1.

Dela crus vs Dimaano

DECISION

VELASCO, JR., J.:

In their complaint for disbarment against respondent Atty. Jose R. Dimaano, Jr., Dolores
L. Dela Cruz, Milagros L. Principe, Narcisa L. Faustino, Jorge V. Legaspi, and Juanito V.
Legaspi alleged that on July 16, 2004, respondent notarized a document denominated
as Extrajudicial Settlement of the Estate with Waiver of Rights purportedly executed by them and
their sister, Zenaida V.L. Navarro. Complainants further alleged that: (1) their signatures in this
document were forged; (2) they did not appear and acknowledge the document on July 16,
2004 before respondent, as notarizing officer; and (3) their purported community tax certificates
indicated in the document were not theirs.

According to complainants, respondent had made untruthful statements in the

acknowledgment portion of the notarized document when he made it appear, among other things,
that complainants personally came and appeared before him and that they affixed their signatures
on the document in his presence. In the process, complainants added, respondent effectively
enabled their sister, Navarro, to assume full ownership of their deceased parents property in
Tibagan, San Miguel, Bulacan, covered by Transfer Certificate of Title No. T-303936 and sell
the same to the Department of Public Works and Highways.

In his answer, respondent admitted having a hand in the preparation of the document in
question, but admitted having indeed notarized it. He explained that he notarized [the] document
in good faith relying on the representation and assurance of Zenaida Navarro that the signatures
and the community tax certificates appearing in the document were true and correct. Navarro
would not, according to respondent, lie to him having known, and being neighbors of, each other
for 30 years. Finally, respondent disclaimed liability for any damage or injury considering that
the falsified document had been revoked and canceled.

In his Report and Recommendation, the Investigating Commissioner of the Office of the
Commission on Bar Discipline, Integrated Bar of the Philippines (IBP), found the following as
established: (1) the questioned document bore the signatures and community tax certificates of,
and purports to have been executed by, complainants and Navarro; (2) respondent indeed
notarized the questioned document on July 16, 2004; (3) complainants did not appear and
acknowledge the document before respondent on July 16, 2004; (4) respondent notarized the
questioned document only on Navarros representation that the signatures appearing and
community tax certificates were true and correct; and (5) respondent did not ascertain if the
purported signatures of each of the complainants appearing in the document belonged to them.

The Commission concluded that with respondents admission of having notarized the
document in question against the factual backdrop as thus established, a clear case of
falsification and violation of the Notarial Law had been committed when he stated in the
Acknowledgment that:
Before me, on this 16th day of July 16, 2004 at Manila, personally came
and appeared the above-named persons with their respective Community Tax
Certificates as follows:
xxxx

who are known to me to be the same persons who executed the foregoing
instrument and they acknowledge to me that the same is their own free act and
deed. x x x

For the stated infraction, the Commission recommended, conformably with the Courts
ruling in Gonzales v. Ramos,[1] that respondent be suspended from the practice of law for one (1)
year; that his notarial commission, if still existing, be revoked; and that he be disqualified for
reappointment as notary public for two (2) years. On September 28, 2007, the IBP Board of
Governors passed Resolution No. XVIII-2007-147, adopting and approving the report and
recommendation of the Commission.

We agree with the recommendation of the Commission and the premises holding it
together. It bears reiterating that notaries public should refrain from affixing their signature and
notarial seal on a document unless the persons who signed it are the same individuals who
executed and personally appeared before the notaries public to attest to the truth of what are
stated therein, for under Section 1 of Public Act No. 2103 or the Notarial Law, an instrument or
document shall be considered authentic if the acknowledgment is made in accordance with the
following requirements:

(a) The acknowledgment shall be made before a notary public or an officer

duly authorized by law of the country to take acknowledgments of instruments or
documents in the place where the act is done. The notary public or the officer
taking the acknowledgment shall certify that the person acknowledging the
instrument or document is known to him and that he is the same person who
executed it, and acknowledged that the same is his free act and deed. The
 certificate shall be made under his official seal, if he is by law required to keep a
seal, and if not, his certificate shall so state.[2]

Without the appearance of the person who actually executed the document in question,
notaries public would be unable to verify the genuineness of the signature of the acknowledging
party and to ascertain that the document is the partys free act or deed.[3] Furthermore, notaries
public are required by the Notarial Law to certify that the party to the instrument has
acknowledged and presented before the notaries public the proper residence certificate (or
exemption from the residence certificate) and to enter its number, place, and date of issue as part
of certification.[4] Rule II, Sec. 12 of the 2004 Rules on Notarial Practice[5] now requires a party
to the instrument to present competent evidence of identity. Sec. 12 provides:
Sec. 12. Competent Evidence of Identity.The phrase competent evidence of
identity refers to the identification of an individual based on:

(a) at least one current identification document issued by an official agency

bearing the photograph and signature of the individual, such as but not limited to,
passport, drivers license, Professional Regulations Commission ID, National
Bureau of Investigation clearance, police clearance, postal ID, voters
ID, Barangay certification, Government Service Insurance System (GSIS) e-card,
Social Security System (SSS) card, Philhealth card, senior citizen card, Overseas
Workers Welfare Administration (OWWA) ID, OFW ID, seamans book, alien
certificate of registration/immigrant certificate of registration, government office
ID, certificate from the National Council for the Welfare of Disabled Persons
(NCWDP), Department of Social Welfare and Development certification [as
amended by A.M. No. 02-8-13-SC dated February 19, 2008]; or

(b) the oath or affirmation of one credible witness not privy to the
instrument, document or transaction who is personally known to the notary public
and who personally knows the individual, or of two credible witnesses neither of
whom is privy to the instrument, document or transaction who each personally
knows the individual and shows to the notary public documentary identification.

One last note. Lawyers commissioned as notaries public are mandated to discharge with
fidelity the duties of their offices, such duties being dictated by public policy and impressed with
public interest. It must be remembered that notarization is not a routinary, meaningless act, for
notarization converts a private document to a public instrument, making it admissible in evidence
without the necessity of preliminary proof of its authenticity and due execution. [6] A notarized
document is by law entitled to full credit upon its face and it is for this reason that notaries public
must observe the basic requirements in notarizing documents. Otherwise, the confidence of the
public on notorized documents will be eroded.

WHEREFORE, for breach of the Notarial Law, the notarial commission of respondent
Atty. Jose R. Dimaano, Jr., if still existing, is REVOKED. He is DISQUALIFIED from being
commissioned as notary public for a period of two (2) years and SUSPENDED from the practice
of law for a period of one (1) year, effective upon receipt of a copy of this Decision,
with WARNING that a repetition of the same negligent act shall be dealt with more severely.

Let all the courts, through the Office of the Court Administrator, as well as the IBP and
the Office of the Bar Confidant, be notified of this Decision and be it entered into respondents
personal record.

SO ORDERED.

3 PERMANENT SAVINGS AND LOAN BANK, petitioner, vs. MARIANO

VELARDE, respondent.

DECISION
AUSTRIA-MARTINEZ, J.:

In a complaint for sum of money filed before the Regional Trial Court of Manila (Branch
37), docketed as Civil Case No. 94-71639, petitioner Permanent Savings and Loan Bank sought
to recover from respondent Mariano Velarde, the sum of P1,000,000.00 plus accrued interests
and penalties, based on a loan obtained by respondent from petitioner bank, evidenced by the
following: (1) promissory note dated September 28, 1983;[1] (2) loan release sheet dated
September 28, 1983;[2] and (3) loan disclosure statement dated September 28, 1983.[3] Petitioner
bank, represented by its Deputy Liquidator after it was placed under liquidation, sent a letter of
demand to respondent on July 27, 1988, demanding full payment of the loan.[4] Despite receipt of
said demand letter,[5] respondent failed to settle his account. Another letter of demand was sent
on February 22, 1994,[6] and this time, respondents counsel replied, stating that the obligation is
not actually existing but covered by contemporaneous or subsequent agreement between the
parties [7]
In his Answer, respondent disclaims any liability on the instrument, thus:

2. The allegations in par. 2, Complaint, on the existence of the alleged loan of P1-Million, and
the purported documents evidencing the same, only the signature appearing at the back of the
promissory note, Annex A seems to be that of herein defendant. However, as to any liability
arising therefrom, the receipt of the said amount of P1-Million shows that the amount was
received by another person, not the herein defendant. Hence, no liability attaches and as further
stated in the special and affirmative defenses that, assuming the promissory note exists, it does
not bind much less is there the intention by the parties to bind the herein defendant. In other
words, the documents relative to the loan do not express the true intention of the parties.[8]

Respondents Answer also contained a denial under oath, which reads:

I, MARIANO Z. VELARDE, of age, am the defendant in this case, that I caused the preparation
of the complaint and that all the allegations thereat are true and correct; that the promissory note
sued upon, assuming that it exists and bears the genuine signature of herein defendant, the same
does not bind him and that it did not truly express the real intention of the parties as stated in the
defenses; [9]

During pre-trial, the issues were defined as follows:

1. Whether or not the defendant has an outstanding loan obligation granted by the plaintiff;

2. Whether or not the defendant is obligated to pay the loan including interests and attorneys
fees;

3. Whether or not the defendant has really executed the Promissory Note considering the doubt
as to the genuineness of the signature and as well as the non-receipt of the said amount;

4. Whether or not the obligation has prescribed on account of the lapse of time from date of
execution and demand for enforcement; and

5. Whether or not the defendant is entitled to his counterclaim and other damages.[10]

On September 6, 1995, petitioner bank presented its sole witness, Antonio Marquez, the
Assistant Department Manager of the Philippine Deposit Insurance Corporation (PDIC) and the
designated Deputy Liquidator for petitioner bank, who identified the Promissory Note[11] dated
September 28, 1983, the Loan Release Sheet[12] dated September 28, 1983, and the Disclosure
Statement of Loan Credit Transaction.[13]
After petitioner bank rested its case, respondent, instead of presenting evidence, filed with
leave of court his demurrer to evidence, alleging the grounds that:
(a) PLAINTIFF FAILED TO PROVE ITS CASE BY PREPONDERANCE OF
EVIDENCE.
(b) THE CAUSE OF ACTION, CONCLUDING ARGUENTI THAT IT EXISTS, IS
BARRED BY PRESCRIPTION AND/OR LACHES.[14]
The trial court, in its Decision dated January 26, 1996, found merit in respondents demurrer
to evidence and dismissed the complaint including respondents counterclaims, without
pronouncement as to costs.[15]
On appeal, the Court of Appeals agreed with the trial court and affirmed the dismissal of the
complaint in its Decision[16] dated October 27, 1999.[17] The appellate court found that petitioner
failed to present any evidence to prove the existence of respondents alleged loan obligations,
considering that respondent denied petitioners allegations in its complaint. It also found that
petitioner banks cause of action is already barred by prescription.[18]
Hence, the present petition for review on certiorari under Rule 45 of the Rules Court, with
the following assignment of errors:
4.1

THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER FAILED TO

ESTABLISH THE GENUINENESS, DUE EXECUTION AND AUTHENTICITY OF THE
SUBJECT LOAN DOCUMENTS.

4.2

THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONERS CAUSE OF

ACTION IS ALREADY BARRED BY PRESCRIPTION AND OR LACHES.[19]

Before going into the merits of the petition, the Court finds it necessary to reiterate the well-
settled rule that only questions of law may be raised in a petition for review on certiorari under
Rule 45 of the Rules of Court, as the Supreme Court is not a trier of facts. [20] It is not our
function to review, examine and evaluate or weigh the probative value of the evidence
presented.[21]
There are, however, exceptions to the rule, e.g., when the factual inferences of the appellate
court are manifestly mistaken; the judgment is based on a misapprehension of facts; or the CA
manifestly overlooked certain relevant and undisputed facts that, if properly considered, would
justify a different legal conclusion.[22] This case falls under said exceptions.
The pertinent rule on actionable documents is found in Rule 8, Section 7 of the Rules of
Court which provides that when the cause of action is anchored on a document, the genuineness
or due execution of the instrument shall be deemed impliedly admitted unless the defendant,
under oath, specifically denies them, and sets forth what he claims to be the facts.
It was the trial courts opinion that:

The mere presentation of supposed documents regarding the loan, but absent the testimony of a
competent witness to the transaction and the documentary evidence, coupled with the denial of
liability by the defendant does not suffice to meet the requisite preponderance of evidence in
civil cases. The documents, standing alone, unsupported by independent evidence of their
existence, have no legal basis to stand on. They are not competent evidence. Such failure leaves
this Court without ample basis to sustain the plaintiffs cause of action and other reliefs prayed
for. The loan document being challenged. (sic) Plaintiff did not exert additional effort to
strengthen its case by the required preponderance of evidence. On this score, the suit must be
dismissed.[23]

The Court of Appeals concurred with the trial courts finding and affirmed the dismissal of
the complaint, viz.:
The bank should have presented at least a single witness qualified to testify on the existence and
execution of the documents it relied upon to prove the disputed loan obligations of Velarde. This
falls short of the requirement that (B)efore any private writing may be received in evidence, its
due execution and authenticity must be proved either: (a) By anyone who saw the writing
executed; (b) By evidence of the genuineness of the handwriting of the maker; or (c) By a
subscribing witness. (Rule 132, Sec. 21, Rules of Court)

It is not true, as the Bank claims, that there is no need to prove the loan and its supporting papers
as Velarde has already admitted these. Velarde had in fact denied these in his responsive
pleading. And consistent with his denial, he objected to the presentation of Marquez as a witness
to identify the Exhibits of the Bank, and objected to their admission when these were offered as
evidence. Though these were grudgingly admitted anyway, still admissibility of evidence should
not be equated with weight of evidence. [24]

A reading of respondents Answer, however, shows that respondent did not specifically deny
that he signed the loan documents. What he merely stated in his Answer was that the signature
appearing at the back of the promissory note seems to be his. Respondent also denied any
liability on the promissory note as he allegedly did not receive the amount stated therein, and the
loan documents do not express the true intention of the parties.[25] Respondent reiterated these
allegations in his denial under oath, stating that the promissory note sued upon, assuming that it
exists and bears the genuine signature of herein defendant, the same does not bind him and that it
did not truly express the real intention of the parties as stated in the defenses [26]
Respondents denials do not constitute an effective specific denial as contemplated by law. In
the early case of Songco vs. Sellner,[27] the Court expounded on how to deny the genuineness and
due execution of an actionable document, viz.:

This means that the defendant must declare under oath that he did not sign the document or that
it is otherwise false or fabricated. Neither does the statement of the answer to the effect that the
instrument was procured by fraudulent representation raise any issue as to its genuineness or due
execution. On the contrary such a plea is an admission both of the genuineness and due
execution thereof, since it seeks to avoid the instrument upon a ground not affecting either.

In fact, respondents allegations amount to an implied admission of the due execution and
genuineness of the promissory note. The admission of the genuineness and due execution of a
document means that the party whose signature it bears admits that he voluntarily signed the
document or it was signed by another for him and with his authority; that at the time it was
signed it was in words and figures exactly as set out in the pleading of the party relying upon it;
that the document was delivered; and that any formalities required by law, such as a seal, an
acknowledgment, or revenue stamp, which it lacks, are waived by him. [28] Also, it effectively
eliminated any defense relating to the authenticity and due execution of the document, e.g., that
the document was spurious, counterfeit, or of different import on its face as the one executed by
the parties; or that the signatures appearing thereon were forgeries; or that the signatures were
unauthorized.[29]
Clearly, both the trial court and the Court of Appeals erred in concluding that respondent
specifically denied petitioners allegations regarding the loan documents, as respondents Answer
shows that he failed to specifically deny under oath the genuineness and due execution of the
promissory note and its concomitant documents. Therefore, respondent is deemed to have
admitted the loan documents and acknowledged his obligation with petitioner; and with
respondents implied admission, it was not necessary for petitioner to present further evidence to
establish the due execution and authenticity of the loan documents sued upon.
While Section 22, Rule 132 of the Rules of Court requires that private documents be proved
of their due execution and authenticity before they can be received in evidence, i.e., presentation
and examination of witnesses to testify on this fact; in the present case, there is no need for proof
of execution and authenticity with respect to the loan documents because of respondents implied
admission thereof.[30]
Respondent claims that he did not receive the net proceeds in the amount of P988,333.00 as
stated in the Loan Release Sheet dated September 23, 1983.[31] The document, however, bears
respondents signature as borrower.[32] Res ipsa loquitur.[33] The document speaks for
itself. Respondent has already impliedly admitted the genuineness and due execution of the loan
documents. No further proof is necessary to show that he undertook the obligation with
petitioner. A person cannot accept and reject the same instrument.[34]
The Court also finds that petitioners claim is not barred by prescription.
Petitioners action for collection of a sum of money was based on a written contract and
prescribes after ten years from the time its right of action arose.[35] The prescriptive period
is interrupted when there is a written extrajudicial demand by the creditors.[36] The interruption
of the prescriptive period by written extrajudicial demand means that the said period would
commence anew from the receipt of the demand.[37]
Thus, in the case of The Overseas Bank of Manila vs. Geraldez,[38] the Court categorically
stated that the correct meaning of interruption as distinguished from
mere suspension or tolling of the prescriptive period is that said period would commence anew
from the receipt of the demand. In said case, the respondents Valenton and Juan, on February 16,
1966, obtained a credit accommodation from the Overseas Bank of Manila in the amount
of P150,000.00. Written extrajudicial demands dated February 9, March 1 and 27, 1968,
November 13 and December 8, 1975 and February 7 and August 27, 1976 were made upon the
respondents but they refused to pay. When the bank filed a case for the recovery of said amount,
the trial court dismissed the same on the ground of prescription as the bank's cause of action
accrued on February 16, 1966 (the date of the manager's check for P150,000.00 issued by the
plaintiff bank to the Republic Bank) and the complaint was filed only on October 22,
1976. Reversing the ruling of the trial court, the Court ruled:

An action upon a written contract must be brought within ten years from the time the right of
action accrues (Art. 1144[1], Civil Code). "The prescription of actions is interrupted when they
are filed before the court, when there is a written extrajudicial demand by the creditors, and when
there is any written acknowledgment of the debt by the debtor" (Art. 1155, Ibid, applied in
Gonzalo Puyat & Sons, Inc. vs. City of Manila, 117 Phil. 985, 993; Philippine National Bank vs.
Fernandez, L-20086, July 10, 1967, 20 SCRA 645, 648; Harden vs. Harden, L-22174, July 21,
1967, 20 SCRA 706, 711).
A written extrajudicial demand wipes out the period that has already elapsed and starts anew the
prescriptive period. Giorgi says: "La interrupcion difiere de la suspension porque borra el tiempo
transcurrido anteriormente y obliga a la prescripcion a comenzar de nuevo" (9 Teoria de las
Obligaciones, 2nd Ed., p. 222). "La interrupcion . . . quita toda eficacia al tiempo pasado y abre
camino a un computo totalmente nuevo, que parte del ultimo momento del acto interruptivo,
precisamente, como si en aquel momento y no antes hubiese nacido el credito" (8 Giorgi, ibid pp.
390-2).

That same view as to the meaning of interruption was adopted in Florendo vs. Organo, 90 Phil.
483, 488, where it ruled that the interruption of the ten-year prescriptive period through a judicial
demand means that "the full period of prescription commenced to run anew upon the cessation of
the suspension". "When prescription is interrupted by a judicial demand, the full time for the
prescription must be reckoned from the cessation of the interruption" (Spring vs. Barr, 120 So.
256 cited in 54 C.J.S. 293, note 27). That rule was followed in Nator and Talon vs. CIR, 114
Phil. 661, Sagucio vs. Bulos, 115 Phil. 786 and Fulton Insurance Co. vs. Manila Railroad
Company, L-24263, November 18, 1967, 21 SCRA 974, 981.

Interruption of the prescriptive period as meaning renewal of the original term seems to be the
basis of the ruling in Ramos vs. Condez, L-22072, August 30, 1967, 20 SCRA 1146, 1151. In
that case the cause of action accrued on June 25, 1952. There was a written acknowledgment by
the vendors on November 10, 1956 of the validity of the deed of sale.

In National Marketing Corporation vs. Marquez, L-25553, January 31, 1969, 26 SCRA 722, it
appears that Gabino Marquez executed on June 24, 1950 a promissory note wherein he bound
himself to pay to the Namarco P12,000 in installments within the one-year period starting on
June 24, 1951 and ending on June 25, 1952. After making partial payments on July 7, 1951 and
February 23, 1952, Marquez defaulted.

His total obligation, including interest, as of October 31, 1964, amounted to P19,990.91. Written
demands for the payment of the obligation were made upon Marquez and his surety on March
22, 1956, February 16, 1963, June 10, September 18 and October 13, 1964. Marquez did not
make any further payment.

The Namarco sued Marquez and his surety on December 16, 1964. They contended that the
action had prescribed because the ten-year period for suing on the note expired on June 25, 1962.
That contention was not sustained. It was held that the prescriptive period was interrupted by the
written demands, copies of which were furnished the surety.

Respondents obligation under the promissory note became due and demandable on October
13, 1983. On July 27, 1988, petitioners counsel made a written demand for petitioner to settle his
obligation. From the time respondents obligation became due and demandable on October 13,
1983, up to the time the demand was made, only 4 years, 9 months and 14 days had elapsed. The
prescriptive period then commenced anew when respondent received the demand letter on
August 5, 1988.[39] Thus, when petitioner sent another demand letter on February 22,
1994,[40] the action still had not yet prescribed as only 5 years, 6 months and 17 days had
lapsed. While the records do not show when respondent received the second demand letter,
 nevertheless, it is still apparent that petitioner had the right to institute the complaint on
September 14, 1994, as it was filed before the lapse of the ten-year prescriptive period.
Lastly, if a demurrer to evidence is granted but on appeal the order of dismissal is reversed,
the movant shall be deemed to have waived the right to present evidence.[41]The movant who
presents a demurrer to the plaintiffs evidence retains the right to present their own evidence, if
the trial court disagrees with them; if the trial court agrees with them, but on appeal, the appellate
court disagrees with both of them and reverses the dismissal order, the defendants lose the right
to present their own evidence. The appellate court shall, in addition, resolve the case and render
judgment on the merits, inasmuch as a demurrer aims to discourage prolonged
litigations.[42] Thus, respondent may no longer offer proof to establish that he has no liability
under the loan documents sued upon by petitioner.
The promissory note signed and admitted by respondent provides for the loan amount
of P1,000,000.00, to mature on October 13, 1983, with interest at the rate of 25% per
annum. The note also provides for a penalty charge of 24% per annum of the amount due and
unpaid, and 25% attorneys fees. Hence, respondent should be held liable for these sums.
WHEREFORE, the petition is GRANTED. The Decisions of the Regional Trial Court of
Manila (Branch 37) dated January 26, 1996, and the Court of Appeals dated October 27, 1999
are SET ASIDE. Respondent is ordered to pay One Million Pesos (P1,000,000.00) plus 25%
interest and 24% penalty charge per annum beginning October 13, 1983 until fully paid, and
25% of the amount due as attorneys fees.
Costs against respondent.
SO ORDERED.

The President of the Church of Jesus Christ of Latter Day Saints v. BTL Construction
Corporation G.R. No. 176439, February 26, 2007

FACTS:
1. COJCOLDS and BTL entered into a Construction Contract for the latter’s construction of the
former’s meeting house facility. However, due to bad weather conditions, power failures, and
revisions in the construction, the completion date of the Medina Project was extended.

2. BTL informed COJCOLDS that it suffered financial losses from another project and thereby
requested that it be allowed to: (a) bill COJCOLDS based on 95% and 100% completion of the
Medina Project; and (b) execute deeds of assignment in favor of its suppliers so that they may
collect any eventual payments directly from COJCOLDS. COJCOLDS granted said request
which BTL, in turn, acknowledged.

3. BTL ceased its operations in the Medina Project because of its lack of funds to advance the
cost of labor necessary to complete the said project, as well as the supervening increase in the
prices of materials and other items for construction. Consequently, COJCOLDS terminated its
 Contract with BTL on August 17, 2001 and, thereafter, engaged the services of another
contractor, Vigor Construction (Vigor), to complete the Medina Project.

4. BTL filed a complaint against COJCOLDS for damages

ISSUE: What are their liabilities to each other?

HELD:
I. Liabilities of COJCOLDS to BTL.
a. The 10% Retention Money and the Unpaid Balance of the Contract Price: Because the 10%
retention money should not be treated as a separate and distinct liability of COJCOLDS to BTL
as it merely forms part of the contract price. While COJCOLDS is bound to eventually return to
BTL the amount of P1,248,179.87 as retention money, the said amount should be automatically
deducted from BTL’s outstanding billings. Ultimately, COJCOLDS’s total liability to BTL
should only be pegged at P1,612,017.74, representing the unpaid balance of 98% of the contract
price, inclusive of the 10% retention money.

II. Liabilities of BTL to COJCOLDS.

a. Liquidated Damages Due to Delay: BTL’s liability to COJCOLDS for liquidated damages is a
result of its delay in the performance of its obligations under the Contract.
b. Cost Overrun: BTL should therefore reimburse COJCOLDS the said cost which the latter
incurred essentially because of BTL’s failure to complete the project as agreed upon.
c. Overpayments: Therefore obliged to return the same to COJCOLDS pursuant to Article 2154
of the Civil Code which states that "[i]f something is received when there is no right to demand
it, and it was unduly delivered through mistake, the obligation to return it arises."

III. Mutual Liabilities: Attorney’s Fees- NONE , because neither party was shown to have acted
in bad faith in pursuing their respective claims against each other. The existence of bad faith is
negated by the fact that the CIAC, the CA, and the Court have all found the parties’ original
claims to be partially meritorious.

Abellana v. Spouses Ponce 437 SCRA 531 (2004)

FACTS:

1. Felomina, the aunt of private respondent Lucila Ponce, purchased from the late Estela Caldoza-
Pacres an agricultural lot with the intention of giving said lot to her niece, Lucila. Thus, in the
deed of sale, the latter was designated as the buyer of the lot covered by an OCT located at Los
Angeles, Butuan City. The total consideration of the sale was P16,500.00, but only P4,500.00
was stated in the deed upon the request of the seller.
2. Subsequently, Felomina applied for the issuance of title in the name of her niece. TCT over the
subject lot was issued in the name of Lucila. Said title, however, remained in the possession of
Felomina who developed the lot through Juanario Torreon and paid real property taxes thereon.

3. The relationship between Felomina and respondent spouses Romeo and Lucila Ponce,
however, turned sour. The latter allegedly became disrespectful and ungrateful to the point of
hurling her insults and even attempting to hurt her physically. Hence, Felomina filed the instant
case for revocation of implied trust to recover legal title over the property.

4. Private respondent spouses Lucila and Romeo, on the other hand, claimed that the purchase
price of the lot was only P4,500.00 and that it was them who paid the same. The payment and
signing of the deed of sale allegedly took place in the office of Atty. Teodoro Emboy in the
presence of the seller and her siblings namely, Aquilino Caldoza and the late Lilia Caldoza.

5. The trial court rendered a decision holding that an implied trust existed between Felomina and
Lucila, such that the latter is merely holding the lot for the benefit of the former. It thus ordered
the conveyance of the subject lot in favor of Felomina.

6. The Court of Appeals set aside the decision of the trial court ruling that Felomina failed to
prove the existence of an implied trust and upheld respondent spouses ownership over the
litigated lot.

ISSUE: Who, as between Felomina and respondent spouses, is the lawful owner of the
controverted lot?

RULING: It was Felomina and not Lucila who truly purchased the questioned lot from
Estela. The donation of immovable property by Felomina to Lucila is void.

Under Article 749 of the Civil Code, in order that the donation of an immovable property may be
valid, it must be made in a public document, specifying therein the property donated and the
value of the charges which the donee must satisfy. The acceptance may be made in the same
deed of donation or in a separate public document, but it shall not take effect unless it is done
during the lifetime of the donor. If the acceptance is made in a separate instrument, the donor
shall be notified thereof in an authentic form, and this step shall be noted in both instruments.

In the instant case, what transpired between Felomina and Lucila was a donation of an
immovable property which was not embodied in a public instrument as required by the foregoing
article. Being an oral donation, the transaction was void. Moreover, even if Felomina enjoyed the
fruits of the land with the intention of giving effect to the donation after her demise, the
conveyance is still a void donation mortis causa, for non-compliance with the formalities of a
will. No valid title passed regardless of the intention of Felomina to donate the property to
Lucila, because the naked intent to convey without the required solemnities does not suffice for
gratuitous alienations, even as between the parties inter se. At any rate, Felomina now seeks to
recover title over the property because of the alleged ingratitude of the respondent spouses.