September 2013 Philippine Supreme Court Decisions on Civil Law

Posted on October 16, 2013 • Posted in Civil Law, Philippines - Cases, Philippines - Law •

Here are select September 2013 rulings of the Supreme Court of the Philippines on civil law:

CIVIL CODE

Civil registry; nature of civil register books; books making up the civil register and all documents relating thereto are public documents and shall be prima facie evidence of the facts therein contained; as public documents, they are admissible in evidence even without further proof of their due execution and genuineness.There is no question that the documentary evidence submitted by petitioner are all public documents. As provided in the Civil Code:

ART. 410. The books making up the civil register and all documents relating thereto shall be considered public documents and shall be prima facie evidence of the facts therein contained.

As public documents, they are admissible in evidence even without further proof of their due execution and genuineness. Thus, the RTC erred when it disregarded said documents on the sole ground that the petitioner did not present the records custodian of the NSO who issued them to testify on their authenticity and due execution since proof of authenticity and due execution was not anymore necessary. Moreover, not only are said documents admissible, they deserve to be given evidentiary weight because they constitute prima facie evidence of the facts stated therein. And in the instant case, the facts stated therein remain unrebutted since neither the private respondent nor the public prosecutor presented evidence to the contrary. In Yasuo Iwasawa v. Felisa Custodio Gangan (a.k.a. “Felisa Gangan Arambulo” and “Felisa Gangan Iwasawa”), et al., G.R. No. 204169, September 11, 2013.

Contracts; contract to sell distinguished from contract of sale; in a contract to sell, ownership remains with the vendor and does not pass to the vendee until full payment of the purchase price; a deed of sale is absolute when there is no stipulation in the contract that title to the property remains with the seller until the full payment of the purchase price. In a conditional sale, as in a contract to sell, ownership remains with the vendor and does not pass to the vendee until full

payment of the purchase price. The full payment of the purchase price partakes of a suspensive condition, and non-fulfillment of the condition prevents the obligation to sell from arising. To differentiate, a deed of sale is absolute when there is no stipulation in the contract that title to the property remains with the seller until full payment of the purchase price. Ramos v. Heruela held that Articles 1191 and 1592 of the Civil Code are applicable to contracts of sale, while R.A. No. 6552 applies to contracts to sell. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No. 179594, September 11, 2013.

Contracts; lease contracts; lease contracts survive the death of the parties and continue to bind the heirs except if the contract states otherwise; the provision in the lease contract stating that “this contract is nontransferable unless prior written consent of the lessor is obtained in writing” refers to transfers inter vivos and not transmissions mortis causa. The Supreme Court has previously ruled that lease contracts, by their nature, are not personal. The general rule, therefore, is lease contracts survive the death of the parties and continue to bind the heirs except if the contract states otherwise. In Sui Man Hui Chan v. Court of Appeals, we held that: “A lease contract is not essentially personal in character. Thus, the rights and obligations therein are transmissible to the heirs. The general rule, therefore, is that heirs are bound by contracts entered into by their predecessors-in-interest except when the rights and obligations arising therefrom are not transmissible by (1) their nature, (2) stipulation or (3) provision of law. In the subject Contract of Lease, not only were there no stipulations prohibiting any transmission of rights, but its very terms and conditions explicitly provided for the transmission of the rights of the lessor and of the lessee to their respective heirs and successors. The contract is the law between the parties. The death of a party does not excuse nonperformance of a contract, which involves a property right, and the rights and obligations thereunder pass to the successors or representatives of the deceased. Similarly, nonperformance is not excused by the death of the party when the other party has a property interest in the subject matter of the contract.” Section 6 of the lease contract provides that “[t]his contract is nontransferable unless prior consent of the lessor is obtained in writing.” Section 6 refers to transfers inter vivos and not transmissions mortis causa. What Section 6 seeks to avoid is for the lessee to substitute a third party in place of the lessee without the lessor’s consent. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No. 179594, September 11, 2013.

Contracts; lease contracts; sublease arrangement; concept. Assignment or transfer of lease, which is covered by Article 1649 of the Civil Code, is different from a sublease arrangement, which is governed by Article 1650 of the same Code. In a sublease, the lessee becomes in turn a lessor to a sub-lessee. The sub-lessee then

becomes liable to pay rentals to the original lessee. However, the juridical relation between the lessor and lessee is not dissolved. The parties continue to be bound by the original lease contract. Thus, in a sublease arrangement, there are at least three parties and two distinct juridical relations. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No. 179594, September 11, 2013.

Contracts; lease contracts; lessee’s right upon the termination of the lease to (a) claim reimbursement from the lessor for half the value of the useful improvements introduced by the lessee in good faith, or to (b) demolish of such improvements. The CA erred in not applying Article 1678 of the Civil Code which provides: “Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary. With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished.”

The foregoing provision applies if the improvements were: (1) introduced in good faith; (2) useful; and (3) suitable to the use for which the lease is intended, without altering the form and substance. We find that the aforementioned requisites are satisfied in this case. The buildings were constructed before German’s demise, during the subsistence of a valid contract of lease. It does not appear that HDSJ prohibited German from constructing the buildings. Thus, HDSJ should have reimbursed German (or his estate) half of the value of the improvements as of 2001. If HDSJ is not willing to reimburse the Inocencios, then the latter should be allowed to demolish the buildings. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No. 179594, September 11, 2013.

Contracts; tortious interference; elements; exception. As correctly pointed out by the Inocencios, tortious interference has the following elements: (1) existence of a valid contract; (2) knowledge on the part of the third person of the existence of the contract; and (3) interference of the third person without legal justification or excuse. In So Ping Bun v. Court of Appeals, we held that there was no tortious interference if the intrusion was impelled by purely economic motives. In So Ping Bun, we explained that: “Authorities debate on whether interference may be

justified where the defendant acts for the sole purpose of furthering his own financial or economic interest. One view is that, as a general rule, justification for interfering with the business relations of another exists where the actor’s motive is to benefit himself. Such justification does not exist where his sole motive is to cause harm to the other. Added to this, some authorities believe that it is not necessary that the interferer’s interest outweighs that of the party whose rights are invaded, and that an individual acts under an economic interest that is substantial, not merely de minimis, such that wrongful and malicious motives are negatived, for he acts in self-protection. Moreover, justification for protecting one’s financial position should not be made to depend on a comparison of his economic interest in the subject matter with that of others. It is sufficient if the impetus of his conduct lies in a proper business interest rather than in wrongful motives.” Analita P. Inocencion, substituting for Ramon Inocencion (deceased) v. Hospicio de San Jose, G.R. No. 201787, September 25, 2013.

Damages; loss of earning capacity; compensation for lost income is in the nature of damages and as such requires due proof of the damages suffered; there must be unbiased proof of the deceased’s income. In People v. Caraig, the Supreme Court had drawn two exceptions to the rule that “documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity,” and have thus awarded damages where there is testimony that the victim was either (1) self-employed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact that in the victim’s line of work no documentary evidence is available; or (2) employed as a daily-wage worker earning less than the minimum wage under current labor laws.” In People of the Philippines v. Edwin Ibanez y Albante, et al., G.R. No. 197813, September 25, 2013.

Estoppel; requisites. For estoppel to take effect, there must be knowledge of the real facts by the party sought to be estopped and reliance by the party claiming estoppel on the representation made by the former. In this case, petitioner cannot be estopped from asking for the return of the vessel in the condition that it had been at the time it was seized by respondent because he had not known of the deteriorated condition of the ship. Ernesto Dy v. Hon. Gina M. Bibat-Palamos, in her capacity as Presiding Judge of the RTC, Branch 64, Makati City, and Orix Metro Leasing and Finance Corporation, G.R. No. 196200, September 11, 2013.

Interest; Judgment award; imposition of interests; under BSP Circular No. 799, effective on July 1, 2013, the interest rate to be imposed for a loan or forbearance

of money, goods or credits and the rate allowed in judgments in the absence of stipulation thereon, was changed from 12% to 6%. Notice must be taken that in Resolution No. 796 dated May 16, 2013, the Monetary Board of the Bangko Sentral ng Pilipinas approved the revision of the interest rate to be imposed for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest. Thus, under BSP Circular No. 799, issued on June 21, 2013 and effective on July 1, 2013, the said rate of interest is now back at six percent (6%), S.C. Megaworld Construction and Development Corporation v. Engr. Luis U. Parada, represented by Engr. Leonardo A. Parada of Genlite Industries, G.R. No. 183804, September 11, 2013.

Laches; concept; the question of laches is addressed to the sound discretion of the court and, being an equitable doctrine, its application is controlled by equitable considerations. Laches has been defined as the failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, thus, giving rise to a presumption that the party entitled to assert it either has abandoned or declined to assert it.

On this score, it is a well-settled principle of law that laches is a recourse in equity, which is, applied only in the absence of statutory law. And though laches applies even to imprescriptible actions, its elements must be proved positively. Ultimately, the question of laches is addressed to the sound discretion of the court and, being an equitable doctrine, its application is controlled by equitable considerations. Citibank, N.A. and the Citigroup Private Bank v. Ester H. Tanco-Gabaldon, et al./ Carol Lim v. Ester H. Tanco-Gabaldon, et al., G.R. No. 198444/G.R. No. 198469-70, September 4, 2013.

Obligations; novation; concept; elements. In novation, a subsequent obligation extinguishes a previous one through substitution either by changing the object or principal conditions, by substituting another in place of the debtor, or by subrogating a third person into the rights of the creditor. Novation requires (a) the existence of a previous valid obligation; (b) the agreement of all parties to the new contract; (c) the extinguishment of the old contract; and (d) the validity of the new one. There cannot be novation in this case since the proposed substituted parties did not agree to the PRA’s supposed assignment of its obligations under the contract for the electrical and light works at Heritage Park to the HPMC. The latter definitely and clearly rejected the PRA’s assignment of its liability under that contract to the HPMC. Philippine Reclamation Authority (formerly known as the

Public Estates Authority v. Romago, Inc./Romago, Inc. Vs. Philippine Reclamation Authority, G.R. Nos. 174665 and 175221, September 18, 2013.

Obligations; novation as a mode of extinguishing an obligation; concept; novation is never presumed but must be clearly and unequivocally shown. Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. It is “the substitution of a new contract, debt, or obligation for an existing one between the same or different parties.” The settled rule is that novation is never presumed, but must be clearly and unequivocally shown. In order for a new agreement to supersede the old one, the parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. Thus, the mere substitution of debtors will not result in novation, and the fact that the creditor accepts payments from a third person, who has assumed the obligation, will result merely in the addition of debtors and not novation, and the creditor may enforce the obligation against both debtors. If there is no agreement as to solidarity, the first and new debtors are considered obligated jointly. Philippine Reclamation Authority (formerly known as thePublic Estates Authority v. Romago, Inc./Romago, Inc. Vs. Philippine Reclamation Authority,G.R. Nos. 174665 and 175221, September 18, 2013.

SPECIAL LAWS

Land registration; an applicant who seeks to have a land registered in his name has the burden of proving that he is its owner in fee simple. As held in Republic v. Lee:

The most basic rule in land registration cases is that “no person is entitled to have land registered under the Cadastral or Torrens system unless he is the owner in fee simple of the same, even though there is no opposition presented against such registration by third persons. x x x In order that the petitioner for the registration of his land shall be permitted to have the same registered, and to have the benefit resulting from the certificate of title, finally, issued, the burden is upon him to show that he is the real and absolute owner, in fee simple.

In First Gas Power Corporation v. Republic of the Philippines, Represented by the Office of the Solicitor General, G.R. No. 169461, September 2, 2013.

Land registration; Nature of land registration proceedings; land registration proceedings are in rem in nature and, hence, by virtue of the publication

requirement, all claimants and occupants of the subject property are deemed to be notified of the existence of a cadastral case involving the subject lots; parties are precluded from re-litigating the same issues already determined by final judgment. In this case, records disclose that petitioner itself manifested during the proceedings before the RTC that there subsists a decision in a previous cadastral case, i.e., Cad. Case No. 37, which covers the same lots it applied apprised of the existence of the foregoing decision even before the rendition of the RTC Decision and Amended Order through the LRA Report dated as early as November 24, 1998 which, as above-quoted, states that the subject lots “were previously applied for registration of title in the [c]adastral proceedings and were both decided under [Cad. Case No. 37], GLRO Record No. 1969, and are subject to the following annotation x x x: ‘Lots 1298 (45-1) [and] 1315 (61-1) Pte. Nueva doc.’” Since it had been duly notified of an existing decision which binds over the subject lots, it was incumbent upon petitioner to prove that the said decision would not affect its claimed status as owner of the subject lots in fee simple. In First Gas Power Corporation v. Republic of the Philippines, Represented by the Office of the Solicitor General, G.R. No. 169461, September 2, 2013.

Land registration proceedings; nature; being a proceeding in rem, there is no need to give personal notice to the owners or claimants of the land sought to be registered in order to vest the courts with power and authority over the res. Since no issue was raised as to Antonia Victorino’s compliance with the prerequisites of notice and publication, she is deemed to have followed such requirements. As a consequence, petitioner is deemed sufficiently notified of the hearing of Antonia’s application. Hence, she cannot claim that she is denied due process. In Crisanta Guido-Enriquez v. Alicia I. Victorino, et al., G.R. No. 180427, September 30, 2013.

Land registration; requirement that the application for land registration must state the full names and addresses of all occupants of the land and those of the adjoining owners, if known, and if not known, it must state the extent of the search made to find them. As to the alleged denial of petitioner’s right to due process due to Antonia Victorino’s failure to identify petitioner as indispensable party in her application for registration, as well as to serve her with actual and personal notice, Section 15 of Presidential Decree No. 1529 simply requires that the application for registration shall “state the full names and addresses of all occupants of the land and those of the adjoining owners, if known, and, if not known, it shall state the extent of the search made to find them.” A perusal of Antonia Victorino’s

Application shows that she enumerated the adjoining owners. She also indicated therein that, to the best of her knowledge, no person has any interest or is in possession of the subject land. The fact that she did not identify petitioner as an occupant or an adjoining owner is not tantamount to denial of petitioner’s right to due process and does not nullify the RTC Decision granting such application. In Crisanta Guido-Enriquez v. Alicia I. Victorino, et al., G.R. No. 180427, September 30, 2013.

Land Registration; Torrens title; conclusive evidence of ownership of the land; the phrase “married to” is merely descriptive of the civil status of the registered owner. A Torrens title is generally a conclusive evidence of the ownership of the land referred to, because there is a strong presumption that it is valid and regularly issued.25 The phrase “married to” is merely descriptive of the civil status of the registered owner. In Juan Sevilla Salas, Jr. v. Eden Villena Aguil, G.R. No. 202370, September 23, 2013.

Marriage; property regimes for marriages that are subsequently declared void under Article 36 of the Family Code; property acquired during the marriage is presumed to have been obtained through the couple’s joint efforts and governed by the rules on co-ownership. In Diño v. Diño, the Supreme Court held that Article 147 of the Family Code applies to the union of parties who are legally capacitated and not barred by any impediment to contract marriage, but whose marriage is nonetheless declared void under Article 36 of the Family Code, as in this case. Article 147 of the Family Code provides:

ART. 147. When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on coownership.

In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obtained by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a party who did not participate in the acquisition by the other party of any property shall be deemed to have contributed jointly in the acquisition thereof if the former’s efforts consisted in the care and maintenance of the family and of the household.

Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in common, without the consent of the other, until after the termination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ownership shall be forfeited in favor of their common children. In case of default of or waiver by any or all of the common children or their descendants, each vacant share shall belong to the respective surviving descendants. In the absence of descendants, such share shall belong to the innocent party. In all cases, the forfeiture shall take place upon termination of the cohabitation. (Emphasis supplied)

Under this property regime, property acquired during the marriage is prima facie presumed to have been obtained through the couple’s joint efforts and governed by the rules on co-ownership. In Juan Sevilla Salas, Jr. v. Eden Villena Aguil, G.R. No. 202370, September 23, 2013.

Marriage; nullity of marriage; a judicial declaration of nullity is required before a valid subsequent marriage can be contracted, or else, what transpires is a bigamous marriage. The Supreme Court has consistently held that a judicial declaration of nullity is required before a valid subsequent marriage can be contracted; or else, what transpires is a bigamous marriage, which is void from the beginning as provided in Article 35(4) of the Family Code of the Philippines. In Yasuo Iwasawa v. Felisa Custodio Gangan (a.k.a. “Felisa Gangan Arambulo” and “Felisa Gangan Iwasawa”), et al., G.R. No. 204169, September 11, 2013.

Realty Installment Buyer Act; right of buyer to refund on installments in case he defaults in the payments of succeeding installments accrues only when he has paid at least two years of installments. Under R.A. No. 6552, the right of the buyer to refund accrues only when he has paid at least two years of installments. In this case, respondent has paid less than two years of installments; hence, it is not entitled to a refund. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No. 179594, September 11, 2013.