liable as surety of the obligation of GTI.
RULING
1. YES. The party, who is barred from appealing and claiming that he has not recovered
enough, must have recovered a judgment upon a claim which is indivisible and, after its
rendition, has coerced by execution full or partial satisfaction. Thus, having elected to collect
from the judgment by execution, he has ratified it, either in toto or partially, and should be
estopped from prosecuting an appeal inconsistent with his collection of the amount
adjudged to him.
In fine, the claim must be one which is indivisible and there must be an execution of
the judgment, either partially or fully. Indeed, the claim of respondent against GTI and
petitioner Yujuico is indivisible since it cannot be split up and made the basis for several
causes of action. However, there is yet no execution of the RTC Decision, either fully or
partially. Respondent merely acceded to the directive of the RTC "to acknowledge and
confirm its obligation to convert the restructured Omnibus Credit Line of GTI from Philippine
Peso loan account into a US Dollar denominated loan obligation." In fact, the RTC, while it
recognized that GTI is indebted to respondent, ruled that "the liquidation of this obligation
is however subject to a condition that the bank [(respondent)] must first comply with its
obligation to convert the Peso loan account into a US Dollar denominated loan and thereafter
[compute] the outstanding obligation of [GTI and petitioner Yujuico] to it." Thus, GTI or
petitioner Yujuico has not been coerced by execution to satisfy the RTC judgment; and
respondent is not precluded to appeal the resolution of the RTC that there is novation and
petitioner Yujuico is released from his obligation as a surety.
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2. YES. Novation has been defined as the substitution or alteration of an obligation by a

subsequent one that cancels or modifies the preceding one.
Here, the attendant facts do not make out a case of novation in the sense of a total or
extinctive novation. There is no document that states in unequivocal terms that the
agreement to convert the loan from peso to US dollar would abrogate the loan restructuring
agreement or the omnibus credit line. Instead what is readily apparent from the exchange of
communications concerning the request for conversion is that the parties recognize the
subsistence of the loan restructuring agreement.
Neither do We see any substantial incompatibility between the obligations of the

parties under the restructuring agreement and the agreement to convert the loan as to
warrant a finding of an implied novation. Implied novation necessitates that the
incompatibility between the old and new obligations be total on every point such that the
old obligation is completely superseded by the new one. This is not the case here. The only
modification that the conversion agreement introduced was that [GTI's and petitioner
Yujuico's] loan obligation would be payable in US dollars instead of Philippine pesos.
Incidentally, the applicable interest rate is lower on account of the change in currency. These
alterations, however, do not suffice to constitute novation.
The agreement to convert the Peso-denominated restructured loan into a US Dollar-
denominated one is an implied or tacit, partial, modificatory novation. There was merely a
change in the method of payment.
3. YES. Without a total or extinctive novation, the surety agreement subsists.
Aside from the absence of a "perfect" novation, another circumstance that militates
against the release of [petitioner] Yujuico as surety is the fact that he executed a
comprehensive or continuing surety, one which is not limited to a single transaction, but
which contemplates a future course of dealing, covering a series of transactions, generally
for an indefinite time or until revoked."
While Article 1215 of the Civil Code provides that novation, compensation or
remission of the debt, made by any of the solidary creditors or with any of the solidary
debtors, shall extinguish the obligation, the novation contemplated therein is a total or
extinctive novation of the old obligation. Also, the Comprehensive Surety Agreement that
petitioner Yujuico executed in favor of respondent is so worded that it covers "any and all
other indebtedness of every kind which is now or may hereafter become due or owing to
[respondent] by the Borrower."
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SPOUSES BELTRAN vs. SPOUSES CANGAYDA

G.R. No. 225033, August 15, 2018, Second Division (Caguioa, J.)
DOCTRINE
In a contract of sale, title passes to the vendee upon the delivery of the thing sold;
whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not
to pass until the full payment of the price. In a contract of sale, the vendor has lost and cannot
recover ownership until and unless the contract is resolved or rescinded; whereas in a contract
to sell, title is retained by the vendor until the full payment of the price.
FACTS
Sometime in August 1989, respondents verbally agreed to sell the disputed property
to petitioners for P35,000.00. After making an initial payment, petitioners took possession
of the disputed property and built their family home thereon. Petitioners subsequently made
additional payments. However, despite respondents' repeated demands, petitioners failed
to pay their remaining balance of P5,310.00. This prompted respondents to refer the matter
to the Office of the Barangay Chairman. Before the OBC, the parties signed an Amicable
Settlement that respondent Apolonio, Jr. should be willing to sign a deed of sale agreement
after petitioner Antonio were able to pay the remaining balance. Failure to comply on the
said agreement, the OBC is willing to indorse this case to the higher court for proper legal
action. Petitioners failed to pay within the period set forth in the Amicable Settlement.
On January 14, 2009, or nearly 17 years after the expiration of petitioners' period to
pay their remaining balance, respondents served upon petitioners a "Last and Final Demand"
to vacate the disputed property within 30 days from notice. This demand was left unheeded.
Consequently, respondents filed a complaint for recovery of possession and damages
(Complaint) before the RTC. Respondents alleged, among others, that petitioners had been
occupying the disputed property without authority, and without payment of rental fees. The
RTC characterized the oral agreement between the parties as a contract to sell. The RTC held
that the consummation of this contract to sell was averted due to petitioners' failure to pay
the purchase price in full. Hence the RTC held that ownership over the disputed property
never passed to petitioners. The CA affirmed the findings of the RTC anent the nature of the
contract entered into by the parties. In addition, it rejected petitioners' invocation of the
Maceda Law.
Petitioners maintain, as they did before the CA, that the oral agreement they entered
into with respondents is a contract of sale, and that, as a necessary incident of such contract,
ownership over the disputed property had been transferred in their favor when they took
possession and built improvements thereon. Further, petitioners argue that respondents are
not entitled to recover possession of the disputed property since they failed to cancel their
oral agreement by way of a notarial act, in accordance with the provisions of the Maceda
Law. Finally, petitioners aver that respondents' Complaint is an action upon a written
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agreement, as it is based on the Amicable Settlement. Thus, petitioners conclude that

respondents' action already prescribed, since it was filed more than 10 years after the lapse
of petitioners' period to pay their outstanding balance. Petitioners further argue that the
Complaint is also barred by laches, considering that respondents allowed petitioners to
continue staying in the disputed property for a period of 17 years after such failure to pay
ISSUES
1. Whether the CA is correct in characterizing the oral agreement between the parties as a
contract to sell;
2. Whether slight delay in the payment of the purchase price is a sufficient ground for the
rescission of a sale of real property.
3. Whether the oral agreement between the parties is covered by the Maceda Law; and
4. Whether respondents' action for recovery of possession should have been dismissed on
the ground of prescription and/or laches.
RULING
1. NO. The agreement between the parties is an oral contract of sale. As a consequence,
ownership of the disputed property passed to petitioners upon its delivery.
Contrary to the CA's findings, neither respondent Loreta's testimony nor clause 6 of
the Amicable Settlement supports the conclusion that the parties' agreement is not contract
of sale, but only a contract to sell — the reason being that it is not evident from said testimony
and clause 6 that there was an express agreement to reserve ownership despite delivery of
the disputed property.
Loreta's testimony shows that the parties' oral agreement constitutes a meeting of
the minds as to the sale of the disputed property and its purchase price. Respondent Loreta's
statements do not in any way suggest that the parties intended to enter into a contract of
sale at a later time. Such statements only pertain to the time at which petitioners expected,
or at least hoped, to acquire the sufficient means to pay the purchase price agreed upon.
Clause 6 of the Amicable Settlement merely states respondent Apolonio, Jr.'s

commitment to formalize and reduce the oral agreement of the parties into a public
instrument upon payment of petitioners' outstanding balance. It bears emphasizing that a
formal document is not necessary for the sale transaction to acquire binding effect.
Hence, the subsequent execution of a formal deed of sale does not negate the perfection of
the parties' oral contract of sale which had already taken place upon the meeting of the
parties' minds as to the subject of the transaction and its purchase price.
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In a contract of sale, ownership of a thing sold shall pass to the buyer upon actual or
constructive delivery thereof in the absence of any stipulation to the contrary. Ownership of
the disputed property passed to petitioners when its possession was transferred in their
favor, as no reservation to the contrary had been made. Considering that respondents'
Complaint is anchored upon their alleged ownership of the disputed property, their prayer
to recover possession thereof as a consequence of such alleged ownership cannot prosper.
2. NO. Slight delay is not sufficient to justify rescission.
Article 1191 of the Civil Code lays down the remedies that the injured party may
resort to in case of breach of a reciprocal obligation — fulfillment of the
obligation or rescission thereof, with damages in either case. Thus, in a contract of sale, the
vendor's failure to pay the price agreed upon generally constitutes breach, and extends to
the vendor the right to demand the contract's fulfillment or rescission. The right of rescission
granted to the injured party under Article 1191 is predicated on a breach of faith by the other
party who violates the reciprocity between them. Rescission may not be resorted to in the
absence of breach of faith. In this connection, Article 1592 extends to the vendee in a sale of
immovable property the right to effect payment even after expiration of the period agreed
upon, as long as no demand for rescission has been made upon him by the vendor.
Article 1592 in conjunction with Article 1191 suggests that in the absence of any
stipulation to the contrary, the vendor's failure to pay within the period agreed upon
shall not constitute a breach of faith, so long as payment is made before the vendor demands
for rescission, either judicially, or by notarial act.
Hence, slight delay in the payment of the purchase price does not serve as a
sufficient ground for the rescission of a sale of real property.
3. NO. Despite the denomination of the deed as a "Deed of Conditional Sale" a reading of the
conditions therein set forth reveals the contrary. Nowhere in the said contract in question
could we find a proviso or stipulation to the effect that title to the property sold is reserved
in the vendor until full payment of the purchase price. There is also no stipulation giving the
vendor (petitioner Taguba) the right to unilaterally rescind the contract the moment the
vendee (private respondent de Leon) fails to pay within a fixed period.
Considering, therefore, the nature of the transaction between petitioner Taguba and
private respondent, as a contract of sale, absolute in nature, the applicable provision is
Article 1592 of the New Civil Code. In the case at bar, petitioner Taguba never notified
private respondent by notarial act that he was rescinding the contract, and neither had he
filed a suit in court to rescind the sale.
Where time is not of the essence of the agreement, a slight delay on the part of
one party in the performance of his obligation is not a sufficient ground for the
rescission of the agreement." Considering that in the instant case, private respondent
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had already actually paid the sum of P12,500.00 of the total stipulated purchase price
of P18,000.00 and had tendered payment of the balance of P5,500.00 within the grace
period of six months from December 31, 1972, equity and justice mandate that she be
given additional period within which to complete payment of the purchase price. Here,
petitioners acknowledge that they failed to settle the purchase price of the disputed property
in full within the deadline set by the Amicable Settlement. Nevertheless, the Court does not
lose sight of the fact that petitioners have already paid more than three-fourths of the
purchase price agreed upon. Further, petitioners have constituted their family home on the
disputed property in good faith, and have lived thereon for 17 years without protest.
In addition, respondents do not dispute that petitioners offered to settle their

outstanding balance of P5,310.00 "two (2) days after the deadline [set by the Amicable
Settlement] and a few times thereafter,” which offers respondents refused to accept.
Respondents also do not claim to have made a demand for rescission at any time before
petitioners made such offers to pay, either through judicial or extra-judicial means, such as
through a notarial act.
Thus, pursuant to Article 1592, and consistent with the Court's rulings
in Taguba and Dignos, the Court deems it proper to grant petitioners a period of 30 days from
notice of this Decision to settle their outstanding balance.
4. Assuming that petitioners' failure to pay constitutes breach, respondents' cause of

action is already barred by prescription.
Respondents hinge their cause of action on petitioners' failure to pay within the
period set by the Amicable Settlement. Hence, this would mean that respondents' action is
one that proceeds from a breach of a written agreement, which, under Article 1144 of
the Civil Code, prescribes in 10 years. Respondents' Complaint was filed 17 years after the
expiration of the payment period stipulated in the Amicable Settlement. Assuming that
petitioners' failure to pay within said period constitutes sufficient breach which gives rise to
a cause of action, such action has clearly prescribed.
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SPOUSES ABRAHAM AND MELCHORA ERMINO vs. GOLDEN VILLAGE

HOMEOWNERS ASSOCIATION, INC.
DOCTRINE
The act of replacing the steel grille gate with a concrete fence was within the legitimate
exercise of GVHAI's proprietary rights over its property. The law recognizes in the owner the
right to enjoy and dispose of a thing, without other limitations than those established by
law. Article 430 of the Civil Code provides that "(e)very owner may enclose or fence his land or
tenements by means of walls, ditches, live or dead hedges, or by any other means without
detriment to servitudes constituted thereon."
Where the waters which flow from a higher state are those which are artificially
collected in man-made lagoons, any damage occasioned thereby entitles the owner of the lower
or servient estate to compensation. Lower estates are only obliged to receive water naturally
flowing from higher estates and such should be free from any human intervention. In the instant
case, what flowed from Hilltop City Subdivision was not water that naturally flowed from a
higher estate.
FACTS
Spouses Ermino are residents of Alco Homes, a subdivision located beside Golden
Village Subdivision (Golden Village) in Barangay Carmen, Cagayan de Oro City. On days prior
to August 12, 1995 and September 10, 1995, there was continuous heavy rain which caused
a large volume of water to fall from the hilltop subdivision to the subdivisions below. The
volume of water directly hit Spouses Ermino's house and damaged their fence, furniture,
appliances and car. Spouses Ermino filed a complaint for damages against E.B. Villarosa, the
developer of Hilltop City Subdivision, and GVHAI. The Hilltop City Subdivision is found at the
upper portion of Alco Homes, making it a higher estate, while Golden Village is located beside
Alco Homes, which makes both Alco Homes and Golden Village lower estates vis-à-vis Hilltop
City Subdivision. Spouses Ermino blamed E.B. Villarosa for negligently failing to observe
Department of Environment and Natural Resources rules and regulations and to provide
retaining walls and other flood control devices which could have prevented the softening of
the earth and consequent inundation. They likewise claimed that GVHAI committed a
wrongful act in constructing the concrete fence which diverted the flow of water to Alco
Homes, hence, making it equally liable to Spouses Ermino.
Spouses Ermino prayed that E.B. Villarosa and GVHAI be made jointly and severally
liable. E.B. Villarosa argued that the location of the house of Spouses Ermino is located at the
lower portion of the Dagong Creek and is indeed flooded every time there is a heavy
downpour, and that the damage was further aggravated by GVHAI's construction of the
concrete fence. It contended, however, that the damage was due to a fortuitous
event. Meanwhile, GVHAI averred that the construction of the concrete fence was in the
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exercise of its proprietary rights and that it was done in order to prevent outsiders from
using the steel grille from entering the subdivision. It likewise asserted that they "should not
be made inutile and lame-duck recipients of whatever waters and/or garbage" that come
from Alco Homes. GVHAI attributed sole liability on E.B. Villarosa for having denuded Hilltop
City Subdivision and for its failure to provide precautionary measures.
ISSUES
1. Whether the CA is correct in ruling that GVHAI was not responsible for the damage to
Spouses Ermino's properties.
2. Whether GVHAI was negligent in building its concrete fence causing the softening of the
earth.
3. Whether GVHAI is imposed with the responsibility on lower estates to receive waters from
higher estates.
4. Whether E.B. Villarosa is responsible for the damage suffered by Spouses Ermino.
RULING
1. YES. Malice or bad faith, at the core of Articles 20 and 21, implies a conscious and
intentional design to do a wrongful act for a dishonest purpose or moral obliquity. While
GVHAI replaced the steel grille gate with a concrete fence, the construction was not intended
to obstruct whatever waters that may naturally flow from the higher estates. The concrete
fence was made to ward off undesirable elements from entering the subdivision. Thus, for
purposes of Articles 20 and 21, the construction of the concrete fence is not contrary to any
law, morals, good customs, or public policy.
2. NO. When GVHAI decided to construct the concrete fence, it could not have reasonably
foreseen any harm that could occur to Spouses Ermino. Any prudent person exercising
reasonable care and caution could not have envisaged such an outcome from the mere
exercise of a proprietary act.
Indeed, the act of replacing the steel grille gate with a concrete fence was within the
legitimate exercise of GVHAI's proprietary rights over its property. The law recognizes in the
owner the right to enjoy and dispose of a thing, without other limitations than those
established by law. Article 430 of the Civil Code provides that "(e)very owner may enclose
or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other
means without detriment to servitudes constituted thereon."
3. NO. Spouses Ermino likewise ascribe liability to GVHAI relying on Article 637 of the Civil
Code and Article 50 of the Water Code.
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Alco Homes and Golden Village are lower in elevation than the Hilltop City
Subdivision, and thus, are legally obliged to receive waters which naturally flow from the
latter, as provided under Article 637 of the Civil Code and Article 50 of the Water Code. An
easement or servitude is "a real right constituted on another's property, corporeal and
immovable, by virtue of which the owner of the same has to abstain from doing or to allow
somebody else to do something on his property for the benefit of another thing or
person." The statutory basis of this right is Article 613 of the Civil Code.
In this regard, Hilltop City Subdivision, the immovable in favor of which the easement is
established, is the dominant estate; while Alco Homes and Golden Village, those that are
subject of the easement, are the servient estates. It must be noted, however, that there is a
concomitant responsibility on the part of Hilltop City Subdivision not to make the obligation
of these lower estates/servient estates more onerous. This obligation is enunciated under
second paragraph of Article 637, as abovementioned, and Article 627 of the Civil Code:
ARTICLE 627. The owner of the dominant estate may make, at his own expense, on the
servient estate any works necessary for the use and preservation of the servitude, but
without altering it or rendering it more burdensome.
Based on the ocular of the Hilltop City Subdivision, the area was bulldozed and the
hills were flattened. There were no retaining walls constructed to prevent the water from
flowing down and the soil was soft. This flattening of the area due to bulldozing changed the
course of water, which ultimately led to the passing of said water to the house of Spouses
Ermino.
Where the waters which flow from a higher state are those which are artificially
collected in man-made lagoons, any damage occasioned thereby entitles the owner of
the lower or servient estate to compensation. Thus, the bulldozing and construction
works done by E.B. Villarosa, not to mention the denudation of the vegetation at the Hilltop
City Subdivision, made Alco Homes and Golden Village's obligation, as lower estates, more
burdensome than what the law contemplated. Lower estates are only obliged to receive
water naturally flowing from higher estates and such should be free from any human
intervention. In the instant case, what flowed from Hilltop City Subdivision was not water
that naturally flowed from a higher estate. The bulldozing and flattening of the hills led to
the softening of the soil that could then be easily carried by the current of water whenever it
rained. Thus, Alco Homes and Golden Village are not anymore obligated to receive such
waters and earth coming from Hilltop City Subdivision.
The Court also agrees with the CA's observation that the concrete fence cannot be
considered as an impediment to Golden Village's obligation to receive the water, because if
only naturally flowing water, without any human intervention, cascaded down from the
Hilltop City Subdivision, the concrete fence would not pose as an obstruction to its flow. In
this regard, the closure of the steel grille gate was effected even before the construction made
by E.B. Villarosa.
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4. YES. E.B. Villarosa is responsible for the damage suffered by Spouses Ermino. E.B. Villarosa
should have provided for the necessary measures such as retaining walls and drainage so
that the large volume of water emanating from it would not unduly cause inconvenience, if
not injury, to the lower estates. E.B. Villarosa's negligence is the proximate cause of the
injury. Had it only exercised prudence, reasonable care and caution in the construction of
Hilltop City Subdivision, then Spouses Ermino would not have experienced the injury that
they suffered.
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SAMUEL AND EDGAR BUYCO v. REPUBLIC OF THE PHILIPPINES

DOCTRINE
A CENRO or PENRO certification is not enough to prove the alienable and disposable
nature of the property sought to be registered because the only way to prove the classification
of the land is through the original classification approved by the DENR Secretary or the
President himself.
FACTS
The brothers Edgardo H. Buyco and Samuel H. Buyco, through their attorney-in-fact
Rieven H. Buyco, filed an application for registration of a parcel of land with then CFI of
Romblon, Branch 82. The Republic of the Philippines through the Director of Lands opposed
the application for registration. The Land Registration Court rendered its judgment granting
aforesaid application. The Director of Lands appealed said Decision to the CA on the basis
that the trial court erred in not declaring the applicants barred by the Constitution from
applying for registration because they are American citizens and are thus disqualified from
acquiring lands in the Philippines; in holding that applicants had established proprietary
rights over the land even before acquiring American citizenship through naturalization; in
not dismissing the application for registration because of applicants' failure to
overthrow the presumption that the land applied for is public land belonging to the
State. The CA dismissed for lack of merit the appeal interposed by the Director of Lands. The
Supreme Court rendered its judgment and granted the petition of the Director of Lands and
reaffirmed the decision of the RTC of Romblon.
Six years later, Edgar Buyco and Samuel Buyco filed for the second time an application
for registration of title covering the same parcel of land. The appellant Republic of the
Philippines filed its opposition with a motion to dismiss the application for registration of
title on the bases that 1) res judicata has already set in; and that 2) the applicants did not
acquire vested rights over the subject parcel of land before acquiring American citizenship.
The Buycos opposed the Republic's motion to dismiss contending that res judicata was not
applicable to the present case and that appellee Samuel A. Buyco has already reacquired his
Filipino citizenship.
The trial court denied the Republic's motion to dismiss, opining that, in the case at
bar being a land registration case, the provisions of Act No. 496 prevails over those of the
Rules of Court. since the order of dismissal is without prejudice, it goes without saying that
the applicant, notwithstanding of the dismissal of his application, can, if he believes his
evidence warrants for a tenable subsequent application for registration, file another
application for because the dismissal of his previous application was without prejudice. He
is not barred by the rule on prior judgment or res judicata because this rule has been
expressly made not applicable in the case at bar by said Sec. 37 of Act No. 496. After trial on
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the merits, the trial court rendered judgment granting the application for registration of title
by the Buycos. The CA, in its Decision dated January 26, 2011, granted the appeal holding
that res judicata finds application to land registration cases and that all its elements are
present in this case. Also, the case concerning the petitioners' first application for land
registration, had been decided with finality. Based on the doctrine of finality of judgment, the
issue or cause involved therein should be laid to rest.
ISSUE
Whether or not the subject land sought to be registered by the Buycos is alienable and
disposable.
RULING
NO. One of the obstacles to their first registration application to bring within the
operation of the Land Registration Act the Subject Land as found by the Court in The Director
of Lands v. Buyco was the absence of evidence to prove that the Subject Land is alienable and
disposable.
In the recent case of In Re: Application for Land Registration Suprema T. Dumo v.
Republic of the Philippines, the Court reiterated the requirement it set in Republic of the
Philippines v. T.A.N. Properties, Inc. that there are TWO documents that must be presented
to prove that the land subject of the application for registration is alienable and
disposable:
(1) a copy of the original classification approved by the DENR Secretary and certified
as a true copy by the legal custodian of the official records, and
(2) a certificate of land classification status issued by the CENRO or the Provincial
Environment and Natural Resources Office (PENRO) based on the land classification
approved by the DENR Secretary.
Dumo also stated that: "a CENRO or PENRO certification is not enough to prove
the alienable and disposable nature of the property sought to be registered because
the only way to prove the classification of the land is through the original
classification approved by the DENR Secretary or the President himself."
Given that the proofs which the petitioners presented in this case to prove the
alienable and disposable character of the Subject Land proceed mainly from a Certification
dated August 14, 1998 issued by the CENRO of Odiongan, Romblon, which is insufficient,
their second attempt to register the Subject Land under the Torrens system must suffer the
same fate as their first.
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REPUBLIC OF THE PHILIPPINES REPRESENTED BY DPWH v. HEIRS OF ELIGIO

CRUZ, REPRESENTED BY CRISANTA OLIQUINO, AND HEIRS OF ELIGIO CRUZ,
REPRESENTED BY MAXIMINO AGALABIA
G.R. No. 208956, October 17, 2018, Second Division (Caguioa, J.)
DOCTRINE
Article 2028 of the Civil Code defines a compromise as a "contract whereby the parties,
by making reciprocal concessions, avoid litigation or put an end to one already commenced.”
Before approving a compromise, courts are thus bound to strictly scrutinize the same to ensure
that the compromise and its execution are compliant with the law and consistent with
procedural rules.
FACTS
Sometime in 1977, the DPWH, then Ministry of Public Highways, conducted the
widening of Visayas Avenue, Quezon City. The construction encroached upon a 4,757-square
meter portion (Disputed Portion) of Lot 643 owned by Virginia B. Uichanco (Lot 643-a-2),
Julita B. Uichanco-Denoga (Lot 643-A-3), and Eligio Cruz (Lot 643-B). The Disputed Portion
was subdivided, and thereafter registered in the name of the Republic. However, no payment
of just compensation was made.
Subsequently, a certain Crisanta Oliquino filed with the DPWH a claim for payment of
just compensation for and on behalf of several heirs of Eligio Cruz. Oliquino demanded just
compensation for the Disputed Portion at the rate of Php15,000.00 per square meter. In
exchange for Atty. Borja's services, Oliquino executed a Deed of Assignment ceding in his
favor the amount of Php14,000,000.00 out of the Php71,355,000.00 she expected to receive
from the Republic. Oliquino later repudiated the deed, prompting the Republic to release the
partial payment of Php39,533,239.13 in Oliquino's favor. Confronted with conflicting claims
of ownership over the Disputed Portion of Lot 643 left unpaid, the Republic withheld further
payments and demanded the claimants to settle their opposing claims through litigation.
Since the claimants failed to do so, the Republic was constrained to file the Interpleader
impleading as defendants the Oliquino group, Agalabia group, and Atty. Borja. The De Leon
group filed a Motion for Intervention, also claiming just compensation as heirs of Eligio Cruz
which was then granted.
After termination of the mediation, the Oliquino group presented before the RTC a
Compromise Agreement for approval. While said agreement allocated the remaining
balance of just compensation corresponding to the Disputed Portion among the
defendants in the Interpleader, only the Oliquino and Agalabia groups agreed upon
the allocation. The RTC ruled m favor of the Oliquino and Agalabia groups and granted their
motion for execution. The Republic filed several motions to avert execution but was denied.
The CA issued the Assailed Decision dismissing the Republic's petition for certiorari for lack
of merit. In so ruling, the CA held that since the Partial Judgment had attained finality, it may
neither be amended nor corrected. Hence, the final and only action to be taken is to have the
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judgment executed in accordance with Rule 39 of the Rules of Court. According to the CA, it
is "immaterial" that the issue raised in the Interpleader has yet to be resolved, as this does
not derogate the judgment's susceptibility to execution.
ISSUE
Whether the CA erred when it affirmed the validity of the Order directing the
immediate execution of the Partial Judgment.
RULING
YES. A compromise intended to resolve a matter under litigation is referred to as

a judicial compromise. The effect of a judicial compromise is well established: “Once stamped
with judicial imprimatur, a compromise agreement becomes more than a mere 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. It has the effect and
authority of res judicata, although no execution may issue until it would have received
the corresponding approval of the court where the litigation pends and its compliance
with the terms of the agreement is thereupon decreed.”
Before approving a compromise, courts are thus bound to strictly scrutinize the same
to ensure that the compromise and its execution are compliant with the law and consistent
with procedural rules. To recall, the Compromise Agreement divides the Republic's entire
remaining balance between and among the defendants, in accordance with the terms
agreed upon by the Oliquino and Agalabia groups. The allocation of the remaining balance
was determined without the participation of all other claimants who likewise stand as
parties to the Interpleader.
Clearly, the immediate execution of the Partial Judgment approving the Compromise
Agreement facilitates the premature distribution of the Republic's remaining balance
without affording the De Leon group and Atty. Borja of the opportunity to establish their
entitlement, if any, to compensation beyond the amounts unilaterally set by the Oliquino and
Agalabia groups. This defeats the very purpose for which the Republic's Interpleader had
been filed, as it opens the portals to protracted litigation not only among the opposing
claimants, but also between said claimants and the Republic.
By affirming the July 2011 Omnibus Order and November 2011 Order, the CA
erroneously exposed the Republic to the very risk against which it sought protection through
its Interpleader.
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INDUSTRIAL PERSONNEL AND MANAGEMENT SERVICES, INC. v. COUNTRY BANKERS

INSURANCE CORPORATION
DOCTRINE
According to the autonomy characteristic of contracts, the contracting parties may

establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or
public policy.
Article 2199 of the Civil Code states: Except as provided by law or by stipulation, one
is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has
duly proved. Such compensation is referred to as actual or compensatory damages.
FACTS
In 2000, Industrial Personnel and Management Services, Inc. (IPAMS) began

recruiting registered nurses for work deployment in the US. It takes eighteen (18) to twenty
four (24) months for the entire immigration process to complete. As the process requires
huge amounts of money, such amounts are advanced to the nurse applicants. By reason of
the advances made to the nurse applicants, the latter were required to post surety bond. The
purpose of the bond is to guarantee the following during its validity period: (a) that they will
comply with the entire immigration process, (b) that they will complete the documents
required, and (c) that they will pass all the qualifying examinations for the issuance of
immigration visa. The Country Bankers Insurance Corporation and IPAMS agreed to provide
bonds for the said nurses. Under the agreement of IPAMS and Country Bankers, the latter
will provide surety bonds and the premiums therefor were paid by IPAMS on behalf of the
nurse applicants.
The surety bonds issued specifically state that the liability of the surety company, i.e.,
respondent Country Bankers, "shall be limited only to actual damages arising from Breach of
Contract by the applicant." In 2004, Country Bankers was not able to pay six (6) claims of
IPAMS. The claims were not denied by Country Bankers, which instead asked for time within
which to pay the claims, as it alleged to be cash strapped at that time. Thereafter, the number
of unpaid claims increased. By February 16, 2007, the total amount of unpaid claims was
P11,309,411.56.
The counsel of Country Bankers, Atty. Marisol Caleja, started to oppose the payment
of claims and insisted on the production of official receipts of IPAMS on the expenses it
incurred for the application of nurses. IPAMS opposed this, saying that the Country Bankers'
insistence on the production of official receipts was contrary to, and not contemplated in, the
MOA and was an impossible condition considering that the U.S. authorities did not issue
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official receipts. In lieu of official receipts, IPAMS submitted statements of accounts, as

provided in the MOA.
The IC issued a Resolution and held that there is no ground for the refusal of Country
Bankers to pay the claims of IPAMS. Its failure to settle the claim after having entered into an
Agreement with the complainant, IPAMS, demonstrates respondent's bad faith in the
fulfillment of their obligation, to the prejudice of the complainant. The DOF decided to affirm
the assailed orders of the IC. The CA held that respondent Country Bankers was justified in
delaying the payment of the claims to petitioner IPAMS because of the purported lack of
submission by petitioner IPAMS of official receipts and other competent proof on the
expenses incurred by petitioner IPAMS in its recruitment of nurse applicants.
ISSUE
Whether there is a valid ground for Country Bankers’ refusal to pay the claims to
IPAMS due to lack of official receipts.
RULING
NO. According to the autonomy characteristic of contracts, the contracting parties

may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order,
or public policy.
The stipulation of the MOA at issue is the provision enumerating requirements that
must be presented by petitioner IPAMS in order to make a valid claim against the surety
bond. Petitioner IPAMS and respondent Country Bankers in essence made a stipulation to
the effect that mere demand letters, affidavits, and statements of accounts are enough proof
of actual damages — that more direct and concrete proofs of expenditures by the petitioner
such as official receipts have been dispensed with in order to prove actual losses.
Can the parties stipulate on the requirements that must be presented in order
to claim against a surety bond? And the answer is a definite YES, pursuant to the autonomy
characteristic of contracts, they can. In an insurance contract, founded on the autonomy of
contracts, the parties are generally not prevented from imposing the terms and conditions
that determine the contract's obligatory force. Thus, the view posited by the CA that the
Requirements for Claim Clause is contrary to law because it is incongruent with Article 2199
of the Civil Code and, therefore, an exception to the rule on autonomy of contracts
is erroneous.
Article 2199 of the Civil Code states: Except as provided by law or by stipulation,
one is entitled to an adequate compensation only for such pecuniary loss suffered by him as
he has duly proved. Such compensation is referred to as actual or compensatory damages.
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The law is clear and unequivocal when it states that one is entitled to adequate
compensation for pecuniary loss only for such losses as he has duly
proved EXCEPT: (1) when the law provides otherwise, or (2) by stipulation of the
parties.
The submission of official receipts and other pieces of evidence as a prerequisite for the
payment of claims is excused by stipulation of the parties; and in lieu thereof, the presentation
of statement of accounts with detailed expenses, demand letters, and affidavits is, by express
stipulation, sufficient evidence for the payment of claims.
Hence, it is crystal clear that the petitioner IPAMS and respondent Country Bankers,
by express stipulation, agreed that in order for the former to have a valid claim under the
surety bond, the only requirements that need to be submitted are the two demand letters,
an Affidavit stating reason of any violation to be executed by responsible officer of the
Recruitment Agency, a Statement of Account detailing the expenses incurred, and the
Transmittal Claim Letter. Evidently, the parties did not include as preconditions for the
payment of claims the submission of official receipts or any other more direct or
concrete piece of evidence to substantiate the expenditures of petitioner IPAMS. If the
parties truly had the intention of treating the submission of official receipts as a requirement
for the payment of claims, they would have included such requirement in the MOA. But they
did not. The SC found that, by stipulation of petitioner IPAMS and respondent Country
Bankers in their MOA, the parties waived the requirement of actually proving the expenses
incurred by petitioner IPAMS through the submission of official receipts and other
documentary evidence. Thus, respondent Country Bankers was not justified in denying the
payment of claims presented by petitioner IPAMS based on the lack of official receipts.
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REPUBLIC OF THE PHILIPPINES v. SPS. ILDEFONSO ALEJANDRE AND ZENAIDA

FERRER ALEJANDRE
G.R. No. 217336, October 17, 2018, Second Division (Caguioa J.)
DOCTRINE
Accordingly, public lands not shown to have been classified, reclassified or released as
alienable agricultural land or alienated to a private person by the State remain part of the
inalienable lands of public domain. Therefore, the onus to overturn, by incontrovertible
evidence, the presumption that the land subject of an application for registration is alienable
and disposable rests with the applicant.
FACTS
On July 18, 1991, Spouses Alejandre filed an application for the registration of Lot No.
6487 under P.D. No. 1529 with an area of 256 square meters. They alleged that they are the
owners of the subject property by virtue of a deed of sale or conveyance; that the subject
property was sold to them by its former owner Angustia Lizardo Taleon by way of a Deed of
Absolute Sale executed on June 20, 1990; that the said land is presently occupied by the
applicants-spouses. The Office of the Solicitor General, as counsel for the Republic, entered
its appearance. The LRA submitted a Report noting that there were discrepancies in the plan
submitted by the applicant spouses, which discrepancies were referred to the Lands
Management Sector for verification and correction.
The trial court issued an order of general default and allowed the applicants-spouses
to present their evidence. The trial court granted the applicant spouses' motion to submit
original tracing cloth plan and technical description for purposes of facilitating the approval
of the re-surveyed plans as well as the submission of the new plan for the scrutiny and
approval of the LRA. The LRA submitted its Final Report stating that it applied the corrected
technical description of the subject lot and no more discrepancy exists, however, the area
was increased by six (6) meters. As such, the trial court ordered the submission of
publication of the amended or new technical description. On May 6, 2000, the trial court
issued another Notice setting the case for Initial Hearing on July 25, 2000.
The Republic filed its Opposition to the application based on the following
grounds:
(1) that neither the applicants nor their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of the land in
question since June 12, 1945 or earlier as required by Section 48 (b) of
Commonwealth Act No. 141, as amended by Presidential Decree No. 1073;
(2) that applicants failed to adduce any muniment of title and/or the tax declarations
with the petition to evidence bona fide acquisition of the land applied for or of its
open, continuous, exclusive and notorious possession and occupation thereof in the
concept of an owner since 12 June 1945 or earlier; that the tax declaration adverted
to in the petition does not appear to be genuine and the tax declaration indicates
pretended possession of applicants to be of recent vintage and
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(3) that the subject property applied for is a portion of the public domain belonging
to the Republic of the Philippines which is not subject to private appropriation.
The CA denied the appeal of the Republic. The CA justified that based on the
allegations of the applicants spouses Ildefonso Alejandre and Zenaida Ferrer Alejandre in
their application for land registration and subsequent pleadings, they come under paragraph
4 of Section 14, Presidential Decree No. 1529 - those who have acquired ownership of
lands in any manner provided for by law - because they acquired the land in question
by virtue of a Deed of Absolute Sale executed on June 20, 1990 from Angustia Alejandre
Taleon who acquired the land from her mother by inheritance.
ISSUE
Whether the subject land is either alienable and disposable land of public domain.
RULING
NO. Under Section 14 of P.D. No. 1529, the following persons may file in the proper
Court of First Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in

open, continuous, exclusive and notorious possession and occupation of alienable and
disposable lands of the public domain under a bona fide claim of ownership since June
12, 1945, or earlier.
(4) Those who have acquired ownership of land in any other manner provided
for by law.
In the case at bar, basing from the allegations of the applicants spouses in their
application for land registration and subsequent pleadings, clearly, they come under
Paragraph 4 of the quoted section and not under Paragraph 1 of the same section. It is
undisputed that they acquired the land in question by virtue of a Deed of Absolute Sale
executed on June 20, 1990 from Angustia Alejandre Taleon who acquired the land from her
mother by inheritance. In other words, the applicant spouses acquired ownership over
Lot 6487 through a contract of sale, which is well within the purview of Paragraph 4
of Section 14 of P.D. No. 1529.
As a consequence, the requirement of open, continuous, exclusive and notorious

possession and/or occupation in the concept of an owner has no application in the case at
bar. Not even the requirement that the land applied for should have been declared
disposable and alienable applies considering that this is just one of the requisites to be
proven when applicants for land registration fall under Paragraph 1 of Section 14 of P.D. No.
1529, which is not the case at bar.
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The Republic argues that under the law, citing Section 24 of PD 1529 and Section
48(b) of Commonwealth Act No. 141, as amended by Section 4 of PD 1073, before an
applicant can register his title over a particular parcel of land, he must show that:
(a) he, by himself or through his predecessors-in-interest, has been in open,

continuous, exclusive and notorious possession and occupation of the subject land
under a bona fide claim of ownership since June 12, 1945, or earlier; and
(b) the subject land falls within the alienable and disposable portion of the public
domain.
Pursuant to Article 419 of the Civil Code, property, in relation to the person to whom it
belongs, is either of public dominion or of private ownership. There are three kinds of
property of public dominion: (1) those intended for public use; (2) those intended for some
public service; and (3) those intended for the development of national wealth. In turn, the
Civil Code classifies property of private ownership into three categories: (1) patrimonial
property of the State under Articles 421 and 422; (2) patrimonial property of LGUs under
Article 424; and (3) property belonging to private individuals under Article 425. With
respect to lands, which are immovable property pursuant to Article 415(1) of the Civil Code,
they can either be lands of public dominion or of private ownership following the general
classification of property under Article 419.
Thus, it can be gathered from the foregoing that the subject of the land registration
application under Section 14 of PD 1529 is either alienable and disposable land of public
domain or private land. While Section 14(4) does not describe or identify the kind of land
unlike in (1), which refer to "alienable and disposable lands of the public domain;" (2), which
refer to "private lands"; and (3) "private lands or abandoned river beds," the land covered
by (4) cannot be other than alienable and disposable land of public domain, i.e., public
agricultural lands and private lands or lands of private ownership in the context of Article
435. Accordingly, public lands not shown to have been classified, reclassified or
released as alienable agricultural land or alienated to a private person by the State
remain part of the inalienable lands of public domain. Therefore, the onus to overturn,
by incontrovertible evidence, the presumption that the land subject of an application
for registration is alienable and disposable rests with the applicant.
Respondents, based on the evidence that they adduced, are apparently claiming
ownership over the land subject of their application for registration by virtue of tradition, as
a consequence of the contract of sale, and by succession in so far as their predecessors-in-
interest are concerned. Both modes are derivative modes of acquiring ownership. Yet, they
failed to prove the nature or classification of the land. The fact that they acquired the
same by sale and their transferor by succession is not incontrovertible proof that it is of
private dominion or ownership. In the absence of such incontrovertible proof of private
ownership, the well-entrenched presumption arising from the Regalian doctrine that the
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subject land is of public domain or dominion must be overcome. Respondents failed to do

this.
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NARCISO MELENDRES, SUBSTITUTED BY HIS WIFE, OFELIA MELENDRES AND

CHILDREN JOSE MARI MELENDRES, AND NARCISO MELENDRES, JR., PETITIONERS, v.
ALICIA CATAMBAY, LORENZA BENAVIDEZ, IN SUBSTITUTION OF HER HUSBAND
EDMUNDO BENAVIDEZ, AND THE REGISTER OF DEEDS OF RIZAL (MORONG BRANCH)
G.R. No. 198026, November 28, 2018, Second Division, (Caguioa J.)
DOCTRINE
If the land in question is proven to be of private ownership and, therefore, beyond the
jurisdiction of the Director of Lands, the free patent and subsequent title issued pursuant
thereto are null and void. The indefeasibility and imprescriptibility of a Torrens title issued
pursuant to a patent may be invoked only, when the land involved originally formed part of
the public domain. If it was a private land, the patent and certificate of title issued upon the
patent are a nullity.
Section 44, Chapter VI of Commonwealth Act No. 141 or the Public Land Act, states that
a free patent may issue in favor of an applicant only if (1) the applicant has continuously
occupied and cultivated, either by himself or through his predecessors-in-interest, a tract or
tracts of agricultural public lands subject to disposition, or (2) who shall have paid the real
estate tax thereon while the same has not been occupied by any person.
FACTS
The instant case is centered on a 1,622-square-meter property located in Plaza Aldea,

Tanay, Rizal, described as Lot No. 3302, Cad-393, Tanay Cadastre. Petitioner Narciso claimed
that he inherited the subject property from Ariston Melendres, who died on January 1, 1992.
Petitioner Narciso likewise alleged that respondent Alicia Catambay's predecessor-in-
interest, Alejandro Catambay, like the other previous tenants and adjoining farmers of the
subject property, had previously attested that he and Ariston owned the subject property,
which had an original area of 13,742 square meters, and that Petitioner Narciso and his
father Ariston were actually, publicly, openly, adversely and continuously in possession of
the subject property for more than thirty (30) years. Petitioner Narciso also maintained that
they planted it with palay on a regular seasonal basis; the subject property became a private
land by operation of law and it may not be treated as a public land falling under the
jurisdiction of the Bureau of Lands for the purpose of issuance of Homestead Patent.
Petitioner Narciso also asserted that Ariston paid the taxes on the subject property as
evidenced by various tax declaration receipts spanning several years.
Petitioner Narciso also alleged that what respondent Catambay actually owns is the
1,353-square-meter parcel of land adjoining the subject property on the eastern side of the
subject property, which respondent Catambay inherited from the late Alejandro. According
to petitioner Narciso, in 1971, unknown to him and Ariston, a Cadastral Survey Team from
the Bureau of Lands surveyed the subject property, the property of respondent Catambay,
and other properties in Barangay Plaza Aldea, Tanay, Rizal. An alleged gross error was
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committed by the Cadastral Survey Team of the Bureau of Lands, which resulted in the
reduction of the original area of the subject property from 13,742 square meters to 4,762
square meters, docketed as Lot No. 3300. OCT No. 1112, which contains an area of only
4,762 square meters, was issued to Ariston.
On the other hand, OCT No. M-2177 for Lot No. 3302, which covers the subject
property was supposedly mistakenly issued in favor of Alejandro with an area of 1,622
square meters. Upon the death of Alejandro, TCT No. M-28802 was issued in favor of
respondent Catambay after the extrajudicial settlement of the estate of Alejandro.
Eventually, TCT No. M-28802 was cancelled and TCT No. M-39517 was issued in favor of
respondents Spouses Edmundo and Lorenza Benavidez (collectively, respondents Sps.
Benavidez) who bought the property from respondent Catambay.
Petitioner Narciso discovered the grave errors in the survey and registration of the
subject property sometime on September 13, 1989 and brought the same to the attention of
respondent Catambay who pointed to respondent Edmundo as her persistent buyer of the
subject property.
A petition for reinvestigation was filed by petitioner Narciso before the CENRO of the
DENR in Taytay, Rizal. The DENR Regional Office No. IV denied the petition filed by petitioner
Narcisio, holding that there was no error committed in the cadastral survey of the Tanay
Cadastre. The OP found that based on the evidence on record and the findings of the DENR
investigators themselves, "the area being actually worked and cultivated by respondent
Catambay through her overseer was included in the title of Amonoy and not the subject
property. The OP also found that petitioner Narciso and his predecessors-in-interest were
the ones "in actual possession" of the subject property and that petitioner Narciso "was still
occupying and tilling the same area, which was not actually possessed and occupied by both
Catambay and Amonoy." Further, the OP held that the OCT issued in favor of Catambay is
"void." Petitioner Narciso and his tenant, Mendez, likewise filed a complaint for illegal
conversion against respondents Catambay and Benavidez before the DARAB. The DARAB
ordered respondents Catambay and Edmundo to pay petitioners' tenant, Mendez,
P61,875.00 as disturbance compensation.
Petitioner Narciso filed before the RTC a Complaint for Annulment of Deed of
Absolute Sale with Reconveyance and Damages with Prayer for Preliminary Injunction and
Restraining Order against respondents Catambay, the Sps. Benavidez, and the Register of
Deeds. The RTC denied the petition. The CA denied petitioners' appeal, affirming the RTC
Decision due to its belief that the proper recourse to remedy the situation is an action for
reversion to be filed solely and exclusively by the Republic of the Philippines, through the
Solicitor General, and not an action filed by a private person.
ISSUE
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Whether there is sufficient cause to cancel the certificate of title covering the subject
property currently in the name of respondents Sps. Benavidez, i.e., TCT No. M-39517, which
traces its origin from OCT No. M-2177 issued in favor of Alejandro Catambay, and to
reconvey the subject property in favor of petitioners.
RULING
YES. At the heart of petitioners' Complaint for Annulment of Deed of Absolute Sale
and Reconveyance is the allegation that OCT No. M-2177, which was issued in favor of
Alejandro Catambay, and from where respondents Benavidez trace their title over the
subject property, was invalidly issued and that they, petitioners, are the true owners of the
subject property by virtue of their actual, public, open, adverse and continuous possession
of the subject property for more than 30 years.
The records show that in 1974, Alejandro filed with the DENR an application for free
patent covering the subject property. With the DENR considering the subject property as
alienable and disposable land of the public domain, it issued, Free Patent No. (IV-1)
001692 covering the subject property in the name of Alejandro. Pursuant thereto, the RD
issued the corresponding OCT, i.e., the assailed OCT No. M-2177 in the name of Alejandro.
In its Decision denying petitioners' Complaint, the RTC essentially invoked the indefeasibility
of OCT No. M-2177 and held that petitioners failed to present sufficient evidence that the
said title was invalidly issued in the name of respondents' predecessor-in-interest,
Alejandro.
While the SC is not unaware that upon the expiration of one year, the decree of
registration and the certificate of title issued shall become incontrovertible and indefeasible,
the indefeasibility of title could be claimed only if a previous valid title to the same parcel of
land does not exist. As a matter of fact, an action for reconveyance is a recognized remedy
available to a person whose property has been wrongfully registered under the Torrens
system in another's name; reconveyance is always available as long as the property has not
passed to an innocent third person for value. Further, the incontestable and indefeasible
character of a Torrens certificate of title does not operate when the land covered thereby is
not capable of registration.
In connection with these doctrines, the Court has previously held in Agne, et al. v. The
Director of Lands, et al., that if the land in question is proven to be of private ownership and,
therefore, beyond the jurisdiction of the Director of Lands, the free patent and subsequent
title issued pursuant thereto are null and void. The indefeasibility and
imprescriptibility of a Torrens title issued pursuant to a patent may be invoked only,
when the land involved originally formed part of the public domain. If it was a private
land, the patent and certificate of title issued upon the patent are a nullity.
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The Court, in the aforesaid case, further explained that the rule on the
incontrovertibility of a certificate of title does not apply where an action for the cancellation
of a patent and a certificate of title issued pursuant thereto is instituted on the ground that
they are null and void because the Bureau of Lands had no jurisdiction to issue them, the
land in question having been withdrawn from the public domain prior to the subsequent
award of the patent and the grant of a certificate of title to another person.
Section 44, Chapter VI of Commonwealth Act No. 141 or the Public Land Act,
states that a free patent may issue in favor of an applicant only if (1) the applicant has
continuously occupied and cultivated, either by himself or through his predecessors-in-
interest, a tract or tracts of agricultural public lands subject to disposition, or (2) who shall
have paid the real estate tax thereon while the same has not been occupied by any person.
Similarly, in Heirs of Santiago v. Heirs of Santiago, the Court explained that it is a

settled rule that a free patent issued over a private land is null and void, and produces no
legal effects whatsoever. Private ownership of land — as when there is a prima facie proof of
ownership like a duly registered possessory information or a clear showing of open,
continuous, exclusive, and notorious possession, by present or previous occupants — is not
affected by the issuance of a free patent over the same land, because the Public Land Law
applies only to lands of the public domain. The Director of Lands has no authority to grant
free patent to lands that have ceased to be public in character and have passed to
private ownership. Consequently, a certificate of title issued pursuant to a homestead
patent partakes of the nature of a certificate issued in a judicial proceeding only if the
land covered by it is really a part of the disposable land of the public domain.
A hard second look at the factual findings of the various courts and administrative
bodies, as well as the evidence on record, reveals that Free Patent No. (IV-1) 001692 issued
in favor of Alejandro did not satisfy the abovementioned requisites for the issuance of a free
patent, making it null and void.
In sum, based on an exhaustive review of the records of the instant case, as well as
the clear and unequivocal factual findings made by several courts, including various
administrative bodies, the Court finds that respondent Catambay and her predecessor-
in-interest did not actually occupy the subject property as to warrant the issuance of
Free Patent No. (IV-1) 001692; respondent Catambay and her predecessor-in-interest
actually occupied and cultivated the adjoining property adjacent to the subject
property and not the subject property; and petitioners, through their predecessors-
in-interest, have actually, publicly, openly, adversely and continuously possessed the
subject property in the concept of an owner since the 1940's, cultivating the said
property as a rice field.
Significantly, during the trial, respondent Catambay herself testified

categorically that respondents Sps. Benavidez had knowledge of the claims of
petitioner Narciso over the subject property prior to the sale entered into with her. It
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bears stressing that even the RTC itself, in its Decision, found that "defendants Alicia
Catambay and defendants-spouses Benavidez had knowledge of the conflicts over the
subject property during their sale transaction." A person who deliberately ignores a
significant fact which would create suspicion in an otherwise reasonable man is not an
innocent purchaser for value. A purchaser cannot close his eyes to facts which should put a
reasonable man upon his guard, and then claim that he acted in good faith under the belief
that there was no defect in the title of the vendor. All told, there is absolutely no doubt in
the mind of the Court that respondents Sps. Benavidez were not innocent purchasers
of the subject property.
It should be clarified, however, that notwithstanding the Court's declaration that the
subject property is private property belonging to petitioners and that Free Patent No. (IV-1)
001692, as well as all the certificates of title originating therefrom, are null and void, the
title of petitioners over the subject property is still imperfect; the issuance of a
certificate of title in favor of petitioners is still subject to the rules on confirmation of
title under Section 48 (b) of the Public Land Act. Nevertheless, as similarly held in Heirs
of Santiago v. Heirs of Santiago, this imperfect title of the petitioners is enough to defeat the
free patent and certificate of title issued over the subject property in favor of respondents
and their predecessors-in-interest. As petitioners are deemed the lawful owners of the
subject property ipso jure by virtue of their open, continuous, exclusive, and notorious
possession and occupation of the subject property, they have the exclusive right to
apply for the issuance of a certificate of title through judicial confirmation of an
imperfect title under Section 48 of the Public Land Act.
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JUN MIRANDA v. SPS. ENGR. ERNESTO AND AIDA MALLARI AND SPS. DOMICIANO C.
REYES AND CARMELITA PANGAN
G.R. No. 218343, November 28, 2018, Second Division (Caguioa, J.)
DOCTRINE
Accion publiciana is a plenary action to recover the better right of possession

(possession de jure), which should be brought in the proper inferior court or Regional Trial
Court (depending upon the value of the property) when the dispossession has lasted for more
than one year (or for less than a year in cases other than those mentioned in Rule 70 of the
Rules). The issue in an accion publiciana is the "better right of possession" of real property
independently of title. This "better right of possession" may or may not proceed from a Torrens
Title.
FACTS
On March 3, 2004, the Spouses Mallari filed the suit for recovery of possession against
Jun Miranda. Thereunder, they alleged that, sometime after causing the Certificate of Sale in
their favor to be annotated in TCT No. NT-266485, they conducted an inspection of the
subject property. They discovered that the same was in the possession of Miranda who
claimed to be the owner thereof, having bought the property from the Spouses Reyes
sometime in 1996. Claiming to be entitled to the ownership and possession of the property,
they prayed that Miranda be ordered to vacate and to surrender the possession thereof to
them.
Miranda averred that he is already, and continues to be, the owner of the subject
property as he bought the same from the Spouses Reyes way back March 20, 1996 despite
that he failed to cause the registration of the sale as he lost the owner's copy of TCT No. NT-
266485. Asserting that the Spouses Reyes no longer have rights or interests over the subject
property at the time of the levy, he maintained that the Spouses Mallari acquired no right
over the same. Claiming to be an innocent purchaser for value who cannot be deprived of
possession over the subject property, he prayed that the complaint be dismissed, that he be
declared the rightful owner of the subject property, and for an award of damages.
Miranda filed a Third-Party Complaint against the Spouses Reyes. Maintaining that
the Spouses Reyes, as sellers, impliedly warranted his protection against eviction, he, thus,
prayed that the said spouses be held liable for any and all damages that he may incur should
he be deprived of the subject property.
The RTC rendered the assailed Decision granting the Spouses Mallari's complaint and
dismissing Miranda's third-party complaint. It pronounced that Miranda is estopped from
claiming ownership over the subject property in view of his failure to annotate his interest
thereto in TCT No. NT-266485; and, that the levy, execution, and sale of the subject property
to the Spouses Mallari is valid because Miranda's claim of ownership, even if true, cannot
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prevail over the rights of the said spouses. In dismissing the third-party complaint, the RTC
ratiocinated that the warranty against eviction does not apply because, first, the Spouses
Reyes, as vendors, had no participation in the execution sale and, second, it was Miranda who
failed to safeguard his right over the property.
The CA affirmed the RTC decision. The CA ruled that the right of Spouses Ernesto and
Aida Mallari having been annotated on TCT NT-266485 through the Notice of Levy prevails
over that of Miranda "in line with the jurisprudential rule that preference is given to a duly
registered levy on attachment or execution over a prior unregistered sale.
ISSUE
Whether the Spouses Mallari have a better right to possession over the subject
property.
RULING
NO. Accion publiciana is a plenary action to recover the better right of possession
(possession de jure), which should be brought in the proper inferior court or Regional Trial
Court (depending upon the value of the property) when the dispossession has lasted for
more than one year (or for less than a year in cases other than those mentioned in Rule 70
of the Rules). The issue in an accion publiciana is the "better right of possession" of real
property independently of title. This "better right of possession" may or may not proceed
from a Torrens title. Despite the lack of an express Rule, however, there is ample
jurisprudential support for upholding the power of a court hearing an accion
publiciana to also rule provisionally on the issue of ownership.
Since the resolution of the issue of ownership in an accion publiciana, like forcible
entry and unlawful detainer, is passed upon only to determine the issue of possession, the
defense of ownership raised by the defendant (i.e., that he, and not the plaintiff, is the rightful
owner) will not trigger a collateral attack on the plaintiff’s certificate of title.
Spouses Mallari claim that they are entitled to the possession of the subject property,
being its rightful owners by virtue of a registered execution sale. On the other hand, Miranda
claims a superior right as an owner of the subject property by virtue of an unregistered Deed
of Absolute Sale. From then on, Miranda asserts that he occupied the subject property in the
concept of an owner and is the actual tiller thereof.
Given the nature of accion publiciana, the rulings of the RTC and the CA on the issue
of ownership should be considered as merely provisional and not conclusive. Since both
parties, Spouses Mallari and Miranda, claim exclusive ownership over the subject property,
the right of ownership recognized in favor of one necessarily excludes the other of such right
since this is not a case of co-ownership.
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Article 1458 of the Civil Code provides that by the contract of sale one of the
contracting parties obligates himself to transfer ownership and to deliver a determinate
thing, and the other to pay a price certain in money or equivalent. Pursuant to Article 1475
of the Civil Code, a contract of sale is a consensual one because it is perfected at the moment
there is a meeting of minds upon the thing which is the object of the contract and upon the
price. As to transfer of ownership, Article 1477 of the Civil Code provides that
the ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof. Under Article 712 of the same Code, ownership and other
real rights over property are acquired and transmitted in consequence of certain contracts,
by tradition. However, the parties may stipulate that ownership in the thing shall not pass to
the purchaser until he has fully paid the price under Article 1478.
The Deed of Absolute Sale between Spouses Reyes, the then registered owners
of the subject property, and Miranda was executed in March 1996 and possession was
already transferred to Miranda, through constructive delivery when the Deed of
Absolute Sale, a public instrument, was executed conformably to Article 1498 of the
Civil Code, and through real delivery when actual possession was turned over to
Miranda pursuant to Article 1497 of the Civil Code.
Pursuant to the applicable provisions of the Civil Code on the contract of sale and
modes of acquiring ownership, Miranda acquired ownership of the subject property when
he took actual physical, or at least constructive, possession thereof. The non-registration of
the Deed of Absolute Sale with the Registry of Deeds for the Province of Nueva Ecija did not
affect the sale's validity and effectivity. Since ownership of the subject property had been
transferred to Miranda in 1996, it ceased to be owned by Spouses Reyes as early as
then. Not being owned by Spouses Reyes, the subject property could not therefore be
made answerable for any judgment rendered against them.
As held by the Court in Panizales v. Palmares, cited in Balbuena, the purchaser

acquires absolutely nothing if at the execution sale the judgment debtor no longer has any
right to or interest in the property purportedly belonging to him.
Based on the above rulings, a judgment creditor or purchaser at an execution

sale acquires only whatever rights that the judgment obligor may have over the
property at the time of levy. Thus, if the judgment obligor has no right, title or interest
over the levied property — as in this case — there is nothing for him to transfer.
Applied to this, the levy made on the subject property could not have created any lien
in favor of Spouses Mallari because their judgment debtors, Spouses Reyes, had no more
right, title or interest thereto or therein at the time of the levy. To recall, they had sold the
property in question to Miranda a whole seven years earlier. Needless to add, there was
nothing that was sold and transferred to Spouses Mallari at the time of the execution. In
conclusion, the Court holds that Miranda has a better right of possession over the
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subject property having acquired ownership thereof prior to the levy on execution
that Spouses Mallari had caused to be made upon the subject property.
That held, the Court also adopts the Final Note in Supapo that the ruling in this case,
being one of accion publiciana, is limited only to the issue of determining who between the
parties has a better right to possession — and this adjudication is not a final and binding
determination of the issue of ownership. As such, this is not a bar for the parties or even third
persons to file an action for the determination of the issue of ownership.
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VDM TRADING, INC. AND SPOUSES LUIS AND NENA DOMINGO, REPRESENTED BY
THEIR ATTORNEY-IN-FACT, ATTY. F. WILLIAM L. VILLAREAL v. LEONITA
CARUNGCONG AND WACK WACK TWIN TOWERS CONDOMINIUM ASSOCIATION, INC.
G.R. No. 206709, February 06, 2019, Second Division (Caguioa J.)
DOCTRINE
According to Article 2176 of the Civil Code, whoever by act or omission causes damage
to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-
delict. A quasi-delict has the following elements: a) the damage suffered by the plaintiff; b) the
act or omission of the defendant supposedly constituting fault or negligence; and c) the causal
connection between the act and the damage sustained by the plaintiff, or proximate cause.
FACTS
Petitioners VDM Trading and Sps. Domingo filed a complaint before the RTC against
respondents Carungcong, Wack Wack Twin Towers Condominium Association and Hak Yek
Tan for damages. While the petitioners Sps. Domingo were in the United States, petitioner
Nena's sister discovered that soapy water was heavily penetrating through the ceiling of the
Unit. With the leak persisting for several days, she reported the matter with the petitioners
Sps. Domingo's counsel and attorney-in-fact, Atty. William Villareal, as well as respondent
Wack Wack's building administrator. Atty. Villareal allegedly met with respondent Wack
Wack's Acting Property Manager, Arlene Cruz, who supposedly revealed that she previously
conducted an inspection on the Unit and found that the strong leak apparently came from
Unit 2308B-1, which is located directly above the Unit. Unit 2308B-1 is owned by respondent
Carungcong, but was being leased by Tan at that time. Cruz allegedly explained that Unit
2308B-1's balcony, which was being utilized as a laundry area, had unauthorized piping and
plumbing works installed therein, which were in violation of respondent Wack Wack's rules
and regulations, as well as the building's original plans.
Atty. Villareal conducted his own inspection of the Unit in the presence of petitioner
Nena’s sister and Cruz, and noted damages on ceilings and walls, including the wall paper
and panel board; cabinets and other improvements on the wall; narra flooring, which
showed warping and permanent discoloration; bed, mattress, sheets, and covers; curtains,
which showed signs of shrinking and deterioration; personal clothing, articles of personal
use, and important documents inside the cabinet; and miscellaneous damages. For this
reason, on behalf of the petitioners Sps. Domingo, Atty. Villareal sent a letter demanding that
respondents Wack Wack and Carungcong make restoration works and/or pay for the
damages caused upon the Unit. When no action was taken by respondents, Atty. Villareal
allegedly sent another letter to respondents Wack Wack, Carungcong, and Tan, as well as
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Golden Dragon Real Estate Corporation, the developer of the Condominium, demanding that
repairs be made on the Unit.
Subsequently, repair works on the Unit were referred to M. Laher Construction for a
quotation. Luis, M. Laher stated that the estimated cost in repairing the Unit amounted to
P490,635.00. Several demand letters were sent by the counsel of the petitioners Sps.
Domingo to respondents Wack Wack, Carungcong, Tan, and Golden Dragon for the payment
of the amount quoted by M. Laher, but to no avail. Hence, the petitioners Sps. Domingo were
constrained to file their Complaint. As stated in the Complaint, the cause of action against
Tan is based on the supposed "unauthorized installation of plumbing in the balcony of
Unit 2308-B1 and unauthorized conversion of said balcony into a laundry/wash
area" undertaken by Tan.
As regards, respondent Carungcong, she was being held solidarily liable with
respondent Tan as the registered owner of Unit 2308-B1, allegedly failing in her
responsibility of ensuring that Tan is complying with all of the rules and regulations of
respondent Wack Wack. With respect to respondent Wack Wack, the cause of action was
based on the latter's alleged act of being "utterly negligent in failing to enforce and
implement the Association's Rules and Regulations prohibiting illegal or unauthorized
constructions, additions, or alteration by tenants to their units."
It was respondent Wack Wack's contention that the responsibility of enforcing and
monitoring the policies on the use and occupancy of condominium units lied solely with
Golden Dragon, as embodied in the Amended Master Deed with Declaration of Restrictions
of Wack Wack Twin Towers. On the other hand, respondent Wack Wack's obligation was
limited to the implementation of the house rules and regulations affecting only the common
and limited areas of the Condominium. Respondent Wack Wack alleged that if there was
indeed any damage caused on the Unit, it would have been due to Tan's wrongdoing and the
failure of respondent Carungcong to diligently and regularly monitor the former's
activities. respondent Carungcong filed her Answer with Third Party Complaint against
Golden Dragon and its specialty contractor, Stalwart Builders Corporation. Respondent
Carungcong argued that the soapy water which seeped through the ceiling of the Unit did not
come from the balcony of her unit, Unit 2308B-1. Also, the installation of piping and
plumbing works done by Stalwart was done with the permission and approval of Golden
Dragon. She countered that if there was any defect in the plumbing works, the damages on
the Unit should be assessed against Golden Dragon and Stalwart.
The RTC granted the complaint against respondent Carungcong. Upon MR filed by
petitioners, the RTC modified its decision and ehld that Wack Wack is soldiarily liable with
Caruncong for the awadrd of damages to petitioners. The CA reversed the RTC decision.
ISSUE
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Whether the CA erred in reversing the RTC decision and order, thus dismissing the
complaint for damages against Carungcong and Wack Wack.
RULING
NO. Questions of fact cannot be raised in an appeal via certiorari before the Court and
are not proper for its consideration. The SC is not a trier of facts. It is not the Court's function
to examine and weigh all over again the evidence presented in the proceedings below. For
this reason alone, the instant Petition warrants dismissal.
Nonetheless, after a careful review of the records of the instant case, the Court finds
no cogent reason to reverse the CA's holding that the petitioners' Complaint for Damages
against the respondents should be dismissed.
The petitioners’ cause of action is based on quasi-delict for they are alleging the
negligence of respondents causing damage to the condominium unit.
According to Article 2176 of the Civil Code, whoever by act or omission causes
damage to another, there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation between the parties,
is called a quasi-delict. A quasi-delict has the following elements: a) the damage suffered by
the plaintiff; b) the act or omission of the defendant supposedly constituting fault or
negligence; and c) the causal connection between the act and the damage sustained by the
plaintiff, or proximate cause
In this case, none of the elements for quasi-delict are present. Aside from the
purely self-serving testimony of Atty. Villareal, the sole witness of the petitioners who is also
the petitioners' counsel, there was no sufficient evidence presented to show the extent of the
damage caused to the Unit. As correctly found by the CA, the photographs offered into
evidence by the petitioners merely depict a wet bed, wet floor, and wet cabinet apparently
taken from one room only, i.e., the master bedroom. The CA was correct in its assessment
that "no photographs were presented to prove that the other rooms of Unit 2208B-1 were
also damaged by the leak.”
As regards the second element of a quasi-delict, a careful perusal of the evidence on

record shows that the petitioners failed to present even a shred of evidence that there
was fault or negligence on the part of the respondents Carungcong and Wack Wack.
The Court has held that in a cause of action based on quasi-delict, the negligence or fault
should be clearly established as it is the basis of the action. The burden of proof is thus placed
on the plaintiff, as it is the duty of a party to present evidence on the facts in issue necessary
to establish his claim or defense by the amount of evidence required by law. Therefore, if the
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plaintiff alleged in his complaint that he was damaged because of the negligent acts of the
defendant, he has the burden of proving such negligence.
As to the supposed fault or negligence of respondent Carungcong, while it is

undisputed that plumbing works were done on the balcony of the unit owned by respondent
Carungcong, there is no evidence presented that suggests that such plumbing works were
illegally or negligently made. The petitioners could not even point out what specific rule or
regulation was supposedly violated by respondent Carungcong or her lessee, Tan, in
undertaking the plumbing works. The closest piece of evidence presented that remotely
suggests some negligence or wrongdoing on the part of respondent Carungcong or her
lessee, Tan, was the supposed statements made by respondent Wack Wack's Acting Property
Manager, Cruz. However, Atty. Villareal's testimony on Cruz's statements is pure hearsay, the
veracity of Cruz's findings was not sufficiently proven.
With respect to the supposed negligence on the part of respondent Wack Wack,
the petitioners do not even dispute that under the Amended Master Deed, respondent Wack
Wack holds title over and exercises maintenance and supervision only with respect to the
common areas. It is also not disputed that the maintenance and repair of the condominium
units shall be made solely on the account of the unit owners, with each unit owner being
"responsible for all the damages to any other Units and/or to any portion of the Projects
resulting from his failure to effect the required maintenance and repairs of his unit."
To constitute quasi-delict, the alleged fault or negligence committed by the

defendant must be the proximate cause of the damage or injury suffered by the
plaintiff. Proximate cause is that cause which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the injury and without which the
result would not have occurred. Stated in simple terms, it must be proven that the supposed
fault or negligence committed by the respondents, i.e., the undertaking of plumbing works
on Unit 2308B-l, was the cause of the damage to the Unit. Such was not proven by the
petitioners.
If a leakage in the plumbing works on the balcony of Unit 2308B-l indeed occurred, it
is highly improbable that such leak would spread to a wide area of the Unit. Second, aside
from the unsubstantiated self-serving testimony of Atty. Villareal, there was no evidence
presented to show that the supposed widespread leak of soapy water in the various parts of
the Unit was caused by plumbing works on the balcony of Unit 2308B-l. Lastly, the fact that
the plumbing works done in Unit 2308B-l was not the cause of the damage suffered by the
petitioners' Unit is further supported by the factual finding of the CA that a case before the
HLURB was previously filed by the petitioners against Golden Dragon. In this complaint,
which was offered in evidence by the petitioners themselves, the latter alleged that in 1996,
way before the installation of the subject plumbing works in Unit 2308B-l, they had already
discovered water leaks in the Unit which damaged the interiors thereof. It was the
petitioners' allegation that the water leakage in the Unit was made possible due to Golden
Dragon's delivery of a "defective and/or substandard unit."
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All in all, with the petitioners failing to prove the existence of the elements of a
quasi-delict in the instant case, the CA committed no reversible error that warrants
the Court's exercise of its discretionary appellate power.
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D.M. CONSUNJI, INC. v. REPUBLIC OF THE PHILIPPINES AND THE HEIRS OF JULIAN
CRUZ, REPRESENTED BY MACARIA CRUZ ESTACIO
G.R. No. 233339, February 13, 2019, Second Division (Caguioa J.)
DOCTRINE
Mere notations appearing in survey plans are inadequate proof of the covered
properties' alienable and disposable character. The applicant, however, must also
present a copy of the original classification of the land into alienable and disposable
land, as declared by the DENR Secretary or as proclaimed by the President.
FACTS
Petitioner filed an application for registration of title over a parcel of land situated at
Bambang, Taguig, Metro Manila with the METC. Julian Cruz, represented by Macaria C.
Estacio, filed an opposition to the application claiming that he is the owner of the subject
parcel of land; that his predecessors-in-interest have occupied and claimed the subject land
since the 1920s. Cruz claims that San Pedro, who is claimed by DMCI to be the former owner
of the subject land, is one of the children of Dionisio Dionisio who was a previous tenant of
the land; and that the tax declaration in the name of San Pedro, all dated 1995 or 1994,
cannot be considered as evidence of ownership.
The MeTC decided to deny the application on the ground that DMCI failed to prove its
actual possession of the property and the possession of its predecessor-in-interest since June
12, 1945 or earlier. Cruz heirs opposed the motion for reconsideration, claiming that the
testimony of San Pedro is not only inconsistent but also false considering that DMCI failed to
prove open, continuous, and notorious possession over the subject property. The Republic,
through the OSG, also opposed the MR, claiming that there is no showing that the subject
land forms part of the disposable and alienable lands of public domain and the documents
offered in evidence to prove this are not enough based on prevailing jurisprudence; that
neither DMCI nor its predecessors-in-interest have been in open, continuous, exclusive, and
notorious possession and occupation of the subject land in the concept of an owner since
June 12, 1945 or earlier. The MeTC issued the assailed order granting the motion for
reconsideration and confirming the title of DMCI over the subject property.
The CA held that DMCI failed to prove the following requisites under Section 14(1) of
Presidential Decree No. 1529 for land registration or judicial confirmation of incomplete or
imperfect title: (1) the subject land forms part of the disposable and alienable lands of the
public domain, and (2) the applicant has been in open, continuous, exclusive and notorious
possession and occupation of the same under a bona fide claim of ownership since June 12,
1945, or earlier.
ISSUE
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1. Whether the CA erred in ruling that DMCI failed to sufficiently prove that the Subject
Land forms part of the alienable and disposable land of the public domain.
2. Whether the CA erred in ruling that DMCI failed to sufficiently prove that its
predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation of the Subject Land under a bona fide claim of ownership
since June 12, 1945 or earlier.
RULING
1. NO. DMCI insists that the Field Inspection Report conducted by the CENRO and the Survey
Plan of the Subject Land are adequate to prove that the Subject Land is included in the
disposable and alienable lands of the public domain. The Court in Sps. Fortuna ruled: Mere
notations appearing in survey plans are inadequate proof of the covered properties'
alienable and disposable character. The applicant, however, must also present a copy
of the original classification of the land into alienable and disposable land, as declared
by the DENR Secretary or as proclaimed by the President.
In Republic v. Heirs of Juan Fabio, the Court ruled that the applicant for land
registration must prove that the DENR Secretary had approved the land classification and
released the land of the public domain as alienable and disposable, and that the land
subject of the application for registration falls within the approved area per verification
through survey by the PENRO or CENRO. In addition, the applicant must present a copy
of the original classification of the land into alienable and disposable, as declared by
the DENR Secretary, or as proclaimed by the President.
2. NO. While DMCI insists that its evidence is sufficient, DMCI has, however, failed to squarely
address the CA's finding in its Decision that the records do not show proof of how San Pedro's
father came to own the Subject Land and how she inherited the same from her father. These
are crucial facts that DMCI needed to establish to show that its predecessor-in-interest had
prior valid claim of ownership over the Subject Land. Precisely, San Pedro's claim of
ownership rests on these crucial facts, and without them such claim becomes tenuous. With
these facts missing, the Court wholly agrees with the CA that "evidence on record is
insufficient to prove that San Pedro or her father possessed or occupied the subject land in
the concept of an owner since June 12, 1945, or earlier."
Also, the evidence that the Cruz heirs adduced to disprove DMCI's claim of ownership,
including Tax Declaration No. 10845 dated October 26, 1941, cast serious doubt on DMCI's
evidence to show its and its predecessors-in-interest's open, continuous, exclusive and
notorious possession and occupation since June 12, 1945 or earlier.
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ANACLETO ALDEN MENESES v. JUNG SOON LINDA LEE-MENESES

G.R. No. 200182, March 13, 2019, Second Division (Caguioa J.)
DOCTRINE
In a long line of cases, the Court has ruled that psychological incapacity under Article
36 must be characterized by gravity, juridical antecedence, and 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.
FACTS
Anacleto and respondent Jung Soon Linda Lee-Meneses met during their college years
in the USA. They became involved romantically after fifteen (15) months of courtship. A year
after, they decided to get married. During the first few years of married life, they lived with
Anacleto's family in Houston, Texas, USA. Linda would always complain of not having enough
money as she wanted to live on their own, away from her parents-in-law. Linda wanted a
luxurious life and she only appreciated her husband when he bought her expensive gifts and
took her out to fancy expensive restaurants.
After ten (10) years of living in the USA, they decided to relocate their business to
Korea. For a couple of years, they lived with Linda's parents. When their business failed, they
decided to return to the Philippines. During their marriage, they always fought about not
having enough money. The constant fighting and nagging caused Anacleto humiliation; he
lost self-esteem and suffered an erectile disorder. Linda even ridiculed Anacleto's inability
to have an erection. She even accused him of having an extra-marital relationship. In May
2005, after living together for almost 21 years, Linda left Anacleto to live in Korea. Later on,
she lived in the USA with their daughter. Linda informed Anacleto that she would come back
only if he could give her a better life financially.
On September 8, 2006, Anacleto filed a Petition for Declaration of Nullity of Marriage

before the RTC. Linda failed to file her responsive pleading Respite service of summons
through publication. Finding that no such collusion exists, the Assistant City Prosecutor
issued a Report recommending that the case proceed to trial.
Anacleto presented the testimony of Dr. Arnulfo V. Lopez, a clinical psychiatrist. Based
on interviews conducted with Anacleto, his office secretary Marife Davi and the parties'
family driver Ronilo Reol, Dr. Lopez concluded that Linda suffers from narcissistic
personality disorder with borderline personality disorder features that render her incapable
of fulfilling the essential marital obligations.
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Dr. Lopez testified that the root cause of Linda's personality disorder can be
traced back to her dysfunctional familial pattern and psychological development. Dr.
Lopez concluded that Linda's psychological incapacity is an integral part of her
personality, which has its juridical antecedence having existed even prior to the
marriage. It is grave, permanent and incurable and which incapacitated her from
performing her essential marital obligations.
The RTC held that the totality of the evidence presented does not show
psychological incapacity on the part of Linda. The RTC found the evidence on record
insufficient for purposes of establishing the gravity and juridical antecedence of Linda's
personality disorder. The CA denied Anacleto's appeal through the Assailed Decision.
ISSUE
Whether the lower courts erred in dismissing Anacleto's petition for declaration of
nullity on the ground of insufficient evidence.
RULING
NO. Article 36 of the Family Code states: A marriage contracted by any party who, at
the time of the celebration, was psychologically incapacitated to comply with the essential
marital obligations of marriage, shall likewise be void even if such incapacity becomes
manifest only after its solemnization. In a long line of cases, the Court has ruled that
psychological incapacity under Article 36 must be characterized by gravity, juridical
antecedence, and 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.
Anacleto argues that Dr. Lopez's findings sufficiently show that Linda's incapacity is
grave, permanent, incurable and has juridical antecedence.
The SC disagrees. As stated, Anacleto's arguments stem from the findings of Dr. Lopez
which, in turn, are based on interviews he conducted with Anacleto, his secretary Marife and
the parties' family driver, Ronilo. In turn, Dr. Lopez based his findings on the factors which
purportedly confronted Linda during her childhood.
While Dr. Lopez attributes the gravity of Linda's disorder to her alleged unhealthy
childhood, none of the informants whom he interviewed claims to have known Linda since
childhood. Moreover, neither Marife nor Ronilo appear to have known Linda prior to the
marriage in question. This significantly impairs the weight of Dr. Lopez's findings, insofar as
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they are based on the informants' narration of Linda's childhood events and circumstances
which they appear to have no personal knowledge of.
In any case, the Court is not a trier of facts. It is well established that the uniform
findings of the lower courts should be accorded great weight in cases where, as here, they
are supported by the evidence on record.
The Court commiserates with Anacleto's plight. Marriage recognized in this

jurisdiction stands beyond love and personal emotions; it is a matter of law. Thus, in actions
for declaration of nullity of marriage, the Court is bound to dispense justice not on the basis
of its own determination on the existence of love or lack thereof, but on the basis of law and
the evidence on record. While the Court recognizes that there may very well be grounds to
nullify the marriage of Anacleto and Linda, the existence of these grounds has not been
sufficiently shown by the evidence presented in this case.
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HEIR OF PASTORA T. CARDENAS AND EUSTAQUIO CARDENAS, NAMELY REMEDIOS

CARDENAS-TUMLOS, REPRESENTED BY HER ATTORNEY-IN-FACT JANET TUMLOS-
QUIZON v. THE CHRISTIAN AND MISSIONARY ALLIANCE CHURCHES OF THE
PHILIPPINES, INC., REPRESENTED BY REO REPOLLO AND LEOCADIO DUQUE, JR.
DOCTRINE
As a general rule, a certificate of title serves as evidence of an indefeasible and

incontrovertible title to the property in favor of the person whose name appears therein.
According to Section 47 of Presidential Decree No. 1529, "no title to registered land in
derogation of the title of the registered owner shall be acquired by prescription or adverse
possession." There can be no acquisitive prescription with respect to a titled parcel of land. The
Court has explained that, by express provision of Section 47 of P.D. 1529, no title to registered
land in derogation to that of the registered owner shall be acquired by prescription or adverse
possession
FACTS
Remedios, heir of Sps. Cardenas, represented by her attorney-in-fact, Janet, filed a

Complaint for Recovery of Possession and Use of Real Property and Damages against
respondents CAMACOP, Repollo and Duque, Jr. before the RTC of Midsayap, Cotabato, Branch
24.
Janet is the daughter of Remedios, a widow and a resident of 610 Winthrop Avenue,
Glendale Heights, Illinois 601239, USA. CAMACOP is a religious corporation, organized and
existing pursuant to the existing laws of the Republic of the Philippines. It is represented by
Repollo and Duque, Jr. In her Complaint, Janet alleged that her mother Remedios is the heir
of the late Sps. Cardenas, who are the registered owners of Lot 90, Psd-37322, with an area
of 410 square meters, located at Poblacion 6, Midsayap, Cotabato, covered by TCT No. T-6097
and Tax Declaration No. K-019938 with a market value of P550,220.00; and that the subject
property is adjacent to Lot 3924-A, Psd-12-013791 owned by CAMACOP where its church is
located and constructed. Janet further alleged that CAMACOP unlawfully occupied the
subject property for their church activities and functions; that CAMACOP continues to
unlawfully occupy the subject property to the damage and prejudice of Janet; that their
repeated oral and written demands fell on deaf ears; and that CAMACOP failed to accede to
the demands and continues to occupy the subject property. Thus, her mother Remedios,
through her, was constrained to file the case before the court a quo.
CAMACOP averred that their occupation of the subject property is not illegal
since they had lawfully purchased it from its registered owner referring to Pastora,
who surrendered the owner's duplicate copy to the representative of the church.
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The RTC dismissed the complaint and held that CAMACOP was able to provide
sufficient documentary and testimonial evidence that the subject property was indeed sold
to it by Pastora. The CA denied Janet’s appeal and affirmed the RTC decision.
ISSUE
Whether Remedios, as represented by Janet, has better right to possess the subject
property.
RULING
YES. The instant case is one for recovery of possession and use of real property. The
Court has held that an action for the recovery of possession must be founded on positive
rights on the part of the plaintiff and not merely on negative ones, as the lack or
insufficiency of title, on the part of the defendant. It was incumbent upon the Heir of Sps.
Cardenas to establish her positive right of possession over the subject property.
The SC held that such positive right of possession over the subject property was
sufficiently established by the Heir of Sps. Cardenas. It is an admitted fact that "the
property Lot 90, Psd-37322 covered by TCT No. T-6097 is still registered in the names
of Pastora T. Cardenas and Eustaquio Cardenas." It is also not disputed by any party that
Remedios, who is being represented by her daughter Janet, is the only daughter and
compulsory Heir of Sps. Cardenas.
As a general rule, a certificate of title serves as evidence of an indefeasible and

incontrovertible title to the property in favor of the person whose name appears
therein.
It is also an admitted fact that "the same lot is still declared for tax purposes in the
name of the plaintiffs Pastora Cardenas and Eustaquio Cardenas." While Tax Declarations
are not conclusive proof of ownership, at the very least they are proof that the holder has a
claim of title over the property and serve as sufficient basis for inferring possession.
In asserting that the subject property was sold by Pastora to CAMACOP, the latter
relies on the existence of a Deed of Sale purportedly executed in 1962. CAMACOP however
maintains that, since all of the copies of this alleged Deed of Sale had been supposedly lost, it
had to resort to the presentation of secondary evidence to prove the existence of this Deed
of Sale.
The SC held that CAMACOP was not able to provide any sufficient secondary evidence
to establish the existence and contents of the supposed 1962 Deed of Sale covering the
subject property. In other words, CAMACOP failed to present sufficient evidence proving that
a sale indeed occurred between Pastora and CAMACOP over the subject property. CAMACOP
was not able to present even a photocopy or any other copy of the purported Deed of Sale.
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To say the least, it is quite unbelievable and extraordinary that not even a single copy of the
purported Deed of Sale was retained by CAMACOP or its counsel, considering the grave
importance of such a document. Hence, the SC found CAMACOP's explanation as to the
complete absence of any available copy of the purported Deed of Sale farfetched and
implausible. The secondary evidence presented by CAMACOP are all unavailing. None of
these documents contains a recital of the contents of the purported Deed of Sale, as required
under the Revised Rules on Evidence. At most, the documents presented merely mention
that copies of the purported Deed of Sale were supposedly transmitted to the DANR. To make
matters worse, the secondary evidence presented by CAMACOP are all inauthentic and
inadmissible documents.
According to Section 47 of Presidential Decree No. 1529, "no title to registered land
in derogation of the title of the registered owner shall be acquired by prescription or adverse
possession." There can be no acquisitive prescription with respect to a titled parcel of
land. The Court has explained that, by express provision of Section 47 of P.D. 1529, no title
to registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession.
In Umbay v. Alecha, the Court explained that the right to recover possession of
registered land is imprescriptible on the part of the registered owner because possession is
a mere consequence of ownership. Moreover, the Court also explained that prescription is
unavailing, not only against the registered owner, but also against his hereditary successors
because the latter merely step into the shoes of the decedent by operation of law and are
merely the continuation of the personality of their predecessor-in-interest.
With respect to the application of laches, the Court disagrees with the CA in its holding
that the doctrine of laches precludes the Heir of Sps. Cardenas from instituting the instant
action to recover possession over the subject property. While a person may not acquire title
to the registered property through continuous adverse possession, in derogation of the title
of the original registered owner, the heir of the latter, however, may lose his right to recover
back the possession of such property and the title thereto, by reason of laches.
In the instant case, according to the CA, the doctrine of laches finds application
because Janet "did not transfer the title of the subject property in her name despite the
passage of more than forty (40) years since the demise of her late parents and admitted the
fact that CAMACOP has been in possession of the subject property since 1962; but no formal
action was taken by her except in 2009 when she sent demand letters to CAMACOP.
Based on the unrebutted testimony of Janet, the Court is not convinced that
there was considerable delay on her part and that she slept on her rights so as to
successfully invoke the doctrine of laches.
The respondents CAMACOP, Reo Repollo and Leocadio Duque, Jr. are hereby ordered
to TURN OVER POSSESSION of the subject property to the Heir of Pastora T. Cardenas and
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Eustaquio Cardenas, namely petitioner Remedios Cardenas-Tumlos, as represented by

petitioner Janet Tumlos-Quizon.
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ROGELIO LOGROSA v. SPOUSES CLEOFE AND CESAR AZARES, SPOUSES ABUNDIO, JR.
AND ANTONIETA TORRES, SPOUSES NELSON SALA AND ARLENE ANG, AND SPOUSES
BONIFACIO, JR., AND WELHELMINA BARUIZ
DOCTRINE
It is a fundamental principle in land registration that the certificate of title serves as

evidence of an indefeasible and incontrovertible title to the property in favor of the
person whose name appears therein. It becomes the best proof of ownership of a parcel
of land. Such principle of indefeasibility has long been well-settled in this jurisdiction and it is
only when the acquisition of the title is attended with fraud or bad faith that the doctrine finds
no application.
A person may exercise the right to compel the partition of real estate if he/she sets forth
in his/her complaint the nature and extent of his title and subsequently proves the same. The
law does not make a distinction as to how the co-owner derived his/her title, may it be through
gratuity or through onerous consideration. In other words, a person who derived his title and
was granted co-ownership rights through gratuity may compel partition.
FACTS
Petitioner Logrosa alleged that he, together with the respondents are co-owners of
eight (8) parcels of lands all situated in the Municipality of Tagum, Davao del Norte. The
TCTs all indicate that petitioner Logrosa, together with the respondents, are co-owners of
the subject properties. Petitioner Logrosa alleged that in 1987, the original owner of the
subject properties, one Benjamin A. Gonzales, sold the subject properties collectively to
petitioner Logrosa and the other respondents. Petitioner Logrosa likewise claimed that the
titles were issued to the parties herein on May 19, 1987, hence the co-ownership over the
aforementioned properties had already existed for more than ten (10) years, without the
parties having entered into any subsequent agreement to keep the above-said properties
undivided. He anchored his complaint on Article 494 of the New Civil Code of the Philippines.
Summoned to plead, only respondents Sps. Azares filed their Answer to the
complaint, and opposed petitioner Logrosa's prayer for partition. Respondents Sps. Azares
contended that while it may be true that petitioner Logrosa's name appeared in the titles of
the properties aforementioned, however, they belied petitioner Logrosa's claim that he is a
co-owner of the same, as he never contributed as to its acquisition and never contributed for
their maintenance, much less paid the taxes due thereon. They further alleged that sometime
in 1985, petitioner Logrosa, being their cousin, used to work for them as their trusted laborer
at their gold mining tunnel in Mt. Diwata, Diwalwal, Monkayo. Sometime in 1986,
respondents Sps. Azares purchased all the properties subject of this case to provide one place
for all the parties herein to live near each other for easy access and mutual security. As time
went by, petitioner Logrosa and the other respondents turned hostile against the Sps. Azares.
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The RTC dismissed the complaint for lack of merit. The CA denied petitioner Logrosa's
appeal.
ISSUE
Whether the CA was correct in upholding the RTC's Decision 2012, which dismissed
petitioner Logrosa's complaint for partition because of its finding that the latter is not a co-
owner and is a mere trustee of the subject properties.
RULING
NO. The Court finds that the evidence on record sufficiently substantiates petitioner
Logrosa's claim that he is a co-owner of the subject properties. The SC noted that petitioner
Logrosa does not rely merely on his own testimony to prove that he is a co-owner of the
subject properties. No one disputes the fact that there are eight certificates of title all of
which clearly and unequivocally identify petitioner Logrosa as one of the co-owners
of the subject properties.
It is a fundamental principle in land registration that the certificate of title serves

as evidence of an indefeasible and incontrovertible title to the property in favor of the
person whose name appears therein. It becomes the best proof of ownership of a parcel
of land. Such principle of indefeasibility has long been well-settled in this jurisdiction and it
is only when the acquisition of the title is attended with fraud or bad faith that the doctrine
finds no application. In the instant case, there is no accusation whatsoever that petitioner
Logrosa was included as co-owner in the TCTs through means of fraud or bad faith.
It is also not disputed by any party that a duly notarized Deed of Absolute Sale
dated April 14, 1987 was executed by all the parties, wherein it clearly states without
ambiguity that one of the vendees of the subject properties is petitioner Logrosa. In the
instant case, it is not disputed that petitioner Logrosa possesses a portion of the subject
property with no opposition by the other parties, aside from respondents Sps. Azares, who
disclaimed petitioner Logrosa's status as co-owner only after more than two decades
since the execution of the Deed of Absolute Sale, and only as a mere reaction to the
Complaint for Partition filed by petitioner Logrosa.
To controvert the strong legal presumption in favor of petitioner Logrosa's co-

ownership over the subject properties, respondents Sps. Azares can only muster the sole
testimony of respondent Cesar. A solitary, self-serving testimony cannot successfully
overturn petitioner Logrosa's prima facie status as co-owner brought about by the execution
of a notarized Deed of Absolute Sale and the issuance of the certificates of title.
If respondents Sps. Azares' mere motivation was to provide one place for all of the
parties to live near each other, respondents Sps. Azares could have easily achieved such
objective without including the parties in the sale transaction. The inclusion of persons in a
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deed of sale and a certificate of title is by no means a prerequisite to allow such persons to
occupy such property. The Court is convinced that the actuations and demeanor of
respondents Sps. Azares are wholly inconsistent with their contention that they are
the sole owners of the subject properties.
With respect to the tax declarations presented by respondents Sps. Azares,

jurisprudence holds that tax declarations and tax receipts as evidence of ownership
cannot prevail over a certificate of title which, to reiterate, is an incontrovertible proof
of ownership. Hence, in order for respondents Sps. Azares' tax declarations to successfully
overturn the strong presumption of petitioner Logrosa's co-ownership, it was incumbent
upon respondents Sps. Azares to fortify their position with other supporting evidence. As
stated above, respondents Sps. Azares were not able to do so.
Assuming for argument's sake that petitioner Logrosa did not contribute in the
payment of the purchase price of the subject properties, it does not necessarily mean that he
could not become a co-owner of the subject properties who can compel partition.
A person may exercise the right to compel the partition of real estate if he/she sets
forth in his/her complaint the nature and extent of his title and subsequently proves the
same. The law does not make a distinction as to how the co-owner derived his/her title, may
it be through gratuity or through onerous consideration. In other words, a person who
derived his title and was granted co-ownership rights through gratuity may compel
partition.
With this clear admission against interest on the part of respondents Sps. Azares that
there was indeed an intention on their part to make petitioner Logrosa and the other
respondents as co-owners of the subject properties, the Court cannot subscribe to the CA's
view that there is insufficiency of evidence confirming petitioner Logrosa's status as co-
owner of the subject properties.
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HUN HYUNG PARK v. EUNG WON CHOI

DOCTRINE
In accordance with Article 1956 of the Civil Code, no interest shall be due unless it has
been expressly stipulated in writing. Here, without further proof of any express agreement that
P375,000.00 of the P1,875,000.00 pertains to interest, the Court is predisposed, based on the
facts of the case, to rule that the entire principal amount owed by Choi to Park is the face value
of the check, or P1,875,000.00.
FACTS
The present petition arose from a complaint for estafa and violation of Batas
Pambansa Blg. 22 filed by Park against Choi. Park, who was engaged in the business of
lending money, extended a loan to Choi in the amount of P1,875,000.00. As payment for the
loan, Choi issued PNB Check No. 0077133 in the same amount dated August 28, 1999 in favor
of Park. On October 5, 1999, Park attempted to deposit the check to his bank account but the
same was returned to him dishonored for having been drawn against a closed
account. Thereafter, Park, through counsel, sent a letter to Choi on May 11, 2000 informing
the latter of the dishonored check. Based on the registry return receipt attached to
Park's Complaint-Affidavit, and as stipulated by Choi during the pre-trial conference, Choi
received the demand letter on May 19, 2000 through a certain Ina Soliven. Nevertheless, Choi
failed to resolve the dishonored check.
With the loan remaining unpaid, Park instituted a complaint against Choi
for estafa and violation of B.P. 22. The Office of the City Prosecutor of Makatim charged Choi
with one count of violation of B.P. 22. The case was later docketed as Criminal Case No.
294690 before the MeTC. In his Demurrer, Choi asserted that the prosecution failed to prove
that he received the notice of dishonor. Thus, Choi argued that since receipt of the notice of
dishonor was not proven, then the presumption of knowledge of insufficiency of funds — an
element for conviction of violation of B.P. 22 — did not arise.
The MeTC granted Choi's Demurrer in an Order dated February 27,

2003 and dismissed the criminal complaint. The RTC - Branch 60 held that while the
evidence presented was insufficient to prove Choi's criminal liability for B.P. 22, it did not
altogether extinguish his civil liability. Accordingly, the RTC - Branch 60 ordered Choi to pay
Park the face value of the check (P1,875,000.00) with legal interest. Aggrieved by the RTC -
Branch 60's remand of the case to the MeTC, Park elevated the matter to the CA. The CA,
however, dismissed Park's petition on procedural grounds.
The MeTC ordered the presentation of Choi's evidence on the civil aspect of the case.
However, in the course of the proceedings before MeTC, Choi repeatedly moved for several
postponements, which postponements eventually led the MeTC to issue its Order declaring
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that Choi had waived his right to present evidence. The MeTC, rendered a Decision finding
Choi civilly liable to Park. Insofar as Choi's alleged indebtedness was concerned, the MeTC
held that the prosecution had proven that the check subject matter of the case was issued by
Choi to Park in exchange of the cash loaned to him. Choi, on the other hand, did not even
adduce any evidence to controvert Park's claim of indebtedness.
In his petition before the CA, Choi's arguments were two-fold: (i) the RTC violated his
constitutional right to due process in denying his motion for reconsideration even before his
period to file a reply to Park's opposition had expired and (ii) the RTC erred in declaring his
right to present evidence to have been waived for the simple reason that the day of
presentation of evidence was the day of the retirement of his lawyer.
In remanding the case to the MeTC, the CA held that only a full-blown hearing would
guarantee a fair resolution of the case. To the CA, the courts' strict adherence to the rules of
procedure may be relaxed when a strict implementation of the rules would cause substantial
injustice to the parties. In particular, the CA held that several postponements were with
"justifiable reasons," such as, in the instances of the erroneous certification and the
substitution of counsel.
ISSUE
Whether the CA committed any reversible error in the issuance of the

assailed Decision and Resolution.
RULING
YES. Justice dictates that the Court resolve the present petition instead of remanding
the same to the lower court, as the dispute arose almost 18 years ago. In this regard, the SC
found that the CA erred in reversing the RTC - Branch 142 Decision dated December 23,
2011 and Order dated March 28, 2012, for the reasons that follow:
I. Contrary to the CA's ruling, Choi was not deprived of due process.
The MeTC, as affirmed by the RTC - Branch 142, was correct in ruling that Choi had
waived his right to present evidence. It does not escape the Court's attention that from the
time the MeTC gave Choi the opportunity to present his evidence on July 16, 2008 until the
issuance of the MeTC Order dated March 7, 2011 declaring Choi's right to present evidence
to have been waived, Choi had been given several opportunities — spanning almost three
(3) years — to present his evidence. There is no deprivation of due process when a party is
given an opportunity to be heard, not only through hearings, but even through pleadings, so
that one may explain one's side or arguments.
That the RTC - Branch 142 denied Choi's Motion for Reconsideration on March 28,
2012, or two days before the lapse of the ten (10) day period given to Choi by the RTC to file
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his Reply to the Opposition does not, by and of itself, support Choi's claim of a violation of due
process considering that, to begin with, the Reply to Opposition is limited to issues and
arguments raised in Park's Opposition, which in turn, is limited to the issues and arguments
raised in Choi's own Motion for Reconsideration.
II. Choi is liable to pay Park the principal amount of P1,875,000.00 and corresponding
legal interests thereon.
Judicial admissions made by parties in the course of the trial in the same case are
conclusive and do not require further evidence to prove them. They are legally binding on
the party making them except when it is shown that they have been made through palpable
mistake, or that no such admission was made, neither of which was shown to exist in this
case. Thus, Choi himself having admitted liability, the only question that remains for the
Court to resolve is the extent of such liability.
In this regard, the Court finds that Choi is liable to pay Park the face value of the check
in the amount of P1,875,000.00 as principal. The Court notes that the only bases relied upon
by Choi in support of his contention that P1,500,000.00 is the principal and P375,000.00 to
be the interest are his own allegations in his Counter-Affidavit. Without more, Choi's bare
allegations on the terms of the loan fail to persuade. This is so because in accordance with
Article 1956 of the Civil Code, no interest shall be due unless it has been expressly stipulated
in writing. Here, without further proof of any express agreement that P375,000.00 of the
P1,875,000.00 pertains to interest, the Court is predisposed, based on the facts of the case,
to rule that the entire principal amount owed by Choi to Park is the face value of the check,
or P1,875,000.00.
Yet, other than mere allegation of payment of P1,590,000.00, Choi has adduced no
evidence to prove the fact of payment. A party claiming that an obligation has been
discharged by payment has the burden of proving the same. As correctly observed by the
RTC - Branch 142, if Choi really did make a partial payment on the loan, then he would have
taken the check back as debtors would in the ordinary course of business. Quite the contrary,
the check for P1,875,000.00 remained in Park's possession who continued to make demands
on the basis of the check.
Finally, even if the Court were to indulge Choi's claim that he handed Park a check for
P1,590,000.00, it has not been shown, much less proven, to the satisfaction of the Court
whether those payments were made specifically by Choi for the purpose of discharging his
loan obligations to Park.
The Court therefore finds that: first, Choi was not deprived of due process, and was
in fact, given more than ample opportunity to present his case; and second, that, as correctly
observed by the MeTC and subsequently affirmed by the RTC - Branch 142, Choi is liable to
pay Park the amount P1,875,000.00 along with its corresponding legal interest.
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FIL-ESTATE MANAGEMENT, INC., MEGATOP REALTY DEVELOPMENT, INC., PEAKSUN

ENTERPRISES AND EXPORT CORPORATION, ARTURO E. DY AND ELENA DY JAO v.
REPUBLIC OF THE PHILIPPINES AND SPOUSES SANTIAGO T. GO, AND NORMA C. GO,
REPRESENTED BY THEIR SON AND ATTORNEY-IN-FACT KENDRICK C. GO
DOCTRINE
To the mind of the Court, the RTC acted conformably with Section 25 of PD 1529, which
provides that "if the opposition or the adverse claim of any person covers only a portion of the
lot and said portion is not properly delimited on the plan attached to the application, conflicting
claims of ownership or possession, or overlapping of boundaries, the court may require the
parties to submit a subdivision plan duly approved by the Director of Lands."
As worded, it is discretionary on the part of the land registration court to require the
parties to submit a subdivision plan duly approved by the appropriate government agency.
Regardless of how the said court exercises its discretion, the burden remains with the oppositor
or adverse claimant to convince by preponderance of evidence the land registration court that
there is an overlapping of boundaries. In this case, petitioners failed.
FACTS
In the application for registration of title filed by applicants and now appellees,
spouses Santiago and Norma Go or appellees over three (3) parcels of land situated at
Almanza, Las Piñas City, designated as Lots Nos. 7, 8 and 14. Appellants presented a Deed of
Absolute Sale to prove that they are the owners of 7 parcels of land in the same area having
bought the same from Goldenrod, Inc. According to appellants, the portions of the land being
applied for by appellees for registration of title overlap the titled properties in the name of
Fil-Estate Consortium, hence, these could not be subject to land registration.
The Republic of the Philippines, through the Office of the Solicitor General filed a
Notice of Appearance authorizing the City Prosecutor of Las Piñas to appear in its behalf.
Oppositors-appellants Fil-Estate Management, Inc., Peaksun Enterprises and Export
Corporation, Megatop Realty Development, Inc., Arturo Dy and Elena Dy Jao entered their
Opposition.
Despite the opposition, the application for title was granted by the court a quo. The
CA in its Decision granted the appeal. The CA only resolved the issue on whether spouses Go
were able to comply with the requirements imposed by law before the registration of title
could be granted and found it unnecessary to dwell on the assigned errors individually. The
CA held that spouses Go failed to prove (1) that the land applied for is alienable public land;
and (2) they openly, continuously, exclusively and notoriously possessed and occupied the
same since June 12, 1945 or earlier. The CA noted that the tax declarations presented by
them show that the earliest payment was made only in 1991. The CA was not convinced with
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the sufficiency of the evidence adduced by spouses Go as to their possession and occupation,
and ruled that they failed to discharge the burden of proof required from applicants in land
registration cases to show clear, positive and convincing evidence that their alleged
possession and occupation were of the nature and duration required by law. The petitioners
took exception to the CA's finding that there is no evidence on record that the parcels of land
subject of the registration have been classified as alienable or disposable since portions
thereof have been proved during trial that they are private property covered by Torrens
titles in the name of the Fil-Estate Consortium.
Petitioners take the position that the RTC Decision was erroneous insofar as it held
that all the lands applied for by spouses Go, without distinction and which would presumably
encompass the titled lands of petitioners, form part of the public domain and belonged to the
State under the Regalian doctrine. Petitioners claim that the CA ruling effectively took away
portions of the property covered by their titles without due notice and hearing. They further
argue that the CA unwittingly sanctioned a collateral attack on their TCTs when the CA ruled
that all lands applied for by spouses Go belonged to the public domain. Accordingly, to
petitioners, the CA Decision has raised a cloud over their Torrens titles.
The OSG likewise quotes the portion of the RTC Decision which ruled that there is no
overlapping, and invokes the doctrine that findings of fact of the trial court and its
conclusions are to be accorded by the Court with high respect, if not conclusive effect
especially when affirmed by the appellate court. Further, the OSG argues that it was
incumbent upon petitioners to have their lands re-surveyed by the DENR order to finally
settle the issue of overlapping.
ISSUE
Whether the CA erred in not partially reversing its July 14, 2008 Decision insofar as
it found that all lands applied for by spouses Go are lands of the public domain and partially
modifying the same to declare that the lands already titled in the name of the Fil-Estate
Consortium (and which are overlapped by the spouses Go's application for original land
registration) under the Torrens system are private properties and can no longer be subject
of any land registration proceedings.
RULING
NO. According to petitioners, since portions of the parcels of land applied for are
already titled, the RTC Decision is correct in denying the land registration application of
spouses Go. Petitioners take the position that the RTC Decision was erroneous insofar as it
held that all the lands applied for by spouses Go, without distinction and which would
presumably encompass the titled lands of petitioners, form part of the public domain and
belonged to the State under the Regalian doctrine. They cite that the lands under TCTs T-
9180, T-9181 and T-9182 were originally registered under Original Certificate of Title No.
5277 issued on May 26, 1966 pursuant to Decree No. N-108906 and OCT 5442 issued on
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August 17, 1966 pursuant to Decree No. N-110141. As such, they conclude that as early as
1966, these lands have been segregated from the public domain and became private
property.
The OSG argues that it was incumbent upon petitioners to have their lands re-
surveyed by the Department of Environment and Natural Resources in order to finally settle
the issue of overlapping.
Since the RTC found that petitioners' contention of overlapping was "not distinctively
established" by their evidence, which mainly consisted of the testimony of their witness
Engr. Cortez, the parcels of land that spouses Go were applying for land registration "could
not have overlapped" the properties of petitioners. After rejecting petitioners' contention,
the RTC proceeded to evaluate the evidence that spouses Go presented, i.e., Deeds of Sale of
Lots 7, 8 and 14 executed on October 16, 1975, October 6, 1967 and December 29, 1964,
respectively, and tax declarations, and noted that "the Deed of Sale executed by Fil-Estate
and Golden Rod, Inc., covering the subject property, was on April 20, 1987." Given these
observations, the RTC concluded that spouses Go were presumed to have first possessed the
subject properties and their claim of ownership over the same was preponderantly more
tenable than that of petitioners.
To the mind of the Court, the RTC acted conformably with Section 25 of PD 1529,
which provides that "if the opposition or the adverse claim of any person covers only a
portion of the lot and said portion is not properly delimited on the plan attached to the
application, conflicting claims of ownership or possession, or overlapping of boundaries, the
court may require the parties to submit a subdivision plan duly approved by the Director of
Lands." As worded, it is discretionary on the part of the land registration court to
require the parties to submit a subdivision plan duly approved by the appropriate
government agency. Regardless of how the said court exercises its discretion, the
burden remains with the oppositor or adverse claimant to convince by preponderance
of evidence the land registration court that there is an overlapping of boundaries. In
this case, petitioners failed.
Likewise, the RTC acted conformably with Section 29 of PD 1529. Since the RTC
was not persuaded by petitioners' evidence that there is an overlapping of boundaries, then
the conflicting claims of ownership and interest in the parcels of land subject of the
application were resolved in favor of spouses Go and, on this basis, the RTC granted their
application. However, the CA set aside the RTC Decision and dismissed spouses Go's
application for registration of title.
The CA, in turn, also acted correctly based on its findings that spouses Go failed
to prove that the parcels of land applied for are alienable public land, and they openly,
continuously, exclusively and notoriously possessed and occupied the same since June
12, 1945 or earlier. Indeed, the deeds of sale and tax declarations that spouses Go adduced
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are insufficient to prove that the subject parcels of land are alienable and disposable land of
the public domain and their imperfect title thereon.
In light of the foregoing, the arguments of petitioners that the CA allowed a

collateral attack on their Torrens titles, created a cloud thereon, and deprived them
thereof without due process are sheer speculations. The RTC as well as the CA did not
make any categorical ruling on the validity of petitioners' Torrens titles. Nor did they declare
that the areas covered by petitioners' Torrens titles are inalienable lands of the public
domain.
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VIVENCIO DALIT v. SPOUSES ROLANDO E. BALAGTAS, SR. AND CARMELITA G.

BALAGTAS, ROLANDO G. BALAGTAS, JR., CLARINA G. BALAGTAS, CARLOTA G.
BALAGTAS, CARMELA G. BALAGTAS, SOFRONIO SARIENTE AND METROPOLITAN
BANK AND TRUST COMPANY
DOCTRINE
One of the modes by which DAR implements the distribution of agricultural lands under
the CARP is through the issuance of a CLOA. A CLOA is a document evidencing ownership of the
land granted or awarded to the qualified ARB, and contains the restrictions and conditions of
such grant. The issuance of CLOA No. T-2165 in Dalit's favor thus confirms his right to
retain possession over the portion of the Disputed Lot identified thereunder, such
possession being an attribute of ownership granted in his favor. the State recognizes the
indefeasibility of CLOAs issued in accordance with applicable law. Under DAR Administrative
Order No. 07-14, the cancellation of erroneously issued CLOAs may be allowed only in the
manner and under the conditions prescribed thereunder. Until duly cancelled in accordance
with the prescribed procedure, CLOAs issued by the DAR shall remain valid and
subsisting and enjoy the same respect accorded to those issued through other modes of
acquisition of title.
FACT
Dalit filed before the Office of the PARAD a petition for maintenance of possession,
with prayer for issuance of status quo order and/or injunction against the Balagtas
family and respondents Sofronio Sariente and Metropolitan Bank and Trust Company, Inc..
Dalit averred that sometime in 1997, Rolando, Sr., with the consent of the rest of the Balagtas
family, instituted him as tenant farmer of the Disputed Lot, and that he had been tilling it
since then. Dalit further alleged that he had been remitting a portion of the proceeds of the
harvest to Balagtas, Sr. as part of the tenurial arrangement.
Dalit alleged that the Balagtas family later mortgaged the Disputed Lot in favor of
Metrobank without his consent, in order to secure an P8,000,000.00 loan. The Balagtas
family defaulted, leading to the foreclosure of the mortgage constituted over the Disputed
Lot and the consolidation of title in Metrobank's name. Subsequently, the Balagtas family
directed Dalit to vacate the Disputed Lot.
Rolando, Sr. denied that Dalit had been instituted as tenant farmer of the Disputed
Lot, and claimed that he was merely employed as bulldozer and street roller operator during
the construction of a memorial park constituted thereon. Rolando, Sr. assailed the PARAD's
jurisdiction, claiming that the Disputed Lot had already been classified as residential
property, as stated in Tax Declaration No. 02927 issued in favor of the Balagtas family.
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Metrobank insisted on its right to take possession of the Disputed Lot as the new
registered owner, and echoed Rolando, Sr.'s position anent PARAD's lack of jurisdiction.
The PARAD issued a Decision declaring Dalit as lawful tenant of the Disputed
Lot. Only Metrobank filed an appeal with the DARAB Central Office. The CA held that
Dalit failed to adduce substantial evidence to show the establishment of a tenancy
relationship. The CA noted that Dalit worked on the Disputed Lot as a hired laborer of the
Balagtas family, tasked to operate the latter's bulldozer and street roller. In this connection,
the CA held that the Pagpapatunay and Sinumpaang Salaysay presented by Dalit do not
suffice to establish a tenancy relationship, for while these documents confirm that Dalit
worked on the Disputed Lot, they do not prove that such work was in the nature of personal
cultivation, or that the Balagtas family agreed to merely share in the harvest arising
therefrom. On this score, the CA held that working on another's landholding, without more,
"does not raise a presumption of the existence of agricultural tenancy."
ISSUE
Whether the CA erred when it held that Dalit failed to establish his status as a de
jure tenant of the Disputed Lot.
RULING
YES. The Comprehensive Agrarian Reform Law of 1988 (CARL) was enacted to
facilitate "a more equitable distribution and ownership of land, with due regard to the rights
of landowners to just compensation and to the ecological needs of the nation." In essence,
the CARL implements the CARP of the Republic. While the CARL initially set a 10-year
implementation period for the CARP following the statute's effectivity, said period was later
extended through the enactment of Republic Act No. 9700 which granted the DAR an
additional period ending June 30, 2014 to complete the acquisition and distribution of all
agricultural lands under the CARP.
The CARP covers not only alienable and disposable lands of the public domain, but
also those lands owned by the government in its private capacity and lands owned by private
individuals, provided they are devoted to or suitable for agriculture.
The fact that the Disputed Lot is agricultural in nature is clearly established by
the evidence on record. The Tax Declaration No. 02927, presented by the Balagtas family
to show that the Disputed Lot had already been re-classified for residential use, was shown
to have been forged through OCA-Cabanatuan's Certification. Notably, neither the Balagtas
family nor Metrobank presented documentary evidence to refute the veracity of OCA-
Cabanatuan's Certification.
One of the modes by which DAR implements the distribution of agricultural lands
under the CARP is through the issuance of a CLOA. A CLOA is a document evidencing
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ownership of the land granted or awarded to the qualified ARB, and contains the restrictions
and conditions of such grant. The issuance of CLOA No. T-2165 in Dalit's favor thus
confirms his right to retain possession over the portion of the Disputed Lot identified
thereunder, such possession being an attribute of ownership granted in his favor.
However, considering that Dalit is only one of several ARBs of the Disputed Lot, the
Court deems it necessary to clarify that this Decision should not be interpreted to grant Dalit
authority to encroach upon any portion of the Disputed Lot beyond the 30,000-square meter
portion granted in his favor, consistent with the boundaries set forth in CLOA No. T-2165.
A perusal of the records shows that in addition to the present case, the Balagtas family
also filed before the RTC of Cabanatuan City a Complaint for Specific Performance with TRO,
Writ of Preliminary Injunction and/or Damages against Metrobank. As correctly observed
by Justice Perlas-Bernabe, this complaint led to the issuance of a Decision directing the
reinstatement of the Balagtas family's TCT.
In this regard, it cannot be gainsaid that the State recognizes the indefeasibility of
CLOAs issued in accordance with applicable law. Under DAR Administrative Order No. 07-
14, the cancellation of erroneously issued CLOAs may be allowed only in the manner and
under the conditions prescribed thereunder. Until duly cancelled in accordance with the
prescribed procedure, CLOAs issued by the DAR shall remain valid and subsisting and
enjoy the same respect accorded to those issued through other modes of acquisition
of title.
To recall, the Balagtas family's Petition for the Lifting of the Coverage of the Land
Under the Agrarian Reform Program had already been denied with finality, as evidenced by
the Certificate of Finality issued by the DAR Regional Director on December 6, 2012. Hence,
the issuance of the Writ of Execution directing the enforcement of the RTC's
superseded Decision cannot defeat CLOA No. T-2165 which, as explained, is already
valid and subsisting by virtue of the denial with finality of the Balagtas family's
petition.
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Case Digests
KAREN NUÑEZ VITO, LYNETTE NUÑEZ MASINDA, WARREN NUÑEZ, AND

ALDEN NUÑEZ v. NORMA MOISES-PALMA
G.R. No. 224466 (Formerly UDK-15574), March 27, 2019, Second Division (Caguioa J.)
DOCTRINE
Under Article 1245 of the Civil Code, there is dation in payment when property is
alienated to the creditor in satisfaction of a debt in money and is governed by the law of sales.
To summarize, the remedies of the unpaid seller, after ownership of the real property not
covered by Republic Act No. 6552 or the Maceda Law, has been vested to the buyer, are:
1. To compel specific performance by filing an action against the buyer for the agreed
purchase price; or
2. To rescind or resolve the contract of sale either judicially or by a notarial act; and
3. In either (1) or (2), to recover damages for the breach of the contract
FACTS
Petitioners' father, Vicentico Nuñez Vicentico, was the original owner of Lot No. 2159-
A, with an area of 429 square meters, located in Mambusao, Capiz as evidenced by Transfer
Certificate of Title No. T-16612. Sometime in May 1992, Vicentico borrowed P30,000.00
from Rosita Moises and as security, executed a real estate mortgage over his property. Since
Rosita had no money, the funds came from Norma Moises-Palma, Rosita's daughter.
According to petitioners, the P30,000.00 loan of Vicentico was subsequently paid as
evidenced by an Affidavit Authorizing Release of Mortgage.
Upon Vicentico's death, the subject lot was transmitted to his heirs, namely
petitioners. Placida died and her 1/5 share was inherited equally by her heirs. Thus,
petitioners each had a pro indiviso 1/4 share in the subject lot equivalent to 107.25 square
meters.
On June 28, 1995, Norma was able to have all petitioners, except Alden, sign a Deed
of Adjudication and Sale (DAS) wherein petitioners purportedly sold to Norma their
respective pro indiviso shares in the subject lot for P50,000.00, but the DAS reflected
P30,000.00 as the consideration in order to reduce the amount to be paid for capital gains
tax and documentary stamp tax. After the execution of the DAS, Norma immediately took
possession of the subject lot.
Instead of paying cash, Norma executed a Promissory Note in favor of petitioners

whereby she obligated herself to pay P50,000.00, which "amount represents the cost of a
parcel of land Norma bought from them. Despite non-payment of the purchase price and the
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absence of Alden's signature on the DAS, Norma was able to cause the registration of the
document with the Register of Deeds of Capiz and TCT T-35460 was issued to her.
On July 10, 2006, Alden instituted a case against respondent for Annulment of TCT
No. T-35460, Declaring Deed of Adjudication and Sale Null and Void, Partition, Reconveyance
and Recovery of Possession of a Portion of Land with Damages before the MTC. During the
pendency of this case, Alden and Norma entered into a Compromise Agreement whereby
Alden agreed to respect Norma's ownership and possession of 85.8 square meters of the
subject lot, the share being claimed by him.
About a year later petitioners Karen, Warren and Lynette, represented by their
brother and attorney-in-fact Alden, filed against Norma a case for Declaration of Nullity of
Deed of Adjudication and Sale, Cancellation of TCT No. T-35460, Recovery of Ownership and/or
Possession of Lot No. 2159-A and Damages before the MTC. The MTC rendered a Decision in
favor of petitioners. Norma filed a Notice of Appeal which was given due course by the MTC.
The RTC rendered a Decision setting aside the MTC's Decision on the ground that Alden, who
was merely acting as attorney-in-fact of Karen, Warren and Lynette, was not included as
indispensable party. The RTC ordered the MTC to include Alden as an indispensable party
and to conduct further proceedings on the case.
Karen, Warren and Lynette, through Alden, and Alden, in his own capacity, filed an
amended complaint before the MTC for Declaration of Nullity of Deed of Adjudication and
Sale, Cancellation of TCT No. T-35460, Recovery of Ownership and/or Possession of Lot No.
2159-A and Damages. The allegations of the amended complaint are basically the same as
those of the original, except the addition of Alden as an indispensable party.
The RTC granted respondent’s appeal and ordered defendant to pay plaintiffs except
Alden Nuñez the amount of Php 50, 000.00 with legal interest. The RTC also declared the
DAS as valid. The CA affirmed the RTC decision with modification. It deleted the order
requiring respondent to pay petitioners the amount of Php 50, 000 as consideration for the
sale.
ISSUE
Whether the CA, in ruling that the transaction between petitioners and Norma
is dacion en pago, erred in applying Article 1245 of the Civil Code.
RULING
YES. It can be gathered from the last paragraph of the DAS wherein the Real Estate
Mortgage which Vicentico executed was "cancelled and considered null and void and no
effect" that a dation in payment might have been intended by the parties therein. Under
Article 1245 of the Civil Code, there is dation in payment when property is alienated
to the creditor in satisfaction of a debt in money and is governed by the law of sales.
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This scheme was affirmed by Laceriano N. Moises, the brother of Norma, who testified
on direct examination that his uncle Vicentico together with his wife mortgaged Lot 2159-A,
the subject lot, to his mother Rosita for the amount of P30,000.00 and the source of the
amount came from his younger sister Norma, and that since no payment was made regarding
the P30,000.00, Vicentico and Placida offset the subject lot for their indebtedness.
While the DAS seems to suggest a dation in payment, the subsequent actuations
of the parties, especially Norma, negate the same or the contemplated offset. If the
intention by the parties was that the heirs of Vicentico were ceding the subject lot to Norma
as payment of the P30,000.00 loan of their father to Rosita, it would be out of the ordinary
for Norma to execute a PN two days after the DAS, acknowledging her indebtedness of the
P50,000.00 to them, promising to pay the same within a specified period, and declaring
against her interest that the said amount represented the "cost" of the land that she bought
from them. In 2007, it would be unlikely for her to execute the AOD wherein she
acknowledged that she owed Karen, Warren and Lynette P50,000.00 if the consideration of
the DAS was Vicentico's indebtedness of P30,000.00. Alden was no longer included because
by then Norma had already paid the P88,000.00 which she agreed to pay him pursuant to
their Compromise Agreement. And, Norma should have insisted in the case filed by Alden
against her that there was an offset of his father's loan to her, through Rosita, her mother.
Thus, there is preponderant evidence that supports the finding that the DAS
was not intended by the parties to be a dation in payment. And, even assuming that the
DAS was a dation in payment, the documents that were subsequently executed had the effect
of novating the same.
Under Article 1291 of the Civil Code, obligations may be modified by: (1)
changing their object or principal conditions; (2) substituting the person of the
debtor; and (3) subrogating a third person in the rights of the creditor.
When Norma executed the PN, AOD and Compromise Agreement, she was
acknowledging that the principal condition or stipulation on the payment of the purchase
price in the DAS had been modified from the offset or cancellation of Vicentico's
indebtedness secured by the REM, without which would have amounted to a dation in
payment, to a loan payable within a certain period, which converted the transaction to a sale
on credit.
Given the foregoing, the CA erred in its finding that the transaction between the
parties is a dation in payment or dacion en pago. The MTC and RTC were, therefore,
correct in considering the transaction as a contract of sale.
In a contract of sale, as in the DAS in this case, the obligation of the vendee to pay the
price is a correlative of the obligation of the vendor to deliver the thing sold. The Civil Code
in the first paragraph of Article 1191 has established the principle that if one of the parties
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fails to comply with what is incumbent upon him, there is a right on the part of the other to
rescind obligation. Since this condition, which is implied as a general rule in all reciprocal
obligations, has the effect of extinguishing rights which are already acquired or vested, it is
resolutory in character, thus a tacit resolutory condition.
To summarize, the remedies of the unpaid seller, after ownership of the real property
not covered by Republic Act No. 6552 or the Maceda Law, has been vested to the buyer, are:
1. To compel specific performance by filing an action against the buyer for the agreed
purchase price;
or
2. To rescind or resolve the contract of sale either judicially or by a notarial act; and
3. In either (1) or (2), to recover damages for the breach of the contract.
Based on Justice J.B.L. Reyes' opinion in Sing, Yee & Cuan, Inc. that the non-payment
of the purchase price in a contract of sale is a negative resolutory condition, the happening
or fulfillment thereof will extinguish the obligation or the sale pursuant to Article 1231 of
the Civil Code, which provides that fulfillment of a resolutory condition is another cause of
extinguishment of obligations. Despite its extinguishment, since the vendor has lost
ownership of the land, the contract must itself be resolved and set aside. It is noted, however,
that the resolution of the sale is the tacit resolutory condition under Article 1191, as
discussed above, which is implied in reciprocal obligations.
The Court is aware that while petitioners alleged the amount of at least P10,000.00 a
year as reasonable value of the use of the premises in the amended complaint, no evidence
was adduced by them to support such claim. Nonetheless, the Court deems it just and
equitable to award reasonable compensation in the amount as alleged by petitioners for the
use and occupation of the premises by Norma because petitioners have been unjustly
deprived of the use of the subject lot. They are entitled to recover possession of the subject
lot because of the failure of Norma to pay the agreed purchase price and she has not been
paying any rental for her use and occupancy of the premises. Under Article 1596, the
measure of damages is the estimated loss directly and naturally resulting in the ordinary
course of events from the buyer's breach of contract for refusing to pay the purchase price.
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Case Digests
DOMESTIC PETROLEUM RETAILER CORP. v. MANILA INTERNATIONAL AIRPORT

AUTHORITY
G.R. No. 210641, March 27, 2019, En Banc (Caguioa, J.)
DOCTRINE
In order to establish the application of solutio indebiti in a given situation, two conditions must
concur: (1) a payment is made when there exists no binding relation between the payor who
has no duty to pay, and the person who received the payment, and (2) the payment is made
through mistake, and not through liberality or some other cause.18 In the instant case, the
Court finds that the essential requisites of solutio indebiti are not present.
FACTS
Petitioner DPRC filed a Complaint for "Collection of Sums of Money" against respondent
MIAA before the RTC, averring that: 1) Petitioner DPRC and respondent MIAA entered into
a Contract of Lease whereby the petitioner leased from the respondent a parcel of land and
the building thereon located at Domestic Road, Pasay City; 2) DPRC was obliged to pay
monthly rentals of P75,357.74 for the land and P33,310.46 for the building; 3) DPRC
faithfully complied with its obligation to pay the monthly rentals since the start of the lease
contract.
Respondent MIAA passed Resolution No. 98-30 which took effect on June 1, 1998 increasing
the rentals paid by its concessionaires and lessees. Respondent MIAA issued Administrative
Order No. 1, Series of 1998 reflecting the new schedule of fees, charges, and rates. DPRC
initially refused to pay the increased rentals which was decreed without prior notice and
hearing. MIAA demanded its payment of P628,895.43 as rental in arrears which was based
on the increase prescribed in Resolution No. 98-30 with 2% interest compounded monthly.
DPRC protested in writing to respondent MIAA the increased rentals and the computation.
However, it also signified its intention to comply in good faith with the terms and conditions
of the lease contract by paying the amount charged. On December 11, 1998, DPRC paid MIAA
P628,895.43 which was based on the new rates.
On December 1, 2004, the First (1st ) Division of the Court promulgated its Decision in the
case of Manila International Airport Authority v. Airspan Corporation, et al, where it nullified
Resolution Nos. 98-30 and 99-11 issued by respondent MIAA for non-observance of the
notice and hearing requirements for the fixing rates required by the Administrative Code.
On December 21, 2005, pursuant to the said decision DPRC advised MIAA of its intention to
stop paying the increased rental rate, and on January 1, 2006, it stopped paying the increased
rental rate, but continued paying the original rental rate prescribed in the lease contract.
MIAA required the payment of P645,216.21 allegedly representing the balance of the rentals
from January up to June 2006. DPRC sent its reply to [respondent] MIAA denying the unpaid
obligation, reiterating that the rental could no longer be computed based on the nullified
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Resolution No. 98-30, and demanding for the refund of its overpayment in the amount of
P9,593,179.87.
The RTC in favor of petitioner DPRC. Respondent MIAA filed an appeal before the CA arguing
that prescription or laches has set in to bar petitioner DPRC from asserting its claim against
respondent MIAA.
The CA decreased MIAA's liability to P3,839,643.05 plus legal interest at 12% per annum
computed from the time of'extrajudicial demand on July 27, 2006. The CA found that the
liability of respondent MIAA to petitioner DPRC for overpaid monthly rentals was in the
nature of a quasi-contract of solutio indebiti because petitioner DPRC's claim against
respondent MIAA is purportedly in the nature of solutio indebiti, the CA held that "the claim
of refund must be commenced within six (6) years from date of payment pursuant to Article
1145(2) of the Civil Code.”
Since DPRC demanded the refund of the increase in monthly rentals mistakenly paid only
on July 27, 2006 and filed this case before the RTC only on December 23, 2008, it can recover
only those paid during the period from January 9,2003 to December 5, 2005[,] or a total
amount of P3,839,643.05, DPRC has, by reason of the six (6) years prescriptive period, lost
its right to recover the amount of P5,753,536.82 paid during the period from December 11,
1998 to December 5, 2002. Unsatisfied, petitioner DPRC filed a MR, which was denied by the
CA. Hence, the instant Petition.
ISSUES
1. Whether the refund of the increased rentals is based on solution indebiti?
2. Whether DPRC's claim against MIAA for full refund of the overpayment of rentals has
prescribed?
RULING:
1. NO. Article 2154 of the Civil Code explains the concept of the quasi-contract of solutio
indebiti:
Art. 2154. If something is received when there is no right to demand it, and it was
unduly delivered through mistake, the obligation to return it arises.
In order to establish the application of solutio indebiti in a given situation, two conditions
must concur: (1) a payment is made when there exists no binding relation between the payor
who has no duty to pay, and the person who received the payment, and (2) the payment is
made through mistake, and not through liberality or some other cause. In the instant case,
the Court finds that the essential requisites of solutio indebiti are not present.
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a. There exists a binding relation between petitioner DPRC and respondent MIAA.
It is undisputed by all parties that respondent MIAA and petitioner DPRC are mutually bound
to each other under a Contract of Lease, which both parties entered on June 4, 1998, covering
the 1,631.12-square-meter parcel of land and a 630.88-square-meter building both located
at Domestic Road, Pasay City.
Hence, with respondent MIAA and petitioner DPRC having the juridical relationship of a
lessor-lessee, it cannot be said that in the instant case, the overpayment of monthly rentals
was made when there existed no binding juridical tie or relation between the pay
or, i.e., petitioner DPRC, and the person who received the payment, i.e., respondent MIAA. In
fact, respondent MIAA itself acknowledged in its Comment that there was.
Applying the foregoing to the instant case, akin to National Commercial Bank of Saudi Arabia
v. Court of Appeals, the Court finds that the cause of action of petitioner DPRC is based on
the violation of a contractual stipulation in the parties' Contract of Lease, and not due to the
existence of a quasi-contract.
The overpayment made by petitioner DPRC is rooted in Section 2.06 of the Contract of Lease,
which provided that petitioner DPRC's monthly rentals shall be subject to price escalation
on the condition that respondent MIAA will issue a valid Administrative Order calling for the
price escalation and that petitioner DPRC will be given prior notice of such price escalation.
Just because the Contract of Lease in itself may be silent as to petitioner DPRC's entitlement
to a refund does not mean that such claim for refund is not provided for in the contract and
cannot be asserted by petitioner DPRC.
Applicable laws form part of, and are read into, contracts without need for any express
reference thereto. Specifically on lease contracts, Article 165929 of the Civil Code, in relation
to Article 1657, states that the aggrieved party in a contract of lease may ask for
indemnification when the other party fails to comply with his/her obligations, one of which
is to ask from the lessee the price of the lease only according to the terms stipulated.
Hence, with these provisions of law read into the parties' Contract of Lease, respondent
MIAA's argument that there is no provision in the Contract of Lease that petitioner DPRC can
rely on to claim for refund of overpayment of monthly rentals is erroneous.
b. For the concept of solutio indebiti to apply, the undue payment must have been made by
reason of either an essential mistake of fact or a mistake in the construction or application of a
doubtful or difficult question of law. Mistake entails an error, misconception, or
misunderstanding.
In the instant case, petitioner DPRC made the overpayments in monthly rentals from
December 11, 1998 to December 5, 2005 not due to any mistake, error, or omission as to any
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factual matter surrounding the payment of rentals. Nor did petitioner DPRC make the
overpayments due to any mistaken construction or application of a doubtful question of law.
Instead, petitioner DPRC deliberately made the payments in accordance with respondent
MIAA's Resolution No. 98-30, albeit under protest. It must be recalled that after the issuance
of Resolution No. 98-30, on December 8, 1998, petitioner DPRC protested in writing to
respondent MIAA, alleging that Resolution No. 98-30 was invalidly issued. However,
petitioner DPRC also signified its intention to comply in good faith with the terms and
conditions of the lease contract by paying the amount charged in accordance with Resolution
No. 98-30 despite registering its objection to its validity. From the very beginning, petitioner
DPRC was consistent in its belief that the increased rentals were not due as Resolution No.
98-30 was, in its view, void.
However, petitioner DPRC still made payment prior to the Court's Decision in Manila
International Airport Authority v. Airspan Corporation, et al., Resolution No. 98-30 was still
presumed to be legal, having the force of law in the absence of any judicial declaration to the
contrary. Hence, petitioner DPRC had no alternative but to make the subject payments,
though under protest
2. NO. Petitioner DPRC's claim against respondent MIAA for full refund of the overpayment
of rentals has not prescribed.
Instead of the prescriptive period of six years for quasi-contracts, it is Article 1144 of the
Civil Code that finds application in the instant case. This Article provides that an action based
on a written contract must be brought within 10 years from the time the right of action
accrues.
Aside from erroneously applying the six-year prescriptive period governing quasi-contracts,
the CA likewise erred in stating that the applicable prescriptive period is reckoned from the
date of petitioner DPRC's first overpayment on December 11, 1998.
In Español v. Board of Administrators, Philippine Veterans Administration, as to when the

right of action of a party who claims payment from the government due to the nullification
of an administrative policy or issuance accrues, the Court held that the claimant has a cause
of action for payment against the government only from the time that the Court declared
invalid the questioned administrative policy.
Hence, the filing of petitioner DPRC's Complaint for sum of money on December 23, 2008
was well within the prescriptive period. Therefore, regardless of whether the prescriptive
period to be applied in the instant case is the one pertaining to actions arising from quasi-
contracts, i.e., six years, or from contracts, i.e., 10 years, considering that the prescriptive
period started to run only on December 1, 2004, petitioner DPRC's claim for a complete
refund of all the overpaid rentals has not prescribed.
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On July 27, 2006, petitioner DPRC sent respondent MIAA a written demand for the refund of
P9,593,179.87, which covers the overpayment of monthly rentals made by petitioner DPRC
since December 11, 1998. According to Article 1155 of the Civil Code, the prescription of
actions is interrupted when a written extrajudicial demand is made. And so, when written
extrajudicial demand for refund of overpayments was made by petitioner DPRC on July 27,
2006, not only was the prescriptive period to file an action suspended. Hence, after petitioner
DPRC made its written extrajudicial demand on July 27, 2006, it actually had until July 27,
2016 to file an action for the full recovery of the overpayment of monthly rentals.
Page 117 of 342

Case Digests
VICTORIA T. FAJARDO v. BELEN CUA-MALATE

DOCTRINE
Independent and in spite of the statute of frauds, courts of equity have enforced oral partition
when it has been completely or partly performed. In the instant case, there is no refutation on
the part of petitioner Victoria as to respondent Belen's assertion that the terms of the
Compromise Agreement have already been partially performed by the parties.
FACTS
Respondent Belen filed an Amended Complaint for Partition and Accounting with
Damages against her siblings, namely petitioner Victoria, Ramon, Adelaida, Emelita, and
Elena (collectively referred to as the defendants siblings). In the Amended Complaint
respondent Belen alleged that she and the defendants siblings are compulsory heirs of their
late mother, Ceferina Toregosa Cua.
Ceferina died intestate on June 10, 1998 and had left certain real and personal properties, as
well as interest in real properties. Respondent Belen further alleged that she did not receive
her lawful share from Ceferina's estate. She prayed that judgment be issued: 1) ordering the
partition and distribution of Ceferina's entire estate; 2) ordering that she (respondent Belen)
be awarded her lawful share; 3) and ordering the defendants siblings to pay respondent
Belen moral damages, exemplary damages, contingency fee, and litigation expenses.
Defendants Ramon, Adelaida, Emelita, and Elena filed their Answer, alleging that they were
willing to settle the partition case amicably; that respondent Belen was receiving her share
from the income of the properties left by their late mother, Ceferina; that it was respondent
Belen who intentionally refused to show documents pertaining to the supposed properties
left by Ceferina; and that respondent Belen is not entitled to the reliefs she prayed for.
Petitioner Victoria filed an Answer alleging that she is in favor of the partition and accounting
of the properties of Ceferina.
The RTC referred the case to mediation through the Philippine Mediation Center (PMC).
During the mediation conferences, all the parties attended and successfully arrived at an
agreement on the manner of partition of Ceferina's estate. A meeting was then scheduled on
April 8, 2010 for the signing of the document entitled Compromise Agreement, which
reduced into writing the prior agreement reached by the parties during the mediation
conferences. On said date, petitioner Victoria did not appear, while all her other siblings
appeared, because she did not have enough money to travel from Manila to Calabanga,
Camarines Sur. Respondent Belen and the other siblings proceeded to sign the Compromise
Agreement and submitted the same before the RTC for approval.
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The RTC rendered a Decision issuing a judgment approving the compromise agreement.
Alleged that the Compromise Agreement cannot be binding as to her, petitioner Victoria filed
an appeal. The CA denied petitioner Victoria's appeal, holding that "[t]he RTC did not err
when it approved the Compromise Agreement." Petitioner Victoria filed a MR, which was
denied by the CA in the assailed Resolution. Hence, the instant Petition for Review
on Certiorari.
ISSUE
Whether the RTC erred in rendering its Decision dated July 1, 2010 based on the compromise
agreement entered into by the parties during the mediation conferences before the PMC?
RULING
YES. Aside from the self-serving assertion of Victoria that she did not sign the compromise,
there is absolutely no evidence substantiating her claim that petitioner Victoria did not come
to an agreement with her siblings as to the partition of the estate of their late mother,
Ceferina. All lower courts found that the parties most definitely came to terms as to the
partition of Ceferina's estate even prior to the translation of the agreement into written form
on April 8, 2010. There was already a valid and binding oral partition that was agreed upon
by the parties.
As factually established by the RTC: during the several settings of conferences between the
parties, all the parties from respondent Belen down to all the defendants siblings were all
present and they have agreed the partition of the properties located in Metro Manila as well
as in the Bicol Region. The parties have already agreed what is supposed to be the properties
allotted to each one of them. However, during the last conference between the parties,
[petitioner Victoria] was present and she agreed first on the partition made between them
of the properties located in the Bicol Region and also agreed of their respective shares of the
properties located in the National Capital Region particularly in Quezon City and Manila.
The RTC likewise noted the fact that the counsel of petitioner Victoria explained that "the
sole reason why petitioner Victoria was not able to sign the document was because she has
no money for transportation" and not because petitioner Victoria disagreed with the terms
of the Compromise Agreement.
The fact that petitioner Victoria failed to sign the written document bearing the terms of the
parties' agreement is of no moment. As explicitly held in Vda. de Reyes v. Court of Appeals,
an oral partition may be valid and binding upon the heirs; there is no law that requires
partition among heirs to be in writing to be valid.
Therefore, even if the document titled Compromise Agreement was not signed by petitioner
Victoria, there was already an oral partition entered into by the parties that bound all of the
siblings. The written agreement only served to reduce into writing for the convenience of the
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parties the terms of the agreement already entered into during the mediation conferences.
In fact, the Court has likewise previously held that, "independent and in spite of the statute
of frauds, courts of equity have enforced oral partition when it has been completely or partly
performed." In the instant case, there is no refutation on the part of petitioner Victoria as to
respondent Belen's assertion that the terms of the Compromise Agreement have already
been partially performed by the parties.
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FILIPINAS ESLON MANUFACTURING CORP. v. HEIRS OF BASILIO LLANES, NAMELY:

CASIANO LLANES, DOMINGO LLANES, FABIAN LLANES, VICTORINA L. TAGALIMOT,
PACENCIA L. MANALES, NORMA L. BACALARES, LOURDES L. PAJARDO, JOSEPHINE
LLANES, JOSEFA LLANES AND JOVENCITA LLANES; ROLYNWIN Q. LAMSON;
PHILIPPINE AMANAH BANK, ALSO KNOWN AS AL-AMANAH ISLAMIC INVESTMENT
BANK OF THE PHILIPPINES; SPOUSES MEDEL AND CARMEN JUSTINIANO A.K.A.
CARMEN & MEDEL JUSTINIANO; RUFINO V. GENILO; MARIA SOL A. SEVESES; SPOUSES
SALVADOR AND CHEQUETHELMA GERONA; CRESOGONO R. SEVESES, MONERA M.
LALANTO; CLAUDIO M. CLOSAS; SPOUSES SERAFIN AND ELSA FERRAREN; EDILBERTO
V. PAZA* AND GENEROSO EMPUESTO
DOCTRINE
Raising the invalidity of a certificate of title in an action for quieting of title is NOT a collateral
attack because it is central, imperative, and essential in such an action that the complainant
shows the invalidity of the deed which casts cloud on his title. In other words, at the heart of the
Complaint for Quieting of Title instituted by petitioner FEMCO is the nullification of OCT No. 0-
1040 in order to remove the cloud besetting its own title. This is manifestly a direct attack.
FACTS
Petitioner FEMCO filed a complaint against the respondents before the RTC of Lanao del
Norte for quieting of title and damages. In its Complaint, FEMCO asserted that it is the
registered owner of a parcel of land situated in Sta. Felomina, Iligan City, its title thereto
being evidenced by TCT No. 17460, that it has constructed thereon its manufacturing plant
for eslon pipes and accessories. It alleged that OCT No. 0-1040 and all the transfer certificate
of titles emanating thereunder, including but not limited to those referred to in the next
preceding paragraph, are apparently valid or effective but are in truth and in fact invalid,
ineffective, voidable, or unenforceable and are prejudicial to FEMCO’s title, and that despite
the knowledge that their titles are fake and fraudulent, respondents Heirs of Llanes and
Rolynwin continue to hold on to their title and in fact has been selling and/or disposing of
the same to the prejudice of Petitioner and the Torrens system. Also, Heirs of Basilio Llanes
continue to pester and annoy FEMCO by claiming that a portion of FEMCO land has
encroached on their titled land, which they know is false.
The Heirs of Basilio Llanes denied the material allegation of the Complaint, alleging that OCT
No. 0-1040 is valid and effective by virtue of a decision of the CFI of Lanao del Norte dated
April 17, 1968; that Lot 1911 has been in actual physical possession by Basilio Llanes; that
petitioner FEMCO is illegally occupying a portion of Lot 1911 consisting of 16,629 sq. meters;
and that TCT No. T-17480 is the one which is invalid, void, and ineffective because it is based
on a non-existing homestead application.
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The RTC issued the assailed Decision in favor of FEMCO. The Heirs of Basilio Llanes, filed
their respective Notices of Appeal. Thus, as to them, the decision rendered by the court a quo
has become final and executory. The CA granted the appeal of respondents PAB, Monera and
Edilberto. The CA posits that in petitioner FEMCO's Complaint for Quieting of Title, the relief
actually sought for was the nullification of OCT No. 0-1040 and all other titles emanating
therefrom. In essence, the CA believes that an action for quieting of title which involves a
challenge to the validity of a certificate of title is a collateral attack which is prohibited by
law.
ISSUE
Whether petitioner FEMCO's Complaint for Quieting of Title is a prohibited collateral attack
on a certificate of title?
RULING
YES. An action or proceeding is deemed an attack on a title when its objective is to nullify
the title, thereby challenging the judgment pursuant to which the title was decreed. The
attack is direct when the objective is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is indirect or collateral when, in an action to
obtain a different relief, an attack on the judgment is nevertheless made as an incident
thereof.
An action to quiet title or to remove the clouds over a title is a special civil action governed
by the second paragraph of Section 1, Rule 63 of the Rules of Court. Specifically, an action for
quieting of title is essentially a common law remedy grounded on equity. The competent
court is tasked to determine the respective rights of the complainant and other claimants,
not only to put things in their proper place, to make the one who has no rights to said
immovable respect and not disturb the other, but also for the benefit of both, so that he who
has the right would see every cloud of doubt over the property dissipated, and he could
afterwards without fear introduce: the improvements he may desire, to use, and even to
abuse the property as he deems best. For an action to quiet title to prosper, two
indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or
an equitable title to or interest in the real property subject of the action; and (2) the deed,
claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to
be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.
In the instant case, the Complaint filed by petitioner FEMCO alleged and, as found by the RTC,
sufficiently proved these two requisites for quieting of title: that petitioner FEMCO has a legal
right in the subject property by virtue of TCT No. T-17460 (a.f.); and that the deed claimed
to be casting a cloud on the title of petitioner FEMCO, i.e., OCT No. 0-1040 (a.f.) based on
Decree No. N-182390 dated April 17, 1968, is invalid, null, and void.
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Hence, raising the invalidity of a certificate of title in an action for quieting of title is NOT a
collateral attack because it is central, imperative, and essential in such an action that the
complainant shows the invalidity of the deed which casts cloud on his title. In other words,
at the heart of the Complaint for Quieting of Title instituted by petitioner FEMCO is the
nullification of OCT No. 0-1040 in order to remove the cloud besetting its own title. This is
manifestly a direct attack.
An action or proceeding is deemed an attack on a title when its objective is to nullify the title,
thereby challenging the judgment pursuant to which the title was decreed. The attack is
direct when the objective is to annul or set aside such judgment, or enjoin its enforcement.
On the other hand, the attack is indirect or collateral when, in an action to obtain a different
relief, an attack on the judgment is nevertheless made as an incident thereof.
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HIPOLITO AGUSTIN AND IMELDA AGUSTIN v. ROMANA DE VERA

G.R. No. 233455, April 03, 2019, En Banc (Caguioa, J.)
DOCTRINE
While a stipulation or promise to the effect that a seller shall execute a deed of sale upon the
completion of payment of the purchase price by the buyer may be considered a factor or a sign
that a contract might possibly be a contract to sell, such stipulation in itself, taken in isolation,
is by no means determinative and conclusive as to the contract being a contract to sell. Still
controlling are (1) the lack of any stipulation in the sale contract reserving the title of the
property on the vendors and (2) the lack of any stipulation giving the sellers the right to
unilaterally rescind the contract upon non-payment of the balance thereof within a fixed
period. The absence of such stipulations in a sale contract makes the said contract a contract
of sale. Hence, the Contract to Purchase and Sale entered into by Gregorio and Hipolito is
a contract of sale.
FACTS
Gregorio and spouses Hipolito and Lolita Agustin executed a document entitled "Contract to
Purchase and Sale" whereby the former agreed to sell to the latter a residential land located
at Tondaligan, Bonuan Gueset, Dagupan City covered by TC No. 36897, under the following
terms and conditions:
d. That immediately upon the payment of PI5,000.00 and after the execution of this
contract[,] the Vendee can take possession of the land and may introduce
improvements and [sic] they may desire;
xxxx
e. That upon release of the title from the bank and upon payments of the balance of
P15,000.00 by the Vendee to the Vendor, the corresponding Deed of Sale will be
executed;
As agreed, the Agustin spouses paid the partial payment of P15,000.00 and immediately took
possession of the land. They had since constructed thereon their residential house and paid
the real estate taxes. On May 17, 2001, Hipolito Agustin sold one-half portion of the land to
his sister, Imelda Agustin, who also introduced improvements on the property and
constructed a sari-sari store.
Considering that Gregorio had not yet delivered the title despite the contract, Hipolito and
Imelda caused the annotation of an adverse claim on TCT No. 36897 on August 22, 2007.
Under a Deed of Absolute Sale dated September 3, 2007, Gregorio sold the property to
Romana M. de Vera for the price of Php500,000.00. Said document was registered on
September 6, 2010.
Gregorio died on September 17, 2007. Petitioners Hipolito and Imelda filed the present case
before the RTC. Hipolito and Imelda alleged that they were surprised to discover a deed of
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absolute sale over the same property purportedly executed by Gregorio, then already 80
years old, 14 days prior to his death, in favor of respondent Romana. Petitioners Hipolito and
Imelda argued that Romana is a buyer in bad faith who had knowledge of Hipolito's
ownership of the subject land by virtue of sale which was annotated on the title, and of
petitioners Hipolito and Imelda's actual possession for more than 20 years already.
The RTC annulled the sale in favor of Romana. The CA reversed it and held that "since the
Contract to Purchase and Sale is not a contract of sale but a mere contract to sell, there was
no automatic transfer of ownership even if Gregorio failed to deliver the title to Hipolito after
securing the release of the [subject] property from bank mortgage. Consequently, the RTC
erred in applying Article 1544 of the Civil Code, which contemplates a double sale of the same
real property." Hipolito and Imelda filed their Motion for Reconsideration on April 18, 2017,
which was subsequently denied by the CA in its assailed Resolution.
ISSUE
Whether the Contract to Purchase and Sale is a contract to sell or a contract of sale?
RULING
YES. The Contract to Purchase and Sale is a mere contract to sell; it is a contract of sale.
According to Article 1458 of the Civil Code, by a contract of sale, one of the contracting parties
obligates himself to transfer the ownership and to deliver a determinate thing, and the other
to pay therefor a price certain in money or its equivalent. Accordingly, the elements of a valid
contract of sale under Article 1458 of the Civil Code are: (1) consent or meeting of the minds;
(2) determinate subject matter; and (3) price certain in money or its equivalent.
In the instant case, the Court finds that all the aforesaid elements are present in the instant
case. By entering into the agreement entitled "Contract to Purchase and Sale," both parties
had arrived at a meeting of the minds that the seller, i.e., Gregorio, transferred the ownership
and possession of the subject property to the buyer, i.e., Hipolito, with the latter obliged to
pay a price certain in money, i.e., P30,000.00. The parties had a clear meeting of the mind
that the ownership and possession over the subject property should be transferred to
Hipolito upon the execution of the Contract to Purchase and Sale:
Upon the execution of the Contract to Purchase and Sale, Gregorio ceded the possession of
the subject property to petitioner Hipolito. It is not disputed that petitioner Hipolito
immediately took possession of the subject property, had constructed thereon their
residential house, and paid the real estate taxes upon the subject property.
In accordance with Articles 1477 and 1478 of the Civil Code, the general rule states that
ownership of property passes on to the buyer ipso jure when its possession is transferred in
the latter's favor if no reservation to the contrary has been made.17In the absence of
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stipulation to the contrary, the ownership of the thing sold passes to the vendee upon actual
or constructive delivery thereof.
Applying the foregoing to the instant case, striking is the fact that actual and physical delivery
of the subject property was made to Hipolito immediately upon the execution of the Contract
to Purchase and Sale without any express or implied stipulation by Gregorio reserving
ownership of the subject property.
Gregorio did not make any express or implied reservation whatsoever withholding
ownership of the subject property from Hipolito. If Gregorio really intended that the transfer
of ownership over the subject property was dependent on the fulfilment of other conditions,
then he would have expressed words to that effect in the Contract to Purchase and Sale. Nor
would he have willingly transferred the physical possession of the subject property to
Hipolito.
The intention of the parties to cede ownership of the subject property to Hipolito is further
buttressed by the fact that after the delivery of the subject property to Hipolito, the obligation
of paying real estate taxes was immediately assumed by Hipolito. The fact that Hipolito had
already assumed the obligation of paying real property taxes on the subject property has not
been disputed by Romana.
Jurisprudence has then established that the hallmark of a contract to sell is the existence of
a clear agreement by the parties that the transfer of ownership is conditioned upon the full
payment of the purchase price, such that, by agreement of the parties, ownership is reserved
to the seller until the purchase price has been fully paid. The nomenclature of the subject
contract as a "Contract to Purchase and Sale" is of no moment, considering that "[t]he Court
looks beyond the title of said document, since the denomination or title given by the parties
in their contract is not conclusive of the nature of its contents."
It is not disputed that there is absolutely no stipulation in the Contract to Purchase and Sale
to the effect that ownership over the subject property is reserved in favor of Gregorio
pending the complete payment of the purchase price by Hipolito. Neither is there a provision
granting Gregorio the unilateral right to rescind the Contract to Purchase and Sale in case of
non-payment. Therefore, bearing in mind the foregoing, the Contract to Purchase and Sale is
a contract of sale, and not a contract to sell.
While a stipulation or promise to the effect that a seller shall execute a deed of sale upon the
completion of payment of the purchase price by the buyer may be considered a factor or a
sign that a contract might possibly be a contract to sell, such stipulation in itself, taken in
isolation, is by no means determinative and conclusive as to the contract being a contract to
sell. Still controlling are (1) the lack of any stipulation in the sale contract reserving the title
of the property on the vendors and (2) the lack of any stipulation giving the sellers the right
to unilaterally rescind the contract upon non-payment of the balance thereof within a fixed
period. The absence of such stipulations in a sale contract makes the said contract a contract
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of sale. Hence, the Contract to Purchase and Sale entered into by Gregorio and Hipolito is
a contract of sale.
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SPOUSES JOHN T. SY AND LENY N. SY, AND VALENTINO T. SY

v. MA. LOURDES DE VERA-NAVARRO AND BENJAEMY HO TAN LANDHOLDINGS, INC.,
HEREIN REPRESENTED BY GRACE T. MOLINA, IN HER CAPACITY AS CORPORATE
SECRETARY
DOCTRINE
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.
FACTS
A Complaint filed by petitioners Sps. Sy against respondents Ma. Lourdes De Vera-Navarro

(respondent De Vera-Navarro) and Benjaemy Ho Tan Landholdings, Inc. (respondent BHTLI)
before the RTC for Declaration of Nullity of Deed of Absolute Sale, Cancellation of Transfer
Certificate of Titles, Recovery of Ownership, and Damages. In their Complaint, it is alleged
that petitioner John was one of the coowners of a parcel of land and the four-storey building
found therein situated at Rizal Street, Barangay Zone IV, Zamboanga City. Petitioners Sps. Sy
alleged that the subject property has a market value of more than P40,000,000.00.
The controversy arose when on May 31, 2006, petitioner John, for himself and in
representation of his co-owners, borrowed P3,720,000.00 from respondent De Vera-
Navarro, secured by a Real Estate Mortgage Contract (Mortgage Contract) over the subject
property. Such Mortgage Contract was annotated on TCT T-171,105.
Petitioners Sps. Sy then alleged that immediately after the execution of the Mortgage
Contract, as per usual practice, respondent De Vera-Navarro asked petitioner John to execute
an undated Deed of Absolute Sale with a stated consideration in the amount of
P5,000,000.00, supposedly for the purpose of providing additional security for the
loan. Petitioners Sps. Sy claimed that they verbally agreed that the mode of payment for the
said loan would be respondent De Vera-Navarro's collection of rental payments from the
tenants of the subject property in the total amount of P70,000.00 per month for five years.
To the surprise of petitioner John, he was informed by respondent BHTLI through a letter
from its representative that the ownership of the subject property had been transferred to
respondent De Vera-Navarro; that a TCT, i.e., TCT T-199,288,8 was issued in favor of
respondent De Vera-Navarro; and that respondent BHTLI was demanding that the
petitioners Sps. Sy vacate the subject property.
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Petitioner Valentino, caused the annotation of an adverse claim on TCT T-199,288. A new
title, i.e., TCT T-129-2011001530,11 was issued in favor of respondent BHTLI.
In the main, petitioners Sps. Sy claimed that they are the rightful owners of the subject
property since the undated Deed of Absolute Sale executed purportedly between petitioner
John and respondent De Vera-Navarro is allegedly null and void, and that, despite the
execution of the Deed of Absolute Sale dated March 30, 2011 by respondent De Vera-Navarro
in favor of respondent BHTLI, the latter has no right to own the property as it was allegedly
not a buyer in good faith.
On the other hand, respondent De Vera-Navarro, while admitting the existence of the
Mortgage Contract to secure the P3,720,000.00 loan agreement with petitioners Sps. Sy,
alleged that the amount remained unpaid and that John even obtained additional loans
reaching more or less P10,500,000.00. Further, respondent De Vera-Navarro claimed that,
petitioner John sold to her the subject property by virtue of the undated Deed of Absolute
Sale. BHTLI it is a buyer in good faith since the sale between it and respondent De Vera-
Navarro over the subject property was supposedly consummated 10 days prior to the
annotation of the adverse claim.
The RTC issued a Decision declaring the purported Deed of Absolute Sale between petitioner
John and respondent De Vera-Navarro an equitable mortgage and thus null and void.
Petitioners Sps. Sy and BHTLI filed an appeal with the CA. Respondent BHTLI likewise filed
an appeal with the CA. Contrary to the findings of the RTC, the CA held that the undated Deed
of Absolute Sale between petitioner John and respondent De Vera-Navarro was indeed a
contract of sale because the records are supposedly bereft of any evidence indicative that
there was an equitable mortgage. The petitioners Sps. Sy filed their MR, which was
subsequently denied by the CA. Hence, the instant appeal via Petition for Review
on Certiorari under Rule 45 of the Rules of Court.
ISSUES
1. Whether purported contract of sale between petitioner John and respondent De Vera-
Navarro is an equitable mortgage and not a legitimate contract of sale?
2. Whether Respondent BHTLI is a buyer in good faith?
RULING
1. YES. The purported contract of sale between petitioner John and respondent De Vera-
Navarro is an equitable mortgage and not a legitimate contract of sale.
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
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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.
Article 1602 of the Civil Code states that a contract shall be presumed to be an equitable
mortgage, in any of the following cases:
(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.
Upon examination of the records of the instant case, the Court finds that there was no reason
for the CA to reverse the RTC's correct finding that an equitable mortgage exists in the instant
case.
Jurisprudence consistently shows that the presence of even one of the circumstances
enumerated in Article 1602 suffices to convert a purported contract of sale into an equitable
mortgage. The existence of any of the circumstances defined in Article 1602 of the New Civil
Code, not the concurrence nor an overwhelming number of such circumstances, is sufficient
for a contract of sale to be presumed an equitable mortgage.
In fact, the Court has previously ruled that when in doubt, courts are generally inclined to
construe a transaction purporting to be a sale as an equitable mortgage, which involves a
lesser transmission of rights and interests over the property in controversy.
Applying the foregoing to the instant case, the Court finds that the presence of at least four
badges of an equitable mortgage creates a very strong presumption that the purported
contract of sale entered between petitioner John and respondent De Vera-Navarro is an
equitable mortgage.
First, it is not disputed by any party that the supposed vendor of the subject property,
petitioner John, remains to be in possession of the subject property despite purportedly
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selling the latter to respondent De Vera-Navarro. It is uncanny for a supposed buyer to desist
from taking possession over property which he/she has already purchased.
Second, the purchase price of the purported sale indicated in the undated Deed of Absolute
Sale is inadequate. The RTC took judicial notice of the public knowledge that similar
establishments located at the commercial center of Zamboanga City have a value of around
P20,000,000.00. Thus, the P5,000,000.00 purchase price supposedly agreed upon by the
parties is grossly inadequate.35 The inadequacy of the purchase price is even confirmed by
the acts of respondent De Vera-Navarro herself. As noted by the RTC, respondent De Vera-
Navarro was able to mortgage the subject property with Landbank of the Philippines for an
amount of P13,000,000.00. Respondent De Vera-Navarro also sold the subject property to
respondent BHTLI for the same amount of P13,000,000.00.
Third, the evidence on record shows that respondent De Vera-Navarro retained for herself
the supposed purchase price. Aside from the testimony of petitioner John that no
consideration was paid at all for the supposed contract of sale, the RTC also noted that no
proof was presented by respondent De Vera-Navarro that she actually parted with the sum
of P5,000,000.00 in favor of petitioner John pursuant to the undated Deed of Absolute Sale.
Fourth, from the evidence presented by petitioners Sps. Sy, it is established that the real
intention of the parties is for the purported contract of sale to merely secure the payment of
their debt owing to respondent De Vera Navarro.
According to testimonies of petitioners Sps. Sy given under oath in open court, during the
execution of the Mortgage Contract petitioner John, right then and there, was immediately
asked to sign an undated Deed of Absolute Sale in favor of respondent De Vera-Navarro as it
was agreed upon that such Deed was to be used as mere additional security to the Mortgage
Contract.
The nomenclature given by the parties to the contract is not conclusive of the nature and
legal effects thereof. Even if a document appears on its face to be a sale, the owner of the
property may prove that the contract is really a loan with mortgage, and that the document
does not express the true intent of the parties.
2. NO. Respondent BHTLI is NOT a buyer in good faith. Consequently, since the purported
contract of sale between petitioner John and respondent De Vera-Navarro was in fact an
equitable mortgage, the sale of the subject property to respondent BHTLI by respondent De
Vera Navarro was correctly adjudged by the RTC to be null and void, considering that the
latter had absolutely no right and capacity to sell the subject property.
He who alleges that he is a purchaser of registered land is burdened to prove such statement.
Such burden is not discharged by simply invoking the ordinary presumption of good faith. In
the instant case, the Court finds that respondent BHTLI failed to discharge such burden.
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Instead of showing good faith on the part of respondent BHTLI, the incontrovertible facts
establish respondent BHTLI's status as a buyer in bad faith.
The Court has held that actual lack of knowledge of the flaw in title by one's transferor is not
enough to constitute a buyer in good faith where there are circumstances that should put a
party on guard, such as the presence of occupants in the subject property. Again, it is not
disputed that petitioners Sps. Sy have been in continuing possession of the subject
property. Yet, this fact did not prompt respondent BHTLI to investigate further as to the
contract of sale it entered with respondent De Vera-Navarro.
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GENEROSO SEPE v. HEIRS OF ANASTACIA* KILANG, REP. BY HER CHILDREN MARIA,

DONATA, FELICIANA, DOMINGA AND SEVERO ALL SURNAMED SOLIJON
DOCTRINE
Article 1354 of the Civil Code provides: "Although the cause is not stated in the contract, it is
presumed that it exists and is lawful, unless the debtor proves the contrary." Otherwise stated,
the law presumes that even if the contract does not state a cause, one exists and is lawful; and
it is incumbent on the party impugning the contract to prove the contrary. If the cause is stated
in the contract and it is shown to be false, then it is incumbent upon the party enforcing the
contract to prove the legality of the cause.
FACTS
Anastacia, who was then an 84-year old, illiterate, rheumatic and bedridden mother, agreed
to the offer of petitioner to undertake the subdivision of her land in Cabawan District,
Tagbilaran City in consideration for one lot in the subdivision and a first preference to buy
any portion that might be for sale; but taking advantage of the ignorance of respondents'
family, petitioner managed to have the DOS executed and misled Feliciana and Donata into
believing that the document was the instrument of subdivision. By the DOS, which was
executed and notarized, with her husband's consent, purportedly sold her paraphernal
property — a lot located at Barrio Gaboc, Tagbilaran City covered by TCT T-10069 — to
spouses Sepe for P15,000.00.
Anastacia executed a notarized Notice of Adverse Claim, wherein she claimed that "the
second duplicate copy of TCT T-10069 was lost sometimes on the first week of December
1992, and was found in the possession of one Generoso Sepe without the knowledge and
consent of the owner" and the "parcel of land was never sold nor encumbered to anybody
else." Respondents, save Dominga, executed the COS for a consideration of P40,000., wherein
they confirmed absolutely and irrevocably the sale of the subject lot situated at Barrio Gaboc
made and executed by their parents, Anastacia and Fabian, in favor of spouses Sepe. After a
year, Anastacia executed a notarized Notice of Withdrawal of Adverse Claim, wherein she
alleged that she was made to sign an Adverse Claim by Dominga and Donata; she did not
understand its contents; and she remembered that she had "already sold the same land to
[spouses Sepe. On the same day, TCT T-10069 in the name of Anastacia was cancelled and
TCT T-35367 was issued in the names of spouses Sepe.
During the same year, Anastacia died. Five years after, Maria wrote the Regional Director of
the National Bureau of Investigation (NBI) seeking assistance relative to this case in a letter
of even date.
Respondents Heirs of Anastacia Kilang, sought the nullification of: 1) Deed of Sale of a
Registered Land executed by Anastacia Kilang with marital consent of Fabian Solijon in favor
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of spouses Generoso Sepe and Gaudencia D. Sepe; and 2) TCT No. T-35367 registered in the
names of spouses Sepe; and for the recovery of title, possession with damages. Respondents
presented their evidence, which included the testimonies and public records relative to TCT
T-10069.
Petitioner filed a Demurrer to Evidence, interposing the grounds of ratification and

prescription of action. The RTC issued an Order granting the demurrer to evidence and
dismissing the case.
The CA granted respondents' appeal. The CA ruled that testimonies of Anastacia's daughters
had established that no consideration whatsoever was paid to their mother. Also, according
to the CA, respondents were able to establish that the withdrawal of the adverse claim was
not done by Anastacia but through the illegal machinations of petitioner.
In this petition, petitioner continues to rely on the DOS, which was duly notarized as proof
of the receipt of the consideration. Petitioner also points out that the CA's observation that
Anastacia had executed the Notice of Adverse Claim with haste showed that she did not sell
her property to anybody is speculative because she could no longer testify as to why she
executed the same. Besides, petitioner adds that the execution of the COS is proof that indeed
there was a sale by Anastacia of the subject lot.
ISSUE
Whether the CA erred in its ruling that there was no consideration for the sale?
RULING
YES. Petitioner's reliance on the DOS as proof that the sale contemplated therein was
supported by sufficient consideration is not without legal basis. The disputable presumption
of existence and legality of the cause or consideration60 inherent in every contract supports
his stance.
Article 1354 of the Civil Code provides: "Although the cause is not stated in the contract, it is
presumed that it exists and is lawful, unless the debtor proves the contrary." Otherwise
stated, the law presumes that even if the contract does not state a cause, one exists and is
lawful; and it is incumbent on the party impugning the contract to prove the contrary. If the
cause is stated in the contract and it is shown to be false, then it is incumbent upon the party
enforcing the contract to prove the legality of the cause.
The presumption of sufficient consideration can be overcome by preponderance of evidence

and that mere assertion that the contract has no consideration is not enough. To contradict
facts in a notarial document and the presumption of regularity in its favor, the evidence must
be clear, convincing and more than merely preponderant.
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Given the foregoing, the Court is not persuaded by the CA's postulation that the oral
refutation by respondents Feliciana and Maria of the consideration stated in the DOS has
reached the threshold of the required quantum of proof of clear and convincing evidence.
Their mere oral declaration that no consideration was paid to their mother Anastacia is
simply not enough given the presence of the following notarized and public documents in
petitioner's favor: Notarized DOS, Notarized Notice of Withdrawal of Adverse Claim, TCT T-
35367, and Notarized COS.
The Court moreover agrees with the RTC's observation that respondents should have
questioned the DOS during the lifetime of their mother Anastacia given that she was the only
person who could confirm or refute its genuineness and contents.
Anastacia died on October 20, 1993,82 about nine months after she executed the Notice of
Withdrawal of Adverse Claim and the issuance of TCT T-35367 in the names of spouses Sepe.
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SEBASTIAN M. QUINOL,* ALIMITA RENDAL-QUINOL, PORFERIA QUINOL-MACATIGUIB,

MARCELO MACATIGUIB, BALTAZAR QUINOL, ELAINE KILAPKILAP-QUINOL, AND
PATRICIA QUINOL
v. LORENZA INOCENCIO, EPIFANIA POA, JIMMY POA, ARTEMIO QUINOL, AND JESUS
QUINOL
DOCTRINE
Tax declarations and tax receipts as evidence of ownership cannot prevail over a certificate of
title which, to reiterate, is a presumptive proof of ownership.
FACTS
On 31 March 1958, Nona Japa and Consorcio Japa, the Japa siblings, sold to Pedro Macatisbis
for P90.00 a portion of maizal land located in Intosan, Poblacion, Siaton Negros Occidental
as evidenced by an unregistered Deed of Absolute Sale.
The Deed of Absolute Sale executed by the Japa siblings was notarized by one Vicente
Kinilitan. The Deed of Absolute Sale does not specify the lot number of the subject property.
The petitioners allege that the subject property sold to their predecessor-in-interest, i.e.,
Pedro, by the respondents' predecessors-in-interest, i.e., the Japa siblings, by virtue of the
Deed of Absolute Sale refers to Lot 584. On the other hand, the respondents maintain that
the subject property subject of the sale actually refers to Lot 585.
As alleged by the petitioners, since 1958, Pedro had been in possession of Lot 584 in the
concept of an owner, planting coconut trees, bananas, and buri trees therein. It is likewise
alleged that Pedro's daughter and the petitioners' mother, Felisa Macatisbis Quinol,
continued to possess the land and transferred the old tax declaration of the subject property
in her name, continuing to pay realty taxes since 1958 up to the present. The petitioners also
allege that Sebastian was able to put up a house inside Lot 584, while respondent Jesus
Quinol, the sibling of Sebastian, mortgaged his share over the subject property to a certain
Magdalena Quilinguen.
The petitioners claim that in 2000, respondent Lorenza Inocencio, who is an heir of Nona
Japa, offered to sell the subject property to Sebastian, claiming that she has title over the
subject property in her name. Sebastian refused as the land was already sold to his
grandfather, Pedro in 1958 This prompted the petitioners to verify with the Register of
Deeds, wherein they discovered that on June 14, 1982, the Register of Deeds had issued in
the name of Hrs. of Nona Japa Original Certificate of Title (OCT) No. FV-34211 under Free
Patent No. (VII-3) 11112 for Lot No. 584, Pls-659-D.
The petitioners prayed that, aside from other reliefs just and equitable, their entitlement to
Lot 584 be quieted; that OCT No. FV-34211 be declared inexistent and, in the alternative, the
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Register of Deeds of Negros Oriental be directed to cancel the same and issue a Transfer
Certificate of Title (TCT) in their names.
Meanwhile, As alleged by the respondents, the aforementioned Free Patent was applied for
by Epifania, one of the daughters of Nona Japa, because the mother of the petitioners, i.e.,
Felisa, told her to do so because the subject property belonged to the Japas. As alleged by the
respondents, Felisa even accompanied respondent Epifania when the latter applied for the
Free Patent. It was Lot 585, not Lot 584, that the late Pedro bought, owned and possessed
since 1958. Pedro used to occupy Lot 584 as tenants of the Japas but after his death,
possession of the land was returned to the latter. The house of the petitioners is erected on
Lot 585 and no such coconut and buri trees or bananas are planted on Lot 584. OCT No. FV-
34211 was issued in good faith by virtue of an application filed in good faith.
The RTC issued a Decision, dismissing the petitioners complaint for lack of cause of action,
ruling that there was no irregularity in the issuance of OCT No. FV-34211 since all the
requirements were complied with. They also failed to show that OCT No. FV-34211, which
they claim casts a cloud of doubt on their legal interest, is invalid or inoperative. Aggrieved,
the petitioners filed an appeal before the CA, which denied their appeal. According to the CA,
the evidence shows that the nature of the petitioners' possession over the subject lot was not
in the concept of an owner.
The petitioners filed a Motion for Reconsideration which was denied by the CA in the assailed
Resolution. Hence, the instant Petition.
ISSUE
Whether payment of real property taxes proves petitioners’ ownership over the subject
property.
RULING
NO. As found by both the RTC and CA, the totality of evidence on record shows that the
respondents' title, i.e., OCT No. FV-34211, which was derived from Free Patent No. (VII-3)
11112, was validly issued in their favor and does not encroach on the property of the
petitioners.
The petitioners placed much reliance on the tax declarations showing their payment of real
property taxes covering Lot 584. First and foremost, tax declarations and tax receipts as
evidence of ownership cannot prevail over a certificate of title which, to reiterate, is a
presumptive proof of ownership.
In any case, as correctly found by the CA, the tax declarations presented by the petitioners
fail to fortify the petitioners' stance that the property owned by them is Lot 584. From the
testimony of the petitioners' own witness, Roily Macahig, the Municipal Assessor of Siaton,
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the descriptions regarding the land covered by the tax declarations are not reliable because
such descriptions were '"only declared by the owner and no actual geodetic survey of that
property at that time,' and categorically stated that the areas in TDs 11549 and 31949 are
not reliable." When pressed by the RTC during trial why there are discrepancies as to the
land area indicated in the tax declarations presented by the petitioners, Macahig expressly
testified that "the owner (referring to the petitioners) did not tell the correct area in their
lot," and that "actually we cannot ascertain the descriptions inscribed in the petitioners' tax
declarations because for tax declaration, x x x, the main purpose is for taxation purposes, x x
x, and it is up to the owner to give us the title of the property and with revised tax declaration
to conform with the title, the area, and the boundaries."
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PEOPLE OF THE PHILIPPINES v. SUSAN SAYO Y REYES AND ALFREDO ROXAS Y SAGON
DOCTRINE
Moral and exemplary damages of P500,000.00 and P100,000.00, respectively, are ordinarily
awarded in cases of Trafficking in Persons as a prostitute. The ratio for the award of damages
was explained by the Court in People v. Lalli, where it ruled that “the criminal case of Trafficking
in Persons as a Prostitute is an analogous case to the crimes of seduction, abduction, rape, or
other lascivious acts.
FACTS
AAA, BBB, and CCC known as the "plaza girls" testified that they have been under the control
and supervision of SAYO as commercial sex workers. Whenever they have customers, SAYO
would bring them either to a motel or to ALFREDO ROXAS's house who provides them a
room for P100 for 30 minutes use of the room. ROXAS also provides condom for the male
customers at P30. The CIDG-WCCD conceptualized an entrapment operation called "Oplan
Sagip Angel." The "Oplan Sagip Angel" operatives proceeded to the target area in Pasig City.
The three men were approached by SAYO who bluntly asked if they wanted women and she
further inquired if they wanted 15 year-old girls. The three customers agreed to take the 15
year-old girls offered by SAYO for P300 each. Thereafter, SAYO informed the three customers
about a room in Baltazar Street which they could rent for P100.00 for each couple. The
customers agreed on the price.
AAA, BBB and CCC met SAYO at the Pasig Plaza. Sayo introduced them to the three men, who
were actually the agents of the ClOG-WCCD and IJM. After the negotiation was concluded, all
of them proceeded to the house of ALFREDO ROXAS at No. 638 Baltazar Street, Brgy. Sto.
Tomas, Pasig City on board a tricycle. Upon reaching the house, they were greeted by "FRED"
ROXAS who openly discussed with SAYO in front of the customers and the “plaza girls”
regarding the transaction for the night. ROXAS told that the room rate for each couple is
P100. AAA saw the customers gave to ROXAS the P300.
When the Nine Hundred Pesos P900 was handed by one of the customers to SAYO to cover
the payment for the services of AAA, BBB and CCC, the CIDG-WCCO agents announced that it
was a raid. Recovered from the possession of ALFREDO ROXAS was the marked money
amounting to P300, the payment for the use of the room for sexual activities while the P900
intended for the sexual services to be provided by the "plaza girls" was recovered from
SUSAN SAYO.
Accused-appellants were then charged with the violation of violation of Republic Act No.
(RA) 9208 or the Anti-Trafficking in Persons Act of 2003. The RTC ruled that the prosecution
was able to prove the guilt of accused-appellants beyond reasonable doubt.
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Accused SUSAN SAYO y REYES was found GUILTY of Qualified Trafficking in Persons under
Section 4 (a,e) and Section 6 (a) of R.A. 9208 insofar as minors AAA and BBB, and is sentenced
to suffer life imprisonment and to pay a fine of P2,000,000.00 insofar as minors AAA and BBB
are concerned. Accused ALFREDO ROXAS was likewise found GUILTY of Qualified Trafficking
in Persons under Section 5 (a) and Section 6 (a) of R.A. 9208, insofar as minors AAA and BBB
are concerned, and is sentenced to suffer life imprisonment and to pay a fine of
P2,000,000.00.
As for complainant CCC who was no longer a minor at the time of commission of the offense,
accused Susan Sayo was found GUILTY of trafficking in persons under Section 4 (a, e) of R.A.
9208 and is sentenced to suffer imprisonment of 20 years and to pay a fine of P1,000,000.00.
Accused Alfredo Roxas was likewise found GUILTY of trafficking in persons under Section
5(a) of R.A. 9208 and is sentenced to suffer the penalty of imprisonment of 15 years and to
pay a fine of P500,000. On appeal, the CA affirmed the RTC Decision with modification, by
adding an award of moral and exemplary damages, but only to AAA and BBB. There was no
discussion on the omission of CCC in the award of damages. Both Sayo and Roxas were
ordered to pay each AAA and BBB P500,000 as moral damages; and P100,000 as exemplary
damages.
Accused-appellants filed a Notice of Appeal. Sayo had died on November 30, 2011 due to
multiple organ failure, secondary to cervical cancer.
ISSUE
Whether Roxas is liable for moral and exemplary damages to AAA, BBB, and CCC?
RULING
YES. The award of damages was modified by the Court.
Moral damages are prescribed under Articles 2217 and 2219 of the Civil Code:
“ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury. Though incapable of pecuniary computation, moral damages may
be recovered if they are the proximate result of the defendant's wrongful act or
omission.”
“ART. 2219. Moral damages may be recovered in the following and analogous cases:
xxxx
(3) Seduction, abduction, rape, or other lascivious acts;
xxxx
The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of
this article, may also recover moral damages.”
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In turn, exemplary damages are awarded in addition to moral damages by way of example
of correction for the public good under Art 2229 of the Civil Code. Furthermore, Art. 2230
states that, “in criminal offenses, exemplary damages as a part of the civil liability may be
imposed when the crime was committed with one or more aggravating circumstances. Such
damages are separate and distinct from fines and shall be paid to the offended party.”
Moral and exemplary damages of P500,000.00 and P100,000.00, respectively, are ordinarily
awarded in cases of Trafficking in Persons as a prostitute. The ratio for the award of damages
was explained by the Court in People v. Lalli, where it ruled that “the criminal case of
Trafficking in Persons as a Prostitute is an analogous case to the crimes of seduction,
abduction, rape, or other lascivious acts. In fact, it is worse. To be trafficked as a prostitute
without one's consent and to be sexually violated four to five times a day by different
strangers is horrendous and atrocious. There is no doubt that the victim experienced
physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, and social humiliation when she was trafficked as a prostitute in
Malaysia.”
In the instant case, while the Information alleged that Roxas "received and harbored" AAA,
BBB, and CCC, it was not proven during the trial that Roxas directly participated in their
prostitution or solicited or assigned customers for them. However, his act of renting out a
room in his house promoted and facilitated their prostitution. Roxas profited from the rental
of the room and his actions are just as deplorable.
In Planteras, Jr. v. People, the Court set the award of moral and exemplary; damages at
P100,000.00 and 50,000.00 in cases of Acts that Promote Trafficking in Persons under
Section 5(a) of RA 9208. Thus, Roxas is liable to pay moral and exemplary damages to AAA,
BBB, and CCC of P100,000.00 and P50,000.00 each. The monetary awards due to the victims
shall earn legal interest of 6% per annum from finality of judgment until full payment.
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SPOUSES ISIDRO R. SALITICO AND CONRADA C. SALITICO

v. HEIRS OF RESURRECCION• MARTINEZ FELIX, NAMELY: LUCIANO, CORAZON AND
CONCEPCION, ALL SURNAMED FELIX, RECAREDO P. HERNANDEZ, IN HIS CAPACITY AS
ADMINISTRATOR OF THE ESTATE OF AMANDA H. BURGOS, AND THE REGISTER OF
DEEDS
DOCTRINE
Reading Article 777 of the Civil Code together with the pertinent provisions of PD 1529 and the
Rules of Court, while an heir may dispose and transfer his/her hereditary share to another
person, before the transferee may compel the issuance of a new certificate of title covering
specific property in his/her name, a final order of distribution of the estate or the order in
anticipation of the final distribution issued by the testate or intestate court must first be had.
FACTS
Amanda is the registered owner of a 1,413 sq.m parcel of land in Bambang, Bulacan. By virtue
of a document entitled Huling Habilin ni Amanda H. Burgos dated May 7, 1986, the subject
property was inherited by the niece of Amanda, Resurreccion, as a devisee. Thereafter,
Resurreccion, as the new owner of the subject property, executed a document
entitled Bilihang Tuluyan ng Lupa dated November 10, 1998, which transferred ownership
over the parcel of land in favor of the petitioners Sps. Salitico. The latter then took physical
possession of the subject property.
Subsequently, a proceeding for the probate of the huling habilin was undertaken before the
RTC. Respondent Recaredo was appointed as the executor of the Huling Habilin. The Probate
Court approved it and issued a Certificate of Allowance on January 12, 2009.
A year after, the petitioners Sps. Salitico received a demand letter requiring them to vacate
the subject property and surrender possession over it to the respondents heirs. To protect
their interest over the subject property, the petitioners Sps. Salitico executed an Affidavit of
Adverse Claim which was however denied registration by the respondent RD.
In their Complaint for specific performance against the respondents, the petitioners Sps.
Salitico sought the delivery and return in their favor of the owner's duplicate copy of OCT P-
1908 and the execution of the corresponding Deed of Absolute Sale by way of confirming
the Bilihang Tuluyan ng Lupa. They likewise prayed that OCT P-1908 be cancelled and a new
one be issued in their names.
The RTC found that Resurreccion had indeed validly sold the subject property which she
inherited from Amanda to the petitioners Sps. Salitico. Nevertheless, the RTC dismissed the
Complaint for the sole reason that the petitioners Sps. Salitico's cause of action had
supposedly not yet accrued, as the Estate of Amanda has not yet been fully settled by the
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Probate Court. On appeal, the CA dismissed the appeal due to the pendency of the probate
proceedings. The petitioners Sps. Salitico filed their MR which was denied by the CA. Hence,
this appeal via Petition for Review on Certiorari.
ISSUES
1. Whether an heir can sell her inherited property during the pendency of the probate
proceedings?
2. Whether the existence of a valid sale means that the RD may already be compelled to
cancel the title in the name of the decedent and issue a new title in the name of the buyers of
the heir’s inheritance?
RULING
1. YES. Article 777 of the Civil Code, which is substantive law, states that the rights of the
inheritance are transmitted from the moment of the death of the decedent. Article 777
operates at the very moment of the decedent's death meaning that the transmission by
succession occurs at the precise moment of death and, therefore, at that precise time, the
heir is already legally deemed to have acquired ownership of his/her share in the
inheritance, "and not at the time of declaration of heirs, or partition, or distribution." Thus,
there is no legal bar to an heir disposing of his/her hereditary share immediately after such
death. The Court, early on in Teves de Jakosalem v. Rafols, et al., explained that a sale made
by a legal or intestate heir of his share in an inheritance does not interfere with the
administration of the estate.
Upon the death of Amanda, Resurreccion became the absolute owner of the devised subject
property, subject to a resolutory condition that upon settlement of Amanda's Estate, the
devise is not declared inofficious or excessive. Hence, there was no legal bar preventing
Resurreccion from entering into a contract of sale with the petitioners Sps. Salitico with
respect to the former's share or interest over the subject property.
As a consequence of the valid contract of sale entered into by the parties, Resurreccion had
the obligation to deliver the subject property to the petitioners Sps. Salitico. In fact, it is not
disputed that the physical delivery of the subject property to the petitioners Sps. Salitico had
been done, with the latter immediately entering into possession of the subject property after
the execution of the Bilihang Tuluyan ng Lupa.
2. NO. The existence of a valid sale in the instant case does not necessarily mean that the RD
may already be compelled to cancel OCT P-1908 and issue a new title in the name of the
petitioners Sps. Salitico.
Under the applicable provisions of PD 1529 and the Rules of Court, it is only upon the
issuance by the testate or intestate court of the final order of distribution of the estate or the
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order in anticipation of the final distribution that the certificate of title covering the subject
property may be issued in the name of the distributees.
In the instant case, there is no showing that, in the pendency of the settlement of the Estate
of Amanda, the Probate Court had issued an order of final distribution or an order in
anticipation of a final distribution, both of which the law deems as requirements before the
RD can issue a new certificate of title in the name of the petitioners Sps. Salitico.
To clarify, this holding does not go against Article 777 of the Civil Code whatsoever. What
the aforesaid Civil Code provision signifies is that there is no legal bar preventing an heir
from disposing his/her hereditary share and transferring such share to another person,
inasmuch as the right thereto is vested or transmitted to the heir from the moment of the
death of the decedent or testator. The rule, however, does not state that the transferee may
already compel the issuance of a new certificate of title covering the specific property in
his/her name.
Hence, reading Article 777 of the Civil Code together with the pertinent provisions of PD
1529 and the Rules of Court, while an heir may dispose and transfer his/her hereditary share
to another person, before the transferee may compel the issuance of a new certificate of title
covering specific property in his/her name, a final order of distribution of the estate or the
order in anticipation of the final distribution issued by the testate or intestate court must
first be had.
Therefore, despite the existence of a valid contract of sale between Resurreccion and the
petitioners Sps. Salitico, which ordinarily would warrant the delivery of the owner's
duplicate copy of OCT P-1908 in favor of the latter, pending the final settlement of the Estate
of Amanda, and absent any order of final distribution or an order in anticipation of a final
distribution from the Probate Court, the RD cannot be compelled at this time to cancel OCT
P-1908 and issue a new certificate of title in favor of the petitioners Sps. Salitico.
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MA. LUISA A. PINEDA v. VIRGINIA ZUÑIGA VDA. DE VEGA

DOCTRINES
1. While delay on the part of respondent was not triggered by an extrajudicial demand because
petitioner had failed to so establish receipt of her demand letter, this delay was triggered when
petitioner judicially demanded the payment of respondent's loan from petitioner.
2. In Cerna v. CA, the Court ruled that the filing of a collection suit barred the foreclosure of the
mortgage.
FACTS
Petitioner filed a complaint dated June 10, 2005 against respondent, praying for the payment
of the latter's principal obligation and the interest thereon or, in default of such payment, the
foreclosure of the property subject of a real estate mortgage.
Petitioner alleged that, on March 25, 2003, respondent borrowed from her P500,000.00
payable within one year with an interest rate of 8% per month.6 To secure the loan,
respondent executed a real estate mortgage over a parcel of land together with all the
buildings and improvements existing thereon (Property), in petitioner's favor.7 On the
loan's maturity, respondent failed to pay her loan despite demand.8 As of May 2005, the
unpaid accumulated interest amounted to P232,000.00.9 In her answer, respondent denied
petitioner's material allegations and countered that the complaint was dismissible for lack
of prior barangay conciliation proceeding and for failure to join her husband as a
party.10 She also argued that the interest rate agreed upon was excessive and
unconscionable, thus illegal.11 She further denied receiving P500,000.00 from petitioner
and claimed that the said amount was the accumulated amount of another obligation she
earlier secured from petitioner.
In her reply, petitioner averred that respondent's husband did not need to be joined because
the transaction did not involve him and although the agreement was to charge an interest
rate of 8% per month, what was actually charged was just 4% per month.
She also admitted that the P500,000.00 indicated in the 2003 Agreement referred to a
previously executed undated real estate mortgage between the parties which secured
respondent's loan of P200,000.00 from her.15 Respondent failed to formally offer her
evidence.
The RTC rendered a Decision finding that the existence of the loan and the real estate
mortgage had been established and, thus, judicial foreclosure would be proper given
respondent's non-compliance therewith. The CA Decision reversed and set aside the RTC
Decision and dismissed the complaint ruling that while petitioner testified that demand was
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sent to respondent by registered mail and received on September 7, 2004, the registry return
card evidencing such receipt was not specifically and formally offered in evidence.
The CA concluded that for failing to prove the requisite demand under Article 1169 of the
Civil Code, respondent could not be considered in default and petitioner's case must fail.
Petitioner filed a motion for reconsideration, which was denied by the CA. Hence, this
Petition.
ISSUES
1. Whether the respondent can be considered in default despite lack of extrajudicial demand?
2. Whether the RTC can grant petitioner the remedies of collection and foreclosure of
mortgage successively?
RULING
1. YES. While the CA is correct on its factual finding that petitioner failed to prove that
extrajudicial demand was made upon respondent as required by law, its legal conclusion that
respondent could not be considered in default is, however, flawed.
What petitioner seeks to enforce against respondent is a contract of loan, which is secured
by a real estate mortgage. Based on the sources of obligations enumerated under Article
1157 of the Civil Code, the obligation that petitioner seeks to make respondent liable for is
one which arises from contract. Liability for damages arises pursuant to Article 1170 of the
Civil Code against "those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof." Delay
or mora is governed by Article 1169 of the Civil Code, which provides:
“ART. 1169. Those obliged to deliver or to do something incur in delay from the time the
obligee judicially or extrajudicially demands from them the fulfillment of their obligation.
X x x x”
Default or mora, which is a kind of voluntary breach of an obligation, signifies the idea of
delay in the fulfillment of an obligation with respect to time.41 In positive obligations, like
an obligation to give, the obligor or debtor incurs in delay from the time the obligee or
creditor demands from him the fulfillment of the obligation.42 Demand may be judicial — if
the creditor files a complaint against the debtor for the fulfillment of the obligation — or
extrajudicial — if the creditor demands from the debtor the fulfillment of the obligation
either orally. or in writing.43 Whether the demand is judicial or extrajudicial, if the obligor
or debtor fails to fulfill or perform his obligations, like payment of a loan, as in this case, he
is in mora solvendi, and, thus, liable for damages.
While delay on the part of respondent was not triggered by an extrajudicial demand because
petitioner had failed to so establish receipt of her demand letter, this delay was triggered
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when petitioner judicially demanded the payment of respondent's loan from petitioner.
While the CA was correct in observing that default generally begins from the moment the
creditor demands the performance of the obligation, and without such demand, judicial or
extrajudicial, the effects of default will not arise,45 it failed to acknowledge that when
petitioner filed her complaint dated June 10, 2005,46 such filing constituted the judicial
demand upon respondent to pay the latter's principal obligation and the interest thereon.
Respondent, having thus incurred in delay (counted from the filing of the complaint), is liable
for damages pursuant to Article 1170 of the Civil Code.
Consequently, the reversal of the assailed CA Decision and Resolution is justified and to that
extent, the Petition is meritorious.
2. NO. The RTC erred in granting petitioner the remedies of collection and foreclosure of
mortgage successively. The settled rule is that these remedies of collection and foreclosure
are mutually exclusive. The invocation or grant of one remedy precludes the other.
Since Bachrach Motor Co., Inc. v. Icarañgal,48 the Court has consistently ruled that, “in the
absence of express statutory provisions, a mortgage creditor may institute against the
mortgage debtor either a personal action for debt or a real action to foreclose the mortgage.
In other words, he may pursue either of the two remedies, but not both. By such election, his
cause of action can by no means be impaired, for each of the two remedies is complete in
itself. Thus, an election to bring a personal action will leave open to him all the properties of
the debtor for attachment and execution, even including the mortgaged property itself. And,
if he waives such personal action and pursues his remedy against the mortgaged property,
an unsatisfied judgment thereon would still give him the right to sue for a deficiency
judgment, in which case, all the properties of the defendant, other than the mortgaged
property, are again open to him for the satisfaction of the deficiency. In either case, his
remedy is complete, his cause of action undiminished, and any advantages attendant to the
pursuit of one or the other remedy are purely accidental and are all under his right of
election. On the other hand, a rule that would authorize the plaintiff to bring a personal action
against the debtor and simultaneously or successively another action against the mortgaged
property, would result not only in multiplicity of suits so offensive to justice and obnoxious
to law and equity but also in subjecting the defendant to the vexation of being sued in the
place of his residence or of the residence of the plaintiff, and then again in the place where
the property lies.”
In Cerna v. CA, the Court ruled that the filing of a collection suit barred the foreclosure of the
mortgage.
Given the foregoing, the Court sustains the RTC's ruling which orders respondent to pay
petitioner the loaned amount of P200,000.00. However, the RTC's ruling that in default of
respondent's payment, petitioner can foreclose on the mortgage is erroneous.
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TRANQUILINO AGBAYANI v. LUPA REALTY HOLDING CORPORATION

G.R. No. 201193, June 10, 2019, En Banc (Caguioa, J.)
DOCTRINE
Simulation requires the following: (1) A deliberate declaration contrary to the will of the
parties; (2) Agreement of the parties to the apparently valid act; and (3) The purpose is to
deceive or to hide from third persons although it is not necessary that the purpose be illicit or
for purposes of fraud. The above three requisites must concur in order that simulation may
exist.
FACTS
Tranquilino Agbayani, who was by then already residing in America, owns a 91,899-sq.m.
parcel of land, situated in Barrio Sinungan, Sta. Ana, Cagayan, originally registered under OCT
No. P-46041.
Tranquilino’s nephew, Vernold, went to to pay the real estate taxes on the subject property,
but was told that Lupa Realty was already the new owner thereof and that the tax declaration
had already been transferred to its name.
There are two documents purporting to transfer to Lupa Realty the land belong to
Tranquilino:
1. The Deed of Sale between Moriel and Lupa Realty “DAS Moriel-Lupa Realty,”
executed on October 29, 1997, which is premised on: a) the “1992 DAS” or the Deed
of Sale which transferred the property from Tranquilino to Nonito on January 21,
1992, and b) the Deed of Sale between Nonito and Moriel, and
2. The Deed of Sale between Tranquilino and Lupa Realty “1997 DAS,” which Moriel
and his mother used in registering the sale to Lupa Realty.
Upon verifying with the RD of Cagayan, Vernold discovered that the subject property was
already registered in the name of Lupa Realty under TCT No. T-109129 pursuant to the 1997
DAS, in consideration of the sum of P425,500.00. Tranquilino filed a Complaint for
Reivindicacion, Cancellation of Title and Document with Damages against Lupa Realty
Holding Corporation through his brother, Kennedy, and his nephew, Vernold. In his
complaint, Tranquilino denied having executed the 1997 DAS, insisting that his signature
thereon must be a forgery because he was in America on 29 October 1997. Accordingly, he
prayed for the cancellation of Lupa Realty's TCT No. T-109129 and the reinstatement of OCT
No. P-46041 in his name, plus damages.
In its Answer, Lupa Realty countered that contrary to the allegation of Tranquilino that he
never sold the subject property, he sold the same to his brother, Nonito Agbayani, as shown
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by a notarized 1992 DAS. In turn, Nonito sold the subject property to Moriel Urdas in a
notarized Deed of Absolute Sale, dated 30 May 1997. According to Lupa Realty, it acquired
the subject property not from Tranquilino but from Moriel by way of a notarized DAS Moriel
Lupa Realty.
Lupa Realty further insisted that it was an innocent purchaser for value and in good faith,
since it was Moriel and his mother who registered the sale in the Registry of Deeds, as shown
by the Affidavit executed by Moriel's mother. According to Lupa Realty, it had no idea that
Moriel and his mother had used a falsified deed of sale with Tranquilino's forged signature
in registering the sale.
Lupa Realty presented its former employee, Demetria Balisi, who testified that she was one
of the two witnesses to the deed of sale between Lupa Realty and Moriel. Demetria
acknowledged that none of the deeds of conveyances between Tranquilino and Nonito;
between Nonito and Moriel; and between Moriel and Lupa Realty - was used in registering
the transfer of the subject property to Lupa Realty. According to Demetria, it was Moriel's
mother who processed the registration, and this was further confirmed by Moriel's mother
in an affidavit stating that they "were able to secure at theirown ways and means a new Title
of the subject property in favor of [Lupa Realty]."
The RTC ruled in favor of Tranquilino and ordered the property’s reconveyance to his name.
The CA reversed the RTC decision and ruled that Tranquilino failed to discharge his burden
to present clear and convincing evidence to overthrow the presumption of regularity of the
1992 DAS in favor of his brother Nonito and to prove his allegation of forgery regarding his
signature. Further, the CA stated that the fact that there is a 1997 DAS is not sufficient in
itself to invalidate TCT No. T-109129 in the name of Lupa Realty. The CA ruled in favor of the
dismissal of Tranquilino's complaint based on the lack of evidence regarding his forgery
allegation and its postulation that his action for declaration of nullity of the 1997 DAS is not
the direct proceeding required by law to attack a Torrens certificate of title since it cannot
be collaterally attacked.
ISSUES
1. Whether the 1997 DAS, which is the basis of the registration of TCT T-109129 in the name
of Lupa Realty, is void for being simulated?
2. Whether Lupa Realty be nonetheless declared as the lawful owner of the subject land
despite the finding that the TCT issued in his favor is void?
3. Whether the action filed by Tranquilino is a collateral attack to Lupa Realty’s title to the
subject property?
RULING
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1. YES. The Court notes that the 1997 DAS contains this recital: "Their right thereto being
duly registered in accordance with the Land Registration Act and evidenced by Original
Certificate of Title No. P-26619 with Homestead Patent No. 119163." It must be noted that
Tranquilino's title is Original Certificate of Title (OCT) No. P-46041 with Free Patent No.
587747.
In both the 1997 DAS and the DAS Moriel-Lupa Realty, the Notary Public's name is illegible.
The Court also agrees with the RTC that it is indeed mind boggling how two distinct
documents which were supposedly notarized on the same date by one Notary Public have
identical notarial details, i.e., document number, page number, book number and year series.
Indeed, one of them must be fake or false.
Based on all the facts narrated, it is the 1997 DAS which is sham or spurious. As noted above,
these are: (1) the similarity of its notarial details' with those of the DAS Moriel-Lupa Realty;
(2) the recital that it pertained to the land covered by "Original Certificate of Title No. P-
26619 with Homestead Patent No. 119163" and not to Tranquilino's OCT No. P-46041 with
Free Patent No. 587747; (3) the inclusion of Lupa Realty, represented by its President,
Roberto P. Alingog, as a party and the CTC details of Roberto P. Alingog, but who is not made
a signatory thereto; (4) the identity of its date of execution with that of the DAS Moriel-Lupa
Realty; and (5) the identity of the notary public's details in both 1997 DAS and the DAS
Moriel-Lupa Realty.
Also, Tranquilino could not have signed the 1997 DAS because he had left for California,
U.S.A. in April, 1989. It is also significant to note that Lupa Realty did not even have the 1997
DAS marked and offered as its evidence is a very strong indication of its falsity. In the Formal
Offer of Documentary Exhibits of Lupa Realty, the 1997 DAS was not marked and offered as
one of its exhibits.38 If the 1997 DAS was truly executed by Tranquilino and is genuine, Lupa
Realty would have marked and offered it as its documentary exhibit. Obviously, Lupa Realty
wanted to distance itself therefrom because it might be accused as being complicit with
Moriel and/or his mother in falsifying the 1997 DAS.
Article 1409(2) of the Civil Code provides that contracts "which are absolutely simulated or
fictitious" are inexistent and void from the beginning. It is also provided in Article 1346 that
"[a]n absolutely simulated or fictitious contract is void." According to Justice Eduardo P.
Caguioa, “simulation is the declaration of a fictitious intent manifested deliberately and in
accordance with the agreement of the parties in order to produce for the purpose of
deceiving others the appearance of a transaction which does not exist or which is different
from their true agreement.44 Simulation involves a defect in the declaration of the will. x x x
Simulation requires the following: (1) A deliberate declaration contrary to the will of the
parties; (2) Agreement of the parties to the apparently valid act; and (3) The purpose is to
deceive or to hide from third persons although it is not necessary that the purpose be illicit
or for purposes of fraud. The above three requisites must concur in order that simulation
may exist.”
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The three requisites are present in the 1997 DAS. There is a deliberate declaration that
Tranquilino sold the subject land to Lupa Realty, which is contrary to their will. The
agreement appears on its face to be a valid act. The purpose is to deceive third persons into
believing that there was such a sale between Tranquilino and Lupa Realty. The purpose, in
this case, is evidently tainted with fraud.
Since the 1997 DAS is void, its registration is likewise void pursuant to Section 53 of P.D. No.
1529, which provides that "any subsequent registration procured by the presentation of a
forged duplicate certificate of title, or a forged deed or other instrument, shall be null and
void." The registration of the 1997 DAS being null and void, it follows that TCT T-109129 in
the name of Lupa Realty is also null and void. Being null and void, it should be cancelled.
2. NO. The resolution of this issue hinges on the validity of the 1992 DAS. If the 1992 DAS
between Tranquilino and Nonito is valid, then Nonito could have validly sold the subject land
to Moriel and Moriel could have thereafter validly sold it to Lupa Realty. The invalidity of
Lupa Realty's TCT does not necessarily render invalid its right of ownership over the subject
land if the sales preceding the sale to it by Moriel are valid.
The admission by Nonito's counsel during the pre-trial proceedings before the RTC that
there was no sale between Tranquilino and Nonito qualifies as a judicial admission because
the statement is a deliberate, clear, unequivocal statement of a party's attorney during
judicial proceedings in open court about a concrete or essential fact within that party's
peculiar knowledge. Moreover, there was no palpable mistake on the part of Nonito's counsel
in making the admission because in the offer of Nonito's testimony on December 2, 2008, he
stated that "the land was the property in suit was never sold to him [Nonito] by his brother
Tranquilino Agbayani."
The admission by Nonito himself, on cross-examination by Tranquilino's counsel, that

Tranquilino was in the United States at the time of the purported transaction supports the
statement of the counsel of Nonito that there was no sale between Tranquilino and Nonito.
Hence, there is no question that the 1992 DAS is void.
The three requisites of a simulated contract are existent. There is a deliberate declaration
that Tranquilino sold the subject land to Nonito, which is contrary to their will because there
was no sale between them. The agreement appears on its face to be a valid act. The purpose
is to deceive third persons into believing that there was such a sale between them.
3. NO. As a rule, a certificate of title shall not be subject to collateral attack pursuant to Sec.
48 of PD 1529. The Court defined a direct attack in Firaza, Sr. v. Spouses Ugay: “The attack is
considered direct when the object of an action is to annul or set aside such proceeding, or
enjoin its enforcement. x x x x Such action to attack a certificate of title may be an original
action or a counterclaim, in which a certificate of title is assailed as void.”
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In this case, there is a direct attack on Lupa Realty's TCT. Firstly, the Complaint filed by
Tranquilino before the RTC is captioned: "For: Reivindicacion, Cancellation of Title and
Document with Damages.” Secondly, the Complaint alleged that the 1997 DAS is a falsified
document and the signature purporting to be that of the plaintiff in said document is a
forgery for the reason that he never sold the land in suit to anybody. Thirdly, the Complaint
prayed that judgment be rendered for Tranquilino declaring, among others, the nullity and
ordering the cancellation of TCT No. T-109129 (in the name of Lupa Realty) and ordering the
revival and reinstatement of OCT No. P-46041 in the name of Tranquilino. The foregoing
clearly show that the Complaint purposefully sought the cancellation of Lupa Realty's TCT,
which is a direct attack thereon.
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SPS. TEDY GARCIA AND PILAR GARCIA v. LORETA T. SANTOS, WINSTON SANTOS AND
CONCHITA TAN
DOCTRINE
According to Article 624, there arises a title to an easement of light and view, even in the
absence of any formal act undertaken by the owner of the dominant estate, if this apparent
visible sign, such as the existence of a door and windows, continues to remain and subsist,
unless, at the time the ownership of the two estates is divided, (1) the contrary should be
provided in the title of conveyance of either of them, or (2) the sign aforesaid should be removed
before the execution of the deed.
FACTS
A Complaint for easements of light, air and view, lateral support, and intermediate distances
and damages with prayer for writ of preliminary injunction and/or issuance of TRO was filed
by the Sps. Garcia against the respondents Spouses Loreta and Winston Santos (the Sps.
Santos) and respondent Conchita Tan (Tan) before the RTC of Iloilo City.
Petitioners alleged that they are the registered owners of Lot 2, Blk. 1, San Jose Street,
Southville Subdivision, Molo, Iloilo City. The subject property, which has been occupied by
them for 11 years, has a one-storey residential house erected thereon and was purchased by
them from the Sps. Santos in October 1998. At the time of the purchase of the subject
property from the Sps. Santos, the one-storey house was already constructed. Also, at the
time of the acquisition of the subject property, the adjoining lot, Lot 1, which is owned by the
Sps. Santos, was an idle land without any improvements. Lot 1 remained empty until the Sps.
Santos started the construction of a two-storey residential house therein on January 24,
2009. Upon inquiry from the construction workers, Tedy was erroneously informed that Tan
was the new owner of Lot 1.
The building constructed on Lot 1 is taller than the Sps. Garcia's one-storey residential house.
As such, the Sps. Santos' building allegedly obstructed the Sps. Garcia's right to light, air, and
view. The Sps. Garcia bemoaned how, prior to the construction on Lot 1, they received
enough bright and natural light from their windows. The construction allegedly rendered the
Sps. Garcia's house dark such that they are unable to do their normal undertakings in the
bedroom, living room and other areas of the house without switching on their lights. The Sps.
Garcia likewise alleged that the said structure constructed on Lot 1 is at a distance of less
than three meters away from the boundary line, in alleged violation of their easement.
Furthermore, the Sps. Santos allegedly caused the excavations on Lot 1 without providing
sufficient lateral support to the concrete perimeter fence of the Sps. Garcia.
The respondents argued that Sps. Garcia failed to allege how they acquired the easement of
light and view either by prescription or title. The respondents maintained that the mere
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presence of windows on the one-storey house of the Sps. Garcia in itself does not give rise to
an easement by title, stressing that there was no tenement standing on Lot 1 at the time of
the construction of the one-storey house standing on the subject property. The respondents
also argued that the Sps. Garcia also failed to acquire an easement by prescription because
they never alleged that they made a formal prohibition of the construction of a taller
structure on Lot 1. With respect to the Sps. Garcia's claims on easement of lateral and
subjacent support, the respondents maintained that such claims are baseless because the
excavation works were all made within Lot 1 and were not deep enough to deprive the Sps.
Garcia subjacent and lateral support. Moreover, these excavations were already finished
without causing any damage to the Sps. Garcia's house.
The RTC ruled in favor of the Sps. Santos and dismissed the Complaint. In sum, the RTC held
that the Sps. Garcia never acquired any easement of light and view either by title or by
prescription. On appeal, the CA affirmed the RTC decision. The Sps. Garcia filed a Motion for
Reconsideration, but it was denied by the CA. Hence, the instant Petition for Review
on Certiorari filed by the Sps. Garcia under Rule 45 of the Rules of Court.
ISSUES
1. Whether Sps. Garcia have acquired an easement of light and view by title despite the lack
of any formal notice or prohibition made upon the owner of the servient estate?
2. Whether respondents should therefore remove from Lot 1 their building or structure
which blocks or impedes petitioners' air, light and view?
RULING
1. YES. By virtue of Article 624 of the Civil Code and applicable jurisprudence, the Court holds
that the Sps. Garcia have acquired an easement of light and view by title despite the lack of
any formal notice or prohibition made upon the owner of the servient estate.
While it is a general rule that a window or opening situated on the wall of the dominant estate
involves a negative easement, and, thus, may only be acquired by prescription, tacked from
the time of the formal prohibition upon the proprietor of the servient estate, it is not true
that all windows or openings situated on the wall of the dominant estate may only be
acquired through prescription.
Aside from prescription, easements may likewise be acquired through title.51 The term
"title" does not necessarily mean a document. Instead, it refers to a juridical act or law
sufficient to create the encumbrance.52 One such legal proviso which grants title to an
easement is found in Article 624 of the Civil Code.
The mode of acquiring an easement under Article 624 is a "legal presumption or apparent
sign." Article 624 finds application in situations wherein two or more estates were
previously owned by a singular owner, or even a single estate but with two or more portions
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being owned by a singular owner. Originally, there is no true easement that exists as there is
only one owner. Hence, at the outset, no other owner is imposed with a
burden.55 Subsequently, one estate or a portion of the estate is alienated in favor of another
person, wherein, in that estate or portion of the estate, an apparent visible sign of an
easement exists. According to Article 624, there arises a title to an easement of light and view,
even in the absence of any formal act undertaken by the owner of the dominant estate, if this
apparent visible sign, such as the existence of a door and windows, continues to remain and
subsist, unless, at the time the ownership of the two estates is divided, ( 1) the contrary
should be provided in the title of conveyance of either of them, or (2) the sign aforesaid
should be removed before the execution of the deed.
This is precisely the situation that has occurred in the instant case. Prior to the purchase of
the subject property by the Sps. Garcia in 1998, the subject property and its adjoining lot, i.e.,
Lot 1, were both owned by singular owners, i.e., the Sps. Santos. On the subject property, a
one-storey house laden with several windows and openings was built and the windows and
openings remained open. Then on October 1998, the subject property, together with the one-
storey structure, was alienated in favor of the Sps. Garcia, while the Sps. Santos retained the
adjoining Lot 1.
From Amor v. Florentino and Gargantos v. Tan Yanon, read together with Cortes v. Yu-Tibo,
it has been jurisprudentially established that, in a situation wherein Article 624 of the Civil
Code applies, there arises an easement if an apparent sign of the existence of an
easement, i.e., the existence of windows and openings on the dominant estate, continues to
remain even after the transfer of the property to the new owner, unless such apparent sign
is removed or if there is an agreement to the contrary.
To reiterate, such is exactly the situation attendant in the instant case. Lot 1 and the subject
property were once owned by one owner, i.e., the Sps. Santos. On the subject property, a one-
storey house with windows and other openings that accept light and view from Lot 1, which
was idle at that time, was built. Subsequently, in 1998, the subject property was alienated in
favor of the Sps. Garcia. It is undisputed that the windows and other openings on the one-
storey house subsisted and remained open. It is also not disputed that there was no
agreement made by the parties whatsoever to the effect that the windows and openings of
the Sps. Garcia's house should be closed or removed.
Hence, in accordance with Article 624 of the Civil Code, from the time the Sps. Santos
transferred the subject property to the Sps. Garcia, there arose by title an easement of light
and view, placing a burden on the servient estate, i.e., Lot 1, to allow the Sps. Garcia's
residence unobstructed access to light and view, subject to certain limitations as will be
discussed hereunder.
2. The Court answers the question with a QUALIFIED YES. Based on Articles 669 and 670 of
the Civil Code, there are two kinds of windows: (1) regular or full or direct view windows,
and (2) restricted, or oblique or side view windows. As for openings, they may be direct
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views — those openings which are made on a wall parallel or almost parallel to the line that
divides the estates, in such a way that the neighboring tenement can be seen without putting
out or turning the head, or oblique views — those openings in a wall which form an angle to
the boundary line, and therefore of necessity requires in order to see the neighboring
tenement to thrust the head out of the opening and look to the right or left.74 In the case at
hand, the openings found on the property of the Sps. Garcia offer a direct view of the property
of the respondents Sps. Santos.
In relation to direct view windows or openings, the Civil Code provides two distance rules or
distances that must be observed before they can be made or established.
Firstly, there is the two-meter distance rule under Article 670 of the Civil Code, which
provides: "[n]o windows, apertures, balconies, or other similar projections which afford a
direct view upon or towards an adjoining land or tenement can be made, without leaving a
distance of two meters between the wall in which they are made and such contiguous
property." This Article is to be read in conjunction with Article 671 as the latter provides the
mechanism by which the two-meter distance is to be measured, to wit: "[t]he distances x x x
shall be measured in cases of direct views from the outer line of the wall when the openings
do not project, from the outer line of the latter when they do, and in cases of oblique views
from the dividing line between the two properties."
Hence, under Article 670, which is the general rule, when a window or any similar opening
affords a direct view of an adjoining land, the distance between the wall in which such
opening is made and the border of the adjoining land should be at least two meters.
Secondly, the three-meter distance rule is embodied in Article 673 of the Civil Code, which
states that whenever by any title a right has been acquired to have direct views, balconies or
belvederes overlooking an adjoining property, the owner of the servient estate cannot build
thereon at less than a distance of three meters, not two meters, from the property line, to be
measured in the manner provided in Article 671.
Article 673 is the exception to the general rule. In a situation wherein an easement is
established or recognized by title or prescription, affording the dominant estate the right to
have a direct view overlooking the adjoining property, i.e., the servient estate, which is the
exact situation in the instant case, the two-meter requirement under Article 670 is not
applicable. Instead, Article 673 is the applicable rule as it contemplates the exact
circumstance attendant in the instant case, i.e., wherein an easement of view is created by
virtue of law. The distance between the structures erected on the servient estate and the
boundary line of the adjoining estate must be at least three meters.
In the instant case, the records show that Roberto Planton Baradas (Baradas), the
construction project engineer who supervised the construction of the Sps. Santos' house
located on Lot 1, testified that "[t]here is a distance of two meters between [the Sps. Garcia's]
fence and the wall of [the respondents] spouses Santos." Simply stated, the distance between
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the structure erected by the Sps. Santos on Lot 1 and the boundary line is only two meters,
which is less than the three-meter distance required under Article 673.
Therefore, considering that the Sps. Garcia have acquired by title an easement of light and
view in accordance with Article 624 of the Civil Code, the Sps. Santos should necessarily
demolish or renovate portions of their residential building so that the three-meter distance
rule as mandated under Article 673 of the Civil Code is observed.
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Case Digests
YOUNG BUILDERS CORP. v. BENSON INDUSTRIES, INC.

DOCTRINE
The complaint filed by YBC is an action for a sum of money arising from its main contract
with BII for the construction of a building. YBC's cause of action is primarily based on BII's
alleged non-payment of its outstanding debts to YBC arising from their main contract,
despite demand. If there was a written building or construction contract that was executed
between BII and YBC, then that would be the actionable document because its terms and
stipulations would spell out the rights and obligations of the parties. However, no such
contract or agreement was attached to YBC's Complaint. Clearly, the subject Accomplishment
Billing is not an actionable document contemplated by the Rules, but is merely evidentiary
in nature.
FACTS
Young Builders Corporation (YBC) filed before the RTC a complaint for collection of sum of
money against Benson Industries, Inc. (BII). YBC alleged that it was contracted by BII for the
purpose of constructing BII’s commercial building in Cebu City, pursuant to an
accomplishment billing basis.
As of 18 May 1998, YBC alleged that it had accomplished works on the main contract
amounting to Php54,022,551.39, of which only Php40,678,430 was paid by BII leaving a
balance of Php13,344,121.39. In addition, BII required YBC to do extra works amounting to
Php11,839,110.99 which, after deducting Php350,880 for the water cistern, resulted in a
total collectible of Php24,832,352.38 both on the main contract and the extra works as per
accomplishment billing dated 18 May 1998. However, despite demand, BII failed to pay its
account.
BII admitted that it contracted YBC to construct the former's building but denied that it was
on an accomplishment billing basis, since the construction was pursuant to a timetable with
which YBC failed to comply. BII argued that YBC committed prior breaches in the agreement
particularly the latter's delay and eventual abandonment of the construction as well as its
defective and inferior workmanship and materials which unduly affected the usefulness and
value of the building. BII also denied YBC's claim for extra works, maintaining that those
were remedial not additional works.
BII filed a Demurrer to Evidence, which the RTC denied ruling that there was an imperative
need for BII to present countervailing evidence against YBC. The CA ruled that that YBC failed
to prove that it was entitled to collect any balance from BII, since the only evidence showing
YBC's alleged monetary claims against BII was its Accomplishment Billing which was a
private document, could not be given probative weight considering that its due execution
and authenticity was not duly proven in accordance with procedural rules. The CA excluded
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Exhibit "B" as evidence because of YBC's failure to authenticate it. The CA dismissed YBC’s
complaint. Hence, this petition.
YBC argued that the there is no longer the need to prove the genuineness and due execution
of the Accomplishment Billing because it is an actionable document that was attached to the
complaint and not specifically denied under oath by BII.
ISSUES
(1) Whether the Accomplishment Billing presented by YBC is an actionable document?

(2) Whether the Accomplishment Billing presented by YBC is admissible in evidence?
RULING
1. NO. The Court finds that the subject Accomplishment Billing is NOT an actionable
document. The complaint filed by YBC is an action for a sum of money arising from its main
contract with BII for the construction of a building. YBC's cause of action is primarily based
on BII's alleged non-payment of its outstanding debts to YBC arising from their main
contract, despite demand. If there was a written building or construction contract that was
executed between BII and YBC, then that would be the actionable document because its
terms and stipulations would spell out the rights and obligations of the parties. However, no
such contract or agreement was attached to YBC's Complaint.
Clearly, the subject Accomplishment Billing is not an actionable document contemplated by

the Rules, but is merely evidentiary in nature. As such, there was no need for BII to
specifically deny its genuineness and due execution under oath.
2. NO. The Court agrees with the CA's ruling that it should be excluded as evidence on the
ground of YBC's failure to authenticate the same. The annexation of an exhibit to a pleading,
such as the Accomplishment Billing in this case, does not amount to an allegation or
averment that the statements and recitals contained therein are true and correct or that the
truth of the recitals therein is tendered as an issue in the case; rather, the truth of such
recitals must be expressly alleged m the pleading in order to raise the issue.
The Accomplishment Billing, being a private document, was not admissible considering that
its due execution and authenticity were not duly proven in accordance with Section 20, Rule
132 of the Rules. Under Section 20 of Rule 132, before a private document is admitted in
evidence, it must be authenticated by any of the following: the person who executed it, the
person before whom its execution was acknowledged, any person who was present and saw
it executed, the person who after its execution, saw it and recognized the signature, being
familiar thereto or an expert, or the person to whom the parties to the instrument had
previously confessed execution thereof.
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In this case, Alfredo Young, the Chairman of the Board of YBC, who signed the
Accomplishment Billing, never testified in court. In his stead, Nelson Go Yu merely identified
Exhibit "B" as the Accomplishment Billing which YBC submitted to BII. Yu did not testify that
he saw the execution of the Accomplishment Billing. Neither did Yu affirm the genuineness
of the signature of Young nor did he testify that Young previously confessed execution of the
same to him.
In the case of Chua v. Court of Appeals, it was held that before private documents can be
received in evidence, proof of their due execution and authenticity must be presented. This
may require the presentation and examination of witnesses to testify as to the due execution
and authenticity of such private documents. When there is no proof as to the authenticity of
the writer's signature appearing in a private document, such private document may be
excluded.
Hence, the Court agrees with the CA that YBC's cause of action for collection no longer has
any veritable leg to stand on.
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CHEVRON PHILIPPINES, INC. (FORMERLY KNOWN AS CALTEX PHILIPPINES, INC. v.

LEO Z. MENDOZA
G.R. Nos. 211533 & 212071, June 19, 2019, En Banc (Caguioa, J.)
DOCTRINE
Jurisprudence has held that the elements of an abuse of right under Article 19 of the Civil
Code are the following: (1) the existence of a legal right or duty, (2) which is exercised in bad
faith, and (3) for the sole intent of prejudicing or injuring another. Malice or bad faith is at the
core of an abuse of right. 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. In the instant case, as noted by the CA, "Mendoza utterly failed in this regard, and was
unable to prove the alleged indications of bad faith on the part of Chevron."
FACTS
Sometime in 1997, Mendoza applied with Caltex for dealership of a company-owned service
station in Sta. Cruz, Virac, Catanduanes. Pursuant to the selection procedure of Caltex,
Mendoza passed the psychographic exam, had undergone the required on-the-job evaluation
and training and made a successful defense of his business proposal. The dealer selection
board of Caltex, however, awarded the Virac dealership to the Spouses Carmen and Jose
Francisco. Jose happened to be the grandson of the owner/lessor of the lot occupied by the
Virac service station. Caltex informed Mendoza of its decision regarding his application, and
advised Mendoza that his name has been included in the Dealers Pool listing.
Mendoza re-applied for dealership of a dealer-owned service station and offered four (4)
service station sites to Caltex, three (3) of which were owned by him. San Andres dealership
was awarded to Mendoza's brother-in-law, Joseph Cua, whom Mendoza claims to have not
even passed the initial screening of Caltex to qualify and be included in the dealers pool
listing. Firmly believing that he was again by-passed, Mendoza reminded Caltex’s Country
Manager that his membership in the dealers pool established a "partnership inchoate"
between him and Caltex which must be respected and fulfilled, and told him that he expected
that he will be given priority and that his proposed site will be well-evaluated. Mendoza,
through his counsel, likewise delivered a letter of demand dated February 24, 1999 to Caltex,
reiterating his position that the award of the San Andres dealership to Cua deprived him of
his rightful dealership, causing him injustice and irreparable damages.
Caltex sent Mendoza a letter saying, “our discretion is limited to pinpointing the most
preferable site thereof to ensure its commercial viability and maximize its service to the
public. While it is true that you have offered a lot in the same town of San Andres, your lot is
in the interior thereof and on a one-way street. On the other hand, the location we have
chosen is on the national highway. Although you are indeed a member of our dealer pool in
the area, this does not, by any means guarantee that you will be chosen dealer, nor does it
create a 'Partnership Inchoate' between us, as you so creatively allege.”
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Mendoza filed his Complaint for Torts & Damages with Preliminary Mandatory Injunction
and/or Temporary Restraining Order before the Regional Trial Court of Virac, Catanduanes.
Caltex filed its Answer with Counterclaims arguing that Mendoza’s unfounded allegations
tarnished its good name and reputation; thus, entitled to moral and exemplary damages,
attorney's fees and litigation expenses.
In ruling against Mendoza, the RTC held that Chevron had no obligation to award the
dealership to Mendoza; hence, Mendoza is not entitled to any of the damages he prayed for.
The CA found that "no abuse of right can be ascribed to Chevron in not awarding the two (2)
dealerships to Mendoza." The CA denied the two Motions for Partial Reconsideration filed
respectively by Chevron and Mendoza. Hence, the instant Petitions for Review
on Certiorari were respectively filed by Chevron and Mendoza.
ISSUE
Whether Chevron's act of awarding dealerships to the Franciscos and Cua, and not to
Mendoza, constitutes an abuse of right which is compensable under our civil laws?
RULING
NO. Chevron did not commit any abuse of right in awarding dealerships to the Franciscos
and Cua, and not to Mendoza.
The Court has previously explained that the aforesaid Civil Code provision contains what is
commonly referred to as the principle of abuse of rights. It sets certain standards which may
be observed not only in the exercise of one's rights but also in the performance of one's
duties. These standards are the following: to act with justice; to give everyone his due; and
to observe honesty and good faith.
The recognized Civil Law Commentator, former CA Justice Eduardo P. Caguioa, explained
that through the principle of abuse of rights, "he incurs in liability who, acting under the aegis
of a legal right and an apparently valid exercise of the same, oversteps the bounds or
limitations imposed on the right by equity and good faith[,] thereby causing damage to
another or to society."
As correctly explained by the CA in the assailed Decision, jurisprudence has held that the
elements of an abuse of right under Article 19 of the Civil Code are the following: (1) the
existence of a legal right or duty, (2) which is exercised in bad faith, and (3) for the sole intent
of prejudicing or injuring another. Malice or bad faith is at the core of an abuse of
right. 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. In the
instant case, as noted by the CA, "Mendoza utterly failed in this regard, and was unable to
prove the alleged indications of bad faith on the part of Chevron."
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To recall, Jose, Mendoza's own witness, testified under oath that Chevron assured the
Franciscos that there was absolutely no undue advantage given to them by Chevron and that
they were awarded the franchise by the latter because of Jose's qualifications as a civil
engineer and his wife's experience as a former marketing manager. There is absolutely no
argument raised by Mendoza in his Petition that belies this factual finding by the CA.
With respect to Chevron's award of the San Andres dealership to Cua, as emphasized by the
CA, it was stipulated by the parties during the pre-trial that the site offered by Cua was a two-
way street located along the national highway, making the site obviously and manifestly
preferable compared to Mendoza's site, which was located at a one-way, inner street not
located along the national highway. Again, upon perusal of the Mendoza Petition, there is
undeniably no cogent argument raised that seriously contradicts the factual finding by the
CA that Chevron's act of awarding a dealership in favor of Cua was perfectly above-board
and was exercised in good faith.
In sum, the Court completely concurs with the CA's assessment that "Chevron had been more
than patient and accommodating to Mendoza who could not simply accept his defeat."
Chevron's act of denying Mendoza's stubborn and obstinate attempts to obtain something
which he has absolutely no right to acquire is definitely not an actionable wrong.
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HEIRS OF SPOUSES MONICO SUYAM AND CARMEN BASUYAO* (BOTH DECEASED),

NAMELY: OLIVER B. SUYAM, MABLE B. SUYAM, CHRISTOPHER B. SUYAM, ABEL B.
SUYAM, AND CHESTER B. SUYAM, REPRESENTED BY THEIR ATTORNEY-INFACT AND
ON HIS OWN BEHALF, TELESFORO B. SUYAM
HEIRS OF FELICIANO JULATON @ PONCIANO, NAMELY: LUCINA J. BADUA, SEMEON
JULATON, JULIANA J. BUCASAS, ISABEL** J. ALLAS, RODOLFO JULATON, CANDIDA*** J.
GAMIT, REPRESENTED BY THEIR ATTORNEY-IN FACT AND ON HER OWN BEHALF,
CONSOLACION JULATON
DOCTRINE
According to Section 14 of the Public Land Act, no certificate of title shall be issued pursuant to
a homestead patent application made under Section 13 unless one-fifth of the land has been
improved and cultivated by the applicant within no less than one and no more than five years
from and after the date of the approval of the application. The certificate shall issue only when
the applicant shall prove that he has resided continuously for at least one year in the
municipality in which the land is located, or in a municipality adjacent to the same, and has
cultivated at least one-fifth of the land continuously since the approval of the application. The
subject property was clearly acquired by Isabel through a fraudulently issued homestead
patent.
FACTS
Respondents Heirs of Feliciano filed a Complaint for Recovery of Ownership, Cancellation of

Title, Annulment of Sale, Reinstatement of Title, Reconveyance and Damages before the
MCTC of Maddela-Nagtipunan, Quirino against the Sps. Suyam and Isabel Ramos.
It was alleged in the Complaint that: 1) the Heirs of Feliciano have a valid claim of ownership
over a parcel of land located at Dipintin, Maddela, Quirino (subject property), which was
allegedly originally owned by Feliciano; 2) Feliciano had been in possession of the subject
property as early as the 1940s or 1950s, and that the Heirs of Feliciano had been cultivating
the subject property personally and through their tenants; and 3) the Heirs of Feliciano had
declared the subject property as their own for taxation purposes and had paid realty taxes
thereon.
The controversy arose when, in 1997, upon trying to pay tax arrears on the subject property
at the Treasurer's Office in Maddela, Quirino, the Heirs of Feliciano were informed that the
subject property had been declared for taxation purposes by the Sps. Suyam. It was
discovered that the Sps. Suyam purchased the subject property from Isabel, who was
supposedly issued a patent and a corresponding OCT No. P-10816 in 1980. The Heirs of
Feliciano vigorously maintained that Isabel acquired title to the subject property
fraudulently as she had never possessed or declared ownership of the subject property and
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alleged that the Sps. Suyam were buyers in bad faith because they did not verify who was in
possession of the subject property prior to purchasing the same.
The Heirs of Sps. Suyam filed a Motion to dismiss the Complaint on the ground that the MCTC
has no jurisdiction over the Complaint, that the Complaint states no cause of action, and that
the action brought by the Heirs of Feliciano is not covered by the Rules on Summary
Procedure.
The new MCTC Judge, set aside the aforesaid Orders and granted the Motion on the ground
of lack of jurisdiction. The Heirs of Feliciano filed an appeal before the Regional Trial Court
of Maddela, Quirino, Branch 38 (RTC). The RTC eventually dismissed the Complaint for lack
of merit. The CA reversed the RTC's Decision and granted the Heirs of Feliciano's appeal and
ruled that appellants are entitled to the possession of the subject land and may now apply
for its registration before the proper court after the cancellation of the prior titles.
ISSUES
1. Whether the title from which the Heirs of Sps. Suyam trace their claim of ownership was
acquired through fraudulent misrepresentation and is therefore void?
2. Whether the subject property had become the private property of the Heirs of Feliciano?
RULING
1. YES. A perusal of OCT No. P-1081 reveals that the patent issued in favor of Isabel is a
homestead patent, i.e., Homestead Patent No. 151715, issued on August 4, 1980.
Under Section 11, Chapter III of Commonwealth Act No. 141, otherwise known as the Public
Land Act, only public lands suitable for agricultural purposes can be disposed by virtue of a
homestead settlement.
According to Section 14 of the Public Land Act, no certificate of title shall be issued pursuant
to a homestead patent application made under Section 13 unless one-fifth of the land has
been improved and cultivated by the applicant within no less than one and no more than five
years from and after the date of the approval of the application. The certificate shall issue
only when the applicant shall prove that he has resided continuously for at least one year in
the municipality in which the land is located, or in a municipality adjacent to the same, and
has cultivated at least one-fifth of the land continuously since the approval of the application.
The subject property was clearly acquired by Isabel through a fraudulently issued
homestead patent.
First and foremost, a homestead patent secured through fraudulent misrepresentation is

held to be null and void.25 As held in Republic of the Philippines v. Court of Appeals,
citing Rep. of the Phils. v. Mina, the Court explained that a certificate of title that is void may
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be ordered canceled. And, a title will be considered void if it is procured through fraud, as
when a person applies for registration of the land on the claim that he has been occupying
and cultivating it. In the case of disposable public lands, failure on the part of the grantee to
comply with the conditions imposed by law is a ground for holding such title void. The lapse
of one (1) year period within which a decree of title may be reopened for fraud would not
prevent the cancellation thereof for to hold that a title may become indefeasible by
registration, even if such title had been secured through fraud or in violation of the law would
be the height of absurdity. Registration should not be a shield of fraud in securing title.
In this case, Isabel failed to comply with any of the conditions imposed under Section 14 of
the Public Land Act for the granting of a certificate of title pursuant to a homestead patent
application. Isabel has never possessed, much more continuously cultivated, the subject
property. The Heirs of Feliciano have been in possession of the land in question for a long
time, and the Heirs of Sps. Suyam have never been in possession thereof despite the fact that
they are residents of the same place where the land is located (Dipintin, Maddela, Quirino)."
In fact, even the RTC factually found that the nephew of Feliciano, Cipriano Marzan, started
tilling the subject property as a tenant of the Heirs of Feliciano as early as 1966. As noted by
the CA, Isabel "never appeared to possess or lay claim over the subject land even as Cipriano
was physically present on the subject land since 1966, tilling and harvesting crops." Hence,
it is abundantly clear that Isabel never cultivated the land.
Second, as further noted by the CA, not only did Isabel fail to declare the subject property for
taxation purposes under her name and to pay any realty taxes, lending more credence to the
fact that Isabel never possessed and cultivated the subject property, as a matter of fact, at
the time when Isabel was supposed to cultivate the subject property in view of the purported
homestead patent application as a prerequisite for the issuance of the OCT, since 1978, it
was the Heirs of Feliciano who had been paying real estate taxes.
Hence, the essential requisite for the issuance of a certificate of title pursuant to a homestead
application under Section 14 of the Public Land Act, i.e., cultivation of one fifth of the land by
Isabel, had not been met. Hence, it is clear that the title from which the Heirs of Sps. Suyam
trace their claim of ownership was acquired through fraudulent misrepresentation and is
therefore void.
2. YES. The Heirs of Feliciano have acquired the subject property by open, continuous and
undisputed possession for more than thirty (30) years, making the subject property the
private property of the Heirs of Feliciano even prior to Isabel's homestead patent application.
To reiterate, under Section 11 of the Public Land Act, only public lands suitable for
agricultural purposes can be disposed by virtue of a homestead patent application. The rule
is well-settled that an OCT issued on the strength of a homestead patent partakes of the
nature of a certificate of title only when the land disposed of is really part of the disposable
land of the public domain.
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The open, exclusive and undisputed possession of alienable public land for the period
prescribed by law creates the legal fiction whereby the land, upon completion of the requisite
period, ipso jure and without the need of judicial or other sanction, ceases to be public land
and becomes private property.
By virtue of the actual, public, open, adverse, and continuous possession of the subject
property by petitioners in the concept of an owner since 1940s, the subject property ceased
to be a land of the public domain and became private property.
Hence, in line with established jurisprudence, if the land in question is proven to be of private
ownership and, therefore, beyond the jurisdiction of the then Director of Lands (now Land
Management Bureau), the free patent and subsequent title issued pursuant thereto are null
and void. The indefeasibility and imprescriptibility of the Torrens title issued pursuant to
such null and void patent do not prevent the nullification of the title. If it was private land,
the patent and certificate of title issued upon the patent are a nullity.
In the instant case, it was established that Lot 2344 is a private property of the Santiago clan
since time immemorial, and that they have declared the same for taxation.
Considering the open, continuous, exclusive and notorious possession and occupation of the
land by respondents and their predecessors-in-interests, they are deemed to have acquired,
by operation of law, a right to a government grant without the necessity of a certificate of
title being issued. The land was thus segregated from the public domain and the director of
lands had no authority to issue a patent. Hence, the free patent covering Lot 2344, a private
land, and the certificate of title issued pursuant thereto, are void.
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RIZAL COMMERCIAL BANKING CORP. v. PLAST-PRINT INDUSTRIES INC.

DOCTRINE
Our Civil Code now admits of the so-called imperfect or modificatory novation where the
original obligation is not extinguished but modified or changed in some of the principal
conditions of the obligation. Thus, Article 1291 provides that obligations may be modified.
FACTS
Plast-Print applied for credit facilities with RCBC in order to have a bigger working
capital and for expansion. The credit facilities were secured by, among others, a real estate
mortgage over properties. Plast-Print availed of the said credit facilities by way of
promissory notes. In sum, Plast-Print had a total principal loan obligation in the amount of
12,980,000.00.
Plast-Print failed to pay its past due obligations and interest. RCBC, therefore, sent a
letter demanding that the latter settle its account. Plast-Print acknowledged its obligation
but stated that based on its records, its outstanding balance was P661,564.45 and as such, it
was “not certain if there were any previous applications to its loans that were not
transmitted to its office and would appreciate any reconciliation to rectify the matter of its
payments.”
The parties reconciled their accounts and records and they confirmed that all
statements of account sent to Plast-Print were correct, except for three applications of
payments. Plast-Print, however, still failed to settle its obligations. Plast-Print offered to
restructure its obligations and RCBC agreed on the condition that the former immediately
pay P4,000,000.00. Two post-dated checks were issued by Plast-Print, of which one was
dishonored. A written demand was, hence, made to Plast-Print for the payment of its
obligations which amounted to P13,452,372.85 within five days from receipt thereof but no
payment was made.
On November 12, 1998, some properties covered by Plast-Print's real estate

mortgage were sold in a public auction, where RCBC emerged as highest bidder. It appears
that a second public auction for the remaining properties covered by said REM was
subsequently scheduled on November 30, 1998.
Unknown to RCBC, Plast-Print had filed before the SEC a petition for suspension of
payments (SEC Petition) on October 5, 1998. Thus, on November 16, 1998, the SEC ordered
a 30-day suspension of all payments due Plast-Print's creditors. Consequently, the second
public auction scheduled on November 30, 1998 did not push through.
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Subsequently, a Restructuring Agreement was entered into under which Plast-Print

acknowledged its indebtedness to RCBC in the amount of P11,216,178.22 as of December 31,
1998. In this regard, Plast-Print bound itself to pay said obligation within a term of six years,
with grace periods of one year and two years for interest and principal payments,
respectively. For this purpose, Plast-Print executed in favor of RCBC a non-negotiable
promissory note in the amount of P11,216,178.22, due on December 31, 2004. It appears,
however, that Plast-Print still failed to settle its obligations with RCBC as agreed. Thus, Plast-
Print negotiated for yet another moratorium on its overdue payments, but RCBC no longer
acceded. Hence, Plast-Print filed a Complaint before the RTC for accounting, cancellation of
bid price and sheriffs Certificate of Sale, injunction and damages (RTC Complaint) against
RCBC.
ISSUE
Whether the Restructuring Agreement had the effect of extinguishing the REM
constituted in RCBC's favor through extinctive novation.
RULING
NO. Articles 1291 and 1292 of the Civil Code govern novation. These provisions state:
ART. 1291. Obligations may be modified by: (1) Changing their object or principal
conditions; (2) Substituting the person of the debtor; (3) Subrogating a third person in
the rights of the creditor.
ART. 1292. In order that an obligation may be extinguished by another which substitute
the same, it is imperative that it be so declared in unequivocal terms, or that the old and
the new obligations be on every point incompatible with each other.
Novation has been defined as the substitution or alteration of an obligation by a

subsequent one that cancels or modifies the preceding one. Unlike other modes of extinction
of obligations, novation is a juridical act of dual function, in that at the time it extinguishes
an obligation, it creates a new one in lieu of the old. This is not to say however, that in every
case of novation the old obligation is necessarily extinguished. Our Civil Code now admits of
the so-called imperfect or modificatory novation where the original obligation is not
extinguished but modified or changed in some of the principal conditions of the obligation.
Thus, Article 1291 provides that obligations may be modified.
While the provisions of the Restructuring Agreement had the effect of "superseding"
the "existing agreements" as to Plast-Print's outstanding loans, the changes contemplated in
said agreement merely modified certain terms relating to these loans, particularly, those
pertaining to the waiver of penalties, reduction of interest rates, renewal of payment periods,
and fixing of principal amounts payable as of the date of the execution of the Restructuring
Agreement. These modifications, while significant, do not amount to a total novation of Plast-
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Print's outstanding loans so as to extinguish the REM constituted to secure such loans, or
nullify the foreclosure of properties conducted before these modifications had taken effect.
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Case Digests
MAKATI WATER, INC. v. AGUA VIDA SYSTEMS, INC.

DOCTRINE
The Court has previously held that in construing an instrument with several provisions,
a construction must be adopted as will give effect to all. Under Article 1374 of the Civil Code,
contracts cannot be construed by parts, but clauses must be interpreted in relation to one
another to give effect to the whole. The legal effect of a contract is not determined alone by any
particular provision disconnected from all others, but from the whole read together.
FACTS
Respondent AVSI and petitioner MWI entered into two (2) separate Franchise
Agreements with an initial term of five (5) years from the dates of their execution. Under
these agreements, MWI shall operate two (2) Agua Vida (AV) water refilling stations under
the franchise of respondent AVSI.
With he Franchise Agreement for AV-Pilar expiring on November 11, 2001, while that
of AV-Arnaiz expiring on December 23, 2001, Estaniel, the President of MWI wrote to AVSI
requesting that the terms and conditions of the Franchise Agreements over AV-Pilar and AV-
Arnaiz be extended until December 31, 2001.
AVSI expressed that it was amenable to the extension of the Franchise Agreements
with a reminder that in the event MWI failed to renew the same, AVSI would enforce Section
IV-4 and IV-5 of both Franchise Agreements.
However, the Franchise Agreements were no longer renewed by the parties. MWI
ceased to operate both water refilling stations under the name of AVSI. However, it operated
said water refilling stations under its own name. Then, AVSI wrote to MWI, reminding the
latter of the termination of the Franchise Agreements and demanded that it be allowed to
repurchase the equipment and for it to cease and desist from operating the water refilling
stations, but MWI failed to heed the demand.
Thus, AVSI filed two (2) separate complaints for Specific Performance and Damages
with Prayer for Writ of Preliminary Attachment against MWI.
The RTC held that, with respect to Sections IV-4 of both Franchise Agreements, the
right to repurchase may only be exercised up to the fourth year from the execution of the
Franchise Agreements. Hence, since more than four years have already elapsed since the
Franchise Agreements were executed in 1996, respondent AVSI cannot invoke anymore the
right to repurchase under Sections IV-4 of the Franchise Agreements.
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However, with respect to Sections IV-5 of the Franchise Agreements, the RTC held
that, in the event of termination of the Franchise Agreements, the said provisions imposed
an obligation upon petitioner MWI to not operate water vending businesses within 2
kilometers from the terminated franchise sites for a period of two years from the time of
termination. The RTC found that the aforesaid provisions found on both Franchise
Agreements are not limited to situations wherein there is premature cancellation of the
Franchise Agreements; the clauses should also apply in cases wherein the Franchise
Agreements have expired, which was exactly what occurred in the instant case. The RTC
explicitly found that the two-year prohibitory period shall be counted from the expiration of
the Franchise Agreements. The RTC therefore ordered the closure of AV-Arnaiz and AV-Pilar,
and ordered MWI to pay AVSI damages.
ISSUE
When the Franchise Agreements state that the two-year prohibition clause apply "in
the event of Termination," is it likewise applicable "in the event of Expiration?"
RULING
YES. Termination under Section IV-5 of the Franchise Agreements includes the
expiration of the said agreements. According to Article 1370 of the Civil Code, if the terms of
a contract are clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulations shall control.
Pursuant to the aforesaid Civil Code provision, "the first and fundamental duty of the
courts is the application of the contract according to its express terms, interpretation being
resorted to only when such literal application is impossible."
The literal, express, and plain meaning of the word termination is end of existence or
conclusion. The expiration of an agreement leads to the end of its existence and effectivity;
an agreement has reached its conclusion upon expiration. Upon close reading of the
Franchise Agreements, there is no provision therein which expressly limits, restricts, or
confines the term termination to the cancellation of the agreements by the acts of the parties
prior to their expiry date. There is no provision in the Franchise Agreements which shows
the parties' alleged intent to exclude the expiration of the agreements from the coverage of
the word termination.
Under Article 1374 of the Civil Code, the various stipulations of a contract shall be
interpreted together, attributing to the doubtful ones that sense which may result from all of
them taken jointly.
The Court has previously held that in construing an instrument with several
provisions, a construction must be adopted as will give effect to all. Under Article 1374 of the
Civil Code, contracts cannot be construed by parts, but clauses must be interpreted in
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relation to one another to give effect to the whole. The legal effect of a contract is not
determined alone by any particular provision disconnected from all others, but from the
whole read together.
Applying the foregoing in the instant case, it is the position of petitioner MWI that the
term termination should be interpreted as excluding expiration if the other provisions of the
Franchise Agreements are considered. Petitioner MWI focuses its sights on select provisions
of Section IV of the Franchise Agreements, which state that: (1) any violation by either party
of the terms and conditions of the agreements shall give the other party the right to
immediately terminate the same by giving a written notice of termination thirty (30) days
before the effectivity of the termination (Section IV-1); (2) the agreements may also be
terminated by respondent AVSI if petitioner MWI is not operating its franchise to the benefit
of the former and is performing any conduct seriously prejudicial to the interest of
respondent AVSI (Section IV-2); and the agreements shall be automatically terminated in
case petitioner MWI ceases operations and/or becomes insolvent, bankrupt, or undergoes
receivership (Section IV-3).
Under the interpretation of petitioner MWI, the aforesaid provisions of Section IV of

the Franchise Agreements supposedly reveal that termination only has three grounds (which
do not include expiration of the agreements), namely: (1) violation of the terms and
conditions of the agreements; (2) conduct seriously prejudicial to the interest of respondent
AVSI; and (3) cessation of operations, insolvency, bankruptcy, and receivership on the part
of petitioner MWI.
The Court does not agree with such an interpretation. There is no provision under the
Franchise Agreements which expressly limits, restricts, or confines the grounds of
termination to the three abovementioned grounds. Section IV of the Franchise Agreements
does not state that these three grounds are the only grounds for termination, to the exclusion
of expiration.
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SACLOLO v. MARQUITO
DOCTRINE
An equitable mortgage, like any other mortgage, is a mere accessory contract

"constituted to secure the fulfillment of a principal obligation," i.e., the full payment of the loan.
Since the true transaction between the parties was an equitable mortgage and not a sale with
right of repurchase, there is no "redemption" or "repurchase" to speak of and the periods
provided under Article 1606 do not apply. Instead, the prescriptive period under Article 1144
of the Civil Code is applicable. In other words, the parties had 10 years from the time the cause
of action accrued to file the appropriate action.
FACTS
Petitioners claimed that they each obtained a loan of ₱3,500.00 from Felipe Marquito,
the father of respondents, with the petitioners’ land as collateral. On said date, respondents'
father began occupying the land. Petitioner Ogatia again borrowed an additional ₱6,000.00,
and again used her aliquot share of the land as collateral for the loan. Thereafter, petitioner
Saclolo also borrowed an additional amount of ₱10,000.00 from respondents, using her
aliquot share of the land as collateral.
Petitioners then verbally informed respondents of their intention to "redeem" the

property, and a written offer to redeem the property was made. Respondents, however,
refused. Thus, petitioners were constrained to file a Complaint for redemption of mortgaged
properties, specific performance with damages before the RTC.
Respondents, on the other hand, alleged that in 1984, petitioners sold the subject
property for ₱1,000.00 under a Memorandum of Deed of Sale with Right of
Repurchase. Since then, they have been in actual possession of the property in the concept
of owner and even introduced improvements thereon. They admitted that since 1984,
petitioners, on numerous occasions, borrowed money from them but explained that they
extended said loans on the understanding that petitioners would execute a deed of absolute
sale in their favor.
After trial, the RTC found that the true transaction between the parties was one of
equitable mortgage. However, it held that the period for the redemption of the property had
lapsed as it was filed beyond the four-year period under Article 1606 of the Civil Code. Thus,
it dismissed the complaint.
ISSUE
Whether the action has prescribed
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RULING
NO. In the instant case, the RTC and CA both held that the subject Memorandum of
Deed of Sale with Right of Repurchase, while purporting to be a sale with right to repurchase,
was, in fact, an equitable mortgage. Factual findings of the lower court, more so when
supported by the evidence, as in this case, command not only respect but even finality and
are binding on the Court.
Thus, the only issue for resolution before the Court is whether petitioners' action to
"redeem" the subject property has prescribed. Both the RTC and the CA held that while the
true transaction was one of equitable mortgage under Articles 1602 and 1603 of the Civil
Code, petitioners could no longer "repurchase" or "redeem" the subject property as the
period for redemption under Article 1606 of the Civil Code has lapsed. This is erroneous.
An equitable mortgage, like any other mortgage, is a mere accessory contract

"constituted to secure the fulfillment of a principal obligation," i.e., the full payment of the
loan. Since the true transaction between the parties was an equitable mortgage and not a
sale with right of repurchase, there is no "redemption" or "repurchase" to speak of and the
periods provided under Article 1606 do not apply. Instead, the prescriptive period under
Article 1144 of the Civil Code is applicable. In other words, the parties had 10 years from the
time the cause of action accrued to file the appropriate action.
The release of additional loans on the basis of the same security, coupled with the fact
that respondents never filed an action to consolidate ownership over the subject property
under Article 1607, evidently shows that for 19 years, respondents expressly recognized: 1)
that petitioners continued to own the subject property and 2) that the loan and equitable
mortgage subsisted. Thus, petitioners' cause of action to recover the subject property can be
said to have accrued only in 2004, that is, when respondents rejected petitioners' offers to
pay and extinguish the loan and to recover the mortgaged property as it was only at this time
that respondents manifested their intention not to comply with the true agreement of the
parties. Undoubtedly, the filing of the complaint in 2005 was made well-within the 10-year
prescriptive period. Such treatment is more in keeping with the principle that:
The provisions of the Civil Code governing equitable mortgages disguised as sale
contracts, like the one herein, are primarily designed to curtail the evils brought about by
contracts of sale with right to repurchase, particularly the circumvention of the usury law
and pactum commissorium. Courts have taken judicial notice of the well-known fact that
contracts of sale with right to repurchase have been frequently resorted to in order to
conceal the true nature of a contract, that is, a loan secured by a mortgage. It is a reality that
grave financial distress renders persons hard-pressed to meet even their basic needs or to
respond to an emergency, leaving no choice to them but to sign deeds of absolute sale of
property or deeds of sale with pacto de retro if only to obtain the much-needed loan from
unscrupulous money lenders.
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Respondents, for their part, are not without remedy. They are entitled to collect the
outstanding amount of petitioners' loan, plus interest, and to foreclose on the subject
property should the latter fail to pay the same. To allow respondents to appropriate the
subject lot without prior foreclosure would produce the same effect as a pactum
comissorium. Upon full satisfaction of the debt, the mortgage, being a security contract, shall
be extinguished and the property should be returned to herein petitioners.
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SPS. BELVIS v. SPS. EROLA

DOCTRINE
While petitioners cannot be deemed to be builders in good faith, it being undisputed that
the land in question is titled land in the name of respondents, the CA and the lower courts
overlooked the fact that petitioners constructed improvements on the subject lot with the
knowledge and consent of respondents. In exceptional cases, the Court has applied Article 448
to instances where a builder, planter, or sower introduces improvements on titled land if with
the knowledge and consent of the owner.
FACTS
Respondents alleged that they are owners of a lot covered by a TCT and a tax
declaration, both in the name of respondent Conrado, who allegedly purchased the same in
October of 1978. As the parties were close relatives, respondents allegedly allowed
petitioners to possess the lot, subject to the condition that they would vacate the same upon
demand.
Respondents then sent petitioners a letter requiring the latter to vacate the property
within 30 days from receipt of the letter. Petitioners, however, refused to comply. Hence, a
complaint was filed against petitioners before the RTC. On the other hand, petitioners
claimed that in 1979, the subject property was purchased by the late Rosario, the mother of
petitioner Cecilia and respondent Conrado. Conrado, however, allegedly succeeded in
registering the property solely in his name. Hence, an implied trust was allegedly created
over the ½ undivided hereditary share of petitioner Cecilia. For over 34 years, petitioners
alleged that they possessed and cultivated the lot in the concept of an owner, believing in
good faith that they were co-owners of the subject lot. In the course of their possession,
petitioners allegedly introduced various improvements thereon by planting bamboos, nipa
palms and coconut trees, and by constructing fishponds.
ISSUE
Whether petitioners are builders in good faith under Article 448 and thus have a right
to retain the subject lot until payment of necessary useful and luxurious expenses.
RULING
YES. When a person builds in good faith on the land of another, the applicable
provision is Article 448, which reads:
Article 448. The owner of the land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing or planting, after
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payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built
or planted to pay the price of the land, and the one who sowed, the proper rent. However, the
builder or planter cannot be obliged to buy the land if its value is considerably more than that
of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does
not choose to appropriate the building or trees after proper indemnity. The parties shall agree
upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
This provision covers only cases in which the builders, sowers or planters believe
themselves to be owners of the land or, at least, to have a claim of title thereto. It does not
apply when the interest is merely that of a holder, such as a mere tenant, agent or
usufructuary. From these pronouncements, good faith is identified by the belief that the land
is owned; or that — by some title — one has the right to build, plant, or sow thereon.
In the case at bar, the CA properly held that petitioners have no right to retain possession of
the property under Article 448 as they were aware that their tolerated possession could be
terminated at any time. Thus, they could not have built on the subject property in the concept
of an owner.
Even assuming that petitioner Cecilia was a co-owner of the subject property, Article
448 would still be inapplicable. Article 448 may not generally apply to a co-owner who
builds, plants, or sows on a property owned in common, for then the co-owner did not build,
plant or sow upon land that exclusively belongs to another but of which he is a co-owner.
While petitioners cannot be deemed to be builders in good faith, it being undisputed

that the land in question is titled land in the name of respondents, the CA and the lower
courts overlooked the fact that petitioners constructed improvements on the subject lot with
the knowledge and consent of respondents. In exceptional cases, the Court has applied
Article 448 to instances where a builder, planter, or sower introduces improvements on
titled land if with the knowledge and consent of the owner.
In the instant case, respondents judicially admitted in their Complaint that “being
close relatives of the plaintiffs, the defendants sought the permission and consent of the
plaintiffs to possess the lot as they do not have any property or house to stay” and that “the
plaintiffs agreed that the defendants possess the lot but with a condition that in case the
plaintiffs will be needing the property, the defendants will vacate the lot in question upon
notice to vacate coming from the plaintiffs.” While respondents may have merely tolerated
petitioners' possession, respondents never denied having knowledge of the fact that
petitioners possessed, cultivated and constructed various permanent improvements on the
subject lot for over 34 years. As such, the Court finds that respondents likewise acted in bad
faith under Article 453 of the Civil Code, which provides:
ART. 453. If there was bad faith, not only on the part of the person who built, planted or
sowed on the land of another, but also on the part of the owner of such land, the rights of one
and the other shall be the same as though both had acted in good faith.
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It is understood that there is bad faith on the part of the landowner whenever the act was done
with his knowledge and without opposition on his part.
Pursuant to the aforementioned article, the rights and obligations of the parties shall
be the same as though both acted in good faith. Therefore, Article 448 in relation to Articles
546 and 548 of the Civil Code applies.
Under Article 448 in relation to Articles 546 and 548, respondents as landowners
have the following options: 1) they may appropriate the improvements, after payment of
indemnity representing the value of the improvements introduced and the necessary, useful
and luxurious expenses defrayed on the subject lots; or 2) they may oblige petitioners to pay
the price of the land, if the value is not considerably more than that of the improvements and
buildings. Should respondents opt to appropriate the improvements made, however,
petitioners may retain the subject lot until reimbursement for the necessary and useful
expenses have been made.
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HEIRS OF SPOUSES RAMIREZ v. ABON

DOCTRINE
Section 109 of PD 1529 also contemplates a situation wherein the petition for
reconstitution is filed by another person having an interest in the property who is not the
registered owner. In other words, when an owner's duplicate certificate of title is lost or
destroyed, a person who is a transferee of the ownership over the property, who is not
necessarily the registered owner, may also file the petition for reconstitution. Similarly, in this
situation, the other persons having interest in the property should be notified of the
proceedings. In this situation, the registered owner must also be duly notified of the
proceedings. By his or her very status as registered owner, the latter is an interested party in
the petition for reconstitution case.
FACTS
Petitioners allege that the subject OCT is registered in the names of the late spouses
Ramirez. On May 30, 1978, Angel Abon, the father of respondent Abon, requested the RD to
issue a new owner's duplicate of the OCT on the basis of a document denominated as
“Confirmation of Previous Sale” (CPS, for brevity) whereby the Sps. Ramirez had allegedly
sold the lot to him. Using the new owner's duplicate of the OCT, Angel was able to segregate
a 135-square meter portion (Lot 1748-A) from Lot 1748 and obtain a TCT thereto.
Petitioners filed a Complaint for Annulment of Confirmation of Previous Sale but the
RTC dismissed the complaint motu proprio for lack of jurisdiction. On appeal to the CA, the
case was dismissed for lack of merit.
Meanwhile, respondent Abon filed before the RTC a petition for reconstitution of the
lost owner's duplicate of the OCT. He alleged in his petition that his father, Angel Abon,
acquired the lot covered by said OCT under the CPS and caused the subdivision of 135 square
meters of the subject property, with TCT No. T-50359 covering the said subdivided portion
of the subject property having been issued.
The RTC granted respondent Abon's petition, ordering the RD to issue a new owner's
duplicate copy of OCT No. 4480 in lieu of the lost one. Said decision became final and
executory. The petitioners then filed a Petition for Annulment of Judgment before the CA.
The petitioners contend, among others, that the RTC, abused its discretion in granting
respondent’s petition for want of jurisdiction. Citing Sec. 12 of Republic Act (RA) No. 26
which requires that the petition for reconstitution shall be filed by the registered owner, his
assigns, or any person having an interest in the property, the petitioners contend that the
heirs of Sps. Ramirez were neither included as petitioners nor notified and this shows
respondent’s illicit desire to appropriate the entire lot. The petitioners further allege that
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respondent did not comply with the jurisdictional requirements. The CA denied the
petitioners’ Petition for Annulment of Judgment for lack of merit.
ISSUE
Whether the CA erred in denying the petitioners Heirs of the Sps. Ramirez' Petition
for Annulment of Judgment.
RULING
NO. Jurisprudence holds that Section 109 of Presidential Decree No. (PD) 1529 is the
law applicable in petitions for issuance of new owner's duplicate certificates of title which
are lost or stolen or destroyed.
To clarify, in the instant case, what has been lost is the owner's duplicate copy of the
subject OCT, and not the original copy of the OCT on file with the RD. A reading of the
provisions clearly reveals that Sections 18 and 19 of RA 26 applies only in cases of
reconstitution of lost or destroyed original certificates of title on file with the Register of
Deeds, while Section 109 of PD 1529 governs petitions for the issuance of new owner's
duplicate certificates of title which are lost or destroyed." Hence, the petitioners Heirs of the
Sps. Ramirez' original position in their Petition for Annulment of Judgment that RA 26
applies in the instant case, a theory they entirely abandoned in the instant Petition, is
incorrect.
The requirements for the replacement of lost owner's duplicate certificate of title may
be summarized, thus: a) the registered owner or other person in interest shall send notice of
the loss or destruction of the owner's duplicate certificate of title to the Register of Deeds of
the province or city where the land lies as soon as the loss or destruction is discovered; b)
the corresponding petition for the replacement of the lost or destroyed owner's duplicate
certificate shall then be filed in court and entitled in the original case in which the decree of
registration was entered; c) the petition shall state under oath the facts and circumstances
surrounding such loss or destruction; and d) the court may set the petition for hearing after
due notice to the Register of Deeds and all other interested parties as shown in the
memorandum of encumbrances noted in the original or transfer certificate of title on file in
the office of the Register of Deeds; and e) after due notice and hearing, the court may direct
the issuance of a new duplicate certificate which shall contain a memorandum of the fact that
it is issued in place of the lost or destroyed certificate and shall in all respects be entitled to
the same faith and credit as the original duplicate.
In the instant case, it is not disputed that the subject OCT remains to be registered in
the name of the predecessors-in-interest of the petitioners Heirs of the Sps. Ramirez, i.e., the
Sps. Ramirez. In other words, regardless of the sale of the subject property in favor of the
father of respondent Abon, Angel, the registered owners of the subject property remained to
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be the Sps. Ramirez, aside from the 135-square meter portion of the subject property that
was subdivided and now covered by TCT No. T- 50359 registered in the name of Angel. It is
similarly not in dispute that the Notice of Hearing was not sent to the petitioners Heirs of the
Sps. Ramirez. Otherwise stated, the petitioners Heirs of the Sps. Ramirez were not notified
of the Petition for Reconstitution.
The Heirs of the Sps. Ramirez, being the successors-in-interest of the registered
owners of the subject property, should be considered interested parties that should have
been notified of the Petition for Reconstitution proceedings. According to Section 41 of PD
1529, "the owner's duplicate certificate of title shall be delivered to the registered owner or
to his duly authorized representative." Because the owner's duplicate copy of a certificate of
title is given to and possessed by the registered owner, ordinarily, when an owner's duplicate
copy is lost or destroyed, it is the registered owner who files the petition for reconstitution.
In such a situation, other persons who have an interest in the property, such as mortgagees,
must be notified of the proceedings. However, Section 109 of PD 1529 also contemplates a
situation wherein the petition for reconstitution is filed by another person having an interest
in the property who is not the registered owner. In other words, when an owner's duplicate
certificate of title is lost or destroyed, a person who is a transferee of the ownership over the
property, who is not necessarily the registered owner, may also file the petition for
reconstitution. Similarly, in this situation, the other persons having interest in the property
should be notified of the proceedings. In this situation, the registered owner must also be
duly notified of the proceedings. By his or her very status as registered owner, the latter is
an interested party in the petition for reconstitution case.
The registered owner is an interested party in the petition for reconstitution case
because "the owner of the land in whose favor and in whose name said land is registered and
inscribed in the certificate of title has a more preferential right to the possession of the
owner's duplicate than one whose name does not appear in the certificate and has yet to
establish his right to the possession thereof."
Therefore, being the registered owners of the subject property, the Sps. Ramirez,
whose rights are now transferred by succession to the petitioners Heirs of the Sps. Ramirez,
should have, at the very least, been given sufficient opportunity to be heard in the Petition
for Reconstitution.
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HEIRS OF CULLADO v. GUTIERREZ

G.R. No. 212938, July 30, 2019, En Banc (Caguioa, J.)
DOCTRINE
While the RTC could have resolved the issue of ownership provisionally to determine the
"better right of possession," which is allowed in an accion publiciana, it was without any power
or jurisdiction to order the reconveyance of the land in dispute because that can be done only
upon a definitive ruling on the said issue - something that cannot be done in an accion
publiciana.
FACTS
The evidence on record shows that on May 10, 1995, OCT P-61499 which covered a
parcel of land was issued in Dominic Gutierrez's favor. Dominic's father, Dominador,
representing Dominic who was then still a minor, filed before the RTC an action for recovery
of ownership, possession with damages with prayer for preliminary mandatory injunction
and TRO against Cullado.
Dominic maintained that Cullado had been squatting on the parcel of land covered by
as early as 1977, and that despite repeated demands, Cullado refused to vacate the said lot.
Cullado, in his Answer with Motion to Dismiss, interposed the special and affirmative
defenses of his actual possession and cultivation of the subject parcel of land in an open,
adverse and continuous manner. He likewise asked for the reconveyance of the property,
considering that Dominic and his father fraudulently had the subject property titled in
Dominic's name.
Dominic's counsel repeatedly failed to attend the scheduled hearings, and as a

consequence, the heirs of Cullado were eventually allowed to present their evidence after
Dominic was deemed to have waived his right to cross-examine the witness of the heirs of
Cullado.
The RTC ruled in favor of the heirs of Cullado. Dominic filed a Petition for Relief from
Judgment wherein he alleged, among others, that his counsel's negligence in handling his
case prevented him from participating therein and from filing his appeal. However, the same
was denied by the R TC for having been filed out of time. Dominic then filed with the CA a
petition for annulment of judgment on the ground of extrinsic fraud and lack of jurisdiction.
The CA initially dismissed the petition but reinstated the same upon Dominic's motion for
reconsideration.
ISSUE
Whether the CA erred in granting Dominic's petition for annulment of judgment.
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RULING
NO. The issue in an accion publiciana is the "better right of possession" of real
from a Torrens title. Thus, a lessee, by virtue of a registered lease contract or an unregistered
lease contract with a term longer than one year, can file, as against the owner or intruder, an
accion publiciana if he has been dispossessed for more than one year. In the same manner, a
registered owner or one with a Torrens title can likewise file an accion publiciana to recover
possession if the one-year prescriptive period for forcible entry and unlawful detainer has
already passed.
While there is no express grant in the Rules of Court that the court wherein an accion
publiciana is lodged can provisionally resolve the issue of ownership, unlike an ordinary
ejectment court which is expressly conferred such authority (albeit in a limited or
provisional manner only, i.e., for purposes of resolving the issue of possession), there is
ample jurisprudential support for upholding the power of a court hearing an accion
publiciana to also rule on the issue of ownership.
This adjudication is not a final determination of the issue of ownership; it is only for
the purpose of resolving the issue of possession, where the issue of ownership is inseparably
linked to the issue of possession. The adjudication of the issue of ownership, being
provisional, is not a bar to an action between the same parties involving title to the property.
The adjudication, in short, is not conclusive on the issue of ownership.
From the foregoing, the Court thus clarifies here that in an accion publiciana, the
defense of ownership will not trigger a collateral attack on the plaintiffs Torrens or
certificate of title because the resolution of the issue of ownership is done only to determine
the issue of possession. In the present case, the Answer of Cullado raised, as "special and
affirmative defenses" to Dominic's accion publiciana, the issue of fraud in obtaining
Dominic's certificate of title on the ground that "neither he nor his father had been in actual
possession and cultivation of the subject parcel of land" and that Dominic was not qualified
as he was then a minor.
In this regard, there is no dispute that Dominic was awarded a patent on May 10, 1995
and Original Certificate of Title No. (OCT) P-61499 was issued in his name pursuant to the
said patent on May 17, 1995. Cullado's Answer, filed on August 18, 1997, questioned the OCT
issued in Dominic's name. At that time, Dominic's OCT had already become incontrovertible
upon the lapse of the one-year period to question it by reason of actual fraud as provided in
Section 32 of PD 1529.
Dominic has a better right of possession because his right is based on ownership
recognized by OCT P-61499 registered and titled under his name. The age-old rule that the
person who has a Torrens title over the land is entitled to possession thereof squarely
applies in his favor.
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In view of the foregoing, the RTC was clearly without jurisdiction in ruling that
Cullado had become the owner of the land in controversy "through the medium of acquisitive
prescription" having been in possession by himself and with his wife for 36 years and that
Dominic must reconvey the land in favor of the heirs of Cullado. While the RTC could have
resolved the issue of ownership provisionally to determine the "better right of possession,"
which is allowed in an accion publiciana, it was without any power or jurisdiction to order
the reconveyance of the land in dispute because that can be done only upon a definitive
ruling on the said issue - something that cannot be done in an accion publiciana.
Lastly, since the special and affirmative defenses raised by the heirs of Cullado in the
Answer pertain to discrepancies or errors in Dominic's certificate of title, which necessarily
entails a review of the decree made in Dominic's favor, the RTC was bereft of any jurisdiction
to rule on such defenses in an action for recovery of possession or accion publiciana initiated
by the registered owner. The RTC even ruled on the issue of the nullity of Dominic's
certificate of title on the ground of his minority at the time of the issuance of the free patent
in his favor - an issue that clearly involved a collateral attack on Dominic's Torrens title,
which "is beyond the province of this proceeding and not within the jurisdiction of the trial
court."
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SPOUSES MODOMO v. SPOUSES LAYUG

DOCTRINE
While the Civil Code permits the subsequent modification of existing obligations, these
obligations cannot be deemed modified in the absence of clear evidence to this effect. Novation
is never presumed, and the animus novandi, whether total or partial, must appear by express
agreement of the parties, or by their acts that are too clear and unequivocal to be mistaken.
Accordingly, the burden to show the existence of novation lies on the party alleging the same.
FACTS
Spouses Layug filed a complaint for ejectment, alleging that: they are the registered
owners and legal possessors of a parcel of land. Aforesaid property was leased to Spouses
Modomo for a period of seven (7) years. Pursuant to the Contract of Lease Spouses Modomo
agreed to pay the amount of Php170,000.00 as monthly rentals subject to an escalation of
10% for the second and third year, 15% on the fourth and fifth year and 20% on the sixth
and seventh year. It was also agreed by the parties that real estate taxes on the property shall
be paid by Spouses Modomo. Subsequently, Spouses Modomo defaulted in the payment of
the escalation of rental fees, rentals for the year 2008 which would have been paid in
advance, and real estate taxes due on the property. Spouses Layug sent a letter demanding
that they settle their unpaid monthly rentals but to no avail. Ultimately, a letter dated was
sent terminating the Contract and containing therein a demand for Spouses Modomo to
vacate the premises. To protect their interest, Spouses Layug instituted the present suit.
On the contrary, Spouses Modomo argued that: the parties originally agreed that
Spouses Modomo would pay the amount of Php170,000.00 subject to an escalation of 10%
for the second and third year, 15% on the fourth and fifth year and 20% on the sixth and
seventh year. However, considering that Jocelyn Modomo had introduced improvements
thereon, she asked Spouses Layug to reduce the monthly rentals to Php150,000.00 and the
non-imposition of the escalation clause and the real estate tax provision. Spouses Modomo
religiously paid the rentals strictly in accordance with their subsequent agreements.
Spouses Layug purportedly reneged on their agreements by imposing the escalation

clause. Therefore, Spouses Modomo prayed that the case be dismissed because the Contract
of Lease had been amended by the subsequent oral agreements between the parties. Spouses
Modomo further claimed that Spouses Layug are in estoppel in pais, due to their
unconditional acceptance of the reduced monthly rental. Lastly, they also alleged that the
Contract of Lease has been novated in view of the subsequent oral agreements of the parties.
ISSUES
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1) Whether the provisions of the Contract of Lease governing rental fees, escalation
and real estate tax payment have been partially novated by the parties' alleged
subsequent verbal agreement;
2) Whether the principle of estoppel in pais applies so as to preclude Spouses Layug

from denying the partial novation of the Contract of Lease; and
3) Whether Spouses Modomo are entitled to reimbursement for useful improvements

made upon the leased property.
RULING
1) There is partial novation. Novation has been defined as the substitution or

alteration of an obligation by a subsequent one that cancels or modifies the preceding one.
Unlike other modes of extinction of obligations, novation is a juridical act of dual function, in
that at the time it extinguishes an obligation, it creates a new one in lieu of the old. This is
not to say however, that in every case of novation the old obligation is necessarily
extinguished. Our Civil Code now admits of the so-called imperfect or modificatory novation
where the original obligation is not extinguished but modified or changed in some of the
principal conditions of the obligation. Thus, article 1291 provides that obligations may be
modified.
While the Civil Code permits the subsequent modification of existing obligations,
these obligations cannot be deemed modified in the absence of clear evidence to this effect.
Novation is never presumed, and the animus novandi, whether total or partial, must appear
by express agreement of the parties, or by their acts that are too clear and unequivocal to be
mistaken. Accordingly, the burden to show the existence of novation lies on the party alleging
the same.
Applying the foregoing principles, the Court finds that while there has been a
modificatory novation of the Contract of Lease through the parties' subsequent verbal
agreement, such novation relates solely to the lowering of the monthly rental fee from
Php170,000.00 to Php150,000.00. The provisions governing escalation and real estate tax
payment, as set forth under the Contract of Lease and modified by the subsequent written
Addenda, stand. It must be stressed that unlike the modification of the monthly rental fee
which is supported by several pieces of documentary evidence and confirmed by Spouses
Layug's own submissions, the modification of the provisions on annual escalation and
proportional payment of real estate tax is supported solely by Spouses Modomo's own self-
serving statements.
2) No. 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
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and acts on such belief, so that he will be prejudiced if the former is permitted to deny the
existence of such facts.
For the principle of estoppel in pais to apply, there must be: (i) conduct amounting to
false representation or concealment of material facts or at least calculated to convey the
impression that the facts are otherwise than, and inconsistent with, those which the party
subsequently attempts to assert; (ii) intent, or at least expectation that this conduct shall be
acted upon, or at least influenced by the other party; and (iii) knowledge, actual or
constructive, of the actual facts.
Based on the records, Spouses Layug served upon Spouses Modomo several letters
expressing their objection to the latter's deficient payments. These letters belie Spouses
Modomo's imputation of silence and acquiescence on the part of Spouses Layug.
3) No. Spouses Modomo maintain that they are entitled to reimbursement under
Article 1678 of the Civil Code, which reads:
ART. 1678. If the lessee makes, in good faith, useful improvements which are suitable to
the use for which the lease is intended, without altering the form or substance of the property
leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of
the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee
may remove the improvements, even though the principal thing may suffer damage thereby. He
shall not, however, cause any more impairment upon the property leased than is necessary.
Suffice it to state that Spouses Modomo have, by their own acts, deprived the Spouses
Layug of the option to appropriate the improvements made upon the leased premises by
causing their demolition. Notably, Spouses Modomo did not dispute that they had "vacated
the leased premises and left no single piece of wood or materials on the premises and
demolished everything." Hence, they are precluded from seeking reimbursement for
improvements that are now inexistent.
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PAZ MANDIN-TROTIN v. FRANCISCO A. BONGO

G.R. No. 212840, 28 August 2019, Second Division (Caguioa, J.)
FACTS
The instant controversy involves a parcel of land Lot No. 3982 situated in Danao,
Panglao, Bohol, containing an area of 32,668 square meters, more or less. Lot No. 3982 is
covered by OCT No. 64051 registered in the name of Candido Bongo and issued on November
27, 1990. Candido Bongo is the husband and father of the defendants-appellees. Candido is
also the only brother of Diosdado Bongo Diosdado, the father of the plaintiff-appellants.
The Heirs of Diosdado Bongo's claim over the subject land is founded on the alleged
acquisition of the land by their father Diosdado from its previous owner, Ancelma Bongcas,
by virtue of the Escritura de Venta executed on March 9, 1929. According to the Heirs of
Diosdado Bongo, after Diosdado purchased the land, he took possession of the same and
cultivated it with the help of Candido. When Candido got married to Irene Arbulo, Diosdado
allowed Candido to construct a house on the land and till the same while giving a share of
the produce to Diosdado. The Heirs of Candido Bongo likewise constructed their own houses
on the land when they got married. When Diosdado died, Candido continued to give them a
share of the harvests. However, in 1997, the Heirs of Diosdado Bongo learned that Candido
caused the Free Patent Application over Lot No. 3982 and the subsequent registration and
issuance of title in his favor sometime in 1990. Hence on September 5, 1997, the Heirs of
Diosdado Bongo caused the filing of an adverse claim.
Subsequently, on March 10, 1999, the Heirs of Diosdado Bongo filed an action seeking
the annulment of title, recovery of ownership and possession of Lot No. 3982, and damages
on the contention that the application of Candido for a free patent was surreptitious and
spurious. Hence, the subsequent registration of the subject land before the Register of Deeds
of Bohol is illegal and the issuance of title is baseless and therefore, null and void ab initio.
On March 14, 2000, intervenor/cross-claimant Paz Mandin-Trotin filed an Urgent

Motion for Intervention. Trotin alleged that Francisco Bongo, Sabina Bongo-Buntag and
Artemia Bongo-Liquit (herein respondents) executed in her favor a Deed of Conditional Sale
on August 21, 1997 over a portion of one hectare of Lot No. 3982 and pursuant thereof she
had already paid the sum of P100,000.00 (out of the P1,000,000.00 consideration, with the
balance of P900,000.00 "to be paid not later than 2 months and on or before October 31,
1997"). Trotin suspended payment of the balance of the stipulated price in the Deed of
Conditional Sale to protect her interests and prayed that judgment be rendered in favor of
the Heirs of Candido Bongo and as a consequence, the Heirs of Candido Bongo be ordered to
execute and deliver to her the one-hectare portion of Lot No. 3982 upon full payment of the
purchase price as stipulated.
The RTC ruled in favor of the Heirs of Candido Bongo. The CA dismissed the appeal
and affirmed the RTC Decision. The CA stated that a prior determination as to whether the
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Deed of Conditional Sale (DCS) that she and the Heirs of Candido Bongo executed was a
contract of sale or a contract to sell was necessary. After citing the pertinent provisions of
the DCS, the CA determined that it was only a contract to sell because based on the
stipulations therein, the vendors reserved title to the subject property until full payment of
the purchase price.
The CA ruled that intervenor Trotin could not anymore compel the Heirs of Candido
Bongo to fulfill their contracted obligation because her failure to pay the balance of the
purchase price amounting to P900,000.00 "not later than 2 months and on or before October
31, 1997" relieved the vendors of any obligation to hold the property in reserve for her, there
being no more contract to speak of. Without filing a motion for reconsideration, intervenor
Trotin filed the instant Rule 45 Petition against respondents.
ISSUE
Whether the CA erred when it ruled that intervenor Trotin, having failed to pay the
balance of the purchase price within the period provided in the DCS, relieved
respondents of any obligation to hold the property subject of the DCS in reserve for
her because there was no more contract to speak of.
RULING
NO. The CA ruled that the DCS between intervenor Trotin and respondents is a
contract to sell and not a contract of sale based on prevailing jurisprudence. Citing Heirs of
Paulino Atienza v. Espidol, the CA stated that in a contract to sell, the ownership is, by
agreement, retained by the seller and is not to pass to the buyer until full payment of the
purchase price; the buyer's full payment of the price is a positive suspensive condition to the
coming into effect of the agreement; and the title simply remains in the seller if the buyer
does not comply with the condition precedent of making payment at the time specified in the
contract.
The CA based its ruling on the provisions of the DCS. Firstly, the DCS dated August 21,
1997 provided that of the P1,000,000.00 consideration, P100,000.00 was to be paid upon
the signing and execution of the contract and the balance of P900,000.00 "to be paid not later
than 2 months and on or before October 31, 1997". Secondly, the DCS provided that a definite
or absolute sale would be executed by the vendors only upon full payment of the purchase
price and in case of non-payment of the purchase price or breach of any term or condition of
the DCS, the latter would become automatically null and void, without need of any formality.
Lastly, the DCS provided that upon rescission, the vendee would peacefully deliver the
property to the vendors.
Rather than questioning the correctness of the CA's ruling on its finding that the DCS
is a contract to sell and not a contract of sale, intervenor Trotin wants the Court to consider
the "relevant facts and documents" referred to and cited in her Affidavit of Merit in support
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of her argument that the DCS was novated when the condition to pay the P900,000.00
balance within two months was changed to when the Adverse Claim of the Heirs of Diosdado
Bongo would be resolved and finally to after the civil case against respondents was
terminated.
Intervenor Trotin is precluded in a Rule 45 certiorari petition to raise factual issues.

Section 1 of Rule 45 is unmistakable: "The petition x x x shall raise only questions of law,
which must be distinctly set forth." For her novation theory to be sustained, the Court will
have to do a factual review. While certain exceptions are allowed, intervenor Trotin
unfortunately fails to cite the relevant exceptions to sustain her plea for the Court to make a
factual review. Also, her theory of novation cannot be entertained for the first time on appeal.
Intervenor Trotin only mentioned the DCS as the basis of her prayer to the CA to include in
its judgment on appeal, the grant of the relief as prayed for in the Answer In Intervention
that respondents be ordered to execute and deliver to her, a Deed of Absolute Sale over the
one-hectare portion of the land covered by OCT No. 64051 "upon full payment of the
purchase price as stipulated." Intervenor Trotin utterly fails to allege her novation theory
and the purported facts surrounding it in her appeal Brief before the CA.
Inasmuch as intervenor Trotin does not question before the Court the legal
conclusion of the CA that the DCS is a contract to sell and pursuant to its provision that in
case she failed to pay the balance of the purchase price when due or to comply with any of
its terms and conditions, the DCS would automatically and without further formality become
null and void, the DCS became ineffective on October 31, 1997 upon the failure of intervenor
Trotin to pay the balance of P900,000.00 to respondents. The CA's ruling on this legal matter,
rightly or wrongly, has already attained finality. Consequently, intervenor Trotin should
vacate the subject one-hectare portion since she no longer has any right to possess the same.
While the DCS also provides that all sums so paid by intervenor Trotin should be
returned by respondents in case the DCS is rescinded for nonpayment of the balance, the
Court deems it just and equitable that the P100,000.00 which she had paid to them upon its
execution be considered as the rental of the one-hectare portion subject of the DCS from
October 31, 1997 to the date when she vacates the said portion, which is over a decade long.
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DR. RUBEN C. BARTOLOME v. REPUBLIC OF THE PHILIPPINES

FACTS
In 2014, petitioner, a resident of Parañaque City, filed a petition for change of name
under Rule 103 of the Rules of Court before the RTC, seeking "to correct the name 'Feliciano
Bartholome' as appearing in his birth certificate. He stated that he has been using the name
'Ruben Cruz Bartolome' since his childhood.”
After posting and publication, petitioner was allowed to present the following
documents to support his claim: 1) Doctor of Medicine Diploma dated May 18, 1965; 2) CSC
Certificate for Medical Examiners Physician dated December 6, 1965; 3) PRC ID No. 0030981
dated December 6, 1968; 4) Marriage Contract No. 894-2-68 dated May 18, 1968; 5)
Philippine Passport No. EB 1611302 dated December 23, 2010; 6) Senior Citizens ID Card
No. 2006661 dated December 11, 2002; and 7) NBI Clearance No. 15050159 dated
November 25, 2011,6 which all bore the name, "Ruben C. Bartolome."
It appears from the records that although the Office of the Solicitor General was
notified and the Office of the City Prosecutor of Parañaque City was deputized to appear on
behalf of the State, no motion to dismiss was filed questioning the jurisdiction of the court or
the venue of the petition. In fact, the State did not present any controverting evidence nor
file any comment or opposition to the petition. It likewise appears from the records that
petitioner's father and siblings were never impleaded.
The RTC denied the petition for failure to exhaust administrative remedies,
insufficiency of evidence, and improper venue. On appeal, the CA affirmed the RTC ruling.
The CA noted that petitioner was seeking to change his first name and to correct his surname
as indicated in his birth certificate. Thus, the CA held that petitioner should have filed a
petition for the correction of entries in his birth certificate under R.A. 9048, instead of a Rule
103 petition for change of name. The CA likewise held that petitioner failed to adduce
sufficient evidence to show that his father and his siblings' last name was actually spelled
"Bartolome."
Hence, petitioner filed the instant Petition insisting that Rule 103 is the proper
remedy. In its Comment, the OSG argued that the CA correctly denied the appeal. The OSG
claims that petitioner should have first filed a petition before the local civil registrar
pursuant to R.A. 9048 in order to change his first name and to correct the spelling of his last
name. The OSG claims that there was no splitting of cause of action as both reliefs are covered
by R.A. 9048.
ISSUE
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Whether the change/correction sought in petitioner's first name, middle name, and
surname, as appearing in his birth certificate, from "Feliciano Bartholome" to "Ruben Cruz
Bartolome" should be filed under R.A. 9048, Rule 103, or Rule 108 of the Rules.
RULING
The CA and the OSG correctly found that the administrative proceeding under
R.A. 9048 applies to all corrections sought in the instant case. Republic Act No. 9048
amended Articles 376 and 412 of the Civil Code, effectively removing clerical errors and
changes of the name outside the ambit of Rule 108 and putting them under the jurisdiction
of the civil registrar.
In the instant case, petitioner seeks to change his first name, to include his middle,
and to correct the spelling of his surname, i.e., from "Feliciano Bartholome" as stated in his
birth certificate to "Ruben Cruz Bartolome". The Court agrees with the CA and the OSG that
the aforementioned changes and corrections are covered by Section 1 of R.A. 9048 as
amended by R.A. 10172, which provides:
Section 1. Authority to Correct Clerical or Typographical Error and Change of

First Name or Nickname. — No entry in a civil register shall be changed or corrected
without a judicial order, except for clerical or typographical errors and change of first
name or nickname, the day and month in the date of birth or sex of a person where it
is patently clear that there was a clerical or typographical error or mistake in the
entry, which can be corrected or changed by the concerned city or municipal civil
registrar or consul general in accordance with the provisions of this Act and its
implementing rules and regulations.
While the grounds for change of name under Rule 103 are found in jurisprudence, the
grounds for change of first name or nickname are expressly provided in R.A. 9048, Section 4,
viz.:
SECTION 4. Grounds for Change of First Name or Nickname. — The petition for
change of first name or nickname may be allowed in any of the following cases:
(1) The petitioner finds the first name or nickname to be ridiculous, tainted with
dishonor or extremely difficult to write or pronounce;
(2) The new first name or nickname has been habitually and continuously used by the
petitioner and he has been publicly known by that first name or nickname in the
community; or
(3) The change will avoid confusion.
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Petitioner seeks to change his first name from "Feliciano " to "Ruben, " on the ground
that he has been using the latter since childhood. Contrary to petitioner's claims therefore,
the change sought is covered by R.A. 9048 and should have been filed with the local civil
registry of the city or municipality where the record being sought to be corrected or changed
is kept.
The inclusion of petitioner's middle name is covered by R.A. 9048, as amended. While
substantial corrections of entries in the civil register are still covered by Rule 108,
typographical or clerical corrections must now be filed under R.A. 9048 as amended. Section
2 of the said law defines clerical or typographical errors. Evidently the test for whether a
correction is clerical or substantial is found in the provision itself. Misspelled names or
missing entries are clerical corrections if they are visible to the eyes or obvious to the
understanding and if they may be readily verified by referring to the existing records in the
civil register. They must not, however, involve any change in nationality, age or status.
In Republic v. Gallo, the Court unequivocally held that a prayer to enter a person's
middle name is a mere clerical error, which may be corrected by referring to existing records.
Thus, it is primarily administrative in nature and should be filed pursuant to R.A. 9048 as
amended. Applying the aforementioned ruling to the instant case therefore, petitioner's
prayer that his middle name, "Cruz" be entered, is a mere clerical correction, and must
therefore be likewise undertaken through the administrative proceeding provided under
R.A. 9048.
As herein petitioner's allegedly misspelled surname, "Bartholome," may be readily

corrected by merely referring to the existing records of the civil registrar, such as the
surnames of petitioner's parents and immediate family members, the petition should have
been filed under R.A. 9048 and not under Rule 103 of the Rules. It likewise follows that the
petition should have been filed with the local civil registry office of the city or municipality
where the record being sought to be corrected or changed is kept, in accordance with Section
3 of R.A. 9048 and not in accordance with the venue provided in Rule 103.
To obviate any further confusion on the matter, the Court categorically holds that
typographical or clerical errors in a person's surname must likewise be corrected through
the administrative proceeding under R.A. 9048.
As herein petitioner's allegedly misspelled surname, "Bartholome," may be readily

corrected by merely referring to the existing records of the civil registrar, such as the
surnames of petitioner's parents and immediate family members, the petition should have
been filed under R.A. 9048 and not under Rule 103 of the Rules. It likewise follows that the
petition should have been filed with the local civil registry office of the city or municipality
where the record being sought to be corrected or changed is kept, in accordance with Section
3 of R.A. 9048 and not in accordance with the venue provided in Rule 103. In sum, all changes
sought by the petitioner fall within the ambit of R.A. 9048. Petitioner may only avail of the
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appropriate judicial remedies when the changes/corrections sought through the

administrative proceeding are denied.
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ENGR. RICARDO O. VASQUEZ v. PNB AND NOTARY PUBLIC JUDE* JOSE F. LATORRE, JR.
DOCTRINE
The principle of mutuality of contracts is pronounced in Article 1308 of the Civil Code,
which states that a contract "must bind both contracting parties; its validity or compliance
cannot be left to the will of one of them." The principle of mutuality of contracts dictates that a
contract must be rendered void when the execution of its terms is skewed in favor of one party.
FACTS
Engineer Ricardo Vasquez applied for and was granted a loan by the Philippine
National Bank on November 8, 1996 under the latter's Pangkabuhayan ng Bayan Program,
in the amount of P600,000.00 evidenced by Promissory Note No. 009/96PNB5 dated
November 8, 1996. Later on, Vasquez again obtained another loan under the Revolving
Credit Line in the sum of P800,000.00, as evidenced by PN 031/96RCL6 dated November 8,
1996. The aforesaid loans, having a total amount of P1,400,000.00 were secured by 4 parcels
of land located in Trece Martirez, Province of Cavite owned and registered under the name
of Vasquez by way of a Real Estate Mortgage Agreement.
On June 21, 1999, however, Vasquez filed a Complaint against PNB and the notary
public who was assigned by PNB as the public auction sale officer, Jude Jose F. Latorre, Jr.
before the RTC for specific performance, annulment of foreclosure proceedings and damages
with prayer for the issuance of a preliminary injunction. In his Complaint, Vasquez alleged
the following, among others:
"3. The rate of interest agreed upon by the parties in these loan agreements is only
17% (and up to 18% for 3 years). Vasquez subsequently suspended further payment
when PNB unilaterally escalated upwardly the interest rate from the stipulated 17%
to 33.00% to 24%, to 34%, to 29% to 21.70% and 20.186% even without prior
knowledge and conformity of Vasquez as borrower.
"4. Alarmed by PNB's unbrindled upward unilateral escalation of interest that

balooned to staggering P2,071,189.64 (as of Sept. 22, 1998) and lately P2,363,315.40
(per notice of Auction Sale) as early as April 05, 1998, and Oct. 17, 1998, Vasquez sent
PNB letter-requests for recomputation of his account to delete the excess interest and
penalties that the parties did not agree in the first place.”
In support of his prayer of issuance of a preliminary injunction, Vasquez claimed that

due to the unilateral escalation of interest rates, it resulted to a rapid surge of his actual
monetary obligation, thus, placing him in a situation where he could no longer pay his
obligations with the bank. As he could no longer comply with his mounting monetary
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obligation, his properties were being subjected to foreclosure proceedings which might later
result to his ejectment.
The RTC rendered a Decision dismissing the Complaint of Vasquez ruling that the Credit
Agreement and the Promissory Notes were executed by the parties willfully and voluntarily.
Further, there was no evidence presented to support Vasquez' assertion that he had already
partially paid the loan obligations. In the assailed Decision, the CA modified the RTC's
Decision. The CA held that the RTC was correct in holding that Vasquez failed to discharge
the burden of showing that the obligation has already been discharged. As to the issue of the
validity of the foreclosure proceedings, the CA held that the "record is bereft of any allegation
and/or evidence that could aid this Court in resolving this issue." Hence, the instant appeal
filed by both parties.
ISSUE
1) Whether the interest rate scheme imposed by PNB under the Credit Agreement
and other loan documents is valid; and
2) If PNB's imposition of interest rates is found to be null and void, what are the
implications of such holding on the foreclosure of the mortgaged properties and the
principal loan obligation of Vasquez.
RULING
1) NO. A key provision of the Credit Agreement readily reveals that even if the parties
were able to stipulate on the aforementioned interest rates, such rates were still subject to
unilateral modification by PNB. Simply stated, under the Credit Agreement entered into by
the parties, a supposedly fixed and specified rate of interest is, in reality, never really fixed.
The interest rates are beholden to the sole will of PNB. It is crystal clear that PNB decided on
its own to modify and increase the rates of interest, without notifying and informing Vasquez
before it modified the monetary interest rates, and the basis for such modification. PNB
merely sent statements of accounts already imposing the interest rates unilaterally
determined by PNB. PNB itself readily admits in its Petition that the modification of the
applicable interest rates under the Credit Agreement is made dependent "on the future
policy adopted by PNB." It has been indubitably established that the escalation of interest
rates in the instant case is solely potestative on the part of the creditor and not anchored on
valid and reasonable standards.
Considering the foregoing, without a doubt, the interest rate scheme imposed upon
Vasquez under the loan agreement is clearly one-sided, unilateral, and violative of one of the
fundamental characteristics of contracts - which is the essential equality of the contracting
parties, oftentimes called the principle of mutuality of contracts. Therefore, the interest
rate scheme provided under the Credit Agreement and the promissory notes is null
and void.
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The principle of mutuality of contracts is pronounced in Article 1308 of the Civil Code,
which states that a contract "must bind both contracting parties; its validity or compliance
cannot be left to the will of one of them." The principle of mutuality of contracts dictates that
a contract must be rendered void when the execution of its terms is skewed in favor of one
party. While providing the payment of interest on the subject loans, the loan documents
executed by the parties, on their face, failed to clearly and definitively fix the specific interest
rates to be applied on the subject loans. Further, under the Credit Agreement, PNB reserved
its unilateral right to increase or decrease the interest rate, should PNB's cost of money to
fund or maintain the loan change. Then, as proven by the Statement of Account on record,
subsequent increases in the monetary interest were unilaterally made by PNB which were
admittedly without notifying Vasquez beforehand. Hence, the interest rates imposed by PNB
in the instant case should be deemed null and void for being violative of the principle of
mutuality of contracts, even assuming arguendo that Vasquez intelligently consented to the
interest rates provisos found in the Credit Agreement and the other loan documents.
Therefore, considering the foregoing discussion, the Court finds no error in the CA's
finding in the assailed Decision that the interest rate scheme imposed by PNB on Vasquez'
loan obligation was unilateral in nature, and, necessarily, null and void.
2) The record shows that the four parcels of lands registered in the name of Vasquez
were already foreclosed by PNB, with the auction sale having been conducted on June 24,
1999. Jurisprudence has held that in a situation wherein a debtor was not given an
opportunity to settle his/her debt at the correct amount due to the imposition of a null and
void interest rate scheme, no foreclosure proceedings may be instituted. The registration of
such foreclosure sale has been held to be invalid and cannot vest title over the mortgaged
property.
In a situation wherein null and void interest rates are imposed under a contract of
loan, the non-payment of the principal loan obligation does not place the debtor in a state of
default, considering that under Article 1252 of the Civil Code, if a debt produces interest,
payment of the principal shall not be deemed to have been made until the interests have
been covered. Necessarily, since the obligation of making interest payments in the instant
case is illegal and thus non-demandable, the payment of the principal loan obligation was
likewise not yet demandable on the part of PNB. With Vasquez not being in a state of default,
the foreclosure of the subject properties should not have proceeded.
Hence, based on established jurisprudence, the fact that the interest rate scheme
imposed upon Vasquez was null and void inevitably leads to the invalidity of the foreclosure
sale. It would be unjust if the foreclosure sale of the subject properties was considered valid,
as this would result in an inequitable situation wherein Vasquez would have his properties
foreclosed for failure to pay a loan that was unduly inflated due to the unilateral and one-
sided imposition of monetary interest.
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Therefore, the CA was incorrect in finding that there is no evidence presented that
warrants the nullification of the foreclosure sale of the subject properties. The Court rules
that the foreclosure sale of the subject properties is null and void. Necessarily, the said
foreclosure sale cannot be deemed to have transferred the right of ownership and possession
to PNB and its successors-in-interest.
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THE MERCANTILE INSURANCE CO., INC. v. DMCI-LAING CONSTRUCTION, INC.

G.R. No. 205007, 16 September 2019, Second Division (Caguioa, J.)
DOCTRINE
Altech's obligation to perform the specified works under the Sub Contract constitutes an
obligation to do. Obligations to do have as their object a prestation consisting of a performance
of a certain activity which, in turn, cannot be exacted without exercising violence against the
person of the debtor. Accordingly, the debtor's failure to fulfill the prestation gives rise to the
creditor's right to obtain from the latter's assets the satisfaction of the money value of the
prestation.
FACTS
On March 17, 1997, Rockwell Land Corporation entered into an agreement with DLCI
for the construction of The Condominium Towers and associated external landscaping works
of Hidalgo Place, Rizal Tower, Luna Garden, and Amorsolo Square at the Rockwell Center,
Makati City. Part of DLCI's scope of work in the Project was the supply and installation of
glazed aluminum and curtain walling. Part of the terms and conditions of the contract
between Rockwell and DLCI was the appointment of Altech as Rockwell's nominated sub-
contractor to DLCI for the supply and installation of glazed aluminum and curtain walling.
On July 30, 1997, in compliance with the agreement between Rockwell and DLCI,
Rockwell sent a Notice of Award to Proceed to Altech for the supply and installation of the
glazed aluminum and curtain walling at the Project. Said NTP bears the conformity of DLCI
and Altech.
Pursuant to the NTP and the Sub Contract between DLCI and Altech, Altech secured a
Performance Bond from Mercantile for its scope of work in the Project. On September 5,
1997, Mercantile, as surety, with Altech, as principal, issued a Performance Bond in favor of
Rockwell and DLCI, as obligee, for the amount of PhP90,448,941.60. Subsequently, on August
26, 1999, Mercantile extended the effectivity of the Performance Bond for another 6 months
from September 5, 1999 to March 5, 2000.
On November 9, 1998, DLCI called Altech's attention to the poor progress of the works
subject of their Sub-Contract in its Letter addressed to Altech's President and General
Manager, Nicanor Peña. DLCI was constrained, in several instances, to undertake the
completion and rectification of unfinished and sub-par works to avert further delay. DLCI
apprised Altech of these instances, as well as its intention to charge the corresponding costs
against Altech's account.
On September 3, 1999, DLCI sent a letter to Mercantile, demanding "liquidation of the

Performance Bond" with interest at the stipulated rate of 2o/o per month (First Call). On
January 20, 2000, Altech advised DLCI that it had relinquished its major assets to its bank:
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due to financial difficulties. Nevertheless, Altech assured DLCI that it "would continue to
provide [its] whole hearted support in terms of the logistical needs of the Project." On
February 21, 2000, DLCI terminated its Sub-Contract with Altech effective immediately.
Subsequently, Mercantile advised DLCI that it had referred its demand to Altech for
appropriate action through its Letter. On March 28, 2000, Mercantile advised DLCI that since
Altech had informed them that negotiations were underway for an amicable settlement, they
would hold further evaluation of DLCI's claim in abeyance "to give enough elbow room to
Altech to settle the claim on its own." After negotiations between DLCI and Altech fell
through, DLCI reiterated its demand for liquidation on November 28, 2000. Mercantile
denied DLCI's claim on February 26, 2001 on the ground that the Performance Bond expired
on March 5, 2000.
Aggrieved, DLCI filed a complaint against Altech and Mercantile before the CIAC. The
Tribunal dismissed DLCI's Complaint. The CA granted DLCI's petition for review through the
Assailed Decision. Contrary to the Tribunal's findings, the CA held that DLCI's First Call was
valid despite its failure to reflect the specific amount claimed. In addition, the CA ruled that
Mercantile cannot escape its liability under the Performance Bond due to its alleged
expiration, considering that it was Mercantile's own inaction which delayed the evaluation
of DLCI's claim.
ISSUE
Whether the CA erred when it directed Mercantile to pay DLCI the sum of
Php31,618,494.81 on the basis of the Performance Bond, with stipulated interest at the rate
of 2% per month.
RULING
Preliminary - DLCJ's demand for liquidation through the First Call was valid.
It is a well-established rule that a contract stands as the law between the parties for
as long as it is not contrary to law, morals, good customs, public order, or public policy.
Hence, to determine the validity of DLCI's demand for liquidation, reference to the conditions
of the Performance Bond is proper.
On the conditions for recovery, the Performance Bond states:
This bond is conditioned upon the OBLIGEE's DLCI's first demand, the SURETY
Mercantile shall immediately indemnify DLCI notwithstanding any dispute to the
effect that the principal has fulfilled its contractual obligation, the amount demanded;
PROVIDED however, that the liability of Mercantile under this bond shall in no case
exceed the sum of Php90,448,941.60. Mercantile further agrees to pay DLCI interest
at the rate of 2% per month on the amount due from the date of receipt by Mercantile
of DLCI's first demand letter up to the date of actual payment.
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By these terms, Mercantile obligated itself to pay DLCI immediately upon demand,
notwithstanding any dispute as to the fulfillment of Altech's obligations under the Sub-
Contract. The Performance Bond thus stands as a contract of surety contemplated under
Article 2047 of the Civil Code which states:
ART. 2047. By guaranty a person, called the guarantor, binds himself to the creditor
to fulfill the obligation of the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions of Section
4, Chapter 3, Title I of this Book shall be observed. In such case the contract is called
a suretyship.
Through a contract of suretyship, one party called the surety, guarantees the
performance by another party, called the principal or obligor, of an obligation or undertaking
in favor of another party, called the obligee. As a result, the surety is considered in law as
being the same party as the debtor in relation to whatever is adjudged touching upon the
obligation of the latter, and their liabilities are interwoven as to be inseparable.
While the contract of surety stands secondary to the principal obligation, the surety's
liability is direct, primary and absolute, albeit limited to the amount for which the contract
of surety is issued. The surety's liability attaches the moment a demand for payment is made
by the creditor.
While the Performance Bond in this case is "conditioned" upon DLCI's first demand,
a close reading of its terms unequivocally indicates that Mercantile's liability thereunder
consists of a pure obligation since such liability attaches immediately upon demand, and is
neither dependent upon any future or uncertain event, nor a past event unknown to the
parties. Thus, the Performance Bond is one that is callable on demand, wherein mere demand
triggers Mercantile's obligation (as surety) to indemnify DLCI (the obligee) the amount for
which said bond was issued, that is, Php90,448,941.60.67
Accordingly, the requirement of "first demand" in this case should be understood in

light of Article 1169, wherein the obligee is deemed to be in delay upon judicial or extra-
judicial demand. Clearly, Mercantile's liability became due upon its receipt of the First Call.
Main Issue - YES. DLCI is entitled to claim the costs it

incurred as a consequence of Altech' s delay and poor workmanship.
Under the Performance Bond, Altech and Mercantile jointly and severally bound
themselves "for the payment of the Performance Bond in the event that Altech should fail to
fully and faithfully undertake and complete its scope of work in strict compliance with the
general conditions, plans and specifications, bill of quantities and other documents, which
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were furnished to Altech and which were incorporated in said Performance Bond by
reference."
Due to Altech's delay and poor workmanship, DLCI was constrained to incur
additional expenses to complete the sub-contract works, which, in turn, amounted to
Php73,887,492.20.88. These expenses, when charged against Altech's account, bring down
the total sub-contract price to Php317,116,223.51. It appears, however, that Altech was able
to previously bill and receive payment for accomplished work in the amount of
Php371,346,953.7289 - an amount evidently more than what Altech is entitled to after
taking DLCI's additional expenses for completion into account.
Thus, DLCI's claim of Php31,618,494.81 represents the difference between the

adjusted sub-contract price of Php317,116,223.51 and DLCI's previous payments of
Php371,346,953.72, less the retention amount which remains with DLCI. The fact that DLCI
paid in excess of what Altech is now entitled to under the Sub-Contract does not place the
claim beyond the scope of the Performance Bond, inasmuch as the claim results from
additional expenses incurred by DLCI to complete the sub-contract works - expenses which
DLCI would not have otherwise incurred had Altech fully and faithfully complied with its
obligations under the Sub-Contract.
Altech's obligation to perform the specified works under the Sub Contract constitutes
an obligation to do. Obligations to do have as their object a prestation consisting of a
performance of a certain activity which, in turn, cannot be exacted without exercising
violence against the person of the debtor. Accordingly, the debtor's failure to fulfill the
prestation gives rise to the creditor's right to obtain from the latter's assets the satisfaction
of the money value of the prestation. As Altech's surety, Mercantile is bound to answer for
the costs incurred by DLCI as a consequence of the latter's non-fulfillment, pursuant to
Article 1167 of the Civil Code:
ART. 1167. If a person obliged to do something fails to do it, the same shall be
executed at his cost.
This same rule shall be observed if he does it in contravention of the tenor of the
obligation. Furthermore, it may be decreed that what has been poorly done be undone. It is
well to note that Mercantile had the opportunity to contest the costs claimed by DLCI, but
again, did not do so. Accordingly, the sum payable, as computed by DLCI, stands.
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ELMER MONTERO v. SANTIAGO MONTERO, JR. AND CHARLIE MONTERO

G.R. No. 217755, 18 September 2019, Second Division (Caguioa, J.)
DOCTRINE
According to jurisprudence, "in a number of cases, the Court has held that actions for
reconveyance of or for cancellation of title to or to quiet title over real property are actions that
fall under the classification of cases that involve title to, or possession of, real property, or any
interest therein." Hence, the instant case is clearly one involving title to, possession of, and
interest in real property. As the subject matter of petitioner Elmer's Complaint involves title to,
possession of, and interest in real property which indisputably has an assessed value of below
P20,000.00, the CA was correct in finding that the RTC had no jurisdiction to hear, try and
decide the case.
FACTS
Petitioner filed a Complaint for Declaration of Nullity of Affidavit of Adjudication,

Cancellation of Tax Declaration No. 52896 and OCT No. P-14452,7 Reconveyance, and
Damages with Prayer for Preliminary Injunction before the RTC against respondents.
Petitioner averred:
1. Dominga Taeza was the second legal wife of Jose Montero. Their children were
Alfredo, Pacita, Marcela, and Ernesto. Dominga had one illegitimate son, Federico
Taeza. Petitioner was a surviving heir of Alfredo Montero.
2. Dominga died intestate and left a parcel of land situated in Pilar, Abra. Free Patent
No. 27941 under Dominga's name was issued over the land on January 11, 1939.
Different tax declarations in Dominga's name also showed that she was in actual
possession of the land. Upon Dominga's death in 1975, her actual, exclusive, open,
continuous, and notorious possession of the land was transferred to her successors-
in-interest by operation of law.
3. Sometime in 1993, when petitioner was about to pay the real estate tax on the
property, he was informed by the Assessors' Office of Pilar, Abra that the same was
already transferred in the name of respondent Santiago by virtue of an Affidavit of
Adjudication dated June 13, 1989 upon the latter's misrepresentation that
respondent Santiago was an only heir of his father Santiago Montero, Sr. The latter,
however, was not related by blood to Dominga, but was the son of Jose Montero,
Dominga's husband by his first marriage.
4. By virtue of the Affidavit of Adjudication, Tax Declaration No. 417 in Dominga's

name was cancelled by Tax Declaration No. 5289 in respondent Santiago's name. OCT
No. P- 14452 covering the land was also issued in the latter's name.
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5. Sometime in 2002, respondent Santiago and his children threatened Ernesto

Montero with physical harm to purposely acquire possession of a residential portion
of the land, and thereafter, respondent Charlie started dumping materials for the
house construction over the pleas of Ernesto Montero. Respondent Santiago, on the
other hand, was also renovating his house located within the residential area of the
land.
6. The respondents wantonly refused to reconvey the property to the surviving heirs
of Dominga.
Respondents Santiago and Charlie filed a Motion to Dismiss, alleging that the RTC had
no jurisdiction over the subject matter of the complaint. The trial court denied respondents'
motion to dismiss ruling that the cause of action is a direct attack upon the title of the
defendants, maintaining that the issuance of OCT No. P-14452 is void ab initio, and
considering that the same was issued way back in 1994, that the equitable remedy of
reconveyance be ordered. The "Motion to Dismiss" is therefore denied, because, evidently,
the cause of action is incapable of pecuniary estimation. The CA granted the respondents'
Rule 65 Petition. Petitioner Elmer filed his Motion for Reconsideration which was denied by
the CA in the assailed Resolution. Hence, the instant appeal.
ISSUE
Whether the subject matter of petitioner Elmer's Complaint involve the title to,
possession of, or interest in real property, or is incapable of pecuniary estimation.
RULING
Petitioner Elmer's Complaint involves the title to, possession of, and interest in real
property, i.e., the subject property, which indisputably has an assessed value of below
P20,000.00. Hence, the RTC had no jurisdiction to hear case. It is the bone of contention of
petitioner Elmer that the Complaint that he filed before the RTC is incapable of pecuniary
estimation as the principal relief that he is seeking is the cancellation of certain documents,
i.e., the Affidavit of Adjudication, Tax Declaration No. 5289, and OCT No. P-14452.
Jurisprudence has held that an action "involving title to real property" means that the
plaintiffs cause of action is based on a claim that he owns such property or that he has the
legal rights to have exclusive control, possession, enjoyment, or disposition of the same.
In connection with the foregoing, it is a hornbook doctrine that a court's jurisdiction

over the subject matter of a particular action is determined by the plaintiffs allegations in the
complaint and the principal relief he seeks in the light of the law that apportions the
jurisdiction of courts. Hence, the Court has held that even if the action is supposedly one for
annulment of a deed, the nature of an action is not determined by what is stated in the
caption of the complaint but by the allegations of the complaint and the reliefs prayed for.
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Where the ultimate objective of the plaintiffs is to obtain title to real property, it should be
filed in the proper court having jurisdiction over the assessed value of the property subject
thereof.
Applying the foregoing in the instant case, the Complaint itself unequivocally states
that petitioner Elmer, by filing the said Complaint, seeks to compel respondents Santiago and
Charlie "to respect the right of ownership and possession over the land in question by the
heirs of Dominga." Simply stated, at the heart of petitioner Elmer's Complaint is his assertion
of the right of ownership and possession over the subject property as against respondents
Santiago and Charlie. Primarily, petitioner Elmer seeks to establish and confirm his supposed
"rightful ownership" over the subject property.
Hence, more than asking for the nullification of documents, it is crystal clear that
petitioner Elmer asserts his alleged right of possession over the subject property by seeking
the reconveyance of the subject property. According to jurisprudence, "in a number of cases,
the Court has held that actions for reconveyance of or for cancellation of title to or to quiet
title over real property are actions that fall under the classification of cases that involve title
to, or possession of, real property, or any interest therein." Hence, the instant case is clearly
one involving title to, possession of, and interest in real property.
The primary relief being sought by petitioner Elmer is really the establishment and
confirmation of his right of ownership and possession over the subject property as against
respondents Santiago and Charlie, considering that the cancellation of the subject OCT would
merely follow and would merely be a consequence of the determination of petitioner Elmer's
title over the subject property. Hence, as the subject matter of petitioner Elmer's Complaint
involves title to, possession of, and interest in real property which indisputably has an
assessed value of below P20,000.00, the CA was correct in finding that the RTC had no
jurisdiction to hear, try and decide the case.
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CAMARINES SUR TEACHERS AND EMPLOYEES ASSOCIATION, INC. v. PROVINCE OF

CAMARINES SUR, REPRESENTED BY GOVERNOR LUIS RAYMUND F. VILLAFUERTE, JR.
G.R. No. 199666, 07 October 2019, Second Division (Caguioa, J.)
DOCTRINE
It must be emphasized that the right to rescind or resolve by the injured party is not
absolute as the third paragraph of Article 1191 authorizes the court to fix a period; thus,
rescission will not be granted in the following cases: (1) where the breach is only slight or
casual; (2) where there has been substantial compliance; and (3) where the court finds valid
reason for giving a period of fulfillment of the obligation. Likewise, the courts may deny
revocation of a donation based on non-fulfillment of "conditions" under Article 764 when the
unperformed part is insignificant.
FACTS
The Province of Camarines Sur is the registered owner of a certain parcel of land
situated in Barangay Peñafrancia, Naga City covered by OCT No. 22. On September 28, 1966,
the Local Government of the Province of Camarines Sur thru then Governor Apolonio G.
Maleniza donated a portion of said property covered by OCT No. 22 to the Camarines Sur
Teachers' Association, Inc. (by virtue of the Deed of Donation Inter Vivos executed by the
parties.
On October 14, 2007, the Province of Camarines Sur executed a Deed of Revocation
of Donation thru Governor Luis Raymund F. Villafuerte, Jr. and served a copy thereof to
CASTEA. On October 23, 2007, the Province of Camarines Sur thru the Provincial Legal
Officer sent a demand letter to CASTEA for the latter to vacate the premises of the property
in question within 10 days from receipt of the letter.
On February 13, 2008, the Province of Camarines Sur, represented by Gov. Luis
Raymund F. Villafuerte, Jr., filed a case for Unlawful Detainer against CASTEA before the
MTCC. On the other hand, CASTEA contends that the Province of Camarines Sur has ceased
to be the owner of the of the property possessed and occupied by CASTEA contending that
the ownership thereof has already been transferred to CASTEA by virtue of the Deed of
Donation Inter Vivos. CASTEA argues that its act of leasing out to Bodega Glassware portion
of the building it constructed on the donated property does not constitute selling,
mortgaging or encumbering the donated property or any improvements thereof.
The MTCC Br. 1 rendered a Decision ordering defendant CASTEA to immediately

vacate the premises. CASTEA appealed the MTCC Br. 1 Decision to the RTC. The RTC took the
stand that there was a need for a court action to revoke the Deed of Donation since CASTEA
denied having violated the conditions thereof and refused to voluntarily return the donated
property. Thus, only a judicial determination could conclusively settle whether the
revocation by the Province was proper.
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The Province filed a petition for certiorari under Rule 65 of the Rules of Court before
the CA. The CA ruled that CASTEA violated the Deed of Donation since a lease is an
encumbrance in contemplation of the law. On the issue of prescription, the CA stated that the
general rules on prescription apply and not the rules on donation since the subject donation
is an onerous one and Article 1108(4) of the Civil Code provides that prescription runs
against juridical persons, except the State and its subdivisions. Thus, the CA ruled that
despite the filing of the unlawful detainer case in 2008, it was not barred by prescription.
ISSUE
1) Whether the CA erred in reversing the RTC Decision.

2) Did the lease defeat the object of the Deed of Donation so that it can be considered
as a substantial and fundamental breach to warrant the resolution of said Deed of
Donation?
RULING
1) YES. The issue here on the validity and propriety of the revocation by the Province
of the Deed of Donation, which will entitle it physical possession of the donated property,
rests on whether CASTEA's breach of the Deed of Donation, if any, warrants the automatic
revocation thereof.
The provision clearly imposes a burden on the donee which is onerous or

burdensome in character - the provision imposes a restriction on the alienation and
encumbrance by CASTEA of the donated property - CASTEA should not sell, mortgage or
encumber the donated property including any and all improvements thereon in favor of any
party. The provision further contains an automatic revocation of the donation upon non-
compliance thereof by CASTEA resulting in its nullity.
In this case, since CASTEA contests the propriety of the Province's revocation of the
Deed of Donation then the mere invocation by the Province of the automatic revocation
clause is insufficient. A judicial declaration of its propriety is, therefore, required before the
continued possession by CASTEA, as donee, can be declared unlawful. Since the present case
is an unlawful detainer, the determination by the Court on this issue will be merely
provisional.
Proceeding now to the prestation not to do that is imbedded in the provision under
review, there appears to be no legal objection to the acts of the donee that are prohibited -
"not sell, mortgage or encumber." They are very reasonable in the light of the intended
purpose of the Deed of Donation.
The Court now proceeds to determine whether the alleged breach of the prestation
not to do, in light of the other prestations of CASTEA as provided in the Deed of Donation, is
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sufficient ground for its automatic revocation or rescission. As earlier noted, the donation
under review is either a modal or onerous one and not purely gratuitous. Thus, the rules on
contracts govern.
It is admitted that one of the grounds for revocation of a donation is the failure of the
donee to comply with any of the conditions of the donation. This is embodied in Article 764
of the Civil Code, which provides:
ART. 764. The donation shall be revoked at the instance of the donor, when the donee
fails to comply with any of the conditions which the former imposed upon the latter.
In this case, the property donated shall be returned to the donor, the alienations made
by the donee and the mortgages imposed thereon by him being void, with the
limitations established, with regard to third persons, by the Mortgage Law and the
Land Registration Laws.
This action shall prescribe after four years from the non-compliance with the
condition, may be transmitted to the heirs of the donor, and may be exercised against
the donee's heirs. (647a)
It must be emphasized that the right to rescind or resolve by the injured party is not
absolute as the third paragraph of Article 1191 authorizes the court to fix a period; thus,
rescission will not be granted in the following cases: (1) where the breach is only slight or
casual; (2) where there has been substantial compliance; and (3) where the court finds valid
reason for giving a period of fulfillment of the obligation. Likewise, the courts may deny
revocation of a donation based on non-fulfillment of "conditions" under Article 764 when
the unperformed part is insignificant.
Given the foregoing disquisition on Article 764 and the pertinent provisions on
obligations and contracts, the Court takes the position that the violation of CASTEA in
entering into the 20-year lease with Bodega Glassware should not be taken in isolation with
the other prestations and conditions in the Deed of Donation, especially the purpose of the
donation. While under Article 764, a single violation or non-fulfillment is sufficient to revoke
a donation based on the phrase "any of the conditions," its application must be circumscribed
within the rules on obligations and contracts wherein substantial and fundamental breach
as to defeat the object of the parties in making the agreement and substantial compliance are
given due recognition and importance. Thus, a blind literal application of Article 764 without
due consideration and regard to the peculiar circumstances of the donation at issue, bearing
in mind the specific intention or purpose of the donor vis-a-vis the tangible benefits of the
donation to the donee, is not adopted, bearing in mind the harshness of the consequence of
revocation.
Thus, it behooves the Court to determine whether the act of CASTEA in entering into
a 20-year contract of lease with Bodega Glassware, which appears to be a violation of the
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non-encumbrance provision or one of the "conditions" imposed upon CASTEA, is a

substantial and fundamental one "that defeated the object of the parties in entering into the
Deed of Donation".
2) NO. First, while an unregistered lease for more than one year is an encumbrance,
the encumbrance was not perpetual as it is time-bound to only 20 years, which is not an
unreasonable period. It must be noted as well that the lease had expired on September 1,
2015. Second, the lease did not cover the entire donated 600-square meter lot and the
building that CASTEA constructed. Only a portion of the building was leased. As admitted in
the Deed of Revocation, "the Province has found out that CASTEA is leasing a portion of the
donated property to Bodega Glassware." Third, the rentals that were being collected were
being given to members of CASTEA as mutual aid and death benefits, as supported by
evidence on record. This is undoubtedly in keeping with the objective of the Deed of
Donation - "the improvement and upliftment of education and other matters related
thereto." Fourth, CASTEA had already complied with its main prestation, which is the
construction of the intended building, and based on the language of the Deed of Donation:
“Provided, lastly that the construction of the building or buildings referred to above shall be
commenced within a period of 1 year from and after the execution of this donation,
otherwise, this donation shall be deemed automatically revoked and voided and of no further
force and effect," it would appear that it is the non-commencement of building construction
within one year from the execution of the Deed of Donation that would trigger the automatic
revocation clause. With the full compliance of its main prestation credited in CASTEA's favor,
the effect of its breach should be lessened or diminished. Fifth, the building constructed by
CASTEA and the donated lot continue to be owned by CASTEA and continue to house its
offices pursuant to the mandate of the Deed of Donation because only a portion of the
building was leased to Bodega Glassware. Sixth, if the prohibited acts: "sell, mortgage or
encumber" are to be interpreted in the light of the objective or "condition" of the donation
as quoted above, then in order for the breach to reach the threshold of substantiality and
fundamentality, the breach by CASTEA should be of a permanent character as to totally and
perpetually deprive CASTEA of the use of the donated lot and the building that it constructed.
Thus, the perceived single violation by CASTEA when weighed against its substantial
compliance of the other "conditions" or prestations of the donation and the avowed purpose
of the donation is, as it should be, considered insignificant to trigger the application of the
automatic revocation clause.
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REPUBLIC OF THE PHILIPPINES v. TANDUAY LUMBER, INC.

G.R. No. 223822, 16 October 2019, Second Division (Caguioa, J.)
DOCTRINE
Clearly, the State's complaint for reversion is based solely on Section 118 of CA 141. Since
the restriction on the conveyance, transfer or disposition of the patented land subject of this
case within five years from and after the issuance of the patent pursuant to Section 118 of CA
141 has been removed and the title of the patentee Epifania San Pedro is, under RA 11231, now
considered as title in fee simple, which is not subject to any restriction on alienation or
encumbrance, the Government no longer has any legal basis to seek the reversion or
reconveyance of the subject land.
FACTS
By virtue of Free Patent No. III-12 17306 dated May 20, 1987, OCT No. P-22-C was
issued and registered on May 25, 1987, in the name of Epifania San Pedro. It covers Lot No.
3070, Cad-333 situated in San Juan, Balagtas, Bulacan with an area of 12,108 square meters.
After the death of Epifania San Pedro, Pelagio Francisco, Sr. executed an Affidavit of Self
Adjudication declaring that he was the sole surviving heir of the patentee. As a consequence
thereof, OCT No. P-22-C was cancelled and Pelagio Francisco was issued TCT No. T-7836 on
October 25, 1990. Thereafter, Pelagio Francisco sold the subject property to defendant
Tanduay Lumber. Thus, TCT No. T-7836 was cancelled and TCT No. P-8582 was issued in the
name of Tanduay Lumber.
On January 31, 2011, a certain Arturo and Teresita Mendoza wrote the OSG a petition
to request the OSG to cause the cancellation of Patent No. P-22-C issued to Epifania San
Pedro, and all subsisting derivative titles. They alleged that the patentee sold the lot covered
by said patent within 5 years from the issuance of the patent, in violation of the provisions
of the Public Land Act. A Complaint for Cancellation of Title/Reversion dated August 31,
2014 was filed by the Republic of the Philippines, represented by the Regional Executive
Director, DENR, Regional Office No. III the private respondents. The RTC dismissed the
Complaint for Cancellation of Title and Reversion is on the grounds of equitable estoppels
and laches. The petitioner filed a motion for reconsideration, which was denied by the RTC.
The petitioner filed the instant Rule 45 Petition. Subsequently, the private respondents,
except Tanduay Lumber, Inc., filed their comments.
ISSUE
Whether the petitioner's complaint for reversion and cancellation of titles is barred
by estoppel and laches.
RULING
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The passage of Republic Act No. 11231 or the "Agricultural Free Patent Reform Act"
has rendered this issue moot and academic. Pursuant to David v. Macapagal-Arroyo, a moot
and academic case is one that ceases to present a justiciable controversy by virtue of
supervening events so that a declaration thereon would have no practical use or value.
Section 3 of RA 11231 provides:
SEC. 3. Agricultural public lands alienated or disposed in favor of qualified public land
applicants under Section 44 of Commonwealth Act No. 141, as amended, shall not be
subject to restrictions imposed under Sections 118, 119 and 121 thereof regarding
acquisitions, encumbrances, conveyances, transfers, or dispositions. Agricultural free
patent shall now be considered as title in fee simple and shall not be subject to any
restriction on encumbrance or alienation.
The Complaint for Cancellation of Title/Reversion dated August 31, 2014 filed by the OSG is
anchored on the following allegations:
Section 118 of C.A. No. 141 proscribes the alienation and encumbrance of a parcel of land
acquired under free patent, within 5 years from its grant.
In the case at bar, FP No. (III-12) 17306 was issued on May 20, 1987 and the
corresponding OCT No. P-22-C was issued on May 25, 1987. On August 24, 1990, or 3
years and 3 months after the grant of the free patent, Pelagio Francisco transferred
the subject lot by executing an Affidavit of Self-Adjudication. Nevertheless, this
transfer is not covered by the five-year prohibition as Section 118 of C.A. No. 141 does
not cover transmission by inheritance, because the land gratuitously given by the
State is preserved and kept in the family of the patentee. However, on December 3,
1990 or just after 3 years and 6 months from the date of grant of the free patent,
Pelagio Francisco transferred the subject land to Tanduay Lumber. This subsequent
transfer falls squarely within the five-year prohibition against the alienation or sale
of the patented land under Section 118 of C.A. No. 141. Accordingly, such transfer
nullifies the said alienation and constitutes a cause for the reversion of the property
to the State.
Considering that Pelagio Francisco failed to comply with the statutory requirement
to maintain the property for himself and his family within the prescribed period of 5
years, the grant in their favor did not ripen into ownership. Since the sale of the
subject lot by Pelagio Francisco to Tanduay Lumber is null and void ab initio, it
produces no legal effect whatsoever. Accordingly, Tanduay Lumber could not have
transferred title to the subsequent holders of title.
Clearly, the State's complaint for reversion is based solely on Section 118 of CA 141.
Since the restriction on the conveyance, transfer or disposition of the patented land subject
of this case within five years from and after the issuance of the patent pursuant to Section
118 of CA 141 has been removed and the title of the patentee Epifania San Pedro is, under
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RA 11231, now considered as title in fee simple, which is not subject to any restriction on
alienation or encumbrance, the Government no longer has any legal basis to seek the
reversion or reconveyance of the subject land.
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CHUA PING HIAN ALSO KNOWN AS JIMMY CHING v. SILVERIO MANAS (DECEASED),
SUBSTITUTED BY HIS HEIRS
DOCTRINE
In a reciprocal obligation, the performance of one is conditioned on the simultaneous

fulfillment of the other obligation. Neither party incurs in delay if the other does not comply or
is not ready to comply in a manner with what is incumbent upon him. In the instant case, it is
not of serious dispute that respondent Manas reneged on his obligations as seller, justifying
petitioner Ching's refusal to pay the balance of the purchase price.
FACTS
Petitioner Ching and his family own several cinemas in Metro Manila. Respondent
introduced himself as a supplier of movie equipment to Emilio Ching's (Ching's brother)
cinemas. Petitioner informed respondent that he needed five complete sets of Simplex Model
XL movie projectors for the cinemas at Sunshine Mall. Respondent informed petitioner that
he happened to have Simplex Model XL projectors which are US Rebuilt. He invited petitioner
to his house to view the same. Since only 4 Simplex projectors were available then,
respondent Manas assured petitioner that the fifth set of Simplex Model XL will arrive from
the United States anytime.
Respondent and petitioner executed the Contract of Sale. Petitioner Ching paid the
amount of P945,000.00 as down payment. The four sets of Simplex XL projectors were
delivered on 22 August 1997. Several other equipment, parts and accessories for the
projector sets were delivered within the period of 22 August 1997 until 8 May 1999.
Petitioner Ching claims that he asked respondent to deliver the fifth Simplex
projector set and install the projectors. However, not having yet the fifth Simplex XL
projector set, Ching received a Century brand projector. Because the opening date of his
cinemas was fast approaching, petitioner agreed. The Century projector, which in the market
is a little higher in price than the Simplex brand, was delivered on 29 November 1998.
Respondent claims to have completed installation of the projectors. On the other

hand, petitioner asserts that respondent Manas failed to completely install the
apparatus/equipment prompting him to hire Nelson Ruzgal to do the wiring connections for
a fee of P20,000.00.
On 24 December 1998, the trial run of the cinemas was successfully held and the
cinemas officially opened on 25 December 1998. In the first 4 months after operations, some
parts of the projectors started having problems. Respondent was informed of the defects and
asked to replace the same but he failed to do so.
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Sometime in May 1999, respondent wrote petitioner a notice of full compliance of the
terms of the contract of sale. He also asked Lito Pilar, one of petitioner’s projectionists to affix
his signature thereon. Petitioner received a copy of this letter only after he received the
summons of the court a quo. Petitioner replied through counsel.
Respondent filed a complaint for Sum of Money and Damages against petitioner. He
alleged that he had faithfully complied with the Contract of Sale and the equipment he
delivered were utilized by petitioner in the formal opening of his cinemas on 24 December
1998. Despite repeated demands, both verbal and written, petitioner refused to pay him the
remaining balance of P2,205.000.00.
The RTC rendered a Decision in favor of respondent. On appeal, the CA found

petitioner’s appeal partly impressed with merit. The CA held that the expenses incurred by
petitioner arising from the incomplete installation and some defective equipment should be
deducted from the outstanding balance owed by petitioner to respondent.
ISSUE
Whether respondent Manas is entitled to an award of stipulated interest for the

supposed delay on the part of petitioner Ching in the payment of the remaining balance of
the contract price.
RULING
NO. Respondent Manas is not entitled to an award of stipulated interest. As agreed

upon by the parties in the Contract of Sale, the stipulated interest to be paid by petitioner
Ching shall only accrue when the installment payment is already due and petitioner Ching
failed to make such installment payment. Simply stated, petitioner Ching shall pay the
stipulated interest only when he is in delay.
Based on the established facts of the instant case, petitioner Ching was not in
delay when he failed to pay the balance of the purchase price. To recall, based on
paragraph 2 of the Contract of Sale, petitioner Ching obligated himself to make three
installment payments as regards the objects of the sale: (a) the down payment of 30% or
P945,000.00 upon the signing of the Contract of Sale, which petitioner Ching did; (b) a second
payment of 40% or P1,260,000.00 upon full and complete delivery of all the items indicated
in the Contract of Sale, provided the complete delivery is effected on or before January 15,
1998; and (c) the balance of 30% or P945,000.00 after the complete installation, dry
run/testing and satisfactory operations of all the units/sets installed.
Stated simply, the Contract of Sale between petitioner Ching, as buyer, and
respondent Manas, as seller, gave rise to a reciprocal obligation, wherein petitioner Ching
was obliged to pay the balance of the purchase price while respondent Manas was obliged to
make complete delivery of the objects of the sale on or before January 15, 1998 and ensure
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complete installation, dry run-testing, and satisfactory operations of all the equipment
installed.
In a reciprocal obligation, the performance of one is conditioned on the simultaneous

fulfillment of the other obligation. Neither party incurs in delay if the other does not comply
or is not ready to comply in a manner with what is incumbent upon him. In the instant case,
it is not of serious dispute that respondent Manas reneged on his obligations as seller,
justifying petitioner Ching's refusal to pay the balance of the purchase price.
First, in its Amended Decision, the CA already found as established fact that
there was no complete delivery of the objects of sale in accordance with the Contract
of Sale.
It was the obligation of respondent Manas to deliver five sets of Simplex Model XL
35mm movie projectors. Respondent Manas was only able to deliver four sets, and the fifth
set delivered was a Century brand projector. As held by the CA in its Amended Decision, the
delivery of the Century brand projector cannot be considered a substantial compliance of the
obligation to deliver a Simplex Model XL movie projector because the Century brand
projector is significantly less valuable compared to a Simplex Model XL movie projector. The
CA likewise noted that petitioner Ching "did not acquiesce to the delivery of the Century
brand as a substitute of the Simplex model. Petitioner he was forced to accept the Century
brand in time for the opening of the movie house."
Second, as factually found by the CA, "the delivery was made after 15 January
1998" in contravention of respondent Manas' obligation to deliver the objects of the
sale on or before January 15, 1998.
Third, there was no complete installation of the movie projector units as

contemplated under the Contract of Sale.
The CA factually found that "respondent Manas is liable to petitioner for failing to
comply with his obligation to completely install the equipment which resulted to petitioner
Ching's expenses in hiring a third party to completely install the projectors." The "complete
installation" contemplated under the Contract of Sale refers to the installation of five
complete sets of Simplex Model XL movie projectors. However, as already discussed, the fifth
Simplex Model XL movie projector was not delivered and installed, despite respondent
Manas promising petitioner Ching that the said unit "was coming anytime soon." Hence, even
as petitioner Ching engaged the services of a third party to complete the installation of the
projectors delivered, there was still no complete installation envisioned under the contract
because the fifth Simplex Model XL unit was never delivered and installed.
Therefore, with petitioner Ching being justified in withholding the payment of the
balance of the purchase price on account of the several breaches of contract committed by
respondent Manas, it cannot be said that petitioner Ching was in delay. Necessarily,
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respondent Manas is not entitled to the stipulated interest as provided in the Contract of
Sale. And considering that petitioner Ching cannot be deemed in delay in accordance with
the Contract of Sale, the legal interest shall accrue only from the finality of this Decision until
full payment.
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PABLO UY, as substituted by his heirs, namely: MYLENE D. UY, PAUL D. UY and
PAMELA UY DACUMA v. HEIRS OF JULITA UY-RENALES
G.R. No. 227460, December 5, 2019, First Division (Caguioa, J.)
DOCTRINE
The notarization of a document does not guarantee its validity because it is not the
function of the notary public to validate an instrument that was never intended by the parties
to have any binding legal effect. Neither is the notarization of a document conclusive as to the
nature of the transaction, nor is it conclusive of the true agreement of the parties thereto.
FACTS
The parcel of land subject of this controversy is Lot No. 43, with a building erected
thereon, containing an area of 198 square meters, located in the Municipality of Catbalogan
in Samar. The lot is covered by TCT No. T-1467, which was registered in the name of
petitioner Pablo Uy's mother, Eufronia Labnao (Labnao).
Labnao had two children: petitioner Uy and Julita Uy-Renales (Julita). Julita had three
children, who are herein respondents Heirs of Julita. Julita died intestate on May 9, 1976.
In a complaint for Declaration of Nullity of Deed of Sale, Reconveyance and Damages,

Uy maintains that upon the death of Labnao in 1995, as the surviving offspring of Labnao, he
became the owner of one-half share of the subject lot and subject building owned by his
deceased mother, with the other half pertaining to the respondents Heirs of Julita as co-
owners.
However, Uy later discovered that the lot was allegedly fraudulently sold by Labnao
in 1990 in favor of the respondents Heirs of Julita through a Deed of Absolute Sale dated
April 11, 1990 (DOAS) purportedly executed by Labnao. According to Uy, the signature of
Labnao therein is a forgery as shown by findings of the PNP Crime Laboratory. Uy noted that
the subject lot and building have been subject of a prior action for interpleader filed by the
lessee of the property, wherein the Court of Appeals (CA) ultimately ruled that the Heirs of
Julita and Uy are entitled to an equal share of the proceeds of the rent due.
Meanwhile, the respondents Heirs of Julita asserted ownership over the subject lot by
virtue of the DOAS executed by Labnao. They assert that Uy's assertion that the DOAS is
fictitious is belied by the prior dismissal of a criminal case for Falsification, filed by petitioner
Uy against the respondents Heirs of Julita.
The Regional Trial Court (RTC) ruled in favor of the respondents Heirs of Julita,
believing that there was indeed a contract of sale. The RTC ordered the Heirs of Julita to give
Uy the present value of one-half of the subject building as the latter's share as co-owner by
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way of inheritance from Labnao. In so ruling, the RTC stressed that the DOAS was notarized,
explaining that a notarial document must be sustained in full force and effect.
The CA denied the petitioner's appeal for lack of merit. According to the CA, the DOAS,
being duly acknowledged before a Notary Public, has in its favor the presumption of
regularity and is conclusive as to the truthfulness of its contents.
ISSUE
Whether there was a valid contract of sale that was entered into over the subject lot
validly transferring ownership over the same in the respondents' favor.
RULING
NO. Because the Deed of Absolute Sale was not properly notarized, it cannot be
presumed […] to have been regularly executed. The sole witness presented by the
respondents Heirs of Julita to prove the existence of the contract of sale actually testified that
there was never any agreement on the part of the respondents Heirs of Julita to purchase the
subject lot from their grandmother and that they were even surprised that the Deed of
Absolute Sale even existed in the first place. To the mind of the Court, therefore, there was
no valid contract of sale in the instant case.
The Deed of Absolute Sale was not properly notarized
According to the notarial law applicable during the time of the notarization of the
Deed of Absolute Sale, "[e]very contract, deed, or other document acknowledged before a
notary public shall have certified thereon that the parties thereto have presented their
proper (cedula) residence certificates or are exempt from the (cedula) residence tax x x x."
In the instant case, as confirmed by the RTC, the notary public,i.e., Atty. Mendiola,
admitted that he did not ask from Labnao any competent evidence of her identity and merely
asked if she was the one who signed the document. 25 On cross-examination, Atty. Mendiola
unequivocally admitted that he "no longer verified the identity of the old woman[.]"
The existence of an alleged notarized deed of sale is not decisive as to the existence and
validity of a contract of sale
A contract of sale is a consensual contract. Under Article 1475 of the Civil Code, the
contract of sale is perfected at the moment there is a meeting of minds upon the thing which
is the object of the contract and upon the price. Because a contract of sale is a consensual
contract, no particular form is required for its validity.
In Spouses Salonga v. Spouses Concepcion, it was held that the notarization of a

document does not guarantee its validity because it is not the function of the notary public
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to validate an instrument that was never intended by the parties to have any binding legal
effect. Neither is the notarization of a document conclusive as to the nature of the transaction,
nor is it conclusive of the true agreement of the parties thereto. Simply stated, the existence,
veracity, and authenticity of a notarized written deed of sale do not conclusively determine
whether all the essential requisites of a contract are present.
Applying the foregoing to the instant case, as made clear in the respondents Heirs of
Julita's Formal Offer of Exhibits/Documentary Evidence, there is no other documentary
evidence that had been offered to prove that a contract of sale was entered into by the
parties aside from the Deed of Absolute Sale. The only other evidence presented to prove
the existence of a contract of sale is the testimony of respondent Jessica.
A careful review of the sworn testimony of respondent Jessica reveals that the
respondents Heirs of Julita never consented to enter into any contract of sale, completely
belying the contents of the Deed of Absolute Sale. Otherwise stated, respondent Jessica's
testimony establishes that there was, in fact, no meeting of the minds with respect to the
alleged sale of the subject lot.
Respondent Jessica never testified that the respondents Heirs of Julita approached
Labnao to offer to buy the subject lot. Nor did she testify that the respondents Heirs of Julita
consented to purchase the subject lot. As well, she never testified that Labnao had
approached them to offer to sell the subject lot. In short, the testimony of respondent Jessica
is devoid of any contention that there was any offer and any acceptance of such offer to buy
the subject lot.
Indeed, during cross-examination, respondent Jessica even candidly admitted that

the respondents Heirs of Julita did not have any participation in the drafting of the Deed
of Absolute Sale and that all the siblings were surprised when this document was given to
them by Labnao in May of 1990 (or one month after the purported execution of the Deed of
Absolute Sale), which was the first time they ever saw the document.
Aside from the foregoing, it also does not escape the Court's attention that the
purported Deed of Absolute Sale was never registered with the Registry of Deeds. If there
was truly a legitimate and genuine sale transaction that occurred, the supposed buyers,
according to ordinary human experience, would have endeavored to secure the
registration of the Deed of Absolute Sale and facilitate the transfer of the subject TCT in
their name. Hence, the Court is convinced that there was no contract of sale.
Void Donation of An Immovable Property
According to Article 749 of the Civil Code, in order for a donation of an immovable
property to be considered valid, the donation must be made in a public document, specifying
therein the property donated and the value of the charges which the donee must satisfy. In
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the instant case, as already explained, the Deed of Absolute Sale was not properly notarized,
making it a private document. Hence, there was no donation made in a public document.
There was [also] no acceptance of any donation manifested by the respondents Heirs
of Julita in the unilaterally executed Deed of Absolute Sale. There was also no separate
instrument that was executed by the respondents Heirs of Julita for the purpose of accepting
any donation from their grandmother. Simply stated, the formalities of making and accepting
a donation of an immovable property required under Article 749 of the Civil Code were not
observed. The donation of real property is void without the formalities stated in Article 749.
Even if it were a valid donation, it would have been collated back to the estate of
Labnao pursuant to Articles 908 and 1064 of the Civil Code, 36 and petitioner Uy and the
respondents Heirs of Julita would have divided the estate of Labnao equally, with petitioner
Uy inheriting in his own right and the respondents Heirs of Julita inheriting as a group per
stirpes or by right of representation.
The Court holds that both the subject lot and building are under the co-ownership of
petitioner Uy and the respondents Heirs of Julita as the intestate heirs of Labnao. The parties
may choose to either judicially or extrajudicially partition the co-owned properties.
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ATTY. LEONARD FLORENT BULATAO v. ZENAIDA ESTONACTOC

DOCTRINE
A 5% per month or 60% per annum interest rate is highly iniquitous and unreasonable.
However, the invalidity of the 5% per month interest rate does not affect the obligation of the
debtor to repay her loan. Since the obligation of making interest payments is illegal and thus
non-demandable, the payment of the principal loan obligation was not yet demandable. With
the debtor not being in a state of default, the foreclosure of the subject properties should not
have proceeded.
FACTS
On June 3, 2008, respondent Zenaida Estonactoc (Zenaida) executed a Deed of

Mortgage of Real Property (DMRP) in favor of Atty. Leonard Florent Bulatao (Atty. Bulatao)
covering a parcel of land in La Union with an area of 42,727 sqm as security for a loan of
P200,000. The DMRP provided for an interest rate of 5% per month.
When Zenaida defaulted in her obligation, Atty. Bulatao foreclosed the mortgage and
petitioned the court for a sale of the property in public auction. By reason of the impending
sale, Zenaida filed a complaint seeking to declare the DMRP as illegal, inexistent and void.
She asserted that Atty. Bulatao took advantage of her financial distress by imposing
an interest rate of 5% per month, which is excessive, iniquitous, unconscionable, exorbitant
and contrary to public policy, rendering the contract null and void. She further alleged that
she only received P80,000 from the contracted loan amount, and that the agreement falsely
indicated that Zenaida is the registered owner of the property despite the fact that it is co-
owned by her with her late husband Adolfo, and that it has not yet been transferred in favor
of her son Jose Rafael.
In his response, Atty. Bulatao alleged that Zenaida was guilty of misrepresentation,
misdeclaration, false pretenses and bad faith by encouraging him to secure a loan with FRB
Credit and Financial Services and even told him that she was willing to pay an interest rate
of 20% to 30% and represented that she could pay the loan in a month or two. He also alleged
that Zenaida represented that she was the sole owner of the subject property and that the
title thereof was lost although the transfer of the title is already being processed.
Since the property was later sold in a foreclosure sale to Atty. Bulatao, the complaint
was amended to include the declaration of nullity of such foreclosure sale.
The Regional Trial Court (RTC) dismissed the complaint, ruling that Zenaida is bound
by the terms of the loan and the DMRP and that the interest on the loan is not exorbitant.
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The Court of Appeals (CA) found Zenaida's appeal partly meritorious, ruling that the
real estate mortgage is not entirely void since Zenaida could validly mortgage the portion
belonging to her. On the interest rate, the CA ruled that the 5% monthly interest was
excessive, unconscionable and exorbitant, rendering the stipulation on interest void.
The CA ruled that the stipulation on interest being void, it is as if there was no express
contract on said interest rate and thus, the interest rate may be reduced as reason and equity
demand, and imposed a legal interest of 12% per annum.
Further, the CA ruled that the foreclosure proceedings could not be given effect,
reasoning out since the debt due is limited to the principal of P200,000 plus 12% p.a. as legal
interest, the previous demand for payment for the amount of P540,000 could not be
considered as a valid demand, and without a valid demand, the obligation is not due.
The CA ruled that the foreclosure could not be considered valid because it would
result in an inequitable situation wherein Zenaida would have her land foreclosed for failure
to pay an over-inflated loan only a small part of which she was obligated to pay, and she was
not given an opportunity to settle her debt at the correct amount without the iniquitous
interest imposed.
ISSUE
Whether the CA was correct in ruling that the stipulated interest in the DMRP was
void and declaring the foreclosure proceedings as void.
RULING
YES. 5% per month or 60% per annum interest rate is highly iniquitous and
unreasonable; and since the interest rate agreed upon is void, the rate of interest should be
12% per annum (the then prevailing interest rate prescribed by the Central Bank of the
Philippines for loans or forbearances of money) from the date of judicial or extrajudicial
demand.
[However,] the invalidity of the 5% per month interest rate does not affect the
obligation of Zenaida to repay her loan of P200,000.00 from Atty. Bulatao. Since the
obligation of making interest payments […] is illegal and thus non-demandable, the payment
of the principal loan obligation was likewise not yet demandable. With [the debtor] not being
in a state of default, the foreclosure of the subject properties should not have proceeded.
The imposition of an unconscionable rate of interest on a money debt, even if

knowingly and voluntarily assumed, is immoral and unjust. It is tantamount to a repugnant
spoliation and an iniquitous deprivation of property, repulsive to the common sense of man.
It has no support in law, in principles of justice, or in the human conscience nor is there any
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reason whatsoever which may justify such imposition as righteous and as one that may be
sustained within the sphere of public or private morals.
Given that the agreement on the 5% monthly interest is void for being
unconscionable, the interest rate prescribed by the Bangko Sentral ng Pilipinas (BSP) for
loans or forbearances of money, credits or goods will be the surrogate or substitute rate not
only for the one-year interest period agreed upon but for the entire period that the loan of
Zenaida remains unpaid.
In a situation wherein null and void interest rates are imposed under a contract of
loan, the non-payment of the principal loan obligation does not place the debtor in a
state of default, considering that under Article 1252 of the Civil Code, if a debt produces
interest, payment of the principal shall not be deemed to have been made until the interests
have been covered. With [the debtor] not being in a state of default, the foreclosure of the
subject properties should not have proceeded.
The invalidity of the 5% per month interest rate does not affect the obligation of
Zenaida to repay her loan of P200,000.00 from Atty. Bulatao. Based on the recent en banc
case of Lara's Gifts & Decors, Inc. v. Midtown Industrial Sales, Inc., the applicable interest is the
BSP-prescribed rate of 12% per annum from the execution of the DMRP on June 3, 2008,
wherein the parties agreed to the payment of interest, to June 30, 2013 and at the rate of 6%
per annum from July 1, 2013 until full payment.
Also, taking into account Article 2212 of the Civil Code, which provides that "[i]nterest
due shall earn legal interest from the time it is judicially demanded, although the obligation
may be silent upon this point," the interest due on the principal amount (computed as
mentioned above) accruing as of judicial demand (the filing of the counterclaim, in this case)
shall separately earn interest at the rate prescribed by the BSP from time of judicial demand
up to full payment. Thus, the CA Decision has to be modified in this respect.
For there to be a valid payment, the three characteristics of payment must be present.
These are:
(1) integrity of payment, which is provided for in Article 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, as the
case may be";
(2) identity of payment, which is provided for in Article 1244: "The debtor of a thing
cannot compel the creditor to receive a different one, although the latter may be of
the same value as, or more valuable than that which is due. In obligations to do or
not to do, an act or forbearance cannot be substituted by another act or
forbearance against the obligee's will"; and
(3) indivisibility of payment, which is provided for in Article 1248: "Unless there is
an express stipulation to that effect, the creditor cannot be compelled partially
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to receive the prestations in which the obligation consists. Neither may the
debtor be required to make partial payments.
These characteristics of payment should mirror the demand made by the creditor in
order for the debtor to incur in delay under Article 1169 f the Civil Code. Since the debtor
cannot compel the creditor to accept an incomplete delivery or an amount less than what is
due, it follows that the creditor cannot compel the debtor to pay more than what is due.
Thus, the characteristics of integrity and identity will be violated if the creditor demands
more than what is due.
Since the debt due is limited to the principal of P200,000.00 with 12% per annum as
legal interest, the previous demand for payment of the amount of P540,000.00 cannot be
considered as a valid demand for payment. Nor can the foreclosure proceedings be
considered valid since the total amount of the indebtedness during the foreclosure
proceedings was pegged at P560,000.00 which included interest and which this Court now
nullifies for being excessive, iniquitous, and exorbitant.
If the foreclosure proceedings were considered valid, it would result in an inequitable

situation wherein plaintiff-appellant will have her land foreclosed for failure to pay an over-
inflated loan only a small part of which she was obligated to pay.
As to the DMRP, the CA recognized Zenaida as a co-owner of the mortgaged property

and as such, she could validly convey through sale or mortgage the portion belonging to her.
53 Thus, the CA ruled that "the Real Estate Mortgage in favor of [Atty. Bulatao] is not entirely
rendered void as its validity is limited only to the portion belonging to [Zenaida]."
[In Paulmitan v. Court of Appeals,] the Court ruled that the sale of the property owned
in common by one co-owner without the consent of the others did not give to the buyer
ownership over the entire land but merely transferred to the buyer the undivided share of
the seller, making the buyer the co-owner of the land in question.
The Court's reliance on Article 493 of the Civil Code to justify the validity of the sale
of the property owned in common by a co-owner without the consent of the other co-owners
insofar as the undivided share of the co- owner seller is concerned has to be reconciled with
the ruling of the Court en banc through Justice J.B.L. Reyes in the case of Estoque v. Pajimula
(Estoque) which has not been overturned.
While in Estoque a specific portion of a co-owned property was sold, that situation is
no different from a situation wherein a co-owner has sold the entire co-owned property, i.e.,
a specific parcel of land of which the seller has only an undivided interest therein, because
the rationale for not recognizing the effectivity of the disposition by a co-owner without
the consent of the other co-owners over a specific portion equally applies to the disposition
of the entire co-owned property, which is more than the undivided interest or share
rightfully pertaining to the disposing co-owner.
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While Article 493 of the Civil Code may not squarely cover the situations wherein a
co-owner, without the consent of the other co-owners, alienate, assign or mortgage: (1) the
entire co-owned property; (2) a specific portion of the co-owned property; (3) an undivided
portion less than the part pertaining to the disposing co-owner; and (4) an undivided portion
more than the part pertaining to the disposing co-owner, the principle of estoppel bars the
disposing co-owner from disavowing the sale to the full extent of his undivided or pro-
indiviso share or part in the co-ownership, subject to the outcome of the partition.
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REPUBLIC OF THE PHILIPPINES v. SPOUSES MARCELINO AND NENITA BUNSAY

DOCTRINE
Capital Gains Tax and other transfer taxes may not be awarded in the form of
consequential damages since the term assumes a fixed definition in the context of
expropriation proceedings; it is limited to the impairment or decrease in value of the portion
which remains with the affected owner after expropriation. It must be clarified, however, that
the courts are not precluded from considering the value of CGT and other transfer taxes in
determining the amount of just compensation to be awarded to the affected owner.
FACTS
The Department of Public Works and Highways (DPWH) filed with the Regional Trial
Court (RTC) a Complaint for Expropriation with Urgent Prayer for the Issuance of a Writ of
Possession (Expropriation Complaint) against Spouses Marcelino and Nenita Bunsay
(Spouses Bunsay), concerning a 100 sq. m. lot in Valenzuela City. The expropriation was for
the DPWH's C-5 Northern Link Road Project Phase 2 (Segment 9) connecting the North
Luzon Expressway (NLEX) to McArthur Highway, Valenzuela City.
The RTC later scheduled the hearing on the issuance of the writ of possession prayed
for and during such hearing, the DPWH deposited checks in the total amount of P200,000
representing the sum of the property's zonal value and replacement cost of the
improvements built thereon. The RTC then issued a writ of possession in favor of DPWH.
Later the DPWH manifested in open court that while all notices sent to Spouses
Bunsay were returned unserved, they already claimed the checks that DPWH deposited with
the RTC. Thus, DPWH moved that the amount received by Spouses Bunsay be deemed as just
compensation.
The RTC granted DPWH's oral motion, directing the DPWH to issue a check in the
amount of P505,374.71 representing the total valuation of the improvements on the
property. The RTC likewise directed the DPWH to pay the value of the Capital Gains Tax
(CGT) and other transfer taxes as consequential damages.
The DPWH filed a motion for partial reconsideration praying that the award
corresponding to the cost of improvements and value of taxes be deleted. The RTC excluded
the replacement cost of improvements but did not modify the ruling as to the taxes. The RTC
explained that what was ordered of DPWH is to pay the consequential damages constituting
the value of CGT and other transfer taxes and not to pay the taxes themselves.
ISSUE
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Whether the RTC was correct in awarding consequential damages equivalent to the
value of the CGT and other transfer taxes in favor of the Spouses Bunsay.
RULING
NO. Consequential damages may be awarded to the owner if, as a result of the
expropriation, the remaining portion not so expropriated suffers from an impairment or
decrease in value. From the foregoing, it becomes clear that the award of consequential
damages representing the value of CGT and other transfer taxes in favor of Spouses Bunsay
was improper.
To recall, the expropriation covered the entire Disputed Property, that is, the entire
100-square meter lot covered by Spouses Bunsay's TCT No. V-16548. Hence, there is no
basis for an award of consequential damages where there is no "remaining portion" to
speak of, as in this case.
In any event, even if there was a "property not taken" or "remaining portion" to speak
of, the award of consequential damages constituting the value of CGT and transfer taxes
would still be improper, in the absence of evidence showing that said remaining portion
had been impaired or had suffered a decrease in value as a result of the expropriation.
[In Republic v. Spouses Salvador, the Court ruled that] CGT may not be awarded in the
form of consequential damages since the term assumes a fixed definition in the context of
expropriation proceedings; it is limited to the impairment or decrease in value of the
portion which remains with the affected owner after expropriation. It must be clarified,
however, that the ruling in Spouses Salvador should not be interpreted to preclude the courts
from considering the value of CGT and other transfer taxes in determining the amount of just
compensation to be awarded to the affected owner.
CGT, being a tax on passive income, is imposed by the National Internal Revenue Code
on the seller as a consequence of the latter's presumed income from the sale or exchange of
real property. Notably however, the transfer of real property by way of expropriation is
not an ordinary sale contemplated under Article 1458 of the Civil Code. Rather, it is akin
to a "forced sale" or one which arises not from the consensual agreement of the vendor and
vendee, but by compulsion of law. Unlike in an ordinary sale wherein the vendor sets and
agrees on the selling price, the compensation paid to the affected owner in an expropriation
proceeding comes in the form of just compensation determined by the court.
Section 6, Rule 67 of the Rules of Court mandates that "in no case shall x x x the owner
be deprived of the actual value of his property so taken." Since just compensation requires
that real, substantial, full and ample equivalent be given for the property taken, the loss
incurred by the affected owner necessarily includes all incidental costs to facilitate the
transfer of the expropriated property to the expropriating authority, including the CGT, other
taxes and fees due on the forced sale. These costs must be taken into consideration in
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determining just compensation in the same way these costs are factored into the selling price
of real property in an arm's length transaction.
Here, Spouses Bunsay received, as just compensation, an amount equal to the sum of
the zonal value of the Disputed Property and the replacement cost of the improvements built
thereon. Evidently, the value of CGT and transfer taxes due on the transfer of the
Disputed Property was not factored into the amount paid to Spouses Bunsay, but
instead, separately awarded as consequential damages.
While the award of consequential damages equivalent to the value of CGT and transfer
taxes must be struck down for being erroneous, the Court deems it just and equitable to
direct the Republic to shoulder such taxes to preserve the compensation awarded to Spouses
Bunsay as a consequence of the expropriation. To stress, compensation, to be just, must be
of such value as to fully rehabilitate the affected owner; it must be sufficient to make the
affected owner whole.
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REPUBLIC OF THE PHILIPPINES v. REMAR QUIÑONEZ

G.R. No. 237412, January 6, 2020, First Division (Caguioa, J.)
DOCTRINE
Article 41 of the Family Code places upon the present spouse the burden of proving the
additional and more stringent requirement of "well-founded belief" which can only be
discharged upon a showing of proper and honest-to-goodness inquiries and efforts to ascertain
not only the absent spouse's whereabouts but, more importantly, that the absent spouse is still
alive or is already dead.
To be able to comply with this requirement, the present spouse must prove that his/her
belief was the result of diligent and reasonable efforts and inquiries to locate the absent spouse
and that based on these efforts and inquiries, he/she believes that under the circumstances, the
absent spouse is already dead. It requires exertion of active effort (not a mere passive one).
FACTS
Respondent Remar Quiñonez (Remar) and his wife Lovelyn were married in
Mangagoy, Bislig City and later had two children. They stayed at the house of Lovelyn's
parents after their wedding. Remar worked as a security guard at the National Food
Authority warehouse in October 1997, and later on transferred to Cebu City for higher pay.
Sometime in 2001, Lovelyn asked Remar's permission to go to a three-month vacation

in Manila to visit relatives, to which Remar reluctantly agreed. During the first three months,
they communicated constantly via cellphone. It was also at this time that Remar resigned
from his work in Cebu City and transferred to Surigao City, where he worked as a security
guard at the Surigao City Hall of Justice.
Remar informed Lovelyn that as soon as she arrived from Manila, they would live
together in Surigao with their children. Thereafter, the calls and text messages tapered off
until the communication between the spouses ceased altogether. At first, Remar thought that
his wife just lost her cellphone, so he inquired about her from their relatives in Bislig City.
Someone informed him that his wife was then already cohabiting with another man and
would no longer be coming back out of shame.
When Remar was later informed that Lovelyn was in Bislig to visit their children, he
filed an emergency leave and left for Bislig City. However, upon arrival, he was informed that
Lovelyn had already left for Lingig. Remar also did not see Lovelyn when he went to Lingig
and was constrained to go back to Surigao City without seeing his wife.
In the summer of 2004, Remar filed a leave from work to look for his wife in Manila,
Batangas and Cavite, to no avail. On February 27, 2013, after almost ten years of trying to
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know about the whereabouts of his wife from their relatives proved futile, Remar filed a
Petition for Declaration of Presumptive Death before the Regional Trial Court (RTC).
The RTC ruled in Remar's favor, finding that Remar was able to show that he had
exerted diligent efforts to locate his wife, considering that he spent his meager resources to
look for her in Surigao del Sur, Metro Manila, Batangas and Cavite — places where he was
told his wife had been seen.
The Republic filed a Petition for Certiorari before the CA seeking to annul the RTC
judgment, arguing that Remar failed to establish that he "exerted proper and honest to
goodness inquiries and efforts to ascertain Lovelyn's whereabouts and whether or not she is
still alive." The CA denied the petition, ruling that the RTC judgment is sufficiently supported
by the evidence on record.
ISSUE
Whether Remar's efforts in locating his wife are sufficient to give rise to a"well-
founded belief" that she is dead.
RULING
NO. Article 41 of the Family Code provides the requirements for a declaration of
presumptive death. Culled from this provision, the essential requisites for a declaration of
presumptive death for the purpose of remarriage are:
1. That the absent spouse has been missing for four consecutive years, or two
consecutive years if the disappearance occurred where there is danger of death
under the circumstances laid down in Article 391, Civil Code;
2. That the present spouse wishes to remarry;
3. That the present spouse has a well-founded belief that the absentee is dead;
and
4. That the present spouse files a summary proceeding for the declaration of
presumptive death of the absentee.
In Republic v. Cantor (Cantor), the Court en banc clarified the meaning of well-founded
belief by comparing the language of Article 41 to its Civil Code counterpart. The Court held:
Article 41 of the Family Code, compared to the old provision of the Civil Code which it
superseded, imposes a stricter standard. It requires a "well-founded belief" that the
absentee is already dead before a petition for declaration of presumptive death can be
granted.
[M]ere absence of the spouse (even for such period required by the law), lack
of any news that such absentee is still alive, failure to communicate or general
presumption of absence under the Civil Code would not suffice. This conclusion
proceeds from the premise that Article 41 of the Family Code places upon the present
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spouse the burden of proving the additional and more stringent requirement of "well-
founded belief" which can only be discharged upon a showing of proper and honest-
to-goodness inquiries and efforts to ascertain not only the absent spouse's
whereabouts but, more importantly, that the absent spouse is still alive or is already
dead.
The law did not define what is meant by "well-founded belief." It depends upon the
circumstances of each particular case. Its determination, so to speak, remains on a case-to-
case basis. To be able to comply with this requirement, the present spouse must prove
that his/her belief was the result of diligent and reasonable efforts and inquiries to
locate the absent spouse and that based on these efforts and inquiries, he/she believes
that under the circumstances, the absent spouse is already dead. It requires exertion of
active effort (not a mere passive one).
Citing Cantor, the Republic asserts that the standard of "well-founded belief" is
exacting; it presupposes that the present spouse had exerted diligent and reasonable efforts
to locate the absent spouse. According to the Republic, Remar's efforts fall short of this
requirement. The Court agrees.
Unfortunately, Remar failed to allege, much less prove, the extent of the search he had
conducted in the places where he claims to have gone. This leaves the Court with no way to
ascertain the extent of Remar's search.
Remar also failed to identify which of Lovelyn's relatives he had communicated with,
and disclose what he learned from these communications. Again, this leaves the Court with
no basis to determine whether the information Remar learned is sufficient to engender a
well- founded belief that Lovelyn is dead.
Moreover, much like the respondent in Cantor, Remar never sought the help of the
authorities to locate Lovelyn in the course of her ten (10)-year disappearance. Remar
was given ample opportunity to explain his failure to report Lovelyn's disappearance,
considering that the Republic first noted such failure when it filed its Petition for Certiorari
with the CA. Curiously, however, Remar chose not to address the matter.
Finally, the allegations in Remar's Petition for Declaration of Presumptive Death

suggest that he is aware of the true cause of Lovelyn's disappearance. He thought that the
cellphone of his wife was just lost so he started inquiries from his and her relatives in [Bislig]
City. One confessed that his wife is now cohabiting with another man and will not be going
home because of shame. He could not believe and refused to believe the devastating news.
The Court commiserates with Remar's plight. Nevertheless, the Court cannot uphold
the issuance of a declaration of presumptive death for the purpose of remarriage where there
appears to be no well-founded belief of the absentee spouse's death, but only the likelihood
that the absentee spouse does not want to be found.
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The Petition raises a pure question of law
Here, the Republic does not dispute the truthfulness of Remar's allegations,
particularly, the specific acts he claims to have done to locate Lovelyn. What the Republic
does question is the sufficiency of these acts, that is, whether they are sufficient to merit a
legal declaration of Lovelyn's presumptive death.
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RICARIDO GOLEZ, in his own behalf and his children, in substitution of the deceased
PRESENTACION GOLEZ v. MARIANO ABAIS
DOCTRINE
Under MC 19, while the succession or transfer of farmholdings granted under PD 27

recognized the pertinent provisions of the Civil Code on succession, such was subject to certain
limitations. Accordingly, even as the successional rights of the original farmer-beneficiary were
recognized, MC 19 prescribed the manner through which the succeeding sole owner-cultivator
should be identified.
FACTS
On March 16, 2001, Presentacion Golez (Presentacion) filed a case for ejectment with
the Department of Agrarian Reform Adjudication Board (DARAB) against her brother-in-law
Mariano Abais (Mariano) from the disputed lots located in Zarraga, Iloilo.
Presentacion alleged that she is the eldest daughter of the late Ireneo Deocampo
(Ireneo) who was an Operation Land Transfer (OLT) beneficiary of the disputed lots. She
alleged that Mariano, the husband of her sister Vicenta, illegally possessed the lots and
mortgaged the same after the death of her sister.
Presentation averred that she was identified as qualified beneficiary of the disputed
lots by the Department of Agrarian Reform (DAR) and that her petition for re-allocation was
likewise granted. Thus, she prayed that Mariano be ordered to vacate the disputed lots and
deliver to her and maintain her in the peaceful possession and cultivation thereof.
Meanwhile, Mariano denied that his possession is illegal, claiming that he was a tenant
by virtue of at least three decisions of the Regional Trial Court and the DARAB.
Provincial Adjudicator Erlinda Vasquez (PA Vasquez), in her decision, declared

Presentacion as lawful possessor and cultivator of the disputed lots as farmer-beneficiary.
PA Vasquez ordered Mariano and all his privies to peacefully vacate the disputed lots and
deliver them to Presentacion.
PA Vasquez based her decision on the Rules and Regulations in Case of Death of a
Tenant-Beneficiary set forth in Ministry Memorandum Circular No. 19, series of 1978 (MC
19) issued by the then Ministry of Agrarian Reform (MAR). Mariano filed an appeal and a
subsequent motion for reconsideration, which were both denied.
Mariano filed an appeal with the Court of Appeals (CA) via Rule 43, arguing that the
DARAB decision is barred by res judicata. The CA granted Mariano's appeal in part, ruling
that Mariano is entitled to possession of the disputed lots as co-owner. The CA anchored its
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ruling on the principle of res judicata, in view of the prior judgments recognizing Vicenta and
Mariano as lawful tenants of the disputed lots.
The CA held that when Ireneo died, he was not merely a tenant over the disputed lots,
but was already the registered owner thereof. Therefore, the CA held, that what he
bequeathed to his heirs upon his death, therefore, was the right of succession as owners —
not as tenants.
ISSUE
Whether the CA was correct in declaring Mariano as a co-owner of the disputed lots.
RULING
NO. The disputed lots had been granted to the original farmer-beneficiary Ireneo
pursuant to PD 27. Accordingly, the transferability of said lots upon Ireneo's death remained
subject to the limitation set forth under PD 27, that is, the disputed lots would be
transferableonly "by hereditary succession or to the Government in accordance with the
provisions of [PD 27], the Code of Agrarian Reforms and other existing laws and regulations."
The transfer of farmholdings upon death of the farmer-beneficiary is governed by MC

19.
PD 27 was issued in 1972 for the declared purpose of emancipating farmer-tenants

of private agricultural lands by transferring ownership of such lands in their favor.
In this connection, the MAR (now DAR) promulgated theRules and Regulations in
Case of Death of a Tenant-Beneficiary set forth in MC 19. MC 19 implemented the limitation
on transferability set forth in PD 27 for the purpose of carrying out the Government's
declared policy of establishing "owner-cultivatorship x x x as the basis of agricultural
development of the country." The pertinent provisions of MC 19 state:
1. Succession to the farmholding covered by [OLT], shall be

governed by the pertinent provisions of the New Civil Code of the
Philippines subject to the following limitations:
xxx xxx xxx
b. The ownership and cultivation of the farmholding shall

ultmately be consolidated in one heir who possesses the following
qualifications: xxx
c. Such owner-cultivator shall compensate the other heirs to the

extent of their respective legal interest in the land, xxx
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xxx xxx xxx
b. Where there are several heirs, and in the absence of extra-

judicial settlement or waiver of rights in favor of one heir who shall
be the sole owner and cultivator, the heirs shall within one month
from death of the tenant-beneficiary be free to choose from among
themselves one who shall have sole ownership and cultivation of
the land, subject to Paragraph 1(b) and (c) hereof: Provided, however,
That the surviving spouse shall be given first preference; otherwise, in
the absence or due to the permanent incapacity of the surviving
spouse, priority shall be determined among the heirs according to
age.
c. In case of disagreement or failure of the heirs to determine

who shall be the owner-cultivator within the period prescribed
herein, the priority rule under theproviso of Paragraph 2(b) hereof
shall apply.
Under MC 19, while the succession or transfer of farmholdings granted under PD 27

recognized the pertinent provisions of the Civil Code on succession, such was subject to
certain limitations. Accordingly, even as the successional rights of the original farmer-
beneficiary were recognized, MC 19 prescribed the manner through which the succeeding
sole owner-cultivator should be identified.
Consistent with the procedure set forth in MC 19, Petitioners' predecessor-in-interest

Presentacion filed her Letter-request and Petition for Reallocation with the DAR Regional
Director. Presentacion's Letter-request and Petition for Reallocation were successively
granted.
Mariano does not dispute that Presentacion was the oldest surviving heir of Ireneo at
the time of the latter's death. He also does not assail that Presentation possessed the
qualifications necessary to succeed Ireneo as new owner-cultivator under MC 19. Thus, in
the absence of any extra-judicial settlement assigning in Vicenta's (Mariano's wife) favor the
priority right to become sole owner and cultivator of the disputed lots, her husband
Mariano's claim of possession is left with no leg to stand on.
Nevertheless, Presentacion, as lawful successor of Ireneo and new owner-cultivator

of the disputed lots, was bound to compensate Ireneo's other compulsory heirs to the
extent of their respective legal interests in the disputed lots, subject to the payment of
whatever outstanding obligations the deceased farmer-beneficiary might still have, as
required by MC 19. 41 This obligation to compensate Ireneo's other compulsory heirs now
falls upon Petitioners, as successors-in-interest of the late Presentacion.
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However, the Court recognizes that the identification of Ireneo's other heirs and the
determination of their respective interests in the disputed lots as well as their obligations to
said deceased farmer-beneficiary are factual matters which cannot be resolved in a petition
for review. Accordingly, the Court deems it proper to remand the case to the DAR Regional
Director, the latter having primary jurisdiction over all matters relating to the
implementation of agrarian laws.
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THE HEIRS OF MARSELLA LUPENA v. PASTORA MEDINA et al.

DOCTRINE
Under paragraph "d" of Section 4.3 of the Revised Manual for Land Surveying
Regulations in the Philippines, a geodetic engineer, in the conduct of relocation survey, must
indicate in his plan the positions of buildings, fences wall and other permanent improvements
adversely affected by the determination of the boundaries. Absent indication in the Relocation
Plan of any encroachment, the same cannot be considered as competent proof that the lot was
unlawfully occupied.
FACTS
On Aug. 29, 2001, Marsella Lupena filed a complaint for recovery of possession of real
property against respondents Pastor Medina (Medina), Jovito Pagsisihan (Pagsisihan),
Cenon Patricio (Patricio) and Bernardo Dionisio (Dionisio) before the Regional Trial Court
(RTC) of Pasig.
According to Lupena, she was the registered owner of a 180 square-meter parcel of
land in Taguig. She alleged that respondents entered her property and unlawfully withheld
and deprived the latter of possession over a big portion thereof by force, intimidation, threat,
strategy and stealth. Lupena demanded that respondents vacate the premises, but the
demands were refused and ignored.
Lupena thus hired a licensed surveyor, Engineer Oscar Tenazas (Engr. Tenazas) to
determine the extent and exact area of the portion of lot individually encroached by each
respondent. After the survey, Engr. Tenazas prepared a Relocation Plan, which was duly
approved by the Land Management Bureau (LMB), Department of Environment and Natural
Resources (DENR) and a Sketch Plan. The respondents were found to have encroached on
Lupena's lot.
For their part, respondents alleged that they were the owners of the parcels of land
on which their houses were erected.
The RTC dismissed the complaint for lack of merit, finding that the evidence
presented by the petitioners Heirs of Lupena, who have substituted Marsella Lupena due to
her death during the pendency of the case, failed to sufficiently establish that the lots
occupied by the respondents were actually part of or overlapped the property covered by
TCT No. 18547 registered in the name of Lupena.
According to the RTC, Section 643(e) of the Revised Manual for Land Surveying
Regulations in the Philippines dated 12 March 1998, provides that when conducting a
relocation survey, the "geodetic engineer as required in verification surveys, shall inform any
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owner affected by the determination of boundaries and obtain a statement from the owner
that he has been informed." The the RTC noted that the Relocation Plan and Sketch Plan
submitted by the [petitioners Heirs of Lupena] did not contain any indication that the said
notice requirement was complied with by Engr. Tenazas.
The Court of Appeals (CA) denied the appeal, ruling that the Relocation Plan prepared
by Engr. Tenazas did not indicate whatsoever that the subject property was encroached by
the respondents.
ISSUE
Whether the CA erred in affirming the dismissal of the petitioners' complaint due to
failure to show that the respondents encroached on the subject property.
RULING
NO. From a precursory reading of the instant Petition, it becomes readily apparent
that the instant Petition puts forward a purely factual issue. It is unmistakably clear that in
the instant Petition, the Court is being asked to re-weigh and re-assess the evidentiary value
of the Relocation Plan.
[A]fter a careful study of the records of the instant case, the Court finds no cogent
reason to reverse the factual finding of the CA that the Relocation Plan presented by the
petitioners Heirs of Lupena as their evidence in chief itself showed that the respondents did
not encroach on the subject property.
In the instant Petition, the petitioners Heirs of Lupena maintain that the
aforementioned Relocation Plan that they presented during the trial is admissible and
competent to show encroachment. However, as stressed by the CA in the assailed Decision,
the Relocation Plan heavily relied upon by the petitioners Heirs of Lupena does not indicate
whatsoever that the subject property was encroached upon by the respondents. In fact, the
petitioners Heirs of Lupena themselves admit that while Section 643 (d) of the Revised
Manual for Land Surveying Regulations in the Philippines requires geodetic engineers to
indicate in the relocation plan the positions of buildings, fences, walls, and other permanent
improvements adversely affected by the determination of the boundaries, in the Relocation
Plan they offered as evidence, it states therein that there are no such adverse buildings,
fences, walls, and other structures put up in the subject property. Curiously, the petitioners
Heirs of Lupena even unequivocally admitted that the respondents did not put up any structure
on the subject property.
The petitioners Heirs of Lupena argue however that the failure of the Relocation Plan
to indicate the fact that the respondents had erected any structure on the subject property
does not damage their theory because "should there be any temporary structures, e.g., sheds,
shanties, make-shift fences, the same does not need to be indicated in the plan because they
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are not permanent structures." Simply stated, the petitioners Heirs of Lupena now argue that
the respondents encroached on the subject property by erecting temporary structures and
not permanent structures.
The petitioners Heirs of Lupena's new theory that the encroachment committed by
the respondents was by way of erecting temporary structures fails to convince. During the
trial, the petitioners Heirs of Lupena made it abundantly clear that, in their allegation, the
respondents encroached on the subject property by building houses and occupying them.
Hence, with the Relocation Plan submitted into evidence by the petitioners Heirs of
Lupena incontrovertibly showing that no buildings, enclosures, and other permanent
structures were put up by the respondents on the subject property, the CA did not commit
any error in holding that the petitioners Heirs of Lupena failed to sufficiently establish that
the respondents encroached upon the subject property.
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DANILO ROMERO et al. v. CRISPINA SOMBRINO

DOCTRINE
Security of tenure may be invoked only by tenants de jure and not by those who are not
true and lawful tenants but became so only through the acts of a supposed landholder who had
no right to the landholdings. Tenancy relation can only be created with the consent of the
landholder who is either the owner, lessee, usufructuary or legal possessor of the land.
FACTS
The property subject of this controversy is a two-hectare portion of Lot. 23, Pls-35
located in Lanao del Norte, which is registered in the name of Lutero Romero after the latter's
homestead application was approved in 1967.
The subject property was subject of a legal dispute involving Lutero and his siblings.
In a civil case for reconveyance and cancellation of registration of mortgage filed before the
Regional Trial Court (RTC), Lutero's mother Teodora, and siblings Presentacion, Lucita,
Gloriosa, and Mindalina averred that Lutero merely held the property in trust for the benefit
of the heirs of their father Eugenio, since the latter was actually the one who first applied for
the homestead. Eugenio's application for homestead was earlier denied because he had
exceeded the maximum limit of 24 hectares.
They also claimed that Lutero subsequently sold the subject property by allegedly
executing three affidavits of sale and therefore no longer has any claim over the subject
property. Lutero thus filed a civil case seeking the annulment of the three affidavits of sales.
The RTC declared the three affidavits of sale null and void and ordered the
respondents, the alleged vendees, to surrender possession of the property to Lutero. The
Court of Appeals (CA) affirmed the ruling of the RTC. The cases were then resolved with
finality by the court in De Romero v. CA, where the court declared that Lutero is the true and
lawful landowner of the subject property, having exclusively acquired the subject property
after successfully applying for a homestead patent over the land in 1967.
The decision in De Romero further found that Eugenio never owned the subject
property, since when he himself tried to apply for a homestead patent, he was disqualified.
Furthermore, the said Decision held that the supposed sale of the subject property by Lutero
in favor of the respondents in Civil Case No. 1056 was null and void for being violative of
Section 118 of Commonwealth Act No. 141, which prohibited the alienation of a homestead
within five years from the issuance of the patent.
When the heirs of Lutero sought the implementation of the writ of execution pursuant
to the Court's decision in De Romero, respondent Crispina Sombrino sought to intervene,
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alleging that she was a tenant of the subject property. However, after being allowed to
intervene, she failed to successfully assert her right to possess the subject property before
the RTC. As such, she sought recourse before the Office of the Provincial Agrarian Reform
Adjudication Board (PARAD) of Iligan City by filing a Complaint for Illegal Ejectment and
Recovery of Possession.
Before the PARAD, Sombrino alleged that she was the actual tenant-cultivator of the
subject property as she and her late husband Valeriano were installed as tenants over the
subject property in 1952 by the alleged original owners of the subject property, the Sps.
Romero, until the said spouses were succeeded by Lucita and her heirs as landowners.
Hence, respondent Sombrino asked that her security of tenure as tenant of the subject
property be upheld.
The PARAD ruled in favor of Sombrino and declared her to be a de jure tenant of the
subject property. The PARAD held that respondent Sombrino was able to establish that
she was installed as tenant by the Sps. Romero in 1952.
Meanwhile, the Department of Agrarian Reform Adjudication Board (DARAB) denied

the appeal of the Heirs of Lutero for lack of merit. The CA likewise denied the ensuing appeal,
ruling that Sombrino established by substantial evidence the essential elements of tenancy.
Thus, according to the CA, the petitioners Heirs of Lutero are bound to respect the leasehold
relationship between the Sps. Romero and respondent Sombrino.
ISSUE
Whether respondent Sombrino is considered a tenant de jure that enjoys security of

tenure.
RULING
NO. [W]ith the finality of De Romero v. CA, it can no longer be disputed that the Sps.
Romero never became the owners of the subject property. Neither did they become the
lessee, usufructuary or legal possessor of the subject property. Hence, the Sps. Romero had
no capacity whatsoever to install respondent Sombrino as a leasehold tenant on the
subject property. Consequently, neither could the heirs of the Sps. Romero (aside from
Lutero) validly enter into any tenancy agreement over the subject property.
Agricultural Leasehold Tenancy
The existence of a tenancy relation is not presumed. According to established

jurisprudence, the following indispensable elements must be proven in order for a tenancy
agreement to arise:
1) the parties are the landowner and the tenant or agricultural lessee;
2) the subject matter of the relationship is an agricultural land;
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3) there is consent between the parties to the relationship;

4) the purpose of the relationship is to bring about agricultural production;
5) there is personal cultivation on the part of the tenant or agricultural lessee; and
6) the harvest is shared between the landowner and the tenant or agricultural lessee.
The absence of any of the requisites does not make an occupant, cultivator, or a
planter a de jure tenant which entitles him to security of tenure under existing tenancy laws.
However, if all the aforesaid requisites are present and an agricultural leasehold
relation is established, the same shall confer upon the agricultural lessee the right to
continue working on the landholding until such leasehold relation is extinguished. The
agricultural lessee shall be entitled to security of tenure on his landholding and cannot be
ejected therefrom unless authorized by the Court for causes herein provided. In case of death
or permanent incapacity of the agricultural lessor, the leasehold shall bind the legal heirs.
The Court finds that respondent Sombrino failed to provide sufficient evidence that
there was, in the first place, an agricultural leasehold tenancy agreement entered into by
herself and the alleged landowners, the Sps. Romero.
Tenancy relationship cannot be presumed. An assertion that one is a tenant does not
automatically give rise to security of tenure. Nor does the sheer fact of working on another's
landholding raise a presumption of the existence of agricultural tenancy. One who claims to
be a tenant has the onus to prove the affirmative allegation of tenancy. Hence, substantial
evidence is needed to establish that the landowner and tenant came to an agreement in
entering into a tenancy relationship.
Considering the foregoing, jurisprudence has held that self-serving statements

regarding supposed tenancy relations are not enough to establish the existence of a tenancy
agreement. Moreover, certifications issued by administrative agencies or officers that a
certain person is a tenant are merely provisional, not conclusive on the courts, and have
little evidentiary value without any corroborating evidence. There should be independent
evidence establishing the consent of the landowner to the relationship.
As explained by the DARAB, "[t]o prove her claim, [respondent Sombrino submitted]
the Joint Affidavit of Sarillo Bacalso and Neil Ocopio, whom she allegedly hired in several
occasions as planters, mud boat operators and thresher operators[.]" Such evidence severely
fails to establish the existence of a tenancy agreement. At most, the aforementioned Joint
Affidavit merely establishes that respondent Sombrino occupied and cultivated the subject
property at some point in time.
The DARAB also gave credence to "the Affidavit of the Barangay Agrarian Reform
Committee (BARC) Chairman." In Soliman, et al. v. Pampanga Sugar Development Co., Inc., et
al., the Court held that the certifications issued by a BARC Chairman to the effect that the
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alleged tenants were actually cultivating the agricultural land deserve scant consideration in
determining the existence of a tenancy relationship.
With respect to acknowledgment receipts presented by respondent Sombrino

showing the payment of irrigation fees and rentals to Lucita, such pieces of documentary
evidence fail to show that the Sps. Romero installed respondent Sombrino as a tenant of the
subject property. The said receipts merely establish that, at most, respondent Sombrino
entered into an arrangement with Lucita and not with the Sps. Romero.
Even assuming arguendo that the Sps. Romero indeed entered into a tenancy
agreement with respondent Sombrino in 1952, such agreement would not have created a
valid tenancy relationship.
Tenancy relationship can only be created with the consent of the true and lawful
landowner who is the owner, lessee, usufructuary or legal possessor of the land. It cannot
be created by the act of a supposed landowner, who has no right to the land subject of the
tenancy, much less by one who has been dispossessed of the same by final judgment.
Given the foregoing, with the absence of the first essential requisite of an agricultural
tenancy relationship, i.e., that the parties to the agreement are the true and lawful
landholders and tenants, respondent Sombrino cannot be considered a de jure tenant who
is entitled to security of tenure under existing tenancy laws.
And corollarily, there being no agricultural tenancy relationship existing in the

instant case, the PARAD and DARAB acted beyond their jurisdiction when they ordered the
petitioners Heirs of Lutero, among other things, to restore possession of the subject property
to respondent Sombrino.
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CYNTHIA A. GALAPON v. REPUBLIC OF THE PHILIPPINES

G.R. No. 243722 (formerly UDK-16060), January 22, 2020, First Division (Caguioa, J.)
DOCTRINE
Article 26 (2) of the Family Code applies to mixed marriages where the divorce decree
is: (i) obtained by the foreign spouse; (ii) obtained jointly by the Filipino and foreign spouse;
and (iii) obtained solely by the Filipino spouse.
FACTS
Cynthia Galapon (Cynthia), a Filipina, and Nok Shik Park (Park), a South Korean
national, got married in the City of Manila, Philippines on Feb. 27, 2012. Their relationship
turned sour and ended with a divorce by mutual agreement in South Korea. After the divorce
was confirmed by the Cheongju Local Court, Cynthia filed before the Regional Trial Court
(RTC) of Sto. Domingo, Nueva Ecija a Petition for the Judicial Recognition of a Foreign
Divorce.
The RTC granted the recognition petition. The Office of the Solicitor General (OSG)
filed a motion for reconsideration, arguing that the petition should have been filed in the RTC
of Manila because the marriage was celebrated and was recorded in the City Civil Registry of
Manila. The OSG argued further that Cynthia is not qualified to avail of the benefits provided
by Art. 26 of the Family Code since the foreign divorce was secured by mutual agreement.
The RTC denied the motion for reconsideration, finding that the requisites for the
application of Article 26, paragraph 2 of the Family Code concur. First, there was a valid
marriage celebrated between Cynthia and Park, as shown by the Certificate of Marriage
issued by the National Statistics Office. Second, a valid divorce was obtained abroad by Park
capacitating him to remarry, as shown by the Certification 16 issued by the Cheongju Local
Court stating that he and Cynthia were divorced on July 16, 2012.
On appeal, the CA ruled that the divorce decree in question cannot be recognized in
this jurisdiction insofar as Cynthia is concerned since it was obtained by mutual agreement.
ISSUE
Whether the divorce decree obtained jointly by Cynthia and her foreign spouse Park
can be recognized in the Philippines
RULING
YES. In the recent case of Republic v. Manalo, the Court en banc extended the scope of
Article 26 (2) to even cover instances where the divorce decree is obtained solely by the
Filipino spouse. Pursuant to the majority ruling in Manalo, Article 26 (2) applies to mixed
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marriages where the divorce decree is: (i) obtained by the foreign spouse; (ii) obtained
jointly by the Filipino and foreign spouse; and (iii) obtained solely by the Filipino spouse.
Based on the records, Cynthia and Park obtained a divorce decree by mutual
agreement under the laws of South Korea. The sufficiency of the evidence presented by
Cynthia to prove the issuance of said divorce decree and the governing national law of her
husband Park was not put in issue. In fact, the CA considered said evidence sufficient to
establish the authenticity and validity of the divorce in question.
As confirmed by Manalo, the divorce decree obtained by Park, with or without

Cynthia's conformity, falls within the scope of Article 26 (2) and merits recognition in this
jurisdiction.
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REDENTOR CATAPANG et al. v. LIPA BANK

DOCTRINE
Article 1332 of the Civil Code shifts the burden of proof from the party alleging the
mistake to the party enforcing the contract. It also alters the rule that a party is presumed to
know the meaning of a document which he signed. Hence, if one of the parties is unable to read
or if the contract is in a language not understood by him, and he alleges fraud or mistake, the
burden of proving that the terms of the contract have been fully explained to the former is
shifted to the person enforcing the contract. If this burden is not satisfied, the presumption of
mistake or fraud stands unrebutted.
FACTS
Petitioner Redentor Catapang and his aunt, petitioner Casiana Garbin, alleged that the
former's parents, the Spouses Alejandro and Rosalinda Catapang (Sps. Catapang), obtained
a loan from respondent Lipa Bank. The loan was secured by a deed of real estate mortgage
over the Sps. Catapang's property in Batangas.
As the Sps. Catapang failed to pay the loan, the mortgage was foreclosed, with the
spouses also failing to exercise their right of redemption. Thus, the property was
consolidated in the name of Lipa Bank and a new title was issued in its favor.
Subsequently, the Sps. Catapang, who were allowed by Lipa Bank to stay in the
property, offered to repurchase the same. Lipa Bank refused to negotiate with them and
instead offered to sell the property to petitioner Redentor for P1.5 million. Lipa Bank then
executed a sales contract with petitioner Redentor providing for a downpayment of
P400,000 upon the signing and execution of the Sales Contract.
However, out of the required P400,000 donwpayment, only P200,000 was paid by
Redentor. In order to secure the complete amount, upon the advice of Lipa Bank's loan
division head, Redentor supposedly secured a loan of P270,000 with Lipa Bank. As collateral,
Redentor presented and submitted to Lipa Bank the owner's duplicate copy of a TCT
covering a certain parcel of land registered in the name of his aunts Gregoria and petitioner
Casiana.
Allegedly, without petitioner Redentor's knowledge and consent, respondent Lipa

Bank successfully convinced petitioner Casiana to sign a promissory note for a P270,000.00
loan and a deed of real estate mortgage over the subject property for P1,440,000.00.
Redentor and Casiana alleged that the execution of the promissory note and deed of real
estate mortgage was tainted with fraud, undue influence and trickery, considering that
Casiana was not a borrower of Lipa Bank and has never been a party to the sales contract.
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Thus, petitioners filed a complaint before the Regional Trial Court (RTC) praying that
the promissory note and the deed of real estate mortgage be declared null and void. They
also prayed for the refund of the amount of P200,000 paid by Redentor and for the return of
Lipa Bank of the owner's duplicate copy of the TCT pertaining to the subject property.
The RTC declared the sales contract entered into between Redentor and Lipa Bank as
valid, but held that the promissory note and the deed of real estate mortgage were void for
having been procured with fraud. The RTC noted that Casiana was unable to comprehend
the English language.
The Court of Appeals (CA) granted respondent's appeal ruling that it was not
convinced that Casiana failed to comprehend and understand the circumstances
surrounding and the meaning behind the documents she executed.
ISSUE
Whether the CA erred in ruling that the promissory note and deed of real estate
mortgage entered into between Casiana and Lipa Bank are valid and binding.
RULING
YES. The absence of a meeting of the minds makes a contract null and void. [W]here
the contracting parties do not agree as to the subject matter of the contract, consent is absent,
making the contract null and void.
The evidence revealed that when respondent Lipa Bank's representative asked
petitioner Casiana to sign the aforesaid documents, he openly misrepresented the very
substance, tenor, and purpose of these documents, taking advantage of petitioner Casiana's
lack of education and failure to understand English. This establishes the failure to agree as
to the subject matter of the aforesaid documents rendering the Promissory Note and Deed
of Real Estate Mortgage null and void.
A contract is a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service. There can be no
contract unless all of the following requisites concur: (1) consent of the contracting parties;
(2) object certain which is the subject matter of the contract; and (3) the cause of the
obligation which is established. When one of the elements is wanting, no contract can be
perfected.
Consent, in turn, is the acceptance by one of the offer made by the other. It is the
meeting of the minds of the parties on the object and the cause which constitutes the
contract. The area of agreement must extend to all points that the parties deem material or
there is no consent at all. As a contract is consensual in nature, it is perfected upon the
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concurrence of the offer and the acceptance. The offer must be certain and the acceptance
must be absolute, unconditional and without variance of any sort from the proposal.
During trial, petitioner Casiana testified that she was only a Grade 6 graduate and not
capable of understanding English. She testified, in Tagalog, that she was approached by
petitioner Redentor about a loan procured by him with respondent Lipa Bank.
During petitioner Casiana's cross-examination, it became evident that she failed to

fully comprehend and understand the reason behind lending her owner's duplicate TCT to
petitioner Redentor. All she understood was that, in lending the title to petitioner Redentor,
she would merely provide a "garantiya" as regards petitioner Redentor's loan with
respondent Lipa Bank, and not a collateral. Petitioner Casiana did not really fully grasp the
import of this "garantiya."
It is clear from the foregoing that petitioner Casiana had no intention whatsoever
to borrow any money from respondent Lipa Bank. It was simply her understanding that
petitioner Redentor had already obtained a loan from respondent Lipa Bank and that she
merely was aiding her nephew by providing a "garantiya" to the loan by way of lending her
owner's duplicate certificate of title to petitioner Redentor so that the latter could show it to
respondent Lipa Bank. It was also clear to her that giving the title as "garantiya" was different
from, and did not mean that it would be used as collateral for petitioner Redentor's loan.
This, to the Court, shows that there was no meeting of the minds as to the subject matter of
the supposed contracts.
Under Article 1332 of the Civil Code, respondent Lipa Bank has the burden of
proving that the terms of the loan documents were fully explained to petitioner Casiana.
Article 1332 of the Civil Code states that when a contract is in a language not understood by
one of the parties, and mistake or fraud is alleged, the person enforcing the contract has the
burden of proving that the terms of the contract were fully explained to the contracting party.
The above article shifts the burden of proof from the party alleging the mistake to the
party enforcing the contract. It also alters the rule that a party is presumed to know the
meaning of a document which he signed. Hence, if one of the parties is unable to read or if the
contract is in a language not understood by him, and he alleges fraud or mistake, the burden
of proving that the terms of the contract have been fully explained to the former is shifted to
the person enforcing the contract. If this burden is not satisfied, the presumption of mistake
or fraud stands unrebutted.
The evidence on record shows that respondent Lipa Bank was not able to satisfy this
burden. As established by the testimony of respondent Lipa Bank's own representative,
Alayon, the terms of the Promissory Note and Deed of Real Estate Mortgage were not
explained whatsoever to petitioner Casiana. Worse, respondent Lipa Bank misrepresented
to petitioner Casiana that she was signing documents that merely provided for a "garantiya"
of petitioner Redentor's loan.
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REPUBLIC OF THE PHILIPPINES v. JULIANA SAN MIGUEL VDA. DE RAMOS et al.

G.R. No. 211576, February 19, 2020, First Division (Caguioa, J.)
DOCTRINE
The sheer fact that there is a remaining portion of real property after the expropriation
is not enough, by and of itself, to be basis for the award of consequential damages. To be sure,
it must still be proven by sufficient evidence that the remaining portion suffers from an
impairment or decrease in value.
FACTS
The property subject of this case is a parcel of land in Valenzuela City covered by TCT
No. V-11181 registered under the names of respondents Juliana San Miguel Vda. de Ramos,
et al. Petitioner Republic, represented by the Department of Public Works and Highways
(DPWH), sought to acquire the subject property in relation to the construction of the North
Luzon Expressway Harbor Link Project.
The Republic offered to purchase the subject property for an amount based on the
zonal value issued by the Bureau of Internal Revenue (BIR), i.e. P457,800, but this offer was
rejected by the respondents. Hence, the Republic filed an action for expropriation before the
Regional Trial Court (RTC) to expropriate the subject property by virtue of R.A. No. 8974.
The Republic then paid a deposit representing 100% of the zonal value of the subject
property. The respondents duly acknowledged receipt of the said deposit and as such, the
RTC issued a writ of possession in favor of the Republic, and later an order of expropriation.
The RTC later allowed the parties to file their respective memoranda, which the respondents
failed to do.
The RTC found that the zonal valuation issued by the BIR of P457,800 is a just
compensation for the subject property. Petitioner filed a motion for partial reconsideration,
arguing that the RTC committed an error in imposing interest on the payment of just
compensation and imposing consequential damages. The RTC partly granted the motion,
decreasing the legal interest from 12% to 6% per annum.
ISSUE
(1) Whether the RTC erred in imposing legal interest on the amount of just
compensation. (YES.)
(2) Whether the RTC erred in requiring the petitioner Republic to pay consequential
damages. (YES.)
RULING
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(1) YES. In Evergreen Manufacturing Corp. v. Republic, citing Apo Fruits Corporation v.
Land Bank of the Philippines, the Court explained that "the rationale for imposing interest on
just compensation is to compensate the property owners for the income that they would
have made if they had been properly compensated — meaning if they had been paid the full
amount of just compensation — at the time of taking when they were deprived of their
property."
In the instant case, however, it is not disputed whatsoever that the respondents
received the amount determined by the RTC as the just, fair, and equitable compensation for
the subject property, i.e., P2,100.00 per sq. m. or P457,800.00, before petitioner Republic
took possession of the subject property. Otherwise stated, there was full and prompt
payment of just compensation at the time of taking.
(2) YES. In Republic v. Soriano, the Court deemed the award of consequential damages
improper because "the subject property is being expropriated in its entirety, there is no
remaining portion which may suffer an impairment or decrease in value as a result of the
expropriation." Petitioner Republic chimes in by asserting that the award of consequential
damages is inapplicable because "the entire area of respondents' property was
expropriated."
Petitioner Republic's position is wrong. Only a portion, and not the entire area, of the
respondents' property was expropriated. As readily admitted by petitioner Republic,
however, the affected area of the expropriation undertaken was only "218 sq. m." out of the
total area of 380 sq. m. Hence, petitioner Republic's position that the entire area of the
subject property was expropriated is not correct.
Be that as it may, the Court deems the award of consequential damages in favor of the
respondents erroneous. The sheer fact that there is a remaining portion of real property
after the expropriation is not enough, by and of itself, to be basis for the award of
consequential damages. To be sure, it must still be proven by sufficient evidence that the
remaining portion suffers from an impairment or decrease in value.
A careful review of the records of the instant case reveals that the RTC's award of
consequential damages is not supported by any evidence establishing that the remaining 162
sq. m. of the subject property suffered from any impairment or decrease in value. Therefore,
the award of consequential damages must be deleted.
[However, the Court ordered the Republic to shoulder CGT and transfer taxes
to preserve the compensation awarded to the respondents.]
While the Court considers the payment of transfer taxes as not forming part of the
consequential damages allowed under the Rules of Court, it must be clarified, however, that
the courts are not precluded from considering the value of capital gains tax (CGT) and other
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transfer taxes in determining the amount of just compensation to be awarded to the affected
owner.
[T]he transfer of real property by way of expropriation is not an ordinary sale

contemplated under Article 1458 of the Civil Code. Rather, it is akin to a "forced sale" or one
which arises not from the consensual agreement of the vendor and vendee, but by
compulsion of law. Unlike in an ordinary sale wherein the vendor sets the selling price, the
compensation paid to the affected owner in an expropriation proceeding comes in the form
of just compensation determined by the court.
In turn, just compensation is defined as the fair and full equivalent of the loss incurred
by the affected owner. The loss incurred by the affected owner necessarily includes all
incidental costs to facilitate the transfer of the expropriated property to the expropriating
authority, including the CGT due on the forced sale and other transfer taxes. These costs must
be taken into consideration in determining just compensation in the same way these costs
are factored into the selling price of real property in an arm's length transaction. Notably, the
value of the expropriated property, as declared by the affected owner, is one of the factors listed
under Section 5 of RA 8974.
Here, the respondents received, as just compensation, an amount equal to the sum of
the subject property's current BIR zonal valuation. Evidently, the value of CGT and transfer
taxes due on the transfer of the subject property were not factored into the amount paid to
the respondents, but instead, separately awarded as consequential damages.
[The] Court deems it just and equitable to direct petitioner Republic to shoulder such
taxes to preserve the compensation awarded to the respondents as a consequence of the
expropriation. To stress, compensation, to be just, it must be of such value as to fully
rehabilitate the affected owner; it must be sufficient to make the affected owner whole.
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PHILIPPINE BANK OF COMMUNICATIONS v. THE REGISTER OF DEEDS FOR THE

PROVINCE OF BENGUET
G.R. No. 222958, March 11, 2020, First Division (Caguioa, J.)
DOCTRINE
A registered owner who fails to prove the loss or destruction of his/her owner's duplicate
certificate of title may not be barred from refiling a new petition to replace the same.
FACTS
On Jan. 28, 2011, Philippine Bank of Communications (PBCOM) filed a petition with
the Regional Trial Court (RTC) for issuance of the owner's duplicate copy of TCT No. 21320
in lieu of the lost one. PBCOM claimed to be the registered owner of the subject property,
having acquired it on March 2, 1985 through an extrajudicial foreclosure sale.
According to PBCOM, the property was not included in its inventory of assets, because
the bank's La Union branch failed to forward all the pertinent records of its acquisition to its
head office in Makati. According to the bank, although it was registered in the bank's name,
it only realized it was lost when it received a notice to real property taxpayers in Benguet. It
alleged that it exerted all possible efforts to locate the copy, to no avail. PBCOM then filed an
affidavit of loss with the Registry of Deeds of Benguet.
The RTC dismissed the petition for insufficiency of evidence, ruling that PBCOM failed
to prove that it exerted all efforts to determine the actual whereabouts of the copy. PBCOM
filed a motion for reconsideration, praying that it be allowed to present additional evidence
to prove the allegations in the petition. The RTC gave PBCOM five (5) days to file a
supplemental motion but the bank failed to comply. As such, the RTC considered the motion
as abandoned.
Instead of filing an appeal, PBCOM filed a second petition, with allegations essentially
the same as that contained in the first petition. The RTC dismissed the second petition, motu
proprio, on the ground of res judicata. The RTC ruled that the first petition was dismissed for
insufficiency of evidence, which was an adjudication on the merits.
PBCOM sought reconsideration, which was denied. It then filed a notice of appeal,
which it later withdrew. Thereafter, it filed a petition for certiorari with the Court of Appeals
(CA), arguing that the dismissal of the first petition did not bar the filing of a second petition,
for otherwise, it would be forever barred from securing a "replacement copy of the missing
title."
The CA dismissed the petition, ruling that PBCOM availed of the wrong remedy and
that all elements of res judicata were attendant.
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ISSUE
(1) Whether PBCOM is barred from refiling a new petition to replace its owner's
duplicate certificate of title after failing to prove its loss or destruction in an earlier petition.
(2) Whether PBCOM availed of the wrong remedy when it filed a Rule 65 petition for
certiorari to challenge the dismissal of the second petition on the ground of res judicata.
RULING
(1) YES. A registered owner who fails to prove the loss or destruction of his/her
owner's duplicate certificate of title may not be barred from refiling a new petition to replace
the same.
It is a fundamental principle in land registration that the certificate of title serves as

evidence of an indefeasible and incontrovertible title to the property in favor of the person
whose name appears therein. It is conclusive evidence with respect to the ownership of the
land described therein.
Presidential Decree No. (P.D.) 1529 or the "Property Registration Decree" mandates
the issuance of this certificate of title in duplicates — the original certificate of title, which is
either an original certificate of title or TCT to be kept by the Register of Deeds and an owner's
duplicate certificate of title to be kept by the registered owner.
[T]here is no doubt that the owner's duplicate certificate of title is a fundamental

aspect of the Torrens system. While a registered owner is free to exercise and enjoy all
manner of rights over his/her property and non-registration thereof does not affect the
validity of said acts as between the parties, no voluntary transaction affecting the land will
be registered (and thus bind third persons) without the presentation of the owner's
duplicate certificate of title as mandated by P.D. 1529.
The requirement that the owner's duplicate certificate of title be presented for
voluntary transactions is precisely what gives the registered owner "security" and "peace of
mind" under the Torrens system. Without the owner's duplicate certificate of title, transfers
and conveyances and agencies and trusts while valid, will not bind the registered land. As
such, the owner's duplicate certificate of title safeguards ownership.
At the same time, the owner's duplicate certificate of title is also crucial to the full and
effective exercise of ownership rights over registered land. Hence, a registered owner has a
substantive right to own and possess the owner's duplicate certificate of title and to replace
the same in case of loss or destruction.
In view of the foregoing, the Court finds that PBCOM, as the undisputed
registered owner of the land covered by TCT No. 21320 on file with the Register of
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Deeds, 44 cannot be barred by res judicata from filing a second petition to replace its
owner's duplicate certificate of title in case of loss or destruction of the original
duplicate.
Although admittedly, it "is to the interest of the public that there should be an end to
litigation by the same parties and their privies over a subject once fully and fairly
adjudicated," it would be extremely impracticable, inconvenient, and unjust to perpetually
preclude the registered owner from registering any voluntary transaction, i.e., sale, donation,
mortgage, lease, etc., on his/her land simply because he/she failed to prove, to the
satisfaction of the court, that he/she, in fact, lost his/her title. If the Court were to uphold the
dismissal of the second petition on the ground of res judicata, PBCOM would be left with no
other remedy under the law to exercise full ownership rights over its own property.
[S]ustaining the dismissal and upholding the applicability of res judicata in the instant
case would not only perpetually prevent PBCOM from registering any voluntary transaction
over the parcel of land, but also perpetually prevent it from complying with its obligations
under the General Banking Law. This interpretation is absurd.
Res judicata lays the rule that an existing final judgment or decree rendered on the
merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter
within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other
actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the
points and matters in issue in the first suit."
As in proceedings for the reconstitution of original certificates of title however,

proceedings for the replacement of owner's duplicate certificates of title only involve "the
re-issuance of a new [owner's duplicate] certificate of title lost or destroyed in its original
form and condition. It does not pass upon the ownership of the land covered by the lost or
destroyed title." Strictly speaking therefore, there is no conclusive adjudication of
rights between adversarial parties in a proceeding for the replacement of a lost or
destroyed owner's duplicate certificate of title.
[T]he Court's authority in a petition for the replacement of a lost owner's duplicate
certificate of title is limited to determining: (1) whether the procedure prescribed in Section
109 has been complied with; and (2) whether the owner's duplicate certificate of title has, in
fact, been lost/destroyed. If the requisites are satisfied, the court, after notice and hearing,
should direct the issuance of a new duplicate certificate in its original form and condition,
with a memorandum of the fact that it is being issued in place of the lost duplicate certificate.
On the other hand, if the requisites are not satisfied, the court, after notice and
hearing, should dismiss the petition without prejudice to the registered owner's
subsequent compliance with the requisites prescribed by law.
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(2) YES. PBCOM's contention that a Rule 65 petition was proper as the Order
dismissing the second petition was void for lack of due process is untenable. Rule 9, Section
1 of the Rules of Court expressly allows the motu proprio dismissal of cases on the ground,
among others, of res judicata.
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MERCEDES GATMAYTAN v. MISIBIS LAND, INC.

G.R. No. 222166, June 10, 2020, First Division (Caguioa, J.)
DOCTRINE
In all cases of registration procured by fraud, the owner may pursue all his legal and
equitable remedies against the parties to such fraud and that registration procured by the
presentation of a forged deed or other instrument shall be null and void. A Torrens title issued
without prior presentation and cancellation of the existing owner's duplicate title does not bind
the property to which it pertains. The title so issued does not produce the effects of a Torrens
title contemplated under PD 1529, including the effects of constructive notice. It is literally a
scrap of paper.
FACTS
On Dec. 9, 1991, petitioners Mercedes Gatmaytan and Erlinda Valdellon purchased

from Oscar and Cidra Garcia (Spouses Garcia) a parcel of land (disputed lot) in Albay with an
area of 6.4868 hectares, covered by TCT No. T-77703 issued in the latter's name.
On April 6, 1992, petitioners, armed with the owner's duplicate copy of TCT No. T-
77703, attempted to register the corresponding Deed of Absolute Sale dated 1991 (1991
DOAS) with the Register of Deeds of Albay. They were able to have the 1991 DOAS annotated
on the TCT but they were not able to cause the transfer of the title in their name since they
lacked the Department of Agrarian Reform (DAR) clearance necessary to do so.
In 2010, when petitioners resumed processing the transfer of the title in their names,
they discovered that the property had been consolidated by respondent Misibis Land Inc.
(MLI) with other adjoining lots and sub-divided into smaller lots covered by new Torrens
titles. Petitioners further discovered that TCT No. T-77703 had already been stamped
"cancelled, "and replaced by subsequent Torrens titles issued on the basis of various deeds
of absolute sale.
As a result, petitioners on Sept. 1, 2020 caused the annotation of their affidavit of

adverse claim on MLI's Torrens titles. On Dec. 10, 2014, they filed a complaint before the
Regional Trial Court (RTC) against MLI and other parties for the nullity of the DOAS covering
the subject property and their declaration as true and rightful owners of the lot.
Answering, MLI claimed that it was an innocent purchaser for value since it relied on
DAA Realty's TCT No. T-97059. Further, it argued that petitioners' cause of action has already
prescribed since an action for reconveyance of real property based on an implied
constructive trust arising from fraud prescribes ten (10) years after the issuance of title in
favor of the defrauder. Here, MLI stressed that the complaint was filed in 2014, or more than
ten (10) years after the issuance of DAA Realty's Torrens title in 1996.
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The RTC dismissed the complaint on the ground of prescription. In the present
petition before the Supreme Court, petitioners mainly argue that the complaint should be
allowed to proceed since it is an action primarily for the declaration of nullity of DOAS and
alternatively, for quieting of title.
ISSUE
Whether the complaint should be allowed to proceed for trial on the merits.
RULING
YES. Petitioners' action should be characterized primarily as one for reconveyance

based on a void contract, and thus, imprescriptible.
Reconveyance based on the nullity of the 1996 DOAS in favor of DAA Realty
An action for reconveyance is a legal remedy granted to a rightful owner of land

wrongfully or erroneously registered in the name of another to compel the latter to reconvey
the land to him. In reconveyance, the decree of registration is respected as incontrovertible.
What is sought instead is the transfer of the property, which has been wrongfully or
erroneously registered in another person's name, to its rightful and legal owner, or to one
with a better right.
Whether an action for reconveyance prescribes or not is determined by the nature of

the action, that is, whether it is founded on a claim of the existence of an implied or constructive
trust, or one based on the existence of a void or inexistent contract.
The prescriptive period for the reconveyance of fraudulently registered real property
is ten (10) years reckoned from the date of the issuance of the certificate of title. This ten-
year prescriptive period begins to run from the date the adverse party repudiates the implied
trust, which repudiation takes place when the adverse party registers the land.
When the consent is totally absent and not merely vitiated, the contract is void. An
action for reconveyance may also be based on a void contract. When the action for
reconveyance is based on a void contract, as when there was no consent on the part of the
alleged vendor, the action is imprescriptible.
In essence, Petitioners assert that the 1996 DOAS is void and inexistent, as: (i) the
purported sellers were no longer the owners of the disputed lot at the time of execution; (ii)
the signature of one of the sellers therein had been forged; and (iii) the buyer-corporation
was legally inexistent at the time of execution.
Here, recovery of ownership is not restricted to the mere fact that a Torrens title
had been issued in favor of DAA Realty, and later, MLI. The above allegations show that the
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recovery of ownership is predicated on the nullification of the underlying mode of

transfer of title of the disputed lot — the issuance of the Torrens titles to DAA Realty and
then to MLI being merely the result of the 1996 DOAS sought to be nullified.
While the Complaint admittedly alleged fraud on the part of DAA Realty and MLI, this
allegation of fraud was essential in attacking the Torrens titles resulting from the underlying
transactions in question — the 1996 DOAS in favor of DAA Realty, and subsequently, the
2005 DOAS in favor of MLI.
It must be noted that MLI filed a Motion for Preliminary Hearing on Affirmative
Defenses (Motion for Preliminary Hearing) invoking the defenses of prescription and lack of
jurisdiction for failure of Petitioners to allege in their Complaint the assessed value of the
disputed lot. In asserting these affirmative defenses, MLI hypothetically admitted the
material allegations in Petitioners' Complaint.
Hence, the material allegations in Petitioners' Complaint, including the

possession by Petitioners of the owner's duplicate title of Spouses Garcia's TCT No. T-
77703 and the annotation of the 1991 DOAS in both original and owner's duplicate
title covering the disputed lot, are deemed hypothetically admitted.
Since the nullity of DAA Realty's Torrens title may be anchored on the non-
presentation of Spouses Garcia's owner's duplicate title, and MLI may not be considered an
innocent purchaser for value, then Petitioners' allegation for reconveyance based on the
nullity of the 1996 DOAS and the Torrens titles resulting therefrom was sufficiently made.
Moreover, Petitioners' action for reconveyance can also be viewed from the law on
sales. It must be noted that the copy of the 1991 DOAS forming part of the records shows
that it is a public document. That the 1991 DOAS is a public document is further confirmed
by the fact that Petitioners were successful in having the 1991 DOAS duly annotated on TCT
No. T-77703, and that the only reason they were unable to cause the transfer of the Torrens
title in their name was because they lacked the DAR clearance necessary to do so.
According to Article 1498 of the Civil Code, the execution of this public document
may partake constructive delivery of the property so as to constitute the Petitioners as full
owners thereof. In turn, the validity of this sale, documented through the 1991 DOAS, was
hypothetically admitted by MLI through its Motion for Preliminary Hearing. In other words,
the second sale to DAA Realty, documented through the 1996 DOAS, may be considered void,
since Spouses Garcia would no longer be the owners of the disputed lot at such time. As early
as 1991, Petitioners may be considered full owners of the property covered by TCT No. T-
77703. This means that DAA Realty could not have acquired anything in 1996. It follows that
MLI purchased nothing from DAA Realty in 2005. Clearly, Petitioners have alleged a
sufficient cause of action in this regard.
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What is then the applicable period in Petitioners' action for reconveyance? Being
based on the allegation of nullity of the 1996 DOAS in favor of DAA Realty, said action should
be deemed imprescriptible.
Quieting of Title
Under Article 476 of the Civil Code, an action for quieting of title may be filed
"[w]henever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective
but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be
prejudicial to said title." This action may be brought by one who has legal or equitable title
to, or interest in the real property which is the subject matter of the action, whether or not
such party is in possession. As a general rule, an action for quieting of title, being a real
action, prescribes thirty (30) years after accrual. However, by way of exception, an action to
quiet title involving property in the possession of the plaintiff is imprescriptible.
For an action for quieting of title to prosper: (i) the plaintiff or complainant must have
a legal or an equitable title to or interest in the real property subject of the action; and (ii)
the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy.
Here, Petitioners claim to have equitable title over the disputed lot based on the 1991
DOAS registered with the RD and annotated on the original and owner's duplicate of Spouses
Garcia's TCT No. T-77703. In addition, they allege that the 1996 DOAS purportedly executed
between Spouses Garcia and DAA Realty, and all transactions subsequent thereto, cast a
cloud of doubt on such equitable title. Hence, the two requisites to sustain an action for
quieting of title have been met.
As stated, an action for quieting of title involving propertynot in the possession of the
plaintiff prescribes thirty (30) years after the cause of action accrues, which, in this case,
appears to have taken place on February 22, 1996, upon issuance of DAA Realty's Torrens
title. Hence, Petitioners' action for quieting of title has not prescribed, as the Complaint was
filed only eighteen (18) years thereafter, on December 10, 2014.
The outright dismissal of the Complaint is unwarranted
In any case, even if the Complaint were to be treated, for the sake of argument, as an
action for reconveyance based solely on an implied constructive trust, the Complaint should
still be allowed to proceed, having been timely filed.
An action for reconveyance of property based on an implied constructive trust

prescribes in ten (10) years, in accordance with Article 1144 (2) of the Civil Code, which
states that that an action involving an obligation created by law must be brought within ten
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(10) years from the time the right of action accrues. However, in cases where fraud is
specifically alleged to have been attendant in the trustee's registration of the subject
property in his/her own name, the prescriptive period is ten (10) years counted from the
true owner's discovery of the fraud.
[I]n all cases of registration procured by fraud, the owner may pursue all his legal and
equitable remedies against the parties to such fraud and that registration procured by the
presentation of a forged deed or other instrument shall be null and void.
[A] Torrens title issued without prior presentation and cancellation of the existing
owner's duplicate title does not bind the property to which it pertains. The title so issued
does not produce the effects of a Torrens title contemplated under PD 1529, including the
effects of constructive notice. It is literally a scrap of paper.
On this basis, coupled with the fact that they were always in possession of the owner's
duplicate copy of TCT No. T-77703, Petitioners cannot be deemed to have been
constructively notified of the issuance of DAA Realty's TCT No. T-97059. The ten (10)-
year prescriptive period thus referred to in Article 1144 (2) of the Civil Code must be
reckoned not from the issuance of DAA Realty's Torrens title, but rather, from Petitioners'
actual discovery of the fraud in 2010. The Complaint, having been filed barely four (4) years
after, or on December 10, 2014, was therefore timely filed.
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Case Digests
THE ROMAN CATHOLIC BISHOP OF MALOLOS, INC. v. THE HEIRS OF MARIANO

MARCOS
DOCTRINE
The doctrine of exhaustion of administrative remedies, in and of itself, is grounded on

practical reasons, including allowing the administrative agencies concerned to take every
opportunity to correct its own errors, as well as affording the litigants the opportunity to avail
of speedy relief through the administrative processes and sparing them of the laborious and
costly resort to courts. However, this principle is not inflexible, and admits of several exceptions
that include situations where the very rationale of the doctrine has been defeated.
FACTS
The Roman Catholic Bishop of Malolos, Inc. (RCBMI) is the registered owner of a
parcel of land covered by OCT No. 597. On Oct. 21, 1972, upon the enactment of Presidential
Decree No. 27, otherwise known as the Tenants Emancipation Decree, portions of said land,
namely those covered by Certificates of Land Transfer (CLT) Nos. 746, 749, and 0392296
(subject property), were awarded to Mariano Marcos (Marcos), now represented by his heirs
(Heirs of Marcos).
On June 17, 1980, RCBMI sought the cancellation of the award of the portions to
Marcos, alleging that the lots were not devoted to rice production but to social and
humanitarian programs. In an order issued on June 29, 1982 [1982 Ministry of Agrarian
Reform (MAR) Order], then MAR granted RCBMI's petition and cancelled CLT No. 0392296 on
the ground that the lot it covered was vacant and uncultivated upon P.D. 27's issuance.
Marcos filed for a reconsideration of the same three years after, but the same was
denied in a January 29, 1986 Order, for the reason that the order of cancellation had long
become final and executory, with Marcos faulted for laches. Despite said cancellation,
however, the Heirs of Marcos allegedly refused to surrender possession of the subject
property.
RCBMI thus filed a complaint for the issuance of a writ of preliminary injunction and
damages on Feb. 2, 1994 before the Office of the Provincial Agrarian Reform Adjudicator
(PARAD) of Malolos, Bulacan, and in its Decision dated July 24, 1995, the PARAD ruled in
favor of RCBMI, and issued an order for the Heirs of Marcos to vacate the subject property
along with a declaration of nullity of any sale made by the Heirs of Marcos involving the same.
The Heirs of Marcos appealed to the Department of Agrarian Reform Adjudication

Board (DARAB), which affirmed the PARAD's Decision and restated the order for the Heirs
of Marcos to vacate. The Heirs of Marcos filed a motion for reconsideration which was
similarly denied by the DARAB.
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The Heirs of Marcos appealed the matter to the Court of Appeals (CA) via a petition
for review under Rule 43, which was denied by the CA on May 26, 2004, which decision
became final and executory with an entry of judgment issued on June 19, 2004. Yet, even
with an entry of judgment, the records were not remanded to the PARAD for execution.
Met with this new delay, RCBMI filed before the CA an Urgent Ex-Parte Motion to
Remand. Over three years later, a certification remanding records of the case to the PARAD
for execution was finally issued. RCBMI then filed a motion for the issuance of a writ of
execution before the PARAD, submitting the 1982 MAR Order which had long become final
and executory.
On March 11, 2008, instead of issuing the writ of execution, the PARAD directed the
Heirs of Marcos to comment or oppose, and set the Motion for the Issuance of Writ of
Execution for hearing. The Heirs of Marcos filed an opposition alleging that a supervening
event made the execution of the 1982 MAR Order impossible or illegal, the same being the
placement of the subject property under the coverage of Republic Act No. (R.A.) 6657,
otherwise known as the "Comprehensive Agrarian Reform Law of 1988" (CARP Law).
On May 6, 2010, the PARAD granted RCBMI's Motion for the Issuance of Writ of
Execution. The Heirs of Marcos filed for a reconsideration of the same on the ground of the
supervening CARP coverage over the subject property. The PARAD granted the same and
held in abeyance the resolution of the motion for the issuance of a writ of execution until the
DAR Secretary had finally decided on the supervening CARP matter involving the subject
property.
The DAR Secretary later held that the parcel of land is exempt from CARP coverage,
and as such, RCBMI filed another Motion to Resolve the Heirs of Marcos' Motion for
Reconsideration. The PARAD ordered the Heirs of Marcos to file a comment or opposition.
The PARAD later issued an order finally granting the motion for the issuance of a writ of
execution. However, RCBMI still had to file three Motions to Resolve before the PARAD finally
issued one.
The Heirs of Marcos moved to quash the writ, arguing that the five-year period from
the date of promulgation of the 1982 MAR Order within which to execute the same has
already lapsed. This was opposed by the RCBMI, arguing that the delay is attributable to the
Heirs of Marcos themselves. The PARAD granted the motion to quash on the same ground,
ruling that the order could only be executed via an action. The PARAD denied
reconsideration.
Aggrieved, RCBMI filed a Petition for Certiorari and Mandamus under Rule 65 before
the CA on February 26, 2016. The CA dismissed RCBMI's petition for its non-exhaustion of
administrative remedies, noting that RCBMI should have first filed an appeal before the
DARAB.
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ISSUES
(1) Whether the CA erred in dismissing RCBMI's petition for certiorari and mandamus
for non-exhaustion of administrative remedies. (YES.)
(2) Whether the PARAD correctly granted the respondents' motion to quash the writ
of execution (NO.)
RULING
(1) YES. This Court finds that the CA erred in dismissing RCBMI's petition outright on
the ground of non-exhaustion of administrative remedies, as the narrative clearly illustrates
how RCBMI's action falls within the exemptions to the said principle.
The CA, in dismissing RCBMI's petition, harked back to Section 5, Rule II of the 1989
DARAB Rules and concluded that as provided therein, RCBMI should have first appealed the
PARAD's quashal of the writ of execution before the DARAB, for the exhaustion of the
administrative remedies.
The doctrine of exhaustion of administrative remedies, in and of itself, is grounded on

practical reasons, including allowing the administrative agencies concerned to take every
opportunity to correct its own errors, as well as affording the litigants the opportunity to
avail of speedy relief through the administrative processes and sparing them of the laborious
and costly resort to courts.
However, this principle is not inflexible, and admits of several exceptions that include
situations where the very rationale of the doctrine has been defeated. The doctrines of
primary jurisdiction and exhaustion of administrative remedies are subject to certain
exceptions, to wit: (a) where there is estoppel on the part of the party invoking the doctrine;
(b) where the challenged administrative act is patently illegal, amounting to lack of
jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably
prejudice the complainant; (d) where the amount involved is relatively so small as to make
the rule impractical and oppressive; (e) where the question involved is purely legal and will
ultimately have to be decided by the courts of justice; (f) where judicial intervention is
urgent; (g) where the application of the doctrine may cause great and irreparable damage;
(h) where the controverted acts violate due process; (i) where the issue of non-exhaustion
of administrative remedies has been rendered moot; (j) where there is no other plain, speedy
and adequate remedy; (k) where strong public interest is involved; and (l) in quo warranto
proceedings.
As applied to the factual backdrop of this case, with the peculiar length of time with
which this case has lasted, this Court concludes that RCBMI's action falls within the temporal
exempting circumstance, or where there is unreasonable delay or official inaction that will
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irretrievably prejudice the complainant. Specifically, the exempting circumstance is the

suspension of RCBMI's enjoyment of its legal victory, which was awarded to it by the MAR in
1982, but to date, 37 years later, remains to be executed.
(2) NO. This unfounded extension and delay of the issuance of the Writ of Execution
dragged on until February 17, 2012, by which time, the five-year period to execute had
already long lapsed, which in turn gave rise to the ground for the Motion to Quash the
execution writ. The stalling of execution is therefore attributable to both the PARAD's
inaction and the Heirs of Marcos' serial oppositions. The long delay, with no knowable
basis in the records, is both unexplained and unacceptable, and may not be taken against
RCBMI, which did not fall short in seeking the execution of the award in its favor through
efforts within the permits of the law.
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Case Digests
NIEVES SELERIO et al. v. TREGIDIO BANCASAN

DOCTRINE
Article 1144 must be read in conjunction with Article 1155 of the Civil Code. Article 1155
states that "[t]he prescription of actions is interrupted when they are filed before the court,
when there is a written extrajudicial demand by the creditors, and when there is any written
acknowledgment of the debt by the debtor." Jurisprudence holds that an interruption of the
prescriptive period wipes out the period that has elapsed, sets the same running anew, and
creates a fresh period for the filing of an action. Thus, in Republic v. Bañez, the Court held that
a written acknowledgment of a debt by the debtor effectively restarts the prescriptive period.
FACTS
Petitioner Nieves Selerio (Nieves) is the claimant, occupant, and possessor of a 600
square-meter parcel of land in Davao City. On Sept. 18, 1993, Nieves executed a Deed of
Transfer and Waiver of Rights, Interests and Improvements over the subject land in favor of
respondents Tregidio Bancasan (Tregidio) conveying, ceding and selling the property and all
improvements thereon.
Nieves supposedly sold the subject property to Tregidio for P200,000 and the former
acknowledged to have received 50% of the amount from the latter. In the deed, the parties
agreed that the 50% remaining balance of the consideration shall be paid only when Nieves
and her family shall have vacated the subject premises, which shall not go beyond April 30,
1994.
After the conveyance, Jose Selerio and Cecilia Ababo filed a case for partition,
accounting of property income and attorney's fees against Nieves, Tregidio and others. Jose
and Cecilia claimed to be the legitimate children of Nieves' husband. In that case, the parties
entered a Compromise Agreement on Sept. 2, 1997, approved by the RTC, wherein the
parties agreed to proceed with the sale over the subject property.
On Feb. 2, 2007, Tregidio sent a letter to petitioners demanding the latter to vacate
the subject property, but the demand remained unheeded. As such, on Feb. 28, 2007,
Tregidio filed a complaint for recovery of possession with the Regional Trial Court (RTC)
against petitioners Nieves and Alicia Selerio (Alicia, Nieves' daughter-in-law) alleging that
he is entitled to the possession of the property by virtue of the aforementioned deed.
In their answer, the petitioners contended that Nieves was forced to affix her
signature on the document upon which she readily acceded as she was in dire need of money
at th[at] time; that she did not appear before the notary public indicated in the Deed as
during those years, she was incapable of engaging any travel to any far place; that Nieves did
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Case Digests
not know that the document she signed is a transfer of rights, interests and improvements
as she was purportedly suffering from a very serious eye illness.
Further, petitioners, in an amended answer, argued that there was no absolute

transfer of rights considering that there are conditions set therein; and that the Deed must
be appreciated as similar to a contract to sell rather than a contract of sale due to the
conditions set therein. They furthermore argued that Tregidio's cause of action had already
prescribed.
The RTC dismissed respondents Tregidio's complaint on the ground that the cause of
action had prescribed. The RTC agreed with petitioners that although respondent filed a case
for recovery of possession, he actually sought to enforce the Deed in order to gain possession
over the property. As such, the action was actually one for specific performance based on a
written contract, which prescribes in 10 years pursuant to Article 1144 of the Civil Code. As
the case was filed only on March 14, 2007 or after almost 13 years from the time petitioners
were obliged to vacate the property on April 30, 1994, the action was already barred by
prescription.
The Court of Appeals (CA) reversed the order of the RTC and held that the action was
filed within the prescriptive period. Contrary to the conclusions of the RTC, the CA held that
the parties entered into a contract of sale. As respondent was already the owner of the
subject property, the CA held that the prescriptive period for the latter's action to recover
the property did not commence to run until February 2, 2007, i.e., when petitioners refused
to vacate the property despite demand, respondent's cause of action accrued.
ISSUE
Whether respondent Tregidio's cause of action has prescribed.
RULING
NO, it has not prescribed, but for a different reason. Article 1144 of the Civil Code
provides that an action based on a written contract must be brought within 10 years from
the time the right of action accrues.
[A] cause of action based on a written contract accrues when the right of the plaintiff
is violated. In this regard, the Court agrees with the RTC that respondent's cause of action to
obtain possession or to enforce the sale accrued on May 1, 1994, when petitioners breached
the Deed by failing or refusing to vacate the subject property on the date agreed upon, i.e.,
April 30, 1994.
The allegations in the Complaint unequivocally show that respondent anchors his
purported right to own and to possess the property on the Deed. Indeed, even the supposed
constructive delivery of the subject property emanates from the said Deed. Pursuant to
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Article 1144 of the Civil Code therefore, respondent had 10 years from May 1, 1994 to file
the appropriate action.
Article 1144, however, must be read in conjunction with Article 1155 of the Civil
Code. Article 1155 states that "[t]he prescription of actions is interrupted when they are filed
before the court, when there is a written extrajudicial demand by the creditors, and when
there is any written acknowledgment of the debt by the debtor."
Jurisprudence holds that an interruption of the prescriptive period wipes out the
period that has elapsed, sets the same running anew, and creates a fresh period for the filing
of an action. Thus, in Republic v. Bañez, the Court held that a written acknowledgment of a
debt by the debtor effectively restarts the prescriptive period.
Applying the foregoing rules, the 10-year period that commenced to run on May 1,
1994 was interrupted when the parties executed the Compromise Agreement dated
September 2, 1997. Undoubtedly, the Compromise Agreement is a written acknowledgment
of petitioner Nieves' obligation to deliver ownership and/or possession of the subject
property and of respondent's correlative obligation to pay the unpaid balance of the
purchase price once said petitioner vacates the property. Precisely, the parties expressly
agreed that the "sale of the house and lot to [d]efendant spouses Teddy and Emy [Bancasan]
shall proceed as agreed and approved by the parties."
In fine, the period to enforce the Deed has not prescribed. The 10-year period, which
commenced on May 1, 1994, was interrupted when the parties executed the Compromise
Agreement on September 2, 1997. This interruption wiped out the period that already elapsed
and started a fresh prescriptive period from September 2, 1997 to September 2, 2007.
Thus, the written extrajudicial demand sent by respondent on February 2, 2007 was
made within the prescriptive period. In fact, said written demand likewise interrupted the
prescriptive period, which commenced anew when petitioners received said demand.
Undoubtedly therefore, the Complaint filed on February 28, 2007 was made within the
prescriptive period.
The RTC erred in ruling that no sale was perfected as petitioner Nieves never delivered
the property and respondents never fully paid the price.
It is elementary that a contract of sale is perfected by mere consent. Consequently,

the actual delivery of the subject matter or payment of the price agreed upon are not
necessary components to establish the existence of a valid sale; and their non-performance
do not also invalidate or render "void" a sale that has beg[u]n to exist as a valid contract at
perfection; non-performance, merely becomes the legal basis for the remedies of either
specific performance or rescission, with damages in either case.
The validity of the deed was not duly proven.
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To reiterate, the RTC dismissed respondent's Complaint solely on the ground of

prescription after petitioners filed their answer but before trial on the merits and without
ruling on petitioners' alternative defenses. These alternative defenses appear to include
allegations of fraud, undue influence, and/or mistake.
It is settled that "[t]he purpose of an action or suit and the law to govern it, including
the period of prescription, is to be determined by the complaint itself, its allegations and
prayer for relief." While it is true that by raising the affirmative defense of prescription, a
defendant hypothetically admits the material allegations in the complaint, said hypothetical
admission, and any ruling on the basis thereof, extends only to the specific affirmative defense
raised. In other words, the procedural tool does not dispense with plaintiff's burden of
actually proving his cause of action, should the affirmative defenses raised prove
unmeritorious.
In other words, allegations as to the validity of the sale, the transfer of ownership, and
the nature of petitioners' possession were deemed hypothetically admitted only for the
purpose of determining whether the action had prescribed. To extend the effect of such
hypothetical admission for the purpose of determining who between the parties has the real
right of possession, the very issue to be proved during trial with actual evidence, amounts to
a prejudgment of the main case without trial on the merits and to a violation of petitioners'
due process rights.
In Samartino v. Raon, the Court explained that "[t]he essence of due process is to be
found in the reasonable opportunity to be heard and submit any evidence one may have in
support of his defense."Although petitioners have been given an opportunity to answer the
claims against them, they have not been given the opportunity to present evidence to
substantiate their alternative defenses.
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Case Digests
USUSAN DEVELOPMENT CORPORATION v. REPUBLIC OF THE PHILIPPINES

G.R. No. 209462, July 15, 2020, First Division (Caguioa, J.)
DOCTRINE
The burden to prove a property's alienable and disposable classification rests with the
petitioner. The CA found that petitioner was unable to do so. Not being a trier of facts and with
no additional evidence presented by petitioner to refute the CA's factual finding in respect of
the three documents that it submitted for the CA's consideration to convince the CA that the
subject lot has indeed been classified as AnD land of public domain, the Court is left with no
option but to deny its Petition.
FACTS
During his lifetime, Jose Carlos owned a 3,975 square meter parcel of land situated in
Taguig. Upon his death, Jose's daughter Maria inherited the property and caused the survey
of the lot under a conversion plan, which was approved by the Bureau of Lands. Later, Maria
sold the lot to petitioner Ususan Development Corp. (now DMCI Project Developers Inc.).
Wanting to have said land titled in its name, petitioner Ususan filed an application for
registration and confirmation of title before the Regional Trial Court (RTC), asserting that
the subject property formed part of the alienable and disposable land of the public domain
as evidenced by a Certification of one Ali Bari, then the Regional Technical Director of the
Forest Management Service of the Department of Environment and Natural Resources (RTD-
FMS-DENR) as well as the Taguig City Land Registration Case Map No. 2623 as confirmed by
a Decision of the Supreme Court in the registration suit earlier filed by Maria Carlos over
such lot.
Petitioner contended that its total length of possession of such land, tacked with that
of its predecessors-in-interest, add up to over sixty years already.
Respondent Republic of the Philippines, through the Office of the Solicitor General,
filed an opposition arguing that the subject property cannot be owned by a private person
nor can it be registered as it still part of the public domain. It likewise asserted that the
Certification of the RTD-FMS-DENR is not competent evidence to prove that such land is
within the alienable and disposable land of public domain because under the present system,
it is only the Community and/or Provincial Environment and Natural Resources Offices of
DENR, as the case may be that has the power to issue classification certificates, and always
subject to the approval of the DENR Secretary.
It further averred that neither applicant[-appellee] nor its predecessors-in-interest

had satisfied the possession or occupation required by law for registration or confirmation
of title to real property.
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The RTC granted the petition after due hearing, ruling that the petitioner has shown
that the property was within the alienable and disposable lands of the public domain, which
it and its predecessors-in-interest have been possessing openly, exclusively, continuously
and notoriously in the concept of an owner for more than sixty (60) years already.
The Court of Appeals (CA) granted the Republic's appeal, dismissing the application
for lack of merit.
ISSUE
Whether the petitioner Ususan Development Corp. is entitled to the registration of

the subject lot.
RULING
NO. To prove the alienable and disposable (AnD) status of the subject lot, petitioner
attaches these three documents: (1) the CENRO or PENRO certification that the land sought
to be registered is AnD as delegated to the Regional Executive Director as Annex "E"; (2)
certified true copy of the original classification approved by the DENR Secretary as Annex
"F"; and (3) certified true copy of the approved Land Classification Maps (LC Maps) used as
basis in the issuance of the certification on the land classification status of a particular parcel
of land with certification by the legal custodian of the official records as Annex "G". These
attached documents, however, were not adduced in and admitted by the RTC.
Petitioner insists on the admission by the Court of these documents by citing Victoria
v. Republic (Victoria) and Llanes v. Republic (Llanes), which was cited in Victoria.
Unfortunately, Victoria and Llanes are not apropos. In Victoria, the Court allowed the
DENR Certification which was submitted by the petitioner therein to prove the AnD status of
the land applied for registration after the Court gave the OSG the opportunity to verify the
authenticity of the Certification and the OSG did not contest its authenticity. In Llanes, the
Court allowed the consideration of the CENRO Certification although it was only presented
during the appeal to the CA. In both Victoria and Llanes, there was no contrary finding
that the DENR and CENRO Certifications pertained to the lots subject of registration in
those cases.
In this case, the CA has rejected the very same three documents that petitioner
is submitting to the Court. In its MR before the CA, petitioner made the same allegations
regarding those three documents and its reliance on Victoria, which are averred in the
Petition.
As laid down by the Court in Dimaapi, et al. v. Golden Bell Loans and Credit Corporation,
et al., the following four rigid parameters limit the giving of due course and granting of
review or appeal by certiorari under Rule 45 of the Rules:
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(1) Only questions of law, which must be distinctly set forth in the petition, shall be
raised (Section 1, Rule 45);
(2) To avoid the outright dismissal of the petition, there must be compliance with the
payment of the docket and other required fees, deposit for costs, proof of proper
service of the petition, the required contents of the petition, and the required
documents that must accompany the petition (Sections 4 and 5, Rule 45);
(3) The Court may on its own initiative deny the appeal bycertiorari on the ground
that it is without merit or is prosecuted manifestly for delay, or that the questions
therein are too insubstantial to require consideration (second paragraph, Section
5, Rule 45); and
(4) A review by certiorari is not a matter of right, but of sound judicial discretion, and
will be granted only where there are special and important considerations by
reason of substance — "when the court a quo has decided a question of substance,
not theretofore determined by the Supreme Court, or decided it in a way probably
not in accord with law or with the applicable decisions of the Supreme Court" —
or procedure — "when the court a quo has so far departed from the accepted and
usual course of judicial proceedings, or so far sanctioned such departure by the
lower court, as to call for an exercise of the power of supervision" (Section 6, Rule
45).
As pointed at the outset, petitioner did not even comply with parameter 1. The
singular issue raised in the Petition is not a pure question of law because its resolution
requires a review of the correctness of the factual determination of the CA that the three
documents which petitioner belatedly submitted to the CA are vague and inconclusive as to
whether the subject lot falls within the areas in Taguig City that have been declared AnD
lands of public domain.
Petitioner anchors its application for original registration of title under Section 14 (1)
and (2) of Presidential Decree No. (PD) 1529 and claims that the subject lot is an AnD land
of public domain.
In the present case, petitioner does not claim that the subject lot is of private
ownership. On the contrary, petitioner claims that it is a land of public dominion that has
been classified as AnD. Consequently, the burden to prove its AnD classification rests with
petitioner.
The CA found that petitioner was unable to do so. Not being a trier of facts and with
no additional evidence presented by petitioner to refute the CA's factual finding in respect of
the three documents that it submitted for the CA's consideration to convince the CA that the
subject lot has indeed been classified as AnD land of public domain, the Court is left with no
option but to deny its Petition.
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Case Digests
SPS. ANASTACIO SR v. HEIRS OF COLOMA

G.R. No. 224572, August 27, 2020, First Division (Caguioa, J.)
DOCTRINE
A rebuttable presumption is established in Article 116 of the Family Code and the party
who invokes that presumption must first establish that the property was acquired during the
marriage because the proof of acquisition during the marriage is a condition sine qua non for
the operation of the presumption in favor of the conjugal partnership. It is not necessary to
prove that the property was acquired with conjugal funds and the presumption still applies
even when the manner in which the property was acquired does not appear. Once the condition
sine qua non is established, then the presumption that all properties acquired during the
marriage, whether the acquisition appears to have been made, contracted or registered in the
name of one spouse or both spouses, are conjugal, remains until the contrary is proved.
FACTS
The Title to the subject property in this case, TCT No. 56899, shows Juan as the
registered owner thereof since January 14, 1965, with the certificate of title likewise carried
the inscription of his marriage to Juliana. Both Juan and Juliana are now deceased, leaving
Rudy P. Coloma and Marcela C. Reyes, respondents, as their legitimate heirs.
According to respondents, the subject property is under the possession of petitioners

by mere tolerance of their parents. Thus, upon the demise of their parents, respondents
demanded the surrender of its possession. However, petitioners refused, which led to the
filing of a case for Recovery of Possession and Title against them. In their Answer,
Petitioners claimed right of ownership over the subject property by virtue of an alleged Deed
of Absolute Sale dated October 7, 2004 executed by Juan during his lifetime. On account of
such claim of ownership, the MCTC dismissed the said case.
Later on, respondents filed the Complaint before the RTC, this time for Annulment of
Document, Recovery of Ownership and Possession with Prayer for Writ of Preliminary
injunction, claiming that the Deed of Absolute Sale allegedly executed by their father in favor
of petitioners is void on two grounds: (1) that the signature of their father, Juan, is a forgery;
and (2) that there is no conformity or consent given by their mother, Juliana, to the alleged
sale. Petitioners also claimed that the consent of Juliana was not necessary to effect a valid
sale since the subject property was the sole property of Juan, having inherited the same from
his paternal ancestors and the spouses had long been separated from bed and board.
In support of their claims, respondents presented, among others, a handwriting

expert who testified that the questioned signature of Juan was indeed forged. On the other
hand, petitioners harped on the alleged separation from bed and board of Juan and Juliana
and presented Juan's alleged paramour since 1978. Said witness testified that during the
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lifetime of Juan, he mortgaged, and subsequently sold the subject property to petitioners
which testimony was later on confirmed by Romeo Anastacio.
ISSUES
Whether the sale of the subject property by Juan in favor of petitioners contemplated
in the DAS is valid
RULING
NO. Petitioners argue that TCT No. 56899 presents a conclusive presumption that the
land described therein was the capital of, and owned exclusively by Juan and that Juan is
stated in the said TCT to have been married to Juliana is merely descriptive of his civil status.
Thus, petitioners claim that the DAS is valid and the consent of Juliana was not required when
Juan sold the subject property to them.
Petitioners' arguments are erroneous. Article 105 of the Family Code provides that
the provisions of Conjugal Partnership of Gains (CPG), shall also apply to CPG already
established before the effectivity of the Family Code, without prejudice to vested rights
already acquired in accordance with the Civil Code or other laws. It will be recalled that
based on the stipulations of the parties, the subject property was acquired in 1965 during
the lifetime of Juan and Juliana while they were married, and it was registered in the name
of Juan married to Juliana.
In 1965, the prevailing property regime between husband and wife was the CPG.
There being no evidence to the contrary, the property regime between Juan and Juliana was
the CPG. A rebuttable presumption is established in Article 116 of the Family Code and the
party who invokes that presumption must first establish that the property was acquired
during the marriage because the proof of acquisition during the marriage is a condition sine
qua non for the operation of the presumption in favor of the conjugal partnership. It is not
necessary to prove that the property was acquired with conjugal funds and the presumption
still applies even when the manner in which the property was acquired does not appear.
Once the condition sine qua non is established, then the presumption that all properties
acquired during the marriage, whether the acquisition appears to have been made,
contracted or registered in the name of one spouse or both spouses, are conjugal, remains
until the contrary is proved.
Given the very stipulations made during the Pre-Trial and TCT No. 56899,
respondents had laid the predicate for the presumption under Article 116 to be invoked. To
overcome the presumption in favor of the conjugal partnership, petitioners were required
to prove the contrary. Unfortunately, petitioners' evidence that TCT No. 56899 was
registered in the name of Juan married to Juliana and the sale from the previous owner,
Valete, to Juan only mentioned Juan as the buyer fell short to overcome the presumption.
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Since petitioners have not presented strong, clear, convincing evidence that the
subject property was exclusive property of Juan, its alienation to them required the consent
of Juliana to be valid. Given that the subject property was the conjugal property of Juan and
Juliana, the CA correctly ruled that the sale of the subject property by Juan without the
consent of Juliana in favor of petitioners contemplated in the DAS is void.
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TIROL v. NOLASCO
G.R. No. 230103, August 27, 2020, First Division (Caguioa, J.)
DOCTRINE
As far as respondent Sol is concerned, she would inherit from Roberto Jr. pursuant to
Article 887(3) and part of his estate would be his share in the estate of her mother, Gloria.
Respondent Sol could not inherit from the estate of Roberto Sr. because Roberto Jr. predeceased
Roberto Sr., his father, and the children of Roberto Jr. would succeed by right of representation
from their grandfather pursuant to Article 972 of the Civil Code. Moreover, respondent Sol is
not related by blood, but only by affinity, to Roberto Sr.
FACTS
Gloria Tirol and Roberto, Sr. died testate. They were survived by their children
namely: Ruth, Cecilia, Marilou, Ciriaco and Anna and his four grandchildren from Roberto Jr.
Roberto Jr predeceased Roberto, Sr. and was survived by his four children from his marriage
with Cecilia Geronimo, namely Martin, Zharina, Francis and Daniel. At the time of his death,
Roberto Jr.'s marriage with his wife had been annulled.
Martin, Cecilia and Ciriaco filed before the RTC a petition to probate the wills of Gloria
and Roberto Sr, which Wills were admitted to probate. Peititoner Martin was appointed as
the Administrator of their estates.
Respondent Sol filed a Motion for Intervention stating that she has a legal interest in
the estate of Gloria and Roberto Sr. because she is the surviving spouse of Roberto Jr. having
married him. Sol alleged that the late Roberto Jr., being one of the children of Gloria and
Roberto Sr., is entitled to at least 1/7 of the estate of his late mother and as the surviving
spouse, she is entitled to that portion belonging to Roberto Jr. which is equivalent to the
legitime of the legitimate children of the decedent. According to her, she is considered a
compulsory heir pursuant to Article 887 of the Civil Code and has an interest or claim in the
estate of her late husband.
Martin opposed the motion arguing that Sol has no legal interest in the probate of the
wills of Gloria and Roberto Sr. and could not represent Roberto Jr., not being a blood relative.
The oppositors also refused to recognize Sol as the legal wife of Roberto Jr.
Later on, respondent Sol filed a motion for intervention in the intestate settlement of
Roberto Jr.'s estate proceedings which was granted. Zharina has been appointed as
Administratrix in the intestate estate of Roberto Jr.
The RTC then denied Sol’s motion to intervene in the testate proceedings of Gloria
and Roberto, Sr. It was held that she has no legal interest in the case. On appeal, the CA stated
that respondent Sol should be allowed to intervene because she is the widow of Roberto Jr.
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and has an interest or claim in her husband's estate, which consists, in part, of the latter's
share in the estate of his deceased mother Gloria. The CA clarified that respondent Sol does
not anchor her motion for intervention on her status as daughter-in-law but rather as an heir
of Roberto Jr.
In this Petition, Martin argues that respondent Sol's rights and interests, if any, can be
fully protected in the settlement of Roberto Jr.'s estate proceeding, which directly involves
the settlement of Roberto Jr.'s intestate estate. Thus, her intervention in the testate
proceedings which involves the wills of Gloria and Roberto Sr., is completely unnecessary
and superfluous.
ISSUE
Whether the CA erred in failing to consider whether respondent Sol's alleged rights
and interests over the estate of Roberto Jr. may be fully protected in the settlement of the
latter’s estate proceeding, which directly involves said estate
RULING
YES. The CA allowed respondent Sol's intervention in the probate proceeding

“because she is the widow of Roberto Jr. and, therefore, has an interest or claim in the estate
of her husband consists, in part, of the latter's share in the estate of his deceased mother,
Gloria.”
Roberto Jr. died after his mother's death but before his father's death. When Gloria
died, Roberto Jr. would have inherited from her as a compulsory heir by virtue of Article
887(1) of the Civil Code, which states:
ART. 887. The following are compulsory heirs:
(1) Legitimate children and descendants, with respect to their legitimate parents and
ascendants;
(2) In default of the foregoing, legitimate parents and ascendants, with respect to their
legitimate children and descendants;
(3) The widow or widower;
(4) Acknowledged natural children, and natural children by legal fiction;
(5) Other illegitimate children referred to in Article 287.
As far as respondent Sol is concerned, she would inherit from Roberto Jr. pursuant to
Article 887(3) and part of his estate would be his share in the estate of her mother, Gloria.
Respondent Sol could not inherit from the estate of Roberto Sr. because Roberto Jr.
predeceased Roberto Sr., his father, and the children of Roberto Jr. would succeed by right of
representation from their grandfather pursuant to Article 972 of the Civil Code. Moreover,
respondent Sol is not related by blood, but only by affinity, to Roberto Sr.
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It should also be noted that the claim of respondent Sol as surviving spouse of Roberto
Jr. is disputed. Sol attached a Certificate of Marriage between her and Roberto Jr. On the other
hand, petitioner Martin, in his Opposition questioned the validity of the marriage of
respondent Sol to his father, Roberto Jr., on the ground that it is bigamous because of
respondent Sol's pre-existing marriage to another man, which had not been nullified before
her marriage to Roberto Jr., and as proof thereof, petitioner Martin attached a Marriage
Certificate showing that on May 15, 1985 respondent Sol married a certain Raul I. Cimagla at
a civil wedding in Davao City.
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DR. NIXON L. TREYES v. ANTONIO L. LARLAR, REV. FR. EMILIO L. LARLAR, et.al.
G.R. No. 232579, September 8, 2020, En Banc (Caguioa, J.)
DOCTRINE
Article 777 of the Civil Code states that the rights of succession are transmitted from the
moment of the death of the decedent. The operation of Article 777 occurs at the very moment
of the decedent's death – the transmission by succession occurs at the precise moment of death
and, therefore, the heir is legally deemed to have acquired ownership of his/her share in the
inheritance at that very moment, and not at the time of declaration of heirs, or partition, or
distribution.
FACTS
Rosie Larlar Treyes, the wife of Dr. Nixon Treyes, died childless and intestate, leaving
behind seven siblings. At the time of her death, Rosie left behind 14 real estate properties,
which she owned together with Dr. Nixon as their conjugal properties.
Dr. Nixon executed two Affidavits of Self- Adjudication, transferring the estate of
Rosie unto himself, claiming that he was the sole heir of his deceased spouse, Rosie. Hence,
the respondents filed before the RTC a Complaint for annulment of the Affidavits of Self-
Adjudication, cancellation of TCTs, reconveyance of ownership and possession, partition,
and damages.
Dr. Nixon moved to dismiss the complaint for lack of jurisdiction over his person but
a re-service of summons was made upon him. He then filed another Motion to Dismiss
arguing that the private respondents' Complaint should be dismissed on the following
grounds: (1) improper venue; (2) prescription; and (3) lack of jurisdiction over the subject
matter. The RTC denied the same. When the case reached the CA, the case was dealt with just
the same.
In this Petition, Dr. Nixon now argues that the RTC has no jurisdiction to hear, try, and
decide the subject matter of the private respondents' Complaint because the determination
of the status of the legal heirs in a separate special proceeding is a prerequisite to an ordinary
suit for recovery of ownership and possession of property instituted by the legal heirs.
ISSUE
Whether or not the determination of the status of the legal heirs in a separate special
proceeding is a prerequisite to an ordinary suit for recovery of ownership and possession of
property instituted by the legal heirs
RULING
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NO. Article 777 of the Civil Code states that the rights of succession are transmitted
from the moment of the death of the decedent. The operation of Article 777 occurs at the
very moment of the decedent's death – the transmission by succession occurs at the precise
moment of death and, therefore, the heir is legally deemed to have acquired ownership of
his/her share in the inheritance at that very moment, and not at the time of declaration of
heirs, or partition, or distribution.
Hence, the Court has held that the title or rights to a deceased person's property are
immediately passed to his or her heirs upon death. The heirs' rights become vested without
need for them to be declared ‘heirs’.
In fact, in partition cases, even before the property is judicially partitioned, the heirs
are already deemed co-owners of the property. Thus, in partition cases, the heirs are deemed
real parties in interest without a prior separate judicial determination of their heirship.
Similarly, in the summary settlement of estates, the heirs may undertake the extrajudicial
settlement of the estate of the decedent amongst themselves through the execution of a
public instrument even without a prior declaration in a separate judicial proceeding that
they are the heirs of the decedent.
The Civil Code identifies certain relatives who are deemed compulsory heirs and
intestate heirs. They refer to relatives that become heirs by virtue of compulsory succession
or intestate succession, as the case may be, by operation of law.
In the instant case, Article 1001 states that brothers and sisters, or their children, who
survive with the widow or widower, shall be entitled to one-half of the inheritance, while the
surviving spouse shall be entitled to the other half.
Hence, subject to the required proof, without any need of prior judicial determination,
the private respondents siblings of Rosie, by operation of law, are entitled to one-half of the
inheritance of the decedent. Thus, in filing their Complaint, they do not seek to have their
right as intestate heirs established, for the simple reason that it is the law that already
establishes that right. What they seek is the enforcement and protection of the right granted
to them under Article 1001 in relation to Article 777 of the Civil Code by asking for the
nullification of the Affidavits of Self-Adjudication that disregard and violate their right as
intestate heirs.
To stress once more, the successional rights of the legal heirs of Rosie are not merely
contingent or expectant — they vest upon the death of the decedent. By being legal heirs,
they are entitled to institute an action to protect their ownership rights acquired by virtue
of succession and are thus real parties in interest in the instant case. To delay the
enforcement of such rights until heirship is determined with finality in a separate special
proceeding would run counter to Article 777 of the Civil Code which recognizes the vesting
of such rights immediately — without a moment's interruption — upon the death of the
decedent.
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Case Digests
YON MITORI INTERNATIONAL INDUSTRIES v. UNION BANK OF THE PHILIPPINES

G.R. No. 225538, October 14, 2020, First Division (Caguioa, J.)
DOCTRINE
For the principle of unjust enrichment to apply, the following requisites must concur: (i)
a person is unjustly benefited; and (ii) such benefit is derived at the expense of or with damages
to another. Moreover, to substantiate a claim for unjust enrichment, the claimant must
unequivocally prove that another party knowingly received something of value to which he was
not entitled and that the state of affairs are such that it would be unjust for the person to keep
the benefit.
FACTS
Tan, doing business under the name and style of Yon Mitor, is a depositor, maintaining
a Current account with Commonwealth, Quezon City branch of Union Bank. Tan deposited in
said Union Bank account, the amount of P420,000.00 through a BPI Check which was drawn
against the account of Angli Lumber & Hardware, Inc., one of Tan's alleged clients.
Tan’s balance was therefore increased to P513,700.60. In the morning of November

14, 2007, Tan withdrew from the said account the amount of P480,000.00. Later that day,
the BPI Check was returned to Union Bank as the account against which it was drawn had
been closed. It was then that Union Bank discovered that Tan's account had been mistakenly
credited. Thus, the branch manager of Union Bank's Commonwealth branch immediately
called Tan to recover the funds mistakenly released. However, Tan refused to return the
funds, claiming that the BPI Check proceeded from a valid transaction between Angli Lumber
and Yon Mitori.
During the course of its investigation, Union Bank discovered that Tan previously
deposited five BPI checks drawn by Angli Lumber against the same BPI account, and that
these five checks were all previously dishonored. Thereafter, Union Bank demanded the
reimbursement of the amount of P420,000.00. Tan refused to return the said amount. Union
Bank then debited the available balance reflected in Tan’s account amounting to
P34,700.6013 and thereafter instituted a Complaint for Sum of Money against Tan.
The RTC ruled in favor of Union Bank finding the application of solutio indebiti under
Article 2154 of the Civil Code. Further, the RTC ruled that under Article 1980 of the Civil
Code, "fixed, savings, and current deposits of money in banks and similar institutions shall
be governed by the provisions concerning simple loan." By reason of the erroneous payment
made in Tan's favor, Tan and Union Bank became mutual debtors and creditors of each other.
Thus, set-off is proper. On appeal to the CA, the RTC decision was affirmed. However, the CA
modified the legal interest rate applied on the awarded sum from 12% to 6% per annum, in
accordance with the Court's ruling in Nacar v. Gallery Frames.
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ISSUE
Whether the CA erred when it affirmed the RTC Decision directing Tan to return the
value of the BPI Check with legal interest
RULING
NO. The dishonor of the BPI Check is not disputed. Evidently, Union Bank was under
no obligation to effect payment in favor of Tan precisely because the BPI Check which Tan
deposited for collection had been dishonored. Allowing Tan to retain the proceeds of the
dishonored BPI Check despite not being entitled thereto would therefore permit unjust
enrichment at Union Bank's expense.
The principle of unjust enrichment is codified under Article 22 of the Civil Code: Every
person who through an act of performance by another, or any other means, acquires or comes
into possession of something at the expense of the latter without just or legal ground, shall
return the same to him.
For the principle to apply, the following requisites must concur: (i) a person is
unjustly benefited; and (ii) such benefit is derived at the expense of or with damages to
another. Moreover, to substantiate a claim for unjust enrichment, the claimant must
unequivocally prove that another party knowingly received something of value to which he
was not entitled and that the state of affairs are such that it would be unjust for the person
to keep the benefit.
The requisites for the application of the principle of unjust enrichment are clearly
present in this case. Here, it was unequivocally established that Tan withdrew and utilized
the proceeds of the BPI Check fully knowing that he was not entitled thereto.
As stated, Union Bank's obligation to credit Tan's account is contingent upon actual
receipt of the value of the BPI Check or notice of its clearance. Due to the dishonor of the BPI
Check, Union Bank's obligation to credit Tan's account with its proceeds did not attach.
Conversely, Tan's right to receive the proceeds of said check did not arise. Nevertheless, Tan
withdrew the proceeds of the BPI Check with full and established knowledge that the account
against which it was drawn had been closed. Tan, the depositor herein, was unjustly
benefited by reason of the erroneous credit made in his favor. Such benefit, in turn, was
derived at the expense of Union Bank as the collecting bank. Thus, based on the principle of
unjust enrichment, Tan is bound to return the proceeds of the BPI Check which he had no
right to receive.
Further, the records show that while Tan harped on Union Bank's alleged gross
negligence, he failed to cite the specific provision of law, banking regulation, or internal rule
which had been violated by Union Bank. Upon notice of the BPI Check's dishonor, Union
Bank's officer immediately notified Tan of such fact. However, despite repeated demands,
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Tan refused to return the amount he had withdrawn insisting that the BPI Check was given
to him for value and in the course of business. Clearly, Tan failed to substantiate his
imputation of gross negligence.
In an attempt to evade liability, Tan also argues that, as his collecting agent, Union
Bank should be held solely responsible for losses arising from its own negligence, pursuant
to Article 1909 of the Civil Code. Tan appears to assert that he, as principal-depositor,
suffered losses because of the technical error in Union Bank's system. This assertion is
clearly false.
As stated, Tan had no right to receive the proceeds of the BPI Check. Evidently, Tan
did not suffer any loss as a result of Union Bank's technical error. On the contrary, Tan unduly
gained from the technical error, as it allowed him to withdraw and utilize funds which he
had no right to receive.
Lastly, as to the awarded sum, not being a loan or forbearance of money, is subject to
6% interest per annum. In turn, such interest should be computed from the time when the
amount due had been established with reasonable certainty, which, in this case, was the date
of Union Bank's extrajudicial demand on November 20, 2007.
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TAMAYAO v. LACAMBRA
G.R. No. 244232, November 3, 2020, First Division (Caguioa, J.)
DOCTRINE
The provision contemplates a case of double or multiple sales by a single vendor. More
specifically, it covers a situation where a single vendor sold one and the same immovable
property to two or more buyers. According to a noted civil law author, it is necessary that the
conveyance must have been made by a party who has an existing right in the thing and the
power to dispose of it. It cannot be invoked where the two different contracts of sale are made
by two different persons, one of them not being the owner of the property sold. And even if the
sale was made by the same person, if the second sale was made when such person was no longer
the owner of the property, because it had been acquired by the first purchaser in full dominion,
the second purchaser cannot acquire any right.
FACTS
During his lifetime, Vicente owned a parcel of land located in Tuguegarao City,
covered by OCT No. 6106 (OCT). Upon his death sometime in 1944, Lot No. 2930 passed on
to his only surviving heirs, Jose and Tomasa, both surnamed Balubal, by intestate succession.
In 1962, Tomasa and Jose executed the first sale, adjudicating unto themselves and
subsequently transferring Lot No. 2930 to Juan, for and in consideration of P325.00. The sale
between Jose and Tomasa, on the one hand, and Juan, on the other, was notarized but was
not annotated on the OCT and neither was it registered to cause the cancellation of the OCT.
Nevertheless, the owner's copy of the OCT was turned over by Tomasa and Jose to Juan. Juan
thereafter took possession of the subject lot.
When Juan died in 1979, said lot passed by intestacy to his heirs, Felipa, Natividad,
Francisco, Sotero, Catalino, and Cirilio, all surnamed Lacambra, and Basillo Coballes (Basilio),
son of Matilde, the deceased daughter of Juan. Catalino built his house on the western portion
of the lot.
In a Deed of Sale of an Undivided Share in a Registered Parcel of Land, the heirs of

Lacambra, except for Cirilio and Catalino, sold their portions — equivalent to 5/14 pro
indiviso, or 329 square meters — in the subject lot to Rogelio. On the same day, Rogelio
executed an Affidavit registering his adverse claim over the 5/14 portion of the lot and
annotated it on the OCT. Thereafter, Rogelio and his wife, Felipa, constructed their house on
the eastern part of the lot, after Sotero, Cirilio and Catalino pointed to them the portion
where they may do so.
When Rogelio finished constructing his house, Pedro Balubal (Pedro), the son of Jose,
and Leandro Andal (Leandro), son of Jose's deceased daughter, Enrica, paid the Spouses
Tamayao a visit and asked them why they bought part of the property from the heirs of
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Lacambra when the lot clearly belonged to their predecessors. In her Answer with
Counterclaim, Tomasa denied that she and her brother, Jose, sold the property to Juan.
Fearful that they might lose not only the land on which their house stood, but also the
very house they constructed on it, the Spouses Tamayao readily agreed to purchase from
Pedro, Tomasa, and Leandro (heirs of Balubal) the entire Lot. Thus, on 24 December 1981,
the heirs of Balubal executed the third sale in favor of Spouses Tamayao.
Meanwhile, Pedro filed a verified petition for the issuance of a new owner's copy of
OCT No. 6106, alleging that their copy had been lost. Subsequently, a new owner's duplicate
of said OCT was issued by the Register of Deeds of Cagayan in favor of Pedro. A TCT was
thereafter issued in the name of Rogelio married to Felipa.
On 21 March 1982, a Complaint for the Annulment of Sale and Title with Damages
was filed by the heirs of Lacambra against the Spouses Tamayao and the heirs of Balubal,
docketed as Civil Case No. 2986 of the RTC. Further, due to the refusal of the Spouses
Tamayao to agree to the demand for legal redemption by Cirilio and Catalino as regards the
5/14 portion sold by their co-owners, Cirilio and Catalino, filed a Complaint for Legal
Redemption and Removal of Improvements against the Spouses Tamayao, docketed as Civil
Case No. 2989 of the RTC.
For their part, the Heirs of Balubal argued that they are the original owners of the
subject property and that the same was never sold to Juan. They claimed that Tomasa was
illiterate while Jose was already bedridden on the day of the execution first sale and could
thus not have appeared before a notary public.
ISSUE
Whether the first sale in favor of Juan should be upheld
RULING
YES. A contract of sale is a consensual contract. No particular form is required for its
validity. Upon perfection thereof, the parties may reciprocally demand performance. The
sale between Jose and Tomasa and Juan is evidenced by a true copy of the notarized
Extrajudicial Settlement and Sale dated January 23, 1962 as certified by the Clerk of Court of
the First Judicial District of Cagayan.
In addition to the foregoing, the execution of the Extrajudicial Settlement and Sale in
a public instrument resulted in the constructive delivery of the object of the sale. Evidently,
mere execution of the deed of conveyance in a public document is equivalent to the delivery
of the property, unless the deed otherwise provides. In the present case, no reservation of
ownership appears in the Extrajudicial Settlement and Sale. On the contrary, the deed
expressly provided that the “HEIRS-VENDOR do by these presents hereby SELL, TRANSFER,
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AND CONVEY unto the said Juan Lacambra, his heirs and assigns the above-described parcel
land.”
The foregoing acts unequivocally confirm that Jose and Tomasa sold the subject lot to
Juan, constructively delivered ownership over the subject lot when the contracting parties
acknowledged the Extrajudicial Settlement and Sale dated January 23, 1962 in a public
instrument, and actually delivered the same when they allowed Juan and his family to take
control and possession of the same. In fact, upon Juan's death, his heirs exercised their
ownership rights by selling portions of the same to Spouses Tamayao. Indeed, Spouses
Tamayao admit that the heirs of Lacambra possessed the property and that they bought a
portion of the land from them before building their house.
While the Court recognizes that the respondent's failure to register the Extrajudicial
Settlement and Sale dated January 23, 1962 and to cause the issuance of a TCT in their names,
considering that Jose and Tomasa already delivered the original owner's duplicate copy of
OCT No. 6106, was irresponsible and not prudent, such fact does not render a validly
perfected and consummated sale void.
The buyer may become the owner of the real property even if the certificate of title is
still registered in the name of the seller. As between the seller and buyer, ownership is
transferred not by the issuance of a new certificate of title in the name of the buyer but by
the execution of the instrument of sale in a public document.
The recording of the sale with the proper Registry of Deeds and the transfer of the
certificate of title in the name of the buyer are necessary only to bind third parties to the
transfer of ownership. As between the seller and the buyer, the transfer of ownership takes
effect upon the execution of a public instrument conveying the real estate. Registration of
the sale with the Registry of Deeds, or the issuance of a new certificate of title, does not confer
ownership on the buyer. Such registration or issuance of a new certificate of title is not one
of the modes of acquiring ownership.
Petitioners insist that they have a better right over Lot No. 2930 as they purchased
the same in good faith and for value from the heirs of Balubal, whose title was free and clear
from any form of lien or encumbrance. The Court disagrees. As the ownership over the
subject lot had been transferred to Juan in 1962, the heirs of Balubal could not transmit any
rights over the property. It is an established principle that no one can give what one does not
have, nemo dat quod non habet. Since the heirs of Balubal no longer owned Lot No. 2930 at
the time of the third sale in 1981, they could not legally transfer ownership and Spouses
Tamayao could not acquire any right over the subject property.
The Court is aware of the principle that a purchaser of property covered by a Torrens
certificate of title is not required to explore further than what the certificate indicates on its
face. This rule, however, applies only to innocent purchasers for value and in good faith; it
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excludes a purchaser who has knowledge of a defect in the title of the vendor, or of facts
sufficient to induce a reasonable prudent man to inquire into the status of the property.
Undoubtedly, Spouses Tamayao were not innocent purchasers for value. In fact, they
were actually proven to be purchasers in bad faith who had actual knowledge that the title
of the vendor, i.e., the heirs of Balubal, was defective and that the land was in the actual
adverse possession of another. In view of the foregoing, the principle that a defective deed
can “be the root of a valid title when an innocent purchaser for value intervenes” cannot
apply.
Petitioners may not even rely on Article 1544 or the rule on double sales, which
states:
Art. 1544. If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession thereof in good
faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who presents
the oldest title, provided there is good faith.
The foregoing provision does not apply to the instant case. The rule on double sales
does not apply when second sale was made when such person was no longer the owner of
the property, because it had been acquired by the first purchaser in full dominion.
The provision contemplates a case of double or multiple sales by a single vendor.

More specifically, it covers a situation where a single vendor sold one and the same
immovable property to two or more buyers. According to a noted civil law author, it is
necessary that the conveyance must have been made by a party who has an existing right in
the thing and the power to dispose of it. It cannot be invoked where the two different
contracts of sale are made by two different persons, one of them not being the owner of the
property sold. And even if the sale was made by the same person, if the second sale was made
when such person was no longer the owner of the property, because it had been acquired by
the first purchaser in full dominion, the second purchaser cannot acquire any right.
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BERNARDO v. FERNANDO
G.R. No. 211034, November 18, 2020, First Division (Caguioa, J.)
DOCTRINE
The law requires that every reasonable presumption leans towards legitimacy, and
establishes the status of a child from the moment of his birth. In case of the need to prove
filiation, the same may only be raised in a direct and separate action instituted to prove the
filiation of the child.
Relatedly, as provided by Article 173 of the Family Code, an action to claim legitimate
filiation is strictly personal to the child whose filiation is in question, and he or she may exercise
such anytime within his lifetime. The only three instances when such right passes to the child's
heirs are: (1) when the child dies during minority; (2) when the child dies in a state of insanity;
or (3) when the child dies after the commencement of the action.
A birth certificate, being a public document, is an important piece of evidence, and offers
prima facie evidence of filiation in accordance with the rule that entries in official records made
in the performance of the duties of a public officer are prima facie evidence of the facts therein
stated. However, as the Court has held in several cases, for a birth certificate to prove paternity,
it must be shown that the putative father had a hand in its preparation.
FACTS
The late Jose Chiong executed a Deed of Donation in favor of Jose Chiong Fernando,
the predecessor-in-interest of respondents. Subsequently, respondents executed an
“Affidavit of Identity of Heirs” (Affidavit), where they claimed to be the legal heirs of the late
Jose Chiong. On the sole basis of the said Affidavit, respondents caused the cancellation of
the titles of the subject properties under the original collective name of “Heirs of Jose Chiong”
and had them transferred to their names.
Mario, on behalf of the heirs of the late Jose Chiong, filed a complaint for Annulment,
Reconveyance and Accounting with Prayer for Preliminary Injunction against respondents.
Mario primarily alleged that his mother, Barbara Chiong (Barbara), was born on December
4, 1912 in Manila, to spouses Jose Chiong and Ambrosia Domingo (Ambrosia), as shown in
the certified photocopy of her certificate of birth issued by the Local Civil Registrar (LCR) of
Manila. Also submitted was Barbara's Certificate of Baptism. Mario submitted that he and his
siblings are the children of Barbara. Hence, being grandchildren of Jose Chiong, they are the
ones who are entitled to the subject properties. Mario averred that respondents were not
the true heirs of Jose Chiong, but were only collateral relatives.
On the other hand, respondents, through their Answer with Counterclaim, disputed
Mario's assertions, and argued that their predecessor-in-interest, Jose Chiong Fernando,
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legally acquired the subject properties from Jose Chiong through a Deed of Donation.
Respondents prayed for the dismissal of the complaint.
ISSUE
Who among the parties sufficiently established their right to the subject properties?
RULING
THE RESPONDENTS. Article 172 of the Family Code outlines the modes by which
one may prove filiation:
ART. 172. The filiation of legitimate children is established by any of the following:
(1) The record of birth appearing in the civil register or a final judgment; or
(2) An admission of legitimate filiation in a public document or a private handwritten
instrument and signed by the parent concerned.
In the absence of the foregoing evidence, the legitimate filiation shall be proved by:
(1) The open and continuous possession of the status of a legitimate child; or
(2) Any other means allowed by the Rules of Court and special laws.
The law requires that every reasonable presumption leans towards legitimacy, and
establishes the status of a child from the moment of his birth. In case of the need to prove
filiation, the same may only be raised in a direct and separate action instituted to prove the
filiation of the child.
Relatedly, as provided by Article 173 of the Family Code, an action to claim legitimate
filiation is strictly personal to the child whose filiation is in question, and he or she may
exercise such anytime within his lifetime. The only three instances when such right passes
to the child's heirs are: (1) when the child dies during minority; (2) when the child dies in a
state of insanity; or (3) when the child dies after the commencement of the action.
In this case, petitioners seek to establish the legitimate status of their mother,
Barbara. However, although there is a mention of Barbara's passing, there is nothing in the
records of the case which would show that Barbara had died under any of the circumstances
outlined under Article 173, which would have transmitted the right to claim her legitimate
status to her heirs, herein petitioners. Given that petitioners here seek to prove Barbara's
legitimate filiation to Jose Chiong absent any of the three circumstances under Article 173,
they may not be considered to have the standing to pursue the same.
Further, without any proven lawful marriage between Ambrosia and Jose Chiong, no
presumption of legitimate filiation arose in favor of Barbara. Since no such presumption
arose, it was incumbent on both Mario and Josefina, et al., to prove the same.
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In the present case, since a certificate of birth was presented, the issues and burdens
revolve around the calibration of the probative value of said certificate for purposes of
proving Barbara's legitimate filiation with Jose Chiong. A birth certificate, being a public
document, is an important piece of evidence, and offers prima facie evidence of filiation in
accordance with the rule that entries in official records made in the performance of the
duties of a public officer are prima facie evidence of the facts therein stated. However, as the
Court has held in several cases, for a birth certificate to prove paternity, it must be shown
that the putative father had a hand in its preparation.
To be sure, and contrary to the finding of the CA, the putative father's signature on
the face of the birth certificate is not indispensable in ascribing probative weight to the same.
For as long as it can be shown that the putative father participated in the preparation of the
certificate of birth, e.g., when the putative father provided the information for the entries to
the certificate, or otherwise caused the registration of the birth, probative weight can be
ascribed.
Unfortunately for petitioners, however, there was neither Jose Chiong's signature on
Barbara's certificate of birth, nor any other proof to the effect that although his signature
does not appear therein, he had a hand in the preparation of the same.
With respect to Barbara's baptismal certificate, as the CA correctly held, it may only
be considered evidence of the administration of the sacraments on the dates so specified, but
is not persuasive in proving the veracities of the entries therein, including the baptized
child's paternity.
Having failed at discharging the burden of proof incumbent upon petitioners in

establishing Barbara's legitimate status, no legitimate filiation between Barbara and Jose
Chiong may be recognized. With no legitimate status for Barbara upon which petitioners
ground their entitlement to the subject properties, no such ancillary right arose for
petitioners, and no right to demand reconveyance and annulment of the subject TCTs may
be adjudged in their favor.
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MACUTAY v. SAMOY
DOCTRINE
As to accion publiciana, this is an ordinary civil proceeding to determine the better right
of possession of real property independently of title. It also refers to an ejectment suit filed after
the expiration of one year from the accrual of the cause of action or from the unlawful
withholding of possession of the real property. The issue in an accion publiciana is the "better
right of possession" of real property independently of title. This "better right of possession" may
or may not proceed from a Torrens title.
publiciana is lodged can provisionally resolve the issue of ownership, there is ample
jurisprudential support for upholding the power of a court hearing an accion publiciana to also
rule on the issue of ownership. This adjudication is not a final determination of the issue of
ownership; it is only for the purpose of resolving the issue of possession, where the issue of
ownership is inseparably linked to the issue of possession.
FACTS
Nicasio is the registered owner of a parcel of land located in Tumauini, Isabela,

covered by an OCT. Nicasio traces his ownership and right of possession to his stepfather,
Fortunato.
Sosima, Alfredo, Rene, Noblito and Sibirino (collectively, respondents) are in

possession of specific areas of a parcel of land in Tumauini, Isabela, with a total area of three
(3) hectares (Disputed Portion). Respondents assert that they have been cultivating the
Disputed Portion as tenants of Urbana and her son, Eugenio Vehemente — the successive
owners of a parcel of land registered under OCT No. P-4319, and Transfer Certificate of Title
(TCT) No. T-8058, respectively. Said parcel, in turn, allegedly includes the Disputed Portion.
The records show that on December 9, 1946, Urbana filed a homestead application
over a parcel of land in Tumauini, Isabela with an area of 16.75 hectares which was granted.
Nevertheless, Homestead Patent No. V-41498 was issued only on January 4, 1955, and later
transmitted to the RD of Isabela on February 7, 1955. On the same date, OCT No. P-4319 was
issued in Urbana's name.
In the interim, Fortunato and Urbana passed away. Homestead Patent No. V-41498
was later transferred to Urbana's sole heir Eugenio, through TCT No. T-8058. Meanwhile,
Fortunato's heirs, represented by his surviving wife Maria Bartolome, filed a petition for
certiorari assailing the adverse orders. The CFI dismissed said petition. The CA reversed on
appeal and remanded the petition for certiorari to the CFI for reception of evidence relative
to the conflicting claims between the parties. The CFI granted the petition for certiorari and
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directed the reinstatement of Fortunato's protest. Despite the favorable Decision of the CFI,
however, Fortunato's heirs did not pursue the protest.
Nevertheless, Fortunato's stepson, herein petitioner Nicasio, managed to secure OCT

No. P-20478 sometime in 1972. Thirty-four (34) years later, Nicasio filed the RTC Complaint.
Therein, Nicasio alleged that respondents are "all in actual possession of the northern
portions of the land covered by OCT No. P-20478 with an area of more or less three (3)
hectares without any legal right to possess the same and against the will of Nicasio," and that
respondents have refused to surrender possession despite repeated demands.
Nicasio thus prayed that judgment be rendered ordering respondents to surrender

actual and physical possession of the Disputed Portion, and pay damages and costs of suit. In
their Answer, respondents averred that the Disputed Portion is covered by Urbana's OCT No.
P-4319 and later, Eugenio's TCT No. T-8058, and that Eugenio recognized the "possession
and ownership" of their respective predecessors-in-interest during his lifetime.
Respondents further alleged that they have been cultivating the Disputed Portion since 1969,
and have built significant improvements on the areas they respectively possess.
ISSUES
Whether Nicasio is the rightful and lawful owner of the subject property
RULING
NO. The allegations in the RTC Complaint shows that the case instituted by Nicasio
was one of Accion Publiciana. The three usual actions to recover possession of real property
are: (1) Accion interdictal or a summary ejectment proceeding, which may be either for
forcible entry (detentacion) or unlawful detainer (desahucio), for the recovery of physical or
material possession (possession de facto) where the dispossession has not lasted for more
than one year, and should be brought in the proper inferior court; (2) Accion publiciana or
the plenary action to recover the better right of possession (possession de jure), which
should be brought in the proper inferior court or RTC (depending upon the value of the
property) when the dispossession has lasted for more than one year (or for less than a year
in cases other than those mentioned in Rule 70 of the ROC); and (3) Accion reivindicatoria
or accion de reivindicacion or reivindicatory action, which is an action for recovery of
ownership which must be brought in the proper inferior court or RTC (depending upon the
value of the property).
In an accion reivindicatoria, the cause of action of the plaintiff is to recover possession

by virtue of his ownership of the land subject of the dispute. As to accion publiciana, this is
an ordinary civil proceeding to determine the better right of possession of real property
independently of title. It also refers to an ejectment suit filed after the expiration of one year
from the accrual of the cause of action or from the unlawful withholding of possession of the
real property. The issue in an accion publiciana is the "better right of possession" of real
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from a Torrens title.
publiciana is lodged can provisionally resolve the issue of ownership, there is ample
jurisprudential support for upholding the power of a court hearing an accion publiciana to
also rule on the issue of ownership. This adjudication is not a final determination of the issue
of ownership; it is only for the purpose of resolving the issue of possession, where the issue
of ownership is inseparably linked to the issue of possession. The adjudication of the issue
of ownership, being provisional, is not a bar to an action between the same parties involving
title to the property. The adjudication, in short, is not conclusive on the issue of ownership.
Nicasio argues that the RTC Decision sanctioned an impermissible collateral attack
on his Torrens title. This assertion lacks merit. As explained, the RTC Complaint is in the
nature of an accion publiciana which is limited to the recovery of the better right of
possession independent of title or ownership. Since an accion publiciana solely involves the
issue of better right of possession, any determination of ownership made in such connection
is neither final nor binding, but rather, merely provisional.
A provisional determination of ownership, whether made in an ejectment or

publiciana proceeding, does not pose a "real attack" on the Torrens title in dispute since
courts do not possess the jurisdiction to order the alteration, modification or cancellation of
Torrens titles in such cases by virtue of Section 48 of PD 1529.
In the assailed Decision, the CA anchored the denial of Nicasio's appeal on the
principle of laches. Nicasio disputes the ruling of the CA by claiming that respondents have
no colorable title or any valid claim of ownership over the Disputed Portion, and are "mere
squatters, whose possession, no matter how long, could not prevail over his certificate of
title."
The Court notes, however, that the Disputed Portion appears to have been registered
under two (2) overlapping titles issued in the name of two (2) different persons namely,
respondents' predecessor-in-interest Urbana, and herein petitioner Nicasio.
Article 1473 of the Civil Code provides, among other things, that when one piece of
real property has been sold to two different persons it shall belong to the person acquiring
it, who first inscribes it in the registry. This rule, of course, presupposes that each of the
vendees or purchasers has acquired title to the land. The real ownership in such a case
depends upon priority of registration. However, in case land has been registered under the
Land Registration Act in the name of two different persons, the earlier in date shall prevail.
As narrated, Urbana's OCT No. P-4319 was issued on February 7, 1955. On the other
hand, Nicasio's OCT No. P-20478 was issued decades later, in 1972. Respondents' possession
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must thus be respected, as it is anchored on the ownership of the first registrant Urbana and
the latter's son and transferee, Eugenio.
As a final note, we stress that our ruling in this case is limited only to the issue of
determining who between the parties has a better right to possession. This adjudication is
not a final and binding determination of the issue of ownership. The proper action for the
final determination of ownership and possession (as a consequence of such ownership), is
an accion reivindicatoria that may be filed against Eugenio, the registered owner of the land
covered by TCT No. T-8058.
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HEIRS OF CABURNAY v. HEIRS OF SISON

DOCTRINE
When Perpetua died, the conjugal partnership between her and Teodulo was
terminated pursuant to Article 126 (1) of the Family Code. With Perpetua's death, the
liquidation of the conjugal partnership between her and Teodulo should have ensued. In many
instances, however, the surviving spouse and the heirs of the deceased spouse do not liquidate
the conjugal properties and they keep them undivided. In such case, a co-ownership is deemed
established for the management, control and enjoyment of the common property. Since the
conjugal partnership no longer subsists, the fruits of the common property are divided
according to the law on co-ownership; that is, in proportion to the share or interest of each
party.
Given that complete separation of property governed the subsequent marriage of

Teodulo and Perla, the 9/16 undivided share or interest in the subject property of Teodulo
belonged to him and remained with him as his separate property when he married Perla. Thus,
he could have disposed of this without need of consent from Perla. However, this disposition or
encumbrance is valid only to the extent of the share or interest of the surviving spouse in the
terminated marriage property, and cannot in no way bind the shares or interests therein of the
other heirs of the deceased spouse.
FACTS
Petitioners alleged that on September 23, 1994, respondents’ predecessor-in-interest

Teodulo Sison sold a parcel of land to petitioners' predecessor-in-interest Apolinario
Caburnay. The parties agreed that Apolinario would pay P40,000.00 as initial payment of the
total purchase price of P150,000.00, the rest of which was to be paid in installments. The
receipt of the initial payment was acknowledged by Teodulo in a handwritten receipt.
Consequently, Apolinario's family occupied the property.
At the time of the sale in 1994, Teodulo's first wife, Perpetua, had died in 1989 and he
had married in 1992 his second wife, Perla, who did not give her consent to the sale.
However, Teodulo passed away before the balance of the purchase price could be paid.
Consequently, Apolinario informed Teodulo's heirs, herein respondents, about the sale and
payment of his remaining balance. Respondent Jesus Sison told Apolinario that they could
not locate the certificate of title and they agreed to settle the amount once the TCT was found.
Due to Apolinario's advanced age and failing memory, no follow-up was made thus, the
purchase price remained unpaid until his death in April 2005.
Upon Apolinario's death, his heirs tried to pay the balance of the purchase price but
Jesus rejected the payment. Petitioners later discovered that respondents had executed an
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Extrajudicial Settlement and the same included the subject property which was given to
Jesus
As a result of the extrajudicial settlement, Jesus effected the cancellation of TCT No.
8791 and caused the issuance of TCT No. 22388 in his favor. Thus, petitioners prayed that
the document captioned Extrajudicial Settlement of Estate be declared null and void and
consequently, nullify TCT No. 22388 in the name of Jesus.
Respondents, on the other hand, denied the execution of the sale between Teodulo
and Apolinario, averring that there was no deed of sale recorded at the Registry of Deeds
thus, the subject property was free from encumbrances when the same was included in the
partition of the estate of Teodulo and Perpetua. Respondents also argue that the action was
barred by prescription and that the receipts only showed that there was a contract to sell
and not one of sale.
ISSUE
Whether the sale by Teodulo of the subject property to Apolinario should be upheld
RULING
YES, but only to the extent of 9/16 of the subject property. Both parties agree that,
having been married during the effectivity of the Civil Code and without any marriage
settlements executed before their marriage, the property regime of Teodulo and his first
wife, Perpetua, was conjugal partnership of gains pursuant to Article 105 of the Family Code.
Also, it is undisputed that the subject property was acquired during the marriage of Teodulo
and Perpetua. As such, the subject property was their conjugal property.
When Perpetua died, the conjugal partnership between her and Teodulo was
terminated pursuant to Article 126 (1) of the Family Code. With Perpetua's death, the
liquidation of the conjugal partnership between her and Teodulo should have ensued. In
many instances, however, the surviving spouse and the heirs of the deceased spouse do not
liquidate the conjugal properties and they keep them undivided. In such case, a co-ownership
is deemed established for the management, control and enjoyment of the common property.
Since the conjugal partnership no longer subsists, the fruits of the common property are
divided according to the law on co-ownership; that is, in proportion to the share or interest
of each party.
As far as the conjugal partnership property of Teodulo and Perpetua, subject matter
of the conflict herein, 1/2 undivided interest therein pertained to Teodulo as his conjugal
share and the other half, which was Perpetua's conjugal share, pertained to her legal heirs.
Based on the facts, there is no mention of conjugal debts at the time of Perpetua's death.
Thus, the subject property became co-owned property of Teodulo and the heirs of Perpetua
upon Perpetua's death.
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Given that complete separation of property governed the subsequent marriage of

Teodulo and Perla, the 9/16 undivided share or interest in the subject property of Teodulo
belonged to him and remained with him as his separate property when he married Perla.
Thus, he could have disposed of this without need of consent from Perla. However, this
disposition or encumbrance is valid only to the extent of the share or interest of the surviving
spouse in the terminated marriage property, and cannot in no way bind the shares or
interests therein of the other heirs of the deceased spouse.
Based on the elements of sale, the transaction between Teodulo and Apolinario is
indeed a contract of sale. Not only was the sale between Teodulo and Apolinario perfected,
it was partially consummated. Teodulo had substantially complied with his prestations as
the seller when he placed the subject property in the control and possession of Apolinario
without reserving its ownership. What was left was the transfer of the certificate of title
covering the subject property from Teodulo to Apolinario. Apolinario had paid a total of
P120,000.00 or 80% of the purchase price of P150,000.00 agreed upon.
As control and possession of the subject property had earlier been ceded by Teodulo
to Apolinario without any stipulation that ownership in the subject property would not pass
to Apolinario until he had fully paid the price, the quoted proviso in the October 20, 1999
receipt had no effect on the ownership of the subject property having already been
transferred to Apolinario by actual delivery.
Despite the existence of a valid contract of sale over the subject property between
Teodulo and Apolinario, the sale is effective only to the extent of the share or interest of
Teodulo therein pursuant to Article 493 of the Civil Code which, is 9/16 of the subject
property.
The sale by Teodulo of the subject property to Apolinario was not necessarily or
totally or entirely void, for his right as a co-owner to the extent of 9/16 thereof was
effectively transferred, making the buyer, Apolinario, a co-owner of the subject property to
that extent and a trustee for the benefit of the co-heirs of Teodulo, his seven children, in
respect of their combined 7/16 interest therein that was not validly sold to Apolinario. Upon
Apolinario's death, petitioners stepped into his shoes and became co-owners together with
Jesus of the subject property.
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HEIRS OF VILLEZA v. ALIANGAN

G.R. No. 244667-69, December 2, 2020, First Division (Caguioa, J.)
DOCTRINE
The provision where the seller agrees to execute a deed of absolute sale when the buyer
has paid in full the purchase price has been construed by the Court to signify that the seller has
withheld the transfer of ownership until the purchase price has been paid in full, making the
agreement between the seller and the buyer a contract to sell and not a contract of sale. The
aforecited stipulation shows that the vendors reserved title to the subject property until full
payment of the purchase price.
FACTS
In controversy are three (3) parcels of land with improvements located at Angadanan,
Isabela all registered under the name of Corazon Villeza.
It is alleged that Corazon, during her lifetime, sold the subject properties to sisters
Elizabeth and Rosalina, respondents herein. However, Corazon died without executing any
deed of conveyance. Respondents thus filed three (3) separate Amended Complaints for
“Specific Performance and Damages,” to compel petitioners Heirs of Corazon Villeza, to
execute the subject deeds.
As to the Centro I property, alleging full payment of the Centro I property,

respondents entreated petitioners, as heirs of Corazon, to honor the Deed of Conditional Sale
dated January 10, 2006. Petitioners did not accede to such request. Repudiating the January
10, 2006 Deed of Conditional Sale for allegedly being void ab initio, petitioners argued, to
wit: (a) when the subject deed was executed on January 10, 2006, Inocencio was still the
registered owner of the Centro I property considering that TCT No. T-356999 was only
issued in Corazon's name on November 14, 2006, Corazon cannot thus appropriate
something she does not own; (b) Corazon was the sole registered owner of TCT No. T-
356999, whatever amount received and acknowledged by Rosario, if any, could never bind
Corazon's property; and (c) respondents, being Canadian citizens, are disqualified under the
Constitution from owning real property in the Philippines. As to the Bunay Property,
petitioners denied the existence of any oral contract of sale of the Bunay property between
Corazon and Elizabeth. They maintained that the two (2) remittance receipts are not
evidence to prove the sale, are self-serving and hearsay. As to the Poblacion Property,
petitioners denied the authenticity of the oral contract of sale of the Poblacion property
between Corazon and Rosalina.
The RTC ruled in favor of respondents. The RTC ratiocinated that the totality of
evidence adduced proved that Corazon, during her lifetime, sold the subject properties to
respondents.
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ISSUE
Whether the defendants may be compelled to comply with the obligations to deliver
and transfer ownership of the subject properties and to execute the corresponding Deeds of
Sale in favor of respondents
RULING
YES. The provision: "that the corresponding Deed of Absolute Sale shall be executed
by the VENDORS upon full payment of the balance" is sanctioned by Article 1478 of the Civil
Code, which allows the parties to stipulate that the ownership in the thing shall not pass to
the purchaser until he has fully paid the price. The provision where the seller agrees to
execute a deed of absolute sale when the buyer has paid in full the purchase price has been
construed by the Court to signify that the seller has withheld the transfer of ownership until
the purchase price has been paid in full, making the agreement between the seller and the
buyer a contract to sell and not a contract of sale. The aforecited stipulation shows that the
vendors reserved title to the subject property until full payment of the purchase price.
In this case, it is not disputed as in fact both parties agreed that the deed of sale shall
only be executed upon payment of the remaining balance of the purchase price. Thus,
pursuant to the above stated jurisprudence, we similarly declare that the transaction entered
into by the parties is a contract to sell.
It must be remembered that the execution of a public instrument, such as a deed of

absolute sale, is equivalent to the delivery of the object of the sale pursuant to Article 1498
of the Civil Code. With respect to the Centro I property, there was no physical delivery thereof
upon the execution of the DCS and Corazon remained in possession thereof until she died,
with her heirs continuing such possession after her death. With the payment in full of the
purchase price by the buyers, the DCS has been performed or consummated. At that point,
had the sellers, Corazon and Rosario, been still alive, they could be compelled by court action
to execute the DAS over the Centro I property, which they contractually promised to execute
upon full payment of the purchase price.
With respect to the Centro I property, while on January 10, 2006 when the DCS was
executed it was still registered in Inocencio's name, the certificate of title over the property
was already transferred to Corazon on November 14, 2006 when TCT T-356999 was issued
in her name. From that time, Corazon had the right to transfer the ownership of the Centro I
property such that in April 2008, when the purchase price was paid in full by respondents,
the sellers could have transferred the ownership thereof to the buyers, as indeed they had
the obligation to do so.
Also, the fact that the seller is not the owner of the object of the sale at the time it is
sold and delivered does not prevent title or ownership from passing to the buyer by
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operation of law if subsequently the seller acquires title thereto or becomes the owner
thereof pursuant to Article 1434.
Regarding the Bunay and Poblacion properties, are the oral contracts of sale covering
them valid and enforceable?
According to Article 1483 of the Civil Code, "subject to the provisions of the Statute of
Frauds and of any other applicable statute, a contract of sale may be made in writing, or by
word of mouth, or partly in writing and partly by word of mouth, or may be inferred from
the conduct of the parties."
With respect to the Statute of Frauds, which is provided in Article 1403 (2) of the Civil
Code, an agreement for the sale of real property or of an interest therein is unenforceable by
action, unless the same, or some note or memorandum thereof, be in writing, and subscribed
by the party charged, or by his agent; and evidence of the agreement cannot be received
without the writing, or a secondary evidence of its contents.
The Court finds that the remittances and receipts which were executed in relation to
the Bunay property may not qualify as "some note or memorandum thereof, in writing, and
subscribed by the party charged" in compliance with Article 1403 (2) because they are
lacking in the required details. While the receipts might have been signed by Corazon, they
do not apparently reflect the application of the amounts which Elizabeth remitted to
Corazon. If the receipts reflected that the amounts indicated therein were for the payment of
the purchase price of the Bunay property, then petitioners would not be insisting that said
amounts were intended to purchase materials which were used in the construction of
respondents' house.
However, with respect to the Poblacion property, the Court finds that the remittances
together with the Acknowledgement Receipt sufficiently satisfy the note or memorandum
requirement under Article 1403 (2) of the Civil Code. Nonetheless, the remittances and
receipts are sufficient proof that the oral sales had been ratified by Corazon.
When Corazon received the full consideration of the sales from Elizabeth and
Rosalina, there was ratification of the oral contracts of sale by acceptance of benefits, making
them enforceable. With the complete payment of the consideration by respondents, the oral
contracts of sale covering the Bunay and Poblacion properties have been "partially
executed," rendering the Statute of Frauds inapplicable.
Lastly, since the obligations of the sellers in the DCS and the two oral contracts of sale
were transmitted upon the death of Corazon and Rosario to petitioners and the other
defendants, the latter are bound to comply with the obligations to deliver and transfer
ownership of the Centro I property to respondents, the Bunay property to Elizabeth, and the
Poblacion property to Rosario. Likewise, since a public document is required to be registered
with the Registry of Deeds to effect the transfer of the certificates of title covering the said
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properties to the buyers, petitioners and the other defendants can be compelled and are
obligated to execute the necessary public documents for that purpose pursuant to Article
1357 of the Civil Code.
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MARASIGAN, JR v. PROVINCIAL AGRARIAN REFORM OFFICCER

DOCTRINE
Under R.A. No. 6657, the Land Bank of the Philippines is charged with the preliminary
determination of the value of lands placed under land reform program and the compensation
to be paid for their taking. Within 30 days from receipt of notice, the landowner shall inform
the DAR of his acceptance or rejection of the offer. In the event the landowner rejects the offer,
a summary administrative proceeding is held by the provincial (PARAD), the regional (RARAD)
or the central (DARAB) adjudicator, as the case may be, depending on the value of the land, for
the purpose of determining the compensation for the land. The landowner, the Land Bank, and
other interested parties are then required to submit evidence as to the just compensation for
the land. The DAR adjudicator decides the case within 30 days after it is submitted for decision.
If the landowner finds the price unsatisfactory, he may bring the matter directly to the
appropriate Regional Trial Court.
FACTS
Petitioner is the registered owner of two parcels of land covered by Transfer

Certificate of Title (TCT) Nos. T-24060 and T-24063 (subject lots). The DAR placed portions
of said subject lots under the coverage of the CARP and RA 6657. The Land Bank of the
Philippines subsequently valued said portions accordingly at P60,795.96 and P52,975.14,
respectively.
The DAR offered to pay the LBP-assessed amounts to petitioner, but the latter
rejected the same. After petitioner failed to reply to DAR's Notice of Land Valuation and
Acquisition within the prescribed period, the DAR instituted before the Provincial Agrarian
Reform Adjudication Board (PARAD) two summary administrative proceedings for the
determination of just compensation. The PARAD found the LBP's basis for its assessment of
just compensation for the subject lots proper.
Aggrieved, petitioner appealed before the DARAB with respect to the PARO's decision
pertaining to the property covered by TCT No. T-24060 (subject property). Petitioner mainly
alleged that the PARO erred (1) since the subject property should not have been placed under
the CARP coverage, and (2) grave abuse of discretion was committed when the two summary
proceedings were heard and decided despite the fact that the subject property was not yet
clearly and particularly identified.
Petitioner also submitted that as early as August 2003, he already made his formal
objections to the inclusion of the subject property under the CARP coverage, through two
letters addressed to the Municipal Agrarian Reform Officer (MARO) of San Juan, Batangas,
citing as reason for the objection the fact that the subject property was a residential area,
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with more than 177 families with their houses built thereon, and who were also subject of
177 ejectment cases pending before the MTC.
The DARAB denied the appeal for lack of jurisdiction. It held that since the action filed
by the DAR with the PARO was for the preliminary determination of just compensation,
petitioner's remedy from an adverse decision therefrom was to file an original action for
judicial determination of just compensation with a Regional Trial Court sitting as a Special
Agrarian Court.
ISSUES
1. Whether the PARO erred in hearing and ruling on the summary administrative
proceeding brought before him for determination of just compensation
2. Whether the DARAB erred in dismissing petitioner's appeal to it for lack of
jurisdiction
RULING
There is nothing contradictory between the provision of Section 50 granting the DAR
primary jurisdiction to determine and adjudicate "agrarian reform matters" and exclusive
original jurisdiction over "all matters involving the implementation of agrarian reform,"
which includes the determination of questions of just compensation, and the provision of
Section 57 granting RTCs "original and exclusive jurisdiction" over (1) all petitions for the
determination of just compensation to landowner, and (2) prosecutions of criminal offenses
under R.A. No. 6657. The first refers to administrative proceedings, while the second refers
to judicial proceedings. Under R.A. No. 6657, the Land Bank of the Philippines is charged with
the preliminary determination of the value of lands placed under land reform program and
the compensation to be paid for their taking. Within 30 days from receipt of notice, the
landowner shall inform the DAR of his acceptance or rejection of the offer. In the event the
landowner rejects the offer, a summary administrative proceeding is held by the provincial
(PARAD), the regional (RARAD) or the central (DARAB) adjudicator, as the case may be,
depending on the value of the land, for the purpose of determining the compensation for the
land. The landowner, the Land Bank, and other interested parties are then required to submit
evidence as to the just compensation for the land. The DAR adjudicator decides the case
within 30 days after it is submitted for decision. If the landowner finds the price
unsatisfactory, he may bring the matter directly to the appropriate Regional Trial Court.
Petitioner's insistence, therefore, on the PARO's grave abuse of discretion and the
DARAB's erroneous restraint is demonstrably misplaced. Instead, what is clearly discernable
is that in the DAR's acquisition of subject property, it followed the prescribed process
outlined in R.A. 6657 and the relevant rules of procedure, with two key points of procedure
that make plain the original error in the present petition.
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First, paragraph (d), Section 16, Chapter V of R.A. 6657 belies petitioner's contentions
that the PARO should or could have first suspended or otherwise referred the case to the
proper agency, instead of denying the same. On the contrary, said provision clearly shows
that the PARO was not at liberty to delay or otherwise suspend the decision in the summary
administrative proceedings brought before him, since the latter was required to decide said
cases within 30 days after they had been submitted for resolution. Second, paragraph (f),
Section 16, Chapter V of R.A. 6657 additionally provides that in the event that a party
disagrees with the PARO's decision in a summary administrative proceeding, the remedy
allowed is for said party to bring the case before the court of proper jurisdiction for final
determination of the just compensation due. Instead, and fatally for his cause, petitioner filed
an appeal before the DARAB, which under the applicable DARAB Rules is no longer allowed.
Section 6 of the DARAB Rules provides: “The party who disagrees with the decision of the
Board/Adjudicator may contest the same by filing an original action with the Special Agrarian
Court (SAC) having jurisdiction over the subject property within fifteen (15) days from his
receipt of the Board/Adjudicator's decision.”
Further, Section 57 of RA 6657 provides: “The Special Agrarian Courts shall have
original and exclusive jurisdiction over all petitions for the determination of just compensation
to landowners, and the prosecution of all criminal offenses under this Act. The Rules of Court
shall apply to all proceedings before the Special Agrarian Courts, unless modified by this Act.
The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction
within thirty (30) days from submission of the case for decision.”
In accordance with this procedural framework, therefore, the PARO was well within
his powers when he proceeded to hear and later decided the summary administrative
proceeding over the subject property. In similar token, the DARAB, in turn, was likewise
correct when it recognized that petitioner's appeal before it was beyond its jurisdiction and
consequently denied the same.
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Spouses Gaspar v. Herminio Angel E. Disini, Jr.

G.R. No. 239644. February 3, 2021, First Division (Caguioa, J.)
DOCTRINE
By filing a third-party complaint against Yu for the purpose of seeking reimbursement

of the purchase price they had paid for the subject Pajero, Spouses Gaspar effectively sought to
declare the COS null and void ab initio and recover what they had given on account of said void
COS. The third-party complaint thus assumes the nature of an action to declare the
inexistence of a contract which does not prescribe.
FACTS
The property subject of the litigation is a white Mitsubishi Pajero. The subject vehicle,
registered in the name of a certain Marquez, was mortgaged by the latter as security for a
loan obtained from Legacy. Legacy is owned by Yu. Marquez failed to pay his loan, leading
Legacy to seize the Pajero. To facilitate the disposal of the Pajero, Marquez executed and
signed a Deed of Sale in blank, that is, without the name and details of the buyer.
Spouses Gaspar who are engaged in the business of buying and selling second-band
vehicles, purchased the subject Pajero from Legacy for the price of P1,000,000.00, as shown
by a manager's check for said amount, and a receipt therefor signed by Salita, Yu's employee.
Rocky, son of the Spouses Gaspar, offered the Pajero for sale to Disini, who agreed to
buy it for the total purchase price of P1,160,000.00. Disini gave a downpayment of
P50,000.00 duly received by Rocky, Disini filled in his details and signed the Deed of
Sale previously executed by Marquez. Disini paid the balance of P1,110,000.00, after the
Spouses Gaspar obtained a Motor Vehicle Clearance Certificate, and registered the subject
Pajero in the name of Disini.
About a year later, on June 30, 2003, the police apprehended the subject Pajero
while it was illegally parked in Makati. Further police investigation revealed that the
vehicle had been stolen from the Office of the President.
Yu failed to reimburse the balance of the purchase price paid by the Spouses Gaspar
for the subject Pajero in the amount of P850,000.00. When written demand failed, Disini filed
a complaint for sum of money with prayer for preliminary attachment (Complaint)] against
Rocky and the Spouses Gaspar to collect the unpaid reimbursement of what he paid for the
subject Pajero. In turn, the [Spouses Gaspar] filed a third-party complaint against Yu and his
employee Salita for the unpaid reimbursement of P850,000.00.
The third party complaint was dismissed by the CA. According to the CA, the sale of
the subject Pajero from Yu to Spouses Gaspar gave rise to an implied warranty of title and a
concomitant implied warranty against eviction. These implied warranties, in turn, prescribe
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6 months from date of delivery of the thing sold pursuant to Article 1571 of the Civil Code.
Here, Spouses Gaspar filed the third-party complaint against Yu and Salita on October 9,
2006, or nearly 4 years after delivery of the subject Pajero on July 12, 2002. Thus, said third-
party complaint was filed out of time.
ISSUES
(1) Whether the third-party complaint filed by Spouses Gaspar against Yu and Salita
should be dismissed; and
(2) Whether Yu and Salita are liable to pay Spouses Gaspar attorney's fees.
RULING
1. Yes with respect to Yu; No with respect to Salita.
Yu is solely liable to reimburse Spouses Gaspar the unpaid portion of the purchase
price of the subject Pajero with legal interest. Yu's liability is anchored on the nullity of the
COS he executed with Spouses Gaspar. In addition, Yu is liable to pay Spouses Gaspar
attorney's fees as he unjustifiably refused in bad faith to satisfy the latter's valid claim. Salita,
being an employee who merely acted under the direction of Yu, is absolved from liability.
The third-party complaint against Yu is based on the nullity of the COS between him and
Spouses Gaspar. The third-party complaint was thus timely filed.
The sole document evincing the sale between Spouses Gaspar and Yu is a handwritten
document signed by the latter's employee Salita which states: “Received from Mrs. Julia
Gaspar the amount of ([P]1,000,000.00) One Million Pesos only[;] [Check No.] 000006319.
[Manager's Check] BPI Family Bank x x x, as full payment for 2000 [Mitsubishi] Pajero [with]
Motor No. MAA0821, Serial No. PAEV46WGNXB000326, Plate No. WVC-555.”
While this COS is more akin to a receipt and leaves much to be desired, it ostensibly
reflects all the elements of a perfected contract of sale, which are: (i) the consent of the
contracting parties; (ii) object certain which is the subject matter of the contract (that is, the
subject Pajero); and (iii) the cause of the obligation which is established (that is, the payment
of the specified price of P1,000,000.00)
By the contract of sale, one of the contracting parties obligates himself or herself to
transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent. In turn, the elements of a valid contract of sale are:
(i) consent or meeting of the minds; (ii) determinate subject matter; and (iii) price certain in
money or its equivalent. With respect to the second element, it is further required that the
thing which is the subject matter of the contract must be licit, and that the vendor must have
a right to transfer the ownership thereof at the time it is delivered.
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Here, the object of the COS turned out to be a vehicle stolen from the Office of the
President which was immediately confiscated when Disini was cited for illegal parking. As a
general rule, the possession of movable property acquired in good faith is equivalent to a
title. This general rule, however, does not apply in cases where the owner of said movable
property has been unlawfully deprived of the same, as in this case where the vehicle subject
of the COS had been stolen.
Evidently, Yu had no right to transfer the ownership of the subject Pajero at the time
it was delivered to Spouses Gaspar, as the object of the COS is clearly illicit. The second
element of a valid contract of sale is consequently absent. The COS executed between Yu and
Spouses Gaspar is therefore void ab initio, pursuant to Article 1409 of the Civil Code.
By filing a third-party complaint against Yu for the purpose of seeking reimbursement

of the purchase price they had paid for the subject Pajero, Spouses Gaspar effectively sought
to declare the COS null and void ab initio and recover what they had given on account of said
void COS. The third-party complaint thus assumes the nature of an action to declare
the inexistence of a contract which does not prescribe.
Contrary to the CA's findings, Yu's liability in this particular case is not hinged on the
implied warranties against hidden defects and/or eviction. That Spouses Gaspar's
Memorandum before the RTC alleged that Yu can be considered in breach of an implied
warranty considering he "sold to Spouses Gaspar a vehicle allegedly clean from any liens and
encumbrances" is of no moment. To be sure, the implied warranties against hidden defects
and eviction are legal concepts with fixed definitions in law.
The implied warranty against hidden defects pertains to defects which render the
thing sold unfit for the use for which it is intended, or should diminish its fitness for such use
to such an extent that, had the vendee been aware thereof, would not have acquired it or
would have given a lower price. As its nomenclature suggests, hidden defects pertain to
imperfections or defects of the object sold. Such is not the case here, where the subject
Pajero, albeit stolen, was in working condition, and was in fact being used by Disini for its
intended purpose when it was confiscated by the authorities.
On the other hand, a breach of the warranty against eviction presupposes the
concurrence of the following requisites: (i) the purchaser has been deprived of the whole or
part of the thing sold; (ii) this eviction is by a final judgment; (iii) the basis thereof is by virtue
of a right prior to the sale made by the vendor; and (iv) the vendor has been summoned and
made co-defendant in the suit for eviction at the instance of the vendee. Here, Disini was not
deprived of possession on the basis of a final judgment. In fact, based on the records, it would
appear that Disini did not contest the confiscation of the subject Pajero when he was
informed that it had been stolen from the Office of the President.
Since none of the foregoing warranties apply, the six-month prescriptive period
under Article 1571 of the Civil Code is inapplicable. As the third-party complaint filed by
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Spouses Gaspar assumes the nature of an action to declare the inexistence of a contract due
to its illicit object, said complaint is imprescriptible under Article 1409.
Salita cannot be held personally liable as she merely acted for and on behalf of her
employer Yu.
While Spouses Gaspar are indeed entitled to reimbursement, only Yu can be held
liable for payment therefor. The records confirm that Salita's signature indeed appears on
the COS. Nevertheless, Yu himself acknowledges that Salita merely affixed her signature
thereon on his behalf, and that only he stands as seller under the COS.
Clearly, Salita transacted with Spouses Gaspar solely upon the direction and on behalf
of Yu, her employer. Accordingly, Salita must be absolved from liability in this case.
2.Only Yu is liable for attorney's fees.
Article 2208 of the Civil Code specifies the instances when attorney's fees may be
awarded, thus: (5) Where the defendant acted in gross and evident bad faith in refusing
to satisfy the plaintiff's plainly valid, just and demandable claim.
To recall, Spouses Gaspar reimbursed Disini the total amount of P400,000.00 upon
the latter's demand. This amount consisted of the P150,000.00 which Yu reimbursed to
Spouses Gaspar, and P250,000.00 from the latter's own funds.
Yu's initial payment of P150,000.00 clearly indicates that he recognized the validity
of Spouses Gaspar's claim for reimbursement. However, Yu decided to withhold further
reimbursement for reasons unknown to the Court. Consequently, Spouses Gaspar were
constrained to pay Disini out of their own pocket, and were later exposed to litigation in view
of their failure to satisfy the remaining balance of P760,000.00 due to lack of funds.
It bears stressing that the Pajero had been sourced from Marquez, Yu's debtor. Good
faith should have thus impelled Yu to reimburse Spouses Gaspar the full amount which they
paid and seek redress from Marquez, the subject Pajero's supposed original owner. Instead
of doing so, Yu withheld further reimbursement despite his earlier recognition of Spouses
Gaspar's valid claim. Such unjustified refusal to satisfy Spouses Gaspar's valid claim
demonstrates Yu's gross and evident bad faith.
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SPOUSES CUENO vs. SPOUSES BAUTISTA

G.R. No. 246445. March 2, 2021, Division, Caguioa, J.:
DOCTRINE
All dispositions, alienations or encumbrances of conjugal real property acquired after
the effectivity of the New Civil Code needs the consent of the wife. Also, all donations of real or
personal property require the consent of the wife except those to the common children for
securing their future or finishing a career, and moderate donations for charity. But should the
wife refuse unreasonably to give her consent, the court may compel her to grant the same.
FACTS
Lot No. 2836 was previously owned by the two sons of Ramon Bonifacio, i.e., Luis
Bonifacio, married to Juana Toribio, and Isidro Bonifacio, married to Victoria Falcatan. These
two sons sold part of their interest to the City of Zamboanga and retained about 7,991 sq. m.
as co-owners. Petitioner Cueno is the daughter of Luis and Juana and is married to petitioner
Eulalio Cueno. In 1961, petitioners bought the pro indiviso share of Isidro in the subject
property (first sale). Pursuant to said sale, a TCT was issued in the names of Luis and Eulalio.
Prior to the issuance of TCT, Eulalio supposedly sold his and Flora's share of the lot to the
latter's father, Luis, without Flora's consent (second sale).
The second sale was also registered on the same day the previous TCT was issued in
the names of Luis and Eulalio. Thereafter, TCT was issued solely in the name of Luis, married
to Juana. In a Deed of Absolute Sale (third sale), Luis allegedly sold the property to herein
respondents. Hence, another TCT was registered in the name of Spouses
Bautista. Thereafter, it appears that respondents took possession of the property and built
improvements on the same. Much later, respondents donated the subject property to their
four children and TCTs were issued in the latter's names.
Allegedly deprived of their share in the property through fraud, petitioners filed a
Complaint for recovery of shares and participation in the subject property, recovery of
possession, declaration of nullity of the second sale and donation, and cancellation of the
TCTs issued in the names of the Bautista children.
Respondents, on the other hand, claimed that they acquired the subject property in
good faith and for value from the registered owner thereof, Luis, as evidenced by the Deed
of Absolute Sale. They further alleged that they constructed their houses on said lot and
continuously possessed the same for over 30 years without objection or protest from
petitioners.
RTC: granted the complaint and declared the second sale between Eulalio and Luis
void. Although the RTC held that fraud and/or forgery was not proven, it invalidated the sale
for lack of the spousal consent of Flora. The RTC concluded that since the second sale was
void and could not be a source of any rights, TCT issued in the name of Luis and all
subsequent deeds and titles were likewise void and any action thereon was
imprescriptible. The RTC, however, upheld the third sale between respondents and Luis
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insofar as the latter's inchoate share over the property. The RTC further stated that
respondents were possessors and builders in good faith and were thus entitled to indemnity
for the improvements introduced into the property pursuant to Article 448 of the Civil Code.
CA: reversed the decision of the RTC. Without expressly discussing whether the
second sale was indeed void for lack of spousal consent, the CA held that respondents had a
better right over the subject properties as they were innocent purchasers in good faith and
for value and had the right to rely on the face of the Torrens certificate of title. In this case,
respondents relied on the face of TCT, which was duly registered in the name of their seller,
Luis, and which had no annotations thereon.
ISSUE
Whether the CA erred in ordering the dismissal of petitioners' complaint.
RULING
NO. RTC invalidated the second sale solely on the ground of lack of spousal consent.
Without discussing the foregoing issue however, the CA directly stated that respondents had
a better right over the subject property as they were innocent purchasers for value. As the
CA failed to resolve the issue of whether the second sale was indeed void for lack of spousal
consent, the Court shall do so now.
It bears emphasis that under Article 1413 of the Spanish Civil Code, the wife's consent
was not required for the sale of conjugal property as the husband's right to administer and
dispose of the same was considered "full, absolute and complete." On the other hand, Articles
96 and 124 of the Family Code unequivocally state that a disposition of community or
conjugal property without the consent of the other spouse is void but shall constitute a
"continuing offer on the part of the consenting spouse and the third person, and may be
perfected as a binding contract upon the acceptance by the other spouse or authorization by
the court before the offer is withdrawn by either or both offerors."
In the instant case, petitioners admit that the subject property belonged to the
conjugal partnership of petitioners and that it was acquired by them in 1963 during the
effectivity of the Civil Code. Recognized Civil Law Commentator, former CA Justice Eduardo
P. Caguioa, explained:
Under the Spanish Civil Code, the husband had full authority to alienate or encumber
the conjugal partnership property without the consent of the wife. This rule has been
changed in view of the new position of the wife under the Civil Code and for the purpose of
protecting the wife against illegal or unlawful alienations made by the husband. In line with
this purpose, alienations made by the husband of real properties cannot now be made
without the consent of the wife except in cases provided for by law.
Under our present Code all dispositions, alienations or encumbrances of conjugal real
property acquired after the effectivity of the new Civil Code needs the consent of the wife.
Also, all donations of real or personal property require the consent of the wife except those
to the common children for securing their future or finishing a career, and moderate
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donations for charity. But should the wife refuse unreasonably to give her consent, the court
may compel her to grant the same.
Unlike the settled rules under the Spanish Civil Code and the Family Code however,
there appears to be an ongoing conflict of characterizations as regards the status of
alienations or encumbrances that fail to comply with Article 166 of the Civil Code. The first
view treats such contracts as void 1) on the basis of lack of consent of an indispensable party
and/or 2) because such transactions contravene mandatory provisions of law. On the other
hand, the second view holds that although Article 166 requires the consent of the wife, the
absence of such consent does not render the entire transaction void but merely voidable in
accordance with Article 173 of the Civil Code.
In the case at bar, the allegation in paragraph 2 of the complaint indicates that
petitioner's estranged husband, defendant Antonio S. Roxas had entered into a contract of
lease with defendant Antonio M. Cayetano without her marital consent being secured as
required by law under Art. 166 of the Civil Code. Petitioner, therefore, has a cause of action
under Art. 173 to file a case for annulment of the contract of lease entered into without her
consent. Petitioner has a cause of action not only against her husband but also against the
lessee, Antonio M. Cayetano, who is a party to the contract of lease.
Non-compliance with Article 166 renders the contract merely voidable under Article
173. It is a threshold principle that provisions of law " must not be read in separate parts.
Rather, the law must be read in its entirety, because a statute is passed as a whole, and is
animated by one general purpose and intent. Its meaning cannot be extracted from any single
part thereof but from a general consideration of the statute as a whole." In this regard,
Article 166, when read in relation to Article 173, leads to the inescapable conclusion that a
contract disposing or encumbering conjugal real property without the wife's consent is not
void but merely voidable.
Finally, it bears reiterating that unlike Articles 166 and 173 of the Civil Code,
the Family Code now expressly declares that alienations or encumbrances of community or
conjugal property without the consent of the other spouse are null and void,
The second sale was voidable but the action to annul the same has prescribed. Applying
the foregoing discussion to the case at bar, the Court holds that petitioners' claim that the
second sale executed by Eulalio in favor of his father-in-law, Luis, is void and thus
imprescriptible lacks merit. As previously explained, contracts that fail to comply with
Article 166 are merely voidable. Article 173 unequivocally states that the action to annul the
same must be brought 1) by the wife, 2) during the marriage, and 3) within ten years from
the questioned transaction.
In the present case, it appears from the Escritura de Venta between Eulalio and his
father-in-law, Luis, that the former sold their share in the subject property to the latter
without Flora's consent on December 4, 1963. Pursuant to Article 173, Flora's action to annul
the contract accrued upon the execution of the sale in 1963 and she had 10 years from the
questioned transaction to file an action to annul the same. Unfortunately, she failed or
refused to exercise her right within the 10-year period. As her right to annul the second sale
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prescribed in 1973, the action commenced on January 14, 2009 was filed out of time. In view
thereof, petitioners have no more right to question the subsequent sale by Luis in favor of
respondents.
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JESUS E. ULAY v. MARANGUYOD BUSTAMANTE

G.R. No. 231721-22, March 18, 2021, First Division (Caguioa, J.)
DOCTRINE
Prior to partition, a sale of a definite portion of a common property requires the consent
of all co-owners because it operates to partition the land with respect to the co-owner selling
his or her specific share therein. Operatively, a co-owner is an owner of the whole and over the
whole he exercises the right of dominion, but he is at the same time the owner of a portion which
is truly abstract.
FACTS
During their lifetime, Candido Bustamante and Candida Dela Cruz-Bustamante

(Spouses Bustamante) owned a 19-hectare unregistered parcel of land designated as Lot No.
1089, located in Taba, La Paz, Carmen, Davao and covered by Homestead Application No.
46102 (E-35169) in the name of Candido Bustamante. Lot No. 1089 was later inherited by
Eugenio Bustamante (Eugenio), Spouses Bustamante's only son. Eugenio later married Juana
Bustamante and had five children, namely: Victoria Bustamante-Quijada, Gregoria
Bustamante-Concha, Salome Bustamante-Sarol, Ramon Bustamante, and Adelaida
Bustamante-Pedroroja (collectively, the Bustamantes).
After Eugenio's death, Juana and the Bustamantes partitioned Lot No. 1089 through
a Deed of Extrajudicial Partition (DEP) dated November 15, 1977. In the DEP, Juana and the
Bustamantes waived their rights over a 5-hectare portion of Lot No. 1089 in favor of a certain
Ramon Tajo and divided the remaining 11-hectare portion equally among themselves,
resulting in six portions with an area of 1.9379 hectares each. On December 7, 1979, a survey
of Lot No. 1089 was conducted, and an approved subdivision plan was accordingly issued. In
the subdivision plan, the shares of Juana and one of her daughters, Gregoria, were
inadvertently interchanged. Despite the erroneous designation in the subdivision plan, Juana
and Gregoria took possession of their respective shares in accordance with the DEP so that
Juana continued possessing Lot No. 1089-E and Gregoria maintained possession of Lot No.
1089-F.
On January 12, 1981, Original Certificate of Title (OCT) No. P-17509 was issued over
Lot No. 1089-E in Gregoria's name, following the erroneous designation in the subdivision
plan. Juana and Gregoria, however, continued to possess their respective lots in accordance
with the sketch provided in the DEP.
Upon Gregoria's passing, Lot No. 1089-F which she continued to possess prior to her
death was inherited by her eight children, namely: Veneranda, Dionisia, Roger, Ernesto,
Amelia, Erlinda, Hilyn, and Estelita (collectively, Gregoria Heirs). Meanwhile, Juana, then a
widow, cohabitated with one Arturo Remillano. Such cohabitation bore two children, namely
Emelita and Felicitas (collectively, the Remillanos). After Juana's passing, the series of events
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that followed facilitated the transfer and exchanges of possessions over Lot No. 1089-E and
Lot No. 1089-F and gave rise to the instant controversy.
On April 5, 1999, four out of the eight Gregoria Heirs, namely Ernesto, Erlinda, Amelia,
and Hilyn on one hand, and Emelita (purportedly representing all the heirs of Juana) on the
other, executed a Deed of Exchange dated April 5, 1999 wherein Ernesto, Erlinda, Amelia,
and Hilyn ceded their rights over Lot No. 1089-E the title over which was issued in Gregoria's
name, their mother, and Emelita, for her part, ceded the rights of the Remillanos over Lot No.
1089-F. The Deed of Exchange was undertaken in conformity with the original designations
provided in the DEP. Pursuant to said Deed of Exchange, on January 16, 2001, Ernesto,
Erlinda, Amelia, and Hilyn later executed a Deed of Sale dated January 16, 2001 which sold a
specific 9,68923 square meters (sq. m.) portion of Lot No. 1089-F to herein petitioner, Jesus
Ulay.
On May 3, 2001, Maranguyod Bustamante, the widow of Ramon (one of the

Bustamantes) entered the 9,689-sq. m. portion of Lot No. 1089-F, which Jesus purchased,
and erected a pre-fabricated house thereon. On the same day, Jesus demanded Maranguyod
to remove the improvements from the lot but to no avail. Jesus was thereafter prompted to
file an action for recovery of possession against Maranguyod on April 8, 2003.
During the pendency of the Recovery case, on September 17, 2004, the Remillanos
executed an Affidavit of Waiver, where they waived their participation over Lot No. 1089-F
in favor of Jesus and two of Gregoria's children, Dionisia and Roger, as well as assigned
specific portions for the three in the following manner: 0.7266 hectare for Dionisia, 0.2422
hectare for Roger, and 0.9690 hectare for Jesus. On December 23, 2004, still during the
pendency of the Recovery case, OCT No. P-41507 covering the disputed 9,689-sq. m. portion
of Lot No. 1089-F was issued in Jesus' name.
Prompted by these circumstances, the Bustamantes filed an action for annulment of

deeds, reconveyance, and damages against Jesus, the Gregoria Heirs, and the Remillanos. The
RTC ruled in favor of the Bustamantes and declared the Deed of Exchange between four of
Gregoria Heirs and Emelita null and void for having been executed without the consent of
the Bustamantes. In this connection, the RTC concluded that the designation of Juana and
Gregoria's shares as reflected in the subdivision plan must prevail over the designation in
the DEP since there was never any attempt on the part of Juana and the Bustamantes to
correct the same. Jesus appealed to the CA. The CA affirmed the RTC in part.
ISSUE
Whether the CA erred in affirming the RTC's Decision insofar as it declared the Deed
of Sale and OCT No. P-41507 null and void.
RULING
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YES. The Court here reverses the lower courts' findings and instead holds that the
said sale is valid but only to the extent of the pro-indiviso shares of Ernesto, Amelia, Erlinda,
and Hilyn, as the four Gregoria Heirs who participated in the sale of the 9,689-sq. m. portion
in favor of Jesus. The said sale may not bind or extend to the pro-indiviso shares of
Veneranda, Dionisia, Roger, and Estelita, as the four Gregoria Heirs who were not parties
thereto. In other words, since there are a total of eight Gregoria Heirs with only half of them
having sold the 9,689-sq. m. portion to Jesus, Jesus is therefore subrogated to the interest
over only the pro-indiviso half of Lot No. 1089-F.
To clearly trace a navigation of the rules on which the Court premises this third
conclusion, a review of pertinent Civil Code provisions is in order. Article 1078 of the Civil
Code provides that where there are two or more heirs, the whole estate of the decedent is,
before partition, owned in common by such heirs:
Art. 1078. Where there are two or more heirs, the whole estate of the decedent is, before
its partition, owned in common by such heirs, subject to the payment of debts of the
deceased. (n)
Time and again, the Court has outlined the specific rules that are in play when the seller of a
property co-owns the object of said sale since under Article 491 of the Civil Code, a sale of
the property owned in common amounts to an alteration thereof which requires the
unanimous consent of the other co-owners. Nevertheless, a co-owner is allowed to alienate
his or her part or pro-indiviso share in the co-ownership, with attendant limits as provided
by Article 493 of the Civil Code. Relatedly, Article 1082 further provides for how an act may
be construed as one intended to terminate the co-ownership:
Based on these provisions, prior to partition, a sale of a definite portion of a common

property requires the consent of all co-owners because it operates to partition the land with
respect to the co-owner selling his or her specific share therein. Operatively, a co-owner is
an owner of the whole and over the whole he exercises the right of dominion, but he is at the
same time the owner of a portion which is truly abstract.
In the interest of protecting the rights of the non-participating Gregoria Heirs on the one
hand, and avoiding a wasteful and unnecessary voiding of the instant sale to Jesus on the
other, the Court finds that the sale is valid and effective only insofar as the pro-indiviso
shares of Ernesto, Amelia, Erlinda, and Hilyn, as the four Gregoria Heirs who participated in
the sale are concerned, and may not extend to the pro-indiviso shares of Veneranda, Dionisia,
Roger, and Estelita, as the four Gregoria Heirs who did not take part in the said sale.
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CONSTANTINO Y. BELIZARIO v. DEPARTMENT OF ENVIRONMENT AND

NATURAL RESOURCES AND THE REGISTRY OF DEEDS OF NASUGBU, BATANGAS
DOCTRINE
The well-settled doctrine is that indefeasibility of a title does not attach to titles issued
pursuant to patents that have been secured by fraud or misrepresentation inasmuch as the
registration of a patent under the Torrens system is not a mode of acquiring ownership and
does not by itself vest title; but it merely confirms the registrant's already existing one. The
certificates of title registered in the names of petitioners not being indefeasible can be ordered
cancelled.
FACTS
On May 12, 1960, the Republic of the Philippines filed a complaint for annulment of
titles against Ayala y Cia, Alfonso Zobel, Antonio Dizon, Lucia Dizon, Ruben Dizon, Adelaida
Reyes, Consolacion D. Degollacion, Artemio Dizon and Zenaida Dizon (Ayalas) before the CFI
Batangas. The Republic alleged that the various titles of the Ayalas illegally included portions
of the territorial waters and lands of the public domain when they caused the survey and
preparation of a composite plan of Hacienda Calatagan that increased the original area from
9,652.583 hectares (the land area covered by TCT No. 722) to 12,000 hectares.
On June 2, 1962, the CFI of Batangas rendered its decision Declaring as null and void
TCT No. T-9550 of the Register of Deeds of the Province of Batangas and other subdivision
titles issued in favor of Ayala y Cia and/or Hacienda de Calatagan over the areas outside its
private land covered by TCT No. 722, which, including the lots in TCT No. T-9550 (lots 360,
362, 363 and 182), are hereby reverted to public dominion.
In Republic of the Philippines v. Ayala y Cia, docketed as G.R. No. L-20950, dated May
31, 1965, the Supreme Court affirmed with modification the CFI Decision. The modification
of said decision, however, had no bearing at all on the issues of the annulment of the
certificates of title and the reversion of illegally registered lands to the public domain. The
High Court found that the excess area outside the private land of the Ayalas as stated in their
titles usurped 2,000 hectares consisting of portions of the territorial sea, the foreshore, the
beach, and navigable waters properly belonging to the public domain.
Twenty-three years after the Supreme Court rendered its decision in G.R. No. L-
20950, the execution of the annulment and reversion portions of the CFI Decision was still
incomplete. In a resolution, dated November 16, 2006, the Supreme Court directed the RTC
to proceed with the immediate execution of the CFI Decision. On December 17, 2007, Judge
Austria of the RTC issued an order directing the Department of Environment and Natural
Resources (DENR) to create a Technical Working Committee (TWC) to conduct another
relocation survey of the property covered by TCT No. 722 or the Hacienda Calatagan. On May
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20, 2008, a survey order was issued by the Regional Executive Director of the DENR creating
three x x x survey teams and one x x x information and education campaign (IEC) team to
conduct the survey and information dissemination on the said relocation survey. Sadly,
despite the clear directive of the Supreme Court, dilatory tactics prevented the execution of
its 1965 decision
Meanwhile, on September 17, 1987, petitioner Constantino Y. Belizario purchased a

24,961[-]square meter parcel of land in Calatagan, Batangas (subject land) from the Ministry
of Agrarian Reform, now the Department of Agrarian Reform (DAR). Consequently, TCT No.
T-51621 was issued in his name over the subject land. On July 12, 2011, petitioner received
an Order of the RTC, dated June 28, 2011, directing the cancellation of his TCT No. T-51621.
Based on the TWC's report, it was found that the subject land was a derivative title of TCT
No. 722 which must be cancelled.
According to petitioner, he attempted to conduct a title trace-back to determine the

mother title of TCT No. T-51621. He approached the Register of Deeds, Land Registration
Authority and Land Management Bureau to conduct his research. His investigation, however,
was unsuccessful due to the unavailability of the titles. On August 9, 2011, petitioner filed a
Motion to Exclude before the RTC arguing chiefly that his TCT No. T-51621 was not derived
from TCT No. 722, hence, it could not be cancelled.
In the assailed Order dated March 19, 2012, the RTC denied petitioner's motion. It
found that petitioner failed to produce sufficient evidence to prove that his land was not
included in the excess area of TCT No. 722. The RTC also held that petitioner did not
satisfactorily overthrow the findings of the TWC. Petitioner filed a motion for
reconsideration against the said RTC Order. He was again allowed to present evidence to
support his allegations, The RTC denied petitioner's motion for reconsideration. It held that
no substantial arguments had been raised by petitioner and that the issues raised by
petitioner had been discussed in its previous Order. Thus, petitioner filed a petition for
certiorari with the CA. The CA denied the certiorari petition of petitioner. Petitioner filed a
motion for reconsideration with the CA, which the CA denied in its Resolution. Hence the
present Petition.
ISSUE
Whether the CA committed reversible errors when it failed to consider that:
(i) since petitioner was never a party to the reversion cases pending before
Branch 10 of RTC Balayan, Batangas [namely, Republic of the Philippines v.
Ayala y Cia, et al. and Republic of the Philippines v. Enrique Zobel, et al. (Ayala
y Cia and Zobel cases) docketed as Civil Case Nos. 373 and 653], the Republic
should have instituted a separate and direct reversion case against petitioner;
(ii) the Decision in the Ayala y Cia and Zobel cases does not bind petitioner;
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(iii) the cancellation of petitioner's TCT No. T-51621 was done without the
benefit of an actual ground survey; and
(iv) petitioner is an innocent purchaser for value of alienable and disposable
land since the Department of Agrarian Reform (DAR) sold the subject land to
him.
RULING
NO. The Petition fails to convince the Court that the CA erred in finding that the RTC
did not act with grave abuse of discretion amounting to lack or excess of jurisdiction.
As to sub-issues (i) and (ii), the Court quotes with approval the following pronouncements
of the CA:
Here, petitioner insists that he was denied due process because his title was cancelled
even though he was not a party to the reversion case instituted by the [Office of the
Solicitor General (OSG)]. The argument, however, must fail. A reversion suit seeks to
nullify a void title. A void title does not enjoy indefeasibility under the Torrens system.
As stated in the recent case of Republic v. Hachero, notwithstanding the fact that the
original certificate of title based on a patent had been cancelled and another
certificate of title [is] issued in the names of the grantee['s] heirs, a void title may still
be reverted back to the State.
Fittingly, as the RTC determined that petitioner's subject land came from the vast
tract of land improperly acquired by the Ayalas in the excess area of Hacienda
Calatagan, then the reversion suit may affect the same. A fortiori, the subject land
originated from the excess area of TCT No. 722 or Hacienda Calatagan, registered
under the name of the Ayalas, the original parties in Civil Case No. 373. Necessarily,
as petitioner was the grantee and successor of a portion of the Hacienda Calatagan's
excess land, then he is bound by the execution of Civil Case No. 373.
Also, the RTC Orders being assailed by petitioner were issued in the execution
proceedings of the CFI Decision in Civil Case No. 373, a case involving reversion of lands of
the public domain.
Unlike in Hsi Pin Liu where the RTC decision therein did not expressly include the
cancellation of the derivative or subsequent titles emanating from the original certificates of
title that were ordered to be cancelled, in the present case, the CFI Decision makes reference
to "Transfer Certificate of Title No. T-9550 x x x of the Register of Deeds of the Province of
Batangas and other subdivision titles issued in favor of Ayala y Cia and/or Hacienda de
[Calatagan, being declared null and void, and] the areas outside its private land covered by
TCT No. 722, which, including the lots in [TCT No.] T-9550 (lots 360, 362, 363 and 182),
[were being] reverted to public dominion." As found by both the RTC and CA, the certificate
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of title covering the subject land in petitioner's name is included in the "other subdivision
titles" that must be cancelled to fully execute the CFI Decision. Based on the TWC's report, it
was found out that the subject land was covered by a derivative title of TCT No. 722, which
must be cancelled.
Indeed, the assailed Orders of the RTC were issued pursuant to its residual authority
conferred by the Rules to carry its jurisdiction into effect, which includes execution of its
judgments.
Regarding sub-issue (iii), this involves a factual review which is not generally allowed
in a Rule 45 petition for certiorari. This is so because the Court is not a trier of facts and will
not re-examine nor re-evaluate the evidence on record. Also, well-settled is the rule that
factual findings of the trial court, when affirmed by the CA, are generally final, binding and
conclusive on the Court. While there are numerous accepted exceptions to the general rule,
none obtains here. The Court is not persuaded by petitioner's arguments to veer away from
the factual findings of the RTC, which were upheld by the CA.
Anent sub-issue (iv), the CA rejected petitioner's arguments. In the present case, the
error or mistake of the DAR in selling the subject land to petitioner cannot be invoked against
the government given the fact that reversion was granted in favor of the Republic due to the
illegal registration of territorial waters and lands of the public domain in favor of the Ayalas
and/or Hacienda Calatagan when the survey and preparation of a composite plan of
Hacienda Calatagan resulted in the increase of its original area of 9,652.583 hectares as
reflected in TCT No. 722 to 12,000 hectares.32 The inclusion of areas in excess of the original
area as reflected in TCT No. 722 in subsequent certificates of title did not vest any right of
private ownership because, as mentioned in the CA Decision and confirmed by jurisprudence
that it cited, registration of lands under the Torrens system is not a mode of acquiring
ownership
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NICXON L. PEREZ, JR. v. AVEGAIL PEREZ-SENERPIDA, ASSISTED BY HER

HUSBAND MR. SENERPIDA
DOCTRINE
However, Article 493 of the Civil Code cannot supersede, and must yield to, Article 147
of the Family Code, which expressly mandates that: "Neither party can encumber or dispose by
acts inter vivos of his or her share in the property acquired during cohabitation and owned in
common, without the consent of the other, until after the termination of their cohabitation
FACTS
Spouses Eliodor Q. Perez and Adelita M. Perez were the registered owners of a parcel
of land known as Lot 2, Block 9 of the consolidation subdivision plan with a total area of 350
square meters, covered by TCT No. T-7396. The spouses had two children, Avegail and
Adonis Perez. Prior to his marriage with Adelita, Eliodoro was married and had several
children, one of whom was Nicxon Perez Sr., who sired petitioner Nicxon Jr.
On October 29, 1995, a sworn statement denominated as Renounciation and Waiver

of Rights (RWR)was executed by Adelita in favor of her husband Eliodoro. Said instrument
was inscribed on TCT No. T-7396 on July 20, 2004. On July 27, 2004, Eliodoro donated the
said parcel of land to Nicxon without the conformity of Adelita. TCT No. T-7396 was cancelled
and in lieu thereof, TCT No. 12547 was issued to Nicxon. Subsequently, a Real Estate
Mortgage was executed by Nicxon in favor of Rolando Ramos on November 16, 2009.
On February 1, 2005, Eliodoro filed against Adelita a petition for declaration of nullity
of marriage under Article 36 of the Family Code before the RTC of Olongapo City, Branch 73.
On June 15, 2005, RTC-Branch 73 rendered a Decision (Marriage Nullity Decision) declaring
the marriage between Eliodoro and Adelita void ab initio.
Eliodoro died on June 28, 2008. On April 14, 2009, an Extrajudicial Settlement Among
Heirs with Waiver was executed and signed by his legitimate and compulsory heirs. On
September 30, 2010, x Avegail Perez-Senerpida brought an action before RTC-Branch 72 in
Civil Case No. 135-0-2010 for Annulment of Donation and Title with Prayer for a Temporary
Restraining Order and a Writ of Preliminary Injunction against Nicxon. She contended that
he is one of the children of late Eliodoro and Adelita. She claimed that the RWR and DoD are
clearly prejudicial to her interest because it affected her future inheritance or legitime. Thus,
the said documents, together with TCT No. T-12547 in the name of Nicxon, should be
annulled.
The RTC rendered a Decision, ordering the annulment of the Renunciation and
Waiver of Rights, annulment of Deed of Donation, nullification of TCT No. T-12547,
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cancellation by the Registry of Deeds of TCT No. T-12547, and issuance of another title over
the subject property in Eliodoro’s name. Nicxon appealed to the CA.
The CA in its Decision dated April 7, 2017 found the appeal filed by Nicxon bereft of
merit. The CA noted that at the time of the donation made by Eliodoro in favor of his
grandson Nicxon, he was still legally married to Adelita given that Eliodoro died on June 28,
2008. As such, Eliodoro should have first secured the conformity of his wife, Adelita, as
expressly required under Article 98 of the Family Code, which provides that: "Neither spouse
may donate any community property without the consent of the other." Nucxon moved for
reconsideration which was denied. Hence this Petition.
ISSUES
(1) Whether the ruling of the CA and the RTC violated the rule on res judicata when
they did not treat as final and executory the earlier Decision in the declaration of nullity of
marriage case (Civil Case No. 44-0-200532); (2) Whether the CA and the RTC erred in ruling
that the property regime of Eliodoro and Adelita was still covered by the ACP despite the
final decision declaring their marriage void ab initio; (3) Whether the DoD executed by
Eliodoro in favor of Nicxon is valid.
RULING
(1) and (2) YES. The CA and RTC erred in not treating as final and executory the
declaration of nullity of marriage between Eliodoro and Adelita, and in ruling that the
property regime of Eliodoro and Adelita was still covered by ACP.
Both the RTC and the CA committed a patent error in their factual finding in this case
that the marriage between Eliodoro and Adelita remained valid and subsisting until
Eliodoro's death on June 28, 2008. While the RTC Decision was rendered on February 24,
2015, or prior to the CA Decision in the Annulment of Judgment Petition dated September
22, 2015, the RTC could not have mistaken the March 5, 2012 Resolution of the CA in CA-G.R.
SP No. 120119 in connection with the Annulment of Judgment Petition to mean reception of
further evidence in the second petition for declaration of nullity of the marriage between
Eliodoro and Adelita that was filed by the former because that Resolution emanated from
the CA in its disposition of the Annulment of Judgment Petition. In other words, if the RTC
entertained any doubt, it should have verified from Branch 75 what the hearing for reception
of further evidence was all about. After all Branch 72 (the RTC of this case) and Branch 75
are both located in Olongapo City. Another option of the RTC would have been to await the
outcome of the Annulment of Judgment Petition filed by Adelita with the CA inasmuch as the
resolution of the issue in the said petition — the annulment of the Marriage Nullity Decision
— was inextricably linked with the instant case.
On the part of the CA, at the time it rendered its Decision on April 7, 2017 in the
present case, the CA Decision in the Annulment of Judgment Petition in CA-G.R. SP No.
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120119 had already been rendered more than a year earlier, or on September 22, 2015. A
mere perusal of the March 5, 2012 Resolution of the CA issued in connection with the
Annulment of Judgment Petition would have made the CA to be circumspect and make a
verification as to whether the RTC's finding in this case in relation to that March 5, 2012
Resolution was factually accurate.
Based on the Court's mere reading of the CA Decision in the Annulment of Judgment
Petition, the factual mistake of the RTC and the CA in this case becomes readily patent,
justifying the relaxation of the rules on the instant Rule 45 certiorari Petition.
Since the Marriage Nullity Decision became final and executory on July 6, 2005, as
confirmed with finality in the CA Decision in the Annulment of Judgment Petition in CA-G.R.
SP No. 120119, prior to Eliodoro's death, then the marriage between him and Adelita, which
was celebrated on December 10, 1975 at Infanta, Pangasinan, was null and void ab initio
pursuant to Article 36 of the Family Code as declared in the Marriage Nullity Decision.
Since the marriage between Adelita and Eliodoro was judicially decreed to be void ab
initio or from the beginning, the RTC and the CA here in this case clearly erred in their ruling
that the ACP regime governed their property relations.
Parenthetically, and to digress a moment, even if their marriage was not declared void
from the beginning, the RTC and the CA would still have erred because the applicable
property regime should have been the conjugal partnership of gains (CPG). Pursuant to
Article 105 of the Family Code, the provisions of Chapter 4, Conjugal Partnership of Gains,
shall apply to CPG already established before the effectivity of the Family Code, without
prejudice to vested rights. Since the marriage between Eliodoro and Adelita was celebrated
on December 10, 1975 and the CPG was then the applicable property regime between validly
married spouses, absent any contract executed before the marriage, then that property
regime continued.
Nicxon is thus correct in his contention that the lower courts in the present case erred
in applying Article 89 of the Family Code, which provides in part that: "No waiver of rights,
interests, shares and effects of the absolute community of property during the marriage can
be made except in case of judicial separation of property." Unquestionably, Article 89 cannot
justify the nullification of Adelita's RWR since Adelita and Eliodoro were not validly married.
Nicxon correctly cites Article 147 of the Family Code as the applicable provision and
the rules on co-ownership govern the property acquired during the cohabitation or
"common law" marriage of Eliodoro and Adelita.
(3) NO. The DoD is void. Under a regime of separation of property, pursuant to
Article 145 of the Family Code, each spouse shall own, dispose of, possess, administer and
enjoy his or own estate, without need of the consent of the other. Understandably, each
spouse can donate or alienate onerously his or her own estate without the need of obtaining
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the other spouse's consent. Under Article 147 of the Family Code, which covers the exclusive
cohabitation of a man and woman as husband and wife without the benefit of marriage or
under a void marriage, there is unfortunately no direct prohibition on donation of any
property acquired during the cohabitation by one party without the consent of the other.
It is true that Article 147 provides that the property acquired during the cohabitation
shall be governed by the rules on co-ownership and pursuant to Article 493 of the Civil Code,
in a co-ownership: "Each co-owner shall have the full ownership of his part and of the fruits
and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and
even substitute another person in its enjoyment, except when personal rights are involved[;
but the effect of the alienation or the mortgage, with respect to the co-owners, shall be
limited to the portion which may be allotted to him in the division upon the termination of
the co-ownership."
With Article 493 of the Civil Code as basis, Eliodoro could have alienated onerously
or gratuitously his part or share in the subject property to Nicxon without the consent of
Adelita, who was half co-owner thereof, and the alienation would have been limited to the
half portion allotted to Eliodoro upon termination of the co-ownership or partition.
Even the donation by Eliodoro of the entire subject property to Nicxon, without the
consent of Adelita, could produce valid effect under Article 493, which would be limited to
his share. Consequently, if Article 493 of the Civil Code were to be applied, the donation to
Nicxon of the subject property could only affect the one-half share of Eliodoro and the one-
half share of Adelita could not have been transferred to Nicxon by virtue of the DoD.
However, Article 493 of the Civil Code cannot supersede, and must yield to, Article
147 of the Family Code, which expressly mandates that: "Neither party can encumber or
dispose by acts inter vivos of his or her share in the property acquired during cohabitation
and owned in common, without the consent of the other, until after the termination of their
cohabitation."
Given the above express prohibition of a party to the cohabitation to encumber or

alienate by acts inter vivos even his or her share in the property acquired during the
cohabitation and owned in common, without the consent of the other party until after the
termination thereof under Article 147, then the donation of any property acquired during
the cohabitation by one party without the consent of the other can only be but void. The rules
on ordinary co-ownership cannot apply to vest validity on the undivided share of the
disposing party. The donation is simply void.
If a disposition of a party’s share in the property under special co ownership created

by virtue of Article 147 without the consent of the other party is proscribed by law, then, and
with more reason, should the disposition of the entire property under such special co-
ownership by a party without the other party's consent be considered void as well.
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To conclude, while the Court finds merit in Nicxon's contention that the lower courts
in the present case erred in finding that the property regime between Adelita and Eliodoro
was governed by the ACP as their marriage subsisted until Eliodoro died, the DoD to him of
the subject property is, nonetheless, void as this is a prohibited disposition under Article 147
of the Family Code.
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FRANCIS LUIGI G. SANTOS v. REPUBLIC OF THE PHILIPPINES

G.R. No. 250520, May 5, 2021, First Division (Caguioa, J.)
DOCTRINE
It must be stressed once again that a change of name is a privilege not a matter of right,
addressed to the sound discretion of the court which has the duty to consider carefully the
consequences of a change of name and to deny the same unless weighty reasons are shown.
Before a person can be authorized to change his name, that is, his true or official name or that
which appears in his birth certificate or is entered in the civil register, he must show proper and
reasonable cause or any convincing reason which may justify such change.
FACTS
Petitioner Francis Luigi G. Santos filed a petition for change of name under Rule 103
of the Rules of Court seeking to change his surname from "Santos" to "Revilla" in his
Certificate of Live Birth. He alleged that sometime in 1991, his parents, Lovely Maria T.
Guzman and Jose Marie Bautista, Jr., also known as Ramon Bong Revilla, Jr., met and engaged
in an intimate relationship. He was later born in Quezon City on January 9, 1992 as "Francis
Luigi Guzman.” Lovely Guzman and Bong Revilla were never married as the latter was
already married to Lani Mercado. Thus, petitioner's Certificate of Live Birth did not bear the
Revilla surname and his father was marked as unknown.
In 1999, Lovely Guzman married Patrick Joseph P. Santos, who, in turn, legally
adopted petitioner. Thus, petitioner's name was changed from "Francis Luigi Guzman" to
"Francis Luigi G. Santos." Although petitioner lived with his mother, he grew up close to Bong
Revilla and the latter's wife and children and was treated by the family as a legitimate son.
He also claimed that he used the name "Luigi Revilla" when he entered show business. Thus,
he filed the instant petition in order to "avoid confusion," "to show his sincere and genuine
desire to associate himself to Bong Revilla and to the Revillas," and to ensure that his records
show his true identity as Bong Revilla's son.
The RTC denied the petition. On appeal, the CA affirmed the decision of the RTC.
ISSUE
Whether the CA erred in denying the petition to change petitioner's surname from
"Santos" to "Revilla."
RULING
NO. To justify a change of name, a person "must show not only some proper or
compelling reason but also that he will be prejudiced by the use of his true and official name."
Unfortunately, none of these reasons justify, in law, the desired change. The Court agrees
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with the RTC that the use of the surname "Revilla" would create further confusion rather
than avoid it, given that: (1) petitioner has never legally used the name "Revilla" despite
having been acknowledged in 1996; (2) he was legally adopted by Patrick Santos in 2001;
(3) he has used the name "Santos'' for all documentary purposes since his adoption; (4)
although he is publicly known to be the son of Bong Revilla, he is known by his peers as "Luigi
Santos"; (5) even after a change of surname, Patrick Santos shall continue to be the father
named in his birth certificate; and (5) he only began using the surname "Revilla" when he
entered show business. Moreover, as adoption severs all legal ties between the adoptee and
his or her biological parents, there is no basis to allow petitioner to change his name to
"Revilla" simply because he is, biologically, the son of Bong Revilla and wants to associate
himself with the Revilla family.
Contrary to the position of the CA, petitioner correctly availed of a Rule 103
proceeding to effect the desired change. However, the Court agrees with the CA, as well as
the RTC, that petitioner failed to prove that there was any compelling reason to justify the
change sought.
Republic v. Hernandez discussed the nature of Rule 103 petitions for change of
name—the only way that the name of person can be changed legally is through a petition for
change of name under Rule 103 of the Rules of Court. Rule 103 petitions for change of name
based on the foregoing jurisprudential grounds is a separate and distinct remedy from that
provided under Rule 108, which involves cancellations and corrections of entries in the civil
registry. Rule 103 procedurally governs judicial petitions for change of given name or
surname, or both, pursuant to Article 376 of the Civil Code. Rule 108, on the other hand,
implements judicial proceedings for the correction or cancellation of entries in the civil
registry pursuant to Article 412 of the Civil Code.
Notably, the foregoing rules were modified by the enactment of R.A. 9048, which
amended Articles 376 and 412 of the Civil Code and vested primary jurisdiction over the
correction of certain clerical or typographical errors and changes of first name with the civil
registrar. In 2012, R.A. 10172 expanded the coverage of the summary administrative
procedure provided under R.A. 9048 to include clerical corrections in the day and/or month
in the date of birth, or in the sex of the person, where it is patently clear that there was a
clerical or typographical error or mistake in the entry. Presently therefore, when an entry
falls within the coverage of R.A. 9048 as amended by R.A. 10172, a person may only avail of
the appropriate judicial remedies under Rule 103 or Rule 108 after the petition in the
administrative proceedings is first filed and later denied. Failure to comply with the
administrative procedure generally renders the petition dismissible for failure to exhaust
administrative remedies and for failure to comply with the doctrine of primary jurisdiction.
Based on the foregoing, the Court holds that petitioner correctly availed himself of the
remedy under Rule 103 in order to change his surname from "Santos" to "Revilla." Contrary
to the findings of the CA, Rule 108 is inapplicable as petitioner does not allege or identify any
erroneous entry that requires substantial rectification or cancellation.
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REPUBLIC v. MANANSALA
G.R. No. 241890, May 3, 2021, First Division (Caguioa, J.)
DOCTRINE
The established legal principle in actions involving land registration is that a party must
prove its allegations not merely by a preponderance of evidence, but by clear and convincing
evidence. Evidence is clear and convincing if it produces in the mind of the trier of fact a firm
belief or conviction as to the allegation sought to be established. It is indeterminate, being more
than preponderance, but not to the extent of such certainty as is required beyond reasonable
doubt in criminal cases. Appropriately, this is the standard of proof that is required in
reconstitution proceedings.
FACTS
Avelino M. Manansala is the sole heir of Fel Manansala (Fel). During his lifetime, Fel
owned two parcels of land situated in the Municipality of Carmona, Province of Cavite. On
June 25, 1997, Fel died leaving the mass of his property, which included the subject lots, to
Manansala. Manansala executed an Extra Judicial Settlement of his father's estate,
adjudicating upon himself sole ownership over the parcels of land covered by TCT Nos. T-
4773 and T- 2822. He submitted a copy thereof in the Office of the Registry of Deeds for the
Province of Cavite for registration, which the RD refused because Manansala failed to present
the original copies of TCT Nos. T-4773 and T-2822. Manansala presented a Certification, to
prove that the subject TCTs were among those burned during the fire that razed the building
which housed the RD sometime in 1959.
Manansala designated his son, Esmeralda as his attorney-in-fact. Esmeraldo filed the
instant petition for the judicial reconstitution of TCT Nos. T-4773 and T-2822 before the RTC,
on the basis of the owner's duplicate copies in his possession.
The LRA issued its Initial Report stating that "it appears that both titles did not exist
in the Registry of Deeds of Cavite, because the information contained therein are not in
accordance with our records.
Manansala submitted his counter-evidence in refutation of the aforesaid findings an.d

asked the LRA for a replotting and re-evaluation of the same. In the Second Report, it was
stated that "upon replotting and re-evaluation thereof, makes the following findings: "the
technical descriptions appearing on the reproductions of owner's duplicate copies of
Transfer Certificates of Title Nos. T-4773 and T- 2822 were found correct after examination
and due computation. The RTC and CA both granted the petition for reconstitution
ISSUE
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Whether the petition for reconstitution of the alleged lost and destroyed original
should be granted.
RULING
NO. Reconstitution is the restoration of the instrument or title allegedly lost or

destroyed in its original form and condition. Its only purpose is to have the title reproduced,
after observing the procedure prescribed by law, in the same form they were when the loss
or destruction occurred. The process involves diligent circumspect evaluation of the
authenticity and relevance of all the evidence presented for fear of the chilling consequences
of mistakenly issuing a reconstituted title when in fact the original is not truly lost or
destroyed, or when an original title does not even exist in the name of the petitioner or the
person from whom the petitioner derives his purported claim or right.
The established legal principle in actions involving land registration is that a party
must prove its allegations not merely by a preponderance of evidence, but by clear and
convincing evidence. Evidence is clear and convincing if it produces in the mind of the trier
of fact a firm belief or conviction as to the allegation sought to be established. It is
indeterminate, being more than preponderance, but not to the extent of such certainty as is
required beyond reasonable doubt in criminal cases. Appropriately, this is the standard of
proof that is required in reconstitution proceedings.
Given that the required quantum of evidence to reconstitute a certificate of title is not
mere preponderance of evidence, but clear and convincing evidence producing in the mind
of the trier of facts a firm belief or conviction as to the allegations sought to be established,
the RTC and CA erred granting the petition based on preponderance of evidence.
The records bear out that only Esmeraldo, attorney-in-fact of respondent Avelino
Manansala (Avelino), was presented as witness before the RTC and who testified that: he is
the son of Avelino; his father is the only heir of the late Fel who died on June 25, 1997, and
left behind two parcels of land situated in Carmona, Cavite as the only heir, Avelino executed
an Extra-Judicial Settlement of Estate of his father and adjudicated upon himself the said
parcels of land; Avelino tried to register the Extra-Judicial Settlement of Estate with the Office
of the Registry of Deeds of Cavite (RD), but its registration was denied on the ground that the
original copies of said titles were among those burned during the fire that razed the Office of
the RD in June 1959; a First Report was issued by the LRA; to rebut said report, a Certification
dated December 10, 2013 from the Department of Environment and Natural Resources
(DENR) stating that the subject properties were verified to be within the "Alienable and
Disposable Land.
CA relied primarily on the Second Report of the LRA in finding the owner's duplicate
of TCT No. T-4773 and TCT No. T-2822, which respondent presented before the RTC, to be
authentic, and as such, could therefore be the source of respondent's petition for
reconstitution. Unfortunately, the reliance by the CA on the Second Report is erroneous.
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In Republic v. Medida, the Court held that certifications of the Regional Technical
Director, DENR cannot be considered prima facie evidence of the facts stated therein, holding
that: "The certifications are not the certified copies or authenticated reproductions of
original official records in the legal custody of a government office. The certifications are not
even records of public documents."
As such, sans the testimonies of Acevedo, Caballero, and the other public officers who
issued respondent's documentary evidence to confirm the veracity of [their] contents, the
same are bereft of probative value and cannot, by their mere issuance, prove the facts stated
therein. At best, they may be considered only as prima facie evidence of their due execution
and date of issuance but do not constitute prima facie evidence of the facts stated therein.
The First and Second Reports of the LRA as well as the certifications of the DENR and
the RD do not fall within the class of public documents under Section 23, Rule 132 of the
Rules since they do not reflect entries in public records made in the performance of a duty
by a public officer, are not certified copies or authenticated reproductions of original official
records in the legal custody of a government office, and are not even records of public
documents. As such, without the testimonies of the public officers who issued respondent's
documentary evidence or were the official custodians thereof to confirm the veracity of their
contents or the existence of the original in their custody and those presented in court are
faithful reproductions of the original, they are bereft of probative value and cannot, by their
mere issuance, prove the facts stated therein. In fact, the contents of the LRA Reports as well
as the DENR and the RD certifications are hearsay because respondent's sole witness and
attorney-in-fact, Esmeraldo, was incompetent to testify on the veracity of their contents, as
he did not prepare any of the certifications or reports nor was he the public officer of the
concerned government agencies, who was the custodian of the documents adverted to in the
certifications and reports or who had personal knowledge of their contents.
Since the pieces of documentary evidence, which purportedly emanated from the
LRA, DENR and RD, have no probative value, being hearsay, there is no competent evidence
to support respondent's petition for reconstitution. Therefore, his petition should be
dismissed.
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SPOUSES ROLANDO AND CYNTHIA RODRIGUEZ v. EXPORT AND INDUSTRY BANK, INC.
DOCTRINE
Without a prior valid demand, the mortgagee-creditor's resort to extra-judicial

foreclosure is premature and thus, void. For the creditor's demand to be considered valid, it
must: (i) specifically relate to the obligation that is due and demandable; and (ii) fully apprise
the debtor of the amount due to the creditor, including any accrued interest and penalties
imposed on the obligation. It follows that an incomplete demand, or one that leaves the debtor
unable to make a valid payment, is ineffective and is insufficient for the purpose of rendering
the debtor in default of the obligation.
FACTS
In 1997, Urban Bank Inc. granted Spouses Rolando and Cynthia Rodriguez credit
accommodations dubbed as "Ready Check Mortgage Lines" (RCMLs). On April 12, 1999,
Urban Bank granted Rolando an increased RCML amounting to P6,000,000.00 (1999 RCML).
The terms and conditions of the 1999 RCML provided, among others, that there must be a
registered first real estate mortgage on a house and lot located at No. 24, Melantic St., San
Lorenzo Village, Makati City registered under the name of Rolando C. Rodriguez married to
Cynthia C. Rodriguez. Thus, Spouses Rodriguez executed an Additional Mortgage Agreement
covering the Makati property. As shown by the residential address indicated therein, the
Makati property stood as Spouses Rodriguez's family home. Spouses Rodriguez later drew
the following checks against their special checking account under the 1999 RCML for a total
amount of Php2,382,558.11.
On April 26, 2000, the Bangko Sentral ng Pilipinas (BSP) ordered the closure of Urban
Bank. Urban Bank and Export and Industry (EIB) bank merged and pursuant to the merger,
all assets and liabilities of Urban Bank were transferred to EIB.
On May 15, 2002, Spouses Rodriguez received a fax from EIB regarding the statement
of account pertaining to Rolando's individual RCML (May 2002 SOA). The statement
reflected a principal outstanding balance of P2,344,000.00. In response, Rolando sent EIB a
letter dated May 31, 2002 asking for additional time to settle his and his wife's accounts since
their accountant would have to reconcile the data. Rolando also pointed out that the
individual RCMLs previously issued in his and Cynthia's names were already cancelled under
the 1999 RCML. EIB agreed to give Spouses Rodriguez an additional period of sixty (60) days
to settle their outstanding obligation in full. However, Spouses Rodriguez failed to do so.
Several demands were made but the Spouses failed to pay.
EIB filed a Petition for Extra-Judicial Foreclosure. IB alleged that Spouses Rodriguez
defaulted on the payment of their obligations under the 1999 RCML despite repeated
demands. EIB thus prayed that the Makati property be sold at a public auction subject to the
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requirements of Act No. 3135. The foreclosure pushed through on March 14, 2003 and the
Makati property was sold to EIB as highest bidder for the amount of P12,000,000.00.
Spouses Rodriguez filed a complaint before the RTC (Nullification Complaint) seeking
to declare the extra-judicial foreclosure null and void.
ISSUE
Whether or not the extra-judicial foreclosure is valid.
RULING
NO. The extra-judicial foreclosure of the Makati property was premature There are
three (3) elements that must be established before a creditor may proceed with the extra-
judicial foreclosure of a mortgage. First, there must have been the failure to pay the loan
obtained from the mortgagee-creditor; second, the loan obligation must be secured by a real
estate mortgage; and third, the mortgagee-creditor has the right to foreclose the real estate
mortgage either judicially or extra-judicially. Subsumed in the first and third elements is the
requirement that the mortgagor-debtor be in default. In the absence of a contractual
stipulation to the contrary, the mortgagor-debtor can only be deemed in default when the
latter fails to pay despite a valid demand made by the mortgagee-creditor.
Clearly, without a prior valid demand, the mortgagee-creditor's resort to extra-

judicial foreclosure is premature and thus, void. For there to be a valid demand, the demand
must comply with the integrity, identity, and indivisibility characteristics of payment. For
the creditor's demand to be considered valid, it must: (i) specifically relate to the obligation
that is due and demandable; and (ii) fully apprise the debtor of the amount due to the
creditor, including any accrued interest and penalties imposed on the obligation. It follows
that an incomplete demand, or one that leaves the debtor unable to make a valid payment, is
ineffective and is insufficient for the purpose of rendering the debtor in default of the
obligation.
Here, the Extra-Judicial Foreclosure Petition clearly shows that EIB specifically
prayed for the extra-judicial foreclosure of the Additional Mortgage Agreement on the
ground of Spouses Rodriguez's failure to pay their obligations under the 1999 RCML. EIB's
written demands pertained to obligations which had been extinguished by way of extinctive
novation. Novation is the substitution or alteration of an obligation by a subsequent one that
cancels or modifies the preceding one. Unlike other modes of extinguishing of obligations,
novation is a juridical act of dual function, in that at the time it extinguishes an obligation, it
creates a new one in lieu of the old. Novation may be total or extinctive, when there is an
absolute extinguishment of the old obligation, or partial, when there is merely a modification
of the old obligation.
In this case, the written demands made and referred to by EIB in the Extra Judicial
Foreclosure Petition pertain not to Spouses Rodriguez's loan obligation under the 1999
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RCML, but to the individual RCMLs previously issued in favor of Cynthia and Rolando.
Notably, these individual RCMLs were explicitly cancelled under clause 13 of the Letter-
Agreement detailing the terms of the 1999 RCML which states that: "This facility shall cancel
the RCML of Ms. Cynthia C. Rodriguez for P3,591,000[.00] with Account No. 7255-00017-0
and RCML of Mr. Rolando C. Rodriguez with Account No. 7255-00016-4."
In the absence of any qualifying stipulation, the term "cancel" in clause 13 should be
interpreted in its literal sense, and should be construed to effect a complete cancellation and
extinguishment of Spouses Rodriguez's individual RCMLs and the creation of the 1999 RCML
in lieu thereof. Pursuant to clause 13, the parties changed the object of Spouses Rodriguez's
obligation through extinctive novation.
It thus becomes clear that the prior written demands served by EIB upon Spouses
Rodriguez pertained to obligations which had been explicitly extinguished under the 1999
RCML. These demands could not have had the effect of placing Spouses Rodriguez in default
of the obligation arising from the 1999 RCML. Accordingly, Spouses Rodriguez were not in
default at the time of the extra-judicial foreclosure. Thus, the extra-judicial foreclosure of the
Makati property was, in law, premature, and therefore, null and void.
Page 332 of 342

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TAN v. MALAYAN LEASING AND FINANCE CORP.

DOCTRINE
Although the suretyship itself is a contract that is ancillary to the main financial
accommodation contract between the principal and the creditor, what sets the surety apart
from a mere guaranty is that in a suretyship, the surety is principally liable, as opposed to a
guarantor who is only secondarily liable. So much so that with a suretyship agreement securing
the loan transaction, a creditor may go directly against the surety even without a prior demand
on the principal debtor, although the latter may be solvent or otherwise able to pay. A surety's
liability stands irrespective of the principal debtor's ability to perform his obligations under the
contract which is subject of the suretyship.
FACTS
On December 8, 2000, respondent New Unitedware Marketing Corporation (NUMC)

obtained a loan from respondent First Malayan Leasing and Finance Corporation (FMLFC)
in the amount of P5,000,000.00, as evidenced by the terms of the Promissory Note executed
on even date. The loan was later refinanced on various dates at the instance of NUMC.
As security for the loan, NUMC executed a Deed of Assignment on July 2, 2001 in favor
of FMLFC, covering NUMC's fire insurance claim proceeds from Philippine Charter Insurance
Corporation (PCIC). Furthermore, as additional security, petitioner Merrie Anne L. Tan
(Merrie Tan), who was a member of NUMC's Board of Directors, and Edward Yao (Yao), as
President and General Manager of NUMC executed a "Continuing Surety Undertaking" on July
27, 2001 in favor of FMLFC. More, on November 29, 2002, one Samson Ding (Ding), also a
member of NUMC's Board of Directors, and Merrie Tan's spouse, Willy Tan (now deceased)
likewise executed a second Continuing Surety Undertaking in favor of FMLFC.
When NUMC defaulted on its payment of the loan, FMLFC declared that as of
November 17, 2004, NUMC owed it the remaining balance of P 2,942,822.36 due, exclusive
of 5% penalty charges and interests When FMLFC's demands on NUMC, as well as on Yao,
Ding and Spouses Merrie and Willy Tan (Spouses Tan) went unheeded, it filed a Complaint
for Sum of Money and Damages with Prayer for Preliminary Attachment.
Then on October 21, 2005, during the pendency of the proceedings before the RTC,
Merrie Tan discovered that Ding, in behalf of another corporation, and Yao, in behalf of
NUMC, had entered into a Compromise Agreement with PCIC, where Ding and Yao were paid
the amounts of P55,570,930.92 and P75,867,556.73, respectively, as payments for the fire
insurance policy claim, the proceeds of which were earlier assigned by NUMC in favor of
FMLFC.
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Premised on the said Compromise Agreement, Merrie Tan argued that Ding and Yao
should be made exclusively liable for FMLFC's claim since they were the ones who received
the proceeds from the fire insurance claim, which was intended to pay for the outstanding
loan obligation of NUMC to FMLFC
Yao, for his part, denied that he received the proceeds of the fire insurance claim from
PCIC, and contended that the indemnity checks which PCIC paid were merely endorsed by
him in his official capacity to the bank for encashment, but that the proceeds of the checks
were delivered by the bank to Ding and Willy Tan. Yao finally added that he already settled
with FMLFC his share of NUMC's obligation when he paid FMLFC the amount of P980,000.00,
in exchange of which the latter executed a "Receipt and Release" in his favor.
ISSUE
Whether the solidary obligation insofar as Spouses Tan and Ding were concerned was
novated by FMLFC's release of Yao.
RULING
NO. The obligation of the Spouses Tan and Ding remain solidary despite the release
of Yao from the same. Article 2047 of the Civil Code provides that “By guaranty a person,
called the guarantor, binds himself to the creditor to fulfill the obligation of the principal
debtor in case the latter should fail to do so If a person binds himself solidarily with the
principal debtor xxx [i]n such case the contract is called a suretyship.”
Although the suretyship itself is a contract that is ancillary to the main financial
accommodation contract between the principal and the creditor, what sets the surety apart
from a mere guaranty is that in a suretyship, the surety is principally liable, as opposed to a
guarantor who is only secondarily liable. So much so that with a suretyship agreement
securing the loan transaction, a creditor may go directly against the surety even without a
prior demand on the principal debtor, although the latter may be solvent or otherwise able
to pay. A surety's liability stands irrespective of the principal debtor's ability to perform his
obligations under the contract which is subject of the suretyship.
In the instant controversy, Merrie Tan, along with Yao executed a "Continuing Surety
Undertaking". Continuing suretyships have been observed by the Court to be usual in the
commercial practice, where the principal places itself in a position to enter into projected
series of transactions with its creditor, with no more need to execute a separate surety
contract for each financial accommodation, since the continuing suretyship covers the
subsequent ones as well These continuing suretyships have the effect of encouraging the
creditor to extend further accommodations without the fears and uncertainties that
unsecured credits carry. Under the "Continuing Surety Undertaking" of the instant case,
FMLFC may seek to recover from NUMC, or from Merrie Tan or Ding, consistent with Article
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1216 of the Civil Code which provides that "The creditor may proceed against any one of the
solidary debtors or some or all of them simultaneously."
In fact, the Receipt and Release executed by FMLFC in favor of Yao categorically
provides for the reservation of its option to proceed against the remaining co-sureties
Spouses Tan and Ding.
FMLFC proceeded against Yao, later released him from the suretyship upon payment
of P 980,000.00, and expressly reserved its right to proceed against NUMC and/or its
remaining co-sureties.
Therefore, Merrie Tan's submissions that (i) FMLFC is estopped from treating her and
the remaining co-sureties as solidary obligors since it accepted partial payment of NUMC's
outstanding loan obligation from Yao; and (ii) that said acceptance and subsequent release
amounted to a novation which converted the suretyship into a divisible obligation are both
misplaced.
On the contrary, FMLFC was well within its rights as a creditor to proceed against
either NUMC or any one or more or all of the co-sureties for the collection of NUMC's
outstanding loan. That it chose to first proceed against Yao and not against the other co-
sureties did not operate as an estoppel on it from subsequently proceeding against the
remaining co-sureties. More, that it agreed to release Yao upon the latter's payment of a
partial amount of the total loan obligation of NUMC also did not operate to bar it from
proceeding against the remaining co-sureties to ensure the full satisfaction of the debt. The
liability of Merrie Tan remains solidary with NUMC, regardless of partial payment by Yao,
precisely because the kind of security she undertook was one of suretyship. However, the
outstanding loan obligation for which Merrie Tan, NUMC and Ding remain solidarity liable
for has been effectively reduced by Yao's partial satisfaction of the same.
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REPUBLIC v. VILLACORTA
DOCTRINE
Article 45(3) of the Family Code provides that a marriage may be annulled for any of
the following causes, existing at the time of the marriage: xxx (3) That the consent of either
party was obtained by fraud, unless such party afterwards, with full knowledge of the facts
constituting the fraud, freely cohabited with the other as husband and wife."
To constitute fraud that warrants annulment under Article 46(2): 1) the wife must have
been pregnant by a man other than her husband at the time of the marriage and 2) the wife
must have fraudulently concealed the same.
FACTS
Melvin and Janufi met in March of 1996 while they were both studying at
Southwestern University, Cebu City. They became sweethearts but ended their relationship
in 2000. Thereafter, Melvin heard that Janufi began dating someone who was working near
the establishment where she was then employed. For months, Melvin and Janufi did not
communicate with one another. Later, however, Janufi asked Melvin to see her. In March of
2001, Melvin visited Janufi and eventually asked her about the rumor that she was dating
someone else. Janufi denied the same and insisted that "no one touched her" and nothing
happened between her and any third party. Thus, Melvin and Janufi reconciled. In April of
2001, Melvin learned that Janufi was pregnant. Melvin was "surprised" and "doubtful" to
learn Janufi was already one month pregnant because they had sexual intercourse only in
March of 2001. Although Melvin doubted the paternity of the child, Janufi supposedly
assured him that he was the only person she had sexual intercourse with.
On December 1, 2001, Janufi gave birth to a baby girl named Mejan Dia and she and
Melvin then began living together. After almost three years or on August 14, 2004, Melvin
and Janufi finally got married.
October 18, 2004, Janufi gave birth to a second child named Javen MeltDuring their
marriage, the couple quarreled about ordinary things. Often times, however, the paternity of
Mejan Dia would become an issue. During a dinner party in 2010, Melvin and Janufi
quarreled and the issue of Mejan Dia's paternity was brought up in the presence of their
relatives. This drove Melvin to finally take a deoxyribonucleic acid (DNA) Parentage
Examination (DNA test) at Hi-Precision Diagnostics.
In November of 2010, the results of the DNA test were released, which revealed that
there was a 0.0% probability that Melvin was the father of Mejan Dia.
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Melvin received a text message from Janufi stating that she had no intention to
deceive Melvin into acknowledging paternity but it only happened once while she was drunk,
and that she never thought her one-time "sin" would "bear fruit. The message also stated
that Janufi was shocked at the result of the DNA test and could not believe that Melvin was
not the father of Mejan Dia.
Melvin filed a petition for annulment of marriage on the ground of fraud under Article
45(3) in relation to Article 46(2) of the Family Code.
ISSUE
Whether or not the marriage should be annulled.
RULING
NO. The facts do not warrant annulment under Article 45(3) in relation to Article
46(2) of the Family Code.
Marriage is a special contract of permanent union between a man and a woman

entered into in accordance with law for the establishment of conjugal and family life. It is the
foundation of the family and an inviolable social institution whose nature, consequences, and
incidents are governed by law and not subject to stipulation xxx. In view thereof, it may be
terminated only for limited grounds as prescribed by law "The state is interested in the
permanency of the marriage relation. The preservation of that relation is deemed essential
to public welfare. The fundamental policy of the state, which regards marriage as
indissoluble and sacred, being the foundation upon which society rests, is to be cautious and
strict in granting annulment[s] of marriage."
Article 45(3) of the Family Code provides that a marriage may be annulled for any of
the following causes, existing at the time of the marriage: xxx (3) That the consent of either
party was obtained by fraud, unless such party afterwards, with full knowledge of the facts
constituting the fraud, freely cohabited with the other as husband and wife."
As opined by CA Justice Eduardo P. Caguioa, a member of the Civil Code Revision and
Family Law Committee, "[a]lthough fraud to vitiate consent has been defined by the Civil
Code as insidious words and machinations which lead a party to enter into a contract without
which he would not have entered into, this general definition of fraud in the Civil Code is not
absolutely applicable to marriage since the subsequent article of the Code (referring to
Article 86 of the Civil Code) limits the kinds of fraud which will serve as grounds for
annulment. Consequently, in order to annul a marriage on the ground of fraud, the fraud
must consist of one of those 58 enumerated in Article 86." Article 86 of the Civil Code is the
precursor of Article 46 of the Family Code.
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To constitute fraud that warrants annulment under Article 46(2): 1) the wife must
have been pregnant by a man other than her husband at the time of the marriage and 2) the
wife must have fraudulently concealed the same.
In this regard, the concealed pregnancy, which vitiates consent, must have existed at
the time of the marriage. Justice Eduardo Caguioa explains that "[t]he essence of the fraud in
this case is the non-disclosure of the present pregnancy of the wife x x x the pregnancy must
exist at the time of the celebration of the marriage, thus, if the wife had previous relations
with other men and as a consequence of which she became pregnant or bore a child
previously, the concealment thereof will not be a ground for annulling the marriage if at the
time the marriage was celebrated the wife was not pregnant.
It is the concealment of the fact of pregnancy by another man at the time of marriage
that constitutes fraud as a ground for annulment. "No other misrepresentation or deceit as
to character, health, rank, fortune or chastity shall constitute such fraud as will give grounds
for action for the annulment of marriage.
In the instant case, the facts readily reveal that Mejan Dia was already almost three
years old when Melvin and Janufi got married on August 4, 2004. As Janufi was not pregnant
at the time of the marriage, any purported fraud she may have committed to induce Melvin
to marry her cannot be considered the fraudulent concealment contemplated under Article
46(2). Indeed, the Court has held that not all fraudulent acts can be invoked to annul a
marriage. The circumstances of fraud under Article 45(3) are exclusive and restrictive.
As Janufi's purported fraud does not squarely fall under Article 46(2), the same
cannot serve as a ground for annulment. Even assuming that Article 46(2) was applicable,
the Court finds that Melvin failed to discharge his burden of proving that Janufi acted with
bad faith and fraudulent intent with clear and convincing evidence. The OSG correctly holds
that while Janufi may have misrepresented the state of her chastity prior to her and Melvin's
reconciliation, it appears that she honestly believed in good faith that Mejan Dia was the child
of Melvin. As there was no bad faith on her part, she cannot be guilty of concealment.
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HEIRS OF HENRY LEUNG, REPRESENTED BY HIS WIDOW, MARILYN LEUNG v. HEIRS OF

MIGUEL MADIO, REPRESENTED BY EDDIE MADIO
G.R. No. 224991, June 23, 2021 (Caguioa, J.)
DOCTRINE
According to Section 24, CA 141, “the Director of Lands shall announce the sale thereof
by publishing the proper notice once a week for six consecutive weeks in the Official Gazette,
and in two newspapers one published in Manila and the other published in the municipality or
in the province where the lands are located, or in a neighboring province, and the same notice
shall be posted on the bulletin board of the Bureau of Lands in Manila, and in the most
conspicuous place in the provincial building and the municipal building of the province and
municipality, respectively, where the land is located”.
FACTS
The instant controversy traces its roots back to an Order of Award issued by the
Director of Lands in favor of petitioner Leung over the subject property located at Baguio
City. The Award was issued in favor of Leung who was the winning bidder in an auction sale
pursuant to Commonwealth Act No. (C.A.) 141, otherwise known as the "Public Land Act," as
amended.
Nearly four years later, on July 29, 1964, Madio, Quiambao, Perposi and Capiao
(collectively, protestants) sought the cancellation of the Award before the Bureau of Lands,
on the following grounds:
1. they are the claimants of the subject property, having been in actual, continuous, open
and adverse possession of the same since 1947, and that they have already built their
houses thereon;
2. Leung failed to comply with the specific requirements under the award, i.e., non-
introduction of any improvement on the subject property since the award of the same
to him;
3. they were not notified that the subject property was publicly bid out and later
awarded to Leung; and
4. they were the ones entitled to acquire the property by virtue of Republic Act No. (R.A.)
730.
The Bureau of Lands investigated the merits of the protestants' claims and in the
course thereof, found that the subject property did have several improvements thereon that
were introduced by the protestants, including a one-storey house owned by Madio.
The Land Investigator later submitted a report which informed, among others, that
improvements on the subject property were found to have been introduced thereon by the
protestants. The DLO-Baguio then forwarded the case to the Regional Land Office of Dagupan
City (RLO-Dagupan) for decision. RLO-Dagupan Regional Director Bernardo C. Albano ruled
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that the protest and claim of the claimants-protestants be dropped and that they vacate the
premises within sixty (60) days from the date of their receipt of copy hereof; and that the
District Land Officer concerned conduct an investigation on the alleged non-compliance by
the applicant with the conditions of the award, and thereafter, submit report thereon.
In compliance with the order of RLO-Dagupan, Land Investigator Bartolo submitted a

report with the following findings: (i) the subject property was more suitable for residential
purposes and was not needed for future public improvements; (ii) Madio constructed a
house thereon sometime in 1947; and (iii) Leung has not made improvements thereon.
On remand and through its Decision, the Office of the President (OP) found the DENR
correctly ruled that the auction sale of the subject property violated Section 24 of C.A. 141
and was therefore void, for its failure to comply with the statutorily required notice. It found
that contrary to the requisite publication of the notice of sale in the Official Gazette for six
consecutive weeks, the notice of the said auction sale was only published twice. The OP
agreed with the DENR holding that respondent Madio was in actual occupation and
possession of the subject property prior to the posting of the notice of its auction sale. It
noted that the reports of the Land Investigator consistently observed that Madio constructed
a house on the subject property in 1947, or 10 years prior to the auction sale on May 31,
1957. It affirmed that Madio's qualification was sufficiently established by the fact that he is
the actual occupant of the subject property, he has constructed his house thereon, and he is
not the owner of any other property in Baguio City.
Petitioner Leung assailed the OP Decision and Resolution via a petition for review
under Rule 43. The CA affirmed the OP and held that respondent was, indeed, the party who
was able to prove compliance with the requirements of R.A. No. 730. Factual considerations
relating to lands of the public domain properly rest within the administrative competence of
the Director of Land and the DENR. Finally, findings of fact of administrative agencies and
quasi-judicial bodies, which have acquired expertise because of their jurisdiction, are
confined to specific matters and are accorded respect, if not finality, by the courts.
ISSUE
Whether the CA erred in affirming the OP Decision which, among others, (i) found the
auction sale over the subject property void; and (ii) deemed the July 13, 1967 Order of the
Regional Director of Lands not yet final and executory.
RULING
NO. The Supreme Court here finds that the central question posed by the Petition has
already been correctly and consistently ruled upon by the DENR, the OP and the CA. After a
careful study of the allegations and the records of this case, the Court is persuaded to respect
and uphold said uniform resolutions, as no sufficient ground is appreciable to disturb them.
Page 340 of 342

Case Digests
According to Section 24, CA 141, “the Director of Lands shall announce the sale
thereof by publishing the proper notice once a week for six consecutive weeks in the Official
Gazette, and in two newspapers one published in Manila and the other published in the
municipality or in the province where the lands are located, or in a neighboring province,
and the same notice shall be posted on the bulletin board of the Bureau of Lands in Manila,
and in the most conspicuous place in the provincial building and the municipal building of
the province and municipality, respectively, where the land is located”.
The Court finds that the notice of the public auction sale of the subject property in the
instant case is wanting. As carefully noted by the DENR 1992 Decision, there was no showing
that the notice of sale was posted in conspicuous places in the provincial building or in the
municipal building of the province or municipality where the subject property is located.
Furthermore, as observed by the OP Decision, contrary to the requisite publication of the
notice of sale in the Official Gazette for six consecutive weeks, the notice of the said auction
sale was only published twice. These irregularities in the publication of notice cannot, by any
stretch, be deemed compliant with the requirement of breadth and frequency of posting
under Section 24.
As a consequence, the failure to publish the notice of the auction sale as statutorily
required constitutes a jurisdictional defect which invalidates the auction sale of the subject
property, as well as the Award in favor of Leung.
Second, the Court also ruled that the Order of the Regional Director of Lands did not
become final and executory, on the ground of non-service to Madio. Sections 9 and 10, Rule
13 of the Rules of Court on service of judgments, orders, and decisions find particular
relevance, to wit:
SEC. 9. Service of Judgments, Final Orders or Resolutions. — Judgments, final

orders or resolutions shall be served either personally or by registered mail.
When a party summoned by publication has failed to appear in the action,
judgments, final orders or resolutions against him shall be served upon him
also by publication at the expense of the prevailing party.
SEC. 10. Completeness of Service. — Personal service is complete upon actual

delivery. Service by ordinary mail is complete upon the expiration of ten (10)
days after mailing, unless the court otherwise provides. Service by registered
mail is complete upon actual receipt by the addressee, or after five (5) days
from the date he received the first notice of the postmaster, whichever date is
earlier.
As consistently found by the DENR 1992 Decision and the OP Decision, the records
provide no proof that proper service of the July 13, 1967 Order was ever made to Madio.
Page 341 of 342

Case Digests
As a rule, judgments are sufficiently served when they are delivered personally, or
through registered mail to the counsel of record, or by leaving them in his office with his
clerk or with a person having charge thereof. After service, a judgment or order which is not
appealed nor made subject of a motion for reconsideration within the prescribed 15-day
period attains finality.
As applied to the instant case, without a valid service of the July 13, 1967 Order to
Madio, the same may not be considered to have become final and executory. More
specifically, the period to appeal or file a motion for reconsideration could not be deemed to
have commenced. Still consequently, the same was still reviewable, as it was in fact reviewed,
by the DENR Secretary.
Page 342 of 342

Ponencias of J. Caguioa in CIVIL LAW 2022

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What are the requirements for publishing notice of a public auction sale of land?

What are the requirements for publishing notice of a public auction sale of land?

What are the requirements for proper service of an order?

What are the requirements for proper service of an order?

Case Digests

Ponencias of J. Caguioa in Civil Law

UNIVERSITY OF SANTO TOMAS

REPUBLIC v. CAPITAL RESOURCES CORPORATION

As to the provision of the 1973 Constitution proscribing corporations from

Moreover, considering the non-inclusion of the contested issues in the Pre-Trial

As to the provision of the 1973 Constitution proscribing corporations from

HEIRS OF TOMAKIN v. HERIS OF NAVARES

2. Whether the CA failed to appreciate the indefeasibility of the Torrens title;

3. Whether the CA failed to appreciate that respondents Navares in not previously

The petition is denied.

2. NO. Contrary to petitioners Tomakin's postulation, respondents Navares availed

4. NO. Respondents Navares, having been in possession of and exercising acts of

REPUBLIC OF THE PHILIPPINES vs. POTENCIANO A. LARRAZABAL, SR.,

Respondent Potenciano's commercial property is Lot No. 844 located at Poblacion,

AMA LAND, INC., vs. WACK WACK RESIDENTS' ASSOCIATION, INC.

Indeed, WWRAI was unable to convincingly demonstrate a clear and unmistakable

In turn, as regards the question of whether AMALI is entitled to a temporary

G. HOLDINGS, INC vs. CEPALCO

They can likewise be distinguished as follows: (1) as to defect: In rescissible contracts,

PRIVATIZATION AND MANAGEMENT OFFICE vs. EDGARDO V. QUESADA, et. al.

REPUBLIC OF THE PHILIPPINES, vs. THE HEIRS OF MEYNARDO CABRERA

The classification and reclassification of public lands into alienable or disposable,

A land registration proceeding is the manner through which an applicant confirms

PADAYHAG vs. DIRECTOR OF LANDS

Anent the publication requirement in reconstitution proceedings under Section 13, RA

1. YES. A verification of the documents adverted to by the Padayhags, which bear a

COCA-COLA BOTTLERS PHILS., INC., vs. ERNANI GUINGONA MEÑEZ

As to exemplary or corrective damages, these may be granted in quasi-delicts if the

ARACELI MAYUGA, vs. ANTONIO ATIENZA

2. Whether Araceli can claim preterition.

REPUBLIC OF THE PHILIPPINES vs. FILEMON SAROMO

1. NO. The subject land is unclassified public forest land.

3. YES. Reversion of the subject land is warranted under Section 91 of

4. NO. Even if Section 91 of CA 141 is ruled out, reversion is warranted based on

REPUBLIC OF THE PHILIPPINES vs. NORTHERN CEMENT CORPORATION

To support its Application, Northern Cement offered, inter alia,the following

Here, the Court is unconvinced by the pieces of evidence submitted by Northern

Second,even if it be assumed that Northern Cement had been in possession of the

The testimonies of the adjoining owners presented by Northern Cement do not

Cogon grass is hardly the "improvement" contemplated by law to prove satisfaction

The importance of exercising acts of dominion on a land sought to be registered

ASTRID A. VAN DE BRUG vs. PHILIPPINE NATIONAL BANK

D.M. RAGASA ENTERPRISES, INC. vs. BANCO DE ORO, INC.

A penal clause is an accessory obligation which the parties attach to a principal

The provision or clause that is applicable in case of non-compliance of the Term or

BENEDICTO V. YUJUICO, vs. FAR EAST BANK AND TRUST COMPANY

2. YES. Novation has been defined as the substitution or alteration of an obligation by a

Neither do We see any substantial incompatibility between the obligations of the

3. YES. Without a total or extinctive novation, the surety agreement subsists.

SPOUSES BELTRAN vs. SPOUSES CANGAYDA

agreement, as it is based on the Amicable Settlement. Thus, petitioners conclude that

Clause 6 of the Amicable Settlement merely states respondent Apolonio, Jr.'s

2. NO. Slight delay is not sufficient to justify rescission.

In addition, respondents do not dispute that petitioners offered to settle their

4. Assuming that petitioners' failure to pay constitutes breach, respondents' cause of