March 2012 Philippine Supreme Court Decisions on Civil Law

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

Civil Code

Contracts; bad faith, fraud. 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 a known duty through some motive or interest or ill will that partakes of the nature of fraud. Fraud has been defined to include an inducement through insidious machination. Insidious machination refers to a deceitful scheme or plot with an evil or devious purpose. Deceit exists where the party, with intent to deceive, conceals or omits to state material facts and, by reason of such omission or concealment, the other party was induced to give consent that would not otherwise have been given. These are allegations of fact that demand clear and convincing proof. They are serious accusations that can be so conveniently and casually invoked, and that is why they are never presumed. In this case, the evidence presented is insufficient to prove that respondent acted in bad faith or fraudulently in dealing with petitioner. R.S. Tomas, Inc. v. Rizal Cement Company, Inc.; G.R. No. 173155. March 21, 2012

Contracts; rescission of contract. The rescission referred to in Article 1191 of the Civil Code, more appropriately referred to as resolution, is on the breach of faith by the defendant, which is violative of the reciprocity between the parties. The right to rescind, however, may be waived, expressly or impliedly. While the right to rescind reciprocal obligations is implied, that is, that such right need not be expressly provided in the contract, nevertheless the contracting parties may waive the same.

Hence, in spite of the existence of dispute or controversy between the parties during the course of the Subcontract Agreement, HRCC had agreed to continue the performance of its obligations pursuant to the Subcontract Agreement. In view of the provision of the Subcontract Agreement, HRCC is deemed to have effectively waived its right to effect extrajudicial rescission of its contract with FFCCI. Accordingly, HRCC, in the guise of rescinding the Subcontract Agreement, was not justified in implementing a work stoppage. F.F. Cruz & Co., Inc. vs. HR Construction Corp.; G.R. No. 187521. March 14, 2012

Contracts; void and inexistent sale not subject to ratification. As to the applicability of Article 1317 of the Civil Code, contracts of sale lacking the approval of the Secretary of the Interior/Agriculture and Natural Resources fall under the class of void and inexistent contracts enumerated in Article 1409, which cannot be ratified.  Section 18 of Act No. 1120 mandates the approval by the Secretary for a sale of friar land to be valid.

The official document denominated as “Sale Certificate” clearly required both the signatures of the Director of Lands who issued such sale certificate to an applicant settler/occupant and the Secretary of the Interior/Agriculture and Natural Resources indicating his approval of the sale. These forms had been prepared and issued by the Chief of the Bureau of Public Lands under the supervision of the Secretary of the Interior, consistent with Act No. 1120 “as may be necessary x x x to carry into effect all the provisions [thereof] that are to be administered by or under [his] direction, and for the conduct of all proceedings arising under such provisions.” Serverino M. Manotok IV, et al. vs. Heirs of Homer L. Barque, represented by Teresita Barque Hernandez; G.R. Nos. 162335 & 162605. March 6, 2012

Contracts; waiver of rights under contract. Waiver is defined as “a voluntary and intentional relinquishment or abandonment of a known existing legal right, advantage, benefit, claim or privilege, which except for such waiver the party would have enjoyed; the voluntary abandonment or surrender, by a capable person, of a right known by him to exist, with the intent that such right shall be surrendered and such person forever deprived of its benefit; or such conduct as warrants an inference of the relinquishment of such right; or the intentional doing of an act inconsistent with claiming it.”

FFCCI’s voluntary payment in favor of HRCC, albeit in amounts substantially different from those claimed by the latter, is a glaring indication that it had effectively waived its right to demand for the joint measurement of the completed works. FFCCI’s failure to demand a joint measurement of HRCC’s completed works reasonably justified the inference that it had already relinquished its right to do so. F.F. Cruz & Co., Inc. vs. HR Construction Corp.; G.R. No. 187521. March 14, 2012

Damages; loss of earning capacity. 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 deceased’s 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.

It was error for the Court of Appeals to have awarded damages for loss of earning capacity based on Nelfa’s testimony alone. First, while it is conceded that the deceased was self-employed, the Court cannot accept that in his line of work there was no documentary proof available to prove his income from such occupation. There would have been receipts, job orders, or some form of written contract or agreement between the deceased and his clients when he is contracted for a job. Second, and more importantly, decedent was not earning “less than the minimum wage” at the time of his death. Paulita “Edith” Serra vs. Nelfa T. Mumar; G.R. No. 193861. March 14, 2012

Employer; liability for damages. Under Article 2180 of the Civil Code, employers are liable for the damages caused by their employees acting within the scope of their assigned tasks. Whenever an employee’s negligence causes damage or injury to another, there instantly arises a presumption that the employer failed to exercise the due diligence of a good father of the family in the selection or supervision of its employees. The liability of the employer is direct or immediate. It is not conditioned upon prior recourse against the negligent employee and a prior showing of insolvency of such employee. Moreover, under Article 2184 of the Civil Code, if the causative factor was the driver’s negligence, the owner of the vehicle who was present is likewise held liable if he could have prevented the mishap by the exercise of due diligence.

Petitioner failed to show that she exercised the level of diligence required in supervising her driver in order to prevent the accident. She admitted that de Castro had only been her driver for one year and she had no knowledge of his driving experience or record of previous accidents. She also admitted that it was de Castro who maintained the vehicle and would even remind her “to pay the installment of the car.” Petitioner also admitted that, at the time of the accident, she did not know what was happening and only knew they bumped into another vehicle when the driver shouted. She then closed her eyes and a moment later felt something heavy fall on the roof of the car. When the vehicle stopped, petitioner left the scene purportedly to ask help from her brother, leaving the other passengers to come to the aid of her injured driver. Paulita “Edith” Serra vs. Nelfa T. Mumar; G.R. No. 193861. March 14, 2012

Interest on the judgment; 12% per annum to be computed from default, which is from judicial or extrajudicial demand. Applying Lunaria v. People, the Court of Appeals modified the appealed judgment holding petitioner liable for the amount of the dishonored check, with 12% interest per annum from the date of judicial demand until the finality of this Decision. We find the need to modify the ruling of the CA with regard to the imposition of interest on the judgment. It has been established that in the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, that is, from judicial or extrajudicial demand under and subject to the provisions of Article 1169of the Civil Code. In Ongson v. People, we held that interest began to run from the time of the extrajudicial demand, as duly proved by the creditor. Thus, petitioner should also be held liable for the amount of the dishonored check, which is ₱1,500,000, plus 12% legal interest covering the period from the date of the receipt of the demand letter on 14 May 1999 to the finality of this Decision. The total amount due in the dispositive portion of the CA’s Decision, inclusive of interest, shall further earn 12% interest per annum from the finality of this Decision until fully paid. Eleanor De Leon Llenado vs. People of the Philippines and Editha Villaflores. G.R. No. 193279. March 14, 2012

Nuisance per se vs. nuisance per accidens; only nuisance per se may be summarily abated without judicial intervention. If petitioner indeed found respondents’ fence to have encroached on the sidewalk, his remedy is not to demolish the same summarily after respondents failed to heed his request to remove it.  Instead, he should go to court and prove respondents’ supposed violations in the construction of the concrete fence.  Indeed, unless a thing is a nuisance per se, it may not be abated summarily without judicial intervention.

Respondents’ fence is not a nuisance per se.  By its nature, it is not injurious to the health or comfort of the community.  It was built primarily to secure the property of respondents and prevent intruders from entering it. And as correctly pointed out by respondents, the sidewalk still exists.  If petitioner believes that respondents’ fence indeed encroaches on the sidewalk, it may be so proven in a hearing conducted for that purpose.  Not being a nuisance per se, but at most a nuisance per accidens, its summary abatement without judicial intervention is unwarranted. Jaime S. Perez, both in his personal and official capacity as Chief, Marikina Demolition Office vs. Spouses Fortunito L. Madrona and Yolanda B. Pante; G.R. No. 184478. March 21, 2012

Special Laws

Act No. 1120 See digest of Serverino M. Manotok IV, et al. vs. Heirs of Homer L. Barque, represented by Teresita Barque Hernandez; G.R. Nos. 162335 & 162605. March 6, 2012, under heading of Contracts.

(Rose thanks Rommell D. Lumagui for assisting in the preparation of this post.)