February 2012 Philippine Supreme Court Decisions on Civil Law

Here are select February 2012 rulings of the Supreme Court of the Philippines on civil law:

Agency; Accounting. Article 1891 of the Civil Code contains a few of the obligations owed by an agent to his principal – Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal. Every stipulation exempting the agent from the obligation to render an account shall be void.

It is evident that the reason behind the failure of petitioner to render an accounting to respondent is immaterial. What is important is that the former fulfill her duty to render an account of the relevant transactions she entered into as respondent’s agent. Caridad Segarra Sazon vs. Letecia Vasquez-Menancio, G.R. No. 192085. February 22, 2012.

Agency; Fruits. Every agent is bound to deliver to the principal whatever the former may have received by virtue of the agency, even though that amount may not be owed to the principal. Caridad Segarra Sazon vs. Letecia Vasquez-Menancio, G.R. No. 192085. February 22, 2012.

Attorney’s fees; When payable. With respect to attorney’s fees, it is proper on the ground that petitioner’s act of denying respondent and its employees access to the leased premises has compelled respondent to litigate and incur expenses to protect its interest. Also, under the circumstances prevailing in the present case, attorney’s fees may be granted on grounds of justice and equity. Manila International Airport vs. Avia Filipinas International, Inc., G.R. No. 180168. February 27, 2012

Civil Code; Moral damages; Exemplary damages; Attorney’s fees.  Article 2219 of the Civil Code of the Philippines provides for recovery of moral damages in certain cases:

Art. 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in Article 309;

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named.

Article 2229 of the Civil Code, on the other hand, provides for recovery of exemplary damages:

 Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.

In this case, we agree with the CA in not awarding moral and exemplary damages for lack of factual basis.

Lastly, Article 2208 of the Civil Code provides for recovery of attorney’s fees and expenses of litigation:

Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen’s compensation and employer’s liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered.

In all cases, the attorney’s fees and expenses of litigation must be reasonable.

Article 111 of the Labor Code provides for a maximum award of attorney’s fees in cases of recovery of wages:

Art. 111. Attorney’s fees.

a.       In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered.

b.      It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered.

Since De Gracia, et al. had to secure the services of the lawyer to recover their unpaid salaries and protect their interest, we agree with the CA’s imposition of attorney’s fees in the amount of ten percent (10%) of the total claims. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012.

Contract; Simulation. Article 1345 of the Civil Code provides that the simulation of a contract may either be absolute or relative.  In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound by it.  The main characteristic of an absolute simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each other what they may have given under the contract.  However, if the parties state a false cause in the contract to conceal their real agreement, the contract is only relatively simulated and the parties are still bound by their real agreement.  Hence, where the essential requisites of a contract are present and the simulation refers only to the content or terms of the contract, the agreement is absolutely binding and enforceable between the parties and their successors in interest. The primary consideration in determining the true nature of a contract is the intention of the parties.  If the words of a contract appear to contravene the evident intention of the parties, the latter shall prevail.  Such intention is determined not only from the express terms of their agreement, but also from the contemporaneous and subsequent acts of the parties. Spouses Jose and Milagros Villaceran vs. Josephine De Guzman, G.R. No. 169055. February 22, 2012.  

Contract; Subrogation. Subrogation is the substitution of one person by another with reference to a lawful claim or right, so that he who is substituted succeeds to the rights of the other in relation to a debt or claim, including its remedies or securities. The principle covers a situation wherein an insurer has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy. It contemplates full substitution such that it places the party subrogated in the shoes of the creditor, and he may use all means that the creditor could employ to enforce payment. Malayan Insurance Co., Inc. vs. Rodelio Alberto and Enrico Alberto  Reyes, G.R. No. 194320. February 1, 2012.

Damages; Torrens system; Laches and prescription. Article 434 of the Civil Code provides that “[i]n an action to recover, the property must be identified, and the plaintiff must rely on the strength of his title and not on the weakness of the defendant’s claim.”  In other words, in order to recover possession, a person must prove (1) the identity of the land claimed, and (2) his title.

Jurisprudence consistently holds that “prescription and laches can not apply to registered land covered by the Torrens system” because “under 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.” Rogelio J. Jakolsalem, et al. vs. Roberto S. Barangan, G.R. No. 175025. February 15, 2012.

Free patent; Fradulently secured. A Free Patent may be issued where the applicant is a natural-born citizen of the Philippines; is not the owner of more than twelve (12) hectares of land; has continuously occupied and cultivated, either by himself or through his predecessors-in-interest, a tract or tracts of agricultural public land subject to disposition, for at least 30 years prior to the effectivity of Republic Act No. 6940; and has paid the real taxes thereon while the same has not been occupied by any person. Once a patent is registered and the corresponding certificate of title is issued, the land covered thereby ceases to be part of public domain and becomes private property, and the Torrens Title issued pursuant to the patent becomes indefeasible upon the expiration of one year from the date of such issuance.

However, a title emanating from a free patent which was secured through fraud does not become indefeasible, precisely because the patent from whence the title sprung is itself void and of no effect whatsoever. Well-settled is the doctrine that the registration of a patent under the Torrens System does not by itself vest title; it merely confirms the registrant’s already existing one. Verily, registration under the Torrens System is not a mode of acquiring ownership.

Nonetheless, a free patent that was fraudulently acquired, and the certificate of title issued pursuant to the same, may only be assailed by the government in an action for reversion pursuant to Section 101 of the Public Land Act. Since it was the Director of Lands who processed and approved the applications of the appellants and who ordered the issuance of the corresponding free patents in their favor in his capacity as administrator of the disposable lands of the public domain, the action for annulment should have been initiated by him, or at least with his prior authority and consent. Nancy T. Lorzano vs. Juan Tabayag, Jr., G.R. No. 189647. February 6, 2012.

Lease; Failure to maintain lessee in peaceful possession. It is clear that petitioner failed to maintain respondent in the peaceful and adequate enjoyment of the leased premises by unjustifiably preventing the latter access thereto. Consequently, in accordance with Article 1658 of the Civil Code, respondent had no duty to make rent payments. Manila International Airport vs. Avia Filipinas International, Inc., G.R. No. 180168. February 27, 2012.

Lease; Increase in rental. Article 1374 of the Civil Code clearly provides that “[t]he various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly. It is true that Article II, Paragraph 2.04 of the Contract of Lease states that “[a]ny subsequent amendment to Administrative Order No. 4, Series of 1982, which will effect a decrease or escalation of the monthly rental or impose new and additional fees and charges, including but not limited to government/MIAA circulars, rules and regulation to this effect, shall be deemed incorporated herein and shall automatically amend this Contract insofar as the monthly rental is concerned.” However, the above quoted provision of the lease contract should not be read in isolation. Rather, it should be read together with the provisions of Article VIII, Paragraph 8.13, which provide that “[a]ny amendment, alteration or modification of th[e] Contract shall not be valid and binding, unless and until made in writing and signed by the parties thereto.” It is clear from the foregoing that the intention of the parties is to subject such amendment to the conformity of both petitioner and respondent. Manila International Airport vs. Avia Filipinas International, Inc., G.R. No. 180168. February 27, 2012

Legal pre-emption; Notice requirement. Article 1623 of the Civil Code provides that the right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The written notice of sale is mandatory. This Court has long established the rule that notwithstanding actual knowledge of a co-owner, the latter is still entitled to a written notice from the selling co-owner in order to remove all uncertainties about the sale, its terms and conditions, as well as its efficacy and status. Sps. Roman Pascual and Mercedita R. Pascual,et al. vs. Sps. Antonio  Ballesteros and Lorenza Melchor-Balles,  G.R. No. 186269. February 15, 2012.

Marriage; Divorce not allowed in the Philippines; Exception based on principles of comity; Divorce must be proven as a fact.  The Supreme Court had already ruled that under the principles of comity, our jurisdiction recognizes a valid divorce obtained by a spouse of foreign nationality. This doctrine was established as early as 1985 in Van Dorn v. Romillo, Jr. wherein the SC said: “It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces, the same being considered contrary to our concept of public policy and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. In this case, the divorce in Nevada released private respondent from the marriage from the standards of American law, under which divorce dissolves the marriage.”

Nonetheless, the fact of divorce must still first be proven as the Supreme Court has enunciated in Garcia v. Recio, to wit: “Before a foreign judgment is given presumptive evidentiary value, the document must first be presented and admitted in evidence. A divorce obtained abroad is proven by the divorce decree itself. Indeed the best evidence of a judgment is the judgment itself. The decree purports to be a written act or record of an act of an official body or tribunal of a foreign country.” Merope Enriquez Vda De Catalan vs Louella A. Catalan-Lee, G.R. No. 183622. February 8, 2012.

Marriage; Presumption of conjugality of property; “Married to” is merely descriptive of the status of the owner. Pursuant to Article 160 of the Civil Code of the Philippines, all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.  Although it is not necessary to prove that the property was acquired with funds of the partnership, proof of acquisition during the marriage is an essential condition for the operation of the presumption in favor of the conjugal partnership. Not having established the time of acquisition of the property, the Dela Peñas insist that the registration thereof in the name of “Antonia R. Dela Peña, of legal age, Filipino, married to Antegono A. Dela Peña” should have already sufficiently established its conjugal nature.  Confronted with the same issue in the case Ruiz vs. Court of Appeals, the Supreme Court ruled, however, that the phrase “married to” is merely descriptive of the civil status of the wife and cannot be interpreted to mean that the husband is also a registered owner.  Because it is likewise possible that the property was acquired by the wife while she was still single and registered only after her marriage, neither would registration thereof in said manner constitute proof that the same was acquired during the marriage and, for said reason, to be presumed conjugal in nature.  “Since there is no showing as to when the property in question was acquired, the fact that the title is in the name of the wife alone is determinative of its nature as paraphernal, i.e., belonging exclusively to said spouse.” Antonia R. Dela Peña, et al. vs Gemma Remilyn C. Avila and Far East Bank & Trust Co., G.R. No. 187490., February 8, 2012.

Mortgage; Foreclosure of Mortgage; Necessary consequence of non-payment. Since foreclosure of the mortgage is but the necessary consequence of non-payment of the mortgage debt, FEBTC-BPI was, likewise, acting well within its rights as mortgagee when it foreclosed the real estate mortgage on the property upon Gemma’s failure to pay the loans secured thereby.  Executed on 26 November 1997, the mortgage predated Antonia’s filing of an Affidavit of Adverse Claim with the Register of Deeds of Marikina on 3 March 1998 and the annotation of a Notice of Lis Pendens on TCT No. 337834 on 10 December 1999.  “The mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfilment of the obligation for whose security it was constituted.”  When the principal obligation is not paid when due, the mortgagee consequently has the right to foreclose the mortgage, sell the property, and apply the proceeds of the sale to the satisfaction of the unpaid loan. Antonia R. Dela Peña, et al. vs Gemma Remilyn C. Avila and Far East Bank & Trust Co., G.R. No. 187490., February 8, 2012.

Mortgage; Third party mortgagor. Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property. The fact that the loans were solely for the benefit of TFRC would not invalidate the mortgage with respect to respondent’s property as long as valid consent was given.  Thus, when respondent executed the real estate mortgage over its properties, such properties thereby secured the performance of the principal obligation notwithstanding the fact that respondent itself had not assumed any liability for the debt of TFRC. China Banking Corporation vs. QBRO Fishing Enterprises, Inc., G.R. No. 184556, February 22, 2012.

Negligence; Contributory negligence. Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard which he is required to conform for his own protection. It is an act or omission amounting to want of ordinary care on the part of the person injured which, concurring with the defendant’s negligence, is the proximate cause of the injury.

Here, we cannot see how the respondents could have contributed to their injury when they were not even aware of the forthcoming danger. It was established during the trial that the jeepney carrying the respondents was following a ten-wheeler truck which was only about three to five meters ahead. When the truck proceeded to traverse the railroad track, Reynaldo, the driver of the jeepney, simply followed through. He did so under the impression that it was safe to proceed. It bears noting that the prevailing circumstances immediately before the collision did not manifest even the slightest indication of an imminent harm. To begin with, the truck they were trailing was able to safely cross the track. Likewise, there was no crossing bar to prevent them from proceeding or, at least, a stoplight or signage to forewarn them of the approaching peril. Thus, relying on his faculties of sight and hearing, Reynaldo had no reason to anticipate the impending danger. He proceeded to cross the track and, all of a sudden, his jeepney was rammed by the train being operated by the petitioners. Even then, the circumstances before the collision negate the imputation of contributory negligence on the part of the respondents. What clearly appears is that the accident would not have happened had the petitioners installed reliable and adequate safety devices along the crossing to ensure the safety of all those who may utilize the same. Philippine National Railways Corporation, et al. vs. Purificacion Vizcara, et al., G.R. No. 190022. February 15, 2012

Negligence; Proximate cause. The petitioners’ negligence in maintaining adequate and necessary public safety devices in the area of the accident was the proximate cause of the mishap. Thus, there is no other party to blame but the petitioners for their failure to ensure that adequate warning devices are installed along the railroad crossing. Philippine National Railways Corporation, et al. vs. Purificacion Vizcara, et al., G.R. No. 190022. February 15, 2012

Obligations; Delay. The civil law concept of delay or default commences from the time the obligor demands, judicially or extrajudicially, the fulfillment of the obligation from the obligee.   In legal parlance, demand is the assertion of a legal or procedural right. Philippine Charter Insurance Corporation vs. Central Colleges of the Philippines and Dynamic Planners and Construction Corporation, G.R. No. 180631-33. February 22, 2012.

Obligation, Extinguishment thereof; Dation in payment.  Indeed, pursuant to Article 1232 of the Civil Code, an obligation is extinguished by payment or performance. There is payment when there is delivery of money or performance of an obligation. Article 1245 of the Civil Code provides for a special mode of payment called dation in payment (dación en pago). There is dation in payment when property is alienated to the creditor in satisfaction of a debt in money. Here, the debtor delivers and transmits to the creditor the former’s ownership over a thing as an accepted equivalent of the payment or performance of an outstanding debt. In such cases, Article 1245 provides that the law on sales shall apply, since the undertaking really partakes – in one sense – of the nature of sale; that is, the creditor is really buying the thing or property of the debtor, the payment for which is to be charged against the debtor’s obligation. Dation in payment extinguishes the obligation to the extent of the value of the thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by agreement – express or implied, or by their silence – consider the thing as equivalent to the obligation, in which case the obligation is totally extinguished. Tan Shuy vs Spouses Guillermo Maulawin, et al., G.R. No. 190375. February 8, 2012.

Obligations; Surety. A surety under Article 2047 of the New Civil Code solidarily binds itself with the principal debtor to assure the fulfillment of the obligation. As provided in Article 2047, the surety undertakes to be bound solidarily with the principal obligor.  That undertaking makes a surety agreement an ancillary contract as it presupposes the existence of a principal contract.  Although the contract of a surety is in essence secondary only to a valid principal obligation, the surety becomes liable for the debt or duty of another although it possesses no direct or personal interest over the obligations nor does it receive any benefit therefrom. The surety’s obligation is not an original and direct one for the performance of his own act, but merely accessory or collateral to the obligation contracted by the principal.  Nevertheless, although the contract of a surety is in essence secondary only to a valid principal obligation, his liability to the creditor or promisee of the principal is said to be direct, primary and absolute; in other words, he is  directly and equally bound with the principal.

Suretyship, in essence, contains two types of relationship – the principal relationship between the obligee and the obligor, and the accessory surety relationship between the principal and the surety.  In this arrangement, the obligee accepts the surety’s solidary undertaking to pay if the obligor does not pay.  Such acceptance, however, does not change in any material way the obligee’s relationship with the principal obligor. Neither does it make the surety an active party to the principal obligee-obligor relationship.  Thus, the acceptance does not give the surety the right to intervene in the principal contract.  The surety’s role arises only upon the obligor’s default, at which time, it can be directly held liable by the obligee for payment as a solidary obligor. Philippine Charter Insurance Corporation vs. Central Colleges of the Philippines and Dynamic Planners and Construction Corporation, G.R. No. 180631-33. February 22, 2012.

Possession; Recovery of possession; Implied vs. constructive trust; Prescription; Acquisitive vs. extinctive prescription; Ordinary vs. extraordinary prescription. In a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary.  The relation of trustee and cestui que trust does not in fact exist, and the holding of a constructive trust is for the trustee himself, and therefore, at all times adverse. Prescription may supervene even if the trustee does not repudiate the relationship.

Prescription, as a mode of acquiring ownership and other real rights over immovable property, is concerned with lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted, and adverse.  Acquisitive prescription of real rights may be ordinary or extraordinary.

The CA correctly dismissed petitioner’s complaint as an action for reconveyance based on an implied or constructive trust prescribes in 10 years from the time the right of action accrues. This is the other kind of prescription under the Civil Code, called extinctive prescription, where rights and actions are lost by the lapse of time.  Petitioner’s action for recovery of possession having been filed 55 years after Macario occupied Dionisia’s share, it is also barred by extinctive prescription.

Ordinary acquisitive prescription requires possession in good faith and with just title for 10 years.  In extraordinary prescription, ownership and other real rights over immovable property are acquired through uninterrupted adverse possession for 30 years without need of title or of good faith. Celerino E. Mercado vs Belen Espinocilla and Ferdinand Espinocilla., G.R. No. 184109, February 1, 2012.

Public Document; Effect of notarization; Presumption of regularity. With the material contradictions in the Dela Peña’s evidence, the CA cannot be faulted for upholding the validity of the impugned 4 November 1997 Deed of Absolute Sale. Having been duly notarized, said deed is a public document which carries the evidentiary weight conferred upon it with respect to its due execution. Regarded as evidence of the facts therein expressed in a clear, unequivocal manner, public documents enjoy a presumption of regularity which may only be rebutted by evidence so clear, strong and convincing as to exclude all controversy as to falsity. The burden of proof to overcome said presumptions lies with the party contesting the notarial document like the Dela Peñas who, unfortunately, failed to discharge said onus.  Absent clear and convincing evidence to contradict the same, we find that the CA correctly pronounced the Deed of Absolute Sale was valid and binding between Antonia and Gemma. Antonia R. Dela Peña, et al. vs Gemma Remilyn C. Avila and Far East Bank & Trust Co., G.R. No. 187490. February 8, 2012 .

Quasi delict; Negligence. Negligence is the want of care required by the circumstances. It is a conduct that involves an unreasonably great risk of causing damage; or, more fully, a conduct that falls below the standard established by law for the protection of others against unreasonably great risk of harm. Not all omissions can be considered as negligent.

The test of negligence is as follows – Could a prudent man, in the case under consideration, foresee harm as a result of the course actually pursued? If so, it was the duty of the actor to take precautions to guard against that harm. Reasonable foresight of harm, followed by ignoring of the suggestion born of this prevision, is always necessary before negligence can be held to exist. Philam Insurance Company, Inc., et al. vs. Court of Appeals and D.M.  Consunji, Inc., G.R. No. 165413. February 22, 2012.

Real Estate Mortgage; Extrajudicial foreclosure sale; Recovery of unpaid balance or deficiency; Inadequacy of sale price.  Citing BPI Family Savings Bank, Inc. v. Avenido, the Supreme Court reiterated the well-entrenched rule that a creditor is not precluded from recovering any unpaid balance on the principal obligation if the extrajudicial foreclosure sale of the property subject of the real estate mortgage results in a deficiency, to wit: “It is settled that if “the proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure of mortgage, the mortgagee is entitled to claim the deficiency from the debtor. While Act No. 3135, as amended, does not discuss the mortgagee’s right to recover the deficiency, neither does it contain any provision expressly or impliedly prohibiting recovery. If the legislature had intended to deny the creditor the right to sue for any deficiency resulting from the foreclosure of a security given to guarantee an obligation, the law would expressly so provide. Absent such a provision in Act No. 3135, as amended, the creditor is not precluded from taking action to recover any unpaid balance on the principal obligation simply because he chose to extrajudicially foreclose the real estate mortgage.”

The Supreme Court ruled in Suico Rattan & Buri Interiors, Inc. v. Court of Appeals that, in deference to the rule that a mortgage is simply a security and cannot be considered payment of an outstanding obligation, the creditor is not barred from recovering the deficiency even if it bought the mortgaged property at the extrajudicial foreclosure sale at a lower price than its market value notwithstanding the fact that said value is more than or equal to the total amount of the debtor’s obligation. Thus, “it is wrong for petitioners to conclude that when respondent bank supposedly bought the foreclosed properties at a very low price, the latter effectively prevented the former from satisfying their whole obligation.  Petitioners still had the option of either redeeming the properties and, thereafter, selling the same for a price which corresponds to what they claim as the properties’ actual market value or by simply selling their right to redeem for a price which is equivalent to the difference between the supposed market value of the said properties and the price obtained during the foreclosure sale. In either case, petitioners will be able to recoup the loss they claim to have suffered by reason of the inadequate price obtained at the auction sale and, thus, enable them to settle their obligation with respondent bank. Moreover, petitioners are not justified in concluding that they should be considered as having paid their obligations in full since respondent bank was the one who acquired the mortgaged properties and that the price it paid was very inadequate. The fact that it is respondent bank, as the mortgagee, which eventually acquired the mortgaged properties and that the bid price was low is not a valid reason for petitioners to refuse to pay the remaining balance of their obligation. Settled is the rule that a mortgage is simply a security and not a satisfaction of indebtedness.” Bank of the Philippine Islands, as successor-in-Interest of Far Far East Bank & Trust Company vs  Cythia L. Reyes, G.R. No. 182769. February 1, 2012.

Res ipsa loquitur; Simple negligence; Elements of negligence; Damages. The doctrine of res ipsa loquitur as a rule of evidence is unusual to the law of negligence which recognizes that prima facie negligence may be established without direct proof and furnishes a substitute for specific proof of negligence.  The doctrine, however, is not a rule of substantive law, but merely a mode of proof or a mere procedural convenience.  The rule, when applicable to the facts and circumstances of a given case, is not meant to and does not dispense with the requirement of proof of culpable negligence on the party charged.  It merely determines and regulates what shall be prima facie evidence thereof and helps the plaintiff in proving a breach of the duty.   The doctrine can be invoked when and only when, under the circumstances involved, direct evidence is absent and not readily available. The requisites for the application of the doctrine of res ipsa loquitur are: (1) the accident was of a kind which does not ordinarily occur unless someone is negligent; (2) the instrumentality or agency which caused the injury was under the exclusive control of the person in charge; and (3) the injury suffered must not have been due to any voluntary action or contribution of the person injured.

Negligence is defined as the failure to observe for the protection of the interests of another person that degree of care, precaution, and vigilance, which the circumstances justly demand, whereby such other person suffers injury. The elements of simple negligence are: (1) that there is lack of precaution on the part of the offender, and (2) that the damage impending to be caused is not immediate or the danger is not clearly manifest

Moral damages are not punitive in nature, but are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly inflicted on a person. Intended for the restoration of the psychological or emotional status quo ante, the award of moral damages is designed to compensate emotional injury suffered, not to impose a penalty on the wrongdoer. Dr. Emmanuel Jarcia, Jr. and Dr. Marilou Bastan vs. People of the  Philippines, G.R. No. 187926. February 15, 2012.

Succession; Hereditary estate transmitted to heirs immediately after death of decedent. Under the rules of succession, the heirs instantaneously became co-owners of the Marcos properties upon the death of the President. The property rights and obligations to the extent of the value of the inheritance of a person are transmitted to another through the decedent’s death. In this concept, nothing prevents the heirs from exercising their right to transfer or dispose of the properties that constitute their legitimes, even absent their declaration or absent the partition or the distribution of the estate. In Jakosalem v. Rafols, the Supreme Court said: “Article 440 of the Civil Code provides that “the possession of hereditary property is deemed to be transmitted to the heir without interruption from the instant of the death of the decedent, in case the inheritance be accepted.” And Manresa with reason states that upon the death of a person, each of his heirs “becomes the undivided owner of the whole estate left with respect to the part or portion which might be adjudicated to him, a community of ownership being thus formed among the coowners of the estate while it remains undivided.” (3 Manresa, 357; Alcala vs. Alcala, 35 Phil. 679.) And according to article 399 of the Civil Code, every part owner may assign or mortgage his part in the common property, and the effect of such assignment or mortgage shall be limited to the portion which may be allotted him in the partition upon the dissolution of the community.” Republic of the Philippines vs Ma. Imelda “Imee” R. Marcos-Manotoc, et al., G.R. No. 171701. February 8, 2012.

Temperate damages.   Under Article 2224 of the Civil Code, temperate or moderate damages are more than nominal but less than compensatory, and may be recovered when the court finds that some pecuniary loss has been suffered, but the amount cannot, from the nature of the case, be proved with certainty.  The CA found that respondent paid for the doctor’s professional fees and incurred other hospital expenses; however, the records failed to show that he presented proof of the actual amount of expenses therein, which served as the basis for the CA to award temperate damages in the amount of P100,000.00. Wuerth Philippines, Inc. vs. Rodante Ynson, G.R. No. 175932, February 15, 2012.

Torrens Title; Doctrine of indefeasibility; Conclusiveness of title; Burden of proof; Direct attack vs. collateral attack. Prohibition against collateral attack does not apply to spurious or non-existent titles, since such titles do not enjoy indefeasibility.  “Well-settled is the rule that the indefeasibility of a title does not attach to titles secured by fraud and misrepresentation.  In view of these circumstances, it was as if no title was ever issued in this case to the petitioner and therefore this is hardly the occasion to talk of collateral attack against a title.”

“An action or proceeding is deemed an attack on a title when the object of the action is to nullify the title, and thus challenge the judgment pursuant to which the title was decreed.  The attack is direct when the object of the action is to annul or set aside such judgment, or to enjoin its enforcement.  On the other hand, it is indirect or collateral when, in an action or proceeding to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.” Heirs of Leoncio C. Oliveros, represented by Aurora B. Oliveros, et al. vs San Miguel Corporation, et al.,  G.R. No. 173531. February 1, 2012.

Void government contract; Payment for services; Quantum meruit. It has been settled in several cases that payment for services done on account of the government, but based on a void contract, cannot be avoided. The government is unjustified in denying what it owes to contractors and in leaving them uncompensated after it has benefitted from the already completed work. Jurisprudence recognizes the principle of quantum meruit. Our courts are courts of both law and equity. Given these, this Court will remain true to the rule of substantial justice and direct the payment of compensation to the contractors, who have completed their services for the government’s Mt. Pinatubo Rehabilitation Project. Otherwise, urgent actions for emergency work in the future would be discouraged. Department of Public Works and Highways vs. Ronaldo E. Quiwa, doing business under the name “R.E.Q. Construction”, et al., G.R. No. 183444. February 8, 2012.

 (Rose thanks Herschel Que, Carolyn Tan and Kay Sy for their assistance in the preparation of this post.)

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