July 2013 Philippine Supreme Court Decisions on Civil Law

Here are select July 2013 rulings of the Supreme Court of the Philippines in civil law:

Civil Code

Agency; 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 Training’s 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 agent’s 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 Revelen’s 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 ship’s tackle. Being the custodian of the goods discharged from a vessel, an arrastre operator’s 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 operator’s 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.

Attorney’s fees; dual concept. In order to resolve the issues in this case, it is necessary to discuss the two concepts of attorney’s 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.

Attorney’s fees for professional services rendered; may be claimed in the very action itself or in a separate action; prescription for oral contract of attorney’s 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 attorney’s fees for professional services be recovered? (2) When can an action for attorney’s 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 respondent’s present claim for attorney’s 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 attorney’s 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 attorney’s fees as an incident of the main action may be availed of only when something is due to the client. Attorney’s 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 attorney’s fees only arises when something has been recovered from which the fee is to be paid. While a claim for attorney’s 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 lawyer’s claim for attorney’s fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. Of course, a petition for attorney’s 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 award’s 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 attorney’s 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 Attorney’s 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 attorney’s 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 petitioner’s legal representation. For this reason, petitioner’s cause of action began to run only from the time the respondents refused to pay him his attorney’s fees, as similarly held in the case of Anido v. Negado.

With respect to petitioner’s entitlement to the claimed attorney’s fees, it is the Court’s 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 attorney’s professional fees in the absence of an express agreement. The recovery of attorney’s 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 client’s 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.

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

Attorney’s fees; when recoverable. The Court of Appeals rightfully upheld the NLRC’s affirmance of the grant of attorney’s 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 attorney’s 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 petitioner’s refusal to reinstate San Miguel with backwages and other benefits to which he had been legally entitled was unjustified, thereby entitling him to recover attorney’s fees. Zuellig Freight and Cargo Systems v. National Labor Relations Commission, et al., G.R. No. 157900, July 22, 2013 

Attorney’s fees; when recoverable. With respect to the award of attorney’s fees, Article 2208 of the Civil Code provides, among others, that such fees may be recovered when exemplary damages are awarded, when the defendant’s 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 Glenda’s 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 RTC’s factual finding that Lourdes was willing and able to pay her obligation – a conclusion arrived at in connection with the said court’s 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 Bonrostro’s 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 RTC’s 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 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. People of the Philippines v. Garry Vergara y Oriel and Joseph Incencio y Paulino, G.R. No. 177763, July 3, 2013 

Damages; 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 victim’s heirs. The Supreme Court sustained the RTC’s award for moral damages in the amount of P50,000.00 even in the absence of proof of mental and emotional suffering of the victim’s 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 victim’s 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 Court’s 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 one’s 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 one’s rights, but also in the performance of one’s 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 Court’s 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 Marañon, 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 Marañon 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 Marañon, 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 CA’s ruling that respondent’s 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. No.192896, July 24, 2013.

Rent; civil fruit; rightful recipient. Rent is a civil fruit that belongs to the owner of the property producing it by right of accession. The rightful recipient of the disputed rent in this case should thus be the owner of the subject lot at the time the rent accrued. Philippine National Bank v. Sps. Bernard and Cresencia Marañon, G.R.No. 189316, July 1, 2013.

Subrogation; basis; definition. Consistent with the pertinent law and jurisprudence, therefore, Exhibit I was already enough by itself to prove the payment of P7,455,421.00 as the full settlement of Caltex’s claim. The payment made to Caltex as the insured being thereby duly documented, respondent became subrogated as a matter of course pursuant to Article 2207 of the Civil Code. In legal contemplation, subrogation is the “substitution of another person in the place of the creditor, to whose rights he succeeds in relation to the debt;” and is “independent of any mere contractual relations between the parties to be affected by it, and is broad enough to cover every instance in which one party is required to pay a debt for which another is primarily answerable, and which in equity and conscience ought to be discharged by the latter.” Vector Shipping Corporation, et al. v. American Home Assurance Co., et al., G.R. No. 159213, July 3, 2013.

Subrogation in insurance cases; accrues simply upon payment by the insurance company of the insurance claim; payment by the insurer to the insured operates as an equitable assignment to the insurer of all remedies that the insured may have against the third party whose negligence or wrongful act caused the loss. The Court holds that petitioner Philam has adequately established the basis of its claim against petitioners ATI and Westwind. Philam, as insurer, was subrogated to the rights of the consignee, Universal Motors Corporation, pursuant to the Subrogation Receipt executed by the latter in favor of the former. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim. Petitioner Philam’s action finds support in Article 2207 of the Civil Code, which provides as follows:

Art. 2207. If the plaintiff’s property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. x x x.

Yet, even with the exclusion of Marine Certificate No. 708-8006717-4, the Subrogation Receipt, on its own, is adequate proof that petitioner Philam paid the consignee’s claim on the damaged goods. Petitioners ATI and Westwind failed to offer any evidence to controvert the same. In Malayan Insurance Co., Inc. v. Alberto, the Court explained the effect of payment by the insurer of the insurance claim in this wise:

We have held that payment by the insurer to the insured operates as an equitable assignment to the insurer of all the remedies that the insured may have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any privity of contract. It accrues simply upon payment by the insurance company of the insurance claim. The doctrine of subrogation has its roots in equity. It is designed to promote and accomplish justice; and is the mode that equity adopts to compel the ultimate payment of a debt by one who, in justice, equity, and good conscience, ought to pay. 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.

Tender of payment; concept; tender of payment, if refused without just cause, will discharge the debtor only after a valid consignation with the court; when tender of payment is not accompanied by the means of payment, and the debtor did not take any immediate step to make a consignation, then interest is not suspended from the time of such tender. Tender of payment “is the manifestation by the debtor of a desire to comply with or pay an obligation. If refused without just cause, the tender of payment will discharge the debtor of the obligation to pay but only after a valid consignation of the sum due shall have been made with the proper court.” “Consignation is the deposit of the [proper amount with a judicial authority] in accordance with rules prescribed by law, after the tender of payment has been refused or because of circumstances which render direct payment to the creditor impossible or inadvisable.”

“Tender of payment, without more, produces no effect.” “[T]o have the effect of payment and the consequent extinguishment of the obligation to pay, the law requires the companion acts of tender of payment and consignation.”

As to the effect of tender of payment on interest, noted civilist Arturo M. Tolentino explained as follows:

When a tender of payment is made in such a form that the creditor could have immediately realized payment if he had accepted the tender, followed by a prompt attempt of the debtor to deposit the means of payment in court by way of consignation, the accrual of interest on the obligation will be suspended from the date of such tender. But when the tender of payment is not accompanied by the means of payment, and the debtor did not take any immediate step to make a consignation, then interest is not suspended from the time of such tender. x x x x (Emphasis supplied) Sps. Nameal and Lourdes Bonrostro v. Sps. Juan and Constacia Luna, G.R. No.172346, July 24, 2013.

Special Laws

Act No. 3135; foreclosure sale; personal notice to the mortgagor in extrajudicial foreclosure proceedings is necessary where there is a stipulation to this effect, and failure to comply with the stipulated notice requirement is a contractual breach sufficient to render the foreclosure sale null and void. It has been consistently held that unless the parties stipulate, “personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary” because Section 3117 of Act 3135 only requires the posting of the notice of sale in three public places and the publication of that notice in a newspaper of general circulation.

In this case, the parties stipulated in paragraph 11 of the Mortgage that:

11. All correspondence relative to this mortgage, including demand letters, summons, subpoenas, or notification of any judicial or extra-judicial action shall be sent to the Mortgagor at xxx or at the address that may hereafter be given in writing by the Mortgagor or the Mortgagee;

However, no notice of the extrajudicial foreclosure was sent by DBP to petitioners about the foreclosure sale scheduled on July 11, 1994. The letters dated January 28, 1994 and March 11, 1994 advising petitioners to immediately pay their obligation to avoid the impending foreclosure of their mortgaged properties are not the notices required in paragraph 11 of the Mortgage. The failure of DBP to comply with their contractual agreement with petitioners, i.e., to send notice, is a breach sufficient to invalidate the foreclosure sale. Carlos Lim, et al. v. Development Bank of the Philippines, G.R. No. 177050, July 1, 2013.

Bases Conversion Development Authority (BCDA); BCDA holds title to Fort Bonifacio; Dream Village sits on the abandoned C-5 Road, which lies outside the areas declared in Proclamation Nos. 2476 and 172 as alienable and disposable. That the BCDA has title to Fort Bonifacio has long been decided with finality. In Samahan ng Masang Pilipino sa Makati, Inc. v. BCDA, it was categorically ruled as follows:

First, it is unequivocal that the Philippine Government, and now the BCDA, has title and ownership over Fort Bonifacio. The case of Acting Registrars of Land Titles and Deeds of Pasay City, Pasig and Makati is final and conclusive on the ownership of the then Hacienda de Maricaban estate by the Republic of the Philippines. Clearly, the issue on the ownership of the subject lands in Fort Bonifacio is laid to rest. Other than their view that the USA is still the owner of the subject lots, petitioner has not put forward any claim of ownership or interest in them. Dream Village Neighborhood Association, Inc., represented by its Incumbent President Greg Seriego v. Bases Conversion Development Authority, G.R. No.192896, July 24, 2013. 

Common Carrier; Carriage of Goods by Sea Act (COGSA); prescriptive period for filing an action for loss or damage of goods. The prescriptive period for filing an action for the loss or damage of the goods under the COGSA is found in paragraph (6), Section 3, thus:

(6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three days of the delivery. Said notice of loss or damage maybe endorsed upon the receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection.

In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered: Provided, That if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered. 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.

Common Carrier; Carriage of Goods by Sea Act (COGSA); prescriptive period for filing an action for loss or damage of goods. The prescriptive period for filing an action for the loss or damage of the goods under the COGSA is found in paragraph (6), Section 3, thus:

(6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three days of the delivery. Said notice of loss or damage maybe endorsed upon the receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection.

In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered: Provided, That if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered.  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.

Family Code; marriage; void ab initio for lack of a marriage license; no inconsistency in finding the marriage null and void ab initio and, at the same time, non-existent; contracts which are absolutely simulated or fictitious are inexistent and void from the beginning. There is no inconsistency in finding the marriage between Benjamin and Sally null and void ab initio and, at the same time, non-existent. Under Article 35 of the Family Code, a marriage solemnized without a license, except those covered by Article 34 where no license is necessary, “shall be void from the beginning.” In this case, the marriage between Benjamin and Sally was solemnized without a license. It was duly established that no marriage license was issued to them and that Marriage License No. N-07568 did not match the marriage license numbers issued by the local civil registrar of Pasig City for the month of February 1982. The case clearly falls under Section 3 of Article 3520 which made their marriage void ab initio. The marriage between Benjamin and Sally was also non-existent. Applying the general rules on void or inexistent contracts under Article 1409 of the Civil Code, contracts which are absolutely simulated or fictitious are “inexistent and void from the beginning.” Thus, the Court of Appeals did not err in sustaining the trial court’s ruling that the marriage between Benjamin and Sally was null and void ab initio and non-existent. Sally Go-Bangayan v. Benjamin Bangayan, Jr., G.R. No. 201061, July 3, 2013.

Family Code; marriage license; certification from the local civil registrar is adequate to prove the non-issuance of a marriage license and, absent any suspicious circumstance, the certification enjoys probative value. The certification from the local civil registrar is adequate to prove the non-issuance of a marriage license and absent any suspicious circumstance, the certification enjoys probative value, being issued by the officer charged under the law to keep a record of all data relative to the issuance of a marriage license. Sally Go-Bangayan v. Benjamin Bangayan, Jr., G.R. No. 201061, July 3, 2013.

Family Code; property relations in cases of cohabitation without the benefit of marriage; rules. The Court of Appeals correctly ruled that the property relations of Benjamin and Sally is governed by Article 148 of the Family Code which states:

Art. 148. In cases of cohabitation not falling under the preceding Article, only the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credit.

If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community of conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly married to another, his or her share shall be forfeited in the manner provided in the last paragraph of the preceding Article.

The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith.

Benjamin and Sally cohabitated without the benefit of marriage. Thus, only the properties acquired by them through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions.  Sally Go-Bangayan v. Benjamin Bangayan, Jr., G.R. No. 201061, July 3, 2013.

Land ownership; decree of registration for which an OCT was issued is accorded greater weight as against tax declarations and tax receipts in the name of another; tax declarations and tax receipts only become the basis of a claim of ownership when coupled with proof of actual possession of property. In the case of Ferrer-Lopez v. CA, the Court ruled that as against an array of proofs consisting of tax declarations and/or tax receipts which are not conclusive evidence of ownership nor proof of the area covered therein, an original certificate of title, which indicates true and legal ownership by the registered owners over the disputed premises, must prevail. Accordingly, respondents’ Decree No. 98992 for which an original certificate of title was issued should be accorded greater weight as against the tax declarations and tax receipts presented by petitioners in this case. Besides, tax declarations and tax receipts may only become the basis of a claim for ownership when they are coupled with proof of actual possession of the property. Heirs of Alejandra Delfin, namely, Leopoldo Delfin, et al. v. Avelina Rabadon, G.R. No. 165014, July 31, 2013.

Land registration; decree of registration bars all claims and rights which arose or may have existed prior to the decree of registration. It is an elemental rule that a decree of registration bars all claims and rights which arose or may have existed prior to the decree of registration. By the issuance of the decree, the land is bound and title thereto quieted, subject only to certain exceptions under the property registration decree. Heirs of Alejandra Delfin, namely, Leopoldo Delfin, et al. v. Avelina RabadonG.R. No. 165014, July 31, 2013.

Republic Act No. 26; reconstitution of title; nature of proceeding; Torrens system; sources of reconstitution; mandatory requirements of publication, posting, and notice. At the outset, the Court notes that the present amended petition for reconstitution is anchored on the owner’s duplicate copy of TCT No. 8240 – a source for reconstitution of title under Section 3(a)29 of RA 26 which, in turn, is governed by the provisions of Section 10 in relation to Section 9 of RA 26 with respect to the publication, posting, and notice requirements. Section 10 reads:

SEC. 10. Nothing hereinbefore provided shall prevent any registered owner or person in interest from filing the petition mentioned in section five of this Act directly with the proper Court of First Instance, based on sources enumerated in sections 2(a), 2(b), 3(a), 3(b), and/or 4(a) of this Act: Provided, however, That the court shall cause a notice of the petition, before hearing and granting the same, to be published in the manner stated in section nine hereof: And, provided, further, That certificates of title reconstituted pursuant to this section shall not be subject to the encumbrance referred to in section seven of this Act.

Corollarily, Section 9 reads in part:

SEC. 9. x x x Thereupon, the court shall cause a notice of the petition to be published, at the expense of the petitioner, twice in successive issues of the Official Gazette, and to be posted on the main entrance of the provincial building and of the municipal building of the municipality or city in which the land lies, at least thirty days prior to the date of hearing, and after hearing, shall determine the petition and render such judgment as justice and equity may require. x x x.

The foregoing provisions, therefore, clearly require that (a) notice of the petition should be published in two (2) successive issues of the Official Gazette; and (b) publication should be made at least thirty (30) days prior to the date of hearing. Substantial compliance with this jurisdictional requirement is not enough; it bears stressing that the acquisition of jurisdiction over a reconstitution case is hinged on a strict compliance with the requirements of the law. Republic of the Philippines v. Ricordito N. De Asis, Jr., G.R. No. 193874, July 24, 2013.

Torrens system; the issue on the validity of title necessitates a remand of the case. The Court recognizes the importance of protecting the country’s Torrens system from fake land titles and deeds. Considering that there is an issue on the validity of the title of petitioner VSD, which title is alleged to be traceable to OCT No. 994 registered on April 19, 1917, which mother title was held to be inexistent in Manotok Realty, Inc. v. CLT Realty Development Corporation, in the interest of justice, and to safeguard the correct titling of properties, a remand is proper to determine which of the parties derived valid title from the legitimate OCT No. 994 registered on May 3, 1917. Since this Court is not a trier of facts and not capacitated to appreciate evidence of the first instance, the Court may remand this case to the Court of Appeals for further proceedings, as it has been similarly tasked in Manotok Realty, Inc. v. CLT Realty Development Corporation. VSD Realty & Development Corporation v. Uniwide Sales, Inc. and Dolores Baello Tejada, G.R. No. 170677, July 31, 2013

Torrens system; Torrens title; lands under a Torrens title cannot be acquired by prescription or adverse possession. Moreover, it is a settled rule that lands under a Torrens title cannot be acquired by prescription or adverse possession. Section 47 of P.D. No. 1529, the Property Registration Decree, expressly provides that no title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession. And, although the registered landowner may still lose his right to recover the possession of his registered property by reason of laches, nowhere has Dream Village alleged or proved laches, which has been defined as such neglect or omission to assert a right, taken in conjunction with lapse of time and other circumstances causing prejudice to an adverse party, as will operate as a bar in equity. Put any way, it is a delay in the assertion of a right which works disadvantage to another because of the inequity founded on some change in the condition or relations of the property or parties. It is based on public policy which, for the peace of society, ordains that relief will be denied to a stale demand which otherwise could be a valid claim. Dream Village Neighborhood Association, Inc., represented by its Incumbent President Greg Seriego v. Bases Conversion Development Authority, G.R. No.192896, July 24, 2013.

(Rose thanks Earla, Frances and Rory for assisting in the preparation of this post.)

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