OBLICON

Case title: de Guzman, Jr. vs. Court of Appeals, Mindanao Station, 785 SCRA 382,
March 02, 2016

Nature of the action: PETITION for review on certiorari of the decision and resolution
of the Court of Appeals, Mindanao Station. JARDELEZA. Third Division.

Facts:

The property subject of this case (property) is a 480-square meter lot that formed part
of Lot No. 532 located at North Poblacion, Medina, Misamis Oriental. Lot No. 532, which
has a total area of 25,178 square meters, was acquired by Lamberto Bajao's
(respondent) parent, Leoncio Bajao,through Free Patent No. 400087 issued on May 28,
1968.

Petitioners acquired the property in two transactions. On May 24, 1969, Spouses Bajao
sold 200 square meters of Lot No. 532 to them for P1,000. On June 18, 1970, Spouses
Bajao sold another 280 square meters of Lot No. 532 to petitioners for P1,400.Both
transactions were evidenced by separate Deeds of Absolute Sale. Spouses Bajao
allegedly promised to segregate the property from the remaining area of Lot No. 53212
and to deliver a separate title to petitioners covering it.However, because the promise
was not forthcoming, petitioner Lydia S. de Guzman executed an Affidavit of Adverse
Claim on April 21, 1980 covering the property. This was annotated on the title covering
Lot No. 532, Original Certificate of Title (OCT) No. P-6903, on April 25, 1980.

On May 29, 1980, petitioners initiated the segregation of the property from Lot No. 532
through a survey. As a result of the survey, petitioners acquired Lot 2-A, Psd-10-
002692. They allegedly acquired possession over the land immediately, fenced the area,
introduced improvements, and planted it with fruit-bearing trees.

On September 26, 1980, or after the death of Leoncio Bajao on February 1, 1972,
respondent and Anastacia Bajao executed an Extrajudicial Settlement Among Heirs
(Extrajudicial Settlement), which subdivided Lot No. 532 into three parts. The property
was included in Lot No. 532-C, which was adjudicated in favor of respondent. The
Extrajudicial Settlement was registered on December 10, 1980.

On December 16, 1980, respondent caused the cancellation of petitioners' annotated

adverse claim over the property and later obtained Transfer Certificate of Title (TCT) No.
T-7133 on February 13 and October 2, 1981. Petitioners thereafter requested
respondent to deliver TCT No. T-7133 so they could present it to the Register of Deeds,
together with the two Deeds of Absolute Sale, for proper annotation.26 Respondent,
however, refused to heed their request.ralawre

Thus, on January 21, 2000, petitioners filed a Complaint for Reconveyance with Writ of
Preliminary Mandatory Injunction and Damages. RTC ruled in favor of the plaintiffs. CA
reversed.
Issue: Whether or not there is an implied trust

Ruling:

Petitioners allege that respondent fraudulently included the property in TCT No. T-7133,
which was issued on February 13 and October 2, 1981. Article 145688 of the Civil Code
provides that a person acquiring property through mistake or fraud becomes, by
operation of law, a trustee of an implied trust for the benefit of the real owner of the
property. An action for reconveyance based on an implied trust generally prescribes in
10 years, the reckoning point of which is the date of registration of the deed or the date
of issuance of the certificate of title over the property. Thus, petitioners had 10 years
from 1981 or until 1991 to file their complaint for reconveyance of property. The
Complaint, however, was filed only on January 21, 2000, or more than 10 years from
the issuance of TCT No. T-7133. Hence, the action is already barred by prescription.

The exception to the ten-year rule on prescription is when the plaintiff is in possession
of the land to be reconveyed. In such case, the action becomes one for quieting of title,
which is imprescriptible. Here, petitioners allege that they were in juridical possession
of the property from the time they put up a fence on it until the filing of the Complaint.
Respondent disputes this claim, countering that petitioners are not in actual and
material possession of the property. Whether petitioners have actual possession of the
lot is a question of fact. We have repeatedly ruled that a petition for review on certiorari
under Rule 45 of the Rules of Court shall raise only questions of law and not questions
of facts. When supported by substantial evidence, the findings of fact of the CA are
conclusive and binding on the parties and are not reviewable by us, unless the case falls
under any of the recognized exceptions.97 Petitioners never raised any of these
exceptions. Assuming they did, none of the exceptions would apply.
Case title: The Insular Life Assurance Company, ltd., vs. Khu, G.R. No. 195176, April
18, 2016

Nature of the action: Petition for Review on Certiorari, DEL CASTILLO, J. Second
Division

Facts:

On March 6, 1997, Felipe N. Khu, Sr. (Felipe) applied for a life insurance policy with
Insular Life under the latter’s Diamond Jubilee Insurance Plan. Felipe accomplished the
required medical questionnaire wherein he did not declare any illness or adverse
medical condition. Insular Life thereafter issued him Policy Number A000015683 with
a face value of P1 million. This took effect on June 22, 1997.5

On June 23, 1999, Felipe’s policy lapsed due to non-payment of the premium covering
the period from June 22, 1999 to June 23, 2000.6

On September 7, 1999, Felipe applied for the reinstatement of his policy and paid
P25,020.00 as premium. Except for the change in his occupation of being self-employed
to being the Municipal Mayor of Binuangan, Misamis Oriental, all the other information
submitted by Felipe in his application for reinstatement was virtually identical to those
mentioned in his original policy.7

On October 12, 1999, Insular Life advised Felipe that his application for reinstatement
may only be considered if he agreed to certain conditions such as payment of additional
premium and the cancellation of the riders pertaining to premium waiver and accidental
death benefits. Felipe agreed to these conditions and on December 27, 1999 paid the
agreed additional premium of P3,054.50.9

In consequence thereof, the premium rates on this policy are adjusted to P28,000.00
annually, P14,843.00 semi-annually and P7,557.00 quarterly, Philippine currency.10

On June 23, 2000, Felipe paid the annual premium in the amount of P28,000.00
covering the period from June 22, 2000 to June 22, 2001. And on July 2, 2001, he also
paid the same amount as annual premium covering the period from June 22, 2001 to
June 21, 2002.11

On September 22, 2001, Felipe died. His Certificate of Death enumerated the following
as causes of death:

Immediate cause: a. End stage renal failure, Hepatic failure

Antecedent cause: b. Congestive heart failure, Diffuse myocardial ischemia.

Underlying cause: c. Diabetes Neuropathy, Alcoholism, and Pneumonia.12

On October 5, 2001, Paz Y. Khu, Felipe Y. Khu, Jr. and Frederick Y. Khu (collectively,
Felipe’s beneficiaries or respondents) filed with Insular Life a claim for benefit under the
reinstated policy. This claim was denied. Instead, Insular Life advised Felipe’s
beneficiaries that it had decided to rescind the reinstated policy on the grounds of
concealment and misrepresentation by Felipe.

Hence, respondents instituted a complaint for specific performance with damages. the
RTC found for Felipe’s beneficiaries. The CA affirmed.

Issue: Whether the contract is valid

Ruling:

As a final note, to characterize the insurer and the insured as contracting parties on
equal footing is inaccurate at best. Insurance contracts are wholly prepared by the
insurer with vast amounts of experience in the industry

purposefully used to its advantage. More often than not, insurance contracts are
contracts of adhesion containing technical terms and conditions of the industry,
confusing if at all understandable to laypersons, that are imposed on those who wish to
avail of insurance. As such, insurance contracts are imbued with public interest that
must be considered whenever the rights and obligations of the insurer and the insured
are to be delineated. Hence, in order to protect the interest of insurance applicants,
insurance companies must be obligated to act with haste upon insurance applications,
to either deny or approve the same, or otherwise be bound to honor the application as
a valid, binding, and effective insurance contract.37

Indeed, more than two years had lapsed from the time the subject insurance policy was
reinstated on June 22, 1999 vis-a-vis Felipe’s death on September 22, 2001.1âwphi1 As
such, the subject insurance policy has already become incontestable at the time of
Felipe’s death.
SALES
Case title: Pidlaoan vs Pidlaoan, G.R. No. 196470, April 20, 2016

Nature of the action: Petition for review on certiorari, BRION, J. Second Division

Facts:

Rosario Victoria (Rosario) and Elma lived together since 1978 until Rosario left for Saudi
Arabia.

In 1984, Elma bought a parcel of land with an area of 201 square meters in Lucena City
and was issued Transfer Certificate of Title (TCT) No. T-50282.2 When Rosario came
home, she caused the construction of a house on the lot but she left again after the
house was built.

Elma allegedly mortgaged the house and lot to a certain Thi Hong Villanueva in
1989.When the properties were about to be foreclosed, Elma allegedly asked for help
from her sister-in-law, Eufemia Pidlaoan (Eufemia), to redeem the property.5 On her
part, Eufemia called her daughter abroad, Normita, to lend money to Elma. Normita
agreed to provide the funds. Elma allegedly sought to sell the land. When she failed to
find a buyer, she offered to sell it to Eufemia or her daughter.

On March 21, 1993, Elma executed a deed of sale entitled "Panananto ng Pagkatanggap
ng Kahustuhang Bayad" transferring the ownership of the lot to Normita.The last
provision in the deed of sale provides that Elma shall eject the person who erected the
house and deliver the lot to Normita. The document was signed by Elma, Normita, and
two witnesses but it was not notarized.

When Elma and Normita were about to have the document notarized, the notary public
advised them to donate the lot instead to avoid capital gains tax. On the next day, Elma
executed a deed of donation in Normita's favor and had it notarized. TCT No. T-50282
was cancelled and TCT No. T-70990 was issued in Normita's name. Since then, Normita
had been paying the real property taxes over the lot but Elma continued to occupy the
house. Rosario found out about the donation when she returned to the country a year
or two after the transaction.

In 1997, the petitioners filed a complaint for reformation of contract, cancellation of TCT
No. T-70990, and damages with prayer for preliminary injunction against Eufemia,
Normita, and Herminigilda Pidlaoan (respondents).

The petitioners argued that: first, they co-owned the lot because both of them
contributed the money used to purchase it; second, Elma and Normita entered into an
equitable mortgage because they intended to constitute a mortgage over the lot to secure
Elma's loan but they executed a deed of sale instead; and third, the deed of donation
was simulated because Elma executed it upon the notary public's advice to avoid capital
gains tax.
The RTC ruled that Rosario and Elma co-owned the lot and the house. Thus, Elma could
only donate her one-half share in the lot. CA affirmed.

Issue: Whether the transaction between Elma and Normita was a sale, a donation, or
an equitable mortgage.

Ruling:

An equitable mortgage is one which, although lacking in some formality or other

requisites demanded by statute, nevertheless reveals the intention of the parties to
charge real property as security for a debt, and contains nothing impossible or contrary
to law.42 Articles 1602 and 1604 of the Civil Code provide that a contract of absolute
sale shall be presumed an equitable mortgage if any of the circumstances listed in Article
1602 is attendant.

Two requisites must concur for Articles 1602 and 1604 of the Civil Code to apply: one,
the parties entered into a contract denominated as a contract of sale; and two, their
intention was to secure an existing debt by way of mortgage.43

In the present case, the unnotarized contract of sale between Elma and Normita is
denominated as "Panananto ng Pagkatanggap ng Kahustuhang Bayad."44 Its contents
show an unconditional sale of property between Elma and Normita. The document
shows no intention to secure a debt or to grant a right to repurchase. Thus, there is no
evidence that the parties agreed to mortgage the property as contemplated in Article
1602 of the Civil Code. Clearly, the contract is not one of equitable mortgage.

Even assuming that Article 1602 of the Civil Code applies in this case, none of the
circumstances are present to give rise to the presumption of equitable mortgage. One,
the petitioners failed to substantiate their claim that the sale price was unusually
inadequate.45 In fact, the sale price of P30,000.00 is not unusually inadequate
compared with the lot's market value of P32,160 as stated in the 1994 tax declaration.
Two, the petitioners continued occupation on the property was coupled with the
respondents' continuous demand for them to vacate it. Third, no other document was
executed for the petitioners to repurchase the lot after the sale contract was executed.
Finally, the respondents paid the real property taxes on the lot.46 These circumstances
contradict the petitioners' claim of equitable mortgage.

A review of the sale contract or the "Panananto ng Pagkatanggap ng Kahustuhang

Bayad" shows that the parties intended no equitable mortgage. The contract even
contains Elma's undertaking to remove Rosario's house on the property.47 This
undertaking supports the conclusion that the parties executed the contract with the
end view of transferring full ownership over the lot to Normita. The RTC rendered its
Decision in favor of Sison. In sum, we rule that based on the records of the case, Elma
and Normita entered in a sale contract, not a donation. Elma sold the entire property to
Normita. Accordingly, TCT No. T-70990 was validly issued in Normita's name.
Case title: Domingo v. Spouses Molina, G.R. No. 200274, April 20, 2016

Nature of the action: Petition for Certiorari, BRION, J. Second Division

Facts:

In June 15, 1951, the spouses Anastacio and Flora Domingo bought a property in
Camiling, Tarlac, consisting of a one-half undivided portion over an 18,164 square meter
parcel of land. The sale was annotated on the Original Certificate of Title (OCT) No.
16354 covering the subject property.

During his lifetime, Anastacio borrowed money from the respondent spouses Genaro
and Elena Molina (spouses Molina). On September 10, 1978 or 10 years after Flora's
death, Anastacio sold his interest over the land to the spouses Molina to answer for his
debts. The sale to the spouses Molina was annotated at the OCT of the subject property.
In 1986, Anastacio died.

In May 19, 1995, the sale of Anastacio's interest was registered under Transfer
Certificate of Title (TCT) No. 2729677 and transferred the entire one-half undivided
portion of the land to the spouses Molina.

Melecio, one of the children of Anastacio and Flora, learned of the transfer and filed a
Complaint for Annulment of Title and Recovery of Ownership (Complaint) against the
spouses Molina. The Regional Trial Court (RTC) dismissedthe case because Melecio
failed to establish his claim that Anastacio did not sell the property to the spouses
Molina. The CA held that Melecio failed to prove by preponderant evidence that there
was fraud in the conveyance of the property to the spouses Molina.

Issue: Whether or not the sale of the subject property to the spouses Molina was
attended with fraud.

Ruling:

The sale of the subject property to the spouses Molina was not attended with fraud.

On the issue of fraud, the lower courts found that there was no fraud in the sale of the
disputed property to the spouses Molina.

The issue of fraud would require the Court to inquire into the weight of evidentiary
matters to determine the merits of the petition and is essentially factual in nature. It is
basic that factual questions cannot be cannot be entertained in a Rule 45 petition,
unless it falls under any of the recognized exceptions found in jurisprudence. The
present petition does not show that it falls under any of the exceptions allowing factual
review.

The CA and RTC conclusion that there is no fraud in the sale is supported by the
evidence on record.
Melecio's argument that no document was executed for the sale is negated by the CA
finding that there was a notarized deed of conveyance executed between Anastacio and
the spouses Molina, as annotated on the OCT of the disputed property.

Furthermore, Melecio's belief that Anastacio could not have sold the property without
his knowledge cannot be considered as proof of fraud to invalidate the spouses Molina's
registered title over the subject property.

Prevailing jurisprudence uniformly holds that findings of facts of the trial court,
particularly when affirmed by the Court of Appeals, are binding upon this Court.

Considering these findings, we find no need to discuss the other issues raised by
Melecio.
CREDIT
TORTS
Case title: Tung Hui Chung vs. Shih Chiu Huang A.K.A. James Shih, G.R. No. 170679,
March 09, 2016

Nature of the action: Petition for review on certiorari. BERSAMIN, J.First Division

Facts:

On September 6, 2001, the petitioners, both Australian citizens, filed in the Regional
Trial Court (RTC), Branch 49, in Manila an amended complaint6 to recover from the
respondent a sum of money and damages (with prayer for a writ of attachment). The
suit, docketed as Civil Case No. 01-101260, involved the contract to sell dated October
30, 2000,7 whereby the respondent, as the vendor, undertook to deliver to the
petitioners, as the vendees, shares of stock worth P10,606,266.00 in Island Information
and Technology, Inc. (the corporation), a publicly listed corporation.

The petitioners alleged that under the provisions of the contract to sell, the equivalent
shares of stock in the corporation should be their value as of February 22, 2001, the
date corresponding to the five-day period prior to the end of the fourth month after
October 30, 2000, the date of the signing of the contract to sell; that according to the
Philippine Stock Exchange, Inc. (PSEI), the shares of the corporation, which stood at
P0.05 for the open, high, low and closing prices on February 22, 2001, had the
equivalent of 177,925,320 shares of stock; and that the respondent failed to deliver the
shares of stock corresponding to the agreed amount on the date fixed by the contract.

Later on, the parties filed their Joint Motion for Approval of a Compromise
Agreement dated August 19, 2003.11 The compromise agreement, which was signed by
the respondent and by Eduard Alcordo, as the attorney-in-fact of the petitioners, with
the assistance of their respective counsels, stipulated that the parties agreed to settle
their respective claims and counterclaims, and the respondent acknowledged therein
his obligation to the petitioners in the amount of $250,000.00, which he promised to
pay in US$ currency.

The parties further agreed that upon payment of the first installment of US$20,000.00,
both of them would jointly move for the partial lifting of the writ of attachment issued
by the RTC against the properties of the respondent.
The RTC approved the compromise agreement on October 20, 2003.13

Upon the respondent's payment of the initial amount of US$20,000.00, the parties filed
their Joint Motion to Partially Lift the Preliminary Attachment dated December 16, 2003
in accordance with the compromise agreement.14 The RTC granted the joint motion.

But the respondent did not pay the November 15, 2004 second installment despite
demand. Instead, he filed in the CA a petition for annulment of judgment dated
November 25, 2004 (C.A.-G.R. SP No. 87768),15 thereby seeking to nullify the amended
order dated October 10, 2001 granting the application for the writ of attachment, and
the order dated October 20, 2003 approving the compromise agreement. Meanwhile, the
petitioners sought the execution of the judgment upon the compromise agreement
through their motion for execution dated December 2, 2004 on the ground of the
respondent's failure to pay the second installment.16 The RTC granted their motion for
execution on December 14, 2004,17 and issued the writ of execution,18 commanding the
sheriff to demand from the respondent the immediate payment of the full amount of
$230,000.00 as indicated in the compromise agreement.

Issue: Whether or not annulment is proper

Ruling:

The annulment by the CA was legally and factually unwarranted.

To start with, a compromise agreement is a contract whereby the parties make reciprocal
concessions to avoid litigation or to put an end to one already commenced. 32 It is an
accepted, nay, even highly encouraged practice in the courts of law of this
jurisdiction.33 It attains the authority and effect of res judicata upon the parties upon
its execution,34 and becomes immediately final and executory, unless rescinded by
grounds which vitiate consent.35 Once stamped with judicial imprimatur, it ceases to be
a mere contract between the parties, and becomes a judgment of the court, to be
enforced through writ of execution.36

The CA did not recognize that what it was asked to annul and set aside in C.A.-G.R. SP
No. 88804 was no longer the compromise agreement of the parties but already the
judgment based on the compromise agreement. The failure to recognize led the CA into
granting the unprecedented relief of annulling the compromise agreement on the ground
of fraud and lack of consent. In so doing, the CA acted without jurisdiction. First of all,
the action before the CA was a special civil action for certiorari that had been brought
on March 7, 2005, which was way beyond the period of 60 days from the rendition of
the judgment based on the compromise agreement on October 20, 2003. The long delay
grossly violated Section 4, Rule 65 of the Rules of Court, which allowed the petition
for certiorari to be filed not later than 60 days from notice of the judgment being assailed.
Moreover, the grounds relied upon by the respondent in his petition for certiorari in C.A.-
G.R. SP No. 88804 - that the RTC had committed grave abuse of discretion tantamount
to excess or lack of jurisdiction for issuing the writ of execution that was patently unjust,
one-side, unfair, fraudulent and unconscionable compromise agreement; and for
issuing the writ of execution of the compromise agreement that lacked consideration -
were not proper grounds for assailing the judgment based on the compromise
agreement. Even assuming that such grounds for the petition for certiorari were true,
which they were not, the judgment based on the compromise agreement could not be
assailed on that basis. As the foregoing excerpt of the assailed decision bears out, the
annulment of the judgment based on the compromise agreement was premised on fraud
and lack of consent on the part of the respondent as a contracting party, which were far
from the jurisdictional error on which the petition for certiorari should have rested.

Case Title: Designer Baskets, Inc vs Air Sea Transport, Inc, G.R. No. 184513, March
09, 2016
Nature of the action: Petition for Review on Certiorari, JARDELEZA, J.Third Division

Facts:

DBI is a domestic corporation engaged in the production of housewares and handicraft

items for export.4 Sometime in October 1995, Ambiente, a foreign-based company,
ordered from DBI5 223 cartons of assorted wooden items (the shipment).6 The shipment
was worth Twelve Thousand Five Hundred Ninety and Eighty-Seven Dollars
(US$12,590.87) and payable through telegraphic transfer.7 Ambiente designated ACCLI
as the forwarding agent that will ship out its order from the Philippines to the United
States (US). ACCLI is a domestic corporation acting as agent of ASTI, a US based
corporation engaged in carrier transport business, in the Philippines.8

On January 7, 1996, DBI delivered the shipment to ACCLI for sea transport from Manila
and delivery to Ambiente at 8306 Wilshire Blvd., Suite 1239, Beverly Hills, California.
To acknowledge receipt and to serve as the contract of sea carriage, ACCLI issued to
DBI triplicate copies of ASTI Bill of Lading No. AC/MLLA601317. 9 DBI retained
possession of the originals of the bills of lading pending the payment of the goods by
Ambiente.10

On January 23, 1996, Ambiente and ASTI entered into an Indemnity Agreement
(Agreement).11 Under the Agreement, Ambiente obligated ASTI to deliver the shipment
to it or to its order "without the surrender of the relevant bill(s) of lading due to the non-
arrival or loss thereof."12 In exchange, Ambiente undertook to indemnify and hold ASTI
and its agent free from any liability as a result of the release of the
shipment.13 Thereafter, ASTI released the shipment to Ambiente without the knowledge
of DBI, and without it receiving payment for the total cost of the shipment.14

DBI then made several demands to Ambiente for the payment of the shipment, but to
no avail. Thus, on October 7, 1996, DBI filed the Original Complaint against ASTI,
ACCLI and ACCLFs incorporators-stockholders15 for the payment of the value of the
shipment in the amount of US$12,590.87 or Three Hundred Thirty-Three and Six
Flundred Fifty-Eight Pesos (P333,658.00), plus interest at the legal rate from January
22, 1996, exemplary damages, attorney's fees and cost of suit. the trial court found
ASTI, ACCLI, and Ambiente solidarity liable to DBI for the value of the shipment. The
CA affirmed the trial court's finding that Ambiente is liable to DBI, but absolved ASTI
and ACCLI from liability.

Issue: Whether or not the contract of the parties is a contract of carriage or contract of
sale

Ruling:

The contract between DBI and ASTI is a contract of carriage of goods; hence, ASTI's
liability should be pursuant to that contract and the law on transportation of goods.
Not being a party to the contract of sale between DBI and Ambiente, ASTI cannot be
held liable for the payment of the value of the goods sold. In this regard, we
cite Loadstar Shipping Company, Incorporated v. Malayan Insurance Company,
Incorporated,71 thus:r

Malayan opposed the petitioners' invocation of the Philex-PASAR purchase agreement,

stating that the contract involved in this case is a contract of affreightment between
the petitioners and PASAR, not the agreement between Philex and PASAR, which was
a contract for the sale of copper concentrates.

On this score, the Court agrees with Malayan that contrary to the trial court's
disquisition, the petitioners cannot validly invoke the penalty clause under the Philex-
PASAR purchase agreement, where penalties are to be imposed by the buyer PASAR
against the seller Philex if some elements exceeding the agreed limitations are found
on the copper concentrates upon delivery. The petitioners are not privy to the
contract of sale of the copper concentrates. The contract between PASAR and
the petitioners is a contract of carriage of goods and not a contract of sale.
Therefore, the petitioners and PASAR are bound by the laws on transportation of
goods and their contract of affreightment. Since the Contract of Affreightment
between the petitioners and PASAR is silent as regards the computation of damages,
whereas the bill of lading presented before the trial court is undecipherable, the New
Civil Code and the Code of Commerce shall govern the contract between the parties.

In view of the foregoing, we hold that under Bill of Lading No. AC/MLLA601317 and the
pertinent law and jurisprudence, ASTI and ACCLI are not liable to DBI. We sustain the
finding of the CA that only Ambiente, as the buyer of the goods, has the obligation to
pay for the value of the shipment. However, in view of our ruling in Nacar v. Gallery
Frames,73 we modify the legal rate of interest imposed by the CA. Instead of 12% per
annum from the finality of this judgment until its full satisfaction, the rate of interest
shall only be 6% per annum.

Case title: Sps De Guzman vs CA, G.R. No. 185757, March 02, 2016

Nature of the action: Petition for Review on Certiorari, JARDELEZA, J., Third Division
Facts:

The property subject of this case (property) is a 480-square meter lot that formed part
of Lot No. 532 located at North Poblacion, Medina, Misamis Oriental. Lot No. 532, which
has a total area of 25,178 square meters, was acquired by Lamberto Bajao's
(respondent) parent, Leoncio Bajao,6 through Free Patent No. 4000877 issued on May
28, 1968.8

Petitioners acquired the property in two transactions. On May 24, 1969, Spouses Bajao
sold 200 square meters of Lot No. 532 to them for P1,000.9 On June 18, 1970, Spouses
Bajao sold another 280 square meters of Lot No. 532 to petitioners for P1,400. 10 Both
transactions were evidenced by separate Deeds of Absolute Sale.11 Spouses Bajao
allegedly promised to segregate the property from the remaining area of Lot No.
53212 and to deliver a separate title to petitioners covering it.13 However, because the
promise was not forthcoming, petitioner Lydia S. de Guzman executed an Affidavit of
Adverse Claim14 on April 21, 1980 covering the property. This was annotated on the title
covering Lot No. 532, Original Certificate of Title (OCT) No. P-6903, on April 25, 1980.15

On May 29, 1980, petitioners initiated the segregation of the property from Lot No. 532
through a survey.16 As a result of the survey, petitioners acquired Lot 2-A, Psd-10-
002692.17They allegedly acquired possession over the land immediately, fenced the area,
introduced improvements, and planted it with fruit-bearing trees.18

On September 26, 1980,19 or after the death of Leoncio Bajao on February 1,

1972,20 respondent and Anastacia Bajao executed an Extrajudicial Settlement Among
Heirs21 (Extrajudicial Settlement), which subdivided Lot No. 532 into three parts. 22 The
property was included in Lot No. 532-C, which was adjudicated in favor of
respondent.23 The Extrajudicial Settlement was registered on December 10, 1980.24

On December 16, 1980, respondent caused the cancellation of petitioners' annotated

adverse claim over the property and later obtained Transfer Certificate of Title (TCT) No.
T-7133 on February 13 and October 2, 1981.25 Petitioners thereafter requested
respondent to deliver TCT No. T-7133 so they could present it to the Register of Deeds,
together with the two Deeds of Absolute Sale, for proper annotation.26 Respondent,
however, refused to heed their request.27cralawred

Thus, on January 21, 2000, petitioners filed a Complaint for Reconveyance with Writ of
Preliminary Mandatory Injunction and Damages.

Issue: Whether or not pari delicto applies

Ruling:

The rule of pari delicto will not apply here in view of the nullity of the contracts of sale
between the parties.79 To have it otherwise would go against the public policy of
preserving the grantee's right to the land under the homestead law. 80 In Binayug v.
Ugaddan,81 we returned the properties which were acquired through a grant of a
homestead patent to the heirs of the original owner after it was proven that the
properties were alienated within the five-year prohibition period under Section 118 of
the Public Land Act. Citing De los Santos v. Roman Catholic Church of Midsayap, et
al.,82 we explained:

In De los Santos v. Roman Catholic Church of Midsayap, a homestead patent covering a

tract of land in Midsayap, Cotabato was granted to Julio Sarabillo (Sarabillo) on
December 9, 1938. (XT No. RP-269 was issued to Sarabillo on March 17, 1939. On
December 31, 1940, Sarabillo sold two hectares of land to the Roman Catholic Church
of Midsayap (Church). Upon Sarabillo's death, Catalina de los Santos (De los Santos)
was appointed administratrix of his estate. In the course of her administration, De los
Santos discovered that Sarabillo's sale of land to the Church was in violation of Section
118 of the Public Land Act, prompting her to file an action for the annulment of said
sale. The Church raised as defense Section 124 of the Public Land Act, as well as the
principle of pari delicto. The Court, in affirming the CFI judgment favoring De los Santos,
ratiocinated:
xxx

x x x Here [De Los Santos] desires to nullify a transaction which was done in violation
of the law. Ordinarily the principle of pari delicto would apply to her because her
predecessor-in-interest has carried out the sale with the presumed knowledge of its
illegality, but because the subject of the transaction is a piece of public land, public
policy requires that she, as heir, be not prevented from re-acquiring it because it
was given by law to her family for her home and cultivation. This is the policy on
which our homestead law is predicated. This right cannot be waived. "It is not within
the competence of any citizen to barter away what public policy by law seeks to
preserve". We are, therefore, constrained to hold that [De Los Santos] can maintain
the present action it being in furtherance of this fundamental aim of our
homestead law.

Case title: IPAMS vs De Vera, G.R. No. 205703, March 07, 2016

Nature of the action: Petition for review on certiorari, MENDOZA, J.Second Division
Facts:

Petitioner Industrial Personnel & Management Services, Inc. (IPAMS) is a local

placement agency duly organized and existing under Philippine laws, with petitioner
Angelito C. Hernandez as its president and managing director. Petitioner SNC Lavalin
Engineers & Contractors, Inc. (SNC-Lavalin) is the principal of IPAMS, a Canadian
company with business interests in several countries. On the other hand, respondent
Alberto Arriola (Arriola) is a licensed general surgeon in the Philippines.4

Employee's Position

Arriola was offered by SNC-Lavalin, through its letter,5 dated May 1, 2008, the position
of Safety Officer in its Ambatovy Project site in Madagascar. The position offered had a
rate of CA$32.00 per hour for forty (40) hours a week with overtime pay in excess of
forty (40) hours. It was for a period of nineteen (19) months starting from June 9, 2008
to December 31, 2009.

Arriola was then hired by SNC-Lavalin, through its local manning agency, IPAMS, and
his overseas employment contract was processed with the Philippine Overseas
Employment Agency (POEA)6 In a letter of understanding,7 dated June 5, 2008, SNC-
Lavalin confirmed Arriola's assignment in the Ambatovy Project. According to Arriola,
he signed the contract of employment in the Philippines.8 On June 9, 2008, Arriola
started working in Madagascar.

After three months, Arriola received a notice of pre-termination of employment,9 dated

September 9, 2009, from SNC-Lavalin. It stated that his employment would be pre-
terminated effective September 11, 2009 due to diminishing workload in the area of his
expertise and the unavailability of alternative assignments. Consequently, on September
15, 2009, Arriola was repatriated. SNC-Lavalin deposited in Arriola's bank account his
pay amounting to Two Thousand Six Hundred Thirty Six Dollars and Eight Centavos
(CA$2,636.80), based on Canadian labor law.

Aggrieved, Arriola filed a complaint against the petitioners for illegal dismissal and non-
payment of overtime pay, vacation leave and sick leave pay before the Labor Arbiter (LA).

Employer's Position

The petitioners denied the charge of illegal dismissal against them. They claimed that
SNC-Lavalin was greatly affected by the global financial crises during the latter part of
2008. The economy of Madagascar, where SNC-Lavalin had business sites, also slowed
down. As proof of its looming financial standing, SNC-Lavalin presented a copy of a news
item in the Financial Post,10 dated March 5, 2009, showing the decline of the value of
its stocks. Thus, it had no choice but to minimize its expenditures and operational
expenses. It re-organized its Health and Safety Department at the Ambatovy Project site
and Arriola was one of those affected.11
The petitioners also invoked EDI-Staffbuilders International, Inc. v. NLRC12 (EDI-
Staffbuilders), pointing out that particular labor laws of a foreign country incorporated
in a contract freely entered into between an OFW and a foreign employer through the
latter's agent was valid. In the present case, as all of Arriola's employment documents
were processed in Canada, not to mention that SNC-Lavalin's office was in Ontario, the
principle of lex loci celebrationis was applicable. Thus, the petitioners insisted that
Canadian laws governed the contract.

The petitioners continued that the pre-termination of Arriola's contract was valid for
being consistent with the provisions of both the Expatriate Policy and laws of Canada.
The said foreign law did not require any ground for early termination of employment,
and the only requirement was the written notice of termination. Even assuming that
Philippine laws should apply, Arriola would still be validly dismissed because domestic
law recognized retrenchment and redundancy as legal grounds for termination.

Issue: Whether or not the contract is valid

Ruling:

A contract freely entered into should, of course, be respected, as PIA argues, since a
contract is the law between the parties. The principle of party autonomy in contracts is
not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that
the contracting parties may establish such stipulations as they may deem convenient,
"provided they are not contrary to law, morals, good customs, public order or
public policy." Thus, counterbalancing the principle of autonomy of contracting parties
is the equally general rule that provisions of applicable law, especially provisions relating
to matters affected with public policy, are deemed written into the contract. Put a little
differently, the governing principle is that parties may not contract away applicable
provisions of law especially peremptory provisions dealing with matters heavily
impressed with public interest. The law relating to labor and employment is clearly
such an area and parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting
with each other. x x x31

In that case, the Court held that the labor relationship between OFW and the foreign
employer is "much affected with public interest and that the otherwise applicable
Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon
some other law to govern their relationship."32 Thus, the Court applied the Philippine
laws, instead of the Pakistan laws. It was also held that the provision in the employment
contract, where the employer could terminate the employee at any time for any ground
and it could even disregard the notice of termination, violates the employee's right to
security of tenure under Articles 280 and 281 of the Labor Code.

Case title: Equitable Savings Bank, (NOW KNOWN AS THE MERGED ENTITY "BDO
UNIBANK, INC.") vs. Palces,G.R. No. 214752, March 09, 2016
Nature of the action: Petition for review on certiorari. PERLAS-BERNABE, J.First
Division

Facts:

On August 15, 2005, respondent purchased a Hyundai Starex GRX Jumbo (subject
vehicle) through a loan granted by petitioner in the amount of P1,196,100.00. In
connection therewith, respondent executed a Promissory' Note with Chattel
Mortgage5 in favor of petitioner, stating, inter alia, that: (a) respondent shall pay
petitioner the aforesaid amount in 36-monthly installments of P33,225.00 per month,
beginning September 18, 2005 and every 18th of the month thereafter until full payment
of the loan; (b) respondent's default in paying any installment renders the remaining
balance due and payable; and (c) respondent's failure to pay any installments shall give
petitioner the right to declare the entire obligation due and payable and may likewise,
at its option, x x x foreclose this mortgage; or file an ordinary civil action for collection
and/or such other action or proceedings as may be allowed under the law.6

From September 18, 2005 to December 21, 2006, respondent paid the monthly
installment of P33,225.00 per month. However, she failed to pay the monthly
installments in January and February 2007, thereby triggering the acceleration clause
contained in the Promissory Note with Chattel Mortgage 7 and prompting petitioner to
send a demand letter8 dated February 22, 2007 to compel respondent to pay the
remaining balance of the loan in the amount of P664,500.00.9 As the demand went
unheeded, petitioner filed the instant Complaint for Recovery of Possession with
Replevin with Alternative Prayer for Sum of Money and Damages 10 against respondent
before the RTC. RTC ruled in petitioner's favor. The CA affirmed the RTC ruling with
modification.

Issue: whether or not the CA correctly ordered petitioner to return to respondent the
amount of P103,000.00 representing the latter's late installment payments

Ruling:

The petition is partly meritorious. Citing Article 1484 of the Civil Code, specifically
paragraph 3 thereof, the CA ruled that petitioner had already waived its right to recover
any unpaid installments when it sought - and was granted - a writ of replevin in order
to regain possession of the subject vehicle. As such, petitioner is no longer entitled to
receive respondent's late partial payments in the aggregate amount of P103,000.00.

The CA is mistaken on this point.

Article 1484 of the Civil Code, which governs the sale of personal properties in
installments, states in full:

Article 1484. In a contract of sale of personal property the price of which is payable
in installments, the vendor may exercise any of the following remedies:
(1)Exact fulfilment of the obligation, should the vendee fail to pay; (2)Cancel the sale,
should the vendee's failure to pay cover two or more installments; (3) Foreclose the
chattel mortgage on the thing sold, if one has been constituted, should the vendee's
failure to pay cover two or more installments.

In this case, he shall have no further action against the purchaser to recover any unpaid
balance of the price. Any agreement to the contrary shall be void. (Emphases and
underscoring supplied)
In this case, there was no vendor-vendee relationship between respondent and
petitioner. A judicious perusal of the records would reveal that respondent never bought
the subject vehicle from petitioner but from a third party, and merely sought financing
from petitioner for its full purchase price. In order to document the loan transaction
between petitioner and respondent, a Promissory Note with Chattel Mortgage 29 dated
August 18, 2005 was executed wherein, inter alia, respondent acknowledged her
indebtedness to petitioner in the amount of P1,196,100.00 and placed the subject
vehicle as a security for the loan.30 Indubitably, a loan contract with the accessory
chattel mortgage contract - and not a contract of sale of personal property in
installments - was entered into by the parties with respondent standing as the debtor-
mortgagor and petitioner as the creditor-mortgagee. Therefore, the conclusion of the CA
that Article 1484 finds application in this case is misplaced, and thus, must be set aside.

The Promissory Note with Chattel Mortgage subject of this case expressly stipulated,
among others, that: (a) monthly installments shall be paid on due date without prior
notice or demand;31 (b) in case of default, the total unpaid principal sum plus the agreed
charges shall become immediately due and payable;32 and (c) the mortgagor's default
will allow the mortgagee to exercise the remedies available to it under the law. In light
of the foregoing provisions, petitioner is justified in filing his Complaint 33 before the RTC
seeking for either the recovery of possession of the subject vehicle so that it can exercise
its rights as a mortgagee, i.e., to conduct foreclosure proceedings over said vehicle;34 or
in the event that the subject vehicle cannot be recovered, to compel respondent to pay
the outstanding balance of her loan.35 Since it is undisputed that petitioner had
regained possession of the subject vehicle, it is only appropriate that foreclosure
proceedings, if none yet has been conducted/concluded, be commenced in accordance
with the provisions of Act No. 1508,36 otherwise known as "The Chattel Mortgage Law,"
as intended. Otherwise, respondent will be placed in an unjust position where she is
deprived of possession of the subject vehicle while her outstanding debt remains unpaid,
either in full or in part, all to the undue advantage of petitioner - a situation which law
and equity will never permit.

Case title: Peña vs Delos Santos, G.R. No. 202223, March 02, 2016

Nature of the action: Motion for Reconsideration, REYES, J., Third Division

Facts:
Jesus Delos Santos (Jesus) and Rosita Delos Santos Flores (Rosita) were the judgment
awardees of the two-thirds portion or 9,915 square meters of four adjoining lots
designated as Lots 393-A, 393-B, 394-D and 394-E, measuring 14,771 sq m, located in
Boracay Island, Malay, Aldan.

The losing parties in the case, Vicente Delos Santos, et al. (plaintiffs) and Spouses Fred
and Joan Elizalde (appellants), appealed. Both appeals were dismissed and considered
withdrawn in the CA upon the appellants' motion to withdraw appeal. In the subsequent
CA, the motion for reconsideration and motion to reinstate appeal filed by the plaintiffs
were denied for being time-barred as it was filed nine days late.7

Atty. Robiso later on sold Lots No. 393-A and 394-D to Peña on December 15, 2006 thru
a Deed of Absolute Sale.15 The tax declarations over the said portions were subsequently
registered in Peña's name.16

The plaintiffs opposed Peña's motion claiming that the conveyance made by Jesus and
Rosita in favor of Atty. Robiso was null and void for being a prohibited transaction
because the latter was their counsel in the case.

Apparently, Atty. Robiso was engaged by Jesus and Rosita to be their counsel in Civil
Case No. 3683 by virtue of an Attorney's Agreement and Undertaking dated July 11,
1998.17 Under the agreement, Atty. Robiso bound himself to render his legal services in
connection with Jesus and Rosita's involvement as party-litigants in Civil Case No. 3683
and to any proceedings that may arise in connection therewith before the CA and this
Court. Atty. Robiso undertook to advance his own funds for all expenses and costs he
may incur in relation to the case. In consideration thereof, Jesus and Rosita obliged
themselves to give or pay to him as contingent professional fees, 2,000 sq m of any and
all lands that the courts will award to them in the case.

Issue: Whether or not the sale is valid

Ruling:

The lawyer should not purchase any interest in the subject matter of the litigation which
he is conducting.

A property is in litigation if there is a contest or litigation over it in court or when it is

subject of a judicial action.27 Records show that the judicial action over the subject lots
was still in the appellate proceedings stage when they were conveyed to Jesus and
Rosita's counsel, Atty. Robiso. The Deed of Transfer or Conveyance and the Deed of
Absolute Sale both dated May 4, 2005 as well as the Confirmation of Sale and Transfer
dated December 5, 2006 were all executed long before the termination of the appellate
proceedings before this Court in G.R. Nos. 141810 and 141812 on February 2, 2007.

Clearly then, since the property conveyed to Atty. Robiso by Jesus and Rosita was still
the object of litigation, the deeds of conveyance executed by the latter are deemed
inexistent. Under Article 1409 of the Code, contracts which are expressly prohibited or
declared void by law are considered inexistent and void from the beginning.28 This being
so, Atty. Robiso could not have transferred a valid title in favor of Peña over the lots
awarded to Jesus and Rosita in Civil Case No. 3683. Consequently, Peña has no legal
standing to be substituted in the stead of or joined with Jesus and Rosita as the first
set of intervenors and to move for issuance of a writ of execution in Civil Case No. 3683.

This is notwithstanding the fact that the sale to Atty. Robiso was made pursuant to a
contingency fee contract. It is true that contingent fee agreements are recognized in this
jurisdiction as a valid exception to the prohibitions under Article 1491(5) of the Civil
Code.32 The Court cannot extend a similar recognition to the present case, however,
since the payment to Atty. Robiso of his contingency fees was made during the pendency
of litigation. "A contingent fee contract is an agreement in writing where the fee, often a
fixed percentage of what may be recovered in the action, is made to depend upon the
success of the litigation. The payment of the contingent fee is not made during the
pendency of the litigation involving the client's property but only after the judgment has
been rendered in the case handled by the lawyer."33

Peña cannot rely on Article 143734 by claiming that Jesus and Rosita are already
estopped from questioning the validity of their deeds of conveyance with Atty. Robiso.
Estoppel is a principle in equity and pursuant to Article 1432 it is adopted insofar as it
is not in conflict with the provisions of the Civil Code and other laws. Otherwise
speaking, estoppel cannot supplant and contravene the provision of law clearly
applicable to a case.35 Conversely, it cannot give validity to an act that is prohibited by
law or one that is against public policy.36

The rationale advanced for the prohibition in Article 1491(5) is that public policy
disallows the transactions in view of the fiduciary relationship involved, i.e., the relation
of trust and confidence and the peculiar control exercised by these persons. It is founded
on public policy because, by virtue of his office, an attorney may easily take advantage
of the credulity and ignorance of his client and unduly enrich himself at the expense of
his client.37 The principle of estoppel runs counter to this policy and to apply it in this
case will be tantamount to sanctioning a prohibited and void transaction.

Case title: BPI vs Lainggo, G.R. No. 205206, March 16, 2016

Nature of the action: Petition for review on certiorari, CARPIO, J.Second Division

Facts:

On 20 July 1999, Rheozel Laingo (Rheozel), the son of respondent Yolanda Laingo
(Laingo), opened a "Platinum 2-in-1 Savings and Insurance" account with petitioner
Bank of the Philippine Islands (BPI) in its Claveria, Davao City branch. The Platinum 2-
in-1 Savings and Insurance account is a savings account where depositors are
automatically covered by an insurance policy against disability or death issued by
petitioner FGU Insurance Corporation (FGU Insurance), now known as BPI/MS
Insurance Corporation. BPI issued Passbook No. 50298 to Rheozel corresponding to
Savings Account No. 2233-0251-11. A Personal Accident Insurance Coverage Certificate
No. 043549 was also issued by FGU Insurance in the name of Rheozel with Laingo as
his named beneficiary.

On 25 September 2000, Rheozel died due to a vehicular accident as evidenced by a

Certificate of Death issued by the Office of the Civil Registrar General of Tagum City,
Davao del Norte. Since Rheozel came from a reputable and affluent family, the Daily
Mirror headlined the story in its newspaper on 26 September 2000.
On 27 September 2000, Laingo instructed the family's personal secretary, Alice
Torbanos (Alice) to go to BPI, Claveria, Davao City branch and inquire about the savings
account of Rheozel. Laingo wanted to use the money in the savings account for Rheozel's
burial and funeral expenses.

Alice went to BPI and talked to Jaime Ibe Rodriguez, BPI's Branch Manager regarding
Laingo's request. Due to Laingo's credit standing and relationship with BPI, BPI
accommodated Laingo who was allowed to withdraw P995,000 from the account of
Rheozel. A certain Ms. Laura Cabico, an employee of BPI, went to Rheozel's wake at the
Cosmopolitan Funeral Parlor to verify some information from Alice and brought with her
a number of documents for Laingo to sign for the withdrawal of the P995,000.

More than two years later or on 21 January 2003, Rheozel's sister, Rhealyn Laingo-
Concepcion, while arranging Rheozel's personal things in his room at their residence in
Ecoland, Davao City, found the Personal Accident Insurance Coverage Certificate No.
043549 issued by FGU Insurance. Rhealyn immediately conveyed the information to
Laingo.

Laingo sent two letters dated 11 September 2003 and 7 November 2003 to BPI and FGU
Insurance requesting them to process her claim as beneficiary of Rheozel's insurance
policy. On 19 February 2004, FGU Insurance sent a reply-letter to Laingo denying her
claim. FGU Insurance stated that Laingo should have filed the claim within three
calendar months from the death of Rheozel.

On 20 February 2004, Laingo filed a Complaint4 for Specific Performance with Damages
and Attorney's Fees with the Regional Trial Court of Davao City, Branch 16 (trial court)
against BPI and FGU Insurance.

Issue: Whether an agency has been created

Ruling:

In this case, since the Platinum 2-in-1 Savings and Insurance account was BPI's
commercial product, offering the insurance coverage for free for every deposit account
opened, Rheozel directly communicated with BPI, the agent of FGU Insurance. BPI not
only facilitated the processing of the deposit account and the collection of necessary
documents but also the necessary endorsement for the prompt approval of the
insurance coverage without any other action on Rheozel's part. Rheozel did not interact
with FGU Insurance directly and every transaction was coursed through BPI.

BPI, as agent of FGU Insurance, had the primary responsibility to ensure that the 2-in-
1 account be reasonably carried out with full disclosure to the parties concerned,
particularly the beneficiaries. Thus, it was incumbent upon BPI to give proper notice of
the existence of the insurance coverage and the stipulation in the insurance contract
for filing a claim to Laingo, as Rheozel's beneficiary, upon the latter's death.

The provision is clear that an agent is bound to carry out the agency. The relationship
existing between principal and agent is a fiduciary one, demanding conditions of trust
and confidence. It is the duty of the agent to act in good faith for the advancement of
the interests of the principal. In this case, BPI had the obligation to carry out the agency
by informing the beneficiary, who appeared before BPI to withdraw funds of the insured
who was BPI's depositor, not only of the existence of the insurance contract but also the
accompanying terms and conditions of the insurance policy in order for the beneficiary
to be able to properly and timely claim the benefit.

Upon Rheozel's death, which was properly communicated to BPI by his mother Laingo,
BPI, in turn, should have fulfilled its duty, as agent of FGU Insurance, of advising Laingo
that there was an added benefit of insurance coverage in Rheozel's savings account. An
insurance company has the duty to communicate with the beneficiary upon receipt of
notice of the death of the insured. This notification is how a good father of a family
should have acted within the scope of its business dealings with its clients. BPI is
expected not only to provide utmost customer satisfaction in terms of its own products
and services but also to give assurance that its business concerns with its partner
entities are implemented accordingly.

There is a rationale in the contract of agency, which flows from the "doctrine of
representation," that notice to the agent is notice to the principal,11 Here, BPI had been
informed of Rheozel's death by the latter's family. Since BPI is the agent of FGU
Insurance, then such notice of death to BPI is considered as notice to FGU Insurance
as well. FGU Insurance cannot now justify the denial of a beneficiary's insurance claim
for being filed out of time when notice of death had been communicated to its agent
within a few days after the death of the depositor-insured. In short, there was timely
notice of Rheozel's death given to FGU Insurance within three months from Rheozel's
death as required by the insurance company.

Case Title: Perez vs Aquino, G.R. No. 217799, March 16, 2016

Nature of the action: Petition for review on certiorari, PERLAS-BERNABE, J. First

Division

Facts:
Respondent is the bona fide tenant6 of a 5,000-square meter (sq. m.) parcel of land
situated in Barangay Pinasling, Gerona, Tarlac (subject land), which was originally
owned by the late Luis Cardona (Luis), and later transferred to the latter's heirs
(Cardona heirs),7

Sometime in 1994, the Cardona heirs sold the subject land to petitioner Cita C. Perez
(petitioner) for the amount of P20,000.00 who was, thereafter, issued a new certificate
of title.8

On January 15, 2002, respondent filed a complaint9 for redemption against petitioner
before the PARAD, docketed as DARAB Case No. III-T-2163-01, averring that: (a) the
sale in favor of petitioner violated his right of pre-emption as the legitimate agricultural
lessee; and (b) petitioner was not a purchaser in good faith, considering that she had
prior knowledge that the subject land was already occupied by him.10

For her part, petitioner claimed,11inter alia, that respondent: (a) had not cultivated the
subject land and allowed it to remain idle; (b) had not been paying lease rentals since
1983; (c) had allowed his children and relatives.to construct residential houses thereon
in violation of agrarian laws; and (d) was fully aware of her acquisition from the Cardona
heirs, but failed to avail of his right of redemption within the prescribed period.

Issue: Whether or not respondent was able to validly exercise his right of redemption

Ruling:

No, In this case, it is undisputed that respondent is the bona fide tenant of the subject
land39 which was sold by the landowner, the Cardona heirs, to a third party, i.e.,
petitioner, without any written notice of the sale to respondent and the DAR.40 As such,
respondent has the right to redeem the same from petitioner within the prescriptive
period of 180 days from written notice of the sale by the latter pursuant to Section 12
of RA 3844, as amended.41 Since it has been established that respondent was never
notified by petitioner of the sale in her favor, then there is no prescription to speak of in
the instant case. As such, respondent has the right to redeem the subject land.42

Nonetheless, having elected to exercise his right to redeem the subject land by filing a
complaint in court, it behooved upon respondent to comply with the requirements for a
valid and effective exercise of such right, i.e., the filing of the complaint should have
been coupled with the consignation of the redemption price to show his willingness and
ability to pay. Considering that respondent failed to consign the redemption price of
P20,000.00 when he filed the complaint for redemption before the PARAD on January
15, 2002, there was no valid exercise of the right to redeem the subject land. It bears
stressing that while the right of redemption under Section 12 of RA 3844, as amended,
is an essential mandate of the agrarian reform legislation to implement the State's policy
of owner-cultivatorship and to achieve a dignified, self-reliant existence for small
fanners, such laudable and commendable policy is never intended to unduly transgress
the corresponding rights of purchasers of land.43 Consequently, the dismissal of the
complaint for redemption is in order.
This notwithstanding, petitioner, as the new owner, is bound to respect and maintain
respondent as tenant of the subject land because of the latter's tenancy right attached
to the,land regardless of who its owner may be.44 Under the law, the existence of an
agricultural leasehold relationship is not terminated by changes in ownership in case of
sale,43 as in this case, since the purpose of the law is to strengthen the security of tenure
of tenants. Thus, in Planters Development Bank v. Garcia,46 the Court held:

[In] case of transfer [x x x], the tenancy relationship between the landowner and his
tenant should be preserved in order to insure the well-being of the tenant or protect him
from being unjustly dispossessed by the transferee or purchaser of the land; in other
words, the purpose of the law in question is to maintain the tenants in the peaceful
possession and cultivation of the land or afford them protection against
unjustified dismissal from their holdings

Case title: Victoria vs Pidlaoan, G.R. No. 196470, April 20, 2016

Nature of the action: Petition for review on certiorari, BRION, J. Second Division

Facts:

he petitioners Rosario Victoria (Rosario) and Elma lived together since 1978 until
Rosario left for Saudi Arabia.
In 1984, Elma bought a parcel of land with an area of 201 square meters in Lucena City
and was issued Transfer Certificate of Title (TCT) No. T-50282.2 When Rosario came
home, she caused the construction of a house on the lot but she left again after the
house was built.3

Elma allegedly mortgaged the house and lot to a certain Thi Hong Villanueva in
1989.4 When the properties were about to be foreclosed, Elma allegedly asked for help
from her sister-in-law, Eufemia Pidlaoan (Eufemia), to redeem the property. 5 On her
part, Eufemia called her daughter abroad, Normita, to lend money to Elma. Normita
agreed to provide the funds.6

Elma allegedly sought to sell the land.7 When she failed to find a buyer, she offered to
sell it to Eufemia or her daughter.8

On March 21, 1993, Elma executed a deed of sale entitled "Panananto ng Pagkatanggap
ng Kahustuhang Bayad" transferring the ownership of the lot to Normita.9 The last
provision in the deed of sale provides that Elma shall eject the person who erected the
house and deliver the lot to Normita.10 The document was signed by Elma, Normita, and
two witnesses but it was not notarized.

When Elma and Normita were about to have the document notarized, the notary public
advised them to donate the lot instead to avoid capital gains tax.11 On the next day,
Elma executed a deed of donation in Normita's favor and had it notarized. TCT No. T-
50282 was cancelled and TCT No. T-70990 was issued in Normita's name.12 Since then,
Normita had been paying the real property taxes over the lot but Elma continued to
occupy the house.

Rosario found out about the donation when she returned to the country a year or two
after the transaction.13

In 1997, the petitioners filed a complaint for reformation of contract, cancellation of

TCT No. T-70990, and damages with prayer for preliminary injunction against Eufemia,
Normita, and Herminigilda Pidlaoan

Issue: Whether or not there is equitable mortgage

Ruling:

Notably, neither the CA nor the RTC found merit in the petitioners' claim of equitable
mortgage. We find no reason to disagree with these conclusions.

An equitable mortgage is one which, although lacking in some formality or other

requisites demanded by statute, nevertheless reveals the intention of the parties to
charge real property as security for a debt, and contains nothing impossible or contrary
to law.42 Articles 1602 and 1604 of the Civil Code provide that a contract of absolute
sale shall be presumed an equitable mortgage if any of the circumstances listed in Article
1602 is attendant.

Two requisites must concur for Articles 1602 and 1604 of the Civil Code to apply: one,
the parties entered into a contract denominated as a contract of sale; and two, their
intention was to secure an existing debt by way of mortgage.43

In the present case, the unnotarized contract of sale between Elma and Normita is
denominated as "Panananto ng Pagkatanggap ng Kahustuhang Bayad."44 Its contents
show an unconditional sale of property between Elma and Normita. The document
shows no intention to secure a debt or to grant a right to repurchase. Thus, there is no
evidence that the parties agreed to mortgage the property as contemplated in Article
1602 of the Civil Code. Clearly, the contract is not one of equitable mortgage.

Even assuming that Article 1602 of the Civil Code applies in this case, none of the
circumstances are present to give rise to the presumption of equitable mortgage. One,
the petitioners failed to substantiate their claim that the sale price was unusually
inadequate.45 In fact, the sale price of P30,000.00 is not unusually inadequate
compared with the lot's market value of P32,160 as stated in the 1994 tax
declaration. Two, the petitioners continued occupation on the property was coupled
with the respondents' continuous demand for them to vacate it. Third, no other
document was executed for the petitioners to repurchase the lot after the sale contract
was executed. Finally, the respondents paid the real property taxes on the lot.46These
circumstances contradict the petitioners' claim of equitable mortgage.

A review of the sale contract or the "Panananto ng Pagkatanggap ng Kahustuhang

Bayad" shows that the parties intended no equitable mortgage. The contract even
contains Elma's undertaking to remove Rosario's house on the property.47 This
undertaking supports the conclusion that the parties executed the contract with the
end view of transferring full ownership over the lot to Normita.

In sum, we rule that based on the records of the case, Elma and Normita entered in a
sale contract, not a donation. Elma sold the entire property to Normita. Accordingly,
TCT No. T-70990 was validly issued in Normita's name.

Case Title: Travel & Tours Advisers, Inc vs Cruz, G.R. No. 199282, March 14, 2016

Nature of the action: Petition for Review on Certiorari, PERALTA, J. Third Division

Facts:
Respondent Edgar Hernandez was driving an Isuzu Passenger Jitney (jeepney) that he
owns with plate number DSG-944 along Angeles-Magalang Road, Barangay San
Francisco, Magalang, Pampanga, on January 9, 1998, around 7:50 p.m. Meanwhile,. a
Daewoo passenger bus (RCJ Bus Lines) with plate number NXM-116, owned by
petitioner Travel and Tours Advisers, Inc. and driven by Edgar Calaycay travelled in the
same direction as that of respondent Edgar Hernandez vehicle. Thereafter, the bus
bumped the rear portion of the jeepney causing it to ram into an acacia tree which
resulted in the death of Alberto Cruz, Jr. and the serious physical injuries of Virginia
Muñoz.

Thus, respondents Edgar Hernandez, Virginia Muñoz and Alberto Cruz, Sr., father of
the deceased Alberto Cruz, Jr., filed a complaint for damages, docketed as Civil Case
No. 9006 before the RTC claiming that the collision was due to the reckless, negligent
and imprudent manner by which Edgar Calaycay was driving the bus, in complete
disregard to existing traffic laws, rules and regulations, and praying that judgment be
rendered ordering Edgar Calaycay and petitioner Travel & Tours Advisers, Inc. to pay

Issue: Whether or not damages are proper

Ruling:

It is settled that actual damages must be substantiated by documentary evidence, such

as receipts, in order to prove expenses incurred as a result of the death of the victim.
As such, the award for actual damages in the amount of P50,000.00 must be modified
accordingly.

Under Article 2206 of the Civil Code, the damages for death caused by a quasi-
delict shall, in addition to the indemnity for the death itself which is fixed by current
jurisprudence at P50,000.00 and which the court a quo failed to award in this case,
include loss of the earning capacity of the deceased and moral damages for mental
anguish by reason of such death. The formula for the computation of loss of earning
capacity is as follows:

Net earning capacity = Life expectancy x [Gross Annual Income - Living Expenses (50%
of gross annual income)], where life expectancy = 2/3 (80 - the age of the deceased)

Evidence on record shows that the deceased was earning P6,000.00 a month as smoke
house operator at Pampanga's Best, Inc., as per Certification (Exhibit "K") issued by the
company's Production Manager, Enrico Ma. O. Hizon, on March 18, 1998, His gross
income therefore amounted to P72,000.00 [P6,000.00 x 12]. Deducting 50% therefrom
(P36,000.00) representing the living expenses, his net annual income amounted to
P36,000.00. Multiplying this by his life expectancy of 40.67 years [2/3(80-19)] having
died at the young age of 19, the award for loss of earning capacity should have been
P1,464,000.00. Considering, however, that his heirs represented by his father,
ALBERTO CRUZ, SR., no longer appealed from the assailed Decision dated January 30,
2008, and no discussion thereon was even attempted in plaintiffs-appellees' appeal
brief, the award for loss of earning capacity in the amount of P250,000.00 stands.
Moral damages in the amount of P50,000.00 is adequate and reasonable, bearing in
mind that the purpose for making such award is not to enrich the heirs of the victim
but to compensate them however inexact for injuries to their feelings.

Petitioner contends that the CA erred in awarding an amount for the loss of earning
capacity of Alberto Cruz, Jr. It claims that the certification from the employer of the
deceased stating that when he was still alive - he earned P6,000.00 per month was not
presented and identified in open court.

In that aspect, petitioner is correct. The records are bereft that such certification was
presented and identified during the trial. It bears stressing that compensation for lost
income is in the nature of damages and as such requires due proof of the damages
suffered; there must be unbiased proof of the deceased's average income.29

In the same manner, petitioner is also partly responsible for the injuries sustained by
respondent Virginia Muñoz hence, of the P16,744.00 actual damages and P30,000.00
moral damages awarded by the CA, petitioner is liable for half of those amounts. Anent
respondent Edgar Hernandez, due to his contributory negligence, he is only entitled to
receive half the amount (P40,200.00) awarded by the CA as actual damages which is
P20,100.00.

As to the award of attorney's fees, it is settled that the award of attorney's fees is the
exception rather than the general rule; counsel's fees are not awarded every time a party
prevails in a suit because of the policy that no premium should be placed on the right
to litigate. Attorney's fees, as part of damages, are not necessarily equated to the amount
paid by a litigant to a lawyer. In the ordinary sense, attorney's fees represent the
reasonable compensation paid to a lawyer by his client for the legal services he has
rendered to the latter; while in its extraordinary concept, they may be awarded by the
court as indemnity for damages to be paid by the losing party to the prevailing party.
Attorney's fees as part of damages are awarded only in the instances specified in Article
220830 of the Civil Code. As such, it is necessary for the court to make findings of fact
and law that would bring the case within the ambit of these enumerated instances to
justify the grant of such award, and in all cases it must be reasonable. 31 In this case,
the RTC, in awarding attorney's fees, reasoned out that [w]hile there is no document
submitted to prove that the plaintiffs spent attorney's fees, it is clear that they paid their
lawyer in the prosecution of this case for which they are entitled to the same.32 Such
reason is conjectural and does not justify the grant of the award, thus, the attorney's
fees should be deleted. However, petitioner shall still have to settle half of the cost of the
suit.
Statute of Frauds

HEIRS OF LEANDRO NATIVIDAD AND JULIANA V. NATIVIDAD, v. JUANA MAURICIO-

NATIVIDAD, AND SPOUSES JEAN NATIVIDAD CRUZ AND JERRY CRUZ,
G.R. No. 198434, February 29, 2016
THIRD DIVISION PERALTA, J.

FACTS:

Sometime in 1974, Sergio Natividad (Sergio), husband of respondent Juana Mauricio-Natividad

(Juana) and father of respondent Jean Natividad-Cruz (Jean), obtained a loan from the
Development Bank of the Philippines (DBP). As security for the loan, Sergio mortgaged two parcels
of land, one of which is co-owned and registered in his name and that of his siblings namely,
Leandro, Domingo and Adoracion. This property is covered by Original Certificate of Title (OCT)
No. 5980. Sergio's siblings executed a Special Power of Attorney authorizing him to mortgage the
said property. The other mortgaged parcel of land, covered by OCT No. 10271, was registered in
the name of Sergio and Juana. Subsequently, Sergio died without being able to pay his obligations
with DBP. Since the loan was nearing its maturity and the mortgaged properties were in danger
of being foreclosed, Leandro paid Sergio's loan obligations. Considering that respondents were
unable to reimburse Leandro for the advances he made in Sergio's favor, respondents agreed that
Sergio's share in the lot which he co-owned with his siblings and the other parcel of land in the
name of Sergio and Juana, shall be assigned in favor of Leandro and Juliana. Leandro's and
Sergio's brother, Domingo, was tasked to facilitate the transfer of ownership of the subject
properties in favor of Leandro and Juliana. However, Domingo died without being able to cause
such transfer. Subsequently, despite demands and several follow-ups made by petitioners,
respondents failed and refused to honor their undertaking.

Respondents waived their right to present evidence and they merely filed their memorandum.
Also, during pendency' of the trial, Leandro died and was substituted by his heirs, herein
petitioners.

On November. 4, 2008, the RTC rendered its Decision in favor of petitioners,

CA PARTLY GRANTED the Decision dated November 4, 2008 and thereby MODIFIED that
defendants-appellants Juana Mauricio-Natividad and Jean Natividad-Cruz are ordered instead to
reimburse plaintiffs-appellees Juliana Natividad and the heirs of the late Leandro Natividad the
amount of P162,514.88 representing the amount of the loan obligation paid to the Development
Bank of the Philippines, plus legal interest of 12% per annum computed from June 23, 2001 until
finality of the judgment, the total amount of which shall be to the extent only of defendants-
appellants' successional rights in the mortgaged properties and Juana1 s conjugal share in [the]
property covered by OCT No. 10271. The award of attorney's fees and cost of suit are AFFIRMED.

ISSUE:
Whether the verbal agreement to convey the property shares of Sergio Natividad in the payment
of his obligation is covered by the statute of frauds despite the fact that it has been partially
executed, is contrary to existing jurisprudence.

RULING:

Suffice it to say that there is no partial execution of any contract, whatsoever, because petitioners
failed to prove, in the first place, that there was a verbal agreement that was entered into.

Even granting that such an agreement existed, the CA did not commit any error in ruling that the
assignment of the shares of Sergio in the subject properties in petitioners' favor as payment of
Sergio's obligation cannot be enforced if there is no written contract to such effect. Under the
Statute of Frauds, an agreement to convey real properties shall be unenforceable by action in the
absence of a written note or memorandum thereof and subscribed by the party charged or by his
agent. As earlier discussed, the pieces of evidence presented by petitioners, consisting of
respondents' acknowledgment of Sergio's loan obligations with DBP as embodied in the
Extrajudicial Settlement Among Heirs, as well as the cash voucher which allegedly represents
payment for taxes and transfer of title in petitioners' name do not serve as written notes or
memoranda of the alleged verbal agreement.

The foregoing, notwithstanding, the Court finds it proper to reiterate the CA ruling that, in any
case, since respondents had already acknowledged that Sergio had, in fact, incurred loan
obligations with the DBP, they are liable to reimburse the amount paid by Leandro for the payment
of the said obligation even if such payment was made without their knowledge or consent

Article 1236 of the Civil Code clearly provides that:

The creditor is not bound to accept payment or performance by a third person who has no
interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.

Whoever pays for another may demand from the debtor what he has paid, except that if he
paid without the knowledge or against the will of the debtor, he can recover only insofar as
the payment has been beneficial to the debtor. (Emphasis supplied)

Neither can respondents evade liability by arguing that they were not parties to the contract
between Sergio and the DBP. As earlier stated, the fact remains that, in the Extrajudicial Settlement
Among Heirs, respondents clearly acknowledged Sergio's loan obligations with the DBP. Being
Sergio's heirs, they succeed not only to the rights of Sergio but also to his obligations.

The following provisions of the Civil Code are clear on this matter, to wit:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance, of a person are transmitted through
his death to another or others either by will or by operation of law.
 Art. 776. The inheritance includes all the property, rights and obligations of a person which
are not extinguished by his death.

Art. 781. The inheritance of a person includes not only the property and the transmissible
rights and obligations existing at the time of his death, but also those which have accrued
thereto since the opening of the succession.

In the present case, respondents, being heirs of Sergio, are now liable to settle his transmissible
obligations, which include the amount due to petitioners, prior to the distribution of the remainder
of Sergio's estate to them, in accordance with Section I, Rule 90 of the Rules of Court.

WHEREFORE, the instant petition is DENIED. The Decision and Resolution of the Court of Appeals,
dated February 7, 2011 and August 25, 2011, respectively, in CA-G.R. CV No. 92840 are AFFIRMED
with MODIFICATION by ORDERING respondents to pay petitioners, in addition to the principal
amount of P162,514.88, interest thereon at the rate of twelve percent (12%) per annum, computed
from June 23, 2001 to June 30, 2013, and six percent (6%) per annum from July 1, 2013 until full
satisfaction of the judgment award.
Contracts; vitiated consent

LEONORA SASA-AKIYAMA, petitioner, vs.

SPOUSES ROMEO AND TERESITA CASAL, respondents.
G.R. No. 216573. April 18, 2016
THIRD DIVISION

FACTS:

Petitioner Leonora Sasa-Akiyama bought a house and lot located in Multinational Village
Subdivision, Moonwalk, Parañaque City (the subject property) from respondent spouses Romeo
and Teresita Casal for P1,700,000, the amount of P300,000 payable upon contract signing and the
balance payable in monthly installments. The conveying Contract to Sell the parties signed on
December 14, 1999 (First Contract to Sell). The purchase price of P1,700,000.00 shall be paid at
the principal office of the SELLER or at such other place as the SELLER shall designate in writing
and without need of demands or the services of a collector, as follows:
a) The sum of THREE HUNDRED THOUSAND PESOS (P300,000.00) upon signing of this
Contract, and;
b) The balance of ONE MILLION FOUR HUNDRED THOUSAND PESOS (P1,400,000.00) shall be
paid within eight (8) years in equal consecutive monthly installments of THIRTY TWO
THOUSAND NINE HUNDRED EIGHTEEN AND THIRTY SEVEN CENTS (P32,918.37) until the
principal sum shall have been paid; with interest on all deferred payments at the rate of 2%
per month payable each month as the principal is paid. The first installment and interest shall
become due and payable without need of demand, on January 15, 2000 and the succeeding
monthly installments to be paid every month thereafter until the remainder of the purchase
price including interests due has been paid in full.

After paying the stipulated downpayment, petitioner made periodic, albeit irregular, installment
payments. However, from October 2002 to April 2003, respondents allegedly refused to accept
petitioner's monthly payments since the latter breached their contract by failing to pay her
monthly amortizations on time. In March 2003, respondent Teresita Casal filed a complaint with
the Barangay Lupon of Moonwalk, Parañaque City, and allegedly threatened to eject petitioner
and her family from the subject property.

RTC upheld the validity of the Second Contract to Sell and dismissed the complaint for lack of
merit. CA affirmed with modification the trial court's Decision.

ISSUE:

Whether or not the Second Contract to Sell is valid

RULING:
To secure the annulment of the Second Contract to Sell, petitioner must prove the existence of
elements which vitiate consent as provided in Article 1390 of the Civil Code, which states:
ART. 1390. The following contracts are voidable or annullable, even though there may have been
no damage to the contracting parties:
xxx xxx xxx
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or
fraud.
Under Article 1335 of the Code, there is intimidation when one of the contracting parties is
compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person
or property, or upon the person or property of his spouse, descendants or ascendants, to give his
consent. A threat to enforce one's claim through competent authority, if the claim is just or legal,
does not vitiate consent.

On the other hand, Article 1331 of the Civil Code provides that the mistake which vitiates consent
should refer to the substance of the thing which is the object of the contract, or to those
conditions which have principally moved one or both parties to enter into the contract. To
invalidate consent on the ground of mistake, the error must be real and not one that could have
been avoided by the party alleging it. The error must arise from facts unknown to him. He cannot
allege an error which refers to a fact known to him or which he should have known by ordinary
diligent examination of the facts. An error so patent and obvious that nobody could have made
it, or one which could have been avoided by ordinary prudence, cannot be invoked by the one
who made it in order to annul his contract.

Finally, the succeeding Article 1338 of the Code states that there is fraud when, through insidious
words or machinations of one of the contracting parties, the other is induced to enter into a
contract which, without them, he would not have agreed to.

The elements which purportedly vitiated petitioner's consent are not present in this case.

None of the elements which vitiate consent obtain under the premises. Respondents' threats of
forfeiture of petitioner's payments or her ejectment from the property, if this be the case, are
insufficient to show that they employed intimidation upon her. Apart from petitioner's self-serving
testimony, the records are bereft of evidence showing that respondents deprived her of her
freewill or left her with no choice but to sign the contract.
In addition, the mistake petitioner alludes to refers to the amount of the balance of the principal
obligation under the First Contract to Sell that was used in determining the purchase price under
the Second Contract to Sell. However, petitioner could have easily avoided this mistake by
exercising ordinary diligence, since all the facts and information necessary for the determination
of the alleged proper amount were available to her. She could have raised the alleged discrepancy
had she been vigilant in ascertaining the remaining balance of the total payments due under the
First Contract to Sell. For the same reason, petitioner's claim that respondents employed fraud in
making her sign the second contract does not hold water. Fraud is never presumed.
IN VIEW OF THE FOREGOING, the petition is DENIED. The Decision dated March 25, 2014 and
Resolution dated January 27, 2015 of the Court of Appeals in CA-G.R. CV No. 95786 are hereby
AFFIRMED with MODIFICATIONS.
1. Petitioner Leonora Sasa-Akiyama is hereby ordered to pay respondent spouses Romeo and
Teresita Casal within sixty (60) days from receipt of this Resolution:
a) The unpaid balance of P939,507.20 under the Contract to Sell executed on June 25, 2003.
b) A 6% interest per annum on the respective balance due reckoned from April 22, 2004, June 18,
2004, and February 21, 2005 up to the finality of this Resolution.
c) A 6% legal interest per annum on the total amount due from the finality of this Resolution until
fully paid. ETHIDa
2. Upon payment of the full amount, respondents shall immediately execute a Deed of Absolute
Sale over the subject property and deliver the corresponding transfer certificate of title to
petitioner.

SO ORDERED.