Tag: Registration

Trade Name vs. Trademark: Priority Rights and Protection Under the IP Code

In Campbridge Waterproofing Systems, Inc. v. Greenseal Products [M] SDN. BHD., the Supreme Court affirmed the Court of Appeals’ decision to cancel Campbridge’s trademark registration for “GREENSEAL”. The Court emphasized that a trade name is protected even without registration and that appropriating another’s trade name as a trademark is unlawful, especially when it misleads the public. This ruling reinforces the protection of established trade names and prevents trademark registrations that infringe on existing business identities.

“Greenseal” Showdown: Who Gets to Claim the Name?

The case revolves around a dispute between Campbridge Waterproofing Systems, Inc. (Campbridge) and Greenseal Products (M) Sdn. Bhd. (Greenseal Malaysia) and Greenseal Philippines Corporation (Greenseal Philippines) (collectively, Greenseal) over the trademark “GREENSEAL.” Greenseal sought to cancel Campbridge’s trademark registration, arguing prior use and trade name protection. The central legal question is whether Campbridge’s trademark registration should be cancelled due to Greenseal’s prior use of the trade name and the potential for public confusion. The resolution of this issue determines the extent of trade name protection versus trademark rights in the Philippines.

The Intellectual Property Code (IP Code) governs trademark and trade name rights in the Philippines. A trademark is defined as any visible sign capable of distinguishing goods or services of an enterprise, while a trade name identifies the business itself. The IP Code aims to protect both trademarks and trade names, preventing consumer confusion and unfair competition. According to Zulueta v. Cyma Greek Taverna Co., trademarks serve three key functions: indicating origin or ownership, guaranteeing quality, and advertising the articles they symbolize.

The Supreme Court, in Zuneca Pharmaceutical v. Natrapharm, Inc., clarified that ownership of a trademark is acquired through registration under the IP Code. However, this registration provides only prima facie evidence of ownership. This means the registration can be challenged if obtained in bad faith or contrary to law. Section 151(b) of the IP Code allows for the cancellation of marks registered in bad faith or violating the Code’s provisions.

The Court found that Campbridge’s registration was indeed contrary to law. Article 165 of the IP Code protects trade names, even without registration, against unlawful acts by third parties. Specifically, Article 165.2(b) states:

(b) In particular, any subsequent use of the trade name by a third party, whether as a trade name or a mark or collective mark, or any such use of a similar trade name or mark, likely to mislead the public, shall be deemed unlawful.

This provision prevents the appropriation of another’s trade name as a trademark if it is likely to cause public confusion. The Court emphasized that using the mark “GREENSEAL” on Campbridge’s products could mislead consumers into thinking they were purchasing products from Greenseal. Furthermore, the Court cited Ecole De Cuisine Manille, Inc. v. Renaud Cointreau & Cie and Fredco Manufacturing Corp. v. President and Fellows of Harvard College, reiterating that Philippine law protects trade names of nationals of Paris Convention member states, even without local registration.

Greenseal had been using its trade name in the Philippines since 2004 and registered with the Securities and Exchange Commission (SEC) in 2006, predating Campbridge’s trademark application in 2009. Thus, Campbridge’s registration of Greenseal’s trade name as a trademark was deemed unlawful and a valid ground for cancellation. This case highlights the interplay between trade name and trademark protection, emphasizing that prior use and registration of a trade name can supersede a later trademark registration.

The Court also addressed the issue of bad faith in Campbridge’s registration, although it ultimately found insufficient evidence to conclude bad faith. Bad faith in trademark registration involves knowledge of prior use or registration by another, essentially copying someone else’s trademark. Fraud involves making false claims about the origin, ownership, or use of the trademark. The Court stated that the determination of bad faith is factual and requires clear and convincing evidence, which was not sufficiently demonstrated in this case.

Respondent points to the fact that since 1987, petitioner’s product was named FlexSeal Elastomeric Sealant and was only changed sometime in the mid-2000s to “GREENSEAL.” Additionally, the respondent added that the petitioner failed to explain how it came up with the word “GREENSEAL,” an invented mark that has no meaning in the dictionary, and why it dropped the words “elastomeric sealant.” All these, the Supreme Court held, do not amount to a showing of knowledge on the part of petitioner of prior creation, use, or registration of respondent’s trade name or mark, or show any false claims in connection with the trademark application and registration.

The Supreme Court clarified that while the Zuneca case established that trademark ownership is acquired through valid registration under the IP Code, this does not negate the protection afforded to trade names. The cancellation of Campbridge’s trademark registration was not based on the “prior use” rule but on the finding that the registration was contrary to law due to the trade name protection afforded to Greenseal. The Court also addressed the Court of Appeals’ misapplication of Sections 3 and 131 of the IP Code, which pertain to reciprocal rights and priority rights based on foreign applications.

Under Article 4(C)(1) of the Paris Convention, the priority period for trademarks is only six months from the date of filing the first application. Since Greenseal filed its Philippine application in 2010, it could not claim priority based on its 1993 Malaysian registration because the six-month period had long expired. Therefore, while the IP Code provides mechanisms for recognizing foreign trademark rights, these mechanisms are subject to specific timelines and requirements.

FAQs

What was the key issue in this case?	The key issue was whether Campbridge’s trademark registration for “GREENSEAL” should be cancelled due to Greenseal’s prior use of the name as a trade name and the likelihood of public confusion.
What is the difference between a trademark and a trade name?	A trademark distinguishes goods or services, while a trade name identifies a business. Trade names are protected even without registration, while trademarks generally require registration for full protection.
*What does prima facie* evidence mean in this context?**	Prima facie evidence means that a trademark registration is initially accepted as proof of ownership, but it can be challenged with evidence to the contrary, such as prior use of a trade name.
Under what circumstances can a trademark registration be cancelled?	A trademark registration can be cancelled if it was obtained in bad faith, is contrary to law, or infringes on an existing trade name or trademark.
What is the significance of Article 165 of the IP Code?	Article 165 protects trade names, even without registration, against unlawful acts by third parties, including using the trade name as a trademark in a way that could mislead the public.
What is the Paris Convention, and how does it relate to this case?	The Paris Convention is an international treaty that protects industrial property rights. It allows nationals of member states to protect their trade names and trademarks in other member states.
What is the “priority right” under the IP Code?	The “priority right” allows an applicant who has filed a trademark application in one country to claim the filing date of that application as the filing date in another country, provided the application is filed within six months.
Why was Campbridge’s trademark registration cancelled in this case?	Campbridge’s registration was cancelled because it appropriated Greenseal’s trade name as a trademark, which was deemed contrary to law and likely to mislead the public, violating Article 165 of the IP Code.

The Supreme Court’s decision underscores the importance of protecting established trade names and preventing the appropriation of these names as trademarks when it creates a likelihood of confusion. While trademark registration provides a legal advantage, it does not override the prior rights and protection afforded to trade names under the Intellectual Property Code. This case emphasizes the need for businesses to conduct thorough due diligence before registering a trademark to avoid infringing on existing trade name rights and misleading consumers.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: CAMPBRIDGE WATERPROOFING SYSTEMS, INC. v. GREENSEAL PRODUCTS [M] SDN. BHD., G.R. No. 269302, January 22, 2025

January 22, 2025

Double Sales and Good Faith: Determining Land Ownership in Conflicting Claims

In a case of conflicting property claims, the Supreme Court ruled that a prior valid sale transfers ownership, even if a subsequent buyer registers the property first. The Court emphasized the importance of good faith in property transactions, protecting the rights of the original buyer and reinforcing the principle that registration alone does not guarantee ownership. This decision clarifies the rights of property buyers and the responsibilities of sellers, safeguarding against fraudulent double sales.

Can a Second Sale Overshadow a Prior Agreement? Examining Property Rights and Good Faith

This case revolves around a dispute over a parcel of land in Manila. Zenaida Gonzales initially purchased the property from the spouses Dominador and Estefania Basas, with several documents formalizing their agreement. Later, the Basas couple sold the same property to Romeo Munda, leading to a legal battle over rightful ownership. The central legal question is whether the initial sale to Gonzales transferred ownership, despite the subsequent sale and registration by Munda. The Supreme Court’s decision hinged on the validity of the first sale and the good faith of the subsequent buyer.

The Supreme Court meticulously examined the contracts between Zenaida Gonzales and the spouses Basas. Three key documents were at the heart of the dispute: the Contract to Sell dated May 10, 1996; the Deed of Absolute Sale (DOAS) dated May 13, 1996; and an Agreement allegedly dated August 14, 1996. While the spouses Basas argued that the Agreement superseded the previous contracts, the Court found that it reinforced the DOAS. The DOAS effectively transferred ownership to Gonzales, subject to certain resolutory conditions outlined in the Agreement. These conditions primarily involved securing the National Housing Authority’s (NHA) approval for the transfer and the subsequent payment of the remaining balance by Gonzales.

The Court underscored that the Agreement, despite its nomenclature, functioned as a contract of sale. Paragraph 5 of the Agreement was particularly telling, as it reserved the seller’s right to repossess ownership if certain conditions were met. This provision indicated that ownership had already been transferred to Gonzales. As the Regional Trial Court (RTC) aptly pointed out, such a right to repossess could not exist if ownership hadn’t been transferred in the first place. Therefore, the Supreme Court concluded that ownership was indeed transferred to Gonzales upon the execution of the DOAS and the subsequent Agreement.

With the initial sale to Gonzales deemed valid, the Supreme Court addressed the second sale to Romeo Munda. Article 1544 of the Civil Code, concerning double sales, was invoked. This provision outlines the rules for determining ownership when the same property is sold to multiple buyers. For Article 1544 to apply, several conditions must be met: the sales must involve the same subject matter, the buyers must have conflicting interests, and the buyers must have purchased from the same seller. However, the Supreme Court found that the sale to Munda did not meet these requisites.

The key factor was that by the time the spouses Basas sold the property to Munda, they were no longer the rightful owners. The previous sale to Gonzales had already transferred ownership. As the legal maxim states, “nemo dat quad non habet,” meaning no one can give what one does not have. Since the Basas couple no longer owned the property, they had no right to transfer it to Munda. Thus, the second sale was deemed invalid.

Even if Article 1544 were applicable, the Supreme Court found that Munda was not a buyer in good faith. Good faith is a crucial element in determining rightful ownership in cases of double sales. A buyer in good faith is one who purchases property without notice of any defect in the seller’s title. The Court acknowledged that when Munda initially executed the Deed of Sale with the Basas couple on August 25, 1997, he may not have been aware of Zenaida’s claim, as her adverse claim was only annotated on the title on October 29, 1997.

However, subsequent events revealed Munda’s lack of good faith. He was required to obtain the NHA’s approval for the transfer, and during this process, he became aware of Zenaida’s adverse claim. The Court highlighted that Munda had knowledge of the defect in the seller’s title when he procured the NHA’s approval dated December 1, 1997, and when he paid the transfer fee on January 30, 1998. Despite this knowledge, he proceeded to register the property under his name. The Supreme Court emphasized that purchasers must maintain good faith throughout the entire transaction, from acquisition to registration. Munda failed to meet this standard.

The Court also considered the conduct of the spouses Basas. They knowingly entered into a valid contract of sale with Zenaida but unjustifiably refused to honor their obligation. This deliberate act warranted the imposition of exemplary damages and attorney’s fees. The Court further noted that although the spouses Basas had passed away, their contractual obligations were transmissible to their heirs. Article 776 of the Civil Code states that inheritance includes all the property, rights, and obligations of a person which are not extinguished by death. Therefore, the heirs of the Basas couple were liable for the consequences of their predecessors’ contractual obligations.

In conclusion, the Supreme Court upheld the rights of Zenaida Gonzales, represented by her heirs, and declared her the rightful owner of the disputed property. The Court’s decision underscored the importance of good faith in property transactions and reinforced the principle that a prior valid sale transfers ownership, even if a subsequent buyer registers the property first. The Court’s ruling not only resolved the specific dispute but also provided valuable guidance for future cases involving conflicting property claims, ensuring fairness and protecting the rights of legitimate property owners.

FAQs

What was the key issue in this case?	The central issue was determining who had the rightful ownership of a property sold twice: first to Zenaida Gonzales and then to Romeo Munda. The court had to determine if the initial sale was valid and whether the subsequent buyer acted in good faith.
What is a Deed of Absolute Sale (DOAS)?	A DOAS is a legal document that transfers ownership of a property from the seller to the buyer. It signifies the completion of the sale, granting the buyer full rights over the property.
What does “good faith” mean in a property transaction?	In property law, “good faith” refers to a buyer who purchases property without knowledge of any defects or conflicting claims on the seller’s title. A buyer in good faith must also pay a fair price for the property.
What is an adverse claim?	An adverse claim is a legal notice registered on a property’s title to inform the public that someone has a claim or interest in that property. It serves as a warning to potential buyers.
What is Article 1544 of the Civil Code?	Article 1544 of the Civil Code addresses situations where the same property is sold to multiple buyers. It establishes rules for determining who has the better right to the property based on possession, registration, and good faith.
What is the legal principle of “nemo dat quad non habet”?	This Latin phrase means “no one can give what one does not have.” It means a seller can only transfer the rights they legally possess and cannot transfer ownership if they no longer own the property.
Are heirs liable for the contractual obligations of their deceased parents?	Yes, heirs are generally liable for the contractual obligations of their deceased parents, but only to the extent of the value of the inheritance they receive. Debts and obligations are charged against the estate of the deceased.
What are exemplary damages?	Exemplary damages are damages awarded to punish a wrongdoer and deter others from similar misconduct. They are imposed as an example or correction for the public good.

This case underscores the critical importance of conducting thorough due diligence when purchasing property. Buyers should verify the seller’s title, check for any encumbrances or adverse claims, and ensure they act in good faith throughout the transaction. The Supreme Court’s decision reinforces the principle that a prior valid sale generally takes precedence, protecting the rights of the original buyer and providing clarity in resolving conflicting property claims.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Heirs of Gonzales vs. Spouses Basas, G.R. No. 206847, June 15, 2022

June 15, 2022

Trademark Ownership: Registration Trumps Prior Use Under the Intellectual Property Code

In a trademark dispute between Zuneca Pharmaceutical and Natrapharm, Inc., the Supreme Court affirmed that under the Intellectual Property Code (IP Code), trademark ownership is acquired through registration, not prior use. This means that the first party to register a trademark in good faith generally has superior rights, even if another party used the mark earlier. However, the Court also held that a prior user in good faith may continue using their mark even after another party registers it, but this right is tied to their existing business.

Whose Brand Is It Anyway? Zuneca vs. Natrapharm’s Trademark Showdown

Zuneca Pharmaceutical, engaged in importing and selling medicines since 1999, used the brand name “ZYNAPS” for its carbamazepine drug. Natrapharm, on the other hand, registered the trademark “ZYNAPSE” in 2007 for its citicoline product. Natrapharm then sued Zuneca for trademark infringement, arguing that “ZYNAPS” was confusingly similar to its registered mark. Zuneca countered that it had been using “ZYNAPS” since 2004, predating Natrapharm’s registration, and that Natrapharm acted in bad faith by registering a confusingly similar mark despite knowing of Zuneca’s prior use. The central legal question before the Supreme Court was: In a trademark dispute, does prior registration trump prior use?

The Supreme Court held that under the IP Code, ownership of a trademark is acquired through registration, provided the registration is made in good faith. This principle is enshrined in Section 122 of the IP Code, which states, “The rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law.” This marked a shift from the previous Trademark Law, which prioritized prior use in determining trademark ownership. The Court emphasized that the intent of the lawmakers was to abandon the rule that ownership of a mark is acquired through use, as evidenced by the legislative history of the IP Code.

The Court found that Natrapharm had registered its trademark in good faith, as there was no evidence that it knew of Zuneca’s prior use of “ZYNAPS” at the time of registration. Consequently, Natrapharm, as the registered owner of “ZYNAPSE,” had the right to prevent others from using confusingly similar marks for related goods or services. However, the Court also recognized an exception: Section 159.1 of the IP Code states that a registered mark has no effect against any person who, in good faith, before the filing date, was using the mark for the purposes of his business or enterprise.

In effect, this exception protects prior users who, in good faith, had already been using a mark before someone else registered it. To clarify, Section 159.1 of the IP Code states:

SECTION 159. Limitations to Actions for Infringement. – Notwithstanding any other provision of this Act, the remedies given to the owner of a right infringed under this Act shall be limited as follows:

159.1. Notwithstanding the provisions of Section 155 hereof, a registered mark shall have no effect against any person who, in good faith, before the filing date or the priority date, was using the mark for the purposes of his business or enterprise: Provided, That his right may only be transferred or assigned together with his enterprise or business or with that part of his enterprise or business in which the mark is used.

This section serves as a limitation on the rights conferred by trademark registration, acknowledging the equities of prior users who have built goodwill around a mark before registration occurs. As the Court elaborated, this section should not be interpreted as merely exempting prior use before the registration date but as protecting the prior user’s right to continue using the mark, as long as it remains connected to their original business.

Building on this principle, the Court ruled that Zuneca, as a prior user in good faith of the “ZYNAPS” mark, was protected from liability for trademark infringement. This protection, however, was not without limits. Zuneca’s right to use “ZYNAPS” was tied to its existing business, and it could not transfer or assign the mark independently of that business. The decision acknowledged the potential for confusion arising from the concurrent use of similar marks for pharmaceutical products but emphasized the importance of adhering to the provisions of the IP Code while also ordering the parties to prominently display information about their products’ uses on their packaging to mitigate confusion.

The Supreme Court underscored the importance of complying with the Generics Act of 1988, as amended, which mandates the use of generic names in prescriptions. The intent is to help protect the public even where brand names may cause confusion. The Court further directed the Food and Drug Administration to monitor and regulate drug names to prevent the concurrent use of confusingly similar names for medicines. This part of the decision recognized the state’s duty to “protect and promote the right to health of the people and instill health consciousness among them.”

In effect, the Zuneca v. Natrapharm ruling clarifies the interplay between registration and use in Philippine trademark law, affirming the primacy of registration while carving out protections for prior users who have acted in good faith. While a registrant has rights to a mark, a good faith prior user of a confusingly similar mark is given some leeway. This is a carefully balanced approach intended to protect the rights of legitimate businesses while also acknowledging prior investments made in building brand recognition.

FAQs

What was the key issue in this case?	The key issue was to determine the prevailing party in a trademark dispute and whether trademark infringement existed, necessitating a ruling on the acquisition of ownership of marks by both parties.
How does the Intellectual Property Code define trademark ownership?	Under the IP Code, trademark ownership is primarily acquired through registration made validly in accordance with the provisions of the law, not through prior use.
What is the “first-to-file” rule?	The “first-to-file” rule means that the first party to register a trademark generally has superior rights, even if another party used the mark earlier.
Does prior use have any relevance under the IP Code?	Yes, Section 159.1 of the IP Code protects a prior user in good faith, allowing them to continue using their mark even after another party registers it, provided the use is tied to their existing business.
What is bad faith in trademark registration?	Bad faith in trademark registration means that the applicant knew of a prior creation, use, or registration by another of an identical or similar trademark.
What was the outcome for Zuneca Pharmaceutical?	Zuneca was declared a prior user in good faith and was protected from liability for trademark infringement, but it could not transfer or assign the mark independently of its business.
What was the outcome for Natrapharm, Inc.?	Natrapharm was affirmed as the lawful registrant of the “ZYNAPSE” mark under the IP Code, solidifying its rights as the registered trademark owner.
What steps were ordered to prevent confusion between the two medicines?	Both companies were ordered to indicate on their packaging, in plain language, the medical conditions that their respective drugs treat and a warning indicating what each drug is not supposed to treat.
What future action was required of the Food and Drug Administration?	The Food and Drug Administration was directed to monitor the parties’ compliance with the labeling directives and to take action toward better regulation of pharmaceutical brands.

This case highlights the importance of trademark registration under the IP Code while also protecting businesses that have previously and in good faith, been using the disputed trademark. It is a balancing act intended to promote both the protection of IP rights and fair competition. This decision underscores the need for businesses to register their trademarks to secure their rights, but it also ensures that prior good-faith users are not unfairly penalized.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ZUNECA PHARMACEUTICAL v. NATRAPHARM, INC., G.R. No. 211850, September 08, 2020

September 8, 2020

Priority of Mortgage Liens: The First to Register Prevails in Foreclosure Disputes

In a dispute involving the foreclosure of mortgaged properties, the Supreme Court reiterated a crucial principle: the mortgage that is first registered takes precedence. This means that a subsequent mortgagee, even if they foreclose on the property first, must recognize and respect the rights of the prior mortgagee. The ruling underscores the importance of registration in establishing the priority of liens, ensuring that those who register their claims first are protected. This decision clarifies the rights and obligations of mortgagees in the Philippines, providing a clear framework for resolving priority disputes.

Unregistered Land, Registered Rights: Who Gets Paid First?

The case revolves around a loan obtained by the Spouses Alviar from Rural Bank of Agoo, Inc. (RBAI), secured by a real estate mortgage. Subsequently, the Spouses Alviar also obtained a loan from Roma Fe C. Villalon, using the same property as collateral. RBAI registered its mortgage before Villalon did. When the Spouses Alviar defaulted on both loans, Villalon foreclosed on the property first. This led to a legal battle over who had the superior right to the proceeds of the foreclosure sale. The central legal question was whether Villalon, as the foreclosing second mortgagee, could disregard RBAI’s prior registered mortgage.

The Regional Trial Court (RTC) initially ruled in favor of Villalon, stating that RBAI had no cause of action against her because there was no contractual relationship between them. However, the Court of Appeals (CA) reversed the RTC’s decision, asserting that RBAI, as the first mortgagee with a prior registered mortgage, had a superior lien on the property. The CA held that Villalon, as the second mortgagee, was obligated to respect RBAI’s priority and that the proceeds of the foreclosure sale should first be used to satisfy RBAI’s claim.

The Supreme Court affirmed the CA’s decision, emphasizing the significance of registration in determining the priority of mortgage liens. The Court cited the case of Hidalgo v. La Tondeña, explaining that a mortgage registered earlier takes precedence over a mortgage registered later, even if the latter was created first. This principle is particularly important in cases involving unregistered land, where registration serves as the operative act that binds third parties.

The Court also addressed Villalon’s argument that she was a third party acting in good faith. The Court rejected this argument, stating that Villalon could not claim ignorance of RBAI’s prior mortgage because it was already registered when she entered into the mortgage agreement with the Spouses Alviar. The act of registration serves as notice to the whole world, including subsequent mortgagees like Villalon. Thus, Villalon was presumed to have been aware of RBAI’s prior lien and took the mortgage subject to it.

Furthermore, the Supreme Court clarified the rights of a second mortgagee in relation to a first mortgagee. While a second mortgagee can foreclose on the property, their rights are subordinate to the superior lien of the first mortgagee. This means that the second mortgagee must wait until the debtor’s obligation to the first mortgagee has been fully satisfied before they can claim any proceeds from the foreclosure sale. The Court explained that Villalon, as a second mortgagee, had the right to redeem the property from RBAI, the first mortgagee. The redemption process is governed by Act No. 3135, as amended, and Section 28 of Rule 39 of the 1997 Rules of Civil Procedure.

According to Section 6 of Act No. 3135:

Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.

To redeem the property, Villalon was required to pay RBAI the following amounts:

The bid price of RBAI in the auction sale (P341,830.94).
Interest on the bid price, computed at one percent (1%) per month.
Any assessments or taxes paid by RBAI, with the same interest rate.

The Supreme Court’s decision reinforces the principle of “first in time, first in right” in mortgage law. This principle dictates that the mortgagee who first registers their lien has the superior right to the property. The purpose of registration is to provide notice to third parties about the existence of the mortgage, thereby protecting the rights of the mortgagee and preventing subsequent encumbrances from impairing their security. Registration creates a public record of the mortgage, making it binding on all persons, including subsequent purchasers, mortgagees, and creditors.

In the context of mortgage foreclosures, the principle of priority is crucial for determining the order in which creditors are paid. When a property is foreclosed, the proceeds of the sale are distributed to the creditors based on the priority of their liens. The first mortgagee is paid first, followed by the second mortgagee, and so on. If there are insufficient funds to satisfy all the claims, the junior lienholders may not receive any payment. The principle of priority ensures that creditors who diligently register their liens are protected and that their claims are satisfied before those of subsequent creditors.

The case also illustrates the importance of due diligence in real estate transactions. Before entering into a mortgage agreement, it is essential for potential mortgagees to conduct a thorough search of the property’s title to determine whether there are any existing liens or encumbrances. This search should include an examination of the records of the Register of Deeds to identify any registered mortgages, judgments, or other claims against the property. By conducting a thorough title search, mortgagees can avoid being surprised by unexpected liens and can make informed decisions about whether to proceed with the transaction.

The Supreme Court’s decision in this case serves as a reminder of the importance of registering real estate transactions promptly. Registration provides notice to the world of the existence of the transaction and protects the rights of the parties involved. Failure to register a real estate transaction can have serious consequences, including the loss of priority over subsequent purchasers, mortgagees, and creditors. By registering their transactions promptly, parties can ensure that their rights are protected and that they have the best possible chance of prevailing in any future disputes.

FAQs

What was the key issue in this case?	The central issue was determining which mortgagee had the superior right to the proceeds from the foreclosure sale: the first mortgagee who registered their mortgage first, or the second mortgagee who foreclosed on the property first. The Supreme Court affirmed that the first registered mortgage has priority.
What does it mean to be a first mortgagee?	A first mortgagee is the lender who holds the first registered mortgage on a property. This gives them the primary claim on the property in case of foreclosure, meaning they get paid before other lenders.
What is the significance of registering a mortgage?	Registering a mortgage provides public notice of the lien, establishing its priority over subsequent claims. It protects the mortgagee’s rights by making the mortgage binding on third parties.
Can a second mortgagee foreclose on a property?	Yes, a second mortgagee can foreclose, but their rights are subordinate to the first mortgagee. This means the first mortgagee must be fully paid before the second mortgagee receives any proceeds from the sale.
What is the right of redemption in foreclosure?	The right of redemption allows the debtor or other lienholders to reclaim the property after foreclosure by paying the outstanding debt, interest, and costs. This right is typically available for a specific period after the foreclosure sale.
How does “good faith” relate to mortgage disputes?	Good faith generally means acting honestly and without knowledge of any defects in the transaction. However, in this case, registration of the first mortgage served as constructive notice, negating any claim of good faith by the second mortgagee.
What law governs extrajudicial foreclosure in the Philippines?	Extrajudicial foreclosure is primarily governed by Act No. 3135, as amended by Act No. 4118. This law outlines the procedures and requirements for foreclosing on a mortgage without going to court.
What must a second mortgagee do to protect their interests?	A second mortgagee must conduct due diligence to determine the existence of prior liens, and understand that their rights are subordinate. They can protect their interests by monitoring the status of the first mortgage and being prepared to redeem the property if necessary.

This case highlights the critical importance of registering mortgage agreements to establish priority and protect the rights of mortgagees. The principle of “first in time, first in right” remains a cornerstone of Philippine mortgage law, ensuring that those who diligently register their claims are given preference in foreclosure disputes. This provides clarity and stability in real estate transactions, encouraging responsible lending and borrowing practices.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ROMA FE C. VILLALON v. RURAL BANK OF AGOO, INC., G.R. No. 239986, July 08, 2019

July 8, 2019

Priority of Title: Resolving Conflicting Land Ownership Claims in the Philippines

In Virgilia T. Aquino, et al. v. Estate of Tomas B. Aguirre, the Supreme Court addressed a dispute over conflicting land titles, prioritizing the earlier registered title. The Court ruled that when two certificates of title cover the same land, the one registered first generally prevails. This decision underscores the importance of timely registration of land titles and provides clarity on resolving disputes arising from overlapping claims, reinforcing the principle that earlier registration confers a stronger right. This case clarifies the process for resolving conflicting land titles, emphasizing the significance of the date of registration in determining ownership.

Whose Land Is It Anyway? A Battle Over Conflicting Titles

The case revolves around a parcel of land in Bacoor, Cavite, which became the subject of a dispute between the Aquino family and the Estate of Tomas B. Aguirre. The Aquinos, claiming ownership through their deceased parents, Basilio A. Aquino and Ambrosia Tantay, sought to reconstitute Transfer Certificate of Title (TCT) No. T-3269. The Estate of Tomas B. Aguirre opposed this, asserting their own claim to the same property under TCT No. T-6874. The central legal question was: Which title should prevail when two certificates of title cover the same land?

The Aquinos initiated LRC Case No. 8843-2009-59 to reconstitute the lost original copy of TCT No. T-3269, registered under their parents’ names. The Regional Trial Court (RTC) initially ruled in favor of the Aquinos, ordering the reconstitution of the title. However, the Estate of Tomas B. Aguirre filed an Urgent Motion to Lift Order of General Default, arguing that the property was already covered by their title, TCT No. T-6874. The RTC denied this motion, prompting the Estate to file a Petition for Annulment of Judgment with the Court of Appeals (CA).

The CA granted the Estate’s petition, nullifying the RTC’s order for reconstitution. The CA reasoned that the Aquinos had committed extrinsic fraud by not including the Estate in the reconstitution proceedings and by failing to disclose the Estate’s possession of the property. Furthermore, the CA found that the RTC lacked jurisdiction because the Aquinos’ petition did not comply with the requirements of Republic Act (RA) No. 26, the law governing judicial reconstitution of titles. The Aquinos then appealed to the Supreme Court, arguing that the CA had erred in granting the annulment and that their title should prevail.

The Supreme Court reversed the CA’s decision, siding with the Aquinos. The Court emphasized the established principle that when two certificates of title purport to cover the same land, the earlier in date prevails. The Court noted that the Estate of Tomas B. Aguirre, in its own pleadings, admitted that its title (TCT No. T-6874) was derived from the same original certificate and decree as the Aquinos’ title (TCT No. T-3269). However, the Aquinos’ title was entered on March 21, 1956, while the Estate’s title was entered on March 21, 1963. Because the Aquinos’ title was registered earlier, the Court held that it had priority.

The Supreme Court cited the case of Degollacion v. Register of Deeds of Cavite, reinforcing the rule that tracing the original certificates is crucial in resolving conflicting claims. The Court quoted Mathay v. Court of Appeals, stating that the transfer certificate issued on an earlier date must prevail, absent any anomaly or irregularity in the registration process. In this case, the Estate’s title was deemed null and void because it was issued for land already titled in the name of Basilio Aquino, the Aquinos’ predecessor-in-interest.

In Degollacion v. Register of Deeds of Cavite we held that if two certificates of title purport to include the same land, whether wholly or partly, the better approach is to trace the original certificates from which the certificates of title were derived. Citing our earlier ruling in Mathay v. Court of Appeals we declared:

x x x where two transfer certificates of title have been issued on different dates, to two different persons, for the same parcel of land even if both are presumed to be title holders in good faith, it does not necessarily follow that he who holds the earlier title should prevail. On the assumption that there was regularity in the registration leading to the eventual issuance of subject transfer certificates of title, the better approach is to trace the original certificates from which the certificates of title in dispute were derived. Should there be only one common original certificate of title, x x x, the transfer certificate issued on an earlier date along the line must prevail, absent any anomaly or irregularity tainting the process of registration.

The Court also addressed the issue of notice in reconstitution proceedings. The Court clarified that when the source of reconstitution is the owner’s duplicate copy of the title, there is no need to notify other parties, such as occupants or adjoining landowners. The Supreme Court referenced Republic v. Sanchez to support this view. The Court quoted Section 10 of RA 26, which states that when a petition is based on sources like the owner’s duplicate title, notices to owners of adjoining lots are not required.

In contrast to the CA’s ruling, the Supreme Court emphasized that Sections 12 and 13 of RA 26, which mandate notices to occupants and adjoining landowners, apply only to petitions based on specific sources enumerated in Section 12. The court highlighted that the Aquinos’ petition was based on the owner’s duplicate copy, thus falling under Section 3(a) of RA 26, which does not require such notices. The ruling reinforces the principle of primus tempore, potior jure—first in time, stronger in right—in resolving land ownership disputes.

This case underscores the critical importance of timely registration of land titles. Failure to register promptly can result in the loss of rights to a subsequent good-faith purchaser who registers their claim first. The Supreme Court’s decision provides a clear framework for resolving disputes involving conflicting land titles, offering guidance to landowners, legal professionals, and the judiciary.

FAQs

What was the key issue in this case?	The central issue was determining which of two conflicting land titles should prevail when both purported to cover the same property. The court had to decide whether the earlier registered title held priority.
What is the principle of “primus tempore, potior jure”?	Primus tempore, potior jure means “first in time, stronger in right.” In this context, it means that the land title registered earlier generally has a superior claim over later titles covering the same property.
Why did the Supreme Court favor the Aquinos’ title?	The Supreme Court favored the Aquinos because their title, TCT No. T-3269, was registered on March 21, 1956, which was earlier than the Estate of Tomas B. Aguirre’s title, TCT No. T-6874, registered on March 21, 1963. The earlier registration date gave the Aquinos a superior right.
What is the significance of Republic Act No. 26 in this case?	Republic Act No. 26 governs the judicial reconstitution of lost or destroyed Torrens certificates of title. The Court clarified which provisions of RA 26 apply when the source of reconstitution is the owner’s duplicate copy of the title.
Does the decision mean the Estate of Tomas B. Aguirre has no recourse?	The decision implies that the Estate of Tomas B. Aguirre’s title is null and void concerning the specific property in question. The Estate may need to pursue separate legal action to address any perceived irregularities in the issuance of the Aquinos’ title, but cannot attack the title collaterally in a reconstitution proceeding.
What should landowners learn from this case?	Landowners should learn the importance of promptly registering their land titles to secure their rights. Timely registration provides a stronger legal basis for resolving disputes and asserting ownership.
What was the Court of Appeals’ initial ruling?	The Court of Appeals initially ruled in favor of the Estate of Tomas B. Aguirre, annulling the RTC’s order for reconstitution based on alleged extrinsic fraud and non-compliance with RA 26. This ruling was later reversed by the Supreme Court.
What is the effect of this ruling on reconstitution proceedings?	This ruling clarifies that when reconstituting a title based on the owner’s duplicate copy, there is no need to notify occupants or adjoining landowners. This simplifies the reconstitution process in such cases.

The Supreme Court’s decision provides a clear precedent for resolving land disputes involving conflicting titles. It underscores the enduring importance of the principle of primus tempore, potior jure and clarifies the procedural requirements for reconstitution proceedings. This case serves as a reminder of the necessity of diligent land registration practices to protect property rights.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Virgilia T. Aquino, et al. v. Estate of Tomas B. Aguirre, G.R. No. 232060, January 14, 2019

January 14, 2019

Double Sales vs. Inheritance: Resolving Land Ownership Disputes in the Philippines

This Supreme Court decision clarifies that Article 1544 of the Civil Code, concerning double sales, doesn’t apply when a property is claimed through both a prior sale and inheritance. The Court emphasized that the core issue is whether the original owner validly transferred ownership before their death. This ruling protects the rights of prior purchasers and prevents heirs from claiming property already sold, ensuring fairness in land disputes.

When a Deed Speaks: Prior Sales Trump Inheritance Claims

This case, Heirs of Ciriaco Bayog-Ang v. Florence Quinones, revolves around a contested parcel of land in Cotabato. Florence Quinones claimed ownership based on a Deed of Absolute Sale from the original owner, Ciriaco Bayog-Ang, executed in 1964. However, Bayog-Ang’s heirs later executed an Extrajudicial Settlement of Estate in 1996, including the same land and obtaining a Transfer Certificate of Title (TCT) in their names. This led to a legal battle to determine who had the rightful claim to the property.

The Regional Trial Court (RTC) initially ruled in favor of the heirs, applying Article 1544 of the Civil Code on double sales. The RTC reasoned that since the heirs were the first to register the land in good faith, they had a superior right. However, the Court of Appeals (CA) reversed this decision, holding that the land was already sold to Florence Quinones during Bayog-Ang’s lifetime, and thus, could not be included in his estate’s partition. The Supreme Court (SC) affirmed the CA’s decision, providing a significant clarification on the application of Article 1544 in relation to inheritance claims.

The Supreme Court emphasized that Article 1544 applies only when the same property is sold to different buyers by the same vendor. In this case, there was no double sale because the heirs’ claim was based on inheritance, not a subsequent sale. The pivotal question, therefore, was whether Bayog-Ang had already transferred ownership to Quinones before his death. If the sale was validly executed, the land would no longer form part of Bayog-Ang’s estate to be inherited by his heirs.

The Court then turned to Article 712 of the Civil Code, which identifies how ownership is acquired:

Art. 712. Ownership is acquired by occupation and by intellectual creation.

Ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition.

They may also be acquired by means of prescription. (609a)

Succession, as a mode of acquiring ownership, transmits the property, rights, and obligations of a deceased person to their heirs. Crucially, heirs can only inherit what the deceased owned at the time of their death. If Bayog-Ang had already sold the land to Quinones, he no longer owned it, and his heirs could not inherit it.

Under the law on sales, particularly Article 1496 of the New Civil Code, ownership transfers to the buyer upon delivery of the property. Article 1498 further clarifies that when a sale is made through a public instrument (like a notarized Deed of Absolute Sale), the execution of that instrument is equivalent to delivery, unless the deed indicates otherwise.

The Deed of Absolute Sale in this case was a notarized document. The Supreme Court reiterated the presumption of regularity for notarized documents. As stated in Spouses Santos v. Spouses Lumbao:

It is well-settled that a document acknowledged before a notary public is a public document that enjoys the presumption of regularity. It is a prima facie evidence of the truth of the facts stated therein and a conclusive presumption of its existence and due execution. To overcome this presumption, there must be presented evidence that is clear and convincing. Absent such evidence, the presumption must be upheld.

The Court found that the heirs failed to present sufficient evidence to overcome this presumption. The RTC itself acknowledged the existence and due execution of the Deed of Absolute Sale. Therefore, in accordance with Article 1498, the execution of the notarized Deed of Absolute Sale transferred ownership of the land from Bayog-Ang to Quinones in 1964.

Having established that Quinones acquired ownership of the land, the Court addressed the issue of prescription and laches. The heirs argued that Quinones’ claim was barred because she had delayed in asserting her rights. However, the Court disagreed, pointing out that Quinones’ action was essentially one for quieting of title. An action to quiet title, where the plaintiff is in actual possession of the land under a claim of ownership, does not prescribe.

The Supreme Court cited Sapto, et al. v. Fabiana, explaining that:

The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain in actual possession of the land, claiming to be owners thereof…

Quinones and her tenant were in possession of the land, and her cause of action to quiet title only arose when the heirs obtained TCT No. T-91543 in their names, disturbing her possession. Therefore, her action, filed in 1998, was not barred by prescription.

Furthermore, the Court found no basis for laches, which requires unreasonable delay in asserting a right to the prejudice of another. The heirs were aware of Quinones’ claim and did not object when she installed a tenant on the land. The Court also dismissed the significance of Quinones’ failure to register the Deed of Absolute Sale or obtain a TCT in her name. Registration is not a means of acquiring ownership, but merely a way of notifying others of an existing claim.

The Court also emphasized that the heirs were bound by the contract between their grandfather and Quinones. Article 1311 of the New Civil Code states that contracts take effect between the parties, their assigns, and their heirs. As heirs, they inherited not only the assets but also the obligations of their predecessor-in-interest.

FAQs

What was the key issue in this case?	The central issue was whether a parcel of land should be awarded to the heirs of the original owner through inheritance or to a buyer who possessed a prior Deed of Absolute Sale. The Court needed to clarify if the principle of double sales applied when one party’s claim was based on inheritance rather than a subsequent sale.
What is Article 1544 of the Civil Code?	Article 1544 governs situations where the same property is sold to multiple buyers by the same seller. It dictates who has the superior right based on possession, registration, and good faith.
Why didn’t Article 1544 apply in this case?	Article 1544 didn’t apply because the heirs’ claim was based on inheritance, not a second sale. The Court clarified that inheritance is a different mode of acquiring property than a sale, and therefore, the double sale rule was inappropriate.
How is ownership transferred in a sale?	Ownership is transferred upon delivery of the property, as specified in Articles 1497 to 1501 of the Civil Code. When a sale is made through a public instrument, like a notarized deed, the execution of the instrument is generally equivalent to delivery.
What is the effect of a notarized Deed of Absolute Sale?	A notarized Deed of Absolute Sale is a public document that carries a presumption of regularity. It is considered prima facie evidence of the truth of the facts stated within and is proof of the document’s due execution.
What does it mean to “quiet title” to a property?	Quieting title is a legal action taken to resolve conflicting claims or remove clouds on a property’s title. It aims to ensure that the rightful owner has clear and undisputed ownership of the land.
Does an action to quiet title prescribe?	No, an action to quiet title does not prescribe if the plaintiff is in actual possession of the land under a claim of ownership. The right to seek a quiet title continues as long as the adverse claim exists.
Is registration of a property title necessary to acquire ownership?	No, registration is not a mode of acquiring ownership. It serves primarily to notify and protect the interests of third parties and to confirm the existence of an existing claim.
Are heirs bound by the contracts of their predecessors?	Yes, heirs are generally bound by the contracts entered into by their predecessors-in-interest. They inherit both the rights and obligations arising from those contracts, unless the rights and obligations are not transmissible by their nature, stipulation, or provision of law.

In conclusion, the Supreme Court’s decision underscores the importance of duly executed contracts in determining property ownership. It clarifies that inheritance cannot override a prior valid sale and reinforces the principle that heirs can only inherit what the deceased actually owned at the time of death. This ruling provides a clear framework for resolving disputes involving conflicting claims based on sale and inheritance, prioritizing the rights of those who have previously and legally purchased the property.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: HEIRS OF CIRIACO BAYOG-ANG VS. FLORENCE QUINONES, G.R. No. 205680, November 21, 2018

November 21, 2018

Prescription in Falsification: When Does the Clock Start Ticking?

The Supreme Court held that the crime of falsification of a public document had already prescribed, thus reversing the conviction of the petitioners. The Court clarified that for falsification, the prescriptive period begins not from the discovery of the falsification, but from the date the falsified document is registered. This ruling underscores the importance of timely filing of complaints to ensure that legal remedies are not barred by prescription, reinforcing the principle that the state’s right to prosecute is not indefinite.

A Father’s Ghostly Signature: Can Time Erase Falsification?

This case revolves around siblings Shirley T. Lim, Mary T. Lim-Leon, and Jimmy T. Lim, officers of Pentel Merchandising Co., Inc. (Pentel). The charge? Falsifying a Secretary’s Certificate dated February 29, 2000, which contained Pentel Board Resolution 2000-001. This resolution authorized Jimmy to sell a Pentel property. The problem: Quintin C. Lim, the siblings’ father and a Pentel director, supposedly signed the resolution, despite having passed away in 1996. The central legal question is whether the crime of falsification had prescribed, barring prosecution despite the alleged forgery.

The petitioners were charged with falsification of a public document, specifically violating Article 172 in relation to Article 171 of the Revised Penal Code (RPC). The Information alleged that the petitioners conspired to falsify the Secretary’s Certificate and Board Resolution to facilitate the transfer of property. The prosecution argued that the petitioners counterfeited Quintin’s signature, making it appear as though he participated in the board meeting and approved the resolution, when he was already deceased. The petitioners contended that they were erroneously charged with falsifying a public document, arguing that the evidence pointed to the falsification of a private document (Board Resolution 2000-001), which requires proof of intent to cause damage, an element they claim was not established.

The Supreme Court clarified that the subject of falsification was indeed the Secretary’s Certificate, a notarized document, which qualifies as a public document under Section 19(b), Rule 132 of the Revised Rules on Evidence. This determination is crucial because the elements and penalties for falsification differ based on whether the document is public or private. The Court emphasized that the Secretary’s Certificate contained the resolution and the signatures of the board members, indicating the petitioners’ involvement in its execution. This finding upheld the charge of falsification of a public document, punishable under Article 172(1) of the RPC, which addresses falsification by a private individual of a public document.

Art. 172. Falsification by private individual and use of falsified documents. – The penalty of prision correccional in its medium and maximum periods and a fine of not more than P5,000 pesos shall be imposed upon:

1. Any private individual who shall commit any of the falsifications enumerated in the next preceding article in any public or official document or letter of exchange or any other kind of commercial document; x x x

A key point of contention was the prescription of the offense. The petitioners raised this defense for the first time on appeal to the Supreme Court, arguing that the crime should have been discovered either on March 21, 2000 (date of the Deed of Absolute Sale) or March 29, 2000 (date TCT No. 142595 was issued). Section 3(g), Rule 117 of the Rules of Criminal Procedure allows an accused to move for the quashal of the complaint on the ground that the criminal action or liability is extinguished. The Court, citing People v. Castro, affirmed that the defense of prescription could be raised at any stage of the proceedings, even if not initially asserted. This ruling is significant because it clarifies that the right to invoke prescription is not waived by a failure to raise it at the earliest opportunity.

The Court then examined when the prescriptive period began. Article 90 of the RPC states that the period for the prescription of offenses commences from the day on which the crime is discovered. However, in cases involving falsification of a public document, the Court referenced Cabral v. Hon. Puno, clarifying that the prescriptive period commences on the date of registration of the forged or falsified document. This is grounded in the principle that registration serves as constructive notice to the entire world.

The rule is well-established that registration in a public registry is a notice to the whole world. The record is constructive notice of its contents as well as all interests, legal and equitable, included therein.

The Court underscored that the act of registration serves as constructive notice, charging everyone with knowledge of the document’s contents. Furthermore, the Court explained that for corporations, the sale of real property requires a board resolution authorizing the transaction and designating an agent. The Secretary’s Certificate serves as evidence of this resolution. The Court emphasized that the falsified Secretary’s Certificate, attesting to Quintin’s participation, was essential for the validity of the sale and the subsequent transfer of title to the Spouses Lee. As the registration of the falsified Secretary’s Certificate occurred on March 29, 2000, the Court concluded that the prescriptive period began on that date.

Article 91 of the RPC stipulates that the period of prescription is interrupted by the filing of the complaint or information. While the exact date of the filing of Lucy’s Affidavit of Complaint was not available, the Court noted that the affidavit was executed on September 21, 2010, more than ten years after March 29, 2000. Thus, prescription had already set in before the complaint was even filed. Consequently, the Court ruled that by the time the criminal Information was filed on May 15, 2012, the petitioners’ criminal liability had been extinguished, warranting the dismissal of the case.

FAQs

What was the key issue in this case?	The key issue was whether the crime of falsification of a public document had prescribed, thus barring prosecution despite the alleged forgery.
When does the prescriptive period begin for falsification of a public document?	The prescriptive period begins on the date of registration of the forged or falsified document, not from the date of discovery of the falsification. This is because registration serves as constructive notice to the world.
Why was the Secretary’s Certificate considered a public document?	The Secretary’s Certificate was considered a public document because it was notarized, falling under the definition provided in Section 19(b), Rule 132 of the Revised Rules on Evidence.
Can the defense of prescription be raised at any stage of the proceedings?	Yes, the defense of prescription can be raised at any stage of the proceedings, even if it was not initially asserted in the lower courts. This is an exception to the general rule that defenses must be raised at the earliest opportunity.
What is the significance of constructive notice in this case?	Constructive notice means that the registration of a document serves as notice to the entire world of its contents. In this case, it means that the registration of the falsified Secretary’s Certificate started the running of the prescriptive period.
What role did the Secretary’s Certificate play in the property sale?	The Secretary’s Certificate was crucial as it served as evidence of the board resolution authorizing the sale of the corporation’s property and designating an agent. Without it, the sale would lack the necessary corporate authorization.
When was the registration of the falsified Secretary’s Certificate?	The registration of the falsified Secretary’s Certificate was on March 29, 2000, making this date the starting point for the prescriptive period.
Why was the case dismissed despite the finding of falsification?	The case was dismissed because the prescriptive period had lapsed before the complaint was filed. The State lost its right to prosecute and punish the petitioners due to the passage of time.

This case underscores the critical importance of timely legal action and the legal implications of constructive notice in property transactions. It serves as a reminder that delays in pursuing legal remedies can result in the loss of legal recourse, even in cases involving serious allegations such as falsification. The principle of prescription acts as a statute of repose, balancing the state’s interest in prosecuting crimes with the individual’s right to be free from indefinite threat of prosecution.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: SHIRLEY T. LIM, ET AL. VS. PEOPLE, G.R. No. 226590, April 23, 2018

April 23, 2018

Unregistered Donations vs. Registered Sales: Priority in Land Ownership Disputes

In a dispute over land ownership, Philippine law prioritizes registered transactions over unregistered ones to protect innocent purchasers. The Supreme Court affirmed this principle, favoring the registered Deed of Absolute Sale over an earlier, unregistered donation propter nuptias (by reason of marriage). This ruling underscores the importance of registering property transactions to ensure legal protection against third parties unaware of prior claims. It highlights the security and reliability the Torrens system provides to those who rely on registered titles when acquiring property.

Love and Land: When an Unregistered Gift Loses to a Valid Sale

The case of Spouses Juan and Antonina Cano v. Spouses Arturo and Emerenciana Cano (G.R. No. 188666 and G.R. No. 190750) revolves around a parcel of land in San Carlos City, Pangasinan. Petitioners Juan and Antonina Cano claimed ownership based on a donation propter nuptias from Feliza Baun in 1962. Respondents Arturo and Emerenciana Cano, on the other hand, asserted their right as purchasers of the land from Feliza in 1982, with the sale duly annotated on the Original Certificate of Title (OCT) No. 62276. The central legal question was: who has the superior right to the land – the donees of an unregistered donation or the purchasers in a registered sale?

The legal battle unfolded across two cases. The first, an ejectment case (G.R. No. 188666), was initiated by the respondents to evict the petitioners from the property. The second, a case for quieting of title (G.R. No. 190750), was filed by the petitioners to assert their ownership and nullify the respondents’ claim. The Municipal Trial Court in Cities (MTCC) initially favored the petitioners in the ejectment case, upholding the validity of the donation. However, the Regional Trial Court (RTC) reversed this decision, a ruling upheld by the Court of Appeals (CA), which favored the respondents due to the registered Deed of Absolute Sale.

The Supreme Court (SC) began its analysis by clarifying the rules governing donations propter nuptias. At the time of the donation in 1962, the Civil Code was in effect. Under Article 129 of the Civil Code, express acceptance was not necessary for the validity of donations propter nuptias. Thus, implied acceptance, such as the celebration of marriage, was sufficient. The Court, therefore, disagreed with the CA’s pronouncement that the donation was invalid due to lack of express acceptance. It emphasized that laws existing at the time of the contract’s execution are applicable. However, this did not change the outcome of the case.

Building on this clarification, the SC addressed the core issue: the effect of an unregistered donation on the rights of third parties. Article 709 of the Civil Code provides that titles of ownership or other rights over immovable property, which are not duly inscribed or annotated in the Registry of Property, shall not prejudice third persons. Similarly, Sections 51 and 52 of Presidential Decree No. (P.D.) 1529, the Property Registration Decree, state that registration is the operative act to convey or affect the land insofar as third persons are concerned, and that every registered instrument affecting registered land serves as constructive notice to all persons.

Quoting Gonzales v. Court of Appeals, the SC reiterated the principle that registration is not necessary for the validity of a donation between the parties. However, registration is essential to bind third persons. Since the donation propter nuptias in favor of petitioners was never registered, it could not prejudice the respondents, who had no participation in the deed or actual knowledge of it. The Court emphasized that mere possession of the property by the petitioners was insufficient to equate to actual knowledge on the part of the respondents.

“Art. 709. The titles of ownership, or other rights over immovable property, which are not duly inscribed or annotated in the Registry of Property shall not prejudice third persons.”

The Court further held that the respondents were innocent purchasers for value, having relied on the clean title (OCT No. 62276) which indicated Feliza’s ownership and did not reflect the donation. Persons dealing with registered land have the right to rely completely on the Torrens title, as stated in the case of Nobleza v. Nuega, and are not required to go beyond what the certificate of title indicates on its face. This protection extends to buyers acting in good faith, without notice of any other person’s right or interest in the property.

While the principle of innocent purchaser for value is not absolute, the petitioners failed to prove that the respondents had actual knowledge of their claim or that there were circumstances that should have compelled them to inquire further. The RTC found that respondent Arturo Cano was in possession of the property as a tenant prior to the sale, based on the annotation on the title. The petitioners could not demonstrate that the structures they claimed as evidence of their possession were present at the time of the sale.

The Court also dismissed the petitioners’ claim of ownership through acquisitive prescription. Section 47 of P.D. 1529 explicitly states that no title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse possession. Since the subject property was registered land, the petitioners’ possession, even if prolonged, could not ripen into ownership. Consequently, the Court affirmed the CA’s decision, declaring the respondents the rightful owners of the property and entitled to its possession.

“Section 47. Registered land not subject to prescriptions. No title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.”

The SC concluded that since the respondents were the rightful owners, they had the right to enjoy and dispose of the property without limitations, as provided by Article 428 of the Civil Code. Any issues related to accession, such as the right to reimbursement of expenses for structures on the land, were left to be addressed in a separate proceeding due to the absence of evidence and arguments presented on these matters.

FAQs

What was the key issue in this case?	The primary issue was determining who had the superior right to a parcel of land: the donees of an unregistered donation propter nuptias or the purchasers in a registered sale. The Supreme Court had to resolve the conflict between these competing claims of ownership.
*What is a donation propter nuptias?*	A donation propter nuptias is a gift made before a marriage, in consideration of the marriage, and in favor of one or both of the future spouses. It is a special type of donation governed by specific rules under the Civil Code and Family Code.
Why was the donation in this case not considered valid initially by the Court of Appeals?	The Court of Appeals initially ruled the donation invalid because it believed there was no proof of acceptance of the donation by the donees in a public instrument. The Supreme Court clarified this point, noting that under the Civil Code (in effect at the time of the donation), express acceptance was not required for donations propter nuptias.
What is the significance of registering property transactions?	Registering property transactions, such as sales or donations, provides legal protection against third parties who may be unaware of the transaction. Registration serves as constructive notice to the world, meaning that anyone dealing with the property is presumed to know about the registered transaction.
What does it mean to be an ‘innocent purchaser for value’?	An innocent purchaser for value is someone who buys property without notice of any other person’s right or interest in the property and pays a fair price for it. They are protected by law and have the right to rely on the correctness of the certificate of title.
Can registered land be acquired through prescription or adverse possession?	No, registered land cannot be acquired through prescription or adverse possession. This is explicitly stated in Section 47 of P.D. 1529, the Property Registration Decree.
Why did the Supreme Court ultimately rule in favor of the respondents?	The Supreme Court favored the respondents because they were considered innocent purchasers for value and their Deed of Absolute Sale was registered. This registration provided them with a superior right over the petitioners’ unregistered donation.
What happens to the structures built on the land by the petitioners?	The Supreme Court acknowledged that its ruling might affect the structures on the property and raise issues of accession (improvements made to the property). However, since these matters were not raised in the case, they would have to be dealt with in a separate proceeding.

This case underscores the critical importance of registering property transactions to protect one’s rights against third parties. While a donation may be valid between the parties involved, it does not bind those without knowledge of it. The ruling reinforces the reliability of the Torrens system, which allows individuals to confidently rely on registered titles when purchasing property.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spouses Juan and Antonina Cano, et al. v. Spouses Arturo and Emerenciana Cano, G.R. No. 188666 and G.R. No. 190750, December 14, 2017

December 14, 2017

Double Sale of Land: Good Faith and Prior Registration Under Philippine Law

In cases of double sale, Philippine law prioritizes the rights of the buyer who first registers the property in good faith. However, this principle does not apply if the second buyer had prior knowledge of the first sale. This means that even if a second buyer registers the property first, their registration is tainted with bad faith, and the first buyer’s rights prevail. This ruling emphasizes the importance of good faith in land transactions and protects the rights of original buyers who may not have immediately registered their purchase.

Navigating Competing Claims: When a Subsequent Buyer Knows Too Much

The case of Spring Homes Subdivision Co., Inc. vs. Spouses Tablada (G.R. No. 200009, January 23, 2017) revolves around a dispute over a parcel of land that was sold twice. Spring Homes initially sold the land to Spouses Tablada, who took possession and built a house on it. Later, Spring Homes, embroiled in a legal battle with Spouses Lumbres, conveyed the same property to the latter as part of a compromise agreement. The central legal question is: Who has the rightful claim to the property, considering the double sale and the differing circumstances of registration and possession?

The factual backdrop reveals that Spouses Lumbres were aware of the prior sale to Spouses Tablada. Despite this knowledge, they proceeded to register the property under their names. This act of registration, the Supreme Court found, was not made in good faith. Philippine law is clear on the matter of double sales, as articulated in Article 1544 of the Civil Code:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession, and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

This provision establishes a hierarchy for determining ownership in double sale situations. First priority is given to the buyer who registers the property in good faith. If no one registers, the buyer who first takes possession in good faith prevails. Finally, if neither registers nor takes possession, the buyer with the oldest title, provided they acted in good faith, is deemed the owner.

The concept of good faith is crucial. It means that the buyer was unaware of any defect in the seller’s title or any prior transaction affecting the property. In this case, the Supreme Court emphasized that Spouses Lumbres could not claim ignorance of the prior sale to Spouses Tablada. Their knowledge of the Tabladas’ possession and construction of a house on the property negated any claim of good faith.

A key aspect of the case was the argument by Spouses Lumbres that Spring Homes was an indispensable party to the lawsuit and that the failure to properly serve summons on Spring Homes invalidated the proceedings. The Supreme Court disagreed, holding that Spring Homes was not an indispensable party because it had already transferred its interest in the property to Spouses Lumbres. The Court cited the case of Uy v. CA (527 Phil. 117, 128 (2006)) to illustrate the concept of indispensable parties, emphasizing that it is the assignee (Spouses Lumbres) who stands to be benefited or injured by the judgment, not the assignor (Spring Homes).

The Court distinguished between indispensable and necessary parties, explaining that while the presence of a necessary party is desirable to settle all possible issues, a final decree can be made in their absence without affecting them. Since the title was already in the name of Spouses Lumbres, any action to nullify that title directly affected them, making them the indispensable party.

Building on this principle, the Supreme Court upheld the Court of Appeals’ decision that the first sale between Spring Homes and Spouses Tablada was valid. The Court noted that the Deed of Absolute Sale indicated a consideration of P157,500.00, which Spouses Tablada had paid. The claim by Spouses Lumbres that a balance of P230,000.00 remained unpaid was not substantiated and was inconsistent with the terms of the Deed of Absolute Sale.

This approach contrasts with the argument presented by Spouses Lumbres, who insisted that the total selling price was P409,500.00 based on the Contract to Sell. However, the Court found that this amount included the cost of the house to be constructed on the land, which Spouses Tablada financed themselves when their PAG-IBIG loan did not materialize due to Spring Homes’ failure to provide the necessary title documents.

Furthermore, the Supreme Court affirmed the principle that every person dealing with registered land may safely rely on the correctness of the certificate of title. However, this reliance is not absolute. As the Court stated in Spouses Lumbres v. Spouses Tablada (545 Phil. 471 (2007)), knowledge gained by the second buyer (Spouses Lumbres) of the first sale (to Spouses Tablada) defeats their rights, even if they were the first to register the second sale. This is because such knowledge taints their prior registration with bad faith.

Therefore, the critical issue was not simply who registered the property first, but whether that registration was done in good faith. The Supreme Court found that Spouses Lumbres acted in bad faith when they registered the property, knowing that it had already been sold to Spouses Tablada, who were in possession and had built a house on it. This bad faith nullified their claim to ownership, and the Court upheld the rights of Spouses Tablada as the rightful owners of the property.

The practical implications of this decision are significant. It reinforces the importance of conducting thorough due diligence before purchasing property. Buyers must investigate not only the title but also the physical condition of the land to ascertain if there are any adverse claims or possessors. It also underscores the need for buyers to promptly register their purchase to protect their rights against subsequent claims. However, registration alone is not sufficient; it must be coupled with good faith.

Moreover, this case highlights the risks associated with relying solely on the certificate of title without considering other factors, such as actual possession and knowledge of prior transactions. While the Torrens system aims to provide certainty and security in land ownership, it does not shield buyers who act in bad faith or willfully ignore facts that would put a reasonable person on notice of potential defects in the seller’s title.

Ultimately, the Spring Homes case serves as a reminder that the principle of primus tempore, potior jure (first in time, stronger in right) is not absolute in cases of double sale. Good faith remains a paramount consideration, and buyers who act with knowledge of prior transactions or with willful blindness to potential defects in title cannot claim priority over earlier buyers who acted in good faith, even if the latter failed to register their purchase promptly.

Thus, the Supreme Court has consistently emphasized the importance of acting with clean hands and a clear conscience in all land transactions. Buyers who seek to take advantage of technicalities or who ignore clear signs of prior ownership will not be favored by the courts.

FAQs

What was the key issue in this case?	The key issue was determining who had the rightful claim to a property sold twice, considering the competing claims of registration and possession. The court needed to decide whether the second buyer’s registration, done with knowledge of the first sale, could override the first buyer’s rights.
What is the legal principle of double sale in the Philippines?	Article 1544 of the Civil Code governs double sales, prioritizing ownership to the buyer who first registers in good faith. If no registration occurs, the buyer who first possesses in good faith prevails, and lastly, the buyer with the oldest title in good faith.
What does ‘good faith’ mean in the context of land sales?	‘Good faith’ means the buyer was unaware of any defect in the seller’s title or any prior transaction affecting the property at the time of purchase and registration. It implies an honest intention to abstain from taking any unconscientious advantage of another.
Why was Spring Homes not considered an indispensable party?	Spring Homes was not indispensable because it had already transferred its interest in the property. The case primarily concerned the validity of the title held by Spouses Lumbres, making them the indispensable party.
How did the court determine that Spouses Lumbres acted in bad faith?	The court determined bad faith because Spouses Lumbres knew of the prior sale to Spouses Tablada, who were already in possession and had built a house on the property. This knowledge negated any claim of good faith during their registration.
What was the significance of the Deed of Absolute Sale in this case?	The Deed of Absolute Sale confirmed the agreed purchase price and terms, which the court used to validate the initial transaction between Spring Homes and Spouses Tablada. It also highlighted inconsistencies in Spouses Lumbres’ claims regarding the remaining balance.
Can a buyer rely solely on the certificate of title when purchasing property?	While a certificate of title provides security, buyers should also investigate the physical condition of the land and be wary of any signs of prior ownership. Good faith requires due diligence beyond just checking the title.
What happens if the first buyer fails to register the property?	If the first buyer doesn’t register, the second buyer can gain priority by registering in good faith. However, knowledge of the prior sale taints their registration, and the first buyer’s rights can still prevail if the second buyer acted in bad faith.
What evidence did the court consider to determine ownership?	The court considered the Deeds of Absolute Sale, the Contract to Sell, evidence of possession, and the knowledge of prior transactions to determine ownership. Good faith, established through these factors, was paramount in the decision.

The Spring Homes case reaffirms the legal principles surrounding double sales of immovable property in the Philippines, emphasizing the crucial role of good faith in determining ownership. While registration provides a strong presumption of ownership, it is not an absolute guarantee, especially when the registering party has knowledge of prior claims. This decision underscores the importance of due diligence and transparency in real estate transactions to protect the rights of all parties involved.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spring Homes Subdivision Co., Inc. vs. Spouses Tablada, G.R. No. 200009, January 23, 2017

January 23, 2017

Mortgage Rights Prevail: Protecting Mortgagee Interests Over Subsequent Property Contracts

In a real estate dispute, the Supreme Court affirmed the rights of a mortgagee over subsequent buyers in contracts to sell, emphasizing the importance of registration and the due diligence required in property transactions. The Court ruled that a real estate mortgage, duly registered, takes precedence over contracts to sell executed after the mortgage’s registration. This decision underscores the principle that registration serves as constructive notice to the world, binding subsequent purchasers to prior encumbrances on the property. This means that individuals entering into agreements involving real estate must conduct thorough due diligence to uncover existing liens or mortgages, as these will take precedence over their later claims.

Navigating Real Estate Entanglements: When Mortgages Overshadow Subsequent Sales

The case before the Supreme Court, Fabio Cahayag and Conrado Rivera vs. Commercial Credit Corporation, involved a complex web of property transactions and competing claims. Dulos Realty, the original owner, mortgaged several properties to Commercial Credit Corporation (CCC). Subsequently, Dulos Realty entered into contracts to sell these properties to various individuals, including Cahayag, Rivera, Escalona, and Baldoza. When Dulos Realty defaulted on its loan, CCC foreclosed the mortgage, leading to a legal battle over who had the superior right to the properties.

The central issue revolved around whether the subsequent buyers, who entered into contracts to sell after the mortgage was registered, had a valid claim against CCC, the mortgagee. Petitioners, the buyers, argued that the mortgage did not cover the improvements on the land and that Dulos Realty was no longer the owner of the properties when the mortgage was executed. They also contended that CCC, as a financial institution, should have exercised greater due diligence and that the mortgage required prior approval from the Housing and Land Use Regulatory Board (HLURB).

The Supreme Court, however, sided with the mortgagee, CCC, and its successor-in-interest, Qua. The Court emphasized that the real estate mortgage explicitly included not only the land but also all the buildings and improvements thereon. This was determined by examining the language of the mortgage agreement itself.

[T]he MORTGAGOR has transferred and conveyed and, by these presents, do hereby transfer and convey by way of FIRST MORTGAGE unto the MORTGAGEE, its successors and assigns the real properties described in the list appearing at the back of this document and/or in a supplemental document attached hereto as Annex “A” and made and integral part hereof, together with all the buildings and/or other improvements now existing or which may hereafter be place[d] or constructed thereon.

The Court found no ambiguity in the mortgage agreement, thereby dismissing the petitioners’ argument that the agreement should be construed against the drafter. The Court underscored the significance of the mortgage’s registration date. Since the contracts to sell were executed after the mortgage’s registration, the buyers were bound by the mortgage. The registration served as constructive notice, meaning that the buyers were legally presumed to know about the mortgage when they entered into their respective contracts.

The legal principle of constructive notice is crucial in property law, establishing that registration of an encumbrance, such as a mortgage, effectively informs all subsequent parties of its existence and implications. The Court cited Articles 1312 and 2126 of the Civil Code to support this principle.

Art. 1312. In contracts creating real rights, third persons who come into possession of the object of the contract are bound thereby, subject to the provisions of the Mortgage Law and the Land Registration laws.

Art. 2126. The mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted.

The Court distinguished this case from Dela Merced v. GSIS, where an unregistered contract to sell preceded a registered mortgage. In Dela Merced, the mortgagee, GSIS, was deemed to have knowledge of the contract to sell, which was equivalent to registration. However, in the present case, the mortgage was registered first, making it binding on the subsequent buyers. Moreover, unlike Dela Merced, the buyers in this case did not fully pay the purchase price or execute a deed of absolute sale before the foreclosure.

The Supreme Court also addressed the argument that CCC, as a financial institution, should have exercised greater due diligence. While financial institutions are generally held to a higher standard of care, the Court found that the registration of the mortgage was sufficient notice to all parties. The buyers could have protected their interests by redeeming the property within the one-year redemption period, which they failed to do.

The Court further clarified the application of the principle of nemo dat quod non habet, which means that one cannot give what one does not have. While the Court of Appeals mistakenly applied this principle to the validity of the sale, the Supreme Court clarified that it applies to the consummation stage, not the perfection stage, of a contract of sale. In this case, Dulos Realty was no longer the owner of the property at the time of delivery to Baldoza; thus, there was no valid transfer of title. This distinction highlights the critical difference between a valid contract of sale and a valid transfer of ownership.

Finally, the Court dismissed the argument that the mortgage lacked prior HLURB approval. Because this argument was raised for the first time on appeal, it was deemed waived. Parties cannot change their theory of a case at the appellate stage, as it would deprive the opposing party of the opportunity to present evidence on the issue.

FAQs

What was the key issue in this case?	The primary issue was whether a registered real estate mortgage took precedence over subsequent contracts to sell involving the same properties. The Court had to determine who had the superior right to the properties.
What is the significance of registering a real estate mortgage?	Registration serves as constructive notice to the world, legally informing everyone about the mortgage. This binds subsequent purchasers to the terms of the mortgage, giving the mortgagee a prior claim on the property.
What is the ‘nemo dat quod non habet’ principle, and how does it apply to this case?	This principle means one cannot give what one does not have. The Supreme Court clarified that this applies at the consummation (delivery) stage of a sale, not the perfection stage.
Why did the Court reject the argument about the lack of HLURB approval?	The Court rejected this argument because it was raised for the first time on appeal. Parties cannot introduce new legal theories at the appellate stage that were not presented during the trial.
How does this case compare to Dela Merced v. GSIS?	In Dela Merced, an unregistered contract to sell preceded a registered mortgage, and the mortgagee had knowledge of the prior contract. Here, the mortgage was registered first, making it binding on subsequent buyers.
What is the redemption period in foreclosure cases, and why is it important?	The redemption period is the time allowed for a mortgagor to reclaim the property after foreclosure. Failing to redeem within this period results in the title being consolidated in the purchaser.
What does it mean to be an ‘innocent purchaser for value’?	An innocent purchaser for value buys property without notice of any other person’s right or interest, paying a fair price. However, this concept was not central to this case because the mortgagee’s title was valid.
What is a contract to sell, and how does it differ from a contract of sale?	A contract to sell stipulates that the seller will execute a deed of sale only after full payment of the purchase price. Unlike a contract of sale, it does not transfer ownership until the condition of full payment is met.

The Supreme Court’s decision in this case reinforces the importance of due diligence and the legal effect of registration in property transactions. It clarifies that a registered mortgage takes precedence over subsequent contracts to sell, protecting the rights of the mortgagee. This ruling serves as a reminder to potential buyers to thoroughly investigate the status of a property before entering into any agreements.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Fabio Cahayag and Conrado Rivera vs. Commercial Credit Corporation, G.R. No. 168078, January 13, 2016

January 13, 2016