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December 2009 Philippine SupremeCourt Decisions on Civil Law

Posted on January 11, 2010 by Hector M. de Leon Jr • Posted in Civil Law •

Tagged agency, conjugal property, contract, corporation, damages, estoppel,

foreclosure, innocent purchaser, interest, laches, marriage, mortgage, novation,prescription, property, rescission, sale, Torrens system, Torrens title, void

contract, voidable contract •

Here are selected December 2009 rulings of the Supreme Court of thePhilippines on civil law and related laws:

Agency; agency by estoppel. An agency by estoppel, which is similar to the

doctrine of apparent authority requires proof of reliance upon therepresentations, and that, in turn, needs proof that the representations predated

the action taken in reliance.

There can be no apparent authority of an agent without acts or conduct on thepart of the principal and such acts or conduct of the principal must have beenknown and relied upon in good faith and as a result of the exercise of

reasonable prudence by a third person as claimant, and such must haveproduced a change of position to its detriment. Such proof is lacking in thiscase. Yun Kwan Byung vs. Philippine Amusement Gaming Corporation, G.R.

No. 163553, December 11, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/163553.htm).

Agency; implied agency. Article 1869 of the Civil Code states that implied

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Agency; implied agency. Article 1869 of the Civil Code states that impliedagency is derived from the acts of the principal, from his silence or lack ofaction, or his failure to repudiate the agency, knowing that another person is

acting on his behalf without authority. Implied agency, being an actualagency, is a fact to be proved by deductions or inferences from other facts.

On the other hand, apparent authority is based on estoppel and can arise from

two instances. First, the principal may knowingly permit the agent to holdhimself out as having such authority, and the principal becomes estopped toclaim that the agent does not have such authority. Second, the principal mayclothe the agent with the indicia of authority as to lead a reasonably prudent

person to believe that the agent actually has such authority. In an agency byestoppel, there is no agency at all, but the one assuming to act as agent hasapparent or ostensible, although not real, authority to represent another.

The law makes no presumption of agency and proving its existence, nature andextent is incumbent upon the person alleging it. Whether or not an agency hasbeen created is a question to be determined by the fact that one represents andis acting for another. Yun Kwan Byung vs. Philippine Amusement GamingCorporation, G.R. No. 163553, December 11, 2009

(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/163553.htm).

Agency; implied agency. The basis for agency is representation, that is, theagent acts for and on behalf of the principal on matters within the scope of hisauthority and said acts have the same legal effect as if they were personallyexecuted by the principal. On the part of the principal, there must be an actualintention to appoint or an intention naturally inferable from his words oractions, while on the part of the agent, there must be an intention to accept the

appointment and act on it. Absent such mutual intent, there is generally noagency.

There is no implied agency in this case because PAGCOR did not hold out tothe public as the principal of ABS Corporation. PAGCOR’s actions did notmislead the public into believing that an agency can be implied from thearrangement with the junket operators, nor did it hold out ABS Corporationwith any apparent authority to represent it in any capacity. The JunketAgreement was merely a contract of lease of facilities and services. Yun Kwan

Byung vs. Philippine Amusement Gaming Corporation, G.R. No. 163553,December 11, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/163553.htm).

Contract; binding effect. A consignee, although not a signatory to the contractof carriage between the shipper and the carrier, becomes a party to the contractby reason of either (1) the relationship of agency between the consignee and theshipper/ consignor; (2) the unequivocal acceptance of the bill of lading delivered

to the consignee, with full knowledge of its contents or (3) availment of the





stipulation pour autrui, i.e., when the consignee, a third person, demandsbefore the carrier the fulfillment of the stipulation made by theconsignor/shipper in the consignee’s favor, specifically the delivery of thegoods/cargoes shipped. MoF Company, Inc. vs. Shin Brokerage Corporation, G.R.

No. 172822, December 18, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/172822.htm).

Contract; interpretation. A compromise is a contract whereby the parties, bymaking reciprocal concessions, avoid a litigation or put an end to one alreadycommenced. It is an agreement intended to terminate a pending suit bymaking reciprocal concessions.

In the construction or interpretation of a compromise agreement, the Court is

guided by the fundamental and cardinal rule that the intention of the parties isto be ascertained from the contract and effect should be given to that intention.Likewise, it must be construed so as to give effect to all the provisions of thecontract. In essence, the contract must be read as a whole. AdriaticoConsortium, Inc. Primary Realty Corp., and Benito Cu-Uy-Gam vs. Land Bank ofthe Philippines, G.R. No. 187838, December 23, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/187838.htm).

Contract; novation. Novation is the extinguishment of an obligation by thesubstitution or change of the obligation by a subsequent one whichextinguishes or modifies the first, either by changing the object or principalconditions, or by substituting another in place of the debtor, or by subrogatinga third person in the rights of the creditor.

Novation may be extinctive or modificatory. It is extinctive when an oldobligation is terminated by the creation of a new one that takes the place of theformer; it is merely modificatory when the old obligation subsists to the extent

that it remains compatible with the amendatory agreement.

Novation may either be express, when the new obligation declares inunequivocal terms that the old obligation is extinguished; or implied, when thenew obligation is on every point incompatible with the old one. The test ofincompatibility is whether the two obligations can stand together, each onewith its own independent existence.

In the instant case, the Court finds that the Partial Compromise Agreemententered into by petitioners and Land Bank constitutes as an implied

modificatory novation or amendment to the Loan/Line Agreement. As such,any provision in the Loan/Line Agreement inconsistent with the provisions of

the Partial Compromise Agreement is deemed amended or waived by the

parties.

In other words, by entering into the Partial Compromise Agreement and





In other words, by entering into the Partial Compromise Agreement and

agreeing to “suspend all actions,” Land Bank effectively waived all its rightsregarding MPC Nos. 0002 and 0004. This necessarily includes its right to assign

under the Loan/Line Agreement. Adriatico Consortium, Inc. Primary RealtyCorp., and Benito Cu-Uy-Gam vs. Land Bank of the Philippines, G.R. No. 187838,

December 23, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/187838.htm).

Contract; rescission. The remedy of “rescission” is not confined to the rescissible

contracts enumerated under Article 1381. Article 1191 of the Civil Code gives

the injured party in reciprocal obligations, such as what contracts are about, theoption to choose between fulfillment and “rescission.” Arturo M. Tolentino, a

well-known authority in civil law, is quick to note, however, that the equivalentof Article 1191 in the old code actually uses the term “resolution” rather than

the present “rescission.” The calibrated meanings of these terms are distinct.

“Rescission” is a subsidiary action based on injury to the plaintiff’s economic

interests as described in Articles 1380 and 1381. “Resolution,” the actionreferred to in Article 1191, on the other hand, is based on the defendant’s

breach of faith, a violation of the reciprocity between the parties. As an actionbased on the binding force of a written contract, therefore, rescission

(resolution) under Article 1191 prescribes in 10 years. Ten years is the period ofprescription of actions based on a written contract under Article 1144.

The distinction makes sense. Article 1191 gives the injured party an option to

choose between, first, fulfillment of the contract and, second, its rescission. An

action to enforce a written contract (fulfillment) is definitely an “action upon awritten contract,” which prescribes in 10 years (Article 1144). It will not be

logical to make the remedy of fulfillment prescribe in 10 years while thealternative remedy of rescission (or resolution) is made to prescribe after only

four years as provided in Article 1389 when the injury from which the twokinds of actions derive is the same. Heirs of Sofia Quirong, etc. vs. Development

Bank of the Philippines, G.R. No. 173441, December 3, 2009.

Contract; void contract. A contract is void if one of the essential requisites of

contracts under Article 1318 of the New Civil Code is lacking.

All these elements must be present to constitute a valid contract. Consent isessential to the existence of a contract; and where it is wanting, the contract is

non-existent. In a contract of sale, its perfection is consummated at the momentthere is a meeting of the minds upon the thing that is the object of the contract

and upon the price. Consent is manifested by the meeting of the offer and the

acceptance of the thing and the cause, which are to constitute the contract. Toenter into a valid contract of sale, the parties must have the capacity to do so.

Every person is presumed to be capacitated to enter into a contract until




satisfactory proof to the contrary is presented. The burden of proof is on theindividual asserting a lack of capacity to contract, and this burden has been

characterized as requiring for its satisfaction clear and convincing evidence.

While a corporation is a juridical person, it cannot act except through its boardof directors as a collective body, which is vested with the power and

responsibility to decide whether the corporation should enter into a contractthat will bind the corporation, subject to the articles of incorporation, by-laws,

or relevant provisions of law. This grant to the board of all corporate powers is

explicit under Section 23 of the Corporation Code, stating: “All corporatepowers shall be exercised, and all corporate business shall be conducted by the

board of directors.”

In the case under consideration, the dispute centers on the element of consent,which FPHC claimed to be lacking since the supposed board of directors that

composed the FPHC was allegedly a “dummy board” of BenjaminRomualdez, the members of which were allegedly installed after the

management and control of FPHC were supposedly fraudulently wrested from

its true owners. The Sandiganbayan, however, differed. It stood pat in its rulingthat the consent by the board of directors, who had the legal capacity to enter

into said contract with a third person, was duly obtained. This Court finds noreason to diverge from the disquisition of the anti-graft court on this matter.

First Philippine Holding Corporation vs. Trans Middle East (Phils.) Equities

Inc., G.R. No. 179505. December 4, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/179505.htm).

Contract; void contract; prescription. The sale of subject properties to

petitioners are null and void. Under Article 1410 of the Civil Code, an action ordefense for the declaration of the inexistence of a contract is imprescriptible.

Hence, petitioners’ contention that respondents’ cause of action is alreadybarred by prescription is without legal basis. Jesus Campos and Rosemarie

Campos-Bautista vs. Nenita Buevinida Pastrana, et al., G.R. No. 175994,

December 8, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/175994.htm).

Contract; void contract; rescission. Petitioners’ argument that the applicable

law in this case is Article 1381(3) of the Civil Code on rescissible contracts andnot Article 1409 on void contracts is not a question of first impression. This issue

had already been settled several decades ago when we held that “an action to

rescind is founded upon and presupposes the existence of a contract”. Acontract which is null and void is no contract at all and hence could not be the

subject of rescission.

In the instant case, the Deeds of Absolute Sale are fictitious and inexistent forbeing absolutely simulated contracts. It is true that the CA cited instances that

may constitute badges of fraud under Article 1387 of the Civil Code on





rescissible contracts. But there is nothing else in the appealed decision to

indicate that rescission was contemplated under the said provision of the CivilCode. The aforementioned badges must have been considered merely as

grounds for holding that the sale is fictitious. Consequently, we find that the CAproperly applied the governing law over the matter under consideration which

is Article 1409 of the Civil Code on void or inexistent contracts. Jesus Camposand Rosemarie Campos-Bautista vs. Nenita Buevinida Pastrana, et al., G.R. No.

175994, December 8, 2009


Contract; void contract; gambling. Gambling is prohibited by the laws of thePhilippines as specifically provided in Articles 195 to 199 of the Revised Penal

Code, as amended. Gambling is an act beyond the pale of good morals, and isthus prohibited and punished to repress an evil that undermines the social,

moral, and economic growth of the nation. Presidential Decree No. 1602 (PD

1602), which modified Articles 195-199 of the Revised Penal Code and repealedinconsistent provisions, prescribed stiffer penalties on illegal gambling.

As a rule, all forms of gambling are illegal. The only form of gambling allowed

by law is that stipulated under Presidential Decree No. 1869, which gavePAGCOR its franchise to maintain and operate gambling casinos. The issue

then turns on whether PAGCOR can validly share its franchise with junketoperators to operate gambling casinos in the country.

The Junket Agreement would be valid if under Section 3(h) of PAGCOR’s

charter, PAGCOR could share its gambling franchise with another entity. In

this case, PAGCOR, by taking only a percentage of the earnings of ABSCorporation from its foreign currency collection, allowed ABS Corporation tooperate gaming tables in the dollar pit. The Junket Agreement is in direct

violation of PAGCOR’s charter and is therefore void.

Since the Junket Agreement violates PAGCOR’s charter, gambling between thejunket player and the junket operator under such agreement is illegal and may

not be enforced by the courts. Article 2014 of the Civil Code, which refers toillegal gambling, states that no action can be maintained by the winner for thecollection of what he has won in a game of chance. Yun Kwan Byung vs.

Philippine Amusement Gaming Corporation, G.R. No. 163553, December 11,2009 (http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/163553.htm).

Contract; voidable. Contracts where consent is given through fraud, are

voidable or annullable. These are not void ab initio since voidable or anullablecontracts are existent, valid, and binding, although they can be annulledbecause of want of capacity or the vitiated consent of one of the parties.

However, before such annulment, they are considered effective and obligatorybetween parties.





As the complaint-in-intervention substantially alleged that the contract wasvoidable, the four-year prescriptive period under Art. 1391 of the New CivilCode will apply.

FPHC, however, contends that the four-year prescriptive period should bereckoned from 24 February 1986, the date when former President Marcos leftthe country, as it was only then that the threat and intimidation against the

Lopezes ceased.

This argument is unconvincing. Based on FPHC’s Petition for Review and its

Complaint-in-Intervention, the ground relied upon by petitioner is fraud. Here,from the time the questioned sale transaction on 24 May 1984 took place,FPHC did not deny that it had actual knowledge of the same. Simply,petitioner was fully aware of the sale of the PCIB shares to TMEE. Despite all

this knowledge, petitioner did not question the said sale from its inception andsome time thereafter. It was only after four years and seven months had lapsedfollowing the knowledge or discovery of the alleged fraudulent sale that

petitioner assailed the same. By then, it was too late for petitioner to beset thesame transaction, since the prescriptive period had already come into play. First Philippine Holding Corporation vs. Trans Middle East (Phils.) EquitiesInc., G.R. No. 179505. December 4, 2009


Damages; exemplary damages. Petitioner argues that assuming arguendothat compensatory damages had been awarded, the same contravened Article

2232 of the Civil Code which provides that in contracts or quasi-contracts, thecourt may award exemplary damages only if the defendant acted in a wanton,fraudulent, reckless, oppressive, or malevolent manner. Since, so petitioner

concludes, there was no finding that it acted in a wanton, fraudulent, reckless,oppressive, or malevolent manner, it is not liable for exemplary damages.

The argument fails. To reiterate, petitioner’s liability is based not on contract or

quasi-contract but on quasi-delict since there is no pre-existing contractualrelation between the parties. Article 2231 of the Civil Code, which provides thatin quasi-delict, exemplary damages may be granted if the defendant acted with

gross negligence, thus applies. For “gross negligence” implies a want orabsence of or failure to exercise even slight care or diligence, or the entireabsence of care, evincing a thoughtless disregard of consequences withoutexerting any effort to avoid them. Metropolitan Bank and Trust Company, etc.

vs. BA Finance Corporation and Malayan Insurance Co, Inc., G.R. No. 179952,December 4, 2009.

Laws; retroactive application. A perusal of RA 9302 shows that nothing indeedtherein authorizes its retroactive application. In fact, its effectivity clauseindicates a clear legislative intent to the contrary: “Section 28. Effectivity




Clause. – This Act shall take effect fifteen (15) days following the completion ofits publication in the Official Gazette or in two (2) newspapers of general

circulation.”

Statutes are prospective and not retroactive in their operation, they being theformulation of rules for the future, not the past. Hence, the legal maxim lex de

futuro, judex de praeterito — the law provides for the future, the judge for thepast, which is articulated in Article 4 of the Civil Code: “Laws shall have noretroactive effect, unless the contrary is provided.” The reason for the rule is the

tendency of retroactive legislation to be unjust and oppressive on account of itsliability to unsettle vested rights or disturb the legal effect of prior transactions. In Re: Petition for Assistance in the Liquidation of Intercity Savings and LoanBank, Inc., Philippine Deposit Insurance Corporation vs. Stockholders of Intercity

Savings and Loan Bank, Inc., G.R. No. 181556, December 14, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/181556.htm).

Marriage; disposition of conjugal property. The husband’s first act ofdisposition of the subject property occurred in 1963 when he executed the SPAand the Deed of Transfer of Rights in favor of Dolores Camisura. Thus, the rightof action of the petitioners accrued in 1963, as Article 173 of the Civil Code

provides that the wife may file for annulment of a contract entered into by thehusband without her consent within ten (10) years from the transactionquestioned. Petitioners filed the action for reconveyance in 1995. Even if we

were to consider that their right of action arose when they learned of thecancellation of TCT No. 107534 and the issuance of TCT No. 290121 in MelanieMingoa’s name in 1993, still, twelve (12) years have lapsed since suchdiscovery, and they filed the petition beyond the period allowed by law.

Moreover, when Sergia Hernandez, together with her children, filed the actionfor reconveyance, the conjugal partnership of property with Hernandez, Sr.had already been terminated by virtue of the latter’s death on April 16, 1983.

Clearly, therefore, petitioners’ action has prescribed.

The failure of Sergia Hernandez to file with the courts an action for annulmentof the contract during the marriage and within ten (10) years from the

transaction necessarily barred her from questioning the sale of the subjectproperty to third persons. Heirs of Domingo Hernandez Sr., et al. vs. PlaridelMingoa, Sr., et al., G.R. No. 146548, December 18, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/146548.htm).

Mortgage; foreclosure. Foreclosure is valid where the debtor is in default in thepayment of an obligation. The essence of a contract of mortgage indebtedness

is that a property has been identified or set apart from the mass of the propertyof the debtor-mortgagor as security for the payment of money or thefulfillment of an obligation to answer the amount of indebtedness, in case ofdefault in payment. Foreclosure is but a necessary consequence of non-

payment of the mortgage indebtedness. In a real estate mortgage when the





principal obligation is not paid when due, the mortgagee has the right to

foreclose the mortgage and to have the property seized and sold with the viewof applying the proceeds to the payment of the obligation.

On the face of respondents’ clear admission that they were unable to settle their

obligations which were secured by the mortgages, EPCIB has a clear right toforeclose the mortgages. Equitable PCI Bank, Inc. vs. Maria Letecia Fernandez, etal., G.R. No. 163117, December 18, 2009


Obligations; corporations. A corporation is vested by law with a personalityseparate and distinct from the people comprising it. Ownership by a single or

small group of stockholders of nearly all of the capital stock of the corporationis not by itself a sufficient ground to disregard the separate corporatepersonality. Thus, obligations incurred by corporate officers, acting ascorporate agents, are direct accountabilities of the corporation they represent.

In this case, none of these exceptional circumstances is present. In its decision,the trial court failed to provide a clear ground why Eugene Lim was held

solidarily liable with Shrimp Specialists. The trial court merely stated thatEugene Lim signed on behalf of the Shrimp Specialists as President withoutexplaining the need to disregard the separate corporate personality. The CAcorrectly ruled that the evidence to hold Eugene Lim solidarily liable should be

more than just signing on behalf of the corporation because artificial entitiescan only act through natural persons. Thus, the CA was correct in dismissingthe case against Eugene Lim. Shrimp Specialist, Inc. vs. Fuji-Triumph Agri-

Industrial Corporation/Fuji-Trimph Agri-Industrial Corporation vs. ShrimpSpecialist, Inc. et al., G.R. No. 168756/G.R. No. 171476, December 7, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/168756.htm).

Obligations; interest. Not being a loan or forbearance of money, the interestshould be 6% per annum computed from the date of extrajudicial demand onSeptember 25, 1992 until finality of judgment; and 12% per annum from

finality of judgment until payment, conformably with Eastern Shipping Lines,Inc. v. Court of Appeals. Metropolitan Bank and Trust Company, etc. vs. BAFinance Corporation and Malayan Insurance Co, Inc., G.R. No. 179952, December4, 2009


Obligations; laches. Petitioners cannot find refuge in the principle of laches. Itis not just the lapse of time or delay that constitutes laches. The essence of laches

is the failure or neglect, for an unreasonable and unexplained length of time, todo that which, through due diligence, could or should have been done earlier,thus giving rise to a presumption that the party entitled to assert it had earlier

abandoned or declined to assert it.The essential elements of laches are: (a) conduct on the part of the defendant, or






of one under whom he claims, giving rise to the situation complained of; (b)delay in asserting complainant’s rights after he had knowledge of defendant’sacts and after he has had the opportunity to sue; (c) lack of knowledge or noticeby defendant that the complainant will assert the right on which he bases his

suit and (d) injury or prejudice to the defendant in the event the relief isaccorded to the complainant.

In the instant case, the second and third elements are missing. Arsenio F.

Olegario, et al. vs. Pedro C. Mari, represented by Lilia C. Mari-Camba, G.R. No.147951, December 14, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/147951.htm).

Property; possession. Respondent’s predecessor, Juan Mari, had declared thedisputed realty for tax purposes as early as 1916. The tax declarations show thathe had a two storey house on the realty. He also planted fruit bearing trees and

bamboos thereon. The records also show that the 897-square meter propertyhad a bamboo fence along its perimeter. All these circumstances clearly showthat Juan Mari was in possession of subject realty in the concept of owner,

publicly and peacefully since 1916 or long before petitioners entered thedisputed realty sometime in 1965.

Based on Article 538 of the Civil Code, the respondent is the preferred possessor

because, benefiting from his father’s tax declaration of the subject realty since1916, he has been in possession thereof for a longer period. On the other hand,petitioners acquired joint possession only sometime in 1965. Arsenio F. Olegario,

et al. vs. Pedro C. Mari, represented by Lilia C. Mari-Camba, G.R. No. 147951,December 14, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/147951.htm).

Sale; contract to sell. A distinction between a contract to sell and a contract ofsale is helpful in order to determine the true intention of the parties. In acontract of sale, the title to the property passes to the vendee upon the delivery

of the thing sold; while in a contract to sell, ownership is, by agreement,reserved for the vendor and is not to pass to the vendee until full payment of thepurchase price. In a contract of sale, non-payment of the price is a negativeresolutory condition. In a contract to sell, full payment is a positive suspensive

condition. In a contract of sale, the vendor loses and cannot recover ownershipof the thing sold until and unless the contract of sale is itself resolved and setaside. In a contract to sell, the title remains with the vendor if the vendee does

not comply with the condition precedent of making payment at the timespecified in the contract. In a contract to sell, the payment of the purchase priceis a positive suspensive condition, the failure of which is not a breach, casual orserious, but a situation which prevents the obligation of the vendor to convey

title from acquiring an obligatory force.

In the instant case, ownership of the general purpose polystyrene products was





In the instant case, ownership of the general purpose polystyrene products wasretained by SMP, Incorporated (SMP) until after the checks given as paymentby Clothespak Manufacturing Philippines (Clothespak) cleared. This was

evidenced by a provisional receipt issued by SMP to Clothespak. Theagreement between SMP and Clothespak involved a contract to sell definedunder Article 1478 of the Civil Code.

On the other hand, the stipulation that the loss or destruction of the productsduring transit is on the account of Clothespak, as buyer of the products, is of nomoment. This does not alter the nature of the contract as a contract to sell. The

free on board stipulation on the contract can coexist with the contract to sell.Otherwise stated, the provisions or stipulations in the contract — for thereservation of the ownership of a thing until full payment of the purchase priceand for the loss or destruction of the thing would be on account of the buyer —

are valid and can exist in conjunction with the other. Bank of the PhilippineIslands as successor-in-interest of Far East Bank and Trust Company vs. SMP,Inc., G.R. No. 175466, December 23, 2009


Special laws

Innocent purchaser for value; financial institutions. While we agree withpetitioners that GSIS, as a financial institution, is bound to exercise more thanjust ordinary diligence in the conduct of its financial dealings, we neverthelessfind no law or jurisprudence supporting petitioners’ claim that financial

institutions are not protected when they are innocent purchasers for value.When financial institutions exercise extraordinary diligence in determining thevalidity of the certificates of title to properties being sold or mortgaged to them

and still fail to find any defect or encumbrance upon the subject properties aftersaid inquiry, such financial institutions should be protected like any otherinnocent purchaser for value if they paid a full and fair price at the time of the

purchase or before having notice of some other person’s claim on or interest inthe property. Alejandro B. Ty and International Realty Corporation vs. Queen’sRow Subdivision, Inc., et al., G.R. No. 173158, December 4, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/173158.htm).

Land registration; possession. In Director, Land Management Bureau v. Courtof Appeals, we explained that – “x x x The phrase “adverse, continuous, open,public, peaceful and in concept of owner,” by which characteristics private

respondent describes his possession and that of his parents, are mereconclusions of law requiring evidentiary support and substantiation. Theburden of proof is on the private respondent, as applicant, to prove by clear,

positive and convincing evidence that the alleged possession of his parents wasof the nature and duration required by law. His bare allegations without more,do not amount to preponderant evidence that would shift the burden of proofto the oppositor.”





Here, we find that petitioner’s possession of the lot has not been of the characterand length of time required by law Josephine Wee vs. Republic of the

Philippines, G.R. No. 177384, December 8, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/177384.htm).

Registered land; buyer in good faith. While every person dealing withregistered land can safely rely on the correctness of the certificate of title issuedtherefor and the law will in no way oblige him to go beyond the certificate to

determine the condition of the property, one will not be permitted to benefitfrom this general rule if there exist important facts which create suspicion to callfor an investigation of the real condition of the land. One who deliberatelyignores a significant fact which would naturally generate wariness is not aninnocent purchaser for value. Vicente N. Luna, Jr. vs. Nario Cabales, OscarPabalan, et al., G.R. No. 173533, December 14, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/173533.htm).

Registered land; non-owner. The registration of a property in one’s name,whether by mistake or fraud, the real owner being another, impresses upon thetitle so acquired the character of a constructive trust for the real owner. Theperson in whose name the land is registered holds it as a mere trustee, and thereal owner is entitled to file an action for reconveyance of the property. TheTorrens system does not protect a usurper from the true owner. Vicente N.

Luna, Jr. vs. Nario Cabales, Oscar Pabalan, et al., G.R. No. 173533, December 14,2009 (http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/173533.htm).

Registered owner; laches. This Court has, on several occasions, already ruledthat even a registered owner of a property may be barred from recoveringpossession of the same by virtue of laches. Laches is the failure or neglect, for anunreasonable and unexplained length of time, to do that which by exerting due

diligence could or should have been done earlier. The law serves those who arevigilant and diligent, and not those who sleep when the law requires them toact. Alejandro B. Ty and International Realty Corporation vs. Queen’s RowSubdivision, Inc., et al., G.R. No. 173158, December 4, 2009(http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/173158.htm).

Torrens title; registration by non-owner. The fact that petitioners were able to

secure titles in their names did not operate to vest upon them ownership overthe subject properties. That act has never been recognized as a mode ofacquiring ownership. The Torrens system does not create or vest title. It onlyconfirms and records title already existing and vested. It does not protect ausurper from the tr







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