SURVEY OF 2012 SC DECISIONS IN CIVIL LAWBy: Dean ED VINCENT S. ALBANO

ARTICLE 8, NCCDecisions of the SC, not NLRC form part of the legal system. In International Management Services Manilyn Pascual v. Logarta, G.R. No. 163657, April 18, 2012, Peralta, J, the SC had the occasion to say that although Art. 8, NCC recognizes judicial decisions, applying or interpreting statutes as part of the legal system of the country, such level of recognition is not afforded to administrative decisions. (Phil. Bank of Communications v. CIR, G.R. No. 112024, January 28, 1999, 302 SCRA 241. It does not apply to a decision of the NLRC.

MARRIAGEJudgment declaring a spouse presumptively dead is immediately final and executory; remedy is Rule 65, not Rule 45. Yolanda Granada and Cyrus Granada got married in 1991. In 1994, Cyrus went to Taiwan to seek employment but since then, he never communicated with Yolanda. After nine (9) years of waiting, she filed a Petition to have Cyrus declared presumptively dead which the RTC granted. The Republic of the Philippines appealed from the decision contending that Yolanda failed to prove earnest efforts to locate Cyrus and thus, failed to prove well-founded belief that he was already dead. Yolanda moved to dismiss the appeal contending that the Petition for Declaration of Presumptive Death based under Art. 41, Family Code was a summary judicial proceedings in which the judgment is immediately final and executory and, thus, not appealable. The CA granted the motion, hence, the Republic filed a petition under Rule 45, where the basic issue is whether the CA erred in dismissing the appeal on the ground that the RTC decision is immediately final and executory hence, not subject of ordinary appeal. Decide. Answer: The CA is correct. The RTC decision is immediately final and executory and not subject to ordinary appeal. A marriage contracted by any person during the subsistence of a previous marriage shall be null and void, unless before the celebration of the subsequent marriage, the prior spouse had been absent for four consecutive years and the spouse present has a well-founded belief that the absent spouse was already dead. In case of disappearance where there is danger of death under the circumstances set forth in the provisions of Article 391 of the Civil Code , an absence of only two years shall be sufficient. For the purpose of contracting the subsequent marriage under the preceding paragraph the spouse present must institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee, without prejudice to the effect of reappearance of the absent spouse. Clearly, a petition for declaration of presumptive death of an absent spouse for the purpose of contracting a subsequent marriage under Article 41 of the Family Code is a summary proceeding as provided for under the Family Code. Further, Title XI of the Family Code is entitled Summary Judicial Proceedings in the Family Law. Subsumed thereunder are Articles 238 and 247, which provide: Art. 238. Until modified by the Supreme Court, the procedural rules in this Title shall apply in all cases provided for in this Code requiring summary court proceedings. Such cases shall be decided in an expeditious manner without regard to technical rules. Art. 247. The judgment of the court shall be immediately final and executory. Further, Article 253 of the Family Code reads: ART. 253. The foregoing rules in Chapters 2 and 3 hereof shall likewise govern summary proceedings filed under Articles 41, 51, 69, 73, 96, 124 and 217, insofar as they are applicable. Taken together, Articles 41, 238, 247 and 253 of the Family Code provide that since a petition for declaration of presumptive death is a summary proceeding, the judgment of the court therein shall be immediately final and executory. In Republic v. Bermudez-Lorino, 489 Phil. 761 (2005) the Republic likewise appealed the CAs affirmation of the RTCs grant of respondents Petition for Declaration of Presumptive Death of her absent spouse. The Court therein held that it was an error for the Republic to file a Notice of Appeal when the latter elevated the matter to the CA, to wit: In Summary Judicial Proceedings under the Family Code, there is no reglementary period within which to perfect an appeal, precisely because judgments rendered thereunder, by express provision of Section 247, Family Code, supra, are immediately final and executory. But, if only to set the records straight and for the future guidance of the bench and the bar, let it be stated that the RTCs decision dated November 7, 2001, was immediately final and executory upon notice to the parties. It was erroneous for the OSG to file a notice of appeal, and for the RTC to give due course thereto. The Court of Appeals acquired no jurisdiction over the case, and should have dismissed the appeal outright on that ground.In Republic v. Bermudez-Lorino, It was opined that what the OSG should have filed was a petition for certiorari under Rule 65, not a petition for review under Rule 45. Petition for declaration of presumptive death is not a special proceeding; but a summary one. In the present case, the Republic argued that Bermudez-Lorino has been superseded by the subsequent Decision of the Court in Republic v. Jomoc, 497 Phil. 528 (2005). In Jomoc, the RTC granted respondents Petition for Declaration of Presumptive Death of her absent husband for the purpose of remarriage. Petitioner Republic appealed the RTC Decision by filing a Notice of Appeal. The trial court disapproved the Notice of Appeal on the ground that, under the Rules of Court, a record on appeal is required to be filed when appealing special proceedings cases. The CA affirmed the RTC ruling. In reversing the CA, it was clarified that while an action for declaration of presumptive death or absence under Rule 72, Section 1(m), expressly falls under the category of special proceedings, a petition for declaration of presumptive death under Article 41 of the Family Code is a summary proceeding, as provided for by Article 238 of the same Code. Since its purpose was to enable her to contract a subsequent valid marriage, petitioners action was a summary proceeding based on Article 41 of the Family Code, rather than a special proceeding under Rule 72 of the Rules of Court. Considering that this action was /not/ a special proceeding, petitioner was /not/ required to file a record on appeal when it appealed the RTC Decision to the CA. /Republic v. Jomoc /did not supersede our ruling in /Republic v. Bermudez-Lorino/. /Jomoc/ did not expound on the characteristics of a summary proceeding under the Family Code/. /In contrast,/ /the Court in /Bermudez-Lorino /expressly stated that its ruling on the impropriety of an ordinary appeal as a vehicle for questioning the trial courts Decision in a summary proceeding for declaration of presumptive death under Article 41 of the Family Code was intended to set the records straight and for the future guidance of the bench and the bar. At any rate, four years after /Jomoc/, this Court settled the rule regarding appeal of judgments rendered in summary proceedings under the Family Code when it ruled in /Republic v. Tango/, G.R. No. 161062, July 31, 2009, 594 SCRA 560: This case presents an opportunity for us to settle the rule on appeal of judgments rendered in summary proceedings under the Family Code and accordingly, refine our previous decisions thereon. Article 238 of the Family Code, under Title XI: SUMMARY JUDICIAL PROCEEDINGS IN THE FAMILY LAW, establishes the rules that govern summary court proceedings in the Family Code: ART. 238. Until modified by the Supreme Court, the procedural rules in this Title shall apply in all cases provided for in this Code requiring summary court proceedings. Such cases shall be decided in an expeditious manner without regard to technical rules. In turn, Article 253 of the Family Code specifies the cases covered by the rules in chapters two and three of the same title. It states: ART. 253. The foregoing rules in Chapters 2 and 3 hereof shall likewise govern summary proceedings filed under Articles 41, 51, 69, 73, 96, 124 and 217, insofar as they are applicable. (Emphasis supplied.) In plain text, Article 247 in Chapter 2 of the same title reads: ART 247. The judgment of the court shall be immediately final and executory. By express provision of law, the judgment of the court in a summary proceeding shall be immediately final and executory. As a matter of course, it follows that no appeal can be had of the trial court's judgment in a summary proceeding for the declaration of presumptive death of an absent spouse under Article 41 of the Family Code. It goes without saying, however, that an aggrieved party may file a petition for certiorari to question abuse of discretion amounting to lack of jurisdiction. Such petition should be filed in the Court of Appeals in accordance with the Doctrine of Hierarchy of Courts. To be sure, even if the Court's original jurisdiction to issue a writ of certiorari is concurrent with the RTCs and the Court of Appeals in certain cases, such concurrence does not sanction an unrestricted freedom of choice of court forum. From the decision of the Court of Appeals, the losing party may then file a petition for review on certiorari under Rule 45 of the Rules of Court with the Supreme Court. This is because the errors which the court may commit in the exercise of jurisdiction are merely errors of judgment which are the proper subject of an appeal. In sum, under Article 41 of the Family Code, the losing party in a summary proceeding for the declaration of presumptive death may file a petition for certiorari with the CA on the ground that, in rendering judgment thereon, the trial court committed grave abuse of discretion amounting to lack of jurisdiction. From the decision of the CA, the aggrieved party may elevate the matter to this Court via a petition for review on certiorari under Rule 45 of the Rules of Court. Evidently then, the CA did not commit any error in dismissing the Republics Notice of Appeal on the ground that the RTC judgment on the Petition for Declaration of Presumptive Death of respondents spouse was immediately final and executory and, hence, not subject to ordinary appeal. (Rep. v. Yolanda C. Granada, G.R. No. 187512, July 13, 2012, Sereno, J). *On whether the CA seriously erred in affirming the RTCs grant of the Petition for Declaration of Presumptive Death under Article 41 of the Family Code based on the evidence that respondent had presented* The Republic assailed the RTCs grant of the Petition for Declaration of Presumptive Death of the absent spouse of respondent on the ground that she had not adduced the evidence required to establish a well-founded belief that her absent spouse was already dead, as expressly required by Article 41 of the Family Code. Petitioner cites /Republic v. Nolasco, /G.R. No. 94053, March 17, 1993, 220 SCRA 20; /United States v. Biasbas, /25 Phil. 71 (1913) and /Republic v. Court of Appeals and Alegro, /513 Phil. 391 (2005) as authorities on the subject. In /Nolasco/, petitioner Republic sought the reversal of the CAs affirmation of the RTCs grant of a Petition for Declaration of Presumptive Death of his absent spouse, a British subject who left their home in the Philippines soon after giving birth to their son while respondent was on board a vessel working as a seafarer. The Republic sought the reversal of the ruling on the ground that respondent was not able to establish his well-founded belief that the absentee is already dead, as required by Article 41 of the Family Code. In ruling thereon, the Court recognized that this provision imposes more stringent requirements than Article 83 of the Civil Code. The Civil Code provision merely requires either that there be no news that the absentee is still alive; or that the absentee is generally considered to be dead and is believed to be so by the spouse present, or is presumed dead under Articles 390 and 391 of the Civil Code. In comparison, the Family Code provision prescribes a well-founded belief that the absentee is already dead before a petition for declaration of presumptive death can be granted. The four requisites for the declaration of presumptive death under the Family Code are as follows: 1. That the absent spouse has been missing for four consecutive years, or two consecutive years if the disappearance occurred where there is danger of death under the circumstances laid down in Article 391, Civil Code; 2. That the present spouse wishes to remarry; 3. That the present spouse has a well-founded belief that the absentee is dead; and 4. That the present spouse files a summary proceeding for the declaration of presumptive death of the absentee. In evaluating whether the present spouse has been able to prove the existence of a well-founded belief that the absent spouse is already dead, the Court in /Nolasco/ cited /United States v. Biasbas/, which it found to be instructive as to the diligence required in searching for a missing spouse. In /Biasbas/, the Court held that defendant Biasbas failed to exercise due diligence in ascertaining the whereabouts of his first wife, considering his admission that that he only had a suspicion that she was dead, and that the only basis of that suspicion was the fact of her absence. Similarly, in /Republic v. Court of Appeals and Alegro/, petitioner Republic sought the reversal of the CA ruling affirming the RTCs grant of the Petition for Declaration of Presumptive Death of the absent spouse on the ground that the respondent therein had not been able to prove a well-founded belief that his spouse was already dead. The Court reversed the CA, granted the Petition, and provided the following criteria for determining the existence of a well-founded belief under Article 41 of the Family Code: For the purpose of contracting the subsequent marriage under the preceding paragraph, the spouse present must institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee, without prejudice to the effect of reappearance of the absent spouse. The spouse present is, thus, burdened to prove that his spouse has been absent and that he has a well-founded belief that the absent spouse is already dead before the present spouse may contract a subsequent marriage. The law does not define what is meant by a well-grounded belief. Cuello Callon writes that /es menester que su creencia sea firme se funde en motivos racionales/. Belief is a state of the mind or condition prompting the doing of an overt act. It may be proved by direct evidence or circumstantial evidence which may tend, even in a slight degree, to elucidate the inquiry or assist to a determination probably founded in truth. Any fact or circumstance relating to the character, habits, conditions, attachments, prosperity and objects of life which usually control the conduct of men, and are the motives of their actions, was, so far as it tends to explain or characterize their disappearance or throw light on their intentions, competence [sic] evidence on the ultimate question of his death. The belief of the present spouse must be the result of proper and honest to goodness inquiries and efforts to ascertain the whereabouts of the absent spouse and whether the absent spouse is still alive or is already dead. Whether or not the spouse present acted on a well-founded belief of death of the absent spouse depends upon the inquiries to be drawn from a great many circumstances occurring before and after the disappearance of the absent spouse and the nature and extent of the inquiries made by present spouse. Applying the foregoing standards to the present case, the Republic pointed out that respondent Yolanda did not initiate a diligent search to locate her absent husband. While her brother testified to having inquired about the whereabouts of Cyrus from the latters relatives, these relatives were not presented to corroborate Diosdados testimony. In short, respondent was not diligent in her search for her husband. Petitioner argues that if she were, she would have sought information from the Taiwanese Consular Office or assistance from other government agencies in Taiwan or the Philippines. She could have also utilized mass media for this end, but she did not. Worse, she failed to explain these omissions. The SC held that the Republics arguments are well-taken, but denied the Petition against the RTC ruling on the issue of whether respondent was able to prove her well-founded belief that her absent spouse was already dead prior to her filing of the Petition to declare him presumptively dead is already final and can no longer be modified or reversed. Indeed, [n]othing is more settled in law than that when a judgment becomes final and executory, it becomes immutable and unalterable. The same may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law. (Rep. v. Yolanda Granada, G.R. No. 187512, June 13, 2012, Sereno, J). *ARTICLE 36* Annabelle Mendoza v. Rep., et al., G.R. No. 157649, November 12, 2012, Bersamin, J, reiterates the basic rule in declaration of nullity of marriage on the ground of psychological incapacity that psychological incapacity must characterized by its being grave, incurable and existing prior to the time of the marriage. The totality of evidence rule to prove psychological incapacity is sufficient. It refers to no less than mental, not physical incapacity that causes a party to be incognitive of the basic marital covenants that must concomitantly be assumed and discharged by the parties to the marriage expressed in Article 68, F.C. In the same vein, the SC in /Rep. v. CA & Eduardo Quintos, Jr., /G.R. No. 159594, November 12, 2012, gossiping with neighbors, leaving the house without the consent of the spouse, refusal to do household chores, gambling are not pieces of evidence of psychological incapacity. Proving that a spouse failed to meet his or her responsibilities and duties as a married person is not enough, it is essential that he or she must be shown to be incapable of doing so due to same psychological illness. It should refer to mental incapacity that causes a party to be truly incognitive of the basic marital covenants under Art. 68, F.C. *PROPERTY RELATIONSHIP* *To be presumed conjugal properties, there must be proof of acquisition during the marriage.* */Q Antonio, a widow obtained a loan from A.G. Aguila & Sons, Co. (Aguila) secured by a Deed of Real Estate Mortgage over a property. She likewise executed a Deed of Absolute Sale over the same property in favor of Gemma who registered the same and obtained a title. Later on, Gemma obtained a loan from FEBTC-BPI but failed to pay the loan, hence, the bank foreclosed the mortgage over the said property. The bank was the highest bidder and consolidated its ownership. In the meantime, Antonia and her son filed a complaint for annulment of the Deed of Sale in favor of Gemma contending that the same is void as the property formed part of her conjugal partnership with her husband who was already dead when the deed of sale was executed. It was also alleged that the sale was simulated and derogatory to her sons hereditary right. The complaint was amended to implead the bank which alleged that it was a mortgagee in good faith. The RTC declared the sale to Gemma void holding that it was a conjugal property of the husband and wife, hence, the sale is void, but on appeal, the CA reversed the decision, holding that the property was an exclusive property of Antonia for failure to prove that the same was acquired during their marriage. It further ruled that the bank was a mortgagee in good faith and for value. Is the CAs ruling correct? Why?/* */Answer: /*Yes. Pursuant to Article 160 of the /Civil Code of the Philippines/, all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife. Although it is not necessary to prove that the property was acquired with funds of the partnership, (Tan v. CA, G.R. No. 120594, June 10, 1997, 273 SCRA 229) proof of acquisition during the marriage is an essential condition for the operation of the presumption in favor of the conjugal partnership. (Manongsong v. Estimo, 452 Phil. 862 (2003). In the case of /Francisco vs. Court of Appeals/, 359 Phil. 519 (1998), it was ruled that: Article 160 of the New Civil Code provides that "all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife." However, the party who invokes this presumption must first prove that the property in controversy was acquired during the marriage. Proof of acquisition /during/ the coverture is a condition /sine qua non/ for the operation of the presumption in favor of the conjugal partnership. The party who asserts this presumption must first prove said time element. Needless to say, the presumption refers only to the property acquired during the marriage and does not operate when there is no showing as to when property alleged to be conjugal was acquired. Moreover, this presumption in favor of conjugality is rebuttable, but only with strong, clear and convincing evidence; there must be a strict proof of exclusive ownership of one of the spouses. As the parties invoking the presumption of conjugality under Article 160 of the /Civil Code/, the Dela Peas did not even come close to proving that the subject property was acquired during the marriage but it was only the bare and uncorroborated assertion that the property was purchased when she was already married. The record is bereft of any evidence from which the actual date of acquisition of the realty can be ascertained. Considering that the presumption of conjugality does not operate if there is no showing of /when/ the property alleged to be conjugal was acquired, (Go v. Yamane, G.R. No. 160762, May 3, 2006, 489 SCRA 107), the CA cannot be faulted for ruling that the realty in litigation was Antonias exclusive property. *Phrase married to is merely descriptive of the status of the owner.* Not having established the time of acquisition of the property, the Dela Peas insist that the registration thereof in the name of Antonia R. Dela Pea, of legal age, Filipino, married to Antegono A. Dela Pea should have already sufficiently established its conjugal nature. Confronted with the same issue in the case /Ruiz vs. Court of Appeals/, 449 Phil. 419 (2003) it was ruled however, that the phrase married to is merely descriptive of the civil status of the wife and cannot be interpreted to mean that the husband is also a registered owner. Because it is likewise possible that the property was acquired by the wife while she was still single and registered only after her marriage, neither would registration thereof in said manner constitute proof that the same was acquired during the marriage and, for said reason, to be presumed conjugal in nature. Since there is no showing as to when the property in question was acquired, the fact that the title is in the name of the wife alone is determinative of its nature as paraphernal, /i.e.,/ belonging exclusively to said spouse. (Antonia dela Pea, et al. v. Gemma Reneilyn Avila, et al., G.R. No. 187490, February 8, 2012, Perez, J). *FAMILY HOME* *Family home is exempt from attachment, levy or forced sale.* */Q In 1984, while Araceli and Ernesto de Mesa were not yet married, they jointly acquired a parcel of land where a house was constructed which they occupied as a family home when they got married. In 1988, Araceli obtained a loan from Clandino and mortgaged the property to secure the payment of the obligation. She issued a check to pay the loan but it was dishonored, hence, a BP22 case was filed against her where she was acquitted but held her civilly liable. A writ of execution was issued and the property was levied upon and sold to satisfy the obligation. Claudio was the highest bidder and a title was issued in his name but leased the property to Araceli and Ernesto but for failure to pay the rents, a complaint for ejectment was filed. In their answer, they contended that Claudion is not the owner because the property being a family home cannot be levied upon as it is exempt from execution. In the meantime, they filed a complaint to declare the title of Claudio void alleging that the property was their family home which is exempt from execution, which was dismissed by the RTC which the CA affirmed holding that the exemption of a family home from execution attachment or forced sale is not automatic and should be raised and prove prior to the execution, forced sale or attachment. The spouses did not however, raise the same. Is the ruling of the lower courts correct? Why?/* */Answer: /*Yes. In the earlier case of /Ramos v. Pangilinan,/ G.R. No. 185920, July 20, 2010, 625 SCRA 181, the rules relative to exemption of family homes from execution were laid down, thus: For the family home to be exempt from execution, distinction must be made as to what law applies based on when it was constituted and what requirements must be complied with by the judgment debtor or his successors claiming such privilege. Hence, two sets of rules are applicable. If the family home was constructed before the effectivity of the Family Code or before August 3, 1988, then it must have been constituted either judicially or extra-judicially as provided under Articles 225, 229-231 and 233 of the Civil Code. Judicial constitution of the family home requires the filing of a verified petition before the courts and the registration of the courts order with the Registry of Deeds of the area where the property is located. Meanwhile, extrajudicial constitution is governed by Articles 240 to 242 of the Civil Code and involves the execution of a public instrument which must also be registered with the Registry of Property. Failure to comply with either one of these two modes of constitution will bar a judgment debtor from availing of the privilege. On the other hand, for family homes constructed after the effectivity of the Family Code on August 3, 1988, there is no need to constitute extrajudicially or judicially, and the exemption is effective from the time it was constituted and lasts as long as any of its beneficiaries under Art. 154 actually resides therein. Moreover, the family home should belong to the absolute community or conjugal partnership, or if exclusively by one spouse, its constitution must have been with consent of the other, and its value must not exceed certain amounts depending upon the area where it is located. Further, the debts incurred for which the exemption does not apply as provided under Art. 155 for which the family home is made answerable must have been incurred after August 3, 1988. In the earlier case of /Kelley, Jr. v. Planters Products, Inc./, G.R. No. 172263, July 9, 2005, 557 SCRA 499, the SC stressed that: Under the Family Code, there is no need to constitute the family home judicially or extrajudicially. All family homes constructed after the effectivity of the Family Code (August 3, 1988) are constituted as such by operation of law. All existing family residences as of August 3, 1988 are considered family homes and are prospectively entitled to the benefits accorded to a family home under the Family Code. The foregoing rules on constitution of family homes, for purposes of exemption from execution, could be summarized as follows: First, family residences constructed before the effectivity of the Family Code or before August 3, 1988 must be constituted as a family home either judicially or extrajudicially in accordance with the provisions of the Civil Code in order to be exempt from execution; Second, family residences constructed after the effectivity of the Family Code on August 3, 1988, are automatically deemed to be family homes and thus exempt from execution from the time it was constituted and lasts as long as any of its beneficiaries actually resides therein; Third, family residences which were not judicially or extrajudicially constituted as a family home prior to the effectivity of the Family Code, but were existing thereafter, are considered as family homes by operation of law and are prospectively entitled to the benefits accorded to a family home under the Family Code. Here, the subject property became a family residence sometime in January 1987. There was no showing, however, that the same was judicially or extrajudicially constituted as a family home in accordance with the provisions of the Civil Code. Still, when the Family Code took effect on August 3, 1988, the subject property became a family home by operation of law and was thus prospectively exempt from execution. The petitioners were thus correct in asserting that the subject property was a family home. (Sps. Araceli & Ernesto de Mesa v. Sps. Claudio & Rufina Acero, et al., G.R. No. 185064, January 16, 2012, Reyes, J). *The family homes exemption from execution must be set up and proved to the Sheriff before the sale of the property at public auction.* */Q The spouses did not assert and prove that their house and lot was a family home prior to the public auction conducted by the sheriff. State the effect of such failure. Explain./* */Answer: /*Their failure to invoke and prove that the house and lot was a family home is a waiver of such defense or right. In /Honrado v. CA,/ 512 Phil. 657 (2005), it was said that at no other time can the status of a residential house as a family home can be set up and proved and its exemption from execution be claimed but before the sale thereof at public auction: While it is true that the family home is constituted on a house and lot from the time it is occupied as a family residence and is exempt from execution or forced sale under Article 153 of the Family Code, such claim for exemption should be set up and proved to the Sheriff before the sale of the property at public auction. Failure to do so would estop the party from later claiming the exemption. As the Court ruled in /Gomez v. Gealone:/ Although the Rules of Court does not prescribe the period within which to claim the exemption, the rule is, nevertheless, well-settled that the right of exemption is a personal privilege granted to the judgment debtor and as such, it must be claimed not by the sheriff, but by the debtor himself at the time of the levy or within a reasonable period thereafter; In the absence of express provision it has variously held that claim (for exemption) must be made at the time of the levy if the debtor is present, that it must be made within a reasonable time, or promptly, or before the creditor has taken any step involving further costs, or before advertisement of sale, or at any time before sale, or within a reasonable time before the sale, or before the sale has commenced, but as to the last there is contrary authority. In the light of the facts above summarized, it is self-evident that appellants did not assert their claim of exemption within a reasonable time. Certainly, reasonable time, for purposes of the law on exemption, does not mean a time after the expiration of the one-year period provided for in Section 30 of Rule 39 of the Rules of Court for judgment debtors to redeem the property sold on execution, otherwise it would render nugatory final bills of sale on execution and defeat the very purpose of execution to put an end to litigation. We said before, and We repeat it now, that litigation must end and terminate sometime and somewhere, and it is essential to an effective administration of justice that, one a judgment has become final, the winning party be not, through a mere subterfuge, deprived of the fruits of the verdict. We now rule that claims for exemption from execution of properties under Section 12 of Rule 39 of the Rules of Court must be presented before its sale on execution by the Sheriff. In /Sps. Versola v. Court of Appeals, /529 Phil. 377 (2006) it was likewise said: Under the cited provision, a family home is deemed constituted on a house and lot from the time it is occupied as a family residence; there is no need to constituted the same judicially or extrajudicially. The settled rule is that the right to exemption or forced sale under Article 153 of the Family Code is a personal privilege granted to the judgment debtor and as such, it must be claimed not by the sheriff, but by the debtor himself before the sale of the property at public auction. It is not sufficient that the person claiming exemption merely alleges that such property is a family home. This claim for exemption must be set up and proved to the Sheriff. Having failed to set up and prove to the sheriff the supposed exemption of the subject property before the sale thereof at public action, they now are barred from raising the same. Failure to do so estop them from later claiming the said exemption. (De Mesa v. Acero, et al., G.R. No. 185064, January 16, 2012, Reyes, J). *Family home as the symbol of love.* Indeed, the family home is a sacred symbol of family love and is the repository of cherished memories that last during ones lifetime. (Cabang v. Basay, G.R. No. 180587, March 20, 2009, 582 SCRA 172). It is likewise without dispute that the family home, from the time of its constitution and so long as any of its beneficiaries resides therein, is generally exempt from execution, forced sale or attachment. (Art. 153, F.C.). The family home is a real right, which is gratuitous, inalienable and free from attachment. It cannot be seized by creditors except in certain special cases. (Josef v. Santos, G.R. No. 165060, November 27, 2008, 572 SCRA 57). However, this right can be waived or be barred by laches by the failure to set up and prove the status of the property as a family home at the time of the levy or a reasonable time thereafter. In this case, it is undisputed that the petitioners allowed a considerable time to lapse before claiming that the subject property is a family home and its exemption from execution and forced sale under the Family Code. The petitioners allowed the subject property to be levied upon and the public sale to proceed. One (1) year lapsed from the time the subject property was sold until a Final Deed of Sale was issued to Claudio, and, later, Aracelis Torrens title was cancelled and a new one issued under Claudios name, still, the petitioner remained silent. In fact, it was only after the respondents filed a complaint for unlawful detainer, or approximately four (4) years from the time of the auction sale, that the petitioner claimed that the subject property is a family home, thus, exempt from execution. For all intents and purposes, the petitioners negligence or omission to assert their right within a reasonable time gives rise to the presumption that they have abandoned, waived or declined to assert it. Since the exemption under Article 153 of the Family Code is a personal right, it is incumbent upon the petitioners to invoke and prove the same within the prescribed period and it is not the sheriffs duty to presume or raise the status of the subject property as a family home. The petitioners negligence or omission renders their present assertion doubtful; it appears that it is a mere afterthought and artifice that cannot be countenanced without doing the respondents injustice and depriving the fruits of the judgment award in their favor. Simple justice and fairness and equitable considerations demand that Claudios title to the property be respected. Equity dictates that the petitioners are made to suffer the consequences of their unexplained negligence. *PROOF OF FILIATION* *Baptismal certificate standing alone cannot be a proof of filiation.* */Q May a baptismal certificate be a proof of filiation? Explain./* */Answer: /*As a rule, no, because being hearsay, it is not conclusive proof of filiation. Recently, there are two (2) cases expounding on the probative value of a baptismal certificate. One is the case of the /Heirs of Pedro Cabais v. CA, /G.R. No. 106314-15, October 8, 1999, 316 SCRA 338 where the SC ruled that: A birth certificate, being a public document, offers /prima facie/ evidence of filiation and a high degree of proof is needed to overthrow the presumption of truth contained in such public document. This is pursuant to the rule that entries in official records made in the performance of his duty by a public officer are /prima facie/ evidence of the facts therein stated. The evidentiary nature of such document must, therefore, be sustained in the absence of strong, complete and conclusive proof of its falsity or nullity. On the contrary, a baptismal certificate is a private document, which, being hearsay, is not a conclusive proof of filiation. It does not have the same probative value as a record of birth, an official or public document. In /US v. Evangelista, /this Court held that church registers of births, marriages, and deaths made subsequent to the promulgation of General Orders No. 68 and the passage of Act No. 190 are no longer public writings, nor are they kept by duly authorized public officials. Thus, in this jurisdiction, a certificate of baptism such as the one herein controversy is no longer regarded with the same evidentiary value as official records of birth. Moreover, on this score, jurisprudence is consistent and uniform in ruling that the canonical certificate of baptism is not sufficient to prove recognition. A baptismal certificate has a limited evidentiary value as proof of filiation inferior to that of a birth certificate. It does not attest to the veracity of the statements regarding the kinsfolk of the one baptized. This is especially true if the birth certificate is not presented. Another case is the /Heirs of Ignacio Conti v. CA, /G.R. No. 118464, December 21, 1998, 300 SCRA 345, where the SC said that the respondents were able to prove by preponderance of evidence their being collateral relatives of the decedent using the baptismal certificate as proof of filiation. This is so because, aside from the baptismal certificate, there were testimonies of witnesses pointing to the heir as the only sibling left by the decedent, hence, the baptismal certificate acquired evidentiary weight to prove filiation. There were in fact four (4) baptismal certificates pointing to the heir and other sisters as having the same set of parents. In Conti, the Court affirmed the rulings of the trial court and the CA to the effect that the Conti respondents were able to prove by preponderance of evidence their being the collateral heirs of deceased Lourdes Sampayo. The Conti petitioners disagreed, arguing that baptismal certificates did not prove the filiation of collateral relatives of the deceased. Agreeing with the CA, the Court said: Under Art. 172 of the Family Code, the filiation of legitimate children shall be proved by any other means allowed by the Rules of Court and special laws, in the absence of a record of birth or a parents admission of such legitimate filiation in a public or private document duly signed by the parent. Such other proof of ones filiation may be a baptismal certificate, a judicial admission, a family Bible in which his name has been entered, common reputation respecting his pedigree, admission by silence, the testimonies of witnesses and other kinds of proof admissible under Rule 130 of the Rules of Court. By analogy, this method of proving filiation may also be utilized in the instant case. Public documents are the written official acts, or records of the official act of the sovereign authority, official bodies and tribunals, and public officers, whether of the Philippines, or a foreign country. The baptismal certificates presented in evidence by private respondents are public documents. Parish priests continue to be the legal custodians of the parish records and are authorized to issue true copies, in the form of certificates, of the entries contained therein. The admissibility of baptismal certificates offered by Lydia S. Reyes, absent the testimony of the officiating priest or the official recorder, was settled in People v. Ritter, citing U.S. v. de Vera (28 Phil. 105 [1914], thus: . The entries made in the Registry Book may be considered as entries made in the course of business under Section 43 of Rule 130, which is an exception to the hearsay rule. The baptisms administered by the church are one of its transactions in the exercise of ecclesiastical duties and recorded in the book of the church during this course of its business. Obviously, Conti did not treat a baptismal certificate, standing alone, as sufficient to prove filiation; on the contrary, Conti expressly held that a baptismal certificate had evidentiary value to prove filiation if considered alongside other evidence of filiation. As such, a baptismal certificate alone is not sufficient to resolve a disputed filiation. (Makati Shangri-La Hotel & Resort Inc. v. Harper, et al., G.R. No. 189998, August 26, 2012, Bersamin, J). *Proof of filiation; support.* */Q In a complaint for support alleging that a child is an illegitimate child of the alleged father, the bases were the record of birth although unsigned by the alleged father and the baptismal certificate identifying the alleged father, as the father of the child without the signature of the alleged father. The RTC granted the support based on those documents. Is the decision correct? Why?/* */Answer: /*No, because the two (2) documents are not proofs of filiation. Before a child may be entitled to support, he must be recognized by the alleged father. Time and again, this Court has ruled that a high standard of proof is required to establish paternity and filiation. An order for x x x support may create an unwholesome situation or may be an irritant to the family or the lives of the parties so that it must be issued only if paternity or filiation is established by clear and convincing evidence. The Rules for establishing filiation are found in Articles 172 and 175 of the Family Code. One such proof is the record of birth appearing in the civil register, Article 172(1) and any other means allowed by the Rules of Court and special laws, (Art. 172(2)(2), Family Code. It is settled that [a] certificate of live birth purportedly identifying the putative father is not competent evidence of paternity when there is no showing that the putative father had a hand in the preparation of said certificate. We also cannot lend credence to Mirasols claim that Antonio supplied certain information through Erlinda. Aside from Antonios denial in having any participation in the preparation of the document as well as the absence of his signature thereon, respondents did not present Erlinda to confirm that Antonio indeed supplied certain entries in Randys birth certificate. Besides, the several unexplained discrepancies in Antonios personal circumstances as reflected in the subject birth certificate are manifestations of Antonios non-participation in its preparation. Most important, it was Mirasol who signed as informant thereon which she confirmed on the witness stand. Neither does the testimony of Randy establish his illegitimate filiation. That during their first encounter in 1994 Randy called Antonio Papa and kissed his hand while Antonio hugged him and promised to support him; or that his Aunt Lelita treated him as a relative and was good to him during his one-week stay in her place, cannot be considered as indications of Randys open and continuous possession of the status of an illegitimate child under the second paragraph of Article 172(1). [T]o prove open and continuous possession of the status of an illegitimate child, there must be evidence of the manifestation of the permanent intention of the supposed father to consider the child as his, by continuous and clear manifestations of parental affection and care, which cannot be attributed to pure charity. Such acts must be of such a nature that they reveal not only the conviction of paternity, but also the apparent desire to have and treat the child as such in all relations in society and in life, not accidentally, but continuously. Here, the single instance that Antonio allegedly hugged Randy and promised to support him cannot be considered as proof of continuous possession of the status of a child. To emphasize, [t]he fathers conduct towards his son must be spontaneous and uninterrupted for this ground to exist. Here, except for that singular occasion in which they met, there are no other acts of Antonio treating Randy as his son. Neither can Antonios paternity be deduced from how his sister Lelita treated Randy. To this Court, Lelitas actuations could have been done due to charity or some other reasons. Randys baptismal certificate is not a good proof of Antonios paternity of Randy. Just like in a birth certificate, the lack of participation of the supposed father in the preparation of a baptismal certificate renders this document incompetent to prove paternity. And while a baptismal certificate may be considered a public document, it can only serve as evidence of the administration of the sacrament on the date specified but not the veracity of the entries with respect to the childs paternity. Thus, x x x baptismal certificates are /per se /inadmissible in evidence as proof of filiation and they cannot be admitted indirectly as circumstantial evidence to prove the same. (Antonio Perla v. Mirasol Baring, et al., G.R. No. 172471, November 12, 2012, Brion, J; See: Gotardo v. Buling, G.R. No. 165166, August 15, 2010, Brion, J). *PROPERTY/LAND REGISTRATION* *Possession and occupation distinguished.* Commonwealth Act No. 141, otherwise known as the Public Land Act, governs the classification and disposition of lands of the public domain. It is clear under Section 48(b) thereof, which applies exclusively to agricultural lands of the public domain, that possession is not enough. In order to emphasize the necessity for actual possession and exclude fictional or constructive possession, Section 48(b) speaks of possession /and /occupation. As explained by this Court in /Republic of the Philippines v. Alconaba/: The law speaks of /possession and occupation/. Since these words are separated by the conjunction /and/, the clear intention of the law is not to make one synonymous with the other. Possession is broader than occupation because it includes constructive possession. When, therefore, the law adds the word /occupation/, it seeks to delimit the all encompassing effect of constructive possession. Taken together with the words open, continuous, exclusive and notorious, the word /occupation/ serves to highlight the fact that for an applicant to qualify, his possession must not be a mere fiction. (471 Phil. 607 (2004)). It does not matter whether the applicant for registration has been in possession and occupation only after June 12, 1945 for the requirements for confirmation of title is deemed complied with as his predecessors-in-interests possession and occupation that date back to June 12, 1945 or earlier are tacked to his. Thus, it is of great importance that there exists well-nigh incontrovertible evidence that the applicants predecessors-in-interest had been in possession and occupation of the property sought to be registered since June 12, 1945. (Rep. v. Heirs of Doroteo Montoja, G.R. No. 195137, June 23, 2012, Reyes, J). *PROPERTY* *Quieting of title requires legal title or equitable title.* */Q When may an action for quieting of title prosper? Explain./*** */Answer: /*In order that an action for quieting of title may prosper, it is essential that the plaintiff must have legal title or equitable title to, or interest in, the property which is the subject matter of the action. Legal title denotes registered ownership, while equitable title means beneficial ownership. In the absence of such legal or equitable title, or interest, there is no cloud to be prevented or removed. (Mananquil, et al. v. Moico, G.R. No. 180076, November 21, 2012). *Accretion, to whom it belongs; dried up rivers belongs to the State.* By law, accretion is the gradual and imperceptible deposit made thru the effects of the current of the water belongs to the owner of the land adjacent to the banks of rivers where it forms. The drying up of the river is not accretion. Hence, the dried up river bed belongs to the State as property of public dominion, not to the riparian owner, unless the law vests the ownership to some other person. (Rep. v. Santos III, et al., G.R. No. 160453, November 12, 20012). *Oral partition is invalid.* The validity of an oral partition is already well-settled. It is not required that the partition agreement be registered or annotated in the title to be valid. After exercising acts of ownership over their respective portions of the contested estate, they are estopped from denying the existence of an oral partition. In this case, none of the original co-owners disputed the partition as it is only the present owners and successors-in-interest who are insisting that no partition had taken place, as the title was merely partially cancelled and many of the owners have yet to secure their own separate titles. Estoppels has set in to bar the present owners from denying an oral partition in view of the acquiescence of their predecessors-in-interest as well as their own acts of ownership over those portions they are occupying. Regardless of whether a parol partition or agreement to partition is valid or enforceable at law, equity will in proper cases, where the parol partition has actually been consummated by the taking of possession in severalty and the exercise of ownership by the parties of their respective portions set off to each other, recognize and enforce such parol partition and the rights of the parties thereunder. (Hernandez v. Andal, 78 Phil. 196 (1947); Tan v. Lim, G.R. No. 128004, September 25, 1998, 296 SCRA 445; Notarte, et al. v. Notarte, G.R. No. 180614, August 29, 2012). *SUCCESSION* *Forgetfulness is not equivalent to being unsound mind.* */Q After the will was admitted to probate, petitioners appealed and contended that the testator was magulyan or forgetful, so much so that it effectively stripped her of her testamentary capacity. She was likewise suffering from paranoia. Petitioners, however, did not present medical evidence to show that she was of unsound mind. There was no showing that she was one month or less, before making the will, she was publicly known to be insane. Is the admission of the will to probate correct? Explain./* */Answer: /*Yes. The state of being forgetful does not necessarily make a person mentally unsound so as to tender him unfit to execute a will. (Torres & Lopez de Bueno v. Lopez, 48 Phil. 772 (1926); Sancho v. Abella, 728 Phil. 728 (1933)). Forgetfulness is not equivalent to being of unsound mind. Besides, Article 799 of the New Civil Code states: Art. 799. To be of sound mind, it is not necessary that the testator be in full possession of all his reasoning faculties, or that his mind be wholly unbroken, unimpaired, or unshattered by disease, injury or other cause. It shall be sufficient if the testator was able at the time of making the will to know the nature of the estate to be disposed of, the proper objects of his bounty, and the character of the testamentary act. The testimony of subscribing witnesses to a will concerning the testators mental condition is entitled to great weight where they are truthful and intelligent. More importantly, a testator is presumed to be of sound mind at the time of the execution of the will and the burden to prove otherwise lies on the oppositor. Article 800 of the New Civil Code states: Art. 800. The law presumes that every person is of sound mind, in the absence of proof to the contrary. The burden of proof that the testator was not of sound mind at the time of making his disposition is on the person who opposes the probate of the will; but if the testator, one month, or less, before making his will was publicly known to be insane, the person who maintains the validity of the will must prove that the testator made it during a lucid interval. The burden of proof to show that the testator was of unsound mind at the time of the execution of the will lies in the oppositors. In this case, they failed to discharge such burden, hence, the admission of the will to probate is correct. (Baltazar, et al. v. Laxa, G.R. No. 174489, April 11, 2012, Del Castillo, J). *OBLIGATIONS & CONTRACTS* *RESCISSION* *Rescission is the remedy for reparation of the damage done.* */Q After the death of their predecessor-in-interest, the heirs became the co-owners of several parcels of land. Some of them took possession of the properties hence, there was a complaint for partition filed by one of the heirs as the other refused to partition the properties. While the action was pending, one of them donated a property belonging to the co-ownership to one of her nephews, without approval of the court, hence, after learning that there was a Donation Inter Vivos, they filed a Supplemental Pleading praying that the donation be rescinded in accordance with Article 1381(4) of the Civil Code. The donee opposed the Supplemental Pleading contending that rescission under Article 1384(1), NCC applies only when there is already a prior judicial decree on who between the contending parties actually owned the properties under litigation. The RTC ordered the rescission of the deed of donation as it was done without the knowledge and approval of the other parties or plaintiffs or the Court. On appeal, the CA reversed the judgment on the ground that before an action for rescission may be filed there must first be a judicial determination that the same actually belonged to the estate of the donor. Hence, the petition raising such issue. Decide./* */Answer: /*Rescission is a remedy granted by law to the contracting parties and even to third persons, to secure the reparation of damages caused to them by a contract, even if it should be valid, by means of the restoration of things to their condition at the moment prior to the celebration of said contract. It is a remedy to make ineffective a contract, validly entered into and therefore obligatory under normal conditions, by reason of external causes resulting in a pecuniary prejudice to one of the contracting parties or their creditors. Contracts which are rescissible are valid contracts having all the essential requisites of a contract, but by reason of injury or damage caused to either of the parties therein or to third persons are considered defective and, thus, may be rescinded. The kinds of rescissible contracts, according to the reason for their susceptibility to rescission, are the following: /first/, those which are rescissible because of lesion or prejudice; (Art. 1381(1) & (2), NCC) /second/, those which are rescissible on account of fraud or bad faith; (Arts. 1381 (3) & (4) & 1382, NCC) and /third/, those which, by special provisions of law, (Civil Code of the Philippines, Articles 1189, 1191, 1526, 1534, 1538, 1539, 1542, 1556, 1560, 1567 and 1659) are susceptible to rescission. *Contracts which refer to things subject of litigation is rescissible pursuant to Article 1381(4) of the Civil Code.* Contracts which are rescissible due to fraud or bad faith include those which involve things under litigation, if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority. Thus, Article 1381(4) of the Civil Code provides: Art. 1381. The following contracts are rescissible: x x x x (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority. The rescission of a contract under Article 1381(4) of the Civil Code only requires the concurrence of the following: /first/, the defendant, during the pendency of the case, enters into a contract which refers to the thing subject of litigation; and /second/, the said contract was entered into without the knowledge and approval of the litigants or of a competent judicial authority. As long as the foregoing requisites concur, it becomes the duty of the court to order the rescission of the said contract. The reason for this is simple. Article 1381(4) seeks to remedy the presence of bad faith among the parties to a case and/or any fraudulent act which they may commit with respect to the thing subject of litigation. When a thing is the subject of a judicial controversy, it should ultimately be bound by whatever disposition the court shall render. The parties to the case are therefore expected, in deference to the courts exercise of jurisdiction over the case, to refrain from doing acts which would dissipate or debase the thing subject of the litigation or otherwise render the impending decision therein ineffectual. There is, then, a restriction on the disposition by the parties of the thing that is the subject of the litigation. Article 1381(4) of the Civil Code requires that any contract entered into by a defendant in a case which refers to things under litigation should be with the knowledge and approval of the litigants or of a competent judicial authority. Further, any disposition of the thing subject of litigation or any act which tends to render inutile the courts impending disposition in such case, /sans /the knowledge and approval of the litigants or of the court, is unmistakably and irrefutably indicative of bad faith. Such acts undermine the authority of the court to lay down the respective rights of the parties in a case relative to the thing subject of litigation and bind them to such determination. The defendant in such a case is not absolutely proscribed from entering into a contract which refer to things under litigation. If, for instance, a defendant enters into a contract which conveys the thing under litigation during the pendency of the case, the conveyance would be valid, there being no definite disposition yet coming from the court with respect to the thing subject of litigation. After all, notwithstanding that the subject thereof is a thing under litigation, such conveyance is but merely an exercise of ownership. This is true even if the defendant effected the conveyance without the knowledge and approval of the litigants or of a competent judicial authority. The absence of such knowledge or approval would not precipitate the invalidity of an otherwise valid contract. Nevertheless, such contract, though considered valid, may be rescinded at the instance of the other litigants pursuant to Article 1381(4) of the Civil Code. Although the gratuitous conveyance of the said parcels of land was valid, the donation /inter vivos /of the same being merely an exercise of ownership, the sellers failure to inform and seek the approval of the petitioners or the RTC regarding the conveyance gave the petitioners the right to have the said donation rescinded pursuant to Article 1381(4) of the Civil Code. *Rescission under Article 1381(4) of the Civil Code is not preconditioned upon the judicial determination as to the ownership of the thing subject of litigation.* The assertion that rescission may only be had after the RTC had finally determined that the parcels of land belonged to the estate of Spouses Baylon does not intrinsically amiss. The petitioners right to institute the action for rescission pursuant to Article 1381(4) of the Civil Code is not preconditioned upon the RTCs determination as to the ownership of the said parcels of land. The right to ask for the rescission of a contract under Article 1381(4) of the Civil Code is not contingent upon the final determination of the ownership of the thing subject of litigation. The primordial purpose of Article 1381(4) of the Civil Code is to secure the possible effectivity of the impending judgment by a court with respect to the thing subject of litigation. It seeks to protect the binding effect of a courts impending adjudication /vis--vis /the thing subject of litigation regardless of which among the contending claims therein would subsequently be upheld. Accordingly, a definitive judicial determination with respect to the thing subject of litigation is not a condition /sine qua non /before the rescissory action contemplated under Article 1381(4) of the Civil Code may be instituted. Moreover, conceding that the right to bring the rescissory action pursuant to Article 1381(4) of the Civil Code is preconditioned upon a judicial determination with regard to the thing subject litigation, this would only bring about the very predicament that the said provision of law seeks to obviate. Assuming /arguendo /that a rescissory action under Article 1381(4) of the Civil Code could only be instituted after the dispute with respect to the thing subject of litigation is judicially determined, there is the possibility that the same may had already been conveyed to third persons acting in good faith, rendering any judicial determination with regard to the thing subject of litigation illusory. Surely, this paradoxical eventuality is not what the law had envisioned. (Lilia Ada, et al. v. Florante Baylon, G.R. No. 182435, August 13, 2012, Reyes, J). *Effect of rescission* In cases involving rescission under the said provision, mutual restitution is required. (Uniland Resources Dev. Corp. v. Dragon, G.R. No. 149338, July 28, 2008, 560 SCRA 63). The parties should be brought back to their original position prior to the inception of the contract. (Uniland Resources Dev. Corp. v. Dragon, G.R. No. 149338, July 28, 2008, 560 SCRA 63). Accordingly, when a decree of rescission is handed down, it is the duty of the court to require both parties to surrender that which they have respectively received and to place each other as far as practicable in [their] original situation. Pursuant to this, Goldloop should return to GSIS the possession and control of the property subject of their agreements while GSIS should reimburse Goldloop whatever amount it had received from the latter by reason of the MOA and the Addendum. As discussed, both parties failed to comply with their respective obligations under their agreements. Hence, relevant is the provision of Article 1192 of the Civil Code which reads: Art. 1192. In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts. *If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages*. (Goldloop Properties, Inc. v. GSIS, G.R. No. 171076, August 1, 2012, Del Castillo, J). *OBLIGATIONS AND CONTRACTS* *Novation; there must be express declaration of extinguishment or the two (2) contracts must be incompatible.* */Q In a suit for sum of money, with prayer for attachment, a counter-bond was issued in consideration of the discharge of the attachment. A compromise was entered into by the parties without including the bonding company, but when the defendants failed to comply there was a motion to order the bonding company to pay according to the counter-bond. The company contended that when the parties submitted a compromise agreement without including it, there was novation of the contract, hence, it is no longer, liable. Is the contention correct? Why?/* */Answer: /*No, because the counter-bond provides that it shall pay any judgment that may be secured by the plaintiff against the defendants. In order for novation to extinguish an obligation, there must be a showing that there is incompatibility between the terms of the compromise agreement and the terms of the counter-bond. Under Article 1292, NCC, in order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other. Nothing in the compromise agreement indicates, or even hints at, releasing the bonding company from its obligation to pay the plaintiff after the latter has obtained a favorable judgment. Clearly, there is no incompatibility between the compromise agreement and the counter-bond. Neither can novation be presumed. In /Dugo v. Lopena/, 116 Phil 1305 (1962), it was said that novation by presumption has never been favored. To be sustained, it need be established that the old and new contracts are incompatible in all points, or that the will to novate appears by express agreement of the parties or in acts of similar import. All things considered, the bonding company, as surety under the terms of the counter-bond it issued, should be held liable for the payment of the unpaid balance due to the judgment creditor. (United Pulp & Paper Co., Inc. v. Acropolis Central Guaranty Corp., G.R. No. 171750, January 25, 2012, Mendoza, J). A surety on a counter-bond given to secure the payment of a judgment becomes liable for the payment of the amount due upon: (1) demand made upon the surety; and (2) notice and summary hearing on the same action. (Sec. 17, Rule 57, Rules of Court). It has been consistently held that the filing of a complaint constitutes a judicial demand. Accordingly, the filing by UPPC of the Motion to Order Surety to Pay Amount of Counter-Bond was already a demand upon Acropolis, as surety, for the payment of the amount due, pursuant to the terms of the bond. In said bond, Acropolis bound itself in the sum of 42,844,353.14 to secure the payment of any judgment that UPPC might recover against Unibox and Ortega. The motion was filed and was set for hearing and the bonding company was duly notified of the hearing hence, it was given the opportunity to be heard. (United Pulp & Paper Co., Inc. v. Acropolis Central Guaranty Corp., G.R. No. 171750, January 25, 2012, Mendoza, J). *FORMS OF CONTRACTS* *Requirement under Art. 1358, NCC on form of contracts is only for purposes of convenience.* * *Article 1358, NCC provides that acts and contracts which have for their object the transmission of real rights over immovable property or the sale of real property must appear in a public document. If the law requires a document or other special form, the contracting parties may compel each other to observe that form once the contract has been perfected. In /Fule v. CA, /G.R. No. 112212, March 2, 1998, it was held that the requirement under Art. 1358, NCC is only for convenience and registration of the instrument only adversely affects third persons. Formal requirements are therefore, for the benefit of third parties. (Art. 1357, NCC). Non-compliance therewith does not adversely affect the validity of the contract nor the contractual rights and obligations of the parties. (Zamora v. Miranda, G.R. No. 162930, December 5, 2012, Peralta, J). */Rule:/* Receipt of payment partakes of the nature of evidence of perfection of a contract. But if it is a forged document, hence, void, there is no contract to speak of. *NOVATION* *The principle of novation cannot be applied in a criminal case.* */Q There was a sale of a real property for P2M but it was found out that instead of registering the same under the name of the vendee, it was registered under anothers name. The vendee demanded for the return of the P2M where the seller issued two (2) checks which were dishonored when presented for payment. Two (2) Estafa thru Falsification of Public Documents cases were filed but before they could be filed in court, the respondent issued another two (2) checks where she contended that there was novation of her obligation when she issued those checks. Is the contention correct? Why?/* */Answer: /*No. The principles of novation cannot apply to extinguish criminal liability. Milla cites /People v. Nery/ to support his contention that his issuance of the checks prior to the filing of the criminal complaint averted his incipient criminal liability. However, it must be clarified that mere payment of an obligation before the institution of a criminal complaint does not, on its own, constitute novation that may prevent criminal liability. The Courts ruling in /Nery /in fact warned: It may be observed in this regard that novation is not one of the means recognized by the Penal Code whereby criminal liability can be extinguished; hence, the role of novation may only be to either prevent the rise of criminal liability or to cast doubt on the true nature of the original petition, whether or not it was such that its breach would not give rise to penal responsibility, as when money loaned is made to appear as a deposit, or other similar disguise is resorted to (Abeto vs. People, 90 Phil. 581; Villareal, 27 Phil. 481). *Even in Civil Law the acceptance of partial payments, without further change in the original relation between the complainant and the accused, cannot produce novation. For the latter to exist, there must be proof of intent to extinguish the original relationship, and such intent cannot be inferred from the mere acceptance of payments on account of what is totally due.* Much less can it be said that the acceptance of partial satisfaction can effect the nullification of a criminal liability that is fully matured, and already in the process of enforcement. Thus, this Court has ruled that *the offended partys acceptance of a promissory note for all or part of the amount misapplied does not obliterate the criminal offense* (Camus vs. Court of Appeals, 48 Off. Gaz. 3898). Further, in /Quinto v. People/, the Court exhaustively explained the concept of novation in relation to incipient criminal liability, /viz/: *Novation is never presumed*, and the /animus novandi/, whether totally or partially, must appear by express agreement of the parties, or by their acts that are too clear and unequivocal to be mistaken. The extinguishment of the old obligation by the new one is a necessary element of novation which may be effected either expressly or impliedly.* *The term expressly means that the contracting parties incontrovertibly disclose that their object in executing the new contract is to extinguish the old one. Upon the other hand, no specific form is required for an implied novation, and all that is prescribed by law would be an incompatibility between the two contracts. *While there is really no hard and fast rule to determine what might constitute to be a sufficient change that can bring about novation, the touchstone for contrariety, however, would be an irreconcilable incompatibility between the old and the new obligations. * There are two ways which could indicate, in fine, the presence of novation and thereby produce the effect of extinguishing an obligation by another which substitutes the same. The first is when novation has been explicitly stated and declared in unequivocal terms. The second is when the old and the new obligations are incompatible on every point. *The test of incompatibility is whether or not the two obligations can stand together, each one having its independent existence. If they cannot, they are incompatible and the latter obligation novates the first. Corollarily, changes that breed incompatibility must be essential in nature and not merely accidental. The incompatibility must take place in any of the essential elements of the obligation, such as its object, cause or principal conditions thereof; otherwise, the change would be merely modificatory in nature and insufficient to extinguish the original obligation.* *The changes alluded to by petitioner consists only in the manner of payment.* There was really no substitution of debtors since private complainant merely acquiesced to the payment but did not give her consent to enter into a new contract. The appellate court observed: 1. xxx xxx xxx *The acceptance by complainant of partial payment tendered by the buyer, Leonor Camacho, does not evince the intention of the complainant to have their agreement novated. It was simply necessitated by the fact that, at that time, Camacho had substantial accounts payable to complainant, and because of the fact that appellant made herself scarce to complainant. (TSN, April 15, 1981, 31-32) Thus, to obviate the situation where complainant would end up with nothing, she was forced to receive the tender of Camacho.* Moreover, it is to be noted that the aforesaid payment was for the purchase, not of the jewelry subject of this case, but of some other jewelry subject of a previous transaction. (/Ibid/. June 8, 1981, 10-11) 1. xxx xxx xxx Art. 315 of the Revised Penal Code defines estafa and penalizes any person who shall defraud another by misappropriating or converting, to the prejudice of another, money, goods, or any other personal property received by the offender in trust or on commission, or for administration, or under any other obligation involving the duty to make delivery of or to return the same, even though such obligation be totally or partially guaranteed by a bond; or by denying having received such money, goods, or other property. It is axiomatic that the gravamen of the offense is the appropriation or conversion of money or property received to the prejudice of the owner. The terms convert and misappropriate have been held to connote an act of using or disposing of anothers property as if it were ones own or devoting it to a purpose or use different from that agreed upon. The phrase, to misappropriate to ones own use has been said to include not only conversion to ones personal advantage, but also every attempt to dispose of the property of another without right. Verily, the sale of the pieces of jewelry on installments (sic) in contravention of the explicit terms of the authority granted to her in Exhibit A (/supra/) is deemed to be one of conversion. Thus, neither the theory of delay in the fulfillment of commission nor that of novation posed by petitioner, can avoid the incipient criminal liability. In /People vs. Nery/, this Court held: 1. xxx xxx xxx *The criminal liability for estafa already committed is then not affected by the subsequent novation of contract, for it is a public offense which must be prosecuted and punished by the State in its own conation*. In the case at bar, the acceptance by MPI of the Equitable PCI checks tendered by Milla could not have novated the original transaction, as the checks were only intended to secure the return of the P2 million the former had already given him. Even then, these checks bounced and were thus unable to satisfy his liability. Moreover, the /estafa/ involved here was not for simple misappropriation or conversion, but was committed through Millas falsification of public documents, the liability for which cannot be extinguished by mere novation. (Milla v. People, et al., G.R. No. 188726, January 25, 2012, Sereno, J). Respondents obligation consists of payment of a sum of money. In order to extinguish said obligation, payment should be made to the proper person as set forth in Article 1240 of the Civil Code, to wit: Article 1240. Payment shall be made to the person in whose favor the obligation has been constituted, */or his successor in interest, or any person authorized to receive it/*. The Court explained in /Cambroon v. City of Butuan/, cited in /Republic v. De Guzman,/ to whom payment should be made in order to extinguish an obligation: Payment made by the debtor to the person of the creditor or to one authorized by him or by the law to receive it extinguishes the obligation. When payment is made to the wrong party, however, the obligation is not extinguished as to the creditor who is without fault or negligence even if the debtor acted in utmost good faith and by mistake as to the person of the creditor or through error induced by fraud of a third person. In general, a payment in order to be effective to discharge an obligation, must be made to the proper person. Thus, payment must be made to the obligee himself or to an agent having authority, express or implied, to receive the particular payment. Payment made to one having apparent authority to receive the money will, as a rule, be treated as though actual authority had been given for its receipt. Likewise, if payment is made to one who by law is authorized to act for the creditor, it will work a discharge. The receipt of money due on a judgment by an officer authorized by law to accept it will, therefore, satisfy the debt. Admittedly, payment of the remaining balance of P200,000.00 was not made to the creditors themselves. Rather, it was allegedly made to a certain Losloso. Respondent claims that Losloso was the authorized agent of petitioners, but the latter dispute it. Loslosos authority to receive payment was embodied in petitioners letter39 addressed to respondent, dated August 7, 1997, where they informed respondent of the amounts they advanced for the payment of the 1997 real estate taxes. In said letter, petitioners reminded respondent of her remaining balance, together with the amount of taxes paid. Taking into consideration the busy schedule of respondent, petitioners advised the latter to leave the payment to a certain Dori who admittedly is Losloso, or to her trusted helper. This is an express authority given to Losloso to receive payment. Moreover, as correctly held by the CA: Furthermore, that Adoracion Losloso was indeed an agent of the appellant spouses is borne out by the following admissions of plaintiff-appellant Atty. Miniano dela Cruz, to wit: Q: You would agree with me that you have authorized this Doiry Losloso to receive payment of whatever balance is due you coming from Ana Marie Concepcion, that is correct? A: In one or two times but not total authority, sir. Q: Yes, but you have authorized her to receive payment? A: One or two times, yes x x x. (/TSN, June 28, 1999, pp.//16-17/)40 Thus, as shown in the receipt signed by petitioners agent and pursuant to the authority granted by petitioners to Losloso, payment made to the latter is deemed payment to petitioners. We find no reason to depart from the RTC 38 /Cembrano v. City of Butuan/, /supra /note 36, at 511-512; at 790-791. And the CA conclusion that payment had already been made and that it extinguished respondent's obligations. (Sps. Dela Cruz v. Ana Marie Concepcion, G.R. No. 172825, October 11, 2012, Peralta, J). *For novation to extinguish another it must be so declared in an unequivocal temrs; or there must be incompatability in every point.* */Q In a case there was a contract for the construction of a building. There was a surety undertaking executed by a third person to ensure the compliance with the terms of the contract. The parties however entered into a MOA revising the work schedule originally agreed upon because of the various subcontracting agreement made by the contractor. The MOA provided that all other terms and conditions of the original building contract not inconsistent with the MOA shall remain in full force and effect. The surety contended that it was relieved of its undertaking due to the new MOA. Is the contention correct? Why?/* */Answer: /*No, because there was no new contract that extinguished the old one. There is nothing in the MOA that expressly extinguished the old obligation of the surety. In fact, it provides that all the terms and conditions of the old contract shall be in full force and effect. Furthermore, in order that the obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and new obligation be in every point incompatible with each other. (Art. 1293, NCC). Novation of a contract is never presumed. In the absence of an express agreement, novation takes place only when the old and the new obligations are incompatible on every point. (Security Bank & Trust Co., Inc. v. Cuenca, 396 Phil. 108 (2000)). Undoubtedly, a surety is released from its obligation when there is a material alteration of the principal contract in connection with which the bond is given, such as a change which imposes a new obligation on the promising party, or which takes away some obligation already imposed, or one which changes the legal effect of the original contract and not merely its form. (Stronghold Ins. Co., Inc. v. Tokyu Construction Co., Ltd., G.R. No. 158820-21, June 5, 1990, 588 SCRA 410; Phil. Charter Ins. Corp. v. Petroleum Distributors & Services Corp., G.R. No. 180898, April 18, 2012, Mendoza, J). *CONTRACTS* *Perfection; elements of contracts; affixing of signature on a letter is considered as express conformity.* */Q What is the effect if a party to a contract of sale affixes his signature on a letter proposing the same? Explain./* */Answer: /*There is express conformity to the terms and conditions of the contract by the act of affixing his signature on the letter. There was a meeting of the minds as to the object and consideration of the contract. Three elements are needed to create a perfected contract: (1) the consent of the contracting parties; (2) an object certain which is the subject matter of the contract; and (3) the cause of the obligation which is established. Under the law on sales, a contract of sale is perfected when the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to the buyer, over which the latter agrees. From that moment, the parties may demand reciprocal performance. (Starbright Sales Ent. Inc. v. Phil. Realty Corporation, G.R. No. 177936, January 16, 2012, Abad, J). *Provision in contract of lease granting the lessee exclusive right to renew; valid; principle of mutuality of contracts.* */Q The parties entered into a lease contract over a parcel of land granting unto the lessee the exclusive option to renew the contract subject to the condition that it should comply with a 60-day notice of the intention to exercise the option to renew the contract which the lessee did. The lessor refused to renew the contract, hence, a complaint to compel the lessor to renew it was filed. The lessor argued that the renewal of the contract cannot be made to depend upon the sole will of the lessee, otherwise, the same would be void for being a potestative condition. Will the action prosper? Why?/* */Answer: /*Yes, because of the principle of mutuality of contracts. In /Allied Banking Corporation v. Court of Appeals/, 348 Phil. 382 (1998), it was ruled that Article 1308 of the Civil Code expresses what is known in law as the principle of mutuality of contracts. It provides that "the contract must bind both the contracting parties; its validity or compliance cannot be left to the will of one of them." This binding effect of a contract on both parties is based on the principle that the obligations arising from contracts have the force of law between the contracting parties, and there must be mutuality between them based essentially on their equality under which it is repugnant to have one party bound by the contract while leaving the other free therefrom. The ultimate purpose is to render void a contract containing a condition which makes its fulfillment dependent solely upon the uncontrolled will of one of the contracting parties. An express agreement which gives the lessee the sole option to renew the lease is frequent and subject to statutory restrictions, valid and binding on the parties. This option, which is provided in the same lease agreement, is fundamentally part of the consideration in the contract and is no different from any other provision of the lease carrying an undertaking on the part of the lessor to act conditioned on the performance by the lessee. It is a purely executory contract and at most confers a right to obtain a renewal if there is compliance with the conditions on which the right is made to depend. The right of renewal constitutes a part of the lessee's interest in the land and forms a substantial and integral part of the agreement. The fact that such option is binding only on the lessor and can be exercised only by the lessee does not render it void for lack of mutuality. After all, the lessor is free to give or not to give the option to the lessee. And while the lessee has a right to elect whether to continue with the lease or not, once he exercises his option to continue and the lessor accepts, both parties are thereafter bound by the new lease agreement. Their rights and obligations become mutually fixed, and the lessee is entitled to retain possession of the property for the duration of the new lease, and the lessor may hold him liable for the rent therefor. The lessee cannot thereafter escape liability even if he should subsequently decide to abandon the premises. Mutuality obtains in such a contract and equality exists between the lessor and the lessee since they remain with the same faculties in respect to fulfillment. (MIAA v. Ding Velayo Sports Center, Inc., G.R. No. 161718, December 14, 2011). */Q It was contended that the terms of the lease contract merely provided for a procedural basis for a negotiation for renewal of the lease and the terms thereof. It contended that there must be renegotiation of the terms thereof. Is the contention correct? Why?/* */Answer: /*No, otherwise, it would violate the principle of mutuality of contracts. As said in /Allied Banking v. CA/, that if we were to adopt the contrary theory that the terms and conditions to be embodied in the renewed contract were still subject to mutual agreement by and between the parties, then the option - which is an integral part of the consideration for the contract - would be rendered worthless. For then, the lessor could easily defeat the lessee's right of renewal by simply imposing unreasonable and onerous conditions to prevent the parties from reaching an agreement, as in the case at bar. As in a statute, no word, clause, sentence, provision or part of a contract shall be considered surplusage or superfluous, meaningless, void, insignificant or nugatory, if that can be reasonably avoided. To this end, a construction which will render every word operative is to be preferred over that which would make some words idle and nugatory. (MIAA v. Ding Velayo Sports Center, Inc., G.R. No. 161718, December 14, 2011). */Q State the effect if the lessee exercises the option to renew the contract but there are no new terms and conditions of the new lease contract. Explain./* */Answer: /*In case the lessee chooses to renew the lease but there are no specified terms and conditions for the new contract of lease, the same terms and conditions as the original contract of lease shall continue to govern, as the following survey of cases in /Allied Banking/ would show: In /Ledesma v. Javellana/ this Court was confronted with a similar problem. In that case the lessee was given the sole option to renew the lease, but the contract failed to specify the terms and conditions that would govern the new contract. When the lease expired, the lessee demanded an extension under the same terms and conditions. The lessor expressed conformity to the renewal of the contract but refused to accede to the claim of the lessee that the renewal should be under the same terms and conditions as the original contract. In sustaining the lessee, this Court made the following pronouncement: x x x [i]n the case of /Hicks v. Manila Hotel Company/, a similar issue was resolved by this Court. It was held that *'such a clause relates to the very contract in which it is placed, and does not permit the defendant upon the renewal of the contract in which the clause is found, to insist upon different terms than those embraced in the contract to be renewed';* and that *'a stipulation to renew always relates to the contract in which it is found and the rights granted thereunder, unless it expressly provides for variations in the terms of the contract to be renewed.'* The same principle is upheld in American Law regarding the renewal of lease contracts. In 50 Am. Jur. 2d, Sec. 1159, at p. 45, where it was said: *'The rule is well-established that a general covenant to renew or extend a lease which makes no provision as to the terms of a renewal or extension implies a renewal or extension upon the same terms as provided in the original lease.'* In the lease contract under consideration, there is no provision to indicate that the renewal will be subject to new terms and conditions that the parties may yet agree upon. It is to renewal provisions of lease contracts of the kind presently considered that the principles stated above squarely apply. We do not agree with the contention of the appellants that if it was intended by the parties to renew the contract under the same terms and conditions stipulated in the contract of lease, such should have expressly so stated in the contract itself. The same argument could easily be interposed by the appellee who could likewise contend that if the intention was to renew the contract of lease under such new terms and conditions that the parties may agree upon, the contract should have so specified. Between the two assertions, there is more logic in the latter. The settled rule is that in case of uncertainty as to the meaning of a provision granting extension to a contract of lease, the tenant is the one favored and not the landlord. 'As a general rule, in construing provisions relating to renewals or extensions, where there is any uncertainty, the tenant is favored, and not the landlord, because the latt