billy partial

7/30/2019 Billy Partial

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G.R. No. 165413

February 22, 2012

PHILAM INSURANCE COMPANY, INC. and AMERICAN HOME

INSURANCE CO.Petitioners

- versus

COURT OF APPEALS, and D.M. CONSUNJI INC., Respondents.SERENO,J.:

Facts: Four gensets from the United States of America were ordered by Citibank,

N.A. (Citibank). Petitioner AHIC insured these gensets under Certificate No. 60221

for USD 851,500 covering various risks. The insurance policy provided that theclaim may be paid in the Philippines by Philam Insurance Co., Inc, AHICs local

settling agent. Citibanks broker-forwarder, Melicia International Services (MIS),

transported the gensets in separate container vans. It was instructed by Citibank to

deliver and haul one genset to Makati City, where the latters office was being

constructed by the building contractor, DMCI.

MIS was further instructed to place the 13-ton genset at the top of Citibanks

building. The broker-forwarder declined, since it had no power cranes. Thus,

Citibank assigned the job to private respondent DMCI, which accepted the task. On16 October 1993, DMCI lifted the genset with a crane (Unic-K-2000) that had a

hydraulic telescopic boom and a loading capacity of 20 tons. During the lifting

process, both the cranes boom and the genset fell and got damaged.

After two days, DMCIs surveyor, Manila Adjusters & Surveyors Co. (MASC) assessed

the condition of the crane and the genset. According to its Survey Certificate, the

genset was already deformed.

Citibank demanded from DMCI the full value of the damaged genset, including thecost, insurance and freight amounting to USD 212,850. Private respondent refused

to pay, asserting that the damage was caused by an accident. Thereafter, Citibank

filed an insurance claim with Philam, AHICs local settling agent, for the value of the

genset. Philam paid the claim for PhP 5,866,146.


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Claiming the right of subrogation, Philam demanded the reimbursement of the

gensets value from DMCI, which denied liability.Thus, on 19 April 1994, Philam filed

a Complaint with the RTC to recover the value of the insured genset

The trial court ruled that the loss or damage to the genset was due to the negligent

operation of the crane hence, DMCI appealed to the CA, which reversed and set

aside the RTCs Decision.

Issue: Whether petitioners have sufficiently established the negligence of DMCI for

the former to recover the value of the damaged genset.

Held: No. Negligence is the want of care required by the circumstances. It is

a conduct that involves an unreasonably great risk of causing damage ; or, more

fully, a conduct that falls below the standard established by law for the protection of

others against unreasonably great risk of harm. Not all omissions can be considered

as negligent.

The test of negligence is as follows Could a prudent man, in the case under

consideration, foresee harm as a result of the course actually pursued? If so, it was

the duty of the actor to take precautions to guard against that harm. Reasonable

foresight of harm, followed by ignoring of the suggestion born of this prevision, is

always necessary before negligence can be held to exist.

G.R. No. 168499

November 26, 2012

SPOUSES EROSTO SANTIAGO and NELSIE SANTIAGO,Petitioners,

vs.

MANCER VILLAMOR, CARLOS VILLAMOR, JOHN VILLAMOR and DOMINGO

VILLAMOR, JR.,Respondents.

BRION,J.:


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Facts: In January 1982,the spouses Villamor, Sr., mortgaged their 4.5-hectare

coconut land in Sta. Rosa, San Jacinto, Masbate, known as Lot No. 1814, to the Rural

Bank of San Jacinto (Masbate), Inc. for a P10, 000.00 loan. For non-payment of the

loan, the San Jacinto Bank extrajudicially foreclosed the mortgage, and, as the

highest bidder at the public auction, bought the land. When the spouses Villamor,

Sr. failed to redeem the property within the prescribed period, the San Jacinto Bank

obtained a final deed of sale in its favor sometime in 1991. The San Jacinto Bank

then offered the land for sale to any interested buyer.

Since the respondents had been in possession and cultivation of the land, they

decided, together with their sister Catalina Villamor Ranchez, to acquire the land

from the San Jacinto Bank. The San Jacinto Bank agreed with the respondents and

Catalina to a P65,000.00 sale, payable in instalments. They made four (4)

instalment payments of P28,000.00, P5,500.00, P7,000.00 and P24,500.00 on

November 4, 1991, November 23, 1992, April 26, 1993 and June 8, 1994,

respectively.

However, on July 19, 1994, the San Jacinto Bank issued a deed of sale in favor of

Domingo, Sr. and on July 21, 1994, the spouses Villamor, Sr. sold the land to the

petitioners for P150, 000.00.

After the respondents refused to vacate the land, the petitioners filed on October

20, 1994 a complaint for quieting of title and recovery of possession against the

respondents.

The petitioners argue that the spouses Villamor, Sr.s execution of the July 21, 1994

deed of sale in the petitioners favor was equivalent to delivery of the land under

Article 1498 of the Civil Code and that they are purchasers in good faith since they

had no knowledge of the supposed transaction between the San Jacinto Bank and

the respondents and Catalina and the respondents' possession of the land should

not be construed against them since, by tradition and practice in San Jacinto,

Masbate, the children use their parents property while the respondents submit that

they hold legal title to the land since they perfected the sale with the San Jacinto

Bank as early as November 4, 1991 and are in actual possession of the land, that

the petitioners are not purchasers in good faith since they failed to ascertain why

the respondents were in possession of the land.


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Issue: 1. Whether or not the deed of sale in the petitioners favor was equivalent

to delivery of the land

2. Whether or not the petitioners are purchasers in good faith since they

had no knowledge of the supposed transaction between

the San Jacinto Bank and the respondents and Catalina

Held: 1. No, execution of public instrument is only prima facie presumption of

delivery. Article 1477 of the Civil Code recognizes that the ownership of the thing

sold shall be transferred to the vendee upon the actual or constructive delivery

thereof. Related to this article is Article 1497 which provides that [t]he thing sold

shall be understood as delivered, when it is placed in the control and possession of

the vendee. With respect to incorporeal property, Article 1498 of the Civil Code

lays down the general rule: the execution of a public instrument shall be

equivalent to the delivery of the thing which is the object of the contract, if from the

deed the contrary does not appear or cannot clearly be inferred. However, the

execution of a public instrument gives rise only to aprima facie presumption of

delivery, which is negated by the failure of the vendee to take actual possession of

the land sold. [A] person who does not have actual possession of the thing sold

cannot transfer constructive possession by the execution and delivery of a public

instrument. In this case, no constructive delivery of the land transpired upon the

execution of the deed of sale since it was not the spouses Villamor, Sr. but the

respondents who had actual possession of the land. The presumption of

constructive delivery is inapplicable and must yield to the reality that the petitioners

were not placed in possession and control of the land.

2. No, The petitioners can hardly claim to be purchasers in good faith.

"A purchaser in good faith is one who buys property without notice that some other

person has a right to or interest in such property and pays its fair price before he

has notice of the adverse claims and interest of another person in the same

property." However, where the land sold is in the possession of a person other than

the vendor, the purchaser must be wary and must investigate the rights of the

actual possessor; without such inquiry, the buyer cannot be said to be in good faith


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and cannot have any right over the property. In this case, the spouses Villamor, Sr.

were not in possession of the land.The petitioners, as prospective vendees, carried

the burden of investigating the rights of the respondents and respondent John who

were then in actual possession of the land. The petitioners cannot take refuge

behind the allegation that, by custom and tradition in San Jacinto, Masbate, the

children use their parents' property, since they offered no proof supporting their

bare allegation. The burden of proving the status of a purchaser in good faith lies

upon the party asserting that status and cannot be discharged by reliance on the

legal presumption of good faith.28The petitioners failed to discharge this burden.

G.R. No. 169055

February 22, 2012

SPOUSES JOSE and MILAGROS VILLACERAN and FAR EAST BANK & TRUST COMPANY,

Petitioners,

- versus -JOSEPHINE DE GUZMAN, Respondent.

VILLARAMA, JR.,J.:

Facts: Josephine De Guzman filed a Complaint with the RTC of Echague, Isabela

against the spouses Jose and Milagros Villaceran and Far East Bank & Trust

Company (FEBTC), Santiago City Branch, for declaration of nullity of sale,

reconveyance, redemption of mortgage and damages with preliminary

injunction. The complaint was later amended to include annulment of foreclosure

and Sheriffs Certificate of Sale. In her Amended Complaint, De Guzman alleged that

she is the registered owner of a parcel of land covered by Transfer Certificate of

Title (TCT) No. T-236168, located in Echague, Isabela, having an area of 971 square

meters and described as Lot 8412-B of the Subdivision Plan Psd-93948. On April 17,

1995, she mortgaged the lot to the Philippine National Bank (PNB) of Santiago City

to secure a loan of P600,000. In order to secure a bigger loan to finance a business

venture, De Guzman asked Milagros Villaceran to obtain an additional loan on her

behalf. She executed a Special Power of Attorney in favor of Milagros. Considering

De Guzmans unsatisfactory loan record with the PNB, Milagros suggested that the
http://www.lawphil.net/judjuris/juri2012/nov2012/gr_168499_2012.html#fnt28http://www.lawphil.net/judjuris/juri2012/nov2012/gr_168499_2012.html#fnt28


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title of the property be transferred to her and Jose Villaceran and they would obtain

a bigger loan as they have a credit line of up to P5,000,000 with the bank.

On June 19, 1996, De Guzman executed a simulated Deed of Absolute Sale in favor

of the spouses Villaceran. On the same day, they went to the PNB and paid the

amount of P721,891.67 using the money of the spouses Villaceran. The spouses

Villaceran registered the Deed of Sale and secured TCT No. T-257416 in their

names. Thereafter, they mortgaged the property with FEBTC Santiago City to

secure a loan of P1,485,000. However, the spouses Villaceran concealed the loan

release from De Guzman. Later, when De Guzman learned of the loan release, she

asked for the loan proceeds less the amount advanced by the spouses Villaceran to

pay the PNB loan. However, the spouses Villaceran refused to give the money

stating that they are already the registered owners of the property and that they

would reconvey the property to De Guzman once she returns the P721,891.67 they

paid to PNB.

De Guzman offered to pay P350,000 provided that the spouses Villaceran would

execute a deed of reconveyance of the property. In view of the simulated character

of their transaction, the spouses Villaceran executed a Deed of Absolute Sale dated

September 6, 1996 in favor of De Guzman. They also promised to pay their

mortgage debt with FEBTC to avoid exposing the property to possible foreclosure

and auction sale. However, the spouses Villaceran failed to settle the loan and

subsequently the property was extrajudicially foreclosed. A Sheriffs Certificate of

Sale was issued in favor of FEBTC for the amount of P3,594,000. De Guzman

asserted that the spouses Villaceran should be compelled to redeem their mortgage

so as not to prejudice her as the real owner of the property.

On the other hand, the spouses Villaceran and FEBTC, in their Amended

Answer, averred that in 1996 De Guzman was introduced to Milagros by a certain

Digna Maranan. Not long afterwards, De Guzman requested Milagros to help her

relative who had a loan obligation with the PNB in the amount of P300,000. As a

consideration for the accommodation, De Guzman would convey her property

located at Maligaya, Echague, Isabela which was then being held in trust by her

cousin, Raul Sison. Because of this agreement, Milagros paid De Guzmans

obligation with the PNB in the amount of P300,000.


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When Milagros asked for the title of the lot, De Guzman explained that her cousin

would not part with the property unless he is reimbursed the amount ofP200,000

representing the amount he spent tilling the land. Milagros advanced the amount

of P200,000 but De Guzmans cousin still refused to reconvey the property. In order

for De Guzman to settle her obligation, she offered to sell her house and lot in

Echague, Isabela. At first, Milagros signified her non-interest in acquiring the same

because she knew that it was mortgaged with the PNB Santiago for P600,000. De

Guzman proposed that they will just secure a bigger loan from another bank using

her house and lot as security. The additional amount will be used in settling De

Guzmans obligation with PNB. Later, De Guzman proposed that she borrow an

additional amount from Milagros which she will use to settle her loan with PNB. To

this request, Milagros acceded. Hence, they went to the PNB and paid in full De

Guzmans outstanding obligation with PNB which already reached P880,000.

Since De Guzmans total obligation already reached P1,380,000, the spouses

Villaceran requested her to execute a deed of absolute sale over the subject

property in their favor. Thus, the Deed of Absolute Sale is supported by a valuable

consideration, and the spouses Villaceran became the lawful owners of the property

as evidenced by TCT No. 257416 issued by the Office of the Register of Deeds of

Isabela. Later, they mortgaged the property to FEBTC for P1,485,000.

The spouses Villaceran denied having executed a deed of conveyance in favor of De

Guzman relative to the subject property and asserted that the signatures appearing

on the September 6, 1996 Deed of Sale, which purported to sell the subject

property back to De Guzman, are not genuine but mere forgeries.

After due proceedings, the trial court rendered its decision on September 27, 2000.

The RTC ruled that the Deed of Sale dated June 19, 1996 executed by De Guzman in

favor of the spouses Villaceran covering the property located in Echague, Isabela

was valid and binding on the parties. The RTC ruled that the said contract was a

relatively simulated contract, simulated only as to the purchase price, but

nonetheless binding upon the parties insofar as their true agreement is concerned.


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Aggrieved, the spouses Villaceran appealed to the CA which in turn ruled that the

RTC was correct in declaring that there was relative simulation of contract because

the deeds of sale did not reflect the true intention of the parties.

Issue: Whether the the Deed of Sale dated June 19, 1996 is a simulated contract

and not a true sale of the subject property.

Held: Yes, Article 1345 of the Civil Code provides that the simulation of a contract

may either be absolute or relative. In absolute simulation, there is a colorable

contract but it has no substance as the parties have no intention to be bound by it.

The main characteristic of an absolute simulation is that the apparent contract is

not really desired or intended to produce legal effect or in any way alter the juridical

situation of the parties. As a result, an absolutely simulated or fictitious contract is

void, and the parties may recover from each other what they may have given under

the contract. However, if the parties state a false cause in the contract to conceal

their real agreement, the contract is only relatively simulated and the parties are

still bound by their real agreement. Hence, where the essential requisites of a

contract are present and the simulation refers only to the content or terms of the

contract, the agreement is absolutely binding and enforceable between the parties

and their successors in interest. The primary consideration in determining the true

nature of a contract is the intention of the parties. If the words of a contract appear

to contravene the evident intention of the parties, the latter shall prevail. Such

intention is determined not only from the express terms of their agreement, but

also from the contemporaneous and subsequent acts of the parties.

G.R. No. 180705

November 27, 2012

EDUARDO M. COJUANGCO, JR., Petitioner,

vs.

REPUBLIC OF THE PHILIPPINES, Respondent.

VELASCO, JR., J.:


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Facts: In 1971, Republic Act No. ("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 a levy from the sale of copra.

Part of which the copra seller was or ought to be issued COCOFUND receipts and

an amount thereof was placed at the disposition of COCOFED, the national

association of coconut producers declared by the Philippine Coconut Administration

("PHILCOA" now "PCA"). The declaration of martial law in September 1972 saw the

issuance of several presidential decrees ("P.D.") purportedly designed to improve

the coconut industry through the collection and use of the coconut levy fund.

Charged with the duty of collecting and administering the Fund was PCA. Like

COCOFED, the PCA, by statutory provisions scattered in different coco levy decrees,

had its share of the coco levy. With the issuance of P.D. No. 755, provided under its

Section 1 that the policy of the State is to provide readily available credit facilities

to the coconut farmers at preferential rates; that this policy can be expeditiously

and efficiently realized by the implementation of the "Agreement for the Acquisition

of a Commercial Bank for the benefit of Coconut Farmers" executed by the PCA;

and that the PCA is hereby authorized to distribute, for free, the shares of stock of

the bank it acquired to the coconut farmers.

Pursuant thereto, the PCA is authorized to utilize the CCSF and the CIDF collections

to acquire a commercial bank and deposit the CCSF levy collections in said bank

interest free, the deposit withdrawable only when the bank has attained a certain

level of sufficiency in its equity capital.

Through the years, a part of the coconut levy funds went directly or indirectly to

finance various projects and/or was converted into various assets or investments.

Relevant is the acquisition of the First United Bank ("FUB"), which was subsequently

renamed as United Coconut Planters Bank ("UCPB").

In connection with the intended acquisition of a commercial bank for the purpose

stated earlier, it would appear that FUB was the bank of choice which Pedro

Cojuangcos group (collectively, "Pedro Cojuangco") had control of. The plan, then,

was for PCA to buy all of Pedro Cojuangcos shares in FUB. However, as later events

unfolded, a simple direct sale from the seller (Pedro) to PCA did not ensue as it was


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made to appear that Cojuangco had the exclusive option to acquire the formers

FUB controlling interests. Emerging from this elaborate, circuitous arrangement

were two deeds.

The first one was simply denominated as Agreement, dated May 1975, entered into

by and between Cojuangco for and in his behalf and in behalf of "certain other

buyers", and Pedro Cojuangco in which the former was purportedly accorded the

option to buy 72.2% of First United Banks (FUB) outstanding capital stock, or

137,866 shares (the "option shares,"), at PhP 200 per share. On its face, this

agreement does not mention the word "option."

The second but related contract, dated May 25, 1975, was denominated as

Agreement for the Acquisition of a Commercial Bank for the Benefit of the Coconut

Farmers of the Philippines. It had PCA, for itself and for the benefit of the coconut

farmers, purchase from Cojuangco the shares of stock subject of the First

Agreement for PhP200.00 per share. As additional consideration for PCAs buy-out

of what Cojuangco would later claim to be his exclusive and personal option, it was

stipulated that, from PCA, Cojuangco shall receive equity in FUB amounting to 10%,

or 7.22%, of the 72.2%, or fully paid shares. And so as not to dilute Cojuangcos

equity position in FUB, later UCPB, the PCA agreed under paragraph 6 (b) of the

second agreement to cede over to the former a number of fully paid FUB shares out

of the shares it (PCA) undertakes to eventually subscribe. It was further stipulated

that Cojuangco would act as bank president for an extendible period of 5 years.

After the EDSA revolution, exclusive and original jurisdiction over ill-gotten wealth

cases were conferred over the Sandiganbayan by virtue of EO 14 issued by then

Pres. Corazon C. Aquino and pursuant to said issuance, the PCGG issued numerous

orders of sequestration, among which were those handed out against shares of

stock in UCPB purportedly owned by or registered in the names of (a) the more than

a million coconut farmers, (b) the CIIF companies and (c) Cojuangco, Jr., including

the SMC shares held by the CIIF companies. On July 31, 1987, the PCGG instituted

before the Sandiganbayan a recovery suit docketed thereat as CC No. 0033.


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Hence, the Sandiganbayan questioned the transfer of the shares of stock of FUB

(later UCPB) by PCA to defendant Cojuangco or the so-called "Cojuangco UCPB

shares" which cost the PCA more than Ten Million Pesos in CCSF in 1975 and further

declare that the transfer of the following FUB/UCPB shares to defendant Eduardo M.

Cojuangco, Jr. was not supported by valuable consideration, and therefore null and

void

Issue: Whether or not the acquisition of the so-called Cojuangco, Jr. UCPB shares by

petitioner Cojuangco not supported by valuable consideration is null and void

Held: No, 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 consideration is usually in the form of money or property, it need not be

monetary. In the case at bar, the Court upheld the validity of the two agreements in

question.

G.R. No. 182769

February 1, 2012

BANK OF THE PHILIPPINE ISLANDS, AS SUCCESSOR-IN-INTEREST OF

FAR EAST BANK & TRUST COMPANY, Petitioner,

- versus -

CYNTHIA L. REYES, Respondent.

LEONARDO-DE CASTRO,J.:

Facts: This is an action for sum of money filed [b]y [p]laintiff Bank of the PhilippineIslands, hereinafter referred to as BPI, as successor-in-interest of Far East Bank &

Trust Company, referred hereto as Far East Bank, against defendant Cynthia L.

Reyes, hereinafter referred to as defendant Reyes.


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As alleged in the Complaint, defendant Reyes borrowed, renewed and received from

Far East Bank the principal of Twenty Million Nine Hundred Thousand Pesos [sic]

(P20,950,000.00). In support of such allegation, four promissory notes were

presented during the course of the trial of the case. As security for the obligation,

defendant Reyes executed Real Estate Mortgage Agreements involving twenty[-]two

(22) parcels of land. When the debt became due and demandable, the defendant

failed to settle her obligation and the plaintiff was constrained to foreclose the

properties. As alleged, after due publication, the mortgaged properties were sold at

public auction on December 20, 2001 by the Office of the Clerk of Court & Ex-Officio

Sheriff of the Regional Trial Court of Malolos, Bulacan.

At the public auction, the mortgaged properties were awarded to BPI in

consideration of its highest bid price amounting to Nine Million Thirty Two Thousand

Nine Hundred Sixty Pesos (P9,032,960.00). On said date, the obligation already

reached Thirty Million Forty (sic) Hundred Twenty Thousand Forty[-]One & 67/100

Pesos (P30,420,041.67), inclusive of interest but excluding attorneys fees,

publication and other charges. After applying the proceeds of the public auction to

the outstanding obligation, there remains to be a deficiency and defendant Reyes is

still indebted, as of January 20, 2003, to the plaintiff in the amount

of P24,545,094.67

In the Answer, the defendant claims that based on the plaintiffs appraisal of the

properties mortgaged to Far East Bank, the twenty[-]two properties fetched a total

appraisal value ofP47,436,000.00 as of January 6, 1998. This appraisal value is

evidenced by the Appraisal, which is attached as Annex 1 of the Answer.

Considering the appraisal value and the outstanding obligation of the defendant, it

appears that the mortgaged properties sold during the public auction are more than

enough as payment to the outstanding obligation of the defendant.

After due trial, the trial court rendered its Decision dated November 3, 2005 in

favour of BPI


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Respondent filed a motion for reconsideration but the same was denied and an

appeal with the Court of Appeals was filed by respondent which resulted in a

reversal of the trial courts judgment

Issue: Whether or not petitioner is entitled to recover the unpaid balance or

deficiency from respondent despite the fact that respondents property, which were

appraised by petitioners predecessor-in-interest at P47,536,000.00, was sold and

later bought by petitioner in an extrajudicial foreclosure sale for only P9,032,960.00

Held: Yes. Citing BPIFamily Savings Bank, Inc. v. Avenido, the Supreme Court

reiterated the well-entrenched rule that a creditor is not precluded from recovering

any unpaid balance on the principal obligation if the extrajudicial foreclosure sale of

the property subject of the real estate mortgage results in a deficiency, to wit: It is

settled that if the proceeds of the sale are insufficient to cover the debt in an

extrajudicial foreclosure of mortgage, the mortgagee is entitled to claim the

deficiency from the debtor. While Act No. 3135, as amended, does not discuss the

mortgagees right to recover the deficiency, neither does it contain any provision

expressly or impliedly prohibiting recovery. If the legislature had intended to deny

the creditor the right to sue for any deficiency resulting from the foreclosure of a

security given to guarantee an obligation, the law would expressly so provide.

Absent such a provision in Act No. 3135, as amended, the creditor is not precluded

from taking action to recover any unpaid balance on the principal obligation simply

because he chose to extrajudicially foreclose the real estate mortgage.

The Supreme Court ruled in Suico Rattan & Buri Interiors, Inc. v. Court of

Appeals that, in deference to the rule that a mortgage is simply a security and

cannot be considered payment of an outstanding obligation, the creditor is not

barred from recovering the deficiency even if it bought the mortgaged property at

the extrajudicial foreclosure sale at a lower price than its market value

notwithstanding the fact that said value is more than or equal to the total amount of

the debtors obligation. Thus, it is wrong for petitioners to conclude that when

respondent bank supposedly bought the foreclosed properties at a very low price,

the latter effectively prevented the former from satisfying their whole obligation.

Petitioners still had the option of either redeeming the properties and, thereafter,


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selling the same for a price which corresponds to what they claim as the properties

actual market value or by simply selling their right to redeem for a price which is

equivalent to the difference between the supposed market value of the said

properties and the price obtained during the foreclosure sale. In either case,

petitioners will be able to recoup the loss they claim to have suffered by reason of

the inadequate price obtained at the auction sale and, thus, enable them to settle

their obligation with respondent bank. Moreover, petitioners are not justified in

concluding that they should be considered as having paid their obligations in full

since respondent bank was the one who acquired the mortgaged properties and

that the price it paid was very inadequate. The fact that it is respondent bank, as

the mortgagee, which eventually acquired the mortgaged properties and that the

bid price was low is not a valid reason for petitioners to refuse to pay the remaining

balance of their obligation. Settled is the rule that a mortgage is simply a security

and not a satisfaction of indebtedness.

G.R. No. 183774

November 14, 2012

PHILIPPINE BANKING CORPORATION,Petitioner,

vs.

ARTURO DY, BERNARDO DY, JOSE DELGADO AND CIPRIANA

DELGADO,Respondents.

PERLAS-BERNABE,J.:

Facts: Cipriana was the registered owner of a 58,129-square meter (sq.m.) lot,

denominated as Lot No. 6966, situated in Barrio Tongkil, Minglanilla, Cebu, covered

by TCT No. 18568. She and her husband, respondent Jose Delgado (Jose), entered

into an agreement with a certain Cecilia Tan (buyer) for the sale of the said property

for a consideration of P10.00/sq.m. It was agreed that the buyer shall make partial

payments from time to time and pay the balance when Cipriana and Jose (Sps.

Delgado) are ready to execute the deed of sale and transfer the title to her.


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At the time of sale, the buyer was already occupying a portion of the property

where she operates a noodle (bihon) factory while the rest was occupied by tenants

which Sps. Delgado undertook to clear prior to full payment. After paying the total

sum of P147,000.00 and being then ready to pay the balance, the buyer demanded

the execution of the deed, which was refused. Eventually, the buyer learned of the

sale of the property to the Dys and its subsequent mortgage to petitioner Philippine

Banking Corporation (Philbank), prompting the filing of the Complaintfor annulment

of certificate of title, specific performance and/or reconveyance with damages

against Sps. Delgado, the Dys and Philbank.

In their Answer, Sps. Delgado, while admitting receipt of the partial payments made

by the buyer, claimed that there was no perfected sale because the latter was not

willing to pay their asking price of P17.00/sq.m. They also interposed a cross-claim

against the Dys averring that the deeds of absolute sale in their favor dated June

28, 1982and June 30, 1982covering Lot No. 6966 and the adjoining Lot No. 4100-A

(on which Sps. Delgado's house stands), were fictitious and merely intended to

enable them (the Dys) to use the said properties as collateral for their loan

application with Philbank and thereafter, pay the true consideration of P17.00/sq.m.

for Lot No. 6966. However, after receiving the loan proceeds, the Dys reneged on

their agreement, prompting Sps. Delgado to cause the annotation of an adverse

claim on the Dys' titles and to inform Philbank of the simulation of the sale. Sps.

Delgado, thus, prayed for the dismissal of the complaint, with a counterclaim for

damages and a cross-claim against the Dys for the payment of the balance of the

purchase price plus damages.

For their part, the Dys denied knowledge of the alleged transaction between cross-

claimants Sps. Delgado and buyer. They claimed to have validly acquired the

subject property from Sps. Delgado and paid the full consideration therefor as the

latter even withdrew their adverse claim and never demanded for the payment of

any unpaid balance.

On the other hand, Philbank filed its Answer asserting that it is an innocent

mortgagee for value without notice of the defect in the title of the Dys. It filed a

cross-claim against Sps. Delgado and the Dys for all the damages that may be


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adjudged against it in the event they are declared seller and purchaser in bad faith,

respectively.

The RTC dismissed the cross-claims of Sps. Delgado against the Dys and Philbank

and on appeal the CA set asidethe RTC's decision and ordered the cancellation of

the Dys' certificates of title and the reinstatement of Cipriana's title. It ruled that

there were no perfected contracts of sale between Sps. Delgado and the Dys in view

of the latter's admission that the deeds of sale were purposely executed to facilitate

the latter's loan application with Philbank and that the prices indicated therein were

not the true consideration. Being merely simulated, the contracts of sale were, thus,

null and void, rendering the subsequent mortgage of the lots likewise void. The CA

also declared Philbank not to be a mortgagee in good faith for its failure to ascertain

how the Dys acquired the properties and to exercise greater care when it conducted

an ocular inspection thereof. It thereby cancelled the mortgage over the two lots.

In the present petition, Philbank insists that it is a mortgagee in good faith. It further

contends that Sps. Delgado are estopped from denying the validity of the mortgage

constituted over the two lots since they participated in inducing Philbank to grant a

loan to the Dys.

On the other hand, Sps. Delgado maintain that Philbank was not an innocent

mortgagee for value for failure to exercise due diligence in transacting with the Dys

and may not invoke the equitable doctrine of estoppel to conceal its own lack of

diligence.

For his part, Arturo Dy filed a Petition-in-Intervention13arguing that while the deeds

of absolute sale over the two properties were admittedly simulated, the simulation

was only a relative one involving a false statement of the price. Hence, the parties

are still bound by their true agreement.

Issue: Whether or not a banking institution can invoke the doctrine of mortgagee in

good faith relying on the indefeasibility of a certificate title


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Held: Primarily, it bears noting that the doctrine of mortgagee in good faith is

based on the rule that all persons dealing with property covered by a Torrens

Certificate of Title are not required to go beyond what appears on the face of the

title. This is in deference to the public interest in upholding the indefeasibility of a

certificate of title as evidence of lawful ownership of the land or of any

encumbrance thereon. In the case of banks and other financial institutions,

however, greater care and due diligence are required since they are imbued with

public interest, failing which renders the mortgagees in bad faith. Thus, before

approving a loan application, it is a standard operating practice for these

institutions to conduct an ocular inspection of the property offered for mortgage and

to verify the genuineness of the title to determine the real owner(s) thereof. The

apparent purpose of an ocular inspection is to protect the true owner of the

property as well as innocent third parties with a right, interest or claim thereon from

a usurper who may have acquired a fraudulent certificate of title thereto.

In this case, while Philbank failed to exercise greater care in conducting the ocular

inspection of the properties offered for mortgage,24its omission did not prejudice

any innocent third parties. In particular, the buyer did not pursue her cause and

abandoned her claim on the property. On the other hand, Sps. Delgado were parties

to the simulated sale in favor of the Dys which was intended to mislead Philbank

into granting the loan application. Thus, no amount of diligence in the conduct of

the ocular inspection could have led to the discovery of the complicity between the

ostensible mortgagors (the Dys) and the true owners (Sps. Delgado). In fine,

Philbank can hardly be deemed negligent under the premises since the ultimate

cause of the mortgagors' (the Dys') defective title was the simulated sale to which

Sps. Delgado were privies.

G.R. No. 184109

February 1, 2012

CELERINO E. MERCADO, Petitioner,

- versus -

BELEN* ESPINOCILLA AND FERDINAND ESPINOCILLA, Respondents.
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VILLARAMA, JR.,J.:

Facts: Doroteo Espinocilla owned a parcel of land, Lot No. 552, with an area of

570 sq. m., located at Magsaysay Avenue, Zone 5, Bulan, Sorsogon. After he died,

his five children, Salvacion, Aspren, Isabel, Macario, and Dionisia divided Lot No.

552 equally among themselves. Later, Dionisia died without issue ahead of her four

siblings, and Macario took possession of Dionisias share. In an affidavit of transfer

of real property dated November 1, 1948, Macario claimed that Dionisia had

donated her share to him in May 1945. Thereafter, on August 9, 1977, Macario and

his daughters Betty Gullaba and Saida Gabelo sold 225 sq. m. to his son Roger

Espinocilla, husband of respondent Belen Espinocilla and father of respondent

Ferdinand Espinocilla. On March 8, 1985, Roger Espinocilla sold 114 sq. m. to

Caridad Atienza. Per actual survey of Lot No. 552, respondent Belen Espinocilla

occupies 109 sq. m., Caridad Atienza occupies 120 sq. m., Caroline Yu occupies 209

sq. m., and petitioner, Salvacion's son, occupies 132 sq. m.

Petitioner sued the respondents to recover two portions: an area of 28.5 [8] sq. m.

which he bought from Aspren and another 28.5 sq. m. which allegedly belonged to

him but was occupied by Macarios house. His claim has since been modified to an

alleged encroachment of only 39 sq. m. that he claims must be returned to him. He

avers that he is entitled to own and possess 171 sq. m. of Lot No. 552, having

inherited 142.5 sq. m. from his mother Salvacion and bought 28.5 sq. m. from his

aunt Aspren. According to him, his mothers inheritance is 142.5 sq. m., that is, 114

sq. m. from Doroteo plus 28.5 sq. m. from Dionisia. Since the area he occupies is

only 132 sq. m., he claims that respondents encroach on his share by 39 sq. m.

Respondents agree that Doroteos five children each inherited 114 sq. m. of Lot No.

552. However, Macarios share increased when he received Dionisias

share. Macarios increased share was then sold to his son Roger, respondents

husband and father. Respondents claim that they rightfully possess the land they

occupy by virtue of acquisitive prescription and that there is no basis for petitioners

claim of encroachment.
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On May 15, 2006, the Regional Trial Court (RTC) ruled in favor of petitioner and held

that he is entitled to 171 sq. m. However, on appeal, the CA reversed the RTC

decision and dismissed petitioners complaint on the ground that extraordinary

acquisitive prescription has already set in in favor of respondents.

Issue: Whether petitioners action to recover the subject portion is barred by

prescription.

Held: Yes. In a constructive trust, there is neither a promise nor any fiduciary

relation to speak of and the so-called trustee neither accepts any trust nor intends

holding the property for the beneficiary. The relation of trustee and cestui que trust

does not in fact exist, and the holding of a constructive trust is for the trustee

himself, and therefore, at all times adverse. Prescription may supervene even if the

trustee does not repudiate the relationship. Prescription, as a mode of acquiring

ownership and other real rights over immovable property, is concerned with lapse of

time in the manner and under conditions laid down by law, namely, that the

possession should be in the concept of an owner, public, peaceful, uninterrupted,

and adverse. Acquisitive prescription of real rights may be ordinary or

extraordinary.

In the case at bar, the CA correctly dismissed petitioners complaint as an action for

reconveyance based on an implied or constructive trust prescribes in 10 years from

the time the right of action accrues. This is the other kind of prescription under the

Civil Code, called extinctive prescription, where rights and actions are lost by the

lapse of time. Petitioners action for recovery of possession having been filed 55

years after Macario occupied Dionisias share, it is also barred by extinctive

prescription.

Ordinary acquisitive prescription requires possession in good faith and with just title

for 10 years. In extraordinary prescription, ownership and other real rights over

immovable property are acquired through uninterrupted adverse possession for 30

years without need of title or of good faith.

G.R. No. 184556


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February 22, 2012

CHINA BANKING CORPORATION, Petitioner

- versus -

QBRO FISHING ENTERPRISES, INC., Respondent.

VILLARAMA, JR., J.:

Facts: In 1994, Trans-Filipinas Realty Corporation (TFRC) obtained a loan from

petitioner China Banking Corporation in the amount of Seven Million Pesos

(P7,000,000). The loan was secured by a real estate mortgage over two parcels of

land covered by Transfer Certificate of Title (TCT) Nos. T-34226 and T-34227. The

credit line of TFRC was later increased to P14,000,000. On May 10, 1996, the Board

of Directors of respondent QBRO Fishing Enterprises, Inc. issued a

resolution authorizing the mortgage of its properties to secure the obligations

incurred or which may [t]hereafter be incurred by [TFRC] with [petitioner]

irrespective of the amount including any renewals, extensions and/or roll-overs

thereof.

On June 3, 1996, respondent, represented by Armando Cesar A. Reyes and

Concepcion R. Quintana, its president and treasurer, respectively, executed a real

estate mortgage over nine parcels of land, covered by TCT Nos. T-38759 to T-

38767, inclusive, as collateral for TFRCs additional loan in the amount

ofP34,500,000. The mortgage was annotated in the Registry of Deeds of General

Santos City.

TFRC, however, defaulted on the payment of its obligation and failed to settle its

account despite having received several demand letters from petitioner. Thus,

petitioner filed a petition for extrajudicial foreclosure of the real properties

respondent and TFRC had mortgaged. During the public auction, petitioner

emerged as the highest bidder and was issued a Certificate of Sale.

Aggrieved, respondent filed a Complaint with the RTC to annul the real estate

mortgage, foreclosure proceedings and auction sale. It alleged that petitioner


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unlawfully treated the TFRC and respondents separate loan accounts, which were

secured by two different and separate real estate mortgages, as a single,

inseparable account. Furthermore, respondent claimed that the loan in the amount

of P34,500,000 had unilaterally ballooned to an unconscionable amount

of P72,208,673.19, thus preventing TFRC from settling its obligation.

In its Answer, petitioner denied that there were two separate loan accounts. It

maintained that the real estate mortgage over respondents properties was

executed to serve as additional security to accommodate TFRCs request for an

increase in its loan line. There being only one loan, petitioner asserted that the

filing of a petition for extrajudicial foreclosure was proper.

After trial on the merits, the RTC dismissed respondents complaint.

Not satisfied with the above RTC Decision, respondent appealed to the CA and on

June 27, 2008, the CA promulgated the decision declaring the foreclosure

proceedings with respect to respondents properties null and void. Petitioner then

filed a motion for reconsideration but was denied in a Resolution dated September

5, 2008.

Issue: Whether the petition for extrajudicial foreclosure is valid with respect to the

mortgaged properties of the third party mortgagor.

Held: Yes. Third persons who are not parties to the principal obligation may secure

the latter by pledging or mortgaging their own property. The fact that the loans

were solely for the benefit of TFRC would not invalidate the mortgage with respect

to respondents property as long as valid consent was given. Thus, when

respondent executed the real estate mortgage over its properties, such properties

thereby secured the performance of the principal obligation notwithstanding the

fact that respondent itself had not assumed any liability for the debt of TFRC.


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G.R. No. 187490

February 8, 2012

ANTONIA R. DELA PEA and ALVIN JOHN B. DELA PEA, Petitioners,

- versus -GEMMA REMILYN C. AVILA and FAR EAST BANK & TRUST CO.,

Respondents.

PEREZ, J.:

Facts: The suit concerns a 277 square meter parcel of residential land, together with

the improvements thereon, situated in Marikina City and previously registered in

the name of petitioner Antonia R. Dela Pea (Antonia), married to Antegono A.

Dela Pea (Antegono) under Transfer Certificate of Title (TCT) No. N-32315 of theRegistry of Deeds of Rizal. On 7 May 1996, Antonia obtained from A.C. Aguila &

Sons, Co. (Aguila) a loan in the sum of P250,000.00 which, pursuant to the

Promissory Note the former executed in favor of the latter, was payable on or

before 7 July 1996, with interest pegged at 5% per month. On the very same day,

Antonia also executed in favor of Aguila a notarized Deed of Real Estate

Mortgage over the property, for the purpose of securing the payment of said loan

obligation.

On 4 November 1997, Antonia executed a notarized Deed of Absolute Sale over the

property in favor of respondent Gemma Remilyn C. Avila (Gemma), for the stated

consideration of P600,000.00. Utilizing the document, Gemma caused the

cancellation of TCT No. N-32315 as well as the issuance of TCT No. 337834 of the

Marikina City Registry of Deeds, naming her as the owner of the subject realty. On

26 November 1997, Gemma also constituted a real estate mortgage over said

parcel in favor of respondent Far East Bank and Trust Company [now Bank of the

Philippine Islands] (FEBTC-BPI), to secure a loan facility with a credit limitofP1,200,000.00. As evidenced by the Promissory Notes she executed from 12

December 1997 to 10 March 1998, Gemma obtained the following loans from

Visayas Avenue Branch of the FEBTC-BPI, in the aggregate sum of P1,200,000.00


23/39

On 3 March 1998, in the meantime, Antonia filed with the Register of Deeds of

Marikina an Affidavit of Adverse Claim to the effect, among others, that she was the

true and lawful owner of the property which had been titled in the name of Gemma

under TCT No. 32315; and, that the Deed of Absolute Sale Gemma utilized in

procuring her title was simulated. As a consequence, Antonias Affidavit of Adverse

Claim was inscribed on TCT No. 337834 as Entry No. 501099 on 10 March 1998. In

view of Gemmas failure to pay the principal as well as the accumulated interest

and penalties on the loans she obtained, on the other hand, FEBTC-BPI caused the

extrajudicial foreclosure of the real estate mortgage constituted over the

property. As the highest bidder at the public auction conducted in the premises,

FEBTC-BPI later consolidated its ownership over the realty and caused the same to

be titled in its name under TCT No. 415392 of the Marikina registry.

On 18 May 1998, Antonia and her son, petitioner Alvin, filed against Gemma the

complaint for annulment of deed of sale docketed before Branch 272 of the

Regional Trial Court (RTC) of Marikina City as Civil Case No. 98-445-MK. Claiming

that the subject realty was conjugal property, the Dela Peas alleged, among other

matters, that the 7 May 1996 Deed of Real Estate Mortgage Antonia executed in

favor of Aguila was not consented to by Antegono who had, by then, already died;

that despite its intended 1998 maturity date, the due date of the loan secured by

the mortgage was shortened by Gemma who, taking advantage of her proximate

relationship with Aguila, altered the same to 1997; and, that the 4 November

1997 Deed of Absolute Sale in favor of Gemma was executed by Antonia who was

misled into believing that the transfer was necessary for the loan the former

promised to procure on her behalf from FEBTC-BPI. In addition to the annulment of

said Deed of Absolute Sale for being simulated and derogatory of Alvins

successional rights, the Dela Peas sought the reconveyance of the property as well

as the grant of their claims for moral and exemplary damages, attorneys fees and

the costs.

Served with summons, Gemma specifically denied the material allegations of the

foregoing complaint in her 1 July 1998 answer. Maintaining that the realty was the

exclusive property of Antonia who misrepresented that her husband was still alive,

Gemma averred that the former failed to pay the P250,000.00 loan she obtained


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from Aguila on its stipulated 7 July 1996 maturity; that approached to help prevent

the extrajudicial foreclosure of the mortgage constituted on the property, she

agreed to settle the outstanding obligation to Aguila and to extend Antonia

a P50,000.00 loan, with interest pegged at 10% per month; that to pay back the

foregoing accommodations, Antonia agreed to the use of the property as collateral

for a loan to be obtained by her from FEBTC-BPI, hence, the execution of the

impugned Deed of Absolute Sale; and, that conformably with the foregoing

agreement, she obtained loans in the total sum of P1,200,000.00 from FEBTC-BPI

and applied the proceeds thereof to the sums owed by Antonia. Together with the

dismissal of the complaint, Gemma also prayed for the grant of her counterclaims

for moral and exemplary damages, attorneys fees, litigation expenses and the

costs.

On 25 September 1999, the Dela Peas filed a supplemental complaint, impleading

FEBTC-BPI as additional defendant. The Dela Peas alleged that FEBTC-BPI was in

bad faith when it purchased the property at public auction on 15 March 1999.

FEBTC-BPI, in turn, asserted that the property was already titled in Gemmas name

when she executed the 26 November 1997 real estate mortgage thereon, to secure

the payment of the loans she obtained in the sum of P1,200,000.00; and, that not

being privy to Antonias transaction with Gemma and unaware of any adverse claim

on the property, it was a mortgagee in good faith, entitled to foreclose the

mortgage upon Gemmas failure to pay the loans she obtained. On 18 December

2007, the RTC went on to render a Decision finding that the subject property was

conjugal in nature and that the 4 November 1997 Deed of Absolute Sale Antonia

executed in favor of Gemma was void as a disposition without the liquidation

required under Article 130 of the Family Code.

Aggrieved, FEBTC-BPI appealed before the CA and on 31 March 2009 the CAs

Second Division rendered the decision reversing the RTCs appealed decision

Issue: 1. Whether or not the foreclosure of the real estate mortgage was valid

notwithstanding the disputed deed of absolute sale

2. Whether or not the deed of absolute sale is valid


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Held: 1. Yes. Since foreclosure of the mortgage is but the necessary consequence

of non-payment of the mortgage debt, FEBTC-BPI was, likewise, acting well within

its rights as mortgagee when it foreclosed the real estate mortgage on the property

upon Gemmas failure to pay the loans secured thereby. Executed on 26 November

1997, the mortgage predated Antonias filing of an Affidavit of Adverse Claim with

the Register of Deeds of Marikina on 3 March 1998 and the annotation of a Notice of

Lis Pendens on TCT No. 337834 on 10 December 1999. The mortgage directly and

immediately subjects the property upon which it is imposed, whoever the possessor

may be, to the fulfilment of the obligation for whose security it was constituted.

When the principal obligation is not paid when due, the mortgagee consequently

has the right to foreclose the mortgage, sell the property, and apply the proceeds of

the sale to the satisfaction of the unpaid loan.

2. Yes. With the material contradictions in the Dela Peas evidence, the CA

cannot be faulted for upholding the validity of the impugned 4 November 1997 Deed of

Absolute Sale. Having been duly notarized, said deed is a public document which carries

the evidentiary weight conferred upon it with respect to its due execution. Regarded as

evidence of the facts therein expressed in a clear, unequivocal manner, public

documents enjoy a presumption of regularity which may only be rebutted by evidence

so clear, strong and convincing as to exclude all controversy as to falsity. The burden ofproof to overcome said presumptions lies with the party contesting the notarial

document like the Dela Peas who, unfortunately, failed to discharge said onus. Absent

clear and convincing evidence to contradict the same, we find that the CA correctly

pronounced the Deed of Absolute Sale was valid and binding between Antonia and

Gemma

G.R. No. 190375

February 8, 2012

TAN SHUY, Petitioner,

- versus -

SPOUSES GUILLERMO MAULAWIN and PARING CARIO-MAULAWIN,

Respondents.


26/39

SERENO,J.:

Facts: Petitioner Tan Shuy is engaged in the business of buying copra and corn in

the Fourth District of Quezon Province. According to Vicente Tan (Vicente), son of

petitioner, whenever they would buy copra or corn from crop sellers, they would

prepare and issue apesada in their favor. Apesada is a document containing

details of the transaction, including the date of sale, the weight of the crop

delivered, the trucking cost, and the net price of the crop. He then explained that

when apesada contained the annotation pd on the total amount of the purchase

price, it meant that the crop delivered had already been paid for by petitioner.

Guillermo Maulawin (Guillermo), respondent in this case, is a farmer-businessman

engaged in the buying and selling of copra and corn. On 10 July 1997, Tan Shuy

extended a loan to Guillermo in the amount of 420,000. In consideration thereof,

Guillermo obligated himself to pay the loan and to sell lucad or copra to petitioner.

Most of the transactions involving Tan Shuy and Guillermo were coursed through

Elena Tan, daughter of petitioner. She served as cashier in the business of Tan

Shuy, who primarily prepared and issued thepesada. In case of her absence,

Vicente would issue thepesada. He also helped his father in buying copra and

granting loans to customers (copra sellers). According to Vicente, part of their

agreement with Guillermo was that they would put the annotation sulong on

thepesada when partial payment for the loan was made. Petitioner alleged that

despite repeated demands, Guillermo remitted only 23,000 in August 1998 and

5,500 in October 1998, or a total of 28,500. He claimed that respondent had an

outstanding balance of 391,500. Thus, convinced that Guillermo no longer had the

intention to pay the loan, petitioner brought the controversy to the Lupon

Tagapamayapa. When no settlement was reached, petitioner filed a Complaint

before the Regional Trial Court (RTC).

Respondent Guillermo countered that he had already paid the subject loan in full.

According to him, he continuously delivered and sold copra to petitioner from April

1998 to April 1999. Respondent said they had an oral arrangement that the net

proceeds thereof shall be applied as installment payments for the loan. He alleged

that his deliveries amounted to 420,537.68 worth of copra. To bolster his claim, he


27/39

presented copies ofpesadas issued by Elena and Vicente. He pointed out that

thepesadas did not contain the notation pd, which meant that actual payment of

the net proceeds from copra deliveries was not given to him, but was instead

applied as loan payment. He averred that Tan Shuy filed a case against him,

because petitioner got mad at him for selling copra to other copra buyers.

On 27 July 2007, the trial court issued a Decision, ruling that the net proceeds from

Guillermos copra deliveries represented in thepesadas, which did not bear the

notation pd should be applied as installment payments for the loan.

On 31 July 2009, the CA affirmed the finding of the trial court.

Issue: Whether the delivery of copra amounted to installment payments for the loan

obtained by respondents from petitioner.

Held: Yes, pursuant to Article 1232 of the Civil Code, an obligation is extinguished

by payment or performance. There is payment when there is delivery of money or

performance of an obligation. Article 1245 of the Civil Code provides for a special

mode of payment called dation in payment (dacin en pago). There is dation in

payment when property is alienated to the creditor in satisfaction of a debt in

money. Here, the debtor delivers and transmits to the creditor the formers

ownership over a thing as an accepted equivalent of the payment or performance of

an outstanding debt. In such cases, Article 1245 provides that the law on sales shall

apply, since the undertaking really partakes in one sense of the nature of sale;

that is, the creditor is really buying the thing or property of the debtor, the payment

for which is to be charged against the debtors obligation. Dation in payment

extinguishes the obligation to the extent of the value of the thing delivered, either

as agreed upon by the parties or as may be proved, unless the parties by

agreement express or implied, or by their silence consider the thing as

equivalent to the obligation, in which case the obligation is totally extinguished.

G.R. No. 192085

February 22, 2012


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CARIDAD SEGARRA SAZON, Petitioner,

- versus -

LETECIA VASQUEZ-MENANCIO, represented by attorney-in-fact

EDGAR S. SEGARRA,Respondent.

SERENO,J;

Facts: Respondent is a resident of the United States of America. Sometime in 1979,

she entrusted the management, administration, care and preservation of her

properties to petitioner. Respondent avers that the lots are productive, and that

petitioner as the administrator has collected and received all the fruits and income

accruing therefrom. Petitioner, on the other hand, claims that several of theproperties do not produce any fruit or generate any income at all, and that any

supposed income derived from them is not sufficient to answer for all the expenses

incurred to maintain them.

According to respondent, petitioner never rendered a full accounting of the fruits

and income derived from the properties, but has instead appropriated and in fact

applied these for her own use and benefit. Denying this allegation, petitioner

presented five lettersdated 21 January 1983, 12 March 1984, 15 September 1986,

2 December 1988, and one undatedwhich had been sent to respondent as proofof the accounting.

Furthermore, petitioner denies receipt of any letter asking her to make an

accounting or to remit the fruits collected from the properties. She further avers

that, since the start of her agency agreement with respondent, the latter never

answered any of the communications petitioner had sought to initiate.

As a result of the foregoing, respondent revoked, in writing, all the powers and

authority of administration granted to petitioner effective March 1997. Thereafter,

the former demanded that petitioner return and/or turn over the possession andadministration of the properties.

Respondent claims that she made repeated verbal, and served written, demands

upon petitioner, asking the latter to render an accounting and to remit the owners

share of the fruits. Petitioner, however, continued to fail and to refuse to perform

her obligation.


29/39

In fact, she continues to hold on to the properties and the management and

administration thereof. Further, she continues to collect, receive, and keep all the

income generated by the properties.

Thus, on 30 October 1997, respondent filed her Complaint with Preliminary

Injunction, praying that the RTC order petitioner to render an accounting and remit

all the fruits and income the latter, as the administrator, received from the

properties.

On the other hand Petitioner claims that in the course of her administration of the

properties, the letters she sent to respondent should be considered as a fulfilment

of her obligation, as respondents agent, to render an accounting of her

administration.

Issue: 1. Whether or not an agent has the obligation to render accounts despite no

demand from the principal

2. Whether or not an agent is bound to deliver the fruits of the property to

the principal despite lack of demand

Held: Yes, Article 1891 of the Civil Code contains a few of the obligations owed by

an agent to his principal Every agent is bound to render an account of his

transactions and to deliver to the principal whatever he may have received by

virtue of the agency, even though it may not be owing to the principal. Every

stipulation exempting the agent from the obligation to render an account shall be

void.

It is evident that the reason behind the failure of petitioner to render an accounting

to respondent is immaterial. What is important is that the former fulfil her duty to

render an account of the relevant transactions she entered into as respondents

agent.

Yes, every agent is bound to deliver to the principal whatever the former may

have received by virtue of the agency, even though that amount may not be owed

to the principal.

G.R. No. 192108

November 21, 2012


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SPOUSES SOCRATES SY AND CELY SY,Petitioner,

vs.

ANDOK'S LITSON CORPORATION,Respondent.

PEREZ,J.:

Facts: Petitioner Cely Sy (Sy) is the registered owner of a 316 square-meter lot

located at 1940 Felix Huertas Street, Sta. Cruz, Manila. Respondent Andoks Litson

Corporation (Andoks) is engaged in the business of selling grilled chicken and pork

with outlets all over the Philippines. On 5 July 2005, Sy and Andoks entered into a

5-year lease contract covering the parcel of land owned by Sy. Monthly rental was

fixed at P60,000.00, exclusive of taxes, for the first 2 years and P66,000.00 for the

third, fourth and fifth year with 10% escalation every year beginning on the fourth

year. Per contract, the lessee shall, upon signing the contract, pay four (4) months

of advance deposit amounting to P240,000.00 and a security deposit equivalent to

four (4) months of rental in the amount of P240,000.00. Accordingly, Andoks issued

a check to Sy for P480,000.00.

Andoks alleged that while in the process of applying for electrical connection on the

improvements to be constructed on Sys land, it was discovered that Sy has an

unpaid Manila Electric Company (MERALCO) bill amounting to P400,000.00. Andoks

presented a system-generated statement from MERALCO.4Andoks further

complained that construction for the improvement it intended for the leased

premises could not proceed because another tenant, Mediapool, Inc. incurred delay

in the construction of a billboard structure also within the leased premises. In its

letter dated 25 August 2005, Andoks first informed Sy about the delay in the

construction of the billboard structure on a portion of its leased property. Three

more letters of the same tenor were sent to Sy but the demands fell on deaf ears.

Consequently, Andoks suffered damages in the total amount of P627,000.00 which

comprises the advance rental and deposit, cost of money, mobilization cost for the

construction of improvement over leased premises, and unrealized income. The

complaint for rescission was filed on 13 February 2008, three years after continued

inaction on the request to have the billboard construction expedited.


31/39

In her Answer, Sy stated that she has faithfully complied with all the terms and

conditions of the lease contract and denied incurring an outstanding electricity bill.

On 24 July 2008, the trial court rendered a decision favoring Andoks and on appeal,

Sy decried deprivation of her right to present evidence resulting in a default

judgment against her. Sy denied that there was a breach on the lease contract. On

20 January 2010, the Court of Appeals dismissed the appeal and affirmed the ruling

of the RTC.

Issue: Whether or not the remedy of rescission is valid in a lease contract

Held: Yes, Article 1191 of the Civil Code provides that the power to rescind

obligations is implied in reciprocal ones, in case one of the obligors should not

comply with what is incumbent upon him. A lease contract is a reciprocal contract.

By signing the lease agreement, the lessor grants possession over his/her property

to the lessee for a period of time in exchange for rental payment. Indeed, rescission

is statutorily recognized in a contract of lease. The aggrieved party is given the

option to the aggrieved party to ask for: (1) the rescission of the contract; (2)

rescission and indemnification for damages; or (3) only indemnification for

damages, allowing the contract to remain in force.

G.R. No. 192486

November 21, 2012

RUPERTA CANO VDA. DE VIRAY and JESUS CARLO GERARD

VIRAY, Petitioners,

vs.

SPOUSES JOSE USI and AMELITA USI, Respondents.

VELASCO, JR., J.:

Facts: The present controversy arose from several parcels of land which form part of

what was then one lot registered in the name of Ellen P. Mendoza with an area of


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9,137 square meters, more or less, Lot 733 is located in Brgy. Bebe Anac, Masantol,

Pampanga.

On April 28, 1986, Geodetic Engineer Abdon G. Fajardo prepared a subdivision plan

(Fajardo Plan, for short), in which the lot was divided into six (6) smaller parcels

designated as: Lot 733-A, Lot 733-B, Lot 733-C, Lot 733-D, Lot 733-E, and Lot 733-F.

The following day, Mendoza executed two separate deeds of absolute sale, the first,

transferring Lot 733-F to Jesus Carlo Gerard Viray and the second deed conveying

Lot 733-A to spouses Avelino Viray and Margarita Masangcay (Sps. Viray). The

names McDwight Mendoza, Mendozas son, and one Ernesto Bustos appear in both

notarized deeds as instrumental witnesses. As of that time, the Fajardo Plan has not

been officially approved by the Land Management Bureau (LMB). And at no time in

the course of the controversy did the spouses Viray and Jesus Viray, as purchasers

cause the annotations of the conveying deeds of sale.

The aforementioned conveyances notwithstanding, Mendoza, Emerenciana M. Vda.

de Mallari (Vda. de Mallari) and respondent spouses Jose Usi and Amelita T. Usi

(Sps. Usi or the Usis), as purported co-owners of Lot 733, executed on August 20,

1990 a Subdivision Agreement. Pursuant to this agreement which adopted, as base

of reference, the LMB-approved subdivision plan prepared by Geodetic Engineer

Alfeo S. Galang (Galang Plan), Lot 733 was subdivided into three lots, i.e., Lots A to

C, with the following area coverage: Lots 733-A, 465 square meters, 733-B, 494

square meters, and 733-C, 6,838 square meters.

Hence, the foregoing overlapping transactions involving the same property or

portions thereof spawned several suits and counter- suits.

In sum, of the six (6) cases filed, the first four (4) have been terminated and only

two cases revolving around Lot 733 remained unresolved. In Civil Case No. 01-

1118(M), the RTC held that the Sps. Usi failed to establish by preponderance of

evidence to support their claim of title, possession and ownership over the lots

subject of their petition while on July 24, 2009 on appeal, the CA rendered the

assailed decision, reversing and setting aside the appealed June 21, 2007 RTC

decision. Vda. de Viray sought but was denied reconsideration, hence, this petition.


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Issue: 1. Whether the two (2) subdivision agreements partake of a bona

fide and legally binding partition contracts or arrangements among co-owners that

validly effectuated the transfer of the subject lots to respondent spouses Usi.

2. Whether or not the deeds of absolute sale were valid

Held: 1. No, Partition, in general, is the separation, division, and assignment of a

thing held in common by those to whom it may belong and contrary to the finding

of the Court of Appeals, the subdivision agreements forged by Mendoza and her

alleged co-owners were not for the partition of pro-indivisoshares of co-owners of

Lot 733 but were actually conveyances, disguised as partitions, of portions of Lot

733 specifically Lots 733-A and 733-B, and portions of the subsequent subdivision of

Lot 733-C. It cannot be overemphasized enough that the two deeds of absolute sale

over portions of substantially the same parcel of land antedated the subdivision

agreements in question and their execution acknowledged too before a notary

public.

2. Yes, The earlier sale of Lot 733-A and Lot 733-F (Fajardo Plan) on April 29,

1986 was valid and effective conveyances of said portions of Lot 733. 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.

G.R. No. 194320

February 1, 2012

MALAYAN INSURANCE CO., INC., Petitioner,

- versus -

RODELIO ALBERTO and ENRICO ALBERTO REYES, Respondents.

VELASCO, JR.,J.:


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Facts: At around 5 oclock in the morning of December 17, 1995, an accident

occurred at the corner of EDSA and Ayala Avenue, Makati City, involving four (4)

vehicles, to wit: (1) a Nissan Bus operated by Aladdin Transit with plate number NYS

381; (2) an Isuzu Tanker with plate number PLR 684; (3) a Fuzo Cargo Truck with

plate number PDL 297; and (4) a Mitsubishi Galant with plate number TLM 732.

Based on the Police Report issued by the on-the-spot investigator, SPO1 Dungga,

the Isuzu Tanker was in front of the Mitsubishi Galant with the Nissan Bus on their

right side shortly before the vehicular incident. All three (3) vehicles were at a halt

along EDSA facing the south direction when the Fuzo Cargo Truck simultaneously

bumped the rear portion of the Mitsubishi Galant and the rear left portion of the

Nissan Bus. Due to the strong impact, these two vehicles were shoved forward and

the front left portion of the Mitsubishi Galant rammed into the rear right portion of

the Isuzu Tanker.

Previously, particularly on December 15, 1994, Malayan Insurance issued Car

Insurance Policy No. PV-025-00220 in favor of First Malayan Leasing and Finance

Corporation (the assured), insuring the aforementioned Mitsubishi Galant against

third party liability, own damage and theft, among others. Having insured the

vehicle against such risks, Malayan Insurance claimed in its Complaint dated

October 18, 1999 that it paid the damages sustained by the assured amounting to

PhP 700,000.

Maintaining that it has been subrogated to the rights and interests of the assured by

operation of law upon its payment to the latter, Malayan Insurance sent several

demand letters to respondents Rodelio Alberto (Alberto) and Enrico Alberto Reyes

(Reyes), the registered owner and the driver, respectively, of the Fuzo Cargo Truck,

requiring them to pay the amount it had paid to the assured. When respondents

refused to settle their liability, Malayan Insurance was constrained to file a

complaint for damages for gross negligence against respondents.

In their Answer, respondents asserted that they cannot be held liable for the

vehicular accident, since its proximate cause was the reckless driving of the Nissan

Bus driver. They alleged that the speeding bus, coming from the service road of


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EDSA, maneuvered its way towards the middle lane without due regard to Reyes

right of way. When the Nissan Bus abruptly stopped, Reyes stepped hard on the

brakes but the braking action could not cope with the inertia and failed to gain

sufficient traction. As a consequence, the Fuzo Cargo Truck hit the rear end of the

Mitsubishi Galant, which, in turn, hit the rear end of the vehicle in front of it. The

Nissan Bus, on the other hand, sideswiped the Fuzo Cargo Truck, causing damage

to the latter in the amount of PhP 20,000. Respondents also controverted the

results of the Police Report, asserting that it was based solely on the biased

narration of the Nissan Bus driver.

In its Decision dated February 2, 2009, the trial court, in Civil Case No. 99-95885,

ruled in favor of Malayan Insurance and declared respondents liable for damages.

Dissatisfied, respondents filed an appeal with the CA which reversed and set aside

the Decision of the trial court and ruled in favor of respondents

Subsequently, Malayan Insurance filed its Motion for Reconsideration, arguing that a

police report is aprima facie evidence of the facts stated in it. And inasmuch as

they never questioned the presentation of the report in evidence, respondents are

deemed to have waived their right to question its authenticity and due execution

and in its Resolution dated October 29, 2010, the CA denied the motion for

reconsideration.

Issue: Whether or not it is proper that Malayan Insurance be subrogated to the

rights of the assured.

Held: Yes, Subrogation is the substitution of one person by another with reference

to a lawful claim or right, so that he who is substituted succeeds to the rights of the

other in relation to a debt or claim, including its remedies or securities. The principle

covers a situation wherein an insurer has paid a loss under an insurance policy is

entitled to all the rights and remedies belonging to the insured against a third party

with respect to any loss covered by the policy. It contemplates full substitution such

that it places the party subrogated in the shoes of the creditor, and he may use all

means that the creditor could employ to enforce payment.


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Bearing in mind that the claim check voucher and the Release of Claim and

Subrogation Receipt presented by Malayan Insurance are already part of the

evidence on record, and since it is not disputed that the insurance company,

indeed, paid PhP 700,000 to the assured, then there is a valid subrogation in the

case at bar.

G.R. Nos. 180631-33

February 22, 2012

PHILIPPINE CHARTER INSURANCE CORPORATION, Petitioner

- versus -

CENTRAL COLLEGES OF THE PHILIPPINES and DYNAMIC

PLANNERS AND CONSTRUCTION CORPORATION, Respondents.

MENDOZA, J.:

Facts: On May 16, 2000, Central Colleges of the Philippines (CCP), an educational

institution, contracted the services of Dynamic Planners and Construction

Corporation (DPCC) to be its general contractor for the construction of its five (5)-

storey school building at No. 39 Aurora Boulevard, Quezon City, with a total contractprice of P248,000,000.00. As embodied in a Contract Agreement, the construction

of the entire building would be done in two phases with each phase valued

at P124,000,000.00.

To guarantee the fulfillment of the obligation, DPCC posted three (3) bonds, all

issued by the Philippine Charter Insurance Corporation (PCIC), namely: (1) Surety

Bond No. PCIC-45542, dated June 25, 2003, amounting to P7,031,460.74; (2)

Performance Bond No. PCIC-45541 in the amount of P2,929,775.31 which wassubsequently increased to P6,199,999.99 through Bond Endorsement No. E-

2003/12527; and (3) Performance Bond No. PCIC-46172 for P692,890.74. All the

bonds were callable on demand and set to expire on October 30, 2003.


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The Phase 1 of the project was completed without issue. Thereafter, CCP paid

DPCC P14,880,000.00 or 12% of the agreed price of P124,000,000.00 with a check

dated March 14, 2002 as downpayment for the Phase 2 of the project. The Phase 2

of the project, however, encountered numerous delays. When CCP audited DPCC

on July 25, 2003, only 47% of the work to be done was actually finished.

Thus, in a letter dated October 29, 2003 addressed to DPCC and PCIC, CCP informed

them of the breach in the contract and its plan to claim on the construction bonds.

On November 6, 2003, CCP notified DPCC and PCIC that only 51% of the project was

completed, which was way behind the construction schedule, prompting it to

declare the occurrence of default against DPCC. It formally requested PCIC to remit

the proceeds of the bonds.

On November 14, 2003, DPCC wrote PCIC confirming the finding that Phase 2 was

only 51% finished and, at the same time, requesting for the extension of its

performance and surety bonds because the supposed revision of the plans would

require more days. In a letter dated November 21, 2003, CCP notified PCIC that

because of DPCCs inability to complete the project on time, it decided to terminate

its contract with the latter and to continue the construction on its own. Meanwhile,

on December 5, 2003, PCIC informed DPCC that it had approved its request for

extension of the bonds.

Eventually, negotiations to continue on with the construction between CCP and

DPCC reached a dead end. CCP hired another contractor to work on the school site.

On August 13, 2004, CCP sent a letter to PCIC of its final demand for the payment

of P13,924,351.47 as indicated in the bonds but on August 20, 2004 was denied.

Thus, on October 28, 2004, CCP filed a complaint with request for arbitration before

the Construction Industry Arbitration Commission (CIAC) against DPCC and PCIC. In

its complaint, CCP prayed that CIAC hold DPCC and PCIC, jointly and severally liable,

against the bonds.


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In their Answer, DPCC and PCIC denied any liability and proffered that CCP

unlawfully withheld the materials, equipment, formworks and scaffoldings left at the

premises amounting to P4,232,264.12.

On June 3, 2005, the CIAC rendered a decision in favor of CCP and all the parties

appealed the CIAC decision to the CA.

On June 29, 2007, the CA modified CIACs earlier decision. The CA found that DPCC

was already in delay for managing to complete only 51% of the construction work

necessary to finish the Phase 2 of the project. It held that due to DPCCs

inexcusable delay, CCP was legally within its rights to terminate the contract with

it. It likewise did not give weight to PCICs defense that Bond No. 46172 was

already released because the said issue was never raised before the CIAC and was

raised for the first time on appeal. PCIC moved for the reconsideration of the said

decision, but the CA disposed of it with a denial in its November 19,

2007 Resolution.

Issue: 1. Whether or not CCP is entitled to the claims on the bond when it filed

beyond the 10 day reglementary period after DPCC was already in default

2. Whether or not PCIC is liable to CCP under the performance bonds and the

surety bond

Held: 1. Yes, The civil law concept of delay or default commences from the time the

obligor demands, judicially or extrajudicially, the fulfillment of the obligation from

the obligee. In legal parlance, demand is the assertion of a legal or procedural

right.

Thus, DPCC became in default on October 29, 2003 when CCP informed it in writing

of the breach of the contract agreement and demanded the fulfillment of its

obligation against the bonds.


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2. Yes. A surety under Article 2047 of the New Civil Code solidarily binds itself

with the principal debtor to assure the fulfillment of the obligation. As provided in

Article 2047, the surety undertakes to be bound solidarily with the principal obligor.

That undertaking makes a surety agreement an ancillary contract as it presupposes

the existence of a principal contract. Although the contract of a surety is in essencesecondary only to a valid principal obligation, the surety becomes liable for the debt

or duty of another although it possesses no direct or personal interest over the

obligations nor does it receive any benefit therefrom. The suretys obligation is not

an original and direct one for the performance of his own act, but merely accessory

or collateral to the obligation contracted by the principal. Nevertheless, although

the contract of a surety is in essence secondary only to a valid principal obligation,

his liability to the creditor or promisee of the principal is said to be direct, primary

and absolute; in other words, he is directly and equally bound with the principal.

Suretyship, in essence, contains two types of relationship the principal relationshipbetween the obligee and the obligor, and the accessory surety relationship between

the principaland the surety. In this arrangement, the obligee accepts the suretys

solidary undertaking to pay if the obligor does not pay. Such acceptance, however,

does not change in any material way the obligees relationship with the principal

obligor. Neither does it make the surety an active party to the principal obligee-

obligor relationship. Thus, the acceptance does not give the surety the right to

intervene in the principal contract. The suretys role arises only upon the obligors

default, at which time, it can be directly held liable by the obligee for payment as a

solidary obligor.

billy partial

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