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I. EFFECT AND APPLICATION OF LAWS

1. What is the doctrine of processual presumption?

Under the doctrine of processual presumption, the party invoking the application of a foreign law has the burden
of proving the law. The foreign law is treated as a question of fact to be properly pleaded and proved as the judge
or labor arbiter cannot take judicial notice of a foreign law. However, where a foreign law is not pleaded or, even if
pleaded, is not proved, the presumption is that foreign law is the same as ours. (In the Matter of the Testate Estate of Aida
A. Bambao, Linda A. Kucskar v. Sekito Jr., G.R. No. 237449, December 2, 2020)

II. HUMAN RELATIONS

2. NPC and BENECO entered into a Contract of Sale of Electricity and subsequently executed a Transition
Contract whereby NPC will supply electric power and energy to BENECO at multiple points of delivery.
NPC granted BENECO a 3% every month as long as BENECO's account was fully paid and updated.
However, BENECO’s employee studied BENECO's operations and discovered its low system losses. It
was found that NPC had been billing BENECO at half the correct amount of electricity delivered to it. NPC
informed BENECO of its underbilling from 2000 to 2004 and requested BENECO to pay the amount. NPC
argues that BENECO’s non-payment would constitute unjust enrichment. Is the NPC correct?
No. Unjust enrichment exists when a person unfairly retains a benefit, money, or property against the fundamental
principles of justice, equity, and good conscience. To be applicable, (a) a person is benefited without a valid basis
or justification, and (b) such benefit is derived at another's expense or damage. Thus, for an action to prosper, he
essential elements must be present: (1) that the defendant has been enriched, (2) that the plaintiff has suffered a
loss, (3) that the enrichment of the defendant is without just or legal ground, and (4) that the plaintiff has no other
action based on contract, quasi-contract, crime or quasi-delict. There is no unjust enrichment when the person
who benefited has a valid claim to such benefit. In this case, NPC and BENECO executed a Contract of Sale of
Electricity and a Transition Contract to govern their rights and obligations in the supply of electric power and
energy. Therefore, any action that one may bring against the other shall be based on the provisions of their
contract. (National Power Corporation vs. Benguet Electric Cooperative, G.R. No. 218378, June 14, 2021)

III. PERSONS AND FAMILY RELATIONS

3. Carolyn and Joselito are lovers. During their relationship, Joselito had drinking and gambling habits. With
a promise to reform, Carolyn married Joselito and gave birth to their children. During the marriage,
Joselito physically and verbally abused Carolyn and their children, and he spent time gambling and
drinking instead of providing for the needs of the family. She filed for Petition for Declaration of Nullity of
Marriage and presented the testimony of Dr. Soriano who diagnosed Joselito with a defective superego
and Antisocial-Dependent Personality Disorder based on the narration of Carolyn and Mamerto, Joselito’s
father who disclosed his behavior as a child. Is the testimony of Dr. Soriano enough to prove that the
psychological incapacity of Joselito has juridical antecedence?
Yes. Article 36 explicitly requires the psychological incapacity to be existing at the time of the celebration of the
marriage, even if such incapacity becomes manifest only after its solemnization. Proof of juridically antecedent
psychological incapacity may consist of testimonies describing the environment where the supposedly
incapacitated spouse lived that may have led to a particular behavior. Here, Dr. Soriano concluded that Joselito's
gross neglect of his responsibilities, immaturity, disregard of his partner's needs and feelings, and abusive
behavior are symptoms of a disorder called Antisocial­-Dependent Personality Disorder which existed prior to his
marriage with Carolyn. The diagnosis was based on the statements of Carolyn and Mamerto. The clear and
understandable causation between Joselito's condition pre-existing before his marriage and its incapacitating
nature regarding the performance of the essential marital covenants clearly proved the juridical antecedence
requirement. (Mutya-Sumilhig v. Sumilhig, G.R. No. 230711, August 22, 2022)

4. Carolyn and Joselito are lovers. During their relationship, Joselito had drinking and gambling habits. With
a promise to reform, Carolyn married Joselito and gave birth to their children. During the marriage,
Joselito physically and verbally abused Carolyn and their children, and he spent time gambling and
drinking instead of providing for the needs of the family. She filed for Petition for Declaration of Nullity of
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Marriage and presented the testimony of Dr. Soriano who diagnosed Joselito with a defective superego
and Antisocial-Dependent Personality Disorder based on the narration of Carolyn and Mamerto, Joselito’s
father who disclosed his behavior as a child. Do the testimony and diagnosis of Dr. Soriano prove that the
psychological incapacity of Joselito is incurable?
Yes. The psychological incapacity contemplated in Article 36 of the Family Code is incurable, not in the medical,
but in the legal sense. This simply means that the incapacity is so enduring and persistent with respect to a
specific partner, and contemplates a situation where the couple's respective personality structures are so
incompatible and antagonistic that the only result of the union would be the inevitable and irreparable breakdown
of the marriage. There must be an undeniable pattern of such persisting failure to be a present, loving, faithful,
respectful, and supportive spouse. There are no medications that may be taken or intervention that may be done
as treatment for Joselito's psychological incapacity to enable him to fulfill his obligations as husband to Carolyn
because what is involved here is Joselito's personality structure. Dr. Soriano's assessment of Joselito's condition
was based on the information she gathered from Carolyn herself and Joselito's father. (Mutya-Sumilhig v. Sumilhig, G.R.
No. 230711, August 22, 2022)

5. Are the testimonies of the spouse, respondent’s father, and expert witness who diagnosed the
respondent without the latter’s personal appearance enough to satisfy the totality of evidence rule to
sustain a finding of the respondent’s psychological incapacity in a Petition for Declaration of Nullity of
Marriage?
Yes. The narratives in an Article 36 petition are often solely those of petitioner and their witnesses, and frequently,
all the trial court has by way of respondent's version is the clinical narration of the factual basis of the expert
report, which, in turn, typically arises from the examination of petitioner and other resource persons. There is
probative value in the testimonies of expert witnesses who diagnosed a respondent without the latter’s personal
appearance because there is no legal and jurisprudential requirement that the person to be declared
psychologically incapacitated be personally examined by a physician. (Mutya-Sumilhig v. Sumilhig, G.R. No. 230711, August
22, 2022)

6. Is personal examination by a physician required to declare a person psychologically incapacitated?

No. Diagnosis by an expert should not be dismissed as "unscientific" just because the expert has not interviewed
the person alleged to be psychologically incapacitated. Not even a personal interview of the respondent can elicit
accurate information because it is highly doubtful that a respondent would admit that he or she is psychologically
incapacitated. The experts may rely on their methods and procedures. To assess psychological incapacity to
perform essential marital obligations, they may focus on the different behaviors manifested by the respondent
prior to the marriage and during the marriage. The spouse of the person alleged to be psychologically
incapacitated may be interviewed by the psychologist since he or she is in the best position to describe his or her
spouse's inability to comply with marital obligations. The non-examination of one of the parties will not
automatically render as hearsay or invalidate the findings of the examining psychologist since marriage, by its
very definition, necessarily involves only two persons. The totality of the behavior of one spouse during
cohabitation and marriage is generally and genuinely witnessed mainly by the other. (Mutya-Sumilhig v. Sumilhig, G.R.
No. 230711, August 22, 2022)

7. In his Petition for Declaration of Nullity of Marriage, Antonio claimed that he and his wife Maribel are both
psychologically incapacitated to comply with their basic marital obligations. Antonio allegedly has affairs
with other women. He engages in womanizing and gambling, returning home in the early hours. In the
Psychiatric Evaluation, the psychiatrist described Antonio as the ambitious but disconcerted son of a
businessman, who had 11 children with four other women. He had a series of short-lived relationships
before he met Maribel. Would Antonio’s acts of infidelity be an indication of psychological incapacity and,
therefore, sufficient grounds to declare a marriage void?
Yes. To be considered as a form of psychological incapacity, infidelity must satisfy the requirements of (1) gravity
or severity, (2) antecedence, and (3) legal incurability or persistence during the marriage. Antonio's failure to show
sincere remorse for his blatant infidelity and the lack of desire to fix his ways to save their marriage clearly amount
to psychological incapacity, which is grave in nature. His chronic infidelity is not only comprised of multiple illicit
amorous relations as his affairs are not casual mistakes as these were shown to be deeply rooted in his
psychopathology which was in place even before his marriage. Further, Antonio's incapacity is incurable. It is
persistent throughout the marriage and is specifically directed at his wife Maribel. (Quiogue v. Quiogue, G.R. No. 203992,
August 22, 2022)
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8. In a Petition for Declaration of Nullity of Marriage, is the wife’s nagging, unpleasant actions and retaliatory
acts of sending vulgar fax messages and hateful letters, and evicting her womanizer husband from the
conjugal home, sufficient evidence of her psychological incapacity?
No. The Court sees that these are typical of a woman treated with contempt. Despite the wife’s belligerent attitude
and verbal offensives towards her husband, these do not amount to psychological incapacity because these only
existed during the marriage, particularly as a reaction to the husband’s philandering. (Quiogue v. Quiogue, G.R. No.
203992, August 22, 2022)

9. Jennifer and Ferdinand were married in 1995, but in 2014, Jennifer filed for the nullity of their marriage,
citing Ferdinand's psychological incapacity. Jennifer testified that Ferdinand was irresponsible,
immature, self-centered, and dependent on his parents. To support her claim, Jennifer presented the
testimony of Dr. Montefalcon, a clinical psychologist who conducted psychological tests on her, as well
as clinical interviews with Ferdinand's sister, Teresita, and the couple's longtime common friend,
Anarose. Ferdinand was invited for a psychological assessment, but to no avail. With the available
resources, Dr. Montefalcon diagnosed Ferdinand with Dependent Personality Disorder, describing it as
chronic, incurable, and rooted in dysfunctional childhood factors. Are the presented pieces of evidence
sufficient to prove Ferdinand’s psychological incapacity?
Yes. Proof of juridical antecedence may consist of testimonies of ordinary witnesses who have been present in
the couple's life before marriage, and are competent to describe the environment where the alleged incapacitated
spouse lived that may have led to the incapacity as manifested through their errant behavior. It is settled, the lack
of personal examination or interview of the psychologically incapacitated spouse does not invalidate the findings
of the expert. It is an accepted practice in psychiatry to base a person's psychiatric history on collateral
information, or information from sources aside from the person evaluated. In all, the totality of evidence presented,
comprising of Montefalcon's psychological report, and the testimonies of Jennifer and Anarose, sufficiently prove
Ferdinand's psychological incapacity as contemplated under Article 36 of the Family Code, warranting the
declaration of nullity of his marriage with Jennifer. Jennifer's account of her experiences with Ferdinand was
corroborated by the testimonies of the couple's long-time friend and the expert evaluation of Montefalcon who
also examined Teresita, clearly and convincingly prove that Ferdinand's incapacity to fulfill his marital and parental
obligations are deeply-rooted from his childhood experiences carried on to his married life.(Dedicatoria v. Dedicatoria,
G.R. No. 250618, July 20, 2022)

10. What are the varying guidelines for determining the existence of psychological incapacity as a ground to
declare a marriage void, as discussed in the recent case of Tan-Andal v. Andal?
First, the psychological incapacity must have juridical antecedence because Article 36 explicitly requires it to exist
at the time of the marriage celebration, even if such incapacity becomes manifest only after its solemnization.
Such a requirement does not require proof that the psychological incapacity stems from a medically-identified
mental or psychological incapacity. Psychological incapacity has always been a legal concept — it is neither a
mental incapacity nor a personality disorder in a strict medical sense. Proof of juridically antecedent psychological
incapacity may consist of testimonies describing the environment where the supposedly incapacitated spouse
lived that may have led to a particular behavior. Second, the psychological incapacity must also be grave to
distinguish it from "mild characterological peculiarities, mood changes, occasional emotional outbursts" generally
brought about by human nature and the natural dynamics of every personal relationship. Finally, psychological
incapacity must be incurable in the legal sense, meaning, the incapacity is so enduring and persistent with respect
to a specific partner, and contemplates a situation where the couple's respective personality structures are so
incompatible and antagonistic that the only result of the union would be the inevitable and irreparable breakdown
of the marriage. (Dedicatoria v. Dedicatoria, G.R. No. 250618, July 20, 2022)

11. Jorge and Hilaria were married on November 14, 1960. Thereafter, they acquired unregistered parcels of
land identified as Lot Nos. 1 and 2. Are the properties conjugal in nature?
Yes. The old Civil Code provides that the future spouses may, in the marriage settlements, agree upon absolute or
relative community of property, or upon complete separation of property, or any other regime. In the absence of
marriage settlements, or when the same are void, the relative community or conjugal partnership of gains shall
govern the property relations between husband and wife. In this case, Jorge and Hilaria were married on
November 14, 1960, or during the effectivity of the Civil Code, hence, their default property relations is the
conjugal partnership of gains absent any showing that they agreed on a particular regime. The properties acquired
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during the lifetime of the husband and wife are presumed to be conjugal. The presumption may be rebutted only
through clear and convincing evidence. (Belinda Alexander v. Spouses Jorge And Hilaria Escalona, G.R. No. 256141. July 19, 2022)

12. Jorge and Hilaria were married on November 14, 1960. Thereafter, they acquired unregistered parcels of
land identified as Lot Nos. 1 and 2. On June 16, 1998, Jorge waived his right over Lot No. 1 in favor of his
illegitimate son, Reygan. Is the alienation valid?
No. Any alienation or encumbrance of the conjugal property concluded after the effectivity of the Family Code
requires the other spouse's written consent or a court order allowing the transaction, otherwise, the disposition is
void. In this case, the contract is void notwithstanding the fact that Jorge and Hilaria were married during the
effectivity of the Civil Code. The Family Code has retroactive effect to existing conjugal partnerships without
prejudice to vested rights. The supposed conveyance of Lot No. 1 to Reygan only took place in 1998, more or
less ten (10) years after the effectivity of the Family Code. Hence, the provisions of the Family Code should
retroactively apply to this conveyance. (Belinda Alexander v. Spouses Jorge And Hilaria Escalona, G.R. No. 256141. July 19, 2022)

13. Antonio and Remedios formed Metro Isuzu Corporation and secured loans from Westmont Bank through
signed promissory notes (PNs). In 1995, Antonio executed a Real Estate Mortgage (REM) to secure a loan
from Westmont Bank, covering conjugal properties. In 1997, Antonio and the bank amended the REM to
increase the loan. This 1995 REM and 1997 Amendment to the REM was approved by the bank without
conducting a credit investigation on Remedios. She filed a complaint seeking to nullify the REM and
amendment. The trial court declared the REM and amendment void, and the PNs without legal effect
insofar as Remedios is concerned. Are deeds of mortgage valid with respect to the conjugal properties
that belong to Antonio?
No. The subject deeds of mortgage were executed in 1995 and 1997, or after the effectivity of the Family Code.
Any alienation or encumbrance of conjugal property made during the effectivity of the Family Code is governed by
Article 124 which provides that any disposition or encumbrance of a conjugal property by one spouse must be
consented to by the other; otherwise, it is void. Prior to the liquidation of the conjugal partnership, the interest of
each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal nor an
equitable estate, and does not ripen into a title until it appears that there are assets in the community as a result
of the liquidation and settlement. Thus, the right of the husband or wife to one-half of the conjugal assets does not
vest until the dissolution and liquidation of the conjugal partnership, or after dissolution of the marriage. Thus,
even on the assumption that Antonio mortgaged only his portion of the conjugal partnership, the mortgage is still
theoretically void because his right to one-half of the conjugal assets does not vest until the liquidation of the
conjugal partnership. (Strong Fort Warehousing Corporation vs. Remedios T. Banta, G.R. Nos. 222369 and 222502, November 16, 2020)

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

14. The DENR awarded lots to former military officers, including the respondents, in December 1996 and
November 1998. But the respondents were unable to introduce any improvements because the Philippine
Navy and the Golf Club were already occupying the lands. The golf course was developed only in 1976.
The respondents filed an accion reinvindicatoria against the Philippine Navy and the Golf Club before the
RTC. Can the Philippine Navy and the Golf Club invoke the exclusionary clause in Proclamation No. 461
(issued in 1965), and claim that the land developed as a golf course is not included in the alienable and
disposable lots in the AFP Officer's Village?
No. The exclusionary clause applies only to areas that are being used or earmarked for public or quasi-public
purposes. Here, the golf course did not yet exist at the time Proclamation No. 461 was issued in 1965. The golf
course was developed only in 1976. As such, the empty land, on which the golf course now stands, remains part
of the alienable and disposable public land of the AFP Officers' Village. The exclusionary clause cannot
comprehend the golf course which was non-existent at the time the proclamation was issued. There is no basis to
identify whether the empty land is being used for public or quasi-public purposes. Moreover, no subsequent law or
proclamation earmarked the land for the construction of the golf course. (Philippine Navy Golf Club, Inc. et. al, v. Abaya,
et.al., G.R. No. 235619, July 13, 2020)

15. Petitioners filed a complaint for quieting of title against Concepcion. The complaint is grounded upon
their claims of ownership over the disputed properties and insists that Concepcion's acts of instituting
tenants and receiving a share from the produce of the land cloud their title. Are the petitioners correct in
filing an action for quieting of title?
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No. Petitioners' cause of action is grounded upon their claims of ownership, which they argue to have been
clouded by Concepcion's exercise of proprietary rights — instituting tenants and collecting rentals and products.
What they perceive as clouds over their title were Concepcion's intrusive acts of dominion over the properties.
Physical intrusion is not a ground for quieting of title. With an allegation of a violation of a right, petitioners do not
seek a declaratory relief or mere removal of cloud over their title. Ultimately, they seek to recover full possession
of the properties as an element of their ownership, which was disturbed by Concepcion's physical intrusion. Thus,
petitioners' claims and arguments clearly speak of an accion reivindicatoria — a suit to recover full possession of
a parcel of land as an element of ownership. (Spouses Velarde v. Heir of Candari, G.R. No. 190057, October 17, 2022)

V. DIFFERENT MODES OF ACQUIRING OWNERSHIP

16. Spouses Patenia owned a 9,600-square meter lot situated in Tagum City and registered under Transfer
Certificate of Title No. T-168688. After Spouses Patenia's death, their children discovered that TCT No.
T-168688 has been cancelled by virtue of a Deed of Donation dated January 18, 2002 that their parents
supposedly executed in favor of the respondents. The children argued that the donation is void because
the notary public failed to require the parties to sign the notarial register. Is the Deed of Donation void for
failing to comply with the legal formalities required of such a document?
No. There is nothing in the law that obligates the parties to a notarized document to sign the notarial register. This
requirement was subsequently included only the 2004 Rules on Notarial Practice which provides that a notary
public should not notarize a document unless the signatory to the document is in the notary's presence personally
at the time of the notarization, and personally known to the notary public or otherwise identified through
competent evidence of identity. At the time of notarization, the signatory shall sign or affix with a thumb or mark
the notary public's notarial register. The present deed of donation, however, was executed and acknowledged
before the notary public on January 18, 2002, when there is no rule yet that requires the parties to sign the
notarial register. (Rowena Patenia-Kinatac-an v. Enriqueta Patenia-Decena, G.R. No. 238325, June 15, 2020)

17. On various dates beginning 2000, Nida purchased on credit from Libra Fishing crude oil and other
petroleum products. As payment for the July 26, 2000, November 12, 2000, and November 27, 2000
purchases, Nida issued three checks which were dishonored by the drawee banks. On May 15, 2013,
Regina, the sole proprietor of Libra Fishing, demanded payment for the outstanding balance but Nida
failed to heed the demand. On June 4, 2013, Regina filed a complaint for a sum of money against Nida.
Nida argued that Regina's action had prescribed. Regina counters that the prescriptive period should be
reckoned from the date of last partial payment of the outstanding debt by the debtor, or from the date of
extrajudicial demand. Does issuing checks transform an agreement into a written contract, thereby
subjecting it to a prescriptive period of 10 years?
No. The checks issued did not convert their agreement into a written contract. To be a written contract, all its
terms must be in writing, and, a contract partly in writing and partly oral is, in legal effect, an oral contract. Also,
the three checks are not the kind of "writing" or "written agreement" contemplated by law for the 10-year limitation
to apply. A "writing" for the payment of money sued in an action, within the meaning of the ten-year statute of
limitations, is one which contains either an express promise to pay or language from which a promise to pay
arises by fair implication. Nothing in the three dishonored checks indicate any promise to pay. Clearly, no written
contract was executed by the parties, instead they verbally agreed for Nida to sell the petroleum products of
Regina. (Regina Q. Alba vs. Nida Arollado, G.R. No. 237140, October 05, 2020)

18. Do all acts of acknowledgment of a debt interrupt the prescriptive period?

No. As provided for in Article 1155 of the Civil Code of the Philippines, the 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. Under this provision, not all acts of acknowledgment of a
debt interrupt prescription. To produce such effect, the acknowledgment must be written so that payment, if not
coupled with a communication signed by the payor, would not interrupt the running of the period of the
prescription. (Regina Q. Alba vs. Nida Arollado, G.R. No. 237140, October 05, 2020)
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VI. LAND TITLES AND DEEDS

19. Philippine Reclamation Authority (PRA) entered into an Amended Joint Venture Agreement (JVA) with
Central Bay Reclamation and Development Corporation (Central Bay), formerly known as AMARI, a
private corporation, to develop three reclaimed islands with a combined titled area of 157.84 hectares
known as the Freedom Islands. The agreement provided that Central Bay will acquire and own 77.34
hectares of the Freedom Islands and 290.156 hectares of still submerged areas of the Manila Bay. Is the
JVA valid?
No. The JVA is not valid since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of
77.34 hectares of the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987
Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.
Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares of still submerged areas
of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution which
prohibits the alienation of natural resources other than agricultural lands of the public domain. (Central Bay
Reclamation and Development Corporation vs. Commission on Audit, G.R. No. 252940, April 5, 2022)

VII. WILLS AND SUCCESSION

20. Aida, a naturalized American citizen, executed a Last Will and Testament in California where she
nominated her cousin, Cosme, as a special independent executor over her assets located in the
Philippines. She died in California and left behind an adopted minor child and a sister. Cosme filed a
petition for the allowance of the will in the Philippines, which was opposed by Aida’s sister. The Court
found no copy of the pertinent California law presented as evidence pursuant to the requirements of the
rules and does not comply with the Philippine laws. Is the will executed by Aida in California valid and
can be allowed in the Philippines?
No. Article 816 of the Civil Code states that the will of an alien who is abroad produces effect in the Philippines if
made with the formalities prescribed by the law of the place in which he resides, or according to the formalities
observed in his country, or in conformity with those which this Code prescribes. Here, Aida is a naturalized
American citizen and that she executed the will in California, USA where she was residing at the time of her
death. As such, the Philippine courts must examine the formalities of Aida's will in accordance with California law.
However, the Philippines does not take judicial notice of foreign laws, hence, they must not only be alleged; they
must be proven. No copy of the pertinent California law presented as evidence pursuant to the requirements of
the rules. (In the Matter of the Testate Estate of Aida A. Bambao, Linda A. Kucskar v. Sekito Jr., G.R. No. 237449, December 2, 2020)

VIII. OBLIGATIONS AND CONTRACTS

21. Is the failure to pay consideration different from lack of consideration?

Yes. Failure to pay consideration does not affect the validity of the contract because actual payment of the
obligation is not one of the three (3) essential requisites of a valid contract. In other words, non-payment of an
obligation does not render a contract void, in which case, the remedy of the injured party is simply demand
fulfillment, or rescission of the contract under Article 1191 of the Civil Code. (Felix Chingkoe And Rosita Chingkoe,
Petitioners, Vs. Faustino Chingkoe And Gloria Chingkoe, G.R. No. 244076, March 16, 2022)

22. Elena borrowed P1.4 Million from China Banking Corporation (China Bank) to increase the working capital
of her general merchandising business. On April 3, 1990, Elena and her common-law husband and
business partner Daniel executed a Real Estate Mortgage (REM) over a parcel of land. Later, the REM was
amended several times increasing the loan. The amendments contained a "blanket mortgage clause"
stating that the REM would secure the payment of obligations already incurred or which may be
subsequently incurred. China Bank filed a petition for foreclosure of the REM with the RTC alleging that
Elena and Daniel obtained P5 Million succeeding loan accommodations. Elena argued that the REM only
covered the loan secured on April 3, 1990 and its amendments. Are the amendments to the REM void for
being contracts of adhesion?
No. The amendments contained a blanket mortgage clause which subsumes all debts of past or future origins and
makes additional funds available to a borrower without the need to execute separate security documents, thus,
saving time, costs, and other resources. Jurisprudence recognizes the validity of this clause but its terms must still
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be judiciously examined. Here, the amendments are contracts of adhesion which are not entirely prohibited. The
one adhering is free to give his consent inasmuch as he is also free to reject it completely. In this case, it was
China Banking Corporation which drafted and prepared the standard forms on which Elena and Daniel adhered
into by merely affixing their signatures. Corollarily, any ambiguity in the provisions of these documents must be
interpreted against China Banking Corporation. (Elena R. Quiambao vs. China Banking Corporation, G.R. No. 238462, May 12,
2021)

23. Lydia offered to sell her entire lot in Boracay to Ulysses, but Ulysses only agreed to buy a portion of the
area. Ulysses drafted a Deed of Absolute Sale over the 800-square meter lot for a beach resort which the
parties signed. Upon payment of the purchase price, Ulysses discovered that the land described in the
deed of sale refers to the elevated and rocky portion and not the flat area which he bought and occupied.
Lydia convinced Ulysses to buy an additional 400-square meter portion of the lot under the condition that
the first contract be amended. Ulysses asked Lydia to prepare the amended deed of sale but she refused
because of the unpaid balance. Ulysses filed against Lydia an action for specific performance and
damages before the trial court, claiming that the first contract is distinct from the additional 400-square
meter lot. The trial court ordered the reformation of the Deed of Absolute Sale and ordered them to
execute another contract of sale in favor of Ulysses. Is the trial court correct in its order?
Yes. If the contract is reduced into writing, it is considered as containing all the terms agreed upon and is
presumed to set out the true covenant of the parties. However, equity orders the reformation of a written
instrument when the real intention of the contracting parties are not expressed by reason of mistake, fraud,
inequitable conduct or accident. In an action for reformation, the court does not attempt to make another contract
for the parties but the instrument is made or construed to express or conform to their real intention. Specifically,
an action for reformation of instrument may prosper only upon the concurrence of the following requisites: (1)
there must have been a meeting of the minds of the parties to the contract; (2) the instrument does not express
the true intention of the parties; and (3) the failure of the instrument to express the true intention of the parties is
due to mistake, fraud, inequitable conduct or accident. Here, all these requisites are present. There was a mistake
in identifying the exact location of the lot in the first sale which caused the failure of the instrument to disclose the
parties' real agreement. (Ulysses Rudi V. Banico v. Lydia Bernadette M. Stager, G.R. No. 232825, September 16, 2020)

IX. CONTRACT OF SALE

24. In a pacto de retro sale, would the failure of the vendee a retro to consolidate his title impair such title or
ownership?
No. The essence of a pacto de retro sale is that title and ownership of the property sold are immediately vested in
the vendee a retro, subject to the resolutory condition of repurchase by the vendor a retro within the stipulated
period. Failure thus of the vendor a retro to perform said resolutory condition vests upon the vendee by operation
of law absolute title and ownership over the property sold. As title is already vested in the vendee a retro, his
failure to consolidate his title under Article 1607 of the Civil Code does not impair such title or ownership for the
method prescribed is merely for the purpose of registering the consolidated title. (Spouses Velarde v. Heir of Candari,
G.R. No. 190057, October 17, 2022)

25. On September 10, 1992, Ricardo sold his 1/4 undivided share in a parcel of land registered under the
names of Hermelina, Ricardo, Lucina, and Victoria, to Spouses Nogra. Upon full payment, Ricardo and
Spouses Nogra executed a Deed of Absolute Sale dated July 13, 2001. Hermelina claimed that she had no
knowledge of this sale until they sought assistance from the barangay through conciliation proceedings.
During these proceedings, Hermelina offered to redeem the property, Spouses Nogra refused to provide
a copy of the DOAS and its details. On September 26, 2007, Ricardo gave them a copy of the DOAS.
Subsequently, Hermelina then filed a Complaint for Annulment of Sale, Redemption before the RTC on
October 16, 2007. Spouses Nogra argued that Hermelina’s exercise of redemption right occurred beyond
the 30-day period stipulated in Article 1623 of the New Civil Code. Is this contention correct?
No. The written notice of sale is mandatory. The Court has long established the rule that notwithstanding actual
knowledge of a co-owner, the latter is still entitled to a written notice from the selling co-owner in order to remove
all uncertainties about the sale, its terms and conditions, as well as its efficacy and status. Mere actual knowledge
of the sale is not sufficient to commence the running of the 30-day period absent all the necessary information
pertinent for the proper exercise of the right. The 30-day redemption period under Article 1623 should be
reckoned from Hermelina's receipt of the Deed of Absolute Sale on September 26, 2007. Hermelina, therefore,
 9

validly exercised and enforced her right by filing the complaint for redemption on October 16, 2007, which is within
the 30-day period under Article 1623. (Hermelina Rama And Baby Rama Lauron v. Spouses Medardo Nogra And Purita Nogra And
Spouses Ricardo Rama And Mariles Rama, G.R. No. 219556, September 14, 2021)

X. CREDIT TRANSACTIONS

26. What is a “blanket mortgage clause” or “dragnet clause”?

A "blanket mortgage clause" or "dragnet clause" subsumes all debts of past or future origins and makes additional
funds available to a borrower without the need to execute separate security documents, thus, saving time, costs,
and other resources. Jurisprudence recognizes the validity of this clause but its terms must still be judiciously
examined. Thus, a mortgage containing a dragnet clause will not be extended to cover future advances, unless
the document evidencing the subsequent advance refers to the mortgage as providing security therefor, or unless
there are clear and supportive evidence to the contrary. (Elena R. Quiambao vs. China Banking Corporation, G.R. No. 238462,
May 12, 2021)

27. Elena borrowed P1.4 Million from China Banking Corporation (China Bank) to increase the working capital
of her general merchandising business. She executed a Real Estate Mortgage (REM) over a parcel of land.
Later, the REM was amended several times increasing the loan. The amendments contained a "blanket
mortgage clause" stating that the REM would secure the payment of obligations already incurred or
which may be subsequently incurred. China Bank filed a petition for foreclosure of the REM with the RTC
alleging that Elena and Daniel obtained P5 Million succeeding loan accommodations covered by eight
promissory notes (PNs). Elena argued that the REM only covered the first loan but not her succeeding
loans for P5 Million. Does the "blanket mortgage clause" in the latest amendment to the REM cover the P5
Million succeeding loans under the eight PNs?
No. A mortgage containing a dragnet clause will not be extended to cover future advances, unless the document
evidencing the subsequent advance refers to the mortgage as providing security therefor, or unless there are
clear and supportive evidence to the contrary. Jurisprudence recognizes the validity of this clause but its terms
must still be judiciously examined. In a case, the foreclosure proceedings were declared void because there is
uncertainty on whether the promissory notes were secured or not. It was not shown that the PNs are within the
terms of the limited liability of the debtor. Here, the eight PNs likewise failed to allude to Elena and Daniel's liability
under the latest amendment to the REM. The PNs do not even make any reference to the REM as a security. The
latest amendment to the REM cannot be interpreted to cover the P5,000,000.00 succeeding loans under the eight
PNs for which the mortgage was foreclosed. (Elena R. Quiambao vs. China Banking Corporation, G.R. No. 238462, May 12, 2021)

28. During the settlement of the estate of Corona Jimenez, her children Danilo, Sonia, Vilma, Federico, and
Chona (Jimenez siblings) discovered a Deed of Donation allegedly executed by Corona in favor of Damian
(also Corona’s child) over the 532-square meter property. Damian mortgaged the property to Calubad and
Keh. Jimenez siblings learned about the mortgage, but only Sonia registered her Affidavit of Adverse
Claim, which was annotated at the back of the said TCT. Sonia was informed that the property was
scheduled for auction. This prompted Jimenez siblings to file a complaint for the annulment of the Deed
of Donation and TCT No. N-217728 and cancellation and annulment of the Deed of Real Estate Mortgage.
The RTC sustained the validity of the TCT issued in the name of Calubad and Keh as they were found to
be innocent mortgagees for value and good faith. Danilo argues that while Calubad and Keh may be
mortgagees in good faith, they are not purchasers in good faith as they were aware of Sonia's adverse
claim when they purchased the property during the public auction. Is his contention correct?
No. Under the doctrine of "the mortgagee in good faith," all persons dealing with property covered by a Torrens
Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title.
The doctrine applies when the following requisites concur, namely: (a) the mortgagor is not the rightful owner of,
or does not have valid title to, the property; (b) the mortgagor succeeded in obtaining a Torrens title over the
property; (c) the mortgagor succeeded in mortgaging the property to another person; (d) the mortgagee relied on
what appears on the title and there exists no facts and circumstances that would compel a reasonably cautious
man to inquire into the status of the property; and (e) the mortgage contract was registered. All these requisites
were satisfied in this case. Accordingly, Sonia's adverse claim, which was annotated after the registered mortgage
in favor of Calubad and Keh, cannot prevail over Calubad and Keh's rights as mortgagees in good faith and
purchasers in the foreclosure sale. Being mortgagees in good faith, they have a superior lien over that of Sonia,
and their right to foreclose is reserved. Their knowledge of the adverse claim is of no moment because their right
 10

as mortgagees in good faith extends up to the time of the foreclosure sale and in their capacity as purchasers.
(Danilo Santiago F. Jimenez v. Damian F. Jimenez, Jr., et.al., G.R. No. 228011, February 10, 2021)

29. Antonio and Remedios formed Metro Isuzu Corporation and secured loans from Westmont Bank through
signed promissory notes (PNs). In 1995, Antonio executed a Real Estate Mortgage (REM) to secure a loan
from Westmont Bank, covering conjugal properties. Remedios later filed a complaint alleging forgery of
her signatures on loan documents, seeking to nullify the REM and amendment.The trial court declared the
REM and amendment void, and the PNs without legal effect insofar as Remedios is concerned. Does the
nullification of the subject deeds of mortgage affect the validity of the promissory notes?
No. A mortgage is merely an accessory agreement and does not affect the principal contract of loan. The
mortgages, while void, can still be considered as instruments evidencing the indebtedness. Being merely
accessory contracts, the nullity of the subject deeds of real estate mortgage on account of the forged signature of
Remedios, does not result in the invalidation of the loan obligation of Antonio. (Strong Fort Warehousing Corporation vs.
Remedios T. Banta, G.R. Nos. 222369 and 222502, November 16, 2020)

30. The Spouses Villanueva borrowed P100,000.00 from The Commoner Lending Corporation (TCLC) payable
within one year As security, Spouses Villanueva executed a real estate mortgage over a parcel of land.
The spouses paid TCLC a total of P82,680.00 but were unable to settle the remaining balance. TCLC
applied with the Office of the Provincial Sheriff to foreclose the real estate mortgage. After notice and
publication, an auction sale was held and the mortgaged property was sold to TCLC as the sole bidder.
Spouses Villanueva protested that TCLC’s action has amounted to a pactum commissorium that is
prohibited under the law. Was the action lawful provided that there was no express stipulation providing
options and authority to TCLC in conducting extra judicial foreclosure?
No. In extrajudicial foreclosure of real estate mortgage, a special power to sell the property is required which must
be either inserted in or attached to the deed of mortgage. In this given case, there were no express stipulations in
the Real Estate Mortgage providing TCLC to act as the attorney-in-fact and to sell the property in case of failure to
fulfill the payment of obligation. Thus, TCLC cannot perform any extra judicial foreclosure of the property without
such authority. In extrajudicial foreclosure, the sale is made through the sheriff by the mortgagees acting as the
agents of mortgagors-owners. Hence, there must be a written authority from the mortgagor-owners in favor of the
mortgagees. Otherwise, the sale would be void. (Commoner Lending Corporation v. Spouses Voltaire And Ella Villanueva, G.R.
No. 235260, August 27, 2020)

XI. COMPROMISE AGREEMENT

31. The Court declared as a nullity the JVA executed by Central Bay, a private corporation, and the Philippine
Reclamation Authority (PRA). Central Bay seeks to recover from the PRA the costs incurred in
implementing the said JVA prior to the declaration of its nullity based on quantum meruit. The parties
submitted a joint motion for judgment based on a Compromise Agreement where PRA offered to pay the
incurred costs of P1,027,031,483.79 by transferring 102,703.15 square meters of reclaimed land to Central
Bay's qualified assignee. Is the Compromise Agreement valid?
No. Applying the maxim "nemo dat quod non habet," the qualified assignee can acquire ownership of the land
only if Central Bay owns the land. The qualified assignee in the Compromise Agreement can only acquire rights
which Central Bay can lawfully exercise. However, Central Bay is a private corporation that cannot own land in the
Philippines pursuant to the constitutional prohibition against private corporations from acquiring any kind of
alienable land of the public domain except through a lease.(Central Bay Reclamation and Development Corporation vs.
Commission on Audit, G.R. No. 252940, April 5, 2022)

32. A City Government in Visayas entered into a compromise agreement with Spouses AAA in the purchase
of the latter’s land so that the city government can construct a road over said land. The compromise
agreement was approved by the RTC, and the City Council ratified said agreement. Months later, the City
Council issued a Resolution withdrawing its ratification of said agreement as they found out the land is
too big for the city’s needs. The City Council informed Spouses AAA that the City Government will not
proceed anymore with said purchase. Can the City Government rescind the compromise agreement?
No. A compromise agreement is in the nature of both a contract and a judgment on the merits. As a contract, the
compromise agreement can only be avoided on grounds of illegality, lack of consent, fraud or duress. In this case,
the City Government and Spouses AAA freely and voluntarily entered into a compromise agreement. Moreover,
 11

the RTC approved the agreement and the city council ratified it. The parties knew exactly the rights and duties
they assumed. It is settled that a compromise agreement, once stamped with judicial imprimatur, becomes more
than a mere contract and acquires the force and effect of a judgment that is immediately final and executory.
Thus, the City Government cannot, later, relieve itself of liability simply because the city council changed its
position. (City Government of Tacloban v. Court of Appeals, G.R. No. 221554, February 3, 2021)

XII. QUASI-CONTRACTS

33. What is solutio indebiti and when may one be absolved from the liability to settle the disallowed
transaction under this principle?
Under the principle of solutio indebiti, 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. Under this principle, recipients may only be
absolved from the liability to settle the disallowed transaction: (1) upon a showing that the disallowed amounts
were genuinely given in consideration of services rendered; or (2) excused by the Court on the basis of undue
prejudice, social justice considerations, and other bona fide exceptions depending on the purpose, nature, and
amount of the disallowed transaction relative to the attending circumstances. (PSALM v. COA, G.R. No. 213425, April 27,
2021)

34. What are the essential elements that must be present for an accion in rem verso to prosper?
An accion in rem verso is considered merely an auxiliary action, available only when there is no other remedy on
contract, quasi-contract, crime, and quasi-delict. In order that accion in rem verso may prosper, the essential
elements must be present: (1) that the defendant has been enriched, (2) that the plaintiff has suffered a loss, (3)
that the enrichment of the defendant is without just or legal ground, and (4) that the plaintiff has no other action
based on contract, quasi-contract, crime or quasi-delict. (National Power Corporation vs. Benguet Electric Cooperative, G.R. No.
218378, June 14, 2021)

35. What is the nature of liability of approving or certifying officers in procurement disallowances?
The liability of approving or certifying officers in procurement disallowances is primarily civil in nature, grounded
upon the principles of solutio indebiti and unjust enrichment. The application of the principles of unjust enrichment
and solutio indebiti in disallowed benefits does not contravene the law on the general liability for unlawful
expenditures. In fact, these principles are consistently applied in government infrastructure or procurement cases
which recognize that a payee or contractor or approving and/or certifying officers cannot be made to shoulder the
cost of a correctly disallowed transaction when it will unjustly enrich the government and the public who accepted
the benefits of the project. (Armando G. Estrella And Lydia G. Chua vs. Commission on Audit, G.R. No. 252079, September 14, 2021)

36. Central Bay claims cost of money at the rate of 12% per annum. Said claim stemmed from the nullification
of Central Bay’s JVA with the government. It relies on the ruling of the Supreme Court that "when the
judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest
shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance or credit." Is Central Bay entitled to legal interest of 12% per annum?
No. This case involves a money claim against the government for reimbursement of costs and payment which
stemmed from the nullification of a JVA entered into by Central Bay and the government. Being a joint venture,
Central Bay undertook the financing and development of the reclamation project at no cost to the government. To
put it succinctly, the losses Central Bay may have entailed are part of the investment risks attached to the
business venture it entered into with the government, which it must solely bear. (Central Bay Reclamation and
Development Corporation vs. Commission on Audit, G.R. No. 252940, April 5, 2022)

37. In claims arising from the principle of quantum meruit, may the claimant also assert that he is entitled to
an award of legal interest?
No. Quantum meruit allows recovery of the reasonable value regardless of any agreement as to value. It entitles
the party to as much as he reasonably deserves as distinguished from quantum valebant or as much as what is
reasonably worth. To award legal interest, is contrary to the principle of quantum meruit, on which the petition is
based. (Central Bay Reclamation and Development Corporation vs. Commission on Audit, G.R. No. 252940, April 5, 2022)
 12

38. A government infrastructure project was undertaken by the Department of Public Works and
Highways-National Capital Region (DPWH-NCR). The project was awarded to four contractors, with each
contractor being awarded two phases of the project. However, irregularities were found in the
procurement process. Audit Observation Memorandum (AOM) No. 10-09 was issued, citing these
irregularities. Subsequently, a Notice of Disallowance (ND) was subsequently issued, disallowing
payments made to the contractors amounting to P36,084,006.06. May the contractors still claim
compensation for projects that were held to be invalidly procured?
Yes. The grant of compensation to contractors, who have entirely or substantially accomplished their obligation
under the contract, on the basis of quantum meruit, regardless of any invalidity or irregularity in its procurement.
To deny payment to the contractor would be to allow the government to unjustly enrich itself at the expense of
another. (Armando G. Estrella And Lydia G. Chua vs. Commission on Audit, G.R. No. 252079, September 14, 2021)

XIII. TORTS AND DAMAGES

39. Faustino and his wife, Gloria, were the registered owners of a parcel of land. Felix claimed that he had
been in possession of the subject property since 1989. After five years of occupying the subject property,
Felix purchased it from Faustino. Both parties then signed the Deed of Sale before a notary public.
Despite Felix’s repeated demands, Faustino refused to surrender the Owner's Duplicate of TCT,
preventing Felix from transferring the property to his name. Later, Felix discovered that Faustino had
mortgaged the subject property to Rizal Commercial Banking Corporation. Can Felix be awarded actual
damages due to the lost business opportunity he could have pursued had he been able to secure a
mortgage on the subject property?
No. Article 2199 of the Civil Code provides that "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.” Actual or
compensatory damages cannot be presumed but must be proven with reasonable degree of certainty. A court
cannot rely on speculations, conjectures, or guesswork as to the fact of damage but must depend upon
competent proof that they have indeed been suffered by the injured party. It must point out specific facts that
could gauge whatever compensatory or actual damages were borne. Hence, Felix's testimony regarding
unrealized profits alone, without receipts, documents, or other similar evidence, cannot be a basis for the award of
actual damages. (Felix Chingkoe And Rosita Chingkoe, Petitioners, Vs. Faustino Chingkoe And Gloria Chingkoe, G.R. No. 244076, March
16, 2022)

40. Almario, who was hired by Skanfil as a mess person on board M/V "DIMI" POS TOPAS, fell from a ladder
while working. Consequently, he suffered injuries. He was brought to a hospital and was diagnosed with
blunt head and back injuries and brain concussion. He was then repatriated and was referred to
company-designated physicians. The physicians examined Almario and he was subsequently referred to
other specialists to better address his concerns. The specialists treated, gave medications and assisted
Almario in rehabilitation. After weeks of treatment and rehabilitation, he was cleared by the specialists
and the company-designated physicians. Unconvinced, Almario consulted another physician who
declared him permanently unfit to resume sea duties. He filed a complaint against Skanfil. Is Almario
entitled to moral and exemplary damages, as well as attorney’s fees?
The award of moral and exemplary damages shall be deleted, but attorney’s fees must be retained. Moral
damages are awarded as compensation for actual injury suffered and not as a penalty. The award is proper when
the employer's action was attended by bad faith or fraud, oppressive to labor, or done in a manner contrary to
morals, good customs, or public policy. Exemplary damages, on the other hand, are imposed not to enrich one
party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially
deleterious actions, and may only be awarded in addition to the moral, temperate, liquidated or compensatory
damages. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner. Here, Skanfil never evaded its liability of
providing medical attention. Almario was referred to physicians to address his medical condition. What is clear is a
difference of opinion on the status of Almario's medical condition. In the absence of substantial evidence showing
malice or bad faith in refusing the seafarer's claim for disability benefits, moral and exemplary damages should
not be awarded. However, the award of attorney's fees is proper. Article 2208 (8) of the Civil Code provides that
attorney's fees may be recovered "in actions for indemnity under workmen's compensation and employer's liability
laws." (Skanfil Maritime Services, Inc., et.al., v. Centeno, G.R. No. 227655, April 27, 2022)