FACTS
Petitioner Angelita Manzano filed with the Philippine Patent Office an action for the cancellation of Letters Patent No. UM-4609 for a gas burner registered in the name of respondent Melecia Madolaria who subsequently assigned the letters patent to New United Foundry and Manufacturing Corporation. Petitioner alleged that (a) the utility model covered by the letters patent, in this case, an LPG gas burner, was not inventive, new or useful; (b) the specification of the letters patent did not comply with the requirements of Sec. 14, RA No. 165, as amended; (c) respondent Melecia Madolaria was not the original, true and actual inventor nor did she derive her rights from the original, true and actual inventor of the utility model covered by the letters patent; and, (d) the letters patent was secured by means of fraud or misrepresentation.
The Director of Patents issued Decision No. 86-56 denying the petition for cancellation and holding that the evidence of petitioner was not able to establish convincingly that the patented utility model of private respondent was anticipated. No evidence whatsoever was presented by petitioner to show that the then applicant Melecia Madolaria withheld with intent to deceive material facts which, if disclosed, would have resulted in the refusal by the Philippine Patent Office to issue the Letters Patent under inquiry.
ISSUE: WON the CA erred in upholding the decision of the Director of Patents.
RULING: NO. In issuing Letters Patent to respondent Madolaria for an LPG Burner, the PPO found her invention novel and patentable. The issuance of such patent creates a presumption which yields only to clear and cogent evidence that the patentee was the original and first inventor. The burden of proving want of novelty is on him who avers it and the burden is a heavy one which is met only by clear and satisfactory proof which overcomes every reasonable doubt.
As found by the Director of Patents, the standard of evidence sufficient to overcome the presumption of legality of the issuance of letters patent to respondent Madolaria was not legally met by petitioner in her action for the cancellation of the patent. The findings and conclusions of the Director of Patent were reiterated and affirmed by the Court of Appeals. The rule is settled that the findings of fact of the Director of Patents, especially when affirmed by the Court of Appeals, are conclusive on this Court when supported by substantial evidence.
The validity of the patent issued by the PPO in favor of private respondent and the question over the inventiveness, novelty and usefulness of the improved model of the LPG burner are matters which are better determined by the PPO. The technical staff of the Philippine Patent Office composed of experts in their field has by the issuance of the patent in question accepted private respondents model of gas burner as a discovery. There is a presumption that the Office has correctly determined the patentability of the model and such action must not be interfered with in the absence of competent evidence to the contrary.
Monday, May 25, 2020
Creser Precision System Inc. vs. CA
GR No. 118708
Feb. 2, 1998
FACTS
Private respondent was granted by the Bureau of Patents, Trademarks and Technology Transfer (BPTTT), a Letters Patent No. UM-6938 covering an aerial fuze. The respondent discovered that petitioner submitted samples of its patented aerial fuze to the Armed Forces of the Philippines (AFP) for testing and is claiming the aforesaid aerial fuze as its own and planning to bid and manufacture the same commercially without license or authority from private respondent.
To protect its right respondent, sent a letter to petitioner advising it of its existing patent and its rights thereunder, warning petitioner of a possible court action and/or application for injunction, should it proceed with the scheduled testing by the military. Petitioner averred that they are the first, true and actual inventor of an aerial fuze denominated as Fuze, PDR 77 CB4 which is developed as early as December 1981 under the Self-Reliance Defense Posture Program (SRDP) of the AFP; that sometime in 1986, and that they began supplying the AFP with the said aerial fuze; that private respondents aerial fuze is identical in every respect to the petitioners fuze; and that the only difference between the two fuzes are miniscule and merely cosmetic in nature.
Petitioner prayed that a temporary restraining order (TRO) and/or writ of preliminary injunction be issued enjoining private respondent including all persons acting on its behalf from manufacturing, marketing and/or profiting therefrom, and/or from performing any other act in connection therewith or tending to prejudice and deprive it of any rights, privileges and benefits to which it is duly entitled as the first, true and actual inventor of the aerial fuze. The court issued a TRO in favor of the petitioner.
ISSUE
Whether or not the petitioner has the right to assail the validity of the patented work of the respondent?
HELD
The court finds the argument of the petitioner untenable. Section 42 of the Law on Patent (RA 165) provides that only the patentee or his successors-in-interest may file an action against infringement. What the law contemplates in the phrase “anyone possessing any right, title or interest in and to the patented invention” refers only to the patentee’s successors-in-interest, assignees or grantees since the action on patent infringement may be brought only in the name of the person granted with the patent. There can be no infringement of a patent until a patent has been issued since the right one has over the invention covered by the patent arises from the grant of the patent alone. Therefore, a person who has not been granted letter of patent over an invention has not acquired right or title over the invention and thus has no cause of action for infringement. Petitioner admitted having no patent over his invention. Respondent’s aerial fuze is covered by letter of patent issued by the Bureau of Patents thus it has in his favor not only the presumption of validity of its patent but that of a legal and factual first and true inventor of the invention.
Private respondent was granted by the Bureau of Patents, Trademarks and Technology Transfer (BPTTT), a Letters Patent No. UM-6938 covering an aerial fuze. The respondent discovered that petitioner submitted samples of its patented aerial fuze to the Armed Forces of the Philippines (AFP) for testing and is claiming the aforesaid aerial fuze as its own and planning to bid and manufacture the same commercially without license or authority from private respondent.
To protect its right respondent, sent a letter to petitioner advising it of its existing patent and its rights thereunder, warning petitioner of a possible court action and/or application for injunction, should it proceed with the scheduled testing by the military. Petitioner averred that they are the first, true and actual inventor of an aerial fuze denominated as Fuze, PDR 77 CB4 which is developed as early as December 1981 under the Self-Reliance Defense Posture Program (SRDP) of the AFP; that sometime in 1986, and that they began supplying the AFP with the said aerial fuze; that private respondents aerial fuze is identical in every respect to the petitioners fuze; and that the only difference between the two fuzes are miniscule and merely cosmetic in nature.
Petitioner prayed that a temporary restraining order (TRO) and/or writ of preliminary injunction be issued enjoining private respondent including all persons acting on its behalf from manufacturing, marketing and/or profiting therefrom, and/or from performing any other act in connection therewith or tending to prejudice and deprive it of any rights, privileges and benefits to which it is duly entitled as the first, true and actual inventor of the aerial fuze. The court issued a TRO in favor of the petitioner.
ISSUE
Whether or not the petitioner has the right to assail the validity of the patented work of the respondent?
HELD
The court finds the argument of the petitioner untenable. Section 42 of the Law on Patent (RA 165) provides that only the patentee or his successors-in-interest may file an action against infringement. What the law contemplates in the phrase “anyone possessing any right, title or interest in and to the patented invention” refers only to the patentee’s successors-in-interest, assignees or grantees since the action on patent infringement may be brought only in the name of the person granted with the patent. There can be no infringement of a patent until a patent has been issued since the right one has over the invention covered by the patent arises from the grant of the patent alone. Therefore, a person who has not been granted letter of patent over an invention has not acquired right or title over the invention and thus has no cause of action for infringement. Petitioner admitted having no patent over his invention. Respondent’s aerial fuze is covered by letter of patent issued by the Bureau of Patents thus it has in his favor not only the presumption of validity of its patent but that of a legal and factual first and true inventor of the invention.
Smith Kline Beckham Corp. vs. CA
GR No. 126627
Aug. 14, 2003
FACTS
Petitioner, Smith Kline Beckman Corporation was granted a patent over an invention entitled "Methods and Compositions for Producing Biphasic Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole Carbamate." The patented invention consisted of a new compound named methyl 5 propylthio-2-benzimidazole carbamate and the methods or compositions utilizing the compound as an active ingredient in fighting infections caused by gastrointestinal parasites and lungworms in animals such as swine, sheep, cattle, goats, horses, and even pet animals.
On the other hand, respondent Tryco Pharma Corporation is a domestic corporation that manufactures, distributes and sells veterinary products including Impregon, a drug that has Albendazole for its active ingredient and is claimed to be effective against gastro-intestinal roundworms, lungworms, tapeworms and fluke infestation in carabaos, cattle and goats.
Petitioner sued private respondent for infringement of patent and unfair competition for advertising and selling as its own the drug Impregon although the same contained petitioner’s patented Albendazole. The respondent averred that that Letters Patent No. 14561 does not cover the substance Albendazole for nowhere in it does that word appear; that even if the patent were to include Albendazole, such substance is unpatentable; that the Bureau of Food and Drugs allowed it to manufacture and market Impregon with Albendazole as it’s known ingredient; that there is no proof that it passed off in any way its veterinary products as those of petitioner; that Letters Patent No. 14561 is null and void, the application for the issuance thereof having been filed beyond the one year period from the filing of an application abroad for the same invention covered thereby, in violation of Section 15 of Republic Act No. 165 (The Patent Law); and that petitioner is not the registered patent.
The court ruled in favor of the respondent. The petitioners filed an appeal with the Court of Appeals but was denied. Hence this present petition.
ISSUE
Whether or not the Court of Appeals erred in not finding that Albendazole is included in petitioners Letter Pattent No. 14561
HELD
From an examination of the evidence on record, the Court finds nothing infirm in the appellate court’s conclusions with respect to the principal issue of whether Tycho Pharma committed patent infringement to the prejudice of SKBC. The burden of proof to substantiate a charge for patent infringement rests on the plaintiff. In the case at bar, petitioner’s evidence consists primarily of its Letters Patent No. 14561, and the testimony of Dr. Orinion, its general manager in the Philippines for its Animal Health Products Division, by which it sought to show that its patent for the compound methyl 5 propylthio-2- benzimidazole carbamate also covers the substance Albendazole. From a reading of the 9 claims of Letters Patent No. 14561 in relation to the other portions thereof, no mention is made of the compound Albendazole.
When the language of its claims is clear and distinct, the patentee is bound thereby and may not claim anything beyond them. And so are the courts bound which may not add to or detract from the claims matters not expressed or necessarily implied, nor may they enlarge the patent beyond the scope of that which the inventor claimed and the patent office allowed, even if the patentee may have been entitled to something more than the words it had chosen would include. It bears stressing that the mere absence of the word Albendazole in Letters Patent No. 14561 is not determinative of Albendazole’s non-inclusion in the claims of the patent. While Albendazole is admittedly a chemical compound that exists by a name different from that covered in SKBC’s letters patent, the language of Letter Patent No. 14561 fails to yield anything at all regarding Albendazole. And no extrinsic evidence had been adduced to prove that Albendazole inheres in SKBC’s patent in spite of its omission therefrom or that the meaning of the claims of the patent embraces the same. While SKBC concedes that the mere literal wordings of its patent cannot establish Tyco Pharma’s infringement, it urges the Court to apply the doctrine of equivalents.
The doctrine of equivalents provides that an infringement also takes place when a device appropriates a prior invention by incorporating its innovative concept and, although with some modification and change, performs substantially the same function in substantially the same way to achieve substantially the same result. Yet again, a scrutiny of SKBC’s evidence fails to convince the Court of the substantial sameness of SKBC’s patented compound and Albendazole. While both compounds have the effect of neutralizing parasites in animals, identity of result does not amount to infringement of patent unless Albendazole operates in substantially the same way or by substantially the same means as the patented compound, even though it performs the same function and achieves the same result.
In other words, the principle or mode of operation must be the same or substantially the same. The doctrine of equivalents thus requires satisfaction of the function-means-and-result test, the patentee having the burden to show that all three components of such equivalency test are met.
Petitioner, Smith Kline Beckman Corporation was granted a patent over an invention entitled "Methods and Compositions for Producing Biphasic Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole Carbamate." The patented invention consisted of a new compound named methyl 5 propylthio-2-benzimidazole carbamate and the methods or compositions utilizing the compound as an active ingredient in fighting infections caused by gastrointestinal parasites and lungworms in animals such as swine, sheep, cattle, goats, horses, and even pet animals.
On the other hand, respondent Tryco Pharma Corporation is a domestic corporation that manufactures, distributes and sells veterinary products including Impregon, a drug that has Albendazole for its active ingredient and is claimed to be effective against gastro-intestinal roundworms, lungworms, tapeworms and fluke infestation in carabaos, cattle and goats.
Petitioner sued private respondent for infringement of patent and unfair competition for advertising and selling as its own the drug Impregon although the same contained petitioner’s patented Albendazole. The respondent averred that that Letters Patent No. 14561 does not cover the substance Albendazole for nowhere in it does that word appear; that even if the patent were to include Albendazole, such substance is unpatentable; that the Bureau of Food and Drugs allowed it to manufacture and market Impregon with Albendazole as it’s known ingredient; that there is no proof that it passed off in any way its veterinary products as those of petitioner; that Letters Patent No. 14561 is null and void, the application for the issuance thereof having been filed beyond the one year period from the filing of an application abroad for the same invention covered thereby, in violation of Section 15 of Republic Act No. 165 (The Patent Law); and that petitioner is not the registered patent.
The court ruled in favor of the respondent. The petitioners filed an appeal with the Court of Appeals but was denied. Hence this present petition.
ISSUE
Whether or not the Court of Appeals erred in not finding that Albendazole is included in petitioners Letter Pattent No. 14561
HELD
From an examination of the evidence on record, the Court finds nothing infirm in the appellate court’s conclusions with respect to the principal issue of whether Tycho Pharma committed patent infringement to the prejudice of SKBC. The burden of proof to substantiate a charge for patent infringement rests on the plaintiff. In the case at bar, petitioner’s evidence consists primarily of its Letters Patent No. 14561, and the testimony of Dr. Orinion, its general manager in the Philippines for its Animal Health Products Division, by which it sought to show that its patent for the compound methyl 5 propylthio-2- benzimidazole carbamate also covers the substance Albendazole. From a reading of the 9 claims of Letters Patent No. 14561 in relation to the other portions thereof, no mention is made of the compound Albendazole.
When the language of its claims is clear and distinct, the patentee is bound thereby and may not claim anything beyond them. And so are the courts bound which may not add to or detract from the claims matters not expressed or necessarily implied, nor may they enlarge the patent beyond the scope of that which the inventor claimed and the patent office allowed, even if the patentee may have been entitled to something more than the words it had chosen would include. It bears stressing that the mere absence of the word Albendazole in Letters Patent No. 14561 is not determinative of Albendazole’s non-inclusion in the claims of the patent. While Albendazole is admittedly a chemical compound that exists by a name different from that covered in SKBC’s letters patent, the language of Letter Patent No. 14561 fails to yield anything at all regarding Albendazole. And no extrinsic evidence had been adduced to prove that Albendazole inheres in SKBC’s patent in spite of its omission therefrom or that the meaning of the claims of the patent embraces the same. While SKBC concedes that the mere literal wordings of its patent cannot establish Tyco Pharma’s infringement, it urges the Court to apply the doctrine of equivalents.
The doctrine of equivalents provides that an infringement also takes place when a device appropriates a prior invention by incorporating its innovative concept and, although with some modification and change, performs substantially the same function in substantially the same way to achieve substantially the same result. Yet again, a scrutiny of SKBC’s evidence fails to convince the Court of the substantial sameness of SKBC’s patented compound and Albendazole. While both compounds have the effect of neutralizing parasites in animals, identity of result does not amount to infringement of patent unless Albendazole operates in substantially the same way or by substantially the same means as the patented compound, even though it performs the same function and achieves the same result.
In other words, the principle or mode of operation must be the same or substantially the same. The doctrine of equivalents thus requires satisfaction of the function-means-and-result test, the patentee having the burden to show that all three components of such equivalency test are met.
Monday, May 18, 2020
SPOUSES YULO V BPI
G.R. No. 217044
January 16, 2019
FACTS
Petitioner spouses Rainer Yulo and Juliet Yulo are both credit card holders of the respondent, Bank of the Philippine Islands (BPI). When the petitioners had been delinquent with their payments, BPI started to send out demand letters and later on filed a complaint for sum of money against the petitioners. Spouses admitted that they used the credit cards issued by the Bank of the Philippine Islands but claimed that their total liability was only P20,000.00. They also alleged that the Bank of the Philippine Islands did not fully disclose to them the Terms and Conditions on their use of the issued credit cards and also, BPI failed to prove their liability. The lower court ruled in favor of BPI and ordered petitioners to pay the bank the sum of P229,378.68. Petitioners filed an appeal with the Regional Trial Court and Court of Appeals but was both denied. The Court of Appeals found that the Yulo Spouses' failure to contest the charges in the monthly Statements of Account signified that they accepted the veracity of the charges. It further noted that Rainier, an insurance underwriter, was familiar with contractual stipulations; hence, he could not feign ignorance over his own contractual obligation to the Bank of the Philippine Islands.
ISSUE
Whether or not petitioners Rainier Jose M. Yulo and Juliet L. Yulo are bound by the Terms and Conditions on their use of credit cards issued by respondent.
RULING
No. As the recipient of an unsolicited credit card, the pre-screened client can then choose to either accept or reject it. When petitioners accepted respondent's credit card by using it to purchase goods and services, a contractual relationship was created between them, "governed by the Terms and Conditions found in the card membership agreement. Such terms and conditions constitute the law between the parties.". However, when issuing a pre-screened or pre-approved credit card, the credit card provider must prove that its client read and consented to the terms and conditions governing the credit card's use. Failure to prove consent means that the client cannot be bound by the provisions of the terms and conditions, despite admitted use of the credit card. With respondent's failure to prove petitioner Rainier's conformity and acceptance of the Terms and Conditions, petitioners cannot be bound by its provisions. The Metropolitan Trial Court ruling was affirmed by both the Regional Trial Court and the Court of Appeals. Since petitioner did not consent to the Terms and Conditions governing his credit card, there is a need to modify the outstanding balance by removing the interests, penalties, and other charges imposed before.
Petitioner spouses Rainer Yulo and Juliet Yulo are both credit card holders of the respondent, Bank of the Philippine Islands (BPI). When the petitioners had been delinquent with their payments, BPI started to send out demand letters and later on filed a complaint for sum of money against the petitioners. Spouses admitted that they used the credit cards issued by the Bank of the Philippine Islands but claimed that their total liability was only P20,000.00. They also alleged that the Bank of the Philippine Islands did not fully disclose to them the Terms and Conditions on their use of the issued credit cards and also, BPI failed to prove their liability. The lower court ruled in favor of BPI and ordered petitioners to pay the bank the sum of P229,378.68. Petitioners filed an appeal with the Regional Trial Court and Court of Appeals but was both denied. The Court of Appeals found that the Yulo Spouses' failure to contest the charges in the monthly Statements of Account signified that they accepted the veracity of the charges. It further noted that Rainier, an insurance underwriter, was familiar with contractual stipulations; hence, he could not feign ignorance over his own contractual obligation to the Bank of the Philippine Islands.
ISSUE
Whether or not petitioners Rainier Jose M. Yulo and Juliet L. Yulo are bound by the Terms and Conditions on their use of credit cards issued by respondent.
RULING
No. As the recipient of an unsolicited credit card, the pre-screened client can then choose to either accept or reject it. When petitioners accepted respondent's credit card by using it to purchase goods and services, a contractual relationship was created between them, "governed by the Terms and Conditions found in the card membership agreement. Such terms and conditions constitute the law between the parties.". However, when issuing a pre-screened or pre-approved credit card, the credit card provider must prove that its client read and consented to the terms and conditions governing the credit card's use. Failure to prove consent means that the client cannot be bound by the provisions of the terms and conditions, despite admitted use of the credit card. With respondent's failure to prove petitioner Rainier's conformity and acceptance of the Terms and Conditions, petitioners cannot be bound by its provisions. The Metropolitan Trial Court ruling was affirmed by both the Regional Trial Court and the Court of Appeals. Since petitioner did not consent to the Terms and Conditions governing his credit card, there is a need to modify the outstanding balance by removing the interests, penalties, and other charges imposed before.
IVQ LAND HOLDINGS, INC., VS. REUBEN BARBOSA
G.R. No. 193156
September 26, 2018
FACTS
Respondent Reuben Barbosa claims that he is the owner of the parcel of land which is the subject property of the case that he bought from Therese Vargas. The property was at that time registered in her name. He took possession of the subject property seven days after he bought the same and he employed a caretaker to live therein. Before Therese Vargas, the owner of the property was Kawilihan Corporation, which company was owned by Jorge Vargas. Respondent stated that the subject property remained registered in the name of Therese Vargas as he entrusted her title to another person for custody, but the said person went to Canada. He paid real estate taxes on the subject property in the name of Kawilihan Corporation from 1978 until 2002. From 2003 to 2006, he paid real estate taxes thereon in the name of Therese Vargas. However, he learned that Therese Vargas's name was cancelled and replaced with that of IVQ in the tax declaration of the subject property.
Respondent filed a Petition for Cancellation and Quieting of Titles against Jorge Vargas III, Benito Montinola from IVQ Land Holdings, Inc. (IVQ) and the Register of Deeds of Quezon City. He prayed for the trial court to issue an order directing the Office of the Register of Deeds of Quezon City to cancel Jorge Vargas III's TCT and IVQ's TCT and adjudicating ownership of the subject property to him. The Regional Trial Court ruled granted Barbosa's petition and ordered the cancellation of IVQ's TCT. Petitioner filed an appeal to the Court of Appeals, but it affirmed the judgment of the trial court as it found that Barbosa was able to prove his ownership of the subject property.
ISSUE
Whether or not IVQ has a right on the subject property.
RULING No. In an action to quiet title, the plaintiffs or complainants must demonstrate a legal or an equitable title to, or an interest in, the subject real property. Likewise, they must show that the deed, claim, encumbrance or proceeding that purportedly casts a cloud on their title is in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. This point is clear from Article 476 of the Civil Code, which reads: "Whenever there is cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet title."
"An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein."
Ownership is not the same as a certificate of title. Registering a piece of land under the Torrens System does not create or vest title, because registration is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. Its issuance in favor of a particular person does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.
The lower courts found that Barbosa was able to substantiate his title to the subject property, while IVQ failed to establish its claim of ownership thereto. All told, despite the exceptional opportunity that was granted to it, IVQ again failed to adduce sufficient and creditworthy evidence that would convince the Court to reconsider the previous denial of its petition.
Respondent Reuben Barbosa claims that he is the owner of the parcel of land which is the subject property of the case that he bought from Therese Vargas. The property was at that time registered in her name. He took possession of the subject property seven days after he bought the same and he employed a caretaker to live therein. Before Therese Vargas, the owner of the property was Kawilihan Corporation, which company was owned by Jorge Vargas. Respondent stated that the subject property remained registered in the name of Therese Vargas as he entrusted her title to another person for custody, but the said person went to Canada. He paid real estate taxes on the subject property in the name of Kawilihan Corporation from 1978 until 2002. From 2003 to 2006, he paid real estate taxes thereon in the name of Therese Vargas. However, he learned that Therese Vargas's name was cancelled and replaced with that of IVQ in the tax declaration of the subject property.
Respondent filed a Petition for Cancellation and Quieting of Titles against Jorge Vargas III, Benito Montinola from IVQ Land Holdings, Inc. (IVQ) and the Register of Deeds of Quezon City. He prayed for the trial court to issue an order directing the Office of the Register of Deeds of Quezon City to cancel Jorge Vargas III's TCT and IVQ's TCT and adjudicating ownership of the subject property to him. The Regional Trial Court ruled granted Barbosa's petition and ordered the cancellation of IVQ's TCT. Petitioner filed an appeal to the Court of Appeals, but it affirmed the judgment of the trial court as it found that Barbosa was able to prove his ownership of the subject property.
ISSUE
Whether or not IVQ has a right on the subject property.
RULING No. In an action to quiet title, the plaintiffs or complainants must demonstrate a legal or an equitable title to, or an interest in, the subject real property. Likewise, they must show that the deed, claim, encumbrance or proceeding that purportedly casts a cloud on their title is in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. This point is clear from Article 476 of the Civil Code, which reads: "Whenever there is cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet title."
"An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein."
Ownership is not the same as a certificate of title. Registering a piece of land under the Torrens System does not create or vest title, because registration is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. Its issuance in favor of a particular person does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.
The lower courts found that Barbosa was able to substantiate his title to the subject property, while IVQ failed to establish its claim of ownership thereto. All told, despite the exceptional opportunity that was granted to it, IVQ again failed to adduce sufficient and creditworthy evidence that would convince the Court to reconsider the previous denial of its petition.
PHILIPPINE NATIONAL BANK v SPOUSES ANGEL AND BUENVENIDA ANAY, AND SPOUSES FRANCISCO AND DOLORES LEE
G.R. No. 197831
July 09, 2018
FACTS
The respondents, Spouses Francisco and Dolores Lee obtained a loan from Philippine National Bank (PNB) in which as a security has included a parcel of land registered in the name of the Spouses Anay. For this purpose, the Spouses Anay executed a Special Power of Attorney (SPA), authorizing the respondents to use the subject property as security for the loan. When Spouses Lee failed to pay their obligation, petitioner foreclosed the property, auctioned it and as the highest bidder, had transferred the certificate of title in the bank’s name. Spouses Anay filed a Complaint against the other spouses and PNB for annulment of the SPA, foreclosure proceedings and the Sheriffs Certificate of Sale on the ground of vitiated consent. It appeared that the daughter of the Spouses Anay was an employee of the Spouses Lee and the latter had urged her to let them borrow the property. At that time, the Spouses Anay were both of old age, weak, hard of hearing and could barely see. So much so that Marietta had to move her father's hand to sign and had to hold her mother's hand while affixing her thumbmark on the SPA. The Court held that the SPA is null and void and of no force and effect. Petitioner appealed and contends that nullity of the SPA is a collateral attack, but the Court ruled that the cancellation of PNB's title does not constitute an indirect or collateral attack because said title was irregularly and illegally issued to begin with, it has emanated from an annulled SPA. PNB maintains that it is a mortgagee in good faith and as such, its title cannot be subjected to collateral attack. In any case, PNB argues, the Spouses Lee should be made liable for damages and restitution to PNB for having acted in bad faith.
ISSUE
1. Whether or not PNB is a mortgagee in good faith.
RULING
The doctrine of mortgagee in good faith "presupposes that the mortgagor, who is not the rightful owner of the property, has already succeeded in obtaining Torrens title over the property in his name and that, after obtaining the said title, he succeeds in mortgaging the property to another who relies on what appears on the title”. Such is not the case here as the fact that the Spouses Anay were the registered owners of the subject property was never disputed.
Based on the testimonial evidence offered by PNB itself through PNB Inspector Marcial Abucay, when the Spouses Anay were made to sign the previously prepared SPA, the husband was already bedridden, half-blind, not able to recognize, cannot read the SPA, and his hand had to be moved by Marietta to approximate the act of signing. PNB Inspector Abucay further testified that he did not hear whether Marietta explained the contents of the document to the Spouses Anay before she made them sign. PNB's theory of being a mortgagee in good faith is therefore unavailing. On the contrary, what appears to be evident is that PNB itself connived with the Spouses Lee if only to ensure that the signatures of the Spouses Anay on the SPA were secured. Since PNB is not a mortgagee in good faith, it is not entitled to protection.
The respondents, Spouses Francisco and Dolores Lee obtained a loan from Philippine National Bank (PNB) in which as a security has included a parcel of land registered in the name of the Spouses Anay. For this purpose, the Spouses Anay executed a Special Power of Attorney (SPA), authorizing the respondents to use the subject property as security for the loan. When Spouses Lee failed to pay their obligation, petitioner foreclosed the property, auctioned it and as the highest bidder, had transferred the certificate of title in the bank’s name. Spouses Anay filed a Complaint against the other spouses and PNB for annulment of the SPA, foreclosure proceedings and the Sheriffs Certificate of Sale on the ground of vitiated consent. It appeared that the daughter of the Spouses Anay was an employee of the Spouses Lee and the latter had urged her to let them borrow the property. At that time, the Spouses Anay were both of old age, weak, hard of hearing and could barely see. So much so that Marietta had to move her father's hand to sign and had to hold her mother's hand while affixing her thumbmark on the SPA. The Court held that the SPA is null and void and of no force and effect. Petitioner appealed and contends that nullity of the SPA is a collateral attack, but the Court ruled that the cancellation of PNB's title does not constitute an indirect or collateral attack because said title was irregularly and illegally issued to begin with, it has emanated from an annulled SPA. PNB maintains that it is a mortgagee in good faith and as such, its title cannot be subjected to collateral attack. In any case, PNB argues, the Spouses Lee should be made liable for damages and restitution to PNB for having acted in bad faith.
ISSUE
1. Whether or not PNB is a mortgagee in good faith.
RULING
The doctrine of mortgagee in good faith "presupposes that the mortgagor, who is not the rightful owner of the property, has already succeeded in obtaining Torrens title over the property in his name and that, after obtaining the said title, he succeeds in mortgaging the property to another who relies on what appears on the title”. Such is not the case here as the fact that the Spouses Anay were the registered owners of the subject property was never disputed.
Based on the testimonial evidence offered by PNB itself through PNB Inspector Marcial Abucay, when the Spouses Anay were made to sign the previously prepared SPA, the husband was already bedridden, half-blind, not able to recognize, cannot read the SPA, and his hand had to be moved by Marietta to approximate the act of signing. PNB Inspector Abucay further testified that he did not hear whether Marietta explained the contents of the document to the Spouses Anay before she made them sign. PNB's theory of being a mortgagee in good faith is therefore unavailing. On the contrary, what appears to be evident is that PNB itself connived with the Spouses Lee if only to ensure that the signatures of the Spouses Anay on the SPA were secured. Since PNB is not a mortgagee in good faith, it is not entitled to protection.
RACELIS V SPOUSES GERMIL JAVIER and REBECCA JAVIER
G.R. No. 189609
January 29, 2018
FACTS
The respondents, Spouses Germil and Rebecca Javier offered to purchase a property from the petitioner Victoria Racelis. Since they could not afford to pay the price, they offered to lease the property while they raise enough money which were also agreed to by the petitioner. The respondents tendered a sum of representing "initial payment or goodwill money." They continued to pay rental fees but later on refused to pay when the petitioner had requested them to vacate the property and terminated the lease agreement after the latter had realized that they had no genuine intention of purchasing the property. The respondents refused to vacate and that made the petitioner to disconnect the electrical services of the property and filed an ejectment complaint against the respondents. The Metropolitan Trial Court dismissed the complaint and ruled that the respondents were entitled to suspend the payment of rent under Article 1658 of the Civil Code due to petitioner’s act of disconnecting electric service over the property. Also, it declared that the their obligation had been extinguished and that the advanced rent and deposit were sufficient to cover their unpaid rent. On appeal, the Regional Trial Court reversed the lower court’s decision. They ruled that the amount paid by the spouses was not given as an advanced payment for rental but as part of the purchase price of the property. An appeal was file by the spouses in the Court of Appeals where it ruled in favor of them. Aggrieved, the petitioner filed this present petition for review.
ISSUE
1. Whether or not respondents Spouses Germil and Rebecca Javier can invoke their right to suspend the payment of rent under Article 1658 of the Civil Code
RULING
1. No. Article 1658 of the Civil Code allows a lessee to postpone the payment I of rent if the lessor fails to either (1) "make the necessary repairs" on the property or (2) "maintain the lessee in peaceful and adequate enjoyment of the property leased." This provision implements the obligation imposed on lessors under Article 1654(3) of the Civil Code. However, this rule will not apply in the present case because the lease had already expired when petitioner requested for the temporary disconnection of electrical service. Petitioner demanded respondents to vacate the premises however instead of surrendering the premises to petitioner, respondents unlawfully withheld possession of the property. Respondents continued to stay in the premises until they moved to their new residence. At that point, petitioner was no longer obligated to maintain respondents in the "peaceful and adequate enjoyment of the lease for the entire duration of the contract." Therefore, respondents cannot use the disconnection of electrical service as justification to suspend the payment of rent.
Assuming that respondents were entitled to invoke their right under Article 1658 of the Civil Code, this does exonerate them from their obligation under Article 1657 of the Civil Code "to pay the price of the lease according to the terms stipulated." Lessees who exercise their right under Article 1658 of the Civil Code are not freed from the obligations imposed by law or contract. Moreover, respondents' obligation to pay rent was not extinguished when they transferred to their new residence. Respondents are liable for a reasonable amount of rent for the use and continued occupation of the property upon the expiration of the lease. To hold otherwise would unjustly enrich respondents at petitioner's expense.
The respondents, Spouses Germil and Rebecca Javier offered to purchase a property from the petitioner Victoria Racelis. Since they could not afford to pay the price, they offered to lease the property while they raise enough money which were also agreed to by the petitioner. The respondents tendered a sum of representing "initial payment or goodwill money." They continued to pay rental fees but later on refused to pay when the petitioner had requested them to vacate the property and terminated the lease agreement after the latter had realized that they had no genuine intention of purchasing the property. The respondents refused to vacate and that made the petitioner to disconnect the electrical services of the property and filed an ejectment complaint against the respondents. The Metropolitan Trial Court dismissed the complaint and ruled that the respondents were entitled to suspend the payment of rent under Article 1658 of the Civil Code due to petitioner’s act of disconnecting electric service over the property. Also, it declared that the their obligation had been extinguished and that the advanced rent and deposit were sufficient to cover their unpaid rent. On appeal, the Regional Trial Court reversed the lower court’s decision. They ruled that the amount paid by the spouses was not given as an advanced payment for rental but as part of the purchase price of the property. An appeal was file by the spouses in the Court of Appeals where it ruled in favor of them. Aggrieved, the petitioner filed this present petition for review.
ISSUE
1. Whether or not respondents Spouses Germil and Rebecca Javier can invoke their right to suspend the payment of rent under Article 1658 of the Civil Code
RULING
1. No. Article 1658 of the Civil Code allows a lessee to postpone the payment I of rent if the lessor fails to either (1) "make the necessary repairs" on the property or (2) "maintain the lessee in peaceful and adequate enjoyment of the property leased." This provision implements the obligation imposed on lessors under Article 1654(3) of the Civil Code. However, this rule will not apply in the present case because the lease had already expired when petitioner requested for the temporary disconnection of electrical service. Petitioner demanded respondents to vacate the premises however instead of surrendering the premises to petitioner, respondents unlawfully withheld possession of the property. Respondents continued to stay in the premises until they moved to their new residence. At that point, petitioner was no longer obligated to maintain respondents in the "peaceful and adequate enjoyment of the lease for the entire duration of the contract." Therefore, respondents cannot use the disconnection of electrical service as justification to suspend the payment of rent.
Assuming that respondents were entitled to invoke their right under Article 1658 of the Civil Code, this does exonerate them from their obligation under Article 1657 of the Civil Code "to pay the price of the lease according to the terms stipulated." Lessees who exercise their right under Article 1658 of the Civil Code are not freed from the obligations imposed by law or contract. Moreover, respondents' obligation to pay rent was not extinguished when they transferred to their new residence. Respondents are liable for a reasonable amount of rent for the use and continued occupation of the property upon the expiration of the lease. To hold otherwise would unjustly enrich respondents at petitioner's expense.
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