CIVIL LAW REVIEW 1 CASES

WEEK 1

1. CIR v. Primetown Property Group, Inc., 531 SCRA 436, G.R. No. 162155. August 28, 2007

FACTS: Gilbert Yap, vice chair of respondent Primetown Property Group, Inc., applied for the refund or
credit of income tax respondent paid in 1997. He explained that the increase in the cost of labor and
materials and difficulty in obtaining financing for projects and collecting receivables caused the real estate
industry to slowdown. As a consequence, while business was good during the first quarter of 1997,
respondent suffered losses amounting to P71,879,228 that year.

According to Yap, because respondent suffered losses, it was not liable for income taxes. Nevertheless,
respondent paid its quarterly corporate income tax and remitted creditable withholding tax from real estate
sales to the BIR, and that respondent was entitled to tax refund or tax credit.

Revenue officer Elizabeth Y. Santos required respondent to submit additional documents to support its claim.

Respondent complied but its claim was not acted upon. Thus, on April 14, 2000, it filed a petition for review
in the Court of Tax Appeals (CTA).

The CTA dismissed the petition as it was filed beyond the two-year prescriptive period for filing a judicial
claim for tax refund or tax credit. It invoked Section 229 of the National Internal Revenue Code (NIRC):

“Sec. 229. Recovery of Taxes Erroneously or Illegally Collected.—No suit or proceeding shall be
maintained in any court for the recovery of any national internal revenue tax hereafter alleged to
have been erroneously or illegally assessed or collected, or of any penalty claimed to have been
collected without authority, or of any sum alleged to have been excessively or in any manner
wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but
such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid
under protest or duress.

In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the
date of payment of the tax or penalty regardless of any supervening cause that may arise after
payment: Provided, however, That the Commissioner may, even without a claim therefor, refund or
credit any tax, where on the face of the return upon which payment was made, such payment appears
clearly to have been erroneously paid.” (emphasis supplied)

The CTA found that respondent filed its final adjusted return on April 14, 1998. Thus, its right to claim a
refund or credit commenced on that date.

The tax court applied Article 13 of the Civil Code which states:

“Art. 13. When the law speaks of years, months, days or nights, it shall be understood that years
are of three hundred sixty-five days each; months, of thirty days; days, of twenty-four hours, and Saavedra, Anne Janine M.
nights from sunset to sunrise.

If the months are designated by their name, they shall be computed by the number of days which
they respectively have.

In computing a period, the first day shall be excluded, and the last included.” (emphasis supplied)

Thus, according to the CTA, the two-year prescriptive period under Section 229 of the NIRC for the filing of
judicial claims was equivalent to 730 days. Because the year 2000 was a leap year, respondent’s petition,

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which was filed 731 days after respondent filed its final adjusted return, was filed beyond the reglementary
period.

On appeal, the CA reversed and set aside the decision of the CTA. It ruled that Article 13 of the Civil Code
did not distinguish between a regular year and a leap year. According to the CA:

“The rule that a year has 365 days applies, notwithstanding the fact that a particular year is a leap
year.”

In other words, even if the year 2000 was a leap year, the periods covered by April 15, 1998 to April 14,
1999 and April 15, 1999 to April 14, 2000 should still be counted as 365 days each or a total of 730 days.
A statute which is clear and explicit shall be neither interpreted nor construed.

Petitioners moved for reconsideration but it was denied. Thus, this appeal.

Petitioners contend that tax refunds, being in the nature of an exemption, should be strictly construed
against claimants. Section 229 of the NIRC should be strictly applied against respondent inasmuch as it has
been consistently held that the prescriptive period (for the filing of tax refunds and
tax credits) begins to run on the day claimants file their final adjusted returns.23 Hence, the claim should
have been filed on or before April 13, 2000 or within 730 days, reckoned from the time respondent filed its
final adjusted return.

The conclusion of the CA that respondent filed its petition for review in the CTA within the two-year
prescriptive period provided in Section 229 of the NIRC is correct. Its basis, however, is not.

The rule is that the two-year prescriptive period is reckoned from the filing of the final adjusted return. But
how should the two-year prescriptive period be computed?

ISSUE: Whether the two-year prescriptive period is reckoned from the filing of the final adjusted return?

RULING: YES. Taxation; Prescription; The rule is that the two-year prescriptive period is reckoned
from the filing of the final adjusted return; A year is equivalent to 365 days regardless of whether
it is a regular year of a leap year.—The rule is that the two-year prescriptive period is reckoned from the
filing of the final adjusted return. But how should the two-year prescriptive period be computed? As already
quoted, Article 13 of the Civil Code provides that when the law speaks of a year, it is understood to be
equivalent to 365 days. In National Marketing Corporation v. Tecson, 29 SCRA 70 (1969), we ruled that a
year is equivalent to 365 days regardless of whether it is a regular year or a leap year.

Words and Phrases; Calendar Month; A calendar month is a month designated in the calendar
without regard to the number of days it may contain.—A calendar month is “a month designated in
the calendar without regard to the number of days it may contain.” It is the “period of time running from
the beginning of a certain numbered day up to, but not including, the corresponding numbered day of the
next month, and if there is not a sufficient number of days in the next month, then up to and including the
last day of that month.” To illustrate, one calendar month from December 31, 2007 will be from January 1,
2008 to January 31, 2008; one calendar month from January 31, 2008 will be from February 1, 2008 until
February 29, 2008. Saavedra, Anne Janine M.

Statutory Construction; Statutes; Repeals; A repealing clause like Sec. 27, Book VII of the
Administrative Code of 1987 is not an express repealing clause because it fails to identify or
designate the laws to be abolished; An implied repeal must have been clearly and unmistakably
intended by the legislature.—A repealing clause like Sec. 27, Book VII of the Administrative Code of 1987
is not an express repealing clause because it fails to identify or designate the laws to be abolished. Thus,
the provision above only impliedly repealed all laws inconsistent with the Administrative Code of 1987.
Implied repeals, however, are not favored. An implied repeal must have been clearly and unmistakably
intended by the legislature. The test is whether the subsequent law encompasses entirely the subject matter
of the former law and they cannot be logically or reasonably reconciled.
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Court holds that Section 31, Chapter VIII, Book I of the Administrative Code of 1987, being the
more recent law, governs the computation of legal periods.—Both Article 13 of the Civil Code and
Section 31, Chapter VIII, Book I of the Administrative Code of 1987 deal with the same subject matter—
the computation of legal periods. Under the Civil Code, a year is equivalent to 365 days whether it be a
regular year or a leap year. Under the Administrative Code of 1987, however, a year is composed of 12
calendar months. Needless to state, under the Administrative Code of 1987, the number of days is irrelevant.
There obviously exists a manifest incompatibility in the manner of computing legal periods under the Civil
Code and the Administrative Code of 1987. For this reason, we hold that Section 31, Chapter VIII, Book I
of the Administrative Code of 1987, being the more recent law, governs the computation of legal periods.
Lex posteriori derogat priori.

Note.—Where two statutes are of contrary tenor or of different dates but are of equal theoretical application
to a particular case, the case designed therefor specially should prevail over the other. (Teves vs.
Sandiganbayan, 447 SCRA 309 [2004])

2. CIR v. Aichi Forging Co., 632 SCRA 422, G.R. No. 184823. October 6, 2010.

FACTS: Respondent filed a claim for refund/credit of input VAT for the period July 1, 2002 to September
30, 2002 in the total amount of P3,891,123.82 with the petitioner Commissioner of Internal Revenue (CIR),
through the Department of Finance (DOF) One-Stop Shop Inter-Agency Tax Credit and Duty Drawback
Center.

Respondent filed a Petition for Review7 with the CTA for the refund/credit of the same input VAT. The case
was docketed as CTA Case No. 7065 and was raffled to the Second Division of the CTA.

In the Petition for Review, respondent alleged that for the period July 1, 2002 to September 30, 2002, it
generated and recorded zero-rated sales in the amount of P131,791,399.00, which was paid pursuant to
Section 106(A) (2) (a) (1), (2) and (3) of the National Internal Revenue Code of 1997 (NIRC); that for the
said period, it incurred and paid input VAT amounting to P3,912,088.14 from purchases and importation
attributable to its zero-rated sales; and that in its application for refund/credit filed with the DOF One-Stop
Shop Inter-Agency Tax Credit and Duty Drawback Center, it only claimed the amount of P3,891,123.82.

In response, petitioner filed his Answer, raising the following special and affirmative defenses, to wit:

4. Petitioner’s alleged claim for refund is subject to administrative investigation by the Bureau;

5. Petitioner must prove that it paid VAT input taxes for the period in question;

6. Petitioner must prove that its sales are export sales contemplated under Sections 106(A) (2) (a),
and 108(B) (1) of the Tax Code of 1997;

7. Petitioner must prove that the claim was filed within the two (2) year period prescribed in Section
229 of the Tax Code;
Saavedra, Anne Janine M.
8. In an action for refund, the burden of proof is on the taxpayer to establish its right to refund,
and failure to sustain the burden is fatal to the claim for refund; and

9. Claims for refund are construed strictly against the claimant for the same partake of the nature
of exemption from taxation.

Trial ensued, after which, on January 4, 2008, the Second Division of the CTA rendered a Decision partially
granting respondent’s claim for refund/credit. Pertinent portions of the Decision read:

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 “For a VAT registered entity whose sales are zero-rated, to validly claim a refund, Section 112 (A) of
the NIRC of 1997, as amended, provides:

SEC. 112. Refunds or Tax Credits of Input Tax.—

(A) Zero-rated or Effectively Zero-rated Sales.—Any VAT-registered person, whose

sales are zero-rated or effectively zero-rated may, within two (2) years after the close
of the taxable quarter when the sales were made, apply for the issuance of a tax credit
certificate or refund of creditable input tax due or paid attributable to such sales,
except transitional input tax, to the extent that such input tax has not been applied
against output tax: x x x

Pursuant to the above provision, petitioner must comply with the following requisites:

(1) the taxpayer is engaged in sales which are zero-rated or effectively zero-rated;
(2) the taxpayer is VAT-registered;
(3) the claim must be filed within two years after the close of the taxable quarter when such sales
were made; and
(4) the creditable input tax due or paid must be attributable to such sales, except the transitional
input tax, to the extent that such input tax has not been applied against the output tax.

The Court finds that the first three requirements have been complied [with] by petitioner.

With regard to the first requisite, the evidence presented by petitioner, such as the Sales Invoices (Exhibits
“II” to “II-262,” “JJ” to “JJ-431,” “KK” to “KK-394” and “LL”) shows that it is engaged in sales which are
zero-rated.

The second requisite has likewise been complied with. The Certificate of Registration with OCN
1RC0000148499 (Exhibit “C”) with the BIR proves that petitioner is a registered VAT taxpayer.

In compliance with the third requisite, petitioner filed its administrative claim for refund on September 30,
2004 (Exhibit “N”) and the present Petition for Review on September 30, 2004, both within the two (2) year
prescriptive period from the close of the taxable quarter when the sales were made, which is from September
30, 2002.

As regards, the fourth requirement, the Court finds that there are some documents and claims of petitioner
that are baseless and have not been satisfactorily substantiated.
xxxx

In sum, petitioner has sufficiently proved that it is entitled to a refund or issuance of a tax credit certificate
representing unutilized excess input VAT payments for the period July 1, 2002 to September 30, 2002,
which are attributable to its zero-rated sales for the same period, but in the reduced amount of
P3,239,119.25.

Dissatisfied with the above-quoted Decision, petitioner filed a Motion for Partial Reconsideration, insisting
that the administrative and the judicial claims were filed beyond the two-year period to claim a tax
Saavedra, Anne Janine M.
refund/credit provided for under Sections 112(A) and 229 of the NIRC. He reasoned that since the year
2004 was a leap year, the filing of the claim for tax refund/credit on September 30, 2004 was beyond the
two-year period, which expired on September 29, 2004. He cited as basis Article 13 of the Civil Code, which
provides that when the law speaks of a year, it is equivalent to 365 days. In addition, petitioner argued that
the simultaneous filing of the administrative and the judicial claims contravenes Sections 112 and 229 of
the NIRC. According to the petitioner, a prior filing of an administrative claim is a “condition precedent”
before a judicial claim can be filed. He explained that the rationale of such requirement rests not only on
the doctrine of exhaustion of administrative remedies but also on the fact that the CTA is an appellate body
which exercises the power of judicial review over administrative actions of the BIR.

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The Second Division of the CTA, however, denied petitioner’s Motion for Partial Reconsideration for lack of
merit. Petitioner thus elevated the matter to the CTA En Banc via a Petition for Review.

The CTA En Banc affirmed the Second Division’s Decision allowing the partial tax refund/credit in favor of
respondent. However, as to the reckoning point for counting the two-year period, the CTA En Banc ruled:

“Petitioner argues that the administrative and judicial claims were filed beyond the period allowed
by law and hence, the honorable Court has no jurisdiction over the same. In addition, petitioner
further contends that respondent’s filing of the administrative and judicial [claims] effectively
eliminates the authority of the honorable Court to exercise jurisdiction over the judicial claim.

We are not persuaded.

Section 114 of the 1997 NIRC, and We quote, to wit:

SEC. 114. Return and Payment of Value-added Tax.—

(A) In General.—Every person liable to pay the value-added tax imposed under this Title
shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25)
days following the close of each taxable quarter prescribed for each taxpayer: Provided,
however, That VAT-registered persons shall pay the value-added tax on a monthly basis.

[x x x x ]

Based on the above-stated provision, a taxpayer has twenty five (25) days from the close of each
taxable quarter within which to file a quarterly return of the amount of his gross sales or receipts. In
the case at bar, the taxable quarter involved was for the period of July 1, 2002 to September 30,
2002. Applying Section 114 of the 1997 NIRC, respondent has until October 25, 2002 within which
to file its quarterly return for its gross sales or receipts [with] which it complied when it filed its VAT
Quarterly Return on October 20, 2002.

In relation to this, the reckoning of the two-year period provided under Section 229 of the 1997 NIRC
should start from the payment of tax subject claim for refund. As stated above, respondent filed its
VAT Return for the taxable third quarter of 2002 on October 20, 2002. Thus, respondent’s
administrative and judicial claims for refund filed on September 30, 2004 were filed on time because
AICHI has until October 20, 2004 within which to file its claim for refund.

In addition, We do not agree with the petitioner’s contention that the 1997 NIRC requires the previous
filing of an administrative claim for refund prior to the judicial claim. This should not be the case as
the law does not prohibit the simultaneous filing of the administrative and judicial claims for refund.
What is controlling is that both claims for refund must be filed within the two-year prescriptive period.

In sum, the Court En Banc finds no cogent justification to disturb the findings and conclusion spelled
out in the assailed January 4, 2008 Decision and March 13, 2008 Resolution of the CTA Second
Division. What the instant petition seeks is for the Court En Banc to view and appreciate the evidence
Saavedra, Anne Janine M.
in their own perspective of things, which unfortunately had already been considered and passed
upon.

Petitioner sought reconsideration but the CTA En Banc denied his Motion for Reconsideration.

ISSUE: Whether respondent’s judicial and administrative claims for tax refund/credit were filed within the
two-year prescriptive period provided in Sections 112(A) and 229 of the NIRC.

RULING: Taxation; Value Added Tax (VAT); Prescription; Tax Refunds; Section 112(A) of the
National Internal Revenue Code (NIRC) is the applicable provision in determining the start of the
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two-year period for claiming a refund/credit of unutilized input Value Added Tax (VAT), and that
Sections 204(C) and 229 of the NIRC are inapplicable as “both provisions apply only to instances
of erroneous payment or illegal collection of internal revenue taxes.”—The pivotal question of when
to reckon the running of the two-year prescriptive period, however, has already been resolved in
Commissioner of Internal Revenue v. Mirant Pagbilao Corporation, 565 SCRA 154 (2008), where we ruled
that Section 112(A) of the NIRC is the applicable provision in determining the start of the two-year period
for claiming a refund/credit of unutilized input VAT, and that Sections 204(C) and 229 of the NIRC are
inapplicable as “both provisions apply only to instances of erroneous payment or illegal collection of internal
revenue taxes.”

Words and Phrases; As between the Civil Code, which provides that a year is equivalent to 365
days, and the Administrative Code of 1987, which states that a year is composed of 12 calendar
months, it is the latter that must prevail following the legal maxim, Lex posteriori derogat
priori.—In Commissioner of Internal Revenue v. Primetown Property Group, Inc., 531 SCRA 436 (2007),
we said that as between the Civil Code, which provides that a year is equivalent to 365 days, and the
Administrative Code of 1987, which states that a year is composed of 12 calendar months, it is the latter
that must prevail following the legal maxim, Lex posteriori derogat priori. Thus: Both Article 13 of the Civil
Code and Section 31, Chapter VIII, Book I of the Administrative Code of 1987 deal with the same subject
matter—the computation of legal periods. Under the Civil Code, a year is equivalent to 365 days whether it
be a regular year or a leap year. Under the Administrative Code of 1987, however, a year is composed of
12 calendar months. Needless to state, under the Administrative Code of 1987, the number of days is
irrelevant. There obviously exists a manifest incompatibility in the manner of computing legal periods under
the Civil Code and the Administrative Code of 1987. For this reason, we hold that Section 31, Chapter VIII,
Book I of the Administrative Code of 1987, being the more recent law, governs the computation of legal
periods. Lex posteriori derogat priori.

Where the taxpayer did not wait for the decision of the Commission of Internal Revenue or the
lapse of the 120-day period, it having simultaneously filed the administrative and the judicial
claims, the filing of said judicial claim with the Court of Tax Appeals is premature.—Section 112(D)
of the NIRC clearly provides that the CIR has “120 days, from the date of the submission of the complete
documents in support of the application [for tax refund/credit],” within which to grant or deny the claim. In
case of full or partial denial by the CIR, the taxpayer’s recourse is to file an appeal before the CTA within 30
days from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act on the
application for tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR to CTA
within 30 days. In this case, the administrative and the judicial claims were simultaneously filed on
September 30, 2004. Obviously, respondent did not wait for the decision of the CIR or the lapse of the 120-
day period. For this reason, we find the filing of the judicial claim with the CTA premature.

Words and Phrases; The phrase “within two (2) years x x x apply for the issuance of a tax credit
certificate or refund” in Section 112(A) of the National Internal Revenue Code (NIRC) refers to
applications for refund/credit filed with the Commission of Internal Revenue (CIR) and not to
appeals made to the Court of Tax Appeals (CTA)—applying the two-year period to judicial claims
would render nugatory Section 112(D) of the NIRC, which already provides for a specific period
within which a taxpayer should appeal the decision or inaction of the CIR.—There is nothing in
Section 112 of the NIRC to support respondent’s view. Subsection (A) of the said provision states that “any
VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two years after the
Saavedra, Anne Janine M.
close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or
refund of creditable input tax due or paid attributable to such sales.” The phrase “within two (2) years x x x
apply for the issuance of a tax credit certificate or refund” refers to applications for refund/credit filed with
the CIR and not to appeals made to the CTA. This is apparent in the first paragraph of subsection (D) of the
same provision, which states that the CIR has “120 days from the submission of complete documents in
support of the application filed in accordance with Subsections (A) and (B)” within which to decide on the
claim. In fact, applying the two-year period to judicial claims would render nugatory Section 112(D) of the
NIRC, which already provides for a specific period within which a taxpayer should appeal the decision or
inaction of the CIR. The second paragraph of Section 112(D) of the NIRC envisions two scenarios: (1) when

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a decision is issued by the CIR before the lapse of the 120-day period; and (2) when no decision is made
after the 120-day period. In both instances, the taxpayer has 30 days within which to file an appeal with
the CTA. As we see it then, the 120-day period is crucial in filing an appeal with the CTA.

3. Co v. New Prosperity Plastic Products, 727 SCRA 503, G.R. No. 183994. June 30, 2014

FACTS: Respondent New Prosperity Plastic Products, represented by Elizabeth Uy (Uy), is the private
complainant in Criminal Case Nos. 206655-59, 206661-77 and 209634 for Violation of Batas Pambansa
(B.P.) Bilang 22 filed against petitioner William Co (Co), which were raffled to the MeTC Branch 49 of
Caloocan City. In the absence of Uy and the private counsel, the cases were provisionally dismissed on June
9, 2003 in open court pursuant to Section 8, Rule 117 of the Revised Rules of Criminal Procedure (Rules).

Uy received a copy of the June 9, 2003 Order on July 2, 2003, while her counsel-of-record received a copy
a day after.

On July 2, 2004, Uy, through counsel, filed a Motion to Revive the Criminal Cases. Hon. Belen B. Ortiz, then
Presiding Judge of the MeTC Branch 49, granted the motion on October 14, 2004 and denied Co’s motion
for reconsideration.

When Co moved for recusation, Judge Ortiz inhibited herself from handling the criminal cases.

The cases were, thereafter, raffled to the MeTC Branch 50 of Caloocan City. Co filed a petition for certiorari
and prohibition with prayer for the issuance of a temporary restraining order (TRO)/writ of preliminary
injunction (WPI) before the RTC of Caloocan City challenging the revival of the criminal cases.

It was, however, dismissed for lack of merit. Co’s motion for reconsideration was, subsequently, denied.

Co then filed a petition for review on certiorari under Rule 45. We dismissed the petition per Resolution
dated February 13, 2006. There being no motion for reconsideration filed, the dismissal became final and
executory.

ISSUE: Whether the one-year time bar of the revival of the criminal cases is computed from issuance of
the order of provisional dismissal

RULING: When the Rules states that the provisional dismissal shall become permanent one year
after the issuance of the order temporarily dismissing the case, it should not be literally
interpreted as such.—There is evident want of jurisprudential support on Co’s supposition that the
dismissal of the cases became permanent one year after the issuance of the June 9, 2003 Order and not
after notice to the offended party. When the Rules states that the provisional dismissal shall become
permanent one year after the issuance of the order temporarily dismissing the case, it should not be literally
interpreted as such. Of course, there is a vital need to satisfy the basic requirements of due process; thus,
said in one case: Although the second paragraph of the new rule states that the order of dismissal shall
become permanent one year after the issuance thereof without the case having been revived, the provision
should be construed to mean that the order of dismissal shall become permanent one year after service of
the order of dismissal on the public prosecutor who has control of the prosecution without the criminal case
having been revived. The public prosecutor cannot be expected to comply with the timeline unless he is Saavedra, Anne Janine M.
served with a copy of the order of dismissal.

Civil Law; Periods; A year is equivalent to 365 days regardless of whether it is a regular year or
a leap year. Equally so, under the Administrative Code of 1987, a year is composed of 12 calendar
months. The number of days is irrelevant.—Granting for the sake of argument that this Court should
take into account 2004 as a leap year and that the one-year period to revive the case should be reckoned
from the date of receipt of the order of provisional dismissal by Uy, We still hold that the motion to revive
the criminal cases against Co was timely filed. A year is equivalent to 365 days regardless of whether it is
a regular year or a leap year. Equally so, under the Administrative Code of 1987, a year is composed of 12
calendar months. The number of days is irrelevant.
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 4. Lavadia v. Heirs of Juan Luces Luna, 730 SCRA 376, G.R. No. 171914, July 23, 2014

FACTS: ATTY. LUNA, a practicing lawyer, was at first a name partner in the prestigious law firm Sycip,
Salazar, Luna, Manalo, Hernandez & Feliciano Law Offices at that time when he was living with his first wife,
herein intervenor-appellant Eugenia Zaballero-Luna (EUGENIA), whom he initially married in a civil
ceremony conducted by the Justice of the Peace of Parañaque, Rizal on September 10, 1947 and later
solemnized in a church ceremony at the Pro-Cathedral in San Miguel, Bulacan

In ATTY. LUNA’s marriage to EUGENIA, they begot seven (7) children. After almost two (2) decades of
marriage, ATTY. LUNA and EUGENIA eventually agreed to live apart from each other in February 1966 and
agreed to separation of property, to which end, they entered into a written agreement entitled “AGREEMENT
FOR SEPARATION AND PROPERTY SETTLEMENT” dated November 12, 1975, whereby they agreed to live
separately and to dissolve and liquidate their conjugal partnership of property.

ATTY. LUNA obtained a divorce decree of his marriage with EUGENIA from the Civil and Commercial Chamber
of the First Circumscription of the Court of First Instance of Sto. Domingo, Dominican Republic. Also in Sto.
Domingo, Dominican Republic, on the same date, ATTY. LUNA contracted another marriage, this time with
SOLEDAD. Thereafter, ATTY. LUNA and SOLEDAD returned to the Philippines and lived together as husband
and wife until 1987.

Sometime in 1977, ATTY. LUNA organized a new law firm named: Luna, Puruganan, Sison and Ongkiko
(LUPSICON) where ATTY. LUNA was the managing partner. LUPSICON through ATTY. LUNA purchased from
Tandang Sora Development Corporation the 6th Floor of Kalaw-Ledesma Condominium Project
(condominium unit) at Gamboa St., Makati City. Said condominium unit was to be used as law office of
LUPSICON. After full payment, the Deed of Absolute Sale over the condominium unit was executed, and
which was registered bearing the following names:

“JUAN LUCES LUNA, married to Soledad L. Luna (46/100);

MARIO E. ONGKIKO, married to Sonia P.G. Ongkiko (25/100);
GREGORIO R. PURUGANAN, married to Paz A. Puruganan (17/100); and
TERESITA CRUZ SISON, married to Antonio J.M. Sison (12/100) x x x”

Subsequently, 8/100 share of ATTY. LUNA and 17/100 share of Atty. Gregorio R. Puruganan in the
condominium unit was sold to Atty. Mario E. Ongkiko, for which a new CCT No. 21761 was issued on February
7, 1992 in the following names:

“JUAN LUCES LUNA, married to Soledad L. Luna (38/100);

MARIO E. ONGKIKO, married to Sonia P.G. Ongkiko (50/100);
TERESITA CRUZ SISON, married to Antonio J.M. Sison (12/100) x x x”

Sometime in 1992, LUPSICON was dissolved and the condominium unit was partitioned by the partners but
the same was still registered in common under CCT No. 21716. The parties stipulated that the interest of
ATTY. LUNA over the condominium unit would be 25/100 share.
Saavedra, Anne Janine M.
ATTY. LUNA thereafter established and headed another law firm with Atty. Renato G. De la Cruz and used a
portion of the office condominium unit as their office. The said law firm lasted until the death of ATTY. JUAN
on July 12, 1997.

After the death of ATTY. JUAN, his share in the condominium unit including the lawbooks, office furniture
and equipment found therein were taken over by Gregorio Z. Luna, ATTY. LUNA’s son of the first marriage.
Gregorio Z. Luna then leased out the 25/100 portion of the condominium unit belonging to his father to
Atty. Renato G. De la Cruz who established his own law firm named Renato G. De la Cruz & Associates.

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The 25/100 pro indiviso share of ATTY. Luna in the condominium unit as well as the law books, office
furniture and equipment became the subject of the complaint filed by SOLEDAD against the heirs of ATTY.
JUAN with the RTC of Makati City.

The complaint alleged that the subject properties were acquired during the existence of the marriage
between ATTY. LUNA and SOLEDAD through their joint efforts that since they had no children, SOLEDAD
became co-owner of the said properties upon the death of ATTY. LUNA to the extent of 3/4 pro indiviso
share consisting of her 1/2 share in the said properties plus her 1/2 share in the net estate of ATTY. LUNA
which was bequeathed to her in the latter’s last will and testament; and that the heirs of ATTY. LUNA through
Gregorio Z. Luna excluded SOLEDAD from her share in the subject properties. The complaint prayed that
SOLEDAD be declared the owner of the 3/4 portion of the subject properties; that the same be partitioned;
that an accounting of the rentals on the condominium unit pertaining to the share of SOLEDAD be conducted;
that a receiver be appointed to preserve and administer the subject properties; and that the heirs of ATTY.
LUNA be ordered to pay attorney’s fees and costs of the suit to SOLEDAD.

The RTC held that:

(a) The 24/100 pro indiviso share in the condominium unit located at the SIXTH FLOOR of the
KALAW LEDESMA CONDOMINIUM PROJECT is adjudged to have been acquired by Juan Lucas Luna
through his sole industry;

(b) Plaintiff has no right as owner or under any other concept over the condominium unit, hence
the entry in Condominium Certificate of Title No. 21761 of the Registry of Deeds of Makati with
respect to the civil status of Juan Luces Luna should be changed from “JUAN LUCES LUNA married
to Soledad L. Luna” to “JUAN LUCES LUNA married to Eugenia Zaballero Luna”;

(c) Plaintiff is declared to be the owner of the books Corpus Juris, Fletcher on Corporation, American
Jurisprudence and Federal Supreme Court Reports found in the condominium unit and defendants
are ordered to deliver them to the plaintiff as soon as appropriate arrangements have been made for
transport and storage.

Petitioner assigned the following errors to the RTC, namely:

I. THE LOWER COURT ERRED IN RULING THAT THE CONDOMINIUM UNIT WAS ACQUIRED THRU THE
SOLE INDUSTRY OF ATTY. JUAN LUCES LUNA;

II. THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-APPELLANT DID NOT CONTRIBUTE
MONEY FOR THE ACQUISITION OF THE CONDOMINIUM UNIT;
III. THE LOWER COURT ERRED IN GIVING CREDENCE TO PORTIONS OF THE TESTIMONY OF
GREGORIO LUNA, WHO HAS NO ACTUAL KNOWLEDGE OF THE ACQUISITION OF THE UNIT, BUT
IGNORED OTHER PORTIONS OF HIS TESTIMONY FAVORABLE TO THE PLAINTIFF-APPELLANT;

IV. THE LOWER COURT ERRED IN NOT GIVING SIGNIFICANCE TO THE FACT THAT THE CONJUGAL
PARTNERSHIP BETWEEN LUNA AND INTERVENOR-APPELLANT WAS ALREADY DISSOLVED AND
LIQUIDATED PRIOR TO THE UNION OF PLAINTIFF-APPELLANT AND LUNA; Saavedra, Anne Janine M.
V. THE LOWER COURT ERRED IN GIVING UNDUE SIGNIFICANCE TO THE ABSENCE OF THE
DISPOSITION OF THE CONDOMINIUM UNIT IN THE HOLOGRAPHIC WILL OF THE PLAINTIFF-
APPELLANT;

VI. THE LOWER COURT ERRED IN GIVING UNDUE SIGNIFICANCE TO THE FACT THAT THE NAME OF
PLAINTIFF-APPELLANT DID NOT APPEAR IN THE DEED OF ABSOLUTE SALE EXECUTED BY TANDANG
SORA DEVELOPMENT CORPORATION OVER THE CONDOMINIUM UNIT;

9
 VII. THE LOWER COURT ERRED IN RULING THAT NEITHER ARTICLE 148 OF THE FAMILY CODE NOR
ARTICLE 144 OF THE CIVIL CODE OF THE PHILIPPINES ARE APPLICABLE;

VIII. THE LOWER COURT ERRED IN NOT RULING THAT THE CAUSE OF ACTION OF THE INTERVENOR-
APPELLANT HAS BEEN BARRED BY PESCRIPTION AND LACHES; and

IX. THE LOWER COURT ERRED IN NOT EXPUNGING/DISMISSING THE INTERVENTION FOR FAILURE
OF INTERVENOR-APPELLANT TO PAY FILING FEE.

In contrast, the respondents attributed the following errors to the trial court, to wit:

I. THE LOWER COURT ERRED IN HOLDING THAT CERTAIN FOREIGN LAW BOOKS IN THE LAW OFFICE
OF ATTY. LUNA WERE BOUGHT WITH THE USE OF PLAINTIFF’S MONEY;

II. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF PROVED BY PREPONDERANCE OF
EVIDENCE (HER CLAIM OVER) THE SPECIFIED FOREIGN LAW BOOKS FOUND IN ATTY. LUNA’S LAW
OFFICE; and

III. THE LOWER COURT ERRED IN NOT HOLDING THAT, ASSUMING PLAINTIFF PAID FOR THE SAID
FOREIGN LAW BOOKS, THE RIGHT TO RECOVER THEM HAD PRESCRIBED AND BARRED BY LACHES
AND ESTOPPEL.

The CA promulgated its assailed modified decision:

EUGENIA, the first wife, was the legitimate wife of ATTY. LUNA until the latter’s death on July 12,
1997. The absolute divorce decree obtained by ATTY. LUNA in the Dominican Republic did not
terminate his prior marriage with EUGENIA because foreign divorce between Filipino citizens is not
recognized in our jurisdiction. x x x

WHEREFORE, premises considered, the assailed August 27, 2001 Decision of the RTC of Makati City,
Branch 138, is hereby MODIFIED as follows:

(a) The 25/100 pro indiviso share in the condominium unit at the SIXTH FLOOR of the KALAW
LEDESMA CONDOMINIUM PROJECT consisting of FIVE HUNDRED SEVENTEEN (517/100) (sic)
SQUARE METERS is hereby adjudged to defendants-appellants, the heirs of Juan Luces Luna
and Eugenia Zaballero-Luna (first marriage), having been acquired from the sole funds and
sole industry of Juan Luces Luna while marriage of Juan Luces Luna and Eugenia Zaballero-
Luna (first marriage) was still subsisting and valid;

(b) Plaintiff-appellant Soledad Lavadia has no right as owner or under any other concept
over the condominium unit, hence the entry in Condominium Certificate of Title No. 21761 of
the Registry of Deeds of Makati with respect to the civil status of Juan Luces Luna should be
changed from “JUAN LUCES LUNA married to Soledad L. Luna” to “JUAN LUCES LUNA married
to Eugenia Zaballero Luna”;

(c) Defendants-appellants, the heirs of Juan Luces Luna and Eugenia Zaballero-Luna (first
Saavedra, Anne Janine M.
marriage) are hereby declared to be the owner of the books Corpus Juris, Fletcher on
Corporation, American Jurisprudence and Federal Supreme Court Reports found in the
condominium unit.

ISSUES: 1. Whether the divorce between Atty. Luna and Eugenia Zaballero-Luna (Eugenia) had validly
dissolved the first marriage

2. Whether the second marriage entered into by the late Atty. Luna and the petitioner entitled the latter to
any rights in property.

10
RULING: Divorce between Filipinos is void and ineffectual under the nationality rule adopted by Philippine
law. Hence, any settlement of property between the parties of the first marriage involving Filipinos submitted
as an incident of a divorce obtained in a foreign country lacks competent judicial approval, and cannot be
enforceable against the assets of the husband who contracts a subsequent marriage.

Civil Law; Conflict of Laws; Nationality Rule; The Civil Code continued to follow the nationality
rule, to the effect that Philippine laws relating to family rights and duties, or to the status,
condition and legal capacity of persons were binding upon citizens of the Philippines, although
living abroad.—The first marriage between Atty. Luna and Eugenia, both Filipinos, was solemnized in the
Philippines on September 10, 1947. The law in force at the time of the solemnization was the Spanish Civil
Code, which adopted the nationality rule. The Civil Code continued to follow the nationality rule, to the effect
that Philippine laws relating to family rights and duties, or to the status, condition and legal capacity of
persons were binding upon citizens of the Philippines, although living abroad. Pursuant to the nationality
rule, Philippine laws governed this case by virtue of both Atty. Luna and Eugenio having remained Filipinos
until the death of Atty. Luna on July 12, 1997 terminated their marriage.

Divorce; The nonrecognition of absolute divorce between Filipinos has remained even under the
Family Code, even if either or both of the spouses are residing abroad.—From the time of the
celebration of the first marriage on September 10, 1947 until the present, absolute divorce between Filipino
spouses has not been recognized in the Philippines. The nonrecognition of absolute divorce between Filipinos
has remained even under the Family Code, even if either or both of the spouses are residing abroad. Indeed,
the only two types of defective marital unions under our laws have been the void and the voidable marriages.
As such, the remedies against such defective marriages have been limited to the declaration of nullity of the
marriage and the annulment of the marriage.

The nonrecognition of absolute divorce in the Philippines is a manifestation of the respect for the
sanctity of the marital union especially among Filipino citizens.—It is true that on January 12, 1976,
the Court of First Instance (CFI) of Sto. Domingo in the Dominican Republic issued the Divorce Decree
dissolving the first marriage of Atty. Luna and Eugenia. Conformably with the nationality rule, however, the
divorce, even if voluntarily obtained abroad, did not dissolve the marriage between Atty. Luna and Eugenia,
which subsisted up to the time of his death on July 12, 1997. This finding conforms to the Constitution,
which characterizes marriage as an inviolable social institution, and regards it as a special contract of
permanent union between a man and a woman for the establishment of a conjugal and family life. The
nonrecognition of absolute divorce in the Philippines is a manifestation of the respect for the sanctity of the
marital union especially among Filipino citizens. It affirms that the extinguishment of a valid marriage must
be grounded only upon the death of either spouse, or upon a ground expressly provided by law. For as long
as this public policy on marriage between Filipinos exists, no divorce decree dissolving the marriage between
them can ever be given legal or judicial recognition and enforcement in this jurisdiction.

Property Relations; Conjugal Partnership of Gains; Considering that Atty. Luna and Eugenia had
not entered into any marriage settlement prior to their marriage on September 10, 1947, the
system of relative community or conjugal partnership of gains governed their property
relations.—Considering that Atty. Luna and Eugenia had not entered into any marriage settlement prior to
their marriage on September 10, 1947, the system of relative community or conjugal partnership of gains
governed their property relations. This is because the Spanish Civil Code, the law then in force at the time
of their marriage, did not specify the property regime of the spouses in the event that they had not entered
Saavedra, Anne Janine M.
into any marriage settlement before or at the time of the marriage. Article 119 of the Civil Code clearly so
provides, to wit: Article 119. The future spouses may in the marriage settlements agree upon absolute or
relative community of property, or upon complete separation of property, or upon any other regime. In the
absence of marriage settlements, or when the same are void, the system of relative community or conjugal
partnership of gains as established in this Code, shall govern the property relations between husband and
wife.

Marriages; In the Philippines, marriages that are bigamous, polygamous, or incestuous are
void.—In the Philippines, marriages that are bigamous, polygamous, or incestuous are void. Article 71 of

11
the Civil Code clearly states: Article 71. All marriages performed outside the Philippines in accordance with
the laws in force in the country where they were performed, and valid there as such, shall also be valid in
this country, except bigamous, polygamous, or incestuous marriages as determined by Philippine law.
Bigamy is an illegal marriage committed by contracting a second or subsequent marriage before the first
marriage has been legally dissolved, or before the absent spouse has been declared presumptively dead by
means of a judgment rendered in the proper proceedings. A bigamous marriage is considered void ab initio.

Property Relations; Co-Ownership; Due to the second marriage between Atty. Luna and the
petitioner being void ab initio by virtue of its being bigamous, the properties acquired during the
bigamous marriage were governed by the rules on co-ownership, conformably with Article 144
of the Civil Code.—Due to the second marriage between Atty. Luna and the petitioner being void ab initio
by virtue of its being bigamous, the properties acquired during the bigamous marriage were governed by
the rules on co-ownership, conformably with Article 144 of the Civil Code, viz.: Article 144. When a man
and a woman live together as husband and wife, but they are not married, or their marriage is void from
the beginning, the property acquired by either or both of them through their work or industry or their wages
and salaries shall be governed by the rules on co-ownership. (n) In such a situation, whoever alleges co-
ownership carried the burden of proof to confirm such fact. To establish co-ownership, therefore, it became
imperative for the petitioner to offer proof of her actual contributions in the acquisition of property. Her
mere allegation of co-ownership, without sufficient and competent evidence, would warrant no relief in her
favor.

Notes.—Article 26 of the Family Code confers jurisdiction on Philippine courts to extend the effect of a
foreign divorce decree to a Filipino spouse without undergoing trial to determine the validity of the
dissolution of the marriage. (Fujiki vs. Marinay, 700 SCRA 69 [2013])

5. Bayot v. CA, 570 SCRA 472, G.R. No. 155635/ G.R. No. 163979. November 7, 2008.*

FACTS: Vicente and Rebecca were married on April 20, 1979 in Sanctuario de San Jose, Greenhills,
Mandaluyong City. On its face, the Marriage Certificate identified Rebecca, then 26 years old, to be an
American citizen7 born in Agana, Guam, USA to Cesar Tanchiong Makapugay, American, and Helen Corn
Makapugay, American.

In San Francisco, California, Rebecca gave birth to Marie Josephine Alexandra or Alix. From then on, Vicente
and Rebecca’s marital relationship seemed to have soured as the latter, sometime in 1996, initiated divorce
proceedings in the Dominican Republic. Before the Court of the First Instance of the Judicial District of Santo
Domingo, Rebecca personally appeared, while Vicente was duly represented by counsel. On February 22,
1996, the Dominican court issued Civil Decree No. 362/96, ordering the dissolution of the couple’s marriage
and “leaving them to remarry after completing the legal requirements,” but giving them joint custody and
guardianship over Alix.

Over a year later, the same court would issue Civil Decree No. 406/97, settling the couple’s property
relations pursuant to an Agreement they executed on December 14, 1996. Said agreement specifically
stated that the “conjugal property which they acquired during their marriage consist[s] only of the real
property and all the improvements and personal properties therein contained at 502 Acacia Avenue,
Alabang, Muntinlupa.”
Saavedra, Anne Janine M.
Meanwhile, on March 14, 1996, or less than a month from the issuance of Civil Decree No. 362/96, Rebecca
filed with the Makati City RTC a petition with attachments, for declaration of nullity of marriage. Rebecca,
however, later moved and secured approval of the motion to withdraw the petition.

Rebecca executed an Affidavit of Acknowledgment stating under oath that she is an American citizen; that,
since 1993, she and Vicente have been living separately; and that she is carrying a child not of Vicente.

Rebecca filed another petition, this time before the Muntinlupa City RTC, for declaration of absolute nullity
of marriage on the ground of Vicente’s alleged psychological incapacity.

12
In it, Rebecca also sought the dissolution of the conjugal partnership of gains with application for support
pendente lite for her and Alix. Rebecca also prayed that Vicente be ordered to pay a permanent monthly
support for their daughter Alix in the amount of PhP 220,000.

Vicente filed a Motion to Dismiss17 on, inter alia, the grounds of lack of cause of action and that the petition
is barred by the prior judgment of divorce. Earlier, on June 5, 2001, Rebecca filed and moved for the
allowance of her application for support pendente lite.

To the motion to dismiss, Rebecca interposed an opposition, insisting on her Filipino citizenship, as affirmed
by the Department of Justice (DOJ), and that, therefore, there is no valid divorce to speak of.

Meanwhile, Vicente, who had in the interim contracted another marriage, and Rebecca commenced several
criminal complaints against each other. Specifically, Vicente filed adultery and perjury complaints against
Rebecca. Rebecca, on the other hand, charged Vicente with bigamy and concubinage.

The RTC declared, among other things, that the divorce judgment invoked by Vicente as bar to the petition
for declaration of absolute nullity of marriage is a matter of defense best taken up during actual trial. As to
the grant of support pendente lite, the trial court held that a mere allegation of adultery against Rebecca
does not operate to preclude her from receiving legal support.

Following the denial of his motion for reconsideration of the above RTC order, Vicente went to the CA on a
petition for certiorari, with a prayer for the issuance of a temporary restraining order (TRO) and/or writ of
preliminary injunction. The CA issued the desired TRO.

To the CA, the RTC ought to have granted Vicente’s motion to dismiss on the basis of the following premises:

(1) As held in China Road and Bridge Corporation v. Court of Appeals, the hypothetical-admission
rule applies in determining whether a complaint or petition states a cause of action. Applying said
rule in the light of the essential elements of a cause of action,28 Rebecca had no cause of action
against Vicente for declaration of nullity of marriage.

(2) Rebecca no longer had a legal right in this jurisdiction to have her marriage with Vicente
declared void, the union having previously been dissolved on February 22, 1996 by the foreign
divorce decree she personally secured as an American citizen. Pursuant to the second paragraph of
Article 26 of the Family Code, such divorce restored Vicente’s capacity to contract another marriage.

(3) Rebecca’s contention about the nullity of a divorce, she being a Filipino citizen at the time the
foreign divorce decree was rendered, was dubious. Her allegation as to her alleged Filipino citizenship
was also doubtful as it was not shown that her father, at the time of her birth, was still a Filipino
citizen. The Certification of Birth of Rebecca issued by the Government of Guam also did not indicate
the nationality of her father.

(4) Rebecca was estopped from denying her American citizenship, having professed to have that
nationality status and having made representations to that effect during momentous events of her
life, such as:
(a) during her marriage; Saavedra, Anne Janine M.
(b) when she applied for divorce; and
(c) when she applied for and eventually secured an American passport on January 18, 1995,
or a little over a year before she initiated the first but later withdrawn petition for nullity of
her marriage (Civil Case No. 96-378) on March 14, 1996.

(5) Assuming that she had dual citizenship, being born of a purportedly Filipino father in Guam,
USA which follows the jus soli principle, Rebecca’s representation and assertion about being an
American citizen when she secured her foreign divorce precluded her from denying her citizenship
and impugning the validity of the divorce.

13
Rebecca seasonably filed a motion for reconsideration of the above Decision, but this recourse was denied.

ISSUE: 1. Whether petitioner Rebecca was a Filipino citizen at the time the divorce judgment was rendered
in the Dominican Republic on February 22, 1996; and

2. Whether the judgment of divorce is valid and, if so, what are its consequent legal effects?

RULING: Family Code; Marriages; Divorce; A foreign divorce can be recognized here, provided
the divorce decree is proven as a fact and as valid under the national law of the alien spouse.—
The Court has taken stock of the holding in Garcia v. Recio that a foreign divorce can be recognized here,
provided the divorce decree is proven as a fact and as valid under the national law of the alien spouse. Be
this as it may, the fact that Rebecca was clearly an American citizen when she secured the divorce and that
divorce is recognized and allowed in any of the States of the Union, the presentation of a copy of foreign
divorce decree duly authenticated by the foreign court issuing said decree is, as here, sufficient.

Note.—The accused who secured a foreign divorce, and later remarried in the Philippines, in the belief that
the foreign divorce was valid, is liable for bigamy. (Diego vs. Castillo, 436 SCRA 67 [2004])

6. Orion Savings Bank v. Suzuki, 740 SCRA 345, G.R. No. 205487, November 12, 2014

FACTS: Respondent Shigekane Suzuki (Suzuki), a Japanese national, met with Ms. Helen Soneja (Soneja)
to inquire about a condominium unit and a parking slot at Cityland Pioneer, Mandaluyong City, allegedly
owned by Yung Sam Kang (Kang), a Korean national and a Special Resident Retiree’s Visa (SRRV) holder.
Soneja informed Suzuki that Unit No. 536 and Parking Slot No. 42 were for sale for P3,000,000.00. Soneja
likewise assured Suzuki that the titles to the unit and the parking slot were clean. After a brief negotiation,
the parties agreed to reduce the price to P2,800,000.00.

Suzuki issued Kang a Bank of the Philippine Island (BPI) Check No. 833496 for One Hundred Thousand
Pesos (P100,000.00) as reservation fee. Suzuki issued Kang another check, BPI Check No. 83350,8 this
time for P2,700,000.00 representing the remaining balance of the purchase price. Suzuki and Kang then
executed a Deed of Absolute Sale dated August 26, 2003, covering Unit No. 536 and Parking Slot No. 42.
Soon after, Suzuki took possession of the condominium unit and parking lot, and commenced the renovation
of the interior of the condominium unit.

Kang thereafter made several representations with Suzuki to deliver the titles to the properties, which were
then allegedly in possession of Alexander Perez (Perez, Orion’s Loans Officer) for safekeeping. Despite
several verbal demands, Kang failed to deliver the documents. Suzuki later on learned that Kang had left
the country, prompting Suzuki to verify the status of the properties with the Mandaluyong City Registry of
Deeds.

Before long, Suzuki learned that CCT No. 9118 representing the title to the Parking Slot No. 42 contained
no annotations although it remained under the name of Cityland Pioneer. This notwithstanding, Cityland
Pioneer, through Assistant Vice President Rosario D. Perez, certified that Kang had fully paid the purchase
price of Unit. No. 53610 and Parking Slot No. 42. Saavedra, Anne Janine M.
CCT No. 18186 representing the title to the condominium unit had no existing encumbrance, except for an
annotation under Entry No. 73321/C-10186 which provided that any conveyance or encumbrance of CCT
No. 18186 shall be subject to approval by the Philippine Retirement Authority (PRA). Although CCT No.
18186 contained Entry No. 66432/C-10186 dated February 2, 1999 representing a mortgage in favor of
Orion for a P1,000,000.00 loan, that annotation was subsequently cancelled on June 16, 2000 by Entry No.
73232/T. No. 10186. Despite the cancellation of the mortgage to Orion, the titles to the properties remained
in possession of Perez.

14
To protect his interests, Suzuki then executed an Affidavit of Adverse Claim. Suzuki then demanded the
delivery of the titles. Orion, (through Perez), however, refused to surrender the titles, and cited the need to
consult Orion’s legal counsel as its reason.

Suzuki received a letter from Orion’s counsel, stating that Kang obtained another loan in the amount of
P1,800,000.00. When Kang failed to pay, he executed a Dacion en Pago in favor of Orion. Orion, however,
did not register the Dacion en Pago, until October 15, 2003. Suzuki executed an Affidavit of Adverse Claim
Suzuki filed a complaint for specific performance and damages against Kang and Orion.

The Regional Trial Court (RTC), Branch 213, Mandaluyong City ruled in favor of Suzuki and ordered Orion
to deliver the CCT Nos. 18186 and 9118 to Suzuki. The court found that Suzuki was an innocent purchaser
for value whose rights over the properties prevailed over Orion’s. The RTC further noted that Suzuki exerted
efforts to verify the status of the properties but he did not find any existing encumbrance in the titles.
Although Orion claims to have purchased the property by way of a Dacion en Pago, Suzuki only learned
about it two (2) months after he bought the properties because Orion never bothered to register or annotate
the Dacion en Pago in CCT Nos. 18186 and 9116.

The RTC further ordered Orion and Kang to jointly and severally pay Suzuki moral damages, exemplary
damages, attorney’s fees, appearance fees, expenses for litigation and cost of suit. Orion timely appealed
the RTC decision with the CA.

The CA partially granted Orion’s appeal and sustained the RTC insofar as it upheld Suzuki’s right over the
properties. The CA further noted that Entry No. 73321/C-10186 pertaining to the withdrawal of investment
of an SRRV only serves as a warning to an SRRV holder about the implications of a conveyance of a property
investment. It deviated from the RTC ruling, however, by deleting the award for moral damages, exemplary
damages, attorney’s fees, expenses for litigation and cost of suit.

Orion sought a reconsideration of the CA decision but the CA denied the motion. Orion then filed a petition
for review on certiorari under Rule 45 with this Court.

ISSUES: 1. Whether spousal consent was belatedly raised on appeal.

2. Whether proof of acquisition during the marital coverture is a condition sine qua non for the operation of
the presumption of conjugal ownership.

3. Whether Suzuki is a purchaser in good faith, and is thus entitled to the protection of the law.

RULING: Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; In a Rule 45
petition, the latitude of judicial review generally excludes a factual and evidentiary reevaluation,
and the Supreme Court (SC) ordinarily abides by the uniform factual conclusions of the trial court
and the appellate court.—In a Rule 45 petition, the latitude of judicial review generally excludes a factual
and evidentiary reevaluation, and the Court ordinarily abides by the uniform factual conclusions of the trial
court and the appellate court. In the present case, while the courts below both arrived at the same
conclusion, there appears to be an incongruence in their factual findings and the legal principle they applied
to the attendant factual circumstances. Thus, we are compelled to examine certain factual issues in the
exercise of our sound discretion to correct any mistaken inference that may have been made.
Saavedra, Anne Janine M.
Civil Law; Conflict of Laws; Lex Loci Rei Sitae; All matters concerning the title and disposition of
real property are determined by what is known as the lex loci rei sitae, which can alone prescribe
the mode by which a title can pass from one person to another, or by which an interest therein
can be gained or lost.—It is a universal principle that real or immovable property is exclusively subject to
the laws of the country or state where it is located. The reason is found in the very nature of immovable
property — its immobility. Immovables are part of the country and so closely connected to it that all rights
over them have their natural center of gravity there. Thus, all matters concerning the title and disposition
of real property are determined by what is known as the lex loci rei sitae, which can alone prescribe the
mode by which a title can pass from one person to another, or by which an interest therein can be gained
or lost. This general principle includes all rules governing the descent, alienation and transfer of immovable
15
property and the validity, effect and construction of wills and other conveyances. This principle even governs
the capacity of the person making a deed relating to immovable property, no matter what its nature may
be. Thus, an instrument will be ineffective to transfer title to land if the person making it is incapacitated by
the lex loci rei sitae, even though under the law of his domicile and by the law of the place where the
instrument is actually made, his capacity is undoubted.

National Law; Property Relations; Property relations between spouses are governed principally
by the national law of the spouses.—Property relations between spouses are governed principally by the
national law of the spouses. However, the party invoking the application of a foreign law has the burden of
proving the foreign law. The foreign law is a question of fact to be properly pleaded and proved as the judge
cannot take judicial notice of a foreign law. He is presumed to know only domestic or the law of the forum.

Remedial Law; Evidence; Proof of Foreign Laws; To prove a foreign law, the party invoking it
must present a copy thereof and comply with Sections 24 and 25 of Rule 132 of the Revised Rules
of Court.—To prove a foreign law, the party invoking it must present a copy thereof and comply
with Sections 24 and 25 of Rule 132 of the Revised Rules of Court which reads: SEC. 24. Proof of
official record.—The record of public documents referred to in paragraph (a) of Section 19, when
admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the
officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept
in the Philippines, with a certificate that such officer has the custody. If the office in which the record is kept
is in a foreign country, the certificate may be made by a secretary of the embassy or legation, consul
general, consul, vice consul, or consular agent or by any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and authenticated by the seal of his office.
(Emphasis supplied) SEC. 25. What attestation of copy must state.—Whenever a copy of a document or
record is attested for the purpose of the evidence, the attestation must state, in substance, that the copy is
a correct copy of the original, or a specific part thereof, as the case may be. The attestation must be under
the official seal of the attesting officer, if there be any, or if he be the clerk of a court having a seal, under
the seal of such court.

Civil Law; Conflict of Laws; Doctrine of Processual Presumption; The International Law doctrine
of presumed-identity approach or processual presumption comes into play, i.e., where a foreign
law is not pleaded or, even if pleaded, is not proven, the presumption is that foreign law is the
same as Philippine Law.—Accordingly, the International Law doctrine of presumed-identity approach or
processual presumption comes into play, i.e., where a foreign law is not pleaded or, even if pleaded, is not
proven, the presumption is that foreign law is the same as Philippine Law. Under Philippine Law, the phrase
“Yung Sam Kang ‘married to’ Hyun Sook Jung” is merely descriptive of the civil status of Kang. In other
words, the import from the certificates of title is that Kang is the owner of the properties as they are
registered in his name alone, and that he is married to Hyun Sook Jung. We are not unmindful that in
numerous cases we have held that registration of the property in the name of only one spouse does not
negate the possibility of it being conjugal or community property. In those cases, however, there was proof
that the properties, though registered in the name of only one spouse, were indeed either conjugal or
community properties. Accordingly, we see no reason to declare as invalid Kang’s conveyance in favor of
Suzuki for the supposed lack of spousal consent.

Remedial Law; Evidence; Public Documents; Public instruments are evidence of the facts that
gave rise to their execution and are to be considered as containing all the terms of the
Saavedra, Anne Janine M.
agreement.—Public instruments are evidence of the facts that gave rise to their execution and are to be
considered as containing all the terms of the agreement. While a notarized document enjoys this
presumption, “the fact that a deed is notarized is not a guarantee of the validity of its contents.” The
presumption of regularity of notarized documents is not absolute and may be rebutted by clear and
convincing evidence to the contrary. In the present case, the presumption cannot apply because the
regularity in the execution of the Dacion en Pago and the loan documents was challenged in the proceedings
below where their prima facie validity was overthrown by the highly questionable circumstances surrounding
their execution.

16
 7. Del Soccoro v. Van Wilsem, 744 SCRA 516, G.R. No. 193707, December 10, 2014

FACTS: Petitioner Norma A. Del Socorro and respondent Ernst Johan Brinkman Van Wilsem contracted
marriage in Holland. They were blessed with a son named Roderigo Norjo Van Wilsem, who at the time of
the filing of the instant petition was sixteen (16) years of age.

Unfortunately, their marriage bond ended on July 19, 1995 by virtue of a Divorce Decree issued by the
appropriate Court of Holland. At that time, their son was only eighteen (18) months old. Thereafter,
petitioner and her son came home to the Philippines.

According to petitioner, respondent made a promise to provide monthly support to their son in the amount
of Two Hundred Fifty (250) Guildene (which is equivalent to Php17,500.00 more or less). However, since
the arrival of petitioner and her son in the Philippines, respondent never gave support to the son, Roderigo.
Not long thereafter, respondent came to the Philippines and remarried in Pinamungahan, Cebu, and since
then, have been residing thereat. Respondent and his new wife established a business known as Paree
Catering, located at Barangay Tajao, Municipality of Pinamungahan, Cebu City. To date, all the parties,
including their son, Roderigo, are presently living in Cebu City.

Petitioner, through her counsel, sent a letter demanding for support from respondent. However, respondent
refused to receive the letter.

Because of the foregoing circumstances, petitioner filed a complaint-affidavit with the Provincial Prosecutor
of Cebu City against respondent for violation of Section 5, paragraph E(2) of R.A. No. 9262 for the latter’s
unjust refusal to support his minor child with petitioner. Respondent submitted his counter-affidavit thereto,
to which petitioner also submitted her reply-affidavit. Thereafter, the Provincial Prosecutor of Cebu City
issued a Resolution recommending the filing of an information for the crime charged against herein
respondent.

The information, which was filed with the RTC-Cebu and raffled to Branch 20 thereof, states that:

That sometime in the year 1995 and up to the present, more or less, in the Municipality of Minglanilla,
Province of Cebu, Philippines, and within the jurisdiction of this Honorable Court, the above named
accused, did then and there wilfully, unlawfully and deliberately deprive, refuse and still continue to
deprive his son RODERIGO NORJO VAN WILSEM, a fourteen (14)-year-old minor, of financial support
legally due him, resulting in economic abuse to the victim.

CONTRARY TO LAW.

Upon motion and after notice and hearing, the RTC-Cebu issued a Hold Departure Order against respondent.
Consequently, respondent was arrested and, subsequently, posted bail.

Petitioner also filed a Motion/Application of Permanent Protection Order to which respondent filed his
Opposition. Pending the resolution thereof, respondent was arraigned.

Subsequently, without the RTC-Cebu having resolved the application of the protection order, respondent
filed a Motion to Dismiss on the ground of: (1) lack of jurisdiction over the offense charged; and (2) Saavedra, Anne Janine M.
prescription of the crime charged.

The RTC-Cebu issued the herein assailed Order, dismissing the instant criminal case against respondent on
the ground that the facts charged in the information do not constitute an offense with respect to the
respondent who is an alien, the dispositive part of which states:

WHEREFORE, the Court finds that the facts charged in the information do not constitute an offense
with respect to the accused, he being an alien, and accordingly, orders this case DISMISSED.

17
 The bail bond posted by accused Ernst Johan Brinkman Van Wilsem for his provisional liberty is
hereby cancelled (sic) and ordered released.

SO ORDERED.

Thereafter, petitioner filed her Motion for Reconsideration thereto reiterating respondent’s obligation to
support their child under Article 19523 of the Family Code, thus, failure to do so makes him liable under
R.A. No. 9262 which “equally applies to all persons in the Philippines who are obliged to support their minor
children regardless of the obligor’s nationality.”

The lower court issued an Order denying petitioner’s Motion for Reconsideration and reiterating its previous
ruling.

ISSUES: 1. Whether or not a foreign national has an obligation to support his minor child under Philippine
law; and

2. Whether or not a foreign national can be held criminally liable under R.A. No. 9262 for his unjustified
failure to support his minor child.

RULING: Remedial Law; Civil Procedure; Appeals; Hierarchy of Courts; Republic v. Sunvar Realty
Development Corporation, 674 SCRA 320 (2012), lays down the instances when a ruling of the
trial court may be brought on appeal directly to the Supreme Court (SC) without violating the
doctrine of hierarchy of courts.—At the outset, let it be emphasized that We are taking cognizance of
the instant petition despite the fact that the same was directly lodged with the Supreme Court, consistent
with the ruling in Republic v. Sunvar Realty Development Corporation, 674 SCRA 320 (2012), which lays
down the instances when a ruling of the trial court may be brought on appeal directly to the Supreme Court
without violating the doctrine of hierarchy of courts.

Civil Law; Conflict of Law; Nationality Theory; Support; Since the respondent is a citizen of
Holland or the Netherlands, the Supreme Court (SC) agrees with the Regional Trial Court (RTC)-
Cebu that he is subject to the laws of his country, not to Philippine law, as to whether he is
obliged to give support to his child, as well as the consequences of his failure to do so.—We agree
with respondent that petitioner cannot rely on Article 195 of the New Civil Code in demanding support from
respondent, who is a foreign citizen, since Article 15 of the New Civil Code stresses the principle of
nationality. In other words, insofar as Philippine laws are concerned, specifically the provisions of the Family
Code on support, the same only applies to Filipino citizens. By analogy, the same principle applies to
foreigners such that they are governed by their national law with respect to family rights and duties. The
obligation to give support to a child is a matter that falls under family rights and duties. Since the respondent
is a citizen of Holland or the Netherlands, we agree with the RTC-Cebu that he is subject to the laws of his
country, not to Philippine law, as to whether he is obliged to give support to his child, as well as the
consequences of his failure to do so.

Conflict of Laws; Evidence; Burden of Proof; Foreign Laws; International Law; In international
law, the party who wants to have a foreign law applied to a dispute or case has the burden of
proving the foreign law.—In international law, the party who wants to have a foreign law applied to a
dispute or case has the burden of proving the foreign law. In the present case, respondent hastily concludes Saavedra, Anne Janine M.
that being a national of the Netherlands, he is governed by such laws on the matter of provision of and
capacity to support. While respondent pleaded the laws of the Netherlands in advancing his position that he
is not obliged to support his son, he never proved the same. It is incumbent upon respondent to plead and
prove that the national law of the Netherlands does not impose upon the parents the obligation to support
their child (either before, during or after the issuance of a divorce decree), because Llorente v. Court of
Appeals, 345 SCRA 592 (2000), has already enunciated that: True, foreign laws do not prove themselves in
our jurisdiction and our courts are not authorized to take judicial notice of them. Like any other fact, they
must be alleged and proved.

18
Doctrine of Processual Presumption; Foreign Laws; If the foreign law involved is not properly
pleaded and proved, our courts will presume that the foreign law is the same as our local or
domestic or internal law.—In view of respondent’s failure to prove the national law of the Netherlands in
his favor, the doctrine of processual presumption shall govern. Under this doctrine, if the foreign law involved
is not properly pleaded and proved, our courts will presume that the foreign law is the same as our local or
domestic or internal law. Thus, since the law of the Netherlands as regards the obligation to support has
not been properly pleaded and proved in the instant case, it is presumed to be the same with Philippine law,
which enforces the obligation of parents to support their children and penalizing the noncompliance
therewith.

8. Land Bank v. Ong, 636 SCRA 266, G.R. No. 190755. November 24, 2010

FACTS: Spouses Johnson and Evangeline Sy secured a loan from Land Bank Legazpi City in the amount of
PhP 16 million. The loan was secured by three (3) residential lots, five (5) cargo trucks, and a warehouse.
Under the loan agreement, PhP 6 million of the loan would be short-term and would mature on February
28, 1997, while the balance of PhP 10 million would be payable in seven (7) years. The Notice of Loan
Approval contained an acceleration clause wherein any default in payment of amortizations or other charges
would accelerate the maturity of the loan.

Subsequently, however, the Spouses Sy found they could no longer pay their loan. On December 9, 1996,
they sold three (3) of their mortgaged parcels of land for PhP 150,000 to Angelina Gloria Ong, Evangeline’s
mother, under a Deed of Sale with Assumption of Mortgage.

Evangeline’s father, petitioner Alfredo Ong, later went to Land Bank to inform it about the sale and
assumption of mortgage.

Atty. Edna Hingco, the Legazpi City Land Bank Branch Head, told Alfredo and his counsel Atty. Ireneo de
Lumen that there was nothing wrong with the agreement with the Spouses Sy but provided them with
requirements for the assumption of mortgage. They were also told that Alfredo should pay part of the
principal which was computed at PhP 750,000 and to update due or accrued interests on the promissory
notes so that Atty. Hingco could easily approve the assumption of mortgage. Two weeks later, Alfredo issued
a check for PhP 750,000 and personally gave it to Atty. Hingco. A receipt was issued for his payment. He
also submitted the other documents required by Land Bank, such as financial statements for 1994 and 1995.
Atty. Hingco then informed Alfredo that the certificate of title of the Spouses Sy would be transferred in his
name but this never materialized. No notice of transfer was sent to him.

Alfredo later found out that his application for assumption of mortgage was not approved by Land Bank.
The bank learned from its credit investigation report that the Ongs had a real estate mortgage in the amount
of PhP 18,300,000 with another bank that was past due. Alfredo claimed that this was fully paid later on.
Nonetheless, Land Bank foreclosed the mortgage of the Spouses Sy after several months. Alfredo only
learned of the foreclosure when he saw the subject mortgage properties included in a Notice of Foreclosure
of Mortgage and Auction Sale at the RTC in Tabaco, Albay. Alfredo’s other counsel, Atty. Madrilejos,
subsequently talked to Land Bank’s lawyer and was told that the PhP 750,000 he paid would be returned to
him.
Saavedra, Anne Janine M.
Alfredo initiated an action for recovery of sum of money with damages against Land Bank, as Alfredo’s
payment was not returned by Land Bank. Alfredo maintained that Land Bank’s foreclosure without informing
him of the denial of his assumption of the mortgage was done in bad faith. He argued that he was lured into
believing that his payment of PhP 750,000 would cause Land Bank to approve his assumption of the loan of
the Spouses Sy and the transfer of the mortgaged properties in his and his wife’s name.6 He also claimed
incurring expenses for attorney’s fees of PhP 150,000, filing fee of PhP 15,000, and PhP 250,000 in moral
damages.

19
Testifying for Land Bank, Atty. Hingco claimed during trial that as branch manager she had no authority to
approve loans and could not assure anybody that their assumption of mortgage would be approved.

According to Atty. Hingco, the bank processes an assumption of mortgage as a new loan, since the new
borrower is considered a new client. They used character, capacity, capital, collateral, and conditions in
determining who can qualify to assume a loan. Alfredo’s proposal to assume the loan, she explained, was
referred to a separate office, the Lending Center.

Atty. Hingco testified that several months after Alfredo made the tender of payment, she received word that
the Lending Center rejected Alfredo’s loan application. She stated that it was the Lending Center and not
her that should have informed Alfredo about the denial of his and his wife’s assumption of mortgage. She
added that although she told Alfredo that the agreement between the spouses Sy and Alfredo was valid
between them and that the bank would accept payments from him, Alfredo did not pay any further amount
so the foreclosure of the loan collaterals ensued. She admitted that Alfredo demanded the return of the PhP
750,000 but said that there was no written demand before the case against the bank was filed in court. She
said that Alfredo had made the payment of PhP 750,000 even before he applied for the assumption of
mortgage and that the bank received the said amount because the subject account was past due and
demandable; and the Deed of Assumption of Mortgage was not used as the basis for the payment.

The RTC held that the contract approving the assumption of mortgage was not perfected as a result of the
credit investigation conducted on Alfredo. It noted that Alfredo was not even informed of the disapproval of
the assumption of mortgage but was just told that the accounts of the spouses Sy had matured and gone
unpaid. It ruled that under the principle of equity and justice, the bank should return the amount Alfredo
had paid with interest at 12% per annum computed from the filing of the complaint. The RTC further held
that Alfredo was entitled to attorney’s fees and litigation expenses for being compelled to litigate.

On appeal, Land Bank faulted the trial court for (1) holding that the payment of PhP 750,000 made by Ong
was one of the requirements for the approval of his proposal to assume the mortgage of the Sy spouses;
(2) erroneously ordering Land Bank to return the amount of PhP 750,000 to Ong on the ground of its failure
to effect novation; and (3) erroneously affirming the award of PhP 50,000 to Ong as attorney’s fees and
litigation expenses.

The CA affirmed the RTC Decision. It held that Alfredo’s recourse is not against the Sy spouses. According
to the appellate court, the payment of PhP 750,000 was for the approval of his assumption of mortgage and
not for payment of arrears incurred by the Sy spouses. As such, it ruled that it would be incorrect to consider
Alfredo a third person with no interest in the fulfillment of the obligation under Article 1236 of the Civil Code.
Although Land Bank was not bound by the Deed between Alfredo and the Spouses Sy, the appellate court
found that Alfredo and Land Bank’s active preparations for Alfredo’s assumption of mortgage essentially
novated the agreement. The CA denied Land Bank’s motion for reconsideration for lack of merit.

ISSUES: 1. Whether the Court of Appeals erred in holding that Art. 1236 of the Civil Code does not apply
and in finding that there is no novation.

2. Whether the Court of Appeals misconstrued the evidence and the law when it affirmed the trial court
decision’s ordering Land Bank to pay Ong the amount of Php750,000.00 with interest at 12% per annum.
3. Whether the Court of Appeals committed reversible error when it affirmed the award of Php50,000.00 to Saavedra, Anne Janine M.
Ong as attorney’s fees and expenses of litigation.

RULING: Civil Law; Obligations and Contracts; Novation; Novation, in its broad concept, may
either be extinctive or modificatory; Essential Requisites of Novation.—On the matter of novation,
Spouses Benjamin and Agrifina Lim v. M.B. Finance Corporation, 508 SCRA 556 (2006), provides the
following discussion: Novation, in its broad concept, may either be extinctive or modificatory. It is extinctive
when an old obligation is terminated by the creation of a new obligation that takes the place of the former;
it is merely modificatory when the old obligation subsists to the extent it remains compatible with the
amendatory agreement. An extinctive novation results either by changing the object or principal conditions
(objective or real), or by substituting the person of the debtor or subrogating a third person in the rights of
20
the creditor (subjective or personal). Under this mode, novation would have dual functions—one to
extinguish an existing obligation, the other to substitute a new one in its place—requiring a conflux of four
essential requisites: (1) a previous valid obligation; (2) an agreement of all parties concerned to a new
contract; (3) the extinguishment of the old obligation; and (4) the birth of a valid new obligation. x x x

The conflicting intention and acts of the parties underscore the absence of any express disclosure
or circumstances with which to deduce a clear and unequivocal intent by the parties to novate
the old agreement.—We do not agree, then, with the CA in holding that there was a novation in the
contract between the parties. Not all the elements of novation were present. Novation must be expressly
consented to. Moreover, the conflicting intention and acts of the parties underscore the absence of any
express disclosure or circumstances with which to deduce a clear and unequivocal intent by the parties to
novate the old agreement.

Estoppel; Elements of Estoppel.—The elements of estoppel are: First, the actor who usually must have
knowledge, notice or suspicion of the true facts, communicates something to another in a misleading way,
either by words, conduct or silence; second, the other in fact relies, and relies reasonably or justifiably,
upon that communication; third, the other would be harmed materially if the actor is later permitted to
assert any claim inconsistent with his earlier conduct; and fourth, the actor knows, expects or foresees that
the other would act upon the information given or that a reasonable person in the actor’s position would
expect or foresee such action.

Unjust Enrichment; Unjust enrichment exists “when a person unjustly retains a benefit to the
loss of another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience.”—We turn then on the principle upon which Land
Bank must return Alfredo’s payment. Unjust enrichment exists “when a person unjustly retains a benefit to
the loss of another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience.” There is unjust enrichment under Art. 22 of the Civil Code
when (1) a person is unjustly benefited, and (2) such benefit is derived at the expense of or with damages
to another.

Accion in Rem Verso; Unjust enrichment has been applied to actions called accion in rem verso;
Conditions in Order that the Accion in Rem Verso may Prosper.—Additionally, unjust enrichment has
been applied to actions called accion in rem verso. In order that the accion in rem verso may prosper, the
following conditions must concur: (1) that the defendant has been enriched; (2) that the plaintiff has
suffered a loss; (3) that the enrichment of the defendant is without just or legal ground; and (4) that the
plaintiff has no other action based on contract, quasi-contract, crime, or quasi-delict. The principle of unjust
enrichment essentially contemplates payment when there is no duty to pay, and the person who receives
the payment has no right to receive it.

Interest Rates; Forbearance of money refers to the contractual obligation of the lender or
creditor to desist for a fixed period from requiring the borrower or debtor to repay the loan or
debt then due and for which 12% per annum is imposed as interest in the absence of a stipulated
rate.—Based on our ruling above, forbearance of money refers to the contractual obligation of the lender
or creditor to desist for a fixed period from requiring the borrower or debtor to repay the loan or debt then
due and for which 12% per annum is imposed as interest in the absence of a stipulated rate. In the instant
case, Alfredo’s conditional payment to Land Bank does not constitute forbearance of money, since there was
Saavedra, Anne Janine M.
no agreement or obligation for Alfredo to pay Land Bank the amount of PhP 750,000, and the obligation of
Land Bank to return what Alfredo has conditionally paid is still in dispute and has not yet been determined.
Thus, it cannot be said that Land Bank’s alleged obligation has become a forbearance of money.

9. Willaware Products Corp. v. Jesichris Manufacturing Corp., 734 SCRA 238, G.R. No.
195549. September 3, 2014.

21
FACTS: Respondent Jesichris Manufacturing Company filed this present complaint for damages for unfair
competition with prayer for permanent injunction to enjoin petitioner Willaware Products Corporation from
manufacturing and distributing plastic-made automotive parts similar to those of respondent.

Respondent alleged that it is a duly registered partnership engaged in the manufacture and distribution of
plastic and metal products, with principal office at No. 100 Mithi Street, Sampalukan, Caloocan City. Since
its registration in 1992, respondent has been manufacturing in its Caloocan plant and distributing throughout
the Philippines plastic-made automotive parts. [Petitioner], on the other hand, which is engaged in the
manufacture and distribution of kitchenware items made of plastic and metal has its office near that of
respondent.

Respondent further alleged that in view of the physical proximity of petitioner’s office to respondent’s office,
and in view of the fact that some of the respondent’s employees had transferred to petitioner, petitioner
had developed familiarity with [respondent’s] products, especially its plastic-made automotive parts.

That sometime in November 2000, respondent discovered that petitioner had been manufacturing and
distributing the same automotive parts with exactly similar design, same material and colors but was selling
these products at a lower price as respondent’s plastic-made automotive parts and to the same customers.

Respondent alleged that it had originated the use of plastic in place of rubber in the manufacture of
automotive underchassis parts such as spring eye bushing, stabilizer bushing, shock absorber bushing,
center bearing cushions, among others. [Petitioner’s] manufacture of the same automotive parts with plastic
material was taken from respondent’s idea of using plastic for automotive parts. Also, [petitioner]
deliberately copied [respondent’s] products all of which acts constitute unfair competition, is and are
contrary to law, morals, good customs and public policy and have caused [respondent] damages in terms
of lost and unrealized profits in the amount of TWO MILLION PESOS as of the date of [respondent’s]
complaint.

Furthermore, petitioner’s tortuous conduct compelled [respondent] to institute this action and thereby to
incur expenses in the way of attorney’s fees and other litigation expenses in the amount of FIVE HUNDRED
THOUSAND PESOS (P500,000.00).

Petitioner denies all the allegations of the [respondent] except for the following facts: that it is engaged in
the manufacture and distribution of kitchenware items made of plastic and metal and that there’s physical
proximity of petitioner’s office to respondent’s office, and that some of respondent’s employees had
transferred to [petitioner] and that over the years petitioner had developed familiarity with respondent’s
products, especially its plastic-made automotive parts.

As its Affirmative Defenses, petitioner claims that there can be no unfair competition as the plastic-made
automotive parts are mere reproductions of original parts and their construction and composition merely
conforms to the specifications of the original parts of motor vehicles they intend to replace. Thus, respondent
cannot claim that it “originated” the use of plastic for these automotive parts. Even assuming for the sake
of argument that respondent indeed originated the use of these plastic automotive parts, it still has no
exclusive right to use, manufacture and sell these as it has no patent over these products. Furthermore,
respondent is not the only exclusive manufacturer of these plastic-made automotive parts as there are other
establishments which were already openly selling them to the public. Saavedra, Anne Janine M.

After trial on the merits, the RTC ruled in favor of respondent. It ruled that petitioner clearly invaded the
rights or interest of respondent by deliberately copying and performing acts amounting to unfair competition.
The RTC further opined that under the circumstances, in order for respondent’s property rights to be
preserved, petitioner’s acts of manufacturing similar plastic-made automotive parts such as those of
respondent’s and the selling of the same products to respondent’s customers, which it cultivated over the
years, will have to be enjoined.

22
On appeal, petitioner asserts that if there is no intellectual property protecting a good belonging to another,
the copying thereof for production and selling does not add up to unfair competition as competition is
promoted by law to benefit consumers. Petitioner further contends that it did not lure away
respondent’s employees to get trade secrets. It points out that the plastic spare parts sold by respondent
are traded in the market and the copying of these can be done by simply buying a sample for a mold to be
made.

Conversely, respondent averred that copyright and patent registrations are immaterial for an unfair
competition case to prosper under Article 28 of the Civil Code. It stresses that the characteristics of unfair
competition are present in the instant case as the parties are trade rivals and petitioner’s acts are contrary
to good conscience for deliberately copying its products and employing its former employees. The CA
affirmed with modification the ruling of the RTC. Dissatisfied, petitioner moved for reconsideration.
However, the same was denied for lack of merit by the CA.

ISSUE: Whether or not petitioner committed acts amounting to unfair competition under Article 28 of the
Civil Code.

RULING: Civil Law; Human Relations; Unfair Competition; The instant case falls under Article 28
of the Civil Code on human relations, and not unfair competition under Republic Act (R.A.) No.
8293, as the present suit is a damage suit and the products are not covered by patent
registration.—Prefatorily, we would like to stress that the instant case falls under Article 28 of the Civil
Code on human relations, and not unfair competition under Republic Act No. 8293, as the present suit is a
damage suit and the products are not covered by patent registration. A fortiori, the existence of patent
registration is immaterial in the present case. The concept of “unfair competition” under Article 28 is very
much broader than that covered by intellectual property laws. Under the present article, which follows the
extended concept of “unfair competition” in American jurisdictions, the term covers even cases of discovery
of trade secrets of a competitor, bribery of his employees, misrepresentation of all kinds, interference with
the fulfillment of a competitor’s contracts, or any malicious interference with the latter’s business.

Article 28 of the Civil Code provides that “unfair competition in agricultural, commercial or
industrial enterprises or in labor through the use of force, intimidation, deceit, machination or
any other unjust, oppressive or high-handed method shall give rise to a right of action by the
person who thereby suffers damage.”—Article 28 of the Civil Code provides that “unfair competition in
agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit,
machination or any other unjust, oppressive or high-handed method shall give rise to a right of action by
the person who thereby suffers damage.” From the foregoing, it is clear that what is being sought to be
prevented is not competition per se but the use of unjust, oppressive or high-handed methods which may
deprive others of a fair chance to engage in business or to earn a living. Plainly, what the law prohibits is
unfair competition and not competition where the means used are fair and legitimate.

In order to qualify the competition as “unfair,” it must have two characteristics: (1) it must
involve an injury to a competitor or trade rival, and (2) it must involve acts which are
characterized as “contrary to good conscience,” or “shocking to judicial sensibilities,” or
otherwise unlawful; in the language of our law, these include force, intimidation, deceit,
machination or any other unjust, oppressive or high-handed method.—In order to qualify the
competition as “unfair,” it must have two characteristics: (1) it must involve an injury to a competitor or Saavedra, Anne Janine M.
trade rival, and (2) it must involve acts which are characterized as “contrary to good conscience,” or
“shocking to judicial sensibilities,” or otherwise unlawful; in the language of our law, these include force,
intimidation, deceit, machination or any other unjust, oppressive or high-handed method. The public injury
or interest is a minor factor; the essence of the matter appears to be a private wrong perpetrated by
unconscionable means.

Unfair Competition; It is evident that petitioner is engaged in unfair competition as shown by his
act of suddenly shifting his business from manufacturing kitchenware to plastic-made
automotive parts; his luring the employees of the respondent to transfer to his employ and trying
to discover the trade secrets of the respondent.—It is evident that petitioner is engaged in unfair
23
competition as shown by his act of suddenly shifting his business from manufacturing kitchenware to plastic-
made automotive parts; his luring the employees of the respondent to transfer to his employ and trying to
discover the trade secrets of the respondent. Moreover, when a person starts an opposing place of business,
not for the sake of profit to himself, but regardless of loss and for the sole purpose of driving his competitor
out of business so that later on he can take advantage of the effects of his malevolent purpose, he is guilty
of wanton wrong. As aptly observed by the court a quo, the testimony of petitioner’s witnesses indicate that
it acted in bad faith in competing with the business of respondent. x x x In sum, petitioner is guilty of unfair
competition under Article 28 of the Civil Code.

10. Vinzons – Chato v. Fortune Tobacco, 575 SCRA 23, G.R. No. 141309

FACTS: The legislature enacted Republic Act No. 7654 (RA 7654), which took effect on July 3, 1993. Prior
to its effectivity, cigarette brands ‘Champion,’ ‘Hope,’ and ‘More’ were considered local brands subjected to
an ad valorem tax at the rate of 20-45%. However, on July 1, 1993, or two days before RA 7654 took effect,
petitioner issued RMC 37-93 reclassifying ‘Champion,’ ‘Hope,’ and ‘More’ as locally manufactured cigarettes
bearing a foreign brand subject to the 55% ad valorem tax. RMC 37-93 in effect subjected ‘Hope,’ ‘More,’
and ‘Champion’ cigarettes to the provisions of RA 7654, specifically, to Sec. 142, (c)(1) on locally
manufactured cigarettes which are currently classified and taxed at 55%, and which imposes an ad valorem
tax of “55% provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack.

BIR Deputy Commissioner Victor A. Deoferio, Jr. sent via telefax a copy of RMC 37-93 to Fortune Tobacco
but it was addressed to no one in particular. Fortune Tobacco received, by ordinary mail, a certified xerox
copy of RMC 37-93.

Respondent filed a motion for reconsideration requesting the recall of RMC 37-93, but was denied in a letter
dated July 30, 1993. The same letter assessed respondent for ad valorem tax deficiency amounting to
P9,598,334.00 (computed on the basis of RMC 37-93) and demanded payment within 10 days from receipt
thereof.

Respondent filed a petition for review with the Court of Tax Appeals (CTA), which on September 30, 1993,
issued an injunction enjoining the implementation of RMC 37-93. In its decision dated August 10, 1994, the
CTA ruled that RMC 37-93 is defective, invalid, and unenforceable and further enjoined petitioner from
collecting the deficiency tax assessment issued pursuant to RMC No. 37-93. This ruling was affirmed by the
Court of Appeals, and finally by this Court in Commissioner of Internal Revenue v. Court of Appeals. It was
held, among others, that RMC 37-93, has fallen short of the requirements for a valid administrative issuance.
Respondent filed before the RTC a complaint for damages against petitioner in her private capacity.
Respondent contended that the latter should be held liable for damages under Article 32 of the Civil Code
considering that the issuance of RMC 37-93 violated its constitutional right against deprivation of property
without due process of law and the right to equal protection of the laws.

Petitioner filed a motion to dismiss contending that:

(1) respondent has no cause of action against her because she issued RMC 37-93 in the performance
of her official function and within the scope of her authority. She claimed that she acted merely as
an agent of the Republic and therefore the latter is the one responsible for her acts; Saavedra, Anne Janine M.
(2) the complaint states no cause of action for lack of allegation of malice or bad faith; and

(3) the certification against forum shopping was signed by respondent’s counsel in violation

RTC denied petitioner’s motion to dismiss holding that to rule on the allegations of petitioner would be to
prematurely decide the merits of the case without allowing the parties to present evidence. It further held
that the defect in the certification against forum shopping was cured by respondent’s submission of the
corporate secretary’s certificate authorizing its counsel to execute the certification against forum shopping.

24
The case was elevated to the Court of Appeals via a petition for certiorari under Rule 65. However, same
was dismissed on the ground that under Article 32 of the Civil Code, liability may arise even if the defendant
did not act with malice or bad faith. The appellate court ratiocinated that Section 38, Book I of the
Administrative Code is the general law on the civil liability of public officers while Article 32 of the Civil Code
is the special law that governs the instant case. Consequently, malice or bad faith need not be alleged in
the complaint for damages. It also sustained the ruling of the RTC that the defect of the certification against
forum shopping was cured by the submission of the corporate secretary’s certificate giving authority to its
counsel to execute the same.”

ISSUE: Whether petitioner is liable for damages

RULING: It is a fundamental principle in the law of public officers that a duty owing to the public in general
cannot give rise to a liability in favor of particular individuals. The failure to perform a public duty can
constitute an individual wrong only when a person can show that, in the public duty, a duty to himself as
an individual is also involved, and that he has suffered a special and peculiar injury by reason of its improper
performance or non-performance.

Administrative Law; Public Officers; Two Kinds of duties exercised by public officers: the “duty
owing to the public collectively” (the body politic), and the “duty owing to particular
individuals.”—There are two kinds of duties exercised by public officers: the “duty owing to the public
collectively” (the body politic), and the “duty owing to particular individuals.”

In determining whether a public officer is liable for an improper performance or non-

performance of a duty, it must first be determined which of the two classes of duties is involved.—
In determining whether a public officer is liable for an improper performance or non-performance of a duty,
it must first be determined which of the two classes of duties is involved. For, indeed, as the eminent Floyd
R. Mechem instructs, “[t]he liability of a public officer to an individual or the public is based upon and is co-
extensive with his duty to the individual or the public. If to the one or the other he owes no duty, to that
one he can incur no liability.” Stated differently, when what is involved is a “duty owing to the public in
general,” an individual cannot have a cause of action for damages against the public officer, even though
he may have been injured by the action or inaction of the officer. In such a case, there is damage to the
individual but no wrong to him. In performing or failing to perform a public duty, the officer has touched his
interest to his prejudice; but the officer owes no duty to him as an individual. The remedy in this case is not
judicial but political.

Exception to this rule occurs when the complaining individual suffers a particular or special injury
on account of the public officer’s improper performance or non-performance of his public duty.—
The exception to this rule occurs when the complaining individual suffers a particular or special injury on
account of the public officer’s improper performance or non-performance of his public duty. An individual
can never be suffered to sue for an injury which, technically, is one to the public only; he must show a
wrong which he specially suffers, and damage alone does not constitute a wrong. A contrary precept (that
an individual, in the absence of a special and peculiar injury, can still institute an action against a public
officer on account of an improper performance or non-performance of a duty owing to the public generally)
will lead to a deluge of suits, for if one man might have an action, all men might have the like—the
complaining individual has no better right than anybody else. If such were the case, no one will serve a
public office. Thus, the rule restated is that an individual cannot have a particular action against a public Saavedra, Anne Janine M.
officer without a particular injury, or a particular right, which are the grounds upon which all actions are
founded.

A public officer, such as the petitioner, vested with quasi-legislative or rule-making power, owes
a duty to the public to promulgate rules which are compliant with the requirements of valid
administrative regulations.—What is involved is a public officer’s duty owing to the public in general. The
petitioner, as the then Commissioner of the Bureau of Internal Revenue, is being taken to task for Revenue
Memorandum Circular (RMC) No. 37-93 which she issued without the requisite notice, hearing and
publication, and which, in Commissioner of Internal Revenue v. Court of Appeals, 261 SCRA 236 (1996), we
declared as having “fallen short of a valid and effective administrative issuance.” A public officer, such as
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the petitioner, vested with quasi-legislative or rule-making power, owes a duty to the public to promulgate
rules which are compliant with the requirements of valid administrative regulations. But it is a duty owed
not to the respondent alone, but to the entire body politic who would be affected, directly or indirectly, by
the administrative rule.

Damages; To have a cause of action for damages against the petitioner, respondent must allege
that it suffered a particular or special injury on account of the non-performance by petitioner of
the public duty.—To have a cause of action for damages against the petitioner, respondent must allege
that it suffered a particular or special injury on account of the non-performance by petitioner of the public
duty. A careful reading of the complaint filed with the trial court reveals that no particular injury is alleged
to have been sustained by the respondent. The phrase “financial and business difficulties” mentioned in the
complaint is a vague notion, ambiguous in concept, and cannot translate into a “particular injury.” In
contrast, the facts of the case eloquently demonstrate that the petitioner took nothing from the respondent,
as the latter did not pay a single centavo on the tax assessment levied by the former by virtue of RMC 37-
93.

With no “particular injury” alleged in the complaint, there is, therefore, no delict or wrongful act
or omission attributable to the petitioner that would violate the primary rights of the respondent;
Elements of a cause of action.—With no “particular injury” alleged in the complaint, there is, therefore,
no delict or wrongful act or omission attributable to the petitioner that would violate the primary rights of
the respondent. Without such delict or tortious act or omission, the complaint then fails to state a cause of
action, because a cause of action is the act or omission by which a party violates a right of another. A cause
of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means
and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to
respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of
the right of the plaintiff or constituting a breach of the obligation of defendant to plaintiff for which the latter
may maintain an action for recovery of damages.

Damages; Under Article 32 of the Civil Code, the liability of the public officer may accrue even if
he/she acted in good faith, as long as there is a violation of constitutional rights.—The June 19,
2007 Decision and the dissent herein reiterates that under Article 32 of the Civil Code, the liability of the
public officer may accrue even if he/she acted in good faith, as long as there is a violation of constitutional
rights, citing Cojuangco, Jr. v. Court of Appeals, 309 SCRA 602 (1999), where we said: Under the aforecited
article, it is not necessary that the public officer acted with malice or bad faith. To be liable, it is enough
that there was a violation of the constitutional rights of petitioners, even on the pretext of justifiable motives
or good faith in the performance of duties.

YNARES-SANTIAGO, Dissenting Opinion:

Civil Law; Damages; As long as there was a violation of constitutional rights, a public officer may
be held liable for damages, and it is not even required that he/she acted with malice or bad
faith.—Jurisprudence is settled that to be liable under Article 32 of the Civil Code, a public officer or a
private individual must have an act in violation of the plaintiff’s constitutional rights regardless of whether
he/she acted in good faith or whether the act was done within or beyond the bounds of authority of said
public officer. The act may have been committed in any manner; what is pivotal is that the act resulted in
a violation of another person’s constitutional rights. No distinction was made whether the public officer acted
Saavedra, Anne Janine M.
within or beyond the scope of authority in order to hold him/her liable. As long as there was a violation of
constitutional rights, a public officer may be held liable for damages, and it is not even required that he/she
acted with malice or bad faith. That the Legislature did not intend to hold the public officer liable for damages
under Article 32 of the Civil Code for violation of constitutional rights only if he/she acted beyond the scope
of authority, is further made clear by the fact that under Article 32, a private individual is similarly held
accountable.

11. Continental Steel Manufacturing Corporation v. Montaño, 603 SCRA 621, G.R. No. 182836.
October 13, 2009.
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FACTS: Hortillano, an employee of petitioner Continental Steel Manufacturing Corporation (Continental
Steel) and a member of respondent Nagkakaisang Manggagawa ng Centro Steel Corporation-Solidarity of
Trade Unions in the Philippines for Empowerment and Reforms (Union) filed a claim for Paternity Leave,
Bereavement Leave and Death and Accident Insurance for dependent, pursuant to the Collective Bargaining
Agreement (CBA) concluded between Continental and the Union

The claim was based on the death of Hortillano’s unborn child. Hortillano’s wife, Marife V. Hortillano, had a
premature delivery while she was in the 38th week of pregnancy.

According to the Certificate of Fetal Death, the female fetus died during labor due to fetal Anoxia secondary
to uteroplacental insufficiency.

Continental Steel immediately granted Hortillano’s claim for paternity leave but denied his claims for
bereavement leave and other death benefits, consisting of the death and accident insurance.

Seeking the reversal of the denial by Continental Steel of Hortillano’s claims for bereavement and other
death benefits, the Union resorted to the grievance machinery provided in the CBA. Despite the series of
conferences held, the parties still failed to settle their dispute,8 prompting the Union to file a Notice to
Arbitrate before the National Conciliation and Mediation Board (NCMB) of the Department of Labor and
Employment (DOLE), National Capital Region (NCR).

In a Submission Agreement, the Union and Continental Steel submitted for voluntary arbitration the sole
issue of whether Hortillano was entitled to bereavement leave and other death benefits pursuant to Article
X, Section 2 and Article XVIII, Section 4.3 of the CBA. The parties mutually chose Atty. Montaño, an
Accredited Voluntary Arbitrator, to resolve said issue.

When the preliminary conferences again proved futile in amicably settling the dispute, the parties proceeded
to submit their respective Position Papers,12 Replies,13 and Rejoinders14 to Atty. Montaño.

The Union argued that Hortillano was entitled to bereavement leave and other death benefits pursuant to
the CBA. The Union maintained that Article X, Section 2 and Article XVIII, Section 4.3 of the CBA did not
specifically state that the dependent should have first been born alive or must have acquired juridical
personality so that his/her subsequent death could be covered by the CBA death benefits. The Union cited
cases wherein employees of MKK Steel Corporation (MKK Steel) and Mayer Steel Pipe Corporation (Mayer
Steel), sister companies of Continental Steel, in similar situations as Hortillano were able to receive death
benefits under similar provisions of their CBAs.

The Union mentioned in particular the case of Steve L. Dugan (Dugan), an employee of Mayer Steel, whose
wife also prematurely delivered a fetus, which had already died prior to the delivery. Dugan was able to
receive paternity leave, bereavement leave, and voluntary contribution under the CBA between his union
and Mayer Steel. Dugan’s child was only 24 weeks in the womb and died before labor, as opposed to
Hortillano’s child who was already 37-38 weeks in the womb and only died during labor.

The Union called attention to the fact that MKK Steel and Mayer Steel are located in the same compound as
Continental Steel; and the representatives of MKK Steel and Mayer Steel who signed the CBA with their
respective employees’ unions were the same as the representatives of Continental Steel who signed the Saavedra, Anne Janine M.
existing CBA with the Union.

Finally, the Union invoked Article 1702 of the Civil Code, which provides that all doubts in labor legislations
and labor contracts shall be construed in favor of the safety of and decent living for the laborer.

On the other hand, Continental Steel posited that the express provision of the CBA did not contemplate the
death of an unborn child, a fetus, without legal personality. It claimed that there are two elements for the
entitlement to the benefits, namely: (1) death and (2) status as legitimate dependent, none of which existed
in Hortillano’s case. Continental Steel, relying on Articles 40, 41 and 4216 of the Civil Code, contended that
only one with civil personality could die. Hence, the unborn child never died because it never acquired
27
juridical personality. Proceeding from the same line of thought, Continental Steel reasoned that a fetus that
was dead from the moment of delivery was not a person at all. Hence, the term dependent could not be
applied to a fetus that never acquired juridical personality. A fetus that was delivered dead could not be
considered a dependent, since it never needed any support, nor did it ever acquire the right to be supported.

Continental Steel maintained that the wording of the CBA was clear and unambiguous. Since neither of the
parties qualified the terms used in the CBA, the legally accepted definitions thereof were deemed
automatically accepted by both parties. The failure of the Union to have unborn child included in the
definition of dependent, as used in the CBA—the death of whom would have qualified the parent-employee
for bereavement leave and other death benefits—bound the Union to the legally accepted definition of the
latter term.

Continental Steel, lastly, averred that similar cases involving the employees of its sister companies, MKK
Steel and Mayer Steel, referred to by the Union, were irrelevant and incompetent evidence, given the
separate and distinct personalities of the companies. Neither could the Union sustain its claim that the grant
of bereavement leave and other death benefits to the parent-employee for the loss of an unborn child
constituted “company practice.”

Atty. Montaño ruled that Hortillano was entitled to bereavement leave with pay and death benefits. Atty.
Montaño identified the elements for entitlement to said benefits, thus:

“This Office declares that for the entitlement of the benefit of bereavement leave with pay by the
covered employees as provided under Article X, Section 2 of the parties’ CBA, three (3) indispensable
elements must be present:
(1) there is “death”;
(2) such death must be of employee’s “dependent”; and
(3) such dependent must be “legitimate.”

On the other hand, for the entitlement to benefit for death and accident insurance as provided under Article
XVIII, Section 4, paragraph (4.3) of the parties’ CBA, four (4) indispensable elements must be present:
(a) there is “death”;
(b) such death must be of employee’s “dependent”;
(c) such dependent must be “legitimate”; and
(d) proper legal document to be presented.”

Atty. Montaño found that there was no dispute that the death of an employee’s legitimate dependent
occurred. The fetus had the right to be supported by the parents from the very moment he/she was
conceived. The fetus had to rely on another for support; he/she could not have existed or sustained
himself/herself without the power or aid of someone else, specifically, his/her mother. Therefore, the fetus
was already a dependent, although he/she died during the labor or delivery. There was also no question
that Hortillano and his wife were lawfully married, making their dependent, unborn child, legitimate.

Aggrieved, Continental Steel filed with the Court of Appeals a Petition for Review on Certiorari, under Section
1, Rule 43 of the Rules of Court.

Continental Steel claimed that Atty. Montaño erred in granting Hortillano’s claims for bereavement leave Saavedra, Anne Janine M.
with pay and other death benefits because no death of an employee’s dependent had occurred. The death
of a fetus, at whatever stage of pregnancy, was excluded from the coverage of the CBA since what was
contemplated by the CBA was the death of a legal person, and not that of a fetus, which did not acquire any
juridical personality. Continental Steel pointed out that its contention was bolstered by the fact that the
term death was qualified by the phrase legitimate dependent. It asserted that the status of a child could
only be determined upon said child’s birth, otherwise, no such appellation can be had. Hence, the conditions
sine qua non for Hortillano’s entitlement to bereavement leave and other death benefits under the CBA were
lacking.

The Court of Appeals, in its Decision dated 27 February 2008, affirmed Atty. Montaño’s Resolution:
28
 “[Herein petitioner Continental Steel’s] exposition on the legal sense in which the term “death” is
used in the CBA fails to impress the Court, and the same is irrelevant for ascertaining the purpose,
which the grant of bereavement leave and death benefits thereunder, is intended to serve. While
there is no arguing with [Continental Steel] that the acquisition of civil personality of a child or fetus
is conditioned on being born alive upon delivery, it does not follow that such event of premature
delivery of a fetus could never be contemplated as a “death” as to be covered by the CBA provision,
undoubtedly an event causing loss and grief to the affected employee, with whom the dead fetus
stands in a legitimate relation. [Continental Steel] has proposed a narrow and technical significance
to the term “death of a legitimate dependent” as condition for granting bereavement leave and death
benefits under the CBA. Following [Continental Steel’s] theory, there can be no experience of “death”
to speak of. The Court, however, does not share this view. A dead fetus simply cannot be equated
with anything less than “loss of human life”, especially for the expectant parents. In this light,
bereavement leave and death benefits are meant to assuage the employee and the latter’s immediate
family, extend to them solace and support, rather than an act conferring legal status or personality
upon the unborn child. [Continental Steel’s] insistence that the certificate of fetal death is for
statistical purposes only sadly misses this crucial point.”

The Court of Appeals denied the Motion for Reconsideration of Continental Steel.

ISSUE: Whether Hortillano was entitled to bereavement leave and other death benefits pursuant to Article
X, Section 2 and Article XVIII, Section 4.3 of the CBA.

RULING: Civil Law; Civil Personality; Death of a Party; Sections 40, 41 and 42 of the Civil Code
do not provide at all a definition of death; While the Civil Code expressly provides that civil
personality may be extinguished by death, it does not explicitly state that only those who have
acquired juridical personality could die—one need not acquire civil personality first before he/she
could die.—Sections 40, 41 and 42 of the Civil Code do not provide at all a definition of death. Moreover,
while the Civil Code expressly provides that civil personality may be extinguished by death, it does not
explicitly state that only those who have acquired juridical personality could die. And third, death has been
defined as the cessation of life. Life is not synonymous with civil personality. One need not acquire civil
personality first before he/she could die. Even a child inside the womb already has life. No less than the
Constitution recognizes the life of the unborn from conception, that the State must protect equally with the
life of the mother. If the unborn already has life, then the cessation thereof even prior to the child being
delivered, qualifies as death.

Labor Law; Collective Bargaining Agreements (CBAs); Bereavement Leave and Death Benefits;
The unborn child can be considered a dependent under the Collective Bargaining Agreement
(CBA) between the parties in the instant case.—The unborn child can be considered a dependent under
the CBA. As Continental Steel itself defines, a dependent is “one who relies on another for support; one not
able to exist or sustain oneself without the power or aid of someone else.” Under said general definition,
even an unborn child is a dependent of its parents. Hortillano’s child could not have reached 38-39 weeks
of its gestational life without depending upon its mother, Hortillano’s wife, for sustenance. Additionally, it is
explicit in the CBA provisions in question that the dependent may be the parent, spouse, or child of a married
employee; or the parent, brother, or sister of a single employee. The CBA did not provide a qualification for Saavedra, Anne Janine M.
the child dependent, such that the child must have been born or must have acquired civil personality, as
Continental Steel avers. Without such qualification, then child shall be understood in its more general sense,
which includes the unborn fetus in the mother’s womb.

Legitimate Children; A legitimate child is a product of, and, therefore, implies a valid and lawful
marriage.—The term legitimate merely addresses the dependent child’s status in relation to his/her
parents. In Angeles v. Maglaya, 469 SCRA 363 (2005) we have expounded on who is a legitimate child,
viz.: A legitimate child is a product of, and, therefore, implies a valid and lawful marriage. Remove the
element of lawful union and there is strictly no legitimate filiation between parents and child. Article 164 of

29
the Family Code cannot be more emphatic on the matter: “Children conceived or born during the marriage
of the parents are legitimate.”

The legitimacy or illegitimacy of a child attaches upon his/her conception.—It is apparent that
according to the Family Code and the aforecited jurisprudence, the legitimacy or illegitimacy of a child
attaches upon his/her conception. In the present case, it was not disputed that Hortillano and his wife were
validly married and that their child was conceived during said marriage, hence, making said child legitimate
upon her conception.

Being for the benefit of the employee, Collective Bargaining Agreement (CBA) provisions on
bereavement leave and other death benefits should be interpreted liberally to give life to the
intentions thereof; It cannot be said that the parents’ grief and sense of loss arising from the
death of their unborn child, who, in this case, had a gestational life of 38-39 weeks but died
during delivery, is any less than that of parents whose child was born alive but died
subsequently.—We emphasize that bereavement leave and other death benefits are granted to an
employee to give aid to, and if possible, lessen the grief of, the said employee and his family who suffered
the loss of a loved one. It cannot be said that the parents’ grief and sense of loss arising from the death of
their unborn child, who, in this case, had a gestational life of 38-39 weeks but died during delivery, is any
less than that of parents whose child was born alive but died subsequently. Being for the benefit of the
employee, CBA provisions on bereavement leave and other death benefits should be interpreted liberally to
give life to the intentions thereof. Time and again, the Labor Code is specific in enunciating that in case of
doubt in the interpretation of any law or provision affecting labor, such should be interpreted in favor of
labor. In the same way, the CBA and CBA provisions should be interpreted in favor of labor.

Saavedra, Anne Janine M.

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