March 2014 Philippine Supreme Court Decisions on Civil Law

Here are select March 2014 rulings of the Supreme Court of the Philippines on civil law:

CIVIL CODE

Action for quieting of title; trial court had no jurisdiction to determine who among the parties have better right over the disputed property which is admittedly still part of the public domain. Having established that the disputed property is public land, the trial court was therefore correct in dismissing the complaint to quiet title for lack of jurisdiction. The trial court had no jurisdiction to determine who among the parties have better right over the disputed property which is admittedly still part of the public domain. As held in Dajunos v. Tandayag (G.R. Nos. L-32651-52, 31 August 1971, 40 SCRA 449):

x x x The Tarucs’ action was for “quieting of title” and necessitated determination of the respective rights of the litigants, both claimants to a free patent title, over a piece of property, admittedly public land. The law, administration, disposition and alienation of public lands with the Director of Lands subject, of course, to the control of the Secretary of Agriculture and Natural Resources.

In sum, the decision rendered in Civil Case No. 1218 on October 28, 1968 is a patent nullity. The lower court did not have power to determine who (the Firmalos or the Tarucs) were entitled to an award of free patent title over that piece of property that yet belonged to the public domain. Neither did it have power to adjudge the Tarucs as entitled to the “true equitable ownership” thereof, the latter’s effect being the same: the exclusion of the Firmalos in favor of the Tarucs. Heirs of Pacifico Pocido, et al. v. Arsenia Avila and Emelinda Chua, G.R. No. 199146, March 19, 2014.

Action for quieting of title. In an action for quieting of title, the complainant is seeking for “an adjudication that a claim of title or interest in property adverse to the claimant is invalid, to free him from the danger of hostile claim, and to remove a cloud upon or quiet title to land where stale or unenforceable claims or demands exist.” Heirs of Pacifico Pocido, et al. v. Arsenia Avila and Emelinda Chua, G.R. No. 199146, March 19, 2014.

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February 2014 Philippine Supreme Court Decisions on Civil Law

Here are select February 2014 rulings of the Supreme Court of the Philippines on civil law:

Contract law; principle of relativity. The basic principle of relativity of contracts is that contracts can only bind the parties who entered into it, and cannot favor or prejudice a third person, even if he is aware of such contract and has acted with knowledge thereof “Where there is no privity of contract, there is likewise no obligation or liability to speak about.” Philippine National Bank v. Teresita Tan Dee, et al., G.R. No. 182128, February 19, 2014.

Contract of sale; obligations of the parties; there is nothing in the decision of the HLURB, as affirmed by the OP and the CA, which shows that the petitioner is being ordered to assume the obligation of any of the respondents.In a contract of sale, the parties’ obligations are plain and simple. The law obliges the vendor to transfer the ownership of and to deliver the thing that is the object of sale. On the other hand, the principal obligation of a vendee is to pay the full purchase price at the agreed time. Philippine National Bank v. Teresita Tan Dee, et al., G.R. No. 182128, February 19, 2014.

Contract to sell; ownership; right to mortgage the property by the owner. Note that at the time PEPI mortgaged the property to the petitioner, the prevailing contract between respondents PEPI and Dee was still the Contract to Sell, as Dee was yet to fully pay the purchase price of the property. On this point, PEPI was acting fully well within its right when it mortgaged the property to the petitioner, for in a contract to sell, ownership is retained by the seller and is not to pass until full payment of the purchase price. In other words, at the time of the mortgage, PEPI was still the owner of the property. Thus, in China Banking Corporation v. Spouses Lozada the Court affirmed the right of the owner/developer to mortgage the property subject of development, to wit: “[P.D.] No. 957 cannot totally prevent the owner or developer from mortgaging the subdivision lot or condominium unit when the title thereto still resides in the owner or developer awaiting the full payment of the purchase price by the installment buyer.” Philippine National Bank v. Teresita Tan Dee, et al., G.R. No. 182128, February 19, 2014.

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January 2014 Philippine Supreme Court Decisions on Civil Law

Here are select January 2014 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Bad faith cannot be presumed; it is a question of fact that must be proven by clear and convincing evidence. It is worth stressing at this point that bad faith cannot be presumed. “It is a question of fact that must be proven” by clear and convincing evidence. “[T]he burden of proving bad faith rests on the one alleging it.” Sadly, spouses Vilbar failed to adduce the necessary evidence. Thus, this Court finds no error on the part of the CA when it did not find bad faith on the part of Gorospe, Sr. Sps. Bernadette and Rodulfo Vilbar v. Angelito L. Opinion, G.R. No. 176043. January 15, 2014.

Banks; exercise the highest degree of diligence, as well as to observe the high standards of integrity and performance in all its transactions because its business was imbued with public interest. Being a banking institution, DBP owed it to Guariña Corporation to exercise the highest degree of diligence, as well as to observe the high standards of integrity and performance in all its transactions because its business was imbued with public interest. The high standards were also necessary to ensure public confidence in the banking system, for, according to Philippine National Bank v. Pike: “The stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks.” Development Bank of the Philippines (DBP) v. Guariña Agricultural and Realty Development Corporation, G.R. No. 160758. January 15, 2014

Common carrier; cargoes while being unloaded generally remain under the custody of the carrier. It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. As hereinbefore found by the RTC and affirmed by the CA based on the evidence presented, the goods were damaged even before they were turned over to ATI. Such damage was even compounded by the negligent acts of petitioner and ATI which both mishandled the goods during the discharging operations. Eastern Shipping Lines, Inc. v. BPI/MS Insurance Corp., and Mitsui Sumitomo Insurance Co., Ltd.,G.R. No. 193986, January 15, 2014.

Common carrier; extraordinary diligence.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. Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such high level of diligence. Eastern Shipping Lines, Inc. v. BPI/MS Insurance Corp., and Mitsui Sumitomo Insurance Co., Ltd.,G.R. No. 193986, January 15, 2014.

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December 2013 Philippine Supreme Court Decisions on Civil Law

Here are seclect December 2013 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Contracts; concept of contracts. A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it. The real nature of a contract may be determined from the express terms of the written agreement and from the contemporaneous and subsequent acts of the contracting parties. However, in the construction or interpretation of an instrument, the intention of the parties is primordial and is to be pursued. The denomination or title given by the parties in their contract is not conclusive of the nature of its contents. ACE Foods, Inc. v. Micro Pacific Technologies Co., Ltd., G.R. No. 200602,  December 11, 2013.

Contracts; contract of loan; interest stipulated; reduced for being iniquitous and unconscionable. Parties to a loan contract have wide latitude to stipulate on any interest rate in view of the Central Bank Circular No. 905 s. 1982 which suspended the Usury Law ceiling on interest effective January 1, 1983. It is, however, worth stressing that interest rates whenever unconscionable may still be declared illegal. There is nothing in the circular which grants lenders carte blanche authority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets.In Menchavez v. Bermudez, the interest rate of 5% per month, which when summed up would reach 60% per annum, is null and void for being excessive, iniquitous, unconscionable and exorbitant, contrary to morals, and the law. Florpina Benvidez v. Nestor Salvador, G.R. No. 173331, December 11, 2013.

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November 2013 Philippine Supreme Court Decisions on Civil Law

Here are select November 2013 rulings of the Supreme Court of the Philippines on civil law:

CIVIL CODE

Contracts; binding effect. It is hornbook doctrine in the law on contracts that the parties are bound by the stipulations, clauses, terms and conditions they have agreed to provided that such stipulations, clauses, terms and conditions are not contrary to law, morals, public order or public policy. Consolidated Industrial Gases, Inc. v. Alabang Medical Center, G.R. No. 181983, November 13, 2013.

Contracts; breach of; when moral damages may be awarded. In Francisco v. Ferrer,this Court ruled that moral damages may be awarded on the following bases:

To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless, malicious, in bad faith, oppressive or abusive.

Under the provisions of this law, in culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries.

Moral damages may be awarded in breaches of contracts where the defendant acted fraudulently or in bad faith.

Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud.

The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party. Invariably such action must be shown to have been willfully done in bad faith or will ill motive. Mere allegations of besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages. It must be shown that the proximate cause thereof was the unlawful act or omission of the [private respondent] petitioners.

An award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code. Alejandro V. Tankeh v. Development Bank of the Philippines, et al., G.R. No. 171428, November 11, 2013.

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September 2013 Philippine Supreme Court Decisions on Civil Law

Here are select September 2013 rulings of the Supreme Court of the Philippines on civil law:

CIVIL CODE

Civil registry; nature of civil register books; books making up the civil register and all documents relating thereto are public documents and shall be prima facie evidence of the facts therein contained; as public documents, they are admissible in evidence even without further proof of their due execution and genuineness.There is no question that the documentary evidence submitted by petitioner are all public documents. As provided in the Civil Code:

ART. 410. The books making up the civil register and all documents relating thereto shall be considered public documents and shall be prima facie evidence of the facts therein contained.

As public documents, they are admissible in evidence even without further proof of their due execution and genuineness. Thus, the RTC erred when it disregarded said documents on the sole ground that the petitioner did not present the records custodian of the NSO who issued them to testify on their authenticity and due execution since proof of authenticity and due execution was not anymore necessary. Moreover, not only are said documents admissible, they deserve to be given evidentiary weight because they constitute prima facie evidence of the facts stated therein. And in the instant case, the facts stated therein remain unrebutted since neither the private respondent nor the public prosecutor presented evidence to the contrary. In Yasuo Iwasawa v. Felisa Custodio Gangan (a.k.a. “Felisa Gangan Arambulo” and “Felisa Gangan Iwasawa”), et al., G.R. No. 204169, September 11, 2013 

Contracts; contract to sell distinguished from contract of sale; in a contract to sell, ownership remains with the vendor and does not pass to the vendee until full payment of the purchase price; a deed of sale is absolute when there is no stipulation in the contract that title to the property remains with the seller until the full payment of the purchase price.  In a conditional sale, as in a contract to sell, ownership remains with the vendor and does not pass to the vendee until full payment of the purchase price. The full payment of the purchase price partakes of a suspensive condition, and non-fulfillment of the condition prevents the obligation to sell from arising. To differentiate, a deed of sale is absolute when there is no stipulation in the contract that title to the property remains with the seller until full payment of the purchase price. Ramos v. Heruela held that Articles 1191 and 1592 of the Civil Code are applicable to contracts of sale, while R.A. No. 6552 applies to contracts to sell. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No. 179594, September 11, 2013.

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August 2013 Philippine Supreme Court Decisions on Civil Law

Here are select August 2013 rulings of the Supreme Court of the Philippines on civil law:

Compensation; Concept; Requisites. Compensation is a mode of extinguishing to the concurrent amount, the debts of persons who in their own right are creditors and debtors of each other. The object of compensation is the prevention of unnecessary suits and payments through the mutual extinction by operation of law of concurring debts.  Article 1279 of the Civil Code provides for the requisites for compensation to take effect:

Article 1279. In order that compensation may be proper, it is necessary:

(1)That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;

(2)That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated;

(3)That the two debts be due;

(4)That they be liquidated and demandable;

(5)That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.

Adelaida Soriano v. People of the Philippines, G.R. No. 181692, August 14, 2013.

Compensation; when both debts are liquidated and demandable.  A debt is liquidated when the amount is known or is determinable by inspection of the terms and conditions of relevant documents. Adelaida Soriano v. People of the Philippines, G.R. No. 181692, August 14, 2013.

Contracts; determination of nature of contract. In determining the nature of a contract, courts are not bound by the title or name given by the parties. The decisive factor in evaluating such agreement is the intention of the parties, as shown not necessarily by the terminology used in the contract but by their conduct, words, actions and deeds prior to, during and immediately after executing the agreement. As such, therefore, documentary and parol evidence may be submitted and admitted to prove such intention. Hur Tin Yang v. People of the Philippines, G.R. No. 195117, August 14, 2013.

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