SPOUSES BENJAMIN C. MAMARIL AND SONIA P. MAMARIL vs. THE BOY SCOUT OF THE PHILIPPINES, AIB SECURITY AGENCY, INC., et al G.R. No. 179382 January 14, 2013

 

Spouses Mamaril are jeepney operators since 1971. They would park their six (6) passenger jeepneys every night at the Boy Scout of the Philippines' (BSP) compound located at 181 Concepcion Street, Malate, Manila for a fee of ₱300.00 per month for each unit. On May 26, 1995, all these vehicles were parked inside the BSP compound. The following morning, however, one of the vehicles was missing and was never recovered. According to the security guards Peña and Gaddi of AIB Security Agency, Inc. (AIB) with whom BSP had contracted for its security and protection, a male person who looked familiar to them took the subject vehicle out of the compound.

 

Sps. Mamaril filed a complaint for damages before the Regional Trial Court (RTC) against BSP, AIB, Peña and Gaddi. BSP denied any liability contending that not only did Sps. Mamaril directly deal with AIB with respect to the manner by which the parked vehicles would be handled, but the parking ticket itself expressly stated that the "Management shall not be responsible for loss of vehicle or any of its accessories or article left therein." It also claimed that Sps. Mamaril erroneously relied on the Guard Service Contract. Apart from not being parties thereto, its provisions cover only the protection of BSP's properties, its officers, and employees.

 

In addition, AIB alleged that it has observed due diligence in the selection, training and supervision of its security guards while Peña and Gaddi claimed that the person who drove out the lost vehicle from the BSP compound represented himself as the owners' authorized driver and had with him a key to the subject vehicle.

 

RTC rendered a Decision in favor of Sps. Mamaril. The RTC found that the act of Peña and Gaddi in allowing the entry of an unidentified person and letting him drive out the subject vehicle in violation of their internal agreement with Sps. Mamaril constituted gross negligence, rendering AIB and its security guards liable for the former's loss. BSP was also adjudged liable because the Guard Service Contract it entered into with AIB offered protection to all properties inside the BSP premises, which necessarily included Sps. Mamaril's vehicles. Moreover, the said contract stipulated AIB's obligation to indemnify BSP for all losses or damages that may be caused by any act or negligence of its security guards. Accordingly, the BSP, AIB, and security guards Peña and Gaddi were held jointly and severally liable for the loss suffered by Sps. Mamaril.

 

Only BSP appealed the foregoing disquisition before the CA. The CA affirmed the finding of negligence on the part of security guards Peña and Gaddi. However, it absolved BSP from any liability, holding that the Guard Service Contract is purely between BSP and AIB and that there was nothing therein that would indicate any obligation and/or liability on the part of BSP in favor of third persons, such as Sps. Mamaril.

 

It further ruled that the agreement between Sps. Mamaril and BSP was substantially a contract of lease whereby the former paid parking fees to the latter for the lease of parking slots. As such, the lessor, BSP, was not an insurer nor bound to take care and/or protect the lessees' vehicles.

 

On the matter of damages, the CA deleted the award of ₱50,000.00 representing the value of the accessories inside the lost vehicle and the ₱275.00 a day for loss of income in the absence of proof to support them. It also deleted the award of moral and exemplary damages and attorney's fees for lack of factual and legal bases.

 

 

Q1: Should BSP be held liable for the loss of their vehicle based on the Guard Service Contract and the parking ticket it issued?

 

No, BSP should not be held liable for the loss of vehicle based on the Guard Service Contract and the parking ticket it issued.

 

In order that a third person benefited by the second paragraph of Article 1311, referred to as a stipulation pour autrui, may demand its fulfillment, the following requisites must concur: (1) There is a stipulation in favor of a third person; (2) The stipulation is a part, not the whole, of the contract; (3) The contracting parties clearly and deliberately conferred a favor to the third person - the favor is not merely incidental; (4) The favor is unconditional and uncompensated; (5) The third person communicated his or her acceptance of the favor before its revocation; and (6) The contracting parties do not represent, or are not authorized, by the third party. 

 

However, none of the foregoing elements obtains in this case. It is undisputed that Sps. Mamaril are not parties to the Guard Service Contract. Neither did the subject agreement contain any stipulation pour autrui. The Guard Service Contract between defendant-appellant BSP and defendant AIB Security Agency is purely between the parties therein.

 

Moreover, the contract between the parties herein was one of lease as defined under Article 1643 of the Civil Code. It has been held that the act of parking a vehicle in a garage, upon payment of a fixed amount, is a lease.  Article 1654 of the Civil Code provides that "the lessor (BSP) is obliged: (1) to deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended; (2) to make on the same during the lease all the necessary repairs in order to keep it suitable for the use to which it has been devoted, unless there is a stipulation to the contrary; and (3) to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract." In relation thereto, Article 1664 of the same Code states that "the lessor is not obliged to answer for a mere act of trespass which a third person may cause on the use of the thing leased; but the lessee shall have a direct action against the intruder."

 

In the instant case, the owners parked passenger jeepneys inside the BSP compound for a monthly fee and took the keys home with them. Hence, a lessor-lessee relationship indubitably existed between them and BSP. BSP was not remiss in its obligation to provide Sps. Mamaril a suitable parking space for their jeepneys as it even hired security guards to secure the premises; hence, it should not be held liable for the loss suffered by Sps. Mamaril.

 

 

Q2: Is the CA’s decision correct in deleting the RTC awards of damages and attorney's fees.

 

Article 20 of the Civil Code provides that every person, who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same. Similarly, Article 2176 of the Civil Code states that whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

 

In this case, it is undisputed that the proximate cause of the loss of Sps. Mamaril's vehicle was the negligent act of security guards Peña and Gaddi in allowing an unidentified person to drive out the subject vehicle. Proximate cause has been defined as that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury or loss, and without which the result would not have occurred.

 

The mishandling of the parked vehicles that resulted in herein complained loss should be recovered only from the tort feasors (Peña and Gaddi) and their employer, AIB; and not against the lessor, BSP. More so, on the matter of damages, Sps. Mamaril failed to substantiate their claim and provide sufficient justification. It is axiomatic that actual damages must be proved with reasonable degree of certainty and a party is entitled only to such compensation for the pecuniary loss that was duly proven. Thus, absent any competent proof of the amount of damages sustained, the CA properly deleted the said awards.

FILCAR TRANSPORT SERVICES vs. JOSE A. ESPINAS G.R. No. 174156 June 20, 2012

Respondent Jose A. Espinas was driving his car along Leon Guinto Street in Manila. He was already in the middle of the intersection when another car, traversing President Quirino Street and going to Roxas Boulevard, suddenly hit and bumped his car. As a result of the impact, Espinas’ car turned clockwise. The other car escaped from the scene of the incident, but Espinas was able to get its plate number. After verifying with the Land Transportation Office, Espinas learned that the owner of the other car, with plate number UCF-545, is Filcar.

Espinas sent several letters to Filcar and to its President and General Manager Carmen Flor, demanding payment for the damages sustained by his car. Espinas then filed a complaint for damages against Filcar and Carmen Flor before the Metropolitan Trial Court (MeTC) of Manila.

Filcar argued that the car was assigned to its Corporate Secretary Atty. Candido Flor, the husband of Carmen Flor. Atty. Flor, for his part, upon seeing the dent and the crack on the car, allegedly asked Floresca, his personal driver, what happened, and the driver replied that it was a result of a "hit and run" while the car was parked in front of Bogota on Pedro Gil Avenue, Manila.

Filcar denied any liability to Espinas and claimed that the incident was not due to its fault or negligence since Floresca was not its employee but that of Atty. Flor. Filcar and Carmen Flor both said that they always exercised the due diligence required of a good father of a family in leasing or assigning their vehicles to third parties.

The MeTC ruled in favor of Espinas, and ordered Filcar and Carmen Flor, jointly and severally, to pay Espinas for the damages including interest and attorney’s fees.

The Regional Trial Court (RTC) of Manila, in the exercise of its appellate jurisdiction, affirmed the MeTC decision. The RTC ruled that Filcar failed to prove that Floresca was not its employee as no proof was adduced that Floresca was personally hired by Atty. Flor.

On appeal, the CA partly granted the petition; it modified the RTC decision by ruling that Carmen Flor, President and General Manager of Filcar, is not personally liable to Espinas. The appellate court pointed out that, subject to recognized exceptions, the liability of a corporation is not the liability of its corporate officers because a corporate entity – subject to well-recognized exceptions – has a separate and distinct personality from its officers and shareholders. The CA, however, affirmed the liability of Filcar to pay Espinas damages.

Q: Is the Court of Appeals’ decision correct in affirming the liability of Filcar, as registered owner of the motor vehicle, to pay for damages caused to Espinas?

Yes, Court of Appeals’ decision is correct in affirming the liability of Filcar, as registered owner of the motor vehicle, to pay for damages caused to Espinas.

Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. Under Article 2176, in relation with Article 2180, of the Civil Code, an action predicated on an employee’s act or omission may be instituted against the employer who is held liable for the negligent act or omission committed by his employee. Although the employer is not the actual tortfeasor, the law makes him vicariously liable on the basis of the civil law principle of pater familias for failure to exercise due care and vigilance over the acts of one’s subordinates to prevent damage to another.

 

Thus, whether Floresca, is an employee of Filcar is irrelevant in arriving at the conclusion that Filcar is primarily and directly liable for the damages sustained by Espinas. Article 2176, in relation with Article 2180, of the Civil Code imposes an obligation upon Filcar, as registered owner, to answer for the damages caused to Espinas’ car. This interpretation is consistent with the strong public policy of maintaining road safety, thereby reinforcing the aim of the State to promote the responsible operation of motor vehicles by its citizens.

REMIGIO D. ESPIRITU AND NOEL AGUSTIN vs. LUTGARDA TORRES DEL ROSARIO represented by SYLVIA R. ASPERILLA G.R. No. 204964 October 15, 2014

 

On June 10, 1988, the Comprehensive Agrarian Reform Law (Republic Act No. 6657) was enacted. On October 10, 2000, del Rosario, through her representative Sylvia R. Asperilla (Asperilla), filed an application for exemption with the Department of Agrarian Reform, seeking to exempt Lot Nos. 854 and 855 from the Comprehensive Agrarian Reform Program (CARP) coverage.

 

On February 19, 2004, then Secretary of Agrarian Reform, Secretary Pagdanganan issued an order granting the application for exemption. Citing Department of Justice Opinion No. 44, Series of 1990, Secretary Pagdanganan stated that lands classified as non-agricultural before the enactment of CARP are beyond its coverage.

 

On March 26, 2004, farmers in del Rosario’s landholdings, led by Espiritu, filed a motion for reconsideration of the order. They argued that under Zoning Ordinance No. 13, Series of 1978, Housing and Land Use Regulatory Board (HLURB) Resolution No. 705, Series of 2001, and Angeles City Council Resolution No. 3300, Series of 2001, the land holdings were classified as agricultural, not industrial. They argued that as per certifications by the HLURB, the landholdings were within the agricultural zone, and there was no zoning ordinance passed that reclassified the area into other land uses.

 

Secretary Pangandaman issued an order granting the motion for reconsideration and revoking the earlier order of then Secretary of Agrarian Reform Pagdanganan. Secretary Pangandaman found that the certifications issued by the HLURB classified the landholdings as agricultural before June 15, 1988. Based on the ocular inspections conducted by the Center for Land Use Policy, Planning and Implementation (CLUPPI), the land remained agricultural and was planted with sugar cane and corn. 

 

Del Rosario filed a notice of appeal before the Office of the President on March 27, 2008. The Office of the President, through then Deputy Executive Secretary Gaite, rendered the decision dismissing the appeal for lack of merit.

 

 

Q: Is Secretary Pangandaman correct in revoking the earlier order of then Secretary Pagdanganan?

 

Yes, Secretary Pangandaman is correct in revoking the earlier order of then Secretary Pagdanganan.

 

Lands classified as non-agricultural in zoning ordinances approved by the Housing and Land Use Regulatory Board or its predecessors prior to June 15, 1998 are outside the coverage of the compulsory acquisition program of the Comprehensive Agrarian Reform Law. However, there has to be substantial evidence to prove that lands sought to be exempted fall within the non-agricultural classification.

 

Accordingly, lands are considered exempt from the coverage of Republic Act No. 6657 if the following requisites are present:

1. Lands were zoned for non-agricultural use by the local government unit; and

2. The zoning ordinance was approved by the Housing and Land Use Regulatory Board before June 15, 1998.

 

In this case, the above requisites are lacking. The land has ceased to be agricultural by virtue of reclassification under Ordinance No. 13, series of 1978 cannot be sustained since the records of the case or the evidence presented thereto are bereft of any indication showing the same. In fact, based on certification from CPDO-ZAU, the land was classified as agricultural. Said land as verified with HLURB-Region III was also classified as agriculture. And lastly, upon ocular inspection, it was found that the same area remained agricultural as it was still dominantly planted with sugar cane and corn.

HEIRS OF LEOPOLDO DELFIN AND SOLEDAD DELFIN v. NATIONAL HOUSING AUTHORITY G.R. No. 193618 November 28, 2016

Delfin Spouses owned a 28,800 square meter parcel of land in Townsite, Suarez, Iligan City.  Sometime in 1982, respondent National Housing Authority (NHA) forcibly took possession of a 10,798 square meter portion of the property. Despite their repeated demands for compensation, the NHA failed to pay the value of the property. The Delfin Spouses thus, filed their Complaint for "Payment of Parcel(s) of Land and Improvements and Damages".

In a letter to the Director of Lands in 1987, it was indicated that the Iligan Property was already occupied by June 1945 and that it had already released for agricultural purposes in favor of its occupants. Before Deputy Public Land Inspector recommended the issuance of a patent in favor of petitioner, upon investigation in the premises of the land, it was found and ascertained that the land was first entered, occupied and possessed and cultivated by him since the year June 1945 up to the present.

NHA alleged that the Delfin Spouses' property was part of a military reservation area. It cited Proclamation No. 2143 as having supposedly reserved the area in which property is situated for Iligan City's slum improvement and resettlement program, and the relocation of families who were dislocated by the National Steel Corporation's five-year expansion program.

Regional Trial Court (RTC) declared the NHA in default, rendering a Decision in favor of the Delfin Spouses. On NHA’s appeal, the Court of Appeals reversed the RTC’s Decision:

The Court of Appeals ruled that the characterization of the property is no longer an issue because the NHA already conceded that the property is disposable public land by citing Proclamation No. 2143, which characterized the property as "a certain disposable parcel of public land." However, the Delfin Spouses supposedly failed to establish their possession of the property since June 12, 1945, as required in Section 48(b) of the Public Land Act.

Q: Are petitioners entitled to just compensation for the Iligan City property occupied by respondent National Housing Authority?\

Yes, petitioners are entitled to just compensation for the Iligan City property occupied by respondent National Housing Authority.

The right to be justly compensated whenever private property is taken for public use cannot be disputed. Article III, Section 9 of the 1987 Constitution states that Section 9. Private property shall not be taken for public use without just compensation. While petitioners may not claim title by prescription, they may, nevertheless, claim title pursuant to Section 48 (b) of Commonwealth Act No. 141 (the Public Land Act).

Section 48 enabled the confirmation of claims and issuance of titles in favor of citizens occupying or claiming to own lands of the public domain or an interest therein. Section 48 (b) specifically pertained to those who "have been in open, continuous, exclusive, and notorious possession and, occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, since June 12, 1945":

Section 48(b) of the Public Land Act therefore requires that two (2) requisites be satisfied before claims of title to public domain lands may be confirmed: first, that the land subject of the claim is agricultural land; and second, open, continuous, notorious, and exclusive possession of the land since June 12, 1945.

In this case, petitioners acquired title over the Iligan Property pursuant to Section 48(b) of the Public Land Act. First, there is no issue that the Iligan Property had already been declared to be alienable and disposable land. Second, Deputy Public Land Inspector’s letters to the Director of Land nevertheless attest to a previous finding that the property had already been occupied as early as June 1945.

Having shown that the requisites of Section 48(b) of the Public Land Act have been satisfied and having established their rights to the Iligan Property, it follows that petitioners must be compensated for its taking.

ONOFRE ANDRES vs. PHILIPPINE NATIONAL BANK G.R. No. 173548 October 15, 2014

The Spouses Victor and Filomena Andres acquired during their marriage a 4,634-square-meter parcel of land in Sto. Domingo, Nueva Ecija. After Victor’s death, his widow, Filomena, and six of their children (Onofre, Roman, Juana, Guillermo, Felisa, and Maxima) agreed in an extrajudicial partition with sale to adjudicate one half of the land to each of them pro indiviso. This document also provides that for 1,000.00, they all sold, transferred, and conveyed to Roman Andres their respective rights and participation to the one-half portion of the property. This was annotated on the title.

Consequently, land title of said land was cancelled, and a new title was issued in the name of Roman Andres and his wife, Lydia Echaus-Andres, under TCT No. NT-57731. Spouses Roman and Lydia Andres mortgaged the property to PNB for 3,000.00. No objection was made, even after the mortgage had been cancelled.

Later, Nueva Ecija Regional Trial Court (RTC) cancelled the guardianship issued in favor of the Security Bank and Trust Company and transferred ownership of the properties of the deceased, Spouses Roman and Lydia Andres, to their only living heir, Reynaldo Andres. TCT No. NT-57731 was consequently cancelled, and title was transferred to the Spouses Reynaldo Andres and Janette de Leon, under TCT No. (NT-239548) NT-7725.

The Spouses Reynaldo Andres and Janette de Leon used this title and mortgaged the property to PNB for a 1.2 million loan. This was without the consent of Onofre Andres.

PNB later foreclosed the property and consolidated title in its name. Petitioner Onofre Andres, the uncle of mortgagors, filed a complaint for cancellation of title and reconveyance of the property alleging that title in mortgagor's name was based on a falsified document denominated as "Self-Adjudication of Sole Heir." PNB denied the material allegations in the complaint. It argued that it conducted an investigation on the property and the title presented to PNB by Reynaldo Andres and his wife was clear and free from adverse claims.

The Regional Trial Court ruled in favor of Onofre Andres by voiding all derivative titles from TCT No. NT-7267. The Court of Appeals modified this decision by declaring as valid and existing TCT No. N-24660 in PNB’s name. CA found that PNB followed the standard practice of banks before approving a loan by sending representatives to inspect the property offered as collateral.

Q: Is PNB an innocent mortgagee for value and in good faith, thus, its right on the property is protected even if the mortgagor obtained title through fraud?

Yes, PNB is an innocent mortgagee for value and in good faith, thus, its right on the property is protected even if the mortgagor obtained title through fraud.

In Cabuhat v. Court of Appeals, it dictates that "when a mortgagee relies upon what appears on the face of a Torrens title and loans money in all good faith on the basis of the title in the name of the mortgagor, only thereafter to learn that the latter’s title was defective, being thus an innocent mortgagee for value, his or her right or lien upon the land mortgaged must be respected and protected, even if the mortgagor obtained her title thereto through fraud."

Further, good faith doctrine applies to innocent mortgagees for value in the 2012 case of Philippine Banking Corporation v. Dy which states that while it is settled that a simulated deed of sale is null and void and therefore, does not convey any right that could ripen into a valid title, it has been equally ruled that, for reasons of public policy, the subsequent nullification of title to a property is not a ground to annul the contractual right which may have been derived by a purchaser, mortgagee or other transferee who acted in good faith.

Furthermore, Section 39 of Act No. 496 provides that every person receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser (or mortgagee) of registered land who takes a certificate of title for value in good faith, shall hold the same free of all encumbrance except those noted on said certificate.

 

It is a rule that banks, as businesses impressed with public interest, must exercise greater care, prudence, and due diligence in all their property dealings. In this case, PNB complied with the standard operating practice of banks, which met the requisite level of diligence, when it sent its personnel to conduct an ocular inspection of the property and verify the status of its ownership and title. Therefore, PNB is a mortgagee in good faith. The title resulting from the foreclosure sale, therefore, is to be protected. The bank is an innocent purchaser for value.

VICENTE L. LUNTAO AND NANETTE L. LUNTAO v. BAP CREDIT GUARANTY CORPORATION AND EFREN M. PINEDA G.R. No. 204412 September 20, 2017

 

Vicente was the owner of a real property in Davao City. He executed a Special Power of Attorney (SPA) in favor of his sister Nanette. Using the authorization given to her, Nanette applied for a loan with BAP and used Vicente's property as collateral. The loan was for the improvement of the facilities of her business, the Holy Infant Medical Clinic. 

 

Upon approval of the loan, the amount of P900,000.00, representing the loan proceeds, was ordered to be released to the clinic through Security Bank. When the loan obligation became due, BAP sent demand letters. In a letter, Nanette and Eleanor's brother Jesus Luntao wrote BAP, asking for additional time to settle his sisters’ accounts.

 

However, Nanette's loan was still left unpaid. As a result, BAP applied for Extra-Judicial Foreclosure of Vicente's property. The Regional Trial Court (RTC) issued a Notice of Foreclosure and a Notice of Extrajudicial Sale.

 

Subsequently, Vicente and Nanette filed a Complaint for Declaration of Nullity of Real Estate Mortgage with a prayer for the issuance of a Temporary Restraining Order and Writ of Preliminary Injunction against BAP. Nanette alleged that the documents brought to her were all blank forms and that she signed the forms on the understanding that it was part of the bank's standard operating procedure. Vicente and Nanette claimed that Eleanor's alleged debt with BAP was separate from Nanette's debt and was not secured by Vicente's property, which should not be foreclosed if Eleanor failed to pay her alleged debt.

 

RTC dismissed the complaint for lack of merit. It found that Nanette and Eleanor filed a loan application with BAP on behalf of the clinic. The trial court gave weight to Jesus' letter. It held that Jesus admitted the existence of the debt, that the loan was obtained in behalf of the clinic, and that the money was used according to its intended purpose. The statements of Jesus were not rebutted by Vicente or Eleanor.

 

Finally, the trial court held that there was no evidence presented to support the allegation that the mortgage was void. Vicente and Nanette elevated the case to the Court of Appeals (CA). CA rendered a Decision denying the appeal and affirming the decision of RTC.

 

Q: Is the Court of Appeals’ correct in affirming the RTC’s Decision? Should the Real Estate Mortgage executed by Vicente L. Luntao and Nanette L. Luntao not be nullified?

 

Yes, the Court of Appeals is correct in affirming the RTC’s Decision. The Real Mortgage executed by Vicente L. Luntao and Nanette L. Luntao should not be nullified.

 

As an accessory contract, a mortgage contract's validity depends on the loan contract's validity. It is, thus, imperative to determine if the contract of loan between petitioners and private respondent is valid. In Pentacapital Investment Corporation v. Mahinay^, it was held that "like any other contract, a contract of loan is subject to the rules governing the requisites and validity of contracts in general."

 

The elements of a valid contract are enumerated in Article 1318 of the Civil Code:

ARTICLE 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established.

In this case, all of the above elements are present in a contract, hence, it was perfected. Petitioners insisted that the contract was not consummated since they did not receive the loan proceeds, which is the object of the loan contract, and therefore, null and void. The principal contact being void, the accessory contract of mortgage was also null and void. However, petitioners received the proceeds of the loan through the account under the name of Holy Infant Medical Clinic/Nanette Luntao/Eleanor Luntao as presented with evidences. Petitioners failed to present rebuttal evidence as their presentation were mere denials.

VICTORIA N. RACELIS, IN HER CAPACITY AS ADMINISTRATOR vs. SPOUSES GERMIL JAVIER AND REBECCA JAVIER G.R. No. 189609 January 29, 2018

Before his death, the late Pedro Nacu, Sr. appointed his daughter, Racelis, to administer his properties, among which was a residential house and lot located in Marikina City. In August 2001, the Spouses Javier offered to purchase the Marikina property. Since they could not afford to pay the price of P3,500,000.00, they offered instead to lease the property while they raise enough money.

On July 2002, the Spouses Javier reassured Racelis of their commitment and even promised to pay P100,000.00 to buy them more time within which to pay the purchase price. However, the Spouses tendered by the end of 2003, a total of P78,000.00 only.

Racelis then wrote to inform them that her family had decided to terminate the lease agreement and to offer the property to other interested buyers. In the same letter, Racelis demanded that they vacate the property by May 30, 2004.

Unfortunately, the parties failed to reach a settlement. Spouses Javier insisted that the sum of P78,000.00 was advanced rent and proposed that this amount be applied to their outstanding liability until they vacate the premises. They refused to give up possession of the property and even refused to pay rent for the succeeding months. Racelis caused the disconnection of the electrical service over the property. She then filed a complaint for ejectment against the Spouses Javier before the Metropolitan Trial Court (MeTC).

During trial, the Spouses Javier vacated the property and moved to their new residence at Greenheights Subdivision. The MeTC dismissed the complaint. It ruled that the Spouses Javier were entitled to suspend the payment of rent under Article 1658 of the Civil Code due to Racelis' act of disconnecting electric service over the property. The MeTC declared that the Spouses Javier's obligation had been extinguished. Their advanced rent and deposit were sufficient to cover their unpaid rent.

On appeal, the Regional Trial Court (RTC) rendered a Decision reversing the MeTC’s decision. The RTC held that the Spouses Javier were not justified in suspending rental payments.  The Spouses Javier appealed to the Court of Appeals (CA). The CA granted the petition of Spouses Javier and reversed and set aside the RTC decision.

Q1: Can respondents Spouses Germil and Rebecca Javier invoke their right to suspend the payment of rent under Article 1658 of the Civil Code?

No, respondents Spouses Germil and Rebecca Javier cannot invoke their right to suspend the payment of rent under Article 1658 of the Civil Code.

Article 1658 of the Civil Code allows a lessee to postpone the payment of rent if the lessor fails to either (1) "make the necessary repairs" on the property or (2) "maintain the lessee in peaceful and adequate enjoyment of the property leased."

In this case, the lease had already expired when petitioner requested for the temporary disconnection of electrical service, hence, the rule in Article 1658 will not apply. Petitioner demanded respondents to vacate the premises. Instead of surrendering the premises to petitioner, respondents unlawfully withheld possession of the property. At that point, petitioner was no longer obligated to maintain respondents in the "peaceful and adequate enjoyment of the lease for the entire duration of the contract." Therefore, respondents cannot use the disconnection of electrical service as justification to suspend the payment of rent. Lessees who exercise their right under Article 1658 of the Civil Code are not freed from the obligations imposed by law or contract. Respondents are liable for a reasonable amount of rent for the use and continued occupation of the property upon the expiration of the lease. To hold otherwise would unjustly enrich respondents at petitioner's expense.

 

Q2: Can the initial payment of P78,000.00 be used to offset Spouses Germil and Rebecca Javier's accrued rent.

 

No, the initial payment of P78,000 cannot be used to offset Spouses Germil and Rebecca Javier’s accrued rent.

In a contract of sale, the non-payment of the purchase price is a resolutory condition that entitles the seller to rescind the sale. In a contract to sell, the payment of the purchase price is a positive suspensive condition that gives rise to the prospective seller's obligation to convey title.

 

Based on the evidence on record, petitioner and respondents executed a contract to sell, not a contract of sale. Since respondents failed to deliver the purchase price at the end of 2003, the contract to sell was deemed cancelled. The contract's cancellation entitles petitioner to retain the earnest money given by respondents. Earnest money, under Article 1482 of the Civil Code, is ordinarily given in a perfected contract of sale. However, earnest money may also be given in a contract to sell. In a contract to sell, earnest money is a show of commitment on the part of the party who intimates his or her willingness to go through with the sale after a specified period or upon compliance with the conditions stated in the contract to sell. There is no unjust enrichment on the part of the seller should the initial payment be deemed forfeited. After all, the owner could have found other offers or a better deal. The earnest money given by respondents is the cost of holding this search in abeyance.

FLORENTINO W. LEONG AND ELENA LEONG, ET AL. vs. EDNA C. SEE G.R. No. 194077 December 3, 2014

 

The spouses Florentino and Carmelita used to own the property located at Quiapo, Manila. They immigrated to the United States and eventually had their marriage dissolved in Illinois. A provision in their marital settlement agreement states that "Florentino shall convey and quitclaim all of his right, title and interest in and to 540 De Guzman Street, Manila, Philippines . . . to Carmelita."

 

Carmelita sold the land to Edna. In lieu of Florentino's signature of conformity in the deed of absolute sale, Carmelita presented a waiver of interest notarized in Illinois. In this waiver, Florentino reiterated his quitclaim over his right, title, and interest to the land. Consequently, the land’s title was transferred to Edna's name. Edna was aware of the Leong relatives staying in the makeshift houses on the land. Carmelita assured her that her nieces and nephews would move out, but demands to vacate were unheeded.  Edna then filed a complaint for recovery of possession against Elena Leong and other relatives of the Leong ex-spouses.

 

In response, Elena alleged the title’s legal infirmity for lack of Florentino's conformity to its sale. She argued that Carmelita's noncompliance with the proviso in the property agreement — that the Quiapo property "may not be alienated without Florentino first obtaining a clean title over the Malabon property" — annulled the transfer to Edna.

 

Florentino filed a complaint for declaration of nullity of contract, title, and damages against Carmelita Leong, Edna C. See, and the Manila Register of Deeds, alleging that the sale was without his consent. The two cases were consolidated.

 

The Regional Trial Court ruled in favor of Edna. The trial court discussed:

By her overt acts, Edna See with her father verified the authenticity of Carmelita’s land title at the Registry of Deeds of Manila. There was no annotation on the same thus deemed a clean. Also, she relied on the duly executed and notarized Certificate of Authority issued by the State of Illinois and Certificate of Authentication issued by the Consul of the Republic of the Philippines for Illinois in support to the Waiver of Interest incorporated in the Deed of Absolute Sale presented to her by Carmelita. The assailed Certificate of Authority is a notarized document and therefore, presumed to be valid and duly executed. Thus, Edna See’s reliance on the notarial acknowledgment found in the duly notarized Certificate of Authority presented by Carmelita is sufficient evidence of good faith.  

 

When appealed, the Court of Appeals affirmed in toto the trial court’s decision.

  

Q: Are the decisions of RTC and CA correct in finding respondent Edna C. as an innocent buyer in good faith and for value?

 

Yes, the decisions of RTC and CA are correct in finding respondent Edna C. See as an            innocent buyer in good faith and for value.

Section 44 of Presidential Decree No. 1529 known as the Property Registration Decree recognizes innocent purchasers in good faith for value and their right to rely on a clean title. Under Section 44. Statutory liens affecting title, it states that every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted in said certificate and any of the enumerated encumbrances therein which may be subsisting.

An innocent purchaser for value refers to someone 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." One claiming to be an innocent purchaser for value has the burden of proving such status. In this case, Edna demonstrated through her overt acts that she is an innocent purchaser. She showed evidences that sufficiently proved she is a buyer in good faith.

SALLY YOSHIZAKI vs. JOY TRAINING CENTER OF AURORA, INC. G.R. No. 174978 July 31, 2013

Respondent Joy Training is a non-stock, non-profit religious educational institution. It was the registered owner of a parcel of land and the building thereon (real properties). Spouses Richard and Linda Johnson sold the real properties, a Wrangler jeep, and other personal properties in favor of the spouses Sally and Yoshio Yoshizaki. The spouses Johnson were members of Joy Training’s board of trustees at the time of sale.

Joy Training filed an action for the Cancellation of Sales and Damages with prayer for the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction against the spouses Yoshizaki and the spouses Johnson before the RTC.

In the complaint, Joy Training alleged that the spouses Johnson sold its properties without the requisite authority from the board of directors. It highlighted that the Articles of Incorporation provides that the board of trustees consists of seven members. On the other hand, the spouses Yoshizaki claimed that Joy Training authorized the spouses Johnson to sell the parcel of land. They asserted that a majority of the board of trustees approved the resolution and maintained that the actual members of the board of trustees consist of five members. Moreover, Connie Dayot, the corporate secretary, issued a certification authorizing the spouses Johnson to act on Joy Training’s behalf. Furthermore, they highlighted that the Wrangler jeep and other personal properties were registered in the name of the spouses Johnson. Lastly, they assailed the RTC’s jurisdiction over the case. They posited that the case is an intra-corporate dispute cognizable by the Securities and Exchange Commission (SEC).

After the presentation of their testimonial evidence, the spouses Yoshizaki formally offered in evidence photocopies of the resolution and certification, among others. Joy Training objected to the formal offer of the photocopied resolution and certification on the ground that they were not the best evidence of their contents. RTC denied the admission of the offered copies. However, it held that the sale was valid because Joy Training authorized the spouses Johnson to sell the real properties.

Joy Training appealed the RTC decision to the CA. The CA upheld the RTC’s jurisdiction over the case but reversed its ruling with respect to the sale of real properties.

The CA did not also give any probative value to the certification. It stated that the certification failed to indicate the date and the names of the trustees present in the meeting. Moreover, the spouses Yoshizaki did not present the minutes that would prove that the certification had been issued pursuant to a board resolution.

Q1: Is the Court of Appeals correct in upholding the RTC’s jurisdiction over the present case?

Yes, the Court of Appeals is correct in upholding the RTC’s jurisdiction over the present case.

Jurisdiction over the subject matter is the power to hear and determine cases of the general class to which the proceedings before a court belong. It is conferred by law. The allegations in the complaint and the status or relationship of the parties determine which court has jurisdiction over the nature of an action.

Joy Training seeks to nullify the sale of the real properties on the ground that there was no contract of agency between Joy Training and the spouses Johnson. This was beyond the ambit of the SEC’s original and exclusive jurisdiction prior to the enactment of Republic Act No. 8799 which only took effect on August 3, 2000. The determination of the existence of a contract of agency and the validity of a contract of sale requires the application of the relevant provisions of the Civil Code. It is a well-settled rule that "disputes concerning the application of the Civil Code are properly cognizable by courts of general jurisdiction." Indeed, no special skill requiring the SEC’s technical expertise is necessary for the disposition of this issue and of this case.

Q2) Was there a contract of agency to sell the real properties between Joy Training and the spouses Johnson?

No, there was no contract of agency to sell the real properties between Joy Training and the spouses Johnson.

Article 1868 of the Civil Code defines a contract of agency as a contract whereby a person "binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter." Moreover, Article 1874 of the Civil Code provides that the contract of agency must be written for the validity of the sale of a piece of land or any interest therein. Otherwise, the sale shall be void.

In the present case, Sally presents three pieces of evidence which allegedly prove that Joy Training specially authorized the spouses Johnson to sell the real properties: (1) TCT No. T-25334, (2) the resolution, (3) and the certification.

These documents do not convince the existence of the contract of agency to sell the real properties. TCT No. T-25334 merely states that Joy Training is represented by the spouses Johnson. The title does not explicitly confer to the spouses Johnson the authority to sell the parcel of land and the building thereon. As to the resolution, the basis for determining the board of trustees’ composition is the trustees as fixed in the articles of incorporation and not the actual members of the board. The second paragraph of Section 25 of the Corporation Code expressly provides that a majority of the number of trustees as fixed in the articles of incorporation shall constitute a quorum for the transaction of corporate business. Moreover, the certification is a mere general power of attorney which comprises all of Joy Training’s business. Article 1877 of the Civil Code clearly states that "an agency couched in general terms comprises only acts of administration, even if the principal should state that he withholds no power or that the agent may execute such acts as he may consider appropriate, or even though the agency should authorize a general and unlimited management."

Q3) Was there a valid contract of sale of the real properties between Joy Training and the spouses Yoshizaki.

No, there was no valid contract of sale of the real properties between Joy Training and the spouse Yoshizaki.

The absence of a contract of agency renders the contract of sale unenforceable. Joy Training effectively did not enter into a valid contract of sale with the spouses Yoshizaki. Sally cannot also claim that she was a buyer in good faith. She misapprehended the rule that persons dealing with a registered land have the legal right to rely on the face of the title and to dispense with the need to inquire further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry. This rule applies when the ownership of a parcel of land is disputed and not when the fact of agency is contested.

 

The established principle states that persons dealing with an agent must ascertain not only the fact of agency, but also the nature and extent of the agent’s authority. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover on his own peril the authority of the agent. Thus, Sally bought the real properties at her own risk; she bears the risk of injury occasioned by her transaction with the spouses Johnson.

INTERNATIONAL EXCHANGE BANK NOW UNION BANK OF THE PHILIPPINES vs SPOUSES JEROME AND QUINNIE BRIONES, AND JOHN DOE G.R. No. 205657 March 29, 2017

Spouses Briones took out a loan of ₱3,789,216.00 from iBank to purchase a BMW Z4 Roadster. The Spouses Briones executed a promissory note with chattel mortgage that required them to take out an insurance policy on the vehicle. The promissory note also gave iBank, as the Spouses Briones' attorney-infact, irrevocable authority to file an insurance claim in case of loss or damage to the vehicle. 

Four months after, the mortgaged BMW Z4 Roadster was carnapped by three (3) armed men. The Spouses Briones declared the loss to iBank, which instructed them to continue paying the next three (3) monthly installments "as a sign of good faith," a directive they complied with. After the Spouses Briones finished paying the three (3)-month installment, iBank sent them a letter demanding full payment of the lost vehicle. Spouses Briones submitted a notice of claim with their insurance company, which denied the claim due to the delayed reporting of the lost vehicle.

iBank filed a complaint for replevin and/or sum of money against the Spouses Briones and a person named John Doe. RTC dismissed iBank's complaint. It ruled that as the duly constituted attorney-in- fact of the Spouses Briones, iBank had the obligation to facilitate the filing of the notice of claim and then to pursue the release of the insurance proceeds. RTC also pointed out that as the Spouses Briones' agent, iBank prioritized its interest over that of its principal when it failed to file the notice of claim with the insurance company and demanded full payment from the spouses.

iBank appealed to the Court of Appeals. In addition, they posited that respondent Jerome's direct dealing with the insurance company was a revocation of the agency relationship between petitioner and respondents. The Court of Appeals upheld the RTC's ruling that "the denial of the insurance claim for delayed filing was a direct consequence of the bank's inaction in not filing the insurance claim."

Q1: Does an agency relationship exist between the parties?

Yes, an agency exists between parties.

Article 1884 of the Civil Code provides that "the agent is bound by his acceptance to carry out the agency, and is liable for the damages which, through his non-performance, the principal may suffer." Also, Rallos v. Felix Go Chan & Sons Realty Corporation lays down the essential elements of agency such as: (1) there is consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; and (4) the agent acts within the scope of his authority.

All the elements of agency exist in this case. Under the promissory note with chattel mortgage, Spouses Briones appointed iBank as their attorney-in-fact, authorizing it to file a claim with the insurance company if the mortgaged vehicle was lost or damaged. Petitioner was also authorized to collect the insurance proceeds as the beneficiary of the insurance policy. Article 1370 of the Civil Code is categorical that when "the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control." Therefore, the agency relationship between the Spouses Briones and iBank is still existing and can be found based on the clear wording of the promissory note with chattel mortgage, which petitioner prepared and respondents signed.

 

Q2: Was the agency relationship revoked or terminated due to respondent’s direct dealing with the insurance company?

No, the agency relationship was not revoked or terminated.

Revocation as a form of extinguishing an agency under Article 1924 of the Civil Code only applies in cases of incompatibility, such as when the principal disregards or bypasses the agent in order to deal with a third person in a way that excludes the agent. The Spouses Briones' claim for loss cannot be seen as an implied revocation of the agency or their way of excluding petitioner. They did not disregard or bypass petitioner when they made an insurance claim; rather, they had no choice but to personally do it because of their agent's negligence.

While a contract of agency is generally revocable at will as it is primarily based on trust and confidence, Article 1927 of the Civil Code provides the instances when an agency becomes irrevocable: Article 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable.

 

In the promissory note with chattel mortgage, the Spouses Briones authorized petitioner to claim, collect, and apply· the insurance proceeds towards the full satisfaction of their loan if the mortgaged vehicle were lost or damaged. Clearly, a bilateral contract existed between the parties, making the agency irrevocable. Petitioner was also aware of the bilateral contract; thus, it included the designation of an irrevocable agency in the promissory note with chattel mortgage that it prepared for the Spouses Briones to sign.

MARIA MENDOZA, in her own capacity and as Attorney-in-fact vs. JULIA POLl CARPIO DELOS SANTOS G.R. No. 176422 March 20, 2013

 

Lot 1681-B and Lot 1684 are presently in the name of respondent Julia Delos Santos; while Lot No. 1646-B on the other hand, is also in the name of respondent but co-owned by Victoria Pantaleon, who bought one-half of the property from petitioner Maria Mendoza and her siblings.

 

Petitioners are grandchildren of Placido and Dominga Mendoza, who had four children: Antonio, Exequiel, Apolonio and Valentin. Petitioners Maria, Deogracias, Dionisia, Adoracion, Marcela and Ricardo are the children of Antonio. Petitioners Juliana, Fely, Mercedes, Elvira and Fortunato, on the other hand, are Valentin’s children. Petitioners alleged that the properties were part of Placido and Dominga’s properties that were subject of an oral partition and subsequently adjudicated to Exequiel. After Exequiel’s death, it passed on to his spouse Leonor and only daughter, Gregoria. After Leonor’s death, her share went to Gregoria. Later, Gregoria died intestate and without issue. They claimed that after Gregoria’s death, respondent Julia, who is Leonor’s sister, adjudicated unto herself all these properties as the sole surviving heir of Leonor and Gregoria. Hence, petitioners claim that the properties should have been reserved by respondent in their behalf and must now revert back to them, applying Article 891 of the Civil Code on reserva troncal.

 

Respondent, however, denies any obligation to reserve the properties as these did not originate from petitioners’ familial line and were not originally owned by Placido and Dominga. According to respondent, the properties were bought by Exequiel and Antonio from a certain Alfonso Ramos. It appears, however, that it was only Exequiel who was in possession of the properties.  The RTC found merit in petitioners’ claim and granted their action for Recovery of Possession by Reserva Troncal, Cancellation of TCT and Reconveyance.

 

On appeal, the Court of Appeals reversed and set aside the RTC decision and dismissed the complaint filed by petitioners.

 

Q: Is the Court of Appeals correct in reversing and setting aside the RTC                   decision?

 

A: Yes, the Court of Appeals is correct in reversing and setting aside the RTC                   decision.

 

The principle of reserva troncal is provided in Article 891 of the Civil Code which            states:

Art. 891. The ascendant who inherits from his descendant any property which the latter may have acquired by gratuitous title from another ascendant, or a brother or sister, is obliged to reserve such property as he may have acquired by operation of law for the benefit of relatives who are within the third degree and belong to the line from which said property came.

 

Based on the circumstances of the present case, Article 891 on reserva troncal is not applicable. While it may appear that the properties are reservable in character, petitioners cannot benefit from reserva troncal. First, because Julia, who now holds the properties in dispute, is not the other ascendant within the purview of Article 891 of the Civil Code and second, because petitioners are not Gregoria’s relatives within the third degree. Petitioners are Gregoria’s fourth degree relatives, being her first cousins. First cousins of the prepositus are fourth degree relatives and are not reservees or reservatarios.

Hence, the CA’s disposition that the complaint filed with the RTC should be dismissed, is correct.

LOLITA BAS CAPABLANCA vs. HEIRS OF PEDRO BAS, represented by JOSEFINA BAS ESPINOSA and REGISTER OF DEEDS OF THE PROVINCE OF CEBU G.R. No. 224144 June 28, 2017

 Andres and Pedro acquired Lot 2535 and Patent No. 1724 was issued in their names. Pedro sold to Faustina, married to Juan Balorio, his portion of Lot 2535.

 After the death of Faustina and her husband, their heirs executed a notarized Extra-Judicial Declaration of Heirs and Deed of Absolute Sale. Lot 2535 was conveyed to one (1) of their heirs, Alejandra Balorio. Alejandra sold the land through a Deed of Absolute Sale to Edith N. Deen. And Edith sold said land to Atty. Eddy A. Deen.

Upon Atty. Deen's death, his heirs executed an Additional Extra-Judicial Settlement with Absolute Deed of Sale and sold Lot 2535 to Norberto B. Bas, who took possession of and built a house on it.  Norberto died without a will and was succeeded by his niece and only heir, Lolita Bas Capablanca. Subsequently, Lolita learned that a TCT No. T-96676 was issued in the names of Andres and Pedro on the basis of a reconstituted Deed of Conveyance No. 96-00004.

Josefina Bas Espinosa (Josefina) represented the Heirs of Pedro Bas to file a complaint for Clarification of Ownership of Lot 2535 against Lolita before the Lupong Tagapamayapa of Barangay. The conflict between the parties was not resolved and resulted to the issuance of a Certification to file Action.

A notarized Partition Agreement of Real Property, Quitclaim and Waiver of Rights was executed between the heirs of Andres and Lolita, representing Norberto, whereby they partitioned Lot 2535 among themselves.  Lolita sought to register her portion in Lot 2535 but was denied by the Register of Deeds, citing the need for a court order. Lolita then learned that TCT No. T-96676 had been partially cancelled and TCT Nos. T-100181, T-100182, T-100183, and T-100185 had been issued in the name of the Heirs of Pedro Bas, represented by Josefina.

Lolita filed a complaint before the RTC for the cancellation of the titles with prayer for moral and exemplary damages, attorney's fees, and litigation expenses.

In their Answer, the Heirs of Pedro Bas claimed that "the sale between Pedro Bas and Faustina Manreal was fake, spurious and invalid because Pedro who was an illiterate never learned how to write his name so that the signature appearing thereon could not have been made by Pedro Bas." They further claimed that the cancellation of TCT No. T-96676 was made pursuant to a final judgment in Civil Case No. 840 for Partition, Damages, and Attorney's Fees.

RTC rendered a Decision in favor of Lolita as it held that there was substantial evidence to prove that Lolita had been in long possession of the lot under a claim of ownership as the heir of Norberto and that it was not necessary for her to be first declared as his heir before filing the complaint. When motion was denied by RTC, the Heirs of Pedro Bas appealed to the Court of Appeals (CA). CA reversed the RTC Decision and dismissed the complaint. According to the CA, Lolita must first be declared as the sole heir to the estate of Norberto in a proper special proceeding.

Q: Does the decision Court of Appeals correct? Explain.

A: No, the Court of Appeals is not correct in reversing the RTC Decision.          

In Marabilles vs. Quito, the Court has stated that no judicial declaration of heirship is necessary in order that an heir may assert his or her right to the property of the deceased. 

The main issue here is the annulment of title to property, which ultimately hinges on the validity of the sale from Pedro to Faustina. Petitioner does not claim any filiation with Pedro or seek to establish her right as his heir as against the respondents. Rather, petitioner seeks to enforce her right over the property which has been allegedly violated by the fraudulent acts of respondents.

 

Respondents never raised their objection to petitioner's capacity to sue either as an affirmative defense or in a motion to dismiss. Rule 9, Section 1 of the Rules of Court states, "defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived." Thus, it was erroneous for the Court of Appeals to dismiss the complaint on the ground that there was no prior judicial declaration of petitioner's heirship to Norberto. To dismiss the case and require petitioner to institute a special proceeding to determine her status as heir of the late Norberto would hamper, instead of serve, justice.