Civil Velasco Cases PDF

Deans
Circle 2016
UNIVERSITY OF SANTO TOMAS
Digested by: DC 2016 Members
Editors:
Tricia Lacuesta
Lorenzo Gayya
Cristopher Reyes
Macky Siazon
Janine Arenas
Ninna Bonsol
Lloyd Javier
CIVIL LAW
Supreme Court decisions penned by Associate Justice
Presbitero J. Velasco, Jr.
Civil Law (Cases Penned by J. Velasco) Deans Circle
2016
Table of Contents
Effect and Application of Laws ................................................................................................. 3
Publication of Laws.................................................................................................................. 4
Waiver of Rights ...................................................................................................................... 5
Human Relations ..................................................................................................................... 6
Persons and Family Relations ..................................................................................................... 7
Persons ................................................................................................................................... 7
Marriage ................................................................................................................................. 8
Dissolution of Marriage ..................................................................................................... 10
Property Relations of the Spouses ..................................................................................... 11
The Family ......................................................................................................................... 14
Paternity and Filiation ....................................................................................................... 14
Property ................................................................................................................................... 15
Accession .............................................................................................................................. 15
Donation ............................................................................................................................... 16
Prescription and Laches ............................................................................................................ 18
Laches ................................................................................................................................... 18
Obligations and Contracts ........................................................................................................ 20
Obligations ............................................................................................................................ 20
Definition .............................................................................................................................. 20
Nature and Effects of Obligations .......................................................................................... 21
Kinds of Civil Obligations ....................................................................................................... 22
Extinguishment of Obligations ............................................................................................... 23
Payment or Performance....................................................................................................... 23
Consignation ......................................................................................................................... 26
Contracts ............................................................................................................................... 27
Inadequacy of Consideration ................................................................................................. 29
Kinds of Contracts ................................................................................................................. 30
Estoppel ................................................................................................................................ 33
Sales ......................................................................................................................................... 34
Double Sale ........................................................................................................................... 34
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Equitable Mortgage ............................................................................................................... 36

Partnership, Agency and Trusts ................................................................................................ 37
Powers .................................................................................................................................. 37
Express vs. Implied Agency .................................................................................................... 38
Compromise ............................................................................................................................. 39
Credit Transactions ................................................................................................................... 41
Loan ...................................................................................................................................... 41
Real Mortgage ....................................................................................................................... 43
Land Titles and Deeds ............................................................................................................... 44
Torrens System...................................................................................................................... 44
Classification of Lands ........................................................................................................... 45
Determination of Valuation of Lands ..................................................................................... 46
Original Registration .............................................................................................................. 48
Subsequent Registration........................................................................................................ 50
Reconstitution of Title ........................................................................................................... 52
Reconveyance ....................................................................................................................... 54
Confirmation of Imperfect Title ............................................................................................. 56
Homestead Patents ............................................................................................................... 57
Notice of Lis Pendens ............................................................................................................ 60
Redemption .......................................................................................................................... 61
Acquisitive Prescription ......................................................................................................... 62
Torts and Damages ................................................................................................................... 64
Exemplary or Corrective Damages ......................................................................................... 64
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CIVIL LAW
EFFECT AND APPLICATION OF LAWS (CIVIL CODE)
EDUARDO M. COJUANGCO, JR. v. REPUBLIC OF THE PHILIPPINES

G.R. No. 180705, November 27, 2012, Velasco, Jr., J.
It is well-settled that laws must be published to be valid. In fact, publication is an indispensable

condition for the effectivity of a law.
Facts:
R.A. 6260 was enacted creating the Coconut Investment Company (CIC) to administer the
Coconut Investment Fund (CIF), which, under Section 8 thereof, was to be sourced from a P0.55 levy
on the sale of every 100 kg. of copra. Charged with the duty of collecting and administering the Fund
was Philippine Coconut Administration (PCA). Like COCOFED with which it had a legal linkage, the
PCA, by statutory provisions scattered in different coco levy decrees, had its share of the coco levy.
Per Cojuangcos own admission, PCA paid, out of the Coconut Consumers Stabilization Fund (CCSF),
the entire acquisition price for the 72.2% option shares. The list of First United Bank (FUB)
stockholders included Cojuangco with 14,440 shares and PCA with 129,955 shares. It would appear
later that, pursuant to the stipulation on maintaining Cojuangcos equity position in the bank, PCA
would cede to him 10% of its subscriptions to (a) the authorized but unissued shares of FUB and (b)
the increase in FUBs capital stock. In all, from the "mother" PCA shares, Cojuangco would receive a
total of 95,304 FUB (UCPB) shares broken down as follows: 14,440 shares + 10% (158,840 shares) +
10% (649,800 shares) = 95,304.
Issue:
Whether or not the agreement between PCA and Cojuangco can be accorded the status of a
law without publication.
Ruling:
NO. It bears to stress at this point that the PCA-Cojuangco Agreement referred to above in
Section 1 of P.D. 755 was not reproduced or attached as an annex to the same law. It is well-settled
that laws must be published to be valid. In fact, publication is an indispensable condition for the
effectivity of a law. Taada v. Tuvera (G.R. No. L-63915, 1986) said as much: Publication of the law is
indispensable in every case x x x. Laws must come out in the open in the clear light of the sun instead
of skulking in the shadows with their dark, deep secrets. Mysterious pronouncements and rumored
rules cannot be recognized as binding unless their existence and contents are confirmed by a valid
publication intended to make full disclosure and give proper notice to the people. The furtive law is
like a scabbarded saber that cannot feint, parry or cut unless the naked blade is drawn. The
publication must be of the full text of the law since the purpose of publication is to inform the public
of the contents of the law. Mere referencing the number of the presidential decree, its title or
whereabouts and its supposed date of effectivity would not satisfy the publication requirement.
In this case, while it incorporated the PCA-Cojuangco Agreement by reference, Section 1 of

P.D. 755 did not in any way reproduce the exact terms of the contract in the decree. Neither was a
copy thereof attached to the decree when published. The SC cannot, therefore, extend to the said
Agreement the status of a law. Consequently, the Court joined the Sandiganbayan in its holding that
the PCA-Cojuangco Agreement shall be treated as an ordinary transaction between agreeing minds to
be governed by contract law under the Civil Code.
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PUBLICATION OF LAWS
NATIONAL ELECTRIFICATION ADMINISTRATION v. VICTORIANO B. GONZAGA

G.R. No. 158761, December 4, 2007, Velasco, Jr., J.
Administrative rules and regulations must also be published if their purpose is to enforce or
implement existing law pursuant also to a valid delegation. Interpretative regulations and those merely
internal in nature, that is, regulating only the personnel of the administrative agency and not the public,
need not be published.
Facts:
Respondent Victoriano B. Gonzaga (Gonzaga) filed his Certificate of Candidacy for

membership in the Board of Directors of Zamboanga del Sur II Electric Cooperative, Inc., District II
(ZAMSURECO). Gonzaga was however disqualified on the ground that his spouse was an incumbent
member of the Sangguniang Bayan of Diplahan, Zamboanga del Sur. Under the Electric Cooperative
Election Code (ECEC), promulgated by petitioner National Electrification Administration (NEA), a
candidate whose spouse occupies an elective government position higher than Barangay Captain is
prohibited to run as director of an electric cooperative.
Thereafter, contending that the ECEC was never published, hence, null and void, Gonzaga
filed with the RTC a Petition for Prohibition and Damages against petitioner National Electrification
Administration (NEA). The RTC ruled in favor of Gonzaga and held that the failure of NEA to state
whether the ECEC was indeed published in a newspaper of general circulation as required by the
New Civil Code and the Administrative Code of 1987 rendered the ECEC null and void. On appeal, the
decision of the trial court was affirmed by the CA. Hence, this petition.
Issue:
Whether or not the ECEC is valid.
Ruling:
No. The CA correctly observed that while ZAMSURECO complied with the requirements of
filing the code with the University of the Philippines Law Center, it offered no proof of publication in
the Official Gazette nor in a newspaper of general circulation. Without compliance with the
requirement of publication, the rules and regulations contained in the ECEC cannot be enforced and
implemented.
Article 2 of the New Civil Code provides that laws shall take effect after fifteen (15) days
following the completion of their publication in the Official Gazette or in a newspaper of general
circulation in the Philippines, unless it is otherwise provided. Executive Order No. 292, otherwise
known as the Administrative Code of 1987, reinforced the requirement of publication and outlined the
procedure.
In the case at bar, the ECEC was issued by petitioner pursuant to its rule-making authority
provided in PD 269, as amended, particularly Sec. 24. The ECEC applies to all electric cooperatives in
the country. It is not a mere internal memorandum, interpretative regulation, or instruction to
subordinates. Thus, the ECEC should comply with the requirements of the Civil Code and the
Administrative Code of 1987.
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WAIVER OF RIGHTS
ESTATE OF THE LATE ENCARNACION VDA. DE PANLILIO, represented by GEORGE LIZARES v

GONZALO DIZON, RICARDO GUINTU, ROGELIO MUNOZ, ELISEO GUINTU, ROBERTO DIZON,
EDILBERTO CATU, HERMINIGILDO FLORES, CIPRIANO DIZON, JUANARIO MANIAGO, GORGONIO
CANLAS, ANTONIO LISING, CARLOS PINEDA, RENATO GOZUN, ALFREDO MERCADO,
BIENVENIDO MACHADA, and the REGIONAL DIRECTOR of the DEPARTMENT OF AGRARIAN
REFORM, REGION III
G.R. No. 148777, October 18, 2007, Velasco Jr. J.
Waiver or an intentional and voluntary surrender of a right can give rise to a valid title or
ownership of a property in favor of another under Article 6 of the Civil Code.
Facts:
Deceased Encarnacion Vda De Panilio (Panlilio) is the owner of various tracts of land located
in Pampanga. Several tenant-farmers, herein private respondents, were planting rice plant upon the
aforementioned tracts of land. On January 20, 1988, Panlilio executed an affidavit which states that
she has placed under the coverage of PD 27 the vast tracts of land without and exception and
therefore be later sold to the tenant-farmers tending the same. Thus pursuant to the January 20
affidavit, Emancipation Patents (EP) were issued to the tenant-farmers tending the aforementioned
tracts of land. On December 29, 1986 Panlilio died. Thereafter George Lizares (Lizares) herein
petitioner and administrator of the estate of Panlilio filed a complaint for cancellation of the EP
issued to the tenant-farmers on the ground that Panlilio executed a subsequent affidavit dated
February 3, 1977 effectively revoking the prior affidavit executed last January 20 of the same year.
The complaint was filed with the Provincial Agrarian Reform Adjudicator (PARAD)
The PARAD dismissed the complaint of Lizares. On appeal with the Department of Agrarian
Reform Adjudication Board (DARAB) the DARAB affirmed the decision of the PARAD. The CA also
affirmed the decision of the PARAD. It held that the February 3 affidavit was not an authentic
document. Now, Lizares comes to the Supreme Court assailing the decision of the CA. Hence this
petition.
Issue:
Whether the January 12, 1977 affidavit executed by Panlilio contained a valid waiver.
Ruling:
Yes. In the instant case, a large portion of Hacienda Masamat with an aggregate area of
115.41 hectares was planted with sugar cane. It is undisputed, as was duly shown in the January 12,
1977 Panlilio Affidavit, that only 50.22 hectares were planted with palay. Thus, approximately 65.19
hectares of the subject landholdings were planted with sugar cane aside from the portions used for
the residences of the tenants and planted with crops for their daily sustenance. Needless to say, with
the January 12, 1977 Panlilio Affidavit, she expressed her intent to include the 65.19 hectares to be
placed under the OLT pursuant to PD 27 in favor of her tenants which otherwise would have been
exempt. Indeed, waiver or an intentional and voluntary surrender of a right can give rise to a valid
title or ownership of a property in favor of another under Article 6 of the Civil Code. Thus, such
disposition through the OLT pursuant to PD 27 is indeed legal and proper and no irregularity can be
attributed to the DAR which merely relied on the January 12, 1977 Panlilio Affidavit.
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HUMAN RELATIONS
EUSEBIO GONZALES v. PHILIPPINE COMMERCIAL AND INTERNATIONAL BANK, EDNA OCAMPO,

and ROBERTO NOCEDA
G.R. No. 180257, February 23, 2011, Velasco, J.
Malice or bad faith is at the core of Art. 19. Malice or bad faith "implies a conscious and
intentional design to do a wrongful act for a dishonest purpose or moral obliquity. The failure to give
prior notice of the termination of credit line in violation of the agreement stipulation and the
subsequent dishonor of the check on the part of the bank is already prima facie evidence of bad faith.
Facts:
Petitioner Gonzales was a client of the respondent bank. He was granted a Credit-On-Hand
Loan Agreement (COHLA) with his accounts as collateral on the limit of the credit line. Gonzales and
his spouse obtained 3 loans from the bank which was covered by 3 promissory notes and a real
estate mortagage over a parcel of land executed by Gonzales and spouses Panlilio who likewise
obtained one of the loans together with Gonzales. Thereafter, the spouses Panlilio who received the
total amount of the loan, failed to pay the interests due from their PCIB account. When Gonzales
issued a check in favor of Unson, it was dishonored by the bank due to the termination by the PCIB of
the credit line under COHLA and likewise froze the foreign account of Gonzales.
Upon failure of the bank to pay the check to Unson, Gonzales was forced to pay the former in
cash. Gonzales likewise demanded the bank to unfreeze his account since it was not him who
benefitted from the loans but the spouses Panlilio. However, PCIB still refused to heed his demand
which compelled Gonzales to file a case for damages against the bank for unjust dishonor of the check
issued in favor of Unson.
The RTC ruled in favor of PCIB which decision was affirmed by the CA. The lower courts
found Gonzales solidarily liable with spouses Panlilio and that the dishonor of the check as well as
the freezing of the foreign account was justified. Hence, this petition.
Issues:
(1) Whether or not the bank was negligent in not giving prior notice to Gonzales in
terminating the COHLA as stipulated in the agreement.
(2) Whether or not the award of damages in favor of Gonzales is proper.
Ruling:
(1) YES. PCIB was grossly negligent in not giving prior notice to Gonzales about its course of
action to suspend, terminate, or revoke the credit line, thereby violating the clear stipulation in the
COHLA. It is undisputed that the bank unilaterally revoked, suspended, and terminated the COHLA
without giving Gonzales prior notice as required by the above stipulation in the COHLA. Thus
violating Art. 19 of the Civil Code.
In order for Art. 19 to be actionable, the following elements must be present: "(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." The Court found that such elements are present in the instant case.
The effectivity clause of the COHLA is crystal clear that termination of the COHLA should be done
only upon prior notice served on the CLIENT. This is the legal duty of PCIB to inform Gonzales of
the termination. However, as shown by the above testimonies, PCIB failed to give prior notice to
Gonzales.
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Malice or bad faith is at the core of Art. 19. Malice or bad faith "implies a conscious and
intentional design to do a wrongful act for a dishonest purpose or moral obliquity." In the instant
case, PCIB was able to send a letter advising Gonzales of the unpaid interest on the loans but failed to
mention anything about the termination of the COHLA. More significantly, no letter was ever sent to
him about the termination of the COHLA. The failure to give prior notice on the part of PCIB is
already prima facie evidence of bad faith. Therefore, it is abundantly clear that this case falls squarely
within the purview of the principle of abuse of rights as embodied in Art. 19.
(2) YES. Nominal damages are recoverable where a legal right is technically violated and
must be vindicated against an invasion that has produced no actual present loss of any kind. Its
award is thus not for the purpose of indemnification for a loss but for the recognition and vindication
of a right. In the present case, Gonzales had the right to be informed of the accrued interest and most
especially, for the suspension of his COHLA. For failure to do so, the bank is liable to pay nominal
damages.
Moreover, the failure to give prior notice when required constitutes a breach of contract and
is a clear violation of Art. 21 of the Code which entitles Gonzales to an award for moral damages.
Even in the absence of malice or bad faith, a depositor still has the right to recover reasonable moral
damages, if the depositor suffered mental anguish, serious anxiety, embarrassment, and humiliation.
Furthermore, the initial carelessness of the banks omission in not properly informing
Gonzales of the outstanding interest dues aggravated by its gross neglect in omitting to give prior
notice as stipulated under the COHLA and in not giving actual notice of the termination of the credit
line justifies the grant of exemplary damages by way of example or correction for the public good.
Finally, an award for attorneys fees is likewise called for from PCIBs negligence which compelled
Gonzales to litigate to protect his interest.
PERSONS AND FAMILY RELATIONS
PERSONS
DREAMWORK CONSTRUCTION, INC. v. CLEOFE S. JANIOLA

G.R. No. 184861, June 30, 2009, VELASCO, JR., J.
For prejudicial question to exist, the civil action must be instituted prior to the institution of the
criminal action.
Facts:
Dreamwork Construction filed a complaint affidavit against Cleofe Janiola for violation of BP
22. Subsequently, Janiola instituted a civil complaint against petitioner by filing a Complaint for the
rescission of an alleged construction agreement between the parties, as well as for damages. The
check, subject of the criminal case, was issued in consideration of the construction agreement.
Thereafter, Janiola filed a Motion to Suspend Proceedings on the ground of the existence of a
prejudicial question. Dreamworks assail that there is no prejudicial question since the element that
the criminal action must be subsequent to the civil action, was missing.
Issue:
Whether or not a prejudicial question exists.
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Ruling:
No. The 2000 Rules on Criminal Procedure, effective since December 1, 2000 provides that
the two essential elements of a prejudicial question are: (a) the previously instituted civil action
involves an issue similar or intimately related to the issue raised in the subsequent criminal action,
and (b) the resolution of such issue determines whether or not the criminal action may proceed.
Therefore, in order for a civil case to create a prejudicial question and, thus, suspend a criminal case,
it must first be established that the civil case was filed previous to the filing of the criminal case.
Assuming arguendo that the civil case was instituted prior to the criminal action, there is still, no
prejudicial question to speak of due to the absence of the second element, because the agreement
surrounding the issuance of dishonored checks is irrelevant to the prosecution for violation of BP 22.
The gravamen of the offense is the issuance of a bad check.
MARRIAGE (FAMILY CODE)
SYED AZHAR ABBAS v. GLORIA GOO ABBAS

G.R. No. 183896, January 30, 2013, Velasco, Jr., J.
To show that a wedding ceremony was conducted and a marriage contract was signed does not
operate to cure the absence of a valid marriage license. Article 4 of the Family Code is clear when it says,
"The absence of any of the essential or formal requisites shall render the marriage void ab initio, except
as stated in Article 35(2)."
Facts:
Syed filed a petition for the declaration of nullity of his marriage to Gloria with the RTC. He
alleged the absence of a marriage license, in Article 4 of the Family Code, as a ground for annulment.
Syed testified that Municipal Civil Registrar, Leodivinia, issued a certification to the effect that the
marriage license number appearing in the marriage contract he submitted, Marriage License No.
9969967, was the number of another marriage license issued to a certain Arlindo and Myra. RTC held
that there was no valid marriage license because it was issued in violation of Article 9 of the FC as the
marriage was not one of those exempt from the license requirement, and that such lack is an absence
of a formal requisite, thus the marriage is void ab initio. CA held that the certification of the Municipal
Civil Registrar failed to categorically state that a diligent search for the marriage license was
conducted, and thus held that said certification has no probative value and gave weight to the fact
that Syed had admitted to having signed the marriage contract and that they comported themselves
to be husband and wife.
Issue:
Whether or not the lack of a marriage license renders the marriage void ab initio.
Ruling:
YES. The Municipal Civil Registrar of Carmona, Cavite, where the marriage license of Gloria
and Syed was allegedly issued, issued a certification to the effect that no such marriage license for
Gloria and Syed was issued, and that the serial number of the marriage license pertained to another
couple, Arlindo and Myra. A certified machine copy of Marriage License No. 9969967 was presented
and indeed, the names of Gloria and Syed do not appear in the document. In Cario v. Cario (403
Phil. 861, 869, 2001), it was held that the certification of the Local Civil Registrar that their office had
no record of a marriage license was adequate to prove the non-issuance of said license. The
presumed validity of the marriage of the parties had been overcome, and that it became the burden
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of the party alleging a valid marriage to prove that the marriage was valid, and that the required
marriage license had been secured. Gloria has failed to discharge that burden, and the only
conclusion that can be reached is that no valid marriage license was issued.
All the evidence cited by the CA to show that a wedding ceremony was conducted and a
marriage contract was signed does not operate to cure the absence of a valid marriage license. Article
4 of the Family Code is clear when it says, "The absence of any of the essential or formal requisites
shall render the marriage void ab initio, except as stated in Article 35(2)." Article 35(3) of the Family
Code also provides that a marriage solemnized without a license is void from the beginning, except
those exempt from the license requirement under Articles 27 to 34, of the same Code. Again, this
marriage cannot be characterized as among the exemptions, and thus, having been solemnized
without a marriage license, is void ab initio. As the marriage license, a formal requisite, is clearly
absent, the marriage of Gloria and Syed is void ab initio.
ERIC U. YU v. HONORABLE JUDGE AGNES REYES-CARPIO, IN HER OFFICIAL CAPACITY AS

PRESIDING JUDGE, REGIONAL TRIAL COURT OF PASIG-BRANCH 261; AND CAROLINE T. YU
G.R. No. 189207, June 15, 2011, Velasco, Jr., J.
The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable
Marriages, clearly allow the reception of evidence on custody, support, and property relations after the
trial court renders a decision granting the petition, or upon entry of judgment granting the petition.
Facts:
A petition for declaration of nullity of marriage was filed by Eric Yu against Caroline Yu.
Caroline moved that the incident on the declaration of nullity of marriage be resolved ahead of the
incidents on custody, support, and property relations, and not simultaneously. Judge Reyes-Carpio
granted such motion stating that the main cause of action is the declaration of nullity of marriage and
the issues relating to property relations, custody and support are merely ancillary incidents thereto.
Issue:
Whether or not the reception of evidence on custody, support and property relations is
necessary for a complete and comprehensive adjudication of the parties respective claims and
defenses.
Ruling:
NO. The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages, clearly allow the reception of evidence on custody, support, and property
relations after the trial court renders a decision granting the petition, or upon entry of judgment
granting the petition. Judge Reyes-Carpio did not deny the reception of evidence on custody, support,
and property relations but merely deferred it, based on the existing rules issued by this Court, to a
time when a decision granting the petition is already at hand and before a final decree is issued. The
trial court shall proceed with the liquidation, partition and distribution, custody, support of common
children, and delivery of their presumptive legitimes upon entry of judgment granting the petition.
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DISSOLUTION OF MARRIAGE
MARIA REBECCA MAKAPUGAY BAYOT v. THE HONORABLE COURT OF APPEALS and VICENTE
MADRIGAL BAYOT
G.R. No. 155635, November 7, 2008, VELASCO, JR., J.
A divorce obtained abroad by an alien married to a Philippine national may be recognized in

the Philippines, provided the decree of divorce is valid according to the national law of the foreigner.
Facts:
Maria Rebecca Makapugay Bayot (Rebecca) and Vicente Madrigal Bayot (Vicente) were
married on April 20, 1979 in Mandaluyong City. On its face, the Marriage Certificate identified
Rebecca to be an American citizen born in Agaa, Guam, USA. Rebecca gave birth to Marie Josephine
Alexandra or Alix. From then on, Vicente and Rebecca's marital relationship seemed to have soured
as the latter initiated divorce proceedings in the CFI of Dominican Republic which ordered the
dissolution of the couple's marriage but giving them joint custody and guardianship over Alix.
Rebecca filed a petition before the Muntinlupa City RTC for declaration of absolute nullity of
marriage and also sought the dissolution of the conjugal partnership of gains with application for
support pendente lite for her and Alix. Vicente filed a Motion to Dismiss on the grounds of lack of
cause of action and that the petition is barred by the prior judgment of divorce. Rebecca interposed
an opposition, insisting her Filipino citizenship, therefore, there is no valid divorce to speak of.
The RTC denied Vicente's motion to dismiss and granted Rebecca's application for
support pendente lite. The CA dismissed the petition of Rebecca and set aside incidental orders the
RTC issued in relation to the case.
Issue:
1. Whether or not Rebecca was a Filipino citizen at the time the divorce judgment was
rendered in the Dominican Republic on February 22, 1996;
2. Whether or not the judgment of divorce is valid.
Ruling:
1. No. There can be no serious dispute that Rebecca, at the time she applied for and obtained
her divorce from Vicente, was an American citizen and remains to be one, absent proof of an effective
repudiation of such citizenship. The following are compelling circumstances indicative of her
American citizenship: (1) she was born in Agaa, Guam, USA; (2) the principle of jus soli is followed in
this American territory granting American citizenship to those who are born there; and (3) she was,
and may still be, a holder of an American passport.
And as aptly found by the CA, Rebecca had consistently professed, asserted, and represented
herself as an American citizen, particularly: (1) during her marriage as shown in the marriage
certificate; (2) in the birth certificate of Alix; and (3) when she secured the divorce from the
Dominican Republic. Mention may be made of the Affidavit of Acknowledgment in which she stated
being an American citizen. The Court can assume hypothetically that Rebecca is now a Filipino
citizen. But from the foregoing disquisition, it is indubitable that Rebecca did not have that status of,
or at least was not yet recognized as, a Filipino citizen when she secured the February 22, 1996
judgment of divorce from the Dominican Republic.
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2. Yes. The Court has taken stock of the holding in Garcia v. Recio that a foreign divorce can be
recognized here, provided the divorce decree is proven as a fact and as valid under the national law
of the alien spouse. Be this as it may, the fact that Rebecca was clearly an American citizen when she
secured the divorce and that divorce is recognized and allowed in any of the States of the Union, the
presentation of a copy of foreign divorce decree duly authenticated by the foreign court issuing said
decree is, as here, sufficient.
Given the validity and efficacy of divorce secured by Rebecca, the same shall be given a res
judicata effect in this jurisdiction. As an obvious result of the divorce decree obtained, the
marital vinculum between Rebecca and Vicente is considered severed; they are both freed from the
bond of matrimony. In plain language, Vicente and Rebecca are no longer husband and wife to each
other. Consequent to the dissolution of the marriage, Vicente could no longer be subject to a
husband's obligation under the Civil Code.
PROPERTY RELATIONS OF THE SPOUSES
METROPOLITAN BANK AND TRUST CO. v. NICHOLSON PASCUAL

G.R. No. 163744, 29 February 2008, Second Divison, (Velasco, Jr., J.)
Only proof of acquisition during the marriage is needed to raise the presumption that the
property is conjugal.
Facts:
During the existence of the marriage of Pascual and his wife Florencia, they purchased a lot
in Makati. The TCT was issued in the name of Florencio married to Nelson Pascual a.k.a. Nicholson
Pascual. Subsequently their marriage was declared null and void by the RTC. However, they were
unable to liquidate their conjugal partnership. After the termination, Florencia obtained a loan with
Metrobank, with the property above as one of the securities of the loan. When Florencia failed to pay
the obligation, Metrobank foreclosed on the said property. When Nicholson heard of the foreclosure
proceedings, he filed with the RTC to declare the nullity of the mortgage of the disputed property,
since the property, still a conjugal property, was mortgaged without his consent. The RTC declared
the mortgage to be null and void, since the encumbrance of the property was made without the
consent of Nicholson.
Issue:
Whether or not the CA erred in declaring subject property as conjugal by applying Article
116 of the Family Code.
Ruling:
Yes. Art. 116 of the Family Code could not be of governing application inasmuch as Nicholson
and Florencia contracted marriage before the effectivity of the Family Code. It is Art. 160 of the Civil
Code that would apply. While Metrobank is correct in saying that Art. 160 of the Civil Code, not Art.
116 of the Family Code, is the applicable legal provision since the property was acquired prior to the
enactment of the Family Code, it errs in its theory that, before conjugal ownership could be legally
presumed, there must be a showing that the property was acquired during marriage using conjugal
funds. Only proof of acquisition during the marriage is needed to raise the presumption that the
property is conjugal.
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METROPOLITAN BANK AND TRUST CO. v. NICHOLSON PASCUAL

G.R. No. 163744, 29 February 2008, Second Divison, (Velasco, Jr., J.)
While the declared nullity of marriage of severs the marital bond and dissolves the conjugal
partnership, the character of the properties acquired before such declaration continues to subsist as
conjugal properties until and after the liquidation and partition of the partnership.
Facts:
During the existence of the marriage of Pascual and his wife Florencia, they purchased a lot
in Makati. The TCT was issued in the name of Florencio married to Nelson Pascual a.k.a. Nicholson
Pascual. Subsequently their marriage was declared null and void by the RTC. However, they were
unable to liquidate their conjugal partnership. After the termination, Florencia obtained a loan with
Metrobank, with the property above as one of the securities of the loan. When Florencia failed to pay
the obligation, Metrobank foreclosed on the said property. When Nicholson heard of the foreclosure
proceedings, he filed with the RTC to declare the nullity of the mortgage of the disputed property,
since the property, still a conjugal property, was mortgaged without his consent. The RTC declared
the mortgage to be null and void, since the encumbrance of the property was made without the
consent of Nicholson.
Issue:
Whether or not the CA erred in not holding that the declaration of nullity of marriage
between the respondent Nicholson Pascual and Florencia Nevalga ipso facto dissolved the regime of
community property of the spouses.
Ruling:
No. While the declared nullity of marriage of Nicholson and Florencia severed their marital
bond and dissolved the conjugal partnership, the character of the properties acquired before such
declaration continues to subsist as conjugal properties until and after the liquidation and partition of
the partnership.
In the case at bar, Florencia constituted the mortgage on the disputed lot a little less than
two years after the dissolution of the conjugal partnership, but before the liquidation of the
partnership. What governed the property relations of the former spouses when the mortgage was
given is co-ownership. Under it, Florencia has the right to mortgage her one-half undivided interest
in the disputed property even without the consent of Nicholson. However, the rights of Metrobank, as
mortgagee, are limited only to the 1/2 undivided portion that Florencia owned. Accordingly, the
mortgage contract insofar as it covered the remaining 1/2 undivided portion of the lot is null and
void.
SPS. LITA DE LEON and FELIX RIO TARROSA v. ANITA B. DE LEON, DANILO B. DE LEON, and
VILMA B. DE LEON
G.R. No. 185063. July 23, 2009. Third Division. Velasco, Jr., J.
For the presumption to arise, it is not even necessary to prove that the property was acquired
with funds of the partnership. Only proof of acquisition during the marriage is needed to raise the
presumption that the property is conjugal.
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Facts:
Bonifacio O. De Leon, while still single, purchased from the Peoples Homesite and Housing
Corporation (PHHC) through a Conditional Contract to Sell on July 20, 1965 a parcel of land. Two
years later, Bonifacio married Anita de Leon. Full payment for the purchase price was paid during the
marriage of Bonifacio and Anita. However, the title of the land was registered in the name of
Bonifacio with a civil status as single. Later, Bonifacio, without the consent of Anita, conveyed the
property to Spouses Tarrosa.
Subsequently, Bonifacio died. Thereafter, Spouses Tarrosa sought the registration of the
Deed of Sale and issuance of a title of the subject property in their favor. This prompted the children
of Bonifacio and Anita to file a reconveyance suit with the RTC on the grounds that the sale was
fraudulent and lack of consent of Anita to the sale. The RTC ruled that the property is a conjugal
property and rendered judgment in favor of Anita and her children. It further nullified the sale
between Bonifacio and Spouses Tarrosa. On appeal, the CA affirmed the decision of the RTC. The CA
held that the Tarrosas failed to overthrow the legal presumption that the parcel of land in dispute
was conjugal. Hence, this petition.
Issue:
1. Whether or not the subject property is a conjugal.

2. Whether or not the sale is void due to lack of consent of Anita.
Ruling:
1.Yes. The subject property is the conjugal property of Bonifacio and Anita. Article 160 of the
1950 Civil Code, the governing provision in effect at the time Bonifacio and Anita contracted
marriage, provides that all property of the marriage is presumed to belong to the conjugal
partnership unless it is proved that it pertains exclusively to the husband or the wife. For the
presumption to arise it is not even necessary to prove that the property was acquired with funds of
the partnership. Only proof of acquisition during the marriage is needed to raise the presumption
that the property is conjugal. In fact, even when the manner in which the properties were acquired
does not appear, the presumption will still apply, and the properties will still be considered conjugal.
In the case at bar, ownership over what was once a PHHC lot and covered by the PHHC-
Bonifacio Conditional Contract to Sell was only transferred during the marriage of Bonifacio and
Anita. In a contract to sell ownership is retained by the seller and is not passed to the buyer until full
payment of the price. Evidently, title to the property in question only passed to Bonifacio after he
had fully paid the purchase price on June 22, 1970. This full payment, to stress, was made more than
two (2) years after his marriage to Anita on April 24, 1968. In net effect, the property was acquired
during the existence of the marriage; as such, ownership to the property is, by law, presumed to
belong to the conjugal partnership.
2.Yes. It cannot be over-emphasized that the 1950 Civil Code is very explicit on the
consequence of the husband alienating or encumbering any real property of the conjugal partnership
without the wifes consent. To a specific point, the sale of a conjugal piece of land by the husband, as
administrator, must, as a rule, be with the wifes consent. Else, the sale is not valid. So it is that in
several cases the Court ruled that the sale by the husband of property belonging to the conjugal
partnership without the consent of the wife is void ab initio, absent any showing that the latter is
incapacitated, under civil interdiction, or like causes. The nullity, as we have explained, proceeds
from the fact that sale is in contravention of the mandatory requirements of Art. 166 of the Code.
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Since Art. 166 of the Code requires the consent of the wife before the husband may alienate or
encumber any real property of the conjugal partnership, it follows that the acts or transactions
executed against this mandatory provision are void except when the law itself authorized their
validity. Accordingly, the Deed of Sale executed on January 12, 1974 between Bonifacio and the
Tarrosas covering the PHHC lot is void.
THE FAMILY
PATERNITY AND FILIATION
GRACE M. GRANDE v. PATRICIO T. ANTONIO

G.R. No. 206248, February 18, 2014, Velasco, Jr., J.
Art. 176 gives illegitimate children the right to decide if they want to use the surname of their
father or not. It is not the father or the mother who is granted by law the right to dictate the surname of
their illegitimate children.
Facts:
Petitioner and respondent lived together as husband and wife, although Antonio was at that
time already married to someone else. Two sons were born out of their relationship. However, The
children were not expressly recognized by respondent as his own in the Record of Births of the
children in the Civil Registry. Petitioner, later on, left for the United States with her two children.
Thus, respondent filed a Petition for Judicial Approval of Recognition with Prayer to take Parental
Authority, Parental Physical Custody, Correction/Change of Surname of Minors and for the Issuance
of Writ of Preliminary Injunction before the Regional Trial Court (RTC), appending a notarized Deed
of Voluntary Recognition of Paternity of the children.
The RTC rendered a Decision in favor of respondent. Petitioner then filed an appeal with the
CA. CA modified the Decision of the RTC ruling that notwithstanding the fathers recognition of his
children, the mother cannot be deprived of her sole parental custody over them absent the most
compelling of reasons. It also maintained that the legal consequence of the recognition made by
respondent Antonio that he is the father of the minors, taken in conjunction with the universally
protected "best-interest-of-the-child" clause, compels the use by the children of the surname
"ANTONIO." Not satisfied with the CAs Decision, petitioner filed a motion for reconsideration insofar
as it decreed the change of the minors surname to "Antonio." In it, she posits that Article 176 of the
Family Codeas amended by Republic Act No. (RA) 9255, couched as it is in permissive language
may not be invoked by a father to compel the use by his illegitimate children of his surname without
the consent of their mother.
Issue:
Whether or not a father has the right to compel the use of his surname by his illegitimate
children upon his recognition of their filiation.
Ruling:
No. Art. 176 gives illegitimate children the right to decide if they want to use the surname of
their father or not. It is not the father or the mother who is granted by law the right to dictate the
surname of their illegitimate children. On its face, Art. 176, as amended, is free from ambiguity. And
where there is no ambiguity, one must abide by its words. The use of the word "may" in the provision
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readily shows that an acknowledged illegitimate child is under no compulsion to use the surname of
his illegitimate father. The word "may" is permissive and operates to confer discretion upon the
illegitimate children. On the matter of childrens surnames, the use of the fathers surname does not
serve the best interest of the minor child. Indeed, the rule regarding the use of a childs surname is
second only to the rule requiring that the child be placed in the best possible situation considering
his circumstances.
PROPERTY
ACCESSION
BANK OF THE PHILIPPINE ISLANDS v. VICENTE VICTOR C. SANCHEZ et al.

G.R. No. 179518. November 19, 2014. THIRD DIVISION. Velasco, Jr., J.
Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built,
planted and sown without right to indemnity.
Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith
may demand the demolition of the work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of the land, and the sower the proper rent.
Facts:
Vicente Victor C. Sanchez, Kenneth Nereo Sanchez and Imelda C. Vda. De Sanchez are owners
of a registered land. Felisa Yap (Yap), the widow of Kenneth Nereo Sanchez, and Jesus V. Garcia
(Garcia), doing business under the name Trans American Sales and Exposition, Inc. (TSEI), agreed to
the sale of the aforementioned property subject to the conditioned that Garcia shall cause the
reconstitution of the original title. Pursuant to this agreement, Yap turned over to Garcia the original
owners copy of TCT 156254 and other related documents. Unknown to Yap and Vicente, Garcia took
possession of the property and advertised the construction and sale of "Trans American Townhouse
V" thereon. Later, Garcia failed to pay the balance of the purchase price as agreed upon.
Thereafter, Yap and the Sanchezes filed before the RTC in Quezon City a Complaint dated for
the rescission of contract, restitution and damages with prayer for TRO/preliminary injunction
against TSEI and Garcia. Meanwhile, Garcia managed to cause the cancellation of TCT 156254 and its
replacement with TCT 383697 in the name of TSEI and use such to entice buyers who to buy the
townhouse units being constructed by TSEI on the subject lot. Furthermore, Garcia was able to
convey parts of the property to several buyers who intervened in the instant case: the spouses Jose
and Visitacion Caminas (Caminas), Reynaldo V. Maniwang (Maniwang), Generoso C. Tulagan
(Tulagan), Varied Traders Concept, Inc. (VTCI), and Arturo Marquez (Marquez).
The RTC ruled that anent the rights of intervenors, the Sanchezes to have a better right over
the subject property considering that the transactions between Garcia/TSEI and the intervenors
suffered from several irregularities, which they, the intervenors, in bad faith, ignored.
Issue:
Whether or not the Sanchezes and Yap are entitled to the remedies provided in Article 449-
450 of the Civil Code.
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Ruling:
Yes. The Sanchezes are to elect their option under the Arts. 449-450 of the New Civil Code.
The bad faith on the part of TSEI, Garcia and the intervenors leads to the application of Articles 449-
450 of the New Civil Code. Consequently, the Sanchezes have the following options: (1) acquire the
property with the townhouses and other buildings and improvements that may be thereon without
indemnifying TSEI or the intervenors; (2) demand from TSEI or the intervenors to demolish what has
been built on the property at the expense of TSEI or the intervenors; or (3) ask the intervenors to pay
the price of the land. As such, the Sanchezes must choose from among these options within thirty
(30) days from finality of this Decision. Should the Sanchezes opt to ask from the intervenors the
value of the land, the case shall be remanded to the RTC for the sole purpose of determining the fair
market value of the lot at the time the same were taken from the Sanchezes in 1988.
If the Sanchezes decide to appropriate the townhouses, other structures and improvements
as their own pursuant to Article 449 of the Civil Code, then the intervenors-purchasers Caminas,
Maniwang, Tulagan, Marquez and VCTI shall be ordered to vacate said premises within a reasonable
time from notice of the finality of the decision by the Sanchezes. They have a right to recover their
investment in the townhouses from Garcia and TSEI. If the Sanchezes do not want to make use of the
townhouses and improvements on the subject lot, then the purchasers can be ordered to demolish
said townhouses or if they dont demolish the same within a reasonable time, then it can be
demolished at their expense. On the 3rd option, if the Sanchezes do not want to appropriate the
townhouses or have the same demolished, then they can ask that the townhouse purchasers pay to
them the fair market value of the respective areas allotted to their respective townhouses subject of
their deeds of sale.
DONATION
TIRSO MONTEROSO vs. COURT OF APPEALS, et al.

G.R. No. 105608, April 30, 2008, J. Velasco, Jr.
SOFIA PENDEJITO VDA. DE MONTEROSO, et al. vs. COURT OF APPEALS and TIRSO MONTEROSO
The circumstance that parties to a void contract choose to ignore its nullity can in no way
enhance the invalid character of such contract. It is axiomatic that void contracts cannot be the subject
of ratification, either express or implied.
Facts:
Don Fabian Monteroso, Sr. married twice and sired eight (8) children, four (4) from each
union. In his first marriage with Soledad Doldol, Soledad, Reygula, Benjamin and Tirso were born.
After Doldol died, his second marriage with Sofia Pendejito bore Florenda, Reynato, Alberto, and
Fabian, Jr. During the early part of his second marriage, Don Fabian filed before the CFI of Agusan an
intestate proceeding for the estate of his deceased first wife to obviate any dispute over the
inheritance. The project for partition was approved and the intestate estate of Doldol was partitioned
and distributed to her four (4) children in equal shares.
In the meantime, the children of Don Fabian from his first marriage married accordingly,
Soledad to Atty. Perfecto Cagampang, Sr., Reygula to Jose Bayan, Benjamin to Mauricia Nakila; and
Tirso to Melecia Tana. Benjamin died, leaving behind four (4) children and his wife. A year and a half
later, Don Fabian also passed away. This brings us to the objects of the squabble: the conjugal
patrimonies of Don Fabian from his two (2) successive marriages. The children of Benjamin filed
with the RTC a complaint for recovery of property with damages against their uncle, Tirso.
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As the heirs of Benjamin alleged in their complaint, Tirso was entrusted with of the parcel
of land part of the share from the estate of Doldol. However, their uncle refused to surrender and
deliver the same when demanded upon the reaching of their majority age. Tirso, in response, alleged
that the said portion was never entrusted to him. It was in the possession of his sister, Soledad, who
was not entitled to any share in the said parcel, having previously opted to exchange hers for another
parcel of land. On the other hand, filed a complaint for partition and damages with receivership
against his stepmother Pendejito and all his step-siblings, which involves 12 parcels of land.
In the latter civil case, Tirso alleged the following: 1) the aforementioned 12 parcels of land
belong to the conjugal partnerships of the first and second marriages contracted by Don Fabian; (2)
SP No. 309, which purportedly judicially settled the intestate estate of his mother, is null and void for
the reason that the project of partition failed to comprehend the entire estate of the decedent as
some parcels were excluded, thereby depriving Tirso of his 1/4 share or legitime; and (3) the parcels
acquired during the second marriage of Don Fabian are not paraphernal properties of Sofia Pendejito
Vda. de Monteroso. The said civil cases were consolidated and the RTC, after fifteen (15) years,
decided in Tirsos favor. However, the subsequent ruling of the RTC ordered Tirso and Soledad to
deliver the specific properties to the respective heirs of Benjamin. On appeal, the CA declared the
partition valid and dismissed the opposition of the Cagampang spouses and Reygulo Monteroso-
Bayan, who all claimed ownership over some of the parcels of land on the strength of the deeds of
conveyance executed in their favor. On the alleged donation to Reygula, the CA likewise agreed with
the RTCs ruling on the nullity thereof.
Issue:
Whether or not the deed of donation executed after the death of Don Fabian in favor of
Reygula is valid, even if Tirso and the heirs of Benjamin do not question its validity as they in fact
signed the same.
Ruling:
No. Just like the issue of the nullity of the three deeds of absolute sale, we agree with the
determination of the RTC and CA as to the invalidity of the donation to Reygula. We need not repeat
the reasons for such determination, except the most basic. We refer to the authority of the person
who executed the deed of donation. As it were, the widow of Benjamin, Nakila, signed the deed of
donation. She, however, cannot give consent to the donation as she has no disposable right thereto.
The legal maxim nemo dat quod non habet applies to this instance as Nakila only has usufructuary
right equal to the share of her children under Article 834 of the Spanish Civil Code of 1889. Besides,
Nakila signed the deed of donation in her name and not in the name of her children who are the heirs
in representation of their father, Benjamin. Lest it be overlooked, the then minor children were not
under the legal guardianship of Nakila, a situation which thus disqualifies her from signing on their
behalf.
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PRESCRIPTION AND LACHES
LACHES
DEPARTMENT OF EDUCATION, DIVISION OF ALBAY v. CELSO OATE

Laches is defined as the failure or neglect, for an unreasonable and unexplained length of time,
to do that whichby the exercise of due diligencecould or should have been done earlier. Verily, laches
serves to deprive a party guilty of it to any judicial remedies.
Facts:
Spouses Oate, owner of a lot, had 3 children: Antonio, Rafael, and Francisco. Celso Oate is
the son of Francisco. Bagumbayan Elementary School of Daraga was constructed on a portion of the
disputed lot. Celso filed a reconstitution which was granted by the RTC. Later, a Deed of Extrajudicial
Settlement of Estate and Cession was executed by Celso and his sisters who waived their successional
rights. Celso claimed ownership of said lot through the deed of extrajudicial settlement. He caused
the lot to be subdivided into 5 lots. Celsos counsel sent a letter to DepEd apprising it about the facts
and circumstances affecting the elementary school and proposed that it purchase a portion Lot No.
6859-A and requested for reasonable rentals from. Celso filed a complaint for Annulment of Donation
and/or Quieting of Title with Recovery of Possession of the lot. The RTC ruled in favor of Celso and
upon appeal, the CA declared the appeals of both petitioners abandoned and dismissed for failure to
pay the required docket fees within the reglementary period. It filed a MR and its appeal was
reinstated. The Municipality of Daraga, Albay totally lost its appeal due to inaction, and the CA issued
a Partial Entry of Judgment and further ruled that Celso's claim of ownership over the lot occupied by
the school is conclusive for being soundly predicated on its title.
Issue:
Whether or not laches can inure to the benefit of DepEd considering that the lot was devoted
to public education when the civil case was filed by Celso.
Ruling:
Yes. Laches is defined as the failure or neglect, for an unreasonable and unexplained length
of time, to do that whichby the exercise of due diligencecould or should have been done
earlier. Verily, laches serves to deprive a party guilty of it to any judicial remedies. Its elements are:
(1) conduct on the part of the defendant, or of one under whom the defendant claims, giving rise to
the situation which the complaint seeks a remedy; (2) delay in asserting the complainant's rights, the
complainant having had knowledge or notice of the defendant's conduct as having been afforded an
opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the
complainant would assert the right in which the defendant bases the suit; and (4) injury or prejudice
to the defendant in the event relief is accorded to the complainant, or the suit is not held barred.
Verily, the application of laches is addressed to the sound discretion of the court as its
application is controlled by equitable considerations. In the instant case, with the foregoing
considerations, we are constrained from giving approbation to the trial and appellate courts' ruling
that the application of the principle of laches would subvert the ends of justice. Indeed, it is unjust for
the State and the affected citizenry to suffer after respondent and his predecessors-in-interest had
slept on their rights for 52 years. Also, the inaction of respondent Oate and his predecessors-in-
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interest for over 50 years has reduced their right to regain possession of Lot 6849-A to a stale
demand.
ASSOCIATED LABOR UNIONS(ALU) and DIVINE WORD UNIVERSITY EMPLOYEES UNION-

ALU(DWUEU-ALU) v. CA, THE ROMAN CATHOLIC ARCHBISHOP OF PALO, LEYTE(RCAP) and
DIVINE WORD UNIVERSITY OF TACLOBAN(DWUT)
G.R. No. 156882, October 31, 2008, VELASCO, JR., J.
Laches means the failure or neglect, for an unreasonable and unexplained length of time, to do
that which by the exercise of due diligence could or should have been done earlier.
Facts:
RCAP is a corporation sole which sold to Societas Verbum Dei(SVD) the subject 13 parcels of
land. While the conveying document was not notarized, the SVD was able to secure the
corresponding TCTs over the subject lots, but the deed conditions, restrictions, and reversionary
right of the RCAP were not annotated. Due to labor unrest, DWUT, run by the SVD, and the Union
engaged in a protracted legal battle. RCAP filed a petition for annotation. RTC dismissed the petition.
RCAP filed a MR. RTC denied the MR on the ground of laches noting that it took the RCAP 37 years
after the execution of the deed of sale before taking judicial action to assert his rights. CA reversed
and held that the RCAP was not barred by laches from asserting his legal right to cause the
annotation of the pertinent paragraphs of the deed of sale on the TCTs covering the subject
properties. It ratiocinated that despite the lapse of 37 years, the annotation would not be inequitable
or prejudicial to any party since the SVD, under whose name the TCTs of the subject properties were
issued, did not interpose any objection to the annotation. It noted that the RTC Order did not specify
the party who would be prejudiced by the annotation.
Issue:
Whether or not the CA erred in not applying the doctrine of laches.
Ruling:
No. According to settled jurisprudence, "laches" means "the failure or neglect, for an
unreasonable and unexplained length of time, to do that whichby the exercise of due diligence
could or should have been done earlier." Verily, laches serves to deprive a party guilty of it of any
judicial remedies. Elements: (1) conduct on the part of the defendant, or of one under whom the
defendant claims, giving rise to the situation which the complaint seeks a remedy; (2) delay in
asserting the complainants rights, the complainant having had knowledge or notice of the
defendants conduct as having been afforded an opportunity to institute a suit; (3) lack of knowledge
or notice on the part of the defendant that the complainant would assert the right in which the
defendant bases the suit; and (4) injury or prejudice to the defendant in the event relief is accorded
to the complainant, or the suit is not held barred.
The 4th and most important element, that is, injury or prejudice to the defendant in the
event relief is accorded to the complainant or the suit is not held barred, is not present under the
premises. As the CA aptly observed, no prejudice can result from the annotation pleaded by the RCAP
since the SVD, the property purchaser, did not oppose the annotation as evidenced by a
manifestation the DWUT filed before the RTC. More so, no prejudice can befall the Union for no
judgment lien has attached or been imposed over the subject properties and, as earlier explained,
there is no showing that the subject properties are the only properties the DWUT has or that its other
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assets and properties are insufficient to meet its obligations. Thus, failing to show any actual interest
over the subject properties that need judicial protection, the Union will not suffer any damage with
the annotation.
OBLIGATIONS AND CONTRACTS
OBLIGATIONS
DEFINITION
SM LAND, INC. v. BASES CONVERSION AND DEVELOPMENT AUTHORITY

G.R. No. 203655, March 18, 2015, Velasco Jr., J.
A contract is a juridical convention manifested in legal form, by virtue of which one or more
persons bind themselves in favor of another or others, or reciprocally, to the fulfillment of a prestation
to give, to do, or not to do. Estoppels against the public are little favored. They should not be invoked
except [in rare] and unusual circumstances, and may not be invoked where they would operate to defeat
the effective operation of a policy adopted to protect the public.
Facts:
Pursuant to R.A. No. 7227, the BCDA opened for disposition and development its Bonifacio
South Property. SM Land, Inc. (SMLI) submitted to the BCDA an unsolicited proposal for the
development of the lot which was accepted by the BCDA. However, the BCDA clarified that its act
should not be construed to bind the agency to enter into a joint venture agreement with SMLI but
only constitutes an authorization to conduct detailed negotiations with SMLI and iron out the terms
and conditions of the agreement. Afterwards, a Certification was issued by the BCDA and signed by
both parties. Then, instead of proceeding with the Competitive Challenge, the BCDA corresponded
with SMLI stating that it will welcome any voluntary and unconditional proposal to improve the
original offer. In turn, SMLI increased the total secured payments with an upfront payment. Without
responding to SMLIs new proposal, the BCDA sent a memorandum to the OP categorically
recommending the termination of the Competitive Challenge. Alarmed by this development, SMLI
urged the BCDA to proceed with the Competitive Challenge as agreed upon. However, the BCDA
terminated the Competitive Challenge altogether.
For its part, SMLI alleged in its petition that the Certification issued by the BCDA and signed
by the parties constituted a contract and that under the said contract, BCDA cannot renege on its
obligation to conduct and complete the Competitive Challenge. The BCDA relies chiefly on the
reservation clause in the Terms of Reference (TOR), which mapped out the procedure to be followed
in the Competitive Challenge, which allegedly authorized the agency to unilaterally cancel the
Competitive Challenge. BCDA add that the terms and conditions agreed upon are disadvantageous to
the government, and that it cannot legally be barred by estoppel in correcting a mistake committed
by its agents. Hence, the petition.
Issue:
(1) Whether or not there exists a valid agreement between SMLI and BCBA.
(2) Whether or not estoppel can be invoked against BCDA.
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Ruling:
(1) YES. There is a perfected contract. When SMLI submitted the first Unsolicited Proposal
to BCDA, the submission constituted an offer to undertake the development of the subject property.
BCDA then entered into negotiations with SMLI until the BCDA finally accepted the terms of the final
unsolicited proposal. Their agreement was thereafter reduced into writing through the issuance of
the Certification of Successful Negotiations where the meeting of the parties minds was reflected.
Then, to manifest their assent to the terms thereof and their respective obligations, both parties
affixed their signatures thereon and had it notarized. The cause of the agreement in the case at hand
is their interest in the sale or acquisition and development of the property and their undertaking to
perform their respective obligations, among others, as reflected in the Certificate and TOR issued by
BCDA. When the BCDA Board issued the Certification, it not only accepted SMLIs Unsolicited
Proposal and declared SMLI eligible to enter into the proposed JV activity. It also agreed to subject
SMLIs Original Proposal to Competitive Challenge pursuant to the NEDA JV Guidelines, which
competitive challenge process shall be immediately implemented following the TOR Volumes 1 and
2. Moreover, said Certification provides that the BCDA shall, thus, commence the activities for the
solicitation for comparative proposals xxx on which date SMLI shall post the required Proposal
Security xxx.
(2) YES. This is in view of the fact that despite BCDAs repeated assurances that it would
respect SMLIs rights as an original proponent, and after putting the latter to considerable trouble
and expense, BCDA went back on its word to comply with its obligations under their agreement and
instead ultimately cancelled the same. BCDAs capriciousness becomes all the more evident in its
conflicting statements as regards whether or not SMLIs proposal would be advantageous to the
government. Despite the testament, the BCDA, over a year later, made a complete turnaround stating
that straight bidding will be best for the Government. As can be gleaned from the BCDAs
Memorandum to the President, respondents themselves recommended to the President that the
selection proceedings be terminated. Moreover, the alleged adverse economic impact on the
government, in finding for SMLI, does not constitute a valid cause for the reversal of the assailed
Decision. To clarify, the courts ruling did not award the project in petitioners favor but merely
ordered that SMLIs proposal be subjected to a competitive challenge. Consequently, any alleged
disadvantage the government would suffer is speculative at most as there is no final award for the
project yet.
NATURE AND EFFECTS OF OBLIGATIONS
GENERAL MILLING CORPORATION v. SPS. LIBRADO RAMOS and REMEDIOS RAMOS

G.R. No. 193723, July 20, 2011, Velasco, Jr., J.
There are three requisites necessary for a finding of default. First, the obligation is demandable
and liquidated; second, the debtor delays performance; and third, the creditor judicially or
extrajudicially requires the debtors performance.
Facts:
General Milling Corporation (GMC) entered into a Growers Contract with spouses Librado
and Remedios Ramos to supply broiler chickens for the spouses to raise. The contract was
accompanied by a Deed of Real Estate Mortgage over a piece of real property. The spouses further
agreed to put up a surety bond. Spouses Ramos eventually were unable to settle their account with
GMC. On March 31, 1997, GMC notified Spouses Ramos that GMC would institute foreclosure
proceedings. On May 7, 1997, GMC filed a Petition for Extrajudicial Foreclosure of Mortgage. The
property was subsequently sold. The Spouses Ramos filed a Complaint for Annulment and/or
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Declaration of Nullity of the Extrajudicial Foreclosure Sale with Damages. It was alleged that the Deed
of Real Estate Mortgage had no fixed term. The RTC ruled in favor of Spouses Ramos stating that the
action of GMC in moving for the foreclosure was premature, because the latters obligation under
their contract was not yet due. The CA found that GMCs action against Spouses Ramos was
premature, as they were not in default when the action was filed on May 7, 1997. GMC claims that its
March 31, 1997 letter is akin to a demand.
Issue:
Whether or not a sufficient demand was made by GMC.
Ruling:
No. According to the CA, GMC did not make a demand on Spouses Ramos but merely
requested them to go to GMCs office to discuss the settlement of their account. In spite of the lack of
demand made on the spouses, however, GMC proceeded with the foreclosure proceedings. We agree
with the appellate court that GMC should have first made a demand on the spouses before
proceeding to foreclose the real estate mortgage. In the case of Development Bank of the Philippines
v. Licuanan, the court stated that the issue of whether demand was made before the foreclosure was
effected is essential. If demand was made and duly received by the respondents and the latter still did
not pay, then they were already in default and foreclosure was proper. However, if demand was not
made, then the loans had not yet become due and demandable. This meant that respondents had not
defaulted in their payments and the foreclosure by petitioner was premature. Foreclosure is valid
only when the debtor is in default in the payment of his obligation.
KINDS OF CIVIL OBLIGATIONS
BANK OF THE PHILIPPINE ISLANDS v. VICENTE VICTOR C. SANCHEZ et al.

G.R. No. 179518. November 19, 2014. THIRD DIVISION. Velasco, Jr., J.
Article 1191 of the Civil Code states that rescission is available to a party in a reciprocal
obligation where one party fails to comply therewith.
Facts:
Vicente Victor C. Sanchez, Kenneth Nereo Sanchez and Imelda C. Vda. De Sanchez are owners
of a registered land. Felisa Yap (Yap), the widow of Kenneth Nereo Sanchez, and Jesus V. Garcia
(Garcia), doing business under the name Trans American Sales and Exposition, Inc. (TSEI), agreed to
the sale of the aforementioned property subject to the conditioned that Garcia shall cause the
reconstitution of the original title. Pursuant to this agreement, Yap turned over to Garcia the original
owners copy of TCT 156254 and other related documents. Unknown to Yap and Vicente, Garcia took
possession of the property and advertised the construction and sale of "Trans American Townhouse
V" thereon. Later, Garcia failed to pay the balance of the purchase price as agreed upon.
Thereafter, Yap and the Sanchezes filed before the RTC in Quezon City a Complaint dated for
the rescission of contract, restitution and damages with prayer for TRO/preliminary injunction
against TSEI and Garcia. Meanwhile, Garcia managed to cause the cancellation of TCT 156254 and its
replacement with TCT 383697 in the name of TSEI and use such to entice buyers who to buy the
townhouse units being constructed by TSEI on the subject lot. Furthermore, Garcia was able to
convey parts of the property to several buyers who intervened in the instant case: the spouses Jose
and Visitacion Caminas (Caminas), Reynaldo V. Maniwang (Maniwang), Generoso C. Tulagan
(Tulagan), Varied Traders Concept, Inc. (VTCI), and Arturo Marquez (Marquez).
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The RTC ruled that anent the rights of intervenors, the Sanchezes to have a better right over
the subject property considering that the transactions between Garcia/TSEI and the intervenors
suffered from several irregularities, which they, the intervenors, in bad faith, ignored.
Issue:
Whether or not rescission of the agreement is barred by the subsequent transfer of the
property.
Ruling:
NO. Rescission of the Agreement was not barred by the subsequent transfer. In the extant
case, the failure of TSEI to pay the consideration for the sale of the subject property entitled the
Sanchezes to rescind the Agreement. And in view of the finding that the intervenors acted in bad faith
in purchasing the property, the subsequent transfer in their favor did not and cannot bar rescission.
EXTINGUISHMENT OF OBLIGATIONS
PAYMENT OR PERFORMANCE
ALLIED BANKING CORPORATION vs. LIM SIO WAN, METROPOLITAN BANK AND TRUST CO., and
PRODUCERS BANK.
G.R. No. 133179, March 27, 2008, Velasco, Jr., J.
Payment made by the debtor to a wrong party does not extinguish the obligation as to the
creditor, if there is no fault or negligence which can be imputed to the latter.
Facts:
Respondent Lim Sio Wan deposited with petitioner Allied Banking Corporation a money
market placement of PhP 1,152,597.35 for a term of 31 days. Then, a person claiming to be Lim Sio
Wan called up an officer of Allied to pre-terminate the money market placement, to issue a managers
check representing the proceeds of the placement, and to give the check to one Deborah Dee Santos.
Allied issued a check, which was cross-checked "For Payees Account Only" and given to Santos. The
Allied check was deposited with Metrobank in the account of FCC as Producers Banks payment of its
obligation to FCC. Metrobank stamped a guaranty on the check. The check was sent to Allied through
the PCHC. Upon the presentment of the check, Allied funded the check even without checking the
authenticity of Lim Sio Wans purported indorsement. Lim Sio Wan deposited with Allied a second
money market placement. Upon the maturity date of the first money market placement, Lim Sio Wan
went to Allied to withdraw it. She was then informed of the events that transpired but she denied it
authorizing it. The bank manager then assured her that her money would be recovered. However,
when she realized that the promise would not happen, she sent a demand letter to Allied. Allied
refused to pay claiming that Lim Sio Wan authorized the pre-termination.
Issue:
Whether or not Allied and Metrobank is liable to Lim Sio Wan.
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Ruling:
Yes. The relationship between a bank (Allied) and a client (Lim Sio Wan) is one of debtor-
creditor. A money market placement is a simple loan or mutuum. Allied is negligent in issuing the
managers check and in transmitting it to Santos without even a written authorization. Allied did not
even ask for the certificate evidencing the money market placement or call up Lim Sio Wan at her
residence or office to confirm her instructions. Both actions could have prevented the whole
fraudulent transaction. As commented by Tolentino, payment made by the debtor to a wrong party
does not extinguish the obligation as to the creditor, if there is no fault or negligence which can be
imputed to the latter. Even when the debtor acted in utmost good faith and by mistake as to the
person of his creditor, or through error induced by the fraud of a third person, the payment to one
who is not in fact his creditor, or authorized to receive such payment, is void, except as provided in
Article 1241. Since no effective payment was made to Lim Sio Wan, the bank still has an obligation to
pay her at 6% interest. However, Metrobank, as the last indorser of the check, is also liable. When
Metrobank indorsed the check in compliance with the PCHC Rules and Regulations without verifying
the authenticity of Lim Sio Wans indorsement and when it accepted the check despite the fact that it
was cross-checked payable to payees account only, its negligent indorsement contributed to the
easier release of Lim Sio Wans money and perpetuation of the fraud. Given the relative participation
of Allied and Metrobank, both banks cannot be adjudged as equally liable. Hence, the 60:40 ratio of
the liabilities of Allied and Metrobank must be upheld.
HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO., LTD. vs. DYNAMIC PLANNERS AND
CONSTRUCTION CORP.
G.R. Nos. 169408 & 170144, April 30, 2008, Velasco, Jr., J.
An obligee is deemed to have waived strict compliance by an obligor with an obligation when
there is an actual knowledge and with intentional acceptance of an incomplete performance, and under
circumstances that would indicate an intention to consider it as complete.
Facts:
Hanjin was awarded a contract for the construction of Davao International Airport Project. It
entered into a Subcontract Agreement with Dynamic wherein Hanjin agreed to pay Dynamic a down
payment within 20 days from contract execution, however, it was paid in 10 installments and also
payments for progress billings came late. Dynamic found design deficiency and called Hanjins
attention to it but upon the prodding of Hanjin which relied on a contrary assessment, Dynamic
proceeded with the construction. The flawed design manifest themselves by cracks appearing in the
beams to the second floor. Upon investigation, it was found out that there was a failure of structural
design. Dynamic recommended post-tensioning but Hanjin refused and it eventually approved the
use of carbon fiber to be used by a new subcontractor. Hanjin served notice that it will not pay the
progress billings for works done after April 2000. By December 2002, when project works had
reached a 94% completion level, Hanjin took over the Project because of alleged abandonment.
Hanjin claims that Dynamic should not be entitled to the retention money because of the delay and
Dynamics subsequent abandonment. Dynamic denies the abandonment but admits suspending work
due to Hanjins act of withholding the release of the down payment and the payment of its progress
billing.
Issue:
Whether or not Dynamic abandoned the work and whether or not it is entitled to the
retention money.
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Ruling:
No. Dynamic did not abandon the work and it is entitled to the retention money. By its
unjustifiable actions, Hanjin forced Dynamic out of the Project when the subcontract works were
already 94% complete. In net effect, Hanjin accepted the benefits arising from the subcontract
agreement without asking Dynamic to finish its part of the bargain. An obligee is deemed to have
waived strict compliance by an obligor with an obligation when the following elements are present:
(1) an intentional acceptance of the defective or incomplete performance; (2) with actual knowledge
of the incompleteness or defect; and (3) under circumstances that would indicate an intention to
consider the performance as complete and renounce any claim arising from the defect. All elements
are present. Hanjin knew that the subcontract works were not yet complete as there were
unresolved matters involving structural design deficiencies. Hanjin made no demand upon Dynamic
to finish its contractual undertaking. By operation of law, Hanjin is thus deemed to have waived its
right to claim any payment for expenses it incurred in completing the work. The admission by Hanjin
that after the April 2002 progress billings, it did not pay Dynamic for work it had accomplished
provides sufficient legal justification for not continuing with the work. There is no legal basis for
Hanjin to withhold payment of Dynamics retention money because when it willfully took over the
unfinished work, it in effect waived any and all of its rights to hold Dynamic liable for any defects,
deficiencies or unfinished work.
BENGUET CORPORATION vs. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES -

MINES ADJUDICATION BOARD and J.G. REALTY AND MINING CORPORATION
G.R. No. 163101, February 13, 2008, Velasco J.
When the mode of payment embodied in the contract is complied with by obligee, the contract
is deemed consummated and cannot be cancelled for non-payment by reason of non-compliance of a
requirement not indicated in the contract.
Facts:
Benguet Corporation and J.G. Realty entered into a Royalty Agreement with Option to
Purchase (RAWOP), wherein J.G. Realty was acknowledged as the owner of four mining claims. Thus,
on August 9, 1989, the Executive Vice-President of Benguet issued a letter informing J.G. Realty of its
intention to develop the mining claims. However, J.G. Realty, through its President sent a letter to the
President of Benguet informing the latter that it was terminating the RAWOP on the following
grounds: (a) The fact that the company has failed to perform the obligations set forth in the RAWOP,
i.e., to undertake development works within 2 years from the execution of the
Agreement; (b) Violation of the Contract by allowing high graders to operate on our claim (c) No
stipulation was provided with respect to the term limit of the RAWOP. (d) Non-payment of the
royalties thereon as provided in the RAWOP.
Thereafter, J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of the RAWOP
with the Legaspi City Panel of Arbitrators (POA) which cancelled the RAWOP and subsequently
affirmed by Mining Adjudication Board (MAB). Hence, this petition.
Issue:
Whether or not the cancellation of the Royalty agreement for alleged breach of contract by
non payment is proper.
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Ruling:
Yes. Evidently, the RAWOP itself provides for the mode of royalty payment by Benguet. The
fact that there was the previous practice whereby J.G. Realty picked-up the checks from Benguet is
unavailing. The mode of payment is embodied in a contract between the parties. As such, the contract
must be considered as the law between the parties and binding on both. Thus, after J.G. Realty
informed Benguet of the bank account where deposits of its royalties may be made, Benguet had the
obligation to deposit the checks. J.G. Realty had no obligation to furnish Benguet with a Board
Resolution considering that the RAWOP itself provided for such payment scheme.
CONSIGNATION
B.E. SAN DIEGO, INC. v. ROSARIO ALZUL

Consignation is the act of depositing the thing due with the court or judicial authorities
whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior
tender of payment.
Facts:
Alzul purchased from B.E. San Diego 4 subdivision lots and took possession of the property.
Alzul signed a "Conditional Deed of Assignment and Transfer of Rights" which assigned to Wilson Yu
her rights under the Contract to Sell in which B.E. San Diego was notified. The contract in Alzuls
name was cancelled and a new one was issued in favor of Yu. Alzul informed B.E. San Diego about
Yu's failure to pay the amounts due and manifested that she would be the one to pay the installments.
Alzul filed for rescission of the conditional deed of assignment against Yu and caused the annotation
of notices of lis pendens on the titles. The RTC ruled in favor of Alzul and was affirmed by the CA. B.E.
San Diego notified Alzul that the contract was declared rescinded and the lots were sold to Spouses
Ventura who later filed an action for Quieting of Title with Prayer for Cancellation of Annotation and
Damages. The RTC ruled in favor of the spouses but was reversed upon appeal.
Alzul tried to serve payment upon B.E. San Diego but the latter refused to accept it. Hence,
Alzul made a manifestation regarding the refusal. Alzul's counsel wrote a letter to B.E. San Diego
citing the latter's refusal and that due to it, Alzul would just consign the balance before the proper
judicial authority but such was rejected by B.E. San Diego. Hence, Alzul filed an action for
consignation and specific performance before the HLURB which was dismissed. Upon appeal to the
OP, it ruled that there was no valid consignation since the period had already prescribed. However, it
was reversed by the CA stating that although there was no valid consignation it found that justice
would be better served by allowing Alzul to effect the consignation.
Issue:
Whether or not Alzul is still entitled to consignation despite the lapse of the period
prescribed by the Court.
Ruling:
No. We agree with petitioner's assertion that even granting arguendo that the instant case
for consignation was instituted within the 30-day period or within a reasonable time thereafter, it
would still not accord respondent relief as no valid consignation was made. Certainly, the records
show that there was no valid consignation made by respondent before the HLURB as she did not
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deposit the amount with the quasi-judicial body as required by law and the rules. Pertinently, the
first paragraph of Article 1258 of the Civil Code provides that "consignation shall be made
by depositing the things due at the disposal of judicial authority, before whom the tender of payment
shall be proved, in a proper case, and the announcement of the consignation in other cases."
Moreover, in order that consignation may be effective, the debtor must show that: (1) there
was a debt due; (2) the consignation of the obligation had been made because the creditor to whom
tender of payment was made refused to accept it, or because s/he was absent or incapacitated, or
because several persons claimed to be entitled to receive the amount due or because the title to the
obligation had been lost; (3) previous notice of the consignation had been given to the person
interested in the performance of the obligation; (4) the amount due was placed at the disposal of the
court; and (5) after the consignation had been made, the person interested was notified of the action.
Respondent did not comply with the provisions of law particularly with the fourth and fifth
requirements specified above for a valid consignation. In her complaint for consignation and specific
performance, respondent only prayed that she be allowed to make the consignation without placing
or depositing the amount due at the disposal of the court of origin. Verily, respondent made no valid
consignation.
CONTRACTS
SPOUSES TAGUMPAY N. ALBOS and AIDA C. ALBOS v. SPOUSES NESTOR M. EMBISAN and
ILUMINADA A. EMBISAN, DEPUTY SHERIFF MARINO V. CACHERO, and the REGISTER OF DEEDS
OF QUEZON CITY
G.R. No. 210831. November 26, 2014. THIRD DIVISION. Velasco, JR., J.
Art. 1306. The contracting parties mayb 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.
Facts:
Spouses Albos entered a loan agreement with Spouses Embisan in the amount P84,000.00
payable within 90 days with a monthly interest rate of 5% secured by a real estate mortgage. Due to
the repeated failure of the petitioners to settle their obligation and their subsequent request for
extensions, Spouses Embisan, imposed a condition that the monthly 5% interest from then on will be
compounded. However this agreement was not reduced into writing. With the interest being
compounded, the obligation of the petitioner ballooned to P296,658.70. Despite the extension given,
Spouses Albos failed to pay their loan. This prompted Spouses Embisan to extra-judicially foreclose
the property. Spouses Embisan emerged as the highest bidder and were issued a Sheriffs Certificate
of Sale. Due to failure to redeem the property, Spouses Emisan executed an Affidavit of Consolidation
over the property and the property was later registered in their name.
Issue:
Whether or not the interest rate agreed upon by the parties is unconscionable.
Ruling:
Yes. Imposing 5% monthly interest, whether compounded or simple, is unconscionable.

Even if there was such an agreement that interest will be compounded the 5% monthly rate, be it
simple or compounded, written or verbal, is void for being too exorbitant, thus running afoul of
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Article 1306 of the New Civil Code. As case law instructs, 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 reason whatsoever which may justify such imposition as righteous and as one that
may be sustained within the sphere of public or private morals.
P.L. UY REALTY CORP. v. ALS MANAGEMENT AND DEV. CORP. and ANTONIO S. LITONJUA
G.R. No. 166462, October 24, 2012, Velasco, J.
Art. 1306 of the Civil Code guarantees the freedom of parties to stipulate the terms of their
contract provided that they are not contrary to law, morals, good customs, public order, or public policy.
Thus, when the provisions of a contract are valid, the parties are bound by such terms under the
principle that a contract is the law between the parties.
Facts:
PLU (vendor) and ALS (vendee) executed a Deed of Absolute Sale with Mortgage covering a
parcel of land. Notably, the parties stipulated in paragraph 4.a of the Deed of Absolute Sale with
Mortgage on the eviction of informal settlers: It is understood that the VENDOR shall have the
property clear of any existing occupants/squatters, the removal of which shall be for the sole
expenses & responsibilities of the VENDOR & that the VENDEE is authorized to withhold payment of
the 1st 24% installment unless the above-undertaking is done and completed to the satisfaction of
the VENDEE. Subsequently, the parties executed a Partial Release of Mortgage attesting to the
payment by ALS of the first installment. ALS, however, failed to pay the 2nd payment despite
demands. PLU filed a Complaint. RTC declared that the removal of the informal settlers on the
property is still a subsisting and valid condition, thus it found the obligation of ALS to pay the balance
of the purchase price has not yet fallen due and demandable and it dismissed the case for being
premature. PLU filed another complaint and RTC dismissed it.
Issue:
Whether or not the stipulation in paragraph 4.a between PLU and ALS is valid.
Ruling:
YES. Art. 1306 of the Civil Code guarantees the freedom of parties to stipulate the terms of
their contract provided that they are not contrary to law, morals, good customs, public order, or
public policy. Thus, when the provisions of a contract are valid, the parties are bound by such terms
under the principle that a contract is the law between the parties.
Here, both parties knew for a fact that the property subject of their contract was occupied by
informal settlers, whose eviction would entail court actions that in turn, would require some amount
of time. They also knew that the length of time that would take to conclude such court actions was
not within their power to determine. Despite such knowledge, both parties still agreed to the
stipulation that the payment of the balance of the purchase price would be deferred until the
informal settlers are ejected. There was never any allegation that PLU was coerced into signing the
Deed of Sale with Mortgage or that its consent was in any way vitiated. PLU was free to accept or
decline such contracted provision. Thus, PLU cannot be allowed to renege on its agreement. It is to be
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borne in mind that the facts show that the parties were fully aware that the land described was
occupied by squatters. As the parties must have known that they could not take the law into their
own hands, but must resort to legal processes in evicting the squatters, they must have realized that
the duration of the suits to be brought would not be under their control nor could the same be
determine in advance. The conclusion is thus forced that the parties must have intended to defer the
performance of the obligations under the contract until the squatters were duly evicted.
INADEQUACY OF CONSIDERATION
EDUARDO M. COJUANGCO, JR. v. REPUBLIC OF THE PHILIPPINES

Inadequacy of the consideration, however, does not render a contract void under Article 1355
of the Civil Code. Inadequacy of consideration does not vitiate a contract unless it is proven that there
was fraud, mistake or undue influence.
Facts:
Philippine Coconut Administration(PCA) have the largest membership in the COCOFUND. A

part of the coconut levy funds was acquired by the United Coconut Planters Bank(UCPB). Cojuangco
had the exclusive option to acquire UCPBs controlling interests. The 1st agreement was by and
between Cojuangco for and in his behalf and Pedro Cojuangco in which the former was purportedly
accorded the option to buy the option shares. The 2nd agreement had PCA, for itself and for the
benefit of the coconut farmers, purchase from Cojuangco the shares of stock subject of the 1st
Agreement.
While the 64.98% portion of the option shares ostensibly pertained to the farmers, the
corresponding stock certificates supposedly representing the farmers equity were in the name of
and delivered to PCA. There were, however, shares forming part of the aforesaid 64.98% portion,
which ended up in the hands of non-farmers. The remaining 27.8% of the UCPB capital stock were
not covered by any of the agreements. PCA agreed to expeditiously distribute the UCPB shares
purchased to such coconut farmers holding registered COCOFUND receipts on equitable basis. As
found by the Sandiganbayan, the PCA appropriated, out of its own fund, an amount for the purchase
of the said 72.2% equity, albeit it would later reimburse itself from the coconut levy fund. And per
Cojuangcos own admission, PCA paid, out of the CCSF, the entire acquisition price for the 72.2%
option shares. It would appear later that, pursuant to the stipulation on maintaining Cojuangcos
equity position in the bank, PCA would cede to him 10% of its subscriptions to (a) the authorized but
unissued shares of UCPB and (b) the increase in UCPBs capital stock. In all, from the "mother" PCA
shares, Cojuangco would receive a total of 95,304 UCPB shares broken down as follows: 14,440
shares + 10% (158,840 shares) + 10% (649,800 shares) = 95,304.
Issue:
Whether or not the PCA-COJUANGCO agreement is a valid contract.
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Ruling:
Yes. Inadequacy of the consideration, however, does not render a contract void under Article
1355 of the Civil Code. Inadequacy of consideration does not vitiate a contract unless it is proven
which in the case at bar was not, that there was fraud, mistake or undue influence. While one may
posit that the PCA-Cojuangco Agreement puts PCA and the coconut farmers at a disadvantage, the
facts do not make out a clear case of violation of any law that will necessitate the recall of said
contract. Indeed, the anti-graft court has not put forward any specific stipulation therein that is at
war with any law, or the Constitution, for that matter. It is even clear as day that none of the parties
who entered into the two agreements with petitioner Cojuangco contested nor sought the
nullification of said agreements, more particularly the PCA who is always provided legal advice in
said transactions by the Government corporate counsel, and a battery of lawyers and presumably the
COA auditor assigned to said agency. A government agency, like the PCA, stoops down to level of an
ordinary citizen when it enters into a private transaction with private individuals. In this setting, PCA
is bound by the law on contracts and is bound to comply with the terms of the PCA-Cojuangco
Agreement which is the law between the parties.
While consideration is usually in the form of money or property, it need not be monetary. A
consideration, in the legal sense of the word, is some right, interest, benefit, or advantage conferred
upon the promisor, to which he is otherwise not lawfully entitled, or any detriment, prejudice, loss,
or disadvantage suffered or undertaken by the promisee other than to such as he is at the time of
consent bound to suffer. The Court rules that the transfer of the subject UCPB shares is clearly
supported by valuable consideration.
KINDS OF CONTRACTS
ANTHONY ORDUA, DENNIS ORDUA, and ANTONITA ORDUA v. EDUARDO J. FUENTEBELLA,

MARCOS S. CID, BENJAMIN F. CID, BERNARD G. BANTA, and ARMANDO GABRIEL, JR.
The Statute of Frauds expressed in Article 1403, par. 2 of the Civil Code applies only to
executory contracts. The legal consequence of non-compliance with the Statute does not come into play
where the contract in question is completed, executed or partially consummated.
Facts:
Gabriel, Sr. sold the subject lot to petitioner Antonita Ordua, payable in installment, but no
formal deed was executed to document the sale. The installments were paid to Gabriel, Sr. and later
to Gabriel, Jr. after the formers death. Improvements were thereafter made by petitioner. Without
the knowledge of petitioners, Gabriel, Jr. sold the property to Banta, who then sold the same to the
Cids and ultimately it was ceded to respondent Fuentebella. Petitioner, after being demanded by
Fuentebella to vacate the disputed land, then filed a Complaint for Annulment of Sale, Title,
Reconveyance with damages with a prayer to acquire ownership over the subject lot upon payment
of their remaining balance. The RTC dismissed the petition because the verbal sale was
unenforceable under the Statute of Frauds. The CA affirmed this ruling.
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Issue:
Whether or not the sale of the subject lot by Gabriel, Jr. to Antonita is unenforceable under
the Statute of Frauds.
Ruling:
No. The Statute of Frauds expressed in Article 1403, par. 2 of the Civil Code applies only to
executory contracts, i.e. those where no performance has yet been made. Stated a bit differently, the
legal consequence of non-compliance with the Statute does not come into play where the contract in
question is completed, executed or partially consummated. The Statute of Frauds, in context,
provides that a contract for the sale of real property or of an interest therein shall be unenforceable
unless the sale or some note or memorandum thereof is in writing and subscribed by the party or his
agent. However, where the verbal contract of sale has been partially executed through the partial
payments made by one party duly received by the vendor, as in the present case, the contract is taken
out of the scope of the Statute.
A contract that infringes the Statute of Frauds is ratified by the acceptance of benefits under
the contract. Evidently, Gabriel, Jr., as his father earlier, had benefited from the partial payments
made by the petitioners. Thus, neither Gabriel Jr. nor the other respondents successive purchasers
of subject lot could plausibly set up the Statute of Frauds to thwart petitioners efforts towards
establishing their lawful right over the subject lot and removing any cloud in their title. As it were,
petitioners need only to pay the outstanding balance of the purchase price and that would complete
the execution of the oral sale.

The fact that only one of the subject lots was used as collateral for a P 600 loan, which the
Cagampang spouses took out, does not weaken the conclusion on the simulated character of the
contracts, as logically drawn from the twin circumstances adverted to.
Facts:
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Issue:
Whether or not the deeds of sale are sham, fictitious and simulated.
Ruling:
Yes. The antecedent facts, as borne by the records, strongly indicate the simulated character
of the sale covered by the deeds of absolute sale. As found below, Don Fabian never relinquished
possession of the covered properties during his lifetime. The first deed was executed on May 1, 1939;
the second on May 10, 1939; and the third on September 24, 1939. Soledad Monteroso-Cagampang,
however, only took possession of the subject properties after Don Fabians death in 1948 or nine (9)
years after contract execution. The gap, unexplained as it were, makes for a strong case that the
parties to the sale never intended to be bound thereby.
The more telling circumstance, however, is the fact that Perfecto had judicially sought the
amendment of the corresponding TCTs so that only the name of his wife, Soledad, shall be inscribed
as real party-in-interest on the Memorandum of Encumbrances at the back portion of the titles. If
only to stress the point, when the deeds were executed in 1939, Soledad and Perfecto Cagampang,
the notarizing officer, were already married. A property acquired during the existence of a marriage
is presumed conjugal. This postulate notwithstanding, Perfecto Cagampang went out of his way to
make it appear that the subject parcels of land were effectively his wifes paraphernal properties. No
explanation was given for this unusual move.
Hence, the Court agrees that the unexplained situations described above sufficiently show
that the purported conveyances were simulated. We also accord credence to Tirsos allegation that
the Cagampang spouses tricked Don Fabian into believing that his creditors were after the properties
which have to be "hidden" by means of simulated conveyances to Soledad Monteroso-Cagampang.
The fact that only one of the subject lots was used as collateral for a P 600 loan which the Cagampang
spouses took out does not weaken the conclusion on the simulated character of the contracts, as
logically drawn from the twin circumstances adverted to.
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ESTOPPEL
LAND BANK OF THE PHILIPPINES v ALFREDO ONG

G.R. No. 190755, November 24, 2010, Velasco Jr. J.
The elements of estoppel are: First, the actor who usually must have knowledge, notice or
suspicion of the true facts, communicates something to another in a misleading way, either by words,
conduct or silence; second, the other in fact relies, and relies reasonably or justifiably, upon that
communication; third, the other would be harmed materially if the actor is later permitted to assert any
claim inconsistent with his earlier conduct; and fourth, the actor knows, expects or foresees that the
other would act upon the information given or that a reasonable person in the actors position would
expect or foresee such action.
Facts:
Sps. Sy secured a loan from Land Bank Legazpi City (Land Bank) herein petitioner, in the
amount of P16,000,000. The aforementioned loan was secured by 3 parcels of land. Subsequently
however, the Sps Sy found that they could no longer pay their loan. As a result, they sold the
aforementioned 3 parcels of land to one Angelina Gloria Ong married to Alfredo Ong. Thereafter
Alfredo Ong (Ong), herein respondent, went to Land Bank to inform it about the aforementioned sale
and their assumption of mortgage. Land Bank told Ong to pay part of the principal which was pegged
at P750,000 so that their application for assumption of mortgage would be approved by Land Bank.
Thus Ong, paid the aforementioned amount. However, Land Bank denied his application for
assumption of mortgage. Subsequently, Ong learned of the foreclosure of the aforementioned
mortgaged properties. This prompted Ong to demand the return of the P750,000 he paid to Land
Bank on the ground that his application for assumption of mortgage was denied. Land Bank refused
to return the aforementioned amount. This prompted Ong to file a case for sum of money against
Land Bank for the return of the P750,000 paid by the former to the latter.
The RTC ruled in favor of Ong and ordered Land Bank to return the amount of P750,000
paid. On appeal with the CA, the CA affirmed the decision of the RTC. Now, Land Bank comes before
the Supreme Court assailing decision of the RTC and CA. Land Bank argues that it should not be
ordered to return the P750,000 to Ong because the aforementioned payment was tendered prior to
the application for assumption of mortgage and that in truth and in fact it was tendered to be applied
for the debt contract by the Sps. Sy. Furthermore, it alleged that it enjoyed a presumption of
regularity and was in good faith when it accepted the P750,000.
Issue:
Whether Land Bank should return the amount paid by Ong.
Ruling:
Yes. We rule that Land Bank is still liable for the return of the P750,000 based on the
principle of unjust enrichment. Land Bank is correct in arguing that it has no obligation as creditor to
recognize Alfredo as a person with interest in the fulfillment of the obligation. But while Land Bank is
not bound to accept the substitution of debtors in the subject real estate mortgage, it is estopped by
its action of accepting Alfredos payment from arguing that it does not have to recognize Alfredo as
the new debtor. By accepting Alfredos payment and keeping silent on the status of Alfredos
application, Land Bank misled Alfredo to believe that he had for all intents and purposes stepped into
the shoes of the Spouses Sy.
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ESTATE OF THE LATE JESUS S. YUJUICO, represented by ADMINISTRATORS BENEDICTO V.

YUJUICO and EDILBERTO V. YUJUICO; and AUGUSTO Y. CARPIO v REPUBLIC OF THE
PHILIPPINES and the COURT OF APPEALS
G.R. No. 168661, October 26, 2007, Velasco Jr. J.
Equitable estoppel may be invoked against public authorities when as in this case, the lot was
already alienated to innocent buyers for value and the government did not undertake any act to contest
the title for an unreasonable length of time.
Facts:
Sometime in 1973, one Fermina Castro (Castro) filed an application for registration and
confirmation of her title over a parcel of land somewhere in Paranaque City with the RTC having
jurisdiction over the same. The Republic through the OSG filed its respective opposition. On 1974, the
RTC rendered its decision, declaring Castro as the true and absolute owner of the parcel of land.
Thereafter, Castro sold the aforementioned lot to Jesus Yujuico (Yujuico) and transferred the
ownership of the land. Subsequently, Yujuico died. On 2001, the Republic through the OSG filed a
complaint for annulment and cancellation of title and reversion against the Heirs of Jesus Yujuico
(Heirs), herein petitioners, over the aforementioned land sold by Castro to Yujuico. The complaint
was filed with the RTC in Paranaque.
The RTC dismissed the complaint of the OSG. On appeal, the CA reversed, it held that the
parcel of land was of public domain and therefore inalienable. Now, the Heirs come before the
Supreme Court assailing the decision of the CA. They contend that the remedy of reversion invoked
by the OSG is not the proper remedy. Hence this petition.
Issue:
Whether or not the Republic through the OSG can validly revert the land in favor of the State.
Ruling:
No. The lapse of almost three decades in filing the instant case, the inexplicable lack of action
of the Republic and the injury this would cause constrain us to rule for petitioners.
Equitable estoppel may be invoked against public authorities when as in this case, the lot
was already alienated to innocent buyers for value and the government did not undertake any act to
contest the title for an unreasonable length of time.
SALES
DOUBLE SALE
RUPERTA CANO and JESUS CARLO GERARD VDA DE VIRAY v. SPS JOSE and AMELITA USI
A double sale situation arises when the following requisites concur: (a) The two (or more) sales
transactions must constitute valid sales; (b) The two (or more) sales transactions must pertain to
exactly the same subject matter; (c) The two (or more) buyers at odds over the rightful ownership of the
subject matter must each represent conflicting interests; and (d) The two (or more) buyers at odds over
the rightful ownership of the subject matter must each have bought from the very same seller.
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Facts:
Lot 733, registered in the name of Mendoza is the subject of this case. Geodetic Engr Fajardo
prepared the Fajardo Plan, in which Lot 733 was divided into 6 smaller parcels of differing size
dimensions: Lot 733(A-F). Mendoza executed 2 separate deeds of absolute sale, the first, transferring
Lot 733-F to Jesus and the second deed conveying Lot 733-A to Sps Viray. Vda. de Viray is the
surviving spouse of Jesus. Mendoza, Vda. de Mallari and Sps. Usi, as purported co-owners of Lot 733,
executed the 1st Subdivision Agreement (SA) in accordance with Galang Plan. Then they executed the
2nd SA. The subdivision of Lot 733, per the Galang Plan, and the 2 SAs concluded based on that plan,
virtually resulted in the loss of the identity of what under the Fajardo Plan were Lot 733-A and Lot
733-F. The Sps. Viray and the late Jesus purchased Lot 733-A and Lot 733-F, respectively, from
Mendoza. As to be expected, the foregoing overlapping transactions involving the same property or
portions thereof spawned several suits and counter-suits.
Issue:
Whether or not the sale to Sps Usi constituted as a double sale and therefore invalid.
Ruling:
Yes. The earlier sale of Lot 733-A and Lot 733-F was valid and effective conveyances. The
subsequent transfers to the Sps. Usi of substantially the same portions of Lot 733 accomplished
through the subdivision agreements constitute in effect double sales of those portions. The Deeds of
Absolute Sale of Lot 733-A and Lot 733-F are valid. It must be noted that the RTC upheld the validity
of the separate deeds of absolute sale of Lots 733-A and 733-F. There can be no question as to the
ownership of the Sps. Viray and Vda. de Viray over the specified and delineated portions of Lot 733
which they purchased for value from Mendoza. Mendoza, as vendor, was bound to transfer the
ownership of and deliver, as well as warrant, the thing which is the object of the sale.
The survey report of LMB surveyor, Engr. Nicdao, would support a finding of double sale. His
report, as earlier indicated, contained the following key findings: (1) Lot 733-A sold to the Sps. Viray
is within Lot 733-B, the part assigned to Sps. Usi under the division; and (2) Lot 733-F is almost
identical to the combined area of Lots 733-C-8 to 733-C-12 awarded to Ellen Mendoza and her
children, McDwight, Bismark, Beverly and Georgenia, and a portion of Lot 733-C-10 (Galang Plan)
adjudicated to Sps. Usi. A double sale situation, which would call, if necessary, the application of Art.
1544 of the Civil Code, arises when, as jurisprudence teaches, the following requisites concur: (a) The
two (or more) sales transactions must constitute valid sales; (b) The two (or more) sales transactions
must pertain to exactly the same subject matter; (c) The two (or more) buyers at odds over the
rightful ownership of the subject matter must each represent conflicting interests; and (d) The two
(or more) buyers at odds over the rightful ownership of the subject matter must each have bought
from the very same seller.
There is no valid sale from Mendoza to respondents Usi. The parties did not execute a valid
deed of sale conveying and transferring the lots in question to respondents. The third element of
cause of the obligation which is established under Art. 1318 of the Civil Code is likewise visibly
absent from the two SAs. The transfer of title to respondents based on said SAs is flawed, irregular,
null and void. Thus the two SAs are not "sales transactions" nor "valid sales" under Art. 1544 of the
Civil Code and, hence, the first essential element under said legal provision was not satisfied.
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EQUITABLE MORTGAGE
SPOUSES FELIPE SOLITARIOS AND JULIA TORDA v. SPOUSES GASTON JAQUE AND LILIA JAQUE
In determining the nature of a contract, the intention of the parties, as shown by the
surrounding circumstances, must be considered. If the real intention of the parties is that the
transaction shall secure the payment of a loan, then it is presumed to be an equitable mortgage, under
Article 1602(6) of the Civil Code.
Facts:
In a complaint, Spouses Jaque alleged that they purchased a lot from Spouses Solitarios in
stages. One-half of the lot was sold to them, and the other half was mortgaged to them to secure a
loan. Spouses Solitarios then agreed to sell the mortgaged half, but Spouses Jaque allowed the former
to retain possession of the lot subject to the condition that they will deliver a portion of the lots
produce. However, Spouses Solitarios stopped delivering any produce and claimed ownership over
the lot. Spouses Solitarios, on the other hand, alleged that they merely mortgaged the lot to Spouses
Jaque after the latter helped them redeem the land from PNB, with the agreement that they would
pay back the Jacques by delivering to them a portion of the lots produce. However, Jacque informed
Spouses Solitarios that he was taking possession of the lot as owner, by showing the deeds of sale,
REM contract, and a TCT to prove his claim. Spouses Solitarios contended that these deeds of sale
were fictitious and that their signatures were forged. They also challenged the validity of the TCT
through fraud machinations.
RTC declared that what the parties entered into was actually an equitable mortgage.
However, the CA reversed and set aside the RTC Decision, and ruled that what was entered into was a
contract of sale.
Issue:
Whether or not the parties entered into a contract of absolute sale.
Ruling:
No. The parties entered into an equitable mortgage, and not a contract of sale.
First, in determining whether a deed of absolute sale in form is a mortgage, the decisive
factor is the intention of the parties, as shown by all the surrounding circumstances. Moreover,
Article 1602 enumerates instances when a contract purporting to be an absolute sale is presumed to
be an equitable mortgage. Article 1602 (6) then provides that 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 then it is presumed to be an equitable mortgage.
This presumption finds support in the following: (1) the testimony of Jaque and the documents he
presented establish the existence of two loans; and (2) the testimonies of the parties reveal that they
came to an agreement regarding payment terms. The fact that the parties agreed on payment terms
is inconsistent with the claim of Jaque that when Spouses Solitarios executed the questioned deeds of
sale they had no other intention but to transfer ownership over the lot.
Second, the Court held that a purported contract of sale where the vendor remains in
physical possession of the land, as lessee or otherwise, is an indicium of an equitable mortgage.
Retention by the vendor of the possession of the property is inconsistent with the vendees
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acquisition of ownership under a true sale, because in the latter, the legal title is immediately
transferred to the vendee.
Lastly, it is further established that when doubt exists as to the true nature of the parties
transaction, courts must construe such transaction purporting to be a sale as an equitable mortgage,
as the latter involves a lesser transmission of rights and interests over the property. It is contrary to
human experience that a person would easily part with his property after incurring a debt. Rather, he
would first look for means to settle his obligations.
PARTNERSHIP, AGENCY AND TRUSTS
POWERS
PACIFIC REHOUSE CORPORATION et al. vs EIB SECURITIES, INC.,

G.R. No. 184036, October 13, 2010, VELASCO, JR., J.
An agent must act within the scope of his authority. An act beyond the scope of authority given
does not bind the principal.
Facts:
Plaintiffs bought Kuok Properties, Inc. (KPP) shares of stock and DMCI shares through the
Philippine Stock Exchange (PSE). The KPP shares were acquired by plaintiffs through their broker,
defendant EIB. Under the agreement between the plaintiffs and their broker EIB, EIB is given the
authority to dispose of the shares of stocks bought by the plaintiff solely for the purpose of paying the
obligations and liabilities of the plaintiffs.
The defendant EIB, however, sold the DMCI shares of stock in order to buy back the KPP
shares of stock.
The plaintiff argues that the disposition of EIB of their DMCI shares of stock does not bind
them as principals because EIB, as agent, acted beyond the scope of their authority.
The RTC rendered a judgment on the pleadings in favor of the plaintiffs but the CA reversed
said RTC decision and remanded the same for further proceedings. Hence, this petition.
Issue:
Whether EIB is authorized to sell the DMCI shares for the purpose of reacquiring the KKP
shares.
Ruling:
NO. Under the agreement between the plaintiffs and the defendant, the right to sell or
dispose of the properties of petitioners by EIB is unequivocally confined to payment of the
obligations and liabilities of petitioners to EIB and none other. Thus, when EIB sold the DMCI shares
to buy back the KKP shares, EIB acted beyond the ambit of its authority as agent. Such act is surely
illegal and does not bind petitioners as principals of EIB.
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EXPRESS VS. IMPLIED AGENCY
FILIPINAS (PRE-FAB BLDG.) SYSTEMS, INC. v MRT DEVELOPMENT CORPORATION; COURT OF

APPEALS; CONSTRUCTION INDUSTRY ARBITRATION COMMISSION; and VICTOR P. LAZATIN,
ELISEO I. EVANGELISTA, and JACINTO M. BUTALID
G.R. Nos. 167829-30, November 13, 2007, Velasco Jr. J.
While the general rule is one cannot be bound to a contract entered into by another person,
there are exceptions, such as when the contracting person was authorized to enter a contract on behalf
of another, or when such contract was ratified.
Facts:
Filipinas Systems Inc (FSI), herein petitioner, is a contractor who submitted its bid to the
Metro Rail Transit Development Corporation (MRTDC) herein respondent, for the construction of the
North Triangle Project which is poised to be a major hub of the light rail transit line system along
EDSA. Verily MRTDC engaged Parsons Interpro JV (PIJV) to act as the Project Management Team to
supervise the project. It also engaged the services of one David Sampson (Sampson) who was
designated as the Area Construction Manager tasked to monitor the day-to-day activities on the
construction site. FSI won the bidding for the construction of the aforementioned project and was
thus awarded with a Notice of Award. The Notice of Award provides that in case of early completion
of construction by FSI, it shall be entitled to an early completion bonus. Thereafter, construction
commenced. The deadline given to FSI was until January 14, 1999 however FSI was only able to
finish construction on May 17, 1999. On October 8, 1999 FSI issued a letter to Sampson requesting an
extension of time and verily move the project deadline. This was approved by Sampson. Thus, the
deadline was moved from January 14, 1999 to August 2, 1999. Because of the change in deadline, FSI
sought its early completion bonus from MRTDC. MRTDC refused to pay FSI the bonus. This prompted
FSI to file its claim with the CIAC.
The CIAC held that MRTDC is liable for the bonus in favor of FSI. On appeal, the CA reversed
the decision of the CIAC. Now, FSI comes before the Supreme Court assailing the decision of the CA. In
its defense, MRTDC avers that Sampson had no authority as Area Construction Manager to authorize
the extension of time for the deadline of the project, and therefore the extension was without legal
effect. Hence this petition.
Issue:
Whether or not MRTDC is liable for the early completion bonus in favor of FSI.
Ruling:
Yes, MRTDC is liable. Article 1317 of the New Civil Code provides that a contract entered into
in the name of another by one who has no authority or legal representation, or who has acted beyond
his powers shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on
whose behalf it has been executed, before it is revoked by the other contracting party.
David Sampson was clearly authorized to issue change orders as he was in charge of the
daily activities of the project. David Sampson was the representative or agent of PIJV who was
engaged as the Project Manager by MRTDC. Being clearly authorized, the acts of David Sampson shall
bind MRTDC and therefore, it shall be held liable for the early completion bonus.
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COMPROMISE
ADRIATICO CONSORTIUM, INC., et al. v. LAND BANK OF THE PHILIPPINES

G.R. No. 187838 December 23, 2009, Velasco, Jr., J.
In the construction or interpretation of a compromise agreement, the intention of the parties is

to be ascertained from the contract and effect should be given to that intention. A contract must be
interpreted from the language of the contract itself according to its plain and ordinary meaning.
Facts:
Respondent Land Bank approved the application of William Siy, the former president of ACI,
for a credit line of P200M. A Mortgage Trust Indenture (MTI) was created to secure the loan. The
MTI was amended to include J.V. Williams Realty and Development Corporation (JVWRDC), a
majority-owned corporation of Siy, as borrower. It was later discovered that Siy did not remit ACIs
payments of the loan. Land Bank obliged petitioners ACI and PRC, with Benito Cu-Uy-Gam, ACIs new
president, to pay the maturing obligations of JVWRDC. Petitioners then filed a Petition for
Declaration of Nullity, Specific Performance, Injunction, and Damages with Prayer for a TRO against
Land Bank and Siy with the RTC of Manila.
The parties entered into a Partial Compromise Agreement wherein ACI agreed, among
others, to pay and actually paid to Land Bank the amount of loan plus interests. The said Agreement
was approved by the RTC. Land Bank, however, informed ACI that the JVWRDC loans were included
in a sealed-bid public auction of Land Bank Non-Performing Assets under the Special Purpose Vehicle
Act. Petitioners filed a Motion for Execution before the RTC stating that Land Bank violated Section 5
of the Partial Compromise Agreement, which provides that the parties agree to suspend all actions
against each other x x x. The RTC granted petitioners Motions and issued the corresponding Writ of
Execution and Writ of Preliminary Injunction. Land Bank filed a Petition for Certiorari and
Prohibition with Prayer for TRO and/or Preliminary Injunction before the CA arguing that the sale of
the MPCs is not prohibited by the Agreement. The CA granted the petition and found that the
compromise agreement sought to prohibit only legal actions.
Issue:
Whether or not the act of Land Bank in selling the receivables violated the Partial
Compromise Agreement, specifically Section 5.
Ruling:
YES. A compromise is a contract whereby the parties, by making reciprocal concessions,

avoid a litigation or put an end to one already commenced. In the construction or interpretation of a
compromise agreement, the Court is guided by the fundamental and cardinal rule that the intention
of the parties is to be ascertained from the contract and effect should be given to that
intention. Likewise, it must be construed so as to give effect to all the provisions of the
contract. Evidently, had the parties intended to limit the application of Sec. 5 to legal actions only,
they would have written a specific word or phrase to pertain to legal actions and not just the word
actions alone.
A contract must be interpreted from the language of the contract itself according to its plain
and ordinary meaning. In the case at bar, the word action should be defined according to its plain
and ordinary meaning, i.e., as the process of doing something; conduct or behavior; a thing done. It is
not limited to actions before a court or a judicial proceeding. Therefore, the only logical conclusion
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that can be derived from the use of the word action in Sec. 5 is that the parties intentionally used it
in its plain and ordinary sense and did not limit it to mean any specific legal term.
Furthermore, Sec. 5 of the Partial Compromise Agreement speaks of cooperation between

the parties to determine the person or persons ultimately liable. By selling the receivables, Land
Bank did not cooperate with petitioners. Thus, it can be safely concluded that the act of Land Bank is
a clear and patent violation of Sec. 5 of the Partial Compromise Agreement.
ALEXANDER S. GAISANO v. BENJAMIN C. AKOL

A compromise agreement is a contract whereby the parties make reciprocal concessions, avoid
litigation, or put an end to one already commenced. Its validity depends on its fulfillment of the
requisites and principles of contracts dictated by law; its terms and conditions being not contrary to
law, morals, good customs, public policy and public order.
Facts:
Akol filed a complaint for recovery of shares of stock against Gaisano. The RTC dismissed the
complaint while the CA reversed the decision of the RTC. While the case was pending with the SC, the
parties jointly filed an Agreement to Terminate Action duly signed by them and their respective
counsels.
Issue:
Whether or not the agreement filed by the parties allows to court to validly render judgment
based on said agreement.
Ruling:
Yes. A compromise agreement is a contract whereby the parties make reciprocal

concessions, avoid litigation, or put an end to one already commenced. Its validity depends on its
fulfillment of the requisites and principles of contracts dictated by law; its terms and conditions
being not contrary to law, morals, good customs, public policy and public order.
A scrutiny of the aforequoted agreement reveals it is a compromise agreement sanctioned

under Article 2028 of the Civil Code. Its terms and conditions are not contrary to law, morals, good
customs, public policy and public order. Hence, judgment can be validly rendered thereon.
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CREDIT TRANSACTIONS
LOAN
SPOUSES TAGUMPAY N. ALBOS and AIDA C. ALBOS v. SPOUSES NESTOR M. EMBISAN and
ILUMINADA A. EMBISAN, DEPUTY SHERIFF MARINO V. CACHERO, and the REGISTER OF DEEDS
OF QUEZON CITY
G.R. No. 210831. November 26, 2014. THIRD DIVISION. Velasco, JR., J.
Article 1956 provides that No interest shall be due unless it has been expressly stipulated in
writing.
Facts:
Spouses Albos entered a loan agreement with Spouses Embisan in the amount P84,000.00
payable within 90 days with a monthly interest rate of 5% secured by a real estate mortgage. Due to
the repeated failure of the petitioners to settle their obligation and their subsequent request for
extensions, Spouses Embisan, imposed a condition that the monthly 5% interest from then on will be
compounded. However this agreement was not reduced into writing. With the interest being
compounded, the obligation of the petitioner ballooned to P296,658.70. Despite the extension given,
Spouses Albos failed to pay their loan. This prompted Spouses Embisan to extra-judicially foreclose
the property. Spouses Embisan emerged as the highest bidder and were issued a Sheriffs Certificate
of Sale. Due to failure to redeem the property, Spouses Emisan executed an Affidavit of Consolidation
over the property and the property was later registered in their name.
Issue:
Whether or not the compounding of interest is valid.
Ruling:
NO. The compounding of interest should be in writing. As mandated by the foregoing

provision, payment of monetary interest shall be due only if: (1) there was an express stipulation for
the payment of interest; and (2) the agreement for such payment was reduced in writing. Thus, the
collection of interest without any stipulation thereof in writing is prohibited by law.
Given the circumstances, the first requirementthat there be an express stipulation for the
payment of interestis not sufficiently complied with, for purposes of imposing compounded
interest on the loan. The requirement does not only entail reducing in writing the interest rate to be
earned but also the manner of earning the same, if it is to be compounded. Failure to specify the
manner of earning interest, however, shall not automatically render the stipulation imposing the
interest rate void since it is readily apparent from the contract itself that the parties herein agreed
for the loan to bear interest. Instead, in default of any stipulation on the manner of earning interest,
simple interest shall accrue.
Settled is the rule that ambiguities in a contract are interpreted against the party that caused
the ambiguity. Any ambiguity in a contract whose terms are susceptible of different interpretations
must be read against the party who drafted it. In the extant case, respondent spouses, having
imposed, unilaterally at that, the compounded interest rate, had the correlative duty of clarifying and
reducing in writing how the said interest shall be earned. Having failed to do so, the silence of the
agreement on the manner of earning interest is a valid argument for prohibiting them from charging
interest at a compounded rate.
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TING TING PUA v. SPOUSES BENITO LO BUN TIONG and CAROLINE SIOK CHING TENG
G.R. No. 198660, October 23, 2013, Velasco, Jr., J.
The collection of interest in loans or forbearance of money is allowed only when these two
conditions concur: (1) there was an express stipulation for the payment of interest; (2) the agreement
for the payment of the interest was reduced in writing. Absent any of these two conditions, the money
debtor cannot be made liable for interest.
Facts:
Respondents owed Petitioner a sum of money way back in 1988 for which the latter gave her
several checks. All of the checks, however, were dishonored and petitioner has not been paid the
amount of the loan plus the agreed interest. Eventually, respondents approached her to get the
computation of their liability including the 2% compounded interest. After bargaining to lower their
liability, respondents gave her another postdated check but like the other checks, the drawee bank
likewise dishonored this check.
Issue:
Whether or not respondents should be obliged to pay the 2% compounded interest.
Ruling:
No. As aptly held by the court a quo, however, respondents cannot be obliged to pay the
interest of the loan on the ground that the supposed agreement to pay such interest was not reduced
to writing. Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates
that no interest shall be due unless it has been expressly stipulated in writing. Thus, petitioner is
entitled only to the principal amount of the loan plus the allowable legal interest from the time of the
demand, at the rate of 6% per annum.
ARTHUR F. MENCHAVEZ v. MARLYN BERMUDEZ

G.R. No. 185368, October 11, 2012, Velasco, Jr., J.
Voluntariness does not make the excessive and exorbitant 5% per month or 60% per annum
stipulation on interest valid.
Facts:
Bermudez obtained a P500,000 loan from Menchavez which she promised to pay in 1 month,
with 5% interest per month. The sum of P565,000 was paid through post-dated checks. Menchavez
alleged entering into a verbal compromise agreement with Bermudez about the delay in payment
and the accumulated interest. Bermudez would deliver 11 post-dated Prudential Bank checks worth
P300,000 as payment. However, 8 of the checks were dishonored as Drawn Against Insufficient
Funds. She was charged with violating BP 22. The MeTC acquitted Bermudez because of payment of
P925,000. The amount was acknowledged by Menchavez in the statement of account which he
prepared where P624,344 was credited to interest and P300,565 to the principal. In the civil aspect
of the case, the RTC ordered Bermudez to pay 165,000 as civil liability. Bermudez appealed to the CA,
which reversed the RTC decision. The CA held that the compromise agreement could not be taken
independently of the loan and that 5% per month or 60% per annum was an unconscionable rate of
interest.
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Issue:
Whether or not the loan obligation of Bermudez has been extinguished with the payment of
P925,000.
Ruling:
YES, the obligation has been extinguished. First, the compromise agreement is not
independent of the original loan. By stating that the compromise agreement and the original loan
transaction are separate and distinct, petitioner would now attempt to exact payment on both. This
goes against the very purpose of the parties entering into a compromise agreement, which was to
extinguish the obligation under the loan. Petitioner may not seek the enforcement of both the
compromise agreement and payment of the loan, even in the event that the compromise agreement
remains unfulfilled. It is beyond cavil that if a party fails or refuses to abide by a compromise
agreement, the other party may either enforce the compromise or regard it as rescinded and insist
upon his original demand. To allow such would constitute unjust enrichment.
Second, Menchavez has been fully paid. The 5% per month interest rate is excessive,
iniquitous and unconscionable. The Statement of Account prepared by Menchavez showed that
Bermudez has already paid P925,000, P425,000 over the P500,000 loan. The original obligation of
PhP 500,000 had already been satisfied, and the PhP 425,000 would be treated as interest paid, even
at the iniquitous rate of 60% per annum.
Parties may be free to contract and stipulates as they see fit, but that is not an absolute
freedom. Art. 1306 of the Civil Code provides. "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." While petitioner harps on the
voluntariness with which the parties agreed upon the 5% per month interest rate, voluntariness does
not make the stipulation on interest valid. The 5% per month, or 60% per annum, rate of interest is,
indeed, iniquitous, and must be strucked down. Petitioner has been sufficiently compensated for the
loan and the interest earned, and cannot be allowed to further recover on an interest rate which is
unconscionable. Since the stipulation on the interest rate is void, it is as if there was no express
contract on said interest rate. Hence, courts may reduce the interest rate as reason and equity
demand.
REAL MORTGAGE
Philippine National Bank v. Spouses Alejandro and Myrna Reblando

G.R. No. 194014 September 12, 2012, Velasco, Jr., J.
Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately
led another to believe a particular thing to be true, and to act upon such belief, he cannot in any
litigation arising out of such declaration, act or omission, be permitted to falsify it.
Facts:
Alejandro and Myrna Reblando (Reblando) obtained a loan from the Philippine National
Bank (PNB). To secure the payment of their loan, the spouses Reblando executed a real estate
mortgage over two parcels of land. The spouses Reblando defaulted on their payment. So, PNB was
prompted to commence an extra-judicial foreclosure of mortgage over the two parcels of land. PNB
was the lone bidder and the lots were awarded to them. The redemption period lapsed without the
spouses Reblando redeeming the parcels of land. So, PNB became the owner thereof upon securing a
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new title over the properties. Spouses Reblando filed a complaint in the RTC for the declaration of
nullity of mortgage over one of the lots. They claimed that at the time the mortgage was constituted,
they were not the owner thereof so they cannot validly constitute a mortgage over the lot. They cited
Article 2085 of the Civil Code which provides that one of the essential requisites of a valid mortgage
is that the mortgagor is the absolute owner of the property mortgage. In its defense, PNB asserted the
issue of estoppel.
Issue:
Whether or not a mortgage can be validly constituted over the lot.
Ruling:
Yes, a mortgage can be validly constituted over the lot. Respondents act of entering into the
mortgage contract with petitioner, benefiting through the receipt of the loaned amount, defaulting in
payment of the loan, letting the property be foreclosed, failing to redeem the property within the
redemption period, and thereafter insisting that the mortgage is void, cannot be countenanced.
Actions of this kind, bearing a hint of fraud on the part of mortgagors, should not be tolerated, for
they go against the basic principle that no person shall unjustly enrich himself or herself at the
expense of another and that parties in a juridical relation must act with justice, honesty, and good
faith in dealing with one another. Respondents are estopped from contesting the validity of the
mortgage, absent any proof that PNB coerced or fraudulently induced respondents into posting the
lot as collateral.
LAND TITLES AND DEEDS
TORRENS SYSTEM
HEIRS OF MAXIMO LABANON vs. HEIRS OF CONSTANCIO LABANON

G.R. No. 160711, August 14, 2004, VELASCO, JR., J.
Section 32 of PD 1529 merely precludes the reopening of the registration proceedings for titles
covered by the Torrens System, but does not foreclose other remedies for the reconveyance of the
property to its rightful owner.
Facts:
Constancio Labanon settled upon, cultivated and introduced improvements on a piece of

alienable and disposable public agricultural land situated at Brgy. Lanao, Kidapawan, Cotabato.
Constancio then asked his brother, Maximo Labanon who was better educated to file the
corresponding public land application to which Maximo acceded. Eventually, the Homestead
Application by Maximo was approved and the Original Certificate of Title No. 41320 was issued in his
favor. In 1955, Maximo executed a notarized document denominated as "Assignment of Rights and
Ownership" to safeguard the ownership and interest of Constancio. In 1962, Maximo executed a
sworn statement reiterating his desire that Constancio, his heirs and assigns shall own the eastern
portion of the Lot. After Constancios death, his heirs extra-judicially settled his estate with
simultaneous sale over the aforesaid eastern portion of the lot in favor of Alberto Makilang. However,
the heirs of Maximo deprived the heirs of Constancio of their ownership over the eastern portion of
said lot. They argue that the heirs of Constancio can no longer question Maximos ownership of the
land after its registration under the principle of indefeasibility of a Transfer Certificate of Title (TCT).
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The RTC ruled in favor of the defendant-heirs of Maximo Labanon. However, the CA reversed the RTC
decision upon appeal. Hence, this petition.
Issue:
Whether or not Original Certificate of Title No. 41320 in the name of MAXIMO LABANON be
now considered indefeasible and conclusive.
Ruling:
No. While it is true that Section 32 of PD 1529 provides that the decree of registration
becomes incontrovertible after a year, it does not altogether deprive an aggrieved party of a remedy
in law.
The mere possession of a certificate of title under the Torrens system does not necessarily
make the possessor a true owner of all the property described therein for he does not by virtue of
said certificate alone become the owner of the land illegally included. The 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. Undeniably, the heirs of Constancio are not precluded from recovering the eastern portion
of Original Certificate of Title (OCT) No. P-14320, with an area subject of the "Assignment of Rights
and Ownership" previously owned by their father, Constancio Labanon. The action for Recovery of
Ownership before the RTC is indeed the appropriate remedy.
CLASSIFICATION OF LANDS
CONRADA O. ALMAGRO v. SPS. MANUEL AMAYA, SR. and LUCILA MERCADO, JESUS MERCADO,
SR., and RICARDO MERCADO
The identification and classification of lands and qualification of farmer-beneficiaries are

factual determination performed by government officials and personnel with expertise in the line of
work they are doing. Their findings, conclusions/recommendations and final actions on the matter,
after thorough investigation and evaluation, have the presumption of regularity and correctness.
Facts:
Conrada allowed spouses Amaya to construct a house on a 46-square meter portion of Lot
No. 13333 on the condition that no additional improvements shall be introduced and that they shall
leave the area upon a 90-day notice. A decade later, Conrada asked the Amayas to vacate. Instead of
heeding the vacation demand, the Amayas, built permanent improvements on their house. Conrada
filed a Complaint against the Sps. Amaya before the DARAB for "Ejectment, Payment of Rentals with
Damages. In their Answer, the Amayas asserted possessory rights over the area on which their house
stands and a portion of subject they are cultivating, they claimed, monthly-rental paying tenant-
farmers. Said portion, the Amayas added, has been placed under Operation Land Transfer (OLT)
pursuant to Presidential Decree No. (PD) 27. Conrada on the other hand contends that the lot has
been primarily devoted to vegetables production and cultivation, not to corn or rice, thus, outside the
ambit of the OLT under PD 27.
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DARAB issued a Decision upholding the validity of the issuance of the EPs to Spouses Amaya,
thus effectively recognizing their tenurial rights. Appellate court affirmed.
Issue:
Whether or not said portions are primarily devoted to vegetable production, as petitioner
insists.
Ruling:
No. PD 27 encompasses only rice and corn land, i.e., agricultural lands primarily devoted to
rice and corn under a system of sharecrop or lease-tenancy. In the instant case, since the
landholdings cultivated by respondents are primarily devoted to vegetable production, it is definitely
outside the coverage, and necessarily cannot properly be placed under the umbrella, of PD 27.
It must be stressed that the issuance of the EPs in the instant case creates a presumption
which yields only to a clear and cogent evidence that the awardee is the qualified and lawful owner
because it involves a tedious process. Moreover, the identification and classification of lands and
qualification of farmer-beneficiaries are factual determination performed by government officials
and personnel with expertise in the line of work they are doing. Their findings,
conclusions/recommendations and final actions on the matter, after thorough investigation and
evaluation, have the presumption of regularity and correctness.
DETERMINATION OF VALUATION OF LANDS
LAND BANK OF THE PHILIPPINES v. HON. ERNESTO P. PAGAYATAN, in his capacity as

Presiding Judge of the Regional Trial Court, Branch 46, San Jose, Occidental Mindoro; and
JOSEFINA S. LUBRICA, in her capacity as Assignee of Federico Suntay
G.R. No. 177190, February 23, 2011, Velasco, Jr., J.
It is only after the DAR has made its final determination of the initial valuation of the land that
the landowner may resort to the judicial determination of the just compensation for the land.
Facts:
Federico S. Suntay owned hectares of land called the Suntay Estate the 300 hectares of
which were erroneously subjected to the Comprehensive Agrarian Reform program (CARP) instead
of the Operation Land Transfer (OLT) pursuant to Presidential Decree No. 27. Consequently,
Certificates of Landownership Award were issued to the farmer-beneficiaries in possession of the
land. However, years passed but Suntay remained unpaid for the property. Hence, Josefina Lubrica,
as assignee of Suntays property, filed a Petition for Summary Determination of Just Compensation
with the Provincial Agrarian Reform Adjudicator (PARAD) of San Jose, Oriental Mindoro which
determined the value of the preliminary just compensation and directed the Land Bank of the
Philippines (LBP) to immediately pay the amount to Lubrica. LBP filed a petition with the Regional
Trial Court arguing that the petition for Summary Determination of Just Compensation with PARAD
was filed prematurely. The RTC denied LBPs petition and directed the latter to make a deposit of the
amount just compensation which PARAD has fixed.
Subsequently, LBP filed an Omnibus Motion for Reconsideration and impleaded the
Department of Agrarian Reform (DAR) on the ground that the latter failed to deliver a claim folder
upon which LBP will preliminary determine the valuation of the covered lands and process the
compensation claims. LBP further averred that the amount to be deposited under Sec. 16 of RA 6657,
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or the Agrarian Reform Law of 1988, should be based on purchase price determined by DAR for the
land contained in the notice of acquisition and not the price determined in an administrative
proceeding before the PARAD but the Court of Appeals denied due course and dismissed the petition
for lack of merit. Hence, this petition was filed.
Issue:
Whether or not it is the PARAD which determines the preliminary valuation of the proper
amount to be deposited under Section 16 of Republic Act No. 6657.
Ruling:
No, it should be the initial valuation made by the DAR and LBP. Sec. 16 of RA 6657 contains
the procedure for the acquisition of private lands, to wit: (a) xxx; (b) xxx; (c) xxx; (d) xxx; (e) Upon
receipt by the landowner of the corresponding payment or in case of rejection or no response from
the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation
in cash or LBP bonds in accordance with this Act, the DAR shall take immediate possession of the
land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in
the name of the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution
of the land to the qualified beneficiaries.
Conspicuously, there is no mention of the PARAD in the foregoing Sec. 16(e) when it speaks
of "the deposit with an accessible bank designated by the DAR of the compensation in cash or LBP
bonds in accordance with this Act." Moreover, it is only after the DAR has made its final
determination of the initial valuation of the land that the landowner may resort to the judicial
determination of the just compensation for the land. Clearly, therefore, it is the initial valuation made
by the DAR and LBP that is contained in the letter-offer to the landowner under Sec. 16(a), said
valuation of which must be deposited and released to the landowner prior to taking possession of the
property.
Notably, DAR failed to prepare the claim folder which is necessary for the LBP to make a
valuation of the land to be expropriated. The proper remedy would have been to ask the DAR and
LBP to determine such initial valuation and to have the amount deposited to his account, in
accordance with Sec. 16 of RA 6657. Nevertheless, it was erroneous for private respondent to have
filed a Petition for Determination of Just Compensation with PARAD when the remedy that she was
seeking was for the deposit of the initial valuation that the DAR and LBP should have made.
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ORIGINAL REGISTRATION
REPUBLIC OF THE PHILIPPINES v. APOSTOLITA SAN MATEO, BRIGIDA TAPANG, ROSITA

ACCION, AND CELSO MERCADO
A CENRO certification that a certain property is alienable, without the corresponding proof
that the DENR Secretary had approved such certification, is insufficient to support a petition for
registration of land. Both certification and approval are required to be presented as proofs that the land
is alienable. Otherwise, the petition for registration must be denied.
Facts:
A petition for registration of title was filed by the respondents. The respondents merely
relied on the certification of DENR-CENRO to the effect that the subject property is alienable. The
concerned government agencies and the owners of the adjoining lots were notified of the hearing.
The notice was also posted in several public places and was published in a newspaper of general
circulation and the Official Gazette.
RTC granted the petition for registration. On appeal, the Republic posited that RTC did not
acquire jurisdiction over the case, because the notice of hearing failed to include the names of all the
owners of the adjoining properties; that the respondents failed to prove their claim of absolute
ownership, because they failed to prove possession over the land sought to be registered; and that
they failed to show that the land sought to be registered is part of the alienable and disposable part of
the public domain. The CA affirmed the RTC decision.
Issue:
Whether or not the subject property is alienable and disposable.
Ruling:
NO. The Court held that, to establish that the land subject of the application is alienable and
disposable public land, the general rule remains: all applications for original registration under the
Property Registration Decree must include both (1) a CENRO or PENRO certification and (2) a
certified true copy of the original classification made by the DENR Secretary. As an exception,
however, the courts in their sound discretion and based solely on the evidence presented on record
may approve the application, pro hac vice, on the ground of substantial compliance showing that
there has been a positive act of government to show the nature and character of the land and an
absence of effective opposition from the government. This exception shall only apply to applications
for registration currently pending before the trial court prior to this decision and shall be
inapplicable to all future applications.
In this case, when the RTC rendered its decision, the rule on strict compliance was already in
effect, pursuant to the rule laid down in Republic v. T.A.N. Properties, G.R. No. 154953, June 26, 2008, as
opposed to the rule on substantial compliance in the case of Republic v. Vega [654 Phil. 511, (2011)],
which is pro hac vice. Thus, there was ample opportunity for the respondents to comply with the new
rule, and present before the RTC evidence of the DENR Secretary's approval of the DENR-South
CENRO Certification. This, they failed to do.
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JOVENDO DEL CASTILLO v. ABUNDIO ORCIGA, et al.

G.R. No. 153850 August 31, 2006, Velasco, Jr., J.
Land transfer under PD No. 27 is effected in two (2) stages: (1) issuance of a CLT to a farmer-
beneficiary; and (2) issuance of an Emancipation Patent.
Facts:
Jovendo del Castillo is the son and administrator of Menardo del Castillo, who previously
owned the subject riceland. The farmland was formerly cultivated by Eugenio Orciga. Pursuant to
Presidential Decree No. 27 (PD No. 27), Eugenio Orciga became the beneficiary of the Land Transfer
Program of the government during his lifetime and was awarded Certificate of Land Transfer No.
0070176 over the said landholding. When Eugenio Orciga died, his heirs agreed to rotate among
themselves the cultivation of the riceland covered by said CLT. After cultivating and harvesting the
riceland, Ronald Orciga abandoned the said farm and left the barrio without turning over the
landowners share of the agricultural harvest.
Del Castillo forcibly entered the subject riceland and started cultivating the said land over
the objection of the respondents. Hence, respondents filed a Reinstatement with Mandatory
Injunction and Damages with the Office of Provincial Adjudicator, DARAB. The petition was
dismissed and its motion for reconsideration was likewise denied. On appeal, the DARAB ordered
del Castillo to vacate the subject landholding for the proper disposition of the DAR. The CA denied
del Castillos petition and ruled that he had no right to take possession of the farmland being
disputed even if the heirs had failed to deliver the agricultural lessors share.
Issue:
Whether or not petitioner, as representative of the disputed farmland, is the rightful
possessor of the disputed farmland under the DAR Land Transfer Program.
Ruling:
No. Eugenio Orciga, the original beneficiary and predecessor-in-interest of respondents, was
awarded Certificate of Land Transfer No. 0070176 over the contested land pursuant to PD No. 27.
Therefore, for all intents and purposes, he is the acknowledged owner of the contested land.
A Certificate of Land Transfer (CLT) is a document issued to a tenant-farmer, which proves

inchoate ownership of an agricultural land primarily devoted to rice and corn production. It is issued
in order for the tenant-farmer to acquire the land. This certificate prescribes the terms and
conditions of ownership over said land and likewise describes the landholding its area and its
location. A CLT is the provisional title of ownership over the landholding while the lot owner is
awaiting full payment of the lands value or for as long as the beneficiary is an "amortizing owner."
Land transfer under PD No. 27 is effected in two (2) stages: (1) issuance of a CLT to a farmer-
beneficiary as soon as DAR transfers the landholding to the farmer-beneficiary in recognition that
said person is a "deemed owner"; and (2) issuance of an Emancipation Patent as proof of full
ownership of the landholding upon full payment of the annual amortizations or lease rentals by the
farmer or beneficiary.
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SUBSEQUENT REGISTRATION
SAMUEL U. LEE AND PAULINE LEE AND ASIATRUST DEVELOPMENT BANK, INC., v. BANGKOK
BANK PUBLIC COMPANY, LIMITED.
G.R. No. 173349, February 09, 2011, J. Velasco Jr.
The presumption of fraud established under Art. 1387 of the Civil Code does not apply to
registered lands if the judgment or attachment made is not also registered.
Facts:
Midas Diversified Export Corp. (MDEC) and Manila Home Textile, Inc. (MHI), which are
owned and controlled by the Lee family, entered into two separate Credit Line Agreements (CLAs)
with Bangkok Bank, which required guarantees from the Lee family. MDEC was likewise granted a
loan facility by Asiatrust Development Bank, Inc. When MDEC had defaulted in the payment of its
loan, Asiatrust initiated negotiations with MDEC and required the Lee family to provide additional
collateral that would secure the loan. Asiatrust agreed that Samuel Lee would mortgage the subject
Antipolo properties to secure the loan, and execute a REM over the properties.
Similarly, the Lee family defaulted and incurred aggregate obligations to Bangkok Bank and
to other creditors, particularly the Security Bank Corp. (SBC). SBC filed a case against the Lee family
for a sum of money resulting from the nonpayment of obligations. A Writ of Preliminary Attachment
in favor of SBC was granted attaching the defendants' real and personal properties. The writ,
however, was neither registered nor annotated on the titles of the subject Antipolo properties at the
RD. Moreover, Bangkok Bank was also granted a writ of preliminary attachment, covering the
properties of the Lee family in Antipolo, Cavite, Quezon City, and Baguio, among others.
With MDEC still unable to make payments on its defaulting loans with Asiatrust, the latter
foreclosed the subject mortgaged Antipolo properties. Subsequently, the sale was registered.
Believing the REM and the foreclosure sale to be fraudulent, Bangkok Bank did not redeem the
subject properties. Consequently, the TCTs covering the subject properties were consolidated in the
name of Asiatrust and new titles were issued in the name of Asiatrust without the annotation of the
writs of preliminary attachment in favor of Bangkok Bank, which were deemed canceled. Hence,
Bangkok Bank filed the instant case for the rescission of the REM over the subject properties,
annulment of the foreclosure sale, cancellation of the new TCTs issued in favor of Asiatrust, alleging
that the presumption of fraud under Article 1387 of the Civil Code applies, considering that a writ of
preliminary attachment was issued. It also claimed that collusion and fraud transpired between the
spouses Lee and Asiatrust in the execution of the REM.
Issue:
Whether or not the REM executed over the subject Antipolo properties and the foreclosure
sale were committed in fraud of petitioners' other creditors hence, the questioned mortgage could be
rescinded.
Ruling:
No. While a judgment was made against the spouses Lee in favor of SBC, this, however, was
not annotated on the titles of the subject properties. In fact, there is no showing that the judgment
has ever been annotated on the titles of the subject properties. As established in the facts, there were
only two annotations at the back of the titles of the Antipolo properties: first, the REM executed in
favor of Asiatrust; and second, the writ of preliminary attachment in favor of Bangkok
Bank. Considering that the earlier SBC judgment or attachment was not, and in fact never was,
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annotated on the titles of the subject Antipolo properties, prior to the execution of the REM, the
presumption of fraud under Art. 1387 of the Code clearly cannot apply.
Furthermore, a careful reading of Art. 1387 of the Code vis--vis its Art. 1385 would plainly
show that in allowing rescission in case of an alienation by onerous title, the third person who
received the property conveyed should likewise be a party to the fraud. As a general rule, whether
the person, against whom a judgment was made or some writ of attachment was issued, acted with
or without fraud, so long as the third person who is in legal possession of the property in question
did not act with fraud and in bad faith, an action for rescission cannot prosper. Asiatrust, being a
third person in good faith, should not be automatically presumed to have acted fraudulently by the
mere execution of the REM over the subject Antipolo properties, there being no evidence of fraud or
bad faith.
ENRIQUETA M. LOCSIN v. BERNARDO HIZON, CARLOS HIZON, SPS. JOSE MANUEL & LOURDES
GUEVARA
G.R. No. 204369, September 17, 2014, Velasco Jr., J.
An innocent purchaser for value is one who buys the property of another without notice that
some other person has a right to or interest in it, and who pays a full and fair price at the time of the
purchase or before receiving any notice of another persons claim.
Facts:
Enriqueta M. Locsin, owner of the subject property located in Quezon City went to the United
States after entering into a compromise agreement in 1993 with Billy Aceron against whom the
former filed an ejectment case. However Locsin, did not know that Marylou Bolos had secured a new
TCT in her favor by registering a Deed of Absolute Sale allegedly executed by Locsin in 1979. Bolos
later sold the subject lot to Bernardo Hizon for P1,000,000 but the land was titled to Carlos name
who is Bernardos son. Despite Bernardos promise for a win-win situation with Locsin, he still sold
the property for P1,000,000 to Spouses Guevarra who in turn mortgaged the property. Locsin then
filed an action for reconveyance, annulment and cancellation of the mortgage lien. The CA affirmed
the RTCs finding that the respondents were innocent purchasers for value.
Issue:
Whether or not the Respondents were innocent purchasers for value.
Ruling:
No. Bernardo knew that Bolos never acquired possession over the lot. In his direct
testimony, Bernardo admitted that he knew of the prior compromise agreement entered by Locsin
with Aceron which recognized Locsin as the registered owner of the land. Having knowledge of the
foregoing facts, Bernardo and Carlos should have been impelled to investigate the reason behind the
arrangement. If Bolos already acquired ownership of the property as early as 1979, it should have
been her who entered into a compromise agreement with Aceron in 1993, not her predecessor-in-
interest, Locsin, who, theoretically, had already divested herself of ownership thereof. The transfer to
Spouses Guevara was also suspicious since there was no deed evidencing the sale. It appeared that
the mortgage was a mere ploy to make it appear that the Sps. Guevara exercised acts of dominion
over the subject property when in fact the Spouses had lack of interest in protecting themselves in
the case.
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The circumstances, taken altogether, strongly indicate that Carlos and the spouses Guevara
failed to exercise the necessary level of caution expected of a bona fide buyer. An innocent purchaser
for value is one who buys the property of another without notice that some other person has a right
to or interest in it, and who pays a full and fair price at the time of the purchase or before receiving
any notice of another persons claim.
RECONSTITUTION OF TITLE
REPUBLIC OF THE PHILIPPINES v. HEIRS OF SPOUSES DONATO SANCHEZ and JUANA MENESES,
represented by RODOLFO S. AGUINALDO
It is well to emphasize that a petition for reconstitution of lost or destroyed OCT requires, as a
condition precedent, that an OCT has indeed been issued.
Facts:
Respondents filed an amended petition for reconstitution of Original Certificate of Title

pursuant to Republic Act No. 26. However, due to difficulties encountered in securing the required
documents ordered by the trial court, respondents moved for the archiving of the case, which motion
was granted by the trial court. The amended petition for reconstitution was later revived when
respondents finally secured the said documents. The petition was published anew and trial later
ensued, with the following documents submitted by respondents in evidence. The RTC though
rendered its Decision dismissing the petition for lack of sufficient evidence, ruling that R.A. No. 26
only applies in cases where the issuance of the OCT sought to be reconstituted has been established,
only that it was lost or destroyed. While acknowledging the existence of Decree No. 418121 which
was issued for the lot subject of the case, the RTC nevertheless held that there is no established proof
that OCT No. 45361 was issued by virtue of said Decree. Respondents insisted that there was
sufficient evidence to prove the issuance of OCT No. 45361.
Issue:
Whether or not the documents presented by respondents were sufficient to warrant the
reconstitution of the alleged lost OCT No. 45361.
Ruling:
No. The Court agrees with the trial court that no clear and convincing proof has been
adduced that OCT No. 45361 was issued by virtue of Decree No. 418121. The Decision dated March
21, 1930 and the Registrars Index Card containing the notation on OCT No. 45361 do not cite nor
mention that Decree No. 418121 was issued to support the issuance of OCT No. 45361. At this point,
it is well to emphasize that a petition for reconstitution of lost or destroyed OCT requires, as a
condition precedent, that an OCT has indeed been issued, for obvious reasons.
Assuming arguendo that respondents were able to sufficiently prove the existence of OCT
No. 45361 considering the totality of the evidence presented, the Court finds that reconstitution
thereof is still not warranted, applying Section 15 of R.A. No. 26. Before a certificate of title which has
been lost or destroyed may be reconstituted, it must first be proved by the claimants that said
certificate of title was still in force at the time it was lost or destroyed, among others. Here, the mere
existence of TCT No. 10202, later cancelled by TCT No. 44365, which, in turn, was superseded by TCT
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No. 80792. It clearly shows that the OCT which respondents seek to be reconstituted is no longer in
force, rendering the procedure, if granted, a mere superfluity.
LOURDES A. PASCUA vs. REPUBLIC OF THE PHILIPPINES

G.R. No. 162097, February 13, 2008, Velasco J.
The purpose of reconstitution of title is to have the original title reproduced in the same form it
was when it was lost or destroyed.
Facts:
Petitioner Pascua claimed that she is the owner of a lot as she inherited it from her parents
and together with her predecessors-in-interest, they have been in open, public, continuous and
peaceful possession of the disputed lot since 1956. The lot was bought by Pascuals parents from
Limuaco who acquired the lot by an award from the cadastral court. Since the title of the lot went
missing and the original copy filed in the Register of Deeds also was lost, Pascual filed a petition
judicial reconstitution of the original certificate of title of the said lot. However, the RTC denied the
petition for reconstitution for insufficiency of evidence. On appeal, CA affirmed the decision of the
RTC because the petitioner failed to present the documents sufficient for reconstitution as provided
for by Section 2, Republic Act No. (RA) 26 entitled An Act Providing a Special Procedure for the
Reconstitution of Torrens Certificate of Title Lost or Destroyed, as amended by RA 6732, or any other
document that could be a sufficient basis for reconstituting title. Hence, this petition.
Issue:
Whether or not Pascual satisfies the requirement of the law in reconstituting the titlE of the
disputed land.
Ruling:
No. Sec. 2 of RA 26 provides that original certificates of title shall be reconstituted from such
of the sources hereunder enumerated as may be available in the following order: (a) The owners
duplicate of the certificate of title; (b) The co-owners, mortgagees, or lessees duplicate of the
certificate of title; (c) A certified copy of the certificate of title, previously issued by the register of
deeds or by a legal custodian thereof; (d) An authenticated copy of the decree of registration or
patent, as the case may be pursuant to which the original certificate of title was issued; (e) A
document, on file in the Registry of Deeds by which the property, the description of which is given in
said document, is mortgaged, leased or encumbered, or an authenticated copy of said document
showing that its original has been registered; and (f) Any other document which, in the judgment of
the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title.
R.A 26 presupposes that the property whose title is sought to be reconstituted has already
been brought under the provisions of the Torrens System, Act No. 496. Petitioners evidence itself,
the Deed of Sale between Limuaco and her parents, stated that the lot was not registered under Act
No. 496 and that the parties agreed to register it under Act No. 3344. Even the Deed of Co-owners
Partition stated that the subject lot, Lot No. 19-pt, is not registered. The other piece of evidence, the
certifications from the LRA, merely stated that Decree No. 412846 covering Lot No. 3209 was issued
on December 4, 1930, but the copy of said decree is not among the salvaged decrees on file with said
office. The said copy is presumed lost or destroyed during World War II. The LRA neither stated that
a certificate of title was actually issued nor mentioned the number of the OCT. It cannot be
determined from any of the evidence submitted by petitioner that the adjudicatee of the purported
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decree was Limuaco. Assuming that Lot Nos. 19-pt and 3209 are the same, we are still constrained to
deny the reconstitution of title mainly because there is no proof that a certificate of title was
originally issued to both lots. The Solicitor General notes that both lots are still unregistered land of
the public domain; thus, no certificate covering such property can be issued under the instant
proceeding.
RECONVEYANCE
AQUALAB PHILIPPINES, INC. v. HEIRS OF MARCELINO PAGOBO, G.R. No. 182673, October 5,
2009, J. VELASCO JR.
An action for annulment of title or reconveyance based on fraud is imprescriptible where the
plaintiff is in possession of the property subject of the acts. Moreover, the defense of indefeasibility of a
Torrens title does not extend to a transferee who takes it with notice of a flaw in the title of his
transferor
Facts:
The heirs of Marcelino Pagobo were in actual possession of the disputed land in controversy
since it was acquired through homestead patent issued in 1969 until 1991 when Aqualab disturbed
their possession. Aqualab on the other hand claims their right to the land on the basis of transfer
from Gaw Kache.
The heirs of Pagobo filed a case in 1994 for the reconveyance of the land due to fraud.
Aqualab however move for the dismissal of the case arguing that an action for reconveyance due to
fraud prescribes in 4 or 10 years. Hence, on the ground of prescription, the subject transaction which
occurred in 1970 or more than 24 years later is already barred. Further, Aqualab also claims that
they are innocent purchaser for value.
Issues:
1. Whether or not the action of Pagobo is barred by prescription.

2. Whether or not Aqualab is an innocent purchaser for value.
Ruling:
1. No. Heirs of Pagobo have duly averred continuous possession until 1991 when such
possession was allegedly disturbed by Aqualab. Being in possession of the subject land. Hence,
Pagobos right to reconveyance or annulment of title has not prescribed or is not time-barred. The
prescriptive period for the reconveyance of fraudulently registered real property is 10 years,
reckoned from the date of the issuance of the certificate of title, if the plaintiff is not in possession.
Thus, one who is in actual possession of a piece of land on a claim of ownership thereof may wait
until his possession is disturbed or his title is attacked before taking steps to vindicate his right.
In the instant case, the heirs of Pagobo were in possession until 1991, and until such
possession is disturbed, the prescriptive period does not run. Since respondents filed their complaint
in 1994, or three years after their possession was allegedly disturbed, it is clear that prescription has
not set in, either due to fraud or constructive trust.
2. No. In the instant case, it would appear that Anthony Gaw Kache, Aqualabs predecessor-
in-interest, was not in possession of subject lots. Such a fact should have put Aqualab on guard
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relative to the possessors (Pagobo) interest over subject lots. A buyer of real property that is in the
possession of a person other than the seller must be wary, and a buyer who does not investigate the
rights of the one in possession can hardly be regarded as a buyer in good faith.
EULOGIO M. PEDRANO v. HEIRS OF BENEDICTO PEDRANO, namely: ROMANA PEDRANO,

ANTONIO PEDRANO, ROSENDA PEDRANO RAAGAS, LEONIDA PEDRANO VILLAMOR, and
ZENAIDA P. DAGOHOY; and HEIRS OF NORBERTO M. PEDRANO, namely: NORBERTO C.
PEDRANO, JR., MARILYN C. PEDRANO, and BENEDICTO C. PEDRANO, represented by NORMIE P.
ALCORIN
An action for the reconveyance of a parcel of land based on implied or constructive trust,
prescribes in 10 years, the point of reference being the date of registration of the deed or the date of the
issuance of the certificate of title of the property. Without an OCT, the date from whence the prescriptive
period could be reckoned is unknown and it could not be determined if indeed the period had already
lapsed or not.
Facts:
The subject of the present case is Lot No. 6416 which was originally owned by one Dr.
Hynson who sold the lot to respondent Romana, wife of the deceased Benedicto Pedrano.
Subsequently, a deed of Sale was executed between petitioner Eulogio, a son of Romana, and Romana
herself, wherein Romana agrees to sell the lot to Eulogio for P30,000. However, despite the
expiration of the period within which to pay, Eulogio still failed to pay Romana the agreed price.
Consequently, respondents, the Heirs of Benedicto, filed a complaint with the RTC praying for the
Annulment of the Deed of Sale as well as the recovery of the possession and ownership of Lot No.
6416.
Meanwhile, since the subject lot was yet untitled, it became the subject of a Cadastral Case
for titling. The Cadastral Court rendered a decision adjudicating the lot to Eulogio. However, although
the lot was adjudicated in favor of Eulogio, no Original Certificate of Title was issued in his favor.
The RTC ruled in favor of Eulogio and held that Article 1144 of the Civil Code provides that if
the action is based on a written contract, the action should be filed within 10 years from the time the
right of action accrues. Consequently, since the Deed of Sale was executed on December 22, 1981,
and the instant action was filed only on September 5, 1996, after more than 14 years, prescription
had already set in. On appeal however, the CA reversed the decision of the RTC and ruled that the
present case involves an implied trust, thus, the applicable law is Art. 1456 of the Civil Code. Hence,
this petition.
Issues:
1. Whether or not Eulogio held the property by virtue of an implied trust.
2. Whether or not the action of respondents had prescribed.
Ruling:
1. Yes. What is clear in the aforecited deed of sale is that the late Romana was the buyer of
Lot No. 6416 from Dr. Hynson; that petitioner was to pay Romana PhP 30,000 for it; and that he had
until December 31, 1982 to do so. Petitioner claims he did but offers no proof of payment although he
occupied the land. While it is incumbent for petitioner to present proof that he indeed paid it, he had
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not presented any. Under these facts and even if we concede that the sale was perfected, still
petitioner failed to perform his obligation to pay the consideration of PhP 30,000 to Romana. Since
petitioner failed to comply with what is incumbent upon him, the injured parties (respondents as
heirs of Romana) may choose between fulfillment and rescission of the sale under Art. 1191 of the
Civil Code. Respondents chose rescission. Thus, the juridical tie between the parties is invalidated
and it leaves the parties with their respective property rights relating to Lot No. 6416 before the
celebration of the December 22, 1981 Deed of Sale.
What remains therefore is the undisputed March 15, 1965 Deed of Sale with Romana as the
buyer. Petitioners possession of Lot No. 6416, owned by his parents, was an implied trust
constituted upon petitioner. The CA is correct in applying Art. 1456 on implied trust to this case.
2. No. An action for the reconveyance of a parcel of land based on implied or constructive
trust, as we have already explained in this case, prescribes in 10 years, the point of reference being
the date of registration of the deed or the date of the issuance of the certificate of title of the property.
In the instant case, no OCT has yet been issued to Lot No. 6416 despite an order on July 3, 1989 to
title Lot Nos. 6409-A and 6416. Without an OCT, the date from whence the prescriptive period could
be reckoned is unknown and it could not be determined if indeed the period had already lapsed or
not. Thus, we agree with the CA that prescription has not yet set in when the instant case was filed on
September 5, 1996.
CONFIRMATION OF IMPERFECT TITLE
REPUBLIC OF THE PHILIPPINES v. IGLESIA NI CRISTO, Trustee and APPLICANT, with its
Executive Minister ERAO MANALO as Corporate Sole
G.R. No. 180067, June 30, 2009, VELASCO, JR., J.
The reckoning of the possession of an applicant for judicial confirmation of imperfect title is the
actual possession of the property. It is sufficient for the property sought to be registered to be already
alienable and disposable at the time of the application for registration of title is filed.
Facts:
On November 19, 1998, Iglesia Ni Cristo filed its Application for Registration of Title of a
parcel of land before the MCTC in Paoay-Currimao. During trial it was established that the subject lot
formed part of a bigger lot owned by one Dionisio Sabuco which was sold to INC in 1952 and
subsequently in 1959 from Bernardo Badanguio, who acquired the remaining lot from Sabuco. The
MCTC, acting as cadastral court, granted INCs application. The CA affirmed the decision.
Consequently, the Republic assails that the subject lot was certified as alienable and disposable land
of the public domain only on May 16, 1993 while the application was filed only in 1998. According to
the Republic, since INC only had five years of possession from the declaration, it fell short of the 30-
year period required under Section 48(b) of Commonwealth Act No. 141.
Issue:
Whether or not the reckoning period of the possession of an applicant for judicial
confirmation of imperfect title is to be counted from the date when the lot was classified as alienable
and disposable.
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Ruling:
No. In Heirs of Mario Malabanan v. Republic, the Court resolved the conflicting rulings of the
case of Herbieto and Naguit. The correct interpretation of Sec. 14(1) of PD 1529 was the principle
adopted in the Naguit ruling. PD 1529 merely requires the property sought to be registered as
already alienable and disposable at the time the application for registration of title is filed. The
required possession is not reckoned from the time of the declaration of the property as alienable and
disposable. Since Section 48(b) merely requires possession since June 12, 1945 and does not require
that the lands should have been alienable and disposable during the entire period of possession, the
possessor is entitled to secure judicial confirmation of his title thereto as soon as it is declared
alienable and disposable.
HOMESTEAD PATENT
Josephine Taguinod and Vic A Aguila v. Court of Appeals

G.R. No. 154654, September 14, 2007, Velasco, Jr., J
Settled in this jurisdiction is the rule that the rights of a holder of a homestead patent are
superior over the rights of the tenants guaranteed by the Agrarian Reform Law but it must be
substantiated by substantial evidence
Facts:
Salud Alvarez Aguila was the registered owner of the disputed lots emanated from a
homestead patent. However prior for registration, Salud has to cancel the title of the lot and
registered in his name. Later on the lots were transferred to Vic A. Aguila and Josephine A. Taguinod
within the prohibition period provided by law. Thereafter, President Ferdinand Marcos promulgated
PD 27 for the emancipation of tenant-farmers from private agricultural lands they till that are
primarily devoted to rice and corn. Pursuant to PD 27, the Department of Agrarian Reform (DAR)
launched Operation Land Transfer (OLT) to implement and enforce the laws provisos of transferring
ownership to qualified tenant-farmers or farmer-beneficiaries of the rice or corn land they are
cultivating under a system of sharecrop or lease-tenancy, with the landowner having retention of not
more than seven (7) hectares of agricultural land thereby including Vic Aguila and Josephine
Taguinods lots. Vic A. Aguila, Salud Aguila, on behalf of then minor Aguila, and Taguinod filed a
notarized application for retention. DAR PARO issued a Resolution granting the application for
retention under not more than seven (7) hectares and the excess shall be placed under OLT
Coverage. Office of the Presidential rendered a Decision reversing of DAR Secretary homestead
subject lots are superior than that of DAR law. CA reversed the decision of OP and ruled that
Taguinod and Aguila failed to discharge the burden of adducing evidence to prove the identities of
the original homestead patentees and that they are the direct compulsory heirs of the original
patentees.
Issue:
Whether or not Taguinod and Aguila proved with substantial evidence identities of the
original homestead patentees and that they are the direct compulsory heirs of the original patentees.
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Ruling:
No. Settled in this jurisdiction is the rule that the rights of a holder of a homestead patent are
superior over the rights of the tenants guaranteed by the Agrarian Reform Law.
The Homestead Act has been enacted for the welfare and protection of the poor. The law
gives a needy citizen a piece of land where he may build a modest house for himself and family and
plant what is necessary for subsistence and for the satisfaction of lifes other needs. The right of the
citizens to their homes and to the things necessary for their subsistence is as vital as the right to life
itself. They have a right to live with a certain degree of comfort as human beings, and the State which
looks after the welfare of the peoples happiness is under a duty to safeguard the satisfaction of this
vital right.
It is therefore incumbent upon petitioners to identify substantial evidence on record to

support the OPs finding that their lots are excluded from the coverage of Comprehensive Agrarian
Reform Program which they have failed to do so for they did not present evidence to support their
claim. If Salud Aguila was the original homestead patentee, as now alleged by petitioners, why was
there a need to cancel the first title and issued it on her name? This is incongruous to say the least. No
explanation was given. Verily, the records do not show who the original homestead patentee was
and whether petitioner Taguinod is a direct compulsory heir of the homestead patentee. Petitioners
contend that the original patentee was one Patrocinia Alvarez, the biological mother of petitioner
Taguinod. This again was not borne out by the records.

The deceased shall be succeeded no longer by his widow, but "by his heirs in law, who shall be
entitled to have issued to them the patentif they show that they have complied with the requirements
therefor".
Facts:
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Issues:
(1) Whether or not Tirso repudiated his co-ownership; and

(2) Whether or not Pendejito is the successor of Don Fabian in the homestead application.
Ruling:
(1)No and (2) No. Tirsos acknowledgment of Pendejito and her childrens possession of four
(4) parcels of land cannot be viewed as the required repudiation to bar Tirso from pursuing his right
to seek partition. Under the law on co-ownership, it behooves on the person desiring to exclude
another from the co-ownership to do the repudiating. Verily, the records do not show that Pendejito
and her children performed acts clearly indicating an intention to repudiate the co-ownership and
then apprising Tirso and other co-owners or co-compulsory heirs of such intention. To be sure, Tirso
and his siblings from the first marriage have a stake on three (3) specific properties, even if these
parcels of land formed part of the conjugal partnership of gains of the second marriage. There can be
no serious dispute that the children of the first marriage have a hereditary right over the share of
Don Fabian in the partnership assets of the first marriage.
Anent Parcel S-1, we join the CA in its holding that it belongs to the heirs of Don Fabian
under Sec. 105 of C.A. No. 141, which pertinently provides: If at any time the applicant or grantee
shall die before the issuance of the patent or the final grant of the land, or during the life of the lease,
or while the applicant or grantee still has obligations pending towards the Government, in
accordance with this Act, he shall be succeeded in his rights and obligations with respect to the land
applied for or granted or issued under this Act by his heirs in law, who shall be entitled to have
issued to them the patent or final concession if they show that they have complied with the
requirements therefor, and who shall be subrogated in all his rights and obligations for the purposes
of this Act.
It is undisputed that Don Fabian was the homestead patent applicant who was subrogated to
the rights of the original applicants, spouses Simeon Cagaanan and Severina Naranjo, by purchasing
from the latter Parcel S-1 on May 8, 1943. Don Fabian cultivated the applied area and declared it for
taxation purposes. The application, however, would be rejected because death supervened. In 1963,
Pendejito filed her own homestead application for Parcel S-1. Said Sec. 105 has been interpreted
in Soliman v. Icdang as having abrogated the right of the widow of a deceased homestead applicant to
secure under Sec. 3 of Act No. 926, otherwise known as the Public Land Act of 1903.
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It appearing that Don Fabian was responsible for meeting the requirements of law for
homesteading Parcel S-1, said property, following Soliman, cannot be categorized as the paraphernal
property of Pendejito. Thus, the homestead patent thereto, if eventually issued, must be made in the
name of the compulsory heirs of Don Fabian. Over it, Pendejito shall be entitled, pursuant to Article
834 of the Spanish Civil Code of 1889, only to a usufructuary right over the property equal to the
corresponding share of each of Don Fabians compulsory heirs, i.e., his eight children.
NOTICE OF LIS PENDENS
FRANCISCO MOTORS CORP. v. HON. COURT OF APPEALS AND ANTONIO RAQUIZA

G.R. No. 117622-23 October 23, 2006, Velasco, Jr. J.
The cancellation of a notice of pendency terminates the effects of such notice; thus, the buyers
of the property cannot be considered transferees pendente lite and purchasers in bad faith.
Facts:
The spouses Alano and Antonio Raquiza entered into a Contract of Legal Retainer wherein it
was agreed that Raquiza would be paid his attorneys fees equivalent to 30% of the properties in
litigation. However, Raquiza was dismissed without justifiable cause. Hence, he was allowed to
intervene in the civil cases with respect to his claim for attorneys fees. The trial court ordered the
annotation of attorneys lien in the titles involved in the civil case including the Las Pinas property
then in the name of Miguel Campos, but said annotation was later cancelled. A judgment was
rendered granting Raquiza his attorneys fees. Pending appeal of said decision, the Las Pias
property was transferred from Miguel Campos to CPJ Corporation as nominee of the Alano spouses,
and later to the Alanos. Despite the fact that the transfer was not yet registered, the Alano spouses
mortgaged the property in favor of petitioner FMC. Thereafter, the property was transferred in the
name of the Alanos, and subsequently, in the name of petitioner FMC.
The CA modified the lower courts judgment holding that Raquiza is entitled to 30% pro
indiviso interest in all the properties reconveyed by Campos et al. The Decision became final and
executory and a writ of execution was subsequently issued by the trial court. FMC moved to quash
the writ of execution alleging that it is a buyer in good faith. The motion to quash was denied. On
reconsideration, the motion was granted and the writ of execution was quashed on the ground that
the Las Pinas property was sold by the Alano spouses to FMC long before the CA awarded Raquizas
attorneys fees.
Raquiza filed a Motion to Enforce his Motion to Execute which was denied on the ground
that the decision sought to be enforced had become final and executory after the lapse of five
years.Hence, Raquiza filed a Petition for Certiorari before the Court, which was remanded to the CA.
The CA granted the petition stating that FMC was bound to recognize the attorneys liens, although
not inscribed in the title, and held that Raquizas petition for certiorari was proper.
Issue:
Whether or not Raquiza can enforce his attorneys lien against the Las Pinas property bought
by FMC in good faith from the Spouses Alano.
Ruling:
No. The annotation of attorneys lien on TCT No. 56520 was cancelled long before petitioner
FMC acquired the property in question. TCT No. 56520 was later cancelled and replaced by TCT No.
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190712 in the name of CPJ Corporation. A notice of lis pendens was inscribed on TCT No. 190712 by
spouses Epifanio J. Alano and Cecilia Alano in view of the pendency of Civil Case No. 4622. On the
other hand, respondent Antonio Raquiza did not bother to have his attorneys lien annotated at the
back of TCT NO. 190712, to protect his interests in it. This annotation was cancelled by the Alano
spouses. Private respondent did not cause the reannotation of the attorneys lien and the notice of lis
pendens despite the pendency of the two civil cases. Thus, when petitioner bought the property in
question, the title was free from the attorneys lien and notice of lis pendens.
The Court held that the filing of a notice of lis pendens in effect (1) keeps the subject matter
of the litigation within the power of the court until the entry of the final judgment so as to prevent the
defeat of the latter by successive alienations; and (2) binds the purchaser of the land subject of the
litigation to the judgment or decree that will be promulgated there on whether such a purchaser is
a bona fide purchaser or not; but (3) does not create a non-existent right or lien. The cancellation of a
notice of pendency terminates the effects of such notice; thus, the buyers of the property cannot be
considered transferees pendente lite and purchasers in bad faith. Petitioner FMC bought the property
pending appeal. The title carried no notice of lis pendens and the private respondent did not cause the
reannotation of or the attorneys lien. Thus, petitioner FMC could not be considered a
transferee pendente lite and buyer in bad faith.
REDEMPTION
ILIGAN BAY MANUFACTURING CORP., et al. v. HENRY DY

G.R. No. 140836 & 140907, June 8, 2007, Velasco, Jr., J.
In cases involving redemption, the law protects the original owner. It is the policy of the law to
aid rather than to defeat the owner's right.
Facts:
Iligan Bay Manufacturing Corp. (IBMC) constructed its oil mills on a parcel of land and later
IBMC became part of United Coconut Oil Mills (UNICOM). Henry Dy was a supplier providing
electrical and construction supplies for the oil mills. IBMC became bankrupt hence its creditors
initiated collection suits. UNICOM, as assignee, acquired the right over the loan accounts of IBMC and
the mortgage on the land where IBMC's oil mill was located. UNICOM foreclosed the mortgage and
acquired the lot. The Provincial Treasurer of Lanao del Norte certified that IBMC/UNICOM was
delinquent in paying its taxes, hence it levied the disputed lot and sold it to Dy being the highest
bidder. Due to IBMC'S unpaid obligations, Dy filed collection suits and a writ of attachment was
issued over the disputed lot. Dy exercised his right of redemption in the tax delinquency sale by
tendering a check and asked that a certificate of redemption be issued in his favor but the Provincial
Treasurer did not do so. Later, the President of UNICOM redeemed the lot and a certificate of
redemption was issued. The Office of the Provincial Treasurer informed UNICOMs president that
there was still an additional redemption price due from UNICOM. Due to UNICOM's failure to pay the
total redemption price, Dy requested that a final deed of sale be executed in his favor but was denied.
Hence, Dy filed a case for Mandamus with Damages. The RTC found that the refusal of the Provincial
Treasurer was proper since UNICOM had redeemed the subject property within the prescribed
period. Upon appeal, the CA ruled that the redemption was not valid for failure to pay the total
redemption price.
Issue:
Whether or not UNICOM had validly redeemed the subject property.
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Ruling:
Yes. Redemption has been defined as "the right of a debtor, and sometimes of a debtor's
other creditors, to repurchase from a buyer at a forced sale, property of the debtor that was seized
and sold in satisfaction of a judgment or other claim against the debtor, which right is usually limited
to forced sale of real property." We have established in jurisprudence that in cases involving
redemption, the law protects the original owner. It is the policy of the law to aid rather than to defeat
the owner's right. Therefore, "redemption should be looked upon with favor and where no injury will
follow, a liberal construction will be given to our redemption laws, specifically on the exercise of the
right to redeem."
As provided in Sec. 78 of PD 464, the redemption price should consist of: (1) the total
amount of taxes and penalties due up to the date of redemption, (2) the costs of sale, and (3) the
interest at the rate of twenty per centum (20%) on the purchase price. We find no error in the CA's
finding that there was a deficiency of PhP 13,742.11 in UNICOM's redemption price. However, we
find no evidence that UNICOM was notified of this deficiency. The Provincial Treasurer's
letters, which were submitted as evidence to prove that there was a deficiency in UNICOM's
redemption payment, did not prove that UNICOM received such letters; thus, there was substantial
compliance of the requirements of the law.
ACQUISITIVE PRESCRIPTION

Acquisitive prescription does not lie against Tirso Monteroso as the required extraordinary
prescription period of 30 years has not yet lapsed, counted from said considered repudiation. Such
would still be true even if the period is counted from the time of the death of Don Fabian when the
Cagampang spouses took exclusive possession of the subject properties.
Facts:
Don Fabian Monteroso, Sr. married twice and sired eight (8) children, four (4) from each union. In his
first marriage with Soledad Doldol, Soledad, Reygula, Benjamin and Tirso were born. After Doldol
died, his second marriage with Sofia Pendejito bore Florenda, Reynato, Alberto, and Fabian, Jr. During
the early part of his second marriage, Don Fabian filed before the CFI of Agusan an intestate
proceeding for the estate of his deceased first wife to obviate any dispute over the inheritance. The
project for partition was approved and the intestate estate of Doldol was partitioned and distributed
to her four (4) children in equal shares.
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Issues:
(1) Whether or not partition is the proper remedy to recover the properties sold to Soledad
Montereoso-Cagampang; and
(2) Whether or not the action of Tirso is barred by extinctive prescription and laches.
Ruling:
(1) Yes and (2) No. Being inextricably intertwined, the Court tackles both issues together.
The fact that Tirso and the other compulsory heirs of Don Fabian were excluded from the possession
of their legitime and the enjoyment of the fruits thereof does not per se argue against the existence of
a co-ownership. While Tirso may not have expressly pleaded the theory of co-ownership, his demand
from, and act of initiating a civil caseagainst the Cagampang spouses for his share, necessarily implies
that he was asserting his right as co-owner or co-heir of the properties unjustly withheld by the
Cagampang spouses, through the instrumentality of simulated deeds of sale covering some of the
hereditary properties. By asserting his right as a compulsory heir, Tirso has effectively brought into
the open the reality that the Cagampang spouses were holding some of the subject properties in trust
and that he is a co-owner of all of them to the extent of his legal share or legitime thereon.
Consequently, we are one with the trial and appellate courts that partition is the proper remedy for
compulsory or legal heirs to get their legitime or share of the inheritance from the decedent. An
action for partition is at once an action for declaration of co-ownership and for segregation and
conveyance of a determinate portion of the properties involved. Also, Sec. 1, Rule 69 of the Rules of
Court pertinently provides that In a complaint in action for partition of real estate, a person having
the right to compel the partition of real estate may do so as provided in this Rule, setting forth in his
complaint the nature and extent of his title and an adequate description of the real estate of which
partition is demanded and joining as defendants all other persons interested in the property.
With regard to the issue on acquisitive prescription, considering that the new Civil Code was
already then in effect, Art. 1141 of said Code applies; thus, Tirso has at the very least 10 years and at
the most 30 years to file the appropriate action in court. The records show that Tirsos cause of
action has not prescribed as he instituted an action for partition in 1970 or only nine (9) years after
the considered express repudiation. Besides, acquisitive prescription also does not lie against Tirso
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even if we consider that a valid express repudiation was indeed made in 1961 by the Cagampang
spouses since in the presence of evident bad faith, the required extraordinary prescription period of
30 years has not yet lapsed, counted from said considered repudiation. Such would still be true even
if the period is counted from the time of the death of Don Fabian when the Cagampang spouses took
exclusive possession of the subject properties.
TORTS AND DAMAGES
EXEMPLARY OR CORRECTIVE DAMAGES
PEOPLE OF THE PHILIPPINES v. ALFREDO DELA CRUZ y MIRANDA, alias DIDONG, G.R. No.
184792, October 12, 2009, J. VELASCO JR.
If the killing is attended with aggravating circumstances, exemplary damages may be awarded.
Facts:
Didong was convicted of the crime of murder as qualified by treachery. The appellate court
reduced the award of civil indemnity to PhP 50,000, deleted the award of moral damages for want of
evidence to support it, and further ordered the payment of PhP 25,000 in exemplary damages. The
accused questions the award of damages made by the court. Hence, the current petition.
Issue:
Whether or not the Appellate Courts imposition of Didongs civil liability is correct.
Ruling:
No. When as a consequence to a criminal act death ensues, the following damages may be
awarded: (1) civil indemnity ex delicto for the death of the victim; (2) actual or compensatory
damages; (3) moral damages; and (4) exemplary damages.
Civil indemnity is mandatory and granted to the heirs of the victim without need of proof
other than the commission of the crime. The award of civil indemnity of PhP 50,000 is increased to
PhP 75,000 in view of the ruling that the crime is murder qualified by the aggravating circumstances
of treachery and evident premeditation. Said crime is a heinous crime under Republic Act 7659
punishable by death but now reduced to reclusion perpetua by virtue of RA 9346, which prohibits
the imposition of death penalty.
The deletion of the award of moral damages was erroneous. Moral damages are mandatory
in cases of murder, without need of allegation and proof other than the death of the victim. The
award of PhP 75,000 as moral damages is consequently in order and in accordance with prevailing
jurisprudence.
The award of exemplary damages is proper under Article 2230 of the Civil Code, since the
killing was attended by the qualifying circumstance of treachery.
64 | P a g e

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Deans

Digested by: DC 2016 Members

Equitable Mortgage ............................................................................................................... 36

EFFECT AND APPLICATION OF LAWS (CIVIL CODE)

EDUARDO M. COJUANGCO, JR. v. REPUBLIC OF THE PHILIPPINES

It is well-settled that laws must be published to be valid. In fact, publication is an indispensable

In this case, while it incorporated the PCA-Cojuangco Agreement by reference, Section 1 of

NATIONAL ELECTRIFICATION ADMINISTRATION v. VICTORIANO B. GONZAGA

Respondent Victoriano B. Gonzaga (Gonzaga) filed his Certificate of Candidacy for

Whether or not the ECEC is valid.

ESTATE OF THE LATE ENCARNACION VDA. DE PANLILIO, represented by GEORGE LIZARES v

EUSEBIO GONZALES v. PHILIPPINE COMMERCIAL AND INTERNATIONAL BANK, EDNA OCAMPO,

(2) Whether or not the award of damages in favor of Gonzales is proper.

PERSONS AND FAMILY RELATIONS

DREAMWORK CONSTRUCTION, INC. v. CLEOFE S. JANIOLA

Whether or not a prejudicial question exists.

MARRIAGE (FAMILY CODE)

SYED AZHAR ABBAS v. GLORIA GOO ABBAS

ERIC U. YU v. HONORABLE JUDGE AGNES REYES-CARPIO, IN HER OFFICIAL CAPACITY AS

A divorce obtained abroad by an alien married to a Philippine national may be recognized in

2. Whether or not the judgment of divorce is valid.

PROPERTY RELATIONS OF THE SPOUSES

METROPOLITAN BANK AND TRUST CO. v. NICHOLSON PASCUAL

METROPOLITAN BANK AND TRUST CO. v. NICHOLSON PASCUAL

1. Whether or not the subject property is a conjugal.

PATERNITY AND FILIATION

GRACE M. GRANDE v. PATRICIO T. ANTONIO

BANK OF THE PHILIPPINE ISLANDS v. VICENTE VICTOR C. SANCHEZ et al.

TIRSO MONTEROSO vs. COURT OF APPEALS, et al.

PRESCRIPTION AND LACHES

DEPARTMENT OF EDUCATION, DIVISION OF ALBAY v. CELSO OATE

ASSOCIATED LABOR UNIONS(ALU) and DIVINE WORD UNIVERSITY EMPLOYEES UNION-

Whether or not the CA erred in not applying the doctrine of laches.

OBLIGATIONS AND CONTRACTS

SM LAND, INC. v. BASES CONVERSION AND DEVELOPMENT AUTHORITY

NATURE AND EFFECTS OF OBLIGATIONS

GENERAL MILLING CORPORATION v. SPS. LIBRADO RAMOS and REMEDIOS RAMOS

Whether or not a sufficient demand was made by GMC.

KINDS OF CIVIL OBLIGATIONS

BANK OF THE PHILIPPINE ISLANDS v. VICENTE VICTOR C. SANCHEZ et al.

Whether or not Allied and Metrobank is liable to Lim Sio Wan.

BENGUET CORPORATION vs. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES -

B.E. SAN DIEGO, INC. v. ROSARIO ALZUL

Yes. Imposing 5% monthly interest, whether compounded or simple, is unconscionable.

EDUARDO M. COJUANGCO, JR. v. REPUBLIC OF THE PHILIPPINES

Philippine Coconut Administration(PCA) have the largest membership in the COCOFUND. A

Whether or not the PCA-COJUANGCO agreement is a valid contract.

ANTHONY ORDUA, DENNIS ORDUA, and ANTONITA ORDUA v. EDUARDO J. FUENTEBELLA,

TIRSO MONTEROSO vs. COURT OF APPEALS, et al.

LAND BANK OF THE PHILIPPINES v ALFREDO ONG

Whether Land Bank should return the amount paid by Ong.

ESTATE OF THE LATE JESUS S. YUJUICO, represented by ADMINISTRATORS BENEDICTO V.

Whether or not the parties entered into a contract of absolute sale.

PARTNERSHIP, AGENCY AND TRUSTS

PACIFIC REHOUSE CORPORATION et al. vs EIB SECURITIES, INC.,

EXPRESS VS. IMPLIED AGENCY

FILIPINAS (PRE-FAB BLDG.) SYSTEMS, INC. v MRT DEVELOPMENT CORPORATION; COURT OF

ADRIATICO CONSORTIUM, INC., et al. v. LAND BANK OF THE PHILIPPINES

In the construction or interpretation of a compromise agreement, the intention of the parties is