Table of contents:pageAgency . . . . . . . . . . . . . . . 01 - 04Partnership . . . . . . . . . . . . 04 - 04Land Titles . . . . . . . . . . . . . 04 - 26Torts & Damages . . . . . . . . . 26 - 39Oblicon . . . . . . . . . . . . . . . 39 - 72Sales . . . . . . . . . . . . . . . . 72 - 96Sectrans . . . . . . . . . . . . . . 96 - 110Property . . . . . . . . . . . . . . 110 -132Succession . . . . . . . . . . . . . 133 -139Persons . . . . . . . . . . . . . . 139 -156* digests are arranged from the most recent to later cases

AGENCY

2000

Agency; Distinguished from SaleVICTORIAS MILLING CO. v. CAG.R. No. 117356. , June 19, 2000.It is clear from Article 1868 that the basis of agency is representation. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions; and on the part of the agent, there must be an intention to accept the appointment and act on it, and in the absence of such intent, there is generally no agency. One factor which most clearly distinguishes agency from other legal concepts is control; one person — the agent — agrees to act under the control or direction of another — the principal. Indeed, the very word "agency" has come to connote control by the principal. The control factor, more than any other, has caused the courts to put contracts between principal and agent in a separate category.This Court has ruled that where the relation of agency is dependent upon the acts of the parties, the law makes no presumption of agency, and it is always a fact to be proved, with the burden of proof resting upon the persons alleging the agency, to show not only the fact of its existence, but also its nature and extent. The question of whether a contract is one of sale or agency depends on the intention of the parties as gathered from the whole scope and effect of the language employed. Ultimately, what is decisive is the intention of the parties. That no agency was meant to be established by the CSC and STM is clearly shown by CSC's communication to petitioner that SLDR No. 1214M had been "sold and endorsed" to it. The use of the words "sold and endorsed" means that STM and CSC intended a contract of sale, and not an agency. …proceeding from the theory that the transactions entered into between petitioner and STM are but serial parts of one account, petitioner insists that its debt has been offset by its claim for STM's unpaid purchases, pursuant to Article 1279 of the Civil Code. However, the trial court found, and the Court of Appeals concurred, that the purchase of sugar covered by SLDR No. 1214M was a separate and independent transaction; it was not a serial part of a single transaction or of one account contrary to petitioner's insistence. Evidence on record shows, without being rebutted, that petitioner had been paid for the sugar purchased under SLDR No. 1214M. Petitioner clearly had the obligation to deliver said commodity to STM or its assignee. Since said sugar had been fully paid for, petitioner and CSC, as assignee of STM, were not mutually creditors and debtors of each other. No reversible error could thereby be imputed to respondent appellate court when it refused to apply Article 1279 of the Civil Code to the present case.Petitioner contends that the sale of sugar under SLDR No. 1214M is a conditional sale or a contract to sell, with title to the sugar still remaining with the vendor…terms and conditions clearly show that petitioner transferred title to the sugar to the buyer or his assignee upon payment of the

purchase price. Said terms clearly establish a contract of sale, not a contract to sell. Petitioner is now estopped from alleging the contrary.

1996

Contract of Agency; Validity & EnforceabilityLIM v. CAFEBRUARY 1996The contention is far from meritorious. The receipt which petitioner signed establishes a contract of agency to sell on commission basis.There are some provisions of the law which require certain formalities for particular contracts:1) When the form is required for the validity of the contract2) When it is required to make the contract effective as against third parties (Arts. 1357 & 1358, Civil Code)3) When form is required for the purpose of proving the existence of the contract (Statute of Frauds).A contract to sell on commission basis does not belong to any of these three categories, hence, it is valid and enforceable in whatever form it may be entered into.

Civil Law/Agency & Land Titles/GPA to sell land & innocent purchaser for valueFRANCISCO A. VELOSO v. COURT, AGLALOMA ESCARIO & REG. OF DEEDS, MLA.G.R. No. 102737, Aug. 21, 1996Petitioner contends that the power of attorney (GPA) was a forgery and presented checks, his marriage certificate, etc. to compare his genuine signature with that in the GPA. He also alleged that the same was not duly notarized for as testified by Atty. Tubig himself, he did not sign thereon nor was it ever recorded in his notarial register.The GPA was valid and regular on its face. It was notarized and such such, carries the evidentiary weight with respect to due execution. While it is true that it was denominated as a GPA, a perusal thereof revealed that it stated an authority to sell. Thus, there was no need for a separate SPA as the document expressly authorized the agent to sell the subject property. The SPA can be included in the GPA when it is specified therein the act or transaction for which the special power is required.We found, however, that the basis presented by petitioner was inadequate to sustain his contention. Mere variance of the signatures is not conclusive proof of forgery. Forgery cannot be presumed. (Tenio-Obsequio v. CA, G.R. No. 107967, 1 Mar. 1994) Petitioner failed to prove his allegation and simply relied on the apprent difference of the signatures. His denial had not established that the signature of the GPA was not his.We agree with the lower court that private respondent was an innocent purchaser for value. Respondent relied on the GPA presented by petitioner’s wife. Being the wife of the owner and having with her the title to the property, there was no reason for private respondent not to believe in her authority. Moreover, the GPA was notarized and carried with it the presumption of its due execution. Thus, having had no inkling on any irregularity and having no participation thereof, private respondent was a buyer in good faith. (Bautista v. CA, G.R. No. 106042, 28 Feb. 1994)Documents acknowledged before a notary have the evidentiary weight with respect to their due execution. The questioned GPA and deed of sale, were notarized and therefore, presumed to be valid and duly executed. Atty. Tubig denied having notarized the said documents and alleged that his signature had also been falsified. He presented samples of his signature to prove his contention. Forgery should be proved by clear nad convincing evidence and whoever alleges it has the burden of proving the saem. Just like petitioner, witness Atty. Tubig merely pointed out that his signature was different from that in the GPA and deed of sale. There had never been an accurate examination of the signature, even that of petitioner. To determine forgery, it was held in Cesar v. Sandiganbayan (G.R. Nos. 54719-50, 17 Jan. 1985): The process of identification must include the determination of the extent, kind and significance of this resemblance as well as of variation. It becomes necessary to determine whether the variation is due to the operation of a different personality, or is only the exepected and inevitable variation found in the genuine writing of the same writer. It is also necessary to decide whether the resemblance is the result of a more

or less skillful imitation, or is the habitual and characteristic resemblance which naturally appeats in a genuine writing. When these 2 questions are correctly answered the whole problem of identification is solved.Even granting that petitioner’s signature was falsified, and the GPA and deed of sale void, such would not revoke title subsequently issued in favor of private respondent, an innocent purchaser for value.Finally, the trial court did not err in applying equitable estoppel, i.e., where one or two innocents must suffer a loss, he who by his conduct made the loss possible must bear it. From the evidence, petitioner must bear the loss as while he declared that he had sole access to the TCT, his wife was able to get it, hence petitioner did not observe due diligence.

Civil Law/AgencyCOSMIC LUMBER v. CA & ISIDRO PEREZ G.R.No. 114311, NOVEMBER 1996 Petitioner argues that the trial court’s decision is void because the compromise agreement upon which it was based is void. Attorney-in-fact Paz G. Villamil-Estrada did not possess the authority to sell nor was she armed with a Board Resolution authorizing the sale of its property. She was merely empowered to enter into a compromise agreement in the recovery suit she was authorized to file against the squatters on the lot, such authority being expresly confined to the “ejectment of third persons or squatters xxx”We agree with petitioner. The authority granted to Estrada under the SPA was explicit and exclusionary: for her to sue to eject all persons found on the lots so that petitioner could take material possession thereof, and for this purpose, to appear at pre-trial and enter into a compromise agreement, but only insofar as this was protective of petitioner’s rights. Nowhere was Estrada granted, expressly or impliedly, the power to sell the lot or portion thereof. Neither can conferment of the power to sell be validly inferred from the specific authority “to enter into a compromise agreement” becuase of the explicit limitation fixed by the grantor that the compromise entered into shall only be to protect petitioner’s rights. In the context of the grant of powers to Estrada, alienation by sale cannot be deemed protective of petitioner’s rights, more so when the land was being sold for P80/sq. m., very much less than its assessed value of P250.00/sq. m.When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. For the principal to confer the right upon an agent to sell real estate, a POA must so express the powers of the agent in clear and unmistakable language. Where there is any reasonable doubt, no such construction shall be given the document. (citations omitted)By selling to respondent Perez a portion of petitioner’s land through a compromise agreement, Estrada acted without authority. The sale ipso jure is void. So is the compromise agreement. This being the case, the judgment based thereon is void as well. It may be argued that petitioner knew of the compromise agreement since the principal is chargeable with and bound by the knowledge of or notice to his agent received while the agent was acting as such. But the general rule is intended to protect those who exercise good faith and not as a shield for unfair dealing. Hence, there is a well-established exception to the general rule as where the conduct and dealings of the agent are such as to raise a clear presumption that he will not communicate to the principal the facts in controversy. (Mutual Life v. Hilton Green, 241 US 613) The logical reason for this exception is that where the agent is committing fraud, it would be contrary to common sense to expect that he would communicate this to the principal. Verily, when an agent is engaged in the perpetration of fraud upon his principal, he is not really acting for the principal but is acting for himself, entirely outside the scope of his agency. (Aetna Casualty v. Local Bldg., 19P2d 612, 616) Indeed, the basic tenets of agency rest on the highest considerations of justice, equity and fair play, and an agent will not be permitted to pervert his authority to his own advantage, and his act in secret hostility to the interests of his principal transcends the power afforded him. (citation omitted)

1995

Civil Law/Agency/Sales/Contract to sellTOYOTA SHAW v. CA244 SCRA 320 (1995 May)A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agentDefiniteness of price is essential element in formation of a binding contract of sale.PARTNERSHIP

1999

Partnership; Creation Of; RequisitesAFISCO INSURANCE CORP., ET AL. VS CAJan. 25, 1999 (1) Partnership; creation of; requisites – Art. 1767 of the CC recognizes the creation of a contract of partnership when “2 or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.” Its requisites are: (1)mutual contribution to a common stock, and (2) a joint interest in the profits.” In other words, a partnership is formed when persons contract “to devote to a common purpose either money, property, or labor with the intention of dividing the profits between themselves.” Meanwhile, an association implies associates who enter into a “joint enterprise x x x for the transaction of business.”(2) Insurance pool; circumstances indicating partnership. – In the case before us, the ceding companies entered into a Pool Agreement or an association that would handle all the insurance businesses covered under their quota-share reinsurance treaty and surplus reinsurance treaty in Munich. The following unmistakably indicates a partnership, or an association covered by Section 24 of the NIRC

1998

Partnership, its Three Final StagesIRMA IDOS v. CA, ET AL.September 1998

Petitioner is charged for violation of BP 22, for issuing a check to complainant, Eddie Alarilla, as payment for his share of assets of their partnership, which was in the process of liquidation, which check however bounced.

There are three final stages of a partnership: (1) dissolution; (2) winding-up; and (3) termination. Dissolution is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the business. It is that point of time that the partners cease to carry on the business together. Winding up is the process of settling the business affairs after dissolution. Termination is the point in time after all the partnership affairs have been wound up.

Art. 1829 of the NCC states that “On dissolution, a partnership is not terminated, but continues until the winding up of partnership affairs is completed.

The best evidence of the existence of the partnership, which was not yet terminated (though in the winding up stage) were the unsold goods and uncollected receivables, which were presented to the trial court. Since the partnership has not been terminated, the petitioner and complainant remained as co-partners. The check was thus issued by the petitioner to complainant as would a partner to another, and not as payment from a debtor to a creditor.

LAND TITLES

2001

Land titles; certificate or registrationLORETA BRAVO CERVANTES, et al vs. HON. COURT OF APPEALS, et al,

G.R. No. 118982, February 19, 2001It is a fundamental principle in land registration that the certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein, in this case the private respondents' father, Antonio Francisco. A title once registered under the Torrens System cannot be defeated even by adverse, open and notorious possession; neither can it be defeated by prescription. Petitioners cannot prove their ownership of the subject parcels of land through tax declarations and corresponding tax receipts inasmuch as they are not conclusive evidence of ownership.

Land Titles; Public landsFELIPE SEVILLE in his capacity as judicial administrator of the estate of JOAQUIN ORTEGA and/or FELIPE SEVILLE, EMILIA ESTRADA, et al vs. NATIONAL DEVELOPMENT COMPANY, et al, G.R. No. 129401, February 2, 2001Unless a public land is shown to have been reclassified as alienable or actually alienated by the State to a private person, that piece of land remains part of the public domain. Hence, occupation thereof, however long, cannot ripen into ownership.Under the Regalian doctrine, all lands of the public domain belong to the State, which is the source of any asserted right to ownership of land. All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. In Menguito v. Republic, 9 the Court held that "[u]nless public land is shown to have been reclassified or alienated to a private person by the State, it remains part of the inalienable public domain. Indeed, 'occupation thereof in the concept of owner, no matter how long, cannot ripen into ownership and be registered as a title.' To overcome such presumption, incontrovertible evidence must be shown by the applicant. Absent such evidence, the land sought to be registered remains inalienable." A person in open, continuous, exclusive and notorious possession of a public land for more than thirty years acquires an imperfect title thereto. That title may be the subject of judicial confirmation, pursuant to Section 48 of the Public Land Act. However, Section 4 of Presidential Decree (PD) No. 1073, 10 paragraph "b" of the aforecited provision applies only to alienable and disposable lands of the public domain. Clearly, the burden of proof that the land has been classified as alienable is on the claimant. In the present case, petitioners failed to discharge this burden. Hence, their possession of the disputed property, however long, cannot ripen into ownership.To begin with, the power to classify a land as alienable belongs to the State, not to private entities. Hence, the pronouncements of Yap or LSBDA cannot effect the reclassification of the property.Semantics aside, petitioners are effectively seeking the modification of LSBDA's OCT, which allegedly encompassed even a parcel of land allegedly belonging to them. Hence, the present suit, purportedly filed for the "recovery of real property and damages," is tantamount to a collateral attack not sanctioned by law. Section 48 of PD 1529, the Property Registration DecreeMoreover, the title became indefeasible and incontrovertible after the lapse of one year from the time of its registration and issuance. 23 Section 32 of PD 1529 provides that "[u]pon the expiration of said period of one year, the decree of registration and the certificate of title shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or other persons responsible for the fraud." Petitioners also claim that the disputed property should be reconveyed to them. This cannot be allowed. Considering that the land was public before the Miscellaneous Sales Patent was issued to LSBDA, petitioners have no standing to ask for the reconveyance of the property to them. The proper remedy is an action for reversion, which may be instituted only by the Office of the Solicitor General, pursuant to Section 101 of the Public Land ActIn the light of our earlier disquisition, the theory has no leg to stand on. Absent any showing that the land has been classified as alienable, their possession thereof, no matter how lengthy, cannot ripen into ownership. In other words, they have not become owners of the disputed property. Moreover, LSBDA's title was derived from a Miscellaneous Sales Patent, not from Yap. Finally, petitioners cannot, by a collateral attack, challenge a certificate of title that has already become

indefeasible and incontrovertible. If petitioners believe that they have been defrauded by Yap, they should seek redress, not in these proceedings, but in a proper action in accordance with law.

2000

Land Titles: Adverse ClaimDiaz Duarte v. OngMay 2000

This is a land dispute between Diaz & the spouses Ong. Diaz inherited the land from his parents. In 1979 Diaz sold the land to Corregidor. Corregidor later on sold back the land by virtue of a deed of repurchase to Diaz. Corregidor however refused to surrender the TC to Diaz hence, she executed an adverse claim to the lot. The Ong's claim to be buyers in good faith. Ong contend that the notice of adverse claim was already cancelled when they bought the property. Diaz disputes the legality of the cancellation & maintains that the Registrar of Deeds should not have automatically cancelled the notice of adverse claim simply because the 30 day period has lapsed.

RULINGS: (1) A notice of adverse claim remains valid even after the lapse of the 30-day period. - The good faith of appellant-spouses rests heavily on whether the notice of adverse claim on Lot 1208 was validly cancelled by the Registrar of Deeds. The issue is no longer of first impression. In the 1996 case of Sajonas v. Court of Appeals (258 SCRA 79), we explained that a notice of adverse claim remain valid even after the lapse of the 30-day period provided by Section 70 of P.D. No. 1529 or the Property Registration Decree. We explained in Sajonas that for as long as there is yet no petition for its cancellation, the notice of adverse claim remains subsisting. Thus: "At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty days. But the above provision cannot and should not be treated separately, but should be read in relation to the sentence following, which reads: "After the lapse of said period, the anotation of the adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest." "If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse of thirty days, then it would have been necessary to include the foregoing caveat to clarify and complete the rule. For then, no adverse claim need be cancelled. If it has been automatically terminated by mere lapse of time, the law would not have required the party in interest to do a useless act." In a petition for cancellation of adverse claim, a hearing must first be conducted. The hearing will afford the parties an opportunity to prove the propriety or impropriety of the adverse claim. Petitioner was unlawfully denied this opportunity when the Registrar of Deeds automatically cancelled the adverse claim. Needless to state, the cancellation of her adverse claim is ineffective.

Land Titles; ConveyanceCORPUZ v. SPS. GROSPE G.R. No. 135297, June 8, 2000.The sale, transfer or conveyance of land reform rights are, as a rule, void in order to prevent a circumvention of agrarian reform laws. However, in the present case, the voluntary surrender or waiver of these rights in favor of the Samahang Nayon is valid because such action is deemed legally permissible conveyance in favor of the government. After the surrender or waiver of said land reform rights, the Department of Agrarian Reform, which took control of the property, validly awarded it to private respondents.We have already ruled that the sale or transfer of rights over a property covered by a Certificate of Land Transfer is void except when the alienation is made in favor of the government or through hereditary succession. This ruling is intended to prevent a reversion to the old feudal system in which the landowners reacquired vast tracts of land, thus negating the government's program of freeing the tenant from the bondage of the soil.

As such [the farmer-beneficiary] gained the rights to possess, cultivate and enjoy the landholding for himself. Those rights over that particular property were granted by the government to him and to no other. To insure his continued possession and enjoyment of the property, he could not, under the law, make any valid form of transfer except to the government or by hereditary succession, to his successors.Despite the above prohibition, however, there are reports that many farmer-beneficiaries of PD 27 have transferred the ownership, rights, and/or possession of their farms/homelots to other persons or have surrendered the same to their former landowners. All these transactions or surrenders are violative of PD 27 and therefore, null and void.Abandonment requires (a) a clear and absolute intention to renounce a right or claim or to desert a right or property; and (b) an external act by which that intention is expressed or carried into effect. The intention to abandon implies a departure, with the avowed intent of never returning, resuming or claiming the right and the interest that have been abandoned. Surrender of possession did not amount to an abandonment because there was an obligation on the part of private respondents to return possession upon full payment of the loan.PD 27 provides that title to land acquired pursuant to the land reform program shall not be transferable except through hereditary succession or to the government, in accordance with the provisions of existing laws and regulations. Section 8 of RA 3844 also provides that "[t]he agricultural leasehold relation...shall be extinguished by: ...(2)[v]oluntary surrender of the landholding by the agricultural lessee, . . . ."Voluntary surrender, as a mode of extinguishment of tenancy relations, does not require court approval as long as it is convincingly and sufficiently proved by competent evidence. Petitioner's voluntary surrender to the Samahang Nayon qualifies as a surrender or transfer to the government because such action forms part of the mechanism for the disposition and the reallocation of farmholdings of tenant-farmers who refuse to become beneficiaries of PD 27. …what was prohibited was the perpetration of the tenancy or leasehold relationship between the landlord and the farmer beneficiary.

Land Titles; Property; OwnershipCARMELINO M. SANTIAGO, MONTSERRAT M. SANTIAGO, NILDA M. IBOLEON, BELINDA MANAHAN AND JOSEFINA M. CAPINPIN, petitioners, vs. THE COURT OF APPEALS AND METROPOLITAN WATERWORKS AND SEWERAGE SYSTEMG.R. No. 109111, June 28, 2000Documents proving ownership such as transfer and original certificates of title are the legs on which petitioners’ case stands. Premised on the relevance of these documents, the trial court ruled in favor of petitioners. However, the proverbial legs of evidence are broken. While the titles presented by petitioners show ownership, such ownership is not of the land claimed, but over the adjoining parcels of land. The technical descriptions in the titles presented by petitioners betray them as adjacent and adjoining owners of the land claimed by MWSS for registration.

A torrens certificate of title covers only the land described therein together with improvements existing thereon, if any, nothing more. The titles presented by petitioners covering as they do land adjacent to that claimed in MWSS’ application for registration, do not support their claim, but even defeat it.Further, we agree with the Court of Appeals that if petitioners’ predecessors-in-interest being members of the bar and learned in the law merely allowed and tolerated MWD or NAWASA’s use of the land, they would have reduced the agreement into writing for use in the registration of their property which at that time was still unregistered.We hold that if petitioners’ predecessors were truly the owners of the subject parcels of land, they would have taken steps to have the land properly titled long ago. The land was possessed by MWSS long before World War II. That was over sixty (60) years ago! Petitioners "slept on the rights" they claim to possess. Relief is denied to a claimant whose right has become "stale" by reason of negligence or inattention for a long period of time.MWSS presented tax declarations to buttress its ownership of the land. True, tax declarations do not prove ownership. However, tax declarations can be strong evidence of ownership when accompanied by possession for a period sufficient for prescription. Since MWSS possessed the land in the concept of owner for more than thirty (30) years preceding the application, MWSS

acquired ownership by prescription. By placing the pipelines under the land, there was material occupation of the land by MWSS, subjecting the land to its will and control. [Under Article 531 of the Civil Code, "Possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by proper acts and legal formalities established for acquiring such right."] Petitioners cannot argue that MWSS’ possession was not "open". The existence of the pipes was indicated above the ground by "pilapils".Even assuming arguendo that the pipes were "hidden" from sight, petitioner cannot claim ignorance of the existence of the pipes. The possession must be public in order to be the basis for prescription. If the owner proves that the possession is clandestine, it will not affect his possession. Petitioners also cannot claim that MWSS abandoned its possession. There is no showing that by discontinuing the use of the pipes, MWSS voluntarily renounced its claim over the land. Petitioners did not prove that the spes recuperendi was gone and the animus revertendi was given up.

Land Titles; Property; Lis pendensZAIDA RUBY S. ALBERTO vs. COURT OF APPEALS, EPIFANIO J. ALANO, CECILIA P. ALANO, YOLANDA P. ALANO, and NATALIA REALTY, INC. June 30, 2000The notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, and serves as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles on the result of the litigation over said property. In Viewmaster Construction Corporation v. Reynaldo Y. Maulit and Edgardo Castro, this Court did not confine the availability of lis pendens only to cases involving the title to or possession of real property when it held that:"According to Section 24, Rule 14 of the Rules of Court and Section 76 of Presidential Decree No. 1529, a notice of lis pendens is proper in the following cases, viz.:a)....An action to recover possession of real estate;b)....An action to quiet title thereto;c)....An action to remove clouds thereon;d)....An action for partition; and e)....Any other proceedings of any kind in Court directly affecting the title to the land or the use or occupation thereof or the buildings thereon."

Land TitlesREPUBLIC OF THE PHILIPPINES vs. CAG.R. No. 130174, July 14, 2000An applicant seeking to establish ownership over land must conclusively show that he is the owner thereof in fee simple, for the standing presumption is that all lands belong to the public domain of the State, unless acquired from the Government either by purchase or by grant, except lands possessed by an occupant and his predecessors since time immemorial, for such possession would justify the presumption that the land had never been part of the public domain or that it had been private property even before the Spanish conquest.The land in question is admittedly public. The applicant has no title at all. Its claim of acquisition of ownership is solely based on possession. In fact, the parcels of land applied for were declared public land by decision of the Cadastral Court. Such being the case, the application for voluntary registration under P. D. No. 1529 [Formerly Act No. 496.] is barred by the prior judgment of the Cadastral Court. The land having been subjected to compulsory registration under the Cadastral Act and declared public land can no longer be the subject of registration by voluntary application under Presidential Decree No. 1529. The second application is barred by res-judicata. As previously held, "[W]here the applicant possesses no title or ownership over the parcel of land, he cannot acquire one under the Torrens System of registration."Nonetheless, applicant anchors its application for registration of title on the provisions of P. D. No. 1529 or in the alternative Com. Act No. 141, Section 48 (b), as amended by Rep. Act No. 1942, which allows "those who by themselves or through their predecessors in interest have been in open, continuous, exclusive and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, for at least thirty years

immediately preceding the filing of the application" to apply for judicial confirmation and registration of title.However, the evidence is inconclusive that applicant and its predecessors in interest had been in open, continuous, exclusive and notorious possession of the land in question, en concepto de dueño, or a bona fide claim of acquisition of ownership for at least thirty (30) years immediately preceding the filing of the application, or since June 12, 1945, or since time immemorial.The applicant failed to prove the fact of possession by itself and its predecessors in interest for at least thirty (30) years before the filing of the application. Applicant failed to prove specific acts showing the nature of its possession and that of its predecessors in interest. The applicant must present specific acts of ownership to substantiate the claim and cannot just offer general statements which are mere conclusions of law than factual evidence of possession." "Actual possession of land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property."The bare assertion of witnesses that the applicant of land had been in the open, adverse and continuous possession of the property for over thirty (30) years is hardly "the well-nigh incontrovertible" evidence required in cases of this nature. In other words, facts constituting possession must be duly established by competent evidence. Consequently, the lower court gravely erred in granting the application.

Land Titles; Reconstitution of TitleREPUBLIC OF THE PHILIPPINES, vs. PILAR ESTIPULARG.R. No. 136588, July 20, 2000Petition for reconstitution of title. Republic Act No. 26 lays down the special requirements and procedure that must be followed before jurisdiction may be acquired over a petition for reconstitution of title. In Section 13 of said Act, these requirements and procedure are provided as follows: "SECTION 13. The Court shall cause a notice of the petition, filed under the preceding section, to be published, at the expense of the petitioner, twice in successive issues of the Official Gazette, and to be posted on the main entrance of the provincial building and of the municipal building of the municipality or city in which the land is situated, at least thirty days prior to the date of hearing. The court shall likewise cause a copy of the notice to be sent, by registered mail or otherwise, at the expense of the petitioner, to every person named therein whose address is known, at least thirty days prior to the date of the hearing. Said notice shall state, among other things, the number of the lost or destroyed certificate of title if known, the name of the registered owner, the name of the occupants or persons in possession of the property, the owner of the adjoining properties, the location, area and boundaries of the property, and the date on which all persons having any interest therein must appear and file their claim or objection to the petition. The petitioner shall, at the hearing, submit proof of publication, posting and service of the notice as directed by the court."These requirements are mandatory and compliance with them is jurisdictional. In Republic v. Court of Appeals, the Court held:"Reconstitution of a certificate of title, in the context of Republic Act No. 26, denotes the restoration in the original form and condition of a lost or destroyed instrument attesting [to] the title of a person to a piece of land. The purpose of the reconstitution is to have, after observing the procedures prescribed by law, the title reproduced in exactly the same way it has been when the loss or destruction occurred. Among the conditions explicitly required by the law is publication of the petition twice in successive issues of the Official Gazette, and its posting at the main entrance of the provincial building and of the municipal building of the municipality or city in which the land is situated, at least thirty days prior to the date of hearing. This directive is mandatory; indeed, its compliance has been held to be jurisdictional. . ."

Thus, before the trial court can acquire jurisdiction to hear and decide a reconstitution case, compliance with the following requisites is imperative:"1. [That] the notice of the petition be published, at the expense of the petitioner, twice in successive issues of the Official Gazette, and posted on the main entrance of the provincial

building and of the municipal building of the municipality or city in which the land is situated, at least thirty days prior to the date of hearing;"2. [That] the notice state among other things, the number of the lost or destroyed certificates of title if known, the name of the registered owner, the name of the occupants or persons in possession of the property, the owner of the adjoining properties and all other interested parties, the location, area and boundaries of the property, and the date on which all persons having any interest therein must appear and file their claim of objection to the petition; "3. [That] a copy of the notice also be sent, by registered mail or otherwise, at the expense of the petitioner, to every person named therein (i.e. the occupants or persons in possession of the property, the owner of the adjoining properties and all other interested parties) whose address is known at least thirty days prior to the date of the hearing; and"4. [That] at the hearing, petitioner submit proof of publication, posting and service of the notice as directed by the court."

Land TitlesFRANCISCO DE GUZMAN, et al. vs. THE NATIONAL TREASURER OF THE REPUBLIC OF THE PHILIPPINES, et al. G.R. No. 143281, August 3, 2000Recovery from Assurance Fund under the Property Registration Decree. Section 95 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provides:SEC. 95. Action for compensation from funds. — A person who, without negligence on his part, sustains loss or damage, or is deprived of land or any estate or interest therein in consequence of the bringing of the land under the operation of the Torrens system or arising after original registration of land, through fraud or in consequence of any error, omission, mistake or misdescription in any certificate of title or in any entry or memorandum in the registration book, and who by the provisions of this Decree is barred or otherwise precluded under the provision of any law from bringing an action for the recovery of such land or the estate or interest therein, may bring an action in any court of competent jurisdiction for the recovery of damage to be paid out of the Assurance Fund. It may be discerned from the foregoing provisions that the persons who may recover from the Assurance Fund are:1) Any person who sustains loss or damage under the following conditions:a) that there was no negligence on his part; andb) that the loss or damage sustained was through any omission, mistake or malfeasance of the court personnel, or the Registrar of Deeds, his deputy, or other employees of the Registry in the performance of their respective duties under the provisions of the Land Registration Act, now, the Property Registration Decree; or2) Any person who has been deprived of any land or interest therein under the following conditions:a) that there was no negligence on his part;b) that he was deprived as a consequence of the bringing of his land or interest therein under the provisions of the Property Registration Decree; or by the registration by any other person as owner of such land; or by mistake, omission or misdescription in any certificate of owner's duplicate, or in any entry or memorandum in the register or other official book or by any cancellation; andc) that he is barred or in any way precluded from bringing an action for the recovery of such land or interest therein, or claim upon the same. The Assurance Fund is intended to relieve innocent persons from the harshness of the doctrine that a certificate is conclusive evidence of an indefeasible title to land. Petitioners did not suffer any prejudice because of the operation of this doctrine. On the contrary, petitioners sought to avail of the benefits of the Torrens System by registering the property in their name. Unfortunately for petitioners, the original owners were able to judicially recover the property from them. That petitioners eventually lost the property to the original owners, however, does not entitle them to compensation under the Assurance Fund. While we commiserate with petitioners, who appear to be victims of unscrupulous scoundrels, we cannot sanction compensation that is not within the law's contemplation. As we said in Treasurer of the Philippines vs. Court of Appeals, the

Government is not an insurer of the unwary citizen's property against the chicanery of scoundrels. Petitioners' recourse is not against the Assurance Fund, as the Court of Appeals pointed out, but against the rogues who duped them.

Land titles; Property; Buyers in Good FaithNATIONAL IRRIGATION ADMINISTRATION vs. COURT OF APPEALS and DICK MANGLAPUSG. R. No. 114348, September 20, 2000LAND TITLES: We agree with NIA that the Transfer Certificate of Title and the Original Certificate of Title covering the subject parcel of land contained a reservation granting the government a right of way over the land covered therein.The transfer certificate of title, on which both the trial court and Court of Appeals relied, contains such a reservation. It states that title to the land shall be: “...subject to the provisions of said Land Registration Act and the Public Land Act, as well as those of Mining Laws, if the land is mineral, and subject, further to such conditions contained in the original title as may be subsisting (underscoring ours).”Under the Original Certificate of Title, there was a reservation and condition that the land is subject to “to all conditions and public easements and servitudes recognized and prescribed by law especially those mentioned in Sections 109, 110, 111, 112, 113 and 114, Commonwealth Act No. 141, as amended.” This reservation, unlike the other imposed on the grant, was not limited by any time period and thus is a subsisting condition.Section 112, Commonwealth Act No. 141, provides that lands granted by patent,“shall further be subject to a right of way not exceeding twenty meters in width for public highways, railroads, irrigation ditches, aqueducts, telegraphs and telephone lines, and similar works as the Government or any public or quasi-public service or enterprises, including mining or forest concessionaires may reasonably require for carrying on their business, with damages for the improvements only (underscoring ours).”The canal NIA constructed was only eleven (11) meters in width. This is well within the limit provided by law. Manglapus has therefore no cause to complain.Article 619 of the Civil Code provides that, “Easements are established either by law or by the will of the owners. The former are called legal and the latter voluntary easements.” In the present case, we find and declare that a legal easement of a right-of-way exists in favor of the government. The land was originally public land, and awarded to respondent Manglapus by free patent. The ruling would be otherwise if the land were originally private property, in which case, just compensation must be paid for the taking of a part thereof for public use as an easement of a right of way.Neither can Manglapus argue that he was a transferee or buyer in good faith. Under the Torrens system, for one to be a buyer in good faith and for value, the vendee must see the transfer certificate of title and rely upon the same.Here, the annotation on the transfer certificate of title imposed on Manglapus the duty to refer to the conditions annotated on the back of the original certificate of title. This, he did not do. The law cannot protect him. Manglapus is a transferee with notice of the liens annotated in the title.One who deals with property registered under the Torrens system is charged with notice of burdens and claims that are annotated on the title

Land Titles; RegistrationAMELITA DOLFO vs. THE REGISTER OF DEEDS, et al, G.R. No. 133465, September 25, 2000Petitioner’s reliance on her title is infirm. While she presented numerous documents to prove its authenticity, however, they have been disputed by Benjamin Flestado, Chief of the Inspection and Investigation Division of the Land Registration Authority (LRA), in his Report showing that her T.C.T. No. T-320601 was issued without legal basis and that no document was on file with the Primary Entry Book of the Registry of Deeds of Trece Martires City to support the issuance thereof. This Report concludes that petitioner’s T.C.T. No. T-320601 is spurious. Such finding is reinforced by the NBI Report dated June 20, 1996 showing that the signature of Register of Deeds Antonia Cabuco appearing on petitioner’s title is a forgery. Consequently, Atty. Artemio

Cana, Acting Register of Deeds of Cavite, filed a complaint with the Regional Trial Court, Branch 89 at Bacoor for annulment of petitioner’s title.The rule that a title issued under the Torrens System is presumed valid and, hence, is the best proof of ownership of a piece of land does not apply where the certificate itself is faulty as to its purported origin.Thus, petitioner cannot invoke the indefeasibility of her certificate of title. It bears emphasis that the Torrens system does not create or vest title but only confirms and records one already existing and vested. Thus, while it may be true, as petitioner argues, that a land registration court has no jurisdiction over parcels of land already covered by a certificate of title, it is equally true that this rule applies only where there exists no serious controversy as to the authenticity of the certificate.

Land Titles; Certificate of titleSPOUSES FLORENTINO ZARAGOZA and ERLINDA ENRIQUEZ-ZARAGOZA vs. THE HONORABLE COURT OF APPEALS, ALBERTA ZARAGOZA MORGAN, G.R. No. 106401, September 29, 2000Sec. 48. Certificate not subject to collateral attack. - A certificate of title shall not be subject to collateral attack. It can not be altered, modified, or cancelled except in a direct proceeding in accordance with law.We have reiterated this rule in the case of Halili vs. Court of Industrial Relations, citing the earlier cases of Constantino vs. Espiritu and Co vs. Court of Appeals. In Halili, we held that a certificate of title accumulates in one document a precise and correct statement of the exact status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with very few exceptions, should not thereafter be impugned, altered, changed, modified, enlarged or diminished, except in some direct proceeding permitted by law. Otherwise, all security in registered titles would be lost. In Constantino, the Court decided that the certificate, in the absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with very few exceptions, should not thereafter be impugned, altered, changed, modified, enlarged or diminished, except in some direct proceeding permitted by law. Otherwise all security in registered titles would be lost. And in Co, we stated that a Torrens title cannot be collaterally attacked. The issue on the validity of title, i.e., whether or not it was fraudulently issued, can only be raised in an action expressly instituted for that purpose.

1999

Forest Lands Not Subject to Private Ownership unless DeclassifiedITUTRALDE V FALCASANTOS Jan. 20, 1999

The Court of Appeals correctly held that “the evidence is unrebutted that the subject land is within the Forest Reserve Area” and hence, not capable of private appropriation and occupation. In Republic c Register of Deeds of QC (244 SCRA 537), we held that “Forest land, like mineral or timber lands which are public lands, are not subject to private ownership under the Constitution, become private properties. In the absence of such classification, the land remains unclassified public land until released therefrom and rendered open to disposition.” Before any land may be declassified form the forest group and converted into alienable or disposable land for agricultural or other purposes, there must be a positive act from the government. Even rules on the confirmation of imperfect titles do not apply unless and until the land classified as forest land is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain

Government Immunity from Laches and Estoppel for Acts of its OfficialsRecovery of Ownership of Subidivision Lands Soldin Good Faith by Private Developer to Innocent Purchaser for ValueRP v CA, et al. Jan. 21, 1999

(1) The State can be put in estoppel by the mistakes or errors of its officials or agents.- Estoppels against the public are not favored; they must be invoked only in rare and unusual circumstances as they could operate to defeat the effective operation of a policy adopted to protect the public. However, the government may not be allowed to deal dishonorably or capriciously with its citizens. In the case at bar, for nearly 20 years, petitioner failed to correct and recover the alleged increase in the lands area of St. Jude. Its prolonged inaction strongly militates against its cause, as its is tantamount to laches, which means “the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either abandoned it or declined to assert it.(2) Buyers of the subdivision lots that were allegedly “enlarged” relied in good faith on the clean certificate of SJEI. – Because subdivision let buyers were in good faith and did not notice any flaw in SJEI’s certificates of title, it is only fair and reasonable to apply the equitable principle of estoppel by laches against the government to avosi an injustice to the innocent purchaser for value.

Public Lands: Only the State Can Institute Reversion ProceedingsURQUIAGA V CAJan. 22, 1999

Even assuming that private respondents acquired title to Let No. 6532-B through fraud and misrepresentation, it is only the State which may institute reversion proceedings under Sec. 101 of the Public Land Act considering the finding that the subject lot was public land at the time of the sales applications. This law provides:

Sec. 101. – All actions for reversion to the Gov’t of land of the public domain or improvements thereon shall be instituted by the SolGen or the officer acting in its stead, in the proper courts, in the name of the RP.

In other words, petitioners have no standing at all to question the validity of respondents’ title.

Land Registration: Effect of Withdrawal of Application for Land RegistrationDIR. OF LANDS VS. CA, ET AL., Feb. 23, 1999(1) Section 37 of the Land Registration Act (Act 246) mandates that the w/drawal of the application for land registration should not mean that the conflicting interests of the parties ceased to exist and therefore the land registration proceedings must be pursued to its conclusion. – The law states that an oppositor who claims ownership over the property covered by the application, or part thereof, may now claim in his answer that the land be registered in his name in the same proceeding.(2) The w/drawal of application for registration of land does not obliterate the conflicting claims over the sale parcel of land. – IF the Dir. Of Lands registers an adverse claim, the lower court is bound to determine the conflicting interest ofthe claimant and the applicant and incase neither succeeds through evidence of proper title for registration, the court may dismiss the case. An opposition presented by the Dir. Of Lands is for all intents and purposes, a conflicting interest as against that of the applicant or of the private oppositors, asserting a claim over the land registered. Consequently, the w/drawal by either the applicant or any of the private oppositors doesn’t ipso fact obliterate the conflicting interests in the case. Neither is the case terminated because under the law, as amended, the trial court is required to resolve the claims of the remaining parties, the withdrawal of the application by the applicant and/or some private oppositors notwithstanding.

Civil Law/ land TitlesDELFIN VOLUNTAD et al. v. SPS. MAGTANGGOL & CORAZON DIZON, et al.August 1999

The general rule is that a person dealing with a registered land has a right to rely on the Torrens Certificate of Title without the need of inquiring further. But this rule cannot apply when

the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. In the case at bar, respondent spouses who knew of the defect in title cannot be deemed buyers in good faith as against the true owner of the land or interest thereon. In the case therefore, there is no need for petitioners to file a separate action to enforce their right to repurchase the property as against the new registered owners.

1998

Registered Land, Sale of; Buyers in good faith defined; Two Transfer Certificates of Title on same land, Rule SPS. SONYA & ISMAEL MATHAY, JR v. CA, ET AL.September 1998

In the three cases merged in this one petition, petitioners, Sps. Mathay, claim title to three lots, which have been also bought and thereafter occupied by three different parties. The SC dismissed the petition.

A purchaser in good faith is “one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same at the time of purchase, or before he has notice of the claims or interest of some other person in the property.” As a rule, he who asserts the status of a purchaser in good faith and for value, has the burden of proving such assertion. Petitioners can’t invoke good faith because at the time the property was sold to them, the private respondents were occupying and cultivating the property. Though as a rule, a person dealing with registered land need not go beyond the certificate of title, where there are circumstances which would put the party on guard, as is the case at bar, it is expected from the purchaser to inquire first into the status and nature of the possession of the occupants. Failure to do so would bar him from invoking the rights of a purchaser in good faith.

As stated in the case of Baltazar v. CA, between two persons both of whom are in good faith and both innocent of any negligence, the law must protect and prefer the lawful holder of registered title over the transferee of a vendor bereft of any transmissible rights. In the instant case, petitioners have no rights against private respondents. Their recourse is against their vendors.

Where two transfer certificates of title have been issued on different dates, to two different persons, for the same parcel of land, even if both are presumed to be titleholders in good faith, it does not necessarily follow that he who holds the earlier title should prevail. The better approach, assuming a regularity in the issuance of the two titles, is to trace the original certificates from which the disputed certificates of title were derived. Should there be only one common original certificate, the transfer certificate issued on an earlier date along the line must prevail, absent any anomaly or irregularity tainting the process of registration.

Land registration; Amendment and Alteration of Certificate of TitleERNESTO DAWSON, ET AL. v. REGISTER OF DEEDS OF Quezon City ET AL.September 1998

The case revolves around the issue of whether Sec. 108 of PD 1529 (Land Registration Act) applies in the instant case where a contract to sell is involved. The first buyer, Louis Dawson, died without having finished paying the whole amount, which obligation was assumed by petitioners, his heirs. The RTC and CA refused the cancellation of the certificate in the name of Louis Dawson and issuance of a new title in the name of petitioners.

The SC allowed the application of Sec 108 of PD 1529 contending that this is a case of a contract to sell and not a contract of sale. In the case of Salazar v. CA, in a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; in a contact to sell, ownership is by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price. Thus, since Louis Dawson was unable to pay the whole price, which was completely paid by petitioners, the property did not become part of the estate of Louis Dawson. Partition is therefore not the proper remedy to determine the ownership of the lot whose

title had not been vested in Louis Dawson during his lifetime as his death caused the loss of his juridical personality, which is the fitness to be the subject of legal relations.

1997

Civil Law/Land TitlesHEIRS OF FELICIDAD CANQUE, et al. v. CA, et al.July 1997

The mortgagor of titled real estate acquired under the Public Land Act but foreclosed by a rural bank, may redeem said property within 2 years from registration of the sheriff's certificate of sale; and if said mortgagor fails to expire such right, he or his heirs may still repurchase the land within 5 years from the expiration of the two-year redemption period.

Civil Law/Land TitlesTHE DIRECTOR OF LANDS v. CA, TEODORA ABISTADO, et al.July 1997

Is newspaper publication of the notice of initial hearing in an original land registration case mandatory or directory? Mandatory.

Admittedly, P.D. No. 1529, §23 provides that publication in the OG suffices to confer jurisdiction upon the land registration court. However, the question boils down to whether, absent any publication in a NOGC, the land registration court can validly confirm and register the title of private respondents. We hold in the negative.

The law used the term “shall” in prescribing the work to be done by the Commissioner of Land Registration upon the latter’s receipt of the court order setting the time for initial hearing. The word denotes an imperative and thus indicates the mandatory character of a statute. P.D. No. 1529, §23 requires notice of the initial hearing by means of publication, mailing and posting, all of which must be complied with. If the intent of the law were otherwise, said section would not have stressed in detail the requirements of mailing of notices to all persons named in the petition. Indeed, if mailing of notices is essential, then by parity of reasoning, publication in a NOGC is likewise imperative since the law included such requirement in its detailed provision.

Further, a land proceedings is in rem, hence must be validated essentially through publication.

It may be asked why publication in a NOGC is mandatory when the law already requires notice by publication in the OG, mailing and posting. The reason is due process and the reality that the OG is not as widely read and circulated and is oftentimes delayed in its circulation.

Civil Law/Land Titles/Reconstitution ORTIGAS & CO. v. JUDGE TIRSO VELASCO & DOLORES MOLINAAugust 1997

R.A. No. 26, §13, lays down the requisites for acquisition by the court of jurisdiction over a proceeding for reconstitution of title:1) Publication, at petitioner's expense, of notice of the petition for reconstitution twice in successive issues of the OG, and posting thereof on the main entrance of the provincial building and of the municipal building of the municipality or city in which the land is situated, at least 30 days prior to the date of hearing;2) Specific statement in the notice of the nubmer of the lost or destroyed certificates of title if known, the name of the registered owner, the name of the occupants or persons in possession of the property, the owner of the adjoining properties and all other interested parties, the location, area and boundaries of the property, and the date on which all persons having any interest therein must appear and file their claim or objection to the petition;3) Sending, by registered mail or otherwise, at the expense of petitioner, of a copy of the notice to every person named therein (i.e., the occupants or persons in possession of the property, the owner of the adjoining properties and all other interested parties) whose address is known, at least 30 days prior to the date of the hearing; and4) Submission by petitioner at the hearing of proof of the publication, posting and service of notice as directed by the court.

Civil Law/Land TitlesJUAN C. CARVAJAL v. CA & SOLID HOMESG.R. No. 98328 October 1997

Is there denial of due process if an applicant for land registration is unable to testify? May a land registration court, after it is convinced that the property subject of an application for registration under the Torrens system is already governed by an existing certificate, dismiss such application and thus ignore petitioner’s insistence on submitting further evidence of his alleged title? What constitutes sufficient evidence to show identity of the land applied for with the land already titled in favor of private respondent?

The petition has no merit.First Issue: Identity of the Property Applied For.The 2 reports prepared by the LRA and DENR Survey Division clearly showed that there

was an overlapping between the 2 properties. Because the futility of petitioner’s application was apparent, the trial court deemed it unnecessary to hear further evidence. We agree.

There was nothing irregular in the trial court’s order to the LRA and DENR to submit reports on the location of the land covered by petitioner’s application and private respondent’s certificate of title. The authority of the land registration court to require the filing of additional papers to aid it in its determination of the propriety of the application is based on P.D. No. 1529, §21, from which, it is also clear that ocular inspection of the property was merely discretionary, not mandatory. Likewise, the land registration court was not obliged to order the survey of the contested lot, especially when another government agency had already submitted a report finding that the contested lot was identical with that described in private respondent’s certificate of title and recommending dismissal of the application for registration.

Further, the order of the land court for the LRA and DENR to submit reports was in accordance with the purposes of the LRA (Zuñiga v. CA, 95 SCRA 740, 747 [1980])

Civil Law/Land Titles/ReconveyanceVICTORIA LEGARDA v. CA, NEW CATHAY HOUSE, INCOctober 1997

The parties entered into a lease agreement over a QC property owned by petitioner (123 West Avenue). For some reason, petitioner refused to sign the contract, although New Cathay House (NCH) made a deposit and a downpayment of rentals. Thus, NCH sued before the RTC for specific performance with preliminary injunction and damages.

We do not have to belabor the fact that all the successors-in-interest of Cabrera to the lot were transferees for value and in good faith, having relied as they did on the clean titles of their predecessors. The successive owners were each armed with indefeasible titles which brought them within the aegis of the Torrens system. It is settled that one who deals with registered property under the Torrens system need not go beyond the same, but only has to rely on the title; he is charged with notice only of such burdens and claims as are annotated on the title. (Sandoval v. CA, 260 SCRA 283 [1996]) Here, no notice of lis pendens was ever annotated on any of the titles. And even if there were such a notice, it would not have created a lien over the property as the main office of a lien is to warn prospective buyers that the property they intend to purchase is the subject of a pending litigation. Therefore, since the property is already in the hands of Luminlun, an innocent purchaser for value, it can no longer be returned to Cabrera, much less to NCH.

Another thing to consider is that Cabrera was impleaded as a respondent only on 12 August 1991, after promulgation of the Gancayco decision. The dispositive portion itself ordered NCH, not Cabrera, to reconvey the property to Legarda. Cabrera was never a party to this case. Neither did he act as NCH's representative. As held in NPC v. NLRC (G.R. No.s 90933-61, 29 May 1997), jurisdiction over a party is acquired by voluntary appearance or by coercive process [summons]. In other words, until Cabrera was impleaded as party respondent and ordered to file

a comment on 12 August 1991 resolution, the Court never obtained jurisdiction over him, and to command NCH to reconvey a property which used to be Cabrera's would be inappropriate as a violation of due process.

Assuming that reconveyance is possible, that NCH and Cabrera are one the same and that Cabrera's payment redounded to the benefit of NCH, reconveyance, under the facts and evidence here, would still not address the issues raised herein.

The application of the sale price to Legarda's judgment debt constituted a payment which extinguished her liability to NCH as the party in whose favor the obligation to pay damages was established. (Art. 1240, NCC) It was a payment in the sense that NCH had to resort to a court-supervised auction sale in order to execute the judgment. With fulfillment of the judgment debtor's obligation, nothing else was required to be done.

Under the Gancayco ruling, the order of reconveyance was premised on the alleged gross negligence of Coronel.

The fact that Cabrera is an NCH officer does not make him a purchaser in bad faith. His act in representing the company was never questioned nor disputed by Legarda. And while it is true that he won in the bidding, it is likewise true that said bidding was conducted by the book. There is no call to be alarmed in case an official of the company emerges as the winning bidder since in some cases, the judgment creditor himself personally participates in the bidding.Legarda, as judgment debtor, cannot claim she was illegally deprived of her property because such deprivation was done in accordance with the rules on execution of judgments. Whether the money used to pay for said property came from the judgment creditor or its representative is not relevant. What is important is that it was purchased for value. Cabrera parted with real money at the auction. Had there been no real purchase and payment below, the subject property would never have been awarded to Cabrera and registered in his name, and the judgment debt would never have been satisfied. Thus, to require either NCH or Cabrera to reconvey the property would be an unlawful intrusion into the lawful exercise of the latter's proprietary right over the land in question, an act which would constitute an actual denial of property without due process.

It may be true that the lot could have fetched a higher price, but there is not hint of any irregularity as regards Cabrera's bid price. Further, despite this low selling price, Legarda still failed to redeem her property within the 1-year redemption period. She could not feign ignorance of the auction sale on account of her counsel's failure to inform her, as the auction sale complied with requirements of notice and publication under the Rules. In absence of any clear and convincing proof that such requisites were not followed, the presumption of regularity stands. While Legarda maintains she was in the U.S. during the redemption period, she admitted that she left only 16 days after the auction sale; moreover, her mother represented her during the latter's absence.

Neither NCH nor Cabrera should be made to suffer the gross negligence of Coronel. If Legarda may be said to be innocent because she was ignorant of her counsel's negligence, with more reason are NCH and Cabrera innocent. As between 2 parties who may lose out to negligence or incompetence of counsel of one, the party who was responsible for making it happen should suffer the consequences. This reflects a basic common law maxim. Here it was Legarda who misjudged and hired the services of a lawyer who practically abandoned her case and who continued to retain him even after his proven apathy and negligence. The Gancayco decision makes much of the fact that Legarda is now “consigned to penury" and, therefore, the Court "must come to the aid of the distraught client." It must be remembered, however, that this Court renders decision not on the basis of emotions, but on its sound judgment, applying the relevant law. Much as we may pity Legarda, we cannot play the role of a "knight in shining armor"

Civil Law/Land TitlesDANIEL C. VILLANUEVA v. CA, LAND REGISTRATION AUTHORITY, OO KIAN TIOKNovember 1997

In Magdalena Homeowners v. CA (184 SCRA 325, 329-30 [1990]), this Court enumerated the cases where a notice of lis pendens is proper:

1) action to recover possession of real estate2) action to quiet title

3) action to remove clouds4) action for partition5) any other proceeding of any kind in court directly affecting the title to the land or

the use or occupation thereof or the buildings thereon.Elements to annotate a notice of lis pendens: (1) property must be of such character as

to be subject to the rule; (2) court must have jurisdiction both over the person and the res; and (3) property or res involved must be sufficiently described in the pleadings.

Only the first requisite is at issue here. Although it is not necessary for the applicant to prove his ownership or interest over the

property sought to be affected by lis pendens, the applicant must, in the complaint or answer filed in the case, assert a claim of possession or title over the subject property in order to give due course to his application. As settled, lis pendens may be annotated only where there is an action or proceeding in court which affects the title to, or possession of, real property.

A notice of lis pendens does not create a nonexistent right or lien. It serves merely as a warning to a person who contracts on the subject property that he does so at his peril and subject to the result of the pending litigation. The registration of the notice of lis pendens is done without leave of court. The Rule merely requires an affirmative relief to be claimed in the answer to enable a defendant to apply for the annotation of the notice. There is no requirement that an applicant-defendant must prove his right or interest over the property sought to be annotated upon.

To require that an applicant must prove his ownership or his interest over the property sought to be affected with the notice of lis pendens will unduly restrict the scope of the rule. In such case, a party questioning the ownership of the registered owner will litigate his or her case without an assurance that the property will be protected from unwanted alienation or encumbrance during the pendency of the action, thereby defeating the very purpose and rationale of the registration.

Civil Law/Land Titles/Innocent Purchaser for ValueGLORIA R. CRUZ v. CA, ROMY V. SUZARA & MANUEL R. VIZCONDENovember 1997Petitioner owned a lot in QC. In 1977, she lived-in with Romy Suzara without benefit of marriage. In 1982, solely out of love and affection, she executed a deed of sale in Romy’s favor without monetary consideration. Romy registered the document in his favor and used the property as collateral for a bank loan. Romy failed to pay off the loan, thus the mortgage was foreclosed. Petitioner paid the bank to restructure the loan, resulting in the extension of the redemption period to 2 years. But without petitioner’s knowledge, Romy redeemed the property and thereafter avoided petitioner. Thus petitioner filed an affidavit of adverse claim with the RD of QC, asserting that the sale to Ronmy was void for lack of consideration and for being contrary to law and public policy. Petitioner then sued before the RTC for quieting of title, declaration of nullity of documents, etc.

The RTC ruled that the sale between petitioner and Romy was valid, with love, affection and accomodation being the consideration for the sale; further, that Vizconde was an innocent purchaser for value. The CA affirmed.

We cannot sustain petitioner. Although under Art. 1490, a husband and wife cannot sell property to one another as a rule which, for policy considerations requires that the prohibition apply to common-law relationships (Calimlim v. Fortun, 129 SCRA 675 [1984]), petitioner can no longer seek reconveyance of the property as it has already been acquired by Vizconde in good faith and for value.

Both lower courts found that on 22 December 1989, when Romy executed the deed of sale in favor of Vizconde, Romy was the registered owner and nothing was annotated in the certificate to indicate a flaw in Romy’s title. It was only on 22 January 1990 that petitioner filed her adverse claim with the RD.

This is without prejudice to any appropriate remedy petitioner may take against Romy.

Civil Law/Land Titles; Lease

REPUBLIC, represented by the Dir. of Lands v. CA, JOSEFINA L. MORATO, et al. November 1997

Will the lease and/or mortgage of a portion of a realty acquired through free patent constitute sufficient ground for the nullification of the grant? Should such property revert to the State once it is invaded by the sea and thus becomes foreshore land?

First. Under the Public Land Act (C.A. No. 141), §§ 118, 121, 122 and 124, any encumbrance of a parcel of land acquired under a free patent or homestead within 5 years from such grant is prohibited = cancellation of grant and reversion of land to public domain. Encumbrance has been defined as anything that impairs the use or transfer of property; anything which constitutes a burden on the title; a burden or charge upon property; a claim or lien upon property.

The lease and mortgage constitute encumbrances as the grantee (Morato) cannot fully use or enjoy the land during the duration of the lease. In a contract of lease which is consensual, bilateral, onerous and commutative, the owner temporarily grants the use of his or her property to another who undertakes to pay rent therefor. During the term of the lease, the grantee cannot enjoy the beneficial use of the land leased, this the Public Land Act prohibits.

As regards the mortgage, it clearly constitues an “encumbrance” prohibited by the law as foreclosure of such mortgage would necessarily result in the auction of the property.

Second. Re: foreshore land reverting to the public domain.Petitioner correctly contends that Morato cannot own foreshore land, although

respondents contend that it is unfair if Morato will be deprived of the whole property just because a portion thereof was immersed in water for reasons not of her own doing.

Here, the free patent application was made in 1972. However, the land has since become foreshore land. Thus, it can no longer be subject of a free patent, with Govt. v. Cabañgis (53 Phil. 112, 115-16 [1929]) explaining the rationale for this proscription, i.e., where an owner has to all intents and purposes abandoned the land and permitted it to be totally destroyed so as to become part of the seashore, the land passes on to the public domain but the owner thus dispossessed does not retain any right to the natural products resulting from their new nature; it is a de facto case of eminent domain and not subject to indemnity.

When the sea moved towards the estate and the tide invaded it, the invaded property became foreshore land and passed to the realm of the public domain.

Civil Law/Land TitlesHEIRS OF MARCIANO NAGAÑO v. CA, et al. November 1997

It is settled that a MTD hypothetically admits the truth of the facts alleged therein. In their complaint, private respondents specifically alleged that they were owners of a portion of the lot for having possessed it in the concept of an owner, openly, peacefully, etc., since 1920. This claim is an assertion that the lot was private land, or that even assuming it was part of the public domain, private respondents ahd already acquired imperfect title thereto under C.A. No. 141, §48, under which, a lot is segregated from the public domain as the beneficiary is conclusively presumed to have performed all the conditions essential to a Government grant.

Thus, merely on the basis of the allegations of the complaint, the lot in question was apparently beyond the jurisdiction of the Director of Lands and could not be the subject of a Free Patent. Hence, dismissal of private respondents' complaint was premature and trial on the merits should have been conducted to thresh out evidentiary matters.

It would been entirely different if the action were clearly for reversion, in which case, it would have to be instituted by the Sol-Gen, pursuant to §101, C.A. No. 141.

In light of the above, and at this time, prescription is unavailing against private respondents' action. A free patent issued over private land is void. Further, private respondents' claim of open, public, etc., possession since 1029 and its illegal inclusion in petitioners' free patent gave private respondents a cause of action for quieting of title, which is imprescriptible. Thus private respondents' complaint may thus likewise be considered an action for quieting of title.

1996

Land Titles; Adverse ClaimGARBIN v. CAFebruary 1996Does the registration of an adverse claim prevail over the title which was registered subsequent to the adverse claim? HELD: No. Under Act No. 496, §110, the purpose of an adverse claim is to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act, and serve as notice and warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than the registered owner. In case at bench, what was registered was merely the adverse claim, and not the Deed of Sale. Therefore, there is still need to resolve the former's validity in separate proceedings, as there is an absence of registration of the actual conveyance of the portion of land therein claimed by private respondents.

Land Titles; ReconstitutionNEW DURAWOOD v. CAFebruary 1996R.A. No. 26, §13 applies only in cases of reconstitution of lost or destroyed original certificates on file with the Register of Deeds, while P.D. No. 1529, §109 governs petitions for issuance of new owner's duplicate certificates of title which are lost or stolen or destroyed. (The former is expressly provided for in P.D. No. 1529, §110.)In Demetriou v. CA (238 SCRA 158, 162 [1994]), we ruled that if a certificate of title has not been lost but is in fact in the possession of another person, the reconstituted title is void and the court rendering the decision has not acquired jurisdiction. Consequently, the decision may be attacked at any time. In case at bench, the owner's duplicate certificates of title were not "lost or destroyed," hence, there was no necessity for the petition filed in the trial court for the "Issuance of New Owner's Duplicate Certificates of Title x x x." In fact, the said court never acquired jurisdiction to order the issuance of new certificates. Hence, the newly issued duplicates are themselves void.It is obvious that this lapse happened because of failure to follow the procedure in P.D. No. 1529:1) No notice of loss or theft sent to the Register of Deeds.2) §107 provides that in case of the refusal or failure of the holder to surrender the owner's duplicate certificate of title, the remedy is a petition in court to compel surrender thereof to the Register of Deeds, and not a petition for reconstitution.

Land Titles; MortgageSTATE INVESTMENT HOUSE v. CAMarch 1996Petitioner's registered mortgage over the property is inferior to that of respondents-spouses' unregistered right. The unrecorded sale between respondents-spouses and Solid is preferred for the reason that if the original owner (Solid) had parted with his ownership of the thing sold then he no longer had ownership and free disposal of that thing so as to be able to mortgage it again. Registration of the mortgage is of no moment since it is understood to be without prejudice to the better right of third parties. (citations omitted)Petitioner asserts that a purchaser or mortgagee of land covered under the Torrens System is not required to do more than rely upon the certificate of title. HELD: As a general rule, where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. This rule, however, admits of an exception as where the purchaser or mortgagee, has knowledge of a defect or lack of title in his vendor xxx In this case, petitioner was well aware it was dealing with Solid, a business entity engaged in the business of selling subdivision lots. In Sunshine v. IAC (203 SCRA 210), the Court, noting petitioner therein to be a

financing corporation, deviated from the general rule that a purchaser or mortgagee of a land is not required to look further than what appears on the face of the Torrens Title.

REPUBLIC v. CAMarch 1996Once a patent is registered under Act No. 496 (now P.D. No. 1529) and the corresponding certificate of title is issued, the land ceases to be part of the public domain and becomes private property over which the Director of Lands will no longer have either control or jurisdiction. (Dir. of Lands v. De Luna, 110 Phil. 28 [1960]) The Torrens Title issued on the basis of a free or homestead patent becomes as indefeasible as one which was judicially secured upon the expiration of one year from date of issuance of patent. However, even after the lapse of one year, the State may still bring an action under §101 of the Public Land Act for the reversion to the public domain of lands which have been fraudulently granted to private individuals. This has been the consistent ruling of this Court. (citations omitted)

REPUBLIC v. CA & HEIRS OF RIBAYAJuly 1996The CA erred in holding that the Republic was barred, as the OCT was conclusive against all persons. One year after its transcription which is the date of its effectivity said certificate of title became incontrovertible. First, the one-year period provided for in Section 38 of Act No. 496 merely refers to a petition for review and is reckoned from the entry of decree. In the second place, there are other remedies available to an aggrieved party after the said one-year period, e.g., reconveyance, covered by Section 55 of Act No. 496 which, inter alia, provides that "in all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud, without prejudice, however, to the rights of any innocent holder for value of a certificate of title." Likewise, an action for damages is sanctioned in cases where the property has been transferred to an innocent purchaser for value, which may be filed within four years from discovery of the fraud. Recourse may also be had against the Assurance Fund.Finally, prescription never lies against the State for the reversion of property which is part of the public forest or of a forest reservation which was registered in favor of any party. Then too, public land registered under the Land Registration Act may be recovered by the State at any time. "Public land fraudulently included in patents or certificates of title may be reverted to the state in accordance with Section 101 of the Public Land Act.

Civil Law/Land TitlesREPUBLIC v. CA & HEIRS OF DEMOCRITO O. PLAZAJuly 1996Petitioner argues that the burden rests on applicant to show by convincing evidence that he has registrable title over the property, which he failed to do. Further, aside from mere tax declarations, all of recent vintage, private respondent has not established actual possession of the property in the manner required by law (§14, P.D. 1529) and jurisprudence.Although tax declarations not conclusive, good indicia of possession in concept of owner. They constitute at least proof that the holder has a claim of title over the property. Such an act strengthens one's bona fide claim of acquisition of ownership. Registration does not vest title. It is merely evidence of such title.

Civil Law/Land Titles/Public Land Act (C.A. No. 141)CLARA ATONG VDA. DE PANALIGAN, et al. v. CA, RTC S. COTOBATO, GAUDENCIO SUPERIORIDAD & SOCORRO BARRIOSJuly 1996The case involves the simple issue of redemption as provided for in §119, C.A. No. 141.Petitioners contend that the CA ruling goes against State Investment House v. CA (215 SCRA 734 [1992]), that in exercising the right of redemption, tender of payment of the repurchase price is necessary. Petitioners point out that during the hearings before the trial court, private respondents could not readily deposit the repurchase price. Petition has no merit.

State Investment is not applicable because it did not involve land granted under a homestead or free patent, but an ordinary parcel of land which was mortgaged and foreclosed. Redemption was thus being exercised under civil law provisions and not under §119, C.A. No. 141, which applies here.

Tender of payment of the repurchase price is not among the requisites of the law and is therefore unnecessary. In PNB v. CA (179 SCRA 619 [1989]), with reference to 2 parcels of land acquired under a free patent for which redemption within 5 years was conceded by petitioner, the Court held that it was not even necessary for the preservation of the right of redemption to make an offer to redeem or tender of payment of purchase price within 5 years. The filing of an action to redeem within that period is equivalent to a formal offer to redeem. There is not even a need for consignation of the redemption price.

HEIRS OF LUIS GONZAGA, et al. v. CA & SPS. JOSE LEELIN September 1996Civil Law/Land Titles: [After declaring that MWSS v. CA, 215 SCRA 783 (1992) is four-square re: overlapping titles], [t]he present controversy hinges on the question as to who, between petitioners and private respondents, have legal and valid title to the two lots.. In MWSS, we ruled: Although petitioner's title was issued in 1940 [earlier than private respondents'] it will be noted that petitioner's title was based on the cadastral survey of Kaloocan City, Cadastral Case No. 34, while private respondents' title was derived from OCT No. 994 issued on April 19, 1917. In Pamintuan v. San Agustin, this Court ruled that in a cadastral case the court has no jurisdiction in an earlier land registration case and a second decree for the same land is null and void. Where two certificates of title purport to include the same land, the earlier in date prevails. xxx In successive registrations, where more than one certificate is issued in respect of a particular estate in land, the person claiming under the prior certificate is entitled to the estate xxx Lastly, a certificate is not conclusive evidence of title if it is shown that the same land had already been registered and an earlier certificate for the same is in existence.We sympathize with petitioner Mascariñas who may be a purchaser for value and in good faith, but whose title, which is only a derivative of the void/later title, could not possibly be of force and effect more than its parent title. Certainly the spring cannot rise higher than its source.

ATOK BIG-WEDGE MINING v. IAC & TUKTUKAN SAINGAN G.R. No. 63528, September 1996Civil Law/Land Titles: In the face of two sets of divergent rulings of the Supreme Court on the nature of the rights of mining claimants over the land where their claim is located, the parties herein seek a definitive ruling on the issue: What is actually the right of a locator of a mining claim located and perfected under the Philippine Bill of 1902 over the land where the claim is found? Does he have an absolute right of ownership or does he have the mere right to possess? Whose right to the land should, therefore, prevail: the mining claimant's or that of an applicant for land registration? Does the mere recording or location of a mining claim ipso facto and irreversibly convert the land into mineral land, notwithstanding the fact that the mining claimant failed to comply with the strict work requirement under the Philippine Bill of 1902?1) The records bear out that private respondent has been in possession of the lot in concept of owner for more than 30 years. While private respondent offered the tax declarations and receipts in evidence, petitioner did not present any evidence in rebuttal thereof. Petitioner merely anchored its cause on its alleged vested rights to its mining claims under the mandate of the Philippine Bill of 1902 and our rulings in McDaniel v. Apacible (42 Phil. 749) and the catena of cases subsequent thereto.2) Petitioner is deemed to have abandoned his mining claims under E.O. No. 141 and P.D. No. 1214.All mineral lands, as part of the country's natural resources, belong to the State. This concept of jura regalia enshrined in past and present Philippine constitutions has not always been the prevailing principle in this jurisdiction. There was a time in our history when the mining laws were comprising of the Filipino people's inherent rights to their natural wealth.

Against this backdrop, we resolve whether or not the ownership of subject land had long been vested on petitioner after it had allegedly located and recorded its mining claim in accordance with the provisions of the Philippine Bill of 1902.This issue is not novel, it having first ruled upon in McDaniel v. Apacible, where we stated: The moment the locator discovered a valuable mineral deposit on the lands located, and perfected his location in accordance with law, the power of the U.S. Gov't. to deprive him of the exclusive right to the possession and enjoyment of the located claim was gone, the lands had become mineral lands and they were exempted from lands that could be granted to any other person. The reservations of public lands cannot be made so as to include prior mineral perfected located locations; and , of course, if a valid mining location is made upon public lands afterward included in a reservation, such inclusion or reservation does not affect the validity of the former location. By such location and perfection, the land located is segregated from the public domain even as against the Government.We reiterated this ruling in 8 cases (citations omitted). These cases notwithstanding, however, there came about thereafter a catena of cases where we declared that the rights of the holder of a mining claim located under the Philippine Bill of 1902, are not absolute or are not strictly of ownership. This was a ncessary premise in our affirmation of the constitutionality of P.D. No. 1214 in the 1987 case of Santa Rosa Mining v. Leido (156 SCRA 1), where we stated that mere location does not mean absolute ownership over the affected land. It merely segregates the located land from the public domain by barring other would-be locators from locating the same. To rule otherwise would imply that location is all that is needed to acquire and maintain rights over a located mining claim.And our ruling there was upheld in 5 cases (citations omitted). While petitioner insists there is only one construction of the provisions of the Philippine Bill of 1902, i.e., in the nature of ownership, private respondent posits the ultimate question of which between the seemingly inconsistent rulings is the correct interpretation of the Philippine Bill of 1902 in relation to E.O. No. 141 and P.D. No. 1214.This is not the first time either that we are asked to resolve these postulations of this court that are perceived to be contradictory. In the 1994 case of United Paracale Mining v. CA (232 SCRA 663), it would have been premature to rule on the issue, not all indispensable parties therein having been joined. That is not the situation in the present controversy.The determination of the rights of a mining claim holder under the Philippine Bill of 1902 is best undertaken on the basis of the very source of those rights, i.e., the Bill itself. Any alteration or change in the nature of those rights must be conceded for as long as such is statutorily and constitutionally sanctioned, for even vested rights may be taken away by the State in the exercise of police power.The recording of mining claims could not have been intended to be the operative act of classifying lands into mineral lands. The recording only operates to reserve to the registrant exclusive rights to undertake mining activities upon the subject land. The power to classify lands into mineral lands could not have been intended under the Philippine Bill of 1902 to be vested in just anyone who records a mining claim. This strengthens our holding that the rights of a mining claimant are confined to possessing the land for purposes of extraction of minerals. Thus, if no minerals are extracted, notwithstanding the recording of the claim, the land is not mineral land and registration thereof is not precluded by such recorded claim. Thus, in case at bench, the mining claimant, who had failed to comply with the annual minimum work requirement, could not, all the more, be expected to have extracted minerals from the mining location.Thus, it can be said (1) that the rights under the Philippine Bill of 1902 of a mining claim holder has been made subject by the Bill itself to the strict requirement that he actually performs work or undertakes improvements on the mine every year and does not merely file his affidavit of annual assessment, which requirement was correctly identified and declared in E.O. No. 141; and (2) That the same rights have been terminated by P.D. No. 1214, a police power enactment, under which non-application for mining lease amounts to waiver of all rights under the Philippine Bill of 1902 and application for mining lease amounts to waiver of the right under the Bill to apply for a patent. In light of these conditions upon the right of a mining claim holder under the Bill, there should remain no doubt now that such rights were not, in the first place, absolute or in the nature of ownership, and neither were they intended to be so.

Applying this to the facts of this case, we find that, not only has petitioner failed to show compliance with the actual annual work requirement, but also that nowhere on the land could any tangible work or improvement be found (as noted by the trial commissioner during an ocular inspection). Understandable thus is the action of the Dir. of Lands not to further appeal from respondent court's decision, the Director conceding the land to be registrable, considering petitioner's non-performance of mining work thereon, private respondent's adverse possession of the subject land more than 30 years and its use thereof for as many years solely for agricultural purposes.Equally borne out by the records is the fact that petitioner had indeed applied for a mining lease under P.D. No. 1214, thus, it has, in effect, waived its rights to secure a patent and it shall have been governed, if private respondent's claim of adverse and open possession of the subject land for more than 30 years were not established, by P.D. No. 463 in its activities respecting its mining lease. (Petition dismissed.)

Civil Law/Land Titles: Remedial Law/Special Proceedings/Jurisdiction of probate courtCivil Law/Succession/Jurisdiction of probate court: Remedial Law/Evidence/Different judges heard and decided the case: valid since full record available to the latter.INTESTATE ESTATE OF THE LATE DON MARIANO SAN PEDRO y ESTEBAN v. CA, et alDec. 18, 1996A probate court's jurisdiction is not limited to the determination of who the heirs are and what shares are due them as regards the decedent's estate. Neither is it confirmed to the issue of the validity of wills. We held in Maniñgat v. Castillo (75 Phil. 532, 535 [1945]) that the main function of a probate court is to settle and liquidate the estates of deceased persons either summarily or through the process of administration. This function necessarily includes the examination of the properties of the deceased so as to rule on whether or not the invetory of the estate properly included them for purposes of distribution. Thus in Trinidad v. CA (202 SCRA 106, 116 [1991]), we held that questions of title to any property apparently still belonging to the estate of the deceased may be passed upon in probate with the consent of all parties, without prejudice to third persons.Parenthetically, questions of title pertaining to the determination prima facie of whether certain properties ought to be included or excluded from inventory and accounting may be resolved by the probate court. (Garcia v. Garcia, 67 Phil. 353, 356-357 [1939]) Thus, the lower court did not commit reversible error when it declared Titulo 4136 as void.Under P.D. 892 (effective 16 Feb. 1976), all holders of Spanish titles/grants should cause their lands covered thereby to be registered under Act No. 496 within 6 months from date of effectivity or until 16 Aug. 1976. Otherwise, non-compliance results in a re-classification of their land. Spanish titles can no longer be countenanced as indubitable evidence of land ownership. (citations omitted)It was error on the part of respondent RTC Judge Bagasao who rendered the decision (but reversed by his successor RTC Judge Fernandez) to have declared the existence, genuineness and authenticity of Titulo 4136 despite the effectivity of P.D. 892. Judge Fernandez emphasized that Titulo 4136 was inadmissible and ineffective as evidence of private ownership.This Court can only surmise that the reason for non-registration of Titulo 4136 under the Torrens system is the lack of the necessary documents to be presented in order to comply with P.D. 892. We do not discount the possibility that the Titulo in question is not genuine, especially since its genuineness and due execution have not been proven. In both cases, the heirs were not able to present the original of Titulo 4136 nor a genuine copy thereof, despite a subpoena duces tecum. As an alternative to prove their claim, petitioners referred to a document known as "hypoteca" allegedly appended to the Titulo. However, it was neither properly identified nor presented as evidence. The photostat submitted by petitioners had, as found by Judge Fernandez, ash rings around portions with alterations which were done to erase any trace of the alterations. Other findings of Judge Fernandez: petitioners did not exert serious effort to retrieve the original, thus leading one to conclude that the original would be adverse if produced.As regards the hipoteca which allegedly defined the metes and bounds of the subject property, petitioners did not establish the conditions required by law for their admissibility as secondary

evidence to prove that there exists a document designated as Titulo 4136. Hence, it acquires no probative value.The private ownership of the land must be proved through genuineness of title AND clear identity of the land claimed. For Spanish titles, the land must be concretely measured per hectare of quinon, not in mass (cuerpos ciertos). (Dir. of Forestry v. CFI Judge Muñoz, 23 SCRA 1183, where we ruled that Titulo 4136 was of doubtful validity.) Further, in Widows & Orphans Association v. CA (212 SCRA 360, 380 [1992]), we ruled that Titulo 4136 had become bereft of any probative value as evidence of land ownership by virtue of P.D. 892.In G.R. No. 103727, the Titulo cannot be superior to the Torrens Titles of private respondents Buhain, Ocampo and Dela Cruz. Under the Torrens system, the titles of private respondents became indefeasible and incontrovertible one year from its final decree. More importantly, these titles, having been issued under the Torrens system, enjoy the conclusive presumption of validity.Re: petitioners' contention that their former counsel was guilty of gross negligence for having failed to call the proper witnesses from the Bureau of Forestry, suffice it to say that counsel's negligence binds the client. Further, petitioners were not prejudiced by the non-presentation of evidence to prove that Buhain & co's. titles were void, considering that petitioners' ownership was not duly proved. It bears repeating that petitioners are not without recourse. P.D. 892 grants all holders of Spanish titles the right to apply for registration of their lands under Act No. 496, within 6 months from the effectivity of P.D. 892. Thereafter, however, any Spanish title, if utilized as evidence of possession, cannot be used as evidence of ownership in any land registration proceedings under the Torrens system.All instruments affecting lands originally registered under the Spanish Mortgage Law may be recorded under Section 194 of the Revised Administrative Code, as amended by Act No. 3344.

Civil Law/Land Titles: Political Law/Constitutional Law/Estoppel does not lie against Government; Natural ResourcesSPOUSES IGNACIO PALOMO & TRINIDAD PASCUAL, & CARMEN PALOMO v. CA, REPUBLIC, FAUSTINO PERFECTO, et al.G.R. No. 95608, Jan. 21, 1997The issues raised essentially boil down to whether or not the alleged OCTs issued pursuant to the CFI order in 1916-1917 and the subsequent TCTs issued in 1953 pursuant to the petition for reconstitution are valid.Petitioners contend that the Treaty of Paris which ended the Spanish-American War recognized the property rights of Spanish and Filipino citizens and the American government had no inherent power to confiscate properties of private citizens and declare them part of any kind of government reservation. They allege that their predecessors-in-interest have been in open, adverse and contituous possession of the subject lands for 20-50 years prior to their registration in 1916-1917. Hence, the reservation of the land for provincial park purposes (Tiwi Hot Spring National Park) in 1913 by then Gov-Gen Forbes was tantamount to deprivation of private property without due process. In support, petitioners presented copies of a number of decisions of the CFI of Albay, 15th Judicial District of the U.S.A. which state that the predecessors in interest of petitioners' father, were in continuous, open and adverse possession of the lots from 20-50 years at the time of their registration in 1916.The Philippines passed to the Spanish Crown by discovery and conquest in the 16th century. Before the Treaty of Paris, our land, whether agricultural, mineral or forest, were under the exclusive patrimony and dominion of the Spanish Crown. Hence, private ownership of land could only be acquired through royal concessions which were documented in various forms, e.g., Titulo Royal or Royal Grant, Concesion Especial or Special Grant, Titulo de Compra or Title by Purchase, and Informacion Posesoria or Possessory Information title obtained under the Spanish Mortgage Law or under the Royal Decree of January 26, 1889.Unfortunately, no proof was presented that petitioners' predecessors in interest dervied title from an old Spanish grant. Petitioners placed much reliance upon the declarations of the CFI of Albay as aforementioned. However, they were not even signed by the judge but were merely certified copies of notification to Diego Palomo (petitioners' predecessor in interest) bearing the signature of the clerk of court.

Moreover, despite claims by petitioners that their predecessors in interest were in open, continuous and adverse possession for 20 to 50 years prior to their registration in 1916-1917, the lots were only surveyed in December 1913, the same year they were acquired by Diego Palomo. Curiously, in February 1913 or 10 months before the lots were surveyed for Diego, the government had already surveyed the area in preparation for its reservation for provincial park purposes. If petitioners' predecessors in interest were indeed in possession of the lots for a number of years prior to their registration in 1916-1917, they would have undoubtedly known about the inclusion of these properties in the reservation in 1913. It is certainly a trifle late at this point to argue that the that the CFI decrees were really issue, the lands are still not capable of appropriation. The adverse possession which may be the basis of a grant of title in confirmation of imperfect title cases applies only to alienable lands of the public domain.There is no question that the lots here were not alienable lands of the public domain. As testified by the District Forester, records in the Bureau of Forestry show that the subject lots were never declared as inalienable and disposal prior to 1913 up to the present. Moreover, as part of the provincial park reservation, they form part of the forest zone.It is elementary in the law governing natural resources that forest land cannot be owned by private persons. It is not registrable and possession thereof, no matter how lengthy, cannot convert it into private property, unless such lands are reclassified and considered disposable and alienable.Neither do the tax receipts preented by petitioners prove ownership since they are not conclusive proof of ownership in land registration cases.We now discuss the matter regarding the forfeiture of improvements introduced on the subject lots. It bears emphasis that E.O. No. 40 (reserving the lots for provincial park purposes) was already in force at the time the lots were surveyed for Diego Palomo. Petitioners also apparently knew that the subject lands were covered under the reservation when they filed a petition for reconstitution of the lost original certificates of title inasmuch as the blue print of the survey done for the reconstitution states: "in conflict with provincial reservation." In any case, petitioners are presumed to know that the law and the failure of government to oppose the registration of the lots in question is no justification for petitioners to plead good faith in introducing improvements on the lots.

1995

Civil Law/Land TitlesLIGON v. CA244 SCRA 693No voluntary instrument shall be registered by the RD unless the owner's duplicate certificate is presented together with such instrument, except in some cases or upon court order. (See discussion re: an order issued by the RTC in exercise of its general jurisdiction, not as a land registration court.)

Civil Law; Land Titles, Pacto de Retro Sales & Equitable MortgageIGNACIO v. COURT OF APPEALS246 SCRA 242 (1995 July)1) An action for consolidation of ownership must be filed as an ordinary civil action, not as a land registration case.2) Whether a particular issue should be resolved by the RTC in its limited jurisdiction as a land registration court is not a jurisdictional question but a procedural question.3) The distinction between the general jurisdiction vested in the RTC and its limited jurisdiction when acting as a land registration court has been eliminated by P.D. No. 1529, to avoid multiplicity of suits. The RTCs now have the authority to act not only on applications for original registration but also over all petitions filed after the original registration of title, with power to hear and determine all questions arising from such applications or petitions. The land registration court can now hear and decide controversial and contentious cases and those involving substantial issues.

Sale of Land/Land TitlesPILAPIL v. CAG.R. No. 55134, Dec. 4, 1995To affect the land sold, the presentation of the deed of sale and its entry in the day book must be done with the surrender of the owner's duplicate of the certificate of title. Production of the owner's duplicate of the certificate of title is required by Section 55 of Act No. 496 (not Section 53 of P.D. No. 1529), and only after compliance with this and other requirements shall actual registration retroact to the date of entry in the day book.However, nonproduction of the owner's duplicate of the certificate of title may not invalidate petitioners' claim of ownership over the lot involved considering the factual circumstances of this case, i.e., constructive knowledge of the prior sale.

TORTS & DAMAGES

2000

Torts; Vicarious Liability of Employers; DamagesMMTC v. CAMay 2000MMTC is the operator of a fleet of passenger buses within the Manila Area. Spouses Rosales sued the bus company for the death of their daughter who was hit by one of the buses owned by MMTC. The RTC found MMTC & their driver guilty of negligence & who ordered to pay actual, moral & exemplary damages, including atty's. fees & costs of lawsuit.

RULINGS: Art. 2180 of CC provides that "employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry." The responsibility of employers for the negligence of their employees in the performance of their duties is primary, that is, the injured party may recover from the employers directly, regardless of the solvency of their employees. Employers may be relieved of responsibility for the negligent acts of their employees within the scope of their assigned tasks only if they can show that "they observed all the diligence of a god father of a family to prevent damage." For this purpose, they have the burden of proving that they have indeed exercised such diligence, both in the selection of the employee who committed the quasi-delict and in the supervision of the performance of his duties. In the selection of prospective employees, employers are required to examine them as to their qualifications, experience, and service records. On the other hand, with respect to the supervision of employees, employers should formulate standard operating procedures, monitor their implementation, and impose disciplinary measures for breaches thereof. To establish these factors in a trial involving the issue of vicarious liability, employers must submit concrete proof, including documentary evidence. Moral damages. - Under Art. 2206, the "spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased." The reason for the grant of moral damages has been explained thus: …the award of moral damages is aimed at a restoration, within the limits of the possible, of the spiritual status quo ante; and therefore, it must be proportionate to the suffering inflicted. The intensity of the pain experienced by the relatives of the victim is proportionate to the intensity of affection for him and bears no relation whatsoever with the wealth or means of the offender. In the instant case, the spouses Rosales presented evidence of the intense moral suffering they had gone through as a result of the loss of Liza Rosalie who was their youngest child. The spouses Rosales claim moral damages in the amount of P5,000,000.00. In People v. Teehankee, Jr., [249 SCRA 54, 116 (1995)] this Court awarded P 1 million as moral damages to the heirs of a seventeen-year-old girl who was murdered. This amount seems reasonable to us as moral damages for the loss of a minor child, whether he or she was a victim of a crime or a quasi-delict.

Hence, we hold that the MMTC and Musa are solidarily liable to the spouses Rosales in the amount of P1,000,000.00 as moral damages for the death of Liza Rosalie.Compensation for loss of earning capacity - Art. 2206 of the Civil Code provides that in addition to the indemnity for death caused by a crime or quasi-delict, the "defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter;…." Compensation of this nature is awarded not for loss of earnings but for loss of capacity to earn money. Evidence must be presented that the victim, if not yet employed at the time of death, was reasonably certain to complete training for a specific profession. In People v. Teehankee, [249 SCRA 54, 118 (1995)] no award of compensation was granted to the heirs of a college freshman because there was no sufficient evidence on record to show that the victim would eventually become a professional pilot. But compensation should be allowed for loss of earning capacity resulting from the death of a minor who has not yet commenced employment or training for a specific profession if sufficient evidence is presented to establish the amount thereof. The argument for allowing compensation for loss of earning capacity of a minor is even stronger if he or she was a student, whether already training for a specific profession or still engaged in general studies. In Khromer v. Dahl, 402 P. 2d 979,982 (1965), the court, in affirming the award by the jury of $85,000.00 to the heirs of an eighteen-year-old college freshman who died of carbon monoxide poisoning, stated as follows: There are numerous cases that have held admissible evidence of prospective earnings of a student of a student or trainee…The appellants contend that such evidence is not admissible unless the course under study relates to a given occupation or profession and it is shown that the student is reasonably certain to follow that occupation or profession. It is true that the majority of these decisions deal with students who are studying for a specific occupation or profession. However, not one of these cases indicate that evidence of one's education as a guide to future earnings is not admissible where the student is engaged in general studies or whose education does not relate to a specific occupation.

Torts; NegligenceFOOD TERMINAL INC. vs. CAG.R. No. 108397, June 21, 2000.The basic issue raised is whether or not the …petitioner was negligent in the care and custody of respondent's goods during storage…petitioner practically admitted that it failed to maintain the agreed temperature of the cold storage area at 2 to 4 degrees centigrade at all times, and this caused the deterioration of the yeast stored therein. Nonetheless, petitioner claimed that temperature was not the sole cause for the deterioration of respondent's goods. Since negligence has been established, petitioner's liability for damages is inescapable.

1999

DamagesARTURO BORJAL and MAX SOLIVEN vs CA and WENCESLAOJan. 14, 1999

Wenceslao filed a civil action for damages based on libel against petitioners for an article referring to “ a conference organizer associated with shady deals who has lot of trash tucked inside his closet, “Thick-faced”,”self-proclaimed hero” and “a person with dubious ways.” The article did not name or identify Wenceslao of the conference he was organizing.RULING: Complaint for damages dismissed. Counterclaim also dismissed

Damages cannot be awarded in the absence of ill-motive in the filing of the complaint. On petitioner’s counterclaim for damages, we find the evidence meager to sustain any award. Private respondent can’t be said to have instituted the present suit in abuse of the legal processes and with hostility to the press; or that he acted maliciously, wantonly oppressively, fraudulently and for the sole purpose of harassing petitioners, thereby entitling the latter to damages. On the contrary, private respondent acted with his right to protect his honor from what he perceived to be malicious imputations against him. Proof and motive that the institution of the action was prompted be a sinister design to vex and humiliate a person must be clearly and preponderantly established to entitle the victim to damages. The law could not have meant to

impose a penalty on the right to litigate, nor should counsel’s fees be awarded every time a party wins a suit.

1998

Civil Law; Moral Damages; Terms and Conditions of Credit Card and New Agreement; Abuse of Right; Damages and Injury distinguishedBPI EXPRESS CARD CORPORATION v. CA, ET AL.

This is a case where private respondent, Marasigan, won an award in the trial court and in the CA for damages allegedly sustained when his BPI credit card was rejected by a restaurant where he was entertaining some guests on December 8, 1989. The SC reversed the CA and held that there was no injury suffered by Marasigan as it was shown that he was at fault why his credit card was dishonored. He was sent a letter by BPI informing him that he was indebted to them and ordering him to pay his obligation. Marasigan did pay using a postdated check, dated December 15, 1989.

By using the postdated check as payment, Marasigan failed to comply with his agreement with the bank to settle his account in order that his credit card would not be suspended. Settled is the doctrine that a check is only a substitute for money and not money, the delivery of such an instrument does not, by itself operate as payment. Thus, the BPI was justified in suspending his credit card. As such, BPI did not abuse its right under the terms and conditions of the contract.

The following are the elements for an abuse of right to exist: (1) there is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another.

Lastly, there is a material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from the injury; and damages are the recompense or compensation awarded for the damages suffered. Thus, in cases where there is damage without injury, in those instances in which the harm or loss was not the result of the violation of a legal duty, the injured party bears the consequences alone. The award for tort damages is based on the premise that an individual was injured in contemplation of law. There must be a breach of a duty, which breach must primarily cause the injury.

Civil Law/Land Titles/Certificate of Title not subject to collateral attackHALILI v. CIR & DRIVERS and CONDUCTORS UNIONMay 1996 The fact that the subject real property was registered under the Torrens System makes the instant petition all the more dismissible, considering that the best proof of ownership of a piece of land is the Certificate of Title. §48 of P.D. No. 1529 provides: a certificate of title shall not be subject to collateral attack.A certificate of title accumulates in one document a precise and correct statement of the exact status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with very few exceptions, should not thereafter be impugned, altered except in some direct proceeding permitted by law. Otherwise, all security in registered titles would be lost.The issue on the validity of title, i.e., whether or not it was fraudulently issued, can only be raised in an action expressly instituted for that purpose. Hence, whether or not petitioners have the right to claim ownership of the land in question is beyond the province of the instant proceeding. Civil Law/Land Titles/Innocent purchasers for value: All portions of said land, now known as Holy Cross Memorial Park, have already been sold out to individual lot buyers, who are innocent purchasers for value. Where innocent third persons, relying on the correctness of the Certificate of Title thus issued, acquire rights over the property, the Court cannot disregard such rights and order the total cancellation of the certificate. Civil Law/Sales/Capacity to sell: As adverted to earlier, ownership of the lot had already been vested in the Union upon sale to it by the Heirs of Halili. Considering this, the Union had every right to dispose of the property. After the termination of the above-entitled cases, judgment therefor having become final and executory, even as of 1982, neither the NLRC nor this Court will have any authority to look into the validity of the disposal by the Union of the property. Under the

circumstances, therefore, it is to be assumed that the sale by the Union, as virtual owner of the property, to MMPCI would not need any authority to sell from the NLRC or from this Court and we hereby write finis to these cases.

1997

Civil Law & Commercial Law/Damages & Transportation LawPHILIPPINE AIRLINES (PAL) v. CA & LEOVIGILDO A. PANTEJOJuly 1997

Pantejo boarded a PAL plane in Manila and disembarked in Cebu City where he was supposed to take his connecting flight to Surigao City. Due to a typhoon, the connecting flight was cancelled. PAL gave each passenger a total of P300.00 cash assistance for the 2-day stay in Cebu. Pantejo requested that he be billeted at PAL's expense as he did not have cash with him, but PAL refused. Pantejo learned that the hotel expenses of 2 other passengers were reimbursed by PAL. Pantejo told PAL's manager that he was going to sue for discrimination. It was only then that PAL offered to pay Pantejo, but due to his ordeal and anguish, Pantejo refused.

What makes PAL liable for damages here is its blatant refusal to accord the amenities equally to all its stranded passengers. No compelling reason was advanced to explain this discriminatory conduct.

Moral damages are not intended to enrich plaintiff, merely to obtain means, diversion or amusements that will serve to alleviate the moral suffering he underwent due to defendant's culpable action and must, perforce, be proportional to the suffering inflicted. However, substantial damages do not translate into excessive damages.

The interest of 6% imposed by the CA should be computed from the date of rendition of judgment and not from the filing of the complaint. This is because at the time of the filing the complaint, the amount of damages to which plaintiff may be entitled remains unliquidated and not known until definitely ascertained, assessed and determined by the courts, and only after presentation of proof.

Civil Law/Torts/Medical Malpractice CasesLEONILA GARCIA-RUEDA v. WILFREDO L. PASCASIO, et al.September 1997

There are 4 elements involved in medical negligence cases: duty, breach, injury and proximate causation.

When the victim employed the services of the doctors, a physician-patient relationship was created. In accepting the case, the doctors in effect represented that, having the needed training and skill possessed by physicians and surgeons practicing in the same filed, they will employ such training, care and skill in the treatment of their patients. They have a duty to use at least the same level of care that any other reasonably competent doctor would use to treat a condition under the same circumstances. The breach of these professional duties of skill and care, or their improper performance, by a physician surgeon whereby the patient is injured in body or in health, constitutes actionable malpractice. Thus, in the event that any injury results to the patient from want of due care or skill during the operation, the surgeons may be held answerable in damages for negligence.

Moreover, in malpractice or negligence cases involving the administration of anaesthesia, the necessity of expert testimony and the availability of the charge of res ipsa to the plaintiff, have been applied in actions against anaesthesiologists to hold the defendant liable for the death or injury of a patient under excessive or improper anaesthesia. Essentially, it requires 2-pronged evidence: evidence as to the recognized standards of the medical community in the particular kind of case, and a showing that the physician in question negligently departed from this standard in his treatment.

Another element in medical negligence cases is causation which is divided into 2 inquiries: whether the doctor's actions in fact casued the harm to the patient and whether these were the proximate cause of the patient's injury.

Commercial Law/Transportation Law; Insurance/Civil Law/Torts and DamagesNEGROS NAVIGATION v. CA, et alNovember 1997

The vessel Don Juan (owned by petitioner) collided with the Tacloban City, an oil tanker owned by PNOC. As the Don Juan sank, several of her passengers perished; but the 4 members of private respondents' families were never found. Petitioner admitted that private respondents purchased 4 tickets and that the tickets were listed in the passenger manifest. However, petitioner denied that the 4 relatives of private respondents actually boarded the vessel as their bodies were never recovered. Further, petitioner contended that the vessel was seaworthy, had a full and competent crew; moreover, that the collision was entirely due to the fault of the Tacloban City.

Issues: (1) whether members of private respondents' families were actually passengers; (2) whether Mecenas v. CA (180 SCRA 83 [1989]) finding petitioner's crew members grossly negligent was binding here; (3) whether the total loss of the Don Juan extinguished petitioner's liability; and (4) whether the damages awarded were excessive, unwarranted, etc.

First. Petitioner contends that private respondents should have proven presence of victims on ship as it is common knowlege that passengers purchase tickets in advance but do not actually use them. No merit. One private respondent testified that he brought his family to the vessel and stayed with them until it was time to depart. There is no reason he should claim members of his family perished merely to sue. People do not normally lie about so grave a matter as the loss of dear ones. It would be more difficult to conceal relatives if they were alive than it is for petitioner to show the contrary.

Second. The trial court and CA both relied on Mecenas in finding that petitioner breached its duty to exercise extraordinary diligence. It was found there that although proximatde cause was negligence of Tacloban City's crew, Don Juan's crew was equally negligent as its master was playing mahjong at the time of collision and the officer on watch admitted that he failed to call the attention of the master to the imminent danger; further, the Don Juan was overloaded and not seaworthy as it sank within 10 to 15 minutes of impact.

While petitioner's contention that the decision here should be based on the records of this case may be true as regards the merits of the individual claims against petitioner, it cannot be true re: cause of the sinking of its ship. Adherence to Mecenas dictated by stare decisis. Further, the trial court made its own independent findings on the basis of the testimonies before it.

Third. It is settled that a shipowner is liable notwithstanding total loss of the ship if fault can be attributed to the shipowner.

Fourth. Petitioner contends that private respondents should be allowed to claim only P43,857.14 each as moral damages since in Mecenas, the amount of P307,500.00 was awarded to the 7 children of the Mecenas couple.

Petitioner's contentkion that the expenses for the erection of a monument and other expenses for memorial services for the victim should be considered included in the death indemnity = without merit. Death indemnity is given to compensate for violation of the rights to life and physical integrity of thedeceased. On the other hand, damages incidental to or arising out of such death are for pecuniary losses of the beneficiaries of the deceased.

Civil Law/Torts; Medical Malpractice SuitDR. NINEVETCH CRUZ v. CA & LYDIA UMALI November 1997

Define a medical malpractice suit: the type of claim which a victim has available to him or her to redress a wrong committed by a medical professional which has caused bodily harm. (Garcia-Rueda v. Pascasio, G.R. No. 118141, 5 September 1997) In this jurisdiction, these claims are most often brought as a civil action for damages under Art. 2176, NCC, and in some instances, as a criminal case under Art. 365, RPC, with which the civil action for damages is impliedly instituted. It is via this latter type of action that the heirs of the deceased here sought redress for petitioner's alleged imprudence and negligence. The information against petitioner (surgeon) and one Dr. Lina Ercillo (anaesthesiologist during deceased's operation) charged them with negligently failing to supply or store sufficient provisions and facilities necessary to meet any

and all exigencies apr to arise before, during and/or after a surgical operation, thereby causing the untimely death of Lydia Umali on the day following the operation. The MTCC acquitted Ercillo but convicted Cruz. The RTC and CA affirmed.

Prior to 22 March 1991, petitioner, upon examination, found a myoma in Lydia's (the deceased) uterus. Petitioner thus scheduled a hysterectomy for 1:00 p.m., 23 March 1991. Lydia and Rowena (daughter) arrived at the hospital (Perpetual Help Clinic and General Hospital on Balagtas Street, San Pablo City, Laguna) on 22 March 1991, at around 4:30 p.m. As Rowena noticed that the clinic was untidy/very dusty, she tried to dissuade her mother from proceeding with the operation. On 23 March 1991, before Lydia was wheeled into the operating room, Rowena asked petitioner if the operation could be postponed. After petitioner and Lydia conversed in petitioner's office, Lydia informed Rowena that petitioner told Lydia that she had to be operated on as scheduled.

During the procedure, Rowena and her other relatives (Rowena's husband, sister and 2 aunts) waited outside the operaing room (OR). Dr. Ercillo then went out of the OR and instructed them to buy tagamet ampules, which Rowena's sister bought immediately. After an hour, Dr. Ercillo came out again and asked them to buy blood for Lydia. They bought type "A" blood from a blood bank (St. Gerald Blood Bank) , which the attendant brought into the OR. After a few hours, petitioner informed them that the operation was finished. The operating staff then went inside petitioner's clinic to eat. Some 30 minutes later, Lydia was brought out of the OR on a stretcher, and petitioner asked Rowena, et al., to buy additional blood. Unfortunately, there was no more type "A" blood available at the blood bank. Thereafter, a person arrived to donate blood which was later transfused into Lydia. Rowena then noticed her mother, who was attached to an oxygen tank, gasping for breath. Apparently, the oxygen supply had run out and Rowena's husband, together with petitioner's driver, had to go to another hospital to get oxygen. Lydia was given the fresh supply of oxygen as soon as it arrived. But at around 10 p.m., Lydia went into shock and her BP dropped to 60/50. Lydia's unstable condition thus necessitated her transfer to another hospital (San Pablo District Hospital [SPDH]) for further examination and so that she could be connected to a respirator. The transfer, however, was without the prior consent of Rowena nor of the other relatives present, who only found out about the intended transfer when an ambulance arrived to take Lydia to this other hospital. Rowena, et al., then boarded a tricycle and followed the ambulance.

Upon Lydia's arrival at SPDH, she was wheeled into the OR and petitioner and Dr. Ercillo re-operated on Lydia as there was blood oozing from the abdominal incision. The attending physicians summoned Dr. Bartolome Angeles, the head of the Obstetrics and Gynecology Dept. of SPDH. However, by the time Dr. Angeles arrived, Lydia was already in shock and possibly dead as her blood pressure was already 0/0. Dr. Angeles then informed petitioner and Dr. Ercillo that there was notheing he could do to save the patient. While petitioner was closing the abdominal wall, Lydia died. Lydia was pronounced dead on 24 March 1991, 3 a.m., with the death certificate indicating "shock" as the immediate cause of death and "disseminated intravascular coagulation (DIC)" as the antecedent cause.

In convicting petitioner, the MTCC found that (1) the clinic was untidy; (2) there was lack of provisions like blood and oxygen to prepare for any contingencies; (3) the manner and fact that Lydia was brought to SPDH indicated there was something wrong in the manner by which petitioner conducted the operation; and (4) no showing that prior to the operation, petitioner conducted a cardio pulmonary clearance or any blood typing.

The RTC reiterated these findings, while the CA observed that: (1) while the untidiness and filthiness of the clinic did not, by themselves, indicate negligence, such nevertheless showed petitioner's absence of due care and supervision over her subordinates (thus leading to the questions of whether these unsanitary conditions permeated the OR; whether the surgical instruments were properly sterilized; whether these conditions contributed to Lydia's infection -- while only petitioner could answer these, she opted not to testify, giving rise to the presumption that she had nothing good to testify in her defense); (2) the need to buy Tagamet and blood, and the empty oxygen tank, showed that petitioner had not prepared for any unforeseen circumstances prior to going into surgery; (3) no showing that petitioner conducted any cardio-pulmonary clearance, or at least procured a clearance from/by an internist, which are standard requirements before a patient is subjected to surgery; (4) no showing that petitioner determined,

as part of the pre-operative evaluation, the patient's bleeding parameters, such as bleeding and clotting time; (5) obviously, petitioner did not prepare the patient; did not get the family's consent to the operation; did not prepare a medical chart with instructions for the patient's care -- no proof of these offered.

SC, however, holds differently and finds the foregoing circumstances insufficient to sustain petitioner's conviction for reckless imprudence resulting in homicide.

Elements of reckless imprudence: (1) offender does or fails to do an act; (2) the doing or failure to do that act is voluntary; (3) that it be without malice; (4) that material damage results from the reckless imprudence; and (5) that there is inexcusable lack of precaution on the part of the offender, considering his employment or occupation, degree of intelligence, physical condition, and other circumstances regarding person, time and place.

Whether or not a physician has committed an "inexcusable lack of precaution" in the treatment of his patient is to be determined according to the standard of care observed by other members of the profession in good standing under similar circumstances bearing in mind the advanced state of the profession at the time of treatment or the present state of medical science. In the recent case of Garcia-Rueda v. Pascasio, this Court stated that in accepting a case, a doctor in effect represents that, having the needed training and skill possessed by physicians and surgeons practicing in the same field, he will employ such training, care and skill in the treatment of his patients. He theerefore has a duty to use at least the same level of care that any other reasonably competent doctor would use to treat a condition under the same circumstances. It is in this aspect of medical malpractice that expert testimony is essential to establish not only the standard of care of the profession but also that the physican's conduct in the treatment and care falls below such standard. Further, inasmuch as the causes of the injuries involved in malpractice actions are determinable only in light of scientific knowledge, it has been recognized that expert testimony is usually necessary to support the conclusion as to causation.

Immediately apparent from a review of the records of this case is the absence of any expert testimony on the matter of the standard of care employed by other physicians of good standing in the conduct of similar operations. The prosecution's expert witnesses in the persons of 2 NBI doctors only testified as to the possible cause of death but did not venture to illuminate the court on the matter of the standard of care that petitioner should have exercised.

All 3 courts below bewailed the inadequacy of the facilities/supplies/provisions and untidiness of petitioner's clinic; the failure to subject the patient to a cardio-pulmonary test prior to the operation; the omission of any form of blood typing before the transfusion; and even the subsequent transfer of Lydia to the SPDH and the reoperation performed on her by petitioner. But while it may be true that the circumstances pointed out by the courts below seemed beyond cavil to constitute reckless imprudence on the part of the surgeon, this conclusion is still best arrived at not through the educated surmises nor conjectures of laymen, including judges, but by the unquestionable knowledge of expert witnesses. For whether a physician or surgeon has exercised the requisite degree of skill and care in the treatment of his patients is, in the generality of cases, a matter of expert opinion. The deference of courts to the expert opinion of qualified physicians stems from its realization that the latter possess unusual technical skills which layment in most instances are incapable of intelligently evaluating. Expert testimony should have been offered to prove that the circumstances cited by the courts below constituted conduct falling below the standard of care employed by other physicians in good standing when performing the same operation. (emphasis supplied) It must be remembered that when the qualifications of a physicial are admitted, as here, there is an inevitable presumption that in proper cases he takes the necessary precaution and employs the best of his knowledge and skill in attending to his clients, unless the contrary is sufficiently established. This presumption is rebuttable by expert opinion which is so sadly lacking in case at bench.

Even granting arguendo that the inadequacy of the facilities/supplies/provisions and untidiness of petitioner's clinic; the failure of petitioner to conduct pre-operation tests on the patient; and the subsequent transfer of Lydia to the SPDH and the reoperation performed on her by petitioner do indicate, even without expert testimony, that petitioner was recklessly imprudent in the exercise of her duties as a surgeon, no cogent proof exists that any of these circumstances caused petitioner's death. Thus, the absence of the fourth element of reckless imprudence: that the injury to the person or property was a consequence of the reckless imprudence.

In litigations involving medical negligence, the plaintiff has th burden of establishing appellant's negligence and for a reasonable conclusion of negligence, there must be proof of breach of duty on the part of the surgeon as well as a causal connection of such breach and the resulting death of his patient. In Chan Lugay v. St. Luke's Hospital (10 CA Reports 415, 427-28 [1966]), where the attending physicial was absolved of liability for the death of complainant's wife and newborn baby, the Court of Appeals held that the negligence must be the proximate cause of the injury; negligence, no matter in what it consists, cannot create a right of action unless it is the proximate cause of the injury complained of.

This Court has no recourse but to rely on the expert testimonies rendered by the prosecution and defense witnesses that substantiate rather than contradict petitioner's allegation that the cause of Lydia's death was DIC which, as attested to by an expert witness, cannot be attributed to petitioner's fault or negligence. The probability that Lydia's death was caused by DIC was unrebutted during trial and has engendered in the mind of this Court a reasonable doubt as to petitioner's guilt. Thus, her acquittal of the crime charged. While we condole with the family of Lydia, our hands are bound by law. Nevertheless, this Court finds petitioner civilly liable for the death of Lydia, for while a conviction requires proof beyond reasonable doubt, only a preponderance of evidence is required to establish civil liability.

Civil Law/Damages/Moral & Exemplary damages (see text of decision)PNB v. CA & CARMELO H. FLORESG.R. No. 116181, Jan. 6, 1997It is not disputed that petitioner is entitled to payment for the construction it made, which arose from a quasi-contractual relation created between the former and private respondent. But should petitioner be paid based on quantum meruit?The issue was answered in the affirmative in Eslao, and we find no reason to depart therefrom as: First, the instant quasi-contract is neither fraudulent nor mala in se. Second, the project was already covered by a specific appropriation. Third, as in private contracts, the facts show that an implied obligation to pay would be imposed upon the government. Fourth, the property or benefit is not ultra vires, i.e., can be the proper subject of an express contract and are within the contractual powers of the public body. Fifth, the case falls within the exemption from the mandatory procedure of public bidding which is dispensed with on the ground of public necessity or when time is of the essence, and considering that the subject project was contiguous to an on-going project performed by petitioner and there is no proof of any unsatisfactory performance of negative slippage. Sixth, the contractor substantially complied (95% complete) in good faith with its obligation and no intentional departure from the specifications were alleged. Seventh, petitioner's claim is clearly supported by equity. Private respondent is reaping benefits from the scallop fence and wire placed by petitioner. Eight, there is no proof of any collusion among the parties. Finally, payment is limited to the actual costs chargeable against funds authorized and certified for the purpose. All these circumstances, taken together, negate fraud and collusion. (Rivera v. Malolos, 102 Phil. 285, 291 [1957])The Sol-Gen, on behalf of private respondent, argues that the matter should be referred to the COA, citing Eslao. Such argument is without merit. Quantum meruit allows recovery of the reasonable value regardless of any agreement as to value. It entitles the party to as much as he reasonably deserves, as distinguished from quantum valebant, ot ro as what is reasonably worth.Unliquidated claims present a justiciable question ripe for judicial determination which is beyond the powers of COA to adjudicate. (See Phil. Operations v. Auditor-General, 94 Phil. 868 [1954]) Recovery based on quantum meruit is in the nature of such claim because its settlement requires the application of judgment and discretion and cannot be adjusted by simple arithmetical processes. In Eslao, the Court found it necessary to refer to the COA the task of determining the total compensation due to the claimants considering that the matter on the exact amont was not in issue and the determinatin thereof involves a review of the factual findings and evidence in support thereof. On the other hand, the lower court here, had already made a factual finding on the amount reasonably due to petitioner and scrutinized the evidence to sustain the claim. Besides, there is nothing in the cited cases which would imply that only the COA can determine the specific amount du to a contractor guided by the established principle of quantum meruit. As

our courts are both courts of law and equity, they are not powerless to determine a factual matter in accordance with both standards. (CA decision set aside and RTC decision reinstated.)

1996

Torts & Damages: Contributory negligence; vicarious liabilityVALENZUELA v. CAFEBRUARY 1996Was V guilty of contributory negligence in parking her car alongside Aurora Blvd., which, L points out, is a no parking zone? No. When V discovered she had a flat tire, she stopped at a lighted place where she parked the car very close to the sidewalk. Under these circumstances, V exercised the standard reasonably dictated by the emergency and could not be considered to have contributed to the unfortunate circumstances. The emergency which lead her to park her car on a sidewalk in Aurora Blvd. was not of her own making, and it was evidence that she had taken all reasonable precautions.Re: the vicarious liability of L's employer, this is not based on the principle of respondeat superior, which holds the master liable for acts of the servant, but that of pater familias, in which the liability ultimately falls upon the employer, for his failure to exercise good father diligence in the selection and supervision of his employees. Ordinarily, evidence demonstrating the employer's diligent supervision of its employee during the performance of the latter's assigned tasks would be enough to relieve him of the liability imposed by Arts. 2180 and 2176. The employer is not expected to exercise supervision over either the employee's private activities or during the performance of tasks either unsanctioned by the former or unrelated to the employee's tasks.When a company gives full use and enjoyment of a company car to its employee, it in effect guarantees that it is, like every good father, satisfied that its employee will use the privilege reasonably and responsively.As such, in providing for a company car, the company owes a responsibility to the public to see to it that the managerial or other employees to whom it entrusts virtually unlimited use of a company issued car are able to use the company car capably and responsibly.[There must be evidence] as to whether or not the company took the steps necessary to determine or ascertain the driving proficiency and history of L, to whom it gave full and unlimited use of a company car. Not having been able to overcome the burden of demonstrating that it should be absolved of liability for entrusting its company car to L, said company, based on the principal of bonus pater familias, ought to be jointly and severally liable with the former for the injuries sustained by V during the accident.

Torts & Damages; Damnum Absque InjuriaSPOUSES CUSTODIO v. CAFEBRUARY 1996There is a material injury between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the injury; and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without injury when the loss or harm was not the result of a violation of a legal duty (damnum absque injuria).In order that a plaintiff may maintain an action for injuries of which he complains, he must establish that such injuries resulted from a breach of [a legal duty] which the defendant owed to the plaintiff -- a concurrence of injury to the plaintiff and legal responsibility by the person causing it. In order that the law will give redress for an act causing damage, that act must be not only hurtful, but wrongful. There must be damnum et injuria.In case at bar, although there was damage, there was no injury.Contrary to claim of private respondents, petitioners could not be said to have violated the principle of abuse of right. In order that said principle can be applied, the following requisites must concur:1) The defendant acted in a manner that is contrary to morals, good customs or public policy;

2) The acts should be willful; and3) There was damage or injury to the plaintiff. (Art. 21, Civil Code)Petitioners' act in constructing a fence within their lot is a valid exercise of their right as owners, hence not contrary to morals, etc. (see Art. 430, Civil Code). At the time the fence was constructed, the lot was not subject to any servitudes. There was no easement of way existing in favor of private respondents, either by law or contract.The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie, although the act may result in damage to another, for no legal right has been invaded. One may use any lawful means to accomplish a lawful purpose and though the means adopted may cause damage another, no cause of action arises in the latter's favor. The courts can give no redress for hardship to an individual resulting from action reasonably calculated to achieve a lawful end by lawful means.

Torts & Damages; Rule 111MANIAGO v. CAThe right to bring an action for damages under the Civil Code must be reserved as required by Rule 111, §1, otherwise it should be dismissed.The right of the injured party to sue separately for the recovery of the civil liability whether arising from crimes or quasi-delicts must be reserved otherwise, they will be deemed instituted with the criminal action. (Dulay v. CA, 243 SCRA 220 [1995]; Yakult v. CA, 190 SCRA 347 [1990])

Torts & Damages; Actual & Moral damagesTRANS-ASIA SHIPPING v. CAMarch 1996Petitioner's ship was unseaworthy even before it embarked on a voyage, thus causing private respondent to be late for work by half a day.Art. 698, Code of Commerce must be read in relation with Arts. 2199 - 2201, 2208 and 21, Civil Code. As such, petitioner is liable for any pecuniary loss or loss of profits which the private respondent may have suffered by reason of petitioner's failure to observe extraordinary diligence. However, in case at bench, private respondent's delay was due to his insistence on disembarking, which forced the vessel to return to its port of origin. Had he remained on the vessel, it would have reached it destination, albeit, half a day late. Moreover, private respondent failed to prove that he did not receive his salary, nor that his absence was not excused. Thus, no actual damages can be awarded.But moral and exemplary damages must be awarded as petitioner allowed its vessel to leave the port of origin with full awareness that it was unseaworthy, hence, it acted with bad faith and in a wanton and reckless manner.

Torts & Damages; Actual damagesMALALUAN v. COMELECMarch 1996COMELEC declared private respondent Evangelista the winner in an election contest and awarded actual damages, notwithstanding the fact that the controversy had become moot and academic on account of the expiration of the term of office.In case at bench, the question as to damages remains ripe for adjudication. Petitioner contends that the damages (attorney's fees, xerox expenses, unearned salary and emoluments) were not alleged nor proved during trial.In light of Arts. 2199 and 2201, Civil Code, actual damages are appropriate only in breaches of obligations in cases of contracts and quasi-contracts, and on the occasion of crimes and quasi-delicts. Thus, the of a party in an election case for actual damages must hinge upon these. In their absence, the claimant must be able to point out a specific provision of law authorizing a money claim for election protest expenses against the losing party. (Atienza, 239 SCRA 298) For instance, the claimant may cite Arts. 19, 20 and 32(5), Civil Code, which create obligations not by contract, crime or negligence, but directly by law.We rule that no breach of contract or quasi-contract nor tortious act nor crime may make petitioner liable for actual damages. Further, private respondent has not been able to point out to

a specific provision of law authorizing a money claim for election protest expenses against the losing party. Insofar as the award of protest expenses and attorney's fees are concerned, We find them to have been awarded without basis, the election protest not having been clearly unfounded.

Torts & Damages: Exemplary damagesPEOPLE v. PATROLLA JR. Y VEGAMarch 1996No factual basis for the award of moral damages. Exemplary damages may be awarded in criminal cases where the crime was committed with one or more aggravating circumstances. No aggravating circumstance is present, other than treachery, which qualified the killing to murder and abuse of superior strength which was however absorbed in treachery, to warrant an award of thereof.

Torts & Damages; Loss of luggageSABENA v. CAMarch 1996Petitioner contends that the alleged negligence of private respondent should be considered the primary cause of the loss of her luggage, as despite her awareness that the flight ticket had been confirmed only for Casablanca and Brussels, and that her flight from Brussels to Manila had yet to be confirmed, she did not retrieve the luggage upon arrival at Brussels.It remained undisputed that private respondent's luggage was lost while in the custody of petitioner. When she discovered her bag was missing, she promptly accomplished and filed a Property Irregularity report, followed up her claim, and even filed a formal letter-complaint. She felt relieved when she was advised that her luggage had been found, with its contents intact when examined, and that she could expect it to arrive 4 days later. The then waited anxiously only to be told later that her luggage had been lost for the second time. Thus, it was clear that petitioner was guilty of gross negligence.In Alitalia v. IAC (192 SCRA 9, 16-18), the Court held: "The Warsaw Convention however denies to the carrier availment of the provisions which exclude or limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to wilful misconduct xxx The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself completely, and declared the stated limits of liability not applicable 'if it is proved that the damage resulted from an act or omission of the carrier xxx' The Convention does not thus operate as an exclusive enumeration of the instances of an airline's liability, or as an absolute limit of the extent of that liability. xxx [I]t should be deemed a limit of liability only in those cases where the cause of death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by any willful misconduct, etc.

PNB v. CA and FLORESApril 1996Moral damages awarded must be commensurate with the loss or injury suffered. Moral damages though incapable of pecuniary estimations, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. Moral damages are emphatically not intended to enrich a complainant at the expense of the defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to obviate the moral suffering he has undergone, by reason of the defendant's culpable action. Its award is aimed at the restoration, within the limits of the possible, of the spiritual status quo ante, and it must be proportional to the suffering inflicted. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions.

BALIWAG TRANSIT v. CA

May 1996 Commercial Law & Civil Law/Transportation & Torts/Common Carriers & Negligence: The use of a kerosene lamp substantially complies with Section 34 (g) of the Land Transportation Code.The aforequoted law clearly allows the use not only of an EWD of the triangular reflectorized plates variety but also parking lights or flares visible one hundred meters away. No negligence, therefore, may be imputed to A & J Trading and its driver.To prove actual damages, the best evidence available to the injured party must be presented. The court cannot rely on uncorroborated testimony whose truth is suspect, but must depend upon competent proof that damages have been actually suffered.Second, as regards lost earnings, Leticia earned P5,000 a month, but was forced to stop working due to her injuries. Considering the nature and extent of her injuries and the length of time it would take her to recover, we find it proper that Baliwag should compensate her lost income for five (5) years. Third, the award of moral damages is in accord with law. In a breach of contract of carriage, moral damages are recoverable if the carrier, through its agent, acted fraudulently or in bad faith. The evidence shows the gross negligence of the driver of Baliwag bus which amounted to bad faith. Finally, we find the award of attorney's fees justified. The complaint for damages was instituted on December 15, 1982, following the unjustified refusal of Baliwag to settle their claim. The Decision was promulgated by the trial court only about nine years later. Numerous pleadings were filed. Given the complexity of the case and the amount of damages involved, the award of P10,000.00 is just and reasonable.

PHILIPPINE AIRLINES v. CA & DR. & MRS. MIRANDAIt is now firmly settled that moral damages are recoverable in suits predicated on breach of a contract of carriage where it is proved that the carrier was guilty of fraud or bad faith. Inattention to and lack of care for the interests of its passengers amount to bad faith. What the law considers as bad faith which may furnish the ground for an award of moral damages would be bad faith in securing the contract and in the execution thereof, as well as in the enforcement of its terms, or any other kind of deceit. Such unprofessional and proscribed conduct is attributable to petitioner airline.It must, of course, be borne in mind that moral damages are not awarded to penalize the defendant but to compensate the plaintiff. In a contractual or quasi-contractual relationship, exemplary damages, on the other hand, may be awarded only if the defendant had acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. Attorney's fees in the concept of damages may be awarded where there is a finding of bad faith. The evidence on record amply sustains that the awards assessed against petitioner are justified and reasonable.

Civil Law/DamagesMR. & MRS. ENGRACIO FABRE & PORFIRIO CABIL v. CA, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, et al.July 1996The CA erred in increasing the amount of compensatory damages because private respondents did not question this award as inadequate. To the contrary, the award of P500,000 by the RTC as actual damages is reasonable considering the contingent nature of her income as a casual employee of a company and as distributor of beauty products and the fact that the possibility that she might be able to work again has not been foreclosed. With respect to the other awards:Moral damages are granted since the driver's gross negligence amounted to bad faith. Exemplary damages and attorney's fees proper. Error for CA to increase award of moral damages and reduce attorney's fees, for same reason as compensatory damages. Bus driver and owners jointly and severally liable.

BALIWAG TRANSIT v. CA, DIVINA VDA. DE DIONISIO, et al. G.R. No. 116624, Septemer 1996

Civil Law/Torts and Damages; Employer's vicarious liability: 1) Circumstances showing negligence of driver: he boarded the bus, sat on the driver's seat and was at the steering wheel when the bus moved pinning down the deceased who was reparing the defective brake system below. The driver should have known that his brake system was being repaired as he was the one who told the deceased to do so. The driver should have partked the bus properly and safely. After alighting from the bus to tell the gasman to fill the tank, he should have placed a stopper or any hard object against a tire or two of the bus. But without taking the necessary precautions, he boarded the bus, causing it to move, which lead to the accident.2) Presumption of negligence on employer's part re: selection of or supervision over employee, rebuttable by clear showing of good father diligence. Hence, to escape solidary liability for quasi-delict committed by an employee, the employer must adduce sufficient proof that it exercised such degree of care. (citations omitted)3) Actual damages: life expectancy and loss of earning capacity; pecuniary loss, loss of support and service; and moral and mental suffering. The loss of earning capacity is based on 2 factors: number of years on the basis of which the damages shall be computed, and the rate at which the loss sustained by the heirs should be fixed. (citations omitted) [Gives Villa Rey formula.]

FOOD TERMINAL, INC. (FTI) v. CA & TAO DEVT., INC. September 1996 Petitioner argues that the CA erred in affirming the rate of interest imposed by the trial court. This contention is well-taken. The CA incorrectly applied the provisions of CB Circular No. 416 referring to legal interest in a loan or forbearance of money, or to cases where money is transferred from one person to another and the obligation to return the same or a portion thereof is adjudged. Any other monetary judgment does not fall within its coverage for such imposition is not within the ambit of authority granted to the CB. When an obligation not constituting a loan or forbearance of money is breached then an interest on the amount of damages awarded may be imposed at the court's discretion at the rate of 6% p.a. in accordance with Art. 2209, NCC. Indeed, the monetary judgment in favor of Tao does not involve a loan or forbearance of money, hence, the proper imposable rate of interest is 6%. However, as declared in Eastern Shipping v. CA (234 SCRA 78), the interim period from the finality of the judgment awarding a monetary claim and until payment thereof, is deemed to be equivalent to a forbearance of credit. Thus, from the time the judgment becomes final until its full satisfaction, the applicable rate of legal interest shall be 12%.The awards of the trial court shall earn interest at the rate of 6% p.a. from 15 May 1984 (the date fixed by the trial court) until fully satisfied, but before judgment becomes final. From date of finality of judgment until the obligation is totally paid, a rate of 12% is imposed.

PEOPLE v. ERMELINO SEQUIÑO, et al. G.R. No. 117397, November 1996We do not agree with the awards of moral and exemplary damages. There is no factual basis therefore insofar as 2 of the private complainants are concerned since they did not ask for and testify thereon. Only 1 private complainant asked for moral damages of P50,000.00 for her worries due to the death of her husband. As to exemplary damages, the law is clear that they are recoverable in criminal cases only when the crime was committed with one or more aggravating circumstances, none of which are proven here.

VIRGILIO M. DEL ROSARIO & CORAZON PAREDES-DEL ROSARIO v. CA & METAL FORMING CORPORATION (MFC)G.R. No. 118325, Jan. 29, 1997There is merit in the petition. The issue is whether or not MFC is answerable to petitioners for the damage caused to petitioners' residence when its roof, made of shingles purchased from and installed by the former, was blown away by a typhoon. The Court rules that it is. What matters here is that MFC's employees delivered and installed the shingles. Thus, all the quibbling about whether Puno acted as agent of MFC or the spouses, is pointless. The matter is

not a factor in determining MFC's liability for its workers' use of inferior materials and their defective installation of the shingles. What likewise matters is that MFC's employees, in installing the shingles, used inferior materials and assembled them in a manner contrary to specifications, in bad faith and with gross negligence. Hence, MFC infringed and is liable on its warranties.Unfortunately, no evidentiary foundation for actual damages, hence must be struck down. But grant of moral damages upheld since with adequate proof and MFC acted in bad faith (Art. 2220, NCC); likewise with exemplary damages. But both awards must be reduced. Grant of attorney's fees struck down since dealt with only in dispositive portion of the RTC decision.

1995

Civil Law/Torts & DamagesFAR EAST BANK v. CA241 SCRA 671(1995 Feb)A quasi-delict can be the cause for breaching a contract that might thereby permit the application of applicable tort principles even where there is a pre-existing contract between plaintiff and defendant.

Civil Law/Torts & DamagesCHUA v. CA242 SCRA 341(1995 Mar)Malicious prosecution has been expanded to include baseless civil suits which are meant to harass or humiliate a defendant, but both malice and lack of probable cause must be clearly shown to justify an award of damages.

OBLIGATIONS AND CONTRACTS

2000

Contracts; Sales; OwnershipArchipelago Mgmt & Mktng Corp v. CA May 2000

This is a land dispute between Rosalina Morales & Archipelago Mgmt & Mktg Corp. The land was originally owned by Rosalina. The corp. claims ownership by virtue of a deed of absolute sale allegedly executed between Rosalina & the corp. Rosalina denies the contract & contends that the signature was obtained by fraud through the machinations of her husband Emetero Morales.

RULINGS: (1) There is fraud when one party is induced by the other to enter into a contract through and solely because of the latter's insidious words or machinations. It was clearly demonstrated that fraud attended the execution of the deed of sale. - (2) Irregularities also impair the notarization of the deed of sale. (3) Acts of ownership were exercised by Rosalina even after the alleged execution of the deed of sale. She continued to possess the disputed property, pay the real estate taxes and collected rentals from the lessees. - Ownership of a property means, among others, the right to enjoy and dispose of it, subject to limitations established by law. The law "recognizes in the owner the right to enjoy and dispose of the thing owned. The right to enjoy includes: the jus utendi or the right to receive from the thing what it produces, and the jus abutendi or the right to consume the thing by its use." Further, "[t]he right to dispose or the jus disponedi, ids the power of the owner to alienate, encumber, transform, and even destroy the thing owned." In the present case, even after Rosalina allegedly sold her paraphernal property to herein petitioner, she still performed acts of ownership over the same. Sixteen days after the alleged execution of the Deed of Sale, she

entered into a contract of lease with Siblings Rodolfo and Nympha as lessees. Furthermore, Rosalina (and her heirs) continued to possess the disputed property even after the alleged sale. She also paid the real estate taxes and collected rentals from the lessees. In fact, after the alleged execution of the questioned Deed of Sale, she even executed a holographic will bequeathing the property to her husband Emeterio, her caretaker Baonguis and her children by her first husband. In stark contrast, petitioner never exercised acts of ownership over the property. Indeed, aside from the alleged Deed of Sale, it presented no other evidence of its ownership such as books, records or financial statements. Moreover, it did not pay the real estate taxes even after a new TCT Deed, It must also be underscored that Atty. Narciso Morales, president of the petitioner corporation, knew of the subsequent acts of Rosalina, but offered no objection thereto.

Contracts; SalesGoldenRod Inc v. CAMay 2000

FACTS: Land dispute again between Barreto Realty & GoldenRod. Barreto Realty executed an agreement w/ GoldenRod wherein Barreto accepted GoldenRod's offer to buy the properties of GoldenRod which was subject to imminent foreclosure. Later on, GoldenRod informed Barreto then its President that it would not go through w/ the sale because of the denial of UCPB of its request for an extension of time to pay the obligation. He also demanded the refund of the earnest money of P1M which it gave to Barreto.RULINGS: (1) An earnest money is part of the purchase price. - We sustain petitioner. Under Article 1482 of the Civil Code, whenever earnest money is given in a contract of sale, it shall be considered as part of the purchase price and as proof of the perfection of the contract. Petitioner clearly stated without any objection from private respondents that the earnest money was intended to form part of the purchase price. It was an advance payment which must be deducted from the total price, especially in the absence of a clear and express agreement thereon.(2)Failure by one party to oppose the other party's declaration of rescission of a contract amounts to an admission of the validity of the rescinding party's claim. (3)Rescission of a contract creates the obligation to return the things which were the object of the contract, together with their fruits and interest. - Article 1385 of the Civil Code provides that rescission creates the obligation to return the things which were the object of the contract together with their fruits and interest. The vendor is therefore obliged to return the purchase price paid to him by the buyer if the latter rescinds the sale, or when the transaction was called off and the subject property had already been sold to a third person, as what obtained in this case. Therefore, by virtue of the extrajudicial rescission of the contract to sell by petitioner without opposition from private respondents who, in turn, sold the property to other persons, private respondent BARRETO REALTY, as the vendor, had the obligation to return the earnest money of P1,000,000.00 plus legal interest from the date it received notice of rescission from petitioner, i.e., 30 August 1998, up to the date of the return of payment. It would be most inequitable if respondent BARRETO REALTY would be allowed to retain petitioner's payment of P1,000,000.00 and at the same time appropriate the proceeds of the second sale made to another.

Oblicon; EstoppelMETROBANK v. CA G.R. No. 122899, June 8, 2000.Petitioner METROBANK is estopped from refusing the discharge of the real estate mortgage on the claim that the subject property still secures "other unliquidated past due loans." In Maneclang vs. Baun, 14 this Court enumerated the requisites for estoppel by conduct to operate, to wit:there must have been a representation or concealment of material facts;the representation must have been with knowledge of the facts;the party to whom it was made must have been ignorant of the truth of the matter; andit must have been with the intention that the other party would act upon it.Petitioner METROBANK is thus barred from taking a stand inconsistent with its representation upon which respondent GTP, as an innocent third person to the real mortgage agreement, placed

exclusive reliance. Respondent GTP had the reasonable right to rely upon such representations as true, considering that it had no participation whatsoever in the mortgage agreement and the preparation of the statement of account, coupled with the expectation that a reputable banking institution such as petitioner METROBANK do conduct their business concerns in the highest standards of efficiency and professionalism. For an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against a person relying thereon. A party may not go back on his own acts and representations to the prejudice of the other party who relied upon them. In the law of evidence, whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing 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.

Oblicon; Contractsl SalesROMAGO ELECTRIC CO. v. CAG.R. No. 125947, June 8, 2000.A contract is defined as a meeting of minds between two persons whereby one binds himself with respect to the other, to give something or to render some service. Generally, contracts need not be in writing in order to be valid. Contracts are obligatory in whatever form they may have been entered into provided all essential requisites for their validity are present. We are not convinced that there was a meeting of the minds between Romago and TSI regarding the question of sharing of payment of rentals and utilities charges, pending the consummation of the Stock Purchase Agreement. There is no adequate showing that TSI consented to any such verbal agreement. On the contrary, TSI through its General Manager Severino Lim and Director Jorge Salazar denied the existence of such verbal agreement or understanding. Sales – …the understanding of the parties was that, unless and until complete and substantial payment on the Motown transaction shall have been made, TSI’s occupancy is allowed as a concession or as "come-on" or incentive for the sale because they could immediately enter into the premises and begin renovation work. Apparently, as a result of this understanding, no mention was made by the parties in the Motown Agreement regarding TSI taking immediate possession of portions of the premises and of any interim sharing of payment of rentals and utilities charges. …since both Romago and TSI paid equally two months rents and utilities charges for the four months period …they shared the use and occupancy of the subject leased premises, the parties actually paid their respective share (of rentals and utilities charges) out of equity and mutual consideration and not pursuant to any verbal agreement existing between them.

Oblicon; Trust; Constructive TrustYUCHENGCO v. REPUBLIC G.R. No. 131127, June 8, 2000Considering that petitioner seeks to recover properties, the ownership and possession of which he was allegedly deprived through fraud, duress and/or coercion, we hold that, assuming hypothetically these averments to be true, the legal relationship of constructive trust was present among the parties concerned in the said transactions. Constructive trust is that created by reason of equity to answer the demands of justice and prevent unjust enrichment. It arises against one, who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, hold. Correspondingly, actions thereon prescribe after ten (10) years as provided by Article 1144 of the Civil Code:The following actions must be brought within ten (10) years from the time the right of action accrues:1. Upon a written contract;2. Upon an obligation created by law;3. Upon a judgment.Article 1154 of the Civil Code is applicable by parallelism, to wit: The period during which the obligee was prevented by fortuitous event from enforcing his right is not reckoned against him.

Contracts; PerfectionJARDINE DAVIES INC. v. CAG.R. No. 128066 , June 19, 2000.A contract is defined as "a juridical convention manifested in legal form, by virtue of which one or more persons bind themselves in favor of another for others, or reciprocally, to the fulfillment of a prestation to give, to do, or not to do." There can be no contract unless the following requisites concur: (a) consent of the contracting parties; (b) object certain which is the subject matter of the contract; and, (c) cause of the obligation which is established. A contract binds both contracting parties and has the force of law between them.Contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made by the offeror. From that moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. To produce a contract, the acceptance must not qualify the terms of the offer. However, the acceptance may be express or implied. For a contract to arise, the acceptance must be made known to the offeror. Accordingly, the acceptance can be withdrawn or revoked before it is made known to the offeror. Cited case: we distinguished between a condition imposed on the perfection of a contract and a condition imposed merely on the performance of an obligation. While failure to comply with the first condition results in the failure of a contract, failure to comply with the second merely gives the other party options and/or remedies to protect his interests.…by the unilateral cancellation of the contract, the defendant has acted with bad faith and this was further aggravated by the subsequent inking of a contract between defendant and co-defendant. It is very evident that (the defendant) thought that by the expedient means of merely writing a letter would automatically cancel or nullify the existing contract entered into by both parties after a process of bidding. This, to the Court's mind, is a flagrant violation of the express provisions of the law and is contrary to fair and just dealings to which every man is due.

Oblicon; NovationESPINA v. CAG.R. No. 116805, June 22, 2000.The novation must be clearly proved since its existence is not presumed. In this light, novation is never presumed; it must be proven as a fact either by express stipulation of the parties or by implication derived from an irreconcilable incompatibility between old and new obligations or contracts. Novation takes place only if the parties expressly so provide, otherwise, the original contract remains in force. In other words, the parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. Where there is no clear agreement to create a new contract in place of the existing one, novation cannot be presumed to take place, unless the terms of the new contract are fully incompatible with the former agreement on every point. Thus, a deed of cession of the right to repurchase a piece of land does not supersede a contract of lease over the same property. On February 13, 1993, petitioner gave respondent a notice to vacate the premises and to pay his back rentals. Failing to do so, respondent's possession became unlawful and his eviction was proper. Now respondent contends that the petitioner's subsequent acceptance of such payment effectively withdrew the cancellation of the provisional sale. We do not agree. Unless the application of payment is expressly indicated, the payment shall be applied to the obligation most onerous to the debtor. In this case, the unpaid rentals constituted the more onerous obligation of the respondent to petitioner. As the payment did not fully settle the unpaid rentals, petitioner's cause of action for ejectment survives.

Contracts; Statute of Frauds; Implied Trusts; SalesVIEWMASTER CONSTRUCTION CORP vs. ROXAS, et al, G.R. No. 133576, July 13, 2000 Petitioner Viewmaster agreed to act as the guarantor of Allen Roxas for the loan that the latter needs from FMIC if herein respondent Allen Roxas shall sell fifty percent (50%) of his shareholdings in State Investment and shall undertake a joint venture project with Plaintiff

Viewmaster to co-develop the two real estate properties in Quezon City and Las Piñas, and if Roxas shall sell and petitioner Viewmaster shall purchase fifty percent (50%) of the latter’s total eventual acquisitions of shares of stock in State Investment. These were not put into writing.The court a quo did not err in finding that the Statute of Frauds covers the foregoing agreements. The verbal agreement entered into between petitioner Viewmaster and respondent Allen Roxas was an agreement that by its terms is not to be performed within a year from the making thereof. To be taken out of the operation of the Statute of Frauds, the agreement must be fully performed on one side within one year from the making thereof."Contracts which by their terms are not to be performed within one year may be taken out of the Statute of Frauds through performance by one party thereto. In order, however, that a partial performance of the contract may take the case out of the operation of the statute, it must appear clear that the full performance has been made by one party within one year, as otherwise the statute would apply." [Babao vs. Perez, 102 Phil756.]In the case at bar, since neither of the parties has fully performed their obligations within the one-year period, then it behooves this Court to declare that the case falls within the coverage of the Statute of Frauds. It will not take a mathematical genius to figure out that the sale of fifty percent (50%) of Allen Roxas’s shareholdings in State Investment would amount to more than five hundred pesos (P500.00). Thus, to be enforceable, the contract must be in writing.

It is contended that an implied trust exists between petitioner and Allen Roxas. The implied trust was allegedly created by operation of law in accordance with Article 1448 of the New Civil Code. Quoted below is the provision referred to:"Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child." (Emphasis Ours)From the above, it is quite clear that in order for the provisions of Article 1448 to apply in the case at bar "the price is paid by another for the purpose of having the beneficial interest of the property." It bears stressing that respondent Allen Roxas obtained a loan from First Metro Investments, Inc. not from petitioner Viewmaster. It was FMIC that provided the funds with which Allen Roxas acquired the controlling interest in State Investment Trust, Inc. FMIC lent the money to Roxas because the latter needed the money and not to obtain any beneficial interest in the shares of stock in State Investment. Viewmaster merely facilitated the loan by acting as guarantor of the loan and nothing more.

Contracts; FraudARRIOLA vs. DEMETRIOThe law, however, requires that in case one of the parties to a contract is unable to read and fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.Consent, having been obtained by fraud, the deed entered into could be annulled.

Obligations and Contracts; SalesPILIPINAS HINO vs. CAIt is, of course, a basic rule in evidence that a party must prove his own affirmative allegations. In civil cases, the burden of proof is on the plaintiff to establish his case by a preponderance of evidence. In affirmative averment the onus probandi falls on pleader’s shoulder.Obligation arising from contracts have the force of law between the contracting parties and should be complied with in good faith.Agreement between the parties, not being contrary to law, morals, good customs, public policy, or public order has therefore the force of law between the parties.Equity is applied only in the absence of, and never against, statutory law or judicial rules of procedure.

Sales: While this Court recognizes that in contracts to sell even if the contract is terminated the seller can retain the sums already received or paid, such can be done only if it is expressly provided for in the contract.

ACE HAULERS CORP. vs. CACivil liability coexists with criminal responsibility. In negligence cases, the offended party (or his heirs) has the option between an action for enforcement of civil liability based on culpa criminal under Article 100 of the Revised Penal Code and an action for recovery of damages based on culpa aquiliana under Article 2176 of the Civil Code. Article 2177 of the Civil Code, however, precludes recovery of damages twice for the same negligent act or omission.Consequently, a separate civil action for damages lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary.

ObliconPRODUCERS BANK OF THE PHILIPPINES, et al vs. BPI & CA G.R. No. 125167, September 8, 2000The nature of an action is determined by the allegations of the complaint. In this case, petitioners' complaint alleges facts constituting its cause of action based on a written contract, the deed of pledge. Hence, the prescriptive period is ten (10) years. The pledge was executed in August 1980 and petitioners refused to register the shares pledged after respondent acquired the same. Respondent commenced suit in 1989, before the ten-year prescriptive period expired.

Oblcion; RescissionSBMA vs. UNIVERSAL INTERNATIONAL GROUP OF TAIWANG.R. No. 131680, September 14, 2000A stipulation authorizing a party to extrajudicially rescind a contract and to recover possession of the property in case of contractual breach is lawful. But when a valid objection is raised, a judicial determination of the issue is still necessary before a takeover may be allowed. In the present case, however, respondents do not deny that there was such a breach of the Agreement; they merely argue that the stipulation allowing a rescission and a recovery of possession is void. Hence, the other party may validly enforce such stipulation.

Oblicon; Interpretation of contractsPILIPINAS BANK vs. COURT OF APPEALS, HON. ELOY R. BELLO, In his capacity as Presiding Judge, RTC_Manila, Branch 15, And MERIDIAN ASSURANCE CORPORATIONG.R. No. 141060, September 29, 2000Petitioners Complaint merely alleged that under the provisions of the Policy, it was entitled to recover from private respondent the amount it lost during the heist. It did not allege therein that the Policys terms were ambiguous or failed to express the true agreement between itself and private respondent. Such being the case, petitioner has no right to insist that it be allowed to present Tubianosas testimony to shed light on the alleged true agreement of the parties, notwithstanding its statement in its Pre_Trial Brief that it was presenting said witness for that purpose.Section 9, Rule 130 of the Revised Rules of Court expressly requires that for parol evidence to be admissible to vary the terms of the written agreement, the mistake or imperfection thereof or its failure to express the true agreement of the parties should be put in issue by the pleadings.As correctly noted by the appellate court, petitioner failed to raise the issue of an intrinsic ambiguity, mistake or imperfection in the terms of the Policy, or of the failure of said contract to express the true intent and agreement of the parties thereto in its Complaint. There was therefore no error on the part of the appellate court when it affirmed the RTCs Order disallowing the recall of Tubianosa to the witness stand, for such disallowance is in accord with the rule that when the terms of an agreement have been reduced to writing, it is considered as containing all

the terms agreed upon and there can be, between the parties and their successors_in_interest, no evidence of such other terms other than the contents of the written agreement.

Contracts; Equitable MortgageTUAZON vs. CA, et alG.R. No. 119794. October 3, 2000Article 1602 of the Civil Code provides that a contact shall be presumed to be an equitable mortgage by the presence of any of the following: '(1) When the price of a sale with right to repurchase is unusually inadequate;(2) When the vendor remains in possession as lessee or otherwise;(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;(4) When the purchaser retains for himself a part of the purchase price;(5) When the vendor binds himself to pay the taxes on the thing sold;(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.'" Under Article 1604 of the New Civil Code, the provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale. And for these provisions of law to apply, two requisites must concur: that the parties entered into a contract denominated as a contract of sale and that their intention was to secure an existing debt by way of mortgage.The present case is entirely different. Records on hand and the documentary evidence introduced by the parties indubitably show no room for construction, Article 1365 of the New Civil Code on reformation of contracts applies only if there is evidence, clear and convincing, that the parties did agree upon a mortgage of subject property. Here, everything appears to be clear and unambiguous and nothing is doubtful, within the contemplation of Article 1602. When the words of the contract are clear and readily understandable, there is no room for construction. The contract is the law between the parties. Said this Court:

Contracts; Extraordinary inflationSINGSON vs. CALTEX (PHILIPPINES).G.R. No. 137798. October 4, 2000The only issue crucial to the present appeal is whether there existed an extraordinary inflation during the period 1968 to 1983 that would call for the application of Article 1250 of the Civil Code and justify an adjustment or increase of the rentals between the parties.Article 1250 of the Civil Code states:In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary.Article 1250 was inserted in the Civil Code of 1950 to abate the uncertainty and confusion that affected contracts entered into or payments made during World War II, and to help provide a just solution to future cases. The Court has held extraordinary inflation to exist when there is a decrease or increase in the purchasing power of the Philippine currency which is unusual or beyond the common fluctuation in the value of said currency, and such increase or decrease could not have been reasonably foreseen or was manifestly beyond the contemplation of the parties at the time of the establishment of the obligation. “Erosion” is indeed an accurate description of the trend of decline in the value of the peso in the past three to four decades. Unfortunate as this trend may be, it is certainly distinct from the phenomenon contemplated by Article 1250.Moreover, this Court has held that the effects of extraordinary inflation are not to be applied without an official declaration thereof by competent authorities.

Contracts; SalesSANTOS vs. HEIRS OF MARIANO, et al. G.R. No. 143325. October 24, 2000

What determines the validity of a contract, in general, is the presence of the elements constituting the same, namely, (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established (Article 1318, Civil Code). "The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts" (Article 1475, Civil Code). Even with a duly executed written document purporting to be a contract of sale, the Court cannot rule that the subject contracts of sale are valid, when the evidence presented in the courts below show that there had been no meeting of the minds between the supposed seller and corresponding buyers of the parcels of land in this case. The case is replete with evidence tending to show that there was really no intention to sell the subject properties, and we need not delve into these matters anew because such factual issues are beyond the scope of our review. Suffice it to note that due execution of documents representing a contract is one thing, but perfection of the contract is definitely another.

Contracts; Breach; SalesDBP V. CA, et al. G.R. No. 137557. October 30, 2000The interest and penalty charges to be paid in case of delay in payments were expressly stipulated in the Conditional Contract of Sale. Under the Civil Code, parties to a contract can make stipulations therein provided they are not contrary to law, morals, good customs, public order or public policy. There being no question as to the validity of the Conditional Contract of Sale, the DBP correctly applied the provision on interests and penalty charges when private respondents failed to pay on the dates agreed upon. No further notice to private respondents had to be given to them.Article 1374 of the Civil Code provides that "the various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly." [N]either the law nor the courts will extricate a party from an unwise or undesirable contract he or she entered into with all the required formalities and with full awareness of its consequences."Article 1229 of the Civil Code states that "Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable." In the instant case, private respondents made regular payments to petitioner DBP in compliance with their principal obligation. They failed only to pay on the dates stipulated in the contract. This indicates the absence of bad faith on the part of private respondents and their willingness to comply with the terms of the contract. There was no substantial breach in the performance of private respondents' obligation. Article 1191 of the Civil Code provides that "The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible . . ." Rescission of a contract will not be permitted for a slight or casual breach, but only such substantial and fundamental breach as would defeat the very object of the parties in making the agreement. Notwithstanding private respondents' delay in paying the amortizations, petitioner DBP unqualifiedly accepted the payments made by them. Hence, petitioner lost its right to rescind the sale on the basis of such late payments.

Contracts; Application of PaymentsPACULDO vs. REGALADOG.R. No. 123855. November 20, 2000The right to specify which among his various obligations to the same creditor is to be satisfied first rests with the debtor, as provided by law, to wit:“Article 1252. He who has various debts of the same kind in favor of one and the same creditor, may declare at the time of making the payment, to which of them the same must be applied.

Unless the parties so stipulate, or when the application of payment is made by the party for whose benefit the term has been constituted, application shall not be made as to debts which are not yet due.If the debtor accepts from the creditor a receipt in which an application of the payment is made, the former cannot complain of the same, unless there is a cause for invalidating the contract. There was no clear assent by petitioner to the change in the manner of application of payment. The petitioner’s silence as regards the application of payment by respondent cannot mean that he consented thereto. There was no meeting of the minds. Though an offer may be made, the acceptance of such offer must be unconditional and unbounded in order that concurrence can give rise to a perfected contract. Hence, petitioner could not be in estoppel.Assuming arguendo that, as alleged by respondent, petitioner did not, at the time the payments were made, choose the obligation to be satisfied first, respondent may exercise the right to apply the payments to the other obligations of petitioner. But this is subject to the condition that the petitioner must give his consent. Petitioner’s silence is not tantamount to consent. The consent must be clear and definite.Under the law, if the debtor did not declare at the time he made the payment to which of his debts with the creditor the payment is to be applied, the law provided the guideline--no payment is to be made to a debt that is not yet due and the payment has to be applied first to the debt most onerous to the debtor.

Contracts; SalesPUA, vs. CA, et al. G.R. No. 134992. November 20, 2000The appellate court correctly found that since said Johnny P. Uy was not even conceived yet at the time of the alleged sale, he therefore had no legal personality to be named as a buyer in the said deed of sale. Neither could he have given his consent thereto. Article 1318 of the New Civil Code provides: There is no contract unless the following requisites concur:(1) Consent of the contracting parties;(2) Object certain which is the subject matter of the contract;(3) Cause of the obligation which is established.The contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Unemancipated minors, insane or demented persons, and deaf-mutes who do not know how to write can not validly give consent to contracts. In the instant case, Johnny P. Uy could not have validly given his consent to the contract of sale, as he was not even conceived yet at the time of its alleged perfection. The appellate court, therefore, correctly ruled that for lack of consent of one of the contracting parties, the deed of sale is null and voidColoma could not have acted as representative of Johnny P. Uy. In the first place, she did not have the right to represent Johnny P. Uy for lack of legal authority to act for and in behalf of said minor. It is well-settled that without authority from the Court, no person can make a valid contract for or on behalf of a minor. Besides, petitioners themselves insist that Coloma was not acting in a representative capacity when she purchased the subject, but rather, that she was acting in her own behalf as the actual buyer of said land.An absolutely simulated contract is not susceptible of ratification.

Obligations; PaymentSPOUSES BUENAFLOR, vs. CA, et alG.R. No. 142021. November 29, 2000In the civil law sense, it means not only the delivery of money but also the performance, in any other manner, of the obligation. The Civil Code enunciates a counterpart principle to the rule on liberal construction under Section 6, Rule 1 of the 1997 Rules of Civil Procedure. Article 1234 of the Civil Code allows substantial performance in the payment of obligations. In order that there may be substantial performance of an obligation, there must have been an attempt in good faith to perform, without any willful or intentional departure therefrom. This concept of substantial

performance may be applied by analogy in the determination of question on the proper payment of the appellate docket fees. In this case, there is good faith attempt to comply with the requirements of the Rules regarding the manner of appeal from the decision of the Regional Trial Court, without any willful or intentional departure therefrom. The postal money orders which were intended for the payment of the appellate docket fees were actually sent to the trial court. They were filed within the reglementary period and received by the trial court. The petitioners clearly intended to file an appeal.

ContractsORTIGAS & CO. LTD. Vs CA, et. alG.R. No. 126102. December 4, 2000The contractual stipulations annotated on the Torrens Title, on which Ortigas relies, must yield to the ordinance. When that stretch of Ortigas Avenue from Roosevelt Street to Madison Street was reclassified as a commercial zone by the Metropolitan Manila Commission in March 1981, the restrictions in the contract of sale between Ortigas and Hermoso, limiting all construction on the disputed lot to single-family residential buildings, were deemed extinguished by the retroactive operation of the zoning ordinance and could no longer be enforced. While our legal system upholds the sanctity of contract so that a contract is deemed law between the contracting parties, nonetheless, stipulations in a contract cannot contravene "law, morals, good customs, public order, or public policy." Otherwise such stipulations would be deemed null and void.

Contracts; CharacteristicsAYALA CORPORATION, vs. ROSA-DIANA REALTY AND DEVELOPMENT CORPORATION G.R. No. 134284. December 1, 2000Contractual obligations between parties have the force of law between them and absent any allegation that the same are contrary to law, morals, good customs, public order or public policy, they must be complied with in good faith. Hence, Article 1159 of the New Civil Code provides"Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith."The party guilty of violating the deed restrictions may only be held alternatively liable for substitute performance of its obligation, that is, for the payment of damages.

Contracts; leaseLHUILLIER, vs. CA, et al.G.R. No. 128058. December 19, 2000

A covenant to renew a lease, which makes no provision on its terms, implies an extension or renewal subject to the same terms in the original lease contract. Since the parties did not make a new one, the terms and conditions of the original except the provision on the rate and period of lease are deemed extended. Corollarily, Art. 1678 of the Civil Code did not apply. 9 The parties agreed that all improvements introduced by the lessee would accrue to the benefit of the owner at the end of the lease, without reimbursement. 10 This stipulation, not being contrary to law, morals, public order or public policy, binds the parties and is the law between them.

Civil Law/ Contracts/ CompromisePETER CHUA LAO v. MACAPUGAY et al.August 1999

In private respondent’s Comment to the petition, they bring to the Court’s attention a Compromise Agreement executed by petitioner and private respondents whereby they mutually agreed to settle amicably their dispute and to cause the dismissal of all pending cases filed by 1 party against the other by filing a joint motion to dismiss.A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical agreement by the CC. Art 202 provides that “a compromise is a contract whereby the parties by making reciprocal concessions, avoid a litigation or put an end to one already commenced. The CC does not only defines and authorizes compromises, it in fact encourages them in civil actions. They are generally to be favored and cannot be set aside if the parties acted in good faith

and made reciprocal concessions to each other in order to terminate a case. However, the law abhors settlement of criminal liability so that the compromise agreement cannot affect charges of violation of RA 3019, sec 3(e) and (j) and Sec 4 and RPC Art 171, 172 par 2, Arts. 206 and 207.

1999

Contracts; Lease; Ejectment; Court Without Power to Extend Leases with Expired ContractCHUA v. CA, IBARRAJan. 21, 1999(1) Petitioners are not entitled to an extension of the time to occupy the premises in view of the termination of the lease agreement on January 1, 1990; court have no power to extend lease with a term.-As there was no longer any lease to speak of which could be extended, the MTC was in effect making a contract for the parties which it obviously did not have the power to do. The potestative authority of the courts to fix a longer term for a lease under Art. 1687 of the CC applies only to cases where there is NO period fixed by the parties.(2) Improvements made by lessees on the leased premises are not valid reasons for their retention thereof; otherwise, a lessee would “improve” his landlord out of his property. – The fact that petitioners allegedly made repairs on the premises in question is not a reason for them to retain the possession of the premises. There is no provision of law which grants the lessees a right of retention over the leased premises on that ground. Art. 448 of the CC, in relation to Art. 546, which provides for full reimbursement of useful improvements and retention of the premises until reimbursements us made, applies only to a possessor in good faith, i.e., one who builds on a land in the belief that he is the owner thereof. In a number of cases, the Court has held that this right does not apply to a mere lessee, otherwise, it would always be in his power to “improve” his landlord our of the latter’s property. Art. 1678 merely grants to such a lessee making in good faith useful improvements the right to be reimbursed ½ of the value of the improvements upon the termination of the lease, or, in the alternative, to remove the improvements if the lessor refuses to make reimbursement.

Requisites for a Valid Contract; Basis for the Award of DamagesABS-CBN v. CA, et al., Jan. 21, 1999

(1) Key issue for consideration in whether there was a perfected contract between VIVA and ABS-CBN. – Resolved against ABS-CBN. A contract is a meeting of the minds between two persons whereby one binds himself to give something or render some service to another for a consideration. Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once there is concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment a contract is produced. When Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the package of films, said package of 104 VIVA film was VIVA’s offer to ABS-CBN to enter into a new Film Exhibition Agreement. But ABS-CBN, sent thru MS. Concio, counter-proposal in the form of a graft contract proposing exhibition of 53 films for consideration of P35M. This counter-proposal could be nothing less than the counter-offer of Mr.Lopez during his conference with Mr. Del Rosario. Clearly, there was no acceptance of VIVA’s offer for it was met by a counter-offer which substantially varied the terms of the offer. ABS-CBN made no unqualified acceptance of VIVA’s offer hence, they underwent a period of bargaining.(2) On the claim of RBS Corp for damages. – The award of moral damages cannot be granted in favor of a corporation because being an artificial person and having existence only in legal contemplation, it has no feelings, no emotions, no senses.

Exemplary damages are imposed by way of correction for the public good, in addition to moral, temperate, liquidated, or compensatory damages. They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or more aggravating circumstances; in quasi-delicts. It may be reiterated that the claims of RBS against ABS-CBN is not based on contract, quasi-contract, delict, or quasi-delict. Hence, the claims of moral and exemplary damages can only be based on Articles 19, 20, and 21 of the CC. Verily then, malice

or bad faith is at the core of Articles 19, 20, 21. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. Such must be substantiated by evidence. There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It was honestly convinced of the merits of its cause after it had undergone serious negotiations culminating in its formal submission of a draft contract. Settled is the rule that the adverse result of an action does not have meant to impose a penalty on the right to litigate. If damages result from a person’s exercise of a right, it is damnum absque injuria.

Contracts; Lease with Option to Purchase; Exception of Period to Exercise OptionDIZON, ET AL. v. CAJan. 28, 1999

Private respondent’s right to exercise the option to purchase expired with the termination of the original contract of lease for one year. Hence, there was an implicit renewal of the contract of lease on a monthly basis. The other terms of the original contract of lease which are revived in the implied new lease under Under Article 1670 of the CC are only those terms which are germane to the lessee’s right of continued enjoyment of the property leased. Therefore, an implied new lease does not ipso facto carry with it any implied revival of private respondent’s option to purchase (as lessee thereof) the leased premises. The provision entitling the lessee the option to purchase the leased premises is not deemed incorporated in the impliedly renewed contract because it is alien to the possession of the lessee. Private respondent’s right to exercise the option to purchase expired with the termination of the original contract of lease for one year.

Principle of Relativity of Contracts; Prescription or Adverse PossessionRAMOS v. CA, BAUTISTA, ET AL. Feb. 3, 1999

(1) Assuming arguendo that the existence of the documents was properly established, still, the supposed agreement embodied in the 2 documents bound only the parties thereto, namely Tolentino and the petitioners, because the latter failed t prove that these were later registered as to operate against the whole world. They could not have bound 3rd person like private respondent because of the basic civil law principle of relativity of contracts. This basic principle applies even if the sales were supposedly concluded at a time prior to the operation of the Torrens system of land registration over the properties involved. (2) No title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. – Bautista’s calim to the properties appears incontrovertible. Under the Cadastral Act, the OCTs issued to the original registrant, shall have the same effect as CTs granted to an application for registration of land under the Land Registration Act, because “no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.”

Oblicon; Option; ContractsCarceller v. CA, SIHI Feb. 10, 1999

Petitioner as lessee and SIHI as lessor entered into a lease contract with option to purchase for a period of 18 months to expire on January 30, 1986. On Jan. 7, 1986, SIHI notified Carceller of its desire to sell the property. In a letter fated Jan. 15, 986, rec’d by SIHI on Jan. 29, 1986, petitioner requested for a 6-month extension of the lease contract alleging he needs time to raise money in order to exercise the option. SIHI disapproved the request and offered to lwase the same property to petitioner at P30,000/month for one year. On Feb. 18, 1986, petitioner notified SIHI of its decision o exercise the option, but this was again disapproved, SIHI stressing that the option had already lapsed. Petitioner filed an action for specific performance.(1) Option defined. – IT is a preparatory contract in which one party grants to the other, for a fixed period and under specified conditions, the power to decide, WON to enter into a principal contract. It binds the party who has given the option, not to enter into the principal contract with the one to who, the option was granted, if the latter should decide to use the option. IT is a

separate agreement distinct from the contract which the parties may enter upon the consummation of the option.(4) Contracts; the law allows the parties leeway in the terms of their agreement. – In the contractual relations, the law allows the parties leeway in the terms of their agreement, which is the law between them. Note that by contract SIHI had given petitioner 4 periods: (a) the option to purchase for P1.8M within the lease period; (b) the option to be exercised w/in the option period by written notice anytime; (c) the “document of sale…to be consummated w/in the month immediately following the month” when petitioner exercises the option; and (d) the payment in equal installments of the purchase price over a period of 60 months. In our view, petitioner’s leter of Jan. 5, 1986 and his formal exercise of the option on Feb. 18, 1986 were within a reasonable time-frame consistent with periods given and the known intent of the parties to the agreement dated Jan. 10, 1985. A contrary view would be harsh and iniquitous.

Sale of Real Property; When Presumed an Equitable Mortgage InsteadMISENA v. RONGAVILLAFeb. 25, 1999(1)Instances when a contract regardless of its nomenclature may be presumed an equitable mortgage; case of . – Art. 1602 of the CC enumerates Instances when a contract regardless of its nomenclature may be presumed an equitable mortgage. It also applies to a contract purporting to be an absolute sale, and the presence of any of the circumstances in 1602 give rise to the presumption in favor of an equitable mortgage. Here, the CA confirmed that 3 circumstances were present and proven, to wit: (1) the inadequacy of the consideration; (2) the respondent remained in possession of the land and (3) the subject property was charged as security for the loan.

Civil Law/ContractsJAIME ONG v. CA & SPOUSES ROBLESJuly 1997Petitioner and Respondent executed an Agreement of Purchase and Sale over a parcel of land. Petitioner failed to completely pay the purchase price so the respondents filed a complaint for rescission of contract and recovery of their property wi