Civil_Velasco_Cases.pdf

Dean’s

Circle 2016 UNIVERSITY OF SANTO TOMAS Digested by: DC 2016 Members Editors: Tricia Lacuesta Lorenzo Gayya Cristopher Reyes Macky Siazon Janine Arenas Ninna Bonsol Lloyd Javier

Supreme Court decisions penned by Associate Justice Presbitero J. Velasco, Jr.

Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016

Table of Contents Effect and Application of Laws ................................................................................................. 3 Publication of Laws .................................................................................................................. 4 Waiver of Rights ...................................................................................................................... 5 Human Relations ..................................................................................................................... 6 Persons and Family Relations ..................................................................................................... 7

Persons ................................................................................................................................... 7 Marriage ................................................................................................................................. 8 Dissolution of Marriage ..................................................................................................... 10 Property Relations of the Spouses ..................................................................................... 11 The Family ......................................................................................................................... 14 Paternity and Filiation ....................................................................................................... 14 Property ................................................................................................................................... 15

Accession .............................................................................................................................. 15 Donation ............................................................................................................................... 16 Prescription and Laches ............................................................................................................ 18

Laches ................................................................................................................................... 18 Obligations and Contracts ........................................................................................................ 20

Obligations ............................................................................................................................ 20 Definition .............................................................................................................................. 20 Nature and Effects of Obligations .......................................................................................... 21 Kinds of Civil Obligations ....................................................................................................... 22 Extinguishment of Obligations ............................................................................................... 23 Payment or Performance....................................................................................................... 23 Consignation ......................................................................................................................... 26 Contracts ............................................................................................................................... 27 Inadequacy of Consideration ................................................................................................. 29 Kinds of Contracts ................................................................................................................. 30 Estoppel ................................................................................................................................ 33 Sales ......................................................................................................................................... 34

Double Sale ........................................................................................................................... 34 1 | Page

Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Equitable Mortgage ............................................................................................................... 36 Partnership, Agency and Trusts ................................................................................................ 37

Powers .................................................................................................................................. 37 Express vs. Implied Agency .................................................................................................... 38 Compromise ............................................................................................................................. 39 Credit Transactions ................................................................................................................... 41

Loan ...................................................................................................................................... 41 Real Mortgage ....................................................................................................................... 43 Land Titles and Deeds ............................................................................................................... 44

Torrens System...................................................................................................................... 44 Classification of Lands ........................................................................................................... 45 Determination of Valuation of Lands ..................................................................................... 46 Original Registration.............................................................................................................. 48 Subsequent Registration........................................................................................................ 50 Reconstitution of Title ........................................................................................................... 52 Reconveyance ....................................................................................................................... 54 Confirmation of Imperfect Title ............................................................................................. 56 Homestead Patents ............................................................................................................... 57 Notice of Lis Pendens ............................................................................................................ 60 Redemption .......................................................................................................................... 61 Acquisitive Prescription ......................................................................................................... 62 Torts and Damages ................................................................................................................... 64

Exemplary or Corrective Damages ......................................................................................... 64

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 CIVIL LAW EFFECT AND APPLICATION OF LAWS (CIVIL CODE) EDUARDO M. COJUANGCO, JR. v. REPUBLIC OF THE PHILIPPINES G.R. No. 180705, November 27, 2012 , Velasco, Jr., J. It is well-settled that laws must be published to be valid. In fact, publication is an indispensable condition for the effectivity of a law.

Facts: R.A. 6260 was enacted creating the Coconut Investment Company (CIC) to administer the Coconut Investment Fund (CIF), which, under Section 8 thereof, was to be sourced from a P0.55 levy on the sale of every 100 kg. of copra. Charged with the duty of collecting and administering the Fund was Philippine Coconut Administration (PCA). Like COCOFED with which it had a legal linkage, the PCA, by statutory provisions scattered in different coco levy decrees, had its share of the coco levy. Per Cojuangco’s own admission, PCA paid, out of the Coconut Consumers Stabilization Fund (CCSF), the entire acquisition price for the 72.2% option shares. The list of First United Bank (FUB) stockholders included Cojuangco with 14,440 shares and PCA with 129,955 shares. It would appear later that, pursuant to the stipulation on maintaining Cojuangco’s equity position in the bank, PCA would cede to him 10% of its subscriptions to (a) the authorized but unissued shares of FUB and (b) the increase in FUB’s capital stock. In all, from the "mother" PCA shares, Cojuangco would receive a total of 95,304 FUB (UCPB) shares broken down as follows: 14,440 shares + 10% (158,840 shares) + 10% (649,800 shares) = 95,304.

Issue: Whether or not the agreement between PCA and Cojuangco can be accorded the status of a law without publication.

Ruling: NO. It bears to stress at this point that the PCA-Cojuangco Agreement referred to above in Section 1 of P.D. 755 was not reproduced or attached as an annex to the same law. It is well-settled that laws must be published to be valid. In fact, publication is an indispensable condition for the effectivity of ainlaw.Tañada L-63915, 1986) saidin asthe much: law is indispensable every case xv.xTuvera x. Laws(G.R. mustNo. come out in the open clearPublication light of the of sunthe instead of skulking in the shadows with their dark, deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as binding unless their existence and contents are confirmed by a valid publication intended to make full disclosure and give proper notice to the people. The furtive law is like a scabbarded saber that cannot feint, parry or cut unless the naked blade is drawn. The publication must be of the full text of the law since the purpose of publication is to inform the public of the contents of the law. Mere referencing the number of the presidential decree, its title or whereabouts and its supposed date of effectivity would not satisfy the publication requirement. In this case, while it incorporated the PCA-Cojuangco Agreement by reference, Section 1 of P.D. 755 did not in any way reproduce the exact terms of the contract in the decree. Neither was a copy thereof attached to the decree when published. The SC cannot, therefore, extend to the said Agreement the status of a law. Consequently, the Court joined the Sandiganbayan in its holding that the PCA-Cojuangco Agreement shall be treated as an ordinary transaction between agreeing minds to be governed by contract law under the Civil Code.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 PUBLICATION OF LAWS NATIONAL ELECTRIFICATION ADMINISTRATIONv. VICTORIANO B. GONZAGA G.R. No. 158761, December 4, 2007, V elasco, Jr., J. Administrative rules and regulations must also be published if their purpose is to e nforce or implement existing law pursuant also to a valid delegation. Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published.

Facts: Respondent Victoriano B. Gonzaga (Gonzaga) filed his Certificate of Candidacy for membership in the Board of Directors of Zamboanga del Sur II Electric Cooperative, Inc., District II (ZAMSURECO). Gonzaga was however disqualified on the ground that his spouse was an incumbent member of the Sangguniang Bayan of Diplahan, Zamboanga del Sur. Under the Electric Cooperative Election Code (ECEC), promulgated by petitioner National Electrification Administration (NEA), a candidate whose spouse occupies an elective government position higher than Barangay Captain is prohibited to run as director of an electric cooperative. Thereafter, contending that the ECEC was never published, hence, null and void, Gonzaga filed with the RTC a Petition for Prohibition and Damages against petitioner National Electrification Administration (NEA). The RTC ruled in favor of Gonzaga and held that the failure of NEA to state whether the ECEC was indeed published in a newspaper of general circulation as required by the New Civil Code and the Administrative Code of 1987 rendered the ECEC null and void. On appeal, the decision of the trial court was affirmed by the CA. Hence, this petition.

Issue: Whether or not the ECEC is valid.

Ruling: No. The CA correctly observed that while ZAMSURECO complied with the requirements of filing the code with the University of the Philippines Law Center, it offered no proof of publication in the Official Gazettenor in a newspaper of general circulation. Without compliance with the requirement of publication, the rules and regulations contained in the ECEC cannot be enforced and implemented. Article 2 of the New Civil Code provides that laws shall take effect after fifteen (15) days following the completion of their publication in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided. Executive Order No. 292, otherwise known as the Administrative Code of 1987, reinforced the requirement of publication and outlined the procedure. In the case at bar, the ECEC was issued by petitioner pursuant to its rule-making authority provided in PD 269, as amended, particularly Sec. 24. The ECEC applies to all electric cooperatives in the country. It is not a mere internal memorandum, interpretative regulation, or instruction to subordinates. Thus, the ECEC should comply with the requirements of the Civil Code and the Administrative Code of 1987.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 WAIVER OF RIGHTS ESTATE OF THE LATE ENCARNACION VDA. DE PANLILIO, represented by GEORGE LIZARES v GONZALO DIZON, RICARDO GUINTU, ROGELIO MUNOZ, ELISEO GUINTU, ROBERTO DIZON, EDILBERTO CATU, HERMINIGILDO FLORES, CIPRIANO DIZON, JUANARIO MANIAGO, GORGONIO CANLAS, ANTONIO LISING, CARLOS PINEDA, RENATO GOZUN, ALFREDO MERCADO, BIENVENIDO MACHADA, and the REGIONAL DIRECTOR of the DEPARTMENT OF AGRARIAN REFORM, REGION III G.R. No. 148777, October 18, 2007, Velasco Jr. J. Waiver or an intentional and voluntary surrender of a right can give rise to a valid title or ownership of a property in favor of another under Article 6 of the Civil Code.

Facts: Deceased Encarnacion Vda De Panilio (Panlilio) is the owner of various tracts of land located in Pampanga. Several tenant-farmers, herein private respondents, were planting rice plant upon the aforementioned tracts of land. On January 20, 1988, Panlilio executed an affidavit which states that she has placed under the coverage of PD 27 the vast tracts of land without and exception and therefore be later sold to the tenant-farmers tending the same. Thus pursuant to the January 20 affidavit, Emancipation Patents (EP) were issued to the tenant-farmers tending the aforementioned tracts of land. On December 29, 1986 Panlilio died. Thereafter George Lizares (Lizares) herein petitioner and administrator of the estate of Panlilio filed a complaint for cancellation of the EP issued to the tenant-farmers on the ground that Panlilio executed a subsequent affidavit dated February 3, 1977 effectively revoking the prior affidavit executed last January 20 of the same year. The complaint was filed with the Provincial Agrarian Reform Adjudicator (PARAD) The PARAD dismissed the complaint of Lizares. On appeal with the Department of Agrarian Reform Adjudication Board (DARAB) the DARAB affirmed the decision of the PARAD. The CA also affirmed the decision of the PARAD. It held that the February 3 affidavit was not an authentic document. Now, Lizares comes to the Supreme Court assailing the decision of the CA. Hence this petition.

Issue: Whether the January 12, 1977 affidavit executed by Panlilio contained a valid waiver.

Ruling: Yes. In the instant case, a large portion of Hacienda Masamat with an aggregate area of 115.41 hectares was planted with sugar cane. It is undisputed, as was duly shown in the January 12, 1977 Panlilio Affidavit, that only 50.22 hectares were planted with palay. Thus, approximately 65.19 hectares of the subject landholdings were planted with sugar cane aside from the portions used for the residences of the tenants and planted with crops for their daily sustenance. Needless to say, with the January 12, 1977 Panlilio Affidavit, she expressed her intent to include the 65.19 hectares to be placed under the OLT pursuant to PD 27 in favor of her tenants which otherwise would have been exempt. Indeed, waiver or an intentional and voluntary surrender of a right can give rise to a valid title or ownership of a property in favor of another under Article 6 of the Civil Code. Thus, such disposition through the OLT pursuant to PD 27 is indeed legal and proper and no irregularity can be attributed to the DAR which merely relied on the January 12, 1977 Panlilio Affidavit.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 HUMAN RELATIONS EUSEBIO GONZALES v. PHILIPPINE COMMERCIAL AND INTERNATIONAL BANK, EDNA OCAMPO, and ROBERTO NOCEDA G.R. No. 180257, February 23, 2011, Velasco, J. Malice or bad faith is at the core of Art. 19. Malice or bad faith "implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. The failure to give prior notice of the termination of credit line in violation of the agreement stipulation and the subsequent dishonor of the check on the part of the bank is already prima facie evidence of bad faith.

Facts: Petitioner Gonzales was a client of the respondent bank. He was granted a Credit-On-Hand Loan Agreement (COHLA) with his accounts as collateral on the limit of the credit line. Gonzales and his spouse obtained 3 loans from the bank which was covered by 3 promissory notes and a real estate mortagage over a parcel of land executed by Gonzales and spouses Panlilio who likewise obtained one of the loans together with Gonzales. Thereafter, the spouses Panlilio who received the total amount of the loan, failed to pay the interests due from their PCIB account. When Gonzales issued a check in favor of Unson, it was dishonored by the bank due to the termination by the PCIB of the credit line under COHLA and likewise froze the foreign account of Gonzales. Upon failure of the bank to pay the check to Unson, Gonzales was forced to pay the former in cash. Gonzales likewise demanded the bank to unfreeze his account since it was not him who benefitted from the loans but the spouses Panlilio. However, PCIB still refused to heed his demand which compelled Gonzales to file a case for damages against the bank for unjust dishonor of the check issued in favor of Unson. The RTC ruled in favor of PCIB which decision was affirmed by the CA. The lower courts found Gonzales solidarily liable with spouses Panlilio and that the dishonor of the check as well as the freezing of the foreign account was justified. Hence, this petition.

Issues: (1) Whether or not the bank was negligent in not giving prior notice to Gonzales in terminating the COHLA as stipulated in the agreement. (2) Whether or not the award of damages in favor of Gonzales is proper.

Ruling: (1) YES. PCIB was grossly negligent in not giving prior notice to Gonzales about its course of action to suspend, terminate, or revoke the credit line, thereby violating the clear stipulation in the COHLA. It is undisputed that the bank unilaterally revoked, suspended, and terminated the COHLA without giving Gonzales prior notice as required by the above stipulation in the COHLA. Thus violating Art. 19 of the Civil Code. In order for Art. 19 to be actionable, the following elements must be present: "(1) the existence of a legal right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or injuring another." The Court found that such elements are present in the instant case. The effectivity clause of the COHLA is crystal clear that termination of the COHLA should be done only upon prior notice served on the CLIENT. This is the legal duty of PCIB – to inform Gonzales of the termination. However, as shown by the above testimonies, PCIB failed to give prior notice to Gonzales.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Malice or bad faith is at the core of Art. 19. Malice or bad faith "implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity." In the instant case, PCIB was able to send a letter advising Gonzales of the unpaid interest on the loans but failed to mention anything about the termination of the COHLA. More significantly, no letter was ever sent to him about the termination of the COHLA. The failure to give prior notice on the part of PCIB is already prima facie evidence of bad faith.Therefore, it is abundantly clear that this case falls squarely within the purview of the principle of abuse of rights as embodied in Art. 19. (2) YES. Nominal damages are recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind. Its award is thus not for the purpose of indemnification for a loss but for the recognition and vindication of a right. In the present case, Gonzales had the right to be informed of the accrued interest and most especially, for the suspension of his COHLA. For failure to do so, the bank is liable to pay nominal damages. Moreover, the failure to give prior notice when required constitutes a breach of contract and is a clear violation of Art. 21 of the Code which entitles Gonzales to an award for moral damages. Even in the absence of malice or bad faith, a depositor still has the right to recover reasonable moral damages, if the depositor suffered mental anguish, serious anxiety, embarrassment, and humiliation.

Furthermore, the initial carelessness of the bank’s omission in not properly informing Gonzales of the outstanding interest dues aggravated by its gross neglect in omitting to give prior notice as stipulated under the COHLA damages and in notby giving noticeor of correction the termination of the credit line justifies the grant of exemplary way actual of example for the public good. Finally, an award for attorney’s fees is likewise called for from PCIB’s negligence which compelled Gonzales to litigate to protect his interest.

PERSONS AND FAMILY RELATIONS PERSONS DREAMWORK CONSTRUCTION, INC. v. CLEOFE S. JANIOLA G.R. No. 184861, June 30, 2009, VELASCO, JR., J. For prejudicial question to exist, the civil action must be instituted prior to the institution of the criminal action.

Facts: Dreamwork Construction filed a complaint affidavit against Cleofe Janiola for violation of BP 22. Subsequently, Janiola instituted a civil complaint against petitioner by filing a Complaint for the rescission of an alleged construction agreement between the parties, as well as for damages. The check, subject of the criminal case, was issued in consideration of the construction agreement. Thereafter, Janiola filed a Motion to Suspend Proceedings on the ground of the existence of a prejudicial question. Dreamworks assail that there is no prejudicial question since the element that the criminal action must be subsequent to the civil action, was missing.

Issue: Whether or not a prejudicial question exists.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Ruling: No. The 2000 Rules on Criminal Procedure, effective since December 1, 2000 provides that the two essential elements of a prejudicial question are: (a) the previously instituted civil action involves an issue similar or intimately related to the issue raised in the subsequent criminal action, and (b) the resolution of such issue determines whether or not the criminal action may proceed. Therefore, in order for a civil case to create a prejudicial question and, thus, suspend a criminal case, it must first be established that the civil case was filed previous to the filing of the criminal case. Assuming arguendo that the civil case was instituted prior to the criminal action, there is still, no prejudicial question to speak of due to the absence of the second element, because the agreement surrounding the issuance of dishonored checks is irrelevant to the prosecution for violation of BP 22. The gravamen of the offense is the issuance of a bad check.

MARRIAGE (FAMILY CODE) SYED AZHAR ABBAS v. GLORIA GOO ABBAS G.R. No. 183896, January 30, 2013, Velasco, Jr., J. To show that a wedding ceremony was conducted and a marriage contract was signed does not operate to cure the absence of a valid marriage license. Article 4 of the Family Code is clear when it says, "The absence of any35(2)." of the essential or formal requisites shall render the marriage void ab initio, except as stated in Article

Facts: Syed filed a petition for the declaration of nullity of his marriage to Gloria with the RTC. He alleged the absence of a marriage license, in Article 4 of the Family Code, as a ground for annulment. Syed testified that Municipal Civil Registrar, Leodivinia, issued a certification to the effect that the marriage license number appearing in the marriage contract he submitted, Marriage License No. 9969967, was the number of another marriage license issued to a certain Arlindo and Myra. RTC held that there was no valid marriage license because it was issued in violation of Article 9 of the FC as the marriage was not one of those exempt from the license requirement, and that such lack is an absence of a formal requisite, thus the marriage is void ab initio. CA held that the certification of the Municipal Civil Registrar failed to categorically state that a diligent search for the marriage license was conducted, and thus held that said certification has no probative value and gave weight to the fact that Syed had admitted to having signed the marriage contract and that they comported themselves to be husband and wife.

Issue: Whether or not the lack of a marriage license renders the marriage void ab initio.

Ruling: YES. The Municipal Civil Registrar of Carmona, Cavite, where the marriage license of Gloria and Syed was allegedly issued, issued a certification to the effect that no such marriage license for Gloria and Syed was issued, and that the serial number of the marriage license pertained to another couple, Arlindo and Myra. A certified machine copy of Marriage License No. 9969967 was presented and indeed, the names of Gloria and Syed do not appear in the document. In Cariño v. Cariño (403 Phil. 861, 869, 2001), it was held that the certification of the Local Civil Registrar that their office had no record of a marriage license was adequate to prove the non-issuance of said license. The presumed validity of the marriage of the parties had been overcome, and that it became the burden 8 | Page

Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 of the party alleging a valid marriage to prove that the marriage was valid, and that the required marriage license had been secured. Gloria has failed to discharge that burden, and the only conclusion that can be reached is that no valid marriage license was issued. All the evidence cited by the CA to show that a wedding ceremony was conducted and a marriage contract was signed does not operate to cure the absence of a valid marriage license. Article 4 of the Family Code is clear when it says, "The absence of any of the essential or formal requisites shall render the marriage void ab initio, except as stated in Article 35(2)." Article 35(3) of the Family Code also provides that a marriage solemnized without a license is void from the beginning, except those exempt from the license requirement under Articles 27 to 34, of the same Code. Again, this marriage cannot be characterized as among the exemptions, and thus, having been solemnized without a marriage license, is void ab initio. As the marriage license, a formal requisite, is clearly absent, the marriage of Gloria and Syed is void ab initio.

ERIC U. YU v. HONORABLE JUDGE AGNES REYES-CARPIO, IN HER OFFICIAL CAPACITY AS PRESIDING JUDGE, REGIONAL TRIAL COURT OF PASIG-BRANCH 261; AND CAROLINE T. YU G.R. No. 189207, June 15, 2011, Velasco, Jr., J. The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages, clearly allow the reception of evidence on custody, support, and property relations after the trial court renders a decision granting the petition, or upon entry of judgment granting the petition.

Facts: A petition for declaration of nullity of marriage was filed by Eric Yu against Caroline Yu. Caroline moved that the incident on the declaration of nullity of marriage be resolved ahead of the incidents on custody, support, and property relations, and not simultaneously. Judge Reyes-Carpio granted such motion stating that the main cause of action is the declaration of nullity of marriage and the issues relating to property relations, custody and support are merely ancillary incidents thereto.

Issue: Whether or not the reception of evidence on custody, support and property relations is necessary for a complete and comprehensive adjudication of the parties’ respective claims and defenses.

Ruling: NO. The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages, clearly allow the reception of evidence on custody, support, and property relations after the trial court renders a decision granting the petition, or upon entry of judgment granting the petition. Judge Reyes-Carpio did not deny the reception of evidence on custody, support, and property relations but merely deferred it, based on the existing rules issued by this Court, to a time when a decision granting the petition is already at hand and before a final decree is issued. The trial court shall proceed with the liquidation, partition and distribution, custody, support of common children, and delivery of their presumptive legitimes upon entry of judgment granting the petition.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 DISSOLUTION OF MARRIAGE MARIA REBECCA MAKAPUGAY BAYOTv. THE HONORABLE COURT OF APPEALS and VICENTE MADRIGAL BAYOT G.R. No. 155635, November 7, 2008 , VELASCO, JR., J. A divorce obtained abroad by an alien married to a Philippine national may be recognized in the Philippines, provided the decree of divorce is valid according to the national law of the foreigner.

Facts: Maria Rebecca Makapugay Bayot (Rebecca) and Vicente Madrigal Bayot (Vicente) were married on April 20, 1979 in Mandaluyong City. On its face, the Marriage Certificate identified Rebecca to be an American citizen born in Agaña, Guam, USA. Rebecca gave birth to Marie Josephine Alexandra or Alix. From then on, Vicente and Rebecca's marital relationship seemed to have soured as the latter initiated divorce proceedings in the CFI of Dominican Republic which ordered the dissolution of the couple's marriage but giving them joint custody and guardianship over Alix. Rebecca filed a petition before the Muntinlupa City RTC for declaration of absolute nullity of marriage and also sought the dissolution of the conjugal partnership of gains with application for support pendente lite for her and Alix. Vicente filed a Motion to Dismiss on the grounds of lack of cause of action and that the petition is barred by the prior judgment of divorce. Rebecca interposed an opposition, insisting her Filipino citizenship, therefore, there is no valid divorce to speak of. The RTC denied Vicente's motion to dismiss and granted Rebecca's application for support pendente lite. The CA dismissed the petition of Rebecca and set aside incidental orders the RTC issued in relation to the case.

Issue: 1.

Whether or not Rebecca was a Filipino citizen at the time the divorce judgment was rendered in the Dominican Republic on February 22, 1996;

2.

Whether or not the judgment of divorce is valid.

Ruling: 1. No. from ThereVicente, can be was no serious dispute that Rebecca, at the sheabsent applied for of and her divorce an American citizen and remains to time be one, proof anobtained effective repudiation of such citizenship. The following are compelling circumstances indicative of her American citizenship: (1) she was born in Agaña, Guam, USA; (2) the principle of jus soli is followed in this American territory granting American citizenship to those who are born there; and (3) she was, and may still be, a holder of an American passport. And as aptly found by the CA, Rebecca had consistently professed, asserted, and represented herself as an American citizen, particularly: (1) during her marriage as shown in the marriage certificate; (2) in the birth certificate of Alix; and (3) when she secured the divorce from the Dominican Republic. Mention may be made of the Affidavit of Acknowledgment in which she stated being an American citizen. The Court can assume hypothetically that Rebecca is now a Filipino citizen. But from the foregoing disquisition, it is indubitable that Rebecca did not have that status of, or at least was not yet recognized as, a Filipino citizen when she secured the February 22, 1996 judgment of divorce from the Dominican Republic.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 2. Yes. The Court has taken stock of the holding in Garcia v. Recio that a foreign divorce can be recognized here, provided the divorce decree is proven as a fact and as valid under the national law of the alien spouse. Be this as it may, the fact that Rebecca was clearly an American citizen when she secured the divorce and that divorce is recognized and allowed in any of the States of the Union, the presentation of a copy of foreign divorce decree duly authenticated by the foreign court issuing said decree is, as here, sufficient. Given the validity and efficacy of divorce secured by Rebecca, the same shall be givenres a judicata effect in this jurisdiction. As an obvious result of the divorce decree obtained, the marital vinculum between Rebecca and Vicente is considered severed; they are both freed from the bond of matrimony. In plain language, Vicente and Rebecca are no longer husband and wife to each other. Consequent to the dissolution of the marriage, Vicente could no longer be subject to a husband's obligation under the Civil Code.

PROPERTY RELATIONS OF THE SPOUSES METROPOLITAN BANK AND TRUST CO. v. NICHOLSON PASCUAL G.R. No. 163744, 29 February 2008, Second Divison, (Velasco, Jr., J.) Only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal.

Facts: During the existence of the marriage of Pascual and his wife Florencia, they purchased a lot in Makati. The TCT was issued in the name of Florencio “married to Nelson Pascual” a.k.a. Nicholson Pascual. Subsequently their marriage was declared null and void by the RTC. However, they were unable to liquidate their conjugal partnership. After the termination, Florencia obtained a loan with Metrobank, with the property above as one of the securities of the loan. When Florencia failed to pay the obligation, Metrobank foreclosed on the said property. When Nicholson heard of the foreclosure proceedings, he filed with the RTC to declare the nullity of the mortgage of the disputed property, since the property, still a conjugal property, was mortgaged without his consent. The RTC declared the mortgage to be null and void, since the encumbrance of the property was made without the consent of Nicholson.

Issue: Whether or not the CA erred in declaring subject property as conjugal by applying Article 116 of the Family Code.

Ruling: Yes. Art. 116 of the Family Code could not be of governing application inasmuch as Nicholson and Florencia contracted marriage before the effectivity of the Family Code. It is Art. 160 of the Civil Code that would apply. While Metrobank is correct in saying that Art. 160 of the Civil Code, not Art. 116 of the Family Code, is the applicable legal provision since the property was acquired prior to the enactment of the Family Code, it errs in its theory that, before conjugal ownership could be legally presumed, there must be a showing that the property was acquired during marriage using conjugal funds. Only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 METROPOLITAN BANK AND TRUST CO. v. NICHOLSON PASCUAL G.R. No. 163744, 29 February 2008, Second Divison, (Velasco, Jr., J.) While the declared nullity of marriage of severs the marital bond and dissolves the conjugal partnership, the character of the properties acquired before such declaration continues to subsist as conjugal properties until and after the liquidation and partition of the partnership.

Facts: During the existence of the marriage of Pascual and his wife Florencia, they purchased a lot in Makati. The TCT was issued in the name of Florencio “married to Nelson Pascual” a.k.a. Nicholson Pascual. Subsequently their marriage was declared null and void by the RTC. However, they were unable to liquidate their conjugal partnership. After the termination, Florencia obtained a loan with Metrobank, with the property above as one of the securities of the loan. When Florencia failed to pay the obligation, Metrobank foreclosed on the said property. When Nicholson heard of the foreclosure proceedings, he filed with the RTC to declare the nullity of the mortgage of the disputed property, since the property, still a conjugal property, was mortgaged without his consent. The RTC declared the mortgage to be null and void, since the encumbrance of the property was made without the consent of Nicholson.

Issue: Whether or not the CA erred in not holding that the declaration of nullity of marriage between the respondent Nicholson Pascual and Florencia Nevalga ipso facto dissolved the regime of community property of the spouses.

Ruling: No. While the declared nullity of marriage of Nicholson and Florencia severed their marital bond and dissolved the conjugal partnership, the character of the properties acquired before such declaration continues to subsist as conjugal properties until and after the liquidation and partition of the partnership. In the case at bar, Florencia constituted the mortgage on the disputed lot a little less than two years after the dissolution of the conjugal partnership, but before the liquidation of the partnership. What governed the property relations of the former spouses when the mortgage was given co-ownership. it, Florencia has the of right to mortgage her one-half undivided interest in the is disputed propertyUnder even without the consent Nicholson. However, the rights of Metrobank, as mortgagee, are limited only to the 1/2 undivided portion that Florencia owned. Accordingly, the mortgage contract insofar as it covered the remaining 1/2 undivided portion of the lot is null and void.

SPS. LITA DE LEON and FELIX RIO TARROSA v. ANITA B. DE LEON, DANILO B. DE LEON, and VILMA B. DE LEON G.R. No. 185063. July 23, 2009. Third Division. Velasco, Jr., J. For the presumption to arise, it is not even necessary to prove that the property was acquired with funds of the partnership. Only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Facts: Bonifacio O. De Leon, while still single, purchased from the People’s Homesite and Housing Corporation (PHHC) through a Conditional Contract to Sell on July 20, 1965 a parcel of land. Two years later, Bonifacio married Anita de Leon. Full payment for the purchase price was paid during the marriage of Bonifacio and Anita. However, the title of the land was registered in the name of Bonifacio with a civil status as “single”. Later, Bonifacio, without the consent of Anita, conveyed the property to Spouses Tarrosa. Subsequently, Bonifacio died. Thereafter, Spouses Tarrosa sought the registration of the Deed of Sale and issuance of a title of the subject property in their favor. This prompted the children of Bonifacio and Anita to file a reconveyance suit with the RTC on the grounds that the sale was fraudulent and lack of consent of Anita to the sale. The RTC ruled that the property is a conjugal property and rendered judgment in favor of Anita and her children. It further nullified the sale between Bonifacio and Spouses Tarrosa. On appeal, the CA affirmed the decision of the RTC. The CA held that the Tarrosas failed to overthrow the legal presumption that the parcel of land in dispute was conjugal. Hence, this petition.

Issue: 1.

Whether or not the subject property is a conjugal.

2.

Whether or not the sale is void due to lack of consent of Anita.

Ruling: 1.Yes. The subject property is the conjugal property of Bonifacio and Anita. Article 160 of the 1950 Civil Code, the governing provision in effect at the time Bonifacio and Anita contracted marriage, provides that all property of the marriage is presumed to belong to the conjugal partnership unless it is proved that it pertains exclusively to the husband or the wife. For the presumption to arise it is not even necessary to prove that the property was acquired with funds of the partnership. Only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal. In fact, even when the manner in which the properties were acquired does not appear, the presumption will still apply, and the properties will still be considered conjugal. In the case at bar, ownership over what was once a PHHC lot and covered by the PHHCBonifacio Conditional Contract to Sell was only transferred during the marriage of Bonifacio and Anita. In a contract to sell ownership is retained by the seller and is not passed to the buyer until full payment of the price. Evidently, title to the property in question only passed to Bonifacio after he had fully paid the purchase price on June 22, 1970. This full payment, to stress, was made more than two (2) years after his marriage to Anita on April 24, 1968. In net effect, the property was acquired during the existence of the marriage; as such, ownership to the property is, by law, presumed to belong to the conjugal partnership. 2.Yes. It cannot be over-emphasized that the 1950 Civil Code is very explicit on the consequence of the husband alienating or encumbering any real property of the conjugal partnership without the wife’s consent. To a specific point, the sale of a conjugal piece of land by the husband, as administrator, must, as a rule, be with the wife’s consent. Else, the sale is not valid. So it is that in several cases the Court ruled that the sale by the husband of property belonging to the conjugal partnership without the consent of the wife is void ab initio, absent any showing that the latter is incapacitated, under civil interdiction, or like causes. The nullity, as we have explained, proceeds from the fact that sale is in contravention of the mandatory requirements of Art. 166 of the Code.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Since Art. 166 of the Code requires the consent of the wife before the husband may alienate or encumber any real property of the conjugal partnership, it follows that the acts or transactions executed against this mandatory provision are void except when the law itself authorized their validity. Accordingly, the Deed of Sale executed on January 12, 1974 between Bonifacio and the Tarrosas covering the PHHC lot is void.

THE FAMILY PATERNITY AND FILIATION GRACE M. GRANDE v. PATRICIO T. ANTONIO G.R. No. 206248, February 18, 2014 , Velasco, Jr., J. Art. 176 gives illegitimate children the right to decide if they want to use the surname of their father or not. It is not the father or the mother who is granted by law the right to dictate the surname of their illegitimate children.

Facts: Petitioner and respondent lived together as husband and wife, although Antonio was at that time already married to someone else. Two sons were born out of their relationship. However, The children were not expressly recognized by respondent as his own in the Record of Births of the children in the Civil Registry. Petitioner, later on, left for the United States with her two children. Thus, respondent filed a Petition for Judicial Approval of Recognition with Prayer to take Parental Authority, Parental Physical Custody, Correction/Change of Surname of Minors and for the Issuance of Writ of Preliminary Injunction before the Regional Trial Court (RTC), appending a notarized Deed of Voluntary Recognition of Paternity of the children. The RTC rendered a Decision in favor of respondent. Petitioner then filed an appeal with the CA. CA modified the Decision of the RTC ruling that notwithstanding the father’s recognition of his children, the mother cannot be deprived of her sole parental custody over them absent the most compelling of reasons. It also maintained that the legal consequence of the recognition made by respondent Antonio that he is the father of the minors, taken in conjunction with the universally protected "best-interest-of-the-child" clause, compels the use by the children of the surname "ANTONIO." Not satisfied with the CA’s Decision, petitioner filed a motion for reconsideration insofar as it decreed the change of the minors’ surname to "Antonio." In it, she posits that Article 176 of the Family Code––as amended by Republic Act No. (RA) 9255, couched as it is in permissive language –– may not be invoked by a father to compel the use by his illegitimate children of his surname without the consent of their mother.

Issue: Whether or not a father has the right to compel the use of his surname by his illegitimate children upon his recognition of their filiation.

Ruling: No. Art. 176 gives illegitimate children the right to decide if they want to use the surname of their father or not. It is not the father or the mother who is granted by law the right to dictate the surname of their illegitimate children. On its face, Art. 176, as amended, is free from ambiguity. And where there is no ambiguity, one must abide by its words. The use of the word "may" in the provision

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 readily shows that an acknowledged illegitimate child is under no compulsion to use the surname of his illegitimate father. The word "may" is permissive and operates to confer discretion upon the illegitimate children. On the matter of children’s surnames, the use of the father’s surname does not serve the best interest of the minor child. Indeed, the rule regarding the use of a child’s surname is second only to the rule requiring that the child be placed in the best possible situation considering his circumstances.

PROPERTY ACCESSION BANK OF THE PHILIPPINE ISLANDSv. VICENTE VICTOR C. SANCHEZ et al. G.R. No. 179518. November 19, 2014. THIRD DIVISION. Velasco, Jr., J. Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted and sown without right to indemnity. Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent.

Facts: Vicente Victor C. Sanchez, Kenneth Nereo Sanchez and Imelda C. Vda. De Sanchez are owners of a registered land. Felisa Yap (Yap), the widow of Kenneth Nereo Sanchez, and Jesus V. Garcia (Garcia), doing business under the name Trans American Sales and Exposition, Inc. (TSEI), agreed to the sale of the aforementioned property subject to the conditioned that Garcia shall cause the reconstitution of the srcinal title. Pursuant to this agreement, Yap turned over to Garcia the srcinal owner’s copy of TCT 156254 and other related documents. Unknown toYap and Vicente, Garcia took possession of the property and advertised the construction and sale of "Trans American Townhouse V" thereon. Later, Garcia failed to pay the balance of the purchase price as agreed upon. Thereafter, Yap and the Sanchezes filed before the RTC in Quezon City a Complaint dated for the rescission of contract, restitution and damages with prayer for TRO/preliminary injunction against TSEI and Garcia. Meanwhile, Garcia managed to cause the cancellation of TCT 156254 and its replacement with TCT 383697 in the name of TSEI and use such to entice buyers who to buy the townhouse units being constructed by TSEI on the subject lot. Furthermore, Garcia was able to convey parts of the property to several buyers who intervened in the instant case: the spouses Jose and Visitacion Caminas (Caminas), Reynaldo V. Maniwang (Maniwang), Generoso C. Tulagan (Tulagan), Varied Traders Concept, Inc. (VTCI), and Arturo Marquez (Marquez). The RTC ruled that anent the rights of intervenors, the Sanchezes to have a better right over the subject property considering that the transactions between Garcia/TSEI and the intervenors suffered from several irregularities, which they, the intervenors, in bad faith, ignored.

Issue: Whether or not the Sanchezes and Yap are entitled to the remedies provided in Article 449450 of the Civil Code.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Ruling: Yes. The Sanchezes are to elect their option under the Arts. 449-450 of the New Civil Code. The bad faith on the part of TSEI, Garcia and the intervenors leads to the application of Articles 449450 of the New Civil Code. Consequently, the Sanchezes have the following options: (1) acquire the property with the townhouses and other buildings and improvements that may be thereon without indemnifying TSEI or the intervenors; (2) demand from TSEI or the intervenors to demolish what has been built on the property at the expense of TSEI or the intervenors; or (3) ask the intervenors to pay the price of the land. As such, the Sanchezes must choose from among these options within thirty (30) days from finality of this Decision. Should the Sanchezes opt to ask from the intervenors the value of the land, the case shall be remanded to the RTC for the sole purpose of determining the fair market value of the lot at the time the same were taken from the Sanchezes in 1988. If the Sanchezes decide to appropriate the townhouses, other structures and improvements as their own pursuant to Article 449 of the Civil Code, then the intervenors-purchasers Caminas, Maniwang, Tulagan, Marquez and VCTI shall be ordered to vacate said premises within a reasonable time from notice of the finality of the decision by the Sanchezes. They have a right to recover their investment in the townhouses from Garcia and TSEI. If the Sanchezes do not want to make use of the townhouses and improvements on the subject lot, then the purchasers can be ordered to demolish said townhouses or if they don’t demolish the same within a reasonable time, then it can be demolished at their expense. On the 3rd option, if the Sanchezes do not want to appropriate the townhouses or have the same demolished, then they can ask that the townhouse purchasers pay to them the fair market value of the respective areas allotted to their respective townhouses subject of their deeds of sale.

DONATION TIRSO MONTEROSO vs. COURT OF APPEALS, et al. G.R. No. 105608, April 30, 2008, J. Velasco, Jr. SOFIA PENDEJITO VDA. DE MONTEROSO, et al. vs. COURT OF APPEALS and TIRSO MONTEROSO G.R. No. 113199, April 30, 2008, J. Velasco, Jr. The circumstance that parties to a void contract choose to ignore its nullity can in no way enhance the invalid character of such contract. It is axiomatic that void contracts cannot be the subject of ratification, either express or implied.

Facts: Don Fabian Monteroso, Sr. married twice and sired eight (8) children, four (4) from each union. In his first marriage with Soledad Doldol, Soledad, Reygula, Benjamin and Tirso were born. After Doldol died, his second marriage with Sofia Pendejito bore Florenda, Reynato, Alberto, and Fabian, Jr. During the early part of his second marriage, Don Fabian filed before the CFI of Agusan an intestate proceeding for the estate of his deceased first wife to obviate any dispute over the inheritance. The project for partition was approved and the intestate estate of Doldol was partitioned and distributed to her four (4) children in equal shares. In the meantime, the children of Don Fabian from his first marriage married accordingly, Soledad to Atty. Perfecto Cagampang, Sr., Reygula to Jose Bayan, Benjamin to Mauricia Nakila; and Tirso to Melecia Tana. Benjamin died, leaving behind four (4) children and his wife. A year and a half later, Don Fabian also passed away. This brings us to the objects of the squabble: the conjugal patrimonies of Don Fabian from his two (2) successive marriages. The children of Benjamin filed with the RTC a complaint for recovery of property with damages against their uncle, Tirso.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 As the heirs of Benjamin alleged in their complaint, Tirso was entrusted with ¼ of the parcel of land part of the share from the estate of Doldol. However, their uncle refused to surrender and deliver the same when demanded upon the reaching of their majority age. Tirso, in response, alleged that the said portion was never entrusted to him. It was in the possession of his sister, Soledad, who was not entitled to any share in the said parcel, having previously opted to exchange hers for another parcel of land. On the other hand, filed a complaint for partition and damages with receivership against his stepmother Pendejito and all his step-siblings, which involves 12 parcels of land. In the latter civil case, Tirso alleged the following: 1) the aforementioned 12 parcels of land belong to the conjugal partnerships of the first and second marriages contracted by Don Fabian; (2) SP No. 309, which purportedly judicially settled the intestate estate of his mother, is null and void for the reason that the project of partition failed to comprehend the entire estate of the decedent as some parcels were excluded, thereby depriving Tirso of his 1/4 share or legitime; and (3) the parcels acquired during the second marriage of Don Fabian are not paraphernal properties of Sofia Pendejito Vda. de Monteroso. The said civil cases were consolidated and the RTC, after fifteen (15) years, decided in Tirso’s favor. However, the subsequent ruling of the RTC ordered Tirso and Soledad to deliver the specific properties to the respective heirs of Benjamin. On appeal, the CA declared the partition valid and dismissed the opposition of the Cagampang spouses and Reygulo MonterosoBayan, who all claimed ownership over some of the parcels of land on the strength of the deeds of conveyance executed in their favor. On the alleged donation to Reygula, the CA likewise agreed with the RTC’s ruling on the nullity thereof.

Issue: Whether or not the deed of donation executed after the death of Don Fabian in favor of Reygula is valid, even if Tirso and the heirs of Benjamin do not question its validity as they in fact signed the same.

Ruling: No. Just like the issue of the nullity of the three deeds of absolute sale, we agree with the determination of the RTC and CA as to the invalidity of the donation to Reygula. We need not repeat the reasons for such determination, except the most basic. We refer to the authority of the person who executed the deed of donation. As it were, the widow of Benjamin, Nakila, signed the deed of donation. She, however, cannot give consent to the donation as she has no disposable right thereto. The legal maxim nemo dat quod non habet applies to this instance as Nakila only has usufructuary right equal to the share of her children under Article 834 of the Spanish Civil Code of 1889. Besides, Nakila signed the deed of donation in her name and not in the name of her children who are the heirs in representation of their father, Benjamin. Lest it be overlooked, the then minor children were not under the legal guardianship of Nakila, a situation which thus disqualifies her from signing on their behalf.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 PRESCRIPTION AND LACHES LACHES DEPARTMENT OF EDUCATION, DIVISION OF ALBAYv. CELSO OÑATE G.R. No. 169501, June 8, 2007, Velasco, Jr., J. Laches is defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which–by the exercise of due diligence–could or should have been done earlier. Verily, laches serves to deprive a party guilty of it to any judicial remedies.

Facts: Spouses Oñate, owner of a lot, had 3 children: Antonio, Rafael, and Francisco. Celso Oñate is the son of Francisco. Bagumbayan Elementary School of Daraga was constructed on a portion of the disputed lot. Celso filed a reconstitution which was granted by the RTC. Later, a Deed of Extrajudicial Settlement of Estate and Cession was executed by Celso and his sisters who waived their successional rights. Celso claimed ownership of said lot through the deed of extrajudicial settlement. He caused the lot to be subdivided into 5 lots. Celso’s counsel sent a letter to DepEd apprising it about the facts and circumstances affecting the elementary school and proposed that it purchase a portion Lot No. 6859-A and requested for reasonable rentals from. Celso filed a complaint for Annulment of Donation and/or Quieting of Title with Recovery of Possession of the lot. The RTC ruled in favor of Celso and upon appeal, the CA declared the appeals of both petitioners abandoned and dismissed for failure to pay the required docket fees within the reglementary period. It filed a MR and its appeal was reinstated. The Municipality of Daraga, Albay totally lost its appeal due to inaction, and the CA issued a Partial Entry of Judgment and further ruled that Celso's claim of ownership over the lot occupied by the school is conclusive for being soundly predicated on its title.

Issue: Whether or not laches can inure to the benefit of DepEd considering that the lot was devoted to public education when the civil case was filed by Celso.

Ruling: Yes. Laches is defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which–by the exercise of due diligence –could or should have been done earlier. Verily, laches serves to deprive a party guilty of it to any judicial remedies. Its elements are: (1) conduct on the part of the defendant, or of one under whom the defendant claims, giving rise to the situation which the complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having had knowledge or notice of the defendant's conduct as having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which the defendant bases the suit ; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred. Verily, the application of laches is addressed to the sound discretion of the court as its application is controlled by equitable considerations. In the instant case, with the foregoing considerations, we are constrained from giving approbation to the trial and appellate courts' ruling that the application of the principle of laches would subvert the ends of justice. Indeed, it is unjust for the State and the affected citizenry to suffer after respondent and his predecessors-in-interest had slept on their rights for 52 years. Also, the inaction of respondent Oñate and his predecessors-in-

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 interest for over 50 years has reduced their right to regain possession of Lot 6849-A to a stale demand.

ASSOCIATED LABOR UNIONS(ALU) and DIVINE WORD UNIVERSITY EMPLOYEES UNIONALU(DWUEU-ALU) v. CA, THE ROMAN CATHOLIC ARCHBISHOP OF PALO, LEYTE(RCAP) and DIVINE WORD UNIVERSITY OF TACLOBAN(DWUT) G.R. No. 156882, October 31, 2008, VELASCO, JR., J. Laches means the failure or neglect, for an unreasonable and unexplained length of time, to do that which by the exercise of due diligence could or should have been done earlier.

Facts: RCAP is a corporation sole which sold to Societas Verbum Dei(SVD) the subject 13 parcels of land. While the conveying document was not notarized, the SVD was able to secure the corresponding TCTs over the subject lots, but the deed conditions, restrictions, and reversionary right of the RCAP were not annotated. Due to labor unrest, DWUT, run by the SVD, and the Union engaged in a protracted legal battle. RCAP filed a petition for annotation. RTC dismissed the petition. RCAP filed a MR. RTC denied the MR on the ground of laches noting that it took the RCAP 37 years after the execution of the deed of sale before taking judicial action to assert his rights. CA reversed and held that the RCAP was not barred by laches from asserting his legal right to cause the annotation of the pertinent paragraphs of the deed of sale on the TCTs covering the subject properties. It ratiocinated that despite the lapse of 37 years, the annotation would not be inequitable or prejudicial to any party since the SVD, under whose name the TCTs of the subject properties were issued, did not interpose any objection to the annotation. It noted that the RTC Order did not specify the party who would be prejudiced by the annotation.

Issue: Whether or not the CA erred in not applying the doctrine of laches.

Ruling: No. According to settled jurisprudence, "laches" means "the failure or neglect, for an unreasonable and unexplained length of time, to do that which —by the exercise of due diligence — could or should have been done earlier." Verily, laches serves to deprive a party guilty of it of any judicial remedies. Elements: (1) conduct on the part of the defendant, or of one under whom the defendant claims, giving rise to the situation which the complaint seeks a remedy; (2) delay in asserting the complainant’s rights, the complainant having had knowledge or notice of the defendant’s conduct as having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which the defendant bases the suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred. The 4th and most important element, that is, injury or prejudice to the defendant in the event relief is accorded to the complainant or the suit is not held barred, is not present under the premises. As the CA aptly observed, no prejudice can result from the annotation pleaded by the RCAP since the SVD, the property purchaser, did not oppose the annotation as evidenced by a manifestation the DWUT filed before the RTC. More so, no prejudice can befall the Union for no judgment lien has attached or been imposed over the subject properties and, as earlier explained, there is no showing that the subject properties are the only properties the DWUT has or that its other

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 assets and properties are insufficient to meet its obligations. Thus, failing to show any actual interest over the subject properties that need judicial protection, the Union will not suffer any damage with the annotation.

OBLIGATIONS AND CONTRACTS OBLIGATIONS DEFINITION SM LAND, INC. v. BASES CONVERSION AND DEVELOPMENT AUTHORITY G.R. No. 203655, March 18, 2015 , Velasco Jr., J. A contract is a juridical convention manifested in legal form, by virtue of which one or more persons bind themselves in favor of another or others, or reciprocally, to the fulfillment of a prestation to give, to do, or not to do. Estoppels against the public are little favored. They should not be invoked except [in rare] and unusual circumstances, and may not be invoked where they would operate to defeat the effective operation of a policy adopted to protect the public.

Facts: Pursuant to R.A. No. 7227, the BCDA opened for disposition and development its Bonifacio South Property. SM Land, Inc. (SMLI) submitted to the BCDA an unsolicited proposal for the development of the lot which was accepted by the BCDA. However, the BCDA clarified that its act should not be construed to bind the agency to enter into a joint venture agreement with SMLI but only constitutes an authorization to conduct detailed negotiations with SMLI and iron out the terms and conditions of the agreement. Afterwards, a Certification was issued by the BCDA and signed by both parties. Then, instead of proceeding with the Competitive Challenge, the BCDA corresponded with SMLI stating that it will welcome any “voluntary and unconditional proposal” to improve the srcinal offer. In turn, SMLI increased the total secured payments with an upfront payment. Without responding to SMLI’s new proposal, the BCDA sent a memorandum to the OP categorically recommending the termination of the Competitive Challenge. Alarmed by this development, SMLI urged the BCDA to proceed with the Competitive Challenge as agreed upon. However, the BCDA terminated the Competitive Challenge altogether. For its part, SMLI alleged in its petition that the Certification issued by the BCDA and signed by the parties constituted a contract and that under the said contract, BCDA cannot renege on its obligation to conduct and complete the Competitive Challenge. The BCDA relies chiefly on the reservation clause in the Terms of Reference (TOR), which mapped out the procedure to be followed in the Competitive Challenge, which allegedly authorized the agency to unilaterally cancel the Competitive Challenge. BCDA add that the terms and conditions agreed upon are disadvantageous to the government, and that it cannot legally be barred by estoppel in correcting a mistake committed by its agents. Hence, the petition.

Issue: (1) Whether or not there exists a valid agreement between SMLI and BCBA. (2) Whether or not estoppel can be invoked against BCDA.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Ruling: (1) YES. There is a perfected contract. When SMLI submitted the first Unsolicited Proposal to BCDA, the submission constituted an offer to undertake the development of the subject property. BCDA then entered into negotiations with SMLI until the BCDA finally accepted the terms of the final unsolicited proposal. Their agreement was thereafter reduced into writing through the issuance of the Certification of Successful Negotiations where the meeting of the parties’ minds was reflected. Then, to manifest their assent to the terms thereof and their respective obligations, both parties affixed their signatures thereon and had it notarized. The cause of the agreement in the case at hand is their interest in the sale or acquisition and development of the property and their undertaking to perform their respective obligations, among others, as reflected in the Certificate and TOR issued by BCDA. When the BCDA Board issued the Certification, it not only accepted SMLI’s Unsolicited Proposal and declared SMLI eligible to en ter into the proposed JV activity. It also “ agreed to subject pursuant to the NEDA JV Guidelines, which SMLI’s Original Proposal to Competitive Challenge competitive challenge process shall be immediately implemented following the TOR Volumes 1 and 2.” Moreover, said Certification provides that“the BCDA shall, thus, commence the activities for the solicitation for comparative proposalsxxx on which date SMLI shall post the required Proposal Security xxx.” (2) YES. This is in view of the fact that despiteBCDA’s repeated assurances that it would respect SMLI’s rights as an srcinal proponent, and after putting the latter to considerable trouble and expense, BCDA went back on its word to comply with its obligations under their agreement and instead ultimately cancelled the same. BCDA’s capriciousness becomes all the more evident in its conflicting statements as regards whether or not SMLI’s proposal would be advantageous to the government. Despite the testament, the BCDA, over a year later, made a complete turnaround stating that straight bidding will be best for the Government. As can be gleaned from the BCDA’s Memorandum to the President, respondents themselves recommended to the President that the selection proceedings be terminated. Moreover, the alleged adverse economic impact on the government, in finding for SMLI, does not constitute a valid cause for the reversal of the assailed Decision. To clarify, the court’s ruling did not award the project in petitioner’s favor but merely ordered that SMLI’s proposal be subjected to a competitive challenge. Consequently, any alleged disadvantage the government would suffer is speculative at most as there is no final award for the project yet.

NATURE AND EFFECTS OF OBLIGATIONS GENERAL MILLING CORPORATION v. SPS. LIBRADO RAMOS and R EMEDIOS RAMOS G.R. No. 193723, July 20, 2011, Velasco, Jr., J. There are three requisites necessary for a finding of default. First, the obligation is demandable and liquidated; second, the debtor delays performance; and third, the creditor judicially or extrajudicially requires the debtor’s performance.

Facts: General Milling Corporation (GMC) entered into a Growers Contract with spouses Librado and Remedios Ramos to supply broiler chickens for the spouses to raise. The contract was accompanied by a Deed of Real Estate Mortgage over a piece of real property. The spouses further agreed to put up a surety bond. Spouses Ramos eventually were unable to settle their account with GMC. On March 31, 1997, GMC notified Spouses Ramos that GMC would institute foreclosure proceedings. On May 7, 1997, GMC filed a Petition for Extrajudicial Foreclosure of Mortgage. The property was subsequently sold. The Spouses Ramos filed a Complaint for Annulment and/or

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Declaration of Nullity of the Extrajudicial Foreclosure Sale with Damages. It was alleged that the Deed of Real Estate Mortgage had no fixed term. The RTC ruled in favor of Spouses Ramos stating that the action of GMC in moving for the foreclosure was premature, because the latter’s obligationnder u their contract was not yet due. The CA found that GMC’s action against Spouses Ramos was premature, as they were not in default when the action was filed on May 7, 1997. GMC claims that its March 31, 1997 letter is akin to a demand.

Issue: Whether or not a sufficient demand was made by GMC.

Ruling: No. According to the CA, GMC did not make a demand on Spouses Ramos but merely requested them to go to GMC’s office to discuss the settlement of their account. In spite of the lack of demand made on the spouses, however, GMC proceeded with the foreclosure proceedings. We agree with the appellate court that GMC should have first made a demand on the spouses before proceeding to foreclose the real estate mortgage. In the case of Development Bank of the Philippines v. Licuanan, the court stated that the issue of whether demand was made before the foreclosure was effected is essential. If demand was made and duly received by the respondents and the latter still did not pay, then they were already in default and foreclosure was proper. However, if demand was not made, then the loans had not yet become due and demandable. This meant that respondents had not defaulted in their payments and the foreclosure by petitioner was premature. Foreclosure is valid only when the debtor is in default in the payment of his obligation.

KINDS OF CIVIL OBLIGATIONS BANK OF THE PHILIPPINE ISLANDSv. VICENTE VICTOR C. SANCHEZ et al. G.R. No. 179518. November 19, 2014. THIRD DIVISION. Velasco, Jr., J. Article 1191 of the Civil Code states that rescission is available to a party in a reciprocal obligation where one party fails to comply therewith.

Facts: Vicente Victor C. Sanchez, Kenneth Nereo Sanchez and Imelda C. Vda. De Sanchez are owners of a registered land. Felisa Yap (Yap), the widow of Kenneth Nereo Sanchez, and Jesus V. Garcia (Garcia), doing business under the name Trans American Sales and Exposition, Inc. (TSEI), agreed to the sale of the aforementioned property subject to the conditioned that Garcia shall cause the reconstitution of the srcinal title. Pursuant to this agreement, Yap turned over to Garcia the srcinal owner’s copy of TCT 156254 and other related documents. Unknown to Yap and Vicente, Garcia took possession of the property and advertised the construction and sale of "Trans American Townhouse V" thereon. Later, Garcia failed to pay the balance of the purchase price as agreed upon. Thereafter, Yap and the Sanchezes filed before the RTC in Quezon City a Complaint dated for the rescission of contract, restitution and damages with prayer for TRO/preliminary injunction against TSEI and Garcia. Meanwhile, Garcia managed to cause the cancellation of TCT 156254 and its replacement with TCT 383697 in the name of TSEI and use such to entice buyers who to buy the townhouse units being constructed by TSEI on the subject lot. Furthermore, Garcia was able to convey parts of the property to several buyers who intervened in the instant case: the spouses Jose and Visitacion Caminas (Caminas), Reynaldo V. Maniwang (Maniwang), Generoso C. Tulagan (Tulagan), Varied Traders Concept, Inc. (VTCI), and Arturo Marquez (Marquez).

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 The RTC ruled that anent the rights of intervenors, the Sanchezes to have a better right over the subject property considering that the transactions between Garcia/TSEI and the intervenors suffered from several irregularities, which they, the intervenors, in bad faith, ignored.

Issue: Whether or not rescission of the agreement is barred by the subsequent transfer of the property.

Ruling: NO. Rescission of the Agreement was not barred by the subsequent transfer. In the extant case, the failure of TSEI to pay the consideration for the sale of the subject property entitled the Sanchezes to rescind the Agreement. And in view of the finding that the intervenors acted in bad faith in purchasing the property, the subsequent transfer in their favor did not and cannot bar rescission.

EXTINGUISHMENT OF OBLIGATIONS PAYMENT OR PERFORMANCE ALLIED BANKING CORPORATION vs. LIM SIO WAN, METROPOLITAN BANK AND TRUST CO., and PRODUCERS BANK. G.R. No. 133179, March 27, 2008, Velasco, Jr., J. Payment made by the debtor to a wrong party does not extinguish the obligation as to the creditor, if there is no fault or negligence which can be imputed to the latter.

Facts: Respondent Lim Sio Wan deposited with petitioner Allied Banking Corporation a money market placement of PhP 1,152,597.35 for a term of 31 days. Then, a person claiming to be Lim Sio Wan called up an officer of Allied to pre-terminate the money market placement, to issue a manager’s check representing the proceeds of the placement, and to give the check to one Deborah Dee Santos. Allied issued a check, which was cross-checked "For Payee’s Account Only" and given to Santos. The Allied check was deposited with Metrobank in the account of FCC as Producers Bank’s payment of its obligation to FCC. Metrobank stamped a guaranty on the check. The check was sent to Allied through the PCHC. Upon the presentment of the check, Allied funded the check even without checking the authenticity of Lim Sio Wan’s purported indorsement. Lim Sio Wan deposited with Allied a second money market placement. Upon the maturity date of the first money market placement, Lim Sio Wan went to Allied to withdraw it. She was then informed of the events that transpired but she denied it authorizing it. The bank manager then assured her that her money would be recovered. However, when she realized that the promise would not happen, she sent a demand letter to Allied. Allied refused to pay claiming that Lim Sio Wan authorized the pre-termination.

Issue: Whether or not Allied and Metrobank is liable to Lim Sio Wan.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Ruling: Yes. The relationship between a bank (Allied) and a client (Lim Sio Wan) is one of debtorcreditor. A money market placement is a simple loan or mutuum. Allied is negligent in issuing the manager’s check and in transmitting it to Santos without even a written authorization. Allied did not even ask for the certificate evidencing the money market placement or call up Lim Sio Wan at her residence or office to confirm her instructions. Both actions could have prevented the whole fraudulent transaction. As commented by Tolentino, payment made by the debtor to a wrong party does not extinguish the obligation as to the creditor, if there is no fault or negligence which can be imputed to the latter. Even when the debtor acted in utmost good faith and by mistake as to the person of his creditor, or through error induced by the fraud of a third person, the payment to one who is not in fact his creditor, or authorized to receive such payment, is void, except as provided in Article 1241. Since no effective payment was made to Lim Sio Wan, the bank still has an obligation to pay her at 6% interest. However, Metrobank, as the last indorser of the check, is also liable. When Metrobank indorsed the check in compliance with the PCHC Rules and Regulations without verifying the authenticity of Lim Sio Wan’s indorsement and when it accepted the check despite the fact that it was cross-checked payable to payee’s account only,its negligent indorsement contributed to the easier release of Lim Sio Wan’s money and perpetuation of the fraud. Given the relative participation of Allied and Metrobank, both banks cannot be adjudged as equally liable. Hence, the 60:40 ratio of the liabilities of Allied and Metrobank must be upheld.

HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO., LTD. vs. DYNAMIC PLANNERS AND CONSTRUCTION CORP. G.R. Nos. 169408 & 170144, April 30, 2008, Velasco, Jr., J. An obligee is deemed to have waived strict compliance by an obligor with an obligation when there is an actual knowledge and with intentional acceptance of an incomplete performance, and under circumstances that would indicate an intention to consider it as complete.

Facts: Hanjin was awarded a contract for the construction of Davao International Airport Project. It entered into a Subcontract Agreement with Dynamic wherein Hanjin agreed to pay Dynamic a down payment within 20 days from contract execution, however, it was paid in 10 installments and also payments for progress billings came late. Dynamic found design deficiency and called Hanjin’s attention to it but upon the prodding of Hanjin which relied on a contrary assessment, Dynamic proceeded with the construction. The flawed design manifest themselves by cracks appearing in the beams to the second floor. Upon investigation, it was found out that there was a failure of structural design. Dynamic recommended post-tensioning but Hanjin refused and it eventually approved the use of carbon fiber to be used by a new subcontractor. Hanjin served notice that it will not pay the progress billings for works done after April 2000. By December 2002, when project works had reached a 94% completion level, Hanjin took over the Project because of alleged abandonment. Hanjin claims that Dynamic should not be entitled to the retention money because of the delay and suspending work Dynamic’s subsequent abandonment. Dynamic denies the abandonment butdmits a due to Hanjin’s act of withholding the release of the down payment and the payment of its progress billing.

Issue: Whether or not Dynamic abandoned the work and whether or not it is entitled to the retention money.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Ruling: No. Dynamic did not abandon the work and it is entitled to the retention money. By its unjustifiable actions, Hanjin forced Dynamic out of the Project when the subcontract works were already 94% complete. In net effect, Hanjin accepted the benefits arising from the subcontract agreement without asking Dynamic to finish its part of the bargain. An obligee is deemed to have waived strict compliance by an obligor with an obligation when the following elements are present: (1) an intentional acceptance of the defective or incomplete performance; (2) with actual knowledge of the incompleteness or defect; and (3) under circumstances that would indicate an intention to consider the performance as complete and renounce any claim arising from the defect. All elements are present. Hanjin knew that the subcontract works were not yet complete as there were unresolved matters involving structural design deficiencies. Hanjin made no demand upon Dynamic to finish its contractual undertaking. By operation of law, Hanjin is thus deemed to have waived its right to claim any payment for expenses it incurred in completing the work. The admission by Hanjin that after the April 2002 progress billings, it did not pay Dynamic for work it had accomplished provides sufficient legal justification for not continuing with the work. There is no legal basis for Hanjin to withhold payment of Dynamic’s retention money because when it willfully took over the unfinished work, it in effect waived any and all of its rights to hold Dynamic liable for any defects, deficiencies or unfinished work.

BENGUET CORPORATION vs. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES MINES ADJUDICATION BOARD and J.G. REALTY AND MINING CORPORATION G.R. No. 163101, February 13, 2008, Velasco J. When the mode of payment embodied in the contract is complied with by obligee, the contract is deemed consummated and cannot be cancelled for non-payment by reason of non-compliance of a requirement not indicated in the contract.

Facts: Benguet Corporation and J.G. Realty entered into a Royalty Agreement with Option to Purchase (RAWOP), wherein J.G. Realty was acknowledged as the owner of four mining claims. Thus, on August 9, 1989, the Executive Vice-President of Benguet issued a letter informing J.G. Realty of its intention to develop the mining claims. However, J.G. Realty, through its President sent a letter to the President of Benguet informing the latter that it was terminating the RAWOP on the following grounds: (a) The fact that the companyhas failed to perform the obligations set forth inthe RAWOP, i.e., to undertake development works within 2 years from the execution of the Agreement; (b) Violation of the Contract by allowing high graders to operate on our claim (c) No stipulation was provided with respect to the term limit of the RAWOP. (d) Non-payment of the royalties thereon as provided in the RAWOP. Thereafter, J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of the RAWOP with the Legaspi City Panel of Arbitrators (POA) which cancelled the RAWOP and subsequently affirmed by MiningAdjudication Board (MAB). Hence, this petition.

Issue: Whether or not the cancellation of the Royalty agreement for alleged breach of contract by non payment is proper.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Ruling: Yes. Evidently, the RAWOP itself provides for the mode of royalty payment by Benguet. The fact that there was the previous practice whereby J.G. Realty picked-up the checks from Benguet is unavailing. The mode of payment is embodied in a contract between the parties. As such, the contract must be considered as the law between the parties and binding on both. Thus, after J.G. Realty informed Benguet of the bank account where deposits of its royalties may be made, Benguet had the obligation to deposit the checks. J.G. Realty had no obligation to furnish Benguet with a Board Resolution considering that the RAWOP itself provided for such payment scheme.

CONSIGNATION B.E. SAN DIEGO, INC. v. ROSARIO ALZUL G.R. No. 169501, June 8, 2007, Velasco, Jr., J. Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior tender of payment.

Facts: Alzul purchased from B.E. San Diego 4 subdivision lots and took possession of the property. Alzul signed a "Conditional Deed of Assignment and Transfer of Rights" which assigned to Wilson Yu her rights under the Contract to Sell in which B.E. San Diego was noti fied. The contract in Alzul’s name was cancelled and a new one was issued in favor of Yu. Alzul informed B.E. San Diego about Yu's failure to pay the amounts due and manifested that she would be the one to pay the installments. Alzul filed for rescission of the conditional deed of assignment against Yu and caused the annotation of notices of lis pendens on the titles. The RTC ruled in favor of Alzul and was affirmed by the CA. B.E. San Diego notified Alzul that the contract was declared rescinded and the lots were sold to Spouses Ventura who later filed an action for Quieting of Title with Prayer for Cancellation of Annotation and Damages. The RTC ruled in favor of the spouses but was reversed upon appeal. Alzul tried to serve payment upon B.E. San Diego but the latter refused to accept it. Hence, Alzul made a manifestation regarding the refusal. Alzul's counsel wrote a letter to B.E. San Diego citing the latter's refusal and that due to it, Alzul would just consign the balance before the proper judicial authority but such was rejected by B.E. San Diego. Hence, Alzul filed an action for consignation and specific performance before the HLURB which was dismissed. Upon appeal to the OP, it ruled that there was no valid consignation since the period had already prescribed. However, it was reversed by the CA stating that although there was no valid consignation it found that justice would be better served by allowing Alzul to effect the consignation.

Issue: Whether or not Alzul is still entitled to consignation despite the lapse of the period prescribed by the Court.

Ruling: No. We agree with petitioner's assertion that even granting arguendo that the instant case for consignation was instituted within the 30-day period or within a reasonable time thereafter, it would still not accord respondent relief as no valid consignation was made. Certainly, the records show that there was no valid consignation made by respondent before the HLURB as she did not

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 deposit the amount with the quasi-judicial body as required by law and the rules. Pertinently, the first paragraph of Article 1258 of the Civil Code provides that "consignation shall be made by depositing the things due at the disposal of judicial authority, before whom the tender of payment shall be proved, in a proper case, and the announcement of the consignation in other cases." Moreover, in order that consignation may be effective, the debtor must show that: (1) there was a debt due; (2) the consignation of the obligation had been made because the creditor to whom tender of payment was made refused to accept it, or because s/he was absent or incapacitated, or because several persons claimed to be entitled to receive the amount due or because the title to the obligation had been lost; (3) previous notice of the consignation had been given to the person interested in the performance of the obligation; (4) the amount due was placed at the disposal of the court; and (5) after the consignation had been made, the person interested was notified of the action. Respondent did not comply with the provisions of law particularly with the fourth and fifth requirements specified above for a valid consignation. In her complaint for consignation and specific performance, respondent only prayed that she be allowed to make the consignation without placing or depositing the amount due at the disposal of the court of srcin. Verily, respondent made no valid consignation.

CONTRACTS SPOUSES A. TAGUMPAY ALBOSSHERIFF and AIDAMARINO C. ALBOS SPOUSES and NESTOR M. EMBISAN ILUMINADA EMBISAN,N. DEPUTY V.v.CACHERO, the REGISTER OF and DEEDS OF QUEZON CITY G.R. No. 210831. November 26, 2014. THIRD DIVISION. Velasco, JR., J. Art. 1306. The contracting parties mayb establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

Facts: Spouses Albos entered a loan agreement with Spouses Embisan in the amount P84,000.00 payable within 90 days with a monthly interest rate of 5% secured by a real estate mortgage. Due to the repeated failure of the petitioners to settle their obligation and their subsequent request for extensions, Spouses Embisan, imposed a condition that the monthly 5% interest from then on will be compounded. However this agreement was not reduced into writing. With the interest being compounded, the obligation of the petitioner ballooned to P296,658.70. Despite the extension given, Spouses Albos failed to pay their loan. This prompted Spouses Embisan to extra-judicially foreclose the property. Spouses Embisan emerged as the highest bidder and were issued a Sheriff’s Certificate of Sale. Due to failure to redeem the property, Spouses Emisan executed an Affidavit of Consolidation over the property and the property was later registered in their name.

Issue: Whether or not the interest rate agreed upon by the parties is unconscionable.

Ruling: Yes. Imposing 5% monthly interest, whether compounded or simple, is unconscionable. Even if there was such an agreement that interest will be compounded the 5% monthly rate, be it simple or compounded, written or verbal, is void for being too exorbitant, thus running afoul of 27 | Page

Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Article 1306 of the New Civil Code. As case law instructs, the imposition of an unconscionable rate of interest on a money debt, even if knowingly and voluntarily assumed, is immoral and unjust. It is tantamount to a repugnant spoliation and an iniquitous deprivation of property, repulsive to the common sense of man. It has no support in law, in principles of justice, or in the human conscience nor is there any reason whatsoever which may justify such imposition as righteous and as one that may be sustained within the sphere of public or private morals.

P.L. UY REALTY CORP. v. ALS MANAGEMENT AND DEV. CORP. and ANTONIO S. LITONJUA G.R. No. 166462, October 24, 2012, Velasco, J.

Art. 1306 of the Civil Code guarantees the freedom of parties to stipulate the terms of their contract provided that they are not contrary to law, morals, good customs, public order, or public policy. Thus, when the provisions of a contract are valid, the parties are bound by such terms under the principle that a contract is the law between the parties.

Facts: PLU (vendor) and ALS (vendee) executed a Deed of Absolute Sale with Mortgage covering a parcel of land. Notably, the parties stipulated in paragraph 4.a of the Deed of Absolute Sale with Mortgage on the eviction of informal settlers: It is understood that the VENDOR shall have the property clear of any existing occupants/squatters, the removal of which shall be for the sole expenses & responsibilities of the VENDOR & that the VENDEE is authorized to withhold payment of the 1st 24% installment unless the above-undertaking is done and completed to the satisfaction of the VENDEE. Subsequently, the parties executed a Partial Release of Mortgage attesting to the payment by ALS of the first installment. ALS, however, failed to pay the 2nd payment despite demands. PLU filed a Complaint. RTC declared that the removal of the informal settlers on the property is still a subsisting and valid condition, thus it found the obligation of ALS to pay the balance of the purchase price has not yet fallen due and demandable and it dismissed the case for being premature. PLU filed another complaint and RTC dismissed it.

Issue: Whether or not the stipulation in paragraph 4.a between PLU and ALS is valid.

Ruling: YES. Art. 1306 of the Civil Code guarantees the freedom of parties to stipulate the terms of their contract provided that they are not contrary to law, morals, good customs, public order, or public policy. Thus, when the provisions of a contract are valid, the parties are bound by such terms under the principle that a contract is the law between the parties. Here, both parties knew for a fact that the property subject of their contract was occupied by informal settlers, whose eviction would entail court actions that in turn, would require some amount of time. They also knew that the length of time that would take to conclude such court actions was not within their power to determine. Despite such knowledge, both parties still agreed to the stipulation that the payment of the balance of the purchase price would be deferred until the informal settlers are ejected. There was never any allegation that PLU was coerced into signing the Deed of Sale with Mortgage or that its consent was in any way vitiated. PLU was free to accept or decline such contracted provision. Thus, PLU cannot be allowed to renege on its agreement. It is to be

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 borne in mind that the facts show that the parties were fully aware that the land described was occupied by squatters. As the parties must have known that they could not take the law into their own hands, but must resort to legal processes in evicting the squatters, they must have realized that the duration of the suits to be brought would not be under their control nor could the same be determine in advance. The conclusion is thus forced that the parties must have intended to defer the performance of the obligations under the contract until the squatters were duly evicted.

INADEQUACY OF CONSIDERATION EDUARDO M. COJUANGCO, JR. v. REPUBLIC OF THE PHILIPPINES G.R. No. 180705, November 27, 2012 , Velasco, Jr., J. Inadequacy of the consideration, however, does not render a contract void under Article 1355 of the Civil Code. Inadequacy of consideration does not vitiate a contract unless it is proven that there was fraud, mistake or undue influence.

Facts: Philippine Coconut Administration(PCA) have the largest membership in the COCOFUND. A part of the coconut levy funds was acquired by the United Coconut Planters Bank(UCPB). Cojuangco had the exclusive option to acquire UCPB’s controlling interests. The 1st agreement was by and between Cojuangco for and in his behalf and Pedro Cojuangco in which the former was purportedly accorded the option to buy the option shares. The nd 2 agreement had PCA, for itself and for the benefit of the coconut farmers, purchase from Cojuangco the shares of stock subject of the 1st Agreement. While the 64.98% portion of the option shares ostensibly pertained to the farmers, the corresponding stock certificates supposedly representing the farmers’ equity were in the name of and delivered to PCA. There were, however, shares forming part of the aforesaid 64.98% portion, which ended up in the hands of non-farmers. The remaining 27.8% of the UCPB capital stock were not covered by any of the agreements. PCA agreed to expeditiously distribute the UCPB shares purchased to such coconut farmers holding registered COCOFUND receipts on equitable basis. As found by the Sandiganbayan, the PCA appropriated, out of its own fund, an amount for the purchase of the said 72.2% equity, albeit it would later reimburse itself from the coconut levy fund. And per Cojuangco’s own admission, PCA paid, out of the CCSF, the entire acquisition price for the 72.2% option shares. It would appear later that, pursuant to the stipulation on maintaining Cojuangco’s equity position in the bank, PCA would cede to him 10% of its subscriptions to (a) the authorized but unissued shares of UCPB and (b) the increase in UCPB’s capital stock. In all, from the "mother" PCA shares, Cojuangco would receive a total of 95,304 UCPB shares broken down as follows: 14,440 shares + 10% (158,840 shares) + 10% (649,800 shares) = 95,304.

Issue: Whether or not the PCA-COJUANGCO agreement is a valid contract.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Ruling: Yes. Inadequacy of the consideration, however, does not render a contract void under Article 1355 of the Civil Code. Inadequacy of consideration does not vitiate a contract unless it is proven which in the case at bar was not, that there was fraud, mistake or undue influence. While one may posit that the PCA-Cojuangco Agreement puts PCA and the coconut farmers at a disadvantage, the facts do not make out a clear case of violation of any law that will necessitate the recall of said contract. Indeed, the anti-graft court has not put forward any specific stipulation therein that is at war with any law, or the Constitution, for that matter. It is even clear as day that none of the parties who entered into the two agreements with petitioner Cojuangco contested nor sought the nullification of said agreements, more particularly the PCA who is always provided legal advice in said transactions by the Government corporate counsel, and a battery of lawyers and presumably the COA auditor assigned to said agency. A government agency, like the PCA, stoops down to level of an ordinary citizen when it enters into a private transaction with private individuals. In this setting, PCA is bound by the law on contracts and is bound to comply with the terms of the PCA-Cojuangco Agreement which is the law between the parties. While consideration is usually in the form of money or property, it need not be monetary. A consideration, in the legal sense of the word, is some right, interest, benefit, or advantage conferred upon the promisor, to which he is otherwise not lawfully entitled, or any detriment, prejudice, loss, or disadvantage suffered or undertaken by the promisee other than to such as he is at the time of consent bound to suffer. The Court rules that the transfer of the subject UCPB shares is clearly supported by valuable consideration.

KINDS OF CONTRACTS ANTHONY ORDUŇA, DENNIS ORDUŇA, and ANTONITA ORDUŇA v. EDUARDO J. FUENTEBELLA,

MARCOS S. CID, BENJAMIN F. CID, BERNARD G. BANTA, and ARMANDO GABRIEL, JR. G.R. No. 176841, June 29, 2010, Velasco, Jr., J. The Statute of Frauds expressed in Article 1403, par. 2 of the Civil Code applies only to executory contracts. The legal consequence of non-compliance with the Statute does not come into play where the contract in question is completed, executed or partially consummated.

Facts: Gabriel, Sr. sold the subject lot to petitioner Antonita Orduňa, payable in installment, but no formal deed was executed to document the sale. The installments were paid to Gabriel, Sr. and later to Gabriel, Jr. after the former’s death. Improvements were thereafter made by petitioner. Without the knowledge of petitioners, Gabriel, Jr. sold the property to Banta, who then sold the same to the Cids and ultimately it was ceded to respondent Fuentebella. Petitioner, after being demanded by Fuentebella to vacate the disputed land, then filed a Complaint for Annulment of Sale, Title, Reconveyance with damages with a prayer to acquire ownership over the subject lot upon payment of their remaining balance. The RTC dismissed the petition because the verbal sale was unenforceable under the Statute of Frauds. The CA affirmed this ruling.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Issue: Whether or not the sale of the subject lot by Gabriel, Jr. to Antonita is unenforceable under the Statute of Frauds.

Ruling: No. The Statute of Frauds expressed in Article 1403, par. 2of the Civil Code applies only to executory contracts, i.e. those where no performance hasyet been made. Stated a bit differently, the legal consequence of non-compliance with the Statute does not come into play where the contract in question is completed, executed or partially consummated. The Statute of Frauds, in context, provides that a contract for the sale of real property or of an interest therein shall be unenforceable unless the sale or some note or memorandum thereof is in writing and subscribed by the party or his agent. However, where the verbal contract of sale has been partially executed through the partial payments made by one party duly received by the vendor, as in the present case, the contract is taken out of the scope of the Statute. A contract that infringes the Statute of Frauds is ratified by the acceptance of benefits under the contract. Evidently, Gabriel, Jr., as hisfather earlier, had benefited fromthe partial payments made by the petitioners. Thus, neither Gabriel Jr. northe other respondents’ successive purchasers of subject lot could plausibly set up the Statute of Fr auds to thwart petitioners’ efforts towards establishing their lawful right over the subject lot and removing any cloud in their title. As it were, petitioners need only to pay the outstanding balance of the purchase price and that would complete the execution of the oral sale.

TIRSO MONTEROSO vs. COURT OF APPEALS, et al. G.R. No. 105608, April 30, 2008, J. Velasco, Jr. SOFIA PENDEJITO VDA. DE MONTEROSO, et al. vs. COURT OF APPEALS and TIRSO MONTEROSO G.R. No. 113199, April 30, 2008, J. Velasco, Jr. The fact that only one of the subject lots was used as collateral for a P 600 loan, which the Cagampang spouses took out, does not weaken the conclusion on the simulated character of the contracts, as logically drawn from the twin circumstances adverted to.

Facts: Don Fabian Monteroso, Sr. married twice and sired eight (8) children, four (4) from each union. In his first marriage with Soledad Doldol, Soledad, Reygula, Benjamin and Tirso were born. After Doldol died, his second marriage with Sofia Pendejito bore Florenda, Reynato, Alberto, and Fabian, Jr. During the early part of his second marriage, Don Fabian filed before the CFI of Agusan an intestate proceeding for the estate of his deceased first wife to obviate any dispute over the inheritance. The project for partition was approved and the intestate estate of Doldol was partitioned and distributed to her four (4) children in equal shares. In the meantime, the children of Don Fabian from his first marriage married accordingly, Soledad to Atty. Perfecto Cagampang, Sr., Reygula to Jose Bayan, Benjamin to Mauricia Nakila; and Tirso to Melecia Tana. Benjamin died, leaving behind four (4) children and his wife. A year and a half later, Don Fabian also passed away. This brings us to the objects of the squabble: the conjugal patrimonies of Don Fabian from his two (2) successive marriages. The children of Benjamin filed with the RTC a complaint for recovery of property with damages against their uncle, Tirso.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 As the heirs of Benjamin alleged in their complaint, Tirso was entrusted with ¼ of the parcel of land part of the share from the estate of Doldol. However, their uncle refused to surrender and deliver the same when demanded upon the reaching of their majority age. Tirso, in response, alleged that the said portion was never entrusted to him. It was in the possession of his sister, Soledad, who was not entitled to any share in the said parcel, having previously opted to exchange hers for another parcel of land. On the other hand, filed a complaint for partition and damages with receivership against his stepmother Pendejito and all his step-siblings, which involves 12 parcels of land. In the latter civil case, Tirso alleged the following: 1) the aforementioned 12 parcels of land belong to the conjugal partnerships of the first and second marriages contracted by Don Fabian; (2) SP No. 309, which purportedly judicially settled the intestate estate of his mother, is null and void for the reason that the project of partition failed to comprehend the entire estate of the decedent as some parcels were excluded, thereby depriving Tirso of his 1/4 share or legitime; and (3) the parcels acquired during the second marriage of Don Fabian are not paraphernal properties of Sofia Pendejito Vda. de Monteroso. The said civil cases were consolidated and the RTC, after fifteen (15) years, decided in Tirso’s favor. However, the subsequent ruling of the RTC ordered Tirso and Soledad to deliver the specific properties to the respective heirs of Benjamin. On appeal, the CA declared the partition valid and dismissed the opposition of the Cagampang spouses and Reygulo MonterosoBayan, who all claimed ownership over some of the parcels of land on the strength of the deeds of conveyance executed in their favor. On the alleged donation to Reygula, the CA likewise agreed with the RTC’s ruling on the nullity thereof.

Issue: Whether or not the deeds of sale are sham, fictitious and simulated.

Ruling: Yes. The antecedent facts, as borne by the records, strongly indicate the simulated character of the sale covered by the deeds of absolute sale. As found below, Don Fabian never relinquished possession of the covered properties during his lifetime. The first deed was executed on May 1, 1939; the second on May 10, 1939; and the third on September 24, 1939. Soledad Monteroso-Cagampang, however, only took possession of the subject properties after Don Fabian’s death in 1948 or nine (9) years after contract execution. The gap, unexplained as it were, makes for a strong case that the parties to the sale never intended to be bound thereby. The more telling circumstance, however, is the fact that Perfecto had judicially sought the amendment of the corresponding TCTs so that only the name of his wife, Soledad, shall be inscribed as real party-in-interest on the Memorandum of Encumbrances at the back portion of the titles. If only to stress the point, when the deeds were executed in 1939, Soledad and Perfecto Cagampang, the notarizing officer, were already married. A property acquired during the existence of a marriage is presumed conjugal. This postulate notwithstanding, Perfecto Cagampang went out of his way to make it appear that the subject parcels of land were effectively his wife’s paraphernal properties. No explanation was given for this unusual move. Hence, the Court agrees that the unexplained situations described above sufficiently show that the purported conveyances were simulated. We also accord credence to Tirso’s allegation that the Cagampang spouses tricked Don Fabian into believing that his creditors were after the properties which have to be "hidden" by means of simulated conveyances to Soledad Monteroso-Cagampang. The fact that only one of the subject lots was used as collateral for a P 600 loan which the Cagampang spouses took out does not weaken the conclusion on the simulated character of the contracts, as logically drawn from the twin circumstances adverted to.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 ESTOPPEL LAND BANK OF THE PHILIPPINES v ALFREDO ONG G.R. No. 190755, November 24, 2010, Velasco Jr. J. The elements of estoppel are: First, the actor who usually must have knowledge, notice or suspicion of the true facts, communicates something to another in a misleading way, either by words, conduct or silence; second, the other in fact relies, and relies reasonably or justifiably, upon that communication; third, the other would be harmed materially if the actor is later permitted to assert any claim inconsistent with his earlier conduct; and fourth, the actor knows, expects or foresees that the other would act upon the information given or that a reasonable person in the actors position would expect or foresee such action.

Facts: Sps. Sy secured a loan from Land Bank Legazpi City (Land Bank) herein petitioner, in the amount of P16,000,000. The aforementioned loan was secured by 3 parcels of land. Subsequently however, the Sps Sy found that they could no longer pay their loan. As a result, they sold the aforementioned 3 parcels of land to one Angelina Gloria Ong married to Alfredo Ong. Thereafter Alfredo Ong (Ong), herein respondent, went to Land Bank to inform it about the aforementioned sale and their assumption of mortgage. Land Bank told Ong to pay part of the principal which was pegged at P750,000 so that their application for assumption of mortgage would be approved by Land Bank. Thus Ong, paid the aforementioned amount. However, Land Bank denied his application for assumption of mortgage. Subsequently, Ong learned of the foreclosure of the aforementioned mortgaged properties. This prompted Ong to demand the return of the P750,000 he paid to Land Bank on the ground that his application for assumption of mortgage was denied. Land Bank refused to return the aforementioned amount. This prompted Ong to file a case for sum of money against Land Bank for the return of the P750,000 paid by the former to the latter. The RTC ruled in favor of Ong and ordered Land Bank to return the amount of P750,000 paid. On appeal with the CA, the CA affirmed the decision of the RTC. Now, Land Bank comes before the Supreme Court assailing decision of the RTC and CA. Land Bank argues that it should not be ordered to return the P750,000 to Ong because the aforementioned payment was tendered prior to the application for assumption of mortgage and that in truth and in fact it was tendered to be applied for the debt contract by the Sps. Sy. Furthermore, it alleged that it enjoyed a presumption of regularity and was in good faith when it accepted the P750,000.

Issue: Whether Land Bank should return the amount paid by Ong.

Ruling: Yes. We rule that Land Bank is still liable for the return of the P750,000 based on the principle of unjust enrichment. Land Bank is correct in arguing that it has no obligation as creditor to recognize Alfredo as a person with interest in the fulfillment of the obligation. But while Land Bank is not bound to accept the substitution of debtors in the subject real estate mortgage, it is estopped by its action of accepting Alfredos payment from arguing that it does not have to recognize Alfredo as the new debtor. By accepting Alfredos payment and keeping silent on the status of Alfredos application, Land Bank misled Alfredo to believe that he had for all intents and purposes stepped into the shoes of the Spouses Sy.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 ESTATE OF THE LATE JESUS S. YUJUICO, represented by ADMINISTRATORS BENEDICTO V. YUJUICO and EDILBERTO V. YUJUICO; and AUGUSTO Y. CARPIO v REPUBLIC OF THE PHILIPPINES and the COURT OF APPEALS G.R. No. 168661, October 26, 2007, Velasco Jr. J. Equitable estoppel may be invoked against public authorities when as in this case, the lot was already alienated to innocent buyers for value and the government did not undertake any act to contest the title for an unreasonable length of time.

Facts: Sometime in 1973, one Fermina Castro (Castro) filed an application for registration and confirmation of her title over a parcel of land somewhere in Paranaque City with the RTC having jurisdiction over the same. The Republic through the OSG filed its respective opposition. On 1974, the RTC rendered its decision, declaring Castro as the true and absolute owner of the parcel of land. Thereafter, Castro sold the aforementioned lot to Jesus Yujuico (Yujuico) and transferred the ownership of the land. Subsequently, Yujuico died. On 2001, the Republic through the OSG filed a complaint for annulment and cancellation of title and reversion against the Heirs of Jesus Yujuico (Heirs), herein petitioners, over the aforementioned land sold by Castro to Yujuico. The complaint was filed with the RTC in Paranaque. The RTC dismissed the complaint of the OSG. On appeal, the CA reversed, it held that the parcel of land was of public domain and therefore inalienable. Now, the Heirs come before the Supreme Court assailing the decision of the CA. They contend that the remedy of reversion invoked by the OSG is not the proper remedy. Hence this petition.

Issue: Whether or not the Republic through the OSG can validly revert the land in favor of the State.

Ruling: No. The lapse of almost three decades in filing the instant case, the inexplicable lack of action of the Republic and the injury this would cause constrain us to rule for petitioners. Equitable estoppel may be invoked against public authorities when as in this case, the lot was already alienated to innocent buyers for value and the government did not undertake any act to contest the title for an unreasonable length of time.

SALES DOUBLE SALE RUPERTA CANO and JESUS CARLO GERARD VDA DE VIRAY v. SPS JOSE and AMELITA USI G.R. No. 192486, November 21, 2012, Velasco, Jr., J. A double sale situation arises when the following requisites concur: (a) The two (or more) sales transactions must constitute valid sales; (b) The two (or more) sales transactions must pertain to exactly the same subject matter; (c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests; and (d) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought from the very same seller.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Facts: Lot 733, registered in the name of Mendoza is the subject of this case. Geodetic Engr Fajardo prepared the Fajardo Plan, in which Lot 733 was divided into 6 smaller parcels of differing size dimensions: Lot 733(A-F). Mendoza executed 2 separate deeds of absolute sale, the first, transferring Lot 733-F to Jesus and the second deed conveying Lot 733-A to Sps Viray. Vda. de Viray is the surviving spouse of Jesus. Mendoza, Vda. de Mallari and Sps. Usi, as purported co-owners of Lot 733, executed the 1st Subdivision Agreement (SA) in accordance with Galang Plan. Then they executed the 2nd SA. The subdivision of Lot 733, per the Galang Plan, and the 2 SAs concluded based on that plan, virtually resulted in the loss of the identity of what under the Fajardo Plan were Lot 733-A and Lot 733-F. The Sps. Viray and the late Jesus purchased Lot 733-A and Lot 733-F, respectively, from Mendoza. As to be expected, the foregoing overlapping transactions involving the same property or portions thereof spawned several suits and counter-suits.

Issue: Whether or not the sale to Sps Usi constituted as a double sale and therefore invalid.

Ruling: Yes. The earlier sale of Lot 733-A and Lot 733-F was valid and effective conveyances. The subsequent transfers to the Sps. Usi of substantially the same portions of Lot 733 accomplished through the subdivision agreements constitute in effect double sales of those portions. The Deeds of Absolute Sale of Lot 733-A and Lot 733-F are valid. It must be noted that the RTC upheld the validity of the separate deeds of absolute sale of Lots 733-A and 733-F. There can be no question as to the ownership of the Sps. Viray and Vda. de Viray over the specified and delineated portions of Lot 733 which they purchased for value from Mendoza. Mendoza, as vendor, was bound to transfer the ownership of and deliver, as well as warrant, the thing which is the object of the sale. The survey report of LMB surveyor, Engr. Nicdao, would support a finding of double sale. His report, as earlier indicated, contained the following key findings: (1) Lot 733-A sold to the Sps. Viray is within Lot 733-B, the part assigned to Sps. Usi under the division; and (2) Lot 733-F is almost identical to the combined area of Lots 733-C-8 to 733-C-12 awarded to Ellen Mendoza and her children, McDwight, Bismark, Beverly and Georgenia, and a portion of Lot 733-C-10 (Galang Plan) adjudicated to Sps. Usi. A double sale situation, which would call, if necessary, the application of Art. 1544 of the Civil Code, arises when, as jurisprudence teaches, the following requisites concur: (a) The two (or more) sales transactions must constitute valid sales; (b) The two (or more) sales transactions must pertain to exactly the same subject matter; (c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests; and (d) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought from the very same seller. There is no valid sale from Mendoza to respondents Usi. The parties did not execute a valid deed of sale conveying and transferring the lots in question to respondents. The third element of cause of the obligation which is established under Art. 1318 of the Civil Code is likewise visibly absent from the two SAs. The transfer of title to respondents based on said SAs is flawed, irregular, null and void. Thus the two SAs are not "sales transactions" nor "valid sales" under Art. 1544 of the Civil Code and, hence, the first essential element under said legal provision was not satisfied.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 EQUITABLE MORTGAGE SPOUSES FELIPE SOLITARIOS AND JULIA TORDA v. SPOUSES GASTON JAQUE AND LILIA JAQUE G.R. No. 199852, November 12, 2014, Velasco, Jr., J. In determining the nature of a contract, the intention of the parties, as shown by the surrounding circumstances, must be considered. If the real intention of the parties is that the transaction shall secure the payment of a loan, then it is presumed to be an equitable mortgage, under Article 1602(6) of the Civil Code.

Facts: In a complaint, Spouses Jaque alleged that they purchased a lot from Spouses Solitarios in stages. One-half of the lot was sold to them, and the other half was mortgaged to them to secure a loan. Spouses Solitarios then agreed to sell the mortgaged half, but Spouses Jaque allowed the former to retain possession of the lot subject to the condition that they will deliver a portion of the lot’s produce. However, Spouses Solitarios stopped delivering any produce and claimed ownership over the lot. Spouses Solitarios, on the other hand, alleged that they merely mortgaged the lot to Spouses Jaque after the latter helped them redeem the land from PNB, with the agreement that they would However, Jacque informed pay back the Jacques by delivering to them a portion of the lot’s roduce. p Spouses Solitarios that he was taking possession of the lot as owner, by showing the deeds of sale, REM contract, and a TCT to prove his claim. Spouses Solitarios contended that these deeds of sale were fictitious and that their signatures were forged. They also challenged the validity ofthe TCT through fraud machinations. RTC declared that what the parties entered into was actually an equitable mortgage. However, the CA reversed and set aside the RTC Decision, and ruled that what was entered into was a contract of sale.

Issue: Whether or not the parties entered into a contract of absolute sale.

Ruling: No. The parties entered into an equitable mortgage, and not a contract of sale. in determining deed of absolute salesurrounding in form is a circumstances. mortgage, the decisive factor isFirst, the intention of thewhether parties,aas shown by all the Moreover, Article 1602 enumerates instances when a contract purporting to be an absolute sale is presumed to be an equitable mortgage. Article 1602 (6) then provides that “in any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of n it is presumed to be an equitable mortgage. a debt or the performance of any other obligation” the This presumption finds support in the following: (1) the testimony of Jaque and the documents he presented establish the existence of two loans; and (2) the testimonies of the parties reveal that they came to an agreement regarding payment terms. The fact that the parties agreed on payment terms is inconsistent with the claim of Jaque that when Spouses Solitarios executed the questioned deeds of sale they had no other intention but to transfer ownership over the lot. Second, the Court held that a purported contract of sale where the vendor remains in physical possession of the land, as lessee or otherwise, is an indicium of an equitable mortgage. Retention by the vendor of the possession of the property is inconsistent with the vendee’s

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 acquisition of ownership under a true sale, because in the latter, the legal title is immediately transferred to the vendee.

Lastly, it is further established that when doubt exists as to the true nature of the parties’ transaction, courts must construe such transaction purporting to be a sale as an equitable mortgage, as the latter involves a lesser transmission of rights and interests over the property. It is contrary to human experience that a person would easily part with his property after incurring a debt. Rather, he would first look for means to settle his obligations.

PARTNERSHIP, AGENCY AND TRUSTS POWERS PACIFIC REHOUSE CORPORATION et al. vs EIB SECURITIES, INC., G.R. No. 184036, October 13, 2010, V ELASCO, JR., J. An agent must act within the scope of his authority. An act beyond the scope of authority given does not bind the principal.

Facts: Plaintiffs bought Kuok Properties, Inc. (KPP) shares of stock and DMCI shares through the Philippine Stock Exchange (PSE). The KPP shares were acquired by plaintiffs through their broker, defendant EIB. Under the agreement between the plaintiffs and their broker EIB, EIB is given the authority to dispose of the shares of stocks bought by the plaintiff solely for the purpose of paying the obligations and liabilities of the plaintiffs. The defendant EIB, however, sold the DMCI shares of stock in order to buy back the KPP shares of stock. The plaintiff argues that the disposition of EIB of their DMCI shares of stock does not bind them as principals because EIB, as agent, acted beyond the scope of their authority. The RTC rendered a judgment on the pleadings in favor of the plaintiffs but the CA reversed said RTC decision and remanded the same for further proceedings. Hence, this petition.

Issue: Whether EIB is authorized to sell the DMCI shares for the purpose of reacquiring the KKP shares.

Ruling: NO. Under the agreement between the plaintiffs and the defendant, the right to sell or dispose of the properties of petitioners by EIB is unequivocally confined to payment of the obligations and liabilities of petitioners to EIB and none other. Thus, when EIB sold the DMCI shares to buy back the KKP shares, EIB acted beyond the ambit of its authority as agent. Such act is surely illegal and does not bind petitioners as principals of EIB.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 EXPRESS VS. IMPLIED AGENCY FILIPINAS (PRE-FAB BLDG.) SYSTEMS, INC. v MRT DEVELOPMENT CORPORATION; COURT OF APPEALS; CONSTRUCTION INDUSTRY ARBITRATION COMMISSION; and VICTOR P. LAZATIN, ELISEO I. EVANGELISTA, and JACINTO M. BUTALID G.R. Nos. 167829-30, November 13, 2007, Velasco Jr. J. While the general rule is one cannot be bound to a contract entered into by another person, there are exceptions, such as when the contracting person was authorized to enter a contract on behalf of another, or when such contract was ratified.

Facts: Filipinas Systems Inc (FSI), herein petitioner, is a contractor who submitted its bid to the Metro Rail Transit Development Corporation (MRTDC) herein respondent, for the construction of the North Triangle Project which is poised to be a major hub of the light rail transit line system along EDSA. Verily MRTDC engaged Parsons Interpro JV (PIJV) to act as the Project Management Team to supervise the project. It also engaged the services of one David Sampson (Sampson) who was designated as the Area Construction Manager tasked to monitor the day-to-day activities on the construction site. FSI won the bidding for the construction of the aforementioned project and was thus awarded with a Notice of Award. The Notice of Award provides that in case of early completion of construction by FSI, it shall be entitled to an early completion bonus. Thereafter, construction commenced. The deadline given to On FSI October was until January 1999 however FSI wasrequesting only able to finish construction on May 17, 1999. 8, 1999 FSI14, issued a letter to Sampson an extension of time and verily move the project deadline. This was approved by Sampson. Thus, the deadline was moved from January 14, 1999 to August 2, 1999. Because of the change in deadline, FSI sought its early completion bonus from MRTDC. MRTDC refused to pay FSI the bonus. This prompted FSI to file its claim with the CIAC. The CIAC held that MRTDC is liable for the bonus in favor of FSI. On appeal, the CA reversed the decision of the CIAC. Now, FSI comes before the Supreme Court assailing the decision of the CA. In its defense, MRTDC avers that Sampson had no authority as Area Construction Manager to authorize the extension of time for the deadline of the project, and therefore the extension was without legal effect. Hence this petition.

Issue: Whether or not MRTDC is liable for the early completion bonus in favor of FSI.

Ruling: Yes, MRTDC is liable. Article 1317 of the New Civil Code provides that a contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. David Sampson was clearly authorized to issue change orders as he was in charge of the daily activities of the project. David Sampson was the representative or agent of PIJV who was engaged as the Project Manager by MRTDC. Being clearly authorized, the acts of David Sampson shall bind MRTDC and therefore, it shall be held liable for the early completion bonus.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 COMPROMISE ADRIATICO CONSORTIUM, INC., et al. v. LAND BANK OF THE PHILIPPINES G.R. No. 187838 December 23, 2009, Velasco, Jr., J. In the construction or interpretation of a compromise agreement, the intention of the parties is to be ascertained from the contract and effect should be given to that intention. A contract must be interpreted from the language of the contract itself according to its plain and ordinary meaning.

Facts: Respondent Land Bank approved the application of William Siy, the former president of ACI, for a credit line of P200M. A Mortgage Trust Indenture (MTI) was created to secure the loan. The MTI was amended to include J.V. Williams Realty and Development Corporation (JVWRDC), a majority-owned corporation of Siy, as borrower. It was later discovered that Siy didnot remit ACI’s payments of the loan. Land Bank obligedpetitioners ACI and PRC, with Benito Cu-Uy-Gam, ACI’s new president, to pay the maturing obligations of JVWRDC. Petitioners then filed a Petition for Declaration of Nullity, Specific Performance, Injunction, and Damages with Prayer for a TRO against Land Bank and Siy with the RTC of Manila. The parties entered into a Partial Compromise Agreement wherein ACI agreed, among others, to pay andactually paid to Land Bankthe amount of loan plus interests. The said Agreement was approved by the RTC. Land Bank, however, informed ACI that the JVWRDC loanswere included in a sealed-bid public auction of Land Bank Non-Performing Assets under the Special Purpose Vehicle Act. Petitioners filed a Motionfor Execution before the RTC stating that Land Bank violated Section 5 of the Partial Compromise Agreement, which provides that the parties agree “to suspend all actions against each other x x x” . The RTC granted petitioners’ Motions and issued the corresponding Writ of Execution and Writ of Preliminary Injunction. Land Bank filed a Petition for Certiorari and Prohibition with Prayer for TRO and/or Preliminary Injunction before the CA arguing that the sale of the MPCs is not prohibited by the Agreement. The CA granted the petition and found that the compromise agreement sought to prohibit only legal actions.

Issue: Whether or not the act of Land Bank in selling the receivables violated the Partial Compromise Agreement, specifically Section 5.

Ruling: YES. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. In the construction or interpretation of a compromise agreement, the Court is guided by the fundamental and cardinal rule that the intention of the parties is to be ascertained from the contract and effect should be given to that intention. Likewise, it must be construed so as to give effect to all the provisions of the contract. Evidently, had the parties intended to limit the application of Sec. 5 to legal actions only, they would have written a specific word or phrase to pertain to legal actions and not just the word “actions” alone. A contract must be interpreted from the language of the contract itself according to its plain and ordinary meaning. In the case at bar, theword “action” should be definedaccording to its plain and ordinary meaning, i.e., as the process of doing something; conduct or behavior; a thing done. It is not limited to actions before a court or a judicial proceeding. Therefore, the only logical conclusion

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 that can be derived from the use of the word “action” in Sec. 5 is that the parties intentionally used it in its plain and ordinary sense and did not limit it to mean any specific legal term. Furthermore, Sec. 5 of the Partial Compromise Agreement speaks of cooperation between the parties to determine the person or persons ultimately liable. By selling the receivables, Land Bank did not cooperate with petitioners. Thus, it can be safely concluded that the act of Land Bank is a clear and patent violation of Sec. 5 of the Partial Compromise Agreement.

ALEXANDER S. GAISANO v. BENJAMIN C. AKOL G.R. No. 193840, June 15, 2011, Velasco, Jr., J. A compromise agreement is a contract whereby the parties make reciprocal concessions, avoid litigation, or put an end to one already commenced. Its validity depends on its fulfillment of the requisites and principles of contracts dictated by law; its terms and conditions being not contrary to law, morals, good customs, public policy and public order.

Facts: Akol filed a complaint for recovery of shares of stock against Gaisano. The RTC dismissed the complaint while the CA reversed the decision of the RTC. While the case was pending with the SC, the parties jointly filed an Agreement to Terminate Action duly signed by them and their respective counsels.

Issue: Whether or not the agreement filed by the parties allows to court to validly render judgment based on said agreement.

Ruling: Yes. A compromise agreement is a contract whereby the parties make reciprocal concessions, avoid litigation, or put an end to one already commenced. Its validity depends on its fulfillment of the requisites and principles of contracts dictated by law; its terms and conditions being not contrary to law, morals, good customs, public policy and public order. A scrutiny of the aforequoted agreement reveals it is a compromise agreement sanctioned under Article 2028 of the Civil Code. Its terms and conditions are not contrary to law, morals, good customs, public policy and public order. Hence, judgment can be validly rendered thereon.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 CREDIT TRANSACTIONS LOAN SPOUSES TAGUMPAY N. ALBOS and AIDA C. ALBOS v. SPOUSES NESTOR M. EMBISAN and ILUMINADA A. EMBISAN, DEPUTY SHERIFF MARINO V. CACHERO, and the REGISTER OF DEEDS OF QUEZON CITY G.R. No. 210831. November 26, 2014. THIRD DIVISION. Velasco, JR., J. Article 1956 provides that “No interest shall be due unless it has been expressly stipulated in writing.”

Facts: Spouses Albos entered a loan agreement with Spouses Embisan in the amount P84,000.00 payable within 90 days with a monthly interest rate of 5% secured by a real estate mortgage. Due to the repeated failure of the petitioners to settle their obligation and their subsequent request for extensions, Spouses Embisan, imposed a condition that the monthly 5% interest from then on will be compounded. However this agreement was not reduced into writing. With the interest being compounded, the obligation of the petitioner ballooned to P296,658.70. Despite the extension given, Spouses Albos failed to pay their loan. This prompted Spouses Embisan to extra-judicially foreclose

the property. Spouses Embisan emerged as the highest bidder and were issued a Sheriff’s Certificate of Sale. Due to failure to redeem the property, Spouses Emisan executed an Affidavit of Consolidation over the property and the property was later registered in their name.

Issue: Whether or not the compounding of interest is valid.

Ruling: NO. The compounding of interest should be in writing. As mandated by the foregoing provision, payment of monetary interest shall be due only if: (1) there was an express stipulation for the payment of interest; and (2) the agreement for such payment was reduced in writing. Thus, the collection of interest without any stipulation thereof in writing is prohibited by law. the circumstances, the first requirement there be an express stipulation for the ––thatfor paymentGiven of interest complied with, purposes of imposing compounded ––is not sufficiently interest on the loan. The requirement does not only entail reducing in writing the interest rate to be earned but also the manner of earning the same, if it is to be compounded. Failure to specify the manner of earning interest, however, shall not automatically render the stipulation imposing the interest rate void since it is readily apparent from the contract itself that the parties herein agreed for the loan to bear interest. Instead, in default of any stipulation on the manner of earning interest, simple interest shall accrue. Settled is the rule that ambiguities in a contract are interpreted against the party that caused the ambiguity. Any ambiguity in a contract whose terms are susceptible of different interpretations must be read against the party who drafted it. In the extant case, respondent spouses, having imposed, unilaterally at that, the compounded interest rate, had the correlative duty of clarifying and reducing in writing how the said interest shall be earned. Having failed to do so, the silence of the agreement on the manner of earning interest is a valid argument for prohibiting them from charging interest at a compounded rate.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016

TING TING PUA v. SPOUSES BENITO LO BUN TIONG and CAROLINE SIOK CHING TENG G.R. No. 198660, October 23, 2013 , Velasco, Jr., J. The collection of interest in loans or forbearance of money is allowed only when these two conditions concur: (1) there was an express stipulation for the payment of interest; (2) the agreement for the payment of the interest was reduced in writing. Absent any of these two conditions, the money debtor cannot be made liable for interest.

Facts: Respondents owed Petitioner a sum of money way back in 1988 for which the latter gave her several checks. All of the checks, however, were dishonored and petitioner has not been paid the amount of the loan plus the agreed interest. Eventually, respondents approached her to get the computation of their liability including the 2% compounded interest. After bargaining to lower their liability, respondents gave her another postdated check but like the other checks, the drawee bank likewise dishonored this check.

Issue: Whether or not respondents should be obliged to pay the 2% compounded interest.

Ruling: No. As aptly held by the court a quo, however, respondents cannot be obliged to pay the interest of the loan on the ground that the supposed agreement to pay such interest was not reduced to writing. Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates that no interest shall be due unless it has been expressly stipulated in writing. Thus, petitioner is entitled only to the principal amount of the loan plus the allowable legal interest from the time o f the demand, at the rate of 6% per annum.

ARTHUR F. MENCHAVEZ v. MARLYN BERMUDEZ G.R. No. 185368, October 11, 2012, Velasco, Jr., J. Voluntariness does not make the excessive and exorbitant 5% per month or 60% per annum stipulation on interest valid.

Facts: Bermudez obtained a P500,000 loan from Menchavez which she promised to pay in 1 month, with 5% interest per month. The sum of P565,000 was paid through post-dated checks. Menchavez alleged entering into a verbal compromise agreement with Bermudez about the delay in payment and the accumulated interest. Bermudez would deliver 11 post-dated Prudential Bank checks worth P300,000 as payment. However, 8 of the checks were dishonored as “Drawn Against Insufficient Funds”. She was charged with violatingBP 22. The MeTC acquitted Bermudez because of payment of P925,000. The amount was acknowledged by Menchavez in the statement of account which he prepared where P624,344 was credited to interest and P300,565 to the principal. In the civil aspect of the case, the RTC ordered Bermudez to pay 165,000 as civil liability. Bermudez appealed to the CA, which reversed the RTC decision. The CA held that the compromise agreement could not be taken independently of the loan and that 5% per month or 60% per annum was an unconscionable rate of interest.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Issue: Whether or not the loan obligation of Bermudez has been extinguished with the payment of P925,000.

Ruling: YES, the obligation has been extinguished. First, the compromise agreement is not independent of the srcinal loan. By stating that the compromise agreement and the srcinal loan transaction are separate and distinct, petitioner would now attempt to exact payment on both. This goes against the very purpose of the parties entering into a compromise agreement, which was to extinguish the obligation under the loan. Petitioner may not seek the enforcement of both the compromise agreement and payment of the loan, even in the event that the compromise agreement remains unfulfilled. It is beyond cavil that if a party fails or refuses to abide by a compromise agreement, the other party may either enforce the compromise or regard it as rescinded and insist upon his srcinal demand. To allow such would constitute unjust enrichment. Second, Menchavez has been fully paid. The 5% per month interest rate is excessive, iniquitous and unconscionable. The Statement of Account prepared by Menchavez showed that Bermudez has already paid P925,000, P425,000 over the P500,000 loan. The srcinal obligation of PhP 500,000 had already been satisfied, and the PhP 425,000 would be treated as interest paid, even at the iniquitous rate of 60% per annum. Parties may be free to contract and stipulates as they see fit, but that is not an absolute freedom. Art. 1306 of the Civil Code provides. "The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy." While petitioner harps on the voluntariness with which the parties agreed upon the 5% per month interest rate, voluntariness does not make the stipulation on interest valid. The 5% per month, or 60% per annum, rate of interest is, indeed, iniquitous, and must be strucked down. Petitioner has been sufficiently compensated for the loan and the interest earned, and cannot be allowed to further recover on an interest rate which is unconscionable. Since the stipulation on the interest rate is void, it is as if there was no express contract on said interest rate. Hence, courts may reduce the interest rate as reason and equity demand.

REAL MORTGAGE Philippine National Bank v. S pouses Alejandro and Myrna Reblando G.R. No. 194014 September 12, 2012, Velasco, Jr., J. Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing to be true, and to act upon such belief, he cannot in any litigation arising out of such declaration, act or omission, be permitted to falsify it.

Facts: Alejandro and Myrna Reblando (Reblando) obtained a loan from the Philippine National Bank (PNB). To secure the payment of their loan, the spouses Reblando executed a real estate mortgage over two parcels of land. The spouses Reblando defaulted on their payment. So, PNB was prompted to commence an extra-judicial foreclosure of mortgage over the two parcels of land. PNB was the lone bidder and the lots were awarded to them. The redemption period lapsed without the spouses Reblando redeeming the parcels of land. So, PNB became the owner thereof upon securing a

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 new title over the properties. Spouses Reblando filed a complaint in the RTC for the declaration of nullity of mortgage over one of the lots. They claimed that at the time the mortgage was constituted, they were not the owner thereof so they cannot validly constitute a mortgage over the lot. They cited Article 2085 of the Civil Code which provides that one of the essential requisites of a valid mortgage is that the mortgagor is the absolute owner of the property mortgage. In its defense, PNB asserted the issue of estoppel.

Issue: Whether or not a mortgage can be validly constituted over the lot.

Ruling: Yes, a mortgage can be validly constituted over the lot. Respondents’ act of entering into the mortgage contract with petitioner, benefiting through the receipt of the loaned amount, defaulting in payment of the loan, letting the property be foreclosed, failing to redeem the property within the redemption period, and thereafter insisting that the mortgage is void, cannot be countenanced. Actions of this kind, bearing a hint of fraud on the part of mortgagors, should not be tolerated, for they go against the basic principle that no person shall unjustly enrich himself or herself at the expense of another and that parties in a juridical relation must act with justice, honesty, and good faith in dealing with one another. Respondents are estopped from contesting the validity of the mortgage, absent any proof that PNB coerced or fraudulently induced respondents into posting the lot as collateral.

LAND TITLES AND DEEDS TORRENS SYSTEM HEIRS OF MAXIMO LABANON vs. HEIRS OF CONSTANCIO LABANON G.R. No. 160711, August 14, 2004, VELASCO, JR., J. Section 32 of PD 1529 merely precludes the reopening of the registration proceedings for titles covered by the Torrens System, but does not foreclose other remedies for the reconveyance of the property to its rightful owner.

Facts: Constancio Labanon settled upon, cultivated and introduced improvements on a piece of alienable and disposable public agricultural land situated at Brgy. Lanao, Kidapawan, Cotabato. Constancio then asked his brother, Maximo Labanon who was better educated to file the corresponding public land application to which Maximo acceded. Eventually, the Homestead Application by Maximo was approved and the Original Certificate of Title No. 41320 was issued in his favor. In 1955, Maximo executed a notarized document denominated as "Assignment of Rights and Ownership" to safeguard the ownership and interest of Constancio. In 1962, Maximo executed a sworn statement reiterating his desire that Constancio, his heirs and assigns shall own the eastern portion of the Lot. After Constancio’s death, his heirs extra -judicially settled his estate with simultaneous sale over the aforesaideastern portion of the lot in favor of Alberto Makilang. However, the heirs of Maximo deprived the heirs of Constancio of their ownership over the eastern portion of said lot. They argue that the heirs of Constancio can no longer question Maximo’s ownership of the land after its registration under the principle of indefeasibility of a Transfer Certificate of Title (TCT).

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 The RTC ruled in favor of the defendant-heirs of Maximo Labanon. However, the CA reversed the RTC decision upon appeal. Hence, this petition.

Issue: Whether or not Original Certificate of Title No. 41320 in the name of MAXIMO LABANON be now considered indefeasible and conclusive.

Ruling: No. While it is true that Section 32 of PD 1529 provides that the decree of registration becomes incontrovertible after a year, it does not altogether deprive an aggrieved party of a remedy in law. The mere possession of a certificate of title under the Torrens system does not necessarily make the possessor a true owner of all the property described therein for he does not by virtue of said certificate alone become the owner of the land illegally included. The remedy of the land owner whose property has been wrongfully or erroneously registered in another's name is, after one year from the date of the decree, not to set aside the decree, but, respecting the decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. Undeniably, the heirs of Constancio are not precluded from recovering the eastern portion of Original Certificate of Title (OCT) No. P-14320, with an area subject of the "Assignment of Rights and Ownership" previously owned by their father, Constancio Labanon. The action for Recovery of Ownership before the RTC is indeed the appropriate remedy.

CLASSIFICATION OF LANDS CONRADA O. ALMAGROv. SPS. MANUEL AMAYA, SR. and LUCILA MERCADO, JESUS M ERCADO, SR., and RICARDO MERCADO G.R. No. 179685, June 19, 2013 , Velasco, Jr., J. The identification and classification of lands and qualification of farmer-beneficiaries are factual determination performed by government officials and personnel with expertise in the line of work they are doing. Their findings, conclusions/recommendations and final actions on the matter, after thorough investigation and evaluation, have the presumption of regularity and correctness.

Facts: Conrada allowed spouses Amaya to construct a house on a 46-square meter portion of Lot No. 13333 on the condition that no additional improvements shall be introduced and that they shall leave the area upon a 90-day notice. A decade later, Conrada asked the Amayas to vacate. Instead of heeding the vacation demand, the Amayas, built permanent improvements on their house. Conrada filed a Complaint against the Sps. Amaya before the DARAB for "Ejectment, Payment of Rentals with Damages. In their Answer, the Amayas asserted possessory rights over the area on which their house stands and a portion of subject they are cultivating, they claimed, monthly-rental paying tenantfarmers. Said portion, the Amayas added, has been placed under Operation Land Transfer (OLT) pursuant to Presidential Decree No. (PD) 27. Conrada on the other hand contends that the lot has been primarily devoted to vegetables production and cultivation, not to corn or rice, thus, outside the ambit of the OLT under PD 27.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 DARAB issued a Decision upholding the validity of the issuance of the EPs to Spouses Amaya, thus effectively recognizing their tenurial rights. Appellate court affirmed.

Issue: Whether or not said portions are primarily devoted to vegetable production, as petitioner insists.

Ruling: No. PD 27 encompasses only rice and corn land, i.e., agricultural lands primarily devoted to rice and corn under a system of sharecrop or lease-tenancy. In the instant case, since the landholdings cultivated by respondents are primarily devoted to vegetable production, it is definitely outside the coverage, and necessarily cannot properly be placed under the umbrella, of PD 27. It must be stressed that the issuance of the EPs in the instant case creates a presumption which yields only to a clear and cogent evidence that the awardee is the qualified and lawful owner because it involves a tedious process. Moreover, the identification and classification of lands and qualification of farmer-beneficiaries are factual determination performed by government officials and personnel with expertise in the line of work they are doing. Their findings, conclusions/recommendations and final actions on the matter, after thorough investigation and evaluation, have the presumption of regularity and correctness.

DETERMINATION OF VALUATION OF LANDS LAND BANK OF THE PHILIPPINES v. HON. ERNESTO P. PAGAYATAN, in his capacity as Presiding Judge of the Regional Trial Court, Branch 46, San Jose, Occidental Mindoro; and JOSEFINA S. LUBRICA, in her c apacity as Assignee of Federico S untay G.R. No. 177190, February 23, 2011, Velasco, Jr., J. It is only after the DAR has made its final determination of the initial valuation of the land that the landowner may resort to the judicial determination of the just compensation for the land.

Facts: Federico S. Suntay owned hectares of land called the “Suntay Estate” the 300 hectares of which were erroneously subjected to the Comprehensive Agrarian Reform program (CARP) instead of the Operation Land Transfer (OLT) pursuant to Presidential Decree No. 27. Consequently, Certificates of Landownership Award were issued to the farmer-beneficiaries in possession of the land. However, years passed but Suntay remained unpaid for the property. Hence, Josefina Lubrica, a Petition for Summary Determination of Just Compensation as assignee of Suntay’s property, iled f with the Provincial Agrarian Reform Adjudicator (PARAD) of San Jose, Oriental Mindoro which determined the value of the preliminary just compensation and directed the Land Bank of the Philippines (LBP) to immediately pay the amount to Lubrica. LBP filed a petition with the Regional Trial Court arguing that the petition for Summary Determination of Just Compensation with PARAD was filed prematurely. The RTC denied LBP’s petition and directed the latter to make a deposit of the amount just compensation which PARAD has fixed. Subsequently, LBP filed an Omnibus Motion for Reconsideration and impleaded the Department of Agrarian Reform (DAR) on the ground that the latter failed to deliver a “claim folder” upon which LBP will preliminary determine the valuation of the covered lands and process the compensation claims. LBP further averred that the amount to be deposited under Sec. 16 of RA 6657,

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 or the Agrarian Reform Law of 1988, should be based on purchase price determined by DAR for the land contained in the notice of acquisition and not the price determined in an administrative proceeding before the PARAD but the Court of Appeals denied due course and dismissed the petition for lack of merit. Hence, this petition was filed.

Issue: Whether or not it is the PARAD which determines the preliminary valuation of the proper amount to be deposited under Section 16 of Republic Act No. 6657.

Ruling: No, it should be the initial valuation made by the DAR and LBP. Sec. 16 of RA 6657 contains the procedure for the acquisition of private lands, to wit: (a) xxx; (b) xxx; (c) xxx; (d) xxx; (e) Upon receipt by the landowner of the corresponding payment or in case of rejection or no response from the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in cash or LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries. Conspicuously, there is no mention of the PARAD in the foregoing Sec. 16(e) when it speaks of "the deposit with an accessible bank designated by the DAR of the compensation in cash or LBP bonds in accordance with this Act." Moreover, it is only after the DAR has made its final determination of the initial valuation of the land that the landowner may resort to the judicial determination of the just compensation for the land. Clearly, therefore, it is the initial valuation made by the DAR and LBP that is contained in the letter-offer to the landowner under Sec. 16(a), said valuation of which must be deposited and released to the landowner prior to taking possession of the property. Notably, DAR failed to prepare the claim folder which is necessary for the LBP to make a valuation of the land to be expropriated. The proper remedy would have been to ask the DAR and LBP to determine such initial valuation and to have the amount deposited to his account, in accordance with Sec. 16 of RA 6657. Nevertheless, it was erroneous for private respondent to have filed a Petition for Determination of Just Compensation with PARAD when the remedy that she was seeking was for the deposit of the initial valuation that the DAR and LBP should have made.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 ORIGINAL REGISTRATION REPUBLIC OF THE PHILIPPINES v. APOSTOLITA SAN MATEO, BRIGIDA TAPANG, ROSITA ACCION, AND CELSO MERCADO G.R. No. 203560, November 10, 2014, Velasco, Jr., J. A CENRO certification that a certain property is alienable, without the corresponding proof that the DENR Secretary had approved such certification, is insufficient to support a petition for registration of land. Both certification and approval are required to be presented as proofs that the land is alienable. Otherwise, the petition for registration must be denied.

Facts: A petition for registration of title was filed by the respondents. The respondents merely relied on the certification of DENR-CENRO to the effect that the subject property is alienable. The concerned government agencies and the owners of the adjoining lots were notified of the hearing. The notice was also posted in several public places and was published in a newspaper of general circulation and the Official Gazette. RTC granted the petition for registration. On appeal, the Republic posited that RTC did not acquire jurisdiction over the case, because the notice of hearing failed to include the names of all the owners of the adjoining properties; that the respondents failed to prove their claim of absolute ownership, because they failed to prove possession over the land sought to be registered; and that they failed to show that the land sought to be registered is part of the alienable and disposable part of the public domain. The CA affirmed the RTC decision.

Issue: Whether or not the subject property is alienable and disposable.

Ruling: NO. The Court held that, to establish that the land subject of the application is alienable and disposable public land, the general rule remains: all applications for srcinal registration under the Property Registration Decree must include both (1) a CENRO or PENRO certification and (2) a certified true copy of the srcinal classification made by the DENR Secretary. As an exception, however, the courts – in their sound discretion and based solely on the evidence presented on record – may approve the application,pro hac vice, on the ground of substantial compliance showing that there has been a positive act of government to show the nature and character of the land and an absence of effective opposition from the government. This exception shall only apply to applications for registration currently pending before the trial court prior to this decision and shall be inapplicable to all future applications. In this case, when the RTC rendered its decision, the rule on strict compliance was already in effect, pursuant to the rule laid down in Republic v. T.A.N. Properties, G.R. No. 154953, June 26, 2008,as opposed to the rule on substantial compliance in the case ofRepublic v. Vega [654 Phil. 511, (2011)], which is pro hac vice. Thus, there was ample opportunity for the respondents to comply with the new rule, and present before the RTC evidence of the DENR Secretary's approval of the DENR-South CENRO Certification. This, they failed to do.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 JOVENDO DEL CASTILLOv. ABUNDIO ORCIGA, et al. G.R. No. 153850 August 31, 2006, Velasco, Jr., J. Land transfer under PD No. 27 is effected in two (2) stages: (1) issuance of a CLT to a farmerbeneficiary; and (2) issuance of an Emancipation Patent.

Facts: Jovendo del Castillo is the son and administrator of Menardo del Castillo, who previously owned the subject riceland. The armland f was formerly cultivated by Eugenio Orciga. Pursuant to Presidential Decree No. 27 (PD No. 27), Eugenio Orciga became the beneficiary of the Land Transfer Program of the government during his lifetime and was awarded Certificate of Land Transfer No. 0070176 over the said landholding. When Eugenio Orciga died, his heirs agreed to rotate among themselves the cultivation of the riceland covered by said CLT. After cultivating and harvesting the riceland, Ronald Orciga abandoned the said farm and left the barrio without turning over the landowner’s share of the agricultural harvest. Del Castillo forcibly entered the subject riceland and started cultivating the said land over the objection of the respondents. Hence, respondents filed a Reinstatement with Mandatory Injunction and Damages with the Office of Provincial Adjudicator, DARAB. The petition was dismissed and its motion for reconsideration was likewise denied. On appeal, the DARAB ordered del Castillo to vacate the subject landholding for theproper disposition of theDAR. The CA denied

del Castillo’s petition and ruled that he had no right to take possession of the farmland being disputed even if the heirs had failed to deliver the a gricultural lessor’s share.

Issue: Whether or not petitioner, as representative of the disputed farmland, is the rightful possessor of the disputed farmland under the DAR Land Transfer Program.

Ruling: No. Eugenio Orciga, thesrcinal beneficiary andpredecessor-in-interest of respondents, was awarded Certificate of Land Transfer No. 0070176 over the contested land pursuant to PD No. 27. Therefore, for all intents and purposes, he is the acknowledged owner of the contested land. A Certificate of Land Transfer (CLT) is a document issued to a tenant-farmer, which proves inchoate ownership of an agricultural land primarily devoted to rice and corn production. It is issued in order for the tenant-farmer to acquire the land. This certificate prescribes the terms and conditions of ownership over said land and likewise describes the landholding – its area and its location. A CLT is the provisional title of ownership over the landholding while the lot owner is awaiting full payment of the land’s value or for aslong as the beneficiary is an "amortizing owner." Land transfer under PD No. 27 is effected in two (2) stages: (1) issuance of a CLT to a farmerbeneficiary as soon as DAR transfers the landholding to the farmer-beneficiary in recognition that said person is a "deemed owner"; and (2) issuance of an Emancipation Patent as proof of full ownership of the landholding upon full payment of the annual amortizations or lease rentals by the farmer or beneficiary.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 SUBSEQUENT REGISTRATION SAMUEL U. LEE AND PAULINE LEE AND ASIATRUST DEVELOPMENT BANK, INC., v. BANGKOK BANK PUBLIC COMPANY, LIMITED. G.R. No. 173349, February 09, 2011, J. Velasco Jr. The presumption of fraud established under Art. 1387 of the Civil Code does not apply to registered lands if the judgment or attachment made is not also registered.

Facts: Midas Diversified Export Corp. (MDEC) and Manila Home Textile, Inc. (MHI), which are owned and controlled by the Lee family, entered into two separate Credit Line Agreements (CLAs) with Bangkok Bank, which required guarantees from the Lee family. MDEC was likewise granted a loan facility by Asiatrust Development Bank, Inc. When MDEC had defaulted in the payment of its loan, Asiatrust initiated negotiations with MDEC and required the Lee family to provide additional collateral that would secure the loan. Asiatrust agreed that Samuel Lee would mortgage the subject Antipolo properties to secure the loan, and execute a REM over the properties. Similarly, the Lee family defaulted and incurred aggregate obligations to Bangkok Bank and to other creditors, particularly the Security Bank Corp. (SBC). SBC filed a case against the Lee family for a sum of money resulting from the nonpayment of obligations. A Writ of Preliminary Attachment in favor of SBC was granted attaching the defendants' real and personal properties. The writ, however, was neither registered nor annotated on the titles of the subject Antipolo properties at the RD. Moreover, Bangkok Bank was also granted a writ of preliminary attachment, covering the properties of the Lee family in Antipolo, Cavite, Quezon City, and Baguio, among others. With MDEC still unable to make payments on its defaulting loans with Asiatrust, the latter foreclosed the subject mortgaged Antipolo properties. Subsequently, the sale was registered. Believing the REM and the foreclosure sale to be fraudulent, Bangkok Bank did not redeem the subject properties. Consequently, the TCTs covering the subject properties were consolidated in the name of Asiatrust and new titles were issued in the name of Asiatrust without the annotation of the writs of preliminary attachment in favor of Bangkok Bank, which were deemed canceled. Hence, Bangkok Bank filed the instant case for the rescission of the REM over the subject properties, annulment of the foreclosure sale, cancellation of the new TCTs issued in favor of Asiatrust, alleging that the presumption of fraud under Article 1387 of the Civil Code applies, considering that a writ of preliminary attachment was issued. It also claimed that collusion and fraud transpired between the spouses Lee and Asiatrust in the execution of the REM.

Issue: Whether or not the REM executed over the subject Antipolo properties and the foreclosure sale were committed in fraud of petitioners' other creditors hence, the questioned mortgage could be rescinded.

Ruling: No. While a judgment was made against the spouses Lee in favor of SBC, this, however, was not annotated on the titles of the subject properties. In fact, there is no showing that the judgment has ever been annotated on the titles of the subject properties. As established in the facts, there were only two annotations at the back of the titles of the Antipolo properties: first, the REM executed in favor of Asiatrust; and second, the writ of preliminary attachment in favor of Bangkok Bank. Considering that the earlier SBC judgment or attachment was not, and in fact never was,

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 annotated on the titles of the subject Antipolo properties, prior to the execution of the REM, the presumption of fraud under Art. 1387 of the Code clearly cannot apply. Furthermore, a careful reading of Art. 1387 of the Code vis-à-vis its Art. 1385 would plainly show that in allowing rescission in case of an alienation by onerous title, the third person who received the property conveyed should likewise be a party to the fraud. As a general rule, whether the person, against whom a judgment was made or some writ of attachment was issued, acted with or without fraud, so long as the third person who is in legal possession of the property in question did not act with fraud and in bad faith, an action for rescission cannot prosper. Asiatrust, being a third person in good faith, should not be automatically presumed to have acted fraudulently by the mere execution of the REM over the subject Antipolo properties, there being no evidence of fraud or bad faith.

ENRIQUETA M. LOCSIN v. BERNARDO HIZON, CARLOS HIZON, SPS. JOSE MANUEL & LOURDES GUEVARA G.R. No. 204369, September 17, 2014, Velasco Jr., J. An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in it, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person’s claim.

Facts: Enriqueta M. Locsin, owner of the subject property located in Quezon City went to the United States after entering into a compromise agreement in 1993 with Billy Aceron against whom the former filed an ejectment case. However Locsin, did not know that Marylou Bolos had secured a new TCT in her favor by registering a Deed of Absolute Sale allegedly executed by Locsin in 1979. Bolos later sold the subject lot to Bernardo Hizon for P1,000,000 but the land was titled to Carlos’ name se for a win-win situation with Locsin, he still sold who is Bernardo’s son. Despite Bernardo’s promi the property for P1,000,000 to Spouses Guevarra who in turn mortgaged the property. Locsin then filed an action for reconveyance, annulment and cancellation of the mortgage lien. The CA affirmed the RTC’s finding that the respondents were innocent purchasers for value.

Issue: Whether or not the Respondents were innocent purchasers for value.

Ruling: No. Bernardo knew that Bolos never acquired possession over the lot. In his direct testimony, Bernardo admitted that he knew of the prior compromise agreement entered by Locsin with Aceron which recognized Locsin as the registered owner of the land. Having knowledge of the foregoing facts, Bernardo and Carlos should have been impelled to investigate the reason behind the arrangement. If Bolos already acquired ownership of the property as early as 1979, it should have been her who entered into a compromise agreement with Aceron in 1993, not her predecessor-ininterest, Locsin, who, theoretically, had already divested herself of ownership thereof. The transfer to Spouses Guevara was also suspicious since there was no deed evidencing the sale. It appeared that the mortgage was a mere ploy to make it appear that the Sps. Guevara exercised acts of dominion over the subject property when in fact the Spouses had lack of interest in protecting themselves in the case.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 The circumstances, taken altogether, strongly indicate that Carlos and the spouses Guevara failed to exercise the necessary level of caution expected of a bona fide buyer. An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in it, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person’s claim.

RECONSTITUTION OF TITLE REPUBLIC OF THE PHILIPPINES v. HEIRS OF SPOUSES DONATO SANCHEZ and JUANA MENESES, represented by RODOLFO S. AGUINALDO G.R. No. 212388, December 10, 2014, Velasco, Jr., J. It is well to emphasize that a petition for reconstitution of lost or destroyed OCT requires, as a condition precedent, that an OCT has indeed been issued.

Facts: Respondents filed an amended petition for reconstitution of Original Certificate of Title pursuant to Republic Act No. 26. However, due to difficulties encountered in securing the required documents ordered by the trial court, respondents moved for the archiving of the case, which motion was granted by the trial court. The amended petition for reconstitution was later revived when respondents finally secured the said documents. The petition was published anew and trial later ensued, with the following documents submitted by respondents in evidence. The RTC though rendered its Decision dismissing the petition for lack of sufficient evidence, ruling that R.A. No. 26 only applies in cases where the issuance of the OCT sought to be reconstituted has been established, only that it was lost or destroyed. While acknowledging the existence of Decree No. 418121 which was issued for the lot subject of the case, the RTC nevertheless held that there is no established proof that OCT No. 45361 was issued by virtue of said Decree. Respondents insisted that there was sufficient evidence to prove the issuance of OCT No. 45361.

Issue: Whether or not the documents presented by respondents were sufficient to warrant the reconstitution of the alleged lost OCT No. 45361.

Ruling: No. The Court agrees with the trial court that no clear and convincing proof has been adduced that OCT No. 45361 was issued by virtue of Decree No. 418121. The Decision dated March 21, 1930 and the Registrar’s Index Card containing the notation on OCT No. 45361 do not cite nor mention that Decree No. 418121 was issued to support the issuance of OCT No. 45361. At this point, it is well to emphasize that a petition for reconstitution of lost or destroyed OCT requires, as a condition precedent, that an OCT has indeed been issued, for obvious reasons.

Assuming arguendo that respondents were able to sufficiently prove the existence of OCT No. 45361 considering the totality of the evidence presented, the Court finds that reconstitution thereof is still not warranted, applying Section 15 of R.A. No. 26. Before a certificate of title which has been lost or destroyed may be reconstituted, it must first be proved by the claimants that said certificate of title was still in force at the time it was lost or destroyed, among others. Here, the mere existence of TCT No. 10202, later cancelled by TCT No. 44365, which, in turn, was superseded by TCT

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 No. 80792. It clearly shows that the OCT which respondents seek to be reconstituted is no longer in force, rendering the procedure, if granted, a mere superfluity.

LOURDES A. PASCUA vs. REPUBLIC OF THE PHILIPPINES G.R. No. 162097, February 13, 2008, Velasco J. The purpose of destroyed. reconstitution of title is to have the srcinal title reproduced in the same form it was when it was lost or

Facts: Petitioner Pascua claimed that she is the owner of a lot as she inherited it from her parents and together with her predecessors-in-interest, they have been in open, public, continuous and from peaceful possession of the disputed lot since 1956. The lot was bought by Pascual’sarents p Limuaco who acquired the lot by an award from the cadastral court. Since the title of the lot went missing and the srcinal copy filed in the Register of Deeds also was lost, Pascual filed a petition judicial reconstitution of the srcinal certificate of title of the said lot. However, the RTC denied the petition for reconstitution for insufficiency of evidence. On appeal, CA affirmed the decision of the RTC because the petitioner failed to present the documents sufficient for reconstitution as provided for by Section 2, Republic Act No. (RA) 26 entitled An Act Providing a Special Procedure for the , as amended by RA 6732, or any other Reconstitution of Torrens Certificate of Title Lost or Destroyed document that could be a sufficient basis for reconstituting title. Hence, this petition.

Issue: Whether or not Pascual satisfies the requirement of the law in reconstituting the titlE of the disputed land.

Ruling: No. Sec. 2 of RA 26 provides that srcinal certificates of title shall be reconstituted from such of the sources hereunder enumerated as may be available in the following order: (a) The owner’s duplicate of the certificate of title; (b) The coowner’s, mortgagee’s, or lessee’s duplicate of the certificate of title; (c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal custodian thereof; (d) An authenticated copy of the decree of registration or patent, as the case may be pursuant to which the srcinal certificate of title was issued; (e) A document, on file in the Registry of Deeds by which the property, the description of which is given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said document showing that its srcinal has been registered; and (f) Any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title. R.A 26 presupposes that the property whose title is sought to be reconstituted has already been brought under the provisions of the Torrens System, Act No. 496. Petitioner’s evidence itself, the Deed of Sale between Limuaco and her parents, stated that the lot was not registered under Act No. 496 and that the parties agreed to register it under Act No. 3344. Even the Deed of Co- owner’s Partition stated that the subject lot, Lot No. 19-pt, is not registered. The other piece of evidence, the certifications from the LRA, merely stated that Decree No. 412846 covering Lot No. 3209 was issued on December 4, 1930, but the copy of said decree is not among the salvaged decrees on file with said office. The said copy is presumed lost or destroyed during World War II. The LRA neither stated that a certificate of title was actually issued nor mentioned the number of the OCT. It cannot be determined from any of the evidence submitted by petitioner that the adjudicatee of the purported

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 decree was Limuaco. Assuming that Lot Nos. 19-pt and 3209 are the same, we are still constrained to deny the reconstitution of title mainly because there is no proof that a certificate of title was srcinally issued to both lots. The Solicitor General notes that both lots are still unregistered land of the public domain; thus, no certificate covering such property can be issued under the instant proceeding.

RECONVEYANCE AQUALAB PHILIPPINES, INC. v. HEIRS OF MARCELINO PAGOBO, G.R. No. 182673, October 5, 2009, J. VELASCO JR. An action for annulment of title or reconveyance based on fraud is imprescriptible where the plaintiff is in possession of the property subject of the acts. Moreover, the defense of indefeasibility of a Torrens title does not extend to a transferee who takes it with notice of a flaw in the title of his transferor

Facts: The heirs of Marcelino Pagobo were in actual possession of the disputed land in controversy since it was acquired through homestead patent issued in 1969 until 1991 when Aqualab disturbed their possession. Aqualab on the other hand claims their right to the landon the basis of transfer from Gaw Kache. The heirs of Pagobo filed a case in 1994 for the reconveyance of the land due to fraud. Aqualab however move for the dismissal of the case arguing that an action for reconveyance due to fraud prescribes in 4 or 10 years. Hence, on the ground of prescription, the subject transaction which occurred in 1970 or more than 24 years later is already barred. Further, Aqualab also claims that they are innocent purchaser for value.

Issues: 1. Whether or not the action of Pagobo is barred by prescription. 2. Whether or not Aqualab is an innocent purchaser for value.

Ruling: 1. No. Heirs of Pagobo have duly averred continuous possession until 1991 when such possession was allegedly disturbed by Aqualab. Being in possession of the subject land. Hence, -barred. The Pagobo’s right to reconveyance or annulment of title has not prescribed or is not time prescriptive period for the reconveyance of fraudulently registered real property is 10 years, reckoned from the date of the issuance of the certificate of title, if the plaintiff is not in possession. Thus, one who is in actual possession of a piece of land on a claim of ownership thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. In the instant case, the heirs of Pagobo were in possession until 1991, and until such possession is disturbed, the prescriptive period does not run. Since respondents filed their complaint in 1994, or three years after their possession was allegedly disturbed, it is clear that prescription has not set in, either due to fraud or constructive trust. 2. No. In the instant case, it would appear that Anthony Gaw Kache, Aqualabs predecessorin-interest, was not in possession of subject lots. Such a fact should have put Aqualab on guard

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 relative to the possessors (Pagobo) interest over subject lots. A buyer of real property that is in the possession of a person other than the seller must be wary, and a buyer who does not investigate the rights of the one in possession can hardly be regarded as a buyer in good faith.

EULOGIO M. PEDRANO v. HEIRS OF BENEDICTO PEDRANO, namely: ROMANA PEDRANO, ANTONIO PEDRANO, ROSENDA PEDRANO RAAGAS, LEONIDA PEDRANO VILLAMOR, and ZENAIDA P. DAGOHOY; and HEIRS OF NORBERTO M. PEDRANO, namely: NORBERTO C. PEDRANO, JR., MARILYN C. PEDRANO, and BENEDICTO C. PEDRANO, represented by NORMIE P. ALCORIN G.R. No. 159666, December 4, 2007, Velasco, Jr., J. An action for the reconveyance of a parcel of land based on implied or constructive trust, prescribes in 10 years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title of the property. Without an OCT, the date from whence the prescriptive period could be reckoned is unknown and it could not be determined if indeed the period had already lapsed or not.

Facts: The subject of the present case is Lot No. 6416 which was srcinally owned by one Dr. Hynson who sold the lot to respondent Romana, wife of the deceased Benedicto Pedrano. Subsequently, a deed of Sale was executed between petitioner Eulogio, a son of Romana, and Romana herself, wherein Romana agrees to sell the lot to Eulogio for P30,000. However, despite the expiration of the period within which to pay, Eulogio still failed to pay Romana the agreed price. Consequently, respondents, the Heirs of Benedicto, filed a complaint with the RTC praying for the Annulment of the Deed of Sale as well as the recovery of the possession and ownership of Lot No. 6416. Meanwhile, since the subject lot was yet untitled, it became the subject of a Cadastral Case for titling. The Cadastral Court rendered a decision adjudicating the lot to Eulogio. However, although the lot was adjudicated in favor of Eulogio, no Original Certificate of Title was issued in his favor. The RTC ruled in favor of Eulogio and held that Article 1144 of the Civil Code provides that if the action is based on a written contract, the action should be filed within 10 years from the time the right of action accrues. Consequently, since the Deed of Sale was executed on December 22, 1981, and the instant action was filed only on September 5, 1996, after more than 14 years, prescription had already set in. On appeal however, the CA reversed the decision of the RTC and ruled that the present case involves an implied trust, thus, the applicable law is Art. 1456 of the Civil Code. Hence, this petition.

Issues: 1. Whether or not Eulogio held the property by virtue of an implied trust. 2. Whether or not the action of respondents had prescribed.

Ruling: 1. Yes. What is clear in the aforecited deed of sale is that the late Romana was the buyer of Lot No. 6416 from Dr. Hynson; that petitioner was to pay Romana PhP 30,000 for it; and that he had until December 31, 1982 to do so. Petitioner claims he did but offers no proof of payment although he occupied the land. While it is incumbent for petitioner to present proof that he indeed paid it, he had

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 not presented any. Under these facts and even if we concede that the sale was perfected, still petitioner failed to perform his obligation to pay the consideration of PhP 30,000 to Romana. Since petitioner failed to comply with what is incumbent upon him, the injured parties (respondents as heirs of Romana) may choose between fulfillment and rescission of the sale under Art. 1191 of the Civil Code. Respondents chose rescission. Thus, the juridical tie between the parties is invalidated and it leaves the parties with their respective property rights relating to Lot No. 6416 before the celebration of the December 22, 1981 Deed of Sale. What remains therefore is the undisputed March 15, 1965 Deed of Sale with Romana as the buyer. Petitioner’s possession of Lot No. 6416, owned by his parents, was an implied trust constituted upon petitioner. The CA is correct in applying Art. 1456 on implied trust to this case. 2. No. An action for the reconveyance of a parcel of land based on implied or constructive trust, as we have already explained in this case, prescribes in 10 years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title of the property. In the instant case, no OCT has yet been issued to Lot No. 6416 despite an order on July 3, 1989 to title Lot Nos. 6409-A and 6416. Without an OCT, the date from whence the prescriptive period could be reckoned is unknown and it could not be determined if indeed the period had already lapsed or not. Thus, we agree with the CA that prescription has not yet set in when the instant case was filed on September 5, 1996.

CONFIRMATION OF IMPERFECT TITLE REPUBLIC OF THE PHILIPPINES v. IGLESIA NI CRISTO, Trustee and APPLICANT, with its Executive Minister ERAO MANALO as Corporate Sole G.R. No. 180067, June 30, 2009, VELASCO, JR., J. The reckoning of the possession of an applicant for judicial confirmation of imperfect title is the actual possession of the property. It is sufficient for the property sought to be registered to be already alienable and disposable at the time of the application for registration of title is filed.

Facts: On November 19, 1998, Iglesia Ni Cristo filed its Application for Registration of Title of a parcel of land before the MCTC in Paoay-Currimao. During trial it was established that the subject lot formed part of a bigger lot owned by one Dionisio Sabuco which was sold to INC in 1952 and subsequently in 1959 from Bernardo Badanguio, who acquired the remaining lot from Sabuco. The MCTC, acting as cadastral court, granted INC’s application. The CA affirmed the decision. Consequently, the Republic assails that the subject lot was certified as alienable and disposable land of the public domain only on May 16, 1993 while the application was filed only in 1998. According to the Republic, since INC only had five years of possession from the declaration, it fell short of the 30year period required under Section 48(b) of Commonwealth Act No. 141.

Issue: Whether or not the reckoning period of the possession of an applicant for judicial confirmation of imperfect title is to be counted from the date when the lot was classified as alienable and disposable.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Ruling: No. In Heirs of Mario Malabanan v. Republic, the Court resolved the conflicting rulings of the case of Herbieto and Naguit. The correct interpretation of Sec. 14(1) of PD 1529 was the principle adopted in the Naguit ruling. PD 1529 merely requires the property sought to be registered as already alienable and disposable at the time the application for registration of title is filed. The required possession is not reckoned from the time of the declaration of the property as alienable and disposable. Since Section 48(b) merely requires possession since June 12, 1945 and does not require that the lands should have been alienable and disposable during the entire period of possession, the possessor is entitled to secure judicial confirmation of his title thereto as soon as it is declared alienable and disposable.

HOMESTEAD PATENT Josephine Taguinod and Vic A Aguila v. Court of Appeals G.R. No. 154654, September 14, 2007, Velasco, Jr., J Settled in this jurisdiction is the rule that the rights of a holder of a homestead patent are superior over the rights of the tenants guaranteed by the Agrarian Reform Law but it must be substantiated by substantial evidence

Facts: Salud Alvarez Aguila was the registered owner of the disputed lots emanated from a homestead patent. However prior for registration, Salud has to cancel the title of the lot and registered in his name. Later on the lots were transferred to Vic A. Aguila and Josephine A. Taguinod within the prohibition period provided by law. Thereafter, President Ferdinand Marcos promulgated PD 27 for the emancipation of tenant-farmers from private agricultural lands they till that are primarily devoted to rice and corn.Pursuant to PD 27, the Department of Agrarian Reform (DAR) launched Operation Land Transfer (OLT) to implement and enforce the laws provisos of transferring ownership to qualified tenant-farmers or farmer-beneficiaries of the rice or corn land they are cultivating under a system of sharecrop or lease-tenancy, with the landowner having retention of not more than seven (7) hectares of agricultural land thereby including Vic Aguila and Josephine Taguinods lots. Vic A. Aguila, Salud Aguila, on behalf of then minor Aguila, and Taguinod filed a notarized application for retention. DAR PAROissued a Resolution granting the application for retention under not more than seven (7) hectares and the excess shall be placed under OLT Coverage. Office of the Presidential rendered a Decision reversing of DAR Secretary homestead subject lots are superior than that of DAR law. CA reversed the decision of OP and ruled that Taguinod and Aguila failed to discharge the burden of adducing evidence to prove the identities of the srcinal homestead patentees and that they are the direct compulsory heirs of the srcinal patentees.

Issue: Whether or not Taguinod and Aguila proved with substantial evidence identities of the srcinal homestead patentees and that they are the direct compulsory heirs of the srcinal patentees.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Ruling: No. Settled in this jurisdiction is the rule that the rights of a holder of a homestead patent are superior over the rights of the t enants guaranteed by the Agrarian Reform Law. The Homestead Act has been enacted for the welfare and protection of the poor. The law gives a needy citizen a piece of land where he may build a modest house for himself and family and plant what is necessary for subsistence and for the satisfaction of lifes other needs. The right of the citizens to their homes and to the things necessary for their subsistence is as vital as the right to life itself. They have a right to live with a certain degree of comfort as human beings, and the State which looks after the welfare of the peoples happiness is under a duty to safeguard the satisfaction of this vital right. It is therefore incumbent upon petitioners to identify substantial evidence on record to support the OPs finding that their lots are excluded from the coverage of Comprehensive Agrarian Reform Program which they have failed to do so for they did not present evidence to support their claim. If Salud Aguila was the srcinal homestead patentee, as now alleged by petitioners, why was there a need to cancel the first title and issued it on her name? This is incongruous to say the least. No explanation was given. Verily, the records do not show who the srcinal homestead patentee was and whether petitioner Taguinod is a direct compulsory heir of the homestead patentee. Petitioners contend that the srcinal patentee was one Patrocinia Alvarez, the biological mother of petitioner Taguinod. This again was not borne out by the records.

TIRSO MONTEROSO vs. COURT OF APPEALS, et al. G.R. No. 105608, April 30, 2008, J. Velasco, Jr. SOFIA PENDEJITO VDA. DE MONTEROSO, et al. vs. COURT OF APPEALS and TIRSO MONTEROSO G.R. No. 113199, April 30, 2008, J. Velasco, Jr. The deceased shall be succeeded no longer by his widow, but "by his heirs in law, who shall be entitled to have issued to them the patent —if they show that they have complied with the requirements therefor".

Facts: Don Fabian Monteroso, Sr. married twice and sired eight (8) children, four (4) from each union. In his first marriage with Soledad Doldol, Soledad, Reygula, Benjamin and Tirso were born. After Doldol died, his second marriage with Sofia Pendejito bore Florenda, Reynato, Alberto, and Fabian, Jr. During the early part of his second marriage, Don Fabian filed before the CFI of Agusan an intestate proceeding for the estate of his deceased first wife to obviate any dispute over the inheritance. The project for partition was approved and the intestate estate of Doldol was partitioned and distributed to her four (4) children in equal shares. In the meantime, the children of Don Fabian from his first marriage married accordingly, Soledad to Atty. Perfecto Cagampang, Sr., Reygula to Jose Bayan, Benjamin to Mauricia Nakila; and Tirso to Melecia Tana. Benjamin died, leaving behind four (4) children and his wife. A year and a half later, Don Fabian also passed away. This brings us to the objects of the squabble: the conjugal patrimonies of Don Fabian from his two (2) successive marriages. The children of Benjamin filed with the RTC a complaint for recovery of property with damages against their uncle, Tirso. As the heirs of Benjamin alleged in their complaint, Tirso was entrusted with ¼ of the parcel of land part of the share from the estate of Doldol. However, their uncle refused to surrender and deliver the same when demanded upon the reaching of their majority age. Tirso, in response, alleged that the said portion was never entrusted to him. It was in the possession of his sister, Soledad, who

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 was not entitled to any share in the said parcel, having previously opted to exchange hers for another parcel of land. On the other hand, filed a complaint for partition and damages with receivership against his stepmother Pendejito and all his step-siblings, which involves 12 parcels of land. In the latter civil case, Tirso alleged the following: 1) the aforementioned 12 parcels of land belong to the conjugal partnerships of the first and second marriages contracted by Don Fabian; (2) SP No. 309, which purportedly judicially settled the intestate estate of his mother, is null and void for the reason that the project of partition failed to comprehend the entire estate of the decedent as some parcels were excluded, thereby depriving Tirso of his 1/4 share or legitime; and (3) the parcels acquired during the second marriage of Don Fabian are not paraphernal properties of Sofia Pendejito Vda. de Monteroso. The said civil cases were consolidated and the RTC, after fifteen (15) years, decided in Tirso’s favor. However, the subsequent ruling of the RTC ordered Tirso and Soledad to deliver the specific properties to the respective heirs of Benjamin. On appeal, the CA declared the partition valid and dismissed the opposition of the Cagampang spouses and Reygulo MonterosoBayan, who all claimed ownership over some of the parcels of land on the strength of the deeds of conveyance executed in their favor. On the alleged donation to Reygula, the CA likewise agreed with the RTC’s ruling on thenullity thereof.

Issues: (1) Whether or not Tirso repudiated his co-ownership; and (2) Whether or not Pendejito is the successor of Don Fabian in the homestead application.

Ruling: (1)No and (2) No. Tirso’s acknowledgment of Pendejitoand her children’s possession of four (4) parcels of land cannot be viewed as the required repudiation to bar Tirso from pursuing his right to seek partition. Under the law on co-ownership, it behooves on the person desiring to exclude another from the co-ownership to do the repudiating. Verily, the records do not show that Pendejito and her children performed acts clearly indicating an intention to repudiate the co-ownership and then apprising Tirso and other co-owners or co-compulsory heirs of such intention. To be sure, Tirso and his siblings from the first marriage have a stake on three (3) specific properties, even if these parcels of land formed part of the conjugal partnership of gains of the second marriage. There can be no serious dispute that the children of the first marriage have a hereditary right over the share of Don Fabian in the partnership assets of the first marriage. Anent Parcel S-1, we join the CA in its holding that it belongs to the heirs of Don Fabian under Sec. 105 of C.A. No. 141, which pertinently provides: “If at any time the applicant or grantee shall die before the issuance of the patent or the final grant of the land, or during the life of the lease, or while the applicant or grantee still has obligations pending towards the Government, in accordance with this Act, he shall be succeeded in his rights and obligations with respect to the land applied for or granted or issued under this Act by his heirs in law, who shall be entitled to have issued to them the patent or final concession if they show that they have complied with the requirements therefor, and who shall be subrogated in all his rights and obligations for the purposes of this Act.” It is undisputed that Don Fabian was the homestead patent applicant who was subrogated to the rights of the srcinal applicants, spouses Simeon Cagaanan and Severina Naranjo, by purchasing from the latter Parcel S-1 on May 8, 1943. Don Fabian cultivated the applied area and declared it for taxation purposes. The application, however, would be rejected because death supervened. In 1963, Pendejito filed her own homestead application for Parcel S-1. Said Sec. 105 has been interpreted in Soliman v. Icdangas having abrogated the right of the widow of a deceased homestead applicant to secure under Sec. 3 of Act No. 926, otherwise known as the Public Land Act of 1903.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 It appearing that Don Fabian was responsible for meeting the requirements of law for homesteading Parcel S-1, said property, following Soliman, cannot be categorized as the paraphernal property of Pendejito. Thus, the homestead patent thereto, if eventually issued, must be made in the name of the compulsory heirs of Don Fabian. Over it, Pendejito shall be entitled, pursuant to Article 834 of the Spanish Civil Code of 1889, only to a usufructuary right over the property equal to the corresponding share of each of Don Fabian’s compulsory heirs, i.e., his eight children.

NOTICE OF LIS PENDENS FRANCISCO MOTORS CORP. v. HON. COURT OF APPEALS AND ANTONIO RAQUIZA G.R. No. 117622-23 October 23, 2006, Velasco, Jr. J. The cancellation of a notice of pendency terminates the effects of such notice; thus, the buyers of the property cannot be considered transferees pendente lite and purchasers in bad faith.

Facts: The spouses Alano and Antonio Raquiza entered into a Contract of Legal Retainer wherein it was agreed that Raquiza would be paid his attorney’s fees equivalent to 30% of the properties in litigation. However, Raquiza was dismissed without justifiable cause. Hence, he was allowed to intervene in the civil cases with respect to his claim for attorney’s fees. The trial court ordered the annotation of attorney’s lien in the titles involved in the civil case including the Las Pinas property then in the name of Miguel Campos, but said annotation was later cancelled. A judgment was rendered granting Raquiza his attorney’sfees. Pending appeal of said decision, the Las Piñas property was transferred from Miguel Campos to CPJ Corporation as nominee of the Alano spouses, and later to the Alanos. Despite the fact that the transfer was not yet registered, the Alano spouses mortgaged the property in favor of petitioner FMC. Thereafter, the property was transferred in the name of the Alanos, and subsequently, in the name of petitioner FMC.

The CA modified the lower court’s judgment holding that Raquiza is entitled to 30% pro indiviso interest in all the properties reconveyed by Campos et al. The Decision became final and executory and a writ of execution was subsequently issued by thetrial court. FMC moved to quash the writ of execution alleging that it is a buyer in good faith. The motion to quash was denied. On reconsideration, the motion was granted and the writ of execution was quashed on the ground that the Las Pinas property was sold by the Alano spouses to FMC long before the CA awarded Raquiza’s attorney’s fees. Raquiza filed a Motion to Enforce his Motion to Execute which was denied on the ground that the decision sought to be enforced had become final and executory after the lapse of five years.Hence, Raquiza filed a Petition for Certiorari before the Court, which was remanded to the CA. The CA granted the petition stating that FMC was bound to recognize the attorney’s liens, although not inscribed in the title, and held that Raquiza’s petition for certiorari was proper.

Issue: Whether or not Raquiza can enforce his attorney’s lien against the Las Pinas property bought by FMC in good faith from the Spouses Alano.

Ruling: No. The annotation of attorney’s lien on TCT No. 56520 was cancelled long before petitioner FMC acquired the property in question. TCT No. 56520 was later cancelled and replaced by TCT No.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 190712 in the name of CPJ Corporation. A notice oflis pendens was inscribed on TCT No. 190712 by spouses Epifanio J. Alano and Cecilia Alano in view of the pendency of Civil Case No. 4622. On the other hand, respondent Antonio Raquiza did not bother to have his attorney’s lien annotated at the back of TCT NO. 190712, to protect his interests in it. This annotation was cancelled by the Alano spouses. Private respondent did not cause the reannotation of the attorney’s lien and the notice oflis pendens despite the pendency of the two civil cases. Thus, when petitioner bought the property in lis pendens. question, the title was free from the attorney’s lien and notice of The Court held that the filing of a notice of lis pendens in effect (1) keeps the subject matter of the litigation within the power of the courtuntil the entry of the final judgment so as to prevent the defeat of the latter by successive alienations; and (2) binds the purchaser of the land subject of the litigation to the judgment or decree that will be promulgated there on whether such a purchaser is a bona fide purchaser or not; but (3) does not create a non-existent right or lien. The cancellation of a notice of pendency terminates the effects of such notice; thus, the buyers of the property cannot be considered transferees pendente lite and purchasers in bad faith. Petitioner FMC bought the property pending appeal. The title carried no notice of lis pendens and the private respondent did not cause the Thus, . petitioner FMC could not be considered a reannotation of or the attorney’s lien transferee pendente lite and buyer in bad faith.

REDEMPTION ILIGAN BAY MANUFACTURING CORP., et al. v. HENRY DY G.R. No. 140836 & 140907, June 8, 2007, Velasco, Jr., J. In cases involving redemption, the law protects the srcinal owner. It is the policy of the law to aid rather than to defeat the owner's right.

Facts: Iligan Bay Manufacturing Corp. (IBMC) constructed its oil mills on a parcel of land and later IBMC became part of United Coconut Oil Mills (UNICOM). Henry Dy was a supplier providing electrical and construction supplies for the oil mills. IBMC became bankrupt hence its creditors initiated collection suits. UNICOM, as assignee, acquired the right over the loan accounts of IBMC and the mortgage on the land where IBMC's oil mill was located. UNICOM foreclosed the mortgage and acquired the lot. The Provincial Treasurer of Lanao del Norte certified that IBMC/UNICOM was delinquent in paying its taxes, hence it levied the disputed lot and sold it to Dy being the highest bidder. Due to IBMC'S unpaid obligations, Dy filed collection suits and a writ of attachment was issued over the disputed lot. Dy exercised his right of redemption in the tax delinquency sale by tendering a check and asked that a certificate of redemption be issued in his favor but the Provincial Treasurer did not do so. Later, the President of UNICOM redeemed the lot and a certificate of redemption was issued. The Office of the Provincial Treasurer informed UNICOM’s president that there was still an additional redemption price due from UNICOM. Due to UNICOM's failure to pay the total redemption price, Dy requested that a final deed of sale be executed in his favor but was denied. Hence, Dy filed a case for Mandamus with Damages. The RTC found that the refusal of the Provincial Treasurer was proper since UNICOM had redeemed the subject property within the prescribed period. Upon appeal, the CA ruled that the redemption was not valid for failure to pay the total redemption price.

Issue: Whether or not UNICOM had validly redeemed the subject property.

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 Ruling: Yes. Redemption has been defined as "the right of a debtor, and sometimes of a debtor's other creditors, to repurchase from a buyer at a forced sale, property of the debtor that was seized and sold in satisfaction of a judgment or other claim against the debtor, which right is usually limited to forced sale of real property." We have established in jurisprudence that in cases involving redemption, the law protects the srcinal owner. It is the policy of the law to aid rather than to defeat the owner's right. Therefore, "redemption should be looked upon with favor and where no injury will follow, a liberal construction will be given to our redemption laws, specifically on the exercise of the right to redeem." As provided in Sec. 78 of PD 464, the redemption price should consist of: (1) the total amount of taxes and penalties due up to the date of redemption, (2) the costs of sale, and (3) the interest at the rate of twenty per centum (20%) on the purchase price. We find no error in the CA's finding that there was a deficiency of PhP 13,742.11 in UNICOM's redemption price. However, we find no evidence that UNICOM was notified of this deficiency. The Provincial Treasurer's letters, which were submitted as evidence to prove that there was a deficiency in UNICOM's redemption payment, did not prove that UNICOM received such letters; thus, there was substantial compliance of the requirements of the law.

ACQUISITIVE PRESCRIPTION TIRSO MONTEROSO vs. COURT OF APPEALS, et al. G.R. No. 105608, April 30, 2008, J. Velasco, Jr. SOFIA PENDEJITO VDA. DE MONTEROSO, et al. vs. COURT OF APPEALS and TIRSO MONTEROSO G.R. No. 113199, April 30, 2008, J. Velasco, Jr. Acquisitive prescription does not lie against Tirso Monteroso as the required extraordinary prescription period of 30 years has not yet lapsed, counted from said considered repudiation. Such would still be true even if the period is counted from the time of the death of Don Fabian when the Cagampang spouses took exclusive possession of the subject properties.

Facts: Don Fabian Monteroso, Sr. married twice and sired eight (8) children, four (4) from each union. In his first marriage with Soledad Doldol, Soledad, Reygula, Benjamin and Tirso were born. After Doldol died, his second marriage with Sofia Pendejito bore Florenda, Reynato, Alberto, and Fabian, Jr. During the early part of his second marriage, Don Fabian filed before the CFI of Agusan an intestate proceeding for the estate of his deceased first wife to obviate any dispute over the inheritance. The project for partition was approved and the intestate estate of Doldol was partitioned and distributed to her four (4) children in equal shares. In the meantime, the children of Don Fabian from his first marriage married accordingly, Soledad to Atty. Perfecto Cagampang, Sr., Reygula to Jose Bayan, Benjamin to Mauricia Nakila; and Tirso to Melecia Tana. Benjamin died, leaving behind four (4) children and his wife. A year and a half later, Don Fabian also passed away. This brings us to the objects of the squabble: the conjugal patrimonies of Don Fabian from his two (2) successive marriages. The children of Benjamin filed with the RTC a complaint for recovery of property with damages against their uncle, Tirso. As the heirs of Benjamin alleged in their complaint, Tirso was entrusted with ¼ of the parcel of land part of the share from the estate of Doldol. However, their uncle refused to surrender and

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 deliver the same when demanded upon the reaching of their majority age. Tirso, in response, alleged that the said portion was never entrusted to him. It was in the possession of his sister, Soledad, who was not entitled to any share in the said parcel, having previously opted to exchange hers for another parcel of land. On the other hand, filed a complaint for partition and damages with receivership against his stepmother Pendejito and all his step-siblings, which involves 12 parcels of land. In the latter civil case, Tirso alleged the following: 1) the aforementioned 12 parcels of land belong to the conjugal partnerships of the first and second marriages contracted by Don Fabian; (2) SP No. 309, which purportedly judicially settled the intestate estate of his mother, is null and void for the reason that the project of partition failed to comprehend the entire estate of the decedent as some parcels were excluded, thereby depriving Tirso of his 1/4 share or legitime; and (3) the parcels acquired during the second marriage of Don Fabian are not paraphernal properties of Sofia Pendejito Vda. de Monteroso. The said civil cases were consolidated and the RTC, after fifteen (15) years, decided in Tirso’s favor. However, the subsequent ruling of the RTC ordered Tirso and Soledad to deliver the specific properties to the respective heirs of Benjamin. On appeal, the CA declared the partition valid and dismissed the opposition of the Cagampang spouses and Reygulo MonterosoBayan, who all claimed ownership over some of the parcels of land on the strength of the deeds of conveyance executed in their favor. On the alleged donation to Reygula, the CA likewise agreed with the RTC’s ruling on the nullity thereof.

Issues: (1) Whether or not partition is the proper remedy to recover the properties sold to Soledad Montereoso-Cagampang; and (2) Whether or not the action of Tirso is barred by extinctive prescription and laches.

Ruling: (1) Yes and (2) No. Being inextricably intertwined, the Court tackles both issues together. The fact that Tirso and the other compulsory heirs of Don Fabian were excluded from the possession of their legitime and the enjoyment of the fruits thereof does not per se argue against the existence of a co-ownership. While Tirso may not have expressly pleaded the theory of co-ownership, his demand from, and act of initiating a civil caseagainst the Cagampang spouses for his share, necessarily implies that he was asserting his right as co-owner or co-heir of the properties unjustly withheld by the Cagampang spouses, through the instrumentality of simulated deeds of sale covering some of the hereditary properties. By asserting his right as a compulsory heir, Tirso has effectively brought into the open the reality that the Cagampang spouses were holding some of the subject properties in trust and that he is a co-owner of all of them to the extent of his legal share or legitime thereon. Consequently, we are one with the trial and appellate courts that partition is the proper remedy for compulsory or legal heirs to get their legitime or share of the inheritance from the decedent. An action for partition is at once an action for declaration of co-ownership and for segregation and conveyance of a determinate portion of the properties involved. Also, Sec. 1, Rule 69 of the Rules of Court pertinently providesthat “In a complaint in action for partition of real estate, a person having the right to compel the partition of real estate may do so as provided in this Rule, setting forth in his complaint the nature and extent of his title and an adequate description of the real estate of which partition is demanded and joining as defendants all other persons interested in the property.” With regard to the issue on acquisitive prescription, considering that the new Civil Code was already then in effect, Art. 1141 of said Code applies; thus, Tirso has at the very least 10 years and at the most 30 years to file the appropriate action in cour t. The records show that Tirso’s cause of action has not prescribed as he instituted an action for partition in 1970 or only nine (9) years after the considered express repudiation. Besides, acquisitive prescription also does not lie against Tirso

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Civil Law (Cases Penned by J. Velasco) Dean’s Circle 2016 even if we consider that a valid express repudiation was indeed made in 1961 by the Cagampang spouses since in the presence of evident bad faith, the required extraordinary prescription period of 30 years has not yet lapsed, counted from said considered repudiation. Such would still be true even if the period is counted from the time of the death of Don Fabian when the Cagampang spouses took exclusive possession of the subject properties.

TORTS AND DAMAGES EXEMPLARY OR CORRECTIVE DAMAGES PEOPLE OF THE PHILIPPINES v. ALFREDO DELA CRUZ y MIR ANDA, alias DIDONG, G.R. No. 184792, October 12, 2009, J. VELASCO JR. If the killing is attended with aggravating circumstances, exemplary damages may be awarded.

Facts: Didong was convicted of the crime of murder as qualified by treachery. The appellate court reduced the award of civil indemnity to PhP 50,000, deleted the award of moral damages for want of evidence to support it, and further ordered the payment of PhP 25,000 in exemplary damages. The accused questions the award of damages made by the court. Hence, the current petition.

Issue: Whether or not the Appellate Court’s imposition of Didong’s civil liability is correct.

Ruling: No. When as a consequence to a criminal act death ensues, the following damages may be awarded: (1) civil indemnity ex delicto for the death of the victim; (2) actual or compensatory damages; (3) moral damages; and (4) exemplary damages. Civil indemnity is mandatory and granted to the heirs of the victim without need of proof other than the commission of the crime. The award of civil indemnity of PhP 50,000 is increased to PhP 75,000 in view of the ruling that the crime is murder qualified by the aggravating circumstances of treachery and evident premeditation. Said crime is a heinous crime under Republic Act 7659 punishable by death but now reduced to reclusion perpetua by virtue of RA 9346, which prohibits the imposition of death penalty. The deletion of the award of moral damages was erroneous. Moral damages are mandatory in cases of murder, without need of allegation and proof other than the death of the victim. The award of PhP 75,000 as moral damages is consequently in order and in accordance with prevailing jurisprudence. The award of exemplary damages is proper under Article 2230 of the Civil Code, since the killing was attended by the qualifying circumstance of treachery.

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