PALS Civil Law

PHILIPPINE ASSOCIATION OF LAW SCHOOLS BAR OPS PILIPINAS 2016 CIVIL LAW Prepared by: Dean Ma. Soledad Deriquito-Mawis and the students of Lyceum of the Philippines University SURVIVING HEIRS OF ALFREDO R. BAUTISTA VS. LINDO G.R. No. 208232, March 10, 2014 Facts: Alfredo R. Bautista (Bautista), petitioner’s predecessor, inherited in 1983 a free-patent land located in Davao Oriental and covered by OCT No. (1572) P-6144.A few years later, he subdivided the property and sold it to several vendees, herein respondents, via a notarized deed of absolute sale dated May 30, 1991. Two months later, OCT No.(1572) P-6144 was canceled and Transfer Certificates of Title (TCTs) were issued in favor of the vendees. On August 1994, Bautista filed a complaint for repurchase against respondents before the RTC, anchoring his cause of action on Section 119 of Commonwealth Act No. (CA) 141, otherwise known as the “Public Land Act,” which reads: “SECTION 119. Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five years from the date of the conveyance.” During the pendency of the action, Bautista died and was substituted by petitioner, Efipania. Respondents, Sps. Lindo entered into a compromise agreement with petitioners, whereby they agree to cede to Epifania 3,230 sq.m..portion of the property as well as to waive, abandon, surrender, and withdraw all claims and counterclaims against each other. RTC approve the compromise agreement on January 2011. Other respondents, filed a Motion to Dismissed on February 2013 alleging lack of jurisdiction of the RTC on the ground that the complaint failed to state the value of the property sought to be recovered and alleges that the total value of the properties in issue is only P16,500 pesos. RTC ruled in favor of the respondent dismissing the case. Issue: Whether or not the RTC erred in granting the motion for the dismissal of the case on the ground of lack of jurisdiction over the subject matter. Ratio: Yes. Jurisdiction of courts is granted by the Constitution and pertinent laws. Jurisdiction of RTCs, as may be relevant to the instant petition, is provided in Sec. 19 of BP 129. Issue: Whether the action filed by petitioners is one involving title to or possession of real property or any interest therein or one incapable of pecuniary estimation. Ratio: The Court rules that the complaint to redeem a land subject of a free patent is a civil action incapable of pecuniary estimation. It is a well-settled rule that jurisdiction of the court is determined by the allegations in the complaint and the character of the relief sought. 10 In this regard, the Court, in Russell v. Vestil, wrote that "in determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the RTCs would depend on the amount of the claim." But where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such Page | 1 PALS BAR OPS PILIPINAS 2016 actions as cases where the subject of the litigation may not be estimated in terms of money, and, hence, are incapable of pecuniary estimation. Decision: WHEREFORE, premises considered, the instant petition is hereby GRANTED. The April 25, 2013 and July 3, 2013 Orders of the Regional Trial Court in Civil Case No. (1798)-021 are hereby REVERSED and SET ASIDE. The Regional Trial Court, Branch 32 in Lupon, Davao Oriental is ORDERED to proceed with dispatch in resolving Civil Case No. (1798)-021. No pronouncement as to costs. AVELINA ABARIENTOS REBUSQUILLO [substituted by her heirs, except Emelinda R. Gualvez] and SALVADOR A. OROSCO, Petitioners, vs. SPS. DOMINGO and EMELINDA REBUSQUILLO GUALVEZ and the CITY ASSESSOR OF LEGAZPI CITY, Respondents. G.R. No. 204029, June 4, 2014 Doctrine: An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement. (Art. 1346, NCC) Facts: Petitioner was one of the seven children of deceased, Eulalio Abarientos and Victoria Villareal. Both of them died intestate. The deceased left a parcel of land in Legazpi City. In 2001, respondent Emelinda (daughter of petitioner), made petitioner sign two documents. In 2003, the petitioner discovered that the two documents were an affidavit of self-adjudication, and a deed of absolute sale in favor of the respondent spouses. Petitioner then filed an action to annul the two documents before the RTC. In the respondents’ answer, they admitted the execution of the affidavit and deed, but they argued that it was with the consent of all the heirs of Eulalio and Victoria, and that such was agreed to be done to facilitate the titling of the property. Respondents further argued that the petitioner received the amount of Php 50,000 for the sale. The RTC ruled in favor of the petitioner. The CA reversed the RTC’s decision and said that the affidavit and the sale were valid. Issue: Whether or not the affidavit of self-adjudication and the sale are valid. - No Held: The petition is granted. Both the affidavit and the deed of sale are void. Ratio: An Affidavit of Self-Adjudication is only proper when the affiant is the sole heir of the decedent. (Sec. 1, Rule 74, ROC). As admitted by respondents, Avelina was not the sole heir of Eulalio. In fact, as admitted by respondents, petitioner Salvador is one of the co-heirs by right of representation of his mother. Without a doubt, Avelina had perjured herself when she declared in the affidavit that she is the only daughter and sole heir of spouses Eulalio and Victoria. The falsity of this claim renders her act of adjudicating to herself the inheritance left by her father invalid. In effect, Avelina was not in the right position to sell and transfer the absolute ownership of the subject property to respondents. As she was not the sole heir of Eulalio and her Affidavit of SelfPage | 2 PALS BAR OPS PILIPINAS 2016 Adjudication is void, the subject property is still subject to partition. Avelina, in fine, did not have the absolute ownership of the subject property but only an aliquot portion. What she could have transferred to respondents was only the ownership of such aliquot portion. It is apparent from the admissions of respondents and the records of this case that Avelina had no intention to transfer the ownership, of whatever extent, over the property to respondents. Hence, the Deed of Absolute Sale is nothing more than a simulated contract. The Civil Code provides: Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement. Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement. In the present case, respondents admitted that the purpose of the sale was to facilitate titling and not the transfer of ownership. VILMA QUINTOS, REPRESENTED BY HER ATTORNEY-IN-FACTS FIDEL I. QUINTOS, JR., ET AL. VS. PELAGIA I. NICOLAS, ET AL. G.R. No. 210252. June 16, 2014 FACTS: Petitioners Vilma Quintos, Florencia Dancel, and Catalino Ibarra, and respondents Pelagia Nicolas, Noli Ibarra, Santiago Ibarra, Pedro Ibarra, David Ibarra, Gilberto Ibarra, and the late Augusto Ibarra are siblings. Their parents, Bienvenido and Escolastica Ibarra, were the owners of the subject property, a 281 sqm. parcel of land situated along Quezon Ave., Poblacion C, Camiling, Tarlac, covered by TCT No. 318717. The deceased parents left their 10 children ownership over the subject property. In 2002, respondent siblings brought an action for partition against petitioners. The case was docketed as Civil Case No. 02-52 and was raffled to the RTC at Camiling, Tarlac but was later on dismissed as neither of the parties appeared and appealed. Respondent siblings instead resorted to executing a Deed of Adjudication to transfer the property in favor of the 10 siblings. As a result, TCT No. 318717 was canceled and TCT No. 390484 was issued in the names of the 10 heirs of the Ibarra spouses. The siblings sold their 7/10 undivided share over the property in favor of their co-respondents, the spouses Recto and Rosemarie Candelario by virtue of a Deed of Absolute Sale and Agreement of Subdivision, and the title was partially cancelled as a result. Petitioners filed a complaint for Quieting of Title and Damages against respondents wherein they alleged that during their parents’ lifetime, the couple distributed their real and personal properties in favor of their 10 children. Upon distribution, petitioners alleged that they received the subject property and the house constructed thereon as their share. They had been in adverse, open, continuous, and uninterrupted possession of the property for over 4 decades and are allegedly entitled to equitable title. Participation in the execution of the aforementioned Deeds was denied. Respondents, on the other hand, countered that petitioners’ cause of action was already barred by estoppel when in 2006, one of petitioners offered to buy the 7/10 undivided share, which is an admission petitioners’ part that the property is not entirely theirs. The Ibarras allegedly mortgaged the property but because of financial constraints, respondent spouses Candelario had to redeem the property. Not having been repaid, the Candelarios accepted their share in the subject property as payment. Lastly, respondents sought, by way of counterclaim, the partition of the property. RTC: dismissed petitioners’ complaint, as it did not find merit in petitioners’ asseverations that they have acquired title over the property through acquisitive prescription and noted there was no Page | 3 PALS BAR OPS PILIPINAS 2016 document evidencing that their parents bequeathed the property.Subsequent transfer of the siblings’ interest in favor of respondent spouses Candelario was upheld. CA: upheld lower court decision and held that since the property is co-owned by the plaintiffsappellants, ( 3/10 undivided interest) and defendants-appellees Spouses Candelarios (7/10 undivided interest) and considering that plaintiffs-appellants had already constructed a 3-storey building at the back portion of the property, partition is in order, in accord with the subdivision plan. ISSUES:1. Whether or not the petitioners were able to prove ownership over the property; 2. Whether or not the respondents’ counterclaim for partition is already barred by laches or res judicata; and 3. Whether or not the CA was correct in approving the subdivision agreement as basis for the partition of the property. HELD: PETITION IS PARTLY MERITORIOUS. Petitioners were not able to prove equitable title or ownership over the property. Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting title to real property.12 For an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on the title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or efficacy.13 In the case at bar, the CA correctly observed that petitioners’ cause of action must necessarily fail mainly in view of the absence of the first requisite. At the outset, it must be emphasized that the determination of whether or not petitioners sufficiently proved their claim of ownership or equitable title is substantially a factual issue that is generally improper for Us to delve into.In any event, a perusal of the records would readily show that petitioners, as aptly observed by the courts below, indeed, failed to substantiate their claim. Their alleged open, continuous, exclusive, and uninterrupted possession of the subject property is belied by the fact that respondent siblings, in 2005, entered into a Contract of Lease with the Avico Lending Investor Co. over the subject lot without any objection from the petitioners. Petitioners’ inability to offer evidence tending to prove that Bienvenido and Escolastica Ibarra transferred the ownership over the property in favor of petitioners is likewise fatal to the latter’s claim. The cardinal rule is that bare allegation of title does not suffice. The burden of proof is on the plaintiff to establish his or her case by preponderance of evidence. Regrettably, petitioners failed to discharge the said burden. There is no reason to disturb the finding of the RTC that all 10 siblings inherited the subject property from Bienvenido and Escolastica Ibarra, and after the respondent siblings sold their aliquot share to the spouses Candelario, petitioners and respondent spouses became co-owners of the same. The counterclaim for partition is not barred by prior judgment. As to the issue of partition as raised by respondents in their counterclaim, the petitioners countered that the action for partition has already been barred by res judicata. The Court had the occasion to rule that dismissal with prejudice satisfies one of the elements of res judicata. It is understandable why petitioners would allege res judicata to bolster their claim. However, dismissal with prejudice under Rule 17, Sec. 3 of the Rules of Court cannot defeat the right of a co-owner to ask for partition at any time, provided that there is no actual adjudication of ownership of shares yet. This is pertinent to Article 494 of the Civil Code which discusses how the law generally does not favor the retention of co-ownership as a property relation, and is interested instead in ascertaining the co-owners’ specific shares so as to prevent the allocation of Page | 4 PALS BAR OPS PILIPINAS 2016 portions to remain perpetually in limbo. Thus, the law provides that each co-owner may demand at any time the partition of the thing owned in common. Between dismissal with prejudice under Rule 17, Sec. 3 and the right granted to co-owners under Art. 494 of the Civil Code, the latter must prevail. To construe otherwise would diminish the substantive right of a co-owner through the promulgation of procedural rules. Such a construction is not sanctioned by the principle, which is too well settled to require citation, that a substantive law cannot be amended by a procedural rule. Art. 494 is an exception to Rule 17, Sec. 3 of the Rules of Court to the effect that even if the order of dismissal for failure to prosecute is silent on whether or not it is with prejudice, it shall be deemed to be without prejudice. This is not to say, however, that the action for partition will never be barred by res judicata. There can still be res judicata in partition cases concerning the same parties and the same subject matter once the respective shares of the co-owners have been determined with finality by a competent court with jurisdiction or if the court determines that partition is improper for coownership does not or no longer exists. The counterclaim for partition is not barred by laches. We now proceed to petitioners’ second line of attack. According to petitioners, the claim for partition is already barred by laches since by 1999, both Bienvenido and Escolastica Ibarra had already died and yet the respondent siblings only belatedly filed the action for partition, Civil Case No. 02-52, in 2002. And since laches has allegedly already set in against respondent siblings, so too should respondent spouses Candelario be barred from claiming the same for they could not have acquired a better right than their predecessors-in-interest. Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which––by the exercise of due diligence––could or should have been done earlier. It is the negligence or omission to assert a right within a reasonable period, warranting the presumption that the party entitled to assert it has either abandoned or declined to assert it. The principle is a creation of equity which, as such, is applied not really to penalize neglect or sleeping upon one’s right, but rather to avoid recognizing a right when to do so would result in a clearly inequitable situation. As an equitable defense, laches does not concern itself with the character of the petitioners’ title, but only with whether or not by reason of the respondents’ long inaction or inexcusable neglect, they should be barred from asserting this claim at all, because to allow them to do so would be inequitable and unjust to petitioners. As correctly appreciated by the lower courts, respondents cannot be said to have neglected to assert their right over the subject property. They cannot be considered to have abandoned their right given that they filed an action for partition. The fact that respondent siblings entered into a Contract of Lease with Avico Lending Investor Co. over the subject property is evidence that they are exercising rights of ownership over the same. The CA erred in approving the Agreement for Subdivision. There is merit, however, in petitioners’ contention that the CA erred in approving the proposal for partition submitted by respondent spouses. Art. 496, as earlier cited, provides that partition shall either be by agreement of the parties or in accordance with the Rules of Court. In this case, the Agreement of Subdivision allegedly executed by respondent spouses Candelario and petitioners cannot serve as basis for partition forrespondents admitted that the agreement was a falsity and that petitioners never took part in preparing the same. The "agreement" was crafted without any consultation whatsoever or any attempt to arrive at mutually acceptable terms with petitioners. It, therefore, lacked the essential requisite of consent. Thus, to approve the agreement in spite of this fact would be tantamount to allowing respondent spouses to divide unilaterally the property among the co-owners based on their own whims and caprices. Page | 5 PALS BAR OPS PILIPINAS 2016 MCMP CONSTRUCTION CORP., Petitioner, vs. MONARK EQUIPMENT CORP., Respondent. G.R. No. 201001: November 10, 2014 DOCTRINE: In a suit for the collection of money, the judge may equitably reduce the penalty when the debtor has partly or irregularly complied with the principal obligation. Further, even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable. FACTS: Monark Equipment Corp. (respondent Monark) leased 5 pieces of heavy equipment to MCMP Construction Corporation (petitioner MCMP) covered by a Rental Equipment Contract. In the invoice, it states that the customer agrees to the following: a) that the credit sales are payable within 30 days from the date of invoice, b) to pay interest at 24% p.a. on all amounts, c) to the collection fee of 1% compounded monthly and 2% per month penalty charge for late payment on amounts overdue d) to pay a sum equal to 25% of any amount due as attorney’s fees in case of suit, and expressly submit to the jurisdiction of the courts of Quezon City, Makati, Pasig or Manila, Metro Manila, for any legal action arising from, this transactions. MCMP however failed to pay all the rental fees. Upon demands by Monark, MCMP was only able to pay P100,000.00 on April 15, 2001 and PhP100,000.00 on August 15, 2001. Further demands went unheeded. As of April 30, 2002, MCMP owed Monark the amount of PhP1,282,481.83. On June 18, 2002, Monark filed a suit for a Sum of Money, the RTC issued a Decision in favor of the plaintiff, ordering MCMP to pay 1,282,481.83, as well as the 25% of the amount and the costs of suit. ISSUE: Can the Court reduce the penalty charges imposed? HELD: YES. The trial court imposed upon MCMP a 24% per annum interest on the rental fees as well as a collection fee of 1% per month compounded monthly and a 2% per month penalty charge. In all, the effective interest rate foisted upon MCMP is 60% per annum. On top of this, MCMP was assessed for attorney’s fees at the rate of 25% of the total amount due. The Court finds these exorbitant and unconscionable rates. Article 1229 of the Civil Code states: Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable. In exercising this power to determine what is iniquitous and unconscionable, courts must consider the circumstances of each case since what may be iniquitous and unconscionable in one may be totally just and equitable in another." Also, respondent promised to pay 25% of his outstanding obligations as attorney’s fees in case of non-payment thereof. Attorney’s fees here are in the nature of liquidated damages. As long as said stipulation does not contravene law, morals, or public order, it is strictly binding upon respondent. Nonetheless, courts are empowered to reduce such rate if the same is iniquitous or unconscionable pursuant to the above-quoted provision. This sentiment is echoed inArticle 2227 of the Civil Code, to wit: Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. Page | 6 PALS BAR OPS PILIPINAS 2016 Following the above provisions, the interest and penalty charges as well as the stipulated attorney’s fees and the collection charge must all be reduced by the Court. Judgment is hereby rendered in favor of the plaintiff, and ordering the defendant to pay the former: 1. PhP 765,380.33 representing the unpaid rental fees; 2. Interest of 12% per annum on the unpaid rental fees to be computed from March 1, 200117 until payment; 3. Penalty and collection charge of 6% per annum on the unpaid rental fees to be computed from March 1, 2001; 4. Attorney's Fees of five percent (5%) of the total amount to be recovered; and, 5. The costs of suit. BERNARDINA P. BARTOLOME, Petitioner, vs. SOCIAL SECURITY SYSTEM and SCANMAR MARITIME SERVICES, INC., Respondents. G.R. No. 192531: November 12, 2014 DOCTRINE: In case of the death of an adopted child, leaving no children or descendants, his parents and relatives by consanguinity and not by adoption, shall be his legal heirs. FACTS: John Colcol died in a work-related accident while he was employed as an electrician by Scanmar Maritime Services, Inc. He was enrolled under the government’s Employees’ Compensation Program (ECP). Since John was childless and unmarried, petitioner Bernardina P. Bartolome, John’s biological mother and, allegedly, sole remaining beneficiary, filed a claim for death benefits with the SSS. However, SSS denied the claim, stating that the petitioner is not considered as the parent of John as he was legally adopted by Cornelio Colcol, the victim’s great grandfather, therefore Bernardina cannot be considered as John’s beneficiary because she is not the deceased’s legitimate parent. Cornelio Colcol, however, already died on October 26, 1987, less than three years since the decree of John’s adoption became final. ISSUE: Do the biological parents of the covered qualify as the deceased’s dependent parent and, thus, entitled to the death benefits? HELD: YES. when Cornelio, in 1985, adoptedJohn, then about two (2) years old, petitioner’s parental authority over John was severed. However, lest it be overlooked, one key detail the ECC missed, aside from Cornelio’s death, was that when the adoptive parent died less than three (3) years after the adoption decree, John was still a minor, at about four (4) years of age. John’s minority at the time of his adopter’s death is a significant factor in the case at bar. Under such circumstance, parental authority should be deemed to have reverted in favor of the biological parents. Moreover, this ruling finds support on the fact that even though parental authority is severed by virtue of adoption, the ties between the adoptee and the biological parents are not entirely eliminated. To demonstrate, the biological parents, insome instances, are able to inherit from the adopted, as can be gleaned from Art. 190 of the Family Code: Art. 190. Legal or intestate succession to the estate of the adopted shall be governed by the following rules: xxx Page | 7 PALS BAR OPS PILIPINAS 2016 (2) When the parents, legitimate or illegitimate, or the legitimate ascendants of the adopted concur withthe adopter, they shall divide the entire estate, one-half tobe inherited by the parents or ascendants and the other half, by the adopters; xxx (6) When only collateral blood relatives of the adopted survive, then the ordinary rules of legal or intestate succession shall apply. Similarly, at the time of Cornelio Colcol’s death, which was prior to the effectivity of the Family Code, the governing provision is Art. 984 of the New Civil Code, which provides: Art. 984. In case of the death of an adopted child, leaving no children or descendants, his parents and relatives by consanguinity and not by adoption, shall be his legal heirs. From the provisions, it is clear that the biological parents retain their rights of succession tothe estate of their child who was the subject of adoption. While the benefits arising from the death of an SSS covered employee do not form part of the estate of the adopted child, the pertinent provision on legal or intestate succession at least reveals the policy on the rights of the biological parents and those by adoption vis-à-vis the right to receive benefits from the adopted. In the same way that certain rights still attach by virtue of the blood relation, so too should certain obligations, which, We rule, include the exercise of parental authority, in the event of the untimely passing of their minor offspring’s adoptive parent. Thus, the Court rules that Cornelio’s death at the time of John’s minority resulted in the restoration of petitioner’s parental authority over the adopted child. Page | 8 PALS BAR OPS PILIPINAS 2016