Case Digest: Priscilla Orbe vs. Filinvest Land, Inc.

G.R. No. 208185, September 6, 2017

Justice Leonen

Facts

1. Agreement Details:

o Priscilla Zafra Orbe (petitioner) entered into a purchase agreement with Filinvest Land,
Inc. (respondent) for a 385-square-meter lot in Taytay, Rizal for ₱2,566,795, payable in
installments.

2. Payments:

o Orbe made partial payments totaling ₱608,648.20 from June 2001 to July 2004 but failed
to meet two years’ worth of monthly installments due to financial difficulties.

3. Cancellation:

o Filinvest sent a notarized notice of cancellation on October 4, 2004, citing Orbe’s failure
to pay the due installments.

4. Complaint:

o Orbe filed a complaint with the HLURB seeking a refund, claiming she was entitled to
benefits under Section 3 of Republic Act (RA) No. 6552, also known as the Maceda Law.

Procedural History

1. HLURB Rulings:

o The HLURB ruled in favor of Orbe, stating she paid for more than two years and was
entitled to a 50% cash surrender value refund under Section 3 of RA 6552.

2. Court of Appeals (CA):

o Reversed the HLURB decision, holding that Orbe did not pay two years' worth of
installments, making her ineligible for Section 3 benefits. It upheld the cancellation
under Section 4 of the Maceda Law.

Issue

Whether Orbe was entitled to benefits under Section 3 of the Maceda Law despite not paying two years’
worth of installments.

Ruling

The Supreme Court partially granted the petition, reversing the CA ruling.

Ratio Decidendi

1. Payment Requirement Under Section 3:

 o The phrase "two years of installments" in RA 6552 pertains to the value equivalent to 24
monthly installments, not the period of payment.

o Orbe’s payments totaled only 21.786 months’ worth of installments

(₱608,648.20/₱27,936.84 per month), falling short of the two-year requirement. Thus,
she was not entitled to Section 3 benefits.

2. Cancellation Requirements Under Section 4:

o Cancellation must follow a valid notarial act. The notice of cancellation issued by
Filinvest was invalid due to procedural defects:

 It was accompanied by a jurat, not an acknowledgment, and did not meet the
requirements for a valid notarial act.

3. Equity and Refund:

o Since Filinvest sold the lot to a third party, the Supreme Court ruled that Orbe’s contract
was still valid and subsisting but could not be enforced against the third-party buyer.

o The Court ordered Filinvest to refund Orbe the total amount paid (₱608,648.20), subject
to legal interest:

 12% per annum from November 17, 2004 to June 30, 2013.

 6% per annum from July 1, 2013 until fully paid.

Disposition

 Petition Granted: The CA decision was reversed.

 Filinvest Ordered to Refund: ₱608,648.20 with interest.

Doctrines

1. Maceda Law Interpretation:

o Section 3 benefits apply only when buyers have paid at least two years' worth of
installments, determined by the stipulated periodic payments.

2. Cancellation Requirements:

o A notice of cancellation must comply with valid notarial requirements, including an

acknowledgment rather than a jurat.

3. Equity in Case of Invalid Cancellation:

o Buyers may be refunded amounts paid with interest if contracts are improperly
canceled, balancing fairness between both parties.
Brittany Corp. v. Bentulan

G.R. No. 231506, April 24, 2023

Justice Gaerlan

Facts

1. Complaints for Forcible Entry:

o Respondents, claiming ownership of parcels of land with alleged accretions in Brgy.

Palestina, San Jose City, filed complaints for forcible entry against petitioners, alleging
they were deprived of physical possession through force and stealth in November 2013.

2. Respondents' Evidence:

o Respondents presented Transfer Certificates of Title (TCTs), a sketch plan of the alleged
accretions, and affidavits claiming possession and farming of the disputed property.

3. Petitioners' Defense:

o Petitioners countered that the land was not an accretion but a property farmed by their
principal, Ganado, since 1967. They argued they were farming as hired workers and had
physical possession long before respondents acquired their titles.

4. MTCC Ruling:

o The MTCC dismissed the complaints, holding that respondents failed to establish prior
physical possession of the contested property and the exact areas of encroachment.

5. RTC Affirmation:

o The RTC upheld the MTCC decision, giving credence to the testimonies of petitioners'
witnesses, particularly neutral BARC chairpersons, who confirmed petitioners’
possession since the 1970s.

6. CA Reversal:

o The CA reversed the lower courts, finding that respondents had proven prior physical
possession through affidavits, barangay certifications, and a sketch plan. The CA relied
on additional evidence submitted on appeal.

Issues

1. Whether respondents proved prior physical possession of the contested property by

preponderance of evidence.

2. Whether the CA erred in considering evidence submitted after the MTCC decision.

Ruling

The Supreme Court granted the petition and reinstated the RTC decision.

Ratio Decidendi
 1. Prior Physical Possession Not Proven:

o For forcible entry, respondents must establish prior physical possession de facto.

o Respondents failed to detail how they discovered or took actual physical possession of
the alleged accretions, which were not included in their TCTs or transfer documents.

2. Petitioners' Possession Proven:

o Petitioners presented consistent, detailed evidence of possession since 1967 through

Ganado’s farming activities, corroborated by neutral BARC chairpersons’ testimonies.

3. Improper Admission of Additional Evidence:

o The CA erred in considering affidavits and certifications submitted after the MTCC
decision, violating the Revised Rules on Summary Procedure. The piecemeal
presentation of evidence undermined the procedural framework.

4. Credibility of Evidence:

o Respondents’ evidence consisted of general claims and lacked corroborative details

about the specific boundaries or possession acts. Petitioners' evidence, including a
survey and witness testimony, outweighed respondents' claims.

Disposition

 Petition Granted: The CA decision was reversed, and the RTC and MTCC rulings dismissing the
complaints for forcible entry were reinstated.

Doctrines

1. Forcible Entry:

o Requires proof of prior physical possession and deprivation through force, intimidation,
threat, strategy, or stealth.

2. Piecemeal Evidence:

o Additional evidence submitted post-judgment violates procedural rules and is

inadmissible.

3. Preponderance of Evidence:

o The party with more credible, detailed, and supported evidence prevails in civil disputes.
Case Digest: Cando v. Solis

G.R. No. 251792, February 27, 2023

Justice Inting

Facts

1. Loan Agreement and Mortgage:

o Spouses Jose and Flocerfida Solis (respondents) borrowed ₱15,000,000 from Lourdes
Cando (petitioner) and executed a document titled "Real Estate Mortgage Without
Judicial Proceedings" covering two properties in Quezon City.

2. Dispute over Sale:

o Cando claimed that the properties were subsequently sold to her via a Deed of Absolute
Sale dated October 29, 2012. Respondents alleged they signed the document out of
mistake and misrepresentation, believing it to be a formality to secure the loan.

3. Annulment Complaint:

o Respondents filed a complaint for annulment of the deed of sale, asserting that the
transaction was a mortgage and not a sale. They claimed the sale price was grossly
inadequate, and they retained possession of the properties after the alleged sale.

4. Defense:

o Cando argued that the deed of sale was valid and the Solises intended to sell the
properties to settle their loan. She contended that the mortgage had been superseded
by the sale.

5. Trial Court Proceedings:

o Cando failed to attend preliminary conferences, leading to an ex parte trial. The Regional
Trial Court (RTC) declared the deed of sale void, ruling that the real intent of the parties
was to secure the loan, and treated the transaction as an equitable mortgage.

Issues

1. Whether the transaction between the parties was an equitable mortgage or a valid sale.

2. Whether the annulment of the deed of sale was proper.

Ruling

The Supreme Court denied the petition and upheld the rulings of the RTC and the Court of Appeals (CA).

Ratio Decidendi

1. Equitable Mortgage:

o The Court found strong indications that the real intent of the parties was to secure the
loan and not to effect a sale.
 o The following circumstances supported the presumption of an equitable mortgage
under Article 1602 of the Civil Code:

 (a) The purchase price (₱15,000,000) was grossly inadequate compared to the
properties' market value (₱60,000,000).

 (b) Respondents remained in possession of the properties after the alleged sale.

 (c) Cando’s demand for respondents to vacate the premises contradicted the
usual terms of a genuine sale.

 (d) Respondents signed the deed of sale under the impression that it was merely
a requirement to facilitate the loan transaction.

2. Annulment of the Deed of Sale:

o The deed of sale was declared void due to the lack of genuine consent from
respondents, as their true intent was to execute a mortgage agreement.

3. Effect of the Annulment:

o The transaction reverted to the original mortgage agreement. Cando retains the right to
enforce payment or judicially foreclose the properties.

4. Procedural Due Process:

o Cando’s failure to appear during trial proceedings was attributed to her negligence. She
was given ample opportunity to present her case but failed to do so.

Disposition

The Supreme Court affirmed the CA and RTC rulings:

 The deed of sale was annulled and declared void.

 The transaction was deemed an equitable mortgage, securing the loan of ₱15,000,000.

 The parties’ rights and obligations reverted to the terms of the original mortgage agreement.

Doctrines

1. Equitable Mortgage:

o A sale is presumed to be an equitable mortgage if there are indications that the true
intent of the parties was to secure a debt.

2. Article 1602:

o Circumstances such as inadequate price, continued possession by the seller, and other
factors may give rise to the presumption of an equitable mortgage.

3. Consent in Contracts:
 o A contract is void if consent is obtained through fraud, mistake, or misrepresentation,
and the true intent of the parties is not reflected in the agreement.

Case Digest: Spouses Ruiz v. De Leon

G.R. No. 240567, August 31, 2022

Justice: Perlas-Bernabe

Facts

1. Ownership and Loan:

o Spouses Joventino and Maria Luisa Ruiz (petitioners) owned a parcel of land in Naga City
covered by TCT No. 36744.

o In 2001, they obtained a loan of ₱700,000 from Grace De Leon (respondent) and
executed a Deed of Absolute Sale (DOAS) over the property as security.

2. Subsequent Loans and Retention of Title:

o After the first loan was paid, the DOAS was left with the respondent. The petitioners
secured additional loans but were not issued new collateral agreements.

o Petitioners continued to occupy the property.

3. Title Transfer:

o In 2005, respondent transferred the title to her name based on the DOAS, which was
altered and notarized in 2004. Petitioners alleged this was fraudulent.

o Petitioners contended that the DOAS was meant to secure a loan, not to effect a sale.

4. Trial Court Ruling:

o The Regional Trial Court (RTC) ruled in favor of the respondent, finding that the DOAS
reflected a genuine sale. It noted discrepancies in Maria Luisa’s testimony and observed
that the petitioners’ daughter acknowledged the respondent’s ownership by purchasing
a portion of the property from her.

5. Court of Appeals Ruling:

o The Court of Appeals (CA) affirmed the RTC’s decision, holding that the petitioners failed
to substantiate their claim that the DOAS was an equitable mortgage.

Issues

1. Whether the DOAS constituted an equitable mortgage or a valid contract of sale.

Ruling

The Supreme Court denied the petition and affirmed the CA and RTC rulings that the DOAS was a valid
contract of sale, not an equitable mortgage.
Ratio Decidendi

1. Equitable Mortgage under Article 1602:

o For a contract to be presumed an equitable mortgage, it must meet the following

conditions:

 (a) It is denominated as a sale.

 (b) The intent of the parties was to secure a debt via a mortgage.

o The existence of any of the circumstances enumerated in Article 1602, such as gross
inadequacy of price or the vendor’s continued possession, could give rise to this
presumption.

2. Findings of RTC and CA:

o The DOAS showed clear intent to sell. The petitioners failed to present convincing
evidence that the agreement was intended as a mortgage.

3. Key Considerations:

o Gross inadequacy of price:

 The alleged inadequacy of ₱700,000 was not supported by evidence, such as fair
market value or comparative sales data.

o Continued possession:

 The respondent allowed the petitioners to remain on the property temporarily

to accommodate boarders, subject to their role as caretakers.

o No evidence of loan repayment:

 Petitioners did not present receipts or proof of repayment, contradicting their

claim of a loan arrangement.

o Acknowledgment by petitioners’ daughter:

 Petitioners’ daughter purchased a portion of the property from the respondent,

which implied recognition of her ownership.

4. Regularity of the DOAS:

o Notarization delays did not invalidate the DOAS as its notarization was for convenience
and not a condition for validity.

5. Burden of Proof:

o The petitioners bore the burden of proving that the DOAS was an equitable mortgage
but failed to provide substantial evidence to rebut the presumption of a valid sale.

Disposition
The Supreme Court affirmed the CA's ruling, upholding the DOAS as a valid contract of sale.

WHEREFORE, the petition is DENIED.

Doctrines

1. Presumption of a Valid Sale:

o A notarized deed of absolute sale carries the presumption of validity, requiring clear and
convincing evidence to rebut.

2. Equitable Mortgage:

o The existence of any circumstances under Article 1602 suffices to establish a

presumption of equitable mortgage, but this presumption may be overturned by
substantial evidence.

3. Proof of Loan:

o Allegations of loan arrangements must be supported by evidence such as payment

receipts or loan records.

Ruby Shelter Builders and Realty Development Corporation vs. Romeo Y. Tan, et al.
G.R. No. 217368
Date: August 5, 2024

Facts:

 Ruby Shelter Builders and Realty Development Corporation (Ruby Shelter) obtained loans from
Romeo Y. Tan and Roberto L. Obiedo, using several properties as collateral.

 The total outstanding loan reached PHP 95 million. To provide Ruby Shelter with additional time
to repay, the parties executed a Memorandum of Agreement (MOA).

 The MOA stipulated that, in the event of Ruby Shelter’s default, Tan and Obiedo could execute
and register deeds of absolute sale, transferring ownership of the collateral properties to
themselves.

 Ruby Shelter executed deeds of absolute sale for the properties, and the MOA required Tan and
Obiedo to pay PHP 5 million as the agreed purchase price.

 Ruby Shelter later defaulted, and Tan and Obiedo notarized and registered the deeds of absolute
sale. Ruby Shelter filed a case in the Regional Trial Court (RTC), asserting that the MOA and
deeds constituted pactum commissorium, a provision prohibited under Article 2088 of the Civil
Code.

RTC Ruling:
The RTC dismissed the complaint, ruling that the MOA did not violate the prohibition against pactum
commissorium since Ruby Shelter voluntarily agreed to the terms.
CA Ruling:
Initially, the Court of Appeals ruled in favor of Ruby Shelter, but upon reconsideration, it reversed itself,
upholding the RTC’s ruling.

Issue:
Does the MOA and the deeds of absolute sale constitute pactum commissorium under Article 2088 of
the Civil Code?

Ruling:
No. The Supreme Court affirmed the CA's ruling and upheld the validity of the MOA.

Reasoning:

1. Definition of Pactum Commissorium:

o It occurs when:

 A property is used as collateral for a loan; and

 The agreement automatically transfers ownership of the collateral to the lender

upon the borrower’s default.

o Such provisions are prohibited because they bypass judicial foreclosure and auction
processes, potentially depriving borrowers of their properties without due process.

2. Voluntary Agreement vs. Automatic Transfer:

o The Court held that pactum commissorium applies only to agreements involving
automatic transfer of ownership upon default.

o In this case, Ruby Shelter voluntarily executed the deeds of absolute sale as part of the
MOA. The transfer was not automatic but was based on the borrower's voluntary
decision to sell the properties as repayment.

3. No Violation of Public Policy:

o The MOA was a distinct and consensual agreement between the parties. Ruby Shelter
willingly agreed to the terms, distinguishing it from an automatic forfeiture of collateral.

Disposition:
The Supreme Court ruled that the MOA and the deeds of absolute sale were valid and did not constitute
pactum commissorium.

Key Doctrine:
The prohibition on pactum commissorium applies only to automatic transfers of ownership of collateral
upon default. Voluntary agreements to sell collateral in repayment of a loan are valid, provided they are
entered into freely by the borrower.
Spouses Benjamin C. Mamaril and Sonia P. Mamaril v. Boy Scouts of the Philippines, AIB Security Agency,
Inc., Cesario Peña, and Vicente Gaddi
G.R. No. 179382
Date: January 14, 2013

Facts:

1. Spouses Mamaril operated jeepneys and parked their vehicles at the Boy Scouts of the
Philippines (BSP) compound in Manila for a monthly fee of ₱300 per vehicle.

2. On May 26, 1995, one of their vehicles, worth ₱200,000, was stolen from the BSP compound.

3. The security guards employed by AIB Security Agency, Inc., admitted negligence, allowing an
unidentified individual to take the vehicle.

4. Spouses Mamaril filed a complaint for damages against BSP, AIB Security Agency, and the
security guards.

5. The RTC found BSP, AIB, and the security guards jointly and severally liable. BSP appealed.

RTC Ruling:

 BSP, AIB, and the security guards were found liable for the theft due to negligence.

 Awards were made for the value of the jeepney, daily loss of income, moral and exemplary
damages, attorney's fees, and costs.

CA Ruling:

 The CA absolved BSP of liability, finding that the parking arrangement was a contract of lease
and BSP was not negligent.

 It ruled that the security guards and their employer, AIB, were solely liable for the loss.

 The awards for accessories, daily loss of income, moral and exemplary damages, and attorney’s
fees were deleted for lack of evidence.

Issues:

1. Is BSP liable for the loss of the vehicle?

2. Did the CA err in deleting the awards for damages and attorney's fees?

Ruling:
The Supreme Court denied the petition and affirmed the CA’s decision.

Reasoning:

1. BSP’s Liability:

o The agreement between the Mamarils and BSP was a lease of parking spaces, not a
bailment. BSP was not an insurer of the vehicles parked on its premises.
 o The negligence of the security guards was attributable to their employer, AIB Security
Agency, not BSP.

o BSP’s contract with AIB did not contain a stipulation pour autrui benefitting third parties
like the Mamarils.

2. Damages and Attorney’s Fees:

o Claims for accessories and daily income lacked sufficient proof, such as receipts or
records.

o Moral and exemplary damages, as well as attorney’s fees, were disallowed because the
RTC failed to justify them adequately.

Key Doctrine:
A lease of parking spaces does not create an obligation for the lessor to insure or secure the vehicles
parked therein. Negligence of security guards hired through a service contract is attributable to their
employer, not the lessor of the premises.

Disposition:
The petition was denied. The CA’s decision absolving BSP and deleting the awards for damages was
affirmed.

National Development Co. v. Domo-Sandot, et al.

G.R. No. 214134
Date: January 12, 2015

Facts:

1. The National Development Company (NDC) acquired Lot No. 263 through a sale executed by
Melchor D. Estrosas, who claimed to be an agent of the Heirs of Lucas Domo.

2. The respondents, including other heirs of Lucas Domo, filed a case seeking the nullification of
the sale, asserting that Melchor had no authority to sell the property on their behalf.

3. NDC argued that Melchor had presented a Special Power of Attorney (SPA) authorizing him to
sell the property and that it was a buyer in good faith.

Lower Court Rulings:

1. The lower courts ruled in favor of the respondents, nullifying the sale of Lot No. 263.

2. It was found that there was no valid SPA granting Melchor the authority to sell the property on
behalf of the heirs.

Issues:

1. Was the sale of Lot No. 263 valid?

2. Was NDC a buyer in good faith?

 3. Was the respondents' action barred by prescription and laches?

Ruling:
The Supreme Court denied the petition and affirmed the Court of Appeals' decision nullifying the sale.

Reasoning:

1. Validity of the Sale:

o Under Article 1874 of the Civil Code, a sale of real property made through an agent
requires the authority of the agent to be in writing; otherwise, the sale is void.

o NDC failed to present a valid SPA proving Melchor’s authority to sell the property. The
reference to an SPA in the deed of sale was insufficient without it being presented as
evidence.

2. Buyer in Good Faith:

o NDC’s claim of being a buyer in good faith could not stand because it failed to exercise
due diligence in verifying Melchor’s authority to sell the property.

o The fact that Melchor's mother and other heirs had previously sold their interest in the
land further indicated that Melchor had no interest in the property to sell.

3. Prescription and Laches:

o The respondents' action was not barred by prescription or laches. The Court emphasized
that the nullification of a void contract, such as a sale executed without proper authority,
does not prescribe.

Key Principle:
For a sale of real property to be valid when executed through an agent, the agent must have written
authority (SPA) that complies with Article 1874 of the Civil Code. Failure to produce such authority
renders the sale void. Moreover, a void contract can be challenged at any time.

Disposition:
The petition was denied, and the nullification of the sale was affirmed.

Spouses Alcantara v. Nido

G.R. No. 165133
Date: April 19, 2010

Petitioners: Spouses Antonio and Joselina Alcantara and Spouses Josefino and Annie Rubi
Respondent: Brigida L. Nido, as attorney-in-fact of Revelen N. Srivastava

Facts:

1. Revelen Srivastava, the owner of a 1,939-square-meter unregistered lot in Cardona, Rizal,

authorized her mother, Brigida Nido (respondent), to manage the property.
 2. In 1984, petitioners offered to buy a 200-square-meter portion of the lot for ₱200/sq.m., to
which Brigida agreed. Petitioners paid ₱3,000 as a downpayment and made subsequent partial
payments amounting to ₱17,500.

3. Petitioners defaulted on their payments and continued occupying a portion of the land.

4. Brigida, acting as attorney-in-fact, filed a complaint for recovery of possession against petitioners
in 1994.

5. The RTC ruled in favor of Brigida, declaring the contract void for lack of written authority and
ordering mutual restitution.

Court of Appeals Ruling:

1. The CA reversed the RTC decision, dismissing the complaint for lack of jurisdiction.

2. The CA ruled that jurisdiction over the case belonged to the Municipal Trial Court (MTC) due to
the assessed value of the property (₱4,890), which fell under the MTC's exclusive original
jurisdiction.

Issues:

1. Was the sale of the land valid despite the lack of written authority of the agent?

2. Did the RTC have jurisdiction over the case?

3. Were petitioners entitled to specific performance of the alleged contract?

Ruling:

The Supreme Court denied the petition and affirmed the CA's decision.

Ratio Decidendi:

1. Validity of the Sale:

o Under Article 1874 of the Civil Code, an agent needs written authority to sell real
property; otherwise, the sale is void.

o The respondent had no written authority to sell on behalf of Revelen Srivastava,

rendering the purported contract void.

o A void contract produces no legal effect and cannot be ratified.

2. Jurisdiction of the RTC:

o The assessed value of the property was ₱4,890, which falls under the exclusive original
jurisdiction of the MTC pursuant to Section 33 of Batas Pambansa Bilang 129, as
amended by R.A. No. 7691.

o The RTC lacked jurisdiction, making its decision void.

3. Specific Performance:
 o Petitioners cannot claim specific performance as the contract was void due to the
absence of a valid written authority for the agent to sell the land.

o Without clear and specific proof of agency, there can be no valid claim for specific
performance.

4. General Power of Attorney:

o The General Power of Attorney presented by respondent was inadmissible as it was

executed abroad and lacked the required certification and authentication under the
Rules of Court.

Key Legal Principles:

1. A sale of land through an agent is void without written authority under Article 1874 of the Civil
Code.

2. Contracts must have consent, a certain object, and lawful cause; a missing requisite renders the
contract void.

3. The jurisdiction of courts is determined by the assessed value of the property involved in a case.

4. A void contract cannot give rise to any enforceable obligation, including claims for specific
performance.

Disposition:

The petition was denied, and the CA's decision dismissing the case was affirmed. The RTC had no
jurisdiction, and the purported sale was void due to the lack of written authority.

PNB-Republic Bank (Maybank Philippines, Inc.) v. Sian-Limsiaco

G.R. No. 196323
Date: February 8, 2021

Petitioner: PNB-Republic Bank (now Maybank Philippines, Inc.)

Respondent: Remedios Sian-Limsiaco

Facts:

1. Loan and Mortgage Agreements:

o Respondent Remedios Sian-Limsiaco obtained sugar crop loans from Maybank (formerly
PNB-Republic Bank) between 1979 and 1984, secured by real estate mortgages on
properties owned by her relatives and acquaintances.

o The total loans amounted to ₱560,200.00, secured by Special Powers of Attorney (SPAs)
executed in favor of Maybank.

2. Non-Payment and Inaction:

o Maybank failed to demand payment or initiate foreclosure for over 16 years.

 o Respondent argued that the debts had prescribed and filed a petition in 2001 to cancel
the mortgage liens on the properties.

3. Subsequent Developments:

o Maybank argued that the loans were assigned to the Bangko Sentral ng Pilipinas (BSP)
under a Deed of Assignment, but the trial court required further proof of the
assignment, which Maybank failed to provide.

Procedural History:

1. RTC Decision:

o The RTC ruled in favor of respondent, declaring the mortgage liens unenforceable due to
the prescription of the principal loan obligations. It ordered the cancellation of the
mortgage annotations on the titles.

2. CA Decision:

o The CA affirmed the RTC ruling, holding that the loans had prescribed and that
respondent, acting on behalf of the mortgagors, had the right to seek cancellation of the
mortgages.

3. Supreme Court Petition:

o Maybank sought review, arguing procedural errors, including the non-inclusion of the
registered property owners as indispensable parties and lack of respondent's legal
standing to file the petition.

Issues:

1. Did the respondent lack legal standing to file the case?

2. Were the real property owners indispensable parties to the case?

3. Did the RTC have jurisdiction to cancel the mortgage liens?

Ruling:

The Supreme Court denied the petition and upheld the rulings of the RTC and CA.

Ratio Decidendi:

1. Legal Standing of Respondent:

o Under Section 3, Rule 3 of the Rules of Court, an agent can file a case on behalf of their
principal without joining the principal, provided the action does not involve ownership
of the principal's property.

o The mortgage agreements involved only the right to foreclose, which is personal in
nature, not ownership of the properties. Hence, respondent acted within her authority
as an agent of the mortgagors.
 2. Non-Inclusion of Real Property Owners:

o The registered property owners (mortgagors) were not indispensable parties. The
cancellation of mortgage liens did not involve a transfer of ownership or rights over the
properties.

o The mortgagors had effectively ratified the respondent's actions by not contesting her
authority throughout the proceedings.

3. Jurisdiction of the RTC:

o The RTC had jurisdiction to cancel the mortgage liens under Section 112 of the Land
Registration Act, provided there was no adverse claim or serious objection.

o Maybank did not dispute the prescription of the loans, and its failure to act for over 16
years rendered its claims unenforceable.

4. Prescription of the Loan Obligations:

o The sugar crop loans were demandable within one year, and Maybank’s failure to
enforce them within the prescriptive period of 10 years rendered the loans and the
accessory mortgage liens unenforceable.

5. Observance of Due Process:

o Both parties were given ample opportunity to present evidence. Procedural lapses, if
any, did not deprive the parties of due process.

Key Legal Principles:

 Prescription of Loans: An action to enforce a written contract prescribes in 10 years. If the

principal obligation is extinguished, accessory contracts, such as mortgages, also become
unenforceable.

 Standing of Agents: Agents can file actions on behalf of their principals under Section 3, Rule 3
of the Rules of Court.

 Land Registration Jurisdiction: RTCs acting as land registration courts may cancel annotations if
there is no controversy requiring a separate civil action.

Disposition:

The petition was denied, and the CA and RTC rulings were affirmed. Maybank’s failure to act for over 16
years resulted in the unenforceability of its claims. The mortgage liens were properly ordered canceled.
V-Gent, Inc. v. Morning Star Travel and Tours, Inc.
G.R. No. 186305
Date: July 22, 2015

Petitioner: V-Gent, Inc.

Respondent: Morning Star Travel and Tours, Inc.

Facts:

1. Transaction and Refund Dispute:

o In 1998, V-Gent purchased 26 two-way plane tickets (Manila-Europe-Manila) from

Morning Star on behalf of individual passengers.

o V-Gent returned 15 unused tickets to Morning Star for a refund. Morning Star refunded
6 tickets valued at $3,445.62 but refused to refund the remaining 9 tickets worth
$5,301.88, claiming these were part of a "buy one, take one" promo.

2. Filing of Complaint:

o On December 15, 2000, V-Gent filed a complaint against Morning Star for the
unrefunded amount, claiming it acted on behalf of the passengers.

3. Morning Star’s Defense:

o Morning Star argued that:

 V-Gent lacked legal standing to sue because the passengers, whose names were
on the tickets, were the real parties-in-interest.

 The tickets were purchased under a promotional offer, limiting the refundable
amount.

4. Lower Court Rulings:

o MeTC: Dismissed V-Gent’s complaint for lack of preponderance of evidence but

recognized V-Gent’s role as the agent of the passengers.

o RTC: Reversed the MeTC ruling, finding V-Gent entitled to the refund.

5. Court of Appeals (CA):

o Reversed the RTC and dismissed V-Gent’s complaint, holding that V-Gent was not the
real party-in-interest as it acted as an agent, and the passengers were the true parties
entitled to the refund.

Issues:

1. Whether V-Gent is the real party-in-interest to file the complaint.

2. Whether Morning Star is estopped from denying V-Gent’s legal standing due to its initial partial
refund.
Ruling:

The Supreme Court denied the petition and affirmed the decision of the CA.

Ratio Decidendi:

1. Real Party-in-Interest:

o A real party-in-interest is the one who stands to be directly benefited or injured by the
judgment.

o V-Gent acted merely as an agent of the passengers, who were the actual owners of the
refunded amounts.

o Under Rule 3, Section 3 of the Rules of Court, an agent may sue in its own name only if:

 The agent acted in its own name during the transaction.

 The principal is undisclosed.

 The transaction does not involve the property of the principal.

o In this case:

 The tickets were issued in the passengers’ names.

 The transaction involved the passengers’ money.

o Hence, V-Gent could not sue in its own name, and the passengers were the real parties-
in-interest.

2. Estoppel:

o Morning Star’s partial refund to V-Gent acknowledged its authority to collect on behalf
of the passengers but not to initiate legal proceedings.

o Filing a suit is an act of strict dominion that requires a special power of attorney from
the principals, which V-Gent failed to present.

o Morning Star was not estopped from questioning V-Gent’s standing to sue.

3. Authority to Sue:

o Under Article 1878(15) of the Civil Code, an agent requires a special power of attorney
to initiate legal proceedings.

o V-Gent did not prove it was granted such authority by the passengers.

Key Legal Principles:

 Real Party-in-Interest (Rule 3, Section 3): An agent can sue in its name only if it acted on behalf
of an undisclosed principal and the transaction did not involve the principal’s property.
  Special Power of Attorney (Article 1878, Civil Code): Necessary for an agent to initiate lawsuits
or other acts of strict dominion on behalf of a principal.

 Estoppel: Partial recognition of an agent’s authority does not extend to acts requiring a special
authority unless explicitly granted.

Disposition:

The petition was denied, affirming that V-Gent was not the real party-in-interest and lacked the
authority to sue on behalf of the passengers. The CA ruling dismissing the complaint was upheld.

"Voidable Contracts"

Spouses Eugenio De Vera and Rosalia Padilla v. Fausta Catungal, substituted by her heirs
G.R. No. 211687
Date: February 10, 2021

Petitioners: Spouses Eugenio De Vera and Rosalia Padilla

Respondents: Fausta Catungal, substituted by her heirs

Facts:

1. Ownership and Disposition of Properties:

o Vicente Catungal owned two parcels of land in Calasiao, Pangasinan. He died in 1944,
leaving heirs, including Fausta and Genaro Catungal.

o On July 23, 1994, Fausta and Genaro executed a Deed of Extrajudicial Settlement Among
Heirs with Absolute Sale (the Deed), transferring ownership of the properties to Spouses
De Vera for ₱30,000.

o Fausta affixed her thumbmark on the Deed, and new tax declarations were issued under
the names of Spouses De Vera.

2. Complaint for Annulment of Deed:

o In 1997, Fausta filed a complaint to annul the Deed, claiming that Spouses De Vera took
advantage of her illiteracy and old age, making her affix her thumbmark through fraud
and deceit.

o She alleged she did not appear before the notary public, the Deed was not explained to
her, and no genuine consideration was received.

3. Defense by Spouses De Vera:

o Spouses De Vera denied the allegations, asserting that the Deed was validly executed
with Fausta and Genaro's consent.

o They argued that Fausta's claims were unsupported, and her co-vendor Genaro did not
contest the Deed.
 4. Trial Court Ruling:

o The RTC dismissed Fausta’s complaint, finding no sufficient evidence of fraud or deceit.
The court upheld the Deed’s validity, citing that Fausta’s claims were mere conjectures.

5. Appeal to the Court of Appeals (CA):

o The CA reversed the RTC decision, holding that Spouses De Vera failed to overcome the
presumption of fraud or mistake under Article 1332 of the Civil Code.

o The CA declared the Deed null and void and ordered the Spouses De Vera to restore the
properties to Fausta’s heirs.

Issue:

Whether the Deed of Extrajudicial Settlement Among Heirs with Absolute Sale was valid, given Fausta’s
claim that her consent was vitiated by fraud or mistake.

Ruling:

The Supreme Court denied the petition and affirmed the CA decision with modification.

Ratio Decidendi:

1. Presumption of Fraud under Article 1332 of the Civil Code:

o When one party to a contract is unable to read or write and alleges fraud or mistake,
Article 1332 requires the party enforcing the contract to prove that its terms were fully
explained to the disadvantaged party.

o Fausta established that she was illiterate through her testimony, corroborated by her
daughter and admissions by the Spouses De Vera. This shifted the burden to Spouses De
Vera to prove that the Deed was explained to Fausta.

2. Failure to Rebut the Presumption of Fraud:

o Spouses De Vera failed to provide clear and convincing evidence that the Deed was
explained to Fausta. Fausta testified that the contents were not explained, and she
believed the document was related to indebtedness, not a sale.

o The notary public did not appear to confirm the due execution of the Deed.

3. Effect on Notarized Documents:

o While notarized documents generally enjoy a presumption of regularity, this

presumption is rebutted when fraud or mistake is proven.

o The evidence showed that Fausta’s consent was vitiated, making the Deed defective and
voidable.

4. Restoration of Properties:
 o Since Fausta’s consent was obtained through fraud, the Deed was annulled. The parcels
of land were ordered restored to Fausta’s and Genaro’s heirs.

Disposition:

The Court declared the Deed null and void. Spouses De Vera were ordered to:

1. Restore the parcels of land to the heirs of Fausta and Genaro Catungal.

2. Pay attorney's fees of ₱30,000.

3. Shoulder the costs of the suit.

Key Legal Principles:

 Article 1332, Civil Code: In contracts involving illiterate or disadvantaged parties, the burden of
proving the full explanation of terms rests on the party seeking enforcement.

 Voidable Contracts: A contract is voidable when consent is vitiated by fraud, mistake, or undue
influence.

 Notarized Documents: The presumption of regularity in notarized documents can be rebutted by

clear and convincing evidence of fraud or mistake.

“Unenforceable Contract”
Willy v. Julian
G.R. No. 207051
Date: December 1, 2021

Petitioners: Heirs of Lorenzo Willy

Respondents: Heirs of Ricardo Julian

Facts:

1. Property Dispute:

o Modesto Willy owned a 67,635-square meter unregistered land in Benguet, covered by

tax declarations in his name.

o In 1963, Modesto executed an agreement (1963 Agreement) transferring portions of the

land to three individuals, including Emilio Dongpaen, in exchange for services rendered.

o The land was surveyed in 1968, and a portion (15,000 square meters, identified as Lots 1
and 2) was segregated for a prospective buyer, Ricardo Julian.

2. Subsequent Transactions:

o In 1969, Dongpaen sold to Ricardo the 10,000-square meter portion initially conveyed to
him by Modesto and an additional 5,000 square meters.
 o Ricardo, in turn, allowed Lorenzo Willy, Modesto’s son, to cultivate Lots 1 and 2, with the
understanding that Lorenzo would deliver a share of the harvest to Ricardo.

3. Conflict:

o Modesto passed away in 1979. Ricardo learned that Lorenzo’s heirs (petitioners) were
claiming the entire property, including Lots 1 and 2, and attempting to sell it.

o Ricardo filed a complaint for partition and damages, seeking segregation and transfer of
Lots 1 and 2 to him.

Issues:

1. **Whether the contracts involving the sale of Lots 1 and 2 were valid and enforceable.

2. **Whether Ricardo was entitled to ownership and segregation of Lots 1 and 2.

Ruling:

The Supreme Court denied the petition and upheld the Court of Appeals’ decision affirming Ricardo’s
ownership of Lots 1 and 2.

Ratio Decidendi:

1. Validity of the Contracts:

o The 1963 Agreement was not a mere conditional sale but an absolute conveyance
where Modesto transferred portions of the property in exchange for services.

o The agreements and deeds of sale were performed or partially performed by the parties,
removing them from the ambit of the Statute of Frauds under Article 1403 of the Civil
Code.

o Constructive delivery occurred when Lots 1 and 2 were identified, segregated, and
placed under Ricardo’s control through Lorenzo’s cultivation on his behalf.

2. Enforceability and Ownership:

o Despite discrepancies in the dates of the deeds of sale, evidence showed the parties’
clear intent to transfer Lots 1 and 2 to Ricardo.

o Lorenzo’s cultivation and Ricardo’s receipt of the fruits of the land indicated Ricardo’s
possession in the concept of owner.

o The presumption of ownership under Articles 525, 440, and 441 of the Civil Code
applied to Ricardo.

3. Jurisdiction of the MCTC:

o The action, though styled as partition, was essentially for ownership and reconveyance
of Lots 1 and 2, which fell within the MCTC’s jurisdiction given the property’s assessed
value.
 4. Attorney’s Fees:

o The petitioners were ordered to pay ₱50,000 in attorney’s fees, with legal interest at 6%
per annum from finality until full payment.

Disposition:

The petition was denied, and the CA’s decision was affirmed with modifications, directing the
petitioners to:

1. Segregate and deliver Lots 1 and 2 (15,000 square meters) to the heirs of Ricardo Julian.

2. Execute a partition project reflecting the segregation.

3. Pay ₱50,000 in attorney’s fees, with 6% annual interest from the decision’s finality.

Key Legal Principles:

 Statute of Frauds (Article 1403, Civil Code): Contracts partially or fully performed are removed
from the Statute of Frauds and enforceable despite being unwritten or unnotarized.

 Constructive Delivery: Delivery of a property occurs when the vendee is placed in control or
possession, even indirectly through an agent.

 Possession in the Concept of Owner: Possession and receipt of fruits indicate ownership unless
successfully rebutted by contrary evidence.

“Void Contract”
City of Tanauan v. Millonte, G.R. No. 219292, June 28, 2021

Facts:

 The contested property, originally owned by the Gonzaga siblings, was allegedly sold to the
Municipality of Tanauan (now City of Tanauan) through a Deed of Absolute Sale executed on
February 10, 1970, for ₱30,000.

 The Gonzagas’ granddaughter, Gloria A. Millonte (respondent), sought to nullify the Deed of
Absolute Sale and the resulting Transfer Certificate of Title (TCT T-42198), claiming that the
Gonzagas were already deceased when the deed was executed.

 The City of Tanauan argued that the deed was valid, invoking the presumption of regularity of
notarized documents and asserting that the action was barred by laches and prescription.

Procedural History:

1. Regional Trial Court (RTC): Declared the Deed of Absolute Sale void, finding that the Gonzaga
siblings had died prior to its execution, making the contract simulated and invalid.

2. Court of Appeals (CA): Affirmed the RTC decision, holding that the respondent provided
sufficient evidence of the Gonzagas’ deaths and that the presumption of regularity of the
notarized deed was overcome.
Issues:

1. Was the Deed of Absolute Sale valid?

2. Did the respondent present sufficient evidence to overcome the presumption of regularity of the
notarized deed?

3. Was the action barred by laches or prescription?

Ruling:

The Supreme Court affirmed the decisions of the RTC and CA, declaring the Deed of Absolute Sale null
and void.

Ratio Decidendi:

1. Validity of the Deed of Absolute Sale:

o A contract is void if any party to it was already deceased at the time of its execution.

o The Court found that one of the Gonzaga siblings, Ambrosio, had died in 1959, and other
siblings were also deceased by 1970. Thus, the Gonzagas could not have signed the
deed, rendering it simulated and void.

2. Evidence Overcoming the Presumption of Regularity:

o The presumption of regularity of notarized documents can be refuted by clear and

convincing evidence.

o The respondent presented certifications, testimonies, and secondary evidence to

establish the deaths of the Gonzagas before 1970. This overcame the presumption of
regularity, especially since the City failed to produce the notary public or any evidence
verifying the identities of the alleged signatories.

3. Imprescriptibility of Action:

o Actions for the declaration of nullity of void contracts are imprescriptible under Article
1410 of the Civil Code.

o The respondent's action to nullify the deed was timely, and laches does not apply to void
contracts.

4. Cancellation of TCT and Restoration of Title:

o Since the Deed of Absolute Sale was void, the title (TCT T-42198) derived from it was
also void. The Court reinstated the Original Certificate of Title (OCT 3243) in the names
of the Gonzaga siblings.

Key Takeaways:

 A contract is void if executed after a party’s death, as death terminates contractual capacity.
  The presumption of regularity for notarized documents is not absolute and may be rebutted with
clear evidence.

 Actions to nullify void contracts are imprescriptible, and the principle of laches does not apply.

 The nullity of the principal contract voids any derivative transactions or titles.

Disposition:

The Supreme Court denied the petition and upheld the nullity of the Deed of Absolute Sale and TCT T-
42198, reinstating OCT 3243 in the name of the Gonzagas.

…………….

Case Digest: G. Holdings, Inc. v. Cagayan Electric Power and Light Company, Inc.

G.R. No. 226213, September 27, 2017

Facts:

 Cagayan Electric Power and Light Company, Inc. (CEPALCO) supplied electricity to Ferrochrome
Philippines, Inc. (FPI) but disconnected service due to FPI’s failure to pay outstanding bills
amounting to ₱30,147,835.65.

 CEPALCO filed a collection case against FPI, resulting in a partial summary judgment awarding
CEPALCO ₱25,608,579.98. While the appeal was pending, CEPALCO sought to execute the
judgment.

 Meanwhile, FPI executed a Deed of Assignment in favor of G. Holdings, Inc. (GHI), its sister
company, transferring all of FPI's properties, valued at ₱280 million, as payment for FPI's debts to
GHI amounting to ₱50,366,926.71.

 CEPALCO contested the Deed of Assignment, claiming it was simulated and fraudulent, executed
to shield FPI’s assets from creditors like CEPALCO.

Procedural History:

1. Regional Trial Court (RTC) CDO: Declared the Deed of Assignment rescissible and ordered its
rescission due to fraud.

2. Court of Appeals (CA): Affirmed the RTC’s decision but found the Deed of Assignment absolutely
simulated and thus void.

Issues:

1. Whether the Deed of Assignment was void for being absolutely simulated.

2. Whether the Deed of Assignment was rescissible due to fraud.

3. Whether GHI is entitled to damages.

Ruling:

The Supreme Court declared the Deed of Assignment inexistent for being absolutely simulated.
Ratio Decidendi:

1. Simulation of the Deed of Assignment:

o The Deed of Assignment was absolutely simulated as FPI did not intend to divest
ownership of the assigned assets to GHI.

o Evidence revealed that FPI retained control over the assets and merely sought to place
them beyond the reach of CEPALCO, its creditor.

o FPI retained rights over the “Outokumpo” smelting process, which was integral to
operating the facilities. The Deed was a sham designed to defraud creditors.

2. Rescission vs. Inexistence:

o Rescission applies to contracts that are valid but prejudicial to creditors. A rescissible
contract presupposes an obligation to restore property if rescinded.

o In contrast, a void or inexistent contract, such as an absolutely simulated one, produces

no legal effect from the start.

o Since the Deed of Assignment was absolutely simulated, it was void ab initio and not
merely rescissible.

3. GHI’s Claim for Damages:

o GHI's claim for damages was dismissed because the Deed of Assignment was inexistent
and could not confer any rights.

4. Fraudulent Intent:

o Badges of fraud, such as the timing of the assignment during pending litigation and the
disparity between the assigned properties' value and the stated consideration,
confirmed the parties’ intent to defraud CEPALCO.

Key Takeaways:

 Absolute Simulation: A contract is absolutely simulated if there is no intention to be bound by

its terms. Such contracts are void and produce no legal effects.

 Rescissible vs. Void Contracts: Rescission is a remedy for valid contracts that are prejudicial to
third parties, while a void contract has no effect from inception.

 Fraudulent Transactions: Acts designed to defraud creditors by shielding assets can render
contracts void or subject to legal challenge.

Disposition:

 The petition was denied, and the Deed of Assignment was declared void for being absolutely
simulated.

 GHI's complaint was dismissed, and CEPALCO was awarded damages and attorney's fees.