September 2012 Philippine Supreme Court Decisions on Civil Law

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

Civil Code

Contracts; capacity. Contracting parties must be juristic entities at the time of the consummation of the contract. Stated otherwise, to form a valid and legal agreement it is necessary that there be a party capable of contracting and a party capable of being contracted with. Hence, if any one party to a supposed contract was already dead at the time of its execution, such contract is undoubtedly simulated and false and, therefore, null and void by reason of its having been made after the death of the party who appears as one of the contracting parties therein. The death of a person terminates contractual capacity. De Belen Vda. de Cabalu, et al. v. Tabu, et al.; G.R. No. 188417. September 24, 2012

Contracts; future inheritance; contractual capacity – Under Article 1347 of the Civil Code, no contract may be entered into upon future inheritance except in cases expressly authorized by law. Paragraph 2 of Article 1347 characterizes a contract entered into upon future inheritance as void. The law applies when the following requisites concur: (1) the succession has not yet been opened; (2) the object of the contract forms part of the inheritance; and (3) the promissor has, with respect to the object, an expectancy of a right which is purely hereditary in nature. De Belen Vda. de Cabalu, et al. v. Tabu, et al.; G.R. No. 188417. September 24, 2012

Lease; implied new lease – An implied new lease will set in if it is shown that: (1) the term of the original contract of lease has expired; (2) the lessor has not given the lessee a notice to vacate; and (3) the lessee continued enjoying the thing leased for 15 days with the acquiescence of the lessor. This acquiescence may be inferred from the failure of the lessor to serve notice to vacate upon the lessee. This principle is provided for under Article 1670 of the Civil Code. Thus, after the expiration of the contract of lease, the implied new lease should have only been in a monthly basis. Zosima Inc. v. Salimbagat; G.R. No. 174376. September 12, 2012

Mortgage; requisites for validity – Article 2085 of the Civil Code provides that a mortgage contract, to be valid, must have the following requisites: (a) that it be constituted to secure the fulfillment of a principal obligation; (b) that the mortgagor be the absolute owner of the thing mortgaged; and (c) that the persons constituting the mortgage have free disposal of their property, and in the absence of free disposal, that they be legally authorized for the purpose. Philippine National Bank v. Sps. Reblando; G.R. No. 194014. September 12, 2012

Obligations; solidary obligations; surety not an indispensable party – Records show that when DMI secured the surety and performance bonds from respondent in compliance with petitioner’s requirement, respondent bound itself “jointly and severally” with DMI for the damages and actual loss that petitioner may suffer should DMI fail to perform its obligations under the Agreement. The term “jointly and severally” expresses a solidary obligation granting petitioner, as creditor, the right to proceed against its debtors, i.e., respondent or DMI.

The nature of the solidary obligation under the surety does not make one an indispensable party.  An indispensable party is a party-in-interest without whom no final determination can be had of an action, and who shall be joined mandatorily either as plaintiffs or defendants. The presence of indispensable parties is necessary to vest the court with jurisdiction, thus, without their presence to a suit or proceeding, the judgment of a court cannot attain real finality. The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present. Living@Sense, Inc. v. Malayan Insurance Company, Inc.; G.R. No. 193753. September 26, 2012

Prescription; actions; attorney’s fees – We agree with the trial and appellate courts, for as the records bear, that the ten (10)-year prescriptive period to file an action based on the subject promissory notes was interrupted by the several letters exchanged between the parties. This is in conformity with the second and third circumstances under Article 1155 of the New Civil Code (NCC) which provides that the prescription of actions is interrupted when: (1) they are filed before the court; (2) there is a written extrajudicial demand by the creditors; and (3) there is any written acknowledgment of the debt by the debtor.

Regarding the award of attorney’s fees, the applicable provision is Article 2208(2) of the NCC which allows the grant thereof when the defendants’ act or omission compelled the plaintiff to litigate or to incur expenses to protect its interest. Considering the circumstances that led to the filing of the complaint in court, and the clear refusal of the petitioners to satisfy their existing debt to the bank despite the long period of time and the accommodations granted to it by the respondent to enable them to satisfy their obligations, we agree that the respondent was compelled by the petitioners’ acts to litigate for the protection of the bank’s interests, making the award of attorney’s fees proper. Magdiwang Realty Corp., et al. v. Manila Banking Corp.; G.R. No. 195592. September 5, 2012

Publication requirement; laws – The publication requirement covers not only statutes but administrative regulations and issuances, as clearly outlined in Tañada v.Tuvera. As opposed to Honasan II v. The Panel of Investigating Prosecutors of the Department of Justice, where the Court held that OMB-DOJ Joint Circular No. 95-001 is only an internal arrangement between the DOJ and the Office of the Ombudsman outlining the authority and responsibilities among prosecutors of both offices in the conduct of preliminary investigation, the assailed Joint Committee’s Rules of Procedure regulate not only the prosecutors of the DOJ and the Comelec but also the conduct and rights of persons, or the public in general. The publication requirement should, therefore, not be ignored.

Publication is a necessary component of procedural due process to give as wide publicity as possible so that all persons having an interest in the proceedings may be notified thereof. The requirement of publication is intended to satisfy the basic requirements of due process. It is imperative for it will be the height of injustice to punish or otherwise burden a citizen for the transgressions of a law or rule of which he had no notice whatsoever. Arroyo v. Dep’t of Justice; G.R. No. 199082/G.R. No. 199085/G.R. No. 199118. September 18, 2012

Publication requirement; regulations – Publication is a basic postulate of procedural due process. The purpose of publication is to duly inform the public of the contents of the laws which govern them and regulate their activities. Article 2 of the Civil Code, as amended by Section 1 of Executive Order No. 200, states that “[l]aws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.” Section 18, Chapter 5, Book I of Executive Order No. 292 or the Administrative Code of 1987 similarly provides that “[l]aws shall take effect after fifteen (15) days following the completion of their publication in the Official Gazette or in a newspaper of general circulation, unless it is otherwise provided.”

Procedural due process demands that administrative rules and regulations be published in order to be effective. There are, however, several exceptions to the requirement of publication. First, an interpretative regulation does not require publication in order to be effective. The applicability of an interpretative regulation “needs nothing further than its bare issuance for it gives no real consequence more than what the law itself has already prescribed.” It “add[s] nothing to the law” and “do[es] not affect the substantial rights of any person.” Second, a regulation that is merely internal in nature does not require publication for its effectivity. It seeks to regulate only the personnel of the administrative agency and not the general public. Third, a letter of instruction issued by an administrative agency concerning rules or guidelines to be followed by subordinates in the performance of their duties does not require publication in order to be effective. Asociation of Southern Tagalog Electric Cooperatives, Inc., et al. v. Energy Regulatory Commission; G.R. No. 192117/G.R. No. 192118. September 18, 2012

Tort; medical negligence; requisites; doctors not guarantors of care – The type of lawsuit which has been called medical malpractice or, more appropriately, medical negligence, is that type of claim which a victim has available to him or her to redress a wrong committed by a medical professional which has caused bodily harm. In order to successfully pursue such a claim, a patient must prove that a health care provider, in most cases a physician, either failed to do something which a reasonably prudent health care provider would have done, or that he or she did something that a reasonably prudent provider would not have done; and that the failure or action caused injury to the patient. Stated otherwise, the complainant must prove: (1) that the health care provider, either by his act or omission, had been negligent, and (2) that such act or omission proximately caused the injury complained of.

In medical negligence cases, it is settled that the complainant has the burden of establishing breach of duty on the part of the doctors or surgeons. It must be proven that such breach of duty has a causal connection to the resulting death of the patient. A verdict in malpractice action cannot be based on speculation or conjecture. Causation must be proven within a reasonable medical probability based upon competent expert testimony.

Doctors are protected by a special law. They are not guarantors of care. They do not even warrant a good result. They are not insurers against mishaps or unusual consequences. Furthermore, they are not liable for honest mistake of judgment. Cereno v. Court of Appeal,s et al.; G.R. No. 167366. September 26, 2012

Unjust enrichment; implied trusts –The statutory basis for unjust enrichment is found in Article 22 of the Civil Code, which provides:

Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

Under the foregoing provision, 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. GSIS, et al. v. COA, et al.; G.R. No. 162372. September 11, 2012

Special Laws

Contracts; rescission – R.A. No. 6552 (or the Realty Installment Buyer Act) recognizes the right of the seller to cancel the contract but any such cancellation must be done in conformity with the requirements therein prescribed. In addition to the notarial act of rescission, the seller is required to refund to the buyer the cash surrender value of the payments on the property. The actual cancellation of the contract can only be deemed to take place upon the expiry of a 30-day period following the receipt by the buyer of the notice of cancellation or demand for rescission by a notarial act and the full payment of the cash surrender value. Planters Dev’t Bank v. Chandumal; G.R. No. 195619. September 5, 2012.

(Rose thanks Earla Langit for assisting in the preparation of this post.)