January 10, 2018

G.R. No. 192971

FLORO MERCENE, Petitioner
vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, Respondent

FACTS: On 19 January 1965, petitioner Floro Mercene (Mercene) obtained a loan from
respondent Government Service Insurance System (GSIS) in the amount of ₱29,500.00.
As security, a real estate mortgage was executed over Mercene's property in Quezon City,
registered under Transfer Certificate of Title No. 90535. The mortgage was registered
and annotated on the title on 24 March 1965.4
On 14 May 1968, Mercene contracted another loan with GSIS for the amount of
₱14,500.00. The loan was likewise secured by a real estate mortgage on the same parcel
of land. The following day, the loan was registered and duly annotated on the title.5
On 11 June 2004, Mercene opted to file a complaint for Quieting of Title6 against GSIS.
He alleged that: since 1968 until the time the complaint was filed, GSIS never exercised
its rights as a mortgagee; the real estate mortgage over his property constituted a cloud on
the title; GSIS' right to foreclose had prescribed. In its answer,7 GSIS assailed that the
complaint failed to state a cause of action and that prescription does not run against it
because it is a government entity.

ISSUE: WHETHER THE COURT OF APPEALS ERRED IN RULING THAT THE

REAL ESTATE MORTGAGES HAD YET TO PRESCRIBE.

HELD: Art. 1169. Those obliged to deliver or to do something incur in delay from the
time the obligee judicially or extrajudicially demands from them the fulfillment of their
obligation. However, the demand by the creditor shall not be necessary in order that delay
may exist:
1) When the obligation or the law expressly so declare; or
2) When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the contract; or
3) When the demand would be useless, as when the obligor has rendered it beyond his
power to perform.
there was no judicial admission on the part of GSIS with regard to prescription because
treating the obligation as prescribed, was merely a conclusion of law. It would have been
different if Mercene's complaint alleged details necessary to determine when GSIS' right
to foreclose arose, i.e., date of maturity and whether demand was necessary.

January 11, 2018

G.R. No. 190286
RAMON E. REYES and CLARA R. PASTOR, Petitioners
vs.
BANCOM DEVELOPMENT CORP., Respondent

FACTS: The dispute in this case originated from a Continuing Guaranty4 executed in
favor of respondent Bancom by Angel E. Reyes, Sr., Florencio
Reyes, Jr., Rosario R. Du, Olivia Arevalo, and the two petitioners herein, Ramon E.
Reyes and Clara R. Pastor (the Reyes Group). In the instrument, the Reyes Group agreed
to guarantee the full and due payment of obligations incurred by Marbella under an
Underwriting Agreement with Bancom. These obligations included certain Promissory
Notes5 issued by Marbella in favor of Bancom on 24 May 1979 for the aggregate amount
of ₱2,828,140.32.
It appears from the records that Marbella was unable to pay back the notes at the time of
their maturity. Consequently, it issued a set of replacement Promissory Notes6 on 22
August 1979, this time for the increased amount of ₱2,901,466.48. It again defaulted on
the payment of this second set of notes, leading to the execution of a third set 7 for the
total amount of ₱3,002,333.84, and finally a fourth set8 for the same amount.
Because of Marbella's continued failure to pay back the loan despite repeated demands,
Bancom filed a Complaint for Sum of Money with a prayer for damages before the RTC
of Makati on 7 July 1981.

ISSUE: Whether the CA correctly ruled that petitioners are liable to Bancom for (a) the
payment of the loan amounts indicated on the Promissory Notes issued by Marbella; and
(b) attorney's fees

HELD: The obligations of Marbella and the Reyes Group under the Promissory Notes
and the Continuing Guaranty, respectively, are plain and unqualified.1âwphi1 Under the
notes, Marbella promised to pay Bancom the amounts stated on the maturity dates
indicated.50 The Reyes Group, on the other hand, agreed to become liable if any of
Marbella's guaranteed obligations were not duly paid on the due date.51 There is
absolutely no support for the assertion that these agreements were not meant to be
binding.
We also note that even if the other agreements referred to by petitioners are taken into
account, the result would be the same. They would still be deemed liable.

January 11, 2018

G.R. No. 212472
SPECIFIED CONTRACTORS & DEVELOPMENT, INC., AND SPOUSES
ARCHITECT ENRIQUE O. OLONAN AND CECILIA R. OLONAN, Petitioners
vs.
JOSE A. POBOCAN , Respondent

FACTS: Architect Olonan allegedly6 agreed to give respondent one (1) unit for every
building Specified Contractors were able to construct as part of respondent's
compensation package to entice him to stay with the company. Two (2) of these projects
that Specified Contractors and respondent were· able to build were the Xavierville Square
Condominium in Quezon City and the Sunrise 1-foliday Mansion Bldg. I in Alfonso,
Cavite. Pursuant to the alleged oral agreement, SpeCified Contractors supposedly ceded,
assigned and transferred Unit 708 of Xavlerville Square Condominium and Unit 208 of
Sunrise Holiday Mansion Bldg. I (subject units) in favor of respondent.
In a March 14, 2011 letter7 addressed to petitioner Architect Enrique Olonan as chairman
of Specified Contractors, respondent requested the execution of Deeds of Assignment or
Deeds of Sale over the subject units in his favor, along with various other beriefits, in
view of his impending retirement on March 19, 2011.
On January 17, 2012, petitioners, instead of filing an answer, interposed a Motion to
Dismiss9 denying the existence of the alleged oral agreement. They argued that, even
assuming arguendo that there was such an oral agreement, the alleged contract is
unenforceable for being in violation of the statute of frauds, nor was there any written
document, note or memorandum showing that the subject units have in fact been ceded,
assigned or transferred to respondent. Moreover, assuming again that said agreement
existed, the cause of action had long prescribed because the alleged agreements were
supposedly entered into in 1994 and 1999 as indicated in respondent's March 14, 2011
demand letter, supra, annexed to the complaint.

ISSUE: Whether or not the action was barred by the statute of frauds.

HELD: Not all actions involving real property are real actions. In Spouses Saraza, et al.
v. Francisco19 , it was clarified that:
x x x Although the end result of the respondent's claim was the transfer of the subject
property to his name, the suit was still essentially for specific performance, a personal
action, because it sought Fernando's execution of a deed of absolute sale based on a
contract which he had previously made.
Similarly, that the end result would be the transfer of the subject units to respondent's
name in the event that his suit is decided in his favor is "an anticipated consequence and
beyond the cause for which the action [for specific performance with damages] was
instituted."20 Had respondent's action proceeded to trial, the crux of the controversy
would have been the existence or non-existence of the alleged oral contract from which
would flow respondent's alleged right to compel petitioners to execute deeds of
conveyance. The transfer of property sought by respondent is but incidental to or an
offshoot of the determination of whether or not there is indeed, to begin with, an
agreement to convey the properties in exchange for services rendered.

March 7, 2018
G.R. No. 196795
INTRAMUROS ADMINISTRATION, Petitioner
vs.
OFFSHORE CONSTRUCTION DEVELOPMENT COMPANY, Respondent

FACTS: In 1998, Intramuros leased certain real properties of the national government,
which it administered to Offshore Construction. Three (3) properties were subjects of
Contracts of Lease: Baluarte De San Andres, with an area of 2, 793 sq. m.;4 Baluarte De
San Francisco De Dilao, with an area of 1,880 sq. m.;5 and Revellin De Recoletos, with
an area of 1,036 sq. m.6 All three (3) properties were leased for five (5) years, from
September 1, 1998 to August 31, 2003. All their lease contracts also made reference to an
August 20, 1998 memorandum of stipulations, which included a provision for lease
renewals every five (5) years upon the parties' mutual agreement.7
Offshore Construction occupied and introduced improvements in the leased premises.
However, Intramuros and the Department of Tourism halted the projects due to Offshore
Construction's non-conformity with Presidential Decree No. 1616, which required 16th to
19th centuries' Philippine-Spanish architecture in the area.8 Consequently, Offshore
Construction filed a complaint with prayer for preliminary injunction and temporary
restraining order against Intramuros and the Department of Tourism before the Manila
Regional Trial Court,9 which was docketed as Civil Case No. 98-91587.10
Eventually, the parties executed a Compromise Agreement on July 26, 1999,11 which the
Manila Regional Trial Court approved on February 8, 2000.12 In the Compromise
Agreement, the parties affirmed the validity of the two (2) lease contracts but terminated
the one over Revellin de Recoletos.1

ISSUE: whether or not Intramuros Administration is entitled to possess the leased

premises and to collect unpaid rentals.

HELD: Article 1643. In the lease of things, one of the parties binds himself to give to
another the enjoyment or use of a thing for a price certain, and for a period which may be
definite or indefinite. However, no lease for more than ninety-nine years shall be valid.
The restrictions and limitations on respondent's use of the leased premises are consistent
with petitioner’s right as lessor to stipulate the use of the properties being leased.128
Neither the Contracts of Lease nor their respective Addendums to the Contract contain
any stipulation that respondent may occupy and use the leased premises until it recovers
the expenses it incurred for improvements it introduced there. Instead, the lease period
was fixed at five (5) years, renewable for another five (5) years upon mutual agreement

March 19, 2018

G.R. No. 200383
NORMA M. DIAMPOC, Petitioner
vs.
JESSIE BUENAVENTURA and THE REGISTRY OF DEEDS FOH THE CITY
OF TAGUIG, Respondents

FACTS: The Diampocs alleged in their Complaint that they owned a 174- square meter
parcel of land (subject property) in Signal Village, Taguig City covered by Transfer
Certificate of Title No. 25044 (TCT 25044); that Buenaventura became their friend; that
Buenaventura asked to borrow the owner's copy of TCT 25044 to be used as security for
a ₱1 million loan she wished to secure; that they acceded, on the condition that
Buenaventura should not sell the subject property; that Buenaventura promised to give
them ₱300,000.00 out of the ₱1 million loan proceeds; that on July 2, 2000,
Buenaventura cause them to sign a folded document without giving them the opportunity
to read its contents; that Buenaventura filed to give them a copy of the document which
they signed; that they discovered later on that Buenaventura became the owner of a one·
half portion (87 square meters) of the subject property by virtue of a supposed deed of
sale in her favor; that they immediately proceeded to the notary public who notarized the
said purported deed of sales and discovered that the said 87-square meter portion was
purportedly sold to Buenaventura for ₱200,000.00; that barangay conciliation
proceedings were commenced, but proved futile; that the purported deed of sale is
spurious; and that the deed was secured through fraud and deceit, and thus null and void.
The Diampocs thus prayed that the purported deed of sale be annulled and the annotation
thereof on TCT 25044 be canceled; that the owner's duplicate copy of TCT 25044 be
returned to them; and that attorney's fees and costs of suit be awarded to them.

ISSUE: Whether THE COURT OF APPEALS ERRED IN RULING THAT THERE

WAS A VALID CONTRACT OF SALE.

HELD: Article 1358 of the Civil Code requires that the form of a contract that transmits
or extinguishes real rights over immovable property should be in a public document, yet
the failure to observe the proper form does not render the transaction invalid. The
necessity of a public document for said contracts is only for convenience; it is not
essential for validity or enforceability. Even a sale of real property, though not contained
in a public instrument or formal writing, is nevertheless valid and binding, for even a
verbal contract of sale or real estate; produces legal effects between the parties.
Consequently, when there is a defect in the notarization of a document, the clear and
convincing evidentiary standard originally attached to a duly-notarized document is
dispensed with, and the measure to test the validity of such document is preponderance of
evidence.15
x x x Nevertheless, the defective notarization of the deed does not affect the validity of
the sale of the house. Although Article 1358 of the Civil Code states that the sale of real
property must appear in a public instrument, the formalities required by this article is not
essential for the validity of the contract but is simply for its greater efficacy or
convenience, or to bind third persons, and is merely a coercive means granted to the
contracting parties to enab1e them to reciprocally compel the observance of the
prescribed form. Consequently, the private conveyance of the house is valid between the
parties.16
Thus, following the above pronouncements, the remaining judicial task, therefore, is to
detennin9 if the deed of sale executed by and between the parties should be upheld.

G.R. No. 192797, April 18, 2018

EXCELLENT ESSENTIALS INTERNATIONAL CORPORATION, Petitioner, v.
EXTRA EXCEL INTERNATIONAL PHILIPPINES, INC., Respondent.

FACTS: The present controversy started from a complaint filed by E. Excel International,
Inc. (Excel International) and Excellent Essentials against Excel Philippines for damages
and to enjoin the latter from selling, distributing, and marketing E. Excel products in the
Philippines.
On 9 August 1996, Excel International and Excel Philippines entered into an exclusive
rights contract wherein the latter was granted exclusive rights to distribute E. Excel
products in the Philippines.2 Under the same contract, Excel International reserved the
right to discontinue or alter their agreement at any time.3
Over the span of four (4) years, Excel International experienced intra-corporate struggle
over the control of the corporation and the operations of its various exclusive distributors
 in Asia. The dispute even reached the Judicial District Court of Utah (Utah Court).
Eventually, the conflict between the principal stakeholders of Excel International, Jau-
Hwa Stewart (Stewart) and Jau-Fei Chen (Chen), took a turn and Stewart somehow
succeeded in gaining control of the company.
On 1 December 2000, Stewart, in her capacity as president of Excel International,
revoked Excel Philippines' exclusive rights contract and appointed Excellent Essentials as
its new exclusive distributor in the Philippines.4
Despite the revocation of its exclusive rights contract and the appointment of Excellent
Essentials, Excel Philippines continued its operation in violation of the new exclusive
distributorship agreement. Thus, on 26 January 2001, Excel International, through
counsel, demanded that Excel Philippines cease from selling, importing, distributing, or
advertising, directly or indirectly, any and all of E. Excel products.5

ISSUE: Whether [Excellent Essentials] a 3rd party to a contract may be held liable?
HELD: yes

A corporation, who is a third party to a contract, may be held liable for

damages if used as a means to breach the obligations between the contracting
parties.
Under the principle of relativity of contracts, only those who are parties to a contract are
liable to its breach.32 Under Article 1314 of the Civil Code, however, any third person
who induces another to violate his contract shall be liable to damages to the other
contracting party. Said provision of law embodies what we often refer to as tortuous or
contractual interference. In So Ping Bun v. CA,33 we laid out the elements of tortuous
interference: (1) existence of a valid contract; (2) knowledge on the part of the third
person of the existence of contract; and (3) interference of the third person is without
legal justification or excuse.34
Prior to the revocation of its exclusive distributorship, Excel International had an existing
contract with Bright Vision wherein they agreed to set up a corporation to exclusively
distribute E. Excel products within the Philippines. This corporation, eventually, turned
out to be Excel Philippines who was given the irrevocable and exclusive right to
distribute, market, and/or sell. Under its agreement with Bright Vision, Excel Philippines'
exclusive distributorship right was irrevocable and may only be modified, transferred, or
terminated upon the mutual consent of both parties. This agreement was effective from
22 May 1995 until 21 May 2005.