CIVIL LAW CASE DIGESTS

Contract; contract of carriage; definition; common carrier; definition; breach of contract of carriage; entitlement to damages; contract of services; standard of care required; damages; when recoverable; quasi-delict; solidary liability of joint tortfeasors. A contract of carriage is defined as one whereby a certain person or association of persons obligate themselves to transport persons, things, or news from one place to another for a fixed price. On its face, the airplane ticket is a valid written contract of carriage. This Court has held that when an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage.

Under Article 1732 of the Civil Code, this persons, corporations, firms, or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public is called a common carrier.

In contrast, the contractual relation between Sampaguita Travel and respondents is a contract for services. Since the contract between the parties is an ordinary one or services, the standard of care required of respondent is that of a good father of a family under Article 1173 of the Civil Code. This connotes reasonable care consistent with that which an ordinarily prudent person would have observed when confronted with a similar situation. The test to determine whether negligence attended the performance of an obligation is: did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence.

For one to be entitled to actual damages, it is necessary to prove the actual amount of loss with a reasonable degree of certainty, premised upon competent proof and the best evidence obtainable by the injured party. To justify an award of actual damages, there must be competent proof of the actual amount of loss. Credence can be given only to claims which are duly supported by receipts.

Under Article 2220 of the Civil Code of the Philippines, an award of moral damages, in breaches of contract, is in order upon a showing that the defendant acted fraudulently or in 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. In the same vein, to warrant the award of exemplary damages, defendant must have acted in wanton, fraudulent, reckless, oppressive, or malevolent manner.

Nominal damages are recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind or where there has been a breach of contract and no substantial injury oractual damages whatsoever have been or can be shown. Under Article 2221 of the Civil Code, nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss suffered.

The amount to be awarded as nominal damages shall be equal or at least commensurate to the injury sustained by respondents considering the concept and purpose of such damages. The amount of nominal damages to be awarded may also depend on certain special reasons extant in the case. The amount of such damages is addressed to the sound discretion of the court and taking into account the relevant circumstances, such as the failure of some respondents to board the flight on schedule and the slight breach in the legal obligations of the airline company to comply with the terms of the contract, i.e., the airplane ticket and of the travel agency to make the correct bookings.

Cathay Pacific and Sampaguita Travel acted together in creating the confusion in the bookings which led to the erroneous cancellation of respondents bookings. Their negligence is the proximate cause of the technical injury sustained by respondents. Therefore, they have become joint tortfeasors, whose responsibility for quasi-delict, under Article 2194 of the Civil Code, is solidary. Cathay Pacific Airways v. Juanita Reyes, et al., G.R. No. 185891, June 26, 2013Contract; contract of sale; disputable presumptions; failure to pay the price; effect of; double sale; effect; registration in good faith; buyer in good faith; duty of a buyer when a piece of land is in the actual possession of third persons. Under Section 3, Rule 131 of the Rules of Court, the following are disputable presumptions: (1) private transactions have been fair and regular; (2) the ordinary course of business has been followed; and (3) there was sufficient consideration for a contract. These presumptions operate against an adversary who has not introduced proof to rebut them. They create the necessity of presenting evidence to rebut the prima facie case they created, and which, if no proof to the contrary is presented and offered, will prevail. The burden of proof remains where it is but, by the presumption, the one who has that burden is relieved for the time being from introducing evidence in support of the averment, because the presumption stands in the place of evidence unless rebutted.

Granting that there was no delivery of the consideration, the seller would have no right to sell again what he no longer owned. His remedy would be to rescind the sale for failure on the part of the buyer to perform his part of their obligation pursuant to Article 1191 of the New Civil Code. In the case of Clara M. Balatbat v. Court Of Appeals and Spouses Jose Repuyan and Aurora Repuyan, it was written:

The failure of the buyer to make good the price does not, in law, cause the ownership to revest to the seller unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil Code. Non-payment only creates a right to demand the fulfillment of the obligation or to rescind the contract. [Emphases supplied]

[O]wnership of an immovable property which is the subject of a double sale shall be transferred: (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith. The requirement of the law then is two-fold: acquisition in good faith and registration in good faith. Good faith must concur with the registration. If it would be shown that a buyer was in bad faith, the alleged registration they have made amounted to no registration at all.

When a piece of land is in the actual possession of persons other than the seller, the buyer must be wary and should investigate the rights of those in possession. Without making such inquiry, one cannot claim that he is a buyer in good faith. When a man proposes to buy or deal with realty, his duty is to read the public manuscript, that is, to look and see who is there upon it and what his rights are. A want of caution and diligence, which an honest man of ordinary prudence is accustomed to exercise in making purchases, is in contemplation of law, a want of good faith. The buyer who has failed to know or discover that the land sold to him is in adverse possession of another is a buyer in bad faith.

[I]f a vendee in a double sale registers the sale after he has acquired knowledge of a previous sale, the registration constitutes a registration in bad faith and does not confer upon him any right. If the registration is done in bad faith, it is as if there is no registration at all, and the buyer who has first taken possession of the property in good faith shall be preferred. Hospicio D. Rosaroso, et al. v. Lucila Laborte Soria, et al., G.R. No. 194846, June 19, 2013Contract; contract of sale; elements; contract to sell; elements; difference between a contract of sale and a contract to sell; effect of non-payment in a contract of sale; laches; definition; Torrens system; exception to general rule that action to recover registered land covered by the Torrens System may not be barred by laches. A contract of sale is defined under Article 1458 of the Civil Code:

By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent.

The elements of a contract of sale are: (a) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter; and (c) price certain in money or its equivalent.

A contract to sell, on the other hand, is defined by Article 1479 of the Civil Code:

[A] bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

In a contract of sale, the title to the property passes to the buyer upon the delivery of the thing sold, whereas in a contract to sell, the ownership is, by agreement, retained by the seller and is not to pass to the vendee until full payment of the purchase price.

Even assuming, arguendo, that the petitioner was not paid, such non payment is immaterial and has no effect on the validity of the contract of sale. A contract of sale is a consensual contract and what is required is the meeting of the minds on the object and the price for its perfection and validity. In this case, the contract was perfected the moment the petitioner and the respondent agreed on the object of the sale the two-hectare parcel of land, and the price Three Thousand Pesos (P3,000.00). Non-payment of the purchase price merely gave rise to a right in favor of the petitioner to either demand specific performance or rescission of the contract of sale.

Laches has been defined as 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 should be stressed that laches is not concerned only with the mere lapse of time. As a general rule, an action to recover registered land covered by the Torrens System may not be barred by laches. Neither can laches be set up to resist the enforcement of an imprescriptible legal right. In exceptional cases, however, the Court allowed laches as a bar to recover a titled property. Thus, in Romero v. Natividad, the Court ruled that laches will bar recovery of the property even if the mode of transfer was invalid. Likewise, in Vda. de Cabrera v. CA, the Court ruled:

In our jurisdiction, it is an enshrined rule that even registered owners of property may be barred from recovering possession of property by virtue of laches. Under the Land Registration Act (now the Property Registration Decree), no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. The same is not true with regard to laches.

More particularly, laches will bar recovery of a property, even if the mode of transfer used by an alleged member of a cultural minority lacks executive approval. Thus, in Heirs of Dicman v. Cario, the Court upheld the Deed of Conveyance of Part Rights and Interests in Agricultural Land executed by Ting-el Dicman in favor of Sioco Cario despite lack of executive approval. The Court stated that despite the judicial pronouncement that the sale of real property by illiterate ethnic minorities is null and void for lack of approval of competent authorities, the right to recover possession has nonetheless been barred through the operation of the equitable doctrine of laches. Ali Akang v. Municipality of Isulan, Sultan Kudarat Province, G.R. No. 186014, June 26, 2013Contract; contract of sale; disqualification of a lawyer to buy under Article 1491; elements of a contract; autonomous nature; obligatory nature of contract; interpretation; courts have no authority to alter a contract by construction or to make a new contract for the parties; penal clause; generally substitutes the indemnity for damages and the payment of interests in case of non-compliance. Admittedly, Article 1491 (5) of the Civil Code prohibits lawyers from acquiring by purchase or assignment the property or rights involved which are the object of the litigation in which they intervene by virtue of their profession. The CA lost sight of the fact, however, that the prohibition applies only during the pendency of the suit and generally does not cover contracts for contingent fees where the transfer takes effect only after the finality of a favorable judgment.

Defined as a meeting of the minds between two persons whereby one binds himself, with respect to the other to give something or to render some service, a contract requires the concurrence of the following requisites: (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.

Viewed in the light of the autonomous nature of contracts enunciated under Article 1306 of the Civil Code, on the other hand, we find that the Kasunduan was correctly found by the RTC to be a valid and binding contract between the parties.

Obligations arising from contracts, after all, have the force of law between the contracting parties who are expected to abide in good faith with their contractual commitments, not weasel out of them. Moreover, when the terms of the contract are clear and leave no doubt as to the intention of the contracting parties, the rule is settled that the literal meaning of its stipulations should govern. In such cases, courts have no authority to alter a contract by construction or to make a new contract for the parties. Since their duty is confined to the interpretation of the one which the parties have made for themselves without regard to its wisdom or folly, it has been ruled that courts cannot supply material stipulations or read into the contract words it does not contain. Indeed, courts will not relieve a party from the adverse effects of an unwise or unfavorable contract freely entered into.

An accessory undertaking to assume greater liability on the part of the obligor in case of breach of an obligation, the foregoing stipulation is a penal clause which serves to strengthen the coercive force of the obligation and provides for liquidated damages for such breach. The obligor would then be bound to pay the stipulated indemnity without the necessity of proof of the existence and the measure of damages caused by the breach.

In obligations with a penal clause, the penalty generally substitutes the indemnity for damages and the payment of interests in case of non-compliance. Usually incorporated to create an effective deterrent against breach of the obligation by making the consequences of such breach as onerous as it may be possible, the rule is settled that a penal clause is not limited to actual and compensatory damages. Heirs of Manuel Uy Ek Liong v. Mauricia Meer Castillo, Heirs of Buenaflor C. Umali, represented by Nancy Umali, et al., G.R. No. 176425, June 5, 2013.Contract; default of debtor; definition; requisites; liquidated damages; stipulation therefor; double function; penalty clause; definition; function. Default or mora on the part of the debtor is the delay in the fulfillment of the prestation by reason of a cause imputable to the former. It is the nonfulfillment of an obligation with respect to time.

It is a general rule that one who contracts to complete certain work within a certain time is liable for the damage for not completing it within such time, unless the delay is excused or waived.

In this jurisdiction, the following requisites must be present in order that the debtor may be in default: (1) that the obligation be demandable and already liquidated; (2) that the debtor delays performance; and (3) that the creditor requires the performance judicially or extrajudicially.

Liability for liquidated damages is governed by Articles 2226 to 2228 of the Civil Code. A stipulation for liquidated damages is attached to an obligation in order to ensure performance and has a double function: (1) to provide for liquidated damages, and (2) to strengthen the coercive force of the obligation by the threat of greater responsibility in the event of breach. The amount agreed upon answers for damages suffered by the owner due to delays in the completion of the project. As a precondition to such award, however, there must be proof of the fact of delay in the performance of the obligation.

A penalty clause, expressly recognized by law, is an accessory undertaking to assume greater liability on the part of the obligor in case of breach of an obligation. It functions to strengthen the coercive force of obligation and to provide, in effect, for what could be the liquidated damages resulting from such a breach. The obligor would then be bound to pay the stipulated indemnity without the necessity of proof on the existence and on the measure of damages caused by the breach. It is well-settled that so long as such stipulation does not contravene law, morals, or public order, it is strictly binding upon the obligor. J Plus Asia Development Corporation v. Utility Assurance Corporation, G.R. No. 199650, June 26, 2013Contract; rescission under Article 1191; mutual restitution; contracts; definition. Mutual restitution is required in cases involving rescission under Article 1191 of the Civil Code; such restitution is necessary to bring back the parties to their original situation prior to the inception of the contract.

As a general rule, a contract is a meeting of minds between two persons. The Civil Code upholds the spirit over the form; thus, it deems an agreement to exist, provided the essential requisites are present. A contract is upheld as long as there is proof of consent, subject matter and cause. Moreover, it is generally obligatory in whatever form it may have been entered into. From the moment there is a meeting of minds between the parties, [the contract] is perfected. Fil-Estate Gold and Development, Inc., et al. v. Vertex Sales and Trading, Inc., G.R. No. 202079, June 10, 2013.

Contract; void contracts; effect. A void contract is equivalent to nothing; it produces no civil effect; and it does not create, modify or extinguish a juridical relation. Joselito C. Borromeo v. Juan T. Mina, G.R. No. 193747, June 5, 2013.

Credit; concurrence and preference of credit; tax clearance is not required for the approval of a project of partition. The position of the BIR, insisting on prior compliance with the tax clearance requirement as a condition for the approval of the project of distribution of the assets of a bank under liquidation, is contrary to both the letter and intent of the law on liquidation of banks by the PDIC.

The law expressly provides that debts and liabilities of the bank under liquidation are to be paid in accordance with the rules on concurrence and preference of credit under the Civil Code. Duties, taxes, and fees due the Government enjoy priority only when they are with reference to a specific movable property, under Article 2241(1) of the Civil Code, or immovable property, under Article 2242(1) of the same Code. However, with reference to the other real and personal property of the debtor, sometimes referred to as free property, the taxes and assessments due the National Government, other than those in Articles 2241(1) and 2242(1) of the Civil Code, such as the corporate income tax, will come only in ninth place in the order of preference. On the other hand, if the BIRs contention that a tax clearance be secured first before the project of distribution of the assets of a bank under liquidation may be approved, then the tax liabilities will be given absolute preference in all instances, including those that do not fall under Articles 2241(1) and 2242(1) of the Civil Code. In order to secure a tax clearance which will serve as proof that the taxpayer had completely paid off his tax liabilities, PDIC will be compelled to settle and pay first all tax liabilities and deficiencies of the bank, regardless of the order of preference under the pertinent provisions of the Civil Code. Following the BIRs stance, therefore, only then may the project of distribution of the banks assets be approved and the other debts and claims thereafter settled, even though under Article 2244 of the Civil Code such debts and claims enjoy preference over taxes and assessments due the National Government. Philippine Deposit Insurance Corporation v. Bureau of Internal Revenue, G.R. No. 172892, June 13, 2013Damages; Attorneys fees; dual concept of attorneys fees; an award of attorneys fees under Article 2208 demands factual, legal, and equitable justification. Article 2208 of the New Civil Code of the Philippines states the policy that should guide the courts when awarding attorneys fees to a litigant. As a general rule, the parties may stipulate the recovery of attorneys fees. In the absence of such stipulation, this article restrictively enumerates the instances when these fees may be recovered.

In ABS-CBN Broadcasting Corp. v. CA, this Court had the occasion to expound on the policy behind the grant of attorneys fees as actual or compensatory damages:

(T)he law is clear that in the absence of stipulation, attorneys fees may be recovered as actual or compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code. The general rule is that attorneys fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit.

The power of the court to award attorneys fees under Article 2208 demands factual, legal, and equitable justification. Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorneys fees may not be awarded where no sufficient showing of bad faith could be reflected in a partys persistence in a case other than an erroneous conviction of the righteousness of his cause.

We have consistently held that an award of attorneys fees under Article 2208 demands factual, legal, and equitable justification to avoid speculation and conjecture surrounding the grant thereof. Due to the special nature of the award of attorneys fees, a rigid standard is imposed on the courts before these fees could be granted. Hence, it is imperative that they clearly and distinctly set forth in their decisions the basis for the award thereof. It is not enough that they merely state the amount of the grant in the dispositive portion of their decisions. It bears reiteration that the award of attorneys fees is an exception rather than the general rule; thus, there must be compelling legal reason to bring the case within the exceptions provided under Article 2208 of the Civil Code to justify the award. Philippine National Construction Corporation v. Apac Marketing Corporation, represented by Cesar M. Ong, Jr., G.R. No. 190957, June 5, 2013.Damages; nominal damages; when warranted in labor cases. [W]hile Van Doorn has a just and valid cause to terminate the respondents employment, it failed to meet the requisite procedural safeguards provided under Article 283 of the Labor Code. In the termination of employment under Article 283, Van Doorn, as the employer, is required to serve a written notice to the respondents and to the DOLE of the intended termination of employment at least one month prior to the cessation of its fishing operations. Poseidon could have easily filed this notice, in the way it represented Van Doorn in its dealings in the Philippines. While this omission does not affect the validity of the termination of employment, it subjects the employer to the payment of indemnity in the form of nominal damages. Poseidon International Maritime Services, Inc. v. Tito R. Tamala, et al., G.R. No. 186475, June 26, 2013Damages; temperate damages; when warranted. Article 2224 of the New Civil Code provides that (t)emperate or moderate damages, which are more than nominal but less than compensatory damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, proved with certainty. People of the Philippines v. Reggie Bernardo, G.R. No. 198789, June 3, 2013.Interest rates; a stipulated interest of 24% per annum is not unconscionable; surcharge on principal loan; a surcharge of 1% per month on the principal loan is valid; surcharge or penalty partakes of the nature of liquidated damages; different from interest payment. In Villanueva v. Court of Appeals, where the issue raised was whether the 24% p.a. stipulated interest rate is unreasonable under the circumstances, we answered in the negative and held:

In Spouses Zacarias Bacolor and Catherine Bacolor v. Banco Filipino Savings and Mortgage Bank, Dagupan City Branch, this Court held that the interest rate of 24% per annum on a loan of P244,000.00, agreed upon by the parties, may not be considered as unconscionable and excessive. As such, the Court ruled that the borrowers cannot renege on their obligation to comply with what is incumbent upon them under the contract of loan as the said contract is the law between the parties and they are bound by its stipulations.

Also, in Garcia v. Court of Appeals, this Court sustained the agreement of the parties to a 24% per annum interest on an P8,649,250.00 loan finding the same to be reasonable and clearly evidenced by the amended credit line agreement entered into by the parties as well as two promissory notes executed by the borrower in favor of the lender.

Based on the above jurisprudence, the Court finds that the 24% per annum interest rate, provided for in the subject mortgage contracts for a loan of P225,000.00, may not be considered unconscionable. Moreover, considering that the mortgage agreement was freely entered into by both parties, the same is the law between them and they are bound to comply with the provisions contained therein.

In Ruiz v. CA, we held:

The 1% surcharge on the principal loan for every month of default is valid. This surcharge or penalty stipulated in a loan agreement in case of default partakes of the nature of liquidated damages under Art. 2227 of the New Civil Code, and is separate and distinct from interest payment. Also referred to as a penalty clause, it is expressly recognized by law. It is an accessory undertaking to assume greater liability on the part of an obligor in case of breach of an obligation. The obligor would then be bound to pay the stipulated amount of indemnity without the necessity of proof on the existence and on the measure of damages caused by the breach.

Spouses Florentino T. Mallari and Aurea V. Mallari v. Prudential Bank of the Philippines, G.R. No. 197861, June 5, 2013Tort; collateral source rule; unjust enrichment; elements. As part of American personal injury law, the collateral source rule was originally applied to tort cases wherein the defendant is prevented from benefiting from the plaintiffs receipt of money from other sources. Under this rule, if an injured person receives compensation for his injuries from a source wholly independent of the tortfeasor, the payment should not be deducted from the damages which he would otherwise collect from the tortfeasor. In a recent Decision by the Illinois Supreme Court, the rule has been described as an established exception to the general rule that damages in negligence actions must be compensatory. The Court went on to explain that although the rule appears to allow a double recovery, the collateral source will have a lien or subrogation right to prevent such a double recovery. In Mitchell v. Haldar, the collateral source rule was rationalized by the Supreme Court of Delaware:

The collateral source rule is predicated on the theory that a tortfeasor has no interest in, and therefore no right to benefit from monies received by the injured person from sources unconnected with the defendant. According to the collateral source rule, a tortfeasor has no right to any mitigation of damages because of payments or compensation received by the injured person from an independent source. The rationale for the collateral source rule is based upon the quasi-punitive nature of tort law liability. It has been explained as follows:

The collateral source rule is designed to strike a balance between two competing principles of tort law: (1) a plaintiff is entitled to compensation sufficient to make him whole, but no more; and (2) a defendant is liable for all damages that proximately result from his wrong. A plaintiff who receives a double recovery for a single tort enjoys a windfall; a defendant who escapes, in whole or in part, liability for his wrong enjoys a windfall. Because the law must sanction one windfall and deny the other, it favors the victim of the wrong rather than the wrongdoer.

Thus, the tortfeasor is required to bear the cost for the full value of his or her negligent conduct even if it results in a windfall for the innocent plaintiff. (Citations omitted)

As seen, the collateral source rule applies in order to place the responsibility for losses on the party causing them. Its application is justified so that the wrongdoer should not benefit from the expenditures made by the injured party or take advantage of contracts or other relations that may exist between the injured party and third persons. Thus, it finds no application to cases involving no-fault insurances under which the insured is indemnified for losses by insurance companies, regardless of who was at fault in the incident generating the losses.

To constitute unjust enrichment, it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean illegally or unlawfully. A claim for unjust enrichment fails when the person who will benefit has a valid claim to such benefit. Mitsubishi Motors Philippines Salaried Employees Union v. Mitsubishi Motors Philippines Corporation, G.R. No. 175773, June 17, 2013.

Unjust enrichment; definition; elements. Unjust enrichment is a term used to depict result or effect of failure to make remuneration of or for property or benefits received under circumstances that give rise to legal or equitable obligation to account for them. To be entitled to remuneration, one must confer benefit by mistake, fraud, coercion, or request. Unjust enrichment is not itself a theory of reconveyance. Rather, it is a prerequisite for the enforcement of the doctrine of restitution. There is unjust enrichment when:

1. A person is unjustly benefited; and

2. Such benefit is derived at the expense of or with damages to another.

Philippine Transmarine Carriers, Inc. v. Leandro Legaspi, G.R. No. 202791, June 10, 2013.

Special LawsFamily Code; support; in proportion to the resources or means of the giver and to the needs of the recipient; support pendente lite in cases of legal separation and petitions for declaration of nullity or annulment of marriage; judicial determination is guided by the Rule on Provisional Orders; support in arrears; deductions from accrued support pendente lite; judgment for support does not become final. As a matter of law, the amount of support which those related by marriage and family relationship is generally obliged to give each other shall be in proportion to the resources or means of the giver and to the needs of the recipient. Such support comprises everything indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacity of the family.

Upon receipt of a verified petition for declaration of absolute nullity of void marriage or for annulment of voidable marriage, or for legal separation, and at any time during the proceeding, the court, motu proprio or upon verified application of any of the parties, guardian or designated custodian, may temporarily grant support pendente lite prior to the rendition of judgment or final order. Because of its provisional nature, a court does not need to delve fully into the merits of the case before it can settle an application for this relief. All that a court is tasked to do is determine the kind and amount of evidence which may suffice to enable it to justly resolve the application. It is enough that the facts be established by affidavits or other documentary evidence appearing in the record.

Judicial determination of support pendente lite in cases of legal separation and petitions for declaration of nullity or annulment of marriage are guided by the provisions of the Rule on Provisional Orders.

On the issue of crediting of money payments or expenses against accrued support, we find as relevant the following rulings by US courts.

In Bradford v. Futrell, appellant sought review of the decision of the Circuit Court which found him in arrears with his child support payments and entered a decree in favor of appellee wife. He complained that in determining the arrearage figure, he should have been allowed full credit for all money and items of personal property given by him to the children themselves, even though he referred to them as gifts. The Court of Appeals of Maryland ruled that in the suit to determine amount of arrears due the divorced wife under decree for support of minor children, the husband (appellant) was not entitled to credit for checks which he had clearly designated as gifts, nor was he entitled to credit for an automobile given to the oldest son or a television set given to the children. Thus, if the children remain in the custody of the mother, the father is not entitled to credit for money paid directly to the children if such was paid without any relation to the decree.

In Martin, Jr. v. Martin, the Supreme Court of Washington held that a father, who is required by a divorce decree to make child support payments directly to the mother, cannot claim credit for payments voluntarily made directly to the children. However, special considerations of an equitable nature may justify a court in crediting such payments on his indebtedness to the mother, when such can be done without injustice to her.

Suffice it to state that the matter of increase or reduction of support should be submitted to the trial court in which the action for declaration for nullity of marriage was filed, as this Court is not a trier of facts. The amount of support may be reduced or increased proportionately according to the reduction or increase of the necessities of the recipient and the resources or means of the person obliged to support. As we held in Advincula v. Advincula:Judgment for support does not become final. The right to support is of such nature that its allowance is essentially provisional; for during the entire period that a needy party is entitled to support, his or her alimony may be modified or altered, in accordance with his increased or decreased needs, and with the means of the giver. It cannot be regarded as subject to final determination.

Susan Lim-Lua v. Danilo Y. Lua, G.R. Nos. 175279-80, June 5, 2013.Family Code; Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages; not applicable in an action for recognition of foreign judgment; foreign judgment relating to the marital status of a person; special proceeding for cancellation or correction of entries in the civil registry under Rule 108 of the Rules of Court; the first husband has a right to file the petition; effect of a foreign divorce decree to a Filipino spouse; Article 26 of the Family Code. The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages (A.M. No. 02-11-10-SC) does not apply in a petition to recognize a foreign judgment relating to the status of a marriage where one of the parties is a citizen of a foreign country. Moreover, in Juliano-Llave v. Republic, this Court held that the rule in A.M. No. 02-11-10-SC that only the husband or wife can file a declaration of nullity or annulment of marriage does not apply if the reason behind the petition is bigamy.

A foreign judgment relating to the status of a marriage affects the civil status, condition and legal capacity of its parties. However, the effect of a foreign judgment is not automatic. To extend the effect of a foreign judgment in the Philippines, Philippine courts must determine if the foreign judgment is consistent with domestic public policy and other mandatory laws. Article 15 of the Civil Code provides that [l]aws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. This is the rule of lex nationalii in private international law. Thus, the Philippine State may require, for effectivity in the Philippines, recognition by Philippine courts of a foreign judgment affecting its citizen, over whom it exercises personal jurisdiction relating to the status, condition and legal capacity of such citizen.

A petition to recognize a foreign judgment declaring a marriage void does not require relitigation under a Philippine court of the case as if it were a new petition for declaration of nullity of marriage. Philippine courts cannot presume to know the foreign laws under which the foreign judgment was rendered. They cannot substitute their judgment on the status, condition and legal capacity of the foreign citizen who is under the jurisdiction of another state. Thus, Philippine courts can only recognize the foreign judgment as a fact according to the rules of evidence.

Since the recognition of a foreign judgment only requires proof of fact of the judgment, it may be made in a special proceeding for cancellation or correction of entries in the civil registry under Rule 108 of the Rules of Court. Rule 1, Section 3 of the Rules of Court provides that [a] special proceeding is a remedy by which a party seeks to establish a status, a right, or a particular fact. Rule 108 creates a remedy to rectify facts of a persons life which are recorded by the State pursuant to the Civil Register Law or Act No. 3753. These are facts of public consequence such as birth, death or marriage, which the State has an interest in recording. There is no doubt that the prior spouse has a personal and material interest in maintaining the integrity of the marriage he contracted and the property relations arising from it. There is also no doubt that he is interested in the cancellation of an entry of a bigamous marriage in the civil registry, which compromises the public record of his marriage. The interest derives from the substantive right of the spouse not only to preserve (or dissolve, in limited instances) his most intimate human relation, but also to protect his property interests that arise by operation of law the moment he contracts marriage. These property interests in marriage include the right to be supported in keeping with the financial capacity of the family and preserving the property regime of the marriage.

Section 2(a) of A.M. No. 02-11-10-SC does not preclude a spouse of a subsisting marriage to question the validity of a subsequent marriage on the ground of bigamy. On the contrary, when Section 2(a) states that [a] petition for declaration of absolute nullity of void marriage may be filed solely by the husband or the wife it refers to the husband or the wife of the subsisting marriage. Under Article 35(4) of the Family Code, bigamous marriages are void from the beginning. Thus, the parties in a bigamous marriage are neither the husband nor the wife under the law. The husband or the wife of the prior subsisting marriage is the one who has the personality to file a petition for declaration of absolute nullity of void marriage under Section 2(a) of A.M. No. 02-11-10-SC.

[A] Filipino citizen cannot dissolve his marriage by the mere expedient of changing his entry of marriage in the civil registry. However, this does not apply in a petition for correction or cancellation of a civil registry entry based on the recognition of a foreign judgment annulling a marriage where one of the parties is a citizen of the foreign country. There is neither circumvention of the substantive and procedural safeguards of marriage under Philippine law, nor of the jurisdiction of Family Courts under R.A. No. 8369. A recognition of a foreign judgment is not an action to nullify a marriage. It is an action for Philippine courts to recognize the effectivity of a foreign judgment, which presupposes a case which was already tried and decided under foreign law. The procedure in A.M. No. 02-11-10-SC does not apply in a petition to recognize a foreign judgment annulling a bigamous marriage where one of the parties is a citizen of the foreign country. Neither can R.A. No. 8369 define the jurisdiction of the foreign court.

Article 26 of the Family Code confers jurisdiction on Philippine courts to extend the effect of a foreign divorce decree to a Filipino spouse without undergoing trial to determine the validity of the dissolution of the marriage. The second paragraph of Article 26 of the Family Code provides that [w]here a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippine law. The second paragraph of Article 26 of the Family Code only authorizes Philippine courts to adopt the effects of a foreign divorce decree precisely because the Philippines does not allow divorce. Philippine courts cannot try the case on the merits because it is tantamount to trying a case for divorce. Minoru Fujiki v. Maria Paz Galela Marinay, et al., G.R. No. 196049, June 26, 2013.

Family Courts Act of 1997; Violence Against Women and Children Act of 2004; Family Courts; jurisdiction; a special court of the same level as RTC; RTCs designated as family courts remain possessed of authority as courts of general original jurisdiction. At the outset, it must be stressed that Family Courts are special courts, of the same level as Regional Trial Courts. Under R.A. 8369, otherwise known as the Family Courts Act of 1997, family courts have exclusive original jurisdiction to hear and decide cases of domestic violence against women and children. In accordance with said law, the Supreme Court designated from among the branches of the Regional Trial Courts at least one Family Court in each of several key cities identified. To achieve harmony with the first mentioned law, Section 7 of R.A. 9262 now provides that Regional Trial Courts designated as Family Courts shall have original and exclusive jurisdiction over cases of VAWC defined under the latter law.

Inspite of its designation as a family court, the RTC of Bacolod City remains possessed of authority as a court of general original jurisdiction to pass upon all kinds of cases whether civil, criminal, special proceedings, land registration, guardianship, naturalization, admiralty or insolvency. It is settled that RTCs have jurisdiction to resolve the constitutionality of a statute, this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law. The Constitution vests the power of judicial review or the power to declare the constitutionality or validity of a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation not only in this Court, but in all RTCs. Jesus C. Garcia v. The Hon. Ray Alan T. Drilon, et al., G.R. No. 179267, June 25, 2013Torrens system; purpose. Torrens title; generally conclusive evidence of the ownership of the land; not subject to collateral attack; Land Registration Authority; functions. The real purpose of the Torrens system is to quiet title to land and to stop forever any question as to its legality. Once a title is registered, the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting on the mirador su casa, to avoid the possibility of losing his land. A Torrens title is generally a conclusive evidence of the ownership of the land referred to therein. A strong presumption exists that Torrens titles are regularly issued and that they are valid.

Section 48 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, explicitly provides that [a] certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law.

The duty of LRA officials to issue decrees of registration is ministerial in the sense that they act under the orders of the court and the decree must be in conformity with the decision of the court and with the data found in the record. They have no discretion in the matter. However, if they are in doubt upon any point in relation to the preparation and issuance of the decree, these officials ought to seek clarification from the court. They act, in this respect, as officials of the court and not as administrative officials, and their act is the act of the court. They are specifically called upon to extend assistance to courts in ordinary and cadastral land registration proceedings. Deogenes O. Rodriguez v. Hon. Court of Appeals and Philippine Chinese Charitable Association, Inc., G.R. No. 184589, June 13, 2013Agency; apparent authority of an agent based on estoppel; concept. In Woodchild Holdings, Inc. v. Roxas Electric and Construction Company, Inc. the Court stated that persons dealing with an assumed agency, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it. In other words, when the petitioner relied only on the words of respondent Alejandro without securing a copy of the SPA in favor of the latter, the petitioner is bound by the risk accompanying such trust on the mere assurance of Alejandro.

The same Woodchild case stressed that apparent authority based on estoppel can arise from the principal who knowingly permit the agent to hold himself out with authority and from the principal who clothe the agent with indicia of authority that would lead a reasonably prudent person to believe that he actually has such authority. Apparent authority of an agent arises only from acts or conduct on the part of the principal and such acts or conduct of the principal must have been known and relied upon in good faith and as a result of the exercise of reasonable prudence by a third person as claimant and such must have produced a change of position to its detriment. In the instant case, the sale to the Spouses Lajarca and other transactions where Alejandro allegedly represented a considerable majority of the co-owners transpired after the sale to the petitioner; thus, the petitioner cannot rely upon these acts or conduct to believe that Alejandro had the same authority to negotiate for the sale of the subject property to him. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R. No.182349, July 24, 2013.

Agency; definition under the Civil Code; form of contract. Article 1868 of the Civil Code defines a contract of agency as a contract whereby a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. It may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.

As a general rule, a contract of agency may be oral.

However, it must be written when the law requires a specific form. Specifically, Article 1874 of the Civil Code provides that the contract of agency must be written for the validity of the sale of a piece of land or any interest therein. Otherwise, the sale shall be void. A related provision, Article 1878 of the Civil Code, states that special powers of attorney are necessary to convey real rights over immovable properties. Sally Yoshizaki v. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013.

Agency; general power of attorney; an agency couched in general terms comprises only acts of administration. The certification is a mere general power of attorney which comprises all of Joy Trainings business. Article 1877 of the Civil Code clearly states that [a]n agency couched in general terms comprises only acts of administration, even if the principal should state that he withholds no power or that the agent may execute such acts as he may consider appropriate, or even though the agency should authorize a general and unlimited management. Sally Yoshizaki v. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013.

Agency; sale of property by a supposed agent is unenforceable if there is really no agency to sell such property; persons dealing with an agent must ascertain not only the fact of agency, but also the nature and extent of the agents authority. Necessarily, the absence of a contract of agency renders the contract of sale unenforceable; Joy Training effectively did not enter into a valid contract of sale with the spouses Yoshizaki. Sally cannot also claim that she was a buyer in good faith. She misapprehended the rule that persons dealing with a registered land have the legal right to rely on the face of the title and to dispense with the need to inquire further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry. This rule applies when the ownership of a parcel of land is disputed and not when the fact of agency is contested. Sally Yoshizaki v. Joy Training Center of Aurora, Inc.,G.R. No. 174978, July 31, 2013.

Agency; special power of attorney; must express the powers of the agent in clear and unmistakable language; when there is any reasonable doubt that the language so used conveys such power, no such construction shall be given the document. We unequivocably declared in Cosmic Lumber Corporation v. Court of Appeals that a special power of attorney must express the powers of the agent in clear and unmistakable language for the principal to confer the right upon an agent to sell real estate. When there is any reasonable doubt that the language so used conveys such power, no such construction shall be given the document. The purpose of the law in requiring a special power of attorney in the disposition of immovable property is to protect the interest of an unsuspecting owner from being prejudiced by the unwarranted act of another and to caution the buyer to assure himself of the specific authorization of the putative agent. Sally Yoshizaki v. Joy Training Center of Aurora, Inc.,G.R. No. 174978, July 31, 2013.

Agency; special power of attorney for sale of property; must expressly mention a sale or include a sale as a necessary ingredient of the authorized act. The special power of attorney mandated by law must be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the authorized act. We unequivocably declared in Cosmic Lumber Corporation v. Court of Appeals that a special power of attorney must express the powers of the agent in clear and unmistakable language for the principal to confer the right upon an agent to sell real estate. When there is any reasonable doubt that the language so used conveys such power, no such construction shall be given the document. The purpose of the law in requiring a special power of attorney in the disposition of immovable property is to protect the interest of an unsuspecting owner from being prejudiced by the unwarranted act of another and to caution the buyer to assure himself of the specific authorization of the putative agent. Sally Yoshizaki v. Joy Training Center of Aurora, Inc.,G.R. No. 174978, July 31, 2013.

Agency; special power of attorney; required for an agent to sell an immovable property; authority must be in writing, otherwise sale is void. In Alcantara v. Nido, the Court emphasized the requirement of an SPA before an agent may sell an immovable property. In the said case, Revelen was the owner of the subject land. Her mother, respondent Brigida Nido accepted the petitioners offer to buy Revelens land at Two Hundred Pesos (P200.00) per sq m. However, Nido was only authorized verbally by Revelen. Thus, the Court declared the sale of the said land null and void under Articles 1874 and 1878 of the Civil Code. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R. No.182349, July 24, 2013.

Arrastre operator; functions; duty to take good care of goods and to turn them over to the party entitled to their possession. The functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the ships tackle. Being the custodian of the goods discharged from a vessel, an arrastre operators duty is to take good care of the goods and to turn them over to the party entitled to their possession. Handling cargo is mainly the arrastre operators principal work so its drivers/operators or employees should observe the standards and measures necessary to prevent losses and damage to shipments under its custody. Asian Terminals, Inc. v. Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.) v. Westwind Shipping Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co., Inc. and Asian Terminals, Inc., G.R. Nos. 181163/181262/181319, July 24, 2013.

Attorneys fees; dual concept. In order to resolve the issues in this case, it is necessary to discuss the two concepts of attorneys fees ordinary and extraordinary. In its ordinary sense, it is the reasonable compensation paid to a lawyer by his client for legal services rendered. In its extraordinary concept, it is awarded by the court to the successful litigant to be paid by the losing party as indemnity for damages. Francisco L. Rosario, Jr. v. Lellani De Guzman, Arleen De Guzman, et al., G.R. No. 191247, July 10, 2013.

Attorneys fees for professional services rendered; may be claimed in the very action itself or in a separate action; prescription for oral contract of attorneys fees is 6 years; concept of quantum meruit; guidelines under the Code of Professional Responsibility. The Court now addresses two important questions: (1) How can attorneys fees for professional services be recovered? (2) When can an action for attorneys fees for professional services be filed? The case of Traders Royal Bank Employees Union-Independent v. NLRC is instructive:

As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No. 0466, private respondents present claim for attorneys fees may be filed before the NLRC even though or, better stated, especially after its earlier decision had been reviewed and partially affirmed. It is well settled that a claim for attorneys fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action.

With respect to the first situation, the remedy for recovering attorneys fees as an incident of the main action may be availed of only when something is due to the client. Attorneys fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorneys fees only arises when something has been recovered from which the fee is to be paid. While a claim for attorneys fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyers claim for attorneys fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. Of course, a petition for attorneys fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the client.

It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees. Hence, private respondent was well within his rights when he made his claim and waited for the finality of the judgment for holiday pay differential, instead of filing it ahead of the awards complete resolution. To declare that a lawyer may file a claim for fees in the same action only before the judgment is reviewed by a higher tribunal would deprive him of his aforestated options and render ineffective the foregoing pronouncements of this Court.

In this case, petitioner opted to file his claim as an incident in the main action, which is permitted by the rules. As to the timeliness of the filing, this Court holds that the questioned motion to determine attorneys fees was seasonably filed.

The records show that the August 8, 1994 RTC decision became final and executory on October 31, 2007. There is no dispute that petitioner filed his Motion to Determine Attorneys Fees on September 8, 2009, which was only about one (1) year and eleven (11) months from the finality of the RTC decision. Because petitioner claims to have had an oral contract of attorneys fees with the deceased spouses, Article 1145 of the Civil Code16 allows him a period of six (6) years within which to file an action to recover professional fees for services rendered. Respondents never asserted or provided any evidence that Spouses de Guzman refused petitioners legal representation. For this reason, petitioners cause of action began to run only from the time the respondents refused to pay him his attorneys fees, as similarly held in the case of Anido v. Negado.

With respect to petitioners entitlement to the claimed attorneys fees, it is the Courts considered view that he is deserving of it and that the amount should be based on quantum meruit. Quantum meruit literally meaning as much as he deserves is used as basis for determining an attorneys professional fees in the absence of an express agreement. The recovery of attorneys fees on the basis of quantum meruit is a device that prevents an unscrupulous client from running away with the fruits of the legal services of counsel without paying for it and also avoids unjust enrichment on the part of the attorney himself. An attorney must show that he is entitled to reasonable compensation for the effort in pursuing the clients cause, taking into account certain factors in fixing the amount of legal fees.

Rule 20.01 of the Code of Professional Responsibility lists the guidelines for determining the proper amount of attorney fees, to wit:

Rule 20.1 A lawyer shall be guided by the following factors in determining his fees:

a) The time spent and the extent of the services rendered or required;

b) The novelty and difficulty of the questions involved;

c) The importance of the subject matter;

d) The skill demanded;

e) The probability of losing other employment as a result of acceptance of the proffered case;

f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;

g) The amount involved in the controversy and the benefits resulting to the client from the service;

h) The contingency or certainty of compensation;

i) The character of the employment, whether occasional or established; and

j) The professional standing of the lawyer.

Francisco L. Rosario, Jr. v. Lellani De Guzman, Arleen De Guzman, et al., G.R. No. 191247, July 10, 2013.

Attorneys fees; recoverable in actions for indemnity under workmens compensation and employers liability laws. However, the Court finds that the petitioner is entitled to attorneys fees pursuant to Article 2208(8) of the Civil Code which states that the award of attorneys fees is justified in actions for indemnity under workmens compensation and employers liability laws. Camilo A. Esguerra v. United Philippines Lines, Inc., et al., G.R. No. 199932, July 3, 2013.

Attorneys fees; when recoverable. The Court of Appeals rightfully upheld the NLRCs affirmance of the grant of attorneys fees to San Miguel. Thereby, the NLRC did not commit any grave abuse of its discretion, considering that San Miguel had been compelled to litigate and to incur expenses to protect his rights and interest. In Producers Bank of the Philippines v. Court of Appeals, the Court ruled that attorneys fees could be awarded to a party whom an unjustified act of the other party compelled to litigate or to incur expenses to protect his interest. It was plain that petitioners refusal to reinstate San Miguel with backwages and other benefits to which he had been legally entitled was unjustified, thereby entitling him to recover attorneys fees. Zuellig Freight and Cargo Systems v. National Labor Relations Commission, et al., G.R. No. 157900, July 22, 2013Attorneys fees; when recoverable. With respect to the award of attorneys fees, Article 2208 of the Civil Code provides, among others, that such fees may be recovered when exemplary damages are awarded, when the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest, and where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable claim. Joyce V. Ardiente v. Spouses Javier and Ma. Theresa Pastofide, G.R. No. 161921, July 17, 2013.

Common carriers; extraordinary diligence in vigilance of goods transported; cargoes while being unloaded generally remain under the custody of the carrier. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the goods. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them. Asian Terminals, Inc. v. Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.) v. Westwind Shipping Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co., Inc. and Asian Terminals, Inc., G.R. Nos. 181163/181262/181319, July 24, 2013.

Contract; absolutely simulated contracts; void from the beginning. The Court is in accord with the observation and findings of the (RTC, Kalibo, Aklan) thus:

The amplitude of foregoing undisputed facts and circumstances clearly shows that the sale of the land in question was purely simulated. It is void from the very beginning (Article 1346, New Civil Code). If the sale was legitimate, defendant Glenda should have immediately taken possession of the land, declared in her name for taxation purposes, registered the sale, paid realty taxes, introduced improvements therein and should not have allowed plaintiff to mortgage the land. These omissions properly militated against defendant Glendas submission that the sale was legitimate and the consideration was paid.

Dr. Lorna C. Formaran v. Dr. Glenda B. Ong and Solomon S. Ong, G.R. No. 186264, July 8, 2013.

Contract of sale; elements. A valid contract of sale requires: (a) a meeting of minds of the parties to transfer ownership of the thing sold in exchange for a price; (b) the subject matter, which must be a possible thing; and (c) the price certain in money or its equivalent. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R. No.182349, July 24, 2013.

Contract to sell; payment of the price; positive suspension condition; effect of failure to pay. Clearly, the RTC arrived at the above-quoted conclusion based on its mistaken premise that rescission is applicable to the case. Hence, its determination of whether there was substantial breach. As may be recalled, however, the CA, in its assailed Decision, found the contract between the parties as a contract to sell, specifically of a real property on installment basis, and as such categorically declared rescission to be not the proper remedy. This is considering that in a contract to sell, payment of the price is a positive suspensive condition, failure of which is not a breach of contract warranting rescission under Article 1191 of the Civil Code but rather just an event that prevents the supposed seller from being bound to convey title to the supposed buyer. Also, and as correctly ruled by the CA, Article 1191 cannot be applied to sales of real property on installment since they are governed by the Maceda Law.

There being no breach to speak of in case of non-payment of the purchase price in a contract to sell, as in this case, the RTCs factual finding that Lourdes was willing and able to pay her obligation a conclusion arrived at in connection with the said courts determination of whether the non-payment of the purchase price in accordance with the terms of the contract was a substantial breach warranting rescission therefore loses significance. The spouses Bonrostros reliance on the said factual finding is thus misplaced. They cannot invoke their readiness and willingness to pay their obligation on November 24, 1993 as an excuse from being made liable for interest beyond the said date. Sps. Nameal and Lourdes Bonrostro v. Sps. Juan and Constacia Luna, G.R. No.172346, July 24, 2013.

Damages; damages for loss of earning capacity; must be duly proven by documentary evidence; exceptions. The Supreme Court agrees with the Court of Appeals when it removed the RTCs award respecting the indemnity for the loss of earning capacity. As it has already previously ruled that damages for loss of earning capacity is in the nature of actual damages, which as a rule must be duly proven by documentary evidence, not merely by the self-serving testimony of the widow.

By way of exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when (1) the deceased is self-employed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact that in the deceaseds line of work no documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws. People of the Philippines v. Garry Vergara y Oriel and Joseph Incencio y Paulino, G.R. No. 177763, July 3, 2013Damages; exemplary damages; concept. As for exemplary damages, Article 2229 provides that exemplary damages may be imposed by way of example or correction for the public good. Nonetheless, 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. In the instant case, the Court agrees with the CA in sustaining the award of exemplary damages, although it reduced the amount granted, considering that respondent spouses were deprived of their water supply for more than nine (9) months, and such deprivation would have continued were it not for the relief granted by the RTC. Joyce V. Ardiente v. Spouses Javier and Ma. Theresa Pastofide, G.R. No. 161921, July 17, 2013.

Damages; exemplary damages; awarded if there is an aggravating circumstance, whether ordinary or qualifying. Unlike the criminal liability which is basically a State concern, the award of exemplary damages, however, is likewise, if not primarily, intended for the offended party who suffers thereby. It would make little sense for an award of exemplary damages to be due the private offended party when the aggravating circumstance is ordinary but to be withheld when it is qualifying. Withal, the ordinary or qualifying nature of an aggravating circumstance is a distinction that should only be of consequence to the criminal, rather than to the civil, liability of the offender. In fine, relative to the civil aspect of the case, an aggravating circumstance, whether ordinary or qualifying, should entitle the offended party to an award of exemplary damages within the unbridled meaning of Article 2230 of the Civil Code. People of the Philippines v. Garry Vergara y Oriel and Joseph Incencio y Paulino, G.R. No. 177763, July 3, 2013.

Damages; interest thereon; where obligation does not constitute a loan or forbearance of money. The CA erred in imposing an interest rate of 12% on the award of damages. Under Article 2209 of the Civil Code, when an obligation not constituting a loan or forbearance of money is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. In the similar case of Belgian Overseas Chartering and Shipping NV v. Philippine First Insurance Co., lnc., the Court reduced the rate of interest on the damages awarded to the carrier therein to 6% from the time of the filing of the complaint until the finality of the decision. Asian Terminals, Inc. v. Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.) v. Westwind Shipping Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co., Inc. and Asian Terminals, Inc., G.R. Nos. 181163/181262/181319, July 24, 2013.

Damages; moral damages; when recoverable. In Philippine National Bank v. Spouses Rocamora, the Supreme Court said that:

Moral damages are not recoverable simply because a contract has been breached. They are recoverable only if the defendant acted fraudulently or in bad faith or in wanton disregard of his contractual obligations. The breach must be wanton, reckless, malicious or in bad faith, and oppressive or abusive. Likewise, a breach of contract may give rise to exemplary damages only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.

Carlos Lim, et al. v. Development Bank of the Philippines, G.R. No. 177050, July 1, 2013.

Damages; moral damages; awarded where the victim of a crime suffered a violent death, even in the absence of proof of mental and emotional suffering of the victims heirs. The Supreme Court sustained the RTCs award for moral damages in the amount of P50,000.00 even in the absence of proof of mental and emotional suffering of the victims heirs. As borne out by human nature and experience, a violent death invariably and necessarily brings about emotional pain and anguish on the part of the victims family. While no amount of damages may totally compensate the sudden and tragic loss of a loved one it is nonetheless awarded to the heirs of the deceased to at least assuage them. People of the Philippines v. Garry Vergara y Oriel and Joseph Incencio y Paulino, G.R. No. 177763, July 3, 2013

Damages; moral and exemplary damages in claims for disability benefits; not recoverable where employer was not negligent in affording the employee with medical treatment, and employer did not forsake employee during the period of disability. The CA correctly denied an award of moral and exemplary damages. The respondents were not negligent in affording the petitioner with medical treatment neither did they forsake him during his period of disability. Camilo A. Esguerra v. United Philippines Lines, Inc., et al., G.R. No. 199932, July 3, 2013.

Human Relations; abuse of rights; Article 19 of the Civil Code; concept; damages as reliefs. The principle of abuse of rights as enshrined in Article 19 of the Civil Code provides that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

In this regard, the Courts ruling in Yuchengco v. The Manila Chronicle Publishing Corporation is instructive, to wit:

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This provision of law sets standards which must be observed in the exercise of ones rights as well as in the performance of its duties, to wit: to act with justice; give everyone his due; and observe honesty and good faith.

In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was elucidated that while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper. The Court said:

One of the more notable innovations of the New Civil Code is the codification of some basic principles that are to be observed for the rightful relationship between human beings and for the stability of the social order. [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated certain fundamental precepts which were designed to indicate certain norms that spring from the fountain of good conscience and which were also meant to serve as guides for human conduct [that] should run as golden threads through society, to the end that law may approach its supreme ideal, which is the sway and dominance of justice. (Id.) Foremost among these principles is that pronounced in Article 19 x x x.

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This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of ones rights, but also in the performance of ones duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper. Joyce V. Ardiente v. Spouses Javier and Ma. Theresa Pastofide, G.R. No. 161921, July 17, 2013.

Human Relations; civil case for fraud; Article 33 of the Civil Code provides that a civil case for damages based on fraud may proceed independently of the criminal case therefor; said civil case will not operate as a prejudicial question that will justify the suspension of a criminal case. It is well settled that a civil action based on defamation, fraud and physical injuries may be independently instituted pursuant to Article 33 of the Civil Code, and does not operate as a prejudicial question that will justify the suspension of a criminal case. This was precisely the Courts thrust in G.R. No. 148193, thus:

Moreover, neither is there a prejudicial question if the civil and the criminal action can, according to law, proceed independently of each other. Under Rule 111, Section 3 of the Revised Rules on Criminal Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code, the independent civil action may be brought by the offended party. It shall proceed independently of the criminal action and shall require only a preponderance of evidence. In no case, however, may the offended party recover damages twice for the same act or omission charged in the criminal action.

In the instant case, Civil Case No. 99-95381, for Damages and Attachment on account of the alleged fraud committed by respondent and his mother in selling the disputed lot to PBI is an independent civil action under Article 33 of the Civil Code. As such, it will not operate as a prejudicial question that will justify the suspension of the criminal case at bar. Rafael Jose Consing, Jr. v. People of the Philippines, G.R. No. 161075, July 15, 2013.

Letter of credit; definition; nature. A letter of credit is a financial device developed by merchants as a convenient and relatively safe mode of dealing with sales of goods to satisfy the seemingly irreconcilable interests of a seller, who refuses to part with his goods before he is paid, and a buyer, who wants to have control of his goods before paying. However, letters of credit are employed by the parties desiring to enter into commercial transactions, not for the benefit of the issuing bank but mainly for the benefit of the parties to the original transaction, in these cases, Nichimen Corporation as the seller and Universal Motors as the buyer. Hence, the latter, as the buyer of the Nissan CKD parts, should be regarded as the person entitled to delivery of the goods. Accordingly, for purposes of reckoning when notice of loss or damage should be given to the carrier or its agent, the date of delivery to Universal Motors is controlling. Asian Terminals, Inc. v. Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.) v. Westwind Shipping Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co., Inc. and Asian Terminals, Inc., G.R. Nos. 181163/181262/181319, July 24, 2013.

Mortgage; includes all natural or civil fruits and improvements found on the mortgaged property when the secured obligation becomes due; in case of non-payment of the secured debt, foreclosure proceedings shall cover not only the hypothecated property but all its accessions and accessories as well; indispensable requisite that mortgagor be the absolute owner of the encumbered property. Rent, as an accessory, follows the principal. In fact, when the principal property is mortgaged, the mortgage shall include all natural or civil fruits and improvements found thereon when the secured obligation becomes due as provided in Article 2127 of the Civil Code, viz:Art. 2127. The mortgage extends to the natural accessions, to the improvements, growing fruits, and the rents or income not yet received when the obligation becomes due, and to the amount of the indemnity granted or owing to the proprietor from the insurers of the property mortgaged, or in virtue of expropriation for public use, with the declarations, amplifications and limitations established by law, whether the estate remains in the possession of the mortgagor, or it passes into the hands of a third person.

Consequently, in case of non-payment of the secured debt, foreclosure proceedings shall cover not only the hypothecated property but all its accessions and accessories as well. This was illustrated in the early case of Cu Unjieng e Hijos v. Mabalacat Sugar Co. where the Court held:

That a mortgage constituted on a sugar central includes not only the land on which it is built but also the buildings, machinery, and accessories installed at the time the mortgage was constituted as well as the buildings, machinery and accessories belonging to the mortgagor, installed after the constitution thereof x x x [.]

Applying such pronouncement in the subsequent case of Spouses Paderes v. Court of Appeals, the Court declared that the improvements constructed by the mortgagor on the subject lot are covered by the real estate mortgage contract with the mortgagee bank and thus included in the foreclosure proceedings instituted by the latter.

However, the rule is not without qualifications. In Castro, Jr. v. CA the Court explained that Article 2127 is predicated on the presumption that the ownership of accessions and accessories also belongs to the mortgagor as the owner of the principal. After all, it is an indispensable requisite of a valid real estate mortgage that the mortgagor be the absolute owner of the encumbered property. Philippine National Bank v. Sps. Bernard and Cresencia Maraon, G.R.No. 189316, July 1, 2013.

Mortgage; mortgagee in good faith; right to have mortgage lien carried over and annotated on the new certificate of title. The protection afforded to PNB as a mortgagee in good faith refers to the right to have its mortgage lien carried over and annotated on the new certificate of title issued to Spouses Maraon as so adjudged by the RTC. Thereafter, to enforce such lien thru foreclosure proceedings in case of non- payment of the secured debt, as PNB did so pursue. The principle, however, is not the singular rule that governs real estate mortgages and foreclosures attended by fraudulent transfers to the mortgagor. Philippine National Bank v. Sps. Bernard and Cresencia Maraon,G.R.No. 189316, July 1, 2013.

Obligations; conditions; fulfillment thereof; deemed fulfilled when obligor voluntarily prevents it fulfillment; requisites. The spouses Bonrostro want to be relieved from paying interest on the amount of P214,492.62 which the spouses Luna paid to Bliss as amortizations by asserting that they were prevented by the latter from fulfilling such obligation. They invoke Art. 1186 of the Civil Code which provides that the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

However, the Court finds Art. 1186 inapplicable to this case. The said provision explicitly speaks of a situation where it is the obligor who voluntarily prevents fulfillment of the condition. Here, Constancia is not the obligor but the obligee. Moreover, even if this significant detail is to be ignored, the mere intention to prevent the happening of the condition or the mere placing of ineffective obstacles to its compliance, without actually preventing fulfillment is not sufficient for the application of Art. 1186. Two requisites must concur for its application, to wit: (1) intent to prevent fulfillment of the condition; and, (2) actual prevention of compliance. Sps. Nameal and Lourdes Bonrostro v. Sps. Juan and Constacia Luna, G.R. No.172346, July 24, 2013.

Obligations; constructive fulfillment; Article 1186 of the Civil Code; requisites. As aptly pointed out by the CA, Article 1186 of the Civil Code, which states that the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment, does not apply in this case, viz:Article 1186 enunciates the doctrine of constructive fulfillment of suspensive conditions, which applies when the following three (3) requisites concur, viz: (1) The condition is suspensive; (2) The obligor actually prevents the fulfillment of the condition; and (3) He acts voluntarily. Suspensive condition is one the happening of which gives rise to the obligation. It will be irrational for any Bank to provide a suspensive condition in the Promissory Note or the Restructuring Agreement that will allow the debtor-promissor to be freed from the duty to pay the loan without paying it.

Carlos Lim, et al. v. Development Bank of the Philippines, G.R. No. 177050, July 1, 2013.

Obligations; if an obligation consists of payment of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest. Under Article 2209 ofthe Civil Code, [i]fthe obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest x x x. There being no stipulation on interest in case ofdelay in the payment ofamortization, the CA thus correctly imposed interest at the legal rate which is now 12%per annum. Sps. Nameal and Lourdes Bonrostro v. Sps. Juan and Constacia Luna, G.R. No.172346, July 24, 2013.

Penalties and interest rates; penalties and interest rates should be expressly stipulated in writing. As to the imposition of additional interest and penalties not stipulated in the Promissory Notes, this should not be allowed. Article 1956 of the Civil Code specifically states that no interest shall be due unless it has been expressly stipulated in writing. Thus, the payment of interest and penalties in loans is allowed only if the parties agreed to it and reduced their agreement in writing. Carlos Lim, et al. v. Development Bank of the Philippines,G.R. No. 177050, July 1, 2013.

Prescription; Article 1144 of the Civil Code. We concur with the CAs ruling that respondents action did not yet prescribe. The legal provision governing this case was not Article 1146 of the Civil Code, but Article 1144 of the Civil Code, which states:

Article 1144. The following actions must be brought within ten years from the time the cause of action accrues:

(1)Upon a written contract; (2) Upon an obligation created by law; (3)Upon a judgment.

Vector Shipping Corporation, et al. v. American Home Assurance Co., et al., G.R. No. 159213, July 3, 2013.

Property; co-ownership; sale of co-owned property; if only one co-owner agreed to the sale, said co-owner only sold his aliquot share in the subject property. But as held by the appellate court, the sale between the petitioner and Alejandro is valid insofar as the aliquot share of respondent Alejandro is concerned. Being a co-owner, Alejandro can validly and legally dispose of his share even without the consent of all the other co-heirs. Since the balance of the full price has not yet been paid, the amount paid shall represent as payment to his aliquot share. This then leaves the sale of the lot of the Altamiranos to the Spouses Lajarca valid only insofar as their shares are concerned, exclusive of the aliquot part of Alejandro, as ruled by the CA. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R. No.182349, July 24, 2013.

Property; patrimonial property and property of public dominion; patrimonial property of the State may be the object of prescription, however, those intended for some public service or the development of national wealth are property of public dominion, which are not susceptible to acquisition by prescription; public domain lands become patrimonial property only if there is a declaration that these are alienable or disposable, together with an express government manifestation that the property is already patrimonial or no longer retained for public service or the development of national wealth. Under Article 422 of the Civil Code, public domain lands become patrimonial property only if there is a declaration that these are alienable or disposable, together with an express government manifestation that the property is already patrimonial or no longer retained for public service or the development of national wealth. Only when the property has become patrimonial can the prescriptive period for the acquisition of property of the public dominion begin to run. Also under Section 14(2) of Presidential Decree (P.D.) No. 1529, it is provided that before acquisitive prescription can commence, the property sought to be registered must not only be classified as alienable and disposable, it must also be expressly declared by the State that it is no longer intended for public service or the development of the national wealth, or that the property has been converted into patrimonial. Absent such an express declaration by the State, the land remains to be property of public dominion. Dream Village Neighborhood Association, Inc., represented by its Incumbent President Greg Seriego v. Bases Conversion Development Authority, G.R.