Here are seclect December 2013 rulings of the Supreme Court of the Philippines on civil law:
Contracts; concept of contracts. A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it. The real nature of a contract may be determined from the express terms of the written agreement and from the contemporaneous and subsequent acts of the contracting parties. However, in the construction or interpretation of an instrument, the intention of the parties is primordial and is to be pursued. The denomination or title given by the parties in their contract is not conclusive of the nature of its contents. ACE Foods, Inc. v. Micro Pacific Technologies Co., Ltd., G.R. No. 200602, December 11, 2013.
Contracts; contract of loan; interest stipulated; reduced for being iniquitous and unconscionable. Parties to a loan contract have wide latitude to stipulate on any interest rate in view of the Central Bank Circular No. 905 s. 1982 which suspended the Usury Law ceiling on interest effective January 1, 1983. It is, however, worth stressing that interest rates whenever unconscionable may still be declared illegal. There is nothing in the circular which grants lenders carte blanche authority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets.In Menchavez v. Bermudez, the interest rate of 5% per month, which when summed up would reach 60% per annum, is null and void for being excessive, iniquitous, unconscionable and exorbitant, contrary to morals, and the law. Florpina Benvidez v. Nestor Salvador, G.R. No. 173331, December 11, 2013.
Damages; award of costs; when entitled. Costs shall be allowed to the prevailing party as a matter of course unless otherwise provided in the Rules of Court. The costs Ramirez may recover are those stated in Section 10, Rule 142 of the Rules of Court. For instance, Ramirez may recover the lawful fees he paid in docketing his action for annulment of sale before the trial court. The court adds thereto the amount of P3,530 or the amount of docket and lawful fees paid by Ramirez for filing this petition before this Court. 35(35) The court deleted the award of moral and exemplary damages; hence, the restriction under Section 7, Rule 142 of the Rules of Courtwould have prevented Ramirez to recover any cost of suit. But the court certifies, in accordance with said Section 7, that Ramirez’s action for annulment of sale involved a substantial and important right such that he is entitled to an award of costs of suit. Needless to stress, the purpose of paragraph N of the real estate mortgage is to apprise the mortgagor, Ramirez, of any action that the mortgagee-bank might take on the subject properties, thus according him the opportunity to safeguard his rights. Jose T. Ramirez v. The Manila Banking Corporation, G.R. No. 198800, December 11, 2013.
Damages; exemplary damages; when entitled. No exemplary damages can be awarded since there is no basis for the award of moral damages and there is no award of temperate, liquidated or compensatory damages.Exemplary damages are imposed by way of example for the public good, in addition to moral, temperate, liquidated or compensatory damages. Jose T. Ramirez v. The Manila Banking Corporation, G.R. No. 198800, December 11, 2013.
Damages; moral damages; when entitled. Nothing supports the trial court’s award of moral damages. There was no testimony of any physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury suffered by Ramirez. The award of moral damages must be anchored on a clear showing that Ramirez actually experienced mental anguish, besmirched reputation, sleepless nights, wounded feelings or similar injury. Ramirez’s testimony is also wanting as to the moral damages he suffered. Jose T. Ramirez v. The Manila Banking Corporation, G.R. No. 198800, December 11, 2013.
Foreclosure; extrajudicial foreclosure; notice of extrajudicial foreclosure proceedings not necessary unless stipulated by the parties. In Carlos Lim, et al. v. Development Bank of the Philippines, the court held that unless the parties stipulate, personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary because Section 3 of Act No. 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 N of the real estate mortgage that all correspondence relative to the mortgage including notifications of extrajudicial actions shall be sent to mortgagor Ramirez at his given address. Respondent had no choice but to comply with this contractual provision it has entered into with Ramirez. The contract is the law between them. Hence, the court cannot agree with the bank that paragraph N of the real estate mortgage does not impose an additional obligation upon it to provide personal notice of the extrajudicial foreclosure sale to the mortgagor Ramirez. Jose T. Ramirez v. The Manila Banking Corporation, G.R. No. 198800, December 11, 2013.
Foreclosure of mortgage; proceeds; obligations covered. The petitioner contends that there was no excess or surplus that needs to be returned to the respondent because her other outstanding obligations and those of her attorney-in-fact were paid out of the proceeds.
The relevant provision, Section 4 of Rule 68 of the Rules of Civil Procedure, mandates that:
Section 4. Disposition of proceeds of sale. — The amount realized from the foreclosure sale of the mortgaged property shall, after deducting the costs of the sale, be paid to the person foreclosing the mortgage, and when there shall be any balance or residue, after paying off the mortgage debt due, the same shall be paid to junior encumbrancers in the order of their priority, to be ascertained by the court, or if there be no such encumbrancers or there be a balance or residue after payment to them, then to the mortgagor or his duly authorized agent, or to the person entitled to it.
Thus, in the absence of any evidence showing that the mortgage also covers the other obligations of the mortgagor, the proceeds from the sale should not be applied to them. Philippine Bank of Communication v. Mary Ann O. Yeung, G.R. No. 179691, December 4, 2013.
Laches; concept of. Well settled is the rule that the elements of laches must be proven positively. Laches is evidentiary in nature, a fact that cannot be established by mere allegations in the pleadings and cannot be resolved in a motion to dismiss. At this stage therefore, the dismissal of the complaint on the ground of laches is premature. Those issues must be resolved at the trial of the case on the merits, wherein both parties will be given ample opportunity to prove their respective claims and defenses. Modesto Sanchez v. Andrew Sanchez, G.R. No. 187661, December 4, 2013.
Mortgage; redemption period; reckoning of the period of redemption by the mortgagor or his successor-in-interest starts from the registration of the sale in the Register of Deeds. The reckoning of the period of redemption by the mortgagor or his successor-in-interest starts from the registration of the sale in the Register of Deeds. Although Section 6 of Act No. 3135, as amended, specifies that the period of redemption starts from and after the date of the sale, jurisprudence has since settled that such period is more appropriately reckoned from the date of registration.United Coconut Planters Bank v. Christopher Lumbo and Milagros Lumbo, G.R. No. 162757, December 11, 2013.
Obligations; force majeure; concept of force majeure. Anent petitioners’ reliance on force majeure, suffice it to state that Peakstar’s breach of its obligations to Metro Concast arising from the MoA cannot be classified as a fortuitous event under jurisprudential formulation.
Fortuitous events by definition are extraordinary events not foreseeable or avoidable. It is therefore, not enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee the same.
To constitute a fortuitous event, the following elements must concur: (a) the cause of the unforeseen and unexpected occurrence or of the failure of the debtor to comply with obligations must be independent of human will; (b) it must be impossible to foresee the event that constitutes the caso fortuito or, if it can be foreseen, it must be impossible to avoid; (c) the occurrence must be such as to render it impossible for the debtor to fulfill obligations in a normal manner; and, (d) the obligor must be free from any participation in the aggravation of the injury or loss. Metro Concast Steel Corp., Spouses Jose S. Dychiao and Tiu Oh Yan, et al. v. Allied Bank Corporation, G.R. No. 177921, December 4, 2013.
Obligations; modes of extinguishment. Article 1231 of the Civil Code states that obligations are extinguished either by payment or performance, the loss of the thing due, the condonation or remission of the debt, the confusion or merger of the rights of creditor and debtor, compensation or novation. Metro Concast Steel Corp., Spouses Jose S. Dychiao and Tiu Oh Yan, et al. v. Allied Bank Corporation, G.R. No. 177921, December 4, 2013.
Obligations; novation; extinctive novation distinguished from modificatory novation.To be sure, novation, in its broad concept, may either be extinctive or modificatory. It is extinctive when an old obligation is terminated by the creation of a new obligation that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory agreement. In either case, however, novation is never presumed, and the animus novandi, whether totally or partially, must appear by express agreement of the parties, or by their acts that are too clear and unequivocal to be mistaken. ACE Foods, Inc. v. Micro Pacific Technologies Co., Ltd., G.R. No. 200602, December 11, 2013.
Property; action for reconveyance; prescriptive period; exception. The Court likewise takes note that Paraguya’s complaint is likewise in the nature of an action for reconveyance because it also prayed for the trial court to order Sps. Crucillo to “surrender ownership and possession of the properties in question to [Paraguya], vacating them altogether . . . .” Despite this, Paraguya’s complaint remains dismissible on the same ground because the prescriptive period for actions for reconveyance is ten (10) years reckoned from the date of issuance of the certificate of title, except when the owner is in possession of the property, in which case the action for reconveyance becomes imprescriptible. Laura F. Paraguya v. Sps. Alma Escurel-Crucillo and Emeterio Crucillo and the Register of Deeds of Sorsogon, G.R. No. 200265, December 2, 2013.
Property; possessor in good faith; reimbursement of necessary and useful expenses. Dionisio was well aware that this temporary arrangement may be terminated at any time. Respondents cannot now refuse to vacate the property or eventually demand reimbursement of necessary and useful expenses under Articles 448 and 546 of the New Civil Code, because the provisions apply only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. Persons who occupy land by virtue of tolerance of the owners are not possessors in good faith. Heirs of Cipriano Trazona, et al. v. Heirs of Dionisio Cañada, et al., G.R. No. 175874, December 11, 2013.
Property; Spanish titles can no longer be used as evidence of ownership after six (6) months from the effectivity of PD 892. Based on Section 1 of PD 892, entitled “Discontinuance of the Spanish Mortgage System of Registration and of the Use of Spanish Titles as Evidence in Land Registration Proceedings,” Spanish titles can no longer be used as evidence of ownership after six (6) months from the effectivity of the law, or starting August 16, 1976. Laura F. Paraguya v. Sps. Alma Escurel-Crucillo and Emeterio Crucillo and the Register of Deeds of Sorsogon, G.R. No. 200265, December 2, 2013.
Property; waiver of interest; when absolute and unconditional.Lucila did not say, “to put everything in proper order, I promise to waive my right” to the property, which is a future undertaking, one that is demandable only when everything is put in proper order. But she instead said, “to put everything in proper order, I hereby waive” etc. The phrase “hereby waive” means that Lucila was, by executing the affidavit, already waiving her right to the property, irreversibly divesting herself of her existing right to the same. After he and his co-owner Emelinda accepted the donation, Isabelo became the owner of half of the subject property having the right to demand its partition.Isabelo C. Dela Cruz v. Lucila C. Dela Cruz, G.R. No. 192383, December 4, 2013.
Quasi-contract; unjust enrichment; concept of; elements.In light of the foregoing, it is unfair to deny petitioner a refund of all his contributions to the car plan. Under Article 22 of the Civil Code, “[e]very 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.” Antonio Locsin II v. Mekeni Food Corporation, G.R. No. 192105, December 9, 2013.
Quasi-contract; concept of quasi-contract. Article 2142 of the same Code likewise clarifies that there are certain lawful, voluntary and unilateral acts which give rise to the juridical relation of quasi-contract, to the end that no one shall be unjustly enriched or benefited at the expense of another. In the absence of specific terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a quasi-contractual relation was created between them. Antonio Locsin II v. Mekeni Food Corporation, G.R. No. 192105, December 9, 2013.
Quasi-delict; elements. Article 2176 of the Civil Code provides that “[w]hoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is a quasi-delict.” Under this provision, the elements necessary to establish a quasi-delict case are: (1) damages to the plaintiff; (2) negligence, by act or omission, of the defendant or by some person for whose acts the defendant must respond, was guilty; and (3) the connection of cause and effect between such negligence and the damages. These elements show that the source of obligation in a quasi-delict case is the breach or omission of mutual duties that civilized society imposes upon its members, or which arise from non-contractual relations of certain members of society to others. Dra. Leila A. Dela Llana v. Rebecca Biong, doing business under the name and style of Pongkay Trading, G.R. No. 182356, December 4, 2013.
Quasi-delict; quantum of proof; preponderance of evidence. Based on these requisites, Dra. dela Llana must first establish by preponderance of evidence the three elements of quasi-delict before we determine Rebecca’s liability as Joel’s employer. She should show the chain of causation between Joel’s reckless driving and her whiplash injury. Only after she has laid this foundation can the presumption — that Rebecca did not exercise the diligence of a good father of a family in the selection and supervision of Joel — arise.Once negligence, the damages and the proximate causation are established, this Court can then proceed with the application and the interpretation of the fifth paragraph of Article 2180 of the Civil Code. Under Article 2176 of the Civil Code, in relation with the fifth paragraph of Article 2180, “an action predicated on an employee’s act or omission may be instituted against the employer who is held liable for the negligent act or omission committed by his employee.”The rationale for these graduated levels of analyses is that it is essentially the wrongful or negligent act or omission itself which creates the vinculum juris in extra-contractual obligations. Dra. Leila A. Dela Llana v. Rebecca Biong, doing business under the name and style of Pongkay Trading, G.R. No. 182356, December 4, 2013.
Sales; car plan benefit; contributions as installment payments distinguished from rental payments. From the evidence on record, it is seen that the Mekeni car plan offered to petitioner was subject to no other term or condition than that Mekeni shall cover one-half of its value, and petitioner shall in turn pay the other half through deductions from his monthly salary. Mekeni has not shown, by documentary evidence or otherwise, that there are other terms and conditions governing its car plan agreement with petitioner. There is no evidence to suggest that if petitioner failed to completely cover one-half of the cost of the vehicle, then all the deductions from his salary going to the cost of the vehicle will be treated as rentals for his use thereof while working with Mekeni, and shall not be refunded. Indeed, there is no such stipulation or arrangement between them. Thus, the CA’s reliance on Elisco Tool is without basis, and its conclusions arrived at in the questioned decision are manifestly mistaken. To repeat what was said in Elisco Tool, “[P]etitioner does not deny that private respondent Rolando Lantan acquired the vehicle in question under a car plan for executives of the Elizalde group of companies. Under a typical car plan, the company advances the purchase price of a car to be paid back by the employee through monthly deductions from his salary. The company retains ownership of the motor vehicle until it shall have been fully paid for. However, retention of registration of the car in the company’s name is only a form of a lien on the vehicle in the event that the employee would abscond before he has fully paid for it. There are also stipulations in car plan agreements to the effect that should the employment of the employee concerned be terminated before all installments are fully paid, the vehicle will be taken by the employer and all installments paid shall be considered rentals per agreement.“
It was made clear in this pronouncement that installments made on the car plan may be treated as rentals only when there is an express stipulation in the car plan agreement to such effect. It was therefore patent error for the appellate court to assume that, even in the absence of express stipulation, petitioner’s payments. Antonio Locsin II v. Mekeni Food Corporation, G.R. No. 192105, December 9, 2013.
Sales; contract of sale; elements; distinguished from contract to sell. Corollary thereto, a contract of sale is classified as a consensual contract, which means that the sale is perfected by mere consent. No particular form is required for its validity. Upon perfection of the contract, the parties may reciprocally demand performance, i.e., the vendee may compel transfer of ownership of the object of the sale, and the vendor may require the vendee to pay the thing sold.
In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, i.e., the full payment of the purchase price. A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. ACE Foods, Inc. v. Micro Pacific Technologies Co., Ltd., G.R. No. 200602, December 11, 2013.
Sales; contract to sell; concept of.Verily, in a contract to sell, the prospective seller binds himself to sell the property subject of the agreement exclusively to the prospective buyer upon fulfillment of the condition agreed upon which is the full payment of the purchase price but reserving to himself the ownership of the subject property despite delivery thereof to the prospective buyer.The full payment of the purchase price in a contract to sell is a suspensive condition, the non-fulfillment of which prevents the prospective seller’s obligation to convey title from becoming effective, as in this case. Optimum Development Bank v. Spouses Benigno v. Jovellanos and Lourdes R. Jovellanos, G.R. No. 189145, December 4, 2013.
Sales; contract to sell; real property in installments; covered by Realty Installment Buyer Protection Act. Further, it is significant to note that given that the Contract to Sell in this case is one which has for its object real property to be sold on an installment basis, the said contract is especially governed by — and thus, must be examined under the provisions of — RA 6552, or the “Realty Installment Buyer Protection Act”, which provides for the rights of the buyer in case of his default in the payment of succeeding installments. Optimum Development Bank v. Spouses Benigno v. Jovellanos and Lourdes R. Jovellanos, G.R. No. 189145, December 4, 2013.
Property Registration Decree; alienable lands of public domain; proof of; to prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the Government. The burden of proof in overcoming the presumption of State ownership of lands of the public domain is on the person applying for registration, or in this case, for homestead patent. The applicant must show that the land subject of the application is alienable or disposable. It must be stressed that incontrovertible evidence must be presented to establish that the land subject of the application is alienable or disposable.
As the court pronounced in Republic of the Phils. v. Tri-Plus Corporation, to prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the Government such as a presidential proclamation or an executive order, an administrative action, investigation reports of Bureau of Lands investigators, and a legislative act or statute. The applicant may also secure a certification from the Government that the lands applied for are alienable and disposable. Republic of the Philippines-Bureau of Forest Development v. Vicente Roxas, et al./Provident Tree Farms, Inc. v. Vicente Roxas, et al., G.R. Nos. 157988/160640, December 11, 2013.
Property Registration Decree; estoppel; the principle of estoppel does not operate against the Government for the act of its agents. Neither can respondent Roxas successfully invoke the doctrine of estoppel against petitioner Republic. While it is true that respondent Roxas was granted Homestead Patent No. 111598 and OCT No. P-5885 only after undergoing appropriate administrative proceedings, the Government is not now estopped from questioning the validity of said homestead patent and certificate of title. It is, after all, hornbook law that the principle of estoppel does not operate against the Government for the act of its agents. And while there may be circumstances when equitable estoppel was applied against public authorities, i.e., when the Government did not undertake any act to contest the title for an unreasonable length of time and the lot was already alienated to innocent buyers for value, such are not present in this case. More importantly, we cannot use the equitable principle of estoppel to defeat the law. Republic of the Philippines-Bureau of Forest Development v. Vicente Roxas, et al./Provident Tree Farms, Inc. v. Vicente Roxas, et al., G.R. Nos. 157988/160640, December 11, 2013.
Property Registration Decree; homestead patent; once registered, the certificate of title issued by virtue of said patent has the force and effect of a Torrens title issued under said registration laws; provided that the land covered by said certificate is a disposable public land within the contemplation of the Public Land Law.It is true that once a homestead patent granted in accordance with the Public Land Act is registered pursuant to Act 496, otherwise known as The Land Registration Act, or Presidential Decree No. 1529, otherwise known as The Property Registration Decree, the certificate of title issued by virtue of said patent has the force and effect of a Torrens title issued under said registration laws.We expounded in Ybañez v. Intermediate Appellate Court that:
The certificate of title serves as evidence of an indefeasible title to the property in favor of the person whose name appears therein. After the expiration of the one (1) year period from the issuance of the decree of registration upon which it is based, it becomes incontrovertible. The settled rule is that a decree of registration and the certificate of title issued pursuant thereto may be attacked on the ground of actual fraud within one (1) year from the date of its entry and such an attack must be direct and not by a collateral proceeding. The validity of the certificate of title in this regard can be threshed out only in an action expressly filed for the purpose.
It must be emphasized that a certificate of title issued under an administrative proceeding pursuant to a homestead patent, as in the instant case, is as indefeasible as a certificate of title issued under a judicial registration proceeding, provided the land covered by said certificate is a disposable public land within the contemplation of the Public Land Law. Republic of the Philippines-Bureau of Forest Development v. Vicente Roxas, et al./Provident Tree Farms, Inc. v. Vicente Roxas, et al., G.R. Nos. 157988/160640, December 11, 2013.
Property Registration Decree; reversion; nature of; grounds. We do not find evidence indicating that respondent Roxas committed fraud when he applied for homestead patent over the subject property. It does not appear that he knowingly and intentionally misrepresented in his application that the subject property was alienable and disposable agricultural land. Nonetheless, we recognized in Republic of the Phils. v. Mangotara that there are instances when we granted reversion for reasons other than fraud:
Reversion is an action where the ultimate relief sought is to revert the land back to the government under the Regalian doctrine. Considering that the land subject of the action originated from a grant by the government, its cancellation is a matter between the grantor and the grantee. In Estate of the Late Jesus S. Yujuico v. Republic (Yujuico case), reversion was defined as an action which seeks to restore public land fraudulently awarded and disposed of to private individuals or corporations to the mass of public domain. It bears to point out, though, that the Court also allowed the resort by the Government to actions for reversion to cancel titles that were void for reasons other than fraud, i.e., violation by the grantee of a patent of the conditions imposed by law; and lack of jurisdiction of the Director of Lands to grant a patent covering inalienable forest land or portion of a river, even when such grant was made through mere oversight. In Republic v. Guerrero, the Court gave a more general statement that the remedy of reversion can be availed of “only in cases of fraudulent or unlawful inclusion of the land in patents or certificates of title.” Republic of the Philippines-Bureau of Forest Development v. Vicente Roxas, et al./Provident Tree Farms, Inc. v. Vicente Roxas, et al., G.R. Nos. 157988/160640, December 11, 2013.
Property Registration Decree; Torrens certificate of title is not conclusive proof of ownership. It is an established rule that a Torrens certificate of title is not conclusive proof of ownership. Verily, a party may seek its annulment on the basis of fraud or misrepresentation. However, such action must be seasonably filed, else the same would be barred. Laura F. Paraguya v. Sps. Alma Escurel-Crucillo and Emeterio Crucillo and the Register of Deeds of Sorsogon, G.R. No. 200265, December 2, 2013.
Property Registration Decree; Torrens certificate of title is not conclusive proof of ownership becomes incontrovertible and indefeasible after one (1) year from the date of its entry. In this relation, Section 32 of PD 1529 provides that the period to contest a decree of registration shall be one (1) year from the date of its entry and that, after the lapse of the said period, the Torrens certificate of title issued thereon becomes incontrovertible and indefeasible, viz.:
Sec. 32. Review of decree of registration; Innocent purchaser for value.— The decree of registration shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced. Whenever the phrase “innocent purchaser for value” or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or any other persons responsible for the fraud. (Emphases and underscoring supplied) Laura F. Paraguya v. Sps. Alma Escurel-Crucillo and Emeterio Crucillo and the Register of Deeds of Sorsogon, G.R. No. 200265, December 2, 2013.
(Rose thanks Anna Lorraine Mendoza for assisting in the preparation of this post.)